Public Law 111-203, 124 Stat. 1376

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Public Law 111-203, 124 Stat. 1376

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PUBLIC LAW 111–203—JULY 21, 2010

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DODD-FRANK WALL STREET REFORM AND
CONSUMER PROTECTION ACT

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124 STAT. 1376

PUBLIC LAW 111–203—JULY 21, 2010

Public Law 111–203
111th Congress
An Act
July 21, 2010
[H.R. 4173]

Dodd-Frank Wall
Street Reform
and Consumer
Protection Act.
12 USC 5301
note.

To promote the financial stability of the United States by improving accountability
and transparency in the financial system, to end ‘‘too big to fail’’, to protect
the American taxpayer by ending bailouts, to protect consumers from abusive
financial services practices, and for other purposes.

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Dodd-Frank
Wall Street Reform and Consumer Protection Act’’.
(b) TABLE OF CONTENTS.—The table of contents for this Act
is as follows:
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

1.
2.
3.
4.
5.
6.

Short title; table of contents.
Definitions.
Severability.
Effective date.
Budgetary effects.
Antitrust savings clause.
TITLE I—FINANCIAL STABILITY

Sec. 101. Short title.
Sec. 102. Definitions.

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Subtitle A—Financial Stability Oversight Council
Sec. 111. Financial Stability Oversight Council established.
Sec. 112. Council authority.
Sec. 113. Authority to require supervision and regulation of certain nonbank financial companies.
Sec. 114. Registration of nonbank financial companies supervised by the Board of
Governors.
Sec. 115. Enhanced supervision and prudential standards for nonbank financial
companies supervised by the Board of Governors and certain bank holding companies.
Sec. 116. Reports.
Sec. 117. Treatment of certain companies that cease to be bank holding companies.
Sec. 118. Council funding.
Sec. 119. Resolution of supervisory jurisdictional disputes among member agencies.
Sec. 120. Additional standards applicable to activities or practices for financial stability purposes.
Sec. 121. Mitigation of risks to financial stability.
Sec. 122. GAO Audit of Council.
Sec. 123. Study of the effects of size and complexity of financial institutions on capital market efficiency and economic growth.
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151.
152.
153.
154.
155.
156.

Subtitle B—Office of Financial Research
Definitions.
Office of Financial Research established.
Purpose and duties of the Office.
Organizational structure; responsibilities of primary programmatic units.
Funding.
Transition oversight.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1377

Subtitle C—Additional Board of Governors Authority for Certain Nonbank Financial
Companies and Bank Holding Companies
Sec. 161. Reports by and examinations of nonbank financial companies by the
Board of Governors.
Sec. 162. Enforcement.
Sec. 163. Acquisitions.
Sec. 164. Prohibition against management interlocks between certain financial
companies.
Sec. 165. Enhanced supervision and prudential standards for nonbank financial
companies supervised by the Board of Governors and certain bank holding companies.
Sec. 166. Early remediation requirements.
Sec. 167. Affiliations.
Sec. 168. Regulations.
Sec. 169. Avoiding duplication.
Sec. 170. Safe harbor.
Sec. 171. Leverage and risk-based capital requirements.
Sec. 172. Examination and enforcement actions for insurance and orderly liquidation purposes.
Sec. 173. Access to United States financial market by foreign institutions.
Sec. 174. Studies and reports on holding company capital requirements.
Sec. 175. International policy coordination.
Sec. 176. Rule of construction.
TITLE II—ORDERLY LIQUIDATION AUTHORITY
Definitions.
Judicial review.
Systemic risk determination.
Orderly liquidation of covered financial companies.
Orderly liquidation of covered brokers and dealers.
Mandatory terms and conditions for all orderly liquidation actions.
Directors not liable for acquiescing in appointment of receiver.
Dismissal and exclusion of other actions.
Rulemaking; non-conflicting law.
Powers and duties of the Corporation.
Miscellaneous provisions.
Prohibition of circumvention and prevention of conflicts of interest.
Ban on certain activities by senior executives and directors.
Prohibition on taxpayer funding.
Study on secured creditor haircuts.
Study on bankruptcy process for financial and nonbank financial institutions
Sec. 217. Study on international coordination relating to bankruptcy process for
nonbank financial institutions
Sec.
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201.
202.
203.
204.
205.
206.
207.
208.
209.
210.
211.
212.
213.
214.
215.
216.

TITLE III—TRANSFER OF POWERS TO THE COMPTROLLER OF THE
CURRENCY, THE CORPORATION, AND THE BOARD OF GOVERNORS
Sec. 300. Short title.
Sec. 301. Purposes.
Sec. 302. Definition.

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Sec.
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311.
312.
313.
314.
315.
316.
317.
318.
319.

Subtitle A—Transfer of Powers and Duties
Transfer date.
Powers and duties transferred.
Abolishment.
Amendments to the Revised Statutes.
Federal information policy.
Savings provisions.
References in Federal law to Federal banking agencies.
Funding.
Contracting and leasing authority.

Subtitle B—Transitional Provisions
Sec. 321. Interim use of funds, personnel, and property of the Office of Thrift Supervision.
Sec. 322. Transfer of employees.
Sec. 323. Property transferred.
Sec. 324. Funds transferred.
Sec. 325. Disposition of affairs.
Sec. 326. Continuation of services.

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124 STAT. 1378

PUBLIC LAW 111–203—JULY 21, 2010

Sec. 327. Implementation plan and reports.
Sec.
Sec.
Sec.
Sec.
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331.
332.
333.
334.
335.
336.

Subtitle C—Federal Deposit Insurance Corporation
Deposit insurance reforms.
Elimination of procyclical assessments.
Enhanced access to information for deposit insurance purposes.
Transition reserve ratio requirements to reflect new assessment base.
Permanent increase in deposit and share insurance.
Management of the Federal Deposit Insurance Corporation.

Subtitle D—Other Matters
Sec. 341. Branching.
Sec. 342. Office of Minority and Women Inclusion.
Sec. 343. Insurance of transaction accounts.
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351.
352.
353.
354.
355.
356.
357.
358.
359.
360.
361.
362.
363.
364.
365.
366.
367.
368.
369.
370.
371.
372.
373.
374.
375.
376.
377.
378.

Subtitle E—Technical and Conforming Amendments
Effective date.
Balanced Budget and Emergency Deficit Control Act of 1985.
Bank Enterprise Act of 1991.
Bank Holding Company Act of 1956.
Bank Holding Company Act Amendments of 1970.
Bank Protection Act of 1968.
Bank Service Company Act.
Community Reinvestment Act of 1977.
Crime Control Act of 1990.
Depository Institution Management Interlocks Act.
Emergency Homeowners’ Relief Act.
Federal Credit Union Act.
Federal Deposit Insurance Act.
Federal Home Loan Bank Act.
Federal Housing Enterprises Financial Safety and Soundness Act of 1992.
Federal Reserve Act.
Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
Flood Disaster Protection Act of 1973.
Home Owners’ Loan Act.
Housing Act of 1948.
Housing and Community Development Act of 1992.
Housing and Urban-Rural Recovery Act of 1983.
National Housing Act.
Neighborhood Reinvestment Corporation Act.
Public Law 93–100.
Securities Exchange Act of 1934.
Title 18, United States Code.
Title 31, United States Code.

TITLE IV—REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERS
Sec. 401. Short title.
Sec. 402. Definitions.
Sec. 403. Elimination of private adviser exemption; limited exemption for foreign
private advisers; limited intrastate exemption.
Sec. 404. Collection of systemic risk data; reports; examinations; disclosures.
Sec. 405. Disclosure provision amendment.
Sec. 406. Clarification of rulemaking authority.
Sec. 407. Exemption of venture capital fund advisers.
Sec. 408. Exemption of and record keeping by private equity fund advisers.
Sec. 409. Family offices.
Sec. 410. State and Federal responsibilities; asset threshold for Federal registration
of investment advisers.
Sec. 411. Custody of client assets.
Sec. 412. Adjusting the accredited investor standard.
Sec. 413. GAO study and report on accredited investors.
Sec. 414. GAO study on self-regulatory organization for private funds.
Sec. 415. Commission study and report on short selling.
Sec. 416. Transition period.

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TITLE V—INSURANCE
Subtitle A—Office of National Insurance
Sec. 501. Short title.
Sec. 502. Federal Insurance Office.
Subtitle B—State-Based Insurance Reform
Sec. 511. Short title.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1379

Sec. 512. Effective date.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

521.
522.
523.
524.
525.
526.
527.

PART I—NONADMITTED INSURANCE
Reporting, payment, and allocation of premium taxes.
Regulation of nonadmitted insurance by insured’s home State.
Participation in national producer database.
Uniform standards for surplus lines eligibility.
Streamlined application for commercial purchasers.
GAO study of nonadmitted insurance market.
Definitions.

PART II—REINSURANCE
Sec. 531. Regulation of credit for reinsurance and reinsurance agreements.
Sec. 532. Regulation of reinsurer solvency.
Sec. 533. Definitions.
PART III—RULE
Sec. 541. Rule of construction.
Sec. 542. Severability.

OF

CONSTRUCTION

TITLE VI—IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS
ASSOCIATION HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS
Sec. 601. Short title.
Sec. 602. Definition.
Sec. 603. Moratorium and study on treatment of credit card banks, industrial loan
companies, and certain other companies under the Bank Holding Company Act of 1956.
Sec. 604. Reports and examinations of holding companies; regulation of functionally
regulated subsidiaries.
Sec. 605. Assuring consistent oversight of permissible activities of depository institution subsidiaries of holding companies.
Sec. 606. Requirements for financial holding companies to remain well capitalized
and well managed.
Sec. 607. Standards for interstate acquisitions.
Sec. 608. Enhancing existing restrictions on bank transactions with affiliates.
Sec. 609. Eliminating exceptions for transactions with financial subsidiaries.
Sec. 610. Lending limits applicable to credit exposure on derivative transactions,
repurchase agreements, reverse repurchase agreements, and securities
lending and borrowing transactions.
Sec. 611. Consistent treatment of derivative transactions in lending limits.
Sec. 612. Restriction on conversions of troubled banks.
Sec. 613. De novo branching into States.
Sec. 614. Lending limits to insiders.
Sec. 615. Limitations on purchases of assets from insiders.
Sec. 616. Regulations regarding capital levels.
Sec. 617. Elimination of elective investment bank holding company framework.
Sec. 618. Securities holding companies.
Sec. 619. Prohibitions on proprietary trading and certain relationships with hedge
funds and private equity funds.
Sec. 620. Study of bank investment activities.
Sec. 621. Conflicts of interest.
Sec. 622. Concentration limits on large financial firms.
Sec. 623. Interstate merger transactions.
Sec. 624. Qualified thrift lenders.
Sec. 625. Treatment of dividends by certain mutual holding companies.
Sec. 626. Intermediate holding companies.
Sec. 627. Interest-bearing transaction accounts authorized.
Sec. 628. Credit card bank small business lending.
TITLE VII—WALL STREET TRANSPARENCY AND ACCOUNTABILITY
Sec. 701. Short title.

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Subtitle A—Regulation of Over-the-Counter Swaps Markets
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712.
713.
714.
715.

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PART I—REGULATORY AUTHORITY
Definitions.
Review of regulatory authority.
Portfolio margining conforming changes.
Abusive swaps.
Authority to prohibit participation in swap activities.

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124 STAT. 1380

PUBLIC LAW 111–203—JULY 21, 2010

Sec.
Sec.
Sec.
Sec.
Sec.

716.
717.
718.
719.
720.

Prohibition against Federal Government bailouts of swaps entities.
New product approval CFTC—SEC process.
Determining status of novel derivative products.
Studies.
Memorandum.

Sec.
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721.
722.
723.
724.
725.
726.
727.
728.
729.
730.
731.
732.
733.
734.
735.
736.
737.
738.
739.
740.
741.
742.
743.
744.
745.
746.
747.
748.
749.
750.
751.
752.
753.
754.

PART II—REGULATION OF SWAP MARKETS
Definitions.
Jurisdiction.
Clearing.
Swaps; segregation and bankruptcy treatment.
Derivatives clearing organizations.
Rulemaking on conflict of interest.
Public reporting of swap transaction data.
Swap data repositories.
Reporting and recordkeeping.
Large swap trader reporting.
Registration and regulation of swap dealers and major swap participants.
Conflicts of interest.
Swap execution facilities.
Derivatives transaction execution facilities and exempt boards of trade.
Designated contract markets.
Margin.
Position limits.
Foreign boards of trade.
Legal certainty for swaps.
Multilateral clearing organizations.
Enforcement.
Retail commodity transactions.
Other authority.
Restitution remedies.
Enhanced compliance by registered entities.
Insider trading.
Antidisruptive practices authority.
Commodity whistleblower incentives and protection.
Conforming amendments.
Study on oversight of carbon markets.
Energy and environmental markets advisory committee.
International harmonization.
Anti-manipulation authority.
Effective date.

Sec.
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761.
762.
763.
764.

Sec.
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765.
766.
767.
768.

Sec.
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769.
770.
771.
772.
773.
774.

Subtitle B—Regulation of Security-Based Swap Markets
Definitions under the Securities Exchange Act of 1934.
Repeal of prohibition on regulation of security-based swap agreements.
Amendments to the Securities Exchange Act of 1934.
Registration and regulation of security-based swap dealers and major security-based swap participants.
Rulemaking on conflict of interest.
Reporting and recordkeeping.
State gaming and bucket shop laws.
Amendments to the Securities Act of 1933; treatment of security-based
swaps.
Definitions under the Investment Company Act of 1940.
Definitions under the Investment Advisers Act of 1940.
Other authority.
Jurisdiction.
Civil penalties.
Effective date.

TITLE VIII—PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION
801. Short title.
802. Findings and purposes.
803. Definitions.
804. Designation of systemic importance.
805. Standards for systemically important financial market utilities and payment, clearing, or settlement activities.
Sec. 806. Operations of designated financial market utilities.
Sec. 807. Examination of and enforcement actions against designated financial
market utilities.
Sec. 808. Examination of and enforcement actions against financial institutions
subject to standards for designated activities.

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PUBLIC LAW 111–203—JULY 21, 2010
Sec.
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809.
810.
811.
812.
813.
814.

124 STAT. 1381

Requests for information, reports, or records.
Rulemaking.
Other authority.
Consultation.
Common framework for designated clearing entity risk management.
Effective date.

TITLE IX—INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE
REGULATION OF SECURITIES
Sec. 901. Short title.
Subtitle A—Increasing Investor Protection
Sec. 911. Investor Advisory Committee established.
Sec. 912. Clarification of authority of the Commission to engage in investor testing.
Sec. 913. Study and rulemaking regarding obligations of brokers, dealers, and investment advisers.
Sec. 914. Study on enhancing investment adviser examinations.
Sec. 915. Office of the Investor Advocate.
Sec. 916. Streamlining of filing procedures for self-regulatory organizations.
Sec. 917. Study regarding financial literacy among investors.
Sec. 918. Study regarding mutual fund advertising.
Sec. 919. Clarification of Commission authority to require investor disclosures before purchase of investment products and services.
Sec. 919A. Study on conflicts of interest.
Sec. 919B. Study on improved investor access to information on investment advisers and broker-dealers.
Sec. 919C. Study on financial planners and the use of financial designations.
Sec. 919D. Ombudsman.
Sec.
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Subtitle B—Increasing Regulatory Enforcement and Remedies
Authority to restrict mandatory pre-dispute arbitration.
Whistleblower protection.
Conforming amendments for whistleblower protection.
Implementation and transition provisions for whistleblower protection.
Collateral bars.
Disqualifying felons and other ‘‘bad actors’’ from Regulation D offerings.
Equal treatment of self-regulatory organization rules.
Clarification that section 205 of the Investment Advisers Act of 1940 does
not apply to State-registered advisers.
929. Unlawful margin lending.
929A. Protection for employees of subsidiaries and affiliates of publicly traded
companies.
929B. Fair Fund amendments.
929C. Increasing the borrowing limit on Treasury loans.
929D. Lost and stolen securities.
929E. Nationwide service of subpoenas.
929F. Formerly associated persons.
929G. Streamlined hiring authority for market specialists.
929H. SIPC Reforms.
929I. Protecting confidentiality of materials submitted to the Commission.
929J. Expansion of audit information to be produced and exchanged.
929K. Sharing privileged information with other authorities.
929L. Enhanced application of antifraud provisions.
929M. Aiding and abetting authority under the Securities Act and the Investment Company Act.
929N. Authority to impose penalties for aiding and abetting violations of the
Investment Advisers Act.
929O. Aiding and abetting standard of knowledge satisfied by recklessness.
929P. Strengthening enforcement by the Commission.
929Q. Revision to recordkeeping rule.
929R. Beneficial ownership and short-swing profit reporting.
929S. Fingerprinting.
929T. Equal treatment of self-regulatory organization rules.
929U. Deadline for completing examinations, inspections and enforcement actions.
929V. Security Investor Protection Act amendments.
929W. Notice to missing security holders.
929X. Short sale reforms.
929Y. Study on extraterritorial private rights of action.
929Z. GAO study on securities litigation.
921.
922.
923.
924.
925.
926.
927.
928.

Subtitle C—Improvements to the Regulation of Credit Rating Agencies
Sec. 931. Findings.

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124 STAT. 1382

PUBLIC LAW 111–203—JULY 21, 2010

Sec. 932. Enhanced regulation, accountability, and transparency of nationally recognized statistical rating organizations.
Sec. 933. State of mind in private actions.
Sec. 934. Referring tips to law enforcement or regulatory authorities.
Sec. 935. Consideration of information from sources other than the issuer in rating
decisions.
Sec. 936. Qualification standards for credit rating analysts.
Sec. 937. Timing of regulations.
Sec. 938. Universal ratings symbols.
Sec. 939. Removal of statutory references to credit ratings.
Sec. 939A. Review of reliance on ratings.
Sec. 939B. Elimination of exemption from fair disclosure rule.
Sec. 939C. Securities and Exchange Commission study on strengthening credit rating agency independence.
Sec. 939D. Government Accountability Office study on alternative business models.
Sec. 939E. Government Accountability Office study on the creation of an independent professional analyst organization.
Sec. 939F. Study and rulemaking on assigned credit ratings.
Sec. 939G. Effect of Rule 436(g).
Sec. 939H. Sense of Congress.
Sec.
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Sec.
Sec.
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Sec.

Subtitle D—Improvements to the Asset-Backed Securitization Process
941. Regulation of credit risk retention.
942. Disclosures and reporting for asset-backed securities.
943. Representations and warranties in asset-backed offerings.
944. Exempted transactions under the Securities Act of 1933.
945. Due diligence analysis and disclosure in asset-backed securities issues.
946. Study on the macroeconomic effects of risk retention requirements.

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951.
952.
953.
954.
955.
956.
957.

Subtitle E—Accountability and Executive Compensation
Shareholder vote on executive compensation disclosures.
Compensation committee independence.
Executive compensation disclosures.
Recovery of erroneously awarded compensation.
Disclosure regarding employee and director hedging.
Enhanced compensation structure reporting.
Voting by brokers.

Subtitle F—Improvements to the Management of the Securities and Exchange
Commission
Sec. 961. Report and certification of internal supervisory controls.
Sec. 962. Triennial report on personnel management.
Sec. 963. Annual financial controls audit.
Sec. 964. Report on oversight of national securities associations.
Sec. 965. Compliance examiners.
Sec. 966. Suggestion program for employees of the Commission.
Sec. 967. Commission organizational study and reform.
Sec. 968. Study on SEC revolving door.
Subtitle G—Strengthening Corporate Governance
Sec. 971. Proxy access.
Sec. 972. Disclosures regarding chairman and CEO structures.

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Subtitle H—Municipal Securities
Sec. 975. Regulation of municipal securities and changes to the board of the MSRB.
Sec. 976. Government Accountability Office study of increased disclosure to investors.
Sec. 977. Government Accountability Office study on the municipal securities markets.
Sec. 978. Funding for Governmental Accounting Standards Board.
Sec. 979. Commission Office of Municipal Securities.
Subtitle I—Public Company Accounting Oversight Board, Portfolio Margining, and
Other Matters
Sec. 981. Authority to share certain information with foreign authorities.
Sec. 982. Oversight of brokers and dealers.
Sec. 983. Portfolio margining.
Sec. 984. Loan or borrowing of securities.
Sec. 985. Technical corrections to Federal securities laws.
Sec. 986. Conforming amendments relating to repeal of the Public Utility Holding
Company Act of 1935.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1383

Sec. 987. Amendment to definition of material loss and nonmaterial losses to the
Deposit Insurance Fund for purposes of Inspector General reviews.
Sec. 988. Amendment to definition of material loss and nonmaterial losses to the
National Credit Union Share Insurance Fund for purposes of Inspector
General reviews.
Sec. 989. Government Accountability Office study on proprietary trading.
Sec. 989A. Senior investor protections.
Sec. 989B. Designated Federal entity inspectors general independence.
Sec. 989C. Strengthening Inspector General accountability.
Sec. 989D. Removal of Inspectors General of designated Federal entities.
Sec. 989E. Additional oversight of financial regulatory system.
Sec. 989F. GAO study of person to person lending.
Sec. 989G. Exemption for nonaccelerated filers.
Sec. 989H. Corrective responses by heads of certain establishments to deficiencies
identified by Inspectors General.
Sec. 989I. GAO study regarding exemption for smaller issuers.
Sec. 989J. Further promoting the adoption of the NAIC Model Regulations that enhance protection of seniors and other consumers.
Subtitle J—Securities and Exchange Commission Match Funding
Sec. 991. Securities and Exchange Commission match funding.
TITLE X—BUREAU OF CONSUMER FINANCIAL PROTECTION
Sec. 1001. Short title.
Sec. 1002. Definitions.
1011.
1012.
1013.
1014.
1015.
1016.
1017.
1018.

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Subtitle B—General Powers of the Bureau
1021. Purpose, objectives, and functions.
1022. Rulemaking authority.
1023. Review of Bureau regulations.
1024. Supervision of nondepository covered persons.
1025. Supervision of very large banks, savings associations, and credit unions.
1026. Other banks, savings associations, and credit unions.
1027. Limitations on authorities of the Bureau; preservation of authorities.
1028. Authority to restrict mandatory pre-dispute arbitration.
1029. Exclusion for auto dealers.
1029A. Effective date.

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1031.
1032.
1033.
1034.
1035.
1036.
1037.

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Sec.

1041.
1042.
1043.
1044.

Sec. 1045.
Sec. 1046.

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Subtitle A—Bureau of Consumer Financial Protection
Establishment of the Bureau of Consumer Financial Protection.
Executive and administrative powers.
Administration.
Consumer Advisory Board.
Coordination.
Appearances before and reports to Congress.
Funding; penalties and fines.
Effective date.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

Sec. 1047.
Sec. 1048.

Subtitle C—Specific Bureau Authorities
Prohibiting unfair, deceptive, or abusive acts or practices.
Disclosures.
Consumer rights to access information.
Response to consumer complaints and inquiries.
Private education loan ombudsman.
Prohibited acts.
Effective date.
Subtitle D—Preservation of State Law
Relation to State law.
Preservation of enforcement powers of States.
Preservation of existing contracts.
State law preemption standards for national banks and subsidiaries
clarified.
Clarification of law applicable to nondepository institution subsidiaries.
State law preemption standards for Federal savings associations and
subsidiaries clarified.
Visitorial standards for national banks and savings associations.
Effective date.
Subtitle E—Enforcement Powers

Sec. 1051. Definitions.

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124 STAT. 1384

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Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

1052.
1053.
1054.
1055.
1056.
1057.
1058.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

Subtitle F—Transfer of Functions and Personnel; Transitional Provisions
1061. Transfer of consumer financial protection functions.
1062. Designated transfer date.
1063. Savings provisions.
1064. Transfer of certain personnel.
1065. Incidental transfers.
1066. Interim authority of the Secretary.
1067. Transition oversight.

Sec.
Sec.
Sec.
Sec.

1071.
1072.
1073.
1074.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

Investigations and administrative discovery.
Hearings and adjudication proceedings.
Litigation authority.
Relief available.
Referrals for criminal proceedings.
Employee protection.
Effective date.

Subtitle G—Regulatory Improvements
Small business data collection.
Assistance for economically vulnerable individuals and families.
Remittance transfers.
Department of the Treasury study on ending the conservatorship of
Fannie Mae, Freddie Mac, and reforming the housing finance system.
1075. Reasonable fees and rules for payment card transactions.
1076. Reverse mortgage study and regulations.
1077. Report on private education loans and private educational lenders.
1078. Study and report on credit scores.
1079. Review, report, and program with respect to exchange facilitators.
1079A. Financial fraud provisions.

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Subtitle H—Conforming Amendments
Sec. 1081. Amendments to the Inspector General Act.
Sec. 1082. Amendments to the Privacy Act of 1974.
Sec. 1083. Amendments to the Alternative Mortgage Transaction Parity Act of
1982.
Sec. 1084. Amendments to the Electronic Fund Transfer Act.
Sec. 1085. Amendments to the Equal Credit Opportunity Act.
Sec. 1086. Amendments to the Expedited Funds Availability Act.
Sec. 1087. Amendments to the Fair Credit Billing Act.
Sec. 1088. Amendments to the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act of 2003.
Sec. 1089. Amendments to the Fair Debt Collection Practices Act.
Sec. 1090. Amendments to the Federal Deposit Insurance Act.
Sec. 1091. Amendment to Federal Financial Institutions Examination Council Act
of 1978.
Sec. 1092. Amendments to the Federal Trade Commission Act.
Sec. 1093. Amendments to the Gramm-Leach-Bliley Act.
Sec. 1094. Amendments to the Home Mortgage Disclosure Act of 1975.
Sec. 1095. Amendments to the Homeowners Protection Act of 1998.
Sec. 1096. Amendments to the Home Ownership and Equity Protection Act of 1994.
Sec. 1097. Amendments to the Omnibus Appropriations Act, 2009.
Sec. 1098. Amendments to the Real Estate Settlement Procedures Act of 1974.
Sec. 1098A. Amendments to the Interstate Land Sales Full Disclosure Act.
Sec. 1099. Amendments to the Right to Financial Privacy Act of 1978.
Sec. 1100. Amendments to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008.
Sec. 1100A. Amendments to the Truth in Lending Act.
Sec. 1100B. Amendments to the Truth in Savings Act.
Sec. 1100C. Amendments to the Telemarketing and Consumer Fraud and Abuse
Prevention Act.
Sec. 1100D. Amendments to the Paperwork Reduction Act.
Sec. 1100E. Adjustments for inflation in the Truth in Lending Act.
Sec. 1100F. Use of consumer reports.
Sec. 1100G. Small business fairness and regulatory transparency.
Sec. 1100H. Effective date.
Sec.
Sec.
Sec.
Sec.

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1101.
1102.
1103.
1104.

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TITLE XI—FEDERAL RESERVE SYSTEM PROVISIONS
Federal Reserve Act amendments on emergency lending authority.
Reviews of special Federal reserve credit facilities.
Public access to information.
Liquidity event determination.

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PUBLIC LAW 111–203—JULY 21, 2010
Sec.
Sec.
Sec.
Sec.
Sec.

1105.
1106.
1107.
1108.
1109.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

TITLE XII—IMPROVING ACCESS TO MAINSTREAM FINANCIAL
INSTITUTIONS
1201. Short title.
1202. Purpose.
1203. Definitions.
1204. Expanded access to mainstream financial institutions.
1205. Low-cost alternatives to payday loans.
1206. Grants to establish loan-loss reserve funds.
1207. Procedural provisions.
1208. Authorization of appropriations.
1209. Regulations.
1210. Evaluation and reports to Congress.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

1301.
1302.
1303.
1304.
1305.
1306.

124 STAT. 1385

Emergency financial stabilization.
Additional related amendments.
Federal Reserve Act amendments on Federal reserve bank governance.
Federal Reserve Act amendments on supervision and regulation policy.
GAO audit of the Federal Reserve facilities; publication of Board actions.

TITLE XIII—PAY IT BACK ACT
Short title.
Amendment to reduce TARP authorization.
Report.
Amendments to Housing and Economic Recovery Act of 2008.
Federal Housing Finance Agency report.
Repayment of unobligated ARRA funds.

TITLE XIV—MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT
Sec. 1400. Short title; designation as enumerated consumer law.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

1401.
1402.
1403.
1404.
1405.
1406.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

1411.
1412.
1413.
1414.
1415.
1416.
1417.
1418.

Sec. 1419.
Sec. 1420.
Sec. 1421.
Sec. 1422.

Subtitle A—Residential Mortgage Loan Origination Standards
Definitions.
Residential mortgage loan origination.
Prohibition on steering incentives.
Liability.
Regulations.
Study of shared appreciation mortgages.
Subtitle B—Minimum Standards For Mortgages
Ability to repay.
Safe harbor and rebuttable presumption.
Defense to foreclosure.
Additional standards and requirements.
Rule of construction.
Amendments to civil liability provisions.
Lender rights in the context of borrower deception.
Six-month notice required before reset of hybrid adjustable rate mortgages.
Required disclosures.
Disclosures required in monthly statements for residential mortgage
loans.
Report by the GAO.
State attorney general enforcement authority.

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Subtitle C—High-Cost Mortgages
Sec. 1431. Definitions relating to high-cost mortgages.
Sec. 1432. Amendments to existing requirements for certain mortgages.
Sec. 1433. Additional requirements for certain mortgages.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

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1441.
1442.
1443.
1444.
1445.
1446.
1447.
1448.
1449.
1450.

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Subtitle D—Office of Housing Counseling
Short title.
Establishment of Office of Housing Counseling.
Counseling procedures.
Grants for housing counseling assistance.
Requirements to use HUD-certified counselors under HUD programs.
Study of defaults and foreclosures.
Default and foreclosure database.
Definitions for counseling-related programs.
Accountability and transparency for grant recipients.
Updating and simplification of mortgage information booklet.

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124 STAT. 1386

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Sec. 1451. Home inspection counseling.
Sec. 1452. Warnings to homeowners of foreclosure rescue scams.
Subtitle E—Mortgage Servicing
Sec. 1461. Escrow and impound accounts relating to certain consumer credit transactions.
Sec. 1462. Disclosure notice required for consumers who waive escrow services.
Sec. 1463. Real Estate Settlement Procedures Act of 1974 amendments.
Sec. 1464. Truth in Lending Act amendments.
Sec. 1465. Escrows included in repayment analysis.
Subtitle F—Appraisal Activities
Sec. 1471. Property appraisal requirements.
Sec. 1472. Appraisal independence requirements.
Sec. 1473. Amendments relating to Appraisal Subcommittee of FFIEC, Appraiser
Independence Monitoring, Approved Appraiser Education, Appraisal
Management Companies, Appraiser Complaint Hotline, Automated
Valuation Models, and Broker Price Opinions.
Sec. 1474. Equal Credit Opportunity Act amendment.
Sec. 1475. Real Estate Settlement Procedures Act of 1974 amendment relating to
certain appraisal fees.
Sec. 1476. GAO study on the effectiveness and impact of various appraisal methods, valuation models and distributions channels, and on the Home
Valuation Code of conduct and the Appraisal Subcommittee.
Sec.
Sec.
Sec.
Sec.

1481.
1482.
1483.
1484.

Subtitle G—Mortgage Resolution and Modification
Multifamily mortgage resolution program.
Home Affordable Modification Program guidelines.
Public availability of information of Making Home Affordable Program.
Protecting tenants at foreclosure extension and clarification.

Subtitle H—Miscellaneous Provisions
Sec. 1491. Sense of Congress regarding the importance of government-sponsored
enterprises reform to enhance the protection, limitation, and regulation
of the terms of residential mortgage credit.
Sec. 1492. GAO study report on government efforts to combat mortgage foreclosure
rescue scams and loan modification fraud.
Sec. 1493. Reporting of mortgage data by State.
Sec. 1494. Study of effect of drywall presence on foreclosures.
Sec. 1495. Definition.
Sec. 1496. Emergency mortgage relief.
Sec. 1497. Additional assistance for Neighborhood Stabilization Program.
Sec. 1498. Legal assistance for foreclosure-related issues.
TITLE XV—MISCELLANEOUS PROVISIONS
Sec. 1501. Restrictions on use of United States funds for foreign governments; protection of American taxpayers.
Sec. 1502. Conflict minerals.
Sec. 1503. Reporting requirements regarding coal or other mine safety.
Sec. 1504. Disclosure of payments by resource extraction issuers.
Sec. 1505. Study by the Comptroller General.
Sec. 1506. Study on core deposits and brokered deposits.
TITLE XVI—SECTION 1256 CONTRACTS
Sec. 1601. Certain swaps, etc., not treated as section 1256 contracts.

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12 USC 5301.

SEC. 2. DEFINITIONS.

As used in this Act, the following definitions shall apply, except
as the context otherwise requires or as otherwise specifically provided in this Act:
(1) AFFILIATE.—The term ‘‘affiliate’’ has the same meaning
as in section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
(2) APPROPRIATE FEDERAL BANKING AGENCY.—On and after
the transfer date, the term ‘‘appropriate Federal banking
agency’’ has the same meaning as in section 3(q) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(q)), as amended by
title III.

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124 STAT. 1387

(3) BOARD OF GOVERNORS.—The term ‘‘Board of Governors’’
means the Board of Governors of the Federal Reserve System.
(4) BUREAU.—The term ‘‘Bureau’’ means the Bureau of
Consumer Financial Protection established under title X.
(5) COMMISSION.—The term ‘‘Commission’’ means the Securities and Exchange Commission, except in the context of the
Commodity Futures Trading Commission.
(6) COMMODITY FUTURES TERMS.—The terms ‘‘futures
commission merchant’’, ‘‘swap’’, ‘‘swap dealer’’, ‘‘swap execution
facility’’, ‘‘derivatives clearing organization’’, ‘‘board of trade’’,
‘‘commodity trading advisor’’, ‘‘commodity pool’’, and ‘‘commodity
pool operator’’ have the same meanings as given the terms
in section 1a of the Commodity Exchange Act (7 U.S.C. 1
et seq.).
(7) CORPORATION.—The term ‘‘Corporation’’ means the Federal Deposit Insurance Corporation.
(8) COUNCIL.—The term ‘‘Council’’ means the Financial Stability Oversight Council established under title I.
(9) CREDIT UNION.—The term ‘‘credit union’’ means a Federal credit union, State credit union, or State-chartered credit
union, as those terms are defined in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752).
(10) FEDERAL BANKING AGENCY.—The term—
(A) ‘‘Federal banking agency’’ means, individually, the
Board of Governors, the Office of the Comptroller of the
Currency, and the Corporation; and
(B) ‘‘Federal banking agencies’’ means all of the agencies referred to in subparagraph (A), collectively.
(11) FUNCTIONALLY REGULATED SUBSIDIARY.—The term
‘‘functionally regulated subsidiary’’ has the same meaning as
in section 5(c)(5) of the Bank Holding Company Act of 1956
(12 U.S.C. 1844(c)(5)).
(12) PRIMARY FINANCIAL REGULATORY AGENCY.—The term
‘‘primary financial regulatory agency’’ means—
(A) the appropriate Federal banking agency, with
respect to institutions described in section 3(q) of the Federal Deposit Insurance Act, except to the extent that an
institution is or the activities of an institution are otherwise
described in subparagraph (B), (C), (D), or (E);
(B) the Securities and Exchange Commission, with
respect to—
(i) any broker or dealer that is registered with
the Commission under the Securities Exchange Act
of 1934, with respect to the activities of the broker
or dealer that require the broker or dealer to be registered under that Act;
(ii) any investment company that is registered with
the Commission under the Investment Company Act
of 1940, with respect to the activities of the investment
company that require the investment company to be
registered under that Act;
(iii) any investment adviser that is registered with
the Commission under the Investment Advisers Act
of 1940, with respect to the investment advisory activities of such company and activities that are incidental
to such advisory activities;

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124 STAT. 1388

PUBLIC LAW 111–203—JULY 21, 2010
(iv) any clearing agency registered with the
Commission under the Securities Exchange Act of
1934, with respect to the activities of the clearing
agency that require the agency to be registered under
such Act;
(v) any nationally recognized statistical rating
organization registered with the Commission under the
Securities Exchange Act of 1934;
(vi) any transfer agent registered with the
Commission under the Securities Exchange Act of
1934;
(vii) any exchange registered as a national securities exchange with the Commission under the Securities Exchange Act of 1934;
(viii) any national securities association registered
with the Commission under the Securities Exchange
Act of 1934;
(ix) any securities information processor registered
with the Commission under the Securities Exchange
Act of 1934;
(x) the Municipal Securities Rulemaking Board
established under the Securities Exchange Act of 1934;
(xi) the Public Company Accounting Oversight
Board established under the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7211 et seq.);
(xii) the Securities Investor Protection Corporation
established under the Securities Investor Protection
Act of 1970 (15 U.S.C. 78aaa et seq.); and
(xiii) any security-based swap execution facility,
security-based swap data repository, security-based
swap dealer or major security-based swap participant
registered with the Commission under the Securities
Exchange Act of 1934, with respect to the securitybased swap activities of the person that require such
person to be registered under such Act;
(C) the Commodity Futures Trading Commission, with
respect to—
(i) any futures commission merchant registered
with the Commodity Futures Trading Commission
under the Commodity Exchange Act (7 U.S.C. 1 et
seq.), with respect to the activities of the futures
commission merchant that require the futures commission merchant to be registered under that Act;
(ii) any commodity pool operator registered with
the Commodity Futures Trading Commission under
the Commodity Exchange Act (7 U.S.C. 1 et seq.),
with respect to the activities of the commodity pool
operator that require the commodity pool operator to
be registered under that Act, or a commodity pool,
as defined in that Act;
(iii) any commodity trading advisor or introducing
broker registered with the Commodity Futures Trading
Commission under the Commodity Exchange Act (7
U.S.C. 1 et seq.), with respect to the activities of the
commodity trading advisor or introducing broker that
require the commodity trading adviser or introducing
broker to be registered under that Act;

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1389

(iv) any derivatives clearing organization registered with the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C.
1 et seq.), with respect to the activities of the derivatives clearing organization that require the derivatives
clearing organization to be registered under that Act;
(v) any board of trade designated as a contract
market by the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C.
1 et seq.);
(vi) any futures association registered with the
Commodity Futures Trading Commission under the
Commodity Exchange Act (7 U.S.C. 1 et seq.);
(vii) any retail foreign exchange dealer registered
with the Commodity Futures Trading Commission
under the Commodity Exchange Act (7 U.S.C. 1 et
seq.), with respect to the activities of the retail foreign
exchange dealer that require the retail foreign
exchange dealer to be registered under that Act;
(viii) any swap execution facility, swap data repository, swap dealer, or major swap participant registered
with the Commodity Futures Trading Commission
under the Commodity Exchange Act (7 U.S.C. 1 et
seq.) with respect to the swap activities of the person
that require such person to be registered under that
Act; and
(ix) any registered entity under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), with respect to
the activities of the registered entity that require the
registered entity to be registered under that Act;
(D) the State insurance authority of the State in which
an insurance company is domiciled, with respect to the
insurance activities and activities that are incidental to
such insurance activities of an insurance company that
is subject to supervision by the State insurance authority
under State insurance law; and
(E) the Federal Housing Finance Agency, with respect
to Federal Home Loan Banks or the Federal Home Loan
Bank System, and with respect to the Federal National
Mortgage Association or the Federal Home Loan Mortgage
Corporation.
(13) PRUDENTIAL STANDARDS.—The term ‘‘prudential standards’’ means enhanced supervision and regulatory standards
developed by the Board of Governors under section 165.
(14) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of the Treasury.
(15) SECURITIES TERMS.—The—
(A) terms ‘‘broker’’, ‘‘dealer’’, ‘‘issuer’’, ‘‘nationally recognized statistical rating organization’’, ‘‘security’’, and ‘‘securities laws’’ have the same meanings as in section 3 of
the Securities Exchange Act of 1934 (15 U.S.C. 78c);
(B) term ‘‘investment adviser’’ has the same meaning
as in section 202 of the Investment Advisers Act of 1940
(15 U.S.C. 80b–2); and
(C) term ‘‘investment company’’ has the same meaning
as in section 3 of the Investment Company Act of 1940
(15 U.S.C. 80a–3).

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124 STAT. 1390

PUBLIC LAW 111–203—JULY 21, 2010
(16) STATE.—The term ‘‘State’’ means any State, commonwealth, territory, or possession of the United States, the District
of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa,
Guam, or the United States Virgin Islands.
(17) TRANSFER DATE.—The term ‘‘transfer date’’ means the
date established under section 311.
(18) OTHER INCORPORATED DEFINITIONS.—
(A) FEDERAL DEPOSIT INSURANCE ACT.—The terms
‘‘bank’’, ‘‘bank holding company’’, ‘‘control’’, ‘‘deposit’’,
‘‘depository institution’’, ‘‘Federal depository institution’’,
‘‘Federal savings association’’, ‘‘foreign bank’’, ‘‘including’’,
‘‘insured branch’’, ‘‘insured depository institution’’, ‘‘national
member bank’’, ‘‘national nonmember bank’’, ‘‘savings
association’’, ‘‘State bank’’, ‘‘State depository institution’’,
‘‘State member bank’’, ‘‘State nonmember bank’’, ‘‘State
savings association’’, and ‘‘subsidiary’’ have the same
meanings as in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813).
(B) HOLDING COMPANIES.—The term—
(i) ‘‘bank holding company’’ has the same meaning
as in section 2 of the Bank Holding Company Act
of 1956 (12 U.S.C. 1841);
(ii) ‘‘financial holding company’’ has the same
meaning as in section 2(p) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(p)); and
(iii) ‘‘savings and loan holding company’’ has the
same meaning as in section 10 of the Home Owners’
Loan Act (12 U.S.C. 1467a(a)).

12 USC 5302.

SEC. 3. SEVERABILITY.

If any provision of this Act, an amendment made by this
Act, or the application of such provision or amendment to any
person or circumstance is held to be unconstitutional, the remainder
of this Act, the amendments made by this Act, and the application
of the provisions of such to any person or circumstance shall not
be affected thereby.
SEC. 4. EFFECTIVE DATE.

12 USC 5301
note.

Except as otherwise specifically provided in this Act or the
amendments made by this Act, this Act and such amendments
shall take effect 1 day after the date of enactment of this Act.
SEC. 5. BUDGETARY EFFECTS.

The budgetary effects of this Act, for the purpose of complying
with the Statutory Pay-As-You-Go-Act of 2010, shall be determined
by reference to the latest statement titled ‘‘Budgetary Effects of
PAYGO Legislation’’ for this Act, jointly submitted for printing
in the Congressional Record by the Chairmen of the House and
Senate Budget Committees, provided that such statement has been
submitted prior to the vote on passage in the House acting first
on this conference report or amendment between the Houses.

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12 USC 5303.

Definition.

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SEC. 6. ANTITRUST SAVINGS CLAUSE.

Nothing in this Act, or any amendment made by this Act,
shall be construed to modify, impair, or supersede the operation
of any of the antitrust laws, unless otherwise specified. For purposes
of this section, the term ‘‘antitrust laws’’ has the same meaning

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1391

as in subsection (a) of 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.

TITLE I—FINANCIAL STABILITY
SEC. 101. SHORT TITLE.

This title may be cited as the ‘‘Financial Stability Act of 2010’’.

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SEC. 102. DEFINITIONS.

Financial
Stability Act of
2010.
12 USC 5301
note.
12 USC 5311.

(a) IN GENERAL.—For purposes of this title, unless the context
otherwise requires, the following definitions shall apply:
(1) BANK HOLDING COMPANY.—The term ‘‘bank holding company’’ has the same meaning as in section 2 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841). A foreign
bank or company that is treated as a bank holding company
for purposes of the Bank Holding Company Act of 1956, pursuant to section 8(a) of the International Banking Act of 1978
(12 U.S.C. 3106(a)), shall be treated as a bank holding company
for purposes of this title.
(2) CHAIRPERSON.—The term ‘‘Chairperson’’ means the
Chairperson of the Council.
(3) MEMBER AGENCY.—The term ‘‘member agency’’ means
an agency represented by a voting member of the Council.
(4) NONBANK FINANCIAL COMPANY DEFINITIONS.—
(A) 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) that is—
(i) incorporated or organized in a country other
than the United States; and
(ii) predominantly engaged in, including through
a branch in the United States, financial activities, as
defined in paragraph (6).
(B) U.S. NONBANK FINANCIAL COMPANY.—The term
‘‘U.S. nonbank financial company’’ means a company (other
than a bank holding company, a Farm Credit System
institution chartered and subject to the provisions of the
Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.), or a
national securities exchange (or parent thereof), clearing
agency (or parent thereof, unless the parent is a bank
holding company), security-based swap execution facility,
or security-based swap data repository registered with the
Commission, or a board of trade designated as a contract
market (or parent thereof), or a derivatives clearing
organization (or parent thereof, unless the parent is a
bank holding company), swap execution facility or a swap
data repository registered with the Commodity Futures
Trading Commission), that is—
(i) incorporated or organized under the laws of
the United States or any State; and
(ii) predominantly engaged in financial activities,
as defined in paragraph (6).

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124 STAT. 1392

PUBLIC LAW 111–203—JULY 21, 2010

(C) NONBANK FINANCIAL COMPANY.—The term
‘‘nonbank financial company’’ means a U.S. nonbank financial company and a foreign nonbank financial company.
(D) NONBANK FINANCIAL COMPANY SUPERVISED BY THE
BOARD OF GOVERNORS.—The term ‘‘nonbank financial company supervised by the Board of Governors’’ means a
nonbank financial company that the Council has determined under section 113 shall be supervised by the Board
of Governors.
(5) OFFICE OF FINANCIAL RESEARCH.—The term ‘‘Office of
Financial Research’’ means the office established under section
152.
(6) PREDOMINANTLY ENGAGED.—A company is ‘‘predominantly engaged in financial activities’’ if—
(A) the annual gross revenues derived by the company
and all of its subsidiaries from activities that are financial
in nature (as defined in section 4(k) of the Bank Holding
Company Act of 1956) and, if applicable, from the ownership or control of one or more insured depository institutions, represents 85 percent or more of the consolidated
annual gross revenues of the company; or
(B) the consolidated assets of the company and all
of its subsidiaries related to activities that are financial
in nature (as defined in section 4(k) of the Bank Holding
Company Act of 1956) and, if applicable, related to the
ownership or control of one or more insured depository
institutions, represents 85 percent or more of the consolidated assets of the company.
(7) SIGNIFICANT INSTITUTIONS.—The terms ‘‘significant
nonbank financial company’’ and ‘‘significant bank holding company’’ have the meanings given those terms by rule of the
Board of Governors, but in no instance shall the term ‘‘significant nonbank financial company’’ include those entities that
are excluded under paragraph (4)(B).
(b) DEFINITIONAL CRITERIA.—The Board of Governors shall
establish, by regulation, the requirements for determining if a company is predominantly engaged in financial activities, as defined
in subsection (a)(6).
(c) FOREIGN NONBANK FINANCIAL COMPANIES.—For purposes
of the application of subtitles A and C (other than section 113(b))
with respect to a foreign nonbank financial company, references
in this title to ‘‘company’’ or ‘‘subsidiary’’ include only the United
States activities and subsidiaries of such foreign company, except
as otherwise provided.

Regulations.

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Subtitle A—Financial Stability Oversight
Council

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12 USC 5321.

SEC. 111. FINANCIAL STABILITY OVERSIGHT COUNCIL ESTABLISHED.

Effective date.

(a) ESTABLISHMENT.—Effective on the date of enactment of
this Act, there is established the Financial Stability Oversight
Council.
(b) MEMBERSHIP.—The Council shall consist of the following
members:
(1) VOTING MEMBERS.—The voting members, who shall each
have 1 vote on the Council shall be—

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1393

(A) the Secretary of the Treasury, who shall serve
as Chairperson of the Council;
(B) the Chairman of the Board of Governors;
(C) the Comptroller of the Currency;
(D) the Director of the Bureau;
(E) the Chairman of the Commission;
(F) the Chairperson of the Corporation;
(G) the Chairperson of the Commodity Futures Trading
Commission;
(H) the Director of the Federal Housing Finance
Agency;
(I) the Chairman of the National Credit Union
Administration Board; and
(J) an independent member appointed by the President,
by and with the advice and consent of the Senate, having
insurance expertise.
(2) NONVOTING MEMBERS.—The nonvoting members, who
shall serve in an advisory capacity as a nonvoting member
of the Council, shall be—
(A) the Director of the Office of Financial Research;
(B) the Director of the Federal Insurance Office;
(C) a State insurance commissioner, to be designated
by a selection process determined by the State insurance
commissioners;
(D) a State banking supervisor, to be designated by
a selection process determined by the State banking supervisors; and
(E) a State securities commissioner (or an officer performing like functions), to be designated by a selection
process determined by such State securities commissioners.
(3) NONVOTING MEMBER PARTICIPATION.—The nonvoting
members of the Council shall not be excluded from any of
the proceedings, meetings, discussions, or deliberations of the
Council, except that the Chairperson may, upon an affirmative
vote of the member agencies, exclude the nonvoting members
from any of the proceedings, meetings, discussions, or deliberations of the Council when necessary to safeguard and promote
the free exchange of confidential supervisory information.
(c) TERMS; VACANCY.—
(1) TERMS.—The independent member of the Council shall
serve for a term of 6 years, and each nonvoting member
described in subparagraphs (C), (D), and (E) of subsection (b)(2)
shall serve for a term of 2 years.
(2) VACANCY.—Any vacancy on the Council shall be filled
in the manner in which the original appointment was made.
(3) ACTING OFFICIALS MAY SERVE.—In the event of a vacancy
in the office of the head of a member agency or department,
and pending the appointment of a successor, or during the
absence or disability of the head of a member agency or department, the acting head of the member agency or department
shall serve as a member of the Council in the place of that
agency or department head.
(d) TECHNICAL AND PROFESSIONAL ADVISORY COMMITTEES.—
The Council may appoint such special advisory, technical, or professional committees as may be useful in carrying out the functions
of the Council, including an advisory committee consisting of State

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124 STAT. 1394

regulators, and the members of such committees may be members
of the Council, or other persons, or both.
(e) MEETINGS.—
(1) TIMING.—The Council shall meet at the call of the
Chairperson or a majority of the members then serving, but
not less frequently than quarterly.
(2) RULES FOR CONDUCTING BUSINESS.—The Council shall
adopt such rules as may be necessary for the conduct of the
business of the Council. Such rules shall be rules of agency
organization, procedure, or practice for purposes of section 553
of title 5, United States Code.
(f) VOTING.—Unless otherwise specified, the Council shall make
all decisions that it is authorized or required to make by a majority
vote of the voting members then serving.
(g) NONAPPLICABILITY OF FACA.—The Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to the Council, or to
any special advisory, technical, or professional committee appointed
by the Council, except that, if an advisory, technical, or professional
committee has one or more members who are not employees of
or affiliated with the United States Government, the Council shall
publish a list of the names of the members of such committee.
(h) ASSISTANCE FROM FEDERAL AGENCIES.—Any department
or agency of the United States may provide to the Council and
any special advisory, technical, or professional committee appointed
by the Council, such services, funds, facilities, staff, and other
support services as the Council may determine advisable.
(i) COMPENSATION OF MEMBERS.—
(1) FEDERAL EMPLOYEE MEMBERS.—All members of the
Council who are officers or employees of the United States
shall serve without compensation in addition to that received
for their services as officers or employees of the United States.
(2) COMPENSATION FOR NON-FEDERAL MEMBER.—Section
5314 of title 5, United States Code, is amended by adding
at the end the following:
‘‘Independent Member of the Financial Stability Oversight
Council (1).’’.
(j) DETAIL OF GOVERNMENT EMPLOYEES.—Any employee of the
Federal Government may be detailed to the Council 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 Council shall report to and be subject
to oversight by the Council during the assignment to the Council,
and shall be compensated by the department or agency from which
the employee was detailed.

Publication.
List.

12 USC 5322.

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PUBLIC LAW 111–203—JULY 21, 2010

SEC. 112. COUNCIL AUTHORITY.

(a) PURPOSES AND DUTIES OF THE COUNCIL.—
(1) IN GENERAL.—The purposes of the Council are—
(A) to identify risks to the financial stability of the
United States that could arise from the material financial
distress or failure, or ongoing activities, of large, interconnected bank holding companies or nonbank financial
companies, or that could arise outside the financial services
marketplace;
(B) to promote market discipline, by eliminating
expectations on the part of shareholders, creditors, and

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1395

counterparties of such companies that the Government will
shield them from losses in the event of failure; and
(C) to respond to emerging threats to the stability
of the United States financial system.
(2) DUTIES.—The Council shall, in accordance with this
title—
(A) collect information from member agencies, other
Federal and State financial regulatory agencies, the Federal Insurance Office and, if necessary to assess risks to
the United States financial system, direct the Office of
Financial Research to collect information from bank holding
companies and nonbank financial companies;
(B) provide direction to, and request data and analyses
from, the Office of Financial Research to support the work
of the Council;
(C) monitor the financial services marketplace in order
to identify potential threats to the financial stability of
the United States;
(D) to monitor domestic and international financial
regulatory proposals and developments, including insurance and accounting issues, and to advise Congress and
make recommendations in such areas that will enhance
the integrity, efficiency, competitiveness, and stability of
the U.S. financial markets;
(E) facilitate information sharing and coordination
among the member agencies and other Federal and State
agencies regarding domestic financial services policy
development, rulemaking, examinations, reporting requirements, and enforcement actions;
(F) recommend to the member agencies general supervisory priorities and principles reflecting the outcome of
discussions among the member agencies;
(G) identify gaps in regulation that could pose risks
to the financial stability of the United States;
(H) require supervision by the Board of Governors
for nonbank financial companies that may pose risks to
the financial stability of the United States in the event
of their material financial distress or failure, or because
of their activities pursuant to section 113;
(I) make recommendations to the Board of Governors
concerning the establishment of heightened prudential
standards for risk-based capital, leverage, liquidity, contingent capital, resolution plans and credit exposure reports,
concentration limits, enhanced public disclosures, and
overall risk management for nonbank financial companies
and large, interconnected bank holding companies supervised by the Board of Governors;
(J) identify systemically important financial market
utilities and payment, clearing, and settlement activities
(as that term is defined in title VIII);
(K) make recommendations to primary financial regulatory agencies to apply new or heightened standards and
safeguards for financial activities or practices that could
create or increase risks of significant liquidity, credit, or
other problems spreading among bank holding companies,
nonbank financial companies, and United States financial
markets;

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Recommendations.

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Deadline.
Reports.

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PUBLIC LAW 111–203—JULY 21, 2010

(L) review and, as appropriate, may submit comments
to the Commission and any standard-setting body with
respect to an existing or proposed accounting principle,
standard, or procedure;
(M) provide a forum for—
(i) discussion and analysis of emerging market
developments and financial regulatory issues; and
(ii) resolution of jurisdictional disputes among the
members of the Council; and
(N) annually report to and testify before Congress on—
(i) the activities of the Council;
(ii) significant financial market and regulatory
developments, including insurance and accounting
regulations and standards, along with an assessment
of those developments on the stability of the financial
system;
(iii) potential emerging threats to the financial
stability of the United States;
(iv) all determinations made under section 113
or title VIII, and the basis for such determinations;
(v) all recommendations made under section 119
and the result of such recommendations; and
(vi) recommendations—
(I) to enhance the integrity, efficiency,
competitiveness, and stability of United States
financial markets;
(II) to promote market discipline; and
(III) to maintain investor confidence.
(b) STATEMENTS BY VOTING MEMBERS OF THE COUNCIL.—At
the time at which each report is submitted under subsection (a),
each voting member of the Council shall—
(1) if such member believes that the Council, the Government, and the private sector are taking all reasonable steps
to ensure financial stability and to mitigate systemic risk that
would negatively affect the economy, submit a signed statement
to Congress stating such belief; or
(2) if such member does not believe that all reasonable
steps described under paragraph (1) are being taken, submit
a signed statement to Congress stating what actions such
member believes need to be taken in order to ensure that
all reasonable steps described under paragraph (1) are taken.
(c) TESTIMONY BY THE CHAIRPERSON.—The Chairperson shall
appear before the Committee on Financial Services of the House
of Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate at an annual hearing, after the report
is submitted under subsection (a)—
(1) to discuss the efforts, activities, objectives, and plans
of the Council; and
(2) to discuss and answer questions concerning such report.
(d) AUTHORITY TO OBTAIN INFORMATION.—
(1) IN GENERAL.—The Council may receive, and may
request the submission of, any data or information from the
Office of Financial Research, member agencies, and the Federal
Insurance Office, as necessary—
(A) to monitor the financial services marketplace to
identify potential risks to the financial stability of the
United States; or

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1397

(B) to otherwise carry out any of the provisions of
this title.
(2) SUBMISSIONS BY THE OFFICE AND MEMBER AGENCIES.—
Notwithstanding any other provision of law, the Office of Financial Research, any member agency, and the Federal Insurance
Office, are authorized to submit information to the Council.
(3) FINANCIAL DATA COLLECTION.—
(A) IN GENERAL.—The Council, acting through the
Office of Financial Research, may require the submission
of periodic and other reports from any nonbank financial
company or bank holding company for the purpose of
assessing the extent to which a financial activity or financial market in which the nonbank financial company or
bank holding company participates, or the nonbank financial company or bank holding company itself, poses a threat
to the financial stability of the United States.
(B) MITIGATION OF REPORT BURDEN.—Before requiring
the submission of reports from any nonbank financial company or bank holding company that is regulated by a
member agency or any primary financial regulatory agency,
the Council, acting through the Office of Financial
Research, shall coordinate with such agencies and shall,
whenever possible, rely on information available from the
Office of Financial Research or such agencies.
(C) MITIGATION IN CASE OF FOREIGN FINANCIAL COMPANIES.—Before requiring the submission of reports from a
company that is a foreign nonbank financial company or
foreign-based bank holding company, the Council shall,
acting through the Office of Financial Research, to the
extent appropriate, consult with the appropriate foreign
regulator of such company and, whenever possible, rely
on information already being collected by such foreign regulator, with English translation.
(4) BACK-UP EXAMINATION BY THE BOARD OF GOVERNORS.—
If the Council is unable to determine whether the financial
activities of a U.S. nonbank financial company pose a threat
to the financial stability of the United States, based on information or reports obtained under paragraphs (1) and (3), discussions with management, and publicly available information,
the Council may request the Board of Governors, and the
Board of Governors is authorized, to conduct an examination
of the U.S. nonbank financial company for the sole purpose
of determining whether the nonbank financial company should
be supervised by the Board of Governors for purposes of this
title.
(5) CONFIDENTIALITY.—
(A) IN GENERAL.—The Council, the Office of Financial
Research, and the other member agencies shall maintain
the confidentiality of any data, information, and reports
submitted under this title.
(B) RETENTION OF PRIVILEGE.—The submission of any
nonpublicly available data or information under this subsection and subtitle B shall not constitute a waiver of,
or otherwise affect, any privilege arising under Federal
or State law (including the rules of any Federal or State
court) to which the data or information is otherwise subject.

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124 STAT. 1398

PUBLIC LAW 111–203—JULY 21, 2010

Applicability.

(C) FREEDOM OF INFORMATION ACT.—Section 552 of
title 5, United States Code, including the exceptions thereunder, shall apply to any data or information submitted
under this subsection and subtitle B.

12 USC 5323.

SEC. 113. AUTHORITY TO REQUIRE SUPERVISION AND REGULATION
OF CERTAIN NONBANK FINANCIAL COMPANIES.

(a) U.S. NONBANK FINANCIAL COMPANIES SUPERVISED BY THE
BOARD OF GOVERNORS.—
(1) DETERMINATION.—The Council, on a nondelegable basis
and by a vote of not fewer than 2⁄3 of the voting members
then serving, including an affirmative vote by the Chairperson,
may determine that a U.S. nonbank financial company shall
be supervised by the Board of Governors and shall be subject
to prudential standards, in accordance with this title, if the
Council determines that material financial distress at the U.S.
nonbank financial company, or the nature, scope, size, scale,
concentration, interconnectedness, or mix of the activities of
the U.S. nonbank financial company, could pose a threat to
the financial stability of the United States.
(2) CONSIDERATIONS.—In making a determination under
paragraph (1), the Council shall consider—
(A) the extent of the leverage of the company;
(B) the extent and nature of the off-balance-sheet exposures of the company;
(C) the extent and nature of the transactions and relationships of the company with other significant nonbank
financial companies and significant bank holding companies;
(D) the importance of the company as a source of
credit for households, businesses, and State and local
governments and as a source of liquidity for the United
States financial system;
(E) the importance of the company as a source of
credit for low-income, minority, or underserved communities, and the impact that the failure of such company
would have on the availability of credit in such communities;
(F) the extent to which assets are managed rather
than owned by the company, and the extent to which
ownership of assets under management is diffuse;
(G) the nature, scope, size, scale, concentration, interconnectedness, and mix of the activities of the company;
(H) the degree to which the company is already regulated by 1 or more primary financial regulatory agencies;
(I) the amount and nature of the financial assets of
the company;
(J) the amount and types of the liabilities of the company, including the degree of reliance on short-term
funding; and
(K) any other risk-related factors that the Council
deems appropriate.
(b) FOREIGN NONBANK FINANCIAL COMPANIES SUPERVISED BY
THE BOARD OF GOVERNORS.—
(1) DETERMINATION.—The Council, on a nondelegable basis
and by a vote of not fewer than 2⁄3 of the voting members
then serving, including an affirmative vote by the Chairperson,

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1399

may determine that a foreign nonbank financial company shall
be supervised by the Board of Governors and shall be subject
to prudential standards, in accordance with this title, if the
Council determines that material financial distress at the foreign nonbank financial company, or the nature, scope, size,
scale, concentration, interconnectedness, or mix of the activities
of the foreign nonbank financial company, could pose a threat
to the financial stability of the United States.
(2) CONSIDERATIONS.—In making a determination under
paragraph (1), the Council shall consider—
(A) the extent of the leverage of the company;
(B) the extent and nature of the United States related
off-balance-sheet exposures of the company;
(C) the extent and nature of the transactions and relationships of the company with other significant nonbank
financial companies and significant bank holding companies;
(D) the importance of the company as a source of
credit for United States households, businesses, and State
and local governments and as a source of liquidity for
the United States financial system;
(E) the importance of the company as a source of
credit for low-income, minority, or underserved communities in the United States, and the impact that the failure
of such company would have on the availability of credit
in such communities;
(F) the extent to which assets are managed rather
than owned by the company and the extent to which ownership of assets under management is diffuse;
(G) the nature, scope, size, scale, concentration, interconnectedness, and mix of the activities of the company;
(H) the extent to which the company is subject to
prudential standards on a consolidated basis in its home
country that are administered and enforced by a comparable foreign supervisory authority;
(I) the amount and nature of the United States financial assets of the company;
(J) the amount and nature of the liabilities of the
company used to fund activities and operations in the
United States, including the degree of reliance on shortterm funding; and
(K) any other risk-related factors that the Council
deems appropriate.
(c) ANTIEVASION.—
(1) DETERMINATIONS.—In order to avoid evasion of this
title, the Council, on its own initiative or at the request of
the Board of Governors, may determine, on a nondelegable
basis and by a vote of not fewer than 2⁄3 of the voting members
then serving, including an affirmative vote by the Chairperson,
that—
(A) material financial distress related to, or the nature,
scope, size, scale, concentration, interconnectedness, or mix
of, the financial activities conducted directly or indirectly
by a company incorporated or organized under the laws
of the United States or any State or the financial activities
in the United States of a company incorporated or organized in a country other than the United States would

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PUBLIC LAW 111–203—JULY 21, 2010
pose a threat to the financial stability of the United States,
based on consideration of the factors in subsection (a)(2)
or (b)(2), as applicable;
(B) the company is organized or operates in such a
manner as to evade the application of this title; and
(C) such financial activities of the company shall be
supervised by the Board of Governors and subject to
prudential standards in accordance with this title, consistent with paragraph (3).
(2) REPORT.—Upon making a determination under paragraph (1), the Council shall submit a report to the appropriate
committees of Congress detailing the reasons for making such
determination.
(3) CONSOLIDATED SUPERVISION OF ONLY FINANCIAL ACTIVITIES; ESTABLISHMENT OF AN INTERMEDIATE HOLDING COMPANY.—
(A) ESTABLISHMENT OF AN INTERMEDIATE HOLDING
COMPANY.—Upon a determination under paragraph (1), the
company that is the subject of the determination may establish an intermediate holding company in which the financial activities of such company and its subsidiaries shall
be conducted (other than the activities described in section
167(b)(2)) in compliance with any regulations or guidance
provided by the Board of Governors. Such intermediate
holding company shall be subject to the supervision of
the Board of Governors and to prudential standards under
this title as if the intermediate holding company were
a nonbank financial company supervised by the Board of
Governors.
(B) ACTION OF THE BOARD OF GOVERNORS.—To facilitate
the supervision of the financial activities subject to the
determination in paragraph (1), the Board of Governors
may require a company to establish an intermediate
holding company, as provided for in section 167, which
would be subject to the supervision of the Board of Governors and to prudential standards under this title, as
if the intermediate holding company were a nonbank financial company supervised by the Board of Governors.
(4) NOTICE AND OPPORTUNITY FOR HEARING AND FINAL
DETERMINATION; JUDICIAL REVIEW.—Subsections (d) through (h)
shall apply to determinations made by the Council pursuant
to paragraph (1) in the same manner as such subsections
apply to nonbank financial companies.
(5) COVERED FINANCIAL ACTIVITIES.—For purposes of this
subsection, the term ‘‘financial activities’’—
(A) means activities that are financial in nature (as
defined in section 4(k) of the Bank Holding Company Act
of 1956);
(B) includes the ownership or control of one or more
insured depository institutions; and
(C) does not include internal financial activities conducted for the company or any affiliate thereof, including
internal treasury, investment, and employee benefit functions.
(6) ONLY FINANCIAL ACTIVITIES SUBJECT TO PRUDENTIAL
SUPERVISION.—Nonfinancial activities of the company shall not

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124 STAT. 1401

be subject to supervision by the Board of Governors and prudential standards of the Board. For purposes of this Act, the
financial activities that are the subject of the determination
in paragraph (1) shall be subject to the same requirements
as a nonbank financial company supervised by the Board of
Governors. Nothing in this paragraph shall prohibit or limit
the authority of the Board of Governors to apply prudential
standards under this title to the financial activities that are
subject to the determination in paragraph (1).
(d) REEVALUATION AND RESCISSION.—The Council shall—
(1) not less frequently than annually, reevaluate each determination made under subsections (a) and (b) with respect to
such nonbank financial company supervised by the Board of
Governors; and
(2) rescind any such determination, if the Council, by a
vote of not fewer than 2⁄3 of the voting members then serving,
including an affirmative vote by the Chairperson, determines
that the nonbank financial company no longer meets the standards under subsection (a) or (b), as applicable.
(e) NOTICE AND OPPORTUNITY FOR HEARING AND FINAL DETERMINATION.—
(1) IN GENERAL.—The Council shall provide to a nonbank
financial company written notice of a proposed determination
of the Council, including an explanation of the basis of the
proposed determination of the Council, that a nonbank financial
company shall be supervised by the Board of Governors and
shall be subject to prudential standards in accordance with
this title.
(2) HEARING.—Not later than 30 days after the date of
receipt of any notice of a proposed determination under paragraph (1), the nonbank financial company may request, in
writing, an opportunity for a written or oral hearing before
the Council to contest the proposed determination. Upon receipt
of a timely request, the Council shall fix a time (not later
than 30 days after the date of receipt of the request) and
place at which such company may appear, personally or through
counsel, to submit written materials (or, at the sole discretion
of the Council, oral testimony and oral argument).
(3) FINAL DETERMINATION.—Not later than 60 days after
the date of a hearing under paragraph (2), the Council shall
notify the nonbank financial company of the final determination
of the Council, which shall contain a statement of the basis
for the decision of the Council.
(4) NO HEARING REQUESTED.—If a nonbank financial company does not make a timely request for a hearing, the Council
shall notify the nonbank financial company, in writing, of the
final determination of the Council under subsection (a) or (b),
as applicable, not later than 10 days after the date by which
the company may request a hearing under paragraph (2).
(f) EMERGENCY EXCEPTION.—
(1) IN GENERAL.—The Council may waive or modify the
requirements of subsection (e) with respect to a nonbank financial company, if the Council determines, by a vote of not fewer
than 2⁄3 of the voting members then serving, including an
affirmative vote by the Chairperson, that such waiver or modification is necessary or appropriate to prevent or mitigate

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Deadlines.

Deadlines.
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PUBLIC LAW 111–203—JULY 21, 2010

threats posed by the nonbank financial company to the financial
stability of the United States.
(2) NOTICE.—The Council shall provide notice of a waiver
or modification under this subsection to the nonbank financial
company concerned as soon as practicable, but not later than
24 hours after the waiver or modification is granted.
(3) INTERNATIONAL COORDINATION.—In making a determination under paragraph (1), the Council shall consult with
the appropriate home country supervisor, if any, of the foreign
nonbank financial company that is being considered for such
a determination.
(4) OPPORTUNITY FOR HEARING.—The Council shall allow
a nonbank financial company to request, in writing, an opportunity for a written or oral hearing before the Council to contest
a waiver or modification under this subsection, not later than
10 days after the date of receipt of notice of the waiver or
modification by the company. Upon receipt of a timely request,
the Council shall fix a time (not later than 15 days after
the date of receipt of the request) and place at which the
nonbank financial company may appear, personally or through
counsel, to submit written materials (or, at the sole discretion
of the Council, oral testimony and oral argument).
(5) NOTICE OF FINAL DETERMINATION.—Not later than 30
days after the date of any hearing under paragraph (4), the
Council shall notify the subject nonbank financial company
of the final determination of the Council under this subsection,
which shall contain a statement of the basis for the decision
of the Council.
(g) CONSULTATION.—The Council shall consult with the primary
financial regulatory agency, if any, for each nonbank financial company or subsidiary of a nonbank financial company that is being
considered for supervision by the Board of Governors under this
section before the Council makes any final determination with
respect to such nonbank financial company under subsection (a),
(b), or (c).
(h) JUDICIAL REVIEW.—If the Council makes a final determination under this section with respect to a nonbank financial company,
such nonbank financial company may, not later than 30 days after
the date of receipt of the notice of final determination under subsection (d)(2), (e)(3), or (f)(5), bring an action in the United States
district court for the judicial district in which the home office
of such nonbank financial company is located, or in the United
States District Court for the District of Columbia, for an order
requiring that the final determination be rescinded, and the court
shall, upon review, dismiss such action or direct the final determination to be rescinded. Review of such an action shall be limited
to whether the final determination made under this section was
arbitrary and capricious.
(i) INTERNATIONAL COORDINATION.—In exercising its duties
under this title with respect to foreign nonbank financial companies,
foreign-based bank holding companies, and cross-border activities
and markets, the Council shall consult with appropriate foreign
regulatory authorities, to the extent appropriate.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1403

SEC. 114. REGISTRATION OF NONBANK FINANCIAL COMPANIES SUPERVISED BY THE BOARD OF GOVERNORS.

12 USC 5324.

Not later than 180 days after the date of a final Council
determination under section 113 that a nonbank financial company
is to be supervised by the Board of Governors, such company
shall register with the Board of Governors, on forms prescribed
by the Board of Governors, which shall include such information
as the Board of Governors, in consultation with the Council, may
deem necessary or appropriate to carry out this title.

Deadline.

SEC. 115. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS
FOR NONBANK FINANCIAL COMPANIES SUPERVISED BY
THE BOARD OF GOVERNORS AND CERTAIN BANK HOLDING
COMPANIES.

12 USC 5325.

(a) IN GENERAL.—
(1) PURPOSE.—In order to prevent or mitigate risks to
the financial stability of the United States that could arise
from the material financial distress, failure, or ongoing activities of large, interconnected financial institutions, the Council
may make recommendations to the Board of Governors concerning the establishment and refinement of prudential standards and reporting and disclosure requirements applicable to
nonbank financial companies supervised by the Board of Governors and large, interconnected bank holding companies,
that—
(A) are more stringent than those applicable to other
nonbank financial companies and bank holding companies
that do not present similar risks to the financial stability
of the United States; and
(B) increase in stringency, based on the considerations
identified in subsection (b)(3).
(2) RECOMMENDED APPLICATION OF REQUIRED STANDARDS.—
In making recommendations under this section, the Council
may—
(A) differentiate among companies that are subject to
heightened standards 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 riskrelated factors that the Council deems appropriate; or
(B) recommend an asset threshold that is higher than
$50,000,000,000 for the application of any standard
described in subsections (c) through (g).
(b) DEVELOPMENT OF PRUDENTIAL STANDARDS.—
(1) IN GENERAL.—The recommendations of the Council
under subsection (a) may include—
(A) risk-based capital requirements;
(B) leverage limits;
(C) liquidity requirements;
(D) resolution plan and credit exposure report requirements;
(E) concentration limits;
(F) a contingent capital requirement;
(G) enhanced public disclosures;
(H) short-term debt limits; and
(I) overall risk management requirements.

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124 STAT. 1404

PUBLIC LAW 111–203—JULY 21, 2010

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(2) PRUDENTIAL STANDARDS FOR FOREIGN FINANCIAL COMPANIES.—In making recommendations concerning the standards
set forth in paragraph (1) that would apply to foreign nonbank
financial companies supervised by the Board of Governors or
foreign-based bank holding companies, the Council shall—
(A) give due regard to the principle of national treatment and equality of competitive opportunity; and
(B) take into account the extent to which the foreign
nonbank financial company or foreign-based bank holding
company is subject on a consolidated basis to home country
standards that are comparable to those applied to financial
companies in the United States.
(3) CONSIDERATIONS.—In making recommendations concerning prudential standards under paragraph (1), the Council
shall—
(A) take into account differences among nonbank financial companies supervised by the Board of Governors and
bank holding companies described in subsection (a), based
on—
(i) the factors described in subsections (a) and
(b) of section 113;
(ii) whether the company owns an insured depository institution;
(iii) nonfinancial activities and affiliations of the
company; and
(iv) any other factors that the Council determines
appropriate;
(B) to the extent possible, ensure that small changes
in the factors listed in subsections (a) and (b) of section
113 would not result in sharp, discontinuous changes in
the prudential standards established under section 165;
and
(C) adapt its recommendations as appropriate in light
of any predominant line of business of such company,
including assets under management or other activities for
which particular standards may not be appropriate.
(c) CONTINGENT CAPITAL.—
(1) STUDY REQUIRED.—The Council shall conduct a study
of the feasibility, benefits, costs, and structure of a contingent
capital requirement for nonbank financial companies supervised
by the Board of Governors and bank holding companies
described in subsection (a), which study shall include—
(A) an evaluation of the degree to which such requirement would enhance the safety and soundness of companies
subject to the requirement, promote the financial stability
of the United States, and reduce risks to United States
taxpayers;
(B) an evaluation of the characteristics and amounts
of contingent capital that should be required;
(C) an analysis of potential prudential standards that
should be used to determine whether the contingent capital
of a company would be converted to equity in times of
financial stress;
(D) an evaluation of the costs to companies, the effects
on the structure and operation of credit and other financial
markets, and other economic effects of requiring contingent
capital;

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1405

(E) an evaluation of the effects of such requirement
on the international competitiveness of companies subject
to the requirement and the prospects for international
coordination in establishing such requirement; and
(F) recommendations for implementing regulations.
(2) REPORT.—The Council shall submit a report to Congress
regarding the study required by paragraph (1) not later than
2 years after the date of enactment of this Act.
(3) RECOMMENDATIONS.—
(A) IN GENERAL.—Subsequent to submitting a report
to Congress under paragraph (2), the Council may make
recommendations to the Board of Governors to require
any nonbank financial company supervised by the Board
of Governors and any bank holding company described
in subsection (a) to maintain a minimum amount of contingent capital that is convertible to equity in times of financial stress.
(B) FACTORS TO CONSIDER.—In making recommendations under this subsection, the Council shall consider—
(i) an appropriate transition period for
implementation of a conversion under this subsection;
(ii) the factors described in subsection (b)(3);
(iii) capital requirements applicable to a nonbank
financial company supervised by the Board of Governors or a bank holding company described in subsection (a), and subsidiaries thereof;
(iv) results of the study required by paragraph
(1); and
(v) any other factor that the Council deems appropriate.
(d) RESOLUTION PLAN AND CREDIT EXPOSURE REPORTS.—
(1) RESOLUTION PLAN.—The Council may make recommendations to the Board of Governors concerning the
requirement that each nonbank financial company supervised
by the Board of Governors and each bank holding company
described in subsection (a) report periodically to the Council,
the Board of Governors, and the Corporation, the plan of such
company for rapid and orderly resolution in the event of material financial distress or failure.
(2) CREDIT EXPOSURE REPORT.—The Council may make recommendations to the Board of Governors concerning the advisability of requiring each nonbank financial company supervised
by the Board of Governors and bank holding company described
in subsection (a) to report periodically to the Council, the Board
of Governors, and the Corporation on—
(A) the nature and extent to which the company has
credit exposure to other significant nonbank financial
companies and significant bank holding companies; and
(B) the nature and extent to which other such significant nonbank financial companies and significant bank
holding companies have credit exposure to that company.
(e) CONCENTRATION LIMITS.—In order to limit the risks that
the failure of any individual company could pose to nonbank financial companies supervised by the Board of Governors or bank
holding companies described in subsection (a), the Council may
make recommendations to the Board of Governors to prescribe
standards to limit such risks, as set forth in section 165.

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124 STAT. 1406

PUBLIC LAW 111–203—JULY 21, 2010

(f) ENHANCED PUBLIC DISCLOSURES.—The Council may make
recommendations to the Board of Governors to require periodic
public disclosures by bank holding companies described in subsection (a) and by nonbank financial companies supervised by the
Board of Governors, in order to support market evaluation of the
risk profile, capital adequacy, and risk management capabilities
thereof.
(g) SHORT-TERM DEBT LIMITS.—The Council may make recommendations to the Board of Governors to require short-term
debt limits to mitigate the risks that an over-accumulation of such
debt could pose to bank holding companies described in subsection
(a), nonbank financial companies supervised by the Board of Governors, or the financial system.
12 USC 5326.

SEC. 116. REPORTS.

(a) IN GENERAL.—Subject to subsection (b), the Council, acting
through the Office of Financial Research, may require a bank
holding company with total consolidated assets of $50,000,000,000
or greater or a nonbank financial company supervised by the Board
of Governors, and any subsidiary thereof, to submit certified reports
to keep the Council informed as to—
(1) the financial condition of the company;
(2) systems for monitoring and controlling financial, operating, and other risks;
(3) transactions with any subsidiary that is a depository
institution; and
(4) the extent to which the activities and operations of
the company and any subsidiary thereof, could, under adverse
circumstances, have the potential to disrupt financial markets
or affect the overall financial stability of the United States.
(b) USE OF EXISTING REPORTS.—
(1) IN GENERAL.—For purposes of compliance with subsection (a), the Council, acting through the Office of Financial
Research, shall, to the fullest extent possible, use—
(A) reports that a bank holding company, nonbank
financial company supervised by the Board of Governors,
or any functionally regulated subsidiary of such company
has been required to provide to other Federal or State
regulatory agencies or to a relevant foreign supervisory
authority;
(B) information that is otherwise required to be
reported publicly; and
(C) externally audited financial statements.
(2) AVAILABILITY.—Each bank holding company described
in subsection (a) and nonbank financial company supervised
by the Board of Governors, and any subsidiary thereof, shall
provide to the Council, at the request of the Council, copies
of all reports referred to in paragraph (1).
(3) CONFIDENTIALITY.—The Council shall maintain the confidentiality of the reports obtained under subsection (a) and
paragraph (1)(A) of this subsection.
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12 USC 5327.

SEC. 117. TREATMENT OF CERTAIN COMPANIES THAT CEASE TO BE
BANK HOLDING COMPANIES.

(a) APPLICABILITY.—This section shall apply to—
(1) any entity that—

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1407

(A) was a bank holding company having total consolidated assets equal to or greater than $50,000,000,000 as
of January 1, 2010; and
(B) received financial assistance under or participated
in the Capital Purchase Program established under the
Troubled Asset Relief Program authorized by the Emergency Economic Stabilization Act of 2008; and
(2) any successor entity (as defined by the Board of Governors, in consultation with the Council) to an entity described
in paragraph (1).
(b) TREATMENT.—If an entity described in subsection (a) ceases
to be a bank holding company at any time after January 1, 2010,
then such entity shall be treated as a nonbank financial company
supervised by the Board of Governors, as if the Council had made
a determination under section 113 with respect to that entity.
(c) APPEAL.—
(1) REQUEST FOR HEARING.—An entity may request, in
writing, an opportunity for a written or oral hearing before
the Council to appeal its treatment as a nonbank financial
company supervised by the Board of Governors in accordance
with this section. Upon receipt of the request, the Council
shall fix a time (not later than 30 days after the date of
receipt of the request) and place at which such entity may
appear, personally or through counsel, to submit written materials (or, at the sole discretion of the Council, oral testimony
and oral argument).
(2) DECISION.—
(A) PROPOSED DECISION.—A Council decision to grant
an appeal under this subsection shall be made by a vote
of not fewer than 2⁄3 of the voting members then serving,
including an affirmative vote by the Chairperson. Not later
than 60 days after the date of a hearing under paragraph
(1), the Council shall submit a report to, and may testify
before, the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the proposed decision of the Council regarding an appeal under paragraph
(1), which report shall include a statement of the basis
for the proposed decision of the Council.
(B) NOTICE OF FINAL DECISION.—The Council shall
notify the subject entity of the final decision of the Council
regarding an appeal under paragraph (1), which notice
shall contain a statement of the basis for the final decision
of the Council, not later than 60 days after the later of—
(i) the date of the submission of the report under
subparagraph (A); or
(ii) if, not later than 1 year after the date of
submission of the report under subparagraph (A), the
Committee on Banking, Housing, and Urban Affairs
of the Senate or the Committee on Financial Services
of the House of Representatives holds one or more
hearings regarding such report, the date of the last
such hearing.
(C) CONSIDERATIONS.—In making a decision regarding
an appeal under paragraph (1), the Council shall consider
whether the company meets the standards under section
113(a) or 113(b), as applicable, and the definition of the

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124 STAT. 1408

PUBLIC LAW 111–203—JULY 21, 2010
term ‘‘nonbank financial company’’ under section 102. The
decision of the Council shall be final, subject to the review
under paragraph (3).
(3) REVIEW.—If the Council denies an appeal under this
subsection, the Council shall, not less frequently than annually,
review and reevaluate the decision.

12 USC 5328.

SEC. 118. COUNCIL FUNDING.

Any expenses of the Council shall be treated as expenses of,
and paid by, the Office of Financial Research.
12 USC 5329.

(a) REQUEST FOR COUNCIL RECOMMENDATION.—The Council
shall seek to resolve a dispute among 2 or more member agencies,
if—
(1) a member agency has a dispute with another member
agency about the respective jurisdiction over a particular bank
holding company, nonbank financial company, or financial
activity or product (excluding matters for which another dispute
mechanism specifically has been provided under title X);
(2) the Council determines that the disputing agencies
cannot, after a demonstrated good faith effort, resolve the dispute without the intervention of the Council; and
(3) any of the member agencies involved in the dispute—
(A) provides all other disputants prior notice of the
intent to request dispute resolution by the Council; and
(B) requests in writing, not earlier than 14 days after
providing the notice described in subparagraph (A), that
the Council seek to resolve the dispute.
(b) COUNCIL RECOMMENDATION.—The Council shall seek to
resolve each dispute described in subsection (a)—
(1) within a reasonable time after receiving the dispute
resolution request;
(2) after consideration of relevant information provided by
each agency party to the dispute; and
(3) by agreeing with 1 of the disputants regarding the
entirety of the matter, or by determining a compromise position.
(c) FORM OF RECOMMENDATION.—Any Council recommendation
under this section shall—
(1) be in writing;
(2) include an explanation of the reasons therefor; and
(3) be approved by the affirmative vote of 2⁄3 of the voting
members of the Council then serving.
(d) NONBINDING EFFECT.—Any recommendation made by the
Council under subsection (c) shall not be binding on the Federal
agencies that are parties to the dispute.

Notice.
Deadline.

12 USC 5330.

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SEC. 119. RESOLUTION OF SUPERVISORY JURISDICTIONAL DISPUTES
AMONG MEMBER AGENCIES.

SEC. 120. ADDITIONAL STANDARDS APPLICABLE TO ACTIVITIES OR
PRACTICES FOR FINANCIAL STABILITY PURPOSES.

(a) IN GENERAL.—The Council may provide for more stringent
regulation of a financial activity by issuing recommendations to
the primary financial regulatory agencies to apply new or heightened standards and safeguards, including standards enumerated
in section 115, for a financial activity or practice conducted by
bank holding companies or nonbank financial companies under
their respective jurisdictions, if the Council determines that the

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1409

conduct, scope, nature, size, scale, concentration, or interconnectedness of such activity or practice could create or increase the risk
of significant liquidity, credit, or other problems spreading among
bank holding companies and nonbank financial companies, financial
markets of the United States, or low-income, minority, or underserved communities.
(b) PROCEDURE FOR RECOMMENDATIONS TO REGULATORS.—
(1) NOTICE AND OPPORTUNITY FOR COMMENT.—The Council
shall consult with the primary financial regulatory agencies
and provide notice to the public and opportunity for comment
for any proposed recommendation that the primary financial
regulatory agencies apply new or heightened standards and
safeguards for a financial activity or practice.
(2) CRITERIA.—The new or heightened standards and safeguards for a financial activity or practice recommended under
paragraph (1)—
(A) shall take costs to long-term economic growth into
account; and
(B) may include prescribing the conduct of the activity
or practice in specific ways (such as by limiting its scope,
or applying particular capital or risk management requirements to the conduct of the activity) or prohibiting the
activity or practice.
(c) IMPLEMENTATION OF RECOMMENDED STANDARDS.—
(1) ROLE OF PRIMARY FINANCIAL REGULATORY AGENCY.—
(A) IN GENERAL.—Each primary financial regulatory
agency may impose, require reports regarding, examine
for compliance with, and enforce standards in accordance
with this section with respect to those entities for which
it is the primary financial regulatory agency.
(B) RULE OF CONSTRUCTION.—The authority under this
paragraph is in addition to, and does not limit, any other
authority of a primary financial regulatory agency. Compliance by an entity with actions taken by a primary financial
regulatory agency under this section shall be enforceable
in accordance with the statutes governing the respective
jurisdiction of the primary financial regulatory agency over
the entity, as if the agency action were taken under those
statutes.
(2) IMPOSITION OF STANDARDS.—The primary financial regulatory agency shall impose the standards recommended by the
Council in accordance with subsection (a), or similar standards
that the Council deems acceptable, or shall explain in writing
to the Council, not later than 90 days after the date on which
the Council issues the recommendation, why the agency has
determined not to follow the recommendation of the Council.
(d) REPORT TO CONGRESS.—The Council shall report to Congress
on—
(1) any recommendations issued by the Council under this
section;
(2) the implementation of, or failure to implement, such
recommendation on the part of a primary financial regulatory
agency; and
(3) in any case in which no primary financial regulatory
agency exists for the nonbank financial company conducting
financial activities or practices referred to in subsection (a),

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124 STAT. 1410

recommendations for legislation that would prevent such activities or practices from threatening the stability of the financial
system of the United States.
(e) EFFECT OF RESCISSION OF IDENTIFICATION.—
(1) NOTICE.—The Council may recommend to the relevant
primary financial regulatory agency that a financial activity
or practice no longer requires any standards or safeguards
implemented under this section.
(2) DETERMINATION OF PRIMARY FINANCIAL REGULATORY
AGENCY TO CONTINUE.—
(A) IN GENERAL.—Upon receipt of a recommendation
under paragraph (1), a primary financial regulatory agency
that has imposed standards under this section shall determine whether such standards should remain in effect.
(B) APPEAL PROCESS.—Each primary financial regulatory agency that has imposed standards under this section shall promulgate regulations to establish a procedure
under which entities under its jurisdiction may appeal
a determination by such agency under this paragraph that
standards imposed under this section should remain in
effect.

Regulations.

12 USC 5331.

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Deadlines.

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PUBLIC LAW 111–203—JULY 21, 2010

SEC. 121. MITIGATION OF RISKS TO FINANCIAL STABILITY.

(a) MITIGATORY ACTIONS.—If the Board of Governors determines that a bank holding company with total consolidated assets
of $50,000,000,000 or more, or a nonbank financial company supervised by the Board of Governors, poses a grave threat to the
financial stability of the United States, the Board of Governors,
upon an affirmative vote of not fewer than 2⁄3 of the voting members
of the Council then serving, shall—
(1) limit the ability of the company to merge with, acquire,
consolidate with, or otherwise become affiliated with another
company;
(2) restrict the ability of the company to offer a financial
product or products;
(3) require the company to terminate one or more activities;
(4) impose conditions on the manner in which the company
conducts 1 or more activities; or
(5) if the Board of Governors determines that the actions
described in paragraphs (1) through (4) are inadequate to mitigate a threat to the financial stability of the United States
in its recommendation, require the company to sell or otherwise
transfer assets or off-balance-sheet items to unaffiliated entities.
(b) NOTICE AND HEARING.—
(1) IN GENERAL.—The Board of Governors, in consultation
with the Council, shall provide to a company described in
subsection (a) written notice that such company is being considered for mitigatory action pursuant to this section, including
an explanation of the basis for, and description of, the proposed
mitigatory action.
(2) HEARING.—Not later than 30 days after the date of
receipt of notice under paragraph (1), the company may request,
in writing, an opportunity for a written or oral hearing before
the Board of Governors to contest the proposed mitigatory
action. Upon receipt of a timely request, the Board of Governors
shall fix a time (not later than 30 days after the date of

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1411

receipt of the request) and place at which such company may
appear, personally or through counsel, to submit written materials (or, at the discretion of the Board of Governors, in consultation with the Council, oral testimony and oral argument).
(3) DECISION.—Not later than 60 days after the date of
a hearing under paragraph (2), or not later than 60 days
after the provision of a notice under paragraph (1) if no hearing
was held, the Board of Governors shall notify the company
of the final decision of the Board of Governors, including the
results of the vote of the Council, as described in subsection
(a).
(c) FACTORS FOR CONSIDERATION.—The Board of Governors and
the Council shall take into consideration the factors set forth in
subsection (a) or (b) of section 113, as applicable, in making any
determination under subsection (a).
(d) APPLICATION TO FOREIGN FINANCIAL COMPANIES.—The
Board of Governors may prescribe regulations regarding the application of this section to foreign nonbank financial companies supervised by the Board of Governors and foreign-based bank holding
companies—
(1) giving due regard to the principle of national treatment
and equality of competitive opportunity; and
(2) taking into account the extent to which the foreign
nonbank financial company or foreign-based bank holding company is subject on a consolidated basis to home country standards that are comparable to those applied to financial companies in the United States.

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SEC. 122. GAO AUDIT OF COUNCIL.

12 USC 5332.

(a) AUTHORITY TO AUDIT.—The Comptroller General of the
United States may audit the activities of—
(1) the Council; and
(2) any person or entity acting on behalf of or under the
authority of the Council, to the extent that such activities
relate to work for the Council by such person or entity.
(b) ACCESS TO INFORMATION.—
(1) IN GENERAL.—Notwithstanding any other provision of
law, the Comptroller General shall, upon request and at such
reasonable time and in such reasonable form as the Comptroller
General may request, have access to—
(A) any records or other information under the control
of or used by the Council;
(B) any records or other information under the control
of a person or entity acting on behalf of or under the
authority of the Council, to the extent that such records
or other information is relevant to an audit under subsection (a); and
(C) the officers, directors, employees, financial advisors,
staff, working groups, and agents and representatives of
the Council (as related to the activities on behalf of the
Council of such agent or representative), at such reasonable
times as the Comptroller General may request.
(2) COPIES.—The Comptroller General may make and
retain copies of such books, accounts, and other records, access
to which is granted under this section, as the Comptroller
General considers appropriate.

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124 STAT. 1412
12 USC 5333.

Cost estimate.

PUBLIC LAW 111–203—JULY 21, 2010

SEC. 123. STUDY OF THE EFFECTS OF SIZE AND COMPLEXITY OF FINANCIAL INSTITUTIONS ON CAPITAL MARKET EFFICIENCY
AND ECONOMIC GROWTH.

(a) STUDY REQUIRED.—
(1) IN GENERAL.—The Chairperson of the Council shall
carry out a study of the economic impact of possible financial
services regulatory limitations intended to reduce systemic risk.
Such study shall estimate the benefits and costs on the efficiency of capital markets, on the financial sector, and on
national economic growth, of—
(A) explicit or implicit limits on the maximum size
of banks, bank holding companies, and other large financial
institutions;
(B) limits on the organizational complexity and diversification of large financial institutions;
(C) requirements for operational separation between
business units of large financial institutions in order to
expedite resolution in case of failure;
(D) limits on risk transfer between business units of
large financial institutions;
(E) requirements to carry contingent capital or similar
mechanisms;
(F) limits on commingling of commercial and financial
activities by large financial institutions;
(G) segregation requirements between traditional
financial activities and trading or other high-risk operations in large financial institutions; and
(H) other limitations on the activities or structure of
large financial institutions that may be useful to limit
systemic risk.
(2) RECOMMENDATIONS.—The study required by this section
shall include recommendations for the optimal structure of
any limits considered in subparagraphs (A) through (E), in
order to maximize their effectiveness and minimize their economic impact.
(b) REPORT.—Not later than the end of the 180-day period
beginning on the date of enactment of this title, and not later
than every 5 years thereafter, the Chairperson shall issue a report
to the Congress containing any findings and determinations made
in carrying out the study required under subsection (a).

Subtitle B—Office of Financial Research

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12 USC 5341.

SEC. 151. DEFINITIONS.

For purposes of this subtitle—
(1) the terms ‘‘Office’’ and ‘‘Director’’ mean the Office of
Financial Research established under this subtitle and the
Director thereof, respectively;
(2) the term ‘‘financial company’’ has the same meaning
as in title II, and includes an insured depository institution
and an insurance company;
(3) the term ‘‘Data Center’’ means the data center established under section 154;
(4) the term ‘‘Research and Analysis Center’’ means the
research and analysis center established under section 154;

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(5) the term ‘‘financial transaction data’’ means the structure and legal description of a financial contract, with sufficient
detail to describe the rights and obligations between counterparties and make possible an independent valuation;
(6) the term ‘‘position data’’—
(A) means data on financial assets or liabilities held
on the balance sheet of a financial company, where positions are created or changed by the execution of a financial
transaction; and
(B) includes information that identifies counterparties,
the valuation by the financial company of the position,
and information that makes possible an independent valuation of the position;
(7) the term ‘‘financial contract’’ means a legally binding
agreement between 2 or more counterparties, describing rights
and obligations relating to the future delivery of items of
intrinsic or extrinsic value among the counterparties; and
(8) the term ‘‘financial instrument’’ means a financial contract in which the terms and conditions are publicly available,
and the roles of one or more of the counterparties are assignable
without the consent of any of the other counterparties (including
common stock of a publicly traded company, government bonds,
or exchange traded futures and options contracts).

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SEC. 152. OFFICE OF FINANCIAL RESEARCH ESTABLISHED.

12 USC 5342.

(a) ESTABLISHMENT.—There is established within the Department of the Treasury the Office of Financial Research.
(b) DIRECTOR.—
(1) IN GENERAL.—The Office shall be headed by a Director,
who shall be appointed by the President, by and with the
advice and consent of the Senate.
(2) TERM OF SERVICE.—The Director shall serve for a term
of 6 years, except that, in the event that a successor is not
nominated and confirmed by the end of the term of service
of a Director, the Director may continue to serve until such
time as the next Director is appointed and confirmed.
(3) EXECUTIVE LEVEL.—The Director shall be compensated
at Level III of the Executive Schedule.
(4) PROHIBITION ON DUAL SERVICE.—The individual serving
in the position of Director may not, during such service, also
serve as the head of any financial regulatory agency.
(5) RESPONSIBILITIES, DUTIES, AND AUTHORITY.—The
Director shall have sole discretion in the manner in which
the Director fulfills the responsibilities and duties and exercises
the authorities described in this subtitle.
(c) BUDGET.—The Director, in consultation with the Chairperson, shall establish the annual budget of the Office.
(d) OFFICE PERSONNEL.—
(1) IN GENERAL.—The Director, in consultation with the
Chairperson, may fix the number of, and appoint and direct,
all employees of the Office.
(2) COMPENSATION.—The Director, in consultation with the
Chairperson, shall fix, adjust, and administer the pay for all
employees of the Office, without regard to chapter 51 or subchapter III of chapter 53 of title 5, United States Code, relating
to classification of positions and General Schedule pay rates.

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President.
Appointment.

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124 STAT. 1414

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Regulations.

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PUBLIC LAW 111–203—JULY 21, 2010

(3) COMPARABILITY.—Section 1206(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 1833b(a)) is amended—
(A) by striking ‘‘Finance Board,’’ and inserting ‘‘Finance
Board, the Office of Financial Research, and the Bureau
of Consumer Financial Protection’’; and
(B) by striking ‘‘and the Office of Thrift Supervision,’’.
(4) SENIOR EXECUTIVES.—Section 3132(a)(1)(D) of title 5,
United States Code, is amended by striking ‘‘and the National
Credit Union Administration;’’ and inserting ‘‘the National
Credit Union Administration, the Bureau of Consumer Financial Protection, and the Office of Financial Research;’’.
(e) ASSISTANCE FROM FEDERAL AGENCIES.—Any department
or agency of the United States may provide to the Office and
any special advisory, technical, or professional committees
appointed by the Office, such services, funds, facilities, staff, and
other support services as the Office may determine advisable. Any
Federal Government employee may be detailed to the Office without
reimbursement, and such detail shall be without interruption or
loss of civil service status or privilege.
(f) PROCUREMENT OF TEMPORARY AND INTERMITTENT SERVICES.—The Director 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.
(g) POST-EMPLOYMENT PROHIBITIONS.—The Secretary, with the
concurrence of the Director of the Office of Government Ethics,
shall issue regulations prohibiting the Director and any employee
of the Office who has had access to the transaction or position
data maintained by the Data Center or other business confidential
information about financial entities required to report to the Office
from being employed by or providing advice or consulting services
to a financial company, for a period of 1 year after last having
had access in the course of official duties to such transaction or
position data or business confidential information, regardless of
whether that entity is required to report to the Office. For employees
whose access to business confidential information was limited, the
regulations may provide, on a case-by-case basis, for a shorter
period of post-employment prohibition, provided that the shorter
period does not compromise business confidential information.
(h) TECHNICAL AND PROFESSIONAL ADVISORY COMMITTEES.—
The Office, in consultation with the Chairperson, 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.
(i) FELLOWSHIP PROGRAM.—The Office, in consultation with
the Chairperson, may establish and maintain an academic and
professional fellowship program, under which qualified academics
and professionals shall be invited to spend not longer than 2 years
at the Office, to perform research and to provide advanced training
for Office personnel.
(j) EXECUTIVE SCHEDULE COMPENSATION.—Section 5314 of title
5, United States Code, is amended by adding at the end the following new item:
‘‘Director of the Office of Financial Research.’’.

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124 STAT. 1415

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SEC. 153. PURPOSE AND DUTIES OF THE OFFICE.

12 USC 5343.

(a) PURPOSE AND DUTIES.—The purpose of the Office is to
support the Council in fulfilling the purposes and duties of the
Council, as set forth in subtitle A, and to support member agencies,
by—
(1) collecting data on behalf of the Council, and providing
such data to the Council and member agencies;
(2) standardizing the types and formats of data reported
and collected;
(3) performing applied research and essential long-term
research;
(4) developing tools for risk measurement and monitoring;
(5) performing other related services;
(6) making the results of the activities of the Office available to financial regulatory agencies; and
(7) assisting such member agencies in determining the
types and formats of data authorized by this Act to be collected
by such member agencies.
(b) ADMINISTRATIVE AUTHORITY.—The Office may—
(1) share data and information, including software developed by the Office, with the Council, member agencies, and
the Bureau of Economic Analysis, which shared data, information, and software—
(A) shall be maintained with at least the same level
of security as is used by the Office; and
(B) may not be shared with any individual or entity
without the permission of the Council;
(2) sponsor and conduct research projects; and
(3) assist, on a reimbursable basis, with financial analyses
undertaken at the request of other Federal agencies that are
not member agencies.
(c) RULEMAKING AUTHORITY.—
(1) SCOPE.—The Office, in consultation with the Chairperson, shall issue rules, regulations, and orders only to the
extent necessary to carry out the purposes and duties described
in paragraphs (1), (2), and (7) of subsection (a).
(2) STANDARDIZATION.—Member agencies, in consultation
with the Office, shall implement regulations promulgated by
the Office under paragraph (1) to standardize the types and
formats of data reported and collected on behalf of the Council,
as described in subsection (a)(2). If a member agency fails
to implement such regulations prior to the expiration of the
3-year period following the date of publication of final regulations, the Office, in consultation with the Chairperson, may
implement such regulations with respect to the financial entities under the jurisdiction of the member agency. This paragraph shall not supersede or interfere with the independent
authority of a member agency under other law to collect data,
in such format and manner as the member agency requires.
(d) TESTIMONY.—
(1) IN GENERAL.—The Director of the Office shall report
to and testify before the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives annually on the activities of the Office, including the work of the Data Center and
the Research and Analysis Center, and the assessment of the

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Reports.

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124 STAT. 1416

Office of significant financial market developments and potential emerging threats to the financial stability of the United
States.
(2) NO PRIOR REVIEW.—No officer or agency of the United
States shall have any authority to require the Director to
submit the testimony required under paragraph (1) or other
congressional testimony to any officer or agency of the United
States for approval, comment, or review prior to the submission
of such testimony. Any such testimony to Congress shall include
a statement that the views expressed therein are those of
the Director and do not necessarily represent the views of
the President.
(e) ADDITIONAL REPORTS.—The Director may provide additional
reports to Congress concerning the financial stability of the United
States. The Director shall notify the Council of any such additional
reports provided to Congress.
(f) SUBPOENA.—
(1) IN GENERAL.—The Director may require from a financial
company, by subpoena, the production of the data requested
under subsection (a)(1) and section 154(b)(1), but only upon
a written finding by the Director that—
(A) such data is required to carry out the functions
described under this subtitle; and
(B) the Office has coordinated with the relevant primary financial regulatory agency, as required under section
154(b)(1)(B)(ii).
(2) FORMAT.—Subpoenas under paragraph (1) shall bear
the signature of the Director, and shall be served by any
person or class of persons designated by the Director for that
purpose.
(3) ENFORCEMENT.—In the case of contumacy or failure
to obey a subpoena, the subpoena shall be enforceable by order
of any appropriate district court of the United States. Any
failure to obey the order of the court may be punished by
the court as a contempt of court.

Notification.

12 USC 5344.

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PUBLIC LAW 111–203—JULY 21, 2010

SEC. 154. ORGANIZATIONAL STRUCTURE; RESPONSIBILITIES OF PRIMARY PROGRAMMATIC UNITS.

(a) IN GENERAL.—There are established within the Office, to
carry out the programmatic responsibilities of the Office—
(1) the Data Center; and
(2) the Research and Analysis Center.
(b) DATA CENTER.—
(1) GENERAL DUTIES.—
(A) DATA COLLECTION.—The Data Center, on behalf
of the Council, shall collect, validate, and maintain all
data necessary to carry out the duties of the Data Center,
as described in this subtitle. The data assembled shall
be obtained from member agencies, commercial data providers, publicly available data sources, and financial entities under subparagraph (B).
(B) AUTHORITY.—
(i) IN GENERAL.—The Office may, as determined
by the Council or by the Director in consultation with
the Council, require the submission of periodic and
other reports from any financial company for the purpose of assessing the extent to which a financial

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1417

activity or financial market in which the financial company participates, or the financial company itself, poses
a threat to the financial stability of the United States.
(ii) MITIGATION OF REPORT BURDEN.—Before
requiring the submission of a report from any financial
company that is regulated by a member agency, any
primary financial regulatory agency, a foreign supervisory authority, or the Office shall coordinate with
such agencies or authority, and shall, whenever possible, rely on information available from such agencies
or authority.
(iii) COLLECTION OF FINANCIAL TRANSACTION AND
POSITION DATA.—The Office shall collect, on a schedule
determined by the Director, in consultation with the
Council, financial transaction data and position data
from financial companies.
(C) RULEMAKING.—The Office shall promulgate regulations pursuant to subsections (a)(1), (a)(2), (a)(7), and (c)(1)
of section 153 regarding the type and scope of the data
to be collected by the Data Center under this paragraph.
(2) RESPONSIBILITIES.—
(A) PUBLICATION.—The Data Center shall prepare and
publish, in a manner that is easily accessible to the public—
(i) a financial company reference database;
(ii) a financial instrument reference database; and
(iii) formats and standards for Office data,
including standards for reporting financial transaction
and position data to the Office.
(B) CONFIDENTIALITY.—The Data Center shall not publish any confidential data under subparagraph (A).
(3) INFORMATION SECURITY.—The Director shall ensure that
data collected and maintained by the Data Center are kept
secure and protected against unauthorized disclosure.
(4) CATALOG OF FINANCIAL ENTITIES AND INSTRUMENTS.—
The Data Center shall maintain a catalog of the financial
entities and instruments reported to the Office.
(5) AVAILABILITY TO THE COUNCIL AND MEMBER AGENCIES.—
The Data Center shall make data collected and maintained
by the Data Center available to the Council and member agencies, as necessary to support their regulatory responsibilities.
(6) OTHER AUTHORITY.—The Office shall, after consultation
with the member agencies, provide certain data to financial
industry participants and to the general public to increase
market transparency and facilitate research on the financial
system, to the extent that intellectual property rights are not
violated, business confidential information is properly protected,
and the sharing of such information poses no significant threats
to the financial system of the United States.
(c) RESEARCH AND ANALYSIS CENTER.—
(1) GENERAL DUTIES.—The Research and Analysis Center,
on behalf of the Council, shall develop and maintain independent analytical capabilities and computing resources—
(A) to develop and maintain metrics and reporting
systems for risks to the financial stability of the United
States;

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Public
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124 STAT. 1418

PUBLIC LAW 111–203—JULY 21, 2010
(B) to monitor, investigate, and report on changes in
systemwide risk levels and patterns to the Council and
Congress;
(C) to conduct, coordinate, and sponsor research to
support and improve regulation of financial entities and
markets;
(D) to evaluate and report on stress tests or other
stability-related evaluations of financial entities overseen
by the member agencies;
(E) to maintain expertise in such areas as may be
necessary to support specific requests for advice and assistance from financial regulators;
(F) to investigate disruptions and failures in the financial markets, report findings, and make recommendations
to the Council based on those findings;
(G) to conduct studies and provide advice on the impact
of policies related to systemic risk; and
(H) to promote best practices for financial risk management.
(d) REPORTING RESPONSIBILITIES.—
(1) REQUIRED REPORTS.—Not later than 2 years after the
date of enactment of this Act, and not later than 120 days
after the end of each fiscal year thereafter, the Office shall
prepare and submit a report to Congress.
(2) CONTENT.—Each report required by this subsection
shall assess the state of the United States financial system,
including—
(A) an analysis of any threats to the financial stability
of the United States;
(B) the status of the efforts of the Office in meeting
the mission of the Office; and
(C) key findings from the research and analysis of
the financial system by the Office.

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12 USC 5345.

SEC. 155. FUNDING.

(a) FINANCIAL RESEARCH FUND.—
(1) FUND ESTABLISHED.—There is established in the
Treasury of the United States a separate fund to be known
as the ‘‘Financial Research Fund’’.
(2) FUND RECEIPTS.—All amounts provided to the Office
under subsection (c), and all assessments that the Office
receives under subsection (d) shall be deposited into the Financial Research Fund.
(3) INVESTMENTS AUTHORIZED.—
(A) AMOUNTS IN FUND MAY BE INVESTED.—The Director
may request the Secretary to invest the portion of the
Financial Research Fund that is not, in the judgment of
the Director, required to meet the needs of the Office.
(B) ELIGIBLE INVESTMENTS.—Investments shall be
made by the Secretary in obligations of the United States
or obligations that are guaranteed as to principal and
interest by the United States, with maturities suitable
to the needs of the Financial Research Fund, as determined
by the Director.
(4) INTEREST AND PROCEEDS CREDITED.—The interest on,
and the proceeds from the sale or redemption of, any obligations

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1419

held in the Financial Research Fund shall be credited to and
form a part of the Financial Research Fund.
(b) USE OF FUNDS.—
(1) IN GENERAL.—Funds obtained by, transferred to, or
credited to the Financial Research Fund shall be immediately
available to the Office, and shall remain available until
expended, to pay the expenses of the Office in carrying out
the duties and responsibilities of the Office.
(2) FEES, ASSESSMENTS, AND OTHER FUNDS NOT GOVERNMENT FUNDS.—Funds obtained by, transferred to, or credited
to the Financial Research Fund shall not be construed to be
Government funds or appropriated moneys.
(3) AMOUNTS NOT SUBJECT TO APPORTIONMENT.—Notwithstanding any other provision of law, amounts in the Financial
Research Fund shall not be subject to apportionment for purposes of chapter 15 of title 31, United States Code, or under
any other authority, or for any other purpose.
(c) INTERIM FUNDING.—During the 2-year period following the
date of enactment of this Act, the Board of Governors shall provide
to the Office an amount sufficient to cover the expenses of the
Office.
(d) PERMANENT SELF-FUNDING.—Beginning 2 years after the
date of enactment of this Act, the Secretary shall establish, by
regulation, and with the approval of the Council, an assessment
schedule, including the assessment base and rates, applicable to
bank holding companies with total consolidated assets of
50,000,000,000 or greater and nonbank financial companies supervised by the Board of Governors, that takes into account differences
among such companies, based on the considerations for establishing
the prudential standards under section 115, to collect assessments
equal to the total expenses of the Office.

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SEC. 156. TRANSITION OVERSIGHT.

Time period.

Effective date.
Regulations.
Assessments.

12 USC 5346.

(a) PURPOSE.—The purpose of this section is to ensure that
the Office—
(1) has an orderly and organized startup;
(2) attracts and retains a qualified workforce; and
(3) establishes comprehensive employee training and benefits programs.
(b) REPORTING REQUIREMENT.—
(1) IN GENERAL.—The Office shall submit an annual report
to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of
the House of Representatives that includes the plans described
in paragraph (2).
(2) PLANS.—The plans described in this paragraph are as
follows:
(A) TRAINING AND WORKFORCE DEVELOPMENT PLAN.—
The Office shall submit a training and workforce development plan that includes, to the extent practicable—
(i) identification of skill and technical expertise
needs and actions taken to meet those requirements;
(ii) steps taken to foster innovation and creativity;
(iii) leadership development and succession planning; and
(iv) effective use of technology by employees.

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(B) WORKPLACE FLEXIBILITY PLAN.—The Office shall
submit a workforce flexibility plan that includes, to the
extent practicable—
(i) telework;
(ii) flexible work schedules;
(iii) phased retirement;
(iv) reemployed annuitants;
(v) part-time work;
(vi) job sharing;
(vii) parental leave benefits and childcare assistance;
(viii) domestic partner benefits;
(ix) other workplace flexibilities; or
(x) any combination of the items described in
clauses (i) through (ix).
(C) RECRUITMENT AND RETENTION PLAN.—The Office
shall submit a recruitment and retention plan that
includes, to the extent practicable, provisions relating to—
(i) the steps necessary to target highly qualified
applicant pools with diverse backgrounds;
(ii) streamlined employment application processes;
(iii) the provision of timely notification of the
status of employment applications to applicants; and
(iv) the collection of information to measure indicators of hiring effectiveness.
(c) EXPIRATION.—The reporting requirement under subsection
(b) shall terminate 5 years after the date of enactment of this
Act.
(d) RULE OF CONSTRUCTION.—Nothing in this section may be
construed to affect—
(1) a collective bargaining agreement, as that term is
defined in section 7103(a)(8) of title 5, United States Code,
that is in effect on the date of enactment of this Act; or
(2) the rights of employees under chapter 71 of title 5,
United States Code.

Subtitle C—Additional Board of Governors
Authority for Certain Nonbank Financial
Companies and Bank Holding Companies

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12 USC 5361.

SEC. 161. REPORTS BY AND EXAMINATIONS OF NONBANK FINANCIAL
COMPANIES BY THE BOARD OF GOVERNORS.

(a) REPORTS.—
(1) IN GENERAL.—The Board of Governors may require
each nonbank financial company supervised by the Board of
Governors, and any subsidiary thereof, to submit reports under
oath, to keep the Board of Governors informed as to—
(A) the financial condition of the company or subsidiary, systems of the company or subsidiary for monitoring and controlling financial, operating, and other risks,
and the extent to which the activities and operations of
the company or subsidiary pose a threat to the financial
stability of the United States; and
(B) compliance by the company or subsidiary with the
requirements of this title.

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(2) USE OF EXISTING REPORTS AND INFORMATION.—In carrying out subsection (a), the Board of Governors shall, to the
fullest extent possible, use—
(A) reports and supervisory information that a nonbank
financial company or subsidiary thereof has been required
to provide to other Federal or State regulatory agencies;
(B) information otherwise obtainable from Federal or
State regulatory agencies;
(C) information that is otherwise required to be
reported publicly; and
(D) externally audited financial statements of such
company or subsidiary.
(3) AVAILABILITY.—Upon the request of the Board of Governors, a nonbank financial company supervised by the Board
of Governors, or a subsidiary thereof, shall promptly provide
to the Board of Governors any information described in paragraph (2).
(b) EXAMINATIONS.—
(1) IN GENERAL.—Subject to paragraph (2), the Board of
Governors may examine any nonbank financial company supervised by the Board of Governors and any subsidiary of such
company, to inform the Board of Governors of—
(A) the nature of the operations and financial condition
of the company and such subsidiary;
(B) the financial, operational, and other risks of the
company or such subsidiary that may pose a threat to
the safety and soundness of such company or subsidiary
or to the financial stability of the United States;
(C) the systems for monitoring and controlling such
risks; and
(D) compliance by the company or such subsidiary
with the requirements of this title.
(2) USE OF EXAMINATION REPORTS AND INFORMATION.—For
purposes of this subsection, the Board of Governors shall, to
the fullest extent possible, rely on reports of examination of
any subsidiary depository institution or functionally regulated
subsidiary made by the primary financial regulatory agency
for that subsidiary, and on information described in subsection
(a)(2).
(c) COORDINATION WITH PRIMARY FINANCIAL REGULATORY
AGENCY.—The Board of Governors shall—
(1) provide reasonable notice to, and consult with, the
primary financial regulatory agency for any subsidiary before
requiring a report or commencing an examination of such subsidiary under this section; and
(2) avoid duplication of examination activities, reporting
requirements, and requests for information, to the fullest extent
possible.

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SEC. 162. ENFORCEMENT.

Notice.
Consultation.

12 USC 5362.

(a) IN GENERAL.—Except as provided in subsection (b), a
nonbank financial company supervised by the Board of Governors
and any subsidiaries of such company (other than any depository
institution subsidiary) shall be subject to the provisions of subsections (b) through (n) of section 8 of the Federal Deposit Insurance
Act (12 U.S.C. 1818), in the same manner and to the same extent
as if the company were a bank holding company, as provided

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PUBLIC LAW 111–203—JULY 21, 2010

in section 8(b)(3) of the Federal Deposit Insurance Act (12 U.S.C.
1818(b)(3)).
(b) ENFORCEMENT AUTHORITY FOR FUNCTIONALLY REGULATED
SUBSIDIARIES.—
(1) REFERRAL.—If the Board of Governors determines that
a condition, practice, or activity of a depository institution
subsidiary or functionally regulated subsidiary of a nonbank
financial company supervised by the Board of Governors does
not comply with the regulations or orders prescribed by the
Board of Governors under this Act, or otherwise poses a threat
to the financial stability of the United States, the Board of
Governors may recommend, in writing, to the primary financial
regulatory agency for the subsidiary that such agency initiate
a supervisory action or enforcement proceeding. The recommendation shall be accompanied by a written explanation
of the concerns giving rise to the recommendation.
(2) BACK-UP AUTHORITY OF THE BOARD OF GOVERNORS.—
If, during the 60-day period beginning on the date on which
the primary financial regulatory agency receives a recommendation under paragraph (1), the primary financial regulatory
agency does not take supervisory or enforcement action against
a subsidiary that is acceptable to the Board of Governors,
the Board of Governors (upon a vote of its members) may
take the recommended supervisory or enforcement action, as
if the subsidiary were a bank holding company subject to supervision by the Board of Governors.
12 USC 5363.

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Applicability.

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SEC. 163. ACQUISITIONS.

(a) ACQUISITIONS OF BANKS; TREATMENT AS A BANK HOLDING
COMPANY.—For purposes of section 3 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1842), a nonbank financial company supervised by the Board of Governors shall be deemed to be, and shall
be treated as, a bank holding company.
(b) ACQUISITION OF NONBANK COMPANIES.—
(1) PRIOR NOTICE FOR LARGE ACQUISITIONS.—Notwithstanding section 4(k)(6)(B) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1843(k)(6)(B)), a bank holding company
with total consolidated assets equal to or greater than
$50,000,000,000 or a nonbank financial company supervised
by the Board of Governors shall not acquire direct or indirect
ownership or control of any voting shares of any company
(other than an insured depository institution) that is engaged
in activities described in section 4(k) of the Bank Holding
Company Act of 1956 having total consolidated assets of
$10,000,000,000 or more, without providing written notice to
the Board of Governors in advance of the transaction.
(2) EXEMPTIONS.—The prior notice requirement in paragraph (1) shall not apply with regard to the acquisition of
shares that would qualify for the exemptions in section 4(c)
or section 4(k)(4)(E) of the Bank Holding Company Act of
1956 (12 U.S.C. 1843(c) and (k)(4)(E)).
(3) NOTICE PROCEDURES.—The notice procedures set forth
in section 4(j)(1) of the Bank Holding Company Act of 1956
(12 U.S.C. 1843(j)(1)), without regard to section 4(j)(3) of that
Act, shall apply to an acquisition of any company (other than
an insured depository institution) by a bank holding company
with total consolidated assets equal to or greater than

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124 STAT. 1423

$50,000,000,000 or a nonbank financial company supervised
by the Board of Governors, as described in paragraph (1),
including any such company engaged in activities described
in section 4(k) of that Act.
(4) STANDARDS FOR REVIEW.—In addition to the standards
provided in section 4(j)(2) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1843(j)(2)), the Board of Governors shall
consider the extent to which the proposed acquisition would
result in greater or more concentrated risks to global or United
States financial stability or the United States economy.
(5) HART-SCOTT-RODINO FILING REQUIREMENT.—Solely for
purposes of section 7A(c)(8) of the Clayton Act (15 U.S.C.
18a(c)(8)), the transactions subject to the requirements of paragraph (1) shall be treated as if Board of Governors approval
is not required.
SEC.

164.

PROHIBITION AGAINST MANAGEMENT INTERLOCKS
BETWEEN CERTAIN FINANCIAL COMPANIES.

12 USC 5364.

A nonbank financial company supervised by the Board of Governors shall be treated as a bank holding company for purposes
of the Depository Institutions Management Interlocks Act (12 U.S.C.
3201 et seq.), except that the Board of Governors shall not exercise
the authority provided in section 7 of that Act (12 U.S.C. 3207)
to permit service by a management official of a nonbank financial
company supervised by the Board of Governors as a management
official of any bank holding company with total consolidated assets
equal to or greater than $50,000,000,000, or other nonaffiliated
nonbank financial company supervised by the Board of Governors
(other than to provide a temporary exemption for interlocks
resulting from a merger, acquisition, or consolidation).

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SEC. 165. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS
FOR NONBANK FINANCIAL COMPANIES SUPERVISED BY
THE BOARD OF GOVERNORS AND CERTAIN BANK HOLDING
COMPANIES.

12 USC 5365.

(a) IN GENERAL.—
(1) PURPOSE.—In order to prevent or mitigate risks to
the financial stability of the United States that could arise
from the material financial distress or failure, or ongoing activities, of large, interconnected financial institutions, the Board
of Governors shall, on its own or pursuant to recommendations
by the Council under section 115, establish prudential standards for nonbank financial companies supervised by the Board
of Governors and bank holding companies with total consolidated assets equal to or greater than $50,000,000,000 that—
(A) are more stringent than the standards and requirements applicable to nonbank financial companies and bank
holding companies that do not present similar risks to
the financial stability of the United States; and
(B) increase in stringency, based on the considerations
identified in subsection (b)(3).
(2) TAILORED APPLICATION.—
(A) IN GENERAL.—In prescribing more stringent
prudential standards under this section, the Board of Governors may, on its own or pursuant to a recommendation
by the Council in accordance with section 115, differentiate
among companies on an individual basis or by category,
taking into consideration their capital structure, riskiness,

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PUBLIC LAW 111–203—JULY 21, 2010
complexity, financial activities (including the financial
activities of their subsidiaries), size, and any other riskrelated factors that the Board of Governors deems appropriate.
(B) ADJUSTMENT OF THRESHOLD FOR APPLICATION OF
CERTAIN STANDARDS.—The Board of Governors may, pursuant to a recommendation by the Council in accordance
with section 115, establish an asset threshold above
$50,000,000,000 for the application of any standard established under subsections (c) through (g).
(b) DEVELOPMENT OF PRUDENTIAL STANDARDS.—
(1) IN GENERAL.—
(A) REQUIRED STANDARDS.—The Board of Governors
shall establish prudential standards for nonbank financial
companies supervised by the Board of Governors and bank
holding companies described in subsection (a), that shall
include—
(i) risk-based capital requirements and leverage
limits, unless the Board of Governors, in consultation
with the Council, determines that such requirements
are not appropriate for a company subject to more
stringent prudential standards because of the activities
of such company (such as investment company activities or assets under management) or structure, in
which case, the Board of Governors shall apply other
standards that result in similarly stringent risk controls;
(ii) liquidity requirements;
(iii) overall risk management requirements;
(iv) resolution plan and credit exposure report
requirements; and
(v) concentration limits.
(B) ADDITIONAL STANDARDS AUTHORIZED.—The Board
of Governors may establish additional prudential standards
for nonbank financial companies supervised by the Board
of Governors and bank holding companies described in
subsection (a), that include—
(i) a contingent capital requirement;
(ii) enhanced public disclosures;
(iii) short-term debt limits; and
(iv) such other prudential standards as the Board
or Governors, on its own or pursuant to a recommendation made by the Council in accordance with section
115, determines are appropriate.
(2) STANDARDS FOR FOREIGN FINANCIAL COMPANIES.—In
applying the standards set forth in paragraph (1) to any foreign
nonbank financial company supervised by the Board of Governors or foreign-based bank holding company, the Board of
Governors shall—
(A) give due regard to the principle of national treatment and equality of competitive opportunity; and
(B) take into account the extent to which the foreign
financial company is subject on a consolidated basis to
home country standards that are comparable to those
applied to financial companies in the United States.
(3) CONSIDERATIONS.—In prescribing prudential standards
under paragraph (1), the Board of Governors shall—

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124 STAT. 1425

(A) take into account differences among nonbank financial companies supervised by the Board of Governors and
bank holding companies described in subsection (a), based
on—
(i) the factors described in subsections (a) and
(b) of section 113;
(ii) whether the company owns an insured depository institution;
(iii) nonfinancial activities and affiliations of the
company; and
(iv) any other risk-related factors that the Board
of Governors determines appropriate;
(B) to the extent possible, ensure that small changes
in the factors listed in subsections (a) and (b) of section
113 would not result in sharp, discontinuous changes in
the prudential standards established under paragraph (1)
of this subsection;
(C) take into account any recommendations of the
Council under section 115; and
(D) adapt the required standards as appropriate in
light of any predominant line of business of such company,
including assets under management or other activities for
which particular standards may not be appropriate.
(4) CONSULTATION.—Before imposing prudential standards
or any other requirements pursuant to this section, including
notices of deficiencies in resolution plans and more stringent
requirements or divestiture orders resulting from such notices,
that are likely to have a significant impact on a functionally
regulated subsidiary or depository institution subsidiary of a
nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a),
the Board of Governors shall consult with each Council member
that primarily supervises any such subsidiary with respect
to any such standard or requirement.
(5) REPORT.—The Board of Governors shall submit an
annual report to Congress regarding the implementation of
the prudential standards required pursuant to paragraph (1),
including the use of such standards to mitigate risks to the
financial stability of the United States.
(c) CONTINGENT CAPITAL.—
(1) IN GENERAL.—Subsequent to submission by the Council
of a report to Congress under section 115(c), the Board of
Governors may issue regulations that require each nonbank
financial company supervised by the Board of Governors and
bank holding companies described in subsection (a) to maintain
a minimum amount of contingent capital that is convertible
to equity in times of financial stress.
(2) FACTORS TO CONSIDER.—In issuing regulations under
this subsection, the Board of Governors shall consider—
(A) the results of the study undertaken by the Council,
and any recommendations of the Council, under section
115(c);
(B) an appropriate transition period for implementation
of contingent capital under this subsection;
(C) the factors described in subsection (b)(3)(A);
(D) capital requirements applicable to the nonbank
financial company supervised by the Board of Governors

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124 STAT. 1426

PUBLIC LAW 111–203—JULY 21, 2010
or a bank holding company described in subsection (a),
and subsidiaries thereof; and
(E) any other factor that the Board of Governors deems
appropriate.
(d) RESOLUTION PLAN AND CREDIT EXPOSURE REPORTS.—
(1) RESOLUTION PLAN.—The Board of Governors shall
require each nonbank financial company supervised by the
Board of Governors and bank holding companies described in
subsection (a) to report periodically to the Board of Governors,
the Council, and the Corporation the plan of such company
for rapid and orderly resolution in the event of material financial distress or failure, which shall include—
(A) information regarding the manner and extent to
which any insured depository institution affiliated with
the company is adequately protected from risks arising
from the activities of any nonbank subsidiaries of the company;
(B) full descriptions of the ownership structure, assets,
liabilities, and contractual obligations of the company;
(C) identification of the cross-guarantees tied to different securities, identification of major counterparties, and
a process for determining to whom the collateral of the
company is pledged; and
(D) any other information that the Board of Governors
and the Corporation jointly require by rule or order.
(2) CREDIT EXPOSURE REPORT.—The Board of Governors
shall require each nonbank financial company supervised by
the Board of Governors and bank holding companies described
in subsection (a) to report periodically to the Board of Governors, the Council, and the Corporation on—
(A) the nature and extent to which the company has
credit exposure to other significant nonbank financial
companies and significant bank holding companies; and
(B) the nature and extent to which other significant
nonbank financial companies and significant bank holding
companies have credit exposure to that company.
(3) REVIEW.—The Board of Governors and the Corporation
shall review the information provided in accordance with this
subsection by each nonbank financial company supervised by
the Board of Governors and bank holding company described
in subsection (a).
(4) NOTICE OF DEFICIENCIES.—If the Board of Governors
and the Corporation jointly determine, based on their review
under paragraph (3), that the resolution plan of a nonbank
financial company supervised by the Board of Governors or
a bank holding company described in subsection (a) is not
credible or would not facilitate an orderly resolution of the
company under title 11, United States Code—
(A) the Board of Governors and the Corporation shall
notify the company of the deficiencies in the resolution
plan; and
(B) the company shall resubmit the resolution plan
within a timeframe determined by the Board of Governors
and the Corporation, with revisions demonstrating that
the plan is credible and would result in an orderly resolution under title 11, United States Code, including any

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124 STAT. 1427

proposed changes in business operations and corporate
structure to facilitate implementation of the plan.
(5) FAILURE TO RESUBMIT CREDIBLE PLAN.—
(A) IN GENERAL.—If a nonbank financial company
supervised by the Board of Governors or a bank holding
company described in subsection (a) fails to timely resubmit
the resolution plan as required under paragraph (4), with
such revisions as are required under subparagraph (B),
the Board of Governors and the Corporation may jointly
impose more stringent capital, leverage, or liquidity
requirements, or restrictions on the growth, activities, or
operations of the company, or any subsidiary thereof, until
such time as the company resubmits a plan that remedies
the deficiencies.
(B) DIVESTITURE.—The Board of Governors and the
Corporation, in consultation with the Council, may jointly
direct a nonbank financial company supervised by the
Board of Governors or a bank holding company described
in subsection (a), by order, to divest certain assets or operations identified by the Board of Governors and the Corporation, to facilitate an orderly resolution of such company
under title 11, United States Code, in the event of the
failure of such company, in any case in which—
(i) the Board of Governors and the Corporation
have jointly imposed more stringent requirements on
the company pursuant to subparagraph (A); and
(ii) the company has failed, within the 2-year
period beginning on the date of the imposition of such
requirements under subparagraph (A), to resubmit the
resolution plan with such revisions as were required
under paragraph (4)(B).
(6) NO LIMITING EFFECT.—A resolution plan submitted in
accordance with this subsection shall not be binding on a bankruptcy court, a receiver appointed under title II, or any other
authority that is authorized or required to resolve the nonbank
financial company supervised by the Board, any bank holding
company, or any subsidiary or affiliate of the foregoing.
(7) NO PRIVATE RIGHT OF ACTION.—No private right of
action may be based on any resolution plan submitted in accordance with this subsection.
(8) RULES.—Not later than 18 months after the date of
enactment of this Act, the Board of Governors and the Corporation shall jointly issue final rules implementing this subsection.
(e) CONCENTRATION LIMITS.—
(1) STANDARDS.—In order to limit the risks that the failure
of any individual company could pose to a nonbank financial
company supervised by the Board of Governors or a bank
holding company described in subsection (a), the Board of Governors, by regulation, shall prescribe standards that limit such
risks.
(2) LIMITATION ON CREDIT EXPOSURE.—The regulations prescribed by the Board of Governors under paragraph (1) shall
prohibit each nonbank financial company supervised by the
Board of Governors and bank holding company described in
subsection (a) from having credit exposure to any unaffiliated
company that exceeds 25 percent of the capital stock and surplus (or such lower amount as the Board of Governors may

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determine by regulation to be necessary to mitigate risks to
the financial stability of the United States) of the company.
(3) CREDIT EXPOSURE.—For purposes of paragraph (2),
‘‘credit exposure’’ to a company means—
(A) all extensions of credit to the company, including
loans, deposits, and lines of credit;
(B) all repurchase agreements and reverse repurchase
agreements with the company, and all securities borrowing
and lending transactions with the company, to the extent
that such transactions create credit exposure for the
nonbank financial company supervised by the Board of
Governors or a bank holding company described in subsection (a);
(C) all guarantees, acceptances, or letters of credit
(including endorsement or standby letters of credit) issued
on behalf of the company;
(D) all purchases of or investment in securities issued
by the company;
(E) counterparty credit exposure to the company in
connection with a derivative transaction between the
nonbank financial company supervised by the Board of
Governors or a bank holding company described in subsection (a) and the company; and
(F) any other similar transactions that the Board of
Governors, by regulation, determines to be a credit exposure for purposes of this section.
(4) ATTRIBUTION RULE.—For purposes of this subsection,
any transaction by a nonbank financial company supervised
by the Board of Governors or a bank holding company described
in subsection (a) with any person is a transaction with a company, to the extent that the proceeds of the transaction are
used for the benefit of, or transferred to, that company.
(5) RULEMAKING.—The Board of Governors may issue such
regulations and orders, including definitions consistent with
this section, as may be necessary to administer and carry
out this subsection.
(6) EXEMPTIONS.—This subsection shall not apply to any
Federal home loan bank. The Board of Governors may, by
regulation or order, exempt transactions, in whole or in part,
from the definition of the term ‘‘credit exposure’’ for purposes
of this subsection, if the Board of Governors finds that the
exemption is in the public interest and is consistent with the
purpose of this subsection.
(7) TRANSITION PERIOD.—
(A) IN GENERAL.—This subsection and any regulations
and orders of the Board of Governors under this subsection
shall not be effective until 3 years after the date of enactment of this Act.
(B) EXTENSION AUTHORIZED.—The Board of Governors
may extend the period specified in subparagraph (A) for
not longer than an additional 2 years.
(f) ENHANCED PUBLIC DISCLOSURES.—The Board of Governors
may prescribe, by regulation, periodic public disclosures by nonbank
financial companies supervised by the Board of Governors and
bank holding companies described in subsection (a) in order to
support market evaluation of the risk profile, capital adequacy,
and risk management capabilities thereof.

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124 STAT. 1429

(g) SHORT-TERM DEBT LIMITS.—
(1) IN GENERAL.—In order to mitigate the risks that an
over-accumulation of short-term debt could pose to financial
companies and to the stability of the United States financial
system, the Board of Governors may, by regulation, prescribe
a limit on the amount of short-term debt, including off-balance
sheet exposures, that may be accumulated by any bank holding
company described in subsection (a) and any nonbank financial
company supervised by the Board of Governors.
(2) BASIS OF LIMIT.—Any limit prescribed under paragraph
(1) shall be based on the short-term debt of the company
described in paragraph (1) as a percentage of capital stock
and surplus of the company or on such other measure as
the Board of Governors considers appropriate.
(3) SHORT-TERM DEBT DEFINED.—For purposes of this subsection, the term ‘‘short-term debt’’ means such liabilities with
short-dated maturity that the Board of Governors identifies,
by regulation, except that such term does not include insured
deposits.
(4) RULEMAKING AUTHORITY.—In addition to prescribing
regulations under paragraphs (1) and (3), the Board of Governors may prescribe such regulations, including definitions
consistent with this subsection, and issue such orders, as may
be necessary to carry out this subsection.
(5) AUTHORITY TO ISSUE EXEMPTIONS AND ADJUSTMENTS.—
Notwithstanding the Bank Holding Company Act of 1956 (12
U.S.C. 1841 et seq.), the Board of Governors may, if it determines such action is necessary to ensure appropriate heightened
prudential supervision, with respect to a company described
in paragraph (1) that does not control an insured depository
institution, issue to such company an exemption from or adjustment to the limit prescribed under paragraph (1).
(h) RISK COMMITTEE.—
(1) NONBANK FINANCIAL COMPANIES SUPERVISED BY THE
BOARD OF GOVERNORS.—The Board of Governors shall require
each nonbank financial company supervised by the Board of
Governors that is a publicly traded company to establish a
risk committee, as set forth in paragraph (3), not later than
1 year after the date of receipt of a notice of final determination
under section 113(e)(3) with respect to such nonbank financial
company supervised by the Board of Governors.
(2) CERTAIN BANK HOLDING COMPANIES.—
(A) MANDATORY REGULATIONS.—The Board of Governors shall issue regulations requiring each bank holding
company that is a publicly traded company and that has
total consolidated assets of not less than $10,000,000,000
to establish a risk committee, as set forth in paragraph
(3).
(B) PERMISSIVE REGULATIONS.—The Board of Governors
may require each bank holding company that is a publicly
traded company and that has total consolidated assets
of less than $10,000,000,000 to establish a risk committee,
as set forth in paragraph (3), as determined necessary
or appropriate by the Board of Governors to promote sound
risk management practices.
(3) RISK COMMITTEE.—A risk committee required by this
subsection shall—

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Effective date.

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(A) be responsible for the oversight of the enterprisewide risk management practices of the nonbank financial
company supervised by the Board of Governors or bank
holding company described in subsection (a), as applicable;
(B) include such number of independent directors as
the Board of Governors may determine appropriate, based
on the nature of operations, size of assets, and other appropriate criteria related to the nonbank financial company
supervised by the Board of Governors or a bank holding
company described in subsection (a), as applicable; and
(C) include at least 1 risk management expert having
experience in identifying, assessing, and managing risk
exposures of large, complex firms.
(4) RULEMAKING.—The Board of Governors shall issue final
rules to carry out this subsection, not later than 1 year after
the transfer date, to take effect not later than 15 months
after the transfer date.
(i) STRESS TESTS.—
(1) BY THE BOARD OF GOVERNORS.—
(A) ANNUAL TESTS REQUIRED.—The Board of Governors,
in coordination with the appropriate primary financial
regulatory agencies and the Federal Insurance Office, shall
conduct annual analyses in which nonbank financial
companies supervised by the Board of Governors and bank
holding companies described in subsection (a) are subject
to evaluation of whether such companies have the capital,
on a total consolidated basis, necessary to absorb losses
as a result of adverse economic conditions.
(B) TEST PARAMETERS AND CONSEQUENCES.—The Board
of Governors—
(i) shall 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;
(ii) may require the tests described in subparagraph (A) at bank holding companies and nonbank
financial companies, in addition to those for which
annual tests are required under subparagraph (A);
(iii) may develop and apply such other analytic
techniques as are necessary to identify, measure, and
monitor risks to the financial stability of the United
States;
(iv) shall require the companies described in
subparagraph (A) to update their resolution plans
required under subsection (d)(1), as the Board of Governors determines appropriate, based on the results
of the analyses; and
(v) shall publish a summary of the results of the
tests required under subparagraph (A) or clause (ii)
of this subparagraph.
(2) BY THE COMPANY.—
(A) REQUIREMENT.—A nonbank financial company
supervised by the Board of Governors and a bank holding
company described in subsection (a) shall conduct semiannual stress tests. All other financial companies that have
total consolidated assets of more than $10,000,000,000 and
are regulated by a primary Federal financial regulatory

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agency shall conduct annual stress tests. The tests required
under this subparagraph shall be conducted in accordance
with the regulations prescribed under subparagraph (C).
(B) REPORT.—A company required to conduct stress
tests under subparagraph (A) shall submit a report to
the Board of Governors and to its primary financial regulatory agency at such time, in such form, and containing
such information as the primary financial regulatory
agency shall require.
(C) REGULATIONS.—Each Federal primary financial
regulatory agency, in coordination with the Board of Governors and the Federal Insurance Office, shall issue consistent and comparable regulations to implement this paragraph that shall—
(i) define the term ‘‘stress test’’ for purposes of
this paragraph;
(ii) establish methodologies for the conduct of
stress tests required by this paragraph that shall provide for at least 3 different sets of conditions, including
baseline, adverse, and severely adverse;
(iii) establish the form and content of the report
required by subparagraph (B); and
(iv) require companies subject to this paragraph
to publish a summary of the results of the required
stress tests.
(j) LEVERAGE LIMITATION.—
(1) REQUIREMENT.—The Board of Governors shall require
a bank holding company with total consolidated assets equal
to or greater than $50,000,000,000 or a nonbank financial company supervised by the Board of Governors to maintain a
debt to equity ratio of no more than 15 to 1, upon a determination by the Council that such company poses a grave threat
to the financial stability of the United States and that the
imposition of such requirement is necessary to mitigate the
risk that such company poses to the financial stability of the
United States. Nothing in this paragraph shall apply to a
Federal home loan bank.
(2) CONSIDERATIONS.—In making a determination under
this subsection, the Council shall consider the factors described
in subsections (a) and (b) of section 113 and any other riskrelated factors that the Council deems appropriate.
(3) REGULATIONS.—The Board of Governors shall promulgate regulations to establish procedures and timelines for complying with the requirements of this subsection.
(k) INCLUSION OF OFF-BALANCE-SHEET ACTIVITIES IN COMPUTING CAPITAL REQUIREMENTS.—
(1) IN GENERAL.—In the case of any bank holding company
described in subsection (a) or nonbank financial company supervised by the Board of Governors, the computation of capital
for purposes of meeting capital requirements shall take into
account any off-balance-sheet activities of the company.
(2) EXEMPTIONS.—If the Board of Governors determines
that an exemption from the requirement under paragraph (1)
is appropriate, the Board of Governors may exempt a company,
or any transaction or transactions engaged in by such company,
from the requirements of paragraph (1).

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(3) OFF-BALANCE-SHEET ACTIVITIES DEFINED.—For purposes
of this subsection, the term ‘‘off-balance-sheet activities’’ means
an existing liability of a company that is not currently a balance
sheet liability, but may become one upon the happening of
some future event, including the following transactions, to the
extent that they may create a liability:
(A) Direct credit substitutes in which a bank substitutes its own credit for a third party, including standby
letters of credit.
(B) Irrevocable letters of credit that guarantee repayment of commercial paper or tax-exempt securities.
(C) Risk participations in bankers’ acceptances.
(D) Sale and repurchase agreements.
(E) Asset sales with recourse against the seller.
(F) Interest rate swaps.
(G) Credit swaps.
(H) Commodities contracts.
(I) Forward contracts.
(J) Securities contracts.
(K) Such other activities or transactions as the Board
of Governors may, by rule, define.
12 USC 5366.

SEC. 166. EARLY REMEDIATION REQUIREMENTS.

Regulations.

(a) IN GENERAL.—The Board of Governors, in consultation with
the Council and the Corporation, shall prescribe regulations establishing requirements to provide for the early remediation of financial
distress of a nonbank financial company supervised by the Board
of Governors or a bank holding company described in section 165(a),
except that nothing in this subsection authorizes the provision
of financial assistance from the Federal Government.
(b) PURPOSE OF THE EARLY REMEDIATION REQUIREMENTS.—
The purpose of the early remediation requirements under subsection
(a) shall be to establish a series of specific remedial actions to
be taken by a nonbank financial company supervised by the Board
of Governors or a bank holding company described in section 165(a)
that is experiencing increasing financial distress, in order to minimize the probability that the company will become insolvent and
the potential harm of such insolvency to the financial stability
of the United States.
(c) REMEDIATION REQUIREMENTS.—The regulations prescribed
by the Board of Governors under subsection (a) shall—
(1) define measures of the financial condition of the company, including regulatory capital, liquidity measures, and
other forward-looking indicators; and
(2) establish requirements that increase in stringency as
the financial condition of the company declines, including—
(A) requirements in the initial stages of financial
decline, including limits on capital distributions, acquisitions, and asset growth; and
(B) requirements at later stages of financial decline,
including a capital restoration plan and capital-raising
requirements, limits on transactions with affiliates,
management changes, and asset sales.

12 USC 5367.

SEC. 167. AFFILIATIONS.

(a) AFFILIATIONS.—Nothing in this subtitle shall be construed
to require a nonbank financial company supervised by the Board

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124 STAT. 1433

of Governors, or a company that controls a nonbank financial company supervised by the Board of Governors, to conform the activities
thereof to the requirements of section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843).
(b) REQUIREMENT.—
(1) IN GENERAL.—
(A) BOARD AUTHORITY.—If a nonbank financial company supervised by the Board of Governors conducts activities other than those that are determined to be financial
in nature or incidental thereto under section 4(k) of the
Bank Holding Company Act of 1956, the Board of Governors may require such company to establish and conduct
all or a portion of such activities that are determined
to be financial in nature or incidental thereto in or through
an intermediate holding company established pursuant to
regulation of the Board of Governors, not later than 90
days (or such longer period as the Board of Governors
may deem appropriate) after the date on which the
nonbank financial company supervised by the Board of
Governors is notified of the determination of the Board
of Governors under this section.
(B) NECESSARY ACTIONS.—Notwithstanding subparagraph (A), the Board of Governors shall require a nonbank
financial company supervised by the Board of Governors
to establish an intermediate holding company if the Board
of Governors makes a determination that the establishment
of such intermediate holding company is necessary to—
(i) appropriately supervise activities that are determined to be financial in nature or incidental thereto;
or
(ii) to ensure that supervision by the Board of
Governors does not extend to the commercial activities
of such nonbank financial company.
(2) INTERNAL FINANCIAL ACTIVITIES.—For purposes of this
subsection, activities that are determined to be financial in
nature or incidental thereto under section 4(k) of the Bank
Holding Company Act of 1956, as described in paragraph (1),
shall not include internal financial activities, including internal
treasury, investment, and employee benefit functions. With
respect to any internal financial activity engaged in for the
company or an affiliate and a non-affiliate of such company
during the year prior to the date of enactment of this Act,
such company (or an affiliate that is not an intermediate
holding company or subsidiary of an intermediate holding company) may continue to engage in such activity, as long as
not less than 2/3 of the assets or 2/3 of the revenues generated
from the activity are from or attributable to such company
or an affiliate, subject to review by the Board of Governors,
to determine whether engaging in such activity presents undue
risk to such company or to the financial stability of the United
States.
(3) SOURCE OF STRENGTH.—A company that directly or
indirectly controls an intermediate holding company established
under this section shall serve as a source of strength to its
subsidiary intermediate holding company.
(4) PARENT COMPANY REPORTS.—The Board of Governors
may, from time to time, require reports under oath from a

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company that controls an intermediate holding company, and
from the appropriate officers or directors of such company,
solely for purposes of ensuring compliance with the provisions
of this section, including assessing the ability of the company
to serve as a source of strength to its subsidiary intermediate
holding company pursuant to paragraph (3) and enforcing such
compliance.
(5) LIMITED PARENT COMPANY ENFORCEMENT.—
(A) IN GENERAL.—In addition to any other authority
of the Board of Governors, the Board of Governors may
enforce compliance with the provisions of this subsection
that are applicable to any company described in paragraph
(1) that controls an intermediate holding company under
section 8 of the Federal Deposit Insurance Act, and such
company shall be subject to such section (solely for such
purposes) in the same manner and to the same extent
as if such company were a bank holding company.
(B) APPLICATION OF OTHER ACT.—Any violation of this
subsection by any company that controls an intermediate
holding company may also be treated as a violation of
the Federal Deposit Insurance Act for purposes of subparagraph (A).
(C) NO EFFECT ON OTHER AUTHORITY.—No provision
of this paragraph shall be construed as limiting any
authority of the Board of Governors or any other Federal
agency under any other provision of law.
(c) REGULATIONS.—The Board of Governors—
(1) shall promulgate regulations to establish the criteria
for determining whether to require a nonbank financial company supervised by the Board of Governors to establish an
intermediate holding company under subsection (b); and
(2) may promulgate regulations to establish any restrictions
or limitations on transactions between an intermediate holding
company or a nonbank financial company supervised by the
Board of Governors and its affiliates, as necessary to prevent
unsafe and unsound practices in connection with transactions
between such company, or any subsidiary thereof, and its
parent company or affiliates that are not subsidiaries of such
company, except that such regulations shall not restrict or
limit any transaction in connection with the bona fide acquisition or lease by an unaffiliated person of assets, goods, or
services.

Criteria.

12 USC 5368.

SEC. 168. REGULATIONS.

The Board of Governors shall have authority to issue regulations to implement subtitles A and C and the amendments made
thereunder. Except as otherwise specified in subtitle A or C, not
later than 18 months after the effective date of this Act, the Board
of Governors shall issue final regulations to implement subtitles
A and C, and the amendments made thereunder.

Deadline.

12 USC 5369.

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PUBLIC LAW 111–203—JULY 21, 2010

SEC. 169. AVOIDING DUPLICATION.

The Board of Governors shall take any action that the Board
of Governors deems appropriate to avoid imposing requirements
under this subtitle that are duplicative of requirements applicable
to bank holding companies and nonbank financial companies under
other provisions of law.

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124 STAT. 1435

SEC. 170. SAFE HARBOR.

12 USC 5370.

(a) REGULATIONS.—The Board of Governors shall promulgate
regulations on behalf of, and in consultation with, the Council
setting forth the criteria for exempting certain types or classes
of U.S. nonbank financial companies or foreign nonbank financial
companies from supervision by the Board of Governors.
(b) CONSIDERATIONS.—In developing the criteria under subsection (a), the Board of Governors shall take into account the
factors for consideration described in subsections (a) and (b) of
section 113 in determining whether a U.S. nonbank financial company or foreign nonbank financial company shall be supervised
by the Board of Governors.
(c) RULE OF CONSTRUCTION.—Nothing in this section shall be
construed to require supervision by the Board of Governors of
a U.S. nonbank financial company or foreign nonbank financial
company, if such company does not meet the criteria for exemption
established under subsection (a).
(d) REVISIONS.—
(1) IN GENERAL.—The Board of Governors shall, in consultation with the Council, review the regulations promulgated
under subsection (a), not less frequently than every 5 years,
and based upon the review, the Board of Governors may revise
such regulations on behalf of, and in consultation with, the
Council to update as necessary the criteria set forth in such
regulations.
(2) TRANSITION PERIOD.—No revisions under paragraph (1)
shall take effect before the end of the 2-year period after the
date of publication of such revisions in final form.
(e) REPORT.—The Chairman of the Board of Governors and
the Chairperson of the Council shall submit a joint report to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of Representatives not later than 30 days after the date of the issuance in
final form of regulations under subsection (a), or any subsequent
revision to such regulations under subsection (d), as applicable.
Such report shall include, at a minimum, the rationale for exemption and empirical evidence to support the criteria for exemption.

Criteria.

SEC. 171. LEVERAGE AND RISK-BASED CAPITAL REQUIREMENTS.

12 USC 5371.

Review.

(a) DEFINITIONS.—For purposes of this section, the following
definitions shall apply:
(1) GENERALLY APPLICABLE LEVERAGE CAPITAL REQUIREMENTS.—The term ‘‘generally applicable leverage capital
requirements’’ means—
(A) the minimum ratios of tier 1 capital to average
total assets, as established by the appropriate Federal
banking agencies to apply to insured depository institutions
under the prompt corrective action regulations implementing section 38 of the Federal Deposit Insurance Act,
regardless of total consolidated asset size or foreign financial exposure; and
(B) includes the regulatory capital components in the
numerator of that capital requirement, average total assets
in the denominator of that capital requirement, and the
required ratio of the numerator to the denominator.

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(2) GENERALLY APPLICABLE RISK-BASED CAPITAL REQUIREMENTS.—The term ‘‘generally applicable risk-based capital
requirements’’ means—
(A) the risk-based capital requirements, as established
by the appropriate Federal banking agencies to apply to
insured depository institutions under the prompt corrective
action regulations implementing section 38 of the Federal
Deposit Insurance Act, regardless of total consolidated asset
size or foreign financial exposure; and
(B) includes the regulatory capital components in the
numerator of those capital requirements, the risk-weighted
assets in the denominator of those capital requirements,
and the required ratio of the numerator to the denominator.
(3) DEFINITION OF DEPOSITORY INSTITUTION HOLDING COMPANY.—The term ‘‘depository institution holding company’’
means a bank holding company or a savings and loan holding
company (as those terms are defined in section 3 of the Federal
Deposit Insurance Act) that is organized in the United States,
including any bank or savings and loan holding company that
is owned or controlled by a foreign organization, but does not
include the foreign organization.
(b) MINIMUM CAPITAL REQUIREMENTS.—
(1) MINIMUM LEVERAGE CAPITAL REQUIREMENTS.—The
appropriate Federal banking agencies shall establish minimum
leverage capital requirements on a consolidated basis for
insured depository institutions, depository institution holding
companies, and nonbank financial companies supervised by
the Board of Governors. The minimum leverage capital requirements established under this paragraph shall not be less than
the generally applicable leverage capital requirements, which
shall serve as a floor for any capital requirements that the
agency may require, nor quantitatively lower than the generally
applicable leverage capital requirements that were in effect
for insured depository institutions as of the date of enactment
of this Act.
(2) MINIMUM RISK-BASED CAPITAL REQUIREMENTS.—The
appropriate Federal banking agencies shall establish minimum
risk-based capital requirements on a consolidated basis for
insured depository institutions, depository institution holding
companies, and nonbank financial companies supervised by
the Board of Governors. The minimum risk-based capital
requirements established under this paragraph shall not be
less than the generally applicable risk-based capital requirements, which shall serve as a floor for any capital requirements
that the agency may require, nor quantitatively lower than
the generally applicable risk-based capital requirements that
were in effect for insured depository institutions as of the
date of enactment of this Act.
(3) INVESTMENTS IN FINANCIAL SUBSIDIARIES.—For purposes
of this section, investments in financial subsidiaries that
insured depository institutions are required to deduct from
regulatory capital under section 5136A of the Revised Statutes
of the United States or section 46(a)(2) of the Federal Deposit
Insurance Act need not be deducted from regulatory capital
by depository institution holding companies or nonbank financial companies supervised by the Board of Governors, unless
such capital deduction is required by the Board of Governors

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124 STAT. 1437

or the primary financial regulatory agency in the case of
nonbank financial companies supervised by the Board of Governors.
(4) EFFECTIVE DATES AND PHASE-IN PERIODS.—
(A) DEBT OR EQUITY INSTRUMENTS ON OR AFTER MAY
19, 2010.—For debt or equity instruments issued on or after
May 19, 2010, by depository institution holding companies
or by nonbank financial companies supervised by the Board
of Governors, this section shall be deemed to have become
effective as of May 19, 2010.
(B) DEBT OR EQUITY INSTRUMENTS ISSUED BEFORE MAY
19, 2010.—For debt or equity instruments issued before May
19, 2010, by depository institution holding companies or
by nonbank financial companies supervised by the Board
of Governors, any regulatory capital deductions required
under this section shall be phased in incrementally over
a period of 3 years, with the phase-in period to begin
on January 1, 2013, except as set forth in subparagraph
(C).
(C) DEBT OR EQUITY INSTRUMENTS OF SMALLER INSTITUTIONS.—For debt or equity instruments issued before May
19, 2010, by depository institution holding companies with
total consolidated assets of less than $15,000,000,000 as
of December 31, 2009, and by organizations that were
mutual holding companies on May 19, 2010, the capital
deductions that would be required for other institutions
under this section are not required as a result of this
section.
(D) DEPOSITORY INSTITUTION HOLDING COMPANIES NOT
PREVIOUSLY SUPERVISED BY THE BOARD OF GOVERNORS.—
For any depository institution holding company that was
not supervised by the Board of Governors as of May 19,
2010, the requirements of this section, except as set forth
in subparagraphs (A) and (B), shall be effective 5 years
after the date of enactment of this Act
(E) CERTAIN BANK HOLDING COMPANY SUBSIDIARIES OF
FOREIGN BANKING ORGANIZATIONS.—For bank holding company subsidiaries of foreign banking organizations that
have relied on Supervision and Regulation Letter SR-011 issued by the Board of Governors (as in effect on May
19, 2010), the requirements of this section, except as set
forth in subparagraph (A), shall be effective 5 years after
the date of enactment of this Act.
(5) EXCEPTIONS.—This section shall not apply to—
(A) debt or equity instruments issued to the United
States or any agency or instrumentality thereof pursuant
to the Emergency Economic Stabilization Act of 2008, and
prior to October 4, 2010;
(B) any Federal home loan bank; or
(C) any small bank holding company that is subject
to the Small Bank Holding Company Policy Statement
of the Board of Governors, as in effect on May 19, 2010.
(6) STUDY AND REPORT ON SMALL INSTITUTION ACCESS TO
CAPITAL.—
(A) STUDY REQUIRED.—The Comptroller General of the
United States, after consultation with the Federal banking

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PUBLIC LAW 111–203—JULY 21, 2010
agencies, shall conduct a study of access to capital by
smaller insured depository institutions.
(B) SCOPE.—For purposes of this study required by
subparagraph (A), the term ‘‘smaller insured depository
institution’’ means an insured depository institution with
total consolidated assets of $5,000,000,000 or less.
(C) REPORT TO CONGRESS.—Not later than 18 months
after the date of enactment of this Act, the Comptroller
General of the United States shall submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House
of Representatives a report summarizing the results of
the study conducted under subparagraph (A), together with
any recommendations for legislative or regulatory action
that would enhance the access to capital of smaller insured
depository institutions, in a manner that is consistent with
safe and sound banking operations.
(7) CAPITAL REQUIREMENTS TO ADDRESS ACTIVITIES THAT
POSE RISKS TO THE FINANCIAL SYSTEM.—
(A) IN GENERAL.—Subject to the recommendations of
the Council, in accordance with section 120, the Federal
banking agencies shall develop capital requirements
applicable to insured depository institutions, depository
institution holding companies, and nonbank financial
companies supervised by the Board of Governors that
address the risks that the activities of such institutions
pose, not only to the institution engaging in the activity,
but to other public and private stakeholders in the event
of adverse performance, disruption, or failure of the institution or the activity.
(B) CONTENT.—Such rules shall address, at a minimum, the risks arising from—
(i) significant volumes of activity in derivatives,
securitized products purchased and sold, financial
guarantees purchased and sold, securities borrowing
and lending, and repurchase agreements and reverse
repurchase agreements;
(ii) concentrations in assets for which the values
presented in financial reports are based on models
rather than historical cost or prices deriving from deep
and liquid 2-way markets; and
(iii) concentrations in market share for any activity
that would substantially disrupt financial markets if
the institution is forced to unexpectedly cease the
activity.

Definition.

SEC. 172. EXAMINATION AND ENFORCEMENT ACTIONS FOR INSURANCE AND ORDERLY LIQUIDATION PURPOSES.

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(a) EXAMINATIONS FOR INSURANCE AND
POSES.—Section 10(b)(3) of the Federal Deposit

RESOLUTION PURInsurance Act (12

U.S.C. 1820(b)(3)) is amended—
(1) by striking ‘‘In addition’’ and inserting the following:
‘‘(A) IN GENERAL.—In addition’’; and
(2) by striking ‘‘whenever the board of directors determines’’
and all that follows through the period and inserting the following: ‘‘or nonbank financial company supervised by the Board
of Governors or a bank holding company described in section

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1439

165(a) of the Financial Stability Act of 2010, whenever the
Board of Directors determines that a special examination of
any such depository institution is necessary to determine the
condition of such depository institution for insurance purposes,
or of such nonbank financial company supervised by the Board
of Governors or bank holding company described in section
165(a) of the Financial Stability Act of 2010, for the purpose
of implementing its authority to provide for orderly liquidation
of any such company under title II of that Act, provided that
such authority may not be used with respect to any such
company that is in a generally sound condition.
‘‘(B) LIMITATION.—Before conducting a special examination of a nonbank financial company supervised by the
Board of Governors or a bank holding company described
in section 165(a) of the Financial Stability Act of 2010,
the Corporation shall review any available and acceptable
resolution plan that the company has submitted in accordance with section 165(d) of that Act, consistent with the
nonbinding effect of such plan, and available reports of
examination, and shall coordinate to the maximum extent
practicable with the Board of Governors, in order to minimize duplicative or conflicting examinations.’’.
(b) ENFORCEMENT AUTHORITY.—Section 8(t) of the Federal
Deposit Insurance Act (12 U.S.C. 1818(t)) is amended—
(1) in paragraph (1), by inserting ‘‘, any depository institution holding company,’’ before ‘‘or any institution-affiliated
party’’;
(2) in paragraph (2)—
(A) by striking ‘‘or’’ at the end of subparagraph (B);
(B) at the end of subparagraph (C), by striking the
period and inserting ‘‘or’’; and
(C) by inserting at the end the following new subparagraph:
‘‘(D) the conduct or threatened conduct (including any
acts or omissions) of the depository institution holding company poses a risk to the Deposit Insurance Fund, provided
that such authority may not be used with respect to a
depository institution holding company that is in generally
sound condition and whose conduct does not pose a foreseeable and material risk of loss to the Deposit Insurance
Fund;’’; and
(3) by adding at the end the following:
‘‘(6) POWERS AND DUTIES WITH RESPECT TO DEPOSITORY
INSTITUTION HOLDING COMPANIES.—For purposes of exercising
the backup authority provided in this subsection—
‘‘(A) the Corporation shall have the same powers with
respect to a depository institution holding company and
its affiliates as the appropriate Federal banking agency
has with respect to the holding company and its affiliates;
and
‘‘(B) the holding company and its affiliates shall have
the same duties and obligations with respect to the Corporation as the holding company and its affiliates have
with respect to the appropriate Federal banking agency.’’.
(c) RULE OF CONSTRUCTION.—Nothing in this Act shall be construed to limit or curtail the Corporation’s current authority to

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Review.

12 USC 5372.

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examine or bring enforcement actions with respect to any insured
depository institution or institution-affiliated party.

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SEC. 173. ACCESS TO UNITED STATES FINANCIAL MARKET BY FOREIGN
INSTITUTIONS.

(a) ESTABLISHMENT OF FOREIGN BANK OFFICES IN THE UNITED
STATES.—Section 7(d)(3) of the International Banking Act of 1978
(12 U.S.C. 3105(d)(3)) is amended—
(1) in subparagraph (C), by striking ‘‘and’’ at the end;
(2) in subparagraph (D), by striking the period at the
end of and inserting ‘‘; and’’; and
(3) by adding at the end the following new subparagraph:
‘‘(E) for a foreign bank that presents a risk to the
stability of United States financial system, whether the
home country of the foreign bank has adopted, or is making
demonstrable progress toward adopting, an appropriate
system of financial regulation for the financial system of
such home country to mitigate such risk.’’.
(b) TERMINATION OF FOREIGN BANK OFFICES IN THE UNITED
STATES.—Section 7(e)(1) of the International Banking Act of 1978
(12 U.S.C. 3105(e)(1)) is amended—
(1) in subparagraph (A), by striking ‘‘or’’ at the end;
(2) in subparagraph (B), by striking the period at the
end of and inserting ‘‘; or’’; and
(3) by inserting after subparagraph (B), the following new
subparagraph:
‘‘(C) for a foreign bank that presents a risk to the
stability of the United States financial system, the home
country of the foreign bank has not adopted, or made
demonstrable progress toward adopting, an appropriate
system of financial regulation to mitigate such risk.’’.
(c) REGISTRATION OR SUCCESSION TO A UNITED STATES BROKER
OR DEALER AND TERMINATION OF SUCH REGISTRATION.—Section
15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o) is
amended by adding at the end the following new subsections:
‘‘(k) REGISTRATION OR SUCCESSION TO A UNITED STATES BROKER
OR DEALER.—In determining whether to permit a foreign person
or an affiliate of a foreign person to register as a United States
broker or dealer, or succeed to the registration of a United States
broker or dealer, the Commission may consider whether, for a
foreign person, or an affiliate of a foreign person that presents
a risk to the stability of the United States financial system, the
home country of the foreign person has adopted, or made demonstrable progress toward adopting, an appropriate system of financial
regulation to mitigate such risk.
‘‘(l) TERMINATION OF A UNITED STATES BROKER OR DEALER.—
For a foreign person or an affiliate of a foreign person that presents
such a risk to the stability of the United States financial system,
the Commission may determine to terminate the registration of
such foreign person or an affiliate of such foreign person as a
broker or dealer in the United States, if the Commission determines
that the home country of the foreign person has not adopted,
or made demonstrable progress toward adopting, an appropriate
system of financial regulation to mitigate such risk.’’.

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SEC. 174. STUDIES AND REPORTS ON HOLDING COMPANY CAPITAL
REQUIREMENTS.

(a) STUDY OF HYBRID CAPITAL INSTRUMENTS.—The Comptroller
General of the United States, in consultation with the Board of
Governors, the Comptroller of the Currency, and the Corporation,
shall conduct a study of the use of hybrid capital instruments
as a component of Tier 1 capital for banking institutions and
bank holding companies. The study shall consider—
(1) the current use of hybrid capital instruments, such
as trust preferred shares, as a component of Tier 1 capital;
(2) the differences between the components of capital permitted for insured depository institutions and those permitted
for companies that control insured depository institutions;
(3) the benefits and risks of allowing such instruments
to be used to comply with Tier 1 capital requirements;
(4) the economic impact of prohibiting the use of such
capital instruments for Tier 1;
(5) a review of the consequences of disqualifying trust
preferred instruments, and whether it could lead to the failure
or undercapitalization of existing banking organizations;
(6) the international competitive implications prohibiting
hybrid capital instruments for Tier 1;
(7) the impact on the cost and availability of credit in
the United States from such a prohibition;
(8) the availability of capital for financial institutions with
less than $10,000,000,000 in total assets; and
(9) any other relevant factors relating to the safety and
soundness of our financial system and potential economic
impact of such a prohibition.
(b) STUDY OF FOREIGN BANK INTERMEDIATE HOLDING COMPANY
CAPITAL REQUIREMENTS.—The Comptroller General of the United
States, in consultation with the Secretary, the Board of Governors,
the Comptroller of the Currency, and the Corporation, shall conduct
a study of capital requirements applicable to United States intermediate holding companies of foreign banks that are bank holding
companies or savings and loan holding companies. The study shall
consider—
(1) current Board of Governors policy regarding the treatment of intermediate holding companies;
(2) the principle of national treatment and equality of
competitive opportunity for foreign banks operating in the
United States;
(3) the extent to which foreign banks are subject on a
consolidated basis to home country capital standards comparable to United States capital standards;
(4) potential effects on United States banking organizations
operating abroad of changes to United States policy regarding
intermediate holding companies;
(5) the impact on the cost and availability of credit in
the United States from a change in United States policy
regarding intermediate holding companies; and
(6) any other relevant factors relating to the safety and
soundness of our financial system and potential economic
impact of such a prohibition.
(c) REPORT.—Not later than 18 months after the date of enactment of this Act, the Comptroller General of the United States
shall submit reports to the Committee on Banking, Housing, and

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Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives summarizing the results of
the studies required under subsection (a). The reports shall include
specific recommendations for legislative or regulatory action
regarding the treatment of hybrid capital instruments, including
trust preferred shares, and shall explain the basis for such recommendations.
Consultation.
12 USC 5373.

12 USC 5374.

SEC. 175. INTERNATIONAL POLICY COORDINATION.

(a) BY THE PRESIDENT.—The President, or a designee of the
President, may coordinate through all available international policy
channels, similar policies as those found in United States law
relating to limiting the scope, nature, size, scale, concentration,
and interconnectedness of financial companies, in order to protect
financial stability and the global economy.
(b) BY THE COUNCIL.—The Chairperson of the Council, in consultation with the other members of the Council, shall regularly
consult with the financial regulatory entities and other appropriate
organizations of foreign governments or international organizations
on matters relating to systemic risk to the international financial
system.
(c) BY THE BOARD OF GOVERNORS AND THE SECRETARY.—The
Board of Governors and the Secretary shall consult with their
foreign counterparts and through appropriate multilateral organizations to encourage comprehensive and robust prudential supervision
and regulation for all highly leveraged and interconnected financial
companies.
SEC. 176. RULE OF CONSTRUCTION.

No regulation or standard imposed under this title may be
construed in a manner that would lessen the stringency of the
requirements of any applicable primary financial regulatory agency
or any other Federal or State agency that are otherwise applicable.
This title, and the rules and regulations or orders prescribed pursuant to this title, do not divest any such agency of any authority
derived from any other applicable law.

TITLE II—ORDERLY LIQUIDATION
AUTHORITY

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12 USC 5381.

SEC. 201. DEFINITIONS.

(a) IN GENERAL.—In this title, the following definitions shall
apply:
(1) ADMINISTRATIVE EXPENSES OF THE RECEIVER.—The term
‘‘administrative expenses of the receiver’’ includes—
(A) the actual, necessary costs and expenses incurred
by the Corporation as receiver for a covered financial company in liquidating a covered financial company; and
(B) any obligations that the Corporation as receiver
for a covered financial company determines are necessary
and appropriate to facilitate the smooth and orderly liquidation of the covered financial company.
(2) BANKRUPTCY CODE.—The term ‘‘Bankruptcy Code’’
means title 11, United States Code.
(3) BRIDGE FINANCIAL COMPANY.—The term ‘‘bridge financial company’’ means a new financial company organized by

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124 STAT. 1443

the Corporation in accordance with section 210(h) for the purpose of resolving a covered financial company.
(4) CLAIM.—The term ‘‘claim’’ means any right to payment,
whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured.
(5) COMPANY.—The term ‘‘company’’ has the same meaning
as in section 2(b) of the Bank Holding Company Act of 1956
(12 U.S.C. 1841(b)), except that such term includes any company described in paragraph (11), the majority of the securities
of which are owned by the United States or any State.
(6) COURT.—The term ‘‘Court’’ means the United States
District Court for the District of Columbia, unless the context
otherwise requires.
(7) COVERED BROKER OR DEALER.—The term ‘‘covered
broker or dealer’’ means a covered financial company that is
a broker or dealer that—
(A) is registered with the Commission under section
15(b) of the Securities Exchange Act of 1934 (15 U.S.C.
78o(b)); and
(B) is a member of SIPC.
(8) COVERED FINANCIAL COMPANY.—The term ‘‘covered
financial company’’—
(A) means a financial company for which a determination has been made under section 203(b); and
(B) does not include an insured depository institution.
(9) COVERED SUBSIDIARY.—The term ‘‘covered subsidiary’’
means a subsidiary of a covered financial company, other
than—
(A) an insured depository institution;
(B) an insurance company; or
(C) a covered broker or dealer.
(10) DEFINITIONS RELATING TO COVERED BROKERS AND
DEALERS.—The terms ‘‘customer’’, ‘‘customer name securities’’,
‘‘customer property’’, and ‘‘net equity’’ in the context of a covered
broker or dealer, have the same meanings as in section 16
of the Securities Investor Protection Act of 1970 (15 U.S.C.
78lll).
(11) FINANCIAL COMPANY.—The term ‘‘financial company’’
means any company that—
(A) is incorporated or organized under any provision
of Federal law or the laws of any State;
(B) is—
(i) a bank holding company, as defined in section
2(a) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(a));
(ii) a nonbank financial company supervised by
the Board of Governors;
(iii) any company that is predominantly engaged
in activities that the Board of Governors has determined are financial in nature or incidental thereto
for purposes of section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) other than a
company described in clause (i) or (ii); or
(iv) any subsidiary of any company described in
any of clauses (i) through (iii) that is predominantly
engaged in activities that the Board of Governors has

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124 STAT. 1444

determined are financial in nature or incidental thereto
for purposes of section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) (other than a
subsidiary that is an insured depository institution
or an insurance company); and
(C) is not a Farm Credit System institution chartered
under and subject to the provisions of the Farm Credit
Act of 1971, as amended (12 U.S.C. 2001 et seq.), a governmental entity, or a regulated entity, as defined under section 1303(20) of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4502(20)).
(12) FUND.—The term ‘‘Fund’’ means the Orderly Liquidation Fund established under section 210(n).
(13) INSURANCE COMPANY.—The term ‘‘insurance company’’
means any entity that is—
(A) engaged in the business of insurance;
(B) subject to regulation by a State insurance regulator;
and
(C) covered by a State law that is designed to specifically deal with the rehabilitation, liquidation, or insolvency
of an insurance company.
(14) NONBANK FINANCIAL COMPANY.—The term ‘‘nonbank
financial company’’ has the same meaning as in section
102(a)(4)(C).
(15) NONBANK FINANCIAL COMPANY SUPERVISED BY THE
BOARD OF GOVERNORS.—The term ‘‘nonbank financial company
supervised by the Board of Governors’’ has the same meaning
as in section 102(a)(4)(D).
(16) SIPC.—The term ‘‘SIPC’’ means the Securities Investor
Protection Corporation.
(b) DEFINITIONAL CRITERIA.—For purpose of the definition of
the term ‘‘financial company’’ under subsection (a)(11), no company
shall be deemed to be predominantly engaged in activities that
the Board of Governors has determined are financial in nature
or incidental thereto for purposes of section 4(k) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1843(k)), if the consolidated revenues of such company from such activities constitute less than
85 percent of the total consolidated revenues of such company,
as the Corporation, in consultation with the Secretary, shall establish by regulation. In determining whether a company is a financial
company under this title, the consolidated revenues derived from
the ownership or control of a depository institution shall be
included.

Regulations.

12 USC 5382.

SEC. 202. JUDICIAL REVIEW.

Notification.

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(a) COMMENCEMENT OF ORDERLY LIQUIDATION.—
(1) PETITION TO DISTRICT COURT.—
(A) DISTRICT COURT REVIEW.—
(i) PETITION TO DISTRICT COURT.—Subsequent to
a determination by the Secretary under section 203
that a financial company satisfies the criteria in section
203(b), the Secretary shall notify the Corporation and
the covered financial company. If the board of directors
(or body performing similar functions) of the covered
financial company acquiesces or consents to the
appointment of the Corporation as receiver, the Secretary shall appoint the Corporation as receiver. If

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124 STAT. 1445

the board of directors (or body performing similar functions) of the covered financial company does not
acquiesce or consent to the appointment of the Corporation as receiver, the Secretary shall petition the United
States District Court for the District of Columbia for
an order authorizing the Secretary to appoint the Corporation as receiver.
(ii) FORM AND CONTENT OF ORDER.—The Secretary
shall present all relevant findings and the recommendation made pursuant to section 203(a) to the
Court. The petition shall be filed under seal.
(iii) DETERMINATION.—On a strictly confidential
basis, and without any prior public disclosure, the
Court, after notice to the covered financial company
and a hearing in which the covered financial company
may oppose the petition, shall determine whether the
determination of the Secretary that the covered financial company is in default or in danger of default
and satisfies the definition of a financial company
under section 201(a)(11) is arbitrary and capricious.
(iv) ISSUANCE OF ORDER.—If the Court determines
that the determination of the Secretary that the covered financial company is in default or in danger of
default and satisfies the definition of a financial company under section 201(a)(11)—
(I) is not arbitrary and capricious, the Court
shall issue an order immediately authorizing the
Secretary to appoint the Corporation as receiver
of the covered financial company; or
(II) is arbitrary and capricious, the Court shall
immediately provide to the Secretary a written
statement of each reason supporting its determination, and afford the Secretary an immediate opportunity to amend and refile the petition under
clause (i).
(v) PETITION GRANTED BY OPERATION OF LAW.—
If the Court does not make a determination within
24 hours of receipt of the petition—
(I) the petition shall be granted by operation
of law;
(II) the Secretary shall appoint the Corporation as receiver; and
(III) liquidation under this title shall automatically and without further notice or action be
commenced and the Corporation may immediately
take all actions authorized under this title.
(B) EFFECT OF DETERMINATION.—The determination of
the Court under subparagraph (A) shall be final, and shall
be subject to appeal only in accordance with paragraph
(2). The decision shall not be subject to any stay or injunction pending appeal. Upon conclusion of its proceedings
under subparagraph (A), the Court shall provide immediately for the record a written statement of each reason
supporting the decision of the Court, and shall provide
copies thereof to the Secretary and the covered financial
company.

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Deadline.

Deadline.

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(C) CRIMINAL PENALTIES.—A person who recklessly discloses a determination of the Secretary under section 203(b)
or a petition of the Secretary under subparagraph (A),
or the pendency of court proceedings as provided for under
subparagraph (A), shall be fined not more than 250,000,
or imprisoned for not more than 5 years, or both.
(2) APPEAL OF DECISIONS OF THE DISTRICT COURT.—
(A) APPEAL TO COURT OF APPEALS.—
(i) IN GENERAL.—Subject to clause (ii), the United
States Court of Appeals for the District of Columbia
Circuit shall have jurisdiction of an appeal of a final
decision of the Court filed by the Secretary or a covered
financial company, through its board of directors, notwithstanding section 210(a)(1)(A)(i), not later than 30
days after the date on which the decision of the Court
is rendered or deemed rendered under this subsection.
(ii) CONDITION OF JURISDICTION.—The Court of
Appeals shall have jurisdiction of an appeal by a covered financial company only if the covered financial
company did not acquiesce or consent to the appointment of a receiver by the Secretary under paragraph
(1)(A).
(iii) EXPEDITION.—The Court of Appeals shall consider any appeal under this subparagraph on an expedited basis.
(iv) SCOPE OF REVIEW.—For an appeal taken under
this subparagraph, review shall be limited to whether
the determination of the Secretary that a covered
financial company is in default or in danger of default
and satisfies the definition of a financial company
under section 201(a)(11) is arbitrary and capricious.
(B) APPEAL TO THE SUPREME COURT.—
(i) IN GENERAL.—A petition for a writ of certiorari
to review a decision of the Court of Appeals under
subparagraph (A) may be filed by the Secretary or
the covered financial company, through its board of
directors, notwithstanding section 210(a)(1)(A)(i), with
the Supreme Court of the United States, not later
than 30 days after the date of the final decision of
the Court of Appeals, and the Supreme Court shall
have discretionary jurisdiction to review such decision.
(ii) WRITTEN STATEMENT.—In the event of a petition under clause (i), the Court of Appeals shall immediately provide for the record a written statement of
each reason for its decision.
(iii) EXPEDITION.—The Supreme Court shall consider any petition under this subparagraph on an expedited basis.
(iv) SCOPE OF REVIEW.—Review by the Supreme
Court under this subparagraph shall be limited to
whether the determination of the Secretary that the
covered financial company is in default or in danger
of default and satisfies the definition of a financial
company under section 201(a)(11) is arbitrary and
capricious.
(b) ESTABLISHMENT AND TRANSMITTAL OF RULES AND PROCEDURES.—

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124 STAT. 1447

(1) IN GENERAL.—Not later than 6 months after the date
of enactment of this Act, the Court shall establish such rules
and procedures as may be necessary to ensure the orderly
conduct of proceedings, including rules and procedures to
ensure that the 24-hour deadline is met and that the Secretary
shall have an ongoing opportunity to amend and refile petitions
under subsection (a)(1).
(2) PUBLICATION OF RULES.—The rules and procedures
established under paragraph (1), and any modifications of such
rules and procedures, shall be recorded and shall be transmitted
to—
(A) the Committee on the Judiciary of the Senate;
(B) the Committee on Banking, Housing, and Urban
Affairs of the Senate;
(C) the Committee on the Judiciary of the House of
Representatives; and
(D) the Committee on Financial Services of the House
of Representatives.
(c) PROVISIONS APPLICABLE TO FINANCIAL COMPANIES.—
(1) BANKRUPTCY CODE.—Except as provided in this subsection, the provisions of the Bankruptcy Code and rules issued
thereunder or otherwise applicable insolvency law, and not
the provisions of this title, shall apply to financial companies
that are not covered financial companies for which the Corporation has been appointed as receiver.
(2) THIS TITLE.—The provisions of this title shall exclusively
apply to and govern all matters relating to covered financial
companies for which the Corporation is appointed as receiver,
and no provisions of the Bankruptcy Code or the rules issued
thereunder shall apply in such cases, except as expressly provided in this title.
(d) TIME LIMIT ON RECEIVERSHIP AUTHORITY.—
(1) BASELINE PERIOD.—Any appointment of the Corporation
as receiver under this section shall terminate at the end of
the 3-year period beginning on the date on which such appointment is made.
(2) EXTENSION OF TIME LIMIT.—The time limit established
in paragraph (1) may be extended by the Corporation for up
to 1 additional year, if the Chairperson of the Corporation
determines and certifies in writing to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives that continuation of the receivership is necessary—
(A) to—
(i) maximize the net present value return from
the sale or other disposition of the assets of the covered
financial company; or
(ii) minimize the amount of loss realized upon
the sale or other disposition of the assets of the covered
financial company; and
(B) to protect the stability of the financial system of
the United States.
(3) SECOND EXTENSION OF TIME LIMIT.—
(A) IN GENERAL.—The time limit under this subsection,
as extended under paragraph (2), may be extended for

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124 STAT. 1448

Deadline.
Termination
date.

Reports.
Deadline.

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PUBLIC LAW 111–203—JULY 21, 2010

up to 1 additional year, if the Chairperson of the Corporation, with the concurrence of the Secretary, submits the
certifications described in paragraph (2).
(B) ADDITIONAL REPORT REQUIRED.—Not later than 30
days after the date of commencement of the extension
under subparagraph (A), the Corporation shall submit a
report to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the House of Representatives describing the need
for the extension and the specific plan of the Corporation
to conclude the receivership before the end of the second
extension.
(4) ONGOING LITIGATION.—The time limit under this subsection, as extended under paragraph (3), may be further
extended solely for the purpose of completing ongoing litigation
in which the Corporation as receiver is a party, provided that
the appointment of the Corporation as receiver shall terminate
not later than 90 days after the date of completion of such
litigation, if—
(A) the Council determines that the Corporation used
its best efforts to conclude the receivership in accordance
with its plan before the end of the time limit described
in paragraph (3);
(B) the Council determines that the completion of
longer-term responsibilities in the form of ongoing litigation
justifies the need for an extension; and
(C) the Corporation submits a report approved by the
Council not later than 30 days after the date of the determinations by the Council under subparagraphs (A) and
(B) to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the House of Representatives, describing—
(i) the ongoing litigation justifying the need for
an extension; and
(ii) the specific plan of the Corporation to complete
the litigation and conclude the receivership.
(5) REGULATIONS.—The Corporation may issue regulations
governing the termination of receiverships under this title.
(6) NO LIABILITY.—The Corporation and the Deposit Insurance Fund shall not be liable for unresolved claims arising
from the receivership after the termination of the receivership.
(e) STUDY OF BANKRUPTCY AND ORDERLY LIQUIDATION PROCESS
FOR FINANCIAL COMPANIES.—
(1) STUDY.—
(A) IN GENERAL.—The Administrative Office of the
United States Courts and the Comptroller General of the
United States shall each monitor the activities of the Court,
and each such Office shall conduct separate studies
regarding the bankruptcy and orderly liquidation process
for financial companies under the Bankruptcy Code.
(B) ISSUES TO BE STUDIED.—In conducting the study
under subparagraph (A), the Administrative Office of the
United States Courts and the Comptroller General of the
United States each shall evaluate—
(i) the effectiveness of chapter 7 or chapter 11
of the Bankruptcy Code in facilitating the orderly liquidation or reorganization of financial companies;

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124 STAT. 1449

(ii) ways to maximize the efficiency and effectiveness of the Court; and
(iii) ways to make the orderly liquidation process
under the Bankruptcy Code for financial companies
more effective.
(2) REPORTS.—Not later than 1 year after the date of enactment of this Act, in each successive year until the third year,
and every fifth year after that date of enactment, the Administrative Office of the United States Courts and the Comptroller
General of the United States shall submit to the Committee
on Banking, Housing, and Urban Affairs and the Committee
on the Judiciary of the Senate and the Committee on Financial
Services and the Committee on the Judiciary of the House
of Representatives separate reports summarizing the results
of the studies conducted under paragraph (1).
(f) STUDY OF INTERNATIONAL COORDINATION RELATING TO BANKRUPTCY PROCESS FOR FINANCIAL COMPANIES.—
(1) STUDY.—
(A) IN GENERAL.—The Comptroller General of the
United States shall conduct a study regarding international
coordination relating to the orderly liquidation of financial
companies under the Bankruptcy Code.
(B) ISSUES TO BE STUDIED.—In conducting the study
under subparagraph (A), the Comptroller General of the
United States shall evaluate, with respect to the bankruptcy process for financial companies—
(i) the extent to which international coordination
currently exists;
(ii) current mechanisms and structures for facilitating international cooperation;
(iii) barriers to effective international coordination;
and
(iv) ways to increase and make more effective
international coordination.
(2) REPORT.—Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States
shall submit to the Committee on Banking, Housing, and Urban
Affairs and the Committee on the Judiciary of the Senate
and the Committee on Financial Services and the Committee
on the Judiciary of the House of Representatives and the Secretary a report summarizing the results of the study conducted
under paragraph (1).
(g) STUDY OF PROMPT CORRECTIVE ACTION IMPLEMENTATION
BY THE APPROPRIATE FEDERAL AGENCIES.—
(1) STUDY.—The Comptroller General of the United States
shall conduct a study regarding the implementation of prompt
corrective action by the appropriate Federal banking agencies.
(2) ISSUES TO BE STUDIED.—In conducting the study under
paragraph (1), the Comptroller General shall evaluate—
(A) the effectiveness of implementation of prompt
corrective action by the appropriate Federal banking agencies and the resolution of insured depository institutions
by the Corporation; and
(B) ways to make prompt corrective action a more
effective tool to resolve the insured depository institutions
at the least possible long-term cost to the Deposit Insurance
Fund.

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PUBLIC LAW 111–203—JULY 21, 2010
(3) REPORT TO COUNCIL.—Not later than 1 year after the
date of enactment of this Act, the Comptroller General shall
submit a report to the Council on the results of the study
conducted under this subsection.
(4) COUNCIL REPORT OF ACTION.—Not later than 6 months
after the date of receipt of the report from the Comptroller
General under paragraph (3), the Council shall submit a report
to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of
the House of Representatives on actions taken in response
to the report, including any recommendations made to the
Federal primary financial regulatory agencies under section
120.

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12 USC 5383.

SEC. 203. SYSTEMIC RISK DETERMINATION.

(a) WRITTEN RECOMMENDATION AND DETERMINATION.—
(1) VOTE REQUIRED.—
(A) IN GENERAL.—On their own initiative, or at the
request of the Secretary, the Corporation and the Board
of Governors shall consider whether to make a written
recommendation described in paragraph (2) with respect
to whether the Secretary should appoint the Corporation
as receiver for a financial company. Such recommendation
shall be made upon a vote of not fewer than 2⁄3 of the
members of the Board of Governors then serving and 2⁄3
of the members of the board of directors of the Corporation
then serving.
(B) CASES INVOLVING BROKERS OR DEALERS.—In the
case of a broker or dealer, or in which the largest United
States subsidiary (as measured by total assets as of the
end of the previous calendar quarter) of a financial company is a broker or dealer, the Commission and the Board
of Governors, at the request of the Secretary, or on their
own initiative, shall consider whether to make the written
recommendation described in paragraph (2) with respect
to the financial company. Subject to the requirements in
paragraph (2), such recommendation shall be made upon
a vote of not fewer than 2⁄3 of the members of the Board
of Governors then serving and 2⁄3 of the members of the
Commission then serving, and in consultation with the
Corporation.
(C) CASES INVOLVING INSURANCE COMPANIES.—In the
case of an insurance company, or in which the largest
United States subsidiary (as measured by total assets as
of the end of the previous calendar quarter) of a financial
company is an insurance company, the Director of the
Federal Insurance Office and the Board of Governors, at
the request of the Secretary or on their own initiative,
shall consider whether to make the written recommendation described in paragraph (2) with respect to the financial
company. Subject to the requirements in paragraph (2),
such recommendation shall be made upon a vote of not
fewer than 2⁄3 of the Board of Governors then serving
and the affirmative approval of the Director of the Federal
Insurance Office, and in consultation with the Corporation.
(2) RECOMMENDATION REQUIRED.—Any written recommendation pursuant to paragraph (1) shall contain—

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(A) an evaluation of whether the financial company
is in default or in danger of default;
(B) a description of the effect that the default of the
financial company would have on financial stability in the
United States;
(C) a description of the effect that the default of the
financial company would have on economic conditions or
financial stability for low income, minority, or underserved
communities;
(D) a recommendation regarding the nature and the
extent of actions to be taken under this title regarding
the financial company;
(E) an evaluation of the likelihood of a private sector
alternative to prevent the default of the financial company;
(F) an evaluation of why a case under the Bankruptcy
Code is not appropriate for the financial company;
(G) an evaluation of the effects on creditors, counterparties, and shareholders of the financial company and
other market participants; and
(H) an evaluation of whether the company satisfies
the definition of a financial company under section 201.
(b) DETERMINATION BY THE SECRETARY.—Notwithstanding any
other provision of Federal or State law, the Secretary shall take
action in accordance with section 202(a)(1)(A), if, upon the written
recommendation under subsection (a), the Secretary (in consultation
with the President) determines that—
(1) the financial company is in default or in danger of
default;
(2) the failure of the financial company and its resolution
under otherwise applicable Federal or State law would have
serious adverse effects on financial stability in the United
States;
(3) no viable private sector alternative is available to prevent the default of the financial company;
(4) any effect on the claims or interests of creditors, counterparties, and shareholders of the financial company and other
market participants as a result of actions to be taken under
this title is appropriate, given the impact that any action taken
under this title would have on financial stability in the United
States;
(5) any action under section 204 would avoid or mitigate
such adverse effects, taking into consideration the effectiveness
of the action in mitigating potential adverse effects on the
financial system, the cost to the general fund of the Treasury,
and the potential to increase excessive risk taking on the part
of creditors, counterparties, and shareholders in the financial
company;
(6) a Federal regulatory agency has ordered the financial
company to convert all of its convertible debt instruments that
are subject to the regulatory order; and
(7) the company satisfies the definition of a financial company under section 201.
(c) DOCUMENTATION AND REVIEW.—
(1) IN GENERAL.—The Secretary shall—
(A) document any determination under subsection (b);
(B) retain the documentation for review under paragraph (2); and

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124 STAT. 1452

(C) notify the covered financial company and the Corporation of such determination.
(2) REPORT TO CONGRESS.—Not later than 24 hours after
the date of appointment of the Corporation as receiver for
a covered financial company, the Secretary shall provide written
notice of the recommendations and determinations reached in
accordance with subsections (a) and (b) to the Majority Leader
and the Minority Leader of the Senate and the Speaker and
the Minority Leader of the House of Representatives, the Committee on Banking, Housing, and Urban Affairs of the Senate,
and the Committee on Financial Services of the House of Representatives, which shall consist of a summary of the basis
for the determination, including, to the extent available at
the time of the determination—
(A) the size and financial condition of the covered
financial company;
(B) the sources of capital and credit support that were
available to the covered financial company;
(C) the operations of the covered financial company
that could have had a significant impact on financial stability, markets, or both;
(D) identification of the banks and financial companies
which may be able to provide the services offered by the
covered financial company;
(E) any potential international ramifications of resolution of the covered financial company under other
applicable insolvency law;
(F) an estimate of the potential effect of the resolution
of the covered financial company under other applicable
insolvency law on the financial stability of the United
States;
(G) the potential effect of the appointment of a receiver
by the Secretary on consumers;
(H) the potential effect of the appointment of a receiver
by the Secretary on the financial system, financial markets,
and banks and other financial companies; and
(I) whether resolution of the covered financial company
under other applicable insolvency law would cause banks
or other financial companies to experience severe liquidity
distress.
(3) REPORTS TO CONGRESS AND THE PUBLIC.—
(A) IN GENERAL.—Not later than 60 days after the
date of appointment of the Corporation as receiver for
a covered financial company, the Corporation shall file
a report with the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives—
(i) setting forth information on the financial condition of the covered financial company as of the date
of the appointment, including a description of its assets
and liabilities;
(ii) describing the plan of, and actions taken by,
the Corporation to wind down the covered financial
company;
(iii) explaining each instance in which the Corporation waived any applicable requirements of part 366

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1453

of title 12, Code of Federal Regulations (or any successor thereto) with respect to conflicts of interest by
any person in the private sector who was retained
to provide services to the Corporation in connection
with such receivership;
(iv) describing the reasons for the provision of any
funding to the receivership out of the Fund;
(v) setting forth the expected costs of the orderly
liquidation of the covered financial company;
(vi) setting forth the identity of any claimant that
is treated in a manner different from other similarly
situated claimants under subsection (b)(4), (d)(4), or
(h)(5)(E), the amount of any additional payment to
such claimant under subsection (d)(4), and the reason
for any such action; and
(vii) which report the Corporation shall publish
on an online website maintained by the Corporation,
subject to maintaining appropriate confidentiality.
(B) AMENDMENTS.—The Corporation shall, on a timely
basis, not less frequently than quarterly, amend or revise
and resubmit the reports prepared under this paragraph,
as necessary.
(C) CONGRESSIONAL TESTIMONY.—The Corporation and
the primary financial regulatory agency, if any, of the
financial company for which the Corporation was appointed
receiver under this title shall appear before Congress, if
requested, not later than 30 days after the date on which
the Corporation first files the reports required under
subparagraph (A).
(4) DEFAULT OR IN DANGER OF DEFAULT.—For purposes
of this title, a financial company shall be considered to be
in default or in danger of default if, as determined in accordance
with subsection (b)—
(A) a case has been, or likely will promptly be, commenced with respect to the financial company under the
Bankruptcy Code;
(B) the financial company has incurred, or is likely
to incur, losses that will deplete all or substantially all
of its capital, and there is no reasonable prospect for the
company to avoid such depletion;
(C) the assets of the financial company are, or are
likely to be, less than its obligations to creditors and others;
or
(D) the financial company is, or is likely to be, unable
to pay its obligations (other than those subject to a bona
fide dispute) in the normal course of business.
(5) GAO REVIEW.—The Comptroller General of the United
States shall review and report to Congress on any determination under subsection (b), that results in the appointment of
the Corporation as receiver, including—
(A) the basis for the determination;
(B) the purpose for which any action was taken pursuant thereto;
(C) the likely effect of the determination and such
action on the incentives and conduct of financial companies
and their creditors, counterparties, and shareholders; and

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124 STAT. 1454

(D) the likely disruptive effect of the determination
and such action on the reasonable expectations of creditors,
counterparties, and shareholders, taking into account the
impact any action under this title would have on financial
stability in the United States, including whether the rights
of such parties will be disrupted.
(d) CORPORATION POLICIES AND PROCEDURES.—As soon as is
practicable after the date of enactment of this Act, the Corporation
shall establish policies and procedures that are acceptable to the
Secretary governing the use of funds available to the Corporation
to carry out this title, including the terms and conditions for the
provision and use of funds under sections 204(d), 210(h)(2)(G)(iv),
and 210(h)(9).
(e) TREATMENT OF INSURANCE COMPANIES AND INSURANCE COMPANY SUBSIDIARIES.—
(1) IN GENERAL.—Notwithstanding subsection (b), if an
insurance company is a covered financial company or a subsidiary or affiliate of a covered financial company, the liquidation or rehabilitation of such insurance company, and any subsidiary or affiliate of such company that is not excepted under
paragraph (2), shall be conducted as provided under applicable
State law.
(2) EXCEPTION FOR SUBSIDIARIES AND AFFILIATES.—The
requirement of paragraph (1) shall not apply with respect to
any subsidiary or affiliate of an insurance company that is
not itself an insurance company.
(3) BACKUP AUTHORITY.—Notwithstanding paragraph (1),
with respect to a covered financial company described in paragraph (1), if, after the end of the 60-day period beginning
on the date on which a determination is made under section
202(a) with respect to such company, the appropriate regulatory
agency has not filed the appropriate judicial action in the
appropriate State court to place such company into orderly
liquidation under the laws and requirements of the State, the
Corporation shall have the authority to stand in the place
of the appropriate regulatory agency and file the appropriate
judicial action in the appropriate State court to place such
company into orderly liquidation under the laws and requirements of the State.

Time period.

12 USC 5384.

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PUBLIC LAW 111–203—JULY 21, 2010

SEC. 204. ORDERLY LIQUIDATION OF COVERED FINANCIAL COMPANIES.

(a) PURPOSE OF ORDERLY LIQUIDATION AUTHORITY.—It is the
purpose of this title to provide the necessary authority to liquidate
failing financial companies that pose a significant risk to the financial stability of the United States in a manner that mitigates
such risk and minimizes moral hazard. The authority provided
in this title shall be exercised in the manner that best fulfills
such purpose, so that—
(1) creditors and shareholders will bear the losses of the
financial company;
(2) management responsible for the condition of the financial company will not be retained; and
(3) the Corporation and other appropriate agencies will
take all steps necessary and appropriate to assure that all
parties, including management, directors, and third parties,
having responsibility for the condition of the financial company

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1455

bear losses consistent with their responsibility, including
actions for damages, restitution, and recoupment of compensation and other gains not compatible with such responsibility.
(b) CORPORATION AS RECEIVER.—Upon the appointment of the
Corporation under section 202, the Corporation shall act as the
receiver for the covered financial company, with all of the rights
and obligations set forth in this title.
(c) CONSULTATION.—The Corporation, as receiver—
(1) shall consult with the primary financial regulatory
agency or agencies of the covered financial company and its
covered subsidiaries for purposes of ensuring an orderly liquidation of the covered financial company;
(2) may consult with, or under subsection (a)(1)(B)(v) or
(a)(1)(L) of section 210, acquire the services of, any outside
experts, as appropriate to inform and aid the Corporation in
the orderly liquidation process;
(3) shall consult with the primary financial regulatory
agency or agencies of any subsidiaries of the covered financial
company that are not covered subsidiaries, and coordinate with
such regulators regarding the treatment of such solvent subsidiaries and the separate resolution of any such insolvent subsidiaries under other governmental authority, as appropriate; and
(4) shall consult with the Commission and the Securities
Investor Protection Corporation in the case of any covered
financial company for which the Corporation has been
appointed as receiver that is a broker or dealer registered
with the Commission under section 15(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o(b)) and is a member
of the Securities Investor Protection Corporation, for the purpose of determining whether to transfer to a bridge financial
company organized by the Corporation as receiver, without
consent of any customer, customer accounts of the covered
financial company.
(d) FUNDING FOR ORDERLY LIQUIDATION.—Upon its appointment as receiver for a covered financial company, and thereafter
as the Corporation may, in its discretion, determine to be necessary
or appropriate, the Corporation may make available to the receivership, subject to the conditions set forth in section 206 and subject
to the plan described in section 210(n)(9), funds for the orderly
liquidation of the covered financial company. All funds provided
by the Corporation under this subsection shall have a priority
of claims under subparagraph (A) or (B) of section 210(b)(1), as
applicable, including funds used for—
(1) making loans to, or purchasing any debt obligation
of, the covered financial company or any covered subsidiary;
(2) purchasing or guaranteeing against loss the assets of
the covered financial company or any covered subsidiary,
directly or through an entity established by the Corporation
for such purpose;
(3) assuming or guaranteeing the obligations of the covered
financial company or any covered subsidiary to 1 or more
third parties;
(4) taking a lien on any or all assets of the covered financial
company or any covered subsidiary, including a first priority
lien on all unencumbered assets of the covered financial company or any covered subsidiary to secure repayment of any
transactions conducted under this subsection;

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124 STAT. 1456

PUBLIC LAW 111–203—JULY 21, 2010
(5) selling or transferring all, or any part, of such acquired
assets, liabilities, or obligations of the covered financial company or any covered subsidiary; and
(6) making payments pursuant to subsections (b)(4), (d)(4),
and (h)(5)(E) of section 210.

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12 USC 5385.

SEC.

205.

ORDERLY LIQUIDATION
DEALERS.

OF

COVERED

BROKERS

AND

(a) APPOINTMENT OF SIPC AS TRUSTEE.—
(1) APPOINTMENT.—Upon the appointment of the Corporation as receiver for any covered broker or dealer, the Corporation shall appoint, without any need for court approval, the
Securities Investor Protection Corporation to act as trustee
for the liquidation under the Securities Investor Protection
Act of 1970 (15 U.S.C. 78aaa et seq.) of the covered broker
or dealer.
(2) ACTIONS BY SIPC.—
(A) FILING.—Upon appointment of SIPC under paragraph (1), SIPC shall promptly file with any Federal district
court of competent jurisdiction specified in section 21 or
27 of the Securities Exchange Act of 1934 (15 U.S.C. 78u,
78aa), an application for a protective decree under the
Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa
et seq.) as to the covered broker or dealer. The Federal
district court shall accept and approve the filing, including
outside of normal business hours, and shall immediately
issue the protective decree as to the covered broker or
dealer.
(B) ADMINISTRATION BY SIPC.—Following entry of the
protective decree, and except as otherwise provided in this
section, the determination of claims and the liquidation
of assets retained in the receivership of the covered broker
or dealer and not transferred to the bridge financial company shall be administered under the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa et seq.) by SIPC,
as trustee for the covered broker or dealer.
(C) DEFINITION OF FILING DATE.—For purposes of the
liquidation proceeding, the term ‘‘filing date’’ means the
date on which the Corporation is appointed as receiver
of the covered broker or dealer.
(D) DETERMINATION OF CLAIMS.—As trustee for the
covered broker or dealer, SIPC shall determine and satisfy,
consistent with this title and with the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa et seq.), all claims
against the covered broker or dealer arising on or before
the filing date.
(b) POWERS AND DUTIES OF SIPC.—
(1) IN GENERAL.—Except as provided in this section, upon
its appointment as trustee for the liquidation of a covered
broker or dealer, SIPC shall have all of the powers and duties
provided by the Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.), including, without limitation, all rights
of action against third parties, and shall conduct such liquidation in accordance with the terms of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa et seq.), except that
SIPC shall have no powers or duties with respect to assets
and liabilities transferred by the Corporation from the covered

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1457

broker or dealer to any bridge financial company established
in accordance with this title.
(2) LIMITATION OF POWERS.—The exercise by SIPC of
powers and functions as trustee under subsection (a) shall
not impair or impede the exercise of the powers and duties
of the Corporation with regard to—
(A) any action, except as otherwise provided in this
title—
(i) to make funds available under section 204(d);
(ii) to organize, establish, operate, or terminate
any bridge financial company;
(iii) to transfer assets and liabilities;
(iv) to enforce or repudiate contracts; or
(v) to take any other action relating to such bridge
financial company under section 210; or
(B) determining claims under subsection (e).
(3) PROTECTIVE DECREE.—SIPC and the Corporation, in
consultation with the Commission, shall jointly determine the
terms of the protective decree to be filed by SIPC with any
court of competent jurisdiction under section 21 or 27 of the
Securities Exchange Act of 1934 (15 U.S.C. 78u, 78aa), as
required by subsection (a).
(4) QUALIFIED FINANCIAL CONTRACTS.—Notwithstanding
any provision of the Securities Investor Protection Act of 1970
(15 U.S.C. 78aaa et seq.) to the contrary (including section
5(b)(2)(C) of that Act (15 U.S.C. 78eee(b)(2)(C))), the rights
and obligations of any party to a qualified financial contract
(as that term is defined in section 210(c)(8)) to which a covered
broker or dealer for which the Corporation has been appointed
receiver is a party shall be governed exclusively by section
210, including the limitations and restrictions contained in
section 210(c)(10)(B).
(c) LIMITATION ON COURT ACTION.—Except as otherwise provided in this title, no court may take any action, including any
action pursuant to the Securities Investor Protection Act of 1970
(15 U.S.C. 78aaa et seq.) or the Bankruptcy Code, to restrain
or affect the exercise of powers or functions of the Corporation
as receiver for a covered broker or dealer and any claims against
the Corporation as such receiver shall be determined in accordance
with subsection (e) and such claims shall be limited to money
damages.
(d) ACTIONS BY CORPORATION AS RECEIVER.—
(1) IN GENERAL.—Notwithstanding any other provision of
this title, no action taken by the Corporation as receiver with
respect to a covered broker or dealer shall—
(A) adversely affect the rights of a customer to customer property or customer name securities;
(B) diminish the amount or timely payment of net
equity claims of customers; or
(C) otherwise impair the recoveries provided to a customer under the Securities Investor Protection Act of 1970
(15 U.S.C. 78aaa et seq.).
(2) NET PROCEEDS.—The net proceeds from any transfer,
sale, or disposition of assets of the covered broker or dealer,
or proceeds thereof by the Corporation as receiver for the covered broker or dealer shall be for the benefit of the estate
of the covered broker or dealer, as provided in this title.

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124 STAT. 1458

PUBLIC LAW 111–203—JULY 21, 2010

(e) CLAIMS AGAINST THE CORPORATION AS RECEIVER.—Any
claim against the Corporation as receiver for a covered broker
or dealer for assets transferred to a bridge financial company established with respect to such covered broker or dealer—
(1) shall be determined in accordance with section 210(a)(2);
and
(2) may be reviewed by the appropriate district or territorial
court of the United States in accordance with section 210(a)(5).
(f) SATISFACTION OF CUSTOMER CLAIMS.—
(1) OBLIGATIONS TO CUSTOMERS.—Notwithstanding any
other provision of this title, all obligations of a covered broker
or dealer or of any bridge financial company established with
respect to such covered broker or dealer to a customer relating
to, or net equity claims based upon, customer property or
customer name securities shall be promptly discharged by SIPC,
the Corporation, or the bridge financial company, as applicable,
by the delivery of securities or the making of payments to
or for the account of such customer, in a manner and in an
amount at least as beneficial to the customer as would have
been the case had the actual proceeds realized from the liquidation of the covered broker or dealer under this title been distributed in a proceeding under the Securities Investor Protection
Act of 1970 (15 U.S.C. 78aaa et seq.) without the appointment
of the Corporation as receiver and without any transfer of
assets or liabilities to a bridge financial company, and with
a filing date as of the date on which the Corporation is
appointed as receiver.
(2) SATISFACTION OF CLAIMS BY SIPC.—SIPC, as trustee
for a covered broker or dealer, shall satisfy customer claims
in the manner and amount provided under the Securities
Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), as
if the appointment of the Corporation as receiver had not
occurred, and with a filing date as of the date on which the
Corporation is appointed as receiver. The Corporation shall
satisfy customer claims, to the extent that a customer would
have received more securities or cash with respect to the allocation of customer property had the covered financial company
been subject to a proceeding under the Securities Investor
Protection Act (15 U.S.C. 78aaa et seq.) without the appointment of the Corporation as receiver, and with a filing date
as of the date on which the Corporation is appointed as receiver.
(g) PRIORITIES.—
(1) CUSTOMER PROPERTY.—As trustee for a covered broker
or dealer, SIPC shall allocate customer property and deliver
customer name securities in accordance with section 8(c) of
the Securities Investor Protection Act of 1970 (15 U.S.C. 78fff–
2(c)).
(2) OTHER CLAIMS.—All claims other than those described
in paragraph (1) (including any unpaid claim by a customer
for the allowed net equity claim of such customer from customer
property) shall be paid in accordance with the priorities in
section 210(b).
(h) RULEMAKING.—The Commission and the Corporation, after
consultation with SIPC, shall jointly issue rules to implement this
section.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1459

SEC. 206. MANDATORY TERMS AND CONDITIONS FOR ALL ORDERLY
LIQUIDATION ACTIONS.

12 USC 5386.

In taking action under this title, the Corporation shall—
(1) determine that such action is necessary for purposes
of the financial stability of the United States, and not for
the purpose of preserving the covered financial company;
(2) ensure that the shareholders of a covered financial
company do not receive payment until after all other claims
and the Fund are fully paid;
(3) ensure that unsecured creditors bear losses in accordance with the priority of claim provisions in section 210;
(4) ensure that management responsible for the failed
condition of the covered financial company is removed (if such
management has not already been removed at the time at
which the Corporation is appointed receiver);
(5) ensure that the members of the board of directors
(or body performing similar functions) responsible for the failed
condition of the covered financial company are removed, if
such members have not already been removed at the time
the Corporation is appointed as receiver; and
(6) not take an equity interest in or become a shareholder
of any covered financial company or any covered subsidiary.
SEC. 207. DIRECTORS NOT LIABLE FOR ACQUIESCING IN APPOINTMENT OF RECEIVER.

12 USC 5387.

The members of the board of directors (or body performing
similar functions) of a covered financial company shall not be liable
to the shareholders or creditors thereof for acquiescing in or consenting in good faith to the appointment of the Corporation as
receiver for the covered financial company under section 203.

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SEC. 208. DISMISSAL AND EXCLUSION OF OTHER ACTIONS.

(a) IN GENERAL.—Effective as of the date of the appointment
of the Corporation as receiver for the covered financial company
under section 202 or the appointment of SIPC as trustee for a
covered broker or dealer under section 205, as applicable, any
case or proceeding commenced with respect to the covered financial
company under the Bankruptcy Code or the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa et seq.) shall be dismissed,
upon notice to the bankruptcy court (with respect to a case commenced under the Bankruptcy Code), and upon notice to SIPC
(with respect to a covered broker or dealer) and no such case
or proceeding may be commenced with respect to a covered financial
company at any time while the orderly liquidation is pending.
(b) REVESTING OF ASSETS.—Effective as of the date of appointment of the Corporation as receiver, the assets of a covered financial
company shall, to the extent they have vested in any entity other
than the covered financial company as a result of any case or
proceeding commenced with respect to the covered financial company under the Bankruptcy Code, the Securities Investor Protection
Act of 1970 (15 U.S.C. 78aaa et seq.), or any similar provision
of State liquidation or insolvency law applicable to the covered
financial company, revest in the covered financial company.
(c) LIMITATION.—Notwithstanding subsections (a) and (b), any
order entered or other relief granted by a bankruptcy court prior
to the date of appointment of the Corporation as receiver shall

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12 USC 5388.

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PUBLIC LAW 111–203—JULY 21, 2010

continue with the same validity as if an orderly liquidation had
not been commenced.
12 USC 5389.

SEC. 209. RULEMAKING; NON-CONFLICTING LAW.

The Corporation shall, in consultation with the Council, prescribe such rules or regulations as the Corporation considers necessary or appropriate to implement this title, including rules and
regulations with respect to the rights, interests, and priorities of
creditors, counterparties, security entitlement holders, or other persons with respect to any covered financial company or any assets
or other property of or held by such covered financial company,
and address the potential for conflicts of interest between or among
individual receiverships established under this title or under the
Federal Deposit Insurance Act. To the extent possible, the Corporation shall seek to harmonize applicable rules and regulations
promulgated under this section with the insolvency laws that would
otherwise apply to a covered financial company.

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12 USC 5390.

SEC. 210. POWERS AND DUTIES OF THE CORPORATION.

(a) POWERS AND AUTHORITIES.—
(1) GENERAL POWERS.—
(A) SUCCESSOR TO COVERED FINANCIAL COMPANY.—The
Corporation shall, upon appointment as receiver for a covered financial company under this title, succeed to—
(i) all rights, titles, powers, and privileges of the
covered financial company and its assets, and of any
stockholder, member, officer, or director of such company; and
(ii) title to the books, records, and assets of any
previous receiver or other legal custodian of such covered financial company.
(B) OPERATION OF THE COVERED FINANCIAL COMPANY
DURING THE PERIOD OF ORDERLY LIQUIDATION.—The Corporation, as receiver for a covered financial company,
may—
(i) take over the assets of and operate the covered
financial company with all of the powers of the members or shareholders, the directors, and the officers
of the covered financial company, and conduct all business of the covered financial company;
(ii) collect all obligations and money owed to the
covered financial company;
(iii) perform all functions of the covered financial
company, in the name of the covered financial company;
(iv) manage the assets and property of the covered
financial company, consistent with maximization of the
value of the assets in the context of the orderly liquidation; and
(v) provide by contract for assistance in fulfilling
any function, activity, action, or duty of the Corporation
as receiver.
(C) FUNCTIONS OF COVERED FINANCIAL COMPANY OFFICERS, DIRECTORS, AND SHAREHOLDERS.—The Corporation
may provide for the exercise of any function by any member
or stockholder, director, or officer of any covered financial
company for which the Corporation has been appointed
as receiver under this title.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1461

(D) ADDITIONAL POWERS AS RECEIVER.—The Corporation shall, as receiver for a covered financial company,
and subject to all legally enforceable and perfected security
interests and all legally enforceable security entitlements
in respect of assets held by the covered financial company,
liquidate, and wind-up the affairs of a covered financial
company, including taking steps to realize upon the assets
of the covered financial company, in such manner as the
Corporation deems appropriate, including through the sale
of assets, the transfer of assets to a bridge financial company established under subsection (h), or the exercise of
any other rights or privileges granted to the receiver under
this section.
(E) ADDITIONAL POWERS WITH RESPECT TO FAILING
SUBSIDIARIES OF A COVERED FINANCIAL COMPANY.—
(i) IN GENERAL.—In any case in which a receiver
is appointed for a covered financial company under
section 202, the Corporation may appoint itself as
receiver of any covered subsidiary of the covered financial company that is organized under Federal law or
the laws of any State, if the Corporation and the Secretary jointly determine that—
(I) the covered subsidiary is in default or in
danger of default;
(II) such action would avoid or mitigate serious
adverse effects on the financial stability or economic conditions of the United States; and
(III) such action would facilitate the orderly
liquidation of the covered financial company.
(ii) TREATMENT AS COVERED FINANCIAL COMPANY.—
If the Corporation is appointed as receiver of a covered
subsidiary of a covered financial company under clause
(i), the covered subsidiary shall thereafter be considered a covered financial company under this title, and
the Corporation shall thereafter have all the powers
and rights with respect to that covered subsidiary as
it has with respect to a covered financial company
under this title.
(F) ORGANIZATION OF BRIDGE COMPANIES.—The Corporation, as receiver for a covered financial company, may
organize a bridge financial company under subsection (h).
(G) MERGER; TRANSFER OF ASSETS AND LIABILITIES.—
(i) IN GENERAL.—Subject to clauses (ii) and (iii),
the Corporation, as receiver for a covered financial
company, may—
(I) merge the covered financial company with
another company; or
(II) transfer any asset or liability of the covered financial company (including any assets and
liabilities held by the covered financial company
for security entitlement holders, any customer
property, or any assets and liabilities associated
with any trust or custody business) without
obtaining any approval, assignment, or consent
with respect to such transfer.
(ii) FEDERAL AGENCY APPROVAL; ANTITRUST
REVIEW.—With respect to a transaction described in

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clause (i)(I) that requires approval by a Federal
agency—
(I) the transaction may not be consummated
before the 5th calendar day after the date of
approval by the Federal agency responsible for
such approval;
(II) if, in connection with any such approval,
a report on competitive factors is required, the
Federal agency responsible for such approval shall
promptly notify the Attorney General of the United
States of the proposed transaction, and the
Attorney General shall provide the required report
not later than 10 days after the date of the request;
and
(III) if notification under section 7A of the
Clayton Act is required with respect to such transaction, then the required waiting period shall end
on the 15th day after the date on which the
Attorney General and the Federal Trade Commission receive such notification, unless the waiting
period is terminated earlier under subsection (b)(2)
of such section 7A, or is extended pursuant to
subsection (e)(2) of such section 7A.
(iii) SETOFF.—Subject to the other provisions of
this title, any transferee of assets from a receiver,
including a bridge financial company, shall be subject
to such claims or rights as would prevail over the
rights of such transferee in such assets under
applicable noninsolvency law.
(H) PAYMENT OF VALID OBLIGATIONS.—The Corporation,
as receiver for a covered financial company, shall, to the
extent that funds are available, pay all valid obligations
of the covered financial company that are due and payable
at the time of the appointment of the Corporation as
receiver, in accordance with the prescriptions and limitations of this title.
(I) APPLICABLE NONINSOLVENCY LAW.—Except as may
otherwise be provided in this title, the applicable noninsolvency law shall be determined by the noninsolvency choice
of law rules otherwise applicable to the claims, rights,
titles, persons, or entities at issue.
(J) SUBPOENA AUTHORITY.—
(i) IN GENERAL.—The Corporation, as receiver for
a covered financial company, may, for purposes of carrying out any power, authority, or duty with respect
to the covered financial company (including determining any claim against the covered financial company and determining and realizing upon any asset
of any person in the course of collecting money due
the covered financial company), exercise any power
established under section 8(n) of the Federal Deposit
Insurance Act, as if the Corporation were the appropriate Federal banking agency for the covered financial
company, and the covered financial company were an
insured depository institution.
(ii) RULE OF CONSTRUCTION.—This subparagraph
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Corporation, in any capacity, might otherwise have
to exercise any powers described in clause (i) or under
any other provision of law.
(K) INCIDENTAL POWERS.—The Corporation, as receiver
for a covered financial company, may exercise all powers
and authorities specifically granted to receivers under this
title, and such incidental powers as shall be necessary
to carry out such powers under this title.
(L) UTILIZATION OF PRIVATE SECTOR.—In carrying out
its responsibilities in the management and disposition of
assets from the covered financial company, the Corporation,
as receiver for a covered financial company, may utilize
the services of private persons, including real estate and
loan portfolio asset management, property management,
auction marketing, legal, and brokerage services, if such
services are available in the private sector, and the Corporation determines that utilization of such services is
practicable, efficient, and cost effective.
(M) SHAREHOLDERS AND CREDITORS OF COVERED FINANCIAL COMPANY.—Notwithstanding any other provision of
law, the Corporation, as receiver for a covered financial
company, shall succeed by operation of law to the rights,
titles, powers, and privileges described in subparagraph
(A), and shall terminate all rights and claims that the
stockholders and creditors of the covered financial company
may have against the assets of the covered financial company or the Corporation arising out of their status as
stockholders or creditors, except for their right to payment,
resolution, or other satisfaction of their claims, as permitted
under this section. The Corporation shall ensure that shareholders and unsecured creditors bear losses, consistent with
the priority of claims provisions under this section.
(N) COORDINATION WITH FOREIGN FINANCIAL AUTHORITIES.—The Corporation, as receiver for a covered financial
company, shall coordinate, to the maximum extent possible,
with the appropriate foreign financial authorities regarding
the orderly liquidation of any covered financial company
that has assets or operations in a country other than the
United States.
(O) RESTRICTION ON TRANSFERS.—
(i) SELECTION OF ACCOUNTS FOR TRANSFER.—If the
Corporation establishes one or more bridge financial
companies with respect to a covered broker or dealer,
the Corporation shall transfer to one of such bridge
financial companies, all customer accounts of the covered broker or dealer, and all associated customer
name securities and customer property, unless the Corporation, after consulting with the Commission and
SIPC, determines that—
(I) the customer accounts, customer name
securities, and customer property are likely to be
promptly transferred to another broker or dealer
that is registered with the Commission under section 15(b) of the Securities Exchange Act of 1934
(15 U.S.C. 73o(b)) and is a member of SIPC; or
(II) the transfer of the accounts to a bridge
financial company would materially interfere with

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the ability of the Corporation to avoid or mitigate
serious adverse effects on financial stability or economic conditions in the United States.
(ii) TRANSFER OF PROPERTY.—SIPC, as trustee for
the liquidation of the covered broker or dealer, and
the Commission shall provide any and all reasonable
assistance necessary to complete such transfers by the
Corporation.
(iii) CUSTOMER CONSENT AND COURT APPROVAL NOT
REQUIRED.—Neither
customer consent nor court
approval shall be required to transfer any customer
accounts or associated customer name securities or
customer property to a bridge financial company in
accordance with this section.
(iv) NOTIFICATION OF SIPC AND SHARING OF
INFORMATION.—The Corporation shall identify to SIPC
the customer accounts and associated customer name
securities and customer property transferred to the
bridge financial company. The Corporation and SIPC
shall cooperate in the sharing of any information necessary for each entity to discharge its obligations under
this title and under the Securities Investor Protection
Act of 1970 (15 U.S.C. 78aaa et seq.) including by
providing access to the books and records of the covered
financial company and any bridge financial company
established in accordance with this title.
(2) DETERMINATION OF CLAIMS.—
(A) IN GENERAL.—The Corporation, as receiver for a
covered financial company, shall report on claims, as set
forth in section 203(c)(3). Subject to paragraph (4) of this
subsection, the Corporation, as receiver for a covered financial company, shall determine claims in accordance with
the requirements of this subsection and regulations prescribed under section 209.
(B) NOTICE REQUIREMENTS.—The Corporation, as
receiver for a covered financial company, in any case
involving the liquidation or winding up of the affairs of
a covered financial company, shall—
(i) promptly publish a notice to the creditors of
the covered financial company to present their claims,
together with proof, to the receiver by a date specified
in the notice, which shall be not earlier than 90 days
after the date of publication of such notice; and
(ii) republish such notice 1 month and 2 months,
respectively, after the date of publication under clause
(i).
(C) MAILING REQUIRED.—The Corporation as receiver
shall mail a notice similar to the notice published under
clause (i) or (ii) of subparagraph (B), at the time of such
publication, to any creditor shown on the books and records
of the covered financial company—
(i) at the last address of the creditor appearing
in such books;
(ii) in any claim filed by the claimant; or
(iii) upon discovery of the name and address of
a claimant not appearing on the books and records
of the covered financial company, not later than 30

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days after the date of the discovery of such name
and address.
(3) PROCEDURES FOR RESOLUTION OF CLAIMS.—
(A) DECISION PERIOD.—
(i) IN GENERAL.—Prior to the 180th day after the
date on which a claim against a covered financial company is filed with the Corporation as receiver, or such
later date as may be agreed as provided in clause
(ii), the Corporation shall notify the claimant whether
it allows or disallows the claim, in accordance with
subparagraphs (B), (C), and (D).
(ii) EXTENSION OF TIME.—By written agreement
executed not later than 180 days after the date on
which a claim against a covered financial company
is filed with the Corporation, the period described in
clause (i) may be extended by written agreement
between the claimant and the Corporation. Failure
to notify the claimant of any disallowance within the
time period set forth in clause (i), as it may be extended
by agreement under this clause, shall be deemed to
be a disallowance of such claim, and the claimant
may file or continue an action in court, as provided
in paragraph (4).
(iii) MAILING OF NOTICE SUFFICIENT.—The requirements of clause (i) shall be deemed to be satisfied
if the notice of any decision with respect to any claim
is mailed to the last address of the claimant which
appears—
(I) on the books, records, or both of the covered
financial company;
(II) in the claim filed by the claimant; or
(III) in documents submitted in proof of the
claim.
(iv) CONTENTS OF NOTICE OF DISALLOWANCE.—If
the Corporation as receiver disallows any claim filed
under clause (i), the notice to the claimant shall contain—
(I) a statement of each reason for the disallowance; and
(II) the procedures required to file or continue
an action in court, as provided in paragraph (4).
(B) ALLOWANCE OF PROVEN CLAIM.—The receiver shall
allow any claim received by the receiver on or before the
date specified in the notice under paragraph (2)(B)(i), which
is proved to the satisfaction of the receiver.
(C) DISALLOWANCE OF CLAIMS FILED AFTER END OF
FILING PERIOD.—
(i) IN GENERAL.—Except as provided in clause (ii),
claims filed after the date specified in the notice published under paragraph (2)(B)(i) shall be disallowed,
and such disallowance shall be final.
(ii) CERTAIN EXCEPTIONS.—Clause (i) shall not
apply with respect to any claim filed by a claimant
after the date specified in the notice published under
paragraph (2)(B)(i), and such claim may be considered
by the receiver under subparagraph (B), if—

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PUBLIC LAW 111–203—JULY 21, 2010
(I) the claimant did not receive notice of the
appointment of the receiver in time to file such
claim before such date; and
(II) such claim is filed in time to permit payment of such claim.
(D) AUTHORITY TO DISALLOW CLAIMS.—
(i) IN GENERAL.—The Corporation may disallow
any portion of any claim by a creditor or claim of
a security, preference, setoff, or priority which is not
proved to the satisfaction of the Corporation.
(ii) PAYMENTS TO UNDERSECURED CREDITORS.—In
the case of a claim against a covered financial company
that is secured by any property or other asset of such
covered financial company, the receiver—
(I) may treat the portion of such claim which
exceeds an amount equal to the fair market value
of such property or other asset as an unsecured
claim; and
(II) may not make any payment with respect
to such unsecured portion of the claim, other than
in connection with the disposition of all claims
of unsecured creditors of the covered financial company.
(iii) EXCEPTIONS.—No provision of this paragraph
shall apply with respect to—
(I) any extension of credit from any Federal
reserve bank, or the Corporation, to any covered
financial company; or
(II) subject to clause (ii), any legally enforceable and perfected security interest in the assets
of the covered financial company securing any such
extension of credit.
(E) LEGAL EFFECT OF FILING.—
(i) STATUTE OF LIMITATIONS TOLLED.—For purposes
of any applicable statute of limitations, the filing of
a claim with the receiver shall constitute a commencement of an action.
(ii) NO PREJUDICE TO OTHER ACTIONS.—Subject to
paragraph (8), the filing of a claim with the receiver
shall not prejudice any right of the claimant to continue
any action which was filed before the date of appointment of the receiver for the covered financial company.
(4) JUDICIAL DETERMINATION OF CLAIMS.—
(A) IN GENERAL.—Subject to subparagraph (B), a claimant may file suit on a claim (or continue an action commenced before the date of appointment of the Corporation
as receiver) in the district or territorial court of the United
States for the district within which the principal place
of business of the covered financial company is located
(and such court shall have jurisdiction to hear such claim).
(B) TIMING.—A claim under subparagraph (A) may
be filed before the end of the 60-day period beginning
on the earlier of—
(i) the end of the period described in paragraph
(3)(A)(i) (or, if extended by agreement of the Corporation and the claimant, the period described in paragraph (3)(A)(ii)) with respect to any claim against a

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covered financial company for which the Corporation
is receiver; or
(ii) the date of any notice of disallowance of such
claim pursuant to paragraph (3)(A)(i).
(C) STATUTE OF LIMITATIONS.—If any claimant fails
to file suit on such claim (or to continue an action on
such claim commenced before the date of appointment of
the Corporation as receiver) prior to the end of the 60day period described in subparagraph (B), the claim shall
be deemed to be disallowed (other than any portion of
such claim which was allowed by the receiver) as of the
end of such period, such disallowance shall be final, and
the claimant shall have no further rights or remedies with
respect to such claim.
(5) EXPEDITED DETERMINATION OF CLAIMS.—
(A) PROCEDURE REQUIRED.—The Corporation shall
establish a procedure for expedited relief outside of the
claims process established under paragraph (3), for any
claimant that alleges—
(i) having a legally valid and enforceable or perfected security interest in property of a covered financial company or control of any legally valid and enforceable security entitlement in respect of any asset held
by the covered financial company for which the Corporation has been appointed receiver; and
(ii) that irreparable injury will occur if the claims
procedure established under paragraph (3) is followed.
(B) DETERMINATION PERIOD.—Prior to the end of the
90-day period beginning on the date on which a claim
is filed in accordance with the procedures established
pursuant to subparagraph (A), the Corporation shall—
(i) determine—
(I) whether to allow or disallow such claim,
or any portion thereof; or
(II) whether such claim should be determined
pursuant to the procedures established pursuant
to paragraph (3);
(ii) notify the claimant of the determination; and
(iii) if the claim is disallowed, provide a statement
of each reason for the disallowance and the procedure
for obtaining a judicial determination.
(C) PERIOD FOR FILING OR RENEWING SUIT.—Any claimant who files a request for expedited relief shall be permitted to file suit (or continue a suit filed before the date
of appointment of the Corporation as receiver seeking a
determination of the rights of the claimant with respect
to such security interest (or such security entitlement) after
the earlier of—
(i) the end of the 90-day period beginning on the
date of the filing of a request for expedited relief;
or
(ii) the date on which the Corporation denies the
claim or a portion thereof.
(D) STATUTE OF LIMITATIONS.—If an action described
in subparagraph (C) is not filed, or the motion to renew
a previously filed suit is not made, before the end of the
30-day period beginning on the date on which such action

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or motion may be filed in accordance with subparagraph
(C), the claim shall be deemed to be disallowed as of
the end of such period (other than any portion of such
claim which was allowed by the receiver), such disallowance
shall be final, and the claimant shall have no further
rights or remedies with respect to such claim.
(E) LEGAL EFFECT OF FILING.—
(i) STATUTE OF LIMITATIONS TOLLED.—For purposes
of any applicable statute of limitations, the filing of
a claim with the receiver shall constitute a commencement of an action.
(ii) NO PREJUDICE TO OTHER ACTIONS.—Subject to
paragraph (8), the filing of a claim with the receiver
shall not prejudice any right of the claimant to continue
any action which was filed before the appointment
of the Corporation as receiver for the covered financial
company.
(6) AGREEMENTS AGAINST INTEREST OF THE RECEIVER.—
No agreement that tends to diminish or defeat the interest
of the Corporation as receiver in any asset acquired by the
receiver under this section shall be valid against the receiver,
unless such agreement—
(A) is in writing;
(B) was executed by an authorized officer or representative of the covered financial company, or confirmed in the
ordinary course of business by the covered financial company; and
(C) has been, since the time of its execution, an official
record of the company or the party claiming under the
agreement provides documentation, acceptable to the
receiver, of such agreement and its authorized execution
or confirmation by the covered financial company.
(7) PAYMENT OF CLAIMS.—
(A) IN GENERAL.—Subject to subparagraph (B), the Corporation as receiver may, in its discretion and to the extent
that funds are available, pay creditor claims, in such
manner and amounts as are authorized under this section,
which are—
(i) allowed by the receiver;
(ii) approved by the receiver pursuant to a final
determination pursuant to paragraph (3) or (5), as
applicable; or
(iii) determined by the final judgment of a court
of competent jurisdiction.
(B) LIMITATION.—A creditor shall, in no event, receive
less than the amount that the creditor is entitled to receive
under paragraphs (2) and (3) of subsection (d), as
applicable.
(C) PAYMENT OF DIVIDENDS ON CLAIMS.—The Corporation as receiver may, in its sole discretion, and to the
extent otherwise permitted by this section, pay dividends
on proven claims at any time, and no liability shall attach
to the Corporation as receiver, by reason of any such payment or for failure to pay dividends to a claimant whose
claim is not proved at the time of any such payment.
(D) RULEMAKING BY THE CORPORATION.—The Corporation may prescribe such rules, including definitions of

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terms, as the Corporation deems appropriate to establish
an interest rate for or to make payments of post-insolvency
interest to creditors holding proven claims against the
receivership estate of a covered financial company, except
that no such interest shall be paid until the Corporation
as receiver has satisfied the principal amount of all creditor
claims.
(8) SUSPENSION OF LEGAL ACTIONS.—
(A) IN GENERAL.—After the appointment of the Corporation as receiver for a covered financial company, the
Corporation may request a stay in any judicial action or
proceeding in which such covered financial company is
or becomes a party, for a period of not to exceed 90 days.
(B) GRANT OF STAY BY ALL COURTS REQUIRED.—Upon
receipt of a request by the Corporation pursuant to
subparagraph (A), the court shall grant such stay as to
all parties.
(9) ADDITIONAL RIGHTS AND DUTIES.—
(A) PRIOR FINAL ADJUDICATION.—The Corporation shall
abide by any final, non-appealable judgment of any court
of competent jurisdiction that was rendered before the
appointment of the Corporation as receiver.
(B) RIGHTS AND REMEDIES OF RECEIVER.—In the event
of any appealable judgment, the Corporation as receiver
shall—
(i) have all the rights and remedies available to
the covered financial company (before the date of
appointment of the Corporation as receiver under section 202) and the Corporation, including removal to
Federal court and all appellate rights; and
(ii) not be required to post any bond in order
to pursue such remedies.
(C) NO ATTACHMENT OR EXECUTION.—No attachment
or execution may be issued by any court upon assets in
the possession of the Corporation as receiver for a covered
financial company.
(D) LIMITATION ON JUDICIAL REVIEW.—Except as otherwise provided in this title, no court shall have jurisdiction
over—
(i) any claim or action for payment from, or any
action seeking a determination of rights with respect
to, the assets of any covered financial company for
which the Corporation has been appointed receiver,
including any assets which the Corporation may
acquire from itself as such receiver; or
(ii) any claim relating to any act or omission of
such covered financial company or the Corporation as
receiver.
(E) DISPOSITION OF ASSETS.—In exercising any right,
power, privilege, or authority as receiver in connection
with any covered financial company for which the Corporation is acting as receiver under this section, the Corporation
shall, to the greatest extent practicable, conduct its operations in a manner that—
(i) maximizes the net present value return from
the sale or disposition of such assets;

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(ii) minimizes the amount of any loss realized in
the resolution of cases;
(iii) mitigates the potential for serious adverse
effects to the financial system;
(iv) ensures timely and adequate competition and
fair and consistent treatment of offerors; and
(v) prohibits discrimination on the basis of race,
sex, or ethnic group in the solicitation and consideration of offers.
(10) STATUTE OF LIMITATIONS FOR ACTIONS BROUGHT BY
RECEIVER.—
(A) IN GENERAL.—Notwithstanding any provision of
any contract, the applicable statute of limitations with
regard to any action brought by the Corporation as receiver
for a covered financial company shall be—
(i) in the case of any contract claim, the longer
of—
(I) the 6-year period beginning on the date
on which the claim accrues; or
(II) the period applicable under State law; and
(ii) in the case of any tort claim, the longer of—
(I) the 3-year period beginning on the date
on which the claim accrues; or
(II) the period applicable under State law.
(B) DATE ON WHICH A CLAIM ACCRUES.—For purposes
of subparagraph (A), the date on which the statute of
limitations begins to run on any claim described in subparagraph (A) shall be the later of—
(i) the date of the appointment of the Corporation
as receiver under this title; or
(ii) the date on which the cause of action accrues.
(C) REVIVAL OF EXPIRED STATE CAUSES OF ACTION.—
(i) IN GENERAL.—In the case of any tort claim
described in clause (ii) for which the applicable statute
of limitations under State law has expired not more
than 5 years before the date of appointment of the
Corporation as receiver for a covered financial company, the Corporation may bring an action as receiver
on such claim without regard to the expiration of the
statute of limitations.
(ii) CLAIMS DESCRIBED.—A tort claim referred to
in clause (i) is a claim arising from fraud, intentional
misconduct resulting in unjust enrichment, or intentional misconduct resulting in substantial loss to the
covered financial company.
(11) AVOIDABLE TRANSFERS.—
(A) FRAUDULENT TRANSFERS.—The Corporation, as
receiver for any covered financial company, may avoid a
transfer of any interest of the covered financial company
in property, or any obligation incurred by the covered financial company, that was made or incurred at or within
2 years before the date on which the Corporation was
appointed receiver, if—
(i) the covered financial company voluntarily or
involuntarily—
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any entity to which the covered financial company
was or became, on or after the date on which
such transfer was made or such obligation was
incurred, indebted; or
(II) received less than a reasonably equivalent
value in exchange for such transferor obligation;
and
(ii) the covered financial company voluntarily or
involuntarily—
(I) was insolvent on the date that such transfer
was made or such obligation was incurred, or
became insolvent as a result of such transfer or
obligation;
(II) was engaged in business or a transaction,
or was about to engage in business or a transaction, for which any property remaining with the
covered financial company was an unreasonably
small capital;
(III) intended to incur, or believed that the
covered financial company would incur, debts that
would be beyond the ability of the covered financial
company to pay as such debts matured; or
(IV) made such transfer to or for the benefit
of an insider, or incurred such obligation to or
for the benefit of an insider, under an employment
contract and not in the ordinary course of business.
(B) PREFERENTIAL TRANSFERS.—The Corporation as
receiver for any covered financial company may avoid a
transfer of an interest of the covered financial company
in property—
(i) to or for the benefit of a creditor;
(ii) for or on account of an antecedent debt that
was owed by the covered financial company before
the transfer was made;
(iii) that was made while the covered financial
company was insolvent;
(iv) that was made—
(I) 90 days or less before the date on which
the Corporation was appointed receiver; or
(II) more than 90 days, but less than 1 year
before the date on which the Corporation was
appointed receiver, if such creditor at the time
of the transfer was an insider; and
(v) that enables the creditor to receive more than
the creditor would receive if—
(I) the covered financial company had been
liquidated under chapter 7 of the Bankruptcy
Code;
(II) the transfer had not been made; and
(III) the creditor received payment of such debt
to the extent provided by the provisions of chapter
7 of the Bankruptcy Code.
(C) POST-RECEIVERSHIP TRANSACTIONS.—The Corporation as receiver for any covered financial company may
avoid a transfer of property of the receivership that
occurred after the Corporation was appointed receiver that

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PUBLIC LAW 111–203—JULY 21, 2010
was not authorized under this title by the Corporation
as receiver.
(D) RIGHT OF RECOVERY.—To the extent that a transfer
is avoided under subparagraph (A), (B), or (C), the Corporation may recover, for the benefit of the covered financial
company, the property transferred or, if a court so orders,
the value of such property (at the time of such transfer)
from—
(i) the initial transferee of such transfer or the
person for whose benefit such transfer was made; or
(ii) any immediate or mediate transferee of any
such initial transferee.
(E) RIGHTS OF TRANSFEREE OR OBLIGEE.—The Corporation may not recover under subparagraph (D)(ii) from—
(i) any transferee that takes for value, including
in satisfaction of or to secure a present or antecedent
debt, in good faith, and without knowledge of the
voidability of the transfer avoided; or
(ii) any immediate or mediate good faith transferee
of such transferee.
(F) DEFENSES.—Subject to the other provisions of this
title—
(i) a transferee or obligee from which the Corporation seeks to recover a transfer or to avoid an obligation
under subparagraph (A), (B), (C), or (D) shall have
the same defenses available to a transferee or obligee
from which a trustee seeks to recover a transfer or
avoid an obligation under sections 547, 548, and 549
of the Bankruptcy Code; and
(ii) the authority of the Corporation to recover
a transfer or avoid an obligation shall be subject to
subsections (b) and (c) of section 546, section 547(c),
and section 548(c) of the Bankruptcy Code.
(G) RIGHTS UNDER THIS SECTION.—The rights of the
Corporation as receiver under this section shall be superior
to any rights of a trustee or any other party (other than
a Federal agency) under the Bankruptcy Code.
(H) RULES OF CONSTRUCTION; DEFINITIONS.—For purposes of—
(i) subparagraphs (A) and (B)—
(I) the term ‘‘insider’’ has the same meaning
as in section 101(31) of the Bankruptcy Code;
(II) a transfer is made when such transfer
is so perfected that a bona fide purchaser from
the covered financial company against whom
applicable law permits such transfer to be perfected cannot acquire an interest in the property
transferred that is superior to the interest in such
property of the transferee, but if such transfer
is not so perfected before the date on which the
Corporation is appointed as receiver for the covered financial company, such transfer is made
immediately before the date of such appointment;
and
(III) the term ‘‘value’’ means property, or satisfaction or securing of a present or antecedent debt
of the covered financial company, but does not

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include an unperformed promise to furnish support
to the covered financial company; and
(ii) subparagraph (B)—
(I) the covered financial company is presumed
to have been insolvent on and during the 90-day
period immediately preceding the date of appointment of the Corporation as receiver; and
(II) the term ‘‘insolvent’’ has the same meaning
as in section 101(32) of the Bankruptcy Code.
(12) SETOFF.—
(A) GENERALLY.—Except as otherwise provided in this
title, any right of a creditor to offset a mutual debt owed
by the creditor to any covered financial company that arose
before the Corporation was appointed as receiver for the
covered financial company against a claim of such creditor
may be asserted if enforceable under applicable noninsolvency law, except to the extent that—
(i) the claim of the creditor against the covered
financial company is disallowed;
(ii) the claim was transferred, by an entity other
than the covered financial company, to the creditor—
(I) after the Corporation was appointed as
receiver of the covered financial company; or
(II)(aa) after the 90-day period preceding the
date on which the Corporation was appointed as
receiver for the covered financial company; and
(bb) while the covered financial company was
insolvent (except for a setoff in connection with
a qualified financial contract); or
(iii) the debt owed to the covered financial company
was incurred by the covered financial company—
(I) after the 90-day period preceding the date
on which the Corporation was appointed as
receiver for the covered financial company;
(II) while the covered financial company was
insolvent; and
(III) for the purpose of obtaining a right of
setoff against the covered financial company
(except for a setoff in connection with a qualified
financial contract).
(B) INSUFFICIENCY.—
(i) IN GENERAL.—Except with respect to a setoff
in connection with a qualified financial contract, if
a creditor offsets a mutual debt owed to the covered
financial company against a claim of the covered financial company on or within the 90-day period preceding
the date on which the Corporation is appointed as
receiver for the covered financial company, the Corporation may recover from the creditor the amount
so offset, to the extent that any insufficiency on the
date of such setoff is less than the insufficiency on
the later of—
(I) the date that is 90 days before the date
on which the Corporation is appointed as receiver
for the covered financial company; or
(II) the first day on which there is an insufficiency during the 90-day period preceding the date

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on which the Corporation is appointed as receiver
for the covered financial company.
(ii) DEFINITION OF INSUFFICIENCY.—In this
subparagraph, the term ‘‘insufficiency’’ means the
amount, if any, by which a claim against the covered
financial company exceeds a mutual debt owed to the
covered financial company by the holder of such claim.
(C) INSOLVENCY.—The term ‘‘insolvent’’ has the same
meaning as in section 101(32) of the Bankruptcy Code.
(D) PRESUMPTION OF INSOLVENCY.—For purposes of
this paragraph, the covered financial company is presumed
to have been insolvent on and during the 90-day period
preceding the date of appointment of the Corporation as
receiver.
(E) LIMITATION.—Nothing in this paragraph (12) shall
be the basis for any right of setoff where no such right
exists under applicable noninsolvency law.
(F) PRIORITY CLAIM.—Except as otherwise provided in
this title, the Corporation as receiver for the covered financial company may sell or transfer any assets free and
clear of the setoff rights of any party, except that such
party shall be entitled to a claim, subordinate to the claims
payable under subparagraphs (A), (B), (C), and (D) of subsection (b)(1), but senior to all other unsecured liabilities
defined in subsection (b)(1)(E), in an amount equal to the
value of such setoff rights.
(13) ATTACHMENT OF ASSETS AND OTHER INJUNCTIVE
RELIEF.—Subject to paragraph (14), any court of competent
jurisdiction may, at the request of the Corporation as receiver
for a covered financial company, issue an order in accordance
with Rule 65 of the Federal Rules of Civil Procedure, including
an order placing the assets of any person designated by the
Corporation under the control of the court and appointing a
trustee to hold such assets.
(14) STANDARDS.—
(A) SHOWING.—Rule 65 of the Federal Rules of Civil
Procedure shall apply with respect to any proceeding under
paragraph (13), without regard to the requirement that
the applicant show that the injury, loss, or damage is
irreparable and immediate.
(B) STATE PROCEEDING.—If, in the case of any proceeding in a State court, the court determines that rules
of civil procedure available under the laws of the State
provide substantially similar protections of the right of
the parties to due process as provided under Rule 65 (as
modified with respect to such proceeding by subparagraph
(A)), the relief sought by the Corporation pursuant to paragraph (14) may be requested under the laws of such State.
(15) TREATMENT OF CLAIMS ARISING FROM BREACH OF CONTRACTS EXECUTED BY THE CORPORATION AS RECEIVER.—Notwithstanding any other provision of this title, any final and nonappealable judgment for monetary damages entered against
the Corporation as receiver for a covered financial company
for the breach of an agreement executed or approved by the
Corporation after the date of its appointment shall be paid
as an administrative expense of the receiver. Nothing in this
paragraph shall be construed to limit the power of a receiver

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124 STAT. 1475

to exercise any rights under contract or law, including to terminate, breach, cancel, or otherwise discontinue such agreement.
(16) ACCOUNTING AND RECORDKEEPING REQUIREMENTS.—
(A) IN GENERAL.—The Corporation as receiver for a
covered financial company shall, consistent with the
accounting and reporting practices and procedures established by the Corporation, maintain a full accounting of
each receivership or other disposition of any covered financial company.
(B) ANNUAL ACCOUNTING OR REPORT.—With respect to
each receivership to which the Corporation is appointed,
the Corporation shall make an annual accounting or report,
as appropriate, available to the Secretary and the Comptroller General of the United States.
(C) AVAILABILITY OF REPORTS.—Any report prepared
pursuant to subparagraph (B) and section 203(c)(3) shall
be made available to the public by the Corporation.
(D) RECORDKEEPING REQUIREMENT.—
(i) IN GENERAL.—The Corporation shall prescribe
such regulations and establish such retention schedules
as are necessary to maintain the documents and
records of the Corporation generated in exercising the
authorities of this title and the records of a covered
financial company for which the Corporation is
appointed receiver, with due regard for—
(I) the avoidance of duplicative record retention; and
(II) the expected evidentiary needs of the Corporation as receiver for a covered financial company and the public regarding the records of covered financial companies.
(ii) RETENTION OF RECORDS.—Unless otherwise
required by applicable Federal law or court order, the
Corporation may not, at any time, destroy any records
that are subject to clause (i).
(iii) RECORDS DEFINED.—As used in this subparagraph, the terms ‘‘records’’ and ‘‘records of a covered
financial company’’ mean any document, book, paper,
map, photograph, microfiche, microfilm, computer or
electronically-created record generated or maintained
by the covered financial company in the course of and
necessary to its transaction of business.
(b) PRIORITY OF EXPENSES AND UNSECURED CLAIMS.—
(1) IN GENERAL.—Unsecured claims against a covered financial company, or the Corporation as receiver for such covered
financial company under this section, that are proven to the
satisfaction of the receiver shall have priority in the following
order:
(A) Administrative expenses of the receiver.
(B) Any amounts owed to the United States, unless
the United States agrees or consents otherwise.
(C) Wages, salaries, or commissions, including vacation, severance, and sick leave pay earned by an individual
(other than an individual described in subparagraph (G)),
but only to the extent of 11,725 for each individual (as
indexed for inflation, by regulation of the Corporation)

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124 STAT. 1476

earned not later than 180 days before the date of appointment of the Corporation as receiver.
(D) Contributions owed to employee benefit plans
arising from services rendered not later than 180 days
before the date of appointment of the Corporation as
receiver, to the extent of the number of employees covered
by each such plan, multiplied by 11,725 (as indexed for
inflation, by regulation of the Corporation), less the aggregate amount paid to such employees under subparagraph
(C), plus the aggregate amount paid by the receivership
on behalf of such employees to any other employee benefit
plan.
(E) Any other general or senior liability of the covered
financial company (which is not a liability described under
subparagraph (F), (G), or (H)).
(F) Any obligation subordinated to general creditors
(which is not an obligation described under subparagraph
(G) or (H)).
(G) Any wages, salaries, or commissions, including
vacation, severance, and sick leave pay earned, owed to
senior executives and directors of the covered financial
company.
(H) Any obligation to shareholders, members, general
partners, limited partners, or other persons, with interests
in the equity of the covered financial company arising
as a result of their status as shareholders, members, general partners, limited partners, or other persons with
interests in the equity of the covered financial company.
(2) POST-RECEIVERSHIP FINANCING PRIORITY.—In the event
that the Corporation, as receiver for a covered financial company, is unable to obtain unsecured credit for the covered
financial company from commercial sources, the Corporation
as receiver may obtain credit or incur debt on the part of
the covered financial company, which shall have priority over
any or all administrative expenses of the receiver under paragraph (1)(A).
(3) CLAIMS OF THE UNITED STATES.—Unsecured claims of
the United States shall, at a minimum, have a higher priority
than liabilities of the covered financial company that count
as regulatory capital.
(4) CREDITORS SIMILARLY SITUATED.—All claimants of a
covered financial company that are similarly situated under
paragraph (1) shall be treated in a similar manner, except
that the Corporation may take any action (including making
payments, subject to subsection (o)(1)(D)(i)) that does not
comply with this subsection, if—
(A) the Corporation determines that such action is
necessary—
(i) to maximize the value of the assets of the
covered financial company;
(ii) to initiate and continue operations essential
to implementation of the receivership or any bridge
financial company;
(iii) to maximize the present value return from
the sale or other disposition of the assets of the covered
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(iv) to minimize the amount of any loss realized
upon the sale or other disposition of the assets of
the covered financial company; and
(B) all claimants that are similarly situated under
paragraph (1) receive not less than the amount provided
in paragraphs (2) and (3) of subsection (d).
(5) SECURED CLAIMS UNAFFECTED.—This section shall not
affect secured claims or security entitlements in respect of
assets or property held by the covered financial company, except
to the extent that the security is insufficient to satisfy the
claim, and then only with regard to the difference between
the claim and the amount realized from the security.
(6) PRIORITY OF EXPENSES AND UNSECURED CLAIMS IN THE
ORDERLY LIQUIDATION OF SIPC MEMBER.—Where the Corporation
is appointed as receiver for a covered broker or dealer,
unsecured claims against such covered broker or dealer, or
the Corporation as receiver for such covered broker or dealer
under this section, that are proven to the satisfaction of the
receiver under section 205(e), shall have the priority prescribed
in paragraph (1), except that—
(A) SIPC shall be entitled to recover administrative
expenses incurred in performing its responsibilities under
section 205 on an equal basis with the Corporation, in
accordance with paragraph (1)(A);
(B) the Corporation shall be entitled to recover any
amounts paid to customers or to SIPC pursuant to section
205(f), in accordance with paragraph (1)(B);
(C) SIPC shall be entitled to recover any amounts
paid out of the SIPC Fund to meet its obligations under
section 205 and under the Securities Investor Protection
Act of 1970 (15 U.S.C. 78aaa et seq.), which claim shall
be subordinate to the claims payable under subparagraphs
(A) and (B) of paragraph (1), but senior to all other claims;
and
(D) the Corporation may, after paying any proven
claims to customers under section 205 and the Securities
Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.),
and as provided above, pay dividends on other proven
claims, in its discretion, and to the extent that funds are
available, in accordance with the priorities set forth in
paragraph (1).
(c) PROVISIONS RELATING TO CONTRACTS ENTERED INTO BEFORE
APPOINTMENT OF RECEIVER.—
(1) AUTHORITY TO REPUDIATE CONTRACTS.—In addition to
any other rights that a receiver may have, the Corporation
as receiver for any covered financial company may disaffirm
or repudiate any contract or lease—
(A) to which the covered financial company is a party;
(B) the performance of which the Corporation as
receiver, in the discretion of the Corporation, determines
to be burdensome; and
(C) the disaffirmance or repudiation of which the Corporation as receiver determines, in the discretion of the
Corporation, will promote the orderly administration of
the affairs of the covered financial company.
(2) TIMING OF REPUDIATION.—The Corporation, as receiver
for any covered financial company, shall determine whether

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PUBLIC LAW 111–203—JULY 21, 2010
or not to exercise the rights of repudiation under this section
within a reasonable period of time.
(3) CLAIMS FOR DAMAGES FOR REPUDIATION.—
(A) IN GENERAL.—Except as provided in paragraphs
(4), (5), and (6) and in subparagraphs (C), (D), and (E)
of this paragraph, the liability of the Corporation as
receiver for a covered financial company for the
disaffirmance or repudiation of any contract pursuant to
paragraph (1) shall be—
(i) limited to actual direct compensatory damages;
and
(ii) determined as of—
(I) the date of the appointment of the Corporation as receiver; or
(II) in the case of any contract or agreement
referred to in paragraph (8), the date of the
disaffirmance or repudiation of such contract or
agreement.
(B) NO LIABILITY FOR OTHER DAMAGES.—For purposes
of subparagraph (A), the term ‘‘actual direct compensatory
damages’’ does not include—
(i) punitive or exemplary damages;
(ii) damages for lost profits or opportunity; or
(iii) damages for pain and suffering.
(C) MEASURE OF DAMAGES FOR REPUDIATION OF QUALIFIED FINANCIAL CONTRACTS.—In the case of any qualified
financial contract or agreement to which paragraph (8)
applies, compensatory damages shall be—
(i) deemed to include normal and reasonable costs
of cover or other reasonable measures of damages utilized in the industries for such contract and agreement
claims; and
(ii) paid in accordance with this paragraph and
subsection (d), except as otherwise specifically provided
in this subsection.
(D) MEASURE OF DAMAGES FOR REPUDIATION OR
DISAFFIRMANCE OF DEBT OBLIGATION.—In the case of any
debt for borrowed money or evidenced by a security, actual
direct compensatory damages shall be no less than the
amount lent plus accrued interest plus any accreted
original issue discount as of the date the Corporation was
appointed receiver of the covered financial company and,
to the extent that an allowed secured claim is secured
by property the value of which is greater than the amount
of such claim and any accrued interest through the date
of repudiation or disaffirmance, such accrued interest
pursuant to paragraph (1).
(E) MEASURE OF DAMAGES FOR REPUDIATION OR
DISAFFIRMANCE OF CONTINGENT OBLIGATION.—In the case
of any contingent obligation of a covered financial company
consisting of any obligation under a guarantee, letter of
credit, loan commitment, or similar credit obligation, the
Corporation may, by rule or regulation, prescribe that
actual direct compensatory damages shall be no less than
the estimated value of the claim as of the date the Corporation was appointed receiver of the covered financial company, as such value is measured based on the likelihood

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that such contingent claim would become fixed and the
probable magnitude thereof.
(4) LEASES UNDER WHICH THE COVERED FINANCIAL COMPANY
IS THE LESSEE.—
(A) IN GENERAL.—If the Corporation as receiver disaffirms or repudiates a lease under which the covered
financial company is the lessee, the receiver shall not be
liable for any damages (other than damages determined
pursuant to subparagraph (B)) for the disaffirmance or
repudiation of such lease.
(B) PAYMENTS OF RENT.—Notwithstanding subparagraph (A), the lessor under a lease to which subparagraph
(A) would otherwise apply shall—
(i) be entitled to the contractual rent accruing
before the later of the date on which—
(I) the notice of disaffirmance or repudiation
is mailed; or
(II) the disaffirmance or repudiation becomes
effective, unless the lessor is in default or breach
of the terms of the lease;
(ii) have no claim for damages under any acceleration clause or other penalty provision in the lease;
and
(iii) have a claim for any unpaid rent, subject
to all appropriate offsets and defenses, due as of the
date of the appointment which shall be paid in accordance with this paragraph and subsection (d).
(5) LEASES UNDER WHICH THE COVERED FINANCIAL COMPANY
IS THE LESSOR.—
(A) IN GENERAL.—If the Corporation as receiver for
a covered financial company repudiates an unexpired written lease of real property of the covered financial company
under which the covered financial company is the lessor
and the lessee is not, as of the date of such repudiation,
in default, the lessee under such lease may either—
(i) treat the lease as terminated by such repudiation; or
(ii) remain in possession of the leasehold interest
for the balance of the term of the lease, unless the
lessee defaults under the terms of the lease after the
date of such repudiation.
(B) PROVISIONS APPLICABLE TO LESSEE REMAINING IN
POSSESSION.—If any lessee under a lease described in
subparagraph (A) remains in possession of a leasehold
interest pursuant to clause (ii) of subparagraph (A)—
(i) the lessee—
(I) shall continue to pay the contractual rent
pursuant to the terms of the lease after the date
of the repudiation of such lease; and
(II) may offset against any rent payment which
accrues after the date of the repudiation of the
lease, any damages which accrue after such date
due to the nonperformance of any obligation of
the covered financial company under the lease
after such date; and
(ii) the Corporation as receiver shall not be liable
to the lessee for any damages arising after such date

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as a result of the repudiation, other than the amount
of any offset allowed under clause (i)(II).
(6) CONTRACTS FOR THE SALE OF REAL PROPERTY.—
(A) IN GENERAL.—If the receiver repudiates any contract (which meets the requirements of subsection (a)(6))
for the sale of real property, and the purchaser of such
real property under such contract is in possession and
is not, as of the date of such repudiation, in default, such
purchaser may either—
(i) treat the contract as terminated by such repudiation; or
(ii) remain in possession of such real property.
(B) PROVISIONS APPLICABLE TO PURCHASER REMAINING
IN POSSESSION.—If any purchaser of real property under
any contract described in subparagraph (A) remains in
possession of such property pursuant to clause (ii) of
subparagraph (A)—
(i) the purchaser—
(I) shall continue to make all payments due
under the contract after the date of the repudiation
of the contract; and
(II) may offset against any such payments any
damages which accrue after such date due to the
nonperformance (after such date) of any obligation
of the covered financial company under the contract; and
(ii) the Corporation as receiver shall—
(I) not be liable to the purchaser for any damages arising after such date as a result of the
repudiation, other than the amount of any offset
allowed under clause (i)(II);
(II) deliver title to the purchaser in accordance
with the provisions of the contract; and
(III) have no obligation under the contract
other than the performance required under subclause (II).
(C) ASSIGNMENT AND SALE ALLOWED.—
(i) IN GENERAL.—No provision of this paragraph
shall be construed as limiting the right of the Corporation as receiver to assign the contract described in
subparagraph (A) and sell the property, subject to the
contract and the provisions of this paragraph.
(ii) NO LIABILITY AFTER ASSIGNMENT AND SALE.—
If an assignment and sale described in clause (i) is
consummated, the Corporation as receiver shall have
no further liability under the contract described in
subparagraph (A) or with respect to the real property
which was the subject of such contract.
(7) PROVISIONS APPLICABLE TO SERVICE CONTRACTS.—
(A) SERVICES PERFORMED BEFORE APPOINTMENT.—In
the case of any contract for services between any person
and any covered financial company for which the Corporation has been appointed receiver, any claim of such person
for services performed before the date of appointment shall
be—
(i) a claim to be paid in accordance with subsections (a), (b), and (d); and

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(ii) deemed to have arisen as of the date on which
the receiver was appointed.
(B) SERVICES PERFORMED AFTER APPOINTMENT AND
PRIOR TO REPUDIATION.—If, in the case of any contract
for services described in subparagraph (A), the Corporation
as receiver accepts performance by the other person before
making any determination to exercise the right of repudiation of such contract under this section—
(i) the other party shall be paid under the terms
of the contract for the services performed; and
(ii) the amount of such payment shall be treated
as an administrative expense of the receivership.
(C) ACCEPTANCE OF PERFORMANCE NO BAR TO SUBSEQUENT REPUDIATION.—The acceptance by the Corporation
as receiver for services referred to in subparagraph (B)
in connection with a contract described in subparagraph
(B) shall not affect the right of the Corporation as receiver
to repudiate such contract under this section at any time
after such performance.
(8) CERTAIN QUALIFIED FINANCIAL CONTRACTS.—
(A) RIGHTS OF PARTIES TO CONTRACTS.—Subject to subsection (a)(8) and paragraphs (9) and (10) of this subsection,
and notwithstanding any other provision of this section,
any other provision of Federal law, or the law of any
State, no person shall be stayed or prohibited from exercising—
(i) any right that such person has to cause the
termination, liquidation, or acceleration of any qualified financial contract with a covered financial company
which arises upon the date of appointment of the Corporation as receiver for such covered financial company
or at any time after such appointment;
(ii) any right under any security agreement or
arrangement or other credit enhancement related to
one or more qualified financial contracts described in
clause (i); or
(iii) any right to offset or net out any termination
value, payment amount, or other transfer obligation
arising under or in connection with 1 or more contracts
or agreements described in clause (i), including any
master agreement for such contracts or agreements.
(B) APPLICABILITY OF OTHER PROVISIONS.—Subsection
(a)(8) shall apply in the case of any judicial action or
proceeding brought against the Corporation as receiver
referred to in subparagraph (A), or the subject covered
financial company, by any party to a contract or agreement
described in subparagraph (A)(i) with such covered financial company.
(C) CERTAIN TRANSFERS NOT AVOIDABLE.—
(i) IN GENERAL.—Notwithstanding subsection
(a)(11), (a)(12), or (c)(12), section 5242 of the Revised
Statutes of the United States, or any other provision
of Federal or State law relating to the avoidance of
preferential or fraudulent transfers, the Corporation,
whether acting as the Corporation or as receiver for
a covered financial company, may not avoid any
transfer of money or other property in connection with

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any qualified financial contract with a covered financial
company.
(ii) EXCEPTION FOR CERTAIN TRANSFERS.—Clause
(i) shall not apply to any transfer of money or other
property in connection with any qualified financial contract with a covered financial company if the transferee
had actual intent to hinder, delay, or defraud such
company, the creditors of such company, or the Corporation as receiver appointed for such company.
(D) CERTAIN CONTRACTS AND AGREEMENTS DEFINED.—
For purposes of this subsection, the following definitions
shall apply:
(i) QUALIFIED FINANCIAL CONTRACT.—The term
‘‘qualified financial contract’’ means any securities contract, commodity contract, forward contract, repurchase
agreement, swap agreement, and any similar agreement that the Corporation determines by regulation,
resolution, or order to be a qualified financial contract
for purposes of this paragraph.
(ii) SECURITIES CONTRACT.—The term ‘‘securities
contract’’—
(I) means a contract for the purchase, sale,
or loan of a security, a certificate of deposit, a
mortgage loan, any interest in a mortgage loan,
a group or index of securities, certificates of
deposit, or mortgage loans or interests therein
(including any interest therein or based on the
value thereof), or any option on any of the foregoing, including any option to purchase or sell
any such security, certificate of deposit, mortgage
loan, interest, group or index, or option, and
including any repurchase or reverse repurchase
transaction on any such security, certificate of
deposit, mortgage loan, interest, group or index,
or option (whether or not such repurchase or
reverse repurchase transaction is a ‘‘repurchase
agreement’’, as defined in clause (v));
(II) does not include any purchase, sale, or
repurchase obligation under a participation in a
commercial mortgage loan unless the Corporation
determines by regulation, resolution, or order to
include any such agreement within the meaning
of such term;
(III) means any option entered into on a
national securities exchange relating to foreign
currencies;
(IV) means the guarantee (including by novation) by or to any securities clearing agency of
any settlement of cash, securities, certificates of
deposit, mortgage loans or interests therein, group
or index of securities, certificates of deposit or
mortgage loans or interests therein (including any
interest therein or based on the value thereof)
or an option on any of the foregoing, including
any option to purchase or sell any such security,
certificate of deposit, mortgage loan, interest,
group or index, or option (whether or not such

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settlement is in connection with any agreement
or transaction referred to in subclauses (I) through
(XII) (other than subclause (II)));
(V) means any margin loan;
(VI) means any extension of credit for the
clearance or settlement of securities transactions;
(VII) means any loan transaction coupled with
a securities collar transaction, any prepaid securities forward transaction, or any total return swap
transaction coupled with a securities sale transaction;
(VIII) means any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;
(IX) means any combination of the agreements
or transactions referred to in this clause;
(X) means any option to enter into any agreement or transaction referred to in this clause;
(XI) means a master agreement that provides
for an agreement or transaction referred to in any
of subclauses (I) through (X), other than subclause
(II), together with all supplements to any such
master agreement, without regard to whether the
master agreement provides for an agreement or
transaction that is not a securities contract under
this clause, except that the master agreement shall
be considered to be a securities contract under
this clause only with respect to each agreement
or transaction under the master agreement that
is referred to in any of subclauses (I) through
(X), other than subclause (II); and
(XII) means any security agreement or
arrangement or other credit enhancement related
to any agreement or transaction referred to in
this clause, including any guarantee or reimbursement obligation in connection with any agreement
or transaction referred to in this clause.
(iii) COMMODITY CONTRACT.—The term ‘‘commodity
contract’’ means—
(I) with respect to a futures commission merchant, a contract for the purchase or sale of a
commodity for future delivery on, or subject to
the rules of, a contract market or board of trade;
(II) with respect to a foreign futures commission merchant, a foreign future;
(III) with respect to a leverage transaction
merchant, a leverage transaction;
(IV) with respect to a clearing organization,
a contract for the purchase or sale of a commodity
for future delivery on, or subject to the rules of,
a contract market or board of trade that is cleared
by such clearing organization, or commodity option
traded on, or subject to the rules of, a contract
market or board of trade that is cleared by such
clearing organization;
(V) with respect to a commodity options dealer,
a commodity option;

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(VI) any other agreement or transaction that
is similar to any agreement or transaction referred
to in this clause;
(VII) any combination of the agreements or
transactions referred to in this clause;
(VIII) any option to enter into any agreement
or transaction referred to in this clause;
(IX) a master agreement that provides for an
agreement or transaction referred to in any of
subclauses (I) through (VIII), together with all
supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not
a commodity contract under this clause, except
that the master agreement shall be considered
to be a commodity contract under this clause only
with respect to each agreement or transaction
under the master agreement that is referred to
in any of subclauses (I) through (VIII); or
(X) any security agreement or arrangement
or other credit enhancement related to any agreement or transaction referred to in this clause,
including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.
(iv) FORWARD CONTRACT.—The term ‘‘forward contract’’ means—
(I) a contract (other than a commodity contract) for the purchase, sale, or transfer of a commodity or any similar good, article, service, right,
or interest which is presently or in the future
becomes the subject of dealing in the forward contract trade, or product or byproduct thereof, with
a maturity date that is more than 2 days after
the date on which the contract is entered into,
including a repurchase or reverse repurchase
transaction (whether or not such repurchase or
reverse repurchase transaction is a ‘‘repurchase
agreement’’, as defined in clause (v)), consignment,
lease, swap, hedge transaction, deposit, loan,
option, allocated transaction, unallocated transaction, or any other similar agreement;
(II) any combination of agreements or transactions referred to in subclauses (I) and (III);
(III) any option to enter into any agreement
or transaction referred to in subclause (I) or (II);
(IV) a master agreement that provides for an
agreement or transaction referred to in subclause
(I), (II), or (III), together with all supplements
to any such master agreement, without regard to
whether the master agreement provides for an
agreement or transaction that is not a forward
contract under this clause, except that the master
agreement shall be considered to be a forward
contract under this clause only with respect to
each agreement or transaction under the master

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agreement that is referred to in subclause (I), (II),
or (III); or
(V) any security agreement or arrangement
or other credit enhancement related to any agreement or transaction referred to in subclause (I),
(II), (III), or (IV), including any guarantee or
reimbursement obligation in connection with any
agreement or transaction referred to in any such
subclause.
AGREEMENT.—The
term
(v)
REPURCHASE
‘‘repurchase agreement’’ (which definition also applies
to a reverse repurchase agreement)—
(I) means an agreement, including related
terms, which provides for the transfer of one or
more certificates of deposit, mortgage related securities (as such term is defined in section 3 of the
Securities Exchange Act of 1934), mortgage loans,
interests in mortgage-related securities or mortgage loans, eligible bankers’ acceptances, qualified
foreign government securities (which, for purposes
of this clause, means a security that is a direct
obligation of, or that is fully guaranteed by, the
central government of a member of the Organization for Economic Cooperation and Development,
as determined by regulation or order adopted by
the Board of Governors), or securities that are
direct obligations of, or that are fully guaranteed
by, the United States or any agency of the United
States against the transfer of funds by the transferee of such certificates of deposit, eligible
bankers’ acceptances, securities, mortgage loans,
or interests with a simultaneous agreement by
such transferee to transfer to the transferor thereof
certificates of deposit, eligible bankers’ acceptances, securities, mortgage loans, or interests as
described above, at a date certain not later than
1 year after such transfers or on demand, against
the transfer of funds, or any other similar agreement;
(II) does not include any repurchase obligation
under a participation in a commercial mortgage
loan, unless the Corporation determines, by regulation, resolution, or order to include any such
participation within the meaning of such term;
(III) means any combination of agreements
or transactions referred to in subclauses (I) and
(IV);
(IV) means any option to enter into any agreement or transaction referred to in subclause (I)
or (III);
(V) means a master agreement that provides
for an agreement or transaction referred to in subclause (I), (III), or (IV), together with all supplements to any such master agreement, without
regard to whether the master agreement provides
for an agreement or transaction that is not a
repurchase agreement under this clause, except

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that the master agreement shall be considered
to be a repurchase agreement under this subclause
only with respect to each agreement or transaction
under the master agreement that is referred to
in subclause (I), (III), or (IV); and
(VI) means any security agreement or arrangement or other credit enhancement related to any
agreement or transaction referred to in subclause
(I), (III), (IV), or (V), including any guarantee or
reimbursement obligation in connection with any
agreement or transaction referred to in any such
subclause.
(vi) SWAP AGREEMENT.—The term ‘‘swap agreement’’ means—
(I) any agreement, including the terms and
conditions incorporated by reference in any such
agreement, which is an interest rate swap, option,
future, or forward agreement, including a rate
floor, rate cap, rate collar, cross-currency rate
swap, and basis swap; a spot, same day-tomorrow,
tomorrow-next, forward, or other foreign exchange,
precious metals, or other commodity agreement;
a currency swap, option, future, or forward agreement; an equity index or equity swap, option,
future, or forward agreement; a debt index or debt
swap, option, future, or forward agreement; a total
return, credit spread or credit swap, option, future,
or forward agreement; a commodity index or commodity swap, option, future, or forward agreement;
weather swap, option, future, or forward agreement; an emissions swap, option, future, or forward agreement; or an inflation swap, option,
future, or forward agreement;
(II) any agreement or transaction that is
similar to any other agreement or transaction
referred to in this clause and that is of a type
that has been, is presently, or in the future
becomes, the subject of recurrent dealings in the
swap or other derivatives markets (including terms
and conditions incorporated by reference in such
agreement) and that is a forward, swap, future,
option, or spot transaction on one or more rates,
currencies, commodities, equity securities or other
equity instruments, debt securities or other debt
instruments, quantitative measures associated
with an occurrence, extent of an occurrence, or
contingency associated with a financial, commercial, or economic consequence, or economic or
financial indices or measures of economic or financial risk or value;
(III) any combination of agreements or transactions referred to in this clause;
(IV) any option to enter into any agreement
or transaction referred to in this clause;
(V) a master agreement that provides for an
agreement or transaction referred to in subclause
(I), (II), (III), or (IV), together with all supplements

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to any such master agreement, without regard to
whether the master agreement contains an agreement or transaction that is not a swap agreement
under this clause, except that the master agreement shall be considered to be a swap agreement
under this clause only with respect to each agreement or transaction under the master agreement
that is referred to in subclause (I), (II), (III), or
(IV); and
(VI) any security agreement or arrangement
or other credit enhancement related to any agreement or transaction referred to in any of subclauses (I) through (V), including any guarantee
or reimbursement obligation in connection with
any agreement or transaction referred to in any
such clause.
(vii) DEFINITIONS RELATING TO DEFAULT.—When
used in this paragraph and paragraphs (9) and (10)—
(I) the term ‘‘default’’ means, with respect to
a covered financial company, any adjudication or
other official decision by any court of competent
jurisdiction, or other public authority pursuant to
which the Corporation has been appointed
receiver; and
(II) the term ‘‘in danger of default’’ means
a covered financial company with respect to which
the Corporation or appropriate State authority has
determined that—
(aa) in the opinion of the Corporation or
such authority—
(AA) the covered financial company
is not likely to be able to pay its obligations in the normal course of business;
and
(BB) there is no reasonable prospect
that the covered financial company will
be able to pay such obligations without
Federal assistance; or
(bb) in the opinion of the Corporation or
such authority—
(AA) the covered financial company
has incurred or is likely to incur losses
that will deplete all or substantially all
of its capital; and
(BB) there is no reasonable prospect
that the capital will be replenished without Federal assistance.
(viii) TREATMENT OF MASTER AGREEMENT AS ONE
AGREEMENT.—Any master agreement for any contract
or agreement described in any of clauses (i) through
(vi) (or any master agreement for such master agreement or agreements), together with all supplements
to such master agreement, shall be treated as a single
agreement and a single qualified financial contact. If
a master agreement contains provisions relating to
agreements or transactions that are not themselves
qualified financial contracts, the master agreement

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124 STAT. 1488

shall be deemed to be a qualified financial contract
only with respect to those transactions that are themselves qualified financial contracts.
(ix) TRANSFER.—The term ‘‘transfer’’ means every
mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with
property or with an interest in property, including
retention of title as a security interest and foreclosure
of the equity of redemption of the covered financial
company.
(x) PERSON.—The term ‘‘person’’ includes any
governmental entity in addition to any entity included
in the definition of such term in section 1, title 1,
United States Code.
(E) CLARIFICATION.—No provision of law shall be construed as limiting the right or power of the Corporation,
or authorizing any court or agency to limit or delay, in
any manner, the right or power of the Corporation to
transfer any qualified financial contract or to disaffirm
or repudiate any such contract in accordance with this
subsection.
(F) WALKAWAY CLAUSES NOT EFFECTIVE.—
(i) IN GENERAL.—Notwithstanding the provisions
of subparagraph (A) of this paragraph and sections
403 and 404 of the Federal Deposit Insurance Corporation Improvement Act of 1991, no walkaway clause
shall be enforceable in a qualified financial contract
of a covered financial company in default.
(ii) LIMITED SUSPENSION OF CERTAIN OBLIGATIONS.—In the case of a qualified financial contract
referred to in clause (i), any payment or delivery obligations otherwise due from a party pursuant to the qualified financial contract shall be suspended from the
time at which the Corporation is appointed as receiver
until the earlier of—
(I) the time at which such party receives notice
that such contract has been transferred pursuant
to paragraph (10)(A); or
(II) 5:00 p.m. (eastern time) on the business
day following the date of the appointment of the
Corporation as receiver.
(iii) WALKAWAY CLAUSE DEFINED.—For purposes
of this subparagraph, the term ‘‘walkaway clause’’
means any provision in a qualified financial contract
that suspends, conditions, or extinguishes a payment
obligation of a party, in whole or in part, or does
not create a payment obligation of a party that would
otherwise exist, solely because of the status of such
party as a nondefaulting party in connection with the
insolvency of a covered financial company that is a
party to the contract or the appointment of or the
exercise of rights or powers by the Corporation as
receiver for such covered financial company, and not
as a result of the exercise by a party of any right
to offset, setoff, or net obligations that exist under
the contract, any other contract between those parties,
or applicable law.

