Safe, Accountable, Fair, and Efficient Banking Act of 2012 or SAFE Banking Act of 2012 - Amends the Bank Holding Company Act of 1956 to prohibit a bank holding company from holding more than 10% of the total amount of deposits of insured depository institutions in the United States.
Directs the Board of Governors of the Federal Reserve System (Board) to require any bank holding company having a deposit concentration in violation of specified interstate banking requirements to sell or transfer liabilities to unaffiliated firms to bring the company into compliance with them.
Revises the formula in the definition of "liabilities" to replace: (1) the total risk-weighted assets of the financial company (or of the U.S. operations of a foreign-based financial company) as adjusted to reflect exposures that are deducted from regulatory capital; with (2) total assets of the financial company (or of the U.S. operations of a foreign-based financial company), including all off-balance-sheet assets, including financings of assets for which the issuer has more than minimal economic or reputational risks or rewards.
Prohibits a financial company from holding more than 10% of the total consolidated liabilities of all financial companies.
Prescribes leverage ratio requirements for operating subsidiaries of bank holding companies and financial companies to prohibit either a bank holding company with total consolidated assets of $50 billion or more, or a Board-supervised nonbank financial company, from maintaining tangible common equity (qualifying common stockholders' equity plus retained earnings) in an amount less than 10% of average total consolidated assets (which include all off-balance-sheet assets, including financings of assets for which the issuer has more than minimal economic or reputational risks or rewards).
Authorizes federal regulators to grant an emergency temporary exemption from such ratio requirements if necessary to prevent an imminent threat to the financial stability of the United States.
Directs the Board to: (1) establish a leverage ratio for all operating non-insured depository institution subsidiaries of bank holding companies with $50 billion or more in total consolidated assets and nonbank financial companies; and (2) require a noncompliant such company to raise capital, sell, or otherwise transfer assets or off-balance sheet items to unaffiliated firms (prompt corrective action).
Prohibits a bank holding company from possessing nondeposit liabilities exceeding 2% of the annual gross domestic product (GDP) of the United States.
Authorizes the Board to: (1) set a separate liability limit for certain bank holding companies primarily engaged in the business of insurance; and (2) exclude specified deposits from its calculation of nondeposit liabilities if necessary to ensure consistent and equitable treatment of institutions with international operations.
Prohibits a nonbank financial company supervised by the Board from possessing nondeposit liabilities exceeding 3% of the U.S. annual GDP.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5714 Introduced in House (IH)]
112th CONGRESS
2d Session
H. R. 5714
To provide for a safe, accountable, fair, and efficient banking system,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 10, 2012
Mr. Miller of North Carolina (for himself and Mr. Ellison) introduced
the following bill; which was referred to the Committee on Financial
Services
_______________________________________________________________________
A BILL
To provide for a safe, accountable, fair, and efficient banking system,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Safe, Accountable, Fair, and
Efficient Banking Act of 2012'' or the ``SAFE Banking Act of 2012''.
SEC. 2. DEFINITIONS.
(a) In General.--As used in this Act--
(1) the term ``appropriate Federal regulator'' means--
(A) the Board of Governors of the Federal Reserve
System (in this Act referred to as the ``Board'');
(B) the Comptroller of the Currency (in this Act
referred to as the ``Comptroller''; or
(C) the Federal Deposit Insurance Corporation (in
this Act referred to as the ``Corporation'');
(2) the term ``average total consolidated assets'' has the
same meaning as in part 225 of title 12, Code of Federal
Regulations, as in effect on the date of enactment of this Act,
or any successor thereto;
(3) the term ``FDIC-assessed deposits'' means the
assessment base, as computed under part 327 of title 12, Code
of Federal Regulations, as in effect on the date of enactment
of this Act, or any successor thereto;
(4) the term ``tangible common equity'' means qualifying
common stockholders' equity plus retained earnings;
(5) the term ``liabilities'' equals a financial company's
total assets less tier 1 capital;
(6) the term ``nondeposit liabilities'' means the total
assets of a bank holding company, less tier 1 capital, less
FDIC-assessed deposits; and
(7) the term ``tier 1 capital'' has the same meaning as in
part 225 of title 12, Code of Federal Regulations, as in effect
on the date of enactment of this Act, or any successor thereto.
(b) Nonbank Financial Company Definitions.--
(1) Foreign nonbank financial company.--The term ``foreign
nonbank financial company'' means a company (other than a
company that is, or is treated in the United States, as a bank
holding company or a subsidiary thereof) that is--
(A) incorporated or organized in a country other
than the United States; and
(B) substantially engaged in, including through a
branch in the United States, activities in the United
States that are financial in nature (as defined in
section 4(k) of the Bank Holding Company Act of 1956).