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(G) CERTAIN OBLIGATIONS TO CLEARING ORGANIZAthe event that the Corporation has been
appointed as receiver for a covered financial company which
is a party to any qualified financial contract cleared by
or subject to the rules of a clearing organization (as defined
in paragraph (9)(D)), the receiver shall use its best efforts
to meet all margin, collateral, and settlement obligations
of the covered financial company that arise under qualified
financial contracts (other than any margin, collateral, or
settlement obligation that is not enforceable against the
receiver under paragraph (8)(F)(i) or paragraph (10)(B)),
as required by the rules of the clearing organization when
due. Notwithstanding any other provision of this title, if
the receiver fails to satisfy any such margin, collateral,
or settlement obligations under the rules of the clearing
organization, the clearing organization shall have the
immediate right to exercise, and shall not be stayed from
exercising, all of its rights and remedies under its rules
and applicable law with respect to any qualified financial
contract of the covered financial company, including, without limitation, the right to liquidate all positions and collateral of such covered financial company under the company’s
qualified financial contracts, and suspend or cease to act
for such covered financial company, all in accordance with
the rules of the clearing organization.
(H) RECORDKEEPING.—
(i) JOINT RULEMAKING.—The Federal primary
financial regulatory agencies shall jointly prescribe
regulations requiring that financial companies maintain such records with respect to qualified financial
contracts (including market valuations) that the Federal primary financial regulatory agencies determine
to be necessary or appropriate in order to assist the
Corporation as receiver for a covered financial company
in being able to exercise its rights and fulfill its obligations under this paragraph or paragraph (9) or (10).
(ii) TIME FRAME.—The Federal primary financial
regulatory agencies shall prescribe joint final or
interim final regulations not later than 24 months
after the date of enactment of this Act.
(iii) BACK-UP RULEMAKING AUTHORITY.—If the Federal primary financial regulatory agencies do not prescribe joint final or interim final regulations within
the time frame in clause (ii), the Chairperson of the
Council shall prescribe, in consultation with the Corporation, the regulations required by clause (i).
(iv) CATEGORIZATION AND TIERING.—The joint regulations prescribed under clause (i) shall, as appropriate,
differentiate among financial companies by taking into
consideration their size, risk, complexity, leverage, frequency and dollar amount of qualified financial contracts, interconnectedness to the financial system, and
any other factors deemed appropriate.
(9) TRANSFER OF QUALIFIED FINANCIAL CONTRACTS.—
(A) IN GENERAL.—In making any transfer of assets
or liabilities of a covered financial company in default,

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which includes any qualified financial contract, the Corporation as receiver for such covered financial company
shall either—
(i) transfer to one financial institution, other than
a financial institution for which a conservator, receiver,
trustee in bankruptcy, or other legal custodian has
been appointed or which is otherwise the subject of
a bankruptcy or insolvency proceeding—
(I) all qualified financial contracts between
any person or any affiliate of such person and
the covered financial company in default;
(II) all claims of such person or any affiliate
of such person against such covered financial company under any such contract (other than any
claim which, under the terms of any such contract,
is subordinated to the claims of general unsecured
creditors of such company);
(III) all claims of such covered financial company against such person or any affiliate of such
person under any such contract; and
(IV) all property securing or any other credit
enhancement for any contract described in subclause (I) or any claim described in subclause (II)
or (III) under any such contract; or
(ii) transfer none of the qualified financial contracts, claims, property or other credit enhancement
referred to in clause (i) (with respect to such person
and any affiliate of such person).
(B) TRANSFER TO FOREIGN BANK, FINANCIAL INSTITUTION, OR BRANCH OR AGENCY THEREOF.—In transferring
any qualified financial contracts and related claims and
property under subparagraph (A)(i), the Corporation as
receiver for the covered financial company shall not make
such transfer to a foreign bank, financial institution organized under the laws of a foreign country, or a branch
or agency of a foreign bank or financial institution unless,
under the law applicable to such bank, financial institution,
branch or agency, to the qualified financial contracts, and
to any netting contract, any security agreement or arrangement or other credit enhancement related to one or more
qualified financial contracts, the contractual rights of the
parties to such qualified financial contracts, netting contracts, security agreements or arrangements, or other credit
enhancements are enforceable substantially to the same
extent as permitted under this section.
(C) TRANSFER OF CONTRACTS SUBJECT TO THE RULES
OF A CLEARING ORGANIZATION.—In the event that the Corporation as receiver for a financial institution transfers
any qualified financial contract and related claims, property, or credit enhancement pursuant to subparagraph
(A)(i) and such contract is cleared by or subject to the
rules of a clearing organization, the clearing organization
shall not be required to accept the transferee as a member
by virtue of the transfer.
(D) DEFINITIONS.—For purposes of this paragraph—

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(i) the term ‘‘financial institution’’ means a broker
or dealer, a depository institution, a futures commission merchant, a bridge financial company, or any
other institution determined by the Corporation, by
regulation, to be a financial institution; and
(ii) the term ‘‘clearing organization’’ has the same
meaning as in section 402 of the Federal Deposit Insurance Corporation Improvement Act of 1991.
(10) NOTIFICATION OF TRANSFER.—
(A) IN GENERAL.—
(i) NOTICE.—The Corporation shall provide notice
in accordance with clause (ii), if—
(I) the Corporation as receiver for a covered
financial company in default or in danger of default
transfers any assets or liabilities of the covered
financial company; and
(II) the transfer includes any qualified financial contract.
(ii) TIMING.—The Corporation as receiver for a covered financial company shall notify any person who
is a party to any contract described in clause (i) of
such transfer not later than 5:00 p.m. (eastern time)
on the business day following the date of the appointment of the Corporation as receiver.
(B) CERTAIN RIGHTS NOT ENFORCEABLE.—
(i) RECEIVERSHIP.—A person who is a party to
a qualified financial contract with a covered financial
company may not exercise any right that such person
has to terminate, liquidate, or net such contract under
paragraph (8)(A) solely by reason of or incidental to
the appointment under this section of the Corporation
as receiver for the covered financial company (or the
insolvency or financial condition of the covered financial company for which the Corporation has been
appointed as receiver)—
(I) until 5:00 p.m. (eastern time) on the business day following the date of the appointment;
or
(II) after the person has received notice that
the contract has been transferred pursuant to
paragraph (9)(A).
(ii) NOTICE.—For purposes of this paragraph, the
Corporation as receiver for a covered financial company
shall be deemed to have notified a person who is a
party to a qualified financial contract with such covered
financial company, if the Corporation has taken steps
reasonably calculated to provide notice to such person
by the time specified in subparagraph (A).
(C) TREATMENT OF BRIDGE FINANCIAL COMPANY.—For
purposes of paragraph (9), a bridge financial company shall
not be considered to be a financial institution for which
a conservator, receiver, trustee in bankruptcy, or other
legal custodian has been appointed, or which is otherwise
the subject of a bankruptcy or insolvency proceeding.
(D) BUSINESS DAY DEFINED.—For purposes of this paragraph, the term ‘‘business day’’ means any day other than
any Saturday, Sunday, or any day on which either the

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New York Stock Exchange or the Federal Reserve Bank
of New York is closed.
(11) DISAFFIRMANCE OR REPUDIATION OF QUALIFIED FINANCIAL CONTRACTS.—In exercising the rights of disaffirmance or
repudiation of the Corporation as receiver with respect to any
qualified financial contract to which a covered financial company is a party, the Corporation shall either—
(A) disaffirm or repudiate all qualified financial contracts between—
(i) any person or any affiliate of such person; and
(ii) the covered financial company in default; or
(B) disaffirm or repudiate none of the qualified financial contracts referred to in subparagraph (A) (with respect
to such person or any affiliate of such person).
(12) CERTAIN SECURITY AND CUSTOMER INTERESTS NOT
AVOIDABLE.—No provision of this subsection shall be construed
as permitting the avoidance of any—
(A) legally enforceable or perfected security interest
in any of the assets of any covered financial company,
except in accordance with subsection (a)(11); or
(B) legally enforceable interest in customer property,
security entitlements in respect of assets or property held
by the covered financial company for any security entitlement holder.
(13) AUTHORITY TO ENFORCE CONTRACTS.—
(A) IN GENERAL.—The Corporation, as receiver for a
covered financial company, may enforce any contract, other
than a liability insurance contract of a director or officer,
a financial institution bond entered into by the covered
financial company, notwithstanding any provision of the
contract providing for termination, default, acceleration,
or exercise of rights upon, or solely by reason of, insolvency,
the appointment of or the exercise of rights or powers
by the Corporation as receiver, the filing of the petition
pursuant to section 202(a)(1), or the issuance of the recommendations or determination, or any actions or events
occurring in connection therewith or as a result thereof,
pursuant to section 203.
(B) CERTAIN RIGHTS NOT AFFECTED.—No provision of
this paragraph may be construed as impairing or affecting
any right of the Corporation as receiver to enforce or
recover under a liability insurance contract of a director
or officer or financial institution bond under other
applicable law.
(C) CONSENT REQUIREMENT AND IPSO FACTO CLAUSES.—
(i) IN GENERAL.—Except as otherwise provided by
this section, no person may exercise any right or power
to terminate, accelerate, or declare a default under
any contract to which the covered financial company
is a party (and no provision in any such contract providing for such default, termination, or acceleration
shall be enforceable), or to obtain possession of or
exercise control over any property of the covered financial company or affect any contractual rights of the
covered financial company, without the consent of the

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124 STAT. 1493

Corporation as receiver for the covered financial company during the 90 day period beginning from the
appointment of the Corporation as receiver.
(ii) EXCEPTIONS.—No provision of this subparagraph shall apply to a director or officer liability insurance contract or a financial institution bond, to the
rights of parties to certain qualified financial contracts
pursuant to paragraph (8), or to the rights of parties
to netting contracts pursuant to subtitle A of title
IV of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4401 et seq.),
or shall be construed as permitting the Corporation
as receiver to fail to comply with otherwise enforceable
provisions of such contract.
(D) CONTRACTS TO EXTEND CREDIT.—Notwithstanding
any other provision in this title, if the Corporation as
receiver enforces any contract to extend credit to the covered financial company or bridge financial company, any
valid and enforceable obligation to repay such debt shall
be paid by the Corporation as receiver, as an administrative
expense of the receivership.
(14) EXCEPTION FOR FEDERAL RESERVE BANKS AND CORPORATION SECURITY INTEREST.—No provision of this subsection shall
apply with respect to—
(A) any extension of credit from any Federal reserve
bank or the Corporation to any covered financial company;
or
(B) any security interest in the assets of the covered
financial company securing any such extension of credit.
(15) SAVINGS CLAUSE.—The meanings of terms used in
this subsection are applicable for purposes of this subsection
only, and shall not be construed or applied so as to challenge
or affect the characterization, definition, or treatment of any
similar terms under any other statute, regulation, or rule,
including the Gramm-Leach-Bliley Act, the Legal Certainty
for Bank Products Act of 2000, the securities laws (as that
term is defined in section 3(a)(47) of the Securities Exchange
Act of 1934), and the Commodity Exchange Act.
(16) ENFORCEMENT OF CONTRACTS GUARANTEED BY THE COVERED FINANCIAL COMPANY.—
(A) IN GENERAL.—The Corporation, as receiver for a
covered financial company or as receiver for a subsidiary
of a covered financial company (including an insured
depository institution) shall have the power to enforce contracts of subsidiaries or affiliates of the covered financial
company, the obligations under which are guaranteed or
otherwise supported by or linked to the covered financial
company, notwithstanding any contractual right to cause
the termination, liquidation, or acceleration of such contracts based solely on the insolvency, financial condition,
or receivership of the covered financial company, if—
(i) such guaranty or other support and all related
assets and liabilities are transferred to and assumed
by a bridge financial company or a third party (other
than a third party for which a conservator, receiver,
trustee in bankruptcy, or other legal custodian has
been appointed, or which is otherwise the subject of

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a bankruptcy or insolvency proceeding) within the
same period of time as the Corporation is entitled
to transfer the qualified financial contracts of such
covered financial company; or
(ii) the Corporation, as receiver, otherwise provides
adequate protection with respect to such obligations.
(B) RULE OF CONSTRUCTION.—For purposes of this
paragraph, a bridge financial company shall not be considered to be a third party for which a conservator, receiver,
trustee in bankruptcy, or other legal custodian has been
appointed, or which is otherwise the subject of a bankruptcy
or insolvency proceeding.
(d) VALUATION OF CLAIMS IN DEFAULT.—
(1) IN GENERAL.—Notwithstanding any other provision of
Federal law or the law of any State, and regardless of the
method utilized by the Corporation for a covered financial company, including transactions authorized under subsection (h),
this subsection shall govern the rights of the creditors of any
such covered financial company.
(2) MAXIMUM LIABILITY.—The maximum liability of the Corporation, acting as receiver for a covered financial company
or in any other capacity, to any person having a claim against
the Corporation as receiver or the covered financial company
for which the Corporation is appointed shall equal the amount
that such claimant would have received if—
(A) the Corporation had not been appointed receiver
with respect to the covered financial company; and
(B) the covered financial company had been liquidated
under chapter 7 of the Bankruptcy Code, or any similar
provision of State insolvency law applicable to the covered
financial company.
(3) SPECIAL PROVISION FOR ORDERLY LIQUIDATION BY SIPC.—
The maximum liability of the Corporation, acting as receiver
or in its corporate capacity for any covered broker or dealer
to any customer of such covered broker or dealer, with respect
to customer property of such customer, shall be—
(A) equal to the amount that such customer would
have received with respect to such customer property in
a case initiated by SIPC under the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa et seq.); and
(B) determined as of the close of business on the date
on which the Corporation is appointed as receiver.
(4) ADDITIONAL PAYMENTS AUTHORIZED.—
(A) IN GENERAL.—Subject to subsection (o)(1)(D)(i), the
Corporation, with the approval of the Secretary, may make
additional payments or credit additional amounts to or
with respect to or for the account of any claimant or category of claimants of the covered financial company, if
the Corporation determines that such payments or credits
are necessary or appropriate to minimize losses to the
Corporation as receiver from the orderly liquidation of the
covered financial company under this section.
(B) LIMITATIONS.—
(i) PROHIBITION.—The Corporation shall not make
any payments or credit amounts to any claimant or
category of claimants that would result in any claimant
receiving more than the face value amount of any

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124 STAT. 1495

claim that is proven to the satisfaction of the Corporation.
(ii) NO OBLIGATION.—Notwithstanding any other
provision of Federal or State law, or the Constitution
of any State, the Corporation shall not be obligated,
as a result of having made any payment under
subparagraph (A) or credited any amount described
in subparagraph (A) to or with respect to, or for the
account, of any claimant or category of claimants, to
make payments to any other claimant or category of
claimants.
(C) MANNER OF PAYMENT.—The Corporation may make
payments or credit amounts under subparagraph (A)
directly to the claimants or may make such payments
or credit such amounts to a company other than a covered
financial company or a bridge financial company established with respect thereto in order to induce such other
company to accept liability for such claims.
(e) LIMITATION ON COURT ACTION.—Except as provided in this
title, no court may take any action to restrain or affect the exercise
of powers or functions of the receiver hereunder, and any remedy
against the Corporation or receiver shall be limited to money damages determined in accordance with this title.
(f) LIABILITY OF DIRECTORS AND OFFICERS.—
(1) IN GENERAL.—A director or officer of a covered financial
company may be held personally liable for monetary damages
in any civil action described in paragraph (2) by, on behalf
of, or at the request or direction of the Corporation, which
action is prosecuted wholly or partially for the benefit of the
Corporation—
(A) acting as receiver for such covered financial company;
(B) acting based upon a suit, claim, or cause of action
purchased from, assigned by, or otherwise conveyed by
the Corporation as receiver; or
(C) acting based upon a suit, claim, or cause of action
purchased from, assigned by, or otherwise conveyed in
whole or in part by a covered financial company or its
affiliate in connection with assistance provided under this
title.
(2) ACTIONS COVERED.—Paragraph (1) shall apply with
respect to actions for gross negligence, including any similar
conduct or conduct that demonstrates a greater disregard of
a duty of care (than gross negligence) including intentional
tortious conduct, as such terms are defined and determined
under applicable State law.
(3) SAVINGS CLAUSE.—Nothing in this subsection shall
impair or affect any right of the Corporation under other
applicable law.
(g) DAMAGES.—In any proceeding related to any claim against
a director, officer, employee, agent, attorney, accountant, or
appraiser of a covered financial company, or any other party
employed by or providing services to a covered financial company,
recoverable damages determined to result from the improvident
or otherwise improper use or investment of any assets of the covered
financial company shall include principal losses and appropriate
interest.

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124 STAT. 1496

PUBLIC LAW 111–203—JULY 21, 2010
(h) BRIDGE FINANCIAL COMPANIES.—
(1) ORGANIZATION.—
(A) PURPOSE.—The Corporation, as receiver for one
or more covered financial companies or in anticipation of
being appointed receiver for one or more covered financial
companies, may organize one or more bridge financial
companies in accordance with this subsection.
(B) AUTHORITIES.—Upon the creation of a bridge financial company under subparagraph (A) with respect to a
covered financial company, such bridge financial company
may—
(i) assume such liabilities (including liabilities
associated with any trust or custody business, but
excluding any liabilities that count as regulatory capital) of such covered financial company as the Corporation may, in its discretion, determine to be appropriate;
(ii) purchase such assets (including assets associated with any trust or custody business) of such covered financial company as the Corporation may, in
its discretion, determine to be appropriate; and
(iii) perform any other temporary function which
the Corporation may, in its discretion, prescribe in
accordance with this section.
(2) CHARTER AND ESTABLISHMENT.—
(A) ESTABLISHMENT.—Except as provided in subparagraph (H), where the covered financial company is a covered
broker or dealer, the Corporation, as receiver for a covered
financial company, may grant a Federal charter to and
approve articles of association for one or more bridge financial company or companies, with respect to such covered
financial company which shall, by operation of law and
immediately upon issuance of its charter and approval
of its articles of association, be established and operate
in accordance with, and subject to, such charter, articles,
and this section.
(B) MANAGEMENT.—Upon its establishment, a bridge
financial company shall be under the management of a
board of directors appointed by the Corporation.
(C) ARTICLES OF ASSOCIATION.—The articles of association and organization certificate of a bridge financial company shall have such terms as the Corporation may provide,
and shall be executed by such representatives as the Corporation may designate.
(D) TERMS OF CHARTER; RIGHTS AND PRIVILEGES.—Subject to and in accordance with the provisions of this subsection, the Corporation shall—
(i) establish the terms of the charter of a bridge
financial company and the rights, powers, authorities,
and privileges of a bridge financial company granted
by the charter or as an incident thereto; and
(ii) provide for, and establish the terms and conditions governing, the management (including the bylaws
and the number of directors of the board of directors)
and operations of the bridge financial company.
(E) TRANSFER OF RIGHTS AND PRIVILEGES OF COVERED
FINANCIAL COMPANY.—

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124 STAT. 1497

(i) IN GENERAL.—Notwithstanding any other provision of Federal or State law, the Corporation may
provide for a bridge financial company to succeed to
and assume any rights, powers, authorities, or privileges of the covered financial company with respect
to which the bridge financial company was established
and, upon such determination by the Corporation, the
bridge financial company shall immediately and by
operation of law succeed to and assume such rights,
powers, authorities, and privileges.
(ii) EFFECTIVE WITHOUT APPROVAL.—Any succession to or assumption by a bridge financial company
of rights, powers, authorities, or privileges of a covered
financial company under clause (i) or otherwise shall
be effective without any further approval under Federal or State law, assignment, or consent with respect
thereto.
(F) CORPORATE GOVERNANCE AND ELECTION AND DESIGNATION OF BODY OF LAW.—To the extent permitted by
the Corporation and consistent with this section and any
rules, regulations, or directives issued by the Corporation
under this section, a bridge financial company may elect
to follow the corporate governance practices and procedures
that are applicable to a corporation incorporated under
the general corporation law of the State of Delaware, or
the State of incorporation or organization of the covered
financial company with respect to which the bridge financial company was established, as such law may be amended
from time to time.
(G) CAPITAL.—
(i) CAPITAL NOT REQUIRED.—Notwithstanding any
other provision of Federal or State law, a bridge financial company may, if permitted by the Corporation,
operate without any capital or surplus, or with such
capital or surplus as the Corporation may in its discretion determine to be appropriate.
(ii) NO CONTRIBUTION BY THE CORPORATION
REQUIRED.—The Corporation is not required to pay
capital into a bridge financial company or to issue
any capital stock on behalf of a bridge financial company established under this subsection.
(iii) AUTHORITY.—If the Corporation determines
that such action is advisable, the Corporation may
cause capital stock or other securities of a bridge financial company established with respect to a covered
financial company to be issued and offered for sale
in such amounts and on such terms and conditions
as the Corporation may, in its discretion, determine.
(iv) OPERATING FUNDS IN LIEU OF CAPITAL AND
IMPLEMENTATION PLAN.—Upon the organization of a
bridge financial company, and thereafter as the Corporation may, in its discretion, determine to be necessary or advisable, the Corporation may make available to the bridge financial company, subject to the
plan described in subsection (n)(9), funds for the operation of the bridge financial company in lieu of capital.
(H) BRIDGE BROKERS OR DEALERS.—

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124 STAT. 1498

PUBLIC LAW 111–203—JULY 21, 2010
(i) IN GENERAL.—The Corporation, as receiver for
a covered broker or dealer, may approve articles of
association for one or more bridge financial companies
with respect to such covered broker or dealer, which
bridge financial company or companies shall, by operation of law and immediately upon approval of its
articles of association—
(I) be established and deemed registered with
the Commission under the Securities Exchange
Act of 1934 and a member of SIPC;
(II) operate in accordance with such articles
and this section; and
(III) succeed to any and all registrations and
memberships of the covered financial company
with or in any self-regulatory organizations.
(ii) OTHER REQUIREMENTS.—Except as provided in
clause (i), and notwithstanding any other provision
of this section, the bridge financial company shall be
subject to the Federal securities laws and all requirements with respect to being a member of a self-regulatory organization, unless exempted from any such
requirements by the Commission, as is necessary or
appropriate in the public interest or for the protection
of investors.
(iii) TREATMENT OF CUSTOMERS.—Except as otherwise provided by this title, any customer of the covered
broker or dealer whose account is transferred to a
bridge financial company shall have all the rights,
privileges, and protections under section 205(f) and
under the Securities Investor Protection Act of 1970
(15 U.S.C. 78aaa et seq.), that such customer would
have had if the account were not transferred from
the covered financial company under this subparagraph.
(iv) OPERATION OF BRIDGE BROKERS OR DEALERS.—
Notwithstanding any other provision of this title, the
Corporation shall not operate any bridge financial company created by the Corporation under this title with
respect to a covered broker or dealer in such a manner
as to adversely affect the ability of customers to
promptly access their customer property in accordance
with applicable law.

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(3) INTERESTS IN AND ASSETS AND OBLIGATIONS OF COVERED
FINANCIAL COMPANY.—Notwithstanding paragraph (1) or (2) or
any other provision of law—
(A) a bridge financial company shall assume, acquire,
or succeed to the assets or liabilities of a covered financial
company (including the assets or liabilities associated with
any trust or custody business) only to the extent that
such assets or liabilities are transferred by the Corporation
to the bridge financial company in accordance with, and
subject to the restrictions set forth in, paragraph (1)(B);
and
(B) a bridge financial company shall not assume,
acquire, or succeed to any obligation that a covered financial company for which the Corporation has been appointed
receiver may have to any shareholder, member, general

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124 STAT. 1499

partner, limited partner, or other person with an interest
in the equity of the covered financial company that arises
as a result of the status of that person having an equity
claim in the covered financial company.
(4) BRIDGE FINANCIAL COMPANY TREATED AS BEING IN
DEFAULT FOR CERTAIN PURPOSES.—A bridge financial company
shall be treated as a covered financial company in default
at such times and for such purposes as the Corporation may,
in its discretion, determine.
(5) TRANSFER OF ASSETS AND LIABILITIES.—
(A) AUTHORITY OF CORPORATION.—The Corporation, as
receiver for a covered financial company, may transfer
any assets and liabilities of a covered financial company
(including any assets or liabilities associated with any trust
or custody business) to one or more bridge financial companies, in accordance with and subject to the restrictions
of paragraph (1).
(B) SUBSEQUENT TRANSFERS.—At any time after the
establishment of a bridge financial company with respect
to a covered financial company, the Corporation, as
receiver, may transfer any assets and liabilities of such
covered financial company as the Corporation may, in its
discretion, determine to be appropriate in accordance with
and subject to the restrictions of paragraph (1).
(C) TREATMENT OF TRUST OR CUSTODY BUSINESS.—For
purposes of this paragraph, the trust or custody business,
including fiduciary appointments, held by any covered
financial company is included among its assets and liabilities.
(D) EFFECTIVE WITHOUT APPROVAL.—The transfer of
any assets or liabilities, including those associated with
any trust or custody business of a covered financial company, to a bridge financial company shall be effective without any further approval under Federal or State law,
assignment, or consent with respect thereto.
(E) EQUITABLE TREATMENT OF SIMILARLY SITUATED
CREDITORS.—The Corporation shall treat all creditors of
a covered financial company that are similarly situated
under subsection (b)(1), in a similar manner in exercising
the authority of the Corporation under this subsection to
transfer any assets or liabilities of the covered financial
company to one or more bridge financial companies established with respect to such covered financial company,
except that the Corporation may take any action (including
making payments, subject to subsection (o)(1)(D)(i)) that
does not comply with this subparagraph, if—
(i) the Corporation determines that such action
is necessary—
(I) to maximize the value of the assets of the
covered financial company;
(II) to maximize the present value return from
the sale or other disposition of the assets of the
covered financial company; or
(III) to minimize the amount of any loss
realized upon the sale or other disposition of the
assets of the covered financial company; and

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124 STAT. 1500

PUBLIC LAW 111–203—JULY 21, 2010
(ii) all creditors that are similarly situated under
subsection (b)(1) receive not less than the amount provided under paragraphs (2) and (3) of subsection (d).
(F) LIMITATION ON TRANSFER OF LIABILITIES.—Notwithstanding any other provision of law, the aggregate amount
of liabilities of a covered financial company that are transferred to, or assumed by, a bridge financial company from
a covered financial company may not exceed the aggregate
amount of the assets of the covered financial company
that are transferred to, or purchased by, the bridge financial company from the covered financial company.
(6) STAY OF JUDICIAL ACTION.—Any judicial action to which
a bridge financial company becomes a party by virtue of its
acquisition of any assets or assumption of any liabilities of
a covered financial company shall be stayed from further proceedings for a period of not longer than 45 days (or such
longer period as may be agreed to upon the consent of all
parties) at the request of the bridge financial company.
(7) AGREEMENTS AGAINST INTEREST OF THE BRIDGE FINANCIAL COMPANY.—No agreement that tends to diminish or defeat
the interest of the bridge financial company in any asset of
a covered financial company acquired by the bridge financial
company shall be valid against the bridge financial company,
unless such agreement—
(A) is in writing;
(B) was executed by an authorized officer or representative of the covered financial company or confirmed in the
ordinary course of business by the covered financial company; and
(C) has been on the official record of the company,
since the time of its execution, or with which, the party
claiming under the agreement provides documentation of
such agreement and its authorized execution or confirmation by the covered financial company that is acceptable
to the receiver.
(8) NO FEDERAL STATUS.—
(A) AGENCY STATUS.—A bridge financial company is
not an agency, establishment, or instrumentality of the
United States.
(B) EMPLOYEE STATUS.—Representatives for purposes
of paragraph (1)(B), directors, officers, employees, or agents
of a bridge financial company are not, solely by virtue
of service in any such capacity, officers or employees of
the United States. Any employee of the Corporation or
of any Federal instrumentality who serves at the request
of the Corporation as a representative for purposes of paragraph (1)(B), director, officer, employee, or agent of a bridge
financial company shall not—
(i) solely by virtue of service in any such capacity
lose any existing status as an officer or employee of
the United States for purposes of title 5, United States
Code, or any other provision of law; or
(ii) receive any salary or benefits for service in
any such capacity with respect to a bridge financial
company in addition to such salary or benefits as are
obtained through employment with the Corporation
or such Federal instrumentality.

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(9) FUNDING AUTHORIZED.—The Corporation may, subject
to the plan described in subsection (n)(9), provide funding to
facilitate any transaction described in subparagraph (A), (B),
(C), or (D) of paragraph (13) with respect to any bridge financial
company, or facilitate the acquisition by a bridge financial
company of any assets, or the assumption of any liabilities,
of a covered financial company for which the Corporation has
been appointed receiver.
(10) EXEMPT TAX STATUS.—Notwithstanding any other
provision of Federal or State law, a bridge financial company,
its franchise, property, and income shall be exempt from all
taxation now or hereafter imposed by the United States, by
any territory, dependency, or possession thereof, or by any
State, county, municipality, or local taxing authority.
(11) FEDERAL AGENCY APPROVAL; ANTITRUST REVIEW.—If
a transaction involving the merger or sale of a bridge financial
company requires approval by a Federal agency, the transaction
may not be consummated before the 5th calendar day after
the date of approval by the Federal agency responsible for
such approval with respect thereto. If, in connection with any
such approval a report on competitive factors from the Attorney
General is required, the Federal agency responsible for such
approval shall promptly notify the Attorney General of the
proposed transaction and the Attorney General shall provide
the required report within 10 days of the request. If a notification is required under section 7A of the Clayton Act with
respect to such transaction, the required waiting period shall
end on the 15th day after the date on which the Attorney
General and the Federal Trade Commission receive such
notification, unless the waiting period is terminated earlier
under section 7A(b)(2) of the Clayton Act, or extended under
section 7A(e)(2) of that Act.
(12) DURATION OF BRIDGE FINANCIAL COMPANY.—Subject
to paragraphs (13) and (14), the status of a bridge financial
company as such shall terminate at the end of the 2-year
period following the date on which it was granted a charter.
The Corporation may, in its discretion, extend the status of
the bridge financial company as such for no more than 3 additional 1-year periods.
(13) TERMINATION OF BRIDGE FINANCIAL COMPANY STATUS.—
The status of any bridge financial company as such shall terminate upon the earliest of—
(A) the date of the merger or consolidation of the
bridge financial company with a company that is not a
bridge financial company;
(B) at the election of the Corporation, the sale of a
majority of the capital stock of the bridge financial company
to a company other than the Corporation and other than
another bridge financial company;
(C) the sale of 80 percent, or more, of the capital
stock of the bridge financial company to a person other
than the Corporation and other than another bridge financial company;
(D) at the election of the Corporation, either the
assumption of all or substantially all of the liabilities of
the bridge financial company by a company that is not
a bridge financial company, or the acquisition of all or

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Reports.
Deadline.

Termination
date.

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date.

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substantially all of the assets of the bridge financial company by a company that is not a bridge financial company,
or other entity as permitted under applicable law; and
(E) the expiration of the period provided in paragraph
(12), or the earlier dissolution of the bridge financial company, as provided in paragraph (15).
(14) EFFECT OF TERMINATION EVENTS.—
(A) MERGER OR CONSOLIDATION.—A merger or consolidation, described in paragraph (13)(A) shall be conducted
in accordance with, and shall have the effect provided
in, the provisions of applicable law. For the purpose of
effecting such a merger or consolidation, the bridge financial company shall be treated as a corporation organized
under the laws of the State of Delaware (unless the law
of another State has been selected by the bridge financial
company in accordance with paragraph (2)(F)), and the
Corporation shall be treated as the sole shareholder thereof,
notwithstanding any other provision of State or Federal
law.
(B) CHARTER CONVERSION.—Following the sale of a
majority of the capital stock of the bridge financial company, as provided in paragraph (13)(B), the Corporation
may amend the charter of the bridge financial company
to reflect the termination of the status of the bridge financial company as such, whereupon the company shall have
all of the rights, powers, and privileges under its constituent documents and applicable Federal or State law.
In connection therewith, the Corporation may take such
steps as may be necessary or convenient to reincorporate
the bridge financial company under the laws of a State
and, notwithstanding any provisions of Federal or State
law, such State-chartered corporation shall be deemed to
succeed by operation of law to such rights, titles, powers,
and interests of the bridge financial company as the Corporation may provide, with the same effect as if the bridge
financial company had merged with the State-chartered
corporation under provisions of the corporate laws of such
State.
(C) SALE OF STOCK.—Following the sale of 80 percent
or more of the capital stock of a bridge financial company,
as provided in paragraph (13)(C), the company shall have
all of the rights, powers, and privileges under its constituent documents and applicable Federal or State law.
In connection therewith, the Corporation may take such
steps as may be necessary or convenient to reincorporate
the bridge financial company under the laws of a State
and, notwithstanding any provisions of Federal or State
law, the State-chartered corporation shall be deemed to
succeed by operation of law to such rights, titles, powers
and interests of the bridge financial company as the Corporation may provide, with the same effect as if the bridge
financial company had merged with the State-chartered
corporation under provisions of the corporate laws of such
State.
(D) ASSUMPTION OF LIABILITIES AND SALE OF ASSETS.—
Following the assumption of all or substantially all of the
liabilities of the bridge financial company, or the sale of

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all or substantially all of the assets of the bridge financial
company, as provided in paragraph (13)(D), at the election
of the Corporation, the bridge financial company may retain
its status as such for the period provided in paragraph
(12) or may be dissolved at the election of the Corporation.
(E) AMENDMENTS TO CHARTER.—Following the consummation of a transaction described in subparagraph (A),
(B), (C), or (D) of paragraph (13), the charter of the
resulting company shall be amended to reflect the termination of bridge financial company status, if appropriate.
(15) DISSOLUTION OF BRIDGE FINANCIAL COMPANY.—
(A) IN GENERAL.—Notwithstanding any other provision
of Federal or State law, if the status of a bridge financial
company as such has not previously been terminated by
the occurrence of an event specified in subparagraph (A),
(B), (C), or (D) of paragraph (13)—
(i) the Corporation may, in its discretion, dissolve
the bridge financial company in accordance with this
paragraph at any time; and
(ii) the Corporation shall promptly commence dissolution proceedings in accordance with this paragraph
upon the expiration of the 2-year period following the
date on which the bridge financial company was chartered, or any extension thereof, as provided in paragraph (12).
(B) PROCEDURES.—The Corporation shall remain the
receiver for a bridge financial company for the purpose
of dissolving the bridge financial company. The Corporation
as receiver for a bridge financial company shall wind up
the affairs of the bridge financial company in conformity
with the provisions of law relating to the liquidation of
covered financial companies under this title. With respect
to any such bridge financial company, the Corporation as
receiver shall have all the rights, powers, and privileges
and shall perform the duties related to the exercise of
such rights, powers, or privileges granted by law to the
Corporation as receiver for a covered financial company
under this title and, notwithstanding any other provision
of law, in the exercise of such rights, powers, and privileges,
the Corporation shall not be subject to the direction or
supervision of any State agency or other Federal agency.
(16) AUTHORITY TO OBTAIN CREDIT.—
(A) IN GENERAL.—A bridge financial company may
obtain unsecured credit and issue unsecured debt.
(B) INABILITY TO OBTAIN CREDIT.—If a bridge financial
company is unable to obtain unsecured credit or issue
unsecured debt, the Corporation may authorize the
obtaining of credit or the issuance of debt by the bridge
financial company—
(i) with priority over any or all of the obligations
of the bridge financial company;
(ii) secured by a lien on property of the bridge
financial company that is not otherwise subject to a
lien; or
(iii) secured by a junior lien on property of the
bridge financial company that is subject to a lien.
(C) LIMITATIONS.—

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(i) IN GENERAL.—The Corporation, after notice and
a hearing, may authorize the obtaining of credit or
the issuance of debt by a bridge financial company
that is secured by a senior or equal lien on property
of the bridge financial company that is subject to a
lien, only if—
(I) the bridge financial company is unable to
otherwise obtain such credit or issue such debt;
and
(II) there is adequate protection of the interest
of the holder of the lien on the property with
respect to which such senior or equal lien is proposed to be granted.
(ii) HEARING.—The hearing required pursuant to
this subparagraph shall be before a court of the United
States, which shall have jurisdiction to conduct such
hearing and to authorize a bridge financial company
to obtain secured credit under clause (i).
(D) BURDEN OF PROOF.—In any hearing under this
paragraph, the Corporation has the burden of proof on
the issue of adequate protection.
(E) QUALIFIED FINANCIAL CONTRACTS.—No credit or
debt obtained or issued by a bridge financial company
may contain terms that impair the rights of a counterparty
to a qualified financial contract upon a default by the
bridge financial company, other than the priority of such
counterparty’s unsecured claim (after the exercise of rights)
relative to the priority of the bridge financial company’s
obligations in respect of such credit or debt, unless such
counterparty consents in writing to any such impairment.
(17) EFFECT ON DEBTS AND LIENS.—The reversal or modification on appeal of an authorization under this subsection
to obtain credit or issue debt, or of a grant under this section
of a priority or a lien, does not affect the validity of any
debt so issued, or any priority or lien so granted, to an entity
that extended such credit in good faith, whether or not such
entity knew of the pendency of the appeal, unless such
authorization and the issuance of such debt, or the granting
of such priority or lien, were stayed pending appeal.
(i) SHARING RECORDS.—If the Corporation has been appointed
as receiver for a covered financial company, other Federal regulators
shall make all records relating to the covered financial company
available to the Corporation, which may be used by the Corporation
in any manner that the Corporation determines to be appropriate.
(j) EXPEDITED PROCEDURES FOR CERTAIN CLAIMS.—
(1) TIME FOR FILING NOTICE OF APPEAL.—The notice of
appeal of any order, whether interlocutory or final, entered
in any case brought by the Corporation against a director,
officer, employee, agent, attorney, accountant, or appraiser of
the covered financial company, or any other person employed
by or providing services to a covered financial company, shall
be filed not later than 30 days after the date of entry of
the order. The hearing of the appeal shall be held not later
than 120 days after the date of the notice of appeal. The
appeal shall be decided not later than 180 days after the
date of the notice of appeal.

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(2) SCHEDULING.—The court shall expedite the consideration of any case brought by the Corporation against a director,
officer, employee, agent, attorney, accountant, or appraiser of
a covered financial company or any other person employed
by or providing services to a covered financial company. As
far as practicable, the court shall give such case priority on
its docket.
(3) JUDICIAL DISCRETION.—The court may modify the
schedule and limitations stated in paragraphs (1) and (2) in
a particular case, based on a specific finding that the ends
of justice that would be served by making such a modification
would outweigh the best interest of the public in having the
case resolved expeditiously.
(k) FOREIGN INVESTIGATIONS.—The Corporation, as receiver for
any covered financial company, and for purposes of carrying out
any power, authority, or duty with respect to a covered financial
company—
(1) may request the assistance of any foreign financial
authority and provide assistance to any foreign financial
authority in accordance with section 8(v) of the Federal Deposit
Insurance Act, as if the covered financial company were an
insured depository institution, the Corporation were the appropriate Federal banking agency for the company, and any foreign
financial authority were the foreign banking authority; and
(2) may maintain an office to coordinate foreign investigations or investigations on behalf of foreign financial authorities.
(l) PROHIBITION ON ENTERING SECRECY AGREEMENTS AND
PROTECTIVE ORDERS.—The Corporation may not enter into any
agreement or approve any protective order which prohibits the
Corporation from disclosing the terms of any settlement of an
administrative or other action for damages or restitution brought
by the Corporation in its capacity as receiver for a covered financial
company.
(m) LIQUIDATION OF CERTAIN COVERED FINANCIAL COMPANIES
OR BRIDGE FINANCIAL COMPANIES.—
(1) IN GENERAL.—Except as specifically provided in this
section, and notwithstanding any other provision of law, the
Corporation, in connection with the liquidation of any covered
financial company or bridge financial company with respect
to which the Corporation has been appointed as receiver, shall—
(A) in the case of any covered financial company or
bridge financial company that is a stockbroker, but is not
a member of the Securities Investor Protection Corporation,
apply the provisions of subchapter III of chapter 7 of the
Bankruptcy Code, in respect of the distribution to any
customer of all customer name security and customer property and member property, as if such covered financial
company or bridge financial company were a debtor for
purposes of such subchapter; or
(B) in the case of any covered financial company or
bridge financial company that is a commodity broker, apply
the provisions of subchapter IV of chapter 7 the Bankruptcy
Code, in respect of the distribution to any customer of
all customer property and member property, as if such
covered financial company or bridge financial company
were a debtor for purposes of such subchapter.
(2) DEFINITIONS.—For purposes of this subsection—

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PUBLIC LAW 111–203—JULY 21, 2010
(A) the terms ‘‘customer’’, ‘‘customer name security’’,
and ‘‘customer property and member property’’ have the
same meanings as in sections 741 and 761 of title 11,
United States Code; and
(B) the terms ‘‘commodity broker’’ and ‘‘stockbroker’’
have the same meanings as in section 101 of the Bankruptcy Code.
(n) ORDERLY LIQUIDATION FUND.—
(1) ESTABLISHMENT.—There is established in the Treasury
of the United States a separate fund to be known as the
‘‘Orderly Liquidation Fund’’, which shall be available to the
Corporation to carry out the authorities contained in this title,
for the cost of actions authorized by this title, including the
orderly liquidation of covered financial companies, payment
of administrative expenses, the payment of principal and
interest by the Corporation on obligations issued under paragraph (5), and the exercise of the authorities of the Corporation
under this title.
(2) PROCEEDS.—Amounts received by the Corporation,
including assessments received under subsection (o), proceeds
of obligations issued under paragraph (5), interest and other
earnings from investments, and repayments to the Corporation
by covered financial companies, shall be deposited into the
Fund.
(3) MANAGEMENT.—The Corporation shall manage the
Fund in accordance with this subsection and the policies and
procedures established under section 203(d).
(4) INVESTMENTS.—At the request of the Corporation, the
Secretary may invest such portion of amounts held in the
Fund that are not, in the judgment of the Corporation, required
to meet the current needs of the Corporation, in obligations
of the United States having suitable maturities, as determined
by the Corporation. The interest on and the proceeds from
the sale or redemption of such obligations shall be credited
to the Fund.
(5) AUTHORITY TO ISSUE OBLIGATIONS.—
(A) CORPORATION AUTHORIZED TO ISSUE OBLIGATIONS.—
Upon appointment by the Secretary of the Corporation
as receiver for a covered financial company, the Corporation
is authorized to issue obligations to the Secretary.
(B) SECRETARY AUTHORIZED TO PURCHASE OBLIGATIONS.—The Secretary may, under such terms and conditions as the Secretary may require, purchase or agree
to purchase any obligations issued under subparagraph
(A), and for such purpose, the Secretary is authorized to
use as a public debt transaction the proceeds of the sale
of any securities issued under chapter 31 of title 31, United
States Code, and the purposes for which securities may
be issued under chapter 31 of title 31, United States Code,
are extended to include such purchases.
(C) INTEREST RATE.—Each purchase of obligations by
the Secretary under this paragraph shall be upon such
terms and conditions as to yield a return at a rate determined by the Secretary, taking into consideration the current average yield on outstanding marketable obligations
of the United States of comparable maturity, plus an

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interest rate surcharge to be determined by the Secretary,
which shall be greater than the difference between—
(i) the current average rate on an index of corporate obligations of comparable maturity; and
(ii) the current average rate on outstanding
marketable obligations of the United States of comparable maturity.
(D) SECRETARY AUTHORIZED TO SELL OBLIGATIONS.—
The Secretary may sell, upon such terms and conditions
as the Secretary shall determine, any of the obligations
acquired under this paragraph.
(E) PUBLIC DEBT TRANSACTIONS.—All purchases and
sales by the Secretary of such obligations under this paragraph shall be treated as public debt transactions of the
United States, and the proceeds from the sale of any obligations acquired by the Secretary under this paragraph shall
be deposited into the Treasury of the United States as
miscellaneous receipts.
(6) MAXIMUM OBLIGATION LIMITATION.—The Corporation
may not, in connection with the orderly liquidation of a covered
financial company, issue or incur any obligation, if, after issuing
or incurring the obligation, the aggregate amount of such obligations outstanding under this subsection for each covered financial company would exceed—
(A) an amount that is equal to 10 percent of the total
consolidated assets of the covered financial company, based
on the most recent financial statement available, during
the 30-day period immediately following the date of
appointment of the Corporation as receiver (or a shorter
time period if the Corporation has calculated the amount
described under subparagraph (B)); and
(B) the amount that is equal to 90 percent of the
fair value of the total consolidated assets of each covered
financial company that are available for repayment, after
the time period described in subparagraph (A).
(7) RULEMAKING.—The Corporation and the Secretary shall
jointly, in consultation with the Council, prescribe regulations
governing the calculation of the maximum obligation limitation
defined in this paragraph.
(8) RULE OF CONSTRUCTION.—
(A) IN GENERAL.—Nothing in this section shall be construed to affect the authority of the Corporation under
subsection (a) or (b) of section 14 or section 15(c)(5) of
the Federal Deposit Insurance Act (12 U.S.C. 1824,
1825(c)(5)), the management of the Deposit Insurance Fund
by the Corporation, or the resolution of insured depository
institutions, provided that—
(i) the authorities of the Corporation contained
in this title shall not be used to assist the Deposit
Insurance Fund or to assist any financial company
under applicable law other than this Act;
(ii) the authorities of the Corporation relating to
the Deposit Insurance Fund, or any other responsibilities of the Corporation under applicable law other
than this title, shall not be used to assist a covered
financial company pursuant to this title; and

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(iii) the Deposit Insurance Fund may not be used
in any manner to otherwise circumvent the purposes
of this title.
(B) VALUATION.—For purposes of determining the
amount of obligations under this subsection—
(i) the Corporation shall include as an obligation
any contingent liability of the Corporation pursuant
to this title; and
(ii) the Corporation shall value any contingent
liability at its expected cost to the Corporation.
(9) ORDERLY LIQUIDATION AND REPAYMENT PLANS.—
(A) ORDERLY LIQUIDATION PLAN.—Amounts in the Fund
shall be available to the Corporation with regard to a
covered financial company for which the Corporation is
appointed receiver after the Corporation has developed an
orderly liquidation plan that is acceptable to the Secretary
with regard to such covered financial company, including
the provision and use of funds, including taking any actions
specified under section 204(d) and subsection (h)(2)(G)(iv)
and (h)(9) of this section, and payments to third parties.
The orderly liquidation plan shall take into account actions
to avoid or mitigate potential adverse effects on low income,
minority, or underserved communities affected by the
failure of the covered financial company, and shall provide
for coordination with the primary financial regulatory agencies, as appropriate, to ensure that such actions are taken.
The Corporation may, at any time, amend any orderly
liquidation plan approved by the Secretary with the concurrence of the Secretary.
(B) MANDATORY REPAYMENT PLAN.—
(i) IN GENERAL.—No amount authorized under
paragraph (6)(B) may be provided by the Secretary
to the Corporation under paragraph (5), unless an
agreement is in effect between the Secretary and the
Corporation that—
(I) provides a specific plan and schedule to
achieve the repayment of the outstanding amount
of any borrowing under paragraph (5); and
(II) demonstrates that income to the Corporation from the liquidated assets of the covered financial company and assessments under subsection
(o) will be sufficient to amortize the outstanding
balance within the period established in the repayment schedule and pay the interest accruing on
such balance within the time provided in subsection (o)(1)(B).
(ii) CONSULTATION WITH AND REPORT TO CONGRESS.—The Secretary and the Corporation shall—
(I) consult with the Committee on Banking,
Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House
of Representatives on the terms of any repayment
schedule agreement; and
(II) submit a copy of the repayment schedule
agreement to the Committees described in subclause (I) before the end of the 30-day period beginning on the date on which any amount is provided

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by the Secretary to the Corporation under paragraph (5).
(10) IMPLEMENTATION EXPENSES.—
(A) IN GENERAL.—Reasonable implementation expenses
of the Corporation incurred after the date of enactment
of this Act shall be treated as expenses of the Council.
(B) REQUESTS FOR REIMBURSEMENT.—The Corporation
shall periodically submit a request for reimbursement for
implementation expenses to the Chairperson of the Council,
who shall arrange for prompt reimbursement to the Corporation of reasonable implementation expenses.
(C) DEFINITION.—As used in this paragraph, the term
‘‘implementation expenses’’—
(i) means costs incurred by the Corporation beginning on the date of enactment of this Act, as part
of its efforts to implement this title that do not relate
to a particular covered financial company; and
(ii) includes the costs incurred in connection with
the development of policies, procedures, rules, and
regulations and other planning activities of the Corporation consistent with carrying out this title.
(o) ASSESSMENTS.—
(1) RISK-BASED ASSESSMENTS.—
(A) ELIGIBLE FINANCIAL COMPANIES DEFINED.—For purposes of this subsection, the term ‘‘eligible financial company’’ means any bank holding company with total consolidated assets equal to or greater than $50,000,000,000 and
any nonbank financial company supervised by the Board
of Governors.
(B) ASSESSMENTS.—The Corporation shall charge one
or more risk-based assessments in accordance with the
provisions of subparagraph (D), if such assessments are
necessary to pay in full the obligations issued by the Corporation to the Secretary under this title within 60 months
of the date of issuance of such obligations.
(C) EXTENSIONS AUTHORIZED.—The Corporation may,
with the approval of the Secretary, extend the time period
under subparagraph (B), if the Corporation determines that
an extension is necessary to avoid a serious adverse effect
on the financial system of the United States.
(D) APPLICATION OF ASSESSMENTS.—To meet the
requirements of subparagraph (B), the Corporation shall—
(i) impose assessments, as soon as practicable, on
any claimant that received additional payments or
amounts from the Corporation pursuant to subsection
(b)(4), (d)(4), or (h)(5)(E), except for payments or
amounts necessary to initiate and continue operations
essential to implementation of the receivership or any
bridge financial company, to recover on a cumulative
basis, the entire difference between—
(I) the aggregate value the claimant received
from the Corporation on a claim pursuant to this
title (including pursuant to subsection (b)(4), (d)(4),
and (h)(5)(E)), as of the date on which such value
was received; and
(II) the value the claimant was entitled to
receive from the Corporation on such claim solely

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from the proceeds of the liquidation of the covered
financial company under this title; and
(ii) if the amounts to be recovered on a cumulative
basis under clause (i) are insufficient to meet the
requirements of subparagraph (B), after taking into
account the considerations set forth in paragraph (4),
impose assessments on—
(I) eligible financial companies; and
(II) financial companies with total consolidated
assets equal to or greater than $50,000,000,000
that are not eligible financial companies.
(E) PROVISION OF FINANCING.—Payments or amounts
necessary to initiate and continue operations essential to
implementation of the receivership or any bridge financial
company described in subparagraph (D)(i) shall not include
the provision of financing, as defined by rule of the Corporation, to third parties.
(2) GRADUATED ASSESSMENT RATE.—The Corporation shall
impose assessments on a graduated basis, with financial companies having greater assets and risk being assessed at a higher
rate.
(3) NOTIFICATION AND PAYMENT.—The Corporation shall
notify each financial company of that company’s assessment
under this subsection. Any financial company subject to assessment under this subsection shall pay such assessment in accordance with the regulations prescribed pursuant to paragraph
(6).
(4) RISK-BASED ASSESSMENT CONSIDERATIONS.—In imposing
assessments under paragraph (1)(D)(ii), the Corporation shall
use a risk matrix. The Council shall make a recommendation
to the Corporation on the risk matrix to be used in imposing
such assessments, and the Corporation shall take into account
any such recommendation in the establishment of the risk
matrix to be used to impose such assessments. In recommending or establishing such risk matrix, the Council and
the Corporation, respectively, shall take into account—
(A) economic conditions generally affecting financial
companies so as to allow assessments to increase during
more favorable economic conditions and to decrease during
less favorable economic conditions;
(B) any assessments imposed on a financial company
or an affiliate of a financial company that—
(i) is an insured depository institution, assessed
pursuant to section 7 or 13(c)(4)(G) of the Federal
Deposit Insurance Act;
(ii) is a member of the Securities Investor Protection Corporation, assessed pursuant to section 4 of
the Securities Investor Protection Act of 1970 (15
U.S.C. 78ddd);
(iii) is an insured credit union, assessed pursuant
to section 202(c)(1)(A)(i) of the Federal Credit Union
Act (12 U.S.C. 1782(c)(1)(A)(i)); or
(iv) is an insurance company, assessed pursuant
to applicable State law to cover (or reimburse payments
made to cover) the costs of the rehabilitation, liquidation, or other State insolvency proceeding with respect
to 1 or more insurance companies;

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(C) the risks presented by the financial company to
the financial system and the extent to which the financial
company has benefitted, or likely would benefit, from the
orderly liquidation of a financial company under this title,
including—
(i) the amount, different categories, and concentrations of assets of the financial company and its affiliates, including both on-balance sheet and off-balance
sheet assets;
(ii) the activities of the financial company and
its affiliates;
(iii) the relevant market share of the financial
company and its affiliates;
(iv) the extent to which the financial company
is leveraged;
(v) the potential exposure to sudden calls on
liquidity precipitated by economic distress;
(vi) the amount, maturity, volatility, and stability
of the company’s financial obligations to, and relationship with, other financial companies;
(vii) the amount, maturity, volatility, and stability
of the liabilities of the company, including the degree
of reliance on short-term funding, taking into consideration existing systems for measuring a company’s riskbased capital;
(viii) the stability and variety of the company’s
sources of funding;
(ix) the company’s importance as a source of credit
for households, businesses, and State and local governments and as a source of liquidity for the financial
system;
(x) the extent to which assets are simply managed
and not owned by the financial company and the extent
to which ownership of assets under management is
diffuse; and
(xi) the amount, different categories, and concentrations of liabilities, both insured and uninsured,
contingent and noncontingent, including both on-balance sheet and off-balance sheet liabilities, of the financial company and its affiliates;
(D) any risks presented by the financial company
during the 10-year period immediately prior to the appointment of the Corporation as receiver for the covered financial
company that contributed to the failure of the covered
financial company; and
(E) such other risk-related factors as the Corporation,
or the Council, as applicable, may determine to be appropriate.
(5) COLLECTION OF INFORMATION.—The Corporation may
impose on covered financial companies such collection of
information requirements as the Corporation deems necessary
to carry out this subsection after the appointment of the Corporation as receiver under this title.
(6) RULEMAKING.—
(A) IN GENERAL.—The Corporation shall prescribe regulations to carry out this subsection. The Corporation shall

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consult with the Secretary in the development and finalization of such regulations.
(B) EQUITABLE TREATMENT.—The regulations prescribed under subparagraph (A) shall take into account
the differences in risks posed to the financial stability
of the United States by financial companies, the differences
in the liability structures of financial companies, and the
different bases for other assessments that such financial
companies may be required to pay, to ensure that assessed
financial companies are treated equitably and that assessments under this subsection reflect such differences.
(p) UNENFORCEABILITY OF CERTAIN AGREEMENTS.—
(1) IN GENERAL.—No provision described in paragraph (2)
shall be enforceable against or impose any liability on any
person, as such enforcement or liability shall be contrary to
public policy.
(2) PROHIBITED PROVISIONS.—A provision described in this
paragraph is any term contained in any existing or future
standstill, confidentiality, or other agreement that, directly or
indirectly—
(A) affects, restricts, or limits the ability of any person
to offer to acquire or acquire;
(B) prohibits any person from offering to acquire or
acquiring; or
(C) prohibits any person from using any previously
disclosed information in connection with any such offer
to acquire or acquisition of,
all or part of any covered financial company, including any
liabilities, assets, or interest therein, in connection with any
transaction in which the Corporation exercises its authority
under this title.
(q) OTHER EXEMPTIONS.—
(1) IN GENERAL.—When acting as a receiver under this
title—
(A) the Corporation, including its franchise, its capital,
reserves and surplus, and its income, shall be exempt from
all taxation imposed by any State, county, municipality,
or local taxing authority, except that any real property
of the Corporation shall be subject to State, territorial,
county, municipal, or local taxation to the same extent
according to its value as other real property is taxed, except
that, notwithstanding the failure of any person to challenge
an assessment under State law of the value of such property, such value, and the tax thereon, shall be determined
as of the period for which such tax is imposed;
(B) no property of the Corporation shall be subject
to levy, attachment, garnishment, foreclosure, or sale without the consent of the Corporation, nor shall any involuntary lien attach to the property of the Corporation; and
(C) the Corporation shall not be liable for any amounts
in the nature of penalties or fines, including those arising
from the failure of any person to pay any real property,
personal property, probate, or recording tax or any
recording or filing fees when due; and
(D) the Corporation shall be exempt from all prosecution by the United States or any State, county, municipality, or local authority for any criminal offense arising

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124 STAT. 1513

under Federal, State, county, municipal, or local law, which
was allegedly committed by the covered financial company,
or persons acting on behalf of the covered financial company, prior to the appointment of the Corporation as
receiver.
(2) LIMITATION.—Paragraph (1) shall not apply with respect
to any tax imposed (or other amount arising) under the Internal
Revenue Code of 1986.
(r) CERTAIN SALES OF ASSETS PROHIBITED.—
(1) PERSONS WHO ENGAGED IN IMPROPER CONDUCT WITH,
OR CAUSED LOSSES TO, COVERED FINANCIAL COMPANIES.—The
Corporation shall prescribe regulations which, at a minimum,
shall prohibit the sale of assets of a covered financial company
by the Corporation to—
(A) any person who—
(i) has defaulted, or was a member of a partnership
or an officer or director of a corporation that has
defaulted, on 1 or more obligations, the aggregate
amount of which exceeds $1,000,000, to such covered
financial company;
(ii) has been found to have engaged in fraudulent
activity in connection with any obligation referred to
in clause (i); and
(iii) proposes to purchase any such asset in whole
or in part through the use of the proceeds of a loan
or advance of credit from the Corporation or from
any covered financial company;
(B) any person who participated, as an officer or
director of such covered financial company or of any affiliate
of such company, in a material way in any transaction
that resulted in a substantial loss to such covered financial
company; or
(C) any person who has demonstrated a pattern or
practice of defalcation regarding obligations to such covered
financial company.
(2) CONVICTED DEBTORS.—Except as provided in paragraph
(3), a person may not purchase any asset of such institution
from the receiver, if that person—
(A) has been convicted of an offense under section
215, 656, 657, 1005, 1006, 1007, 1008, 1014, 1032, 1341,
1343, or 1344 of title 18, United States Code, or of conspiring to commit such an offense, affecting any covered
financial company; and
(B) is in default on any loan or other extension of
credit from such covered financial company which, if not
paid, will cause substantial loss to the Fund or the Corporation.
(3) SETTLEMENT OF CLAIMS.—Paragraphs (1) and (2) shall
not apply to the sale or transfer by the Corporation of any
asset of any covered financial company to any person, if the
sale or transfer of the asset resolves or settles, or is part
of the resolution or settlement, of 1 or more claims that have
been, or could have been, asserted by the Corporation against
the person.
(4) DEFINITION OF DEFAULT.—For purposes of this subsection, the term ‘‘default’’ means a failure to comply with

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the terms of a loan or other obligation to such an extent
that the property securing the obligation is foreclosed upon.
(s) RECOUPMENT OF COMPENSATION FROM SENIOR EXECUTIVES
AND DIRECTORS.—
(1) IN GENERAL.—The Corporation, as receiver of a covered
financial company, may recover from any current or former
senior executive or director substantially responsible for the
failed condition of the covered financial company any compensation received during the 2-year period preceding the date on
which the Corporation was appointed as the receiver of the
covered financial company, except that, in the case of fraud,
no time limit shall apply.
(2) COST CONSIDERATIONS.—In seeking to recover any such
compensation, the Corporation shall weigh the financial and
deterrent benefits of such recovery against the cost of executing
the recovery.
(3) RULEMAKING.—The Corporation shall promulgate regulations to implement the requirements of this subsection,
including defining the term ‘‘compensation’’ to mean any financial remuneration, including salary, bonuses, incentives, benefits, severance, deferred compensation, or golden parachute
benefits, and any profits realized from the sale of the securities
of the covered financial company.
SEC. 211. MISCELLANEOUS PROVISIONS.

12 USC 5391.

(a) CLARIFICATION OF PROHIBITION REGARDING CONCEALMENT
ASSETS FROM RECEIVER OR LIQUIDATING AGENT.—Section
1032(1) of title 18, United States Code, is amended by inserting
‘‘the Federal Deposit Insurance Corporation acting as receiver for
a covered financial company, in accordance with title II of the
Dodd-Frank Wall Street Reform and Consumer Protection Act,’’
before ‘‘or the National Credit’’.
(b) CONFORMING AMENDMENT.—Section 1032 of title 18, United
States Code, is amended in the section heading, by striking ‘‘of
financial institution’’.
(c) FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT
ACT OF 1991.—Section 403(a) of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 4403(a)) is
amended by inserting ‘‘section 210(c) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, section 1367 of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992
(12 U.S.C. 4617(d)),’’ after ‘‘section 11(e) of the Federal Deposit
Insurance Act,’’.
(d) FDIC INSPECTOR GENERAL REVIEWS.—
(1) SCOPE.—The Inspector General of the Corporation shall
conduct, supervise, and coordinate audits and investigations
of the liquidation of any covered financial company by the
Corporation as receiver under this title, including collecting
and summarizing—
(A) a description of actions taken by the Corporation
as receiver;
(B) a description of any material sales, transfers, mergers, obligations, purchases, and other material transactions
entered into by the Corporation;
(C) an evaluation of the adequacy of the policies and
procedures of the Corporation under section 203(d) and
orderly liquidation plan under section 210(n)(14);
OF

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Audits.
Investigations.

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124 STAT. 1515

(D) an evaluation of the utilization by the Corporation
of the private sector in carrying out its functions, including
the adequacy of any conflict-of-interest reviews; and
(E) an evaluation of the overall performance of the
Corporation in liquidating the covered financial company,
including administrative costs, timeliness of liquidation
process, and impact on the financial system.
(2) FREQUENCY.—Not later than 6 months after the date
of appointment of the Corporation as receiver under this title
and every 6 months thereafter, the Inspector General of the
Corporation shall conduct the audit and investigation described
in paragraph (1).
(3) REPORTS AND TESTIMONY.—The Inspector General of
the Corporation shall include in the semiannual reports
required by section 5(a) of the Inspector General Act of 1978
(5 U.S.C. App.), a summary of the findings and evaluations
under paragraph (1), and shall appear before the appropriate
committees of Congress, if requested, to present each such
report.
(4) FUNDING.—
(A) INITIAL FUNDING.—The expenses of the Inspector
General of the Corporation in carrying out this subsection
shall be considered administrative expenses of the receivership.
(B) ADDITIONAL FUNDING.—If the maximum amount
available to the Corporation as receiver under this title
is insufficient to enable the Inspector General of the Corporation to carry out the duties under this subsection,
the Corporation shall pay such additional amounts from
assessments imposed under section 210.
(5) TERMINATION OF RESPONSIBILITIES.—The duties and
responsibilities of the Inspector General of the Corporation
under this subsection shall terminate 1 year after the date
of termination of the receivership under this title.
(e) TREASURY INSPECTOR GENERAL REVIEWS.—
(1) SCOPE.—The Inspector General of the Department of
the Treasury shall conduct, supervise, and coordinate audits
and investigations of actions taken by the Secretary related
to the liquidation of any covered financial company under this
title, including collecting and summarizing—
(A) a description of actions taken by the Secretary
under this title;
(B) an analysis of the approval by the Secretary of
the policies and procedures of the Corporation under section
203 and acceptance of the orderly liquidation plan of the
Corporation under section 210; and
(C) an assessment of the terms and conditions underlying the purchase by the Secretary of obligations of the
Corporation under section 210.
(2) FREQUENCY.—Not later than 6 months after the date
of appointment of the Corporation as receiver under this title
and every 6 months thereafter, the Inspector General of the
Department of the Treasury shall conduct the audit and investigation described in paragraph (1).
(3) REPORTS AND TESTIMONY.—The Inspector General of
the Department of the Treasury shall include in the semiannual
reports required by section 5(a) of the Inspector General Act

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Deadlines.

Audits.
Investigations.

Deadlines.

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Reports.

Evaluation.

Recommendation.

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12 USC 5392.

PUBLIC LAW 111–203—JULY 21, 2010

of 1978 (5 U.S.C. App.), a summary of the findings and assessments under paragraph (1), and shall appear before the appropriate committees of Congress, if requested, to present each
such report.
(4) TERMINATION OF RESPONSIBILITIES.—The duties and
responsibilities of the Inspector General of the Department
of the Treasury under this subsection shall terminate 1 year
after the date on which the obligations purchased by the Secretary from the Corporation under section 210 are fully
redeemed.
(f) PRIMARY FINANCIAL REGULATORY AGENCY INSPECTOR GENERAL REVIEWS.—
(1) SCOPE.—Upon the appointment of the Corporation as
receiver for a covered financial company supervised by a Federal primary financial regulatory agency or the Board of Governors under section 165, the Inspector General of the agency
or the Board of Governors shall make a written report reviewing
the supervision by the agency or the Board of Governors of
the covered financial company, which shall—
(A) evaluate the effectiveness of the agency or the
Board of Governors in carrying out its supervisory responsibilities with respect to the covered financial company;
(B) identify any acts or omissions on the part of agency
or Board of Governors officials that contributed to the
covered financial company being in default or in danger
of default;
(C) identify any actions that could have been taken
by the agency or the Board of Governors that would have
prevented the company from being in default or in danger
of default; and
(D) recommend appropriate administrative or legislative action.
(2) REPORTS AND TESTIMONY.—Not later than 1 year after
the date of appointment of the Corporation as receiver under
this title, the Inspector General of the Federal primary financial
regulatory agency or the Board of Governors shall provide
the report required by paragraph (1) to such agency or the
Board of Governors, and along with such agency or the Board
of Governors, as applicable, shall appear before the appropriate
committees of Congress, if requested, to present the report
required by paragraph (1). Not later than 90 days after the
date of receipt of the report required by paragraph (1), such
agency or the Board of Governors, as applicable, shall provide
a written report to Congress describing any actions taken in
response to the recommendations in the report, and if no such
actions were taken, describing the reasons why no actions
were taken.
SEC. 212. PROHIBITION OF CIRCUMVENTION AND PREVENTION OF
CONFLICTS OF INTEREST.

(a) NO OTHER FUNDING.—Funds for the orderly liquidation
of any covered financial company under this title shall only be
provided as specified under this title.
(b) LIMIT ON GOVERNMENTAL ACTIONS.—No governmental
entity may take any action to circumvent the purposes of this
title.

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(c) CONFLICT OF INTEREST.—In the event that the Corporation
is appointed receiver for more than 1 covered financial company
or is appointed receiver for a covered financial company and receiver
for any insured depository institution that is an affiliate of such
covered financial company, the Corporation shall take appropriate
action, as necessary to avoid any conflicts of interest that may
arise in connection with multiple receiverships.

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SEC. 213. BAN ON CERTAIN ACTIVITIES BY SENIOR EXECUTIVES AND
DIRECTORS.

(a) PROHIBITION AUTHORITY.—The Board of Governors or, if
the covered financial company was not supervised by the Board
of Governors, the Corporation, may exercise the authority provided
by this section.
(b) AUTHORITY TO ISSUE ORDER.—The appropriate agency
described in subsection (a) may take any action authorized by
subsection (c), if the agency determines that—
(1) a senior executive or a director of the covered financial
company, prior to the appointment of the Corporation as
receiver, has, directly or indirectly—
(A) violated—
(i) any law or regulation;
(ii) any cease-and-desist order which has become
final;
(iii) any condition imposed in writing by a Federal
agency in connection with any action on any application, notice, or request by such company or senior
executive; or
(iv) any written agreement between such company
and such agency;
(B) engaged or participated in any unsafe or unsound
practice in connection with any financial company; or
(C) committed or engaged in any act, omission, or
practice which constitutes a breach of the fiduciary duty
of such senior executive or director;
(2) by reason of the violation, practice, or breach described
in any subparagraph of paragraph (1), such senior executive
or director has received financial gain or other benefit by reason
of such violation, practice, or breach and such violation, practice, or breach contributed to the failure of the company; and
(3) such violation, practice, or breach—
(A) involves personal dishonesty on the part of such
senior executive or director; or
(B) demonstrates willful or continuing disregard by
such senior executive or director for the safety or soundness
of such company.
(c) AUTHORIZED ACTIONS.—
(1) IN GENERAL.—The appropriate agency for a financial
company, as described in subsection (a), may serve upon a
senior executive or director described in subsection (b) a written
notice of the intention of the agency to prohibit any further
participation by such person, in any manner, in the conduct
of the affairs of any financial company for a period of time
determined by the appropriate agency to be commensurate
with such violation, practice, or breach, provided such period
shall be not less than 2 years.

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12 USC 5393.

Notice.
Time period.

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Applicability.

(2) PROCEDURES.—The due process requirements and other
procedures under section 8(e) of the Federal Deposit Insurance
Act (12 U.S.C. 1818(e)) shall apply to actions under this section
as if the covered financial company were an insured depository
institution and the senior executive or director were an institution-affiliated party, as those terms are defined in that Act.
(d) REGULATIONS.—The Corporation and the Board of Governors, in consultation with the Council, shall jointly prescribe
rules or regulations to administer and carry out this section,
including rules, regulations, or guidelines to further define the
term senior executive for the purposes of this section.

12 USC 5394.

SEC. 214. PROHIBITION ON TAXPAYER FUNDING.

(a) LIQUIDATION REQUIRED.—All financial companies put into
receivership under this title shall be liquidated. No taxpayer funds
shall be used to prevent the liquidation of any financial company
under this title.
(b) RECOVERY OF FUNDS.—All funds expended in the liquidation
of a financial company under this title shall be recovered from
the disposition of assets of such financial company, or shall be
the responsibility of the financial sector, through assessments.
(c) NO LOSSES TO TAXPAYERS.—Taxpayers shall bear no losses
from the exercise of any authority under this title.

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SEC. 215. STUDY ON SECURED CREDITOR HAIRCUTS.

(a) STUDY REQUIRED.—The Council shall conduct a study evaluating the importance of maximizing United States taxpayer protections and promoting market discipline with respect to the treatment
of fully secured creditors in the utilization of the orderly liquidation
authority authorized by this Act. In carrying out such study, the
Council shall—
(1) not be prejudicial to current or past laws or regulations
with respect to secured creditor treatment in a resolution
process;
(2) study the similarities and differences between the resolution mechanisms authorized by the Bankruptcy Code, the
Federal Deposit Insurance Corporation Improvement Act of
1991, and the orderly liquidation authority authorized by this
Act;
(3) determine how various secured creditors are treated
in such resolution mechanisms and examine how a haircut
(of various degrees) on secured creditors could improve market
discipline and protect taxpayers;
(4) compare the benefits and dynamics of prudent lending
practices by depository institutions in secured loans for consumers and small businesses to the lending practices of secured
creditors to large, interconnected financial firms;
(5) consider whether credit differs according to different
types of collateral and different terms and timing of the extension of credit; amd
(6) include an examination of stakeholders who were
unsecured or under-collateralized and seek collateral when a
firm is failing, and the impact that such behavior has on
financial stability and an orderly resolution that protects taxpayers if the firm fails.
(b) REPORT.—Not later than the end of the 1-year period beginning on the date of enactment of this Act, the Council shall issue
a report to the Congress containing all findings and conclusions

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124 STAT. 1519

made by the Council in carrying out the study required under
subsection (a).
SEC. 216. STUDY ON BANKRUPTCY PROCESS FOR FINANCIAL AND
NONBANK FINANCIAL INSTITUTIONS.

(a) STUDY.—
(1) IN GENERAL.—Upon enactment of this Act, the Board
of Governors, in consultation with the Administrative Office
of the United States Courts, shall conduct a study regarding
the resolution of financial companies under the Bankruptcy
Code, under chapter 7 or 11 thereof .
(2) ISSUES TO BE STUDIED.—Issues to be studied under
this section include—
(A) the effectiveness of chapter 7 and chapter 11 of
the Bankruptcy Code in facilitating the orderly resolution
or reorganization of systemic financial companies;
(B) whether a special financial resolution court or panel
of special masters or judges should be established to oversee
cases involving financial companies to provide for the resolution of such companies under the Bankruptcy Code, in
a manner that minimizes adverse impacts on financial
markets without creating moral hazard;
(C) whether amendments to the Bankruptcy Code
should be adopted to enhance the ability of the Code to
resolve financial companies in a manner that minimizes
adverse impacts on financial markets without creating
moral hazard;
(D) whether amendments should be made to the Bankruptcy Code, the Federal Deposit Insurance Act, and other
insolvency laws to address the manner in which qualified
financial contracts of financial companies are treated; and
(E) the implications, challenges, and benefits to creating a new chapter or subchapter of the Bankruptcy Code
to deal with financial companies.
(b) REPORTS TO CONGRESS.—Not later than 1 year after the
date of enactment of this Act, and in each successive year until
the fifth year after the date of enactment of this Act, the Administrative Office of the United States courts shall submit to the
Committees on Banking, Housing, and Urban Affairs and the
Judiciary of the Senate and the Committees on Financial Services
and the Judiciary of the House of Representatives a report summarizing the results of the study conducted under subsection (a).

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SEC. 217. STUDY ON INTERNATIONAL COORDINATION RELATING TO
BANKRUPTCY PROCESS FOR NONBANK FINANCIAL
INSTITUTIONS.

(a) STUDY.—
(1) IN GENERAL.—The Board of Governors, in consultation
with the Administrative Office of the United States Courts,
shall conduct a study regarding international coordination
relating to the resolution of systemic financial companies under
the United States Bankruptcy Code and applicable foreign law.
(2) ISSUES TO BE STUDIED.—With respect to the bankruptcy
process for financial companies, issues to be studied under
this section include—
(A) the extent to which international coordination currently exists;

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(B) current mechanisms and structures for facilitating
international cooperation;
(C) barriers to effective international coordination; and
(D) ways to increase and make more effective international coordination of the resolution of financial companies, so as to minimize the impact on the financial system
without creating moral hazard.
(b) REPORT TO CONGRESS.—Not later than 1 year after the
date of enactment of this Act, the Administrative office of the
United States Courts shall submit to the Committees on Banking,
Housing, and Urban Affairs and the Judiciary of the Senate and
the Committees on Financial Services and the Judiciary of the
House of Representatives a report summarizing the results of the
study conducted under subsection (a).
Enhancing
Financial
Institution Safety
and Soundness
Act of 2010.

TITLE III—TRANSFER OF POWERS TO
THE COMPTROLLER OF THE CURRENCY, THE CORPORATION, AND THE
BOARD OF GOVERNORS

12 USC 5301
note.

SEC. 300. SHORT TITLE.

12 USC 5401.

SEC. 301. PURPOSES.

This title may be cited as the ‘‘Enhancing Financial Institution
Safety and Soundness Act of 2010’’.
The purposes of this title are—
(1) to provide for the safe and sound operation of the
banking system of the United States;
(2) to preserve and protect the dual system of Federal
and State-chartered depository institutions;
(3) to ensure the fair and appropriate supervision of each
depository institution, regardless of the size or type of charter
of the depository institution; and
(4) to streamline and rationalize the supervision of depository institutions and the holding companies of depository
institutions.

12 USC 5402.

SEC. 302. DEFINITION.

In this title, the term ‘‘transferred employee’’ means, as the
context requires, an employee transferred to the Office of the Comptroller of the Currency or the Corporation under section 322.

Subtitle A—Transfer of Powers and Duties
12 USC 5411.

SEC. 311. TRANSFER DATE.

Definition.

(a) TRANSFER DATE.—Except as provided in subsection (b), the
term ‘‘transfer date’’ means the date that is 1 year after the date
of enactment of this Act.
(b) EXTENSION PERMITTED.—
(1) NOTICE REQUIRED.—The Secretary, in consultation with
the Comptroller of the Currency, the Director of the Office
of Thrift Supervision, the Chairman of the Board of Governors,
and the Chairperson of the Corporation, may extend the period
under subsection (a) and designate a transfer date that is

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Deadline.

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not later than 18 months after the date of enactment of this
Act, if the Secretary transmits to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives—
(A) a written determination that commencement of
the orderly process to implement this title is not feasible
by the date that is 1 year after the date of enactment
of this Act;
(B) an explanation of why an extension is necessary
to commence the process of orderly implementation of this
title;
(C) the transfer date designated under this subsection;
and
(D) a description of the steps that will be taken to
initiate the process of an orderly and timely implementation of this title within the extended time period.
(2) PUBLICATION OF NOTICE.—Not later than 270 days after
the date of enactment of this Act, the Secretary shall publish
in the Federal Register notice of any transfer date designated
under paragraph (1).

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SEC. 312. POWERS AND DUTIES TRANSFERRED.

Deadline.
Federal Register,
publication.

12 USC 5412.

(a) EFFECTIVE DATE.—This section, and the amendments made
by this section, shall take effect on the transfer date.
(b) FUNCTIONS OF THE OFFICE OF THRIFT SUPERVISION.—
(1) SAVINGS AND LOAN HOLDING COMPANY FUNCTIONS
TRANSFERRED.—
(A) TRANSFER OF FUNCTIONS.—There are transferred
to the Board of Governors all functions of the Office of
Thrift Supervision and the Director of the Office of Thrift
Supervision (including the authority to issue orders)
relating to—
(i) the supervision of—
(I) any savings and loan holding company; and
(II) any subsidiary (other than a depository
institution) of a savings and loan holding company;
and
(ii) all rulemaking authority of the Office of Thrift
Supervision and the Director of the Office of Thrift
Supervision relating to savings and loan holding
companies.
(B) POWERS, AUTHORITIES, RIGHTS, AND DUTIES.—The
Board of Governors shall succeed to all powers, authorities,
rights, and duties that were vested in the Office of Thrift
Supervision and the Director of the Office of Thrift Supervision on the day before the transfer date relating to the
functions and authority transferred under subparagraph
(A).
(2) ALL OTHER FUNCTIONS TRANSFERRED.—
(A) BOARD OF GOVERNORS.—All rulemaking authority
of the Office of Thrift Supervision and the Director of
the Office of Thrift Supervision under section 11 of the
Home Owners’ Loan Act (12 U.S.C. 1468) relating to transactions with affiliates and extensions of credit to executive
officers, directors, and principal shareholders and under
section 5(q) of such Act relating to tying arrangements
is transferred to the Board of Governors.

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(B) COMPTROLLER OF THE CURRENCY.—Except as provided in paragraph (1) and subparagraph (A)—
(i) there are transferred to the Office of the Comptroller of the Currency and the Comptroller of the
Currency—
(I) all functions of the Office of Thrift Supervision and the Director of the Office of Thrift
Supervision, respectively, relating to Federal
savings associations; and
(II) all rulemaking authority of the Office of
Thrift Supervision and the Director of the Office
of Thrift Supervision, respectively, relating to
savings associations; and
(ii) the Office of the Comptroller of the Currency
and the Comptroller of the Currency shall succeed
to all powers, authorities, rights, and duties that were
vested in the Office of Thrift Supervision and the
Director of the Office of Thrift Supervision, respectively, on the day before the transfer date relating
to the functions and authority transferred under clause
(i).
(C) CORPORATION.—Except as provided in paragraph
(1) and subparagraphs (A) and (B)—
(i) all functions of the Office of Thrift Supervision
and the Director of the Office of Thrift Supervision
relating to State savings associations are transferred
to the Corporation; and
(ii) the Corporation shall succeed to all powers,
authorities, rights, and duties that were vested in the
Office of Thrift Supervision and the Director of the
Office of Thrift Supervision on the day before the
transfer date relating to the functions transferred
under clause (i).
(c) CONFORMING AMENDMENTS.—Section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813) is amended—
(1) in subsection (q), by striking paragraphs (1) through
(4) and inserting the following:
‘‘(1) the Office of the Comptroller of the Currency, in the
case of—
‘‘(A) any national banking association;
‘‘(B) any Federal branch or agency of a foreign bank;
and
‘‘(C) any Federal savings association;
‘‘(2) the Federal Deposit Insurance Corporation, in the case
of—
‘‘(A) any State nonmember insured bank;
‘‘(B) any foreign bank having an insured branch; and
‘‘(C) any State savings association;
‘‘(3) the Board of Governors of the Federal Reserve System,
in the case of—
‘‘(A) any State member bank;
‘‘(B) any branch or agency of a foreign bank with
respect to any provision of the Federal Reserve Act which
is made applicable under the International Banking Act
of 1978;
‘‘(C) any foreign bank which does not operate an
insured branch;

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‘‘(D) any agency or commercial lending company other
than a Federal agency;
‘‘(E) supervisory or regulatory proceedings arising from
the authority given to the Board of Governors under section
7(c)(1) of the International Banking Act of 1978, including
such proceedings under the Financial Institutions Supervisory Act of 1966;
‘‘(F) any bank holding company and any subsidiary
(other than a depository institution) of a bank holding
company; and
‘‘(G) any savings and loan holding company and any
subsidiary (other than a depository institution) of a savings
and loan holding company.’’; and
(2) in paragraphs (1) and (3) of subsection (u), by striking
‘‘(other than a bank holding company’’ and inserting ‘‘(other
than a bank holding company or savings and loan holding
company’’.
(d) CONSUMER PROTECTION.—Nothing in this section may be
construed to limit or otherwise affect the transfer of powers under
title X.
SEC. 313. ABOLISHMENT.

12 USC 5413.

Effective 90 days after the transfer date, the Office of Thrift
Supervision and the position of Director of the Office of Thrift
Supervision are abolished.

Effective date.

SEC. 314. AMENDMENTS TO THE REVISED STATUTES.

(a) AMENDMENT TO SECTION 324.—Section 324 of the Revised
Statutes of the United States (12 U.S.C. 1) is amended to read
as follows:
‘‘SEC. 324. COMPTROLLER OF THE CURRENCY.

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‘‘(a) OFFICE OF THE COMPTROLLER OF THE CURRENCY ESTABLISHED.—There is established in the Department of the Treasury
a bureau to be known as the ‘Office of the Comptroller of the
Currency’ which is charged with assuring the safety and soundness
of, and compliance with laws and regulations, fair access to financial
services, and fair treatment of customers by, the institutions and
other persons subject to its jurisdiction.
‘‘(b) COMPTROLLER OF THE CURRENCY.—
‘‘(1) IN GENERAL.—The chief officer of the Office of the
Comptroller of the Currency shall be known as the Comptroller
of the Currency. The Comptroller of the Currency shall perform
the duties of the Comptroller of the Currency under the general
direction of the Secretary of the Treasury. The Secretary of
the Treasury may not delay or prevent the issuance of any
rule or the promulgation of any regulation by the Comptroller
of the Currency, and may not intervene in any matter or
proceeding before the Comptroller of the Currency (including
agency enforcement actions), unless otherwise specifically provided by law.
‘‘(2) ADDITIONAL AUTHORITY.—The Comptroller of the Currency shall have the same authority with respect to functions
transferred to the Comptroller of the Currency under the
Enhancing Financial Institution Safety and Soundness Act of
2010 as was vested in the Director of the Office of Thrift
Supervision on the transfer date, as defined in section 311
of that Act.’’.

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(b) SUPERVISION OF FEDERAL SAVINGS ASSOCIATIONS.—Chapter
9 of title VII of the Revised Statutes of the United States (12
U.S.C. 1 et seq.) is amended by inserting after section 327A (12
U.S.C. 4a) the following:
12 USC 4b.

‘‘SEC. 327B. DEPUTY COMPTROLLER FOR THE SUPERVISION AND
EXAMINATION OF FEDERAL SAVINGS ASSOCIATIONS.

Designation.

‘‘The Comptroller of the Currency shall designate a Deputy
Comptroller, who shall be responsible for the supervision and examination of Federal savings associations.’’.
(c) AMENDMENT TO SECTION 329.—Section 329 of the Revised
Statutes of the United States (12 U.S.C. 11) is amended by inserting
before the period at the end the following: ‘‘or any Federal savings
association’’.
(d) EFFECTIVE DATE.—This section, and the amendments made
by this section, shall take effect on the transfer date.

12 USC 1 note.

SEC. 315. FEDERAL INFORMATION POLICY.

Section 3502(5) of title 44, United States Code, is amended
by inserting ‘‘Office of the Comptroller of the Currency,’’ after
‘‘the Securities and Exchange Commission,’’.

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12 USC 5414.

SEC. 316. SAVINGS PROVISIONS.

(a) OFFICE OF THRIFT SUPERVISION.—
(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT
AFFECTED.—Sections 312(b) and 313 shall not affect the validity
of any right, duty, or obligation of the United States, the
Director of the Office of Thrift Supervision, the Office of Thrift
Supervision, or any other person, that existed on the day before
the transfer date.
(2) CONTINUATION OF SUITS.—This title shall not abate
any action or proceeding commenced by or against the Director
of the Office of Thrift Supervision or the Office of Thrift Supervision before the transfer date, except that—
(A) for any action or proceeding arising out of a function of the Office of Thrift Supervision or the Director
of the Office of Thrift Supervision transferred to the Board
of Governors by this title, the Board of Governors shall
be substituted for the Office of Thrift Supervision or the
Director of the Office of Thrift Supervision as a party
to the action or proceeding on and after the transfer date;
(B) for any action or proceeding arising out of a function of the Office of Thrift Supervision or the Director
of the Office of Thrift Supervision transferred to the Office
of the Comptroller of the Currency or the Comptroller
of the Currency by this title, the Office of the Comptroller
of the Currency or the Comptroller of the Currency shall
be substituted for the Office of Thrift Supervision or the
Director of the Office of Thrift Supervision, as the case
may be, as a party to the action or proceeding on and
after the transfer date; and
(C) for any action or proceeding arising out of a function of the Office of Thrift Supervision or the Director
of the Office of Thrift Supervision transferred to the Corporation by this title, the Corporation shall be substituted
for the Office of Thrift Supervision or the Director of the
Office of Thrift Supervision as a party to the action or
proceeding on and after the transfer date.

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124 STAT. 1525

(b) CONTINUATION OF EXISTING OTS ORDERS, RESOLUTIONS,
DETERMINATIONS, AGREEMENTS, REGULATIONS, ETC.—All orders,
resolutions,
determinations,
agreements,
and
regulations,
interpretative rules, other interpretations, guidelines, procedures,
and other advisory materials, that have been issued, made, prescribed, or allowed to become effective by the Office of Thrift Supervision or the Director of the Office of Thrift Supervision, or by
a court of competent jurisdiction, in the performance of functions
that are transferred by this title and that are in effect on the
day before the transfer date, shall continue in effect according
to the terms of such orders, resolutions, determinations, agreements, and regulations, interpretative rules, other interpretations,
guidelines, procedures, and other advisory materials, and shall be
enforceable by or against—
(1) the Board of Governors, in the case of a function of
the Office of Thrift Supervision or the Director of the Office
of Thrift Supervision transferred to the Board of Governors,
until modified, terminated, set aside, or superseded in accordance with applicable law by the Board of Governors, by any
court of competent jurisdiction, or by operation of law;
(2) the Office of the Comptroller of the Currency or the
Comptroller of the Currency, in the case of a function of the
Office of Thrift Supervision or the Director of the Office of
Thrift Supervision transferred to the Office of the Comptroller
of the Currency or the Comptroller of the Currency, respectively, until modified, terminated, set aside, or superseded in
accordance with applicable law by the Office of the Comptroller
of the Currency or the Comptroller of the Currency, by any
court of competent jurisdiction, or by operation of law; and
(3) the Corporation, in the case of a function of the Office
of Thrift Supervision or the Director of the Office of Thrift
Supervision transferred to the Corporation, until modified,
terminated, set aside, or superseded in accordance with
applicable law by the Corporation, by any court of competent
jurisdiction, or by operation of law.
(c) IDENTIFICATION OF REGULATIONS CONTINUED.—
(1) BY THE BOARD OF GOVERNORS.—Not later than the
transfer date, the Board of Governors shall—
(A) identify the regulations continued under subsection
(b) that will be enforced by the Board of Governors; and
(B) publish a list of the regulations identified under
subparagraph (A) in the Federal Register.
(2) BY OFFICE OF THE COMPTROLLER OF THE CURRENCY.—
Not later than the transfer date, the Office of the Comptroller
of the Currency shall—
(A) after consultation with the Corporation, identify
the regulations continued under subsection (b) that will
be enforced by the Office of the Comptroller of the Currency; and
(B) publish a list of the regulations identified under
subparagraph (A) in the Federal Register.
(3) BY THE CORPORATION.—Not later than the transfer date,
the Corporation shall—
(A) after consultation with the Office of the Comptroller
of the Currency, identify the regulations continued under
subsection (b) that will be enforced by the Corporation;
and

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(B) publish a list of the regulations identified under
subparagraph (A) in the Federal Register.
(d) STATUS OF REGULATIONS PROPOSED OR NOT YET EFFECTIVE.—
(1) PROPOSED REGULATIONS.—Any proposed regulation of
the Office of Thrift Supervision, which the Office of Thrift
Supervision in performing functions transferred by this title,
has proposed before the transfer date but has not published
as a final regulation before such date, shall be deemed to
be a proposed regulation of the Office of the Comptroller of
the Currency or the Board of Governors, as appropriate,
according to the terms of the proposed regulation.
(2) REGULATIONS NOT YET EFFECTIVE.—Any interim or final
regulation of the Office of Thrift Supervision, which the Office
of Thrift Supervision, in performing functions transferred by
this title, has published before the transfer date but which
has not become effective before that date, shall become effective
as a regulation of the Office of the Comptroller of the Currency
or the Board of Governors, as appropriate, according to the
terms of the interim or final regulation, unless modified, terminated, set aside, or superseded in accordance with applicable
law by the Office of the Comptroller of the Currency or the
Board of Governors, as appropriate, by any court of competent
jurisdiction, or by operation of law.
12 USC 5415.

SEC. 317. REFERENCES IN FEDERAL LAW TO FEDERAL BANKING AGENCIES.

On and after the transfer date, any reference in Federal law
to the Director of the Office of Thrift Supervision or the Office
of Thrift Supervision, in connection with any function of the Director
of the Office of Thrift Supervision or the Office of Thrift Supervision
transferred under section 312(b) or any other provision of this
subtitle, shall be deemed to be a reference to the Comptroller
of the Currency, the Office of the Comptroller of the Currency,
the Chairperson of the Corporation, the Corporation, the Chairman
of the Board of Governors, or the Board of Governors, as appropriate
and consistent with the amendments made in subtitle E.

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SEC. 318. FUNDING.

12 USC 16.

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(a) COMPENSATION OF EXAMINERS.—Section 5240 of the Revised
Statutes of the United States (12 U.S.C. 481 et seq.) is amended—
(1) in the second undesignated paragraph (12 U.S.C. 481),
in the fourth sentence, by striking ‘‘without regard to the provisions of other laws applicable to officers or employees of the
United States’’ and inserting the following: ‘‘set and adjusted
subject to chapter 71 of title 5, United States Code, and without
regard to the provisions of other laws applicable to officers
or employees of the United States’’; and
(2) in the third undesignated paragraph (12 U.S.C. 482),
in the first sentence, by striking ‘‘shall fix’’ and inserting ‘‘shall,
subject to chapter 71 of title 5, United States Code, fix’’.
(b) FUNDING OF OFFICE OF THE COMPTROLLER OF THE CURRENCY.—Chapter 4 of title LXII of the Revised Statutes is amended
by inserting after section 5240 (12 U.S.C. 481, 482) the following:
‘‘SEC. 5240A. The Comptroller of the Currency may collect
an assessment, fee, or other charge from any entity described in
section 3(q)(1) of the Federal Deposit Insurance Act (12 U.S.C.

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124 STAT. 1527

1813(q)(1)), as the Comptroller determines is necessary or appropriate to carry out the responsibilities of the Office of the Comptroller of the Currency. In establishing the amount of an assessment, fee, or charge collected from an entity under this section,
the Comptroller of the Currency may take into account the nature
and scope of the activities of the entity, the amount and type
of assets that the entity holds, the financial and managerial condition of the entity, and any other factor, as the Comptroller of
the Currency determines is appropriate. Funds derived from any
assessment, fee, or charge collected or payment made pursuant
to this section may be deposited by the Comptroller of the Currency
in accordance with the provisions of section 5234. Such funds shall
not be construed to be Government funds or appropriated monies,
and shall not be subject to apportionment for purposes of chapter
15 of title 31, United States Code, or any other provision of law.
The authority of the Comptroller of the Currency under this section
shall be in addition to the authority under section 5240.
‘‘The Comptroller of the Currency shall have sole authority
to determine the manner in which the obligations of the Office
of the Comptroller of the Currency shall be incurred and its
disbursements and expenses allowed and paid, in accordance with
this section, except as provided in chapter 71 of title 5, United
States Code (with respect to compensation).’’.
(c) FUNDING OF BOARD OF GOVERNORS.—Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended by adding at the
end the following:
‘‘(s) ASSESSMENTS, FEES, AND OTHER CHARGES FOR CERTAIN
COMPANIES.—
‘‘(1) IN GENERAL.—The Board shall collect a total amount
of assessments, fees, or other charges from the companies
described in paragraph (2) that is equal to the total expenses
the Board estimates are necessary or appropriate to carry out
the supervisory and regulatory responsibilities of the Board
with respect to such companies.
‘‘(2) COMPANIES.—The companies described in this paragraph are—
‘‘(A) all bank holding companies having total consolidated assets of $50,000,000,000 or more;
‘‘(B) all savings and loan holding companies having
total consolidated assets of $50,000,000,000 or more; and
‘‘(C) all nonbank financial companies supervised by
the Board under section 113 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act.’’.
(d) CORPORATION EXAMINATION FEES.—Section 10(e) of the Federal Deposit Insurance Act (12 U.S.C. 1820(e)) is amended by
striking paragraph (1) and inserting the following:
‘‘(1) REGULAR AND SPECIAL EXAMINATIONS OF DEPOSITORY
INSTITUTIONS.—The cost of conducting any regular examination
or special examination of any depository institution under subsection (b)(2), (b)(3), or (d) or of any entity described in section
3(q)(2) may be assessed by the Corporation against the institution or entity to meet the expenses of the Corporation in carrying out such examinations.’’.
(e) EFFECTIVE DATE.—This section, and the amendments made
by this section, shall take effect on the transfer date.

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124 STAT. 1528
12 USC 5416.

PUBLIC LAW 111–203—JULY 21, 2010

SEC. 319. CONTRACTING AND LEASING AUTHORITY.

Notwithstanding the Federal Property and Administrative
Services Act of 1949 (41 U.S.C. 251 et seq.) or any other provision
of law (except the full and open competition requirements of the
Competition in Contracting Act), the Office of the Comptroller of
the Currency may—
(1) enter into and perform contracts, execute instruments,
and acquire real property (or property interest) as the Comptroller deems necessary to carry out the duties and responsibilities of the Office of the Comptroller of the Currency; and
(2) hold, maintain, sell, lease, or otherwise dispose of the
property (or property interest) acquired under paragraph (1).

Subtitle B—Transitional Provisions
12 USC 5431.

SEC. 321. INTERIM USE OF FUNDS, PERSONNEL, AND PROPERTY OF
THE OFFICE OF THRIFT SUPERVISION.

Consultation.

Determination.

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(a) IN GENERAL.—Before the transfer date, the Office of the
Comptroller of the Currency, the Corporation, and the Board of
Governors shall—
(1) consult and cooperate with the Office of Thrift Supervision to facilitate the orderly transfer of functions to the Office
of the Comptroller of the Currency, the Corporation, and the
Board of Governors in accordance with this title;
(2) determine jointly, from time to time—
(A) the amount of funds necessary to pay any expenses
associated with the transfer of functions (including
expenses for personnel, property, and administrative services) during the period beginning on the date of enactment
of this Act and ending on the transfer date;
(B) which personnel are appropriate to facilitate the
orderly transfer of functions by this title; and
(C) what property and administrative services are necessary to support the Office of the Comptroller of the
Currency, the Corporation, and the Board of Governors
during the period beginning on the date of enactment of
this Act and ending on the transfer date; and
(3) take such actions as may be necessary to provide for
the orderly implementation of this title.
(b) AGENCY CONSULTATION.—When requested jointly by the
Office of the Comptroller of the Currency, the Corporation, and
the Board of Governors to do so before the transfer date, the
Office of Thrift Supervision shall—
(1) pay to the Office of the Comptroller of the Currency,
the Corporation, or the Board of Governors, as applicable, from
funds obtained by the Office of Thrift Supervision through
assessments, fees, or other charges that the Office of Thrift
Supervision is authorized by law to impose, such amounts
as the Office of the Comptroller of the Currency, the Corporation, and the Board of Governors jointly determine to be necessary under subsection (a);
(2) detail to the Office of the Comptroller of the Currency,
the Corporation, or the Board of Governors, as applicable, such
personnel as the Office of the Comptroller of the Currency,
the Corporation, and the Board of Governors jointly determine
to be appropriate under subsection (a); and

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124 STAT. 1529

(3) make available to the Office of the Comptroller of the
Currency, the Corporation, or the Board of Governors, as
applicable, such property and provide to the Office of the Comptroller of the Currency, the Corporation, or the Board of Governors, as applicable, such administrative services as the Office
of the Comptroller of the Currency, the Corporation, and the
Board of Governors jointly determine to be necessary under
subsection (a).
(c) NOTICE REQUIRED.—The Office of the Comptroller of the
Currency, the Corporation, and the Board of Governors shall jointly
give the Office of Thrift Supervision reasonable prior notice of
any request that the Office of the Comptroller of the Currency,
the Corporation, and the Board of Governors jointly intend to make
under subsection (b).

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SEC. 322. TRANSFER OF EMPLOYEES.

12 USC 5432.

(a) IN GENERAL.—
(1) OFFICE OF THRIFT SUPERVISION EMPLOYEES.—
(A) IN GENERAL.—Except as provided in section 1064,
all employees of the Office of Thrift Supervision shall be
transferred to the Office of the Comptroller of the Currency
or the Corporation for employment in accordance with this
section.
(B) ALLOCATING EMPLOYEES FOR TRANSFER TO
RECEIVING AGENCIES.—The Director of the Office of Thrift
Supervision, the Comptroller of the Currency, and the
Chairperson of the Corporation shall—
(i) jointly determine the number of employees of
the Office of Thrift Supervision necessary to perform
or support the functions that are transferred to the
Office of the Comptroller of the Currency or the Corporation by this title; and
(ii) consistent with the determination under clause
(i), jointly identify employees of the Office of Thrift
Supervision for transfer to the Office of the Comptroller
of the Currency or the Corporation.
(2) EMPLOYEES TRANSFERRED; SERVICE PERIODS CREDITED.—
For purposes of this section, periods of service with a Federal
home loan bank, a joint office of Federal home loan banks,
or a Federal reserve bank shall be credited as periods of service
with a Federal agency.
(3) APPOINTMENT AUTHORITY FOR EXCEPTED SERVICE TRANSFERRED.—
(A) IN GENERAL.—Except as provided in subparagraph
(B), any appointment authority of the Office of Thrift
Supervision under Federal law that relates to the functions
transferred under section 312, including the regulations
of the Office of Personnel Management, for filling the positions of employees in the excepted service shall be transferred to the Comptroller of the Currency or the Chairperson of the Corporation, as appropriate.
(B) DECLINING TRANSFERS ALLOWED.—The Comptroller
of the Currency or the Chairperson of the Corporation
may decline to accept a transfer of authority under
subparagraph (A) (and the employees appointed under that
authority) to the extent that such authority relates to positions excepted from the competitive service because of their

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Deadlines.

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Notice.

Time period.

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confidential, policy-making, policy-determining, or policyadvocating character.
(4) ADDITIONAL APPOINTMENT AUTHORITY.—Notwithstanding any other provision of law, the Office of the Comptroller of the Currency and the Corporation may appoint transferred employees to positions in the Office of the Comptroller
of the Currency or the Corporation, respectively.
(b) TIMING OF TRANSFERS AND POSITION ASSIGNMENTS.—Each
employee to be transferred under subsection (a)(1) shall—
(1) be transferred not later than 90 days after the transfer
date; and
(2) receive notice of the position assignment of the employee
not later than 120 days after the effective date of the transfer
of the employee.
(c) TRANSFER OF FUNCTIONS.—
(1) IN GENERAL.—Notwithstanding any other provision of
law, the transfer of employees under this subtitle shall be
deemed a transfer of functions for the purpose of section 3503
of title 5, United States Code.
(2) PRIORITY.—If any provision of this subtitle conflicts
with any protection provided to a transferred employee under
section 3503 of title 5, United States Code, the provisions
of this subtitle shall control.
(d) EMPLOYEE STATUS AND ELIGIBILITY.—The transfer of functions and employees under this subtitle, and the abolishment of
the Office of Thrift Supervision under section 313, shall not affect
the status of the transferred employees as employees of an agency
of the United States under any provision of law.
(e) EQUAL STATUS AND TENURE POSITIONS.—
(1) STATUS AND TENURE.—Each transferred employee from
the Office of Thrift Supervision shall be placed in a position
at the Office of the Comptroller of the Currency or the Corporation with the same status and tenure as the transferred
employee held on the day before the date on which the employee
was transferred.
(2) FUNCTIONS.—To the extent practicable, each transferred
employee shall be placed in a position at the Office of the
Comptroller of the Currency or the Corporation, as applicable,
responsible for the same functions and duties as the transferred
employee had on the day before the date on which the employee
was transferred, in accordance with the expertise and preferences of the transferred employee.
(f) NO ADDITIONAL CERTIFICATION REQUIREMENTS.—An examiner who is a transferred employee shall not be subject to any
additional certification requirements before being placed in a comparable position at the Office of the Comptroller of the Currency
or the Corporation, if the examiner carries out examinations of
the same type of institutions as an employee of the Office of the
Comptroller of the Currency or the Corporation as the employee
was responsible for carrying out before the date on which the
employee was transferred.
(g) PERSONNEL ACTIONS LIMITED.—
(1) PROTECTION.—
(A) IN GENERAL.—Except as provided in paragraph (2),
each affected employee shall not, during the 30-month
period beginning on the transfer date, be involuntarily

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separated, or involuntarily reassigned outside his or her
locality pay area.
(B) AFFECTED EMPLOYEES.—For purposes of this paragraph, the term ‘‘affected employee’’ means—
(i) an employee transferred from the Office of
Thrift Supervision holding a permanent position on
the day before the transfer date; and
(ii) an employee of the Office of the Comptroller
of the Currency or the Corporation holding a permanent position on the day before the transfer date.
(2) EXCEPTIONS.—Paragraph (1) does not limit the right
of the Office of the Comptroller of the Currency or the Corporation to—
(A) separate an employee for cause or for unacceptable
performance;
(B) terminate an appointment to a position excepted
from the competitive service because of its confidential
policy-making, policy-determining, or policy-advocating
character; or
(C) reassign an employee outside such employee’s
locality pay area when the Office of the Comptroller of
the Currency or the Corporation determines that the
reassignment is necessary for the efficient operation of
the agency.
(h) PAY.—
(1) 30-MONTH PROTECTION.—Except as provided in paragraph (2), during the 30-month period beginning on the date
on which the employee was transferred under this subtitle,
a transferred employee shall be paid at a rate that is not
less than the basic rate of pay, including any geographic differential, that the transferred employee received during the
pay period immediately preceding the date on which the
employee was transferred. Notwithstanding the preceding sentence, if the employee was receiving a higher rate of basic
pay on a temporary basis (because of a temporary assignment,
temporary promotion, or other temporary action) immediately
before the transfer, the Agency may reduce the rate of basic
pay on the date the rate would have been reduced but for
the transfer, and the protected rate for the remainder of the
30-month period will be the reduced rate that would have
applied but for the transfer.
(2) EXCEPTIONS.—The Comptroller of the Currency or the
Corporation may reduce the rate of basic pay of a transferred
employee—
(A) for cause, including for unacceptable performance;
or
(B) with the consent of the transferred employee.
(3) PROTECTION ONLY WHILE EMPLOYED.—This subsection
shall apply to a transferred employee only during the period
that the transferred employee remains employed by Office of
the Comptroller of the Currency or the Corporation.
(4) PAY INCREASES PERMITTED.—Nothing in this subsection
shall limit the authority of the Comptroller of the Currency
or the Chairperson of the Corporation to increase the pay
of a transferred employee.
(i) BENEFITS.—
(1) RETIREMENT BENEFITS FOR TRANSFERRED EMPLOYEES.—

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(A) IN GENERAL.—
(i) CONTINUATION OF EXISTING RETIREMENT PLAN.—
Each transferred employee shall remain enrolled in
the retirement plan of the transferred employee, for
as long as the transferred employee is employed by
the Office of the Comptroller of the Currency or the
Corporation.
(ii) EMPLOYER’S CONTRIBUTION.—The Comptroller
of the Currency or the Chairperson of the Corporation,
as appropriate, shall pay any employer contributions
to the existing retirement plan of each transferred
employee, as required under each such existing retirement plan.
(B) DEFINITION.—In this paragraph, the term ‘‘existing
retirement plan’’ means, with respect to a transferred
employee, the retirement plan (including the Financial
Institutions Retirement Fund), and any associated thrift
savings plan, of the agency from which the employee was
transferred in which the employee was enrolled on the
day before the date on which the employee was transferred.
(2) BENEFITS OTHER THAN RETIREMENT BENEFITS.—
(A) DURING FIRST YEAR.—
(i) EXISTING PLANS CONTINUE.—During the 1-year
period following the transfer date, each transferred
employee may retain membership in any employee benefit program (other than a retirement benefit program)
of the agency from which the employee was transferred
under this title, including any dental, vision, long term
care, or life insurance program to which the employee
belonged on the day before the transfer date.
(ii) EMPLOYER’S CONTRIBUTION.—The Office of the
Comptroller of the Currency or the Corporation, as
appropriate, shall pay any employer cost required to
extend coverage in the benefit program to the transferred employee as required under that program or
negotiated agreements.
(B) DENTAL, VISION, OR LIFE INSURANCE AFTER FIRST
YEAR.—If, after the 1-year period beginning on the transfer
date, the Office of the Comptroller of the Currency or
the Corporation determines that the Office of the Comptroller of the Currency or the Corporation, as the case
may be, will not continue to participate in any dental,
vision, or life insurance program of an agency from which
an employee was transferred, a transferred employee who
is a member of the program may, before the decision takes
effect and without regard to any regularly scheduled open
season, elect to enroll in—
(i) the enhanced dental benefits program established under chapter 89A of title 5, United States
Code;
(ii) the enhanced vision benefits established under
chapter 89B of title 5, United States Code; and
(iii) the Federal Employees’ Group Life Insurance
Program established under chapter 87 of title 5, United
States Code, without regard to any requirement of
insurability.

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124 STAT. 1533

(C) LONG TERM CARE INSURANCE AFTER 1ST YEAR.—
If, after the 1-year period beginning on the transfer date,
the Office of the Comptroller of the Currency or the Corporation determines that the Office of the Comptroller of
the Currency or the Corporation, as appropriate, will not
continue to participate in any long term care insurance
program of an agency from which an employee transferred,
a transferred employee who is a member of such a program
may, before the decision takes effect, elect to apply for
coverage under the Federal Long Term Care Insurance
Program established under chapter 90 of title 5, United
States Code, under the underwriting requirements
applicable to a new active workforce member, as described
in part 875 of title 5, Code of Federal Regulations (or
any successor thereto).
(D) CONTRIBUTION OF TRANSFERRED EMPLOYEE.—
(i) IN GENERAL.—Subject to clause (ii), a transferred employee who is enrolled in a plan under the
Federal Employees Health Benefits Program shall pay
any employee contribution required under the plan.
(ii) COST DIFFERENTIAL.—The Office of the Comptroller of the Currency or the Corporation, as
applicable, shall pay any difference in cost between
the employee contribution required under the plan provided to transferred employees by the agency from
which the employee transferred on the date of enactment of this Act and the plan provided by the Office
of the Comptroller of the Currency or the Corporation,
as the case may be, under this section.
(iii) FUNDS TRANSFER.—The Office of the Comptroller of the Currency or the Corporation, as the case
may be, shall transfer to the Employees Health Benefits Fund established under section 8909 of title 5,
United States Code, an amount determined by the
Director of the Office of Personnel Management, after
consultation with the Comptroller of the Currency or
the Chairperson of the Corporation, as the case may
be, and the Office of Management and Budget, to be
necessary to reimburse the Fund for the cost to the
Fund of providing any benefits under this subparagraph that are not otherwise paid for by a transferred
employee under clause (i).
(E) SPECIAL PROVISIONS TO ENSURE CONTINUATION OF
LIFE INSURANCE BENEFITS.—
(i) IN GENERAL.—An annuitant, as defined in section 8901 of title 5, United States Code, who is enrolled
in a life insurance plan administered by an agency
from which employees are transferred under this title
on the day before the transfer date shall be eligible
for coverage by a life insurance plan under sections
8706(b), 8714a, 8714b, or 8714c of title 5, United States
Code, or by a life insurance plan established by the
Office of the Comptroller of the Currency or the Corporation, as applicable, without regard to any regularly
scheduled open season or any requirement of insurability.
(ii) CONTRIBUTION OF TRANSFERRED EMPLOYEE.—

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(I) IN GENERAL.—Subject to subclause (II), a
transferred employee enrolled in a life insurance
plan under this subparagraph shall pay any
employee contribution required by the plan.
(II) COST DIFFERENTIAL.—The Office of the
Comptroller of the Currency or the Corporation,
as the case may be, shall pay any difference in
cost between the benefits provided by the agency
from which the employee transferred on the date
of enactment of this Act and the benefits provided
under this section.
(III) FUNDS TRANSFER.—The Office of the
Comptroller of the Currency or the Corporation,
as the case may be, shall transfer to the Federal
Employees’ Group Life Insurance Fund established
under section 8714 of title 5, United States Code,
an amount determined by the Director of the Office
of Personnel Management, after consultation with
the Comptroller of the Currency or the Chairperson of the Corporation, as the case may be,
and the Office of Management and Budget, to be
necessary to reimburse the Federal Employees’
Group Life Insurance Fund for the cost to the
Federal Employees’ Group Life Insurance Fund
of providing benefits under this subparagraph not
otherwise paid for by a transferred employee under
subclause (I).
(IV) CREDIT FOR TIME ENROLLED IN OTHER
PLANS.—For any transferred employee, enrollment
in a life insurance plan administered by the agency
from which the employee transferred, immediately
before enrollment in a life insurance plan under
chapter 87 of title 5, United States Code, shall
be considered as enrollment in a life insurance
plan under that chapter for purposes of section
8706(b)(1)(A) of title 5, United States Code.
(j) INCORPORATION INTO AGENCY PAY SYSTEM.—Not later than
30 months after the transfer date, the Comptroller of the Currency
and the Chairperson of the Corporation shall place each transferred
employee into the established pay system and structure of the
appropriate employing agency.
(k) EQUITABLE TREATMENT.—In administering the provisions
of this section, the Comptroller of the Currency and the Chairperson
of the Corporation—
(1) may not take any action that would unfairly disadvantage a transferred employee relative to any other employee
of the Office of the Comptroller of the Currency or the Corporation on the basis of prior employment by the Office of Thrift
Supervision;
(2) may take such action as is appropriate in an individual
case to ensure that a transferred employee receives equitable
treatment, with respect to the status, tenure, pay, benefits
(other than benefits under programs administered by the Office
of Personnel Management), and accrued leave or vacation time
for prior periods of service with any Federal agency of the
transferred employee;

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124 STAT. 1535

(3) shall, jointly with the Director of the Office of Thrift
Supervision, develop and adopt procedures and safeguards
designed to ensure that the requirements of this subsection
are met; and
(4) shall conduct a study detailing the position assignments
of all employees transferred pursuant to subsection (a),
describing the procedures and safeguards adopted pursuant
to paragraph (3), and demonstrating that the requirements
of this subsection have been met; and shall, not later than
365 days after the transfer date, submit a copy of such study
to Congress.
(l) REORGANIZATION.—
(1) IN GENERAL.—If the Comptroller of the Currency or
the Chairperson of the Corporation determines, during the
2-year period beginning 1 year after the transfer date, that
a reorganization of the staff of the Office of the Comptroller
of the Currency or the Corporation, respectively, is required,
the reorganization shall be deemed a ‘‘major reorganization’’
for purposes of affording affected employees retirement under
section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States
Code.
(2) SERVICE CREDIT.—For purposes of this subsection,
periods of service with a Federal home loan bank or a joint
office of Federal home loan banks shall be credited as periods
of service with a Federal agency.

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SEC. 323. PROPERTY TRANSFERRED.

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12 USC 5433.

(a) PROPERTY DEFINED.—For purposes of this section, the term
‘‘property’’ includes all real property (including leaseholds) and all
personal property, including computers, furniture, fixtures, equipment, books, accounts, records, reports, files, memoranda, paper,
reports of examination, work papers, and correspondence related
to such reports, and any other information or materials.
(b) PROPERTY OF THE OFFICE OF THRIFT SUPERVISION.—
(1) IN GENERAL.—No later than 90 days after the transfer
date, all property of the Office of Thrift Supervision (other
than property described under paragraph (b)(2)) that the Comptroller of the Currency and the Chairperson of the Corporation
jointly determine is used, on the day before the transfer date,
to perform or support the functions of the Office of Thrift
Supervision transferred to the Office of the Comptroller of
the Currency or the Corporation under this title, shall be transferred to the Office of the Comptroller of the Currency or
the Corporation in a manner consistent with the transfer of
employees under this subtitle.
(2) PERSONAL PROPERTY.—All books, accounts, records,
reports, files, memoranda, papers, documents, reports of examination, work papers, and correspondence of the Office of Thrift
Supervision that the Comptroller of the Currency, the Chairperson of the Corporation, and the Chairman of the Board
of Governors jointly determine is used, on the day before the
transfer date, to perform or support the functions of the Office
of Thrift Supervision transferred to the Board of Governors
under this title shall be transferred to the Board of Governors
in a manner consistent with the purposes of this title.
(c) CONTRACTS RELATED TO PROPERTY TRANSFERRED.—Each
contract, agreement, lease, license, permit, and similar arrangement

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relating to property transferred to the Office of the Comptroller
of the Currency or the Corporation by this section shall be transferred to the Office of the Comptroller of the Currency or the
Corporation, as appropriate, together with the property to which
it relates.
(d) PRESERVATION OF PROPERTY.—Property identified for
transfer under this section shall not be altered, destroyed, or deleted
before transfer under this section.
12 USC 5434.

SEC. 324. FUNDS TRANSFERRED.

The funds that, on the day before the transfer date, the Director
of the Office of Thrift Supervision (in consultation with the Comptroller of the Currency, the Chairperson of the Corporation, and
the Chairman of the Board of Governors) determines are not necessary to dispose of the affairs of the Office of Thrift Supervision
under section 325 and are available to the Office of Thrift Supervision to pay the expenses of the Office of Thrift Supervision—
(1) relating to the functions of the Office of Thrift Supervision transferred under section 312(b)(2)(B), shall be transferred to the Office of the Comptroller of the Currency on
the transfer date;
(2) relating to the functions of the Office of Thrift Supervision transferred under section 312(b)(2)(C), shall be transferred to the Corporation on the transfer date; and
(3) relating to the functions of the Office of Thrift Supervision transferred under section 312(b)(1)(A), shall be transferred to the Board of Governors on the transfer date.

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Time periods.
12 USC 5435.

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SEC. 325. DISPOSITION OF AFFAIRS.

(a) AUTHORITY OF DIRECTOR.—During the 90-day period beginning on the transfer date, the Director of the Office of Thrift
Supervision—
(1) shall, solely for the purpose of winding up the affairs
of the Office of Thrift Supervision relating to any function
transferred to the Office of the Comptroller of the Currency,
the Corporation, or the Board of Governors under this title—
(A) manage the employees of the Office of Thrift Supervision who have not yet been transferred and provide for
the payment of the compensation and benefits of the
employees that accrue before the date on which the
employees are transferred under this title; and
(B) manage any property of the Office of Thrift Supervision, until the date on which the property is transferred
under section 323; and
(2) may take any other action necessary to wind up the
affairs of the Office of Thrift Supervision.
(b) STATUS OF DIRECTOR.—
(1) IN GENERAL.—Notwithstanding the transfer of functions
under this subtitle, during the 90-day period beginning on
the transfer date, the Director of the Office of Thrift Supervision
shall retain and may exercise any authority vested in the
Director of the Office of Thrift Supervision on the day before
the transfer date, only to the extent necessary—
(A) to wind up the Office of Thrift Supervision; and
(B) to carry out the transfer under this subtitle during
such 90-day period.

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(2) OTHER PROVISIONS.—For purposes of paragraph (1), the
Director of the Office of Thrift Supervision shall, during the
90-day period beginning on the transfer date, continue to be—
(A) treated as an officer of the United States; and
(B) entitled to receive compensation at the same annual
rate of basic pay that the Director of the Office of Thrift
Supervision received on the day before the transfer date.
SEC. 326. CONTINUATION OF SERVICES.

12 USC 5436.

Any agency, department, or other instrumentality of the United
States, and any successor to any such agency, department, or
instrumentality, that was, before the transfer date, providing support services to the Office of Thrift Supervision in connection with
functions transferred to the Office of the Comptroller of the Currency, the Corporation or the Board of Governors under this title,
shall—
(1) continue to provide such services, subject to reimbursement by the Office of the Comptroller of the Currency, the
Corporation, or the Board of Governors, until the transfer of
functions under this title is complete; and
(2) consult with the Comptroller of the Currency, the Chairperson of the Corporation, or the Chairman of the Board of
Governors, as appropriate, to coordinate and facilitate a prompt
and orderly transition.

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SEC. 327. IMPLEMENTATION PLAN AND REPORTS.

Consultation.

12 USC 5437.

(a) PLAN SUBMISSION.—Within 180 days of the enactment of
the Dodd-Frank Wall Street Reform and Consumer Protection Act,
the Board of Governors, the Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision, shall
jointly submit a plan to the Committee on Banking, Housing, and
Urban Affairs of the Senate, the Committee on Financial Services
of the House of Representatives, and the Inspectors General of
the Department of the Treasury, the Corporation, and the Board
of Governors detailing the steps the Board of Governors, the Corporation, the Office of the Comptroller of the Currency, and the
Office of Thrift Supervision will take to implement the provisions
of sections 301 through 326, and the provisions of the amendments
made by such sections.
(b) INSPECTORS GENERAL REVIEW OF THE PLAN.—Within 60
days of receiving the plan required under subsection (a), the Inspectors General of the Department of the Treasury, the Corporation,
and the Board of Governors shall jointly provide a written report
to the Board of Governors, the Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision and
shall submit a copy to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives detailing whether the plan
conforms with the provisions of sections 301 through 326, and
the provisions of the amendments made by such sections,
including—
(1) whether the plan sufficiently takes into consideration
the orderly transfer of personnel;
(2) whether the plan describes procedures and safeguards
to ensure that the Office of Thrift Supervision employees are
not unfairly disadvantaged relative to employees of the Office
of the Comptroller of the Currency and the Corporation;

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(3) whether the plan sufficiently takes into consideration
the orderly transfer of authority and responsibilities;
(4) whether the plan sufficiently takes into consideration
the effective transfer of funds;
(5) whether the plan sufficiently takes in consideration
the orderly transfer of property; and
(6) any additional recommendations for an orderly and
effective process.
(c) IMPLEMENTATION REPORTS.—Not later than 6 months after
the date on which the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives receives the report required under
subsection (b), and every 6 months thereafter until all aspects
of the plan have been implemented, the Inspectors General of
the Department of the Treasury, the Corporation, and the Board
of Governors shall jointly provide a written report on the status
of the implementation of the plan to the Board of Governors, the
Corporation, the Office of the Comptroller of the Currency, and
the Office of Thrift Supervision and shall submit a copy to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of Representatives.

Subtitle C—Federal Deposit Insurance
Corporation
SEC. 331. DEPOSIT INSURANCE REFORMS.

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12 USC 1817
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(a) SIZE DISTINCTIONS.—Section 7(b)(2) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(b)(2)) is amended—
(1) by striking subparagraph (D); and
(2) by redesignating subparagraph (C) as subparagraph
(D).
(b) ASSESSMENT BASE.—The Corporation shall amend the regulations issued by the Corporation under section 7(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)) to define the
term ‘‘assessment base’’ with respect to an insured depository
institution for purposes of that section 7(b)(2), as an amount equal
to—
(1) the average consolidated total assets of the insured
depository institution during the assessment period; minus
(2) the sum of—
(A) the average tangible equity of the insured depository institution during the assessment period; and
(B) in the case of an insured depository institution
that is a custodial bank (as defined by the Corporation,
based on factors including the percentage of total revenues
generated by custodial businesses and the level of assets
under custody) or a banker’s bank (as that term is used
in section 5136 of the Revised Statutes (12 U.S.C. 24)),
an amount that the Corporation determines is necessary
to establish assessments consistent with the definition
under section 7(b)(1) of the Federal Deposit Insurance Act
(12 U.S.C. 1817(b)(1)) for a custodial bank or a banker’s
bank.

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SEC. 332. ELIMINATION OF PROCYCLICAL ASSESSMENTS.

Section 7(e) of the Federal Deposit Insurance Act is amended—
(1) in paragraph (2)—
(A) by amending subparagraph (B) to read as follows:
‘‘(B) LIMITATION.—The Board of Directors may, in its
sole discretion, suspend or limit the declaration of payment
of dividends under subparagraph (A).’’;
(B) by amending subparagraph (C) to read as follows:
‘‘(C) NOTICE AND OPPORTUNITY FOR COMMENT.—The
Corporation shall prescribe, by regulation, after notice and
opportunity for comment, the method for the declaration,
calculation, distribution, and payment of dividends under
this paragraph’’; and
(C) by striking subparagraphs (D) through (G); and
(2) in paragraph (4)(A) by striking ‘‘paragraphs (2)(D) and’’
and inserting ‘‘paragraphs (2) and’’.

12 USC 1817.

Regulations.

SEC. 333. ENHANCED ACCESS TO INFORMATION FOR DEPOSIT INSURANCE PURPOSES.

(a) Section 7(a)(2)(B) of the Federal Deposit Insurance Act
is amended by striking ‘‘agreement’’ and inserting ‘‘consultation’’.
(b) Section 7(b)(1)(E) of the Federal Deposit Insurance Act
is amended—
(1) in clause (i), by striking ‘‘such as’’ and inserting
‘‘including’’; and
(2) in clause (iii), by striking ‘‘Corporation’’ and inserting
‘‘Corporation, except as provided in section 7(a)(2)(B)’’.

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SEC. 334. TRANSITION RESERVE RATIO REQUIREMENTS TO REFLECT
NEW ASSESSMENT BASE.

(a) Section 7(b)(3)(B) of the Federal Deposit Insurance Act
is amended to read as follows:
‘‘(B) MINIMUM RESERVE RATIO.—The reserve ratio designated by the Board of Directors for any year may not
be less than 1.35 percent of estimated insured deposits,
or the comparable percentage of the assessment base set
forth in paragraph (2)(C).’’.
(b) Section 3(y)(3) of the Federal Deposit Insurance Act is
amended by inserting ‘‘, or such comparable percentage of the
assessment base set forth in section 7(b)(2)(C)’’ before the period.
(c) For a period of not less than 5 years after the date of
the enactment of this title, the Federal Deposit Insurance Corporation shall make available to the public the reserve ratio and the
designated reserve ratio using both estimated insured deposits and
the assessment base under section 7(b)(2)(C) of the Federal Deposit
Insurance Act.
(d) RESERVE RATIO.—Notwithstanding the timing requirements
of section 7(b)(3)(E)(ii) of the Federal Deposit Insurance Act, the
Corporation shall take such steps as may be necessary for the
reserve ratio of the Deposit Insurance Fund to reach 1.35 percent
of estimated insured deposits by September 30, 2020.
(e) OFFSET.—In setting the assessments necessary to meet the
requirements of subsection (d), the Corporation shall offset the
effect of subsection (d) on insured depository institutions with total
consolidated assets of less than $10,000,000,000.

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12 USC 1813.

Time period.
Public
information.
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SEC. 335. PERMANENT INCREASE IN DEPOSIT AND SHARE INSURANCE.

(a) PERMANENT INCREASE IN DEPOSIT INSURANCE.—Section
11(a)(1)(E) of the Federal Deposit Insurance Act (12 U.S.C.
1821(a)(1)(E)) is amended—
(1) by striking ‘‘$100,000’’ and inserting ‘‘$250,000’’; and
(2) by adding at the end the following new sentences:
‘‘Notwithstanding any other provision of law, the increase in
the standard maximum deposit insurance amount to $250,000
shall apply to depositors in any institution for which the Corporation was appointed as receiver or conservator on or after
January 1, 2008, and before October 3, 2008. The Corporation
shall take such actions as are necessary to carry out the requirements of this section with respect to such depositors, without
regard to any time limitations under this Act. In implementing
this and the preceding 2 sentences, any payment on a deposit
claim made by the Corporation as receiver or conservator to
a depositor above the standard maximum deposit insurance
amount in effect at the time of the appointment of the Corporation as receiver or conservator shall be deemed to be part
of the net amount due to the depositor under subparagraph
(B).’’
(b) PERMANENT INCREASE IN SHARE INSURANCE.—Section
207(k)(5) of the Federal Credit Union Act (12 U.S.C. 1787(k)(5))
is amended by striking ‘‘$100,000’’ and inserting ‘‘$250,000’’.
SEC. 336. MANAGEMENT OF THE FEDERAL DEPOSIT INSURANCE CORPORATION.

12 USC 1812
note.

(a) IN GENERAL.—Section 2 of the Federal Deposit Insurance
Act (12 U.S.C. 1812) is amended—
(1) in subsection (a)(1)(B), by striking ‘‘Director of the Office
of Thrift Supervision’’ and inserting ‘‘Director of the Consumer
Financial Protection Bureau’’;
(2) by amending subsection (d)(2) to read as follows:
‘‘(2) ACTING OFFICIALS MAY SERVE.—In the event of a
vacancy in the office of the Comptroller of the Currency or
the office of Director of the Consumer Financial Protection
Bureau and pending the appointment of a successor, or during
the absence or disability of the Comptroller of the Currency
or the Director of the Consumer Financial Protection Bureau,
the acting Comptroller of the Currency or the acting Director
of the Consumer Financial Protection Bureau, as the case may
be, shall be a member of the Board of Directors in the place
of the Comptroller or Director.’’; and
(3) in subsection (f)(2), by striking ‘‘Office of Thrift Supervision’’ and inserting ‘‘Consumer Financial Protection Bureau’’.
(b) EFFECTIVE DATE.—This section, and the amendments made
by this section, shall take effect on the transfer date.

Subtitle D—Other Matters

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12 USC 5451.

SEC. 341. BRANCHING.

Notwithstanding the Federal Deposit Insurance Act (12 U.S.C.
1811 et seq.), the Bank Holding Company Act of 1956 (12 U.S.C.
1841 et seq.), or any other provision of Federal or State law,
a savings association that becomes a bank may—

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(1) continue to operate any branch or agency that the
savings association operated immediately before the savings
association became a bank; and
(2) establish, acquire, and operate additional branches and
agencies at any location within any State in which the savings
association operated a branch immediately before the savings
association became a bank, if the law of the State in which
the branch is located, or is to be located, would permit establishment of the branch if the bank were a State bank chartered
by such State.

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SEC. 342. OFFICE OF MINORITY AND WOMEN INCLUSION.

(a) OFFICE OF MINORITY AND WOMEN INCLUSION.—
(1) ESTABLISHMENT.—
(A) IN GENERAL.—Except as provided in subparagraph
(B), not later than 6 months after the date of enactment
of this Act, each agency shall establish an Office of Minority
and Women Inclusion that shall be responsible for all matters of the agency relating to diversity in management,
employment, and business activities.
(B) BUREAU.—The Bureau shall establish an Office
of Minority and Women Inclusion not later than 6 months
after the designated transfer date established under section
1062.
(2) TRANSFER OF RESPONSIBILITIES.—Each agency that, on
the day before the date of enactment of this Act, assigned
the responsibilities described in paragraph (1) (or comparable
responsibilities) to another office of the agency shall ensure
that such responsibilities are transferred to the Office.
(3) DUTIES WITH RESPECT TO CIVIL RIGHTS LAWS.—The
responsibilities described in paragraph (1) do not include
enforcement of statutes, regulations, or executive orders pertaining to civil rights, except each Director shall coordinate
with the agency administrator, or the designee of the agency
administrator, regarding the design and implementation of any
remedies resulting from violations of such statutes, regulations,
or executive orders.
(b) DIRECTOR.—
(1) IN GENERAL.—The Director of each Office shall be
appointed by, and shall report to, the agency administrator.
The position of Director shall be a career reserved position
in the Senior Executive Service, as that position is defined
in section 3132 of title 5, United States Code, or an equivalent
designation.
(2) DUTIES.—Each Director shall develop standards for—
(A) equal employment opportunity and the racial,
ethnic, and gender diversity of the workforce and senior
management of the agency;
(B) increased participation of minority-owned and
women-owned businesses in the programs and contracts
of the agency, including standards for coordinating technical assistance to such businesses; and
(C) assessing the diversity policies and practices of
entities regulated by the agency.
(3) OTHER DUTIES.—Each Director shall advise the agency
administrator on the impact of the policies and regulations
of the agency on minority-owned and women-owned businesses.

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12 USC 5452.
Deadlines.

Standards.

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Standards.
Procedures.

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(4) RULE OF CONSTRUCTION.—Nothing in paragraph (2)(C)
may be construed to mandate any requirement on or otherwise
affect the lending policies and practices of any regulated entity,
or to require any specific action based on the findings of the
assessment.
(c) INCLUSION IN ALL LEVELS OF BUSINESS ACTIVITIES.—
(1) IN GENERAL.—The Director of each Office shall develop
and implement standards and procedures to ensure, to the
maximum extent possible, the fair inclusion and utilization
of minorities, women, and minority-owned and women-owned
businesses in all business and activities of the agency at all
levels, including in procurement, insurance, and all types of
contracts.
(2) CONTRACTS.—The procedures established by each
agency for review and evaluation of contract proposals and
for hiring service providers shall include, to the extent consistent with applicable law, a component that gives consideration to the diversity of the applicant. Such procedure shall
include a written statement, in a form and with such content
as the Director shall prescribe, that a contractor shall ensure,
to the maximum extent possible, the fair inclusion of women
and minorities in the workforce of the contractor and, as
applicable, subcontractors.
(3) TERMINATION.—
(A) DETERMINATION.—The standards and procedures
developed and implemented under this subsection shall
include a procedure for the Director to make a determination whether an agency contractor, and, as applicable, a
subcontractor has failed to make a good faith effort to
include minorities and women in their workforce.
(B) EFFECT OF DETERMINATION.—
(i) RECOMMENDATION TO AGENCY ADMINISTRATOR.—Upon a determination described in subparagraph (A), the Director shall make a recommendation
to the agency administrator that the contract be terminated.
(ii) ACTION BY AGENCY ADMINISTRATOR.—Upon
receipt of a recommendation under clause (i), the
agency administrator may—
(I) terminate the contract;
(II) make a referral to the Office of Federal
Contract Compliance Programs of the Department
of Labor; or
(III) take other appropriate action.
(d) APPLICABILITY.—This section shall apply to all contracts
of an agency for services of any kind, including the services of
financial institutions, investment banking firms, mortgage banking
firms, asset management firms, brokers, dealers, financial services
entities, underwriters, accountants, investment consultants, and
providers of legal services. The contracts referred to in this subsection include all contracts for all business and activities of an
agency, at all levels, including contracts for the issuance or guarantee of any debt, equity, or security, the sale of assets, the management of the assets of the agency, the making of equity investments
by the agency, and the implementation by the agency of programs
to address economic recovery.

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124 STAT. 1543

(e) REPORTS.—Each Office shall submit to Congress an annual
report regarding the actions taken by the agency and the Office
pursuant to this section, which shall include—
(1) a statement of the total amounts paid by the agency
to contractors since the previous report;
(2) the percentage of the amounts described in paragraph
(1) that were paid to contractors described in subsection (c)(1);
(3) the successes achieved and challenges faced by the
agency in operating minority and women outreach programs;
(4) the challenges the agency may face in hiring qualified
minority and women employees and contracting with qualified
minority-owned and women-owned businesses; and
(5) any other information, findings, conclusions, and recommendations for legislative or agency action, as the Director
determines appropriate.
(f) DIVERSITY IN AGENCY WORKFORCE.—Each agency shall take
affirmative steps to seek diversity in the workforce of the agency
at all levels of the agency in a manner consistent with applicable
law. Such steps shall include—
(1) recruiting at historically black colleges and universities,
Hispanic-serving institutions, women’s colleges, and colleges
that typically serve majority minority populations;
(2) sponsoring and recruiting at job fairs in urban communities;
(3) placing employment advertisements in newspapers and
magazines oriented toward minorities and women;
(4) partnering with organizations that are focused on developing opportunities for minorities and women to place talented
young minorities and women in industry internships, summer
employment, and full-time positions;
(5) where feasible, partnering with inner-city high schools,
girls’ high schools, and high schools with majority minority
populations to establish or enhance financial literacy programs
and provide mentoring; and
(6) any other mass media communications that the Office
determines necessary.
(g) DEFINITIONS.—For purposes of this section, the following
definitions shall apply:
(1) AGENCY.—The term ‘‘agency’’ means—
(A) the Departmental Offices of the Department of
the Treasury;
(B) the Corporation;
(C) the Federal Housing Finance Agency;
(D) each of the Federal reserve banks;
(E) the Board;
(F) the National Credit Union Administration;
(G) the Office of the Comptroller of the Currency;
(H) the Commission; and
(I) the Bureau.
(2) AGENCY ADMINISTRATOR.—The term ‘‘agency administrator’’ means the head of an agency.
(3) MINORITY.—The term ‘‘minority’’ has the same meaning
as in section 1204(c) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811 note).
(4) MINORITY-OWNED BUSINESS.—The term ‘‘minority-owned
business’’ has the same meaning as in section 21A(r)(4)(A)

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PUBLIC LAW 111–203—JULY 21, 2010
of the Federal Home Loan Bank Act (12 U.S.C. 1441a(r)(4)(A)),
as in effect on the day before the transfer date.
(5) OFFICE.—The term ‘‘Office’’ means the Office of Minority
and Women Inclusion established by an agency under subsection (a).
(6) WOMEN-OWNED BUSINESS.—The term ‘‘women-owned
business’’ has the meaning given the term ‘‘women’s business’’
in section 21A(r)(4)(B) of the Federal Home Loan Bank Act
(12 U.S.C. 1441a(r)(4)(B)), as in effect on the day before the
transfer date.

SEC. 343. INSURANCE OF TRANSACTION ACCOUNTS.

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12 USC 1821
note.
Effective date.
12 USC 1821
note.

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(a) BANKS AND SAVINGS ASSOCIATIONS.—
(1) AMENDMENTS.—Section 11(a)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(a)(1)) is amended—
(A) in subparagraph (B)—
(i) by striking ‘‘The net amount’’ and inserting
the following:
‘‘(i) IN GENERAL.—Subject to clause (ii), the net
amount’’; and
(ii) by adding at the end the following new clauses:
‘‘(ii) INSURANCE FOR NONINTEREST-BEARING TRANSACTION ACCOUNTS.—Notwithstanding clause (i), the
Corporation shall fully insure the net amount that
any depositor at an insured depository institution
maintains in a noninterest-bearing transaction
account. Such amount shall not be taken into account
when computing the net amount due to such depositor
under clause (i).
‘‘(iii) NONINTEREST-BEARING TRANSACTION ACCOUNT
DEFINED.—For purposes of this subparagraph, the term
‘noninterest-bearing transaction account’ means a
deposit or account maintained at an insured depository
institution—
‘‘(I) with respect to which interest is neither
accrued nor paid;
‘‘(II) on which the depositor or account holder
is permitted to make withdrawals by negotiable
or transferable instrument, payment orders of
withdrawal, telephone or other electronic media
transfers, or other similar items for the purpose
of making payments or transfers to third parties
or others; and
‘‘(III) on which the insured depository institution does not reserve the right to require advance
notice of an intended withdrawal.’’; and
(B) in subparagraph (C), by striking ‘‘subparagraph
(B)’’ and inserting ‘‘subparagraph (B)(i)’’.
(2) EFFECTIVE DATE.—The amendments made by paragraph
(1) shall take effect on December 31, 2010.
(3) PROSPECTIVE REPEAL.—Effective January 1, 2013, section 11(a)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1821(a)(1)), as amended by paragraph (1), is amended—
(A) in subparagraph (B)—
(i) by striking ‘‘DEPOSIT.—’’ and all that follows
through ‘‘clause (ii), the net amount’’ and insert
‘‘DEPOSIT.—The net amount’’; and

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1545

(ii) by striking clauses (ii) and (iii); and
(B) in subparagraph (C), by striking ‘‘subparagraph
(B)(i)’’ and inserting ‘‘subparagraph (B)’’.
(b) CREDIT UNIONS.—
(1) AMENDMENTS.—Section 207(k)(1) of the Federal Credit
Union Act (12 U.S.C. 1787(k)(1)) is amended—
(A) in subparagraph (A)—
(i) by striking ‘‘Subject to the provisions of paragraph (2), the net amount’’ and inserting the following:
‘‘(i) NET AMOUNT OF INSURANCE PAYABLE.—Subject
to clause (ii) and the provisions of paragraph (2), the
net amount’’; and
(ii) by adding at the end the following new clauses:
‘‘(ii) INSURANCE FOR NONINTEREST-BEARING TRANSACTION ACCOUNTS.—Notwithstanding clause (i), the
Board shall fully insure the net amount that any
member or depositor at an insured credit union maintains in a noninterest-bearing transaction account.
Such amount shall not be taken into account when
computing the net amount due to such member or
depositor under clause (i).
‘‘(iii) NONINTEREST-BEARING TRANSACTION ACCOUNT
DEFINED.—For purposes of this subparagraph, the term
‘noninterest-bearing transaction account’ means an
account or deposit maintained at an insured credit
union—
‘‘(I) with respect to which interest is neither
accrued nor paid;
‘‘(II) on which the account holder or depositor
is permitted to make withdrawals by negotiable
or transferable instrument, payment orders of
withdrawal, telephone or other electronic media
transfers, or other similar items for the purpose
of making payments or transfers to third parties
or others; and
‘‘(III) on which the insured credit union does
not reserve the right to require advance notice
of an intended withdrawal.’’; and
(B) in subparagraph (B), by striking ‘‘subparagraph
(A)’’ and inserting ‘‘subparagraph (A)(i)’’.
(2) EFFECTIVE DATE.—The amendments made by paragraph
(1) shall take effect upon the date of the enactment of this
Act
(3) PROSPECTIVE REPEAL.—Effective January 1, 2013, section 207(k)(1) of the Federal Credit Union Act (12 U.S.C.
1787(k)(1)), as amended by paragraph (1), is amended—
(A) in subparagraph (A)—
(i) by striking ‘‘(i) NET AMOUNT OF INSURANCE PAYABLE.—’’ and all that follows through ‘‘paragraph (2),
the net amount’’ and inserting ‘‘Subject to the provisions of paragraph (2), the net amount’’; and
(ii) by striking clauses (ii) and (iii); and
(B) in subparagraph (B), by striking ‘‘subparagraph
(A)(i)’’ and inserting ‘‘subparagraph (A)’’.

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12 USC 1787
note.
Effective date.
12 USC 1787
note.

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Subtitle E—Technical and Conforming
Amendments
12 USC 906 note.

SEC. 351. EFFECTIVE DATE.

Except as provided in section 364(a), the amendments made
by this subtitle shall take effect on the transfer date.
SEC. 352. BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL
ACT OF 1985.

Section 256(h) of the Balanced Budget and Emergency Deficit
Control Act of 1985 (2 U.S.C. 906(h)) is amended—
(1) in paragraph (4), by striking subparagraphs (C) and
(G); and
(2) by redesignating subparagraphs (D), (E), (F), and (H)
as subparagraphs (C), (D), (E), and (F), respectively.
SEC. 353. BANK ENTERPRISE ACT OF 1991.

Definition.

Section 232(a) of the Bank Enterprise Act of 1991 (12 U.S.C.
1834(a)) is amended—
(1) in the subsection heading, by striking ‘‘BY FEDERAL
RESERVE BOARD’’;
(2) in paragraph (1)—
(A) by striking ‘‘The Board of Governors of the Federal
Reserve System,’’ and inserting ‘‘The Comptroller of the
Currency’’; and
(B) by striking ‘‘section 7(b)(2)(H)’’ and inserting ‘‘section 7(b)(2)(E)’’;
(3) in paragraph (2)(A), by striking ‘‘Board’’ and inserting
‘‘Comptroller’’; and
(4) in paragraph (3)—
(A) by redesignating subparagraphs (A) through (C)
as subparagraphs (B) through (D), respectively; and
(B) by inserting before subparagraph (B) the following:
‘‘(A) COMPTROLLER.—The term ‘Comptroller’ means the
Comptroller of the Currency.’’.

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SEC. 354. BANK HOLDING COMPANY ACT OF 1956.

The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et
seq.) is amended—
(1) in section 2(j)(3) (12 U.S.C. 1841(j)(3)), strike ‘‘Director
of the Office of Thrift Supervision’’ and inserting ‘‘appropriate
Federal banking agency’’;
(2) in section 4 (12 U.S.C. 1843)—
(A) in subsection (i)—
(i) in paragraph (4)—
(I) in subparagraph (A)—
(aa) in the subparagraph heading, by
striking ‘‘TO DIRECTOR’’; and
(bb) by striking ‘‘Board’’ and all that follows through the end of the subparagraph and
inserting ‘‘Board shall solicit comments and
recommendations from—
‘‘(i) the Comptroller of the Currency, with respect
to the acquisition of a Federal savings association;
and

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124 STAT. 1547

‘‘(ii) the Federal Deposit Insurance Corporation,
with respect to the acquisition of a State savings
association.’’.
(II) in subparagraph (B), by striking ‘‘Director’’
each place that term appears and inserting ‘‘Comptroller of the Currency or the Federal Deposit
Insurance Corporation, as applicable,’’;
(ii) in paragraph (5)—
(I) in subparagraph (B), by striking ‘‘Director
with’’ and inserting ‘‘Comptroller of the Currency
or the Federal Deposit Insurance Corporation, as
applicable, with’’; and
(II) by striking ‘‘Director’’ each place that term
appears and inserting ‘‘Comptroller of the Currency or the Federal Deposit Insurance Corporation’’;
(iii) in paragraph (6), by striking ‘‘Director’’ and
inserting ‘‘Comptroller of the Currency or the Federal
Deposit Insurance Corporation, as applicable,’’; and
(iv) by striking paragraph (7); and
(3) in section 5(f) (12 U.S.C. 1844(f))—
(A) by striking ‘‘subpena’’ each place that term appears
and inserting ‘‘subpoena’’;
(B) by striking ‘‘subpenas’’ each place that term
appears and inserting ‘‘subpoenas’’; and
(C) by striking ‘‘subpenaed’’ and inserting ‘‘subpoenaed’’.
SEC. 355. BANK HOLDING COMPANY ACT AMENDMENTS OF 1970.

Section 106(b)(1) of the Bank Holding Company Act Amendments of 1970 (12 U.S.C. 1972(1)) is amended in the undesignated
matter following subparagraph (E) by inserting ‘‘issue such regulations as are necessary to carry out this section, and, in consultation
with the Comptroller of the Currency and the Federal Deposit
Insurance Company, may’’ after ‘‘The Board may’’.
SEC. 356. BANK PROTECTION ACT OF 1968.

The Bank Protection Act of 1968 (12 U.S.C. 1881 et seq.)
is amended—
(1) in section 2 (12 U.S.C. 1881), by striking ‘‘the term’’
and all that follows through the end of the section and inserting
‘‘the term ‘Federal supervisory agency’ means the appropriate
Federal banking agency, as defined in section 3(q) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(q)).’’;
(2) in section 3 (12 U.S.C. 1882), by striking ‘‘and loan’’
each place that term appears; and
(3) in section 5 (12 U.S.C. 1884), by striking ‘‘and loan’’.

Definition.

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SEC. 357. BANK SERVICE COMPANY ACT.

The Bank Service Company Act (12 U.S.C. 1861 et seq.) is
amended—
(1) in section 1(b)(4) (12 U.S.C. 1861(b)(4))—
(A) by inserting after ‘‘an insured bank,’’ the following:
‘‘a savings association,’’;
(B) by striking ‘‘Director of the Office of Thrift Supervision’’ and inserting ‘‘appropriate Federal banking agency’’;
and

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PUBLIC LAW 111–203—JULY 21, 2010
(C) by striking ‘‘, the Federal Savings and Loan Insurance Corporation,’’;
(2) in section 1(b)(5), by striking ‘‘term ‘insured depository
institution’ has the same meaning as in section 3(c)’’ and
inserting ‘‘terms ‘depository institution’ and ‘savings association’
have the same meanings as in section 3’’; and
(3) in section 7(c)(2) (12 U.S.C. 1867(c)(2)), by inserting
‘‘each’’ after ‘‘notify’’.

SEC. 358. COMMUNITY REINVESTMENT ACT OF 1977.

Regulations.
Applicability.

The Community Reinvestment Act of 1977 (12 U.S.C. 2901
et seq.) is amended—
(1) in section 803 (12 U.S.C. 2902)—
(A) in paragraph (1)—
(i) in subparagraph (A), by inserting ‘‘and Federal
savings associations (the deposits of which are insured
by the Federal Deposit Insurance Corporation)’’ after
‘‘banks’’;
(ii) in subparagraph (B), by striking ‘‘and bank
holding companies’’ and inserting ‘‘, bank holding
companies, and savings and loan holding companies’’;
and
(iii) in subparagraph (C), by striking ‘‘; and’’ and
inserting ‘‘, and State savings associations (the deposits
of which are insured by the Federal Deposit Insurance
Corporation).’’; and
(B) by striking paragraph (2) (relating to the Office
of Thrift Supervision), as added by section 744(q) of the
Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (Public Law 101–73; 103 Stat. 440); and
(2) in section 806 (12 U.S.C. 2905), by inserting ‘‘, except
that the Comptroller of the Currency shall prescribe regulations
applicable to savings associations and the Board of Governors
shall prescribe regulations applicable to insured State member
banks, bank holding companies and savings and loan holding
companies,’’ after ‘‘supervisory agency’’.
SEC. 359. CRIME CONTROL ACT OF 1990.

The Crime Control Act of 1990 is amended—
(1) in section 2539(c)(2) (28 U.S.C. 509 note)—
(A) by striking subparagraphs (C) and (D); and
(B) by redesignating subparagraphs (E) through (H)
as subparagraphs (C) through (G), respectively; and
(2) in section 2554(b)(2) (Public Law 101–647; 104 Stat.
4890)—
(A) in subparagraph (A), by striking ‘‘, the Director
of the Office of Thrift Supervision,’’ and inserting ‘‘the
Comptroller of the Currency’’; and
(B) in subparagraph (B), by striking ‘‘, the Director’’
and all that follows through ‘‘Trust Corporation’’ and
inserting ‘‘or the Federal Deposit Insurance Corporation’’.

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SEC. 360. DEPOSITORY INSTITUTION MANAGEMENT INTERLOCKS ACT.

The Depository Institution Management Interlocks Act (12
U.S.C. 3201 et seq.) is amended—
(1) in section 207 (12 U.S.C. 3206)—
(A) in paragraph (1), by inserting before the comma
at the end the following: ‘‘and Federal savings associations

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(the deposits of which are insured by the Federal Deposit
Insurance Corporation)’’;
(B) in paragraph (2), by striking ‘‘, and bank holding
companies’’ and inserting ‘‘, bank holding companies, and
savings and loan holding companies’’;
(C) in paragraph (3), by striking ‘‘Corporation,’’ and
inserting ‘‘Corporation and State savings associations (the
deposits of which are insured by the Federal Deposit Insurance Corporation),’’;
(D) by striking paragraph (4);
(E) by redesignating paragraphs (5) and (6) as paragraphs (4) and (5), respectively; and
(F) in paragraph (5), as so redesignated, by striking
‘‘through (5)’’ and inserting ‘‘through (4)’’;
(2) in section 209 (12 U.S.C. 3207)—
(A) in paragraph (1), by inserting before the comma
at the end the following: ‘‘and Federal savings associations
(the deposits of which are insured by the Federal Deposit
Insurance Corporation)’’;
(B) in paragraph (2), by striking ‘‘, and bank holding
companies’’ and inserting ‘‘, bank holding companies, and
savings and loan holding companies’’;
(C) in paragraph (3), by striking ‘‘Corporation,’’ and
inserting ‘‘Corporation and State savings associations (the
deposits of which are insured by the Federal Deposit Insurance Corporation),’’;
(D) by striking paragraph (4); and
(E) by redesignating paragraph (5) as paragraph (4);
and
(3) in section 210(a) (12 U.S.C. 3208(a))—
(A) by striking ‘‘his’’ and inserting ‘‘the’’; and
(B) by inserting ‘‘of the Attorney General’’ after
‘‘enforcement functions’’.
SEC. 361. EMERGENCY HOMEOWNERS’ RELIEF ACT.

Section 110 of the Emergency Homeowners’ Relief Act (12
U.S.C. 2709) is amended in the second sentence, by striking ‘‘Home
Loan Bank Board, the Federal Savings and Loan Insurance Corporation’’ and inserting ‘‘Housing Finance Agency’’.

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SEC. 362. FEDERAL CREDIT UNION ACT.

The Federal Credit Union Act (12 U.S.C. 1751 et seq.) is
amended—
(1) in section 107(8) (12 U.S.C. 1757(8)), by striking ‘‘or
the Federal Savings and Loan Insurance Corporation’’;
(2) in section 205 (12 U.S.C. 1785)—
(A) in subsection (b)(2)(G)(i), by striking ‘‘the Office
of Thrift Supervision and’’; and
(B) in subsection (i)(1), by striking ‘‘or the Federal
Savings and Loan Insurance Corporation’’; and
(3) in section 206(g)(7) (12 U.S.C. 1786(g)(7))—
(A) in subparagraph (A)—
(i) in clause (ii), by striking ‘‘(b)(8)’’ and inserting
‘‘(b)(9)’’;
(ii) in clause (v)—
(I) by striking ‘‘depository’’ and inserting
‘‘financial’’; and
(II) by adding ‘‘and’’ at the end;

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PUBLIC LAW 111–203—JULY 21, 2010
(iii) in clause (vi)—
(I) by striking ‘‘Board’’ and inserting ‘‘Agency’’;
and
(II) by striking ‘‘; and’’ and inserting a period;
and
(iv) by striking clause (vii); and
(B) in subparagraph (D)—
(i) in clause (iii), by adding ‘‘and’’ at the end;
(ii) in clause (iv)—
(I) by striking ‘‘Board’’ and inserting ‘‘Agency’’;
and
(II) by striking ‘‘and’’ at the end; and
(iii) by striking clause (v).

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SEC. 363. FEDERAL DEPOSIT INSURANCE ACT.

The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.)
is amended—
(1) in section 3 (12 U.S.C. 1813)—
(A) in subsection (b)(1)(C), by striking ‘‘Director of the
Office of Thrift Supervision’’ and inserting ‘‘Comptroller
of the Currency’’;
(B) in subsection (l)(5), in the matter preceding
subparagraph (A), by striking ‘‘Director of the Office of
Thrift Supervision,’’; and
(C) in subsection (z), by striking ‘‘the Director of the
Office of Thrift Supervision,’’;
(2) in section 7 (12 U.S.C. 1817)—
(A) in subsection (a)—
(i) in paragraph (2)—
(I) in subparagraph (A)—
(aa) in the first sentence, by striking ‘‘the
Director of the Office of Thrift Supervision,’’;
(bb) in the second sentence—
(AA) by striking ‘‘the Director of the
Office of Thrift Supervision,’’ and inserting
‘‘to’’; and
(BB) by inserting ‘‘to’’ before ‘‘any Federal home’’; and
(cc) by striking ‘‘Finance Board’’ each place
that term appears and inserting ‘‘Finance
Agency’’; and
(II) in subparagraph (B), by striking ‘‘the
Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the
Director of the Office of Thrift Supervision,’’ and
inserting ‘‘the Comptroller of the Currency and
the Board of Governors of the Federal Reserve
System,’’;
(ii) in paragraph (3), in the first sentence, by
striking ‘‘Comptroller of the Currency, the Chairman
of the Board of Governors of the Federal Reserve
System, and the Director of the Office of Thrift Supervision.’’ and inserting ‘‘Comptroller of the Currency,
and the Chairman of the Board of Governors of the
Federal Reserve System.’’;
(iii) in paragraph (6), by striking ‘‘section
232(a)(3)(C)’’ and inserting ‘‘section 232(a)(3)(D)’’; and

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1551

(iv) in paragraph (7), by striking ‘‘, the Director
of the Office of Thrift Supervision,’’; and
(B) in subsection (n)—
(i) in the heading, by striking ‘‘DIRECTOR OF THE
OFFICE OF THRIFT SUPERVISION’’ and inserting ‘‘COMPTROLLER OF THE CURRENCY’’;
(ii) in the first sentence—
(I) by striking ‘‘the Director of the Office of
Thrift Supervision’’ and inserting ‘‘the Comptroller
of the Currency’’; and
(II) by inserting ‘‘Federal’’ before ‘‘savings
associations’’;
(iii) in the third sentence, by striking ‘‘, the
Financing Corporation, and the Resolution Funding
Corporation’’; and
(iv) by striking ‘‘the Director’’ each place that term
appears and inserting ‘‘the Comptroller’’;
(3) in section 8 (12 U.S.C. 1818)—
(A) in subsection (a)(8)(B)(ii), in the last sentence, by
striking ‘‘Director of the Office of Thrift Supervision’’ each
place that term appears and inserting ‘‘Comptroller of the
Currency’’;
(B) in subsection (b)(3)—
(i) by inserting ‘‘any savings and loan holding company and any subsidiary (other than a depository
institution) of a savings and loan holding company
(as such terms are defined in section 10 of Home
Owners’ Loan Act)), any noninsured State member
bank’’ after ‘‘Bank Holding Company Act of 1956,’’;
and
(ii) by inserting ‘‘or against a savings and loan
holding company or any subsidiary thereof (other than
a depository institution or a subsidiary of such depository institution)’’ before the period at the end;
(C) by striking paragraph (9) of subsection (b) and
inserting the following new paragraph:
‘‘(9) [Repealed]’’.
(D) in subsection (e)(7)—
(i) in subparagraph (A)—
(I) in clause (v), by inserting ‘‘and’’ after the
semicolon;
(II) in clause (vi)—
(aa) by striking ‘‘Board’’ and inserting
‘‘Agency’’; and
(bb) by striking ‘‘; and’’ and inserting a
period; and
(III) by striking clause (vii); and
(ii) in subparagraph (D)—
(I) in clause (iii), by inserting ‘‘and’’ after the
semicolon;
(II) in clause (iv)—
(aa) by striking ‘‘Board’’ and inserting
‘‘Agency’’; and
(bb) by striking ‘‘; and’’ and inserting a
period; and
(III) by striking clause (v);
(E) in subsection (j)—

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124 STAT. 1552

PUBLIC LAW 111–203—JULY 21, 2010
(i) in paragraph (2), by striking ‘‘, or as a savings
association under subsection (b)(9) of this section’’;
(ii) in paragraph (3), by inserting ‘‘or’’ after the
semicolon;
(iii) in paragraph (4), by striking ‘‘; or’’ and
inserting a comma; and
(iv) by striking paragraph (5);
(F) in subsection (o), by striking ‘‘Director of the Office
of Thrift Supervision’’ and inserting ‘‘Comptroller of the
Currency’’; and
(G) in subsection (w)(3)(A), by striking ‘‘and the Office
of Thrift Supervision’’;
(4) in section 10 (12 U.S.C. 1820)—
(A) in subsection (d)(5), by striking ‘‘or the Resolution
Trust Corporation’’ each place that term appears; and
(B) in subsection (k)(5)(B)—
(i) in clause (ii), by inserting ‘‘and’’ after the semicolon;
(ii) in clause (iii), by striking ‘‘; and’’ and inserting
a period; and
(iii) by striking clause (iv);
(5) in section 11 (12 U.S.C. 1821)—
(A) in subsection (c)—
(i) in paragraph (2)(A)(ii), by striking ‘‘(other than
section 21A of the Federal Home Loan Bank Act)’’;
(ii) in paragraph (4), by striking ‘‘Except as otherwise provided in section 21A of the Federal Home
Loan Bank Act and notwithstanding’’ and inserting
‘‘Notwithstanding’’;
(iii) in paragraph (6)—
(I) in the heading, by striking ‘‘DIRECTOR OF
THE OFFICE OF THRIFT SUPERVISION’’ and inserting
‘‘COMPTROLLER OF THE CURRENCY’’;
(II) in subparagraph (A)—
(aa) by striking ‘‘or the Resolution Trust
Corporation’’; and
(bb) by striking ‘‘Director of the Office of
Thrift Supervision’’ and inserting ‘‘Comptroller
of the Currency’’; and
(III) by amending subparagraph (B) to read
as follows:
‘‘(B) RECEIVER.—The Corporation may, at the discretion of the Comptroller of the Currency, be appointed
receiver and the Corporation may accept any such appointment.’’;
(iv) in paragraph (12)(A), by striking ‘‘or the Resolution Trust Corporation’’;
(B) in subsection (d)—
(i) in paragraph (17)(A), by striking ‘‘or the
Director of the Office of Thrift Supervision’’; and
(ii) in paragraph (18)(B), by striking ‘‘or the
Director of the Office of Thrift Supervision’’;
(C) in subsection (m)—
(i) in paragraph (9), by striking ‘‘or the Director
of the Office of Thrift Supervision, as appropriate’’;

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1553

(ii) in paragraph (16), by striking ‘‘or the Director
of the Office of Thrift Supervision, as appropriate’’
each place that term appears; and
(iii) in paragraph (18), by striking ‘‘or the Director
of the Office of Thrift Supervision, as appropriate’’
each place that term appears;
(D) in subsection (n)—
(i) in paragraph (1)(A)—
(I) by striking ‘‘, or the Director of the Office
of Thrift Supervision, with respect to’’ and
inserting ‘‘or’’; and
(II) by striking ‘‘applicable,,’’ and inserting
‘‘applicable,’’;
(ii) in paragraph (2)(A), by striking ‘‘or the Director
of the Office of Thrift Supervision’’;
(iii) in paragraph (4)(D), by striking ‘‘and the
Director of the Office of Thrift Supervision, as appropriate,’’;
(iv) in paragraph (4)(G), by striking ‘‘and the
Director of the Office of Thrift Supervision, as appropriate,’’; and
(v) in paragraph (12)(B)—
(I) by inserting ‘‘as’’ after ‘‘shall appoint the
Corporation’’;
(II) by striking ‘‘or the Director of the Office
of Thrift Supervision, as appropriate,’’ each place
such term appears;
(E) in subsection (p)—
(i) in paragraph (2)(B), by striking ‘‘the Corporation, the FSLIC Resolution Fund, or the Resolution
Trust Corporation,’’ and inserting ‘‘or the Corporation,’’;
and
(ii) in paragraph (3)(B), by striking ‘‘, the FSLIC
Resolution Fund, the Resolution Trust Corporation,’’;
and
(F) in subsection (r), by striking ‘‘and the Resolution
Trust Corporation’’;
(6) in section 13(k)(1)(A)(iv) (12 U.S.C. 1823(k)(1)(A)(iv)),
by striking ‘‘Director of the Office of Thrift Supervision’’ and
inserting ‘‘Comptroller of the Currency’’;
(7) in section 18 (12 U.S.C. 1828)—
(A) in subsection (c)(2)—
(i) in subparagraph (A), by inserting ‘‘or a Federal
savings association’’ before the semicolon;
(ii) in subparagraph (B), by adding ‘‘and’’ at the
end;
(iii) in subparagraph (C), by striking ‘‘(except’’ and
all that follows through ‘‘; and’’ and inserting ‘‘or a
State savings association.’’; and
(iv) by striking subparagraph (D);
(B) in subsection (g)(1), by striking ‘‘the Director of
the Office of Thrift Supervision’’and inserting ‘‘the Comptroller of the Currency’’;
(C) in subsection (i)(2)(C), by striking ‘‘Director of the
Office of Thrift Supervision’’ and inserting ‘‘Corporation’’;
and
(D) in subsection (m)—

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124 STAT. 1554

PUBLIC LAW 111–203—JULY 21, 2010
(i) in paragraph (1)—
(I) in subparagraph (A), by striking ‘‘and the
Director of the Office of Thrift Supervision’’ and
inserting ‘‘or the Comptroller of the Currency, as
appropriate,’’; and
(II) in subparagraph (B), by striking ‘‘and
orders of the Director of the Office of Thrift Supervision’’ and inserting ‘‘of the Comptroller of the
Currency and orders of the Corporation and the
Comptroller of the Currency’’;
(ii) in paragraph (2)—
(I) in subparagraph (A), by striking ‘‘Director
of the Office of Thrift Supervision’’ and inserting
‘‘Comptroller of the Currency, as appropriate,’’; and
(II) in subparagraph (B)—
(aa) in the matter before clause (i), by
striking ‘‘Director of the Office of Thrift Supervision’’ and inserting ‘‘Corporation or the
Comptroller of the Currency, as appropriate,’’;
and
(bb) in the matter following clause (ii)—
(AA) in the first sentence, by striking
‘‘Director of the Office of Thrift Supervision’’ and inserting ‘‘Office of the Comptroller of the Currency, as appropriate,’’;
and
(BB) by striking the second sentence
and inserting the following: ‘‘The Corporation or the Comptroller of the Currency,
as appropriate, may take any other corrective measures with respect to the subsidiary, including the authority to require
the subsidiary to terminate the activities
or operations posing such risks, as the
Corporation or the Comptroller of the Currency, respectively, may deem appropriate.’’; and
(iii) in paragraph (3)—
(I) in subparagraph (A), in the second sentence—
(aa) by inserting ‘‘, in the case of a Federal
savings association,’’ before ‘‘consult with’’; and
(bb) by striking ‘‘Director of the Office of
Thrift Supervision’’ and inserting ‘‘Comptroller
of the Currency’’; and
(II) in subparagraph (B)—
(aa) in the subparagraph heading, by
striking ‘‘DIRECTOR’’ and inserting ‘‘COMPTROLLER OF THE CURRENCY’’;
(bb) by striking ‘‘Office of Thrift Supervision’’ and inserting ‘‘Comptroller of the Currency’’;
(cc) by inserting a comma after ‘‘soundness’’; and
(dd) by inserting ‘‘as to Federal savings
associations’’ after ‘‘compliance’’;
(8) in section 19(e) (12 U.S.C. 1829(e))—

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124 STAT. 1555

(A) in paragraph (1), by striking ‘‘Director of the Office
of Thrift Supervision’’ and inserting ‘‘Board of Governors
of the Federal Reserve System’’; and
(B) in paragraph (2), by striking ‘‘Director of the Office
of Thrift Supervision’’ and inserting ‘‘Board of Governors
of the Federal Reserve System’’;
(9) in section 28 (12 U.S.C. 1831e)—
(A) in subsection (e)—
(i) in paragraph (2)—
(I) in subparagraph (A)(ii), by striking
‘‘Director of the Office of Thrift Supervision’’ and
inserting ‘‘Comptroller of the Currency or the Corporation, as appropriate’’;
(II) in subparagraph (C), by striking ‘‘Director
of the Office of Thrift Supervision’’ and inserting
‘‘Comptroller of the Currency or the Corporation,
as appropriate,’’; and
(III) in subparagraph (F), by striking ‘‘Director
of the Office of Thrift Supervision’’ and inserting
‘‘Comptroller of the Currency or the Corporation,
as appropriate’’; and
(ii) in paragraph (3)—
(I) in subparagraph (A), by striking ‘‘Director
of the Office of Thrift Supervision’’ and inserting
‘‘Comptroller of the Currency or the Corporation,
as appropriate’’; and
(II) in subparagraph (B), by striking ‘‘Director
of the Office of Thrift Supervision’’ and inserting
‘‘Comptroller of the Currency or the Corporation,
as appropriate,’’; and
(B) in subsection (h)(2), by striking ‘‘Director of the
Office of Thrift Supervision’’ and inserting ‘‘Comptroller
of the Currency, of the Corporation,’’; and
(10) in section 33(e) (12 U.S.C. 1831j(e)), by striking ‘‘Federal Housing Finance Board, the Comptroller of the Currency,
and the Director of the Office of Thrift Supervision’’ and
inserting ‘‘Federal Housing Finance Agency and the Comptroller of the Currency’’.
SEC. 364. FEDERAL HOME LOAN BANK ACT.

(a) REPEAL OF SECTION 18(c).—Effective 90 days after the
transfer date, section 18(c) of the Federal Home Loan Bank Act
(12 U.S.C. 1438(c)) is repealed.
(b) REPEAL OF SECTION 21A.—Section 21A of the Federal Home
Loan Bank Act (12 U.S.C. 1441a) is repealed.

12 USC 1438
note.
Effective date.

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SEC. 365. FEDERAL HOUSING ENTERPRISES FINANCIAL SAFETY AND
SOUNDNESS ACT OF 1992.

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended—
(1) in section 1315(b) (12 U.S.C. 4515(b)), by striking ‘‘the
Federal Deposit Insurance Corporation, and the Office of Thrift
Supervision.’’ and inserting ‘‘and the Federal Deposit Insurance
Corporation.’’; and
(2) in section 1317(c) (12 U.S.C. 4517(c)), by striking ‘‘the
Federal Deposit Insurance Corporation, or the Director of the
Office of Thrift Supervision’’ and inserting ‘‘or the Federal
Deposit Insurance Corporation’’.

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PUBLIC LAW 111–203—JULY 21, 2010

SEC. 366. FEDERAL RESERVE ACT.

The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended—
(1) in section 11(a)(2) (12 U.S.C. 248(a)(2))—
(A) by inserting ‘‘State savings associations that are
insured depository institutions (as defined in section 3 of
the Federal Deposit Insurance Act),’’ after ‘‘case of insured’’;
(B) by striking ‘‘Director of the Office of Thrift Supervision’’ and inserting ‘‘Comptroller of the Currency’’;
(C) by inserting ‘‘Federal’’ before ‘‘savings association
which’’; and
(D) by striking ‘‘savings and loan association’’ and
inserting ‘‘savings association’’; and
(2) in section 19(b) (12 U.S.C. 461(b))—
(A) in paragraph (1)(F), by striking ‘‘Director of the
Office of Thrift Supervision’’ and inserting ‘‘Comptroller
of the Currency’’; and
(B) in paragraph (4)(B), by striking ‘‘Director of the
Office of Thrift Supervision’’ and inserting ‘‘Comptroller
of the Currency’’.

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SEC.

367.

FINANCIAL INSTITUTIONS REFORM,
ENFORCEMENT ACT OF 1989.

RECOVERY,

AND

The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 is amended—
(1) in section 203 (12 U.S.C. 1812 note), by striking subsection (b);
(2) in section 302(1) (12 U.S.C. 1467a note), by striking
‘‘Director of the Office of Thrift Supervision’’ and inserting
‘‘Comptroller of the Currency’’;
(3) in section 305(12 U.S.C. 1464 note), by striking subsection (b);
(4) in section 308 (12 U.S.C. 1463 note)—
(A) in subsection (a), by striking ‘‘Director of the Office
of Thrift Supervision’’ and inserting ‘‘Chairman of the
Board of Governors of the Federal Reserve System, the
Comptroller of the Currency, the Chairman of the National
Credit Union Administration,’’; and
(B) by adding at the end the following new subsection:
‘‘(c) REPORTS.—The Secretary of the Treasury, the Chairman
of the Board of Governors of the Federal Reserve System, the
Comptroller of the Currency, the Chairman of the National Credit
Union Administration, and the Chairperson of Board of Directors
of the Federal Deposit Insurance Corporation shall each submit
an annual report to the Congress containing a description of actions
taken to carry out this section.’’;
(5) in section 402 (12 U.S.C. 1437 note)—
(A) in subsection (a), by striking ‘‘Director of the Office
of Thrift Supervision’’ and inserting ‘‘Comptroller of the
Currency’’;
(B) by striking subsection (b);
(C) in subsection (e)—
(i) in paragraph (1), by striking ‘‘Office of Thrift
Supervision’’ and inserting ‘‘Comptroller of the Currency’’; and
(ii) in each of paragraphs (2), (3), and (4), by
striking ‘‘Director of the Office of Thrift Supervision’’

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124 STAT. 1557

each place that term appears and inserting ‘‘Comptroller of the Currency’’; and
(D) by striking ‘‘Federal Housing Finance Board’’ each
place that term appears and inserting ‘‘Federal Housing
Finance Agency’’;
(6) in section 1103(a) (12 U.S.C. 3332(a)), by striking ‘‘and
the Resolution Trust Corporation’’;
(7) in section 1205(b) (12 U.S.C. 1818 note)—
(A) in paragraph (1)—
(i) by striking subparagraph (B); and
(ii) by redesignating subparagraphs (C) through
(F) as subparagraphs (B) through (E), respectively;
and
(B) in paragraph (2), by striking ‘‘paragraph (1)(F)’’
and inserting ‘‘paragraph (1)(E)’’;
(8) in section 1206 (12 U.S.C. 1833b)—
(A) by striking ‘‘Board, the Oversight Board of the
Resolution Trust Corporation’’ and inserting ‘‘Agency, and’’;
and
(B) by striking ‘‘, and the Office of Thrift Supervision’’;
(9) in section 1216 (12 U.S.C. 1833e)—
(A) in subsection (a)—
(i) in paragraph (3), by adding ‘‘and’’ at the end;
(ii) in paragraph (4), by striking the semicolon
at the end and inserting a period;
(iii) by striking paragraphs (2), (5), and (6); and
(iv) by redesignating paragraphs (3) and (4), as
paragraphs (2) and (3), respectively;
(B) in subsection (c)—
(i) by striking ‘‘the Director of the Office of Thrift
Supervision,’’ and inserting ‘‘and’’; and
(ii) by striking ‘‘the Thrift Depositor Protection
Oversight Board of the Resolution Trust Corporation,
and the Resolution Trust Corporation’’; and
(C) in subsection (d)—
(i) by striking paragraphs (3), (5), and (6); and
(ii) by redesignating paragraphs (4), (7), and (8)
as paragraphs (3), (4), and (5), respectively.
SEC. 368. FLOOD DISASTER PROTECTION ACT OF 1973.

Section 3(a)(5) of the Flood Disaster Protection Act of 1973
(42 U.S.C. 4003(a)(5)) is amended by striking ‘‘, the Office of Thrift
Supervision’’.

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SEC. 369. HOME OWNERS’ LOAN ACT.

The Home Owners’ Loan Act (12 U.S.C. 1461 et seq.) is
amended—
(1) in section 1 (12 U.S.C. 1461), by striking the table
of contents;
(2) in section 2 (12 U.S.C. 1462), as amended by this
Act—
(A) by striking paragraphs (1) and (3);
(B) by redesignating paragraph (2) as paragraph (1);
(C) by redesignating paragraphs (4) through (9) as
paragraphs (2) through (7), respectively; and
(D) by adding at the end the following:

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PUBLIC LAW 111–203—JULY 21, 2010
‘‘(8) BOARD.—The term ‘Board’, other than in the context
of the Board of Directors of the Corporation, means the Board
of Governors of the Federal Reserve System.
‘‘(9) COMPTROLLER.—The term ‘Comptroller’ means the
Comptroller of the Currency.’’;
(3) in section 3 (12 U.S.C. 1462a)—
(A) by striking the section heading and inserting the
following:

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‘‘SEC. 3. ADMINISTRATIVE PROVISIONS.’’;

(B) by striking subsections (a), (b), (c), (d), (g), (h),
(i), and (j);
(C) by redesignating subsections (e) and (f) as subsections (a) and (b), respectively;
(D) in subsection (a), as so redesignated—
(i) in the heading by striking ‘‘OF THE DIRECTOR’’;
and
(ii) in the matter preceding paragraph (1), by
striking ‘‘The Director’’ and inserting ‘‘In accordance
with subtitle A of title III of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, the appropriate Federal banking agency’’; and
(E) in subsection (b), as so redesignated, by striking
‘‘Director’’ and inserting ‘‘appropriate Federal banking
agency’’;
(4) in section 4 (12 U.S.C. 1463)—
(A) in subsection (a)—
(i) in the subsection heading, by striking ‘‘FEDERAL’’;
(ii) by striking paragraphs (1) and (2) and inserting
the following:
‘‘(1) EXAMINATION AND SAFE AND SOUND OPERATION.—
‘‘(A) FEDERAL SAVINGS ASSOCIATIONS.—The Comptroller
shall provide for the examination and safe and sound operation of Federal savings associations.
‘‘(B) STATE SAVINGS ASSOCIATIONS.—The Corporation
shall provide for the examination and safe and sound operation of State savings associations.
‘‘(2) REGULATIONS FOR SAVINGS ASSOCIATIONS.—The Comptroller may prescribe regulations with respect to savings
associations, as the Comptroller determines to be appropriate
to carry out the purposes of this Act.’’; and
(iii) in paragraph (3), by striking ‘‘Director’’ each
place that term appears and inserting ‘‘Comptroller
and the Corporation’’;
(B) in subsection (b)—
(i) in paragraph (2)—
(I) in subparagraph (A), by adding ‘‘and’’ at
the end;
(II) in subparagraph (B), by striking ‘‘; and’’
and inserting a period; and
(III) by striking subparagraph (C); and
(ii) by striking ‘‘Director’’ each place that term
appears and inserting ‘‘Comptroller’’;
(C) in subsection (c)—

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1559

(i) by striking ‘‘All regulations and policies of the
Director’’ and inserting ‘‘The regulations of the Comptroller and the policies of the Comptroller and the
Corporation’’; and
(ii) by striking ‘‘of the Currency’’;
(D) in subsection (e)(5), by striking ‘‘Director’’ and
inserting ‘‘Comptroller’’;
(E) in subsection (f), by striking ‘‘Director’’ each place
that term appears and inserting ‘‘appropriate Federal
banking agency’’; and
(F) in subsection (h), by striking ‘‘Director’’ each place
that term appears and inserting ‘‘appropriate Federal
banking agency’’;
(5) in section 5 (12 U.S.C. 1464)—
(A) in subsection (a), by striking ‘‘Director’’, each place
such term appears and inserting ‘‘Comptroller of the Currency’’;
(B) in subsection (b), by striking ‘‘Director’’, each place
such term appears and inserting ‘‘Comptroller of the Currency’’;
(C) in subsection (c)—
(i) in paragraph (5)—
(I) in subparagraph (A), by striking ‘‘Director’’
and inserting ‘‘appropriate Federal banking
agency’’; and
(II) in subparagraph (B)—
(aa) by striking ‘‘The Director’’ and
inserting ‘‘The appropriate Federal banking
agency’’; and
(bb) by striking ‘‘the Director’’ and
inserting ‘‘the appropriate Federal banking
agency’’;
(D) in subsection (d)—
(i) in paragraph (1)—
(I) in subparagraph (A)—
(aa) in the first sentence, by striking
‘‘Director’’ and inserting ‘‘appropriate Federal
banking agency’’;
(bb) in the second sentence—
(AA) by striking ‘‘Director’s own name
and through the Director’s own attorneys’’
and inserting ‘‘name of the appropriate
Federal banking agency and through the
attorneys of the appropriate Federal
banking agency’’; and
(BB) by striking ‘‘Director’’ each place
that term appears and inserting ‘‘appropriate Federal banking agency’’; and
(cc) in the third sentence, by striking
‘‘Director’’ each place that term appears and
inserting ‘‘Comptroller’’;
(II) in subparagraph (B)—
(aa) in clauses (i) through (iv), by striking
‘‘Director’’ each place that term appears and
inserting ‘‘appropriate Federal banking
agency’’;
(III) in clause (v)—

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124 STAT. 1560

PUBLIC LAW 111–203—JULY 21, 2010
(aa) in the matter preceding subclause (I),
by striking ‘‘Director’’ and inserting ‘‘appropriate Federal banking agency’’;
(bb) in subclause (II), by striking ‘‘subpenas’’ and inserting ‘‘subpoenas’’; and
(cc) in the matter following subclause (II),
by striking ‘‘subpena’’ and inserting ‘‘subpoena’’;
(IV) in clause (vi)—
(aa) in the first sentence, by striking
‘‘Director’’ and inserting ‘‘appropriate Federal
banking agency’’; and
(bb) in the second sentence, by striking
‘‘Director’’ and inserting ‘‘Comptroller’’;
(V) in clause (vii)—
(aa) in the first sentence, by striking ‘‘subpena’’ and inserting ‘‘subpoena’’;
(bb) in the second sentence, by striking
‘‘subpenaed’’ and inserting ‘‘subpoenaed’’; and
(cc) in the third sentence, by striking
‘‘Director’’ and inserting ‘‘appropriate Federal
banking agency’’;
(ii) in paragraph (2)—
(I) in subparagraph (A)—
(aa) by striking ‘‘Director of the Office of
Thrift Supervision’’ and inserting ‘‘appropriate
Federal banking agency’’;
(bb) by striking ‘‘any insured savings
association’’ and inserting ‘‘an insured savings
association’’; and
(cc) by striking ‘‘Director determines, in
the Director’s discretion’’ and inserting ‘‘appropriate Federal banking agency determines, in
the discretion of the appropriate Federal
banking agency’’;
(II) in subparagraph (B), by striking ‘‘Director’’
each place that term appears and inserting ‘‘appropriate Federal banking agency’’;
(III) in subparagraphs (C) and (D), by striking
‘‘Director’’ and inserting ‘‘appropriate Federal
banking agency’’;
(IV) in subparagraph (E)—
(aa) in clause (ii)—
(AA) in the clause heading, by
striking ‘‘OR RTC’’; and
(BB) by striking ‘‘or the Resolution
Trust Corporation, as appropriate,’’ each
place that term appears; and
(bb) by striking ‘‘Director’’ each place that
term appears and inserting ‘‘appropriate Federal banking agency’’; and
(iii) in paragraph (3)—
(I) in subparagraph (A), by striking ‘‘Director’’
each place that term appears and inserting ‘‘Comptroller’’; and
(II) in subparagraph (B)—

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(aa) in the subparagraph heading, by
striking ‘‘OR RTC’’;
(bb) by striking ‘‘Corporation or the Resolution Trust’’; and
(cc) by striking ‘‘Director’’ and inserting
‘‘Comptroller’’;
(iv) in paragraph (4), by striking ‘‘Director’’ and
inserting ‘‘appropriate Federal banking agency’’;
(v) in paragraph (6)—
(I) in subparagraph (A), by striking ‘‘Director’’
and inserting ‘‘Comptroller’’; and
(II) in subparagraphs (B) and (C), by striking
‘‘Director’’ each place that term appears and
inserting ‘‘appropriate Federal banking agency’’;
(vi) in paragraph (7)—
(I) in subparagraphs (A), (B), and (D), by
striking ‘‘Director’’ each place that term appears
and inserting ‘‘appropriate Federal banking
agency’’;
(II) in subparagraph (C), by striking ‘‘Director’’
and inserting ‘‘Federal Deposit Insurance Corporation or the Comptroller, as appropriate,’’; and
(III) by striking subparagraph (E) and
inserting the following:
‘‘(E) ADMINISTRATION BY THE COMPTROLLER AND THE
CORPORATION.—The Comptroller may issue such regulations, and the appropriate Federal banking agency may
issue such orders, including those issued pursuant to section 8 of the Federal Deposit Insurance Act, as may be
necessary to administer and carry out this paragraph and
to prevent evasion of this paragraph.’’;
(E) in subsection (e)(2), strike ‘‘Director’’ and insert
‘‘Comptroller’’;
(F) in subsection (i)—
(i) by striking ‘‘Director’’, each place such term
appears, and inserting ‘‘Comptroller’’;
(ii) in paragraph (2), in the heading, by striking
‘‘DIRECTOR’’ and inserting ‘‘COMPTROLLER’’;
(iii) in paragraph (5)(A), by striking ‘‘of the Currency’’; and
(iv) except as provided in clauses (i) through (iii),
by striking ‘‘Director’’ each place such term appears
and inserting ‘‘Comptroller’’;
(G) in subsection (o)—
(i) in paragraph (1), by striking ‘‘Director’’ and
inserting ‘‘Comptroller’’; and
(ii) in paragraph (2)(B), by striking ‘‘Director’s
determination’’ and inserting ‘‘determination of the
Comptroller’’;
(H) in subsections (m), (n), (o), and (p), by striking
‘‘Director’’, each place such term appears, and inserting
‘‘Comptroller’’;
(I) in subsection (q)—
(i) in paragraph (6), by striking ‘‘of Governors of
the Federal Reserve System’’;
(ii) by striking ‘‘Director’’ each place that term
appears and inserting ‘‘Board’’; and

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PUBLIC LAW 111–203—JULY 21, 2010
(iii) by inserting ‘‘in consultation with the Comptroller and the Corporation,’’ before ‘‘considers’’;
(J) in subsection (r)(3), by striking ‘‘Director’’ and
inserting ‘‘Comptroller of the Currency’’;
(K) in subsection (s)—
(i) in paragraph (1), strike ‘‘Director’’ and insert
‘‘Comptroller of the Currency’’;
(ii) in paragraph (2), strike ‘‘Director’’ and insert
‘‘Comptroller of the Currency’’;
(iii) in paragraph (3), by striking ‘‘Director’s discretion, the Director’’ and inserting ‘‘discretion of the
appropriate Federal banking agency, the appropriate
Federal banking agency,’’;
(iv) in paragraph (4), by striking ‘‘Director’’ each
place that term appears and inserting ‘‘appropriate
Federal banking agency’’; and
(v) in paragraph (5)—
(I) by striking ‘‘Director’’, each place such term
appears, and inserting ‘‘appropriate Federal
banking agency’’; and
(II) by striking ‘‘Director’s approval’’ and
inserting ‘‘approval of the appropriate Federal
banking agency’’;
(L) in subsection (t)—
(i) in paragraph (1), by striking subparagraph (D);
(ii) by striking paragraph (3) and inserting the
following:
‘‘(3) [Repealed].’’;
(iii) in paragraph (5)—
(I) in subparagraph (B), by striking ‘‘Corporation, in its sole discretion’’ and inserting ‘‘appropriate Federal banking agency, in the sole discretion of the appropriate Federal banking agency’’;
and
(II) by striking subparagraph (D);
(iv) in paragraph (6)—
(I) by striking subparagraph (A) and inserting
the following:
‘‘(A) [Reserved].’’;
(II) in subparagraph (B), by striking ‘‘Director’’
each place that term appears and inserting ‘‘appropriate Federal banking agency’’;
(III) in subparagraph (C)—
(aa) in clause (i), by striking ‘‘Director’s
prior approval’’ and inserting ‘‘prior approval
of the appropriate Federal banking agency’’;
(bb) in clause (ii), by striking ‘‘Director’s
discretion’’ and inserting ‘‘discretion of the
appropriate Federal banking agency’’; and
(cc) by striking ‘‘Director’’ each place that
term appears and inserting ‘‘appropriate Federal banking agency’’;
(IV) in subparagraph (E), by striking ‘‘Director
shall’’ and inserting ‘‘appropriate Federal banking
agency may’’; and
(V) in subparagraph (F), by striking ‘‘Director’’
and all that follows through the end of the

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subparagraph and inserting ‘‘appropriate Federal
banking agency under this Act or any other provision of law.’’;
(v) in paragraph (7), by striking ‘‘Director’’ each
place that term appears and inserting ‘‘appropriate
Federal banking agency’’;
(vi) by striking paragraph (8) and inserting the
following:
‘‘(8) [Repealed].’’;
(vii) in paragraph (9)—
(I) in subparagraph (A), by striking ‘‘Director’’
and inserting ‘‘Comptroller’’;
(II) in subparagraph (C), by striking ‘‘of the
Currency’’; and
(III) by striking subparagraph (B) and redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively; and
(viii) except as provided in clauses (i) through (vii),
by striking ‘‘Director’’ each place that term appears
and inserting ‘‘appropriate Federal banking agency’’;
(M) in subsection (u), by striking ‘‘Director’’ each place
that term appears and inserting ‘‘appropriate Federal
banking agency’’;
(N) in subsection (v)—
(i) in paragraph (2), by striking ‘‘Director’s determinations’’ and inserting ‘‘determinations of the appropriate Federal banking agency’’; and
(ii) by striking ‘‘Director’’ each place that term
appears and inserting ‘‘appropriate Federal banking
agency’’;
(O) in subsection (w)(1)—
(i) in subparagraph (A)(II), by striking ‘‘Director’s
intention’’ and inserting ‘‘intention of the Comptroller’’;
and
(ii) in subparagraph (B), by striking ‘‘Director’s
intention’’ and inserting ‘‘intention of the Comptroller’’;
and
(P) except as provided in subparagraphs (A) through
(J), by striking ‘‘Director’’ each place that term appears
and inserting ‘‘Comptroller’’;
(6) in section 8 (12 U.S.C. 1466a), by striking ‘‘Director’’
each place that term appears and inserting ‘‘Comptroller’’;
(7) in section 9 (12 U.S.C. 1467)—
(A) in subsection (a), by striking ‘‘assessed by the
Director’’ and all that follows through the end of the subsection and inserting the following: ‘‘assessed by—
‘‘(1) the Comptroller, against each such Federal savings
association, as the Comptroller deems necessary or appropriate;
and
‘‘(2) the Corporation, against each such State savings
association, as the Corporation deems necessary or appropriate.’’;
(B) in subsection (b), by striking ‘‘Director’’, each place
such term appears, and inserting ‘‘Comptroller or Corporation, as appropriate’’;
(C) in subsection (e)—

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PUBLIC LAW 111–203—JULY 21, 2010
(i) by striking ‘‘Only the Director’’ and inserting
‘‘The Comptroller’’; and
(ii) by striking ‘‘Director’s designee’’ and inserting
‘‘designee of the Comptroller’’;
(D) by striking subsection (f) and inserting the following:
‘‘(f) [Reserved].’’;
(E) in subsection (g)—
(i) in paragraph (1), by striking ‘‘Director’’ and
inserting ‘‘appropriate Federal banking agency’’; and
(ii) in paragraph (2), by striking ‘‘Director, or the
Corporation, as the case may be,’’ and inserting ‘‘appropriate Federal banking agency for the savings association’’;
(F) in subsection (i), by striking ‘‘Director’’ each place
that term appears and inserting ‘‘appropriate Federal
banking agency’’;
(G) in subsection (j), by striking ‘‘Director’s sole discretion’’ and inserting ‘‘sole discretion of the appropriate Federal banking agency’’;
(H) in subsection (k), by striking ‘‘Director may assess
against institutions for which the Director is the appropriate Federal banking agency, as defined in section 3
of the Federal Deposit Insurance Act,’’ and inserting ‘‘appropriate Federal banking agency may assess against an
institution’’; and
(I) except as provided in subparagraphs (A) through
(G), by striking ‘‘Director’’ each place that term appears
and inserting ‘‘appropriate Federal banking agency’’;
(8) in section 10 (12 U.S.C. 1467a)—
(A) in subsection (a)(1), by striking ‘‘Director’’ each
place that term appears and inserting ‘‘appropriate Federal
banking agency’’;
(B) in subsection (b)—
(i) in paragraph (2), by striking ‘‘and the regional
office of the Director of the district in which its principal office is located,’’; and
(ii) in paragraph (6), by striking ‘‘Director’s own
motion or application’’ and inserting ‘‘motion or application of the Board’’;
(C) in subsection (c)—
(i) in paragraph (2)(F), by striking ‘‘of Governors
of the Federal Reserve System’’;
(ii) in paragraph (4)(B), in the subparagraph
heading, by striking ‘‘BY DIRECTOR’’;
(iii) in paragraph (6)(D), in the subparagraph
heading, by striking ‘‘BY DIRECTOR’’; and
(iv) in paragraph (9)(E), by inserting ‘‘(in consultation with the appropriate Federal banking agency)’’
after ‘‘including a determination’’;
(D) in subsection (g)(5)(B), by striking ‘‘the Director’s
discretion’’ and inserting ‘‘the discretion of the Board’’;
(E) in subsection (l), by striking ‘‘Director’’ each place
that term appears and inserting ‘‘appropriate Federal
banking agency’’;
(F) in subsection (m), by striking ‘‘Director’’ and
inserting ‘‘appropriate Federal banking agency’’;

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(G) in subsection (p)—
(i) in paragraph (1)—
(I) by striking ‘‘Director determines’’ the 1st
place such term appears and inserting ‘‘Board or
the appropriate Federal banking agency for the
savings association determines’’;
(II) by striking ‘‘Director may’’ and inserting
‘‘Board may’’; and
(III) by striking ‘‘Director determines’’ the 2nd
place such term appears and inserting ‘‘Board, in
consultation with the appropriate Federal banking
agency for the savings association determines’’;
and
(ii) in paragraph (2), by striking ‘‘Director’’, each
place such term appears, and inserting ‘‘Board’’;
(H) in subsection (q), by striking ‘‘Director’’, each place
such term appears, and inserting ‘‘Board’’;
(I) in subsection (r), by striking ‘‘Director’’, each place
such term appears, and inserting ‘‘Board or appropriate
Federal banking agency’’;
(J) in subsection (s)—
(i) in paragraph (2)—
(I) in subparagraph (B)(ii), by striking ‘‘Director’s judgment’’ and inserting ‘‘judgment of the
appropriate Federal banking agency for the
savings association’’; and
(II) by striking ‘‘Director’’ each place that term
appears and inserting ‘‘appropriate Federal
banking agency for the savings association’’; and
(ii) in paragraph (4), by striking ‘‘Director’’ and
inserting ‘‘Comptroller’’; and
(K) except as provided in subparagraphs (A) through
(J), by striking ‘‘Director’’ each place that term appears
and inserting ‘‘Board’’;
(9) in section 11 (12 U.S.C. 1468), by striking ‘‘Director’’
each place that term appears and inserting ‘‘appropriate Federal banking agency’’;
(10) in section 12 (12 U.S.C. 1468a), by striking ‘‘the
Director’’ and inserting ‘‘a Federal banking agency’’; and
(11) in section 13 (12 U.S.C. 1468a) is amended by striking
‘‘Director’’ and inserting ‘‘a Federal banking agency’’.

12 USC 1468b.

SEC. 370. HOUSING ACT OF 1948.

Section 502(c) of the Housing Act of 1948 (12 U.S.C. 1701c(c))
is amended—
(1) in the matter preceding paragraph (1), by striking ‘‘and
the Director of the Office of Thrift Supervision’’ and inserting
‘‘, the Comptroller of the Currency, and the Federal Deposit
Insurance Corporation’’; and
(2) in paragraph (3), by striking ‘‘Board’’ and inserting
‘‘Agency’’.

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SEC. 371. HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1992.

Section 543 of the Housing and Community Development Act
of 1992 (Public Law 102–550; 106 Stat. 3798) is amended—
(1) in subsection (c)(1)—
(A) by striking subparagraphs (D) through (F); and

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(B) by redesignating subparagraphs (G) and (H) as
subparagraphs (D) and (E), respectively; and
(2) in subsection (f)—
(A) in paragraph (2), by striking ‘‘the Office of Thrift
Supervision,’’ each place that term appears; and
(B) in paragraph (3)—
(i) in the matter preceding subparagraph (A), by
striking ‘‘the Office of Thrift Supervision,’’; and
(ii) in subparagraph (D), by striking ‘‘Office of
Thrift Supervision,’’.

SEC. 372. HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983.

Section 469 of the Housing and Urban-Rural Recovery Act
of 1983 (12 U.S.C. 1701p–1) is amended in the first sentence,
by striking ‘‘Federal Home Loan Bank Board’’ and inserting ‘‘Federal Housing Finance Agency’’.
SEC. 373. NATIONAL HOUSING ACT.

Section 202(f) of the National Housing Act (12 U.S.C. 1708(f))
is amended—
(1) by striking paragraph (5) and inserting the following:
‘‘(5) if the mortgagee is a national bank, a subsidiary or
affiliate of such bank, a Federal savings association or a subsidiary or affiliate of a savings association, the Comptroller
of the Currency;’’;
(2) in paragraph (6), by adding ‘‘and’’ at the end;
(3) in paragraph (7)—
(A) by inserting ‘‘or State savings association’’ after
‘‘State bank’’; and
(B) by striking ‘‘; and’’ and inserting a period; and
(4) by striking paragraph (8).
SEC. 374. NEIGHBORHOOD REINVESTMENT CORPORATION ACT.

Section 606(c)(3) of the Neighborhood Reinvestment Corporation Act (42 U.S.C. 8105(c)(3)) is amended by striking ‘‘Federal
Home Loan Bank Board’’ and inserting ‘‘Federal Housing Finance
Agency’’.
SEC. 375. PUBLIC LAW 93–100.

Section 5(d) of Public Law 93–100 (12 U.S.C. 1470(a)) is
amended—
(1) in paragraph (1), by striking ‘‘Federal Savings and
Loan Insurance Corporation with respect to insured institutions, the Board of Governors of the Federal Reserve System
with respect to State member insured banks, and the Federal
Deposit Insurance Corporation with respect to State nonmember insured banks’’ and inserting ‘‘appropriate Federal
banking agency, with respect to the institutions subject to
the jurisdiction of each such agency,’’; and
(2) in paragraph (2), by striking ‘‘supervisory’’ and inserting
‘‘banking’’.

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SEC. 376. SECURITIES EXCHANGE ACT OF 1934.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended—
(1) in section 3(a)(34) (15 U.S.C. 78c(a)(34))—
(A) in subparagraph (A)—

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(i) in clause (i), by striking ‘‘or a subsidiary or
a department or division of any such bank’’ and
inserting ‘‘a subsidiary or a department or division
of any such bank, a Federal savings association (as
defined in section 3(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(2))), the deposits of which
are insured by the Federal Deposit Insurance Corporation, or a subsidiary or department or division of any
such Federal savings association’’;
(ii) in clause (ii), by striking ‘‘or a subsidiary or
a department or division of such subsidiary’’ and
inserting ‘‘a subsidiary or a department or division
of such subsidiary, or a savings and loan holding company’’;
(iii) in clause (iii), by striking ‘‘or a subsidiary
or department or division thereof;’’ and inserting ‘‘a
subsidiary or department or division of any such bank,
a State savings association (as defined in section 3(b)(3)
of the Federal Deposit Insurance Act (12 U.S.C.
1813(b)(3))), the deposits of which are insured by the
Federal Deposit Insurance Corporation, or a subsidiary
or a department or division of any such State savings
association; and’’;
(iv) by striking clause (iv); and
(v) by redesignating clause (v) as clause (iv);
(B) in subparagraph (B)—
(i) in clause (i), by striking ‘‘or a subsidiary of
any such bank’’ and inserting ‘‘a subsidiary of any
such bank, a Federal savings association (as defined
in section 3(b)(2) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(b)(2))), the deposits of which are
insured by the Federal Deposit Insurance Corporation,
or a subsidiary of any such Federal savings association’’;
(ii) in clause (ii), by striking ‘‘or a subsidiary of
a bank holding company which is a bank other than
a bank specified in clause (i), (iii), or (iv) of this
subparagraph’’ and inserting ‘‘a subsidiary of a bank
holding company that is a bank other than a bank
specified in clause (i) or (iii) of this subparagraph,
or a savings and loan holding company’’;
(iii) in clause (iii), by striking ‘‘or a subsidiary
thereof;’’ and inserting ‘‘a subsidiary of any such bank,
a State savings association (as defined in section 3(b)(3)
of the Federal Deposit Insurance Act (12 U.S.C.
1813(b)(3))), the deposits of which are insured by the
Federal Deposit Insurance Corporation, or a subsidiary
of any such State savings association; and’’;
(iv) by striking clause (iv); and
(v) by redesignating clause (v) as clause (iv);
(C) in subparagraph (C)—
(i) in clause (i), by striking ‘‘bank’’ and inserting
‘‘bank or a Federal savings association (as defined in
section 3(b)(2) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(b)(2))), the deposits of which are
insured by the Federal Deposit Insurance Corporation’’;

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(ii) in clause (ii), by striking ‘‘or a subsidiary of
a bank holding company which is a bank other than
a bank specified in clause (i), (iii), or (iv) of this
subparagraph’’ and inserting ‘‘a subsidiary of a bank
holding company that is a bank other than a bank
specified in clause (i) or (iii) of this subparagraph,
or a savings and loan holding company’’;
(iii) in clause (iii), by striking ‘‘System)’’ and
inserting, ‘‘System) or a State savings association (as
defined in section 3(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(3))), the deposits of which
are insured by the Federal Deposit Insurance Corporation; and’’;
(iv) by striking clause (iv); and
(v) by redesignating clause (v) as clause (iv);
(D) in subparagraph (D)—
(i) in clause (i), by inserting after ‘‘bank’’ the following: ‘‘or a Federal savings association (as defined
in section 3(b)(2) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(b)(2))), the deposits of which are
insured by the Federal Deposit Insurance Corporation’’;
(ii) in clause (ii), by adding ‘‘and’’ at the end;
(iii) by striking clause (iii);
(iv) by redesignating clause (iv) as clause (iii); and
(v) in clause (iii), as so redesignated, by inserting
after ‘‘bank’’ the following: ‘‘or a State savings association (as defined in section 3(b)(3) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(b)(3))), the deposits of
which are insured by the Federal Deposit Insurance
Corporation’’;
(E) in subparagraph (F)—
(i) in clause (i), by inserting after ‘‘bank’’ the following: ‘‘or a Federal savings association (as defined
in section 3(b)(2) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(b)(2))), the deposits of which are
insured by the Federal Deposit Insurance Corporation’’;
(ii) by striking clause (ii);
(iii) by redesignating clauses (iii), (iv), and (v) as
clauses (ii), (iii), and (iv), respectively; and
(iv) in clause (iii), as so redesignated, by inserting
before the semicolon the following: ‘‘or a State savings
association (as defined in section 3(b)(3) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(b)(3))), the
deposits of which are insured by the Federal Deposit
Insurance Corporation’’;
(F) in subparagraph (G)—
(i) in clause (i), by inserting after ‘‘national bank’’
the following: ‘‘, a Federal savings association (as
defined in section 3(b)(2) of the Federal Deposit Insurance Act), the deposits of which are insured by the
Federal Deposit Insurance Corporation,’’;
(ii) in clause (iii)—
(I) by inserting after ‘‘bank)’’ the following:
‘‘, a State savings association (as defined in section
3(b)(3) of the Federal Deposit Insurance Act), the
deposits of which are insured by the Federal
Deposit Insurance Corporation,’’; and

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(II) by adding ‘‘and’’ at the end;
(iii) by striking clause (iv); and
(iv) by redesignating clause (v) as clause (iv); and
(G) in the undesignated matter following subparagraph
(H), by striking ‘‘, and the term ‘District of Columbia
savings and loan association’ means any association subject
to examination and supervision by the Office of Thrift
Supervision under section 8 of the Home Owners’ Loan
Act of 1933’’;
(2) in section 12(i) (15 U.S.C. 78l(i))—
(A) in paragraph (1), by inserting after ‘‘national
banks’’ the following: ‘‘and Federal savings associations,
the accounts of which are insured by the Federal Deposit
Insurance Corporation’’;
(B) by striking ‘‘(3)’’ and all that follows through ‘‘vested
in the Office of Thrift Supervision’’ and inserting ‘‘and
(3) with respect to all other insured banks and State
savings associations, the accounts of which are insured
by the Federal Deposit Insurance Corporation, are vested
in the Federal Deposit Insurance Corporation’’; and
(C) in the second sentence, by striking ‘‘the Federal
Deposit Insurance Corporation, and the Office of Thrift
Supervision’’ and inserting ‘‘and the Federal Deposit Insurance Corporation’’;
(3) in section 15C(g)(1) (15 U.S.C. 78o–5(g)(1)), by striking
‘‘the Director of the Office of Thrift Supervision, the Federal
Savings and Loan Insurance Corporation,’’; and
(4) in section 23(b)(1) (15 U.S.C. 78w(b)(1)), by striking
‘‘, other than the Office of Thrift Supervision,’’.

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SEC. 377. TITLE 18, UNITED STATES CODE.

Title 18, United States Code, is amended—
(1) in section 212(c)(2)—
(A) by striking subparagraph (C); and
(B) by redesignating subparagraphs (D) through (H)
as subparagraphs (C) through (G), respectively;
(2) in section 657, by striking ‘‘Office of Thrift Supervision,
the Resolution Trust Corporation,’’;
(3) in section 981(a)(1)(D)—
(A) by striking ‘‘Resolution Trust Corporation,’’; and
(B) by striking ‘‘or the Office of Thrift Supervision’’;
(4) in section 982(a)(3)—
(A) by striking ‘‘Resolution Trust Corporation,’’; and
(B) by striking ‘‘or the Office of Thrift Supervision’’;
(5) in section 1006—
(A) by striking ‘‘Office of Thrift Supervision,’’; and
(B) by striking ‘‘the Resolution Trust Corporation,’’;
(6) in section 1014—
(A) by striking ‘‘the Office of Thrift Supervision’’; and
(B) by striking ‘‘the Resolution Trust Corporation,’’;
and
(7) in section 1032(1)—
(A) by striking ‘‘the Resolution Trust Corporation,’’;
and
(B) by striking ‘‘or the Director of the Office of Thrift
Supervision’’.

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SEC. 378. TITLE 31, UNITED STATES CODE.

Title 31, United States Code, is amended—
(1) in section 321—
(A) in subsection (c)—
(i) in paragraph (1), by adding ‘‘and’’ at the end;
(ii) in paragraph (2), by striking ‘‘; and’’ and
inserting a period; and
(iii) by striking paragraph (3); and
(B) by striking subsection (e); and
(2) in section 714(a), by striking ‘‘the Office of the Comptroller of the Currency, and the Office of Thrift Supervision.’’
and inserting ‘‘and the Office of the Comptroller of the Currency.’’.
Private Fund
Investment
Advisers
Registration Act
of 2010.
15 USC 80b–20
note.

TITLE IV—REGULATION OF ADVISERS
TO HEDGE FUNDS AND OTHERS
SEC. 401. SHORT TITLE.

This title may be cited as the ‘‘Private Fund Investment
Advisers Registration Act of 2010’’.

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SEC. 402. DEFINITIONS.

15 USC 80b–2
note.

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(a) INVESTMENT ADVISERS ACT OF 1940 DEFINITIONS.—Section
202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–
2(a)) is amended by adding at the end the following:
‘‘(29) The term ‘private fund’ means an issuer that would
be an investment company, as defined in section 3 of the
Investment Company Act of 1940 (15 U.S.C. 80a–3), but for
section 3(c)(1) or 3(c)(7) of that Act.
‘‘(30) The term ‘foreign private adviser’ means any investment adviser who—
‘‘(A) has no place of business in the United States;
‘‘(B) has, in total, fewer than 15 clients and investors
in the United States in private funds advised by the investment adviser;
‘‘(C) has aggregate assets under management attributable to clients in the United States and investors in
the United States in private funds advised by the investment adviser of less than $25,000,000, or such higher
amount as the Commission may, by rule, deem appropriate
in accordance with the purposes of this title; and
‘‘(D) neither—
‘‘(i) holds itself out generally to the public in the
United States as an investment adviser; nor
‘‘(ii) acts as—
‘‘(I) an investment adviser to any investment
company registered under the Investment Company Act of 1940; or
‘‘(II) a company that has elected to be a business development company pursuant to section 54
of the Investment Company Act of 1940 (15 U.S.C.
80a–53), and has not withdrawn its election.’’.
(b) OTHER DEFINITIONS.—As used in this title, the terms
‘‘investment adviser’’ and ‘‘private fund’’ have the same meanings
as in section 202 of the Investment Advisers Act of 1940, as
amended by this title.

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124 STAT. 1571

SEC. 403. ELIMINATION OF PRIVATE ADVISER EXEMPTION; LIMITED
EXEMPTION FOR FOREIGN PRIVATE ADVISERS; LIMITED
INTRASTATE EXEMPTION.

Section 203(b) of the Investment Advisers Act of 1940 (15
U.S.C. 80b–3(b)) is amended—
(1) in paragraph (1), by inserting ‘‘, other than an investment adviser who acts as an investment adviser to any private
fund,’’ before ‘‘all of whose’’;
(2) by striking paragraph (3) and inserting the following:
‘‘(3) any investment adviser that is a foreign private
adviser;’’; and
(3) in paragraph (5), by striking ‘‘or’’ at the end;
(4) in paragraph (6)—
(A) by striking ‘‘any investment adviser’’ and inserting
‘‘(A) any investment adviser’’;
(B) by redesignating subparagraphs (A) and (B) as
clauses (i) and (ii), respectively; and
(C) in clause (ii) (as so redesignated), by striking the
period at the end and inserting ‘‘; or’’; and
(D) by adding at the end the following:
‘‘(B) any investment adviser that is registered with the Commodity Futures Trading Commission as a commodity trading
advisor and advises a private fund, provided that, if after the
date of enactment of the Private Fund Investment Advisers Registration Act of 2010, the business of the advisor should become
predominately the provision of securities-related advice, then such
adviser shall register with the Commission.’’.
(5) by adding at the end the following:
‘‘(7) any investment adviser, other than any entity that
has elected to be regulated or is regulated as a business development company pursuant to section 54 of the Investment Company Act of 1940 (15 U.S.C. 80a–54), who solely advises—
‘‘(A) small business investment companies that are
licensees under the Small Business Investment Act of 1958;
‘‘(B) entities that have received from the Small Business Administration notice to proceed to qualify for a
license as a small business investment company under
the Small Business Investment Act of 1958, which notice
or license has not been revoked; or
‘‘(C) applicants that are affiliated with 1 or more
licensed small business investment companies described
in subparagraph (A) and that have applied for another
license under the Small Business Investment Act of 1958,
which application remains pending.’’.

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SEC. 404. COLLECTION OF SYSTEMIC RISK DATA; REPORTS; EXAMINATIONS; DISCLOSURES.

Section 204 of the Investment Advisers Act of 1940 (15 U.S.C.
80b–4) is amended—
(1) by redesignating subsections (b) and (c) as subsections
(c) and (d), respectively; and
(2) by inserting after subsection (a) the following:
‘‘(b) RECORDS AND REPORTS OF PRIVATE FUNDS.—
‘‘(1) IN GENERAL.—The Commission may require any investment adviser registered under this title—
‘‘(A) to maintain such records of, and file with the
Commission such reports regarding, private funds advised

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124 STAT. 1572

PUBLIC LAW 111–203—JULY 21, 2010
by the investment adviser, as necessary and appropriate
in the public interest and for the protection of investors,
or for the assessment of systemic risk by the Financial
Stability Oversight Council (in this subsection referred to
as the ‘Council’); and
‘‘(B) to provide or make available to the Council those
reports or records or the information contained therein.
‘‘(2) TREATMENT OF RECORDS.—The records and reports of
any private fund to which an investment adviser registered
under this title provides investment advice shall be deemed
to be the records and reports of the investment adviser.
‘‘(3) REQUIRED INFORMATION.—The records and reports
required to be maintained by an investment adviser and subject
to inspection by the Commission under this subsection shall
include, for each private fund advised by the investment
adviser, a description of—
‘‘(A) the amount of assets under management and use
of leverage, including off-balance-sheet leverage;
‘‘(B) counterparty credit risk exposure;
‘‘(C) trading and investment positions;
‘‘(D) valuation policies and practices of the fund;
‘‘(E) types of assets held;
‘‘(F) side arrangements or side letters, whereby certain
investors in a fund obtain more favorable rights or entitlements than other investors;
‘‘(G) trading practices; and
‘‘(H) such other information as the Commission, in
consultation with the Council, determines is necessary and
appropriate in the public interest and for the protection
of investors or for the assessment of systemic risk, which
may include the establishment of different reporting
requirements for different classes of fund advisers, based
on the type or size of private fund being advised.
‘‘(4) MAINTENANCE OF RECORDS.—An investment adviser
registered under this title shall maintain such records of private
funds advised by the investment adviser for such period or
periods as the Commission, by rule, may prescribe as necessary
and appropriate in the public interest and for the protection
of investors, or for the assessment of systemic risk.
‘‘(5) FILING OF RECORDS.—The Commission shall issue rules
requiring each investment adviser to a private fund to file
reports containing such information as the Commission deems
necessary and appropriate in the public interest and for the
protection of investors or for the assessment of systemic risk.
‘‘(6) EXAMINATION OF RECORDS.—
‘‘(A) PERIODIC AND SPECIAL EXAMINATIONS.—The
Commission—
‘‘(i) shall conduct periodic inspections of the records
of private funds maintained by an investment adviser
registered under this title in accordance with a
schedule established by the Commission; and
‘‘(ii) may conduct at any time and from time to
time such additional, special, and other examinations
as the Commission may prescribe as necessary and
appropriate in the public interest and for the protection
of investors, or for the assessment of systemic risk.

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124 STAT. 1573

‘‘(B) AVAILABILITY OF RECORDS.—An investment adviser
registered under this title shall make available to the
Commission any copies or extracts from such records as
may be prepared without undue effort, expense, or delay,
as the Commission or its representatives may reasonably
request.
‘‘(7) INFORMATION SHARING.—
‘‘(A) IN GENERAL.—The Commission shall make available to the Council copies of all reports, documents, records,
and information filed with or provided to the Commission
by an investment adviser under this subsection as the
Council may consider necessary for the purpose of assessing
the systemic risk posed by a private fund.
‘‘(B) CONFIDENTIALITY.—The Council shall maintain
the confidentiality of information received under this paragraph in all such reports, documents, records, and information, in a manner consistent with the level of confidentiality
established for the Commission pursuant to paragraph (8).
The Council shall be exempt from section 552 of title 5,
United States Code, with respect to any information in
any report, document, record, or information made available, to the Council under this subsection.’’.
‘‘(8) COMMISSION CONFIDENTIALITY OF REPORTS.—Notwithstanding any other provision of law, the Commission may not
be compelled to disclose any report or information contained
therein required to be filed with the Commission under this
subsection, except that nothing in this subsection authorizes
the Commission—
‘‘(A) to withhold information from Congress, upon an
agreement of confidentiality; or
‘‘(B) prevent the Commission from complying with—
‘‘(i) a request for information from any other Federal department or agency or any self-regulatory
organization requesting the report or information for
purposes within the scope of its jurisdiction; or
‘‘(ii) an order of a court of the United States in
an action brought by the United States or the Commission.
‘‘(9) OTHER RECIPIENTS CONFIDENTIALITY.—Any department, agency, or self-regulatory organization that receives
reports or information from the Commission under this subsection shall maintain the confidentiality of such reports, documents, records, and information in a manner consistent with
the level of confidentiality established for the Commission
under paragraph (8).
‘‘(10) PUBLIC INFORMATION EXCEPTION.—
‘‘(A) IN GENERAL.—The Commission, the Council, and
any other department, agency, or self-regulatory organization that receives information, reports, documents, records,
or information from the Commission under this subsection,
shall be exempt from the provisions of section 552 of title
5, United States Code, with respect to any such report,
document, record, or information. Any proprietary information of an investment adviser ascertained by the Commission from any report required to be filed with the Commission pursuant to this subsection shall be subject to the
same limitations on public disclosure as any facts

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PUBLIC LAW 111–203—JULY 21, 2010
ascertained during an examination, as provided by section
210(b) of this title.
‘‘(B) PROPRIETARY INFORMATION.—For purposes of this
paragraph, proprietary information includes sensitive, nonpublic information regarding—
‘‘(i) the investment or trading strategies of the
investment adviser;
‘‘(ii) analytical or research methodologies;
‘‘(iii) trading data;
‘‘(iv) computer hardware or software containing
intellectual property; and
‘‘(v) any additional information that the Commission determines to be proprietary.
‘‘(11) ANNUAL REPORT TO CONGRESS.—The Commission
shall report annually to Congress on how the Commission has
used the data collected pursuant to this subsection to monitor
the markets for the protection of investors and the integrity
of the markets.’’.

SEC. 405. DISCLOSURE PROVISION AMENDMENT.

Section 210(c) of the Investment Advisers Act of 1940 (15
U.S.C. 80b–10(c)) is amended by inserting before the period at
the end the following: ‘‘or for purposes of assessment of potential
systemic risk’’.
SEC. 406. CLARIFICATION OF RULEMAKING AUTHORITY.

Consultation.
Deadline.

Section 211 of the Investment Advisers Act of 1940 (15 U.S.C.
80b–11) is amended—
(1) in subsection (a), by inserting before the period at
the end of the first sentence the following: ‘‘, including rules
and regulations defining technical, trade, and other terms used
in this title, except that the Commission may not define the
term ‘client’ for purposes of paragraphs (1) and (2) of section
206 to include an investor in a private fund managed by an
investment adviser, if such private fund has entered into an
advisory contract with such adviser’’; and
(2) by adding at the end the following:
‘‘(e) DISCLOSURE RULES ON PRIVATE FUNDS.—The Commission
and the Commodity Futures Trading Commission shall, after consultation with the Council but not later than 12 months after
the date of enactment of the Private Fund Investment Advisers
Registration Act of 2010, jointly promulgate rules to establish the
form and content of the reports required to be filed with the
Commission under subsection 204(b) and with the Commodity
Futures Trading Commission by investment advisers that are registered both under this title and the Commodity Exchange Act
(7 U.S.C. 1a et seq.).’’.

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SEC. 407. EXEMPTION OF AND REPORTING BY VENTURE CAPITAL FUND
ADVISERS.

Regulations.

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Section 203 of the Investment Advisers Act of 1940 (15 U.S.C.
80b–3) is amended by adding at the end the following:
‘‘(l) EXEMPTION OF VENTURE CAPITAL FUND ADVISERS.—No
investment adviser that acts as an investment adviser solely to
1 or more venture capital funds shall be subject to the registration
requirements of this title with respect to the provision of investment
advice relating to a venture capital fund. Not later than 1 year
after the date of enactment of this subsection, the Commission

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124 STAT. 1575

shall issue final rules to define the term ‘venture capital fund’
for purposes of this subsection. The Commission shall require such
advisers to maintain such records and provide to the Commission
such annual or other reports as the Commission determines necessary or appropriate in the public interest or for the protection
of investors.’’.

Records.

SEC. 408. EXEMPTION OF AND REPORTING BY CERTAIN PRIVATE FUND
ADVISERS.

Section 203 of the Investment Advisers Act of 1940 (15 U.S.C.
80b–3) is amended by adding at the end the following:
‘‘(m) EXEMPTION OF AND REPORTING BY CERTAIN PRIVATE FUND
ADVISERS.—
‘‘(1) IN GENERAL.—The Commission shall provide an exemption from the registration requirements under this section to
any investment adviser of private funds, if each of such investment adviser acts solely as an adviser to private funds and
has assets under management in the United States of less
than $150,000,000.
‘‘(2) REPORTING.—The Commission shall require investment
advisers exempted by reason of this subsection to maintain
such records and provide to the Commission such annual or
other reports as the Commission determines necessary or appropriate in the public interest or for the protection of investors.
‘‘(n) REGISTRATION AND EXAMINATION OF MID-SIZED PRIVATE
FUND ADVISERS.—In prescribing regulations to carry out the
requirements of this section with respect to investment advisers
acting as investment advisers to mid-sized private funds, the
Commission shall take into account the size, governance, and investment strategy of such funds to determine whether they pose systemic risk, and shall provide for registration and examination procedures with respect to the investment advisers of such funds which
reflect the level of systemic risk posed by such funds.’’.

Records.

Regulations.
Procedures.

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SEC. 409. FAMILY OFFICES.

(a) IN GENERAL.—Section 202(a)(11) of the Investment Advisers
Act of 1940 (15 U.S.C. 80b–2(a)(11)) is amended by striking ‘‘or
(G)’’ and inserting the following: ‘‘; (G) any family office, as defined
by rule, regulation, or order of the Commission, in accordance
with the purposes of this title; or (H)’’.
(b) RULEMAKING.—The rules, regulations, or orders issued by
the Commission pursuant to section 202(a)(11)(G) of the Investment
Advisers Act of 1940, as added by this section, regarding the definition of the term ‘‘family office’’ shall provide for an exemption
that—
(1) is consistent with the previous exemptive policy of the
Commission, as reflected in exemptive orders for family offices
in effect on the date of enactment of this Act, and the
grandfathering provisions in paragraph (3);
(2) recognizes the range of organizational, management,
and employment structures and arrangements employed by
family offices; and
(3) does not exclude any person who was not registered
or required to be registered under the Investment Advisers
Act of 1940 on January 1, 2010 from the definition of the
term ‘‘family office’’, solely because such person provides investment advice to, and was engaged before January 1, 2010 in
providing investment advice to—

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note.

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Deadline.

PUBLIC LAW 111–203—JULY 21, 2010

(A) natural persons who, at the time of their applicable
investment, are officers, directors, or employees of the
family office who—
(i) have invested with the family office before
January 1, 2010; and
(ii) are accredited investors, as defined in Regulation D of the Commission (or any successor thereto)
under the Securities Act of 1933, or, as the Commission
may prescribe by rule, the successors-in-interest
thereto;
(B) any company owned exclusively and controlled by
members of the family of the family office, or as the
Commission may prescribe by rule;
(C) any investment adviser registered under the Investment Adviser Act of 1940 that provides investment advice
to the family office and who identifies investment
opportunities to the family office, and invests in such transactions on substantially the same terms as the family office
invests, but does not invest in other funds advised by
the family office, and whose assets as to which the family
office directly or indirectly provides investment advice represent, in the aggregate, not more than 5 percent of the
value of the total assets as to which the family office
provides investment advice.
(c) ANTIFRAUD AUTHORITY.—A family office that would not be
a family office, but for subsection (b)(3), shall be deemed to be
an investment adviser for the purposes of paragraphs (1), (2) and
(4) of section 206 of the Investment Advisers Act of 1940.

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SEC. 410. STATE AND FEDERAL RESPONSIBILITIES; ASSET THRESHOLD
FOR FEDERAL REGISTRATION OF INVESTMENT ADVISERS.

Section 203A(a) of the of the Investment Advisers Act of 1940
(15 U.S.C. 80b–3a(a)) is amended—
(1) by redesignating paragraph (2) as paragraph (3); and
(2) by inserting after paragraph (1) the following:
‘‘(2) TREATMENT OF MID-SIZED INVESTMENT ADVISERS.—
‘‘(A) IN GENERAL.—No investment adviser described
in subparagraph (B) shall register under section 203, unless
the investment adviser is an adviser to an investment
company registered under the Investment Company Act
of 1940, or a company which has elected to be a business
development company pursuant to section 54 of the Investment Company Act of 1940, and has not withdrawn the
election, except that, if by effect of this paragraph an
investment adviser would be required to register with 15
or more States, then the adviser may register under section
203.
‘‘(B) COVERED PERSONS.—An investment adviser
described in this subparagraph is an investment adviser
that—
‘‘(i) is required to be registered as an investment
adviser with the securities commissioner (or any
agency or office performing like functions) of the State
in which it maintains its principal office and place
of business and, if registered, would be subject to examination as an investment adviser by any such commissioner, agency, or office; and

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124 STAT. 1577

‘‘(ii) has assets under management between—
‘‘(I) the amount specified under subparagraph
(A) of paragraph (1), as such amount may have
been adjusted by the Commission pursuant to that
subparagraph; and
‘‘(II) $100,000,000, or such higher amount as
the Commission may, by rule, deem appropriate
in accordance with the purposes of this title.’’.
SEC. 411. CUSTODY OF CLIENT ASSETS.

The Investment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.)
is amended by adding at the end the following new section:
‘‘SEC. 223. CUSTODY OF CLIENT ACCOUNTS.

15 USC 80b–18b.

‘‘An investment adviser registered under this title shall take
such steps to safeguard client assets over which such adviser has
custody, including, without limitation, verification of such assets
by an independent public accountant, as the Commission may,
by rule, prescribe.’’.
SEC. 412. COMPTROLLER GENERAL STUDY ON CUSTODY RULE COSTS.

The Comptroller General of the United States shall—
(1) conduct a study of—
(A) the compliance costs associated with the current
Securities and Exchange Commission rules 204–2 (17
C.F.R. Parts 275.204–2) and rule 206(4)–2 (17 C.F.R.
275.206(4)–2) under the Investment Advisers Act of 1940
regarding custody of funds or securities of clients by investment advisers; and
(B) the additional costs if subsection (b)(6) of rule
206(4)–2 (17 C.F.R. 275.206(4)–2(b)(6)) relating to operational independence were eliminated; and
(2) submit a report to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results
of such study, not later than 3 years after the date of enactment
of this Act.

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SEC. 413. ADJUSTING THE ACCREDITED INVESTOR STANDARD.

Reports.
Deadline.

15 USC 77b note.

(a) IN GENERAL.—The Commission shall adjust any net worth
standard for an accredited investor, as set forth in the rules of
the Commission under the Securities Act of 1933, so that the
individual net worth of any natural person, or joint net worth
with the spouse of that person, at the time of purchase, is more
than $1,000,000 (as such amount is adjusted periodically by rule
of the Commission), excluding the value of the primary residence
of such natural person, except that during the 4-year period that
begins on the date of enactment of this Act, any net worth standard
shall be $1,000,000, excluding the value of the primary residence
of such natural person.
(b) REVIEW AND ADJUSTMENT.—
(1) INITIAL REVIEW AND ADJUSTMENT.—
(A) INITIAL REVIEW.—The Commission may undertake
a review of the definition of the term ‘‘accredited investor’’,
as such term applies to natural persons, to determine
whether the requirements of the definition, excluding the
requirement relating to the net worth standard described
in subsection (a), should be adjusted or modified for the

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PUBLIC LAW 111–203—JULY 21, 2010
protection of investors, in the public interest, and in light
of the economy.
(B) ADJUSTMENT OR MODIFICATION.—Upon completion
of a review under subparagraph (A), the Commission may,
by notice and comment rulemaking, make such adjustments
to the definition of the term ‘‘accredited investor’’, excluding
adjusting or modifying the requirement relating to the
net worth standard described in subsection (a), as such
term applies to natural persons, as the Commission may
deem appropriate for the protection of investors, in the
public interest, and in light of the economy.
(2) SUBSEQUENT REVIEWS AND ADJUSTMENT.—
(A) SUBSEQUENT REVIEWS.—Not earlier than 4 years
after the date of enactment of this Act, and not less frequently than once every 4 years thereafter, the Commission
shall undertake a review of the definition, in its entirety,
of the term ‘‘accredited investor’’, as defined in section
230.215 of title 17, Code of Federal Regulations, or any
successor thereto, as such term applies to natural persons,
to determine whether the requirements of the definition
should be adjusted or modified for the protection of investors, in the public interest, and in light of the economy.
(B) ADJUSTMENT OR MODIFICATION.—Upon completion
of a review under subparagraph (A), the Commission may,
by notice and comment rulemaking, make such adjustments
to the definition of the term ‘‘accredited investor’’, as
defined in section 230.215 of title 17, Code of Federal
Regulations, or any successor thereto, as such term applies
to natural persons, as the Commission may deem appropriate for the protection of investors, in the public interest,
and in light of the economy.

Deadlines.

SEC. 414. RULE OF CONSTRUCTION RELATING TO THE COMMODITIES
EXCHANGE ACT.

The Investment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.)
is further amended by adding at the end the following new section:
15 USC 80b–18c.

‘‘SEC. 224. RULE OF CONSTRUCTION RELATING TO THE COMMODITIES
EXCHANGE ACT.

‘‘Nothing in this title shall relieve any person of any obligation
or duty, or affect the availability of any right or remedy available
to the Commodity Futures Trading Commission or any private
party, arising under the Commodity Exchange Act (7 U.S.C. 1
et seq.) governing commodity pools, commodity pool operators, or
commodity trading advisors.’’.

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SEC. 415. GAO STUDY AND REPORT ON ACCREDITED INVESTORS.

The Comptroller General of the United States shall conduct
a study on the appropriate criteria for determining the financial
thresholds or other criteria needed to qualify for accredited investor
status and eligibility to invest in private funds, and shall submit
a report to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the
House of Representatives on the results of such study not later
than 3 years after the date of enactment of this Act.

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SEC. 416. GAO STUDY ON SELF-REGULATORY ORGANIZATION FOR PRIVATE FUNDS.

The Comptroller General of the United States shall—
(1) conduct a study of the feasibility of forming a selfregulatory organization to oversee private funds; and
(2) submit a report to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results
of such study, not later than 1 year after the date of enactment
of this Act.

Reports.
Deadline.

SEC. 417. COMMISSION STUDY AND REPORT ON SHORT SELLING.

(a) STUDIES.—The Division of Risk, Strategy, and Financial
Innovation of the Commission shall conduct—
(1) a study, taking into account current scholarship, on
the state of short selling on national securities exchanges and
in the over-the-counter markets, with particular attention to
the impact of recent rule changes and the incidence of—
(A) the failure to deliver shares sold short; or
(B) delivery of shares on the fourth day following the
short sale transaction; and
(2) a study of—
(A) the feasibility, benefits, and costs of requiring
reporting publicly, in real time short sale positions of publicly listed securities, or, in the alternative, reporting such
short positions in real time only to the Commission and
the Financial Industry Regulatory Authority; and
(B) the feasibility, benefits, and costs of conducting
a voluntary pilot program in which public companies will
agree to have all trades of their shares marked ‘‘short’’,
‘‘market maker short’’, ‘‘buy’’, ‘‘buy-to-cover’’, or ‘‘long’’, and
reported in real time through the Consolidated Tape.
(b) REPORTS.—The Commission shall submit a report to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of Representatives—
(1) on the results of the study required under subsection
(a)(1), including recommendations for market improvements,
not later than 2 years after the date of enactment of this
Act; and
(2) on the results of the study required under subsection
(a)(2), not later than 1 year after the date of enactment of
this Act.

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SEC. 418. QUALIFIED CLIENT STANDARD.

Section 205(e) of the Investment Advisers Act of 1940 (15
U.S.C. 80b–5(e)) is amended by adding at the end the following:
‘‘With respect to any factor used in any rule or regulation by
the Commission in making a determination under this subsection,
if the Commission uses a dollar amount test in connection with
such factor, such as a net asset threshold, the Commission shall,
by order, not later than 1 year after the date of enactment of
the Private Fund Investment Advisers Registration Act of 2010,
and every 5 years thereafter, adjust for the effects of inflation
on such test. Any such adjustment that is not a multiple of $100,000
shall be rounded to the nearest multiple of $100,000.’’.

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124 STAT. 1580
15 USC 80b–2
note.
Effective date.

PUBLIC LAW 111–203—JULY 21, 2010

SEC. 419. TRANSITION PERIOD.

Except as otherwise provided in this title, this title and the
amendments made by this title shall become effective 1 year after
the date of enactment of this Act, except that any investment
adviser may, at the discretion of the investment adviser, register
with the Commission under the Investment Advisers Act of 1940
during that 1-year period, subject to the rules of the Commission.

TITLE V—INSURANCE
Federal
Insurance Office
Act of 2010.
31 USC 301 note.

Subtitle A—Federal Insurance Office
SEC. 501. SHORT TITLE.

This subtitle may be cited as the ‘‘Federal Insurance Office
Act of 2010’’.
SEC. 502. FEDERAL INSURANCE OFFICE.

(a) ESTABLISHMENT OF OFFICE.—Subchapter I of chapter 3 of
subtitle I of title 31, United States Code, is amended—
(1) by redesignating section 312 as section 315;
(2) by redesignating section 313 as section 312; and
(3) by inserting after section 312 (as so redesignated) the
following new sections:

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‘‘SEC. 313. FEDERAL INSURANCE OFFICE.

‘‘(a) ESTABLISHMENT.—There is established within the Department of the Treasury the Federal Insurance Office.
‘‘(b) LEADERSHIP.—The Office shall be headed by a Director,
who shall be appointed by the Secretary of the Treasury. The
position of Director shall be a career reserved position in the Senior
Executive Service, as that position is defined under section 3132
of title 5, United States Code.
‘‘(c) FUNCTIONS.—
‘‘(1) AUTHORITY PURSUANT TO DIRECTION OF SECRETARY.—
The Office, pursuant to the direction of the Secretary, shall
have the authority—
‘‘(A) to monitor 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;
‘‘(B) to monitor the extent to which traditionally underserved communities and consumers, minorities (as such
term is defined in section 1204(c) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 1811 note)), and low- and moderate-income persons
have access to affordable insurance products regarding all
lines of insurance, except health insurance;
‘‘(C) to recommend to the Financial Stability Oversight
Council that it designate an insurer, including the affiliates
of such insurer, as an entity subject to regulation as a
nonbank financial company supervised by the Board of
Governors pursuant to title I of the Dodd-Frank Wall Street
Reform and Consumer Protection Act;
‘‘(D) to assist the Secretary in administering the Terrorism Insurance Program established in the Department

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124 STAT. 1581

of the Treasury under the Terrorism Risk Insurance Act
of 2002 (15 U.S.C. 6701 note);
‘‘(E) to coordinate Federal efforts and develop Federal
policy 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 (r));
‘‘(F) to determine, in accordance with subsection (f),
whether State insurance measures are preempted by covered agreements;
‘‘(G) to consult with the States (including State insurance regulators) regarding insurance matters of national
importance and prudential insurance matters of international importance; and
‘‘(H) to perform such other related duties and authorities as may be assigned to the Office by the Secretary.
‘‘(2) ADVISORY FUNCTIONS.—The Office shall advise the Secretary on major domestic and prudential international insurance policy issues.
‘‘(3) ADVISORY CAPACITY ON COUNCIL.—The Director shall
serve in an advisory capacity on the Financial Stability Oversight Council established under the Financial Stability Act
of 2010.
‘‘(d) SCOPE.—The authority of the Office 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.).
‘‘(e) GATHERING OF INFORMATION.—
‘‘(1) IN GENERAL.—In carrying out the functions required
under subsection (c), the Office may—
‘‘(A) receive and collect data and information on and
from the insurance industry and insurers;
‘‘(B) enter into information-sharing agreements;
‘‘(C) analyze and disseminate data and information;
and
‘‘(D) issue reports regarding all lines of insurance
except health insurance.
‘‘(2) COLLECTION OF INFORMATION FROM INSURERS AND
AFFILIATES.—
‘‘(A) IN GENERAL.—Except as provided in paragraph
(3), the Office may require an insurer, or any affiliate
of an insurer, to submit such data or information as the

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PUBLIC LAW 111–203—JULY 21, 2010
Office may reasonably require in carrying out the functions
described under subsection (c).
‘‘(B) RULE OF CONSTRUCTION.—Notwithstanding any
other provision of this section, for purposes of subparagraph
(A), the term ‘insurer’ means any entity that writes insurance or reinsures risks and issues contracts or policies
in 1 or more States.
‘‘(3) EXCEPTION FOR SMALL INSURERS.—Paragraph (2) shall
not apply with respect to any insurer or affiliate thereof that
meets a minimum size threshold that the Office may establish,
whether by order or rule.
‘‘(4) ADVANCE COORDINATION.—Before collecting any data
or information under paragraph (2) from an insurer, or affiliate
of an insurer, the Office shall coordinate with each relevant
Federal agency and 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 to
determine if the information to be collected is available from,
and may be obtained in a timely manner by, such Federal
agency or State insurance regulator, individually or collectively,
other regulatory agency, or publicly available sources. If the
Director determines that such data or information is available,
and may be obtained in a timely manner, from such an agency,
regulator, regulatory agency, or source, the Director shall obtain
the data or information from such agency, regulator, regulatory
agency, or source. If the Director determines that such data
or information is not so available, the Director may collect
such data or information from an insurer (or affiliate) only
if the Director complies with the requirements of subchapter
I of chapter 35 of title 44, United States Code (relating to
Federal information policy; commonly known as the Paperwork
Reduction Act), in collecting such data or 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.
‘‘(5) CONFIDENTIALITY.—
‘‘(A) RETENTION OF PRIVILEGE.—The submission of any
nonpublicly available data and information to the Office
under this subsection shall not constitute a waiver of,
or otherwise affect, any privilege arising under Federal
or State law (including the rules of any Federal or State
court) to which the data or information is otherwise subject.
‘‘(B) CONTINUED APPLICATION OF PRIOR CONFIDENTIALITY AGREEMENTS.—Any requirement under Federal or
State law to the extent otherwise applicable, or any requirement pursuant to a written agreement in effect between
the original source of any nonpublicly available data or
information and the source of such data or information
to the Office, regarding the privacy or confidentiality of
any data or information in the possession of the source
to the Office, shall continue to apply to such data or
information after the data or information has been provided
pursuant to this subsection to the Office.
‘‘(C) INFORMATION-SHARING AGREEMENT.—Any data or
information obtained by the Office may be made available

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124 STAT. 1583

to State insurance regulators, individually or collectively,
through an information-sharing agreement that—
‘‘(i) shall comply with applicable Federal law; and
‘‘(ii) shall not constitute a waiver of, or otherwise
affect, any privilege under Federal or State law
(including the rules of any Federal or State court)
to which the data or information is otherwise subject.
‘‘(D) AGENCY DISCLOSURE REQUIREMENTS.—Section 552
of title 5, United States Code, shall apply to any data
or information submitted to the Office by an insurer or
an affiliate of an insurer.
‘‘(6) SUBPOENAS AND ENFORCEMENT.—The Director shall
have the power to require by subpoena the production of the
data or information requested under paragraph (2), but only
upon a written finding by the Director that such data or
information is required to carry out the functions described
under subsection (c) and that the Office has coordinated with
such regulator or agency as required under paragraph (4).
Subpoenas shall bear the signature of the Director and shall
be served by any person or class of persons designated by
the Director for that purpose. In the case of contumacy or
failure to obey a subpoena, the subpoena shall be enforceable
by order of any appropriate district court of the United States.
Any failure to obey the order of the court may be punished
by the court as a contempt of court.
‘‘(f) PREEMPTION OF STATE INSURANCE MEASURES.—
‘‘(1) STANDARD.—A State insurance measure shall be preempted pursuant to this section or section 314 if, and only
to the extent that the Director 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
Director 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 Director regarding State
insurance measures, and any preemption under paragraph
(1) as a result of such determination, shall be limited

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PUBLIC LAW 111–203—JULY 21, 2010

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 Director 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.
‘‘(g) APPLICABILITY OF ADMINISTRATIVE PROCEDURES ACT.—
Determinations of inconsistency made pursuant to subsection (f)(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.
‘‘(h) REGULATIONS, POLICIES, AND PROCEDURES.—The Secretary
may issue orders, regulations, policies, and procedures to implement
this section.
‘‘(i) CONSULTATION.—The Director shall consult with State
insurance regulators, individually or collectively, to the extent the
Director determines appropriate, in carrying out the functions of
the Office.
‘‘(j) 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;
‘‘(2) be construed to alter, amend, or limit any provision
of the Consumer Financial Protection Agency Act of 2010; or
‘‘(3) affect the preemption of any State insurance measure
otherwise inconsistent with and preempted by Federal law.

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124 STAT. 1585

‘‘(k) 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.
‘‘(l) 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.
‘‘(m) 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.
‘‘(n) ANNUAL REPORTS TO CONGRESS.—
‘‘(1) SECTION 313(f) REPORTS.—Beginning September 30,
2011, the Director shall submit a report on or before September
30 of each calendar year to the President and 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 on any actions taken
by the Office pursuant to subsection (f) (regarding preemption
of inconsistent State insurance measures).
‘‘(2) INSURANCE INDUSTRY.—Beginning September 30, 2011,
the Director shall submit a report on or before September
30 of each calendar year to the President and to the Committee
on Financial Services of the House of Representatives and
the Committee on Banking, Housing, and Urban Affairs of
the Senate on the insurance industry and any other information
as deemed relevant by the Director or requested by such
Committees.
‘‘(o) REPORTS ON U.S. AND GLOBAL REINSURANCE MARKET.—
The Director shall submit to the Committee on Financial Services
of the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate—
‘‘(1) a report received not later than September 30, 2012,
describing the breadth and scope of the global reinsurance
market and the critical role such market plays in supporting
insurance in the United States; and
‘‘(2) a report received not later than January 1, 2013,
and updated not later than January 1, 2015, describing the
impact 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.
‘‘(p) STUDY AND REPORT ON REGULATION OF INSURANCE.—
‘‘(1) IN GENERAL.—Not later than 18 months after the date
of enactment of this section, the Director shall conduct a study
and submit a report to Congress on how to modernize and
improve the system of insurance regulation in the United
States.

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‘‘(2) CONSIDERATIONS.—The study and report required
under paragraph (1) shall be based on and guided by the
following considerations:
‘‘(A) Systemic risk regulation with respect to insurance.
‘‘(B) Capital standards and the relationship between
capital allocation and liabilities, including standards
relating to liquidity and duration risk.
‘‘(C) Consumer protection for insurance products and
practices, including gaps in State regulation.
‘‘(D) The degree of national uniformity of State insurance regulation.
‘‘(E) The regulation of insurance companies and affiliates on a consolidated basis.
‘‘(F) International coordination of insurance regulation.
‘‘(3) ADDITIONAL FACTORS.—The study and report required
under paragraph (1) shall also examine the following factors:
‘‘(A) The costs and benefits of potential Federal regulation of insurance across various lines of insurance (except
health insurance).
‘‘(B) The feasibility of regulating only certain lines
of insurance at the Federal level, while leaving other lines
of insurance to be regulated at the State level.
‘‘(C) The ability of any potential Federal regulation
or Federal regulators to eliminate or minimize regulatory
arbitrage.
‘‘(D) The impact that developments in the regulation
of insurance in foreign jurisdictions might have on the
potential Federal regulation of insurance.
‘‘(E) The ability of any potential Federal regulation
or Federal regulator to provide robust consumer protection
for policyholders.
‘‘(F) The potential consequences of subjecting insurance
companies to a Federal resolution authority, including the
effects of any Federal resolution authority—
‘‘(i) on the operation of State insurance guaranty
fund systems, including the loss of guaranty fund coverage if an insurance company is subject to a Federal
resolution authority;
‘‘(ii) on policyholder protection, including the loss
of the priority status of policyholder claims over other
unsecured general creditor claims;
‘‘(iii) in the case of life insurance companies, on
the loss of the special status of separate account assets
and separate account liabilities; and
‘‘(iv) on the international competitiveness of insurance companies.
‘‘(G) Such other factors as the Director determines
necessary or appropriate, consistent with the principles
set forth in paragraph (2).
‘‘(4) REQUIRED RECOMMENDATIONS.—The study and report
required under paragraph (1) shall also contain any legislative,
administrative, or regulatory recommendations, as the Director
determines appropriate, to carry out or effectuate the findings
set forth in such report.
‘‘(5) CONSULTATION.—With respect to the study and report
required under paragraph (1), the Director shall consult with

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the State insurance regulators, consumer organizations, representatives of the insurance industry and policyholders, and
other organizations and experts, as appropriate.
‘‘(q) USE OF EXISTING RESOURCES.—To carry out this section,
the Office may employ personnel, facilities, and any other resource
of the Department of the Treasury available to the Secretary and
the Secretary shall dedicate specific personnel to the Office.
‘‘(r) 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) 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.
‘‘(6) OFFICE.—The term ‘Office’ means the Federal Insurance Office established by this section.
‘‘(7) 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.
‘‘(8) STATE INSURANCE REGULATOR.—The term ‘State insurance regulator’ means any State regulatory authority responsible for the supervision of insurers.
‘‘(9) 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.
‘‘(10) UNITED STATES INSURER.—The term ‘United States
insurer’ means—

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‘‘(A) an insurer that is organized under the laws of
a State; or
‘‘(B) a United States branch of a non-United States
insurer.
‘‘(s) AUTHORIZATION OF APPROPRIATIONS.—There are authorized
to be appropriated for the Office for each fiscal year such sums
as may be necessary.
‘‘SEC. 314. COVERED AGREEMENTS.

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Time period.

‘‘(a) AUTHORITY.—The Secretary and the United States Trade
Representative are authorized, jointly, to negotiate and enter into
covered agreements on behalf of the United States.
‘‘(b) REQUIREMENTS FOR CONSULTATION WITH CONGRESS.—
‘‘(1) IN GENERAL.—Before initiating negotiations to enter
into a covered agreement under subsection (a), during such
negotiations, and before entering into any such agreement,
the Secretary and the United States Trade Representative shall
jointly consult with the Committee on Financial Services and
the Committee on Ways and Means of the House of Representatives and the Committee on Banking, Housing, and Urban
Affairs and the Committee on Finance of the Senate.
‘‘(2) SCOPE.—The consultation described in paragraph (1)
shall include consultation with respect to—
‘‘(A) the nature of the agreement;
‘‘(B) how and to what extent the agreement will achieve
the applicable purposes, policies, priorities, and objectives
of section 313 and this section; and
‘‘(C) the implementation of the agreement, including
the general effect of the agreement on existing State laws.
‘‘(c) SUBMISSION AND LAYOVER PROVISIONS.—A covered agreement under subsection (a) may enter into force with respect to
the United States only if—
‘‘(1) the Secretary and the United States Trade Representative jointly submit to the congressional committees specified
in subsection (b)(1), on a day on which both Houses of Congress
are in session, a copy of the final legal text of the agreement;
and
‘‘(2) a period of 90 calendar days beginning on the date
on which the copy of the final legal text of the agreement
is submitted to the congressional committees under paragraph
(1) has expired.’’.
(b) DUTIES OF SECRETARY.—Section 321(a) of title 31, United
States Code, is amended—
(1) in paragraph (7), by striking ‘‘; and’’ and inserting
a semicolon;
(2) in paragraph (8)(C), by striking the period at the end
and inserting ‘‘; and’’; and
(3) by adding at the end the following new paragraph:
‘‘(9) advise the President on major domestic and international prudential policy issues in connection with all lines
of insurance except health insurance.’’.
(c) CLERICAL AMENDMENT.—The table of sections for subchapter
I of chapter 3 of title 31, United States Code, is amended by
striking the item relating to section 312 and inserting the following
new items:
‘‘Sec. 312. Terrorism and financial intelligence.
‘‘Sec. 313. Federal Insurance Office.

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124 STAT. 1589

‘‘Sec. 314. Covered agreements.
‘‘Sec. 315. Continuing in office.’’.

Subtitle B—State-Based Insurance Reform
SEC. 511. SHORT TITLE.

This subtitle may be cited as the ‘‘Nonadmitted and Reinsurance Reform Act of 2010’’.
SEC. 512. EFFECTIVE DATE.

Except as otherwise specifically provided in this subtitle, this
subtitle shall take effect upon the expiration of the 12-month period
beginning on the date of the enactment of this subtitle.

Nonadmitted and
Reinsurance
Reform Act
of 2010.
15 USC 8201
note.
15 USC 8201
note.

PART I—NONADMITTED INSURANCE

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SEC. 521. REPORTING, PAYMENT, AND ALLOCATION OF PREMIUM
TAXES.

(a) HOME STATE’S EXCLUSIVE AUTHORITY.—No State other than
the home State of an insured may require any premium tax payment for nonadmitted insurance.
(b) ALLOCATION OF NONADMITTED PREMIUM TAXES.—
(1) IN GENERAL.—The States may enter into a compact
or otherwise establish procedures to allocate among the States
the premium taxes paid to an insured’s home State described
in subsection (a).
(2) EFFECTIVE DATE.—Except as expressly otherwise provided in such compact or other procedures, any such compact
or other procedures—
(A) if adopted on or before the expiration of the 330day period that begins on the date of the enactment of
this subtitle, shall apply to any premium taxes that, on
or after such date of enactment, are required to be paid
to any State that is subject to such compact or procedures;
and
(B) if adopted after the expiration of such 330-day
period, shall apply to any premium taxes that, on or after
January 1 of the first calendar year that begins after
the expiration of such 330-day period, are required to be
paid to any State that is subject to such compact or procedures.
(3) REPORT.—Upon the expiration of the 330-day period
referred to in paragraph (2), the NAIC may submit a report
to the Committee on Financial Services and the Committee
on the Judiciary of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate
identifying and describing any compact or other procedures
for allocation among the States of premium taxes that have
been adopted during such period by any States.
(4) NATIONWIDE SYSTEM.—The Congress intends that each
State adopt nationwide uniform requirements, forms, and procedures, such as an interstate compact, that provide for the
reporting, payment, collection, and allocation of premium taxes
for nonadmitted insurance consistent with this section.
(c) ALLOCATION BASED ON TAX ALLOCATION REPORT.—To facilitate the payment of premium taxes among the States, an insured’s
home State may require surplus lines brokers and insureds who

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15 USC 8201.

Applicability.

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PUBLIC LAW 111–203—JULY 21, 2010

have independently procured insurance to annually file tax allocation reports with the insured’s home State detailing the portion
of the nonadmitted insurance policy premium or premiums attributable to properties, risks, or exposures located in each State.
The filing of a nonadmitted insurance tax allocation report and
the payment of tax may be made by a person authorized by the
insured to act as its agent.
15 USC 8202.

SEC. 522. REGULATION OF NONADMITTED INSURANCE BY INSURED’S
HOME STATE.

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(a) HOME STATE AUTHORITY.—Except as otherwise provided
in this section, the placement of nonadmitted insurance shall be
subject to the statutory and regulatory requirements solely of the
insured’s home State.
(b) BROKER LICENSING.—No State other than an insured’s home
State may require a surplus lines broker to be licensed in order
to sell, solicit, or negotiate nonadmitted insurance with respect
to such insured.
(c) ENFORCEMENT PROVISION.—With respect to section 521 and
subsections (a) and (b) of this section, any law, regulation, provision,
or action of any State that applies or purports to apply to nonadmitted insurance sold to, solicited by, or negotiated with an
insured whose home State is another State shall be preempted
with respect to such application.
(d) WORKERS’ COMPENSATION EXCEPTION.—This section may
not be construed to preempt any State law, rule, or regulation
that restricts the placement of workers’ compensation insurance
or excess insurance for self-funded workers’ compensation plans
with a nonadmitted insurer.
15 USC 8203.

SEC. 523. PARTICIPATION IN NATIONAL PRODUCER DATABASE.

Time period.

After the expiration of the 2-year period beginning on the
date of the enactment of this subtitle, a State may not collect
any fees relating to licensing of an individual or entity as a surplus
lines broker in the State unless the State has in effect at such
time laws or regulations that provide for participation by the State
in the national insurance producer database of the NAIC, or any
other equivalent uniform national database, for the licensure of
surplus lines brokers and the renewal of such licenses.

15 USC 8204.

SEC. 524. UNIFORM STANDARDS FOR SURPLUS LINES ELIGIBILITY.

A State may not—
(1) impose eligibility requirements on, or otherwise establish eligibility criteria for, nonadmitted insurers domiciled in
a United States jurisdiction, except in conformance with such
requirements and criteria in sections 5A(2) and 5C(2)(a) of
the Non-Admitted Insurance Model Act, unless the State has
adopted nationwide uniform requirements, forms, and procedures developed in accordance with section 521(b) of this subtitle that include alternative nationwide uniform eligibility
requirements; or
(2) prohibit a surplus lines broker from placing nonadmitted insurance with, or procuring nonadmitted insurance
from, a nonadmitted insurer domiciled outside the United
States that is listed on the Quarterly Listing of Alien Insurers
maintained by the International Insurers Department of the
NAIC.

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PUBLIC LAW 111–203—JULY 21, 2010
SEC.

525.

STREAMLINED
CHASERS.

APPLICATION

FOR

COMMERCIAL

124 STAT. 1591
PUR-

A surplus lines broker seeking to procure or place nonadmitted
insurance in a State for an exempt commercial purchaser shall
not be required to satisfy any State requirement to make a due
diligence search to determine whether the full amount or type
of insurance sought by such exempt commercial purchaser can
be obtained from admitted insurers if—
(1) the broker procuring or placing the surplus lines insurance has disclosed to the exempt commercial purchaser that
such insurance may or may not be available from the admitted
market that may provide greater protection with more regulatory oversight; and
(2) the exempt commercial purchaser has subsequently
requested in writing the broker to procure or place such insurance from a nonadmitted insurer.

15 USC 8205.

Written request.

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SEC. 526. GAO STUDY OF NONADMITTED INSURANCE MARKET.

(a) IN GENERAL.—The Comptroller General of the United States
shall conduct a study of the nonadmitted insurance market to
determine the effect of the enactment of this part on the size
and market share of the nonadmitted insurance market for providing coverage typically provided by the admitted insurance
market.
(b) CONTENTS.—The study shall determine and analyze—
(1) the change in the size and market share of the nonadmitted insurance market and in the number of insurance
companies and insurance holding companies providing such
business in the 18-month period that begins upon the effective
date of this subtitle;
(2) the extent to which insurance coverage typically provided by the admitted insurance market has shifted to the
nonadmitted insurance market;
(3) the consequences of any change in the size and market
share of the nonadmitted insurance market, including differences in the price and availability of coverage available
in both the admitted and nonadmitted insurance markets;
(4) the extent to which insurance companies and insurance
holding companies that provide both admitted and nonadmitted
insurance have experienced shifts in the volume of business
between admitted and nonadmitted insurance; and
(5) the extent to which there has been a change in the
number of individuals who have nonadmitted insurance policies, the type of coverage provided under such policies, and
whether such coverage is available in the admitted insurance
market.
(c) CONSULTATION WITH NAIC.—In conducting the study under
this section, the Comptroller General shall consult with the NAIC.
(d) REPORT.—The Comptroller General shall complete the study
under this section and submit a report to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives
regarding the findings of the study not later than 30 months after
the effective date of this subtitle.
SEC. 527. DEFINITIONS.

15 USC 8206.

For purposes of this part, the following definitions shall apply:

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Effective dates.

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(1) ADMITTED INSURER.—The term ‘‘admitted insurer’’
means, with respect to a State, an insurer licensed to engage
in the business of insurance in such State.
(2) AFFILIATE.—The term ‘‘affiliate’’ means, with respect
to an insured, any entity that controls, is controlled by, or
is under common control with the insured.
(3) AFFILIATED GROUP.—The term ‘‘affiliated group’’ means
any group of entities that are all affiliated.
(4) CONTROL.—An entity has ‘‘control’’ over another entity
if—
(A) the entity directly or indirectly or acting through
1 or more other persons owns, controls, or has the power
to vote 25 percent or more of any class of voting securities
of the other entity; or
(B) the entity controls in any manner the election
of a majority of the directors or trustees of the other entity.
(5) EXEMPT COMMERCIAL PURCHASER.—The term ‘‘exempt
commercial purchaser’’ means any person purchasing commercial insurance that, at the time of placement, meets the following requirements:
(A) The person employs or retains a qualified risk
manager to negotiate insurance coverage.
(B) The person has paid aggregate nationwide commercial property and casualty insurance premiums in excess
of $100,000 in the immediately preceding 12 months.
(C)(i) The person meets at least 1 of the following
criteria:
(I) The person possesses a net worth in excess
of $20,000,000, as such amount is adjusted pursuant
to clause (ii).
(II) The person generates annual revenues in
excess of $50,000,000, as such amount is adjusted
pursuant to clause (ii).
(III) The person employs more than 500 full-time
or full-time equivalent employees per individual
insured or is a member of an affiliated group employing
more than 1,000 employees in the aggregate.
(IV) The person is a not-for-profit organization or
public entity generating annual budgeted expenditures
of at least $30,000,000, as such amount is adjusted
pursuant to clause (ii).
(V) The person is a municipality with a population
in excess of 50,000 persons.
(ii) Effective on the fifth January 1 occurring after
the date of the enactment of this subtitle and each fifth
January 1 occurring thereafter, the amounts in subclauses
(I), (II), and (IV) of clause (i) shall be adjusted to reflect
the percentage change for such 5-year period in the Consumer Price Index for All Urban Consumers published
by the Bureau of Labor Statistics of the Department of
Labor.
(6) HOME STATE.—
(A) IN GENERAL.—Except as provided in subparagraph
(B), the term ‘‘home State’’ means, with respect to an
insured—

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124 STAT. 1593

(i) the State in which an insured maintains its
principal place of business or, in the case of an individual, the individual’s principal residence; or
(ii) if 100 percent of the insured risk is located
out of the State referred to in clause (i), the State
to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.
(B) AFFILIATED GROUPS.—If more than 1 insured from
an affiliated group are named insureds on a single nonadmitted insurance contract, the term ‘‘home State’’ means
the home State, as determined pursuant to subparagraph
(A), of the member of the affiliated group that has the
largest percentage of premium attributed to it under such
insurance contract.
(7) INDEPENDENTLY PROCURED INSURANCE.—The term
‘‘independently procured insurance’’ means insurance procured
directly by an insured from a nonadmitted insurer.
(8) NAIC.—The term ‘‘NAIC’’ means the National Association of Insurance Commissioners or any successor entity.
(9) NONADMITTED INSURANCE.—The term ‘‘nonadmitted
insurance’’ means any property and casualty insurance permitted to be placed directly or through a surplus lines broker
with a nonadmitted insurer eligible to accept such insurance.
(10) NON-ADMITTED INSURANCE MODEL ACT.—The term
‘‘Non-Admitted Insurance Model Act’’ means the provisions of
the Non-Admitted Insurance Model Act, as adopted by the
NAIC on August 3, 1994, and amended on September 30,
1996, December 6, 1997, October 2, 1999, and June 8, 2002.
(11) NONADMITTED INSURER.—The term ‘‘nonadmitted
insurer’’—
(A) means, with respect to a State, an insurer not
licensed to engage in the business of insurance in such
State; but
(B) does not include a risk retention group, as that
term is defined in section 2(a)(4) of the Liability Risk
Retention Act of 1986 (15 U.S.C. 3901(a)(4)).
(12) PREMIUM TAX.—The term ‘‘premium tax’’ means, with
respect to surplus lines or independently procured insurance
coverage, any tax, fee, assessment, or other charge imposed
by a government entity directly or indirectly based on any
payment made as consideration for an insurance contract for
such insurance, including premium deposits, assessments, registration fees, and any other compensation given in consideration for a contract of insurance.
(13) QUALIFIED RISK MANAGER.—The term ‘‘qualified risk
manager’’ means, with respect to a policyholder of commercial
insurance, a person who meets all of the following requirements:
(A) The person is an employee of, or third-party
consultant retained by, the commercial policyholder.
(B) The person provides skilled services in loss prevention, loss reduction, or risk and insurance coverage analysis, and purchase of insurance.
(C) The person—
(i)(I) has a bachelor’s degree or higher from an
accredited college or university in risk management,
business administration, finance, economics, or any

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124 STAT. 1594

PUBLIC LAW 111–203—JULY 21, 2010
other field determined by a State insurance commissioner or other State regulatory official or entity to
demonstrate minimum competence in risk management; and
(II)(aa) has 3 years of experience in risk financing,
claims administration, loss prevention, risk and insurance analysis, or purchasing commercial lines of insurance; or
(bb) has—
(AA) a designation as a Chartered Property
and Casualty Underwriter (in this subparagraph
referred to as ‘‘CPCU’’) issued by the American
Institute for CPCU/Insurance Institute of America;
(BB) a designation as an Associate in Risk
Management (ARM) issued by the American
Institute for CPCU/Insurance Institute of America;
(CC) a designation as Certified Risk Manager
(CRM) issued by the National Alliance for Insurance Education & Research;
(DD) a designation as a RIMS Fellow (RF)
issued by the Global Risk Management Institute;
or
(EE) any other designation, certification, or
license determined by a State insurance commissioner or other State insurance regulatory official
or entity to demonstrate minimum competency in
risk management;
(ii)(I) has at least 7 years of experience in risk
financing, claims administration, loss prevention, risk
and insurance coverage analysis, or purchasing
commercial lines of insurance; and
(II) has any 1 of the designations specified in
subitems (AA) through (EE) of clause (i)(II)(bb);
(iii) has at least 10 years of experience in risk
financing, claims administration, loss prevention, risk
and insurance coverage analysis, or purchasing
commercial lines of insurance; or
(iv) has a graduate degree from an accredited college or university in risk management, business
administration, finance, economics, or any other field
determined by a State insurance commissioner or other
State regulatory official or entity to demonstrate minimum competence in risk management.
(14) REINSURANCE.—The term ‘‘reinsurance’’ means the
assumption by an insurer of all or part of a risk undertaken
originally by another insurer.
(15) SURPLUS LINES BROKER.—The term ‘‘surplus lines
broker’’ means an individual, firm, or corporation which is
licensed in a State to sell, solicit, or negotiate insurance on
properties, risks, or exposures located or to be performed in
a State with nonadmitted insurers.
(16) STATE.—The term ‘‘State’’ includes any State of the
United States, the District of Columbia, the Commonwealth
of Puerto Rico, Guam, the Northern Mariana Islands, the Virgin
Islands, and American Samoa.

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124 STAT. 1595

PART II—REINSURANCE
SEC. 531. REGULATION OF CREDIT FOR REINSURANCE AND REINSURANCE AGREEMENTS.

15 USC 8221.

(a) CREDIT FOR REINSURANCE.—If the State of domicile of a
ceding insurer is an NAIC-accredited State, or has financial solvency
requirements substantially similar to the requirements necessary
for NAIC accreditation, and recognizes credit for reinsurance for
the insurer’s ceded risk, then no other State may deny such credit
for reinsurance.
(b) ADDITIONAL PREEMPTION OF EXTRATERRITORIAL APPLICATION
OF STATE LAW.—In addition to the application of subsection (a),
all laws, regulations, provisions, or other actions of a State that
is not the domiciliary State of the ceding insurer, except those
with respect to taxes and assessments on insurance companies
or insurance income, are preempted to the extent that they—
(1) restrict or eliminate the rights of the ceding insurer
or the assuming insurer to resolve disputes pursuant to contractual arbitration to the extent such contractual provision is
not inconsistent with the provisions of title 9, United States
Code;
(2) require that a certain State’s law shall govern the
reinsurance contract, disputes arising from the reinsurance
contract, or requirements of the reinsurance contract;
(3) attempt to enforce a reinsurance contract on terms
different than those set forth in the reinsurance contract, to
the extent that the terms are not inconsistent with this part;
or
(4) otherwise apply the laws of the State to reinsurance
agreements of ceding insurers not domiciled in that State.
SEC. 532. REGULATION OF REINSURER SOLVENCY.

15 USC 8222.

(a) DOMICILIARY STATE REGULATION.—If the State of domicile
of a reinsurer is an NAIC-accredited State or has financial solvency
requirements substantially similar to the requirements necessary
for NAIC accreditation, such State shall be solely responsible for
regulating the financial solvency of the reinsurer.
(b) NONDOMICILIARY STATES.—
(1) LIMITATION ON FINANCIAL INFORMATION REQUIREMENTS.—If the State of domicile of a reinsurer is an NAICaccredited State or has financial solvency requirements
substantially similar to the requirements necessary for NAIC
accreditation, no other State may require the reinsurer to provide any additional financial information other than the
information the reinsurer is required to file with its domiciliary
State.
(2) RECEIPT OF INFORMATION.—No provision of this section
shall be construed as preventing or prohibiting a State that
is not the State of domicile of a reinsurer from receiving a
copy of any financial statement filed with its domiciliary State.

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SEC. 533. DEFINITIONS.

15 USC 8223.

For purposes of this part, the following definitions shall apply:
(1) CEDING INSURER.—The term ‘‘ceding insurer’’ means
an insurer that purchases reinsurance.
(2) DOMICILIARY STATE.—The terms ‘‘State of domicile’’ and
‘‘domiciliary State’’ mean, with respect to an insurer or

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PUBLIC LAW 111–203—JULY 21, 2010
reinsurer, the State in which the insurer or reinsurer is incorporated or entered through, and licensed.
(3) NAIC.—The term ‘‘NAIC’’ means the National Association of Insurance Commissioners or any successor entity.
(4) REINSURANCE.—The term ‘‘reinsurance’’ means the
assumption by an insurer of all or part of a risk undertaken
originally by another insurer.
(5) REINSURER.—
(A) IN GENERAL.—The term ‘‘reinsurer’’ means an
insurer to the extent that the insurer—
(i) is principally engaged in the business of reinsurance;
(ii) does not conduct significant amounts of direct
insurance as a percentage of its net premiums; and
(iii) is not engaged in an ongoing basis in the
business of soliciting direct insurance.
(B) DETERMINATION.—A determination of whether an
insurer is a reinsurer shall be made under the laws of
the State of domicile in accordance with this paragraph.
(6) STATE.—The term ‘‘State’’ includes any State of the
United States, the District of Columbia, the Commonwealth
of Puerto Rico, Guam, the Northern Mariana Islands, the Virgin
Islands, and American Samoa.

PART III—RULE OF CONSTRUCTION
SEC. 541. RULE OF CONSTRUCTION.

15 USC 8231.

Nothing in this subtitle or the amendments made by this subtitle shall be construed to modify, impair, or supersede the application of the antitrust laws. Any implied or actual conflict between
this subtitle and any amendments to this subtitle and the antitrust
laws shall be resolved in favor of the operation of the antitrust
laws.
SEC. 542. SEVERABILITY.

15 USC 8232.

If any section or subsection of this subtitle, or any application
of such provision to any person or circumstance, is held to be
unconstitutional, the remainder of this subtitle, and the application
of the provision to any other person or circumstance, shall not
be affected.

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Bank and
Savings
Association
Holding
Company and
Depository
Institution
Regulatory
Improvements
Act of 2010.
12 USC 1811
note.

12 USC 1815
note.

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TITLE VI—IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS ASSOCIATION HOLDING COMPANIES AND
DEPOSITORY INSTITUTIONS
SEC. 601. SHORT TITLE.

This title may be cited as the ‘‘Bank and Savings Association
Holding Company and Depository Institution Regulatory Improvements Act of 2010’’.
SEC. 602. DEFINITION.

For purposes of this title, a company is a ‘‘commercial firm’’
if the annual gross revenues derived by the company and all of
its affiliates from activities that are financial in nature (as defined

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in section 4(k) of the Bank Holding Company Act of 1956 (12
U.S.C. 1843(k))) and, if applicable, from the ownership or control
of one or more insured depository institutions, represent less than
15 percent of the consolidated annual gross revenues of the company.

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SEC. 603. MORATORIUM AND STUDY ON TREATMENT OF CREDIT CARD
BANKS, INDUSTRIAL LOAN COMPANIES, AND CERTAIN
OTHER COMPANIES UNDER THE BANK HOLDING COMPANY
ACT OF 1956.

(a) MORATORIUM.—
(1) DEFINITIONS.—In this subsection—
(A) the term ‘‘credit card bank’’ means an institution
described in section 2(c)(2)(F) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(F));
(B) the term ‘‘industrial bank’’ means an institution
described in section 2(c)(2)(H) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(H)); and
(C) the term ‘‘trust bank’’ means an institution
described in section 2(c)(2)(D) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(D)).
(2) MORATORIUM ON PROVISION OF DEPOSIT INSURANCE.—
The Corporation may not approve an application for deposit
insurance under section 5 of the Federal Deposit Insurance
Act (12 U.S.C. 1815) that is received after November 23, 2009,
for an industrial bank, a credit card bank, or a trust bank
that is directly or indirectly owned or controlled by a commercial firm.
(3) CHANGE IN CONTROL.—
(A) IN GENERAL.—Except as provided in subparagraph
(B), the appropriate Federal banking agency shall disapprove a change in control, as provided in section 7(j)
of the Federal Deposit Insurance Act (12 U.S.C. 1817(j)),
of an industrial bank, a credit card bank, or a trust bank
if the change in control would result in direct or indirect
control of the industrial bank, credit card bank, or trust
bank by a commercial firm.
(B) EXCEPTIONS.—Subparagraph (A) shall not apply
to a change in control of an industrial bank, credit card
bank, or trust bank—
(i) that—
(I) is in danger of default, as determined by
the appropriate Federal banking agency;
(II) results from the merger or whole acquisition of a commercial firm that directly or indirectly
controls the industrial bank, credit card bank, or
trust bank in a bona fide merger with or acquisition by another commercial firm, as determined
by the appropriate Federal banking agency; or
(III) results from an acquisition of voting
shares of a publicly traded company that controls
an industrial bank, credit card bank, or trust bank,
if, after the acquisition, the acquiring shareholder
(or group of shareholders acting in concert) holds
less than 25 percent of any class of the voting
shares of the company; and

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12 USC 1815
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124 STAT. 1598

PUBLIC LAW 111–203—JULY 21, 2010

(ii) that has obtained all regulatory approvals
otherwise required for such change of control under
any applicable Federal or State law, including section
7(j) of the Federal Deposit Insurance Act (12 U.S.C.
1817(j)).
(4) SUNSET.—This subsection shall cease to have effect
3 years after the date of enactment of this Act.
(b) GOVERNMENT ACCOUNTABILITY OFFICE STUDY OF EXCEPTIONS UNDER THE BANK HOLDING COMPANY ACT OF 1956.—
(1) STUDY REQUIRED.—The Comptroller General of the
United States shall carry out a study to determine whether
it is necessary, in order to strengthen the safety and soundness
of institutions or the stability of the financial system, to eliminate the exceptions under section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841) for institutions described
in—
(A) section 2(a)(5)(E) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(a)(5)(E));
(B) section 2(a)(5)(F) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(a)(5)(F));
(C) section 2(c)(2)(D) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(2)(D));
(D) section 2(c)(2)(F) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(2)(F));
(E) section 2(c)(2)(H) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(2)(H)); and
(F) section 2(c)(2)(B) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(2)(B)).
(2) CONTENT OF STUDY.—
(A) IN GENERAL.—The study required under paragraph
(1), with respect to the institutions referenced in each
of subparagraphs (A) through (E) of paragraph (1), shall,
to the extent feasible be based on information provided
to the Comptroller General by the appropriate Federal
or State regulator, and shall—
(i) identify the types and number of institutions
excepted from section 2 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841) under each of the subparagraphs described in subparagraphs (A) through (E)
of paragraph (1);
(ii) generally describe the size and geographic locations of the institutions described in clause (i);
(iii) determine the extent to which the institutions
described in clause (i) are held by holding companies
that are commercial firms;
(iv) determine whether the institutions described
in clause (i) have any affiliates that are commercial
firms;
(v) identify the Federal banking agency responsible
for the supervision of the institutions described in
clause (i) on and after the transfer date;
(vi) determine the adequacy of the Federal bank
regulatory framework applicable to each category of
institution described in clause (i), including any restrictions (including limitations on affiliate transactions or
cross-marketing) that apply to transactions between

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124 STAT. 1599

an institution, the holding company of the institution,
and any other affiliate of the institution; and
(vii) evaluate the potential consequences of subjecting the institutions described in clause (i) to the
requirements of the Bank Holding Company Act of
1956, including with respect to the availability and
allocation of credit, the stability of the financial system
and the economy, the safe and sound operation of
each category of institution, and the impact on the
types of activities in which such institutions, and the
holding companies of such institutions, may engage.
(B) SAVINGS ASSOCIATIONS.—With respect to institutions described in paragraph (1)(F), the study required
under paragraph (1) shall—
(i) determine the adequacy of the Federal bank
regulatory framework applicable to such institutions,
including any restrictions (including limitations on
affiliate transactions or cross-marketing) that apply
to transactions between an institution, the holding
company of the institution, and any other affiliate of
the institution; and
(ii) evaluate the potential consequences of subjecting the institutions described in paragraph (1)(F)
to the requirements of the Bank Holding Company
Act of 1956, including with respect to the availability
and allocation of credit, the stability of the financial
system and the economy, the safe and sound operation
of such institutions, and the impact on the types of
activities in which such institutions, and the holding
companies of such institutions, may engage.
(3) REPORT.—Not later than 18 months after the date of
enactment of this Act, the Comptroller General shall submit
to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of
the House of Representatives a report on the study required
under paragraph (1).

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SEC. 604. REPORTS AND EXAMINATIONS OF HOLDING COMPANIES;
REGULATION OF FUNCTIONALLY REGULATED SUBSIDIARIES.

(a) REPORTS BY BANK HOLDING COMPANIES.—Sections 5(c)(1)
of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(1))
is amended—
(1) by striking subclause (A)(ii) and inserting the following:
‘‘(ii) compliance by the bank holding company or
subsidiary with—
‘‘(I) this Act;
‘‘(II) Federal laws that the Board has specific
jurisdiction to enforce against the company or subsidiary; and
‘‘(III) other than in the case of an insured
depository institution or functionally regulated
subsidiary, any other applicable provision of Federal law.’’;
(2) by striking subparagraph (B) and inserting the following:

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PUBLIC LAW 111–203—JULY 21, 2010

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‘‘(B) USE OF EXISTING REPORTS AND OTHER SUPERVISORY
INFORMATION.—The Board shall, to the fullest extent possible, use—
‘‘(i) reports and other supervisory information that
the bank holding company or any subsidiary thereof
has been required to provide to other Federal or State
regulatory agencies;
‘‘(ii) externally audited financial statements of the
bank holding company or subsidiary;
‘‘(iii) information otherwise available from Federal
or State regulatory agencies; and
‘‘(iv) information that is otherwise required to be
reported publicly.’’; and
(3) by adding at the end the following:
‘‘(C) AVAILABILITY.—Upon the request of the Board,
the bank holding company or a subsidiary of the bank
holding company shall promptly provide to the Board any
information described in clauses (i) through (iii) of subparagraph (B).’’.
(b) EXAMINATIONS OF BANK HOLDING COMPANIES.—Section
5(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C.
1844(c)(2)) is amended to read as follows:
‘‘(2) EXAMINATIONS.—
‘‘(A) IN GENERAL.—Subject to subtitle B of the Consumer Financial Protection Act of 2010, the Board may
make examinations of a bank holding company and each
subsidiary of a bank holding company in order to—
‘‘(i) inform the Board of—
‘‘(I) the nature of the operations and financial
condition of the bank holding company and the
subsidiary;
‘‘(II) the financial, operational, and other risks
within the bank holding company system that may
pose a threat to—
‘‘(aa) the safety and soundness of the bank
holding company or of any depository institution subsidiary of the bank holding company;
or
‘‘(bb) the stability of the financial system
of the United States; and
‘‘(III) the systems of the bank holding company
for monitoring and controlling the risks described
in subclause (II); and
‘‘(ii) monitor the compliance of the bank holding
company and the subsidiary with—
‘‘(I) this Act;
‘‘(II) Federal laws that the Board has specific
jurisdiction to enforce against the company or subsidiary; and
‘‘(III) other than in the case of an insured
depository institution or functionally regulated
subsidiary, any other applicable provisions of Federal law.
‘‘(B) USE OF REPORTS TO REDUCE EXAMINATIONS.—For
purposes of this paragraph, the Board shall, to the fullest
extent possible, rely on—

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1601

‘‘(i) examination reports made by other Federal
or State regulatory agencies relating to a bank holding
company and any subsidiary of a bank holding company; and
‘‘(ii) the reports and other information required
under paragraph (1).
‘‘(C) COORDINATION WITH OTHER REGULATORS.—The
Board shall—
‘‘(i) provide reasonable notice to, and consult with,
the appropriate Federal banking agency, the Securities
and Exchange Commission, the Commodity Futures
Trading Commission, or State regulatory agency, as
appropriate, for a subsidiary that is a depository
institution or a functionally regulated subsidiary of
a bank holding company before commencing an examination of the subsidiary under this section; and
‘‘(ii) to the fullest extent possible, avoid duplication
of examination activities, reporting requirements, and
requests for information.’’.
(c) AUTHORITY TO REGULATE FUNCTIONALLY REGULATED
SUBSIDIARIES OF BANK HOLDING COMPANIES.—The Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended—
(1) in section 5(c)(5)(B) (12 U.S.C. 1844(c)(5)(B)), by striking
clause (v) and inserting the following:
‘‘(v) an entity that is subject to regulation by,
or registration with, the Commodity Futures Trading
Commission, with respect to activities conducted as
a futures commission merchant, commodity trading
adviser, commodity pool, commodity pool operator,
swap execution facility, swap data repository, swap
dealer, major swap participant, and activities that are
incidental to such commodities and swaps activities.’’;
and
(2) by striking section 10A (12 U.S.C. 1848a).
(d) ACQUISITIONS OF BANKS.—Section 3(c) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1842(c)) is amended by adding
at the end the following:
‘‘(7) FINANCIAL STABILITY.—In every case, the Board shall
take into consideration the extent to which a proposed acquisition, merger, or consolidation would result in greater or more
concentrated risks to the stability of the United States banking
or financial system.’’.
(e) ACQUISITIONS OF NONBANKS.—
(1) NOTICE PROCEDURES.—Section 4(j)(2)(A) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1843(j)(2)(A)) is
amended by striking ‘‘or unsound banking practices’’ and
inserting ‘‘unsound banking practices, or risk to the stability
of the United States banking or financial system’’.
(2) ACTIVITIES THAT ARE FINANCIAL IN NATURE.—Section
4(k)(6)(B) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(k)(6)(B)) is amended to read as follows:
‘‘(B) APPROVAL NOT REQUIRED FOR CERTAIN FINANCIAL
ACTIVITIES.—
‘‘(i) IN GENERAL.—Except as provided in subsection
(j) with regard to the acquisition of a savings association and clause (ii), a financial holding company may

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124 STAT. 1602

PUBLIC LAW 111–203—JULY 21, 2010

commence any activity, or acquire any company, pursuant to paragraph (4) or any regulation prescribed or
order issued under paragraph (5), without prior
approval of the Board.
‘‘(ii) EXCEPTION.—A financial holding company may
not acquire a company, without the prior approval
of the Board, in a transaction in which the total consolidated assets to be acquired by the financial holding
company exceed $10,000,000,000.
‘‘(iii) HART-SCOTT-RODINO FILING REQUIREMENT.—
Solely for purposes of section 7A(c)(8) of the Clayton
Act (15 U.S.C. 18a(c)(8)), the transactions subject to
the requirements of this paragraph shall be treated
as if the approval of the Board is not required.’’.
(f) BANK MERGER ACT TRANSACTIONS.—Section 18(c)(5) of the
Federal Deposit Insurance Act (12 U.S.C. 1828(c)(5)) is amended,
in the matter immediately following subparagraph (B), by striking
‘‘and the convenience and needs of the community to be served’’
and inserting ‘‘the convenience and needs of the community to
be served, and the risk to the stability of the United States banking
or financial system’’.
(g) REPORTS BY SAVINGS AND LOAN HOLDING COMPANIES.—
Section 10(b)(2) of the Home Owners’ Loan Act (12 U.S.C.
1467a(b)(2) is amended—
(1) by striking ‘‘Each savings’’ and inserting the following:
‘‘(A) IN GENERAL.—Each savings’’; and
(2) by adding at the end the following:
‘‘(B) USE OF EXISTING REPORTS AND OTHER SUPERVISORY
INFORMATION.—The Board shall, to the fullest extent possible, use—
‘‘(i) reports and other supervisory information that
the savings and loan holding company or any subsidiary thereof has been required to provide to other
Federal or State regulatory agencies;
‘‘(ii) externally audited financial statements of the
savings and loan holding company or subsidiary;
‘‘(iii) information that is otherwise available from
Federal or State regulatory agencies; and
‘‘(iv) information that is otherwise required to be
reported publicly.
‘‘(C) AVAILABILITY.—Upon the request of the Board,
a savings and loan holding company or a subsidiary of
a savings and loan holding company shall promptly provide
to the Board any information described in clauses (i)
through (iii) of subparagraph (B).’’.
(h) EXAMINATION OF SAVINGS AND LOAN HOLDING COMPANIES.—
(1) DEFINITIONS.—Section 2 of the Home Owners’ Loan
Act (12 U.S.C. 1462) is amended by adding at the end the
following:
‘‘(10) APPROPRIATE FEDERAL BANKING AGENCY.—The term
‘appropriate Federal banking agency’ has the same meaning
as in section 3(q) of the Federal Deposit Insurance Act (12
U.S.C. 1813(q)).
‘‘(11) FUNCTIONALLY REGULATED SUBSIDIARY.—The term
‘functionally regulated subsidiary’ has the same meaning as
in section 5(c)(5) of the Bank Holding Company Act of 1956
(12 U.S.C. 1844(c)(5)).’’.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1603

(2) EXAMINATION.—Section 10(b) of the Home Owners’ Loan
Act (12 U.S.C. 1467a(b)) is amended by striking paragraph
(4) and inserting the following:
‘‘(4) EXAMINATIONS.—
‘‘(A) IN GENERAL.—Subject to subtitle B of the Consumer Financial Protection Act of 2010, the Board may
make examinations of a savings and loan holding company
and each subsidiary of a savings and loan holding company
system, in order to—
‘‘(i) inform the Board of—
‘‘(I) the nature of the operations and financial
condition of the savings and loan holding company
and the subsidiary;
‘‘(II) the financial, operational, and other risks
within the savings and loan holding company
system that may pose a threat to—
‘‘(aa) the safety and soundness of the
savings and loan holding company or of any
depository institution subsidiary of the savings
and loan holding company; or
‘‘(bb) the stability of the financial system
of the United States; and
‘‘(III) the systems of the savings and loan
holding company for monitoring and controlling
the risks described in subclause (II); and
‘‘(ii) monitor the compliance of the savings and
loan holding company and the subsidiary with—
‘‘(I) this Act;
‘‘(II) Federal laws that the Board has specific
jurisdiction to enforce against the company or subsidiary; and
‘‘(III) other than in the case of an insured
depository institution or functionally regulated
subsidiary, any other applicable provisions of Federal law.
‘‘(B) USE OF REPORTS TO REDUCE EXAMINATIONS.—For
purposes of this subsection, the Board shall, to the fullest
extent possible, rely on—
‘‘(i) the examination reports made by other Federal
or State regulatory agencies relating to a savings and
loan holding company and any subsidiary; and
‘‘(ii) the reports and other information required
under paragraph (2).
‘‘(C) COORDINATION WITH OTHER REGULATORS.—The
Board shall—
‘‘(i) provide reasonable notice to, and consult with,
the appropriate Federal banking agency, the Securities
and Exchange Commission, the Commodity Futures
Trading Commission, or State regulatory agency, as
appropriate, for a subsidiary that is a depository
institution or a functionally regulated subsidiary of
a savings and loan holding company before commencing an examination of the subsidiary under this
section; and
‘‘(ii) to the fullest extent possible, avoid duplication
of examination activities, reporting requirements, and
requests for information.’’.

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PUBLIC LAW 111–203—JULY 21, 2010

(i) DEFINITION OF THE TERM ‘‘SAVINGS AND LOAN HOLDING
COMPANY’’.—Section 10(a)(1)(D)(ii) of the Home Owners’ Loan Act
(12 U.S.C. 1467a(a)(1)(D)(ii)) is amended to read as follows:
‘‘(ii) EXCLUSION.—The term ‘savings and loan
holding company’ does not include—
‘‘(I) a bank holding company that is registered
under, and subject to, the Bank Holding Company
Act of 1956 (12 U.S.C. 1841 et seq.), or to any
company directly or indirectly controlled by such
company (other than a savings association);
‘‘(II) a company that controls a savings association that functions solely in a trust or fiduciary
capacity as described in section 2(c)(2)(D) of the
Bank Holding Company Act of 1956 (12 U.S.C.
1841(c)(2)(D)); or
‘‘(III) a company described in subsection
(c)(9)(C) solely by virtue of such company’s control
of an intermediate holding company established
pursuant to section 10A.’’.
(j) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the transfer date.

12 USC 1462
note.

SEC.

605.

ASSURING CONSISTENT OVERSIGHT OF PERMISSIBLE
ACTIVITIES OF DEPOSITORY INSTITUTION SUBSIDIARIES
OF HOLDING COMPANIES.

(a) IN GENERAL.—The Federal Deposit Insurance Act (12 U.S.C.
1811 et seq.) is amended by inserting after section 25 the following
new section:

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12 USC 1831c.

‘‘SEC. 26. ASSURING CONSISTENT OVERSIGHT OF SUBSIDIARIES OF
HOLDING COMPANIES.

‘‘(a) DEFINITIONS.—For purposes of this section:
‘‘(1) BOARD.—The term ‘Board’ means the Board of Governors of the Federal Reserve System.
‘‘(2) FUNCTIONALLY REGULATED SUBSIDIARY.—The term
‘functionally regulated subsidiary’ has the same meaning as
in section 5(c)(5) of the Bank Holding Company Act.
‘‘(3) LEAD INSURED DEPOSITORY INSTITUTION.—The term
‘lead insured depository institution’ has the same meaning as
in section 2(o)(8) of the Bank Holding Company Act.
‘‘(b) EXAMINATION REQUIREMENTS.—Subject to subtitle B of the
Consumer Financial Protection Act of 2010, the Board shall examine
the activities of a nondepository institution subsidiary (other than
a functionally regulated subsidiary or a subsidiary of a depository
institution) of a depository institution holding company that are
permissible for the insured depository institution subsidiaries of
the depository institution holding company in the same manner,
subject to the same standards, and with the same frequency as
would be required if such activities were conducted in the lead
insured depository institution of the depository institution holding
company.
‘‘(c) STATE COORDINATION.—
‘‘(1) CONSULTATION AND COORDINATION.—If a nondepository
institution subsidiary is supervised by a State bank supervisor
or other State regulatory authority, the Board, in conducting
the examinations required in subsection (b), shall consult and
coordinate with such State regulator.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1605

‘‘(2)
ALTERNATING
EXAMINATIONS
PERMITTED.—The
examinations required under subsection (b) may be conducted
in joint or alternating manner with a State regulator, if the
Board determines that an examination of a nondepository
institution subsidiary conducted by the State carries out the
purposes of this section.
‘‘(d) APPROPRIATE FEDERAL BANKING AGENCY BACKUP EXAMINATION AUTHORITY.—
‘‘(1) IN GENERAL.—In the event that the Board does not
conduct examinations required under subsection (b) in the same
manner, subject to the same standards, and with the same
frequency as would be required if such activities were conducted
by the lead insured depository institution subsidiary of the
depository institution holding company, the appropriate Federal
banking agency for the lead insured depository institution may
recommend in writing (which shall include a written explanation of the concerns giving rise to the recommendation) that
the Board perform the examination required under subsection
(b).
‘‘(2) EXAMINATION BY AN APPROPRIATE FEDERAL BANKING
AGENCY.—If the Board does not, before the end of the 60day period beginning on the date on which the Board receives
a recommendation under paragraph (1), begin an examination
as required under subsection (b) or provide a written explanation or plan to the appropriate Federal banking agency
making such recommendation responding to the concerns raised
by the appropriate Federal banking agency for the lead insured
depository institution, the appropriate Federal banking agency
for the lead insured depository institution may, subject to the
Consumer Financial Protection Act of 2010, examine the activities that are permissible for a depository institution subsidiary
conducted by such nondepository institution subsidiary (other
than a functionally regulated subsidiary or a subsidiary of
a depository institution) of the depository institution holding
company as if the nondepository institution subsidiary were
an insured depository institution for which the appropriate
Federal banking agency of the lead insured depository institution was the appropriate Federal banking agency, to determine
whether the activities—
‘‘(A) pose a material threat to the safety and soundness
of any insured depository institution subsidiary of the
depository institution holding company;
‘‘(B) are conducted in accordance with applicable Federal law; and
‘‘(C) are subject to appropriate systems for monitoring
and controlling the financial, operating, and other material
risks of the activities that may pose a material threat
to the safety and soundness of the insured depository
institution subsidiaries of the holding company.
‘‘(3) AGENCY COORDINATION WITH THE BOARD.—An appropriate Federal banking agency that conducts an examination
pursuant to paragraph (2) shall coordinate examination of the
activities of nondepository institution subsidiaries described in
subsection (b) with the Board in a manner that—
‘‘(A) avoids duplication;
‘‘(B) shares information relevant to the supervision
of the depository institution holding company;

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Time period.

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‘‘(C) achieves the objectives of subsection (b); and
‘‘(D) ensures that the depository institution holding
company and the subsidiaries of the depository institution
holding company are not subject to conflicting supervisory
demands by such agency and the Board.
‘‘(4) FEE PERMITTED FOR EXAMINATION COSTS.—An appropriate Federal banking agency that conducts an examination
or enforcement action pursuant to this section may collect an
assessment, fee, or such other charge from the subsidiary as
the appropriate Federal banking agency determines necessary
or appropriate to carry out the responsibilities of the appropriate Federal banking agency in connection with such examination.
‘‘(e) REFERRALS FOR ENFORCEMENT BY APPROPRIATE FEDERAL
BANKING AGENCY.—
‘‘(1) RECOMMENDATION OF ENFORCEMENT ACTION.—The
appropriate Federal banking agency for the lead insured depository institution, based upon its examination of a nondepository
institution subsidiary conducted pursuant to subsection (d),
or other relevant information, may submit to the Board, in
writing, a recommendation that the Board take enforcement
action against such nondepository institution subsidiary,
together with an explanation of the concerns giving rise to
the recommendation, if the appropriate Federal banking agency
determines (by a vote of its members, if applicable) that the
activities of the nondepository institution subsidiary pose a
material threat to the safety and soundness of any insured
depository institution subsidiary of the depository institution
holding company.
‘‘(2) BACK-UP AUTHORITY OF THE APPROPRIATE FEDERAL
BANKING AGENCY.—If, within the 60-day period beginning on
the date on which the Board receives a recommendation under
paragraph (1), the Board does not take enforcement action
against the nondepository institution subsidiary or provide a
plan for supervisory or enforcement action that is acceptable
to the appropriate Federal banking agency that made the recommendation pursuant to paragraph (1), such agency may take
the recommended enforcement action against the nondepository
institution subsidiary, in the same manner as if the nondepository institution subsidiary were an insured depository institution for which the agency was the appropriate Federal banking
agency.
‘‘(f) COORDINATION AMONG APPROPRIATE FEDERAL BANKING
AGENCIES.—Each Federal banking agency, prior to or when exercising authority under subsection (d) or (e) shall—
‘‘(1) provide reasonable notice to, and consult with, the
appropriate Federal banking agency or State bank supervisor
(or other State regulatory agency) of the nondepository institution subsidiary of a depository institution holding company
that is described in subsection (d) before commencing any examination of the subsidiary;
‘‘(2) to the fullest extent possible—
‘‘(A) rely on the examinations, inspections, and reports
of the appropriate Federal banking agency or the State
bank supervisor (or other State regulatory agency) of the
subsidiary;

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124 STAT. 1607

‘‘(B) avoid duplication of examination activities,
reporting requirements, and requests for information; and
‘‘(C) ensure that the depository institution holding company and the subsidiaries of the depository institution
holding company are not subject to conflicting supervisory
demands by the appropriate Federal banking agencies.
‘‘(g) RULE OF CONSTRUCTION.—No provision of this section shall
be construed as limiting any authority of the Board, the Corporation, or the Comptroller of the Currency under any other provision
of law.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on the transfer date.

12 USC 1831c
note.

SEC. 606. REQUIREMENTS FOR FINANCIAL HOLDING COMPANIES TO
REMAIN WELL CAPITALIZED AND WELL MANAGED.

(a) AMENDMENT.—Section 4(l)(1) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1843(l)(1)) is amended—
(1) in subparagraph (B), by striking ‘‘and’’ at the end;
(2) by redesignating subparagraph (C) as subparagraph
(D);
(3) by inserting after subparagraph (B) the following:
‘‘(C) the bank holding company is well capitalized and
well managed; and’’; and
(4) in subparagraph (D)(ii), as so redesignated, by striking
‘‘subparagraphs (A) and (B)’’ and inserting ‘‘subparagraphs (A),
(B), and (C)’’.
(b) HOME OWNERS’ LOAN ACT AMENDMENT.—Section 10(c)(2)
of the Home Owners’ Loan Act (12 U.S.C. 1467a(c)(2)) is amended
by adding at the end the following new subparagraph:
‘‘(H) Any activity that is permissible for a financial
holding company (as such term is defined under section
2(p) of the Bank Holding Company Act of 1956 (12 U.S.C.
1841(p)) to conduct under section 4(k) of the Bank Holding
Company Act of 1956 if—
‘‘(i) the savings and loan holding company meets
all of the criteria to qualify as a financial holding
company, and complies with all of the requirements
applicable to a financial holding company, under sections 4(l) and 4(m) of the Bank Holding Company
Act and section 804(c) of the Community Reinvestment
Act of 1977 (12 U.S.C. 2903(c)) as if the savings and
loan holding company was a bank holding company;
and
‘‘(ii) the savings and loan holding company conducts the activity in accordance with the same terms,
conditions, and requirements that apply to the conduct
of such activity by a bank holding company under
the Bank Holding Company Act of 1956 and the
Board’s regulations and interpretations under such
Act.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the transfer date.

12 USC 1467a
note.

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SEC. 607. STANDARDS FOR INTERSTATE ACQUISITIONS.

(a) ACQUISITION OF BANKS.—Section 3(d)(1)(A) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1842(d)(1)(A)) is amended
by striking ‘‘adequately capitalized and adequately managed’’ and
inserting ‘‘well capitalized and well managed’’.

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12 USC 1831u
note.

PUBLIC LAW 111–203—JULY 21, 2010

(b) INTERSTATE BANK MERGERS.—Section 44(b)(4)(B) of the Federal Deposit Insurance Act (12 U.S.C. 1831u(b)(4)(B)) is amended
by striking ‘‘will continue to be adequately capitalized and adequately managed’’ and inserting ‘‘will be well capitalized and well
managed’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the transfer date.

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SEC. 608. ENHANCING EXISTING RESTRICTIONS ON BANK TRANSACTIONS WITH AFFILIATES.

(a) AFFILIATE TRANSACTIONS.—Section 23A of the Federal
Reserve Act (12 U.S.C. 371c) is amended—
(1) in subsection (b)—
(A) in paragraph (1), by striking subparagraph (D)
and inserting the following:
‘‘(D) any investment fund with respect to which a
member bank or affiliate thereof is an investment adviser;
and’’; and
(B) in paragraph (7)—
(i) in subparagraph (A), by inserting before the
semicolon at the end the following: ‘‘, including a purchase of assets subject to an agreement to repurchase’’;
(ii) in subparagraph (C), by striking ‘‘, including
assets subject to an agreement to repurchase,’’;
(iii) in subparagraph (D)—
(I) by inserting ‘‘or other debt obligations’’ after
‘‘acceptance of securities’’; and
(II) by striking ‘‘or’’ at the end; and
(iv) by adding at the end the following:
‘‘(F) a transaction with an affiliate that involves the
borrowing or lending of securities, to the extent that the
transaction causes a member bank or a subsidiary to have
credit exposure to the affiliate; or
‘‘(G) a derivative transaction, as defined in paragraph
(3) of section 5200(b) of the Revised Statutes of the United
States (12 U.S.C. 84(b)), with an affiliate, to the extent
that the transaction causes a member bank or a subsidiary
to have credit exposure to the affiliate;’’;
(2) in subsection (c)—
(A) in paragraph (1)—
(i) in the matter preceding subparagraph (A), by
striking ‘‘subsidiary’’ and all that follows through ‘‘time
of the transaction’’ and inserting ‘‘subsidiary, and any
credit exposure of a member bank or a subsidiary
to an affiliate resulting from a securities borrowing
or lending transaction, or a derivative transaction,
shall be secured at all times’’; and
(ii) in each of subparagraphs (A) through (D), by
striking ‘‘or letter of credit’’ and inserting ‘‘letter of
credit, or credit exposure’’;
(B) by striking paragraph (2);
(C) by redesignating paragraphs (3) through (5) as
paragraphs (2) through (4), respectively;
(D) in paragraph (2), as so redesignated, by inserting
before the period at the end ‘‘, or credit exposure to an
affiliate resulting from a securities borrowing or lending
transaction, or derivative transaction’’; and

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1609

(E) in paragraph (3), as so redesignated—
(i) by inserting ‘‘or other debt obligations’’ after
‘‘securities’’; and
(ii) by striking ‘‘or guarantee’’ and all that follows
through ‘‘behalf of,’’ and inserting ‘‘guarantee, acceptance, or letter of credit issued on behalf of, or credit
exposure from a securities borrowing or lending transaction, or derivative transaction to,’’;
(3) in subsection (d)(4), in the matter preceding subparagraph (A), by striking ‘‘or issuing’’ and all that follows through
‘‘behalf of,’’ and inserting ‘‘issuing a guarantee, acceptance,
or letter of credit on behalf of, or having credit exposure
resulting from a securities borrowing or lending transaction,
or derivative transaction to,’’; and
(4) in subsection (f)—
(A) in paragraph (2)—
(i) by striking ‘‘or order’’;
(ii) by striking ‘‘if it finds’’ and all that follows
through the end of the paragraph and inserting the
following: ‘‘if—
‘‘(i) the Board finds the exemption to be in the
public interest and consistent with the purposes of
this section, and notifies the Federal Deposit Insurance
Corporation of such finding; and
‘‘(ii) before the end of the 60-day period beginning
on the date on which the Federal Deposit Insurance
Corporation receives notice of the finding under clause
(i), the Federal Deposit Insurance Corporation does
not object, in writing, to the finding, based on a determination that the exemption presents an unacceptable
risk to the Deposit Insurance Fund.’’;
(iii) by striking the Board and inserting the following:
‘‘(A) IN GENERAL.—The Board’’; and
(iv) by adding at the end the following:
‘‘(B) ADDITIONAL EXEMPTIONS.—
‘‘(i) NATIONAL BANKS.—The Comptroller of the Currency may, by order, exempt a transaction of a national
bank from the requirements of this section if—
‘‘(I) the Board and the Office of the Comptroller of the Currency jointly find the exemption
to be in the public interest and consistent with
the purposes of this section and notify the Federal
Deposit Insurance Corporation of such finding; and
‘‘(II) before the end of the 60-day period beginning on the date on which the Federal Deposit
Insurance Corporation receives notice of the
finding under subclause (I), the Federal Deposit
Insurance Corporation does not object, in writing,
to the finding, based on a determination that the
exemption presents an unacceptable risk to the
Deposit Insurance Fund.
‘‘(ii) STATE BANKS.—The Federal Deposit Insurance
Corporation may, by order, exempt a transaction of
a State nonmember bank, and the Board may, by order,
exempt a transaction of a State member bank, from
the requirements of this section if—

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Notification.

Time period.
Notice.

Notification.

Time period.
Notice.

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Notification.

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Time period.
Notice.

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‘‘(I) the Board and the Federal Deposit Insurance Corporation jointly find that the exemption
is in the public interest and consistent with the
purposes of this section; and
‘‘(II) the Federal Deposit Insurance Corporation finds that the exemption does not present
an unacceptable risk to the Deposit Insurance
Fund.’’; and
(B) by adding at the end the following:
‘‘(4) AMOUNTS OF COVERED TRANSACTIONS.—The Board may
issue such regulations or interpretations as the Board determines are necessary or appropriate with respect to the manner
in which a netting agreement may be taken into account in
determining the amount of a covered transaction between a
member bank or a subsidiary and an affiliate, including the
extent to which netting agreements between a member bank
or a subsidiary and an affiliate may be taken into account
in determining whether a covered transaction is fully secured
for purposes of subsection (d)(4). An interpretation under this
paragraph with respect to a specific member bank, subsidiary,
or affiliate shall be issued jointly with the appropriate Federal
banking agency for such member bank, subsidiary, or affiliate.’’.
(b) TRANSACTIONS WITH AFFILIATES.—Section 23B(e) of the Federal Reserve Act (12 U.S.C. 371c–1(e)) is amended—
(1) by striking the undesignated matter following subparagraph (B);
(2) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively, and adjusting the clause margins
accordingly;
(3) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively, and adjusting the subparagraph margins accordingly;
(4) by striking ‘‘The Board’’ and inserting the following:
‘‘(1) IN GENERAL.—The Board’’;
(5) in paragraph (1)(B), as so redesignated—
(A) in the matter preceding clause (i), by inserting
before ‘‘regulations’’ the following: ‘‘subject to paragraph
(2), if the Board finds that an exemption or exclusion
is in the public interest and is consistent with the purposes
of this section, and notifies the Federal Deposit Insurance
Corporation of such finding,’’; and
(B) in clause (ii), by striking the comma at the end
and inserting a period; and
(6) by adding at the end the following:
‘‘(2) EXCEPTION.—The Board may grant an exemption or
exclusion under this subsection only if, during the 60-day period
beginning on the date of receipt of notice of the finding from
the Board under paragraph (1)(B), the Federal Deposit Insurance Corporation does not object, in writing, to such exemption
or exclusion, based on a determination that the exemption
presents an unacceptable risk to the Deposit Insurance Fund.’’.
(c) HOME OWNERS’ LOAN ACT.—Section 11 of the Home Owners’
Loan Act (12 U.S.C. 1468) is amended by adding at the end the
following:
‘‘(d) EXEMPTIONS.—

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124 STAT. 1611

‘‘(1) FEDERAL SAVINGS ASSOCIATIONS.—The Comptroller of
the Currency may, by order, exempt a transaction of a Federal
savings association from the requirements of this section if—
‘‘(A) the Board and the Office of the Comptroller of
the Currency jointly find the exemption to be in the public
interest and consistent with the purposes of this section
and notify the Federal Deposit Insurance Corporation of
such finding; and
‘‘(B) before the end of the 60-day period beginning
on the date on which the Federal Deposit Insurance Corporation receives notice of the finding under subparagraph
(A), the Federal Deposit Insurance Corporation does not
object, in writing, to the finding, based on a determination
that the exemption presents an unacceptable risk to the
Deposit Insurance Fund.
‘‘(2) STATE SAVINGS ASSOCIATION.—The Federal Deposit
Insurance Corporation may, by order, exempt a transaction
of a State savings association from the requirements of this
section if the Board and the Federal Deposit Insurance Corporation jointly find that—
‘‘(A) the exemption is in the public interest and consistent with the purposes of this section; and
‘‘(B) the exemption does not present an unacceptable
risk to the Deposit Insurance Fund.’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall take effect 1 year after the transfer date.

Notification.

Time period.
Notice.

12 USC 371c
note.

SEC. 609. ELIMINATING EXCEPTIONS FOR TRANSACTIONS WITH FINANCIAL SUBSIDIARIES.

(a) AMENDMENT.—Section 23A(e) of the Federal Reserve Act
(12 U.S.C. 371c(e)) is amended—
(1) by striking paragraph (3); and
(2) by redesignating paragraph (4) as paragraph (3).
(b) PROSPECTIVE APPLICATION OF AMENDMENT.—The amendments made by this section shall apply with respect to any covered
transaction between a bank and a subsidiary of the bank, as those
terms are defined in section 23A of the Federal Reserve Act (12
U.S.C. 371c), that is entered into on or after the date of enactment
of this Act.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect 1 year after the transfer date.

12 USC 371c
note.

12 USC 371c
note.

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SEC. 610. LENDING LIMITS APPLICABLE TO CREDIT EXPOSURE ON
DERIVATIVE TRANSACTIONS, REPURCHASE AGREEMENTS,
REVERSE REPURCHASE AGREEMENTS, AND SECURITIES
LENDING AND BORROWING TRANSACTIONS.

(a) NATIONAL BANKS.—Section 5200(b) of the Revised Statutes
of the United States (12 U.S.C. 84(b)) is amended—
(1) in paragraph (1), by striking ‘‘shall include’’ and all
that follows through the end of the paragraph and inserting
the following: ‘‘shall include—
‘‘(A) all direct or indirect advances of funds to a person
made on the basis of any obligation of that person to
repay the funds or repayable from specific property pledged
by or on behalf of the person;
‘‘(B) to the extent specified by the Comptroller of the
Currency, any liability of a national banking association

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12 USC 84 note.

PUBLIC LAW 111–203—JULY 21, 2010

to advance funds to or on behalf of a person pursuant
to a contractual commitment; and
‘‘(C) any credit exposure to a person arising from a
derivative transaction, repurchase agreement, reverse
repurchase agreement, securities lending transaction, or
securities borrowing transaction between the national
banking association and the person;’’;
(2) in paragraph (2), by striking the period at the end
and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(3) the term ‘derivative transaction’ includes any transaction that is a contract, agreement, swap, warrant, note, or
option that is based, in whole or in part, on the value of,
any interest in, or any quantitative measure or the occurrence
of any event relating to, one or more commodities, securities,
currencies, interest or other rates, indices, or other assets.’’.
(b) SAVINGS ASSOCIATIONS.—Section 5(u)(3) of the Home
Owners’ Loan Act (12 U.S.C. 1464(u)(3)) is amended by striking
‘‘Director’’ each place that term appears and inserting ‘‘Comptroller
of the Currency’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect 1 year after the transfer date.
SEC. 611. CONSISTENT TREATMENT OF DERIVATIVE TRANSACTIONS
IN LENDING LIMITS.

12 USC 1828
note.

(a) AMENDMENT.—Section 18 of the Federal Deposit Insurance
Act (12 U.S.C. 1828) is amended by adding at the end the following:
‘‘(y) STATE LENDING LIMIT TREATMENT OF DERIVATIVES TRANSACTIONS.—An insured State bank may engage in a derivative transaction, as defined in section 5200(b)(3) of the Revised Statutes
of the United States (12 U.S.C. 84(b)(3)), only if the law with
respect to lending limits of the State in which the insured State
bank is chartered takes into consideration credit exposure to derivative transactions.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect 18 months after the transfer date.
SEC. 612. RESTRICTION ON CONVERSIONS OF TROUBLED BANKS.

(a) CONVERSION OF A NATIONAL BANKING ASSOCIATION.—The
Act entitled ‘‘An Act to provide for the conversion of national
banking associations into and their merger or consolidation with
State banks, and for other purposes.’’ (12 U.S.C. 214 et seq.) is
amended by adding at the end the following:

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12 USC 214d.

‘‘SEC. 10. PROHIBITION ON CONVERSION.

‘‘A national banking association may not convert to a State
bank or State savings association during any period in which the
national banking association is subject to a cease and desist order
(or other formal enforcement order) issued by, or a memorandum
of understanding entered into with, the Comptroller of the Currency
with respect to a significant supervisory matter.’’.
(b) CONVERSION OF A STATE BANK OR SAVINGS ASSOCIATION.—
Section 5154 of the Revised Statutes of the United States (12
U.S.C. 35) is amended by adding at the end the following: ‘‘The
Comptroller of the Currency may not approve the conversion of
a State bank or State savings association to a national banking
association or Federal savings association during any period in
which the State bank or State savings association is subject to

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1613

a cease and desist order (or other formal enforcement order) issued
by, or a memorandum of understanding entered into with, a State
bank supervisor or the appropriate Federal banking agency with
respect to a significant supervisory matter or a final enforcement
action by a State Attorney General.’’.
(c) CONVERSION OF A FEDERAL SAVINGS ASSOCIATION.—Section
5(i) of the Home Owners’ Loan Act (12 U.S.C. 1464(i)) is amended
by adding at the end the following:
‘‘(6) LIMITATION ON CERTAIN CONVERSIONS BY FEDERAL
SAVINGS ASSOCIATIONS.—A Federal savings association may not
convert to a State bank or State savings association during
any period in which the Federal savings association is subject
to a cease and desist order (or other formal enforcement order)
issued by, or a memorandum of understanding entered into
with, the Office of Thrift Supervision or the Comptroller of
the Currency with respect to a significant supervisory matter.’’.
(d) EXCEPTION.—The prohibition on the approval of conversions
under the amendments made by subsections (a), (b), and (c) shall
not apply, if—
(1) the Federal banking agency that would be the appropriate Federal banking agency after the proposed conversion
gives the appropriate Federal banking agency or State bank
supervisor that issued the cease and desist order (or other
formal enforcement order) or memorandum of understanding,
as appropriate, written notice of the proposed conversion
including a plan to address the significant supervisory matter
in a manner that is consistent with the safe and sound operation of the institution;
(2) within 30 days of receipt of the written notice required
under paragraph (1), the appropriate Federal banking agency
or State bank supervisor that issued the cease and desist order
(or other formal enforcement order) or memorandum of understanding, as appropriate, does not object to the conversion
or the plan to address the significant supervisory matter;
(3) after conversion of the insured depository institution,
the appropriate Federal banking agency after the conversion
implements such plan; and
(4) in the case of a final enforcement action by a State
Attorney General, approval of the conversion is conditioned
on compliance by the insured depository institution with the
terms of such final enforcement action.
(e) NOTIFICATION OF PENDING ENFORCEMENT ACTIONS.—
(1) COPY OF CONVERSION APPLICATION.—At the time an
insured depository institution files a conversion application,
the insured depository institution shall transmit a copy of the
conversion application to—
(A) the appropriate Federal banking agency for the
insured depository institution; and
(B) the Federal banking agency that would be the
appropriate Federal banking agency of the insured depository institution after the proposed conversion.
(2) NOTIFICATION AND ACCESS TO INFORMATION.—Upon
receipt of a copy of the application described in paragraph
(1), the appropriate Federal banking agency for the insured
depository institution proposing the conversion shall—
(A) notify the Federal banking agency that would be
the appropriate Federal banking agency for the institution

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12 USC 35 note.

Notice.

Deadline.

12 USC 35 note.

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PUBLIC LAW 111–203—JULY 21, 2010
after the proposed conversion in writing of any ongoing
supervisory or investigative proceedings that the appropriate Federal banking agency for the institution proposing
to convert believes is likely to result, in the near term
and absent the proposed conversion, in a cease and desist
order (or other formal enforcement order) or memorandum
of understanding with respect to a significant supervisory
matter; and
(B) provide the Federal banking agency that would
be the appropriate Federal banking agency for the institution after the proposed conversion access to all investigative
and supervisory information relating to the proceedings
described in subparagraph (A).

SEC. 613. DE NOVO BRANCHING INTO STATES.

(a) NATIONAL BANKS.—Section 5155(g)(1)(A) of the Revised Statutes of the United States (12 U.S.C. 36(g)(1)(A)) is amended to
read as follows:
‘‘(A) the law of the State in which the branch is located,
or is to be located, would permit establishment of the
branch, if the national bank were a State bank chartered
by such State; and’’.
(b) STATE INSURED BANKS.—Section 18(d)(4)(A)(i) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(d)(4)(A)(i)) is amended to
read as follows:
‘‘(i) the law of the State in which the branch is
located, or is to be located, would permit establishment
of the branch, if the bank were a State bank chartered
by such State; and’’.
SEC. 614. LENDING LIMITS TO INSIDERS.

12 USC 375b
note.

(a) EXTENSIONS OF CREDIT.—Section 22(h)(9)(D)(i) of the Federal Reserve Act (12 U.S.C. 375b(9)(D)(i)) is amended—
(1) by striking the period at the end and inserting ‘‘; or’’;
(2) by striking ‘‘a person’’ and inserting ‘‘the person’’;
(3) by striking ‘‘extends credit by making’’ and inserting
the following: ‘‘extends credit to a person by—
‘‘(I) making’’; and
(4) by adding at the end the following:
‘‘(II) having credit exposure to the person
arising from a derivative transaction (as defined
in section 5200(b) of the Revised Statutes of the
United States (12 U.S.C. 84(b))), repurchase agreement, reverse repurchase agreement, securities
lending transaction, or securities borrowing transaction between the member bank and the person.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall take effect 1 year after the transfer date.

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SEC. 615. LIMITATIONS ON PURCHASES OF ASSETS FROM INSIDERS.

(a) AMENDMENT TO THE FEDERAL DEPOSIT INSURANCE ACT.—
Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828)
is amended by adding at the end the following:
‘‘(z) GENERAL PROHIBITION ON SALE OF ASSETS.—
‘‘(1) IN GENERAL.—An insured depository institution may
not purchase an asset from, or sell an asset to, an executive
officer, director, or principal shareholder of the insured depository institution, or any related interest of such person (as

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124 STAT. 1615

such terms are defined in section 22(h) of Federal Reserve
Act), unless—
‘‘(A) the transaction is on market terms; and
‘‘(B) if the transaction represents more than 10 percent
of the capital stock and surplus of the insured depository
institution, the transaction has been approved in advance
by a majority of the members of the board of directors
of the insured depository institution who do not have an
interest in the transaction.
‘‘(2) RULEMAKING.—The Board of Governors of the Federal
Reserve System may issue such rules as may be necessary
to define terms and to carry out the purposes this subsection.
Before proposing or adopting a rule under this paragraph,
the Board of Governors of the Federal Reserve System shall
consult with the Comptroller of the Currency and the Corporation as to the terms of the rule.’’.
(b) AMENDMENTS TO THE FEDERAL RESERVE ACT.—Section 22(d)
of the Federal Reserve Act (12 U.S.C. 375) is amended to read
as follows:
‘‘(d) [Reserved]’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the transfer date.

Consultation.

12 USC 375 note.

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SEC. 616. REGULATIONS REGARDING CAPITAL LEVELS.

(a) CAPITAL LEVELS OF BANK HOLDING COMPANIES.—Section
5(b) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(b))
is amended—
(1) by inserting after ‘‘orders’’ the following: ‘‘, including
regulations and orders relating to the capital requirements
for bank holding companies,’’; and
(2) by adding at the end the following: ‘‘In establishing
capital regulations pursuant to this subsection, the Board shall
seek to make such requirements countercyclical, so that the
amount of capital required to be maintained by a company
increases in times of economic expansion and decreases in
times of economic contraction, consistent with the safety and
soundness of the company.’’.
(b) CAPITAL LEVELS OF SAVINGS AND LOAN HOLDING COMPANIES.—Section 10(g)(1) of the Home Owners’ Loan Act (12 U.S.C.
1467a(g)(1)) is amended—
(1) by inserting after ‘‘orders’’ the following: ‘‘, including
regulations and orders relating to capital requirements for
savings and loan holding companies,’’; and
(2) by inserting at the end the following: ‘‘In establishing
capital regulations pursuant to this subsection, the appropriate
Federal banking agency shall seek to make such requirements
countercyclical so that the amount of capital required to be
maintained by a company increases in times of economic expansion and decreases in times of economic contraction, consistent
with the safety and soundness of the company.’’.
(c) CAPITAL LEVELS OF INSURED DEPOSITORY INSTITUTIONS.—
Section 908(a)(1) of the International Lending Supervision Act of
1983 (12 U.S.C. 3907(a)(1)) is amended by adding at the end the
following: ‘‘Each appropriate Federal banking agency shall seek
to make the capital standards required under this section or other
provisions of Federal law for insured depository institutions countercyclical so that the amount of capital required to be maintained

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by an insured depository institution increases in times of economic
expansion and decreases in times of economic contraction, consistent
with the safety and soundness of the insured depository institution.’’
(d) SOURCE OF STRENGTH.—The Federal Deposit Insurance Act
(12 U.S.C. 1811 et seq.) is amended by inserting after section
38 (12 U.S.C. 1831o) the following:
12 USC 1831o–1.

Deadline.

12 USC 1467a
note.

‘‘SEC. 38A. SOURCE OF STRENGTH.

‘‘(a) HOLDING COMPANIES.—The appropriate Federal banking
agency for a bank holding company or savings and loan holding
company shall require the bank holding company or savings and
loan holding company to serve as a source of financial strength
for any subsidiary of the bank holding company or savings and
loan holding company that is a depository institution.
‘‘(b) OTHER COMPANIES.—If an insured depository institution
is not the subsidiary of a bank holding company or savings and
loan holding company, the appropriate Federal banking agency
for the insured depository institution shall require any company
that directly or indirectly controls the insured depository institution
to serve as a source of financial strength for such institution.
‘‘(c) REPORTS.—The appropriate Federal banking agency for
an insured depository institution described in subsection (b) may,
from time to time, require the company, or a company that directly
or indirectly controls the insured depository institution, to submit
a report, under oath, for the purposes of—
‘‘(1) assessing the ability of such company to comply with
the requirement under subsection (b); and
‘‘(2) enforcing the compliance of such company with the
requirement under subsection (b).
‘‘(d) RULES.—Not later than 1 year after the transfer date,
as defined in section 311 of the Enhancing Financial Institution
Safety and Soundness Act of 2010, the appropriate Federal banking
agencies shall jointly issue final rules to carry out this section.
‘‘(e) DEFINITION.—In this section, the term ‘source of financial
strength’ means the ability of a company that directly or indirectly
owns or controls an insured depository institution to provide financial assistance to such insured depository institution in the event
of the financial distress of the insured depository institution.’’.
(e) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the transfer date.
SEC. 617. ELIMINATION OF ELECTIVE INVESTMENT BANK HOLDING
COMPANY FRAMEWORK.

15 USC 78q note.

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12 USC 1850a.

(a) AMENDMENT.—Section 17 of the Securities Exchange Act
of 1934 (15 U.S.C. 78q) is amended—
(1) by striking subsection (i); and
(2) by redesignating subsections (j) and (k) as subsections
(i) and (j), respectively.
(b) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the transfer date.
SEC. 618. SECURITIES HOLDING COMPANIES.

(a) DEFINITIONS.—In this section—
(1) the term ‘‘associated person of a securities holding company’’ means a person directly or indirectly controlling, controlled by, or under common control with, a securities holding
company;

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124 STAT. 1617

(2) the term ‘‘foreign bank’’ has the same meaning as
in section 1(b)(7) of the International Banking Act of 1978
(12 U.S.C. 3101(7));
(3) the term ‘‘insured bank’’ has the same meaning as
in section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813);
(4) the term ‘‘securities holding company’’—
(A) means—
(i) a person (other than a natural person) that
owns or controls 1 or more brokers or dealers registered
with the Commission; and
(ii) the associated persons of a person described
in clause (i); and
(B) does not include a person that is—
(i) a nonbank financial company supervised by the
Board under title I;
(ii) an insured bank (other than an institution
described in subparagraphs (D), (F), or (H) of section
2(c)(2) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(c)(2)) or a savings association;
(iii) an affiliate of an insured bank (other than
an institution described in subparagraphs (D), (F), or
(H) of section 2(c)(2) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(2)) or an affiliate of
a savings association;
(iv) a foreign bank, foreign company, or company
that is described in section 8(a) of the International
Banking Act of 1978 (12 U.S.C. 3106(a));
(v) a foreign bank that controls, directly or
indirectly, a corporation chartered under section 25A
of the Federal Reserve Act (12 U.S.C. 611 et seq.);
or
(vi) subject to comprehensive consolidated supervision by a foreign regulator;
(5) the term ‘‘supervised securities holding company’’ means
a securities holding company that is supervised by the Board
of Governors under this section; and
(6) the terms ‘‘affiliate’’, ‘‘bank’’, ‘‘bank holding company’’,
‘‘company’’, ‘‘control’’, ‘‘savings association’’, and ‘‘subsidiary’’
have the same meanings as in section 2 of the Bank Holding
Company Act of 1956.
(b) SUPERVISION OF A SECURITIES HOLDING COMPANY NOT
HAVING A BANK OR SAVINGS ASSOCIATION AFFILIATE.—
(1) IN GENERAL.—A securities holding company that is
required by a foreign regulator or provision of foreign law
to be subject to comprehensive consolidated supervision may
register with the Board of Governors under paragraph (2) to
become a supervised securities holding company. Any securities
holding company filing such a registration shall be supervised
in accordance with this section, and shall comply with the
rules and orders prescribed by the Board of Governors
applicable to supervised securities holding companies.
(2) REGISTRATION AS A SUPERVISED SECURITIES HOLDING
COMPANY.—
(A) REGISTRATION.—A securities holding company that
elects to be subject to comprehensive consolidated supervision shall register by filing with the Board of Governors

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124 STAT. 1618

PUBLIC LAW 111–203—JULY 21, 2010
such information and documents as the Board of Governors,
by regulation, may prescribe as necessary or appropriate
in furtherance of the purposes of this section.
(B) EFFECTIVE DATE.—A securities holding company
that registers under subparagraph (A) shall be deemed
to be a supervised securities holding company, effective
on the date that is 45 days after the date of receipt of
the registration information and documents under subparagraph (A) by the Board of Governors, or within such shorter
period as the Board of Governors, by rule or order, may
determine.
(c) SUPERVISION OF SECURITIES HOLDING COMPANIES.—
(1) RECORDKEEPING AND REPORTING.—
(A) RECORDKEEPING AND REPORTING REQUIRED.—Each
supervised securities holding company and each affiliate
of a supervised securities holding company shall make
and keep for periods determined by the Board of Governors
such records, furnish copies of such records, and make
such reports, as the Board of Governors determines to
be necessary or appropriate to carry out this section, to
prevent evasions thereof, and to monitor compliance by
the supervised securities holding company or affiliate with
applicable provisions of law.
(B) FORM AND CONTENTS.—
(i) IN GENERAL.—Any record or report required
to be made, furnished, or kept under this paragraph
shall—
(I) be prepared in such form and according
to such specifications (including certification by
a registered public accounting firm), as the Board
of Governors may require; and
(II) be provided promptly to the Board of Governors at any time, upon request by the Board
of Governors.
(ii) CONTENTS.—Records and reports required to
be made, furnished, or kept under this paragraph may
include—
(I) a balance sheet or income statement of
the supervised securities holding company or an
affiliate of a supervised securities holding company;
(II) an assessment of the consolidated capital
and liquidity of the supervised securities holding
company;
(III) a report by an independent auditor
attesting to the compliance of the supervised securities holding company with the internal risk
management and internal control objectives of the
supervised securities holding company; and
(IV) a report concerning the extent to which
the supervised securities holding company or affiliate has complied with the provisions of this section and any regulations prescribed and orders
issued under this section.
(2) USE OF EXISTING REPORTS.—
(A) IN GENERAL.—The Board of Governors shall, to
the fullest extent possible, accept reports in fulfillment

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124 STAT. 1619

of the requirements of this paragraph that a supervised
securities holding company or an affiliate of a supervised
securities holding company has been required to provide
to another regulatory agency or a self-regulatory organization.
(B) AVAILABILITY.—A supervised securities holding
company or an affiliate of a supervised securities holding
company shall promptly provide to the Board of Governors,
at the request of the Board of Governors, any report
described in subparagraph (A), as permitted by law.
(3) EXAMINATION AUTHORITY.—
(A) FOCUS OF EXAMINATION AUTHORITY.—The Board
of Governors may make examinations of any supervised
securities holding company and any affiliate of a supervised
securities holding company to carry out this subsection,
to prevent evasions thereof, and to monitor compliance
by the supervised securities holding company or affiliate
with applicable provisions of law.
(B) DEFERENCE TO OTHER EXAMINATIONS.—For purposes of this subparagraph, the Board of Governors shall,
to the fullest extent possible, use the reports of examination
made by other appropriate Federal or State regulatory
authorities with respect to any functionally regulated subsidiary or any institution described in subparagraph (D),
(F), or (H) of section 2(c)(2) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(2)).
(d) CAPITAL AND RISK MANAGEMENT.—
(1) IN GENERAL.—The Board of Governors shall, by regulation or order, prescribe capital adequacy and other risk management standards for supervised securities holding companies
that are appropriate to protect the safety and soundness of
the supervised securities holding companies and address the
risks posed to financial stability by supervised securities
holding companies.
(2) DIFFERENTIATION.—In imposing standards under this
subsection, the Board of Governors may differentiate among
supervised securities holding companies on an individual basis,
or by category, taking into consideration the requirements
under paragraph (3).
(3) CONTENT.—Any standards imposed on a supervised
securities holding company under this subsection shall take
into account—
(A) the differences among types of business activities
carried out by the supervised securities holding company;
(B) the amount and nature of the financial assets of
the supervised securities holding company;
(C) the amount and nature of the liabilities of the
supervised securities holding company, including the
degree of reliance on short-term funding;
(D) the extent and nature of the off-balance sheet
exposures of the supervised securities holding company;
(E) the extent and nature of the transactions and relationships of the supervised securities holding company with
other financial companies;
(F) the importance of the supervised securities holding
company as a source of credit for households, businesses,

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124 STAT. 1620

Effective date.

PUBLIC LAW 111–203—JULY 21, 2010

and State and local governments, and as a source of
liquidity for the financial system; and
(G) the nature, scope, and mix of the activities of
the supervised securities holding company.
(4) NOTICE.—A capital requirement imposed under this
subsection may not take effect earlier than 180 days after
the date on which a supervised securities holding company
is provided notice of the capital requirement.
(e) OTHER PROVISIONS OF LAW APPLICABLE TO SUPERVISED
SECURITIES HOLDING COMPANIES.—
(1) FEDERAL DEPOSIT INSURANCE ACT.—Subsections (b), (c)
through (s), and (u) of section 8 of the Federal Deposit Insurance
Act (12 U.S.C. 1818) shall apply to any supervised securities
holding company, and to any subsidiary (other than a bank
or an institution described in subparagraph (D), (F), or (H)
of section 2(c)(2) of the Bank Holding Company Act of 1956
(12 U.S.C. 1841(c)(2))) of a supervised securities holding company, in the same manner as such subsections apply to a
bank holding company for which the Board of Governors is
the appropriate Federal banking agency. For purposes of
applying such subsections to a supervised securities holding
company or a subsidiary (other than a bank or an institution
described in subparagraph (D), (F), or (H) of section 2(c)(2)
of the Bank Holding Company Act of 1956 (12 U.S.C.
1841(c)(2))) of a supervised securities holding company, the
Board of Governors shall be deemed the appropriate Federal
banking agency for the supervised securities holding company
or subsidiary.
(2) BANK HOLDING COMPANY ACT OF 1956.—Except as the
Board of Governors may otherwise provide by regulation or
order, a supervised securities holding company shall be subject
to the provisions of the Bank Holding Company Act of 1956
(12 U.S.C. 1841 et seq.) in the same manner and to the same
extent a bank holding company is subject to such provisions,
except that a supervised securities holding company may not,
by reason of this paragraph, be deemed to be a bank holding
company for purposes of section 4 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1843).
SEC. 619. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN
RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE
EQUITY FUNDS.

The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et
seq.) is amended by adding at the end the following:

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12 USC 1851.

‘‘SEC. 13. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN
RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE EQUITY
FUNDS.

‘‘(a) IN GENERAL.—
‘‘(1) PROHIBITION.—Unless otherwise provided in this section, a banking entity shall not—
‘‘(A) engage in proprietary trading; or
‘‘(B) acquire or retain any equity, partnership, or other
ownership interest in or sponsor a hedge fund or a private
equity fund.
‘‘(2) NONBANK FINANCIAL COMPANIES SUPERVISED BY THE
BOARD.—Any nonbank financial company supervised by the
Board that engages in proprietary trading or takes or retains

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1621

any equity, partnership, or other ownership interest in or sponsors a hedge fund or a private equity fund shall be subject,
by rule, as provided in subsection (b)(2), to additional capital
requirements for and additional quantitative limits with
regards to such proprietary trading and taking or retaining
any equity, partnership, or other ownership interest in or
sponsorship of a hedge fund or a private equity fund, except
that permitted activities as described in subsection (d) shall
not be subject to the additional capital and additional quantitative limits except as provided in subsection (d)(3), as if
the nonbank financial company supervised by the Board were
a banking entity.
‘‘(b) STUDY AND RULEMAKING.—
‘‘(1) STUDY.—Not later than 6 months after the date of
enactment of this section, the Financial Stability Oversight
Council shall study and make recommendations on implementing the provisions of this section so as to—
‘‘(A) promote and enhance the safety and soundness
of banking entities;
‘‘(B) protect taxpayers and consumers and enhance
financial stability by minimizing the risk that insured
depository institutions and the affiliates of insured depository institutions will engage in unsafe and unsound activities;
‘‘(C) limit the inappropriate transfer of Federal subsidies from institutions that benefit from deposit insurance
and liquidity facilities of the Federal Government to
unregulated entities;
‘‘(D) reduce conflicts of interest between the selfinterest of banking entities and nonbank financial companies supervised by the Board, and the interests of the
customers of such entities and companies;
‘‘(E) limit activities that have caused undue risk or
loss in banking entities and nonbank financial companies
supervised by the Board, or that might reasonably be
expected to create undue risk or loss in such banking
entities and nonbank financial companies supervised by
the Board;
‘‘(F) appropriately accommodate the business of insurance within an insurance company, subject to regulation
in accordance with the relevant insurance company investment laws, while protecting the safety and soundness of
any banking entity with which such insurance company
is affiliated and of the United States financial system;
and
‘‘(G) appropriately time the divestiture of illiquid assets
that are affected by the implementation of the prohibitions
under subsection (a).
‘‘(2) RULEMAKING.—
‘‘(A) IN GENERAL.—Unless otherwise provided in this
section, not later than 9 months after the completion of
the study under paragraph (1), the appropriate Federal
banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission,
shall consider the findings of the study under paragraph
(1) and adopt rules to carry out this section, as provided
in subparagraph (B).

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124 STAT. 1622

‘‘(B) COORDINATED RULEMAKING.—
‘‘(i) REGULATORY AUTHORITY.—The regulations
issued under this paragraph shall be issued by—
‘‘(I) the appropriate Federal banking agencies,
jointly, with respect to insured depository institutions;
‘‘(II) the Board, with respect to any company
that controls an insured depository institution, or
that is treated as a bank holding company for
purposes of section 8 of the International Banking
Act, any nonbank financial company supervised
by the Board, and any subsidiary of any of the
foregoing (other than a subsidiary for which an
agency described in subclause (I), (III), or (IV)
is the primary financial regulatory agency);
‘‘(III) the Commodity Futures Trading
Commission, with respect to any entity for which
the Commodity Futures Trading Commission is
the primary financial regulatory agency, as defined
in section 2 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act; and
‘‘(IV) the Securities and Exchange Commission, with respect to any entity for which the Securities and Exchange Commission is the primary
financial regulatory agency, as defined in section
2 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
‘‘(ii) COORDINATION, CONSISTENCY, AND COMPARABILITY.—In developing and issuing regulations
pursuant to this section, the appropriate Federal
banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission shall consult and coordinate with each
other, as appropriate, for the purposes of assuring,
to the extent possible, that such regulations are comparable and provide for consistent application and
implementation of the applicable provisions of this section to avoid providing advantages or imposing disadvantages to the companies affected by this subsection
and to protect the safety and soundness of banking
entities and nonbank financial companies supervised
by the Board.
‘‘(iii) COUNCIL ROLE.—The Chairperson of the
Financial Stability Oversight Council shall be responsible for coordination of the regulations issued under
this section.
‘‘(c) EFFECTIVE DATE.—
‘‘(1) IN GENERAL.—Except as provided in paragraphs (2)
and (3), this section shall take effect on the earlier of—
‘‘(A) 12 months after the date of the issuance of final
rules under subsection (b); or
‘‘(B) 2 years after the date of enactment of this section.
‘‘(2) CONFORMANCE PERIOD FOR DIVESTITURE.—A banking
entity or nonbank financial company supervised by the Board
shall bring its activities and investments into compliance with
the requirements of this section not later than 2 years after
the date on which the requirements become effective pursuant

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124 STAT. 1623

to this section or 2 years after the date on which the entity
or company becomes a nonbank financial company supervised
by the Board. The Board may, by rule or order, extend this
two-year period for not more than one year at a time, if,
in the judgment of the Board, such an extension is consistent
with the purposes of this section and would not be detrimental
to the public interest. The extensions made by the Board under
the preceding sentence may not exceed an aggregate of 3 years.
‘‘(3) EXTENDED TRANSITION FOR ILLIQUID FUNDS.—
‘‘(A) APPLICATION.—The Board may, upon the application of a banking entity, extend the period during which
the banking entity, to the extent necessary to fulfill a
contractual obligation that was in effect on May 1, 2010,
may take or retain its equity, partnership, or other ownership interest in, or otherwise provide additional capital
to, an illiquid fund.
‘‘(B) TIME LIMIT ON APPROVAL.—The Board may grant
1 extension under subparagraph (A), which may not exceed
5 years.
‘‘(4) DIVESTITURE REQUIRED.—Except as otherwise provided
in subsection (d)(1)(G), a banking entity may not engage in
any activity prohibited under subsection (a)(1)(B) after the earlier of—
‘‘(A) the date on which the contractual obligation to
invest in the illiquid fund terminates; and
‘‘(B) the date on which any extensions granted by the
Board under paragraph (3) expire.
‘‘(5) ADDITIONAL CAPITAL DURING TRANSITION PERIOD.—Notwithstanding paragraph (2), on the date on which the rules
are issued under subsection (b)(2), the appropriate Federal
banking agencies, the Securities and Exchange Commission,
and the Commodity Futures Trading Commission shall issue
rules, as provided in subsection (b)(2), to impose additional
capital requirements, and any other restrictions, as appropriate,
on any equity, partnership, or ownership interest in or sponsorship of a hedge fund or private equity fund by a banking
entity.
‘‘(6) SPECIAL RULEMAKING.—Not later than 6 months after
the date of enactment of this section, the Board shall issues
rules to implement paragraphs (2) and (3).
‘‘(d) PERMITTED ACTIVITIES.—
‘‘(1) IN GENERAL.—Notwithstanding the restrictions under
subsection (a), to the extent permitted by any other provision
of Federal or State law, and subject to the limitations under
paragraph (2) and any restrictions or limitations that the appropriate Federal banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading Commission,
may determine, the following activities (in this section referred
to as ‘permitted activities’) are permitted:
‘‘(A) The purchase, sale, acquisition, or disposition of
obligations of the United States or any agency thereof,
obligations, participations, or other instruments of or issued
by the Government National Mortgage Association, the
Federal National Mortgage Association, the Federal Home
Loan Mortgage Corporation, a Federal Home Loan Bank,
the Federal Agricultural Mortgage Corporation, or a Farm
Credit System institution chartered under and subject to

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PUBLIC LAW 111–203—JULY 21, 2010
the provisions of the Farm Credit Act of 1971 (12 U.S.C.
2001 et seq.), and obligations of any State or of any political
subdivision thereof.
‘‘(B) The purchase, sale, acquisition, or disposition of
securities and other instruments described in subsection
(h)(4) in connection with underwriting or market-makingrelated activities, to the extent that any such activities
permitted by this subparagraph are designed not to exceed
the reasonably expected near term demands of clients,
customers, or counterparties.
‘‘(C) Risk-mitigating hedging activities in connection
with and related to individual or aggregated positions,
contracts, or other holdings of a banking entity that are
designed to reduce the specific risks to the banking entity
in connection with and related to such positions, contracts,
or other holdings.
‘‘(D) The purchase, sale, acquisition, or disposition of
securities and other instruments described in subsection
(h)(4) on behalf of customers.
‘‘(E) Investments in one or more small business investment companies, as defined in section 102 of the Small
Business Investment Act of 1958 (15 U.S.C. 662), investments designed primarily to promote the public welfare,
of the type permitted under paragraph (11) of section 5136
of the Revised Statutes of the United States (12 U.S.C.
24), or investments that are qualified rehabilitation
expenditures with respect to a qualified rehabilitated
building or certified historic structure, as such terms are
defined in section 47 of the Internal Revenue Code of
1986 or a similar State historic tax credit program.
‘‘(F) The purchase, sale, acquisition, or disposition of
securities and other instruments described in subsection
(h)(4) by a regulated insurance company directly engaged
in the business of insurance for the general account of
the company and by any affiliate of such regulated insurance company, provided that such activities by any affiliate
are solely for the general account of the regulated insurance
company, if—
‘‘(i) the purchase, sale, acquisition, or disposition
is conducted in compliance with, and subject to, the
insurance company investment laws, regulations, and
written guidance of the State or jurisdiction in which
each such insurance company is domiciled; and
‘‘(ii) the appropriate Federal banking agencies,
after consultation with the Financial Stability Oversight Council and the relevant insurance commissioners of the States and territories of the United
States, have not jointly determined, after notice and
comment, that a particular law, regulation, or written
guidance described in clause (i) is insufficient to protect
the safety and soundness of the banking entity, or
of the financial stability of the United States.
‘‘(G) Organizing and offering a private equity or hedge
fund, including serving as a general partner, managing
member, or trustee of the fund and in any manner selecting
or controlling (or having employees, officers, directors, or
agents who constitute) a majority of the directors, trustees,

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124 STAT. 1625

or management of the fund, including any necessary
expenses for the foregoing, only if—
‘‘(i) the banking entity provides bona fide trust,
fiduciary, or investment advisory services;
‘‘(ii) the fund is organized and offered only in
connection with the provision of bona fide trust, fiduciary, or investment advisory services and only to persons that are customers of such services of the banking
entity;
‘‘(iii) the banking entity does not acquire or retain
an equity interest, partnership interest, or other
ownership interest in the funds except for a de minimis
investment subject to and in compliance with paragraph (4);
‘‘(iv) the banking entity complies with the restrictions under paragraphs (1) and (2) of subparagraph
(f);
‘‘(v) the banking entity does not, directly or
indirectly, guarantee, assume, or otherwise insure the
obligations or performance of the hedge fund or private
equity fund or of any hedge fund or private equity
fund in which such hedge fund or private equity fund
invests;
‘‘(vi) the banking entity does not share with the
hedge fund or private equity fund, for corporate, marketing, promotional, or other purposes, the same name
or a variation of the same name;
‘‘(vii) no director or employee of the banking entity
takes or retains an equity interest, partnership
interest, or other ownership interest in the hedge fund
or private equity fund, except for any director or
employee of the banking entity who is directly engaged
in providing investment advisory or other services to
the hedge fund or private equity fund; and
‘‘(viii) the banking entity discloses to prospective
and actual investors in the fund, in writing, that any
losses in such hedge fund or private equity fund are
borne solely by investors in the fund and not by the
banking entity, and otherwise complies with any additional rules of the appropriate Federal banking agencies, the Securities and Exchange Commission, or the
Commodity Futures Trading Commission, as provided
in subsection (b)(2), designed to ensure that losses
in such hedge fund or private equity fund are borne
solely by investors in the fund and not by the banking
entity.
‘‘(H) Proprietary trading conducted by a banking entity
pursuant to paragraph (9) or (13) of section 4(c), provided
that the trading occurs solely outside of the United States
and that the banking entity is not directly or indirectly
controlled by a banking entity that is organized under
the laws of the United States or of one or more States.
‘‘(I) The acquisition or retention of any equity, partnership, or other ownership interest in, or the sponsorship
of, a hedge fund or a private equity fund by a banking
entity pursuant to paragraph (9) or (13) of section 4(c)

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PUBLIC LAW 111–203—JULY 21, 2010
solely outside of the United States, provided that no ownership interest in such hedge fund or private equity fund
is offered for sale or sold to a resident of the United
States and that the banking entity is not directly or
indirectly controlled by a banking entity that is organized
under the laws of the United States or of one or more
States.
‘‘(J) Such other activity as the appropriate Federal
banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission
determine, by rule, as provided in subsection (b)(2), would
promote and protect the safety and soundness of the
banking entity and the financial stability of the United
States.
‘‘(2) LIMITATION ON PERMITTED ACTIVITIES.—
‘‘(A) IN GENERAL.—No transaction, class of transactions, or activity may be deemed a permitted activity
under paragraph (1) if the transaction, class of transactions,
or activity—
‘‘(i) would involve or result in a material conflict
of interest (as such term shall be defined by rule as
provided in subsection (b)(2)) between the banking
entity and its clients, customers, or counterparties;
‘‘(ii) would result, directly or indirectly, in a material exposure by the banking entity to high-risk assets
or high-risk trading strategies (as such terms shall
be defined by rule as provided in subsection (b)(2));
‘‘(iii) would pose a threat to the safety and soundness of such banking entity; or
‘‘(iv) would pose a threat to the financial stability
of the United States.
‘‘(B) RULEMAKING.—The appropriate Federal banking
agencies, the Securities and Exchange Commission, and
the Commodity Futures Trading Commission shall issue
regulations to implement subparagraph (A), as part of the
regulations issued under subsection (b)(2).
‘‘(3) CAPITAL AND QUANTITATIVE LIMITATIONS.—The appropriate Federal banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading Commission
shall, as provided in subsection (b)(2), adopt rules imposing
additional capital requirements and quantitative limitations,
including diversification requirements, regarding the activities
permitted under this section if the appropriate Federal banking
agencies, the Securities and Exchange Commission, and the
Commodity Futures Trading Commission determine that additional capital and quantitative limitations are appropriate to
protect the safety and soundness of banking entities engaged
in such activities.
‘‘(4) DE MINIMIS INVESTMENT.—
‘‘(A) IN GENERAL.—A banking entity may make and
retain an investment in a hedge fund or private equity
fund that the banking entity organizes and offers, subject
to the limitations and restrictions in subparagraph (B)
for the purposes of—
‘‘(i) establishing the fund and providing the fund
with sufficient initial equity for investment to permit
the fund to attract unaffiliated investors; or

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1627

‘‘(ii) making a de minimis investment.
‘‘(B) LIMITATIONS AND RESTRICTIONS ON INVESTMENTS.—
‘‘(i) REQUIREMENT TO SEEK OTHER INVESTORS.—
A banking entity shall actively seek unaffiliated investors to reduce or dilute the investment of the banking
entity to the amount permitted under clause (ii).
‘‘(ii) LIMITATIONS ON SIZE OF INVESTMENTS.—Notwithstanding any other provision of law, investments
by a banking entity in a hedge fund or private equity
fund shall—
‘‘(I) not later than 1 year after the date of
establishment of the fund, be reduced through
redemption, sale, or dilution to an amount that
is not more than 3 percent of the total ownership
interests of the fund;
‘‘(II) be immaterial to the banking entity, as
defined, by rule, pursuant to subsection (b)(2), but
in no case may the aggregate of all of the interests
of the banking entity in all such funds exceed
3 percent of the Tier 1 capital of the banking
entity.
‘‘(iii) CAPITAL.—For purposes of determining
compliance with applicable capital standards under
paragraph (3), the aggregate amount of the outstanding
investments by a banking entity under this paragraph,
including retained earnings, shall be deducted from
the assets and tangible equity of the banking entity,
and the amount of the deduction shall increase
commensurate with the leverage of the hedge fund
or private equity fund.
‘‘(C) EXTENSION.—Upon an application by a banking
entity, the Board may extend the period of time to meet
the requirements under subparagraph (B)(ii)(I) for 2 additional years, if the Board finds that an extension would
be consistent with safety and soundness and in the public
interest.
‘‘(e) ANTI-EVASION.—
‘‘(1) RULEMAKING.—The appropriate Federal banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission shall issue regulations,
as part of the rulemaking provided for in subsection (b)(2),
regarding internal controls and recordkeeping, in order to
insure compliance with this section.
‘‘(2) TERMINATION OF ACTIVITIES OR INVESTMENT.—Notwithstanding any other provision of law, whenever an appropriate
Federal banking agency, the Securities and Exchange Commission, or the Commodity Futures Trading Commission, as appropriate, has reasonable cause to believe that a banking entity
or nonbank financial company supervised by the Board under
the respective agency’s jurisdiction has made an investment
or engaged in an activity in a manner that functions as an
evasion of the requirements of this section (including through
an abuse of any permitted activity) or otherwise violates the
restrictions under this section, the appropriate Federal banking
agency, the Securities and Exchange Commission, or the Commodity Futures Trading Commission, as appropriate, shall

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PUBLIC LAW 111–203—JULY 21, 2010

order, after due notice and opportunity for hearing, the banking
entity or nonbank financial company supervised by the Board
to terminate the activity and, as relevant, dispose of the investment. Nothing in this paragraph shall be construed to limit
the inherent authority of any Federal agency or State regulatory authority to further restrict any investments or activities
under otherwise applicable provisions of law.
‘‘(f) LIMITATIONS ON RELATIONSHIPS WITH HEDGE FUNDS AND
PRIVATE EQUITY FUNDS.—
‘‘(1) IN GENERAL.—No banking entity that serves, directly
or indirectly, as the investment manager, investment adviser,
or sponsor to a hedge fund or private equity fund, or that
organizes and offers a hedge fund or private equity fund pursuant to paragraph (d)(1)(G), and no affiliate of such entity,
may enter into a transaction with the fund, or with any other
hedge fund or private equity fund that is controlled by such
fund, that would be a covered transaction, as defined in section
23A of the Federal Reserve Act (12 U.S.C. 371c), with the
hedge fund or private equity fund, as if such banking entity
and the affiliate thereof were a member bank and the hedge
fund or private equity fund were an affiliate thereof.
‘‘(2) TREATMENT AS MEMBER BANK.—A banking entity that
serves, directly or indirectly, as the investment manager, investment adviser, or sponsor to a hedge fund or private equity
fund, or that organizes and offers a hedge fund or private
equity fund pursuant to paragraph (d)(1)(G), shall be subject
to section 23B of the Federal Reserve Act (12 U.S.C. 371c–
1), as if such banking entity were a member bank and such
hedge fund or private equity fund were an affiliate thereof.
‘‘(3) PERMITTED SERVICES.—
‘‘(A) IN GENERAL.—Notwithstanding paragraph (1), the
Board may permit a banking entity to enter into any prime
brokerage transaction with any hedge fund or private
equity fund in which a hedge fund or private equity fund
managed, sponsored, or advised by such banking entity
has taken an equity, partnership, or other ownership
interest, if—
‘‘(i) the banking entity is in compliance with each
of the limitations set forth in subsection (d)(1)(G) with
regard to a hedge fund or private equity fund organized
and offered by such banking entity;
‘‘(ii) the chief executive officer (or equivalent
officer) of the banking entity certifies in writing
annually (with a duty to update the certification if
the information in the certification materially changes)
that the conditions specified in subsection (d)(1)(g)(v)
are satisfied; and
‘‘(iii) the Board has determined that such transaction is consistent with the safe and sound operation
and condition of the banking entity.
‘‘(B) TREATMENT OF PRIME BROKERAGE TRANSACTIONS.—
For purposes of subparagraph (A), a prime brokerage transaction described in subparagraph (A) shall be subject to
section 23B of the Federal Reserve Act (12 U.S.C. 371c1) as if the counterparty were an affiliate of the banking
entity.

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124 STAT. 1629

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‘‘(4) APPLICATION TO NONBANK FINANCIAL COMPANIES SUPERVISED BY THE BOARD.—The appropriate Federal banking agen-

Regulations.

cies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission shall adopt rules, as provided in subsection (b)(2), imposing additional capital charges
or other restrictions for nonbank financial companies supervised
by the Board to address the risks to and conflicts of interest
of banking entities described in paragraphs (1), (2), and (3)
of this subsection.
‘‘(g) RULES OF CONSTRUCTION.—
‘‘(1) LIMITATION ON CONTRARY AUTHORITY.—Except as provided in this section, notwithstanding any other provision of
law, the prohibitions and restrictions under this section shall
apply to activities of a banking entity or nonbank financial
company supervised by the Board, even if such activities are
authorized for a banking entity or nonbank financial company
supervised by the Board.
‘‘(2) SALE OR SECURITIZATION OF LOANS.—Nothing in this
section shall be construed to limit or restrict the ability of
a banking entity or nonbank financial company supervised
by the Board to sell or securitize loans in a manner otherwise
permitted by law.
‘‘(3) AUTHORITY OF FEDERAL AGENCIES AND STATE REGULATORY AUTHORITIES.—Nothing in this section shall be construed to limit the inherent authority of any Federal agency
or State regulatory authority under otherwise applicable provisions of law.
‘‘(h) DEFINITIONS.—In this section, the following definitions
shall apply:
‘‘(1) BANKING ENTITY.—The term ‘banking entity’ means
any insured depository institution (as defined in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813)), any company that controls an insured depository institution, or that
is treated as a bank holding company for purposes of section
8 of the International Banking Act of 1978, and any affiliate
or subsidiary of any such entity. For purposes of this paragraph,
the term ‘insured depository institution’ does not include an
institution that functions solely in a trust or fiduciary capacity,
if—
‘‘(A) all or substantially all of the deposits of such
institution are in trust funds and are received in a bona
fide fiduciary capacity;
‘‘(B) no deposits of such institution which are insured
by the Federal Deposit Insurance Corporation are offered
or marketed by or through an affiliate of such institution;
‘‘(C) such institution does not accept demand deposits
or deposits that the depositor may withdraw by check
or similar means for payment to third parties or others
or make commercial loans; and
‘‘(D) such institution does not—
‘‘(i) obtain payment or payment related services
from any Federal Reserve bank, including any service
referred to in section 11A of the Federal Reserve Act
(12 U.S.C. 248a); or
‘‘(ii) exercise discount or borrowing privileges
pursuant to section 19(b)(7) of the Federal Reserve
Act (12 U.S.C. 461(b)(7)).

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124 STAT. 1630

PUBLIC LAW 111–203—JULY 21, 2010
‘‘(2) HEDGE FUND; PRIVATE EQUITY FUND.—The terms ‘hedge
fund’ and ‘private equity fund’ mean an issuer that would
be an investment company, as defined in the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), but for section
3(c)(1) or 3(c)(7) of that Act, or such similar funds as the
appropriate Federal banking agencies, the Securities and
Exchange Commission, and the Commodity Futures Trading
Commission may, by rule, as provided in subsection (b)(2),
determine.
‘‘(3) NONBANK FINANCIAL COMPANY SUPERVISED BY THE
BOARD.—The term ‘nonbank financial company supervised by
the Board’ means a nonbank financial company supervised
by the Board of Governors, as defined in section 102 of the
Financial Stability Act of 2010.
‘‘(4) PROPRIETARY TRADING.—The term ‘proprietary trading’,
when used with respect to a banking entity or nonbank financial
company supervised by the Board, means engaging as a principal for the trading account of the banking entity or nonbank
financial company supervised by the Board in any transaction
to purchase or sell, or otherwise acquire or dispose of, any
security, any derivative, any contract of sale of a commodity
for future delivery, any option on any such security, derivative,
or contract, or any other security or financial instrument that
the appropriate Federal banking agencies, the Securities and
Exchange Commission, and the Commodity Futures Trading
Commission may, by rule as provided in subsection (b)(2), determine.
‘‘(5) SPONSOR.—The term to ‘sponsor’ a fund means—
‘‘(A) to serve as a general partner, managing member,
or trustee of a fund;
‘‘(B) in any manner to select or to control (or to have
employees, officers, or directors, or agents who constitute)
a majority of the directors, trustees, or management of
a fund; or
‘‘(C) to share with a fund, for corporate, marketing,
promotional, or other purposes, the same name or a variation of the same name.
‘‘(6) TRADING ACCOUNT.—The term ‘trading account’ means
any account used for acquiring or taking positions in the securities and instruments described in paragraph (4) principally
for the purpose of selling in the near term (or otherwise with
the intent to resell in order to profit from short-term price
movements), and any such other accounts as the appropriate
Federal banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading Commission
may, by rule as provided in subsection (b)(2), determine.
‘‘(7) ILLIQUID FUND.—
‘‘(A) IN GENERAL.—The term ‘illiquid fund’ means a
hedge fund or private equity fund that—
‘‘(i) as of May 1, 2010, was principally invested
in, or was invested and contractually committed to
principally invest in, illiquid assets, such as portfolio
companies, real estate investments, and venture capital investments; and
‘‘(ii) makes all investments pursuant to, and consistent with, an investment strategy to principally
invest in illiquid assets. In issuing rules regarding

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1631

this subparagraph, the Board shall take into consideration the terms of investment for the hedge fund or
private equity fund, including contractual obligations,
the ability of the fund to divest of assets held by
the fund, and any other factors that the Board determines are appropriate.
‘‘(B) HEDGE FUND.—For the purposes of this paragraph,
the term ‘hedge fund’ means any fund identified under
subsection (h)(2), and does not include a private equity
fund, as such term is used in section 203(m) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(m)).’’.
SEC. 620. STUDY OF BANK INVESTMENT ACTIVITIES.

(a) STUDY.—
(1) IN GENERAL.—Not later than 18 months after the date
of enactment of this Act, the appropriate Federal banking agencies shall jointly review and prepare a report on the activities
that a banking entity, as such term is defined in the Bank
Holding Company Act of 1956 (12 U.S.C. 1841 et. seq.), may
engage in under Federal and State law, including activities
authorized by statute and by order, interpretation and guidance.
(2) CONTENT.—In carrying out the study under paragraph
(1), the appropriate Federal banking agencies shall review and
consider—
(A) the type of activities or investments;
(B) any financial, operational, managerial, or reputation risks associated with or presented as a result of the
banking entity engaged in the activity or making the investment; and
(C) risk mitigation activities undertaken by the
banking entity with regard to the risks.
(b) REPORT AND RECOMMENDATIONS TO THE COUNCIL AND TO
CONGRESS.—The appropriate Federal banking agencies shall submit
to the Council, the Committee on Financial Services of the House
of Representatives, and the Committee on Banking, Housing, and
Urban Affairs of the Senate the study conducted pursuant to subsection (a) no later than 2 months after its completion. In addition
to the information described in subsection (a), the report shall
include recommendations regarding—
(1) whether each activity or investment has or could have
a negative effect on the safety and soundness of the banking
entity or the United States financial system;
(2) the appropriateness of the conduct of each activity or
type of investment by banking entities; and
(3) additional restrictions as may be necessary to address
risks to safety and soundness arising from the activities or
types of investments described in subsection (a).

Deadline.

SEC. 621. CONFLICTS OF INTEREST.

(a) IN GENERAL.—The Securities Act of 1933 (15 U.S.C. 77a
et seq.) is amended by inserting after section 27A the following:

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‘‘SEC.

27B.

CONFLICTS OF INTEREST
SECURITIZATIONS.

RELATING

TO

CERTAIN

15 USC 77z–2a.

‘‘(a) IN GENERAL.—An underwriter, placement agent, initial
purchaser, or sponsor, or any affiliate or subsidiary of any such
entity, of an asset-backed security (as such term is defined in

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124 STAT. 1632

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15 USC 77z–2a
note.

PUBLIC LAW 111–203—JULY 21, 2010

section 3 of the Securities and Exchange Act of 1934 (15 U.S.C.
78c), which for the purposes of this section shall include a synthetic
asset-backed security), shall not, at any time for a period ending
on the date that is one year after the date of the first closing
of the sale of the asset-backed security, engage in any transaction
that would involve or result in any material conflict of interest
with respect to any investor in a transaction arising out of such
activity.
‘‘(b) RULEMAKING.—Not later than 270 days after the date
of enactment of this section, the Commission shall issue rules
for the purpose of implementing subsection (a).
‘‘(c) EXCEPTION.—The prohibitions of subsection (a) shall not
apply to—
‘‘(1) risk-mitigating hedging activities in connection with
positions or holdings arising out of the underwriting, placement,
initial purchase, or sponsorship of an asset-backed security,
provided that such activities are designed to reduce the specific
risks to the underwriter, placement agent, initial purchaser,
or sponsor associated with positions or holdings arising out
of such underwriting, placement, initial purchase, or sponsorship; or
‘‘(2) purchases or sales of asset-backed securities made
pursuant to and consistent with—
‘‘(A) commitments of the underwriter, placement agent,
initial purchaser, or sponsor, or any affiliate or subsidiary
of any such entity, to provide liquidity for the asset-backed
security, or
‘‘(B) bona fide market-making in the asset backed security.
‘‘(d) RULE OF CONSTRUCTION.—This subsection shall not otherwise limit the application of section 15G of the Securities Exchange
Act of 1934.’’.
(b) EFFECTIVE DATE.—Section 27B of the Securities Act of 1933,
as added by this section, shall take effect on the effective date
of final rules issued by the Commission under subsection (b) of
such section 27B, except that subsections (b) and (d) of such section
27B shall take effect on the date of enactment of this Act.
SEC. 622. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS.

The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et
seq.) is amended by adding at the end the following:

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12 USC 1852.

‘‘SEC. 14. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS.

‘‘(a) DEFINITIONS.—In this section—
‘‘(1) the term ‘Council’ means the Financial Stability Oversight Council;
‘‘(2) the term ‘financial company’ 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;
‘‘(E) a nonbank financial company supervised by the
Board under title I of the Dodd-Frank Wall Street Reform
and Consumer Protection Act; and
‘‘(F) a foreign bank or company that is treated as
a bank holding company for purposes of this Act; and
‘‘(3) the term ‘liabilities’ means—

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124 STAT. 1633

‘‘(A) with respect to a United States financial company—
‘‘(i) the total risk-weighted assets of the financial
company, as determined under the risk-based capital
rules applicable to bank holding companies, as adjusted
to reflect exposures that are deducted from regulatory
capital; less
‘‘(ii) the total regulatory capital of the financial
company under the risk-based capital rules applicable
to bank holding companies;
‘‘(B) with respect to a foreign-based financial company—
‘‘(i) the total risk-weighted assets of the United
States operations of the financial company, as determined under the applicable risk-based capital rules,
as adjusted to reflect exposures that are deducted from
regulatory capital; less
‘‘(ii) the total regulatory capital of the United
States operations of the financial company, as determined under the applicable risk-based capital rules;
and
‘‘(C) with respect to an insurance company or other
nonbank financial company supervised by the Board, such
assets of the company as the Board shall specify by rule,
in order to provide for consistent and equitable treatment
of such companies.
‘‘(b) CONCENTRATION LIMIT.—Subject to the recommendations
by the Council under subsection (e), a financial company may not
merge or consolidate with, acquire all or substantially all of the
assets of, or otherwise acquire control of, another company, if the
total consolidated liabilities of the acquiring financial company upon
consummation of the transaction would exceed 10 percent of the
aggregate consolidated liabilities of all financial companies at the
end of the calendar year preceding the transaction.
‘‘(c) EXCEPTION TO CONCENTRATION LIMIT.—With the prior written consent of the Board, the concentration limit under subsection
(b) shall not apply to an acquisition—
‘‘(1) of a bank in default or in danger of default;
‘‘(2) with respect to which assistance is provided by the
Federal Deposit Insurance Corporation under section 13(c) of
the Federal Deposit Insurance Act (12 U.S.C. 1823(c)); or
‘‘(3) that would result only in a de minimis increase in
the liabilities of the financial company.
‘‘(d) RULEMAKING AND GUIDANCE.—The Board shall issue regulations implementing this section in accordance with the recommendations of the Council under subsection (e), including the
definition of terms, as necessary. The Board may issue interpretations or guidance regarding the application of this section to an
individual financial company or to financial companies in general.
‘‘(e) COUNCIL STUDY AND RULEMAKING.—
‘‘(1) STUDY AND RECOMMENDATIONS.—Not later than 6
months after the date of enactment of this section, the Council
shall—
‘‘(A) complete a study of the extent to which the concentration limit under this section would affect financial
stability, moral hazard in the financial system, the efficiency and competitiveness of United States financial firms

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124 STAT. 1634

PUBLIC LAW 111–203—JULY 21, 2010
and financial markets, and the cost and availability of
credit and other financial services to households and
businesses in the United States; and
‘‘(B) make recommendations regarding any modifications to the concentration limit that the Council determines
would more effectively implement this section.
‘‘(2) RULEMAKING.—Not later than 9 months after the date
of completion of the study under paragraph (1), and notwithstanding subsections (b) and (d), the Board shall issue final
regulations implementing this section, which shall reflect any
recommendations by the Council under paragraph (1)(B).’’.

Deadline.

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SEC. 623. INTERSTATE MERGER TRANSACTIONS.

(a) INTERSTATE MERGER TRANSACTIONS.—Section 18(c) of the
Federal Deposit Insurance Act (12 U.S.C. 1828(c)) is amended by
adding at the end the following:
‘‘(13)(A) Except as provided in subparagraph (B), the responsible
agency may not approve an application for an interstate merger
transaction if the resulting insured depository institution (including
all insured depository institutions which are affiliates of the
resulting insured depository institution), upon consummation of
the transaction, would control more than 10 percent of the total
amount of deposits of insured depository institutions in the United
States.
‘‘(B) Subparagraph (A) shall not apply to an interstate merger
transaction that involves 1 or more insured depository institutions
in default or in danger of default, or with respect to which the
Corporation provides assistance under section 13.
‘‘(C) In this paragraph—
‘‘(i) the term ‘interstate merger transaction’ means a merger
transaction involving 2 or more insured depository institutions
that have different home States and that are not affiliates;
and
‘‘(ii) the term ‘home State’ means—
‘‘(I) with respect to a national bank, the State in which
the main office of the bank is located;
‘‘(II) with respect to a State bank or State savings
association, the State by which the State bank or State
savings association is chartered; and
‘‘(III) with respect to a Federal savings association,
the State in which the home office (as defined by the
regulations of the Director of the Office of Thrift Supervision, or, on and after the transfer date, the Comptroller
of the Currency) of the Federal savings association is
located.’’.
(b) ACQUISITIONS BY BANK HOLDING COMPANIES.—
(1) IN GENERAL.—Section 4 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1843) is amended—
(A) in subsection (i), by adding at the end the following:
‘‘(8) INTERSTATE ACQUISITIONS.—
‘‘(A) IN GENERAL.—The Board may not approve an
application by a bank holding company to acquire an
insured depository institution under subsection (c)(8) or
any other provision of this Act if—
‘‘(i) the home State of such insured depository
institution is a State other than the home State of
the bank holding company; and

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124 STAT. 1635

‘‘(ii) the applicant (including all insured depository
institutions which are affiliates of the applicant) controls, or upon consummation of the transaction would
control, more than 10 percent of the total amount
of deposits of insured depository institutions in the
United States.
‘‘(B) EXCEPTION.—Subparagraph (A) shall not apply
to an acquisition that involves an insured depository
institution in default or in danger of default, or with respect
to which the Federal Deposit Insurance Corporation provides assistance under section 13 of the Federal Deposit
Insurance Act (12 U.S.C. 1823).’’; and
(B) in subsection (k)(6)(B), by striking ‘‘savings association’’ and inserting ‘‘insured depository institution’’.
(2) DEFINITIONS.—Section 2(o)(4) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(o)(4)) is amended—
(A) in subparagraph (B), by striking ‘‘and’’ at the end;
(B) in subparagraph (C)(ii), by striking the period at
the end and inserting a semicolon; and
(C) by adding at the end the following:
‘‘(D) with respect to a State savings association, the
State by which the savings association is chartered; and
‘‘(E) with respect to a Federal savings association, the
State in which the home office (as defined by the regulations of the Director of the Office of Thrift Supervision,
or, on and after the transfer date, the Comptroller of the
Currency) of the Federal savings association is located.’’.
(c) ACQUISITIONS BY SAVINGS AND LOAN HOLDING COMPANIES.—
Section 10(e)(2) of the Home Owners’ Loan Act (12 U.S.C.
1467a(e)(2)) is amended—
(1) in paragraph (2)—
(A) in subparagraph (C), by striking ‘‘or’’ at the end;
(B) in subparagraph (D), by striking the period at
the end and inserting ‘‘, or’’; and
(C) by adding at the end the following:
‘‘(E) in the case of an application by a savings and
loan holding company to acquire an insured depository
institution, if—
‘‘(i) the home State of the insured depository
institution is a State other than the home State of
the savings and loan holding company;
‘‘(ii) the applicant (including all insured depository
institutions which are affiliates of the applicant) controls, or upon consummation of the transaction would
control, more than 10 percent of the total amount
of deposits of insured depository institutions in the
United States; and
‘‘(iii) the acquisition does not involve an insured
depository institution in default or in danger of default,
or with respect to which the Federal Deposit Insurance
Corporation provides assistance under section 13 of
the Federal Deposit Insurance Act (12 U.S.C. 1823).’’;
and
(2) by adding at the end the following:
‘‘(7) DEFINITIONS.—For purposes of paragraph (2)(E)—
‘‘(A) the terms ‘default’, ‘in danger of default’, and
‘insured depository institution’ have the same meanings

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PUBLIC LAW 111–203—JULY 21, 2010
as in section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813); and
‘‘(B) the term ‘home State’ means—
‘‘(i) with respect to a national bank, the State
in which the main office of the bank is located;
‘‘(ii) with respect to a State bank or State savings
association, the State by which the savings association
is chartered;
‘‘(iii) with respect to a Federal savings association,
the State in which the home office (as defined by
the regulations of the Director of the Office of Thrift
Supervision, or, on and after the transfer date, the
Comptroller of the Currency) of the Federal savings
association is located; and
‘‘(iv) with respect to a savings and loan holding
company, the State in which the amount of total
deposits of all insured depository institution subsidiaries of such company was the greatest on the date
on which the company became a savings and loan
holding company.’’.

SEC. 624. QUALIFIED THRIFT LENDERS.

Section 10(m)(3) of the Home Owners’ Loan Act (12 U.S.C.
1467a(m)(3)) is amended—
(1) by striking subparagraph (A) and inserting the following:
‘‘(A) IN GENERAL.—A savings association that fails to
become or remain a qualified thrift lender shall immediately be subject to the restrictions under subparagraph
(B).’’; and
(2) in subparagraph (B)(i), by striking subclause (III) and
inserting the following:
‘‘(III) DIVIDENDS.—The savings association
may not pay dividends, except for dividends that—
‘‘(aa) would be permissible for a national
bank;
‘‘(bb) are necessary to meet obligations of
a company that controls such savings association; and
‘‘(cc) are specifically approved by the
Comptroller of the Currency and the Board
after a written request submitted to the Comptroller of the Currency and the Board by the
savings association not later than 30 days
before the date of the proposed payment.
‘‘(IV) REGULATORY AUTHORITY.—A savings
association that fails to become or remain a qualified thrift lender shall be deemed to have violated
section 5 of the Home Owners’ Loan Act (12 U.S.C.
1464) and subject to actions authorized by section
5(d) of the Home Owners’ Loan Act (12 U.S.C.
1464(d)).’’.

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SEC. 625. TREATMENT OF DIVIDENDS BY CERTAIN MUTUAL HOLDING
COMPANIES.

(a) IN GENERAL.—Section 10(o) of the Home Owners’ Loan
Act (12 U.S.C. 1467a(o) is amended by adding at the end the
following:

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1637

‘‘(11) DIVIDENDS.—
‘‘(A) DECLARATION OF DIVIDENDS.—
‘‘(i) ADVANCE NOTICE REQUIRED.—Each subsidiary
of a mutual holding company that is a savings association shall give the appropriate Federal banking agency
and the Board notice not later than 30 days before
the date of a proposed declaration by the board of
directors of the savings association of any dividend
on the guaranty, permanent, or other nonwithdrawable
stock of the savings association.
‘‘(ii) INVALID DIVIDENDS.—Any dividend described
in clause (i) that is declared without giving notice
to the appropriate Federal banking agency and the
Board under clause (i), or that is declared during the
30-day period preceding the date of a proposed declaration for which notice is given to the appropriate Federal
banking agency and the Board under clause (i), shall
be invalid and shall confer no rights or benefits upon
the holder of any such stock.
‘‘(B) WAIVER OF DIVIDENDS.—A mutual holding company may waive the right to receive any dividend declared
by a subsidiary of the mutual holding company, if—
‘‘(i) no insider of the mutual holding company,
associate of an insider, or tax-qualified or non-taxqualified employee stock benefit plan of the mutual
holding company holds any share of the stock in the
class of stock to which the waiver would apply; or
‘‘(ii) the mutual holding company gives written
notice to the Board of the intent of the mutual holding
company to waive the right to receive dividends, not
later than 30 days before the date of the proposed
date of payment of the dividend, and the Board does
not object to the waiver.
‘‘(C) RESOLUTION INCLUDED IN WAIVER NOTICE.—A
notice of a waiver under subparagraph (B) shall include
a copy of the resolution of the board of directors of the
mutual holding company, in such form and substance as
the Board may determine, together with any supporting
materials relied upon by the board of directors of the
mutual holding company, concluding that the proposed dividend waiver is consistent with the fiduciary duties of the
board of directors to the mutual members of the mutual
holding company.
‘‘(D) STANDARDS FOR WAIVER OF DIVIDEND.—The Board
may not object to a waiver of dividends under subparagraph
(B) if—
‘‘(i) the waiver would not be detrimental to the
safe and sound operation of the savings association;
‘‘(ii) the board of directors of the mutual holding
company expressly determines that a waiver of the
dividend by the mutual holding company is consistent
with the fiduciary duties of the board of directors to
the mutual members of the mutual holding company;
and
‘‘(iii) the mutual holding company has, prior to
December 1, 2009—

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12 USC 1467a
note.

PUBLIC LAW 111–203—JULY 21, 2010

‘‘(I) reorganized into a mutual holding company under subsection (o);
‘‘(II) issued minority stock either from its midtier stock holding company or its subsidiary stock
savings association; and
‘‘(III) waived dividends it had a right to receive
from the subsidiary stock savings association.
‘‘(E) VALUATION.—
‘‘(i) IN GENERAL.—The appropriate Federal banking
agency shall consider waived dividends in determining
an appropriate exchange ratio in the event of a full
conversion to stock form.
‘‘(ii) EXCEPTION.—In the case of a savings association that has reorganized into a mutual holding company, has issued minority stock from a mid-tier stock
holding company or a subsidiary stock savings association of the mutual holding company, and has waived
dividends it had a right to receive from a subsidiary
savings association before December 1, 2009, the appropriate Federal banking agency shall not consider
waived dividends in determining an appropriate
exchange ratio in the event of a full conversion to
stock form.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on the transfer date.
SEC. 626. INTERMEDIATE HOLDING COMPANIES.

The Home Owners’ Loan Act (12 U.S.C. 1461 et seq.) is
amended by inserting after section 10 (12 U.S.C. 1467a) the following new section:
12 USC 1467b.

‘‘SEC. 10A. INTERMEDIATE HOLDING COMPANIES.

‘‘(a) DEFINITION.—For purposes of this section:
‘‘(1) FINANCIAL ACTIVITIES.—The term ‘financial activities’
means activities described in clauses (i) and (ii) of section
10(c)(9)(A).
‘‘(2) GRANDFATHERED UNITARY SAVINGS AND LOAN HOLDING
COMPANY.—The term ‘grandfathered unitary savings and loan
holding company’ means a company described in section
10(c)(9)(C).
‘‘(3) INTERNAL FINANCIAL ACTIVITIES.—The term ‘internal
financial activities’ includes—
‘‘(A) internal financial activities conducted by a grandfathered savings and loan holding company or any affiliate;
and
‘‘(B) internal treasury, investment, and employee benefit functions.
‘‘(b) REQUIREMENT.—
‘‘(1) IN GENERAL.—
‘‘(A) ACTIVITIES OTHER THAN FINANCIAL ACTIVITIES.—
If a grandfathered unitary savings and loan holding company conducts activities other than financial activities, the
Board may require such company to establish and conduct
all or a portion of such financial activities in or through
an intermediate holding company, which shall be a savings
and loan holding company, established pursuant to regulations of the Board, not later than 90 days (or such longer

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1639

period as the Board may deem appropriate) after the
transfer date.
‘‘(B) OTHER ACTIVITIES.—Notwithstanding subparagraph (A), the Board shall require a grandfathered unitary
savings and loan holding company to establish an intermediate holding company if the Board makes a determination that the establishment of such intermediate holding
company is necessary—
‘‘(i) to appropriately supervise activities that are
determined to be financial activities; or
‘‘(ii) to ensure that supervision by the Board does
not extend to the activities of such company that are
not financial activities.
‘‘(2) INTERNAL FINANCIAL ACTIVITIES.—
‘‘(A) TREATMENT OF INTERNAL FINANCIAL ACTIVITIES.—
For purposes of this subsection, the internal financial
activities of a grandfathered unitary savings and loan
holding company shall not be required to be placed in
an intermediate holding company.
‘‘(B) GRANDFATHERED ACTIVITIES.—A grandfathered
unitary savings and loan holding company may continue
to engage in an internal financial activity, subject to review
by the Board to determine whether engaging in such
activity presents undue risk to the grandfathered unitary
savings and loan holding company or to the financial stability of the United States, if—
‘‘(i) the grandfathered unitary savings and loan
holding company engaged in the activity during the
year before the date of enactment of this section; and
‘‘(ii) at least 2⁄3 of the assets or 2⁄3 of the revenues
generated from the activity are from or attributable
to the grandfathered unitary savings and loan holding
company.
‘‘(3) SOURCE OF STRENGTH.—A grandfathered unitary
savings and loan holding company that directly or indirectly
controls an intermediate holding company established under
this section shall serve as a source of strength to its subsidiary
intermediate holding company.
‘‘(4) PARENT COMPANY REPORTS.—The Board, may from time
to time, examine and require reports under oath from a grandfathered unitary savings and loan holding company that controls an intermediate holding company, and from the appropriate officers or directors of such company, solely for purposes
of ensuring compliance with the provisions of this section,
including assessing the ability of the company to serve as
a source of strength to its subsidiary intermediate holding
company as required under paragraph (3) and enforcing compliance with such requirement.
‘‘(5) LIMITED PARENT COMPANY ENFORCEMENT.—
‘‘(A) IN GENERAL.—In addition to any other authority
of the Board, the Board may enforce compliance with the
provisions of this subsection that are applicable to any
company described in paragraph (1)(A) that controls an
intermediate holding company under section 8 of the Federal Deposit Insurance Act, and a company described in
paragraph (1)(A) shall be subject to such section (solely
for purposes of this subparagraph) in the same manner

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124 STAT. 1640

PUBLIC LAW 111–203—JULY 21, 2010
and to the same extent as if the company described in
paragraph (1)(A) were a savings and loan holding company.
‘‘(B) APPLICATION OF OTHER ACT.—Any violation of this
subsection by a grandfathered unitary savings and loan
holding company that controls an intermediate holding
company may also be treated as a violation of the Federal
Deposit Insurance Act for purposes of subparagraph (A).
‘‘(C) NO EFFECT ON OTHER AUTHORITY.—No provision
of this paragraph shall be construed as limiting any
authority of the Board or any other Federal agency under
any other provision of law.
‘‘(c) REGULATIONS.—The Board—
‘‘(1) shall promulgate regulations to establish the criteria
for determining whether to require a grandfathered unitary
savings and loan holding company to establish an intermediate
holding company under subsection (b); and
‘‘(2) may promulgate regulations to establish any restrictions or limitations on transactions between an intermediate
holding company or a parent of such company and its affiliates,
as necessary to prevent unsafe and unsound practices in connection with transactions between the intermediate holding company, or any subsidiary thereof, and its parent company or
affiliates that are not subsidiaries of the intermediate holding
company, except that such regulations shall not restrict or
limit any transaction in connection with the bona fide acquisition or lease by an unaffiliated person of assets, goods, or
services.
‘‘(d) RULES OF CONSTRUCTION.—
‘‘(1) ACTIVITIES.—Nothing in this section shall be construed
to require a grandfathered unitary savings and loan holding
company to conform its activities to permissible activities.
‘‘(2) PERMISSIBLE CORPORATE REORGANIZATION.—The formation of an intermediate holding company as required in subsection (b) shall be presumed to be a permissible corporate
reorganization as described in section 10(c)(9)(D).’’.

SEC. 627. INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED.

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12 USC 371a
note.

(a) REPEAL OF PROHIBITION ON PAYMENT OF INTEREST ON
DEMAND DEPOSITS.—
(1) FEDERAL RESERVE ACT.—Section 19(i) of the Federal
Reserve Act (12 U.S.C. 371a) is amended to read as follows:
‘‘(i) [Repealed]’’.
(2) HOME OWNERS’ LOAN ACT.—The first sentence of section
5(b)(1)(B) of the Home Owners’ Loan Act (12 U.S.C.
1464(b)(1)(B)) is amended by striking ‘‘savings association may
not—’’ and all that follows through ‘‘(ii) permit any’’ and
inserting ‘‘savings association may not permit any’’.
(3) FEDERAL DEPOSIT INSURANCE ACT.—Section 18(g) of the
Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is amended
to read as follows:
‘‘(g) [Repealed]’’.
(b) EFFECTIVE DATE.—The amendments made by subsection
(a) shall take effect 1 year after the date of the enactment of
this Act.
SEC. 628. CREDIT CARD BANK SMALL BUSINESS LENDING.

Section 2(c)(2)(F)(v) of the Bank Holding Company Act of 1956
(12 U.S.C. 1841(c)(2)(F)(v)) is amended by inserting before the

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124 STAT. 1641

period the following: ‘‘, other than credit card loans that are made
to businesses that meet the criteria for a small business concern
to be eligible for business loans under regulations established by
the Small Business Administration under part 121 of title 13,
Code of Federal Regulations’’.

TITLE VII—WALL STREET
TRANSPARENCY AND ACCOUNTABILITY
SEC. 701. SHORT TITLE.

This title may be cited as the ‘‘Wall Street Transparency and
Accountability Act of 2010’’.

Wall Street
Transparency
and
Accountability
Act of 2010.
15 USC 8301
note.

Subtitle A—Regulation of Over-theCounter Swaps Markets
PART I—REGULATORY AUTHORITY
SEC. 711. DEFINITIONS.

15 USC 8301.

In this subtitle, the terms ‘‘prudential regulator’’, ‘‘swap’’, ‘‘swap
dealer’’, ‘‘major swap participant’’, ‘‘swap data repository’’, ‘‘associated person of a swap dealer or major swap participant’’, ‘‘eligible
contract participant’’, ‘‘swap execution facility’’, ‘‘security-based
swap’’, ‘‘security-based swap dealer’’, ‘‘major security-based swap
participant’’, and ‘‘associated person of a security-based swap dealer
or major security-based swap participant’’ have the meanings given
the terms in section 1a of the Commodity Exchange Act (7 U.S.C.
1a), including any modification of the meanings under section 721(b)
of this Act.

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SEC. 712. REVIEW OF REGULATORY AUTHORITY.

15 USC 8302.

(a) CONSULTATION.—
(1) COMMODITY FUTURES TRADING COMMISSION.—Before
commencing any rulemaking or issuing an order regarding
swaps, swap dealers, major swap participants, swap data
repositories, derivative clearing organizations with regard to
swaps, persons associated with a swap dealer or major swap
participant, eligible contract participants, or swap execution
facilities pursuant to this subtitle, the Commodity Futures
Trading Commission shall consult and coordinate to the extent
possible with the Securities and Exchange Commission and
the prudential regulators for the purposes of assuring regulatory consistency and comparability, to the extent possible.
(2) SECURITIES AND EXCHANGE COMMISSION.—Before commencing any rulemaking or issuing an order regarding securitybased swaps, security-based swap dealers, major security-based
swap participants, security-based swap data repositories,
clearing agencies with regard to security-based swaps, persons
associated with a security-based swap dealer or major securitybased swap participant, eligible contract participants with
regard to security-based swaps, or security-based swap execution facilities pursuant to subtitle B, the Securities and
Exchange Commission shall consult and coordinate to the

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124 STAT. 1642

PUBLIC LAW 111–203—JULY 21, 2010
extent possible with the Commodity Futures Trading Commission and the prudential regulators for the purposes of assuring
regulatory consistency and comparability, to the extent possible.
(3) PROCEDURES AND DEADLINE.—Such regulations shall
be prescribed in accordance with applicable requirements of
title 5, United States Code, and shall be issued in final form
not later than 360 days after the date of enactment of this
Act.
(4) APPLICABILITY.—The requirements of paragraphs (1)
and (2) shall not apply to an order issued—
(A) in connection with or arising from a violation or
potential violation of any provision of the Commodity
Exchange Act (7 U.S.C. 1 et seq.);
(B) in connection with or arising from a violation or
potential violation of any provision of the securities laws;
or
(C) in any proceeding that is conducted on the record
in accordance with sections 556 and 557 of title 5, United
States Code.
(5) EFFECT.—Nothing in this subsection authorizes any
consultation or procedure for consultation that is not consistent
with the requirements of subchapter II of chapter 5, and chapter
7, of title 5, United States Code (commonly known as the
‘‘Administrative Procedure Act’’).
(6) RULES; ORDERS.—In developing and promulgating rules
or orders pursuant to this subsection, each Commission shall
consider the views of the prudential regulators.
(7) TREATMENT OF SIMILAR PRODUCTS AND ENTITIES.—
(A) IN GENERAL.—In adopting rules and orders under
this subsection, the Commodity Futures Trading Commission and the Securities and Exchange Commission shall
treat functionally or economically similar products or entities described in paragraphs (1) and (2) in a similar
manner.
(B) EFFECT.—Nothing in this subtitle requires the
Commodity Futures Trading Commission or the Securities
and Exchange Commission to adopt joint rules or orders
that treat functionally or economically similar products
or entities described in paragraphs (1) and (2) in an identical manner.
(8) MIXED SWAPS.—The Commodity Futures Trading
Commission and the Securities and Exchange Commission,
after consultation with the Board of Governors, shall jointly
prescribe such regulations regarding mixed swaps, as described
in section 1a(47)(D) of the Commodity Exchange Act (7 U.S.C.
1a(47)(D)) and in section 3(a)(68)(D) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(68)(D)), as may be necessary
to carry out the purposes of this title.
(b) LIMITATION.—
(1) COMMODITY FUTURES TRADING COMMISSION.—Nothing
in this title, unless specifically provided, confers jurisdiction
on the Commodity Futures Trading Commission to issue a
rule, regulation, or order providing for oversight or regulation
of—
(A) security-based swaps; or
(B) with regard to its activities or functions concerning
security-based swaps—

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124 STAT. 1643

(i) security-based swap dealers;
(ii) major security-based swap participants;
(iii) security-based swap data repositories;
(iv) associated persons of a security-based swap
dealer or major security-based swap participant;
(v) eligible contract participants with respect to
security-based swaps; or
(vi) swap execution facilities with respect to security-based swaps.
(2) SECURITIES AND EXCHANGE COMMISSION.—Nothing in
this title, unless specifically provided, confers jurisdiction on
the Securities and Exchange Commission or State securities
regulators to issue a rule, regulation, or order providing for
oversight or regulation of—
(A) swaps; or
(B) with regard to its activities or functions concerning
swaps—
(i) swap dealers;
(ii) major swap participants;
(iii) swap data repositories;
(iv) persons associated with a swap dealer or major
swap participant;
(v) eligible contract participants with respect to
swaps; or
(vi) swap execution facilities with respect to swaps.
(3) PROHIBITION ON CERTAIN FUTURES ASSOCIATIONS AND
NATIONAL SECURITIES ASSOCIATIONS.—
(A) FUTURES ASSOCIATIONS.—Notwithstanding any
other provision of law (including regulations), unless otherwise authorized by this title, no futures association registered under section 17 of the Commodity Exchange Act
(7 U.S.C. 21) may issue a rule, regulation, or order for
the oversight or regulation of, or otherwise assert jurisdiction over, for any purpose, any security-based swap, except
that this subparagraph shall not limit the authority of
a registered futures association to examine for compliance
with, and enforce, its rules on capital adequacy.
(B) NATIONAL SECURITIES ASSOCIATIONS.—Notwithstanding any other provision of law (including regulations),
unless otherwise authorized by this title, no national securities association registered under section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o–3) may issue
a rule, regulation, or order for the oversight or regulation
of, or otherwise assert jurisdiction over, for any purpose,
any swap, except that this subparagraph shall not limit
the authority of a national securities association to examine
for compliance with, and enforce, its rules on capital adequacy.
(c) OBJECTION TO COMMISSION REGULATION.—
(1) FILING OF PETITION FOR REVIEW.—
(A) IN GENERAL.—If either Commission referred to in
this section determines that a final rule, regulation, or
order of the other Commission conflicts with subsection
(a)(7) or (b), then the complaining Commission may obtain
review of the final rule, regulation, or order in the United
States Court of Appeals for the District of Columbia Circuit
by filing in the court, not later than 60 days after the

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124 STAT. 1644

date of publication of the final rule, regulation, or order,
a written petition requesting that the rule, regulation, or
order be set aside.
(B) EXPEDITED PROCEEDING.—A proceeding described
in subparagraph (A) shall be expedited by the United States
Court of Appeals for the District of Columbia Circuit.
(2) TRANSMITTAL OF PETITION AND RECORD.—
(A) IN GENERAL.—A copy of a petition described in
paragraph (1) shall be transmitted not later than 1 business
day after the date of filing by the complaining Commission
to the Secretary of the responding Commission.
(B) DUTY OF RESPONDING COMMISSION.—On receipt of
the copy of a petition described in paragraph (1), the
responding Commission shall file with the United States
Court of Appeals for the District of Columbia Circuit—
(i) a copy of the rule, regulation, or order under
review (including any documents referred to therein);
and
(ii) any other materials prescribed by the United
States Court of Appeals for the District of Columbia
Circuit.
(3) STANDARD OF REVIEW.—The United States Court of
Appeals for the District of Columbia Circuit shall—
(A) give deference to the views of neither Commission;
and
(B) determine to affirm or set aside a rule, regulation,
or order of the responding Commission under this subsection, based on the determination of the court as to
whether the rule, regulation, or order is in conflict with
subsection (a)(7) or (b), as applicable.
(4) JUDICIAL STAY.—The filing of a petition by the complaining Commission pursuant to paragraph (1) shall operate
as a stay of the rule, regulation, or order until the date on
which the determination of the United States Court of Appeals
for the District of Columbia Circuit is final (including any
appeal of the determination).
(d) JOINT RULEMAKING.—
(1) IN GENERAL.—Notwithstanding any other provision of
this title and subsections (b) and (c), the Commodity Futures
Trading Commission and the Securities and Exchange Commission, in consultation with the Board of Governors, shall further
define the terms ‘‘swap’’, ‘‘security-based swap’’, ‘‘swap dealer’’,
‘‘security-based swap dealer’’, ‘‘major swap participant’’, ‘‘major
security-based swap participant’’, ‘‘eligible contract participant’’,
and ‘‘security-based swap agreement’’ in section 1a(47)(A)(v)
of the Commodity Exchange Act (7 U.S.C. 1a(47)(A)(v)) and
section 3(a)(78) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(78)).
(2) AUTHORITY OF THE COMMISSIONS.—
(A) IN GENERAL.—Notwithstanding any other provision
of this title, the Commodity Futures Trading Commission
and the Securities and Exchange Commission, in consultation with the Board of Governors, shall jointly adopt such
other rules regarding such definitions as the Commodity
Futures Trading Commission and the Securities and

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Exchange Commission determine are necessary and appropriate, in the public interest, and for the protection of
investors.
(B) TRADE REPOSITORY RECORDKEEPING.—Notwithstanding any other provision of this title, the Commodity
Futures Trading Commission and the Securities and
Exchange Commission, in consultation with the Board of
Governors, shall engage in joint rulemaking to jointly adopt
a rule or rules governing the books and records that are
required to be kept and maintained regarding securitybased swap agreements by persons that are registered as
swap data repositories under the Commodity Exchange
Act, including uniform rules that specify the data elements
that shall be collected and maintained by each repository.
(C) BOOKS AND RECORDS.—Notwithstanding any other
provision of this title, the Commodity Futures Trading
Commission and the Securities and Exchange Commission,
in consultation with the Board of Governors, shall engage
in joint rulemaking to jointly adopt a rule or rules governing books and records regarding security-based swap
agreements, including daily trading records, for swap
dealers, major swap participants, security-based swap
dealers, and security-based swap participants.
(D) COMPARABLE RULES.—Rules and regulations prescribed jointly under this title by the Commodity Futures
Trading Commission and the Securities and Exchange
Commission shall be comparable to the maximum extent
possible, taking into consideration differences in
instruments and in the applicable statutory requirements.
(E) TRACKING UNCLEARED TRANSACTIONS.—Any rules
prescribed under subparagraph (A) shall require the
maintenance of records of all activities relating to securitybased swap agreement transactions defined under subparagraph (A) that are not cleared.
(F) SHARING OF INFORMATION.—The Commodity
Futures Trading Commission shall make available to the
Securities and Exchange Commission information relating
to security-based swap agreement transactions defined in
subparagraph (A) that are not cleared.
(3) FINANCIAL STABILITY OVERSIGHT COUNCIL.—In the event
that the Commodity Futures Trading Commission and the Securities and Exchange Commission fail to jointly prescribe rules
pursuant to paragraph (1) or (2) in a timely manner, at the
request of either Commission, the Financial Stability Oversight
Council shall resolve the dispute—
(A) within a reasonable time after receiving the
request;
(B) after consideration of relevant information provided
by each Commission; and
(C) by agreeing with 1 of the Commissions regarding
the entirety of the matter or by determining a compromise
position.
(4) JOINT INTERPRETATION.—Any interpretation of, or guidance by either Commission regarding, a provision of this title,
shall be effective only if issued jointly by the Commodity
Futures Trading Commission and the Securities and Exchange
Commission, after consultation with the Board of Governors,

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124 STAT. 1646

Deadline.

PUBLIC LAW 111–203—JULY 21, 2010

if this title requires the Commodity Futures Trading Commission and the Securities and Exchange Commission to issue
joint regulations to implement the provision.
(e) GLOBAL RULEMAKING TIMEFRAME.—Unless otherwise provided in this title, or an amendment made by this title, the Commodity Futures Trading Commission or the Securities and Exchange
Commission, or both, shall individually, and not jointly, promulgate
rules and regulations required of each Commission under this title
or an amendment made by this title not later than 360 days
after the date of enactment of this Act.
(f) RULES AND REGISTRATION BEFORE FINAL EFFECTIVE
DATES.—Beginning on the date of enactment of this Act and notwithstanding the effective date of any provision of this Act, the
Commodity Futures Trading Commission and the Securities and
Exchange Commission may, in order to prepare for the effective
dates of the provisions of this Act—
(1) promulgate rules, regulations, or orders permitted or
required by this Act;
(2) conduct studies and prepare reports and recommendations required by this Act;
(3) register persons under the provisions of this Act; and
(4) exempt persons, agreements, contracts, or transactions
from provisions of this Act, under the terms contained in this
Act,
provided, however, that no action by the Commodity Futures
Trading Commission or the Securities and Exchange Commission
described in paragraphs (1) through (4) shall become effective prior
to the effective date applicable to such action under the provisions
of this Act.
SEC. 713. PORTFOLIO MARGINING CONFORMING CHANGES.

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(a) SECURITIES EXCHANGE ACT OF 1934.—Section 15(c)(3) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o(c)(3)) is amended
by adding at the end the following:
‘‘(C) Notwithstanding any provision of sections
2(a)(1)(C)(i) or 4d(a)(2) of the Commodity Exchange Act
and the rules and regulations thereunder, and pursuant
to an exemption granted by the Commission under section
36 of this title or pursuant to a rule or regulation, cash
and securities may be held by a broker or dealer registered
pursuant to subsection (b)(1) and also registered as a
futures commission merchant pursuant to section 4f(a)(1)
of the Commodity Exchange Act, in a portfolio margining
account carried as a futures account subject to section
4d of the Commodity Exchange Act and the rules and
regulations thereunder, pursuant to a portfolio margining
program approved by the Commodity Futures Trading
Commission, and subject to subchapter IV of chapter 7
of title 11 of the United States Code and the rules and
regulations thereunder. The Commission shall consult with
the Commodity Futures Trading Commission to adopt rules
to ensure that such transactions and accounts are subject
to comparable requirements to the extent practicable for
similar products.’’.
(b) COMMODITY EXCHANGE ACT.—Section 4d of the Commodity
Exchange Act (7 U.S.C. 6d) is amended by adding at the end
the following:

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124 STAT. 1647

‘‘(h) Notwithstanding subsection (a)(2) or the rules and regulations thereunder, and pursuant to an exemption granted by the
Commission under section 4(c) of this Act or pursuant to a rule
or regulation, a futures commission merchant that is registered
pursuant to section 4f(a)(1) of this Act and also registered as a
broker or dealer pursuant to section 15(b)(1) of the Securities
Exchange Act of 1934 may, pursuant to a portfolio margining program approved by the Securities and Exchange Commission pursuant to section 19(b) of the Securities Exchange Act of 1934, hold
in a portfolio margining account carried as a securities account
subject to section 15(c)(3) of the Securities Exchange Act of 1934
and the rules and regulations thereunder, a contract for the purchase or sale of a commodity for future delivery or an option
on such a contract, and any money, securities or other property
received from a customer to margin, guarantee or secure such
a contract, or accruing to a customer as the result of such a
contract. The Commission shall consult with the Securities and
Exchange Commission to adopt rules to ensure that such transactions and accounts are subject to comparable requirements to
the extent practical for similar products.’’.
(c) DUTY OF COMMODITY FUTURES TRADING COMMISSION.—Section 20 of the Commodity Exchange Act (7 U.S.C. 24) is amended
by adding at the end the following:
‘‘(c) The Commission shall exercise its authority to ensure that
securities held in a portfolio margining account carried as a futures
account are customer property and the owners of those accounts
are customers for the purposes of subchapter IV of chapter 7 of
title 11 of the United States Code.’’.

Contracts.

SEC. 714. ABUSIVE SWAPS.

15 USC 8303.

The Commodity Futures Trading Commission or the Securities
and Exchange Commission, or both, individually may, by rule or
order—
(1) collect information as may be necessary concerning
the markets for any types of—
(A) swap (as defined in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a)); or
(B) security-based swap (as defined in section 1a of
the Commodity Exchange Act (7 U.S.C. 1a)); and
(2) issue a report with respect to any types of swaps or
security-based swaps that the Commodity Futures Trading
Commission or the Securities and Exchange Commission determines to be detrimental to—
(A) the stability of a financial market; or
(B) participants in a financial market.

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SEC. 715. AUTHORITY TO PROHIBIT PARTICIPATION IN SWAP ACTIVITIES.

Consultation.

Reports.

15 USC 8304.

Except as provided in section 4 of the Commodity Exchange
Act (7 U.S.C. 6), if the Commodity Futures Trading Commission
or the Securities and Exchange Commission determines that the
regulation of swaps or security-based swaps markets in a foreign
country undermines the stability of the United States financial
system, either Commission, in consultation with the Secretary of
the Treasury, may prohibit an entity domiciled in the foreign
country from participating in the United States in any swap or
security-based swap activities.

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124 STAT. 1648
15 USC 8305.

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PUBLIC LAW 111–203—JULY 21, 2010

SEC. 716. PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS
OF SWAPS ENTITIES.

(a) PROHIBITION ON FEDERAL ASSISTANCE.—Notwithstanding
any other provision of law (including regulations), no Federal assistance may be provided to any swaps entity with respect to any
swap, security-based swap, or other activity of the swaps entity.
(b) DEFINITIONS.—In this section:
(1) FEDERAL ASSISTANCE.—The term ‘‘Federal assistance’’
means the use of any advances from any Federal Reserve
credit facility or discount window that is not part of a program
or facility with broad-based eligibility under section 13(3)(A)
of the Federal Reserve Act, Federal Deposit Insurance Corporation insurance or guarantees for the purpose of—
(A) making any loan to, or purchasing any stock, equity
interest, or debt obligation of, any swaps entity;
(B) purchasing the assets of any swaps entity;
(C) guaranteeing any loan or debt issuance of any
swaps entity; or
(D) entering into any assistance arrangement
(including tax breaks), loss sharing, or profit sharing with
any swaps entity.
(2) SWAPS ENTITY.—
(A) IN GENERAL.—The term ‘‘swaps entity’’ means any
swap dealer, security-based swap dealer, major swap
participant, major security-based swap participant, that
is registered under—
(i) the Commodity Exchange Act (7 U.S.C. 1 et
seq.); or
(ii) the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.).
(B) EXCLUSION.—The term ‘‘swaps entity’’ does not
include any major swap participant or major security-based
swap participant that is an insured depository institution.
(c) AFFILIATES OF INSURED DEPOSITORY INSTITUTIONS.—The
prohibition on Federal assistance contained in subsection (a) does
not apply to and shall not prevent an insured depository institution
from having or establishing an affiliate which is a swaps entity,
as long as such insured depository institution is part of a bank
holding company, or savings and loan holding company, that is
supervised by the Federal Reserve and such swaps entity affiliate
complies with sections 23A and 23B of the Federal Reserve Act
and such other requirements as the Commodity Futures Trading
Commission or the Securities Exchange Commission, as appropriate, and the Board of Governors of the Federal Reserve System,
may determine to be necessary and appropriate.
(d) ONLY BONA FIDE HEDGING AND TRADITIONAL BANK ACTIVITIES PERMITTED.—The prohibition in subsection (a) shall apply to
any insured depository institution unless the insured depository
institution limits its swap or security-based swap activities to:
(1) Hedging and other similar risk mitigating activities
directly related to the insured depository institution’s activities.
(2) Acting as a swaps entity for swaps or security-based
swaps involving rates or reference assets that are permissible
for investment by a national bank under the paragraph designated as ‘‘Seventh.’’ of section 5136 of the Revised Statutes
of the United States ( 12 U.S.C. 24), other than as described
in paragraph (3).

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1649

(3) LIMITATION ON CREDIT DEFAULT SWAPS.—Acting as a
swaps entity for credit default swaps, including swaps or security-based swaps referencing the credit risk of asset-backed
securities as defined in section 3(a)(77) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(77)) (as amended by
this Act) shall not be considered a bank permissible activity
for purposes of subsection (d)(2) unless such swaps or securitybased swaps are cleared by a derivatives clearing organization
(as such term is defined in section la of the Commodity
Exchange Act (7 U.S.C. la)) or a clearing agency (as such
term is defined in section 3 of the Securities Exchange Act
(15 U.S.C. 78c)) that is registered, or exempt from registration,
as a derivatives clearing organization under the Commodity
Exchange Act or as a clearing agency under the Securities
Exchange Act, respectively.
(e) EXISTING SWAPS AND SECURITY-BASED SWAPS.—The prohibition in subsection (a) shall only apply to swaps or security-based
swaps entered into by an insured depository institution after the
end of the transition period described in subsection (f).
(f) TRANSITION PERIOD.—To the extent an insured depository
institution qualifies as a ‘‘swaps entity’’ and would be subject to
the Federal assistance prohibition in subsection (a), the appropriate
Federal banking agency, after consulting with and considering the
views of the Commodity Futures Trading Commission or the Securities Exchange Commission, as appropriate, shall permit the insured
depository institution up to 24 months to divest the swaps entity
or cease the activities that require registration as a swaps entity.
In establishing the appropriate transition period to effect such
divestiture or cessation of activities, which may include making
the swaps entity an affiliate of the insured depository institution,
the appropriate Federal banking agency shall take into account
and make written findings regarding the potential impact of such
divestiture or cessation of activities on the insured depository
institution’s (1) mortgage lending, (2) small business lending, (3)
job creation, and (4) capital formation versus the potential negative
impact on insured depositors and the Deposit Insurance Fund of
the Federal Deposit Insurance Corporation. The appropriate Federal
banking agency may consider such other factors as may be appropriate. The appropriate Federal banking agency may place such
conditions on the insured depository institution’s divestiture or
ceasing of activities of the swaps entity as it deems necessary
and appropriate. The transition period under this subsection may
be extended by the appropriate Federal banking agency, after consultation with the Commodity Futures Trading Commission and
the Securities and Exchange Commission, for a period of up to
1 additional year.
(g) EXCLUDED ENTITIES.—For purposes of this section, the term
‘‘swaps entity’’ shall not include any insured depository institution
under the Federal Deposit Insurance Act or a covered financial
company under title II which is in a conservatorship, receivership,
or a bridge bank operated by the Federal Deposit Insurance Corporation.
(h) EFFECTIVE DATE.—The prohibition in subsection (a) shall
be effective 2 years following the date on which this Act is effective.
(i) LIQUIDATION REQUIRED.—
(1) IN GENERAL.—

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124 STAT. 1650

PUBLIC LAW 111–203—JULY 21, 2010

(A) FDIC INSURED INSTITUTIONS.—All swaps entities
that are FDIC insured institutions that are put into
receivership or declared insolvent as a result of swap or
security-based swap activity of the swaps entities shall
be subject to the termination or transfer of that swap
or security-based swap activity in accordance with
applicable law prescribing the treatment of those contracts.
No taxpayer funds shall be used to prevent the receivership
of any swap entity resulting from swap or security-based
swap activity of the swaps entity.
(B) INSTITUTIONS THAT POSE A SYSTEMIC RISK AND ARE
SUBJECT TO HEIGHTENED PRUDENTIAL SUPERVISION AS REGULATED UNDER SECTION 113.—All swaps entities that are
institutions that pose a systemic risk and are subject to
heightened prudential supervision as regulated under section 113, that are put into receivership or declared insolvent
as a result of swap or security-based swap activity of the
swaps entities shall be subject to the termination or
transfer of that swap or security-based swap activity in
accordance with applicable law prescribing the treatment
of those contracts. No taxpayer funds shall be used to
prevent the receivership of any swap entity resulting from
swap or security-based swap activity of the swaps entity.
(C) NON-FDIC INSURED, NON-SYSTEMICALLY SIGNIFICANT INSTITUTIONS NOT SUBJECT TO HEIGHTENED PRUDENTIAL SUPERVISION AS REGULATED UNDER SECTION 113.—No
taxpayer resources shall be used for the orderly liquidation
of any swaps entities that are non-FDIC insured, nonsystemically significant institutions not subject to heightened prudential supervision as regulated under section 113.
(2) RECOVERY OF FUNDS.—All funds expended on the termination or transfer of the swap or security-based swap activity
of the swaps entity shall be recovered in accordance with
applicable law from the disposition of assets of such swap
entity or through assessments, including on the financial sector
as provided under applicable law.
(3) NO LOSSES TO TAXPAYERS.—Taxpayers shall bear no
losses from the exercise of any authority under this title.
(j) PROHIBITION ON UNREGULATED COMBINATION OF SWAPS
ENTITIES AND BANKING.—At no time following adoption of the rules
in subsection (k) may a bank or bank holding company be permitted
to be or become a swap entity unless it conducts its swap or
security-based swap activity in compliance with such minimum
standards set by its prudential regulator as are reasonably calculated to permit the swaps entity to conduct its swap or securitybased swap activities in a safe and sound manner and mitigate
systemic risk.
(k) RULES.—In prescribing rules, the prudential regulator for
a swaps entity shall consider the following factors:
(1) The expertise and managerial strength of the swaps
entity, including systems for effective oversight.
(2) The financial strength of the swaps entity.
(3) Systems for identifying, measuring and controlling risks
arising from the swaps entity’s operations.
(4) Systems for identifying, measuring and controlling the
swaps entity’s participation in existing markets.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1651

(5) Systems for controlling the swaps entity’s participation
or entry into in new markets and products.
(l) AUTHORITY OF THE FINANCIAL STABILITY OVERSIGHT
COUNCIL.—The Financial Stability Oversight Council may determine that, when other provisions established by this Act are insufficient to effectively mitigate systemic risk and protect taxpayers,
that swaps entities may no longer access Federal assistance with
respect to any swap, security-based swap, or other activity of the
swaps entity. Any such determination by the Financial Stability
Oversight Council of a prohibition of federal assistance shall be
made on an institution-by-institution basis, and shall require the
vote of not fewer than two-thirds of the members of the Financial
Stability Oversight Council, which must include the vote by the
Chairman of the Council, the Chairman of the Board of Governors
of the Federal Reserve System, and the Chairperson of the Federal
Deposit Insurance Corporation. Notice and hearing requirements
for such determinations shall be consistent with the standards
provided in title I.
(m) BAN ON PROPRIETARY TRADING IN DERIVATIVES.—An
insured depository institution shall comply with the prohibition
on proprietary trading in derivatives as required by section 619
of the Dodd-Frank Wall Street Reform and Consumer Protection
Act.
SEC. 717. NEW PRODUCT APPROVAL CFTC—SEC PROCESS.

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(a) AMENDMENTS TO THE COMMODITY EXCHANGE ACT.—Section
2(a)(1)(C) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(C))
is amended—
(1) in clause (i) by striking ‘‘This’’ and inserting ‘‘(I) Except
as provided in subclause (II), this’’; and
(2) by adding at the end of clause (i) the following:
‘‘(II) This Act shall apply to and the Commission shall have jurisdiction with respect to
accounts, agreements, and transactions involving,
and may permit the listing for trading pursuant
to section 5c(c) of, a put, call, or other option
on 1 or more securities (as defined in section 2(a)(1)
of the Securities Act of 1933 or section 3(a)(10)
of the Securities Exchange Act of 1934 on the
date of enactment of the Futures Trading Act of
1982), including any group or index of such securities, or any interest therein or based on the value
thereof, that is exempted by the Securities and
Exchange Commission pursuant to section 36(a)(1)
of the Securities Exchange Act of 1934 with the
condition that the Commission exercise concurrent
jurisdiction over such put, call, or other option;
provided, however, that nothing in this paragraph
shall be construed to affect the jurisdiction and
authority of the Securities and Exchange Commission over such put, call, or other option.’’.
(b) AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.—
The Securities Exchange Act of 1934 is amended by adding the
following section after section 3A (15 U.S.C. 78c–1):
‘‘SEC. 3B. SECURITIES-RELATED DERIVATIVES.

15 USC 78c–2.

‘‘(a) Any agreement, contract, or transaction (or class thereof)
that is exempted by the Commodity Futures Trading Commission

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124 STAT. 1652

PUBLIC LAW 111–203—JULY 21, 2010

pursuant to section 4(c)(1) of the Commodity Exchange Act (7
U.S.C. 6(c)(1)) with the condition that the Commission exercise
concurrent jurisdiction over such agreement, contract, or transaction
(or class thereof) shall be deemed a security for purposes of the
securities laws.
‘‘(b) With respect to any agreement, contract, or transaction
(or class thereof) that is exempted by the Commodity Futures
Trading Commission pursuant to section 4(c)(1) of the Commodity
Exchange Act (7 U.S.C. 6(c)(1)) with the condition that the Commission exercise concurrent jurisdiction over such agreement, contract,
or transaction (or class thereof), references in the securities laws
to the ‘purchase’ or ‘sale’ of a security shall be deemed to include
the execution, termination (prior to its scheduled maturity date),
assignment, exchange, or similar transfer or conveyance of, or extinguishing of rights or obligations under such agreement, contract,
or transaction, as the context may require.’’.
(c) AMENDMENT TO SECURITIES EXCHANGE ACT OF 1934.—Section 19(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(b))
is amended by adding at the end the following:
‘‘(10) Notwithstanding paragraph (2), the time period
within which the Commission is required by order to approve
a proposed rule change or institute proceedings to determine
whether the proposed rule change should be disapproved is
stayed pending a determination by the Commission upon the
request of the Commodity Futures Trading Commission or its
Chairman that the Commission issue a determination as to
whether a product that is the subject of such proposed rule
change is a security pursuant to section 718 of the Wall Street
Transparency and Accountability Act of 2010.’’.
(d) AMENDMENT TO COMMODITY EXCHANGE ACT.—Section
5c(c)(1) of the Commodity Exchange Act (7 U.S.C. 7a–2(c)(1)) is
amended—
(1) by striking ‘‘Subject to paragraph (2)’’ and inserting
the following:
‘‘(A) ELECTION.—Subject to paragraph (2)’’; and
(2) by adding at the end the following:
‘‘(B) CERTIFICATION.—The certification of a product
pursuant to this paragraph shall be stayed pending a determination by the Commission upon the request of the Securities and Exchange Commission or its Chairman that the
Commission issue a determination as to whether the
product that is the subject of such certification is a contract
of sale of a commodity for future delivery, an option on
such a contract, or an option on a commodity pursuant
to section 718 of the Wall Street Transparency and Accountability Act of 2010.’’.
15 USC 8306.

SEC. 718. DETERMINING STATUS OF NOVEL DERIVATIVE PRODUCTS.

(a) PROCESS FOR DETERMINING THE STATUS OF A NOVEL DERIVAPRODUCT.—
(1) NOTICE.—
(A) IN GENERAL.—Any person filing a proposal to list
or trade a novel derivative product that may have elements
of both securities and contracts of sale of a commodity
for future delivery (or options on such contracts or options
on commodities) may concurrently provide notice and furnish a copy of such filing with the Securities and Exchange

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1653

Commission and the Commodity Futures Trading Commission. Any such notice shall state that notice has been
made with both Commissions.
(B) NOTIFICATION.—If no concurrent notice is made
pursuant to subparagraph (A), within 5 business days after
determining that a proposal that seeks to list or trade
a novel derivative product may have elements of both securities and contracts of sale of a commodity for future
delivery (or options on such contracts or options on
commodities), the Securities and Exchange Commission or
the Commodity Futures Trading Commission, as applicable,
shall notify the other Commission and provide a copy of
such filing to the other Commission.
(2) REQUEST FOR DETERMINATION.—
(A) IN GENERAL.—No later than 21 days after receipt
of a notice under paragraph (1), or upon its own initiative
if no such notice is received, the Commodity Futures
Trading Commission may request that the Securities and
Exchange Commission issue a determination as to whether
a product is a security, as defined in section 3(a)(10) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)).
(B) REQUEST.—No later than 21 days after receipt of
a notice under paragraph (1), or upon its own initiative
if no such notice is received, the Securities and Exchange
Commission may request that the Commodity Futures
Trading Commission issue a determination as to whether
a product is a contract of sale of a commodity for future
delivery, an option on such a contract, or an option on
a commodity subject to the Commodity Futures Trading
Commission’s exclusive jurisdiction under section 2(a)(1)(A)
of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)).
(C) REQUIREMENT RELATING TO REQUEST.—A request
under subparagraph (A) or (B) shall be made by submitting
such request, in writing, to the Securities and Exchange
Commission or the Commodity Futures Trading Commission, as applicable.
(D) EFFECT.—Nothing in this paragraph shall be construed to prevent—
(i) the Commodity Futures Trading Commission
from requesting that the Securities and Exchange
Commission grant an exemption pursuant to section
36(a)(1) of the Securities Exchange Act of 1934 (15
U.S.C. 78mm(a)(1)) with respect to a product that is
the subject of a filing under paragraph (1); or
(ii) the Securities and Exchange Commission from
requesting that the Commodity Futures Trading
Commission grant an exemption pursuant to section
4(c)(1) of the Commodity Exchange Act (7 U.S.C.
6(c)(1)) with respect to a product that is the subject
of a filing under paragraph (1),
Provided, however, that nothing in this subparagraph shall
be construed to require the Commodity Futures Trading
Commission or the Securities and Exchange Commission
to issue an exemption requested pursuant to this subparagraph; provided further, That an order granting or denying
an exemption described in this subparagraph and issued

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124 STAT. 1654

under paragraph (3)(B) shall not be subject to judicial
review pursuant to subsection (b).
(E) WITHDRAWAL OF REQUEST.—A request under
subparagraph (A) or (B) may be withdrawn by the Commission making the request at any time prior to a determination being made pursuant to paragraph (3) for any reason
by providing written notice to the head of the other
Commission.
(3) DETERMINATION.—Notwithstanding any other provision
of law, no later than 120 days after the date of receipt of
a request—
(A) under subparagraph (A) or (B) of paragraph (2),
unless such request has been withdrawn pursuant to paragraph (2)(E), the Securities and Exchange Commission or
the Commodity Futures Trading Commission, as applicable,
shall, by order, issue the determination requested in
subparagraph (A) or (B) of paragraph (2), as applicable,
and the reasons therefor; or
(B) under paragraph (2)(D), unless such request has
been withdrawn, the Securities and Exchange Commission
or the Commodity Futures Trading Commission, as
applicable, shall grant an exemption or provide reasons
for not granting such exemption, provided that any decision
by the Securities and Exchange Commission not to grant
such exemption shall not be reviewable under section 25
of the Securities Exchange Act of 1934 (15 U.S.C. 78y).
(b) JUDICIAL RESOLUTION.—
(1) IN GENERAL.—The Commodity Futures Trading
Commission or the Securities and Exchange Commission may
petition the United States Court of Appeals for the District
of Columbia Circuit for review of a final order of the other
Commission issued pursuant to subsection (a)(3)(A), with
respect to a novel derivative product that may have elements
of both securities and contracts of sale of a commodity for
future delivery (or options on such contracts or options on
commodities) that it believes affects its statutory jurisdiction
within 60 days after the date of entry of such order, a written
petition requesting a review of the order. Any such proceeding
shall be expedited by the Court of Appeals.
(2) TRANSMITTAL OF PETITION AND RECORD.—A copy of a
petition described in paragraph (1) shall be transmitted not
later than 1 business day after filing by the complaining
Commission to the responding Commission. On receipt of the
petition, the responding Commission shall file with the court
a copy of the order under review and any documents referred
to therein, and any other materials prescribed by the court.
(3) STANDARD OF REVIEW.—The court, in considering a petition filed pursuant to paragraph (1), shall give no deference
to, or presumption in favor of, the views of either Commission.
(4) JUDICIAL STAY.—The filing of a petition by the complaining Commission pursuant to paragraph (1) shall operate
as a stay of the order, until the date on which the determination
of the court is final (including any appeal of the determination).

Deadline.

Deadline.

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Deadline.

15 USC 8307.

PUBLIC LAW 111–203—JULY 21, 2010

SEC. 719. STUDIES.

(a) STUDY ON EFFECTS OF POSITION LIMITS
EXCHANGES IN THE UNITED STATES.—

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1655

(1) STUDY.—The Commodity Futures Trading Commission,
in consultation with each entity that is a designated contract
market under the Commodity Exchange Act, shall conduct a
study of the effects (if any) of the position limits imposed
pursuant to the other provisions of this title on excessive speculation and on the movement of transactions from exchanges
in the United States to trading venues outside the United
States.
(2) REPORT TO THE CONGRESS.—Within 12 months after
the imposition of position limits pursuant to the other provisions of this title, the Commodity Futures Trading Commission,
in consultation with each entity that is a designated contract
market under the Commodity Exchange Act, shall submit to
the Congress a report on the matters described in paragraph
(1).
(3) REQUIRED HEARING.—Within 30 legislative days after
the submission to the Congress of the report described in paragraph (2), the Committee on Agriculture of the House of Representatives shall hold a hearing examining the findings of
the report.
(4) BIENNIAL REPORTING.—In addition to the study required
in paragraph (1), the Chairman of the Commodity Futures
Trading Commission shall prepare and submit to the Congress
biennial reports on the growth or decline of the derivatives
markets in the United States and abroad, which shall include
assessments of the causes of any such growth or decline, the
effectiveness of regulatory regimes in managing systemic risk,
a comparison of the costs of compliance at the time of the
report for market participants subject to regulation by the
United States with the costs of compliance in December 2008
for the market participants, and the quality of the available
data. In preparing the report, the Chairman shall solicit the
views of, consult with, and address the concerns raised by,
market participants, regulators, legislators, and other
interested parties.
(b) STUDY ON FEASIBILITY OF REQUIRING USE OF STANDARDIZED
ALGORITHMIC DESCRIPTIONS FOR FINANCIAL DERIVATIVES.—
(1) IN GENERAL.—The Securities and Exchange Commission
and the Commodity Futures Trading Commission shall conduct
a joint study of the feasibility of requiring the derivatives
industry to adopt standardized computer-readable algorithmic
descriptions which may be used to describe complex and
standardized financial derivatives.
(2) GOALS.—The algorithmic descriptions defined in the
study shall be designed to facilitate computerized analysis of
individual derivative contracts and to calculate net exposures
to complex derivatives. The algorithmic descriptions shall be
optimized for simultaneous use by—
(A) commercial users and traders of derivatives;
(B) derivative clearing houses, exchanges and electronic trading platforms;
(C) trade repositories and regulator investigations of
market activities; and
(D) systemic risk regulators.
The study will also examine the extent to which the algorithmic
description, together with standardized and extensible legal

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124 STAT. 1656

definitions, may serve as the binding legal definition of derivative contracts. The study will examine the logistics of possible
implementations of standardized algorithmic descriptions for
derivatives contracts. The study shall be limited to electronic
formats for exchange of derivative contract descriptions and
will not contemplate disclosure of proprietary valuation models.
(3) INTERNATIONAL COORDINATION.—In conducting the
study, the Securities and Exchange Commission and the Commodity Futures Trading Commission shall coordinate the study
with international financial institutions and regulators as
appropriate and practical.
(4) REPORT.—Within 8 months after the date of the enactment of this Act, the Securities and Exchange Commission
and the Commodity Futures Trading Commission shall jointly
submit to the Committees on Agriculture and on Financial
Services of the House of Representatives and the Committees
on Agriculture, Nutrition, and Forestry and on Banking,
Housing, and Urban Affairs of the Senate a written report
which contains the results of the study required by paragraphs
(1) through (3).
(c) INTERNATIONAL SWAP REGULATION.—
(1) IN GENERAL.—The Commodity Futures Trading
Commission and the Securities and Exchange Commission shall
jointly conduct a study—
(A) relating to—
(i) swap regulation in the United States, Asia,
and Europe; and
(ii) clearing house and clearing agency regulation
in the United States, Asia, and Europe; and
(B) that identifies areas of regulation that are similar
in the United States, Asia and Europe and other areas
of regulation that could be harmonized
(2) REPORT.—Not later than 18 months after the date of
enactment of this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall
submit to the Committee on Agriculture, Nutrition, and Forestry and the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Agriculture and
the Committee on Financial Services of the House of Representatives a report that includes a description of the results of
the study under subsection (a), including—
(A) identification of the major exchanges and their
regulator in each geographic area for the trading of swaps
and security-based swaps including a listing of the major
contracts and their trading volumes and notional values
as well as identification of the major swap dealers participating in such markets;
(B) identification of the major clearing houses and
clearing agencies and their regulator in each geographic
area for the clearing of swaps and security-based swaps,
including a listing of the major contracts and the clearing
volumes and notional values as well as identification of
the major clearing members of such clearing houses and
clearing agencies in such markets;
(C) a description of the comparative methods of clearing
swaps in the United States, Asia, and Europe; and

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(D) a description of the various systems used for establishing margin on individual swaps, security-based swaps,
and swap portfolios.
(d) STABLE VALUE CONTRACTS.—
(1) DETERMINATION.—
(A) STATUS.—Not later than 15 months after the date
of the enactment of this Act, the Securities and Exchange
Commission and the Commodity Futures Trading Commission shall, jointly, conduct a study to determine whether
stable value contracts fall within the definition of a swap.
In making the determination required under this subparagraph, the Commissions jointly shall consult with the
Department of Labor, the Department of the Treasury,
and the State entities that regulate the issuers of stable
value contracts.
(B) REGULATIONS.—If the Commissions determine that
stable value contracts fall within the definition of a swap,
the Commissions jointly shall determine if an exemption
for stable value contracts from the definition of swap is
appropriate and in the public interest. The Commissions
shall issue regulations implementing the determinations
required under this paragraph. Until the effective date
of such regulations, and notwithstanding any other provision of this title, the requirements of this title shall not
apply to stable value contracts.
(C) LEGAL CERTAINTY.—Stable value contracts in effect
prior to the effective date of the regulations described in
subparagraph (B) shall not be considered swaps.
(2) DEFINITION.—For purposes of this subsection, the term
‘‘stable value contract’’ means any contract, agreement, or transaction that provides a crediting interest rate and guaranty
or financial assurance of liquidity at contract or book value
prior to maturity offered by a bank, insurance company, or
other State or federally regulated financial institution for the
benefit of any individual or commingled fund available as an
investment in an employee benefit plan (as defined in section
3(3) of the Employee Retirement Income Security Act of 1974,
including plans described in section 3(32) of such Act) subject
to participant direction, an eligible deferred compensation plan
(as defined in section 457(b) of the Internal Revenue Code
of 1986) that is maintained by an eligible employer described
in section 457(e)(1)(A) of such Code, an arrangement described
in section 403(b) of such Code, or a qualified tuition program
(as defined in section 529 of such Code).

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SEC. 720. MEMORANDUM.

15 USC 8308.

(a)(1) The Commodity Futures Trading Commission and the
Federal Energy Regulatory Commission shall, not later than 180
days after the date of the enactment of this Act, negotiate a memorandum of understanding to establish procedures for—
(A) applying their respective authorities in a manner so
as to ensure effective and efficient regulation in the public
interest;
(B) resolving conflicts concerning overlapping jurisdiction
between the 2 agencies; and
(C) avoiding, to the extent possible, conflicting or duplicative regulation.

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PUBLIC LAW 111–203—JULY 21, 2010

(2) Such memorandum and any subsequent amendments to
the memorandum shall be promptly submitted to the appropriate
committees of Congress.
(b) The Commodity Futures Trading Commission and the Federal Energy Regulatory Commission shall, not later than 180 days
after the date of the enactment of this section, negotiate a memorandum of understanding to share information that may be
requested where either Commission is conducting an investigation
into potential manipulation, fraud, or market power abuse in markets subject to such Commission’s regulation or oversight. Shared
information shall remain subject to the same restrictions on disclosure applicable to the Commission initially holding the information.

PART II—REGULATION OF SWAP MARKETS

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SEC. 721. DEFINITIONS.

(a) IN GENERAL.—Section 1a of the Commodity Exchange Act
(7 U.S.C. 1a) is amended—
(1) by redesignating paragraphs (2), (3) and (4), (5) through
(17), (18) through (23), (24) through (28), (29), (30), (31) through
(33), and (34) as paragraphs (6), (8) and (9), (11) through
(23), (26) through (31), (34) through (38), (40), (41), (44) through
(46), and (51), respectively;
(2) by inserting after paragraph (1) the following:
‘‘(2) APPROPRIATE FEDERAL BANKING AGENCY.—The term
‘appropriate Federal banking agency’—
‘‘(A) has the meaning given the term in section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1813);
‘‘(B) means the Board in the case of a noninsured
State bank; and
‘‘(C) is the Farm Credit Administration for farm credit
system institutions.
‘‘(3) ASSOCIATED PERSON OF A SECURITY-BASED SWAP DEALER
OR MAJOR SECURITY-BASED SWAP PARTICIPANT.—The term ‘associated person of a security-based swap dealer or major securitybased swap participant’ has the meaning given the term in
section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)).
‘‘(4) ASSOCIATED PERSON OF A SWAP DEALER OR MAJOR SWAP
PARTICIPANT.—
‘‘(A) IN GENERAL.—The term ‘associated person of a
swap dealer or major swap participant’ means a person
who is associated with a swap dealer or major swap participant as a partner, officer, employee, or agent (or any person
occupying a similar status or performing similar functions),
in any capacity that involves—
‘‘(i) the solicitation or acceptance of swaps; or
‘‘(ii) the supervision of any person or persons so
engaged.
‘‘(B) EXCLUSION.—Other than for purposes of section
4s(b)(6), the term ‘associated person of a swap dealer or
major swap participant’ does not include any person associated with a swap dealer or major swap participant the
functions of which are solely clerical or ministerial.
‘‘(5) BOARD.—The term ‘Board’ means the Board of Governors of the Federal Reserve System.’’;

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1659

(3) by inserting after paragraph (6) (as redesignated by
paragraph (1)) the following:
‘‘(7) CLEARED SWAP.—The term ‘cleared swap’ means any
swap that is, directly or indirectly, submitted to and cleared
by a derivatives clearing organization registered with the
Commission.’’;
(4) in paragraph (9) (as redesignated by paragraph (1)),
by striking ‘‘except onions’’ and all that follows through the
period at the end and inserting the following: ‘‘except onions
(as provided by the first section of Public Law 85–839 (7 U.S.C.
13–1)) and motion picture box office receipts (or any index,
measure, value, or data related to such receipts), and all services, rights, and interests (except motion picture box office
receipts, or any index, measure, value or data related to such
receipts) in which contracts for future delivery are presently
or in the future dealt in.’’;
(5) by inserting after paragraph (9) (as redesignated by
paragraph (1)) the following:
‘‘(10) COMMODITY POOL.—
‘‘(A) IN GENERAL.—The term ‘commodity pool’ means
any investment trust, syndicate, or similar form of enterprise operated for the purpose of trading in commodity
interests, including any—
‘‘(i) commodity for future delivery, security futures
product, or swap;
‘‘(ii) agreement, contract, or transaction described
in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
‘‘(iii) commodity option authorized under section
4c; or
‘‘(iv) leverage transaction authorized under section
19.
‘‘(B) FURTHER DEFINITION.—The Commission, by rule
or regulation, may include within, or exclude from, the
term ‘commodity pool’ any investment trust, syndicate, or
similar form of enterprise if the Commission determines
that the rule or regulation will effectuate the purposes
of this Act.’’;
(6) by striking paragraph (11) (as redesignated by paragraph (1)) and inserting the following:
‘‘(11) COMMODITY POOL OPERATOR.—
‘‘(A) IN GENERAL.—The term ‘commodity pool operator’
means any person—
‘‘(i) engaged in a business that is of the nature
of a commodity pool, investment trust, syndicate, or
similar form of enterprise, and who, in connection
therewith, solicits, accepts, or receives from others,
funds, securities, or property, either directly or through
capital contributions, the sale of stock or other forms
of securities, or otherwise, for the purpose of trading
in commodity interests, including any—
‘‘(I) commodity for future delivery, security
futures product, or swap;
‘‘(II) agreement, contract, or transaction
described in section 2(c)(2)(C)(i) or section
2(c)(2)(D)(i);
‘‘(III) commodity option authorized under section 4c; or

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124 STAT. 1660

PUBLIC LAW 111–203—JULY 21, 2010
‘‘(IV) leverage transaction authorized under
section 19; or
‘‘(ii) who is registered with the Commission as
a commodity pool operator.
‘‘(B) FURTHER DEFINITION.—The Commission, by rule
or regulation, may include within, or exclude from, the
term ‘commodity pool operator’ any person engaged in a
business that is of the nature of a commodity pool, investment trust, syndicate, or similar form of enterprise if the
Commission determines that the rule or regulation will
effectuate the purposes of this Act.’’;
(7) in paragraph (12) (as redesignated by paragraph (1)),
in subparagraph (A)—
(A) in clause (i)—
(i) in subclause (I), by striking ‘‘made or to be
made on or subject to the rules of a contract market
or derivatives transaction execution facility’’ and
inserting ‘‘, security futures product, or swap’’;
(ii) by redesignating subclauses (II) and (III) as
subclauses (III) and (IV);
(iii) by inserting after subclause (I) the following:
‘‘(II) any agreement, contract, or transaction
described in section 2(c)(2)(C)(i) or section
2(c)(2)(D)(i)’’; and
(iv) in subclause (IV) (as so redesignated), by
striking ‘‘or’’;
(B) in clause (ii), by striking the period at the end
and inserting a semicolon; and
(C) by adding at the end the following:
‘‘(iii) is registered with the Commission as a commodity trading advisor; or
‘‘(iv) the Commission, by rule or regulation, may
include if the Commission determines that the rule
or regulation will effectuate the purposes of this Act.’’;
(8) in paragraph (17) (as redesignated by paragraph (1)),
in subparagraph (A), in the matter preceding clause (i), by
striking ‘‘paragraph (12)(A)’’ and inserting ‘‘paragraph (18)(A)’’;
(9) in paragraph (18) (as redesignated by paragraph (1))—
(A) in subparagraph (A)—
(i) in the matter following clause (vii)(III)—
(I) by striking ‘‘section 1a (11)(A)’’ and
inserting ‘‘paragraph (17)(A)’’; and
(II) by striking ‘‘$25,000,000’’ and inserting
‘‘$50,000,000’’; and
(ii) in clause (xi), in the matter preceding subclause
(I), by striking ‘‘total assets in an amount’’ and
inserting ‘‘amounts invested on a discretionary basis,
the aggregate of which is’’;
(10) by striking paragraph (22) (as redesignated by paragraph (1)) and inserting the following:
‘‘(22) FLOOR BROKER.—
‘‘(A) IN GENERAL.—The term ‘floor broker’ means any
person—
‘‘(i) who, in or surrounding any pit, ring, post,
or other place provided by a contract market for the
meeting of persons similarly engaged, shall purchase
or sell for any other person—

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124 STAT. 1661

‘‘(I) any commodity for future delivery, security
futures product, or swap; or
‘‘(II) any commodity option authorized under
section 4c; or
‘‘(ii) who is registered with the Commission as
a floor broker.
‘‘(B) FURTHER DEFINITION.—The Commission, by rule
or regulation, may include within, or exclude from, the
term ‘floor broker’ any person in or surrounding any pit,
ring, post, or other place provided by a contract market
for the meeting of persons similarly engaged who trades
for any other person if the Commission determines that
the rule or regulation will effectuate the purposes of this
Act.’’;
(11) by striking paragraph (23) (as redesignated by paragraph (1)) and inserting the following:
‘‘(23) FLOOR TRADER.—
‘‘(A) IN GENERAL.—The term ‘floor trader’ means any
person—
‘‘(i) who, in or surrounding any pit, ring, post,
or other place provided by a contract market for the
meeting of persons similarly engaged, purchases, or
sells solely for such person’s own account—
‘‘(I) any commodity for future delivery, security
futures product, or swap; or
‘‘(II) any commodity option authorized under
section 4c; or
‘‘(ii) who is registered with the Commission as
a floor trader.
‘‘(B) FURTHER DEFINITION.—The Commission, by rule
or regulation, may include within, or exclude from, the
term ‘floor trader’ any person in or surrounding any pit,
ring, post, or other place provided by a contract market
for the meeting of persons similarly engaged who trades
solely for such person’s own account if the Commission
determines that the rule or regulation will effectuate the
purposes of this Act.’’;
(12) by inserting after paragraph (23) (as redesignated
by paragraph (1)) the following:
‘‘(24) FOREIGN EXCHANGE FORWARD.—The term ‘foreign
exchange forward’ means a transaction that solely involves
the exchange of 2 different currencies on a specific future
date at a fixed rate agreed upon on the inception of the contract
covering the exchange.
‘‘(25) FOREIGN EXCHANGE SWAP.—The term ‘foreign
exchange swap’ means a transaction that solely involves—
‘‘(A) an exchange of 2 different currencies on a specific
date at a fixed rate that is agreed upon on the inception
of the contract covering the exchange; and
‘‘(B) a reverse exchange of the 2 currencies described
in subparagraph (A) at a later date and at a fixed rate
that is agreed upon on the inception of the contract covering
the exchange.’’;
(13) by striking paragraph (28) (as redesignated by paragraph (1)) and inserting the following:
‘‘(28) FUTURES COMMISSION MERCHANT.—

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124 STAT. 1662

PUBLIC LAW 111–203—JULY 21, 2010
‘‘(A) IN GENERAL.—The term ‘futures commission merchant’ means an individual, association, partnership, corporation, or trust—
‘‘(i) that—
‘‘(I) is—
‘‘(aa) engaged in soliciting or in accepting
orders for—
‘‘(AA) the purchase or sale of a commodity for future delivery;
‘‘(BB) a security futures product;
‘‘(CC) a swap;
‘‘(DD) any agreement, contract, or
transaction
described
in
section
2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
‘‘(EE) any commodity option authorized under section 4c; or
‘‘(FF)
any
leverage
transaction
authorized under section 19; or
‘‘(bb) acting as a counterparty in any
agreement, contract, or transaction described
in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
and
‘‘(II) in or in connection with the activities
described in items (aa) or (bb) of subclause (I),
accepts any money, securities, or property (or
extends credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result
or may result therefrom; or
‘‘(ii) that is registered with the Commission as
a futures commission merchant.
‘‘(B) FURTHER DEFINITION.—The Commission, by rule
or regulation, may include within, or exclude from, the
term ‘futures commission merchant’ any person who
engages in soliciting or accepting orders for, or acting as
a counterparty in, any agreement, contract, or transaction
subject to this Act, and who accepts any money, securities,
or property (or extends credit in lieu thereof) to margin,
guarantee, or secure any trades or contracts that result
or may result therefrom, if the Commission determines
that the rule or regulation will effectuate the purposes
of this Act.’’;
(14) in paragraph (30) (as redesignated by paragraph (1)),
in subparagraph (B), by striking ‘‘state’’ and inserting ‘‘State’’;
(15) by striking paragraph (31) (as redesignated by paragraph (1)) and inserting the following:
‘‘(31) INTRODUCING BROKER.—
‘‘(A) IN GENERAL.—The term ‘introducing broker’ means
any person (except an individual who elects to be and
is registered as an associated person of a futures commission merchant)—
‘‘(i) who—
‘‘(I) is engaged in soliciting or in accepting
orders for—
‘‘(aa) the purchase or sale of any commodity for future delivery, security futures
product, or swap;

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‘‘(bb) any agreement, contract, or transaction described in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
‘‘(cc) any commodity option authorized
under section 4c; or
‘‘(dd) any leverage transaction authorized
under section 19; and
‘‘(II) does not accept any money, securities,
or property (or extend credit in lieu thereof) to
margin, guarantee, or secure any trades or contracts that result or may result therefrom; or
‘‘(ii) who is registered with the Commission as
an introducing broker.
‘‘(B) FURTHER DEFINITION.—The Commission, by rule
or regulation, may include within, or exclude from, the
term ‘introducing broker’ any person who engages in soliciting or accepting orders for any agreement, contract, or
transaction subject to this Act, and who does not accept
any money, securities, or property (or extend credit in
lieu thereof) to margin, guarantee, or secure any trades
or contracts that result or may result therefrom, if the
Commission determines that the rule or regulation will
effectuate the purposes of this Act.’’;
(16) by inserting after paragraph (31) (as redesignated
by paragraph (1)) the following:
‘‘(32) MAJOR SECURITY-BASED SWAP PARTICIPANT.—The term
‘major security-based swap participant’ has the meaning given
the term in section 3(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)).
‘‘(33) MAJOR SWAP PARTICIPANT.—
‘‘(A) IN GENERAL.—The term ‘major swap participant’
means any person who is not a swap dealer, and—
‘‘(i) maintains a substantial position in swaps for
any of the major swap categories as determined by
the Commission, excluding—
‘‘(I) positions held for hedging or mitigating
commercial risk; and
‘‘(II) positions maintained by any employee
benefit plan (or any contract held by such a plan)
as defined in paragraphs (3) and (32) of section
3 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1002) for the primary purpose of hedging or mitigating any risk directly
associated with the operation of the plan;
‘‘(ii) whose outstanding swaps create substantial
counterparty exposure that could have serious adverse
effects on the financial stability of the United States
banking system or financial markets; or
‘‘(iii)(I) is a financial entity that is highly leveraged
relative to the amount of capital it holds and that
is not subject to capital requirements established by
an appropriate Federal banking agency; and
‘‘(II) maintains a substantial position in outstanding swaps in any major swap category as determined by the Commission.
‘‘(B) DEFINITION OF SUBSTANTIAL POSITION.—For purposes of subparagraph (A), the Commission shall define

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by rule or regulation the term ‘substantial position’ at
the threshold that the Commission determines to be prudent for the effective monitoring, management, and oversight of entities that are systemically important or can
significantly impact the financial system of the United
States. In setting the definition under this subparagraph,
the Commission shall consider the person’s relative position
in uncleared as opposed to cleared swaps and may take
into consideration the value and quality of collateral held
against counterparty exposures.
‘‘(C) SCOPE OF DESIGNATION.—For purposes of subparagraph (A), a person may be designated as a major swap
participant for 1 or more categories of swaps without being
classified as a major swap participant for all classes of
swaps.
‘‘(D) EXCLUSIONS.—The definition under this paragraph
shall not include an entity whose primary business is providing financing, and uses derivatives for the purpose of
hedging underlying commercial risks related to interest
rate and foreign currency exposures, 90 percent or more
of which arise from financing that facilitates the purchase
or lease of products, 90 percent or more of which are
manufactured by the parent company or another subsidiary
of the parent company.’’;
(17) by inserting after paragraph (38) (as redesignated
by paragraph (1)) the following:
‘‘(39) PRUDENTIAL REGULATOR.—The term ‘prudential regulator’ means—
‘‘(A) the Board in the case of a swap dealer, major
swap participant, security-based swap dealer, or major
security-based swap participant that is—
‘‘(i) a State-chartered bank that is a member of
the Federal Reserve System;
‘‘(ii) a State-chartered branch or agency of a foreign
bank;
‘‘(iii) any foreign bank which does not operate an
insured branch;
‘‘(iv) any organization operating under section 25A
of the Federal Reserve Act or having an agreement
with the Board under section 225 of the Federal
Reserve Act;
‘‘(v) any bank holding company (as defined in section 2 of the Bank Holding Company Act of 1965
(12 U.S.C. 1841)), any foreign bank (as defined in
section 1(b)(7) of the International Banking Act of 1978
(12 U.S.C. 3101(b)(7)) that is treated as a bank holding
company under section 8(a) of the International
Banking Act of 1978 (12 U.S.C. 3106(a)), and any subsidiary of such a company or foreign bank (other than
a subsidiary that is described in subparagraph (A)
or (B) or that is required to be registered with the
Commission as a swap dealer or major swap participant under this Act or with the Securities and
Exchange Commission as a security-based swap dealer
or major security-based swap participant);

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1665

‘‘(vi) after the transfer date (as defined in section
311 of the Dodd-Frank Wall Street Reform and Consumer Protection Act), any savings and loan holding
company (as defined in section 10 of the Home Owners’
Loan Act (12 U.S.C. 1467a)) and any subsidiary of
such company (other than a subsidiary that is
described in subparagraph (A) or (B) or that is required
to be registered as a swap dealer or major swap participant with the Commission under this Act or with the
Securities and Exchange Commission as a securitybased swap dealer or major security-based swap
participant); or
‘‘(vii) any organization operating under section 25A
of the Federal Reserve Act (12U.S.C. 611 et seq.) or
having an agreement with the Board under section
25 of the Federal Reserve Act (12 U.S.C. 601 et seq.);
‘‘(B) the Office of the Comptroller of the Currency
in the case of a swap dealer, major swap participant, security-based swap dealer, or major security-based swap
participant that is—
‘‘(i) a national bank;
‘‘(ii) a federally chartered branch or agency of a
foreign bank; or
‘‘(iii) any Federal savings association;
‘‘(C) the Federal Deposit Insurance Corporation in the
case of a swap dealer, major swap participant, securitybased swap dealer, or major security-based swap participant that is—
‘‘(i) a State-chartered bank that is not a member
of the Federal Reserve System; or
‘‘(ii) any State savings association;
‘‘(D) the Farm Credit Administration, in the case of
a swap dealer, major swap participant, security-based swap
dealer, or major security-based swap participant that is
an institution chartered under the Farm Credit Act of
1971 (12 U.S.C. 2001 et seq.); and
‘‘(E) the Federal Housing Finance Agency in the case
of a swap dealer, major swap participant, security-based
swap dealer, or major security-based swap participant that
is a regulated entity (as such term is defined in section
1303 of the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992).’’;
(18) in paragraph (40) (as redesignated by paragraph (1))—
(A) by striking subparagraph (B);
(B) by redesignating subparagraphs (C), (D), and (E)
as subparagraphs (B), (C), and (F), respectively;
(C) in subparagraph (C) (as so redesignated), by
striking ‘‘and’’; and
(D) by inserting after subparagraph (C) (as so redesignated) the following:
‘‘(D) a swap execution facility registered under section
5h;
‘‘(E) a swap data repository registered under section
21; and’’;
(19) by inserting after paragraph (41) (as redesignated
by paragraph (1)) the following:

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124 STAT. 1666

PUBLIC LAW 111–203—JULY 21, 2010
‘‘(42) SECURITY-BASED SWAP.—The term ‘security-based
swap’ has the meaning given the term in section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
‘‘(43) SECURITY-BASED SWAP DEALER.—The term ‘securitybased swap dealer’ has the meaning given the term in section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).’’;
(20) in paragraph (46) (as redesignated by paragraph (1)),
by striking ‘‘subject to section 2(h)(7)’’ and inserting ‘‘subject
to section 2(h)(5)’’;
(21) by inserting after paragraph (46) (as redesignated
by paragraph (1)) the following:
‘‘(47) SWAP.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph
(B), the term ‘swap’ means any agreement, contract, or
transaction—
‘‘(i) that is a put, call, cap, floor, collar, or similar
option of any kind that is for the purchase or sale,
or based on the value, of 1 or more interest or other
rates, currencies, commodities, securities, instruments
of indebtedness, indices, quantitative measures, or
other financial or economic interests or property of
any kind;
‘‘(ii) that provides for any purchase, sale, payment,
or delivery (other than a dividend on an equity security) that is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event
or contingency associated with a potential financial,
economic, or commercial consequence;
‘‘(iii) that provides on an executory basis for the
exchange, on a fixed or contingent basis, of 1 or more
payments based on the value or level of 1 or more
interest or other rates, currencies, commodities, securities, instruments of indebtedness, indices, quantitative
measures, or other financial or economic interests or
property of any kind, or any interest therein or based
on the value thereof, and that transfers, as between
the parties to the transaction, in whole or in part,
the financial risk associated with a future change in
any such value or level without also conveying a current or future direct or indirect ownership interest
in an asset (including any enterprise or investment
pool) or liability that incorporates the financial risk
so transferred, including any agreement, contract, or
transaction commonly known as—
‘‘(I) an interest rate swap;
‘‘(II) a rate floor;
‘‘(III) a rate cap;
‘‘(IV) a rate collar;
‘‘(V) a cross-currency rate swap;
‘‘(VI) a basis swap;
‘‘(VII) a currency swap;
‘‘(VIII) a foreign exchange swap;
‘‘(IX) a total return swap;
‘‘(X) an equity index swap;
‘‘(XI) an equity swap;
‘‘(XII) a debt index swap;
‘‘(XIII) a debt swap;

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1667

‘‘(XIV) a credit spread;
‘‘(XV) a credit default swap;
‘‘(XVI) a credit swap;
‘‘(XVII) a weather swap;
‘‘(XVIII) an energy swap;
‘‘(XIX) a metal swap;
‘‘(XX) an agricultural swap;
‘‘(XXI) an emissions swap; and
‘‘(XXII) a commodity swap;
‘‘(iv) that is an agreement, contract, or transaction
that is, or in the future becomes, commonly known
to the trade as a swap;
‘‘(v) including any security-based swap agreement
which meets the definition of ‘swap agreement’ as
defined in section 206A of the Gramm-Leach-Bliley
Act (15 U.S.C. 78c note) of which a material term
is based on the price, yield, value, or volatility of any
security or any group or index of securities, or any
interest therein; or
‘‘(vi) that is any combination or permutation of,
or option on, any agreement, contract, or transaction
described in any of clauses (i) through (v).
‘‘(B) EXCLUSIONS.—The term ‘swap’ does not include—
‘‘(i) any contract of sale of a commodity for future
delivery (or option on such a contract), leverage contract authorized under section 19, security futures
product, or agreement, contract, or transaction
described in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
‘‘(ii) any sale of a nonfinancial commodity or security for deferred shipment or delivery, so long as the
transaction is intended to be physically settled;
‘‘(iii) any put, call, straddle, option, or privilege
on any security, certificate of deposit, or group or index
of securities, including any interest therein or based
on the value thereof, that is subject to—
‘‘(I) the Securities Act of 1933 (15 U.S.C. 77a
et seq.); and
‘‘(II) the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.);
‘‘(iv) any put, call, straddle, option, or privilege
relating to a foreign currency entered into on a national
securities exchange registered pursuant to section 6(a)
of the Securities Exchange Act of 1934 (15 U.S.C.
78f(a));
‘‘(v) any agreement, contract, or transaction providing for the purchase or sale of 1 or more securities
on a fixed basis that is subject to—
‘‘(I) the Securities Act of 1933 (15 U.S.C. 77a
et seq.); and
‘‘(II) the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.);
‘‘(vi) any agreement, contract, or transaction providing for the purchase or sale of 1 or more securities
on a contingent basis that is subject to the Securities
Act of 1933 (15 U.S.C. 77a et seq.) and the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.), unless
the agreement, contract, or transaction predicates the

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124 STAT. 1668

Determination.

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PUBLIC LAW 111–203—JULY 21, 2010
purchase or sale on the occurrence of a bona fide
contingency that might reasonably be expected to affect
or be affected by the creditworthiness of a party other
than a party to the agreement, contract, or transaction;
‘‘(vii) any note, bond, or evidence of indebtedness
that is a security, as defined in section 2(a)(1) of the
Securities Act of 1933 (15 U.S.C. 77b(a)(1));
‘‘(viii) any agreement, contract, or transaction that
is—
‘‘(I) based on a security; and
‘‘(II) entered into directly or through an underwriter (as defined in section 2(a)(11) of the Securities Act of 1933 (15 U.S.C. 77b(a)(11)) by the issuer
of such security for the purposes of raising capital,
unless the agreement, contract, or transaction is
entered into to manage a risk associated with capital raising;
‘‘(ix) any agreement, contract, or transaction a
counterparty of which is a Federal Reserve bank, the
Federal Government, or a Federal agency that is
expressly backed by the full faith and credit of the
United States; and
‘‘(x) any security-based swap, other than a securitybased swap as described in subparagraph (D).
‘‘(C) RULE OF CONSTRUCTION REGARDING MASTER
AGREEMENTS.—
‘‘(i) IN GENERAL.—Except as provided in clause
(ii), the term ‘swap’ includes a master agreement that
provides for an agreement, contract, or transaction that
is a swap under subparagraph (A), together with each
supplement to any master agreement, without regard
to whether the master agreement contains an agreement, contract, or transaction that is not a swap pursuant to subparagraph (A).
‘‘(ii) EXCEPTION.—For purposes of clause (i), the
master agreement shall be considered to be a swap
only with respect to each agreement, contract, or transaction covered by the master agreement that is a swap
pursuant to subparagraph (A).
‘‘(D) MIXED SWAP.—The term ‘security-based swap’
includes any agreement, contract, or transaction that is
as described in section 3(a)(68)(A) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(68)(A)) and also
is based on the value of 1 or more interest or other rates,
currencies, commodities, instruments of indebtedness,
indices, quantitative measures, other financial or economic
interest or property of any kind (other than a single security or a narrow-based security index), or the occurrence,
non-occurrence, or the extent of the occurrence of an event
or contingency associated with a potential financial, economic, or commercial consequence (other than an event
described in subparagraph (A)(iii)).
‘‘(E) TREATMENT OF FOREIGN EXCHANGE SWAPS AND
FORWARDS.—
‘‘(i) IN GENERAL.—Foreign exchange swaps and foreign exchange forwards shall be considered swaps
under this paragraph unless the Secretary makes a

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1669

written determination under section 1b that either foreign exchange swaps or foreign exchange forwards or
both—
‘‘(I) should be not be regulated as swaps under
this Act; and
‘‘(II) are not structured to evade the DoddFrank Wall Street Reform and Consumer Protection Act in violation of any rule promulgated by
the Commission pursuant to section 721(c) of that
Act.
‘‘(ii) CONGRESSIONAL NOTICE; EFFECTIVENESS.—The
Secretary shall submit any written determination
under clause (i) to the appropriate committees of Congress, including the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee
on Agriculture of the House of Representatives. Any
such written determination by the Secretary shall not
be effective until it is submitted to the appropriate
committees of Congress.
‘‘(iii) REPORTING.—Notwithstanding a written
determination by the Secretary under clause (i), all
foreign exchange swaps and foreign exchange forwards
shall be reported to either a swap data repository,
or, if there is no swap data repository that would
accept such swaps or forwards, to the Commission
pursuant to section 4r within such time period as
the Commission may by rule or regulation prescribe.
‘‘(iv) BUSINESS STANDARDS.—Notwithstanding a
written determination by the Secretary pursuant to
clause (i), any party to a foreign exchange swap or
forward that is a swap dealer or major swap participant
shall conform to the business conduct standards contained in section 4s(h).
‘‘(v) SECRETARY.—For purposes of this subparagraph, the term ‘Secretary’ means the Secretary of
the Treasury.
‘‘(F) EXCEPTION FOR CERTAIN FOREIGN EXCHANGE SWAPS
AND FORWARDS.—
‘‘(i) REGISTERED ENTITIES.—Any foreign exchange
swap and any foreign exchange forward that is listed
and traded on or subject to the rules of a designated
contract market or a swap execution facility, or that
is cleared by a derivatives clearing organization, shall
not be exempt from any provision of this Act or amendments made by the Wall Street Transparency and
Accountability Act of 2010 prohibiting fraud or manipulation.
‘‘(ii) RETAIL TRANSACTIONS.—Nothing in subparagraph (E) shall affect, or be construed to affect, the
applicability of this Act or the jurisdiction of the
Commission with respect to agreements, contracts, or
transactions in foreign currency pursuant to section
2(c)(2).
‘‘(48) SWAP DATA REPOSITORY.—The term ‘swap data repository’ means any person that collects and maintains information
or records with respect to transactions or positions in, or the
terms and conditions of, swaps entered into by third parties

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124 STAT. 1670

15 USC 8321.

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15 USC 8321.

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PUBLIC LAW 111–203—JULY 21, 2010

for the purpose of providing a centralized recordkeeping facility
for swaps.
‘‘(49) SWAP DEALER.—
‘‘(A) IN GENERAL.—The term ‘swap dealer’ means any
person who—
‘‘(i) holds itself out as a dealer in swaps;
‘‘(ii) makes a market in swaps;
‘‘(iii) regularly enters into swaps with counterparties as an ordinary course of business for its own
account; or
‘‘(iv) engages in any activity causing the person
to be commonly known in the trade as a dealer or
market maker in swaps,
provided however, in no event shall an insured depository
institution be considered to be a swap dealer to the extent
it offers to enter into a swap with a customer in connection
with originating a loan with that customer.
‘‘(B) INCLUSION.—A person may be designated as a
swap dealer for a single type or single class or category
of swap or activities and considered not to be a swap
dealer for other types, classes, or categories of swaps or
activities.
‘‘(C) EXCEPTION.—The term ‘swap dealer’ does not
include a person that enters into swaps for such person’s
own account, either individually or in a fiduciary capacity,
but not as a part of a regular business.
‘‘(D) DE MINIMIS EXCEPTION.—The Commission shall
exempt from designation as a swap dealer an entity that
engages in a de minimis quantity of swap dealing in connection with transactions with or on behalf of its customers.
The Commission shall promulgate regulations to establish
factors with respect to the making of this determination
to exempt.
‘‘(50) SWAP EXECUTION FACILITY.—The term ‘swap execution
facility’ means a trading system or platform in which multiple
participants have the ability to execute or trade swaps by
accepting bids and offers made by multiple participants in
the facility or system, through any means of interstate commerce, including any trading facility, that—
‘‘(A) facilitates the execution of swaps between persons;
and
‘‘(B) is not a designated contract market.’’.
(22) in paragraph (51) (as redesignated by paragraph (1)),
in subparagraph (A)(i), by striking ‘‘partipants’’ and inserting
‘‘participants’’.
(b) AUTHORITY TO DEFINE TERMS.—The Commodity Futures
Trading Commission may adopt a rule to define—
(1) the term ‘‘commercial risk’’; and
(2) any other term included in an amendment to the Commodity Exchange Act (7 U.S.C. 1 et seq.) made by this subtitle.
(c) MODIFICATION OF DEFINITIONS.—To include transactions and
entities that have been structured to evade this subtitle (or an
amendment made by this subtitle), the Commodity Futures Trading
Commission shall adopt a rule to further define the terms ‘‘swap’’,
‘‘swap dealer’’, ‘‘major swap participant’’, and ‘‘eligible contract
participant’’.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1671

(d) EXEMPTIONS.—Section 4(c)(1) of the Commodity Exchange
Act (7 U.S.C. 6(c)(1)) is amended by striking ‘‘except that’’ and
all that follows through the period at the end and inserting the
following: ‘‘except that—
‘‘(A) unless the Commission is expressly authorized by any
provision described in this subparagraph to grant exemptions,
with respect to amendments made by subtitle A of the Wall
Street Transparency and Accountability Act of 2010—
‘‘(i) with respect to—
‘‘(I) paragraphs (2), (3), (4), (5), and (7), paragraph
(18)(A)(vii)(III), paragraphs (23), (24), (31), (32), (38),
(39), (41), (42), (46), (47), (48), and (49) of section
1a, and sections 2(a)(13), 2(c)(1)(D), 4a(a), 4a(b), 4d(c),
4d(d), 4r, 4s, 5b(a), 5b(b), 5(d), 5(g), 5(h), 5b(c), 5b(i),
8e, and 21; and
‘‘(II) section 206(e) of the Gramm-Leach-Bliley Act
(Public Law 106–102; 15 U.S.C. 78c note); and
‘‘(ii) in sections 721(c) and 742 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act; and
‘‘(B) the Commission and the Securities and Exchange
Commission may by rule, regulation, or order jointly exclude
any agreement, contract, or transaction from section 2(a)(1)(D))
if the Commissions determine that the exemption would be
consistent with the public interest.’’.
(e) CONFORMING AMENDMENTS.—
(1) Section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act
(7 U.S.C. 2(c)(2)(B)(i)(II)) is amended—
(A) in item (cc)—
(i) in subitem (AA), by striking ‘‘section 1a(20)’’
and inserting ‘‘section 1a’’; and
(ii) in subitem (BB), by striking ‘‘section 1a(20)’’
and inserting ‘‘section 1a’’; and
(B) in item (dd), by striking ‘‘section 1a(12)(A)(ii)’’ and
inserting ‘‘section 1a(18)(A)(ii)’’.
(2) Section 4m(3) of the Commodity Exchange Act (7 U.S.C.
6m(3)) is amended by striking ‘‘section 1a(6)’’ and inserting
‘‘section 1a’’.
(3) Section 4q(a)(1) of the Commodity Exchange Act (7
U.S.C. 6o–1(a)(1)) is amended by striking ‘‘section 1a(4)’’ and
inserting ‘‘section 1a(9)’’.
(4) Section 5(e)(1) of the Commodity Exchange Act (7 U.S.C.
7(e)(1)) is amended by striking ‘‘section 1a(4)’’ and inserting
‘‘section 1a(9)’’.
(5) Section 5a(b)(2)(F) of the Commodity Exchange Act
(7 U.S.C. 7a(b)(2)(F)) is amended by striking ‘‘section 1a(4)’’
and inserting ‘‘section 1a(9)’’.
(6) Section 5b(a) of the Commodity Exchange Act (7 U.S.C.
7a–1(a)) is amended, in the matter preceding paragraph (1),
by striking ‘‘section 1a(9)’’ and inserting ‘‘section 1a’’.
(7) Section 5c(c)(2)(B) of the Commodity Exchange Act (7
U.S.C. 7a–2(c)(2)(B)) is amended by striking ‘‘section 1a(4)’’
and inserting ‘‘section 1a(9)’’.
(8) Section 6(g)(5)(B)(i) of the Securities Exchange Act of
1934 (15 U.S.C. 78f(g)(5)(B)(i)) is amended—
(A) in subclause (I), by striking ‘‘section 1a(12)(B)(ii)’’
and inserting ‘‘section 1a(18)(B)(ii)’’; and

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124 STAT. 1672

7 USC 27.

7 USC 1a note.

PUBLIC LAW 111–203—JULY 21, 2010

(B) in subclause (II), by striking ‘‘section 1a(12)’’ and
inserting ‘‘section 1a(18)’’.
(9) Section 402 of the Legal Certainty for Bank Products
Act of 2000 (7 U.S.C. 27 et seq.) is amended—
(A) in subsection (a)(7), by striking ‘‘section 1a(20)’’
and inserting ‘‘section 1a’’;
(B) in subsection (b)(2), by striking ‘‘section 1a(12)’’
and inserting ‘‘section 1a’’; and
(C) in subsection (c), by striking ‘‘section 1a(4)’’ and
inserting ‘‘section 1a’’.
(10) The first section of Public Law 85–839 (7 U.S.C. 13–
1) is amended in subsection (a), in the first sentence, by
inserting ‘‘motion picture box office receipts (or any index,
measure, value, or data related to such receipts) or’’ after
‘‘sale of’’.
(f) EFFECTIVE DATE.—Notwithstanding any other provision of
this Act, the amendments made by subsection (a)(4) shall take
effect on June 1, 2010.

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SEC. 722. JURISDICTION.

(a) EXCLUSIVE JURISDICTION.—Section 2(a)(1) of the Commodity
Exchange Act (7 U.S.C. 2(a)(1)) is amended—
(1) in subparagraph (A), in the first sentence—
(A) by inserting ‘‘the Wall Street Transparency and
Accountability Act of 2010 (including an amendment made
by that Act) and’’ after ‘‘otherwise provided in’’;
(B) by striking ‘‘(C) and (D)’’ and inserting ‘‘(C), (D),
and (I)’’;
(C) by striking ‘‘(c) through (i) of this section’’ and
inserting ‘‘(c) and (f)’’;
(D) by striking ‘‘contracts of sale’’ and inserting ‘‘swaps
or contracts of sale’’; and
(E) by striking ‘‘or derivatives transaction execution
facility registered pursuant to section 5 or 5a’’ and inserting
‘‘pursuant to section 5 or a swap execution facility pursuant
to section 5h’’; and
(2) by adding at the end the following:
‘‘(G)(i) Nothing in this paragraph shall limit the jurisdiction conferred on the Securities and Exchange Commission by the Wall Street Transparency and Accountability
Act of 2010 with regard to security-based swap agreements
as defined pursuant to section 3(a)(78) of the Securities
Exchange Act of 1934, and security-based swaps.
‘‘(ii) In addition to the authority of the Securities and
Exchange Commission described in clause (i), nothing in
this subparagraph shall limit or affect any statutory
authority of the Commission with respect to an agreement,
contract, or transaction described in clause (i).
‘‘(H) Notwithstanding any other provision of law, the
Wall Street Transparency and Accountability Act of 2010
shall not apply to, and the Commodity Futures Trading
Commission shall have no jurisdiction under such Act (or
any amendments to the Commodity Exchange Act made
by such Act) with respect to, any security other than a
security-based swap.’’.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1673

(b) REGULATION OF SWAPS UNDER FEDERAL AND STATE LAW.—
Section 12 of the Commodity Exchange Act (7 U.S.C. 16) is amended
by adding at the end the following:
‘‘(h) REGULATION OF SWAPS AS INSURANCE UNDER STATE LAW.—
A swap—
‘‘(1) shall not be considered to be insurance; and
‘‘(2) may not be regulated as an insurance contract under
the law of any State.’’.
(c) AGREEMENTS, CONTRACTS, AND TRANSACTIONS TRADED ON
AN ORGANIZED EXCHANGE.—Section 2(c)(2)(A) of the Commodity
Exchange Act (7 U.S.C. 2(c)(2)(A)) is amended—
(1) in clause (i), by striking ‘‘or’’ at the end;
(2) by redesignating clause (ii) as clause (iii); and
(3) by inserting after clause (i) the following:
‘‘(ii) a swap; or’’.
(d) APPLICABILITY.—Section 2 of the Commodity Exchange Act
(7 U.S.C. 2) (as amended by section 723(a)(3)) is amended by adding
at the end the following:
‘‘(i) APPLICABILITY.—The provisions of this Act relating to swaps
that were enacted by the Wall Street Transparency and Accountability Act of 2010 (including any rule prescribed or regulation
promulgated under that Act), shall not apply to activities outside
the United States unless those activities—
‘‘(1) have a direct and significant connection with activities
in, or effect on, commerce of the United States; or
‘‘(2) contravene such rules or regulations as the Commission
may prescribe or promulgate as are necessary or appropriate
to prevent the evasion of any provision of this Act that was
enacted by the Wall Street Transparency and Accountability
Act of 2010.’’.
(e) FEDERAL ENERGY REGULATORY COMMISSION.—Section
2(a)(1) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)) is amended
by adding at the end the following:
‘‘(I)(i) Nothing in this Act shall limit or affect any
statutory authority of the Federal Energy Regulatory
Commission or a State regulatory authority (as defined
in section 3(21) of the Federal Power Act (16 U.S.C. 796(21))
with respect to an agreement, contract, or transaction that
is entered into pursuant to a tariff or rate schedule
approved by the Federal Energy Regulatory Commission
or a State regulatory authority and is—
‘‘(I) not executed, traded, or cleared on a registered
entity or trading facility; or
‘‘(II) executed, traded, or cleared on a registered
entity or trading facility owned or operated by a
regional transmission organization or independent
system operator.
‘‘(ii) In addition to the authority of the Federal Energy
Regulatory Commission or a State regulatory authority
described in clause (i), nothing in this subparagraph shall
limit or affect—
‘‘(I) any statutory authority of the Commission
with respect to an agreement, contract, or transaction
described in clause (i); or
‘‘(II) the jurisdiction of the Commission under
subparagraph (A) with respect to an agreement, contract, or transaction that is executed, traded, or cleared

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15 USC 8322.

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7 USC 1b.

PUBLIC LAW 111–203—JULY 21, 2010

on a registered entity or trading facility that is not
owned or operated by a regional transmission organization or independent system operator (as defined by
sections 3(27) and (28) of the Federal Power Act (16
U.S.C. 796(27), 796(28)).’’.
(f) PUBLIC INTEREST WAIVER.—Section 4(c) of the Commodity
Exchange Act (7 U.S.C. 6(c)) (as amended by section 721(d)) is
amended by adding at the end the following:
‘‘(6) If the Commission determines that the exemption
would be consistent with the public interest and the purposes
of this Act, the Commission shall, in accordance with paragraphs (1) and (2), exempt from the requirements of this Act
an agreement, contract, or transaction that is entered into—
‘‘(A) pursuant to a tariff or rate schedule approved
or permitted to take effect by the Federal Energy Regulatory Commission;
‘‘(B) pursuant to a tariff or rate schedule establishing
rates or charges for, or protocols governing, the sale of
electric energy approved or permitted to take effect by
the regulatory authority of the State or municipality having
jurisdiction to regulate rates and charges for the sale of
electric energy within the State or municipality; or
‘‘(C) between entities described in section 201(f) of the
Federal Power Act (16 U.S.C. 824(f)).’’.
(g) AUTHORITY OF FERC.—Nothing in the Wall Street Transparency and Accountability Act of 2010 or the amendments to
the Commodity Exchange Act made by such Act shall limit or
affect any statutory enforcement authority of the Federal Energy
Regulatory Commission pursuant to section 222 of the Federal
Power Act and section 4A of the Natural Gas Act that existed
prior to the date of enactment of the Wall Street Transparency
and Accountability Act of 2010.
(h) DETERMINATION.—The Commodity Exchange Act is
amended by inserting after section 1a (7 U.S.C. 1a) the following:
‘‘SEC.

1b.

REQUIREMENTS OF SECRETARY OF THE TREASURY
REGARDING EXEMPTION OF FOREIGN EXCHANGE SWAPS
AND FOREIGN EXCHANGE FORWARDS FROM DEFINITION
OF THE TERM ‘SWAP’.

‘‘(a) REQUIRED CONSIDERATIONS.—In determining whether to
exempt foreign exchange swaps and foreign exchange forwards from
the definition of the term ‘swap’, the Secretary of the Treasury
(referred to in this section as the ‘Secretary’) shall consider—
‘‘(1) whether the required trading and clearing of foreign
exchange swaps and foreign exchange forwards would create
systemic risk, lower transparency, or threaten the financial
stability of the United States;
‘‘(2) whether foreign exchange swaps and foreign exchange
forwards are already subject to a regulatory scheme that is
materially comparable to that established by this Act for other
classes of swaps;
‘‘(3) the extent to which bank regulators of participants
in the foreign exchange market provide adequate supervision,
including capital and margin requirements;
‘‘(4) the extent of adequate payment and settlement systems; and

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124 STAT. 1675

‘‘(5) the use of a potential exemption of foreign exchange
swaps and foreign exchange forwards to evade otherwise
applicable regulatory requirements.
‘‘(b) DETERMINATION.—If the Secretary makes a determination
to exempt foreign exchange swaps and foreign exchange forwards
from the definition of the term ‘swap’, the Secretary shall submit
to the appropriate committees of Congress a determination that
contains—
‘‘(1) an explanation regarding why foreign exchange swaps
and foreign exchange forwards are qualitatively different from
other classes of swaps in a way that would make the foreign
exchange swaps and foreign exchange forwards ill-suited for
regulation as swaps; and
‘‘(2) an identification of the objective differences of foreign
exchange swaps and foreign exchange forwards with respect
to standard swaps that warrant an exempted status.
‘‘(c) EFFECT OF DETERMINATION.—A determination by the Secretary under subsection (b) shall not exempt any foreign exchange
swaps and foreign exchange forwards traded on a designated contract market or swap execution facility from any applicable antifraud and antimanipulation provision under this title.’’.

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SEC. 723. CLEARING.

(a) CLEARING REQUIREMENT.—
(1) IN GENERAL.—Section 2 of the Commodity Exchange
Act (7 U.S.C. 2) is amended—
(A) by striking subsections (d), (e), (g), and (h); and
(B) by redesignating subsection (i) as subsection (g).
(2) SWAPS; LIMITATION ON PARTICIPATION.—Section 2 of the
Commodity Exchange Act (7 U.S.C. 2) (as amended by paragraph (1)) is amended by inserting after subsection (c) the
following:
‘‘(d) SWAPS.—Nothing in this Act (other than subparagraphs
(A), (B), (C), (D), (G), and (H) of subsection (a)(1), subsections
(f) and (g), sections 1a, 2(a)(13), 2(c)(2)(A)(ii), 2(e), 2(h), 4(c), 4a,
4b, and 4b–1, subsections (a), (b), and (g) of section 4c, sections
4d, 4e, 4f, 4g, 4h, 4i, 4j, 4k, 4l, 4m, 4n, 4o, 4p, 4r, 4s, 4t, 5,
5b, 5c, 5e, and 5h, subsections (c) and (d) of section 6, sections
6c, 6d, 8, 8a, and 9, subsections (e)(2), (f), and (h) of section 12,
subsections (a) and (b) of section 13, sections 17, 20, 21, and 22(a)(4),
and any other provision of this Act that is applicable to registered
entities or Commission registrants) governs or applies to a swap.
‘‘(e) LIMITATION ON PARTICIPATION.—It shall be unlawful for
any person, other than an eligible contract participant, to enter
into a swap unless the swap is entered into on, or subject to
the rules of, a board of trade designated as a contract market
under section 5.’’.
(3) MANDATORY CLEARING OF SWAPS.—Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended by inserting
after subsection (g) (as redesignated by paragraph (1)(B)) the
following:
‘‘(h) CLEARING REQUIREMENT.—
‘‘(1) IN GENERAL.—
‘‘(A) STANDARD FOR CLEARING.—It shall be unlawful
for any person to engage in a swap unless that person
submits such swap for clearing to a derivatives clearing

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Public comment.
Time period.

Notice.

Public
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organization that is registered under this Act or a derivatives clearing organization that is exempt from registration
under this Act if the swap is required to be cleared.
‘‘(B) OPEN ACCESS.—The rules of a derivatives clearing
organization described in subparagraph (A) shall—
‘‘(i) prescribe that all swaps (but not contracts
of sale of a commodity for future delivery or options
on such contracts) submitted to the derivatives clearing
organization with the same terms and conditions are
economically equivalent within the derivatives clearing
organization and may be offset with each other within
the derivatives clearing organization; and
‘‘(ii) provide for non-discriminatory clearing of a
swap (but not a contract of sale of a commodity for
future delivery or option on such contract) executed
bilaterally or on or through the rules of an unaffiliated
designated contract market or swap execution facility.
‘‘(2) COMMISSION REVIEW.—
‘‘(A) COMMISSION-INITIATED REVIEW.—
‘‘(i) The Commission on an ongoing basis shall
review each swap, or any group, category, type, or
class of swaps to make a determination as to whether
the swap or group, category, type, or class of swaps
should be required to be cleared.
‘‘(ii) The Commission shall provide at least a 30day public comment period regarding any determination made under clause (i).
‘‘(B) SWAP SUBMISSIONS.—
‘‘(i) A derivatives clearing organization shall
submit to the Commission each swap, or any group,
category, type, or class of swaps that it plans to accept
for clearing, and provide notice to its members (in
a manner to be determined by the Commission) of
the submission.
‘‘(ii) Any swap or group, category, type, or class
of swaps listed for clearing by a derivative clearing
organization as of the date of enactment of this subsection shall be considered submitted to the Commission.
‘‘(iii) The Commission shall—
‘‘(I) make available to the public submissions
received under clauses (i) and (ii);
‘‘(II) review each submission made under
clauses (i) and (ii), and determine whether the
swap, or group, category, type, or class of swaps
described in the submission is required to be
cleared; and
‘‘(III) provide at least a 30-day public comment
period regarding its determination as to whether
the clearing requirement under paragraph (1)(A)
shall apply to the submission.
‘‘(C) DEADLINE.—The Commission shall make its determination under subparagraph (B)(iii) not later than 90
days after receiving a submission made under subparagraphs (B)(i) and (B)(ii), unless the submitting derivatives
clearing organization agrees to an extension for the time
limitation established under this subparagraph.

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124 STAT. 1677

‘‘(D) DETERMINATION.—
‘‘(i) In reviewing a submission made under
subparagraph (B), the Commission shall review
whether the submission is consistent with section
5b(c)(2).
‘‘(ii) In reviewing a swap, group of swaps, or class
of swaps pursuant to subparagraph (A) or a submission
made under subparagraph (B), the Commission shall
take into account the following factors:
‘‘(I) The existence of significant outstanding
notional exposures, trading liquidity, and adequate
pricing data.
‘‘(II) The availability of rule framework,
capacity, operational expertise and resources, and
credit support infrastructure to clear the contract
on terms that are consistent with the material
terms and trading conventions on which the contract is then traded.
‘‘(III) The effect on the mitigation of systemic
risk, taking into account the size of the market
for such contract and the resources of the derivatives clearing organization available to clear the
contract.
‘‘(IV) The effect on competition, including
appropriate fees and charges applied to clearing.
‘‘(V) The existence of reasonable legal certainty
in the event of the insolvency of the relevant
derivatives clearing organization or 1 or more of
its clearing members with regard to the treatment
of customer and swap counterparty positions,
funds, and property.
‘‘(iii) In making a determination under subparagraph (A) or (B)(iii) that the clearing requirement shall
apply, the Commission may require such terms and
conditions to the requirement as the Commission determines to be appropriate.
‘‘(E) RULES.—Not later than 1 year after the date of
the enactment of this subsection, the Commission shall
adopt rules for a derivatives clearing organization’s submission for review, pursuant to this paragraph, of a swap,
or a group, category, type, or class of swaps, that it seeks
to accept for clearing. Nothing in this subparagraph limits
the Commission from making a determination under
subparagraph (B)(iii) for swaps described in subparagraph
(B)(ii).
‘‘(3) STAY OF CLEARING REQUIREMENT.—
‘‘(A) IN GENERAL.—After making a determination
pursuant to paragraph (2)(B), the Commission, on application of a counterparty to a swap or on its own initiative,
may stay the clearing requirement of paragraph (1) until
the Commission completes a review of the terms of the
swap (or the group, category, type, or class of swaps) and
the clearing arrangement.
‘‘(B) DEADLINE.—The Commission shall complete a
review undertaken pursuant to subparagraph (A) not later
than 90 days after issuance of the stay, unless the derivatives clearing organization that clears the swap, or group,

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124 STAT. 1678

category, type, or class of swaps agrees to an extension
of the time limitation established under this subparagraph.
‘‘(C) DETERMINATION.—Upon completion of the review
undertaken pursuant to subparagraph (A), the Commission
may—
‘‘(i) determine, unconditionally or subject to such
terms and conditions as the Commission determines
to be appropriate, that the swap, or group, category,
type, or class of swaps must be cleared pursuant to
this subsection if it finds that such clearing is consistent with paragraph (2)(D); or
‘‘(ii) determine that the clearing requirement of
paragraph (1) shall not apply to the swap, or group,
category, type, or class of swaps.
‘‘(D) RULES.—Not later than 1 year after the date
of the enactment of the Wall Street Transparency and
Accountability Act of 2010, the Commission shall adopt
rules for reviewing, pursuant to this paragraph, a derivatives clearing organization’s clearing of a swap, or a group,
category, type, or class of swaps, that it has accepted for
clearing.
‘‘(4) PREVENTION OF EVASION.—
‘‘(A) IN GENERAL.—The Commission shall prescribe
rules under this subsection (and issue interpretations of
rules prescribed under this subsection) as determined by
the Commission to be necessary to prevent evasions of
the mandatory clearing requirements under this Act.
‘‘(B) DUTY OF COMMISSION TO INVESTIGATE AND TAKE
CERTAIN ACTIONS.—To the extent the Commission finds
that a particular swap, group, category, type, or class of
swaps would otherwise be subject to mandatory clearing
but no derivatives clearing organization has listed the
swap, group, category, type, or class of swaps for clearing,
the Commission shall—
‘‘(i) investigate the relevant facts and circumstances;
‘‘(ii) within 30 days issue a public report containing
the results of the investigation; and
‘‘(iii) take such actions as the Commission determines to be necessary and in the public interest, which
may include requiring the retaining of adequate
margin or capital by parties to the swap, group, category, type, or class of swaps.
‘‘(C) EFFECT ON AUTHORITY.—Nothing in this paragraph—
‘‘(i) authorizes the Commission to adopt rules
requiring a derivatives clearing organization to list
for clearing a swap, group, category, type, or class
of swaps if the clearing of the swap, group, category,
type, or class of swaps would threaten the financial
integrity of the derivatives clearing organization; and
‘‘(ii) affects the authority of the Commission to
enforce the open access provisions of paragraph (1)(B)
with respect to a swap, group, category, type, or class
of swaps that is listed for clearing by a derivatives
clearing organization.

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Regulations.

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124 STAT. 1679

‘‘(5) REPORTING TRANSITION RULES.—Rules adopted by the
Commission under this section shall provide for the reporting
of data, as follows:
‘‘(A) Swaps entered into before the date of the enactment of this subsection shall be reported to a registered
swap data repository or the Commission no later than
180 days after the effective date of this subsection.
‘‘(B) Swaps entered into on or after such date of enactment shall be reported to a registered swap data repository
or the Commission no later than the later of—
‘‘(i) 90 days after such effective date; or
‘‘(ii) such other time after entering into the swap
as the Commission may prescribe by rule or regulation.
‘‘(6) CLEARING TRANSITION RULES.—
‘‘(A) Swaps entered into before the date of the enactment of this subsection are exempt from the clearing
requirements of this subsection if reported pursuant to
paragraph (5)(A).
‘‘(B) Swaps entered into before application of the
clearing requirement pursuant to this subsection are
exempt from the clearing requirements of this subsection
if reported pursuant to paragraph (5)(B).
‘‘(7) EXCEPTIONS.—
‘‘(A) IN GENERAL.—The requirements of paragraph
(1)(A) shall not apply to a swap if 1 of the counterparties
to the swap—
‘‘(i) is not a financial entity;
‘‘(ii) is using swaps to hedge or mitigate commercial
risk; and
‘‘(iii) notifies the Commission, in a manner set
forth by the Commission, how it generally meets its
financial obligations associated with entering into noncleared swaps.
‘‘(B) OPTION TO CLEAR.—The application of the clearing
exception in subparagraph (A) is solely at the discretion
of the counterparty to the swap that meets the conditions
of clauses (i) through (iii) of subparagraph (A).
‘‘(C) FINANCIAL ENTITY DEFINITION.—
‘‘(i) IN GENERAL.—For the purposes of this paragraph, the term ‘financial entity’ means—
‘‘(I) a swap dealer;
‘‘(II) a security-based swap dealer;
‘‘(III) a major swap participant;
‘‘(IV) a major security-based swap participant;
‘‘(V) a commodity pool;
‘‘(VI) a private fund as defined in section
202(a) of the Investment Advisers Act of 1940 (15
U.S.C. 80-b-2(a));
‘‘(VII) an employee benefit plan as defined in
paragraphs (3) and (32) of section 3 of the
Employee Retirement Income Security Act of 1974
(29 U.S.C. 1002);
‘‘(VIII) a person predominantly engaged in
activities that are in the business of banking, or
in activities that are financial in nature, as defined
in section 4(k) of the Bank Holding Company Act
of 1956.

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124 STAT. 1680

PUBLIC LAW 111–203—JULY 21, 2010
‘‘(ii) EXCLUSION.—The Commission shall consider
whether to exempt small banks, savings associations,
farm credit system institutions, and credit unions,
including—
‘‘(I) depository institutions with total assets
of $10,000,000,000 or less;
‘‘(II) farm credit system institutions with total
assets of $10,000,000,000 or less; or
‘‘(III) credit unions with total assets of
$10,000,000,000 or less.
‘‘(iii) LIMITATION.—Such definition shall not
include an entity whose primary business is providing
financing, and uses derivatives for the purpose of
hedging underlying commercial risks related to interest
rate and foreign currency exposures, 90 percent or
more of which arise from financing that facilitates
the purchase or lease of products, 90 percent or more
of which are manufactured by the parent company
or another subsidiary of the parent company.
‘‘(D) TREATMENT OF AFFILIATES.—
‘‘(i) IN GENERAL.—An affiliate of a person that
qualifies for an exception under subparagraph (A)
(including affiliate entities predominantly engaged in
providing financing for the purchase of the merchandise or manufactured goods of the person) may qualify
for the exception only if the affiliate, acting on behalf
of the person and as an agent, uses the swap to hedge
or mitigate the commercial risk of the person or other
affiliate of the person that is not a financial entity.
‘‘(ii) PROHIBITION RELATING TO CERTAIN AFFILIATES.—The exception in clause (i) shall not apply if
the affiliate is—
‘‘(I) a swap dealer;
‘‘(II) a security-based swap dealer;
‘‘(III) a major swap participant;
‘‘(IV) a major security-based swap participant;
‘‘(V) an issuer that would be an investment
company, as defined in section 3 of the Investment
Company Act of 1940 (15 U.S.C. 80a–3), but for
paragraph (1) or (7) of subsection (c) of that Act
(15 U.S.C. 80a–3(c));
‘‘(VI) a commodity pool; or
‘‘(VII) a bank holding company with over
$50,000,000,000 in consolidated assets.
‘‘(iii) TRANSITION RULE FOR AFFILIATES.—An affiliate, subsidiary, or a wholly owned entity of a person
that qualifies for an exception under subparagraph
(A) and is predominantly engaged in providing
financing for the purchase or lease of merchandise
or manufactured goods of the person shall be exempt
from the margin requirement described in section 4s(e)
and the clearing requirement described in paragraph
(1) with regard to swaps entered into to mitigate the
risk of the financing activities for not less than a
2-year period beginning on the date of enactment of
this clause.
‘‘(E) ELECTION OF COUNTERPARTY.—

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Time period.

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124 STAT. 1681

‘‘(i) SWAPS REQUIRED TO BE CLEARED.—With
respect to any swap that is subject to the mandatory
clearing requirement under this subsection and entered
into by a swap dealer or a major swap participant
with a counterparty that is not a swap dealer, major
swap participant, security-based swap dealer, or major
security-based swap participant, the counterparty shall
have the sole right to select the derivatives clearing
organization at which the swap will be cleared.
‘‘(ii) SWAPS NOT REQUIRED TO BE CLEARED.—With
respect to any swap that is not subject to the mandatory clearing requirement under this subsection and
entered into by a swap dealer or a major swap participant with a counterparty that is not a swap dealer,
major swap participant, security-based swap dealer,
or major security-based swap participant, the
counterparty—
‘‘(I) may elect to require clearing of the swap;
and
‘‘(II) shall have the sole right to select the
derivatives clearing organization at which the
swap will be cleared.
‘‘(F) ABUSE OF EXCEPTION.—The Commission may prescribe such rules or issue interpretations of the rules as
the Commission determines to be necessary to prevent
abuse of the exceptions described in this paragraph. The
Commission may also request information from those persons claiming the clearing exception as necessary to prevent
abuse of the exceptions described in this paragraph.
‘‘(8) TRADE EXECUTION.—
‘‘(A) IN GENERAL.—With respect to transactions
involving swaps subject to the clearing requirement of paragraph (1), counterparties shall—
‘‘(i) execute the transaction on a board of trade
designated as a contract market under section 5; or
‘‘(ii) execute the transaction on a swap execution
facility registered under 5h or a swap execution facility
that is exempt from registration under section 5h(f)
of this Act.
‘‘(B) EXCEPTION.—The requirements of clauses (i) and
(ii) of subparagraph (A) shall not apply if no board of
trade or swap execution facility makes the swap available
to trade or for swap transactions subject to the clearing
exception under paragraph (7).’’.
(b) COMMODITY EXCHANGE ACT.—Section 2 of the Commodity
Exchange Act (7 U.S.C. 2) is amended by adding at the end the
following:
‘‘(j) COMMITTEE APPROVAL BY BOARD.—Exemptions from the
requirements of subsection (h)(1) to clear a swap and subsection
(h)(8) to execute a swap through a board of trade or swap execution
facility shall be available to a counterparty that is an issuer of
securities that are registered under section 12 of the Securities
Exchange Act of 1934 (15 U.S.C. 78l) or that is required to file
reports pursuant to section 15(d) of the Securities Exchange Act
of 1934 (15 U.S.C. 78o) only if an appropriate committee of the
issuer’s board or governing body has reviewed and approved its
decision to enter into swaps that are subject to such exemptions.’’.

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PUBLIC LAW 111–203—JULY 21, 2010
(c) GRANDFATHER PROVISIONS.—
(1) LEGAL CERTAINTY FOR CERTAIN TRANSACTIONS IN EXEMPT
COMMODITIES.—Not later than 60 days after the date of enactment of this Act, a person may submit to the Commodity
Futures Trading Commission a petition to remain subject to
section 2(h) of the Commodity Exchange Act (7 U.S.C. 2(h))
(as in effect on the day before the date of enactment of this
Act).
(2) CONSIDERATION; AUTHORITY OF COMMODITY FUTURES
TRADING COMMISSION.—The Commodity Futures Trading
Commission—
(A) shall consider any petition submitted under
subparagraph (A) in a prompt manner; and
(B) may allow a person to continue operating subject
to section 2(h) of the Commodity Exchange Act (7 U.S.C.
2(h)) (as in effect on the day before the date of enactment
of this Act) for not longer than a 1-year period.
(3) AGRICULTURAL SWAPS.—
(A) IN GENERAL.—Except as provided in subparagraph
(B), no person shall offer to enter into, enter into, or confirm
the execution of, any swap in an agricultural commodity
(as defined by the Commodity Futures Trading Commission).
(B) EXCEPTION.—Notwithstanding subparagraph (A), a
person may offer to enter into, enter into, or confirm the
execution of, any swap in an agricultural commodity pursuant to section 4(c) of the Commodity Exchange Act (7
U.S.C. 6(c)) or any rule, regulation, or order issued thereunder (including any rule, regulation, or order in effect
as of the date of enactment of this Act) by the Commodity
Futures Trading Commission to allow swaps under such
terms and conditions as the Commission shall prescribe.
(4) REQUIRED REPORTING.—If the exception described in
section 2(h)(8)(B) of the Commodity Exchange Act applies, the
counterparties shall comply with any recordkeeping and transaction reporting requirements that may be prescribed by the
Commission with respect to swaps subject to section 2(h)(8)(B)
of the Commodity Exchange Act.

7 USC 2 note.
Deadline.

Regulations.

Compliance.
Records.

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SEC. 724. SWAPS; SEGREGATION AND BANKRUPTCY TREATMENT.

(a) SEGREGATION REQUIREMENTS FOR CLEARED SWAPS.—Section
4d of the Commodity Exchange Act (7 U.S.C. 6d) (as amended
by section 732) is amended by adding at the end the following:
‘‘(f) SWAPS.—
‘‘(1) REGISTRATION REQUIREMENT.—It shall be unlawful for
any person to accept any money, securities, or property (or
to extend any credit in lieu of money, securities, or property)
from, for, or on behalf of a swaps customer to margin, guarantee, or secure a swap cleared by or through a derivatives
clearing organization (including money, securities, or property
accruing to the customer as the result of such a swap), unless
the person shall have registered under this Act with the
Commission as a futures commission merchant, and the registration shall not have expired nor been suspended nor
revoked.
‘‘(2) CLEARED SWAPS.—

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1683

‘‘(A) SEGREGATION REQUIRED.—A futures commission
merchant shall treat and deal with all money, securities,
and property of any swaps customer received to margin,
guarantee, or secure a swap cleared by or though a derivatives clearing organization (including money, securities, or
property accruing to the swaps customer as the result
of such a swap) as belonging to the swaps customer.
‘‘(B) COMMINGLING PROHIBITED.—Money, securities,
and property of a swaps customer described in subparagraph (A) shall be separately accounted for and shall not
be commingled with the funds of the futures commission
merchant or be used to margin, secure, or guarantee any
trades or contracts of any swaps customer or person other
than the person for whom the same are held.
‘‘(3) EXCEPTIONS.—
‘‘(A) USE OF FUNDS.—
‘‘(i) IN GENERAL.—Notwithstanding paragraph (2),
money, securities, and property of swap customers of
a futures commission merchant described in paragraph
(2) may, for convenience, be commingled and deposited
in the same account or accounts with any bank or
trust company or with a derivatives clearing organization.
‘‘(ii) WITHDRAWAL.—Notwithstanding paragraph
(2), such share of the money, securities, and property
described in clause (i) as in the normal course of business shall be necessary to margin, guarantee, secure,
transfer, adjust, or settle a cleared swap with a derivatives clearing organization, or with any member of
the derivatives clearing organization, may be withdrawn and applied to such purposes, including the
payment of commissions, brokerage, interest, taxes,
storage, and other charges, lawfully accruing in connection with the cleared swap.
‘‘(B) COMMISSION ACTION.—Notwithstanding paragraph
(2), in accordance with such terms and conditions as the
Commission may prescribe by rule, regulation, or order,
any money, securities, or property of the swaps customers
of a futures commission merchant described in paragraph
(2) may be commingled and deposited in customer accounts
with any other money, securities, or property received by
the futures commission merchant and required by the
Commission to be separately accounted for and treated
and dealt with as belonging to the swaps customer of
the futures commission merchant.
‘‘(4) PERMITTED INVESTMENTS.—Money described in paragraph (2) may be invested in obligations of the United States,
in general obligations of any State or of any political subdivision
of a State, and in obligations fully guaranteed as to principal
and interest by the United States, or in any other investment
that the Commission may by rule or regulation prescribe, and
such investments shall be made in accordance with such rules
and regulations and subject to such conditions as the Commission may prescribe.
‘‘(5) COMMODITY CONTRACT.—A swap cleared by or through
a derivatives clearing organization shall be considered to be
a commodity contract as such term is defined in section 761

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124 STAT. 1684

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7 USC 6s.

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PUBLIC LAW 111–203—JULY 21, 2010

of title 11, United States Code, with regard to all money,
securities, and property of any swaps customer received by
a futures commission merchant or a derivatives clearing
organization to margin, guarantee, or secure the swap
(including money, securities, or property accruing to the customer as the result of the swap).
‘‘(6) PROHIBITION.—It shall be unlawful for any person,
including any derivatives clearing organization and any depository institution, that has received any money, securities, or
property for deposit in a separate account or accounts as provided in paragraph (2) to hold, dispose of, or use any such
money, securities, or property as belonging to the depositing
futures commission merchant or any person other than the
swaps customer of the futures commission merchant.’’.
(b) BANKRUPTCY TREATMENT OF CLEARED SWAPS.—Section 761
of title 11, United States Code, is amended—
(1) in paragraph (4), by striking subparagraph (F) and
inserting the following:
‘‘(F)(i) any other contract, option, agreement, or transaction that is similar to a contract, option, agreement,
or transaction referred to in this paragraph; and
‘‘(ii) with respect to a futures commission merchant
or a clearing organization, any other contract, option, agreement, or transaction, in each case, that is cleared by a
clearing organization;’’; and
(2) in paragraph (9)(A)(i), by striking ‘‘the commodity
futures account’’ and inserting ‘‘a commodity contract account’’.
(c) SEGREGATION REQUIREMENTS FOR UNCLEARED SWAPS.—Section 4s of the Commodity Exchange Act (as added by section 731)
is amended by adding at the end the following:
‘‘(l) SEGREGATION REQUIREMENTS.—
‘‘(1) SEGREGATION OF ASSETS HELD AS COLLATERAL IN
UNCLEARED SWAP TRANSACTIONS.—
‘‘(A) NOTIFICATION.—A swap dealer or major swap
participant shall be required to notify the counterparty
of the swap dealer or major swap participant at the beginning of a swap transaction that the counterparty has the
right to require segregation of the funds or other property
supplied to margin, guarantee, or secure the obligations
of the counterparty.
‘‘(B) SEGREGATION AND MAINTENANCE OF FUNDS.—At
the request of a counterparty to a swap that provides
funds or other property to a swap dealer or major swap
participant to margin, guarantee, or secure the obligations
of the counterparty, the swap dealer or major swap participant shall—
‘‘(i) segregate the funds or other property for the
benefit of the counterparty; and
‘‘(ii) in accordance with such rules and regulations
as the Commission may promulgate, maintain the
funds or other property in a segregated account separate from the assets and other interests of the swap
dealer or major swap participant.
‘‘(2) APPLICABILITY.—The requirements described in paragraph (1) shall—

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1685

‘‘(A) apply only to a swap between a counterparty and
a swap dealer or major swap participant that is not submitted for clearing to a derivatives clearing organization;
and
‘‘(B)(i) not apply to variation margin payments; or
‘‘(ii) not preclude any commercial arrangement
regarding—
‘‘(I) the investment of segregated funds or other
property that may only be invested in such investments
as the Commission may permit by rule or regulation;
and
‘‘(II) the related allocation of gains and losses
resulting from any investment of the segregated funds
or other property.
‘‘(3) USE OF INDEPENDENT THIRD-PARTY CUSTODIANS.—The
segregated account described in paragraph (1) shall be—
‘‘(A) carried by an independent third-party custodian;
and
‘‘(B) designated as a segregated account for and on
behalf of the counterparty.
‘‘(4) REPORTING REQUIREMENT.—If the counterparty does
not choose to require segregation of the funds or other property
supplied to margin, guarantee, or secure the obligations of
the counterparty, the swap dealer or major swap participant
shall report to the counterparty of the swap dealer or major
swap participant on a quarterly basis that the back office
procedures of the swap dealer or major swap participant
relating to margin and collateral requirements are in compliance with the agreement of the counterparties.’’.

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SEC. 725. DERIVATIVES CLEARING ORGANIZATIONS.

(a) REGISTRATION REQUIREMENT.—Section 5b of the Commodity
Exchange Act (7 U.S.C. 7a–1) is amended by striking subsections
(a) and (b) and inserting the following:
‘‘(a) REGISTRATION REQUIREMENT.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
it shall be unlawful for a derivatives clearing organization,
directly or indirectly, to make use of the mails or any means
or instrumentality of interstate commerce to perform the functions of a derivatives clearing organization with respect to—
‘‘(A) a contract of sale of a commodity for future
delivery (or an option on the contract of sale) or option
on a commodity, in each case, unless the contract or option
is—
‘‘(i) excluded from this Act by subsection
(a)(1)(C)(i), (c), or (f) of section 2; or
‘‘(ii) a security futures product cleared by a clearing
agency registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.); or
‘‘(B) a swap.
‘‘(2) EXCEPTION.—Paragraph (1) shall not apply to a derivatives clearing organization that is registered with the Commission.
‘‘(b) VOLUNTARY REGISTRATION.—A person that clears 1 or more
agreements, contracts, or transactions that are not required to

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124 STAT. 1686

PUBLIC LAW 111–203—JULY 21, 2010

be cleared under this Act may register with the Commission as
a derivatives clearing organization.’’.
(b) REGISTRATION FOR DEPOSITORY INSTITUTIONS AND CLEARING
AGENCIES; EXEMPTIONS; COMPLIANCE OFFICER; ANNUAL REPORTS.—
Section 5b of the Commodity Exchange Act (7 U.S.C. 7a–1) is
amended by adding at the end the following:
‘‘(g) EXISTING DEPOSITORY INSTITUTIONS AND CLEARING AGENCIES.—
‘‘(1) IN GENERAL.—A depository institution or clearing
agency registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.) that is required to be registered as a derivatives
clearing organization under this section is deemed to be registered under this section to the extent that, before the date
of enactment of this subsection—
‘‘(A) the depository institution cleared swaps as a multilateral clearing organization; or
‘‘(B) the clearing agency cleared swaps.
‘‘(2) CONVERSION OF DEPOSITORY INSTITUTIONS.—A depository institution to which this subsection applies may, by the
vote of the shareholders owning not less than 51 percent of
the voting interests of the depository institution, be converted
into a State corporation, partnership, limited liability company,
or similar legal form pursuant to a plan of conversion, if the
conversion is not in contravention of applicable State law.
‘‘(3) SHARING OF INFORMATION.—The Securities and
Exchange Commission shall make available to the Commission,
upon request, all information determined to be relevant by
the Securities and Exchange Commission regarding a clearing
agency deemed to be registered with the Commission under
paragraph (1).
‘‘(h) EXEMPTIONS.—The Commission may exempt, conditionally
or unconditionally, a derivatives clearing organization from registration under this section for the clearing of swaps if the Commission
determines that the derivatives clearing organization is subject
to comparable, comprehensive supervision and regulation by the
Securities and Exchange Commission or the appropriate government authorities in the home country of the organization. Such
conditions may include, but are not limited to, requiring that the
derivatives clearing organization be available for inspection by the
Commission and make available all information requested by the
Commission.
‘‘(i) DESIGNATION OF CHIEF COMPLIANCE OFFICER.—
‘‘(1) IN GENERAL.—Each derivatives clearing organization
shall designate an individual to serve as a chief compliance
officer.
‘‘(2) DUTIES.—The chief compliance officer shall—
‘‘(A) report directly to the board or to the senior officer
of the derivatives clearing organization;
‘‘(B) review the compliance of the derivatives clearing
organization with respect to the core principles described
in subsection (c)(2);
‘‘(C) in consultation with the board of the derivatives
clearing organization, a body performing a function similar
to the board of the derivatives clearing organization, or
the senior officer of the derivatives clearing organization,
resolve any conflicts of interest that may arise;

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1687

‘‘(D) be responsible for administering each policy and
procedure that is required to be established pursuant to
this section;
‘‘(E) ensure compliance with this Act (including regulations) relating to agreements, contracts, or transactions,
including each rule prescribed by the Commission under
this section;
‘‘(F) establish procedures for the remediation of noncompliance issues identified by the compliance officer
through any—
‘‘(i) compliance office review;
‘‘(ii) look-back;
‘‘(iii) internal or external audit finding;
‘‘(iv) self-reported error; or
‘‘(v) validated complaint; and
‘‘(G) establish and follow appropriate procedures for
the handling, management response, remediation, retesting, and closing of noncompliance issues.
‘‘(3) ANNUAL REPORTS.—
‘‘(A) IN GENERAL.—In accordance with rules prescribed
by the Commission, the chief compliance officer shall
annually prepare and sign a report that contains a description of—
‘‘(i) the compliance of the derivatives clearing
organization of the compliance officer with respect to
this Act (including regulations); and
‘‘(ii) each policy and procedure of the derivatives
clearing organization of the compliance officer
(including the code of ethics and conflict of interest
policies of the derivatives clearing organization).
‘‘(B) REQUIREMENTS.—A compliance report under
subparagraph (A) shall—
‘‘(i) accompany each appropriate financial report
of the derivatives clearing organization that is required
to be furnished to the Commission pursuant to this
section; and
‘‘(ii) include a certification that, under penalty of
law, the compliance report is accurate and complete.’’.
(c) CORE PRINCIPLES FOR DERIVATIVES CLEARING ORGANIZATIONS.—Section 5b(c) of the Commodity Exchange Act (7 U.S.C.
7a–1(c)) is amended by striking paragraph (2) and inserting the
following:
‘‘(2) CORE PRINCIPLES FOR DERIVATIVES CLEARING ORGANIZATIONS.—
‘‘(A) COMPLIANCE.—
‘‘(i) IN GENERAL.—To be registered and to maintain
registration as a derivatives clearing organization, a
derivatives clearing organization shall comply with
each core principle described in this paragraph and
any requirement that the Commission may impose by
rule or regulation pursuant to section 8a(5).
‘‘(ii) DISCRETION OF DERIVATIVES CLEARING
ORGANIZATION.—Subject to any rule or regulation prescribed by the Commission, a derivatives clearing
organization shall have reasonable discretion in establishing the manner by which the derivatives clearing

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124 STAT. 1688

PUBLIC LAW 111–203—JULY 21, 2010
organization complies with each core principle
described in this paragraph.
‘‘(B) FINANCIAL RESOURCES.—
‘‘(i) IN GENERAL.—Each derivatives clearing
organization shall have adequate financial, operational,
and managerial resources, as determined by the
Commission, to discharge each responsibility of the
derivatives clearing organization.
‘‘(ii) MINIMUM AMOUNT OF FINANCIAL RESOURCES.—
Each derivatives clearing organization shall possess
financial resources that, at a minimum, exceed the
total amount that would—
‘‘(I) enable the organization to meet its financial obligations to its members and participants
notwithstanding a default by the member or
participant creating the largest financial exposure
for that organization in extreme but plausible
market conditions; and
‘‘(II) enable the derivatives clearing organization to cover the operating costs of the derivatives
clearing organization for a period of 1 year (as
calculated on a rolling basis).
‘‘(C) PARTICIPANT AND PRODUCT ELIGIBILITY.—
‘‘(i) IN GENERAL.—Each derivatives clearing
organization shall establish—
‘‘(I) appropriate admission and continuing
eligibility standards (including sufficient financial
resources and operational capacity to meet obligations arising from participation in the derivatives
clearing organization) for members of, and participants in, the derivatives clearing organization; and
‘‘(II) appropriate standards for determining the
eligibility of agreements, contracts, or transactions
submitted to the derivatives clearing organization
for clearing.
‘‘(ii) REQUIRED PROCEDURES.—Each derivatives
clearing organization shall establish and implement
procedures to verify, on an ongoing basis, the compliance of each participation and membership requirement of the derivatives clearing organization.
‘‘(iii) REQUIREMENTS.—The participation and membership requirements of each derivatives clearing
organization shall—
‘‘(I) be objective;
‘‘(II) be publicly disclosed; and
‘‘(III) permit fair and open access.
‘‘(D) RISK MANAGEMENT.—
‘‘(i) IN GENERAL.—Each derivatives clearing
organization shall ensure that the derivatives clearing
organization possesses the ability to manage the risks
associated with discharging the responsibilities of the
derivatives clearing organization through the use of
appropriate tools and procedures.
‘‘(ii) MEASUREMENT OF CREDIT EXPOSURE.—Each
derivatives clearing organization shall—
‘‘(I) not less than once during each business
day of the derivatives clearing organization,

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1689

measure the credit exposures of the derivatives
clearing organization to each member and participant of the derivatives clearing organization; and
‘‘(II) monitor each exposure described in subclause (I) periodically during the business day of
the derivatives clearing organization.
‘‘(iii) LIMITATION OF EXPOSURE TO POTENTIAL
LOSSES FROM DEFAULTS.—Each derivatives clearing
organization, through margin requirements and other
risk control mechanisms, shall limit the exposure of
the derivatives clearing organization to potential losses
from defaults by members and participants of the
derivatives clearing organization to ensure that—
‘‘(I) the operations of the derivatives clearing
organization would not be disrupted; and
‘‘(II) nondefaulting members or participants
would not be exposed to losses that nondefaulting
members or participants cannot anticipate or control.
REQUIREMENTS.—The
margin
‘‘(iv)
MARGIN
required from each member and participant of a derivatives clearing organization shall be sufficient to cover
potential exposures in normal market conditions.
‘‘(v) REQUIREMENTS REGARDING MODELS AND
PARAMETERS.—Each model and parameter used in setting margin requirements under clause (iv) shall be—
‘‘(I) risk-based; and
‘‘(II) reviewed on a regular basis.
‘‘(E) SETTLEMENT PROCEDURES.—Each derivatives
clearing organization shall—
‘‘(i) complete money settlements on a timely basis
(but not less frequently than once each business day);
‘‘(ii) employ money settlement arrangements to
eliminate or strictly limit the exposure of the derivatives clearing organization to settlement bank risks
(including credit and liquidity risks from the use of
banks to effect money settlements);
‘‘(iii) ensure that money settlements are final when
effected;
‘‘(iv) maintain an accurate record of the flow of
funds associated with each money settlement;
‘‘(v) possess the ability to comply with each term
and condition of any permitted netting or offset
arrangement with any other clearing organization;
‘‘(vi) regarding physical settlements, establish
rules that clearly state each obligation of the derivatives clearing organization with respect to physical
deliveries; and
‘‘(vii) ensure that each risk arising from an obligation described in clause (vi) is identified and managed.
‘‘(F) TREATMENT OF FUNDS.—
‘‘(i) REQUIRED STANDARDS AND PROCEDURES.—Each
derivatives clearing organization shall establish standards and procedures that are designed to protect and
ensure the safety of member and participant funds
and assets.

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124 STAT. 1690

‘‘(ii) HOLDING OF FUNDS AND ASSETS.—Each derivatives clearing organization shall hold member and
participant funds and assets in a manner by which
to minimize the risk of loss or of delay in the access
by the derivatives clearing organization to the assets
and funds.
‘‘(iii) PERMISSIBLE INVESTMENTS.—Funds and
assets invested by a derivatives clearing organization
shall be held in instruments with minimal credit,
market, and liquidity risks.
‘‘(G) DEFAULT RULES AND PROCEDURES.—
‘‘(i) IN GENERAL.—Each derivatives clearing
organization shall have rules and procedures designed
to allow for the efficient, fair, and safe management
of events during which members or participants—
‘‘(I) become insolvent; or
‘‘(II) otherwise default on the obligations of
the members or participants to the derivatives
clearing organization.
‘‘(ii) DEFAULT PROCEDURES.—Each derivatives
clearing organization shall—
‘‘(I) clearly state the default procedures of the
derivatives clearing organization;
‘‘(II) make publicly available the default rules
of the derivatives clearing organization; and
‘‘(III) ensure that the derivatives clearing
organization may take timely action—
‘‘(aa) to contain losses and liquidity pressures; and
‘‘(bb) to continue meeting each obligation
of the derivatives clearing organization.
‘‘(H) RULE ENFORCEMENT.—Each derivatives clearing
organization shall—
‘‘(i) maintain adequate arrangements and
resources for—
‘‘(I) the effective monitoring and enforcement
of compliance with the rules of the derivatives
clearing organization; and
‘‘(II) the resolution of disputes;
‘‘(ii) have the authority and ability to discipline,
limit, suspend, or terminate the activities of a member
or participant due to a violation by the member or
participant of any rule of the derivatives clearing
organization; and
‘‘(iii) report to the Commission regarding rule
enforcement activities and sanctions imposed against
members and participants as provided in clause (ii).
‘‘(I) SYSTEM SAFEGUARDS.—Each derivatives clearing
organization shall—
‘‘(i) establish and maintain a program of risk analysis and oversight to identify and minimize sources
of operational risk through the development of appropriate controls and procedures, and automated systems, that are reliable, secure, and have adequate scalable capacity;

Public
information.

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Reports.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1691

‘‘(ii) establish and maintain emergency procedures,
backup facilities, and a plan for disaster recovery that
allows for—
‘‘(I) the timely recovery and resumption of
operations of the derivatives clearing organization;
and
‘‘(II) the fulfillment of each obligation and
responsibility of the derivatives clearing organization; and
‘‘(iii) periodically conduct tests to verify that the
backup resources of the derivatives clearing organization are sufficient to ensure daily processing, clearing,
and settlement.
‘‘(J) REPORTING.—Each derivatives clearing organization shall provide to the Commission all information that
the Commission determines to be necessary to conduct
oversight of the derivatives clearing organization.
‘‘(K) RECORDKEEPING.—Each derivatives clearing
organization shall maintain records of all activities related
to the business of the derivatives clearing organization
as a derivatives clearing organization—
‘‘(i) in a form and manner that is acceptable to
the Commission; and
‘‘(ii) for a period of not less than 5 years.
‘‘(L) PUBLIC INFORMATION.—
‘‘(i) IN GENERAL.—Each derivatives clearing
organization shall provide to market participants sufficient information to enable the market participants
to identify and evaluate accurately the risks and costs
associated with using the services of the derivatives
clearing organization.
‘‘(ii) AVAILABILITY OF INFORMATION.—Each derivatives clearing organization shall make information concerning the rules and operating and default procedures
governing the clearing and settlement systems of the
derivatives clearing organization available to market
participants.
‘‘(iii) PUBLIC DISCLOSURE.—Each derivatives
clearing organization shall disclose publicly and to the
Commission information concerning—
‘‘(I) the terms and conditions of each contract,
agreement, and transaction cleared and settled by
the derivatives clearing organization;
‘‘(II) each clearing and other fee that the
derivatives clearing organization charges the members and participants of the derivatives clearing
organization;
‘‘(III) the margin-setting methodology, and the
size and composition, of the financial resource
package of the derivatives clearing organization;
‘‘(IV) daily settlement prices, volume, and open
interest for each contract settled or cleared by
the derivatives clearing organization; and
‘‘(V) any other matter relevant to participation
in the settlement and clearing activities of the
derivatives clearing organization.

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Tests.

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124 STAT. 1692

Contracts.

Regulations.

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Regulations.
7 USC 7a–1 note.

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PUBLIC LAW 111–203—JULY 21, 2010

‘‘(M)
INFORMATION-SHARING.—Each
derivatives
clearing organization shall—
‘‘(i) enter into, and abide by the terms of, each
appropriate and applicable domestic and international
information-sharing agreement; and
‘‘(ii) use relevant information obtained from each
agreement described in clause (i) in carrying out the
risk management program of the derivatives clearing
organization.
‘‘(N) ANTITRUST CONSIDERATIONS.—Unless necessary or
appropriate to achieve the purposes of this Act, a derivatives clearing organization shall not—
‘‘(i) adopt any rule or take any action that results
in any unreasonable restraint of trade; or
‘‘(ii) impose any material anticompetitive burden.
‘‘(O) GOVERNANCE FITNESS STANDARDS.—
‘‘(i) GOVERNANCE ARRANGEMENTS.—Each derivatives clearing organization shall establish governance
arrangements that are transparent—
‘‘(I) to fulfill public interest requirements; and
‘‘(II) to permit the consideration of the views
of owners and participants.
‘‘(ii) FITNESS STANDARDS.—Each derivatives
clearing organization shall establish and enforce appropriate fitness standards for—
‘‘(I) directors;
‘‘(II) members of any disciplinary committee;
‘‘(III) members of the derivatives clearing
organization;
‘‘(IV) any other individual or entity with direct
access to the settlement or clearing activities of
the derivatives clearing organization; and
‘‘(V) any party affiliated with any individual
or entity described in this clause.
‘‘(P) CONFLICTS OF INTEREST.—Each derivatives
clearing organization shall—
‘‘(i) establish and enforce rules to minimize conflicts of interest in the decision-making process of the
derivatives clearing organization; and
‘‘(ii) establish a process for resolving conflicts of
interest described in clause (i).
‘‘(Q) COMPOSITION OF GOVERNING BOARDS.—Each
derivatives clearing organization shall ensure that the composition of the governing board or committee of the derivatives clearing organization includes market participants.
‘‘(R) LEGAL RISK.—Each derivatives clearing organization shall have a well-founded, transparent, and enforceable
legal framework for each aspect of the activities of the
derivatives clearing organization.’’.
(d) CONFLICTS OF INTEREST.—The Commodity Futures Trading
Commission shall adopt rules mitigating conflicts of interest in
connection with the conduct of business by a swap dealer or a
major swap participant with a derivatives clearing organization,
board of trade, or a swap execution facility that clears or trades
swaps in which the swap dealer or major swap participant has
a material debt or material equity investment.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1693

(e) REPORTING REQUIREMENTS.—Section 5b of the Commodity
Exchange Act (7 U.S.C. 7a–1) (as amended by subsection (b)) is
amended by adding at the end the following:
‘‘(k) REPORTING REQUIREMENTS.—
‘‘(1) DUTY OF DERIVATIVES CLEARING ORGANIZATIONS.—Each
derivatives clearing organization that clears swaps shall provide
to the Commission all information that is determined by the
Commission to be necessary to perform each responsibility of
the Commission under this Act.
‘‘(2) DATA COLLECTION AND MAINTENANCE REQUIREMENTS.—
The Commission shall adopt data collection and maintenance
requirements for swaps cleared by derivatives clearing
organizations that are comparable to the corresponding requirements for—
‘‘(A) swaps data reported to swap data repositories;
and
‘‘(B) swaps traded on swap execution facilities.
‘‘(3) REPORTS ON SECURITY-BASED SWAP AGREEMENTS TO
BE SHARED WITH THE SECURITIES AND EXCHANGE COMMISSION.—
‘‘(A) IN GENERAL.—A derivatives clearing organization
that clears security-based swap agreements (as defined
in section 1a(47)(A)(v)) shall, upon request, open to inspection and examination to the Securities and Exchange
Commission all books and records relating to such securitybased swap agreements, consistent with the confidentiality
and disclosure requirements of section 8.
‘‘(B) JURISDICTION.—Nothing in this paragraph shall
affect the exclusive jurisdiction of the Commission to prescribe recordkeeping and reporting requirements for a
derivatives clearing organization that is registered with
the Commission.
‘‘(4) INFORMATION SHARING.—Subject to section 8, and upon
request, the Commission shall share information collected
under paragraph (2) with—
‘‘(A) the Board;
‘‘(B) the Securities and Exchange Commission;
‘‘(C) each appropriate prudential regulator;
‘‘(D) the Financial Stability Oversight Council;
‘‘(E) the Department of Justice; and
‘‘(F) any other person that the Commission determines
to be appropriate, including—
‘‘(i) foreign financial supervisors (including foreign
futures authorities);
‘‘(ii) foreign central banks; and
‘‘(iii) foreign ministries.
‘‘(5) CONFIDENTIALITY AND INDEMNIFICATION AGREEMENT.—
Before the Commission may share information with any entity
described in paragraph (4)—
‘‘(A) the Commission shall receive a written agreement
from each entity stating that the entity shall abide by
the confidentiality requirements described in section 8
relating to the information on swap transactions that is
provided; and
‘‘(B) each entity shall agree to indemnify the Commission for any expenses arising from litigation relating to
the information provided under section 8.

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‘‘(6) PUBLIC INFORMATION.—Each derivatives clearing
organization that clears swaps shall provide to the Commission
(including any designee of the Commission) information under
paragraph (2) in such form and at such frequency as is required
by the Commission to comply with the public reporting requirements contained in section 2(a)(13).’’.
(f) PUBLIC DISCLOSURE.—Section 8(e) of the Commodity
Exchange Act (7 U.S.C. 12(e)) is amended in the last sentence—
(1) by inserting ‘‘, central bank and ministries,’’ after
‘‘department’’ each place it appears; and
(2) by striking ‘‘. is a party.’’ and inserting ‘‘, is a party.’’.
(g) LEGAL CERTAINTY FOR IDENTIFIED BANKING PRODUCTS.—
(1) REPEALS.—The Legal Certainty for Bank Products Act
of 2000 (7 U.S.C. 27 et seq.) is amended—
(A) by striking sections 404 and 407 (7 U.S.C. 27b,
27e);
(B) in section 402 (7 U.S.C. 27), by striking subsection
(d); and
(C) in section 408 (7 U.S.C. 27f)—
(i) in subsection (c)—
(I) by striking ‘‘in the case’’ and all that follows
through ‘‘a hybrid’’ and inserting ‘‘in the case of
a hybrid’’;
(II) by striking ‘‘; or’’ and inserting a period;
and
(III) by striking paragraph (2);
(ii) by striking subsection (b); and
(iii) by redesignating subsection (c) as subsection
(b).
(2) LEGAL CERTAINTY FOR BANK PRODUCTS ACT OF 2000.—
Section 403 of the Legal Certainty for Bank Products Act of
2000 (7 U.S.C. 27a) is amended to read as follows:

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‘‘SEC. 403. EXCLUSION OF IDENTIFIED BANKING PRODUCT.

‘‘(a) EXCLUSION.—Except as provided in subsection (b) or (c)—
‘‘(1) the Commodity Exchange Act (7 U.S.C. 1 et seq.)
shall not apply to, and the Commodity Futures Trading
Commission shall not exercise regulatory authority under the
Commodity Exchange Act (7 U.S.C. 1 et seq.) with respect
to, an identified banking product; and
‘‘(2) the definitions of ‘security-based swap’ in section
3(a)(68) of the Securities Exchange Act of 1934 and ‘securitybased swap agreement’ in section 1a(47)(A)(v) of the Commodity
Exchange Act and section 3(a)(78) of the Securities Exchange
Act of 1934 do not include any identified bank product.
‘‘(b) EXCEPTION.—An appropriate Federal banking agency may
except an identified banking product of a bank under its regulatory
jurisdiction from the exclusion in subsection (a) if the agency determines, in consultation with the Commodity Futures Trading
Commission and the Securities and Exchange Commission, that
the product—
‘‘(1) would meet the definition of a ‘swap’ under section
1a(47) of the Commodity Exchange Act (7 U.S.C. 1a) or a
‘security-based swap’ under that section 3(a)(68) of the Securities Exchange Act of 1934; and
‘‘(2) has become known to the trade as a swap or securitybased swap, or otherwise has been structured as an identified

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124 STAT. 1695

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banking product for the purpose of evading the provisions of
the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities
Act of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.).
‘‘(c) EXCEPTION.—The exclusions in subsection (a) shall not
apply to an identified bank product that—
‘‘(1) is a product of a bank that is not under the regulatory
jurisdiction of an appropriate Federal banking agency;
‘‘(2) meets the definition of swap in section 1a(47) of the
Commodity Exchange Act or security-based swap in section
3(a)(68) of the Securities Exchange Act of 1934; and
‘‘(3) has become known to the trade as a swap or securitybased swap, or otherwise has been structured as an identified
banking product for the purpose of evading the provisions of
the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities
Act of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.).’’.
(h) REDUCING CLEARING SYSTEMIC RISK.—Section 5b(f)(1) of
the Commodity Exchange Act (7 U.S.C. 7a-1(F)(i)) is amended by
adding at the end the following: ‘‘In order to minimize systemic
risk, under no circumstances shall a derivatives clearing organization be compelled to accept the counterparty credit risk of another
clearing organization.’’.

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SEC. 726. RULEMAKING ON CONFLICT OF INTEREST.

15 USC 8323.

(a) IN GENERAL.—In order to mitigate conflicts of interest,
not later than 180 days after the date of enactment of the Wall
Street Transparency and Accountability Act of 2010, the Commodity
Futures Trading Commission shall adopt rules which may include
numerical limits on the control of, or the voting rights with respect
to, any derivatives clearing organization that clears swaps, or swap
execution facility or board of trade designated as a contract market
that posts swaps or makes swaps available for trading, by a bank
holding company (as defined in section 2 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841)) with total consolidated
assets of $50,000,000,000 or more, a nonbank financial company
(as defined in section 102) supervised by the Board, an affiliate
of such a bank holding company or nonbank financial company,
a swap dealer, major swap participant, or associated person of
a swap dealer or major swap participant.
(b) PURPOSES.—The Commission shall adopt rules if it determines, after the review described in subsection (a), that such rules
are necessary or appropriate to improve the governance of, or to
mitigate systemic risk, promote competition, or mitigate conflicts
of interest in connection with a swap dealer or major swap participant’s conduct of business with, a derivatives clearing organization,
contract market, or swap execution facility that clears or posts
swaps or makes swaps available for trading and in which such
swap dealer or major swap participant has a material debt or
equity investment.
(c) CONSIDERATIONS.—In adopting rules pursuant to this section, the Commodity Futures Trading Commission shall consider
any conflicts of interest arising from the amount of equity owned
by a single investor, the ability to vote, cause the vote of, or
withhold votes entitled to be cast on any matters by the holders
of the ownership interest, and the governance arrangements of
any derivatives clearing organization that clears swaps, or swap

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124 STAT. 1696

PUBLIC LAW 111–203—JULY 21, 2010

execution facility or board of trade designated as a contract market
that posts swaps or makes swaps available for trading.

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SEC. 727. PUBLIC REPORTING OF SWAP TRANSACTION DATA.

Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a))
is amended by adding at the end the following:
‘‘(13) PUBLIC AVAILABILITY OF SWAP TRANSACTION DATA.—
‘‘(A) DEFINITION OF REAL-TIME PUBLIC REPORTING.—
In this paragraph, the term ‘real-time public reporting’
means to report data relating to a swap transaction,
including price and volume, as soon as technologically practicable after the time at which the swap transaction has
been executed.
‘‘(B) PURPOSE.—The purpose of this section is to
authorize the Commission to make swap transaction and
pricing data available to the public in such form and at
such times as the Commission determines appropriate to
enhance price discovery.
‘‘(C) GENERAL RULE.—The Commission is authorized
and required to provide by rule for the public availability
of swap transaction and pricing data as follows:
‘‘(i) With respect to those swaps that are subject
to the mandatory clearing requirement described in
subsection (h)(1) (including those swaps that are
excepted from the requirement pursuant to subsection
(h)(7)), the Commission shall require real-time public
reporting for such transactions.
‘‘(ii) With respect to those swaps that are not subject to the mandatory clearing requirement described
in subsection (h)(1), but are cleared at a registered
derivatives clearing organization, the Commission shall
require real-time public reporting for such transactions.
‘‘(iii) With respect to swaps that are not cleared
at a registered derivatives clearing organization and
which are reported to a swap data repository or the
Commission under subsection (h)(6), the Commission
shall require real-time public reporting for such transactions, in a manner that does not disclose the business
transactions and market positions of any person.
‘‘(iv) With respect to swaps that are determined
to be required to be cleared under subsection (h)(2)
but are not cleared, the Commission shall require realtime public reporting for such transactions.
‘‘(D) REGISTERED ENTITIES AND PUBLIC REPORTING.—
The Commission may require registered entities to publicly
disseminate the swap transaction and pricing data required
to be reported under this paragraph.
‘‘(E) RULEMAKING REQUIRED.—With respect to the rule
providing for the public availability of transaction and
pricing data for swaps described in clauses (i) and (ii)
of subparagraph (C), the rule promulgated by the Commission shall contain provisions—
‘‘(i) to ensure such information does not identify
the participants;

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1697

‘‘(ii) to specify the criteria for determining what
constitutes a large notional swap transaction (block
trade) for particular markets and contracts;
‘‘(iii) to specify the appropriate time delay for
reporting large notional swap transactions (block
trades) to the public; and
‘‘(iv) that take into account whether the public
disclosure will materially reduce market liquidity.
‘‘(F) TIMELINESS OF REPORTING.—Parties to a swap
(including agents of the parties to a swap) shall be responsible for reporting swap transaction information to the
appropriate registered entity in a timely manner as may
be prescribed by the Commission.
‘‘(G) REPORTING OF SWAPS TO REGISTERED SWAP DATA
REPOSITORIES.—Each swap (whether cleared or uncleared)
shall be reported to a registered swap data repository.
‘‘(14) SEMIANNUAL AND ANNUAL PUBLIC REPORTING OF
AGGREGATE SWAP DATA.—
‘‘(A) IN GENERAL.—In accordance with subparagraph
(B), the Commission shall issue a written report on a
semiannual and annual basis to make available to the
public information relating to—
‘‘(i) the trading and clearing in the major swap
categories; and
‘‘(ii) the market participants and developments in
new products.
‘‘(B) USE; CONSULTATION.—In preparing a report under
subparagraph (A), the Commission shall—
‘‘(i) use information from swap data repositories
and derivatives clearing organizations; and
‘‘(ii) consult with the Office of the Comptroller
of the Currency, the Bank for International Settlements, and such other regulatory bodies as may be
necessary.
‘‘(C) AUTHORITY OF THE COMMISSION.—The Commission
may, by rule, regulation, or order, delegate the public
reporting responsibilities of the Commission under this
paragraph in accordance with such terms and conditions
as the Commission determines to be appropriate and in
the public interest.’’.
SEC. 728. SWAP DATA REPOSITORIES.

The Commodity Exchange Act is amended by inserting after
section 20 (7 U.S.C. 24) the following:

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‘‘SEC. 21. SWAP DATA REPOSITORIES.