(2) U.S. nonbank financial company.--The term ``U.S.
nonbank financial company'' means a company (other than a bank
holding company or a subsidiary thereof) that is--
(A) incorporated or organized under the laws of the
United States or any State; and
(B) substantially engaged in activities in the
United States that are financial in nature (as defined
in section 4(k) of the Bank Holding Company Act of
1956).
(3) Nonbank financial company.--The term ``nonbank
financial company'' means a U.S. nonbank financial company and
a foreign nonbank financial company.
SEC. 3. CONCENTRATION LIMITS.
(a) Nationwide Concentration Limits.--Section 3(d) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1842(d)) is amended--
(1) in paragraph (2), by striking subparagraph (A) and
inserting the following:
``(A) Nationwide concentration limits.--No bank
holding company may hold more than 10 percent of the
total amount of deposits of insured depository
institutions in the United States.''; and
(2) by striking paragraph (5) and inserting the following:
``(5) Enforced compliance.--The Board shall require any
bank holding company having a deposit concentration in
violation of this subsection to sell or otherwise transfer
deposit liabilities to unaffiliated firms to bring the company
into compliance with this subsection.''.
(b) Treatment of Liabilities.--Section 14 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1852) is amended--
(1) in subsection (a), by striking paragraph (3) and
inserting the following:
``(3) the term `liabilities' means--
``(A) with respect to a United States financial
company--
``(i) the total assets of the financial
company, including all off-balance-sheet
assets, including financings of assets for
which the issuer has more than minimal economic
or reputational risks or rewards; less
``(ii) the total regulatory capital of the
financial company;
``(B) with respect to a foreign-based financial
company--
``(i) the total assets of the United States
operations of the financial company, including
all off-balance-sheet assets, including
financings of assets for which the issuer has
more than minimal economic or reputational
risks or rewards of the financial company; less
``(ii) the total regulatory capital of the
United States operations of the financial
company; 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.''; and
(2) by striking subsections (b) through (e) and inserting
the following:
``(b) Concentration Limit.--A financial company may not hold more
than 10 percent of the total consolidated liabilities of all financial
companies.
``(c) Required Disposition.--The Board shall require any financial
company having liabilities in violation of this section to sell or
otherwise transfer liabilities to unaffiliated firms to bring the
company into compliance with this section.
``(d) Rulemaking and Guidance.--The Board shall issue regulations
implementing this section, 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.''.
SEC. 4. LEVERAGE RATIO AND SIZE REQUIREMENTS FOR BANK HOLDING
COMPANIES.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended by inserting after section 5 the following:
``SEC. 5A. LIMITS ON LEVERAGE AND SIZE.
``(a) Leverage Ratio Requirements for Bank Holding Companies and
Financial Companies.--
``(1) Leverage ratio.--
``(A) In general.--No bank holding company with
total consolidated assets equal to or greater than
$50,000,000,000 or nonbank financial company supervised
by the Board may maintain tangible common equity in an
amount less than 10 percent of average total
consolidated assets.
``(B) Average total consolidated assets.--For
purposes of this paragraph, average total consolidated
assets shall include all off-balance-sheet assets,
including financings of assets for which the issuer has
more than minimal economic or reputational risks or
rewards.
``(2) Exemptions.--
``(A) In general.--The Board may adjust the
leverage ratio requirements provided in paragraph (1)
for any class of institutions, based upon the size or
activity of such class of institutions. No adjustment
made under this subparagraph may allow an institution
to carry less tangible common equity than provided in
paragraph (1).
``(B) Authority of other regulators.--
``(i) In general.--The appropriate Federal
regulator may, in a manner consistent with this
subsection, grant any bank holding company an
emergency temporary exemption from the ratio
requirements provided in paragraph (1) or (2),
where necessary to prevent an imminent threat
to the financial stability of the United
States.
``(ii) Publication required.--Any exemption
granted under this subparagraph shall be
published in the Federal Register within a
reasonable period after the date on which such
exemption is granted, not to exceed 90 days,
and such publication shall provide--
``(I) the name of the bank holding
company or financial company being
granted an exemption;
``(II) the reason for the
exemption; and
``(III) the plan of the appropriate
Federal regulator detailing the manner
by which the bank holding company shall
be brought into compliance with
paragraphs (1) and (2).
``(3) Leverage ratio requirements for operating
subsidiaries of bank holding companies and nonbank financial
companies supervised by the board.--For bank holding companies
with total consolidated assets equal to or greater than
$50,000,000,000 and nonbank financial companies supervised by
the Board, the Board may promulgate regulations establishing a
leverage ratio, in a manner consistent with paragraph (1), for
all operating subsidiaries that are not insured depository
institutions.