7 USC 24a.

‘‘(a) REGISTRATION REQUIREMENT.—
‘‘(1) REQUIREMENT; AUTHORITY OF DERIVATIVES CLEARING
ORGANIZATION.—
‘‘(A) IN GENERAL.—It shall be unlawful for any person,
unless registered with the Commission, directly or
indirectly to make use of the mails or any means or
instrumentality of interstate commerce to perform the functions of a swap data repository.
‘‘(B)
REGISTRATION
OF
DERIVATIVES
CLEARING
ORGANIZATIONS.—A derivatives clearing organization may
register as a swap data repository.

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124 STAT. 1698

PUBLIC LAW 111–203—JULY 21, 2010
‘‘(2) INSPECTION AND EXAMINATION.—Each registered swap
data repository shall be subject to inspection and examination
by any representative of the Commission.
‘‘(3) COMPLIANCE WITH CORE PRINCIPLES.—
‘‘(A) IN GENERAL.—To be registered, and maintain registration, as a swap data repository, the swap data repository shall comply with—
‘‘(i) the requirements and core principles described
in this section; and
‘‘(ii) any requirement that the Commission may
impose by rule or regulation pursuant to section 8a(5).
‘‘(B) REASONABLE DISCRETION OF SWAP DATA REPOSITORY.—Unless otherwise determined by the Commission
by rule or regulation, a swap data repository described
in subparagraph (A) shall have reasonable discretion in
establishing the manner in which the swap data repository
complies with the core principles described in this section.
‘‘(b) STANDARD SETTING.—
‘‘(1) DATA IDENTIFICATION.—
‘‘(A) IN GENERAL.—In accordance with subparagraph
(B), the Commission shall prescribe standards that specify
the data elements for each swap that shall be collected
and maintained by each registered swap data repository.
‘‘(B) REQUIREMENT.—In carrying out subparagraph (A),
the Commission shall prescribe consistent data element
standards applicable to registered entities and reporting
counterparties.
‘‘(2) DATA COLLECTION AND MAINTENANCE.—The Commission shall prescribe data collection and data maintenance standards for swap data repositories.
‘‘(3) COMPARABILITY.—The standards prescribed by the
Commission under this subsection shall be comparable to the
data standards imposed by the Commission on derivatives
clearing organizations in connection with their clearing of
swaps.
‘‘(c) DUTIES.—A swap data repository shall—
‘‘(1) accept data prescribed by the Commission for each
swap under subsection (b);
‘‘(2) confirm with both counterparties to the swap the
accuracy of the data that was submitted;
‘‘(3) maintain the data described in paragraph (1) in such
form, in such manner, and for such period as may be required
by the Commission;
‘‘(4)(A) provide direct electronic access to the Commission
(or any designee of the Commission, including another registered entity); and
‘‘(B) provide the information described in paragraph (1)
in such form and at such frequency as the Commission may
require to comply with the public reporting requirements contained in section 2(a)(13);
‘‘(5) at the direction of the Commission, establish automated
systems for monitoring, screening, and analyzing swap data,
including compliance and frequency of end user clearing exemption claims by individual and affiliated entities;
‘‘(6) maintain the privacy of any and all swap transaction
information that the swap data repository receives from a swap
dealer, counterparty, or any other registered entity; and

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1699

‘‘(7) on a confidential basis pursuant to section 8, upon
request, and after notifying the Commission of the request,
make available all data obtained by the swap data repository,
including individual counterparty trade and position data, to—
‘‘(A) each appropriate prudential regulator;
‘‘(B) the Financial Stability Oversight Council;
‘‘(C) the Securities and Exchange Commission;
‘‘(D) the Department of Justice; and
‘‘(E) any other person that the Commission determines
to be appropriate, including—
‘‘(i) foreign financial supervisors (including foreign
futures authorities);
‘‘(ii) foreign central banks; and
‘‘(iii) foreign ministries; and
‘‘(8) establish and maintain emergency procedures, backup
facilities, and a plan for disaster recovery that allows for the
timely recovery and resumption of operations and the fulfillment of the responsibilities and obligations of the organization.
‘‘(d) CONFIDENTIALITY AND INDEMNIFICATION AGREEMENT.—
Before the swap data repository may share information with any
entity described in subsection (c)(7)—
‘‘(1) the swap data repository shall receive a written agreement from each entity stating that the entity shall abide by
the confidentiality requirements described in section 8 relating
to the information on swap transactions that is provided; and
‘‘(2) each entity shall agree to indemnify the swap data
repository and the Commission for any expenses arising from
litigation relating to the information provided under section
8.
‘‘(e) DESIGNATION OF CHIEF COMPLIANCE OFFICER.—
‘‘(1) IN GENERAL.—Each swap data repository shall designate an individual to serve as a chief compliance officer.
‘‘(2) DUTIES.—The chief compliance officer shall—
‘‘(A) report directly to the board or to the senior officer
of the swap data repository;
‘‘(B) review the compliance of the swap data repository
with respect to the requirements and core principles
described in this section;
‘‘(C) in consultation with the board of the swap data
repository, a body performing a function similar to the
board of the swap data repository, or the senior officer
of the swap data repository, resolve any conflicts of interest
that may arise;
‘‘(D) be responsible for administering each policy and
procedure that is required to be established pursuant to
this section;
‘‘(E) ensure compliance with this Act (including regulations) relating to agreements, contracts, or transactions,
including each rule prescribed by the Commission under
this section;
‘‘(F) establish procedures for the remediation of noncompliance issues identified by the chief compliance officer
through any—
‘‘(i) compliance office review;
‘‘(ii) look-back;
‘‘(iii) internal or external audit finding;
‘‘(iv) self-reported error; or

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124 STAT. 1700

Certification.

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Regulations.

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PUBLIC LAW 111–203—JULY 21, 2010

‘‘(v) validated complaint; and
‘‘(G) establish and follow appropriate procedures for
the handling, management response, remediation, retesting, and closing of noncompliance issues.
‘‘(3) ANNUAL REPORTS.—
‘‘(A) IN GENERAL.—In accordance with rules prescribed
by the Commission, the chief compliance officer shall
annually prepare and sign a report that contains a description of—
‘‘(i) the compliance of the swap data repository
of the chief compliance officer with respect to this
Act (including regulations); and
‘‘(ii) each policy and procedure of the swap data
repository of the chief compliance officer (including
the code of ethics and conflict of interest policies of
the swap data repository).
‘‘(B) REQUIREMENTS.—A compliance report under
subparagraph (A) shall—
‘‘(i) accompany each appropriate financial report
of the swap data repository that is required to be
furnished to the Commission pursuant to this section;
and
‘‘(ii) include a certification that, under penalty of
law, the compliance report is accurate and complete.
‘‘(f) CORE PRINCIPLES APPLICABLE TO SWAP DATA REPOSITORIES.—
‘‘(1) ANTITRUST CONSIDERATIONS.—Unless necessary or
appropriate to achieve the purposes of this Act, a swap data
repository shall not—
‘‘(A) adopt any rule or take any action that results
in any unreasonable restraint of trade; or
‘‘(B) impose any material anticompetitive burden on
the trading, clearing, or reporting of transactions.
‘‘(2) GOVERNANCE ARRANGEMENTS.—Each swap data repository shall establish governance arrangements that are transparent—
‘‘(A) to fulfill public interest requirements; and
‘‘(B) to support the objectives of the Federal Government, owners, and participants.
‘‘(3) CONFLICTS OF INTEREST.—Each swap data repository
shall—
‘‘(A) establish and enforce rules to minimize conflicts
of interest in the decision-making process of the swap data
repository; and
‘‘(B) establish a process for resolving conflicts of
interest described in subparagraph (A).
‘‘(4) ADDITIONAL DUTIES DEVELOPED BY COMMISSION.—
‘‘(A) IN GENERAL.—The Commission may develop 1 or
more additional duties applicable to swap data repositories.
‘‘(B) CONSIDERATION OF EVOLVING STANDARDS.—In
developing additional duties under subparagraph (A), the
Commission may take into consideration any evolving
standard of the United States or the international community.
‘‘(C) ADDITIONAL DUTIES FOR COMMISSION DESIGNEES.—
The Commission shall establish additional duties for any
registrant described in section 1a(48) in order to minimize

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124 STAT. 1701

conflicts of interest, protect data, ensure compliance, and
guarantee the safety and security of the swap data repository.
‘‘(g) REQUIRED REGISTRATION FOR SWAP DATA REPOSITORIES.—
Any person that is required to be registered as a swap data repository under this section shall register with the Commission regardless of whether that person is also licensed as a bank or registered
with the Securities and Exchange Commission as a swap data
repository.
‘‘(h) RULES.—The Commission shall adopt rules governing persons that are registered under this section.’’.

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SEC. 729. REPORTING AND RECORDKEEPING.

The Commodity Exchange Act is amended by inserting after
section 4q (7 U.S.C. 6o–1) the following:

7 USC 6q.

‘‘SEC. 4r. REPORTING AND RECORDKEEPING FOR UNCLEARED SWAPS.

7 USC 6r.

‘‘(a) REQUIRED REPORTING OF SWAPS NOT ACCEPTED BY ANY
DERIVATIVES CLEARING ORGANIZATION.—
‘‘(1) IN GENERAL.—Each swap that is not accepted for
clearing by any derivatives clearing organization shall be
reported to—
‘‘(A) a swap data repository described in section 21;
or
‘‘(B) in the case in which there is no swap data repository that would accept the swap, to the Commission pursuant to this section within such time period as the Commission may by rule or regulation prescribe.
‘‘(2) TRANSITION RULE FOR PREENACTMENT SWAPS.—
‘‘(A) SWAPS ENTERED INTO BEFORE THE DATE OF ENACTMENT OF THE WALL STREET TRANSPARENCY AND ACCOUNTABILITY ACT OF 2010.—Each swap entered into before the
date of enactment of the Wall Street Transparency and
Accountability Act of 2010, the terms of which have not
expired as of the date of enactment of that Act, shall
be reported to a registered swap data repository or the
Commission by a date that is not later than—
‘‘(i) 30 days after issuance of the interim final
rule; or
‘‘(ii) such other period as the Commission determines to be appropriate.
‘‘(B) COMMISSION RULEMAKING.—The Commission shall
promulgate an interim final rule within 90 days of the
date of enactment of this section providing for the reporting
of each swap entered into before the date of enactment
as referenced in subparagraph (A).
‘‘(C) EFFECTIVE DATE.—The reporting provisions
described in this section shall be effective upon the enactment of this section.
‘‘(3) REPORTING OBLIGATIONS.—
‘‘(A) SWAPS IN WHICH ONLY 1 COUNTERPARTY IS A SWAP
DEALER OR MAJOR SWAP PARTICIPANT.—With respect to a
swap in which only 1 counterparty is a swap dealer or
major swap participant, the swap dealer or major swap
participant shall report the swap as required under paragraphs (1) and (2).
‘‘(B) SWAPS IN WHICH 1 COUNTERPARTY IS A SWAP
DEALER AND THE OTHER A MAJOR SWAP PARTICIPANT.—With

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respect to a swap in which 1 counterparty is a swap dealer
and the other a major swap participant, the swap dealer
shall report the swap as required under paragraphs (1)
and (2).
‘‘(C) OTHER SWAPS.—With respect to any other swap
not described in subparagraph (A) or (B), the counterparties
to the swap shall select a counterparty to report the swap
as required under paragraphs (1) and (2).
‘‘(b) DUTIES OF CERTAIN INDIVIDUALS.—Any individual or entity
that enters into a swap shall meet each requirement described
in subsection (c) if the individual or entity did not—
‘‘(1) clear the swap in accordance with section 2(h)(1); or
‘‘(2) have the data regarding the swap accepted by a swap
data repository in accordance with rules (including timeframes)
adopted by the Commission under section 21.
‘‘(c) REQUIREMENTS.—An individual or entity described in subsection (b) shall—
‘‘(1) upon written request from the Commission, provide
reports regarding the swaps held by the individual or entity
to the Commission in such form and in such manner as the
Commission may request; and
‘‘(2) maintain books and records pertaining to the swaps
held by the individual or entity in such form, in such manner,
and for such period as the Commission may require, which
shall be open to inspection by—
‘‘(A) any representative of the Commission;
‘‘(B) an appropriate prudential regulator;
‘‘(C) the Securities and Exchange Commission;
‘‘(D) the Financial Stability Oversight Council; and
‘‘(E) the Department of Justice.
‘‘(d) IDENTICAL DATA.—In prescribing rules under this section,
the Commission shall require individuals and entities described
in subsection (b) to submit to the Commission a report that contains
data that is not less comprehensive than the data required to
be collected by swap data repositories under section 21.’’.
SEC. 730. LARGE SWAP TRADER REPORTING.

The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by adding after section 4s (as added by section 731) the following:

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7 USC 6t.

‘‘SEC. 4t. LARGE SWAP TRADER REPORTING.

‘‘(a) PROHIBITION.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
it shall be unlawful for any person to enter into any swap
that the Commission determines to perform a significant price
discovery function with respect to registered entities if—
‘‘(A) the person directly or indirectly enters into the
swap during any 1 day in an amount equal to or in excess
of such amount as shall be established periodically by
the Commission; and
‘‘(B) the person directly or indirectly has or obtains
a position in the swap equal to or in excess of such amount
as shall be established periodically by the Commission.
‘‘(2) EXCEPTION.—Paragraph (1) shall not apply if—
‘‘(A) the person files or causes to be filed with the
properly designated officer of the Commission such reports

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124 STAT. 1703

regarding any transactions or positions described in subparagraphs (A) and (B) of paragraph (1) as the Commission
may require by rule or regulation; and
‘‘(B) in accordance with the rules and regulations of
the Commission, the person keeps books and records of
all such swaps and any transactions and positions in any
related commodity traded on or subject to the rules of
any designated contract market or swap execution facility,
and of cash or spot transactions in, inventories of, and
purchase and sale commitments of, such a commodity.
‘‘(b) REQUIREMENTS.—
‘‘(1) IN GENERAL.—Books and records described in subsection (a)(2)(B) shall—
‘‘(A) show such complete details concerning all transactions and positions as the Commission may prescribe
by rule or regulation;
‘‘(B) be open at all times to inspection and examination
by any representative of the Commission; and
‘‘(C) be open at all times to inspection and examination
by the Securities and Exchange Commission, to the extent
such books and records relate to transactions in swaps
(as that term is defined in section 1a(47)(A)(v)), and consistent with the confidentiality and disclosure requirements
of section 8.
‘‘(2) JURISDICTION.—Nothing in paragraph (1) shall affect
the exclusive jurisdiction of the Commission to prescribe recordkeeping and reporting requirements for large swap traders
under this section.
‘‘(c) APPLICABILITY.—For purposes of this section, the swaps,
futures, and cash or spot transactions and positions of any person
shall include the swaps, futures, and cash or spot transactions
and positions of any persons directly or indirectly controlled by
the person.
‘‘(d) SIGNIFICANT PRICE DISCOVERY FUNCTION.—In making a
determination as to whether a swap performs or affects a significant
price discovery function with respect to registered entities, the
Commission shall consider the factors described in section 4a(a)(3).’’.

Records.

SEC. 731. REGISTRATION AND REGULATION OF SWAP DEALERS AND
MAJOR SWAP PARTICIPANTS.

The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by inserting after section 4r (as added by section 729) the following:

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‘‘SEC. 4s. REGISTRATION AND REGULATION OF SWAP DEALERS AND
MAJOR SWAP PARTICIPANTS.

7 USC 6s.

‘‘(a) REGISTRATION.—
‘‘(1) SWAP DEALERS.—It shall be unlawful for any person
to act as a swap dealer unless the person is registered as
a swap dealer with the Commission.
‘‘(2) MAJOR SWAP PARTICIPANTS.—It shall be unlawful for
any person to act as a major swap participant unless the
person is registered as a major swap participant with the
Commission.
‘‘(b) REQUIREMENTS.—
‘‘(1) IN GENERAL.—A person shall register as a swap dealer
or major swap participant by filing a registration application
with the Commission.
‘‘(2) CONTENTS.—

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124 STAT. 1704

‘‘(A) IN GENERAL.—The application shall be made in
such form and manner as prescribed by the Commission,
and shall contain such information, as the Commission
considers necessary concerning the business in which the
applicant is or will be engaged.
‘‘(B) CONTINUAL REPORTING.—A person that is registered as a swap dealer or major swap participant shall
continue to submit to the Commission reports that contain
such information pertaining to the business of the person
as the Commission may require.
‘‘(3) EXPIRATION.—Each registration under this section shall
expire at such time as the Commission may prescribe by rule
or regulation.
‘‘(4) RULES.—Except as provided in subsections (d) and
(e), the Commission may prescribe rules applicable to swap
dealers and major swap participants, including rules that limit
the activities of swap dealers and major swap participants.
‘‘(5) TRANSITION.—Rules under this section shall provide
for the registration of swap dealers and major swap participants
not later than 1 year after the date of enactment of the Wall
Street Transparency and Accountability Act of 2010.
‘‘(6) STATUTORY DISQUALIFICATION.—Except to the extent
otherwise specifically provided by rule, regulation, or order,
it shall be unlawful for a swap dealer or a major swap participant to permit any person associated with a swap dealer or
a major swap participant who is subject to a statutory disqualification to effect or be involved in effecting swaps on behalf
of the swap dealer or major swap participant, if the swap
dealer or major swap participant knew, or in the exercise
of reasonable care should have known, of the statutory disqualification.
‘‘(c) DUAL REGISTRATION.—
‘‘(1) SWAP DEALER.—Any person that is required to be registered as a swap dealer under this section shall register with
the Commission regardless of whether the person also is a
depository institution or is registered with the Securities and
Exchange Commission as a security-based swap dealer.
‘‘(2) MAJOR SWAP PARTICIPANT.—Any person that is required
to be registered as a major swap participant under this section
shall register with the Commission regardless of whether the
person also is a depository institution or is registered with
the Securities and Exchange Commission as a major securitybased swap participant.
‘‘(d) RULEMAKINGS.—
‘‘(1) IN GENERAL.—The Commission shall adopt rules for
persons that are registered as swap dealers or major swap
participants under this section.
‘‘(2) EXCEPTION FOR PRUDENTIAL REQUIREMENTS.—
‘‘(A) IN GENERAL.—The Commission may not prescribe
rules imposing prudential requirements on swap dealers
or major swap participants for which there is a prudential
regulator.
‘‘(B) APPLICABILITY.—Subparagraph (A) does not limit
the authority of the Commission to prescribe rules as
directed under this section.
‘‘(e) CAPITAL AND MARGIN REQUIREMENTS.—
‘‘(1) IN GENERAL.—

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Regulations.
Deadline.

Regulations.

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‘‘(A) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS
THAT ARE BANKS.—Each registered swap dealer and major
swap participant for which there is a prudential regulator
shall meet such minimum capital requirements and minimum initial and variation margin requirements as the
prudential regulator shall by rule or regulation prescribe
under paragraph (2)(A).
‘‘(B) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS
THAT ARE NOT BANKS.—Each registered swap dealer and
major swap participant for which there is not a prudential
regulator shall meet such minimum capital requirements
and minimum initial and variation margin requirements
as the Commission shall by rule or regulation prescribe
under paragraph (2)(B).
‘‘(2) RULES.—
‘‘(A) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS
THAT ARE BANKS.—The prudential regulators, in consultation with the Commission and the Securities and Exchange
Commission, shall jointly adopt rules for swap dealers and
major swap participants, with respect to their activities
as a swap dealer or major swap participant, for which
there is a prudential regulator imposing—
‘‘(i) capital requirements; and
‘‘(ii) both initial and variation margin requirements
on all swaps that are not cleared by a registered derivatives clearing organization.
‘‘(B) SWAP DEALERS AND MAJOR SWAP PARTICIPANTS
THAT ARE NOT BANKS.—The Commission shall adopt rules
for swap dealers and major swap participants, with respect
to their activities as a swap dealer or major swap participant, for which there is not a prudential regulator
imposing—
‘‘(i) capital requirements; and
‘‘(ii) both initial and variation margin requirements
on all swaps that are not cleared by a registered derivatives clearing organization.
‘‘(C) CAPITAL.—In setting capital requirements for a
person that is designated as a swap dealer or a major
swap participant for a single type or single class or category
of swap or activities, the prudential regulator and the
Commission shall take into account the risks associated
with other types of swaps or classes of swaps or categories
of swaps engaged in and the other activities conducted
by that person that are not otherwise subject to regulation
applicable to that person by virtue of the status of the
person as a swap dealer or a major swap participant.
‘‘(3) STANDARDS FOR CAPITAL AND MARGIN.—
‘‘(A) IN GENERAL.—To offset the greater risk to the
swap dealer or major swap participant and the financial
system arising from the use of swaps that are not cleared,
the requirements imposed under paragraph (2) shall—
‘‘(i) help ensure the safety and soundness of the
swap dealer or major swap participant; and
‘‘(ii) be appropriate for the risk associated with
the non-cleared swaps held as a swap dealer or major
swap participant.
‘‘(B) RULE OF CONSTRUCTION.—

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124 STAT. 1706

‘‘(i) IN GENERAL.—Nothing in this section shall
limit, or be construed to limit, the authority—
‘‘(I) of the Commission to set financial responsibility rules for a futures commission merchant
or introducing broker registered pursuant to section 4f(a) (except for section 4f(a)(3)) in accordance
with section 4f(b); or
‘‘(II) of the Securities and Exchange Commission to set financial responsibility rules for a
broker or dealer registered pursuant to section
15(b) of the Securities Exchange Act of 1934 (15
U.S.C. 78o(b)) (except for section 15(b)(11) of that
Act (15 U.S.C. 78o(b)(11)) in accordance with section 15(c)(3) of the Securities Exchange Act of 1934
(15 U.S.C. 78o(c)(3)).
‘‘(ii) FUTURES COMMISSION MERCHANTS AND OTHER
DEALERS.—A futures commission merchant, introducing broker, broker, or dealer shall maintain sufficient capital to comply with the stricter of any
applicable capital requirements to which such futures
commission merchant, introducing broker, broker, or
dealer is subject to under this Act or the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.).
‘‘(C) MARGIN REQUIREMENTS.—In prescribing margin
requirements under this subsection, the prudential regulator with respect to swap dealers and major swap participants for which it is the prudential regulator and the
Commission with respect to swap dealers and major swap
participants for which there is no prudential regulator
shall permit the use of noncash collateral, as the regulator
or the Commission determines to be consistent with—
‘‘(i) preserving the financial integrity of markets
trading swaps; and
‘‘(ii) preserving the stability of the United States
financial system.
‘‘(D) COMPARABILITY OF CAPITAL AND MARGIN REQUIREMENTS.—
‘‘(i) IN GENERAL.—The prudential regulators, the
Commission, and the Securities and Exchange
Commission shall periodically (but not less frequently
than annually) consult on minimum capital requirements and minimum initial and variation margin
requirements.
‘‘(ii) COMPARABILITY.—The entities described in
clause (i) shall, to the maximum extent practicable,
establish and maintain comparable minimum capital
requirements and minimum initial and variation
margin requirements, including the use of non cash
collateral, for—
‘‘(I) swap dealers; and
‘‘(II) major swap participants.
‘‘(f) REPORTING AND RECORDKEEPING.—
‘‘(1) IN GENERAL.—Each registered swap dealer and major
swap participant—

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124 STAT. 1707

‘‘(A) shall make such reports as are required by the
Commission by rule or regulation regarding the transactions and positions and financial condition of the registered swap dealer or major swap participant;
‘‘(B)(i) for which there is a prudential regulator, shall
keep books and records of all activities related to the business as a swap dealer or major swap participant in such
form and manner and for such period as may be prescribed
by the Commission by rule or regulation; and
‘‘(ii) for which there is no prudential regulator, shall
keep books and records in such form and manner and
for such period as may be prescribed by the Commission
by rule or regulation;
‘‘(C) shall keep books and records described in subparagraph (B) open to inspection and examination by any representative of the Commission; and
‘‘(D) shall keep any such books and records relating
to swaps defined in section 1a(47)(A)(v) open to inspection
and examination by the Securities and Exchange Commission.
‘‘(2) RULES.—The Commission shall adopt rules governing
reporting and recordkeeping for swap dealers and major swap
participants.
‘‘(g) DAILY TRADING RECORDS.—
‘‘(1) IN GENERAL.—Each registered swap dealer and major
swap participant shall maintain daily trading records of the
swaps of the registered swap dealer and major swap participant
and all related records (including related cash or forward transactions) and recorded communications, including electronic
mail, instant messages, and recordings of telephone calls, for
such period as may be required by the Commission by rule
or regulation.
‘‘(2) INFORMATION REQUIREMENTS.—The daily trading
records shall include such information as the Commission shall
require by rule or regulation.
‘‘(3) COUNTERPARTY RECORDS.—Each registered swap dealer
and major swap participant shall maintain daily trading records
for each counterparty in a manner and form that is identifiable
with each swap transaction.
‘‘(4) AUDIT TRAIL.—Each registered swap dealer and major
swap participant shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions.
‘‘(5) RULES.—The Commission shall adopt rules governing
daily trading records for swap dealers and major swap participants.
‘‘(h) BUSINESS CONDUCT STANDARDS.—
‘‘(1) IN GENERAL.—Each registered swap dealer and major
swap participant shall conform with such business conduct
standards as prescribed in paragraph (3) and as may be prescribed by the Commission by rule or regulation that relate
to—
‘‘(A) fraud, manipulation, and other abusive practices
involving swaps (including swaps that are offered but not
entered into);
‘‘(B) diligent supervision of the business of the registered swap dealer and major swap participant;
‘‘(C) adherence to all applicable position limits; and

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124 STAT. 1708

‘‘(D) such other matters as the Commission determines
to be appropriate.
‘‘(2) RESPONSIBILITIES WITH RESPECT TO SPECIAL ENTITIES.—
‘‘(A) ADVISING SPECIAL ENTITIES.—A swap dealer or
major swap participant that acts as an advisor to a special
entity regarding a swap shall comply with the requirements
of subparagraph (4) with respect to such Special Entity.
‘‘(B) ENTERING OF SWAPS WITH RESPECT TO SPECIAL
ENTITIES.—A swap dealer that enters into or offers to enter
into swap with a Special Entity shall comply with the
requirements of subparagraph (5) with respect to such
Special Entity.
‘‘(C) SPECIAL ENTITY DEFINED.—For purposes of this
subsection, the term ‘special entity’ means—
‘‘(i) a Federal agency;
‘‘(ii) a State, State agency, city, county, municipality, or other political subdivision of a State;
‘‘(iii) any employee benefit plan, as defined in section 3 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1002);
‘‘(iv) any governmental plan, as defined in section
3 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1002); or
‘‘(v) any endowment, including an endowment that
is an organization described in section 501(c)(3) of the
Internal Revenue Code of 1986.
‘‘(3) BUSINESS CONDUCT REQUIREMENTS.—Business conduct
requirements adopted by the Commission shall—
‘‘(A) establish a duty for a swap dealer or major swap
participant to verify that any counterparty meets the eligibility standards for an eligible contract participant;
‘‘(B) require disclosure by the swap dealer or major
swap participant to any counterparty to the transaction
(other than a swap dealer, major swap participant, securitybased swap dealer, or major security-based swap participant) of—
‘‘(i) information about the material risks and
characteristics of the swap;
‘‘(ii) any material incentives or conflicts of interest
that the swap dealer or major swap participant may
have in connection with the swap; and
‘‘(iii)(I) for cleared swaps, upon the request of the
counterparty, receipt of the daily mark of the transaction from the appropriate derivatives clearing
organization; and
‘‘(II) for uncleared swaps, receipt of the daily mark
of the transaction from the swap dealer or the major
swap participant;
‘‘(C) establish a duty for a swap dealer or major swap
participant to communicate in a fair and balanced manner
based on principles of fair dealing and good faith; and
‘‘(D) establish such other standards and requirements
as the Commission may determine are appropriate in the
public interest, for the protection of investors, or otherwise
in furtherance of the purposes of this Act.
‘‘(4) SPECIAL REQUIREMENTS FOR SWAP DEALERS ACTING AS
ADVISORS.—

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124 STAT. 1709

‘‘(A) IN GENERAL.—It shall be unlawful for a swap
dealer or major swap participant—
‘‘(i) to employ any device, scheme, or artifice to
defraud any Special Entity or prospective customer
who is a Special Entity;
‘‘(ii) to engage in any transaction, practice, or
course of business that operates as a fraud or deceit
on any Special Entity or prospective customer who
is a Special Entity; or
‘‘(iii) to engage in any act, practice, or course of
business that is fraudulent, deceptive or manipulative.
‘‘(B) DUTY.—Any swap dealer that acts as an advisor
to a Special Entity shall have a duty to act in the best
interests of the Special Entity.
‘‘(C) REASONABLE EFFORTS.—Any swap dealer that acts
as an advisor to a Special Entity shall make reasonable
efforts to obtain such information as is necessary to make
a reasonable determination that any swap recommended
by the swap dealer is in the best interests of the Special
Entity, including information relating to—
‘‘(i) the financial status of the Special Entity;
‘‘(ii) the tax status of the Special Entity;
‘‘(iii) the investment or financing objectives of the
Special Entity; and
‘‘(iv) any other information that the Commission
may prescribe by rule or regulation.
‘‘(5) SPECIAL REQUIREMENTS FOR SWAP DEALERS AS
COUNTERPARTIES TO SPECIAL ENTITIES.—
‘‘(A) Any swap dealer or major swap participant that
offers to enter or enters into a swap with a Special Entity
shall—
‘‘(i) comply with any duty established by the
Commission for a swap dealer or major swap participant, with respect to a counterparty that is an eligible
contract participant within the meaning of subclause
(I) or (II) of clause (vii) of section 1a(18) of this Act,
that requires the swap dealer or major swap participant to have a reasonable basis to believe that the
counterparty that is a Special Entity has an independent representative that—
‘‘(I) has sufficient knowledge to evaluate the
transaction and risks;
‘‘(II) is not subject to a statutory disqualification;
‘‘(III) is independent of the swap dealer or
major swap participant;
‘‘(IV) undertakes a duty to act in the best
interests of the counterparty it represents;
‘‘(V) makes appropriate disclosures;
‘‘(VI) will provide written representations to
the Special Entity regarding fair pricing and the
appropriateness of the transaction; and
‘‘(VII) in the case of employee benefit plans
subject to the Employee Retirement Income Security act of 1974, is a fiduciary as defined in section
3 of that Act (29 U.S.C. 1002); and

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124 STAT. 1710

PUBLIC LAW 111–203—JULY 21, 2010

‘‘(ii) before the initiation of the transaction, disclose
to the Special Entity in writing the capacity in which
the swap dealer is acting; and
‘‘(B) the Commission may establish such other standards and requirements as the Commission may determine
are appropriate in the public interest, for the protection
of investors, or otherwise in furtherance of the purposes
of this Act.
‘‘(6) RULES.—The Commission shall prescribe rules under
this subsection governing business conduct standards for swap
dealers and major swap participants.
‘‘(7) APPLICABILITY.—This section shall not apply with
respect to a transaction that is—
‘‘(A) initiated by a Special Entity on an exchange or
swap execution facility; and
‘‘(B) one in which the swap dealer or major swap
participant does not know the identity of the counterparty
to the transaction.
‘‘(i) DOCUMENTATION STANDARDS.—
‘‘(1) IN GENERAL.—Each registered swap dealer and major
swap participant shall conform with such standards as may
be prescribed by the Commission by rule or regulation that
relate to timely and accurate confirmation, processing, netting,
documentation, and valuation of all swaps.
‘‘(2) RULES.—The Commission shall adopt rules governing
documentation standards for swap dealers and major swap
participants.
‘‘(j) DUTIES.—Each registered swap dealer and major swap
participant at all times shall comply with the following requirements:
‘‘(1) MONITORING OF TRADING.—The swap dealer or major
swap participant shall monitor its trading in swaps to prevent
violations of applicable position limits.
‘‘(2) RISK MANAGEMENT PROCEDURES.—The swap dealer or
major swap participant shall establish robust and professional
risk management systems adequate for managing the dayto-day business of the swap dealer or major swap participant.
‘‘(3) DISCLOSURE OF GENERAL INFORMATION.—The swap
dealer or major swap participant shall disclose to the Commission and to the prudential regulator for the swap dealer or
major swap participant, as applicable, information concerning—
‘‘(A) terms and conditions of its swaps;
‘‘(B) swap trading operations, mechanisms, and practices;
‘‘(C) financial integrity protections relating to swaps;
and
‘‘(D) other information relevant to its trading in swaps.
‘‘(4) ABILITY TO OBTAIN INFORMATION.—The swap dealer
or major swap participant shall—
‘‘(A) establish and enforce internal systems and procedures to obtain any necessary information to perform any
of the functions described in this section; and
‘‘(B) provide the information to the Commission and
to the prudential regulator for the swap dealer or major
swap participant, as applicable, on request.

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124 STAT. 1711

‘‘(5) CONFLICTS OF INTEREST.—The swap dealer and major
swap participant shall implement conflict-of-interest systems
and procedures that—
‘‘(A) establish structural and institutional safeguards
to ensure that the activities of any person within the firm
relating to research or analysis of the price or market
for any commodity or swap or acting in a role of providing
clearing activities or making determinations as to accepting
clearing customers are separated by appropriate informational partitions within the firm from the review, pressure,
or oversight of persons whose involvement in pricing,
trading, or clearing activities might potentially bias their
judgment or supervision and contravene the core principles
of open access and the business conduct standards
described in this Act; and
‘‘(B) address such other issues as the Commission
determines to be appropriate.
‘‘(6) ANTITRUST CONSIDERATIONS.—Unless necessary or
appropriate to achieve the purposes of this Act, a swap dealer
or major swap participant shall not—
‘‘(A) adopt any process or take any action that results
in any unreasonable restraint of trade; or
‘‘(B) impose any material anticompetitive burden on
trading or clearing.
‘‘(7) RULES.—The Commission shall prescribe rules under
this subsection governing duties of swap dealers and major
swap participants.
‘‘(k) DESIGNATION OF CHIEF COMPLIANCE OFFICER.—
‘‘(1) IN GENERAL.—Each swap dealer and major swap
participant shall designate an individual to serve as a chief
compliance officer.
‘‘(2) DUTIES.—The chief compliance officer shall—
‘‘(A) report directly to the board or to the senior officer
of the swap dealer or major swap participant;
‘‘(B) review the compliance of the swap dealer or major
swap participant with respect to the swap dealer and major
swap participant requirements described in this section;
‘‘(C) in consultation with the board of directors, a body
performing a function similar to the board, or the senior
officer of the organization, resolve any conflicts of interest
that may arise;
‘‘(D) be responsible for administering each policy and
procedure that is required to be established pursuant to
this section;
‘‘(E) ensure compliance with this Act (including regulations) relating to swaps, including each rule prescribed
by the Commission under this section;
‘‘(F) establish procedures for the remediation of noncompliance issues identified by the chief compliance officer
through any—
‘‘(i) compliance office review;
‘‘(ii) look-back;
‘‘(iii) internal or external audit finding;
‘‘(iv) self-reported error; or
‘‘(v) validated complaint; and

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PUBLIC LAW 111–203—JULY 21, 2010
‘‘(G) establish and follow appropriate procedures for
the handling, management response, remediation, retesting, and closing of noncompliance issues.
‘‘(3) ANNUAL REPORTS.—
‘‘(A) IN GENERAL.—In accordance with rules prescribed
by the Commission, the chief compliance officer shall
annually prepare and sign a report that contains a description of—
‘‘(i) the compliance of the swap dealer or major
swap participant with respect to this Act (including
regulations); and
‘‘(ii) each policy and procedure of the swap dealer
or major swap participant of the chief compliance
officer (including the code of ethics and conflict of
interest policies).
‘‘(B) REQUIREMENTS.—A compliance report under
subparagraph (A) shall—
‘‘(i) accompany each appropriate financial report
of the swap dealer or major swap participant that
is required to be furnished to the Commission pursuant
to this section; and
‘‘(ii) include a certification that, under penalty of
law, the compliance report is accurate and complete.’’.

Certification.

SEC. 732. CONFLICTS OF INTEREST.

Procedures.

Regulations.

Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is
amended—
(1) by redesignating subsection (c) as subsection (e); and
(2) by inserting after subsection (b) the following:
‘‘(c) CONFLICTS OF INTEREST.—The Commission shall require
that futures commission merchants and introducing brokers implement conflict-of-interest systems and procedures that—
‘‘(1) establish structural and institutional safeguards to
ensure that the activities of any person within the firm relating
to research or analysis of the price or market for any commodity
are separated by appropriate informational partitions within
the firm from the review, pressure, or oversight of persons
whose involvement in trading or clearing activities might potentially bias the judgment or supervision of the persons; and
‘‘(2) address such other issues as the Commission determines to be appropriate.
‘‘(d) DESIGNATION OF CHIEF COMPLIANCE OFFICER.—Each
futures commission merchant shall designate an individual to serve
as its Chief Compliance Officer and perform such duties and responsibilities as shall be set forth in regulations to be adopted by
the Commission or rules to be adopted by a futures association
registered under section 17.’’.
SEC. 733. SWAP EXECUTION FACILITIES.

The Commodity Exchange Act is amended by inserting after
section 5g (7 U.S.C. 7b–2) the following:

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7 USC 7b–3.

‘‘SEC. 5h. SWAP EXECUTION FACILITIES.

‘‘(a) REGISTRATION.—
‘‘(1) IN GENERAL.—No person may operate a facility for
the trading or processing of swaps unless the facility is registered as a swap execution facility or as a designated contract
market under this section.

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124 STAT. 1713

‘‘(2) DUAL REGISTRATION.—Any person that is registered
as a swap execution facility under this section shall register
with the Commission regardless of whether the person also
is registered with the Securities and Exchange Commission
as a swap execution facility.
‘‘(b) TRADING AND TRADE PROCESSING.—
‘‘(1) IN GENERAL.—Except as specified in paragraph (2),
a swap execution facility that is registered under subsection
(a) may—
‘‘(A) make available for trading any swap; and
‘‘(B) facilitate trade processing of any swap.
‘‘(2) AGRICULTURAL SWAPS.—A swap execution facility may
not list for trading or confirm the execution of any swap in
an agricultural commodity (as defined by the Commission)
except pursuant to a rule or regulation of the Commission
allowing the swap under such terms and conditions as the
Commission shall prescribe.
‘‘(c) IDENTIFICATION OF FACILITY USED TO TRADE SWAPS BY
CONTRACT MARKETS.—A board of trade that operates a contract
market shall, to the extent that the board of trade also operates
a swap execution facility and uses the same electronic trade execution system for listing and executing trades of swaps on or through
the contract market and the swap execution facility, identify
whether the electronic trading of such swaps is taking place on
or through the contract market or the swap execution facility.
‘‘(d) RULE-WRITING.—
‘‘(1) The Securities and Exchange Commission and Commodity Futures Trading Commission may promulgate rules
defining the universe of swaps that can be executed on a
swap execution facility. These rules shall take into account
the price and nonprice requirements of the counterparties to
a swap and the goal of this section as set forth in subsection
(e).
‘‘(2) For all swaps that are not required to be executed
through a swap execution facility as defined in paragraph (1),
such trades may be executed through any other available means
of interstate commerce.
‘‘(3) The Securities and Exchange Commission and Commodity Futures Trading Commission shall update these rules
as necessary to account for technological and other innovation.
‘‘(e) RULE OF CONSTRUCTION.—The goal of this section is to
promote the trading of swaps on swap execution facilities and
to promote pre-trade price transparency in the swaps market.
‘‘(f) CORE PRINCIPLES FOR SWAP EXECUTION FACILITIES.—
‘‘(1) COMPLIANCE WITH CORE PRINCIPLES.—
‘‘(A) IN GENERAL.—To be registered, and maintain registration, as a swap execution facility, the swap execution
facility shall comply with—
‘‘(i) the core principles described in this subsection;
and
‘‘(ii) any requirement that the Commission may
impose by rule or regulation pursuant to section 8a(5).
‘‘(B) REASONABLE DISCRETION OF SWAP EXECUTION
FACILITY.—Unless otherwise determined by the Commission by rule or regulation, a swap execution facility

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124 STAT. 1714

PUBLIC LAW 111–203—JULY 21, 2010
described in subparagraph (A) shall have reasonable discretion in establishing the manner in which the swap execution facility complies with the core principles described
in this subsection.
‘‘(2) COMPLIANCE WITH RULES.—A swap execution facility
shall—
‘‘(A) establish and enforce compliance with any rule
of the swap execution facility, including—
‘‘(i) the terms and conditions of the swaps traded
or processed on or through the swap execution facility;
and
‘‘(ii) any limitation on access to the swap execution
facility;
‘‘(B) establish and enforce trading, trade processing,
and participation rules that will deter abuses and have
the capacity to detect, investigate, and enforce those rules,
including means—
‘‘(i) to provide market participants with impartial
access to the market; and
‘‘(ii) to capture information that may be used in
establishing whether rule violations have occurred;
‘‘(C) establish rules governing the operation of the
facility, including rules specifying trading procedures to
be used in entering and executing orders traded or posted
on the facility, including block trades; and
‘‘(D) provide by its rules that when a swap dealer
or major swap participant enters into or facilitates a swap
that is subject to the mandatory clearing requirement of
section 2(h), the swap dealer or major swap participant
shall be responsible for compliance with the mandatory
trading requirement under section 2(h)(8).
‘‘(3) SWAPS NOT READILY SUSCEPTIBLE TO MANIPULATION.—
The swap execution facility shall permit trading only in swaps
that are not readily susceptible to manipulation.
‘‘(4) MONITORING OF TRADING AND TRADE PROCESSING.—
The swap execution facility shall—
‘‘(A) establish and enforce rules or terms and conditions
defining, or specifications detailing—
‘‘(i) trading procedures to be used in entering and
executing orders traded on or through the facilities
of the swap execution facility; and
‘‘(ii) procedures for trade processing of swaps on
or through the facilities of the swap execution facility;
and
‘‘(B) monitor trading in swaps to prevent manipulation,
price distortion, and disruptions of the delivery or cash
settlement process through surveillance, compliance, and
disciplinary practices and procedures, including methods
for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions.
‘‘(5) ABILITY TO OBTAIN INFORMATION.—The swap execution
facility shall—
‘‘(A) establish and enforce rules that will allow the
facility to obtain any necessary information to perform
any of the functions described in this section;
‘‘(B) provide the information to the Commission on
request; and

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124 STAT. 1715

‘‘(C) have the capacity to carry out such international
information-sharing agreements as the Commission may
require.
‘‘(6) POSITION LIMITS OR ACCOUNTABILITY.—
‘‘(A) IN GENERAL.—To reduce the potential threat of
market manipulation or congestion, especially during
trading in the delivery month, a swap execution facility
that is a trading facility shall adopt for each of the contracts
of the facility, as is necessary and appropriate, position
limitations or position accountability for speculators.
‘‘(B) POSITION LIMITS.—For any contract that is subject
to a position limitation established by the Commission
pursuant to section 4a(a), the swap execution facility
shall—
‘‘(i) set its position limitation at a level no higher
than the Commission limitation; and
‘‘(ii) monitor positions established on or through
the swap execution facility for compliance with the
limit set by the Commission and the limit, if any,
set by the swap execution facility.
‘‘(7) FINANCIAL INTEGRITY OF TRANSACTIONS.—The swap
execution facility shall establish and enforce rules and procedures for ensuring the financial integrity of swaps entered
on or through the facilities of the swap execution facility,
including the clearance and settlement of the swaps pursuant
to section 2(h)(1).
‘‘(8) EMERGENCY AUTHORITY.—The swap execution facility
shall adopt rules to provide for the exercise of emergency
authority, in consultation or cooperation with the Commission,
as is necessary and appropriate, including the authority to
liquidate or transfer open positions in any swap or to suspend
or curtail trading in a swap.
‘‘(9) TIMELY PUBLICATION OF TRADING INFORMATION.—
‘‘(A) IN GENERAL.—The swap execution facility shall
make public timely information on price, trading volume,
and other trading data on swaps to the extent prescribed
by the Commission.
‘‘(B) CAPACITY OF SWAP EXECUTION FACILITY.—The
swap execution facility shall be required to have the
capacity to electronically capture and transmit trade
information with respect to transactions executed on the
facility.
‘‘(10) RECORDKEEPING AND REPORTING.—
‘‘(A) IN GENERAL.—A swap execution facility shall—
‘‘(i) maintain records of all activities relating to
the business of the facility, including a complete audit
trail, in a form and manner acceptable to the Commission for a period of 5 years;
‘‘(ii) report to the Commission, in a form and
manner acceptable to the Commission, such information as the Commission determines to be necessary
or appropriate for the Commission to perform the
duties of the Commission under this Act; and
‘‘(iii) shall keep any such records relating to swaps
defined in section 1a(47)(A)(v) open to inspection and
examination by the Securities and Exchange Commission.’’

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124 STAT. 1716

‘‘(B) REQUIREMENTS.—The Commission shall adopt
data collection and reporting requirements for swap execution facilities that are comparable to corresponding requirements for derivatives clearing organizations and swap data
repositories.
‘‘(11) ANTITRUST CONSIDERATIONS.—Unless necessary or
appropriate to achieve the purposes of this Act, the swap execution facility shall not—
‘‘(A) adopt any rules or taking any actions that result
in any unreasonable restraint of trade; or
‘‘(B) impose any material anticompetitive burden on
trading or clearing.
‘‘(12) CONFLICTS OF INTEREST.—The swap execution facility
shall—
‘‘(A) establish and enforce rules to minimize conflicts
of interest in its decision-making process; and
‘‘(B) establish a process for resolving the conflicts of
interest.
‘‘(13) FINANCIAL RESOURCES.—
‘‘(A) IN GENERAL.—The swap execution facility shall
have adequate financial, operational, and managerial
resources to discharge each responsibility of the swap
execution facility.
‘‘(B DETERMINATION OF RESOURCE ADEQUACY.—The
financial resources of a swap execution facility shall be
considered to be adequate if the value of the financial
resources exceeds the total amount that would enable the
swap execution facility to cover the operating costs of the
swap execution facility for a 1-year period, as calculated
on a rolling basis.
‘‘(14) SYSTEM SAFEGUARDS.—The swap execution facility
shall—
‘‘(A) establish and maintain a program of risk analysis
and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and automated systems, that—
‘‘(i) are reliable and secure; and
‘‘(ii) have adequate scalable capacity;
‘‘(B) establish and maintain emergency procedures,
backup facilities, and a plan for disaster recovery that
allow for—
‘‘(i) the timely recovery and resumption of operations; and
‘‘(ii) the fulfillment of the responsibilities and
obligations of the swap execution facility; and
‘‘(C) periodically conduct tests to verify that the backup
resources of the swap execution facility are sufficient to
ensure continued—
‘‘(i) order processing and trade matching;
‘‘(ii) price reporting;
‘‘(iii) market surveillance and
‘‘(iv) maintenance of a comprehensive and accurate
audit trail.
‘‘(15) DESIGNATION OF CHIEF COMPLIANCE OFFICER.—
‘‘(A) IN GENERAL.—Each swap execution facility shall
designate an individual to serve as a chief compliance
officer.

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124 STAT. 1717

‘‘(B) DUTIES.—The chief compliance officer shall—
‘‘(i) report directly to the board or to the senior
officer of the facility;
‘‘(ii) review compliance with the core principles
in this subsection;
‘‘(iii) in consultation with the board of the facility,
a body performing a function similar to that of a board,
or the senior officer of the facility, resolve any conflicts
of interest that may arise;
‘‘(iv) be responsible for establishing and administering the policies and procedures required to be
established pursuant to this section;
‘‘(v) ensure compliance with this Act and the rules
and regulations issued under this Act, including rules
prescribed by the Commission pursuant to this section;
and
‘‘(vi) establish procedures for the remediation of
noncompliance issues found during compliance office
reviews, look backs, internal or external audit findings,
self-reported errors, or through validated complaints.
‘‘(C) REQUIREMENTS FOR PROCEDURES.—In establishing
procedures under subparagraph (B)(vi), the chief compliance officer shall design the procedures to establish the
handling, management response, remediation, retesting,
and closing of noncompliance issues.
‘‘(D) ANNUAL REPORTS.—
‘‘(i) IN GENERAL.—In accordance with rules prescribed by the Commission, the chief compliance officer
shall annually prepare and sign a report that contains
a description of—
‘‘(I) the compliance of the swap execution
facility with this Act; and
‘‘(II) the policies and procedures, including the
code of ethics and conflict of interest policies, of
the swap execution facility.
‘‘(ii) REQUIREMENTS.—The chief compliance officer
shall—
‘‘(I) submit each report described in clause
(i) with the appropriate financial report of the
swap execution facility that is required to be submitted to the Commission pursuant to this section;
and
‘‘(II) include in the report a certification that,
under penalty of law, the report is accurate and
complete.
‘‘(g) EXEMPTIONS.—The Commission may exempt, conditionally
or unconditionally, a swap execution facility from registration under
this section if the Commission finds that the facility is subject
to comparable, comprehensive supervision and regulation on a
consolidated basis by the Securities and Exchange Commission,
a prudential regulator, or the appropriate governmental authorities
in the home country of the facility.
‘‘(h) RULES.—The Commission shall prescribe rules governing
the regulation of alternative swap execution facilities under this
section.’’.

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124 STAT. 1718

PUBLIC LAW 111–203—JULY 21, 2010

SEC. 734. DERIVATIVES TRANSACTION EXECUTION FACILITIES AND
EXEMPT BOARDS OF TRADE.
Repeal.

7 USC 7a–3 note.

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Procedures.

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(a) IN GENERAL.—Sections 5a and 5d of the Commodity
Exchange Act (7 U.S.C. 7a, 7a–3) are repealed.
(b) CONFORMING AMENDMENTS.—
(1) Section 2 of the Commodity Exchange Act (7 U.S.C.
2) is amended—
(A) in subsection (a)(1)(A), in the first sentence, by
striking ‘‘or 5a’’; and
(B) in paragraph (2) of subsection (g) (as redesignated
by section 723(a)(1)(B)), by striking ‘‘section 5a of this
Act’’ and all that follows through ‘‘5d of this Act’’ and
inserting ‘‘section 5b of this Act’’.
(2) Section 6(g)(1)(A) of the Securities Exchange Act of
1934 (15 U.S.C. 78f(g)(1)(A)) is amended—
(A) by striking ‘‘that—’’ and all that follows through
‘‘(i) has been designated’’ and inserting ‘‘that has been
designated’’;
(B) by striking ‘‘; or’’ and inserting ‘‘; and’’ and
(C) by striking clause (ii).
(c) ABILITY TO PETITION COMMISSION.—
(1) IN GENERAL.—Prior to the final effective dates in this
title, a person may petition the Commodity Futures Trading
Commission to remain subject to the provisions of section 5d
of the Commodity Exchange Act, as such provisions existed
prior to the effective date of this subtitle.
(2) CONSIDERATION OF PETITION.—The Commodity Futures
Trading Commission shall consider any petition submitted
under paragraph (1) in a prompt manner and may allow a
person to continue operating subject to the provisions of section
5d of the Commodity Exchange Act for up to 1 year after
the effective date of this subtitle.
SEC. 735. DESIGNATED CONTRACT MARKETS.

(a) CRITERIA FOR DESIGNATION.—Section 5 of the Commodity
Exchange Act (7 U.S.C. 7) is amended by striking subsection (b).
(b) CORE PRINCIPLES FOR CONTRACT MARKETS.—Section 5 of
the Commodity Exchange Act (7 U.S.C. 7) is amended by striking
subsection (d) and inserting the following:
‘‘(d) CORE PRINCIPLES FOR CONTRACT MARKETS.—
‘‘(1) DESIGNATION AS CONTRACT MARKET.—
‘‘(A) IN GENERAL.—To be designated, and maintain a
designation, as a contract market, a board of trade shall
comply with—
‘‘(i) any core principle described in this subsection;
and
‘‘(ii) any requirement that the Commission may
impose by rule or regulation pursuant to section 8a(5).
‘‘(B) REASONABLE DISCRETION OF CONTRACT MARKET.—
Unless otherwise determined by the Commission by rule
or regulation, a board of trade described in subparagraph
(A) shall have reasonable discretion in establishing the
manner in which the board of trade complies with the
core principles described in this subsection.
‘‘(2) COMPLIANCE WITH RULES.—

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124 STAT. 1719

‘‘(A) IN GENERAL.—The board of trade shall establish,
monitor, and enforce compliance with the rules of the contract market, including—
‘‘(i) access requirements;
‘‘(ii) the terms and conditions of any contracts to
be traded on the contract market; and
‘‘(iii) rules prohibiting abusive trade practices on
the contract market.
‘‘(B) CAPACITY OF CONTRACT MARKET.—The board of
trade shall have the capacity to detect, investigate, and
apply appropriate sanctions to any person that violates
any rule of the contract market.
‘‘(C) REQUIREMENT OF RULES.—The rules of the contract
market shall provide the board of trade with the ability
and authority to obtain any necessary information to perform any function described in this subsection, including
the capacity to carry out such international informationsharing agreements as the Commission may require.
‘‘(3) CONTRACTS NOT READILY SUBJECT TO MANIPULATION.—
The board of trade shall list on the contract market only contracts that are not readily susceptible to manipulation.
‘‘(4) PREVENTION OF MARKET DISRUPTION.—The board of
trade shall have the capacity and responsibility to prevent
manipulation, price distortion, and disruptions of the delivery
or cash-settlement process through market surveillance, compliance, and enforcement practices and procedures, including—
‘‘(A) methods for conducting real-time monitoring of
trading; and
‘‘(B) comprehensive and accurate trade reconstructions.
‘‘(5) POSITION LIMITATIONS OR ACCOUNTABILITY.—
‘‘(A) IN GENERAL.—To reduce the potential threat of
market manipulation or congestion (especially during
trading in the delivery month), the board of trade shall
adopt for each contract of the board of trade, as is necessary
and appropriate, position limitations or position accountability for speculators.
‘‘(B) MAXIMUM ALLOWABLE POSITION LIMITATION.—For
any contract that is subject to a position limitation established by the Commission pursuant to section 4a(a), the
board of trade shall set the position limitation of the board
of trade at a level not higher than the position limitation
established by the Commission.
‘‘(6) EMERGENCY AUTHORITY.—The board of trade, in consultation or cooperation with the Commission, shall adopt rules
to provide for the exercise of emergency authority, as is necessary and appropriate, including the authority—
‘‘(A) to liquidate or transfer open positions in any contract;
‘‘(B) to suspend or curtail trading in any contract;
and
‘‘(C) to require market participants in any contract
to meet special margin requirements.
‘‘(7) AVAILABILITY OF GENERAL INFORMATION.—The board
of trade shall make available to market authorities, market
participants, and the public accurate information concerning—
‘‘(A) the terms and conditions of the contracts of the
contract market; and

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124 STAT. 1720

‘‘(B)(i) the rules, regulations, and mechanisms for executing transactions on or through the facilities of the contract market; and
‘‘(ii) the rules and specifications describing the operation of the contract market’s—
‘‘(I) electronic matching platform; or
‘‘(II) trade execution facility.
‘‘(8) DAILY PUBLICATION OF TRADING INFORMATION.—The
board of trade shall make public daily information on settlement prices, volume, open interest, and opening and closing
ranges for actively traded contracts on the contract market.
‘‘(9) EXECUTION OF TRANSACTIONS.—
‘‘(A) IN GENERAL.—The board of trade shall provide
a competitive, open, and efficient market and mechanism
for executing transactions that protects the price discovery
process of trading in the centralized market of the board
of trade.
‘‘(B) RULES.—The rules of the board of trade may
authorize, for bona fide business purposes—
‘‘(i) transfer trades or office trades;
‘‘(ii) an exchange of—
‘‘(I) futures in connection with a cash commodity transaction;
‘‘(II) futures for cash commodities; or
‘‘(III) futures for swaps; or
‘‘(iii) a futures commission merchant, acting as
principal or agent, to enter into or confirm the execution of a contract for the purchase or sale of a commodity for future delivery if the contract is reported,
recorded, or cleared in accordance with the rules of
the contract market or a derivatives clearing organization.
‘‘(10) TRADE INFORMATION.—The board of trade shall maintain rules and procedures to provide for the recording and
safe storage of all identifying trade information in a manner
that enables the contract market to use the information—
‘‘(A) to assist in the prevention of customer and market
abuses; and
‘‘(B) to provide evidence of any violations of the rules
of the contract market.
‘‘(11) FINANCIAL INTEGRITY OF TRANSACTIONS.—The board
of trade shall establish and enforce—
‘‘(A) rules and procedures for ensuring the financial
integrity of transactions entered into on or through the
facilities of the contract market (including the clearance
and settlement of the transactions with a derivatives
clearing organization); and
‘‘(B) rules to ensure—
‘‘(i) the financial integrity of any—
‘‘(I) futures commission merchant; and
‘‘(II) introducing broker; and
‘‘(ii) the protection of customer funds.
‘‘(12) PROTECTION OF MARKETS AND MARKET PARTICIPANTS.—The board of trade shall establish and enforce rules—

Public
information.

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124 STAT. 1721

‘‘(A) to protect markets and market participants from
abusive practices committed by any party, including abusive practices committed by a party acting as an agent
for a participant; and
‘‘(B) to promote fair and equitable trading on the contract market.
‘‘(13) DISCIPLINARY PROCEDURES.—The board of trade shall
establish and enforce disciplinary procedures that authorize
the board of trade to discipline, suspend, or expel members
or market participants that violate the rules of the board of
trade, or similar methods for performing the same functions,
including delegation of the functions to third parties.
‘‘(14) DISPUTE RESOLUTION.—The board of trade shall establish and enforce rules regarding, and provide facilities for alternative dispute resolution as appropriate for, market participants and any market intermediaries.
‘‘(15) GOVERNANCE FITNESS STANDARDS.—The board of trade
shall establish and enforce appropriate fitness standards for
directors, members of any disciplinary committee, members
of the contract market, and any other person with direct access
to the facility (including any party affiliated with any person
described in this paragraph).
‘‘(16) CONFLICTS OF INTEREST.—The board of trade shall
establish and enforce rules—
‘‘(A) to minimize conflicts of interest in the decisionmaking process of the contract market; and
‘‘(B) to establish a process for resolving conflicts of
interest described in subparagraph (A).
‘‘(17) COMPOSITION OF GOVERNING BOARDS OF CONTRACT
MARKETS.—The governance arrangements of the board of trade
shall be designed to permit consideration of the views of market
participants.
‘‘(18) RECORDKEEPING.—The board of trade shall maintain
records of all activities relating to the business of the contract
market—
‘‘(A) in a form and manner that is acceptable to the
Commission; and
‘‘(B) for a period of at least 5 years.
‘‘(19) ANTITRUST CONSIDERATIONS.—Unless necessary or
appropriate to achieve the purposes of this Act, the board
of trade shall not—
‘‘(A) adopt any rule or taking any action that results
in any unreasonable restraint of trade; or
‘‘(B) impose any material anticompetitive burden on
trading on the contract market.
‘‘(20) SYSTEM SAFEGUARDS.—The board of trade shall—
‘‘(A) establish and maintain a program of risk analysis
and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and the development of automated
systems, that are reliable, secure, and have adequate scalable capacity;
‘‘(B) establish and maintain emergency procedures,
backup facilities, and a plan for disaster recovery that
allow for the timely recovery and resumption of operations
and the fulfillment of the responsibilities and obligations
of the board of trade; and

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124 STAT. 1722

PUBLIC LAW 111–203—JULY 21, 2010
‘‘(C) periodically conduct tests to verify that backup
resources are sufficient to ensure continued order processing and trade matching, price reporting, market surveillance, and maintenance of a comprehensive and accurate
audit trail.
‘‘(21) FINANCIAL RESOURCES.—
‘‘(A) IN GENERAL.—The board of trade shall have adequate financial, operational, and managerial resources to
discharge each responsibility of the board of trade.
‘‘(B) DETERMINATION OF ADEQUACY.—The financial
resources of the board of trade shall be considered to be
adequate if the value of the financial resources exceeds
the total amount that would enable the contract market
to cover the operating costs of the contract market for
a 1-year period, as calculated on a rolling basis.
‘‘(22) DIVERSITY OF BOARD OF DIRECTORS.—The board of
trade, if a publicly traded company, shall endeavor to recruit
individuals to serve on the board of directors and the other
decision-making bodies (as determined by the Commission) of
the board of trade from among, and to have the composition
of the bodies reflect, a broad and culturally diverse pool of
qualified candidates.
‘‘(23) SECURITIES AND EXCHANGE COMMISSION.—The board
of trade shall keep any such records relating to swaps defined
in section 1a(47)(A)(v) open to inspection and examination by
the Securities and Exchange Commission.’’.

Records.

SEC. 736. MARGIN.

Section 8a(7) of the Commodity Exchange Act (7 U.S.C. 12a(7))
is amended—
(1) in subparagraph (C), by striking ‘‘, excepting the setting
of levels of margin’’;
(2) by redesignating subparagraphs (D) through (F) as subparagraphs (E) through (G), respectively; and
(3) by inserting after subparagraph (C) the following:
‘‘(D) margin requirements, provided that the rules,
regulations, or orders shall—
‘‘(i) be limited to protecting the financial integrity
of the derivatives clearing organization;
‘‘(ii) be designed for risk management purposes
to protect the financial integrity of transactions; and
‘‘(iii) not set specific margin amounts;’’.

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SEC. 737. POSITION LIMITS.

(a) AGGREGATE POSITION LIMITS.—Section 4a(a) of the Commodity Exchange Act (7 U.S.C. 6a(a)) is amended—
(1) by inserting after ‘‘(a)’’ the following:
‘‘(1) IN GENERAL.—’’;
(2) in the first sentence, by striking ‘‘on electronic trading
facilities with respect to a significant price discovery contract’’
and inserting ‘‘swaps that perform or affect a significant price
discovery function with respect to registered entities’’;
(3) in the second sentence—
(A) by inserting ‘‘, including any group or class of
traders,’’ after ‘‘held by any person’’; and
(B) by striking ‘‘on an electronic trading facility with
respect to a significant price discovery contract,’’ and
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124 STAT. 1723

designated contract market or a swap execution facility,
or swaps not traded on or subject to the rules of a designated contract market or a swap execution facility that
performs a significant price discovery function with respect
to a registered entity,’’; and
(4) by adding at the end the following:
‘‘(2) ESTABLISHMENT OF LIMITATIONS.—
‘‘(A) IN GENERAL.—In accordance with the standards
set forth in paragraph (1) of this subsection and consistent
with the good faith exception cited in subsection (b)(2),
with respect to physical commodities other than excluded
commodities as defined by the Commission, the Commission shall by rule, regulation, or order establish limits
on the amount of positions, as appropriate, other than
bona fide hedge positions, that may be held by any person
with respect to contracts of sale for future delivery or
with respect to options on the contracts or commodities
traded on or subject to the rules of a designated contract
market.
‘‘(B) TIMING.—
‘‘(i) EXEMPT COMMODITIES.—For exempt commodities, the limits required under subparagraph (A) shall
be established within 180 days after the date of the
enactment of this paragraph.
‘‘(ii) AGRICULTURAL COMMODITIES.—For agricultural commodities, the limits required under subparagraph (A) shall be established within 270 days after
the date of the enactment of this paragraph.
‘‘(C) GOAL.—In establishing the limits required under
subparagraph (A), the Commission shall strive to ensure
that trading on foreign boards of trade in the same commodity will be subject to comparable limits and that any
limits to be imposed by the Commission will not cause
price discovery in the commodity to shift to trading on
the foreign boards of trade.
‘‘(3) SPECIFIC LIMITATIONS.—In establishing the limits
required in paragraph (2), the Commission, as appropriate,
shall set limits—
‘‘(A) on the number of positions that may be held
by any person for the spot month, each other month, and
the aggregate number of positions that may be held by
any person for all months; and
‘‘(B) to the maximum extent practicable, in its discretion—
‘‘(i) to diminish, eliminate, or prevent excessive
speculation as described under this section;
‘‘(ii) to deter and prevent market manipulation,
squeezes, and corners;
‘‘(iii) to ensure sufficient market liquidity for bona
fide hedgers; and
‘‘(iv) to ensure that the price discovery function
of the underlying market is not disrupted.
‘‘(4) SIGNIFICANT PRICE DISCOVERY FUNCTION.—In making
a determination whether a swap performs or affects a significant price discovery function with respect to regulated markets,
the Commission shall consider, as appropriate:

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‘‘(A) PRICE LINKAGE.—The extent to which the swap
uses or otherwise relies on a daily or final settlement
price, or other major price parameter, of another contract
traded on a regulated market based upon the same underlying commodity, to value a position, transfer or convert
a position, financially settle a position, or close out a position.
‘‘(B) ARBITRAGE.—The extent to which the price for
the swap is sufficiently related to the price of another
contract traded on a regulated market based upon the
same underlying commodity so as to permit market participants to effectively arbitrage between the markets by
simultaneously maintaining positions or executing trades
in the swaps on a frequent and recurring basis.
‘‘(C) MATERIAL PRICE REFERENCE.—The extent to
which, on a frequent and recurring basis, bids, offers, or
transactions in a contract traded on a regulated market
are directly based on, or are determined by referencing,
the price generated by the swap.
‘‘(D) MATERIAL LIQUIDITY.—The extent to which the
volume of swaps being traded in the commodity is sufficient
to have a material effect on another contract traded on
a regulated market.
‘‘(E) OTHER MATERIAL FACTORS.—Such other material
factors as the Commission specifies by rule or regulation
as relevant to determine whether a swap serves a significant price discovery function with respect to a regulated
market.
‘‘(5) ECONOMICALLY EQUIVALENT CONTRACTS.—
‘‘(A) Notwithstanding any other provision of this section, the Commission shall establish limits on the amount
of positions, including aggregate position limits, as appropriate, other than bona fide hedge positions, that may
be held by any person with respect to swaps that are
economically equivalent to contracts of sale for future
delivery or to options on the contracts or commodities
traded on or subject to the rules of a designated contract
market subject to paragraph (2).
‘‘(B) In establishing limits pursuant to subparagraph
(A), the Commission shall—
‘‘(i) develop the limits concurrently with limits
established under paragraph (2), and the limits shall
have similar requirements as under paragraph (3)(B);
and
‘‘(ii) establish the limits simultaneously with limits
established under paragraph (2).
‘‘(6) AGGREGATE POSITION LIMITS.—The Commission shall,
by rule or regulation, establish limits (including related hedge
exemption provisions) on the aggregate number or amount of
positions in contracts based upon the same underlying commodity (as defined by the Commission) that may be held by
any person, including any group or class of traders, for each
month across—
‘‘(A) contracts listed by designated contract markets;
‘‘(B) with respect to an agreement contract, or transaction that settles against any price (including the daily
or final settlement price) of 1 or more contracts listed

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124 STAT. 1725

for trading on a registered entity, contracts traded on a
foreign board of trade that provides members or other
participants located in the United States with direct access
to its electronic trading and order matching system; and
‘‘(C) swap contracts that perform or affect a significant
price discovery function with respect to regulated entities.
‘‘(7) EXEMPTIONS.—The Commission, by rule, regulation,
or order, may exempt, conditionally or unconditionally, any
person or class of persons, any swap or class of swaps, any
contract of sale of a commodity for future delivery or class
of such contracts, any option or class of options, or any transaction or class of transactions from any requirement it may
establish under this section with respect to position limits.’’.
(b) CONFORMING AMENDMENTS.—Section 4a(b) of the Commodity Exchange Act (7 U.S.C. 6a(b)) is amended—
(1) in paragraph (1), by striking ‘‘or derivatives transaction
execution facility or facilities or electronic trading facility’’ and
inserting ‘‘or swap execution facility or facilities’’; and
(2) in paragraph (2), by striking ‘‘or derivatives transaction
execution facility or facilities or electronic trading facility’’ and
inserting ‘‘or swap execution facility’’.
(c) BONA FIDE HEDGING TRANSACTION.—Section 4a(c) of the
Commodity Exchange Act is amended—
(1) by inserting ‘‘(1)’’ after ‘‘(c)’’; and
(2) by adding at the end the following:
‘‘(2) For the purposes of implementation of subsection (a)(2)
for contracts of sale for future delivery or options on the contracts or commodities, the Commission shall define what constitutes a bona fide hedging transaction or position as a transaction or position that—
‘‘(A)(i) represents a substitute for transactions made
or to be made or positions taken or to be taken at a
later time in a physical marketing channel;
‘‘(ii) is economically appropriate to the reduction of
risks in the conduct and management of a commercial
enterprise; and
‘‘(iii) arises from the potential change in the value
of—
‘‘(I) assets that a person owns, produces, manufactures, processes, or merchandises or anticipates
owning, producing, manufacturing, processing, or merchandising;
‘‘(II) liabilities that a person owns or anticipates
incurring; or
‘‘(III) services that a person provides, purchases,
or anticipates providing or purchasing; or
‘‘(B) reduces risks attendant to a position resulting
from a swap that—
‘‘(i) was executed opposite a counterparty for which
the transaction would qualify as a bona fide hedging
transaction pursuant to subparagraph (A); or
‘‘(ii) meets the requirements of subparagraph (A).’’.
(d) EFFECTIVE DATE.—This section and the amendments made
by this section shall become effective on the date of the enactment
of this section.

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PUBLIC LAW 111–203—JULY 21, 2010

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SEC. 738. FOREIGN BOARDS OF TRADE.

(a) IN GENERAL.—Section 4(b) of the Commodity Exchange Act
(7 U.S.C. 6(b)) is amended—
(1) in the first sentence, by striking ‘‘The Commission’’
and inserting the following:
‘‘(2) PERSONS LOCATED IN THE UNITED STATES.—
‘‘(A) IN GENERAL.—The Commission’’;
(2) in the second sentence, by striking ‘‘Such rules and
regulations’’ and inserting the following:
‘‘(B) DIFFERENT REQUIREMENTS.—Rules and regulations
described in subparagraph (A)’’;
(3) in the third sentence—
(A) by striking ‘‘No rule or regulation’’ and inserting
the following:
‘‘(C) PROHIBITION.—Except as provided in paragraphs
(1) and (2), no rule or regulation’’;
(B) by striking ‘‘that (1) requires’’ and inserting the
following: ‘‘that—
‘‘(i) requires’’; and
(C) by striking ‘‘market, or (2) governs’’ and inserting
the following: ‘‘market; or
‘‘(ii) governs’’; and
(4) by inserting before paragraph (2) (as designated by
paragraph (1)) the following:
‘‘(1) FOREIGN BOARDS OF TRADE.—
‘‘(A) REGISTRATION.—The Commission may adopt rules
and regulations requiring registration with the Commission
for a foreign board of trade that provides the members
of the foreign board of trade or other participants located
in the United States with direct access to the electronic
trading and order matching system of the foreign board
of trade, including rules and regulations prescribing procedures and requirements applicable to the registration of
such foreign boards of trade. For purposes of this paragraph, ‘direct access’ refers to an explicit grant of authority
by a foreign board of trade to an identified member or
other participant located in the United States to enter
trades directly into the trade matching system of the foreign board of trade. In adopting such rules and regulations,
the commission shall consider—
‘‘(i) whether any such foreign board of trade is
subject to comparable, comprehensive supervision and
regulation by the appropriate governmental authorities
in the foreign board of trade’s home country; and
‘‘(ii) any previous commission findings that the
foreign board of trade is subject to comparable comprehensive supervision and regulation by the appropriate government authorities in the foreign board of
trade’s home country.
‘‘(B) LINKED CONTRACTS.—The Commission may not
permit a foreign board of trade to provide to the members
of the foreign board of trade or other participants located
in the United States direct access to the electronic trading
and order-matching system of the foreign board of trade
with respect to an agreement, contract, or transaction that
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124 STAT. 1727

a registered entity, unless the Commission determines
that—
‘‘(i) the foreign board of trade makes public daily
trading information regarding the agreement, contract,
or transaction that is comparable to the daily trading
information published by the registered entity for the
1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of
trade settles; and
‘‘(ii) the foreign board of trade (or the foreign
futures authority that oversees the foreign board of
trade)—
‘‘(I) adopts position limits (including related
hedge exemption provisions) for the agreement,
contract, or transaction that are comparable to
the position limits (including related hedge exemption provisions) adopted by the registered entity
for the 1 or more contracts against which the
agreement, contract, or transaction traded on the
foreign board of trade settles;
‘‘(II) has the authority to require or direct
market participants to limit, reduce, or liquidate
any position the foreign board of trade (or the
foreign futures authority that oversees the foreign
board of trade) determines to be necessary to prevent or reduce the threat of price manipulation,
excessive speculation as described in section 4a,
price distortion, or disruption of delivery or the
cash settlement process;
‘‘(III) agrees to promptly notify the Commission, with regard to the agreement, contract, or
transaction that settles against any price
(including the daily or final settlement price) of
1 or more contracts listed for trading on a registered entity, of any change regarding—
‘‘(aa) the information that the foreign
board of trade will make publicly available;
‘‘(bb) the position limits that the foreign
board of trade or foreign futures authority will
adopt and enforce;
‘‘(cc) the position reductions required to
prevent manipulation, excessive speculation as
described in section 4a, price distortion, or
disruption of delivery or the cash settlement
process; and
‘‘(dd) any other area of interest expressed
by the Commission to the foreign board of
trade or foreign futures authority;
‘‘(IV) provides information to the Commission
regarding large trader positions in the agreement,
contract, or transaction that is comparable to the
large trader position information collected by the
Commission for the 1 or more contracts against
which the agreement, contract, or transaction
traded on the foreign board of trade settles; and
‘‘(V) provides the Commission such information as is necessary to publish reports on aggregate

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trader positions for the agreement, contract, or
transaction traded on the foreign board of trade
that are comparable to such reports on aggregate
trader positions for the 1 or more contracts against
which the agreement, contract, or transaction
traded on the foreign board of trade settles.
‘‘(C) EXISTING FOREIGN BOARDS OF TRADE.—Subparagraphs (A) and (B) shall not be effective with respect to
any foreign board of trade to which, prior to the date
of enactment of this paragraph, the Commission granted
direct access permission until the date that is 180 days
after that date of enactment.’’.
(b) LIABILITY OF REGISTERED PERSONS TRADING ON A FOREIGN
BOARD OF TRADE.—Section 4 of the Commodity Exchange Act (7
U.S.C. 6) is amended—
(1) in subsection (a), in the matter preceding paragraph
(1), by inserting ‘‘or by subsection (e)’’ after ‘‘Unless exempted
by the Commission pursuant to subsection (c)’’; and
(2) by adding at the end the following:
‘‘(e) LIABILITY OF REGISTERED PERSONS TRADING ON A FOREIGN
BOARD OF TRADE.—
‘‘(1) IN GENERAL.—A person registered with the Commission, or exempt from registration by the Commission, under
this Act may not be found to have violated subsection (a)
with respect to a transaction in, or in connection with, a contract of sale of a commodity for future delivery if the person—
‘‘(A) has reason to believe that the transaction and
the contract is made on or subject to the rules of a foreign
board of trade that is—
‘‘(i) legally organized under the laws of a foreign
country;
‘‘(ii) authorized to act as a board of trade by a
foreign futures authority; and
‘‘(iii) subject to regulation by the foreign futures
authority; and
‘‘(B) has not been determined by the Commission to
be operating in violation of subsection (a).
‘‘(2) RULE OF CONSTRUCTION.—Nothing in this subsection
shall be construed as implying or creating any presumption
that a board of trade, exchange, or market is located outside
the United States, or its territories or possessions, for purposes
of subsection (a).’’.
(c) CONTRACT ENFORCEMENT FOR FOREIGN FUTURES CONTRACTS.—Section 22(a) of the Commodity Exchange Act (7 U.S.C.
25(a)) (as amended by section 739) is amended by adding at the
end the following:
‘‘(6) CONTRACT ENFORCEMENT FOR FOREIGN FUTURES CONTRACTS.—A contract of sale of a commodity for future delivery
traded or executed on or through the facilities of a board of trade,
exchange, or market located outside the United States for purposes
of section 4(a) shall not be void, voidable, or unenforceable, and
a party to such a contract shall not be entitled to rescind or
recover any payment made with respect to the contract, based
on the failure of the foreign board of trade to comply with any
provision of this Act.’’.

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124 STAT. 1729

SEC. 739. LEGAL CERTAINTY FOR SWAPS.

Section 22(a) of the Commodity Exchange Act (7 U.S.C. 25(a))
is amended by striking paragraph (4) and inserting the following:
‘‘(4) CONTRACT ENFORCEMENT BETWEEN ELIGIBLE COUNTERPARTIES.—
‘‘(A) IN GENERAL.—No hybrid instrument sold to any
investor shall be void, voidable, or unenforceable, and no party
to a hybrid instrument shall be entitled to rescind, or recover
any payment made with respect to, the hybrid instrument
under this section or any other provision of Federal or State
law, based solely on the failure of the hybrid instrument to
comply with the terms or conditions of section 2(f) or regulations
of the Commission.
‘‘(B) SWAPS.—No agreement, contract, or transaction
between eligible contract participants or persons reasonably
believed to be eligible contract participants shall be void, voidable, or unenforceable, and no party to such agreement, contract, or transaction shall be entitled to rescind, or recover
any payment made with respect to, the agreement, contract,
or transaction under this section or any other provision of
Federal or State law, based solely on the failure of the agreement, contract, or transaction—
‘‘(i) to meet the definition of a swap under section
1a; or
‘‘(ii) to be cleared in accordance with section 2(h)(1).
‘‘(5) LEGAL CERTAINTY FOR LONG-TERM SWAPS ENTERED INTO
BEFORE THE DATE OF ENACTMENT OF THE WALL STREET TRANSPARENCY AND ACCOUNTABILITY ACT OF 2010.—
‘‘(A) EFFECT ON SWAPS.—Unless specifically reserved in
the applicable swap, neither the enactment of the Wall Street
Transparency and Accountability Act of 2010, nor any requirement under that Act or an amendment made by that Act,
shall constitute a termination event, force majeure, illegality,
increased costs, regulatory change, or similar event under a
swap (including any related credit support arrangement) that
would permit a party to terminate, renegotiate, modify, amend,
or supplement 1 or more transactions under the swap.
‘‘(B) POSITION LIMITS.—Any position limit established under
the Wall Street Transparency and Accountability Act of 2010
shall not apply to a position acquired in good faith prior to
the effective date of any rule, regulation, or order under the
Act that establishes the position limit; provided, however, that
such positions shall be attributed to the trader if the trader’s
position is increased after the effective date of such position
limit rule, regulation, or order.’’.
SEC. 740. MULTILATERAL CLEARING ORGANIZATIONS.

Sections 408 and 409 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4421, 4422) are repealed.

Repeal.

SEC. 741. ENFORCEMENT.

(a) ENFORCEMENT AUTHORITY.—The Commodity Exchange Act
is amended by inserting after section 4b (7 U.S.C. 6b) the following:
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‘‘SEC. 4b–1. ENFORCEMENT AUTHORITY.

7 USC 6b–1.

‘‘(a) COMMODITY FUTURES TRADING COMMISSION.—Except as
provided in subsections (b), (c), and (d), the Commission shall have
exclusive authority to enforce the provisions of subtitle A of the

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Wall Street Transparency and Accountability Act of 2010 with
respect to any person.
‘‘(b) PRUDENTIAL REGULATORS.—The prudential regulators shall
have exclusive authority to enforce the provisions of section 4s(e)
with respect to swap dealers or major swap participants for which
they are the prudential regulator.
‘‘(c) REFERRALS.—
‘‘(1) PRUDENTIAL REGULATORS.—If the prudential regulator
for a swap dealer or major swap participant has cause to
believe that the swap dealer or major swap participant, or
any affiliate or division of the swap dealer or major swap
participant, may have engaged in conduct that constitutes a
violation of the nonprudential requirements of this Act
(including section 4s or rules adopted by the Commission under
that section), the prudential regulator may promptly notify
the Commission in a written report that includes—
‘‘(A) a request that the Commission initiate an enforcement proceeding under this Act; and
‘‘(B) an explanation of the facts and circumstances
that led to the preparation of the written report.
‘‘(2) COMMISSION.—If the Commission has cause to believe
that a swap dealer or major swap participant that has a prudential regulator may have engaged in conduct that constitutes
a violation of any prudential requirement of section 4s or rules
adopted by the Commission under that section, the Commission
may notify the prudential regulator of the conduct in a written
report that includes—
‘‘(A) a request that the prudential regulator initiate
an enforcement proceeding under this Act or any other
Federal law (including regulations); and
‘‘(B) an explanation of the concerns of the Commission,
and a description of the facts and circumstances, that led
to the preparation of the written report.
‘‘(d) BACKSTOP ENFORCEMENT AUTHORITY.—
‘‘(1) INITIATION OF ENFORCEMENT PROCEEDING BY PRUDENTIAL REGULATOR.—If the Commission does not initiate an
enforcement proceeding before the end of the 90-day period
beginning on the date on which the Commission receives a
written report under subsection (c)(1), the prudential regulator
may initiate an enforcement proceeding.
‘‘(2) INITIATION OF ENFORCEMENT PROCEEDING BY COMMISSION.—If the prudential regulator does not initiate an enforcement proceeding before the end of the 90-day period beginning
on the date on which the prudential regulator receives a written
report under subsection (c)(2), the Commission may initiate
an enforcement proceeding.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 4b of the Commodity Exchange Act (7 U.S.C.
6b) is amended—
(A) in subsection (a)(2), by striking ‘‘or other agreement, contract, or transaction subject to paragraphs (1)
and (2) of section 5a(g),’’ and inserting ‘‘or swap,’’;
(B) in subsection (b), by striking ‘‘or other agreement,
contract or transaction subject to paragraphs (1) and (2)
of section 5a(g),’’ and inserting ‘‘or swap,’’; and
(C) by adding at the end the following:

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124 STAT. 1731

‘‘(e) It shall be unlawful for any person, directly or indirectly,
by the use of any means or instrumentality of interstate commerce,
or of the mails, or of any facility of any registered entity, in
or in connection with any order to make, or the making of, any
contract of sale of any commodity for future delivery (or option
on such a contract), or any swap, on a group or index of securities
(or any interest therein or based on the value thereof)—
‘‘(1) to employ any device, scheme, or artifice to defraud;
‘‘(2) to make any untrue statement of a material fact or
to omit to state a material fact necessary in order to make
the statements made, in the light of the circumstances under
which they were made, not misleading; or
‘‘(3) to engage in any act, practice, or course of business
which operates or would operate as a fraud or deceit upon
any person.’’.
(2) Section 4c(a)(1) of the Commodity Exchange Act (7
U.S.C. 6c(a)(1)) is amended by inserting ‘‘or swap’’ before ‘‘if
the transaction is used or may be used’’.
(3) Section 6(c) of the Commodity Exchange Act (7 U.S.C.
9) is amended in the first sentence by inserting ‘‘or of any
swap,’’ before ‘‘or has willfully made’’.
(4) Section 6(d) of the Commodity Exchange Act (7 U.S.C.
13b) is amended in the first sentence, in the matter preceding
the proviso, by inserting ‘‘or of any swap,’’ before ‘‘or otherwise
is violating’’.
(5) Section 6c(a) of the Commodity Exchange Act (7 U.S.C.
13a–1(a)) is amended in the matter preceding the proviso by
inserting ‘‘or any swap’’ after ‘‘commodity for future delivery’’.
(6) Section 9 of the Commodity Exchange Act (7 U.S.C.
13) is amended—
(A) in subsection (a)—
(i) in paragraph (2), by inserting ‘‘or of any swap,’’
before ‘‘or to corner’’; and
(ii) in paragraph (4), by inserting ‘‘swap data
repository,’’ before ‘‘or futures association’’ and
(B) in subsection (e)(1)—
(i) by inserting ‘‘swap data repository,’’ before ‘‘or
registered futures association’’; and
(ii) by inserting ‘‘, or swaps,’’ before ‘‘on the basis’’.
(7) Section 9(a) of the Commodity Exchange Act (7 U.S.C.
13(a)) is amended by adding at the end the following:
‘‘(6) Any person to abuse the end user clearing exemption
under section 2(h)(4), as determined by the Commission.’’.
(8) Section 2(c)(2)(B) of the Commodity Exchange Act (7
U.S.C. 2(c)(2)(B)) is amended—
(A) by striking ‘‘(dd),’’ each place it appears;
(B) in clause (iii), by inserting ‘‘, and accounts or pooled
investment vehicles described in clause (vi),’’ before ‘‘shall
be subject to’’; and
(C) by adding at the end the following:
‘‘(vi) This Act applies to, and the Commission shall
have jurisdiction over, an account or pooled investment
vehicle that is offered for the purpose of trading, or
that trades, any agreement, contract, or transaction
in foreign currency described in clause (i).’’.
(9) Section 2(c)(2)(C) of the Commodity Exchange Act (7
U.S.C. 2(c)(2)(C)) is amended—

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Applicability.

Penalty.

Penalty.

15 USC 8324.

PUBLIC LAW 111–203—JULY 21, 2010

(A) by striking ‘‘(dd),’’ each place it appears;
(B) in clause (ii)(I), by inserting ‘‘, and accounts or
pooled investment vehicles described in clause (vii),’’ before
‘‘shall be subject to’’; and
(C) by adding at the end the following:
‘‘(vii) This Act applies to, and the Commission
shall have jurisdiction over, an account or pooled
investment vehicle that is offered for the purpose of
trading, or that trades, any agreement, contract, or
transaction in foreign currency described in clause (i).’’.
(10) Section 1a(19)(A)(iv)(II) of the Commodity Exchange
Act (7 U.S.C. 1a(19)(A)(iv)(II)) (as redesignated by section
721(a)(1)) is amended by inserting before the semicolon at the
end the following: ‘‘provided, however, that for purposes of
section 2(c)(2)(B)(vi) and section 2(c)(2)(C)(vii), the term ‘eligible
contract participant’ shall not include a commodity pool in
which any participant is not otherwise an eligible contract
participant’’.
(11) Section 6(e) of the Commodity Exchange Act (7 U.S.C.
9a) is amended by adding at the end the following:
‘‘(4) Any designated clearing organization that knowingly
or recklessly evades or participates in or facilitates an evasion
of the requirements of section 2(h) shall be liable for a civil
money penalty in twice the amount otherwise available for
a violation of section 2(h).
‘‘(5) Any swap dealer or major swap participant that knowingly or recklessly evades or participates in or facilitates an
evasion of the requirements of section 2(h) shall be liable for
a civil money penalty in twice the amount otherwise available
for a violation of section 2(h).’’.
(c) SAVINGS CLAUSE.—Notwithstanding any other provision of
this title, nothing in this subtitle shall be construed as divesting
any appropriate Federal banking agency of any authority it may
have to establish or enforce, with respect to a person for which
such agency is the appropriate Federal banking agency, prudential
or other standards pursuant to authority granted by Federal law
other than this title.
SEC. 742. RETAIL COMMODITY TRANSACTIONS.

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(a) IN GENERAL.—Section 2(c) of the Commodity Exchange Act
(7 U.S.C. 2(c)) is amended—
(1) in paragraph (1), by striking ‘‘5a (to the extent provided
in section 5a(g)), 5b, 5d, or 12(e)(2)(B))’’ and inserting ‘‘, 5b,
or 12(e)(2)(B))’’; and
(2) in paragraph (2), by adding at the end the following:
‘‘(D) RETAIL COMMODITY TRANSACTIONS.—
‘‘(i) APPLICABILITY.—Except as provided in clause
(ii), this subparagraph shall apply to any agreement,
contract, or transaction in any commodity that is—
‘‘(I) entered into with, or offered to (even if
not entered into with), a person that is not an
eligible contract participant or eligible commercial
entity; and
‘‘(II) entered into, or offered (even if not
entered into), on a leveraged or margined basis,
or financed by the offeror, the counterparty, or

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124 STAT. 1733

a person acting in concert with the offeror or
counterparty on a similar basis.
‘‘(ii) EXCEPTIONS.—This subparagraph shall not
apply to—
‘‘(I) an agreement, contract, or transaction
described in paragraph (1) or subparagraphs (A),
(B), or (C), including any agreement, contract, or
transaction specifically excluded from subparagraph (A), (B), or (C);
‘‘(II) any security;
‘‘(III) a contract of sale that—
‘‘(aa) results in actual delivery within 28
days or such other longer period as the
Commission may determine by rule or regulation based upon the typical commercial practice in cash or spot markets for the commodity
involved; or
‘‘(bb) creates an enforceable obligation to
deliver between a seller and a buyer that have
the ability to deliver and accept delivery,
respectively, in connection with the line of
business of the seller and buyer; or
‘‘(IV) an agreement, contract, or transaction
that is listed on a national securities exchange
registered under section 6(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78f(a)); or
‘‘(V) an identified banking product, as defined
in section 402(b) of the Legal Certainty for Bank
Products Act of 2000 (7 U.S.C.27(b)).
‘‘(iii) ENFORCEMENT.—Sections 4(a), 4(b), and 4b
apply to any agreement, contract, or transaction
described in clause (i), as if the agreement, contract,
or transaction was a contract of sale of a commodity
for future delivery.
‘‘(iv) ELIGIBLE COMMERCIAL ENTITY.—For purposes
of this subparagraph, an agricultural producer, packer,
or handler shall be considered to be an eligible commercial entity for any agreement, contract, or transaction
for a commodity in connection with the line of business
of the agricultural producer, packer, or handler.’’.
(b) GRAMM-LEACH-BLILEY ACT.—Section 206(a) of the GrammLeach-Bliley Act (Public Law 106–102; 15 U.S.C. 78c note) is
amended, in the matter preceding paragraph (1), by striking ‘‘For
purposes of’’ and inserting ‘‘Except as provided in subsection (e),
for purposes of’’.
(c) CONFORMING AMENDMENTS RELATING TO RETAIL FOREIGN
EXCHANGE TRANSACTIONS.—
(1) Section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act
(7 U.S.C. 2(c)(2)(B)(i)(II)) is amended—
(A) in item (aa), by inserting ‘‘United States’’ before
‘‘financial institution’’;
(B) by striking items (dd) and (ff);
(C) by redesignating items (ee) and (gg) as items (dd)
and (ff), respectively; and
(D) in item (dd) (as so redesignated), by striking the
semicolon and inserting ‘‘; or’’.

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(2) Section 2(c)(2) of the Commodity Exchange Act (7 U.S.C.
2(c)(2)) (as amended by subsection (a)(2)) is amended by adding
at the end the following:
‘‘(E) PROHIBITION.—
‘‘(i)
DEFINITION
OF
FEDERAL
REGULATORY
AGENCY.—In this subparagraph, the term ‘Federal
regulatory agency’ means—
‘‘(I) the Commission;
‘‘(II) the Securities and Exchange Commission;
‘‘(III) an appropriate Federal banking agency;
‘‘(IV) the National Credit Union Association;
and
‘‘(V) the Farm Credit Administration.
‘‘(ii) PROHIBITION.—
‘‘(I) IN GENERAL.—Except as provided in subclause (II), a person described in subparagraph
(B)(i)(II) for which there is a Federal regulatory
agency shall not offer to, or enter into with, a
person that is not an eligible contract participant,
any agreement, contract, or transaction in foreign
currency described in subparagraph (B)(i)(I) except
pursuant to a rule or regulation of a Federal regulatory agency allowing the agreement, contract,
or transaction under such terms and conditions
as the Federal regulatory agency shall prescribe.
‘‘(II) EFFECTIVE DATE.—With regard to persons
described in subparagraph (B)(i)(II) for which a
Federal regulatory agency has issued a proposed
rule concerning agreements, contracts, or transactions in foreign currency described in subparagraph (B)(i)(I) prior to the date of enactment of
this subclause, subclause (I) shall take effect 90
days after the date of enactment of this subclause.
‘‘(iii) REQUIREMENTS OF RULES AND REGULATIONS.—
‘‘(I) IN GENERAL.—The rules and regulations
described in clause (ii) shall prescribe appropriate
requirements with respect to—
‘‘(aa) disclosure;
‘‘(bb) recordkeeping;
‘‘(cc) capital and margin;
‘‘(dd) reporting;
‘‘(ee) business conduct;
‘‘(ff) documentation; and
‘‘(gg) such other standards or requirements as the Federal regulatory agency shall
determine to be necessary.
‘‘(II) TREATMENT.—The rules or regulations
described in clause (ii) shall treat all agreements,
contracts, and transactions in foreign currency
described in subparagraph (B)(i)(I), and all agreements, contracts, and transactions in foreign currency that are functionally or economically similar
to agreements, contracts, or transactions described
in subparagraph (B)(i)(I), similarly.’’.

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124 STAT. 1735

SEC. 743. OTHER AUTHORITY.

7 USC 1a note.

Unless otherwise provided by the amendments made by this
subtitle, the amendments made by this subtitle do not divest any
appropriate Federal banking agency, the Commodity Futures
Trading Commission, the Securities and Exchange Commission,
or other Federal or State agency of any authority derived from
any other applicable law.
SEC. 744. RESTITUTION REMEDIES.

Section 6c(d) of the Commodity Exchange Act (7 U.S.C. 13a–
1(d)) is amended by adding at the end the following:
‘‘(3) EQUITABLE REMEDIES.—In any action brought under
this section, the Commission may seek, and the court may
impose, on a proper showing, on any person found in the
action to have committed any violation, equitable remedies
including—
‘‘(A) restitution to persons who have sustained losses
proximately caused by such violation (in the amount of
such losses); and
‘‘(B) disgorgement of gains received in connection with
such violation.’’.

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SEC. 745. ENHANCED COMPLIANCE BY REGISTERED ENTITIES.

(a) EFFECT OF INTERPRETATION.—Section 5c(a) of the Commodity Exchange Act (7 U.S.C. 7a–2(a)) is amended by striking
paragraph (2) and inserting the following:
‘‘(2) EFFECT OF INTERPRETATION.—An interpretation issued
under paragraph (1) may provide the exclusive means for complying with each section described in paragraph (1).’’.
(b) NEW CONTRACTS, NEW RULES, AND RULE AMENDMENTS.—
Section 5c of the Commodity Exchange Act (7 U.S.C. 7a–2) is
amended by striking subsection (c) and inserting the following:
‘‘(c) NEW CONTRACTS, NEW RULES, AND RULE AMENDMENTS.—
‘‘(1) IN GENERAL.—A registered entity may elect to list
for trading or accept for clearing any new contract, or other
instrument, or may elect to approve and implement any new
rule or rule amendment, by providing to the Commission (and
the Secretary of the Treasury, in the case of a contract of
sale of a government security for future delivery (or option
on such a contract) or a rule or rule amendment specifically
related to such a contract) a written certification that the
new contract or instrument or clearing of the new contract
or instrument, new rule, or rule amendment complies with
this Act (including regulations under this Act).
‘‘(2) RULE REVIEW.—The new rule or rule amendment
described in paragraph (1) shall become effective, pursuant
to the certification of the registered entity and notice of such
certification to its members (in a manner to be determined
by the Commission), on the date that is 10 business days
after the date on which the Commission receives the certification (or such shorter period as determined by the Commission
by rule or regulation) unless the Commission notifies the registered entity within such time that it is staying the certification
because there exist novel or complex issues that require additional time to analyze, an inadequate explanation by the
submitting registered entity, or a potential inconsistency with
this Act (including regulations under this Act).

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PUBLIC LAW 111–203—JULY 21, 2010
‘‘(3) STAY OF CERTIFICATION FOR RULES.—
‘‘(A) A notification by the Commission pursuant to
paragraph (2) shall stay the certification of the new rule
or rule amendment for up to an additional 90 days from
the date of the notification.
‘‘(B) A rule or rule amendment subject to a stay pursuant to subparagraph (A) shall become effective, pursuant
to the certification of the registered entity, at the expiration
of the period described in subparagraph (A) unless the
Commission—
‘‘(i) withdraws the stay prior to that time; or
‘‘(ii) notifies the registered entity during such
period that it objects to the proposed certification on
the grounds that it is inconsistent with this Act
(including regulations under this Act).
‘‘(C) The Commission shall provide a not less than
30-day public comment period, within the 90-day period
in which the stay is in effect as described in subparagraph
(A), whenever the Commission reviews a rule or rule
amendment pursuant to a notification by the Commission
under this paragraph.
‘‘(4) PRIOR APPROVAL.—
‘‘(A) IN GENERAL.—A registered entity may request that
the Commission grant prior approval to any new contract
or other instrument, new rule, or rule amendment.
‘‘(B) PRIOR APPROVAL REQUIRED.—Notwithstanding any
other provision of this section, a designated contract market
shall submit to the Commission for prior approval each
rule amendment that materially changes the terms and
conditions, as determined by the Commission, in any contract of sale for future delivery of a commodity specifically
enumerated in section 1a(10) (or any option thereon) traded
through its facilities if the rule amendment applies to
contracts and delivery months which have already been
listed for trading and have open interest.
‘‘(C) DEADLINE.—If prior approval is requested under
subparagraph (A), the Commission shall take final action
on the request not later than 90 days after submission
of the request, unless the person submitting the request
agrees to an extension of the time limitation established
under this subparagraph.
‘‘(5) APPROVAL.—
‘‘(A) RULES.—The Commission shall approve a new
rule, or rule amendment, of a registered entity unless the
Commission finds that the new rule, or rule amendment,
is inconsistent with this subtitle (including regulations).
‘‘(B) CONTRACTS AND INSTRUMENTS.—The Commission
shall approve a new contract or other instrument unless
the Commission finds that the new contract or other
instrument would violate this Act (including regulations).
‘‘(C) SPECIAL RULE FOR REVIEW AND APPROVAL OF EVENT
CONTRACTS AND SWAPS CONTRACTS.—
‘‘(i) EVENT CONTRACTS.—In connection with the
listing of agreements, contracts, transactions, or swaps
in excluded commodities that are based upon the occurrence, extent of an occurrence, or contingency (other
than a change in the price, rate, value, or levels of

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1737

a commodity described in section 1a(2)(i)), by a designated contract market or swap execution facility, the
Commission may determine that such agreements, contracts, or transactions are contrary to the public
interest if the agreements, contracts, or transactions
involve—
‘‘(I) activity that is unlawful under any Federal
or State law;
‘‘(II) terrorism;
‘‘(III) assassination;
‘‘(IV) war;
‘‘(V) gaming; or
‘‘(VI) other similar activity determined by the
Commission, by rule or regulation, to be contrary
to the public interest.
‘‘(ii) PROHIBITION.—No agreement, contract, or
transaction determined by the Commission to be contrary to the public interest under clause (i) may be
listed or made available for clearing or trading on
or through a registered entity.
‘‘(iii) SWAPS CONTRACTS.—
‘‘(I) IN GENERAL.—In connection with the
listing of a swap for clearing by a derivatives
clearing organization, the Commission shall determine, upon request or on its own motion, the initial
eligibility, or the continuing qualification, of a
derivatives clearing organization to clear such a
swap under those criteria, conditions, or rules that
the Commission, in its discretion, determines.
‘‘(II) REQUIREMENTS.—Any such criteria, conditions, or rules shall consider—
‘‘(aa) the financial integrity of the derivatives clearing organization; and
‘‘(bb) any other factors which the Commission determines may be appropriate.
‘‘(iv) DEADLINE.—The Commission shall take final
action under clauses (i) and (ii) in not later than 90
days from the commencement of its review unless the
party seeking to offer the contract or swap agrees
to an extension of this time limitation.’’.
(c) VIOLATION OF CORE PRINCIPLES.—Section 5c of the Commodity Exchange Act (7 U.S.C. 7a–2) is amended by striking subsection (d).

Determination.

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SEC. 746. INSIDER TRADING.

Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a))
is amended by adding at the end the following:
‘‘(3) CONTRACT OF SALE.—It shall be unlawful for any
employee or agent of any department or agency of the Federal
Government who, by virtue of the employment or position of
the employee or agent, acquires information that may affect
or tend to affect the price of any commodity in interstate
commerce, or for future delivery, or any swap, and which
information has not been disseminated by the department or
agency of the Federal Government holding or creating the
information in a manner which makes it generally available
to the trading public, or disclosed in a criminal, civil, or

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124 STAT. 1738

PUBLIC LAW 111–203—JULY 21, 2010
administrative hearing, or in a congressional, administrative,
or Government Accountability Office report, hearing, audit, or
investigation, to use the information in his personal capacity
and for personal gain to enter into, or offer to enter into—
‘‘(A) a contract of sale of a commodity for future
delivery (or option on such a contract);
‘‘(B) an option (other than an option executed or traded
on a national securities exchange registered pursuant to
section 6(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78f(a)); or
‘‘(C) a swap.
‘‘(4) NONPUBLIC INFORMATION.—
‘‘(A) IMPARTING OF NONPUBLIC INFORMATION.—It shall
be unlawful for any employee or agent of any department
or agency of the Federal Government who, by virtue of
the employment or position of the employee or agent,
acquires information that may affect or tend to affect the
price of any commodity in interstate commerce, or for future
delivery, or any swap, and which information has not been
disseminated by the department or agency of the Federal
Government holding or creating the information in a
manner which makes it generally available to the trading
public, or disclosed in a criminal, civil, or administrative
hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, to impart the information in his personal capacity
and for personal gain with intent to assist another person,
directly or indirectly, to use the information to enter into,
or offer to enter into—
‘‘(i) a contract of sale of a commodity for future
delivery (or option on such a contract);
‘‘(ii) an option (other than an option executed or
traded on a national securities exchange registered
pursuant to section 6(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78f(a)); or
‘‘(iii) a swap.
‘‘(B) KNOWING USE.—It shall be unlawful for any person
who receives information imparted by any employee or
agent of any department or agency of the Federal Government as described in subparagraph (A) to knowingly use
such information to enter into, or offer to enter into—
‘‘(i) a contract of sale of a commodity for future
delivery (or option on such a contract);
‘‘(ii) an option (other than an option executed or
traded on a national securities exchange registered
pursuant to section 6(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78f(a)); or
‘‘(iii) a swap.
‘‘(C) THEFT OF NONPUBLIC INFORMATION.—It shall be
unlawful for any person to steal, convert, or misappropriate,
by any means whatsoever, information held or created
by any department or agency of the Federal Government
that may affect or tend to affect the price of any commodity
in interstate commerce, or for future delivery, or any swap,
where such person knows, or acts in reckless disregard
of the fact, that such information has not been disseminated
by the department or agency of the Federal Government

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holding or creating the information in a manner which
makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or
in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, and
to use such information, or to impart such information
with the intent to assist another person, directly or
indirectly, to use such information to enter into, or offer
to enter into—
‘‘(i) a contract of sale of a commodity for future
delivery (or option on such a contract);
‘‘(ii) an option (other than an option executed or
traded on a national securities exchange registered
pursuant to section 6(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78f(a)); or
‘‘(iii) a swap, provided, however, that nothing in
this subparagraph shall preclude a person that has
provided information concerning, or generated by, the
person, its operations or activities, to any employee
or agent of any department or agency of the Federal
Government, voluntarily or as required by law, from
using such information to enter into, or offer to enter
into, a contract of sale, option, or swap described in
clauses (i), (ii), or (iii).’’.
SEC. 747. ANTIDISRUPTIVE PRACTICES AUTHORITY.

Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a))
(as amended by section 746) is amended by adding at the end
the following:
‘‘(5) DISRUPTIVE PRACTICES.—It shall be unlawful for any
person to engage in any trading, practice, or conduct on or
subject to the rules of a registered entity that—
‘‘(A) violates bids or offers;
‘‘(B) demonstrates intentional or reckless disregard for
the orderly execution of transactions during the closing
period; or
‘‘(C) is, is of the character of, or is commonly known
to the trade as, ‘spoofing’ (bidding or offering with the
intent to cancel the bid or offer before execution).
‘‘(6) RULEMAKING AUTHORITY.—The Commission may make
and promulgate such rules and regulations as, in the judgment
of the Commission, are reasonably necessary to prohibit the
trading practices described in paragraph (5) and any other
trading practice that is disruptive of fair and equitable trading.
‘‘(7) USE OF SWAPS TO DEFRAUD.—It shall be unlawful for
any person to enter into a swap knowing, or acting in reckless
disregard of the fact, that its counterparty will use the swap
as part of a device, scheme, or artifice to defraud any third
party.’’.
SEC. 748. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION.

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The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by adding at the end the following:
‘‘SEC. 23. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION.

7 USC 26.

‘‘(a) DEFINITIONS.—In this section:

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124 STAT. 1740

‘‘(1) COVERED JUDICIAL OR ADMINISTRATIVE ACTION.—The
term ‘covered judicial or administrative action’ means any
judicial or administrative action brought by the Commission
under this Act that results in monetary sanctions exceeding
$1,000,000.
‘‘(2) FUND.—The term ‘Fund’ means the Commodity
Futures Trading Commission Customer Protection Fund established under subsection (g).
‘‘(3) MONETARY SANCTIONS.—The term ‘monetary sanctions’,
when used with respect to any judicial or administrative action
means—
‘‘(A) any monies, including penalties, disgorgement,
restitution, and interest ordered to be paid; and
‘‘(B) any monies deposited into a disgorgement fund
or other fund pursuant to section 308(b) of the SarbanesOxley Act of 2002 (15 U.S.C. 7246(b)), as a result of such
action or any settlement of such action.
‘‘(4) ORIGINAL INFORMATION.—The term ‘original information’ means information that—
‘‘(A) is derived from the independent knowledge or
analysis of a whistleblower;
‘‘(B) is not known to the Commission from any other
source, unless the whistleblower is the original source of
the information; and
‘‘(C) is not exclusively derived from an allegation made
in a judicial or administrative hearing, in a governmental
report, hearing, audit, or investigation, or from the news
media, unless the whistleblower is a source of the information.
‘‘(5) RELATED ACTION.—The term ‘related action’, when used
with respect to any judicial or administrative action brought
by the Commission under this Act, means any judicial or
administrative action brought by an entity described in subclauses (I) through (VI) of subsection (h)(2)(C) that is based
upon the original information provided by a whistleblower
pursuant to subsection (a) that led to the successful enforcement
of the Commission action.
‘‘(6) SUCCESSFUL RESOLUTION.—The term ‘successful resolution’, when used with respect to any judicial or administrative
action brought by the Commission under this Act, includes
any settlement of such action.
‘‘(7) WHISTLEBLOWER.—The term ‘whistleblower’ means any
individual, or 2 or more individuals acting jointly, who provides
information relating to a violation of this Act to the Commission, in a manner established by rule or regulation by the
Commission.
‘‘(b) AWARDS.—
‘‘(1) IN GENERAL.—In any covered judicial or administrative
action, or related action, the Commission, under regulations
prescribed by the Commission and subject to subsection (c),
shall pay an award or awards to 1 or more whistleblowers
who voluntarily provided original information to the Commission that led to the successful enforcement of the covered
judicial or administrative action, or related action, in an aggregate amount equal to—

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124 STAT. 1741

‘‘(A) not less than 10 percent, in total, of what has
been collected of the monetary sanctions imposed in the
action or related actions; and
‘‘(B) not more than 30 percent, in total, of what has
been collected of the monetary sanctions imposed in the
action or related actions.
‘‘(2) PAYMENT OF AWARDS.—Any amount paid under paragraph (1) shall be paid from the Fund.
‘‘(c) DETERMINATION OF AMOUNT OF AWARD; DENIAL OF
AWARD.—
‘‘(1) DETERMINATION OF AMOUNT OF AWARD.—
‘‘(A) DISCRETION.—The determination of the amount
of an award made under subsection (b) shall be in the
discretion of the Commission.
‘‘(B) CRITERIA.—In determining the amount of an
award made under subsection (b), the Commission—
‘‘(i) shall take into consideration—
‘‘(I) the significance of the information provided by the whistleblower to the success of the
covered judicial or administrative action;
‘‘(II) the degree of assistance provided by the
whistleblower and any legal representative of the
whistleblower in a covered judicial or administrative action;
‘‘(III) the programmatic interest of the
Commission in deterring violations of the Act
(including regulations under the Act) by making
awards to whistleblowers who provide information
that leads to the successful enforcement of such
laws; and
‘‘(IV) such additional relevant factors as the
Commission may establish by rule or regulation;
and
‘‘(ii) shall not take into consideration the balance
of the Fund.
‘‘(2) DENIAL OF AWARD.—No award under subsection (b)
shall be made—
‘‘(A) to any whistleblower who is, or was at the time
the whistleblower acquired the original information submitted to the Commission, a member, officer, or employee
of—
‘‘(i) a appropriate regulatory agency;
‘‘(ii) the Department of Justice;
‘‘(iii) a registered entity;
‘‘(iv) a registered futures association;
‘‘(v) a self-regulatory organization as defined in
section 3(a) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)); or
‘‘(vi) a law enforcement organization;
‘‘(B) to any whistleblower who is convicted of a criminal
violation related to the judicial or administrative action
for which the whistleblower otherwise could receive an
award under this section;
‘‘(C) to any whistleblower who submits information
to the Commission that is based on the facts underlying
the covered action submitted previously by another whistleblower;

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124 STAT. 1742

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Deadline.

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PUBLIC LAW 111–203—JULY 21, 2010

‘‘(D) to any whistleblower who fails to submit information to the Commission in such form as the Commission
may, by rule or regulation, require.
‘‘(d) REPRESENTATION.—
‘‘(1) PERMITTED REPRESENTATION.—Any whistleblower who
makes a claim for an award under subsection (b) may be
represented by counsel.
‘‘(2) REQUIRED REPRESENTATION.—
‘‘(A) IN GENERAL.—Any whistleblower who anonymously makes a claim for an award under subsection (b)
shall be represented by counsel if the whistleblower submits the information upon which the claim is based.
‘‘(B) DISCLOSURE OF IDENTITY.—Prior to the payment
of an award, a whistleblower shall disclose the identity
of the whistleblower and provide such other information
as the Commission may require, directly or through counsel
for the whistleblower.
‘‘(e) NO CONTRACT NECESSARY.—No contract with the Commission is necessary for any whistleblower to receive an award under
subsection (b), unless otherwise required by the Commission, by
rule or regulation.
‘‘(f) APPEALS.—
‘‘(1) IN GENERAL.—Any determination made under this section, including whether, to whom, or in what amount to make
awards, shall be in the discretion of the Commission.
‘‘(2) APPEALS.—Any determination described in paragraph
(1) may be appealed to the appropriate court of appeals of
the United States not more than 30 days after the determination is issued by the Commission.
‘‘(3) REVIEW.—The court shall review the determination
made by the Commission in accordance with section 7064 of
title 5, United States Code.
‘‘(g) COMMODITY FUTURES TRADING COMMISSION CUSTOMER
PROTECTION FUND.—
‘‘(1) ESTABLISHMENT.—There is established in the Treasury
of the United States a revolving fund to be known as the
‘Commodity Futures Trading Commission Customer Protection
Fund’.
‘‘(2) USE OF FUND.—The Fund shall be available to the
Commission, without further appropriation or fiscal year limitation, for—
‘‘(A) the payment of awards to whistleblowers as provided in subsection (a); and
‘‘(B) the funding of customer education initiatives
designed to help customers protect themselves against
fraud or other violations of this Act, or the rules and
regulations thereunder.
‘‘(3) DEPOSITS AND CREDITS.—There shall be deposited into
or credited to the Fund:
‘‘(A) MONETARY SANCTIONS.—Any monetary sanctions
collected by the Commission in any covered judicial or
administrative action that is not otherwise distributed to
victims of a violation of this Act or the rules and regulations
thereunder underlying such action, unless the balance of
the Fund at the time the monetary judgment is collected
exceeds $100,000,000.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1743

‘‘(B) ADDITIONAL AMOUNTS.—If the amounts deposited
into or credited to the Fund under subparagraph (A) are
not sufficient to satisfy an award made under subsection
(b), there shall be deposited into or credited to the Fund
an amount equal to the unsatisfied portion of the award
from any monetary sanction collected by the Commission
in any judicial or administrative action brought by the
Commission under this Act that is based on information
provided by a whistleblower.
‘‘(C) INVESTMENT INCOME.—All income from investments made under paragraph (4).
‘‘(4) INVESTMENTS.—
‘‘(A) AMOUNTS IN FUND MAY BE INVESTED.—The
Commission may request the Secretary of the Treasury
to invest the portion of the Fund that is not, in the Commission’s judgment, required to meet the current needs of
the Fund.
‘‘(B) ELIGIBLE INVESTMENTS.—Investments shall be
made by the Secretary of the Treasury in obligations of
the United States or obligations that are guaranteed as
to principal and interest by the United States, with maturities suitable to the needs of the Fund as determined
by the Commission.
‘‘(C) INTEREST AND PROCEEDS CREDITED.—The interest
on, and the proceeds from the sale or redemption of, any
obligations held in the Fund shall be credited to, and
form a part of, the Fund.
‘‘(5) REPORTS TO CONGRESS.—Not later than October 30
of each year, the Commission shall transmit to the Committee
on Agriculture, Nutrition, and Forestry of the Senate, and
the Committee on Agriculture of the House of Representatives
a report on—
‘‘(A) the Commission’s whistleblower award program
under this section, including a description of the number
of awards granted and the types of cases in which awards
were granted during the preceding fiscal year;
‘‘(B) customer education initiatives described in paragraph (2)(B) that were funded by the Fund during the
preceding fiscal year;
‘‘(C) the balance of the Fund at the beginning of the
preceding fiscal year;
‘‘(D) the amounts deposited into or credited to the
Fund during the preceding fiscal year;
‘‘(E) the amount of earnings on investments of amounts
in the Fund during the preceding fiscal year;
‘‘(F) the amount paid from the Fund during the preceding fiscal year to whistleblowers pursuant to subsection
(b);
‘‘(G) the amount paid from the Fund during the preceding fiscal year for customer education initiatives
described in paragraph (2)(B);
‘‘(H) the balance of the Fund at the end of the preceding
fiscal year; and
‘‘(I) a complete set of audited financial statements,
including a balance sheet, income statement, and cash
flow analysis.
‘‘(h) PROTECTION OF WHISTLEBLOWERS.—

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124 STAT. 1744

PUBLIC LAW 111–203—JULY 21, 2010
‘‘(1) PROHIBITION AGAINST RETALIATION.—
‘‘(A) IN GENERAL.—No employer may discharge,
demote, suspend, threaten, harass, directly or indirectly,
or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because
of any lawful act done by the whistleblower—
‘‘(i) in providing information to the Commission
in accordance with subsection (b); or
‘‘(ii) in assisting in any investigation or judicial
or administrative action of the Commission based upon
or related to such information.
‘‘(B) ENFORCEMENT.—
‘‘(i) CAUSE OF ACTION.—An individual who alleges
discharge or other discrimination in violation of
subparagraph (A) may bring an action under this subsection in the appropriate district court of the United
States for the relief provided in subparagraph (C),
unless the individual who is alleging discharge or other
discrimination in violation of subparagraph (A) is an
employee of the Federal Government, in which case
the individual shall only bring an action under section
1221 of title 5, United States Code.
‘‘(ii) SUBPOENAS.—A subpoena requiring the
attendance of a witness at a trial or hearing conducted
under this subsection may be served at any place in
the United States.
‘‘(iii) STATUTE OF LIMITATIONS.—An action under
this subsection may not be brought more than 2 years
after the date on which the violation reported in
subparagraph (A) is committed.
‘‘(C) RELIEF.—Relief for an individual prevailing in an
action brought under subparagraph (B) shall include—
‘‘(i) reinstatement with the same seniority status
that the individual would have had, but for the
discrimination;
‘‘(ii) the amount of back pay otherwise owed to
the individual, with interest; and
‘‘(iii) compensation for any special damages sustained as a result of the discharge or discrimination,
including litigation costs, expert witness fees, and
reasonable attorney’s fees.
‘‘(2) CONFIDENTIALITY.—
‘‘(A) IN GENERAL.—Except as provided in subparagraphs (B) and (C), the Commission, and any officer or
employee of the Commission, shall not disclose any information, including information provided by a whistleblower
to the Commission, which could reasonably be expected
to reveal the identity of a whistleblower, except in accordance with the provisions of section 552a of title 5, United
States Code, unless and until required to be disclosed to
a defendant or respondent in connection with a public
proceeding instituted by the Commission or any entity
described in subparagraph (C). For purposes of section
552 of title 5, United States Code, this paragraph shall
be considered a statute described in subsection (b)(3)(B)
of such section 552.

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124 STAT. 1745

‘‘(B) EFFECT.—Nothing in this paragraph is intended
to limit the ability of the Attorney General to present
such evidence to a grand jury or to share such evidence
with potential witnesses or defendants in the course of
an ongoing criminal investigation.
‘‘(C) AVAILABILITY TO GOVERNMENT AGENCIES.—
‘‘(i) IN GENERAL.—Without the loss of its status
as confidential in the hands of the Commission, all
information referred to in subparagraph (A) may, in
the discretion of the Commission, when determined
by the Commission to be necessary or appropriate to
accomplish the purposes of this Act and protect customers and in accordance with clause (ii), be made
available to—
‘‘(I) the Department of Justice;
‘‘(II) an appropriate department or agency of
the Federal Government, acting within the scope
of its jurisdiction;
‘‘(III) a registered entity, registered futures
association, or self-regulatory organization as
defined in section 3(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a));
‘‘(IV) a State attorney general in connection
with any criminal investigation;
‘‘(V) an appropriate department or agency of
any State, acting within the scope of its jurisdiction; and
‘‘(VI) a foreign futures authority.
‘‘(ii) MAINTENANCE OF INFORMATION.—Each of the
entities, agencies, or persons described in clause (i)
shall maintain information described in that clause
as confidential, in accordance with the requirements
in subparagraph (A).
‘‘(iii) STUDY ON IMPACT OF FOIA EXEMPTION ON
COMMODITY FUTURES TRADING COMMISSION.—
‘‘(I) STUDY.—The Inspector General of the
Commission shall conduct a study—
‘‘(aa) on whether the exemption under section 552(b)(3) of title 5, United States Code
(known as the Freedom of Information Act)
established in paragraph (2)(A) aids whistleblowers in disclosing information to the
Commission;
‘‘(bb) on what impact the exemption has
had on the public’s ability to access information about the Commission’s regulation of commodity futures and option markets; and
‘‘(cc) to make any recommendations on
whether the Commission should continue to
use the exemption.
‘‘(II) REPORT.—Not later than 30 months after
the date of enactment of this clause, the Inspector
General shall—
‘‘(aa) submit a report on the findings of
the study required under this clause to the
Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on

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124 STAT. 1746

Public
information.
Web posting.

Deadline.

PUBLIC LAW 111–203—JULY 21, 2010

Financial Services of the House of Representatives; and
‘‘(bb) make the report available to the
public through publication of a report on the
website of the Commission.
‘‘(3) RIGHTS RETAINED.—Nothing in this section shall be
deemed to diminish the rights, privileges, or remedies of any
whistleblower under any Federal or State law, or under any
collective bargaining agreement.
‘‘(i) RULEMAKING AUTHORITY.—The Commission shall have the
authority to issue such rules and regulations as may be necessary
or appropriate to implement the provisions of this section consistent
with the purposes of this section.
‘‘(j) IMPLEMENTING RULES.—The Commission shall issue final
rules or regulations implementing the provisions of this section
not later than 270 days after the date of enactment of the Wall
Street Transparency and Accountability Act of 2010.
‘‘(k) ORIGINAL INFORMATION.—Information submitted to the
Commission by a whistleblower in accordance with rules or regulations implementing this section shall not lose its status as original
information solely because the whistleblower submitted such
information prior to the effective date of such rules or regulations,
provided such information was submitted after the date of enactment of the Wall Street Transparency and Accountability Act of
2010.
‘‘(l) AWARDS.—A whistleblower may receive an award pursuant
to this section regardless of whether any violation of a provision
of this Act, or a rule or regulation thereunder, underlying the
judicial or administrative action upon which the award is based
occurred prior to the date of enactment of the Wall Street Transparency and Accountability Act of 2010.
‘‘(m) PROVISION OF FALSE INFORMATION.—A whistleblower who
knowingly and willfully makes any false, fictitious, or fraudulent
statement or representation, or who makes or uses any false writing
or document knowing the same to contain any false, fictitious,
or fraudulent statement or entry, shall not be entitled to an award
under this section and shall be subject to prosecution under section
1001 of title 18, United States Code.
‘‘(n) NONENFORCEABILITY OF CERTAIN PROVISIONS WAIVING
RIGHTS AND REMEDIES OR REQUIRING ARBITRATION OF DISPUTES.—
‘‘(1) WAIVER OF RIGHTS AND REMEDIES.—The rights and
remedies provided for in this section may not be waived by
any agreement, policy form, or condition of employment
including by a predispute arbitration agreement.
‘‘(2) PREDISPUTE ARBITRATION AGREEMENTS.—No predispute
arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section.’’.

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SEC. 749. CONFORMING AMENDMENTS.

(a) Section 4d of the Commodity Exchange Act (7 U.S.C. 6d)
(as amended by section 724) is amended—
(1) in subsection (a)—
(A) in the matter preceding paragraph (1)—
(i) by striking ‘‘engage as’’ and inserting ‘‘be a’’;
and

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1747

(ii) by striking ‘‘or introducing broker’’ and all that
follows through ‘‘or derivatives transaction execution
facility’’;
(B) in paragraph (1), by striking ‘‘or introducing
broker’’; and
(C) in paragraph (2), by striking ‘‘if a futures commission merchant,’’; and
(2) by adding at the end the following:
‘‘(g) It shall be unlawful for any person to be an introducing
broker unless such person shall have registered under this Act
with the Commission as an introducing broker and such registration
shall not have expired nor been suspended nor revoked.’’.
(b) Section 4m(3) of the Commodity Exchange Act (7 U.S.C.
6m(3)) is amended—
(1) by striking ‘‘(3) Subsection (1) of this section’’ and
inserting the following:
‘‘(3) EXCEPTION.—
‘‘(A) IN GENERAL.—Paragraph (1)’’; and
(2) by striking ‘‘to any investment trust’’ and all that follows
through the period at the end and inserting the following:
‘‘to any commodity pool that is engaged primarily in trading
commodity interests.
‘‘(B) ENGAGED PRIMARILY.—For purposes of subparagraph
(A), a commodity trading advisor or a commodity pool shall
be considered to be ‘engaged primarily’ in the business of being
a commodity trading advisor or commodity pool if it is or
holds itself out to the public as being engaged primarily, or
proposes to engage primarily, in the business of advising on
commodity interests or investing, reinvesting, owning, holding,
or trading in commodity interests, respectively.
‘‘(C) COMMODITY INTERESTS.—For purposes of this paragraph, commodity interests shall include contracts of sale of
a commodity for future delivery, options on such contracts,
security futures, swaps, leverage contracts, foreign exchange,
spot and forward contracts on physical commodities, and any
monies held in an account used for trading commodity
interests.’’.
(c) Section 5c of the Commodity Exchange Act (7 U.S.C. 7a–
2) is amended—
(1) in subsection (a)(1)—
(A) by striking ‘‘, 5a(d),’’; and
(B) by striking ‘‘and section (2)(h)(7) with respect to
significant price discovery contracts,’’; and
(2) in subsection (f)(1), by striking ‘‘section 4d(c) of this
Act’’ and inserting ‘‘section 4d(e)’’.
(d) Section 5e of the Commodity Exchange Act (7 U.S.C. 7b)
is amended by striking ‘‘or revocation of the right of an electronic
trading facility to rely on the exemption set forth in section 2(h)(3)
with respect to a significant price discovery contract,’’.
(e) Section 6(b) of the Commodity Exchange Act (7 U.S.C.
8(b)) is amended in the first sentence by striking ‘‘, or to revoke
the right of an electronic trading facility to rely on the exemption
set forth in section 2(h)(3) with respect to a significant price discovery contract,’’.
(f) Section 12(e)(2)(B) of the Commodity Exchange Act (7 U.S.C.
16(e)(2)(B)) is amended—

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124 STAT. 1748

PUBLIC LAW 111–203—JULY 21, 2010

(1) by striking ‘‘section 2(c), 2(d), 2(f), or 2(g) of this Act’’
and inserting ‘‘section 2(c) or 2(f) of this Act’’; and
(2) by striking ‘‘2(h) or’’.
(g) Section 17(r)(1) of the Commodity Exchange Act (7 U.S.C.
21(r)(1)) is amended by striking ‘‘section 4d(c) of this Act’’ and
inserting ‘‘section 4d(e)’’.
(h) Section 22 of the Commodity Exchange Act is amended—
(1) in subsection (a)(1)(B), by—
(A) inserting ‘‘or any swap’’ after ‘‘commodity)’’; and
(B) inserting ‘‘or any swap’’ after ‘‘such contract’’;
(2) in subsection (a)(1)(C), by adding at the end the following:
‘‘(iv) a swap; or’’; and
(3) in subsection (b)(1)(A), by striking ‘‘section 2(h)(7) or
sections 5 through 5c’’ and inserting ‘‘section 5, 5b, 5c, 5h,
or 21’’.
(i) Section 408(2)(C) of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4421(2)(C)) is amended—
(1) by striking ‘‘section 2(c), 2(d), 2(f), or (2)(g) of such
Act’’ and inserting ‘‘section 2(c), 2(f), or 2(i) of that Act’’; and
(2) by striking ‘‘2(h) or’’.

7 USC 25.

SEC. 750. STUDY ON OVERSIGHT OF CARBON MARKETS.

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Establishment.

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(a) INTERAGENCY WORKING GROUP.—There is established to
carry out this section an interagency working group (referred to
in this section as the ‘‘interagency group’’) composed of the following
members or designees:
(1) The Chairman of the Commodity Futures Trading
Commission (referred to in this section as the ‘‘Commission’’),
who shall serve as Chairman of the interagency group.
(2) The Secretary of Agriculture.
(3) The Secretary of the Treasury.
(4) The Chairman of the Securities and Exchange Commission.
(5) The Administrator of the Environmental Protection
Agency.
(6) The Chairman of the Federal Energy Regulatory
Commission.
(7) The Commissioner of the Federal Trade Commission.
(8) The Administrator of the Energy Information Administration.
(b) ADMINISTRATIVE SUPPORT.—The Commission shall provide
the interagency group such administrative support services as are
necessary to enable the interagency group to carry out the functions
of the interagency group under this section.
(c) CONSULTATION.—In carrying out this section, the interagency group shall consult with representatives of exchanges,
clearinghouses, self-regulatory bodies, major carbon market participants, consumers, and the general public, as the interagency group
determines to be appropriate.
(d) STUDY.—The interagency group shall conduct a study on
the oversight of existing and prospective carbon markets to ensure
an efficient, secure, and transparent carbon market, including oversight of spot markets and derivative markets.
(e) REPORT.—Not later than 180 days after the date of enactment of this Act, the interagency group shall submit to Congress
a report on the results of the study conducted under subsection

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1749

(b), including recommendations for the oversight of existing and
prospective carbon markets to ensure an efficient, secure, and transparent carbon market, including oversight of spot markets and
derivative markets.
SEC. 751. ENERGY AND ENVIRONMENTAL MARKETS ADVISORY COMMITTEE.

Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a))
(as amended by section 727) is amended by adding at the end
the following:
‘‘(15) ENERGY AND ENVIRONMENTAL MARKETS ADVISORY
COMMITTEE.—
‘‘(A) ESTABLISHMENT.—
‘‘(i) IN GENERAL.—An Energy and Environmental
Markets Advisory Committee is hereby established.
‘‘(ii) MEMBERSHIP.—The Committee shall have 9
members.
‘‘(iii) ACTIVITIES.—The Committee’s objectives and
scope of activities shall be—
‘‘(I) to conduct public meetings;
‘‘(II) to submit reports and recommendations
to the Commission (including dissenting or
minority views, if any); and
‘‘(III) otherwise to serve as a vehicle for discussion and communication on matters of concern to
exchanges, firms, end users, and regulators
regarding energy and environmental markets and
their regulation by the Commission.
‘‘(B) REQUIREMENTS.—
‘‘(i) IN GENERAL.—The Committee shall hold public
meetings at such intervals as are necessary to carry
out the functions of the Committee, but not less frequently than 2 times per year.
‘‘(ii) MEMBERS.—Members shall be appointed to
3-year terms, but may be removed for cause by vote
of the Commission.
‘‘(C) APPOINTMENT.—The Commission shall appoint
members with a wide diversity of opinion and who represent a broad spectrum of interests, including hedgers
and consumers.
‘‘(D) REIMBURSEMENT.—Members shall be entitled to
per diem and travel expense reimbursement by the
Commission.
‘‘(E) FACA.—The Committee shall not be subject to
the Federal Advisory Committee Act (5 U.S.C. App.).’’.

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SEC. 752. INTERNATIONAL HARMONIZATION.

(a) In order to promote effective and consistent global regulation
of swaps and security-based swaps, the Commodity Futures Trading
Commission, the Securities and Exchange Commission, and the
prudential regulators (as that term is defined in section 1a(39)
of the Commodity Exchange Act), as appropriate, shall consult
and coordinate with foreign regulatory authorities on the establishment of consistent international standards with respect to the regulation (including fees) of swaps, security-based swaps, swap entities,
and security-based swap entities and may agree to such information-sharing arrangements as may be deemed to be necessary or

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Public meetings.

Consultation.
Standards.
15 USC 8325.
Securities.

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124 STAT. 1750

Contracts.

PUBLIC LAW 111–203—JULY 21, 2010

appropriate in the public interest or for the protection of investors,
swap counterparties, and security-based swap counterparties.
(b) In order to promote effective and consistent global regulation
of contracts of sale of a commodity for future delivery and options
on such contracts, the Commodity Futures Trading Commission
shall consult and coordinate with foreign regulatory authorities
on the establishment of consistent international standards with
respect to the regulation of contracts of sale of a commodity for
future delivery and options on such contracts, and may agree to
such information-sharing arrangements as may be deemed necessary or appropriate in the public interest for the protection of
users of contracts of sale of a commodity for future delivery.
SEC. 753. ANTI-MANIPULATION AUTHORITY.

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Regulations.
Deadline.

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(a) PROHIBITION REGARDING MANIPULATION AND FALSE
INFORMATION.—Subsection (c) of section 6 of the Commodity
Exchange Act (7 U.S.C. 9, 15) is amended to read as follows:
‘‘(c) PROHIBITION REGARDING MANIPULATION AND FALSE
INFORMATION.—
‘‘(1) PROHIBITION AGAINST MANIPULATION.—It shall be
unlawful for any person, directly or indirectly, to use or employ,
or attempt to use or employ, in connection with any swap,
or a contract of sale of any commodity in interstate commerce,
or for future delivery on or subject to the rules of any registered
entity, any manipulative or deceptive device or contrivance,
in contravention of such rules and regulations as the Commission shall promulgate by not later than 1 year after the date
of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, provided no rule or regulation promulgated by the Commission shall require any person to disclose
to another person nonpublic information that may be material
to the market price, rate, or level of the commodity transaction,
except as necessary to make any statement made to the other
person in or in connection with the transaction not misleading
in any material respect.
‘‘(A) SPECIAL PROVISION FOR MANIPULATION BY FALSE
REPORTING.—Unlawful manipulation for purposes of this
paragraph shall include, but not be limited to, delivering,
or causing to be delivered for transmission through the
mails or interstate commerce, by any means of communication whatsoever, a false or misleading or inaccurate report
concerning crop or market information or conditions that
affect or tend to affect the price of any commodity in
interstate commerce, knowing, or acting in reckless disregard of the fact that such report is false, misleading
or inaccurate.
‘‘(B) EFFECT ON OTHER LAW.—Nothing in this paragraph shall affect, or be construed to affect, the applicability
of section 9(a)(2).
‘‘(C) GOOD FAITH MISTAKES.—Mistakenly transmitting,
in good faith, false or misleading or inaccurate information
to a price reporting service would not be sufficient to violate
subsection (c)(1)(A).
‘‘(2) PROHIBITION REGARDING FALSE INFORMATION.—It shall
be unlawful for any person to make any false or misleading
statement of a material fact to the Commission, including in
any registration application or any report filed with the

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1751

Commission under this Act, or any other information relating
to a swap, or a contract of sale of a commodity, in interstate
commerce, or for future delivery on or subject to the rules
of any registered entity, or to omit to state in any such statement any material fact that is necessary to make any statement
of a material fact made not misleading in any material respect,
if the person knew, or reasonably should have known, the
statement to be false or misleading.
‘‘(3) OTHER MANIPULATION.—In addition to the prohibition
in paragraph (1), it shall be unlawful for any person, directly
or indirectly, to manipulate or attempt to manipulate the price
of any swap, or of any commodity in interstate commerce,
or for future delivery on or subject to the rules of any registered
entity.
‘‘(4) ENFORCEMENT.—
‘‘(A) AUTHORITY OF COMMISSION.—If the Commission
has reason to believe that any person (other than a registered entity) is violating or has violated this subsection,
or any other provision of this Act (including any rule,
regulation, or order of the Commission promulgated in
accordance with this subsection or any other provision of
this Act), the Commission may serve upon the person a
complaint.
‘‘(B) CONTENTS OF COMPLAINT.—A complaint under
subparagraph (A) shall—
‘‘(i) contain a description of the charges against
the person that is the subject of the complaint; and
‘‘(ii) have attached or contain a notice of hearing
that specifies the date and location of the hearing
regarding the complaint.
‘‘(C) HEARING.—A hearing described in subparagraph
(B)(ii)—
‘‘(i) shall be held not later than 3 days after service
of the complaint described in subparagraph (A);
‘‘(ii) shall require the person to show cause
regarding why—
‘‘(I) an order should not be made—
‘‘(aa) to prohibit the person from trading
on, or subject to the rules of, any registered
entity; and
‘‘(bb) to direct all registered entities to
refuse all privileges to the person until further
notice of the Commission; and
‘‘(II) the registration of the person, if registered
with the Commission in any capacity, should not
be suspended or revoked; and
‘‘(iii) may be held before—
‘‘(I) the Commission; or
‘‘(II) an administrative law judge designated
by the Commission, under which the administrative law judge shall ensure that all evidence is
recorded in written form and submitted to the
Commission.
‘‘(5) SUBPOENA.—For the purpose of securing effective
enforcement of the provisions of this Act, for the purpose of
any investigation or proceeding under this Act, and for the
purpose of any action taken under section 12(f), any member

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124 STAT. 1752

PUBLIC LAW 111–203—JULY 21, 2010
of the Commission or any Administrative Law Judge or other
officer designated by the Commission (except as provided in
paragraph (7)) may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and
require the production of any books, papers, correspondence,
memoranda, or other records that the Commission deems relevant or material to the inquiry.
‘‘(6) WITNESSES.—The attendance of witnesses and the
production of any such records may be required from any place
in the United States, any State, or any foreign country or
jurisdiction at any designated place of hearing.
‘‘(7) SERVICE.—A subpoena issued under this section may
be served upon any person who is not to be found within
the territorial jurisdiction of any court of the United States
in such manner as the Federal Rules of Civil Procedure prescribe for service of process in a foreign country, except that
a subpoena to be served on a person who is not to be found
within the territorial jurisdiction of any court of the United
States may be issued only on the prior approval of the Commission.
‘‘(8) REFUSAL TO OBEY.—In case of contumacy by, or refusal
to obey a subpoena issued to, any person, the Commission
may invoke the aid of any court of the United States within
the jurisdiction in which the investigation or proceeding is
conducted, or where such person resides or transacts business,
in requiring the attendance and testimony of witnesses and
the production of books, papers, correspondence, memoranda,
and other records. Such court may issue an order requiring
such person to appear before the Commission or member or
Administrative Law Judge or other officer designated by the
Commission, there to produce records, if so ordered, or to give
testimony touching the matter under investigation or in question.
‘‘(9) FAILURE TO OBEY.—Any failure to obey such order
of the court may be punished by the court as a contempt
thereof. All process in any such case may be served in the
judicial district wherein such person is an inhabitant or transacts business or wherever such person may be found.
‘‘(10) EVIDENCE.—On the receipt of evidence under paragraph (4)(C)(iii), the Commission may—
‘‘(A) prohibit the person that is the subject of the
hearing from trading on, or subject to the rules of, any
registered entity and require all registered entities to refuse
the person all privileges on the registered entities for such
period as the Commission may require in the order;
‘‘(B) if the person is registered with the Commission
in any capacity, suspend, for a period not to exceed 180
days, or revoke, the registration of the person;
‘‘(C) assess such person—
‘‘(i) a civil penalty of not more than an amount
equal to the greater of—
‘‘(I) $140,000; or
‘‘(II) triple the monetary gain to such person
for each such violation; or
‘‘(ii) in any case of manipulation or attempted
manipulation in violation of this subsection or section

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124 STAT. 1753

9(a)(2), a civil penalty of not more than an amount
equal to the greater of—
‘‘(I) $1,000,000; or
‘‘(II) triple the monetary gain to the person
for each such violation; and
‘‘(D) require restitution to customers of damages proximately caused by violations of the person.
‘‘(11) ORDERS.—
‘‘(A) NOTICE.—The Commission shall provide to a person described in paragraph (10) and the appropriate governing board of the registered entity notice of the order
described in paragraph (10) by—
‘‘(i) registered mail;
‘‘(ii) certified mail; or
‘‘(iii) personal delivery.
‘‘(B) REVIEW.—
‘‘(i) IN GENERAL.—A person described in paragraph
(10) may obtain a review of the order or such other
equitable relief as determined to be appropriate by
a court described in clause (ii).
‘‘(ii) PETITION.—To obtain a review or other relief
under clause (i), a person may, not later than 15 days
after notice is given to the person under clause (i),
file a written petition to set aside the order with the
United States Court of Appeals—
‘‘(I) for the circuit in which the petitioner carries out the business of the petitioner; or
‘‘(II) in the case of an order denying registration, the circuit in which the principal place of
business of the petitioner is located, as listed on
the application for registration of the petitioner.
‘‘(C) PROCEDURE.—
‘‘(i) DUTY OF CLERK OF APPROPRIATE COURT.—The
clerk of the appropriate court under subparagraph
(B)(ii) shall transmit to the Commission a copy of a
petition filed under subparagraph (B)(ii).
‘‘(ii) DUTY OF COMMISSION.—In accordance with
section 2112 of title 28, United States Code, the
Commission shall file in the appropriate court
described in subparagraph (B)(ii) the record theretofore
made.
‘‘(iii) JURISDICTION OF APPROPRIATE COURT.—Upon
the filing of a petition under subparagraph (B)(ii), the
appropriate court described in subparagraph (B)(ii)
may affirm, set aside, or modify the order of the
Commission.’’.
(b) CEASE AND DESIST ORDERS, FINES.—Section 6(d) of the
Commodity Exchange Act (7 U.S.C. 13b) is amended to read as
follows:
‘‘(d) If any person (other than a registered entity), is violating
or has violated subsection (c) or any other provisions of this Act
or of the rules, regulations, or orders of the Commission thereunder,
the Commission may, upon notice and hearing, and subject to
appeal as in other cases provided for in subsection (c), make and
enter an order directing that such person shall cease and desist
therefrom and, if such person thereafter and after the lapse of
the period allowed for appeal of such order or after the affirmance

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of such order, shall knowingly fail or refuse to obey or comply
with such order, such person, upon conviction thereof, shall be
fined not more than the higher of $140,000 or triple the monetary
gain to such person, or imprisoned for not more than 1 year,
or both, except that if such knowing failure or refusal to obey
or comply with such order involves any offense within subsection
(a) or (b) of section 9, such person, upon conviction thereof, shall
be subject to the penalties of said subsection (a) or (b): Provided,
That any such cease and desist order under this subsection against
any respondent in any case of manipulation shall be issued only
in conjunction with an order issued against such respondent under
subsection (c).’’.
(c) MANIPULATIONS; PRIVATE RIGHTS OF ACTION.—Section
22(a)(1) of the Commodity Exchange Act (7 U.S.C. 25(a)(1)) is
amended by striking subparagraph (D) and inserting the following:
‘‘(D) who purchased or sold a contract referred to in
subparagraph (B) hereof or swap if the violation constitutes—
‘‘(i) the use or employment of, or an attempt to use
or employ, in connection with a swap, or a contract of
sale of a commodity, in interstate commerce, or for future
delivery on or subject to the rules of any registered entity,
any manipulative device or contrivance in contravention
of such rules and regulations as the Commission shall
promulgate by not later than 1 year after the date of
enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act; or
‘‘(ii) a manipulation of the price of any such contract
or swap or the price of the commodity underlying such
contract or swap.’’.
(d) EFFECTIVE DATE.—
(1) The amendments made by this section shall take effect
on the date on which the final rule promulgated by the Commodity Futures Trading Commission pursuant to this Act takes
effect.
(2) Paragraph (1) shall not preclude the Commission from
undertaking prior to the effective date any rulemaking necessary to implement the amendments contained in this section.

7 USC 9 note.

7 USC 7a note.

SEC. 754. EFFECTIVE DATE.

Unless otherwise provided in this title, the provisions of this
subtitle shall take effect on the later of 360 days after the date
of the enactment of this subtitle or, to the extent a provision
of this subtitle requires a rulemaking, not less than 60 days after
publication of the final rule or regulation implementing such provision of this subtitle.

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Subtitle B—Regulation of Security-Based
Swap Markets
SEC. 761. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF
1934.

(a) DEFINITIONS.—Section 3(a) of the Securities Exchange Act
of 1934 (15 U.S.C. 78c(a)) is amended—

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124 STAT. 1755

(1) in subparagraphs (A) and (B) of paragraph (5), by
inserting ‘‘(not including security-based swaps, other than security-based swaps with or for persons that are not eligible contract participants)’’ after ‘‘securities’’ each place that term
appears;
(2) in paragraph (10), by inserting ‘‘security-based swap,’’
after ‘‘security future,’’;
(3) in paragraph (13), by adding at the end the following:
‘‘For security-based swaps, such terms include the execution,
termination (prior to its scheduled maturity date), assignment,
exchange, or similar transfer or conveyance of, or extinguishing
of rights or obligations under, a security-based swap, as the
context may require.’’;
(4) in paragraph (14), by adding at the end the following:
‘‘For security-based swaps, such terms include the execution,
termination (prior to its scheduled maturity date), assignment,
exchange, or similar transfer or conveyance of, or extinguishing
of rights or obligations under, a security-based swap, as the
context may require.’’;
(5) in paragraph (39)—
(A) in subparagraph (B)(i)—
(i) in subclause (I), by striking ‘‘or government
securities dealer’’ and inserting ‘‘government securities
dealer, security-based swap dealer, or major securitybased swap participant’’; and
(ii) in subclause (II), by inserting ‘‘security-based
swap dealer, major security-based swap participant,’’
after ‘‘government securities dealer,’’;
(B) in subparagraph (C), by striking ‘‘or government
securities dealer’’ and inserting ‘‘government securities
dealer, security-based swap dealer, or major security-based
swap participant’’; and
(C) in subparagraph (D), by inserting ‘‘security-based
swap dealer, major security-based swap participant,’’ after
‘‘government securities dealer,’’; and
(6) by adding at the end the following:
‘‘(65) ELIGIBLE CONTRACT PARTICIPANT.—The term ‘eligible
contract participant’ has the same meaning as in section 1a
of the Commodity Exchange Act (7 U.S.C. 1a).
‘‘(66) MAJOR SWAP PARTICIPANT.—The term ‘major swap
participant’ has the same meaning as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a).
‘‘(67) MAJOR SECURITY-BASED SWAP PARTICIPANT.—
‘‘(A) IN GENERAL.—The term ‘major security-based
swap participant’ means any person—
‘‘(i) who is not a security-based swap dealer; and
‘‘(ii)(I) who maintains a substantial position in
security-based swaps for any of the major securitybased swap categories, as such categories are determined by the Commission, excluding both positions
held for hedging or mitigating commercial risk and
positions maintained by any employee benefit plan (or
any contract held by such a plan) as defined in paragraphs (3) and (32) of section 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002)
for the primary purpose of hedging or mitigating any
risk directly associated with the operation of the plan;

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124 STAT. 1756

PUBLIC LAW 111–203—JULY 21, 2010
‘‘(II) whose outstanding security-based swaps
create substantial counterparty exposure that could
have serious adverse effects on the financial stability
of the United States banking system or financial markets; or
‘‘(III) that is a financial entity that—
‘‘(aa) is highly leveraged relative to the amount
of capital such entity holds and that is not subject
to capital requirements established by an appropriate Federal banking agency; and
‘‘(bb) maintains a substantial position in outstanding security-based swaps in any major security-based swap category, as such categories are
determined by the Commission.
‘‘(B) DEFINITION OF SUBSTANTIAL POSITION.—For purposes of subparagraph (A), the Commission shall define,
by rule or regulation, the term ‘substantial position’ at
the threshold that the Commission determines to be prudent for the effective monitoring, management, and oversight of entities that are systemically important or can
significantly impact the financial system of the United
States. In setting the definition under this subparagraph,
the Commission shall consider the person’s relative position
in uncleared as opposed to cleared security-based swaps
and may take into consideration the value and quality
of collateral held against counterparty exposures.
‘‘(C) SCOPE OF DESIGNATION.—For purposes of subparagraph (A), a person may be designated as a major securitybased swap participant for 1 or more categories of securitybased swaps without being classified as a major securitybased swap participant for all classes of security-based
swaps.
‘‘(68) SECURITY-BASED SWAP.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph
(B), the term ‘security-based swap’ means any agreement,
contract, or transaction that—
‘‘(i) is a swap, as that term is defined under section
1a of the Commodity Exchange Act (without regard
to paragraph (47)(B)(x) of such section); and
‘‘(ii) is based on—
‘‘(I) an index that is a narrow-based security
index, including any interest therein or on the
value thereof;
‘‘(II) a single security or loan, including any
interest therein or on the value thereof; or
‘‘(III) the occurrence, nonoccurrence, or extent
of the occurrence of an event relating to a single
issuer of a security or the issuers of securities
in a narrow-based security index, provided that
such event directly affects the financial statements, financial condition, or financial obligations
of the issuer.
‘‘(B) RULE OF CONSTRUCTION REGARDING MASTER
AGREEMENTS.—The term ‘security-based swap’ shall be construed to include a master agreement that provides for
an agreement, contract, or transaction that is a securitybased swap pursuant to subparagraph (A), together with

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124 STAT. 1757

all supplements to any such master agreement, without
regard to whether the master agreement contains an agreement, contract, or transaction that is not a security-based
swap pursuant to subparagraph (A), except that the master
agreement shall be considered to be a security-based swap
only with respect to each agreement, contract, or transaction under the master agreement that is a securitybased swap pursuant to subparagraph (A).
‘‘(C) EXCLUSIONS.—The term ‘security-based swap’ does
not include any agreement, contract, or transaction that
meets the definition of a security-based swap only because
such agreement, contract, or transaction references, is
based upon, or settles through the transfer, delivery, or
receipt of an exempted security under paragraph (12), as
in effect on the date of enactment of the Futures Trading
Act of 1982 (other than any municipal security as defined
in paragraph (29) as in effect on the date of enactment
of the Futures Trading Act of 1982), unless such agreement,
contract, or transaction is of the character of, or is commonly known in the trade as, a put, call, or other option.
‘‘(D) MIXED SWAP.—The term ‘security-based swap’
includes any agreement, contract, or transaction that is
as described in subparagraph (A) and also is based on
the value of 1 or more interest or other rates, currencies,
commodities, instruments of indebtedness, indices, quantitative measures, other financial or economic interest or
property of any kind (other than a single security or a
narrow-based security index), or the occurrence, non-occurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or
commercial consequence (other than an event described
in subparagraph (A)(ii)(III)).
‘‘(E) RULE OF CONSTRUCTION REGARDING USE OF THE
TERM INDEX.—The term ‘index’ means an index or group
of securities, including any interest therein or based on
the value thereof.
‘‘(69) SWAP.—The term ‘swap’ has the same meaning as
in section 1a of the Commodity Exchange Act (7 U.S.C. 1a).
‘‘(70) PERSON ASSOCIATED WITH A SECURITY-BASED SWAP
DEALER OR MAJOR SECURITY-BASED SWAP PARTICIPANT.—
‘‘(A) IN GENERAL.—The term ‘person associated with
a security-based swap dealer or major security-based swap
participant’ or ‘associated person of a security-based swap
dealer or major security-based swap participant’ means—
‘‘(i) any partner, officer, director, or branch manager of such security-based swap dealer or major security-based swap participant (or any person occupying
a similar status or performing similar functions);
‘‘(ii) any person directly or indirectly controlling,
controlled by, or under common control with such security-based swap dealer or major security-based swap
participant; or
‘‘(iii) any employee of such security-based swap
dealer or major security-based swap participant.
‘‘(B) EXCLUSION.—Other than for purposes of section
15F(l)(2), the term ‘person associated with a security-based
swap dealer or major security-based swap participant’ or

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124 STAT. 1758

PUBLIC LAW 111–203—JULY 21, 2010
‘associated person of a security-based swap dealer or major
security-based swap participant’ does not include any person associated with a security-based swap dealer or major
security-based swap participant whose functions are solely
clerical or ministerial.
‘‘(71) SECURITY-BASED SWAP DEALER.—
‘‘(A) IN GENERAL.—The term ‘security-based swap
dealer’ means any person who—
‘‘(i) holds themself out as a dealer in securitybased swaps;
‘‘(ii) makes a market in security-based swaps;
‘‘(iii) regularly enters into security-based swaps
with counterparties as an ordinary course of business
for its own account; or
‘‘(iv) engages in any activity causing it to be commonly known in the trade as a dealer or market maker
in security-based swaps.
‘‘(B) DESIGNATION BY TYPE OR CLASS.—A person may
be designated as a security-based swap dealer for a single
type or single class or category of security-based swap
or activities and considered not to be a security-based swap
dealer for other types, classes, or categories of securitybased swaps or activities.
‘‘(C) EXCEPTION.—The term ‘security-based swap
dealer’ does not include a person that enters into securitybased swaps for such person’s own account, either individually or in a fiduciary capacity, but not as a part of regular
business.
‘‘(D) DE MINIMIS EXCEPTION.—The Commission shall
exempt from designation as a security-based swap dealer
an entity that engages in a de minimis quantity of securitybased swap dealing in connection with transactions with
or on behalf of its customers. The Commission shall promulgate regulations to establish factors with respect to the
making of any determination to exempt.
‘‘(72) APPROPRIATE FEDERAL BANKING AGENCY.—The term
‘appropriate Federal banking agency’ has the same meaning
as in section 3(q) of the Federal Deposit Insurance Act (12
U.S.C. 1813(q)).
‘‘(73) BOARD.—The term ‘Board’ means the Board of Governors of the Federal Reserve System.
‘‘(74) PRUDENTIAL REGULATOR.—The term ‘prudential regulator’ has the same meaning as in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a).
‘‘(75) SECURITY-BASED SWAP DATA REPOSITORY.—The term
‘security-based swap data repository’ means any person that
collects and maintains information or records with respect to
transactions or positions in, or the terms and conditions of,
security-based swaps entered into by third parties for the purpose of providing a centralized recordkeeping facility for security-based swaps.
‘‘(76) SWAP DEALER.—The term ‘swap dealer’ has the same
meaning as in section 1a of the Commodity Exchange Act
(7 U.S.C. 1a).
‘‘(77) SECURITY-BASED SWAP EXECUTION FACILITY.—The
term ‘security-based swap execution facility’ means a trading
system or platform in which multiple participants have the

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124 STAT. 1759

ability to execute or trade security-based swaps by accepting
bids and offers made by multiple participants in the facility
or system, through any means of interstate commerce, including
any trading facility, that—
‘‘(A) facilitates the execution of security-based swaps
between persons; and
‘‘(B) is not a national securities exchange.
‘‘(78) SECURITY-BASED SWAP AGREEMENT.—
‘‘(A) IN GENERAL.—For purposes of sections 9, 10, 16,
20, and 21A of this Act, and section 17 of the Securities
Act of 1933 (15 U.S.C. 77q), the term ‘security-based swap
agreement’ means a swap agreement as defined in section
206A of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note)
of which a material term is based on the price, yield,
value, or volatility of any security or any group or index
of securities, or any interest therein.
‘‘(B) EXCLUSIONS.—The term ‘security-based swap
agreement’ does not include any security-based swap.’’.
(b) AUTHORITY TO FURTHER DEFINE TERMS.—The Securities
and Exchange Commission may, by rule, further define—
(1) the term ‘‘commercial risk’’;
(2) any other term included in an amendment to the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) made by this
subtitle; and
(3) the terms ‘‘security-based swap’’, ‘‘security-based swap
dealer’’, ‘‘major security-based swap participant’’, and ‘‘eligible
contract participant’’, with regard to security-based swaps (as
such terms are defined in the amendments made by subsection
(a)) for the purpose of including transactions and entities that
have been structured to evade this subtitle or the amendments
made by this subtitle.

15 USC 8341.

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SEC. 762. REPEAL OF PROHIBITION ON REGULATION OF SECURITYBASED SWAP AGREEMENTS.

(a) REPEAL.—Sections 206B and 206C of the Gramm-LeachBliley Act (Public Law 106–102; 15 U.S.C. 78c note) are repealed.
(b) CONFORMING AMENDMENTS TO GRAMM-LEACH-BLILEY.—Section 206A(a) of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note)
is amended in the material preceding paragraph (1), by striking
‘‘Except as’’ and all that follows through ‘‘that—’’ and inserting
the following: ‘‘Except as provided in subsection (b), as used in
this section, the term ‘swap agreement’ means any agreement,
contract, or transaction that—’’.
(c) CONFORMING AMENDMENTS TO THE SECURITIES ACT OF
1933.—
(1) Section 2A of the Securities Act of 1933 (15 U.S.C.
77b–1) is amended—
(A) by striking subsection (a) and reserving that subsection; and
(B) by striking ‘‘(as defined in section 206B of the
Gramm-Leach-Bliley Act)’’ each place that such term
appears and inserting ‘‘(as defined in section 3(a)(78) of
the Securities Exchange Act of 1934)’’.
(2) Section 17 of the Securities Act of 1933 (15 U.S.C.
77q) is amended—
(A) in subsection (a)—

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PUBLIC LAW 111–203—JULY 21, 2010

(i) by inserting ‘‘(including security-based swaps)’’
after ‘‘securities’’; and
(ii) by striking ‘‘(as defined in section 206B of
the Gramm-Leach-Bliley Act)’’ and inserting ‘‘(as
defined in section 3(a)(78) of the Securities Exchange
Act)’’; and
(B) in subsection (d), by striking ‘‘206B of the GrammLeach-Bliley Act’’ and inserting ‘‘3(a)(78) of the Securities
Exchange Act of 1934’’.
(d) CONFORMING AMENDMENTS TO THE SECURITIES EXCHANGE
ACT OF 1934.—The Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.) is amended—
(1) in section 3A (15 U.S.C. 78c–1)—
(A) by striking subsection (a) and reserving that subsection; and
(B) by striking ‘‘(as defined in section 206B of the
Gramm-Leach-Bliley Act)’’ each place that the term
appears;
(2) in section 9 (15 U.S.C. 78i)—
(A) in subsection (a), by striking paragraphs (2)
through (5) and inserting the following:
‘‘(2) To effect, alone or with 1 or more other persons, a series
of transactions in any security registered on a national securities
exchange, any security not so registered, or in connection with
any security-based swap or security-based swap agreement with
respect to such security creating actual or apparent active trading
in such security, or raising or depressing the price of such security,
for the purpose of inducing the purchase or sale of such security
by others.
‘‘(3) If a dealer, broker, security-based swap dealer, major security-based swap participant, or other person selling or offering
for sale or purchasing or offering to purchase the security, a security-based swap, or a security-based swap agreement with respect
to such security, to induce the purchase or sale of any security
registered on a national securities exchange, any security not so
registered, any security-based swap, or any security-based swap
agreement with respect to such security by the circulation or
dissemination in the ordinary course of business of information
to the effect that the price of any such security will or is likely
to rise or fall because of market operations of any 1 or more
persons conducted for the purpose of raising or depressing the
price of such security.
‘‘(4) If a dealer, broker, security-based swap dealer, major security-based swap participant, or other person selling or offering
for sale or purchasing or offering to purchase the security, a security-based swap, or security-based swap agreement with respect
to such security, to make, regarding any security registered on
a national securities exchange, any security not so registered, any
security-based swap, or any security-based swap agreement with
respect to such security, for the purpose of inducing the purchase
or sale of such security, such security-based swap, or such securitybased swap agreement any statement which was at the time and
in the light of the circumstances under which it was made, false
or misleading with respect to any material fact, and which that
person knew or had reasonable ground to believe was so false
or misleading.

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124 STAT. 1761

‘‘(5) For a consideration, received directly or indirectly from
a broker, dealer, security-based swap dealer, major security-based
swap participant, or other person selling or offering for sale or
purchasing or offering to purchase the security, a security-based
swap, or security-based swap agreement with respect to such security, to induce the purchase of any security registered on a national
securities exchange, any security not so registered, any securitybased swap, or any security-based swap agreement with respect
to such security by the circulation or dissemination of information
to the effect that the price of any such security will or is likely
to rise or fall because of the market operations of any 1 or more
persons conducted for the purpose of raising or depressing the
price of such security.’’; and
(B) in subsection (i), by striking ‘‘(as defined in section
206B of the Gramm-Leach-Bliley Act)’’;
(3) in section 10 (15 U.S.C. 78j)—
(A) in subsection (b), by striking ‘‘(as defined in section
206B of the Gramm-Leach-Bliley Act),’’ each place that
term appears; and
(B) in the matter following subsection (b), by striking
‘‘(as defined in section 206B of the Gramm-Leach-Bliley
Act), in each place that such terms appear’’;
(4) in section 15 (15 U.S.C. 78o)—
(A) in subsection (c)(1)(A), by striking ‘‘(as defined in
section 206B of the Gramm-Leach-Bliley Act),’’;
(B) in subparagraphs (B) and (C) of subsection (c)(1),
by striking ‘‘(as defined in section 206B of the GrammLeach-Bliley Act)’’ each place that term appears;
(C) by redesignating subsection (i), as added by section
303(f) of the Commodity Futures Modernization Act of 2000
(Public Law 106–554; 114 Stat. 2763A–455)), as subsection
(j); and
(D) in subsection (j), as redesignated by subparagraph
(C), by striking ‘‘(as defined in section 206B of the GrammLeach-Bliley Act)’’;
(5) in section 16 (15 U.S.C. 78p)—
(A) in subsection (a)(2)(C), by striking ‘‘(as defined
in section 206(b) of the Gramm-Leach-Bliley Act (15 U.S.C.
78c note))’’;
(B) in subsection (a)(3)(B), by inserting ‘‘or securitybased swaps’’ after ‘‘security-based swap agreement’’;
(C) in the first sentence of subsection (b), by striking
‘‘(as defined in section 206B of the Gramm-Leach-Bliley
Act)’’;
(D) in the third sentence of subsection (b), by striking
‘‘(as defined in section 206B of the Gramm-Leach Bliley
Act)’’ and inserting ‘‘or a security-based swap’’; and
(E) in subsection (g), by striking ‘‘(as defined in section
206B of the Gramm-Leach-Bliley Act)’’;
(6) in section 20 (15 U.S.C. 78t),
(A) in subsection (d), by striking ‘‘(as defined in section
206B of the Gramm-Leach-Bliley Act)’’; and
(B) in subsection (f), by striking ‘‘(as defined in section
206B of the Gramm-Leach-Bliley Act)’’; and
(7) in section 21A (15 U.S.C. 78u–1)—
(A) in subsection (a)(1), by striking ‘‘(as defined in
section 206B of the Gramm-Leach-Bliley Act)’’; and

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124 STAT. 1762

PUBLIC LAW 111–203—JULY 21, 2010
(B) in subsection (g), by striking ‘‘(as defined in section
206B of the Gramm-Leach-Bliley Act)’’.

SEC. 763. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.

(a) CLEARING FOR SECURITY-BASED SWAPS.—The Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by
inserting after section 3B (as added by section 717 of this Act):
15 USC 78c–3.

‘‘SEC. 3C. CLEARING FOR SECURITY-BASED SWAPS.

Public comment.

Notice.

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Public
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Public comment.

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‘‘(a) IN GENERAL.—
‘‘(1) STANDARD FOR CLEARING.—It shall be unlawful for
any person to engage in a security-based swap unless that
person submits such security-based swap for clearing to a
clearing agency that is registered under this Act or a clearing
agency that is exempt from registration under this Act if the
security-based swap is required to be cleared.
‘‘(2) OPEN ACCESS.—The rules of a clearing agency described
in paragraph (1) shall—
‘‘(A) prescribe that all security-based swaps submitted
to the clearing agency with the same terms and conditions
are economically equivalent within the clearing agency and
may be offset with each other within the clearing agency;
and
‘‘(B) provide for non-discriminatory clearing of a security-based swap executed bilaterally or on or through the
rules of an unaffiliated national securities exchange or
security-based swap execution facility.
‘‘(b) COMMISSION REVIEW.—
‘‘(1) COMMISSION-INITIATED REVIEW.—
‘‘(A) The Commission on an ongoing basis shall review
each security-based swap, or any group, category, type,
or class of security-based swaps to make a determination
that such security-based swap, or group, category, type,
or class of security-based swaps should be required to be
cleared.
‘‘(B) The Commission shall provide at least a 30-day
public comment period regarding any determination under
subparagraph (A).
‘‘(2) SWAP SUBMISSIONS.—
‘‘(A) A clearing agency shall submit to the Commission
each security-based swap, or any group, category, type,
or class of security-based swaps that it plans to accept
for clearing and provide notice to its members (in a manner
to be determined by the Commission) of such submission.
‘‘(B) Any security-based swap or group, category, type,
or class of security-based swaps listed for clearing by a
clearing agency as of the date of enactment of this subsection shall be considered submitted to the Commission.
‘‘(C) The Commission shall—
‘‘(i) make available to the public any submission
received under subparagraphs (A) and (B);
‘‘(ii) review each submission made under subparagraphs (A) and (B), and determine whether the security-based swap, or group, category, type, or class of
security-based swaps, described in the submission is
required to be cleared; and
‘‘(iii) provide at least a 30-day public comment
period regarding its determination whether the

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1763

clearing requirement under subsection (a)(1) shall
apply to the submission.
‘‘(3) DEADLINE.—The Commission shall make its determination under paragraph (2)(C) not later than 90 days after
receiving a submission made under paragraphs (2)(A) and
(2)(B), unless the submitting clearing agency agrees to an extension for the time limitation established under this paragraph.
‘‘(4) DETERMINATION.—
‘‘(A) In reviewing a submission made under paragraph
(2), the Commission shall review whether the submission
is consistent with section 17A.
‘‘(B) In reviewing a security-based swap, group of security-based swaps or class of security-based swaps pursuant
to paragraph (1) or a submission made under paragraph
(2), the Commission shall take into account the following
factors:
‘‘(i) The existence of significant outstanding
notional exposures, trading liquidity and adequate
pricing data.
‘‘(ii) The availability of rule framework, capacity,
operational expertise and resources, and credit support
infrastructure to clear the contract on terms that are
consistent with the material terms and trading conventions on which the contract is then traded.
‘‘(iii) The effect on the mitigation of systemic risk,
taking into account the size of the market for such
contract and the resources of the clearing agency available to clear the contract.
‘‘(iv) The effect on competition, including appropriate fees and charges applied to clearing.
‘‘(v) The existence of reasonable legal certainty
in the event of the insolvency of the relevant clearing
agency or 1 or more of its clearing members with
regard to the treatment of customer and security-based
swap counterparty positions, funds, and property.
‘‘(C) In making a determination under subsection (b)(1)
or paragraph (2)(C) that the clearing requirement shall
apply, the Commission may require such terms and conditions to the requirement as the Commission determines
to be appropriate.
‘‘(5) RULES.—Not later than 1 year after the date of the
enactment of this section, the Commission shall adopt rules
for a clearing agency’s submission for review, pursuant to this
subsection, of a security-based swap, or a group, category, type,
or class of security-based swaps, that it seeks to accept for
clearing. Nothing in this paragraph limits the Commission
from making a determination under paragraph (2)(C) for security-based swaps described in paragraph (2)(B).
‘‘(c) STAY OF CLEARING REQUIREMENT.—
‘‘(1) IN GENERAL.—After making a determination pursuant
to subsection (b)(2), the Commission, on application of a
counterparty to a security-based swap or on its own initiative,
may stay the clearing requirement of subsection (a)(1) until
the Commission completes a review of the terms of the securitybased swap (or the group, category, type, or class of securitybased swaps) and the clearing arrangement.

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124 STAT. 1764

‘‘(2) DEADLINE.—The Commission shall complete a review
undertaken pursuant to paragraph (1) not later than 90 days
after issuance of the stay, unless the clearing agency that
clears the security-based swap, or group, category, type, or
class of security-based swaps, agrees to an extension of the
time limitation established under this paragraph.
‘‘(3) DETERMINATION.—Upon completion of the review
undertaken pursuant to paragraph (1), the Commission may—
‘‘(A) determine, unconditionally or subject to such
terms and conditions as the Commission determines to
be appropriate, that the security-based swap, or group,
category, type, or class of security-based swaps, must be
cleared pursuant to this subsection if it finds that such
clearing is consistent with subsection (b)(4); or
‘‘(B) determine that the clearing requirement of subsection (a)(1) shall not apply to the security-based swap,
or group, category, type, or class of security-based swaps.
‘‘(4) RULES.—Not later than 1 year after the date of the
enactment of this section, the Commission shall adopt rules
for reviewing, pursuant to this subsection, a clearing agency’s
clearing of a security-based swap, or a group, category, type,
or class of security-based swaps, that it has accepted for
clearing.
‘‘(d) PREVENTION OF EVASION.—
‘‘(1) IN GENERAL.—The Commission shall prescribe rules
under this section (and issue interpretations of rules prescribed
under this section), as determined by the Commission to be
necessary to prevent evasions of the mandatory clearing
requirements under this Act.
‘‘(2) DUTY OF COMMISSION TO INVESTIGATE AND TAKE CERTAIN ACTIONS.—To the extent the Commission finds that a
particular security-based swap or any group, category, type,
or class of security-based swaps that would otherwise be subject
to mandatory clearing but no clearing agency has listed the
security-based swap or the group, category, type, or class of
security-based swaps for clearing, the Commission shall—
‘‘(A) investigate the relevant facts and circumstances;
‘‘(B) within 30 days issue a public report containing
the results of the investigation; and
‘‘(C) take such actions as the Commission determines
to be necessary and in the public interest, which may
include requiring the retaining of adequate margin or capital by parties to the security-based swap or the group,
category, type, or class of security-based swaps.
‘‘(3) EFFECT ON AUTHORITY.—Nothing in this subsection—
‘‘(A) authorizes the Commission to adopt rules
requiring a clearing agency to list for clearing a securitybased swap or any group, category, type, or class of security-based swaps if the clearing of the security-based swap
or the group, category, type, or class of security-based
swaps would threaten the financial integrity of the clearing
agency; and
‘‘(B) affects the authority of the Commission to enforce
the open access provisions of subsection (a)(2) with respect
to a security-based swap or the group, category, type, or
class of security-based swaps that is listed for clearing
by a clearing agency.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1765

‘‘(e) REPORTING TRANSITION RULES.—Rules adopted by the
Commission under this section shall provide for the reporting of
data, as follows:
‘‘(1) Security-based swaps entered into before the date of
the enactment of this section shall be reported to a registered
security-based swap data repository or the Commission no later
than 180 days after the effective date of this section.
‘‘(2) Security-based swaps entered into on or after such
date of enactment shall be reported to a registered securitybased swap data repository or the Commission no later than
the later of—
‘‘(A) 90 days after such effective date; or
‘‘(B) such other time after entering into the securitybased swap as the Commission may prescribe by rule or
regulation.
‘‘(f) CLEARING TRANSITION RULES.—
‘‘(1) Security-based swaps entered into before the date of
the enactment of this section are exempt from the clearing
requirements of this subsection if reported pursuant to subsection (e)(1).
‘‘(2) Security-based swaps entered into before application
of the clearing requirement pursuant to this section are exempt
from the clearing requirements of this section if reported pursuant to subsection (e)(2).
‘‘(g) EXCEPTIONS.—
‘‘(1) IN GENERAL.—The requirements of subsection (a)(1)
shall not apply to a security-based swap if 1 of the counterparties to the security-based swap—
‘‘(A) is not a financial entity;
‘‘(B) is using security-based swaps to hedge or mitigate
commercial risk; and
‘‘(C) notifies the Commission, in a manner set forth
by the Commission, how it generally meets its financial
obligations associated with entering into non-cleared security-based swaps.
‘‘(2) OPTION TO CLEAR.—The application of the clearing
exception in paragraph (1) is solely at the discretion of the
counterparty to the security-based swap that meets the conditions of subparagraphs (A) through (C) of paragraph (1).
‘‘(3) FINANCIAL ENTITY DEFINITION.—
‘‘(A) IN GENERAL.—For the purposes of this subsection,
the term ‘financial entity’ means—
‘‘(i) a swap dealer;
‘‘(ii) a security-based swap dealer;
‘‘(iii) a major swap participant;
‘‘(iv) a major security-based swap participant;
‘‘(v) a commodity pool as defined in section 1a(10)
of the Commodity Exchange Act;
‘‘(vi) a private fund as defined in section 202(a)
of the Investment Advisers Act of 1940 (15 U.S.C.
80–b–2(a));
‘‘(vii) an employee benefit plan as defined in paragraphs (3) and (32) of section 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002);
‘‘(viii) a person predominantly engaged in activities
that are in the business of banking or financial in

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124 STAT. 1766

PUBLIC LAW 111–203—JULY 21, 2010
nature, as defined in section 4(k) of the Bank Holding
Company Act of 1956.
‘‘(B) EXCLUSION.—The Commission shall consider
whether to exempt small banks, savings associations, farm
credit system institutions, and credit unions, including—
‘‘(i) depository institutions with total assets of
$10,000,000,000 or less;
‘‘(ii) farm credit system institutions with total
assets of $10,000,000,000 or less; or
‘‘(iii) credit unions with total assets of
$10,000,000,000 or less.
‘‘(4) TREATMENT OF AFFILIATES.—
‘‘(A) IN GENERAL.—An affiliate of a person that qualifies
for an exception under this subsection (including affiliate
entities predominantly engaged in providing financing for
the purchase of the merchandise or manufactured goods
of the person) may qualify for the exception only if the
affiliate, acting on behalf of the person and as an agent,
uses the security-based swap to hedge or mitigate the
commercial risk of the person or other affiliate of the
person that is not a financial entity.
‘‘(B) PROHIBITION RELATING TO CERTAIN AFFILIATES.—
The exception in subparagraph (A) shall not apply if the
affiliate is—
‘‘(i) a swap dealer;
‘‘(ii) a security-based swap dealer;
‘‘(iii) a major swap participant;
‘‘(iv) a major security-based swap participant;
‘‘(v) an issuer that would be an investment company, as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3), but for paragraph
(1) or (7) of subsection (c) of that Act (15 U.S.C. 80a–
3(c));
‘‘(vi) a commodity pool; or
‘‘(vii) a bank holding company with over
$50,000,000,000 in consolidated assets.
‘‘(C) TRANSITION RULE FOR AFFILIATES.—An affiliate,
subsidiary, or a wholly owned entity of a person that qualifies for an exception under subparagraph (A) and is
predominantly engaged in providing financing for the purchase or lease of merchandise or manufactured goods of
the person shall be exempt from the margin requirement
described in section 15F(e) and the clearing requirement
described in subsection (a) with regard to security-based
swaps entered into to mitigate the risk of the financing
activities for not less than a 2-year period beginning on
the date of enactment of this subparagraph.
‘‘(5) ELECTION OF COUNTERPARTY.—
‘‘(A) SECURITY-BASED SWAPS REQUIRED TO BE
CLEARED.—With respect to any security-based swap that
is subject to the mandatory clearing requirement under
subsection (a) and entered into by a security-based swap
dealer or a major security-based swap participant with
a counterparty that is not a swap dealer, major swap
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124 STAT. 1767

sole right to select the clearing agency at which the security-based swap will be cleared.
‘‘(B) SECURITY-BASED SWAPS NOT REQUIRED TO BE
CLEARED.—With respect to any security-based swap that
is not subject to the mandatory clearing requirement under
subsection (a) and entered into by a security-based swap
dealer or a major security-based swap participant with
a counterparty that is not a swap dealer, major swap
participant, security-based swap dealer, or major securitybased swap participant, the counterparty—
‘‘(i) may elect to require clearing of the securitybased swap; and
‘‘(ii) shall have the sole right to select the clearing
agency at which the security-based swap will be
cleared.
‘‘(6) ABUSE OF EXCEPTION.—The Commission may prescribe
such rules or issue interpretations of the rules as the Commission determines to be necessary to prevent abuse of the exceptions described in this subsection. The Commission may also
request information from those persons claiming the clearing
exception as necessary to prevent abuse of the exceptions
described in this subsection.
‘‘(h) TRADE EXECUTION.—
‘‘(1) IN GENERAL.—With respect to transactions involving
security-based swaps subject to the clearing requirement of
subsection (a)(1), counterparties shall—
‘‘(A) execute the transaction on an exchange; or
‘‘(B) execute the transaction on a security-based swap
execution facility registered under section 3D or a securitybased swap execution facility that is exempt from registration under section 3D(e).
‘‘(2) EXCEPTION.—The requirements of subparagraphs (A)
and (B) of paragraph (1) shall not apply if no exchange or
security-based swap execution facility makes the security-based
swap available to trade or for security-based swap transactions
subject to the clearing exception under subsection (g).
‘‘(i) BOARD APPROVAL.—Exemptions from the requirements of
this section to clear a security-based swap or execute a securitybased swap through a national securities exchange or securitybased swap execution facility shall be available to a counterparty
that is an issuer of securities that are registered under section
12 or that is required to file reports pursuant to section 15(d),
only if an appropriate committee of the issuer’s board or governing
body has reviewed and approved the issuer’s decision to enter
into security-based swaps that are subject to such exemptions.
‘‘(j) DESIGNATION OF CHIEF COMPLIANCE OFFICER.—
‘‘(1) IN GENERAL.—Each registered clearing agency shall
designate an individual to serve as a chief compliance officer.
‘‘(2) DUTIES.—The chief compliance officer shall—
‘‘(A) report directly to the board or to the senior officer
of the clearing agency;
‘‘(B) in consultation with its board, a body performing
a function similar thereto, or the senior officer of the registered clearing agency, resolve any conflicts of interest
that may arise;

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PUBLIC LAW 111–203—JULY 21, 2010

‘‘(C) be responsible for administering each policy and
procedure that is required to be established pursuant to
this section;
‘‘(D) ensure compliance with this title (including regulations issued under this title) relating to agreements, contracts, or transactions, including each rule prescribed by
the Commission under this section;
‘‘(E) establish procedures for the remediation of noncompliance issues identified by the compliance officer
through any—
‘‘(i) compliance office review;
‘‘(ii) look-back;
‘‘(iii) internal or external audit finding;
‘‘(iv) self-reported error; or
‘‘(v) validated complaint; and
‘‘(F) establish and follow appropriate procedures for
the handling, management response, remediation, retesting, and closing of noncompliance issues.
‘‘(3) ANNUAL REPORTS.—
‘‘(A) IN GENERAL.—In accordance with rules prescribed
by the Commission, the chief compliance officer shall
annually prepare and sign a report that contains a description of—
‘‘(i) the compliance of the registered clearing
agency or security-based swap execution facility of the
compliance officer with respect to this title (including
regulations under this title); and
‘‘(ii) each policy and procedure of the registered
clearing agency of the compliance officer (including
the code of ethics and conflict of interest policies of
the registered clearing agency).
‘‘(B) REQUIREMENTS.—A compliance report under
subparagraph (A) shall—
‘‘(i) accompany each appropriate financial report
of the registered clearing agency that is required to
be furnished to the Commission pursuant to this section; and
‘‘(ii) include a certification that, under penalty of
law, the compliance report is accurate and complete.’’.
(b) CLEARING AGENCY REQUIREMENTS.—Section 17A of the
Securities Exchange Act of 1934 (15 U.S.C. 78q–1) is amended
by adding at the end the following:
‘‘(g) REGISTRATION REQUIREMENT.—It shall be unlawful for a
clearing agency, unless registered with the Commission, directly
or indirectly to make use of the mails or any means or instrumentality of interstate commerce to perform the functions of a clearing
agency with respect to a security-based swap.
‘‘(h) VOLUNTARY REGISTRATION.—A person that clears agreements, contracts, or transactions that are not required to be cleared
under this title may register with the Commission as a clearing
agency.
‘‘(i) STANDARDS FOR CLEARING AGENCIES CLEARING SECURITYBASED SWAP TRANSACTIONS.—To be registered and to maintain
registration as a clearing agency that clears security-based swap
transactions, a clearing agency shall comply with such standards
as the Commission may establish by rule. In establishing any
such standards, and in the exercise of its oversight of such a

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clearing agency pursuant to this title, the Commission may conform
such standards or oversight to reflect evolving United States and
international standards. Except where the Commission determines
otherwise by rule or regulation, a clearing agency shall have reasonable discretion in establishing the manner in which it complies
with any such standards.
‘‘(j) RULES.—The Commission shall adopt rules governing persons that are registered as clearing agencies for security-based
swaps under this title.
‘‘(k) EXEMPTIONS.—The Commission may exempt, conditionally
or unconditionally, a clearing agency from registration under this
section for the clearing of security-based swaps if the Commission
determines that the clearing agency is subject to comparable, comprehensive supervision and regulation by the Commodity Futures
Trading Commission or the appropriate government authorities
in the home country of the agency. Such conditions may include,
but are not limited to, requiring that the clearing agency be available for inspection by the Commission and make available all
information requested by the Commission.
‘‘(l) EXISTING DEPOSITORY INSTITUTIONS AND DERIVATIVE
CLEARING ORGANIZATIONS.—
‘‘(1) IN GENERAL.—A depository institution or derivative
clearing organization registered with the Commodity Futures
Trading Commission under the Commodity Exchange Act that
is required to be registered as a clearing agency under this
section is deemed to be registered under this section solely
for the purpose of clearing security-based swaps to the extent
that, before the date of enactment of this subsection—
‘‘(A) the depository institution cleared swaps as a multilateral clearing organization; or
‘‘(B) the derivative clearing organization cleared swaps
pursuant to an exemption from registration as a clearing
agency.
‘‘(2) CONVERSION OF DEPOSITORY INSTITUTIONS.—A depository institution to which this subsection applies may, by the
vote of the shareholders owning not less than 51 percent of
the voting interests of the depository institution, be converted
into a State corporation, partnership, limited liability company,
or similar legal form pursuant to a plan of conversion, if the
conversion is not in contravention of applicable State law.
‘‘(3) SHARING OF INFORMATION.—The Commodity Futures
Trading Commission shall make available to the Commission,
upon request, all information determined to be relevant by
the Commodity Futures Trading Commission regarding a
derivatives clearing organization deemed to be registered with
the Commission under paragraph (1).
‘‘(m) MODIFICATION OF CORE PRINCIPLES.—The Commission
may conform the core principles established in this section to reflect
evolving United States and international standards.’’.
(c) SECURITY-BASED SWAP EXECUTION FACILITIES.—The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended
by inserting after section 3C (as added by subsection (a) of this
section) the following:
‘‘SEC. 3D. SECURITY-BASED SWAP EXECUTION FACILITIES.

15 USC 78c–4.

‘‘(a) REGISTRATION.—

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PUBLIC LAW 111–203—JULY 21, 2010

‘‘(1) IN GENERAL.—No person may operate a facility for
the trading or processing of security-based swaps, unless the
facility is registered as a security-based swap execution facility
or as a national securities exchange under this section.
‘‘(2) DUAL REGISTRATION.—Any person that is registered
as a security-based swap execution facility under this section
shall register with the Commission regardless of whether the
person also is registered with the Commodity Futures Trading
Commission as a swap execution facility.
‘‘(b) TRADING AND TRADE PROCESSING.—A security-based swap
execution facility that is registered under subsection (a) may—
‘‘(1) make available for trading any security-based swap;
and
‘‘(2) facilitate trade processing of any security-based swap.
‘‘(c) IDENTIFICATION OF FACILITY USED TO TRADE SECURITYBASED SWAPS BY NATIONAL SECURITIES EXCHANGES.—A national
securities exchange shall, to the extent that the exchange also
operates a security-based swap execution facility and uses the same
electronic trade execution system for listing and executing trades
of security-based swaps on or through the exchange and the facility,
identify whether electronic trading of such security-based swaps
is taking place on or through the national securities exchange
or the security-based swap execution facility.
‘‘(d) CORE PRINCIPLES FOR SECURITY-BASED SWAP EXECUTION
FACILITIES.—
‘‘(1) COMPLIANCE WITH CORE PRINCIPLES.—
‘‘(A) IN GENERAL.—To be registered, and maintain registration, as a security-based swap execution facility, the
security-based swap execution facility shall comply with—
‘‘(i) the core principles described in this subsection;
and
‘‘(ii) any requirement that the Commission may
impose by rule or regulation.
‘‘(B) REASONABLE DISCRETION OF SECURITY-BASED SWAP
EXECUTION FACILITY.—Unless otherwise determined by the
Commission, by rule or regulation, a security-based swap
execution facility described in subparagraph (A) shall have
reasonable discretion in establishing the manner in which
it complies with the core principles described in this subsection.
‘‘(2) COMPLIANCE WITH RULES.—A security-based swap
execution facility shall—
‘‘(A) establish and enforce compliance with any rule
established by such security-based swap execution facility,
including—
‘‘(i) the terms and conditions of the security-based
swaps traded or processed on or through the facility;
and
‘‘(ii) any limitation on access to the facility;
‘‘(B) establish and enforce trading, trade processing,
and participation rules that will deter abuses and have
the capacity to detect, investigate, and enforce those rules,
including means—
‘‘(i) to provide market participants with impartial
access to the market; and
‘‘(ii) to capture information that may be used in
establishing whether rule violations have occurred; and

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124 STAT. 1771

‘‘(C) establish rules governing the operation of the
facility, including rules specifying trading procedures to
be used in entering and executing orders traded or posted
on the facility, including block trades.
‘‘(3) SECURITY-BASED SWAPS NOT READILY SUSCEPTIBLE TO
MANIPULATION.—The security-based swap execution facility
shall permit trading only in security-based swaps that are
not readily susceptible to manipulation.
‘‘(4) MONITORING OF TRADING AND TRADE PROCESSING.—
The security-based swap execution facility shall—
‘‘(A) establish and enforce rules or terms and conditions
defining, or specifications detailing—
‘‘(i) trading procedures to be used in entering and
executing orders traded on or through the facilities
of the security-based swap execution facility; and
‘‘(ii) procedures for trade processing of securitybased swaps on or through the facilities of the securitybased swap execution facility; and
‘‘(B) monitor trading in security-based swaps to prevent
manipulation, price distortion, and disruptions of the
delivery or cash settlement process through surveillance,
compliance, and disciplinary practices and procedures,
including methods for conducting real-time monitoring of
trading and comprehensive and accurate trade reconstructions.
‘‘(5) ABILITY TO OBTAIN INFORMATION.—The security-based
swap execution facility shall—
‘‘(A) establish and enforce rules that will allow the
facility to obtain any necessary information to perform
any of the functions described in this subsection;
‘‘(B) provide the information to the Commission on
request; and
‘‘(C) have the capacity to carry out such international
information-sharing agreements as the Commission may
require.
‘‘(6) FINANCIAL INTEGRITY OF TRANSACTIONS.—The securitybased swap execution facility shall establish and enforce rules
and procedures for ensuring the financial integrity of securitybased swaps entered on or through the facilities of the securitybased swap execution facility, including the clearance and
settlement of security-based swaps pursuant to section 3C(a)(1).
‘‘(7) EMERGENCY AUTHORITY.—The security-based swap
execution facility shall adopt rules to provide for the exercise
of emergency authority, in consultation or cooperation with
the Commission, as is necessary and appropriate, including
the authority to liquidate or transfer open positions in any
security-based swap or to suspend or curtail trading in a security-based swap.
‘‘(8) TIMELY PUBLICATION OF TRADING INFORMATION.—
‘‘(A) IN GENERAL.—The security-based swap execution
facility shall make public timely information on price,
trading volume, and other trading data on security-based
swaps to the extent prescribed by the Commission.
‘‘(B) CAPACITY OF SECURITY-BASED SWAP EXECUTION
FACILITY.—The security-based swap execution facility shall
be required to have the capacity to electronically capture

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124 STAT. 1772

and transmit and disseminate trade information with
respect to transactions executed on or through the facility.
‘‘(9) RECORDKEEPING AND REPORTING.—
‘‘(A) IN GENERAL.—A security-based swap execution
facility shall—
‘‘(i) maintain records of all activities relating to
the business of the facility, including a complete audit
trail, in a form and manner acceptable to the Commission for a period of 5 years; and
‘‘(ii) report to the Commission, in a form and
manner acceptable to the Commission, such information as the Commission determines to be necessary
or appropriate for the Commission to perform the
duties of the Commission under this title.
‘‘(B) REQUIREMENTS.—The Commission shall adopt
data collection and reporting requirements for securitybased swap execution facilities that are comparable to corresponding requirements for clearing agencies and securitybased swap data repositories.
‘‘(10) ANTITRUST CONSIDERATIONS.—Unless necessary or
appropriate to achieve the purposes of this title, the securitybased swap execution facility shall not—
‘‘(A) adopt any rules or taking any actions that result
in any unreasonable restraint of trade; or
‘‘(B) impose any material anticompetitive burden on
trading or clearing.
‘‘(11) CONFLICTS OF INTEREST.—The security-based swap
execution facility shall—
‘‘(A) establish and enforce rules to minimize conflicts
of interest in its decision-making process; and
‘‘(B) establish a process for resolving the conflicts of
interest.
‘‘(12) FINANCIAL RESOURCES.—
‘‘(A) IN GENERAL.—The security-based swap execution
facility shall have adequate financial, operational, and
managerial resources to discharge each responsibility of
the security-based swap execution facility, as determined
by the Commission.
‘‘(B) DETERMINATION OF RESOURCE ADEQUACY.—The
financial resources of a security-based swap execution
facility shall be considered to be adequate if the value
of the financial resources—
‘‘(i) enables the organization to meet its financial
obligations to its members and participants notwithstanding a default by the member or participant creating the largest financial exposure for that organization in extreme but plausible market conditions; and
‘‘(ii) exceeds the total amount that would enable
the security-based swap execution facility to cover the
operating costs of the security-based swap execution
facility for a 1-year period, as calculated on a rolling
basis.
‘‘(13) SYSTEM SAFEGUARDS.—The security-based swap
execution facility shall—

Time period.

Regulations.

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124 STAT. 1773

‘‘(A) establish and maintain a program of risk analysis
and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and automated systems, that—
‘‘(i) are reliable and secure; and
‘‘(ii) have adequate scalable capacity;
‘‘(B) establish and maintain emergency procedures,
backup facilities, and a plan for disaster recovery that
allow for—
‘‘(i) the timely recovery and resumption of operations; and
‘‘(ii) the fulfillment of the responsibilities and
obligations of the security-based swap execution
facility; and
‘‘(C) periodically conduct tests to verify that the backup
resources of the security-based swap execution facility are
sufficient to ensure continued—
‘‘(i) order processing and trade matching;
‘‘(ii) price reporting;
‘‘(iii) market surveillance; and
‘‘(iv) maintenance of a comprehensive and accurate
audit trail.
‘‘(14) DESIGNATION OF CHIEF COMPLIANCE OFFICER.—
‘‘(A) IN GENERAL.—Each security-based swap execution
facility shall designate an individual to serve as a chief
compliance officer.
‘‘(B) DUTIES.—The chief compliance officer shall—
‘‘(i) report directly to the board or to the senior
officer of the facility;
‘‘(ii) review compliance with the core principles
in this subsection;
‘‘(iii) in consultation with the board of the facility,
a body performing a function similar to that of a board,
or the senior officer of the facility, resolve any conflicts
of interest that may arise;
‘‘(iv) be responsible for establishing and administering the policies and procedures required to be
established pursuant to this section;
‘‘(v) ensure compliance with this title and the rules
and regulations issued under this title, including rules
prescribed by the Commission pursuant to this section;
‘‘(vi) establish procedures for the remediation of
noncompliance issues found during—
‘‘(I) compliance office reviews;
‘‘(II) look backs;
‘‘(III) internal or external audit findings;
‘‘(IV) self-reported errors; or
‘‘(V) through validated complaints; and
‘‘(vii) establish and follow appropriate procedures
for the handling, management response, remediation,
retesting, and closing of noncompliance issues.
‘‘(C) ANNUAL REPORTS.—
‘‘(i) IN GENERAL.—In accordance with rules prescribed by the Commission, the chief compliance officer
shall annually prepare and sign a report that contains
a description of—

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PUBLIC LAW 111–203—JULY 21, 2010

‘‘(I) the compliance of the security-based swap
execution facility with this title; and
‘‘(II) the policies and procedures, including the
code of ethics and conflict of interest policies, of
the security-based security-based swap execution
facility.
‘‘(ii) REQUIREMENTS.—The chief compliance officer
shall—
‘‘(I) submit each report described in clause
(i) with the appropriate financial report of the
security-based swap execution facility that is
required to be submitted to the Commission pursuant to this section; and
‘‘(II) include in the report a certification that,
under penalty of law, the report is accurate and
complete.
‘‘(e) EXEMPTIONS.—The Commission may exempt, conditionally
or unconditionally, a security-based swap execution facility from
registration under this section if the Commission finds that the
facility is subject to comparable, comprehensive supervision and
regulation on a consolidated basis by the Commodity Futures
Trading Commission.
‘‘(f) RULES.—The Commission shall prescribe rules governing
the regulation of security-based swap execution facilities under
this section.’’.
(d) SEGREGATION OF ASSETS HELD AS COLLATERAL IN SECURITYBASED SWAP TRANSACTIONS.—The Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.) is amended by inserting after section 3D
(as added by subsection (b)) the following:

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15 USC 78c–5.

‘‘SEC. 3E. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SECURITY-BASED SWAP TRANSACTIONS.

‘‘(a) REGISTRATION REQUIREMENT.—It shall be unlawful for any
person to accept any money, securities, or property (or to extend
any credit in lieu of money, securities, or property) from, for, or
on behalf of a security-based swaps customer to margin, guarantee,
or secure a security-based swap cleared by or through a clearing
agency (including money, securities, or property accruing to the
customer as the result of such a security-based swap), unless the
person shall have registered under this title with the Commission
as a broker, dealer, or security-based swap dealer, and the registration shall not have expired nor been suspended nor revoked.
‘‘(b) CLEARED SECURITY-BASED SWAPS.—
‘‘(1) SEGREGATION REQUIRED.—A broker, dealer, or securitybased swap dealer shall treat and deal with all money, securities, and property of any security-based swaps customer
received to margin, guarantee, or secure a security-based swap
cleared by or though a clearing agency (including money, securities, or property accruing to the security-based swaps customer
as the result of such a security-based swap) as belonging to
the security-based swaps customer.
‘‘(2) COMMINGLING PROHIBITED.—Money, securities, and
property of a security-based swaps customer described in paragraph (1) shall be separately accounted for and shall not be
commingled with the funds of the broker, dealer, or securitybased swap dealer or be used to margin, secure, or guarantee

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124 STAT. 1775

any trades or contracts of any security-based swaps customer
or person other than the person for whom the same are held.
‘‘(c) EXCEPTIONS.—
‘‘(1) USE OF FUNDS.—
‘‘(A) IN GENERAL.—Notwithstanding subsection (b),
money, securities, and property of a security-based swaps
customer of a broker, dealer, or security-based swap dealer
described in subsection (b) may, for convenience, be
commingled and deposited in the same 1 or more accounts
with any bank or trust company or with a clearing agency.
‘‘(B) WITHDRAWAL.—Notwithstanding subsection (b),
such share of the money, securities, and property described
in subparagraph (A) as in the normal course of business
shall be necessary to margin, guarantee, secure, transfer,
adjust, or settle a cleared security-based swap with a
clearing agency, or with any member of the clearing agency,
may be withdrawn and applied to such purposes, including
the payment of commissions, brokerage, interest, taxes,
storage, and other charges, lawfully accruing in connection
with the cleared security-based swap.
‘‘(2) COMMISSION ACTION.—Notwithstanding subsection (b),
in accordance with such terms and conditions as the Commission may prescribe by rule, regulation, or order, any money,
securities, or property of the security-based swaps customer
of a broker, dealer, or security-based swap dealer described
in subsection (b) may be commingled and deposited as provided
in this section with any other money, securities, or property
received by the broker, dealer, or security-based swap dealer
and required by the Commission to be separately accounted
for and treated and dealt with as belonging to the securitybased swaps customer of the broker, dealer, or security-based
swap dealer.
‘‘(d) PERMITTED INVESTMENTS.—Money described in subsection
(b) may be invested in obligations of the United States, in general
obligations of any State or of any political subdivision of a State,
and in obligations fully guaranteed as to principal and interest
by the United States, or in any other investment that the Commission may by rule or regulation prescribe, and such investments
shall be made in accordance with such rules and regulations and
subject to such conditions as the Commission may prescribe.
‘‘(e) PROHIBITION.—It shall be unlawful for any person,
including any clearing agency and any depository institution, that
has received any money, securities, or property for deposit in a
separate account or accounts as provided in subsection (b) to hold,
dispose of, or use any such money, securities, or property as
belonging to the depositing broker, dealer, or security-based swap
dealer or any person other than the swaps customer of the broker,
dealer, or security-based swap dealer.
‘‘(f) SEGREGATION REQUIREMENTS FOR UNCLEARED SECURITYBASED SWAPS.—
‘‘(1) SEGREGATION OF ASSETS HELD AS COLLATERAL IN
UNCLEARED SECURITY-BASED SWAP TRANSACTIONS.—
‘‘(A) NOTIFICATION.—A security-based swap dealer or
major security-based swap participant shall be required
to notify the counterparty of the security-based swap dealer
or major security-based swap participant at the beginning
of a security-based swap transaction that the counterparty

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124 STAT. 1776

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has the right to require segregation of the funds of other
property supplied to margin, guarantee, or secure the
obligations of the counterparty.
‘‘(B) SEGREGATION AND MAINTENANCE OF FUNDS.—At
the request of a counterparty to a security-based swap
that provides funds or other property to a security-based
swap dealer or major security-based swap participant to
margin, guarantee, or secure the obligations of the
counterparty, the security-based swap dealer or major security-based swap participant shall—
‘‘(i) segregate the funds or other property for the
benefit of the counterparty; and
‘‘(ii) in accordance with such rules and regulations
as the Commission may promulgate, maintain the
funds or other property in a segregated account separate from the assets and other interests of the securitybased swap dealer or major security-based swap
participant.
‘‘(2) APPLICABILITY.—The requirements described in paragraph (1) shall—
‘‘(A) apply only to a security-based swap between a
counterparty and a security-based swap dealer or major
security-based swap participant that is not submitted for
clearing to a clearing agency; and
‘‘(B)(i) not apply to variation margin payments; or
‘‘(ii) not preclude any commercial arrangement
regarding—
‘‘(I) the investment of segregated funds or other
property that may only be invested in such investments
as the Commission may permit by rule or regulation;
and
‘‘(II) the related allocation of gains and losses
resulting from any investment of the segregated funds
or other property.
‘‘(3) USE OF INDEPENDENT THIRD-PARTY CUSTODIANS.—The
segregated account described in paragraph (1) shall be—
‘‘(A) carried by an independent third-party custodian;
and
‘‘(B) designated as a segregated account for and on
behalf of the counterparty.
‘‘(4) REPORTING REQUIREMENT.—If the counterparty does
not choose to require segregation of the funds or other property
supplied to margin, guarantee, or secure the obligations of
the counterparty, the security-based swap dealer or major security-based swap participant shall report to the counterparty
of the security-based swap dealer or major security-based swap
participant on a quarterly basis that the back office procedures
of the security-based swap dealer or major security-based swap
participant relating to margin and collateral requirements are
in compliance with the agreement of the counterparties.
‘‘(g) BANKRUPTCY.—A security-based swap, as defined in section
3(a)(68) shall be considered to be a security as such term is used
in section 101(53A)(B) and subchapter III of title 11, United States
Code. An account that holds a security-based swap, other than
a portfolio margining account referred to in section 15(c)(3)(C) shall
be considered to be a securities account, as that term is defined
in section 741 of title 11, United States Code. The definitions

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124 STAT. 1777

of the terms ‘purchase’ and ‘sale’ in section 3(a)(13) and (14) shall
be applied to the terms ‘purchase’ and ‘sale’, as used in section
741 of title 11, United States Code. The term ‘customer’, as defined
in section 741 of title 11, United States Code, excludes any person,
to the extent that such person has a claim based on any open
repurchase agreement, open reverse repurchase agreement, stock
borrowed agreement, non-cleared option, or non-cleared securitybased swap except to the extent of any margin delivered to or
by the customer with respect to which there is a customer protection
requirement under section 15(c)(3) or a segregation requirement.’’.
(e) TRADING IN SECURITY-BASED SWAPS.—Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) is amended by adding
at the end the following:
‘‘(l) SECURITY-BASED SWAPS.—It shall be unlawful for any person to effect a transaction in a security-based swap with or for
a person that is not an eligible contract participant, unless such
transaction is effected on a national securities exchange registered
pursuant to subsection (b).’’.
(f) ADDITIONS OF SECURITY-BASED SWAPS TO CERTAIN ENFORCEMENT PROVISIONS.—Section 9(b) of the Securities Exchange Act
of 1934 (15 U.S.C. 78i(b)) is amended by striking paragraphs (1)
through (3) and inserting the following:
‘‘(1) any transaction in connection with any security
whereby any party to such transaction acquires—
‘‘(A) any put, call, straddle, or other option or privilege
of buying the security from or selling the security to
another without being bound to do so;
‘‘(B) any security futures product on the security; or
‘‘(C) any security-based swap involving the security
or the issuer of the security;
‘‘(2) any transaction in connection with any security with
relation to which such person has, directly or indirectly, any
interest in any—
‘‘(A) such put, call, straddle, option, or privilege;
‘‘(B) such security futures product; or
‘‘(C) such security-based swap; or
‘‘(3) any transaction in any security for the account of
any person who such person has reason to believe has, and
who actually has, directly or indirectly, any interest in any—
‘‘(A) such put, call, straddle, option, or privilege;
‘‘(B) such security futures product with relation to such
security; or
‘‘(C) any security-based swap involving such security
or the issuer of such security.’’.
(g) RULEMAKING AUTHORITY TO PREVENT FRAUD, MANIPULATION AND DECEPTIVE CONDUCT IN SECURITY-BASED SWAPS.—Section
9 of the Securities Exchange Act of 1934 (15 U.S.C. 78i) is amended
by adding at the end the following:
‘‘(j) It shall be unlawful for any person, directly or indirectly,
by the use of any means or instrumentality of interstate commerce
or of the mails, or of any facility of any national securities exchange,
to effect any transaction in, or to induce or attempt to induce
the purchase or sale of, any security-based swap, in connection
with which such person engages in any fraudulent, deceptive, or
manipulative act or practice, makes any fictitious quotation, or
engages in any transaction, practice, or course of business which
operates as a fraud or deceit upon any person. The Commission

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shall, for the purposes of this subsection, by rules and regulations
define, and prescribe means reasonably designed to prevent, such
transactions, acts, practices, and courses of business as are fraudulent, deceptive, or manipulative, and such quotations as are fictitious.’’.
(h) POSITION LIMITS AND POSITION ACCOUNTABILITY FOR SECURITY-BASED SWAPS.—The Securities Exchange Act of 1934 is
amended by inserting after section 10A (15 U.S.C. 78j–1) the following:

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‘‘SEC. 10B. POSITION LIMITS AND POSITION ACCOUNTABILITY FOR
SECURITY-BASED SWAPS AND LARGE TRADER REPORTING.

Fraud.
Regulations.

‘‘(a) POSITION LIMITS.—As a means reasonably designed to prevent fraud and manipulation, the Commission shall, by rule or
regulation, as necessary or appropriate in the public interest or
for the protection of investors, establish limits (including related
hedge exemption provisions) on the size of positions in any securitybased swap that may be held by any person. In establishing such
limits, the Commission may require any person to aggregate positions in—
‘‘(1) any security-based swap and any security or loan or
group of securities or loans on which such security-based swap
is based, which such security-based swap references, or to which
such security-based swap is related as described in paragraph
(68) of section 3(a), and any other instrument relating to such
security or loan or group or index of securities or loans; or
‘‘(2) any security-based swap and—
‘‘(A) any security or group or index of securities, the
price, yield, value, or volatility of which, or of which any
interest therein, is the basis for a material term of such
security-based swap as described in paragraph (68) of section 3(a); and
‘‘(B) any other instrument relating to the same security
or group or index of securities described under subparagraph (A).
‘‘(b) EXEMPTIONS.—The Commission, by rule, regulation, or
order, may conditionally or unconditionally exempt any person or
class of persons, any security-based swap or class of security-based
swaps, or any transaction or class of transactions from any requirement the Commission may establish under this section with respect
to position limits.
‘‘(c) SRO RULES.—
‘‘(1) IN GENERAL.—As a means reasonably designed to prevent fraud or manipulation, the Commission, by rule, regulation, or order, as necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance
of the purposes of this title, may direct a self-regulatory
organization—
‘‘(A) to adopt rules regarding the size of positions in
any security-based swap that may be held by—
‘‘(i) any member of such self-regulatory organization; or
‘‘(ii) any person for whom a member of such selfregulatory organization effects transactions in such
security-based swap; and

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124 STAT. 1779

‘‘(B) to adopt rules reasonably designed to ensure
compliance with requirements prescribed by the Commission under this subsection.
‘‘(2) REQUIREMENT TO AGGREGATE POSITIONS.—In establishing the limits under paragraph (1), the self-regulatory
organization may require such member or person to aggregate
positions in—
‘‘(A) any security-based swap and any security or loan
or group or narrow-based security index of securities or
loans on which such security-based swap is based, which
such security-based swap references, or to which such security-based swap is related as described in section 3(a)(68),
and any other instrument relating to such security or loan
or group or narrow-based security index of securities or
loans; or
‘‘(B)(i) any security-based swap; and
‘‘(ii) any security-based swap and any other instrument
relating to the same security or group or narrow-based
security index of securities.
‘‘(d) LARGE TRADER REPORTING.—The Commission, by rule or
regulation, may require any person that effects transactions for
such person’s own account or the account of others in any securitiesbased swap or uncleared security-based swap and any security
or loan or group or narrow-based security index of securities or
loans as set forth in paragraphs (1) and (2) of subsection (a) under
this section to report such information as the Commission may
prescribe regarding any position or positions in any security-based
swap or uncleared security-based swap and any security or loan
or group or narrow-based security index of securities or loans and
any other instrument relating to such security or loan or group
or narrow-based security index of securities or loans as set forth
in paragraphs (1) and (2) of subsection (a) under this section.’’.
(i) PUBLIC REPORTING AND REPOSITORIES FOR SECURITY-BASED
SWAPS.—Section 13 of the Securities Exchange Act of 1934 (15
U.S.C. 78m) is amended by adding at the end the following:
‘‘(m) PUBLIC AVAILABILITY OF SECURITY-BASED SWAP TRANSACTION DATA.—
‘‘(1) IN GENERAL.—
‘‘(A) DEFINITION OF REAL-TIME PUBLIC REPORTING.—
In this paragraph, the term ‘real-time public reporting’
means to report data relating to a security-based swap
transaction, including price and volume, as soon as technologically practicable after the time at which the securitybased swap transaction has been executed.
‘‘(B) PURPOSE.—The purpose of this subsection is to
authorize the Commission to make security-based swap
transaction and pricing data available to the public in
such form and at such times as the Commission determines
appropriate to enhance price discovery.
‘‘(C) GENERAL RULE.—The Commission is authorized
to provide by rule for the public availability of securitybased swap transaction, volume, and pricing data as follows:
‘‘(i) With respect to those security-based swaps
that are subject to the mandatory clearing requirement
described in section 3C(a)(1) (including those securitybased swaps that are excepted from the requirement

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pursuant to section 3C(g)), the Commission shall
require real-time public reporting for such transactions.
‘‘(ii) With respect to those security-based swaps
that are not subject to the mandatory clearing requirement described in section 3C(a)(1), but are cleared
at a registered clearing agency, the Commission shall
require real-time public reporting for such transactions.
‘‘(iii) With respect to security-based swaps that
are not cleared at a registered clearing agency and
which are reported to a security-based swap data
repository or the Commission under section 3C(a)(6),
the Commission shall require real-time public
reporting for such transactions, in a manner that does
not disclose the business transactions and market positions of any person.
‘‘(iv) With respect to security-based swaps that
are determined to be required to be cleared under
section 3C(b) but are not cleared, the Commission shall
require real-time public reporting for such transactions.
‘‘(D) REGISTERED ENTITIES AND PUBLIC REPORTING.—
The Commission may require registered entities to publicly
disseminate the security-based swap transaction and
pricing data required to be reported under this paragraph.
‘‘(E) RULEMAKING REQUIRED.—With respect to the rule
providing for the public availability of transaction and
pricing data for security-based swaps described in clauses
(i) and (ii) of subparagraph (C), the rule promulgated by
the Commission shall contain provisions—
‘‘(i) to ensure such information does not identify
the participants;
‘‘(ii) to specify the criteria for determining what
constitutes a large notional security-based swap transaction (block trade) for particular markets and contracts;
‘‘(iii) to specify the appropriate time delay for
reporting large notional security-based swap transactions (block trades) to the public; and
‘‘(iv) that take into account whether the public
disclosure will materially reduce market liquidity.
‘‘(F) TIMELINESS OF REPORTING.—Parties to a securitybased swap (including agents of the parties to a securitybased swap) shall be responsible for reporting securitybased swap transaction information to the appropriate registered entity in a timely manner as may be prescribed
by the Commission.
‘‘(G) REPORTING OF SWAPS TO REGISTERED SECURITYBASED SWAP DATA REPOSITORIES.—Each security-based
swap (whether cleared or uncleared) shall be reported to
a registered security-based swap data repository.
‘‘(H) REGISTRATION OF CLEARING AGENCIES.—A clearing
agency may register as a security-based swap data repository.
‘‘(2) SEMIANNUAL AND ANNUAL PUBLIC REPORTING OF AGGREGATE SECURITY-BASED SWAP DATA.—

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124 STAT. 1781

‘‘(A) IN GENERAL.—In accordance with subparagraph
(B), the Commission shall issue a written report on a
semiannual and annual basis to make available to the
public information relating to—
‘‘(i) the trading and clearing in the major securitybased swap categories; and
‘‘(ii) the market participants and developments in
new products.
‘‘(B) USE; CONSULTATION.—In preparing a report under
subparagraph (A), the Commission shall—
‘‘(i) use information from security-based swap data
repositories and clearing agencies; and
‘‘(ii) consult with the Office of the Comptroller
of the Currency, the Bank for International Settlements, and such other regulatory bodies as may be
necessary.
‘‘(C) AUTHORITY OF COMMISSION.—The Commission
may, by rule, regulation, or order, delegate the public
reporting responsibilities of the Commission under this
paragraph in accordance with such terms and conditions
as the Commission determines to be appropriate and in
the public interest.
‘‘(n) SECURITY-BASED SWAP DATA REPOSITORIES.—
‘‘(1) REGISTRATION REQUIREMENT.—It shall be unlawful for
any person, unless registered with the Commission, directly
or indirectly, to make use of the mails or any means or
instrumentality of interstate commerce to perform the functions
of a security-based swap data repository.
‘‘(2) INSPECTION AND EXAMINATION.—Each registered security-based swap data repository shall be subject to inspection
and examination by any representative of the Commission.
‘‘(3) COMPLIANCE WITH CORE PRINCIPLES.—
‘‘(A) IN GENERAL.—To be registered, and maintain registration, as a security-based swap data repository, the
security-based swap data repository shall comply with—
‘‘(i) the requirements and core principles described
in this subsection; and
‘‘(ii) any requirement that the Commission may
impose by rule or regulation.
‘‘(B) REASONABLE DISCRETION OF SECURITY-BASED SWAP
DATA REPOSITORY.—Unless otherwise determined by the
Commission, by rule or regulation, a security-based swap
data repository described in subparagraph (A) shall have
reasonable discretion in establishing the manner in which
the security-based swap data repository complies with the
core principles described in this subsection.
‘‘(4) STANDARD SETTING.—
‘‘(A) DATA IDENTIFICATION.—
‘‘(i) IN GENERAL.—In accordance with clause (ii),
the Commission shall prescribe standards that specify
the data elements for each security-based swap that
shall be collected and maintained by each registered
security-based swap data repository.
‘‘(ii) REQUIREMENT.—In carrying out clause (i), the
Commission shall prescribe consistent data element
standards applicable to registered entities and
reporting counterparties.

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‘‘(B) DATA COLLECTION AND MAINTENANCE.—The
Commission shall prescribe data collection and data
maintenance standards for security-based swap data repositories.
‘‘(C) COMPARABILITY.—The standards prescribed by the
Commission under this subsection shall be comparable to
the data standards imposed by the Commission on clearing
agencies in connection with their clearing of security-based
swaps.
‘‘(5) DUTIES.—A security-based swap data repository shall—
‘‘(A) accept data prescribed by the Commission for each
security-based swap under subsection (b);
‘‘(B) confirm with both counterparties to the securitybased swap the accuracy of the data that was submitted;
‘‘(C) maintain the data described in subparagraph (A)
in such form, in such manner, and for such period as
may be required by the Commission;
‘‘(D)(i) provide direct electronic access to the Commission (or any designee of the Commission, including another
registered entity); and
‘‘(ii) provide the information described in subparagraph
(A) in such form and at such frequency as the Commission
may require to comply with the public reporting requirements set forth in subsection (m);
‘‘(E) at the direction of the Commission, establish automated systems for monitoring, screening, and analyzing
security-based swap data;
‘‘(F) maintain the privacy of any and all security-based
swap transaction information that the security-based swap
data repository receives from a security-based swap dealer,
counterparty, or any other registered entity; and
‘‘(G) on a confidential basis pursuant to section 24,
upon request, and after notifying the Commission of the
request, make available all data obtained by the securitybased swap data repository, including individual
counterparty trade and position data, to—
‘‘(i) each appropriate prudential regulator;
‘‘(ii) the Financial Stability Oversight Council;
‘‘(iii) the Commodity Futures Trading Commission;
‘‘(iv) the Department of Justice; and
‘‘(v) any other person that the Commission determines to be appropriate, including—
‘‘(I) foreign financial supervisors (including foreign futures authorities);
‘‘(II) foreign central banks; and
‘‘(III) foreign ministries.
‘‘(H) CONFIDENTIALITY AND INDEMNIFICATION AGREEMENT.—Before the security-based swap data repository may
share information with any entity described in subparagraph (G)—
‘‘(i) the security-based swap data repository shall
receive a written agreement from each entity stating
that the entity shall abide by the confidentiality
requirements described in section 24 relating to the
information on security-based swap transactions that
is provided; and

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124 STAT. 1783

‘‘(ii) each entity shall agree to indemnify the security-based swap data repository and the Commission
for any expenses arising from litigation relating to
the information provided under section 24.
‘‘(6) DESIGNATION OF CHIEF COMPLIANCE OFFICER.—
‘‘(A) IN GENERAL.—Each security-based swap data
repository shall designate an individual to serve as a chief
compliance officer.
‘‘(B) DUTIES.—The chief compliance officer shall—
‘‘(i) report directly to the board or to the senior
officer of the security-based swap data repository;
‘‘(ii) review the compliance of the security-based
swap data repository with respect to the requirements
and core principles described in this subsection;
‘‘(iii) in consultation with the board of the securitybased swap data repository, a body performing a function similar to the board of the security-based swap
data repository, or the senior officer of the securitybased swap data repository, resolve any conflicts of
interest that may arise;
‘‘(iv) be responsible for administering each policy
and procedure that is required to be established pursuant to this section;
‘‘(v) ensure compliance with this title (including
regulations) relating to agreements, contracts, or transactions, including each rule prescribed by the Commission under this section;
‘‘(vi) establish procedures for the remediation of
noncompliance issues identified by the chief compliance
officer through any—
‘‘(I) compliance office review;
‘‘(II) look-back;
‘‘(III) internal or external audit finding;
‘‘(IV) self-reported error; or
‘‘(V) validated complaint; and
‘‘(vii) establish and follow appropriate procedures
for the handling, management response, remediation,
retesting, and closing of noncompliance issues.
‘‘(C) ANNUAL REPORTS.—
‘‘(i) IN GENERAL.—In accordance with rules prescribed by the Commission, the chief compliance officer
shall annually prepare and sign a report that contains
a description of—
‘‘(I) the compliance of the security-based swap
data repository of the chief compliance officer with
respect to this title (including regulations); and
‘‘(II) each policy and procedure of the securitybased swap data repository of the chief compliance
officer (including the code of ethics and conflict
of interest policies of the security-based swap data
repository).
‘‘(ii) REQUIREMENTS.—A compliance report under
clause (i) shall—
‘‘(I) accompany each appropriate financial
report of the security-based swap data repository
that is required to be furnished to the Commission
pursuant to this section; and

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PUBLIC LAW 111–203—JULY 21, 2010
‘‘(II) include a certification that, under penalty
of law, the compliance report is accurate and complete.
‘‘(7) CORE PRINCIPLES APPLICABLE TO SECURITY-BASED SWAP
DATA REPOSITORIES.—
‘‘(A) ANTITRUST CONSIDERATIONS.—Unless necessary or
appropriate to achieve the purposes of this title, the swap
data repository shall not—
‘‘(i) adopt any rule or take any action that results
in any unreasonable restraint of trade; or
‘‘(ii) impose any material anticompetitive burden
on the trading, clearing, or reporting of transactions.
‘‘(B) GOVERNANCE ARRANGEMENTS.—Each securitybased swap data repository shall establish governance
arrangements that are transparent—
‘‘(i) to fulfill public interest requirements; and
‘‘(ii) to support the objectives of the Federal
Government, owners, and participants.
‘‘(C) CONFLICTS OF INTEREST.—Each security-based
swap data repository shall—
‘‘(i) establish and enforce rules to minimize conflicts of interest in the decision-making process of the
security-based swap data repository; and
‘‘(ii) establish a process for resolving any conflicts
of interest described in clause (i).
‘‘(D) ADDITIONAL DUTIES DEVELOPED BY COMMISSION.—
‘‘(i) IN GENERAL.—The Commission may develop
1 or more additional duties applicable to security-based
swap data repositories.
‘‘(ii) CONSIDERATION OF EVOLVING STANDARDS.—In
developing additional duties under subparagraph (A),
the Commission may take into consideration any
evolving standard of the United States or the international community.
‘‘(iii) ADDITIONAL DUTIES FOR COMMISSION DESIGNEES.—The Commission shall establish additional
duties for any registrant described in section
13(m)(2)(C) in order to minimize conflicts of interest,
protect data, ensure compliance, and guarantee the
safety and security of the security-based swap data
repository.
‘‘(8) REQUIRED REGISTRATION FOR SECURITY-BASED SWAP
DATA REPOSITORIES.—Any person that is required to be registered as a security-based swap data repository under this
subsection shall register with the Commission, regardless of
whether that person is also licensed under the Commodity
Exchange Act as a swap data repository.
‘‘(9) RULES.—The Commission shall adopt rules governing
persons that are registered under this subsection.’’.

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SEC. 764. REGISTRATION AND REGULATION OF SECURITY-BASED SWAP
DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS.

(a) IN GENERAL.—The Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) is amended by inserting after section 15E
(15 U.S.C. 78o–7) the following:

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‘‘SEC. 15F. REGISTRATION AND REGULATION OF SECURITY-BASED
SWAP DEALERS AND MAJOR SECURITY-BASED SWAP
PARTICIPANTS.

‘‘(a) REGISTRATION.—
‘‘(1) SECURITY-BASED SWAP DEALERS.—It shall be unlawful
for any person to act as a security-based swap dealer unless
the person is registered as a security-based swap dealer with
the Commission.
‘‘(2) MAJOR SECURITY-BASED SWAP PARTICIPANTS.—It shall
be unlawful for any person to act as a major security-based
swap participant unless the person is registered as a major
security-based swap participant with the Commission.
‘‘(b) REQUIREMENTS.—
‘‘(1) IN GENERAL.—A person shall register as a securitybased swap dealer or major security-based swap participant
by filing a registration application with the Commission.
‘‘(2) CONTENTS.—
‘‘(A) IN GENERAL.—The application shall be made in
such form and manner as prescribed by the Commission,
and shall contain such information, as the Commission
considers necessary concerning the business in which the
applicant is or will be engaged.
‘‘(B) CONTINUAL REPORTING.—A person that is registered as a security-based swap dealer or major securitybased swap participant shall continue to submit to the
Commission reports that contain such information pertaining to the business of the person as the Commission
may require.
‘‘(3) EXPIRATION.—Each registration under this section shall
expire at such time as the Commission may prescribe by rule
or regulation.
‘‘(4) RULES.—Except as provided in subsections (d) and
(e), the Commission may prescribe rules applicable to securitybased swap dealers and major security-based swap participants,
including rules that limit the activities of non-bank securitybased swap dealers and major security-based swap participants.
‘‘(5) TRANSITION.—Not later than 1 year after the date
of enactment of the Wall Street Transparency and Accountability Act of 2010, the Commission shall issue rules under
this section to provide for the registration of security-based
swap dealers and major security-based swap participants.
‘‘(6) STATUTORY DISQUALIFICATION.—Except to the extent
otherwise specifically provided by rule, regulation, or order
of the Commission, it shall be unlawful for a security-based
swap dealer or a major security-based swap participant to
permit any person associated with a security-based swap dealer
or a major security-based swap participant who is subject to
a statutory disqualification to effect or be involved in effecting
security-based swaps on behalf of the security-based swap
dealer or major security-based swap participant, if the securitybased swap dealer or major security-based swap participant
knew, or in the exercise of reasonable care should have known,
of the statutory disqualification.
‘‘(c) DUAL REGISTRATION.—
‘‘(1) SECURITY-BASED SWAP DEALER.—Any person that is
required to be registered as a security-based swap dealer under
this section shall register with the Commission, regardless

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PUBLIC LAW 111–203—JULY 21, 2010
of whether the person also is registered with the Commodity
Futures Trading Commission as a swap dealer.
‘‘(2) MAJOR SECURITY-BASED SWAP PARTICIPANT.—Any person that is required to be registered as a major security-based
swap participant under this section shall register with the
Commission, regardless of whether the person also is registered
with the Commodity Futures Trading Commission as a major
swap participant.
‘‘(d) RULEMAKING.—
‘‘(1) IN GENERAL.—The Commission shall adopt rules for
persons that are registered as security-based swap dealers or
major security-based swap participants under this section.
‘‘(2) EXCEPTION FOR PRUDENTIAL REQUIREMENTS.—
‘‘(A) IN GENERAL.—The Commission may not prescribe
rules imposing prudential requirements on security-based
swap dealers or major security-based swap participants
for which there is a prudential regulator.
‘‘(B) APPLICABILITY.—Subparagraph (A) does not limit
the authority of the Commission to prescribe rules as
directed under this section.
‘‘(e) CAPITAL AND MARGIN REQUIREMENTS.—
‘‘(1) IN GENERAL.—
‘‘(A) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE BANKS.—Each
registered security-based swap dealer and major securitybased swap participant for which there is not a prudential
regulator shall meet such minimum capital requirements
and minimum initial and variation margin requirements
as the prudential regulator shall by rule or regulation
prescribe under paragraph (2)(A).
‘‘(B) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE NOT BANKS.—
Each registered security-based swap dealer and major security-based swap participant for which there is not a prudential regulator shall meet such minimum capital requirements and minimum initial and variation margin requirements as the Commission shall by rule or regulation prescribe under paragraph (2)(B).
‘‘(2) RULES.—
‘‘(A) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE BANKS.—The
prudential regulators, in consultation with the Commission
and the Commodity Futures Trading Commission, shall
adopt rules for security-based swap dealers and major security-based swap participants, with respect to their activities
as a swap dealer or major swap participant, for which
there is a prudential regulator imposing—
‘‘(i) capital requirements; and
‘‘(ii) both initial and variation margin requirements
on all security-based swaps that are not cleared by
a registered clearing agency.
‘‘(B) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE NOT BANKS.—
The Commission shall adopt rules for security-based swap
dealers and major security-based swap participants, with
respect to their activities as a swap dealer or major swap

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participant, for which there is not a prudential regulator
imposing—
‘‘(i) capital requirements; and
‘‘(ii) both initial and variation margin requirements
on all swaps that are not cleared by a registered
clearing agency.
‘‘(C) CAPITAL.—In setting capital requirements for a
person that is designated as a security-based swap dealer
or a major security-based swap participant for a single
type or single class or category of security-based swap
or activities, the prudential regulator and the Commission
shall take into account the risks associated with other
types of security-based swaps or classes of security-based
swaps or categories of security-based swaps engaged in
and the other activities conducted by that person that
are not otherwise subject to regulation applicable to that
person by virtue of the status of the person.
‘‘(3) STANDARDS FOR CAPITAL AND MARGIN.—
‘‘(A) IN GENERAL.—To offset the greater risk to the
security-based swap dealer or major security-based swap
participant and the financial system arising from the use
of security-based swaps that are not cleared, the requirements imposed under paragraph (2) shall —
‘‘(i) help ensure the safety and soundness of the
security-based swap dealer or major security-based
swap participant; and
‘‘(ii) be appropriate for the risk associated with
the non-cleared security-based swaps held as a security-based swap dealer or major security-based swap
participant.
‘‘(B) RULE OF CONSTRUCTION.—
‘‘(i) IN GENERAL.—Nothing in this section shall
limit, or be construed to limit, the authority—
‘‘(I) of the Commission to set financial responsibility rules for a broker or dealer registered
pursuant to section 15(b) (except for section
15(b)(11) thereof) in accordance with section
15(c)(3); or
‘‘(II) of the Commodity Futures Trading
Commission to set financial responsibility rules
for a futures commission merchant or introducing
broker registered pursuant to section 4f(a) of the
Commodity Exchange Act (except for section
4f(a)(3) thereof) in accordance with section 4f(b)
of the Commodity Exchange Act.
‘‘(ii) FUTURES COMMISSION MERCHANTS AND OTHER
DEALERS.—A futures commission merchant, introducing broker, broker, or dealer shall maintain sufficient capital to comply with the stricter of any
applicable capital requirements to which such futures
commission merchant, introducing broker, broker, or
dealer is subject to under this title or the Commodity
Exchange Act.
‘‘(C) MARGIN REQUIREMENTS.—In prescribing margin
requirements under this subsection, the prudential regulator with respect to security-based swap dealers and major
security-based swap participants that are depository

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institutions, and the Commission with respect to securitybased swap dealers and major security-based swap participants that are not depository institutions shall permit the
use of noncash collateral, as the regulator or the Commission determines to be consistent with—
‘‘(i) preserving the financial integrity of markets
trading security-based swaps; and
‘‘(ii) preserving the stability of the United States
financial system.
‘‘(D) COMPARABILITY OF CAPITAL AND MARGIN REQUIREMENTS.—
‘‘(i) IN GENERAL.—The prudential regulators, the
Commission, and the Securities and Exchange
Commission shall periodically (but not less frequently
than annually) consult on minimum capital requirements and minimum initial and variation margin
requirements.
‘‘(ii) COMPARABILITY.—The entities described in
clause (i) shall, to the maximum extent practicable,
establish and maintain comparable minimum capital
requirements and minimum initial and variation
margin requirements, including the use of noncash
collateral, for—
‘‘(I) security-based swap dealers; and
‘‘(II) major security-based swap participants.
‘‘(f) REPORTING AND RECORDKEEPING.—
‘‘(1) IN GENERAL.—Each registered security-based swap
dealer and major security-based swap participant—
‘‘(A) shall make such reports as are required by the
Commission, by rule or regulation, regarding the transactions and positions and financial condition of the registered security-based swap dealer or major security-based
swap participant;
‘‘(B)(i) for which there is a prudential regulator, shall
keep books and records of all activities related to the business as a security-based swap dealer or major securitybased swap participant in such form and manner and for
such period as may be prescribed by the Commission by
rule or regulation; and
‘‘(ii) for which there is no prudential regulator, shall
keep books and records in such form and manner and
for such period as may be prescribed by the Commission
by rule or regulation; and
‘‘(C) shall keep books and records described in subparagraph (B) open to inspection and examination by any representative of the Commission.
‘‘(2) RULES.—The Commission shall adopt rules governing
reporting and recordkeeping for security-based swap dealers
and major security-based swap participants.
‘‘(g) DAILY TRADING RECORDS.—
‘‘(1) IN GENERAL.—Each registered security-based swap
dealer and major security-based swap participant shall maintain daily trading records of the security-based swaps of the
registered security-based swap dealer and major security-based
swap participant and all related records (including related cash
or forward transactions) and recorded communications,
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telephone calls, for such period as may be required by the
Commission by rule or regulation.
‘‘(2) INFORMATION REQUIREMENTS.—The daily trading
records shall include such information as the Commission shall
require by rule or regulation.
‘‘(3) COUNTERPARTY RECORDS.—Each registered securitybased swap dealer and major security-based swap participant
shall maintain daily trading records for each counterparty in
a manner and form that is identifiable with each securitybased swap transaction.
‘‘(4) AUDIT TRAIL.—Each registered security-based swap
dealer and major security-based swap participant shall maintain a complete audit trail for conducting comprehensive and
accurate trade reconstructions.
‘‘(5) RULES.—The Commission shall adopt rules governing
daily trading records for security-based swap dealers and major
security-based swap participants.
‘‘(h) BUSINESS CONDUCT STANDARDS.—
‘‘(1) IN GENERAL.—Each registered security-based swap
dealer and major security-based swap participant shall conform
with such business conduct standards as prescribed in paragraph (3) and as may be prescribed by the Commission by
rule or regulation that relate to—
‘‘(A) fraud, manipulation, and other abusive practices
involving security-based swaps (including security-based
swaps that are offered but not entered into);
‘‘(B) diligent supervision of the business of the registered security-based swap dealer and major securitybased swap participant;
‘‘(C) adherence to all applicable position limits; and
‘‘(D) such other matters as the Commission determines
to be appropriate.
‘‘(2) RESPONSIBILITIES WITH RESPECT TO SPECIAL ENTITIES.—
‘‘(A) ADVISING SPECIAL ENTITIES.—A security-based
swap dealer or major security-based swap participant that
acts as an advisor to special entity regarding a securitybased swap shall comply with the requirements of paragraph (4) with respect to such special entity.
‘‘(B) ENTERING OF SECURITY-BASED SWAPS WITH
RESPECT TO SPECIAL ENTITIES.—A security-based swap
dealer that enters into or offers to enter into securitybased swap with a special entity shall comply with the
requirements of paragraph (5) with respect to such special
entity.
‘‘(C) SPECIAL ENTITY DEFINED.—For purposes of this
subsection, the term ‘special entity’ means—
‘‘(i) a Federal agency;
‘‘(ii) a State, State agency, city, county, municipality, or other political subdivision of a State or;
‘‘(iii) any employee benefit plan, as defined in section 3 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1002);
‘‘(iv) any governmental plan, as defined in section
3 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1002); or

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‘‘(v) any endowment, including an endowment that
is an organization described in section 501(c)(3) of the
Internal Revenue Code of 1986.
‘‘(3) BUSINESS CONDUCT REQUIREMENTS.—Business conduct
requirements adopted by the Commission shall—
‘‘(A) establish a duty for a security-based swap dealer
or major security-based swap participant to verify that
any counterparty meets the eligibility standards for an
eligible contract participant;
‘‘(B) require disclosure by the security-based swap
dealer or major security-based swap participant to any
counterparty to the transaction (other than a securitybased swap dealer, major security-based swap participant,
security-based swap dealer, or major security-based swap
participant) of—
‘‘(i) information about the material risks and
characteristics of the security-based swap;
‘‘(ii) any material incentives or conflicts of interest
that the security-based swap dealer or major securitybased swap participant may have in connection with
the security-based swap; and
‘‘(iii)(I) for cleared security-based swaps, upon the
request of the counterparty, receipt of the daily mark
of the transaction from the appropriate derivatives
clearing organization; and
‘‘(II) for uncleared security-based swaps, receipt
of the daily mark of the transaction from the securitybased swap dealer or the major security-based swap
participant;
‘‘(C) establish a duty for a security-based swap dealer
or major security-based swap participant to communicate
in a fair and balanced manner based on principles of fair
dealing and good faith; and
‘‘(D) establish such other standards and requirements
as the Commission may determine are appropriate in the
public interest, for the protection of investors, or otherwise
in furtherance of the purposes of this Act.
‘‘(4) SPECIAL REQUIREMENTS FOR SECURITY-BASED SWAP
DEALERS ACTING AS ADVISORS.—
‘‘(A) IN GENERAL.—It shall be unlawful for a securitybased swap dealer or major security-based swap participant—
‘‘(i) to employ any device, scheme, or artifice to
defraud any special entity or prospective customer who
is a special entity;
‘‘(ii) to engage in any transaction, practice, or
course of business that operates as a fraud or deceit
on any special entity or prospective customer who is
a special entity; or
‘‘(iii) to engage in any act, practice, or course of
business that is fraudulent, deceptive, or manipulative.
‘‘(B) DUTY.—Any security-based swap dealer that acts
as an advisor to a special entity shall have a duty to
act in the best interests of the special entity.
‘‘(C) REASONABLE EFFORTS.—Any security-based swap
dealer that acts as an advisor to a special entity shall
make reasonable efforts to obtain such information as is

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necessary to make a reasonable determination that any
security-based swap recommended by the security-based
swap dealer is in the best interests of the special entity,
including information relating to—
‘‘(i) the financial status of the special entity;
‘‘(ii) the tax status of the special entity;
‘‘(iii) the investment or financing objectives of the
special entity; and
‘‘(iv) any other information that the Commission
may prescribe by rule or regulation.
‘‘(5) SPECIAL REQUIREMENTS FOR SECURITY-BASED SWAP
DEALERS AS COUNTERPARTIES TO SPECIAL ENTITIES.—
‘‘(A) IN GENERAL.—Any security-based swap dealer or
major security-based swap participant that offers to or
enters into a security-based swap with a special entity
shall—
‘‘(i) comply with any duty established by the
Commission for a security-based swap dealer or major
security-based swap participant, with respect to a
counterparty that is an eligible contract participant
within the meaning of subclause (I) or (II) of clause
(vii) of section 1a(18) of the Commodity Exchange Act,
that requires the security-based swap dealer or major
security-based swap participant to have a reasonable
basis to believe that the counterparty that is a special
entity has an independent representative that—
‘‘(I) has sufficient knowledge to evaluate the
transaction and risks;
‘‘(II) is not subject to a statutory disqualification;
‘‘(III) is independent of the security-based
swap dealer or major security-based swap participant;
‘‘(IV) undertakes a duty to act in the best
interests of the counterparty it represents;
‘‘(V) makes appropriate disclosures;
‘‘(VI) will provide written representations to
the special entity regarding fair pricing and the
appropriateness of the transaction; and
‘‘(VII) in the case of employee benefit plans
subject to the Employee Retirement Income Security act of 1974, is a fiduciary as defined in section
3 of that Act (29 U.S.C. 1002); and
‘‘(ii) before the initiation of the transaction, disclose
to the special entity in writing the capacity in which
the security-based swap dealer is acting.
‘‘(B) COMMISSION AUTHORITY.—The Commission may
establish such other standards and requirements under
this paragraph as the Commission may determine are
appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of
this Act.
‘‘(6) RULES.—The Commission shall prescribe rules under
this subsection governing business conduct standards for security-based swap dealers and major security-based swap participants.

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‘‘(7) APPLICABILITY.—This subsection shall not apply with
respect to a transaction that is—
‘‘(A) initiated by a special entity on an exchange or
security-based swaps execution facility; and
‘‘(B) the security-based swap dealer or major securitybased swap participant does not know the identity of the
counterparty to the transaction.’’
‘‘(i) DOCUMENTATION STANDARDS.—
‘‘(1) IN GENERAL.—Each registered security-based swap
dealer and major security-based swap participant shall conform
with such standards as may be prescribed by the Commission,
by rule or regulation, that relate to timely and accurate confirmation, processing, netting, documentation, and valuation
of all security-based swaps.
‘‘(2) RULES.—The Commission shall adopt rules governing
documentation standards for security-based swap dealers and
major security-based swap participants.
‘‘(j) DUTIES.—Each registered security-based swap dealer and
major security-based swap participant shall, at all times, comply
with the following requirements:
‘‘(1) MONITORING OF TRADING.—The security-based swap
dealer or major security-based swap participant shall monitor
its trading in security-based swaps to prevent violations of
applicable position limits.
‘‘(2) RISK MANAGEMENT PROCEDURES.—The security-based
swap dealer or major security-based swap participant shall
establish robust and professional risk management systems
adequate for managing the day-to-day business of the securitybased swap dealer or major security-based swap participant.
‘‘(3) DISCLOSURE OF GENERAL INFORMATION.—The securitybased swap dealer or major security-based swap participant
shall disclose to the Commission and to the prudential regulator
for the security-based swap dealer or major security-based swap
participant, as applicable, information concerning—
‘‘(A) terms and conditions of its security-based swaps;
‘‘(B) security-based swap trading operations, mechanisms, and practices;
‘‘(C) financial integrity protections relating to securitybased swaps; and
‘‘(D) other information relevant to its trading in security-based swaps.
‘‘(4) ABILITY TO OBTAIN INFORMATION.—The security-based
swap dealer or major security-based swap participant shall—
‘‘(A) establish and enforce internal systems and procedures to obtain any necessary information to perform any
of the functions described in this section; and
‘‘(B) provide the information to the Commission and
to the prudential regulator for the security-based swap
dealer or major security-based swap participant, as
applicable, on request.
‘‘(5) CONFLICTS OF INTEREST.—The security-based swap
dealer and major security-based swap participant shall implement conflict-of-interest systems and procedures that—
‘‘(A) establish structural and institutional safeguards
to ensure that the activities of any person within the firm
relating to research or analysis of the price or market
for any security-based swap or acting in a role of providing

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124 STAT. 1793

clearing activities or making determinations as to accepting
clearing customers are separated by appropriate informational partitions within the firm from the review, pressure,
or oversight of persons whose involvement in pricing,
trading, or clearing activities might potentially bias their
judgment or supervision and contravene the core principles
of open access and the business conduct standards
described in this title; and
‘‘(B) address such other issues as the Commission
determines to be appropriate.
‘‘(6) ANTITRUST CONSIDERATIONS.—Unless necessary or
appropriate to achieve the purposes of this title, the securitybased swap dealer or major security-based swap participant
shall not—
‘‘(A) adopt any process or take any action that results
in any unreasonable restraint of trade; or
‘‘(B) impose any material anticompetitive burden on
trading or clearing.
‘‘(7) RULES.—The Commission shall prescribe rules under
this subsection governing duties of security-based swap dealers
and major security-based swap participants.
‘‘(k) DESIGNATION OF CHIEF COMPLIANCE OFFICER.—
‘‘(1) IN GENERAL.—Each security-based swap dealer and
major security-based swap participant shall designate an individual to serve as a chief compliance officer.
‘‘(2) DUTIES.—The chief compliance officer shall—
‘‘(A) report directly to the board or to the senior officer
of the security-based swap dealer or major security-based
swap participant;
‘‘(B) review the compliance of the security-based swap
dealer or major security-based swap participant with
respect to the security-based swap dealer and major security-based swap participant requirements described in this
section;
‘‘(C) in consultation with the board of directors, a body
performing a function similar to the board, or the senior
officer of the organization, resolve any conflicts of interest
that may arise;
‘‘(D) be responsible for administering each policy and
procedure that is required to be established pursuant to
this section;
‘‘(E) ensure compliance with this title (including regulations) relating to security-based swaps, including each rule
prescribed by the Commission under this section;
‘‘(F) establish procedures for the remediation of noncompliance issues identified by the chief compliance officer
through any—
‘‘(i) compliance office review;
‘‘(ii) look-back;
‘‘(iii) internal or external audit finding;
‘‘(iv) self-reported error; or
‘‘(v) validated complaint; and
‘‘(G) establish and follow appropriate procedures for
the handling, management response, remediation, retesting, and closing of noncompliance issues.
‘‘(3) ANNUAL REPORTS.—

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‘‘(A) IN GENERAL.—In accordance with rules prescribed
by the Commission, the chief compliance officer shall
annually prepare and sign a report that contains a description of—
‘‘(i) the compliance of the security-based swap
dealer or major swap participant with respect to this
title (including regulations); and
‘‘(ii) each policy and procedure of the securitybased swap dealer or major security-based swap
participant of the chief compliance officer (including
the code of ethics and conflict of interest policies).
‘‘(B) REQUIREMENTS.—A compliance report under
subparagraph (A) shall—
‘‘(i) accompany each appropriate financial report
of the security-based swap dealer or major securitybased swap participant that is required to be furnished
to the Commission pursuant to this section; and
‘‘(ii) include a certification that, under penalty of
law, the compliance report is accurate and complete.
‘‘(l)
ENFORCEMENT
AND
ADMINISTRATIVE
PROCEEDING
AUTHORITY.—
‘‘(1) PRIMARY ENFORCEMENT AUTHORITY.—
‘‘(A) SECURITIES AND EXCHANGE COMMISSION.—Except
as provided in subparagraph (B), (C), or (D), the Commission shall have primary authority to enforce subtitle B,
and the amendments made by subtitle B of the Wall Street
Transparency and Accountability Act of 2010, with respect
to any person.
‘‘(B) PRUDENTIAL REGULATORS.—The prudential regulators shall have exclusive authority to enforce the provisions of subsection (e) and other prudential requirements
of this title (including risk management standards), with
respect to security-based swap dealers or major securitybased swap participants for which they are the prudential
regulator.
‘‘(C) REFERRAL.—
‘‘(i) VIOLATIONS OF NONPRUDENTIAL REQUIREMENTS.—If the appropriate Federal banking agency for
security-based swap dealers or major security-based
swap participants that are depository institutions has
cause to believe that such security-based swap dealer
or major security-based swap participant may have
engaged in conduct that constitutes a violation of the
nonprudential requirements of this section or rules
adopted by the Commission thereunder, the agency
may recommend in writing to the Commission that
the Commission initiate an enforcement proceeding as
authorized under this title. The recommendation shall
be accompanied by a written explanation of the concerns giving rise to the recommendation.
‘‘(ii) VIOLATIONS OF PRUDENTIAL REQUIREMENTS.—
If the Commission has cause to believe that a securities-based swap dealer or major securities-based swap
participant that has a prudential regulator may have
engaged in conduct that constitute a violation of the
prudential requirements of subsection (e) or rules
adopted thereunder, the Commission may recommend

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124 STAT. 1795

in writing to the prudential regulator that the prudential regulator initiate an enforcement proceeding as
authorized under this title. The recommendation shall
be accompanied by a written explanation of the concerns giving rise to the recommendation.
‘‘(D) BACKSTOP ENFORCEMENT AUTHORITY.—
‘‘(i) INITIATION OF ENFORCEMENT PROCEEDING BY
PRUDENTIAL REGULATOR.—If the Commission does not
initiate an enforcement proceeding before the end of
the 90-day period beginning on the date on which
the Commission receives a written report under subsection (C)(i), the prudential regulator may initiate
an enforcement proceeding.
‘‘(ii) INITIATION OF ENFORCEMENT PROCEEDING BY
COMMISSION.—If the prudential regulator does not initiate an enforcement proceeding before the end of the
90-day period beginning on the date on which the
prudential regulator receives a written report under
subsection (C)(ii), the Commission may initiate an
enforcement proceeding.
‘‘(2) CENSURE, DENIAL, SUSPENSION; NOTICE AND HEARING.—
The Commission, by order, shall censure, place limitations on
the activities, functions, or operations of, or revoke the registration of any security-based swap dealer or major security-based
swap participant that has registered with the Commission
pursuant to subsection (b) if the Commission finds, on the
record after notice and opportunity for hearing, that such censure, placing of limitations, or revocation is in the public
interest and that such security-based swap dealer or major
security-based swap participant, or any person associated with
such security-based swap dealer or major security-based swap
participant effecting or involved in effecting transactions in
security-based swaps on behalf of such security-based swap
dealer or major security-based swap participant, whether prior
or subsequent to becoming so associated—
‘‘(A) has committed or omitted any act, or is subject
to an order or finding, enumerated in subparagraph (A),
(D), or (E) of paragraph (4) of section 15(b);
‘‘(B) has been convicted of any offense specified in
subparagraph (B) of such paragraph (4) within 10 years
of the commencement of the proceedings under this subsection;
‘‘(C) is enjoined from any action, conduct, or practice
specified in subparagraph (C) of such paragraph (4);
‘‘(D) is subject to an order or a final order specified
in subparagraph (F) or (H), respectively, of such paragraph
(4); or
‘‘(E) has been found by a foreign financial regulatory
authority to have committed or omitted any act, or violated
any foreign statute or regulation, enumerated in subparagraph (G) of such paragraph (4).
‘‘(3) ASSOCIATED PERSONS.—With respect to any person who
is associated, who is seeking to become associated, or, at the
time of the alleged misconduct, who was associated or was
seeking to become associated with a security-based swap dealer
or major security-based swap participant for the purpose of
effecting or being involved in effecting security-based swaps

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Time period.

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15 USC 8342.

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on behalf of such security-based swap dealer or major securitybased swap participant, the Commission, by order, shall censure, place limitations on the activities or functions of such
person, or suspend for a period not exceeding 12 months, or
bar such person from being associated with a security-based
swap dealer or major security-based swap participant, if the
Commission finds, on the record after notice and opportunity
for a hearing, that such censure, placing of limitations, suspension, or bar is in the public interest and that such person—
‘‘(A) has committed or omitted any act, or is subject
to an order or finding, enumerated in subparagraph (A),
(D), or (E) of paragraph (4) of section 15(b);
‘‘(B) has been convicted of any offense specified in
subparagraph (B) of such paragraph (4) within 10 years
of the commencement of the proceedings under this subsection;
‘‘(C) is enjoined from any action, conduct, or practice
specified in subparagraph (C) of such paragraph (4);
‘‘(D) is subject to an order or a final order specified
in subparagraph (F) or (H), respectively, of such paragraph
(4); or
‘‘(E) has been found by a foreign financial regulatory
authority to have committed or omitted any act, or violated
any foreign statute or regulation, enumerated in subparagraph (G) of such paragraph (4).
‘‘(4) UNLAWFUL CONDUCT.—It shall be unlawful—
‘‘(A) for any person as to whom an order under paragraph (3) is in effect, without the consent of the Commission, willfully to become, or to be, associated with a security-based swap dealer or major security-based swap
participant in contravention of such order; or
‘‘(B) for any security-based swap dealer or major security-based swap participant to permit such a person, without the consent of the Commission, to become or remain
a person associated with the security-based swap dealer
or major security-based swap participant in contravention
of such order, if such security-based swap dealer or major
security-based swap participant knew, or in the exercise
of reasonable care should have known, of such order.’’.
(b) SAVINGS CLAUSE.—Notwithstanding any other provision of
this title, nothing in this subtitle shall be construed as divesting
any appropriate Federal banking agency of any authority it may
have to establish or enforce, with respect to a person for which
such agency is the appropriate Federal banking agency, prudential
or other standards pursuant to authority by Federal law other
than this title.

15 USC 8343.

SEC. 765. RULEMAKING ON CONFLICT OF INTEREST.

Deadline.

(a) IN GENERAL.—In order to mitigate conflicts of interest,
not later than 180 days after the date of enactment of the Wall
Street Transparency and Accountability Act of 2010, the Securities
and Exchange Commission shall adopt rules which may include
numerical limits on the control of, or the voting rights with respect
to, any clearing agency that clears security-based swaps, or on
the control of any security-based swap execution facility or national
securities exchange that posts or makes available for trading security-based swaps, by a bank holding company (as defined in section

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2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841))
with total consolidated assets of $50,000,000,000 or more, a nonbank
financial company (as defined in section 102) supervised by the
Board of Governors of the Federal Reserve System, affiliate of
such a bank holding company or nonbank financial company, a
security-based swap dealer, major security-based swap participant,
or person associated with a security-based swap dealer or major
security-based swap participant.
(b) PURPOSES.—The Securities and Exchange Commission shall
adopt rules if the Commission determines, after the review
described in subsection (a), that such rules are necessary or appropriate to improve the governance of, or to mitigate systemic risk,
promote competition, or mitigate conflicts of interest in connection
with a security-based swap dealer or major security-based swap
participant’s conduct of business with, a clearing agency, national
securities exchange, or security-based swap execution facility that
clears, posts, or makes available for trading security-based swaps
and in which such security-based swap dealer or major securitybased swap participant has a material debt or equity investment.
(c) CONSIDERATIONS.—In adopting rules pursuant to this section, the Securities and Exchange Commission shall consider any
conflicts of interest arising from the amount of equity owned by
a single investor, the ability to vote, cause the vote of, or withhold
votes entitled to be cast on any matters by the holders of the
ownership interest, and the governance arrangements of any derivatives clearing organization that clears swaps, or swap execution
facility or board of trade designated as a contract market that
posts swaps or makes swaps available for trading.
SEC. 766. REPORTING AND RECORDKEEPING.

(a) IN GENERAL.—The Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) is amended by inserting after section 13 the
following:
‘‘SEC. 13A. REPORTING AND RECORDKEEPING FOR CERTAIN SECURITY-BASED SWAPS.

15 USC 78m–1.

‘‘(a) REQUIRED REPORTING OF SECURITY-BASED SWAPS NOT
ACCEPTED BY ANY CLEARING AGENCY OR DERIVATIVES CLEARING
ORGANIZATION.—
‘‘(1) IN GENERAL.—Each security-based swap that is not
accepted for clearing by any clearing agency or derivatives
clearing organization shall be reported to—
‘‘(A) a security-based swap data repository described
in section 13(n); or
‘‘(B) in the case in which there is no security-based
swap data repository that would accept the security-based
swap, to the Commission pursuant to this section within
such time period as the Commission may by rule or regulation prescribe.
‘‘(2) TRANSITION RULE FOR PREENACTMENT SECURITY-BASED
SWAPS.—
‘‘(A) SECURITY-BASED SWAPS ENTERED INTO BEFORE THE

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DATE OF ENACTMENT OF THE WALL STREET TRANSPARENCY
AND ACCOUNTABILITY ACT OF 2010.—Each security-based

swap entered into before the date of enactment of the
Wall Street Transparency and Accountability Act of 2010,
the terms of which have not expired as of the date of
enactment of that Act, shall be reported to a registered

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PUBLIC LAW 111–203—JULY 21, 2010

security-based swap data repository or the Commission
by a date that is not later than—
‘‘(i) 30 days after issuance of the interim final
rule; or
‘‘(ii) such other period as the Commission determines to be appropriate.
‘‘(B) COMMISSION RULEMAKING.—The Commission shall
promulgate an interim final rule within 90 days of the
date of enactment of this section providing for the reporting
of each security-based swap entered into before the date
of enactment as referenced in subparagraph (A).
‘‘(C) EFFECTIVE DATE.—The reporting provisions
described in this section shall be effective upon the date
of the enactment of this section.
‘‘(3) REPORTING OBLIGATIONS.—
‘‘(A) SECURITY-BASED SWAPS IN WHICH ONLY 1
COUNTERPARTY IS A SECURITY-BASED SWAP DEALER OR
MAJOR SECURITY-BASED SWAP PARTICIPANT.—With respect
to a security-based swap in which only 1 counterparty
is a security-based swap dealer or major security-based
swap participant, the security-based swap dealer or major
security-based swap participant shall report the securitybased swap as required under paragraphs (1) and (2).
‘‘(B) SECURITY-BASED SWAPS IN WHICH 1 COUNTERPARTY
IS A SECURITY-BASED SWAP DEALER AND THE OTHER A MAJOR
SECURITY-BASED SWAP PARTICIPANT.—With respect to a
security-based swap in which 1 counterparty is a securitybased swap dealer and the other a major security-based
swap participant, the security-based swap dealer shall
report the security-based swap as required under paragraphs (1) and (2).
‘‘(C) OTHER SECURITY-BASED SWAPS.—With respect to
any other security-based swap not described in subparagraph (A) or (B), the counterparties to the security-based
swap shall select a counterparty to report the securitybased swap as required under paragraphs (1) and (2).
‘‘(b) DUTIES OF CERTAIN INDIVIDUALS.—Any individual or entity
that enters into a security-based swap shall meet each requirement
described in subsection (c) if the individual or entity did not—
‘‘(1) clear the security-based swap in accordance with section 3C(a)(1); or
‘‘(2) have the data regarding the security-based swap
accepted by a security-based swap data repository in accordance
with rules (including timeframes) adopted by the Commission
under this title.
‘‘(c) REQUIREMENTS.—An individual or entity described in subsection (b) shall—
‘‘(1) upon written request from the Commission, provide
reports regarding the security-based swaps held by the individual or entity to the Commission in such form and in such
manner as the Commission may request; and
‘‘(2) maintain books and records pertaining to the securitybased swaps held by the individual or entity in such form,
in such manner, and for such period as the Commission may
require, which shall be open to inspection by—
‘‘(A) any representative of the Commission;
‘‘(B) an appropriate prudential regulator;

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‘‘(C) the Commodity Futures Trading Commission;
‘‘(D) the Financial Stability Oversight Council; and
‘‘(E) the Department of Justice.
‘‘(d) IDENTICAL DATA.—In prescribing rules under this section,
the Commission shall require individuals and entities described
in subsection (b) to submit to the Commission a report that contains
data that is not less comprehensive than the data required to
be collected by security-based swap data repositories under this
title.’’.
(b) BENEFICIAL OWNERSHIP REPORTING.—Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended—
(1) in subsection (d)(1), by inserting ‘‘or otherwise becomes
or is deemed to become a beneficial owner of any of the foregoing
upon the purchase or sale of a security-based swap that the
Commission may define by rule, and’’ after ‘‘Alaska Native
Claims Settlement Act,’’; and
(2) in subsection (g)(1), by inserting ‘‘or otherwise becomes
or is deemed to become a beneficial owner of any security
of a class described in subsection (d)(1) upon the purchase
or sale of a security-based swap that the Commission may
define by rule’’ after ‘‘subsection (d)(1) of this section’’.
(c) REPORTS BY INSTITUTIONAL INVESTMENT MANAGERS.—Section 13(f)(1) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(f)(1)) is amended by inserting ‘‘or otherwise becomes or is
deemed to become a beneficial owner of any security of a class
described in subsection (d)(1) upon the purchase or sale of a security-based swap that the Commission may define by rule,’’ after
‘‘subsection (d)(1) of this section’’.
(d) ADMINISTRATIVE PROCEEDING AUTHORITY.—Section 15(b)(4)
of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(4)) is
amended—
(1) in subparagraph (C), by inserting ‘‘security-based swap
dealer, major security-based swap participant,’’ after ‘‘government securities dealer,’’; and
(2) in subparagraph (F), by striking ‘‘broker or dealer’’
and inserting ‘‘broker, dealer, security-based swap dealer, or
a major security-based swap participant’’.
(e) SECURITY-BASED SWAP BENEFICIAL OWNERSHIP.—Section 13
of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended
by adding at the end the following:
‘‘(o) BENEFICIAL OWNERSHIP.—For purposes of this section and
section 16, a person shall be deemed to acquire beneficial ownership
of an equity security based on the purchase or sale of a securitybased swap, only to the extent that the Commission, by rule,
determines after consultation with the prudential regulators and
the Secretary of the Treasury, that the purchase or sale of the
security-based swap, or class of security-based swap, provides
incidents of ownership comparable to direct ownership of the equity
security, and that it is necessary to achieve the purposes of this
section that the purchase or sale of the security-based swaps, or
class of security-based swap, be deemed the acquisition of beneficial
ownership of the equity security.’’.
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SEC. 767. STATE GAMING AND BUCKET SHOP LAWS.

Section 28(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78bb(a)) is amended to read as follows:
‘‘(a) LIMITATION ON JUDGMENTS.—

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‘‘(1) IN GENERAL.—No person permitted to maintain a suit
for damages under the provisions of this title shall recover,
through satisfaction of judgment in 1 or more actions, a total
amount in excess of the actual damages to that person on
account of the act complained of. Except as otherwise specifically provided in this title, nothing in this title shall affect
the jurisdiction of the securities commission (or any agency
or officer performing like functions) of any State over any
security or any person insofar as it does not conflict with
the provisions of this title or the rules and regulations under
this title.
‘‘(2) RULE OF CONSTRUCTION.—Except as provided in subsection (f), the rights and remedies provided by this title shall
be in addition to any and all other rights and remedies that
may exist at law or in equity.
‘‘(3) STATE BUCKET SHOP LAWS.—No State law which prohibits or regulates the making or promoting of wagering or
gaming contracts, or the operation of ‘bucket shops’ or other
similar or related activities, shall invalidate—
‘‘(A) any put, call, straddle, option, privilege, or other
security subject to this title (except any security that has
a pari-mutuel payout or otherwise is determined by the
Commission, acting by rule, regulation, or order, to be
appropriately subject to such laws), or apply to any activity
which is incidental or related to the offer, purchase, sale,
exercise, settlement, or closeout of any such security;
‘‘(B) any security-based swap between eligible contract
participants; or
‘‘(C) any security-based swap effected on a national
securities exchange registered pursuant to section 6(b).
‘‘(4) OTHER STATE PROVISIONS.—No provision of State law
regarding the offer, sale, or distribution of securities shall apply
to any transaction in a security-based swap or a security futures
product, except that this paragraph may not be construed as
limiting any State antifraud law of general applicability. A
security-based swap may not be regulated as an insurance
contract under any provision of State law.’’.

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SEC. 768. AMENDMENTS TO THE SECURITIES ACT OF 1933; TREATMENT
OF SECURITY-BASED SWAPS.

(a) DEFINITIONS.—Section 2(a) of the Securities Act of 1933
(15 U.S.C. 77b(a)) is amended—
(1) in paragraph (1), by inserting ‘‘security-based swap,’’
after ‘‘security future,’’;
(2) in paragraph (3), by adding at the end the following:
‘‘Any offer or sale of a security-based swap by or on behalf
of the issuer of the securities upon which such security-based
swap is based or is referenced, an affiliate of the issuer, or
an underwriter, shall constitute a contract for sale of, sale
of, offer for sale, or offer to sell such securities.’’; and
(3) by adding at the end the following:
‘‘(17) The terms ‘swap’ and ‘security-based swap’ have the
same meanings as in section 1a of the Commodity Exchange
Act (7 U.S.C. 1a).
‘‘(18) The terms ‘purchase’ or ‘sale’ of a security-based swap
shall be deemed to mean the execution, termination (prior
to its scheduled maturity date), assignment, exchange, or

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124 STAT. 1801

similar transfer or conveyance of, or extinguishing of rights
or obligations under, a security-based swap, as the context
may require.’’.
(b) REGISTRATION OF SECURITY-BASED SWAPS.—Section 5 of the
Securities Act of 1933 (15 U.S.C. 77e) is amended by adding at
the end the following:
‘‘(d) Notwithstanding the provisions of section 3 or 4, unless
a registration statement meeting the requirements of section 10(a)
is in effect as to a security-based swap, it shall be unlawful for
any person, directly or indirectly, to make use of any means or
instruments of transportation or communication in interstate commerce or of the mails to offer to sell, offer to buy or purchase
or sell a security-based swap to any person who is not an eligible
contract participant as defined in section 1a(18) of the Commodity
Exchange Act (7 U.S.C. 1a(18)).’’.
SEC. 769. DEFINITIONS UNDER THE INVESTMENT COMPANY ACT OF
1940.

Section 2(a) of the Investment Company Act of 1940 (15 U.S.C.
80a–2) is amended by adding at the end the following:
‘‘(54) The terms ‘commodity pool’, ‘commodity pool operator’,
‘commodity trading advisor’, ‘major swap participant’, ‘swap’,
‘swap dealer’, and ‘swap execution facility’ have the same
meanings as in section 1a of the Commodity Exchange Act
(7 U.S.C. 1a).’’.
SEC. 770. DEFINITIONS UNDER THE INVESTMENT ADVISERS ACT OF
1940.

Section 202(a) of the Investment Advisers Act of 1940 (15
U.S.C. 80b–2) is amended by adding at the end the following:
‘‘(29) The terms ‘commodity pool’, ‘commodity pool operator’,
‘commodity trading advisor’, ‘major swap participant’, ‘swap’,
‘swap dealer’, and ‘swap execution facility’ have the same
meanings as in section 1a of the Commodity Exchange Act
(7 U.S.C. 1a).’’.
SEC. 771. OTHER AUTHORITY.

15 USC 8344.

Unless otherwise provided by its terms, this subtitle does not
divest any appropriate Federal banking agency, the Securities and
Exchange Commission, the Commodity Futures Trading Commission, or any other Federal or State agency, of any authority derived
from any other provision of applicable law.

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SEC. 772. JURISDICTION.

(a) IN GENERAL.—Section 36 of the Securities Exchange Act
of 1934 (15 U.S.C. 78mm) is amended by adding at the end the
following:
‘‘(c) DERIVATIVES.—Unless the Commission is expressly authorized by any provision described in this subsection to grant exemptions, the Commission shall not grant exemptions, with respect
to amendments made by subtitle B of the Wall Street Transparency
and Accountability Act of 2010, with respect to paragraphs (65),
(66), (68), (69), (70), (71), (72), (73), (74), (75), (76), and (79) of
section 3(a), and sections 10B(a), 10B(b), 10B(c), 13A, 15F, 17A(g),
17A(h), 17A(i), 17A(j), 17A(k), and 17A(l); provided that the Commission shall have exemptive authority under this title with respect
to security-based swaps as to the same matters that the Commodity

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PUBLIC LAW 111–203—JULY 21, 2010

Futures Trading Commission has under the Wall Street Transparency and Accountability Act of 2010 with respect to swaps,
including under section 4(c) of the Commodity Exchange Act.’’.
(b) RULE OF CONSTRUCTION.—Section 30 of the Securities
Exchange Act of 1934 (15 U.S.C. 78dd) is amended by adding
at the end the following:
‘‘(c) RULE OF CONSTRUCTION.—No provision of this title that
was added by the Wall Street Transparency and Accountability
Act of 2010, or any rule or regulation thereunder, shall apply
to any person insofar as such person transacts a business in security-based swaps without the jurisdiction of the United States,
unless such person transacts such business in contravention of
such rules and regulations as the Commission may prescribe as
necessary or appropriate to prevent the evasion of any provision
of this title that was added by the Wall Street Transparency and
Accountability Act of 2010. This subsection shall not be construed
to limit the jurisdiction of the Commission under any provision
of this title, as in effect prior to the date of enactment of the
Wall Street Transparency and Accountability Act of 2010.’’.
SEC. 773. CIVIL PENALTIES.
15 USC 78u–2.

Section 21B of the Securities Exchange Act of 1934 (15 U.S.C.
78p-2) is amended by adding at the end the following:
‘‘(f) SECURITY-BASED SWAPS.—
‘‘(1) CLEARING AGENCY.—Any clearing agency that knowingly or recklessly evades or participates in or facilitates an
evasion of the requirements of section 3C shall be liable for
a civil money penalty in twice the amount otherwise available
for a violation of section 3C.
‘‘(2) SECURITY-BASED SWAP DEALER OR MAJOR SECURITYBASED SWAP PARTICIPANT.—Any security-based swap dealer or
major security-based swap participant that knowingly or recklessly evades or participates in or facilitates an evasion of
the requirements of section 3C shall be liable for a civil money
penalty in twice the amount otherwise available for a violation
of section 3C.’’.

15 USC 77b note.

SEC. 774. EFFECTIVE DATE.

Unless otherwise provided, the provisions of this subtitle shall
take effect on the later of 360 days after the date of the enactment
of this subtitle or, to the extent a provision of this subtitle requires
a rulemaking, not less than 60 days after publication of the final
rule or regulation implementing such provision of this subtitle.
Payment,
Clearing, and
Settlement
Supervision Act
of 2010.
12 USC 5301
note.

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12 USC 5461.

TITLE VIII—PAYMENT, CLEARING, AND
SETTLEMENT SUPERVISION
SEC. 801. SHORT TITLE.

This title may be cited as the ‘‘Payment, Clearing, and Settlement Supervision Act of 2010’’.
SEC. 802. FINDINGS AND PURPOSES.

(a) FINDINGS.—Congress finds the following:
(1) The proper functioning of the financial markets is
dependent upon safe and efficient arrangements for the clearing

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and settlement of payment, securities, and other financial transactions.
(2) Financial market utilities that conduct or support multilateral payment, clearing, or settlement activities may reduce
risks for their participants and the broader financial system,
but such utilities may also concentrate and create new risks
and thus must be well designed and operated in a safe and
sound manner.
(3) Payment, clearing, and settlement activities conducted
by financial institutions also present important risks to the
participating financial institutions and to the financial system.
(4) Enhancements to the regulation and supervision of
systemically important financial market utilities and the conduct of systemically important payment, clearing, and settlement activities by financial institutions are necessary—
(A) to provide consistency;
(B) to promote robust risk management and safety
and soundness;
(C) to reduce systemic risks; and
(D) to support the stability of the broader financial
system.
(b) PURPOSE.—The purpose of this title is to mitigate systemic
risk in the financial system and promote financial stability by—
(1) authorizing the Board of Governors to promote uniform
standards for the—
(A) management of risks by systemically important
financial market utilities; and
(B) conduct of systemically important payment,
clearing, and settlement activities by financial institutions;
(2) providing the Board of Governors an enhanced role
in the supervision of risk management standards for systemically important financial market utilities;
(3) strengthening the liquidity of systemically important
financial market utilities; and
(4) providing the Board of Governors an enhanced role
in the supervision of risk management standards for systemically important payment, clearing, and settlement activities
by financial institutions.

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SEC. 803. DEFINITIONS.

12 USC 5462.

In this title, the following definitions shall apply:
(1) APPROPRIATE FINANCIAL REGULATOR.—The term ‘‘appropriate financial regulator’’ means—
(A) the primary financial regulatory agency, as defined
in section 2 of this Act;
(B) the National Credit Union Administration, with
respect to any insured credit union under the Federal
Credit Union Act (12 U.S.C. 1751 et seq.); and
(C) the Board of Governors, with respect to organizations operating under section 25A of the Federal Reserve
Act (12 U.S.C. 611), and any other financial institution
engaged in a designated activity.
(2) DESIGNATED ACTIVITY.—The term ‘‘designated activity’’
means a payment, clearing, or settlement activity that the
Council has designated as systemically important under section
804.

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124 STAT. 1804

PUBLIC LAW 111–203—JULY 21, 2010
(3) DESIGNATED CLEARING ENTITY.—The term ‘‘designated
clearing entity’’ means a designated financial market utility
that is a derivatives clearing organization registered under
section 5b of the Commodity Exchange Act (7 U.S.C. 7a-1)
or a clearing agency registered with the Securities and
Exchange Commission under section 17A of the Securities
Exchange Act of 1934 (15 U.S.C. 78q-1).
(4) DESIGNATED FINANCIAL MARKET UTILITY.—The term
‘‘designated financial market utility’’ means a financial market
utility that the Council has designated as systemically important under section 804.
(5) FINANCIAL INSTITUTION.—
(A) IN GENERAL.—The term ‘‘financial institution’’
means—
(i) a depository institution, as defined in section
3 of the Federal Deposit Insurance Act (12 U.S.C.
1813);
(ii) a branch or agency of a foreign bank, as defined
in section 1(b) of the International Banking Act of
1978 (12 U.S.C. 3101);
(iii) an organization operating under section 25
or 25A of the Federal Reserve Act (12 U.S.C. 601–
604a and 611 through 631);
(iv) a credit union, as defined in section 101 of
the Federal Credit Union Act (12 U.S.C. 1752);
(v) a broker or dealer, as defined in section 3
of the Securities Exchange Act of 1934 (15 U.S.C. 78c);
(vi) an investment company, as defined in section
3 of the Investment Company Act of 1940 (15 U.S.C.
80a–3);
(vii) an insurance company, as defined in section
2 of the Investment Company Act of 1940 (15 U.S.C.
80a–2);
(viii) an investment adviser, as defined in section
202 of the Investment Advisers Act of 1940 (15 U.S.C.
80b–2);
(ix) a futures commission merchant, commodity
trading advisor, or commodity pool operator, as defined
in section 1a of the Commodity Exchange Act (7 U.S.C.
1a); and
(x) any company engaged in activities that are
financial in nature or incidental to a financial activity,
as described in section 4 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1843(k)).
(B) EXCLUSIONS.—The term ‘‘financial institution’’ does
not include designated contract markets, registered futures
associations, swap data repositories, and swap execution
facilities registered under the Commodity Exchange Act
(7 U.S.C. 1 et seq.), or national securities exchanges,
national securities associations, alternative trading systems, securities information processors solely with respect
to the activities of the entity as a securities information
processor, security-based swap data repositories, and swap
execution facilities registered under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.), or designated
clearing entities, provided that the exclusions in this

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124 STAT. 1805

subparagraph apply only with respect to the activities that
require the entity to be so registered.
(6) FINANCIAL MARKET UTILITY.—
(A) INCLUSION.—The term ‘‘financial market utility’’
means any person that manages or operates a multilateral
system for the purpose of transferring, clearing, or settling
payments, securities, or other financial transactions among
financial institutions or between financial institutions and
the person.
(B) EXCLUSIONS.—The term ‘‘financial market utility’’
does not include—
(i) designated contract markets, registered futures
associations, swap data repositories, and swap execution facilities registered under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), or national securities
exchanges, national securities associations, alternative
trading systems, security-based swap data repositories,
and swap execution facilities registered under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
solely by reason of their providing facilities for comparison of data respecting the terms of settlement of securities or futures transactions effected on such exchange
or by means of any electronic system operated or controlled by such entities, provided that the exclusions
in this clause apply only with respect to the activities
that require the entity to be so registered; and
(ii) any broker, dealer, transfer agent, or investment company, or any futures commission merchant,
introducing broker, commodity trading advisor, or commodity pool operator, solely by reason of functions
performed by such institution as part of brokerage,
dealing, transfer agency, or investment company activities, or solely by reason of acting on behalf of a financial market utility or a participant therein in connection with the furnishing by the financial market utility
of services to its participants or the use of services
of the financial market utility by its participants, provided that services performed by such institution do
not constitute critical risk management or processing
functions of the financial market utility.
(7) PAYMENT, CLEARING, OR SETTLEMENT ACTIVITY.—
(A) IN GENERAL.—The term ‘‘payment, clearing, or
settlement activity’’ means an activity carried out by 1
or more financial institutions to facilitate the completion
of financial transactions, but shall not include any offer
or sale of a security under the Securities Act of 1933
(15 U.S.C. 77a et seq.), or any quotation, order entry,
negotiation, or other pre-trade activity or execution activity.
(B) FINANCIAL TRANSACTION.—For the purposes of
subparagraph (A), the term ‘‘financial transaction’’
includes—
(i) funds transfers;
(ii) securities contracts;
(iii) contracts of sale of a commodity for future
delivery;
(iv) forward contracts;
(v) repurchase agreements;

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124 STAT. 1806

PUBLIC LAW 111–203—JULY 21, 2010
(vi) swaps;
(vii) security-based swaps;
(viii) swap agreements;
(ix) security-based swap agreements;
(x) foreign exchange contracts;
(xi) financial derivatives contracts; and
(xii) any similar transaction that the Council determines to be a financial transaction for purposes of
this title.
(C) INCLUDED ACTIVITIES.—When conducted with
respect to a financial transaction, payment, clearing, and
settlement activities may include—
(i) the calculation and communication of unsettled
financial transactions between counterparties;
(ii) the netting of transactions;
(iii) provision and maintenance of trade, contract,
or instrument information;
(iv) the management of risks and activities associated with continuing financial transactions;
(v) transmittal and storage of payment instructions;
(vi) the movement of funds;
(vii) the final settlement of financial transactions;
and
(viii) other similar functions that the Council may
determine.
(D) EXCLUSION.—Payment, clearing, and settlement
activities shall not include public reporting of swap transaction data under section 727 or 763(i) of the Wall Street
Transparency and Accountability Act of 2010.
(8) SUPERVISORY AGENCY.—
(A) IN GENERAL.—The term ‘‘Supervisory Agency’’
means the Federal agency that has primary jurisdiction
over a designated financial market utility under Federal
banking, securities, or commodity futures laws, as follows:
(i) The Securities and Exchange Commission, with
respect to a designated financial market utility that
is a clearing agency registered with the Securities and
Exchange Commission.
(ii) The Commodity Futures Trading Commission,
with respect to a designated financial market utility
that is a derivatives clearing organization registered
with the Commodity Futures Trading Commission.
(iii) The appropriate Federal banking agency, with
respect to a designated financial market utility that
is an institution described in section 3(q) of the Federal
Deposit Insurance Act.
(iv) The Board of Governors, with respect to a
designated financial market utility that is otherwise
not subject to the jurisdiction of any agency listed
in clauses (i), (ii), and (iii).
(B) MULTIPLE AGENCY JURISDICTION.—If a designated
financial market utility is subject to the jurisdictional
supervision of more than 1 agency listed in subparagraph
(A), then such agencies should agree on 1 agency to act
as the Supervisory Agency, and if such agencies cannot
agree on which agency has primary jurisdiction, the Council

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shall decide which agency is the Supervisory Agency for
purposes of this title.
(9) SYSTEMICALLY IMPORTANT AND SYSTEMIC IMPORTANCE.—
The terms ‘‘systemically important’’ and ‘‘systemic importance’’
mean a situation where the failure of or a disruption to the
functioning of a financial market utility or the conduct of a
payment, clearing, or settlement activity could create, or
increase, the risk of significant liquidity or credit problems
spreading among financial institutions or markets and thereby
threaten the stability of the financial system of the United
States.

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SEC. 804. DESIGNATION OF SYSTEMIC IMPORTANCE.

12 USC 5463.

(a) DESIGNATION.—
(1) FINANCIAL STABILITY OVERSIGHT COUNCIL.—The Council,
on a nondelegable basis and by a vote of not fewer than 2⁄3
of members then serving, including an affirmative vote by
the Chairperson of the Council, shall designate those financial
market utilities or payment, clearing, or settlement activities
that the Council determines are, or are likely to become,
systemically important.
(2) CONSIDERATIONS.—In determining whether a financial
market utility or payment, clearing, or settlement activity is,
or is likely to become, systemically important, the Council
shall take into consideration the following:
(A) The aggregate monetary value of transactions processed by the financial market utility or carried out through
the payment, clearing, or settlement activity.
(B) The aggregate exposure of the financial market
utility or a financial institution engaged in payment,
clearing, or settlement activities to its counterparties.
(C) The relationship, interdependencies, or other interactions of the financial market utility or payment, clearing,
or settlement activity with other financial market utilities
or payment, clearing, or settlement activities.
(D) The effect that the failure of or a disruption to
the financial market utility or payment, clearing, or settlement activity would have on critical markets, financial
institutions, or the broader financial system.
(E) Any other factors that the Council deems appropriate.
(b) RESCISSION OF DESIGNATION.—
(1) IN GENERAL.—The Council, on a nondelegable basis
and by a vote of not fewer than 2⁄3 of members then serving,
including an affirmative vote by the Chairperson of the Council,
shall rescind a designation of systemic importance for a designated financial market utility or designated activity if the
Council determines that the utility or activity no longer meets
the standards for systemic importance.
(2) EFFECT OF RESCISSION.—Upon rescission, the financial
market utility or financial institutions conducting the activity
will no longer be subject to the provisions of this title or
any rules or orders prescribed under this title.
(c) CONSULTATION AND NOTICE AND OPPORTUNITY FOR
HEARING.—

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124 STAT. 1808

Deadline.

Deadline.

Deadlines.

Web posting.
Federal Register,
publication.

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Deadlines.

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(1) CONSULTATION.—Before making any determination
under subsection (a) or (b), the Council shall consult with
the relevant Supervisory Agency and the Board of Governors.
(2) ADVANCE NOTICE AND OPPORTUNITY FOR HEARING.—
(A) IN GENERAL.—Before making any determination
under subsection (a) or (b), the Council shall provide the
financial market utility or, in the case of a payment,
clearing, or settlement activity, financial institutions with
advance notice of the proposed determination of the
Council.
(B) NOTICE IN FEDERAL REGISTER.—The Council shall
provide such advance notice to financial institutions by
publishing a notice in the Federal Register.
(C) REQUESTS FOR HEARING.—Within 30 days from the
date of any notice of the proposed determination of the
Council, the financial market utility or, in the case of
a payment, clearing, or settlement activity, a financial
institution engaged in the designated activity may request,
in writing, an opportunity for a written or oral hearing
before the Council to demonstrate that the proposed designation or rescission of designation is not supported by
substantial evidence.
(D) WRITTEN SUBMISSIONS.—Upon receipt of a timely
request, the Council shall fix a time, not more than 30
days after receipt of the request, unless extended at the
request of the financial market utility or financial institution, and place at which the financial market utility or
financial institution may appear, personally or through
counsel, to submit written materials, or, at the sole discretion of the Council, oral testimony or oral argument.
(3) EMERGENCY EXCEPTION.—
(A) WAIVER OR MODIFICATION BY VOTE OF THE
COUNCIL.—The Council may waive or modify the requirements of paragraph (2) if the Council determines, by an
affirmative vote of not fewer than 2⁄3 of members then
serving, including an affirmative vote by the Chairperson
of the Council, that the waiver or modification is necessary
to prevent or mitigate an immediate threat to the financial
system posed by the financial market utility or the payment, clearing, or settlement activity.
(B) NOTICE OF WAIVER OR MODIFICATION.—The Council
shall provide notice of the waiver or modification to the
financial market utility concerned or, in the case of a
payment, clearing, or settlement activity, to financial
institutions, as soon as practicable, which shall be no later
than 24 hours after the waiver or modification in the
case of a financial market utility and 3 business days
in the case of financial institutions. The Council shall provide the notice to financial institutions by posting a notice
on the website of the Council and by publishing a notice
in the Federal Register.
(d) NOTIFICATION OF FINAL DETERMINATION.—
(1) AFTER HEARING.—Within 60 days of any hearing under
subsection (c)(2), the Council shall notify the financial market
utility or financial institutions of the final determination of
the Council in writing, which shall include findings of fact
upon which the determination of the Council is based.

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124 STAT. 1809

(2) WHEN NO HEARING REQUESTED.—If the Council does
not receive a timely request for a hearing under subsection
(c)(2), the Council shall notify the financial market utility or
financial institutions of the final determination of the Council
in writing not later than 30 days after the expiration of the
date by which a financial market utility or a financial institution could have requested a hearing. All notices to financial
institutions under this subsection shall be published in the
Federal Register.
(e) EXTENSION OF TIME PERIODS.—The Council may extend
the time periods established in subsections (c) and (d) as the Council
determines to be necessary or appropriate.

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SEC. 805. STANDARDS FOR SYSTEMICALLY IMPORTANT FINANCIAL
MARKET UTILITIES AND PAYMENT, CLEARING, OR SETTLEMENT ACTIVITIES.

Federal Register,
publication.

12 USC 5464.

(a) AUTHORITY TO PRESCRIBE STANDARDS.—
(1) BOARD OF GOVERNORS.—Except as provided in paragraph (2), the Board of Governors, by rule or order, and in
consultation with the Council and the Supervisory Agencies,
shall prescribe risk management standards, taking into consideration relevant international standards and existing prudential requirements, governing—
(A) the operations related to the payment, clearing,
and settlement activities of designated financial market
utilities; and
(B) the conduct of designated activities by financial
institutions.
(2) SPECIAL PROCEDURES FOR DESIGNATED CLEARING ENTITIES AND DESIGNATED ACTIVITIES OF CERTAIN FINANCIAL INSTITUTIONS.—
(A) CFTC AND COMMISSION.—The Commodity Futures
Trading Commission and the Commission may each prescribe regulations, in consultation with the Council and
the Board of Governors, containing risk management standards, taking into consideration relevant international
standards and existing prudential requirements, for those
designated clearing entities and financial institutions
engaged in designated activities for which each is the
Supervisory Agency or the appropriate financial regulator,
governing—
(i) the operations related to payment, clearing, and
settlement activities of such designated clearing entities; and
(ii) the conduct of designated activities by such
financial institutions.
(B) REVIEW AND DETERMINATION.—The Board of Governors may determine that existing prudential requirements of the Commodity Futures Trading Commission, the
Commission, or both (including requirements prescribed
pursuant to subparagraph (A)) with respect to designated
clearing entities and financial institutions engaged in designated activities for which the Commission or the Commodity Futures Trading Commission is the Supervisory
Agency or the appropriate financial regulator are insufficient to prevent or mitigate significant liquidity, credit,

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operational, or other risks to the financial markets or to
the financial stability of the United States.
(C) WRITTEN DETERMINATION.—Any determination by
the Board of Governors under subparagraph (B) shall be
provided in writing to the Commodity Futures Trading
Commission or the Commission, as applicable, and the
Council, and shall explain why existing prudential requirements, considered as a whole, are insufficient to ensure
that the operations and activities of the designated clearing
entities or the activities of financial institutions described
in subparagraph (B) will not pose significant liquidity,
credit, operational, or other risks to the financial markets
or to the financial stability of the United States. The Board
of Governors’ determination shall contain a detailed analysis supporting its findings and identify the specific prudential requirements that are insufficient.
(D) CFTC AND COMMISSION RESPONSE.—The Commodity Futures Trading Commission or the Commission,
as applicable, shall within 60 days either object to the
Board of Governors’ determination with a detailed analysis
as to why existing prudential requirements are sufficient,
or submit an explanation to the Council and the Board
of Governors describing the actions to be taken in response
to the Board of Governors’ determination.
(E) AUTHORIZATION.—Upon an affirmative vote by not
fewer than 2/3 of members then serving on the Council,
the Council shall either find that the response submitted
under subparagraph (D) is sufficient, or require the Commodity Futures Trading Commission, or the Commission,
as applicable, to prescribe such risk management standards
as the Council determines is necessary to address the specific prudential requirements that are determined to be
insufficient.’’
(b) OBJECTIVES AND PRINCIPLES.—The objectives and principles
for the risk management standards prescribed under subsection
(a) shall be to—
(1) promote robust risk management;
(2) promote safety and soundness;
(3) reduce systemic risks; and
(4) support the stability of the broader financial system.
(c) SCOPE.—The standards prescribed under subsection (a) may
address areas such as—
(1) risk management policies and procedures;
(2) margin and collateral requirements;
(3) participant or counterparty default policies and procedures;
(4) the ability to complete timely clearing and settlement
of financial transactions;
(5) capital and financial resource requirements for designated financial market utilities; and
(6) other areas that are necessary to achieve the objectives
and principles in subsection (b).
(d) LIMITATION ON SCOPE.—Except as provided in subsections
(e) and (f) of section 807, nothing in this title shall be construed
to permit the Council or the Board of Governors to take any action
or exercise any authority granted to the Commodity Futures
Trading Commission under section 2(h) of the Commodity Exchange

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124 STAT. 1811

Act or the Securities and Exchange Commission under section 3C(a)
of the Securities Exchange Act of 1934, including—
(1) the approval of, disapproval of, or stay of the clearing
requirement for any group, category, type, or class of swaps
that a designated clearing entity may accept for clearing;
(2) the determination that any group, category, type, or
class of swaps shall be subject to the mandatory clearing
requirement of section 2(h)(1) of the Commodity Exchange Act
or section 3C(a)(1) of the Securities Exchange Act of 1934;
(3) the determination that any person is exempt from the
mandatory clearing requirement of section 2(h)(1) of the Commodity Exchange Act or section 3C(a)(1) of the Securities
Exchange Act of 1934; or
(4) any authority granted to the Commodity Futures
Trading Commission or the Securities and Exchange Commission with respect to transaction reporting or trade execution.
(e) THRESHOLD LEVEL.—The standards prescribed under subsection (a) governing the conduct of designated activities by financial
institutions shall, where appropriate, establish a threshold as to
the level or significance of engagement in the activity at which
a financial institution will become subject to the standards with
respect to that activity.
(f) COMPLIANCE REQUIRED.—Designated financial market utilities and financial institutions subject to the standards prescribed
under subsection (a) for a designated activity shall conduct their
operations in compliance with the applicable risk management
standards.

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SEC. 806. OPERATIONS OF DESIGNATED FINANCIAL MARKET UTILITIES.

12 USC 5465.

(a) FEDERAL RESERVE ACCOUNT AND SERVICES.—The Board
of Governors may authorize a Federal Reserve Bank to establish
and maintain an account for a designated financial market utility
and provide the services listed in section 11A(b) of the Federal
Reserve Act (12 U.S.C. 248a(b)) and deposit accounts under the
first undesignated paragraph of section 13 of the Federal Reserve
Act (12 U.S.C. 342) to the designated financial market utility that
the Federal Reserve Bank is authorized under the Federal Reserve
Act to provide to a depository institution, subject to any applicable
rules, orders, standards, or guidelines prescribed by the Board
of Governors.
(b) ADVANCES.—The Board of Governors may authorize a Federal Reserve bank under section 10B of the Federal Reserve Act
(12 U.S.C. 347b) to provide to a designated financial market utility
discount and borrowing privileges only in unusual or exigent circumstances, upon the affirmative vote of a majority of the Board
of Governors then serving (or such other number in accordance
with the provisions of section 11(r)(2) of the Federal Reserve Act
(12 U.S.C. 248(r)(2)) after consultation with the Secretary, and
upon a showing by the designated financial market utility that
it is unable to secure adequate credit accommodations from other
banking institutions. All such discounts and borrowing privileges
shall be subject to such other limitations, restrictions, and regulations as the Board of Governors may prescribe. Access to discount
and borrowing privileges under section 10B of the Federal Reserve
Act as authorized in this section does not require a designated

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financial market utility to be or become a bank or bank holding
company.
(c) EARNINGS ON FEDERAL RESERVE BALANCES.—A Federal
Reserve Bank may pay earnings on balances maintained by or
on behalf of a designated financial market utility in the same
manner and to the same extent as the Federal Reserve Bank
may pay earnings to a depository institution under the Federal
Reserve Act, subject to any applicable rules, orders, standards,
or guidelines prescribed by the Board of Governors.
(d) RESERVE REQUIREMENTS.—The Board of Governors may
exempt a designated financial market utility from, or modify any,
reserve requirements under section 19 of the Federal Reserve Act
(12 U.S.C. 461) applicable to a designated financial market utility.
(e) CHANGES TO RULES, PROCEDURES, OR OPERATIONS.—
(1) ADVANCE NOTICE.—
(A) ADVANCE NOTICE OF PROPOSED CHANGES
REQUIRED.—A designated financial market utility shall provide notice 60 days in advance notice to its Supervisory
Agency of any proposed change to its rules, procedures,
or operations that could, as defined in rules of each Supervisory Agency, materially affect, the nature or level of
risks presented by the designated financial market utility.
(B) TERMS AND STANDARDS PRESCRIBED BY THE SUPERVISORY AGENCIES.—Each Supervisory Agency, in consultation with the Board of Governors, shall prescribe regulations that define and describe the standards for determining when notice is required to be provided under
subparagraph (A).
(C) CONTENTS OF NOTICE.—The notice of a proposed
change shall describe—
(i) the nature of the change and expected effects
on risks to the designated financial market utility,
its participants, or the market; and
(ii) how the designated financial market utility
plans to manage any identified risks.
(D) ADDITIONAL INFORMATION.—The Supervisory
Agency may require a designated financial market utility
to provide any information necessary to assess the effect
the proposed change would have on the nature or level
of risks associated with the designated financial market
utility’s payment, clearing, or settlement activities and the
sufficiency of any proposed risk management techniques.
(E) NOTICE OF OBJECTION.—The Supervisory Agency
shall notify the designated financial market utility of any
objection regarding the proposed change within 60 days
from the later of—
(i) the date that the notice of the proposed change
is received; or
(ii) the date any further information requested
for consideration of the notice is received.
(F) CHANGE NOT ALLOWED IF OBJECTION.—A designated
financial market utility shall not implement a change to
which the Supervisory Agency has an objection.
(G) CHANGE ALLOWED IF NO OBJECTION WITHIN 60
DAYS.—A designated financial market utility may implement a change if it has not received an objection to the
proposed change within 60 days of the later of—

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124 STAT. 1813

(i) the date that the Supervisory Agency receives
the notice of proposed change; or
(ii) the date the Supervisory Agency receives any
further information it requests for consideration of the
notice.
(H) REVIEW EXTENSION FOR NOVEL OR COMPLEX
ISSUES.—The Supervisory Agency may, during the 60-day
review period, extend the review period for an additional
60 days for proposed changes that raise novel or complex
issues, subject to the Supervisory Agency providing the
designated financial market utility with prompt written
notice of the extension. Any extension under this subparagraph will extend the time periods under subparagraphs
(E) and (G).
(I) CHANGE ALLOWED EARLIER IF NOTIFIED OF NO OBJECTION.—A designated financial market utility may implement a change in less than 60 days from the date of
receipt of the notice of proposed change by the Supervisory
Agency, or the date the Supervisory Agency receives any
further information it requested, if the Supervisory Agency
notifies the designated financial market utility in writing
that it does not object to the proposed change and authorizes the designated financial market utility to implement
the change on an earlier date, subject to any conditions
imposed by the Supervisory Agency.
(2) EMERGENCY CHANGES.—
(A) IN GENERAL.—A designated financial market utility
may implement a change that would otherwise require
advance notice under this subsection if it determines that—
(i) an emergency exists; and
(ii) immediate implementation of the change is
necessary for the designated financial market utility
to continue to provide its services in a safe and sound
manner.
(B) NOTICE REQUIRED WITHIN 24 HOURS.—The designated financial market utility shall provide notice of any
such emergency change to its Supervisory Agency, as soon
as practicable, which shall be no later than 24 hours after
implementation of the change.
(C) CONTENTS OF EMERGENCY NOTICE.—In addition to
the information required for changes requiring advance
notice, the notice of an emergency change shall describe—
(i) the nature of the emergency; and
(ii) the reason the change was necessary for the
designated financial market utility to continue to provide its services in a safe and sound manner.
(D) MODIFICATION OR RESCISSION OF CHANGE MAY BE
REQUIRED.—The Supervisory Agency may require modification or rescission of the change if it finds that the change
is not consistent with the purposes of this Act or any
applicable rules, orders, or standards prescribed under section 805(a).
(3) COPYING THE BOARD OF GOVERNORS.—The Supervisory
Agency shall provide the Board of Governors concurrently with
a complete copy of any notice, request, or other information
it issues, submits, or receives under this subsection.

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PUBLIC LAW 111–203—JULY 21, 2010
(4) CONSULTATION WITH BOARD OF GOVERNORS.—Before
taking any action on, or completing its review of, a change
proposed by a designated financial market utility, the Supervisory Agency shall consult with the Board of Governors.

12 USC 5466.

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SEC. 807. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST
DESIGNATED FINANCIAL MARKET UTILITIES.

(a) EXAMINATION.—Notwithstanding any other provision of law
and subject to subsection (d), the Supervisory Agency shall conduct
examinations of a designated financial market utility at least once
annually in order to determine the following:
(1) The nature of the operations of, and the risks borne
by, the designated financial market utility.
(2) The financial and operational risks presented by the
designated financial market utility to financial institutions,
critical markets, or the broader financial system.
(3) The resources and capabilities of the designated financial market utility to monitor and control such risks.
(4) The safety and soundness of the designated financial
market utility.
(5) The designated financial market utility’s compliance
with—
(A) this title; and
(B) the rules and orders prescribed under this title.
(b) SERVICE PROVIDERS.—Whenever a service integral to the
operation of a designated financial market utility is performed
for the designated financial market utility by another entity,
whether an affiliate or non-affiliate and whether on or off the
premises of the designated financial market utility, the Supervisory
Agency may examine whether the provision of that service is in
compliance with applicable law, rules, orders, and standards to
the same extent as if the designated financial market utility were
performing the service on its own premises.
(c) ENFORCEMENT.—For purposes of enforcing the provisions
of this title, a designated financial market utility shall be subject
to, and the appropriate Supervisory Agency shall have authority
under the provisions of subsections (b) through (n) of section 8
of the Federal Deposit Insurance Act (12 U.S.C. 1818) in the same
manner and to the same extent as if the designated financial
market utility was an insured depository institution and the Supervisory Agency was the appropriate Federal banking agency for
such insured depository institution.
(d) BOARD OF GOVERNORS INVOLVEMENT IN EXAMINATIONS.—
(1) BOARD OF GOVERNORS CONSULTATION ON EXAMINATION
PLANNING.—The Supervisory Agency shall consult annually
with the Board of Governors regarding the scope and methodology of any examination conducted under subsections (a) and
(b). The Supervisory Agency shall lead all examinations conducted under subsections (a) and (b)
(2) BOARD OF GOVERNORS PARTICIPATION IN EXAMINATION.—
The Board of Governors may, in its discretion, participate in
any examination led by a Supervisory Agency and conducted
under subsections (a) and (b).
(e) BOARD OF GOVERNORS ENFORCEMENT RECOMMENDATIONS.—
(1) RECOMMENDATION.—The Board of Governors may, after
consulting with the Council and the Supervisory Agency, at
any time recommend to the Supervisory Agency that such

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124 STAT. 1815

agency take enforcement action against a designated financial
market utility in order to prevent or mitigate significant
liquidity, credit, operational, or other risks to the financial
markets or to the financial stability of the United States. Any
such recommendation for enforcement action shall provide a
detailed analysis supporting the recommendation of the Board
of Governors.
(2) CONSIDERATION.—The Supervisory Agency shall consider the recommendation of the Board of Governors and submit
a response to the Board of Governors within 60 days.
(3) BINDING ARBITRATION.—If the Supervisory Agency
rejects, in whole or in part, the recommendation of the Board
of Governors, the Board of Governors may refer the recommendation to the Council for a binding decision on whether
an enforcement action is warranted.
(4) ENFORCEMENT ACTION.—Upon an affirmative vote by
a majority of the Council in favor of the Board of Governors’
recommendation under paragraph (3), the Council may require
the Supervisory Agency to—
(A) exercise the enforcement authority referenced in
subsection (c); and
(B) take enforcement action against the designated
financial market utility.
(f) EMERGENCY ENFORCEMENT ACTIONS BY THE BOARD OF GOVERNORS.—
(1) IMMINENT RISK OF SUBSTANTIAL HARM.—The Board of
Governors may, after consulting with the Supervisory Agency
and upon an affirmative vote by a majority the Council, take
enforcement action against a designated financial market utility
if the Board of Governors has reasonable cause to conclude
that—
(A) either—
(i) an action engaged in, or contemplated by, a
designated financial market utility (including any
change proposed by the designated financial market
utility to its rules, procedures, or operations that would
otherwise be subject to section 806(e)) poses an
imminent risk of substantial harm to financial institutions, critical markets, or the broader financial system
of the United States; or
(ii) the condition of a designated financial market
utility poses an imminent risk of substantial harm
to financial institutions, critical markets, or the
broader financial system; and
(B) the imminent risk of substantial harm precludes
the Board of Governors’ use of the procedures in subsection
(e).
(2) ENFORCEMENT AUTHORITY.—For purposes of taking
enforcement action under paragraph (1), a designated financial
market utility shall be subject to, and the Board of Governors
shall have authority under the provisions of subsections (b)
through (n) of section 8 of the Federal Deposit Insurance Act
(12 U.S.C. 1818) in the same manner and to the same extent
as if the designated financial market utility was an insured
depository institution and the Board of Governors was the
appropriate Federal banking agency for such insured depository
institution.

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12 USC 5467.

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SEC. 808. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST
FINANCIAL INSTITUTIONS SUBJECT TO STANDARDS FOR
DESIGNATED ACTIVITIES.

(a) EXAMINATION.—The appropriate financial regulator is
authorized to examine a financial institution subject to the standards prescribed under section 805(a) for a designated activity in
order to determine the following:
(1) The nature and scope of the designated activities
engaged in by the financial institution.
(2) The financial and operational risks the designated
activities engaged in by the financial institution may pose
to the safety and soundness of the financial institution.
(3) The financial and operational risks the designated
activities engaged in by the financial institution may pose
to other financial institutions, critical markets, or the broader
financial system.
(4) The resources available to and the capabilities of the
financial institution to monitor and control the risks described
in paragraphs (2) and (3).
(5) The financial institution’s compliance with this title
and the rules and orders prescribed under section 805(a).
(b) ENFORCEMENT.—For purposes of enforcing the provisions
of this title, and the rules and orders prescribed under this section,
a financial institution subject to the standards prescribed under
section 805(a) for a designated activity shall be subject to, and
the appropriate financial regulator shall have authority under the
provisions of subsections (b) through (n) of section 8 of the Federal
Deposit Insurance Act (12 U.S.C. 1818) in the same manner and
to the same extent as if the financial institution was an insured
depository institution and the appropriate financial regulator was
the appropriate Federal banking agency for such insured depository
institution.
(c) TECHNICAL ASSISTANCE.—The Board of Governors shall consult with and provide such technical assistance as may be required
by the appropriate financial regulators to ensure that the rules
and orders prescribed under this title are interpreted and applied
in as consistent and uniform a manner as practicable.
(d) DELEGATION.—
(1) EXAMINATION.—
(A) REQUEST TO BOARD OF GOVERNORS.—The appropriate financial regulator may request the Board of Governors to conduct or participate in an examination of a
financial institution subject to the standards prescribed
under section 805(a) for a designated activity in order
to assess the compliance of such financial institution with—
(i) this title; or
(ii) the rules or orders prescribed under this title.
(B) EXAMINATION BY BOARD OF GOVERNORS.—Upon
receipt of an appropriate written request, the Board of
Governors will conduct the examination under such terms
and conditions to which the Board of Governors and the
appropriate financial regulator mutually agree.
(2) ENFORCEMENT.—
(A) REQUEST TO BOARD OF GOVERNORS.—The appropriate financial regulator may request the Board of Governors to enforce this title or the rules or orders prescribed

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124 STAT. 1817

under this title against a financial institution that is subject to the standards prescribed under section 805(a) for
a designated activity.
(B) ENFORCEMENT BY BOARD OF GOVERNORS.—Upon
receipt of an appropriate written request, the Board of
Governors shall determine whether an enforcement action
is warranted, and, if so, it shall enforce compliance with
this title or the rules or orders prescribed under this title
and, if so, the financial institution shall be subject to,
and the Board of Governors shall have authority under
the provisions of subsections (b) through (n) of section
8 of the Federal Deposit Insurance Act (12 U.S.C. 1818)
in the same manner and to the same extent as if the
financial institution was an insured depository institution
and the Board of Governors was the appropriate Federal
banking agency for such insured depository institution.
(e) BACK-UP AUTHORITY OF THE BOARD OF GOVERNORS.—
(1) EXAMINATION AND ENFORCEMENT.—Notwithstanding
any other provision of law, the Board of Governors may—
(A) conduct an examination of the type described in
subsection (a) of any financial institution that is subject
to the standards prescribed under section 805(a) for a designated activity; and
(B) enforce the provisions of this title or any rules
or orders prescribed under this title against any financial
institution that is subject to the standards prescribed under
section 805(a) for a designated activity.
(2) LIMITATIONS.—
(A) EXAMINATION.—The Board of Governors may exercise the authority described in paragraph (1)(A) only if
the Board of Governors has—
(i) reasonable cause to believe that a financial
institution is not in compliance with this title or the
rules or orders prescribed under this title with respect
to a designated activity;
(ii) notified, in writing, the appropriate financial
regulator and the Council of its belief under clause
(i) with supporting documentation included;
(iii) requested the appropriate financial regulator
to conduct a prompt examination of the financial
institution;
(iv) either—
(I) not been afforded a reasonable opportunity
to participate in an examination of the financial
institution by the appropriate financial regulator
within 30 days after the date of the Board’s
notification under clause (ii); or
(II) reasonable cause to believe that the financial institution’s noncompliance with this title or
the rules or orders prescribed under this title poses
a substantial risk to other financial institutions,
critical markets, or the broader financial system,
subject to the Board of Governors affording the
appropriate financial regulator a reasonable opportunity to participate in the examination; and
(v) obtained the approval of the Council upon an
affirmative vote by a majority of the Council.

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(B) ENFORCEMENT.—The Board of Governors may exercise the authority described in paragraph (1)(B) only if
the Board of Governors has—
(i) reasonable cause to believe that a financial
institution is not in compliance with this title or the
rules or orders prescribed under this title with respect
to a designated activity;
(ii) notified, in writing, the appropriate financial
regulator and the Council of its belief under clause
(i) with supporting documentation included and with
a recommendation that the appropriate financial regulator take 1 or more specific enforcement actions
against the financial institution;
(iii) either—
(I) not been notified, in writing, by the appropriate financial regulator of the commencement
of an enforcement action recommended by the
Board of Governors against the financial institution within 60 days from the date of the notification under clause (ii); or
(II) reasonable cause to believe that the financial institution’s noncompliance with this title or
the rules or orders prescribed under this title poses
significant liquidity, credit, operational, or other
risks to the financial markets or to the financial
stability of the United States, subject to the Board
of Governors notifying the appropriate financial
regulator of the Board’s enforcement action; and
(iv) obtained the approval of the Council upon
an affirmative vote by a majority of the Council.
(3) ENFORCEMENT PROVISIONS.—For purposes of taking
enforcement action under paragraph (1), the financial institution shall be subject to, and the Board of Governors shall
have authority under the provisions of subsections (b) through
(n) of section 8 of the Federal Deposit Insurance Act (12 U.S.C.
1818) in the same manner and to the same extent as if the
financial institution was an insured depository institution and
the Board of Governors was the appropriate Federal banking
agency for such insured depository institution.

Notification.

Deadline.

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12 USC 5468.

PUBLIC LAW 111–203—JULY 21, 2010

SEC. 809. REQUESTS FOR INFORMATION, REPORTS, OR RECORDS.

(a) INFORMATION TO ASSESS SYSTEMIC IMPORTANCE.—
(1) FINANCIAL MARKET UTILITIES.—The Council is authorized to require any financial market utility to submit such
information as the Council may require for the sole purpose
of assessing whether that financial market utility is systemically important, but only if the Council has reasonable cause
to believe that the financial market utility meets the standards
for systemic importance set forth in section 804.
(2) FINANCIAL INSTITUTIONS ENGAGED IN PAYMENT,
CLEARING, OR SETTLEMENT ACTIVITIES.—The Council is authorized to require any financial institution to submit such information as the Council may require for the sole purpose of assessing
whether any payment, clearing, or settlement activity engaged
in or supported by a financial institution is systemically important, but only if the Council has reasonable cause to believe

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1819

that the activity meets the standards for systemic importance
set forth in section 804.
(b) REPORTING AFTER DESIGNATION.—
(1) DESIGNATED FINANCIAL MARKET UTILITIES.—The Board
of Governors and the Council may each require a designated
financial market utility to submit reports or data to the Board
of Governors and the Council in such frequency and form
as deemed necessary by the Board of Governors or the Council
in order to assess the safety and soundness of the utility
and the systemic risk that the utility’s operations pose to the
financial system.
(2) FINANCIAL INSTITUTIONS SUBJECT TO STANDARDS FOR
DESIGNATED ACTIVITIES.—The Board of Governors and the
Council may each require 1 or more financial institutions subject to the standards prescribed under section 805(a) for a
designated activity to submit, in such frequency and form as
deemed necessary by the Board of Governors or the Council,
reports and data to the Board of Governors and the Council
solely with respect to the conduct of the designated activity
and solely to assess whether—
(A) the rules, orders, or standards prescribed under
section 805(a) with respect to the designated activity appropriately address the risks to the financial system presented
by such activity; and
(B) the financial institutions are in compliance with
this title and the rules and orders prescribed under section
805(a) with respect to the designated activity.
(3) LIMITATION.—The Board of Governors may, upon an
affirmative vote by a majority of the Council, prescribe regulations under this section that impose a recordkeeping or
reporting requirement on designated clearing entities or financial institutions engaged in designated activities that are subject to standards that have been prescribed under section
805(a)(2).
(c) COORDINATION WITH APPROPRIATE FEDERAL SUPERVISORY
AGENCY.—
(1) ADVANCE COORDINATION.—Before requesting any material information from, or imposing reporting or recordkeeping
requirements on, any financial market utility or any financial
institution engaged in a payment, clearing, or settlement
activity, the Board of Governors or the Council shall coordinate
with the Supervisory Agency for a financial market utility
or the appropriate financial regulator for a financial institution
to determine if the information is available from or may be
obtained by the agency in the form, format, or detail required
by the Board of Governors or the Council.
(2) SUPERVISORY REPORTS.—Notwithstanding any other
provision of law, the Supervisory Agency, the appropriate financial regulator, and the Board of Governors are authorized to
disclose to each other and the Council copies of its examination
reports or similar reports regarding any financial market utility
or any financial institution engaged in payment, clearing, or
settlement activities.
(d) TIMING OF RESPONSE FROM APPROPRIATE FEDERAL SUPERVISORY AGENCY.—If the information, report, records, or data
requested by the Board of Governors or the Council under subsection (c)(1) are not provided in full by the Supervisory Agency

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124 STAT. 1820

Notification.

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12 USC 5469.

PUBLIC LAW 111–203—JULY 21, 2010

or the appropriate financial regulator in less than 15 days after
the date on which the material is requested, the Board of Governors
or the Council may request the information or impose recordkeeping
or reporting requirements directly on such persons as provided
in subsections (a) and (b) with notice to the agency.
(e) SHARING OF INFORMATION.—
(1) MATERIAL CONCERNS.—Notwithstanding any other
provision of law, the Board of Governors, the Council, the
appropriate financial regulator, and any Supervisory Agency
are authorized to—
(A) promptly notify each other of material concerns
about a designated financial market utility or any financial
institution engaged in designated activities; and
(B) share appropriate reports, information, or data
relating to such concerns.
(2) OTHER INFORMATION.—Notwithstanding any other
provision of law, the Board of Governors, the Council, the
appropriate financial regulator, or any Supervisory Agency may,
under such terms and conditions as it deems appropriate, provide confidential supervisory information and other information
obtained under this title to each other, and to the Secretary,
Federal Reserve Banks, State financial institution supervisory
agencies, foreign financial supervisors, foreign central banks,
and foreign finance ministries, subject to reasonable assurances
of confidentiality, provided, however, that no person or entity
receiving information pursuant to this section may disseminate
such information to entities or persons other than those listed
in this paragraph without complying with applicable law,
including section 8 of the Commodity Exchange Act (7 U.S.C.
12).
(f) PRIVILEGE MAINTAINED.—The Board of Governors, the
Council, the appropriate financial regulator, and any Supervisory
Agency providing reports or data under this section shall not be
deemed to have waived any privilege applicable to those reports
or data, or any portion thereof, by providing the reports or data
to the other party or by permitting the reports or data, or any
copies thereof, to be used by the other party.
(g) DISCLOSURE EXEMPTION.—Information obtained by the
Board of Governors, the Supervisory Agencies, or the Council under
this section and any materials prepared by the Board of Governors,
the Supervisory Agencies, or the Council regarding their assessment
of the systemic importance of financial market utilities or any
payment, clearing, or settlement activities engaged in by financial
institutions, and in connection with their supervision of designated
financial market utilities and designated activities, shall be confidential supervisory information exempt from disclosure under section 552 of title 5, United States Code. For purposes of such section
552, this subsection shall be considered a statute described in
subsection (b)(3) of such section 552.
SEC. 810. RULEMAKING.

The Board of Governors, the Supervisory Agencies, and the
Council are authorized to prescribe such rules and issue such orders
as may be necessary to administer and carry out their respective
authorities and duties granted under this title and prevent evasions
thereof.

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124 STAT. 1821

SEC. 811. OTHER AUTHORITY.

12 USC 5470.

Unless otherwise provided by its terms, this title does not
divest any appropriate financial regulator, any Supervisory Agency,
or any other Federal or State agency, of any authority derived
from any other applicable law, except that any standards prescribed
by the Board of Governors under section 805 shall supersede any
less stringent requirements established under other authority to
the extent of any conflict.
SEC. 812. CONSULTATION.

12 USC 5471.

(a) CFTC.—The Commodity Futures Trading Commission shall
consult with the Board of Governors—
(1) prior to exercising its authorities under sections
2(h)(2)(C), 2(h)(3)(A), 2(h)(3)(C), 2(h)(4)(A), and 2(h)(4)(B) of
the Commodity Exchange Act, as amended by the Wall Street
Transparency and Accountability Act of 2010;
(2) with respect to any rule or rule amendment of a derivatives clearing organization for which a stay of certification
has been issued under section 745(b)(3) of the Wall Street
Transparency and Accountability Act of 2010; and
(3) prior to exercising its rulemaking authorities under
section 728 of the Wall Street Transparency and Accountability
Act of 2010.
(b) SEC.—The Commission shall consult with the Board of
Governors—
(1) prior to exercising its authorities under sections
3C(a)(2)(C), 3C(a)(3)(A), 3C(a)(3)(C), 3C(a)(4)(A), and 3C(a)(4)(B)
of the Securities Exchange Act of 1934, as amended by the
Wall Street Transparency and Accountability Act of 2010;
(2) with respect to any proposed rule change of a clearing
agency for which an extension of the time for review has
been designated under section 19(b)(2) of the Securities
Exchange Act of 1934; and
(3) prior to exercising its rulemaking authorities under
section 13(n) of the Securities Exchange Act of 1934, as added
by section 763(i) of the Wall Street Transparency and Accountability Act of 2010.

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SEC. 813. COMMON FRAMEWORK FOR DESIGNATED CLEARING ENTITY
RISK MANAGEMENT.

The Commodity Futures Trading Commission and the Commission shall coordinate with the Board of Governors to jointly develop
risk management supervision programs for designated clearing entities. Not later than 1 year after the date of enactment of this
Act, the Commodity Futures Trading Commission, the Commission,
and the Board of Governors shall submit a joint report to the
Committee on Banking, Housing, and Urban Affairs and the Committee on Agriculture, Nutrition, and Forestry of the Senate, and
the Committee on Financial Services and the Committee on Agriculture of the House of Representatives recommendations for—
(1) improving consistency in the designated clearing entity
oversight programs of the Commission and the Commodity
Futures Trading Commission;
(2) promoting robust risk management by designated
clearing entities;
(3) promoting robust risk management oversight by regulators of designated clearing entities; and

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12 USC 5472.

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PUBLIC LAW 111–203—JULY 21, 2010
(4) improving regulators’ ability to monitor the potential
effects of designated clearing entity risk management on the
stability of the financial system of the United States.

SEC. 814. EFFECTIVE DATE.

12 USC 5461
note.

This title is effective as of the date of enactment of this Act.

Investor
Protection and
Securities
Reform Act of
2010.

TITLE
IX—INVESTOR
PROTECTIONS
AND IMPROVEMENTS TO THE REGULATION OF SECURITIES

15 USC 78a note.

SEC. 901. SHORT TITLE.

This title may be cited as the ‘‘Investor Protection and Securities Reform Act of 2010’’.

Subtitle A—Increasing Investor Protection
SEC. 911. INVESTOR ADVISORY COMMITTEE ESTABLISHED.

Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.) is amended by adding at the end the following:

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15 USC 78pp.

‘‘SEC. 39. INVESTOR ADVISORY COMMITTEE.

‘‘(a) ESTABLISHMENT AND PURPOSE.—
‘‘(1) ESTABLISHMENT.—There is established within the
Commission the Investor Advisory Committee (referred to in
this section as the ‘Committee’).
‘‘(2) PURPOSE.—The Committee shall—
‘‘(A) advise and consult with the Commission on—
‘‘(i) regulatory priorities of the Commission;
‘‘(ii) issues relating to the regulation of securities
products, trading strategies, and fee structures, and
the effectiveness of disclosure;
‘‘(iii) initiatives to protect investor interest; and
‘‘(iv) initiatives to promote investor confidence and
the integrity of the securities marketplace; and
‘‘(B) submit to the Commission such findings and recommendations as the Committee determines are appropriate, including recommendations for proposed legislative
changes.
‘‘(b) MEMBERSHIP.—
‘‘(1) IN GENERAL.—The members of the Committee shall
be—
‘‘(A) the Investor Advocate;
‘‘(B) a representative of State securities commissions;
‘‘(C) a representative of the interests of senior citizens;
and
‘‘(D) not fewer than 10, and not more than 20, members
appointed by the Commission, from among individuals
who—
‘‘(i) represent the interests of individual equity
and debt investors, including investors in mutual
funds;
‘‘(ii) represent the interests of institutional investors, including the interests of pension funds and registered investment companies;

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1823

‘‘(iii) are knowledgeable about investment issues
and decisions; and
‘‘(iv) have reputations of integrity.
‘‘(2) TERM.—Each member of the Committee appointed
under paragraph (1)(B) shall serve for a term of 4 years.
‘‘(3) MEMBERS NOT COMMISSION EMPLOYEES.—Members
appointed under paragraph (1)(B) shall not be deemed to be
employees or agents of the Commission solely because of membership on the Committee.
‘‘(c) CHAIRMAN; VICE CHAIRMAN; SECRETARY; ASSISTANT SECRETARY.—
‘‘(1) IN GENERAL.—The members of the Committee shall
elect, from among the members of the Committee—
‘‘(A) a chairman, who may not be employed by an
issuer;
‘‘(B) a vice chairman, who may not be employed by
an issuer;
‘‘(C) a secretary; and
‘‘(D) an assistant secretary.
‘‘(2) TERM.—Each member elected under paragraph (1)
shall serve for a term of 3 years in the capacity for which
the member was elected under paragraph (1).
‘‘(d) MEETINGS.—
‘‘(1) FREQUENCY OF MEETINGS.—The Committee shall
meet—
‘‘(A) not less frequently than twice annually, at the
call of the chairman of the Committee; and
‘‘(B) from time to time, at the call of the Commission.
‘‘(2) NOTICE.—The chairman of the Committee shall give
the members of the Committee written notice of each meeting,
not later than 2 weeks before the date of the meeting.
‘‘(e) COMPENSATION AND TRAVEL EXPENSES.—Each member of
the Committee who is not a full-time employee of the United States
shall—
‘‘(1) be entitled to receive compensation at a rate not to
exceed the daily equivalent of the annual rate of basic pay
in effect for a position at level V of the Executive Schedule
under section 5316 of title 5, United States Code, for each
day during which the member is engaged in the actual performance of the duties of the Committee; and
‘‘(2) while away from the home or regular place of business
of the member in the performance of services for the Committee,
be allowed travel expenses, including per diem in lieu of subsistence, in the same manner as persons employed intermittently
in the Government service are allowed expenses under section
5703(b) of title 5, United States Code.
‘‘(f) STAFF.—The Commission shall make available to the Committee such staff as the chairman of the Committee determines
are necessary to carry out this section.
‘‘(g) REVIEW BY COMMISSION.—The Commission shall—
‘‘(1) review the findings and recommendations of the Committee; and
‘‘(2) each time the Committee submits a finding or recommendation to the Commission, promptly issue a public statement—
‘‘(A) assessing the finding or recommendation of the
Committee; and

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124 STAT. 1824

PUBLIC LAW 111–203—JULY 21, 2010

‘‘(B) disclosing the action, if any, the Commission
intends to take with respect to the finding or recommendation.
‘‘(h) COMMITTEE FINDINGS.—Nothing in this section shall
require the Commission to agree to or act upon any finding or
recommendation of the Committee.
‘‘(i) FEDERAL ADVISORY COMMITTEE ACT.—The Federal Advisory
Committee Act (5 U.S.C. App.) shall not apply with respect to
the Committee and its activities.
‘‘(j) AUTHORIZATION OF APPROPRIATIONS.—There is authorized
to be appropriated to the Commission such sums as are necessary
to carry out this section.’’.
SEC. 912. CLARIFICATION OF AUTHORITY OF THE COMMISSION TO
ENGAGE IN INVESTOR TESTING.

Section 19 of the Securities Act of 1933 (15 U.S.C. 77s) is
amended by adding at the end the following:
‘‘(e) EVALUATION OF RULES OR PROGRAMS.—For the purpose
of evaluating any rule or program of the Commission issued or
carried out under any provision of the securities laws, as defined
in section 3 of the Securities Exchange Act of 1934 (15 U.S.C.
78c), and the purposes of considering, proposing, adopting, or
engaging in any such rule or program or developing new rules
or programs, the Commission may—
‘‘(1) gather information from and communicate with investors or other members of the public;
‘‘(2) engage in such temporary investor testing programs
as the Commission determines are in the public interest or
would protect investors; and
‘‘(3) consult with academics and consultants, as necessary
to carry out this subsection.
‘‘(f) RULE OF CONSTRUCTION.—For purposes of the Paperwork
Reduction Act (44 U.S.C. 3501 et seq.), any action taken under
subsection (e) shall not be construed to be a collection of information.’’.
SEC. 913. STUDY AND RULEMAKING REGARDING OBLIGATIONS OF
BROKERS, DEALERS, AND INVESTMENT ADVISERS.
15 USC 78o note.

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(a) DEFINITION.—For purposes of this section, the term ‘‘retail
customer’’ means a natural person, or the legal representative of
such natural person, who—
(1) receives personalized investment advice about securities
from a broker or dealer or investment adviser; and
(2) uses such advice primarily for personal, family, or
household purposes.
(b) STUDY.—The Commission shall conduct a study to
evaluate—
(1) the effectiveness of existing legal or regulatory standards of care for brokers, dealers, investment advisers, persons
associated with brokers or dealers, and persons associated with
investment advisers for providing personalized investment
advice and recommendations about securities to retail customers imposed by the Commission and a national securities
association, and other Federal and State legal or regulatory
standards; and
(2) whether there are legal or regulatory gaps, shortcomings, or overlaps in legal or regulatory standards in the
protection of retail customers relating to the standards of care

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124 STAT. 1825

for brokers, dealers, investment advisers, persons associated
with brokers or dealers, and persons associated with investment
advisers for providing personalized investment advice about
securities to retail customers that should be addressed by rule
or statute.
(c) CONSIDERATIONS.—In conducting the study required under
subsection (b), the Commission shall consider—
(1) the effectiveness of existing legal or regulatory standards of care for brokers, dealers, investment advisers, persons
associated with brokers or dealers, and persons associated with
investment advisers for providing personalized investment
advice and recommendations about securities to retail customers imposed by the Commission and a national securities
association, and other Federal and State legal or regulatory
standards;
(2) whether there are legal or regulatory gaps, shortcomings, or overlaps in legal or regulatory standards in the
protection of retail customers relating to the standards of care
for brokers, dealers, investment advisers, persons associated
with brokers or dealers, and persons associated with investment
advisers for providing personalized investment advice about
securities to retail customers that should be addressed by rule
or statute;
(3) whether retail customers understand that there are
different standards of care applicable to brokers, dealers, investment advisers, persons associated with brokers or dealers, and
persons associated with investment advisers in the provision
of personalized investment advice about securities to retail
customers;
(4) whether the existence of different standards of care
applicable to brokers, dealers, investment advisers, persons
associated with brokers or dealers, and persons associated with
investment advisers is a source of confusion for retail customers
regarding the quality of personalized investment advice that
retail customers receive;
(5) the regulatory, examination, and enforcement resources
devoted to, and activities of, the Commission, the States, and
a national securities association to enforce the standards of
care for brokers, dealers, investment advisers, persons associated with brokers or dealers, and persons associated with
investment advisers when providing personalized investment
advice and recommendations about securities to retail customers, including—
(A) the effectiveness of the examinations of brokers,
dealers, and investment advisers in determining compliance with regulations;
(B) the frequency of the examinations; and
(C) the length of time of the examinations;
(6) the substantive differences in the regulation of brokers,
dealers, and investment advisers, when providing personalized
investment advice and recommendations about securities to
retail customers;
(7) the specific instances related to the provision of
personalized investment advice about securities in which—
(A) the regulation and oversight of investment advisers
provide greater protection to retail customers than the
regulation and oversight of brokers and dealers; and

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124 STAT. 1826

PUBLIC LAW 111–203—JULY 21, 2010
(B) the regulation and oversight of brokers and dealers
provide greater protection to retail customers than the
regulation and oversight of investment advisers;
(8) the existing legal or regulatory standards of State securities regulators and other regulators intended to protect retail
customers;
(9) the potential impact on retail customers, including the
potential impact on access of retail customers to the range
of products and services offered by brokers and dealers, of
imposing upon brokers, dealers, and persons associated with
brokers or dealers—
(A) the standard of care applied under the Investment
Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) for providing
personalized investment advice about securities to retail
customers of investment advisers, as interpreted by the
Commission and the courts; and
(B) other requirements of the Investment Advisers Act
of 1940 (15 U.S.C. 80b–1 et seq.);
(10) the potential impact of eliminating the broker and
dealer exclusion from the definition of ‘‘investment adviser’’
under section 202(a)(11)(C) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b–2(a)(11)(C)), in terms of—
(A) the impact and potential benefits and harm to
retail customers that could result from such a change,
including any potential impact on access to personalized
investment advice and recommendations about securities
to retail customers or the availability of such advice and
recommendations;
(B) the number of additional entities and individuals
that would be required to register under, or become subject
to, the Investment Advisers Act of 1940 (15 U.S.C. 80b–
1 et seq.), and the additional requirements to which brokers, dealers, and persons associated with brokers and
dealers would become subject, including—
(i) any potential additional associated person
licensing, registration, and examination requirements;
and
(ii) the additional costs, if any, to the additional
entities and individuals; and
(C) the impact on Commission and State resources
to—
(i) conduct examinations of registered investment
advisers and the representatives of registered investment advisers, including the impact on the examination cycle; and
(ii) enforce the standard of care and other
applicable requirements imposed under the Investment
Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.);
(11) the varying level of services provided by brokers,
dealers, investment advisers, persons associated with brokers
or dealers, and persons associated with investment advisers
to retail customers and the varying scope and terms of retail
customer relationships of brokers, dealers, investment advisers,
persons associated with brokers or dealers, and persons associated with investment advisers with such retail customers;
(12) the potential impact upon retail customers that could
result from potential changes in the regulatory requirements

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124 STAT. 1827

or legal standards of care affecting brokers, dealers, investment
advisers, persons associated with brokers or dealers, and persons associated with investment advisers relating to their
obligations to retail customers regarding the provision of investment advice, including any potential impact on—
(A) protection from fraud;
(B) access to personalized investment advice, and recommendations about securities to retail customers; or
(C) the availability of such advice and recommendations;
(13) the potential additional costs and expenses to—
(A) retail customers regarding and the potential impact
on the profitability of their investment decisions; and
(B) brokers, dealers, and investment advisers resulting
from potential changes in the regulatory requirements or
legal standards affecting brokers, dealers, investment
advisers, persons associated with brokers or dealers, and
persons associated with investment advisers relating to
their obligations, including duty of care, to retail customers;
and
(14) any other consideration that the Commission considers
necessary and appropriate in determining whether to conduct
a rulemaking under subsection (f).
(d) REPORT.—
(1) IN GENERAL.—Not later than 6 months after the date
of enactment of this Act, the Commission shall submit a report
on the study required under subsection (b) to—
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate; and
(B) the Committee on Financial Services of the House
of Representatives.
(2) CONTENT REQUIREMENTS.—The report required under
paragraph (1) shall describe the findings, conclusions, and recommendations of the Commission from the study required
under subsection (b), including—
(A) a description of the considerations, analysis, and
public and industry input that the Commission considered,
as required under subsection (b), to make such findings,
conclusions, and policy recommendations; and
(B) an analysis of whether any identified legal or regulatory gaps, shortcomings, or overlap in legal or regulatory
standards in the protection of retail customers relating
to the standards of care for brokers, dealers, investment
advisers, persons associated with brokers or dealers, and
persons associated with investment advisers for providing
personalized investment advice about securities to retail
customers.
(e) PUBLIC COMMENT.—The Commission shall seek and consider
public input, comments, and data in order to prepare the report
required under subsection (d).
(f) RULEMAKING.—The Commission may commence a rulemaking, as necessary or appropriate in the public interest and
for the protection of retail customers (and such other customers
as the Commission may by rule provide), to address the legal
or regulatory standards of care for brokers, dealers, investment
advisers, persons associated with brokers or dealers, and persons
associated with investment advisers for providing personalized

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15 USC 78o note.

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investment advice about securities to such retail customers. The
Commission shall consider the findings conclusions, and recommendations of the study required under subsection (b).
(g) AUTHORITY TO ESTABLISH A FIDUCIARY DUTY FOR BROKERS
AND DEALERS.—
(1) SECURITIES EXCHANGE ACT OF 1934.—Section 15 of the
Securities Exchange Act of 1934 (15 U.S.C. 78o) is amended
by adding at the end the following:
‘‘(k) STANDARD OF CONDUCT.—
‘‘(1) IN GENERAL.—Notwithstanding any other provision of
this Act or the Investment Advisers Act of 1940, the Commission may promulgate rules to provide that, with respect to
a broker or dealer, when providing personalized investment
advice about securities to a retail customer (and such other
customers as the Commission may by rule provide), the
standard of conduct for such broker or dealer with respect
to such customer shall be the same as the standard of conduct
applicable to an investment adviser under section 211 of the
Investment Advisers Act of 1940. The receipt of compensation
based on commission or other standard compensation for the
sale of securities shall not, in and of itself, be considered
a violation of such standard applied to a broker or dealer.
Nothing in this section shall require a broker or dealer or
registered representative to have a continuing duty of care
or loyalty to the customer after providing personalized investment advice about securities.
‘‘(2) DISCLOSURE OF RANGE OF PRODUCTS OFFERED.—Where
a broker or dealer sells only proprietary or other limited range
of products, as determined by the Commission, the Commission
may by rule require that such broker or dealer provide notice
to each retail customer and obtain the consent or acknowledgment of the customer. The sale of only proprietary or other
limited range of products by a broker or dealer shall not,
in and of itself, be considered a violation of the standard set
forth in paragraph (1).
‘‘(l) OTHER MATTERS.—The Commission shall—
‘‘(1) facilitate the provision of simple and clear disclosures
to investors regarding the terms of their relationships with
brokers, dealers, and investment advisers, including any material conflicts of interest; and
‘‘(2) examine and, where appropriate, promulgate rules
prohibiting or restricting certain sales practices, conflicts of
interest, and compensation schemes for brokers, dealers, and
investment advisers that the Commission deems contrary to
the public interest and the protection of investors.’’.
(2) INVESTMENT ADVISERS ACT OF 1940.—Section 211 of the
Investment Advisers Act of 1940, is further amended by adding
at the end the following new subsections:
‘‘(g) STANDARD OF CONDUCT.—
‘‘(1) IN GENERAL.—The Commission may promulgate rules
to provide that the standard of conduct for all brokers, dealers,
and investment advisers, when providing personalized investment advice about securities to retail customers (and such
other customers as the Commission may by rule provide), shall
be to act in the best interest of the customer without regard
to the financial or other interest of the broker, dealer, or investment adviser providing the advice. In accordance with such

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124 STAT. 1829

rules, any material conflicts of interest shall be disclosed and
may be consented to by the customer. Such rules shall provide
that such standard of conduct shall be no less stringent than
the standard applicable to investment advisers under section
206(1) and (2) of this Act when providing personalized investment advice about securities, except the Commission shall not
ascribe a meaning to the term ‘customer’ that would include
an investor in a private fund managed by an investment
adviser, where such private fund has entered into an advisory
contract with such adviser. The receipt of compensation based
on commission or fees shall not, in and of itself, be considered
a violation of such standard applied to a broker, dealer, or
investment adviser.
‘‘(2) RETAIL CUSTOMER DEFINED.—For purposes of this subsection, the term ‘retail customer’ means a natural person,
or the legal representative of such natural person, who—
‘‘(A) receives personalized investment advice about
securities from a broker, dealer, or investment adviser;
and
‘‘(B) uses such advice primarily for personal, family,
or household purposes.
‘‘(h) OTHER MATTERS.—The Commission shall—
‘‘(1) facilitate the provision of simple and clear disclosures
to investors regarding the terms of their relationships with
brokers, dealers, and investment advisers, including any material conflicts of interest; and
‘‘(2) examine and, where appropriate, promulgate rules
prohibiting or restricting certain sales practices, conflicts of
interest, and compensation schemes for brokers, dealers, and
investment advisers that the Commission deems contrary to
the public interest and the protection of investors.’’.
(h) HARMONIZATION OF ENFORCEMENT.—
(1) SECURITIES EXCHANGE ACT OF 1934.—Section 15 of the
Securities Exchange Act of 1934, as amended by subsection
(g)(1), is further amended by adding at the end the following
new subsection:
‘‘(m) HARMONIZATION OF ENFORCEMENT.—The enforcement
authority of the Commission with respect to violations of the
standard of conduct applicable to a broker or dealer providing
personalized investment advice about securities to a retail customer
shall include—
‘‘(1) the enforcement authority of the Commission with
respect to such violations provided under this Act; and
‘‘(2) the enforcement authority of the Commission with
respect to violations of the standard of conduct applicable to
an investment adviser under the Investment Advisers Act of
1940, including the authority to impose sanctions for such
violations, and
the Commission shall seek to prosecute and sanction violators of
the standard of conduct applicable to a broker or dealer providing
personalized investment advice about securities to a retail customer
under this Act to same extent as the Commission prosecutes and
sanctions violators of the standard of conduct applicable to an
investment advisor under the Investment Advisers Act of 1940.’’.
(2) INVESTMENT ADVISERS ACT OF 1940.—Section 211 of the
Investment Advisers Act of 1940, as amended by subsection

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(g)(2), is further amended by adding at the end the following
new subsection:
‘‘(i) HARMONIZATION OF ENFORCEMENT.—The enforcement
authority of the Commission with respect to violations of the
standard of conduct applicable to an investment adviser shall
include—
‘‘(1) the enforcement authority of the Commission with
respect to such violations provided under this Act; and
‘‘(2) the enforcement authority of the Commission with
respect to violations of the standard of conduct applicable to
a broker or dealer providing personalized investment advice
about securities to a retail customer under the Securities
Exchange Act of 1934, including the authority to impose sanctions for such violations, and
the Commission shall seek to prosecute and sanction violators of
the standard of conduct applicable to an investment adviser under
this Act to same extent as the Commission prosecutes and sanctions
violators of the standard of conduct applicable to a broker or dealer
providing personalized investment advice about securities to a retail
customer under the Securities Exchange Act of 1934.’’.
15 USC 80b–11
note.
Review.

Time period.

SEC. 914. STUDY ON ENHANCING INVESTMENT ADVISER EXAMINATIONS.

(a) STUDY REQUIRED.—
(1) IN GENERAL.—The Commission shall review and analyze
the need for enhanced examination and enforcement resources
for investment advisers.
(2) AREAS OF CONSIDERATION.—The study required by this
subsection shall examine—
(A) the number and frequency of examinations of
investment advisers by the Commission over the 5 years
preceding the date of the enactment of this subtitle;
(B) the extent to which having Congress authorize
the Commission to designate one or more self-regulatory
organizations to augment the Commission’s efforts in overseeing investment advisers would improve the frequency
of examinations of investment advisers; and
(C) current and potential approaches to examining the
investment advisory activities of dually registered brokerdealers and investment advisers or affiliated broker-dealers
and investment advisers.
(b) REPORT REQUIRED.—The Commission shall report its
findings to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate, not later than 180 days after the
date of enactment of this subtitle, and shall use such findings
to revise its rules and regulations, as necessary. The report shall
include a discussion of regulatory or legislative steps that are
recommended or that may be necessary to address concerns identified in the study.

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SEC. 915. OFFICE OF THE INVESTOR ADVOCATE.

Section 4 of the Securities Exchange Act of 1934 (15 U.S.C.
78d) is amended by adding at the end the following:
‘‘(g) OFFICE OF THE INVESTOR ADVOCATE.—
‘‘(1) OFFICE ESTABLISHED.—There is established within the
Commission the Office of the Investor Advocate (in this subsection referred to as the ‘Office’).

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124 STAT. 1831

‘‘(2) INVESTOR ADVOCATE.—
‘‘(A) IN GENERAL.—The head of the Office shall be
the Investor Advocate, who shall—
‘‘(i) report directly to the Chairman; and
‘‘(ii) be appointed by the Chairman, in consultation
with the Commission, from among individuals having
experience in advocating for the interests of investors
in securities and investor protection issues, from the
perspective of investors.
‘‘(B) COMPENSATION.—The annual rate of pay for the
Investor Advocate shall be equal to the highest rate of
annual pay for other senior executives who report to the
Chairman of the Commission.
‘‘(C) LIMITATION ON SERVICE.—An individual who
serves as the Investor Advocate may not be employed by
the Commission—
‘‘(i) during the 2-year period ending on the date
of appointment as Investor Advocate; or
‘‘(ii) during the 5-year period beginning on the
date on which the person ceases to serve as the
Investor Advocate.
‘‘(3) STAFF OF OFFICE.—The Investor Advocate, after consultation with the Chairman of the Commission, may retain
or employ independent counsel, research staff, and service staff,
as the Investor Advocate deems necessary to carry out the
functions, powers, and duties of the Office.
‘‘(4) FUNCTIONS OF THE INVESTOR ADVOCATE.—The Investor
Advocate shall—
‘‘(A) assist retail investors in resolving significant problems such investors may have with the Commission or
with self-regulatory organizations;
‘‘(B) identify areas in which investors would benefit
from changes in the regulations of the Commission or the
rules of self-regulatory organizations;
‘‘(C) identify problems that investors have with financial service providers and investment products;
‘‘(D) analyze the potential impact on investors of—
‘‘(i) proposed regulations of the Commission; and
‘‘(ii) proposed rules of self-regulatory organizations
registered under this title; and
‘‘(E) to the extent practicable, propose to the Commission changes in the regulations or orders of the Commission
and to Congress any legislative, administrative, or personnel changes that may be appropriate to mitigate problems identified under this paragraph and to promote the
interests of investors.
‘‘(5) ACCESS TO DOCUMENTS.—The Commission shall ensure
that the Investor Advocate has full access to the documents
of the Commission and any self-regulatory organization, as
necessary to carry out the functions of the Office.
‘‘(6) ANNUAL REPORTS.—
‘‘(A) REPORT ON OBJECTIVES.—
‘‘(i) IN GENERAL.—Not later than June 30 of each
year after 2010, the Investor Advocate shall submit
to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial
Services of the House of Representatives a report on

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124 STAT. 1832

the objectives of the Investor Advocate for the following
fiscal year.
‘‘(ii) CONTENTS.—Each report required under
clause (i) shall contain full and substantive analysis
and explanation.
‘‘(B) REPORT ON ACTIVITIES.—
‘‘(i) IN GENERAL.—Not later than December 31 of
each year after 2010, the Investor Advocate shall
submit to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a
report on the activities of the Investor Advocate during
the immediately preceding fiscal year.
‘‘(ii) CONTENTS.—Each report required under
clause (i) shall include—
‘‘(I) appropriate statistical information and full
and substantive analysis;
‘‘(II) information on steps that the Investor
Advocate has taken during the reporting period
to improve investor services and the responsiveness of the Commission and self-regulatory
organizations to investor concerns;
‘‘(III) a summary of the most serious problems
encountered by investors during the reporting
period;
‘‘(IV) an inventory of the items described in
subclause (III) that includes—
‘‘(aa) identification of any action taken by
the Commission or the self-regulatory
organization and the result of such action;
‘‘(bb) the length of time that each item
has remained on such inventory; and
‘‘(cc) for items on which no action has
been taken, the reasons for inaction, and an
identification of any official who is responsible
for such action;
‘‘(V) recommendations for such administrative
and legislative actions as may be appropriate to
resolve problems encountered by investors; and
‘‘(VI) any other information, as determined
appropriate by the Investor Advocate.
‘‘(iii) INDEPENDENCE.—Each report required under
this paragraph shall be provided directly to the
Committees listed in clause (i) without any prior review
or comment from the Commission, any commissioner,
any other officer or employee of the Commission, or
the Office of Management and Budget.
‘‘(iv) CONFIDENTIALITY.—No report required under
clause (i) may contain confidential information.
‘‘(7) REGULATIONS.—The Commission shall, by regulation,
establish procedures requiring a formal response to all recommendations submitted to the Commission by the Investor
Advocate, not later than 3 months after the date of such submission.’’.

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Procedures.
Deadline.

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SEC. 916. STREAMLINING OF FILING PROCEDURES FOR SELF-REGULATORY ORGANIZATIONS.

(a) FILING PROCEDURES.—Section 19(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by striking
paragraph (2) (including the undesignated matter immediately following subparagraph (B)) and inserting the following:
‘‘(2) APPROVAL PROCESS.—
‘‘(A) APPROVAL PROCESS ESTABLISHED.—
‘‘(i) IN GENERAL.—Except as provided in clause
(ii), not later than 45 days after the date of publication
of a proposed rule change under paragraph (1), the
Commission shall—
‘‘(I) by order, approve or disapprove the proposed rule change; or
‘‘(II) institute proceedings under subparagraph
(B) to determine whether the proposed rule change
should be disapproved.
‘‘(ii) EXTENSION OF TIME PERIOD.—The Commission
may extend the period established under clause (i)
by not more than an additional 45 days, if—
‘‘(I) the Commission determines that a longer
period is appropriate and publishes the reasons
for such determination; or
‘‘(II) the self-regulatory organization that filed
the proposed rule change consents to the longer
period.
‘‘(B) PROCEEDINGS.—
‘‘(i) NOTICE AND HEARING.—If the Commission does
not approve or disapprove a proposed rule change
under subparagraph (A), the Commission shall provide
to the self-regulatory organization that filed the proposed rule change—
‘‘(I) notice of the grounds for disapproval under
consideration; and
‘‘(II) opportunity for hearing, to be concluded
not later than 180 days after the date of publication of notice of the filing of the proposed rule
change.
‘‘(ii) ORDER OF APPROVAL OR DISAPPROVAL.—
‘‘(I) IN GENERAL.—Except as provided in subclause (II), not later than 180 days after the date
of publication under paragraph (1), the Commission shall issue an order approving or disapproving
the proposed rule change.
‘‘(II) EXTENSION OF TIME PERIOD.—The
Commission may extend the period for issuance
under clause (I) by not more than 60 days, if—
‘‘(aa) the Commission determines that a
longer period is appropriate and publishes the
reasons for such determination; or
‘‘(bb) the self-regulatory organization that
filed the proposed rule change consents to the
longer period.
‘‘(C) STANDARDS FOR APPROVAL AND DISAPPROVAL.—
‘‘(i) APPROVAL.—The Commission shall approve a
proposed rule change of a self-regulatory organization
if it finds that such proposed rule change is consistent

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124 STAT. 1834

with the requirements of this title and the rules and
regulations issued under this title that are applicable
to such organization.
‘‘(ii) DISAPPROVAL.—The Commission shall disapprove a proposed rule change of a self-regulatory
organization if it does not make a finding described
in clause (i).
‘‘(iii) TIME FOR APPROVAL.—The Commission may
not approve a proposed rule change earlier than 30
days after the date of publication under paragraph
(1), unless the Commission finds good cause for so
doing and publishes the reason for the finding.
‘‘(D) RESULT OF FAILURE TO INSTITUTE OR CONCLUDE
PROCEEDINGS.—A proposed rule change shall be deemed
to have been approved by the Commission, if—
‘‘(i) the Commission does not approve or disapprove
the proposed rule change or begin proceedings under
subparagraph (B) within the period described in
subparagraph (A); or
‘‘(ii) the Commission does not issue an order
approving or disapproving the proposed rule change
under subparagraph (B) within the period described
in subparagraph (B)(ii).
‘‘(E) PUBLICATION DATE BASED ON FEDERAL REGISTER
PUBLISHING.—For purposes of this paragraph, if, after filing
a proposed rule change with the Commission pursuant
to paragraph (1), a self-regulatory organization publishes
a notice of the filing of such proposed rule change, together
with the substantive terms of such proposed rule change,
on a publicly accessible website, the Commission shall
thereafter send the notice to the Federal Register for
publication thereof under paragraph (1) within 15 days
of the date on which such website publication is made.
If the Commission fails to send the notice for publication
thereof within such 15 day period, then the date of publication shall be deemed to be the date on which such website
publication was made.
‘‘(F) RULEMAKING.—
‘‘(i) IN GENERAL.—Not later than 180 days after
the date of enactment of the Investor Protection and
Securities Reform Act of 2010, after consultation with
other regulatory agencies, the Commission shall
promulgate rules setting forth the procedural requirements of the proceedings required under this paragraph.
‘‘(ii) NOTICE AND COMMENT NOT REQUIRED.—The
rules promulgated by the Commission under clause
(i) are not required to include republication of proposed
rule changes or solicitation of public comment.’’.
(b) CLARIFICATION OF FILING DATE.—
(1) RULE OF CONSTRUCTION.—Section 19(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by adding
at the end the following:
‘‘(10) RULE OF CONSTRUCTION RELATING TO FILING DATE
OF PROPOSED RULE CHANGES.—
‘‘(A) IN GENERAL.—For purposes of this subsection, the
date of filing of a proposed rule change shall be deemed

Publication.

Notice.
Deadline.
Web posting.

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Deadline.
Procedures.

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124 STAT. 1835

to be the date on which the Commission receives the proposed rule change.
‘‘(B) EXCEPTION.—A proposed rule change has not been
received by the Commission for purposes of subparagraph
(A) if, not later than 7 business days after the date of
receipt by the Commission, the Commission notifies the
self-regulatory organization that such proposed rule change
does not comply with the rules of the Commission relating
to the required form of a proposed rule change, except
that if the Commission determines that the proposed rule
change is unusually lengthy and is complex or raises novel
regulatory issues, the Commission shall inform the selfregulatory organization of such determination not later
than 7 business days after the date of receipt by the
Commission and, for the purposes of subparagraph (A),
a proposed rule change has not been received by the
Commission, if, not later than 21 days after the date of
receipt by the Commission, the Commission notifies the
self-regulatory organization that such proposed rule change
does not comply with the rules of the Commission relating
to the required form of a proposed rule change.’’.
(2) PUBLICATION.—Section 19(b)(1) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)(1)) is amended by
striking ‘‘upon’’ and inserting ‘‘as soon as practicable after
the date of’’.
(c) EFFECTIVE DATE OF PROPOSED RULES.—Section 19(b)(3) of
the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(3)) is
amended—
(1) in subparagraph (A)—
(A) by striking ‘‘may take effect’’ and inserting ‘‘shall
take effect’’; and
(B) by inserting ‘‘on any person, whether or not the
person is a member of the self-regulatory organization’’
after ‘‘charge imposed by the self-regulatory organization’’;
and
(2) in subparagraph (C)—
(A) by amending the second sentence to read as follows:
‘‘At any time within the 60-day period beginning on the
date of filing of such a proposed rule change in accordance
with the provisions of paragraph (1), the Commission summarily may temporarily suspend the change in the rules
of the self-regulatory organization made thereby, if it
appears to the Commission that such action is necessary
or appropriate in the public interest, for the protection
of investors, or otherwise in furtherance of the purposes
of this title.’’;
(B) by inserting after the second sentence the following:
‘‘If the Commission takes such action, the Commission
shall institute proceedings under paragraph (2)(B) to determine whether the proposed rule should be approved or
disapproved.’’; and
(C) in the third sentence, by striking ‘‘the preceding
sentence’’ and inserting ‘‘this subparagraph’’.
(d) CONFORMING CHANGE.—Section 19(b)(4)(D) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)(4)(D)) is amended to read
as follows:

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PUBLIC LAW 111–203—JULY 21, 2010
‘‘(D)(i) The Commission shall order the temporary
suspension of any change in the rules of a clearing agency
made by a proposed rule change that has taken effect
under paragraph (3), if the appropriate regulatory agency
for the clearing agency notifies the Commission not later
than 30 days after the date on which the proposed rule
change was filed of—
‘‘(I) the determination by the appropriate regulatory agency that the rules of such clearing agency,
as so changed, may be inconsistent with the safeguarding of securities or funds in the custody or control
of such clearing agency or for which it is responsible;
and
‘‘(II) the reasons for the determination described
in subclause (I).
‘‘(ii) If the Commission takes action under clause (i),
the Commission shall institute proceedings under paragraph (2)(B) to determine if the proposed rule change
should be approved or disapproved.’’.

Notification.
Deadline.

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SEC. 917. STUDY REGARDING FINANCIAL LITERACY AMONG INVESTORS.

(a) IN GENERAL.—The Commission shall conduct a study to
identify—
(1) the existing level of financial literacy among retail
investors, including subgroups of investors identified by the
Commission;
(2) methods to improve the timing, content, and format
of disclosures to investors with respect to financial intermediaries, investment products, and investment services;
(3) the most useful and understandable relevant information that retail investors need to make informed financial
decisions before engaging a financial intermediary or purchasing an investment product or service that is typically sold
to retail investors, including shares of open-end companies,
as that term is defined in section 5 of the Investment Company
Act of 1940 (15 U.S.C. 80a–5) that are registered under section
8 of that Act;
(4) methods to increase the transparency of expenses and
conflicts of interests in transactions involving investment services and products, including shares of open-end companies
described in paragraph (3);
(5) the most effective existing private and public efforts
to educate investors; and
(6) in consultation with the Financial Literacy and Education Commission, a strategy (including, to the extent practicable, measurable goals and objectives) to increase the financial literacy of investors in order to bring about a positive
change in investor behavior.
(b) REPORT.—Not later than 2 years after the date of enactment
of this Act, the Commission shall submit a report on the study
required under subsection (a) to—
(1) the Committee on Banking, Housing, and Urban Affairs
of the Senate; and
(2) the Committee on Financial Services of the House of
Representatives.

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124 STAT. 1837

SEC. 918. STUDY REGARDING MUTUAL FUND ADVERTISING.

(a) IN GENERAL.—The Comptroller General of the United States
shall conduct a study on mutual fund advertising to identify—
(1) existing and proposed regulatory requirements for openend investment company advertisements;
(2) current marketing practices for the sale of open-end
investment company shares, including the use of past performance data, funds that have merged, and incubator funds;
(3) the impact of such advertising on consumers; and
(4) recommendations to improve investor protections in
mutual fund advertising and additional information necessary
to ensure that investors can make informed financial decisions
when purchasing shares.
(b) REPORT.—Not later than 18 months after the date of enactment of this Act, the Comptroller General of the United States
shall submit a report on the results of the study conducted under
subsection (a) to—
(1) the Committee on Banking, Housing, and Urban Affairs
of the United States Senate; and
(2) the Committee on Financial Services of the House of
Representatives.
SEC. 919. CLARIFICATION OF COMMISSION AUTHORITY TO REQUIRE
INVESTOR DISCLOSURES BEFORE PURCHASE OF INVESTMENT PRODUCTS AND SERVICES.

Section 15 of the Securities Exchange Act of 1934 (15 U.S.C.
78o) is amended by adding at the end the following:
‘‘(n) DISCLOSURES TO RETAIL INVESTORS.—
‘‘(1) IN GENERAL.—Notwithstanding any other provision of
the securities laws, the Commission may issue rules designating
documents or information that shall be provided by a broker
or dealer to a retail investor before the purchase of an investment product or service by the retail investor.
‘‘(2) CONSIDERATIONS.—In developing any rules under paragraph (1), the Commission shall consider whether the rules
will promote investor protection, efficiency, competition, and
capital formation.
‘‘(3) FORM AND CONTENTS OF DOCUMENTS AND INFORMATION.—Any documents or information designated under a rule
promulgated under paragraph (1) shall—
‘‘(A) be in a summary format; and
‘‘(B) contain clear and concise information about—
‘‘(i) investment objectives, strategies, costs, and
risks; and
‘‘(ii) any compensation or other financial incentive
received by a broker, dealer, or other intermediary
in connection with the purchase of retail investment
products.’’.

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SEC. 919A. STUDY ON CONFLICTS OF INTEREST.

(a) IN GENERAL.—The Comptroller General of the United States
shall conduct a study—
(1) to identify and examine potential conflicts of interest
that exist between the staffs of the investment banking and
equity and fixed income securities analyst functions within
the same firm; and

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(2) to make recommendations to Congress designed to protect investors in light of such conflicts.
(b) CONSIDERATIONS.—In conducting the study under subsection
(a), the Comptroller General shall—
(1) consider—
(A) the potential for investor harm resulting from conflicts, including consideration of the forms of misconduct
engaged in by the several securities firms and individuals
that entered into the Global Analyst Research Settlements
in 2003 (also known as the ‘‘Global Settlement’’);
(B) the nature and benefits of the undertakings to
which those firms agreed in enforcement proceedings,
including firewalls between research and investment
banking, separate reporting lines, dedicated legal and
compliance staffs, allocation of budget, physical separation,
compensation, employee performance evaluations, coverage
decisions, limitations on soliciting investment banking business, disclosures, transparency, and other measures;
(C) whether any such undertakings should be codified
and applied permanently to securities firms, or whether
the Commission should adopt rules applying any such
undertakings to securities firms; and
(D) whether to recommend regulatory or legislative
measures designed to mitigate possible adverse consequences to investors arising from the conflicts of interest
or to enhance investor protection or confidence in the integrity of the securities markets; and
(2) consult with State attorneys general, State securities
officials, the Commission, the Financial Industry Regulatory
Authority (‘‘FINRA’’), NYSE Regulation, investor advocates,
brokers, dealers, retail investors, institutional investors, and
academics.
(c) REPORT.—The Comptroller General shall submit a report
on the results of the study required by this section to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives,
not later than 18 months after the date of enactment of this Act.
15 USC 80b–10
note.

SEC. 919B. STUDY ON IMPROVED INVESTOR ACCESS TO INFORMATION
ON INVESTMENT ADVISERS AND BROKER-DEALERS.

(a) STUDY.—
(1) IN GENERAL.—Not later than 6 months after the date
of enactment of this Act, the Commission shall complete a
study, including recommendations, of ways to improve the
access of investors to registration information (including disciplinary actions, regulatory, judicial, and arbitration proceedings, and other information) about registered and previously registered investment advisers, associated persons of
investment advisers, brokers and dealers and their associated
persons on the existing Central Registration Depository and
Investment Adviser Registration Depository systems, as well
as identify additional information that should be made publicly
available.
(2) CONTENTS.—The study required by subsection (a) shall
include an analysis of the advantages and disadvantages of
further centralizing access to the information contained in the
2 systems, including—

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124 STAT. 1839

(A) identification of those data pertinent to investors;
and
(B) the identification of the method and format for
displaying and publishing such data to enhance accessibility by and utility to investors.
(b) IMPLEMENTATION.—Not later than 18 months after the date
of completion of the study required by subsection (a), the Commission shall implement any recommendations of the study.

Deadlines.

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SEC. 919C. STUDY ON FINANCIAL PLANNERS AND THE USE OF FINANCIAL DESIGNATIONS.

(a) IN GENERAL.—The Comptroller General of the United States
shall conduct a study to evaluate—
(1) the effectiveness of State and Federal regulations to
protect investors and other consumers from individuals who
hold themselves out as financial planners through the use
of misleading titles, designations, or marketing materials;
(2) current State and Federal oversight structure and regulations for financial planners; and
(3) legal or regulatory gaps in the regulation of financial
planners and other individuals who provide or offer to provide
financial planning services to consumers.
(b) CONSIDERATIONS.—In conducting the study required under
subsection (a), the Comptroller General shall consider—
(1) the role of financial planners in providing advice
regarding the management of financial resources, including
investment planning, income tax planning, education planning,
retirement planning, estate planning, and risk management;
(2) whether current regulations at the State and Federal
level provide adequate ethical and professional standards for
financial planners;
(3) the possible risk posed to investors and other consumers
by individuals who hold themselves out as financial planners
or as otherwise providing financial planning services in connection with the sale of financial products, including insurance
and securities;
(4) the possible risk posed to investors and other consumers
by individuals who otherwise use titles, designations, or marketing materials in a misleading way in connection with the
delivery of financial advice;
(6) the ability of investors and other consumers to understand licensing requirements and standards of care that apply
to individuals who hold themselves out as financial planners
or as otherwise providing financial planning services;
(7) the possible benefits to investors and other consumers
of regulation and professional oversight of financial planners;
and
(8) any other consideration that the Comptroller General
deems necessary or appropriate to effectively execute the study
required under subsection (a).
(c) RECOMMENDATIONS.—In providing recommendations for the
appropriate regulation of financial planners and other individuals
who provide or offer to provide financial planning services, in order
to protect investors and other consumers of financial planning services, the Comptroller General shall consider—

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PUBLIC LAW 111–203—JULY 21, 2010
(1) the appropriate structure for regulation of financial
planners and individuals providing financial planning services;
and
(2) the appropriate scope of the regulations needed to protect investors and other consumers, including but not limited
to the need to establish competency standards, practice standards, ethical guidelines, disciplinary authority, and transparency to investors and other consumers.
(d) REPORT.—
(1) IN GENERAL.—Not later than 180 days after the date
of enactment of this Act, the Comptroller General shall submit
a report on the study required under subsection (a) to—
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate;
(B) the Special Committee on Aging of the Senate;
and
(C) the Committee on Financial Services of the House
of Representatives.
(2) CONTENT REQUIREMENTS.—The report required under
paragraph (1) shall describe the findings and determinations
made by the Comptroller General in carrying out the study
required under subsection (a), including a description of the
considerations, analysis, and government, public, industry, nonprofit and consumer input that the Comptroller General considered to make such findings, conclusions, and legislative, regulatory, or other recommendations.

15 USC 78d.

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SEC. 919D. OMBUDSMAN.

Section 4(g) of the Securities Exchange Act of 1934, as added
by section 914, is amended by adding at the end the following:
‘‘(8) OMBUDSMAN.—
‘‘(A) APPOINTMENT.—Not later than 180 days after the
date on which the first Investor Advocate is appointed
under paragraph (2)(A)(i), the Investor Advocate shall
appoint an Ombudsman, who shall report directly to the
Investor Advocate.
‘‘(B) DUTIES.—The Ombudsman appointed under
subparagraph (A) shall—
‘‘(i) act as a liaison between the Commission and
any retail investor in resolving problems that retail
investors may have with the Commission or with selfregulatory organizations;
‘‘(ii) review and make recommendations regarding
policies and procedures to encourage persons to present
questions to the Investor Advocate regarding compliance with the securities laws; and
‘‘(iii) establish safeguards to maintain the confidentiality of communications between the persons
described in clause (ii) and the Ombudsman.
‘‘(C) LIMITATION.—In carrying out the duties of the
Ombudsman under subparagraph (B), the Ombudsman
shall utilize personnel of the Commission to the extent
practicable. Nothing in this paragraph shall be construed
as replacing, altering, or diminishing the activities of any
ombudsman or similar office of any other agency.
‘‘(D) REPORT.—The Ombudsman shall submit a semiannual report to the Investor Advocate that describes the

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124 STAT. 1841

activities and evaluates the effectiveness of the Ombudsman during the preceding year. The Investor Advocate
shall include the reports required under this section in
the reports required to be submitted by the Inspector Advocate under paragraph (6).’’.

Subtitle B—Increasing Regulatory
Enforcement and Remedies
SEC.

921.

AUTHORITY TO
ARBITRATION.

RESTRICT

MANDATORY

PRE-DISPUTE

(a) AMENDMENT TO SECURITIES EXCHANGE ACT OF 1934.—Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o),
as amended by this title, is further amended by adding at the
end the following new subsection:
‘‘(o) AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRATION.—The Commission, by rule, may prohibit, or impose conditions
or limitations on the use of, agreements that require customers
or clients of any broker, dealer, or municipal securities dealer
to arbitrate any future dispute between them arising under the
Federal securities laws, the rules and regulations thereunder, or
the rules of a self-regulatory organization if it finds that such
prohibition, imposition of conditions, or limitations are in the public
interest and for the protection of investors.’’.
(b) AMENDMENT TO INVESTMENT ADVISERS ACT OF 1940.—Section 205 of the Investment Advisers Act of 1940 (15 U.S.C. 80b–
5) is amended by adding at the end the following new subsection:
‘‘(f) AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRATION.—The Commission, by rule, may prohibit, or impose conditions
or limitations on the use of, agreements that require customers
or clients of any investment adviser to arbitrate any future dispute
between them arising under the Federal securities laws, the rules
and regulations thereunder, or the rules of a self-regulatory
organization if it finds that such prohibition, imposition of conditions, or limitations are in the public interest and for the protection
of investors.’’.
SEC. 922. WHISTLEBLOWER PROTECTION.

(a) IN GENERAL.—The Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) is amended by inserting after section 21E
the following:

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‘‘SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND PROTECTION.

15 USC 78u–6.

‘‘(a) DEFINITIONS.—In this section the following definitions shall
apply:
‘‘(1) COVERED JUDICIAL OR ADMINISTRATIVE ACTION.—The
term ‘covered judicial or administrative action’ means any
judicial or administrative action brought by the Commission
under the securities laws that results in monetary sanctions
exceeding $1,000,000.
‘‘(2) FUND.—The term ‘Fund’ means the Securities and
Exchange Commission Investor Protection Fund.
‘‘(3) ORIGINAL INFORMATION.—The term ‘original information’ means information that—

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‘‘(A) is derived from the independent knowledge or
analysis of a whistleblower;
‘‘(B) is not known to the Commission from any other
source, unless the whistleblower is the original source of
the information; and
‘‘(C) is not exclusively derived from an allegation made
in a judicial or administrative hearing, in a governmental
report, hearing, audit, or investigation, or from the news
media, unless the whistleblower is a source of the information.
‘‘(4) MONETARY SANCTIONS.—The term ‘monetary sanctions’,
when used with respect to any judicial or administrative action,
means—
‘‘(A) any monies, including penalties, disgorgement,
and interest, ordered to be paid; and
‘‘(B) any monies deposited into a disgorgement fund
or other fund pursuant to section 308(b) of the SarbanesOxley Act of 2002 (15 U.S.C. 7246(b)), as a result of such
action or any settlement of such action.
‘‘(5) RELATED ACTION.—The term ‘related action’, when used
with respect to any judicial or administrative action brought
by the Commission under the securities laws, means any
judicial or administrative action brought by an entity described
in subclauses (I) through (IV) of subsection (h)(2)(D)(i) that
is based upon the original information provided by a whistleblower pursuant to subsection (a) that led to the successful
enforcement of the Commission action.
‘‘(6) WHISTLEBLOWER.—The term ‘whistleblower’ means any
individual who provides, or 2 or more individuals acting jointly
who provide, information relating to a violation of the securities
laws to the Commission, in a manner established, by rule
or regulation, by the Commission.
‘‘(b) AWARDS.—
‘‘(1) IN GENERAL.—In any covered judicial or administrative
action, or related action, the Commission, under regulations
prescribed by the Commission and subject to subsection (c),
shall pay an award or awards to 1 or more whistleblowers
who voluntarily provided original information to the Commission that led to the successful enforcement of the covered
judicial or administrative action, or related action, in an aggregate amount equal to—
‘‘(A) not less than 10 percent, in total, of what has
been collected of the monetary sanctions imposed in the
action or related actions; and
‘‘(B) not more than 30 percent, in total, of what has
been collected of the monetary sanctions imposed in the
action or related actions.
‘‘(2) PAYMENT OF AWARDS.—Any amount paid under paragraph (1) shall be paid from the Fund.
‘‘(c) DETERMINATION OF AMOUNT OF AWARD; DENIAL OF
AWARD.—
‘‘(1) DETERMINATION OF AMOUNT OF AWARD.—
‘‘(A) DISCRETION.—The determination of the amount
of an award made under subsection (b) shall be in the
discretion of the Commission.
‘‘(B) CRITERIA.—In determining the amount of an
award made under subsection (b), the Commission—

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‘‘(i) shall take into consideration—
‘‘(I) the significance of the information provided by the whistleblower to the success of the
covered judicial or administrative action;
‘‘(II) the degree of assistance provided by the
whistleblower and any legal representative of the
whistleblower in a covered judicial or administrative action;
‘‘(III) the programmatic interest of the
Commission in deterring violations of the securities laws by making awards to whistleblowers who
provide information that lead to the successful
enforcement of such laws; and
‘‘(IV) such additional relevant factors as the
Commission may establish by rule or regulation;
and
‘‘(ii) shall not take into consideration the balance
of the Fund.
‘‘(2) DENIAL OF AWARD.—No award under subsection (b)
shall be made—
‘‘(A) to any whistleblower who is, or was at the time
the whistleblower acquired the original information submitted to the Commission, a member, officer, or employee
of—
‘‘(i) an appropriate regulatory agency;
‘‘(ii) the Department of Justice;
‘‘(iii) a self-regulatory organization;
‘‘(iv) the Public Company Accounting Oversight
Board; or
‘‘(v) a law enforcement organization;
‘‘(B) to any whistleblower who is convicted of a criminal
violation related to the judicial or administrative action
for which the whistleblower otherwise could receive an
award under this section;
‘‘(C) to any whistleblower who gains the information
through the performance of an audit of financial statements
required under the securities laws and for whom such
submission would be contrary to the requirements of section
10A of the Securities Exchange Act of 1934 (15 U.S.C.
78j–1); or
‘‘(D) to any whistleblower who fails to submit information to the Commission in such form as the Commission
may, by rule, require.
‘‘(d) REPRESENTATION.—
‘‘(1) PERMITTED REPRESENTATION.—Any whistleblower who
makes a claim for an award under subsection (b) may be
represented by counsel.
‘‘(2) REQUIRED REPRESENTATION.—
‘‘(A) IN GENERAL.—Any whistleblower who anonymously makes a claim for an award under subsection (b)
shall be represented by counsel if the whistleblower anonymously submits the information upon which the claim is
based.
‘‘(B) DISCLOSURE OF IDENTITY.—Prior to the payment
of an award, a whistleblower shall disclose the identity
of the whistleblower and provide such other information

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124 STAT. 1844

Determination.
Deadline.

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PUBLIC LAW 111–203—JULY 21, 2010

as the Commission may require, directly or through counsel
for the whistleblower.
‘‘(e) NO CONTRACT NECESSARY.—No contract with the Commission is necessary for any whistleblower to receive an award under
subsection (b), unless otherwise required by the Commission by
rule or regulation.
‘‘(f) APPEALS.—Any determination made under this section,
including whether, to whom, or in what amount to make awards,
shall be in the discretion of the Commission. Any such determination, except the determination of the amount of an award if the
award was made in accordance with subsection (b), may be appealed
to the appropriate court of appeals of the United States not more
than 30 days after the determination is issued by the Commission.
The court shall review the determination made by the Commission
in accordance with section 706 of title 5, United States Code.
‘‘(g) INVESTOR PROTECTION FUND.—
‘‘(1) FUND ESTABLISHED.—There is established in the
Treasury of the United States a fund to be known as the
‘Securities and Exchange Commission Investor Protection
Fund’.
‘‘(2) USE OF FUND.—The Fund shall be available to the
Commission, without further appropriation or fiscal year limitation, for—
‘‘(A) paying awards to whistleblowers as provided in
subsection (b); and
‘‘(B) funding the activities of the Inspector General
of the Commission under section 4(i).
‘‘(3) DEPOSITS AND CREDITS.—
‘‘(A) IN GENERAL.—There shall be deposited into or
credited to the Fund an amount equal to—
‘‘(i) any monetary sanction collected by the
Commission in any judicial or administrative action
brought by the Commission under the securities laws
that is not added to a disgorgement fund or other
fund under section 308 of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7246) or otherwise distributed to victims of a violation of the securities laws, or the rules
and regulations thereunder, underlying such action,
unless the balance of the Fund at the time the monetary sanction is collected exceeds $300,000,000;
‘‘(ii) any monetary sanction added to a
disgorgement fund or other fund under section 308
of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246)
that is not distributed to the victims for whom the
Fund was established, unless the balance of the
disgorgement fund at the time the determination is
made not to distribute the monetary sanction to such
victims exceeds $200,000,000; and
‘‘(iii) all income from investments made under
paragraph (4).
‘‘(B) ADDITIONAL AMOUNTS.—If the amounts deposited
into or credited to the Fund under subparagraph (A) are
not sufficient to satisfy an award made under subsection
(b), there shall be deposited into or credited to the Fund
an amount equal to the unsatisfied portion of the award
from any monetary sanction collected by the Commission

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in the covered judicial or administrative action on which
the award is based.
‘‘(4) INVESTMENTS.—
‘‘(A) AMOUNTS IN FUND MAY BE INVESTED.—The
Commission may request the Secretary of the Treasury
to invest the portion of the Fund that is not, in the discretion of the Commission, required to meet the current needs
of the Fund.
‘‘(B) ELIGIBLE INVESTMENTS.—Investments shall be
made by the Secretary of the Treasury in obligations of
the United States or obligations that are guaranteed as
to principal and interest by the United States, with maturities suitable to the needs of the Fund as determined
by the Commission on the record.
‘‘(C) INTEREST AND PROCEEDS CREDITED.—The interest
on, and the proceeds from the sale or redemption of, any
obligations held in the Fund shall be credited to the Fund.
‘‘(5) REPORTS TO CONGRESS.—Not later than October 30
of each fiscal year beginning after the date of enactment of
this subsection, the Commission shall submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate, and
the Committee on Financial Services of the House of Representatives a report on—
‘‘(A) the whistleblower award program, established
under this section, including—
‘‘(i) a description of the number of awards granted;
and
‘‘(ii) the types of cases in which awards were
granted during the preceding fiscal year;
‘‘(B) the balance of the Fund at the beginning of the
preceding fiscal year;
‘‘(C) the amounts deposited into or credited to the
Fund during the preceding fiscal year;
‘‘(D) the amount of earnings on investments made
under paragraph (4) during the preceding fiscal year;
‘‘(E) the amount paid from the Fund during the preceding fiscal year to whistleblowers pursuant to subsection
(b);
‘‘(F) the balance of the Fund at the end of the preceding
fiscal year; and
‘‘(G) a complete set of audited financial statements,
including—
‘‘(i) a balance sheet;
‘‘(ii) income statement; and
‘‘(iii) cash flow analysis.
‘‘(h) PROTECTION OF WHISTLEBLOWERS.—
‘‘(1) PROHIBITION AGAINST RETALIATION.—
‘‘(A) IN GENERAL.—No employer may discharge,
demote, suspend, threaten, harass, directly or indirectly,
or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because
of any lawful act done by the whistleblower—
‘‘(i) in providing information to the Commission
in accordance with this section;
‘‘(ii) in initiating, testifying in, or assisting in any
investigation or judicial or administrative action of

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the Commission based upon or related to such information; or
‘‘(iii) in making disclosures that are required or
protected under the Sarbanes-Oxley Act of 2002 (15
U.S.C. 7201 et seq.), the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.), including section 10A(m)
of such Act (15 U.S.C. 78f(m)), section 1513(e) of title
18, United States Code, and any other law, rule, or
regulation subject to the jurisdiction of the Commission.
‘‘(B) ENFORCEMENT.—
‘‘(i) CAUSE OF ACTION.—An individual who alleges
discharge or other discrimination in violation of
subparagraph (A) may bring an action under this subsection in the appropriate district court of the United
States for the relief provided in subparagraph (C).
‘‘(ii) SUBPOENAS.—A subpoena requiring the
attendance of a witness at a trial or hearing conducted
under this section may be served at any place in the
United States.
‘‘(iii) STATUTE OF LIMITATIONS.—
‘‘(I) IN GENERAL.—An action under this subsection may not be brought—
‘‘(aa) more than 6 years after the date
on which the violation of subparagraph (A)
occurred; or
‘‘(bb) more than 3 years after the date
when facts material to the right of action are
known or reasonably should have been known
by the employee alleging a violation of
subparagraph (A).
‘‘(II) REQUIRED ACTION WITHIN 10 YEARS.—Notwithstanding subclause (I), an action under this
subsection may not in any circumstance be brought
more than 10 years after the date on which the
violation occurs.
‘‘(C) RELIEF.—Relief for an individual prevailing in an
action brought under subparagraph (B) shall include—
‘‘(i) reinstatement with the same seniority status
that the individual would have had, but for the
discrimination;
‘‘(ii) 2 times the amount of back pay otherwise
owed to the individual, with interest; and
‘‘(iii) compensation for litigation costs, expert witness fees, and reasonable attorneys’ fees.
‘‘(2) CONFIDENTIALITY.—
‘‘(A) IN GENERAL.—Except as provided in subparagraphs (B) and (C), the Commission and any officer or
employee of the Commission shall not disclose any information, including information provided by a whistleblower
to the Commission, which could reasonably be expected
to reveal the identity of a whistleblower, except in accordance with the provisions of section 552a of title 5, United
States Code, unless and until required to be disclosed to
a defendant or respondent in connection with a public
proceeding instituted by the Commission or any entity
described in subparagraph (C). For purposes of section

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124 STAT. 1847

552 of title 5, United States Code, this paragraph shall
be considered a statute described in subsection (b)(3)(B)
of such section.
‘‘(B) EXEMPTED STATUTE.—For purposes of section 552
of title 5, United States Code, this paragraph shall be
considered a statute described in subsection (b)(3)(B) of
such section 552.
‘‘(C) RULE OF CONSTRUCTION.—Nothing in this section
is intended to limit, or shall be construed to limit, the
ability of the Attorney General to present such evidence
to a grand jury or to share such evidence with potential
witnesses or defendants in the course of an ongoing
criminal investigation.
‘‘(D) AVAILABILITY TO GOVERNMENT AGENCIES.—
‘‘(i) IN GENERAL.—Without the loss of its status
as confidential in the hands of the Commission, all
information referred to in subparagraph (A) may, in
the discretion of the Commission, when determined
by the Commission to be necessary to accomplish the
purposes of this Act and to protect investors, be made
available to—
‘‘(I) the Attorney General of the United States;
‘‘(II) an appropriate regulatory authority;
‘‘(III) a self-regulatory organization;
‘‘(IV) a State attorney general in connection
with any criminal investigation;
‘‘(V) any appropriate State regulatory
authority;
‘‘(VI) the Public Company Accounting Oversight Board;
‘‘(VII) a foreign securities authority; and
‘‘(VIII) a foreign law enforcement authority.
‘‘(ii) CONFIDENTIALITY.—
‘‘(I) IN GENERAL.—Each of the entities
described in subclauses (I) through (VI) of clause
(i) shall maintain such information as confidential
in accordance with the requirements established
under subparagraph (A).
‘‘(II) FOREIGN AUTHORITIES.—Each of the entities described in subclauses (VII) and (VIII) of
clause (i) shall maintain such information in
accordance with such assurances of confidentiality
as the Commission determines appropriate.
‘‘(3) RIGHTS RETAINED.—Nothing in this section shall be
deemed to diminish the rights, privileges, or remedies of any
whistleblower under any Federal or State law, or under any
collective bargaining agreement.
‘‘(i) PROVISION OF FALSE INFORMATION.—A whistleblower shall
not be entitled to an award under this section if the whistleblower—
‘‘(1) knowingly and willfully makes any false, fictitious,
or fraudulent statement or representation; or
‘‘(2) uses any false writing or document knowing the writing
or document contains any false, fictitious, or fraudulent statement or entry.
‘‘(j) RULEMAKING AUTHORITY.—The Commission shall have the
authority to issue such rules and regulations as may be necessary

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124 STAT. 1848

PUBLIC LAW 111–203—JULY 21, 2010

or appropriate to implement the provisions of this section consistent
with the purposes of this section.’’.
(b) PROTECTION FOR EMPLOYEES OF NATIONALLY RECOGNIZED
STATISTICAL RATING ORGANIZATIONS.—Section 1514A(a) of title 18,
United States Code, is amended—
(1) by inserting ‘‘or nationally recognized statistical rating
organization (as defined in section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c),’’ after ‘‘78o(d)),’’; and
(2) by inserting ‘‘or nationally recognized statistical rating
organization’’ after ‘‘such company’’.
(c) SECTION 1514A OF TITLE 18, UNITED STATES CODE.—
(1) STATUTE OF LIMITATIONS; JURY TRIAL.—Section
1514A(b)(2) of title 18, United States Code, is amended—
(A) in subparagraph (D)—
(i) by striking ‘‘90’’ and inserting ‘‘180’’; and
(ii) by striking the period at the end and inserting
‘‘, or after the date on which the employee became
aware of the violation.’’; and
(B) by adding at the end the following:
‘‘(E) JURY TRIAL.—A party to an action brought under
paragraph (1)(B) shall be entitled to trial by jury.’’.
(2) PRIVATE SECURITIES LITIGATION WITNESSES; NONENFORCEABILITY; INFORMATION.—Section 1514A of title 18,
United States Code, is amended by adding at the end the
following:
‘‘(e) NONENFORCEABILITY OF CERTAIN PROVISIONS WAIVING
RIGHTS AND REMEDIES OR REQUIRING ARBITRATION OF DISPUTES.—
‘‘(1) WAIVER OF RIGHTS AND REMEDIES.—The rights and
remedies provided for in this section may not be waived by
any agreement, policy form, or condition of employment,
including by a predispute arbitration agreement.
‘‘(2) PREDISPUTE ARBITRATION AGREEMENTS.—No predispute
arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section.’’.
(d) STUDY OF WHISTLEBLOWER PROTECTION PROGRAM.—
(1) STUDY.—The Inspector General of the Commission shall
conduct a study of the whistleblower protections established
under the amendments made by this section, including—
(A) whether the final rules and regulation issued under
the amendments made by this section have made the
whistleblower protection program (referred to in this subsection as the ‘‘program’’) clearly defined and user-friendly;
(B) whether the program is promoted on the website
of the Commission and has been widely publicized;
(C) whether the Commission is prompt in—
(i) responding to—
(I) information provided by whistleblowers;
and
(II) applications for awards filed by whistleblowers;
(ii) updating whistleblowers about the status of
their applications; and
(iii) otherwise communicating with the interested
parties;
(D) whether the minimum and maximum reward levels
are adequate to entice whistleblowers to come forward with

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124 STAT. 1849

information and whether the reward levels are so high
as to encourage illegitimate whistleblower claims;
(E) whether the appeals process has been unduly
burdensome for the Commission;
(F) whether the funding mechanism for the Investor
Protection Fund is adequate;
(G) whether, in the interest of protecting investors
and identifying and preventing fraud, it would be useful
for Congress to consider empowering whistleblowers or
other individuals, who have already attempted to pursue
the case through the Commission, to have a private right
of action to bring suit based on the facts of the same
case, on behalf of the Government and themselves, against
persons who have committee securities fraud;
(H)(i) whether the exemption under section 552(b)(3)
of title 5 (known as the Freedom of Information Act) established in section 21F(h)(2)(A) of the Securities Exchange
Act of 1934, as added by this Act, aids whistleblowers
in disclosing information to the Commission;
(ii) what impact the exemption described in clause
(i) has had on the ability of the public to access information
about the regulation and enforcement by the Commission
of securities; and
(iii) any recommendations on whether the exemption
described in clause (i) should remain in effect; and
(I) such other matters as the Inspector General deems
appropriate.
(2) REPORT.—Not later than 30 months after the date of
enactment of this Act, the Inspector General shall—
(A) submit a report on the findings of the study
required under paragraph (1) to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House; and
(B) make the report described in subparagraph (A)
available to the public through publication of the report
on the website of the Commission.

Public
information.
Web posting.

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SEC. 923. CONFORMING AMENDMENTS FOR WHISTLEBLOWER PROTECTION.

(a) IN GENERAL.—
(1) SECURITIES ACT OF 1933.—Section 20(d)(3)(A) of the Securities Act of 1933 (15 U.S.C. 77t(d)(3)(A)) is amended by
inserting ‘‘and section 21F of the Securities Exchange Act of
1934’’ after ‘‘the Sarbanes-Oxley Act of 2002’’.
(2) INVESTMENT COMPANY ACT OF 1940.—Section 42(e)(3)(A)
of the Investment Company Act of 1940 (15 U.S.C. 80a–
41(e)(3)(A)) is amended by inserting ‘‘and section 21F of the
Securities Exchange Act of 1934’’ after ‘‘the Sarbanes-Oxley
Act of 2002’’.
(3) INVESTMENT ADVISERS ACT OF 1940.—Section 209(e)(3)(A)
of the Investment Advisers Act of 1940 (15 U.S.C. 80b–
9(e)(3)(A)) is amended by inserting ‘‘and section 21F of the
Securities Exchange Act of 1934’’ after ‘‘the Sarbanes-Oxley
Act of 2002’’.
(b) SECURITIES EXCHANGE ACT.—
(1) SECTION 21.—Section 21(d)(3)(C)(i) of the Securities
Exchange Act of 1934 (15 U.S.C. 78u(d)(3)(C)(i)) is amended

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PUBLIC LAW 111–203—JULY 21, 2010
by inserting ‘‘and section 21F of this title’’ after ‘‘the SarbanesOxley Act of 2002’’.
(2) SECTION 21A.—Section 21A of the Securities Exchange
Act of 1934 (15 U.S.C. 78u–1) is amended—
(A) in subsection (d)(1) by—
(i) striking ‘‘(subject to subsection (e))’’; and
(ii) inserting ‘‘and section 21F of this title’’ after
‘‘the Sarbanes-Oxley Act of 2002’’;
(B) by striking subsection (e); and
(C) by redesignating subsections (f) and (g) as subsections (e) and (f), respectively.

15 USC 78u–7.

SEC. 924. IMPLEMENTATION AND TRANSITION PROVISIONS FOR
WHISTLEBLOWER PROTECTION.

Deadline.

(a) IMPLEMENTING RULES.—The Commission shall issue final
regulations implementing the provisions of section 21F of the Securities Exchange Act of 1934, as added by this subtitle, not later
than 270 days after the date of enactment of this Act.
(b) ORIGINAL INFORMATION.—Information provided to the
Commission in writing by a whistleblower shall not lose the status
of original information (as defined in section 21F(a)(3) of the Securities Exchange Act of 1934, as added by this subtitle) solely because
the whistleblower provided the information prior to the effective
date of the regulations, if the information is provided by the whistleblower after the date of enactment of this subtitle.
(c) AWARDS.—A whistleblower may receive an award pursuant
to section 21F of the Securities Exchange Act of 1934, as added
by this subtitle, regardless of whether any violation of a provision
of the securities laws, or a rule or regulation thereunder, underlying
the judicial or administrative action upon which the award is based,
occurred prior to the date of enactment of this subtitle.
(d) ADMINISTRATION AND ENFORCEMENT.—The Securities and
Exchange Commission shall establish a separate office within the
Commission to administer and enforce the provisions of section
21F of the Securities Exchange Act of 1934 (as add by section
922(a)). Such office shall report annually to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on
its activities, whistleblower complaints, and the response of the
Commission to such complaints.

Establishment.

Reports.
Deadline.

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SEC. 925. COLLATERAL BARS.

(a) SECURITIES EXCHANGE ACT OF 1934.—
(1) SECTION 15.—Section 15(b)(6)(A) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o(b)(6)(A)) is amended by
striking ‘‘12 months, or bar such person from being associated
with a broker or dealer,’’ and inserting ‘‘12 months, or bar
any such person from being associated with a broker, dealer,
investment adviser, municipal securities dealer, municipal
advisor, transfer agent, or nationally recognized statistical
rating organization,’’.
(2) SECTION 15B.—Section 15B(c)(4) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o–4(c)(4)) is amended by
striking ‘‘twelve months or bar any such person from being
associated with a municipal securities dealer,’’ and inserting
‘‘12 months or bar any such person from being associated with
a broker, dealer, investment adviser, municipal securities

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124 STAT. 1851

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dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization,’’.
(3) SECTION 17A.—Section 17A(c)(4)(C) of the Securities
Exchange Act of 1934 (15 U.S.C. 78q–1(c)(4)(C)) is amended
by striking ‘‘twelve months or bar any such person from being
associated with the transfer agent,’’ and inserting ‘‘12 months
or bar any such person from being associated with any transfer
agent, broker, dealer, investment adviser, municipal securities
dealer, municipal advisor, or nationally recognized statistical
rating organization,’’.
(b) INVESTMENT ADVISERS ACT OF 1940.—Section 203(f) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b–3(f)) is amended
by striking ‘‘twelve months or bar any such person from being
associated with an investment adviser,’’ and inserting ‘‘12 months
or bar any such person from being associated with an investment
adviser, broker, dealer, municipal securities dealer, municipal
advisor, transfer agent, or nationally recognized statistical rating
organization,’’.

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SEC. 926. DISQUALIFYING FELONS AND OTHER ‘‘BAD ACTORS’’ FROM
REGULATION D OFFERINGS.

15 USC 77d note.

Not later than 1 year after the date of enactment of this
Act, the Commission shall issue rules for the disqualification of
offerings and sales of securities made under section 230.506 of
title 17, Code of Federal Regulations, that—
(1) are substantially similar to the provisions of section
230.262 of title 17, Code of Federal Regulations, or any successor thereto; and
(2) disqualify any offering or sale of securities by a person
that—
(A) is subject to a final order of a State securities
commission (or an agency or officer of a State performing
like functions), a State authority that supervises or examines banks, savings associations, or credit unions, a State
insurance commission (or an agency or officer of a State
performing like functions), an appropriate Federal banking
agency, or the National Credit Union Administration,
that—
(i) bars the person from—
(I) association with an entity regulated by such
commission, authority, agency, or officer;
(II) engaging in the business of securities,
insurance, or banking; or
(III) engaging in savings association or credit
union activities; or
(ii) constitutes a final order based on a violation
of any law or regulation that prohibits fraudulent,
manipulative, or deceptive conduct within the 10-year
period ending on the date of the filing of the offer
or sale; or
(B) has been convicted of any felony or misdemeanor
in connection with the purchase or sale of any security
or involving the making of any false filing with the Commission.

Deadline.

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124 STAT. 1852

PUBLIC LAW 111–203—JULY 21, 2010

SEC. 927. EQUAL TREATMENT OF SELF-REGULATORY ORGANIZATION
RULES.

Section 29(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78cc(a)) is amended by striking ‘‘an exchange required thereby’’
and inserting ‘‘a self-regulatory organization,’’.
SEC. 928. CLARIFICATION THAT SECTION 205 OF THE INVESTMENT
ADVISERS ACT OF 1940 DOES NOT APPLY TO STATE-REGISTERED ADVISERS.

Section 205(a) of the Investment Advisers Act of 1940 (15
U.S.C. 80b–5(a)) is amended, in the matter preceding paragraph
(1)—
(1) by striking ‘‘, unless exempt from registration pursuant
to section 203(b),’’ and inserting ‘‘registered or required to be
registered with the Commission’’;
(2) by striking ‘‘make use of the mails or any means or
instrumentality of interstate commerce, directly or indirectly,
to’’; and
(3) by striking ‘‘to’’ after ‘‘in any way’’.
SEC. 929. UNLAWFUL MARGIN LENDING.

Section 7(c)(1)(A) of the Securities Exchange Act of 1934 (15
U.S.C. 78g(c)(1)(A)) is amended by striking ‘‘; and’’ and inserting
‘‘; or’’.
SEC. 929A. PROTECTION FOR EMPLOYEES OF SUBSIDIARIES AND
AFFILIATES OF PUBLICLY TRADED COMPANIES.

Section 1514A of title 18, United States Code, is amended
by inserting ‘‘including any subsidiary or affiliate whose financial
information is included in the consolidated financial statements
of such company’’ after ‘‘the Securities Exchange Act of 1934 (15
U.S.C. 78o(d))’’.
SEC. 929B. FAIR FUND AMENDMENTS.

Section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7246(a)) is amended—
(1) by striking subsection (a) and inserting the following:
‘‘(a) CIVIL PENALTIES TO BE USED FOR THE RELIEF OF VICTIMS.—
If, in any judicial or administrative action brought by the Commission under the securities laws, the Commission obtains a civil
penalty against any person for a violation of such laws, or such
person agrees, in settlement of any such action, to such civil penalty,
the amount of such civil penalty shall, on the motion or at the
direction of the Commission, be added to and become part of a
disgorgement fund or other fund established for the benefit of
the victims of such violation.’’;
(2) in subsection (b)—
(A) by striking ‘‘for a disgorgement fund described in
subsection (a)’’ and inserting ‘‘for a disgorgement fund or
other fund described in subsection (a)’’; and
(B) by striking ‘‘in the disgorgement fund’’ and
inserting ‘‘in such fund’’; and
(3) by striking subsection (e).
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SEC. 929C. INCREASING THE BORROWING LIMIT ON TREASURY LOANS.

Section 4(h) of the Securities Investor Protection Act of 1970
(15 U.S.C. 78ddd(h)) is amended in the first sentence, by striking
‘‘$1,000,000,000’’ and inserting ‘‘$2,500,000,000’’.

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124 STAT. 1853

SEC. 929D. LOST AND STOLEN SECURITIES.

Section 17(f)(1) of the Securities Exchange Act of 1934 (15
U.S.C. 78q(f)(1)) is amended—
(1) in subparagraph (A), by striking ‘‘missing, lost, counterfeit, or stolen securities’’ and inserting ‘‘securities that are
missing, lost, counterfeit, stolen, or cancelled’’; and
(2) in subparagraph (B), by striking ‘‘or stolen’’ and
inserting ‘‘stolen, cancelled, or reported in such other manner
as the Commission, by rule, may prescribe’’.
SEC. 929E. NATIONWIDE SERVICE OF SUBPOENAS.

(a) SECURITIES ACT OF 1933.—Section 22(a) of the Securities
Act of 1933 (15 U.S.C. 77v(a)) is amended by inserting after the
second sentence the following: ‘‘In any action or proceeding
instituted by the Commission under this title in a United States
district court for any judicial district, a subpoena issued to compel
the attendance of a witness or the production of documents or
tangible things (or both) at a hearing or trial may be served at
any place within the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not apply to a subpoena issued
under the preceding sentence.’’.
(b) SECURITIES EXCHANGE ACT OF 1934.—Section 27 of the
Securities Exchange Act of 1934 (15 U.S.C. 78aa) is amended by
inserting after the third sentence the following: ‘‘In any action
or proceeding instituted by the Commission under this title in
a United States district court for any judicial district, a subpoena
issued to compel the attendance of a witness or the production
of documents or tangible things (or both) at a hearing or trial
may be served at any place within the United States. Rule
45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not
apply to a subpoena issued under the preceding sentence.’’.
(c) INVESTMENT COMPANY ACT OF 1940.—Section 44 of the
Investment Company Act of 1940 (15 U.S.C. 80a–43) is amended
by inserting after the fourth sentence the following: ‘‘In any action
or proceeding instituted by the Commission under this title in
a United States district court for any judicial district, a subpoena
issued to compel the attendance of a witness or the production
of documents or tangible things (or both) at a hearing or trial
may be served at any place within the United States. Rule
45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not
apply to a subpoena issued under the preceding sentence.’’.
(d) INVESTMENT ADVISERS ACT OF 1940.—Section 214 of the
Investment Advisers Act of 1940 (15 U.S.C. 80b–14) is amended
by inserting after the third sentence the following: ‘‘In any action
or proceeding instituted by the Commission under this title in
a United States district court for any judicial district, a subpoena
issued to compel the attendance of a witness or the production
of documents or tangible things (or both) at a hearing or trial
may be served at any place within the United States. Rule
45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not
apply to a subpoena issued under the preceding sentence.’’.
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SEC. 929F. FORMERLY ASSOCIATED PERSONS.

(a) MEMBER OR EMPLOYEE OF THE MUNICIPAL SECURITIES RULEBOARD.—Section 15B(c)(8) of the Securities Exchange Act
of 1934 (15 U.S.C. 78o–4(c)(8)) is amended by striking ‘‘any member
MAKING

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Applicability.

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PUBLIC LAW 111–203—JULY 21, 2010

or employee’’ and inserting ‘‘any person who is, or at the time
of the alleged violation or abuse was, a member or employee’’.
(b) PERSON ASSOCIATED WITH A GOVERNMENT SECURITIES
BROKER OR DEALER.—Section 15C(c) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o–5(c)) is amended—
(1) in paragraph (1)(C), by striking ‘‘any person associated,
or seeking to become associated,’’ and inserting ‘‘any person
who is, or at the time of the alleged misconduct was, associated
or seeking to become associated’’; and
(2) in paragraph (2)—
(A) in subparagraph (A), by inserting ‘‘, seeking to
become associated, or, at the time of the alleged misconduct,
associated or seeking to become associated’’ after ‘‘any person associated’’; and
(B) in subparagraph (B), by inserting ‘‘, seeking to
become associated, or, at the time of the alleged misconduct,
associated or seeking to become associated’’ after ‘‘any person associated’’.
(c) PERSON ASSOCIATED WITH A MEMBER OF A NATIONAL SECURITIES EXCHANGE OR REGISTERED SECURITIES ASSOCIATION.—Section 21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C.
78u(a)(1)) is amended, in the first sentence, by inserting ‘‘, or,
as to any act or practice, or omission to act, while associated
with a member, formerly associated’’ after ‘‘member or a person
associated’’.
(d) PARTICIPANT OF A REGISTERED CLEARING AGENCY.—Section
21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78u(a)(1))
is amended, in the first sentence, by inserting ‘‘or, as to any act
or practice, or omission to act, while a participant, was a participant,’’ after ‘‘in which such person is a participant,’’.
(e) OFFICER OR DIRECTOR OF A SELF-REGULATORY ORGANIZATION.—Section 19(h)(4) of the Securities Exchange Act of 1934 (15
U.S.C. 78s(h)(4)) is amended—
(1) by striking ‘‘any officer or director’’ and inserting ‘‘any
person who is, or at the time of the alleged misconduct was,
an officer or director’’; and
(2) by striking ‘‘such officer or director’’ and inserting ‘‘such
person’’.
(f) OFFICER OR DIRECTOR OF AN INVESTMENT COMPANY.—Section 36(a) of the Investment Company Act of 1940 (15 U.S.C.
80a–35(a)) is amended—
(1) by striking ‘‘a person serving or acting’’ and inserting
‘‘a person who is, or at the time of the alleged misconduct
was, serving or acting’’; and
(2) by striking ‘‘such person so serves or acts’’ and inserting
‘‘such person so serves or acts, or at the time of the alleged
misconduct, so served or acted’’.
(g) PERSON ASSOCIATED WITH A PUBLIC ACCOUNTING FIRM.—
(1) SARBANES-OXLEY ACT OF 2002 AMENDMENT.—Section
2(a)(9) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(9))
is amended by adding at the end the following:
‘‘(C) INVESTIGATIVE AND ENFORCEMENT AUTHORITY.—
For purposes of sections 3(c), 101(c), 105, and 107(c) and
the rules of the Board and Commission issued thereunder,
except to the extent specifically excepted by such rules,
the terms defined in subparagraph (A) shall include any

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124 STAT. 1855

person associated, seeking to become associated, or formerly
associated with a public accounting firm, except that—
‘‘(i) the authority to conduct an investigation of
such person under section 105(b) shall apply only with
respect to any act or practice, or omission to act, by
the person while such person was associated or seeking
to become associated with a registered public
accounting firm; and
‘‘(ii) the authority to commence a disciplinary proceeding under section 105(c)(1), or impose sanctions
under section 105(c)(4), against such person shall apply
only with respect to—
‘‘(I) conduct occurring while such person was
associated or seeking to become associated with
a registered public accounting firm; or
‘‘(II) non-cooperation, as described in section
105(b)(3), with respect to a demand in a Board
investigation for testimony, documents, or other
information relating to a period when such person
was associated or seeking to become associated
with a registered public accounting firm.’’.
(2) SECURITIES EXCHANGE ACT OF 1934 AMENDMENT.—Section 21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C.
78u(a)(1)) is amended by striking ‘‘or a person associated with
such a firm’’ and inserting ‘‘, a person associated with such
a firm, or, as to any act, practice, or omission to act, while
associated with such firm, a person formerly associated with
such a firm’’.
(h) SUPERVISORY PERSONNEL OF AN AUDIT FIRM.—Section
105(c)(6) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(c)(6))
is amended—
(1) in subparagraph (A), by striking ‘‘the supervisory personnel’’ and inserting ‘‘any person who is, or at the time of
the alleged failure reasonably to supervise was, a supervisory
person’’; and
(2) in subparagraph (B)—
(A) by striking ‘‘No associated person’’ and inserting
‘‘No current or former supervisory person’’; and
(B) by striking ‘‘any other person’’ and inserting ‘‘any
associated person’’.
(i) MEMBER OF THE PUBLIC COMPANY ACCOUNTING OVERSIGHT
BOARD.—Section 107(d)(3) of the Sarbanes-Oxley Act of 2002 (15
U.S.C. 7217(d)(3)) is amended by striking ‘‘any member’’ and
inserting ‘‘any person who is, or at the time of the alleged misconduct was, a member’’.

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SEC. 929G. STREAMLINED HIRING AUTHORITY FOR MARKET SPECIALISTS.

(a) APPOINTMENT AUTHORITY.—Section 3114 of title 5, United
States Code, is amended by striking the section heading and all
that follows through the end of subsection (a) and inserting the
following:

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124 STAT. 1856

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‘‘§ 3114. Appointment of candidates to certain positions in
the competitive service by the Securities and
Exchange Commission
‘‘(a) APPLICABILITY.—This section applies with respect to any
position of accountant, economist, and securities compliance examiner at the Commission that is in the competitive service, and
any position at the Commission in the competitive service that
requires specialized knowledge of financial and capital market
formation or regulation, financial market structures or surveillance,
or information technology.’’.
(b) CLERICAL AMENDMENT.—The table of sections for chapter
31 of title 5, United States Code, is amended by striking the
item relating to section 3114 and inserting the following:
‘‘3114. Appointment of candidates to positions in the competitive service by the Securities and Exchange Commission.’’.
15 USC 78d note.

(c) PAY AUTHORITY.—The Commission may set the rate of pay
for experts and consultants appointed under the authority of section
3109 of title 5, United States Code, in the same manner in which
it sets the rate of pay for employees of the Commission.
SEC. 929H. SIPC REFORMS.

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Deadlines.
Determination.

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(a) INCREASING THE CASH LIMIT OF PROTECTION.—Section 9
of the Securities Investor Protection Act of 1970 (15 U.S.C. 78fff–
3) is amended—
(1) in subsection (a)(1), by striking ‘‘$100,000 for each such
customer’’ and inserting ‘‘the standard maximum cash advance
amount for each such customer, as determined in accordance
with subsection (d)’’; and
(2) by adding the following new subsections:
‘‘(d) STANDARD MAXIMUM CASH ADVANCE AMOUNT DEFINED.—
For purposes of this section, the term ‘standard maximum cash
advance amount’ means $250,000, as such amount may be adjusted
after December 31, 2010, as provided under subsection (e).
‘‘(e) INFLATION ADJUSTMENT.—
‘‘(1) IN GENERAL.—Not later than January 1, 2011, and
every 5 years thereafter, and subject to the approval of the
Commission as provided under section 3(e)(2), the Board of
Directors of SIPC shall determine whether an inflation adjustment to the standard maximum cash advance amount is appropriate. If the Board of Directors of SIPC determines such an
adjustment is appropriate, then the standard maximum cash
advance amount shall be an amount equal to—
‘‘(A) $250,000 multiplied by—
‘‘(B) the ratio of the annual value of the Personal
Consumption Expenditures Chain-Type Price Index (or any
successor index thereto), published by the Department of
Commerce, for the calendar year preceding the year in
which such determination is made, to the published annual
value of such index for the calendar year preceding the
year in which this subsection was enacted.
The index values used in calculations under this paragraph
shall be, as of the date of the calculation, the values most
recently published by the Department of Commerce.
‘‘(2) ROUNDING.—If the standard maximum cash advance
amount determined under paragraph (1) for any period is not

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a multiple of $10,000, the amount so determined shall be
rounded down to the nearest $10,000.
‘‘(3) PUBLICATION AND REPORT TO THE CONGRESS.—Not later
than April 5 of any calendar year in which a determination
is required to be made under paragraph (1)—
‘‘(A) the Commission shall publish in the Federal Register the standard maximum cash advance amount; and
‘‘(B) the Board of Directors of SIPC shall submit a
report to the Congress stating the standard maximum cash
advance amount.
‘‘(4) IMPLEMENTATION PERIOD.—Any adjustment to the
standard maximum cash advance amount shall take effect on
January 1 of the year immediately succeeding the calendar
year in which such adjustment is made.
‘‘(5) INFLATION ADJUSTMENT CONSIDERATIONS.—In making
any determination under paragraph (1) to increase the standard
maximum cash advance amount, the Board of Directors of
SIPC shall consider—
‘‘(A) the overall state of the fund and the economic
conditions affecting members of SIPC;
‘‘(B) the potential problems affecting members of SIPC;
and
‘‘(C) such other factors as the Board of Directors of
SIPC may determine appropriate.’’.
(b) LIQUIDATION OF A CARRYING BROKER-DEALER.—Section
5(a)(3) of the Securities Investor Protection Act of 1970 (15 U.S.C.
78eee(a)(3)) is amended—
(1) by striking the undesignated matter immediately following subparagraph (B);
(2) in subparagraph (A), by striking ‘‘any member of SIPC’’
and inserting ‘‘the member’’;
(3) in subparagraph (B), by striking the comma at the
end and inserting a period;
(4) by striking ‘‘If SIPC’’ and inserting the following:
‘‘(A) IN GENERAL.—SIPC may, upon notice to a member
of SIPC, file an application for a protective decree with
any court of competent jurisdiction specified in section 21(e)
or 27 of the Securities Exchange Act of 1934, except that
no such application shall be filed with respect to a member,
the only customers of which are persons whose claims
could not be satisfied by SIPC advances pursuant to section
9, if SIPC’’; and
(5) by adding at the end the following:
‘‘(B) CONSENT REQUIRED.—No member of SIPC that
has a customer may enter into an insolvency, receivership,
or bankruptcy proceeding, under Federal or State law, without the specific consent of SIPC, except as provided in
title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act.’’.

Federal Register,
publication.

Effective date.

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SEC. 929I. PROTECTING CONFIDENTIALITY OF MATERIALS SUBMITTED
TO THE COMMISSION.

(a) SECURITIES EXCHANGE ACT OF 1934.—Section 24 of the
Securities Exchange Act of 1934 (15 U.S.C. 78x) is amended—
(1) in subsection (d), by striking ‘‘subsection (e)’’ and
inserting ‘‘subsection (f)’’;
(2) by redesignating subsection (e) as subsection (f); and

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PUBLIC LAW 111–203—JULY 21, 2010

(3) by inserting after subsection (d) the following:
‘‘(e) RECORDS OBTAINED FROM REGISTERED PERSONS.—
‘‘(1) IN GENERAL.—Except as provided in subsection (f),
the Commission shall not be compelled to disclose records or
information obtained pursuant to section 17(b), or records or
information based upon or derived from such records or
information, if such records or information have been obtained
by the Commission for use in furtherance of the purposes
of this title, including surveillance, risk assessments, or other
regulatory and oversight activities.
‘‘(2) TREATMENT OF INFORMATION.—For purposes of section
552 of title 5, United States Code, this subsection shall be
considered a statute described in subsection (b)(3)(B) of such
section 552. Collection of information pursuant to section 17
shall be an administrative action involving an agency against
specific individuals or agencies pursuant to section 3518(c)(1)
of title 44, United States Code.’’.
(b) INVESTMENT COMPANY ACT OF 1940.—Section 31 of the
Investment Company Act of 1940 (15 U.S.C. 80a-30) is amended—
(1) by striking subsection (c) and inserting the following:
‘‘(c) LIMITATIONS ON DISCLOSURE BY COMMISSION.—Notwithstanding any other provision of law, the Commission shall not
be compelled to disclose any records or information provided to
the Commission under this section, or records or information based
upon or derived from such records or information, if such records
or information have been obtained by the Commission for use
in furtherance of the purposes of this title, including surveillance,
risk assessments, or other regulatory and oversight activities.
Nothing in this subsection authorizes the Commission to withhold
information from the Congress or prevent the Commission from
complying with a request for information from any other Federal
department or agency requesting the information for purposes
within the scope of jurisdiction of that department or agency, or
complying with an order of a court of the United States in an
action brought by the United States or the Commission. For purposes of section 552 of title 5, United States Code, this section
shall be considered a statute described in subsection (b)(3)(B) of
such section 552. Collection of information pursuant to section
31 shall be an administrative action involving an agency against
specific individuals or agencies pursuant to section 3518(c)(1) of
title 44, United States Code.’’;
(2) by striking subsection (d); and
(3) by redesignating subsections (e) and (f) as subsections
(d) and (e), respectively.
(c) INVESTMENT ADVISERS ACT OF 1940.—Section 210 of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-10) is amended
by adding at the end the following:
‘‘(d) LIMITATIONS ON DISCLOSURE BY THE COMMISSION.—Notwithstanding any other provision of law, the Commission shall
not be compelled to disclose any records or information provided
to the Commission under section 204, or records or information
based upon or derived from such records or information, if such
records or information have been obtained by the Commission for
use in furtherance of the purposes of this title, including surveillance, risk assessments, or other regulatory and oversight activities.
Nothing in this subsection authorizes the Commission to withhold
information from the Congress or prevent the Commission from

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complying with a request for information from any other Federal
department or agency requesting the information for purposes
within the scope of jurisdiction of that department or agency, or
complying with an order of a court of the United States in an
action brought by the United States or the Commission. For purposes of section 552 of title 5, United States Code, this subsection
shall be considered a statute described in subsection (b)(3)(B) of
such section 552. Collection of information pursuant to section
204 shall be an administrative action involving an agency against
specific individuals or agencies pursuant to section 3518(c)(1) of
title 44, United States Code.’’.

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SEC. 929J. EXPANSION OF AUDIT INFORMATION TO BE PRODUCED
AND EXCHANGED.

Section 106 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216)
is amended—
(1) by striking subsection (b) and inserting the following:
‘‘(b) PRODUCTION OF DOCUMENTS.—
‘‘(1) PRODUCTION BY FOREIGN FIRMS.—If a foreign public
accounting firm performs material services upon which a registered public accounting firm relies in the conduct of an audit
or interim review, issues an audit report, performs audit work,
or conducts interim reviews, the foreign public accounting firm
shall—
‘‘(A) produce the audit work papers of the foreign public
accounting firm and all other documents of the firm related
to any such audit work or interim review to the Commission
or the Board, upon request of the Commission or the Board;
and
‘‘(B) be subject to the jurisdiction of the courts of the
United States for purposes of enforcement of any request
for such documents.
‘‘(2) OTHER PRODUCTION.—Any registered public accounting
firm that relies, in whole or in part, on the work of a foreign
public accounting firm in issuing an audit report, performing
audit work, or conducting an interim review, shall—
‘‘(A) produce the audit work papers of the foreign public
accounting firm and all other documents related to any
such work in response to a request for production by the
Commission or the Board; and
‘‘(B) secure the agreement of any foreign public
accounting firm to such production, as a condition of the
reliance by the registered public accounting firm on the
work of that foreign public accounting firm.’’;
(2) by redesignating subsection (d) as subsection (g); and
(3) by inserting after subsection (c) the following:
‘‘(d) SERVICE OF REQUESTS OR PROCESS.—
‘‘(1) IN GENERAL.—Any foreign public accounting firm that
performs work for a domestic registered public accounting firm
shall furnish to the domestic registered public accounting firm
a written irrevocable consent and power of attorney that designates the domestic registered public accounting firm as an
agent upon whom may be served any request by the Commission or the Board under this section or upon whom may be
served any process, pleadings, or other papers in any action
brought to enforce this section.

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‘‘(2) SPECIFIC AUDIT WORK.—Any foreign public accounting
firm that performs material services upon which a registered
public accounting firm relies in the conduct of an audit or
interim review, issues an audit report, performs audit work,
or, performs interim reviews, shall designate to the Commission
or the Board an agent in the United States upon whom may
be served any request by the Commission or the Board under
this section or upon whom may be served any process, pleading,
or other papers in any action brought to enforce this section.
‘‘(e) SANCTIONS.—A willful refusal to comply, in whole in or
in part, with any request by the Commission or the Board under
this section, shall be deemed a violation of this Act.
‘‘(f) OTHER MEANS OF SATISFYING PRODUCTION OBLIGATIONS.—
Notwithstanding any other provisions of this section, the staff of
the Commission or the Board may allow a foreign public accounting
firm that is subject to this section to meet production obligations
under this section through alternate means, such as through foreign
counterparts of the Commission or the Board.’’.

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SEC.

929K.

SHARING PRIVILEGED
AUTHORITIES.

INFORMATION

WITH

OTHER

Section 24 of the Securities Exchange Act of 1934 (15 U.S.C.
78x) is amended—
(1) in subsection (d), as amended by subsection (d)(1)(A),
by striking ‘‘subsection (f)’’ and inserting ‘‘subsection (g)’’;
(2) in subsection (e), as added by subsection (d)(1)(C), by
striking ‘‘subsection (f)’’ and inserting ‘‘subsection (g)’’;
(3) by redesignating subsection (f) as subsection (g); and
(4) by inserting after subsection (e) the following:
‘‘(f) SHARING PRIVILEGED INFORMATION WITH OTHER AUTHORITIES.—
‘‘(1) PRIVILEGED INFORMATION PROVIDED BY THE COMMISSION.—The Commission shall not be deemed to have waived
any privilege applicable to any information by transferring
that information to or permitting that information to be used
by—
‘‘(A) any agency (as defined in section 6 of title 18,
United States Code);
‘‘(B) the Public Company Accounting Oversight Board;
‘‘(C) any self-regulatory organization;
‘‘(D) any foreign securities authority;
‘‘(E) any foreign law enforcement authority; or
‘‘(F) any State securities or law enforcement authority.
‘‘(2) NONDISCLOSURE OF PRIVILEGED INFORMATION PROVIDED
TO THE COMMISSION.—The Commission shall not be compelled
to disclose privileged information obtained from any foreign
securities authority, or foreign law enforcement authority, if
the authority has in good faith determined and represented
to the Commission that the information is privileged.
‘‘(3) NONWAIVER OF PRIVILEGED INFORMATION PROVIDED TO
THE COMMISSION.—
‘‘(A) IN GENERAL.—Federal agencies, State securities
and law enforcement authorities, self-regulatory organizations, and the Public Company Accounting Oversight Board
shall not be deemed to have waived any privilege applicable
to any information by transferring that information to or
permitting that information to be used by the Commission.

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‘‘(B) EXCEPTION.—The provisions of subparagraph (A)
shall not apply to a self-regulatory organization or the
Public Company Accounting Oversight Board with respect
to information used by the Commission in an action against
such organization.
‘‘(4) DEFINITIONS.—For purposes of this subsection—
‘‘(A) the term ‘privilege’ includes any work-product
privilege, attorney-client privilege, governmental privilege,
or other privilege recognized under Federal, State, or foreign law;
‘‘(B) the term ‘foreign law enforcement authority’
means any foreign authority that is empowered under foreign law to detect, investigate or prosecute potential violations of law; and
‘‘(C) the term ‘State securities or law enforcement
authority’ means the authority of any State or territory
that is empowered under State or territory law to detect,
investigate, or prosecute potential violations of law.’’.
SEC. 929L. ENHANCED APPLICATION OF ANTIFRAUD PROVISIONS.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended—
(1) in section 9—
(A) by striking ‘‘registered on a national securities
exchange’’ each place that term appears and inserting
‘‘other than a government security’’;
(B) in subsection (b), by striking ‘‘by use of any facility
of a national securities exchange,’’; and
(C) in subsection (c), by inserting after ‘‘unlawful for
any’’ the following: ‘‘broker, dealer, or’’;
(2) in section 10(a)(1), by striking ‘‘registered on a national
securities exchange’’ and inserting ‘‘other than a government
security’’; and
(3) in section 15(c)(1)(A), by striking ‘‘otherwise than on
a national securities exchange of which it is a member’’.

15 USC 78i.

15 USC 78j.

15 USC 78o.

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SEC. 929M. AIDING AND ABETTING AUTHORITY UNDER THE SECURITIES ACT AND THE INVESTMENT COMPANY ACT.

(a) UNDER THE SECURITIES ACT OF 1933.—Section 15 of the
Securities Act of 1933 (15 U.S.C. 77o) is amended—
(1) by striking ‘‘Every person who’’ and inserting ‘‘(a)
CONTROLLING PERSONS.—Every person who’’; and
(2) by adding at the end the following:
‘‘(b) PROSECUTION OF PERSONS WHO AID AND ABET VIOLATIONS.—For purposes of any action brought by the Commission
under subparagraph (b) or (d) of section 20, any person that knowingly or recklessly provides substantial assistance to another person
in violation of a provision of this Act, or of any rule or regulation
issued under this Act, shall be deemed to be in violation of such
provision to the same extent as the person to whom such assistance
is provided.’’.
(b) UNDER THE INVESTMENT COMPANY ACT OF 1940.—Section
48 of the Investment Company Act of 1940 (15 U.S.C. 80a–48)
is amended by redesignating subsection (b) as subsection (c) and
inserting after subsection (a) the following:
‘‘(b) For purposes of any action brought by the Commission
under subsection (d) or (e) of section 42, any person that knowingly
or recklessly provides substantial assistance to another person in

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violation of a provision of this Act, or of any rule or regulation
issued under this Act, shall be deemed to be in violation of such
provision to the same extent as the person to whom such assistance
is provided.’’.
SEC. 929N. AUTHORITY TO IMPOSE PENALTIES FOR AIDING AND ABETTING VIOLATIONS OF THE INVESTMENT ADVISERS ACT.

Section 209 of the Investment Advisers Act of 1940 (15 U.S.C.
80b–9) is amended by inserting at the end the following new subsection:
‘‘(f) AIDING AND ABETTING.—For purposes of any action brought
by the Commission under subsection (e), any person that knowingly
or recklessly has aided, abetted, counseled, commanded, induced,
or procured a violation of any provision of this Act, or of any
rule, regulation, or order hereunder, shall be deemed to be in
violation of such provision, rule, regulation, or order to the same
extent as the person that committed such violation.’’.
SEC. 929O. AIDING AND ABETTING STANDARD OF KNOWLEDGE SATISFIED BY RECKLESSNESS.

Section 20(e) of the Securities Exchange Act of 1934 (15 U.S.C.
78t(e)) is amended by inserting ‘‘or recklessly’’ after ‘‘knowingly’’.

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SEC. 929P. STRENGTHENING ENFORCEMENT BY THE COMMISSION.

(a) AUTHORITY TO IMPOSE CIVIL PENALTIES IN CEASE AND
DESIST PROCEEDINGS.—
(1) UNDER THE SECURITIES ACT OF 1933.—Section 8A of
the Securities Act of 1933 (15 U.S.C. 77h–1) is amended by
adding at the end the following new subsection:
‘‘(g) AUTHORITY TO IMPOSE MONEY PENALTIES.—
‘‘(1) GROUNDS.—In any cease-and-desist proceeding under
subsection (a), the Commission may impose a civil penalty
on a person if the Commission finds, on the record, after notice
and opportunity for hearing, that—
‘‘(A) such person—
‘‘(i) is violating or has violated any provision of
this title, or any rule or regulation issued under this
title; or
‘‘(ii) is or was a cause of the violation of any
provision of this title, or any rule or regulation thereunder; and
‘‘(B) such penalty is in the public interest.
‘‘(2) MAXIMUM AMOUNT OF PENALTY.—
‘‘(A) FIRST TIER.—The maximum amount of a penalty
for each act or omission described in paragraph (1) shall
be $7,500 for a natural person or $75,000 for any other
person.
‘‘(B) SECOND TIER.—Notwithstanding subparagraph
(A), the maximum amount of penalty for each such act
or omission shall be $75,000 for a natural person or
$375,000 for any other person, if the act or omission
described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory
requirement.
‘‘(C) THIRD TIER.—Notwithstanding subparagraphs (A)
and (B), the maximum amount of penalty for each such
act or omission shall be $150,000 for a natural person
or $725,000 for any other person, if—

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124 STAT. 1863

‘‘(i) the act or omission described in paragraph
(1) involved fraud, deceit, manipulation, or deliberate
or reckless disregard of a regulatory requirement; and
‘‘(ii) such act or omission directly or indirectly
resulted in—
‘‘(I) substantial losses or created a significant
risk of substantial losses to other persons; or
‘‘(II) substantial pecuniary gain to the person
who committed the act or omission.
‘‘(3) EVIDENCE CONCERNING ABILITY TO PAY.—In any proceeding in which the Commission may impose a penalty under
this section, a respondent may present evidence of the ability
of the respondent to pay such penalty. The Commission may,
in its discretion, consider such evidence in determining whether
such penalty is in the public interest. Such evidence may relate
to the extent of the ability of the respondent to continue in
business and the collectability of a penalty, taking into account
any other claims of the United States or third parties upon
the assets of the respondent and the amount of the assets
of the respondent.’’.
(2) UNDER THE SECURITIES EXCHANGE ACT OF 1934.—Section
21B(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78u–
2(a)) is amended—
(A) by striking the matter following paragraph (4);
(B) in the matter preceding paragraph (1), by inserting
after ‘‘opportunity for hearing,’’ the following: ‘‘that such
penalty is in the public interest and’’;
(C) by redesignating paragraphs (1) through (4) as
subparagraphs (A) through (D), respectively, and adjusting
the margins accordingly;
(D) by striking ‘‘In any proceeding’’ and inserting the
following:
‘‘(1) IN GENERAL.—In any proceeding’’; and
(E) by adding at the end the following:
‘‘(2) CEASE-AND-DESIST PROCEEDINGS.—In any proceeding
instituted under section 21C against any person, the Commission may impose a civil penalty, if the Commission finds, on
the record after notice and opportunity for hearing, that such
person—
‘‘(A) is violating or has violated any provision of this
title, or any rule or regulation issued under this title;
or
‘‘(B) is or was a cause of the violation of any provision
of this title, or any rule or regulation issued under this
title.’’.
(3) UNDER THE INVESTMENT COMPANY ACT OF 1940.—Section
9(d)(1) of the Investment Company Act of 1940 (15 U.S.C.
80a–9(d)(1)) is amended—
(A) by striking the matter following subparagraph (C);
(B) in the matter preceding subparagraph (A), by
inserting after ‘‘opportunity for hearing,’’ the following:
‘‘that such penalty is in the public interest, and’’;
(C) by redesignating subparagraphs (A) through (C)
as clauses (i) through (iii), respectively, and adjusting the
margins accordingly;
(D) by striking ‘‘In any proceeding’’ and inserting the
following:

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PUBLIC LAW 111–203—JULY 21, 2010

‘‘(A) IN GENERAL.—In any proceeding’’; and
(E) by adding at the end the following:
‘‘(B) CEASE-AND-DESIST PROCEEDINGS.—In any proceeding instituted pursuant to subsection (f) against any
person, the Commission may impose a civil penalty if the
Commission finds, on the record, after notice and opportunity for hearing, that such person—
‘‘(i) is violating or has violated any provision of
this title, or any rule or regulation issued under this
title; or
‘‘(ii) is or was a cause of the violation of any
provision of this title, or any rule or regulation issued
under this title.’’.
(4) UNDER THE INVESTMENT ADVISERS ACT OF 1940.—Section
203(i)(1) of the Investment Advisers Act of 1940 (15 U.S.C.
80b–3(i)(1)) is amended—
(A) by striking the matter following subparagraph (D);
(B) in the matter preceding subparagraph (A), by
inserting after ‘‘opportunity for hearing,’’ the following:
‘‘that such penalty is in the public interest and’’;
(C) by redesignating subparagraphs (A) through (D)
as clauses (i) through (iv), respectively, and adjusting the
margins accordingly;
(D) by striking ‘‘In any proceeding’’ and inserting the
following:
‘‘(A) IN GENERAL.—In any proceeding’’; and
(E) by adding at the end the following new subparagraph:
‘‘(B) CEASE-AND-DESIST PROCEEDINGS.—In any proceeding instituted pursuant to subsection (k) against any
person, the Commission may impose a civil penalty if the
Commission finds, on the record, after notice and opportunity for hearing, that such person—
‘‘(i) is violating or has violated any provision of
this title, or any rule or regulation issued under this
title; or
‘‘(ii) is or was a cause of the violation of any
provision of this title, or any rule or regulation issued
under this title.’’.
(b) EXTRATERRITORIAL JURISDICTION OF THE ANTIFRAUD PROVISIONS OF THE FEDERAL SECURITIES LAWS.—
(1) UNDER THE SECURITIES ACT OF 1933.—Section 22 of
the Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by
adding at the end the following new subsection:
‘‘(c) EXTRATERRITORIAL JURISDICTION.—The district courts of
the United States and the United States courts of any Territory
shall have jurisdiction of an action or proceeding brought or
instituted by the Commission or the United States alleging a violation of section 17(a) involving—
‘‘(1) conduct within the United States that constitutes
significant steps in furtherance of the violation, even if the
securities transaction occurs outside the United States and
involves only foreign investors; or
‘‘(2) conduct occurring outside the United States that has
a foreseeable substantial effect within the United States.’’.

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(2) UNDER THE SECURITIES EXCHANGE ACT OF 1934.—Section
27 of the Securities Exchange Act of 1934 (15 U.S.C. 78aa)
is amended—
(A) by striking ‘‘The district’’ and inserting the following:
‘‘(a) IN GENERAL.—The district’’; and
(B) by adding at the end the following new subsection:
‘‘(b) EXTRATERRITORIAL JURISDICTION.—The district courts of
the United States and the United States courts of any Territory
shall have jurisdiction of an action or proceeding brought or
instituted by the Commission or the United States alleging a violation of the antifraud provisions of this title involving—
‘‘(1) conduct within the United States that constitutes
significant steps in furtherance of the violation, even if the
securities transaction occurs outside the United States and
involves only foreign investors; or
‘‘(2) conduct occurring outside the United States that has
a foreseeable substantial effect within the United States.’’.
(3) UNDER THE INVESTMENT ADVISERS ACT OF 1940.—Section
214 of the Investment Advisers Act of 1940 (15 U.S.C. 80b–
14) is amended—
(A) by striking ‘‘The district’’ and inserting the following:
‘‘(a) IN GENERAL.—The district’’; and
(B) by adding at the end the following new subsection:
‘‘(b) EXTRATERRITORIAL JURISDICTION.—The district courts of
the United States and the United States courts of any Territory
shall have jurisdiction of an action or proceeding brought or
instituted by the Commission or the United States alleging a violation of section 206 involving—
‘‘(1) conduct within the United States that constitutes
significant steps in furtherance of the violation, even if the
violation is committed by a foreign adviser and involves only
foreign investors; or
‘‘(2) conduct occurring outside the United States that has
a foreseeable substantial effect within the United States.’’.
(c) CONTROL PERSON LIABILITY UNDER THE SECURITIES
EXCHANGE ACT OF 1934.—Section 20(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78t(a)) is amended by inserting after ‘‘controlled person is liable’’ the following: ‘‘(including to the Commission
in any action brought under paragraph (1) or (3) of section 21(d))’’.

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SEC. 929Q. REVISION TO RECORDKEEPING RULE.

(a) INVESTMENT COMPANY ACT OF 1940 AMENDMENTS.—Section
31 of the Investment Company Act of 1940 (15 U.S.C. 80a–30)
is amended—
(1) in subsection (a)(1), by adding at the end the following:
‘‘Each person having custody or use of the securities, deposits,
or credits of a registered investment company shall maintain
and preserve all records that relate to the custody or use
by such person of the securities, deposits, or credits of the
registered investment company for such period or periods as
the Commission, by rule or regulation, may prescribe, as necessary or appropriate in the public interest or for the protection
of investors.’’; and
(2) in subsection (b), by adding at the end the following:
‘‘(4) RECORDS OF PERSONS WITH CUSTODY OR USE.—

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‘‘(A) IN GENERAL.—Records of persons having custody
or use of the securities, deposits, or credits of a registered
investment company that relate to such custody or use,
are subject at any time, or from time to time, to such
reasonable periodic, special, or other examinations and
other information and document requests by representatives of the Commission, as the Commission deems necessary or appropriate in the public interest or for the
protection of investors.
‘‘(B) CERTAIN PERSONS SUBJECT TO OTHER REGULATION.—Any person that is subject to regulation and examination by a Federal financial institution regulatory agency
(as such term is defined under section 212(c)(2) of title
18, United States Code) may satisfy any examination
request, information request, or document request
described under subparagraph (A), by providing to the
Commission a detailed listing, in writing, of the securities,
deposits, or credits of the registered investment company
within the custody or use of such person.’’.
(b) INVESTMENT ADVISERS ACT OF 1940 AMENDMENT.—Section
204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b–4)
is amended by adding at the end the following new subsection:
‘‘(d) RECORDS OF PERSONS WITH CUSTODY OR USE.—
‘‘(1) IN GENERAL.—Records of persons having custody or
use of the securities, deposits, or credits of a client, that relate
to such custody or use, are subject at any time, or from time
to time, to such reasonable periodic, special, or other examinations and other information and document requests by representatives of the Commission, as the Commission deems necessary or appropriate in the public interest or for the protection
of investors.
‘‘(2) CERTAIN PERSONS SUBJECT TO OTHER REGULATION.—
Any person that is subject to regulation and examination by
a Federal financial institution regulatory agency (as such term
is defined under section 212(c)(2) of title 18, United States
Code) may satisfy any examination request, information
request, or document request described under paragraph (1),
by providing the Commission with a detailed listing, in writing,
of the securities, deposits, or credits of the client within the
custody or use of such person.’’.

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SEC. 929R. BENEFICIAL OWNERSHIP AND SHORT-SWING PROFIT
REPORTING.

(a) BENEFICIAL OWNERSHIP REPORTING.—Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended—
(1) in subsection (d)(1)—
(A) by inserting after ‘‘within ten days after such
acquisition’’ the following: ‘‘or within such shorter time
as the Commission may establish by rule’’; and
(B) by striking ‘‘send to the issuer of the security
at its principal executive office, by registered or certified
mail, send to each exchange where the security is traded,
and’’;
(2) in subsection (d)(2)—
(A) by striking ‘‘in the statements to the issuer and
the exchange, and’’; and

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124 STAT. 1867

(B) by striking ‘‘shall be transmitted to the issuer
and the exchange and’’;
(3) in subsection (g)(1), by striking ‘‘shall send to the issuer
of the security and’’; and
(4) in subsection (g)(2)—
(A) by striking ‘‘sent to the issuer and’’; and
(B) by striking ‘‘shall be transmitted to the issuer
and’’.
(b) SHORT-SWING PROFIT REPORTING.—Section 16(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78p(a)) is amended—
(1) in paragraph (1), by striking ‘‘(and, if such security
is registered on a national securities exchange, also with the
exchange)’’; and
(2) in paragraph (2)(B), by inserting after ‘‘officer’’ the
following: ‘‘, or within such shorter time as the Commission
may establish by rule’’.
SEC. 929S. FINGERPRINTING.

Section 17(f)(2) of the Securities Exchange Act of 1934 (15
U.S.C. 78q(f)(2)) is amended—
(1) in the first sentence, by striking ‘‘and registered clearing
agency,’’ and inserting ‘‘registered clearing agency, registered
securities information processor, national securities exchange,
and national securities association’’; and
(2) in the second sentence, by striking ‘‘or clearing agency,’’
and inserting ‘‘clearing agency, securities information processor,
national securities exchange, or national securities association,’’.
SEC. 929T. EQUAL TREATMENT OF SELF-REGULATORY ORGANIZATION
RULES.

Section 29(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78cc(a)) is amended by striking ‘‘an exchange required thereby’’
and inserting ‘‘a self-regulatory organization,’’.
SEC. 929U. DEADLINE FOR COMPLETING EXAMINATIONS, INSPECTIONS
AND ENFORCEMENT ACTIONS.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 4D the following new section:

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‘‘SEC. 4E. DEADLINE FOR COMPLETING ENFORCEMENT INVESTIGATIONS AND COMPLIANCE EXAMINATIONS AND INSPECTIONS.

‘‘(a) ENFORCEMENT INVESTIGATIONS.—
‘‘(1) IN GENERAL.—Not later than 180 days after the date
on which Commission staff provide a written Wells notification
to any person, the Commission staff shall either file an action
against such person or provide notice to the Director of the
Division of Enforcement of its intent to not file an action.
‘‘(2) EXCEPTIONS FOR CERTAIN COMPLEX ACTIONS.—Notwithstanding paragraph (1), if the Director of the Division of
Enforcement of the Commission or the Director’s designee determines that a particular enforcement investigation is sufficiently
complex such that a determination regarding the filing of an
action against a person cannot be completed within the deadline
specified in paragraph (1), the Director of the Division of
Enforcement of the Commission or the Director’s designee may,
after providing notice to the Chairman of the Commission,

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15 USC 78d–5.

Notification.
Filing.

Time period.

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extend such deadline as needed for one additional 180-day
period. If after the additional 180-day period the Director of
the Division of Enforcement of the Commission or the Director’s
designee determines that a particular enforcement investigation
is sufficiently complex such that a determination regarding
the filing of an action against a person cannot be completed
within the additional 180-day period, the Director of the Division of Enforcement of the Commission or the Director’s designee may, after providing notice to and receiving approval
of the Commission, extend such deadline as needed for one
or more additional successive 180-day periods.
‘‘(b) COMPLIANCE EXAMINATIONS AND INSPECTIONS.—
‘‘(1) IN GENERAL.—Not later than 180 days after the date
on which Commission staff completes the on-site portion of
its compliance examination or inspection or receives all records
requested from the entity being examined or inspected, whichever is later, Commission staff shall provide the entity being
examined or inspected with written notification indicating
either that the examination or inspection has concluded, has
concluded without findings, or that the staff requests the entity
undertake corrective action.
‘‘(2) EXCEPTION FOR CERTAIN COMPLEX ACTIONS.—Notwithstanding paragraph (1), if the head of any division or office
within the Commission responsible for compliance examinations
and inspections or his designee determines that a particular
compliance examination or inspection is sufficiently complex
such that a determination regarding concluding the examination or inspection, or regarding the staff requests the entity
undertake corrective action, cannot be completed within the
deadline specified in paragraph (1), the head of any division
or office within the Commission responsible for compliance
examinations and inspections or his designee may, after providing notice to the Chairman of the Commission, extend such
deadline as needed for one additional 180-day period.’’.

Notification.

Time period.

SEC. 929V. SECURITY INVESTOR PROTECTION ACT AMENDMENTS.

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(a) INCREASING THE MINIMUM ASSESSMENT PAID BY SIPC MEMBERS.—Section 4(d)(1)(C) of the Securities Investor Protection Act
of 1970 (15 U.S.C. 78ddd(d)(1)(C)) is amended by striking ‘‘$150
per annum’’ and inserting the following: ‘‘0.02 percent of the gross
revenues from the securities business of such member of SIPC’’.
(b) INCREASING THE FINE FOR PROHIBITED ACTS UNDER SIPA.—
Section 14(c) of the Securities Investor Protection Act of 1970 (15
U.S.C. 78jjj(c)) is amended—
(1) in paragraph (1), by striking ‘‘$50,000’’ and inserting
‘‘$250,000’’; and
(2) in paragraph (2), by striking ‘‘$50,000’’ and inserting
‘‘$250,000’’.
(c) PENALTY FOR MISREPRESENTATION OF SIPC MEMBERSHIP
OR PROTECTION.—Section 14 of the Securities Investor Protection
Act of 1970 (15 U.S.C. 78jjj) is amended by adding at the end
the following new subsection:
‘‘(d) MISREPRESENTATION OF SIPC MEMBERSHIP OR PROTECTION.—
‘‘(1) IN GENERAL.—Any person who falsely represents by
any means (including, without limitation, through the Internet
or any other medium of mass communication), with actual

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knowledge of the falsity of the representation and with an
intent to deceive or cause injury to another, that such person,
or another person, is a member of SIPC or that any person
or account is protected or is eligible for protection under this
Act or by SIPC, shall be liable for any damages caused thereby
and shall be fined not more than $250,000 or imprisoned for
not more than 5 years.
‘‘(2) INJUNCTIONS.—Any court having jurisdiction of a civil
action arising under this Act may grant temporary injunctions
and final injunctions on such terms as the court deems reasonable to prevent or restrain any violation of paragraph (1).
Any such injunction may be served anywhere in the United
States on the person enjoined, shall be operative throughout
the United States, and shall be enforceable, by proceedings
in contempt or otherwise, by any United States court having
jurisdiction over that person. The clerk of the court granting
the injunction shall, when requested by any other court in
which enforcement of the injunction is sought, transmit
promptly to the other court a certified copy of all papers in
the case on file in such clerk’s office.’’.

Procedures.
Certification.
Records.

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SEC. 929W. NOTICE TO MISSING SECURITY HOLDERS.

Section 17A of the Securities Exchange Act of 1934 (15 U.S.C.
78q–1) is amended by adding at the end the following new subsection:
‘‘(g) DUE DILIGENCE FOR THE DELIVERY OF DIVIDENDS,
INTEREST, AND OTHER VALUABLE PROPERTY RIGHTS.—
‘‘(1) REVISION OF RULES REQUIRED.—The Commission shall
revise its regulations in section 240.17Ad–17 of title 17, Code
of Federal Regulations, as in effect on December 8, 1997, to
extend the application of such section to brokers and dealers
and to provide for the following:
‘‘(A) A requirement that the paying agent provide a
single written notification to each missing security holder
that the missing security holder has been sent a check
that has not yet been negotiated. The written notification
may be sent along with a check or other mailing subsequently sent to the missing security holder but must be
provided no later than 7 months after the sending of the
not yet negotiated check.
‘‘(B) An exclusion for paying agents from the notification requirements when the value of the not yet negotiated
check is less than $25.
‘‘(C) A provision clarifying that the requirements
described in subparagraph (A) shall have no effect on State
escheatment laws.
‘‘(D) For purposes of such revised regulations—
‘‘(i) a security holder shall be considered a ‘missing
security holder’ if a check is sent to the security holder
and the check is not negotiated before the earlier of
the paying agent sending the next regularly scheduled
check or the elapsing of 6 months after the sending
of the not yet negotiated check; and
‘‘(ii) the term ‘paying agent’ includes any issuer,
transfer agent, broker, dealer, investment adviser,
indenture trustee, custodian, or any other person that

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Deadline.

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PUBLIC LAW 111–203—JULY 21, 2010
accepts payments from the issuer of a security and
distributes the payments to the holders of the security.
‘‘(2) RULEMAKING.—The Commission shall adopt such rules,
regulations, and orders necessary to implement this subsection
no later than 1 year after the date of enactment of this subsection. In proposing such rules, the Commission shall seek
to minimize disruptions to current systems used by or on behalf
of paying agents to process payment to account holders and
avoid requiring multiple paying agents to send written notification to a missing security holder regarding the same not yet
negotiated check.’’.

Deadline.

SEC. 929X. SHORT SALE REFORMS.

Regulations.

Deadline.

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Regulations.

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(a) SHORT SALE DISCLOSURE.—Section 13(f) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m(f)) is amended by redesignating paragraphs (2), (3), (4), and (5) as paragraphs (3), (4), (5),
and (6), respectively, and inserting after paragraph (1) the following:
‘‘(2) The Commission shall prescribe rules providing for
the public disclosure of the name of the issuer and the title,
class, CUSIP number, aggregate amount of the number of
short sales of each security, and any additional information
determined by the Commission following the end of the
reporting period. At a minimum, such public disclosure shall
occur every month.’’.
(b) SHORT SELLING ENFORCEMENT.—Section 9 of the Securities
Exchange Act of 1934 (15 U.S.C. 78i) is amended—
(1) by redesignating subsections (d), (e), (f), (g), (h), and
(i) as subsections (e), (f), (g), (h), (i), and (j), respectively; and
(2) inserting after subsection (c), the following new subsection:
‘‘(d) TRANSACTIONS RELATING TO SHORT SALES OF SECURITIES.—
It shall be unlawful for any person, directly or indirectly, by the
use of the mails or any means or instrumentality of interstate
commerce, or of any facility of any national securities exchange,
or for any member of a national securities exchange to effect,
alone or with one or more other persons, a manipulative short
sale of any security. The Commission shall issue such other rules
as are necessary or appropriate to ensure that the appropriate
enforcement options and remedies are available for violations of
this subsection in the public interest or for the protection of investors.’’.
(c) INVESTOR NOTIFICATION.—Section 15 of the Securities
Exchange Act of 1934 (15 U.S.C. 78o) is amended—
(1) by redesignating subsections (e), (f), (g), (h), and (i)
as subsections (f), (g), (h), (i), and (j), respectively; and
(2) inserting after subsection (d) the following new subsection:
‘‘(e) NOTICES TO CUSTOMERS REGARDING SECURITIES LENDING.—
Every registered broker or dealer shall provide notice to its customers that they may elect not to allow their fully paid securities
to be used in connection with short sales. If a broker or dealer
uses a customer’s securities in connection with short sales, the
broker or dealer shall provide notice to its customer that the broker
or dealer may receive compensation in connection with lending
the customer’s securities. The Commission, by rule, as it deems
necessary or appropriate in the public interest and for the protection

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124 STAT. 1871

of investors, may prescribe the form, content, time, and manner
of delivery of any notice required under this paragraph.’’.
SEC. 929Y. STUDY ON EXTRATERRITORIAL PRIVATE RIGHTS OF
ACTION.

(a) IN GENERAL.—The Securities and Exchange Commission
of the United States shall solicit public comment and thereafter
conduct a study to determine the extent to which private rights
of action under the antifraud provisions of the Securities and
Exchange Act of 1934 (15 U.S.C. 78u-4) should be extended to
cover—
(1) conduct within the United States that constitutes a
significant step in the furtherance of the violation, even if
the securities transaction occurs outside the United States and
involves only foreign investors; and
(2) conduct occurring outside the United States that has
a foreseeable substantial effect within the United States.
(b) CONTENTS.—The study shall consider and analyze, among
other things—
(1) the scope of such a private right of action, including
whether it should extend to all private actors or whether it
should be more limited to extend just to institutional investors
or otherwise;
(2) what implications such a private right of action would
have on international comity;
(3) the economic costs and benefits of extending a private
right of action for transnational securities frauds; and
(4) whether a narrower extraterritorial standard should
be adopted.
(c) REPORT.—A report of the study shall be submitted and
recommendations made to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial
Services of the House not later than 18 months after the date
of enactment of this Act.

Public comment.

SEC. 929Z. GAO STUDY ON SECURITIES LITIGATION.

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(a) STUDY.—The Comptroller General of the United States shall
conduct a study on the impact of authorizing a private right of
action against any person who aids or abets another person in
violation of the securities laws. To the extent feasible, this study
shall include—
(1) a review of the role of secondary actors in companies
issuance of securities;
(2) the courts interpretation of the scope of liability for
secondary actors under Federal securities laws after January
14, 2008; and
(3) the types of lawsuits decided under the Private Securities Litigation Act of 1995.
(b) REPORT.—Not later than 1 year after the date of enactment
of this Act, the Comptroller General shall submit a report to Congress on the findings of the study required under subsection (a).

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Subtitle C—Improvements to the
Regulation of Credit Rating Agencies
15 USC 78o–7
note.

SEC. 931. FINDINGS.

Congress finds the following:
(1) Because of the systemic importance of credit ratings
and the reliance placed on credit ratings by individual and
institutional investors and financial regulators, the activities
and performances of credit rating agencies, including nationally
recognized statistical rating organizations, are matters of
national public interest, as credit rating agencies are central
to capital formation, investor confidence, and the efficient
performance of the United States economy.
(2) Credit rating agencies, including nationally recognized
statistical rating organizations, play a critical ‘‘gatekeeper’’ role
in the debt market that is functionally similar to that of securities analysts, who evaluate the quality of securities in the
equity market, and auditors, who review the financial statements of firms. Such role justifies a similar level of public
oversight and accountability.
(3) Because credit rating agencies perform evaluative and
analytical services on behalf of clients, much as other financial
‘‘gatekeepers’’ do, the activities of credit rating agencies are
fundamentally commercial in character and should be subject
to the same standards of liability and oversight as apply to
auditors, securities analysts, and investment bankers.
(4) In certain activities, particularly in advising arrangers
of structured financial products on potential ratings of such
products, credit rating agencies face conflicts of interest that
need to be carefully monitored and that therefore should be
addressed explicitly in legislation in order to give clearer
authority to the Securities and Exchange Commission.
(5) In the recent financial crisis, the ratings on structured
financial products have proven to be inaccurate. This inaccuracy
contributed significantly to the mismanagement of risks by
financial institutions and investors, which in turn adversely
impacted the health of the economy in the United States and
around the world. Such inaccuracy necessitates increased
accountability on the part of credit rating agencies.

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SEC. 932. ENHANCED REGULATION, ACCOUNTABILITY, AND TRANSPARENCY OF NATIONALLY RECOGNIZED STATISTICAL
RATING ORGANIZATIONS.

(a) IN GENERAL.—Section 15E of the Securities Exchange Act
of 1934 (15 U.S.C. 78o–7) is amended—
(1) in subsection (b)—
(A) in paragraph (1)(A), by striking ‘‘furnished’’ and
inserting ‘‘filed’’ and by striking ‘‘furnishing’’ and inserting
‘‘filing’’;
(B) in paragraph (1)(B), by striking ‘‘furnishing’’ and
inserting ‘‘filing’’; and
(C) in the first sentence of paragraph (2), by striking
‘‘furnish to’’ and inserting ‘‘file with’’;
(2) in subsection (c)—
(A) in paragraph (2)—

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124 STAT. 1873

(i) in the second sentence, by inserting ‘‘any other
provision of this section, or’’ after ‘‘Notwithstanding’’;
and
(ii) by inserting after the period at the end the
following: ‘‘Nothing in this paragraph may be construed
to afford a defense against any action or proceeding
brought by the Commission to enforce the antifraud
provisions of the securities laws.’’; and
(B) by adding at the end the following:
‘‘(3) INTERNAL CONTROLS OVER PROCESSES FOR DETERMINING
CREDIT RATINGS.—
‘‘(A) IN GENERAL.—Each nationally recognized statistical rating organization shall establish, maintain, enforce,
and document an effective internal control structure governing the implementation of and adherence to policies,
procedures, and methodologies for determining credit
ratings, taking into consideration such factors as the
Commission may prescribe, by rule.
‘‘(B) ATTESTATION REQUIREMENT.—The Commission
shall prescribe rules requiring each nationally recognized
statistical rating organization to submit to the Commission
an annual internal controls report, which shall contain—
‘‘(i) a description of the responsibility of the
management of the nationally recognized statistical
rating organization in establishing and maintaining
an effective internal control structure under subparagraph (A);
‘‘(ii) an assessment of the effectiveness of the
internal control structure of the nationally recognized
statistical rating organization; and
‘‘(iii) the attestation of the chief executive officer,
or equivalent individual, of the nationally recognized
statistical rating organization.’’;
(3) in subsection (d)—
(A) by inserting after ‘‘or revoke the registration of
any nationally recognized statistical rating organization’’
the following: ‘‘, or with respect to any person who is
associated with, who is seeking to become associated with,
or, at the time of the alleged misconduct, who was associated or was seeking to become associated with a nationally
recognized statistical rating organization, the Commission,
by order, shall censure, place limitations on the activities
or functions of such person, suspend for a period not
exceeding 1 year, or bar such person from being associated
with a nationally recognized statistical rating organization,’’;
(B) by inserting ‘‘bar’’ after ‘‘placing of limitations,
suspension,’’;
(C) in paragraph (2), by striking ‘‘furnished to’’ and
inserting ‘‘filed with’’;
(D) in paragraph (2), by redesignating subparagraphs
(A) and (B) as clauses (i) and (ii), respectively, and
adjusting the clause margins accordingly;
(E) by redesignating paragraphs (1) through (5) as
subparagraphs (A) through (E), respectively, and adjusting
the subparagraph margins accordingly;

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Reports.

Assessment.

Censure.

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124 STAT. 1874

PUBLIC LAW 111–203—JULY 21, 2010
(F) in the matter preceding subparagraph (A), as so
redesignated, by striking ‘‘The Commission’’ and inserting
the following:
‘‘(1) IN GENERAL.—The Commission’’;
(G) in subparagraph (D), as so redesignated—
(i) by striking ‘‘furnish’’ and inserting ‘‘file’’; and
(ii) by striking ‘‘or’’ at the end.
(H) in subparagraph (E), as so redesignated, by striking
the period at the end and inserting a semicolon; and
(I) by adding at the end the following:
‘‘(F) has failed reasonably to supervise, with a view
to preventing a violation of the securities laws, an individual who commits such a violation, if the individual
is subject to the supervision of that person.
‘‘(2) SUSPENSION OR REVOCATION FOR PARTICULAR CLASS
OF SECURITIES.—
‘‘(A) IN GENERAL.—The Commission may temporarily
suspend or permanently revoke the registration of a nationally recognized statistical rating organization with respect
to a particular class or subclass of securities, if the Commission finds, on the record after notice and opportunity for
hearing, that the nationally recognized statistical rating
organization does not have adequate financial and managerial resources to consistently produce credit ratings with
integrity.
‘‘(B) CONSIDERATIONS.—In making any determination
under subparagraph (A), the Commission shall consider—
‘‘(i) whether the nationally recognized statistical
rating organization has failed over a sustained period
of time, as determined by the Commission, to produce
ratings that are accurate for that class or subclass
of securities; and
‘‘(ii) such other factors as the Commission may
determine.’’;
(4) in subsection (h), by adding at the end the following:
‘‘(3) SEPARATION OF RATINGS FROM SALES AND MARKETING.—
‘‘(A) RULES REQUIRED.—The Commission shall issue
rules to prevent the sales and marketing considerations
of a nationally recognized statistical rating organization
from influencing the production of ratings by the nationally
recognized statistical rating organization.
‘‘(B) CONTENTS OF RULES.—The rules issued under
subparagraph (A) shall provide for—
‘‘(i) exceptions for small nationally recognized
statistical rating organizations with respect to which
the Commission determines that the separation of the
production of ratings and sales and marketing activities is not appropriate; and
‘‘(ii) suspension or revocation of the registration
of a nationally recognized statistical rating organization, if the Commission finds, on the record, after notice
and opportunity for a hearing, that—
‘‘(I) the nationally recognized statistical rating
organization has committed a violation of a rule
issued under this subsection; and
‘‘(II) the violation of a rule issued under this
subsection affected a rating.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1875

‘‘(4) LOOK-BACK REQUIREMENT.—
‘‘(A) REVIEW BY THE NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION.—Each nationally recognized
statistical rating organization shall establish, maintain,
and enforce policies and procedures reasonably designed
to ensure that, in any case in which an employee of a
person subject to a credit rating of the nationally recognized
statistical rating organization or the issuer, underwriter,
or sponsor of a security or money market instrument subject to a credit rating of the nationally recognized statistical
rating organization was employed by the nationally recognized statistical rating organization and participated in
any capacity in determining credit ratings for the person
or the securities or money market instruments during the
1-year period preceding the date an action was taken with
respect to the credit rating, the nationally recognized statistical rating organization shall—
‘‘(i) conduct a review to determine whether any
conflicts of interest of the employee influenced the
credit rating; and
‘‘(ii) take action to revise the rating if appropriate,
in accordance with such rules as the Commission shall
prescribe.
‘‘(B) REVIEW BY COMMISSION.—
‘‘(i) IN GENERAL.—The Commission shall conduct
periodic reviews of the policies described in subparagraph (A) and the implementation of the policies at
each nationally recognized statistical rating organization to ensure they are reasonably designed and implemented to most effectively eliminate conflicts of
interest.
‘‘(ii) TIMING OF REVIEWS.—The Commission shall
review the code of ethics and conflict of interest policy
of each nationally recognized statistical rating
organization—
‘‘(I) not less frequently than annually; and
‘‘(II) whenever such policies are materially
modified or amended.
‘‘(5) REPORT TO COMMISSION ON CERTAIN EMPLOYMENT
TRANSITIONS.—
‘‘(A) REPORT REQUIRED.—Each nationally recognized
statistical rating organization shall report to the Commission any case such organization knows or can reasonably
be expected to know where a person associated with such
organization within the previous 5 years obtains employment with any obligor, issuer, underwriter, or sponsor of
a security or money market instrument for which the
organization issued a credit rating during the 12-month
period prior to such employment, if such employee—
‘‘(i) was a senior officer of such organization;
‘‘(ii) participated in any capacity in determining
credit ratings for such obligor, issuer, underwriter, or
sponsor; or
‘‘(iii) supervised an employee described in clause
(ii).

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124 STAT. 1876

‘‘(B) PUBLIC DISCLOSURE.—Upon receiving such a
report, the Commission shall make such information publicly available.’’;
(5) in subsection (j)—
(A) by striking ‘‘Each’’ and inserting the following:
‘‘(1) IN GENERAL.—Each’’; and
(B) by adding at the end the following:
‘‘(2) LIMITATIONS.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph
(B), an individual designated under paragraph (1) may
not, while serving in the designated capacity—
‘‘(i) perform credit ratings;
‘‘(ii) participate in the development of ratings
methodologies or models;
‘‘(iii) perform marketing or sales functions; or
‘‘(iv) participate in establishing compensation
levels, other than for employees working for that individual.
‘‘(B) EXCEPTION.—The Commission may exempt a small
nationally recognized statistical rating organization from
the limitations under this paragraph, if the Commission
finds that compliance with such limitations would impose
an unreasonable burden on the nationally recognized statistical rating organization.
‘‘(3) OTHER DUTIES.—Each individual designated under
paragraph (1) shall establish procedures for the receipt, retention, and treatment of—
‘‘(A) complaints regarding credit ratings, models, methodologies, and compliance with the securities laws and
the policies and procedures developed under this section;
and
‘‘(B) confidential, anonymous complaints by employees
or users of credit ratings.
‘‘(4) COMPENSATION.—The compensation of each compliance
officer appointed under paragraph (1) shall not be linked to
the financial performance of the nationally recognized statistical rating organization and shall be arranged so as to ensure
the independence of the officer’s judgment.
‘‘(5) ANNUAL REPORTS REQUIRED.—
‘‘(A) ANNUAL REPORTS REQUIRED.—Each individual designated under paragraph (1) shall submit to the nationally
recognized statistical rating organization an annual report
on the compliance of the nationally recognized statistical
rating organization with the securities laws and the policies
and procedures of the nationally recognized statistical
rating organization that includes—
‘‘(i) a description of any material changes to the
code of ethics and conflict of interest policies of the
nationally recognized statistical rating organization;
and
‘‘(ii) a certification that the report is accurate and
complete.
‘‘(B) SUBMISSION OF REPORTS TO THE COMMISSION.—
Each nationally recognized statistical rating organization
shall file the reports required under subparagraph (A)
together with the financial report that is required to be
submitted to the Commission under this section.’’;

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124 STAT. 1877

(6) in subsection (k), by striking ‘‘furnish to’’ and inserting
‘‘file with’’;
(7) in subsection (l)(2)(A)(i), by striking ‘‘furnished’’ and
inserting ‘‘filed’’; and
(8) by striking subsection (p) and inserting the following:
‘‘(p) REGULATION OF NATIONALLY RECOGNIZED STATISTICAL
RATING ORGANIZATIONS.—
‘‘(1) ESTABLISHMENT OF OFFICE OF CREDIT RATINGS.—
‘‘(A) OFFICE ESTABLISHED.—The Commission shall
establish within the Commission an Office of Credit Ratings
(referred to in this subsection as the ‘Office’) to administer
the rules of the Commission—
‘‘(i) with respect to the practices of nationally recognized statistical rating organizations in determining
ratings, for the protection of users of credit ratings
and in the public interest;
‘‘(ii) to promote accuracy in credit ratings issued
by nationally recognized statistical rating organizations; and
‘‘(iii) to ensure that such ratings are not unduly
influenced by conflicts of interest.
‘‘(B) DIRECTOR OF THE OFFICE.—The head of the Office
shall be the Director, who shall report to the Chairman.
‘‘(2) STAFFING.—The Office established under this subsection shall be staffed sufficiently to carry out fully the requirements of this section. The staff shall include persons with
knowledge of and expertise in corporate, municipal, and structured debt finance.
‘‘(3) COMMISSION EXAMINATIONS.—
‘‘(A) ANNUAL EXAMINATIONS REQUIRED.—The Office
shall conduct an examination of each nationally recognized
statistical rating organization at least annually.
‘‘(B) CONDUCT OF EXAMINATIONS.—Each examination
under subparagraph (A) shall include a review of—
‘‘(i) whether the nationally recognized statistical
rating organization conducts business in accordance
with the policies, procedures, and rating methodologies
of the nationally recognized statistical rating organization;
‘‘(ii) the management of conflicts of interest by
the nationally recognized statistical rating organization;
‘‘(iii) implementation of ethics policies by the
nationally recognized statistical rating organization;
‘‘(iv) the internal supervisory controls of the nationally recognized statistical rating organization;
‘‘(v) the governance of the nationally recognized
statistical rating organization;
‘‘(vi) the activities of the individual designated by
the nationally recognized statistical rating organization
under subsection (j)(1);
‘‘(vii) the processing of complaints by the nationally
recognized statistical rating organization; and
‘‘(viii) the policies of the nationally recognized
statistical rating organization governing the postemployment activities of former staff of the nationally
recognized statistical rating organization.

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‘‘(C) INSPECTION REPORTS.—The Commission shall
make available to the public, in an easily understandable
format, an annual report summarizing—
‘‘(i) the essential findings of all examinations conducted under subparagraph (A), as deemed appropriate
by the Commission;
‘‘(ii) the responses by the nationally recognized
statistical rating organizations to any material regulatory deficiencies identified by the Commission under
clause (i); and
‘‘(iii) whether the nationally recognized statistical
rating organizations have appropriately addressed the
recommendations of the Commission contained in previous reports under this subparagraph.
‘‘(4) RULEMAKING AUTHORITY.—The Commission shall—
‘‘(A) establish, by rule, fines, and other penalties
applicable to any nationally recognized statistical rating
organization that violates the requirements of this section
and the rules thereunder; and
‘‘(B) issue such rules as may be necessary to carry
out this section.
‘‘(q) TRANSPARENCY OF RATINGS PERFORMANCE.—
‘‘(1) RULEMAKING REQUIRED.—The Commission shall, by
rule, require that each nationally recognized statistical rating
organization publicly disclose information on the initial credit
ratings determined by the nationally recognized statistical
rating organization for each type of obligor, security, and money
market instrument, and any subsequent changes to such credit
ratings, for the purpose of allowing users of credit ratings
to evaluate the accuracy of ratings and compare the performance of ratings by different nationally recognized statistical
rating organizations.
‘‘(2) CONTENT.—The rules of the Commission under this
subsection shall require, at a minimum, disclosures that—
‘‘(A) are comparable among nationally recognized
statistical rating organizations, to allow users of credit
ratings to compare the performance of credit ratings across
nationally recognized statistical rating organizations;
‘‘(B) are clear and informative for investors having
a wide range of sophistication who use or might use credit
ratings;
‘‘(C) include performance information over a range of
years and for a variety of types of credit ratings, including
for credit ratings withdrawn by the nationally recognized
statistical rating organization;
‘‘(D) are published and made freely available by the
nationally recognized statistical rating organization, on an
easily accessible portion of its website, and in writing,
when requested;
‘‘(E) are appropriate to the business model of a nationally recognized statistical rating organization; and
‘‘(F) each nationally recognized statistical rating
organization include an attestation with any credit rating
it issues affirming that no part of the rating was influenced
by any other business activities, that the rating was based
solely on the merits of the instruments being rated, and

Public
information.

Fines.
Penalties.

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124 STAT. 1879

that such rating was an independent evaluation of the
risks and merits of the instrument.
‘‘(r) CREDIT RATINGS METHODOLOGIES.—The Commission shall
prescribe rules, for the protection of investors and in the public
interest, with respect to the procedures and methodologies,
including qualitative and quantitative data and models, used by
nationally recognized statistical rating organizations that require
each nationally recognized statistical rating organization—
‘‘(1) to ensure that credit ratings are determined using
procedures and methodologies, including qualitative and quantitative data and models, that are—
‘‘(A) approved by the board of the nationally recognized
statistical rating organization, a body performing a function
similar to that of a board; and
‘‘(B) in accordance with the policies and procedures
of the nationally recognized statistical rating organization
for the development and modification of credit rating procedures and methodologies;
‘‘(2) to ensure that when material changes to credit rating
procedures and methodologies (including changes to qualitative
and quantitative data and models) are made, that—
‘‘(A) the changes are applied consistently to all credit
ratings to which the changed procedures and methodologies
apply;
‘‘(B) to the extent that changes are made to credit
rating surveillance procedures and methodologies, the
changes are applied to then-current credit ratings by the
nationally recognized statistical rating organization within
a reasonable time period determined by the Commission,
by rule; and
‘‘(C) the nationally recognized statistical rating
organization publicly discloses the reason for the change;
and
‘‘(3) to notify users of credit ratings—
‘‘(A) of the version of a procedure or methodology,
including the qualitative methodology or quantitative
inputs, used with respect to a particular credit rating;
‘‘(B) when a material change is made to a procedure
or methodology, including to a qualitative model or quantitative inputs;
‘‘(C) when a significant error is identified in a procedure or methodology, including a qualitative or quantitative
model, that may result in credit rating actions; and
‘‘(D) of the likelihood of a material change described
in subparagraph (B) resulting in a change in current credit
ratings.
‘‘(s) TRANSPARENCY OF CREDIT RATING METHODOLOGIES AND
INFORMATION REVIEWED.—
‘‘(1) FORM FOR DISCLOSURES.—The Commission shall
require, by rule, each nationally recognized statistical rating
organization to prescribe a form to accompany the publication
of each credit rating that discloses—
‘‘(A) information relating to—
‘‘(i) the assumptions underlying the credit rating
procedures and methodologies;
‘‘(ii) the data that was relied on to determine the
credit rating; and

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124 STAT. 1880

PUBLIC LAW 111–203—JULY 21, 2010
‘‘(iii) if applicable, how the nationally recognized
statistical rating organization used servicer or remittance reports, and with what frequency, to conduct
surveillance of the credit rating; and
‘‘(B) information that can be used by investors and
other users of credit ratings to better understand credit
ratings in each class of credit rating issued by the nationally recognized statistical rating organization.
‘‘(2) FORMAT.—The form developed under paragraph (1)
shall—
‘‘(A) be easy to use and helpful for users of credit
ratings to understand the information contained in the
report;
‘‘(B) require the nationally recognized statistical rating
organization to provide the content described in paragraph
(3)(B) in a manner that is directly comparable across types
of securities; and
‘‘(C) be made readily available to users of credit ratings,
in electronic or paper form, as the Commission may, by
rule, determine.
‘‘(3) CONTENT OF FORM.—
‘‘(A) QUALITATIVE CONTENT.—Each nationally recognized statistical rating organization shall disclose on the
form developed under paragraph (1)—
‘‘(i) the credit ratings produced by the nationally
recognized statistical rating organization;
‘‘(ii) the main assumptions and principles used
in constructing procedures and methodologies,
including qualitative methodologies and quantitative
inputs and assumptions about the correlation of
defaults across underlying assets used in rating structured products;
‘‘(iii) the potential limitations of the credit ratings,
and the types of risks excluded from the credit ratings
that the nationally recognized statistical rating
organization does not comment on, including liquidity,
market, and other risks;
‘‘(iv) information on the uncertainty of the credit
rating, including—
‘‘(I) information on the reliability, accuracy,
and quality of the data relied on in determining
the credit rating; and
‘‘(II) a statement relating to the extent to
which data essential to the determination of the
credit rating were reliable or limited, including—
‘‘(aa) any limits on the scope of historical
data; and
‘‘(bb) any limits in accessibility to certain
documents or other types of information that
would have better informed the credit rating;
‘‘(v) whether and to what extent third party due
diligence services have been used by the nationally
recognized statistical rating organization, a description
of the information that such third party reviewed in
conducting due diligence services, and a description
of the findings or conclusions of such third party;

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124 STAT. 1881

‘‘(vi) a description of the data about any obligor,
issuer, security, or money market instrument that were
relied upon for the purpose of determining the credit
rating;
‘‘(vii) a statement containing an overall assessment
of the quality of information available and considered
in producing a rating for an obligor, security, or money
market instrument, in relation to the quality of
information available to the nationally recognized
statistical rating organization in rating similar
issuances;
‘‘(viii) information relating to conflicts of interest
of the nationally recognized statistical rating organization; and
‘‘(ix) such additional information as the Commission may require.
‘‘(B) QUANTITATIVE CONTENT.—Each nationally recognized statistical rating organization shall disclose on the
form developed under this subsection—
‘‘(i) an explanation or measure of the potential
volatility of the credit rating, including—
‘‘(I) any factors that might lead to a change
in the credit ratings; and
‘‘(II) the magnitude of the change that a user
can expect under different market conditions;
‘‘(ii) information on the content of the rating,
including—
‘‘(I) the historical performance of the rating;
and
‘‘(II) the expected probability of default and
the expected loss in the event of default;
‘‘(iii) information on the sensitivity of the rating
to assumptions made by the nationally recognized
statistical rating organization, including—
‘‘(I) 5 assumptions made in the ratings process
that, without accounting for any other factor,
would have the greatest impact on a rating if
the assumptions were proven false or inaccurate;
and
‘‘(II) an analysis, using specific examples, of
how each of the 5 assumptions identified under
subclause (I) impacts a rating;
‘‘(iv) such additional information as may be
required by the Commission.
‘‘(4) DUE DILIGENCE SERVICES FOR ASSET-BACKED SECURITIES.—
‘‘(A) FINDINGS.—The issuer or underwriter of any assetbacked security shall make publicly available the findings
and conclusions of any third-party due diligence report
obtained by the issuer or underwriter.
‘‘(B) CERTIFICATION REQUIRED.—In any case in which
third-party due diligence services are employed by a nationally recognized statistical rating organization, an issuer,
or an underwriter, the person providing the due diligence
services shall provide to any nationally recognized statistical rating organization that produces a rating to which

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Regulations.
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such services relate, written certification, as provided in
subparagraph (C).
‘‘(C) FORMAT AND CONTENT.—The Commission shall
establish the appropriate format and content for the written
certifications required under subparagraph (B), to ensure
that providers of due diligence services have conducted
a thorough review of data, documentation, and other relevant information necessary for a nationally recognized
statistical rating organization to provide an accurate rating.
‘‘(D) DISCLOSURE OF CERTIFICATION.—The Commission
shall adopt rules requiring a nationally recognized statistical rating organization, at the time at which the nationally recognized statistical rating organization produces a
rating, to disclose the certification described in subparagraph (B) to the public in a manner that allows the public
to determine the adequacy and level of due diligence services provided by a third party.
‘‘(t) CORPORATE GOVERNANCE, ORGANIZATION, AND MANAGEMENT OF CONFLICTS OF INTEREST.—
‘‘(1) BOARD OF DIRECTORS.—Each nationally recognized
statistical rating organization shall have a board of directors.
‘‘(2) INDEPENDENT DIRECTORS.—
‘‘(A) IN GENERAL.—At least 1⁄2 of the board of directors,
but not fewer than 2 of the members thereof, shall be
independent of the nationally recognized statistical rating
agency. A portion of the independent directors shall include
users of ratings from a nationally recognized statistical
rating organization.
‘‘(B) INDEPENDENCE DETERMINATION.—In order to be
considered independent for purposes of this subsection, a
member of the board of directors of a nationally recognized
statistical rating organization—
‘‘(i) may not, other than in his or her capacity
as a member of the board of directors or any committee
thereof—
‘‘(I) accept any consulting, advisory, or other
compensatory fee from the nationally recognized
statistical rating organization; or
‘‘(II) be a person associated with the nationally
recognized statistical rating organization or with
any affiliated company thereof; and
‘‘(ii) shall be disqualified from any deliberation
involving a specific rating in which the independent
board member has a financial interest in the outcome
of the rating.
‘‘(C) COMPENSATION AND TERM.—The compensation of
the independent members of the board of directors of a
nationally recognized statistical rating organization shall
not be linked to the business performance of the nationally
recognized statistical rating organization, and shall be
arranged so as to ensure the independence of their judgment. The term of office of the independent directors shall
be for a pre-agreed fixed period, not to exceed 5 years,
and shall not be renewable.
‘‘(3) DUTIES OF BOARD OF DIRECTORS.—In addition to the
overall responsibilities of the board of directors, the board shall
oversee—

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‘‘(A) the establishment, maintenance, and enforcement
of policies and procedures for determining credit ratings;
‘‘(B) the establishment, maintenance, and enforcement
of policies and procedures to address, manage, and disclose
any conflicts of interest;
‘‘(C) the effectiveness of the internal control system
with respect to policies and procedures for determining
credit ratings; and
‘‘(D) the compensation and promotion policies and practices of the nationally recognized statistical rating organization.
‘‘(4) TREATMENT OF NRSRO SUBSIDIARIES.—If a nationally
recognized statistical rating organization is a subsidiary of a
parent entity, the board of the directors of the parent entity
may satisfy the requirements of this subsection by assigning
to a committee of such board of directors the duties under
paragraph (3), if—
‘‘(A) at least 1⁄2 of the members of the committee
(including the chairperson of the committee) are independent, as defined in this section; and
‘‘(B) at least 1 member of the committee is a user
of ratings from a nationally recognized statistical rating
organization.
‘‘(5) EXCEPTION AUTHORITY.—If the Commission finds that
compliance with the provisions of this subsection present an
unreasonable burden on a small nationally recognized statistical rating organization, the Commission may permit the
nationally recognized statistical rating organization to delegate
such responsibilities to a committee that includes at least one
individual who is a user of ratings of a nationally recognized
statistical rating organization.’’.
(b) CONFORMING AMENDMENT.—Section 3(a)(62) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(62)) is amended by
striking subparagraph (A) and redesignating subparagraphs (B)
and (C) as subparagraphs (A) and (B), respectively.

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SEC. 933. STATE OF MIND IN PRIVATE ACTIONS.

(a) ACCOUNTABILITY.—Section 15E(m) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o–7(m)) is amended to read
as follows:
‘‘(m) ACCOUNTABILITY.—
‘‘(1) IN GENERAL.—The enforcement and penalty provisions
of this title shall apply to statements made by a credit rating
agency in the same manner and to the same extent as such
provisions apply to statements made by a registered public
accounting firm or a securities analyst under the securities
laws, and such statements shall not be deemed forward-looking
statements for the purposes of section 21E.
‘‘(2) RULEMAKING.—The Commission shall issue such rules
as may be necessary to carry out this subsection.’’.
(b) STATE OF MIND.—Section 21D(b)(2) of the Securities
Exchange Act of 1934 (15 U.S.C. 78u–4(b)(2)) is amended—
(1) by striking ‘‘In any’’ and inserting the following:
‘‘(A) IN GENERAL.—Except as provided in subparagraph
(B), in any’’; and
(2) by adding at the end the following:

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‘‘(B) EXCEPTION.—In the case of an action for money
damages brought against a credit rating agency or a
controlling person under this title, it shall be sufficient,
for purposes of pleading any required state of mind in
relation to such action, that the complaint state with
particularity facts giving rise to a strong inference that
the credit rating agency knowingly or recklessly failed—
‘‘(i) to conduct a reasonable investigation of the
rated security with respect to the factual elements
relied upon by its own methodology for evaluating
credit risk; or
‘‘(ii) to obtain reasonable verification of such factual elements (which verification may be based on
a sampling technique that does not amount to an audit)
from other sources that the credit rating agency considered to be competent and that were independent of
the issuer and underwriter.’’.

SEC. 934. REFERRING TIPS TO LAW ENFORCEMENT OR REGULATORY
AUTHORITIES.

Section 15E of the Securities Exchange Act of 1934 (15 U.S.C.
78o–7), as amended by this subtitle, is amended by adding at
the end the following:
‘‘(u) DUTY TO REPORT TIPS ALLEGING MATERIAL VIOLATIONS
OF LAW.—
‘‘(1) DUTY TO REPORT.—Each nationally recognized statistical rating organization shall refer to the appropriate law
enforcement or regulatory authorities any information that the
nationally recognized statistical rating organization receives
from a third party and finds credible that alleges that an
issuer of securities rated by the nationally recognized statistical
rating organization has committed or is committing a material
violation of law that has not been adjudicated by a Federal
or State court.
‘‘(2) RULE OF CONSTRUCTION.—Nothing in paragraph (1)
may be construed to require a nationally recognized statistical
rating organization to verify the accuracy of the information
described in paragraph (1).’’.
SEC. 935. CONSIDERATION OF INFORMATION FROM SOURCES OTHER
THAN THE ISSUER IN RATING DECISIONS.

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Section 15E of the Securities Exchange Act of 1934 (15 U.S.C.
78o–7), as amended by this subtitle, is amended by adding at
the end the following:
‘‘(v) INFORMATION FROM SOURCES OTHER THAN THE ISSUER.—
In producing a credit rating, a nationally recognized statistical
rating organization shall consider information about an issuer that
the nationally recognized statistical rating organization has, or
receives from a source other than the issuer or underwriter, that
the nationally recognized statistical rating organization finds credible and potentially significant to a rating decision.’’.
15 USC 78o–7
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Deadline.
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SEC. 936. QUALIFICATION STANDARDS FOR CREDIT RATING ANALYSTS.

Not later than 1 year after the date of enactment of this
Act, the Commission shall issue rules that are reasonably designed
to ensure that any person employed by a nationally recognized
statistical rating organization to perform credit ratings—

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(1) meets standards of training, experience, and competence
necessary to produce accurate ratings for the categories of
issuers whose securities the person rates; and
(2) is tested for knowledge of the credit rating process.
SEC. 937. TIMING OF REGULATIONS.

Unless otherwise specifically provided in this subtitle, the
Commission shall issue final regulations, as required by this subtitle
and the amendments made by this subtitle, not later than 1 year
after the date of enactment of this Act.

15 USC 78o–7
note.

SEC. 938. UNIVERSAL RATINGS SYMBOLS.

15 USC 78o–8.

(a) RULEMAKING.—The Commission shall require, by rule, each
nationally recognized statistical rating organization to establish,
maintain, and enforce written policies and procedures that—
(1) assess the probability that an issuer of a security or
money market instrument will default, fail to make timely
payments, or otherwise not make payments to investors in
accordance with the terms of the security or money market
instrument;
(2) clearly define and disclose the meaning of any symbol
used by the nationally recognized statistical rating organization
to denote a credit rating; and
(3) apply any symbol described in paragraph (2) in a
manner that is consistent for all types of securities and money
market instruments for which the symbol is used.
(b) RULE OF CONSTRUCTION.—Nothing in this section shall prohibit a nationally recognized statistical rating organization from
using distinct sets of symbols to denote credit ratings for different
types of securities or money market instruments.

Procedures.

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SEC. 939. REMOVAL OF STATUTORY REFERENCES TO CREDIT RATINGS.

(a) FEDERAL DEPOSIT INSURANCE ACT.—The Federal Deposit
Insurance Act (12 U.S.C. 1811 et seq.) is amended—
(1) in section 7(b)(1)(E)(i), by striking ‘‘credit rating entities,
and other private economic’’ and insert ‘‘private economic,
credit,’’;
(2) in section 28(d)—
(A) in the subsection heading, by striking ‘‘NOT OF
INVESTMENT GRADE’’;
(B) in paragraph (1), by striking ‘‘not of investment
grade’’ and inserting ‘‘that does not meet standards of
credit-worthiness as established by the Corporation’’;
(C) in paragraph (2), by striking ‘‘not of investment
grade’’;
(D) by striking paragraph (3);
(E) by redesignating paragraph (4) as paragraph (3);
and
(F) in paragraph (3), as so redesignated—
(i) by striking subparagraph (A);
(ii) by redesignating subparagraphs (B) and (C)
as subparagraphs (A) and (B), respectively; and
(iii) in subparagraph (B), as so redesignated, by
striking ‘‘not of investment grade’’ and inserting ‘‘that
does not meet standards of credit-worthiness as established by the Corporation’’; and
(3) in section 28(e)—

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12 USC 1831e.

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15 USC 78c.

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(A) in the subsection heading, by striking ‘‘NOT OF
INVESTMENT GRADE’’;
(B) in paragraph (1), by striking ‘‘not of investment
grade’’ and inserting ‘‘that does not meet standards of
credit-worthiness as established by the Corporation’’; and
(C) in paragraphs (2) and (3), by striking ‘‘not of investment grade’’ each place that it appears and inserting ‘‘that
does not meet standards of credit-worthiness established
by the Corporation’’.
(b) FEDERAL HOUSING ENTERPRISES FINANCIAL SAFETY AND
SOUNDNESS ACT OF 1992.—Section 1319 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.
4519) is amended by striking ‘‘that is a nationally recognized statistical rating organization, as such term is defined in section 3(a)
of the Securities Exchange Act of 1934,’’.
(c)
INVESTMENT
COMPANY
ACT
OF
1940.—Section
6(a)(5)(A)(iv)(I) Investment Company Act of 1940 (15 U.S.C. 80a–
6(a)(5)(A)(iv)(I)) is amended by striking ‘‘is rated investment grade
by not less than 1 nationally recognized statistical rating organization’’ and inserting ‘‘meets such standards of credit-worthiness as
the Commission shall adopt’’.
(d) REVISED STATUTES.—Section 5136A of title LXII of the
Revised Statutes of the United States (12 U.S.C. 24a) is amended—
(1) in subsection (a)(2)(E), by striking ‘‘any applicable
rating’’ and inserting ‘‘standards of credit-worthiness established by the Comptroller of the Currency’’;
(2) in the heading for subsection (a)(3) by striking ‘‘RATING
OR COMPARABLE REQUIREMENT’’ and inserting ‘‘REQUIREMENT’’;
(3) subsection (a)(3), by amending subparagraph (A) to
read as follows:
‘‘(A) IN GENERAL.—A national bank meets the requirements of this paragraph if the bank is one of the 100
largest insured banks and has not fewer than 1 issue
of outstanding debt that meets standards of credit-worthiness or other criteria as the Secretary of the Treasury
and the Board of Governors of the Federal Reserve System
may jointly establish.’’.
(4) in the heading for subsection (f), by striking ‘‘MAINTAIN
PUBLIC RATING OR’’ and inserting ‘‘MEET STANDARDS OF CREDITWORTHINESS’’; and
(5) in subsection (f)(1), by striking ‘‘any applicable rating’’
and inserting ‘‘standards of credit-worthiness established by
the Comptroller of the Currency’’.
(e) SECURITIES EXCHANGE ACT OF 1934.—Section 3(a) Securities
Exchange Act of 1934 (15 U.S.C. 78a(3)(a)) is amended—
(1) in paragraph (41), by striking ‘‘is rated in one of the
two highest rating categories by at least one nationally recognized statistical rating organization’’ and inserting ‘‘meets
standards of credit-worthiness as established by the Commission’’; and
(2) in paragraph (53)(A), by striking ‘‘is rated in 1 of the
4 highest rating categories by at least 1 nationally recognized
statistical rating organization’’ and inserting ‘‘meets standards
of credit-worthiness as established by the Commission’’.
(f) WORLD BANK DISCUSSIONS.—Section 3(a)(6) of the amendment in the nature of a substitute to the text of H.R. 4645, as
ordered reported from the Committee on Banking, Finance and

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124 STAT. 1887

Urban Affairs on September 22, 1988, as enacted into law by
section 555 of Public Law 100–461, (22 U.S.C. 286hh(a)(6)), is
amended by striking ‘‘credit rating’’ and inserting ‘‘credit-worthiness’’.
(g) EFFECTIVE DATE.—The amendments made by this section
shall take effect 2 years after the date of enactment of this Act.
(h) STUDY AND REPORT.—
(1) IN GENERAL.—Commission shall undertake a study on
the feasability and desirability of—
(A) standardizing credit ratings terminology, so that
all credit rating agencies issue credit ratings using identical
terms;
(B) standardizing the market stress conditions under
which ratings are evaluated;
(C) requiring a quantitative correspondence between
credit ratings and a range of default probabilities and
loss expectations under standardized conditions of economic
stress; and
(D) standardizing credit rating terminology across
asset classes, so that named ratings correspond to a
standard range of default probabilities and expected losses
independent of asset class and issuing entity.
(2) REPORT.—Not later than 1 year after the date of enactment of this Act, the Commission shall submit to Congress
a report containing the findings of the study under paragraph
(1) and the recommendations, if any, of the Commission with
respect to the study.
SEC. 939A. REVIEW OF RELIANCE ON RATINGS.

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(a) AGENCY REVIEW.—Not later than 1 year after the date
of the enactment of this subtitle, each Federal agency shall, to
the extent applicable, review—
(1) any regulation issued by such agency that requires
the use of an assessment of the credit-worthiness of a security
or money market instrument; and
(2) any references to or requirements in such regulations
regarding credit ratings.
(b) MODIFICATIONS REQUIRED.—Each such agency shall modify
any such regulations identified by the review conducted under
subsection (a) to remove any reference to or requirement of reliance
on credit ratings and to substitute in such regulations such standard
of credit-worthiness as each respective agency shall determine as
appropriate for such regulations. In making such determination,
such agencies shall seek to establish, to the extent feasible, uniform
standards of credit-worthiness for use by each such agency, taking
into account the entities regulated by each such agency and the
purposes for which such entities would rely on such standards
of credit-worthiness.
(c) REPORT.—Upon conclusion of the review required under
subsection (a), each Federal agency shall transmit a report to Congress containing a description of any modification of any regulation
such agency made pursuant to subsection (b).

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12 USC 24a note.

Regulations.
15 USC 78o–7
note.
Deadline.

Standards.

SEC. 939B. ELIMINATION OF EXEMPTION FROM FAIR DISCLOSURE
RULE.

15 USC 78m
note.

Not later than 90 days after the date of enactment of this
subtitle, the Securities Exchange Commission shall revise Regulation FD (17 C.F.R. 243.100) to remove from such regulation the

Deadline.

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exemption for entities whose primary business is the issuance of
credit ratings (17 C.F.R. 243.100(b)(2)(iii)).
SEC. 939C. SECURITIES AND EXCHANGE COMMISSION STUDY ON
STRENGTHENING CREDIT RATING AGENCY INDEPENDENCE.

(a) STUDY.—The Commission shall conduct a study of—
(1) the independence of nationally recognized statistical
rating organizations; and
(2) how the independence of nationally recognized statistical rating organizations affects the ratings issued by the
nationally recognized statistical rating organizations.
(b) SUBJECTS FOR EVALUATION.—In conducting the study under
subsection (a), the Commission shall evaluate—
(1) the management of conflicts of interest raised by a
nationally recognized statistical rating organization providing
other services, including risk management advisory services,
ancillary assistance, or consulting services;
(2) the potential impact of rules prohibiting a nationally
recognized statistical rating organization that provides a rating
to an issuer from providing other services to the issuer; and
(3) any other issue relating to nationally recognized statistical rating organizations, as the Chairman of the Commission
determines is appropriate.
(c) REPORT.—Not later than 3 years after the date of enactment
of this Act, the Chairman of the Commission shall submit to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of Representatives a report on the results of the study conducted under subsection (a), including recommendations, if any, for improving the
integrity of ratings issued by nationally recognized statistical rating
organizations.
15 USC 78o–9
note.

SEC. 939D. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON ALTERNATIVE BUSINESS MODELS.

(a) STUDY.—The Comptroller General of the United States shall
conduct a study on alternative means for compensating nationally
recognized statistical rating organizations in order to create incentives for nationally recognized statistical rating organizations to
provide more accurate credit ratings, including any statutory
changes that would be required to facilitate the use of an alternative
means of compensation.
(b) REPORT.—Not later than 18 months after the date of enactment of this Act, the Comptroller General shall submit to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of Representatives a report on the results of the study conducted under subsection (a), including recommendations, if any, for providing incentives to credit rating agencies to improve the credit rating process.

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SEC. 939E. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON THE
CREATION
OF
AN
INDEPENDENT
PROFESSIONAL
ANALYST ORGANIZATION.

(a) STUDY.—The Comptroller General of the United States shall
conduct a study on the feasibility and merits of creating an independent professional organization for rating analysts employed by
nationally recognized statistical rating organizations that would
be responsible for—

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124 STAT. 1889

(1) establishing independent standards for governing the
profession of rating analysts;
(2) establishing a code of ethical conduct; and
(3) overseeing the profession of rating analysts.
(b) REPORT.—Not later than 1 year after the date of publication
of the rules issued by the Commission pursuant to section 936,
the Comptroller General shall submit to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives a report
on the results of the study conducted under subsection (a).

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SEC. 939F. STUDY AND RULEMAKING ON ASSIGNED CREDIT RATINGS.

(a) DEFINITION.—In this section, the term ‘‘structured finance
product’’ means an asset-backed security, as defined in section
3(a)(77) of the Securities Exchange Act of 1934, as added by section
941, and any structured product based on an asset-backed security,
as determined by the Commission, by rule.
(b) STUDY.—The Commission shall carry out a study of—
(1) the credit rating process for structured finance products
and the conflicts of interest associated with the issuer-pay
and the subscriber-pay models;
(2) the feasibility of establishing a system in which a public
or private utility or a self-regulatory organization assigns
nationally recognized statistical rating organizations to determine the credit ratings of structured finance products,
including—
(A) an assessment of potential mechanisms for determining fees for the nationally recognized statistical rating
organizations;
(B) appropriate methods for paying fees to the nationally recognized statistical rating organizations;
(C) the extent to which the creation of such a system
would be viewed as the creation of moral hazard by the
Federal Government; and
(D) any constitutional or other issues concerning the
establishment of such a system;
(3) the range of metrics that could be used to determine
the accuracy of credit ratings; and
(4) alternative means for compensating nationally recognized statistical rating organizations that would create incentives for accurate credit ratings.
(c) REPORT AND RECOMMENDATION.—Not later than 24 months
after the date of enactment of this Act, the Commission shall
submit to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the
House of Representatives a report that contains—
(1) the findings of the study required under subsection
(b); and
(2) any recommendations for regulatory or statutory
changes that the Commission determines should be made to
implement the findings of the study required under subsection
(b).
(d) RULEMAKING.—
(1) RULEMAKING.—After submission of the report under
subsection (c), the Commission shall, by rule, as the Commission determines is necessary or appropriate in the public
interest or for the protection of investors, establish a system

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PUBLIC LAW 111–203—JULY 21, 2010
for the assignment of nationally recognized statistical rating
organizations to determine the initial credit ratings of structured finance products, in a manner that prevents the issuer,
sponsor, or underwriter of the structured finance product from
selecting the nationally recognized statistical rating organization that will determine the initial credit ratings and monitor
such credit ratings. In issuing any rule under this paragraph,
the Commission shall give thorough consideration to the provisions of section 15E(w) of the Securities Exchange Act of 1934,
as that provision would have been added by section 939D
of H.R. 4173 (111th Congress), as passed by the Senate on
May 20, 2010, and shall implement the system described in
such section 939D unless the Commission determines that an
alternative system would better serve the public interest and
the protection of investors.
(2) RULE OF CONSTRUCTION.—Nothing in this subsection
may be construed to limit or suspend any other rulemaking
authority of the Commission.

SEC. 939G. EFFECT OF RULE 436(G).

Rule 436(g), promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, shall have no force
or effect.
SEC. 939H. SENSE OF CONGRESS.

It is the sense of Congress that the Securities and Exchange
Commission should exercise the rulemaking authority of the
Commission under section 15E(h)(2)(B) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o–7(h)(2)(B)) to prevent improper conflicts
of interest arising from employees of nationally recognized statistical rating organizations providing services to issuers of securities
that are unrelated to the issuance of credit ratings, including consulting, advisory, and other services.

Subtitle D—Improvements to the AssetBacked Securitization Process

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SEC. 941. REGULATION OF CREDIT RISK RETENTION.

(a) DEFINITION OF ASSET-BACKED SECURITY.—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:
‘‘(77) ASSET-BACKED SECURITY.—The term ‘asset-backed
security’—
‘‘(A) means a fixed-income or other security
collateralized by any type of self-liquidating financial asset
(including a loan, a lease, a mortgage, or a secured or
unsecured receivable) that allows the holder of the security
to receive payments that depend primarily on cash flow
from the asset, including—
‘‘(i) a collateralized mortgage obligation;
‘‘(ii) a collateralized debt obligation;
‘‘(iii) a collateralized bond obligation;
‘‘(iv) a collateralized debt obligation of asset-backed
securities;
‘‘(v) a collateralized debt obligation of collateralized
debt obligations; and

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‘‘(vi) a security that the Commission, by rule, determines to be an asset-backed security for purposes of
this section; and
‘‘(B) does not include a security issued by a finance
subsidiary held by the parent company or a company controlled by the parent company, if none of the securities
issued by the finance subsidiary are held by an entity
that is not controlled by the parent company.’’.
(b) CREDIT RISK RETENTION.—The Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.) is amended by inserting after section
15F, as added by this Act, the following:

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‘‘SEC. 15G. CREDIT RISK RETENTION.

15 USC 78o–11.

‘‘(a) DEFINITIONS.—In this section—
‘‘(1) the term ‘Federal banking agencies’ means the Office
of the Comptroller of the Currency, the Board of Governors
of the Federal Reserve System, and the Federal Deposit Insurance Corporation;
‘‘(2) the term ‘insured depository institution’ has the same
meaning as in section 3(c) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(c));
‘‘(3) the term ‘securitizer’ means—
‘‘(A) an issuer of an asset-backed security; or
‘‘(B) a person who organizes and initiates an assetbacked securities transaction by selling or transferring
assets, either directly or indirectly, including through an
affiliate, to the issuer; and
‘‘(4) the term ‘originator’ means a person who—
‘‘(A) through the extension of credit or otherwise, creates a financial asset that collateralizes an asset-backed
security; and
‘‘(B) sells an asset directly or indirectly to a securitizer.
‘‘(b) REGULATIONS REQUIRED.—
‘‘(1) IN GENERAL.—Not later than 270 days after the date
of enactment of this section, the Federal banking agencies
and the Commission shall jointly prescribe regulations to
require any securitizer to retain an economic interest in a
portion of the credit risk for any asset that the securitizer,
through the issuance of an asset-backed security, transfers,
sells, or conveys to a third party.
‘‘(2) RESIDENTIAL MORTGAGES.—Not later than 270 days
after the date of the enactment of this section, the Federal
banking agencies, the Commission, the Secretary of Housing
and Urban Development, and the Federal Housing Finance
Agency, shall jointly prescribe regulations to require any
securitizer to retain an economic interest in a portion of the
credit risk for any residential mortgage asset that the
securitizer, through the issuance of an asset-backed security,
transfers, sells, or conveys to a third party.
‘‘(c) STANDARDS FOR REGULATIONS.—
‘‘(1) STANDARDS.—The regulations prescribed under subsection (b) shall—
‘‘(A) prohibit a securitizer from directly or indirectly
hedging or otherwise transferring the credit risk that the
securitizer is required to retain with respect to an asset;
‘‘(B) require a securitizer to retain—

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124 STAT. 1892

‘‘(i) not less than 5 percent of the credit risk for
any asset—
‘‘(I) that is not a qualified residential mortgage
that is transferred, sold, or conveyed through the
issuance of an asset-backed security by the
securitizer; or
‘‘(II) that is a qualified residential mortgage
that is transferred, sold, or conveyed through the
issuance of an asset-backed security by the
securitizer, if 1 or more of the assets that
collateralize the asset-backed security are not
qualified residential mortgages; or
‘‘(ii) less than 5 percent of the credit risk for an
asset that is not a qualified residential mortgage that
is transferred, sold, or conveyed through the issuance
of an asset-backed security by the securitizer, if the
originator of the asset meets the underwriting standards prescribed under paragraph (2)(B);
‘‘(C) specify—
‘‘(i) the permissible forms of risk retention for purposes of this section;
‘‘(ii) the minimum duration of the risk retention
required under this section; and
‘‘(iii) that a securitizer is not required to retain
any part of the credit risk for an asset that is transferred, sold or conveyed through the issuance of an
asset-backed security by the securitizer, if all of the
assets that collateralize the asset-backed security are
qualified residential mortgages;
‘‘(D) apply, regardless of whether the securitizer is
an insured depository institution;
‘‘(E) with respect to a commercial mortgage, specify
the permissible types, forms, and amounts of risk retention
that would meet the requirements of subparagraph (B),
which in the determination of the Federal banking agencies
and the Commission may include—
‘‘(i) retention of a specified amount or percentage
of the total credit risk of the asset;
‘‘(ii) retention of the first-loss position by a thirdparty purchaser that specifically negotiates for the purchase of such first loss position, holds adequate financial resources to back losses, provides due diligence
on all individual assets in the pool before the issuance
of the asset-backed securities, and meets the same
standards for risk retention as the Federal banking
agencies and the Commission require of the securitizer;
‘‘(iii) a determination by the Federal banking agencies and the Commission that the underwriting standards and controls for the asset are adequate; and
‘‘(iv) provision of adequate representations and
warranties and related enforcement mechanisms; and
‘‘(F) establish appropriate standards for retention of
an economic interest with respect to collateralized debt
obligations, securities collateralized by collateralized debt
obligations, and similar instruments collateralized by other
asset-backed securities; and
‘‘(G) provide for—

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‘‘(i) a total or partial exemption of any
securitization, as may be appropriate in the public
interest and for the protection of investors;
‘‘(ii) a total or partial exemption for the
securitization of an asset issued or guaranteed by the
United States, or an agency of the United States, as
the Federal banking agencies and the Commission
jointly determine appropriate in the public interest
and for the protection of investors, except that, for
purposes of this clause, the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation are not agencies of the United States;
‘‘(iii) a total or partial exemption for any assetbacked security that is a security issued or guaranteed
by any State of the United States, or by any political
subdivision of a State or territory, or by any public
instrumentality of a State or territory that is exempt
from the registration requirements of the Securities
Act of 1933 by reason of section 3(a)(2) of that Act
(15 U.S.C. 77c(a)(2)), or a security defined as a qualified
scholarship funding bond in section 150(d)(2) of the
Internal Revenue Code of 1986, as may be appropriate
in the public interest and for the protection of investors; and
‘‘(iv) the allocation of risk retention obligations
between a securitizer and an originator in the case
of a securitizer that purchases assets from an originator, as the Federal banking agencies and the
Commission jointly determine appropriate.
‘‘(2) ASSET CLASSES.—
‘‘(A) ASSET CLASSES.—The regulations prescribed under
subsection (b) shall establish asset classes with separate
rules for securitizers of different classes of assets, including
residential mortgages, commercial mortgages, commercial
loans, auto loans, and any other class of assets that the
Federal banking agencies and the Commission deem appropriate.
‘‘(B) CONTENTS.—For each asset class established
under subparagraph (A), the regulations prescribed under
subsection (b) shall include underwriting standards established by the Federal banking agencies that specify the
terms, conditions, and characteristics of a loan within the
asset class that indicate a low credit risk with respect
to the loan.
‘‘(d) ORIGINATORS.—In determining how to allocate risk retention obligations between a securitizer and an originator under subsection (c)(1)(E)(iv), the Federal banking agencies and the Commission shall—
‘‘(1) reduce the percentage of risk retention obligations
required of the securitizer by the percentage of risk retention
obligations required of the originator; and
‘‘(2) consider—
‘‘(A) whether the assets sold to the securitizer have
terms, conditions, and characteristics that reflect low credit
risk;
‘‘(B) whether the form or volume of transactions in
securitization markets creates incentives for imprudent

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124 STAT. 1894

origination of the type of loan or asset to be sold to the
securitizer; and
‘‘(C) the potential impact of the risk retention obligations on the access of consumers and businesses to credit
on reasonable terms, which may not include the transfer
of credit risk to a third party.
‘‘(e) EXEMPTIONS, EXCEPTIONS, AND ADJUSTMENTS.—
‘‘(1) IN GENERAL.—The Federal banking agencies and the
Commission may jointly adopt or issue exemptions, exceptions,
or adjustments to the rules issued under this section, including
exemptions, exceptions, or adjustments for classes of institutions or assets relating to the risk retention requirement and
the prohibition on hedging under subsection (c)(1).
‘‘(2) APPLICABLE STANDARDS.—Any exemption, exception,
or adjustment adopted or issued by the Federal banking agencies and the Commission under this paragraph shall—
‘‘(A) help ensure high quality underwriting standards
for the securitizers and originators of assets that are
securitized or available for securitization; and
‘‘(B) encourage appropriate risk management practices
by the securitizers and originators of assets, improve the
access of consumers and businesses to credit on reasonable
terms, or otherwise be in the public interest and for the
protection of investors.
‘‘(3) CERTAIN INSTITUTIONS AND PROGRAMS EXEMPT.—
‘‘(A) FARM CREDIT SYSTEM INSTITUTIONS.—Notwithstanding any other provision of this section, the requirements of this section shall not apply to any loan or other
financial asset made, insured, guaranteed, or purchased
by any institution that is subject to the supervision of
the Farm Credit Administration, including the Federal
Agricultural Mortgage Corporation.
‘‘(B) OTHER FEDERAL PROGRAMS.—This section shall
not apply to any residential, multifamily, or health care
facility mortgage loan asset, or securitization based directly
or indirectly on such an asset, which is insured or guaranteed by the United States or an agency of the United
States. For purposes of this subsection, the Federal
National Mortgage Association, the Federal Home Loan
Mortgage Corporation, and the Federal home loan banks
shall not be considered an agency of the United States.
‘‘(4) EXEMPTION FOR QUALIFIED RESIDENTIAL MORTGAGES.—
‘‘(A) IN GENERAL.—The Federal banking agencies, the
Commission, the Secretary of Housing and Urban Development, and the Director of the Federal Housing Finance
Agency shall jointly issue regulations to exempt qualified
residential mortgages from the risk retention requirements
of this subsection.
‘‘(B) QUALIFIED RESIDENTIAL MORTGAGE.—The Federal
banking agencies, the Commission, the Secretary of
Housing and Urban Development, and the Director of the
Federal Housing Finance Agency shall jointly define the
term ‘qualified residential mortgage’ for purposes of this
subsection, taking into consideration underwriting and
product features that historical loan performance data
indicate result in a lower risk of default, such as—

Regulations.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1895

‘‘(i) documentation and verification of the financial
resources relied upon to qualify the mortgagor;
‘‘(ii) standards with respect to—
‘‘(I) the residual income of the mortgagor after
all monthly obligations;
‘‘(II) the ratio of the housing payments of the
mortgagor to the monthly income of the mortgagor;
‘‘(III) the ratio of total monthly installment
payments of the mortgagor to the income of the
mortgagor;
‘‘(iii) mitigating the potential for payment shock
on adjustable rate mortgages through product features
and underwriting standards;
‘‘(iv) mortgage guarantee insurance or other types
of insurance or credit enhancement obtained at the
time of origination, to the extent such insurance or
credit enhancement reduces the risk of default; and
‘‘(v) prohibiting or restricting the use of balloon
payments, negative amortization, prepayment penalties, interest-only payments, and other features that
have been demonstrated to exhibit a higher risk of
borrower default.
‘‘(C) LIMITATION ON DEFINITION.—The Federal banking
agencies, the Commission, the Secretary of Housing and
Urban Development, and the Director of the Federal
Housing Finance Agency in defining the term ‘qualified
residential mortgage’, as required by subparagraph (B),
shall define that term to be no broader than the definition
‘qualified mortgage’ as the term is defined under section
129C(c)(2) of the Truth in Lending Act, as amended by
the Consumer Financial Protection Act of 2010, and regulations adopted thereunder.
‘‘(5) CONDITION FOR QUALIFIED RESIDENTIAL MORTGAGE
EXEMPTION.—The regulations issued under paragraph (4) shall
provide that an asset-backed security that is collateralized by
tranches of other asset-backed securities shall not be exempt
from the risk retention requirements of this subsection.
‘‘(6) CERTIFICATION.—The Commission shall require an
issuer to certify, for each issuance of an asset-backed security
collateralized exclusively by qualified residential mortgages,
that the issuer has evaluated the effectiveness of the internal
supervisory controls of the issuer with respect to the process
for ensuring that all assets that collateralize the asset-backed
security are qualified residential mortgages.
‘‘(f) ENFORCEMENT.—The regulations issued under this section
shall be enforced by—
‘‘(1) the appropriate Federal banking agency, with respect
to any securitizer that is an insured depository institution;
and
‘‘(2) the Commission, with respect to any securitizer that
is not an insured depository institution.
‘‘(g) AUTHORITY OF COMMISSION.—The authority of the Commission under this section shall be in addition to the authority of
the Commission to otherwise enforce the securities laws.
‘‘(h) AUTHORITY TO COORDINATE ON RULEMAKING.—The Chairperson of the Financial Stability Oversight Council shall coordinate
all joint rulemaking required under this section.

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124 STAT. 1896

PUBLIC LAW 111–203—JULY 21, 2010

‘‘(i) EFFECTIVE DATE OF REGULATIONS.—The regulations issued
under this section shall become effective—
‘‘(1) with respect to securitizers and originators of assetbacked securities backed by residential mortgages, 1 year after
the date on which final rules under this section are published
in the Federal Register; and
‘‘(2) with respect to securitizers and originators of all other
classes of asset-backed securities, 2 years after the date on
which final rules under this section are published in the Federal
Register.’’.
(c) STUDY ON RISK RETENTION.—
(1) STUDY.—The Board of Governors of the Federal Reserve
System, in coordination and consultation with the Comptroller
of the Currency, the Director of the Office of Thrift Supervision,
the Chairperson of the Federal Deposit Insurance Corporation,
and the Securities and Exchange Commission shall conduct
a study of the combined impact on each individual class of
asset-backed security established under section 15G(c)(2) of
the Securities Exchange Act of 1934, as added by subsection
(b), of—
(A) the new credit risk retention requirements contained in the amendment made by subsection (b), including
the effect credit risk retention requirements have on
increasing the market for Federally subsidized loans; and
(B) the Financial Accounting Statements 166 and 167
issued by the Financial Accounting Standards Board.
(2) REPORT.—Not later than 90 days after the date of
enactment of this Act, the Board of Governors of the Federal
Reserve System shall submit to Congress a report on the study
conducted under paragraph (1). Such report shall include statutory and regulatory recommendations for eliminating any negative impacts on the continued viability of the asset-backed
securitization markets and on the availability of credit for
new lending identified by the study conducted under paragraph
(1).

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SEC. 942. DISCLOSURES AND REPORTING FOR ASSET-BACKED SECURITIES.

(a) SECURITIES EXCHANGE ACT OF 1934.—Section 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(d)) is amended—
(1) by striking ‘‘(d) Each’’ and inserting the following:
‘‘(d) SUPPLEMENTARY AND PERIODIC INFORMATION.—
‘‘(1) IN GENERAL.—Each’’;
(2) in the third sentence, by inserting after ‘‘securities
of each class’’ the following: ‘‘, other than any class of assetbacked securities,’’; and
(3) by adding at the end the following:
‘‘(2) ASSET-BACKED SECURITIES.—
‘‘(A) SUSPENSION OF DUTY TO FILE.—The Commission
may, by rule or regulation, provide for the suspension
or termination of the duty to file under this subsection
for any class of asset-backed security, on such terms and
conditions and for such period or periods as the Commission
deems necessary or appropriate in the public interest or
for the protection of investors.
‘‘(B) CLASSIFICATION OF ISSUERS.—The Commission
may, for purposes of this subsection, classify issuers and

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1897

prescribe requirements appropriate for each class of issuers
of asset-backed securities.’’.
(b) SECURITIES ACT OF 1933.—Section 7 of the Securities Act
of 1933 (15 U.S.C. 77g) is amended by adding at the end the
following:
‘‘(c) DISCLOSURE REQUIREMENTS.—
‘‘(1) IN GENERAL.—The Commission shall adopt regulations
under this subsection requiring each issuer of an asset-backed
security to disclose, for each tranche or class of security,
information regarding the assets backing that security.
‘‘(2) CONTENT OF REGULATIONS.—In adopting regulations
under this subsection, the Commission shall—
‘‘(A) set standards for the format of the data provided
by issuers of an asset-backed security, which shall, to the
extent feasible, facilitate comparison of such data across
securities in similar types of asset classes; and
‘‘(B) require issuers of asset-backed securities, at a
minimum, to disclose asset-level or loan-level data, if such
data are necessary for investors to independently perform
due diligence, including—
‘‘(i) data having unique identifiers relating to loan
brokers or originators;
‘‘(ii) the nature and extent of the compensation
of the broker or originator of the assets backing the
security; and
‘‘(iii) the amount of risk retention by the originator
and the securitizer of such assets.’’.

Regulations.

SEC. 943. REPRESENTATIONS AND WARRANTIES IN ASSET-BACKED
OFFERINGS.

15 USC 78o–7
note.

Not later than 180 days after the date of enactment of this
Act, the Securities and Exchange Commission shall prescribe regulations on the use of representations and warranties in the market
for asset-backed securities (as that term is defined in section 3(a)(77)
of the Securities Exchange Act of 1934, as added by this subtitle)
that—
(1) require each national recognized statistical rating
organization to include in any report accompanying a credit
rating a description of—
(A) the representations, warranties, and enforcement
mechanisms available to investors; and
(B) how they differ from the representations, warranties, and enforcement mechanisms in issuances of similar
securities; and
(2) require any securitizer (as that term is defined in section
15G(a) of the Securities Exchange Act of 1934, as added by
this subtitle) to disclose fulfilled and unfulfilled repurchase
requests across all trusts aggregated by the securitizer, so
that investors may identify asset originators with clear underwriting deficiencies.

Deadline.
Regulations.

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SEC. 944. EXEMPTED TRANSACTIONS UNDER THE SECURITIES ACT
OF 1933.

(a) EXEMPTION ELIMINATED.—Section 4 of the Securities Act
of 1933 (15 U.S.C. 77d) is amended—
(1) by striking paragraph (5); and
(2) by striking ‘‘(6) transactions’’ and inserting the following:

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124 STAT. 1898

PUBLIC LAW 111–203—JULY 21, 2010

‘‘(5) transactions’’.
(b) CONFORMING AMENDMENT.—Section 3(a)(4)(B)(vii)(I) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)(B)(vii)(I)) is
amended by striking ‘‘4(6)’’ and inserting ‘‘4(5)’’.
SEC. 945. DUE DILIGENCE ANALYSIS AND DISCLOSURE IN ASSETBACKED SECURITIES ISSUES.

Deadline.
Regulations.

Section 7 of the Securities Act of 1933 (15 U.S.C. 77g), as
amended by this subtitle, is amended by adding at the end the
following:
‘‘(d) REGISTRATION STATEMENT FOR ASSET-BACKED SECURITIES.—Not later than 180 days after the date of enactment of
this subsection, the Commission shall issue rules relating to the
registration statement required to be filed by any issuer of an
asset-backed security (as that term is defined in section 3(a)(77)
of the Securities Exchange Act of 1934) that require any issuer
of an asset-backed security—
‘‘(1) to perform a review of the assets underlying the assetbacked security; and
‘‘(2) to disclose the nature of the review under paragraph
(1).’’.

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SEC. 946. STUDY ON THE MACROECONOMIC EFFECTS OF RISK RETENTION REQUIREMENTS.

(a) STUDY REQUIRED.—The Chairman of the Financial Services
Oversight Council shall carry out a study on the macroeconomic
effects of the risk retention requirements under this subtitle, and
the amendments made by this subtitle, with emphasis placed on
potential beneficial effects with respect to stabilizing the real estate
market. Such study shall include—
(1) an analysis of the effects of risk retention on real
estate asset price bubbles, including a retrospective estimate
of what fraction of real estate losses may have been averted
had such requirements been in force in recent years;
(2) an analysis of the feasibility of minimizing real estate
price bubbles by proactively adjusting the percentage of risk
retention that must be borne by creditors and securitizers of
real estate debt, as a function of regional or national market
conditions;
(3) a comparable analysis for proactively adjusting mortgage origination requirements;
(4) an assessment of whether such proactive adjustments
should be made by an independent regulator, or in a formulaic
and transparent manner;
(5) an assessment of whether such adjustments should
take place independently or in concert with monetary policy;
and
(6) recommendations for implementation and enabling
legislation.
(b) REPORT.—Not later than the end of the 180-day period
beginning on the date of the enactment of this title, the Chairman
of the Financial Services Oversight Council shall issue a report
to the Congress containing any findings and determinations made
in carrying out the study required under subsection (a).

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1899

Subtitle E—Accountability and Executive
Compensation
SEC.

951.

SHAREHOLDER
DISCLOSURES.

VOTE

ON

EXECUTIVE

COMPENSATION

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The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 14 (15 U.S.C. 78n) the following:

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‘‘SEC. 14A. SHAREHOLDER APPROVAL OF EXECUTIVE COMPENSATION.

15 USC 78n–1.

‘‘(a) SEPARATE RESOLUTION REQUIRED.—
‘‘(1) IN GENERAL.—Not less frequently than once every 3
years, a proxy or consent or authorization for an annual or
other meeting of the shareholders for which the proxy solicitation rules of the Commission require compensation disclosure
shall include a separate resolution subject to shareholder vote
to approve the compensation of executives, as disclosed pursuant to section 229.402 of title 17, Code of Federal Regulations,
or any successor thereto.
‘‘(2) FREQUENCY OF VOTE.—Not less frequently than once
every 6 years, a proxy or consent or authorization for an annual
or other meeting of the shareholders for which the proxy solicitation rules of the Commission require compensation disclosure
shall include a separate resolution subject to shareholder vote
to determine whether votes on the resolutions required under
paragraph (1) will occur every 1, 2, or 3 years.
‘‘(3) EFFECTIVE DATE.—The proxy or consent or authorization for the first annual or other meeting of the shareholders
occurring after the end of the 6-month period beginning on
the date of enactment of this section shall include—
‘‘(A) the resolution described in paragraph (1); and
‘‘(B) a separate resolution subject to shareholder vote
to determine whether votes on the resolutions required
under paragraph (1) will occur every 1, 2, or 3 years.
‘‘(b) SHAREHOLDER APPROVAL OF GOLDEN PARACHUTE COMPENSATION.—
‘‘(1) DISCLOSURE.—In any proxy or consent solicitation
material (the solicitation of which is subject to the rules of
the Commission pursuant to subsection (a)) for a meeting of
the shareholders occurring after the end of the 6-month period
beginning on the date of enactment of this section, at which
shareholders are asked to approve an acquisition, merger,
consolidation, or proposed sale or other disposition of all or
substantially all the assets of an issuer, the person making
such solicitation shall disclose in the proxy or consent solicitation material, in a clear and simple form in accordance with
regulations to be promulgated by the Commission, any agreements or understandings that such person has with any named
executive officers of such issuer (or of the acquiring issuer,
if such issuer is not the acquiring issuer) concerning any type
of compensation (whether present, deferred, or contingent) that
is based on or otherwise relates to the acquisition, merger,
consolidation, sale, or other disposition of all or substantially
all of the assets of the issuer and the aggregate total of all
such compensation that may (and the conditions upon which

Deadlines.

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124 STAT. 1900

PUBLIC LAW 111–203—JULY 21, 2010

it may) be paid or become payable to or on behalf of such
executive officer.
‘‘(2) SHAREHOLDER APPROVAL.—Any proxy or consent or
authorization relating to the proxy or consent solicitation material containing the disclosure required by paragraph (1) shall
include a separate resolution subject to shareholder vote to
approve such agreements or understandings and compensation
as disclosed, unless such agreements or understandings have
been subject to a shareholder vote under subsection (a).
‘‘(c) RULE OF CONSTRUCTION.—The shareholder vote referred
to in subsections (a) and (b) shall not be binding on the issuer
or the board of directors of an issuer, and may not be construed—
‘‘(1) as overruling a decision by such issuer or board of
directors;
‘‘(2) to create or imply any change to the fiduciary duties
of such issuer or board of directors;
‘‘(3) to create or imply any additional fiduciary duties for
such issuer or board of directors; or
‘‘(4) to restrict or limit the ability of shareholders to make
proposals for inclusion in proxy materials related to executive
compensation.
‘‘(d) DISCLOSURE OF VOTES.—Every institutional investment
manager subject to section 13(f) shall report at least annually
how it voted on any shareholder vote pursuant to subsections (a)
and (b), unless such vote is otherwise required to be reported
publicly by rule or regulation of the Commission.
‘‘(e) EXEMPTION.—The Commission may, by rule or order,
exempt an issuer or class of issuers from the requirement under
subsection (a) or (b). In determining whether to make an exemption
under this subsection, the Commission shall take into account,
among other considerations, whether the requirements under subsections (a) and (b) disproportionately burdens small issuers.’’.

Reports.
Deadline.

SEC. 952. COMPENSATION COMMITTEE INDEPENDENCE.

(a) IN GENERAL.—The Securities Exchange Act of 1934 (15
U.S.C. 78 et seq.) is amended by inserting after section 10B, as
added by section 753, the following:
15 USC 78j–3.

‘‘SEC. 10C. COMPENSATION COMMITTEES.

‘‘(a) INDEPENDENCE OF COMPENSATION COMMITTEES.—
‘‘(1) LISTING STANDARDS.—The Commission shall, by rule,
direct the national securities exchanges and national securities
associations to prohibit the listing of any equity security of
an issuer, other than an issuer that is a controlled company,
limited partnership, company in bankruptcy proceedings, openended management investment company that is registered
under the Investment Company Act of 1940, or a foreign private
issuer that provides annual disclosures to shareholders of the
reasons that the foreign private issuer does not have an independent compensation committee, that does not comply with
the requirements of this subsection.
‘‘(2) INDEPENDENCE OF COMPENSATION COMMITTEES.—The
rules of the Commission under paragraph (1) shall require
that each member of the compensation committee of the board
of directors of an issuer be—
‘‘(A) a member of the board of directors of the issuer;
and
‘‘(B) independent.

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Regulations.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1901

‘‘(3) INDEPENDENCE.—The rules of the Commission under
paragraph (1) shall require that, in determining the definition
of the term ‘independence’ for purposes of paragraph (2), the
national securities exchanges and the national securities
associations shall consider relevant factors, including—
‘‘(A) the source of compensation of a member of the
board of directors of an issuer, including any consulting,
advisory, or other compensatory fee paid by the issuer
to such member of the board of directors; and
‘‘(B) whether a member of the board of directors of
an issuer is affiliated with the issuer, a subsidiary of the
issuer, or an affiliate of a subsidiary of the issuer.
‘‘(4) EXEMPTION AUTHORITY.—The rules of the Commission
under paragraph (1) shall permit a national securities exchange
or a national securities association to exempt a particular relationship from the requirements of paragraph (2), with respect
to the members of a compensation committee, as the national
securities exchange or national securities association determines is appropriate, taking into consideration the size of an
issuer and any other relevant factors.
‘‘(b) INDEPENDENCE OF COMPENSATION CONSULTANTS AND
OTHER COMPENSATION COMMITTEE ADVISERS.—
‘‘(1) IN GENERAL.—The compensation committee of an issuer
may only select a compensation consultant, legal counsel, or
other adviser to the compensation committee after taking into
consideration the factors identified by the Commission under
paragraph (2).
‘‘(2) RULES.—The Commission shall identify factors that
affect the independence of a compensation consultant, legal
counsel, or other adviser to a compensation committee of an
issuer. Such factors shall be competitively neutral among categories of consultants, legal counsel, or other advisers and
preserve the ability of compensation committees to retain the
services of members of any such category, and shall include—
‘‘(A) the provision of other services to the issuer by
the person that employs the compensation consultant, legal
counsel, or other adviser;
‘‘(B) the amount of fees received from the issuer by
the person that employs the compensation consultant, legal
counsel, or other adviser, as a percentage of the total
revenue of the person that employs the compensation
consultant, legal counsel, or other adviser;
‘‘(C) the policies and procedures of the person that
employs the compensation consultant, legal counsel, or
other adviser that are designed to prevent conflicts of
interest;
‘‘(D) any business or personal relationship of the compensation consultant, legal counsel, or other adviser with
a member of the compensation committee; and
‘‘(E) any stock of the issuer owned by the compensation
consultant, legal counsel, or other adviser.
‘‘(c) COMPENSATION COMMITTEE AUTHORITY RELATING TO COMPENSATION CONSULTANTS.—
‘‘(1) AUTHORITY TO RETAIN COMPENSATION CONSULTANT.—

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124 STAT. 1902

PUBLIC LAW 111–203—JULY 21, 2010

‘‘(A) IN GENERAL.—The compensation committee of an
issuer, in its capacity as a committee of the board of directors, may, in its sole discretion, retain or obtain the advice
of a compensation consultant.
‘‘(B) DIRECT RESPONSIBILITY OF COMPENSATION COMMITTEE.—The compensation committee of an issuer shall
be directly responsible for the appointment, compensation,
and oversight of the work of a compensation consultant.
‘‘(C) RULE OF CONSTRUCTION.—This paragraph may not
be construed—
‘‘(i) to require the compensation committee to
implement or act consistently with the advice or recommendations of the compensation consultant; or
‘‘(ii) to affect the ability or obligation of a compensation committee to exercise its own judgment in
fulfillment of the duties of the compensation committee.
‘‘(2) DISCLOSURE.—In any proxy or consent solicitation
material for an annual meeting of the shareholders (or a special
meeting in lieu of the annual meeting) occurring on or after
the date that is 1 year after the date of enactment of this
section, each issuer shall disclose in the proxy or consent material, in accordance with regulations of the Commission,
whether—
‘‘(A) the compensation committee of the issuer retained
or obtained the advice of a compensation consultant; and
‘‘(B) the work of the compensation consultant has
raised any conflict of interest and, if so, the nature of
the conflict and how the conflict is being addressed.
‘‘(d) AUTHORITY TO ENGAGE INDEPENDENT LEGAL COUNSEL AND
OTHER ADVISERS.—
‘‘(1) IN GENERAL.—The compensation committee of an
issuer, in its capacity as a committee of the board of directors,
may, in its sole discretion, retain and obtain the advice of
independent legal counsel and other advisers.
‘‘(2) DIRECT RESPONSIBILITY OF COMPENSATION COMMITTEE.—The compensation committee of an issuer shall be
directly responsible for the appointment, compensation, and
oversight of the work of independent legal counsel and other
advisers.
‘‘(3) RULE OF CONSTRUCTION.—This subsection may not be
construed—
‘‘(A) to require a compensation committee to implement
or act consistently with the advice or recommendations
of independent legal counsel or other advisers under this
subsection; or
‘‘(B) to affect the ability or obligation of a compensation
committee to exercise its own judgment in fulfillment of
the duties of the compensation committee.
‘‘(e) COMPENSATION OF COMPENSATION CONSULTANTS, INDEPENDENT LEGAL COUNSEL, AND OTHER ADVISERS.—Each issuer shall
provide for appropriate funding, as determined by the compensation
committee in its capacity as a committee of the board of directors,
for payment of reasonable compensation—
‘‘(1) to a compensation consultant; and
‘‘(2) to independent legal counsel or any other adviser to
the compensation committee.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1903

‘‘(f) COMMISSION RULES.—
‘‘(1) IN GENERAL.—Not later than 360 days after the date
of enactment of this section, the Commission shall, by rule,
direct the national securities exchanges and national securities
associations to prohibit the listing of any security of an issuer
that is not in compliance with the requirements of this section.
‘‘(2) OPPORTUNITY TO CURE DEFECTS.—The rules of the
Commission under paragraph (1) shall provide for appropriate
procedures for an issuer to have a reasonable opportunity to
cure any defects that would be the basis for the prohibition
under paragraph (1), before the imposition of such prohibition.
‘‘(3) EXEMPTION AUTHORITY.—
‘‘(A) IN GENERAL.—The rules of the Commission under
paragraph (1) shall permit a national securities exchange
or a national securities association to exempt a category
of issuers from the requirements under this section, as
the national securities exchange or the national securities
association determines is appropriate.
‘‘(B) CONSIDERATIONS.—In determining appropriate
exemptions under subparagraph (A), the national securities
exchange or the national securities association shall take
into account the potential impact of the requirements of
this section on smaller reporting issuers.
‘‘(g) CONTROLLED COMPANY EXEMPTION.—
‘‘(1) IN GENERAL.—This section shall not apply to any controlled company.
‘‘(2) DEFINITION.—For purposes of this section, the term
‘controlled company’ means an issuer—
‘‘(A) that is listed on a national securities exchange
or by a national securities association; and
‘‘(B) that holds an election for the board of directors
of the issuer in which more than 50 percent of the voting
power is held by an individual, a group, or another issuer.’’.
(b) STUDY AND REPORT.—
(1) STUDY.—The Securities and Exchange Commission shall
conduct a study and review of the use of compensation consultants and the effects of such use.
(2) REPORT.—Not later than 2 years after the date of the
enactment of this Act, the Commission shall submit a report
to Congress on the results of the study and review required
by this subsection.

Deadline.

Procedures.

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SEC. 953. EXECUTIVE COMPENSATION DISCLOSURES.

(a) DISCLOSURE OF PAY VERSUS PERFORMANCE.—Section 14
of the Securities Exchange Act of 1934 (15 U.S.C. 78n), as amended
by this title, is amended by adding at the end the following:
‘‘(i) DISCLOSURE OF PAY VERSUS PERFORMANCE.—The Commission shall, by rule, require each issuer to disclose in any proxy
or consent solicitation material for an annual meeting of the shareholders of the issuer a clear description of any compensation
required to be disclosed by the issuer under section 229.402 of
title 17, Code of Federal Regulations (or any successor thereto),
including information that shows the relationship between executive
compensation actually paid and the financial performance of the
issuer, taking into account any change in the value of the shares
of stock and dividends of the issuer and any distributions. The

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124 STAT. 1904

15 USC 78l note.
Regulations.

PUBLIC LAW 111–203—JULY 21, 2010

disclosure under this subsection may include a graphic representation of the information required to be disclosed.’’.
(b) ADDITIONAL DISCLOSURE REQUIREMENTS.—
(1) IN GENERAL.—The Commission shall amend section
229.402 of title 17, Code of Federal Regulations, to require
each issuer to disclose in any filing of the issuer described
in section 229.10(a) of title 17, Code of Federal Regulations
(or any successor thereto)—
(A) the median of the annual total compensation of
all employees of the issuer, except the chief executive officer
(or any equivalent position) of the issuer;
(B) the annual total compensation of the chief executive
officer (or any equivalent position) of the issuer; and
(C) the ratio of the amount described in subparagraph
(A) to the amount described in subparagraph (B).
(2) TOTAL COMPENSATION.—For purposes of this subsection,
the total compensation of an employee of an issuer shall be
determined in accordance with section 229.402(c)(2)(x) of title
17, Code of Federal Regulations, as in effect on the day before
the date of enactment of this Act.
SEC. 954. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION.

The Securities Exchange Act of 1934 is amended by inserting
after section 10C, as added by section 952, the following:
15 USC 78j–4.

‘‘SEC. 10D. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION
POLICY.

Regulations.

‘‘(a) LISTING STANDARDS.—The Commission shall, by rule, direct
the national securities exchanges and national securities associations to prohibit the listing of any security of an issuer that does
not comply with the requirements of this section.
‘‘(b) RECOVERY OF FUNDS.—The rules of the Commission under
subsection (a) shall require each issuer to develop and implement
a policy providing—
‘‘(1) for disclosure of the policy of the issuer on incentivebased compensation that is based on financial information
required to be reported under the securities laws; and
‘‘(2) that, in the event that the issuer is required to prepare
an accounting restatement due to the material noncompliance
of the issuer with any financial reporting requirement under
the securities laws, the issuer will recover from any current
or former executive officer of the issuer who received incentivebased compensation (including stock options awarded as compensation) during the 3-year period preceding the date on which
the issuer is required to prepare an accounting restatement,
based on the erroneous data, in excess of what would have
been paid to the executive officer under the accounting restatement.’’.

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SEC.

Regulations.

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955.

DISCLOSURE
HEDGING.

REGARDING

EMPLOYEE

AND

DIRECTOR

Section 14 of the Securities Exchange Act of 1934 (15 U.S.C.
78n), as amended by this title, is amended by adding at the end
the following:
‘‘(j) DISCLOSURE OF HEDGING BY EMPLOYEES AND DIRECTORS.—
The Commission shall, by rule, require each issuer to disclose
in any proxy or consent solicitation material for an annual meeting
of the shareholders of the issuer whether any employee or member

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124 STAT. 1905

of the board of directors of the issuer, or any designee of such
employee or member, is permitted to purchase financial instruments
(including prepaid variable forward contracts, equity swaps, collars,
and exchange funds) that are designed to hedge or offset any
decrease in the market value of equity securities—
‘‘(1) granted to the employee or member of the board of
directors by the issuer as part of the compensation of the
employee or member of the board of directors; or
‘‘(2) held, directly or indirectly, by the employee or member
of the board of directors.’’.

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SEC. 956. ENHANCED COMPENSATION STRUCTURE REPORTING.

(a) ENHANCED DISCLOSURE AND REPORTING OF COMPENSATION
ARRANGEMENTS.—
(1) IN GENERAL.—Not later than 9 months after the date
of enactment of this title, the appropriate Federal regulators
jointly shall prescribe regulations or guidelines to require each
covered financial institution to disclose to the appropriate Federal regulator the structures of all incentive-based compensation arrangements offered by such covered financial institutions
sufficient to determine whether the compensation structure—
(A) provides an executive officer, employee, director,
or principal shareholder of the covered financial institution
with excessive compensation, fees, or benefits; or
(B) could lead to material financial loss to the covered
financial institution.
(2) RULES OF CONSTRUCTION.—Nothing in this section shall
be construed as requiring the reporting of the actual compensation of particular individuals. Nothing in this section shall
be construed to require a covered financial institution that
does not have an incentive-based payment arrangement to
make the disclosures required under this subsection.
(b) PROHIBITION ON CERTAIN COMPENSATION ARRANGEMENTS.—
Not later than 9 months after the date of enactment of this title,
the appropriate Federal regulators shall jointly prescribe regulations or guidelines that prohibit any types of incentive-based payment arrangement, or any feature of any such arrangement, that
the regulators determine encourages inappropriate risks by covered
financial institutions—
(1) by providing an executive officer, employee, director,
or principal shareholder of the covered financial institution
with excessive compensation, fees, or benefits; or
(2) that could lead to material financial loss to the covered
financial institution.
(c) STANDARDS.—The appropriate Federal regulators shall—
(1) ensure that any standards for compensation established
under subsections (a) or (b) are comparable to the standards
established under section of the Federal Deposit Insurance
Act (12 U.S.C. 2 1831p–1) for insured depository institutions;
and
(2) in establishing such standards under such subsections,
take into consideration the compensation standards described
in section 39(c) of the Federal Deposit Insurance Act (12 U.S.C.
1831p– 9 1(c)).
(d) ENFORCEMENT.—The provisions of this section and the regulations issued under this section shall be enforced under section

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Deadline.
Regulations.

Deadline.
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PUBLIC LAW 111–203—JULY 21, 2010

505 of the Gramm-Leach-Bliley Act and, for purposes of such section, a violation of this section or such regulations shall be treated
as a violation of subtitle A of title V of such Act.
(e) DEFINITIONS.—As used in this section—
(1) the term ‘‘appropriate Federal regulator’’ means the
Board of Governors of the Federal Reserve System, the Office
of the Comptroller of the Currency, the Board of Directors
of the Federal Deposit Insurance Corporation, the Director
of the Office of Thrift Supervision, the National Credit Union
Administration Board, the Securities and Exchange Commission, the Federal Housing Finance Agency; and
(2) the term ‘‘covered financial institution’’ means—
(A) a depository institution or depository institution
holding company, as such terms are defined in section
3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);
(B) a broker-dealer registered under section 15 of the
Securities Exchange Act of 1934 (15 U.S.C. 78o);
(C) a credit union, as described in section 19(b)(1)(A)(iv)
of the Federal Reserve Act;
(D) an investment advisor, as such term is defined
in section 202(a)(11) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-2(a)(11));
(E) the Federal National Mortgage Association;
(F) the Federal Home Loan Mortgage Corporation; and
(G) any other financial institution that the appropriate
Federal regulators, jointly, by rule, determine should be
treated as a covered financial institution for purposes of
this section.
(f) EXEMPTION FOR CERTAIN FINANCIAL INSTITUTIONS.—The
requirements of this section shall not apply to covered financial
institutions with assets of less than $1,000,000,000.

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SEC. 957. VOTING BY BROKERS.

Section 6(b) of the Securities Exchange Act of 1934 (15 U.S.C.
78f(b)) is amended—
(1) in paragraph (9)—
(A) in subparagraph (A), by redesignating clauses (i)
through (v) as subclauses (I) through (V), respectively, and
adjusting the margins accordingly;
(B) by redesignating subparagraphs (A) through (D)
as clauses (i) through (iv), respectively, and adjusting the
margins accordingly;
(C) by inserting ‘‘(A)’’ after ‘‘(9)’’; and
(D) in the matter immediately following clause (iv),
as so redesignated, by striking ‘‘As used’’ and inserting
the following:
‘‘(B) As used’’.
(2) by adding at the end the following:
‘‘(10)(A) The rules of the exchange prohibit any member
that is not the beneficial owner of a security registered under
section 12 from granting a proxy to vote the security in connection with a shareholder vote described in subparagraph (B),
unless the beneficial owner of the security has instructed the
member to vote the proxy in accordance with the voting instructions of the beneficial owner.
‘‘(B) A shareholder vote described in this subparagraph
is a shareholder vote with respect to the election of a member

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PUBLIC LAW 111–203—JULY 21, 2010

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of the board of directors of an issuer, executive compensation,
or any other significant matter, as determined by the Commission, by rule, and does not include a vote with respect to
the uncontested election of a member of the board of directors
of any investment company registered under the Investment
Company Act of 1940 (15 U.S.C. 80b–1 et seq.).
‘‘(C) Nothing in this paragraph shall be construed to prohibit a national securities exchange from prohibiting a member
that is not the beneficial owner of a security registered under
section 12 from granting a proxy to vote the security in connection with a shareholder vote not described in subparagraph
(A).’’.

Subtitle F—Improvements to the Management of the Securities and Exchange
Commission

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SEC. 961. REPORT AND CERTIFICATION OF INTERNAL SUPERVISORY
CONTROLS.

15 USC 78d–6.

(a) ANNUAL REPORTS AND CERTIFICATION.—Not later than 90
days after the end of each fiscal year, the Commission shall submit
a report to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the
House of Representatives on the conduct by the Commission of
examinations of registered entities, enforcement investigations, and
review of corporate financial securities filings.
(b) CONTENTS OF REPORTS.—Each report under subsection (a)
shall contain—
(1) an assessment, as of the end of the most recent fiscal
year, of the effectiveness of—
(A) the internal supervisory controls of the Commission; and
(B) the procedures of the Commission applicable to
the staff of the Commission who perform examinations
of registered entities, enforcement investigations, and
reviews of corporate financial securities filings;
(2) a certification that the Commission has adequate
internal supervisory controls to carry out the duties of the
Commission described in paragraph (1)(B); and
(3) a summary by the Comptroller General of the United
States of the review carried out under subsection (d).
(c) CERTIFICATION.—
(1) SIGNATURE.—The certification under subsection (b)(2)
shall be signed by the Director of the Division of Enforcement,
the Director of the Division of Corporation Finance, and the
Director of the Office of Compliance Inspections and Examinations (or the head of any successor division or office).
(2) CONTENT OF CERTIFICATION.—Each individual described
in paragraph (1) shall certify that the individual—
(A) is directly responsible for establishing and
maintaining the internal supervisory controls of the Division or Office of which the individual is the head;
(B) is knowledgeable about the internal supervisory
controls of the Division or Office of which the individual
is the head;

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124 STAT. 1908

(C) has evaluated the effectiveness of the internal
supervisory controls during the 90-day period ending on
the final day of the fiscal year to which the report relates;
and
(D) has disclosed to the Commission any significant
deficiencies in the design or operation of internal supervisory controls that could adversely affect the ability of
the Division or Office to consistently conduct inspections,
or investigations, or reviews of filings with professional
competence and integrity.
(d) NEW DIRECTOR OR ACTING DIRECTOR.—Notwithstanding
subsection (a), if the Director of the Division of Enforcement, the
Director of the Division of Corporate Finance, or the Director of
the Office of Compliance Inspections and Examinations has served
as Director of the Division or Office for less than 90 days on
the date on which a report is required to be submitted under
subsection (a), the Commission may submit the report on the date
on which the Director has served as Director for 90 days. If there
is no Director of the Division of Enforcement, the Division of Corporate Finance, or the Office of Compliance Inspections and
Examinations, on the date on which a report is required to be
submitted under subsection (a), the Acting Director of the Division
or Office may make the certification required under subsection
(c).
(e) REVIEW BY THE COMPTROLLER GENERAL.—
(1) REPORT.—The Comptroller General of the United States
shall submit to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives a report that contains a review
of the adequacy and effectiveness of the internal supervisory
control structure and procedures described in subsection (b)(1),
not less frequently than once every 3 years, at a time to
coincide with the publication of the reports of the Commission
under this section.
(2) AUTHORITY TO HIRE EXPERTS.—The Comptroller General
of the United States may hire independent consultants with
specialized expertise in any area relevant to the duties of
the Comptroller General described in this section, in order
to assist the Comptroller General in carrying out such duties.

Time period.

Time period.

15 USC 78d–7.

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PUBLIC LAW 111–203—JULY 21, 2010

SEC. 962. TRIENNIAL REPORT ON PERSONNEL MANAGEMENT.

(a) TRIENNIAL REPORT REQUIRED.—Once every 3 years, the
Comptroller General of the United States shall submit a report
to the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House
of Representatives on the quality of personnel management by
the Commission.
(b) CONTENTS OF REPORT.—Each report under subsection (a)
shall include—
(1) an evaluation of—
(A) the effectiveness of supervisors in using the skills,
talents, and motivation of the employees of the Commission
to achieve the goals of the Commission;
(B) the criteria for promoting employees of the Commission to supervisory positions;
(C) the fairness of the application of the promotion
criteria to the decisions of the Commission;

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1909

(D) the competence of the professional staff of the
Commission;
(E) the efficiency of communication between the units
of the Commission regarding the work of the Commission
(including communication between divisions and between
subunits of a division) and the efforts by the Commission
to promote such communication;
(F) the turnover within subunits of the Commission,
including the consideration of supervisors whose subordinates have an unusually high rate of turnover;
(G) whether there are excessive numbers of low-level,
mid-level, or senior-level managers;
(H) any initiatives of the Commission that increase
the competence of the staff of the Commission;
(I) the actions taken by the Commission regarding
employees of the Commission who have failed to perform
their duties and circumstances under which the Commission has issued to employees a notice of termination; and
(J) such other factors relating to the management of
the Commission as the Comptroller General determines
are appropriate;
(2) an evaluation of any improvements made with respect
to the areas described in paragraph (1) since the date of submission of the previous report; and
(3) recommendations for how the Commission can use the
human resources of the Commission more effectively and efficiently to carry out the mission of the Commission.
(c) CONSULTATION.—In preparing the report under subsection
(a), the Comptroller General shall consult with current employees
of the Commission, retired employees and other former employees
of the Commission, the Inspector General of the Commission, persons that have business before the Commission, any union representing the employees of the Commission, private management
consultants, academics, and any other source that the Comptroller
General deems appropriate.
(d) REPORT BY COMMISSION.—Not later than 90 days after
the date on which the Comptroller General submits each report
under subsection (a), the Commission shall submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives
a report describing the actions taken by the Commission in response
to the recommendations contained in the report under subsection
(a).
(e) REIMBURSEMENTS FOR COST OF REPORTS.—
(1) REIMBURSEMENTS REQUIRED.—The Commission shall
reimburse the Government Accountability Office for the full
cost of making the reports under this section, as billed therefor
by the Comptroller General.
(2) CREDITING AND USE OF REIMBURSEMENTS.—Such
reimbursements shall—
(A) be credited to the appropriation account ‘‘Salaries
and Expenses, Government Accountability Office’’ current
when the payment is received; and
(B) remain available until expended.
(f) AUTHORITY TO HIRE EXPERTS.—The Comptroller General
of the United States may hire independent consultants with specialized expertise in any area relevant to the duties of the Comptroller

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PUBLIC LAW 111–203—JULY 21, 2010

General described in this section, in order to assist the Comptroller
General in carrying out such duties.
15 USC 78d–8.

SEC. 963. ANNUAL FINANCIAL CONTROLS AUDIT.