``(4) Prompt corrective action.--
``(A) Authorities.--The Board shall require any
bank holding company with total consolidated assets
equal to or greater than $50,000,000,000 or nonbank
financial company supervised by the Board that is in
violation of paragraph (1) to raise capital, sell or
otherwise transfer assets, liabilities, or off-balance-
sheet items to unaffiliated firms, or impose conditions
on the manner in which the bank holding company
conducts 1 or more activities to bring the company into
compliance with paragraph (1).
``(B) Corrective action plan.--The Board shall, not
later than 60 days after determining that a bank
holding company or financial company is in violation of
paragraph (1), present to the members of the Committee
on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives a plan detailing the manner by which
the bank holding company or financial company shall be
brought into compliance with the applicable provision
of law.
``(C) Reports to congress.--
``(i) Written reports.--The Board shall
provide to the members of the Committee on
Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services
of the House of Representatives periodic
reports for each 60-day period during which a
corrective action plan required by subparagraph
(B) has not been fulfilled.
``(ii) Testimony.--The Board shall provide
testimony to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives for each 90-day period that a
corrective action plan required by subparagraph
(B) has not been fulfilled.
``(b) Limits on Nondeposit Liabilities for Bank Holding Companies
and Nonbank Financial Companies Supervised by the Board.--
``(1) Bank holding companies.--
``(A) Limit on nondeposit liabilities for bank
holding companies.--No bank holding company may possess
nondeposit liabilities exceeding 2 percent of the
annual gross domestic product of the United States.
``(B) Determination of gross domestic product.--The
annual gross domestic product of the United States
shall be determined for purposes of subparagraph (A)
using the average of such product over the 16 calendar
quarters, as calculated by the Bureau of Economic
Analysis of the Department of Commerce, most recently
completed as of the time of the determination.
``(C) Off-balance-sheet liabilities.--The
computation of the limit under this paragraph shall
take into account off-balance-sheet liabilities,
including any liabilities used to finance assets for
which the issuer has more than minimal economic or
reputational risks or rewards.
``(D) Treatment of insurance companies.--
Notwithstanding the liability limit established in this
section, the Board may set a separate liability limit
with respect to certain bank holding companies
primarily engaged in the business of insurance, as the
Board deems necessary in order to provide for
consistent and equitable treatment of such
institutions. In establishing such separate liability
limits for insurance companies, for any insurance
company with any subsidiary regulated by a State
insurance regulator, the Board shall consult the
appropriate State insurance regulator.
``(E) Treatment of foreign deposits.--
Notwithstanding the definition of the term `nondeposit
liabilities' established in this section, the Board may
exclude from its calculation of nondeposit liabilities
any foreign and other deposits not covered by the
definition of the term `FDIC-assessed deposits', if the
Board deems such action necessary to ensure the
consistent and equitable treatment of institutions with
international operations.
``(2) Nonbank financial companies supervised by the
board.--
``(A) Limit on nondeposit liabilities for nonbank
financial companies supervised by the board.--No
nonbank financial company supervised by the Board may
possess nondeposit liabilities exceeding 3 percent of
the annual gross domestic product of the United States.
``(B) Determination of gross domestic product.--The
annual gross domestic product of the United States
shall be determined for purposes of subparagraph (A)
using the average of such product over the 16 calendar
quarters, as calculated by the Bureau of Economic
Analysis of the Department of Commerce, most recently
completed as of the time of the determination.
``(C) Off-balance-sheet liabilities.--The
computation of the limit under this paragraph shall
take into account off-balance-sheet liabilities,
including any liabilities used to finance assets for
which the issuer has more than minimal economic or
reputational risks or rewards.
``(D) Treatment of insurance companies.--
Notwithstanding the liability limit established by this
paragraph, the Board may set a separate liability limit
with respect to insurance companies or other financial
companies, as the Board determines necessary in order
to provide for consistent and equitable treatment of
such institutions. In establishing such separate
liability limits for insurance companies, for any
insurance company with any subsidiary regulated by a
State insurance regulator, the Board shall consult with
the appropriate State insurance regulator.
``(E) Treatment of foreign deposits.--
Notwithstanding the definition of the term `nondeposit
liabilities' established in this section, the Board may
exclude from its calculation of nondeposit liabilities
any foreign and other deposits not covered by the
definition of the term `FDIC-assessed deposits', if the
Board deems such action necessary to ensure the
consistent and equitable treatment of institutions with
international operations.