(a) REPORTS OF COMMISSION.—
(1) ANNUAL REPORTS REQUIRED.—Not later than 6 months
after the end of each fiscal year, the Commission shall publish
and submit to Congress a report that—
(A) describes the responsibility of the management of
the Commission for establishing and maintaining an adequate internal control structure and procedures for financial reporting; and
(B) contains an assessment of the effectiveness of the
internal control structure and procedures for financial
reporting of the Commission during that fiscal year.
(2) ATTESTATION.—The reports required under paragraph
(1) shall be attested to by the Chairman and chief financial
officer of the Commission.
(b) REPORT BY COMPTROLLER GENERAL.—
(1) REPORT REQUIRED.—Not later than 6 months after the
end of the first fiscal year after the date of enactment of
this Act, the Comptroller General of the United States shall
submit a report to Congress that assesses—
(A) the effectiveness of the internal control structure
and procedures of the Commission for financial reporting;
and
(B) the assessment of the Commission under subsection
(a)(1)(B).
(2) ATTESTATION.—The Comptroller General shall attest
to, and report on, the assessment made by the Commission
under subsection (a).
(c) REIMBURSEMENTS FOR COST OF REPORTS.—
(1) REIMBURSEMENTS REQUIRED.—The Commission shall
reimburse the Government Accountability Office for the full
cost of making the reports under subsection (b), as billed
therefor by the Comptroller General.
(2) CREDITING AND USE OF REIMBURSEMENTS.—Such
reimbursements shall—
(A) be credited to the appropriation account ‘‘Salaries
and Expenses, Government Accountability Office’’ current
when the payment is received; and
(B) remain available until expended.

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15 USC 78d–9.

SEC. 964. REPORT ON OVERSIGHT OF NATIONAL SECURITIES ASSOCIATIONS.

(a) REPORT REQUIRED.—Not later than 2 years after the date
of enactment of this Act, and every 3 years thereafter, the Comptroller General of the United States shall submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives
a report that includes an evaluation of the oversight by the Commission of national securities associations registered under section
15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o–3)
with respect to—
(1) the governance of such national securities associations,
including the identification and management of conflicts of
interest by such national securities associations, together with
an analysis of the impact of any conflicts of interest on the

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regulatory enforcement or rulemaking by such national securities associations;
(2) the examinations carried out by the national securities
associations, including the expertise of the examiners;
(3) the executive compensation practices of such national
securities associations;
(4) the arbitration services provided by the national securities associations;
(5) the review performed by national securities associations
of advertising by the members of the national securities associations;
(6) the cooperation with and assistance to State securities
administrators by the national securities associations to promote investor protection;
(7) how the funding of national securities associations is
used to support the mission of the national securities associations, including—
(A) the methods of funding;
(B) the sufficiency of funds;
(C) how funds are invested by the national securities
association pending use; and
(D) the impact of the methods, sufficiency, and investment of funds on regulatory enforcement by the national
securities associations;
(8) the policies regarding the employment of former
employees of national securities associations by regulated entities;
(9) the ongoing effectiveness of the rules of the national
securities associations in achieving the goals of the rules;
(10) the transparency of governance and activities of the
national securities associations; and
(11) any other issue that has an impact, as determined
by the Comptroller General, on the effectiveness of such
national securities associations in performing their mission and
in dealing fairly with investors and members;
(b) REIMBURSEMENTS FOR COST OF REPORTS.—
(1) REIMBURSEMENTS REQUIRED.—The Commission shall
reimburse the Government Accountability Office for the full
cost of making the reports under subsection (a), as billed
therefor by the Comptroller General.
(2) CREDITING AND USE OF REIMBURSEMENTS.—Such
reimbursements shall—
(A) be credited to the appropriation account ‘‘Salaries
and Expenses, Government Accountability Office’’ current
when the payment is received; and
(B) remain available until expended.

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SEC. 965. COMPLIANCE EXAMINERS.

Section 4 of the Securities Exchange Act of 1934 (15 U.S.C.
78d) is amended by adding at the end the following:
‘‘(h) EXAMINERS.—
‘‘(1) DIVISION OF TRADING AND MARKETS.—The Division of
Trading and Markets of the Commission, or any successor
organizational unit, shall have a staff of examiners who shall—
‘‘(A) perform compliance inspections and examinations
of entities under the jurisdiction of that Division; and
‘‘(B) report to the Director of that Division.

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PUBLIC LAW 111–203—JULY 21, 2010
‘‘(2) DIVISION OF INVESTMENT MANAGEMENT.—The Division
of Investment Management of the Commission, or any successor
organizational unit, shall have a staff of examiners who shall—
‘‘(A) perform compliance inspections and examinations
of entities under the jurisdiction of that Division; and
‘‘(B) report to the Director of that Division.’’.

SEC. 966. SUGGESTION PROGRAM FOR EMPLOYEES OF THE COMMISSION.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 4C (15 U.S.C. 78d–3) the
following:

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15 USC 78d–4.

‘‘SEC. 4D. ADDITIONAL DUTIES OF INSPECTOR GENERAL.

‘‘(a) SUGGESTION SUBMISSIONS BY COMMISSION EMPLOYEES.—
‘‘(1) HOTLINE ESTABLISHED.—The Inspector General of the
Commission shall establish and maintain a telephone hotline
or other electronic means for the receipt of—
‘‘(A) suggestions by employees of the Commission for
improvements in the work efficiency, effectiveness, and
productivity, and the use of the resources, of the Commission; and
‘‘(B) allegations by employees of the Commission of
waste, abuse, misconduct, or mismanagement within the
Commission.
‘‘(2) CONFIDENTIALITY.—The Inspector General shall maintain as confidential—
‘‘(A) the identity of any individual who provides
information by the means established under paragraph
(1), unless the individual requests otherwise, in writing;
and
‘‘(B) at the request of any such individual, any specific
information provided by the individual.
‘‘(b) CONSIDERATION OF REPORTS.—The Inspector General shall
consider any suggestions or allegations received by the means established under subsection (a)(1), and shall recommend appropriate
action in relation to such suggestions or allegations.
‘‘(c) RECOGNITION.—The Inspector General may recognize any
employee who makes a suggestion under subsection (a)(1) (or by
other means) that would or does—
‘‘(1) increase the work efficiency, effectiveness, or productivity of the Commission; or
‘‘(2) reduce waste, abuse, misconduct, or mismanagement
within the Commission.
‘‘(d) REPORT.—The Inspector General of the Commission shall
submit to Congress an annual report containing a description of—
‘‘(1) the nature, number, and potential benefits of any
suggestions received under subsection (a);
‘‘(2) the nature, number, and seriousness of any allegations
received under subsection (a);
‘‘(3) any recommendations made or actions taken by the
Inspector General in response to substantiated allegations
received under subsection (a); and
‘‘(4) any action the Commission has taken in response
to suggestions or allegations received under subsection (a).
‘‘(e) FUNDING.—The activities of the Inspector General under
this subsection shall be funded by the Securities and Exchange

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Commission Investor Protection Fund established under section
21F.’’.

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SEC. 967. COMMISSION ORGANIZATIONAL STUDY AND REFORM.

(a) STUDY REQUIRED.—
(1) IN GENERAL.—Not later than the end of the 90-day
period beginning on the date of the enactment of this subtitle,
the Securities and Exchange Commission (hereinafter in this
section referred to as the ‘‘SEC’’) shall hire an independent
consultant of high caliber and with expertise in organizational
restructuring and the operations of capital markets to examine
the internal operations, structure, funding, and the need for
comprehensive reform of the SEC, as well as the SEC’s relationship with and the reliance on self-regulatory organizations and
other entities relevant to the regulation of securities and the
protection of securities investors that are under the SEC’s
oversight.
(2) SPECIFIC AREAS FOR STUDY.—The study required under
paragraph (1) shall, at a minimum, include the study of—
(A) the possible elimination of unnecessary or redundant units at the SEC;
(B) improving communications between SEC offices
and divisions;
(C) the need to put in place a clear chain-of-command
structure, particularly for enforcement examinations and
compliance inspections;
(D) the effect of high-frequency trading and other
technological advances on the market and what the SEC
requires to monitor the effect of such trading and advances
on the market;
(E) the SEC’s hiring authorities, workplace policies,
and personal practices, including—
(i) whether there is a need to further streamline
hiring authorities for those who are not lawyers,
accountants, compliance examiners, or economists;
(ii) whether there is a need for further pay reforms;
(iii) the diversity of skill sets of SEC employees
and whether the present skill set diversity efficiently
and effectively fosters the SEC’s mission of investor
protection; and
(iv) the application of civil service laws by the
SEC;
(F) whether the SEC’s oversight and reliance on selfregulatory organizations promotes efficient and effective
governance for the securities markets; and
(G) whether adjusting the SEC’s reliance on self-regulatory organizations is necessary to promote more efficient
and effective governance for the securities markets.
(b) CONSULTANT REPORT.—Not later than the end of the 150day period after being retained, the independent consultant hired
pursuant to subsection (a)(1) shall issue a report to the SEC and
the Congress containing—
(1) a detailed description of any findings and conclusions
made while carrying out the study required under subsection
(a)(1); and
(2) recommendations for legislative, regulatory, or administrative action that the consultant determines appropriate to

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enable the SEC and other entities on which the consultant
reports to perform their statutorily or otherwise mandated missions.
(c) SEC REPORT.—Not later than the end of the 6-month period
beginning on the date the consultant issues the report under subsection (b), and every 6-months thereafter during the 2-year period
following the date on which the consultant issues such report,
the SEC shall issue a report to the Committee on Financial Services
of the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate describing the SEC’s
implementation of the regulatory and administrative recommendations contained in the consultant’s report.

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SEC. 968. STUDY ON SEC REVOLVING DOOR.

(a) GOVERNMENT ACCOUNTABILITY OFFICE STUDY.—The Comptroller General of the United States shall conduct a study that
will—
(1) review the number of employees who leave the Securities and Exchange Commission to work for financial institutions
regulated by such Commission;
(2) determine how many employees who leave the Securities
and Exchange Commission worked on cases that involved financial institutions regulated by such Commission;
(3) review the length of time employees work for the Securities and Exchange Commission before leaving to be employed
by financial institutions regulated by such Commission;
(4) review existing internal controls and make recommendations on strengthening such controls to ensure that
employees of the Securities and Exchange Commission who
are later employed by financial institutions did not assist such
institutions in violating any rules or regulations of the Commission during the course of their employment with such Commission;
(5) determine if greater post-employment restrictions are
necessary to prevent employees of the Securities and Exchange
Commission from being employed by financial institutions after
employment with such Commission;
(6) determine if the volume of employees of the Securities
and Exchange Commission who are later employed by financial
institutions has led to inefficiencies in enforcement;
(7) determine if employees of the Securities and Exchange
Commission who are later employed by financial institutions
assisted such institutions in circumventing Federal rules and
regulations while employed by such Commission;
(8) review any information that may address the volume
of employees of the Securities and Exchange Commission who
are later employed by financial institutions, and make recommendations to Congress; and
(9) review other additional issues as may be raised during
the course of the study conducted under this subsection.
(b) REPORT.—Not later than 1 year after the date of the enactment of this subtitle, the Comptroller General of the United States
shall submit to the Committee on Financial Services of the House
of Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate a report on the results of the study
required by subsection (a).

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124 STAT. 1915

Subtitle G—Strengthening Corporate
Governance
SEC. 971. PROXY ACCESS.

(a) PROXY ACCESS.—Section 14(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78n(a)) is amended—
(1) by inserting ‘‘(1)’’ after ‘‘(a)’’; and
(2) by adding at the end the following:
‘‘(2) The rules and regulations prescribed by the Commission
under paragraph (1) may include—
‘‘(A) a requirement that a solicitation of proxy, consent,
or authorization by (or on behalf of) an issuer include a nominee
submitted by a shareholder to serve on the board of directors
of the issuer; and
‘‘(B) a requirement that an issuer follow a certain procedure
in relation to a solicitation described in subparagraph (A).’’.
(b) REGULATIONS.—The Commission may issue rules permitting
the use by a shareholder of proxy solicitation materials supplied
by an issuer of securities for the purpose of nominating individuals
to membership on the board of directors of the issuer, under such
terms and conditions as the Commission determines are in the
interests of shareholders and for the protection of investors.
(c) EXEMPTIONS.—The Commission may, by rule or order,
exempt an issuer or class of issuers from the requirement made
by this section or an amendment made by this section. In determining whether to make an exemption under this subsection, the
Commission shall take into account, among other considerations,
whether the requirement in the amendment made by subsection
(a) disproportionately burdens small issuers.

15 USC 78n note.

15 USC 78n note.

SEC. 972. DISCLOSURES REGARDING CHAIRMAN AND CEO STRUCTURES.

The Securities Exchange Act of 1934 (15 U.S. C. 78a et seq.)
is amended by inserting after section 14A, as added by this title,
the following:
‘‘SEC. 14B. CORPORATE GOVERNANCE.

15 USC 78n–2.

‘‘Not later than 180 days after the date of enactment of this
subsection, the Commission shall issue rules that require an issuer
to disclose in the annual proxy sent to investors the reasons why
the issuer has chosen—
‘‘(1) the same person to serve as chairman of the board
of directors and chief executive officer (or in equivalent positions); or
‘‘(2) different individuals to serve as chairman of the board
of directors and chief executive officer (or in equivalent positions
of the issuer).’’.

Deadline.
Regulations.

Subtitle H—Municipal Securities

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SEC. 975. REGULATION OF MUNICIPAL SECURITIES AND CHANGES TO
THE BOARD OF THE MSRB.

(a) REGISTRATION OF MUNICIPAL SECURITIES DEALERS AND
MUNICIPAL ADVISORS.—Section 15B(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o–4(a)) is amended—

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124 STAT. 1916

PUBLIC LAW 111–203—JULY 21, 2010

(1) in paragraph (1)—
(A) by inserting ‘‘(A)’’ after ‘‘(1)’’; and
(B) by adding at the end the following:
‘‘(B) It shall be unlawful for a municipal advisor to
provide advice to or on behalf of a municipal entity or
obligated person with respect to municipal financial products or the issuance of municipal securities, or to undertake
a solicitation of a municipal entity or obligated person,
unless the municipal advisor is registered in accordance
with this subsection.’’;
(2) in paragraph (2), by inserting ‘‘or municipal advisor’’
after ‘‘municipal securities dealer’’ each place that term appears;
(3) in paragraph (3), by inserting ‘‘or municipal advisor’’
after ‘‘municipal securities dealer’’ each place that term appears;
(4) in paragraph (4), by striking ‘‘dealer, or municipal securities dealer or class of brokers, dealers, or municipal securities
dealers’’ and inserting ‘‘dealer, municipal securities dealer, or
municipal advisor, or class of brokers, dealers, municipal securities dealers, or municipal advisors’’; and
(5) by adding at the end the following:
‘‘(5) No municipal advisor shall make use of the mails
or any means or instrumentality of interstate commerce to
provide advice to or on behalf of a municipal entity or obligated
person with respect to municipal financial products, the
issuance of municipal securities, or to undertake a solicitation
of a municipal entity or obligated person, in connection with
which such municipal advisor engages in any fraudulent, deceptive, or manipulative act or practice.’’.
(b) MUNICIPAL SECURITIES RULEMAKING BOARD.—Section
15B(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78o–
4(b)) is amended—
(1) in paragraph (1)—
(A) in the first sentence, by striking ‘‘Not later than’’
and all that follows through ‘‘appointed by the Commission’’
and inserting ‘‘The Municipal Securities Rulemaking Board
shall be composed of 15 members, or such other number
of members as specified by rules of the Board pursuant
to paragraph (2)(B),’’;
(B) by striking the second sentence and inserting the
following: ‘‘The members of the Board shall serve as members for a term of 3 years or for such other terms as
specified by rules of the Board pursuant to paragraph
(2)(B), and shall consist of (A) 8 individuals who are independent of any municipal securities broker, municipal securities dealer, or municipal advisor, at least 1 of whom
shall be representative of institutional or retail investors
in municipal securities, at least 1 of whom shall be representative of municipal entities, and at least 1 of whom
shall be a member of the public with knowledge of or
experience in the municipal industry (which members are
hereinafter referred to as ‘public representatives’); and (B)
7 individuals who are associated with a broker, dealer,
municipal securities dealer, or municipal advisor, including
at least 1 individual who is associated with and representative of brokers, dealers, or municipal securities dealers
that are not banks or subsidiaries or departments or divisions of banks (which members are hereinafter referred

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124 STAT. 1917

to as ‘broker-dealer representatives’), at least 1 individual
who is associated with and representative of municipal
securities dealers which are banks or subsidiaries or
departments or divisions of banks (which members are
hereinafter referred to as ‘bank representatives’), and at
least 1 individual who is associated with a municipal
advisor (which members are hereinafter referred to as
‘advisor representatives’ and, together with the brokerdealer representatives and the bank representatives, are
referred to as ‘regulated representatives’). Each member
of the board shall be knowledgeable of matters related
to the municipal securities markets.’’; and
(C) in the third sentence, by striking ‘‘initial’’;
(2) in paragraph (2)—
(A) in the matter preceding subparagraph (A)—
(i) by inserting before the period at the end of
the first sentence the following: ‘‘and advice provided
to or on behalf of municipal entities or obligated persons by brokers, dealers, municipal securities dealers,
and municipal advisors with respect to municipal
financial products, the issuance of municipal securities,
and solicitations of municipal entities or obligated persons undertaken by brokers, dealers, municipal securities dealers, and municipal advisors’’; and
(ii) by striking the second sentence;
(B) in subparagraph (A)—
(i) in the matter preceding clause (i)—
(I) by inserting ‘‘, and no broker, dealer, municipal securities dealer, or municipal advisor shall
provide advice to or on behalf of a municipal entity
or obligated person with respect to municipal
financial products or the issuance of municipal
securities,’’ after ‘‘sale of, any municipal security’’;
and
(II) by inserting ‘‘and municipal entities or
obligated persons’’ after ‘‘protection of investors’’;
(ii) in clause (i), by striking ‘‘municipal securities
brokers and municipal securities dealers’’ each place
that term appears and inserting ‘‘municipal securities
brokers, municipal securities dealers, and municipal
advisors’’;
(iii) in clause (ii), by adding ‘‘and’’ at the end;
(iv) in clause (iii), by striking ‘‘; and’’ and inserting
a period; and
(v) by striking clause (iv);
(C) by amending subparagraph (B) to read as follows:
‘‘(B) establish fair procedures for the nomination and election of members of the Board and assure fair representation
in such nominations and elections of public representatives,
broker dealer representatives, bank representatives, and
advisor representatives. Such rules—
‘‘(i) shall provide that the number of public representatives of the Board shall at all times exceed the total number
of regulated representatives and that the membership shall
at all times be as evenly divided in number as possible
between public representatives and regulated representatives;

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Requirements.

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‘‘(ii) shall specify the length or lengths of terms members shall serve;
‘‘(iii) may increase the number of members which shall
constitute the whole Board, provided that such number
is an odd number; and
‘‘(iv) shall establish requirements regarding the
independence of public representatives.’’.
(D) in subparagraph (C)—
(i) by inserting ‘‘and municipal financial products’’
after ‘‘municipal securities’’ the first two times that
term appears;
(ii) by inserting ‘‘, municipal entities, obligated
persons,’’ before ‘‘and the public interest’’;
(iii) by striking ‘‘between’’ and inserting ‘‘among’’;
(iv) by striking ‘‘issuers, municipal securities brokers, or municipal securities dealers, to fix’’ and
inserting ‘‘municipal entities, obligated persons, municipal securities brokers, municipal securities dealers,
or municipal advisors, to fix’’; and
(v) by striking ‘‘brokers or municipal securities
dealers, to regulate’’ and inserting ‘‘brokers, municipal
securities dealers, or municipal advisors, to regulate’’;
(E) in subparagraph (D)—
(i) by inserting ‘‘and advice concerning municipal
financial products’’ after ‘‘transactions in municipal
securities’’;
(ii) by striking ‘‘That no’’ and inserting ‘‘that no’’;
(iii) by inserting ‘‘municipal advisor,’’ before ‘‘or
person associated’’; and
(iv) by striking ‘‘a municipal securities broker or
municipal securities dealer may be compelled’’ and
inserting ‘‘a municipal securities broker, municipal
securities dealer, or municipal advisor may be compelled’’;
(F) in subparagraph (E)—
(i) by striking ‘‘municipal securities brokers and
municipal securities dealers’’ and inserting ‘‘municipal
securities brokers, municipal securities dealers, and
municipal advisors’’; and
(ii) by striking ‘‘municipal securities broker or
municipal securities dealer’’ and inserting ‘‘municipal
securities broker, municipal securities dealer, or municipal advisor’’;
(G) in subparagraph (G), by striking ‘‘municipal securities brokers and municipal securities dealers’’ and inserting
‘‘municipal securities brokers, municipal securities dealers,
and municipal advisors’’;
(H) in subparagraph (J)—
(i) by striking ‘‘municipal securities broker and
each municipal securities dealer’’ and inserting ‘‘municipal securities broker, municipal securities dealer, and
municipal advisor’’; and
(ii) by striking the period at the end of the second
sentence and inserting ‘‘, which may include charges
for failure to submit to the Board, or to any information
system operated by the Board, within the prescribed
timeframes, any items of information or documents

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124 STAT. 1919

required to be submitted under any rule issued by
the Board.’’;
(I) in subparagraph (K)—
(i) by inserting ‘‘broker, dealer, or’’ before ‘‘municipal securities dealer’’ each place that term appears;
and
(ii) by striking ‘‘municipal securities investment
portfolio’’ and inserting ‘‘related account of a broker,
dealer, or municipal securities dealer’’; and
(J) by adding at the end the following:
‘‘(L) with respect to municipal advisors—
‘‘(i) prescribe means reasonably designed to prevent acts, practices, and courses of business as are
not consistent with a municipal advisor’s fiduciary duty
to its clients;
‘‘(ii) provide continuing education requirements for
municipal advisors;
‘‘(iii) provide professional standards; and
‘‘(iv) not impose a regulatory burden on small
municipal advisors that is not necessary or appropriate
in the public interest and for the protection of investors, municipal entities, and obligated persons, provided that there is robust protection of investors
against fraud.’’;
(3) by redesignating paragraph (3) as paragraph (7); and
(4) by inserting after paragraph (2) the following:
‘‘(3) The Board, in conjunction with or on behalf of any
Federal financial regulator or self-regulatory organization,
may—
‘‘(A) establish information systems; and
‘‘(B) assess such reasonable fees and charges for the
submission of information to, or the receipt of information
from, such systems from any persons which systems may
be developed for the purposes of serving as a repository
of information from municipal market participants or otherwise in furtherance of the purposes of the Board, a Federal
financial regulator, or a self-regulatory organization, except
that the Board—
‘‘(i) may not charge a fee to municipal entities
or obligated persons to submit documents or other
information to the Board or charge a fee to any person
to obtain, directly from the Internet site of the Board,
documents or information submitted by municipal entities, obligated persons, brokers, dealers, municipal
securities dealers, or municipal advisors, including
documents submitted under the rules of the Board
or the Commission; and
‘‘(ii) shall not be prohibited from charging commercially reasonable fees for automated subscription-based
feeds or similar services, or for charging for other
data or document-based services customized upon
request of any person, made available to commercial
enterprises, municipal securities market professionals,
or the general public, whether delivered through the
Internet or any other means, that contain all or part
of the documents or information, subject to approval
of the fees by the Commission under section 19(b).

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PUBLIC LAW 111–203—JULY 21, 2010

‘‘(4) The Board may provide guidance and assistance in
the enforcement of, and examination for, compliance with the
rules of the Board to the Commission, a registered securities
association under section 15A, or any other appropriate regulatory agency, as applicable.
‘‘(5) The Board, the Commission, and a registered securities
association under section 15A, or the designees of the Board,
the Commission, or such association, shall meet not less frequently than 2 times a year—
‘‘(A) to describe the work of the Board, the Commission,
and the registered securities association involving the regulation of municipal securities; and
‘‘(B) to share information about—
‘‘(i) the interpretation of the Board, the Commission, and the registered securities association of Board
rules; and
‘‘(ii) examination and enforcement of compliance
with Board rules.’’.
(c) DISCIPLINE OF BROKERS, DEALERS, MUNICIPAL SECURITIES
DEALERS AND MUNICIPAL ADVISORS; FIDUCIARY DUTY OF MUNICIPAL
ADVISORS.—Section 15B(c) of the Securities Exchange Act of 1934
(15 U.S.C. 78o–4(c)) is amended—
(1) in paragraph (1), by inserting ‘‘, and no broker, dealer,
municipal securities dealer, or municipal advisor shall make
use of the mails or any means or instrumentality of interstate
commerce to provide advice to or on behalf of a municipal
entity or obligated person with respect to municipal financial
products, the issuance of municipal securities, or to undertake
a solicitation of a municipal entity or obligated person,’’ after
‘‘any municipal security’’;
(2) by adding at the end of paragraph (1) the following:
‘‘A municipal advisor and any person associated with such
municipal advisor shall be deemed to have a fiduciary duty
to any municipal entity for whom such municipal advisor acts
as a municipal advisor, and no municipal advisor may engage
in any act, practice, or course of business which is not consistent
with a municipal advisor’s fiduciary duty or that is in contravention of any rule of the Board.’’.
(3) in paragraph (2), by inserting ‘‘or municipal advisor’’
after ‘‘municipal securities dealer’’ each place that term appears;
(4) in paragraph (3)—
(A) by inserting ‘‘or municipal entities or obligated
person’’ after ‘‘protection of investors’’ each place that term
appears; and
(B) by inserting ‘‘or municipal advisor’’ after ‘‘municipal
securities dealer’’ each place that term appears;
(5) in paragraph (4), by inserting ‘‘or municipal advisor’’
after ‘‘municipal securities dealer or obligated person’’ each
place that term appears;
(6) in paragraph (6)(B), by inserting ‘‘or municipal entities
or obligated person’’ after ‘‘protection of investors’’;
(7) in paragraph (7)—
(A) in subparagraph (A)—
(i) in clause (i), by striking ‘‘; and’’ and inserting
a semicolon;
(ii) in clause (ii), by striking the period and
inserting ‘‘; and’’; and

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(iii) by adding at the end the following:
‘‘(iii) the Commission, or its designee, in the case
of municipal advisors.’’.
(B) in subparagraph (B), by inserting ‘‘or municipal
entities or obligated person’’ after ‘‘protection of investors’’;
and
(8) by adding at the end the following:
‘‘(9)(A) Fines collected by the Commission for violations
of the rules of the Board shall be equally divided between
the Commission and the Board.
‘‘(B) Fines collected by a registered securities association
under section 15A(7) with respect to violations of the rules
of the Board shall be accounted for by such registered securities
association separately from other fines collected under section
15A(7) and shall be allocated between such registered securities
association and the Board, and such allocation shall require
the registered securities association to pay to the Board 1⁄3
of all fines collected by the registered securities association
reasonably allocable to violations of the rules of the Board,
or such other portion of such fines as may be directed by
the Commission upon agreement between the registered securities association and the Board.’’.
(d) ISSUANCE OF MUNICIPAL SECURITIES.—Section 15B(d)(2) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o–4(d)) is
amended—
(1) by striking ‘‘through a municipal securities broker or
municipal securities dealer or otherwise’’ and inserting ‘‘through
a municipal securities broker, municipal securities dealer,
municipal advisor, or otherwise’’; and
(2) by inserting ‘‘or municipal advisors’’ before ‘‘to furnish’’.
(e) DEFINITIONS.—Section 15B of the Securities Exchange Act
of 1934 (15 U.S.C. 78o–4) is amended by adding at the end the
following:
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) the term ‘Board’ means the Municipal Securities Rulemaking Board established under subsection (b)(1);
‘‘(2) the term ‘guaranteed investment contract’ includes
any investment that has specified withdrawal or reinvestment
provisions and a specifically negotiated or bid interest rate,
and also includes any agreement to supply investments on
2 or more future dates, such as a forward supply contract;
‘‘(3) the term ‘investment strategies’ includes plans or programs for the investment of the proceeds of municipal securities
that are not municipal derivatives, guaranteed investment contracts, and the recommendation of and brokerage of municipal
escrow investments;
‘‘(4) the term ‘municipal advisor’—
‘‘(A) means a person (who is not a municipal entity
or an employee of a municipal entity) that—
‘‘(i) provides advice to or on behalf of a municipal
entity or obligated person with respect to municipal
financial products or the issuance of municipal securities, including advice with respect to the structure,
timing, terms, and other similar matters concerning
such financial products or issues; or
‘‘(ii) undertakes a solicitation of a municipal entity;

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PUBLIC LAW 111–203—JULY 21, 2010
‘‘(B) includes financial advisors, guaranteed investment
contract brokers, third-party marketers, placement agents,
solicitors, finders, and swap advisors, if such persons are
described in any of clauses (i) through (iii) of subparagraph
(A); and
‘‘(C) does not include a broker, dealer, or municipal
securities dealer serving as an underwriter (as defined
in section 2(a)(11) of the Securities Act of 1933) (15 U.S.C.
77b(a)(11)), any investment adviser registered under the
Investment Advisers Act of 1940, or persons associated
with such investment advisers who are providing investment advice, any commodity trading advisor registered
under the Commodity Exchange Act or persons associated
with a commodity trading advisor who are providing advice
related to swaps, attorneys offering legal advice or providing services that are of a traditional legal nature, or
engineers providing engineering advice;
‘‘(5) the term ‘municipal financial product’ means municipal
derivatives, guaranteed investment contracts, and investment
strategies;
‘‘(6) the term ‘rules of the Board’ means the rules proposed
and adopted by the Board under subsection (b)(2);
‘‘(7) the term ‘person associated with a municipal advisor’
or ‘associated person of an advisor’ means—
‘‘(A) any partner, officer, director, or branch manager
of such municipal advisor (or any person occupying a
similar status or performing similar functions);
‘‘(B) any other employee of such municipal advisor
who is engaged in the management, direction, supervision,
or performance of any activities relating to the provision
of advice to or on behalf of a municipal entity or obligated
person with respect to municipal financial products or the
issuance of municipal securities; and
‘‘(C) any person directly or indirectly controlling, controlled by, or under common control with such municipal
advisor;
‘‘(8) the term ‘municipal entity’ means any State, political
subdivision of a State, or municipal corporate instrumentality
of a State, including—
‘‘(A) any agency, authority, or instrumentality of the
State, political subdivision, or municipal corporate
instrumentality;
‘‘(B) any plan, program, or pool of assets sponsored
or established by the State, political subdivision, or municipal corporate instrumentality or any agency, authority,
or instrumentality thereof; and
‘‘(C) any other issuer of municipal securities;
‘‘(9) the term ‘solicitation of a municipal entity or obligated
person’ means a direct or indirect communication with a municipal entity or obligated person made by a person, for direct
or indirect compensation, on behalf of a broker, dealer, municipal securities dealer, municipal advisor, or investment adviser
(as defined in section 202 of the Investment Advisers Act of
1940) that does not control, is not controlled by, or is not
under common control with the person undertaking such solicitation for the purpose of obtaining or retaining an engagement
by a municipal entity or obligated person of a broker, dealer,

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municipal securities dealer, or municipal advisor for or in
connection with municipal financial products, the issuance of
municipal securities, or of an investment adviser to provide
investment advisory services to or on behalf of a municipal
entity; and
‘‘(10) the term ‘obligated person’ means any person,
including an issuer of municipal securities, who is either generally or through an enterprise, fund, or account of such person,
committed by contract or other arrangement to support the
payment of all or part of the obligations on the municipal
securities to be sold in an offering of municipal securities.’’.
(f) REGISTERED SECURITIES ASSOCIATION.—Section 15A(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o–3(b)) is amended
by adding at the end the following:
‘‘(15) The rules of the association provide that the association shall—
‘‘(A) request guidance from the Municipal Securities
Rulemaking Board in interpretation of the rules of the
Municipal Securities Rulemaking Board; and
‘‘(B) provide information to the Municipal Securities
Rulemaking Board about the enforcement actions and
examinations of the association under section 15B(b)(2)(E),
so that the Municipal Securities Rulemaking Board may—
‘‘(i) assist in such enforcement actions and
examinations; and
‘‘(ii) evaluate the ongoing effectiveness of the rules
of the Board.’’.
(g) REGISTRATION AND REGULATION OF BROKERS AND
DEALERS.—Section 15 of the Securities Exchange Act of 1934 is
amended—
(1) in subsection (b)(4), by inserting ‘‘municipal advisor,’’
after ‘‘municipal securities dealer’’ each place that term appears;
and
(2) in subsection (c), by inserting ‘‘broker, dealer, or’’ before
‘‘municipal securities dealer’’ each place that term appears.
(h) ACCOUNTS AND RECORDS, REPORTS, EXAMINATIONS OF
EXCHANGES, MEMBERS, AND OTHERS.—Section 17(a)(1) of the Securities Exchange Act of 1934 is amended by inserting ‘‘municipal
advisor,’’ after ‘‘municipal securities dealer’’.
(i) EFFECTIVE DATE.—This section, and the amendments made
by this section, shall take effect on October 1, 2010.

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SEC.

976.

GOVERNMENT ACCOUNTABILITY OFFICE
INCREASED DISCLOSURE TO INVESTORS.

STUDY

15 USC 78o.

15 USC 78q.
15 USC 78o note.

OF

(a) STUDY.—The Comptroller General of the United States shall
conduct a study and review of the disclosure required to be made
by issuers of municipal securities.
(b) SUBJECTS FOR EVALUATION.—In conducting the study under
subsection (a), the Comptroller General of the United States shall—
(1) broadly describe—
(A) the size of the municipal securities markets and
the issuers and investors; and
(B) the disclosures provided by issuers to investors;
(2) compare the amount, frequency, and quality of disclosures that issuers of municipal securities are required by law
to provide for the benefit of municipal securities holders,
including the amount of and frequency of disclosures actually

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provided by issuers of municipal securities, with the amount
of and frequency of disclosures that issuers of corporate securities provide for the benefit of corporate securities holders,
taking into account the differences between issuers of municipal
securities and issuers of corporate securities;
(3) evaluate the costs and benefits to various types of
issuers of municipal securities of requiring issuers of municipal
bonds to provide additional financial disclosures for the benefit
of investors;
(4) evaluate the potential benefit to investors from additional financial disclosures by issuers of municipal bonds; and
(5) make recommendations relating to disclosure requirements for municipal issuers, including the advisability of the
repeal or retention of section 15B(d) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o–4(d)) (commonly known as the
‘‘Tower Amendment’’).
(c) REPORT.—Not later than 24 months after the date of enactment of this Act, the Comptroller General of the United States
shall submit a report to Congress on the results of the study
conducted under subsection (a), including recommendations for how
to improve disclosure by issuers of municipal securities.
SEC. 977. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON THE
MUNICIPAL SECURITIES MARKETS.

Deadline.

(a) STUDY.—The Comptroller General of the United States shall
conduct a study of the municipal securities markets.
(b) REPORT.—Not later than 18 months after the date of enactment of this Act, the Comptroller General of the United States
shall submit a report to the Committee on Banking, Housing, and
Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives, with copies to the Special
Committee on Aging of the Senate and the Commission, on the
results of the study conducted under subsection (a), including—
(1) an analysis of the mechanisms for trading, quality
of trade executions, market transparency, trade reporting, price
discovery, settlement clearing, and credit enhancements;
(2) the needs of the markets and investors and the impact
of recent innovations;
(3) recommendations for how to improve the transparency,
efficiency, fairness, and liquidity of trading in the municipal
securities markets, including with reference to items listed
in paragraph (1); and
(4) potential uses of derivatives in the municipal securities
markets.
(c) RESPONSES.—Not later than 180 days after receipt of the
report required under subsection (b), the Commission shall submit
a response to the Committee on Banking, Housing, and Urban
Affairs of the Senate, and the Committee on Financial Services
of the House of Representatives, with a copy to the Special Committee on Aging of the Senate, stating the actions the Commission
has taken in response to the recommendations contained in such
report.

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SEC. 978. FUNDING FOR GOVERNMENTAL ACCOUNTING STANDARDS
BOARD.

(a) AMENDMENT TO THE SECURITIES ACT OF 1933.—Section 19
of the Securities Act of 1933 (15 U.S.C. 77s), as amended by section
912, is further amended by adding at the end the following:

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124 STAT. 1925

‘‘(g) FUNDING FOR THE GASB.—
‘‘(1) IN GENERAL.—The Commission may, subject to the
limitations imposed by section 15B of the Securities Exchange
Act of 1934 (15 U.S.C. 78o–4), require a national securities
association registered under the Securities Exchange Act of
1934 to establish—
‘‘(A) a reasonable annual accounting support fee to
adequately fund the annual budget of the Governmental
Accounting Standards Board (referred to in this subsection
as the ‘GASB’); and
‘‘(B) rules and procedures, in consultation with the
principal organizations representing State governors, legislators, local elected officials, and State and local finance
officers, to provide for the equitable allocation, assessment,
and collection of the accounting support fee established
under subparagraph (A) from the members of the association, and the remittance of all such accounting support
fees to the Financial Accounting Foundation.
‘‘(2) ANNUAL BUDGET.—For purposes of this subsection, the
annual budget of the GASB is the annual budget reviewed
and approved according to the internal procedures of the Financial Accounting Foundation.
‘‘(3) USE OF FUNDS.—Any fees or funds collected under
this subsection shall be used to support the efforts of the
GASB to establish standards of financial accounting and
reporting recognized as generally accepted accounting principles
applicable to State and local governments of the United States.
‘‘(4) LIMITATION ON FEE.—The annual accounting support
fees collected under this subsection for a fiscal year shall not
exceed the recoverable annual budgeted expenses of the GASB
(which may include operating expenses, capital, and accrued
items).
‘‘(5) RULES OF CONSTRUCTION.—
‘‘(A) FEES NOT PUBLIC MONIES.—Accounting support
fees collected under this subsection and other receipts of
the GASB shall not be considered public monies of the
United States.
‘‘(B) LIMITATION ON AUTHORITY OF THE COMMISSION.—
Nothing in this subsection shall be construed to—
‘‘(i) provide the Commission or any national securities association direct or indirect oversight of the
budget or technical agenda of the GASB; or
‘‘(ii) affect the setting of generally accepted
accounting principles by the GASB.
‘‘(C) NONINTERFERENCE WITH STATES.—Nothing in this
subsection shall be construed to impair or limit the
authority of a State or local government to establish
accounting and financial reporting standards.’’.
(b) STUDY OF FUNDING FOR GOVERNMENTAL ACCOUNTING
STANDARDS BOARD.—
(1) STUDY.—The Comptroller General of the United States
shall conduct a study that evaluates—
(A) the role and importance of the Governmental
Accounting Standards Board in the municipal securities
markets; and
(B) the manner and the level at which the Governmental Accounting Standards Board has been funded.

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PUBLIC LAW 111–203—JULY 21, 2010
(2) CONSULTATION.—In conducting the study required
under paragraph (1), the Comptroller General shall consult
with the principal organizations representing State governors,
legislators, local elected officials, and State and local finance
officers.
(3) REPORT.—Not later than 180 days after the date of
enactment of this Act, the Comptroller General shall submit
to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of
the House of Representatives a report on the study required
under paragraph (1).

15 USC 78o–4a.

SEC. 979. COMMISSION OFFICE OF MUNICIPAL SECURITIES.

Establishment.

(a) IN GENERAL.—There shall be in the Commission an Office
of Municipal Securities, which shall—
(1) administer the rules of the Commission with respect
to the practices of municipal securities brokers and dealers,
municipal securities advisors, municipal securities investors,
and municipal securities issuers; and
(2) coordinate with the Municipal Securities Rulemaking
Board for rulemaking and enforcement actions as required by
law.
(b) DIRECTOR OF THE OFFICE.—The head of the Office of Municipal Securities shall be the Director, who shall report to the Chairman.
(c) STAFFING.—
(1) IN GENERAL.—The Office of Municipal Securities shall
be staffed sufficiently to carry out the requirements of this
section.
(2) REQUIREMENT.—The staff of the Office of Municipal
Securities shall include individuals with knowledge of and
expertise in municipal finance.

Subtitle I—Public Company Accounting
Oversight Board, Portfolio Margining,
and Other Matters

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SEC. 981. AUTHORITY TO SHARE CERTAIN INFORMATION WITH FOREIGN AUTHORITIES.

(a) DEFINITION.—Section 2(a) of the Sarbanes-Oxley Act of 2002
(15 U.S.C. 7201(a)) is amended by adding at the end the following:
‘‘(17) FOREIGN AUDITOR OVERSIGHT AUTHORITY.—The term
‘foreign auditor oversight authority’ means any governmental
body or other entity empowered by a foreign government to
conduct inspections of public accounting firms or otherwise
to administer or enforce laws related to the regulation of public
accounting firms.’’.
(b) AVAILABILITY TO SHARE INFORMATION.—Section 105(b)(5)
of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)) is amended
by adding at the end the following:
‘‘(C) AVAILABILITY TO FOREIGN OVERSIGHT AUTHORITIES.—Without the loss of its status as confidential and
privileged in the hands of the Board, all information
referred to in subparagraph (A) that relates to a public
accounting firm that a foreign government has empowered

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124 STAT. 1927

a foreign auditor oversight authority to inspect or otherwise
enforce laws with respect to, may, at the discretion of
the Board, be made available to the foreign auditor oversight authority, if—
‘‘(i) the Board finds that it is necessary to accomplish the purposes of this Act or to protect investors;
‘‘(ii) the foreign auditor oversight authority provides—
‘‘(I) such assurances of confidentiality as the
Board may request;
‘‘(II) a description of the applicable information
systems and controls of the foreign auditor oversight authority; and
‘‘(III) a description of the laws and regulations
of the foreign government of the foreign auditor
oversight authority that are relevant to information access; and
‘‘(iii) the Board determines that it is appropriate
to share such information.’’.
(c) CONFORMING AMENDMENT.—Section 105(b)(5)(A) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(A)) is amended by
striking ‘‘subparagraph (B)’’ and inserting ‘‘subparagraphs (B) and
(C)’’.
SEC. 982. OVERSIGHT OF BROKERS AND DEALERS.

(a) DEFINITIONS.—
(1) DEFINITIONS AMENDED.—Title I of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7201 et seq.) is amended by adding
at the end the following new section:

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‘‘SEC. 110. DEFINITIONS.

15 USC 7220.

‘‘For the purposes of this title, the following definitions shall
apply:
‘‘(1) AUDIT.—The term ‘audit’ means an examination of
the financial statements, reports, documents, procedures, controls, or notices of any issuer, broker, or dealer by an independent public accounting firm in accordance with the rules
of the Board or the Commission, for the purpose of expressing
an opinion on the financial statements or providing an audit
report.
‘‘(2) AUDIT REPORT.—The term ‘audit report’ means a document, report, notice, or other record—
‘‘(A) prepared following an audit performed for purposes of compliance by an issuer, broker, or dealer with
the requirements of the securities laws; and
‘‘(B) in which a public accounting firm either—
‘‘(i) sets forth the opinion of that firm regarding
a financial statement, report, notice, or other document, procedures, or controls; or
‘‘(ii) asserts that no such opinion can be expressed.
‘‘(3) BROKER.—The term ‘broker’ means a broker (as such
term is defined in section 3(a)(4) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(4))) that is required to file a
balance sheet, income statement, or other financial statement
under section 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)),
where such balance sheet, income statement, or financial statement is required to be certified by a registered public accounting
firm.

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‘‘(4) DEALER.—The term ‘dealer’ means a dealer (as such
term is defined in section 3(a)(5) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(5))) that is required to file a
balance sheet, income statement, or other financial statement
under section 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)),
where such balance sheet, income statement, or financial statement is required to be certified by a registered public accounting
firm.
‘‘(5) PROFESSIONAL STANDARDS.—The term ‘professional
standards’ means—
‘‘(A) accounting principles that are—
‘‘(i) established by the standard setting body
described in section 19(b) of the Securities Act of 1933,
as amended by this Act, or prescribed by the Commission under section 19(a) of that Act (15 U.S.C. 17a(s))
or section 13(b) of the Securities Exchange Act of 1934
(15 U.S.C. 78a(m)); and
‘‘(ii) relevant to audit reports for particular issuers,
brokers, or dealers, or dealt with in the quality control
system of a particular registered public accounting
firm; and
‘‘(B) auditing standards, standards for attestation
engagements, quality control policies and procedures, ethical and competency standards, and independence standards (including rules implementing title II) that the Board
or the Commission determines—
‘‘(i) relate to the preparation or issuance of audit
reports for issuers, brokers, or dealers; and
‘‘(ii) are established or adopted by the Board under
section 103(a), or are promulgated as rules of the
Commission.
‘‘(6) SELF-REGULATORY ORGANIZATION.—The term ‘self-regulatory organization’ has the same meaning as in section 3(a)
of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).’’.
(2) CONFORMING AMENDMENT.—Section 2(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(a)) is amended in
the matter preceding paragraph (1), by striking ‘‘In this’’ and
inserting ‘‘Except as otherwise specifically provided in this Act,
in this’’.
(b) ESTABLISHMENT AND ADMINISTRATION OF THE PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD.—Section 101 of the SarbanesOxley Act of 2002 (15 U.S.C. 7211) is amended—
(1) by striking ‘‘issuers’’ each place that term appears and
inserting ‘‘issuers, brokers, and dealers’’; and
(2) in subsection (a)—
(A) by striking ‘‘public companies’’ and inserting
‘‘companies’’; and
(B) by striking ‘‘for companies the securities of which
are sold to, and held by and for, public investors’’.
(c) REGISTRATION WITH THE BOARD.—Section 102 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7212) is amended—
(1) in subsection (a)—
(A) by striking ‘‘Beginning 180’’ and all that follows
through ‘‘101(d), it’’ and inserting ‘‘It’’; and
(B) by striking ‘‘issuer’’ and inserting ‘‘issuer, broker,
or dealer’’;
(2) in subsection (b)—

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124 STAT. 1929

(A) in paragraph (2)(A), by striking ‘‘issuers’’ and
inserting ‘‘issuers, brokers, and dealers’’; and
(B) by striking ‘‘issuer’’ each place that term appears
and inserting ‘‘issuer, broker, or dealer’’.
(d) AUDITING AND INDEPENDENCE.—Section 103(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7213(a)) is amended—
(1) in paragraph (1), by striking ‘‘and such ethics standards’’
and inserting ‘‘such ethics standards, and such independence
standards’’;
(2) in paragraph (2)(A)(iii), by striking ‘‘describe in each
audit report’’ and inserting ‘‘in each audit report for an issuer,
describe’’; and
(3) in paragraph (2)(B)(i), by striking ‘‘issuers’’ and
inserting ‘‘issuers, brokers, and dealers’’.
(e) INSPECTIONS OF REGISTERED PUBLIC ACCOUNTING FIRMS.—
(1) AMENDMENTS.—Section 104(a) of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7214(a)) is amended—
(A) by striking ‘‘The Board shall’’ and inserting the
following:
‘‘(1) INSPECTIONS GENERALLY.—The Board shall’’; and
(B) by adding at the end the following:
‘‘(2) INSPECTIONS OF AUDIT REPORTS FOR BROKERS AND
DEALERS.—
‘‘(A) The Board may, by rule, conduct and require
a program of inspection in accordance with paragraph (1),
on a basis to be determined by the Board, of registered
public accounting firms that provide one or more audit
reports for a broker or dealer. The Board, in establishing
such a program, may allow for differentiation among classes
of brokers and dealers, as appropriate.
‘‘(B) If the Board determines to establish a program
of inspection pursuant to subparagraph (A), the Board shall
consider in establishing any inspection schedules whether
differing schedules would be appropriate with respect to
registered public accounting firms that issue audit reports
only for one or more brokers or dealers that do not receive,
handle, or hold customer securities or cash or are not
a member of the Securities Investor Protection Corporation.
‘‘(C) Any rules of the Board pursuant to this paragraph
shall be subject to prior approval by the Commission pursuant to section 107(b) before the rules become effective,
including an opportunity for public notice and comment.
‘‘(D) Notwithstanding anything to the contrary in section 102 of this Act, a public accounting firm shall not
be required to register with the Board if the public
accounting firm is exempt from the inspection program
which may be established by the Board under subparagraph (A).’’.
(2) CONFORMING AMENDMENT.—Section 17(e)(1)(A) of the
Securities Exchange Act of 1934 (15 U.S.C. 78q(e)(1)(A)) is
amended by striking ‘‘registered public accounting firm’’ and
inserting ‘‘independent public accounting firm, or by a registered public accounting firm if the firm is required to be
registered under the Sarbanes-Oxley Act of 2002,’’.
(f) INVESTIGATIONS AND DISCIPLINARY PROCEEDINGS.—Section
105(c)(7)(B) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7215(c)(7)(B)) is amended—

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(1) in the subparagraph heading, by inserting ‘‘, BROKER,
after ‘‘ISSUER’’;
(2) by striking ‘‘any issuer’’ each place that term appears
and inserting ‘‘any issuer, broker, or dealer’’; and
(3) by striking ‘‘an issuer under this subsection’’ and
inserting ‘‘a registered public accounting firm under this subsection’’.
(g) FOREIGN PUBLIC ACCOUNTING FIRMS.—Section 106(a) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216(a)) is amended—
(1) in paragraph (1), by striking ‘‘issuer’’ and inserting
‘‘issuer, broker, or dealer’’; and
(2) in paragraph (2), by striking ‘‘issuers’’ and inserting
‘‘issuers, brokers, or dealers’’.
(h) FUNDING.—Section 109 of the Sarbanes-Oxley Act of 2002
(15 U.S.C. 7219) is amended—
(1) in subsection (c)(2), by striking ‘‘subsection (i)’’ and
inserting ‘‘subsection (j)’’;
(2) in subsection (d)—
(A) in paragraph (2), by striking ‘‘allowing for differentiation among classes of issuers, as appropriate’’ and
inserting ‘‘and among brokers and dealers, in accordance
with subsection (h), and allowing for differentiation among
classes of issuers, brokers and dealers, as appropriate’’;
and
(B) by adding at the end the following:
‘‘(3) BROKERS AND DEALERS.—The Board shall begin the
allocation, assessment, and collection of fees under paragraph
(2) with respect to brokers and dealers with the payment of
support fees to fund the first full fiscal year beginning after
the date of enactment of the Investor Protection and Securities
Reform Act of 2010.’’;
(3) by redesignating subsections (h), (i), and (j) as subsections (i), (j), and (k), respectively; and
(4) by inserting after subsection (g) the following:
‘‘(h) ALLOCATION OF ACCOUNTING SUPPORT FEES AMONG BROKERS AND DEALERS.—
‘‘(1) OBLIGATION TO PAY.—Each broker or dealer shall pay
to the Board the annual accounting support fee allocated to
such broker or dealer under this section.
‘‘(2) ALLOCATION.—Any amount due from a broker or dealer
(or from a particular class of brokers and dealers) under this
section shall be allocated among brokers and dealers and payable by the broker or dealer (or the brokers and dealers in
the particular class, as applicable).
‘‘(3) PROPORTIONALITY.—The amount due from a broker
or dealer shall be in proportion to the net capital of the broker
or dealer (before or after any adjustments), compared to the
total net capital of all brokers and dealers (before or after
any adjustments), in accordance with rules issued by the
Board.’’.
(i) REFERRAL OF INVESTIGATIONS TO A SELF-REGULATORY
ORGANIZATION.—Section 105(b)(4)(B) of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7215(b)(4)(B)) is amended—
(1) by redesignating clauses (ii) and (iii) as clauses (iii)
and (iv), respectively; and
(2) by inserting after clause (i) the following:
OR DEALER’’

Fees.

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15 USC 78m.

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‘‘(ii) to a self-regulatory organization, in the case
of an investigation that concerns an audit report for
a broker or dealer that is under the jurisdiction of
such self-regulatory organization;’’.
(j) USE OF DOCUMENTS RELATED TO AN INSPECTION OR INVESTIGATION.—Section 105(b)(5)(B)(ii) of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7215(b)(5)(B)(ii)) is amended—
(1) in subclause (III), by striking ‘‘and’’ at the end;
(2) in subclause (IV), by striking the comma and inserting
‘‘; and’’; and
(3) by inserting after subclause (IV) the following:
‘‘(V) a self-regulatory organization, with
respect to an audit report for a broker or dealer
that is under the jurisdiction of such self-regulatory organization,’’.

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SEC. 983. PORTFOLIO MARGINING.

(a) ADVANCES.—Section 9(a)(1) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78fff3(a)(1)) is amended by inserting
‘‘or options on commodity futures contracts’’ after ‘‘claim for securities’’.
(b) DEFINITIONS.—Section 16 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll) is amended—
(1) by striking paragraph (2) and inserting the following:
‘‘(2) CUSTOMER.—
‘‘(A) IN GENERAL.—The term ‘customer’ of a debtor
means any person (including any person with whom the
debtor deals as principal or agent) who has a claim on
account of securities received, acquired, or held by the
debtor in the ordinary course of its business as a broker
or dealer from or for the securities accounts of such person
for safekeeping, with a view to sale, to cover consummated
sales, pursuant to purchases, as collateral, security, or
for purposes of effecting transfer.
‘‘(B) INCLUDED PERSONS.—The term ‘customer’
includes—
‘‘(i) any person who has deposited cash with the
debtor for the purpose of purchasing securities;
‘‘(ii) any person who has a claim against the debtor
for cash, securities, futures contracts, or options on
futures contracts received, acquired, or held in a portfolio margining account carried as a securities account
pursuant to a portfolio margining program approved
by the Commission; and
‘‘(iii) any person who has a claim against the debtor
arising out of sales or conversions of such securities.
‘‘(C) EXCLUDED PERSONS.—The term ‘customer’ does
not include any person, to the extent that—
‘‘(i) the claim of such person arises out of transactions with a foreign subsidiary of a member of SIPC;
or
‘‘(ii) such person has a claim for cash or securities
which by contract, agreement, or understanding, or
by operation of law, is part of the capital of the debtor,
or is subordinated to the claims of any or all creditors
of the debtor, notwithstanding that some ground exists

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for declaring such contract, agreement, or understanding void or voidable in a suit between the claimant and the debtor.’’;
(2) in paragraph (4)—
(A) in subparagraph (C), by striking ‘‘and’’ at the end;
(B) by redesignating subparagraph (D) as subparagraph (E); and
(C) by inserting after subparagraph (C) the following:
‘‘(D) in the case of a portfolio margining account of
a customer that is carried as a securities account pursuant
to a portfolio margining program approved by the Commission, a futures contract or an option on a futures contract
received, acquired, or held by or for the account of a debtor
from or for such portfolio margining account, and the proceeds thereof; and’’;
(3) in paragraph (9), in the matter following subparagraph
(L), by inserting after ‘‘Such term’’ the following: ‘‘includes
revenues earned by a broker or dealer in connection with a
transaction in the portfolio margining account of a customer
carried as securities accounts pursuant to a portfolio margining
program approved by the Commission. Such term’’; and
(4) in paragraph (11)—
(A) in subparagraph (A)—
(i) by striking ‘‘filing date, all’’ and all that follows
through the end of the subparagraph and inserting
the following: ‘‘filing date—
‘‘(i) all securities positions of such customer (other
than customer name securities reclaimed by such customer); and
‘‘(ii) all positions in futures contracts and options
on futures contracts held in a portfolio margining
account carried as a securities account pursuant to
a portfolio margining program approved by the
Commission, including all property collateralizing such
positions, to the extent that such property is not otherwise included herein; minus’’; and
(B) in the matter following subparagraph (C), by
striking ‘‘In determining’’ and inserting the following: ‘‘A
claim for a commodity futures contract received, acquired,
or held in a portfolio margining account pursuant to a
portfolio margining program approved by the Commission
or a claim for a security futures contract, shall be deemed
to be a claim with respect to such contract as of the
filing date, and such claim shall be treated as a claim
for cash. In determining’’.

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SEC. 984. LOAN OR BORROWING OF SECURITIES.

(a) RULEMAKING AUTHORITY.—Section 10 of the Securities
Exchange Act of 1934 (15 U.S.C. 78j) is amended by adding at
the end the following:
‘‘(c)(1) To effect, accept, or facilitate a transaction involving
the loan or borrowing of securities in contravention of such
rules and regulations as the Commission may prescribe as
necessary or appropriate in the public interest or for the protection of investors.
‘‘(2) Nothing in paragraph (1) may be construed to limit
the authority of the appropriate Federal banking agency (as

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1933

defined in section 3(q) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(q))), the National Credit Union Administration,
or any other Federal department or agency having a responsibility under Federal law to prescribe rules or regulations
restricting transactions involving the loan or borrowing of securities in order to protect the safety and soundness of a financial
institution or to protect the financial system from systemic
risk.’’.
(b) RULEMAKING REQUIRED.—Not later than 2 years after the
date of enactment of this Act, the Commission shall promulgate
rules that are designed to increase the transparency of information
available to brokers, dealers, and investors, with respect to the
loan or borrowing of securities.

Deadline.
15 USC 78j note.

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SEC. 985. TECHNICAL CORRECTIONS TO FEDERAL SECURITIES LAWS.

(a) SECURITIES ACT OF 1933.—The Securities Act of 1933 (15
U.S.C. 77a et seq.) is amended—
(1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by striking ‘‘individual;’’ and inserting ‘‘individual,’’;
(2) in section 18 (15 U.S.C. 77r)—
(A) in subsection (b)(1)(C), by striking ‘‘is a security’’
and inserting ‘‘a security’’; and
(B) in subsection (c)(2)(B)(i), by striking ‘‘State, or’’
and inserting ‘‘State or’’;
(3) in section 19(d)(6)(A) (15 U.S.C. 77s(d)(6)(A)), by striking
‘‘in paragraph (1) of (3)’’ and inserting ‘‘in paragraph (1) or
(3)’’; and
(4) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z–2(c)(1)(B)(ii)),
by striking ‘‘business entity;’’ and inserting ‘‘business entity,’’.
(b) SECURITIES EXCHANGE ACT OF 1934.—The Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended—
(1) in section 2 (15 U.S.C. 78b), by striking ‘‘affected’’ and
inserting ‘‘effected’’;
(2) in section 3 (15 U.S.C. 78c)—
(A) in subsection (a)(55)(A), by striking ‘‘section 3(a)(12)
of the Securities Exchange Act of 1934’’ and inserting ‘‘section 3(a)(12) of this title’’; and
(B) in subsection (g), by striking ‘‘company, account
person, or entity’’ and inserting ‘‘company, account, person,
or entity’’;
(3) in section 10A(i)(1)(B) (15 U.S.C. 78j–1(i)(1)(B))—
(A) in the subparagraph heading, by striking ‘‘MINIMUS’’
and inserting ‘‘MINIMIS’’; and
(B) in clause (i), by striking ‘‘nonaudit’’ and inserting
‘‘non-audit’’;
(4) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by striking
‘‘earning statement’’ and inserting ‘‘earnings statement’’;
(5) in section 15 (15 U.S.C. 78o)—
(A) in subsection (b)(1)—
(i) in subparagraph (B), by striking ‘‘The order
granting’’ and all that follows through ‘‘from such membership.’’; and
(ii) in the undesignated matter immediately following subparagraph (B), by inserting after the first
sentence the following: ‘‘The order granting registration
shall not be effective until such broker or dealer has
become a member of a registered securities association,

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124 STAT. 1934

PUBLIC LAW 111–203—JULY 21, 2010

or until such broker or dealer has become a member
of a national securities exchange, if such broker or
dealer effects transactions solely on that exchange,
unless the Commission has exempted such broker or
dealer, by rule or order, from such membership.’’;
(6) in section 15C(a)(2) (15 U.S.C. 78o–5(a)(2))—
(A) by redesignating clauses (i) and (ii) as subparagraphs (A) and (B), respectively, and adjusting the subparagraph margins accordingly;
(B) in subparagraph (B), as so redesignated, by striking
‘‘The order granting’’ and all that follows through ‘‘from
such membership.’’; and
(C) in the matter following subparagraph (B), as so
redesignated, by inserting after the first sentence the following: ‘‘The order granting registration shall not be effective until such government securities broker or government
securities dealer has become a member of a national securities exchange registered under section 6 of this title, or
a securities association registered under section 15A of
this title, unless the Commission has exempted such
government securities broker or government securities
dealer, by rule or order, from such membership.’’;
(7) in section 17(b)(1)(B) (15 U.S.C. 78q(b)(1)(B)), by
striking ‘‘15A(k) gives’’ and inserting ‘‘15A(k), give’’; and
(8) in section 21C(c)(2) (15 U.S.C. 78u–3(c)(2)), by striking
‘‘paragraph (1) subsection’’ and inserting ‘‘Paragraph (1)’’.
(c) TRUST INDENTURE ACT OF 1939.—The Trust Indenture Act
of 1939 (15 U.S.C. 77aaa et seq.) is amended—
(1) in section 304(b) (15 U.S.C. 77ddd(b)), by striking ‘‘section 2 of such Act’’ and inserting ‘‘section 2(a) of such Act’’;
and
(2) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)), by striking
‘‘, in the’’ and inserting ‘‘in the’’.
(d) INVESTMENT COMPANY ACT OF 1940.—The Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is amended—
(1) in section 2(a)(19) (15 U.S.C. 80a–2(a)(19)), in the
matter following subparagraph (B)(vii)—
(A) by striking ‘‘clause (vi)’’ each place that term
appears and inserting ‘‘clause (vii)’’; and
(B) in each of subparagraphs (A)(vi) and (B)(vi), by
adding ‘‘and’’ at the end of subclause (III);
(2) in section 9(b)(4)(B) (15 U.S.C. 80a–9(b)(4)(B)), by
adding ‘‘or’’ after the semicolon at the end;
(3) in section 12(d)(1)(J) (15 U.S.C. 80a–12(d)(1)(J)), by
striking ‘‘any provision of this subsection’’ and inserting ‘‘any
provision of this paragraph’’;
(4) in section 17(f) (15 U.S.C. 80a–17(f))—
(A) in paragraph (4), by striking ‘‘No such member’’
and inserting ‘‘No member of a national securities
exchange’’; and
(B) in paragraph (6), by striking ‘‘company may serve’’
and inserting ‘‘company, may serve’’; and
(5)
in
section
61(a)(3)(B)(iii)
(15
U.S.C.
80a–
60(a)(3)(B)(iii))—
(A) by striking ‘‘paragraph (1) of section 205’’ and
inserting ‘‘section 205(a)(1)’’; and

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1935

(B) by striking ‘‘clause (A) or (B) of that section’’ and
inserting ‘‘paragraph (1) or (2) of section 205(b)’’.
(e) INVESTMENT ADVISERS ACT OF 1940.—The Investment
Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) is amended—
(1) in section 203 (15 U.S.C. 80b–3)—
(A) in subsection (c)(1)(A), by striking ‘‘principal business office and’’ and inserting ‘‘principal office, principal
place of business, and’’; and
(B) in subsection (k)(4)(B), in the matter following
clause (ii), by striking ‘‘principal place of business’’ and
inserting ‘‘principal office or place of business’’;
(2) in section 206(3) (15 U.S.C. 80b–6(3)), by adding ‘‘or’’
after the semicolon at the end;
(3) in section 213(a) (15 U.S.C. 80b–13(a)), by striking
‘‘principal place of business’’ and inserting ‘‘principal office or
place of business’’; and
(4) in section 222 (15 U.S.C. 80b–18a), by striking ‘‘principal
place of business’’ each place that term appears and inserting
‘‘principal office and place of business’’.

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SEC. 986. CONFORMING AMENDMENTS RELATING TO REPEAL OF THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935.

(a) SECURITIES EXCHANGE ACT OF 1934.—The Securities
Exchange Act of 1934 (15 U.S.C. 78 et seq.) is amended—
(1) in section 3(a)(47) (15 U.S.C. 78c(a)(47)), by striking
‘‘the Public Utility Holding Company Act of 1935 (15 U.S.C.
79a et seq.),’’;
(2) in section 12(k) (15 U.S.C. 78l(k)), by amending paragraph (7) to read as follows:
‘‘(7) DEFINITION.—For purposes of this subsection, the term
‘emergency’ means—
‘‘(A) a major market disturbance characterized by or
constituting—
‘‘(i) sudden and excessive fluctuations of securities
prices generally, or a substantial threat thereof, that
threaten fair and orderly markets; or
‘‘(ii) a substantial disruption of the safe or efficient
operation of the national system for clearance and
settlement of transactions in securities, or a substantial threat thereof; or
‘‘(B) a major disturbance that substantially disrupts,
or threatens to substantially disrupt—
‘‘(i) the functioning of securities markets, investment companies, or any other significant portion or
segment of the securities markets; or
‘‘(ii) the transmission or processing of securities
transactions.’’; and
(3) in section 21(h)(2) (15 U.S.C. 78u(h)(2)), by striking
‘‘section 18(c) of the Public Utility Holding Company Act of
1935,’’.
(b) TRUST INDENTURE ACT OF 1939.—The Trust Indenture Act
of 1939 (15 U.S.C. 77aaa et seq.) is amended—
(1) in section 303 (15 U.S.C. 77ccc), by striking paragraph
(17) and inserting the following:
‘‘(17) The terms ‘Securities Act of 1933’ and ‘Securities
Exchange Act of 1934’ shall be deemed to refer, respectively,

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124 STAT. 1936

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to such Acts, as amended, whether amended prior to or after
the enactment of this title.’’;
(2) in section 308 (15 U.S.C. 77hhh), by striking ‘‘Securities
Act of 1933, the Securities Exchange Act of 1934, or the Public
Utility Holding Company Act of 1935’’ each place that term
appears and inserting ‘‘Securities Act of 1933 or the Securities
Exchange Act of 1934’’;
(3) in section 310 (15 U.S.C. 77jjj), by striking subsection
(c);
(4) in section 311 (15 U.S.C. 77kkk), by striking subsection
(c);
(5) in section 323(b) (15 U.S.C. 77www(b)), by striking
‘‘Securities Act of 1933, or the Securities Exchange Act of
1934, or the Public Utility Holding Company Act of 1935’’
and inserting ‘‘Securities Act of 1933 or the Securities Exchange
Act of 1934’’; and
(6) in section 326 (15 U.S.C. 77zzz), by striking ‘‘Securities
Act of 1933, or the Securities Exchange Act of 1934, or the
Public Utility Holding Company Act of 1935,’’ and inserting
‘‘Securities Act of 1933 or the Securities Exchange Act of 1934’’.
(c) INVESTMENT COMPANY ACT OF 1940.—The Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is amended—
(1) in section 2(a)(44) (15 U.S.C. 80a–2(a)(44)), by striking
‘‘ ‘Public Utility Holding Company Act of 1935’,’’;
(2) in section 3(c) (15 U.S.C. 80a–3(c)), by striking paragraph (8) and inserting the following:
‘‘(8) [Repealed]’’;
(3) in section 38(b) (15 U.S.C. 80a–37(b)), by striking ‘‘the
Public Utility Holding Company Act of 1935,’’; and
(4) in section 50 (15 U.S.C. 80a–49), by striking ‘‘the Public
Utility Holding Company Act of 1935,’’.
(d) INVESTMENT ADVISERS ACT OF 1940.—Section 202(a)(21)
of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a)(21))
is amended by striking ‘‘ ‘Public Utility Holding Company Act of
1935’,’’.
SEC. 987. AMENDMENT TO DEFINITION OF MATERIAL LOSS AND NONMATERIAL LOSSES TO THE DEPOSIT INSURANCE FUND
FOR PURPOSES OF INSPECTOR GENERAL REVIEWS.

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12 USC 1831o.

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(a) IN GENERAL.—Section 38(k) of the Federal Deposit Insurance Act (U.S.C. 1831o(k)) is amended—
(1) in paragraph (2), by striking subparagraph (B) and
inserting the following:
‘‘(B) MATERIAL LOSS DEFINED.—The term ‘material loss’
means any estimated loss in excess of—
‘‘(i) $200,000,000, if the loss occurs during the
period beginning on January 1, 2010, and ending on
December 31, 2011;
‘‘(ii) $150,000,000, if the loss occurs during the
period beginning on January 1, 2012, and ending on
December 31, 2013; and
‘‘(iii) $50,000,000, if the loss occurs on or after
January 1, 2014, provided that if the inspector general
of a Federal banking agency certifies to the Committee
on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1937

of Representatives that the number of projected failures of depository institutions that would require material loss reviews for the following 12 months will be
greater than 30 and would hinder the effectiveness
of its oversight functions, then the definition of ‘material loss’ shall be $75,000,000 for a duration of 1 year
from the date of the certification.’’;
(2) in paragraph (4)(A) by striking ‘‘the report’’ and
inserting ‘‘any report on losses required under this subsection,’’;
(3) by striking paragraph (6);
(4) by redesignating paragraph (5) as paragraph (6); and
(5) by inserting after paragraph (4) the following:
‘‘(5) LOSSES THAT ARE NOT MATERIAL.—
‘‘(A) SEMIANNUAL REPORT.—For the 6-month period
ending on March 31, 2010, and each 6-month period thereafter, the Inspector General of each Federal banking agency
shall—
‘‘(i) identify losses that the Inspector General estimates have been incurred by the Deposit Insurance
Fund during that 6-month period, with respect to the
insured depository institutions supervised by the Federal banking agency;
‘‘(ii) for each loss incurred by the Deposit Insurance
Fund that is not a material loss, determine—
‘‘(I) the grounds identified by the Federal
banking agency or State bank supervisor for
appointing the Corporation as receiver under section 11(c)(5); and
‘‘(II) whether any unusual circumstances exist
that might warrant an in-depth review of the loss;
and
‘‘(iii) prepare and submit a written report to the
appropriate Federal banking agency and to Congress
on the results of any determination by the Inspector
General, including—
‘‘(I) an identification of any loss that warrants
an in-depth review, together with the reasons why
such review is warranted, or, if the Inspector General determines that no review is warranted, an
explanation of such determination; and
‘‘(II) for each loss identified under subclause
(I) that warrants an in-depth review, the date
by which such review, and a report on such review
prepared in a manner consistent with reports
under paragraph (1)(A), will be completed and submitted to the Federal banking agency and Congress.
‘‘(B) DEADLINE FOR SEMIANNUAL REPORT.—The
Inspector General of each Federal banking agency shall—
‘‘(i) submit each report required under paragraph
(A) expeditiously, and not later than 90 days after
the end of the 6-month period covered by the report;
and
‘‘(ii) provide a copy of the report required under
paragraph (A) to any Member of Congress, upon
request.’’.

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(b) TECHNICAL AND CONFORMING AMENDMENT.—The heading
for subsection (k) of section 38 of the Federal Deposit Insurance
Act (U.S.C. 1831o(k)) is amended to read as follows:
‘‘(k) REVIEWS REQUIRED WHEN DEPOSIT INSURANCE FUND
INCURS LOSSES.—’’.
SEC. 988. AMENDMENT TO DEFINITION OF MATERIAL LOSS AND NONMATERIAL LOSSES TO THE NATIONAL CREDIT UNION
SHARE INSURANCE FUND FOR PURPOSES OF INSPECTOR
GENERAL REVIEWS.

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Reports.

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(a) IN GENERAL.—Section 216(j) of the Federal Credit Union
Act (12 U.S.C. 1790d(j)) is amended to read as follows:
‘‘(j) REVIEWS REQUIRED WHEN SHARE INSURANCE FUND EXPERIENCES LOSSES.—
‘‘(1) IN GENERAL.—If the Fund incurs a material loss with
respect to an insured credit union, the Inspector General of
the Board shall—
‘‘(A) submit to the Board a written report reviewing
the supervision of the credit union by the Administration
(including the implementation of this section by the
Administration), which shall include—
‘‘(i) a description of the reasons why the problems
of the credit union resulted in a material loss to the
Fund; and
‘‘(ii) recommendations for preventing any such loss
in the future; and
‘‘(B) submit a copy of the report under subparagraph
(A) to—
‘‘(i) the Comptroller General of the United States;
‘‘(ii) the Corporation;
‘‘(iii) in the case of a report relating to a State
credit union, the appropriate State supervisor; and
‘‘(iv) to any Member of Congress, upon request.
‘‘(2) MATERIAL LOSS DEFINED.—For purposes of determining
whether the Fund has incurred a material loss with respect
to an insured credit union, a loss is material if it exceeds
the sum of—
‘‘(A) $25,000,000; and
‘‘(B) an amount equal to 10 percent of the total assets
of the credit union on the date on which the Board initiated
assistance under section 208 or was appointed liquidating
agent.
‘‘(3) PUBLIC DISCLOSURE REQUIRED.—
‘‘(A) IN GENERAL.—The Board shall disclose a report
under this subsection, upon request under section 552 of
title 5, United States Code, without excising—
‘‘(i) any portion under section 552(b)(5) of title
5, United States Code; or
‘‘(ii) any information about the insured credit union
(other than trade secrets) under section 552(b)(8) of
title 5, United States Code.
‘‘(B) RULE OF CONSTRUCTION.—Subparagraph (A) may
not be construed as requiring the agency to disclose the
name of any customer of the insured credit union (other
than an institution-affiliated party), or information from
which the identity of such customer could reasonably be
ascertained.

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‘‘(4) LOSSES THAT ARE NOT MATERIAL.—
‘‘(A) SEMIANNUAL REPORT.—For the 6-month period
ending on March 31, 2010, and each 6-month period thereafter, the Inspector General of the Board shall—
‘‘(i) identify any losses that the Inspector General
estimates were incurred by the Fund during such 6month period, with respect to insured credit unions;
‘‘(ii) for each loss to the Fund that is not a material
loss, determine—
‘‘(I) the grounds identified by the Board or
the State official having jurisdiction over a State
credit union for appointing the Board as the liquidating agent for any Federal or State credit union;
and
‘‘(II) whether any unusual circumstances exist
that might warrant an in-depth review of the loss;
and
‘‘(iii) prepare and submit a written report to the
Board and to Congress on the results of the determinations of the Inspector General that includes—
‘‘(I) an identification of any loss that warrants
an in-depth review, and the reasons such review
is warranted, or if the Inspector General determines that no review is warranted, an explanation
of such determination; and
‘‘(II) for each loss identified in subclause (I)
that warrants an in-depth review, the date by
which such review, and a report on the review
prepared in a manner consistent with reports
under paragraph (1)(A), will be completed.
‘‘(B) DEADLINE FOR SEMIANNUAL REPORT.—The
Inspector General of the Board shall—
‘‘(i) submit each report required under subparagraph (A) expeditiously, and not later than 90 days
after the end of the 6-month period covered by the
report; and
‘‘(ii) provide a copy of the report required under
subparagraph (A) to any Member of Congress, upon
request.
‘‘(5) GAO REVIEW.—The Comptroller General of the United
States shall, under such conditions as the Comptroller General
determines to be appropriate—
‘‘(A) review each report made under paragraph (1),
including the extent to which the Inspector General of
the Board complied with the requirements under section
8L of the Inspector General Act of 1978 (5 U.S.C. App.)
with respect to each such report; and
‘‘(B) recommend improvements to the supervision of
insured credit unions (including improvements relating to
the implementation of this section).’’.

Time periods.

Determination.

Recommendations.

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SEC. 989. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON PROPRIETARY TRADING.

(a) DEFINITIONS.—In this section—
(1) the term ‘‘covered entity’’ means—
(A) an insured depository institution, an affiliate of
an insured depository institution, a bank holding company,

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124 STAT. 1940

PUBLIC LAW 111–203—JULY 21, 2010
a financial holding company, or a subsidiary of a bank
holding company or a financial holding company, as those
terms are defined in the Bank Holding Company Act of
1956 (12 U.S.C. 1841 et seq.); and
(B) any other entity, as the Comptroller General of
the United States may determine; and
(2) the term ‘‘proprietary trading’’ means the act of a covered entity investing as a principal in securities, commodities,
derivatives, hedge funds, private equity firms, or such other
financial products or entities as the Comptroller General may
determine.
(b) STUDY.—
(1) IN GENERAL.—The Comptroller General of the United
States shall conduct a study regarding the risks and conflicts
associated with proprietary trading by and within covered entities, including an evaluation of—
(A) whether proprietary trading presents a material
systemic risk to the stability of the United States financial
system, and if so, the costs and benefits of options for
mitigating such systemic risk;
(B) whether proprietary trading presents material risks
to the safety and soundness of the covered entities that
engage in such activities, and if so, the costs and benefits
of options for mitigating such risks;
(C) whether proprietary trading presents material conflicts of interest between covered entities that engage in
proprietary trading and the clients of the institutions who
use the firm to execute trades or who rely on the firm
to manage assets, and if so, the costs and benefits of
options for mitigating such conflicts of interest;
(D) whether adequate disclosure regarding the risks
and conflicts of proprietary trading is provided to the
depositors, trading and asset management clients, and
investors of covered entities that engage in proprietary
trading, and if not, the costs and benefits of options for
the improvement of such disclosure; and
(E) whether the banking, securities, and commodities
regulators of institutions that engage in proprietary trading
have in place adequate systems and controls to monitor
and contain any risks and conflicts of interest related to
proprietary trading, and if not, the costs and benefits of
options for the improvement of such systems and controls.
(2) CONSIDERATIONS.—In carrying out the study required
under paragraph (1), the Comptroller General shall consider—
(A) current practice relating to proprietary trading;
(B) the advisability of a complete ban on proprietary
trading;
(C) limitations on the scope of activities that covered
entities may engage in with respect to proprietary trading;
(D) the advisability of additional capital requirements
for covered entities that engage in proprietary trading;
(E) enhanced restrictions on transactions between
affiliates related to proprietary trading;
(F) enhanced accounting disclosures relating to proprietary trading;
(G) enhanced public disclosure relating to proprietary
trading; and

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(H) any other options the Comptroller General deems
appropriate.
(c) REPORT TO CONGRESS.—Not later than 15 months after
the date of enactment of this Act, the Comptroller General shall
submit a report to Congress on the results of the study conducted
under subsection (b).
(d) ACCESS BY COMPTROLLER GENERAL.—For purposes of conducting the study required under subsection (b), the Comptroller
General shall have access, upon request, to any information, data,
schedules, books, accounts, financial records, reports, files, electronic communications, or other papers, things, or property
belonging to or in use by a covered entity that engages in proprietary trading, and to the officers, directors, employees, independent
public accountants, financial advisors, staff, and agents and representatives of a covered entity (as related to the activities of
the agent or representative on behalf of the covered entity), at
such reasonable times as the Comptroller General may request.
The Comptroller General may make and retain copies of books,
records, accounts, and other records, as the Comptroller General
deems appropriate.
(e) CONFIDENTIALITY OF REPORTS.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
Comptroller General may not disclose information regarding—
(A) any proprietary trading activity of a covered entity,
unless such information is disclosed at a level of generality
that does not reveal the investment or trading position
or strategy of the covered entity for any specific security,
commodity, derivative, or other investment or financial
product; or
(B) any individual interviewed by the Comptroller General for purposes of the study under subsection (b), unless
such information is disclosed at a level of generality that
does not reveal—
(i) the name of or identifying details relating to
such individual; or
(ii) in the case of an individual who is an employee
of a third party that provides professional services
to a covered entity believed to be engaged in proprietary trading, the name of or any identifying details
relating to such third party.
(2) EXCEPTIONS.—The Comptroller General may disclose
the information described in paragraph (1)—
(A) to a department, agency, or official of the Federal
Government, for official use, upon request;
(B) to a committee of Congress, upon request; and
(C) to a court, upon an order of such court.

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SEC. 989A. SENIOR INVESTOR PROTECTIONS.

12 USC 5537.

(a) DEFINITIONS.—As used in this section—
(1) the term ‘‘eligible entity’’ means—
(A) a securities commission (or any agency or office
performing like functions) of a State that the Office determines has adopted rules on the appropriate use of designations in the offer or sale of securities or the provision
of investment advice that meet or exceed the minimum
requirements of the NASAA Model Rule on the Use of

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124 STAT. 1942

PUBLIC LAW 111–203—JULY 21, 2010
Senior-Specific Certifications and Professional Designations
(or any successor thereto);
(B) the insurance commission (or any agency or office
performing like functions) of any State that the Office
determines has—
(i) adopted rules on the appropriate use of designations in the sale of insurance products that, to the
extent practicable, conform to the minimum requirements of the National Association of Insurance
Commissioners Model Regulation on the Use of SeniorSpecific Certifications and Professional Designations
in the Sale of Life Insurance and Annuities (or any
successor thereto); and
(ii) adopted rules with respect to fiduciary or suitability requirements in the sale of annuities that meet
or exceed the minimum requirements established by
the Suitability in Annuity Transactions Model Regulation of the National Association of Insurance Commissioners (or any successor thereto); or
(C) a consumer protection agency of any State, if—
(i) the securities commission (or any agency or
office performing like functions) of the State is eligible
under subparagraph (A); or
(ii) the insurance commission (or any agency or
office performing like functions) of the State is eligible
under subparagraph (B);
(2) the term ‘‘financial product’’ means a security, an insurance product (including an insurance product that pays a
return, whether fixed or variable), a bank product, and a loan
product;
(3) the term ‘‘misleading designation’’—
(A) means a certification, professional designation, or
other purported credential that indicates or implies that
a salesperson or adviser has special certification or training
in advising or servicing seniors; and
(B) does not include a certification, professional designation, license, or other credential that—
(i) was issued by or obtained from an academic
institution having regional accreditation;
(ii) meets the standards for certifications and
professional designations outlined by the NASAA
Model Rule on the Use of Senior-Specific Certifications
and Professional Designations (or any successor
thereto) or by the Model Regulations on the Use of
Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities,
adopted by the National Association of Insurance
Commissioners (or any successor thereto); or
(iii) was issued by or obtained from a State;
(4) the term ‘‘misleading or fraudulent marketing’’ means
the use of a misleading designation by a person that sells
to or advises a senior in connection with the sale of a financial
product;
(5) the term ‘‘NASAA’’ means the North American Securities Administrators Association;
(6) the term ‘‘Office’’ means the Office of Financial Literacy
of the Bureau;

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1943

(7) the term ‘‘senior’’ means any individual who has
attained the age of 62 years or older; and
(8) the term ‘‘State’’ has the same meaning as in section
3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
(b) GRANTS TO STATES FOR ENHANCED PROTECTION OF SENIORS
FROM BEING MISLED BY FALSE DESIGNATIONS.—The Office shall
establish a program under which the Office may make grants
to States or eligible entities—
(1) to hire staff to identify, investigate, and prosecute
(through civil, administrative, or criminal enforcement actions)
cases involving misleading or fraudulent marketing;
(2) to fund technology, equipment, and training for regulators, prosecutors, and law enforcement officers, in order to
identify salespersons and advisers who target seniors through
the use of misleading designations;
(3) to fund technology, equipment, and training for prosecutors to increase the successful prosecution of salespersons and
advisers who target seniors with the use of misleading designations;
(4) to provide educational materials and training to regulators on the appropriateness of the use of designations by
salespersons and advisers in connection with the sale and marketing of financial products;
(5) to provide educational materials and training to seniors
to increase awareness and understanding of misleading or
fraudulent marketing;
(6) to develop comprehensive plans to combat misleading
or fraudulent marketing of financial products to seniors; and
(7) to enhance provisions of State law to provide protection
for seniors against misleading or fraudulent marketing.
(c) APPLICATIONS.—A State or eligible entity desiring a grant
under this section shall submit an application to the Office, in
such form and in such a manner as the Office may determine,
that includes—
(1) a proposal for activities to protect seniors from misleading or fraudulent marketing that are proposed to be funded
using a grant under this section, including—
(A) an identification of the scope of the problem of
misleading or fraudulent marketing in the State;
(B) a description of how the proposed activities would—
(i) protect seniors from misleading or fraudulent
marketing in the sale of financial products, including
by proactively identifying victims of misleading and
fraudulent marketing who are seniors;
(ii) assist in the investigation and prosecution of
those using misleading or fraudulent marketing; and
(iii) discourage and reduce cases of misleading or
fraudulent marketing; and
(C) a description of how the proposed activities would
be coordinated with other State efforts; and
(2) any other information, as the Office determines is appropriate.
(d) PERFORMANCE OBJECTIVES AND REPORTING REQUIREMENTS.—The Office may establish such performance objectives and
reporting requirements for States and eligible entities receiving
a grant under this section as the Office determines are necessary

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124 STAT. 1944

PUBLIC LAW 111–203—JULY 21, 2010

to carry out and assess the effectiveness of the program under
this section.
(e) MAXIMUM AMOUNT.—The amount of a grant under this
section may not exceed—
(1) $500,000 for each of 3 consecutive fiscal years, if the
recipient is a State, or an eligible entity of a State, that has
adopted rules—
(A) on the appropriate use of designations in the offer
or sale of securities or investment advice that meet or
exceed the minimum requirements of the NASAA Model
Rule on the Use of Senior-Specific Certifications and Professional Designations (or any successor thereto);
(B) on the appropriate use of designations in the sale
of insurance products that, to the extent practicable, conform to the minimum requirements of the National Association of Insurance Commissioners Model Regulation on the
Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities (or
any successor thereto); and
(C) with respect to fiduciary or suitability requirements
in the sale of annuities that meet or exceed the minimum
requirements established by the Suitability in Annuity
Transactions Model Regulation of the National Association
of Insurance Commissioners (or any successor thereto); and
(2) $100,000 for each of 3 consecutive fiscal years, if the
recipient is a State, or an eligible entity of a State, that has
adopted—
(A) rules on the appropriate use of designations in
the offer or sale of securities or investment advice that
meet or exceed the minimum requirements of the NASAA
Model Rule on the Use of Senior-Specific Certifications
and Professional Designations (or any successor thereto);
or
(B) rules—
(i) on the appropriate use of designations in the
sale of insurance products that, to the extent practicable, conform to the minimum requirements of the
National Association of Insurance Commissioners
Model Regulation on the Use of Senior-Specific Certifications and Professional Designations in the Sale of
Life Insurance and Annuities (or any successor
thereto); and
(ii) with respect to fiduciary or suitability requirements in the sale of annuities that meet or exceed
the minimum requirements established by the Suitability in Annuity Transactions Model Regulation of
the National Association of Insurance Commissioners
(or any successor thereto).
(f) SUBGRANTS.—A State or eligible entity that receives a grant
under this section may make a subgrant, as the State or eligible
entity determines is necessary to carry out the activities funded
using a grant under this section.
(g) REAPPLICATION.—A State or eligible entity that receives
a grant under this section may reapply for a grant under this
section, notwithstanding the limitations on grant amounts under
subsection (e).

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1945

(h) AUTHORIZATION OF APPROPRIATIONS.—There are authorized
to be appropriated to carry out this section, $8,000,000 for each
of fiscal years 2011 through 2015.
SEC. 989B. DESIGNATED FEDERAL ENTITY INSPECTORS GENERAL
INDEPENDENCE.

Section 8G of the Inspector General Act of 1978 (5 U.S.C.
App.) is amended—
(1) in subsection (a)(4)—
(A) in the matter preceding subparagraph (A), by
inserting ‘‘the board or commission of the designated Federal entity, or in the event the designated Federal entity
does not have a board or commission,’’ after ‘‘means’’;
(B) in subparagraph (A), by striking ‘‘and’’ after the
semicolon; and
(C) by adding after subparagraph (B) the following:
‘‘(C) with respect to the Federal Labor Relations
Authority, such term means the members of the Authority
(described under section 7104 of title 5, United States
Code);
‘‘(D) with respect to the National Archives and Records
Administration, such term means the Archivist of the
United States;
‘‘(E) with respect to the National Credit Union
Administration, such term means the National Credit
Union Administration Board (described under section 102
of the Federal Credit Union Act (12 U.S.C. 1752a);
‘‘(F) with respect to the National Endowment of the
Arts, such term means the National Council on the Arts;
‘‘(G) with respect to the National Endowment for the
Humanities, such term means the National Council on
the Humanities; and
‘‘(H) with respect to the Peace Corps, such term means
the Director of the Peace Corps;’’; and
(2) in subsection (h), by inserting ‘‘if the designated Federal
entity is not a board or commission, include’’ after ‘‘designated
Federal entities and’’.

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SEC. 989C. STRENGTHENING INSPECTOR GENERAL ACCOUNTABILITY.

Section 5(a) of the Inspector General Act of 1978 (5 U.S.C.
App.) is amended—
(1) in paragraph (12), by striking ‘‘and’’ after the semicolon;
(2) in paragraph (13), by striking the period and inserting
a semicolon; and
(3) by adding at the end the following:
‘‘(14)(A) an appendix containing the results of any peer
review conducted by another Office of Inspector General during
the reporting period; or
‘‘(B) if no peer review was conducted within that reporting
period, a statement identifying the date of the last peer review
conducted by another Office of Inspector General;
‘‘(15) a list of any outstanding recommendations from any
peer review conducted by another Office of Inspector General
that have not been fully implemented, including a statement
describing the status of the implementation and why
implementation is not complete; and
‘‘(16) a list of any peer reviews conducted by the Inspector
General of another Office of the Inspector General during the

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124 STAT. 1946

PUBLIC LAW 111–203—JULY 21, 2010
reporting period, including a list of any outstanding recommendations made from any previous peer review (including
any peer review conducted before the reporting period) that
remain outstanding or have not been fully implemented.’’.

SEC. 989D. REMOVAL OF INSPECTORS GENERAL OF DESIGNATED FEDERAL ENTITIES.

Section 8G(e) of the Inspector General Act of 1978 (5 U.S.C.
App.) is amended—
(1) by redesignating the sentences following ‘‘(e)’’ as paragraph (2); and
(2) by striking ‘‘(e)’’ and inserting the following:
‘‘(e)(1) In the case of a designated Federal entity for which
a board or commission is the head of the designated Federal entity,
a removal under this subsection may only be made upon the written
concurrence of a 2⁄3 majority of the board or commission.’’.
5 USC app. 11
note.

SEC. 989E. ADDITIONAL OVERSIGHT OF FINANCIAL REGULATORY
SYSTEM.

(a) COUNCIL

OF

INSPECTORS GENERAL

ON

FINANCIAL OVER-

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SIGHT.—

(1) ESTABLISHMENT AND MEMBERSHIP.—There is established
a Council of Inspectors General on Financial Oversight (in
this section referred to as the ‘‘Council of Inspectors General’’)
chaired by the Inspector General of the Department of the
Treasury and composed of the inspectors general of the following:
(A) The Board of Governors of the Federal Reserve
System.
(B) The Commodity Futures Trading Commission.
(C) The Department of Housing and Urban Development.
(D) The Department of the Treasury.
(E) The Federal Deposit Insurance Corporation.
(F) The Federal Housing Finance Agency.
(G) The National Credit Union Administration.
(H) The Securities and Exchange Commission.
(I) The Troubled Asset Relief Program (until the termination of the authority of the Special Inspector General
for such program under section 121(k) of the Emergency
Economic Stabilization Act of 2008 (12 U.S.C. 5231(k))).
(2) DUTIES.—
(A) MEETINGS.—The Council of Inspectors General
shall meet not less than once each quarter, or more frequently if the chair considers it appropriate, to facilitate
the sharing of information among inspectors general and
to discuss the ongoing work of each inspector general who
is a member of the Council of Inspectors General, with
a focus on concerns that may apply to the broader financial
sector and ways to improve financial oversight.
(B) ANNUAL REPORT.—Each year the Council of Inspectors General shall submit to the Council and to Congress
a report including—
(i) for each inspector general who is a member
of the Council of Inspectors General, a section within
the exclusive editorial control of such inspector general
that highlights the concerns and recommendations of
such inspector general in such inspector general’s

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1947

ongoing and completed work, with a focus on issues
that may apply to the broader financial sector; and
(ii) a summary of the general observations of the
Council of Inspectors General based on the views
expressed by each inspector general as required by
clause (i), with a focus on measures that should be
taken to improve financial oversight.
(3) WORKING GROUPS TO EVALUATE COUNCIL.—
(A) CONVENING A WORKING GROUP.—The Council of
Inspectors General may, by majority vote, convene a
Council of Inspectors General Working Group to evaluate
the effectiveness and internal operations of the Council.
(B) PERSONNEL AND RESOURCES.—The inspectors general who are members of the Council of Inspectors General
may detail staff and resources to a Council of Inspectors
General Working Group established under this paragraph
to enable it to carry out its duties.
(C) REPORTS.—A Council of Inspectors General
Working Group established under this paragraph shall
submit regular reports to the Council and to Congress
on its evaluations pursuant to this paragraph.
(b) RESPONSE TO REPORT BY COUNCIL.—The Council shall
respond to the concerns raised in the report of the Council of
Inspectors General under subsection (a)(2)(B) for such year.

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SEC. 989F. GAO STUDY OF PERSON TO PERSON LENDING.

(a) STUDY.—
(1) IN GENERAL.—The Comptroller General of the United
States shall conduct a study of person to person lending to
determine the optimal Federal regulatory structure.
(2) CONSULTATION.—In conducting the study required
under paragraph (1), the Comptroller General shall consult
with Federal banking agencies, the Commission, consumer
groups, outside experts, and the person to person lending
industry.
(3) CONTENT OF STUDY.—The study required under paragraph (1) shall include an examination of—
(A) the regulatory structure as it exists on the date
of enactment of this Act, as determined by the Commission,
with particular attention to—
(i) the application of the Securities Act of 1933
to person to person lending platforms;
(ii) the posting of consumer loan information on
the EDGAR database of the Commission; and
(iii) the treatment of privately held person to person lending platforms as public companies;
(B) the State and other Federal regulators responsible
for the oversight and regulation of person to person lending
markets;
(C) any Federal, State, or local government or private
studies of person to person lending completed or in progress
on the date of enactment of this Act;
(D) consumer privacy and data protections, minimum
credit standards, anti-money laundering and risk management in the regulatory structure as it exists on the date
of enactment of this Act, and whether additional or alternative safeguards are needed; and

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124 STAT. 1948

PUBLIC LAW 111–203—JULY 21, 2010
(E) the uses of person to person lending.
(b) REPORT.—
(1) IN GENERAL.—Not later than 1 year after the date
of enactment of this Act, the Comptroller General shall submit
a report on the study required under subsection (a) to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House
of Representatives.
(2) CONTENT OF REPORT.—The report required under paragraph (1) shall include alternative regulatory options,
including—
(A) the involvement of other Federal agencies; and
(B) alternative approaches by the Commission and recommendations on whether the alternative approaches are
effective.

SEC. 989G. EXEMPTION FOR NONACCELERATED FILERS.
15 USC 7262.

Deadline.
Reports.
5 USC app. 5
note.

Certification.

(a) EXEMPTION.—Section 404 of the Sarbanes-Oxley Act of 2002
is amended by adding at the end the following:
‘‘(c) EXEMPTION FOR SMALLER ISSUERS.—Subsection (b) shall
not apply with respect to any audit report prepared for an issuer
that is neither a ‘large accelerated filer’ nor an ‘accelerated filer’
as those terms are defined in Rule 12b–2 of the Commission (17
C.F.R. 240.12b–2).’’.
(b) STUDY.—The Securities and Exchange Commission shall
conduct a study to determine how the Commission could reduce
the burden of complying with section 404(b) of the Sarbanes-Oxley
Act of 2002 for companies whose market capitalization is between
$75,000,000 and $250,000,000 for the relevant reporting period
while maintaining investor protections for such companies. The
study shall also consider whether any such methods of reducing
the compliance burden or a complete exemption for such companies
from compliance with such section would encourage companies to
list on exchanges in the United States in their initial public
offerings. Not later than 9 months after the date of the enactment
of this subtitle, the Commission shall transmit a report of such
study to Congress.
SEC.

CORRECTIVE RESPONSES BY HEADS OF CERTAIN
ESTABLISHMENTS TO DEFICIENCIES IDENTIFIED BY
INSPECTORS GENERAL.

The Chairman of the Board of Governors of the Federal Reserve
System, the Chairman of the Commodity Futures Trading Commission, the Chairman of the National Credit Union Administration,
the Director of the Pension Benefit Guaranty Corporation, and
the Chairman of the Securities and Exchange Commission shall
each—
(1) take action to address deficiencies identified by a report
or investigation of the Inspector General of the establishment
concerned; or
(2) certify to both Houses of Congress that no action is
necessary or appropriate in connection with a deficiency
described in paragraph (1).
SEC.

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989H.

989I.

GAO STUDY
ISSUERS.

REGARDING

EXEMPTION

FOR

SMALLER

(a) STUDY REGARDING EXEMPTION FOR SMALLER ISSUERS.—The
Comptroller General of the United States shall carry out a study

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1949

on the impact of the amendments made by this Act to section
404(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7262(b)), which
shall include an analysis of—
(1) whether issuers that are exempt from such section
404(b) have fewer or more restatements of published accounting
statements than issuers that are required to comply with such
section 404(b);
(2) the cost of capital for issuers that are exempt from
such section 404(b) compared to the cost of capital for issuers
that are required to comply with such section 404(b);
(3) whether there is any difference in the confidence of
investors in the integrity of financial statements of issuers
that comply with such section 404(b) and issuers that are
exempt from compliance with such section 404(b);
(4) whether issuers that do not receive the attestation
for internal controls required under such section 404(b) should
be required to disclose the lack of such attestation to investors;
and
(5) the costs and benefits to issuers that are exempt from
such section 404(b) that voluntarily have obtained the attestation of an independent auditor.
(b) REPORT.—Not later than 3 years after the date of enactment
of this Act, the Comptroller General shall submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives
a report on the results of the study required under subsection
(a).

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SEC. 989J. FURTHER PROMOTING THE ADOPTION OF THE NAIC MODEL
REGULATIONS THAT ENHANCE PROTECTION OF SENIORS
AND OTHER CONSUMERS.

15 USC 77c note.

(a) IN GENERAL.—The Commission shall treat as exempt securities described under section 3(a)(8) of the Securities Act of 1933
(15 U.S.C. 77c(a)(8)) any insurance or endowment policy or annuity
contract or optional annuity contract—
(1) the value of which does not vary according to the
performance of a separate account;
(2) that—
(A) satisfies standard nonforfeiture laws or similar
requirements of the applicable State at the time of issue;
or
(B) in the absence of applicable standard nonforfeiture
laws or requirements, satisfies the Model Standard Nonforfeiture Law for Life Insurance or Model Standard Nonforfeiture Law for Individual Deferred Annuities, or any successor model law, as published by the National Association
of Insurance Commissioners; and
(3) that is issued—
(A) on and after June 16, 2013, in a State, or issued
by an insurance company that is domiciled in a State,
that—
(i) adopts rules that govern suitability requirements in the sale of an insurance or endowment policy
or annuity contract or optional annuity contract, which
shall substantially meet or exceed the minimum
requirements established by the Suitability in Annuity
Transactions Model Regulation adopted by the

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124 STAT. 1950

Deadline.

PUBLIC LAW 111–203—JULY 21, 2010

National Association of Insurance Commissioners in
March 2010; and
(ii) adopts rules that substantially meet or exceed
the minimum requirements of any successor modifications to the model regulations described in subparagraph (A) within 5 years of the adoption by the Association of any further successors thereto; or
(B) by an insurance company that adopts and implements practices on a nationwide basis for the sale of any
insurance or endowment policy or annuity contract or
optional annuity contract that meet or exceed the minimum
requirements established by the National Association of
Insurance Commissioners Suitability in Annuity Transactions Model Regulation (Model 275), and any successor
thereto, and is therefore subject to examination by the
State of domicile of the insurance company, or by any
other State where the insurance company conducts sales
of such products, for the purpose of monitoring compliance
under this section.
(b) RULE OF CONSTRUCTION.—Nothing in this section shall be
construed to affect whether any insurance or endowment policy
or annuity contract or optional annuity contract that is not described
in this section is or is not an exempt security under section 3(a)(8)
of the Securities Act of 1933 (15 U.S.C. 77c(a)(8)).

Subtitle J—Securities and Exchange
Commission Match Funding
SEC. 991. SECURITIES AND EXCHANGE COMMISSION MATCH FUNDING.

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Fees.
Assessments.

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(a) MATCH FUNDING AUTHORITY.—
(1) AMENDMENTS.—Section 31 of the Securities Exchange
Act of 1934 (15 U.S.C. 78ee) is amended—
(A) by striking subsection (a) and inserting the following:
‘‘(a) RECOVERY OF COSTS OF ANNUAL APPROPRIATION.—The
Commission shall, in accordance with this section, collect transaction fees and assessments that are designed to recover the costs
to the Government of the annual appropriation to the Commission
by Congress.’’;
(B) in subsection (e)(2), by striking ‘‘September 30’’
and inserting ‘‘September 25’’;
(C) in subsection (g), by striking ‘‘April 30 of the fiscal
year preceding the fiscal year to which such rate applies’’
and inserting ‘‘30 days after the date on which an Act
making a regular appropriation to the Commission for such
fiscal year is enacted’’;
(D) by striking subsection (j) and inserting the following:
‘‘(j) ADJUSTMENTS TO FEE RATES.—
‘‘(1) ANNUAL ADJUSTMENT.—Subject to subsections (i)(1)(B)
and (k), for each fiscal year, the Commission shall by order
adjust each of the rates applicable under subsections (b) and
(c) for such fiscal year to a uniform adjusted rate that, when
applied to the baseline estimate of the aggregate dollar amount
of sales for such fiscal year, is reasonably likely to produce

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1951

aggregate fee collections under this section (including assessments collected under subsection (d) of this section) that are
equal to the regular appropriation to the Commission by Congress for such fiscal year.
‘‘(2) MID-YEAR ADJUSTMENT.—Subject to subsections
(i)(1)(B) and (k), for each fiscal year, the Commission shall
determine, by March 1 of such fiscal year, whether, based
on the actual aggregate dollar volume of sales during the first
5 months of such fiscal year, the baseline estimate of the
aggregate dollar volume of sales used under paragraph (1)
for such fiscal year is reasonably likely to be 10 percent (or
more) greater or less than the actual aggregate dollar volume
of sales for such fiscal year. If the Commission so determines,
the Commission shall by order, no later than March 1, adjust
each of the rates applicable under subsections (b) and (c) for
such fiscal year to a uniform adjusted rate that, when applied
to the revised estimate of the aggregate dollar amount of sales
for the remainder of such fiscal year, is reasonably likely to
produce aggregate fee collections under this section (including
fees collected during such five-month period and assessments
collected under subsection (d) of this section) that are equal
to the regular appropriation to the Commission by Congress
for such fiscal year. In making such revised estimate, the
Commission shall, after consultation with the Congressional
Budget Office and the Office of Management and Budget, use
the same methodology required by subsection (l).
‘‘(3) REVIEW.—In exercising its authority under this subsection, the Commission shall not be required to comply with
the provisions of section 553 of title 5, United States Code.
An adjusted rate prescribed under paragraph (1) or (2) and
published under subsection (g) shall not be subject to judicial
review.
‘‘(4) EFFECTIVE DATE.—
‘‘(A) ANNUAL ADJUSTMENT.—Subject to subsections
(i)(1)(B) and (k), an adjusted rate prescribed under paragraph (1) shall take effect on the later of—
‘‘(i) the first day of the fiscal year to which such
rate applies; or
‘‘(ii) 60 days after the date on which an Act making
a regular appropriation to the Commission for such
fiscal year is enacted.
‘‘(B) MID-YEAR ADJUSTMENT.—An adjusted rate prescribed under paragraph (2) shall take effect on April 1
of the fiscal year to which such rate applies.’’;
(E) in subsection (k), by striking ‘‘30 days’’ and
inserting ‘‘60 days’’; and
(F) in subsection (l), by striking ‘‘DEFINITIONS.—’’ and
all that follows through ‘‘SALES.—The baseline’’ and
inserting ‘‘BASELINE ESTIMATE OF THE AGGREGATE DOLLAR
AMOUNT OF SALES.—The baseline’’.
(2) EFFECTIVE DATE.—The amendments made by this subsection shall take effect on the later of—
(A) October 1, 2011; or
(B) the date of enactment of an Act making a regular
appropriation to the Commission for fiscal year 2012.
(b) AMENDMENTS TO REGISTRATION FEE PROVISIONS.—

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Determination.
Deadline.

Order.
Deadline.

15 USC 78ee.

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124 STAT. 1952

PUBLIC LAW 111–203—JULY 21, 2010
(1) 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—
(A) by striking ‘‘offsetting’’ each place that term
appears and inserting ‘‘fee’’;
(B) by striking paragraphs (1), (3), (4), (6), (8), and
(9);
(C) by redesignating paragraph (2) as paragraph (1);
(D) by redesignating paragraph (5) as paragraph (2);
(E) by redesignating paragraph (7) as paragraph (3);
(F) by redesignating paragraph (10) as paragraph (5);
(G) by redesignating paragraph (11) as paragraph (6);
(H) in paragraph (1), as so redesignated, by striking
‘‘paragraph (5) or (6).’’ and inserting ‘‘paragraph (2).’’;
(I) in paragraph (2), as so redesignated—
(i) by striking ‘‘of the fiscal years 2003 through
2011’’ and inserting ‘‘fiscal year’’; and
(ii) by striking ‘‘paragraph (2)’’ and inserting ‘‘paragraph (1)’’;
(J) by inserting after paragraph (3), as so redesignated,
the following:
‘‘(4) REVIEW AND EFFECTIVE DATE.—In exercising its
authority under this subsection, the Commission shall not be
required to comply with the provisions of section 553 of title
5, United States Code. An adjusted rate prescribed under paragraph (2) and published under paragraph (5) shall not be subject to judicial review. An adjusted rate prescribed under paragraph (2) shall take effect on the first day of the fiscal year
to which such rate applies.’’;
(K) in paragraph (5), as redesignated, by striking ‘‘April
30’’ and inserting ‘‘August 31’’;
(L) in paragraph (6), as so redesignated—
(i) by striking ‘‘of the fiscal years 2002 through
2011’’ and inserting ‘‘fiscal year’’; and
(ii) by inserting at the end of the table in subparagraph (A) the following:

‘‘2012 ...................................................
2013 .....................................................
2014 .....................................................
2015 .....................................................
2016 .....................................................
2017 .....................................................
2018 .....................................................
2019 .....................................................
2020 .....................................................
2021 and each fiscal year thereafter

$425,000,000
$455,000,000
$485,000,000
$515,000,000
$550,000,000
$585,000,000
$620,000,000
$660,000,000
$705,000,000
An amount that is equal to the target
fee collection amount for the prior fiscal year, adjusted by the rate of inflation.’’.

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(2) 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—
(A) in paragraph (3), by striking ‘‘paragraphs (5) and
(6)’’ and inserting ‘‘paragraph (4)’’;
(B) by striking paragraphs (4), (5), and (6);
(C) by inserting after paragraph (3) the following:

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1953

‘‘(4) ANNUAL ADJUSTMENT.—For each fiscal year, the
Commission shall by order adjust the rate required by paragraph (3) for such fiscal year to a rate that is equal to the
rate (expressed in dollars per million) that is applicable under
section 6(b) of the Securities Act of 1933 for such fiscal year.
‘‘(5) FEE COLLECTIONS.—Fees collected pursuant to this subsection for fiscal year 2012 and each fiscal year thereafter
shall be deposited and credited as general revenue of the
Treasury and shall not be available for obligation.
‘‘(6) EFFECTIVE DATE; PUBLICATION.—In exercising its
authority under this subsection, the Commission shall not be
required to comply with the provisions of section 553 of title
5, United States Code. An adjusted rate prescribed under paragraph (4) shall be published and take effect in accordance
with section 6(b) of the Securities Act of 1933 (15 U.S.C.
77f(b)).’’; and
(D) by striking paragraphs (8), (9), and (10).
(3) 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—
(A) in paragraph (1), by striking ‘‘paragraphs (5) and
(6)’’ each time that term appears and inserting ‘‘paragraph
(4)’’;
(B) in paragraph (3), by striking ‘‘paragraphs (5) and
(6)’’ and inserting ‘‘paragraph (4)’’;
(C) by striking paragraphs (4), (5), and (6);
(D) by inserting after paragraph (3) the following:
‘‘(4) ANNUAL ADJUSTMENT.—For each fiscal year, the
Commission shall by order adjust the rate required by paragraphs (1) and (3) for such fiscal year to a rate that is equal
to the rate (expressed in dollars per million) that is applicable
under section 6(b) of the Securities Act of 1933 (15 U.S.C.
77f(b)) for such fiscal year.
‘‘(5) FEE COLLECTION.—Fees collected pursuant to this subsection for fiscal year 2012 and each fiscal year thereafter
shall be deposited and credited as general revenue of the
Treasury and shall not be available for obligation.
‘‘(6) REVIEW; EFFECTIVE DATE; PUBLICATION.—In exercising
its authority under this subsection, the Commission shall not
be required to comply with the provisions of section 553 of
title 5, United States Code. An adjusted rate prescribed under
paragraph (4) shall be published and take effect in accordance
with section 6(b) of the Securities Act of 1933 (15 U.S.C.
77f(b)).’’;
(E) by striking paragraphs (8), (9), and (10); and
(F) by redesignating paragraph (11) as paragraph (8).
(4) EFFECTIVE DATE.—The amendments made by this subsection shall take effect on October 1, 2011, except that for
fiscal year 2012, the Commission shall publish the rate established under section 6(b) of the Securities Act of 1933 (15
U.S.C. 77f(b)), as amended by this Act, on August 31, 2011.
(c) AUTHORIZATION OF APPROPRIATIONS.—Section 35 of the Securities Exchange Act of 1934 (15 U.S.C. 78kk) is amended to read
as follows:

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15 USC 77f note.

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124 STAT. 1954

PUBLIC LAW 111–203—JULY 21, 2010

‘‘SEC. 35. AUTHORIZATION OF APPROPRIATIONS.

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15 USC 78ee
note.

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‘‘In addition to any other funds authorized to be appropriated
to the Commission, there are authorized to be appropriated to
carry out the functions, powers, and duties of the Commission—
‘‘(1) for fiscal year 2011, $1,300,000,000;
‘‘(2) for fiscal year 2012, $1,500,000,000;
‘‘(3) for fiscal year 2013, $1,750,000,000;
‘‘(4) for fiscal year 2014, $2,000,000,000; and
‘‘(5) for fiscal year 2015, $2,250,000,000.’’.
(d) TRANSMITTAL OF BUDGET REQUESTS.—
(1) AMENDMENT.—Section 31 of the Securities Exchange
Act of 1934 (15 U.S.C. 78ee) is amended by adding at the
end the following:
‘‘(m) TRANSMITTAL OF COMMISSION BUDGET REQUESTS.—
‘‘(1) BUDGET REQUIRED.—For fiscal year 2012, and each
fiscal year thereafter, the Commission shall prepare and submit
a budget to the President. Whenever the Commission submits
a budget estimate or request to the President or the Office
of Management and Budget, the Commission shall concurrently
transmit copies of the estimate or request to the Committee
on Appropriations of the Senate, the Committee on Appropriations of the House of Representatives, the Committee on
Banking, Housing, and Urban Affairs of the Senate, and the
Committee on Financial Services of the House of Representatives.
‘‘(2) SUBMISSION TO CONGRESS.—The President shall submit
each budget submitted under paragraph (1) to Congress, in
unaltered form, together with the annual budget for the
Administration submitted by the President.
‘‘(3) CONTENTS.—The Commission shall include in each
budget submitted under paragraph (1)—
‘‘(A) an itemization of the amount of funds necessary
to carry out the functions of the Commission.
‘‘(B) an amount to be designated as contingency funding
to be used by the Commission to address unanticipated
needs; and
‘‘(C) a designation of any activities of the Commission
for which multi-year budget authority would be suitable.’’.
(2) BUDGET OF THE PRESIDENT.—For fiscal year 2012, and
each fiscal year thereafter, the annual budget for the Administration submitted by the President to Congress shall reflect
the amendments made by this section.
(e) SECURITIES AND EXCHANGE COMMISSION RESERVE FUND.—
(1) AMENDMENT.—Section 4 of the Securities Exchange Act
of 1934 (15 U.S.C. 78d), as amended by this Act, is amended
by adding at the end the following:
‘‘(i) SECURITIES AND EXCHANGE COMMISSION RESERVE FUND.—
‘‘(1) RESERVE FUND ESTABLISHED.—There is established in
the Treasury of the United States a separate fund, to be known
as the ‘Securities and Exchange Commission Reserve Fund’
(referred to in this subsection as the ‘Reserve Fund’).
‘‘(2) RESERVE FUND AMOUNTS.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph
(B), any registration fees collected by the Commission under
section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b))
or section 24(f) of the Investment Company Act of 1940

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1955

(15 U.S.C. 80a-24(f)) shall be deposited into the Reserve
Fund.
‘‘(B) LIMITATIONS.—For any 1 fiscal year—
‘‘(i) the amount deposited in the Fund may not
exceed $50,000,000; and
‘‘(ii) the balance in the Fund may not exceed
$100,000,000.
‘‘(C) EXCESS FEES.—Any amounts in excess of the
limitations described in subparagraph (B) that the Commission collects from registration fees under section 6(b) of
the Securities Act of 1933 (15 U.S.C. 77f(b)) or section
24(f) of the Investment Company Act of 1940 (15 U.S.C.
80a-24(f)) shall be deposited in the General Fund of the
Treasury of the United States and shall not be available
for obligation by the Commission.
‘‘(3) USE OF AMOUNTS IN RESERVE FUND.—The Commission
may obligate amounts in the Reserve Fund, not to exceed
a total of $100,000,000 in any 1 fiscal year, as the Commission
determines is necessary to carry out the functions of the
Commission. Any amounts in the reserve fund shall remain
available until expended. Not later than 10 days after the
date on which the Commission obligates amounts under this
paragraph, the Commission shall notify Congress of the date,
amount, and purpose of the obligation.
‘‘(4) RULE OF CONSTRUCTION.—Amounts collected and
deposited in the Reserve Fund shall not be construed to be
Government funds or appropriated monies and shall not be
subject to apportionment for the purpose of chapter 15 of title
31, United States Code, or under any other authority.’’.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall take effect on October 1, 2011.

TITLE X—BUREAU OF CONSUMER
FINANCIAL PROTECTION
SEC. 1001. SHORT TITLE.

This title may be cited as the ‘‘Consumer Financial Protection
Act of 2010’’.

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SEC. 1002. DEFINITIONS.

Deadline.
Notification.

15 USC 78d note.

Consumer
Financial
Protection Act of
2010.
12 USC 5301
note.

12 USC 5481.

Except as otherwise provided in this title, for purposes of this
title, the following definitions shall apply:
(1) AFFILIATE.—The term ‘‘affiliate’’ means any person that
controls, is controlled by, or is under common control with
another person.
(2) BUREAU.—The term ‘‘Bureau’’ means the Bureau of
Consumer Financial Protection.
(3) BUSINESS OF INSURANCE.—The term ‘‘business of insurance’’ means the writing of insurance or the reinsuring of
risks by an insurer, including all acts necessary to such writing
or reinsuring and the activities relating to the writing of insurance or the reinsuring of risks conducted by persons who act
as, or are, officers, directors, agents, or employees of insurers
or who are other persons authorized to act on behalf of such
persons.

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124 STAT. 1956

PUBLIC LAW 111–203—JULY 21, 2010
(4) CONSUMER.—The term ‘‘consumer’’ means an individual
or an agent, trustee, or representative acting on behalf of
an individual.
(5) CONSUMER FINANCIAL PRODUCT OR SERVICE.—The term
‘‘consumer financial product or service’’ means any financial
product or service that is described in one or more categories
under—
(A) paragraph (15) and is offered or provided for use
by consumers primarily for personal, family, or household
purposes; or
(B) clause (i), (iii), (ix), or (x) of paragraph (15)(A),
and is delivered, offered, or provided in connection with
a consumer financial product or service referred to in
subparagraph (A).
(6) COVERED PERSON.—The term ‘‘covered person’’ means—
(A) any person that engages in offering or providing
a consumer financial product or service; and
(B) any affiliate of a person described in subparagraph
(A) if such affiliate acts as a service provider to such
person.
(7) CREDIT.—The term ‘‘credit’’ means the right granted
by a person to a consumer to defer payment of a debt, incur
debt and defer its payment, or purchase property or services
and defer payment for such purchase.
(8) DEPOSIT-TAKING ACTIVITY.—The term ‘‘deposit-taking
activity’’ means—
(A) the acceptance of deposits, maintenance of deposit
accounts, or the provision of services related to the acceptance of deposits or the maintenance of deposit accounts;
(B) the acceptance of funds, the provision of other
services related to the acceptance of funds, or the maintenance of member share accounts by a credit union; or
(C) the receipt of funds or the equivalent thereof, as
the Bureau may determine by rule or order, received or
held by a covered person (or an agent for a covered person)
for the purpose of facilitating a payment or transferring
funds or value of funds between a consumer and a third
party.
(9) DESIGNATED TRANSFER DATE.—The term ‘‘designated
transfer date’’ means the date established under section 1062.
(10) DIRECTOR.—The term ‘‘Director’’ means the Director
of the Bureau.
(11) ELECTRONIC CONDUIT SERVICES.—The term ‘‘electronic
conduit services’’—
(A) means the provision, by a person, of electronic
data transmission, routing, intermediate or transient storage, or connections to a telecommunications system or network; and
(B) does not include a person that provides electronic
conduit services if, when providing such services, the person—
(i) selects or modifies the content of the electronic
data;
(ii) transmits, routes, stores, or provides connections for electronic data, including financial data, in
a manner that such financial data is differentiated
from other types of data of the same form that such

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1957

person transmits, routes, or stores, or with respect
to which, provides connections; or
(iii) is a payee, payor, correspondent, or similar
party to a payment transaction with a consumer.
(12) ENUMERATED CONSUMER LAWS.—Except as otherwise
specifically provided in section 1029, subtitle G or subtitle
H, the term ‘‘enumerated consumer laws’’ means—
(A) the Alternative Mortgage Transaction Parity Act
of 1982 (12 U.S.C. 3801 et seq.);
(B) the Consumer Leasing Act of 1976 (15 U.S.C. 1667
et seq.);
(C) the Electronic Fund Transfer Act (15 U.S.C. 1693
et seq.), except with respect to section 920 of that Act;
(D) the Equal Credit Opportunity Act (15 U.S.C. 1691
et seq.);
(E) the Fair Credit Billing Act (15 U.S.C. 1666 et
seq.);
(F) the Fair Credit Reporting Act (15 U.S.C. 1681
et seq.), except with respect to sections 615(e) and 628
of that Act (15 U.S.C. 1681m(e), 1681w);
(G) the Home Owners Protection Act of 1998 (12 U.S.C.
4901 et seq.);
(H) the Fair Debt Collection Practices Act (15 U.S.C.
1692 et seq.);
(I) subsections (b) through (f) of section 43 of the Federal Deposit Insurance Act (12 U.S.C. 1831t(c)–(f));
(J) sections 502 through 509 of the Gramm-LeachBliley Act (15 U.S.C. 6802–6809) except for section 505
as it applies to section 501(b);
(K) the Home Mortgage Disclosure Act of 1975 (12
U.S.C. 2801 et seq.);
(L) the Home Ownership and Equity Protection Act
of 1994 (15 U.S.C. 1601 note);
(M) the Real Estate Settlement Procedures Act of 1974
(12 U.S.C. 2601 et seq.);
(N) the S.A.F.E. Mortgage Licensing Act of 2008 (12
U.S.C. 5101 et seq.);
(O) the Truth in Lending Act (15 U.S.C. 1601 et seq.);
(P) the Truth in Savings Act (12 U.S.C. 4301 et seq.);
(Q) section 626 of the Omnibus Appropriations Act,
2009 (Public Law 111–8); and
(R) the Interstate Land Sales Full Disclosure Act (15
U.S.C. 1701).
(13) FAIR LENDING.—The term ‘‘fair lending’’ means fair,
equitable, and nondiscriminatory access to credit for consumers.
(14) FEDERAL CONSUMER FINANCIAL LAW.—The term ‘‘Federal consumer financial law’’ means the provisions of this title,
the enumerated consumer laws, the laws for which authorities
are transferred under subtitles F and H, and any rule or
order prescribed by the Bureau under this title, an enumerated
consumer law, or pursuant to the authorities transferred under
subtitles F and H. The term does not include the Federal
Trade Commission Act.
(15) FINANCIAL PRODUCT OR SERVICE.—
(A) IN GENERAL.—The term ‘‘financial product or
service’’ means—

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124 STAT. 1958

PUBLIC LAW 111–203—JULY 21, 2010
(i) extending credit and servicing loans, including
acquiring, purchasing, selling, brokering, or other
extensions of credit (other than solely extending
commercial credit to a person who originates consumer
credit transactions);
(ii) extending or brokering leases of personal or
real property that are the functional equivalent of purchase finance arrangements, if—
(I) the lease is on a non-operating basis;
(II) the initial term of the lease is at least
90 days; and
(III) in the case of a lease involving real property, at the inception of the initial lease, the transaction is intended to result in ownership of the
leased property to be transferred to the lessee,
subject to standards prescribed by the Bureau;
(iii) providing real estate settlement services,
except such services excluded under subparagraph (C),
or performing appraisals of real estate or personal
property;
(iv) engaging in deposit-taking activities, transmitting or exchanging funds, or otherwise acting as a
custodian of funds or any financial instrument for use
by or on behalf of a consumer;
(v) selling, providing, or issuing stored value or
payment instruments, except that, in the case of a
sale of, or transaction to reload, stored value, only
if the seller exercises substantial control over the terms
or conditions of the stored value provided to the consumer where, for purposes of this clause—
(I) a seller shall not be found to exercise
substantial control over the terms or conditions
of the stored value if the seller is not a party
to the contract with the consumer for the stored
value product, and another person is principally
responsible for establishing the terms or conditions
of the stored value; and
(II) advertising the nonfinancial goods or services of the seller on the stored value card or device
is not in itself an exercise of substantial control
over the terms or conditions;
(vi) providing check cashing, check collection, or
check guaranty services;
(vii) providing payments or other financial data
processing products or services to a consumer by any
technological means, including processing or storing
financial or banking data for any payment instrument,
or through any payments systems or network used
for processing payments data, including payments
made through an online banking system or mobile
telecommunications network, except that a person shall
not be deemed to be a covered person with respect
to financial data processing solely because the person—

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124 STAT. 1959

(I) is a merchant, retailer, or seller of any
nonfinancial good or service who engages in financial data processing by transmitting or storing payments data about a consumer exclusively for purpose of initiating payments instructions by the
consumer to pay such person for the purchase
of, or to complete a commercial transaction for,
such nonfinancial good or service sold directly by
such person to the consumer; or
(II) provides access to a host server to a person
for purposes of enabling that person to establish
and maintain a website;
(viii) providing financial advisory services (other
than services relating to securities provided by a person
regulated by the Commission or a person regulated
by a State securities Commission, but only to the extent
that such person acts in a regulated capacity) to consumers on individual financial matters or relating to
proprietary financial products or services (other than
by publishing any bona fide newspaper, news magazine, or business or financial publication of general
and regular circulation, including publishing market
data, news, or data analytics or investment information
or recommendations that are not tailored to the individual needs of a particular consumer), including—
(I) providing credit counseling to any consumer; and
(II) providing services to assist a consumer
with debt management or debt settlement, modifying the terms of any extension of credit, or
avoiding foreclosure;
(ix) collecting, analyzing, maintaining, or providing
consumer report information or other account information, including information relating to the credit history
of consumers, used or expected to be used in connection
with any decision regarding the offering or provision
of a consumer financial product or service, except to
the extent that—
(I) a person—
(aa) collects, analyzes, or maintains
information that relates solely to the transactions between a consumer and such person;
(bb) provides the information described in
item (aa) to an affiliate of such person; or
(cc) provides information that is used or
expected to be used solely in any decision
regarding the offering or provision of a product
or service that is not a consumer financial
product or service, including a decision for
employment, government licensing, or a residential lease or tenancy involving a consumer;
and
(II) the information described in subclause
(I)(aa) is not used by such person or affiliate in
connection with any decision regarding the offering
or provision of a consumer financial product or

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124 STAT. 1960

PUBLIC LAW 111–203—JULY 21, 2010
service to the consumer, other than credit
described in section 1027(a)(2)(A);
(x) collecting debt related to any consumer financial product or service; and
(xi) such other financial product or service as may
be defined by the Bureau, by regulation, for purposes
of this title, if the Bureau finds that such financial
product or service is—
(I) entered into or conducted as a subterfuge
or with a purpose to evade any Federal consumer
financial law; or
(II) permissible for a bank or for a financial
holding company to offer or to provide under any
provision of a Federal law or regulation applicable
to a bank or a financial holding company, and
has, or likely will have, a material impact on consumers.
(B) RULE OF CONSTRUCTION.—
(i) IN GENERAL.—For purposes of subparagraph
(A)(xi)(II), and subject to clause (ii) of this subparagraph, the following activities provided to a covered
person shall not, for purposes of this title, be considered
incidental or complementary to a financial activity
permissible for a financial holding company to engage
in under any provision of a Federal law or regulation
applicable to a financial holding company:
(I) Providing information products or services
to a covered person for identity authentication.
(II) Providing information products or services
for fraud or identify theft detection, prevention,
or investigation.
(III) Providing document retrieval or delivery
services.
(IV) Providing public records information
retrieval.
(V) Providing information products or services
for anti-money laundering activities.
(ii) LIMITATION.—Nothing in clause (i) may be construed as modifying or limiting the authority of the
Bureau to exercise any—
(I) examination or enforcement powers
authority under this title with respect to a covered
person or service provider engaging in an activity
described in subparagraph (A)(ix); or
(II) powers authorized by this title to prescribe
rules, issue orders, or take other actions under
any enumerated consumer law or law for which
the authorities are transferred under subtitle F
or H.
(C) EXCLUSIONS.—The term ‘‘financial product or
service’’ does not include—
(i) the business of insurance; or
(ii) electronic conduit services.
(16) FOREIGN EXCHANGE.—The term ‘‘foreign exchange’’
means the exchange, for compensation, of currency of the
United States or of a foreign government for currency of another
government.

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124 STAT. 1961

(17) INSURED CREDIT UNION.—The term ‘‘insured credit
union’’ has the same meaning as in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752).
INSTRUMENT.—The
term
‘‘payment
(18)
PAYMENT
instrument’’ means a check, draft, warrant, money order, traveler’s check, electronic instrument, or other instrument, payment of funds, or monetary value (other than currency).
(19) PERSON.—The term ‘‘person’’ means an individual,
partnership, company, corporation, association (incorporated or
unincorporated), trust, estate, cooperative organization, or other
entity.
(20) PERSON REGULATED BY THE COMMODITY FUTURES
TRADING COMMISSION.—The term ‘‘person regulated by the Commodity Futures Trading Commission’’ means any person that
is registered, or required by statute or regulation to be registered, with the Commodity Futures Trading Commission, but
only to the extent that the activities of such person are subject
to the jurisdiction of the Commodity Futures Trading Commission under the Commodity Exchange Act.
(21) PERSON REGULATED BY THE COMMISSION.—The term
‘‘person regulated by the Commission’’ means a person who
is—
(A) a broker or dealer that is required to be registered
under the Securities Exchange Act of 1934;
(B) an investment adviser that is registered under
the Investment Advisers Act of 1940;
(C) an investment company that is required to be registered under the Investment Company Act of 1940, and
any company that has elected to be regulated as a business
development company under that Act;
(D) a national securities exchange that is required
to be registered under the Securities Exchange Act of 1934;
(E) a transfer agent that is required to be registered
under the Securities Exchange Act of 1934;
(F) a clearing corporation that is required to be registered under the Securities Exchange Act of 1934;
(G) any self-regulatory organization that is required
to be registered with the Commission;
(H) any nationally recognized statistical rating
organization that is required to be registered with the
Commission;
(I) any securities information processor that is required
to be registered with the Commission;
(J) any municipal securities dealer that is required
to be registered with the Commission;
(K) any other person that is required to be registered
with the Commission under the Securities Exchange Act
of 1934; and
(L) any employee, agent, or contractor acting on behalf
of, registered with, or providing services to, any person
described in any of subparagraphs (A) through (K), but
only to the extent that any person described in any of
subparagraphs (A) through (K), or the employee, agent,
or contractor of such person, acts in a regulated capacity.
(22) PERSON REGULATED BY A STATE INSURANCE REGULATOR.—The term ‘‘person regulated by a State insurance regulator’’ means any person that is engaged in the business of

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PUBLIC LAW 111–203—JULY 21, 2010
insurance and subject to regulation by any State insurance
regulator, but only to the extent that such person acts in
such capacity.
(23) PERSON THAT PERFORMS INCOME TAX PREPARATION
ACTIVITIES FOR CONSUMERS.—The term ‘‘person that performs
income tax preparation activities for consumers’’ means—
(A) any tax return preparer (as defined in section
7701(a)(36) of the Internal Revenue Code of 1986), regardless of whether compensated, but only to the extent that
the person acts in such capacity;
(B) any person regulated by the Secretary under section
330 of title 31, United States Code, but only to the extent
that the person acts in such capacity; and
(C) any authorized IRS e-file Providers (as defined
for purposes of section 7216 of the Internal Revenue Code
of 1986), but only to the extent that the person acts in
such capacity.
(24) PRUDENTIAL REGULATOR.—The term ‘‘prudential regulator’’ means—
(A) in the case of an insured depository institution
or depository institution holding company (as defined in
section 3 of the Federal Deposit Insurance Act), or subsidiary of such institution or company, the appropriate
Federal banking agency, as that term is defined in section
3 of the Federal Deposit Insurance Act; and
(B) in the case of an insured credit union, the National
Credit Union Administration.
(25) RELATED PERSON.—The term ‘‘related person’’—
(A) shall apply only with respect to a covered person
that is not a bank holding company (as that term is defined
in section 2 of the Bank Holding Company Act of 1956),
credit union, or depository institution;
(B) shall be deemed to mean a covered person for
all purposes of any provision of Federal consumer financial
law; and
(C) means—
(i) any director, officer, or employee charged with
managerial responsibility for, or controlling shareholder of, or agent for, such covered person;
(ii) any shareholder, consultant, joint venture
partner, or other person, as determined by the Bureau
(by rule or on a case-by-case basis) who materially
participates in the conduct of the affairs of such covered
person; and
(iii) any independent contractor (including any
attorney, appraiser, or accountant) who knowingly or
recklessly participates in any—
(I) violation of any provision of law or regulation; or
(II) breach of a fiduciary duty.
(26) SERVICE PROVIDER.—
(A) IN GENERAL.—The term ‘‘service provider’’ means
any person that provides a material service to a covered
person in connection with the offering or provision by such
covered person of a consumer financial product or service,
including a person that—

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124 STAT. 1963

(i) participates in designing, operating, or
maintaining the consumer financial product or service;
or
(ii) processes transactions relating to the consumer
financial product or service (other than unknowingly
or incidentally transmitting or processing financial
data in a manner that such data is undifferentiated
from other types of data of the same form as the
person transmits or processes).
(B) EXCEPTIONS.—The term ‘‘service provider’’ does not
include a person solely by virtue of such person offering
or providing to a covered person—
(i) a support service of a type provided to
businesses generally or a similar ministerial service;
or
(ii) time or space for an advertisement for a consumer financial product or service through print, newspaper, or electronic media.
(C) RULE OF CONSTRUCTION.—A person that is a service
provider shall be deemed to be a covered person to the
extent that such person engages in the offering or provision
of its own consumer financial product or service.
(27) STATE.—The term ‘‘State’’ means any State, territory,
or possession of the United States, the District of Columbia,
the Commonwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Islands, Guam, American Samoa, or the
United States Virgin Islands or any federally recognized Indian
tribe, as defined by the Secretary of the Interior under section
104(a) of the Federally Recognized Indian Tribe List Act of
1994 (25 U.S.C. 479a–1(a)).
(28) STORED VALUE.—
(A) IN GENERAL.—The term ‘‘stored value’’ means funds
or monetary value represented in any electronic format,
whether or not specially encrypted, and stored or capable
of storage on electronic media in such a way as to be
retrievable and transferred electronically, and includes a
prepaid debit card or product, or any other similar product,
regardless of whether the amount of the funds or monetary
value may be increased or reloaded.
(B) EXCLUSION.—Notwithstanding subparagraph (A),
the term ‘‘stored value’’ does not include a special purpose
card or certificate, which shall be defined for purposes
of this paragraph as funds or monetary value represented
in any electronic format, whether or not specially
encrypted, that is—
(i) issued by a merchant, retailer, or other seller
of nonfinancial goods or services;
(ii) redeemable only for transactions with the merchant, retailer, or seller of nonfinancial goods or services or with an affiliate of such person, which affiliate
itself is a merchant, retailer, or seller of nonfinancial
goods or services;
(iii) issued in a specified amount that, except in
the case of a card or product used solely for telephone
services, may not be increased or reloaded;
(iv) purchased on a prepaid basis in exchange for
payment; and

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124 STAT. 1964

PUBLIC LAW 111–203—JULY 21, 2010
(v) honored upon presentation to such merchant,
retailer, or seller of nonfinancial goods or services or
an affiliate of such person, which affiliate itself is
a merchant, retailer, or seller of nonfinancial goods
or services, only for any nonfinancial goods or services.
(29) TRANSMITTING OR EXCHANGING FUNDS.—The term
‘‘transmitting or exchanging funds’’ means receiving currency,
monetary value, or payment instruments from a consumer for
the purpose of exchanging or transmitting the same by any
means, including transmission by wire, facsimile, electronic
transfer, courier, the Internet, or through bill payment services
or through other businesses that facilitate third-party transfers
within the United States or to or from the United States.

Subtitle A—Bureau of Consumer Financial
Protection
12 USC 5491.

Applicability.

President.

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SEC. 1011. ESTABLISHMENT OF THE BUREAU OF CONSUMER FINANCIAL PROTECTION.

(a) BUREAU ESTABLISHED.—There is established in the Federal
Reserve System, an independent bureau to be known as the ‘‘Bureau
of Consumer Financial Protection’’, which shall regulate the offering
and provision of consumer financial products or services under
the Federal consumer financial laws. The Bureau shall be considered an Executive agency, as defined in section 105 of title 5,
United States Code. Except as otherwise provided expressly by
law, all Federal laws dealing with public or Federal contracts,
property, works, officers, employees, budgets, or funds, including
the provisions of chapters 5 and 7 of title 5, shall apply to the
exercise of the powers of the Bureau.
(b) DIRECTOR AND DEPUTY DIRECTOR.—
(1) IN GENERAL.—There is established the position of the
Director, who shall serve as the head of the Bureau.
(2) APPOINTMENT.—Subject to paragraph (3), the Director
shall be appointed by the President, by and with the advice
and consent of the Senate.
(3) QUALIFICATION.—The President shall nominate the
Director from among individuals who are citizens of the United
States.
(4) COMPENSATION.—The Director shall be compensated at
the rate prescribed for level II of the Executive Schedule under
section 5313 of title 5, United States Code.
(5) DEPUTY DIRECTOR.—There is established the position
of Deputy Director, who shall—
(A) be appointed by the Director; and
(B) serve as acting Director in the absence or unavailability of the Director.
(c) TERM.—
(1) IN GENERAL.—The Director shall serve for a term of
5 years.
(2) EXPIRATION OF TERM.—An individual may serve as
Director after the expiration of the term for which appointed,
until a successor has been appointed and qualified.
(3) REMOVAL FOR CAUSE.—The President may remove the
Director for inefficiency, neglect of duty, or malfeasance in
office.

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124 STAT. 1965

(d) SERVICE RESTRICTION.—No Director or Deputy Director may
hold any office, position, or employment in any Federal reserve
bank, Federal home loan bank, covered person, or service provider
during the period of service of such person as Director or Deputy
Director.
(e) OFFICES.—The principal office of the Bureau shall be in
the District of Columbia. The Director may establish regional offices
of the Bureau, including in cities in which the Federal reserve
banks, or branches of such banks, are located, in order to carry
out the responsibilities assigned to the Bureau under the Federal
consumer financial laws.

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SEC. 1012. EXECUTIVE AND ADMINISTRATIVE POWERS.

12 USC 5492.

(a) POWERS OF THE BUREAU.—The Bureau is authorized to
establish the general policies of the Bureau with respect to all
executive and administrative functions, including—
(1) the establishment of rules for conducting the general
business of the Bureau, in a manner not inconsistent with
this title;
(2) to bind the Bureau and enter into contracts;
(3) directing the establishment and maintenance of divisions or other offices within the Bureau, in order to carry
out the responsibilities under the Federal consumer financial
laws, and to satisfy the requirements of other applicable law;
(4) to coordinate and oversee the operation of all administrative, enforcement, and research activities of the Bureau;
(5) to adopt and use a seal;
(6) to determine the character of and the necessity for
the obligations and expenditures of the Bureau;
(7) the appointment and supervision of personnel employed
by the Bureau;
(8) the distribution of business among personnel appointed
and supervised by the Director and among administrative units
of the Bureau;
(9) the use and expenditure of funds;
(10) implementing the Federal consumer financial laws
through rules, orders, guidance, interpretations, statements of
policy, examinations, and enforcement actions; and
(11) performing such other functions as may be authorized
or required by law.
(b) DELEGATION OF AUTHORITY.—The Director of the Bureau
may delegate to any duly authorized employee, representative, or
agent any power vested in the Bureau by law.
(c) AUTONOMY OF THE BUREAU.—
(1) COORDINATION WITH THE BOARD OF GOVERNORS.—Notwithstanding any other provision of law applicable to the supervision or examination of persons with respect to Federal consumer financial laws, the Board of Governors may delegate
to the Bureau the authorities to examine persons subject to
the jurisdiction of the Board of Governors for compliance with
the Federal consumer financial laws.
(2) AUTONOMY.—Notwithstanding the authorities granted
to the Board of Governors under the Federal Reserve Act,
the Board of Governors may not—
(A) intervene in any matter or proceeding before the
Director, including examinations or enforcement actions,
unless otherwise specifically provided by law;

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124 STAT. 1966

PUBLIC LAW 111–203—JULY 21, 2010
(B) appoint, direct, or remove any officer or employee
of the Bureau; or
(C) merge or consolidate the Bureau, or any of the
functions or responsibilities of the Bureau, with any division or office of the Board of Governors or the Federal
reserve banks.
(3) RULES AND ORDERS.—No rule or order of the Bureau
shall be subject to approval or review by the Board of Governors. The Board of Governors may not delay or prevent
the issuance of any rule or order of the Bureau.
(4) RECOMMENDATIONS AND TESTIMONY.—No officer or
agency of the United States shall have any authority to require
the Director or any other officer of the Bureau to submit legislative recommendations, or testimony or comments on legislation,
to any officer or agency of the United States for approval,
comments, or review prior to the submission of such recommendations, testimony, or comments to the Congress, if such
recommendations, testimony, or comments to the Congress
include a statement indicating that the views expressed therein
are those of the Director or such officer, and do not necessarily
reflect the views of the Board of Governors or the President.
(5) CLARIFICATION OF AUTONOMY OF THE BUREAU IN LEGAL
PROCEEDINGS.—The Bureau shall not be liable under any provision of law for any action or inaction of the Board of Governors,
and the Board of Governors shall not be liable under any
provision of law for any action or inaction of the Bureau.

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12 USC 5493.

SEC. 1013. ADMINISTRATION.

(a) PERSONNEL.—
(1) APPOINTMENT.—
(A) IN GENERAL.—The Director may fix the number
of, and appoint and direct, all employees of the Bureau,
in accordance with the applicable provisions of title 5,
United States Code.
(B) EMPLOYEES OF THE BUREAU.—The Director is
authorized to employ attorneys, compliance examiners,
compliance supervision analysts, economists, statisticians,
and other employees as may be deemed necessary to conduct the business of the Bureau. Unless otherwise provided
expressly by law, any individual appointed under this section 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 an Executive agency.
(C) WAIVER AUTHORITY.—
(i) IN GENERAL.—In making any appointment
under subparagraph (A), the Director may waive the
requirements of chapter 33 of title 5, United States
Code, and the regulations implementing such chapter,
to the extent necessary to appoint employees on terms
and conditions that are consistent with those set forth
in section 11(1) of the Federal Reserve Act (12 U.S.C.
248(1)), while providing for—
(I) fair, credible, and transparent methods of
establishing qualification requirements for, recruitment for, and appointments to positions;

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1967

(II) fair and open competition and equitable
treatment in the consideration and selection of
individuals to positions;
(III) fair, credible, and transparent methods
of assigning, reassigning, detailing, transferring,
and promoting employees.
(ii) VETERANS PREFERENCES.—In implementing
this subparagraph, the Director shall comply with the
provisions of section 2302(b)(11), regarding veterans’
preference requirements, in a manner consistent with
that in which such provisions are applied under
chapter 33 of title 5, United States Code. The authority
under this subparagraph to waive the requirements
of that chapter 33 shall expire 5 years after the date
of enactment of this Act.
(2) COMPENSATION.—Notwithstanding any otherwise
applicable provision of title 5, United States Code, concerning
compensation, including the provisions of chapter 51 and
chapter 53, the following provisions shall apply with respect
to employees of the Bureau:
(A) The rates of basic pay for all employees of the
Bureau may be set and adjusted by the Director.
(B) The Director shall at all times provide compensation (including benefits) to each class of employees that,
at a minimum, are comparable to the compensation and
benefits then being provided by the Board of Governors
for the corresponding class of employees.
(C) All such employees shall be compensated (including
benefits) on terms and conditions that are consistent with
the terms and conditions set forth in section 11(l) of the
Federal Reserve Act (12 U.S.C. 248(l)).
(3) BUREAU PARTICIPATION IN FEDERAL RESERVE SYSTEM

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RETIREMENT
PLAN.—

PLAN

AND

FEDERAL

RESERVE

SYSTEM

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Applicability.

THRIFT

(A) EMPLOYEE ELECTION.—Employees appointed to the
Bureau may elect to participate in either—
(i) both the Federal Reserve System Retirement
Plan and the Federal Reserve System Thrift Plan,
under the same terms on which such participation
is offered to employees of the Board of Governors who
participate in such plans and under the terms and
conditions specified under section 1064(i)(1)(C); or
(ii) the Civil Service Retirement System under
chapter 83 of title 5, United States Code, or the Federal
Employees Retirement System under chapter 84 of
title 5, United States Code, if previously covered under
one of those Federal employee retirement systems.
(B) ELECTION PERIOD.—Bureau employees shall make
an election under this paragraph not later than 1 year
after the date of appointment by, or transfer under subtitle
F to, the Bureau. Participation in, and benefit accruals
under, any other retirement plan established or maintained
by the Federal Government shall end not later than the
date on which participation in, and benefit accruals under,
the Federal Reserve System Retirement Plan and Federal
Reserve System Thrift Plan begin.

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Payments.

Applicability.

Deadline.
Appointment.

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(C) EMPLOYER CONTRIBUTION.—The Bureau shall pay
an employer contribution to the Federal Reserve System
Retirement Plan, in the amount established as an employer
contribution under the Federal Employees Retirement
System, as established under chapter 84 of title 5, United
States Code, for each Bureau employee who elects to
participate in the Federal Reserve System Retirement Plan.
The Bureau shall pay an employer contribution to the
Federal Reserve System Thrift Plan for each Bureau
employee who elects to participate in such plan, as required
under the terms of such plan.
(D) CONTROLLED GROUP STATUS.—The Bureau is the
same employer as the Federal Reserve System (as comprised of the Board of Governors and each of the 12 Federal
reserve banks prior to the date of enactment of this Act)
for purposes of subsections (b), (c), (m), and (o) of section
414 of the Internal Revenue Code of 1986, (26 U.S.C.
414).
(4) LABOR-MANAGEMENT RELATIONS.—Chapter 71 of title
5, United States Code, shall apply to the Bureau and the
employees of the Bureau.
(5) AGENCY OMBUDSMAN.—
(A) ESTABLISHMENT REQUIRED.—Not later than 180
days after the designated transfer date, the Bureau shall
appoint an ombudsman.
(B) DUTIES OF OMBUDSMAN.—The ombudsman
appointed in accordance with subparagraph (A) shall—
(i) act as a liaison between the Bureau and any
affected person with respect to any problem that such
party may have in dealing with the Bureau, resulting
from the regulatory activities of the Bureau; and
(ii) assure that safeguards exist to encourage
complainants to come forward and preserve confidentiality.
(b) SPECIFIC FUNCTIONAL UNITS.—
(1) RESEARCH.—The Director shall establish a unit whose
functions shall include researching, analyzing, and reporting
on—
(A) developments in markets for consumer financial
products or services, including market areas of alternative
consumer financial products or services with high growth
rates and areas of risk to consumers;
(B) access to fair and affordable credit for traditionally
underserved communities;
(C) consumer awareness, understanding, and use of
disclosures and communications regarding consumer financial products or services;
(D) consumer awareness and understanding of costs,
risks, and benefits of consumer financial products or services;
(E) consumer behavior with respect to consumer financial products or services, including performance on mortgage loans; and
(F) experiences of traditionally underserved consumers,
including un-banked and under-banked consumers.

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124 STAT. 1969

(2) COMMUNITY AFFAIRS.—The Director shall establish a
unit whose functions shall include providing information, guidance, and technical assistance regarding the offering and provision of consumer financial products or services to traditionally
underserved consumers and communities.
(3) COLLECTING AND TRACKING COMPLAINTS.—
(A) IN GENERAL.—The Director shall establish a unit
whose functions shall include establishing a single, tollfree telephone number, a website, and a database or utilizing an existing database to facilitate the centralized
collection of, monitoring of, and response to consumer complaints regarding consumer financial products or services.
The Director shall coordinate with the Federal Trade
Commission or other Federal agencies to route complaints
to such agencies, where appropriate.
(B) ROUTING CALLS TO STATES.—To the extent practicable, State agencies may receive appropriate complaints
from the systems established under subparagraph (A), if—
(i) the State agency system has the functional
capacity to receive calls or electronic reports routed
by the Bureau systems;
(ii) the State agency has satisfied any conditions
of participation in the system that the Bureau may
establish, including treatment of personally identifiable
information and sharing of information on complaint
resolution or related compliance procedures and
resources; and
(iii) participation by the State agency includes
measures necessary to provide for protection of personally identifiable information that conform to the standards for protection of the confidentiality of personally
identifiable information and for data integrity and
security that apply to the Federal agencies described
in subparagraph (D).
(C) REPORTS TO THE CONGRESS.—The Director shall
present an annual report to Congress not later than March
31 of each year on the complaints received by the Bureau
in the prior year regarding consumer financial products
and services. Such report shall include information and
analysis about complaint numbers, complaint types, and,
where applicable, information about resolution of complaints.
(D) DATA SHARING REQUIRED.—To facilitate preparation
of the reports required under subparagraph (C), supervision
and enforcement activities, and monitoring of the market
for consumer financial products and services, the Bureau
shall share consumer complaint information with prudential regulators, the Federal Trade Commission, other Federal agencies, and State agencies, subject to the standards
applicable to Federal agencies for protection of the confidentiality of personally identifiable information and for data
security and integrity. The prudential regulators, the Federal Trade Commission, and other Federal agencies shall
share data relating to consumer complaints regarding consumer financial products and services with the Bureau,
subject to the standards applicable to Federal agencies

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Establishment.

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for protection of confidentiality of personally identifiable
information and for data security and integrity.
(c) OFFICE OF FAIR LENDING AND EQUAL OPPORTUNITY.—
(1) ESTABLISHMENT.—The Director shall establish within
the Bureau the Office of Fair Lending and Equal Opportunity.
(2) FUNCTIONS.—The Office of Fair Lending and Equal
Opportunity shall have such powers and duties as the Director
may delegate to the Office, including—
(A) providing oversight and enforcement of Federal
laws intended to ensure the fair, equitable, and nondiscriminatory access to credit for both individuals and communities that are enforced by the Bureau, including the Equal
Credit Opportunity Act and the Home Mortgage Disclosure
Act;
(B) coordinating fair lending efforts of the Bureau with
other Federal agencies and State regulators, as appropriate, to promote consistent, efficient, and effective
enforcement of Federal fair lending laws;
(C) working with private industry, fair lending, civil
rights, consumer and community advocates on the promotion of fair lending compliance and education; and
(D) providing annual reports to Congress on the efforts
of the Bureau to fulfill its fair lending mandate.
(3) ADMINISTRATION OF OFFICE.—There is established the
position of Assistant Director of the Bureau for Fair Lending
and Equal Opportunity, who—
(A) shall be appointed by the Director; and
(B) shall carry out such duties as the Director may
delegate to such Assistant Director.
(d) OFFICE OF FINANCIAL EDUCATION.—
(1) ESTABLISHMENT.—The Director shall establish an Office
of Financial Education, which shall be responsible for developing and implementing initiatives intended to educate and
empower consumers to make better informed financial
decisions.
(2) OTHER DUTIES.—The Office of Financial Education shall
develop and implement a strategy to improve the financial
literacy of consumers that includes measurable goals and objectives, in consultation with the Financial Literacy and Education
Commission, consistent with the National Strategy for Financial Literacy, through activities including providing opportunities for consumers to access—
(A) financial counseling, including community-based
financial counseling, where practicable;
(B) information to assist with the evaluation of credit
products and the understanding of credit histories and
scores;
(C) savings, borrowing, and other services found at
mainstream financial institutions;
(D) activities intended to—
(i) prepare the consumer for educational expenses
and the submission of financial aid applications, and
other major purchases;
(ii) reduce debt; and
(iii) improve the financial situation of the consumer;

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124 STAT. 1971

(E) assistance in developing long-term savings strategies; and
(F) wealth building and financial services during the
preparation process to claim earned income tax credits
and Federal benefits.
(3) COORDINATION.—The Office of Financial Education shall
coordinate with other units within the Bureau in carrying
out its functions, including—
(A) working with the Community Affairs Office to
implement the strategy to improve financial literacy of
consumers; and
(B) working with the research unit established by the
Director to conduct research related to consumer financial
education and counseling.
(4) REPORT.—Not later than 24 months after the designated
transfer date, and annually thereafter, the Director shall
submit a report on its financial literacy activities and strategy
to improve financial literacy of consumers to—
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate; and
(B) the Committee on Financial Services of the House
of Representatives.
(5) MEMBERSHIP IN FINANCIAL LITERACY AND EDUCATION
COMMISSION.—Section 513(c)(1) of the Financial Literacy and
Education Improvement Act (20 U.S.C. 9702(c)(1)) is amended—
(A) in subparagraph (B), by striking ‘‘and’’ at the end;
(B) by redesignating subparagraph (C) as subparagraph (D); and
(C) by inserting after subparagraph (B) the following
new subparagraph:
‘‘(C) the Director of the Bureau of Consumer Financial
Protection; and’’.
(6) CONFORMING AMENDMENT.—Section 513(d) of the Financial Literacy and Education Improvement Act (20 U.S.C.
9702(d)) is amended by adding at the end the following: ‘‘The
Director of the Bureau of Consumer Financial Protection shall
serve as the Vice Chairman.’’.
(7) STUDY AND REPORT ON FINANCIAL LITERACY PROGRAM.—
(A) IN GENERAL.—The Comptroller General of the
United States shall conduct a study to identify—
(i) the feasibility of certification of persons providing the programs or performing the activities
described in paragraph (2), including recognizing outstanding programs, and developing guidelines and
resources
for
community-based
practitioners,
including—
(I) a potential certification process and standards for certification;
(II) appropriate certifying entities;
(III) resources required for funding such a
process; and
(IV) a cost-benefit analysis of such certification;
(ii) technological resources intended to collect, analyze, evaluate, or promote financial literacy and counseling programs;

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(iii) effective methods, tools, and strategies
intended to educate and empower consumers about
personal finance management; and
(iv) recommendations intended to encourage the
development of programs that effectively improve
financial education outcomes and empower consumers
to make better informed financial decisions based on
findings.
(B) REPORT.—Not later than 1 year after the date
of enactment of this Act, the Comptroller General of the
United States shall submit a report on the results of the
study conducted under this paragraph to the Committee
on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House
of Representatives.
(e) OFFICE OF SERVICE MEMBER AFFAIRS.—
(1) IN GENERAL.—The Director shall establish an Office
of Service Member Affairs, which shall be responsible for developing and implementing initiatives for service members and
their families intended to—
(A) educate and empower service members and their
families to make better informed decisions regarding consumer financial products and services;
(B) coordinate with the unit of the Bureau established
under subsection (b)(3), in order to monitor complaints
by service members and their families and responses to
those complaints by the Bureau or other appropriate Federal or State agency; and
(C) coordinate efforts among Federal and State agencies, as appropriate, regarding consumer protection measures relating to consumer financial products and services
offered to, or used by, service members and their families.
(2) COORDINATION.—
(A) REGIONAL SERVICES.—The Director is authorized
to assign employees of the Bureau as may be deemed
necessary to conduct the business of the Office of Service
Member Affairs, including by establishing and maintaining
the functions of the Office in regional offices of the Bureau
located near military bases, military treatment facilities,
or other similar military facilities.
(B) AGREEMENTS.—The Director is authorized to enter
into memoranda of understanding and similar agreements
with the Department of Defense, including any branch
or agency as authorized by the department, in order to
carry out the business of the Office of Service Member
Affairs.
(3) DEFINITION.—As used in this subsection, the term
‘‘service member’’ means any member of the United States
Armed Forces and any member of the National Guard or
Reserves.
(f) TIMING.—The Office of Fair Lending and Equal Opportunity,
the Office of Financial Education, and the Office of Service Member
Affairs shall each be established not later than 1 year after the
designated transfer date.
(g) OFFICE OF FINANCIAL PROTECTION FOR OLDER AMERICANS.—
(1) ESTABLISHMENT.—Before the end of the 180-day period
beginning on the designated transfer date, the Director shall

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124 STAT. 1973

establish the Office of Financial Protection for Older Americans,
the functions of which shall include activities designed to facilitate the financial literacy of individuals who have attained
the age of 62 years or more (in this subsection, referred to
as ‘‘seniors’’) on protection from unfair, deceptive, and abusive
practices and on current and future financial choices, including
through the dissemination of materials to seniors on such
topics.
(2) ASSISTANT DIRECTOR.—The Office of Financial Protection for Older Americans (in this subsection referred to as
the ‘‘Office’’) shall be headed by an assistant director.
(3) DUTIES.—The Office shall—
(A) develop goals for programs that provide seniors
financial literacy and counseling, including programs
that—
(i) help seniors recognize warning signs of unfair,
deceptive, or abusive practices, protect themselves from
such practices;
(ii) provide one-on-one financial counseling on
issues including long-term savings and later-life economic security; and
(iii) provide personal consumer credit advocacy to
respond to consumer problems caused by unfair, deceptive, or abusive practices;
(B) monitor certifications or designations of financial
advisors who advise seniors and alert the Commission and
State regulators of certifications or designations that are
identified as unfair, deceptive, or abusive;
(C) not later than 18 months after the date of the
establishment of the Office, submit to Congress and the
Commission any legislative and regulatory recommendations on the best practices for—
(i) disseminating information regarding the legitimacy of certifications of financial advisers who advise
seniors;
(ii) methods in which a senior can identify the
financial advisor most appropriate for the senior’s
needs; and
(iii) methods in which a senior can verify a financial advisor’s credentials;
(D) conduct research to identify best practices and
effective methods, tools, technology and strategies to educate and counsel seniors about personal finance management with a focus on—
(i) protecting themselves from unfair, deceptive,
and abusive practices;
(ii) long-term savings; and
(iii) planning for retirement and long-term care;
(E) coordinate consumer protection efforts of seniors
with other Federal agencies and State regulators, as appropriate, to promote consistent, effective, and efficient
enforcement; and
(F) work with community organizations, non-profit
organizations, and other entities that are involved with
educating or assisting seniors (including the National Education and Resource Center on Women and Retirement
Planning).

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124 STAT. 1974

PUBLIC LAW 111–203—JULY 21, 2010

SEC. 1014. CONSUMER ADVISORY BOARD.

(a) ESTABLISHMENT REQUIRED.—The Director shall establish
a Consumer Advisory Board to advise and consult with the Bureau
in the exercise of its functions under the Federal consumer financial
laws, and to provide information on emerging practices in the
consumer financial products or services industry, including regional
trends, concerns, and other relevant information.
(b) MEMBERSHIP.—In appointing the members of the Consumer
Advisory Board, the Director shall seek to assemble experts in
consumer protection, financial services, community development,
fair lending and civil rights, and consumer financial products or
services and representatives of depository institutions that primarily serve underserved communities, and representatives of
communities that have been significantly impacted by higher-priced
mortgage loans, and seek representation of the interests of covered
persons and consumers, without regard to party affiliation. Not
fewer than 6 members shall be appointed upon the recommendation
of the regional Federal Reserve Bank Presidents, on a rotating
basis.
(c) MEETINGS.—The Consumer Advisory Board shall meet from
time to time at the call of the Director, but, at a minimum, shall
meet at least twice in each year.
(d) COMPENSATION AND TRAVEL EXPENSES.—Members of the
Consumer Advisory Board who are not full-time employees of the
United States shall—
(1) be entitled to receive compensation at a rate fixed
by the Director while attending meetings of the Consumer
Advisory Board, including travel time; and
(2) be allowed travel expenses, including transportation
and subsistence, while away from their homes or regular places
of business.
12 USC 5495.

SEC. 1015. COORDINATION.

The Bureau shall coordinate with the Commission, the Commodity Futures Trading Commission, the Federal Trade Commission, and other Federal agencies and State regulators, as appropriate, to promote consistent regulatory treatment of consumer
financial and investment products and services.

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12 USC 5496.

SEC. 1016. APPEARANCES BEFORE AND REPORTS TO CONGRESS.

(a) APPEARANCES BEFORE CONGRESS.—The Director of the
Bureau shall appear 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).
(b) REPORTS REQUIRED.—The Bureau shall, concurrent with
each semi-annual hearing referred to in subsection (a), prepare
and submit to the President and to 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, a report, beginning with the session
following the designated transfer date. The Bureau may also submit
such report to the Committee on Commerce, Science, and Transportation of the Senate.
(c) CONTENTS.—The reports required by subsection (b) shall
include—

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1975

(1) a discussion of the significant problems faced by consumers in shopping for or obtaining consumer financial products
or services;
(2) a justification of the budget request of the previous
year;
(3) a list of the significant rules and orders adopted by
the Bureau, as well as other significant initiatives conducted
by the Bureau, during the preceding year and the plan of
the Bureau for rules, orders, or other initiatives to be undertaken during the upcoming period;
(4) an analysis of complaints about consumer financial
products or services that the Bureau has received and collected
in its central database on complaints during the preceding
year;
(5) a list, with a brief statement of the issues, of the
public supervisory and enforcement actions to which the Bureau
was a party during the preceding year;
(6) the actions taken regarding rules, orders, and supervisory actions with respect to covered persons which are not
credit unions or depository institutions;
(7) an assessment of significant actions by State attorneys
general or State regulators relating to Federal consumer financial law;
(8) an analysis of the efforts of the Bureau to fulfill the
fair lending mission of the Bureau; and
(9) an analysis of the efforts of the Bureau to increase
workforce and contracting diversity consistent with the procedures established by the Office of Minority and Women Inclusion.

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SEC. 1017. FUNDING; PENALTIES AND FINES.

12 USC 5497.

(a) TRANSFER OF FUNDS FROM BOARD OF GOVERNORS.—
(1) IN GENERAL.—Each year (or quarter of such year), beginning on the designated transfer date, and each quarter thereafter, the Board of Governors shall transfer to the Bureau
from the combined earnings of the Federal Reserve System,
the amount determined by the Director to be reasonably necessary to carry out the authorities of the Bureau under Federal
consumer financial law, taking into account such other sums
made available to the Bureau from the preceding year (or
quarter of such year).
(2) FUNDING CAP.—
(A) IN GENERAL.—Notwithstanding paragraph (1), and
in accordance with this paragraph, the amount that shall
be transferred to the Bureau in each fiscal year shall
not exceed a fixed percentage of the total operating
expenses of the Federal Reserve System, as reported in
the Annual Report, 2009, of the Board of Governors, equal
to—
(i) 10 percent of such expenses in fiscal year 2011;
(ii) 11 percent of such expenses in fiscal year 2012;
and
(iii) 12 percent of such expenses in fiscal year
2013, and in each year thereafter.
(B) ADJUSTMENT OF AMOUNT.—The dollar amount
referred to in subparagraph (A)(iii) shall be adjusted

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124 STAT. 1976

annually, using the percent increase, if any, in the employment cost index for total compensation for State and local
government workers published by the Federal Government,
or the successor index thereto, for the 12-month period
ending on September 30 of the year preceding the transfer.
(C) REVIEWABILITY.—Notwithstanding any other provision in this title, the funds derived from the Federal
Reserve System pursuant to this subsection shall not be
subject to review by the Committees on Appropriations
of the House of Representatives and the Senate.
(3) TRANSITION PERIOD.—Beginning on the date of enactment of this Act and until the designated transfer date, the
Board of Governors shall transfer to the Bureau the amount
estimated by the Secretary needed to carry out the authorities
granted to the Bureau under Federal consumer financial law,
from the date of enactment of this Act until the designated
transfer date.
(4) BUDGET AND FINANCIAL MANAGEMENT.—
(A) FINANCIAL OPERATING PLANS AND FORECASTS.—The
Director shall provide to the Director of the Office of
Management and Budget copies of the financial operating
plans and forecasts of the Director, as prepared by the
Director in the ordinary course of the operations of the
Bureau, and copies of the quarterly reports of the financial
condition and results of operations of the Bureau, as prepared by the Director in the ordinary course of the operations of the Bureau.
(B) FINANCIAL STATEMENTS.—The Bureau shall prepare
annually a statement of—
(i) assets and liabilities and surplus or deficit;
(ii) income and expenses; and
(iii) sources and application of funds.
(C) FINANCIAL MANAGEMENT SYSTEMS.—The Bureau
shall implement and maintain financial management systems that comply substantially with Federal financial
management systems requirements and applicable Federal
accounting standards.
(D) ASSERTION OF INTERNAL CONTROLS.—The Director
shall provide to the Comptroller General of the United
States an assertion as to the effectiveness of the internal
controls that apply to financial reporting by the Bureau,
using the standards established in section 3512(c) of title
31, United States Code.
(E) RULE OF CONSTRUCTION.—This subsection may not
be construed as implying any obligation on the part of
the Director to consult with or obtain the consent or
approval of the Director of the Office of Management and
Budget with respect to any report, plan, forecast, or other
information referred to in subparagraph (A) or any jurisdiction or oversight over the affairs or operations of the
Bureau.
(F) FINANCIAL STATEMENTS.—The financial statements
of the Bureau shall not be consolidated with the financial
statements of either the Board of Governors or the Federal
Reserve System.
(5) AUDIT OF THE BUREAU.—

Transfer
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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1977

(A) IN GENERAL.—The Comptroller General shall
annually audit the financial transactions of the Bureau
in accordance with the United States generally accepted
government auditing standards, as may be prescribed by
the Comptroller General of the United States. The audit
shall be conducted at the place or places where accounts
of the Bureau are normally kept. The representatives of
the Government Accountability Office shall have access
to the personnel and to all books, accounts, documents,
papers, records (including electronic records), reports, files,
and all other papers, automated data, things, or property
belonging to or under the control of or used or employed
by the Bureau pertaining to its financial transactions and
necessary to facilitate the audit, and such representatives
shall be afforded full facilities for verifying transactions
with the balances or securities held by depositories, fiscal
agents, and custodians. All such books, accounts, documents, records, reports, files, papers, and property of the
Bureau shall remain in possession and custody of the
Bureau. The Comptroller General may obtain and duplicate
any such books, accounts, documents, records, working
papers, automated data and files, or other information
relevant to such audit without cost to the Comptroller
General, and the right of access of the Comptroller General
to such information shall be enforceable pursuant to section
716(c) of title 31, United States Code.
(B) REPORT.—The Comptroller General shall submit
to the Congress a report of each annual audit conducted
under this subsection. The report to the Congress shall
set forth the scope of the audit and shall include the
statement of assets and liabilities and surplus or deficit,
the statement of income and expenses, the statement of
sources and application of funds, and such comments and
information as may be deemed necessary to inform Congress of the financial operations and condition of the
Bureau, together with such recommendations with respect
thereto as the Comptroller General may deem advisable.
A copy of each report shall be furnished to the President
and to the Bureau at the time submitted to the Congress.
(C) ASSISTANCE AND COSTS.—For the purpose of conducting an audit under this subsection, the Comptroller
General may, in the discretion of the Comptroller General,
employ by contract, without regard to section 3709 of the
Revised Statutes of the United States (41 U.S.C. 5), professional services of firms and organizations of certified public
accountants for temporary periods or for special purposes.
Upon the request of the Comptroller General, the Director
of the Bureau shall transfer to the Government Accountability Office from funds available, the amount requested
by the Comptroller General to cover the full costs of any
audit and report conducted by the Comptroller General.
The Comptroller General shall credit funds transferred
to the account established for salaries and expenses of
the Government Accountability Office, and such amount
shall be available upon receipt and without fiscal year
limitation to cover the full costs of the audit and report.
(b) CONSUMER FINANCIAL PROTECTION FUND.—

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124 STAT. 1978

PUBLIC LAW 111–203—JULY 21, 2010
(1) SEPARATE FUND IN FEDERAL RESERVE ESTABLISHED.—
There is established in the Federal Reserve a separate fund,
to be known as the ‘‘Bureau of Consumer Financial Protection
Fund’’ (referred to in this section as the ‘‘Bureau Fund’’). The
Bureau Fund shall be maintained and established at a Federal
reserve bank, in accordance with such requirements as the
Board of Governors may impose.
(2) FUND RECEIPTS.—All amounts transferred to the Bureau
under subsection (a) shall be deposited into the Bureau Fund.
(3) INVESTMENT AUTHORITY.—
(A) AMOUNTS IN BUREAU FUND MAY BE INVESTED.—
The Bureau may request the Board of Governors to direct
the investment of the portion of the Bureau Fund that
is not, in the judgment of the Bureau, required to meet
the current needs of the Bureau.
(B) ELIGIBLE INVESTMENTS.—Investments authorized
by this paragraph shall be made in obligations of the
United States or obligations that are guaranteed as to
principal and interest by the United States, with maturities
suitable to the needs of the Bureau Fund, as determined
by the Bureau.
(C) INTEREST AND PROCEEDS CREDITED.—The interest
on, and the proceeds from the sale or redemption of, any
obligations held in the Bureau Fund shall be credited to
the Bureau Fund.
(c) USE OF FUNDS.—
(1) IN GENERAL.—Funds obtained by, transferred to, or
credited to the Bureau Fund shall be immediately available
to the Bureau and under the control of the Director, and shall
remain available until expended, to pay the expenses of the
Bureau in carrying out its duties and responsibilities. The
compensation of the Director and other employees of the Bureau
and all other expenses thereof may be paid from, obtained
by, transferred to, or credited to the Bureau Fund under this
section.
(2) FUNDS THAT ARE NOT GOVERNMENT FUNDS.—Funds
obtained by or transferred to the Bureau Fund shall not be
construed to be Government funds or appropriated monies.
(3) AMOUNTS NOT SUBJECT TO APPORTIONMENT.—Notwithstanding any other provision of law, amounts in the Bureau
Fund and in the Civil Penalty Fund established under subsection (d) shall not be subject to apportionment for purposes
of chapter 15 of title 31, United States Code, or under any
other authority.
(d) PENALTIES AND FINES.—
(1) ESTABLISHMENT OF VICTIMS RELIEF FUND.—There is
established in the Federal Reserve a separate fund, to be known
as the ‘‘Consumer Financial Civil Penalty Fund’’ (referred to
in this section as the ‘‘Civil Penalty Fund’’). The Civil Penalty
Fund shall be maintained and established at a Federal reserve
bank, in accordance with such requirements as the Board of
Governors may impose. If the Bureau obtains a civil penalty
against any person in any judicial or administrative action
under Federal consumer financial laws, the Bureau shall
deposit into the Civil Penalty Fund, the amount of the penalty
collected.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1979

(2) PAYMENT TO VICTIMS.—Amounts in the Civil Penalty
Fund shall be available to the Bureau, without fiscal year
limitation, for payments to the victims of activities for which
civil penalties have been imposed under the Federal consumer
financial laws. To the extent that such victims cannot be located
or such payments are otherwise not practicable, the Bureau
may use such funds for the purpose of consumer education
and financial literacy programs.
(e) AUTHORIZATION OF APPROPRIATIONS; ANNUAL REPORT.—
(1) DETERMINATION REGARDING NEED FOR APPROPRIATED
FUNDS.—
(A) IN GENERAL.—The Director is authorized to determine that sums available to the Bureau under this section
will not be sufficient to carry out the authorities of the
Bureau under Federal consumer financial law for the
upcoming year.
(B) REPORT REQUIRED.—When making a determination
under subparagraph (A), the Director shall prepare a report
regarding the funding of the Bureau, including the assets
and liabilities of the Bureau, and the extent to which
the funding needs of the Bureau are anticipated to exceed
the level of the amount set forth in subsection (a)(2). The
Director shall submit the report to the President and to
the Committee on Appropriations of the Senate and the
Committee on Appropriations of the House of Representatives.
(2) AUTHORIZATION OF APPROPRIATIONS.—If the Director
makes the determination and submits the report pursuant to
paragraph (1), there are hereby authorized to be appropriated
to the Bureau, for the purposes of carrying out the authorities
granted in Federal consumer financial law, $200,000,000 for
each of fiscal years 2010, 2011, 2012, 2013, and 2014.
(3) APPORTIONMENT.—Notwithstanding any other provision
of law, the amounts in paragraph (2) shall be subject to apportionment under section 1517 of title 31, United States Code,
and restrictions that generally apply to the use of appropriated
funds in title 31, United States Code, and other laws.
(4) ANNUAL REPORT.—The Director shall prepare and
submit a report, on an annual basis, to the Committee on
Appropriations of the Senate and the Committee on Appropriations of the House of Representatives regarding the financial
operating plans and forecasts of the Director, the financial
condition and results of operations of the Bureau, and the
sources and application of funds of the Bureau, including any
funds appropriated in accordance with this subsection.
SEC. 1018. EFFECTIVE DATE.

This subtitle shall become effective on the date of enactment
of this Act.

12 USC 5491
note.

Subtitle B—General Powers of the Bureau
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SEC. 1021. PURPOSE, OBJECTIVES, AND FUNCTIONS.

12 USC 5511.

(a) PURPOSE.—The Bureau shall seek to implement and, where
applicable, enforce Federal consumer financial law consistently for
the purpose of ensuring that all consumers have access to markets

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124 STAT. 1980

PUBLIC LAW 111–203—JULY 21, 2010

for consumer financial products and services and that markets
for consumer financial products and services are fair, transparent,
and competitive.
(b) OBJECTIVES.—The Bureau is authorized to exercise its
authorities under Federal consumer financial law for the purposes
of ensuring that, with respect to consumer financial products and
services—
(1) consumers are provided with timely and understandable
information to make responsible decisions about financial transactions;
(2) consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination;
(3) outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order to reduce
unwarranted regulatory burdens;
(4) Federal consumer financial law is enforced consistently,
without regard to the status of a person as a depository institution, in order to promote fair competition; and
(5) markets for consumer financial products and services
operate transparently and efficiently to facilitate access and
innovation.
(c) FUNCTIONS.—The primary functions of the Bureau are—
(1) conducting financial education programs;
(2) collecting, investigating, and responding to consumer
complaints;
(3) collecting, researching, monitoring, and publishing
information relevant to the functioning of markets for consumer
financial products and services to identify risks to consumers
and the proper functioning of such markets;
(4) subject to sections 1024 through 1026, supervising covered persons for compliance with Federal consumer financial
law, and taking appropriate enforcement action to address violations of Federal consumer financial law;
(5) issuing rules, orders, and guidance implementing Federal consumer financial law; and
(6) performing such support activities as may be necessary
or useful to facilitate the other functions of the Bureau.

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12 USC 5512.

SEC. 1022. RULEMAKING AUTHORITY.

(a) IN GENERAL.—The Bureau is authorized to exercise its
authorities under Federal consumer financial law to administer,
enforce, and otherwise implement the provisions of Federal consumer financial law.
(b) RULEMAKING, ORDERS, AND GUIDANCE.—
(1) GENERAL AUTHORITY.—The Director may prescribe rules
and issue orders and guidance, as may be necessary or appropriate to enable the Bureau to administer and carry out the
purposes and objectives of the Federal consumer financial laws,
and to prevent evasions thereof.
(2) STANDARDS FOR RULEMAKING.—In prescribing a rule
under the Federal consumer financial laws—
(A) the Bureau shall consider—
(i) the potential benefits and costs to consumers
and covered persons, including the potential reduction
of access by consumers to consumer financial products
or services resulting from such rule; and

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1981

(ii) the impact of proposed rules on covered persons, as described in section 1026, and the impact
on consumers in rural areas;
(B) the Bureau shall consult with the appropriate
prudential regulators or other Federal agencies prior to
proposing a rule and during the comment process regarding
consistency with prudential, market, or systemic objectives
administered by such agencies; and
(C) if, during the consultation process described in
subparagraph (B), a prudential regulator provides the
Bureau with a written objection to the proposed rule of
the Bureau or a portion thereof, the Bureau shall include
in the adopting release a description of the objection and
the basis for the Bureau decision, if any, regarding such
objection, 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.
(3) EXEMPTIONS.—
(A) IN GENERAL.—The Bureau, by rule, may conditionally or unconditionally exempt any class of covered
persons, service providers, or consumer financial products
or services, from any provision of this title, or from any
rule issued under this title, as the Bureau determines
necessary or appropriate to carry out the purposes and
objectives of this title, taking into consideration the factors
in subparagraph (B).
(B) FACTORS.—In issuing an exemption, as permitted
under subparagraph (A), the Bureau shall, as appropriate,
take into consideration—
(i) the total assets of the class of covered persons;
(ii) the volume of transactions involving consumer
financial products or services in which the class of
covered persons engages; and
(iii) existing provisions of law which are applicable
to the consumer financial product or service and the
extent to which such provisions provide consumers with
adequate protections.
(4) EXCLUSIVE RULEMAKING AUTHORITY.—
(A) IN GENERAL.—Notwithstanding any other provisions of Federal law and except as provided in section
1061(b)(5), to the extent that a provision of Federal consumer financial law authorizes the Bureau and another
Federal agency to issue regulations under that provision
of law for purposes of assuring compliance with Federal
consumer financial law and any regulations thereunder,
the Bureau shall have the exclusive authority to prescribe
rules subject to those provisions of law.
(B) DEFERENCE.—Notwithstanding any power granted
to any Federal agency or to the Council under this title,
and subject to section 1061(b)(5)(E), the deference that
a court affords to the Bureau with respect to a determination by the Bureau regarding the meaning or interpretation
of any provision of a Federal consumer financial law shall
be applied as if the Bureau were the only agency authorized
to apply, enforce, interpret, or administer the provisions
of such Federal consumer financial law.
(c) MONITORING.—

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(1) IN GENERAL.—In order to support its rulemaking and
other functions, the Bureau shall monitor for risks to consumers
in the offering or provision of consumer financial products
or services, including developments in markets for such products or services.
(2) CONSIDERATIONS.—In allocating its resources to perform
the monitoring required by this section, the Bureau may consider, among other factors—
(A) likely risks and costs to consumers associated with
buying or using a type of consumer financial product or
service;
(B) understanding by consumers of the risks of a type
of consumer financial product or service;
(C) the legal protections applicable to the offering or
provision of a consumer financial product or service,
including the extent to which the law is likely to adequately
protect consumers;
(D) rates of growth in the offering or provision of
a consumer financial product or service;
(E) the extent, if any, to which the risks of a consumer
financial product or service may disproportionately affect
traditionally underserved consumers; or
(F) the types, number, and other pertinent characteristics of covered persons that offer or provide the consumer
financial product or service.
(3) SIGNIFICANT FINDINGS.—
(A) IN GENERAL.—The Bureau shall publish not fewer
than 1 report of significant findings of its monitoring
required by this subsection in each calendar year, beginning
with the first calendar year that begins at least 1 year
after the designated transfer date.
(B) CONFIDENTIAL INFORMATION.—The Bureau may
make public such information obtained by the Bureau
under this section as is in the public interest, through
aggregated reports or other appropriate formats designed
to protect confidential information in accordance with paragraphs (4), (6), (8), and (9).
(4) COLLECTION OF INFORMATION.—
(A) IN GENERAL.—In conducting any monitoring or
assessment required by this section, the Bureau shall have
the authority to gather information from time to time
regarding the organization, business conduct, markets, and
activities of covered persons and service providers.
(B) METHODOLOGY.—In order to gather information
described in subparagraph (A), the Bureau may—
(i) gather and compile information from a variety
of sources, including examination reports concerning
covered persons or service providers, consumer complaints, voluntary surveys and voluntary interviews
of consumers, surveys and interviews with covered persons and service providers, and review of available
databases; and
(ii) require covered persons and service providers
participating in consumer financial services markets
to file with the Bureau, under oath or otherwise, in
such form and within such reasonable period of time
as the Bureau may prescribe by rule or order, annual

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124 STAT. 1983

or special reports, or answers in writing to specific
questions, furnishing information described in paragraph (4), as necessary for the Bureau to fulfill the
monitoring, assessment, and reporting responsibilities
imposed by Congress.
(C) LIMITATION.—The Bureau may not use its authorities under this paragraph to obtain records from covered
persons and service providers participating in consumer
financial services markets for purposes of gathering or
analyzing the personally identifiable financial information
of consumers.
(5) LIMITED INFORMATION GATHERING.—In order to assess
whether a nondepository is a covered person, as defined in
section 1002, the Bureau may require such nondepository to
file with the Bureau, under oath or otherwise, in such form
and within such reasonable period of time as the Bureau may
prescribe by rule or order, annual or special reports, or answers
in writing to specific questions.
(6) CONFIDENTIALITY RULES.—
(A) RULEMAKING.—The Bureau shall prescribe rules
regarding the confidential treatment of information
obtained from persons in connection with the exercise of
its authorities under Federal consumer financial law.
(B) ACCESS BY THE BUREAU TO REPORTS OF OTHER
REGULATORS.—
(i) EXAMINATION AND FINANCIAL CONDITION
REPORTS.—Upon providing reasonable assurances of
confidentiality, the Bureau shall have access to any
report of examination or financial condition made by
a prudential regulator or other Federal agency having
jurisdiction over a covered person or service provider,
and to all revisions made to any such report.
(ii) PROVISION OF OTHER REPORTS TO THE
BUREAU.—In addition to the reports described in clause
(i), a prudential regulator or other Federal agency
having jurisdiction over a covered person or service
provider may, in its discretion, furnish to the Bureau
any other report or other confidential supervisory
information concerning any insured depository institution, credit union, or other entity examined by such
agency under authority of any provision of Federal
law.
(C) ACCESS BY OTHER REGULATORS TO REPORTS OF THE
BUREAU.—
(i) EXAMINATION REPORTS.—Upon providing
reasonable assurances of confidentiality, a prudential
regulator, a State regulator, or any other Federal
agency having jurisdiction over a covered person or
service provider shall have access to any report of
examination made by the Bureau with respect to such
person, and to all revisions made to any such report.
(ii) PROVISION OF OTHER REPORTS TO OTHER REGULATORS.—In addition to the reports described in clause
(i), the Bureau may, in its discretion, furnish to a
prudential regulator or other agency having jurisdiction over a covered person or service provider any

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124 STAT. 1984

PUBLIC LAW 111–203—JULY 21, 2010
other report or other confidential supervisory information concerning such person examined by the Bureau
under the authority of any other provision of Federal
law.
(7) REGISTRATION.—
(A) IN GENERAL.—The Bureau may prescribe rules
regarding registration requirements applicable to a covered
person, other than an insured depository institution,
insured credit union, or related person.
(B) REGISTRATION INFORMATION.—Subject to rules prescribed by the Bureau, the Bureau may publicly disclose
registration information to facilitate the ability of consumers to identify covered persons that are registered with
the Bureau.
(C) CONSULTATION WITH STATE AGENCIES.—In developing and implementing registration requirements under
this paragraph, the Bureau shall consult with State agencies regarding requirements or systems (including coordinated or combined systems for registration), where appropriate.
(8) PRIVACY CONSIDERATIONS.—In collecting information
from any person, publicly releasing information held by the
Bureau, or requiring covered persons to publicly report information, the Bureau shall take steps to ensure that proprietary,
personal, or confidential consumer information that is protected
from public disclosure under section 552(b) or 552a of title
5, United States Code, or any other provision of law, is not
made public under this title.
(9) CONSUMER PRIVACY.—
(A) IN GENERAL.—The Bureau may not obtain from
a covered person or service provider any personally identifiable financial information about a consumer from the financial records of the covered person or service provider,
except—
(i) if the financial records are reasonably described
in a request by the Bureau and the consumer provides
written permission for the disclosure of such information by the covered person or service provider to the
Bureau; or
(ii) as may be specifically permitted or required
under other applicable provisions of law and in accordance with the Right to Financial Privacy Act of 1978
(12 U.S.C. 3401 et seq.).
(B) TREATMENT OF COVERED PERSON OR SERVICE PROVIDER.—With respect to the application of any provision
of the Right to Financial Privacy Act of 1978, to a disclosure
by a covered person or service provider subject to this
subsection, the covered person or service provider shall
be treated as if it were a ‘‘financial institution’’, as defined
in section 1101 of that Act (12 U.S.C. 3401).
(d) ASSESSMENT OF SIGNIFICANT RULES.—
(1) IN GENERAL.—The Bureau shall conduct an assessment
of each significant rule or order adopted by the Bureau under
Federal consumer financial law. The assessment shall address,
among other relevant factors, the effectiveness of the rule or
order in meeting the purposes and objectives of this title and
the specific goals stated by the Bureau. The assessment shall

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124 STAT. 1985

reflect available evidence and any data that the Bureau reasonably may collect.
(2) REPORTS.—The Bureau shall publish a report of its
assessment under this subsection not later than 5 years after
the effective date of the subject rule or order.
(3) PUBLIC COMMENT REQUIRED.—Before publishing a report
of its assessment, the Bureau shall invite public comment on
recommendations for modifying, expanding, or eliminating the
newly adopted significant rule or order.

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SEC. 1023. REVIEW OF BUREAU REGULATIONS.

12 USC 5513.

(a) REVIEW OF BUREAU REGULATIONS.—On the petition of a
member agency of the Council, the Council may set aside a final
regulation prescribed by the Bureau, or any provision thereof, if
the Council decides, in accordance with subsection (c), that the
regulation or provision would put the safety and soundness of
the United States banking system or the stability of the financial
system of the United States at risk.
(b) PETITION.—
(1) PROCEDURE.—An agency represented by a member of
the Council may petition the Council, in writing, and in accordance with rules prescribed pursuant to subsection (f), to stay
the effectiveness of, or set aside, a regulation if the member
agency filing the petition—
(A) has in good faith attempted to work with the
Bureau to resolve concerns regarding the effect of the rule
on the safety and soundness of the United States banking
system or the stability of the financial system of the United
States; and
(B) files the petition with the Council not later than
10 days after the date on which the regulation has been
published in the Federal Register.
(2) PUBLICATION.—Any petition filed with the Council
under this section shall be published in the Federal Register
and transmitted contemporaneously with filing to the Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of Representatives.
(c) STAYS AND SET ASIDES.—
(1) STAY.—
(A) IN GENERAL.—Upon the request of any member
agency, the Chairperson of the Council may stay the
effectiveness of a regulation for the purpose of allowing
appropriate consideration of the petition by the Council.
(B) EXPIRATION.—A stay issued under this paragraph
shall expire on the earlier of—
(i) 90 days after the date of filing of the petition
under subsection (b); or
(ii) the date on which the Council makes a decision
under paragraph (3).
(2) NO ADVERSE INFERENCE.—After the expiration of any
stay imposed under this section, no inference shall be drawn
regarding the validity or enforceability of a regulation which
was the subject of the petition.
(3) VOTE.—
(A) IN GENERAL.—The decision to issue a stay of, or
set aside, any regulation under this section shall be made

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only with the affirmative vote in accordance with subparagraph (B) of 2⁄3 of the members of the Council then serving.
(B) AUTHORIZATION TO VOTE.—A member of the Council
may vote to stay the effectiveness of, or set aside, a final
regulation prescribed by the Bureau only if the agency
or department represented by that member has—
(i) considered any relevant information provided
by the agency submitting the petition and by the
Bureau; and
(ii) made an official determination, at a public
meeting where applicable, that the regulation which
is the subject of the petition would put the safety
and soundness of the United States banking system
or the stability of the financial system of the United
States at risk.
(4) DECISIONS TO SET ASIDE.—
(A) EFFECT OF DECISION.—A decision by the Council
to set aside a regulation prescribed by the Bureau, or
provision thereof, shall render such regulation, or provision
thereof, unenforceable.
(B) TIMELY ACTION REQUIRED.—The Council may not
issue a decision to set aside a regulation, or provision
thereof, which is the subject of a petition under this section
after the expiration of the later of—
(i) 45 days following the date of filing of the petition, unless a stay is issued under paragraph (1); or
(ii) the expiration of a stay issued by the Council
under this section.
(C) SEPARATE AUTHORITY.—The issuance of a stay
under this section does not affect the authority of the
Council to set aside a regulation.
(5) DISMISSAL DUE TO INACTION.—A petition under this
section shall be deemed dismissed if the Council has not issued
a decision to set aside a regulation, or provision thereof, within
the period for timely action under paragraph (4)(B).
(6) PUBLICATION OF DECISION.—Any decision under this
subsection to issue a stay of, or set aside, a regulation or
provision thereof shall be published by the Council in the
Federal Register as soon as practicable after the decision is
made, with an explanation of the reasons for the decision.
(7) RULEMAKING PROCEDURES INAPPLICABLE.—The notice
and comment procedures under section 553 of title 5, United
States Code, shall not apply to any decision under this section
of the Council to issue a stay of, or set aside, a regulation.
(8) JUDICIAL REVIEW OF DECISIONS BY THE COUNCIL.—A
decision by the Council to set aside a regulation prescribed
by the Bureau, or provision thereof, shall be subject to review
under chapter 7 of title 5, United States Code.
(d) APPLICATION OF OTHER LAW.—Nothing in this section shall
be construed as altering, limiting, or restricting the application
of any other provision of law, except as otherwise specifically provided in this section, including chapter 5 and chapter 7 of title
5, United States Code, to a regulation which is the subject of
a petition filed under this section.
(e) SAVINGS CLAUSE.—Nothing in this section shall be construed
as limiting or restricting the Bureau from engaging in a rulemaking
in accordance with applicable law.

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(f) IMPLEMENTING RULES.—The Council shall prescribe procedural rules to implement this section.

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SEC. 1024. SUPERVISION OF NONDEPOSITORY COVERED PERSONS.

(a) SCOPE OF COVERAGE.—
(1) APPLICABILITY.—Notwithstanding any other provision
of this title, and except as provided in paragraph (3), this
section shall apply to any covered person who—
(A) offers or provides origination, brokerage, or servicing of loans secured by real estate for use by consumers
primarily for personal, family, or household purposes, or
loan modification or foreclosure relief services in connection
with such loans;
(B) is a larger participant of a market for other consumer financial products or services, as defined by rule
in accordance with paragraph (2);
(C) the Bureau has reasonable cause to determine,
by order, after notice to the covered person and a reasonable opportunity for such covered person to respond, based
on complaints collected through the system under section
1013(b)(3) or information from other sources, that such
covered person is engaging, or has engaged, in conduct
that poses risks to consumers with regard to the offering
or provision of consumer financial products or services;
(D) offers or provides to a consumer any private education loan, as defined in section 140 of the Truth in
Lending Act (15 U.S.C. 1650), notwithstanding section
1027(a)(2)(A) and subject to section 1027(a)(2)(C); or
(E) offers or provides to a consumer a payday loan.
(2) RULEMAKING TO DEFINE COVERED PERSONS SUBJECT TO
THIS SECTION.—The Bureau shall consult with the Federal
Trade Commission prior to issuing a rule, in accordance with
paragraph (1)(B), to define covered persons subject to this section. The Bureau shall issue its initial rule not later than
1 year after the designated transfer date.
(3) RULES OF CONSTRUCTION.—
(A) CERTAIN PERSONS EXCLUDED.—This section shall
not apply to persons described in section 1025(a) or 1026(a).
(B) ACTIVITY LEVELS.—For purposes of computing
activity levels under paragraph (1) or rules issued thereunder, activities of affiliated companies (other than insured
depository institutions or insured credit unions) shall be
aggregated.
(b) SUPERVISION.—
(1) IN GENERAL.—The Bureau shall require reports and
conduct examinations on a periodic basis of persons described
in subsection (a)(1) for purposes of—
(A) assessing compliance with the requirements of Federal consumer financial law;
(B) obtaining information about the activities and
compliance systems or procedures of such person; and
(C) detecting and assessing risks to consumers and
to markets for consumer financial products and services.
(2) RISK-BASED SUPERVISION PROGRAM.—The Bureau shall
exercise its authority under paragraph (1) in a manner designed
to ensure that such exercise, with respect to persons described
in subsection (a)(1), is based on the assessment by the Bureau

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124 STAT. 1988

of the risks posed to consumers in the relevant product markets
and geographic markets, and taking into consideration, as
applicable—
(A) the asset size of the covered person;
(B) the volume of transactions involving consumer
financial products or services in which the covered person
engages;
(C) the risks to consumers created by the provision
of such consumer financial products or services;
(D) the extent to which such institutions are subject
to oversight by State authorities for consumer protection;
and
(E) any other factors that the Bureau determines to
be relevant to a class of covered persons.
(3) COORDINATION.—To minimize regulatory burden, the
Bureau shall coordinate its supervisory activities with the
supervisory activities conducted by prudential regulators and
the State bank regulatory authorities, including establishing
their respective schedules for examining persons described in
subsection (a)(1) and requirements regarding reports to be submitted by such persons.
(4) USE OF EXISTING REPORTS.—The Bureau shall, to the
fullest extent possible, use—
(A) reports pertaining to persons described in subsection (a)(1) that have been provided or required to have
been provided to a Federal or State agency; and
(B) information that has been reported publicly.
(5) PRESERVATION OF AUTHORITY.—Nothing in this title
may be construed as limiting the authority of the Director
to require reports from persons described in subsection (a)(1),
as permitted under paragraph (1), regarding information owned
or under the control of such person, regardless of whether
such information is maintained, stored, or processed by another
person.
(6) REPORTS OF TAX LAW NONCOMPLIANCE.—The Bureau
shall provide the Commissioner of Internal Revenue with any
report of examination or related information identifying possible
tax law noncompliance.
(7) REGISTRATION, RECORDKEEPING AND OTHER REQUIREMENTS FOR CERTAIN PERSONS.—
(A) IN GENERAL.—The Bureau shall prescribe rules
to facilitate supervision of persons described in subsection
(a)(1) and assessment and detection of risks to consumers.
(B) RECORDKEEPING.—The Bureau may require a person described in subsection (a)(1), to generate, provide,
or retain records for the purposes of facilitating supervision
of such persons and assessing and detecting risks to consumers.
(C) REQUIREMENTS CONCERNING OBLIGATIONS.—The
Bureau may prescribe rules regarding a person described
in subsection (a)(1), to ensure that such persons are legitimate entities and are able to perform their obligations
to consumers. Such requirements may include background
checks for principals, officers, directors, or key personnel
and bonding or other appropriate financial requirements.

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(D) CONSULTATION WITH STATE AGENCIES.—In developing and implementing requirements under this paragraph, the Bureau shall consult with State agencies
regarding requirements or systems (including coordinated
or combined systems for registration), where appropriate.
(c) ENFORCEMENT AUTHORITY.—
(1) THE BUREAU TO HAVE ENFORCEMENT AUTHORITY.—
Except as provided in paragraph (3) and section 1061, with
respect to any person described in subsection (a)(1), to the
extent that Federal law authorizes the Bureau and another
Federal agency to enforce Federal consumer financial law, the
Bureau shall have exclusive authority to enforce that Federal
consumer financial law.
(2) REFERRAL.—Any Federal agency authorized to enforce
a Federal consumer financial law described in paragraph (1)
may recommend in writing to the Bureau that the Bureau
initiate an enforcement proceeding, as the Bureau is authorized
by that Federal law or by this title.
(3) COORDINATION WITH THE FEDERAL TRADE COMMISSION.—
(A) IN GENERAL.—The Bureau and the Federal Trade
Commission shall negotiate an agreement for coordinating
with respect to enforcement actions by each agency
regarding the offering or provision of consumer financial
products or services by any covered person that is described
in subsection (a)(1), or service providers thereto. The agreement shall include procedures for notice to the other
agency, where feasible, prior to initiating a civil action
to enforce any Federal law regarding the offering or provision of consumer financial products or services.
(B) CIVIL ACTIONS.—Whenever a civil action has been
filed by, or on behalf of, the Bureau or the Federal Trade
Commission for any violation of any provision of Federal
law described in subparagraph (A), or any regulation prescribed under such provision of law—
(i) the other agency may not, during the pendency
of that action, institute a civil action under such provision of law against any defendant named in the complaint in such pending action for any violation alleged
in the complaint; and
(ii) the Bureau or the Federal Trade Commission
may intervene as a party in any such action brought
by the other agency, and, upon intervening—
(I) be heard on all matters arising in such
enforcement action; and
(II) file petitions for appeal in such actions.
(C) AGREEMENT TERMS.—The terms of any agreement
negotiated under subparagraph (A) may modify or supersede the provisions of subparagraph (B).
(D) DEADLINE.—The agencies shall reach the agreement required under subparagraph (A) not later than 6
months after the designated transfer date.
(d) EXCLUSIVE RULEMAKING AND EXAMINATION AUTHORITY.—
Notwithstanding any other provision of Federal law and except
as provided in section 1061, to the extent that Federal law authorizes the Bureau and another Federal agency to issue regulations
or guidance, conduct examinations, or require reports from a person
described in subsection (a)(1) under such law for purposes of

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assuring compliance with Federal consumer financial law and any
regulations thereunder, the Bureau shall have the exclusive
authority to prescribe rules, issue guidance, conduct examinations,
require reports, or issue exemptions with regard to a person
described in subsection (a)(1), subject to those provisions of law.
(e) SERVICE PROVIDERS.—A service provider to a person
described in subsection (a)(1) shall be subject to the authority
of the Bureau under this section, to the same extent as if such
service provider were engaged in a service relationship with a
bank, and the Bureau were an appropriate Federal banking agency
under section 7(c) of the Bank Service Company Act (12 U.S.C.
1867(c)). In conducting any examination or requiring any report
from a service provider subject to this subsection, the Bureau shall
coordinate with the appropriate prudential regulator, as applicable.
(f) PRESERVATION OF FARM CREDIT ADMINISTRATION
AUTHORITY.—No provision of this title may be construed as modifying, limiting, or otherwise affecting the authority of the Farm
Credit Administration.

Coordination.

12 USC 5515.

SEC. 1025. SUPERVISION OF VERY LARGE BANKS, SAVINGS ASSOCIATIONS, AND CREDIT UNIONS.

Applicability.

(a) SCOPE OF COVERAGE.—This section shall apply to any covered person that is—
(1) an insured depository institution with total assets of
more than $10,000,000,000 and any affiliate thereof; or
(2) an insured credit union with total assets of more than
$10,000,000,000 and any affiliate thereof.
(b) SUPERVISION.—
(1) IN GENERAL.—The Bureau shall have exclusive
authority to require reports and conduct examinations on a
periodic basis of persons described in subsection (a) for purposes
of—
(A) assessing compliance with the requirements of Federal consumer financial laws;
(B) obtaining information about the activities subject
to such laws and the associated compliance systems or
procedures of such persons; and
(C) detecting and assessing associated risks to consumers and to markets for consumer financial products
and services.
(2) COORDINATION.—To minimize regulatory burden, the
Bureau shall coordinate its supervisory activities with the
supervisory activities conducted by prudential regulators and
the State bank regulatory authorities, including consultation
regarding their respective schedules for examining such persons
described in subsection (a) and requirements regarding reports
to be submitted by such persons.
(3) USE OF EXISTING REPORTS.—The Bureau shall, to the
fullest extent possible, use—
(A) reports pertaining to a person described in subsection (a) that have been provided or required to have
been provided to a Federal or State agency; and
(B) information that has been reported publicly.
(4) PRESERVATION OF AUTHORITY.—Nothing in this title
may be construed as limiting the authority of the Director
to require reports from a person described in subsection (a),
as permitted under paragraph (1), regarding information owned

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124 STAT. 1991

or under the control of such person, regardless of whether
such information is maintained, stored, or processed by another
person.
(5) REPORTS OF TAX LAW NONCOMPLIANCE.—The Bureau
shall provide the Commissioner of Internal Revenue with any
report of examination or related information identifying possible
tax law noncompliance.
(c) PRIMARY ENFORCEMENT AUTHORITY.—
(1) THE BUREAU TO HAVE PRIMARY ENFORCEMENT
AUTHORITY.—To the extent that the Bureau and another Federal agency are authorized to enforce a Federal consumer financial law, the Bureau shall have primary authority to enforce
that Federal consumer financial law with respect to any person
described in subsection (a).
(2) REFERRAL.—Any Federal agency, other than the Federal
Trade Commission, that is authorized to enforce a Federal
consumer financial law may recommend, in writing, to the
Bureau that the Bureau initiate an enforcement proceeding
with respect to a person described in subsection (a), as the
Bureau is authorized to do by that Federal consumer financial
law.
(3) BACKUP ENFORCEMENT AUTHORITY OF OTHER FEDERAL
AGENCY.—If the Bureau does not, before the end of the 120day period beginning on the date on which the Bureau receives
a recommendation under paragraph (2), initiate an enforcement
proceeding, the other agency referred to in paragraph (2) may
initiate an enforcement proceeding, including performing follow
up supervisory and support functions incidental thereto, to
assure compliance with such proceeding.
(d) SERVICE PROVIDERS.—A service provider to a person
described in subsection (a) shall be subject to the authority of
the Bureau under this section, to the same extent as if the Bureau
were an appropriate Federal banking agency under section 7(c)
of the Bank Service Company Act 12 U.S.C. 1867(c). In conducting
any examination or requiring any report from a service provider
subject to this subsection, the Bureau shall coordinate with the
appropriate prudential regulator.
(e) SIMULTANEOUS AND COORDINATED SUPERVISORY ACTION.—
(1) EXAMINATIONS.—A prudential regulator and the Bureau
shall, with respect to each insured depository institution,
insured credit union, or other covered person described in subsection (a) that is supervised by the prudential regulator and
the Bureau, respectively—
(A) coordinate the scheduling of examinations of the
insured depository institution, insured credit union, or
other covered person described in subsection (a);
(B) conduct simultaneous examinations of each insured
depository institution or insured credit union, unless such
institution requests examinations to be conducted separately;
(C) share each draft report of examination with the
other agency and permit the receiving agency a reasonable
opportunity (which shall not be less than a period of 30
days after the date of receipt) to comment on the draft
report before such report is made final; and

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(D) prior to issuing a final report of examination or
taking supervisory action, take into consideration concerns,
if any, raised in the comments made by the other agency.
(2) COORDINATION WITH STATE BANK SUPERVISORS.—The
Bureau shall pursue arrangements and agreements with State
bank supervisors to coordinate examinations, consistent with
paragraph (1).
(3) AVOIDANCE OF CONFLICT IN SUPERVISION.—
(A) REQUEST.—If the proposed supervisory determinations of the Bureau and a prudential regulator (in this
section referred to collectively as the ‘‘agencies’’) are conflicting, an insured depository institution, insured credit
union, or other covered person described in subsection (a)
may request the agencies to coordinate and present a joint
statement of coordinated supervisory action.
(B) JOINT STATEMENT.—The agencies shall provide a
joint statement under subparagraph (A), not later than
30 days after the date of receipt of the request of the
insured depository institution, credit union, or covered person described in subsection (a).
(4) APPEALS TO GOVERNING PANEL.—
(A) IN GENERAL.—If the agencies do not resolve the
conflict or issue a joint statement required by subparagraph
(B), or if either of the agencies takes or attempts to take
any supervisory action relating to the request for the joint
statement without the consent of the other agency, an
insured depository institution, insured credit union, or
other covered person described in subsection (a) may
institute an appeal to a governing panel, as provided in
this subsection, not later than 30 days after the expiration
of the period during which a joint statement is required
to be filed under paragraph (3)(B).
(B) COMPOSITION OF GOVERNING PANEL.—The governing panel for an appeal under this paragraph shall
be composed of—
(i) a representative from the Bureau and a representative of the prudential regulator, both of whom—
(I) have not participated in the material supervisory determinations under appeal; and
(II) do not directly or indirectly report to the
person who participated materially in the supervisory determinations under appeal; and
(ii) one individual representative, to be determined
on a rotating basis, from among the Board of Governors, the Corporation, the National Credit Union
Administration, and the Office of the Comptroller of
the Currency, other than any agency involved in the
subject dispute.
(C) CONDUCT OF APPEAL.—In an appeal under this
paragraph—
(i) the insured depository institution, insured
credit union, or other covered person described in subsection (a)—
(I) shall include in its appeal all the facts
and legal arguments pertaining to the matter; and

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(II) may, through counsel, employees, or representatives, appear before the governing panel
in person or by telephone; and
(ii) the governing panel—
(I) may request the insured depository institution, insured credit union, or other covered person
described in subsection (a), the Bureau, or the
prudential regulator to produce additional information relevant to the appeal; and
(II) by a majority vote of its members, shall
provide a final determination, in writing, not later
than 30 days after the date of filing of an
informationally complete appeal, or such longer
period as the panel and the insured depository
institution, insured credit union, or other covered
person described in subsection (a) may jointly
agree.
(D) PUBLIC AVAILABILITY OF DETERMINATIONS.—A governing panel shall publish all information contained in
a determination by the governing panel, with appropriate
redactions of information that would be subject to an
exemption from disclosure under section 552 of title 5,
United States Code.
(E) PROHIBITION AGAINST RETALIATION.—The Bureau
and the prudential regulators shall prescribe rules to provide safeguards from retaliation against the insured depository institution, insured credit union, or other covered person described in subsection (a) instituting an appeal under
this paragraph, as well as their officers and employees.
(F) LIMITATION.—The process provided in this paragraph shall not apply to a determination by a prudential
regulator to appoint a conservator or receiver for an insured
depository institution or a liquidating agent for an insured
credit union, as the case may be, or a decision to take
action pursuant to section 38 of the Federal Deposit Insurance Act (12 U.S.C. 1831o) or section 212 of the Federal
Credit Union Act (112 U.S.C. 1790a), as applicable.
(G) EFFECT ON OTHER AUTHORITY.—Nothing in this
section shall modify or limit the authority of the Bureau
to interpret, or take enforcement action under, any Federal
consumer financial law, or the authority of a prudential
regulator to interpret or take enforcement action under
any other provision of Federal law for safety and soundness
purposes.

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SEC. 1026. OTHER BANKS, SAVINGS ASSOCIATIONS, AND CREDIT
UNIONS.

12 USC 5516.

(a) SCOPE OF COVERAGE.—This section shall apply to any covered person that is—
(1) an insured depository institution with total assets of
$10,000,000,000 or less; or
(2) an insured credit union with total assets of
$10,000,000,000 or less.
(b) REPORTS.—The Director may require reports from a person
described in subsection (a), as necessary to support the role of
the Bureau in implementing Federal consumer financial law, to

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124 STAT. 1994

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Records.

Notification.
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PUBLIC LAW 111–203—JULY 21, 2010

support its examination activities under subsection (c), and to assess
and detect risks to consumers and consumer financial markets.
(1) USE OF EXISTING REPORTS.—The Bureau shall, to the
fullest extent possible, use—
(A) reports pertaining to a person described in subsection (a) that have been provided or required to have
been provided to a Federal or State agency; and
(B) information that has been reported publicly.
(2) PRESERVATION OF AUTHORITY.—Nothing in this subsection may be construed as limiting the authority of the
Director from requiring from a person described in subsection
(a), as permitted under paragraph (1), information owned or
under the control of such person, regardless of whether such
information is maintained, stored, or processed by another person.
(3) REPORTS OF TAX LAW NONCOMPLIANCE.—The Bureau
shall provide the Commissioner of Internal Revenue with any
report of examination or related information identifying possible
tax law noncompliance.
(c) EXAMINATIONS.—
(1) IN GENERAL.—The Bureau may, at its discretion, include
examiners on a sampling basis of the examinations performed
by the prudential regulator to assess compliance with the
requirements of Federal consumer financial law of persons
described in subsection (a).
(2) AGENCY COORDINATION.—The prudential regulator
shall—
(A) provide all reports, records, and documentation
related to the examination process for any institution
included in the sample referred to in paragraph (1) to
the Bureau on a timely and continual basis;
(B) involve such Bureau examiner in the entire examination process for such person; and
(C) consider input of the Bureau concerning the scope
of an examination, conduct of the examination, the contents
of the examination report, the designation of matters
requiring attention, and examination ratings.
(d) ENFORCEMENT.—
(1) IN GENERAL.—Except for requiring reports under subsection (b), the prudential regulator is authorized to enforce
the requirements of Federal consumer financial laws and, with
respect to a covered person described in subsection (a), shall
have exclusive authority (relative to the Bureau) to enforce
such laws .
(2) COORDINATION WITH PRUDENTIAL REGULATOR.—
(A) REFERRAL.—When the Bureau has reason to believe
that a person described in subsection (a) has engaged in
a material violation of a Federal consumer financial law,
the Bureau shall notify the prudential regulator in writing
and recommend appropriate action to respond.
(B) RESPONSE.—Upon receiving a recommendation
under subparagraph (A), the prudential regulator shall provide a written response to the Bureau not later than 60
days thereafter.
(e) SERVICE PROVIDERS.—A service provider to a substantial
number of persons described in subsection (a) shall be subject
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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1995

extent as if the Bureau were an appropriate Federal bank agency
under section 7(c) of the Bank Service Company Act (12 U.S.C.
1867(c)). When conducting any examination or requiring any report
from a service provider subject to this subsection, the Bureau shall
coordinate with the appropriate prudential regulator.
SEC. 1027. LIMITATIONS ON AUTHORITIES OF THE BUREAU; PRESERVATION OF AUTHORITIES.

12 USC 5517.

(a) EXCLUSION FOR MERCHANTS, RETAILERS, AND OTHER
SELLERS OF NONFINANCIAL GOODS OR SERVICES.—
(1) SALE OR BROKERAGE OF NONFINANCIAL GOOD OR
SERVICE.—The Bureau may not exercise any rulemaking, supervisory, enforcement or other authority under this title with
respect to a person who is a merchant, retailer, or seller of
any nonfinancial good or service and is engaged in the sale
or brokerage of such nonfinancial good or service, except to
the extent that such person is engaged in offering or providing
any consumer financial product or service, or is otherwise subject to any enumerated consumer law or any law for which
authorities are transferred under subtitle F or H.
(2) OFFERING OR PROVISION OF CERTAIN CONSUMER FINAN-

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CIAL PRODUCTS OR SERVICES IN CONNECTION WITH THE SALE
OR BROKERAGE OF NONFINANCIAL GOOD OR SERVICE.—
(A) IN GENERAL.—Except as provided in subparagraph

(B), and subject to subparagraph (C), the Bureau may
not exercise any rulemaking, supervisory, enforcement, or
other authority under this title with respect to a merchant,
retailer, or seller of nonfinancial goods or services, but
only to the extent that such person—
(i) extends credit directly to a consumer, in a case
in which the good or service being provided is not
itself a consumer financial product or service (other
than credit described in this subparagraph), exclusively
for the purpose of enabling that consumer to purchase
such nonfinancial good or service directly from the
merchant, retailer, or seller;
(ii) directly, or through an agreement with another
person, collects debt arising from credit extended as
described in clause (i); or
(iii) sells or conveys debt described in clause (i)
that is delinquent or otherwise in default.
(B) APPLICABILITY.—Subparagraph (A) does not apply
to any credit transaction or collection of debt, other than
as described in subparagraph (C)(i), arising from a transaction described in subparagraph (A)—
(i) in which the merchant, retailer, or seller of
nonfinancial goods or services assigns, sells or otherwise conveys to another person such debt owed by
the consumer (except for a sale of debt that is delinquent or otherwise in default, as described in subparagraph (A)(iii));
(ii) in which the credit extended significantly
exceeds the market value of the nonfinancial good or
service provided, or the Bureau otherwise finds that
the sale of the nonfinancial good or service is done
as a subterfuge, so as to evade or circumvent the
provisions of this title; or

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PUBLIC LAW 111–203—JULY 21, 2010
(iii) in which the merchant, retailer, or seller of
nonfinancial goods or services regularly extends credit
and the credit is subject to a finance charge.
(C) LIMITATIONS.—
(i) IN GENERAL.—Notwithstanding subparagraph
(B), subparagraph (A) shall apply with respect to a
merchant, retailer, or seller of nonfinancial goods or
services that is not engaged significantly in offering
or providing consumer financial products or services.
(ii) EXCEPTION.—Subparagraph (A) and clause (i)
of this subparagraph do not apply to any merchant,
retailer, or seller of nonfinancial goods or services—
(I) if such merchant, retailer, or seller of nonfinancial goods or services is engaged in a transaction described in subparagraph (B)(i) or (B)(ii);
or
(II) to the extent that such merchant, retailer,
or seller is subject to any enumerated consumer
law or any law for which authorities are transferred under subtitle F or H, but the Bureau may
exercise such authority only with respect to that
law.
(D) RULES.—
(i) AUTHORITY OF OTHER AGENCIES.—No provision
of this title shall be construed as modifying, limiting,
or superseding the supervisory or enforcement
authority of the Federal Trade Commission or any
other agency (other than the Bureau) with respect
to credit extended, or the collection of debt arising
from such extension, directly by a merchant or retailer
to a consumer exclusively for the purpose of enabling
that consumer to purchase nonfinancial goods or services directly from the merchant or retailer.
(ii) SMALL BUSINESSES.—A merchant, retailer, or
seller of nonfinancial goods or services that would
otherwise be subject to the authority of the Bureau
solely by virtue of the application of subparagraph
(B)(iii) shall be deemed not to be engaged significantly
in offering or providing consumer financial products
or services under subparagraph (C)(i), if such person—
(I) only extends credit for the sale of nonfinancial goods or services, as described in
subparagraph (A)(i);
(II) retains such credit on its own accounts
(except to sell or convey such debt that is delinquent or otherwise in default); and
(III) meets the relevant industry size threshold
to be a small business concern, based on annual
receipts, pursuant to section 3 of the Small Business Act (15 U.S.C. 632) and the implementing
rules thereunder.
(iii) INITIAL YEAR.—A merchant, retailer, or seller
of nonfinancial goods or services shall be deemed to
meet the relevant industry size threshold described
in clause (ii)(III) during the first year of operations
of that business concern if, during that year, the

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1997

receipts of that business concern reasonably are
expected to meet that size threshold.
(iv) OTHER STANDARDS FOR SMALL BUSINESS.—With
respect to a merchant, retailer, or seller of nonfinancial
goods or services that is a classified on a basis other
than annual receipts for the purposes of section 3
of the Small Business Act (15 U.S.C. 632) and the
implementing rules thereunder, such merchant,
retailer, or seller shall be deemed to meet the relevant
industry size threshold described in clause (ii)(III) if
such merchant, retailer, or seller meets the relevant
industry size threshold to be a small business concern
based on the number of employees, or other such
applicable measure, established under that Act.
(E) EXCEPTION FROM STATE ENFORCEMENT.—To the
extent that the Bureau may not exercise authority under
this subsection with respect to a merchant, retailer, or
seller of nonfinancial goods or services, no action by a
State attorney general or State regulator with respect to
a claim made under this title may be brought under subsection 1042(a), with respect to an activity described in
any of clauses (i) through (iii) of subparagraph (A) by
such merchant, retailer, or seller of nonfinancial goods
or services.
(b) EXCLUSION FOR REAL ESTATE BROKERAGE ACTIVITIES.—
(1) REAL ESTATE BROKERAGE ACTIVITIES EXCLUDED.—Without limiting subsection (a), and except as permitted in paragraph (2), the Bureau may not exercise any rulemaking, supervisory, enforcement, or other authority under this title with
respect to a person that is licensed or registered as a real
estate broker or real estate agent, in accordance with State
law, to the extent that such person—
(A) acts as a real estate agent or broker for a buyer,
seller, lessor, or lessee of real property;
(B) brings together parties interested in the sale, purchase, lease, rental, or exchange of real property;
(C) negotiates, on behalf of any party, any portion
of a contract relating to the sale, purchase, lease, rental,
or exchange of real property (other than in connection
with the provision of financing with respect to any such
transaction); or
(D) offers to engage in any activity, or act in any
capacity, described in subparagraph (A), (B), or (C).
(2) DESCRIPTION OF ACTIVITIES.—The Bureau may exercise
rulemaking, supervisory, enforcement, or other authority under
this title with respect to a person described in paragraph (1)
when such person is—
(A) engaged in an activity of offering or providing
any consumer financial product or service, except that the
Bureau may exercise such authority only with respect to
that activity; or
(B) otherwise subject to any enumerated consumer law
or any law for which authorities are transferred under
subtitle F or H, but the Bureau may exercise such authority
only with respect to that law.
(c) EXCLUSION FOR MANUFACTURED HOME RETAILERS AND MODULAR HOME RETAILERS.—

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124 STAT. 1998

PUBLIC LAW 111–203—JULY 21, 2010
(1) IN GENERAL.—The Director may not exercise any rulemaking, supervisory, enforcement, or other authority over a
person to the extent that—
(A) such person is not described in paragraph (2);
and
(B) such person—
(i) acts as an agent or broker for a buyer or seller
of a manufactured home or a modular home;
(ii) facilitates the purchase by a consumer of a
manufactured home or modular home, by negotiating
the purchase price or terms of the sales contract (other
than providing financing with respect to such transaction); or
(iii) offers to engage in any activity described in
clause (i) or (ii).
(2) DESCRIPTION OF ACTIVITIES.—A person is described in
this paragraph to the extent that such person is engaged in
the offering or provision of any consumer financial product
or service or is otherwise subject to any enumerated consumer
law or any law for which authorities are transferred under
subtitle F or H.
(3) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply:
(A) MANUFACTURED HOME.—The term ‘‘manufactured
home’’ has the same meaning as in section 603 of the
National Manufactured Housing Construction and Safety
Standards Act of 1974 (42 U.S.C. 5402).
(B) MODULAR HOME.—The term ‘‘modular home’’ means
a house built in a factory in 2 or more modules that
meet the State or local building codes where the house
will be located, and where such modules are transported
to the building site, installed on foundations, and completed.
(d) EXCLUSION FOR ACCOUNTANTS AND TAX PREPARERS.—
(1) IN GENERAL.—Except as permitted in paragraph (2),
the Bureau may not exercise any rulemaking, supervisory,
enforcement, or other authority over—
(A) any person that is a certified public accountant,
permitted to practice as a certified public accounting firm,
or certified or licensed for such purpose by a State, or
any individual who is employed by or holds an ownership
interest with respect to a person described in this subparagraph, when such person is performing or offering to perform—
(i) customary and usual accounting activities,
including the provision of accounting, tax, advisory,
or other services that are subject to the regulatory
authority of a State board of accountancy or a Federal
authority; or
(ii) other services that are incidental to such customary and usual accounting activities, to the extent
that such incidental services are not offered or provided—
(I) by the person separate and apart from such
customary and usual accounting activities; or
(II) to consumers who are not receiving such
customary and usual accounting activities; or

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 1999

(B) any person, other than a person described in
subparagraph (A) that performs income tax preparation
activities for consumers.
(2) DESCRIPTION OF ACTIVITIES.—
(A) IN GENERAL.—Paragraph (1) shall not apply to
any person described in paragraph (1)(A) or (1)(B) to the
extent that such person is engaged in any activity which
is not a customary and usual accounting activity described
in paragraph (1)(A) or incidental thereto but which is the
offering or provision of any consumer financial product
or service, except to the extent that a person described
in paragraph (1)(A) is engaged in an activity which is
a customary and usual accounting activity described in
paragraph (1)(A), or incidental thereto.
(B) NOT A CUSTOMARY AND USUAL ACCOUNTING
ACTIVITY.—For purposes of this subsection, extending or
brokering credit is not a customary and usual accounting
activity, or incidental thereto.
(C) RULE OF CONSTRUCTION.—For purposes of subparagraphs (A) and (B), a person described in paragraph (1)(A)
shall not be deemed to be extending credit, if such person
is only extending credit directly to a consumer, exclusively
for the purpose of enabling such consumer to purchase
services described in clause (i) or (ii) of paragraph (1)(A)
directly from such person, and such credit is—
(i) not subject to a finance charge; and
(ii) not payable by written agreement in more than
4 installments.
(D) OTHER LIMITATIONS.—Paragraph (1) does not apply
to any person described in paragraph (1)(A) or (1)(B) that
is otherwise subject to any enumerated consumer law or
any law for which authorities are transferred under subtitle
F or H.
(e) EXCLUSION FOR PRACTICE OF LAW.—
(1) IN GENERAL.—Except as provided under paragraph (2),
the Bureau may not exercise any supervisory or enforcement
authority with respect to an activity engaged in by an attorney
as part of the practice of law under the laws of a State in
which the attorney is licensed to practice law.
(2) RULE OF CONSTRUCTION.—Paragraph (1) shall not be
construed so as to limit the exercise by the Bureau of any
supervisory, enforcement, or other authority regarding the
offering or provision of a consumer financial product or service
described in any subparagraph of section 1002(5)—
(A) that is not offered or provided as part of, or incidental to, the practice of law, occurring exclusively within
the scope of the attorney-client relationship; or
(B) that is otherwise offered or provided by the attorney
in question with respect to any consumer who is not
receiving legal advice or services from the attorney in
connection with such financial product or service.
(3) EXISTING AUTHORITY.—Paragraph (1) shall not be construed so as to limit the authority of the Bureau with respect
to any attorney, to the extent that such attorney is otherwise
subject to any of the enumerated consumer laws or the authorities transferred under subtitle F or H.

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124 STAT. 2000

PUBLIC LAW 111–203—JULY 21, 2010

(f) EXCLUSION FOR PERSONS REGULATED BY A STATE INSURANCE
REGULATOR.—
(1) IN GENERAL.—No provision of this title shall be construed as altering, amending, or affecting the authority of any
State insurance regulator to adopt rules, initiate enforcement
proceedings, or take any other action with respect to a person
regulated by a State insurance regulator. Except as provided
in paragraph (2), the Bureau shall have no authority to exercise
any power to enforce this title with respect to a person regulated
by a State insurance regulator.
(2) DESCRIPTION OF ACTIVITIES.—Paragraph (1) does not
apply to any person described in such paragraph to the extent
that such person is engaged in the offering or provision of
any consumer financial product or service or is otherwise subject to any enumerated consumer law or any law for which
authorities are transferred under subtitle F or H.
(3) STATE INSURANCE AUTHORITY UNDER GRAMM-LEACHBLILEY.—Notwithstanding paragraph (2), the Bureau shall not
exercise any authorities that are granted a State insurance
authority under section 505(a)(6) of the Gramm-Leach-Bliley
Act with respect to a person regulated by a State insurance
authority.
(g) EXCLUSION FOR EMPLOYEE BENEFIT AND COMPENSATION
PLANS AND CERTAIN OTHER ARRANGEMENTS UNDER THE INTERNAL
REVENUE CODE OF 1986.—
(1) PRESERVATION OF AUTHORITY OF OTHER AGENCIES.—
No provision of this title shall be construed as altering,
amending, or affecting the authority of the Secretary of the
Treasury, the Secretary of Labor, or the Commissioner of
Internal Revenue to adopt regulations, initiate enforcement
proceedings, or take any actions with respect to any specified
plan or arrangement.
(2) ACTIVITIES NOT CONSTITUTING THE OFFERING OR PROVISION OF ANY CONSUMER FINANCIAL PRODUCT OR SERVICE.—For
purposes of this title, a person shall not be treated as having
engaged in the offering or provision of any consumer financial
product or service solely because such person is—
(A) a specified plan or arrangement;
(B) engaged in the activity of establishing or
maintaining, for the benefit of employees of such person
(or for members of an employee organization), any specified
plan or arrangement; or
(C) engaged in the activity of establishing or
maintaining a qualified tuition program under section
529(b)(1) of the Internal Revenue Code of 1986 offered
by a State or other prepaid tuition program offered by
a State.
(3) LIMITATION ON BUREAU AUTHORITY.—
(A) IN GENERAL.—Except as provided under subparagraphs (B) and (C), the Bureau may not exercise any rulemaking or enforcement authority with respect to products
or services that relate to any specified plan or arrangement.
(B) BUREAU ACTION PURSUANT TO AGENCY REQUEST.—
(i) AGENCY REQUEST.—The Secretary and the Secretary of Labor may jointly issue a written request
to the Bureau regarding implementation of appropriate
consumer protection standards under this title with

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124 STAT. 2001

respect to the provision of services relating to any
specified plan or arrangement.
(ii) AGENCY RESPONSE.—In response to a request
by the Bureau, the Secretary and the Secretary of
Labor shall jointly issue a written response, not later
than 90 days after receipt of such request, to grant
or deny the request of the Bureau regarding
implementation of appropriate consumer protection
standards under this title with respect to the provision
of services relating to any specified plan or arrangement.
(iii) SCOPE OF BUREAU ACTION.—Subject to a
request or response pursuant to clause (i) or clause
(ii) by the agencies made under this subparagraph,
the Bureau may exercise rulemaking authority, and
may act to enforce a rule prescribed pursuant to such
request or response, in accordance with the provisions
of this title. A request or response made by the Secretary and the Secretary of Labor under this subparagraph shall describe the basis for, and scope of, appropriate consumer protection standards to be implemented under this title with respect to the provision
of services relating to any specified plan or arrangement.
(C) DESCRIPTION OF PRODUCTS OR SERVICES.—To the
extent that a person engaged in providing products or
services relating to any specified plan or arrangement is
subject to any enumerated consumer law or any law for
which authorities are transferred under subtitle F or H,
subparagraph (A) shall not apply with respect to that law.
(4) SPECIFIED PLAN OR ARRANGEMENT.—For purposes of
this subsection, the term ‘‘specified plan or arrangement’’ means
any plan, account, or arrangement described in section 220,
223, 401(a), 403(a), 403(b), 408, 408A, 529, or 530 of the Internal
Revenue Code of 1986, or any employee benefit or compensation
plan or arrangement, including a plan that is subject to title
I of the Employee Retirement Income Security Act of 1974,
or any prepaid tuition program offered by a State.
(h) PERSONS REGULATED BY A STATE SECURITIES COMMISSION.—
(1) IN GENERAL.—No provision of this title shall be construed as altering, amending, or affecting the authority of any
securities commission (or any agency or office performing like
functions) of any State to adopt rules, initiate enforcement
proceedings, or take any other action with respect to a person
regulated by any securities commission (or any agency or office
performing like functions) of any State. Except as permitted
in paragraph (2) and subsection (f), the Bureau shall have
no authority to exercise any power to enforce this title with
respect to a person regulated by any securities commission
(or any agency or office performing like functions) of any State,
but only to the extent that the person acts in such regulated
capacity.
(2) DESCRIPTION OF ACTIVITIES.—Paragraph (1) shall not
apply to any person to the extent such person is engaged
in the offering or provision of any consumer financial product
or service, or is otherwise subject to any enumerated consumer

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Contracts.
Procedures.
Notification.

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PUBLIC LAW 111–203—JULY 21, 2010

law or any law for which authorities are transferred under
subtitle F or H.
(i) EXCLUSION FOR PERSONS REGULATED BY THE COMMISSION.—
(1) IN GENERAL.—No provision of this title may be construed as altering, amending, or affecting the authority of the
Commission to adopt rules, initiate enforcement proceedings,
or take any other action with respect to a person regulated
by the Commission. The Bureau shall have no authority to
exercise any power to enforce this title with respect to a person
regulated by the Commission.
(2) CONSULTATION AND COORDINATION.—Notwithstanding
paragraph (1), the Commission shall consult and coordinate,
where feasible, with the Bureau with respect to any rule
(including any advance notice of proposed rulemaking)
regarding an investment product or service that is the same
type of product as, or that competes directly with, a consumer
financial product or service that is subject to the jurisdiction
of the Bureau under this title or under any other law. In
carrying out this paragraph, the agencies shall negotiate an
agreement to establish procedures for such coordination,
including procedures for providing advance notice to the Bureau
when the Commission is initiating a rulemaking.
(j) EXCLUSION FOR PERSONS REGULATED BY THE COMMODITY
FUTURES TRADING COMMISSION.—
(1) IN GENERAL.—No provision of this title shall be construed as altering, amending, or affecting the authority of the
Commodity Futures Trading Commission to adopt rules, initiate
enforcement proceedings, or take any other action with respect
to a person regulated by the Commodity Futures Trading
Commission. The Bureau shall have no authority to exercise
any power to enforce this title with respect to a person regulated
by the Commodity Futures Trading Commission.
(2) CONSULTATION AND COORDINATION.—Notwithstanding
paragraph (1), the Commodity Futures Trading Commission
shall consult and coordinate with the Bureau with respect
to any rule (including any advance notice of proposed rulemaking) regarding a product or service that is the same type
of product as, or that competes directly with, a consumer financial product or service that is subject to the jurisdiction of
the Bureau under this title or under any other law.
(k) EXCLUSION FOR PERSONS REGULATED BY THE FARM CREDIT
ADMINISTRATION.—
(1) IN GENERAL.—No provision of this title shall be construed as altering, amending, or affecting the authority of the
Farm Credit Administration to adopt rules, initiate enforcement
proceedings, or take any other action with respect to a person
regulated by the Farm Credit Administration. The Bureau shall
have no authority to exercise any power to enforce this title
with respect to a person regulated by the Farm Credit Administration.
(2) DEFINITION.—For purposes of this subsection, the term
‘‘person regulated by the Farm Credit Administration’’ means
any Farm Credit System institution that is chartered and subject to the provisions of the Farm Credit Act of 1971 (12
U.S.C. 2001 et seq.).
(l) EXCLUSION FOR ACTIVITIES RELATING TO CHARITABLE CONTRIBUTIONS.—

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2003

(1) IN GENERAL.—The Director and the Bureau may not
exercise any rulemaking, supervisory, enforcement, or other
authority, including authority to order penalties, over any
activities related to the solicitation or making of voluntary
contributions to a tax-exempt organization as recognized by
the Internal Revenue Service, by any agent, volunteer, or representative of such organizations to the extent the organization,
agent, volunteer, or representative thereof is soliciting or providing advice, information, education, or instruction to any
donor or potential donor relating to a contribution to the
organization.
(2) LIMITATION.—The exclusion in paragraph (1) does not
apply to other activities not described in paragraph (1) that
are the offering or provision of any consumer financial product
or service, or are otherwise subject to any enumerated consumer
law or any law for which authorities are transferred under
subtitle F or H.
(m) INSURANCE.—The Bureau may not define as a financial
product or service, by regulation or otherwise, engaging in the
business of insurance.
(n) LIMITED AUTHORITY OF THE BUREAU.—Notwithstanding subsections (a) through (h) and (l), a person subject to or described
in one or more of such provisions—
(1) may be a service provider; and
(2) may be subject to requests from, or requirements
imposed by, the Bureau regarding information in order to carry
out the responsibilities and functions of the Bureau and in
accordance with section 1022, 1052, or 1053.
(o) NO AUTHORITY TO IMPOSE USURY LIMIT.—No provision of
this title shall be construed as conferring authority on the Bureau
to establish a usury limit applicable to an extension of credit offered
or made by a covered person to a consumer, unless explicitly authorized by law.
(p) ATTORNEY GENERAL.—No provision of this title, including
section 1024(c)(1), shall affect the authorities of the Attorney General under otherwise applicable provisions of law.
(q) SECRETARY OF THE TREASURY.—No provision of this title
shall affect the authorities of the Secretary, including with respect
to prescribing rules, initiating enforcement proceedings, or taking
other actions with respect to a person that performs income tax
preparation activities for consumers.
(r) DEPOSIT INSURANCE AND SHARE INSURANCE.—Nothing in
this title shall affect the authority of the Corporation under the
Federal Deposit Insurance Act or the National Credit Union
Administration Board under the Federal Credit Union Act as to
matters related to deposit insurance and share insurance, respectively.
(s) FAIR HOUSING ACT.—No provision of this title shall be
construed as affecting any authority arising under the Fair Housing
Act.

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SEC. 1028. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE
ARBITRATION.

12 USC 5518.

(a) STUDY AND REPORT.—The Bureau shall conduct a study
of, and shall provide a report to Congress concerning, the use
of agreements providing for arbitration of any future dispute

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Applicability.

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12 USC 5519.

PUBLIC LAW 111–203—JULY 21, 2010

between covered persons and consumers in connection with the
offering or providing of consumer financial products or services.
(b) FURTHER AUTHORITY.—The Bureau, by regulation, may prohibit or impose conditions or limitations on the use of an agreement
between a covered person and a consumer for a consumer financial
product or service providing for arbitration of any future dispute
between the parties, if the Bureau finds that such a prohibition
or imposition of conditions or limitations is in the public interest
and for the protection of consumers. The findings in such rule
shall be consistent with the study conducted under subsection (a).
(c) LIMITATION.—The authority described in subsection (b) may
not be construed to prohibit or restrict a consumer from entering
into a voluntary arbitration agreement with a covered person after
a dispute has arisen.
(d) EFFECTIVE DATE.—Notwithstanding any other provision of
law, any regulation prescribed by the Bureau under subsection
(b) shall apply, consistent with the terms of the regulation, to
any agreement between a consumer and a covered person entered
into after the end of the 180-day period beginning on the effective
date of the regulation, as established by the Bureau.
SEC. 1029. EXCLUSION FOR AUTO DEALERS.

(a) SALE, SERVICING, AND LEASING OF MOTOR VEHICLES
EXCLUDED.—Except as permitted in subsection (b), the Bureau may
not exercise any rulemaking, supervisory, enforcement or any other
authority, including any authority to order assessments, over a
motor vehicle dealer that is predominantly engaged in the sale
and servicing of motor vehicles, the leasing and servicing of motor
vehicles, or both.
(b) CERTAIN FUNCTIONS EXCEPTED.—Subsection (a) shall not
apply to any person, to the extent that such person—
(1) provides consumers with any services related to residential or commercial mortgages or self-financing transactions
involving real property;
(2) operates a line of business—
(A) that involves the extension of retail credit or retail
leases involving motor vehicles; and
(B) in which—
(i) the extension of retail credit or retail leases
are provided directly to consumers; and
(ii) the contract governing such extension of retail
credit or retail leases is not routinely assigned to an
unaffiliated third party finance or leasing source; or
(3) offers or provides a consumer financial product or
service not involving or related to the sale, financing, leasing,
rental, repair, refurbishment, maintenance, or other servicing
of motor vehicles, motor vehicle parts, or any related or
ancillary product or service.
(c) PRESERVATION OF AUTHORITIES OF OTHER AGENCIES.—
Except as provided in subsections (b) and (d), nothing in this
title, including subtitle F, shall be construed as modifying, limiting,
or superseding the operation of any provision of Federal law, or
otherwise affecting the authority of the Board of Governors, the
Federal Trade Commission, or any other Federal agency, with
respect to a person described in subsection (a).
(d) FEDERAL TRADE COMMISSION AUTHORITY.—Notwithstanding
section 18 of the Federal Trade Commission Act, the Federal Trade

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124 STAT. 2005

Commission is authorized to prescribe rules under sections 5 and
18(a)(1)(B) of the Federal Trade Commission Act. in accordance
with section 553 of title 5, United States Code, with respect to
a person described in subsection (a).
(e) COORDINATION WITH OFFICE OF SERVICE MEMBER
AFFAIRS.—The Board of Governors and the Federal Trade Commission shall coordinate with the Office of Service Member Affairs,
to ensure that—
(1) service members and their families are educated and
empowered to make better informed decisions regarding consumer financial products and services offered by motor vehicle
dealers, with a focus on motor vehicle dealers in the proximity
of military installations; and
(2) complaints by service members and their families concerning such motor vehicle dealers are effectively monitored
and responded to, and where appropriate, enforcement action
is pursued by the authorized agencies.
(f) DEFINITIONS.—For purposes of this section, the following
definitions shall apply:
(1) MOTOR VEHICLE.—The term ‘‘motor vehicle’’ means—
(A) any self-propelled vehicle designed for transporting
persons or property on a street, highway, or other road;
(B) recreational boats and marine equipment;
(C) motorcycles;
(D) motor homes, recreational vehicle trailers, and
slide-in campers, as those terms are defined in sections
571.3 and 575.103 (d) of title 49, Code of Federal Regulations, or any successor thereto; and
(E) other vehicles that are titled and sold through
dealers.
(2) MOTOR VEHICLE DEALER.—The term ‘‘motor vehicle
dealer’’ means any person or resident in the United States,
or any territory of the United States, who—
(A) is licensed by a State, a territory of the United
States, or the District of Columbia to engage in the sale
of motor vehicles; and
(B) takes title to, holds an ownership in, or takes
physical custody of motor vehicles.
SEC. 1029A. EFFECTIVE DATE.

This subtitle shall become effective on the designated transfer
date, except that sections 1022, 1024, and 1025(e) shall become
effective on the date of enactment of this Act.

12 USC 5511
note.

Subtitle C—Specific Bureau Authorities

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SEC. 1031. PROHIBITING UNFAIR, DECEPTIVE, OR ABUSIVE ACTS OR
PRACTICES.

12 USC 5531.

(a) IN GENERAL.—The Bureau may take any action authorized
under subtitle E to prevent a covered person or service provider
from committing or engaging in an unfair, deceptive, or abusive
act or practice under Federal law in connection with any transaction
with a consumer for a consumer financial product or service, or
the offering of a consumer financial product or service.
(b) RULEMAKING.—The Bureau may prescribe rules applicable
to a covered person or service provider identifying as unlawful

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124 STAT. 2006

PUBLIC LAW 111–203—JULY 21, 2010

unfair, deceptive, or abusive acts or practices in connection with
any transaction with a consumer for a consumer financial product
or service, or the offering of a consumer financial product or service.
Rules under this section may include requirements for the purpose
of preventing such acts or practices.
(c) UNFAIRNESS.—
(1) IN GENERAL.—The Bureau shall have no authority under
this section to declare an act or practice in connection with
a transaction with a consumer for a consumer financial product
or service, or the offering of a consumer financial product
or service, to be unlawful on the grounds that such act or
practice is unfair, unless the Bureau has a reasonable basis
to conclude that—
(A) the act or practice causes or is likely to cause
substantial injury to consumers which is not reasonably
avoidable by consumers; and
(B) such substantial injury is not outweighed by
countervailing benefits to consumers or to competition.
(2) CONSIDERATION OF PUBLIC POLICIES.—In determining
whether an act or practice is unfair, the Bureau may consider
established public policies as evidence to be considered with
all other evidence. Such public policy considerations may not
serve as a primary basis for such determination.
(d) ABUSIVE.—The Bureau shall have no authority under this
section to declare an act or practice abusive in connection with
the provision of a consumer financial product or service, unless
the act or practice—
(1) materially interferes with the ability of a consumer
to understand a term or condition of a consumer financial
product or service; or
(2) takes unreasonable advantage of—
(A) a lack of understanding on the part of the consumer
of the material risks, costs, or conditions of the product
or service;
(B) the inability of the consumer to protect the interests
of the consumer in selecting or using a consumer financial
product or service; or
(C) the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.
(e) CONSULTATION.—In prescribing rules under this section,
the Bureau shall consult with the Federal banking agencies, or
other Federal agencies, as appropriate, concerning the consistency
of the proposed rule with prudential, market, or systemic objectives
administered by such agencies.
(f) CONSIDERATION OF SEASONAL INCOME.—The rules of the
Bureau under this section shall provide, with respect to an extension
of credit secured by residential real estate or a dwelling, if documented income of the borrower, including income from a small
business, is a repayment source for an extension of credit secured
by residential real estate or a dwelling, the creditor may consider
the seasonality and irregularity of such income in the underwriting
of and scheduling of payments for such credit.
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12 USC 5532.

SEC. 1032. DISCLOSURES.

(a) IN GENERAL.—The Bureau may prescribe rules to ensure
that the features of any consumer financial product or service,
both initially and over the term of the product or service, are

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2007

fully, accurately, and effectively disclosed to consumers in a manner
that permits consumers to understand the costs, benefits, and risks
associated with the product or service, in light of the facts and
circumstances.
(b) MODEL DISCLOSURES.—
(1) IN GENERAL.—Any final rule prescribed by the Bureau
under this section requiring disclosures may include a model
form that may be used at the option of the covered person
for provision of the required disclosures.
(2) FORMAT.—A model form issued pursuant to paragraph
(1) shall contain a clear and conspicuous disclosure that, at
a minimum—
(A) uses plain language comprehensible to consumers;
(B) contains a clear format and design, such as an
easily readable type font; and
(C) succinctly explains the information that must be
communicated to the consumer.
(3) CONSUMER TESTING.—Any model form issued pursuant
to this subsection shall be validated through consumer testing.
(c) BASIS FOR RULEMAKING.—In prescribing rules under this
section, the Bureau shall consider available evidence about consumer awareness, understanding of, and responses to disclosures
or communications about the risks, costs, and benefits of consumer
financial products or services.
(d) SAFE HARBOR.—Any covered person that uses a model form
included with a rule issued under this section shall be deemed
to be in compliance with the disclosure requirements of this section
with respect to such model form.
(e) TRIAL DISCLOSURE PROGRAMS.—
(1) IN GENERAL.—The Bureau may permit a covered person
to conduct a trial program that is limited in time and scope,
subject to specified standards and procedures, for the purpose
of providing trial disclosures to consumers that are designed
to improve upon any model form issued pursuant to subsection
(b)(1), or any other model form issued to implement an enumerated statute, as applicable.
(2) SAFE HARBOR.—The standards and procedures issued
by the Bureau shall be designed to encourage covered persons
to conduct trial disclosure programs. For the purposes of administering this subsection, the Bureau may establish a limited
period during which a covered person conducting a trial disclosure program shall be deemed to be in compliance with, or
may be exempted from, a requirement of a rule or an enumerated consumer law.
(3) PUBLIC DISCLOSURE.—The rules of the Bureau shall
provide for public disclosure of trial disclosure programs, which
public disclosure may be limited, to the extent necessary to
encourage covered persons to conduct effective trials.
(f) COMBINED MORTGAGE LOAN DISCLOSURE.—Not later than
1 year after the designated transfer date, the Bureau shall propose
for public comment rules and model disclosures that combine the
disclosures required under the Truth in Lending Act and sections
4 and 5 of the Real Estate Settlement Procedures Act of 1974,
into a single, integrated disclosure for mortgage loan transactions
covered by those laws, unless the Bureau determines that any
proposal issued by the Board of Governors and the Secretary of
Housing and Urban Development carries out the same purpose.

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124 STAT. 2008
12 USC 5533.

PUBLIC LAW 111–203—JULY 21, 2010

SEC. 1033. CONSUMER RIGHTS TO ACCESS INFORMATION.

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(a) IN GENERAL.—Subject to rules prescribed by the Bureau,
a covered person shall make available to a consumer, upon request,
information in the control or possession of the covered person concerning the consumer financial product or service that the consumer
obtained from such covered person, including information relating
to any transaction, series of transactions, or to the account including
costs, charges and usage data. The information shall be made
available in an electronic form usable by consumers.
(b) EXCEPTIONS.—A covered person may not be required by
this section to make available to the consumer—
(1) any confidential commercial information, including an
algorithm used to derive credit scores or other risk scores
or predictors;
(2) any information collected by the covered person for
the purpose of preventing fraud or money laundering, or
detecting, or making any report regarding other unlawful or
potentially unlawful conduct;
(3) any information required to be kept confidential by
any other provision of law; or
(4) any information that the covered person cannot retrieve
in the ordinary course of its business with respect to that
information.
(c) NO DUTY TO MAINTAIN RECORDS.—Nothing in this section
shall be construed to impose any duty on a covered person to
maintain or keep any information about a consumer.
(d) STANDARDIZED FORMATS FOR DATA.—The Bureau, by rule,
shall prescribe standards applicable to covered persons to promote
the development and use of standardized formats for information,
including through the use of machine readable files, to be made
available to consumers under this section.
(e) CONSULTATION.—The Bureau shall, when prescribing any
rule under this section, consult with the Federal banking agencies
and the Federal Trade Commission to ensure, to the extent appropriate, that the rules—
(1) impose substantively similar requirements on covered
persons;
(2) take into account conditions under which covered persons do business both in the United States and in other countries; and
(3) do not require or promote the use of any particular
technology in order to develop systems for compliance.

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12 USC 5534.

SEC. 1034. RESPONSE TO CONSUMER COMPLAINTS AND INQUIRIES.

Procedures.

(a) TIMELY REGULATOR RESPONSE TO CONSUMERS.—The Bureau
shall establish, in consultation with the appropriate Federal regulatory agencies, reasonable procedures to provide a timely response
to consumers, in writing where appropriate, to complaints against,
or inquiries concerning, a covered person, including—
(1) steps that have been taken by the regulator in response
to the complaint or inquiry of the consumer;
(2) any responses received by the regulator from the covered
person; and
(3) any follow-up actions or planned follow-up actions by
the regulator in response to the complaint or inquiry of the
consumer.

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124 STAT. 2009

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(b) TIMELY RESPONSE TO REGULATOR BY COVERED PERSON.—
A covered person subject to supervision and primary enforcement
by the Bureau pursuant to section 1025 shall provide a timely
response, in writing where appropriate, to the Bureau, the prudential regulators, and any other agency having jurisdiction over such
covered person concerning a consumer complaint or inquiry,
including—
(1) steps that have been taken by the covered person to
respond to the complaint or inquiry of the consumer;
(2) responses received by the covered person from the consumer; and
(3) follow-up actions or planned follow-up actions by the
covered person to respond to the complaint or inquiry of the
consumer.
(c) PROVISION OF INFORMATION TO CONSUMERS.—
(1) IN GENERAL.—A covered person subject to supervision
and primary enforcement by the Bureau pursuant to section
1025 shall, in a timely manner, comply with a consumer request
for information in the control or possession of such covered
person concerning the consumer financial product or service
that the consumer obtained from such covered person, including
supporting written documentation, concerning the account of
the consumer.
(2) EXCEPTIONS.—A covered person subject to supervision
and primary enforcement by the Bureau pursuant to section
1025, a prudential regulator, and any other agency having
jurisdiction over a covered person subject to supervision and
primary enforcement by the Bureau pursuant to section 1025
may not be required by this section to make available to the
consumer—
(A) any confidential commercial information, including
an algorithm used to derive credit scores or other risk
scores or predictors;
(B) any information collected by the covered person
for the purpose of preventing fraud or money laundering,
or detecting or making any report regarding other unlawful
or potentially unlawful conduct;
(C) any information required to be kept confidential
by any other provision of law; or
(D) any nonpublic or confidential information,
including confidential supervisory information.
(d) AGREEMENTS WITH OTHER AGENCIES.—The Bureau shall
enter into a memorandum of understanding with any affected Federal regulatory agency regarding procedures by which any covered
person, and the prudential regulators, and any other agency having
jurisdiction over a covered person, including the Secretary of the
Department of Housing and Urban Development and the Secretary
of Education, shall comply with this section.

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Compliance.

Memorandum.

SEC. 1035. PRIVATE EDUCATION LOAN OMBUDSMAN.

12 USC 5535.

(a) ESTABLISHMENT.—The Secretary, in consultation with the
Director, shall designate a Private Education Loan Ombudsman
(in this section referred to as the ‘‘Ombudsman’’) within the Bureau,
to provide timely assistance to borrowers of private education loans.
(b) PUBLIC INFORMATION.—The Secretary and the Director shall
disseminate information about the availability and functions of
the Ombudsman to borrowers and potential borrowers, as well

Designation.

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Deadline.
Memorandum.

Recommendations.

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12 USC 5536.

PUBLIC LAW 111–203—JULY 21, 2010

as institutions of higher education, lenders, guaranty agencies, loan
servicers, and other participants in private education student loan
programs.
(c) FUNCTIONS OF OMBUDSMAN.—The Ombudsman designated
under this subsection shall—
(1) in accordance with regulations of the Director, receive,
review, and attempt to resolve informally complaints from borrowers of loans described in subsection (a), including, as appropriate, attempts to resolve such complaints in collaboration
with the Department of Education and with institutions of
higher education, lenders, guaranty agencies, loan servicers,
and other participants in private education loan programs;
(2) not later than 90 days after the designated transfer
date, establish a memorandum of understanding with the student loan ombudsman established under section 141(f) of the
Higher Education Act of 1965 (20 U.S.C. 1018(f)), to ensure
coordination in providing assistance to and serving borrowers
seeking to resolve complaints related to their private education
or Federal student loans;
(3) compile and analyze data on borrower complaints
regarding private education loans; and
(4) make appropriate recommendations to the Director,
the Secretary, the Secretary of Education, the Committee on
Banking, Housing, and Urban Affairs and the Committee on
Health, Education, Labor, and Pensions of the Senate and
the Committee on Financial Services and the Committee on
Education and Labor of the House of Representatives.
(d) ANNUAL REPORTS.—
(1) IN GENERAL.—The Ombudsman shall prepare an annual
report that describes the activities, and evaluates the effectiveness of the Ombudsman during the preceding year.
(2) SUBMISSION.—The report required by paragraph (1)
shall be submitted on the same date annually to the Secretary,
the Secretary of Education, the Committee on Banking,
Housing, and Urban Affairs and the Committee on Health,
Education, Labor, and Pensions of the Senate and the Committee on Financial Services and the Committee on Education
and Labor of the House of Representatives.
(e) DEFINITIONS.—For purposes of this section, the terms ‘‘private education loan’’ and ‘‘institution of higher education’’ have
the same meanings as in section 140 of the Truth in Lending
Act (15 U.S.C. 1650).
SEC. 1036. PROHIBITED ACTS.

(a) IN GENERAL.—It shall be unlawful for—
(1) any covered person or service provider—
(A) to offer or provide to a consumer any financial
product or service not in conformity with Federal consumer
financial law, or otherwise commit any act or omission
in violation of a Federal consumer financial law; or
(B) to engage in any unfair, deceptive, or abusive act
or practice;
(2) any covered person or service provider to fail or refuse,
as required by Federal consumer financial law, or any rule
or order issued by the Bureau thereunder—
(A) to permit access to or copying of records;
(B) to establish or maintain records; or

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124 STAT. 2011

(C) to make reports or provide information to the
Bureau; or
(3) any person to knowingly or recklessly provide substantial assistance to a covered person or service provider in violation of the provisions of section 1031, or any rule or order
issued thereunder, and notwithstanding any provision of this
title, the provider of such substantial assistance shall be
deemed to be in violation of that section to the same extent
as the person to whom such assistance is provided.
(b) EXCEPTION.—No person shall be held to have violated subsection (a)(1) solely by virtue of providing or selling time or space
to a covered person or service provider placing an advertisement.
SEC. 1037. EFFECTIVE DATE.

This subtitle shall take effect on the designated transfer date.

12 USC 5531
note.

Subtitle D—Preservation of State Law

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SEC. 1041. RELATION TO STATE LAW.

12 USC 5551.

(a) IN GENERAL.—
(1) RULE OF CONSTRUCTION.—This title, other than sections
1044 through 1048, may not be construed as annulling, altering,
or affecting, or exempting any person subject to the provisions
of this title from complying with, the statutes, regulations,
orders, or interpretations in effect in any State, except to the
extent that any such provision of law is inconsistent with
the provisions of this title, and then only to the extent of
the inconsistency.
(2) GREATER PROTECTION UNDER STATE LAW.—For purposes
of this subsection, a statute, regulation, order, or interpretation
in effect in any State is not inconsistent with the provisions
of this title if the protection that such statute, regulation,
order, or interpretation affords to consumers is greater than
the protection provided under this title. A determination
regarding whether a statute, regulation, order, or interpretation
in effect in any State is inconsistent with the provisions of
this title may be made by the Bureau on its own motion
or in response to a nonfrivolous petition initiated by any
interested person.
(b) RELATION TO OTHER PROVISIONS OF ENUMERATED CONSUMER LAWS THAT RELATE TO STATE LAW.—No provision of this
title, except as provided in section 1083, shall be construed as
modifying, limiting, or superseding the operation of any provision
of an enumerated consumer law that relates to the application
of a law in effect in any State with respect to such Federal law.
(c) ADDITIONAL CONSUMER PROTECTION REGULATIONS IN
RESPONSE TO STATE ACTION.—
(1) NOTICE OF PROPOSED RULE REQUIRED.—The Bureau
shall issue a notice of proposed rulemaking whenever a majority
of the States has enacted a resolution in support of the
establishment or modification of a consumer protection regulation by the Bureau.
(2) BUREAU CONSIDERATIONS REQUIRED FOR ISSUANCE OF
FINAL REGULATION.—Before prescribing a final regulation based
upon a notice issued pursuant to paragraph (1), the Bureau
shall take into account whether—

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124 STAT. 2012

(A) the proposed regulation would afford greater protection to consumers than any existing regulation;
(B) the intended benefits of the proposed regulation
for consumers would outweigh any increased costs or
inconveniences for consumers, and would not discriminate
unfairly against any category or class of consumers; and
(C) a Federal banking agency has advised that the
proposed regulation is likely to present an unacceptable
safety and soundness risk to insured depository institutions.
(3) EXPLANATION OF CONSIDERATIONS.—The Bureau—
(A) shall include a discussion of the considerations
required in paragraph (2) in the Federal Register notice
of a final regulation prescribed pursuant to this subsection;
and
(B) whenever the Bureau determines not to prescribe
a final regulation, shall publish an explanation of such
determination in the Federal Register, and provide a copy
of such explanation to each State that enacted a resolution
in support of the proposed regulation, the Committee on
Banking, Housing, and Urban Affairs of the Senate, and
the Committee on Financial Services of the House of Representatives.
(4) RESERVATION OF AUTHORITY.—No provision of this subsection shall be construed as limiting or restricting the
authority of the Bureau to enhance consumer protection standards established pursuant to this title in response to its own
motion or in response to a request by any other interested
person.
(5) RULE OF CONSTRUCTION.—No provision of this subsection shall be construed as exempting the Bureau from complying with subchapter II of chapter 5 of title 5, United States
Code.
(6) DEFINITION.—For purposes of this subsection, the term
‘‘consumer protection regulation’’ means a regulation that the
Bureau is authorized to prescribe under the Federal consumer
financial laws.

Federal Register,
publication.

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12 USC 5552.

PUBLIC LAW 111–203—JULY 21, 2010

SEC. 1042. PRESERVATION OF ENFORCEMENT POWERS OF STATES.

(a) IN GENERAL.—
(1) ACTION BY STATE.—Except as provided in paragraph
(2), the attorney general (or the equivalent thereof) of any
State may bring a civil action in the name of such State
in any district court of the United States in that State or
in State court that is located in that State and that has jurisdiction over the defendant, to enforce provisions of this title or
regulations issued under this title, and to secure remedies
under provisions of this title or remedies otherwise provided
under other law. A State regulator may bring a civil action
or other appropriate proceeding to enforce the provisions of
this title or regulations issued under this title with respect
to any entity that is State-chartered, incorporated, licensed,
or otherwise authorized to do business under State law (except
as provided in paragraph (2)), and to secure remedies under
provisions of this title or remedies otherwise provided under
other provisions of law with respect to such an entity.

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124 STAT. 2013

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(2) ACTION BY STATE AGAINST NATIONAL BANK OR FEDERAL
SAVINGS ASSOCIATION TO ENFORCE RULES.—
(A) IN GENERAL.—Except as permitted under subparagraph (B), the attorney general (or equivalent thereof) of
any State may not bring a civil action in the name of
such State against a national bank or Federal savings
association to enforce a provision of this title.
(B) ENFORCEMENT OF RULES PERMITTED.—The attorney
general (or the equivalent thereof) of any State may bring
a civil action in the name of such State against a national
bank or Federal savings association in any district court
of the United States in the State or in State court that
is located in that State and that has jurisdiction over
the defendant to enforce a regulation prescribed by the
Bureau under a provision of this title and to secure remedies under provisions of this title or remedies otherwise
provided under other law.
(3) RULE OF CONSTRUCTION.—No provision of this title shall
be construed as modifying, limiting, or superseding the operation of any provision of an enumerated consumer law that
relates to the authority of a State attorney general or State
regulator to enforce such Federal law.
(b) CONSULTATION REQUIRED.—
(1) NOTICE.—
(A) IN GENERAL.—Before initiating any action in a
court or other administrative or regulatory proceeding
against any covered person as authorized by subsection
(a) to enforce any provision of this title, including any
regulation prescribed by the Bureau under this title, a
State attorney general or State regulator shall timely provide a copy of the complete complaint to be filed and
written notice describing such action or proceeding to the
Bureau and the prudential regulator, if any, or the designee
thereof.
(B) EMERGENCY ACTION.—If prior notice is not practicable, the State attorney general or State regulator shall
provide a copy of the complete complaint and the notice
to the Bureau and the prudential regulator, if any, immediately upon instituting the action or proceeding.
(C) CONTENTS OF NOTICE.—The notification required
under this paragraph shall, at a minimum, describe—
(i) the identity of the parties;
(ii) the alleged facts underlying the proceeding;
and
(iii) whether there may be a need to coordinate
the prosecution of the proceeding so as not to interfere
with any action, including any rulemaking, undertaken
by the Bureau, a prudential regulator, or another Federal agency.
(2) BUREAU RESPONSE.—In any action described in paragraph (1), the Bureau may—
(A) intervene in the action as a party;
(B) upon intervening—
(i) remove the action to the appropriate United
States district court, if the action was not originally
brought there; and

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PUBLIC LAW 111–203—JULY 21, 2010

(ii) be heard on all matters arising in the action;
and
(C) appeal any order or judgment, to the same extent
as any other party in the proceeding may.
(c) REGULATIONS.—The Bureau shall prescribe regulations to
implement the requirements of this section and, from time to time,
provide guidance in order to further coordinate actions with the
State attorneys general and other regulators.
(d) PRESERVATION OF STATE AUTHORITY.—
(1) STATE CLAIMS.—No provision of this section shall be
construed as altering, limiting, or affecting the authority of
a State attorney general or any other regulatory or enforcement
agency or authority to bring an action or other regulatory
proceeding arising solely under the law in effect in that State.
(2) STATE SECURITIES REGULATORS.—No provision of this
title shall be construed as altering, limiting, or affecting the
authority of a State securities commission (or any agency or
office performing like functions) under State law to adopt rules,
initiate enforcement proceedings, or take any other action with
respect to a person regulated by such commission or authority.
(3) STATE INSURANCE REGULATORS.—No provision of this
title shall be construed as altering, limiting, or affecting the
authority of a State insurance commission or State insurance
regulator under State law to adopt rules, initiate enforcement
proceedings, or take any other action with respect to a person
regulated by such commission or regulator.
12 USC 5553.

SEC. 1043. PRESERVATION OF EXISTING CONTRACTS.

This title, and regulations, orders, guidance, and interpretations
prescribed, issued, or established by the Bureau, shall not be construed to alter or affect the applicability of any regulation, order,
guidance, or interpretation prescribed, issued, and established by
the Comptroller of the Currency or the Director of the Office of
Thrift Supervision regarding the applicability of State law under
Federal banking law to any contract entered into on or before
the date of enactment of this Act, by national banks, Federal
savings associations, or subsidiaries thereof that are regulated and
supervised by the Comptroller of the Currency or the Director
of the Office of Thrift Supervision, respectively.
SEC. 1044. STATE LAW PREEMPTION STANDARDS FOR NATIONAL
BANKS AND SUBSIDIARIES CLARIFIED.

(a) IN GENERAL.—Chapter one of title LXII of the Revised
Statutes of the United States (12 U.S.C. 21 et seq.) is amended
by inserting after section 5136B the following new section:

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12 USC 25b.

‘‘SEC. 5136C. STATE LAW PREEMPTION STANDARDS FOR NATIONAL
BANKS AND SUBSIDIARIES CLARIFIED.

‘‘(a) DEFINITIONS.—For purposes of this section, the following
definitions shall apply:
‘‘(1) NATIONAL BANK.—The term ‘national bank’ includes—
‘‘(A) any bank organized under the laws of the United
States; and
‘‘(B) any Federal branch established in accordance with
the International Banking Act of 1978.
‘‘(2) STATE CONSUMER FINANCIAL LAWS.—The term ‘State
consumer financial law’ means a State law that does not directly
or indirectly discriminate against national banks and that

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2015

directly and specifically regulates the manner, content, or terms
and conditions of any financial transaction (as may be authorized for national banks to engage in), or any account related
thereto, with respect to a consumer.
‘‘(3) OTHER DEFINITIONS.—The terms ‘affiliate’, ‘subsidiary’,
‘includes’, and ‘including’ have the same meanings as in section
3 of the Federal Deposit Insurance Act.
‘‘(b) PREEMPTION STANDARD.—
‘‘(1) IN GENERAL.—State consumer financial laws are preempted, only if—
‘‘(A) application of a State consumer financial law
would have a discriminatory effect on national banks, in
comparison with the effect of the law on a bank chartered
by that State;
‘‘(B) in accordance with the legal standard for preemption in the decision of the Supreme Court of the United
States in Barnett Bank of Marion County, N. A. v. Nelson,
Florida Insurance Commissioner, et al., 517 U.S. 25 (1996),
the State consumer financial law prevents or significantly
interferes with the exercise by the national bank of its
powers; and any preemption determination under this
subparagraph may be made by a court, or by regulation
or order of the Comptroller of the Currency on a caseby-case basis, in accordance with applicable law; or
‘‘(C) the State consumer financial law is preempted
by a provision of Federal law other than this title.
‘‘(2) SAVINGS CLAUSE.—This title and section 24 of the
Federal Reserve Act (12 U.S.C. 371) do not preempt, annul,
or affect the applicability of any State law to any subsidiary
or affiliate of a national bank (other than a subsidiary or
affiliate that is chartered as a national bank).
‘‘(3) CASE-BY-CASE BASIS.—
‘‘(A) DEFINITION.—As used in this section the term
‘case-by-case basis’ refers to a determination pursuant to
this section made by the Comptroller concerning the impact
of a particular State consumer financial law on any national
bank that is subject to that law, or the law of any other
State with substantively equivalent terms.
‘‘(B) CONSULTATION.—When making a determination
on a case-by-case basis that a State consumer financial
law of another State has substantively equivalent terms
as one that the Comptroller is preempting, the Comptroller
shall first consult with the Bureau of Consumer Financial
Protection and shall take the views of the Bureau into
account when making the determination.
‘‘(4) RULE OF CONSTRUCTION.—This title does not occupy
the field in any area of State law.
‘‘(5) STANDARDS OF REVIEW.—
‘‘(A) PREEMPTION.—A court reviewing any determinations made by the Comptroller regarding preemption of
a State law by this title or section 24 of the Federal
Reserve Act (12 U.S.C. 371) shall assess the validity of
such determinations, depending upon the thoroughness evident in the consideration of the agency, the validity of
the reasoning of the agency, the consistency with other
valid determinations made by the agency, and other factors

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124 STAT. 2016

Notice.
Public comment.
Deadline.

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Federal Register,
publication.

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PUBLIC LAW 111–203—JULY 21, 2010

which the court finds persuasive and relevant to its decision.
‘‘(B) SAVINGS CLAUSE.—Except as provided in subparagraph (A), nothing in this section shall affect the deference
that a court may afford to the Comptroller in making
determinations regarding the meaning or interpretation
of title LXII of the Revised Statutes of the United States
or other Federal laws.
‘‘(6) COMPTROLLER DETERMINATION NOT DELEGABLE.—Any
regulation, order, or determination made by the Comptroller
of the Currency under paragraph (1)(B) shall be made by the
Comptroller, and shall not be delegable to another officer or
employee of the Comptroller of the Currency.
‘‘(c) SUBSTANTIAL EVIDENCE.—No regulation or order of the
Comptroller of the Currency prescribed under subsection (b)(1)(B),
shall be interpreted or applied so as to invalidate, or otherwise
declare inapplicable to a national bank, the provision of the State
consumer financial law, unless substantial evidence, made on the
record of the proceeding, supports the specific finding regarding
the preemption of such provision in accordance with the legal
standard of the decision of the Supreme Court of the United States
in Barnett Bank of Marion County, N.A. v. Nelson, Florida Insurance Commissioner, et al., 517 U.S. 25 (1996).
‘‘(d) PERIODIC REVIEW OF PREEMPTION DETERMINATIONS.—
‘‘(1) IN GENERAL.—The Comptroller of the Currency shall
periodically conduct a review, through notice and public comment, of each determination that a provision of Federal law
preempts a State consumer financial law. The agency shall
conduct such review within the 5-year period after prescribing
or otherwise issuing such determination, and at least once
during each 5-year period thereafter. After conducting the
review of, and inspecting the comments made on, the determination, the agency shall publish a notice in the Federal
Register announcing the decision to continue or rescind the
determination or a proposal to amend the determination. Any
such notice of a proposal to amend a determination and the
subsequent resolution of such proposal shall comply with the
procedures set forth in subsections (a) and (b) of section 5244
of the Revised Statutes of the United States (12 U.S.C. 43
(a), (b)).
‘‘(2) REPORTS TO CONGRESS.—At the time of issuing a review
conducted under paragraph (1), the Comptroller of the Currency
shall submit a report regarding such review to the Committee
on Financial Services of the House of Representatives and
the Committee on Banking, Housing, and Urban Affairs of
the Senate. The report submitted to the respective committees
shall address whether the agency intends to continue, rescind,
or propose to amend any determination that a provision of
Federal law preempts a State consumer financial law, and
the reasons therefor.
‘‘(e) APPLICATION OF STATE CONSUMER FINANCIAL LAW TO
SUBSIDIARIES AND AFFILIATES.—Notwithstanding any provision of
this title or section 24 of Federal Reserve Act (12 U.S.C. 371),
a State consumer financial law shall apply to a subsidiary or
affiliate of a national bank (other than a subsidiary or affiliate
that is chartered as a national bank) to the same extent that

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124 STAT. 2017

the State consumer financial law applies to any person, corporation,
or other entity subject to such State law.
‘‘(f) PRESERVATION OF POWERS RELATED TO CHARGING
INTEREST.—No provision of this title shall be construed as altering
or otherwise affecting the authority conferred by section 5197 of
the Revised Statutes of the United States (12 U.S.C. 85) for the
charging of interest by a national bank at the rate allowed by
the laws of the State, territory, or district where the bank is
located, including with respect to the meaning of ‘interest’ under
such provision.
‘‘(g) TRANSPARENCY OF OCC PREEMPTION DETERMINATIONS.—
The Comptroller of the Currency shall publish and update no less
frequently than quarterly, a list of preemption determinations by
the Comptroller of the Currency then in effect that identifies the
activities and practices covered by each determination and the
requirements and constraints determined to be preempted.’’.
(b) CLERICAL AMENDMENT.—The table of sections for chapter
one of title LXII of the Revised Statutes of the United States
is amended by inserting after the item relating to section 5136B
the following new item:

Publication.
Deadline.
Records.

‘‘Sec. 5136C. State law preemption standards for national banks and subsidiaries
clarified.’’.
SEC. 1045. CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY
INSTITUTION SUBSIDIARIES.

Section 5136C of the Revised Statutes of the United States
(as added by this subtitle) is amended by adding at the end the
following:
‘‘(h) CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY
INSTITUTION SUBSIDIARIES AND AFFILIATES OF NATIONAL BANKS.—
‘‘(1) DEFINITIONS.—For purposes of this subsection, the
terms ‘depository institution’, ‘subsidiary’, and ‘affiliate’ have
the same meanings as in section 3 of the Federal Deposit
Insurance Act.
‘‘(2) RULE OF CONSTRUCTION.—No provision of this title
or section 24 of the Federal Reserve Act (12 U.S.C. 371) shall
be construed as preempting, annulling, or affecting the applicability of State law to any subsidiary, affiliate, or agent of
a national bank (other than a subsidiary, affiliate, or agent
that is chartered as a national bank).’’.

12 USC 25b.

SEC. 1046. STATE LAW PREEMPTION STANDARDS FOR FEDERAL
SAVINGS ASSOCIATIONS AND SUBSIDIARIES CLARIFIED.

(a) IN GENERAL.—The Home Owners’ Loan Act (12 U.S.C. 1461
et seq.) is amended by inserting after section 5 the following new
section:

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‘‘SEC. 6. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS
ASSOCIATIONS CLARIFIED.

12 USC 1465.

‘‘(a) IN GENERAL.—Any determination by a court or by the
Director or any successor officer or agency regarding the relation
of State law to a provision of this Act or any regulation or order
prescribed under this Act shall be made in accordance with the
laws and legal standards applicable to national banks regarding
the preemption of State law.
‘‘(b) PRINCIPLES OF CONFLICT PREEMPTION APPLICABLE.—Notwithstanding the authorities granted under sections 4 and 5, this
Act does not occupy the field in any area of State law.’’.

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PUBLIC LAW 111–203—JULY 21, 2010

(b) CLERICAL AMENDMENT.—The table of sections for the Home
Owners’ Loan Act (12 U.S.C. 1461 et seq.) is amended by striking
the item relating to section 6 and inserting the following new
item:
‘‘Sec. 6. State law preemption standards for Federal savings associations and
subsidiaries clarified.’’.
SEC. 1047. VISITORIAL STANDARDS FOR NATIONAL BANKS AND
SAVINGS ASSOCIATIONS.
12 USC 25b.

12 USC 1465.
Applicability.

12 USC 5551
note.

(a) NATIONAL BANKS.—Section 5136C of the Revised Statutes
of the United States (as added by this subtitle) is amended by
adding at the end the following:
‘‘(i) VISITORIAL POWERS.—
‘‘(1) IN GENERAL.—In accordance with the decision of the
Supreme Court of the United States in Cuomo v. Clearing
House Assn., L. L. C. (129 S. Ct. 2710 (2009)), no provision
of this title which relates to visitorial powers or otherwise
limits or restricts the visitorial authority to which any national
bank is subject shall be construed as limiting or restricting
the authority of any attorney general (or other chief law enforcement officer) of any State to bring an action against a national
bank in a court of appropriate jurisdiction to enforce an
applicable law and to seek relief as authorized by such law.
‘‘(j) ENFORCEMENT ACTIONS.—The ability of the Comptroller
of the Currency to bring an enforcement action under this title
or section 5 of the Federal Trade Commission Act does not preclude
any private party from enforcing rights granted under Federal
or State law in the courts.’’.
(b) SAVINGS ASSOCIATIONS.—Section 6 of the Home Owners’
Loan Act (as added by this title) is amended by adding at the
end the following:
‘‘(c) VISITORIAL POWERS.—The provisions of sections 5136C(i)
of the Revised Statutes of the United States shall apply to Federal
savings associations, and any subsidiary thereof, to the same extent
and in the same manner as if such savings associations, or subsidiaries thereof, were national banks or subsidiaries of national banks,
respectively.’’
‘‘(d) ENFORCEMENT ACTIONS.—The ability of the Comptroller
of the Currency to bring an enforcement action under this Act
or section 5 of the Federal Trade Commission Act does not preclude
any private party from enforcing rights granted under Federal
or State law in the courts.’’.
SEC. 1048. EFFECTIVE DATE.

This subtitle shall become effective on the designated transfer
date.

Subtitle E—Enforcement Powers

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12 USC 5561.

SEC. 1051. DEFINITIONS.

For purposes of this subtitle, the following definitions shall
apply:
(1) BUREAU INVESTIGATION.—The term ‘‘Bureau investigation’’ means any inquiry conducted by a Bureau investigator
for the purpose of ascertaining whether any person is or has

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been engaged in any conduct that is a violation, as defined
in this section.
(2) BUREAU INVESTIGATOR.—The term ‘‘Bureau investigator’’ means any attorney or investigator employed by the
Bureau who is charged with the duty of enforcing or carrying
into effect any Federal consumer financial law.
(3) CUSTODIAN.—The term ‘‘custodian’’ means the custodian
or any deputy custodian designated by the Bureau.
(4) DOCUMENTARY MATERIAL.—The term ‘‘documentary
material’’ includes the original or any copy of any book, document, record, report, memorandum, paper, communication, tabulation, chart, logs, electronic files, or other data or data compilations stored in any medium.
(5) VIOLATION.—The term ‘‘violation’’ means any act or
omission that, if proved, would constitute a violation of any
provision of Federal consumer financial law.

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SEC. 1052. INVESTIGATIONS AND ADMINISTRATIVE DISCOVERY.

12 USC 5562.

(a) JOINT INVESTIGATIONS.—
(1) IN GENERAL.—The Bureau or, where appropriate, a
Bureau investigator, may engage in joint investigations and
requests for information, as authorized under this title.
(2) FAIR LENDING.—The authority under paragraph (1)
includes matters relating to fair lending, and where appropriate, joint investigations with, and requests for information
from, the Secretary of Housing and Urban Development, the
Attorney General of the United States, or both.
(b) SUBPOENAS.—
(1) IN GENERAL.—The Bureau or a Bureau investigator
may issue subpoenas for the attendance and testimony of witnesses and the production of relevant papers, books, documents,
or other material in connection with hearings under this title.
(2) FAILURE TO OBEY.—In the case of contumacy or refusal
to obey a subpoena issued pursuant to this paragraph and
served upon any person, the district court of the United States
for any district in which such person is found, resides, or
transacts business, upon application by the Bureau or a Bureau
investigator and after notice to such person, may issue an
order requiring such person to appear and give testimony or
to appear and produce documents or other material.
(3) CONTEMPT.—Any failure to obey an order of the court
under this subsection may be punished by the court as a
contempt thereof.
(c) DEMANDS.—
(1) IN GENERAL.—Whenever the Bureau has reason to
believe that any person may be in possession, custody, or control
of any documentary material or tangible things, or may have
any information, relevant to a violation, the Bureau may, before
the institution of any proceedings under the Federal consumer
financial law, issue in writing, and cause to be served upon
such person, a civil investigative demand requiring such person
to—
(A) produce such documentary material for inspection
and copying or reproduction in the form or medium
requested by the Bureau;
(B) submit such tangible things;
(C) file written reports or answers to questions;

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PUBLIC LAW 111–203—JULY 21, 2010
(D) give oral testimony concerning documentary material, tangible things, or other information; or
(E) furnish any combination of such material, answers,
or testimony.
(2) REQUIREMENTS.—Each civil investigative demand shall
state the nature of the conduct constituting the alleged violation
which is under investigation and the provision of law applicable
to such violation.
(3) PRODUCTION OF DOCUMENTS.—Each civil investigative
demand for the production of documentary material shall—
(A) describe each class of documentary material to
be produced under the demand with such definiteness and
certainty as to permit such material to be fairly identified;
(B) prescribe a return date or dates which will provide
a reasonable period of time within which the material
so demanded may be assembled and made available for
inspection and copying or reproduction; and
(C) identify the custodian to whom such material shall
be made available.
(4) PRODUCTION OF THINGS.—Each civil investigative
demand for the submission of tangible things shall—
(A) describe each class of tangible things to be submitted under the demand with such definiteness and certainty as to permit such things to be fairly identified;
(B) prescribe a return date or dates which will provide
a reasonable period of time within which the things so
demanded may be assembled and submitted; and
(C) identify the custodian to whom such things shall
be submitted.
(5) DEMAND FOR WRITTEN REPORTS OR ANSWERS.—Each civil
investigative demand for written reports or answers to questions shall—
(A) propound with definiteness and certainty the
reports to be produced or the questions to be answered;
(B) prescribe a date or dates at which time written
reports or answers to questions shall be submitted; and
(C) identify the custodian to whom such reports or
answers shall be submitted.
(6) ORAL TESTIMONY.—Each civil investigative demand for
the giving of oral testimony shall—
(A) prescribe a date, time, and place at which oral
testimony shall be commenced; and
(B) identify a Bureau investigator who shall conduct
the investigation and the custodian to whom the transcript
of such investigation shall be submitted.
(7) SERVICE.—Any civil investigative demand issued, and
any enforcement petition filed, under this section may be
served—
(A) by any Bureau investigator at any place within
the territorial jurisdiction of any court of the United States;
and
(B) upon any person who is not found within the territorial jurisdiction of any court of the United States—
(i) in such manner as the Federal Rules of Civil
Procedure prescribe for service in a foreign nation;
and

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(ii) to the extent that the courts of the United
States have authority to assert jurisdiction over such
person, consistent with due process, the United States
District Court for the District of Columbia shall have
the same jurisdiction to take any action respecting
compliance with this section by such person that such
district court would have if such person were personally
within the jurisdiction of such district court.
(8) METHOD OF SERVICE.—Service of any civil investigative
demand or any enforcement petition filed under this section
may be made upon a person, including any legal entity, by—
(A) delivering a duly executed copy of such demand
or petition to the individual or to any partner, executive
officer, managing agent, or general agent of such person,
or to any agent of such person authorized by appointment
or by law to receive service of process on behalf of such
person;
(B) delivering a duly executed copy of such demand
or petition to the principal office or place of business of
the person to be served; or
(C) depositing a duly executed copy in the United
States mails, by registered or certified mail, return receipt
requested, duly addressed to such person at the principal
office or place of business of such person.
(9) PROOF OF SERVICE.—
(A) IN GENERAL.—A verified return by the individual
serving any civil investigative demand or any enforcement
petition filed under this section setting forth the manner
of such service shall be proof of such service.
(B) RETURN RECEIPTS.—In the case of service by registered or certified mail, such return shall be accompanied
by the return post office receipt of delivery of such demand
or enforcement petition.
(10) PRODUCTION OF DOCUMENTARY MATERIAL.—The
production of documentary material in response to a civil investigative demand shall be made under a sworn certificate, in
such form as the demand designates, by the person, if a natural
person, to whom the demand is directed or, if not a natural
person, by any person having knowledge of the facts and circumstances relating to such production, to the effect that all
of the documentary material required by the demand and in
the possession, custody, or control of the person to whom the
demand is directed has been produced and made available
to the custodian.
(11) SUBMISSION OF TANGIBLE THINGS.—The submission of
tangible things in response to a civil investigative demand
shall be made under a sworn certificate, in such form as the
demand designates, by the person to whom the demand is
directed or, if not a natural person, by any person having
knowledge of the facts and circumstances relating to such
production, to the effect that all of the tangible things required
by the demand and in the possession, custody, or control of
the person to whom the demand is directed have been submitted
to the custodian.
(12) SEPARATE ANSWERS.—Each reporting requirement or
question in a civil investigative demand shall be answered
separately and fully in writing under oath, unless it is objected

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Certificate.

Certificate.

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PUBLIC LAW 111–203—JULY 21, 2010
to, in which event the reasons for the objection shall be stated
in lieu of an answer, and it shall be submitted under a sworn
certificate, in such form as the demand designates, by the
person, if a natural person, to whom the demand is directed
or, if not a natural person, by any person responsible for
answering each reporting requirement or question, to the effect
that all information required by the demand and in the possession, custody, control, or knowledge of the person to whom
the demand is directed has been submitted.
(13) TESTIMONY.—
(A) IN GENERAL.—
(i) OATH AND RECORDATION.—The examination of
any person pursuant to a demand for oral testimony
served under this subsection shall be taken before
an officer authorized to administer oaths and affirmations by the laws of the United States or of the place
at which the examination is held. The officer before
whom oral testimony is to be taken shall put the
witness on oath or affirmation and shall personally,
or by any individual acting under the direction of and
in the presence of the officer, record the testimony
of the witness.
(ii) TRANSCRIPTION.—The testimony shall be taken
stenographically and transcribed.
(iii) TRANSMISSION TO CUSTODIAN.—After the testimony is fully transcribed, the officer investigator before
whom the testimony is taken shall promptly transmit
a copy of the transcript of the testimony to the custodian.
(B) PARTIES PRESENT.—Any Bureau investigator before
whom oral testimony is to be taken shall exclude from
the place where the testimony is to be taken all other
persons, except the person giving the testimony, the
attorney for that person, the officer before whom the testimony is to be taken, an investigator or representative
of an agency with which the Bureau is engaged in a joint
investigation, and any stenographer taking such testimony.
(C) LOCATION.—The oral testimony of any person taken
pursuant to a civil investigative demand shall be taken
in the judicial district of the United States in which such
person resides, is found, or transacts business, or in such
other place as may be agreed upon by the Bureau investigator before whom the oral testimony of such person is
to be taken and such person.
(D) ATTORNEY REPRESENTATION.—
(i) IN GENERAL.—Any person compelled to appear
under a civil investigative demand for oral testimony
pursuant to this section may be accompanied, represented, and advised by an attorney.
(ii) AUTHORITY.—The attorney may advise a person
described in clause (i), in confidence, either upon the
request of such person or upon the initiative of the
attorney, with respect to any question asked of such
person.
(iii) OBJECTIONS.—A person described in clause (i),
or the attorney for that person, may object on the
record to any question, in whole or in part, and such

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person shall briefly state for the record the reason
for the objection. An objection may properly be made,
received, and entered upon the record when it is
claimed that such person is entitled to refuse to answer
the question on grounds of any constitutional or other
legal right or privilege, including the privilege against
self-incrimination, but such person shall not otherwise
object to or refuse to answer any question, and such
person or attorney shall not otherwise interrupt the
oral examination.
(iv) REFUSAL TO ANSWER.—If a person described
in clause (i) refuses to answer any question—
(I) the Bureau may petition the district court
of the United States pursuant to this section for
an order compelling such person to answer such
question; and
(II) if the refusal is on grounds of the privilege
against self-incrimination, the testimony of such
person may be compelled in accordance with the
provisions of section 6004 of title 18, United States
Code.
(E) TRANSCRIPTS.—For purposes of this subsection—
(i) after the testimony of any witness is fully transcribed, the Bureau investigator shall afford the witness (who may be accompanied by an attorney) a
reasonable opportunity to examine the transcript;
(ii) the transcript shall be read to or by the witness,
unless such examination and reading are waived by
the witness;
(iii) any changes in form or substance which the
witness desires to make shall be entered and identified
upon the transcript by the Bureau investigator, with
a statement of the reasons given by the witness for
making such changes;
(iv) the transcript shall be signed by the witness,
unless the witness in writing waives the signing, is
ill, cannot be found, or refuses to sign; and
(v) if the transcript is not signed by the witness
during the 30-day period following the date on which
the witness is first afforded a reasonable opportunity
to examine the transcript, the Bureau investigator
shall sign the transcript and state on the record the
fact of the waiver, illness, absence of the witness, or
the refusal to sign, together with any reasons given
for the failure to sign.
(F) CERTIFICATION BY INVESTIGATOR.—The Bureau
investigator shall certify on the transcript that the witness
was duly sworn by him or her and that the transcript
is a true record of the testimony given by the witness,
and the Bureau investigator shall promptly deliver the
transcript or send it by registered or certified mail to
the custodian.
(G) COPY OF TRANSCRIPT.—The Bureau investigator
shall furnish a copy of the transcript (upon payment of
reasonable charges for the transcript) to the witness only,
except that the Bureau may for good cause limit such

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Deadline.

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witness to inspection of the official transcript of his testimony.
(H) WITNESS FEES.—Any witness appearing for the
taking of oral testimony pursuant to a civil investigative
demand shall be entitled to the same fees and mileage
which are paid to witnesses in the district courts of the
United States.
(d) CONFIDENTIAL TREATMENT OF DEMAND MATERIAL.—
(1) IN GENERAL.—Documentary materials and tangible
things received as a result of a civil investigative demand
shall be subject to requirements and procedures regarding confidentiality, in accordance with rules established by the Bureau.
(2) DISCLOSURE TO CONGRESS.—No rule established by the
Bureau regarding the confidentiality of materials submitted
to, or otherwise obtained by, the Bureau shall be intended
to prevent disclosure to either House of Congress or to an
appropriate committee of the Congress, except that the Bureau
is permitted to adopt rules allowing prior notice to any party
that owns or otherwise provided the material to the Bureau
and had designated such material as confidential.
(e) PETITION FOR ENFORCEMENT.—
(1) IN GENERAL.—Whenever any person fails to comply
with any civil investigative demand duly served upon him
under this section, or whenever satisfactory copying or reproduction of material requested pursuant to the demand cannot
be accomplished and such person refuses to surrender such
material, the Bureau, through such officers or attorneys as
it may designate, may file, in the district court of the United
States for any judicial district in which such person resides,
is found, or transacts business, and serve upon such person,
a petition for an order of such court for the enforcement of
this section.
(2) SERVICE OF PROCESS.—All process of any court to which
application may be made as provided in this subsection may
be served in any judicial district.
(f) PETITION FOR ORDER MODIFYING OR SETTING ASIDE
DEMAND.—
(1) IN GENERAL.—Not later than 20 days after the service
of any civil investigative demand upon any person under subsection (b), or at any time before the return date specified
in the demand, whichever period is shorter, or within such
period exceeding 20 days after service or in excess of such
return date as may be prescribed in writing, subsequent to
service, by any Bureau investigator named in the demand,
such person may file with the Bureau a petition for an order
by the Bureau modifying or setting aside the demand.
(2) COMPLIANCE DURING PENDENCY.—The time permitted
for compliance with the demand in whole or in part, as determined proper and ordered by the Bureau, shall not run during
the pendency of a petition under paragraph (1) at the Bureau,
except that such person shall comply with any portions of
the demand not sought to be modified or set aside.
(3) SPECIFIC GROUNDS.—A petition under paragraph (1)
shall specify each ground upon which the petitioner relies in
seeking relief, and may be based upon any failure of the demand
to comply with the provisions of this section, or upon any
constitutional or other legal right or privilege of such person.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2025

(g) CUSTODIAL CONTROL.—At any time during which any custodian is in custody or control of any documentary material, tangible
things, reports, answers to questions, or transcripts of oral testimony given by any person in compliance with any civil investigative
demand, such person may file, in the district court of the United
States for the judicial district within which the office of such custodian is situated, and serve upon such custodian, a petition for
an order of such court requiring the performance by such custodian
of any duty imposed upon him by this section or rule promulgated
by the Bureau.
(h) JURISDICTION OF COURT.—
(1) IN GENERAL.—Whenever any petition is filed in any
district court of the United States under this section, such
court shall have jurisdiction to hear and determine the matter
so presented, and to enter such order or orders as may be
required to carry out the provisions of this section.
(2) APPEAL.—Any final order entered as described in paragraph (1) shall be subject to appeal pursuant to section 1291
of title 28, United States Code.

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SEC. 1053. HEARINGS AND ADJUDICATION PROCEEDINGS.

(a) IN GENERAL.—The Bureau is authorized to conduct hearings
and adjudication proceedings with respect to any person in the
manner prescribed by chapter 5 of title 5, United States Code
in order to ensure or enforce compliance with—
(1) the provisions of this title, including any rules prescribed by the Bureau under this title; and
(2) any other Federal law that the Bureau is authorized
to enforce, including an enumerated consumer law, and any
regulations or order prescribed thereunder, unless such Federal
law specifically limits the Bureau from conducting a hearing
or adjudication proceeding and only to the extent of such limitation.
(b) SPECIAL RULES FOR CEASE-AND-DESIST PROCEEDINGS.—
(1) ORDERS AUTHORIZED.—
(A) IN GENERAL.—If, in the opinion of the Bureau,
any covered person or service provider is engaging or has
engaged in an activity that violates a law, rule, or any
condition imposed in writing on the person by the Bureau,
the Bureau may, subject to sections 1024, 1025, and 1026,
issue and serve upon the covered person or service provider
a notice of charges in respect thereof.
(B) CONTENT OF NOTICE.—The notice under subparagraph (A) shall contain a statement of the facts constituting
the alleged violation or violations, and shall fix a time
and place at which a hearing will be held to determine
whether an order to cease and desist should issue against
the covered person or service provider, such hearing to
be held not earlier than 30 days nor later than 60 days
after the date of service of such notice, unless an earlier
or a later date is set by the Bureau, at the request of
any party so served.
(C) CONSENT.—Unless the party or parties served
under subparagraph (B) appear at the hearing personally
or by a duly authorized representative, such person shall
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124 STAT. 2026

(D) PROCEDURE.—In the event of consent under
subparagraph (C), or if, upon the record, made at any
such hearing, the Bureau finds that any violation specified
in the notice of charges has been established, the Bureau
may issue and serve upon the covered person or service
provider an order to cease and desist from the violation
or practice. Such order may, by provisions which may be
mandatory or otherwise, require the covered person or
service provider to cease and desist from the subject
activity, and to take affirmative action to correct the conditions resulting from any such violation.
(2) EFFECTIVENESS OF ORDER.—A cease-and-desist order
shall become effective at the expiration of 30 days after the
date of service of an order under paragraph (1) upon the covered
person or service provider concerned (except in the case of
a cease-and-desist order issued upon consent, which shall
become effective at the time specified therein), and shall remain
effective and enforceable as provided therein, except to such
extent as the order is stayed, modified, terminated, or set
aside by action of the Bureau or a reviewing court.
(3) DECISION AND APPEAL.—Any hearing provided for in
this subsection shall be held in the Federal judicial district
or in the territory in which the residence or principal office
or place of business of the person is located unless the person
consents to another place, and shall be conducted in accordance
with the provisions of chapter 5 of title 5 of the United States
Code. After such hearing, and within 90 days after the Bureau
has notified the parties that the case has been submitted to
the Bureau for final decision, the Bureau shall render its decision (which shall include findings of fact upon which its decision
is predicated) and shall issue and serve upon each party to
the proceeding an order or orders consistent with the provisions
of this section. Judicial review of any such order shall be
exclusively as provided in this subsection. Unless a petition
for review is timely filed in a court of appeals of the United
States, as provided in paragraph (4), and thereafter until the
record in the proceeding has been filed as provided in paragraph
(4), the Bureau may at any time, upon such notice and in
such manner as the Bureau shall determine proper, modify,
terminate, or set aside any such order. Upon filing of the
record as provided, the Bureau may modify, terminate, or set
aside any such order with permission of the court.
(4) APPEAL TO COURT OF APPEALS.—Any party to any proceeding under this subsection may obtain a review of any
order served pursuant to this subsection (other than an order
issued with the consent of the person concerned) by the filing
in the court of appeals of the United States for the circuit
in which the principal office of the covered person is located,
or in the United States Court of Appeals for the District of
Columbia Circuit, within 30 days after the date of service
of such order, a written petition praying that the order of
the Bureau be modified, terminated, or set aside. A copy of
such petition shall be forthwith transmitted by the clerk of
the court to the Bureau, and thereupon the Bureau shall file
in the court the record in the proceeding, as provided in section
2112 of title 28 of the United States Code. Upon the filing
of such petition, such court shall have jurisdiction, which upon

Deadline.
Notification.
Order.

Deadline.
Petition.

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Records.

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124 STAT. 2027

the filing of the record shall except as provided in the last
sentence of paragraph (3) be exclusive, to affirm, modify, terminate, or set aside, in whole or in part, the order of the Bureau.
Review of such proceedings shall be had as provided in chapter
7 of title 5 of the United States Code. The judgment and
decree of the court shall be final, except that the same shall
be subject to review by the Supreme Court of the United
States, upon certiorari, as provided in section 1254 of title
28 of the United States Code.
(5) NO STAY.—The commencement of proceedings for
judicial review under paragraph (4) shall not, unless specifically
ordered by the court, operate as a stay of any order issued
by the Bureau.
(c) SPECIAL RULES FOR TEMPORARY CEASE-AND-DESIST PROCEEDINGS.—
(1) IN GENERAL.—Whenever the Bureau determines that
the violation specified in the notice of charges served upon
a person, including a service provider, pursuant to subsection
(b), or the continuation thereof, is likely to cause the person
to be insolvent or otherwise prejudice the interests of consumers
before the completion of the proceedings conducted pursuant
to subsection (b), the Bureau may issue a temporary order
requiring the person to cease and desist from any such violation
or practice and to take affirmative action to prevent or remedy
such insolvency or other condition pending completion of such
proceedings. Such order may include any requirement authorized under this subtitle. Such order shall become effective upon
service upon the person and, unless set aside, limited, or suspended by a court in proceedings authorized by paragraph
(2), shall remain effective and enforceable pending the completion of the administrative proceedings pursuant to such notice
and until such time as the Bureau shall dismiss the charges
specified in such notice, or if a cease-and-desist order is issued
against the person, until the effective date of such order.
(2) APPEAL.—Not later than 10 days after the covered person or service provider concerned has been served with a temporary cease-and-desist order, the person may apply to the
United States district court for the judicial district in which
the residence or principal office or place of business of the
person is located, or the United States District Court for the
District of Columbia, for an injunction setting aside, limiting,
or suspending the enforcement, operation, or effectiveness of
such order pending the completion of the administrative proceedings pursuant to the notice of charges served upon the
person under subsection (b), and such court shall have jurisdiction to issue such injunction.
(3) INCOMPLETE OR INACCURATE RECORDS.—
(A) TEMPORARY ORDER.—If a notice of charges served
under subsection (b) specifies, on the basis of particular
facts and circumstances, that the books and records of
a covered person or service provider are so incomplete
or inaccurate that the Bureau is unable to determine the
financial condition of that person or the details or purpose
of any transaction or transactions that may have a material
effect on the financial condition of that person, the Bureau
may issue a temporary order requiring—

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(i) the cessation of any activity or practice which
gave rise, whether in whole or in part, to the incomplete or inaccurate state of the books or records; or
(ii) affirmative action to restore such books or
records to a complete and accurate state, until the
completion of the proceedings under subsection (b)(1).
(B) EFFECTIVE PERIOD.—Any temporary order issued
under subparagraph (A)—
(i) shall become effective upon service; and
(ii) unless set aside, limited, or suspended by a
court in proceedings under paragraph (2), shall remain
in effect and enforceable until the earlier of—
(I) the completion of the proceeding initiated
under subsection (b) in connection with the notice
of charges; or
(II) the date the Bureau determines, by examination or otherwise, that the books and records
of the covered person or service provider are
accurate and reflect the financial condition thereof.
(d) SPECIAL RULES FOR ENFORCEMENT OF ORDERS.—
(1) IN GENERAL.—The Bureau may in its discretion apply
to the United States district court within the jurisdiction of
which the principal office or place of business of the person
is located, for the enforcement of any effective and outstanding
notice or order issued under this section, and such court shall
have jurisdiction and power to order and require compliance
herewith.
(2) EXCEPTION.—Except as otherwise provided in this subsection, no court shall have jurisdiction to affect by injunction
or otherwise the issuance or enforcement of any notice or order
or to review, modify, suspend, terminate, or set aside any
such notice or order.
(e) RULES.—The Bureau shall prescribe rules establishing such
procedures as may be necessary to carry out this section.

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12 USC 5564.

SEC. 1054. LITIGATION AUTHORITY.

(a) IN GENERAL.—If any person violates a Federal consumer
financial law, the Bureau may, subject to sections 1024, 1025,
and 1026, commence a civil action against such person to impose
a civil penalty or to seek all appropriate legal and equitable relief
including a permanent or temporary injunction as permitted by
law.
(b) REPRESENTATION.—The Bureau may act in its own name
and through its own attorneys in enforcing any provision of this
title, rules thereunder, or any other law or regulation, or in any
action, suit, or proceeding to which the Bureau is a party.
(c) COMPROMISE OF ACTIONS.—The Bureau may compromise
or settle any action if such compromise is approved by the court.
(d) NOTICE TO THE ATTORNEY GENERAL.—
(1) IN GENERAL.—When commencing a civil action under
Federal consumer financial law, or any rule thereunder, the
Bureau shall notify the Attorney General and, with respect
to a civil action against an insured depository institution or
insured credit union, the appropriate prudential regulator.
(2) NOTICE AND COORDINATION.—
(A) NOTICE OF OTHER ACTIONS.—In addition to any
notice required under paragraph (1), the Bureau shall

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notify the Attorney General concerning any action, suit,
or proceeding to which the Bureau is a party, except an
action, suit, or proceeding that involves the offering or
provision of consumer financial products or services.
(B) COORDINATION.—In order to avoid conflicts and
promote consistency regarding litigation of matters under
Federal law, the Attorney General and the Bureau shall
consult regarding the coordination of investigations and
proceedings, including by negotiating an agreement for
coordination by not later than 180 days after the designated
transfer date. The agreement under this subparagraph
shall include provisions to ensure that parallel investigations and proceedings involving the Federal consumer
financial laws are conducted in a manner that avoids conflicts and does not impede the ability of the Attorney General to prosecute violations of Federal criminal laws.
(C) RULE OF CONSTRUCTION.—Nothing in this paragraph shall be construed to limit the authority of the
Bureau under this title, including the authority to interpret
Federal consumer financial law.
(e) APPEARANCE BEFORE THE SUPREME COURT.—The Bureau
may represent itself in its own name before the Supreme Court
of the United States, provided that the Bureau makes a written
request to the Attorney General within the 10-day period which
begins on the date of entry of the judgment which would permit
any party to file a petition for writ of certiorari, and the Attorney
General concurs with such request or fails to take action within
60 days of the request of the Bureau.
(f) FORUM.—Any civil action brought under this title may be
brought in a United States district court or in any court of competent jurisdiction of a state in a district in which the defendant
is located or resides or is doing business, and such court shall
have jurisdiction to enjoin such person and to require compliance
with any Federal consumer financial law.
(g) TIME FOR BRINGING ACTION.—
(1) IN GENERAL.—Except as otherwise permitted by law
or equity, no action may be brought under this title more
than 3 years after the date of discovery of the violation to
which an action relates.
(2) LIMITATIONS UNDER OTHER FEDERAL LAWS.—
(A) IN GENERAL.—An action arising under this title
does not include claims arising solely under enumerated
consumer laws.
(B) BUREAU AUTHORITY.—In any action arising solely
under an enumerated consumer law, the Bureau may commence, defend, or intervene in the action in accordance
with the requirements of that provision of law, as
applicable.
(C) TRANSFERRED AUTHORITY.—In any action arising
solely under laws for which authorities were transferred
under subtitles F and H, the Bureau may commence,
defend, or intervene in the action in accordance with the
requirements of that provision of law, as applicable.
SEC. 1055. RELIEF AVAILABLE.

Consultation.
Deadline.

Deadlines.

12 USC 5565.

(a) ADMINISTRATIVE PROCEEDINGS OR COURT ACTIONS.—

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124 STAT. 2030

PUBLIC LAW 111–203—JULY 21, 2010

(1) JURISDICTION.—The court (or the Bureau, as the case
may be) in an action or adjudication proceeding brought under
Federal consumer financial law, shall have jurisdiction to grant
any appropriate legal or equitable relief with respect to a violation of Federal consumer financial law, including a violation
of a rule or order prescribed under a Federal consumer financial
law.
(2) RELIEF.—Relief under this section may include, without
limitation—
(A) rescission or reformation of contracts;
(B) refund of moneys or return of real property;
(C) restitution;
(D) disgorgement or compensation for unjust enrichment;
(E) payment of damages or other monetary relief;
(F) public notification regarding the violation, including
the costs of notification;
(G) limits on the activities or functions of the person;
and
(H) civil money penalties, as set forth more fully in
subsection (c).
(3) NO EXEMPLARY OR PUNITIVE DAMAGES.—Nothing in this
subsection shall be construed as authorizing the imposition
of exemplary or punitive damages.
(b) RECOVERY OF COSTS.—In any action brought by the Bureau,
a State attorney general, or any State regulator to enforce any
Federal consumer financial law, the Bureau, the State attorney
general, or the State regulator may recover its costs in connection
with prosecuting such action if the Bureau, the State attorney
general, or the State regulator is the prevailing party in the action.
(c) CIVIL MONEY PENALTY IN COURT AND ADMINISTRATIVE
ACTIONS.—
(1) IN GENERAL.—Any person that violates, through any
act or omission, any provision of Federal consumer financial
law shall forfeit and pay a civil penalty pursuant to this subsection.
(2) PENALTY AMOUNTS.—
(A) FIRST TIER.—For any violation of a law, rule, or
final order or condition imposed in writing by the Bureau,
a civil penalty may not exceed $5,000 for each day during
which such violation or failure to pay continues.
(B) SECOND TIER.—Notwithstanding paragraph (A), for
any person that recklessly engages in a violation of a
Federal consumer financial law, a civil penalty may not
exceed $25,000 for each day during which such violation
continues.
(C) THIRD TIER.—Notwithstanding subparagraphs (A)
and (B), for any person that knowingly violates a Federal
consumer financial law, a civil penalty may not exceed
$1,000,000 for each day during which such violation continues.
(3) MITIGATING FACTORS.—In determining the amount of
any penalty assessed under paragraph (2), the Bureau or the
court shall take into account the appropriateness of the penalty
with respect to—
(A) the size of financial resources and good faith of
the person charged;

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124 STAT. 2031

(B) the gravity of the violation or failure to pay;
(C) the severity of the risks to or losses of the consumer, which may take into account the number of products
or services sold or provided;
(D) the history of previous violations; and
(E) such other matters as justice may require.
(4) AUTHORITY TO MODIFY OR REMIT PENALTY.—The Bureau
may compromise, modify, or remit any penalty which may
be assessed or had already been assessed under paragraph
(2). The amount of such penalty, when finally determined,
shall be exclusive of any sums owed by the person to the
United States in connection with the costs of the proceeding,
and may be deducted from any sums owing by the United
States to the person charged.
(5) NOTICE AND HEARING.—No civil penalty may be assessed
under this subsection with respect to a violation of any Federal
consumer financial law, unless—
(A) the Bureau gives notice and an opportunity for
a hearing to the person accused of the violation; or
(B) the appropriate court has ordered such assessment
and entered judgment in favor of the Bureau.
SEC. 1056. REFERRALS FOR CRIMINAL PROCEEDINGS.

12 USC 5566.

If the Bureau obtains evidence that any person, domestic or
foreign, has engaged in conduct that may constitute a violation
of Federal criminal law, the Bureau shall transmit such evidence
to the Attorney General of the United States, who may institute
criminal proceedings under appropriate law. Nothing in this section
affects any other authority of the Bureau to disclose information.

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SEC. 1057. EMPLOYEE PROTECTION.

12 USC 5567.

(a) IN GENERAL.—No covered person or service provider shall
terminate or in any other way discriminate against, or cause to
be terminated or discriminated against, any covered employee or
any authorized representative of covered employees by reason of
the fact that such employee or representative, whether at the initiative of the employee or in the ordinary course of the duties of
the employee (or any person acting pursuant to a request of the
employee), has—
(1) provided, caused to be provided, or is about to provide
or cause to be provided, information to the employer, the
Bureau, or any other State, local, or Federal, government
authority or law enforcement agency relating to any violation
of, or any act or omission that the employee reasonably believes
to be a violation of, any provision of this title or any other
provision of law that is subject to the jurisdiction of the Bureau,
or any rule, order, standard, or prohibition prescribed by the
Bureau;
(2) testified or will testify in any proceeding resulting from
the administration or enforcement of any provision of this title
or any other provision of law that is subject to the jurisdiction
of the Bureau, or any rule, order, standard, or prohibition
prescribed by the Bureau;
(3) filed, instituted, or caused to be filed or instituted
any proceeding under any Federal consumer financial law; or
(4) objected to, or refused to participate in, any activity,
policy, practice, or assigned task that the employee (or other
such person) reasonably believed to be in violation of any law,

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Deadlines.

Notification.

Determination.

Notification.

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Order.

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PUBLIC LAW 111–203—JULY 21, 2010

rule, order, standard, or prohibition, subject to the jurisdiction
of, or enforceable by, the Bureau.
(b) DEFINITION OF COVERED EMPLOYEE.—For the purposes of
this section, the term ‘‘covered employee’’ means any individual
performing tasks related to the offering or provision of a consumer
financial product or service.
(c) PROCEDURES AND TIMETABLES.—
(1) COMPLAINT.—
(A) IN GENERAL.—A person who believes that he or
she has been discharged or otherwise discriminated against
by any person in violation of subsection (a) may, not later
than 180 days after the date on which such alleged violation
occurs, file (or have any person file on his or her behalf)
a complaint with the Secretary of Labor alleging such
discharge or discrimination and identifying the person
responsible for such act.
(B) ACTIONS OF SECRETARY OF LABOR.—Upon receipt
of such a complaint, the Secretary of Labor shall notify,
in writing, the person named in the complaint who is
alleged to have committed the violation, of—
(i) the filing of the complaint;
(ii) the allegations contained in the complaint;
(iii) the substance of evidence supporting the complaint; and
(iv) opportunities that will be afforded to such
person under paragraph (2).
(2) INVESTIGATION BY SECRETARY OF LABOR.—
(A) IN GENERAL.—Not later than 60 days after the
date of receipt of a complaint filed under paragraph (1),
and after affording the complainant and the person named
in the complaint who is alleged to have committed the
violation that is the basis for the complaint an opportunity
to submit to the Secretary of Labor a written response
to the complaint and an opportunity to meet with a representative of the Secretary of Labor to present statements
from witnesses, the Secretary of Labor shall—
(i) initiate an investigation and determine whether
there is reasonable cause to believe that the complaint
has merit; and
(ii) notify the complainant and the person alleged
to have committed the violation of subsection (a), in
writing, of such determination.
(B) NOTICE OF RELIEF AVAILABLE.—If the Secretary
of Labor concludes that there is reasonable cause to believe
that a violation of subsection (a) has occurred, the Secretary
of Labor shall, together with the notice under subparagraph
(A)(ii), issue a preliminary order providing the relief prescribed by paragraph (4)(B).
(C) REQUEST FOR HEARING.—Not later than 30 days
after the date of receipt of notification of a determination
of the Secretary of Labor under this paragraph, either
the person alleged to have committed the violation or the
complainant may file objections to the findings or preliminary order, or both, and request a hearing on the record.
The filing of such objections shall not operate to stay any
reinstatement remedy contained in the preliminary order.
Any such hearing shall be conducted expeditiously, and

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124 STAT. 2033

if a hearing is not requested in such 30-day period, the
preliminary order shall be deemed a final order that is
not subject to judicial review.
(3) GROUNDS FOR DETERMINATION OF COMPLAINTS.—
(A) IN GENERAL.—The Secretary of Labor shall dismiss
a complaint filed under this subsection, and shall not conduct an investigation otherwise required under paragraph
(2), unless the complainant makes a prima facie showing
that any behavior described in paragraphs (1) through
(4) of subsection (a) was a contributing factor in the
unfavorable personnel action alleged in the complaint.
(B) REBUTTAL EVIDENCE.—Notwithstanding a finding
by the Secretary of Labor that the complainant has made
the showing required under subparagraph (A), no investigation otherwise required under paragraph (2) shall be conducted, if the employer demonstrates, by clear and convincing evidence, that the employer would have taken the
same unfavorable personnel action in the absence of that
behavior.
(C) EVIDENTIARY STANDARDS.—The Secretary of Labor
may determine that a violation of subsection (a) has
occurred only if the complainant demonstrates that any
behavior described in paragraphs (1) through (4) of subsection (a) was a contributing factor in the unfavorable
personnel action alleged in the complaint. Relief may not
be ordered under subparagraph (A) if the employer demonstrates by clear and convincing evidence that the
employer would have taken the same unfavorable personnel
action in the absence of that behavior.
(4) ISSUANCE OF FINAL ORDERS; REVIEW PROCEDURES.—
(A) TIMING.—Not later than 120 days after the date
of conclusion of any hearing under paragraph (2), the Secretary of Labor shall issue a final order providing the
relief prescribed by this paragraph or denying the complaint. At any time before issuance of a final order, a
proceeding under this subsection may be terminated on
the basis of a settlement agreement entered into by the
Secretary of Labor, the complainant, and the person alleged
to have committed the violation.
(B) PENALTIES.—
(i) ORDER OF SECRETARY OF LABOR.—If, in response
to a complaint filed under paragraph (1), the Secretary
of Labor determines that a violation of subsection (a)
has occurred, the Secretary of Labor shall order the
person who committed such violation—
(I) to take affirmative action to abate the violation;
(II) to reinstate the complainant to his or her
former position, together with compensation
(including back pay) and restore the terms, conditions, and privileges associated with his or her
employment; and
(III) to provide compensatory damages to the
complainant.
(ii) PENALTY.—If an order is issued under clause
(i), the Secretary of Labor, at the request of the
complainant, shall assess against the person against

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124 STAT. 2034

whom the order is issued, a sum equal to the aggregate
amount of all costs and expenses (including attorney
fees and expert witness fees) reasonably incurred, as
determined by the Secretary of Labor, by the complainant for, or in connection with, the bringing of the
complaint upon which the order was issued.
(C) PENALTY FOR FRIVOLOUS CLAIMS.—If the Secretary
of Labor finds that a complaint under paragraph (1) is
frivolous or has been brought in bad faith, the Secretary
of Labor may award to the prevailing employer a reasonable attorney fee, not exceeding $1,000, to be paid by
the complainant.
(D) DE NOVO REVIEW.—
(i) FAILURE OF THE SECRETARY TO ACT.—If the
Secretary of Labor has not issued a final order within
210 days after the date of filing of a complaint under
this subsection, or within 90 days after the date of
receipt of a written determination, the complainant
may bring an action at law or equity for de novo
review in the appropriate district court of the United
States having jurisdiction, which shall have jurisdiction
over such an action without regard to the amount
in controversy, and which action shall, at the request
of either party to such action, be tried by the court
with a jury.
(ii) PROCEDURES.—A proceeding under clause (i)
shall be governed by the same legal burdens of proof
specified in paragraph (3). The court shall have jurisdiction to grant all relief necessary to make the
employee whole, including injunctive relief and
compensatory damages, including—
(I) reinstatement with the same seniority
status that the employee would have had, but
for the discharge or discrimination;
(II) the amount of back pay, with interest;
and
(III) compensation for any special damages
sustained as a result of the discharge or discrimination, including litigation costs, expert witness
fees, and reasonable attorney fees.
(E) OTHER APPEALS.—Unless the complainant brings
an action under subparagraph (D), any person adversely
affected or aggrieved by a final order issued under subparagraph (A) may file a petition for review of the order in
the United States Court of Appeals for the circuit in which
the violation with respect to which the order was issued,
allegedly occurred or the circuit in which the complainant
resided on the date of such violation, not later than 60
days after the date of the issuance of the final order of
the Secretary of Labor under subparagraph (A). Review
shall conform to chapter 7 of title 5, United States Code.
The commencement of proceedings under this subparagraph shall not, unless ordered by the court, operate as
a stay of the order. An order of the Secretary of Labor
with respect to which review could have been obtained
under this subparagraph shall not be subject to judicial
review in any criminal or other civil proceeding.

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(5) FAILURE TO COMPLY WITH ORDER.—
(A) ACTIONS BY THE SECRETARY.—If any person has
failed to comply with a final order issued under paragraph
(4), the Secretary of Labor may file a civil action in the
United States district court for the district in which the
violation was found to have occurred, or in the United
States district court for the District of Columbia, to enforce
such order. In actions brought under this paragraph, the
district courts shall have jurisdiction to grant all appropriate relief including injunctive relief and compensatory
damages.
(B) CIVIL ACTIONS TO COMPEL COMPLIANCE.—A person
on whose behalf an order was issued under paragraph
(4) may commence a civil action against the person to
whom such order was issued to require compliance with
such order. The appropriate United States district court
shall have jurisdiction, without regard to the amount in
controversy or the citizenship of the parties, to enforce
such order.
(C) AWARD OF COSTS AUTHORIZED.—The court, in
issuing any final order under this paragraph, may award
costs of litigation (including reasonable attorney and expert
witness fees) to any party, whenever the court determines
such award is appropriate.
(D) MANDAMUS PROCEEDINGS.—Any nondiscretionary
duty imposed by this section shall be enforceable in a
mandamus proceeding brought under section 1361 of title
28, United States Code.
(d) UNENFORCEABILITY OF CERTAIN AGREEMENTS.—
(1) NO WAIVER OF RIGHTS AND REMEDIES.—Except as provided under paragraph (3), and notwithstanding any other
provision of law, the rights and remedies provided for in this
section may not be waived by any agreement, policy, form,
or condition of employment, including by any predispute
arbitration agreement.
(2) NO PREDISPUTE ARBITRATION AGREEMENTS.—Except as
provided under paragraph (3), and notwithstanding any other
provision of law, no predispute arbitration agreement shall
be valid or enforceable to the extent that it requires arbitration
of a dispute arising under this section.
(3) EXCEPTION.—Notwithstanding paragraphs (1) and (2),
an arbitration provision in a collective bargaining agreement
shall be enforceable as to disputes arising under subsection
(a)(4), unless the Bureau determines, by rule, that such provision is inconsistent with the purposes of this title.
SEC. 1058. EFFECTIVE DATE.

This subtitle shall become effective on the designated transfer
date.

Regulation.

12 USC 5561
note.

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Subtitle F—Transfer of Functions and
Personnel; Transitional Provisions
SEC. 1061. TRANSFER OF CONSUMER FINANCIAL PROTECTION FUNCTIONS.

12 USC 5581.

(a) DEFINED TERMS.—For purposes of this subtitle—

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124 STAT. 2036

PUBLIC LAW 111–203—JULY 21, 2010

(1) the term ‘‘consumer financial protection functions’’
means—
(A) all authority to prescribe rules or issue orders
or guidelines pursuant to any Federal consumer financial
law, including performing appropriate functions to promulgate and review such rules, orders, and guidelines; and
(B) the examination authority described in subsection
(c)(1), with respect to a person described in subsection
1025(a); and
(2) the terms ‘‘transferor agency’’ and ‘‘transferor agencies’’
mean, respectively—
(A) the Board of Governors (and any Federal reserve
bank, as the context requires), the Federal Deposit Insurance Corporation, the Federal Trade Commission, the
National Credit Union Administration, the Office of the
Comptroller of the Currency, the Office of Thrift Supervision, and the Department of Housing and Urban Development, and the heads of those agencies; and
(B) the agencies listed in subparagraph (A), collectively.
(b) IN GENERAL.—Except as provided in subsection (c), consumer financial protection functions are transferred as follows:
(1) BOARD OF GOVERNORS.—
(A) TRANSFER OF FUNCTIONS.—All consumer financial
protection functions of the Board of Governors are transferred to the Bureau.
(B) BOARD OF GOVERNORS AUTHORITY.—The Bureau
shall have all powers and duties that were vested in the
Board of Governors, relating to consumer financial protection functions, on the day before the designated transfer
date.
(2) COMPTROLLER OF THE CURRENCY.—
(A) TRANSFER OF FUNCTIONS.—All consumer financial
protection functions of the Comptroller of the Currency
are transferred to the Bureau.
(B) COMPTROLLER AUTHORITY.—The Bureau shall have
all powers and duties that were vested in the Comptroller
of the Currency, relating to consumer financial protection
functions, on the day before the designated transfer date.
(3) DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION.—
(A) TRANSFER OF FUNCTIONS.—All consumer financial
protection functions of the Director of the Office of Thrift
Supervision are transferred to the Bureau.
(B) DIRECTOR AUTHORITY.—The Bureau shall have all
powers and duties that were vested in the Director of
the Office of Thrift Supervision, relating to consumer financial protection functions, on the day before the designated
transfer date.
(4) FEDERAL DEPOSIT INSURANCE CORPORATION.—
(A) TRANSFER OF FUNCTIONS.—All consumer financial
protection functions of the Federal Deposit Insurance Corporation are transferred to the Bureau.
(B) CORPORATION AUTHORITY.—The Bureau shall have
all powers and duties that were vested in the Federal
Deposit Insurance Corporation, relating to consumer financial protection functions, on the day before the designated
transfer date.
(5) FEDERAL TRADE COMMISSION.—

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2037

(A) TRANSFER OF FUNCTIONS.—The authority of the
Federal Trade Commission under an enumerated consumer
law to prescribe rules, issue guidelines, or conduct a study
or issue a report mandated under such law shall be transferred to the Bureau on the designated transfer date.
Nothing in this title shall be construed to require a mandatory transfer of any employee of the Federal Trade Commission.
(B) BUREAU AUTHORITY.—
(i) IN GENERAL.—The Bureau shall have all powers
and duties under the enumerated consumer laws to
prescribe rules, issue guidelines, or to conduct studies
or issue reports mandated by such laws, that were
vested in the Federal Trade Commission on the day
before the designated transfer date.
(ii) FEDERAL TRADE COMMISSION ACT.—Subject to
subtitle B, the Bureau may enforce a rule prescribed
under the Federal Trade Commission Act by the Federal Trade Commission with respect to an unfair or
deceptive act or practice to the extent that such rule
applies to a covered person or service provider with
respect to the offering or provision of a consumer financial product or service as if it were a rule prescribed
under section 1031 of this title.
(C) AUTHORITY OF THE FEDERAL TRADE COMMISSION.—
(i) IN GENERAL.—No provision of this title shall
be construed as modifying, limiting, or otherwise
affecting the authority of the Federal Trade Commission (including its authority with respect to affiliates
described in section 1025(a)(1)) under the Federal
Trade Commission Act or any other law, other than
the authority under an enumerated consumer law to
prescribe rules, issue official guidelines, or conduct
a study or issue a report mandated under such law.
(ii) COMMISSION AUTHORITY RELATING TO RULES
PRESCRIBED BY THE BUREAU.—Subject to subtitle B,
the Federal Trade Commission shall have authority
to enforce under the Federal Trade Commission Act
(15 U.S.C. 41 et seq.) a rule prescribed by the Bureau
under this title with respect to a covered person subject
to the jurisdiction of the Federal Trade Commission
under that Act, and a violation of such a rule by
such a person shall be treated as a violation of a
rule issued under section 18 of that Act (15 U.S.C.
57a) with respect to unfair or deceptive acts or practices.
(D) COORDINATION.—To avoid duplication of or conflict
between rules prescribed by the Bureau under section 1031
of this title and the Federal Trade Commission under section 18(a)(1)(B) of the Federal Trade Commission Act that
apply to a covered person or service provider with respect
to the offering or provision of consumer financial products
or services, the agencies shall negotiate an agreement with
respect to rulemaking by each agency, including consultation with the other agency prior to proposing a rule and
during the comment period.

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124 STAT. 2038

PUBLIC LAW 111–203—JULY 21, 2010
(E) DEFERENCE.—No provision of this title shall be
construed as altering, limiting, expanding, or otherwise
affecting the deference that a court affords to the—
(i) Federal Trade Commission in making determinations regarding the meaning or interpretation of
any provision of the Federal Trade Commission Act,
or of any other Federal law for which the Commission
has authority to prescribe rules; or
(ii) Bureau in making determinations regarding
the meaning or interpretation of any provision of a
Federal consumer financial law (other than any law
described in clause (i)).
(6) NATIONAL CREDIT UNION ADMINISTRATION.—
(A) TRANSFER OF FUNCTIONS.—All consumer financial
protection functions of the National Credit Union Administration are transferred to the Bureau.
(B)
NATIONAL
CREDIT
UNION
ADMINISTRATION
AUTHORITY.—The Bureau shall have all powers and duties
that were vested in the National Credit Union Administration, relating to consumer financial protection functions,
on the day before the designated transfer date.
(7) DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT.—
(A) TRANSFER OF FUNCTIONS.—All consumer protection
functions of the Secretary of the Department of Housing
and Urban Development relating to the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.),
the Secure and Fair Enforcement for Mortgage Licensing
Act of 2008 (12 U.S.C. 5102 et seq.), and the Interstate
Land Sales Full Disclosure Act (15 U.S.C. 1701 et seq.)
are transferred to the Bureau.
(B) AUTHORITY OF THE DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT.—The Bureau shall have all powers
and duties that were vested in the Secretary of the Department of Housing and Urban Development relating to the
Real Estate Settlement Procedures Act of 1974 (12 U.S.C.
2601 et seq.), the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.), and
the Interstate Land Sales Full Disclosure Act (15 U.S.C.
1701 et seq.), on the day before the designated transfer
date.
(c) AUTHORITIES OF THE PRUDENTIAL REGULATORS.—
(1) EXAMINATION.—A transferor agency that is a prudential
regulator shall have—
(A) authority to require reports from and conduct
examinations for compliance with Federal consumer financial laws with respect to a person described in section
1025(a), that is incidental to the backup and enforcement
procedures provided to the regulator under section 1025(c);
and
(B) exclusive authority (relative to the Bureau) to
require reports from and conduct examinations for compliance with Federal consumer financial laws with respect
to a person described in section 1026(a), except as provided
to the Bureau under subsections (b) and (c) of section
1026.
(2) ENFORCEMENT.—

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124 STAT. 2039

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(A) LIMITATION.—The authority of a transferor agency
that is a prudential regulator to enforce compliance with
Federal consumer financial laws with respect to a person
described in section 1025(a), shall be limited to the backup
and enforcement procedures in described in section 1025(c).
(B) EXCLUSIVE AUTHORITY.—A transferor agency that
is a prudential regulator shall have exclusive authority
(relative to the Bureau) to enforce compliance with Federal
consumer financial laws with respect to a person described
in section 1026(a), except as provided to the Bureau under
subsections (b) and (c) of section 1026.
(C) STATUTORY ENFORCEMENT.—For purposes of carrying out the authorities under, and subject to the limitations of, subtitle B, each prudential regulator may enforce
compliance with the requirements imposed under this title,
and any rule or order prescribed by the Bureau under
this title, under—
(i) the Federal Credit Union Act (12 U.S.C. 1751
et seq.), by the National Credit Union Administration
Board with respect to any covered person or service
provider that is an insured credit union, or service
provider thereto, or any affiliate of an insured credit
union, who is subject to the jurisdiction of the Board
under that Act; and
(ii) section 8 of the Federal Deposit Insurance Act
(12 U.S.C. 1818), by the appropriate Federal banking
agency, as defined in section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)), with respect to a
covered person or service provider that is a person
described in section 3(q) of that Act and who is subject
to the jurisdiction of that agency, as set forth in sections 3(q) and 8 of the Federal Deposit Insurance Act;
or
(iii) the Bank Service Company Act (12 U.S.C.
1861 et seq.).
(d) EFFECTIVE DATE.—Subsections (b) and (c) shall become effective on the designated transfer date.

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SEC. 1062. DESIGNATED TRANSFER DATE.

12 USC 5582.

(a) IN GENERAL.—Not later than 60 days after the date of
enactment of this Act, the Secretary shall—
(1) in consultation with the Chairman of the Board of
Governors, the Chairperson of the Corporation, the Chairman
of the Federal Trade Commission, the Chairman of the National
Credit Union Administration Board, the Comptroller of the
Currency, the Director of the Office of Thrift Supervision, the
Secretary of the Department of Housing and Urban Development, and the Director of the Office of Management and Budget,
designate a single calendar date for the transfer of functions
to the Bureau under section 1061; and
(2) publish notice of that designated date in the Federal
Register.
(b) CHANGING DESIGNATION.—The Secretary—
(1) may, in consultation with the Chairman of the Board
of Governors, the Chairperson of the Federal Deposit Insurance
Corporation, the Chairman of the Federal Trade Commission,
the Chairman of the National Credit Union Administration

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Federal Register,
publication.

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124 STAT. 2040

Board, the Comptroller of the Currency, the Director of the
Office of Thrift Supervision, the Secretary of the Department
of Housing and Urban Development, and the Director of the
Office of Management and Budget, change the date designated
under subsection (a); and
(2) shall publish notice of any changed designated date
in the Federal Register.
(c) PERMISSIBLE DATES.—
(1) IN GENERAL.—Except as provided in paragraph (2), any
date designated under this section shall be not earlier than
180 days, nor later than 12 months, after the date of enactment
of this Act.
(2) EXTENSION OF TIME.—The Secretary may designate a
date that is later than 12 months after the date of enactment
of this Act if the Secretary transmits to appropriate committees
of Congress—
(A) a written determination that orderly implementation of this title is not feasible before the date that is
12 months after the date of enactment of this Act;
(B) an explanation of why an extension is necessary
for the orderly implementation of this title; and
(C) a description of the steps that will be taken to
effect an orderly and timely implementation of this title
within the extended time period.
(3) EXTENSION LIMITED.—In no case may any date designated under this section be later than 18 months after the
date of enactment of this Act.

Notice.
Federal Register,
publication.
Time period.

Determination.

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12 USC 5583.

PUBLIC LAW 111–203—JULY 21, 2010

SEC. 1063. SAVINGS PROVISIONS.

(a) BOARD OF GOVERNORS.—
(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT
AFFECTED.—Section 1061(b)(1) does not affect the validity of
any right, duty, or obligation of the United States, the Board
of Governors (or any Federal reserve bank), or any other person
that—
(A) arises under any provision of law relating to any
consumer financial protection function of the Board of Governors transferred to the Bureau by this title; and
(B) existed on the day before the designated transfer
date.
(2) CONTINUATION OF SUITS.—No provision of this Act shall
abate any proceeding commenced by or against the Board of
Governors (or any Federal reserve bank) before the designated
transfer date with respect to any consumer financial protection
function of the Board of Governors (or any Federal reserve
bank) transferred to the Bureau by this title, except that the
Bureau, subject to sections 1024, 1025, and 1026, shall be
substituted for the Board of Governors (or Federal reserve
bank) as a party to any such proceeding as of the designated
transfer date.
(b) FEDERAL DEPOSIT INSURANCE CORPORATION.—
(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT
AFFECTED.—Section 1061(b)(4) does not affect the validity of
any right, duty, or obligation of the United States, the Federal
Deposit Insurance Corporation, the Board of Directors of that
Corporation, or any other person, that—

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2041

(A) arises under any provision of law relating to any
consumer financial protection function of the Federal
Deposit Insurance Corporation transferred to the Bureau
by this title; and
(B) existed on the day before the designated transfer
date.
(2) CONTINUATION OF SUITS.—No provision of this Act shall
abate any proceeding commenced by or against the Federal
Deposit Insurance Corporation (or the Board of Directors of
that Corporation) before the designated transfer date with
respect to any consumer financial protection function of the
Federal Deposit Insurance Corporation transferred to the
Bureau by this title, except that the Bureau, subject to sections
1024, 1025, and 1026, shall be substituted for the Federal
Deposit Insurance Corporation (or Board of Directors) as a
party to any such proceeding as of the designated transfer
date.
(c) FEDERAL TRADE COMMISSION.—Section 1061(b)(5) does not
affect the validity of any right, duty, or obligation of the United
States, the Federal Trade Commission, or any other person, that—
(1) arises under any provision of law relating to any consumer financial protection function of the Federal Trade
Commission transferred to the Bureau by this title; and
(2) existed on the day before the designated transfer date.
(d) NATIONAL CREDIT UNION ADMINISTRATION.—
(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT
AFFECTED.—Section 1061(b)(6) does not affect the validity of
any right, duty, or obligation of the United States, the National
Credit Union Administration, the National Credit Union
Administration Board, or any other person, that—
(A) arises under any provision of law relating to any
consumer financial protection function of the National
Credit Union Administration transferred to the Bureau
by this title; and
(B) existed on the day before the designated transfer
date.
(2) CONTINUATION OF SUITS.—No provision of this Act shall
abate any proceeding commenced by or against the National
Credit Union Administration (or the National Credit Union
Administration Board) before the designated transfer date with
respect to any consumer financial protection function of the
National Credit Union Administration transferred to the
Bureau by this title, except that the Bureau, subject to sections
1024, 1025, and 1026, shall be substituted for the National
Credit Union Administration (or National Credit Union
Administration Board) as a party to any such proceeding as
of the designated transfer date.
(e) OFFICE OF THE COMPTROLLER OF THE CURRENCY.—
(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT
AFFECTED.—Section 1061(b)(2) does not affect the validity of
any right, duty, or obligation of the United States, the Comptroller of the Currency, the Office of the Comptroller of the
Currency, or any other person, that—
(A) arises under any provision of law relating to any
consumer financial protection function of the Comptroller
of the Currency transferred to the Bureau by this title;
and

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124 STAT. 2042

PUBLIC LAW 111–203—JULY 21, 2010
(B) existed on the day before the designated transfer
date.
(2) CONTINUATION OF SUITS.—No provision of this Act shall
abate any proceeding commenced by or against the Comptroller
of the Currency (or the Office of the Comptroller of the Currency) with respect to any consumer financial protection function of the Comptroller of the Currency transferred to the
Bureau by this title before the designated transfer date, except
that the Bureau, subject to sections 1024, 1025, and 1026,
shall be substituted for the Comptroller of the Currency (or
the Office of the Comptroller of the Currency) as a party to
any such proceeding as of the designated transfer date.
(f) OFFICE OF THRIFT SUPERVISION.—
(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT
AFFECTED.—Section 1061(b)(3) does not affect the validity of
any right, duty, or obligation of the United States, the Director
of the Office of Thrift Supervision, the Office of Thrift Supervision, or any other person, that—
(A) arises under any provision of law relating to any
consumer financial protection function of the Director of
the Office of Thrift Supervision transferred to the Bureau
by this title; and
(B) that existed on the day before the designated
transfer date.
(2) CONTINUATION OF SUITS.—No provision of this Act shall
abate any proceeding commenced by or against the Director
of the Office of Thrift Supervision (or the Office of Thrift Supervision) with respect to any consumer financial protection function of the Director of the Office of Thrift Supervision transferred to the Bureau by this title before the designated transfer
date, except that the Bureau, subject to sections 1024, 1025,
and 1026, shall be substituted for the Director (or the Office
of Thrift Supervision) as a party to any such proceeding as
of the designated transfer date.
(g) DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT.—
(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT
AFFECTED.—Section 1061(b)(7) shall not affect the validity of
any right, duty, or obligation of the United States, the Secretary
of the Department of Housing and Urban Development (or
the Department of Housing and Urban Development), or any
other person, that—
(A) arises under any provision of law relating to any
function of the Secretary of the Department of Housing
and Urban Development with respect to the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.),
the Secure and Fair Enforcement for Mortgage Licensing
Act of 2008 (12 U.S.C. 5102 et seq.), or the Interstate
Land Sales Full Disclosure Act (15 U.S.C. 1701 et seq)
transferred to the Bureau by this title; and
(B) existed on the day before the designated transfer
date.
(2) CONTINUATION OF SUITS.—This title shall not abate
any proceeding commenced by or against the Secretary of the
Department of Housing and Urban Development (or the Department of Housing and Urban Development) with respect to
any consumer financial protection function of the Secretary

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2043

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of the Department of Housing and Urban Development transferred to the Bureau by this title before the designated transfer
date, except that the Bureau, subject to sections 1024, 1025,
and 1026, shall be substituted for the Secretary of the Department of Housing and Urban Development (or the Department
of Housing and Urban Development) as a party to any such
proceeding as of the designated transfer date.
(h) CONTINUATION OF EXISTING ORDERS, RULINGS, DETERMINATIONS, AGREEMENTS, AND RESOLUTIONS.—
(1) IN GENERAL.—Except as provided in paragraph (2) and
under subsection (i), all orders, resolutions, determinations,
agreements, and rulings that have been issued, made, prescribed, or allowed to become effective by any transferor agency
or by a court of competent jurisdiction, in the performance
of consumer financial protection functions that are transferred
by this title and that are in effect on the day before the
designated transfer date, shall continue in effect, and shall
continue to be enforceable by the appropriate transferor agency,
according to the terms of those orders, resolutions, determinations, agreements, and rulings, and shall not be enforceable
by or against the Bureau.
(2) EXCEPTION FOR ORDERS APPLICABLE TO PERSONS
DESCRIBED IN SECTION 1025(a).—All orders, resolutions, determinations, agreements, and rulings that have been issued,
made, prescribed, or allowed to become effective by any transferor agency or by a court of competent jurisdiction, in the
performance of consumer financial protection functions that
are transferred by this title and that are in effect on the
day before the designated transfer date with respect to any
person described in section 1025(a), shall continue in effect,
according to the terms of those orders, resolutions, determinations, agreements, and rulings, and shall be enforceable by
or against the Bureau or transferor agency.
(i) IDENTIFICATION OF RULES AND ORDERS CONTINUED.—Not
later than the designated transfer date, the Bureau—
(1) shall, after consultation with the head of each transferor
agency, identify the rules and orders that will be enforced
by the Bureau; and
(2) shall publish a list of such rules and orders in the
Federal Register.
(j) STATUS OF RULES PROPOSED OR NOT YET EFFECTIVE.—
(1) PROPOSED RULES.—Any proposed rule of a transferor
agency which that agency, in performing consumer financial
protection functions transferred by this title, has proposed
before the designated transfer date, but has not been published
as a final rule before that date, shall be deemed to be a
proposed rule of the Bureau.
(2) RULES NOT YET EFFECTIVE.—Any interim or final rule
of a transferor agency which that agency, in performing consumer financial protection functions transferred by this title,
has published before the designated transfer date, but which
has not become effective before that date, shall become effective
as a rule of the Bureau according to its terms.
SEC. 1064. TRANSFER OF CERTAIN PERSONNEL.

12 USC 5584.

(a) IN GENERAL.—

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124 STAT. 2044

PUBLIC LAW 111–203—JULY 21, 2010

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(1) CERTAIN FEDERAL RESERVE SYSTEM EMPLOYEES TRANSFERRED.—
(A) IDENTIFYING EMPLOYEES FOR TRANSFER.—The
Bureau and the Board of Governors shall—
(i) jointly determine the number of employees of
the Board of Governors necessary to perform or support
the consumer financial protection functions of the
Board of Governors that are transferred to the Bureau
by this title; and
(ii) consistent with the number determined under
clause (i), jointly identify employees of the Board of
Governors for transfer to the Bureau, in a manner
that the Bureau and the Board of Governors, in their
sole discretion, determine equitable.
EMPLOYEES
TRANSFERRED.—All
(B)
IDENTIFIED
employees of the Board of Governors identified under
subparagraph (A)(ii) shall be transferred to the Bureau
for employment.
(C) FEDERAL RESERVE BANK EMPLOYEES.—Employees
of any Federal reserve bank who are performing consumer
financial protection functions on behalf of the Board of
Governors shall be treated as employees of the Board of
Governors for purposes of subparagraphs (A) and (B).
(2) CERTAIN FDIC EMPLOYEES TRANSFERRED.—
(A) IDENTIFYING EMPLOYEES FOR TRANSFER.—The
Bureau and the Board of Directors of the Federal Deposit
Insurance Corporation shall—
(i) jointly determine the number of employees of
that Corporation necessary to perform or support the
consumer financial protection functions of the Corporation that are transferred to the Bureau by this title;
and
(ii) consistent with the number determined under
clause (i), jointly identify employees of the Corporation
for transfer to the Bureau, in a manner that the
Bureau and the Board of Directors of the Corporation,
in their sole discretion, determine equitable.
(B)
IDENTIFIED
EMPLOYEES
TRANSFERRED.—All
employees of the Corporation identified under subparagraph (A)(ii) shall be transferred to the Bureau for employment.
(3) CERTAIN NCUA EMPLOYEES TRANSFERRED.—
(A) IDENTIFYING EMPLOYEES FOR TRANSFER.—The
Bureau and the National Credit Union Administration
Board shall—
(i) jointly determine the number of employees of
the National Credit Union Administration necessary
to perform or support the consumer financial protection
functions of the National Credit Union Administration
that are transferred to the Bureau by this title; and
(ii) consistent with the number determined under
clause (i), jointly identify employees of the National
Credit Union Administration for transfer to the
Bureau, in a manner that the Bureau and the National
Credit Union Administration Board, in their sole
discretion, determine equitable.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2045

(B)
IDENTIFIED
EMPLOYEES
TRANSFERRED.—All
employees of the National Credit Union Administration
identified under subparagraph (A)(ii) shall be transferred
to the Bureau for employment.
(4) CERTAIN OFFICE OF THE COMPTROLLER OF THE CURRENCY
EMPLOYEES TRANSFERRED.—
(A) IDENTIFYING EMPLOYEES FOR TRANSFER.—The
Bureau and the Comptroller of the Currency shall—
(i) jointly determine the number of employees of
the Office of the Comptroller of the Currency necessary
to perform or support the consumer financial protection
functions of the Office of the Comptroller of the Currency that are transferred to the Bureau by this title;
and
(ii) consistent with the number determined under
clause (i), jointly identify employees of the Office of
the Comptroller of the Currency for transfer to the
Bureau, in a manner that the Bureau and the Office
of the Comptroller of the Currency, in their sole discretion, determine equitable.
(B)
IDENTIFIED
EMPLOYEES
TRANSFERRED.—All
employees of the Office of the Comptroller of the Currency
identified under subparagraph (A)(ii) shall be transferred
to the Bureau for employment.
(5) CERTAIN OFFICE OF THRIFT SUPERVISION EMPLOYEES
TRANSFERRED.—
(A) IDENTIFYING EMPLOYEES FOR TRANSFER.—The
Bureau and the Director of the Office of Thrift Supervision
shall—
(i) jointly determine the number of employees of
the Office of Thrift Supervision necessary to perform
or support the consumer financial protection functions
of the Office of Thrift Supervision that are transferred
to the Bureau by this title; and
(ii) consistent with the number determined under
clause (i), jointly identify employees of the Office of
Thrift Supervision for transfer to the Bureau, in a
manner that the Bureau and the Office of Thrift Supervision, in their sole discretion, determine equitable.
(B)
IDENTIFIED
EMPLOYEES
TRANSFERRED.—All
employees of the Office of Thrift Supervision identified
under subparagraph (A)(ii) shall be transferred to the
Bureau for employment.
(6) CERTAIN EMPLOYEES OF DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT TRANSFERRED.—
(A) IDENTIFYING EMPLOYEES FOR TRANSFER.—The
Bureau and the Secretary of the Department of Housing
and Urban Development shall—
(i) jointly determine the number of employees of
the Department of Housing and Urban Development
necessary to perform or support the consumer protection functions of the Department that are transferred
to the Bureau by this title; and
(ii) consistent with the number determined under
clause (i), jointly identify employees of the Department
of Housing and Urban Development for transfer to
the Bureau in a manner that the Bureau and the

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124 STAT. 2046

PUBLIC LAW 111–203—JULY 21, 2010

Secretary of the Department of Housing and Urban
Development, in their sole discretion, deem equitable.
EMPLOYEES
TRANSFERRED.—All
(B)
IDENTIFIED
employees of the Department of Housing and Urban
Development identified under subparagraph (A)(ii) shall
be transferred to the Bureau for employment.
(7) CONSUMER EDUCATION, FINANCIAL LITERACY, CONSUMER
COMPLAINTS, AND RESEARCH FUNCTIONS.—The Bureau and each
of the transferor agencies (except the Federal Trade Commission) shall jointly determine the number of employees and
the types and grades of employees necessary to perform the
functions of the Bureau under subtitle A, including consumer
education, financial literacy, policy analysis, responses to consumer complaints and inquiries, research, and similar functions. All employees jointly identified under this paragraph
shall be transferred to the Bureau for employment.
(8) AUTHORITY OF THE PRESIDENT TO RESOLVE DISPUTES.—
(A) ACTION AUTHORIZED.—In the event that the Bureau
and a transferor agency are unable to reach an agreement
under paragraphs (1) through (7) by the designated transfer
date, the President, or the designee thereof, may issue
an order or directive to the transferor agency to effect
the transfer of personnel and property under this subtitle.
(B) TRANSMITTAL TO CONGRESS REQUIRED.—If an order
or directive is issued under subparagraph (A), the President
shall transmit a copy of the written determination made
with respect to such order or directive, including an explanation for the need for the order or directive, to the Committee on Banking, Housing, and Urban Affairs and the
Committee on Appropriations of the Senate and the Committee on Financial Services and the Committee on Appropriations of the House of Representatives.
(C) SUNSET.—The authority provided in this paragraph
shall terminate 3 years after the designated transfer date.
(9) APPOINTMENT AUTHORITY FOR EXCEPTED SERVICE AND
SENIOR EXECUTIVE SERVICE TRANSFERRED.—
(A) IN GENERAL.—In the case of an employee occupying
a position in the excepted service or the Senior Executive
Service, any appointment authority established pursuant
to law or regulations of the Office of Personnel Management
for filling such positions shall be transferred, subject to
subparagraph (B).
(B) DECLINING TRANSFERS ALLOWED.—An agency or
entity may decline to make a transfer of authority under
subparagraph (A) (and the employees appointed pursuant
thereto) to the extent that such authority relates to positions excepted from the competitive service because of their
confidential, policy-making, policy-determining, or policyadvocating character, and non-career positions in the
Senior Executive Service (within the meaning of section
3132(a)(7) of title 5, United States Code).
(b) TIMING OF TRANSFERS AND POSITION ASSIGNMENTS.—Each
employee to be transferred under this section shall—
(1) be transferred not later than 90 days after the designated transfer date; and
(2) receive notice of a position assignment not later than
120 days after the effective date of his or her transfer.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2047

(c) TRANSFER OF FUNCTION.—
(1) IN GENERAL.—Notwithstanding any other provision of
law, the transfer of employees shall be deemed a transfer
of functions for the purpose of section 3503 of title 5, United
States Code.
(2) PRIORITY OF THIS TITLE.—If any provisions of this title
conflict with any protection provided to transferred employees
under section 3503 of title 5, United States Code, the provisions
of this title shall control.
(d) EQUAL STATUS AND TENURE POSITIONS.—
(1) EMPLOYEES TRANSFERRED FROM THE FEDERAL RESERVE
SYSTEM, FDIC, HUD, NCUA, OCC, AND OTS.—Each employee transferred to the Bureau from the Board of Governors, a Federal
reserve bank, the Federal Deposit Insurance Corporation, the
Department of Housing and Urban Development, the National
Credit Union Administration, the Office of the Comptroller
of the Currency, or the Office of Thrift Supervision shall be
placed in a position at the Bureau with the same status and
tenure as that employee held on the day before the designated
transfer date.
(2) EMPLOYEES TRANSFERRED FROM THE FEDERAL RESERVE
SYSTEM.—For purposes of determining the status and position
placement of a transferred employee, any period of service
with the Board of Governors or a Federal reserve bank shall
be credited as a period of service with a Federal agency.
(e) ADDITIONAL CERTIFICATION REQUIREMENTS LIMITED.—
Examiners transferred to the Bureau are not subject to any additional certification requirements before being placed in a comparable
examiner position at the Bureau examining the same types of
institutions as they examined before they were transferred.
(f) PERSONNEL ACTIONS LIMITED.—
(1) 2-YEAR PROTECTION.—Except as provided in paragraph
(2), each transferred employee holding a permanent position
on the day before the designated transfer date may not, during
the 2-year period beginning on the designated transfer date,
be involuntarily separated, or involuntarily reassigned outside
his or her locality pay area.
(2) EXCEPTIONS.—Paragraph (1) does not limit the right
of the Bureau—
(A) to separate an employee for cause or for unacceptable performance;
(B) to terminate an appointment to a position excepted
from the competitive service because of its confidential
policy-making, policy-determining, or policy-advocating
character; or
(C) to reassign a supervisory employee outside of his
or her locality pay area when the Bureau determines that
the reassignment is necessary for the efficient operation
of the Bureau.
(g) PAY.—
(1) 2-YEAR PROTECTION.—
(A) IN GENERAL.—Except as provided in paragraph (2),
each transferred employee shall, during the 2-year period
beginning on the designated transfer date, receive pay at
a rate equal to not less than the basic rate of pay (including
any geographic differential) that the employee received

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Applicability.

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PUBLIC LAW 111–203—JULY 21, 2010
during the pay period immediately preceding the date of
transfer.
(B) LIMITATION.—Notwithstanding subparagraph (A),
if the employee was receiving a higher rate of basic pay
on a temporary basis (because of a temporary assignment,
temporary promotion, or other temporary action) immediately before the date of transfer, the Bureau may reduce
the rate of basic pay on the date on which the rate would
have been reduced but for the transfer, and the protected
rate for the remainder of the 2-year period shall be the
reduced rate that would have applied, but for the transfer.
(2) EXCEPTIONS.—Paragraph (1) does not limit the right
of the Bureau to reduce the rate of basic pay of a transferred
employee—
(A) for cause;
(B) for unacceptable performance; or
(C) with the consent of the employee.
(3) PROTECTION ONLY WHILE EMPLOYED.—Paragraph (1)
applies to a transferred employee only while that employee
remains employed by the Bureau.
(4) PAY INCREASES PERMITTED.—Paragraph (1) does not
limit the authority of the Bureau to increase the pay of a
transferred employee.
(h) REORGANIZATION.—
(1) BETWEEN 1ST AND 3RD YEAR.—
(A) IN GENERAL.—If the Bureau determines, during
the 2-year period beginning 1 year after the designated
transfer date, that a reorganization of the staff of the
Bureau is required—
(i) that reorganization shall be deemed a ‘‘substantial reorganization’’ for purposes of affording affected
employees retirement under section 8336(d)(2) or
8414(b)(1)(B) of title 5, United States Code;
(ii) before the reorganization occurs, all employees
in the same locality pay area as defined by the Office
of Personnel Management shall be placed in a uniform
position classification system; and
(iii) any resulting reduction in force shall be governed by the provisions of chapter 35 of title 5, United
States Code, except that the Bureau shall—
(I) establish competitive areas (as that term
is defined in regulations issued by the Office of
Personnel Management) to include at a minimum
all employees in the same locality pay area as
defined by the Office of Personnel Management;
(II) establish competitive levels (as that term
is defined in regulations issued by the Office of
Personnel Management) without regard to whether
the particular employees have been appointed to
positions in the competitive service or the excepted
service; and
(III) afford employees appointed to positions
in the excepted service (other than to a position
excepted from the competitive service because of
its confidential policy-making, policy-determining,
or policy-advocating character) the same assignment rights to positions within the Bureau as

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2049

employees appointed to positions in the competitive service.
(B) SERVICE CREDIT FOR REDUCTIONS IN FORCE.—For
purposes of this paragraph, periods of service with a Federal home loan bank, a joint office of the Federal home
loan banks, the Board of Governors, a Federal reserve
bank, the Federal Deposit Insurance Corporation, or the
National Credit Union Administration shall be credited
as periods of service with a Federal agency.
(2) AFTER 3RD YEAR.—
(A) IN GENERAL.—If the Bureau determines, at any
time after the 3-year period beginning on the designated
transfer date, that a reorganization of the staff of the
Bureau is required, any resulting reduction in force shall
be governed by the provisions of chapter 35 of title 5,
United States Code, except that the Bureau shall establish
competitive levels (as that term is defined in regulations
issued by the Office of Personnel Management) without
regard to types of appointment held by particular
employees transferred under this section.
(B) SERVICE CREDIT FOR REDUCTIONS IN FORCE.—For
purposes of this paragraph, periods of service with a Federal home loan bank, a joint office of the Federal home
loan banks, the Board of Governors, a Federal reserve
bank, the Federal Deposit Insurance Corporation, or the
National Credit Union Administration shall be credited
as periods of service with a Federal agency.
(i) BENEFITS.—
(1) RETIREMENT BENEFITS FOR TRANSFERRED EMPLOYEES.—
(A) IN GENERAL.—
(i) CONTINUATION OF EXISTING RETIREMENT PLAN.—
Unless an election is made under clause (iii) or
subparagraph (B), each employee transferred pursuant
to this subtitle shall remain enrolled in the existing
retirement plan of that employee as of the date of
transfer, through any period of continuous employment
with the Bureau.
(ii) EMPLOYER CONTRIBUTION.—The Bureau shall
pay any employer contributions to the existing retirement plan of each transferred employee, as required
under that plan.
(iii) OPTION TO ELECT INTO THE FEDERAL RESERVE

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SYSTEM
SYSTEM

RETIREMENT PLAN AND FEDERAL RESERVE
THRIFT PLAN.—Any employee transferred

pursuant to this subtitle may, during the 1-year period
beginning 6 months after the designated transfer date,
elect to end their participation and benefit accruals
under their existing retirement plan or plans and elect
to participate in both the Federal Reserve System
Retirement Plan and the Federal Reserve System
Thrift Plan, through any period of continuous employment with the Bureau, under the same terms as are
applicable to Federal Reserve System transferred
employees, as provided in subparagraph (C). An election of coverage by the Federal Reserve System Retirement Plan and the Federal Reserve System Thrift Plan
shall begin on the day following the end of the 18-

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PUBLIC LAW 111–203—JULY 21, 2010
month period beginning on the designated transfer
date, and benefit accruals under the existing retirement plan of the transferred employee shall end on
the last day of the 18-month period beginning on the
designated transfer date If an employee elects to
participate in the Federal Reserve System Retirement
Plan and the Federal Reserve System Thrift Plan,
all of the service of the employee that was creditable
under their existing retirement plan shall be transferred to the Federal Reserve System Retirement Plan
on the day following the end of the 18-month period
beginning on the designated transfer date.
(iv) BUREAU CONTRIBUTION.—The Bureau shall pay
an employer contribution to the Federal Reserve
System Retirement Plan, in the amount established
as an employer contribution under the Federal
Employees Retirement System, as established under
chapter 84 of title 5, United States Code, for each
Bureau employee who elects to participate in the Federal Reserve System Retirement Plan under this
subparagraph. The Bureau shall pay an employer contribution to the Federal Reserve System Thrift Plan
for each Bureau employee who elects to participate
in such plan, as required under the terms of the Federal Reserve System Thrift Plan.
(v) ADDITIONAL FUNDING.—The Bureau shall
transfer to the Federal Reserve System Retirement
Plan an amount determined by the Board of Governors,
in consultation with the Bureau, to be necessary to
reimburse the Federal Reserve System Retirement
Plan for the costs to such plan of providing benefits
to employees electing coverage under the Federal
Reserve System Retirement Plan under subparagraph
(iii), and who were transferred to the Bureau from
outside of the Federal Reserve System.
(vi) OPTION TO ELECT INTO THRIFT PLAN CREATED
BY THE BUREAU.—If the Bureau chooses to establish
a thrift plan, the employees transferred pursuant to
this subtitle shall have the option to elect, under such
terms and conditions as the Bureau may establish,
coverage under such a thrift plan established by the
Bureau. Transferred employees may not remain in the
thrift plan of the agency from which the employee
transferred under this subtitle, if the employee elects
to participate in a thrift plan established by the
Bureau.
(B) OPTION FOR EMPLOYEES TRANSFERRED FROM FED-

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ERAL RESERVE SYSTEM TO BE SUBJECT TO THE FEDERAL
EMPLOYEE RETIREMENT PROGRAM.—
(i) ELECTION.—Any Federal Reserve System trans-

ferred employee who was enrolled in the Federal
Reserve System Retirement Plan on the day before
the date of his or her transfer to the Bureau may,
during the 1-year period beginning 6 months after
the designated transfer date, elect to be subject to
the Federal Employee Retirement Program.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2051

(ii) EFFECTIVE DATE OF COVERAGE.—An election
of coverage by the Federal Employee Retirement Program under this subparagraph shall begin on the day
following the end of the 18-month period beginning
on the designated transfer date, and benefit accruals
under the existing retirement plan of the Federal
Reserve System transferred employee shall end on the
last day of the 18-month period beginning on the designated transfer date.
(C) BUREAU PARTICIPATION IN FEDERAL RESERVE
SYSTEM RETIREMENT PLAN.—
(i) BENEFITS PROVIDED.—Federal Reserve System
employees transferred pursuant to this subtitle shall
continue to be eligible to participate in the Federal
Reserve System Retirement Plan and Federal Reserve
System Thrift Plan through any period of continuous
employment with the Bureau, unless the employee
makes an election under subparagraph (A)(vi) or (B).
The retirement benefits, formulas, and features offered
to the Federal Reserve System transferred employees
shall be the same as those offered to employees of
the Board of Governors who participate in the Federal
Reserve System Retirement Plan and the Federal
Reserve System Thrift Plan, as amended from time
to time.
(ii) LIMITATION.—The Bureau shall not have
responsibility or authority—
(I) to amend an existing retirement plan
(including the Federal Reserve System Retirement
Plan or Federal Reserve System Thrift Plan);
(II) for administering an existing retirement
plan (including the Federal Reserve System Retirement Plan or Federal Reserve System Thrift Plan);
or
(III) for ensuring the plans comply with
applicable laws, fiduciary rules, and related
responsibilities.
(iii) TAX QUALIFIED STATUS.—Notwithstanding any
other provision of law, providing benefits to Federal
Reserve System employees transferred to the Bureau
pursuant to this subtitle, and to employees who elect
coverage pursuant to subparagraph (A)(iii) or under
section 1013(a)(2)(B), shall not cause any existing
retirement plan (including the Federal Reserve System
Retirement Plan and the Federal Reserve System
Thrift Plan) to lose its tax-qualified status under sections 401(a) and 501(a) of the Internal Revenue Code
of 1986.
(iv) BUREAU CONTRIBUTION.—The Bureau shall pay
any employer contributions to the existing retirement
plan (including the Federal Reserve System Retirement
Plan and the Federal Reserve System Thrift Plan)
for each Federal Reserve System transferred employee
participating in those plans, as required under the
plan, after the designated transfer date.
(v) CONTROLLED GROUP STATUS.—The Bureau is
the same employer as the Federal Reserve System

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124 STAT. 2052

PUBLIC LAW 111–203—JULY 21, 2010
(as comprised of the Board of Governors and each
of the 12 Federal reserve banks prior to the date of
enactment of this Act) for purposes of subsections (b),
(c), (m), and (o) of section 414 of the Internal Revenue
Code of 1986 (26 U.S.C. 414).
(D) DEFINITIONS.—For purposes of this paragraph—
(i) the term ‘‘existing retirement plan’’ means, with
respect to an employee transferred pursuant to this
subtitle, the retirement plan (including the Financial
Institutions Retirement Fund) and any associated
thrift savings plan, of the agency from which the
employee was transferred under this subtitle, in which
the employee was enrolled on the day before the date
on which the employee was transferred;
(ii) the term ‘‘Federal Employee Retirement Program’’ means either the Civil Service Retirement
System established under chapter 83 of title 5, United
States Code, or the Federal Employees Retirement
System established under chapter 84 of title 5, United
States Code, depending upon the service history of
the individual;
(iii) the term ‘‘Federal Reserve System transferred
employee’’ means a transferred employee who is an
employee of the Board of Governors or a Federal
reserve bank on the day before the designated transfer
date, and who is transferred to the Bureau on the
designated transfer date pursuant to this subtitle;
(iv) the term ‘‘Federal Reserve System Retirement
Plan’’ means the Retirement Plan for Employees of
the Federal Reserve System; and
(v) the term ‘‘Federal Reserve System Thrift Plan’’
means the Thrift Plan for Employees of the Federal
Reserve System.
(2) BENEFITS OTHER THAN RETIREMENT BENEFITS FOR
TRANSFERRED EMPLOYEES.—
(A) DURING 1ST YEAR.—
(i) EXISTING PLANS CONTINUE.—Each employee
transferred pursuant to this subtitle may, for 1 year
after the designated transfer date, retain membership
in any other employee benefit program of the agency
or bank from which the employee transferred, including
a medical, dental, vision, long term care, or life insurance program, to which the employee belonged on the
day before the designated transfer date.
(ii) EMPLOYER CONTRIBUTION.—The Bureau shall
reimburse the agency or bank from which an employee
was transferred for any cost incurred by that agency
or bank in continuing to extend coverage in the benefit
program to the employee, as required under that program or negotiated agreements.
(B) MEDICAL, DENTAL, VISION, OR LIFE INSURANCE
AFTER FIRST YEAR.—If, at the end of the 1-year period
beginning on the designated transfer date, the Bureau
has not established its own, or arranged for participation
in another entity’s, medical, dental, vision, or life insurance
program, an employee transferred pursuant to this subtitle
who was a member of such a program at the agency or

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2053

Federal reserve bank from which the employee transferred
may, before the coverage of that employee ends under
subparagraph (A)(i), elect to enroll, without regard to any
regularly scheduled open season, in—
(i) the enhanced dental benefits program established under chapter 89A of title 5, United States
Code;
(ii) the enhanced vision benefits established under
chapter 89B of title 5, United States Code;
(iii) the Federal Employees Group Life Insurance
Program established under chapter 87 of title 5, United
States Code, without regard to any requirement of
insurability; and
(iv) the Federal Employees Health Benefits Program established under chapter 89 of title 5, United
States Code.
(C) LONG TERM CARE INSURANCE AFTER 1ST YEAR.—
If, at the end of the 1-year period beginning on the designated transfer date, the Bureau has not established its
own, or arranged for participation in another entity’s, long
term care insurance program, an employee transferred
pursuant to this subtitle who was a member of such a
program at the agency or Federal reserve bank from which
the employee transferred may, before the coverage of that
employee ends under subparagraph (A)(i), elect to apply
for coverage under the Federal Long Term Care Insurance
Program established under chapter 90 of title 5, United
States Code, under the underwriting requirements
applicable to a new active workforce member (as defined
in part 875 of title 5, Code of Federal Regulations).
(D) EMPLOYEE CONTRIBUTION.—An individual enrolled
in the Federal Employees Health Benefits program shall
pay any employee contribution required by the plan.
(E) ADDITIONAL FUNDING.—The Bureau shall transfer
to the Federal Employees Health Benefits Fund established
under section 8909 of title 5, United States Code, an
amount determined by the Director of the Office of Personnel Management, after consultation with the Bureau
and the Office of Management and Budget, to be necessary
to reimburse the Fund for the cost to the Fund of providing
benefits under this paragraph.
(F) CREDIT FOR TIME ENROLLED IN OTHER PLANS.—
For employees transferred under this title, enrollment in
a health benefits plan administered by a transferor agency
or a Federal reserve bank, as the case may be, immediately
before enrollment in a health benefits plan under chapter
89 of title 5, United States Code, shall be considered as
enrollment in a health benefits plan under that chapter
for purposes of section 8905(b)(1)(A) of title 5, United States
Code.
(G) SPECIAL PROVISIONS TO ENSURE CONTINUATION OF
LIFE INSURANCE BENEFITS.—
(i) IN GENERAL.—An annuitant (as defined in section 8901(3) of title 5, United States Code) who is
enrolled in a life insurance plan administered by a
transferor agency on the day before the designated
transfer date shall be eligible for coverage by a life

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PUBLIC LAW 111–203—JULY 21, 2010

insurance plan under sections 8706(b), 8714a, 8714b,
and 8714c of title 5, United States Code, or in a life
insurance plan established by the Bureau, without
regard to any regularly scheduled open season and
requirement of insurability.
(ii) EMPLOYEE CONTRIBUTION.—An individual
enrolled in a life insurance plan under this subparagraph shall pay any employee contribution required
by the plan.
(iii) ADDITIONAL FUNDING.—The Bureau shall
transfer to the Employees’ Life Insurance Fund established under section 8714 of title 5, United States
Code, an amount determined by the Director of the
Office of Personnel Management, after consultation
with the Bureau and the Office of Management and
Budget, to be necessary to reimburse the Fund for
the cost to the Fund of providing benefits under this
subparagraph not otherwise paid for by the employee
under clause (ii).
(iv) CREDIT FOR TIME ENROLLED IN OTHER PLANS.—
For employees transferred under this title, enrollment
in a life insurance plan administered by a transferor
agency immediately before enrollment in a life insurance plan under chapter 87 of title 5, United States
Code, shall be considered as enrollment in a life insurance plan under that chapter for purposes of section
8706(b)(1)(A) of title 5, United States Code.
(3) OPM RULES.—The Office of Personnel Management
shall issue such rules as are necessary to carry out this subsection.
(j) IMPLEMENTATION OF UNIFORM PAY AND CLASSIFICATION
SYSTEM.—Not later than 2 years after the designated transfer date,
the Bureau shall implement a uniform pay and classification system
for all employees transferred under this title.
(k) EQUITABLE TREATMENT.—In administering the provisions
of this section, the Bureau—
(1) shall take no action that would unfairly disadvantage
transferred employees relative to each other based on their
prior employment by the Board of Governors, the Federal
Deposit Insurance Corporation, the Department of Housing and
Urban Development, the National Credit Union Administration,
the Office of the Comptroller of the Currency, the Office of
Thrift Supervision, a Federal reserve bank, a Federal home
loan bank, or a joint office of the Federal home loan banks;
and
(2) may take such action as is appropriate in individual
cases so that employees transferred under this section receive
equitable treatment, with respect to the status, tenure, pay,
benefits (other than benefits under programs administered by
the Office of Personnel Management), and accrued leave or
vacation time of those employees, for prior periods of service
with any Federal agency, including the Board of Governors,
the Corporation, the Department of Housing and Urban
Development, the National Credit Union Administration, the
Office of the Comptroller of the Currency, the Office of Thrift
Supervision, a Federal reserve bank, a Federal home loan bank,
or a joint office of the Federal home loan banks.

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124 STAT. 2055

(l) IMPLEMENTATION.—In implementing the provisions of this
section, the Bureau shall coordinate with the Office of Personnel
Management and other entities having expertise in matters related
to employment to ensure a fair and orderly transition for affected
employees.
SEC. 1065. INCIDENTAL TRANSFERS.

12 USC 5585.

(a) INCIDENTAL TRANSFERS AUTHORIZED.—The Director of the
Office of Management and Budget, in consultation with the Secretary, shall make such additional incidental transfers and dispositions of assets and liabilities held, used, arising from, available,
or to be made available, in connection with the functions transferred
by this title, as the Director may determine necessary to accomplish
the purposes of this title.
(b) SUNSET.—The authority provided in this section shall terminate 5 years after the date of enactment of this Act.
SEC. 1066. INTERIM AUTHORITY OF THE SECRETARY.

12 USC 5586.

(a) IN GENERAL.—The Secretary is authorized to perform the
functions of the Bureau under this subtitle until the Director of
the Bureau is confirmed by the Senate in accordance with section
1011.
(b) INTERIM ADMINISTRATIVE SERVICES BY THE DEPARTMENT
OF THE TREASURY.—The Department of the Treasury may provide
administrative services necessary to support the Bureau before
the designated transfer date.

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SEC. 1067. TRANSITION OVERSIGHT.

12 USC 5587.

(a) PURPOSE.—The purpose of this section is to ensure that
the Bureau—
(1) has an orderly and organized startup;
(2) attracts and retains a qualified workforce; and
(3) establishes comprehensive employee training and benefits programs.
(b) REPORTING REQUIREMENT.—
(1) IN GENERAL.—The Bureau shall submit an annual
report to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives that includes the plans
described in paragraph (2).
(2) PLANS.—The plans described in this paragraph are as
follows:
(A) TRAINING AND WORKFORCE DEVELOPMENT PLAN.—
The Bureau shall submit a training and workforce development plan that includes, to the extent practicable—
(i) identification of skill and technical expertise
needs and actions taken to meet those requirements;
(ii) steps taken to foster innovation and creativity;
(iii) leadership development and succession planning; and
(iv) effective use of technology by employees.
(B) WORKPLACE FLEXIBILITIES PLAN.—The Bureau shall
submit a workforce flexibility plan that includes, to the
extent practicable—
(i) telework;
(ii) flexible work schedules;
(iii) phased retirement;
(iv) reemployed annuitants;

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124 STAT. 2056

PUBLIC LAW 111–203—JULY 21, 2010

(v) part-time work;
(vi) job sharing;
(vii) parental leave benefits and childcare assistance;
(viii) domestic partner benefits;
(ix) other workplace flexibilities; or
(x) any combination of the items described in
clauses (i) through (ix).
(C) RECRUITMENT AND RETENTION PLAN.—The Bureau
shall submit a recruitment and retention plan that
includes, to the extent practicable, provisions relating to—
(i) the steps necessary to target highly qualified
applicant pools with diverse backgrounds;
(ii) streamlined employment application processes;
(iii) the provision of timely notification of the
status of employment applications to applicants; and
(iv) the collection of information to measure indicators of hiring effectiveness.
(c) EXPIRATION.—The reporting requirement under subsection
(b) shall terminate 5 years after the date of enactment of this
Act.
(d) RULE OF CONSTRUCTION.—Nothing in this section may be
construed to affect—
(1) a collective bargaining agreement, as that term is
defined in section 7103(a)(8) of title 5, United States Code,
that is in effect on the date of enactment of this Act; or
(2) the rights of employees under chapter 71 of title 5,
United States Code.
(e) PARTICIPATION IN EXAMINATIONS.—In order to prepare the
Bureau to conduct examinations under section 1025 upon the designated transfer date, the Bureau and the applicable prudential
regulator may agree to include, on a sampling basis, examiners
on examinations of the compliance with Federal consumer financial
law of institutions described in section 1025(a) conducted by the
prudential regulators prior to the designated transfer date.

Subtitle G—Regulatory Improvements
SEC. 1071. SMALL BUSINESS DATA COLLECTION.

(a) IN GENERAL.—The Equal Credit Opportunity Act (15 U.S.C.
1691 et seq.) is amended by inserting after section 704A the following:

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15 USC 1691o–2.

‘‘SEC. 704B. SMALL BUSINESS LOAN DATA COLLECTION.

‘‘(a) PURPOSE.—The purpose of this section is to facilitate
enforcement of fair lending laws and enable communities, governmental entities, and creditors to identify business and community
development needs and opportunities of women-owned, minorityowned, and small businesses.
‘‘(b) INFORMATION GATHERING.—Subject to the requirements
of this section, in the case of any application to a financial institution for credit for women-owned, minority-owned, or small business,
the financial institution shall—
‘‘(1) inquire whether the business is a women-owned,
minority-owned, or small business, without regard to whether
such application is received in person, by mail, by telephone,

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2057

by electronic mail or other form of electronic transmission,
or by any other means, and whether or not such application
is in response to a solicitation by the financial institution;
and
‘‘(2) maintain a record of the responses to such inquiry,
separate from the application and accompanying information.
‘‘(c) RIGHT TO REFUSE.—Any applicant for credit may refuse
to provide any information requested pursuant to subsection (b)
in connection with any application for credit.
‘‘(d) NO ACCESS BY UNDERWRITERS.—
‘‘(1) LIMITATION.—Where feasible, no loan underwriter or
other officer or employee of a financial institution, or any affiliate of a financial institution, involved in making any determination concerning an application for credit shall have access
to any information provided by the applicant pursuant to a
request under subsection (b) in connection with such application.
‘‘(2) LIMITED ACCESS.—If a financial institution determines
that a loan underwriter or other officer or employee of a financial institution, or any affiliate of a financial institution,
involved in making any determination concerning an application for credit should have access to any information provided
by the applicant pursuant to a request under subsection (b),
the financial institution shall provide notice to the applicant
of the access of the underwriter to such information, along
with notice that the financial institution may not discriminate
on the basis of such information.
‘‘(e) FORM AND MANNER OF INFORMATION.—
‘‘(1) IN GENERAL.—Each financial institution shall compile
and maintain, in accordance with regulations of the Bureau,
a record of the information provided by any loan applicant
pursuant to a request under subsection (b).
‘‘(2) ITEMIZATION.—Information compiled and maintained
under paragraph (1) shall be itemized in order to clearly and
conspicuously disclose—
‘‘(A) the number of the application and the date on
which the application was received;
‘‘(B) the type and purpose of the loan or other credit
being applied for;
‘‘(C) the amount of the credit or credit limit applied
for, and the amount of the credit transaction or the credit
limit approved for such applicant;
‘‘(D) the type of action taken with respect to such
application, and the date of such action;
‘‘(E) the census tract in which is located the principal
place of business of the women-owned, minority-owned,
or small business loan applicant;
‘‘(F) the gross annual revenue of the business in the
last fiscal year of the women-owned, minority-owned, or
small business loan applicant preceding the date of the
application;
‘‘(G) the race, sex, and ethnicity of the principal owners
of the business; and
‘‘(H) any additional data that the Bureau determines
would aid in fulfilling the purposes of this section.
‘‘(3) NO PERSONALLY IDENTIFIABLE INFORMATION.—In compiling and maintaining any record of information under this

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Records.

Determination.
Notice.

Records.

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Time period.

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PUBLIC LAW 111–203—JULY 21, 2010

section, a financial institution may not include in such record
the name, specific address (other than the census tract required
under paragraph (1)(E)), telephone number, electronic mail
address, or any other personally identifiable information concerning any individual who is, or is connected with, the womenowned, minority-owned, or small business loan applicant.
‘‘(4) DISCRETION TO DELETE OR MODIFY PUBLICLY AVAILABLE
DATA.—The Bureau may, at its discretion, delete or modify
data collected under this section which is or will be available
to the public, if the Bureau determines that the deletion or
modification of the data would advance a privacy interest.
‘‘(f) AVAILABILITY OF INFORMATION.—
‘‘(1) SUBMISSION TO BUREAU.—The data required to be compiled and maintained under this section by any financial
institution shall be submitted annually to the Bureau.
‘‘(2) AVAILABILITY OF INFORMATION.—Information compiled
and maintained under this section shall be—
‘‘(A) retained for not less than 3 years after the date
of preparation;
‘‘(B) made available to any member of the public, upon
request, in the form required under regulations prescribed
by the Bureau;
‘‘(C) annually made available to the public generally
by the Bureau, in such form and in such manner as is
determined by the Bureau, by regulation.
‘‘(3) COMPILATION OF AGGREGATE DATA.—The Bureau may,
at its discretion—
‘‘(A) compile and aggregate data collected under this
section for its own use; and
‘‘(B) make public such compilations of aggregate data.
‘‘(g) BUREAU ACTION.—
‘‘(1) IN GENERAL.—The Bureau shall prescribe such rules
and issue such guidance as may be necessary to carry out,
enforce, and compile data pursuant to this section.
‘‘(2) EXCEPTIONS.—The Bureau, by rule or order, may adopt
exceptions to any requirement of this section and may, conditionally or unconditionally, exempt any financial institution
or class of financial institutions from the requirements of this
section, as the Bureau deems necessary or appropriate to carry
out the purposes of this section.
‘‘(3) GUIDANCE.—The Bureau shall issue guidance designed
to facilitate compliance with the requirements of this section,
including assisting financial institutions in working with
applicants to determine whether the applicants are womenowned, minority-owned, or small businesses for purposes of
this section.
‘‘(h) DEFINITIONS.—For purposes of this section, the following
definitions shall apply:
‘‘(1) FINANCIAL INSTITUTION.—The term ‘financial institution’ means any partnership, company, corporation, association
(incorporated or unincorporated), trust, estate, cooperative
organization, or other entity that engages in any financial
activity.
‘‘(2) SMALL BUSINESS.—The term ‘small business’ has the
same meaning as the term ‘small business concern’ in section
3 of the Small Business Act (15 U.S.C. 632).

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124 STAT. 2059

‘‘(3) SMALL BUSINESS LOAN.—The term ‘small business loan’
means a loan made to a small business.
‘‘(4) MINORITY.—The term ‘minority’ has the same meaning
as in section 1204(c)(3) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989.
‘‘(5) MINORITY-OWNED BUSINESS.—The term ‘minorityowned business’ means a business—
‘‘(A) more than 50 percent of the ownership or control
of which is held by 1 or more minority individuals; and
‘‘(B) more than 50 percent of the net profit or loss
of which accrues to 1 or more minority individuals.
‘‘(6) WOMEN-OWNED BUSINESS.—The term ‘women-owned
business’ means a business—
‘‘(A) more than 50 percent of the ownership or control
of which is held by 1 or more women; and
‘‘(B) more than 50 percent of the net profit or loss
of which accrues to 1 or more women.’’.
(b) TECHNICAL AND CONFORMING AMENDMENTS.—Section 701(b)
of the Equal Credit Opportunity Act (15 U.S.C. 1691(b)) is
amended—
(1) in paragraph (3), by striking ‘‘or’’ at the end;
(2) in paragraph (4), by striking the period at the end
and inserting ‘‘; or’’; and
(3) by inserting after paragraph (4), the following:
‘‘(5) to make an inquiry under section 704B, in accordance
with the requirements of that section.’’.
(c) CLERICAL AMENDMENT.—The table of sections for title VII
of the Consumer Credit Protection Act is amended by inserting
after the item relating to section 704A the following new item:

15 USC 1691
note.

‘‘704B. Small business loan data collection.’’.

(d) EFFECTIVE DATE.—This section shall become effective on
the designated transfer date.

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SEC. 1072. ASSISTANCE FOR ECONOMICALLY VULNERABLE INDIVIDUALS AND FAMILIES.

(a) HERA AMENDMENTS.—Section 1132 of the Housing and
Economic Recovery Act of 2008 (12 U.S.C. 1701x note) is amended—
(1) in subsection (a), by inserting in each of paragraphs
(1), (2), (3), and (4) ‘‘or economically vulnerable individuals
and families’’ after ‘‘homebuyers’’ each place that term appears;
(2) in subsection (b)(1), by inserting ‘‘or economically
vulnerable individuals and families’’ after ‘‘homebuyers’’;
(3) in subsection (c)(1)—
(A) in subparagraph (A), by striking ‘‘or’’ at the end;
(B) in subparagraph (B), by striking the period at
the end and inserting ‘‘; or’’; and
(C) by adding at the end the following:
‘‘(C) a nonprofit corporation that—
‘‘(i) is exempt from taxation under section 501(c)(3)
of the Internal Revenue Code of 1986; and
‘‘(ii) specializes or has expertise in working with
economically vulnerable individuals and families, but
whose primary purpose is not provision of credit counseling services.’’; and
(4) in subsection (d)(1), by striking ‘‘not more than 5’’.

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124 STAT. 2060
12 USC 1701x
note.

(b) APPLICABILITY.—Amendments made by subsection (a) shall
not apply to programs authorized by section 1132 of the Housing
and Economic Recovery Act of 2008 (12 U.S.C. 1701x note) that
are funded with appropriations prior to fiscal year 2011.

12 USC 5601.

SEC. 1073. REMITTANCE TRANSFERS.

(a) TREATMENT OF REMITTANCE TRANSFERS.—The Electronic
Fund Transfer Act (15 U.S.C. 1693 et seq.) is amended—
(1) in section 902(b) (15 U.S.C. 1693(b)), by inserting ‘‘and
remittance’’ after ‘‘electronic fund’’;
(2) in section 904(c) (15 U.S.C. 1693b(c)), in the first sentence, by inserting ‘‘or remittance transfers’’ after ‘‘electronic
fund transfers’’;
(3) by redesignating sections 919, 920, 921, and 922 as
sections 920, 921, 922, and 923, respectively; and
(4) by inserting after section 918 the following:

15 USC
1693p–1693r,
1693 note.
15 USC 1693o–1.

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PUBLIC LAW 111–203—JULY 21, 2010

‘‘SEC. 919. REMITTANCE TRANSFERS.

‘‘(a) DISCLOSURES REQUIRED FOR REMITTANCE TRANSFERS.—
‘‘(1) IN GENERAL.—Each remittance transfer provider shall
make disclosures as required under this section and in accordance with rules prescribed by the Board. Disclosures required
under this section shall be in addition to any other disclosures
applicable under this title.
‘‘(2) DISCLOSURES.—Subject to rules prescribed by the
Board, a remittance transfer provider shall provide, in writing
and in a form that the sender may keep, to each sender
requesting a remittance transfer, as applicable to the transaction—
‘‘(A) at the time at which the sender requests a remittance transfer to be initiated, and prior to the sender
making any payment in connection with the remittance
transfer, a disclosure describing—
‘‘(i) the amount of currency that will be received
by the designated recipient, using the values of the
currency into which the funds will be exchanged;
‘‘(ii) the amount of transfer and any other fees
charged by the remittance transfer provider for the
remittance transfer; and
‘‘(iii) any exchange rate to be used by the remittance transfer provider for the remittance transfer,
to the nearest 1/100th of a point; and
‘‘(B) at the time at which the sender makes payment
in connection with the remittance transfer—
‘‘(i) a receipt showing—
‘‘(I) the information described in subparagraph
(A);
‘‘(II) the promised date of delivery to the designated recipient; and
‘‘(III) the name and either the telephone
number or the address of the designated recipient,
if either the telephone number or the address of
the designated recipient is provided by the sender;
and
‘‘(ii) a statement containing—
‘‘(I) information about the rights of the sender
under this section regarding the resolution of
errors; and

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124 STAT. 2061

‘‘(II) appropriate contact information for—
‘‘(aa) the remittance transfer provider; and
‘‘(bb) the State agency that regulates the
remittance transfer provider and the Board,
including the toll-free telephone number established under section 1013 of the Consumer
Financial Protection Act of 2010.
‘‘(3) REQUIREMENTS RELATING TO DISCLOSURES.—With
respect to each disclosure required to be provided under paragraph (2) a remittance transfer provider shall—
‘‘(A) provide an initial notice and receipt, as required
by subparagraphs (A) and (B) of paragraph (2), and an
error resolution statement, as required by subsection (d),
that clearly and conspicuously describe the information
required to be disclosed therein; and
‘‘(B) with respect to any transaction that a sender
conducts electronically, comply with the Electronic Signatures in Global and National Commerce Act (15 U.S.C.
7001 et seq.).
‘‘(4) EXCEPTION FOR DISCLOSURES OF AMOUNT RECEIVED.—
‘‘(A) IN GENERAL.—Subject to the rules prescribed by
the Board, and except as provided under subparagraph
(B), the disclosures required regarding the amount of currency that will be received by the designated recipient
shall be deemed to be accurate, so long as the disclosures
provide a reasonably accurate estimate of the foreign currency to be received. This paragraph shall apply only to
a remittance transfer provider who is an insured depository
institution, as defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813), or an insured credit union,
as defined in section 101 of the Federal Credit Union
Act (12 U.S.C. 1752), and if—
‘‘(i) a remittance transfer is conducted through
a demand deposit, savings deposit, or other asset
account that the sender holds with such remittance
transfer provider; and
‘‘(ii) at the time at which the sender requests the
transaction, the remittance transfer provider is unable
to know, for reasons beyond its control, the amount
of currency that will be made available to the designated recipient.
‘‘(B) DEADLINE.—The application of subparagraph (A)
shall terminate 5 years after the date of enactment of
the Consumer Financial Protection Act of 2010, unless
the Board determines that termination of such provision
would negatively affect the ability of remittance transfer
providers described in subparagraph (A) to send remittances to locations in foreign countries, in which case,
the Board may, by rule, extend the application of subparagraph (A) to not longer than 10 years after the date of
enactment of the Consumer Financial Protection Act of
2010.
‘‘(5) EXEMPTION AUTHORITY.—The Board may, by rule,
permit a remittance transfer provider to satisfy the requirements of—
‘‘(A) paragraph (2)(A) orally, if the transaction is conducted entirely by telephone;

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124 STAT. 2062

‘‘(B) paragraph (2)(B), in the case of a transaction
conducted entirely by telephone, by mailing the disclosures
required under such subparagraph to the sender, not later
than 1 business day after the date on which the transaction
is conducted, or by including such documents in the next
periodic statement, if the telephone transaction is conducted through a demand deposit, savings deposit, or other
asset account that the sender holds with the remittance
transfer provider;
‘‘(C) subparagraphs (A) and (B) of paragraph (2)
together in one written disclosure, but only to the extent
that the information provided in accordance with paragraph
(3)(A) is accurate at the time at which payment is made
in connection with the subject remittance transfer; and
‘‘(D) paragraph (2)(A), without compliance with section
101(c) of the Electronic Signatures in Global Commerce
Act, if a sender initiates the transaction electronically and
the information is displayed electronically in a manner
that the sender can keep.
‘‘(6) STOREFRONT AND INTERNET NOTICES.—
‘‘(A) IN GENERAL.—
‘‘(i) PROMINENT POSTING.—Subject to subparagraph
(B), the Board may prescribe rules to require a remittance transfer provider to prominently post, and timely
update, a notice describing a model remittance transfer
for one or more amounts, as the Board may determine,
which notice shall show the amount of currency that
will be received by the designated recipient, using the
values of the currency into which the funds will be
exchanged.
‘‘(ii) ONSITE DISPLAYS.—The Board may require the
notice prescribed under this subparagraph to be displayed in every physical storefront location owned or
controlled by the remittance transfer provider.
‘‘(iii) INTERNET NOTICES.—Subject to paragraph (3),
the Board shall prescribe rules to require a remittance
transfer provider that provides remittance transfers
via the Internet to provide a notice, comparable to
a storefront notice described in this subparagraph,
located on the home page or landing page (with respect
to such remittance transfer services) owned or controlled by the remittance transfer provider.
‘‘(iv) RULEMAKING AUTHORITY.—In prescribing
rules under this subparagraph, the Board may impose
standards or requirements regarding the provision of
the storefront and Internet notices required under this
subparagraph and the provision of the disclosures
required under paragraphs (2) and (3).
‘‘(B) STUDY AND ANALYSIS.—Prior to proposing rules
under subparagraph (A), the Board shall undertake appropriate studies and analyses, which shall be consistent with
section 904(a)(2), and may include an advanced notice of
proposed rulemaking, to determine whether a storefront
notice or Internet notice facilitates the ability of a consumer—
‘‘(i) to compare prices for remittance transfers; and

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2063

‘‘(ii) to understand the types and amounts of any
fees or costs imposed on remittance transfers.
‘‘(b) FOREIGN LANGUAGE DISCLOSURES.—The disclosures
required under this section shall be made in English and in each
of the foreign languages principally used by the remittance transfer
provider, or any of its agents, to advertise, solicit, or market,
either orally or in writing, at that office.
‘‘(c) REGULATIONS REGARDING TRANSFERS TO CERTAIN
NATIONS.—If the Board determines that a recipient nation does
not legally allow, or the method by which transactions are made
in the recipient country do not allow, a remittance transfer provider
to know the amount of currency that will be received by the designated recipient, the Board may prescribe rules (not later than
18 months after the date of enactment of the Consumer Financial
Protection Act of 2010) addressing the issue, which rules shall
include standards for a remittance transfer provider to provide—
‘‘(1) a receipt that is consistent with subsections (a) and
(b); and
‘‘(2) a reasonably accurate estimate of the foreign currency
to be received, based on the rate provided to the sender by
the remittance transfer provider at the time at which the
transaction was initiated by the sender.
‘‘(d) REMITTANCE TRANSFER ERRORS.—
‘‘(1) ERROR RESOLUTION.—
‘‘(A) IN GENERAL.—If a remittance transfer provider
receives oral or written notice from the sender within 180
days of the promised date of delivery that an error occurred
with respect to a remittance transfer, including the amount
of currency designated in subsection (a)(3)(A) that was
to be sent to the designated recipient of the remittance
transfer, using the values of the currency into which the
funds should have been exchanged, but was not made
available to the designated recipient in the foreign country,
the remittance transfer provider shall resolve the error
pursuant to this subsection and investigate the reason
for the error.
‘‘(B) REMEDIES.—Not later than 90 days after the date
of receipt of a notice from the sender pursuant to subparagraph (A), the remittance transfer provider shall, as
applicable to the error and as designated by the sender—
‘‘(i) refund to the sender the total amount of funds
tendered by the sender in connection with the remittance transfer which was not properly transmitted;
‘‘(ii) make available to the designated recipient,
without additional cost to the designated recipient or
to the sender, the amount appropriate to resolve the
error;
‘‘(iii) provide such other remedy, as determined
appropriate by rule of the Board for the protection
of senders; or
‘‘(iv) provide written notice to the sender that there
was no error with an explanation responding to the
specific complaint of the sender.
‘‘(2) RULES.—The Board shall establish, by rule issued not
later than 18 months after the date of enactment of the Consumer Financial Protection Act of 2010, clear and appropriate
standards for remittance transfer providers with respect to

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124 STAT. 2064

error resolution relating to remittance transfers, to protect
senders from such errors. Standards prescribed under this paragraph shall include appropriate standards regarding record
keeping, as required, including documentation—
‘‘(A) of the complaint of the sender;
‘‘(B) that the sender provides the remittance transfer
provider with respect to the alleged error; and
‘‘(C) of the findings of the remittance transfer provider
regarding the investigation of the alleged error that the
sender brought to their attention.
‘‘(3) CANCELLATION AND REFUND POLICY RULES.—Not later
than 18 months after the date of enactment of the Consumer
Financial Protection Act of 2010, the Board shall issue final
rules regarding appropriate remittance transfer cancellation
and refund policies for consumers.
‘‘(e) APPLICABILITY OF THIS TITLE.—
‘‘(1) IN GENERAL.—A remittance transfer that is not an
electronic fund transfer, as defined in section 903, shall not
be subject to any of the provisions of sections 905 through
913. A remittance transfer that is an electronic fund transfer,
as defined in section 903, shall be subject to all provisions
of this title, except for section 908, that are otherwise applicable
to electronic fund transfers under this title.
‘‘(2) RULE OF CONSTRUCTION.—Nothing in this section shall
be construed—
‘‘(A) to affect the application to any transaction, to
any remittance provider, or to any other person of any
of the provisions of subchapter II of chapter 53 of title
31, United States Code, section 21 of the Federal Deposit
Insurance Act (12 U.S.C. 1829b), or chapter 2 of title I
of Public Law 91–508 (12 U.S.C. 1951–1959), or any regulations promulgated thereunder; or
‘‘(B) to cause any fund transfer that would not otherwise be treated as such under paragraph (1) to be treated
as an electronic fund transfer, or as otherwise subject to
this title, for the purposes of any of the provisions referred
to in subparagraph (A) or any regulations promulgated
thereunder.
‘‘(f) ACTS OF AGENTS.—
‘‘(1) IN GENERAL.—A remittance transfer provider shall be
liable for any violation of this section by any agent, authorized
delegate, or person affiliated with such provider, when such
agent, authorized delegate, or affiliate acts for that remittance
transfer provider.
‘‘(2) OBLIGATIONS OF REMITTANCE TRANSFER PROVIDERS.—
The Board shall prescribe rules to implement appropriate
standards or conditions of, liability of a remittance transfer
provider, including a provider who acts through an agent or
authorized delegate. An agency charged with enforcing the
requirements of this section, or rules prescribed by the Board
under this section, may consider, in any action or other proceeding against a remittance transfer provider, the extent to
which the provider had established and maintained policies
or procedures for compliance, including policies, procedures,
or other appropriate oversight measures designed to assure
compliance by an agent or authorized delegate acting for such
provider.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2065

‘‘(g) DEFINITIONS.—As used in this section—
‘‘(1) the term ‘designated recipient’ means any person
located in a foreign country and identified by the sender as
the authorized recipient of a remittance transfer to be made
by a remittance transfer provider, except that a designated
recipient shall not be deemed to be a consumer for purposes
of this Act;
‘‘(2) the term ‘remittance transfer’—
‘‘(A) means the electronic (as defined in section 106(2)
of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006(2))) transfer of funds requested
by a sender located in any State to a designated recipient
that is initiated by a remittance transfer provider, whether
or not the sender holds an account with the remittance
transfer provider or whether or not the remittance transfer
is also an electronic fund transfer, as defined in section
903; and
‘‘(B) does not include a transfer described in subparagraph (A) in an amount that is equal to or lesser than
the amount of a small-value transaction determined, by
rule, to be excluded from the requirements under section
906(a);
‘‘(3) the term ‘remittance transfer provider’ means any person or financial institution that provides remittance transfers
for a consumer in the normal course of its business, whether
or not the consumer holds an account with such person or
financial institution; and
‘‘(4) the term ‘sender’ means a consumer who requests
a remittance provider to send a remittance transfer for the
consumer to a designated recipient.’’.
(b) AUTOMATED CLEARINGHOUSE SYSTEM.—
(1) EXPANSION OF SYSTEM.—The Board of Governors shall
work with the Federal reserve banks and the Department of
the Treasury to expand the use of the automated clearinghouse
system and other payment mechanisms for remittance transfers
to foreign countries, with a focus on countries that receive
significant remittance transfers from the United States, based
on—
(A) the number, volume, and size of such transfers;
(B) the significance of the volume of such transfers
relative to the external financial flows of the receiving
country, including—
(i) the total amount transferred; and
(ii) the total volume of payments made by United
States Government agencies to beneficiaries and
retirees living abroad;
(C) the feasibility of such an expansion; and
(D) the ability of the Federal Reserve System to establish payment gateways in different geographic regions and
currency zones to receive remittance transfers and route
them through the payments systems in the destination
countries.
(2) REPORT TO CONGRESS.—Not later than one calendar
year after the date of enactment of this Act, and on April
30 biennially thereafter during the 10-year period beginning
on that date of enactment, the Board of Governors shall submit
a report to the Committee on Banking, Housing, and Urban

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124 STAT. 2066

PUBLIC LAW 111–203—JULY 21, 2010

Affairs of the Senate and the Committee on Financial Services
of the House of Representatives on the status of the automated
clearinghouse system and its progress in complying with the
requirements of this subsection. The report shall include an
analysis of adoption rates of International ACH Transactions
rules and formats, the efficacy of increasing adoption rates,
and potential recommendations to increase adoption.
(c) EXPANSION OF FINANCIAL INSTITUTION PROVISION OF REMITTANCE TRANSFERS.—
(1) PROVISION OF GUIDELINES TO INSTITUTIONS.—Each of
the Federal banking agencies and the National Credit Union
Administration shall provide guidelines to financial institutions
under the jurisdiction of the agency regarding the offering
of low-cost remittance transfers and no-cost or low-cost basic
consumer accounts, as well as agency services to remittance
transfer providers.
(2) ASSISTANCE TO FINANCIAL LITERACY COMMISSION.—As
part of its duties as members of the Financial Literacy and
Education Commission, the Bureau, the Federal banking agencies, and the National Credit Union Administration shall assist
the Financial Literacy and Education Commission in executing
the Strategy for Assuring Financial Empowerment (or the
‘‘SAFE Strategy’’), as it relates to remittances.
(d) FEDERAL CREDIT UNION ACT CONFORMING AMENDMENT.—
Paragraph (12) of section 107 of the Federal Credit Union Act
(12 U.S.C. 1757) is amended to read as follows:
‘‘(12) in accordance with regulations prescribed by the
Board—
‘‘(A) to sell, to persons in the field of membership,
negotiable checks (including travelers checks), money
orders, and other similar money transfer instruments
(including international and domestic electronic fund transfers and remittance transfers, as defined in section 919
of the Electronic Fund Transfer Act); and
‘‘(B) to cash checks and money orders for persons in
the field of membership for a fee;’’.
(e) REPORT ON FEASIBILITY OF AND IMPEDIMENTS TO USE OF
REMITTANCE HISTORY IN CALCULATION OF CREDIT SCORE.—Before
the end of the 365-day period beginning on the date of enactment
of this Act, the Director shall submit a report to the President,
the Committee on Banking, Housing, and Urban Affairs of the
Senate, and the Committee on Financial Services of the House
of Representatives regarding—
(1) the manner in which the remittance history of a consumer could be used to enhance the credit score of the consumer;
(2) the current legal and business model barriers and
impediments that impede the use of the remittance history
of the consumer to enhance the credit score of the consumer;
and
(3) recommendations on the manner in which maximum
transparency and disclosure to consumers of exchange rates
for remittance transfers subject to this title and the amendments made by this title may be accomplished, whether or
not such exchange rates are known at the time of origination
or payment by the consumer for the remittance transfer,
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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2067

used and the amount of currency that the recipient of the
remittance transfer received, using the values of the currency
into which the funds were exchanged, as contained in sections
919(a)(2)(D) and 919(a)(3) of the Electronic Fund Transfer Act
(as amended by this section).

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SEC. 1074. DEPARTMENT OF THE TREASURY STUDY ON ENDING THE
CONSERVATORSHIP OF FANNIE MAE, FREDDIE MAC, AND
REFORMING THE HOUSING FINANCE SYSTEM.

(a) STUDY REQUIRED.—
(1) IN GENERAL.—The Secretary of the Treasury shall conduct a study of and develop recommendations regarding the
options for ending the conservatorship of the Federal National
Mortgage Association (in this section referred to as ‘‘Fannie
Mae’’) and the Federal Home Loan Mortgage Corporation (in
this section referred to as ‘‘Freddie Mac’’), while minimizing
the cost to taxpayers, including such options as—
(A) the gradual wind-down and liquidation of such
entities;
(B) the privatization of such entities;
(C) the incorporation of the functions of such entities
into a Federal agency;
(D) the dissolution of Fannie Mae and Freddie Mac
into smaller companies; or
(E) any other measures the Secretary determines
appropriate.
(2) ANALYSES.—The study required under paragraph (1)
shall include an analysis of—
(A) the role of the Federal Government in supporting
a stable, well-functioning housing finance system, and
whether and to what extent the Federal Government should
bear risks in meeting Federal housing finance objectives;
(B) how the current structure of the housing finance
system can be improved;
(C) how the housing finance system should support
the continued availability of mortgage credit to all segments
of the market;
(D) how the housing finance system should be structured to ensure that consumers continue to have access
to 30-year, fixed rate, pre-payable mortgages and other
mortgage products that have simple terms that can be
easily understood;
(E) the role of the Federal Housing Administration
and the Department of Veterans Affairs in a future housing
system;
(F) the impact of reforms of the housing finance system
on the financing of rental housing;
(G) the impact of reforms of the housing finance system
on secondary market liquidity;
(H) the role of standardization in the housing finance
system;
(I) how housing finance systems in other countries
offer insights that can help inform options for reform in
the United States; and
(J) the options for transition to a reformed housing
finance system.

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PUBLIC LAW 111–203—JULY 21, 2010

(b) REPORT AND RECOMMENDATIONS.—Not later than January
31, 2011, the Secretary of the Treasury shall submit the report
and recommendations required under subsection (a) to the Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of Representatives.
SEC. 1075. REASONABLE FEES AND RULES FOR PAYMENT CARD TRANSACTIONS.

15 USC 1693p,
1693q.
15 USC 1693o–2.

(a) IN GENERAL.—The Electronic Fund Transfer Act (15 U.S.C.
1693 et seq.) is amended—
(1) by redesignating sections 920 and 921 as sections 921
and 922, respectively; and
(2) by inserting after section 919 the following:
‘‘SEC. 920. REASONABLE FEES AND RULES FOR PAYMENT CARD TRANSACTIONS.

‘‘(a) REASONABLE INTERCHANGE TRANSACTION FEES FOR ELECDEBIT TRANSACTIONS.—
‘‘(1) REGULATORY AUTHORITY OVER INTERCHANGE TRANSACTION FEES.—The Board may prescribe regulations, pursuant
to section 553 of title 5, United States Code, regarding any
interchange transaction fee that an issuer may receive or charge
with respect to an electronic debit transaction, to implement
this subsection (including related definitions), and to prevent
circumvention or evasion of this subsection.
‘‘(2) REASONABLE INTERCHANGE TRANSACTION FEES.—The
amount of any interchange transaction fee that an issuer may
receive or charge with respect to an electronic debit transaction
shall be reasonable and proportional to the cost incurred by
the issuer with respect to the transaction.
‘‘(3) RULEMAKING REQUIRED.—
‘‘(A) IN GENERAL.—The Board shall prescribe regulations in final form not later than 9 months after the date
of enactment of the Consumer Financial Protection Act
of 2010, to establish standards for assessing whether the
amount of any interchange transaction fee described in
paragraph (2) is reasonable and proportional to the cost
incurred by the issuer with respect to the transaction.
‘‘(B) INFORMATION COLLECTION.—The Board may
require any issuer (or agent of an issuer) or payment
card network to provide the Board with such information
as may be necessary to carry out the provisions of this
subsection and the Board, in issuing rules under subparagraph (A) and on at least a bi-annual basis thereafter,
shall disclose such aggregate or summary information concerning the costs incurred, and interchange transaction
fees charged or received, by issuers or payment card networks in connection with the authorization, clearance or
settlement of electronic debit transactions as the Board
considers appropriate and in the public interest.
‘‘(4) CONSIDERATIONS; CONSULTATION.—In prescribing regulations under paragraph (3)(A), the Board shall—
‘‘(A) consider the functional similarity between—
‘‘(i) electronic debit transactions; and
‘‘(ii) checking transactions that are required within
the Federal Reserve bank system to clear at par;
‘‘(B) distinguish between—

TRONIC

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124 STAT. 2069

‘‘(i) the incremental cost incurred by an issuer
for the role of the issuer in the authorization, clearance,
or settlement of a particular electronic debit transaction, which cost shall be considered under paragraph
(2); and
‘‘(ii) other costs incurred by an issuer which are
not specific to a particular electronic debit transaction,
which costs shall not be considered under paragraph
(2); and
‘‘(C) consult, as appropriate, with the Comptroller of
the Currency, the Board of Directors of the Federal Deposit
Insurance Corporation, the Director of the Office of Thrift
Supervision, the National Credit Union Administration
Board, the Administrator of the Small Business Administration, and the Director of the Bureau of Consumer Financial Protection.
‘‘(5) ADJUSTMENTS TO INTERCHANGE TRANSACTION FEES FOR
FRAUD PREVENTION COSTS.—
‘‘(A) ADJUSTMENTS.—The Board may allow for an
adjustment to the fee amount received or charged by an
issuer under paragraph (2), if—
‘‘(i) such adjustment is reasonably necessary to
make allowance for costs incurred by the issuer in
preventing fraud in relation to electronic debit transactions involving that issuer; and
‘‘(ii) the issuer complies with the fraud-related
standards established by the Board under subparagraph (B), which standards shall—
‘‘(I) be designed to ensure that any fraudrelated adjustment of the issuer is limited to the
amount described in clause (i) and takes into
account
any
fraud-related
reimbursements
(including amounts from charge-backs) received
from consumers, merchants, or payment card networks in relation to electronic debit transactions
involving the issuer; and
‘‘(II) require issuers to take effective steps to
reduce the occurrence of, and costs from, fraud
in relation to electronic debit transactions,
including
through
the
development
and
implementation of cost-effective fraud prevention
technology.
‘‘(B) RULEMAKING REQUIRED.—
‘‘(i) IN GENERAL.—The Board shall prescribe regulations in final form not later than 9 months after
the date of enactment of the Consumer Financial
Protection Act of 2010, to establish standards for
making adjustments under this paragraph.
‘‘(ii) FACTORS FOR CONSIDERATION.—In issuing the
standards and prescribing regulations under this paragraph, the Board shall consider—
‘‘(I) the nature, type, and occurrence of fraud
in electronic debit transactions;
‘‘(II) the extent to which the occurrence of
fraud depends on whether authorization in an electronic debit transaction is based on signature, PIN,
or other means;

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‘‘(III) the available and economical means by
which fraud on electronic debit transactions may
be reduced;
‘‘(IV) the fraud prevention and data security
costs expended by each party involved in electronic
debit transactions (including consumers, persons
who accept debit cards as a form of payment, financial institutions, retailers and payment card networks);
‘‘(V) the costs of fraudulent transactions
absorbed by each party involved in such transactions (including consumers, persons who accept
debit cards as a form of payment, financial institutions, retailers and payment card networks);
‘‘(VI) the extent to which interchange transaction fees have in the past reduced or increased
incentives for parties involved in electronic debit
transactions to reduce fraud on such transactions;
and
‘‘(VII) such other factors as the Board considers appropriate.
‘‘(6) EXEMPTION FOR SMALL ISSUERS.—
‘‘(A) IN GENERAL.—This subsection shall not apply to
any issuer that, together with its affiliates, has assets
of less than $10,000,000,000, and the Board shall exempt
such issuers from regulations prescribed under paragraph
(3)(A).
‘‘(B) DEFINITION.—For purposes of this paragraph, the
term ‘‘issuer’’ shall be limited to the person holding the
asset account that is debited through an electronic debit
transaction.
‘‘(7) EXEMPTION FOR GOVERNMENT-ADMINISTERED PAYMENT
PROGRAMS AND RELOADABLE PREPAID CARDS.—
‘‘(A) IN GENERAL.—This subsection shall not apply to
an interchange transaction fee charged or received with
respect to an electronic debit transaction in which a person
uses—
‘‘(i) a debit card or general-use prepaid card that
has been provided to a person pursuant to a Federal,
State or local government-administered payment program, in which the person may only use the debit
card or general-use prepaid card to transfer or debit
funds, monetary value, or other assets that have been
provided pursuant to such program; or
‘‘(ii) a plastic card, payment code, or device that
is—
‘‘(I) linked to funds, monetary value, or assets
which are purchased or loaded on a prepaid basis;
‘‘(II) not issued or approved for use to access
or debit any account held by or for the benefit
of the card holder (other than a subaccount or
other method of recording or tracking funds purchased or loaded on the card on a prepaid basis);
‘‘(III) redeemable at multiple, unaffiliated merchants or service providers, or automated teller
machines;

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124 STAT. 2071

‘‘(IV) used to transfer or debit funds, monetary
value, or other assets; and
‘‘(V) reloadable and not marketed or labeled
as a gift card or gift certificate.
‘‘(B) EXCEPTION.—Notwithstanding subparagraph (A),
after the end of the 1-year period beginning on the effective
date provided in paragraph (9), this subsection shall apply
to an interchange transaction fee charged or received with
respect to an electronic debit transaction described in
subparagraph (A)(i) in which a person uses a generaluse prepaid card, or an electronic debit transaction
described in subparagraph (A)(ii), if any of the following
fees may be charged to a person with respect to the card:
‘‘(i) A fee for an overdraft, including a shortage
of funds or a transaction processed for an amount
exceeding the account balance.
‘‘(ii) A fee imposed by the issuer for the first withdrawal per month from an automated teller machine
that is part of the issuer’s designated automated teller
machine network.
‘‘(C) DEFINITION.—For purposes of subparagraph (B),
the term ‘designated automated teller machine network’
means either—
‘‘(i) all automated teller machines identified in the
name of the issuer; or
‘‘(ii) any network of automated teller machines
identified by the issuer that provides reasonable and
convenient access to the issuer’s customers.
‘‘(D) REPORTING.—Beginning 12 months after the date
of enactment of the Consumer Financial Protection Act
of 2010, the Board shall annually provide a report to the
Congress regarding —
‘‘(i) the prevalence of the use of general-use prepaid
cards in Federal, State or local government-administered payment programs; and
‘‘(ii) the interchange transaction fees and cardholder fees charged with respect to the use of such
general-use prepaid cards.
‘‘(8) REGULATORY AUTHORITY OVER NETWORK FEES.—
‘‘(A) IN GENERAL.—The Board may prescribe regulations, pursuant to section 553 of title 5, United States
Code, regarding any network fee.
‘‘(B) LIMITATION.—The authority under subparagraph
(A) to prescribe regulations shall be limited to regulations
to ensure that—
‘‘(i) a network fee is not used to directly or
indirectly compensate an issuer with respect to an
electronic debit transaction; and
‘‘(ii) a network fee is not used to circumvent or
evade the restrictions of this subsection and regulations prescribed under such subsection.
‘‘(C) RULEMAKING REQUIRED.—The Board shall prescribe regulations in final form before the end of the 9month period beginning on the date of the enactment of
the Consumer Financial Protection Act of 2010, to carry
out the authorities provided under subparagraph (A).

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‘‘(9) EFFECTIVE DATE.—This subsection shall take effect
at the end of the 12-month period beginning on the date of
the enactment of the Consumer Financial Protection Act of
2010.
‘‘(b) LIMITATION ON PAYMENT CARD NETWORK RESTRICTIONS.—
‘‘(1) PROHIBITIONS AGAINST EXCLUSIVITY ARRANGEMENTS.—
‘‘(A) NO EXCLUSIVE NETWORK.—The Board shall, before
the end of the 1-year period beginning on the date of
the enactment of the Consumer Financial Protection Act
of 2010, prescribe regulations providing that an issuer or
payment card network shall not directly or through any
agent, processor, or licensed member of a payment card
network, by contract, requirement, condition, penalty, or
otherwise, restrict the number of payment card networks
on which an electronic debit transaction may be processed
to—
‘‘(i) 1 such network; or
‘‘(ii) 2 or more such networks which are owned,
controlled, or otherwise operated by —
‘‘(I) affiliated persons; or
‘‘(II) networks affiliated with such issuer.
‘‘(B) NO ROUTING RESTRICTIONS.—The Board shall,
before the end of the 1-year period beginning on the date
of the enactment of the Consumer Financial Protection
Act of 2010, prescribe regulations providing that an issuer
or payment card network shall not, directly or through
any agent, processor, or licensed member of the network,
by contract, requirement, condition, penalty, or otherwise,
inhibit the ability of any person who accepts debit cards
for payments to direct the routing of electronic debit transactions for processing over any payment card network that
may process such transactions.
‘‘(2) LIMITATION ON RESTRICTIONS ON OFFERING DISCOUNTS
FOR USE OF A FORM OF PAYMENT.—
‘‘(A) IN GENERAL.—A payment card network shall not,
directly or through any agent, processor, or licensed
member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability of any person
to provide a discount or in-kind incentive for payment
by the use of cash, checks, debit cards, or credit cards
to the extent that—
‘‘(i) in the case of a discount or in-kind incentive
for payment by the use of debit cards, the discount
or in-kind incentive does not differentiate on the basis
of the issuer or the payment card network;
‘‘(ii) in the case of a discount or in-kind incentive
for payment by the use of credit cards, the discount
or in-kind incentive does not differentiate on the basis
of the issuer or the payment card network; and
‘‘(iii) to the extent required by Federal law and
applicable State law, such discount or in-kind incentive
is offered to all prospective buyers and disclosed clearly
and conspicuously.
‘‘(B) LAWFUL DISCOUNTS.—For purposes of this paragraph, the network may not penalize any person for the
providing of a discount that is in compliance with Federal
law and applicable State law.

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‘‘(3) LIMITATION ON RESTRICTIONS ON SETTING TRANSACTION
MINIMUMS OR MAXIMUMS.—
‘‘(A) IN GENERAL.—A payment card network shall not,
directly or through any agent, processor, or licensed
member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability—
‘‘(i) of any person to set a minimum dollar value
for the acceptance by that person of credit cards, to
the extent that —
‘‘(I) such minimum dollar value does not differentiate between issuers or between payment
card networks; and
‘‘(II) such minimum dollar value does not
exceed $10.00; or
‘‘(ii) of any Federal agency or institution of higher
education to set a maximum dollar value for the acceptance by that Federal agency or institution of higher
education of credit cards, to the extent that such maximum dollar value does not differentiate between
issuers or between payment card networks.
‘‘(B) INCREASE IN MINIMUM DOLLAR AMOUNT.—The
Board may, by regulation prescribed pursuant to section
553 of title 5, United States Code, increase the amount
of the dollar value listed in subparagraph (A)(i)(II).
‘‘(4) RULE OF CONSTRUCTION:.—No provision of this subsection shall be construed to authorize any person—
‘‘(A) to discriminate between debit cards within a payment card network on the basis of the issuer that issued
the debit card; or
‘‘(B) to discriminate between credit cards within a payment card network on the basis of the issuer that issued
the credit card.
‘‘(c) DEFINITIONS.—For purposes of this section, the following
definitions shall apply:
‘‘(1) AFFILIATE.—The term ‘affiliate’ means any company
that controls, is controlled by, or is under common control
with another company.
‘‘(2) DEBIT CARD.—The term ‘debit card’—
‘‘(A) means any card, or other payment code or device,
issued or approved for use through a payment card network
to debit an asset account (regardless of the purpose for
which the account is established), whether authorization
is based on signature, PIN, or other means;
‘‘(B) includes a general-use prepaid card, as that term
is defined in section 915(a)(2)(A); and
‘‘(C) does not include paper checks.
‘‘(3) CREDIT CARD.—The term ‘credit card’ has the same
meaning as in section 103 of the Truth in Lending Act.
‘‘(4) DISCOUNT.—The term ‘discount’—
‘‘(A) means a reduction made from the price that customers are informed is the regular price; and
‘‘(B) does not include any means of increasing the
price that customers are informed is the regular price.
‘‘(5) ELECTRONIC DEBIT TRANSACTION.—The term ‘electronic
debit transaction’ means a transaction in which a person uses
a debit card.
‘‘(6) FEDERAL AGENCY.—The term ‘Federal agency’ means—

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‘‘(A) an agency (as defined in section 101 of title 31,
United States Code); and
‘‘(B) a Government corporation (as defined in section
103 of title 5, United States Code).
‘‘(7) INSTITUTION OF HIGHER EDUCATION.—The term ‘institution of higher education’ has the same meaning as in 101
and 102 of the Higher Education Act of 1965 (20 U.S.C. 1001,
1002).
‘‘(8) INTERCHANGE TRANSACTION FEE.—The term ‘interchange transaction fee’ means any fee established, charged
or received by a payment card network for the purpose of
compensating an issuer for its involvement in an electronic
debit transaction.
‘‘(9) ISSUER.—The term ‘issuer’ means any person who
issues a debit card, or credit card, or the agent of such person
with respect to such card.
‘‘(10) NETWORK FEE.—The term ‘network fee’ means any
fee charged and received by a payment card network with
respect to an electronic debit transaction, other than an interchange transaction fee.
‘‘(11) PAYMENT CARD NETWORK.—The term ‘payment card
network’ means an entity that directly, or through licensed
members, processors, or agents, provides the proprietary services, infrastructure, and software that route information and
data to conduct debit card or credit card transaction authorization, clearance, and settlement, and that a person uses in
order to accept as a form of payment a brand of debit card,
credit card or other device that may be used to carry out
debit or credit transactions.
‘‘(d) ENFORCEMENT.—
‘‘(1) IN GENERAL.—Compliance with the requirements
imposed under this section shall be enforced under section
918.
‘‘(2) EXCEPTION.—Sections 916 and 917 shall not apply
with respect to this section or the requirements imposed pursuant to this section.’’.
(b) AMENDMENT TO THE FOOD AND NUTRITION ACT OF 2008.—
Section 7(h)(10) of the Food and Nutrition Act of 2008 (7 U.S.C.
2016(h)(10)) is amended to read as follows:
‘‘(10) FEDERAL LAW NOT APPLICABLE.—Section 920 of the
Electronic Fund Transfer Act shall not apply to electronic benefit transfer or reimbursement systems under this Act.’’.
(c) AMENDMENT TO THE FARM SECURITY AND RURAL INVESTMENT
ACT OF 2002.—Section 4402 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 3007) is amended by adding at the
end the following new subsection:
‘‘(f) FEDERAL LAW NOT APPLICABLE.—Section 920 of the Electronic Fund Transfer Act shall not apply to electronic benefit
transfer systems established under this section.’’.
(d) AMENDMENT TO THE CHILD NUTRITION ACT OF 1966.—Section 11 of the Child Nutrition Act of 1966 (42 U.S.C. 1780) is
amended by adding at the end the following:
‘‘(c) FEDERAL LAW NOT APPLICABLE.—Section 920 of the Electronic Fund Transfer Act shall not apply to electronic benefit
transfer systems established under this Act or the Richard B.
Russell National School Lunch Act (42 U.S.C. 1751 et seq.).’’.

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124 STAT. 2075

SEC. 1076. REVERSE MORTGAGE STUDY AND REGULATIONS.

12 USC 5602.

(a) STUDY.—Not later than 1 year after the designated transfer
date, the Bureau shall conduct a study on reverse mortgage transactions.
(b) REGULATIONS.—
(1) IN GENERAL.—If the Bureau determines through the
study required under subsection (a) that conditions or limitations on reverse mortgage transactions are necessary or appropriate for accomplishing the purposes and objectives of this
title, including protecting borrowers with respect to the
obtaining of reverse mortgage loans for the purpose of funding
investments, annuities, and other investment products and the
suitability of a borrower in obtaining a reverse mortgage for
such purpose.
(2) IDENTIFIED PRACTICES AND INTEGRATED DISCLOSURES.—
The regulations prescribed under paragraph (1) may, as the
Bureau may so determine—
(A) identify any practice as unfair, deceptive, or abusive
in connection with a reverse mortgage transaction; and
(B) provide for an integrated disclosure standard and
model disclosures for reverse mortgage transactions, consistent with section 4302(d), that combines the relevant
disclosures required under the Truth in Lending Act (15
U.S.C. 1601 et seq.) and the Real Estate Settlement Procedures Act, with the disclosures required to be provided
to consumers for Home Equity Conversion Mortgages under
section 255 of the National Housing Act.
(c) RULE OF CONSTRUCTION.—This section shall not be construed as limiting the authority of the Bureau to issue regulations,
orders, or guidance that apply to reverse mortgages prior to the
completion of the study required under subsection (a).

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SEC. 1077. REPORT ON PRIVATE EDUCATION LOANS AND PRIVATE
EDUCATIONAL LENDERS.

(a) REPORT.—Not later than 2 years after the date of enactment
of this Act, the Director and the Secretary of Education, in consultation with the Commissioners of the Federal Trade Commission,
and the Attorney General of the United States, shall submit a
report to the Committee on Banking, Housing, and Urban Affairs
and the Committee on Health, Education, Labor, and Pensions
of the Senate and the Committee on Financial Services and the
Committee on Education and Labor of the House of Representatives,
on private education loans (as that term is defined in section
140 of the Truth in Lending Act (15 U.S.C. 1650)) and private
educational lenders (as that term is defined in such section).
(b) CONTENT.—The report required by this section shall
examine, at a minimum—
(1) the growth and changes of the private education loan
market in the United States;
(2) factors influencing such growth and changes;
(3) the extent to which students and parents of students
rely on private education loans to finance postsecondary education and the private education loan indebtedness of borrowers;
(4) the characteristics of private education loan borrowers,
including—

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(A) the types of institutions of higher education that
they attend;
(B) socioeconomic characteristics (including income and
education levels, racial characteristics, geographical background, age, and gender);
(C) what other forms of financing borrowers use to
pay for education;
(D) whether they exhaust their Federal loan options
before taking out a private loan;
(E) whether such borrowers are dependent or independent students (as determined under part F of title IV
of the Higher Education Act of 1965) or parents of such
students;
(F) whether such borrowers are students enrolled in
a program leading to a certificate, license, or credential
other than a degree, an associates degree, a baccalaureate
degree, or a graduate or professional degree; and
(G) if practicable, employment and repayment behaviors;
(5) the characteristics of private educational lenders,
including whether such creditors are for-profit, non-profit, or
institutions of higher education;
(6) the underwriting criteria used by private educational
lenders, including the use of cohort default rate (as such term
is defined in section 435(m) of the Higher Education Act of
1965);
(7) the terms, conditions, and pricing of private education
loans;
(8) the consumer protections available to private education
loan borrowers, including the effectiveness of existing disclosures and requirements and borrowers’ awareness and understanding about terms and conditions of various financial products;
(9) whether Federal regulators and the public have access
to information sufficient to provide them with assurances that
private education loans are provided in accord with the Nation’s
fair lending laws and that allows public officials to determine
lender compliance with fair lending laws; and
(10) any statutory or legislative recommendations necessary
to improve consumer protections for private education loan
borrowers and to better enable Federal regulators and the
public to ascertain private educational lender compliance with
fair lending laws.

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SEC. 1078. STUDY AND REPORT ON CREDIT SCORES.

(a) STUDY.—The Bureau shall conduct a study on the nature,
range, and size of variations between the credit scores sold to
creditors and those sold to consumers by consumer reporting agencies that compile and maintain files on consumers on a nationwide
basis (as defined in section 603(p) of the Fair Credit Reporting
Act; 15 U.S.C. 1681a(p)), and whether such variations disadvantage
consumers.
(b) REPORT TO CONGRESS.—The Bureau shall submit a report
to Congress on the results of the study conducted under subsection
(a) not later than 1 year after the date of enactment of this Act.

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SEC. 1079. REVIEW, REPORT, AND PROGRAM WITH RESPECT TO
EXCHANGE FACILITATORS.

12 USC 5603.

(a) REVIEW.—The Director shall review all Federal laws and
regulations relating to the protection of consumers who use
exchange facilitators for transactions primarily for personal, family,
or household purposes.
(b) REPORT.—Not later than 1 year after the designated transfer
date, the Director shall submit to Congress a report describing—
(1) recommendations for legislation to ensure the appropriate protection of consumers who use exchange facilitators
for transactions primarily for personal, family, or household
purposes;
(2) recommendations for updating the regulations of Federal departments and agencies to ensure the appropriate protection of such consumers; and
(3) recommendations for regulations to ensure the appropriate protection of such consumers.
(c) PROGRAM.—Not later than 2 years after the date of the
submission of the report under subsection (b), the Bureau shall,
consistent with subtitle B, propose regulations or otherwise establish a program to protect consumers who use exchange facilitators.
(d) EXCHANGE FACILITATOR DEFINED.—In this section, the term
‘‘exchange facilitator’’ means a person that—
(1) facilitates, for a fee, an exchange of like kind property
by entering into an agreement with a taxpayer by which the
exchange facilitator acquires from the taxpayer the contractual
rights to sell the taxpayer’s relinquished property and transfers
a replacement property to the taxpayer as a qualified intermediary (within the meaning of Treasury Regulations section
1.1031(k)–1(g)(4)) or enters into an agreement with the taxpayer to take title to a property as an exchange accommodation
titleholder (within the meaning of Revenue Procedure 2000–
37) or enters into an agreement with a taxpayer to act as
a qualified trustee or qualified escrow holder (within the
meaning of Treasury Regulations section 1.1031(k)–1(g)(3));
(2) maintains an office for the purpose of soliciting business
to perform the services described in paragraph (1); or
(3) advertises any of the services described in paragraph
(1) or solicits clients in printed publications, direct mail, television or radio advertisements, telephone calls, facsimile transmissions, or other electronic communications directed to the
general public for purposes of providing any such services.

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SEC. 1079A. FINANCIAL FRAUD PROVISIONS.

(a) SENTENCING GUIDELINES.—
(1) SECURITIES FRAUD.—
(A) DIRECTIVE.—Pursuant to its authority under section 994 of title 28, United States Code, and in accordance
with this paragraph, the United States Sentencing
Commission shall review and, if appropriate, amend the
Federal Sentencing Guidelines and policy statements
applicable to persons convicted of offenses relating to securities fraud or any other similar provision of law, in order
to reflect the intent of Congress that penalties for the
offenses under the guidelines and policy statements appropriately account for the potential and actual harm to the
public and the financial markets from the offenses.

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(B) REQUIREMENTS.—In making any amendments to
the Federal Sentencing Guidelines and policy statements
under subparagraph (A), the United States Sentencing
Commission shall—
(i) ensure that the guidelines and policy statements, particularly section 2B1.1(b)(14) and section
2B1.1(b)(17) (and any successors thereto), reflect—
(I) the serious nature of the offenses described
in subparagraph (A);
(II) the need for an effective deterrent and
appropriate punishment to prevent the offenses;
and
(III) the effectiveness of incarceration in furthering the objectives described in subclauses (I)
and (II);
(ii) consider the extent to which the guidelines
appropriately account for the potential and actual harm
to the public and the financial markets resulting from
the offenses;
(iii) ensure reasonable consistency with other relevant directives and guidelines and Federal statutes;
(iv) make any necessary conforming changes to
guidelines; and
(v) ensure that the guidelines adequately meet
the purposes of sentencing, as set forth in section
3553(a)(2) of title 18, United States Code.
(2) FINANCIAL INSTITUTION FRAUD.—
(A) DIRECTIVE.—Pursuant to its authority under section 994 of title 28, United States Code, and in accordance
with this paragraph, the United States Sentencing
Commission shall review and, if appropriate, amend the
Federal Sentencing Guidelines and policy statements
applicable to persons convicted of fraud offenses relating
to financial institutions or federally related mortgage loans
and any other similar provisions of law, to reflect the
intent of Congress that the penalties for the offenses under
the guidelines and policy statements ensure appropriate
terms of imprisonment for offenders involved in substantial
bank frauds or other frauds relating to financial institutions.
(B) REQUIREMENTS.—In making any amendments to
the Federal Sentencing Guidelines and policy statements
under subparagraph (A), the United States Sentencing
Commission shall—
(i) ensure that the guidelines and policy statements
reflect—
(I) the serious nature of the offenses described
in subparagraph (A);
(II) the need for an effective deterrent and
appropriate punishment to prevent the offenses;
and
(III) the effectiveness of incarceration in furthering the objectives described in subclauses (I)
and (II);
(ii) consider the extent to which the guidelines
appropriately account for the potential and actual harm

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to the public and the financial markets resulting from
the offenses;
(iii) ensure reasonable consistency with other relevant directives and guidelines and Federal statutes;
(iv) make any necessary conforming changes to
guidelines; and
(v) ensure that the guidelines adequately meet
the purposes of sentencing, as set forth in section
3553(a)(2) of title 18, United States Code.
(b) EXTENSION OF STATUTE OF LIMITATIONS FOR SECURITIES
FRAUD VIOLATIONS.—
(1) IN GENERAL.—Chapter 213 of title 18, United States
Code, is amended by adding at the end the following:
‘‘§ 3301. Securities fraud offenses
‘‘(a) DEFINITION.—In this section, the term ‘securities fraud
offense’ means a violation of, or a conspiracy or an attempt to
violate—
‘‘(1) section 1348;
‘‘(2) section 32(a) of the Securities Exchange Act of 1934
(15 U.S.C. 78ff(a));
‘‘(3) section 24 of the Securities Act of 1933 (15 U.S.C.
77x);
‘‘(4) section 217 of the Investment Advisers Act of 1940
(15 U.S.C. 80b–17);
‘‘(5) section 49 of the Investment Company Act of 1940
(15 U.S.C. 80a–48); or
‘‘(6) section 325 of the Trust Indenture Act of 1939 (15
U.S.C. 77yyy).
‘‘(b) LIMITATION.—No person shall be prosecuted, tried, or punished for a securities fraud offense, unless the indictment is found
or the information is instituted within 6 years after the commission
of the offense.’’.
(2) TECHNICAL AND CONFORMING AMENDMENT.—The table
of sections for chapter 213 of title 18, United States Code,
is amended by adding at the end the following:

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‘‘3301. Securities fraud offenses.’’.

(c) AMENDMENTS TO THE FALSE CLAIMS ACT RELATING TO
LIMITATIONS ON ACTIONS.—Section 3730(h) of title 31, United States
Code, is amended—
(1) in paragraph (1), by striking ‘‘or agent on behalf of
the employee, contractor, or agent or associated others in furtherance of other efforts to stop 1 or more violations of this
subchapter’’ and inserting ‘‘agent or associated others in furtherance of an action under this section or other efforts to
stop 1 or more violations of this subchapter’’; and
(2) by adding at the end the following:
‘‘(3) LIMITATION ON BRINGING CIVIL ACTION.—A civil action
under this subsection may not be brought more than 3 years
after the date when the retaliation occurred.’’.

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PUBLIC LAW 111–203—JULY 21, 2010

Subtitle H—Conforming Amendments
5 USC app. 8G
note.
Effective date.
5 USC app. 8G.

Appointment.

SEC. 1081. AMENDMENTS TO THE INSPECTOR GENERAL ACT.

Effective on the date of enactment of this Act, the Inspector
General Act of 1978 (5 U.S.C. App. 3) is amended—
(1) in section 8G(a)(2), by inserting ‘‘and the Bureau of
Consumer Financial Protection’’ after ‘‘Board of Governors of
the Federal Reserve System’’;
(2) in section 8G(c), by adding at the end the following:
‘‘For purposes of implementing this section, the Chairman of
the Board of Governors of the Federal Reserve System shall
appoint the Inspector General of the Board of Governors of
the Federal Reserve System and the Bureau of Consumer
Financial Protection. The Inspector General of the Board of
Governors of the Federal Reserve System and the Bureau of
Consumer Financial Protection shall have all of the authorities
and responsibilities provided by this Act with respect to the
Bureau of Consumer Financial Protection, as if the Bureau
were part of the Board of Governors of the Federal Reserve
System.’’; and
(3) in section 8G(g)(3), by inserting ‘‘and the Bureau of
Consumer Financial Protection’’ after ‘‘Board of Governors of
the Federal Reserve System’’ the first place that term appears.

5 USC 552a note.

SEC. 1082. AMENDMENTS TO THE PRIVACY ACT OF 1974.

Effective date.

Effective on the date of enactment of this Act, section 552a
of title 5, United States Code, is amended by adding at the end
the following:
‘‘(w) APPLICABILITY TO BUREAU OF CONSUMER FINANCIAL
PROTECTION.—Except as provided in the Consumer Financial
Protection Act of 2010, this section shall apply with respect to
the Bureau of Consumer Financial Protection.’’.

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SEC. 1083. AMENDMENTS TO THE ALTERNATIVE MORTGAGE TRANSACTION PARITY ACT OF 1982.

(a) IN GENERAL.—The Alternative Mortgage Transaction Parity
Act of 1982 (12 U.S.C. 3801 et seq.) is amended—
(1) in section 803 (12 U.S.C. 3802(1)), by striking ‘‘1974’’
and all that follows through ‘‘described and defined’’ and
inserting the following: ‘‘1974), in which the interest rate or
finance charge may be adjusted or renegotiated, described and
defined’’; and
(2) in section 804 (12 U.S.C. 3803)—
(A) in subsection (a)—
(i) in each of paragraphs (1), (2), and (3), by
inserting after ‘‘transactions made’’ each place that
term appears ‘‘on or before the designated transfer
date, as determined under section 1062 of the Consumer Financial Protection Act of 2010,’’;
(ii) in paragraph (2), by striking ‘‘and’’ at the end;
(iii) in paragraph (3), by striking the period at
the end and inserting ‘‘; and’’; and
(iv) by adding at the end the following new paragraph:
‘‘(4) with respect to transactions made after the designated
transfer date, only in accordance with regulations governing
alternative mortgage transactions, as issued by the Bureau

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124 STAT. 2081

of Consumer Financial Protection for federally chartered
housing creditors, in accordance with the rulemaking authority
granted to the Bureau of Consumer Financial Protection with
regard to federally chartered housing creditors under provisions
of law other than this section.’’;
(B) by striking subsection (c) and inserting the following:
‘‘(c) PREEMPTION OF STATE LAW.—An alternative mortgage
transaction may be made by a housing creditor in accordance with
this section, notwithstanding any State constitution, law, or regulation that prohibits an alternative mortgage transaction. For purposes of this subsection, a State constitution, law, or regulation
that prohibits an alternative mortgage transaction does not include
any State constitution, law, or regulation that regulates mortgage
transactions generally, including any restriction on prepayment
penalties or late charges.’’; and
(C) by adding at the end the following:
‘‘(d) BUREAU ACTIONS.—The Bureau of Consumer Financial
Protection shall—
‘‘(1) review the regulations identified by the Comptroller
of the Currency and the National Credit Union Administration,
(as those rules exist on the designated transfer date), as
applicable under paragraphs (1) through (3) of subsection (a);
‘‘(2) determine whether such regulations are fair and not
deceptive and otherwise meet the objectives of the Consumer
Financial Protection Act of 2010; and
‘‘(3) promulgate regulations under subsection (a)(4) after
the designated transfer date.
‘‘(e) DESIGNATED TRANSFER DATE.—As used in this section,
the term ‘designated transfer date’ means the date determined
under section 1062 of the Consumer Financial Protection Act of
2010.’’.
(b) EFFECTIVE DATE.—This section and the amendments made
by this section shall become effective on the designated transfer
date.
(c) RULE OF CONSTRUCTION.—The amendments made by subsection (a) shall not affect any transaction covered by the Alternative Mortgage Transaction Parity Act of l982 (12 U.S.C. 3801
et seq.) and entered into on or before the designated transfer
date.

Review.

Determination.

Regulations.
Definition.

12 USC 3802
note.
12 USC 3802
note.

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SEC. 1084. AMENDMENTS TO THE ELECTRONIC FUND TRANSFER ACT.

The Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.)
is amended—
(1) by striking ‘‘Board’’ each place that term appears and
inserting ‘‘Bureau’’, except in subsections (a) and (e) of section
904 (as amended in paragraph (3) of this section) and in 918
(15 U.S.C. 1693o) (as so designated by the Credit Card Act
of 2009) and section 920 (as added by section 1076);
(2) in section 903 (15 U.S.C. 1693a)—
(A) by redesignating paragraphs (3) through (11) as
paragraphs (4) through (12), respectively; and
(B) by inserting after paragraph (3) the following:
‘‘(4) the term ‘Bureau’ means the Bureau of Consumer
Financial Protection;’’;
(3) in section 904 (15 U.S.C. 1693b)—

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15 USC 1693a et
seq.

Definition.

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Regulations.

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(A) in subsection (a), by striking ‘‘(a) PRESCRIPTION
BOARD.—The Board shall prescribe regulations to carry
out the purposes of this title.’’ and inserting the following:
‘‘(a) PRESCRIPTION BY THE BUREAU AND THE BOARD.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
the Bureau shall prescribe rules to carry out the purposes
of this title.
‘‘(2) AUTHORITY OF THE BOARD.—The Board shall have sole
authority to prescribe rules—
‘‘(A) to carry out the purposes of this title with respect
to a person described in section 1029(a) of the Consumer
Financial Protection Act of 2010; and
‘‘(B) to carry out the purposes of section 920.’’; and
(B) by adding at the end the following new subsection:
‘‘(e) DEFERENCE.—No provision of this title may be construed
as altering, limiting, or otherwise affecting the deference that a
court affords to—
‘‘(1) the Bureau in making determinations regarding the
meaning or interpretation of any provision of this title for
which the Bureau has authority to prescribe regulations; or
‘‘(2) the Board in making determinations regarding the
meaning or interpretation of section 920.’’.
(4) in section 916(d) (15 U.S.C. 1693m) (as so designated
by the Credit CARD Act of 2009)—
(A) in the subsection heading, by striking ‘‘OF BOARD
OR APPROVAL OF DULY AUTHORIZED OFFICIAL OR EMPLOYEE
OF FEDERAL RESERVE SYSTEM’’;
(B) by inserting ‘‘Bureau or the’’ before ‘‘Board’’ each
place that term appears; and
(C) by inserting ‘‘Bureau of Consumer Financial Protection or the’’ before ‘‘Federal Reserve System’’; and
(5) in section 918 (15 U.S.C. 1693o) (as so designated
by the Credit CARD Act of 2009)—
(A) in subsection (a)—
(i) by striking ‘‘Compliance’’ and inserting ‘‘Subject
to subtitle B of the Consumer Financial Protection
Act of 2010, compliance’’;
(ii) by striking paragraphs (1) and (2), and
inserting the following:
‘‘(1) section 8 of the Federal Deposit Insurance Act, by
the appropriate Federal banking agency, as defined in section
3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)),
with respect to—
‘‘(A) national banks, Federal savings associations, and
Federal branches and Federal agencies of foreign banks;
‘‘(B) member banks of the Federal Reserve System
(other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies,
and insured State branches of foreign banks), commercial
lending companies owned or controlled by foreign banks,
and organizations operating under section 25 or 25A of
the Federal Reserve Act; and
‘‘(C) banks and State savings associations insured by
the Federal Deposit Insurance Corporation (other than
members of the Federal Reserve System), and insured State
branches of foreign banks;’’;
BY

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(iii) by redesignating paragraphs (3) through (5)
as paragraphs (2) through (4), respectively;
(iv) in paragraph (2) (as so redesignated), by
striking the period at the end and inserting a semicolon;
(v) in paragraph (3) (as so redesignated), by
striking ‘‘and’’ at the end;
(vi) in paragraph (4) (as so redesignated), by
striking the period at the end and inserting ‘‘and’’;
and
(vii) by adding at the end the following:
‘‘(5) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau, with respect to any person subject
to this title, except that the Bureau shall not have authority
to enforce the requirements of section 920 or any regulations
prescribed by the Board under section 920.’’;
(B) in subsection (b), by inserting ‘‘any of paragraphs
(1) through (4) of’’ before ‘‘subsection (a)’’ each place that
term appears; and
(C) by striking subsection (c) and inserting the following:
‘‘(c) OVERALL ENFORCEMENT AUTHORITY OF THE FEDERAL TRADE
COMMISSION.—Except to the extent that enforcement of the requirements imposed under this title is specifically committed to some
other Government agency under any of paragraphs (1) through
(4) of subsection (a), and subject to subtitle B of the Consumer
Financial Protection Act of 2010, the Federal Trade Commission
shall be authorized to enforce such requirements. For the purpose
of the exercise by the Federal Trade Commission of its functions
and powers under the Federal Trade Commission Act, a violation
of any requirement imposed under this title shall be deemed a
violation of a requirement imposed under that Act. All of the functions and powers of the Federal Trade Commission under the Federal Trade Commission Act are available to the Federal Trade
Commission to enforce compliance by any person subject to the
jurisdiction of the Federal Trade Commission with the requirements
imposed under this title, irrespective of whether that person is
engaged in commerce or meets any other jurisdictional tests under
the Federal Trade Commission Act.’’.
SEC. 1085. AMENDMENTS TO THE EQUAL CREDIT OPPORTUNITY ACT.

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The Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.)
is amended—
(1) by striking ‘‘Board’’ each place that term appears, other
than in section 703(f) (as added by this section) and section
704(a)(4) (15 U.S.C. 1691c(a)(4)), and inserting ‘‘Bureau’’;
(2) in section 702 (15 U.S.C. 1691a), by striking subsection
(c) and inserting the following:
‘‘(c) The term ‘Bureau’ means the Bureau of Consumer Financial
Protection.’’;
(3) in section 703 (15 U.S.C. 1691b)—
(A) by striking the section heading and inserting the
following:

Definition.

‘‘SEC. 703. PROMULGATION OF REGULATIONS BY THE BUREAU.’’;

(B) by striking ‘‘(a) REGULATIONS.—’’;
(C) by striking subsection (b);

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(D) by redesignating paragraphs (1) through (5) as
subsections (a) through (e), respectively;
(E) in subsection (c), as so redesignated, by striking
‘‘paragraph (2)’’ and inserting ‘‘subsection (b)’’; and
(F) by adding at the end the following:
‘‘(f) BOARD AUTHORITY.—Notwithstanding subsection (a), the
Board shall prescribe regulations to carry out the purposes of this
title with respect to a person described in section 1029(a) of the
Consumer Financial Protection Act of 2010. These regulations may
contain but are not limited to such classifications, differentiation,
or other provision, and may provide for such adjustments and
exceptions for any class of transactions, as in the judgment of
the Board are necessary or proper to effectuate the purposes of
this title, to prevent circumvention or evasion thereof, or to facilitate
or substantiate compliance therewith.
‘‘(g) DEFERENCE.—Notwithstanding any power granted to any
Federal agency under this title, the deference that a court affords
to a Federal agency with respect to a determination made by
such agency relating to the meaning or interpretation of any provision of this title that is subject to the jurisdiction of such agency
shall be applied as if that agency were the only agency authorized
to apply, enforce, interpret, or administer the provisions of this
title’’;
(4) in section 704 (15 U.S.C. 1691c)—
(A) in subsection (a)—
(i) by striking ‘‘Compliance’’ and inserting ‘‘Subject
to subtitle B of the Consumer Protection Financial
Protection Act of 2010’’;
(ii) by striking paragraphs (1) and (2) and inserting
the following:
‘‘(1) section 8 of the Federal Deposit Insurance Act, by
the appropriate Federal banking agency, as defined in section
3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)),
with respect to—
‘‘(A) national banks, Federal savings associations, and
Federal branches and Federal agencies of foreign banks;
‘‘(B) member banks of the Federal Reserve System
(other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies,
and insured State branches of foreign banks), commercial
lending companies owned or controlled by foreign banks,
and organizations operating under section 25 or 25A of
the Federal Reserve Act; and
‘‘(C) banks and State savings associations insured by
the Federal Deposit Insurance Corporation (other than
members of the Federal Reserve System), and insured State
branches of foreign banks;’’;
(iii) by redesignating paragraphs (3) through (9)
as paragraphs (2) through (8), respectively;
(iv) in paragraph (7) (as so redesignated), by
striking ‘‘and’’ at the end;
(v) in paragraph (8) (as so redesignated), by
striking the period at the end, and inserting ‘‘; and’’;
and
(vi) by adding at the end the following:

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‘‘(9) Subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau, with respect to any person subject
to this title.’’;
(B) by striking subsection (c) and inserting the following:
‘‘(c) OVERALL ENFORCEMENT AUTHORITY OF FEDERAL TRADE
COMMISSION.—Except to the extent that enforcement of the requirements imposed under this title is specifically committed to some
other Government agency under any of paragraphs (1) through
(8) of subsection (a), and subject to subtitle B of the Consumer
Financial Protection Act of 2010, the Federal Trade Commission
shall be authorized to enforce such requirements. For the purpose
of the exercise by the Federal Trade Commission of its functions
and powers under the Federal Trade Commission Act (15 U.S.C.
41 et seq.), a violation of any requirement imposed under this
subchapter shall be deemed a violation of a requirement imposed
under that Act. All of the functions and powers of the Federal
Trade Commission under the Federal Trade Commission Act are
available to the Federal Trade Commission to enforce compliance
by any person with the requirements imposed under this title,
irrespective of whether that person is engaged in commerce or
meets any other jurisdictional tests under the Federal Trade
Commission Act, including the power to enforce any rule prescribed
by the Bureau under this title in the same manner as if the
violation had been a violation of a Federal Trade Commission
trade regulation rule.’’; and
(C) in subsection (d), by striking ‘‘Board’’ and inserting
‘‘Bureau’’;
(5) in section 706(e) (15 U.S.C. 1691e(e))—
(A) in the subsection heading—
(i) by striking ‘‘BOARD’’ each place that term
appears and inserting ‘‘BUREAU’’; and
(ii) by striking ‘‘FEDERAL RESERVE SYSTEM’’ and
inserting ‘‘BUREAU OF CONSUMER FINANCIAL PROTECTION’’; and
(B) by striking ‘‘Federal Reserve System’’ and inserting
‘‘Bureau of Consumer Financial Protection’’;
(6) in section 706(g) (15 U.S.C. 1691e(g)), by striking ‘‘(3)’’
and inserting ‘‘(9)’’; and
(7) in section 706(f) (15 U.S.C. 1691e(f)), by striking ‘‘two
years from’’ each place that term appears and inserting ‘‘5
years after’’.

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SEC. 1086. AMENDMENTS TO THE EXPEDITED FUNDS AVAILABILITY
ACT.

(a) AMENDMENT TO SECTION 603.—Section 603(d)(1) of the Expedited Funds Availability Act (12 U.S.C. 4002) is amended by
inserting after ‘‘Board’’ the following ‘‘, jointly with the Director
of the Bureau of Consumer Financial Protection,’’.
(b) AMENDMENTS TO SECTION 604.—Section 604 of the Expedited Funds Availability Act (12 U.S.C. 4003) is amended—
(1) by inserting after ‘‘Board’’ each place that term appears,
other than in subsection (f), the following: ‘‘, jointly with the
Director of the Bureau of Consumer Financial Protection,’’;
and

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Deadline.

PUBLIC LAW 111–203—JULY 21, 2010

(2) in subsection (f), by striking ‘‘Board.’’ each place that
term appears and inserting the following: ‘‘Board, jointly with
the Director of the Bureau of Consumer Financial Protection.’’.
(c) AMENDMENTS TO SECTION 605.—Section 605 of the Expedited
Funds Availability Act (12 U.S.C. 4004) is amended—
(1) by inserting after ‘‘Board’’ each place that term appears,
other than in the heading for section 605(f)(1), the following:
‘‘, jointly with the Director of the Bureau of Consumer Financial
Protection,’’; and
(2) in subsection (f)(1), in the paragraph heading, by
inserting ‘‘AND BUREAU’’ after ‘‘BOARD’’.
(d) AMENDMENTS TO SECTION 609.—Section 609 of the Expedited Funds Availability Act (12 U.S.C. 4008) is amended:
(1) in subsection (a), by inserting after ‘‘Board’’ the following
‘‘, jointly with the Director of the Bureau of Consumer Financial
Protection,’’; and
(2) by striking subsection (e) and inserting the following:
‘‘(e) CONSULTATIONS.—In prescribing regulations under subsections (a) and (b), the Board and the Director of the Bureau
of Consumer Financial Protection, in the case of subsection (a),
and the Board, in the case of subsection (b), shall consult with
the Comptroller of the Currency, the Board of Directors of the
Federal Deposit Insurance Corporation, and the National Credit
Union Administration Board.’’.
(e) EXPEDITED FUNDS AVAILABILITY IMPROVEMENTS.—Section
603 of the Expedited Funds Availability Act (12 U.S.C. 4002) is
amended—
(1) in subsection (a)(2)(D), by striking ‘‘$100’’ and inserting
‘‘$200’’; and
(2) in subsection (b)(3)(C), in the subparagraph heading,
by striking ‘‘$100’’ and inserting ‘‘$200’’; and
(3) in subsection (c)(1)(B)(iii), in the clause heading, by
striking ‘‘$100’’ and inserting ‘‘$200’’.
(f) REGULAR ADJUSTMENTS FOR INFLATION.—Section 607 of the
Expedited Funds Availability Act (12 U.S.C. 4006) is amended
by adding at the end the following:
‘‘(f) ADJUSTMENTS TO DOLLAR AMOUNTS FOR INFLATION.—The
dollar amounts under this title shall be adjusted every 5 years
after December 31, 2011, by the annual percentage increase in
the Consumer Price Index for Urban Wage Earners and Clerical
Workers, as published by the Bureau of Labor Statistics, rounded
to the nearest multiple of $25.’’.
SEC. 1087. AMENDMENTS TO THE FAIR CREDIT BILLING ACT.

15 USC 1666,
1666c, 1666j.

The Fair Credit Billing Act (15 U.S.C. 1666–1666j) is amended
by striking ‘‘Board’’ each place that term appears, other than in
section 105(i) (as added by this subtitle) and inserting ‘‘Bureau’’.

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SEC. 1088. AMENDMENTS TO THE FAIR CREDIT REPORTING ACT AND
THE FAIR AND ACCURATE CREDIT TRANSACTIONS ACT
OF 2003.

(a) FAIR CREDIT REPORTING ACT.—The Fair Credit Reporting
Act (15 U.S.C. 1681 et seq.) is amended—
(1) in section 603 (15 U.S.C. 1681a)—
(A) by redesignating subsections (w) and (x) as subsections (x) and (y), respectively; and
(B) by inserting after subsection (v) the following:

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‘‘(w) The term ‘Bureau’ means the Bureau of Consumer Financial Protection.’’; and
(2) except as otherwise specifically provided in this subsection—
(A) by striking ‘‘Federal Trade Commission’’ each place
that term appears and inserting ‘‘Bureau’’;
(B) by striking ‘‘FTC’’ each place that term appears
and inserting ‘‘Bureau’’;
(C) by striking ‘‘the Commission’’ each place that term
appears, other than sections 615(e) (15 U.S.C. 1681m(e))
and 628(a)(1) (15 U.S.C. 1681w(a)(1)), and inserting ‘‘the
Bureau’’; and
(D) by striking ‘‘The Federal banking agencies, the
National Credit Union Administration, and the Commission
shall jointly’’ each place that term appears, other than
section 615(e)(1) (15 U.S.C. 1681m(e)) and section 628(a)(1)
(15 U.S.C. 1681w(a)(1)), and inserting ‘‘The Bureau shall’’;
(3) in section 603(k)(2) (15 U.S.C. 1681a(k)(2)), by striking
‘‘Board of Governors of the Federal Reserve System’’ and
inserting ‘‘Bureau’’;
(4) in section 604(g) (15 U.S.C. 1681b(g))—
(A) in paragraph (3), by striking subparagraph (C)
and inserting the following:
‘‘(C) as otherwise determined to be necessary and
appropriate, by regulation or order, by the Bureau or the
applicable State insurance authority (with respect to any
person engaged in providing insurance or annuities).’’; and
(B) by striking paragraph (5) and inserting the following:
‘‘(5) REGULATIONS AND EFFECTIVE DATE FOR PARAGRAPH
(2).—
‘‘(A) REGULATIONS REQUIRED.—The Bureau may, after
notice and opportunity for comment, prescribe regulations
that permit transactions under paragraph (2) that are
determined to be necessary and appropriate to protect
legitimate operational, transactional, risk, consumer, and
other needs (and which shall include permitting actions
necessary for administrative verification purposes), consistent with the intent of paragraph (2) to restrict the
use of medical information for inappropriate purposes.’’;
(5) in section 605(h)(2)(A) (15 U.S.C. 1681c(h)(2)(A)), by
striking ‘‘with respect to the entities that are subject to their
respective enforcement authority under section 621’’ and
inserting ‘‘, in consultation with the Federal banking agencies,
the National Credit Union Administration, and the Federal
Trade Commission,’’.
(6) in section 611(e)(2) (15 U.S.C. 1681i(e)), by striking
paragraph (2) and inserting the following:
‘‘(2) EXCLUSION.—Complaints received or obtained by the
Bureau pursuant to its investigative authority under the Consumer Financial Protection Act of 2010 shall not be subject
to paragraph (1).’’;
(7) in section 615(d)(2)(B) (15 U.S.C. 1681m(d)(2)(B)), by
striking ‘‘the Federal banking agencies’’ and inserting ‘‘the Federal Trade Commission, the Federal banking agencies,’’;
(8) in section 615(e)(1) (15 U.S.C. 1681m(e)(1)), by striking
‘‘and the Commission’’ and inserting ‘‘the Federal Trade

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Definition.

15 USC 1681a et
seq.
15 USC 1681s.
15 USC 1681a et
seq.

15 USC 1681c,
1681s–2.

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PUBLIC LAW 111–203—JULY 21, 2010
Commission, the Commodity Futures Trading Commission, and
the Securities and Exchange Commission’’;
(9) in section 615(h)(6) (15 U.S.C. 1681m(h)(6)), by striking
subparagraph (A) and inserting the following:
‘‘(A) RULES REQUIRED.—The Bureau shall prescribe
rules to carry out this subsection.’’;
(10) in section 621 (15 U.S.C. 1681s)—
(A) by striking subsection (a) and inserting the following:
‘‘(a) ENFORCEMENT BY FEDERAL TRADE COMMISSION.—
‘‘(1) IN GENERAL.—The Federal Trade Commission shall
be authorized to enforce compliance with the requirements
imposed by this title under the Federal Trade Commission
Act (15 U.S.C. 41 et seq.), with respect to consumer reporting
agencies and all other persons subject thereto, except to the
extent that enforcement of the requirements imposed under
this title is specifically committed to some other Government
agency under any of subparagraphs (A) through (G) of subsection (b)(1), and subject to subtitle B of the Consumer Financial Protection Act of 2010, subsection (b). For the purpose
of the exercise by the Federal Trade Commission of its functions
and powers under the Federal Trade Commission Act, a violation of any requirement or prohibition imposed under this title
shall constitute an unfair or deceptive act or practice in commerce, in violation of section 5(a) of the Federal Trade Commission Act (15 U.S.C. 45(a)), and shall be subject to enforcement
by the Federal Trade Commission under section 5(b) of that
Act with respect to any consumer reporting agency or person
that is subject to enforcement by the Federal Trade Commission
pursuant to this subsection, irrespective of whether that person
is engaged in commerce or meets any other jurisdictional tests
under the Federal Trade Commission Act. The Federal Trade
Commission shall have such procedural, investigative, and
enforcement powers, including the power to issue procedural
rules in enforcing compliance with the requirements imposed
under this title and to require the filing of reports, the production of documents, and the appearance of witnesses, as though
the applicable terms and conditions of the Federal Trade
Commission Act were part of this title. Any person violating
any of the provisions of this title shall be subject to the penalties
and entitled to the privileges and immunities provided in the
Federal Trade Commission Act as though the applicable terms
and provisions of such Act are part of this title.
‘‘(2) PENALTIES.—
‘‘(A) KNOWING VIOLATIONS.—Except as otherwise provided by subtitle B of the Consumer Financial Protection
Act of 2010, in the event of a knowing violation, which
constitutes a pattern or practice of violations of this title,
the Federal Trade Commission may commence a civil action
to recover a civil penalty in a district court of the United
States against any person that violates this title. In such
action, such person shall be liable for a civil penalty of
not more than $2,500 per violation.
‘‘(B) DETERMINING PENALTY AMOUNT.—In determining
the amount of a civil penalty under subparagraph (A),
the court shall take into account the degree of culpability,
any history of such prior conduct, ability to pay, effect

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on ability to continue to do business, and such other matters as justice may require.
‘‘(C) LIMITATION.—Notwithstanding paragraph (2), a
court may not impose any civil penalty on a person for
a violation of section 623(a)(1), unless the person has been
enjoined from committing the violation, or ordered not to
commit the violation, in an action or proceeding brought
by or on behalf of the Federal Trade Commission, and
has violated the injunction or order, and the court may
not impose any civil penalty for any violation occurring
before the date of the violation of the injunction or order.’’;
(B) by striking subsection (b) and inserting the following:
‘‘(b) ENFORCEMENT BY OTHER AGENCIES.—
‘‘(1) IN GENERAL.—Subject to subtitle B of the Consumer
Financial Protection Act of 2010, compliance with the requirements imposed under this title with respect to consumer
reporting agencies, persons who use consumer reports from
such agencies, persons who furnish information to such agencies, and users of information that are subject to section 615(d)
shall be enforced under—
‘‘(A) section 8 of the Federal Deposit Insurance Act
(12 U.S.C. 1818), by the appropriate Federal banking
agency, as defined in section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)), with respect to—
‘‘(i) any national bank or State savings association,
and any Federal branch or Federal agency of a foreign
bank;
‘‘(ii) any member bank of the Federal Reserve
System (other than a national bank), a branch or
agency of a foreign bank (other than a Federal branch,
Federal agency, or insured State branch of a foreign
bank), a commercial lending company owned or controlled by a foreign bank, and any organization operating under section 25 or 25A of the Federal Reserve
Act; and
‘‘(iii) any bank or Federal savings association
insured by the Federal Deposit Insurance Corporation
(other than a member of the Federal Reserve System)
and any insured State branch of a foreign bank;
‘‘(B) the Federal Credit Union Act (12 U.S.C. 1751
et seq.), by the Administrator of the National Credit Union
Administration with respect to any Federal credit union;
‘‘(C) subtitle IV of title 49, United States Code, by
the Secretary of Transportation, with respect to all carriers
subject to the jurisdiction of the Surface Transportation
Board;
‘‘(D) the Federal Aviation Act of 1958 (49 U.S.C. App.
1301 et seq.), by the Secretary of Transportation, with
respect to any air carrier or foreign air carrier subject
to that Act;
‘‘(E) the Packers and Stockyards Act, 1921 (7 U.S.C.
181 et seq.) (except as provided in section 406 of that
Act), by the Secretary of Agriculture, with respect to any
activities subject to that Act;

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124 STAT. 2090

‘‘(F) the Commodity Exchange Act, with respect to
a person subject to the jurisdiction of the Commodity
Futures Trading Commission;
‘‘(G) the Federal securities laws, and any other laws
that are subject to the jurisdiction of the Securities and
Exchange Commission, with respect to a person that is
subject to the jurisdiction of the Securities and Exchange
Commission; and
‘‘(H) subtitle E of the Consumer Financial Protection
Act of 2010, by the Bureau, with respect to any person
subject to this title.
‘‘(2) INCORPORATED DEFINITIONS.—The terms used in paragraph (1) that are not defined in this title or otherwise defined
in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C.
1813(s)) have the same meanings as in section 1(b) of the
International Banking Act of 1978 (12 U.S.C. 3101).’’;
(C) in subsection (c)(2)—
(i) by inserting ‘‘and the Federal Trade Commission’’ before ‘‘or the appropriate’’; and
(ii) by inserting ‘‘and the Federal Trade Commission’’ before ‘‘or appropriate’’ each place that term
appears;
(D) in subsection (c)(4), by inserting before ‘‘or the
appropriate’’ each place that term appears the following:
‘‘, the Federal Trade Commission,’’;
(E) by striking subsection (e) and inserting the following:
‘‘(e) REGULATORY AUTHORITY.—
‘‘(1) IN GENERAL.—The Bureau shall prescribe such regulations as are necessary to carry out the purposes of this title,
except with respect to sections 615(e) and 628. The Bureau
may prescribe regulations as may be necessary or appropriate
to administer and carry out the purposes and objectives of
this title, and to prevent evasions thereof or to facilitate compliance therewith. Except as provided in section 1029(a) of the
Consumer Financial Protection Act of 2010, the regulations
prescribed by the Bureau under this title shall apply to any
person that is subject to this title, notwithstanding the enforcement authorities granted to other agencies under this section.
‘‘(2) DEFERENCE.—Notwithstanding any power granted to
any Federal agency under this title, the deference that a court
affords to a Federal agency with respect to a determination
made by such agency relating to the meaning or interpretation
of any provision of this title that is subject to the jurisdiction
of such agency shall be applied as if that agency were the
only agency authorized to apply, enforce, interpret, or administer the provisions of this title The regulations prescribed
by the Bureau under this title shall apply to any person that
is subject to this title, notwithstanding the enforcement authorities granted to other agencies under this section.’’; and
(F) in subsection (f)(2), by striking ‘‘the Federal banking
agencies’’ and insert ‘‘the Federal Trade Commission, the
Federal banking agencies,’’;
(11) in section 623 (15 U.S.C. 1681s–2)—
(A) in subsection (a)(7), by striking subparagraph (D)
and inserting the following:
‘‘(D) MODEL DISCLOSURE.—

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Applicability.

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‘‘(i) DUTY OF BUREAU.—The Bureau shall prescribe
a brief model disclosure that a financial institution
may use to comply with subparagraph (A), which shall
not exceed 30 words.
‘‘(ii) USE OF MODEL NOT REQUIRED.—No provision
of this paragraph may be construed to require a financial institution to use any such model form prescribed
by the Bureau.
‘‘(iii) COMPLIANCE USING MODEL.—A financial
institution shall be deemed to be in compliance with
subparagraph (A) if the financial institution uses any
model form prescribed by the Bureau under this
subparagraph, or the financial institution uses any
such model form and rearranges its format.’’;
(B) in subsection (a)(8), by inserting ‘‘, in consultation
with the Federal Trade Commission, the Federal banking
agencies, and the National Credit Union Administration,’’
before ‘‘shall jointly’’; and
(C) by striking subsection (e) and inserting the following:
‘‘(e) ACCURACY GUIDELINES AND REGULATIONS REQUIRED.—
‘‘(1) GUIDELINES.—The Bureau shall, with respect to persons or entities that are subject to the enforcement authority
of the Bureau under section 621—
‘‘(A) establish and maintain guidelines for use by each
person that furnishes information to a consumer reporting
agency regarding the accuracy and integrity of the information relating to consumers that such entities furnish to
consumer reporting agencies, and update such guidelines
as often as necessary; and
‘‘(B) prescribe regulations requiring each person that
furnishes information to a consumer reporting agency to
establish reasonable policies and procedures for implementing the guidelines established pursuant to subparagraph (A).
‘‘(2) CRITERIA.—In developing the guidelines required by
paragraph (1)(A), the Bureau shall—
‘‘(A) identify patterns, practices, and specific forms of
activity that can compromise the accuracy and integrity
of information furnished to consumer reporting agencies;
‘‘(B) review the methods (including technological
means) used to furnish information relating to consumers
to consumer reporting agencies;
‘‘(C) determine whether persons that furnish information to consumer reporting agencies maintain and enforce
policies to ensure the accuracy and integrity of information
furnished to consumer reporting agencies; and
‘‘(D) examine the policies and processes that persons
that furnish information to consumer reporting agencies
employ to conduct reinvestigations and correct inaccurate
information relating to consumers that has been furnished
to consumer reporting agencies.’’;
(12) in section 628(a)(1) (15 U.S.C. 1681w(a)(1)), by striking
‘‘Not later than’’ and all that follows through ‘‘Exchange
Commission,’’ and inserting ‘‘The Federal Trade Commission,
the Securities and Exchange Commission, the Commodity
Futures Trading Commission, the Federal banking agencies,

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Review.

Determination.

Examination.

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and the National Credit Union Administration, with respect
to the entities that are subject to their respective enforcement
authority under section 621,’’; and
(13) in section 628(a)(3) (15 U.S.C. 1681w(a)(3)), by striking
‘‘the Federal banking agencies, the National Credit Union
Administration, the Commission, and the Securities and
Exchange Commission’’ and inserting ‘‘the agencies identified
in paragraph (1)’’.
(b) FAIR AND ACCURATE CREDIT TRANSACTIONS ACT OF 2003.—
The Fair and Accurate Credit Transactions Act of 2003 (Public
Law 108–159) is amended—
(1) in section 112(b) (15 U.S.C. 1681c–1 note), by striking
‘‘Commission’’ and inserting ‘‘Bureau’’;
(2) in section 211(d) (15 U.S.C. 1681j note), by striking
‘‘Commission’’ each place that term appears and inserting
‘‘Bureau’’;
(3) in section 214(b) (15 U.S.C. 1681s–3 note), by striking
paragraph (1) and inserting the following:
‘‘(1) IN GENERAL.—Regulations to carry out section 624
of the Fair Credit Reporting Act (15 U.S.C. 1681s–3), shall
be prescribed, as described in paragraph (2), by—
‘‘(A) the Commodity Futures Trading Commission, with
respect to entities subject to its enforcement authorities;
‘‘(B) the Securities and Exchange Commission, with
respect to entities subject to its enforcement authorities;
and
‘‘(C) the Bureau, with respect to other entities subject
to this Act.’’; and
(4) in section 214(e)(1) (15 U.S.C. 1681s–3 note), by striking
‘‘Commission’’ and inserting ‘‘Bureau’’.

Regulations.

SEC. 1089. AMENDMENTS TO THE FAIR DEBT COLLECTION PRACTICES
ACT.

15 USC 1692k,
1692m, 1692o.

Definition.

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Compliance.

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The Fair Debt Collection Practices Act (15 U.S.C. 1692 et
seq.) is amended—
(1) by striking ‘‘Commission’’ each place that term appears
and inserting ‘‘Bureau’’;
(2) in section 803 (15 U.S.C. 1692a)—
(A) by striking paragraph (1) and inserting the following:
‘‘(1) The term ‘Bureau’ means the Bureau of Consumer
Financial Protection.’’;
(3) in section 814 (15 U.S.C. 1692l)—
(A) by striking subsection (a) and inserting the following:
‘‘(a) FEDERAL TRADE COMMISSION.—The Federal Trade Commission shall be authorized to enforce compliance with this title, except
to the extent that enforcement of the requirements imposed under
this title is specifically committed to another Government agency
under any of paragraphs (1) through (5) of subsection (b), subject
to subtitle B of the Consumer Financial Protection Act of 2010.
For purpose of the exercise by the Federal Trade Commission
of its functions and powers under the Federal Trade Commission
Act (15 U.S.C. 41 et seq.), a violation of this title shall be deemed
an unfair or deceptive act or practice in violation of that Act.
All of the functions and powers of the Federal Trade Commission

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under the Federal Trade Commission Act are available to the Federal Trade Commission to enforce compliance by any person with
this title, irrespective of whether that person is engaged in commerce or meets any other jurisdictional tests under the Federal
Trade Commission Act, including the power to enforce the provisions
of this title, in the same manner as if the violation had been
a violation of a Federal Trade Commission trade regulation rule.’’;
and
(B) in subsection (b)—
(i) by striking ‘‘Compliance’’ and inserting ‘‘Subject
to subtitle B of the Consumer Financial Protection
Act of 2010, compliance’’;
(ii) by striking paragraphs (1) and (2) and inserting
the following:
‘‘(1) section 8 of the Federal Deposit Insurance Act, by
the appropriate Federal banking agency, as defined in section
3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)),
with respect to—
‘‘(A) national banks, Federal savings associations, and
Federal branches and Federal agencies of foreign banks;
‘‘(B) member banks of the Federal Reserve System
(other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies,
and insured State branches of foreign banks), commercial
lending companies owned or controlled by foreign banks,
and organizations operating under section 25 or 25A of
the Federal Reserve Act; and
‘‘(C) banks and State savings associations insured by
the Federal Deposit Insurance Corporation (other than
members of the Federal Reserve System), and insured State
branches of foreign banks;’’;
(iii) by redesignating paragraphs (3) through (6),
as paragraphs (2) through (5), respectively;
(iv) in paragraph (4) (as so redesignated), by
striking ‘‘and’’ at the end;
(v) in paragraph (5) (as so redesignated), by
striking the period at the end and inserting ‘‘; and’’;
and
(vi) by inserting before the undesignated matter
at the end the following:
‘‘(6) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau, with respect to any person subject
to this title.’’.
(4) in subsection (d), by striking ‘‘Neither the Commission’’
and all that follows through the end of the subsection and
inserting the following: ‘‘Except as provided in section 1029(a)
of the Consumer Financial Protection Act of 2010, the Bureau
may prescribe rules with respect to the collection of debts
by debt collectors, as defined in this title.’’.

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SEC. 1090. AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.

The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.)
is amended—
(1) in section 8(t) (12 U.S.C. 1818(t)), by adding at the
end the following:

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124 STAT. 2094

PUBLIC LAW 111–203—JULY 21, 2010
‘‘(6) REFERRAL TO BUREAU OF CONSUMER FINANCIAL PROTECTION.—Subject to subtitle B of the Consumer Financial Protection Act of 2010, each appropriate Federal banking agency
shall make a referral to the Bureau of Consumer Financial
Protection when the Federal banking agency has a reasonable
belief that a violation of an enumerated consumer law, as
defined in the Consumer Financial Protection Act of 2010,
has been committed by any insured depository institution or
institution-affiliated party within the jurisdiction of that appropriate Federal banking agency.’’; and
(2) in section 43 (12 U.S.C. 1831t)—
(A) in subsection (c), by striking ‘‘Federal Trade
Commission’’ and inserting ‘‘Bureau’’;
(B) in subsection (d), by striking ‘‘Federal Trade
Commission’’ and inserting ‘‘Bureau’’;
(C) in subsection (e)—
(i) in paragraph (2), by striking ‘‘Federal Trade
Commission’’ and inserting ‘‘Bureau’’; and
(ii) by adding at the end the following new paragraph:
‘‘(5) BUREAU.—The term ‘Bureau’ means the Bureau of
Consumer Financial Protection.’’; and
(D) in subsection (f)—
(i) by striking paragraph (1) and inserting the
following:
‘‘(1) LIMITED ENFORCEMENT AUTHORITY.—Compliance with
the requirements of subsections (b), (c), and (e), and any regulation prescribed or order issued under such subsection, shall
be enforced under the Consumer Financial Protection Act of
2010, by the Bureau, subject to subtitle B of the Consumer
Financial Protection Act of 2010, and under the Federal Trade
Commission Act (15 U.S.C. 41 et seq.) by the Federal Trade
Commission.’’; and
(ii) in paragraph (2), by striking subparagraph (C)
and inserting the following:
‘‘(C) LIMITATION ON STATE ACTION WHILE FEDERAL
ACTION PENDING.—If the Bureau or Federal Trade Commission has instituted an enforcement action for a violation
of this section, no appropriate State supervisory agency
may, during the pendency of such action, bring an action
under this section against any defendant named in the
complaint of the Bureau or Federal Trade Commission
for any violation of this section that is alleged in that
complaint.’’.

Definition.

SEC. 1091. AMENDMENT TO 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)) is amended by
striking ‘‘Director, Office of Thrift Supervision’’ and inserting
‘‘Director of the Consumer Financial Protection Bureau’’.

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SEC. 1092. AMENDMENTS TO THE FEDERAL TRADE COMMISSION ACT.

Section 18(f) of the Federal Trade Commission Act (15 U.S.C.
57a(f)) is amended—
(1) by striking the subsection heading and inserting the
following:

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AND

124 STAT. 2095

‘‘(f) DEFINITIONS OF BANKS, SAVINGS AND LOAN INSTITUTIONS,
FEDERAL CREDIT UNIONS.—’’.
(2) by striking paragraph (1) and inserting the following:
‘‘(1) [Repealed.]’’;
(3) by striking paragraphs (5) through (7);
(4) in paragraph (2)—
(A) by striking ‘‘(2) ENFORCEMENT’’ and all that follows
through ‘‘in the case of’’ and inserting the following:
‘‘(2) DEFINITION.—For purposes of this Act, the term ‘bank’
means’’;
(B) in subparagraph (A), by striking ‘‘, by the division’’
and all that follows through ‘‘Currency’’;
(C) in subparagraph (B)—
(i) by striking ‘‘, by the division’’ and all that
follows through ‘‘System’’; and
(ii) by striking ‘‘25(a)’’ and inserting ‘‘25A’’; and
(D) in subparagraph (C)—
(i) by striking ‘‘(other’’ and inserting ‘‘(other than’’;
and
(ii) by striking ‘‘, by the division’’ and all that
follows through ‘‘Corporation’’;
(5) in paragraph (3), by striking ‘‘Compliance’’ and all that
follows through ‘‘as defined in’’ and inserting the following:
‘‘For purposes of this Act, the term ‘‘savings and loan institution’’ has the same meaning as in’’; and
(6) in paragraph (4), by striking ‘‘Compliance’’ and all that
follows through ‘‘credit unions under’’ and inserting the following: ‘‘For purposes of this Act, the term ‘‘Federal credit
union’’ has the same meaning as in’’.

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SEC. 1093. AMENDMENTS TO THE GRAMM-LEACH-BLILEY ACT.

Title V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 et
seq.) is amended—
(1) in section 501(b) (15 U.S.C. 6801(b)), by inserting ‘‘,
other than the Bureau of Consumer Financial Protection,’’ after
‘‘505(a)’’;
(2) in section 502(e)(5) (15 U.S.C. 6802(e)(5)), by inserting
‘‘the Bureau of Consumer Financial Protection’’ after
‘‘(including’’;
(3) in section 504(a) (15 U.S.C. 6804(a))—
(A) by striking paragraphs (1) and (2) and inserting
the following:
‘‘(1) RULEMAKING.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph
(C), the Bureau of Consumer Financial Protection and the
Securities and Exchange Commission shall have authority
to prescribe such regulations as may be necessary to carry
out the purposes of this subtitle with respect to financial
institutions and other persons subject to their respective
jurisdiction under section 505 (and notwithstanding subtitle B of the Consumer Financial Protection Act of 2010),
except that the Bureau of Consumer Financial Protection
shall not have authority to prescribe regulations with
respect to the standards under section 501.
‘‘(B) CFTC.—The Commodity Futures Trading
Commission shall have authority to prescribe such regulations as may be necessary to carry out the purposes of

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124 STAT. 2096

this subtitle with respect to financial institutions and other
persons subject to the jurisdiction of the Commodity
Futures Trading Commission under section 5g of the Commodity Exchange Act.
‘‘(C) FEDERAL TRADE COMMISSION AUTHORITY.—Notwithstanding the authority of the Bureau of Consumer
Financial Protection under subparagraph (A), the Federal
Trade Commission shall have authority to prescribe such
regulations as may be necessary to carry out the purposes
of this subtitle with respect to any financial institution
that is a person described in section 1029(a) of the Consumer Financial Protection Act of 2010.
‘‘(D) RULE OF CONSTRUCTION.—Nothing in this paragraph shall be construed to alter, affect, or otherwise limit
the authority of a State insurance authority to adopt regulations to carry out this subtitle.
‘‘(2) COORDINATION, CONSISTENCY, AND COMPARABILITY.—
Each of the agencies authorized under paragraph (1) to prescribe regulations shall consult and coordinate with the other
such agencies and, as appropriate, and with representatives
of State insurance authorities designated by the National
Association of Insurance Commissioners, for the purpose of
assuring, to the extent possible, that the regulations prescribed
by each such agency are consistent and comparable with the
regulations prescribed by the other such agencies.’’; and
(B) in paragraph (3), by striking ‘‘, and shall be issued
in final form not later than 6 months after the date of
enactment of this Act’’;
(4) in section 505(a) (15 U.S.C. 6805(a))—
(A) by striking ‘‘This subtitle’’ and all that follows
through ‘‘as follows:’’ and inserting ‘‘Subject to subtitle
B of the Consumer Financial Protection Act of 2010, this
subtitle and the regulations prescribed thereunder shall
be enforced by the Bureau of Consumer Financial Protection, the Federal functional regulators, the State insurance
authorities, and the Federal Trade Commission with
respect to financial institutions and other persons subject
to their jurisdiction under applicable law, as follows:’’;
(B) in paragraph (1)—
(i) in the matter preceding subparagraph (A), by
inserting ‘‘by the appropriate Federal banking agency,
as defined in section 3(q) of the Federal Deposit Insurance Act,’’ after ‘‘Act,’’;
(ii) in subparagraph (A), by striking ‘‘, by the Office
of the Comptroller of the Currency’’;
(iii) in subparagraph (B), by striking ‘‘, by the
Board of Governors of the Federal Reserve System’’;
(iv) in subparagraph (C), by striking ‘‘, by the
Board of Directors of the Federal Deposit Insurance
Corporation’’; and
(v) in subparagraph (D), by striking ‘‘, by the
Director of the Office of Thrift Supervision’’; and
(C) by adding at the end the following:
‘‘(8) Under subtitle E of the Consumer Financial Protection
Act of 2010, by the Bureau of Consumer Financial Protection,
in the case of any financial institution and other covered person
or service provider that is subject to the jurisdiction of the

Consultation.

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Deadline.

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Bureau and any person subject to this subtitle, but not with
respect to the standards under section 501.’’;
(5) in section 505(b)(1) (15 U.S.C. 6805(b)(1)), by inserting
‘‘, other than the Bureau of Consumer Financial Protection,’’
after ‘‘subsection (a)’’; and
(6) in section 507(b) (15 U.S.C. 6807), by striking ‘‘Federal
Trade Commission’’ and inserting ‘‘Bureau of Consumer Financial Protection’’.

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SEC. 1094. AMENDMENTS TO THE HOME MORTGAGE DISCLOSURE ACT
OF 1975.

The Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2801
et seq.) is amended—
(1) by striking ‘‘Board’’ each place that term appears, other
than in sections 303, 304(h), 305(b) (as amended by this section), and 307(a) (as amended by this section) and inserting
‘‘Bureau’’.
(2) in section 303 (12 U.S.C. 2802)—
(A) by redesignating paragraphs (1) through (6) as
paragraphs (2) through (7), respectively; and
(B) by inserting before paragraph (2) the following:
‘‘(1) the term ‘Bureau’ means the Bureau of Consumer
Financial Protection;’’;
(3) in section 304 (12 U.S.C. 2803)—
(A) in subsection (b)—
(i) in paragraph (4), by inserting ‘‘age,’’ before ‘‘and
gender’’;
(ii) in paragraph (3), by striking ‘‘and’’ at the end;
(iii) in paragraph (4), by striking the period at
the end and inserting a semicolon; and
(iv) by adding at the end the following:
‘‘(5) the number and dollar amount of mortgage loans
grouped according to measurements of—
‘‘(A) the total points and fees payable at origination
in connection with the mortgage as determined by the
Bureau, taking into account 15 U.S.C. 1602(aa)(4);
‘‘(B) the difference between the annual percentage rate
associated with the loan and a benchmark rate or rates
for all loans;
‘‘(C) the term in months of any prepayment penalty
or other fee or charge payable on repayment of some portion
of principal or the entire principal in advance of scheduled
payments; and
‘‘(D) such other information as the Bureau may require;
and
‘‘(6) the number and dollar amount of mortgage loans and
completed applications grouped according to measurements of—
‘‘(A) the value of the real property pledged or proposed
to be pledged as collateral;
‘‘(B) the actual or proposed term in months of any
introductory period after which the rate of interest may
change;
‘‘(C) the presence of contractual terms or proposed
contractual terms that would allow the mortgagor or
applicant to make payments other than fully amortizing
payments during any portion of the loan term;

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‘‘(D) the actual or proposed term in months of the
mortgage loan;
‘‘(E) the channel through which application was made,
including retail, broker, and other relevant categories;
‘‘(F) as the Bureau may determine to be appropriate,
a unique identifier that identifies the loan originator as
set forth in section 1503 of the S.A.F.E. Mortgage Licensing
Act of 2008;
‘‘(G) as the Bureau may determine to be appropriate,
a universal loan identifier;
‘‘(H) as the Bureau may determine to be appropriate,
the parcel number that corresponds to the real property
pledged or proposed to be pledged as collateral;
‘‘(I) the credit score of mortgage applicants and mortgagors, in such form as the Bureau may prescribe; and
‘‘(J) such other information as the Bureau may
require.’’;
(B) by striking subsection (h) and inserting the following:
‘‘(h) SUBMISSION TO AGENCIES.—
‘‘(1) IN GENERAL.—The data required to be disclosed under
subsection (b) shall be submitted to the Bureau or to the
appropriate agency for the institution reporting under this title,
in accordance with rules prescribed by the Bureau. Notwithstanding the requirement of subsection (a)(2)(A) for disclosure
by census tract, the Bureau, in consultation with other appropriate agencies described in paragraph (2) and, after notice
and comment, shall develop regulations that—
‘‘(A) prescribe the format for such disclosures, the
method for submission of the data to the appropriate
agency, and the procedures for disclosing the information
to the public;
‘‘(B) require the collection of data required to be disclosed under subsection (b) with respect to loans sold by
each institution reporting under this title;
‘‘(C) require disclosure of the class of the purchaser
of such loans;
‘‘(D) permit any reporting institution to submit in
writing to the Bureau or to the appropriate agency such
additional data or explanations as it deems relevant to
the decision to originate or purchase mortgage loans; and
‘‘(E) modify or require modification of itemized information, for the purpose of protecting the privacy interests
of the mortgage applicants or mortgagors, that is or will
be available to the public.
‘‘(2) OTHER APPROPRIATE AGENCIES.—The appropriate agencies described in this paragraph are—
‘‘(A) the appropriate Federal banking agencies, as
defined in section 3(q) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(q)), with respect to the entities that
are subject to the jurisdiction of each such agency, respectively;
‘‘(B) the Federal Deposit Insurance Corporation for
banks insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System),
mutual savings banks, insured State branches of foreign
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124 STAT. 2099

section 303(2)(A) which is not otherwise referred to in
this paragraph;
‘‘(C) the National Credit Union Administration Board
with respect to credit unions; and
‘‘(D) the Secretary of Housing and Urban Development
with respect to other lending institutions not regulated
by the agencies referred to in subparagraph (A) or (B).
‘‘(3) RULES FOR MODIFICATIONS UNDER PARAGRAPH (1).—
‘‘(A) APPLICATION.—A modification under paragraph
(1)(E) shall apply to information concerning—
‘‘(i) credit score data described in subsection
(b)(6)(I), in a manner that is consistent with the purpose described in paragraph (1)(E); and
‘‘(ii) age or any other category of data described
in paragraph (5) or (6) of subsection (b), as the Bureau
determines to be necessary to satisfy the purpose
described in paragraph (1)(E), and in a manner consistent with that purpose.
‘‘(B) STANDARDS.—The Bureau shall prescribe standards for any modification under paragraph (1)(E) to effectuate the purposes of this title, in light of the privacy
interests of mortgage applicants or mortgagors. Where necessary to protect the privacy interests of mortgage
applicants or mortgagors, the Bureau shall provide for
the disclosure of information described in subparagraph
(A) in aggregate or other reasonably modified form, in
order to effectuate the purposes of this title.’’;
(C) in subsection (i), by striking ‘‘subsection (b)(4)’’
and inserting ‘‘subsections (b)(4), (b)(5), and (b)(6)’’;
(D) in subsection (j)—
(i) by striking paragraph (3) and inserting the
following:
‘‘(3) CHANGE OF FORM NOT REQUIRED.—A depository institution meets the disclosure requirement of paragraph (1) if the
institution provides the information required under such paragraph in such formats as the Bureau may require’’; and
(ii) in paragraph (2)(A), by striking ‘‘in the format
in which such information is maintained by the institution’’ and inserting ‘‘in such formats as the Bureau
may require’’;
(E) in subsection (m), by striking paragraph (2) and
inserting the following:
‘‘(2) FORM OF INFORMATION.—In complying with paragraph
(1), a depository institution shall provide the person requesting
the information with a copy of the information requested in
such formats as the Bureau may require.’’; and
(F) by adding at the end the following:
‘‘(n) TIMING OF CERTAIN DISCLOSURES.—The data required to
be disclosed under subsection (b) shall be submitted to the Bureau
or to the appropriate agency for any institution reporting under
this title, in accordance with regulations prescribed by the Bureau.
Institutions shall not be required to report new data under paragraph (5) or (6) of subsection (b) before the first January 1 that
occurs after the end of the 9-month period beginning on the date
on which regulations are issued by the Bureau in final form with
respect to such disclosures.’’;
(4) in section 305 (12 U.S.C. 2804)—

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(A) by striking subsection (b) and inserting the following:
‘‘(b) POWERS OF CERTAIN OTHER AGENCIES.—
‘‘(1) IN GENERAL.—Subject to subtitle B of the Consumer
Financial Protection Act of 2010, compliance with the requirements of this title shall be enforced—
‘‘(A) under section 8 of the Federal Deposit Insurance
Act, the appropriate Federal banking agency, as defined
in section 3(q) of the Federal Deposit Insurance Act (12
U.S.C. 1813(q)), with respect to—
‘‘(i) any national bank or Federal savings association, and any Federal branch or Federal agency of
a foreign bank;
‘‘(ii) any member bank of the Federal Reserve
System (other than a national bank), branch or agency
of a foreign bank (other than a Federal branch, Federal
agency, and insured State branch of a foreign bank),
commercial lending company owned or controlled by
a foreign bank, and any organization operating under
section 25 or 25A of the Federal Reserve Act; and
‘‘(iii) any bank or State savings association insured
by the Federal Deposit Insurance Corporation (other
than a member of the Federal Reserve System), any
mutual savings bank as, defined in section 3(f) of the
Federal Deposit Insurance Act (12 U.S.C. 1813(f)), any
insured State branch of a foreign bank, and any other
depository institution not referred to in this paragraph
or subparagraph (B) or (C);
‘‘(B) under subtitle E of the Consumer Financial Protection Act of 2010, by the Bureau, with respect to any person
subject to this subtitle;
‘‘(C) under the Federal Credit Union Act, by the
Administrator of the National Credit Union Administration
with respect to any insured credit union; and
‘‘(D) with respect to other lending institutions, by the
Secretary of Housing and Urban Development.
‘‘(2) INCORPORATED DEFINITIONS.—The terms used in paragraph (1) that are not defined in this title or otherwise defined
in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C.
1813(s)) shall have the same meanings as in section 1(b) of
the International Banking Act of 1978 (12 U.S.C. 3101).’’; and
(B) by adding at the end the following:
‘‘(d) OVERALL ENFORCEMENT AUTHORITY OF THE BUREAU OF
CONSUMER FINANCIAL PROTECTION.—Subject to subtitle B of the
Consumer Financial Protection Act of 2010, enforcement of the
requirements imposed under this title is committed to each of
the agencies under subsection (b). To facilitate research, examinations, and enforcement, all data collected pursuant to section 304
shall be available to the entities listed under subsection (b). The
Bureau may exercise its authorities under the Consumer Financial
Protection Act of 2010 to exercise principal authority to examine
and enforce compliance by any person with the requirements of
this title.’’;
(5) in section 306 (12 U.S.C. 2805(b)), by striking subsection
(b) and inserting the following:
‘‘(b) EXEMPTION AUTHORITY.—The Bureau may, by regulation,
exempt from the requirements of this title any State-chartered

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124 STAT. 2101

depository institution within any State or subdivision thereof, if
the agency determines that, under the law of such State or subdivision, that institution is subject to requirements that are substantially similar to those imposed under this title, and that such
law contains adequate provisions for enforcement. Notwithstanding
any other provision of this subsection, compliance with the requirements imposed under this subsection shall be enforced by the Office
of the Comptroller of the Currency under section 8 of the Federal
Deposit Insurance Act, in the case of national banks and Federal
savings associations, the deposits of which are insured by the Federal Deposit Insurance Corporation.’’; and
(6) by striking section 307 (12 U.S.C. 2806) and inserting
the following:
‘‘SEC. 307. COMPLIANCE IMPROVEMENT METHODS.

12 USC 2806.

‘‘(a) IN GENERAL.—
‘‘(1) CONSULTATION REQUIRED.—The Director of the Bureau
of Consumer Financial Protection, with the assistance of the
Secretary, the Director of the Bureau of the Census, the Board
of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, and such other persons as the
Bureau deems appropriate, shall develop or assist in the
improvement of, methods of matching addresses and census
tracts to facilitate compliance by depository institutions in as
economical a manner as possible with the requirements of
this title.
‘‘(2) AUTHORIZATION OF APPROPRIATIONS.—There are
authorized to be appropriated, such sums as may be necessary
to carry out this subsection.
‘‘(3) CONTRACTING AUTHORITY.—The Director of the Bureau
of Consumer Financial Protection is authorized to utilize, contract with, act through, or compensate any person or agency
in order to carry out this subsection.
‘‘(b) RECOMMENDATIONS TO CONGRESS.—The Director of the
Bureau of Consumer Financial Protection shall recommend to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of Representatives, such additional legislation as the Director of the Bureau
of Consumer Financial Protection deems appropriate to carry out
the purpose of this title.’’.

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SEC. 1095. AMENDMENTS TO THE HOMEOWNERS PROTECTION ACT
OF 1998.

Section 10 of the Homeowners Protection Act of 1998 (12 U.S.C.
4909) is amended—
(1) in subsection (a)—
(A) by striking ‘‘Compliance’’ and all that follows
through the end of paragraph (1) and inserting the following: ‘‘Subject to subtitle B of the Consumer Financial
Protection Act of 2010, compliance with the requirements
imposed under this Act shall be enforced under—
‘‘(1) section 8 of the Federal Deposit Insurance Act, by
the appropriate Federal banking agency (as defined in section
3(q) of that Act), with respect to—
‘‘(A) insured depository institutions (as defined in section 3(c)(2) of that Act);
‘‘(B) depository institutions described in clause (i), (ii),
or (iii) of section 19(b)(1)(A) of the Federal Reserve Act

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which are not insured depository institutions (as defined
in section 3(c)(2) of the Federal Deposit Insurance Act);
and
‘‘(C) depository institutions described in clause (v) or
(vi) of section 19(b)(1)(A) of the Federal Reserve Act which
are not insured depository institutions (as defined in section
3(c)(2) of the Federal Deposit Insurance Act);’’;
(B) in paragraph (2), by striking ‘‘and’’ at the end;
(C) in paragraph (3), by striking the period at the
end and inserting ‘‘; and’’; and
(D) by adding at the end the following:
‘‘(4) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau of Consumer Financial Protection, with
respect to any person subject to this Act.’’; and
(2) in subsection (b)(2), by inserting before the period at
the end the following: ‘‘, subject to subtitle B of the Consumer
Financial Protection Act of 2010’’.

SEC. 1096. AMENDMENTS TO THE HOME OWNERSHIP AND EQUITY
PROTECTION ACT OF 1994.

The Home Ownership and Equity Protection Act of 1994 (15
U.S.C. 1601 note) is amended—
(1) in section 158(a), by striking ‘‘Board of Governors of
the Federal Reserve System, in consultation with the Consumer
Advisory Council of the Board’’ and inserting ‘‘Bureau, in consultation with the Advisory Board to the Bureau’’; and
(2) in section 158(b), by striking ‘‘Board of Governors of
the Federal Reserve System’’ and inserting ‘‘Bureau’’.
15 USC 1638
note.

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SEC. 1097. AMENDMENTS TO THE OMNIBUS APPROPRIATIONS ACT,
2009.

Section 626 of the Omnibus Appropriations Act, 2009 (15 U.S.C.
1638 note) is amended—
(1) by striking subsection (a) and inserting the following:
‘‘(a)(1) The Bureau of Consumer Financial Protection shall have
authority to prescribe rules with respect to mortgage loans in
accordance with section 553 of title 5, United States Code. Such
rulemaking shall relate to unfair or deceptive acts or practices
regarding mortgage loans, which may include unfair or deceptive
acts or practices involving loan modification and foreclosure rescue
services. Any violation of a rule prescribed under this paragraph
shall be treated as a violation of a rule prohibiting unfair, deceptive,
or abusive acts or practices under the Consumer Financial Protection Act of 2010 and a violation of a rule under section 18 of
the Federal Trade Commission Act (15 U.S.C. 57a) regarding unfair
or deceptive acts or practices.
‘‘(2) The Bureau of Consumer Financial Protection shall enforce
the rules issued under paragraph (1) in the same manner, by
the same means, and with the same jurisdiction, powers, and duties,
as though all applicable terms and provisions of the Consumer
Financial Protection Act of 2010 were incorporated into and made
part of this subsection.
‘‘(3) Subject to subtitle B of the Consumer Financial Protection
Act of 2010, the Federal Trade Commission shall enforce the rules
issued under paragraph (1), in the same manner, by the same
means, and with the same jurisdiction, as though all applicable
terms and provisions of the Federal Trade Commission Act were
incorporated into and made part of this section.’’; and

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(2) in subsection (b)—
(A) by striking paragraph (1) and inserting the following:
‘‘(1) Except as provided in paragraph (6), in any case in
which the attorney general of a State has reason to believe
that an interest of the residents of the State has been or
is threatened or adversely affected by the engagement of any
person subject to a rule prescribed under subsection (a) in
practices that violate such rule, the State, as parens patriae,
may bring a civil action on behalf of its residents in an appropriate district court of the United States or other court of
competent jurisdiction—
‘‘(A) to enjoin that practice;
‘‘(B) to enforce compliance with the rule;
‘‘(C) to obtain damages, restitution, or other compensation on behalf of the residents of the State; or
‘‘(D) to obtain penalties and relief provided under the
Consumer Financial Protection Act of 2010, the Federal
Trade Commission Act, and such other relief as the court
deems appropriate.’’;
(B) in paragraphs (2) and (3), by striking ‘‘the primary
Federal regulator’’ each time the term appears and
inserting ‘‘the Bureau of Consumer Financial Protection
or the Commission, as appropriate’’;
(C) in paragraph (3), by inserting ‘‘and subject to subtitle B of the Consumer Financial Protection Act of 2010,’’
after ‘‘paragraph (2),’’; and
(D) in paragraph (6), by striking ‘‘the primary Federal
regulator’’ each place that term appears and inserting ‘‘the
Bureau of Consumer Financial Protection or the Commission’’.

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SEC. 1098. AMENDMENTS TO THE REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974.

The Real Estate Settlement Procedures Act of 1974 (12 U.S.C.
2601 et seq.) is amended—
(1) in section 3 (12 U.S.C. 2602)—
(A) in paragraph (7), by striking ‘‘and’’ at the end;
(B) in paragraph (8), by striking the period at the
end and inserting ‘‘; and’’; and
(C) by adding at the end the following:
‘‘(9) the term ‘Bureau’ means the Bureau of Consumer
Financial Protection.’’;
(2) in section 4 (12 U.S.C. 2603)—
(A) in subsection (a), by striking the first sentence
and inserting the following: ‘‘The Bureau shall publish
a single, integrated disclosure for mortgage loan transactions (including real estate settlement cost statements)
which includes the disclosure requirements of this section
and section 5, in conjunction with the disclosure requirements of the Truth in Lending Act that, taken together,
may apply to a transaction that is subject to both or either
provisions of law. The purpose of such model disclosure
shall be to facilitate compliance with the disclosure requirements of this title and the Truth in Lending Act, and

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to aid the borrower or lessee in understanding the transaction by utilizing readily understandable language to simplify the technical nature of the disclosures.’’;
(B) by striking ‘‘Secretary’’ each place that term
appears and inserting ‘‘Bureau’’; and
(C) by striking ‘‘form’’ each place that term appears
and inserting ‘‘forms’’;
(3) in section 5 (12 U.S.C. 2604)—
(A) by striking ‘‘Secretary’’ each place that term
appears and inserting ‘‘Bureau’’; and
(B) in subsection (a), by striking the first sentence
and inserting the following: ‘‘The Bureau shall prepare
and distribute booklets jointly addressing compliance with
the requirements of the Truth in Lending Act and the
provisions of this title, in order to help persons borrowing
money to finance the purchase of residential real estate
better to understand the nature and costs of real estate
settlement services.’’;
(4) in section 6(j)(3) (12 U.S.C. 2605(j)(3))—
(A) by striking ‘‘Secretary’’ and inserting ‘‘Bureau’’;
and
(B) by striking ‘‘, by regulations that shall take effect
not later than April 20, 1991,’’;
(5) in section 7(b) (12 U.S.C. 2606(b)) by striking ‘‘Secretary’’ and inserting ‘‘Bureau’’;
(6) in section 8(c)(5) (12 U.S.C. 2607(c)(5)), by striking
‘‘Secretary’’ and inserting ‘‘Bureau’’;
(7) in section 8(d) (12 U.S.C. 2607(d))—
(A) in the subsection heading, by inserting ‘‘BUREAU
AND’’ before ‘‘SECRETARY’’; and
(B) by striking paragraph (4), and inserting the following:
‘‘(4) The Bureau, the Secretary, or the attorney general
or the insurance commissioner of any State may bring an
action to enjoin violations of this section. Except, to the extent
that a person is subject to the jurisdiction of the Bureau,
the Secretary, or the attorney general or the insurance commissioner of any State, the Bureau shall have primary authority
to enforce or administer this section, subject to subtitle B
of the Consumer Financial Protection Act of 2010.’’;
(8) in section 10(c) (12 U.S.C. 2609(c) and (d)), by striking
‘‘Secretary’’ and inserting ‘‘Bureau’’;
(9) in section 16 (12 U.S.C. 2614), by inserting ‘‘the
Bureau,’’ before ‘‘the Secretary’’;
(10) in section 18 (12 U.S.C. 2616), by striking ‘‘Secretary’’
each place that term appears and inserting ‘‘Bureau’’; and
(11) in section 19 (12 U.S.C. 2617)—
(A) in the section heading by striking ‘‘SECRETARY’’
and inserting ‘‘BUREAU’’;
(B) in subsection (a), by striking ‘‘Secretary’’ each place
that term appears and inserting ‘‘Bureau’’; and
(C) in subsections (b) and (c), by striking ‘‘the Secretary’’ each place that term appears and inserting ‘‘the
Bureau’’.

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SEC. 1098A. AMENDMENTS TO THE INTERSTATE LAND SALES FULL
DISCLOSURE ACT.

The Interstate Land Sales Full Disclosure Act (15 U.S.C. 1701
et seq.) is amended—
(1) by striking ‘‘Secretary’’ each place that term appears
and inserting ‘‘Director’’;
(2) by striking ‘‘Department of Housing and Urban Development’’ each place that term appears and inserting ‘‘Bureau
of Consumer Financial Protection’’;
(3) by striking ‘‘Department’’ each place that term appears
and inserting ‘‘Bureau’’;
(4) in section 1402 (15 U.S.C. 1701)—
(A) by striking paragraph (1) and inserting the following:
‘‘(1) ‘Director’ means the Director of the Bureau of Consumer FinancialProtection;’’;
(B) in paragraph (10), by striking ‘‘and’’ at the end;
(C) in paragraph (11), by striking the period at the
end and inserting ‘‘; and’’; and
(D) by adding at the end the following:
‘‘(12) ‘Bureau’ means the Bureau of Consumer Financial
Protection.’’; and
(5) in section 1416(a) (15 U.S.C. 1715(a)), by striking ‘‘Secretary of Housing and Urban Development’’ and inserting
‘‘Director of the Bureau of Consumer Financial Protection’’.

15 USC 1702 et
seq.
15 USC 1715.

15 USC 1715.

Definition.

Definition.

SEC. 1099. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT
OF 1978.

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The Right to Financial Privacy Act of 1978 (12 U.S.C. 3401
et seq.) is amended—
(1) in section 1101—
(A) in paragraph (6)—
(i) in subparagraph (A), by inserting ‘‘and’’ after
the semicolon;
(ii) in subparagraph (B), by striking ‘‘and’’ at the
end; and
(iii) by striking subparagraph (C); and
(B) in paragraph (7), by striking subparagraph (B),
and inserting the following:
‘‘(B) the Bureau of Consumer Financial Protection;’’;
(2) in section 1112(e) (12 U.S.C. 3412(e)), by striking ‘‘and
the Commodity Futures Trading Commission is permitted’’ and
inserting ‘‘the Commodity Futures Trading Commission, and
the Bureau of Consumer Financial Protection is permitted’’;
and
(3) in section 1113 (12 U.S.C. 3413), by adding at the
end the following new subsection:
‘‘(r) DISCLOSURE TO THE BUREAU OF CONSUMER FINANCIAL
PROTECTION.—Nothing in this title shall apply to the examination
by or disclosure to the Bureau of Consumer Financial Protection
of financial records or information in the exercise of its authority
with respect to a financial institution.’’.

12 USC 3401.

SEC. 1100. AMENDMENTS TO THE SECURE AND FAIR ENFORCEMENT
FOR MORTGAGE LICENSING ACT OF 2008.

The S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101
et seq.) is amended—

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12 USC 5102,
5106.
12 USC 5102 et
seq.

Definitions.

Definition.

System.

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PUBLIC LAW 111–203—JULY 21, 2010
(1) by striking ‘‘a Federal banking agency’’ each place that
term appears, other than in paragraphs (7) and (11) of section
1503 and section 1507(a)(1), and inserting ‘‘the Bureau’’;
(2) by striking ‘‘Federal banking agencies’’ each place that
term appears and inserting ‘‘Bureau’’; and
(3) by striking ‘‘Secretary’’ each place that term appears
and inserting ‘‘Director’’;
(4) in section 1503 (12 U.S.C. 5102)—
(A) by redesignating paragraphs (2) through (12) as
(3) through (13), respectively;
(B) by striking paragraph (1) and inserting the following:
‘‘(1) BUREAU.—The term ‘Bureau’ means the Bureau of
Consumer Financial Protection.
‘‘(2) FEDERAL BANKING AGENCY.—The term ‘Federal
banking agency’ means the Board of Governors of the Federal
Reserve System, the Office of the Comptroller of the Currency,
the National Credit Union Administration, and the Federal
Deposit Insurance Corporation.’’; and
(C) by striking paragraph (10), as so designated by
this section, and inserting the following:
‘‘(10) DIRECTOR.—The term ‘Director’ means the Director
of the Bureau of Consumer Financial Protection.’’; and
(5) in section 1507 (12 U.S.C. 5106)—
(A) in subsection (a)—
(i) by striking paragraph (1) and inserting the
following:
‘‘(1) IN GENERAL.—The Bureau shall develop and maintain
a system for registering employees of a depository institution,
employees of a subsidiary that is owned and controlled by
a depository institution and regulated by a Federal banking
agency, or employees of an institution regulated by the Farm
Credit Administration, as registered loan originators with the
Nationwide Mortgage Licensing System and Registry. The
system shall be implemented before the end of the 1-year
period beginning on the date of enactment of the Consumer
Financial Protection Act of 2010.’’; and
(ii) in paragraph (2)—
(I) by striking ‘‘appropriate Federal banking
agency and the Farm Credit Administration’’ and
inserting ‘‘Bureau’’; and
(II) by striking ‘‘employees’s identity’’ and
inserting ‘‘identity of the employee’’; and
(B) in subsection (b), by striking ‘‘through the Financial
Institutions Examination Council, and the Farm Credit
Administration’’, and inserting ‘‘and the Bureau of Consumer Financial Protection’’;
(6) in section 1508 (12 U.S.C. 5107)—
(A) by striking the section heading and inserting the
following: ‘‘SEC. 1508. BUREAU OF CONSUMER FINANCIAL

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PROTECTION BACKUP AUTHORITY TO ESTABLISH LOAN
ORIGINATOR LICENSING SYSTEM.’’; and

(B) by adding at the end the following:
‘‘(f) REGULATION AUTHORITY.—

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124 STAT. 2107

‘‘(1) IN GENERAL.—The Bureau is authorized to promulgate
regulations setting minimum net worth or surety bond requirements for residential mortgage loan originators and minimum
requirements for recovery funds paid into by loan originators.
‘‘(2) CONSIDERATIONS.—In issuing regulations under paragraph (1), the Bureau shall take into account the need to
provide originators adequate incentives to originate affordable
and sustainable mortgage loans, as well as the need to ensure
a competitive origination market that maximizes consumer
access to affordable and sustainable mortgage loans.’’;
(7) by striking section 1510 (12 U.S.C. 5109) and inserting
the following:
‘‘SEC. 1510. FEES.

12 USC 5109.

‘‘The Bureau, the Farm Credit Administration, and the Nationwide Mortgage Licensing System and Registry may charge reasonable fees to cover the costs of maintaining and providing access
to information from the Nationwide Mortgage Licensing System
and Registry, to the extent that such fees are not charged to
consumers for access to such system and registry.’’;
(8) by striking section 1513 (12 U.S.C. 5112) and inserting
the following:
‘‘SEC. 1513. LIABILITY PROVISIONS.

12 USC 5112.

‘‘The Bureau, any State official or agency, or any organization
serving as the administrator of the Nationwide Mortgage Licensing
System and Registry or a system established by the Director under
section 1509, or any officer or employee of any such entity, shall
not be subject to any civil action or proceeding for monetary damages by reason of the good faith action or omission of any officer
or employee of any such entity, while acting within the scope
of office or employment, relating to the collection, furnishing, or
dissemination of information concerning persons who are loan originators or are applying for licensing or registration as loan originators.’’; and
(9) in section 1514 (12 U.S.C. 5113) in the section heading,
by striking ‘‘UNDER HUD BACKUP LICENSING SYSTEM’’ and
inserting ‘‘BY THE BUREAU’’.

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SEC. 1100A. AMENDMENTS TO THE TRUTH IN LENDING ACT.

The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended—
(1) in section 103 (15 U.S.C. 1602)—
(A) by redesignating subsections (b) through (bb) as
subsections (c) through (cc), respectively; and
(B) by inserting after subsection (a) the following:
‘‘(b) BUREAU.—The term ‘Bureau’ means the Bureau of Consumer Financial Protection.’’;
(2) by striking ‘‘Board’’ each place that term appears, other
than in section 140(d) and sections 105(i) and 108(a), as
amended by this section, and inserting ‘‘Bureau’’;
(3) by striking ‘‘Federal Trade Commission’’ each place
that term appears, other than in section 108(c) and section
129(m), as amended by this Act, and other than in the context
of a reference to the Federal Trade Commission Act, and
inserting ‘‘Bureau’’;
(4) in section 105(a) (15 U.S.C. 1604(a)), in the second
sentence—

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15 USC 1602 et
seq.
15 USC 1616,
1632, 1651.

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Publication.

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15 USC 1607.

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PUBLIC LAW 111–203—JULY 21, 2010

(A) by striking ‘‘Except in the case of a mortgage
referred to in section 103(aa), these regulations may contain
such’’ and inserting ‘‘Except with respect to the provisions
of section 129 that apply to a mortgage referred to in
section 103(aa), such regulations may contain such additional requirements,’’; and
(B) by inserting ‘‘all or’’ after ‘‘exceptions for’’;
(5) in section 105(b) (15 U.S.C. 1604(b)), by striking the
first sentence and inserting the following: ‘‘The Bureau shall
publish a single, integrated disclosure for mortgage loan transactions (including real estate settlement cost statements) which
includes the disclosure requirements of this title in conjunction
with the disclosure requirements of the Real Estate Settlement
Procedures Act of 1974 that, taken together, may apply to
a transaction that is subject to both or either provisions of
law. The purpose of such model disclosure shall be to facilitate
compliance with the disclosure requirements of this title and
the Real Estate Settlement Procedures Act of 1974, and to
aid the borrower or lessee in understanding the transaction
by utilizing readily understandable language to simplify the
technical nature of the disclosures.’’;
(6) in section 105(f)(1) (15 U.S.C. 1604(f)(1)), by inserting
‘‘all or’’ after ‘‘from all or part of this title’’;
(7) in section 105 (15 U.S.C. 1604), by adding at the end
the following:
‘‘(i) AUTHORITY OF THE BOARD TO PRESCRIBE
RULES.—Notwithstanding subsection (a), the Board
shall have authority to prescribe rules under this title
with respect to a person described in section 1029(a)
of the Consumer Financial Protection Act of 2010.
Regulations prescribed under this subsection may contain such classifications, differentiations, or other
provisions, as in the judgment of the Board are necessary or proper to effectuate the purposes of this
title, to prevent circumvention or evasion thereof, or
to facilitate compliance therewith.’’;
(8) in section 108 (15 U.S.C. 1604), by adding at the end
the following:
(A) by striking subsection (a) and inserting the following:
‘‘(a) ENFORCING AGENCIES.—Subject to subtitle B of the Consumer Financial Protection Act of 2010, compliance with the
requirements imposed under this title shall be enforced under—
‘‘(1) section 8 of the Federal Deposit Insurance Act, by
the appropriate Federal banking agency, as defined in section
3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)),
with respect to—
‘‘(A) national banks, Federal savings associations, and
Federal branches and Federal agencies of foreign banks;
‘‘(B) member banks of the Federal Reserve System
(other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies,
and insured State branches of foreign banks), commercial
lending companies owned or controlled by foreign banks,
and organizations operating under section 25 or 25A of
the Federal Reserve Act; and

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‘‘(C) banks and State savings associations insured by
the Federal Deposit Insurance Corporation (other than
members of the Federal Reserve System), and insured State
branches of foreign banks;
‘‘(2) the Federal Credit Union Act, by the Director of the
National Credit Union Administration, with respect to any
Federal credit union;
‘‘(3) the Federal Aviation Act of 1958, by the Secretary
of Transportation, with respect to any air carrier or foreign
air carrier subject to that Act;
‘‘(4) the Packers and Stockyards Act, 1921 (except as provided in section 406 of that Act), by the Secretary of Agriculture,
with respect to any activities subject to that Act;
‘‘(5) the Farm Credit Act of 1971, by the Farm Credit
Administration with respect to any Federal land bank, Federal
land bank association, Federal intermediate credit bank, or
production credit association; and
‘‘(6) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau, with respect to any person subject
to this title.’’; and
(B) by striking subsection (c) and inserting the following:
‘‘(c) OVERALL ENFORCEMENT AUTHORITY OF THE FEDERAL TRADE
COMMISSION.—Except to the extent that enforcement of the requirements imposed under this title is specifically committed to some
other Government agency under any of paragraphs (1) through
(5) of subsection (a), and subject to subtitle B of the Consumer
Financial Protection Act of 2010, the Federal Trade Commission
shall be authorized to enforce such requirements. For the purpose
of the exercise by the Federal Trade Commission of its functions
and powers under the Federal Trade Commission Act, a violation
of any requirement imposed under this title shall be deemed a
violation of a requirement imposed under that Act. All of the functions and powers of the Federal Trade Commission under the Federal Trade Commission Act are available to the Federal Trade
Commission to enforce compliance by any person with the requirements under this title, irrespective of whether that person is
engaged in commerce or meets any other jurisdictional tests under
the Federal Trade Commission Act.’’; and
(9) in section 129 (15 U.S.C. 1639), by striking subsection
(m) and inserting the following:
‘‘(m) CIVIL PENALTIES IN FEDERAL TRADE COMMISSION
ENFORCEMENT ACTIONS.—For purposes of enforcement by the Federal Trade Commission, any violation of a regulation issued by
the Bureau pursuant to subsection (l)(2) shall be treated as a
violation of a rule promulgated under section 18 of the Federal
Trade Commission Act (15 U.S.C. 57a) regarding unfair or deceptive
acts or practices.’’; and
(10) in chapter 5 (15 U.S.C. 1667 et seq.)—
(A) by striking ‘‘the Board’’ each place that term
appears and inserting ‘‘the Bureau’’; and
(B) by striking ‘‘The Board’’ each place that term
appears and inserting ‘‘The Bureau’’.

15 USC 1667c,
1667e, 1667f.
15 USC 1667a,
1667e, 1667f.

SEC. 1100B. AMENDMENTS TO THE TRUTH IN SAVINGS ACT.

The Truth in Savings Act (12 U.S.C. 4301 et seq.) is amended—

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PUBLIC LAW 111–203—JULY 21, 2010
(1) by striking ‘‘Board’’ each place that term appears, other
than in section 272(b) (12 U.S.C. 4311), and inserting ‘‘Bureau’’;
(2) in section 270(a) (12 U.S.C. 4309)—
(A) by striking ‘‘Compliance’’ and all that follows
through the end of paragraph (1) and inserting: ‘‘Subject
to subtitle B of the Consumer Financial Protection Act
of 2010, compliance with the requirements imposed under
this subtitle shall be enforced under—
‘‘(1) section 8 of the Federal Deposit Insurance Act by
the appropriate Federal banking agency (as defined in section
3(q) of that Act), with respect to—
‘‘(A) insured depository institutions (as defined in section 3(c)(2) of that Act);
‘‘(B) depository institutions described in clause (i), (ii),
or (iii) of section 19(b)(1)(A) of the Federal Reserve Act
which are not insured depository institutions (as defined
in section 3(c)(2) of the Federal Deposit Insurance Act);
and
‘‘(C) depository institutions described in clause (v) or
(vi) of section 19(b)(1)(A) of the Federal Reserve Act which
are not insured depository institutions (as defined in section
3(c)(2) of the Federal Deposit Insurance Act);’’;
(B) in paragraph (2), by striking the period at the
end and inserting ‘‘; and’’; and
(C) by adding at the end the following:
‘‘(3) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau, with respect to any person subject
to this subtitle.’’;
(3) in section 272(b) (12 U.S.C. 4311(b)), by striking ‘‘regulation prescribed by the Board’’ each place that term appears
and inserting ‘‘regulation prescribed by the Bureau’’; and
(4) in section 274 (12 U.S.C. 4313), by striking paragraph
(4) and inserting the following:
‘‘(4) BUREAU.—The term ‘Bureau’ means the Bureau of
Consumer Financial Protection.’’.

12 USC 4302 et
seq.

Definition.

SEC. 1100C. AMENDMENTS TO THE TELEMARKETING AND CONSUMER
FRAUD AND ABUSE PREVENTION ACT.

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(a) AMENDMENTS TO SECTION 3.—Section 3 of the Telemarketing
and Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6102)
is amended by striking subsections (b) and (c) and inserting the
following:
‘‘(b) RULEMAKING AUTHORITY.—The Commission shall have
authority to prescribe rules under subsection (a), in accordance
with section 553 of title 5, United States Code. In prescribing
a rule under this section that relates to the provision of a consumer
financial product or service that is subject to the Consumer Financial Protection Act of 2010, including any enumerated consumer
law thereunder, the Commission shall consult with the Bureau
of Consumer Financial Protection regarding the consistency of a
proposed rule with standards, purposes, or objectives administered
by the Bureau of Consumer Financial Protection.
‘‘(c) VIOLATIONS.—Any violation of any rule prescribed under
subsection (a)—
‘‘(1) shall be treated as a violation of a rule under section
18 of the Federal Trade Commission Act regarding unfair or
deceptive acts or practices; and

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‘‘(2) that is committed by a person subject to the Consumer
Financial Protection Act of 2010 shall be treated as a violation
of a rule under section 1031 of that Act regarding unfair,
deceptive, or abusive acts or practices.’’.
(b) AMENDMENTS TO SECTION 4.—Section 4(d) of the Telemarketing and Consumer Fraud and Abuse Prevention Act (15
U.S.C. 6103(d)) is amended by inserting after ‘‘Commission’’ each
place that term appears the following: ‘‘or the Bureau of Consumer
Financial Protection’’.
(c) AMENDMENTS TO SECTION 5.—Section 5(c) of the Telemarketing and Consumer Fraud and Abuse Prevention Act (15
U.S.C. 6104(c)) is amended by inserting after ‘‘Commission’’ each
place that term appears the following: ‘‘or the Bureau of Consumer
Financial Protection’’.
(d) AMENDMENT TO SECTION 6.—Section 6 of the Telemarketing
and Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6105)
is amended by adding at the end the following:
‘‘(d) ENFORCEMENT BY BUREAU OF CONSUMER FINANCIAL
PROTECTION.—Except as otherwise provided in sections 3(d), 3(e),
4, and 5, and subject to subtitle B of the Consumer Financial
Protection Act of 2010, this Act shall be enforced by the Bureau
of Consumer Financial Protection under subtitle E of the Consumer
Financial Protection Act of 2010, with respect to the offering or
provision of a consumer financial product or service subject to
that Act.’’.
SEC. 1100D. AMENDMENTS TO THE PAPERWORK REDUCTION ACT.

(a) DESIGNATION AS AN INDEPENDENT AGENCY.—Section 2(5)
of the Paperwork Reduction Act (44 U.S.C. 3502(5)) is amended
by inserting ‘‘the Bureau of Consumer Financial Protection, the
Office of Financial Research,’’ after ‘‘the Securities and Exchange
Commission,’’.
(b) COMPARABLE TREATMENT.—Section 3513 of title 44, United
States Code, is amended by adding at the end the following:
‘‘(c) COMPARABLE TREATMENT.—Notwithstanding any other
provision of law, the Director shall treat or review a rule or order
prescribed or proposed by the Director of the Bureau of Consumer
Financial Protection on the same terms and conditions as apply
to any rule or order prescribed or proposed by the Board of Governors of the Federal Reserve System.’’.

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SEC. 1100E. ADJUSTMENTS FOR INFLATION IN THE TRUTH IN LENDING
ACT.

(a) CAPS.—
(1) CREDIT TRANSACTIONS.—Section 104(3) of the Truth in
Lending Act (15 U.S.C. 1603(3)) is amended by striking
‘‘$25,000’’ and inserting ‘‘$50,000’’.
(2) CONSUMER LEASES.—Section 181(1) of the Truth in
Lending Act (15 U.S.C. 1667(1)) is amended by striking
‘‘$25,000’’ and inserting ‘‘$50,000’’.
(b) ADJUSTMENTS FOR INFLATION.—On and after December 31,
2011, the Bureau shall adjust annually the dollar amounts described
in sections 104(3) and 181(1) of the Truth in Lending Act (as
amended by this section), by the annual percentage increase in
the Consumer Price Index for Urban Wage Earners and Clerical
Workers, as published by the Bureau of Labor Statistics, rounded
to the nearest multiple of $100, or $1,000, as applicable.

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15 USC 1603
note.

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PUBLIC LAW 111–203—JULY 21, 2010

SEC. 1100F. USE OF CONSUMER REPORTS.

Section 615 of the Fair Credit Reporting Act (15 U.S.C. 1681m)
is amended—
(1) in subsection (a)—
(A) by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively;
(B) by inserting after paragraph (1) the following:
‘‘(2) provide to the consumer written or electronic disclosure—
‘‘(A) of a numerical credit score as defined in section
609(f)(2)(A) used by such person in taking any adverse
action based in whole or in part on any information in
a consumer report; and
‘‘(B) of the information set forth in subparagraphs (B)
through (E) of section 609(f)(1);’’; and
(C) in paragraph (4) (as so redesignated), by striking
‘‘paragraph (2)’’ and inserting ‘‘paragraph (3)’’; and
(2) in subsection (h)(5)—
(A) in subparagraph (C), by striking ‘‘; and’’ and
inserting a semicolon;
(B) in subparagraph (D), by striking the period and
inserting ‘‘; and’’; and
(C) by inserting at the end the following:
‘‘(E) include a statement informing the consumer of—
‘‘(i) a numerical credit score as defined in section
609(f)(2)(A), used by such person in making the credit
decision described in paragraph (1) based in whole
or in part on any information in a consumer report;
and
‘‘(ii) the information set forth in subparagraphs
(B) through (E) of section 609(f)(1).’’.

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SEC. 1100G. SMALL BUSINESS FAIRNESS AND REGULATORY TRANSPARENCY.

(a) PANEL REQUIREMENT.—Section 609(d) of title 5, United
States Code, is amended by striking ‘‘means the’’ and all that
follows and inserting the following: ‘‘means—
‘‘(1) the Environmental Protection Agency;
‘‘(2) the Consumer Financial Protection Bureau of the Federal Reserve System; and
‘‘(3) the Occupational Safety and Health Administration
of the Department of Labor.’’.
(b) INITIAL REGULATORY FLEXIBILITY ANALYSIS.—Section 603
of title 5, United States Code, is amended by adding at the end
the following:
‘‘(d)(1) For a covered agency, as defined in section 609(d)(2),
each initial regulatory flexibility analysis shall include a description
of—
‘‘(A) any projected increase in the cost of credit for small
entities;
‘‘(B) any significant alternatives to the proposed rule which
accomplish the stated objectives of applicable statutes and
which minimize any increase in the cost of credit for small
entities; and
‘‘(C) advice and recommendations of representatives of
small entities relating to issues described in subparagraphs
(A) and (B) and subsection (b).

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‘‘(2) A covered agency, as defined in section 609(d)(2), shall,
for purposes of complying with paragraph (1)(C)—
‘‘(A) identify representatives of small entities in consultation with the Chief Counsel for Advocacy of the Small Business
Administration; and
‘‘(B) collect advice and recommendations from the representatives identified under subparagraph (A) relating to
issues described in subparagraphs (A) and (B) of paragraph
(1) and subsection (b).’’.
(c) FINAL REGULATORY FLEXIBILITY ANALYSIS.—Section 604(a)
of title 5, United States Code, is amended—
(1) in paragraph (4), by striking ‘‘and’’ at the end;
(2) in paragraph (5), by striking the period at the end
and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(6) for a covered agency, as defined in section 609(d)(2),
a description of the steps the agency has taken to minimize
any additional cost of credit for small entities.’’.
SEC. 1100H. EFFECTIVE DATE.

5 USC 552a note.

Except as otherwise provided in this subtitle and the amendments made by this subtitle, this subtitle and the amendments
made by this subtitle, other than sections 1081 and 1082, shall
become effective on the designated transfer date.

TITLE XI—FEDERAL RESERVE SYSTEM
PROVISIONS

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SEC. 1101. FEDERAL RESERVE ACT AMENDMENTS ON EMERGENCY
LENDING AUTHORITY.

(a) FEDERAL RESERVE ACT.—The third undesignated paragraph
of section 13 of the Federal Reserve Act (12 U.S.C. 343) (relating
to emergency lending authority) is amended—
(1) by inserting ‘‘(3)(A)’’ before ‘‘In unusual’’;
(2) by striking ‘‘individual, partnership, or corporation’’ the
first place that term appears and inserting the following:
‘‘participant in any program or facility with broad-based eligibility’’;
(3) by striking ‘‘exchange for an individual or a partnership
or corporation’’ and inserting ‘‘exchange,’’;
(4) by striking ‘‘such individual, partnership, or corporation’’ and inserting the following: ‘‘such participant in any program or facility with broad-based eligibility’’;
(5) by striking ‘‘for individuals, partnerships, corporations’’
and inserting ‘‘for any participant in any program or facility
with broad-based eligibility’’; and
(6) by striking ‘‘may prescribe.’’ and inserting the following:
‘‘may prescribe.
‘‘(B)(i) As soon as is practicable after the date of enactment of this subparagraph, the Board shall establish, by
regulation, in consultation with the Secretary of the
Treasury, the policies and procedures governing emergency
lending under this paragraph. Such policies and procedures
shall be designed to ensure that any emergency lending
program or facility is for the purpose of providing liquidity
to the financial system, and not to aid a failing financial

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Procedures.

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company, and that the security for emergency loans is
sufficient to protect taxpayers from losses and that any
such program is terminated in a timely and orderly fashion.
The policies and procedures established by the Board shall
require that a Federal reserve bank assign, consistent with
sound risk management practices and to ensure protection
for the taxpayer, a lendable value to all collateral for a
loan executed by a Federal reserve bank under this paragraph in determining whether the loan is secured satisfactorily for purposes of this paragraph.
‘‘(ii) The Board shall establish procedures to prohibit
borrowing from programs and facilities by borrowers that
are insolvent. Such procedures may include a certification
from the chief executive officer (or other authorized officer)
of the borrower, at the time the borrower initially borrows
under the program or facility (with a duty by the borrower
to update the certification if the information in the certification materially changes), that the borrower is not insolvent. A borrower shall be considered insolvent for purposes
of this subparagraph, if the borrower is in bankruptcy,
resolution under title II of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, or any other Federal
or State insolvency proceeding.
‘‘(iii) A program or facility that is structured to remove
assets from the balance sheet of a single and specific company, or that is established for the purpose of assisting
a single and specific company avoid bankruptcy, resolution
under title II of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, or any other Federal or State
insolvency proceeding, shall not be considered a program
or facility with broad-based eligibility.
‘‘(iv) The Board may not establish any program or
facility under this paragraph without the prior approval
of the Secretary of the Treasury.
‘‘(C) The Board shall provide to the Committee on
Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of Representatives—
‘‘(i) not later than 7 days after the Board authorizes
any loan or other financial assistance under this paragraph, a report that includes—
‘‘(I) the justification for the exercise of
authority to provide such assistance;
‘‘(II) the identity of the recipients of such
assistance;
‘‘(III) the date and amount of the assistance,
and form in which the assistance was provided;
and
‘‘(IV) the material terms of the assistance,
including—
‘‘(aa) duration;
‘‘(bb) collateral pledged and the value
thereof;
‘‘(cc) all interest, fees, and other revenue
or items of value to be received in exchange
for the assistance;

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Deadlines.
Reports.

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‘‘(dd) any requirements imposed on the
recipient with respect to employee compensation, distribution of dividends, or any other
corporate decision in exchange for the assistance; and
‘‘(ee) the expected costs to the taxpayers
of such assistance; and
‘‘(ii) once every 30 days, with respect to any outstanding loan or other financial assistance under this
paragraph, written updates on—
‘‘(I) the value of collateral;
‘‘(II) the amount of interest, fees, and other
revenue or items of value received in exchange
for the assistance; and
‘‘(III) the expected or final cost to the taxpayers of such assistance.
‘‘(D) The information required to be submitted to Congress under subparagraph (C) related to—
‘‘(i) the identity of the participants in an emergency
lending program or facility commenced under this
paragraph;
‘‘(ii) the amounts borrowed by each participant
in any such program or facility;
‘‘(iii) identifying details concerning the assets or
collateral held by, under, or in connection with such
a program or facility,
shall be kept confidential, upon the written request of
the Chairman of the Board, in which case such information
shall be made available only to the Chairpersons or
Ranking Members of the Committees described in subparagraph (C).
‘‘(E) If an entity to which a Federal reserve bank
has provided a loan under this paragraph becomes a covered financial company, as defined in section 201 of the
Dodd-Frank Wall Street Reform and Consumer Protection
Act, at any time while such loan is outstanding, and the
Federal reserve bank incurs a realized net loss on the
loan, then the Federal reserve bank shall have a claim
equal to the amount of the net realized loss against the
covered entity, with the same priority as an obligation
to the Secretary of the Treasury under section 210(b) of
the Dodd-Frank Wall Street Reform and Consumer Protection Act.’’.
(b) CONFORMING AMENDMENT.—Section 507(a)(2) of title 11,
United States Code, is amended by inserting ‘‘unsecured claims
of any Federal reserve bank related to loans made through programs
or facilities authorized under section 13(3) of the Federal Reserve
Act (12 U.S.C. 343),’’ after ‘‘this title,’’.
(c) REFERENCES.—On and after the date of enactment of this
Act, any reference in any provision of Federal law to the third
undesignated paragraph of section 13 of the Federal Reserve Act
(12 U.S.C. 343) shall be deemed to be a reference to section 13(3)
of the Federal Reserve Act, as so designated by this section.

Confidentiality.

Effective date.
12 USC 343 note.

SEC. 1102. AUDITS OF SPECIAL FEDERAL RESERVE CREDIT FACILITIES.

(a) AUDITS.—Section 714 of title 31, United States Code, is
amended by adding at the end the following:

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124 STAT. 2116

PUBLIC LAW 111–203—JULY 21, 2010

‘‘(f) AUDITS OF CREDIT FACILITIES OF THE FEDERAL RESERVE
SYSTEM.—
‘‘(1) DEFINITIONS.—In this subsection, the following definitions shall apply:
‘‘(A) CREDIT FACILITY.—The term ‘credit facility’ means
a program or facility, including any special purpose vehicle
or other entity established by or on behalf of the Board
of Governors of the Federal Reserve System or a Federal
reserve bank, authorized by the Board of Governors under
section 13(3) of the Federal Reserve Act (12 U.S.C. 343),
that is not subject to audit under subsection (e).
‘‘(B) COVERED TRANSACTION.—The term ‘covered transaction’ means any open market transaction or discount
window advance that meets the definition of ‘covered transaction’ in section 11(s) of the Federal Reserve Act.
‘‘(2) AUTHORITY FOR AUDITS AND EXAMINATIONS.—Subject
to paragraph (3), and notwithstanding any limitation in subsection (b) on the auditing and oversight of certain functions
of the Board of Governors of the Federal Reserve System or
any Federal reserve bank, the Comptroller General of the
United States may conduct audits, including onsite examinations, of the Board of Governors, a Federal reserve bank, or
a credit facility, if the Comptroller General determines that
such audits are appropriate, solely for the purposes of assessing,
with respect to a credit facility or a covered transaction—
‘‘(A) the operational integrity, accounting, financial
reporting, and internal controls governing the credit facility
or covered transaction;
‘‘(B) the effectiveness of the security and collateral
policies established for the facility or covered transaction
in mitigating risk to the relevant Federal reserve bank
and taxpayers;
‘‘(C) whether the credit facility or the conduct of a
covered transaction inappropriately favors one or more specific participants over other institutions eligible to utilize
the facility; and
‘‘(D) the policies governing the use, selection, or payment of third-party contractors by or for any credit facility
or to conduct any covered transaction.
‘‘(3) REPORTS AND DELAYED DISCLOSURE.—
‘‘(A) REPORTS REQUIRED.—A report on each audit conducted under paragraph (2) shall be submitted by the
Comptroller General to the Congress before the end of
the 90-day period beginning on the date on which such
audit is completed.
‘‘(B) CONTENTS.—The report under subparagraph (A)
shall include a detailed description of the findings and
conclusions of the Comptroller General with respect to
the matters described in paragraph (2) that were audited
and are the subject of the report, together with such recommendations for legislative or administrative action
relating to such matters as the Comptroller General may
determine to be appropriate.
‘‘(C) DELAYED RELEASE OF CERTAIN INFORMATION.—
‘‘(i) IN GENERAL.—The Comptroller General shall
not disclose to any person or entity, including to Congress, the names or identifying details of specific

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2117

participants in any credit facility or covered transaction, the amounts borrowed by or transferred by
or to specific participants in any credit facility or covered transaction, or identifying details regarding assets
or collateral held or transferred by, under, or in connection with any credit facility or covered transaction,
and any report provided under subparagraph (A) shall
be redacted to ensure that such names and details
are not disclosed.
‘‘(ii) DELAYED RELEASE.—The nondisclosure obligation under clause (i) shall expire with respect to any
participant on the date on which the Board of Governors, directly or through a Federal reserve bank,
publicly discloses the identity of the subject participant
or the identifying details of the subject assets, collateral, or transaction.
‘‘(iii) GENERAL RELEASE.—The Comptroller General
shall release a nonredacted version of any report on
a credit facility 1 year after the effective date of the
termination by the Board of Governors of the
authorization for the credit facility. For purposes of
this clause, a credit facility shall be deemed to have
terminated 24 months after the date on which the
credit facility ceases to make extensions of credit and
loans, unless the credit facility is otherwise terminated
by the Board of Governors.
‘‘(iv) EXCEPTIONS.—The nondisclosure obligation
under clause (i) shall not apply to the credit facilities
Maiden Lane, Maiden Lane II, and Maiden Lane III.
‘‘(v) RELEASE OF COVERED TRANSACTION INFORMATION.—The Comptroller General shall release a nonredacted version of any report regarding covered transactions upon the release of the information regarding
such covered transactions by the Board of Governors
of the Federal Reserve System, as provided in section
11(s) of the Federal Reserve Act.’’.
(b) ACCESS TO RECORDS.—Section 714(d) of title 31, United
States Code, is amended—
(1) in paragraph (2), by inserting ‘‘or any person or entity
described in paragraph (3)(A)’’ after ‘‘used by an agency’’;
(2) in paragraph (3), by inserting ‘‘or (f)’’ after ‘‘subsection
(e)’’ each place that term appears;
(3) in clauses (i) and (ii) of paragraph (3)(A), by inserting
‘‘or the Federal Reserve banks’’ after ‘‘by the Board’’ each place
that term appears;
(4) in paragraph (3)(A)(ii), by inserting ‘‘participating in
or’’ after ‘‘any entity’’; and
(5) in paragraph (3)(B), by adding at the end the following:
‘‘The Comptroller General may make and retain copies of books,
accounts, and other records provided under subparagraph (A)
as the Comptroller General deems appropriate. The Comptroller
General shall provide to any person or entity described in
subparagraph (A) a current list of officers and employees to
whom, with proper identification, records and property may
be made available, and who may make notes or copies necessary
to carry out a audit or examination under this subsection.’’.

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Deadline.

Records.

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PUBLIC LAW 111–203—JULY 21, 2010

SEC. 1103. PUBLIC ACCESS TO INFORMATION.

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Web posting.
Time period.

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(a) IN GENERAL.—Section 2B of the Federal Reserve Act (12
U.S.C. 225b) is amended by adding at the end the following:
‘‘(c) PUBLIC ACCESS TO INFORMATION.—The Board shall place
on its home Internet website, a link entitled ‘Audit’, which shall
link to a webpage that shall serve as a repository of information
made available to the public for a reasonable period of time, not
less than 6 months following the date of release of the relevant
information, including—
‘‘(1) the reports prepared by the Comptroller General under
section 714 of title 31, United States Code;
‘‘(2) the annual financial statements prepared by an independent auditor for the Board in accordance with section 11B;
‘‘(3) the reports to the Committee on Banking, Housing,
and Urban Affairs of the Senate required under section 13(3)
(relating to emergency lending authority); and
‘‘(4) such other information as the Board reasonably
believes is necessary or helpful to the public in understanding
the accounting, financial reporting, and internal controls of
the Board and the Federal reserve banks.’’.
(b) FEDERAL RESERVE TRANSPARENCY AND RELEASE OF
INFORMATION.—Section 11 of the Federal Reserve Act (12 U.S.C.
248) is amended by adding at the end the following new subsection:
‘‘(s) FEDERAL RESERVE TRANSPARENCY AND RELEASE OF
INFORMATION.—
‘‘(1) IN GENERAL.—In order to ensure the disclosure in
a timely manner consistent with the purposes of this Act of
information concerning the borrowers and counterparties
participating in emergency credit facilities, discount window
lending programs, and open market operations authorized or
conducted by the Board or a Federal reserve bank, the Board
of Governors shall disclose, as provided in paragraph (2)—
‘‘(A) the names and identifying details of each borrower,
participant, or counterparty in any credit facility or covered
transaction;
‘‘(B) the amount borrowed by or transferred by or to
a specific borrower, participant, or counterparty in any
credit facility or covered transaction;
‘‘(C) the interest rate or discount paid by each borrower,
participant, or counterparty in any credit facility or covered
transaction; and
‘‘(D) information identifying the types and amounts
of collateral pledged or assets transferred in connection
with participation in any credit facility or covered transaction.
‘‘(2) MANDATORY RELEASE DATE.—In the case of—
‘‘(A) a credit facility, the Board shall disclose the
information described in paragraph (1) on the date that
is 1 year after the effective date of the termination by
the Board of the authorization of the credit facility; and
‘‘(B) a covered transaction, the Board shall disclose
the information described in paragraph (1) on the last
day of the eighth calendar quarter following the calendar
quarter in which the covered transaction was conducted.
‘‘(3) EARLIER RELEASE DATE AUTHORIZED.—The Chairman
of the Board may publicly release the information described
in paragraph (1) before the relevant date specified in paragraph

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2119

(2), if the Chairman determines that such disclosure would
be in the public interest and would not harm the effectiveness
of the relevant credit facility or the purpose or conduct of
covered transactions.
‘‘(4) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply:
‘‘(A) CREDIT FACILITY.—The term ‘credit facility’ has
the same meaning as in section 714(f)(1)(A) of title 31,
United States Code.
‘‘(B) COVERED TRANSACTION.—The term ‘covered transaction’ means—
‘‘(i) any open market transaction with a nongovernmental third party conducted under the first undesignated paragraph of section 14 or subparagraph (a),
(b), or (c) of the 2nd undesignated paragraph of such
section, after the date of enactment of the Dodd-Frank
Wall Street Reform and Consumer Protection Act; and
‘‘(ii) any advance made under section 10B after
the date of enactment of that Act.
‘‘(5) TERMINATION OF CREDIT FACILITY BY OPERATION OF
LAW.—A credit facility shall be deemed to have terminated
as of the end of the 24-month period beginning on the date
on which the credit facility ceases to make extensions of credit
and loans, unless the credit facility is otherwise terminated
by the Board before such date.
‘‘(6) CONSISTENT TREATMENT OF INFORMATION.—Except as
provided in this subsection or section 13(3)(D), or in section
714(f)(3)(C) of title 31, United States Code, the information
described in paragraph (1) and information concerning the
transactions described in section 714(f) of such title, shall be
confidential, including for purposes of section 552(b)(3) of title
5 of such Code, until the relevant mandatory release date
described in paragraph (2), unless the Chairman of the Board
determines that earlier disclosure of such information would
be in the public interest and would not harm the effectiveness
of the relevant credit facility or the purpose of conduct of
the relevant transactions.
‘‘(7) PROTECTION OF PERSONAL PRIVACY.—This subsection
and section 13(3)(C), section 714(f)(3)(C) of title 31, United
States Code, and subsection (a) or (c) of section 1109 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act
shall not be construed as requiring any disclosure of nonpublic
personal information (as defined for purposes of section 502
of the Gramm-Leach-Bliley Act (12 U.S.C. 6802)) concerning
any individual who is referenced in collateral pledged or assets
transferred in connection with a credit facility or covered transaction, unless the person is a borrower, participant, or
counterparty under the credit facility or covered transaction.
‘‘(8) STUDY OF FOIA EXEMPTION IMPACT.—
‘‘(A) STUDY.—The Inspector General of the Board of
Governors of the Federal Reserve System shall—
‘‘(i) conduct a study on the impact that the exemption from section 552(b)(3) of title 5 (known as the
Freedom of Information Act) established under paragraph (6) has had on the ability of the public to access
information about the administration by the Board
of Governors of emergency credit facilities, discount

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124 STAT. 2120

window lending programs, and open market operations;
and
‘‘(ii) make any recommendations on whether the
exemption described in clause (i) should remain in
effect.
‘‘(B) REPORT.—Not later than 30 months after the date
of enactment of this section, the Inspector General of the
Board of Governors of the Federal Reserve System shall
submit a report on the findings of the study required under
subparagraph (A) to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives, and
publish the report on the website of the Board.
‘‘(9) RULE OF CONSTRUCTION.—Nothing in this section is
meant to affect any pending litigation or lawsuit filed under
section 552 of title 5, United States Code (popularly known
as the Freedom of Information Act), on or before the date
of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act.’’.