``(3) Prompt corrective action.--
``(A) Authorities.--The Board shall require any
bank holding company or financial company that is in
violation of a provision of paragraph (1) or (2), as
applicable, to sell or otherwise transfer assets,
liabilities or off-balance-sheet items to unaffiliated
firms, to terminate 1 or more activities, or to impose
conditions on the manner in which the bank holding
company or financial company conducts 1 or more
activities to bring the company into compliance with
paragraphs (1) or (2), as applicable.
``(B) Corrective action plan.--The Board shall, not
later than 60 days after determining that a bank
holding company or financial company is in violation of
paragraph (1) or (2), present to the members of the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the
House of Representatives a plan detailing the manner by
which the bank holding company or financial company
shall be brought into compliance with the applicable
provision.
``(C) Reports to congress.--
``(i) Written reports.--The Board shall
provide to the members of the Committee on
Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services
of the House of Representatives periodic
reports for each 60-day period during which a
corrective action plan required by subparagraph
(B) has not been fulfilled.
``(ii) Testimony.--The Board shall provide
testimony to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives for each 120-day period during
which a corrective action plan required by
subparagraph (B) has not been fulfilled.
``(c) Definitions.--As used in this section--
``(1) the term `appropriate Federal regulator' means--
``(A) the Board of Governors of the Federal Reserve
System (in this Act referred to as the `Board');
``(B) the Comptroller General of the United States
(in this Act referred to as the `Comptroller'; or
``(C) the Federal Deposit Insurance Corporation (in
this Act referred to as the `Corporation');
``(2) the term `average total consolidated assets' has the
same meaning as in part 225 of title 12, Code of Federal
Regulations, as in effect on the date of enactment of this Act,
or any successor thereto;
``(3) the term `FDIC-assessed deposits' means the
assessment base, as computed under part 327 of title 12, Code
of Federal Regulations, as in effect on the date of enactment
of this Act, or any successor thereto;
``(4) the term `liabilities' equals a financial company's
total assets less tier 1 capital;
``(5) the term `nondeposit liabilities' means the total
assets of a bank holding company, less tier 1 capital, less
FDIC-assessed deposits;
``(6) the term `foreign nonbank financial company' means a
company (other than a company that is, or is treated in the
United States, as a bank holding company or a subsidiary
thereof) that is--
``(A) incorporated or organized in a country other
than the United States; and
``(B) substantially engaged in, including through a
branch in the United States, activities in the United
States that are financial in nature (as defined in
section 4(k) of the Bank Holding Company Act of 1956);
``(7) the term `U.S. nonbank financial company' means a
company (other than a bank holding company or a subsidiary
thereof) that is--
``(A) incorporated or organized under the laws of
the United States or any State; and
``(B) substantially engaged in activities in the
United States that are financial in nature (as defined
in section 4(k) of the Bank Holding Company Act of
1956);
``(8) the term `nonbank financial company' means a U.S.
nonbank financial company and a foreign nonbank financial
company;
``(9) the term `tangible common equity' means qualifying
common stockholders' equity plus retained earnings; and
``(10) the term `tier 1 capital' has the same meaning as in
part 225 of title 12, Code of Federal Regulations, as in effect
on the date of enactment of this section, or any successor
thereto.''.
SEC. 5. EFFECTIVE DATE.
(a) In General.--This Act and the amendments made by this Act shall
take effect upon the date of enactment of this Act.
(b) Allowance for Bank Holding Companies and Financial Companies
Not in Compliance at Date of Enactment.--Any institution that is in
violation of--
(1) the deposit concentration limit in section 3(d)(2)(A)
of the Bank Holding Act of 1956, as amended by this Act, as of
the date of enactment of this Act, shall bring itself into
compliance with that limit not later than 1 year after the date
of enactment of this Act;
(2) the concentration limit in section 14 of the Bank
Holding Company Act of 1956, as amended by this Act, as of the
date of enactment of this Act, shall bring itself into
compliance with that limit not later than 1 year after the date
of enactment of this Act;
(3) the leverage ratios in section 5A of the Bank Holding
Act of 1956, as amended by this Act, as of the date of
enactment of this Act, shall bring itself into compliance with
those ratios, not later than 1 year after the date of enactment
of this Act; and
(4) the limits on nondeposit liabilities in section 7A of
the Bank Holding Company Act of 1956, as added by this Act, as
of the date of enactment of this Act, shall bring itself into
compliance with those limits, not later than 3 years after the
date of enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Referred to the Subcommittee on Insurance, Housing and Community Opportunity.
Referred to the Subcommittee on Financial Institutions and Consumer Credit.
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