Publication.
Web posting.

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12 USC 5611.

PUBLIC LAW 111–203—JULY 21, 2010

SEC. 1104. LIQUIDITY EVENT DETERMINATION.

(a) DETERMINATION AND WRITTEN RECOMMENDATION.—
(1) DETERMINATION REQUEST.—The Secretary may request
the Corporation and the Board of Governors to determine
whether a liquidity event exists that warrants use of the guarantee program authorized under section 1105.
(2) REQUIREMENTS OF DETERMINATION.—Any determination
pursuant to paragraph (1) shall—
(A) be written; and
(B) contain an evaluation of the evidence that—
(i) a liquidity event exists;
(ii) failure to take action would have serious
adverse effects on financial stability or economic conditions in the United States; and
(iii) actions authorized under section 1105 are
needed to avoid or mitigate potential adverse effects
on the United States financial system or economic
conditions.
(b) PROCEDURES.—Notwithstanding any other provision of Federal or State law, upon the determination of both the Corporation
(upon a vote of not fewer than 2⁄3 of the members of the Corporation
then serving) and the Board of Governors (upon a vote of not
fewer than 2⁄3 of the members of the Board of Governors then
serving) under subsection (a) that a liquidity event exists that
warrants use of the guarantee program authorized under section
1105, and with the written consent of the Secretary—
(1) the Corporation shall take action in accordance with
section 1105(a); and
(2) the Secretary (in consultation with the President) shall
take action in accordance with section 1105(c).
(c) DOCUMENTATION AND REVIEW.—
(1) DOCUMENTATION.—The Secretary shall—
(A) maintain the written documentation of each determination of the Corporation and the Board of Governors
under this section; and
(B) provide the documentation for review under paragraph (2).

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2121

(2) GAO REVIEW.—The Comptroller General of the United
States shall review and report to Congress on any determination of the Corporation and the Board of Governors under
subsection (a), including—
(A) the basis for the determination; and
(B) the likely effect of the actions taken.
(d) REPORT TO CONGRESS.—On the earlier of the date of a
submission made to Congress under section 1105(c), or within 30
days of the date of a determination under subsection (a), the Secretary shall provide written notice of the determination of the
Corporation and the Board of Governors to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives,
including a description of the basis for the determination.

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SEC. 1105. EMERGENCY FINANCIAL STABILIZATION.

12 USC 5612.

(a) IN GENERAL.—Upon the written determination of the Corporation and the Board of Governors under section 1104, the Corporation shall create a widely available program to guarantee
obligations of solvent insured depository institutions or solvent
depository institution holding companies (including any affiliates
thereof) during times of severe economic distress, except that a
guarantee of obligations under this section may not include the
provision of equity in any form.
(b) RULEMAKING AND TERMS AND CONDITIONS.—
(1) POLICIES AND PROCEDURES.—As soon as is practicable
after the date of enactment of this Act, the Corporation shall
establish, by regulation, and in consultation with the Secretary,
policies and procedures governing the issuance of guarantees
authorized by this section. Such policies and procedures may
include a requirement of collateral as a condition of any such
guarantee.
(2) TERMS AND CONDITIONS.—The terms and conditions of
any guarantee program shall be established by the Corporation,
with the concurrence of the Secretary.
(c) DETERMINATION OF GUARANTEED AMOUNT.—
(1) IN GENERAL.—In connection with any program established pursuant to subsection (a) and subject to paragraph
(2) of this subsection, the Secretary (in consultation with the
President) shall determine the maximum amount of debt outstanding that the Corporation may guarantee under this section, and the President may transmit to Congress a written
report on the plan of the Corporation to exercise the authority
under this section to issue guarantees up to that maximum
amount and a request for approval of such plan. The Corporation shall exercise the authority under this section to issue
guarantees up to that specified maximum amount upon passage
of the joint resolution of approval, as provided in subsection
(d). Absent such approval, the Corporation shall issue no such
guarantees.
(2) ADDITIONAL DEBT GUARANTEE AUTHORITY.—If the Secretary (in consultation with the President) determines, after
a submission to Congress under paragraph (1), that the maximum guarantee amount should be raised, and the Council
concurs with that determination, the President may transmit
to Congress a written report on the plan of the Corporation
to exercise the authority under this section to issue guarantees

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124 STAT. 2122

up to the increased maximum debt guarantee amount. The
Corporation shall exercise the authority under this section to
issue guarantees up to that specified maximum amount upon
passage of the joint resolution of approval, as provided in
subsection (d). Absent such approval, the Corporation shall
issue no such guarantees.
(d) RESOLUTION OF APPROVAL.—
(1) ADDITIONAL DEBT GUARANTEE AUTHORITY.—Arequest by
the President under this section shall be considered granted
by Congress upon adoption of a joint resolution approving such
request. Such joint resolution shall be considered in the Senate
under expedited procedures.
(2) FAST TRACK CONSIDERATION IN SENATE.—
(A) RECONVENING.—Upon receipt of a request under
subsection (c), if the Senate has adjourned or recessed
for more than 2 days, the majority leader of the Senate,
after consultation with the minority leader of the Senate,
shall notify the Members of the Senate that, pursuant
to this section, the Senate shall convene not later than
the second calendar day after receipt of such message.
(B) PLACEMENT ON CALENDAR.—Upon introduction in
the Senate, the joint resolution shall be placed immediately
on the calendar.
(C) FLOOR CONSIDERATION.—
(i) IN GENERAL.—Notwithstanding Rule XXII of the
Standing Rules of the Senate, it is in order at any
time during the period beginning on the 4th day after
the date on which Congress receives a request under
subsection (c), and ending on the 7th day after that
date (even though a previous motion to the same effect
has been disagreed to) to move to proceed to the consideration of the joint resolution, and all points of order
against the joint resolution (and against consideration
of the joint resolution) are waived. The motion to proceed is not debatable. The motion is not subject to
a motion to postpone. A motion to reconsider the vote
by which the motion is agreed to or disagreed to shall
not be in order. If a motion to proceed to the consideration of the resolution is agreed to, the joint resolution
shall remain the unfinished business until disposed
of.
(ii) DEBATE.—Debate on the joint resolution, and
on all debatable motions and appeals in connection
therewith, shall be limited to not more than 10 hours,
which shall be divided equally between the majority
and minority leaders or their designees. A motion further to limit debate is in order and not debatable.
An amendment to, or a motion to postpone, or a motion
to proceed to the consideration of other business, or
a motion to recommit the joint resolution is not in
order.
(iii) VOTE ON PASSAGE.—The vote on passage shall
occur immediately following the conclusion of the
debate on the joint resolution, and a single quorum
call at the conclusion of the debate if requested in
accordance with the rules of the Senate.

President.

Notification.
Deadline.

Time period.

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Limitation.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2123

(iv) RULINGS OF THE CHAIR ON PROCEDURE.—
Appeals from the decisions of the Chair relating to
the application of the rules of the Senate, as the case
may be, to the procedure relating to a joint resolution
shall be decided without debate.
(3) RULES.—
(A) COORDINATION WITH ACTION BY HOUSE OF REPRESENTATIVES.—If, before the passage by the Senate of
a joint resolution of the Senate, the Senate receives a
joint resolution, from the House of Representatives, then
the following procedures shall apply:
(i) The joint resolution of the House of Representatives shall not be referred to a committee.
(ii) With respect to a joint resolution of the
Senate—
(I) the procedure in the Senate shall be the
same as if no joint resolution had been received
from the other House; but
(II) the vote on passage shall be on the joint
resolution of the House of Representatives.
(B) TREATMENT OF JOINT RESOLUTION OF HOUSE OF
REPRESENTATIVES.—If the Senate fails to introduce or consider a joint resolution under this section, the joint resolution of the House of Representatives shall be entitled to
expedited floor procedures under this subsection.
(C) TREATMENT OF COMPANION MEASURES.—If, following passage of the joint resolution in the Senate, the
Senate then receives the companion measure from the
House of Representatives, the companion measure shall
not be debatable.
(D) RULES OF THE SENATE.—This subsection is enacted
by Congress—
(i) as an exercise of the rulemaking power of the
Senate, and as such it is deemed a part of the rules
of the Senate, but applicable only with respect to the
procedure to be followed in the Senate in the case
of a joint resolution, and it supersedes other rules,
only to the extent that it is inconsistent with such
rules; and
(ii) with full recognition of the constitutional right
of the Senate to change the rules (so far as relating
to the procedure of the Senate) at any time, in the
same manner, and to the same extent as in the case
of any other rule of the Senate.
(4) DEFINITION.—As used in this subsection, the term ‘‘joint
resolution’’ means only a joint resolution—
(A) that is introduced not later than 3 calendar days
after the date on which the request referred to in subsection
(c) is received by Congress;
(B) that does not have a preamble;
(C) the title of which is as follows: ‘‘Joint resolution
relating to the approval of a plan to guarantee obligations
under section 1105 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act’’; and
(D) the matter after the resolving clause of which
is as follows: ‘‘That Congress approves the obligation of

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Procedures.
Applicability.

Deadline.

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124 STAT. 2124

PUBLIC LAW 111–203—JULY 21, 2010

any amount described in section 1105(c) of the Dodd-Frank
Wall Street Reform and Consumer Protection Act.’’.
(e) FUNDING.—
(1) FEES AND OTHER CHARGES.—The Corporation shall
charge fees and other assessments to all participants in the
program established pursuant to this section, in such amounts
as are necessary to offset projected losses and administrative
expenses, including amounts borrowed pursuant to paragraph
(3), and such amounts shall be available to the Corporation.
(2) EXCESS FUNDS.—If, at the conclusion of the program
established under this section, there are any excess funds collected from the fees associated with such program, the funds
shall be deposited in the General Fund of the Treasury.
(3) AUTHORITY OF CORPORATION.—The Corporation—
(A) may borrow funds from the Secretary of the
Treasury and issue obligations of the Corporation to the
Secretary for amounts borrowed, and the amounts borrowed
shall be available to the Corporation for purposes of carrying out a program established pursuant to this section,
including the payment of reasonable costs of administering
the program, and the obligations issued shall be repaid
in full with interest through fees and charges paid by
participants in accordance with paragraphs (1) and (4),
as applicable; and
(B) may not borrow funds from the Deposit Insurance
Fund established pursuant to section 11(a)(4) of the Federal
Deposit Insurance Act.
(4) BACKUP SPECIAL ASSESSMENTS.—To the extent that the
funds collected pursuant to paragraph (1) are insufficient to
cover any losses or expenses, including amounts borrowed
pursuant to paragraph (3), arising from a program established
pursuant to this section, the Corporation shall impose a special
assessment solely on participants in the program, in amounts
necessary to address such insufficiency, and which shall be
available to the Corporation to cover such losses or expenses.
(5) AUTHORITY OF THE SECRETARY.—The Secretary may
purchase any obligations issued under paragraph (3)(A). For
such purpose, the Secretary may use the proceeds of the sale
of any securities issued under chapter 31 of title 31, United
States Code, and the purposes for which securities may be
issued under that chapter 31 are extended to include such
purchases, and the amount of any securities issued under that
chapter 31 for such purpose shall be treated in the same
manner as securities issued under section 208(n)(5)(E).
(f) RULE OF CONSTRUCTION.—For purposes of this section, a
guarantee of deposits held by insured depository institutions shall
not be treated as a debt guarantee program.
(g) DEFINITIONS.—For purposes of this section, the following
definitions shall apply:
(1) COMPANY.—The term ‘‘company’’ means any entity other
than a natural person that is incorporated or organized under
Federal law or the laws of any State.
(2) DEPOSITORY INSTITUTION HOLDING COMPANY.—The term
‘‘depository institution holding company’’ has the same meaning
as in section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
(3) LIQUIDITY EVENT.—The term ‘‘liquidity event’’ means—

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124 STAT. 2125

(A) an exceptional and broad reduction in the general
ability of financial market participants—
(i) to sell financial assets without an unusual and
significant discount; or
(ii) to borrow using financial assets as collateral
without an unusual and significant increase in margin;
or
(B) an unusual and significant reduction in the ability
of financial market participants to obtain unsecured credit.
(4) SOLVENT.—The term ‘‘solvent’’ means that the value
of the assets of an entity exceed its obligations to creditors.

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SEC. 1106. ADDITIONAL RELATED AMENDMENTS.

12 USC 5613.

(a) SUSPENSION OF PARALLEL FEDERAL DEPOSIT INSURANCE ACT
AUTHORITY.—Effective upon the date of enactment of this section,
the Corporation may not exercise its authority under section
13(c)(4)(G)(i) of the Federal Deposit Insurance Act (12 U.S.C.
1823(c)(4)(G)(i)) to establish any widely available debt guarantee
program for which section 1105 would provide authority.
(b) FEDERAL DEPOSIT INSURANCE ACT.—Section 13(c)(4)(G) of
the Federal Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)) is
amended—
(1) in clause (i)—
(A) in subclause (I), by inserting ‘‘for which the Corporation has been appointed receiver’’ before ‘‘would have
serious’’; and
(B) in the undesignated matter following subclause
(II), by inserting ‘‘for the purpose of winding up the insured
depository institution for which the Corporation has been
appointed receiver’’ after ‘‘provide assistance under this
section’’; and
(2) in clause (v)(I), by striking ‘‘The’’ and inserting ‘‘Not
later than 3 days after making a determination under clause
(i), the’’.
(c) EFFECT OF DEFAULT ON AN FDIC GUARANTEE.—If an insured
depository institution or depository institution holding company
(as those terms are defined in section 3 of the Federal Deposit
Insurance Act) participating in a program under section 1105, or
any participant in a debt guarantee program established pursuant
to section 13(c)(4)(G)(i) of the Federal Deposit Insurance Act defaults
on any obligation guaranteed by the Corporation after the date
of enactment of this Act, the Corporation shall—
(1) appoint itself as receiver for the insured depository
institution that defaults; and
(2) with respect to any other participating company that
is not an insured depository institution that defaults—
(A) require—
(i) consideration of whether a determination shall
be made, as provided in section 203 to resolve the
company under section 202; and
(ii) the company to file a petition for bankruptcy
under section 301 of title 11, United States Code, if
the Corporation is not appointed receiver pursuant
to section 202 within 30 days of the date of default;
or

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(B) file a petition for involuntary bankruptcy on behalf
of the company under section 303 of title 11, United States
Code.

SEC. 1107. FEDERAL RESERVE ACT AMENDMENTS ON FEDERAL
RESERVE BANK GOVERNANCE.

The 5th subparagraph of the 4th undesignated paragraph of
section 4 of the Federal Reserve Act (12 U.S.C. 341) is amended
by striking the 2nd sentence and inserting the following: ‘‘The
president shall be the chief executive officer of the bank and shall
be appointed by the Class B and Class C directors of the bank,
with the approval of the Board of Governors of the Federal Reserve
System, for a term of 5 years; and all other executive officers
and all employees of the bank shall be directly responsible to
the president.’’.
SEC. 1108. FEDERAL RESERVE ACT AMENDMENTS ON SUPERVISION
AND REGULATION POLICY.

12 USC 242 note.

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12 USC 247b.

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(a) ESTABLISHMENT OF THE POSITION OF VICE CHAIRMAN FOR
SUPERVISION.—
(1) POSITION ESTABLISHED.—The second undesignated paragraph of section 10 of the Federal Reserve Act (12 U.S.C.
242) (relating to the Chairman and Vice Chairman of the Board)
is amended by striking the third sentence and inserting the
following: ‘‘Of the persons thus appointed, 1 shall be designated
by the President, by and with the advice and consent of the
Senate, to serve as Chairman of the Board for a term of 4
years, and 2 shall be designated by the President, by and
with the advice and consent of the Senate, to serve as Vice
Chairmen of the Board, each for a term of 4 years, 1 of whom
shall serve in the absence of the Chairman, as provided in
the fourth undesignated paragraph of this section, and 1 of
whom shall be designated Vice Chairman for Supervision. The
Vice Chairman for Supervision shall develop policy recommendations for the Board regarding supervision and regulation of depository institution holding companies and other financial firms supervised by the Board, and shall oversee the supervision and regulation of such firms.’’.
(2) EFFECTIVE DATE.—The amendment made by subsection
(a) takes effect on the date of enactment of this title and
applies to individuals who are designated by the President
on or after that date to serve as Vice Chairman of Supervision.
(b) APPEARANCES BEFORE CONGRESS.—Section 10 of the Federal
Reserve Act (12 U.S.C. 241 et seq.) is amended by adding at the
end the following:
‘‘(12) APPEARANCES BEFORE CONGRESS.—The Vice Chairman for Supervision shall appear before the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives and at semi-annual hearings regarding the efforts, activities, objectives, and plans of the Board with respect to the
conduct of supervision and regulation of depository institution
holding companies and other financial firms supervised by the
Board.’’.
(c) BOARD RESPONSIBILITY TO SET SUPERVISION AND REGULATORY POLICY.—Section 11 of the Federal Reserve Act (12 U.S.C.
248) (relating to enumerated powers of the Board) is amended
by adding at the end of subsection (k) (relating to delegation)

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the following: ‘‘The Board of Governors may not delegate to a
Federal reserve bank its functions for the establishment of policies
for the supervision and regulation of depository institution holding
companies and other financial firms supervised by the Board of
Governors.’’.
(d) EXERCISE OF FEDERAL RESERVE AUTHORITY.—
(1) NO DECISIONS BY FEDERAL RESERVE BANK PRESIDENTS.—
No provision of title I relating to the authority of the Board
of Governors shall be construed as conferring any decisionmaking authority on presidents of Federal reserve banks.
(2) VOTING DECISIONS BY BOARD.—The Board of Governors
shall not delegate the authority to make any voting decision
that the Board of Governors is authorized or required to make
under title I of this Act in contravention of section 11(k) of
the Federal Reserve Act.

12 USC 5614.

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SEC. 1109. GAO AUDIT OF THE FEDERAL RESERVE FACILITIES;
PUBLICATION OF BOARD ACTIONS.

(a) GAO AUDIT.—
(1) IN GENERAL.—Notwithstanding section 714(b) of title
31, United States Code, or any other provision of law, the
Comptroller General of the United States (in this subsection
referred to as the ‘‘Comptroller General’’) shall conduct a onetime audit of all loans and other financial assistance provided
during the period beginning on December 1, 2007 and ending
on the date of enactment of this Act by the Board of Governors
or a Federal reserve bank under the Asset-Backed Commercial
Paper Money Market Mutual Fund Liquidity Facility, the Term
Asset-Backed Securities Loan Facility, the Primary Dealer
Credit Facility, the Commercial Paper Funding Facility, the
Term Securities Lending Facility, the Term Auction Facility,
Maiden Lane, Maiden Lane II, Maiden Lane III, the agency
Mortgage-Backed Securities program, foreign currency liquidity
swap lines, and any other program created as a result of
section 13(3) of the Federal Reserve Act (as so designated
by this title).
(2) ASSESSMENTS.—In conducting the audit under paragraph (1), the Comptroller General shall assess—
(A) the operational integrity, accounting, financial
reporting, and internal controls of the credit facility;
(B) the effectiveness of the security and collateral policies established for the facility in mitigating risk to the
relevant Federal reserve bank and taxpayers;
(C) whether the credit facility inappropriately favors
one or more specific participants over other institutions
eligible to utilize the facility;
(D) the policies governing the use, selection, or payment of third-party contractors by or for any credit facility;
and
(E) whether there were conflicts of interest with respect
to the manner in which such facility was established or
operated.
(3) TIMING.—The audit required by this subsection shall
be commenced not later than 30 days after the date of enactment of this Act, and shall be completed not later than 12
months after that date of enactment.

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(4) REPORT REQUIRED.—The Comptroller General shall
submit a report on the audit conducted under paragraph (1)
to the Congress not later than 12 months after the date of
enactment of this Act, and such report shall be made available
to—
(A) the Speaker of the House of Representatives;
(B) the majority and minority leaders of the House
of Representatives;
(C) the majority and minority leaders of the Senate;
(D) the Chairman and Ranking Member of the Committee on Banking, Housing, and Urban Affairs of the
Senate and of the Committee on Financial Services of the
House of Representatives; and
(E) any member of Congress who requests it.
(b) AUDIT OF FEDERAL RESERVE BANK GOVERNANCE.—
(1) AUDIT.—
(A) IN GENERAL.—Not later than 1 year after the date
of enactment of this Act, the Comptroller General shall
complete an audit of the governance of the Federal reserve
bank system.
(B) REQUIRED EXAMINATIONS.—The audit required
under subparagraph (A) shall—
(i) examine the extent to which the current system
of appointing Federal reserve bank directors effectively
represents ‘‘the public, without discrimination on the
basis of race, creed, color, sex or national origin, and
with due but not exclusive consideration to the
interests of agriculture, commerce, industry, services,
labor, and consumers’’ in the selection of bank directors, as such requirement is set forth under section
4 of the Federal Reserve Act;
(ii) examine whether there are actual or potential
conflicts of interest created when the directors of Federal reserve banks, which execute the supervisory functions of the Board of Governors of the Federal Reserve
System, are elected by member banks;
(iii) examine the establishment and operations of
each facility described in subsection (a)(1) and each
Federal reserve bank involved in the establishment
and operations thereof; and
(iv) identify changes to selection procedures for
Federal reserve bank directors, or to other aspects
of Federal reserve bank governance, that would—
(I) improve how the public is represented;
(II) eliminate actual or potential conflicts of
interest in bank supervision;
(III) increase the availability of information
useful for the formation and execution of monetary
policy; or
(IV) in other ways increase the effectiveness
or efficiency of reserve banks.
(2) REPORT REQUIRED.—A report on the audit conducted
under paragraph (1) shall be submitted by the Comptroller
General to the Congress before the end of the 90-day period
beginning on the date on which such audit is completed, and
such report shall be made available to—
(A) the Speaker of the House of Representatives;

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(B) the majority and minority leaders of the House
of Representatives;
(C) the majority and minority leaders of the Senate;
(D) the Chairman and Ranking Member of the Committee on Banking, Housing, and Urban Affairs of the
Senate and of the Committee on Financial Services of the
House of Representatives; and
(E) any member of Congress who requests it.
(c) PUBLICATION OF BOARD ACTIONS.—Notwithstanding any
other provision of law, the Board of Governors shall publish on
its website, not later than December 1, 2010, with respect to all
loans and other financial assistance provided during the period
beginning on December 1, 2007 and ending on the date of enactment
of this Act under the Asset-Backed Commercial Paper Money
Market Mutual Fund Liquidity Facility, the Term Asset-Backed
Securities Loan Facility, the Primary Dealer Credit Facility, the
Commercial Paper Funding Facility, the Term Securities Lending
Facility, the Term Auction Facility, Maiden Lane, Maiden Lane
II, Maiden Lane III, the agency Mortgage-Backed Securities program, foreign currency liquidity swap lines, and any other program
created as a result of section 13(3) of the Federal Reserve Act
(as so designated by this title)—
(1) the identity of each business, individual, entity, or foreign central bank to which the Board of Governors or a Federal
reserve bank has provided such assistance;
(2) the type of financial assistance provided to that business, individual, entity, or foreign central bank;
(3) the value or amount of that financial assistance;
(4) the date on which the financial assistance was provided;
(5) the specific terms of any repayment expected, including
the repayment time period, interest charges, collateral, limitations on executive compensation or dividends, and other material terms; and
(6) the specific rationale for each such facility or program.

Web posting.
Deadline.

TITLE XII—IMPROVING ACCESS TO
MAINSTREAM FINANCIAL INSTITUTIONS

Improving Access
to Mainstream
Financial
Institutions Act
of 2010.

SEC. 1201. SHORT TITLE.

12 USC 5301
note.

This title may be cited as the ‘‘Improving Access to Mainstream
Financial Institutions Act of 2010’’.
SEC. 1202. PURPOSE.

12 USC 5621.

The purpose of this title is to encourage initiatives for financial
products and services that are appropriate and accessible for millions of Americans who are not fully incorporated into the financial
mainstream.

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SEC. 1203. DEFINITIONS.

12 USC 5622.

In this title, the following definitions shall apply:
(1) ACCOUNT.—The term ‘‘account’’ means an agreement
between an individual and an eligible entity under which the
individual obtains from or through the entity 1 or more banking
products and services, and includes a deposit account, a savings

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account (including a money market savings account), an account
for a closed-end loan, and other products or services, as the
Secretary deems appropriate.
(2) COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION.—
The term ‘‘community development financial institution’’ has
the same meaning as in section 103(5) of the Community
Development Banking and Financial Institutions Act of 1994
(12 U.S.C. 4702(5)).
(3) ELIGIBLE ENTITY.—The term ‘‘eligible entity’’ means—
(A) an organization described in section 501(c)(3) of
the Internal Revenue Code of 1986, and exempt from tax
under section 501(a) of such Code;
(B) a federally insured depository institution;
(C) a community development financial institution;
(D) a State, local, or tribal government entity; or
(E) a partnership or other joint venture comprised
of 1 or more of the entities described in subparagraphs
(A) through (D), in accordance with regulations prescribed
by the Secretary under this title.
(4) FEDERALLY INSURED DEPOSITORY INSTITUTION.—The
term ‘‘federally insured depository institution’’ means any
insured depository institution (as that term is defined in section
3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) and
any insured credit union (as that term is defined in section
101 of the Federal Credit Union Act (12 U.S.C. 1752)).
12 USC 5623.

SEC. 1204. EXPANDED ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS.

Grants.

(a) IN GENERAL.—The Secretary is authorized to establish a
multiyear program of grants, cooperative agreements, financial
agency agreements, and similar contracts or undertakings to promote initiatives designed—
(1) to enable low- and moderate-income individuals to
establish one or more accounts in a federally insured depository
institution that are appropriate to meet the financial needs
of such individuals; and
(2) to improve access to the provision of accounts, on reasonable terms, for low- and moderate-income individuals.
(b) PROGRAM ELIGIBILITY AND ACTIVITIES.—
(1) IN GENERAL.—The Secretary shall restrict participation
in any program established under subsection (a) to an eligible
entity. Subject to regulations prescribed by the Secretary under
this title, 1 or more eligible entities may participate in 1 or
several programs established under subsection (a).
(2) ACCOUNT ACTIVITIES.—Subject to regulations prescribed
by the Secretary, an eligible entity may, in participating in
a program established under subsection (a), offer or provide
to low- and moderate-income individuals products and services
relating to accounts, including—
(A) small-dollar value loans; and
(B) financial education and counseling relating to conducting transactions in and managing accounts.

12 USC 5624.

SEC. 1205. LOW-COST ALTERNATIVES TO SMALL DOLLAR LOANS.

(a) GRANTS AUTHORIZED.—The Secretary is authorized to establish multiyear demonstration programs by means of grants, cooperative agreements, financial agency agreements, and similar contracts
or undertakings, with eligible entities to provide low-cost, small

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loans to consumers that will provide alternatives to more costly
small dollar loans.
(b) TERMS AND CONDITIONS.—
(1) IN GENERAL.—Loans under this section shall be made
on terms and conditions, and pursuant to lending practices,
that are reasonable for consumers.
(2) FINANCIAL LITERACY AND EDUCATION OPPORTUNITIES.—
(A) IN GENERAL.—Each eligible entity awarded a grant
under this section shall promote and take appropriate steps
to ensure the provision of financial literacy and education
opportunities, such as relevant counseling services, educational courses, or wealth building programs, to each consumer provided with a loan pursuant to this section.
(B) AUTHORITY TO EXPAND ACCESS.—As part of the
grants, agreements, and undertakings established under
this section, the Secretary may implement reasonable
measures or programs designed to expand access to financial literacy and education opportunities, including relevant
counseling services, educational courses, or wealth building
programs to be provided to individuals who obtain loans
from eligible entities under this section.

Grants.

SEC. 1206. GRANTS TO ESTABLISH LOAN-LOSS RESERVE FUNDS.

The Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4701 et seq.) is amended by adding
at the end the following:

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‘‘SEC. 122. GRANTS TO ESTABLISH LOAN-LOSS RESERVE FUNDS.

12 USC 4719.

‘‘(a) PURPOSES.—The purposes of this section are—
‘‘(1) to make financial assistance available from the Fund
in order to help community development financial institutions
defray the costs of operating small dollar loan programs, by
providing the amounts necessary for such institutions to establish their own loan loss reserve funds to mitigate some of
the losses on such small dollar loan programs; and
‘‘(2) to encourage community development financial institutions to establish and maintain small dollar loan programs
that would help give consumers access to mainstream financial
institutions and combat high cost small dollar lending.
‘‘(b) GRANTS.—
‘‘(1) LOAN-LOSS RESERVE FUND GRANTS.—The Fund shall
make grants to community development financial institutions
or to any partnership between such community development
financial institutions and any other federally insured depository
institution with a primary mission to serve targeted investment
areas, as such areas are defined under section 103(16), to
enable such institutions or any partnership of such institutions
to establish a loan-loss reserve fund in order to defray the
costs of a small dollar loan program established or maintained
by such institution.
‘‘(2) MATCHING REQUIREMENT.—A community development
financial institution or any partnership of institutions established pursuant to paragraph (1) shall provide non-Federal
matching funds in an amount equal to 50 percent of the amount
of any grant received under this section.
‘‘(3) USE OF FUNDS.—Any grant amounts received by a
community development financial institution or any partnership between or among such institutions under paragraph (1)—

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‘‘(A) may not be used by such institution to provide
direct loans to consumers;
‘‘(B) may be used by such institution to help recapture
a portion or all of a defaulted loan made under the small
dollar loan program of such institution; and
‘‘(C) may be used to designate and utilize a fiscal
agent for services normally provided by such an agent.
‘‘(4) TECHNICAL ASSISTANCE GRANTS.—The Fund shall make
technical assistance grants to community development financial
institutions or any partnership between or among such institutions to support and maintain a small dollar loan program.
Any grant amounts received under this paragraph may be
used for technology, staff support, and other costs associated
with establishing a small dollar loan program.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) the term ‘consumer reporting agency that compiles
and maintains files on consumers on a nationwide basis’ has
the same meaning given such term in section 603(p) of the
Fair Credit Reporting Act (15 U.S.C. 1681a(p)); and
‘‘(2) the term ‘small dollar loan program’ means a loan
program wherein a community development financial institution or any partnership between or among such institutions
offers loans to consumers that—
‘‘(A) are made in amounts not exceeding $2,500;
‘‘(B) must be repaid in installments;
‘‘(C) have no pre-payment penalty;
‘‘(D) the institution has to report payments regarding
the loan to at least 1 of the consumer reporting agencies
that compiles and maintains files on consumers on a nationwide basis; and
‘‘(E) meet any other affordability requirements as may
be established by the Administrator.’’.

Application.
12 USC 5625.

SEC. 1207. PROCEDURAL PROVISIONS.

12 USC 5626.

SEC. 1208. AUTHORIZATION OF APPROPRIATIONS.

An eligible entity desiring to participate in a program or obtain
a grant under this title shall submit an application to the Secretary,
in such form and containing such information as the Secretary
may require.
(a) AUTHORIZATION TO THE SECRETARY.—There are authorized
to be appropriated to the Secretary, such sums as are necessary
to both administer and fund the programs and projects authorized
by this title, to remain available until expended.
(b) AUTHORIZATION TO THE FUND.—There is authorized to be
appropriated to the Fund for each fiscal year beginning in fiscal
year 2010, an amount equal to the amount of the administrative
costs of the Fund for the operation of the grant program established
under this title.

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12 USC 5627.

SEC. 1209. REGULATIONS.

(a) IN GENERAL.—The Secretary is authorized to promulgate
regulations to implement and administer the grant programs and
undertakings authorized by this title.
(b) REGULATORY AUTHORITY.—Regulations prescribed under
this section may contain such classifications, differentiations, or
other provisions, and may provide for such adjustments and exceptions for any class of grant programs, undertakings, or eligible

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entities, as, in the judgment of the Secretary, are necessary or
proper to effectuate the purposes of this title, to prevent circumvention or evasion of this title, or to facilitate compliance with this
title.
SEC. 1210. EVALUATION AND REPORTS TO CONGRESS.

12 USC 5628.

For each fiscal year in which a program or project is carried
out under this title, the Secretary shall submit a report to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of Representatives containing a description of the activities funded, amounts
distributed, and measurable results, as appropriate and available.

TITLE XIII—PAY IT BACK ACT
SEC. 1301. SHORT TITLE.

This title may be cited as the ‘‘Pay It Back Act’’.

Pay It Back Act.
12 USC 5201
note.

SEC. 1302. AMENDMENT TO REDUCE TARP AUTHORIZATION.

Section 115(a) of the Emergency Economic Stabilization Act
of 2008 (12 U.S.C. 5225(a)) is amended—
(1) in paragraph (3)—
(A) by striking ‘‘, $700,000,000,000, as such amount
is reduced by $1,259,000,000, as such amount is reduced
by $1,244,000,000’’ and inserting ‘‘$475,000,000,000’’; and
(B) by striking ‘‘outstanding at any one time’’; and
(2) by adding at the end the following:
‘‘(4) For purposes of this subsection, the amount of
authority considered to be exercised by the Secretary shall
not be reduced by—
‘‘(A) any amounts received by the Secretary before,
on, or after the date of enactment of the Pay It Back
Act from repayment of the principal of financial assistance
by an entity that has received financial assistance under
the TARP or any other program enacted by the Secretary
under the authorities granted to the Secretary under this
Act;
‘‘(B) any amounts committed for any guarantees pursuant to the TARP that became or become uncommitted;
or
‘‘(C) any losses realized by the Secretary.
‘‘(5) No authority under this Act may be used to incur
any obligation for a program or initiative that was not initiated
prior to June 25, 2010.’’.

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SEC. 1303. REPORT.

Section 106 of the Emergency Economic Stabilization Act of
2008 (12 U.S.C. 5216) is amended by inserting at the end the
following:
‘‘(f) REPORT.—The Secretary of the Treasury shall report to
Congress every 6 months on amounts received and transferred
to the general fund under subsection (d).’’.

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PUBLIC LAW 111–203—JULY 21, 2010

SEC. 1304. AMENDMENTS TO HOUSING AND ECONOMIC RECOVERY ACT
OF 2008.

(a) SALE OF FANNIE MAE OBLIGATIONS AND SECURITIES BY
TREASURY; DEFICIT REDUCTION.—Section 304(g)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C.
1719(g)(2)) is amended—
(1) by redesignating subparagraph (C) as subparagraph
(D); and
(2) by inserting after subparagraph (B) the following:
‘‘(C) DEFICIT REDUCTION.—The Secretary of the
Treasury shall deposit in the General Fund of the Treasury
any amounts received by the Secretary from the sale of
any obligation acquired by the Secretary under this subsection, where such amounts shall be—
‘‘(i) dedicated for the sole purpose of deficit reduction; and
‘‘(ii) prohibited from use as an offset for other
spending increases or revenue reductions.’’.
(b) SALE OF FREDDIE MAC OBLIGATIONS AND SECURITIES BY
THE TREASURY; DEFICIT REDUCTION.—Section 306(l)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455(l)(2))
is amended—
(1) by redesignating subparagraph (C) as subparagraph
(D); and
(2) by inserting after subparagraph (B) the following:
‘‘(C) DEFICIT REDUCTION.—The Secretary of the
Treasury shall deposit in the General Fund of the Treasury
any amounts received by the Secretary from the sale of
any obligation acquired by the Secretary under this subsection, where such amounts shall be—
‘‘(i) dedicated for the sole purpose of deficit reduction; and
‘‘(ii) prohibited from use as an offset for other
spending increases or revenue reductions.’’.
(c) SALE OF FEDERAL HOME LOAN BANKS OBLIGATIONS BY THE
TREASURY; DEFICIT REDUCTION.—Section 11(l)(2) of the Federal
Home Loan Bank Act (12 U.S.C. 1431(l)(2)) is amended—
(1) by redesignating subparagraph (C) as subparagraph
(D); and
(2) by inserting after subparagraph (B) the following:
‘‘(C) DEFICIT REDUCTION.—The Secretary of the
Treasury shall deposit in the General Fund of the Treasury
any amounts received by the Secretary from the sale of
any obligation acquired by the Secretary under this subsection, where such amounts shall be—
‘‘(i) dedicated for the sole purpose of deficit reduction; and
‘‘(ii) prohibited from use as an offset for other
spending increases or revenue reductions.’’.
(d) REPAYMENT OF FEES.—Any periodic commitment fee or any
other fee or assessment paid by the Federal National Mortgage
Association or Federal Home Loan Mortgage Corporation to the
Secretary of the Treasury as a result of any preferred stock purchase
agreement, mortgage-backed security purchase program, or any
other program or activity authorized or carried out pursuant to
the authorities granted to the Secretary of the Treasury under
section 1117 of the Housing and Economic Recovery Act of 2008
THE

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12 USC 1455
note.

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124 STAT. 2135

(Public Law 110–289; 122 Stat. 2683), including any fee agreed
to by contract between the Secretary and the Association or Corporation, shall be deposited in the General Fund of the Treasury
where such amounts shall be—
(1) dedicated for the sole purpose of deficit reduction; and
(2) prohibited from use as an offset for other spending
increases or revenue reductions.
SEC. 1305. FEDERAL HOUSING FINANCE AGENCY REPORT.

The Director of the Federal Housing Finance Agency shall
submit to Congress a report on the plans of the Agency to continue
to support and maintain the Nation’s vital housing industry, while
at the same time guaranteeing that the American taxpayer will
not suffer unnecessary losses.
SEC. 1306. REPAYMENT OF UNOBLIGATED ARRA FUNDS.

(a) REJECTION OF ARRA FUNDS BY STATE.—Section 1607 of
the American Recovery and Reinvestment Act of 2009 (Public Law
111–5; 123 Stat. 305) is amended by adding at the end the following:
‘‘(d) STATEWIDE REJECTION OF FUNDS.—If funds provided to
any State in any division of this Act are not accepted for use
by the Governor of the State pursuant to subsection (a) or by
the State legislature pursuant to subsection (b), then all such funds
shall be—
‘‘(1) rescinded; and
‘‘(2) deposited in the General Fund of the Treasury where
such amounts shall be—
‘‘(A) dedicated for the sole purpose of deficit reduction;
and
‘‘(B) prohibited from use as an offset for other spending
increases or revenue reductions.’’.
(b) WITHDRAWAL OR RECAPTURE OF UNOBLIGATED FUNDS.—
Title XVI of the American Recovery and Reinvestment Act of 2009
(Public Law 111–5; 123 Stat. 302) is amended by adding at the
end the following:

Rescission.

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‘‘SEC. 1613. WITHDRAWAL OR RECAPTURE OF UNOBLIGATED FUNDS.

‘‘Notwithstanding any other provision of this Act, if the head
of any executive agency withdraws or recaptures for any reason
funds appropriated or otherwise made available under this division,
and such funds have not been obligated by a State to a local
government or for a specific project, such recaptured funds shall
be—
‘‘(1) rescinded; and
‘‘(2) deposited in the General Fund of the Treasury where
such amounts shall be—
‘‘(A) dedicated for the sole purpose of deficit reduction;
and
‘‘(B) prohibited from use as an offset for other spending
increases or revenue reductions.’’.
(c) RETURN OF UNOBLIGATED FUNDS BY END OF 2012.—Section
1603 of the American Recovery and Reinvestment Act of 2009
(Public Law 111–5; 123 Stat. 302) is amended by—
(1) striking ‘‘All funds’’ and inserting ‘‘(a) IN GENERAL.—
All funds’’; and
(2) adding at the end the following:
‘‘(b) REPAYMENT OF UNOBLIGATED FUNDS.—Any discretionary
appropriations made available in this division that have not been

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obligated as of December 31, 2012, are hereby rescinded, and such
amounts shall be deposited in the General Fund of the Treasury
where such amounts shall be—
‘‘(1) dedicated for the sole purpose of deficit reduction;
and
‘‘(2) prohibited from use as an offset for other spending
increases or revenue reductions.
‘‘(c) PRESIDENTIAL WAIVER AUTHORITY.—
‘‘(1) IN GENERAL.—The President may waive the requirements under subsection (b), if the President determines that
it is not in the best interest of the Nation to rescind a specific
unobligated amount after December 31, 2012.
‘‘(2) REQUESTS.—The head of an executive agency may also
apply to the President for a waiver from the requirements
under subsection (b).’’.

TITLE XIV—MORTGAGE REFORM AND
ANTI-PREDATORY LENDING ACT

Mortgage Reform
and AntiPredatory
Lending Act.

SEC. 1400. SHORT TITLE; DESIGNATION AS ENUMERATED CONSUMER
LAW.
15 USC 1601
note.
12 USC 5481
note.

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15 USC 1601
note.

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(a) SHORT TITLE.—This title may be cited as the ‘‘Mortgage
Reform and Anti-Predatory Lending Act’’.
(b) DESIGNATION AS ENUMERATED CONSUMER LAW UNDER THE
PURVIEW OF THE BUREAU OF CONSUMER FINANCIAL PROTECTION.—
Subtitles A, B, C, and E and sections 1471, 1472, 1475, and 1476,
and the amendments made by such subtitles and sections, shall
be enumerated consumer laws, as defined in section 1002, and
come under the purview of the Bureau of Consumer Financial
Protection for purposes of title X, including the transfer of functions
and personnel under subtitle F of title X and the savings provisions
of such subtitle.
(c) REGULATIONS; EFFECTIVE DATE.—
(1) REGULATIONS.—The regulations required to be prescribed under this title or the amendments made by this title
shall—
(A) be prescribed in final form before the end of the
18-month period beginning on the designated transfer date;
and
(B) take effect not later than 12 months after the
date of issuance of the regulations in final form.
(2) EFFECTIVE DATE ESTABLISHED BY RULE.—Except as provided in paragraph (3), a section, or provision thereof, of this
title shall take effect on the date on which the final regulations
implementing such section, or provision, take effect.
(3) EFFECTIVE DATE.—A section of this title for which regulations have not been issued on the date that is 18 months
after the designated transfer date shall take effect on such
date.

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124 STAT. 2137

Subtitle A—Residential Mortgage Loan
Origination Standards

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SEC. 1401. DEFINITIONS.

Section 103 of the Truth in Lending Act (15 U.S.C. 1602)
is amended by adding at the end the following new subsection:
‘‘(cc) DEFINITIONS RELATING TO MORTGAGE ORIGINATION AND
RESIDENTIAL MORTGAGE LOANS.—
‘‘(1) COMMISSION.—Unless otherwise specified, the term
‘Commission’ means the Federal Trade Commission.
‘‘(2) MORTGAGE ORIGINATOR.—The term ‘mortgage originator’—
‘‘(A) means any person who, for direct or indirect compensation or gain, or in the expectation of direct or indirect
compensation or gain—
‘‘(i) takes a residential mortgage loan application;
‘‘(ii) assists a consumer in obtaining or applying
to obtain a residential mortgage loan; or
‘‘(iii) offers or negotiates terms of a residential
mortgage loan;
‘‘(B) includes any person who represents to the public,
through advertising or other means of communicating or
providing information (including the use of business cards,
stationery, brochures, signs, rate lists, or other promotional
items), that such person can or will provide any of the
services or perform any of the activities described in
subparagraph (A);
‘‘(C) does not include any person who is (i) not otherwise described in subparagraph (A) or (B) and who performs
purely administrative or clerical tasks on behalf of a person
who is described in any such subparagraph, or (ii) an
employee of a retailer of manufactured homes who is not
described in clause (i) or (iii) of subparagraph (A) and
who does not advise a consumer on loan terms (including
rates, fees, and other costs);
‘‘(D) does not include a person or entity that only
performs real estate brokerage activities and is licensed
or registered in accordance with applicable State law,
unless such person or entity is compensated by a lender,
a mortgage broker, or other mortgage originator or by
any agent of such lender, mortgage broker, or other mortgage originator;
‘‘(E) does not include, with respect to a residential
mortgage loan, a person, estate, or trust that provides
mortgage financing for the sale of 3 properties in any
12-month period to purchasers of such properties, each
of which is owned by such person, estate, or trust and
serves as security for the loan, provided that such loan—
‘‘(i) is not made by a person, estate, or trust that
has constructed, or acted as a contractor for the
construction of, a residence on the property in the
ordinary course of business of such person, estate, or
trust;
‘‘(ii) is fully amortizing;

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PUBLIC LAW 111–203—JULY 21, 2010
‘‘(iii) is with respect to a sale for which the seller
determines in good faith and documents that the buyer
has a reasonable ability to repay the loan;
‘‘(iv) has a fixed rate or an adjustable rate that
is adjustable after 5 or more years, subject to reasonable annual and lifetime limitations on interest rate
increases; and
‘‘(v) meets any other criteria the Board may prescribe;
‘‘(F) does not include the creditor (except the creditor
in a table-funded transaction) under paragraph (1), (2),
or (4) of section 129B(c); and
‘‘(G) does not include a servicer or servicer employees,
agents and contractors, including but not limited to those
who offer or negotiate terms of a residential mortgage
loan for purposes of renegotiating, modifying, replacing
and subordinating principal of existing mortgages where
borrowers are behind in their payments, in default or have
a reasonable likelihood of being in default or falling behind.
‘‘(3) NATIONWIDE MORTGAGE LICENSING SYSTEM AND REGISTRY.—The term ‘Nationwide Mortgage Licensing System and
Registry’ has the same meaning as in the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008.
‘‘(4) OTHER DEFINITIONS RELATING TO MORTGAGE ORIGINATOR.—For purposes of this subsection, a person ‘assists a
consumer in obtaining or applying to obtain a residential mortgage loan’ by, among other things, advising on residential mortgage loan terms (including rates, fees, and other costs), preparing residential mortgage loan packages, or collecting
information on behalf of the consumer with regard to a residential mortgage loan.
‘‘(5) RESIDENTIAL MORTGAGE LOAN.—The term ‘residential
mortgage loan’ means any consumer credit transaction that
is secured by a mortgage, deed of trust, or other equivalent
consensual security interest on a dwelling or on residential
real property that includes a dwelling, other than a consumer
credit transaction under an open end credit plan or, for purposes of sections 129B and 129C and section 128(a) (16), (17),
(18), and (19), and sections 128(f) and 130(k), and any regulations promulgated thereunder, an extension of credit relating
to a plan described in section 101(53D) of title 11, United
States Code.
‘‘(6) SECRETARY.—The term ‘Secretary’, when used in
connection with any transaction or person involved with a
residential mortgage loan, means the Secretary of Housing
and Urban Development.
‘‘(7) SERVICER.—The term ‘servicer’ has the same meaning
as in section 6(i)(2) of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2605(i)(2)).’’.

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SEC. 1402. RESIDENTIAL MORTGAGE LOAN ORIGINATION.

(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended—
(1) by redesignating the 2nd of the 2 sections designated
as section 129 (15 U.S.C. 1639a) (relating to duty of servicers
of residential mortgages) as section 129A; and

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124 STAT. 2139

(2) by inserting after section 129A (as so redesignated)
the following new section:
‘‘§ 129B. Residential mortgage loan origination
‘‘(a) FINDING AND PURPOSE.—
‘‘(1) FINDING.—The Congress finds that economic stabilization would be enhanced by the protection, limitation, and regulation of the terms of residential mortgage credit and the practices related to such credit, while ensuring that responsible,
affordable mortgage credit remains available to consumers.
‘‘(2) PURPOSE.—It is the purpose of this section and section
129C to assure that consumers are offered and receive residential mortgage loans on terms that reasonably reflect their ability
to repay the loans and that are understandable and not unfair,
deceptive or abusive.
‘‘(b) DUTY OF CARE.—
‘‘(1) STANDARD.—Subject to regulations prescribed under
this subsection, each mortgage originator shall, in addition
to the duties imposed by otherwise applicable provisions of
State or Federal law—
‘‘(A) be qualified and, when required, registered and
licensed as a mortgage originator in accordance with
applicable State or Federal law, including the Secure and
Fair Enforcement for Mortgage Licensing Act of 2008; and
‘‘(B) include on all loan documents any unique identifier of the mortgage originator provided by the Nationwide
Mortgage Licensing System and Registry.
‘‘(2) COMPLIANCE PROCEDURES REQUIRED.—The Board shall
prescribe regulations requiring depository institutions to establish and maintain procedures reasonably designed to assure
and monitor the compliance of such depository institutions,
the subsidiaries of such institutions, and the employees of
such institutions or subsidiaries with the requirements of this
section and the registration procedures established under section 1507 of the Secure and Fair Enforcement for Mortgage
Licensing Act of 2008.’’.
(b) CLERICAL AMENDMENT.—The table of sections for chapter
2 of the Truth in Lending Act is amended by inserting after the
item relating to section 129 the following new items:

15 USC 1639b.

Regulations.

‘‘129A. Fiduciary duty of servicers of pooled residential mortgages.
‘‘129B. Residential mortgage loan origination.’’.

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SEC. 1403. PROHIBITION ON STEERING INCENTIVES.

Section 129B of the Truth in Lending Act (as added by section
1402(a)) is amended by inserting after subsection (b) the following
new subsection:
‘‘(c) PROHIBITION ON STEERING INCENTIVES.—
‘‘(1) IN GENERAL.—For any residential mortgage loan, no
mortgage originator shall receive from any person and no person shall pay to a mortgage originator, directly or indirectly,
compensation that varies based on the terms of the loan (other
than the amount of the principal).
‘‘(2) RESTRUCTURING OF FINANCING ORIGINATION FEE.—
‘‘(A) IN GENERAL.—For any mortgage loan, a mortgage
originator may not receive from any person other than
the consumer and no person, other than the consumer,
who knows or has reason to know that a consumer has

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Waiver authority.

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directly compensated or will directly compensate a mortgage originator may pay a mortgage originator any origination fee or charge except bona fide third party charges
not retained by the creditor, mortgage originator, or an
affiliate of the creditor or mortgage originator .
‘‘(B) EXCEPTION.—Notwithstanding subparagraph (A),
a mortgage originator may receive from a person other
than the consumer an origination fee or charge, and a
person other than the consumer may pay a mortgage originator an origination fee or charge, if—
‘‘(i) the mortgage originator does not receive any
compensation directly from the consumer; and
‘‘(ii) the consumer does not make an upfront payment of discount points, origination points, or fees,
however denominated (other than bona fide third party
charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or originator), except
that the Board may, by rule, waive or provide exemptions to this clause if the Board determines that such
waiver or exemption is in the interest of consumers
and in the public interest.
‘‘(3) REGULATIONS.—The Board shall prescribe regulations
to prohibit—
‘‘(A) mortgage originators from steering any consumer
to a residential mortgage loan that—
‘‘(i) the consumer lacks a reasonable ability to
repay (in accordance with regulations prescribed under
section 129C(a)); or
‘‘(ii) has predatory characteristics or effects (such
as equity stripping, excessive fees, or abusive terms);
‘‘(B) mortgage originators from steering any consumer
from a residential mortgage loan for which the consumer
is qualified that is a qualified mortgage (as defined in
section 129C(b)(2)) to a residential mortgage loan that is
not a qualified mortgage;
‘‘(C) abusive or unfair lending practices that promote
disparities among consumers of equal credit worthiness
but of different race, ethnicity, gender, or age; and
‘‘(D) mortgage originators from—
‘‘(i) mischaracterizing the credit history of a consumer or the residential mortgage loans available to
a consumer;
‘‘(ii)
mischaracterizing
or
suborning
the
mischaracterization of the appraised value of the property securing the extension of credit; or
‘‘(iii) if unable to suggest, offer, or recommend to
a consumer a loan that is not more expensive than
a loan for which the consumer qualifies, discouraging
a consumer from seeking a residential mortgage loan
secured by a consumer’s principal dwelling from
another mortgage originator.
‘‘(4) RULES OF CONSTRUCTION.—No provision of this subsection shall be construed as—
‘‘(A) permitting any yield spread premium or other
similar compensation that would, for any residential mortgage loan, permit the total amount of direct and indirect
compensation from all sources permitted to a mortgage

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originator to vary based on the terms of the loan (other
than the amount of the principal);
‘‘(B) limiting or affecting the amount of compensation
received by a creditor upon the sale of a consummated
loan to a subsequent purchaser;
‘‘(C) restricting a consumer’s ability to finance, at the
option of the consumer, including through principal or rate,
any origination fees or costs permitted under this subsection, or the mortgage originator’s right to receive such
fees or costs (including compensation) from any person,
subject to paragraph (2)(B), so long as such fees or costs
do not vary based on the terms of the loan (other than
the amount of the principal) or the consumer’s decision
about whether to finance such fees or costs; or
‘‘(D) prohibiting incentive payments to a mortgage
originator based on the number of residential mortgage
loans originated within a specified period of time.’’.
SEC. 1404. LIABILITY.

Section 129B of the Truth in Lending Act is amended by
inserting after subsection (c) (as added by section 1403) the following new subsection:
‘‘(d) LIABILITY FOR VIOLATIONS.—
‘‘(1) IN GENERAL.—For purposes of providing a cause of
action for any failure by a mortgage originator, other than
a creditor, to comply with any requirement imposed under
this section and any regulation prescribed under this section,
section 130 shall be applied with respect to any such failure
by substituting ‘mortgage originator’ for ‘creditor’ each place
such term appears in each such subsection.
‘‘(2) MAXIMUM.—The maximum amount of any liability of
a mortgage originator under paragraph (1) to a consumer for
any violation of this section shall not exceed the greater of
actual damages or an amount equal to 3 times the total amount
of direct and indirect compensation or gain accruing to the
mortgage originator in connection with the residential mortgage
loan involved in the violation, plus the costs to the consumer
of the action, including a reasonable attorney’s fee.’’.

Applicability.

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SEC. 1405. REGULATIONS.

(a) DISCRETIONARY REGULATORY AUTHORITY.—Section 129B of
the Truth in Lending Act is amended by inserting after subsection
(d) (as added by section 1404) the following new subsection:
‘‘(e) DISCRETIONARY REGULATORY AUTHORITY.—
‘‘(1) IN GENERAL.—The Board shall, by regulations, prohibit
or condition terms, acts or practices relating to residential
mortgage loans that the Board finds to be abusive, unfair,
deceptive, predatory, necessary or proper to ensure that responsible, affordable mortgage credit remains available to consumers in a manner consistent with the purposes of this section
and section 129C, necessary or proper to effectuate the purposes
of this section and section 129C, to prevent circumvention or
evasion thereof, or to facilitate compliance with such sections,
or are not in the interest of the borrower.
‘‘(2) APPLICATION.—The regulations prescribed under paragraph (1) shall be applicable to all residential mortgage loans
and shall be applied in the same manner as regulations prescribed under section 105.

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‘‘(f) Section 129B and any regulations promulgated thereunder
do not apply to an extension of credit relating to a plan described
in section 101(53D) of title 11, United States Code.’’.
(b) DISCLOSURES.—Notwithstanding any other provision of this
title, in order to improve consumer awareness and understanding
of transactions involving residential mortgage loans through the
use of disclosures, the Board may, by rule, exempt from or modify
disclosure requirements, in whole or in part, for any class of residential mortgage loans if the Board determines that such exemption
or modification is in the interest of consumers and in the public
interest.

15 USC 1601
note.

SEC. 1406. STUDY OF SHARED APPRECIATION MORTGAGES.

(a) STUDY.—The Secretary of Housing and Urban Development,
in consultation with the Secretary of the Treasury and other relevant agencies, shall conduct a comprehensive study to determine
prudent statutory and regulatory requirements sufficient to provide
for the widespread use of shared appreciation mortgages to
strengthen local housing markets, provide new opportunities for
affordable homeownership, and enable homeowners at risk of foreclosure to refinance or modify their mortgages.
(b) REPORT.—Not later than the expiration of the 6-month
period beginning on the date of the enactment of this Act, the
Secretary of Housing and Urban Development shall submit a report
to the Congress on the results of the study, which shall include
recommendations for the regulatory and legislative requirements
referred to in subsection (a).

Subtitle B—Minimum Standards For
Mortgages
SEC. 1411. ABILITY TO REPAY.

(a) IN GENERAL.—
(1) RULE OF CONSTRUCTION.—No regulation, order, or guidance issued by the Bureau under this title shall be construed
as requiring a depository institution to apply mortgage underwriting standards that do not meet the minimum underwriting
standards required by the appropriate prudential regulator of
the depository institution.
(2) AMENDMENT TO TRUTH IN LENDING ACT.—Chapter 2
of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended
by inserting after section 129B (as added by section 1402(a))
the following new section:

15 USC 1639c
note.

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15 USC 1639c.

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‘‘§ 129C. Minimum standards for residential mortgage loans
‘‘(a) ABILITY TO REPAY.—
‘‘(1) IN GENERAL.—In accordance with regulations prescribed by the Board, no creditor may make a residential mortgage loan unless the creditor makes a reasonable and good
faith determination based on verified and documented information that, at the time the loan is consummated, the consumer
has a reasonable ability to repay the loan, according to its
terms, and all applicable taxes, insurance (including mortgage
guarantee insurance), and assessments.
‘‘(2) MULTIPLE LOANS.—If the creditor knows, or has reason
to know, that 1 or more residential mortgage loans secured

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124 STAT. 2143

by the same dwelling will be made to the same consumer,
the creditor shall make a reasonable and good faith determination, based on verified and documented information, that the
consumer has a reasonable ability to repay the combined payments of all loans on the same dwelling according to the terms
of those loans and all applicable taxes, insurance (including
mortgage guarantee insurance), and assessments.
‘‘(3) BASIS FOR DETERMINATION.—A determination under
this subsection of a consumer’s ability to repay a residential
mortgage loan shall include consideration of the consumer’s
credit history, current income, expected income the consumer
is reasonably assured of receiving, current obligations, debtto-income ratio or the residual income the consumer will have
after paying non-mortgage debt and mortgage-related obligations, employment status, and other financial resources other
than the consumer’s equity in the dwelling or real property
that secures repayment of the loan. A creditor shall determine
the ability of the consumer to repay using a payment schedule
that fully amortizes the loan over the term of the loan.
‘‘(4) INCOME VERIFICATION.—A creditor making a residential
mortgage loan shall verify amounts of income or assets that
such creditor relies on to determine repayment ability, including
expected income or assets, by reviewing the consumer’s Internal
Revenue Service Form W–2, tax returns, payroll receipts, financial institution records, or other third-party documents that
provide reasonably reliable evidence of the consumer’s income
or assets. In order to safeguard against fraudulent reporting,
any consideration of a consumer’s income history in making
a determination under this subsection shall include the
verification of such income by the use of—
‘‘(A) Internal Revenue Service transcripts of tax
returns; or
‘‘(B) a method that quickly and effectively verifies
income documentation by a third party subject to rules
prescribed by the Board.
‘‘(5) EXEMPTION.—With respect to loans made, guaranteed,
or insured by Federal departments or agencies identified in
subsection (b)(3)(B)(ii), such departments or agencies may
exempt refinancings under a streamlined refinancing from this
income verification requirement as long as the following conditions are met:
‘‘(A) The consumer is not 30 days or more past due
on the prior existing residential mortgage loan.
‘‘(B) The refinancing does not increase the principal
balance outstanding on the prior existing residential mortgage loan, except to the extent of fees and charges allowed
by the department or agency making, guaranteeing, or
insuring the refinancing.
‘‘(C) Total points and fees (as defined in section
103(aa)(4), other than bona fide third party charges not
retained by the mortgage originator, creditor, or an affiliate
of the creditor or mortgage originator) payable in connection with the refinancing do not exceed 3 percent of the
total new loan amount.
‘‘(D) The interest rate on the refinanced loan is lower
than the interest rate of the original loan, unless the borrower is refinancing from an adjustable rate to a fixed-

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rate loan, under guidelines that the department or agency
shall establish for loans they make, guarantee, or issue.
‘‘(E) The refinancing is subject to a payment schedule
that will fully amortize the refinancing in accordance with
the regulations prescribed by the department or agency
making, guaranteeing, or insuring the refinancing.
‘‘(F) The terms of the refinancing do not result in
a balloon payment, as defined in subsection (b)(2)(A)(ii).
‘‘(G) Both the residential mortgage loan being
refinanced and the refinancing satisfy all requirements
of the department or agency making, guaranteeing, or
insuring the refinancing.
‘‘(6) NONSTANDARD LOANS.—
‘‘(A) VARIABLE RATE LOANS THAT DEFER REPAYMENT
OF ANY PRINCIPAL OR INTEREST.—For purposes of determining, under this subsection, a consumer’s ability to repay
a variable rate residential mortgage loan that allows or
requires the consumer to defer the repayment of any principal or interest, the creditor shall use a fully amortizing
repayment schedule.
‘‘(B) INTEREST-ONLY LOANS.—For purposes of determining, under this subsection, a consumer’s ability to repay
a residential mortgage loan that permits or requires the
payment of interest only, the creditor shall use the payment
amount required to amortize the loan by its final maturity.
‘‘(C) CALCULATION FOR NEGATIVE AMORTIZATION.—In
making any determination under this subsection, a creditor
shall also take into consideration any balance increase
that may accrue from any negative amortization provision.
‘‘(D) CALCULATION PROCESS.—For purposes of making
any determination under this subsection, a creditor shall
calculate the monthly payment amount for principal and
interest on any residential mortgage loan by assuming—
‘‘(i) the loan proceeds are fully disbursed on the
date of the consummation of the loan;
‘‘(ii) the loan is to be repaid in substantially equal
monthly amortizing payments for principal and
interest over the entire term of the loan with no balloon
payment, unless the loan contract requires more rapid
repayment (including balloon payment), in which case
the calculation shall be made (I) in accordance with
regulations prescribed by the Board, with respect to
any loan which has an annual percentage rate that
does not exceed the average prime offer rate for a
comparable transaction, as of the date the interest
rate is set, by 1.5 or more percentage points for a
first lien residential mortgage loan; and by 3.5 or more
percentage points for a subordinate lien residential
mortgage loan; or (II) using the contract’s repayment
schedule, with respect to a loan which has an annual
percentage rate, as of the date the interest rate is
set, that is at least 1.5 percentage points above the
average prime offer rate for a first lien residential
mortgage loan; and 3.5 percentage points above the
average prime offer rate for a subordinate lien residential mortgage loan; and

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‘‘(iii) the interest rate over the entire term of the
loan is a fixed rate equal to the fully indexed rate
at the time of the loan closing, without considering
the introductory rate.
‘‘(E) REFINANCE OF HYBRID LOANS WITH CURRENT
LENDER.—In considering any application for refinancing
an existing hybrid loan by the creditor into a standard
loan to be made by the same creditor in any case in
which there would be a reduction in monthly payment
and the mortgagor has not been delinquent on any payment
on the existing hybrid loan, the creditor may—
‘‘(i) consider the mortgagor’s good standing on the
existing mortgage;
‘‘(ii) consider if the extension of new credit would
prevent a likely default should the original mortgage
reset and give such concerns a higher priority as an
acceptable underwriting practice; and
‘‘(iii) offer rate discounts and other favorable terms
to such mortgagor that would be available to new
customers with high credit ratings based on such
underwriting practice.
‘‘(7) FULLY-INDEXED RATE DEFINED.—For purposes of this
subsection, the term ‘fully indexed rate’ means the index rate
prevailing on a residential mortgage loan at the time the loan
is made plus the margin that will apply after the expiration
of any introductory interest rates.
‘‘(8) REVERSE MORTGAGES AND BRIDGE LOANS.—This subsection shall not apply with respect to any reverse mortgage
or temporary or bridge loan with a term of 12 months or
less, including to any loan to purchase a new dwelling where
the consumer plans to sell a different dwelling within 12
months.
‘‘(9) SEASONAL INCOME.—If documented income, including
income from a small business, is a repayment source for a
residential mortgage loan, a creditor may consider the
seasonality and irregularity of such income in the underwriting
of and scheduling of payments for such credit.’’.
(b) CLERICAL AMENDMENT.—The table of sections for chapter
2 of the Truth in Lending Act is amended by inserting after the
item relating to section 129B (as added by section 1402(b)) the
following new item:
‘‘129C. Minimum standards for residential mortgage loans.’’.

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SEC. 1412. SAFE HARBOR AND REBUTTABLE PRESUMPTION.

Section 129C of the Truth in Lending Act is amended by
inserting after subsection (a) (as added by section 1411) the following new subsection:
‘‘(b) PRESUMPTION OF ABILITY TO REPAY.—
‘‘(1) IN GENERAL.—Any creditor with respect to any residential mortgage loan, and any assignee of such loan subject to
liability under this title, may presume that the loan has met
the requirements of subsection (a), if the loan is a qualified
mortgage.
‘‘(2) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply:
‘‘(A) QUALIFIED MORTGAGE.—The term ‘qualified mortgage’ means any residential mortgage loan—

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‘‘(i) for which the regular periodic payments for
the loan may not—
‘‘(I) result in an increase of the principal balance; or
‘‘(II) except as provided in subparagraph (E),
allow the consumer to defer repayment of principal;
‘‘(ii) except as provided in subparagraph (E), the
terms of which do not result in a balloon payment,
where a ‘balloon payment’ is a scheduled payment
that is more than twice as large as the average of
earlier scheduled payments;
‘‘(iii) for which the income and financial resources
relied upon to qualify the obligors on the loan are
verified and documented;
‘‘(iv) in the case of a fixed rate loan, for which
the underwriting process is based on a payment
schedule that fully amortizes the loan over the loan
term and takes into account all applicable taxes, insurance, and assessments;
‘‘(v) in the case of an adjustable rate loan, for
which the underwriting is based on the maximum rate
permitted under the loan during the first 5 years,
and a payment schedule that fully amortizes the loan
over the loan term and takes into account all applicable
taxes, insurance, and assessments;
‘‘(vi) that complies with any guidelines or regulations established by the Board relating to ratios of
total monthly debt to monthly income or alternative
measures of ability to pay regular expenses after payment of total monthly debt, taking into account the
income levels of the borrower and such other factors
as the Board may determine relevant and consistent
with the purposes described in paragraph (3)(B)(i);
‘‘(vii) for which the total points and fees (as defined
in subparagraph (C)) payable in connection with the
loan do not exceed 3 percent of the total loan amount;
‘‘(viii) for which the term of the loan does not
exceed 30 years, except as such term may be extended
under paragraph (3), such as in high-cost areas; and
‘‘(ix) in the case of a reverse mortgage (except
for the purposes of subsection (a) of section 129C,
to the extent that such mortgages are exempt
altogether from those requirements), a reverse mortgage which meets the standards for a qualified mortgage, as set by the Board in rules that are consistent
with the purposes of this subsection.
‘‘(B) AVERAGE PRIME OFFER RATE.—The term ‘average
prime offer rate’ means the average prime offer rate for
a comparable transaction as of the date on which the
interest rate for the transaction is set, as published by
the Board..
‘‘(C) POINTS AND FEES.—
‘‘(i) IN GENERAL.—For purposes of subparagraph
(A), the term ‘points and fees’ means points and fees
as defined by section 103(aa)(4) (other than bona fide

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third party charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator).
‘‘(ii) COMPUTATION.—For purposes of computing
the total points and fees under this subparagraph,
the total points and fees shall exclude either of the
amounts described in the following subclauses, but not
both:
‘‘(I) Up to and including 2 bona fide discount
points payable by the consumer in connection with
the mortgage, but only if the interest rate from
which the mortgage’s interest rate will be discounted does not exceed by more than 1 percentage
point the average prime offer rate.
‘‘(II) Unless 2 bona fide discount points have
been excluded under subclause (I), up to and
including 1 bona fide discount point payable by
the consumer in connection with the mortgage,
but only if the interest rate from which the mortgage’s interest rate will be discounted does not
exceed by more than 2 percentage points the average prime offer rate.
‘‘(iii) BONA FIDE DISCOUNT POINTS DEFINED.—For
purposes of clause (ii), the term ‘bona fide discount
points’ means loan discount points which are knowingly
paid by the consumer for the purpose of reducing,
and which in fact result in a bona fide reduction of,
the interest rate or time-price differential applicable
to the mortgage.
‘‘(iv) INTEREST RATE REDUCTION.—Subclauses (I)
and (II) of clause (ii) shall not apply to discount points
used to purchase an interest rate reduction unless
the amount of the interest rate reduction purchased
is reasonably consistent with established industry
norms and practices for secondary mortgage market
transactions.
‘‘(D) SMALLER LOANS.—The Board shall prescribe rules
adjusting the criteria under subparagraph (A)(vii) in order
to permit lenders that extend smaller loans to meet the
requirements of the presumption of compliance under paragraph (1). In prescribing such rules, the Board shall consider the potential impact of such rules on rural areas
and other areas where home values are lower.
‘‘(E) BALLOON LOANS.—The Board may, by regulation,
provide that the term ‘qualified mortgage’ includes a balloon loan—
‘‘(i) that meets all of the criteria for a qualified
mortgage under subparagraph (A) (except clauses
(i)(II), (ii), (iv), and (v) of such subparagraph);
‘‘(ii) for which the creditor makes a determination
that the consumer is able to make all scheduled payments, except the balloon payment, out of income or
assets other than the collateral;
‘‘(iii) for which the underwriting is based on a
payment schedule that fully amortizes the loan over
a period of not more than 30 years and takes into

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account all applicable taxes, insurance, and assessments; and
‘‘(iv) that is extended by a creditor that—
‘‘(I) operates predominantly in rural or underserved areas;
‘‘(II) together with all affiliates, has total
annual residential mortgage loan originations that
do not exceed a limit set by the Board;
‘‘(III) retains the balloon loans in portfolio;
and
‘‘(IV) meets any asset size threshold and any
other criteria as the Board may establish, consistent with the purposes of this subtitle.
‘‘(3) REGULATIONS.—
‘‘(A) IN GENERAL.—The Board shall prescribe regulations to carry out the purposes of this subsection.
‘‘(B) REVISION OF SAFE HARBOR CRITERIA.—
‘‘(i) IN GENERAL.—The Board may prescribe regulations that revise, add to, or subtract from the criteria
that define a qualified mortgage upon a finding that
such regulations are necessary or proper to ensure
that responsible, affordable mortgage credit remains
available to consumers in a manner consistent with
the purposes of this section, necessary and appropriate
to effectuate the purposes of this section and section
129B, to prevent circumvention or evasion thereof, or
to facilitate compliance with such sections.
‘‘(ii) LOAN DEFINITION.—The following agencies
shall, in consultation with the Board, prescribe rules
defining the types of loans they insure, guarantee,
or administer, as the case may be, that are qualified
mortgages for purposes of paragraph (2)(A), and such
rules may revise, add to, or subtract from the criteria
used to define a qualified mortgage under paragraph
(2)(A), upon a finding that such rules are consistent
with the purposes of this section and section 129B,
to prevent circumvention or evasion thereof, or to facilitate compliance with such sections:
‘‘(I) The Department of Housing and Urban
Development, with regard to mortgages insured
under the National Housing Act (12 U.S.C. 1707
et seq.).
‘‘(II) The Department of Veterans Affairs, with
regard to a loan made or guaranteed by the Secretary of Veterans Affairs.
‘‘(III) The Department of Agriculture, with
regard loans guaranteed by the Secretary of Agriculture pursuant to 42 U.S.C. 1472(h).
‘‘(IV) The Rural Housing Service, with regard
to loans insured by the Rural Housing Service.’’.

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SEC. 1413. DEFENSE TO FORECLOSURE.

Section 130 of the Truth in Lending Act (15 U.S.C. 1640)
is amended by adding at the end the following new subsection:
‘‘(k) DEFENSE TO FORECLOSURE.—
‘‘(1) IN GENERAL.—Notwithstanding any other provision of
law, when a creditor, assignee, or other holder of a residential

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mortgage loan or anyone acting on behalf of such creditor,
assignee, or holder, initiates a judicial or nonjudicial foreclosure
of the residential mortgage loan, or any other action to collect
the debt in connection with such loan, a consumer may assert
a violation by a creditor of paragraph (1) or (2) of section
129B(c), or of section 129C(a), as a matter of defense by
recoupment or set off without regard for the time limit on
a private action for damages under subsection (e).
‘‘(2) AMOUNT OF RECOUPMENT OR SETOFF.—
‘‘(A) IN GENERAL.—The amount of recoupment or setoff under paragraph (1) shall equal the amount to which
the consumer would be entitled under subsection (a) for
damages for a valid claim brought in an original action
against the creditor, plus the costs to the consumer of
the action, including a reasonable attorney’s fee.
‘‘(B) SPECIAL RULE.—Where such judgment is rendered
after the expiration of the applicable time limit on a private
action for damages under subsection (e), the amount of
recoupment or set-off under paragraph (1) derived from
damages under subsection (a)(4) shall not exceed the
amount to which the consumer would have been entitled
under subsection (a)(4) for damages computed up to the
day preceding the expiration of the applicable time limit.’’.

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SEC. 1414. ADDITIONAL STANDARDS AND REQUIREMENTS.

(a) IN GENERAL.—Section 129C of the Truth in Lending Act
is amended by inserting after subsection (b) (as added by this
title) the following new subsections:
‘‘(c) PROHIBITION ON CERTAIN PREPAYMENT PENALTIES.—
‘‘(1) PROHIBITED ON CERTAIN LOANS.—
‘‘(A) IN GENERAL.—A residential mortgage loan that
is not a ‘qualified mortgage’, as defined under subsection
(b)(2), may not contain terms under which a consumer
must pay a prepayment penalty for paying all or part
of the principal after the loan is consummated.
‘‘(B) EXCLUSIONS.—For purposes of this subsection, a
‘qualified mortgage’ may not include a residential mortgage
loan that—
‘‘(i) has an adjustable rate; or
‘‘(ii) has an annual percentage rate that exceeds
the average prime offer rate for a comparable transaction, as of the date the interest rate is set—
‘‘(I) by 1.5 or more percentage points, in the
case of a first lien residential mortgage loan having
a original principal obligation amount that is equal
to or less than the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable
size, as of the date of such interest rate set, pursuant to the 6th sentence of section 305(a)(2) the
Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1454(a)(2));
‘‘(II) by 2.5 or more percentage points, in the
case of a first lien residential mortgage loan having
a original principal obligation amount that is more
than the amount of the maximum limitation on
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effect for a residence of the applicable size, as
of the date of such interest rate set, pursuant
to the 6th sentence of section 305(a)(2) the Federal
Home Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2)); and
‘‘(III) by 3.5 or more percentage points, in the
case of a subordinate lien residential mortgage
loan.
‘‘(2) PUBLICATION OF AVERAGE PRIME OFFER RATE AND APR
THRESHOLDS.—The Board—

Deadline.

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‘‘(A) shall publish, and update at least weekly, average
prime offer rates;
‘‘(B) may publish multiple rates based on varying types
of mortgage transactions; and
‘‘(C) shall adjust the thresholds established under subclause (I), (II), and (III) of paragraph (1)(B)(ii) as necessary
to reflect significant changes in market conditions and
to effectuate the purposes of the Mortgage Reform and
Anti-Predatory Lending Act.
‘‘(3) PHASED-OUT PENALTIES ON QUALIFIED MORTGAGES.—
A qualified mortgage (as defined in subsection (b)(2)) may not
contain terms under which a consumer must pay a prepayment
penalty for paying all or part of the principal after the loan
is consummated in excess of the following limitations:
‘‘(A) During the 1-year period beginning on the date
the loan is consummated, the prepayment penalty shall
not exceed an amount equal to 3 percent of the outstanding
balance on the loan.
‘‘(B) During the 1-year period beginning after the
period described in subparagraph (A), the prepayment penalty shall not exceed an amount equal to 2 percent of
the outstanding balance on the loan.
‘‘(C) During the 1-year period beginning after the 1year period described in subparagraph (B), the prepayment
penalty shall not exceed an amount equal to 1 percent
of the outstanding balance on the loan.
‘‘(D) After the end of the 3-year period beginning on
the date the loan is consummated, no prepayment penalty
may be imposed on a qualified mortgage.
‘‘(4) OPTION FOR NO PREPAYMENT PENALTY REQUIRED.—A
creditor may not offer a consumer a residential mortgage loan
product that has a prepayment penalty for paying all or part
of the principal after the loan is consummated as a term of
the loan without offering the consumer a residential mortgage
loan product that does not have a prepayment penalty as a
term of the loan.
‘‘(d) SINGLE PREMIUM CREDIT INSURANCE PROHIBITED.—No
creditor may finance, directly or indirectly, in connection with any
residential mortgage loan or with any extension of credit under
an open end consumer credit plan secured by the principal dwelling
of the consumer, any credit life, credit disability, credit unemployment, or credit property insurance, or any other accident, lossof-income, life, or health insurance, or any payments directly or
indirectly for any debt cancellation or suspension agreement or
contract, except that—

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‘‘(1) insurance premiums or debt cancellation or suspension
fees calculated and paid in full on a monthly basis shall not
be considered financed by the creditor; and
‘‘(2) this subsection shall not apply to credit unemployment
insurance for which the unemployment insurance premiums
are reasonable, the creditor receives no direct or indirect compensation in connection with the unemployment insurance premiums, and the unemployment insurance premiums are paid
pursuant to another insurance contract and not paid to an
affiliate of the creditor.
‘‘(e) ARBITRATION.—
‘‘(1) IN GENERAL.—No residential mortgage loan and no
extension of credit under an open end consumer credit plan
secured by the principal dwelling of the consumer may include
terms which require arbitration or any other nonjudicial procedure as the method for resolving any controversy or settling
any claims arising out of the transaction.
‘‘(2) POST-CONTROVERSY AGREEMENTS.—Subject to paragraph (3), paragraph (1) shall not be construed as limiting
the right of the consumer and the creditor or any assignee
to agree to arbitration or any other nonjudicial procedure as
the method for resolving any controversy at any time after
a dispute or claim under the transaction arises.
‘‘(3) NO WAIVER OF STATUTORY CAUSE OF ACTION.—No provision of any residential mortgage loan or of any extension of
credit under an open end consumer credit plan secured by
the principal dwelling of the consumer, and no other agreement
between the consumer and the creditor relating to the residential mortgage loan or extension of credit referred to in paragraph (1), shall be applied or interpreted so as to bar a consumer from bringing an action in an appropriate district court
of the United States, or any other court of competent jurisdiction, pursuant to section 130 or any other provision of law,
for damages or other relief in connection with any alleged
violation of this section, any other provision of this title, or
any other Federal law.
‘‘(f) MORTGAGES WITH NEGATIVE AMORTIZATION.—No creditor
may extend credit to a borrower in connection with a consumer
credit transaction under an open or closed end consumer credit
plan secured by a dwelling or residential real property that includes
a dwelling, other than a reverse mortgage, that provides or permits
a payment plan that may, at any time over the term of the extension
of credit, result in negative amortization unless, before such transaction is consummated—
‘‘(1) the creditor provides the consumer with a statement
that—
‘‘(A) the pending transaction will or may, as the case
may be, result in negative amortization;
‘‘(B) describes negative amortization in such manner
as the Board shall prescribe;
‘‘(C) negative amortization increases the outstanding
principal balance of the account; and
‘‘(D) negative amortization reduces the consumer’s
equity in the dwelling or real property; and
‘‘(2) in the case of a first-time borrower with respect to
a residential mortgage loan that is not a qualified mortgage,
the first-time borrower provides the creditor with sufficient

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documentation to demonstrate that the consumer received
homeownership counseling from organizations or counselors
certified by the Secretary of Housing and Urban Development
as competent to provide such counseling.’’.
(b) CONFORMING AMENDMENT RELATING TO ENFORCEMENT.—
Section 108(a) of the Truth in Lending Act (15 U.S.C. 1607(a))
is amended by inserting after paragraph (6) the following new
paragraph:
‘‘(7) sections 21B and 21C of the Securities Exchange Act
of 1934, in the case of a broker or dealer, other than a depository
institution, by the Securities and Exchange Commission.’’.
(c) PROTECTION AGAINST LOSS OF ANTI-DEFICIENCY PROTECTION.—Section 129C of the Truth in Lending Act is amended by
inserting after subsection (f) (as added by subsection (a)) the following new subsection:
‘‘(g) PROTECTION AGAINST LOSS OF ANTI-DEFICIENCY PROTECTION.—
‘‘(1) DEFINITION.—For purposes of this subsection, the term
‘anti-deficiency law’ means the law of any State which provides
that, in the event of foreclosure on the residential property
of a consumer securing a mortgage, the consumer is not liable,
in accordance with the terms and limitations of such State
law, for any deficiency between the sale price obtained on
such property through foreclosure and the outstanding balance
of the mortgage.
‘‘(2) NOTICE AT TIME OF CONSUMMATION.—In the case of
any residential mortgage loan that is, or upon consummation
will be, subject to protection under an anti-deficiency law, the
creditor or mortgage originator shall provide a written notice
to the consumer describing the protection provided by the antideficiency law and the significance for the consumer of the
loss of such protection before such loan is consummated.
‘‘(3) NOTICE BEFORE REFINANCING THAT WOULD CAUSE LOSS
OF PROTECTION.—In the case of any residential mortgage loan
that is subject to protection under an anti-deficiency law, if
a creditor or mortgage originator provides an application to
a consumer, or receives an application from a consumer, for
any type of refinancing for such loan that would cause the
loan to lose the protection of such anti-deficiency law, the
creditor or mortgage originator shall provide a written notice
to the consumer describing the protection provided by the antideficiency law and the significance for the consumer of the
loss of such protection before any agreement for any such
refinancing is consummated.’’.
(d) POLICY REGARDING ACCEPTANCE OF PARTIAL PAYMENT.—
Section 129C of the Truth in Lending Act is amended by inserting
after subsection (g) (as added by subsection (c)) the following new
subsection:
‘‘(h) POLICY REGARDING ACCEPTANCE OF PARTIAL PAYMENT.—
In the case of any residential mortgage loan, a creditor shall disclose
prior to settlement or, in the case of a person becoming a creditor
with respect to an existing residential mortgage loan, at the time
such person becomes a creditor—
‘‘(1) the creditor’s policy regarding the acceptance of partial
payments; and

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‘‘(2) if partial payments are accepted, how such payments
will be applied to such mortgage and if such payments will
be placed in escrow.
‘‘(i) TIMESHARE PLANS.—This section and any regulations
promulgated under this section do not apply to an extension of
credit relating to a plan described in section 101(53D) of title
11, United States Code.’’.
SEC. 1415. RULE OF CONSTRUCTION.

Except as otherwise expressly provided in section 129B or 129C
of the Truth in Lending Act (as added by this title), no provision
of such section 129B or 129C shall be construed as superseding,
repealing, or affecting any duty, right, obligation, privilege, or
remedy of any person under any other provision of the Truth
in Lending Act or any other provision of Federal or State law.

15 USC 1639b
note.

SEC. 1416. AMENDMENTS TO CIVIL LIABILITY PROVISIONS.

(a) INCREASE IN AMOUNT OF CIVIL MONEY PENALTIES FOR CERVIOLATIONS.—Section 130(a) of the Truth in Lending Act (15
U.S.C. 1640(a)) is amended—
(1) in paragraph (2)(A)(ii)—
(A) by striking ‘‘$100’’ and inserting ‘‘$200’’; and
(B) by striking ‘‘$1,000’’ and inserting ‘‘$2,000’’;
(2) in paragraph (2)(B), by striking ‘‘$500,000’’ and inserting
‘‘$1,000,000’’; and
(3) in paragraph (4), by inserting ‘‘, paragraph (1) or (2)
of section 129B(c), or section 129C(a)’’ after ‘‘section 129’’.
(b) STATUTE OF LIMITATIONS EXTENDED FOR SECTION 129 VIOLATIONS.—Section 130(e) of the Truth in Lending Act (15 U.S.C.
1640(e)) is amended—
(1) in the first sentence, by striking ‘‘Any action’’ and
inserting ‘‘Except as provided in the subsequent sentence, any
action’’; and
(2) by inserting after the first sentence the following new
sentence: ‘‘Any action under this section with respect to any
violation of section 129, 129B, or 129C may be brought in
any United States district court, or in any other court of competent jurisdiction, before the end of the 3-year period beginning
on the date of the occurrence of the violation.’’.
TAIN

SEC. 1417. LENDER RIGHTS IN THE CONTEXT OF BORROWER DECEPTION.

Section 130 of the Truth in Lending Act (15 U.S.C. 1640)
is amended by adding after subsection (k) (as added by this title)
the following new subsection:
‘‘(l) EXEMPTION FROM LIABILITY AND RESCISSION IN CASE OF
BORROWER FRAUD OR DECEPTION.—In addition to any other remedy
available by law or contract, no creditor or assignee shall be liable
to an obligor under this section, if such obligor, or co-obligor has
been convicted of obtaining by actual fraud such residential mortgage loan.’’.

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SEC. 1418. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF HYBRID
ADJUSTABLE RATE MORTGAGES.

(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended by inserting after section 128
the following new section:

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‘‘§ 128A. Reset of hybrid adjustable rate mortgages
‘‘(a) HYBRID ADJUSTABLE RATE MORTGAGES DEFINED.—For purposes of this section, the term ‘hybrid adjustable rate mortgage’
means a consumer credit transaction secured by the consumer’s
principal residence with a fixed interest rate for an introductory
period that adjusts or resets to a variable interest rate after such
period.
‘‘(b) NOTICE OF RESET AND ALTERNATIVES.—During the 1-month
period that ends 6 months before the date on which the interest
rate in effect during the introductory period of a hybrid adjustable
rate mortgage adjusts or resets to a variable interest rate or,
in the case of such an adjustment or resetting that occurs within
the first 6 months after consummation of such loan, at consummation, the creditor or servicer of such loan shall provide a written
notice, separate and distinct from all other correspondence to the
consumer, that includes the following:
‘‘(1) Any index or formula used in making adjustments
to or resetting the interest rate and a source of information
about the index or formula.
‘‘(2) An explanation of how the new interest rate and payment would be determined, including an explanation of how
the index was adjusted, such as by the addition of a margin.
‘‘(3) A good faith estimate, based on accepted industry
standards, of the creditor or servicer of the amount of the
monthly payment that will apply after the date of the adjustment or reset, and the assumptions on which this estimate
is based.
‘‘(4) A list of alternatives consumers may pursue before
the date of adjustment or reset, and descriptions of the actions
consumers must take to pursue these alternatives, including—
‘‘(A) refinancing;
‘‘(B) renegotiation of loan terms;
‘‘(C) payment forbearances; and
‘‘(D) pre-foreclosure sales.
‘‘(5) The names, addresses, telephone numbers, and Internet addresses of counseling agencies or programs reasonably
available to the consumer that have been certified or approved
and made publicly available by the Secretary of Housing and
Urban Development or a State housing finance authority (as
defined in section 1301 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989).
‘‘(6) The address, telephone number, and Internet address
for the State housing finance authority (as so defined) for
the State in which the consumer resides.
‘‘(c) SAVINGS CLAUSE.—The Board may require the notice in
paragraph (b) or other notice consistent with this Act for adjustable
rate mortgage loans that are not hybrid adjustable rate mortgage
loans.’’.
(b) CLERICAL AMENDMENT.—The table of sections for chapter
2 of the Truth in Lending Act is amended by inserting after the
item relating to section 128 the following new item:

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‘‘128A. Reset of hybrid adjustable rate mortgages.’’.
SEC. 1419. REQUIRED DISCLOSURES.

Section 128(a) of Truth in Lending Act (15 U.S.C. 1638(a))
is amended by adding at the end the following new paragraphs:

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‘‘(16) In the case of a variable rate residential mortgage
loan for which an escrow or impound account will be established
for the payment of all applicable taxes, insurance, and assessments—
‘‘(A) the amount of initial monthly payment due under
the loan for the payment of principal and interest, and
the amount of such initial monthly payment including the
monthly payment deposited in the account for the payment
of all applicable taxes, insurance, and assessments; and
‘‘(B) the amount of the fully indexed monthly payment
due under the loan for the payment of principal and
interest, and the amount of such fully indexed monthly
payment including the monthly payment deposited in the
account for the payment of all applicable taxes, insurance,
and assessments.
‘‘(17) In the case of a residential mortgage loan, the aggregate amount of settlement charges for all settlement services
provided in connection with the loan, the amount of charges
that are included in the loan and the amount of such charges
the borrower must pay at closing, the approximate amount
of the wholesale rate of funds in connection with the loan,
and the aggregate amount of other fees or required payments
in connection with the loan.
‘‘(18) In the case of a residential mortgage loan, the aggregate amount of fees paid to the mortgage originator in connection with the loan, the amount of such fees paid directly by
the consumer, and any additional amount received by the originator from the creditor.
‘‘(19) In the case of a residential mortgage loan, the total
amount of interest that the consumer will pay over the life
of the loan as a percentage of the principal of the loan. Such
amount shall be computed assuming the consumer makes each
monthly payment in full and on-time, and does not make any
over-payments.’’.

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SEC. 1420. DISCLOSURES REQUIRED IN MONTHLY STATEMENTS FOR
RESIDENTIAL MORTGAGE LOANS.

Section 128 of the Truth in Lending Act (15 U.S.C. 1638)
is amended by adding at the end the following new subsection:
‘‘(f) PERIODIC STATEMENTS FOR RESIDENTIAL MORTGAGE
LOANS.—
‘‘(1) IN GENERAL.—The creditor, assignee, or servicer with
respect to any residential mortgage loan shall transmit to the
obligor, for each billing cycle, a statement setting forth each
of the following items, to the extent applicable, in a conspicuous
and prominent manner:
‘‘(A) The amount of the principal obligation under the
mortgage.
‘‘(B) The current interest rate in effect for the loan.
‘‘(C) The date on which the interest rate may next
reset or adjust.
‘‘(D) The amount of any prepayment fee to be charged,
if any.
‘‘(E) A description of any late payment fees.
‘‘(F) A telephone number and electronic mail address
that may be used by the obligor to obtain information
regarding the mortgage.

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‘‘(G) The names, addresses, telephone numbers, and
Internet addresses of counseling agencies or programs
reasonably available to the consumer that have been certified or approved and made publicly available by the Secretary of Housing and Urban Development or a State
housing finance authority (as defined in section 1301 of
the Financial Institutions Reform, Recovery, and Enforcement Act of 1989).
‘‘(H) Such other information as the Board may prescribe in regulations.
‘‘(2) DEVELOPMENT AND USE OF STANDARD FORM.—The
Board shall develop and prescribe a standard form for the
disclosure required under this subsection, taking into account
that the statements required may be transmitted in writing
or electronically.
‘‘(3) EXCEPTION.—Paragraph (1) shall not apply to any fixed
rate residential mortgage loan where the creditor, assignee,
or servicer provides the obligor with a coupon book that provides
the obligor with substantially the same information as required
in paragraph (1).’’.

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SEC. 1421. REPORT BY THE GAO.

(a) REPORT REQUIRED.—The Comptroller General of the United
States shall conduct a study to determine the effects the enactment
of this Act will have on the availability and affordability of credit
for consumers, small businesses, homebuyers, and mortgage
lending, including the effect—
(1) on the mortgage market for mortgages that are not
within the safe harbor provided in the amendments made by
this subtitle;
(2) on the ability of prospective homebuyers to obtain
financing;
(3) on the ability of homeowners facing resets or adjustments to refinance—for example, do they have fewer refinancing options due to the unavailability of certain loan products that were available before the enactment of this Act;
(4) on minorities’ ability to access affordable credit compared with other prospective borrowers;
(5) on home sales and construction;
(6) of extending the rescission right, if any, on adjustable
rate loans and its impact on litigation;
(7) of State foreclosure laws and, if any, an investor’s
ability to transfer a property after foreclosure;
(8) of expanding the existing provisions of the Home Ownership and Equity Protection Act of 1994;
(9) of prohibiting prepayment penalties on high-cost mortgages; and
(10) of establishing counseling services under the Department of Housing and Urban Development and offered through
the Office of Housing Counseling.
(b) REPORT.—Before the end of the 1-year period beginning
on the date of the enactment of this Act, the Comptroller General
shall submit a report to the Congress containing the findings and
conclusions of the Comptroller General with respect to the study
conducted pursuant to subsection (a).
(c) EXAMINATION RELATED TO CERTAIN CREDIT RISK RETENTION
PROVISIONS.—The report required by subsection (b) shall also

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include an analysis by the Comptroller General of the effect on
the capital reserves and funding of lenders of credit risk retention
provisions for non-qualified mortgages, including an analysis of
the exceptions and adjustments authorized in section 129C(b)(3)
of the Truth in Lending Act and a recommendation on whether
a uniform standard is needed.
(d) ANALYSIS OF CREDIT RISK RETENTION PROVISIONS.—The
report required by subsection (b) shall also include—
(1) an analysis by the Comptroller General of whether
the credit risk retention provisions have significantly reduced
risks to the larger credit market of the repackaging and selling
of securitized loans on a secondary market; and
(2) recommendations to the Congress on adjustments that
should be made, or additional measures that should be undertaken.
SEC. 1422. STATE ATTORNEY GENERAL ENFORCEMENT AUTHORITY.

Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e))
is amended by striking ‘‘section 129 may also’’ and inserting ‘‘section
129, 129B, 129C, 129D, 129E, 129F, 129G, or 129H of this Act
may also’’.

Subtitle C—High-Cost Mortgages

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SEC. 1431. DEFINITIONS RELATING TO HIGH-COST MORTGAGES.

(a) HIGH-COST MORTGAGE DEFINED.—Section 103(aa) of the
Truth in Lending Act (15 U.S.C. 1602(aa)) is amended by striking
all that precedes paragraph (2) and inserting the following:
‘‘(aa) HIGH-COST MORTGAGE.—
‘‘(1) DEFINITION.—
‘‘(A) IN GENERAL.—The term ‘high-cost mortgage’, and
a mortgage referred to in this subsection, means a consumer credit transaction that is secured by the consumer’s
principal dwelling, other than a reverse mortgage transaction, if—
‘‘(i) in the case of a credit transaction secured—
‘‘(I) by a first mortgage on the consumer’s principal dwelling, the annual percentage rate at consummation of the transaction will exceed by more
than 6.5 percentage points (8.5 percentage points,
if the dwelling is personal property and the transaction is for less than $50,000) the average prime
offer rate, as defined in section 129C(b)(2)(B), for
a comparable transaction; or
‘‘(II) by a subordinate or junior mortgage on
the consumer’s principal dwelling, the annual
percentage rate at consummation of the transaction will exceed by more than 8.5 percentage
points the average prime offer rate, as defined
in section 129C(b)(2)(B), for a comparable transaction;
‘‘(ii) the total points and fees payable in connection
with the transaction, other than bona fide third party
charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator, exceed—

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‘‘(I) in the case of a transaction for $20,000
or more, 5 percent of the total transaction amount;
or
‘‘(II) in the case of a transaction for less than
$20,000, the lesser of 8 percent of the total transaction amount or $1,000 (or such other dollar
amount as the Board shall prescribe by regulation);
or
‘‘(iii) the credit transaction documents permit the
creditor to charge or collect prepayment fees or penalties more than 36 months after the transaction
closing or such fees or penalties exceed, in the aggregate, more than 2 percent of the amount prepaid.
‘‘(B) INTRODUCTORY RATES TAKEN INTO ACCOUNT.—For
purposes of subparagraph (A)(i), the annual percentage
rate of interest shall be determined based on the following
interest rate:
‘‘(i) In the case of a fixed-rate transaction in which
the annual percentage rate will not vary during the
term of the loan, the interest rate in effect on the
date of consummation of the transaction.
‘‘(ii) In the case of a transaction in which the
rate of interest varies solely in accordance with an
index, the interest rate determined by adding the index
rate in effect on the date of consummation of the
transaction to the maximum margin permitted at any
time during the loan agreement.
‘‘(iii) In the case of any other transaction in which
the rate may vary at any time during the term of
the loan for any reason, the interest charged on the
transaction at the maximum rate that may be charged
during the term of the loan.
‘‘(C) MORTGAGE INSURANCE.—For the purposes of computing the total points and fees under paragraph (4), the
total points and fees shall exclude—
‘‘(i) any premium provided by an agency of the
Federal Government or an agency of a State;
‘‘(ii) any amount that is not in excess of the amount
payable under policies in effect at the time of origination under section 203(c)(2)(A) of the National Housing
Act (12 U.S.C. 1709(c)(2)(A)), provided that the premium, charge, or fee is required to be refundable on
a pro-rated basis and the refund is automatically issued
upon notification of the satisfaction of the underlying
mortgage loan; and
‘‘(iii) any premium paid by the consumer after
closing.’’.
(b) ADJUSTMENT OF PERCENTAGE POINTS.—Section 103(aa)(2)
of the Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is amended
by striking subparagraph (B) and inserting the following new
subparagraph:
‘‘(B) An increase or decrease under subparagraph (A)—
‘‘(i) may not result in the number of percentage
points referred to in paragraph (1)(A)(i)(I) being less
than 6 percentage points or greater than 10 percentage
points; and

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‘‘(ii) may not result in the number of percentage
points referred to in paragraph (1)(A)(i)(II) being less
than 8 percentage points or greater than 12 percentage
points.’’.
(c) POINTS AND FEES DEFINED.—
(1) IN GENERAL.—Section 103(aa)(4) of the Truth in Lending
Act (15 U.S.C. 1602(aa)(4)) is amended—
(A) by striking subparagraph (B) and inserting the
following:
‘‘(B) all compensation paid directly or indirectly by
a consumer or creditor to a mortgage originator from any
source, including a mortgage originator that is also the
creditor in a table-funded transaction;’’;
(B) by redesignating subparagraph (D) as subparagraph (G); and
(C) by inserting after subparagraph (C) the following
new subparagraphs:
‘‘(D) premiums or other charges payable at or before
closing for any credit life, credit disability, credit unemployment, or credit property insurance, or any other accident,
loss-of-income, life or health insurance, or any payments
directly or indirectly for any debt cancellation or suspension
agreement or contract, except that insurance premiums
or debt cancellation or suspension fees calculated and paid
in full on a monthly basis shall not be considered financed
by the creditor;
‘‘(E) the maximum prepayment fees and penalties
which may be charged or collected under the terms of
the credit transaction;
‘‘(F) all prepayment fees or penalties that are incurred
by the consumer if the loan refinances a previous loan
made or currently held by the same creditor or an affiliate
of the creditor; and’’.
(2) CALCULATION OF POINTS AND FEES FOR OPEN-END CONSUMER CREDIT PLANS.—Section 103(aa) of the Truth in Lending
Act (15 U.S.C. 1602(aa)) is amended—
(A) by redesignating paragraph (5) as paragraph (6);
and
(B) by inserting after paragraph (4) the following new
paragraph:
‘‘(5) CALCULATION OF POINTS AND FEES FOR OPEN-END CONSUMER CREDIT PLANS.—In the case of open-end consumer credit
plans, points and fees shall be calculated, for purposes of this
section and section 129, by adding the total points and fees
known at or before closing, including the maximum prepayment
penalties which may be charged or collected under the terms
of the credit transaction, plus the minimum additional fees
the consumer would be required to pay to draw down an amount
equal to the total credit line.’’.
(d) BONA FIDE DISCOUNT LOAN DISCOUNT POINTS.—Section 103
of the Truth in Lending Act (15 U.S.C. 1602) is amended by
inserting after subsection (cc) (as added by section 1401) the following new subsection:
‘‘(dd) BONA FIDE DISCOUNT POINTS AND PREPAYMENT PENALTIES.—For the purposes of determining the amount of points
and fees for purposes of subsection (aa), either the amounts

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described in paragraph (1) or (2) of the following paragraphs, but
not both, shall be excluded:
‘‘(1) Up to and including 2 bona fide discount points payable
by the consumer in connection with the mortgage, but only
if the interest rate from which the mortgage’s interest rate
will be discounted does not exceed by more than 1 percentage
point—
‘‘(A) the average prime offer rate, as defined in section
129C; or
‘‘(B) if secured by a personal property loan, the average
rate on a loan in connection with which insurance is provided under title I of the National Housing Act (12 U.S.C.
1702 et seq.).
‘‘(2) Unless 2 bona fide discount points have been excluded
under paragraph (1), up to and including 1 bona fide discount
point payable by the consumer in connection with the mortgage,
but only if the interest rate from which the mortgage’s interest
rate will be discounted does not exceed by more than 2 percentage points—
‘‘(A) the average prime offer rate, as defined in section
129C; or
‘‘(B) if secured by a personal property loan, the average
rate on a loan in connection with which insurance is provided under title I of the National Housing Act (12 U.S.C.
1702 et seq.).
‘‘(3) For purposes of paragraph (1), the term ‘bona fide
discount points’ means loan discount points which are knowingly paid by the consumer for the purpose of reducing, and
which in fact result in a bona fide reduction of, the interest
rate or time-price differential applicable to the mortgage.
‘‘(4) Paragraphs (1) and (2) shall not apply to discount
points used to purchase an interest rate reduction unless the
amount of the interest rate reduction purchased is reasonably
consistent with established industry norms and practices for
secondary mortgage market transactions.’’.
SEC. 1432. AMENDMENTS TO EXISTING REQUIREMENTS FOR CERTAIN
MORTGAGES.
Repeal.

(a) PREPAYMENT PENALTY PROVISIONS.—Section 129(c)(2) of the
Truth in Lending Act (15 U.S.C. 1639(c)(2)) is hereby repealed.
(b) NO BALLOON PAYMENTS.—Section 129(e) of the Truth in
Lending Act (15 U.S.C. 1639(e)) is amended to read as follows:
‘‘(e) NO BALLOON PAYMENTS.—No high-cost mortgage may contain a scheduled payment that is more than twice as large as
the average of earlier scheduled payments. This subsection shall
not apply when the payment schedule is adjusted to the seasonal
or irregular income of the consumer.’’.

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SEC. 1433. ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES.

(a) ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES.—Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended—
(1) by redesignating subsections (j), (k), (l) and (m) as
subsections (n), (o), (p), and (q) respectively; and
(2) by inserting after subsection (i) the following new subsections:
‘‘(j) RECOMMENDED DEFAULT.—No creditor shall recommend or
encourage default on an existing loan or other debt prior to and
in connection with the closing or planned closing of a high-cost

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mortgage that refinances all or any portion of such existing loan
or debt.
‘‘(k) LATE FEES.—
‘‘(1) IN GENERAL.—No creditor may impose a late payment
charge or fee in connection with a high-cost mortgage—
‘‘(A) in an amount in excess of 4 percent of the amount
of the payment past due;
‘‘(B) unless the loan documents specifically authorize
the charge or fee;
‘‘(C) before the end of the 15-day period beginning
on the date the payment is due, or in the case of a loan
on which interest on each installment is paid in advance,
before the end of the 30-day period beginning on the date
the payment is due; or
‘‘(D) more than once with respect to a single late payment.
‘‘(2) COORDINATION WITH SUBSEQUENT LATE FEES.—If a payment is otherwise a full payment for the applicable period
and is paid on its due date or within an applicable grace
period, and the only delinquency or insufficiency of payment
is attributable to any late fee or delinquency charge assessed
on any earlier payment, no late fee or delinquency charge
may be imposed on such payment.
‘‘(3) FAILURE TO MAKE INSTALLMENT PAYMENT.—If, in the
case of a loan agreement the terms of which provide that
any payment shall first be applied to any past due principal
balance, the consumer fails to make an installment payment
and the consumer subsequently resumes making installment
payments but has not paid all past due installments, the creditor may impose a separate late payment charge or fee for
any principal due (without deduction due to late fees or related
fees) until the default is cured.
‘‘(l) ACCELERATION OF DEBT.—No high-cost mortgage may contain a provision which permits the creditor to accelerate the indebtedness, except when repayment of the loan has been accelerated
by default in payment, or pursuant to a due-on-sale provision,
or pursuant to a material violation of some other provision of
the loan document unrelated to payment schedule.
‘‘(m) RESTRICTION ON FINANCING POINTS AND FEES.—No creditor may directly or indirectly finance, in connection with any highcost mortgage, any of the following:
‘‘(1) Any prepayment fee or penalty payable by the consumer in a refinancing transaction if the creditor or an affiliate
of the creditor is the noteholder of the note being refinanced.
‘‘(2) Any points or fees.’’.
(b) PROHIBITIONS ON EVASIONS.—Section 129 of the Truth in
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (q) (as so redesignated by subsection (a)(1)) the following
new subsection:
‘‘(r) PROHIBITIONS ON EVASIONS, STRUCTURING OF TRANSACTIONS, AND RECIPROCAL ARRANGEMENTS.—A creditor may not
take any action in connection with a high-cost mortgage—
‘‘(1) to structure a loan transaction as an open-end credit
plan or another form of loan for the purpose and with the
intent of evading the provisions of this title; or

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‘‘(2) to divide any loan transaction into separate parts for
the purpose and with the intent of evading provisions of this
title.’’.
(c) MODIFICATION OR DEFERRAL FEES.—Section 129 of the Truth
in Lending Act (15 U.S.C. 1639) is amended by inserting after
subsection (r) (as added by subsection (b) of this section) the following new subsection:
‘‘(s) MODIFICATION AND DEFERRAL FEES PROHIBITED.—A creditor, successor in interest, assignee, or any agent of any of the
above, may not charge a consumer any fee to modify, renew, extend,
or amend a high-cost mortgage, or to defer any payment due under
the terms of such mortgage.’’.
(d) PAYOFF STATEMENT.—Section 129 of the Truth in Lending
Act (15 U.S.C. 1639) is amended by inserting after subsection
(s) (as added by subsection (c) of this section) the following new
subsection:
‘‘(t) PAYOFF STATEMENT.—
‘‘(1) FEES.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph
(B), no creditor or servicer may charge a fee for informing
or transmitting to any person the balance due to pay off
the outstanding balance on a high-cost mortgage.
‘‘(B) TRANSACTION FEE.—When payoff information
referred to in subparagraph (A) is provided by facsimile
transmission or by a courier service, a creditor or servicer
may charge a processing fee to cover the cost of such
transmission or service in an amount not to exceed an
amount that is comparable to fees imposed for similar
services provided in connection with consumer credit transactions that are secured by the consumer’s principal
dwelling and are not high-cost mortgages.
‘‘(C) FEE DISCLOSURE.—Prior to charging a transaction
fee as provided in subparagraph (B), a creditor or servicer
shall disclose that payoff balances are available for free
pursuant to subparagraph (A).
‘‘(D) MULTIPLE REQUESTS.—If a creditor or servicer has
provided payoff information referred to in subparagraph
(A) without charge, other than the transaction fee allowed
by subparagraph (B), on 4 occasions during a calendar
year, the creditor or servicer may thereafter charge a
reasonable fee for providing such information during the
remainder of the calendar year.
‘‘(2) PROMPT DELIVERY.—Payoff balances shall be provided
within 5 business days after receiving a request by a consumer
or a person authorized by the consumer to obtain such information.’’.
(e) PRE-LOAN COUNSELING REQUIRED.—Section 129 of the Truth
in Lending Act (15 U.S.C. 1639) is amended by inserting after
subsection t) (as added by subsection (d) of this section) the following
new subsection:
‘‘(u) PRE-LOAN COUNSELING.—
‘‘(1) IN GENERAL.—A creditor may not extend credit to
a consumer under a high-cost mortgage without first receiving
certification from a counselor that is approved by the Secretary
of Housing and Urban Development, or at the discretion of

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the Secretary, a State housing finance authority, that the consumer has received counseling on the advisability of the mortgage. Such counselor shall not be employed by the creditor
or an affiliate of the creditor or be affiliated with the creditor.
‘‘(2) DISCLOSURES REQUIRED PRIOR TO COUNSELING.—No
counselor may certify that a consumer has received counseling
on the advisability of the high-cost mortgage unless the counselor can verify that the consumer has received each statement
required (in connection with such loan) by this section or the
Real Estate Settlement Procedures Act of 1974 with respect
to the transaction.
‘‘(3) REGULATIONS.—The Board may prescribe such regulations as the Board determines to be appropriate to carry out
the requirements of paragraph (1).’’.
(f) CORRECTIONS AND UNINTENTIONAL VIOLATIONS.—Section 129
of the Truth in Lending Act (15 U.S.C. 1639) is amended by
inserting after subsection (u) (as added by subsection (e)) the following new subsection:
‘‘(v) CORRECTIONS AND UNINTENTIONAL VIOLATIONS.—A creditor
or assignee in a high-cost mortgage who, when acting in good
faith, fails to comply with any requirement under this section
will not be deemed to have violated such requirement if the creditor
or assignee establishes that either—
‘‘(1) within 30 days of the loan closing and prior to the
institution of any action, the consumer is notified of or discovers
the violation, appropriate restitution is made, and whatever
adjustments are necessary are made to the loan to either,
at the choice of the consumer—
‘‘(A) make the loan satisfy the requirements of this
chapter; or
‘‘(B) in the case of a high-cost mortgage, change the
terms of the loan in a manner beneficial to the consumer
so that the loan will no longer be a high-cost mortgage;
or
‘‘(2) within 60 days of the creditor’s discovery or receipt
of notification of an unintentional violation or bona fide error
and prior to the institution of any action, the consumer is
notified of the compliance failure, appropriate restitution is
made, and whatever adjustments are necessary are made to
the loan to either, at the choice of the consumer—
‘‘(A) make the loan satisfy the requirements of this
chapter; or
‘‘(B) in the case of a high-cost mortgage, change the
terms of the loan in a manner beneficial so that the loan
will no longer be a high-cost mortgage.’’.

Subtitle D—Office of Housing Counseling
SEC. 1441. SHORT TITLE.

This subtitle may be cited as the ‘‘Expand and Preserve Home
Ownership Through Counseling Act’’.

Deadlines.
Notifications.

Expand and
Preserve Home
Ownership
Through
Counseling Act.
12 USC 1701
note.

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SEC. 1442. ESTABLISHMENT OF OFFICE OF HOUSING COUNSELING.

Section 4 of the Department of Housing and Urban Development Act (42 U.S.C. 3533) is amended by adding at the end the
following new subsection:

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124 STAT. 2164

PUBLIC LAW 111–203—JULY 21, 2010
‘‘(g) OFFICE OF HOUSING COUNSELING.—
‘‘(1) ESTABLISHMENT.—There is established, in the Department, the Office of Housing Counseling.
‘‘(2) DIRECTOR.—There is established the position of
Director of Housing Counseling. The Director shall be the head
of the Office of Housing Counseling and shall be appointed
by, and shall report to, the Secretary. Such position shall be
a career-reserved position in the Senior Executive Service.
‘‘(3) FUNCTIONS.—
‘‘(A) IN GENERAL.—The Director shall have primary
responsibility within the Department for all activities and
matters relating to homeownership counseling and rental
housing counseling, including—
‘‘(i) research, grant administration, public outreach, and policy development relating to such counseling; and
‘‘(ii) establishment, coordination, and administration of all regulations, requirements, standards, and
performance measures under programs and laws
administered by the Department that relate to housing
counseling, homeownership counseling (including
maintenance of homes), mortgage-related counseling
(including home equity conversion mortgages and
credit protection options to avoid foreclosure), and
rental housing counseling, including the requirements,
standards, and performance measures relating to
housing counseling.
‘‘(B) SPECIFIC FUNCTIONS.—The Director shall carry out
the functions assigned to the Director and the Office under
this section and any other provisions of law. Such functions
shall include establishing rules necessary for—
‘‘(i) the counseling procedures under section
106(g)(1) of the Housing and Urban Development Act
of 1968 (12 U.S.C. 1701x(h)(1));
‘‘(ii) carrying out all other functions of the Secretary under section 106(g) of the Housing and Urban
Development Act of 1968, including the establishment,
operation, and publication of the availability of the
toll-free telephone number under paragraph (2) of such
section;
‘‘(iii) contributing to the distribution of home
buying information booklets pursuant to section 5 of
the Real Estate Settlement Procedures Act of 1974
(12 U.S.C. 2604);
‘‘(iv) carrying out the certification program under
section 106(e) of the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701x(e));
‘‘(v) carrying out the assistance program under
section 106(a)(4) of the Housing and Urban Development Act of 1968, including criteria for selection of
applications to receive assistance;
‘‘(vi) carrying out any functions regarding abusive,
deceptive, or unscrupulous lending practices relating
to residential mortgage loans that the Secretary considers appropriate, which shall include conducting the
study under section 6 of the Expand and Preserve
Home Ownership Through Counseling Act;

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124 STAT. 2165

‘‘(vii) providing for operation of the advisory committee established under paragraph (4) of this subsection;
‘‘(viii)
collaborating
with
community-based
organizations with expertise in the field of housing
counseling; and
‘‘(ix) providing for the building of capacity to provide housing counseling services in areas that lack
sufficient services, including underdeveloped areas that
lack basic water and sewer systems, electricity services,
and safe, sanitary housing.
‘‘(4) ADVISORY COMMITTEE.—
‘‘(A) IN GENERAL.—The Secretary shall appoint an
advisory committee to provide advice regarding the carrying out of the functions of the Director.
‘‘(B) MEMBERS.—Such advisory committee shall consist
of not more than 12 individuals, and the membership of
the committee shall equally represent the mortgage and
real estate industry, including consumers and housing
counseling agencies certified by the Secretary.
‘‘(C) TERMS.—Except as provided in subparagraph (D),
each member of the advisory committee shall be appointed
for a term of 3 years. Members may be reappointed at
the discretion of the Secretary.
‘‘(D) TERMS OF INITIAL APPOINTEES.—As designated by
the Secretary at the time of appointment, of the members
first appointed to the advisory committee, 4 shall be
appointed for a term of 1 year and 4 shall be appointed
for a term of 2 years.
‘‘(E) PROHIBITION OF PAY; TRAVEL EXPENSES.—Members
of the advisory committee shall serve without pay, but
shall receive travel expenses, including per diem in lieu
of subsistence, in accordance with applicable provisions
under subchapter I of chapter 57 of title 5, United States
Code.
‘‘(F) ADVISORY ROLE ONLY.—The advisory committee
shall have no role in reviewing or awarding housing counseling grants.
‘‘(5) SCOPE OF HOMEOWNERSHIP COUNSELING.—In carrying
out the responsibilities of the Director, the Director shall ensure
that homeownership counseling provided by, in connection with,
or pursuant to any function, activity, or program of the Department addresses the entire process of homeownership, including
the decision to purchase a home, the selection and purchase
of a home, issues arising during or affecting the period of
ownership of a home (including refinancing, default and foreclosure, and other financial decisions), and the sale or other
disposition of a home.’’.

Appointment.

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SEC. 1443. COUNSELING PROCEDURES.

(a) IN GENERAL.—Section 106 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x) is amended by adding
at the end the following new subsection:
‘‘(g) PROCEDURES AND ACTIVITIES.—
‘‘(1) COUNSELING PROCEDURES.—

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124 STAT. 2166

PUBLIC LAW 111–203—JULY 21, 2010
‘‘(A) IN GENERAL.—The Secretary shall establish,
coordinate, and monitor the administration by the Department of Housing and Urban Development of the counseling
procedures for homeownership counseling and rental
housing counseling provided in connection with any program of the Department, including all requirements, standards, and performance measures that relate to homeownership and rental housing counseling.
‘‘(B) HOMEOWNERSHIP COUNSELING.—For purposes of
this subsection and as used in the provisions referred to
in this subparagraph, the term ‘homeownership counseling’
means counseling related to homeownership and residential
mortgage loans. Such term includes counseling related to
homeownership and residential mortgage loans that is provided pursuant to—
‘‘(i) section 105(a)(20) of the Housing and Community Development Act of 1974 (42 U.S.C. 5305(a)(20));
‘‘(ii) in the United States Housing Act of 1937—
‘‘(I) section 9(e) (42 U.S.C. 1437g(e));
‘‘(II)
section
8(y)(1)(D)
(42
U.S.C.
1437f(y)(1)(D));
‘‘(III)
section
18(a)(4)(D)
(42
U.S.C.
1437p(a)(4)(D));
‘‘(IV) section 23(c)(4) (42 U.S.C. 1437u(c)(4));
‘‘(V) section 32(e)(4) (42 U.S.C. 1437z–4(e)(4));
‘‘(VI) section 33(d)(2)(B) (42 U.S.C. 1437z–
5(d)(2)(B));
‘‘(VII) sections 302(b)(6) and 303(b)(7) (42
U.S.C. 1437aaa–1(b)(6), 1437aaa–2(b)(7)); and
‘‘(VIII) section 304(c)(4) (42 U.S.C. 1437aaa–
3(c)(4));
‘‘(iii) section 302(a)(4) of the American Homeownership and Economic Opportunity Act of 2000 (42 U.S.C.
1437f note);
‘‘(iv) sections 233(b)(2) and 258(b) of the CranstonGonzalez National Affordable Housing Act (42 U.S.C.
12773(b)(2), 12808(b));
‘‘(v) this section and section 101(e) of the Housing
and Urban Development Act of 1968 (12 U.S.C. 1701x,
1701w(e));
‘‘(vi) section 220(d)(2)(G) of the Low-Income
Housing Preservation and Resident Homeownership
Act of 1990 (12 U.S.C. 4110(d)(2)(G));
‘‘(vii) sections 422(b)(6), 423(b)(7), 424(c)(4),
442(b)(6), and 443(b)(6) of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C.
12872(b)(6), 12873(b)(7), 12874(c)(4), 12892(b)(6), and
12893(b)(6));
‘‘(viii) section 491(b)(1)(F)(iii) of the McKinneyVento
Homeless
Assistance
Act
(42
U.S.C.
11408(b)(1)(F)(iii));
‘‘(ix) sections 202(3) and 810(b)(2)(A) of the Native
American Housing and Self-Determination Act of 1996
(25 U.S.C. 4132(3), 4229(b)(2)(A));
‘‘(x) in the National Housing Act—
‘‘(I) in section 203 (12 U.S.C. 1709), the penultimate undesignated paragraph of paragraph (2)

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124 STAT. 2167

of subsection (b), subsection (c)(2)(A), and subsection (r)(4);
‘‘(II) subsections (a) and (c)(3) of section 237
(12 U.S.C. 1715z–2); and
‘‘(III) subsections (d)(2)(B) and (m)(1) of section
255 (12 U.S.C. 1715z–20);
‘‘(xi) section 502(h)(4)(B) of the Housing Act of
1949 (42 U.S.C. 1472(h)(4)(B));
‘‘(xii) section 508 of the Housing and Urban
Development Act of 1970 (12 U.S.C. 1701z–7); and
‘‘(xiii) section 106 of the Energy Policy Act of 1992
(42 U.S.C. 12712 note).
‘‘(C) RENTAL HOUSING COUNSELING.—For purposes of
this subsection, the term ‘rental housing counseling’ means
counseling related to rental of residential property, which
may include counseling regarding future homeownership
opportunities and providing referrals for renters and
prospective renters to entities providing counseling and
shall include counseling related to such topics that is provided pursuant to—
‘‘(i) section 105(a)(20) of the Housing and Community Development Act of 1974 (42 U.S.C. 5305(a)(20));
‘‘(ii) in the United States Housing Act of 1937—
‘‘(I) section 9(e) (42 U.S.C. 1437g(e));
‘‘(II)
section
18(a)(4)(D)
(42
U.S.C.
1437p(a)(4)(D));
‘‘(III) section 23(c)(4) (42 U.S.C. 1437u(c)(4));
‘‘(IV) section 32(e)(4) (42 U.S.C. 1437z–4(e)(4));
‘‘(V) section 33(d)(2)(B) (42 U.S.C. 1437z–
5(d)(2)(B)); and
‘‘(VI) section 302(b)(6) (42 U.S.C. 1437aaa–
1(b)(6));
‘‘(iii) section 233(b)(2) of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C.
12773(b)(2));
‘‘(iv) section 106 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x);
‘‘(v) section 422(b)(6) of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C.
12872(b)(6));
‘‘(vi) section 491(b)(1)(F)(iii) of the McKinney-Vento
Homeless Assistance Act (42 U.S.C. 11408(b)(1)(F)(iii));
‘‘(vii) sections 202(3) and 810(b)(2)(A) of the Native
American Housing and Self-Determination Act of 1996
(25 U.S.C. 4132(3), 4229(b)(2)(A)); and
‘‘(viii) the rental assistance program under section
8 of the United States Housing Act of 1937 (42 U.S.C.
1437f).
‘‘(2) STANDARDS FOR MATERIALS.—The Secretary, in consultation with the advisory committee established under subsection (g)(4) of the Department of Housing and Urban Development Act, shall establish standards for materials and forms
to be used, as appropriate, by organizations providing homeownership counseling services, including any recipients of assistance pursuant to subsection (a)(4).
‘‘(3) MORTGAGE SOFTWARE SYSTEMS.—

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124 STAT. 2168

‘‘(A) CERTIFICATION.—The Secretary shall provide for
the certification of various computer software programs
for consumers to use in evaluating different residential
mortgage loan proposals. The Secretary shall require, for
such certification, that the mortgage software systems take
into account—
‘‘(i) the consumer’s financial situation and the cost
of maintaining a home, including insurance, taxes, and
utilities;
‘‘(ii) the amount of time the consumer expects to
remain in the home or expected time to maturity of
the loan; and
‘‘(iii) such other factors as the Secretary considers
appropriate to assist the consumer in evaluating
whether to pay points, to lock in an interest rate,
to select an adjustable or fixed rate loan, to select
a conventional or government-insured or guaranteed
loan and to make other choices during the loan application process.
If the Secretary determines that available existing software
is inadequate to assist consumers during the residential
mortgage loan application process, the Secretary shall
arrange for the development by private sector software
companies of new mortgage software systems that meet
the Secretary’s specifications.
‘‘(B) USE AND INITIAL AVAILABILITY.—Such certified
computer software programs shall be used to supplement,
not replace, housing counseling. The Secretary shall provide
that such programs are initially used only in connection
with the assistance of housing counselors certified pursuant
to subsection (e).
‘‘(C) AVAILABILITY.—After a period of initial availability
under subparagraph (B) as the Secretary considers appropriate, the Secretary shall take reasonable steps to make
mortgage software systems certified pursuant to this paragraph widely available through the Internet and at public
locations, including public libraries, senior-citizen centers,
public housing sites, offices of public housing agencies that
administer rental housing assistance vouchers, and housing
counseling centers.
‘‘(D) BUDGET COMPLIANCE.—This paragraph shall be
effective only to the extent that amounts to carry out
this paragraph are made available in advance in appropriations Acts.
‘‘(4) NATIONAL PUBLIC SERVICE MULTIMEDIA CAMPAIGNS TO
PROMOTE HOUSING COUNSELING.—
‘‘(A) IN GENERAL.—The Director of Housing Counseling
shall develop, implement, and conduct national public
service multimedia campaigns designed to make persons
facing mortgage foreclosure, persons considering a
subprime mortgage loan to purchase a home, elderly persons, persons who face language barriers, low-income persons, minorities, and other potentially vulnerable consumers aware that it is advisable, before seeking or
maintaining a residential mortgage loan, to obtain homeownership counseling from an unbiased and reliable

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Web posting.

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sources and that such homeownership counseling is available, including through programs sponsored by the Secretary of Housing and Urban Development.
‘‘(B) CONTACT INFORMATION.—Each segment of the
multimedia campaign under subparagraph (A) shall publicize the toll-free telephone number and website of the
Department of Housing and Urban Development through
which persons seeking housing counseling can locate a
housing counseling agency in their State that is certified
by the Secretary of Housing and Urban Development and
can provide advice on buying a home, renting, defaults,
foreclosures, credit issues, and reverse mortgages.
‘‘(C) AUTHORIZATION OF APPROPRIATIONS.—There are
authorized to be appropriated to the Secretary, not to
exceed $3,000,000 for fiscal years 2009, 2010, and 2011,
for the development, implementation, and conduct of
national public service multimedia campaigns under this
paragraph.
‘‘(D) FORECLOSURE RESCUE EDUCATION PROGRAMS.—
‘‘(i) IN GENERAL.—Ten percent of any funds appropriated pursuant to the authorization under subparagraph (C) shall be used by the Director of Housing
Counseling to conduct an education program in areas
that have a high density of foreclosure. Such program
shall involve direct mailings to persons living in such
areas describing—
‘‘(I) tips on avoiding foreclosure rescue scams;
‘‘(II) tips on avoiding predatory lending mortgage agreements;
‘‘(III) tips on avoiding for-profit foreclosure
counseling services; and
‘‘(IV) local counseling resources that are
approved by the Department of Housing and
Urban Development.
‘‘(ii) PROGRAM EMPHASIS.—In conducting the education program described under clause (i), the Director
of Housing Counseling shall also place an emphasis
on serving communities that have a high percentage
of retirement communities or a high percentage of
low-income minority communities.
‘‘(iii) TERMS DEFINED.—For purposes of this
subparagraph:
‘‘(I) HIGH DENSITY OF FORECLOSURES.—An area
has a ‘high density of foreclosures’ if such area
is one of the metropolitan statistical areas (as that
term is defined by the Director of the Office of
Management and Budget) with the highest home
foreclosure rates.
‘‘(II) HIGH PERCENTAGE OF RETIREMENT
COMMUNITIES.—An area has a ‘high percentage of
retirement communities’ if such area is one of the
metropolitan statistical areas (as that term is
defined by the Director of the Office of Management and Budget) with the highest percentage
of residents aged 65 or older.
‘‘(III) HIGH PERCENTAGE OF LOW-INCOME
MINORITY COMMUNITIES.—An area has a ‘high

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information.
Web posting.

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Notification.

PUBLIC LAW 111–203—JULY 21, 2010

percentage of low-income minority communities’
if such area contains a higher-than-normal
percentage of residents who are both minorities
and low-income, as defined by the Director of
Housing Counseling.
‘‘(5) EDUCATION PROGRAMS.—The Secretary shall provide
advice and technical assistance to States, units of general local
government, and nonprofit organizations regarding the
establishment and operation of, including assistance with the
development of content and materials for, educational programs
to inform and educate consumers, particularly those most
vulnerable with respect to residential mortgage loans (such
as elderly persons, persons facing language barriers, low-income
persons, minorities, and other potentially vulnerable consumers), regarding home mortgages, mortgage refinancing,
home equity loans, home repair loans, and where appropriate
by region, any requirements and costs associated with obtaining
flood or other disaster-specific insurance coverage.’’.
(b) CONFORMING AMENDMENTS TO GRANT PROGRAM FOR HOMEOWNERSHIP COUNSELING ORGANIZATIONS.—Section 106(c)(5)(A)(ii) of
the Housing and Urban Development Act of 1968 (12 U.S.C.
1701x(c)(5)(A)(ii)) is amended—
(1) in subclause (III), by striking ‘‘and’’ at the end;
(2) in subclause (IV) by striking the period at the end
and inserting ‘‘; and’’; and
(3) by inserting after subclause (IV) the following new
subclause:
‘‘(V) notify the housing or mortgage applicant
of the availability of mortgage software systems
provided pursuant to subsection (g)(3).’’.
SEC. 1444. GRANTS FOR HOUSING COUNSELING ASSISTANCE.

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Standards.
Guidelines.

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Section 106(a) of the Housing and Urban Development Act
of 1968 (12 U.S.C. 1701x(a)) is amended by adding at the end
the following new paragraph:
‘‘(4) HOMEOWNERSHIP AND RENTAL COUNSELING ASSISTANCE.—
‘‘(A) IN GENERAL.—The Secretary shall make financial
assistance available under this paragraph to HUD-approved
housing counseling agencies and State housing finance agencies.
‘‘(B) QUALIFIED ENTITIES.—The Secretary shall establish
standards and guidelines for eligibility of organizations
(including governmental and nonprofit organizations) to receive
assistance under this paragraph, in accordance with subparagraph (D).
‘‘(C) DISTRIBUTION.—Assistance made available under this
paragraph shall be distributed in a manner that encourages
efficient and successful counseling programs and that ensures
adequate distribution of amounts for rural areas having
traditionally low levels of access to such counseling services,
including areas with insufficient access to the Internet. In
distributing such assistance, the Secretary may give priority
consideration to entities serving areas with the highest home
foreclosure rates.
‘‘(D) LIMITATION ON DISTRIBUTION OF ASSISTANCE.—
‘‘(i) IN GENERAL.—None of the amounts made available
under this paragraph shall be distributed to—

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‘‘(I) any organization which has been convicted
for a violation under Federal law relating to an election
for Federal office; or
‘‘(II) any organization which employs applicable
individuals.
‘‘(ii) DEFINITION OF APPLICABLE INDIVIDUALS.—In this
subparagraph, the term ‘applicable individual’ means an
individual who—
‘‘(I) is—
‘‘(aa) employed by the organization in a permanent or temporary capacity;
‘‘(bb) contracted or retained by the organization; or
‘‘(cc) acting on behalf of, or with the express
or apparent authority of, the organization; and
‘‘(II) has been convicted for a violation under Federal law relating to an election for Federal office.
‘‘(E) GRANTMAKING PROCESS.—In making assistance available under this paragraph, the Secretary shall consider appropriate ways of streamlining and improving the processes for
grant application, review, approval, and award.
‘‘(F) AUTHORIZATION OF APPROPRIATIONS.—There are
authorized to be appropriated $45,000,000 for each of fiscal
years 2009 through 2012 for—
‘‘(i) the operations of the Office of Housing Counseling
of the Department of Housing and Urban Development;
‘‘(ii) the responsibilities of the Director of Housing
Counseling under paragraphs (2) through (5) of subsection
(g); and
‘‘(iii) assistance pursuant to this paragraph for entities
providing homeownership and rental counseling.’’.

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SEC. 1445. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS
UNDER HUD PROGRAMS.

Section 106(e) of the Housing and Urban Development Act
of 1968 (12 U.S.C. 1701x(e)) is amended—
(1) by striking paragraph (1) and inserting the following
new paragraph:
‘‘(1) REQUIREMENT FOR ASSISTANCE.—An organization may
not receive assistance for counseling activities under subsection
(a)(1)(iii), (a)(2), (a)(4), (c), or (d) of this section, or under section
101(e), unless the organization, or the individuals through
which the organization provides such counseling, has been certified by the Secretary under this subsection as competent
to provide such counseling.’’;
(2) in paragraph (2)—
(A) by inserting ‘‘and for certifying organizations’’
before the period at the end of the first sentence; and
(B) in the second sentence by striking ‘‘for certification’’
and inserting ‘‘, for certification of an organization, that
each individual through which the organization provides
counseling shall demonstrate, and, for certification of an
individual,’’;
(3) in paragraph (3), by inserting ‘‘organizations and’’ before
‘‘individuals’’;
(4) by redesignating paragraph (3) as paragraph (5); and

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124 STAT. 2172

PUBLIC LAW 111–203—JULY 21, 2010
(5) by inserting after paragraph (2) the following new paragraphs:
‘‘(3) REQUIREMENT UNDER HUD PROGRAMS.—Any homeownership counseling or rental housing counseling (as such terms
are defined in subsection (g)(1)) required under, or provided
in connection with, any program administered by the Department of Housing and Urban Development shall be provided
only by organizations or counselors certified by the Secretary
under this subsection as competent to provide such counseling.
‘‘(4) OUTREACH.—The Secretary shall take such actions as
the Secretary considers appropriate to ensure that individuals
and organizations providing homeownership or rental housing
counseling are aware of the certification requirements and
standards of this subsection and of the training and certification
programs under subsection (f).’’.

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SEC. 1446. STUDY OF DEFAULTS AND FORECLOSURES.

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Deadlines.
Reports.

The Secretary of Housing and Urban Development shall conduct
an extensive study of the root causes of default and foreclosure
of home loans, using as much empirical data as are available.
The study shall also examine the role of escrow accounts in helping
prime and nonprime borrowers to avoid defaults and foreclosures,
and the role of computer registries of mortgages, including those
used for trading mortgage loans. Not later than 12 months after
the date of the enactment of this Act, the Secretary shall submit
to the Congress a preliminary report regarding the study. Not
later than 24 months after such date of enactment, the Secretary
shall submit a final report regarding the results of the study,
which shall include any recommended legislation relating to the
study, and recommendations for best practices and for a process
to identify populations that need counseling the most.

12 USC 1701p–2.

SEC. 1447. DEFAULT AND FORECLOSURE DATABASE.

Public
information.

(a) ESTABLISHMENT.—The Secretary of Housing and Urban
Development and the Director of the Bureau, in consultation with
the Federal agencies responsible for regulation of banking and
financial institutions involved in residential mortgage lending and
servicing, shall establish and maintain a database of information
on foreclosures and defaults on mortgage loans for one- to fourunit residential properties and shall make such information publicly
available, subject to subsection (e).
(b) CENSUS TRACT DATA.—Information in the database may
be collected, aggregated, and made available on a census tract
basis.
(c) REQUIREMENTS.—Information collected and made available
through the database shall include—
(1) the number and percentage of such mortgage loans
that are delinquent by more than 30 days;
(2) the number and percentage of such mortgage loans
that are delinquent by more than 90 days;
(3) the number and percentage of such properties that
are real estate-owned;
(4) number and percentage of such mortgage loans that
are in the foreclosure process;
(5) the number and percentage of such mortgage loans
that have an outstanding principal obligation amount that is
greater than the value of the property for which the loan
was made; and

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(6) such other information as the Secretary of Housing
and Urban Development and the Director of the Bureau consider appropriate.
(d) RULE OF CONSTRUCTION.—Nothing in this section shall be
construed to encourage discriminatory or unsound allocation of
credit or lending policies or practices.
(e) PRIVACY AND CONFIDENTIALITY.—In establishing and
maintaining the database described in subsection (a), the Secretary
of Housing and Urban Development and the Director of the Bureau
shall—
(1) be subject to the standards applicable to Federal agencies for the protection of the confidentiality of personally identifiable information and for data security and integrity;
(2) implement the necessary measures to conform to the
standards for data integrity and security described in paragraph
(1); and
(3) collect and make available information under this section, in accordance with paragraphs (5) and (6) of section
1022(c) and the rules prescribed under such paragraphs, in
order to protect privacy and confidentiality.

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SEC. 1448. DEFINITIONS FOR COUNSELING-RELATED PROGRAMS.

Section 106 of the Housing and Urban Development Act of
1968 (12 U.S.C. 1701x), as amended by the preceding provisions
of this subtitle, is amended by adding at the end the following
new subsection:
‘‘(h) DEFINITIONS.—For purposes of this section:
‘‘(1) NONPROFIT ORGANIZATION.—The term ‘nonprofit
organization’ has the meaning given such term in section 104(5)
of the Cranston-Gonzalez National Affordable Housing Act (42
U.S.C. 12704(5)), except that subparagraph (D) of such section
shall not apply for purposes of this section.
‘‘(2) STATE.—The term ‘State’ means each of the several
States, the Commonwealth of Puerto Rico, the District of
Columbia, the Commonwealth of the Northern Mariana Islands,
Guam, the Virgin Islands, American Samoa, the Trust Territories of the Pacific, or any other possession of the United
States.
‘‘(3) UNIT OF GENERAL LOCAL GOVERNMENT.—The term ‘unit
of general local government’ means any city, county, parish,
town, township, borough, village, or other general purpose political subdivision of a State.
‘‘(4) HUD-APPROVED COUNSELING AGENCY.—The term
‘HUD-approved counseling agency’ means a private or public
nonprofit organization that is—
‘‘(A) exempt from taxation under section 501(c) of the
Internal Revenue Code of 1986; and
‘‘(B) certified by the Secretary to provide housing counseling services.
‘‘(5) STATE HOUSING FINANCE AGENCY.—The term ‘State
housing finance agency’ means any public body, agency, or
instrumentality specifically created under State statute that
is authorised to finance activities designed to provide housing
and related facilities throughout an entire State through land
acquisition, construction, or rehabilitation.’’.

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SEC. 1449. ACCOUNTABILITY AND TRANSPARENCY FOR GRANT RECIPIENTS.

Reports.
Records.

Deadline.
Reimbursement.

Definition.

Section 106 of the Housing and Urban Development Act of
1968 (12 U.S.C. 1701x), as amended by the preceding provisions
of this subtitle, is amended by adding at the end the following:
‘‘(i) ACCOUNTABILITY FOR RECIPIENTS OF COVERED ASSISTANCE.—
‘‘(1) TRACKING OF FUNDS.—The Secretary shall—
‘‘(A) develop and maintain a system to ensure that
any organization or entity that receives any covered assistance uses all amounts of covered assistance in accordance
with this section, the regulations issued under this section,
and any requirements or conditions under which such
amounts were provided; and
‘‘(B) require any organization or entity, as a condition
of receipt of any covered assistance, to agree to comply
with such requirements regarding covered assistance as
the Secretary shall establish, which shall include—
‘‘(i) appropriate periodic financial and grant
activity reporting, record retention, and audit requirements for the duration of the covered assistance to
the organization or entity to ensure compliance with
the limitations and requirements of this section, the
regulations under this section, and any requirements
or conditions under which such amounts were provided;
and
‘‘(ii) any other requirements that the Secretary
determines are necessary to ensure appropriate
administration and compliance.
‘‘(2) MISUSE OF FUNDS.—If any organization or entity that
receives any covered assistance is determined by the Secretary
to have used any covered assistance in a manner that is materially in violation of this section, the regulations issued under
this section, or any requirements or conditions under which
such assistance was provided—
‘‘(A) the Secretary shall require that, within 12 months
after the determination of such misuse, the organization
or entity shall reimburse the Secretary for such misused
amounts and return to the Secretary any such amounts
that remain unused or uncommitted for use; and
‘‘(B) such organization or entity shall be ineligible,
at any time after such determination, to apply for or receive
any further covered assistance.
The remedies under this paragraph are in addition to any
other remedies that may be available under law.
‘‘(3) COVERED ASSISTANCE.—For purposes of this subsection,
the term ‘covered assistance’ means any grant or other financial
assistance provided under this section.’’.

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SEC. 1450. UPDATING AND SIMPLIFICATION OF MORTGAGE INFORMATION BOOKLET.

Section 5 of the Real Estate Settlement Procedures Act of
1974 (12 U.S.C. 2604) is amended—
(1) in the section heading, by striking ‘‘SPECIAL’’ and
inserting ‘‘HOME BUYING’’;
(2) by striking subsections (a) and (b) and inserting the
following new subsections:

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124 STAT. 2175

‘‘(a) PREPARATION AND DISTRIBUTION.—The Director of the
Bureau of Consumer Financial Protection (hereafter in this section
referred to as the ‘Director’) shall prepare, at least once every
5 years, a booklet to help consumers applying for federally related
mortgage loans to understand the nature and costs of real estate
settlement services. The Director shall prepare the booklet in various languages and cultural styles, as the Director determines to
be appropriate, so that the booklet is understandable and accessible
to homebuyers of different ethnic and cultural backgrounds. The
Director shall distribute such booklets to all lenders that make
federally related mortgage loans. The Director shall also distribute
to such lenders lists, organized by location, of homeownership counselors certified under section 106(e) of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x(e)) for use in complying
with the requirement under subsection (c) of this section.
‘‘(b) CONTENTS.—Each booklet shall be in such form and detail
as the Director shall prescribe and, in addition to such other
information as the Director may provide, shall include in plain
and understandable language the following information:
‘‘(1) A description and explanation of the nature and purpose of the costs incident to a real estate settlement or a
federally related mortgage loan. The description and explanation shall provide general information about the mortgage
process as well as specific information concerning, at a minimum—
‘‘(A) balloon payments;
‘‘(B) prepayment penalties;
‘‘(C) the advantages of prepayment; and
‘‘(D) the trade-off between closing costs and the interest
rate over the life of the loan.
‘‘(2) An explanation and sample of the uniform settlement
statement required by section 4.
‘‘(3) A list and explanation of lending practices, including
those prohibited by the Truth in Lending Act or other applicable
Federal law, and of other unfair practices and unreasonable
or unnecessary charges to be avoided by the prospective buyer
with respect to a real estate settlement.
‘‘(4) A list and explanation of questions a consumer
obtaining a federally related mortgage loan should ask
regarding the loan, including whether the consumer will have
the ability to repay the loan, whether the consumer sufficiently
shopped for the loan, whether the loan terms include prepayment penalties or balloon payments, and whether the loan
will benefit the borrower.
‘‘(5) An explanation of the right of rescission as to certain
transactions provided by sections 125 and 129 of the Truth
in Lending Act.
‘‘(6) A brief explanation of the nature of a variable rate
mortgage and a reference to the booklet entitled ‘Consumer
Handbook on Adjustable Rate Mortgages’, published by the
Director, or to any suitable substitute of such booklet that
the Director may subsequently adopt pursuant to such section.
‘‘(7) A brief explanation of the nature of a home equity
line of credit and a reference to the pamphlet required to
be provided under section 127A of the Truth in Lending Act.
‘‘(8) Information about homeownership counseling services
made available pursuant to section 106(a)(4) of the Housing

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List.

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and Urban Development Act of 1968 (12 U.S.C. 1701x(a)(4)),
a recommendation that the consumer use such services, and
notification that a list of certified providers of homeownership
counseling in the area, and their contact information, is available.
‘‘(9) An explanation of the nature and purpose of escrow
accounts when used in connection with loans secured by residential real estate and the requirements under section 10 of
this Act regarding such accounts.
‘‘(10) An explanation of the choices available to buyers
of residential real estate in selecting persons to provide necessary services incidental to a real estate settlement.
‘‘(11) An explanation of a consumer’s responsibilities, liabilities, and obligations in a mortgage transaction.
‘‘(12) An explanation of the nature and purpose of real
estate appraisals, including the difference between an appraisal
and a home inspection.
‘‘(13) Notice that the Office of Housing of the Department
of Housing and Urban Development has made publicly available
a brochure regarding loan fraud and a World Wide Web address
and toll-free telephone number for obtaining the brochure.
The booklet prepared pursuant to this section shall take into consideration differences in real estate settlement procedures that may
exist among the several States and territories of the United States
and among separate political subdivisions within the same State
and territory.’’;
(3) in subsection (c), by inserting at the end the following
new sentence: ‘‘Each lender shall also include with the booklet
a reasonably complete or updated list of homeownership counselors who are certified pursuant to section 106(e) of the
Housing and Urban Development Act of 1968 (12 U.S.C.
1701x(e)) and located in the area of the lender.’’; and
(4) in subsection (d), by inserting after the period at the
end of the first sentence the following: ‘‘The lender shall provide
the booklet in the version that is most appropriate for the
person receiving it.’’.

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12 USC 1701x–1.

SEC. 1451. HOME INSPECTION COUNSELING.

(a) PUBLIC OUTREACH.—
(1) IN GENERAL.—The Secretary of Housing and Urban
Development (in this section referred to as the ‘‘Secretary’’)
shall take such actions as may be necessary to inform potential
homebuyers of the availability and importance of obtaining
an independent home inspection. Such actions shall include—
(A) publication of the HUD/FHA form HUD 92564–
CN entitled ‘‘For Your Protection: Get a Home Inspection’’,
in both English and Spanish languages;
(B) publication of the HUD/FHA booklet entitled ‘‘For
Your Protection: Get a Home Inspection’’, in both English
and Spanish languages;
(C) development and publication of a HUD booklet
entitled ‘‘For Your Protection—Get a Home Inspection’’ that
does not reference FHA-insured homes, in both English
and Spanish languages; and
(D) publication of the HUD document entitled ‘‘Ten
Important Questions To Ask Your Home Inspector’’, in
both English and Spanish languages.

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(2) AVAILABILITY.—The Secretary shall make the materials
specified in paragraph (1) available for electronic access and,
where appropriate, inform potential homebuyers of such availability through home purchase counseling public service
announcements and toll-free telephone hotlines of the Department of Housing and Urban Development. The Secretary shall
give special emphasis to reaching first-time and low-income
homebuyers with these materials and efforts.
(3) UPDATING.—The Secretary may periodically update and
revise such materials, as the Secretary determines to be appropriate.
(b) REQUIREMENT FOR FHA-APPROVED LENDERS.—Each mortgagee approved for participation in the mortgage insurance programs under title II of the National Housing Act shall provide
prospective homebuyers, at first contact, whether upon pre-qualification, pre-approval, or initial application, the materials specified
in subparagraphs (A), (B), and (D) of subsection (a)(1).
(c) REQUIREMENTS FOR HUD-APPROVED COUNSELING AGENCIES.—Each counseling agency certified pursuant by the Secretary
to provide housing counseling services shall provide each of their
clients, as part of the home purchase counseling process, the materials specified in subparagraphs (C) and (D) of subsection (a)(1).
(d) TRAINING.—Training provided the Department of Housing
and Urban Development for housing counseling agencies, whether
such training is provided directly by the Department or otherwise,
shall include—
(1) providing information on counseling potential homebuyers of the availability and importance of getting an independent home inspection;
(2) providing information about the home inspection
process, including the reasons for specific inspections such as
radon and lead-based paint testing;
(3) providing information about advising potential homebuyers on how to locate and select a qualified home inspector;
and
(4) review of home inspection public outreach materials
of the Department.

Public
information.

SEC. 1452. WARNINGS TO HOMEOWNERS OF FORECLOSURE RESCUE
SCAMS.

42 USC 8108.

(a) ASSISTANCE TO NRC.—Notwithstanding any other provision
of law, of any amounts made available for any fiscal year pursuant
to section 106(a)(4)(F) of the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701x(a)(4)(F)) (as added by section 1444),
10 percent shall be used only for assistance to the Neighborhood
Reinvestment Corporation for activities, in consultation with
servicers of residential mortgage loans, to provide notice to borrowers under such loans who are delinquent with respect to payments due under such loans that makes such borrowers aware
of the dangers of fraudulent activities associated with foreclosure.
(b) NOTICE.—The Neighborhood Reinvestment Corporation, in
consultation with servicers of residential mortgage loans, shall use
the amounts provided pursuant to subsection (a) to carry out activities to inform borrowers under residential mortgage loans—
(1) that the foreclosure process is complex and can be
confusing;

Notice.

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(2) that the borrower may be approached during the foreclosure process by persons regarding saving their home and
they should use caution in any such dealings;
(3) that there are Federal Government and nonprofit agencies that may provide information about the foreclosure process,
including the Department of Housing and Urban Development;
(4) that they should contact their lender immediately, contact the Department of Housing and Urban Development to
find a housing counseling agency certified by the Department
to assist in avoiding foreclosure, or visit the Department’s
website regarding tips for avoiding foreclosure; and
(5) of the telephone number of the loan servicer or successor, the telephone number of the Department of Housing
and Urban Development housing counseling line, and the Uniform Resource Locators (URLs) for the Department of Housing
and Urban Development Web sites for housing counseling and
for tips for avoiding foreclosure.

Subtitle E—Mortgage Servicing
SEC. 1461. ESCROW AND IMPOUND ACCOUNTS RELATING TO CERTAIN
CONSUMER CREDIT TRANSACTIONS.

(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended by inserting after section 129C
(as added by section 1411) the following new section:

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15 USC 1639d.

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‘‘§ 129D. Escrow or impound accounts relating to certain consumer credit transactions
‘‘(a) IN GENERAL.—Except as provided in subsection (b), (c),
(d), or (e), a creditor, in connection with the consummation of
a consumer credit transaction secured by a first lien on the principal
dwelling of the consumer, other than a consumer credit transaction
under an open end credit plan or a reverse mortgage, shall establish,
before the consummation of such transaction, an escrow or impound
account for the payment of taxes and hazard insurance, and, if
applicable, flood insurance, mortgage insurance, ground rents, and
any other required periodic payments or premiums with respect
to the property or the loan terms, as provided in, and in accordance
with, this section.
‘‘(b) WHEN REQUIRED.—No impound, trust, or other type of
account for the payment of property taxes, insurance premiums,
or other purposes relating to the property may be required as
a condition of a real property sale contract or a loan secured
by a first deed of trust or mortgage on the principal dwelling
of the consumer, other than a consumer credit transaction under
an open end credit plan or a reverse mortgage, except when—
‘‘(1) any such impound, trust, or other type of escrow or
impound account for such purposes is required by Federal
or State law;
‘‘(2) a loan is made, guaranteed, or insured by a State
or Federal governmental lending or insuring agency;
‘‘(3) the transaction is secured by a first mortgage or lien
on the consumer’s principal dwelling having an original principal obligation amount that—
‘‘(A) does not exceed the amount of the maximum
limitation on the original principal obligation of mortgage

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124 STAT. 2179

in effect for a residence of the applicable size, as of the
date such interest rate set, pursuant to the sixth sentence
of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), and the annual percentage rate will exceed the average prime offer rate as defined
in section 129C by 1.5 or more percentage points; or
‘‘(B) exceeds the amount of the maximum limitation
on the original principal obligation of mortgage in effect
for a residence of the applicable size, as of the date such
interest rate set, pursuant to the sixth sentence of section
305(a)(2) the Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1454(a)(2)), and the annual percentage rate
will exceed the average prime offer rate as defined in
section 129C by 2.5 or more percentage points; or
‘‘(4) so required pursuant to regulation.
‘‘(c) EXEMPTIONS.—The Board may, by regulation, exempt from
the requirements of subsection (a) a creditor that—
‘‘(1) operates predominantly in rural or underserved areas;
‘‘(2) together with all affiliates, has total annual mortgage
loan originations that do not exceed a limit set by the Board;
‘‘(3) retains its mortgage loan originations in portfolio; and
‘‘(4) meets any asset size threshold and any other criteria
the Board may establish, consistent with the purposes of this
subtitle.
‘‘(d) DURATION OF MANDATORY ESCROW OR IMPOUND
ACCOUNT.—An escrow or impound account established pursuant
to subsection (b) shall remain in existence for a minimum period
of 5 years, beginning with the date of the consummation of the
loan, unless and until—
‘‘(1) such borrower has sufficient equity in the dwelling
securing the consumer credit transaction so as to no longer
be required to maintain private mortgage insurance;
‘‘(2) such borrower is delinquent;
‘‘(3) such borrower otherwise has not complied with the
legal obligation, as established by rule; or
‘‘(4) the underlying mortgage establishing the account is
terminated.
‘‘(e) LIMITED EXEMPTIONS FOR LOANS SECURED BY SHARES IN
A COOPERATIVE OR IN WHICH AN ASSOCIATION MUST MAINTAIN
A MASTER INSURANCE POLICY.—Escrow accounts need not be established for loans secured by shares in a cooperative. Insurance premiums need not be included in escrow accounts for loans secured
by dwellings or units, where the borrower must join an association
as a condition of ownership, and that association has an obligation
to the dwelling or unit owners to maintain a master policy insuring
the dwellings or units.
‘‘(f) CLARIFICATION ON ESCROW ACCOUNTS FOR LOANS NOT
MEETING STATUTORY TEST.—For mortgages not covered by the
requirements of subsection (b), no provision of this section shall
be construed as precluding the establishment of an impound, trust,
or other type of account for the payment of property taxes, insurance
premiums, or other purposes relating to the property—
‘‘(1) on terms mutually agreeable to the parties to the
loan;
‘‘(2) at the discretion of the lender or servicer, as provided
by the contract between the lender or servicer and the borrower;
or

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Notice.
Deadline.
Regulations.

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‘‘(3) pursuant to the requirements for the escrowing of
flood insurance payments for regulated lending institutions in
section 102(d) of the Flood Disaster Protection Act of 1973.
‘‘(g) ADMINISTRATION OF MANDATORY ESCROW OR IMPOUND
ACCOUNTS.—
‘‘(1) IN GENERAL.—Except as may otherwise be provided
for in this title or in regulations prescribed by the Board,
escrow or impound accounts established pursuant to subsection
(b) shall be established in a federally insured depository institution or credit union.
‘‘(2) ADMINISTRATION.—Except as provided in this section
or regulations prescribed under this section, an escrow or
impound account subject to this section shall be administered
in accordance with—
‘‘(A) the Real Estate Settlement Procedures Act of 1974
and regulations prescribed under such Act;
‘‘(B) the Flood Disaster Protection Act of 1973 and
regulations prescribed under such Act; and
‘‘(C) the law of the State, if applicable, where the
real property securing the consumer credit transaction is
located.
‘‘(3) APPLICABILITY OF PAYMENT OF INTEREST.—If prescribed
by applicable State or Federal law, each creditor shall pay
interest to the consumer on the amount held in any impound,
trust, or escrow account that is subject to this section in the
manner as prescribed by that applicable State or Federal law.
‘‘(4) PENALTY COORDINATION WITH RESPA.—Any action or
omission on the part of any person which constitutes a violation
of the Real Estate Settlement Procedures Act of 1974 or any
regulation prescribed under such Act for which the person
has paid any fine, civil money penalty, or other damages shall
not give rise to any additional fine, civil money penalty, or
other damages under this section, unless the action or omission
also constitutes a direct violation of this section.
‘‘(h) DISCLOSURES RELATING TO MANDATORY ESCROW OR
IMPOUND ACCOUNT.—In the case of any impound, trust, or escrow
account that is required under subsection (b), the creditor shall
disclose by written notice to the consumer at least 3 business
days before the consummation of the consumer credit transaction
giving rise to such account or in accordance with timeframes established in prescribed regulations the following information:
‘‘(1) The fact that an escrow or impound account will be
established at consummation of the transaction.
‘‘(2) The amount required at closing to initially fund the
escrow or impound account.
‘‘(3) The amount, in the initial year after the consummation
of the transaction, of the estimated taxes and hazard insurance,
including flood insurance, if applicable, and any other required
periodic payments or premiums that reflects, as appropriate,
either the taxable assessed value of the real property securing
the transaction, including the value of any improvements on
the property or to be constructed on the property (whether
or not such construction will be financed from the proceeds
of the transaction) or the replacement costs of the property.
‘‘(4) The estimated monthly amount payable to be escrowed
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applicable) and any other required periodic payments or premiums.
‘‘(5) The fact that, if the consumer chooses to terminate
the account in the future, the consumer will become responsible
for the payment of all taxes, hazard insurance, and flood insurance, if applicable, as well as any other required periodic payments or premiums on the property unless a new escrow or
impound account is established.
‘‘(6) Such other information as the Board determines necessary for the protection of the consumer.
‘‘(i) DEFINITIONS.—For purposes of this section, the following
definitions shall apply:
‘‘(1) FLOOD INSURANCE.—The term ‘flood insurance’ means
flood insurance coverage provided under the national flood
insurance program pursuant to the National Flood Insurance
Act of 1968.
‘‘(2) HAZARD INSURANCE.—The term ‘hazard insurance’ shall
have the same meaning as provided for ‘hazard insurance’,
‘casualty insurance’, ‘homeowner’s insurance’, or other similar
term under the law of the State where the real property
securing the consumer credit transaction is located.’’.
(b) EXEMPTIONS AND MODIFICATIONS.—The Board may prescribe
rules that revise, add to, or subtract from the criteria of section
129D(b) of the Truth in Lending Act if the Board determines that
such rules are in the interest of consumers and in the public
interest.
(c) CLERICAL AMENDMENT.—The table of sections for chapter
2 of the Truth in Lending Act is amended by inserting after the
item relating to section 129C (as added by section 1411) the following new item:

15 USC 1639d
note.

‘‘129D. Escrow or impound accounts relating to certain consumer credit transactions.’’.

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SEC. 1462. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO
WAIVE ESCROW SERVICES.

15 USC 1639d.

Section 129D of the Truth in Lending Act (as added by section
1461) is amended by adding at the end the following new subsection:
‘‘(j) DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE
ESCROW SERVICES.—
‘‘(1) IN GENERAL.—If—
‘‘(A) an impound, trust, or other type of account for
the payment of property taxes, insurance premiums, or
other purposes relating to real property securing a consumer credit transaction is not established in connection
with the transaction; or
‘‘(B) a consumer chooses, and provides written notice
to the creditor or servicer of such choice, at any time
after such an account is established in connection with
any such transaction and in accordance with any statute,
regulation, or contractual agreement, to close such account,
the creditor or servicer shall provide a timely and clearly written disclosure to the consumer that advises the consumer of
the responsibilities of the consumer and implications for the
consumer in the absence of any such account.
‘‘(2) DISCLOSURE REQUIREMENTS.—Any disclosure provided
to a consumer under paragraph (1) shall include the following:

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‘‘(A) Information concerning any applicable fees or costs
associated with either the non-establishment of any such
account at the time of the transaction, or any subsequent
closure of any such account.
‘‘(B) A clear and prominent statement that the consumer is responsible for personally and directly paying
the non-escrowed items, in addition to paying the mortgage
loan payment, in the absence of any such account, and
the fact that the costs for taxes, insurance, and related
fees can be substantial.
‘‘(C) A clear explanation of the consequences of any
failure to pay non-escrowed items, including the possible
requirement for the forced placement of insurance by the
creditor or servicer and the potentially higher cost
(including any potential commission payments to the
servicer) or reduced coverage for the consumer in the event
of any such creditor-placed insurance.
‘‘(D) Such other information as the Board determines
necessary for the protection of the consumer.’’.

SEC. 1463. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974
AMENDMENTS.

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(a) SERVICER PROHIBITIONS.—Section 6 of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2605) is amended
by adding at the end the following new subsections:
‘‘(k) SERVICER PROHIBITIONS.—
‘‘(1) IN GENERAL.—A servicer of a federally related mortgage
shall not—
‘‘(A) obtain force-placed hazard insurance unless there
is a reasonable basis to believe the borrower has failed
to comply with the loan contract’s requirements to maintain
property insurance;
‘‘(B) charge fees for responding to valid qualified written requests (as defined in regulations which the Bureau
of Consumer Financial Protection shall prescribe) under
this section;
‘‘(C) fail to take timely action to respond to a borrower’s
requests to correct errors relating to allocation of payments,
final balances for purposes of paying off the loan, or
avoiding foreclosure, or other standard servicer’s duties;
‘‘(D) fail to respond within 10 business days to a
request from a borrower to provide the identity, address,
and other relevant contact information about the owner
or assignee of the loan; or
‘‘(E) fail to comply with any other obligation found
by the Bureau of Consumer Financial Protection, by regulation, to be appropriate to carry out the consumer protection
purposes of this Act.
‘‘(2) FORCE-PLACED INSURANCE DEFINED.—For purposes of
this subsection and subsections (l) and (m), the term ‘forceplaced insurance’ means hazard insurance coverage obtained
by a servicer of a federally related mortgage when the borrower
has failed to maintain or renew hazard insurance on such
property as required of the borrower under the terms of the
mortgage.
‘‘(l) REQUIREMENTS FOR FORCE-PLACED INSURANCE.—A servicer
of a federally related mortgage shall not be construed as having

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a reasonable basis for obtaining force-placed insurance unless the
requirements of this subsection have been met.
‘‘(1) WRITTEN NOTICES TO BORROWER.—A servicer may not
impose any charge on any borrower for force-placed insurance
with respect to any property securing a federally related mortgage unless—
‘‘(A) the servicer has sent, by first-class mail, a written
notice to the borrower containing—
‘‘(i) a reminder of the borrower’s obligation to maintain hazard insurance on the property securing the
federally related mortgage;
‘‘(ii) a statement that the servicer does not have
evidence of insurance coverage of such property;
‘‘(iii) a clear and conspicuous statement of the
procedures by which the borrower may demonstrate
that the borrower already has insurance coverage; and
‘‘(iv) a statement that the servicer may obtain such
coverage at the borrower’s expense if the borrower
does not provide such demonstration of the borrower’s
existing coverage in a timely manner;
‘‘(B) the servicer has sent, by first-class mail, a second
written notice, at least 30 days after the mailing of the
notice under subparagraph (A) that contains all the
information described in each clause of such subparagraph;
and
‘‘(C) the servicer has not received from the borrower
any demonstration of hazard insurance coverage for the
property securing the mortgage by the end of the 15-day
period beginning on the date the notice under subparagraph
(B) was sent by the servicer.
‘‘(2) SUFFICIENCY OF DEMONSTRATION.—A servicer of a federally related mortgage shall accept any reasonable form of
written confirmation from a borrower of existing insurance
coverage, which shall include the existing insurance policy
number along with the identity of, and contact information
for, the insurance company or agent, or as otherwise required
by the Bureau of Consumer Financial Protection.
‘‘(3) TERMINATION OF FORCE-PLACED INSURANCE.—Within
15 days of the receipt by a servicer of confirmation of a borrower’s existing insurance coverage, the servicer shall—
‘‘(A) terminate the force-placed insurance; and
‘‘(B) refund to the consumer all force-placed insurance
premiums paid by the borrower during any period during
which the borrower’s insurance coverage and the forceplaced insurance coverage were each in effect, and any
related fees charged to the consumer’s account with respect
to the force-placed insurance during such period.
‘‘(4) CLARIFICATION WITH RESPECT TO FLOOD DISASTER
PROTECTION ACT.—No provision of this section shall be construed as prohibiting a servicer from providing simultaneous
or concurrent notice of a lack of flood insurance pursuant
to section 102(e) of the Flood Disaster Protection Act of 1973.
‘‘(m) LIMITATIONS ON FORCE-PLACED INSURANCE CHARGES.—
All charges, apart from charges subject to State regulation as the
business of insurance, related to force-placed insurance imposed
on the borrower by or through the servicer shall be bona fide
and reasonable.’’.

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PUBLIC LAW 111–203—JULY 21, 2010

(b) INCREASE IN PENALTY AMOUNTS.—Section 6(f) of the Real
Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(f)) is
amended—
(1) in paragraphs (1)(B) and (2)(B), by striking ‘‘$1,000’’
each place such term appears and inserting ‘‘$2,000’’; and
(2) in paragraph (2)(B)(i), by striking ‘‘$500,000’’ and
inserting ‘‘$1,000,000’’.
(c) DECREASE IN RESPONSE TIMES.—Section 6(e) of the Real
Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is
amended—
(1) in paragraph (1)(A), by striking ‘‘20 days’’ and inserting
‘‘5 days’’;
(2) in paragraph (2), by striking ‘‘60 days’’ and inserting
‘‘30 days’’; and
(3) by adding at the end the following new paragraph:
‘‘(4) LIMITED EXTENSION OF RESPONSE TIME.—The 30-day
period described in paragraph (2) may be extended for not
more than 15 days if, before the end of such 30-day period,
the servicer notifies the borrower of the extension and the
reasons for the delay in responding.’’.
(d) PROMPT REFUND OF ESCROW ACCOUNTS UPON PAYOFF.—
Section 6(g) of the Real Estate Settlement Procedures Act of 1974
(12 U.S.C. 2605(g)) is amended by adding at the end the following
new sentence: ‘‘Any balance in any such account that is within
the servicer’s control at the time the loan is paid off shall be
promptly returned to the borrower within 20 business days or
credited to a similar account for a new mortgage loan to the borrower with the same lender.’’.

Deadline.
Notification.

Deadline.

SEC. 1464. TRUTH IN LENDING ACT AMENDMENTS.

PROMPT CREDITING OF HOME LOAN PAYTruth in Lending Act (15 U.S.C. 1631
et seq.) is amended by inserting after section 129E (as added
by section 1472) the following new section:

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(a) REQUIREMENTS FOR
MENTS.—Chapter 2 of the

15 USC 1639f.

‘‘§ 129F. Requirements for prompt crediting of home loan
payments
‘‘(a) IN GENERAL.—In connection with a consumer credit transaction secured by a consumer’s principal dwelling, no servicer shall
fail to credit a payment to the consumer’s loan account as of
the date of receipt, except when a delay in crediting does not
result in any charge to the consumer or in the reporting of negative
information to a consumer reporting agency, except as required
in subsection (b).
‘‘(b) EXCEPTION.—If a servicer specifies in writing requirements
for the consumer to follow in making payments, but accepts a
payment that does not conform to the requirements, the servicer
shall credit the payment as of 5 days after receipt.’’.
(b) REQUESTS FOR PAYOFF AMOUNTS.—Chapter 2 of the Truth
in Lending Act (15 U.S.C. 1631 et seq.), as amended by this title,
is amended by inserting after section 129F (as added by subsection
(a)) the following new section:

15 USC 1639g.

‘‘§ 129G. Requests for payoff amounts of home loan
‘‘A creditor or servicer of a home loan shall send an accurate
payoff balance within a reasonable time, but in no case more

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than 7 business days, after the receipt of a written request for
such balance from or on behalf of the borrower.’’.
SEC. 1465. ESCROWS INCLUDED IN REPAYMENT ANALYSIS.

Section 128(b) of the Truth in Lending Act (15 U.S.C. 1638(b))
is amended by adding at the end the following new paragraph:
‘‘(4) REPAYMENT ANALYSIS REQUIRED TO INCLUDE ESCROW
PAYMENTS.—
‘‘(A) IN GENERAL.—In the case of any consumer credit
transaction secured by a first mortgage or lien on the
principal dwelling of the consumer, other than a consumer
credit transaction under an open end credit plan or a
reverse mortgage, for which an impound, trust, or other
type of account has been or will be established in connection
with the transaction for the payment of property taxes,
hazard and flood (if any) insurance premiums, or other
periodic payments or premiums with respect to the property, the information required to be provided under subsection (a) with respect to the number, amount, and due
dates or period of payments scheduled to repay the total
of payments shall take into account the amount of any
monthly payment to such account for each such repayment
in accordance with section 10(a)(2) of the Real Estate
Settlement Procedures Act of 1974.
‘‘(B) ASSESSMENT VALUE.—The amount taken into
account under subparagraph (A) for the payment of property taxes, hazard and flood (if any) insurance premiums,
or other periodic payments or premiums with respect to
the property shall reflect the taxable assessed value of
the real property securing the transaction after the consummation of the transaction, including the value of any
improvements on the property or to be constructed on
the property (whether or not such construction will be
financed from the proceeds of the transaction), if known,
and the replacement costs of the property for hazard insurance, in the initial year after the transaction.’’.

Subtitle F—Appraisal Activities
SEC. 1471. PROPERTY APPRAISAL REQUIREMENTS.

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Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et
seq.) is amended by inserting after 129G (as added by section
1464(b)) the following new section:
‘‘§ 129H. Property appraisal requirements
‘‘(a) IN GENERAL.—A creditor may not extend credit in the
form of a higher-risk mortgage to any consumer without first
obtaining a written appraisal of the property to be mortgaged
prepared in accordance with the requirements of this section.
‘‘(b) APPRAISAL REQUIREMENTS.—
‘‘(1) PHYSICAL PROPERTY VISIT.—Subject to the rules prescribed under paragraph (4), an appraisal of property to be
secured by a higher-risk mortgage does not meet the requirement of this section unless it is performed by a certified or
licensed appraiser who conducts a physical property visit of
the interior of the mortgaged property.
‘‘(2) SECOND APPRAISAL UNDER CERTAIN CIRCUMSTANCES.—

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‘‘(A) IN GENERAL.—If the purpose of a higher-risk mortgage is to finance the purchase or acquisition of the mortgaged property from a person within 180 days of the purchase or acquisition of such property by that person at
a price that was lower than the current sale price of the
property, the creditor shall obtain a second appraisal from
a different certified or licensed appraiser. The second
appraisal shall include an analysis of the difference in
sale prices, changes in market conditions, and any improvements made to the property between the date of the previous sale and the current sale.
‘‘(B) NO COST TO APPLICANT.—The cost of any second
appraisal required under subparagraph (A) may not be
charged to the applicant.
‘‘(3) CERTIFIED OR LICENSED APPRAISER DEFINED.—For purposes of this section, the term ‘certified or licensed appraiser’
means a person who—
‘‘(A) is, at a minimum, certified or licensed by the
State in which the property to be appraised is located;
and
‘‘(B) performs each appraisal in conformity with the
Uniform Standards of Professional Appraisal Practice and
title XI of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989, and the regulations prescribed under such title, as in effect on the date of the
appraisal.
‘‘(4) REGULATIONS.—
‘‘(A) IN GENERAL.—The Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the
National Credit Union Administration Board, the Federal
Housing Finance Agency, and the Bureau shall jointly prescribe regulations to implement this section.
‘‘(B) EXEMPTION.—The agencies listed in subparagraph
(A) may jointly exempt, by rule, a class of loans from
the requirements of this subsection or subsection (a) if
the agencies determine that the exemption is in the public
interest and promotes the safety and soundness of creditors.
‘‘(c) FREE COPY OF APPRAISAL.—A creditor shall provide 1 copy
of each appraisal conducted in accordance with this section in
connection with a higher-risk mortgage to the applicant without
charge, and at least 3 days prior to the transaction closing date.
‘‘(d) CONSUMER NOTIFICATION.—At the time of the initial mortgage application, the applicant shall be provided with a statement
by the creditor that any appraisal prepared for the mortgage is
for the sole use of the creditor, and that the applicant may choose
to have a separate appraisal conducted at the expense of the
applicant.
‘‘(e) VIOLATIONS.—In addition to any other liability to any person under this title, a creditor found to have willfully failed to
obtain an appraisal as required in this section shall be liable
to the applicant or borrower for the sum of $2,000.
‘‘(f) HIGHER-RISK MORTGAGE DEFINED.—For purposes of this
section, the term ‘higher-risk mortgage’ means a residential mortgage loan, other than a reverse mortgage loan that is a qualified
mortgage, as defined in section 129C, secured by a principal
dwelling—

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‘‘(1) that is not a qualified mortgage, as defined in section
129C; and
‘‘(2) with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction, as defined
in section 129C, as of the date the interest rate is set—
‘‘(A) by 1.5 or more percentage points, in the case
of a first lien residential mortgage loan having an original
principal obligation amount that does not exceed the
amount of the maximum limitation on the original principal
obligation of mortgage in effect for a residence of the
applicable size, as of the date of such interest rate set,
pursuant to the sixth sentence of section 305(a)(2) the
Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2));
‘‘(B) by 2.5 or more percentage points, in the case
of a first lien residential mortgage loan having an original
principal obligation amount that exceeds the amount of
the maximum limitation on the original principal obligation
of mortgage in effect for a residence of the applicable size,
as of the date of such interest rate set, pursuant to the
sixth sentence of section 305(a)(2) the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1454(a)(2)); and
‘‘(C) by 3.5 or more percentage points for a subordinate
lien residential mortgage loan.’’.
SEC. 1472. APPRAISAL INDEPENDENCE REQUIREMENTS.

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(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended by inserting after section 129D
(as added by section 1461(a)) the following new section:
‘‘§ 129E. Appraisal independence requirements
‘‘(a) IN GENERAL.—It shall be unlawful, in extending credit
or in providing any services for a consumer credit transaction
secured by the principal dwelling of the consumer, to engage in
any act or practice that violates appraisal independence as described
in or pursuant to regulations prescribed under this section.
‘‘(b) APPRAISAL INDEPENDENCE.—For purposes of subsection (a),
acts or practices that violate appraisal independence shall include—
‘‘(1) any appraisal of a property offered as security for
repayment of the consumer credit transaction that is conducted
in connection with such transaction in which a person with
an interest in the underlying transaction compensates, coerces,
extorts, colludes, instructs, induces, bribes, or intimidates a
person, appraisal management company, firm, or other entity
conducting or involved in an appraisal, or attempts, to compensate, coerce, extort, collude, instruct, induce, bribe, or intimidate such a person, for the purpose of causing the appraised
value assigned, under the appraisal, to the property to be
based on any factor other than the independent judgment of
the appraiser;
‘‘(2)
mischaracterizing,
or
suborning
any
mischaracterization of, the appraised value of the property
securing the extension of the credit;
‘‘(3) seeking to influence an appraiser or otherwise to
encourage a targeted value in order to facilitate the making
or pricing of the transaction; and

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‘‘(4) withholding or threatening to withhold timely payment
for an appraisal report or for appraisal services rendered when
the appraisal report or services are provided for in accordance
with the contract between the parties.
‘‘(c) EXCEPTIONS.—The requirements of subsection (b) shall not
be construed as prohibiting a mortgage lender, mortgage broker,
mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, consumer,
or any other person with an interest in a real estate transaction
from asking an appraiser to undertake 1 or more of the following:
‘‘(1) Consider additional, appropriate property information,
including the consideration of additional comparable properties
to make or support an appraisal.
‘‘(2) Provide further detail, substantiation, or explanation
for the appraiser’s value conclusion.
‘‘(3) Correct errors in the appraisal report.
‘‘(d) PROHIBITIONS ON CONFLICTS OF INTEREST.—No certified
or licensed appraiser conducting, and no appraisal management
company procuring or facilitating, an appraisal in connection with
a consumer credit transaction secured by the principal dwelling
of a consumer may have a direct or indirect interest, financial
or otherwise, in the property or transaction involving the appraisal.
‘‘(e) MANDATORY REPORTING.—Any mortgage lender, mortgage
broker, mortgage banker, real estate broker, appraisal management
company, employee of an appraisal management company, or any
other person involved in a real estate transaction involving an
appraisal in connection with a consumer credit transaction secured
by the principal dwelling of a consumer who has a reasonable
basis to believe an appraiser is failing to comply with the Uniform
Standards of Professional Appraisal Practice, is violating applicable
laws, or is otherwise engaging in unethical or unprofessional conduct, shall refer the matter to the applicable State appraiser certifying and licensing agency.
‘‘(f) NO EXTENSION OF CREDIT.—In connection with a consumer
credit transaction secured by a consumer’s principal dwelling, a
creditor who knows, at or before loan consummation, of a violation
of the appraisal independence standards established in subsections
(b) or (d) shall not extend credit based on such appraisal unless
the creditor documents that the creditor has acted with reasonable
diligence to determine that the appraisal does not materially misstate or misrepresent the value of such dwelling.
‘‘(g) RULES AND INTERPRETIVE GUIDELINES.—
‘‘(1) IN GENERAL.—Except as provided under paragraph
(2), the Board, the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, the National Credit Union
Administration Board, the Federal Housing Finance Agency,
and the Bureau may jointly issue rules, interpretive guidelines,
and general statements of policy with respect to acts or practices that violate appraisal independence in the provision of
mortgage lending services for a consumer credit transaction
secured by the principal dwelling of the consumer and mortgage
brokerage services for such a transaction, within the meaning
of subsections (a), (b), (c), (d), (e), (f), (h), and (i).
‘‘(2) INTERIM FINAL REGULATIONS.—The Board shall, for
purposes of this section, prescribe interim final regulations
no later than 90 days after the date of enactment of this
section defining with specificity acts or practices that violate

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124 STAT. 2189

appraisal independence in the provision of mortgage lending
services for a consumer credit transaction secured by the principal dwelling of the consumer or mortgage brokerage services
for such a transaction and defining any terms in this section
or such regulations. Rules prescribed by the Board under this
paragraph shall be deemed to be rules prescribed by the agencies jointly under paragraph (1).
‘‘(h) APPRAISAL REPORT PORTABILITY.—Consistent with the
requirements of this section, the Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the National
Credit Union Administration Board, the Federal Housing Finance
Agency, and the Bureau may jointly issue regulations that address
the issue of appraisal report portability, including regulations that
ensure the portability of the appraisal report between lenders for
a consumer credit transaction secured by a 1-4 unit single family
residence that is the principal dwelling of the consumer, or mortgage
brokerage services for such a transaction.
‘‘(i) CUSTOMARY AND REASONABLE FEE.—
‘‘(1) IN GENERAL.—Lenders and their agents shall compensate fee appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of
the property being appraised. Evidence for such fees may be
established by objective third-party information, such as
government agency fee schedules, academic studies, and independent private sector surveys. Fee studies shall exclude
assignments ordered by known appraisal management companies.
‘‘(2) FEE APPRAISER DEFINITION.—For purposes of this section, the term ‘fee appraiser’ means a person who is not an
employee of the mortgage loan originator or appraisal management company engaging the appraiser and is—
‘‘(A) a State licensed or certified appraiser who receives
a fee for performing an appraisal and certifies that the
appraisal has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice; or
‘‘(B) a company not subject to the requirements of
section 1124 of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.)
that utilizes the services of State licensed or certified
appraisers and receives a fee for performing appraisals
in accordance with the Uniform Standards of Professional
Appraisal Practice.
‘‘(3) EXCEPTION FOR COMPLEX ASSIGNMENTS.—In the case
of an appraisal involving a complex assignment, the customary
and reasonable fee may reflect the increased time, difficulty,
and scope of the work required for such an appraisal and
include an amount over and above the customary and reasonable fee for non-complex assignments.
‘‘(j) SUNSET.—Effective on the date the interim final regulations
are promulgated pursuant to subsection (g), the Home Valuation
Code of Conduct announced by the Federal Housing Finance Agency
on December 23, 2008, shall have no force or effect.
‘‘(k) PENALTIES.—
‘‘(1) FIRST VIOLATION.—In addition to the enforcement
provisions referred to in section 130, each person who violates
this section shall forfeit and pay a civil penalty of not more
than $10,000 for each day any such violation continues.

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124 STAT. 2190
Applicability.

PUBLIC LAW 111–203—JULY 21, 2010

‘‘(2) SUBSEQUENT VIOLATIONS.—In the case of any person
on whom a civil penalty has been imposed under paragraph
(1), paragraph (1) shall be applied by substituting ‘$20,000’
for ‘$10,000’ with respect to all subsequent violations.
‘‘(3) ASSESSMENT.—The agency referred to in subsection
(a) or (c) of section 108 with respect to any person described
in paragraph (1) shall assess any penalty under this subsection
to which such person is subject.’’.
(b) CLERICAL AMENDMENT.—The table of sections for chapter
2 of the Truth in Lending Act is amended by inserting after the
item relating to section 129D (as added by section 1461(c)) the
following new items:
‘‘129E. Appraisal independence requirements.
‘‘129F. Requirements for prompt crediting of home loan payments.
‘‘129G. Requests for payoff amounts of home loan.
‘‘129H. Property appraisal requirements.’’.

Applicability.

(c) DEFERENCE.—Section 105 of the Truth in Lending Act (15
U.S.C. 1604) is amended by adding at the end the following:
‘‘(h) DEFERENCE.—Notwithstanding any power granted to any
Federal agency under this title, the deference that a court affords
to the Bureau with respect to a determination made by the Bureau
relating to the meaning or interpretation of any provision of this
title, other than section 129E or 129H, shall be applied as if the
Bureau were the only agency authorized to apply, enforce, interpret,
or administer the provisions of this title.’’.
(d) CONFORMING AMENDMENTS IN TITLE X NOT APPLICABLE
TO SECTIONS 129E AND 129H.—Notwithstanding section 1099A,
the term ‘‘Board’’ in sections 129E and 129H, as added by this
subtitle, shall not be substituted by the term ‘‘Bureau’’.

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SEC. 1473. AMENDMENTS RELATING TO APPRAISAL SUBCOMMITTEE
OF FFIEC, APPRAISER INDEPENDENCE MONITORING,
APPROVED APPRAISER EDUCATION, APPRAISAL MANAGEMENT COMPANIES, APPRAISER COMPLAINT HOTLINE,
AUTOMATED VALUATION MODELS, AND BROKER PRICE
OPINIONS.

(a) THRESHOLD LEVELS.—Section 1112(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3341(b)) is amended by inserting before the period the following: ‘‘, and receives concurrence from the Bureau of Consumer
Financial Protection that such threshold level provides reasonable
protection for consumers who purchase 1–4 unit single-family residences’’.
(b) ANNUAL REPORT OF APPRAISAL SUBCOMMITTEE.—Section
1103(a) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3332(a)) is amended at the end by
inserting the following new paragraph:
‘‘(5) transmit an annual report to the Congress not later
than June 15 of each year that describes the manner in which
each function assigned to the Appraisal Subcommittee has been
carried out during the preceding year. The report shall also
detail the activities of the Appraisal Subcommittee, including
the results of all audits of State appraiser regulatory agencies,
and provide an accounting of disapproved actions and warnings
taken in the previous year, including a description of the conditions causing the disapproval and actions taken to achieve
compliance.’’.

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124 STAT. 2191

(c) OPEN MEETINGS.—Section 1104(b) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3333(b)) is amended—
(1) by inserting ‘‘in public session after notice in the Federal
Register, but may close certain portions of these meetings
related to personnel and review of preliminary State audit
reports,’’ after ‘‘shall meet’’; and
(2) by adding after the final period the following: ‘‘The
subject matter discussed in any closed or executive session
shall be described in the Federal Register notice of the
meeting.’’.
(d) REGULATIONS.—Section 1106 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3335)
is amended—
(1) by inserting ‘‘prescribe regulations in accordance with
chapter 5 of title 5, United States Code (commonly referred
to as the Administrative Procedures Act) after notice and opportunity for comment,’’ after ‘‘hold hearings’’; and
(2) at the end by inserting ‘‘Any regulations prescribed
by the Appraisal Subcommittee shall (unless otherwise provided
in this title) be limited to the following functions: temporary
practice, national registry, information sharing, and enforcement. For purposes of prescribing regulations, the Appraisal
Subcommittee shall establish an advisory committee of industry
participants, including appraisers, lenders, consumer advocates,
real estate agents, and government agencies, and hold meetings
as necessary to support the development of regulations.’’.
(e) APPRAISAL REVIEWS AND COMPLEX APPRAISALS.—
(1) SECTION 1110.—Section 1110 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3339) is amended—
(A) in paragraph (1), by striking ‘‘and’’;
(B) in paragraph (2), by striking the period at the
end and inserting ‘‘; and’’; and
(C) by inserting after paragraph (2) the following:
‘‘(3) that such appraisals shall be subject to appropriate
review for compliance with the Uniform Standards of Professional Appraisal Practice.’’.
(2) SECTION 1113.—Section 1113 of the Financial Institutions and Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3342) is amended by inserting before the period the
following: ‘‘, where a complex 1-to-4 unit single family residential appraisal means an appraisal for which the property to
be appraised, the form of ownership, the property characteristics, or the market conditions are atypical’’.
(f) APPRAISAL MANAGEMENT SERVICES.—
(1) SUPERVISION OF THIRD PARTY PROVIDERS OF APPRAISAL
MANAGEMENT SERVICES.—Section 1103(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3332(a)) (as previously amended by this section)
is amended—
(A) by amending paragraph (1) to read as follows:
‘‘(1) monitor the requirements established by States—
‘‘(A) for the certification and licensing of individuals
who are qualified to perform appraisals in connection with
federally related transactions, including a code of professional responsibility; and

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‘‘(B) for the registration and supervision of the operations and activities of an appraisal management company;’’; and
(B) by adding at the end the following new paragraph:
‘‘(6) maintain a national registry of appraisal management
companies that either are registered with and subject to supervision of a State appraiser certifying and licensing agency or
are operating subsidiaries of a Federally regulated financial
institution.’’.
(2) APPRAISAL MANAGEMENT COMPANY MINIMUM REQUIREMENTS.—Title XI of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et
seq.) is amended by adding at the end the following new section
(and amending the table of contents accordingly):

12 USC 3353.

‘‘SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM REQUIREMENTS.

Regulations.
Applicability.
States.

‘‘(a) IN GENERAL.—The Board of Governors of the Federal
Reserve System, the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau
of Consumer Financial Protection shall jointly, by rule, establish
minimum requirements to be applied by a State in the registration
of appraisal management companies. Such requirements shall
include a requirement that such companies—
‘‘(1) register with and be subject to supervision by a State
appraiser certifying and licensing agency in each State in which
such company operates;
‘‘(2) verify that only licensed or certified appraisers are
used for federally related transactions;
‘‘(3) require that appraisals coordinated by an appraisal
management company comply with the Uniform Standards of
Professional Appraisal Practice; and
‘‘(4) require that appraisals are conducted independently
and free from inappropriate influence and coercion pursuant
to the appraisal independence standards established under section 129E of the Truth in Lending Act.
‘‘(b) RELATION TO STATE LAW.—Nothing in this section shall
be construed to prevent States from establishing requirements in
addition to any rules promulgated under subsection (a).
‘‘(c) FEDERALLY REGULATED FINANCIAL INSTITUTIONS.—The
requirements of subsection (a) shall apply to an appraisal management company that is a subsidiary owned and controlled by a
financial institution and regulated by a Federal financial institution
regulatory agency. An appraisal management company that is a
subsidiary owned and controlled by a financial institution regulated
by a Federal financial institution regulatory agency shall not be
required to register with a State.
‘‘(d) REGISTRATION LIMITATIONS.—An appraisal management
company shall not be registered by a State or included on the
national registry if such company, in whole or in part, directly
or indirectly, is owned by any person who has had an appraiser
license or certificate refused, denied, cancelled, surrendered in lieu
of revocation, or revoked in any State. Additionally, each person
that owns more than 10 percent of an appraisal management company shall be of good moral character, as determined by the State
appraiser certifying and licensing agency, and shall submit to a

Applicability.

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background investigation carried out by the State appraiser certifying and licensing agency.
‘‘(e) REPORTING.—The Board of Governors of the Federal
Reserve System, the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau
of Consumer Financial Protection shall jointly promulgate regulations for the reporting of the activities of appraisal management
companies to the Appraisal Subcommittee in determining the payment of the annual registry fee.
‘‘(f) EFFECTIVE DATE.—
‘‘(1) IN GENERAL.—No appraisal management company may
perform services related to a federally related transaction in
a State after the date that is 36 months after the date on
which the regulations required to be prescribed under subsection (a) are prescribed in final form unless such company
is registered with such State or subject to oversight by a Federal
financial institutions regulatory agency.
‘‘(2) EXTENSION OF EFFECTIVE DATE.—Subject to the
approval of the Council, the Appraisal Subcommittee may
extend by an additional 12 months the requirements for the
registration and supervision of appraisal management companies if it makes a written finding that a State has made
substantial progress in establishing a State appraisal management company registration and supervision system that appears
to conform with the provisions of this title.’’.
(3) STATE APPRAISER CERTIFYING AND LICENSING AGENCY
AUTHORITY.—Section 1117 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3346) is
amended by adding at the end the following: ‘‘The duties of
such agency may additionally include the registration and
supervision of appraisal management companies and the addition of information about the appraisal management company
to the national registry.’’.
(4) APPRAISAL MANAGEMENT COMPANY DEFINITION.—Section
1121 of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 3350) is amended by adding
at the end the following:
‘‘(11) APPRAISAL MANAGEMENT COMPANY.—The term
‘appraisal management company’ means, in connection with
valuing properties collateralizing mortgage loans or mortgages
incorporated into a securitization, any external third party
authorized either by a creditor of a consumer credit transaction
secured by a consumer’s principal dwelling or by an underwriter
of or other principal in the secondary mortgage markets, that
oversees a network or panel of more than 15 certified or licensed
appraisers in a State or 25 or more nationally within a given
year—
‘‘(A) to recruit, select, and retain appraisers;
‘‘(B) to contract with licensed and certified appraisers
to perform appraisal assignments;
‘‘(C) to manage the process of having an appraisal
performed, including providing administrative duties such
as receiving appraisal orders and appraisal reports, submitting completed appraisal reports to creditors and underwriters, collecting fees from creditors and underwriters for

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PUBLIC LAW 111–203—JULY 21, 2010

services provided, and reimbursing appraisers for services
performed; or
‘‘(D) to review and verify the work of appraisers.’’.
(g) STATE AGENCY REPORTING REQUIREMENT.—Section 1109(a)
of the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3338(a)) is amended—
(1) by striking ‘‘and’’ after the semicolon in paragraph
(1);
(2) by redesignating paragraph (2) as paragraph (4); and
(3) by inserting after paragraph (1) the following new paragraphs:
‘‘(2) transmit reports on the issuance and renewal of
licenses and certifications, sanctions, disciplinary actions,
license and certification revocations, and license and certification suspensions on a timely basis to the national registry
of the Appraisal Subcommittee;
‘‘(3) transmit reports on a timely basis of supervisory activities involving appraisal management companies or other thirdparty providers of appraisals and appraisal management services, including investigations initiated and disciplinary actions
taken; and’’.
(h) REGISTRY FEES MODIFIED.—
(1) IN GENERAL.—Section 1109(a) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3338(a)) is amended—
(A) by amending paragraph (4) (as modified by section
1473(g)) to read as follows:
‘‘(4) collect—
‘‘(A) from such individuals who perform or seek to
perform appraisals in federally related transactions, an
annual registry fee of not more than $40, such fees to
be transmitted by the State agencies to the Council on
an annual basis; and
‘‘(B) from an appraisal management company that
either has registered with a State appraiser certifying and
licensing agency in accordance with this title or operates
as a subsidiary of a federally regulated financial institution,
an annual registry fee of—
‘‘(i) in the case of such a company that has been
in existence for more than a year, $25 multiplied by
the number of appraisers working for or contracting
with such company in such State during the previous
year, but where such $25 amount may be adjusted,
up to a maximum of $50, at the discretion of the
Appraisal Subcommittee, if necessary to carry out the
Subcommittee’s functions under this title; and
‘‘(ii) in the case of such a company that has not
been in existence for more than a year, $25 multiplied
by an appropriate number to be determined by the
Appraisal Subcommittee, and where such number will
be used for determining the fee of all such companies
that were not in existence for more than a year, but
where such $25 amount may be adjusted, up to a
maximum of $50, at the discretion of the Appraisal
Subcommittee, if necessary to carry out the Subcommittee’s functions under this title.’’; and

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124 STAT. 2195

(B) by amending the matter following paragraph (4),
as redesignated, to read as follows:
‘‘Subject to the approval of the Council, the Appraisal Subcommittee
may adjust the dollar amount of registry fees under paragraph
(4)(A), up to a maximum of $80 per annum, as necessary to carry
out its functions under this title. The Appraisal Subcommittee
shall consider at least once every 5 years whether to adjust the
dollar amount of the registry fees to account for inflation. In implementing any change in registry fees, the Appraisal Subcommittee
shall provide flexibility to the States for multi-year certifications
and licenses already in place, as well as a transition period to
implement the changes in registry fees. In establishing the amount
of the annual registry fee for an appraisal management company,
the Appraisal Subcommittee shall have the discretion to impose
a minimum annual registry fee for an appraisal management company to protect against the under reporting of the number of
appraisers working for or contracted by the appraisal management
company.’’.
(2) INCREMENTAL REVENUES.—Incremental revenues collected pursuant to the increases required by this subsection
shall be placed in a separate account at the United States
Treasury, entitled the ‘‘Appraisal Subcommittee Account’’.
(i) GRANTS AND REPORTS.—Section 1109(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3338(b)) is amended—
(1) by striking ‘‘and’’ after the semicolon in paragraph
(3);
(2) by striking the period at the end of paragraph (4)
and inserting a semicolon;
(3) by adding at the end the following new paragraphs:
‘‘(5) to make grants to State appraiser certifying and
licensing agencies, in accordance with policies to be developed
by the Appraisal Subcommittee, to support the efforts of such
agencies to comply with this title, including—
‘‘(A) the complaint process, complaint investigations,
and appraiser enforcement activities of such agencies; and
‘‘(B) the submission of data on State licensed and certified appraisers and appraisal management companies to
the National appraisal registry, including information
affirming that the appraiser or appraisal management company meets the required qualification criteria and formal
and informal disciplinary actions; and
‘‘(6) to report to all State appraiser certifying and licensing
agencies when a license or certification is surrendered, revoked,
or suspended.’’.
Obligations authorized under this subsection may not exceed 75
percent of the fiscal year total of incremental increase in fees
collected and deposited in the ‘‘Appraisal Subcommittee Account’’
pursuant to subsection (h).
(j) CRITERIA.—Section 1116 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3345)
is amended—
(1) in subsection (c), by inserting ‘‘whose criteria for the
licensing of a real estate appraiser currently meet or exceed
the minimum criteria issued by the Appraisal Qualifications
Board of The Appraisal Foundation for the licensing of real
estate appraisers’’ before the period at the end; and

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PUBLIC LAW 111–203—JULY 21, 2010

(2) by striking subsection (e) and inserting the following
new subsection:
‘‘(e) MINIMUM QUALIFICATION REQUIREMENTS.—Any requirements established for individuals in the position of ‘Trainee
Appraiser’ and ‘Supervisory Appraiser’ shall meet or exceed the
minimum qualification requirements of the Appraiser Qualifications
Board of The Appraisal Foundation. The Appraisal Subcommittee
shall have the authority to enforce these requirements.’’.
(k) MONITORING OF STATE APPRAISER CERTIFYING AND
LICENSING AGENCIES.—Section 1118 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3347)
is amended—
(1) by amending subsection (a) to read as follows:
‘‘(a) IN GENERAL.—The Appraisal Subcommittee shall monitor
each State appraiser certifying and licensing agency for the purposes of determining whether such agency—
‘‘(1) has policies, practices, funding, staffing, and procedures
that are consistent with this title;
‘‘(2) processes complaints and completes investigations in
a reasonable time period;
‘‘(3) appropriately disciplines sanctioned appraisers and
appraisal management companies;
‘‘(4) maintains an effective regulatory program; and
‘‘(5) reports complaints and disciplinary actions on a timely
basis to the national registries on appraisers and appraisal
management companies maintained by the Appraisal Subcommittee.
The Appraisal Subcommittee shall have the authority to remove
a State licensed or certified appraiser or a registered appraisal
management company from a national registry on an interim basis,
not to exceed 90 days, pending State agency action on licensing,
certification, registration, and disciplinary proceedings. The
Appraisal Subcommittee and all agencies, instrumentalities, and
Federally recognized entities under this title shall not recognize
appraiser certifications and licenses from States whose appraisal
policies, practices, funding, staffing, or procedures are found to
be inconsistent with this title. The Appraisal Subcommittee shall
have the authority to impose sanctions, as described in this section,
against a State agency that fails to have an effective appraiser
regulatory program. In determining whether such a program is
effective, the Appraisal Subcommittee shall include an analysis
of the licensing and certification of appraisers, the registration
of appraisal management companies, the issuance of temporary
licenses and certifications for appraisers, the receiving and tracking
of submitted complaints against appraisers and appraisal management companies, the investigation of complaints, and enforcement
actions against appraisers and appraisal management companies.
The Appraisal Subcommittee shall have the authority to impose
interim actions and suspensions against a State agency as an
alternative to, or in advance of, the derecognition of a State agency.’’.
(2) in subsection (b)(2), by inserting after ‘‘authority’’ the
following: ‘‘or sufficient funding’’.
(l) RECIPROCITY.—Subsection (b) of section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3351(b)) is amended to read as follows:
‘‘(b) RECIPROCITY.—Notwithstanding any other provisions of
this title, a federally related transaction shall not be appraised

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by a certified or licensed appraiser unless the State appraiser
certifying or licensing agency of the State certifying or licensing
such appraiser has in place a policy of issuing a reciprocal certification or license for an individual from another State when—
‘‘(1) the appraiser licensing and certification program of
such other State is in compliance with the provisions of this
title; and
‘‘(2) the appraiser holds a valid certification from a State
whose requirements for certification or licensing meet or exceed
the licensure standards established by the State where an
individual seeks appraisal licensure.’’.
(m) CONSIDERATION OF PROFESSIONAL APPRAISAL DESIGNATIONS.—Section 1122(d) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351(d)) is
amended by striking ‘‘shall not exclude’’ and all that follows through
the end of the subsection and inserting the following: ‘‘may include
education achieved, experience, sample appraisals, and references
from prior clients. Membership in a nationally recognized professional appraisal organization may be a criteria considered, though
lack of membership therein shall not be the sole bar against consideration for an assignment under these criteria.’’.
(n) APPRAISER INDEPENDENCE.—Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3351) is amended by adding at the end the following new
subsection:
‘‘(g) APPRAISER INDEPENDENCE MONITORING.—The Appraisal
Subcommittee shall monitor each State appraiser certifying and
licensing agency for the purpose of determining whether such
agency’s policies, practices, and procedures are consistent with the
purposes of maintaining appraiser independence and whether such
State has adopted and maintains effective laws, regulations, and
policies aimed at maintaining appraiser independence.’’.
(o) APPRAISER EDUCATION.—Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3351) is amended by inserting after subsection (g) (as added
by subsection (l) of this section) the following new subsection:
‘‘(h) APPROVED EDUCATION.—The Appraisal Subcommittee shall
encourage the States to accept courses approved by the Appraiser
Qualification Board’s Course Approval Program.’’.
(p) APPRAISAL COMPLAINT HOTLINE.—Section 1122 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3351), as amended by this section, is amended by adding
at the end the following new subsection:
‘‘(i) APPRAISAL COMPLAINT NATIONAL HOTLINE.—If, 6 months
after the date of the enactment of this subsection, the Appraisal
Subcommittee determines that no national hotline exists to receive
complaints of non-compliance with appraisal independence standards and Uniform Standards of Professional Appraisal Practice,
including complaints from appraisers, individuals, or other entities
concerning the improper influencing or attempted improper influencing of appraisers or the appraisal process, the Appraisal Subcommittee shall establish and operate such a national hotline, which
shall include a toll-free telephone number and an email address.
If the Appraisal Subcommittee operates such a national hotline,
the Appraisal Subcommittee shall refer complaints for further action
to appropriate governmental bodies, including a State appraiser
certifying and licensing agency, a financial institution regulator,

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or other appropriate legal authorities. For complaints referred to
State appraiser certifying and licensing agencies or to Federal regulators, the Appraisal Subcommittee shall have the authority to
follow up such complaint referrals in order to determine the status
of the resolution of the complaint.’’.
(q) AUTOMATED VALUATION MODELS.—Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3331 et seq.), as amended by this section, is amended by
adding at the end the following new section (and amending the
table of contents accordingly):
12 USC 3354.

‘‘SEC. 1125. AUTOMATED VALUATION MODELS USED TO ESTIMATE
COLLATERAL VALUE FOR MORTGAGE LENDING PURPOSES.

‘‘(a) IN GENERAL.—Automated valuation models shall adhere
to quality control standards designed to—
‘‘(1) ensure a high level of confidence in the estimates
produced by automated valuation models;
‘‘(2) protect against the manipulation of data;
‘‘(3) seek to avoid conflicts of interest;
‘‘(4) require random sample testing and reviews; and
‘‘(5) account for any other such factor that the agencies
listed in subsection (b) determine to be appropriate.
‘‘(b) ADOPTION OF REGULATIONS.—The Board, the Comptroller
of the Currency, the Federal Deposit Insurance Corporation, the
National Credit Union Administration Board, the Federal Housing
Finance Agency, and the Bureau of Consumer Financial Protection,
in consultation with the staff of the Appraisal Subcommittee and
the Appraisal Standards Board of the Appraisal Foundation, shall
promulgate regulations to implement the quality control standards
required under this section.
‘‘(c) ENFORCEMENT.—Compliance with regulations issued under
this subsection shall be enforced by—
‘‘(1) with respect to a financial institution, or subsidiary
owned and controlled by a financial institution and regulated
by a Federal financial institution regulatory agency, the Federal
financial institution regulatory agency that acts as the primary
Federal supervisor of such financial institution or subsidiary;
and
‘‘(2) with respect to other participants in the market for
appraisals of 1-to-4 unit single family residential real estate,
the Federal Trade Commission, the Bureau of Consumer Financial Protection, and a State attorney general.
‘‘(d) AUTOMATED VALUATION MODEL DEFINED.—For purposes
of this section, the term ‘automated valuation model’ means any
computerized model used by mortgage originators and secondary
market issuers to determine the collateral worth of a mortgage
secured by a consumer’s principal dwelling.’’.
(r) BROKER PRICE OPINIONS.—Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3331 et seq.), as amended by this section, is amended by adding
at the end the following new section (and amending the table
of contents accordingly):
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12 USC 3355.

‘‘SEC. 1126. BROKER PRICE OPINIONS.

‘‘(a) GENERAL PROHIBITION.—In conjunction with the purchase
of a consumer’s principal dwelling, broker price opinions may not
be used as the primary basis to determine the value of a piece

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of property for the purpose of a loan origination of a residential
mortgage loan secured by such piece of property.
‘‘(b) BROKER PRICE OPINION DEFINED.—For purposes of this
section, the term ‘broker price opinion’ means an estimate prepared
by a real estate broker, agent, or sales person that details the
probable selling price of a particular piece of real estate property
and provides a varying level of detail about the property’s condition,
market, and neighborhood, and information on comparable sales,
but does not include an automated valuation model, as defined
in section 1125(c).’’.
(s) AMENDMENTS TO APPRAISAL SUBCOMMITTEE.—Section 1011
of the Federal Financial Institutions Examination Council Act of
1978 (12 U.S.C. 3310) is amended—
(1) in the first sentence, by adding before the period the
following: ‘‘, the Bureau of Consumer Financial Protection, and
the Federal Housing Finance Agency’’; and
(2) by inserting at the end the following: ‘‘At all times
at least one member of the Appraisal Subcommittee shall have
demonstrated knowledge and competence through licensure,
certification, or professional designation within the appraisal
profession.’’.
(t) TECHNICAL CORRECTIONS.—
(1) Section 1119(a)(2) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3348(a)(2))
is amended by striking ‘‘council,’’ and inserting ‘‘Council,’’.
(2) Section 1121(6) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(6))
is amended by striking ‘‘Corporations,’’ and inserting ‘‘Corporation,’’.
(3) Section 1121(8) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(8))
is amended by striking ‘‘council’’ and inserting ‘‘Council’’.
(4) Section 1122 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is
amended—
(A) in subsection (a)(1) by moving the left margin of
subparagraphs (A), (B), and (C) 2 ems to the right; and
(B) in subsection (c)—
(i) by striking ‘‘Federal Financial Institutions
Examination Council’’ and inserting ‘‘Financial Institutions Examination Council’’; and
(ii) by striking ‘‘the council’s functions’’ and
inserting ‘‘the Council’s functions’’.

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SEC. 1474. EQUAL CREDIT OPPORTUNITY ACT AMENDMENT.

Subsection (e) of section 701 of the Equal Credit Opportunity
Act (15 U.S.C. 1691) is amended to read as follows:
‘‘(e) COPIES FURNISHED TO APPLICANTS.—
‘‘(1) IN GENERAL.—Each creditor shall furnish to an
applicant a copy of any and all written appraisals and valuations developed in connection with the applicant’s application
for a loan that is secured or would have been secured by
a first lien on a dwelling promptly upon completion, but in
no case later than 3 days prior to the closing of the loan,
whether the creditor grants or denies the applicant’s request
for credit or the application is incomplete or withdrawn.

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‘‘(2) WAIVER.—The applicant may waive the 3 day requirement provided for in paragraph (1), except where otherwise
required in law.
‘‘(3) REIMBURSEMENT.—The applicant may be required to
pay a reasonable fee to reimburse the creditor for the cost
of the appraisal, except where otherwise required in law.
‘‘(4) FREE COPY.—Notwithstanding paragraph (3), the creditor shall provide a copy of each written appraisal or valuation
at no additional cost to the applicant.
‘‘(5) NOTIFICATION TO APPLICANTS.—At the time of application, the creditor shall notify an applicant in writing of the
right to receive a copy of each written appraisal and valuation
under this subsection.
‘‘(6) VALUATION DEFINED.—For purposes of this subsection,
the term ‘valuation’ shall include any estimate of the value
of a dwelling developed in connection with a creditor’s decision
to provide credit, including those values developed pursuant
to a policy of a government sponsored enterprise or by an
automated valuation model, a broker price opinion, or other
methodology or mechanism.’’.

SEC. 1475. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974
AMENDMENT RELATING TO CERTAIN APPRAISAL FEES.
12 USC 2603.

Section 4 of the Real Estate Settlement Procedures Act of
1974 is amended by adding at the end the following new subsection:
‘‘(c) The standard form described in subsection (a) may include,
in the case of an appraisal coordinated by an appraisal management
company (as such term is defined in section 1121(11) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3350(11))), a clear disclosure of—
‘‘(1) the fee paid directly to the appraiser by such company;
and
‘‘(2) the administration fee charged by such company.’’.

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SEC. 1476. GAO STUDY ON THE EFFECTIVENESS AND IMPACT OF VARIOUS APPRAISAL METHODS, VALUATION MODELS AND
DISTRIBUTIONS CHANNELS, AND ON THE HOME VALUATION CODE OF CONDUCT AND THE APPRAISAL SUBCOMMITTEE.

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(a) IN GENERAL.—The Government Accountability Office shall
conduct a study on—
(1) the effectiveness and impact of—
(A) appraisal methods, including the cost approach,
the comparative sales approach, the income approach, and
others that may be available;
(B) appraisal valuation models, including licensed and
certified appraisals, broker-priced opinions, and automated
valuation models; and
(C) appraisal distribution channels, including appraisal
management companies, independent appraisal operations
within mortgage originators, and fee-for-service appraisers;
(2) the Home Valuation Code of Conduct; and
(3) the Appraisal Subcommittee’s functions pursuant to
title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989.
(b) STUDY.—Not later than—
(1) 12 months after the date of enactment of this Act,
the Government Accountability Office shall submit a study

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2201

to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of
the House of Representatives; and
(2) 90 days after the date of enactment of this Act, the
Government Accountability Office shall provide a report on
the status of the study and any preliminary findings to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House
of Representatives.
(c) CONTENT OF STUDY.—The study required by this section
shall include an examination of the following:
(1) APPRAISAL APPROACHES, VALUATION MODELS, AND DISTRIBUTION CHANNELS.—
(A) The prevalence, alone or in combination, of certain
appraisal approaches, models, and channels in purchasemoney and refinance mortgage transactions.
(B) The accuracy of these approaches, models, and
channels in assessing the property as collateral.
(C) Whether and how these approaches, models, and
channels contributed to price speculation during the previous cycle.
(D) The costs to consumers of these approaches, models,
and channels.
(E) The disclosure of fees to consumers in the appraisal
process.
(F) To what extent the usage of these approaches,
models, and channels may be influenced by a conflict of
interest between the mortgage lender and the appraiser
and the mechanism by which the lender selects and compensates the appraiser.
(G) The suitability of these approaches, models, and
channels in rural versus urban areas.
(2) HOME VALUATION CODE OF CONDUCT (HVCC).—
(A) How the HVCC affects mortgage lenders’ selection
of appraisers.
(B) How the HVCC affects State regulation of
appraisers and appraisal distribution channels.
(C) How the HVCC affects the quality and cost of
appraisals and the length of time to obtain an appraisal.
(D) How the HVCC affects mortgage brokers, small
businesses, and consumers.
(d) ADDITIONAL STUDY REQUIRED.—
(1) IN GENERAL.—Not later than 18 months after the date
of enactment of this Act, the Government Accountability Office
shall submit a study to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.
(2) CONTENT OF ADDITIONAL STUDY.—The study required
under paragraph (1) shall include—
(A) an examination of—
(i) the Appraisal Subcommittee’s ability to monitor
and enforce State and Federal certification requirements and standards, including by providing a summary with a statistical breakdown of enforcement
actions taken during the last 10 years;

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124 STAT. 2202

PUBLIC LAW 111–203—JULY 21, 2010
(ii) whether existing Federal financial institutions
regulatory agency exemptions on appraisals for federally related transactions needs to be revised; and
(iii) whether new means of data collection, such
as the establishment of a national repository, would
benefit the Appraisal Subcommittee’s ability to perform
its functions; and
(B) recommendations from this examination for
administrative and legislative action at the Federal and
State level.

Subtitle G—Mortgage Resolution and
Modification
12 USC 5220b.

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Time period.

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SEC. 1481. MULTIFAMILY MORTGAGE RESOLUTION PROGRAM.

(a) ESTABLISHMENT.—The Secretary of Housing and Urban
Development shall develop a program under this subsection to
ensure the protection of current and future tenants and at-risk
multifamily properties, where feasible, based on criteria that may
include—
(1) creating sustainable financing of such properties, that
may take into consideration such factors as—
(A) the rental income generated by such properties;
and
(B) the preservation of adequate operating reserves;
(2) maintaining the level of Federal, State, and city subsidies in effect as of the date of the enactment of this Act;
(3) providing funds for rehabilitation; and
(4) facilitating the transfer of such properties, when appropriate and with the agreement of owners, to responsible new
owners and ensuring affordability of such properties.
(b) COORDINATION.—The Secretary of Housing and Urban
Development may, in carrying out the program developed under
this section, coordinate with the Secretary of the Treasury, the
Federal Deposit Insurance Corporation, the Board of Governors
of the Federal Reserve System, the Federal Housing Finance
Agency, and any other Federal Government agency that the Secretary considers appropriate.
(c) DEFINITION.—For purposes of this section, the term ‘‘multifamily properties’’ means a residential structure that consists of
5 or more dwelling units.
(d) PREVENTION OF QUALIFICATION FOR CRIMINAL APPLICANTS.—
(1) IN GENERAL.—No person shall be eligible to begin
receiving assistance from the Making Home Affordable Program
authorized under the Emergency Economic Stabilization Act
of 2008 (12 U.S.C. 5201 et seq.), or any other mortgage assistance program authorized or funded by that Act, on or after
60 days after the date of the enactment of this Act, if such
person, in connection with a mortgage or real estate transaction,
has been convicted, within the last 10 years, of any one of
the following:
(A) Felony larceny, theft, fraud, or forgery.
(B) Money laundering.
(C) Tax evasion.
(2) PROCEDURES.—The Secretary shall establish procedures
to ensure compliance with this subsection.

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124 STAT. 2203

(3) REPORT.—The Secretary shall report to the Committee
on Financial Services of the House of Representatives and
the Committee on Banking, Housing, and Urban Affairs of
the Senate regarding the implementation of this provision.
The report shall also describe the steps taken to implement
this subsection.
SEC. 1482. HOME AFFORDABLE MODIFICATION PROGRAM GUIDELINES.

12 USC 5219a.

(a) NET PRESENT VALUE INPUT DATA.—The Secretary of the
Treasury (in this section referred to as the ‘‘Secretary’’) shall revise
the supplemental directives and other guidelines for the Home
Affordable Modification Program of the Making Home Affordable
initiative of the Secretary of the Treasury, authorized under the
Emergency Economic Stabilization Act of 2008 (Public Law 110–
343), to require each mortgage servicer participating in such program to provide each borrower under a mortgage whose request
for a mortgage modification under the Program is denied with
all borrower-related and mortgage-related input data used in any
net present value (NPV) analyses performed in connection with
the subject mortgage. Such input data shall be provided to the
borrower at the time of such denial.
(b) WEB-BASED SITE FOR NPV CALCULATOR AND APPLICATION.—
(1) NPV CALCULATOR.—In carrying out the Home Affordable Modification Program, the Secretary shall establish and
maintain a site on the World Wide Web that provides a calculator for net present value analyses of a mortgage, based on
the Secretary’s methodology for calculating such value, that
mortgagors can use to enter information regarding their own
mortgages and that provides a determination after entering
such information regarding a mortgage of whether such mortgage would be accepted or rejected for modification under the
Program, using such methodology.
(2) DISCLOSURE.—Such Web site shall also prominently
disclose that each mortgage servicer participating in such Program may use a method for calculating net present value
of a mortgage that is different than the method used by such
calculator.
(3) APPLICATION.—The Secretary shall make a reasonable
effort to include on such World Wide Web site a method for
homeowners to apply for a mortgage modification under the
Home Affordable Modification Program.
(c) PUBLIC AVAILABILITY OF NPV METHODOLOGY, COMPUTER
MODEL, AND VARIABLES.—The Secretary shall make publicly available, including by posting on a World Wide Web site of the Secretary—
(1) the Secretary’s methodology and computer model,
including all formulae used in such computer model, used for
calculating net present value of a mortgage that is used by
the calculator established pursuant to subsection (b); and
(2) all non-proprietary variables used in such net present
value analysis.

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SEC. 1483. PUBLIC AVAILABILITY OF INFORMATION OF MAKING HOME
AFFORDABLE PROGRAM.

12 USC 5219b.

(a) REVISIONS TO PROGRAM GUIDELINES.—The Secretary of the
Treasury (in this section referred to as the ‘‘Secretary’’) shall revise
the guidelines for the Home Affordable Modification Program of
the Making Home Affordable initiative of the Secretary of the

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124 STAT. 2204

Deadlines.
Reports.
Web posting.

Records.

Regulations.

PUBLIC LAW 111–203—JULY 21, 2010

Treasury, authorized under the Emergency Economic Stabilization
Act of 2008 (Public Law 110–343), to provide that the data being
collected by the Secretary from each mortgage servicer and lender
participating in the Program is made public in accordance with
subsection (b).
(b) PUBLIC AVAILABILITY.—Data shall be made available
according to the following guidelines:
(1) Not more than 14 days after each monthly deadline
for submission of data by mortgage servicers and lenders
participating in the Program, reports shall be made publicly
available by means of a World Wide Web site of the Secretary,
and by submitting a report to the Congress, that shall includes
the following information:
(A) The number of requests for mortgage modifications
under the Program that the servicer or lender has received.
(B) The number of requests for mortgage modifications
under the Program that the servicer or lender has processed.
(C) The number of requests for mortgage modifications
under the Program that the servicer or lender has
approved.
(D) The number of requests for mortgage modifications
under the Program that the servicer or lender has denied.
(2) Not more than 60 days after each monthly deadline
for submission of data by mortgage servicers and lenders
participating in the Program, the Secretary shall make data
tables available to the public at the individual record level.
The Secretary shall issue regulations prescribing—
(A) the procedures for disclosing such data to the
public; and
(B) such deletions as the Secretary may determine
to be appropriate to protect any privacy interest of any
mortgage modification applicant, including the deletion or
alteration of the applicant’s name and identification
number.
SEC. 1484. PROTECTING TENANTS AT FORECLOSURE EXTENSION AND
CLARIFICATION.

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The Protecting Tenants at Foreclosure Act is amended—
(1) in section 702 (12 U.S.C. 5220 note)—
(A) in subsection (a)(2), by striking ‘‘, as of the date
of such notice of foreclosure’’; and
(B) in subsection (c), by inserting after the period the
following: ‘‘For purposes of this section, the date of a notice
of foreclosure shall be deemed to be the date on which
complete title to a property is transferred to a successor
entity or person as a result of an order of a court or
pursuant to provisions in a mortgage, deed of trust, or
security deed.’’; and
(2) in section 704 (12 U.S.C. 5201 note), by striking ‘‘2012’’
and inserting ‘‘2014’’.

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124 STAT. 2205

Subtitle H—Miscellaneous Provisions

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SEC. 1491. SENSE OF CONGRESS REGARDING THE IMPORTANCE OF
GOVERNMENT-SPONSORED ENTERPRISES REFORM TO
ENHANCE THE PROTECTION, LIMITATION, AND REGULATION OF THE TERMS OF RESIDENTIAL MORTGAGE
CREDIT.

(a) FINDINGS.—The Congress finds as follows:
(1) The Government-sponsored enterprises, Federal
National Mortgage Association (Fannie Mae) and the Federal
Home Loan Mortgage Corporation (Freddie Mac), were chartered by Congress to ensure a reliable and affordable supply
of mortgage funding, but enjoy a dual legal status as privately
owned corporations with Government mandated affordable
housing goals.
(2) In 1996, the Department of Housing and Urban Development required that 42 percent of Fannie Mae’s and Freddie
Mac’s mortgage financing should go to borrowers with income
levels below the median for a given area.
(3) In 2004, the Department of Housing and Urban Development revised those goals, increasing them to 56 percent of
their overall mortgage purchases by 2008, and additionally
mandated that 12 percent of all mortgage purchases by Fannie
Mae and Freddie Mac be ‘‘special affordable’’ loans made to
borrowers with incomes less than 60 percent of an area’s
median income, a target that ultimately increased to 28 percent
for 2008.
(4) To help fulfill those mandated affordable housing goals,
in 1995 the Department of Housing and Urban Development
authorized Fannie Mae and Freddie Mac to purchase subprime
securities that included loans made to low-income borrowers.
(5) After this authorization to purchase subprime securities,
subprime and near-prime loans increased from 9 percent of
securitized mortgages in 2001 to 40 percent in 2006, while
the market share of conventional mortgages dropped from 78.8
percent in 2003 to 50.1 percent by 2007 with a corresponding
increase in subprime and Alt-A loans from 10.1 percent to
32.7 percent over the same period.
(6) In 2004 alone, Fannie Mae and Freddie Mac purchased
$175,000,000,000 in subprime mortgage securities, which
accounted for 44 percent of the market that year, and from
2005 through 2007, Fannie Mae and Freddie Mac purchased
approximately $1,000,000,000,000 in subprime and Alt-A loans,
while Fannie Mae’s acquisitions of mortgages with less than
10 percent down payments almost tripled.
(7) According to data from the Federal Housing Finance
Agency (FHFA) for the fourth quarter of 2008, Fannie Mae
and Freddie Mac own or guarantee 75 percent of all newly
originated mortgages, and Fannie Mae and Freddie Mac currently own 13.3 percent of outstanding mortgage debt in the
United States and have issued mortgage-backed securities for
31.0 percent of the residential debt market, a combined total
of 44.3 percent of outstanding mortgage debt in the United
States.
(8) On September 7, 2008, the FHFA placed Fannie Mae
and Freddie Mac into conservatorship, with the Treasury

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124 STAT. 2206

PUBLIC LAW 111–203—JULY 21, 2010

Department subsequently agreeing to purchase at least
$200,000,000,000 of preferred stock from each enterprise in
exchange for warrants for the purchase of 79.9 percent of
each enterprise’s common stock.
(9) The conservatorship for Fannie Mae and Freddie Mac
has
potentially
exposed
taxpayers
to
upwards
of
$5,300,000,000,000 worth of risk.
(10) The hybrid public-private status of Fannie Mae and
Freddie Mac is untenable and must be resolved to assure that
consumers are offered and receive residential mortgage loans
on terms that reasonably reflect their ability to repay the
loans and that are understandable and not unfair, deceptive,
or abusive.
(b) SENSE OF THE CONGRESS.—It is the sense of the Congress
that efforts to enhance by the protection, limitation, and regulation
of the terms of residential mortgage credit and the practices related
to such credit would be incomplete without enactment of meaningful
structural reforms of Fannie Mae and Freddie Mac.
SEC. 1492. GAO STUDY REPORT ON GOVERNMENT EFFORTS TO COMBAT MORTGAGE FORECLOSURE RESCUE SCAMS AND
LOAN MODIFICATION FRAUD.

(a) STUDY.—The Comptroller General of the United States shall
conduct a study of the current inter-agency efforts of the Secretary
of the Treasury, the Secretary of Housing and Urban Development,
the Attorney General, and the Federal Trade Commission to crackdown on mortgage foreclosure rescue scams and loan modification
fraud in order to advise the Congress to the risks and vulnerabilities
of emerging schemes in the loan modification arena.
(b) REPORT.—
(1) IN GENERAL.—The Comptroller General shall submit
a report to the Congress on the study conducted under subsection (a) containing such recommendations for legislative and
administrative actions as the Comptroller General may determine to be appropriate in addition to the recommendations
required under paragraph (2).
(2) SPECIFIC TOPICS.—The report made under paragraph
(1) shall include—
(A) an evaluation of the effectiveness of the interagency task force current efforts to combat mortgage foreclosure rescue scams and loan modification fraud scams;
(B) specific recommendations on agency or legislative
action that are essential to properly protect homeowners
from mortgage foreclosure rescue scams and loan modification fraud scams; and
(C) the adequacy of financial resources that the Federal
Government is allocating to—
(i) crackdown on loan modification and foreclosure
rescue scams; and
(ii) the education of homeowners about fraudulent
scams relating to loan modification and foreclosure
rescues.
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SEC. 1493. REPORTING OF MORTGAGE DATA BY STATE.
12 USC
1715z–25.

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(a) IN GENERAL.—Section 104(a) of the Helping Families Save
Their Homes Act of 2009 (division A of Public Law 111–22) is
amended—

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124 STAT. 2207

(1) in paragraph (2), by striking ‘‘resulting’’ and inserting
‘‘in each State that result’’;
(2) in paragraph (3), by inserting ‘‘each State for’’ after
‘‘modifications in’’; and
(3) in paragraph (4), by inserting ‘‘in each State’’ after
‘‘total number of loans’’.
(b) CONFORMING AMENDMENT.—Section 104(b)(1)(A) of such Act
is amended by adding at the end the following sentence: ‘‘Not
later than 60 days after the date of the enactment of the DoddFrank Wall Street Reform and Consumer Protection Act, the Comptroller of the Currency and the Director of the Office of Thrift
Supervision shall update such requirements to reflect amendments
made to this section by such Act.’’.

Deadline.

SEC. 1494. STUDY OF EFFECT OF DRYWALL PRESENCE ON FORECLOSURES.

(a) STUDY.—The Secretary of Housing and Urban Development,
in consultation with the Secretary of the Treasury, shall conduct
a study of the effect on residential mortgage loan foreclosures
of—
(1) the presence in residential structures subject to such
mortgage loans of drywall that was imported from China during
the period beginning with 2004 and ending at the end of 2007;
and
(2) the availability of property insurance for residential
structures in which such drywall is present.
(b) REPORT.—Not later than the expiration of the 120-day period
beginning on the date of the enactment of this Act, the Secretary
of Housing and Urban Development shall submit to the Congress
a report on the study conducted under subsection (a) containing
its findings, conclusions, and recommendations.
SEC. 1495. DEFINITION.

For purposes of this title, the term ‘‘designated transfer date’’
means the date established under section 1062 of this Act.

15 USC 1601
note.

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SEC. 1496. EMERGENCY MORTGAGE RELIEF.

(a) EMERGENCY HOMEOWNERS’ RELIEF FUND.—Effective October
1, 2010, and notwithstanding any other provision of law, there
is hereby made available to the Secretary of Housing and Urban
Development such sums as are necessary to provide $1,000,000,000
in assistance through the Emergency Homeowners’ Relief Fund,
which such Secretary shall establish pursuant to section 107 of
the Emergency Housing Act of 1975 (12 U.S.C. 2706), as such
Act is amended by this section, for use for emergency mortgage
assistance in accordance with title I of such Act.
(b) REAUTHORIZATION OF EMERGENCY MORTGAGE RELIEF PROGRAM.—Title I of the Emergency Housing Act of 1975 is amended—
(1) in section 103 (12 U.S.C. 2702)—
(A) in paragraph (2)—
(i) by striking ‘‘have indicated’’ and all that follows
through ‘‘regulation of the holder’’ and insert ‘‘have
certified’’;
(ii) by striking ‘‘(such as the volume of delinquent
loans in its portfolio)’’; and
(iii) by striking ‘‘, except that such statement’’ and
all that follows through ‘‘purposes of this title’’; and

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12 USC 2706
note.

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Determination.

Guidelines.
Procedures.

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12 USC 2706.

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(B) in paragraph (4), by inserting ‘‘or medical conditions’’ after ‘‘adverse economic conditions’’;
(2) in section 104 (12 U.S.C. 2703)—
(A) in subsection (b), by striking ‘‘, but such assistance’’
and all that follows through the period at the end and
inserting the following: ‘‘. The amount of assistance provided to a homeowner under this title shall be an amount
that the Secretary determines is reasonably necessary to
supplement such amount as the homeowner is capable
of contributing toward such mortgage payment, except that
the aggregate amount of such assistance provided for any
homeowner shall not exceed $50,000.’’;
(B) in subsection (d), by striking ‘‘interest on a loan
or advance’’ and all that follows through the end of the
subsection and inserting the following: ‘‘(1) the rate of
interest on any loan or advance of credit insured under
this title shall be fixed for the life of the loan or advance
of credit and shall not exceed the rate of interest that
is generally charged for mortgages on single-family housing
insured by the Secretary of Housing and Urban Development under title II of the National Housing Act at the
time such loan or advance of credit is made, and (2) no
interest shall be charged on interest which is deferred
on a loan or advance of credit made under this title. In
establishing rates, terms and conditions for loans or
advances of credit made under this title, the Secretary
shall take into account a homeowner’s ability to repay
such loan or advance of credit.’’; and
(C) in subsection (e), by inserting after the period at
the end of the first sentence the following: ‘‘Any eligible
homeowner who receives a grant or an advance of credit
under this title may repay the loan in full, without penalty,
by lump sum or by installment payments at any time
before the loan becomes due and payable.’’;
(3) in section 105 (12 U.S.C. 2704)—
(A) by striking subsection (b);
(B) in subsection (e)—
(i) by inserting ‘‘and emergency mortgage relief
payments made under section 106’’ after ‘‘insured
under this section’’; and
(ii) by striking ‘‘$1,500,000,000 at any one time’’
and inserting ‘‘$3,000,000,000’’;
(C) by redesignating subsections (c), (d), and (e) as
subsections (b), (c), and (d), respectively; and
(D) by adding at the end the following new subsection:
‘‘(e) The Secretary shall establish underwriting guidelines or
procedures to allocate amounts made available for loans and
advances insured under this section and for emergency relief payments made under section 106 based on the likelihood that a
mortgagor will be able to resume mortgage payments, pursuant
to the requirement under section 103(5).’’;
(4) in section 107—
(A) by striking ‘‘(a)’’; and
(B) by striking subsection (b);
(5) in section 108 (12 U.S.C. 2707), by adding at the end
the following new subsection:

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124 STAT. 2209

‘‘(d) COVERAGE OF EXISTING PROGRAMS.—The Secretary shall
allow funds to be administered by a State that has an existing
program that is determined by the Secretary to provide substantially similar assistance to homeowners. After such determination
is made such State shall not be required to modify such program
to comply with the provisions of this title.’’;
(6) in section 109 (12 U.S.C. 2708)—
(A) in the section heading, by striking ‘‘AUTHORIZATION
AND’’;
(B) by striking subsection (a);
(C) by striking ‘‘(b)’’; and
(D) by striking ‘‘1977’’ and inserting ‘‘2011’’;
(7) by striking sections 110, 111, and 113 (12 U.S.C. 2709,
2710, 2712); and
(8) by redesignating section 112 (12 U.S.C. 2711) as section
110.

Determination.

SEC. 1497. ADDITIONAL ASSISTANCE FOR NEIGHBORHOOD STABILIZATION PROGRAM.

42 USC 5301
note.

(a) IN GENERAL.—Effective October 1, 2010, out of funds in
the Treasury not otherwise appropriated, there is hereby made
available to the Secretary of Housing and Urban Development
$1,000,000,000, and the Secretary of Housing and Urban Development shall use such amounts for assistance to States and units
of general local government for the redevelopment of abandoned
and foreclosed homes, in accordance with the same provisions
applicable under the second undesignated paragraph under the
heading ‘‘Community Planning and Development—Community
Development Fund’’ in title XII of division A of the American
Recovery and Reinvestment Act of 2009 (Public Law 111–5; 123
Stat. 217) to amounts made available under such second undesignated paragraph, except as follows:
(1) Notwithstanding the matter of such second undesignated paragraph that precedes the first proviso, amounts made
available by this section shall remain available until expended.
(2) The 3rd, 4th, 5th, 6th, 7th, and 15th provisos of such
second undesignated paragraph shall not apply to amounts
made available by this section.
(3) Amounts made available by this section shall be allocated based on a funding formula for such amounts established
by the Secretary in accordance with section 2301(b) of the
Housing and Economic Recovery Act of 2008 (42 U.S.C. 5301
note), except that—
(A) notwithstanding paragraph (2) of such section
2301(b), the formula shall be established not later than
30 days after the date of the enactment of this Act;
(B) notwithstanding such section 2301(b), each State
shall receive, at a minimum, not less than 0.5 percent
of funds made available under this section;
(C) the Secretary may establish a minimum grant
amount for direct allocations to units of general local
government located within a State, which shall not exceed
$1,000,000;
(D) each State and local government receiving grant
amounts shall establish procedures to create preferences

Effective date.
State and local
governments.

19:19 Sep 08, 2010

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Procedures.

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124 STAT. 2210

for the development of affordable rental housing for properties assisted with amounts made available by this section;
and
(E) the Secretary may use not more than 2 percent
of the funds made available under this section for technical
assistance to grantees.
(4) Paragraph (1) of section 2301(c) of the Housing and
Economic Recovery Act of 2008 shall not apply to amounts
made available by this section.
(5) The fourth proviso from the end of such second undesignated paragraph shall be applied to amounts made available
by this section by substituting ‘‘2013’’ for ‘‘2012’’.
(6) Notwithstanding section 2301(a) of the Housing and
Economic Recovery Act of 2008, the term ‘‘State’’ means any
State, as defined in section 102 of the Housing and Community
Development Act of 1974 (42 U.S.C. 5302), and the District
of Columbia, for purposes of this section and this title, as
applied to amounts made available by this section.
(7)(A) None of the amounts made available by this section
shall be distributed to—
(i) any organization which has been convicted for a
violation under Federal law relating to an election for
Federal office; or
(ii) any organization which employs applicable individuals.
(B) In this paragraph, the term ‘‘applicable individual’’
means an individual who—
(i) is—
(I) employed by the organization in a permanent
or temporary capacity;
(II) contracted or retained by the organization;
or
(III) acting on behalf of, or with the express or
apparent authority of, the organization; and
(ii) has been convicted for a violation under Federal
law relating to an election for Federal office.
(8) An eligible entity receiving a grant under this section
shall, to the maximum extent feasible, provide for the hiring
of employees who reside in the vicinity, as such term is defined
by the Secretary, of projects funded under this section or contract with small businesses that are owned and operated by
persons residing in the vicinity of such projects.
(b) ADDITIONAL AMENDMENTS.—
(1) SECTION 2301.—Section 2301(f)(3)(A)(ii) of the Housing
and Economic Recovery Act of 2008 (42 U.S.C.
5301(f)(3)(A)(ii))—
(A) is amended by striking ‘‘for the purchase and
redevelopment of abandoned and foreclosed upon homes
or residential properties that will be used’’; and
(B) shall apply with respect to any unexpended or
unobligated balances, including recaptured and reallocated
funds made available under this Act, section 2301 of the
Housing and Economic Recovery Act of 2008 (42 U.S.C.
5301), and the heading ‘‘Community Planning and Development—Community Development Fund’’ in title XII of division A of the American Recovery and Reinvestment Act
of 2009 (Public Law 111-5; 123 Stat. 217).

Applicability.

Definition.

Election
violations.

Definition.

42 USC 5301
note.

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Applicability.

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124 STAT. 2211

(2) NOTICE OF FORECLOSURE.—For any amounts made
available under this section, under division B, title III of the
Housing and Economic Recovery Act of 2008 (42 U.S.C. 5301),
or under the heading ‘‘Community Planning and Development—
Community Development Fund’’ in title XII of division A of
the American Recovery and Reinvestment Act of 2009 (Public
Law 111-5; 123 Stat. 217), the date of a notice of foreclosure
shall be deemed to be the date on which complete title to
a property is transferred to a successor entity or person as
a result of an order of a court or pursuant to provisions in
a mortgage, deed of trust, or security deed.

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SEC. 1498. LEGAL ASSISTANCE FOR FORECLOSURE-RELATED ISSUES.

(a) ESTABLISHMENT.—The Secretary of Housing and Urban
Development (hereafter in this section referred to as the ‘‘Secretary’’) shall establish a program for making grants for providing
a full range of foreclosure legal assistance to low- and moderateincome homeowners and tenants related to home ownership
preservation, home foreclosure prevention, and tenancy associated
with home foreclosure.
(b) COMPETITIVE ALLOCATION.—The Secretary shall allocate
amounts made available for grants under this section to State
and local legal organizations on the basis of a competitive process.
For purposes of this subsection ‘‘State and local legal organizations’’
are those State and local organizations whose primary business
or mission is to provide legal assistance.
(c) PRIORITY TO CERTAIN AREAS.—In allocating amounts in
accordance with subsection (b), the Secretary shall give priority
consideration to State and local legal organizations that are operating in the 125 metropolitan statistical areas (as that term is
defined by the Director of the Office of Management and Budget)
with the highest home foreclosure rates.
(d) LEGAL ASSISTANCE.—
(1) IN GENERAL.—Any State or local legal organization that
receives financial assistance pursuant to this section may use
such amounts only to assist—
(A) homeowners of owner-occupied homes with mortgages in default, in danger of default, or subject to or
at risk of foreclosure; and
(B) tenants at risk of or subject to eviction as a result
of foreclosure of the property in which such tenant resides.
(2) COMMENCE USE WITHIN 90 DAYS.—Any State or local
legal organization that receives financial assistance pursuant
to this section shall begin using any financial assistance
received under this section within 90 days after receipt of
the assistance.
(3) PROHIBITION ON CLASS ACTIONS.—No funds provided
to a State or local legal organization under this section may
be used to support any class action litigation.
(4) LIMITATION ON LEGAL ASSISTANCE.—Legal assistance
funded with amounts provided under this section shall be limited to mortgage-related default, eviction, or foreclosure proceedings, without regard to whether such foreclosure is judicial
or nonjudicial.
(5) EFFECTIVE DATE.—Notwithstanding any other provision
of this Act, this subsection shall take effect on the date of
the enactment of this Act.

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Grants.
12 USC 1701x–2.

States and local
organizations.

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PUBLIC LAW 111–203—JULY 21, 2010

(e) LIMITATION ON DISTRIBUTION OF ASSISTANCE.—
(1) IN GENERAL.—None of the amounts made available
under this section shall be distributed to—
(A) any organization which has been convicted for a
violation under Federal law relating to an election for
Federal office; or
(B) any organization which employs applicable individuals.
(2) DEFINITION OF APPLICABLE INDIVIDUALS.—In this subsection, the term ‘‘applicable individual’’ means an individual
who—
(A) is—
(i) employed by the organization in a permanent
or temporary capacity;
(ii) contracted or retained by the organization; or
(iii) acting on behalf of, or with the express or
apparent authority of, the organization; and
(B) has been convicted for a violation under Federal
law relating to an election for Federal office.
(f) AUTHORIZATION OF APPROPRIATIONS.—There are authorized
to be appropriated to the Secretary $35,000,000 for each of fiscal
years 2011 through 2012 for grants under this section.

Election
violations.

TITLE XV—MISCELLANEOUS
PROVISIONS
SEC. 1501. RESTRICTIONS ON USE OF UNITED STATES FUNDS FOR
FOREIGN GOVERNMENTS; PROTECTION OF AMERICAN
TAXPAYERS.

The Bretton Woods Agreements Act (22 U.S.C. 286 et seq.)
is amended by adding at the end the following:

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22 USC 286tt.

‘‘SEC. 68. RESTRICTIONS ON USE OF UNITED STATES FUNDS FOR FOREIGN GOVERNMENTS; PROTECTION OF AMERICAN TAXPAYERS.

‘‘(a) IN GENERAL.—The Secretary of the Treasury shall instruct
the United States Executive Director at the International Monetary
Fund—
‘‘(1) to evaluate, prior to consideration by the Board of
Executive Directors of the Fund , any proposal submitted to
the Board for the Fund to make a loan to a country if—
‘‘(A) the amount of the public debt of the country
exceeds the gross domestic product of the country as of
the most recent year for which such information is available; and
‘‘(B) the country is not eligible for assistance from
the International Development Association.
‘‘(2) OPPOSITION TO LOANS UNLIKELY TO BE REPAID IN
FULL.—If any such evaluation indicates that the proposed loan
is not likely to be repaid in full, the Secretary of the Treasury
shall instruct the United States Executive Director at the Fund
to use the voice and vote of the United States to oppose the
proposal.
‘‘(b) REPORTS TO CONGRESS.—Within 30 days after the Board
of Executive Directors of the Fund approves a proposal described
in subsection (a), and annually thereafter by June 30, for the

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124 STAT. 2213

duration of any program approved under such proposals, the Secretary of the Treasury shall report in writing to the Committee
on Financial Services of the House of Representatives and the
Committee on Foreign Relations and the Committee on Banking,
Housing, and Urban Affairs of the Senate assessing the likelihood
that loans made pursuant to such proposals will be repaid in
full, including—
‘‘(1) the borrowing country’s current debt status, including,
to the extent possible, its maturity structure, whether it has
fixed or floating rates, whether it is indexed, and by whom
it is held;
‘‘(2) the borrowing country’s external and internal
vulnerabilities that could potentially affect its ability to repay;
and
‘‘(3) the borrowing country’s debt management strategy.’’.

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SEC. 1502. CONFLICT MINERALS.

(a) SENSE OF CONGRESS ON EXPLOITATION AND TRADE OF CONFLICT MINERALS ORIGINATING IN THE DEMOCRATIC REPUBLIC OF
THE CONGO.—It is the sense of Congress that the exploitation
and trade of conflict minerals originating in the Democratic Republic
of the Congo is helping to finance conflict characterized by extreme
levels of violence in the eastern Democratic Republic of the Congo,
particularly sexual- and gender-based violence, and contributing
to an emergency humanitarian situation therein, warranting the
provisions of section 13(p) of the Securities Exchange Act of 1934,
as added by subsection (b).
(b) DISCLOSURE RELATING TO CONFLICT MINERALS ORIGINATING
IN THE DEMOCRATIC REPUBLIC OF THE CONGO.—Section 13 of the
Securities Exchange Act of 1934 (15 U.S.C. 78m), as amended
by this Act, is amended by adding at the end the following new
subsection:
‘‘(p) DISCLOSURES RELATING TO CONFLICT MINERALS ORIGINATING IN THE DEMOCRATIC REPUBLIC OF THE CONGO.—
‘‘(1) REGULATIONS.—
‘‘(A) IN GENERAL.—Not later than 270 days after the
date of the enactment of this subsection, the Commission
shall promulgate regulations requiring any person
described in paragraph (2) to disclose annually, beginning
with the person’s first full fiscal year that begins after
the date of promulgation of such regulations, whether conflict minerals that are necessary as described in paragraph
(2)(B), in the year for which such reporting is required,
did originate in the Democratic Republic of the Congo
or an adjoining country and, in cases in which such conflict
minerals did originate in any such country, submit to the
Commission a report that includes, with respect to the
period covered by the report—
‘‘(i) a description of the measures taken by the
person to exercise due diligence on the source and
chain of custody of such minerals, which measures
shall include an independent private sector audit of
such report submitted through the Commission that
is conducted in accordance with standards established
by the Comptroller General of the United States, in
accordance with rules promulgated by the Commission,
in consultation with the Secretary of State; and

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15 USC 78m
note.

Deadlines.
Effective date.
Reports.

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124 STAT. 2214

Web posting.

President.
Determination.

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Publication.

President.
Determination.
Certification.

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‘‘(ii) a description of the products manufactured
or contracted to be manufactured that are not DRC
conflict free (‘DRC conflict free’ is defined to mean
the products that do not contain minerals that directly
or indirectly finance or benefit armed groups in the
Democratic Republic of the Congo or an adjoining
country), the entity that conducted the independent
private sector audit in accordance with clause (i), the
facilities used to process the conflict minerals, the
country of origin of the conflict minerals, and the
efforts to determine the mine or location of origin with
the greatest possible specificity.
‘‘(B) CERTIFICATION.—The person submitting a report
under subparagraph (A) shall certify the audit described
in clause (i) of such subparagraph that is included in such
report. Such a certified audit shall constitute a critical
component of due diligence in establishing the source and
chain of custody of such minerals.
‘‘(C) UNRELIABLE DETERMINATION.—If a report required
to be submitted by a person under subparagraph (A) relies
on a determination of an independent private sector audit,
as described under subparagraph (A)(i), or other due diligence processes previously determined by the Commission
to be unreliable, the report shall not satisfy the requirements of the regulations promulgated under subparagraph
(A)(i).
‘‘(D) DRC CONFLICT FREE.—For purposes of this paragraph, a product may be labeled as ‘DRC conflict free’
if the product does not contain conflict minerals that
directly or indirectly finance or benefit armed groups in
the Democratic Republic of the Congo or an adjoining
country.
‘‘(E) INFORMATION AVAILABLE TO THE PUBLIC.—Each
person described under paragraph (2) shall make available
to the public on the Internet website of such person the
information disclosed by such person under subparagraph
(A).
‘‘(2) PERSON DESCRIBED.—A person is described in this paragraph if—
‘‘(A) the person is required to file reports with the
Commission pursuant to paragraph (1)(A); and
‘‘(B) conflict minerals are necessary to the functionality
or production of a product manufactured by such person.
‘‘(3) REVISIONS AND WAIVERS.—The Commission shall revise
or temporarily waive the requirements described in paragraph
(1) if the President transmits to the Commission a determination that—
‘‘(A) such revision or waiver is in the national security
interest of the United States and the President includes
the reasons therefor; and
‘‘(B) establishes a date, not later than 2 years after
the initial publication of such exemption, on which such
exemption shall expire.
‘‘(4) TERMINATION OF DISCLOSURE REQUIREMENTS.—The
requirements of paragraph (1) shall terminate on the date
on which the President determines and certifies to the appropriate congressional committees, but in no case earlier than

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2215

the date that is one day after the end of the 5-year period
beginning on the date of the enactment of this subsection,
that no armed groups continue to be directly involved and
benefitting from commercial activity involving conflict minerals.
‘‘(5) DEFINITIONS.—For purposes of this subsection, the
terms ‘adjoining country’, ‘appropriate congressional committees’, ‘armed group’, and ‘conflict mineral’ have the meaning
given those terms under section 1502 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act.’’.
(c) STRATEGY AND MAP TO ADDRESS LINKAGES BETWEEN CONFLICT MINERALS AND ARMED GROUPS.—
(1) STRATEGY.—
(A) IN GENERAL.—Not later than 180 days after the
date of the enactment of this Act, the Secretary of State,
in consultation with the Administrator of the United States
Agency for International Development, shall submit to the
appropriate congressional committees a strategy to address
the linkages between human rights abuses, armed groups,
mining of conflict minerals, and commercial products.
(B) CONTENTS.—The strategy required by subparagraph (A) shall include the following:
(i) A plan to promote peace and security in the
Democratic Republic of the Congo by supporting efforts
of the Government of the Democratic Republic of the
Congo, including the Ministry of Mines and other relevant agencies, adjoining countries, and the international community, in particular the United Nations
Group of Experts on the Democratic Republic of Congo,
to—
(I) monitor and stop commercial activities
involving the natural resources of the Democratic
Republic of the Congo that contribute to the activities of armed groups and human rights violations
in the Democratic Republic of the Congo; and
(II) develop stronger governance and economic
institutions that can facilitate and improve transparency in the cross-border trade involving the
natural resources of the Democratic Republic of
the Congo to reduce exploitation by armed groups
and promote local and regional development.
(ii) A plan to provide guidance to commercial entities seeking to exercise due diligence on and formalize
the origin and chain of custody of conflict minerals
used in their products and on their suppliers to ensure
that conflict minerals used in the products of such
suppliers do not directly or indirectly finance armed
conflict or result in labor or human rights violations.
(iii) A description of punitive measures that could
be taken against individuals or entities whose commercial activities are supporting armed groups and human
rights violations in the Democratic Republic of the
Congo.
(2) MAP.—
(A) IN GENERAL.—Not later than 180 days after the
date of the enactment of this Act, the Secretary of State
shall, in accordance with the recommendation of the United

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124 STAT. 2216

Nations Group of Experts on the Democratic Republic of
the Congo in their December 2008 report—
(i) produce a map of mineral-rich zones, trade
routes, and areas under the control of armed groups
in the Democratic Republic of the Congo and adjoining
countries based on data from multiple sources,
including—
(I) the United Nations Group of Experts on
the Democratic Republic of the Congo;
(II) the Government of the Democratic
Republic of the Congo, the governments of
adjoining countries, and the governments of other
Member States of the United Nations; and
(III) local and international nongovernmental
organizations;
(ii) make such map available to the public; and
(iii) provide to the appropriate congressional
committees an explanatory note describing the sources
of information from which such map is based and
the identification, where possible, of the armed groups
or other forces in control of the mines depicted.
(B) DESIGNATION.—The map required under subparagraph (A) shall be known as the ‘‘Conflict Minerals Map’’,
and mines located in areas under the control of armed
groups in the Democratic Republic of the Congo and
adjoining countries, as depicted on such Conflict Minerals
Map, shall be known as ‘‘Conflict Zone Mines’’.
(C) UPDATES.—The Secretary of State shall update the
map required under subparagraph (A) not less frequently
than once every 180 days until the date on which the
disclosure requirements under paragraph (1) of section
13(p) of the Securities Exchange Act of 1934, as added
by subsection (b), terminate in accordance with the provisions of paragraph (4) of such section 13(p).
(D) PUBLICATION IN FEDERAL REGISTER.—The Secretary
of State shall add minerals to the list of minerals in the
definition of conflict minerals under section 1502, as appropriate. The Secretary shall publish in the Federal Register
notice of intent to declare a mineral as a conflict mineral
included in such definition not later than one year before
such declaration.
(d) REPORTS.—
(1) BASELINE REPORT.—Not later than 1 year after the
date of the enactment of this Act and annually thereafter
until the termination of the disclosure requirements under
section 13(p) of the Securities Exchange Act of 1934, the Comptroller General of the United States shall submit to appropriate
congressional committees a report that includes an assessment
of the rate of sexual- and gender-based violence in war-torn
areas of the Democratic Republic of the Congo and adjoining
countries.
(2) REGULAR REPORT ON EFFECTIVENESS.—Not later than
2 years after the date of the enactment of this Act and annually
thereafter, the Comptroller General of the United States shall
submit to the appropriate congressional committees a report
that includes the following:

Public
information.

Deadline.

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Notice.
Deadline.

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124 STAT. 2217

(A) An assessment of the effectiveness of section 13(p)
of the Securities Exchange Act of 1934, as added by subsection (b), in promoting peace and security in the Democratic Republic of the Congo and adjoining countries.
(B) A description of issues encountered by the Securities and Exchange Commission in carrying out the provisions of such section 13(p).
(C)(i) A general review of persons described in clause
(ii) and whether information is publicly available about—
(I) the use of conflict minerals by such persons;
and
(II) whether such conflict minerals originate from
the Democratic Republic of the Congo or an adjoining
country.
(ii) A person is described in this clause if—
(I) the person is not required to file reports with
the Securities and Exchange Commission pursuant to
section 13(p)(1)(A) of the Securities Exchange Act of
1934, as added by subsection (b); and
(II) conflict minerals are necessary to the
functionality or production of a product manufactured
by such person.
(3) REPORT ON PRIVATE SECTOR AUDITING.—Not later than
30 months after the date of the enactment of this Act, and
annually thereafter, the Secretary of Commerce shall submit
to the appropriate congressional committees a report that
includes the following:
(A) An assessment of the accuracy of the independent
private sector audits and other due diligence processes
described under section 13(p) of the Securities Exchange
Act of 1934.
(B) Recommendations for the processes used to carry
out such audits, including ways to—
(i) improve the accuracy of such audits; and
(ii) establish standards of best practices.
(C) A listing of all known conflict mineral processing
facilities worldwide.
(e) DEFINITIONS.—For purposes of this section:
(1) ADJOINING COUNTRY.—The term ‘‘adjoining country’’,
with respect to the Democratic Republic of the Congo, means
a country that shares an internationally recognized border with
the Democratic Republic of the Congo.
(2) APPROPRIATE CONGRESSIONAL COMMITTEES.—The term
‘‘appropriate congressional committees’’ means—
(A) the Committee on Appropriations, the Committee
on Foreign Affairs, the Committee on Ways and Means,
and the Committee on Financial Services of the House
of Representatives; and
(B) the Committee on Appropriations, the Committee
on Foreign Relations, the Committee on Finance, and the
Committee on Banking, Housing, and Urban Affairs of
the Senate.
(3) ARMED GROUP.—The term ‘‘armed group’’ means an
armed group that is identified as perpetrators of serious human
rights abuses in the annual Country Reports on Human Rights
Practices under sections 116(d) and 502B(b) of the Foreign
Assistance Act of 1961 (22 U.S.C. 2151n(d) and 2304(b)) relating

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124 STAT. 2218

PUBLIC LAW 111–203—JULY 21, 2010
to the Democratic Republic of the Congo or an adjoining
country.
(4) CONFLICT MINERAL.—The term ‘‘conflict mineral’’
means—
(A) columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives; or
(B) any other mineral or its derivatives determined
by the Secretary of State to be financing conflict in the
Democratic Republic of the Congo or an adjoining country.
(5) UNDER THE CONTROL OF ARMED GROUPS.—The term
‘‘under the control of armed groups’’ means areas within the
Democratic Republic of the Congo or adjoining countries in
which armed groups—
(A) physically control mines or force labor of civilians
to mine, transport, or sell conflict minerals;
(B) tax, extort, or control any part of trade routes
for conflict minerals, including the entire trade route from
a Conflict Zone Mine to the point of export from the Democratic Republic of the Congo or an adjoining country; or
(C) tax, extort, or control trading facilities, in whole
or in part, including the point of export from the Democratic
Republic of the Congo or an adjoining country.

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15 USC 78m–2.

SEC. 1503. REPORTING REQUIREMENTS REGARDING COAL OR OTHER
MINE SAFETY.

(a) REPORTING MINE SAFETY INFORMATION.—Each issuer that
is required to file reports pursuant to section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o) and
that is an operator, or that has a subsidiary that is an operator,
of a coal or other mine shall include, in each periodic report filed
with the Commission under the securities laws on or after the
date of enactment of this Act, the following information for the
time period covered by such report:
(1) For each coal or other mine of which the issuer or
a subsidiary of the issuer is an operator—
(A) the total number of violations of mandatory health
or safety standards that could significantly and substantially contribute to the cause and effect of a coal or other
mine safety or health hazard under section 104 of the
Federal Mine Safety and Health Act of 1977 (30 U.S.C.
814) for which the operator received a citation from the
Mine Safety and Health Administration;
(B) the total number of orders issued under section
104(b) of such Act (30 U.S.C. 814(b));
(C) the total number of citations and orders for
unwarrantable failure of the mine operator to comply with
mandatory health or safety standards under section 104(d)
of such Act (30 U.S.C. 814(d));
(D) the total number of flagrant violations under section 110(b)(2) of such Act (30 U.S.C. 820(b)(2));
(E) the total number of imminent danger orders issued
under section 107(a) of such Act (30 U.S.C. 817(a));
(F) the total dollar value of proposed assessments from
the Mine Safety and Health Administration under such
Act (30 U.S.C. 801 et seq.); and
(G) the total number of mining-related fatalities.

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124 STAT. 2219

(2) A list of such coal or other mines, of which the issuer
or a subsidiary of the issuer is an operator, that receive written
notice from the Mine Safety and Health Administration of—
(A) a pattern of violations of mandatory health or
safety standards that are of such nature as could have
significantly and substantially contributed to the cause
and effect of coal or other mine health or safety hazards
under section 104(e) of such Act (30 U.S.C. 814(e)); or
(B) the potential to have such a pattern.
(3) Any pending legal action before the Federal Mine Safety
and Health Review Commission involving such coal or other
mine.
(b) REPORTING SHUTDOWNS AND PATTERNS OF VIOLATIONS.—
Beginning on and after the date of enactment of this Act, each
issuer that is an operator, or that has a subsidiary that is an
operator, of a coal or other mine shall file a current report with
the Commission on Form 8–K (or any successor form) disclosing
the following regarding each coal or other mine of which the issuer
or subsidiary is an operator:
(1) The receipt of an imminent danger order issued under
section 107(a) of the Federal Mine Safety and Health Act of
1977 (30 U.S.C. 817(a)).
(2) The receipt of written notice from the Mine Safety
and Health Administration that the coal or other mine has—
(A) a pattern of violations of mandatory health or
safety standards that are of such nature as could have
significantly and substantially contributed to the cause
and effect of coal or other mine health or safety hazards
under section 104(e) of such Act (30 U.S.C. 814(e)); or
(B) the potential to have such a pattern.
(c) RULE OF CONSTRUCTION.—Nothing in this section shall be
construed to affect any obligation of a person to make a disclosure
under any other applicable law in effect before, on, or after the
date of enactment of this Act.
(d) COMMISSION AUTHORITY.—
(1) ENFORCEMENT.—A violation by any person of this section, or any rule or regulation of the Commission issued under
this section, shall be treated for all purposes in the same
manner as a violation of the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.) or the rules and regulations issued
thereunder, consistent with the provisions of this section, and
any such person shall be subject to the same penalties, and
to the same extent, as for a violation of such Act or the rules
or regulations issued thereunder.
(2) RULES AND REGULATIONS.—The Commission is authorized to issue such rules or regulations as are necessary or
appropriate for the protection of investors and to carry out
the purposes of this section.
(e) DEFINITIONS.—In this section—
(1) the terms ‘‘issuer’’ and ‘‘securities laws’’ have the
meaning given the terms in section 3 of the Securities Exchange
Act of 1934 (15 U.S.C. 78c);
(2) the term ‘‘coal or other mine’’ means a coal or other
mine, as defined in section 3 of the Federal Mine Safety and
Health Act of 1977 (30 U.S.C. 802), that is subject to the
provisions of such Act (30 U.S.C. 801 et seq.); and

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124 STAT. 2220

PUBLIC LAW 111–203—JULY 21, 2010

(3) the term ‘‘operator’’ has the meaning given the term
in section 3 of the Federal Mine Safety and Health Act of
1977 (30 U.S.C. 802).
(f) EFFECTIVE DATE.—This section shall take effect on the day
that is 30 days after the date of enactment of this Act.
SEC. 1504. DISCLOSURE OF PAYMENTS BY RESOURCE EXTRACTION
ISSUERS.

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Deadline.
Regulations.
Reports.

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Section 13 of the Securities Exchange Act of 1934 (15 U.S.C.
78m), as amended by this Act, is amended by adding at the end
the following:
‘‘(q) DISCLOSURE OF PAYMENTS BY RESOURCE EXTRACTION
ISSUERS.—
‘‘(1) DEFINITIONS.—In this subsection—
‘‘(A) the term ‘commercial development of oil, natural
gas, or minerals’ includes exploration, extraction, processing, export, and other significant actions relating to
oil, natural gas, or minerals, or the acquisition of a license
for any such activity, as determined by the Commission;
‘‘(B) the term ‘foreign government’ means a foreign
government, a department, agency, or instrumentality of
a foreign government, or a company owned by a foreign
government, as determined by the Commission;
‘‘(C) the term ‘payment’—
‘‘(i) means a payment that is—
‘‘(I) made to further the commercial development of oil, natural gas, or minerals; and
‘‘(II) not de minimis; and
‘‘(ii) includes taxes, royalties, fees (including
license fees), production entitlements, bonuses, and
other material benefits, that the Commission, consistent with the guidelines of the Extractive Industries
Transparency Initiative (to the extent practicable),
determines are part of the commonly recognized revenue stream for the commercial development of oil,
natural gas, or minerals;
‘‘(D) the term ‘resource extraction issuer’ means an
issuer that—
‘‘(i) is required to file an annual report with the
Commission; and
‘‘(ii) engages in the commercial development of
oil, natural gas, or minerals;
‘‘(E) the term ‘interactive data format’ means an electronic data format in which pieces of information are identified using an interactive data standard; and
‘‘(F) the term ‘interactive data standard’ means
standardized list of electronic tags that mark information
included in the annual report of a resource extraction
issuer.
‘‘(2) DISCLOSURE.—
‘‘(A) INFORMATION REQUIRED.—Not later than 270 days
after the date of enactment of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, the Commission
shall issue final rules that require each resource extraction
issuer to include in an annual report of the resource extraction issuer information relating to any payment made by
the resource extraction issuer, a subsidiary of the resource

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2221

extraction issuer, or an entity under the control of the
resource extraction issuer to a foreign government or the
Federal Government for the purpose of the commercial
development of oil, natural gas, or minerals, including—
‘‘(i) the type and total amount of such payments
made for each project of the resource extraction issuer
relating to the commercial development of oil, natural
gas, or minerals; and
‘‘(ii) the type and total amount of such payments
made to each government.
‘‘(B) CONSULTATION IN RULEMAKING.—In issuing rules
under subparagraph (A), the Commission may consult with
any agency or entity that the Commission determines is
relevant.
‘‘(C) INTERACTIVE DATA FORMAT.—The rules issued
under subparagraph (A) shall require that the information
included in the annual report of a resource extraction issuer
be submitted in an interactive data format.
‘‘(D) INTERACTIVE DATA STANDARD.—
‘‘(i) IN GENERAL.—The rules issued under subparagraph (A) shall establish an interactive data standard
for the information included in the annual report of
a resource extraction issuer.
‘‘(ii) ELECTRONIC TAGS.—The interactive data
standard shall include electronic tags that identify,
for any payments made by a resource extraction issuer
to a foreign government or the Federal Government—
‘‘(I) the total amounts of the payments, by
category;
‘‘(II) the currency used to make the payments;
‘‘(III) the financial period in which the payments were made;
‘‘(IV) the business segment of the resource
extraction issuer that made the payments;
‘‘(V) the government that received the payments, and the country in which the government
is located;
‘‘(VI) the project of the resource extraction
issuer to which the payments relate; and
‘‘(VII) such other information as the Commission may determine is necessary or appropriate
in the public interest or for the protection of investors.
‘‘(E) INTERNATIONAL TRANSPARENCY EFFORTS.—To the
extent practicable, the rules issued under subparagraph
(A) shall support the commitment of the Federal Government to international transparency promotion efforts
relating to the commercial development of oil, natural gas,
or minerals.
‘‘(F) EFFECTIVE DATE.—With respect to each resource
extraction issuer, the final rules issued under subparagraph
(A) shall take effect on the date on which the resource
extraction issuer is required to submit an annual report
relating to the fiscal year of the resource extraction issuer
that ends not earlier than 1 year after the date on which
the Commission issues final rules under subparagraph (A).
‘‘(3) PUBLIC AVAILABILITY OF INFORMATION.—

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124 STAT. 2222

PUBLIC LAW 111–203—JULY 21, 2010
‘‘(A) IN GENERAL.—To the extent practicable, the
Commission shall make available online, to the public,
a compilation of the information required to be submitted
under the rules issued under paragraph (2)(A).
‘‘(B) OTHER INFORMATION.—Nothing in this paragraph
shall require the Commission to make available online
information other than the information required to be submitted under the rules issued under paragraph (2)(A).
‘‘(4) AUTHORIZATION OF APPROPRIATIONS.—There are
authorized to be appropriated to the Commission such sums
as may be necessary to carry out this subsection.’’.

Web posting.

SEC. 1505. STUDY BY THE COMPTROLLER GENERAL.
Deadline.
Reports.

(a) IN GENERAL.—Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States
shall issue a report assessing the relative independence, effectiveness, and expertise of presidentially appointed inspectors general
and inspectors general of designated Federal entities, as such term
is defined under section 8G of the Inspector General Act of 1978,
and the effects on independence of the amendments to the Inspector
General Act of 1978 made by this Act.
(b) REPORT.—The report required by subsection (a) shall be
issued to the Committees on Financial Services and Oversight and
Government Reform of the House of Representatives and the
Committees on Banking, Housing, and Urban Affairs and Homeland
Security and Governmental Affairs of the Senate.
SEC. 1506. STUDY ON CORE DEPOSITS AND BROKERED DEPOSITS.

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(a) STUDY.—The Corporation shall conduct a study to
evaluate—
(1) the definition of core deposits for the purpose of calculating the insurance premiums of banks;
(2) the potential impact on the Deposit Insurance Fund
of revising the definitions of brokered deposits and core deposits
to better distinguish between them;
(3) an assessment of the differences between core deposits
and brokered deposits and their role in the economy and
banking sector of the United States;
(4) the potential stimulative effect on local economies of
redefining core deposits; and
(5) the competitive parity between large institutions and
community banks that could result from redefining core
deposits.
(b) REPORT TO CONGRESS.—Not later than 1 year after the
date of enactment of this Act, the Corporation shall submit to
the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House
of Representatives a report on the results of the study under subsection (a) that includes legislative recommendations, if any, to
address concerns arising in connection with the definitions of core
deposits and brokered deposits.

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PUBLIC LAW 111–203—JULY 21, 2010

124 STAT. 2223

TITLE XVI—SECTION 1256 CONTRACTS
SEC. 1601. CERTAIN SWAPS, ETC., NOT TREATED AS SECTION 1256 CONTRACTS.

(a) IN GENERAL.—Subsection (b) of section 1256 of the Internal
Revenue Code of 1986 is amended—
(1) by redesignating paragraphs (1) through (5) as subparagraphs (A) through (E), respectively, and by indenting such
subparagraphs (as so redesignated) accordingly,
(2) by striking ‘‘For purposes of’’ and inserting the following:
‘‘(1) IN GENERAL.—For purposes of’’, and
(3) by striking the last sentence and inserting the following
new paragraph:
‘‘(2) EXCEPTIONS.—The term ‘section 1256 contract’ shall
not include—
‘‘(A) any securities futures contract or option on such
a contract unless such contract or option is a dealer securities futures contract, or
‘‘(B) any interest rate swap, currency swap, basis swap,
interest rate cap, interest rate floor, commodity swap,
equity swap, equity index swap, credit default swap, or
similar agreement.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after the date of the enactment of this Act.

26 USC 1256.

26 USC 1256
note.

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Approved July 21, 2010.

LEGISLATIVE HISTORY—H.R. 4173 (S. 3217):
HOUSE REPORTS: No. 111–517 (Comm. of Conference).
SENATE REPORTS: No. 111–176 (Comm. on Banking, Housing, and Urban Affairs)
accompanying S. 3217.
CONGRESSIONAL RECORD:
Vol. 155 (2009): Dec. 9–11, considered and passed House.
Vol. 156 (2010): May 20, considered and passed Senate, amended, in lieu of
S. 3217.
June 30, House agreed to conference report.
July 13, 15, Senate considered and agreed to conference
report.
DAILY COMPILATION OF PRESIDENTIAL DOCUMENTS (2010):
July 21, Presidential remarks.

Æ

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