[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3691 Introduced in Senate (IS)]
110th CONGRESS
2d Session
S. 3691
To amend the Commodity Exchange Act to require reporting and
recordkeeping for positions involving credit-default swaps, to grant
the Federal Reserve Board authority over investment-bank holding
companies, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
November 19, 2008
Ms. Collins introduced the following bill; which was read twice and
referred to the Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To amend the Commodity Exchange Act to require reporting and
recordkeeping for positions involving credit-default swaps, to grant
the Federal Reserve Board authority over investment-bank holding
companies, 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 ``Financial Regulation Reform Act of
2008''.
SEC. 2. REPORTING AND RECORDKEEPING FOR POSITIONS INVOLVING CREDIT-
DEFAULT SWAPS.
(a) In General.--Section 2(h) of the Commodity Exchange Act (7
U.S.C. 2(h)) is amended by adding at the end the following:
``(8) Reporting and recordkeeping for positions involving
credit-default swaps.--
``(A) Definitions.--In this paragraph:
``(i) Credit-default swap.--The term
`credit-default swap' means a bilateral
derivative contract that transfers, in exchange
for 1 or more lump-sum or other payments, from
1 party to another, the risk that an entity,
regardless of whether owned by the buyer of the
protection, may experience a loss of value from
a credit event such as a default, credit
downgrade, or other contractually agreed-upon
adverse event.
``(ii) Credit-default swap trading
clearinghouse.--The term `credit-default swap
trading clearinghouse' means an approved
centralized clearinghouse for credit-default
swap trading that is designated by the
Securities and Exchange Commission, in
consultation with the Commodity Futures Trading
Commission and the Chairman of the Board of
Governors of the Federal Reserve System.
``(iii) Reportable contract.--The term
`reportable contract' means a contract,
agreement, or transaction involving a credit-
default swap, executed through a credit-default
swap trading clearinghouse.
``(B) Use of credit-default swap trading
clearinghouses.--Each credit-default swap trading
clearinghouse--
``(i) shall be subject to regulation by the
Commission;
``(ii) shall be capitalized by participants
in the credit-default swap trading
clearinghouse at a level that is sufficient to
guarantee payment for trading in credit-default
swaps; and
``(iii) may assess participants in the
credit-default swap trading clearinghouse in an
amount necessary to maintain a default fund for
the credit-default swap trading clearinghouse.
``(C) Recordkeeping.--The Commission, by rule,
shall require any person holding, maintaining, or
controlling any position in any reportable contract
under this paragraph--
``(i) to maintain such records as directed
by the Commission for a period of 5 years, or
longer, if directed by the Commission; and
``(ii) to provide such records upon request
to the Commission, the Department of Justice,
the Securities and Exchange Commission, or the
Federal Reserve System, as applicable.
``(D) Reporting of positions involving credit-
default swaps.--The Commission shall prescribe rules
requiring such regular or continuous reporting of
positions in reportable contracts in accordance with
such requirements regarding size limits for reportable
positions and the form, timing, and manner of filing
such reports under this paragraph, as the Commission
shall determine.''.
(b) Conforming Amendments.--Section 4a(e) of the Commodity Exchange
Act (7 U.S.C. 6a(e)) is amended--
(1) in the first sentence--
(A) by inserting ``, by any credit-default swap
trading clearinghouse (as defined in section
2(h)(8)(A)),'' after ``registered by the Commission'';
and
(B) by inserting ``, credit-default swap trading
clearinghouse,'' after ``derivatives transaction
execution facility''; and
(2) in the second sentence, by inserting ``, by any credit-
default swap trading clearinghouse (as defined in section
2(h)(8)(A)),'' after ``registered by the Commission''.
SEC. 3. FEDERAL RESERVE BOARD AUTHORITY OVER INVESTMENT BANK HOLDING
COMPANIES.
(a) Regulation by the Board of Governors of the Federal Reserve
System.--
(1) Rulemaking required.--Not later than 90 days after the
date of enactment of this Act, the Board of Governors of the
Federal Reserve System (in this section referred to as the
``Board'') shall issue final rules to provide for the
examination of the safety and soundness of, and the extent of
systemic financial risk posed by, any investment bank holding
company organized in or doing business in the United States.
(2) Information from investment bank holding companies.--
The rules of the Board under this section shall provide for
reasonable reporting of information by each investment bank
holding company, to the extent necessary to carry out the
purposes of this section.
(b) Rule of Construction.--Nothing in this section shall be
construed as negating or preempting the authority of the Securities and
Exchange Commission to exercise its authority over broker or dealer
operations in accordance with applicable provisions of law.
(c) Exchange of Information on Systemic Risk.--The Securities and
Exchange Commission, the Commodity Futures Trading Commission, and
other appropriate Federal regulatory agencies shall provide to the
Board all relevant information, as directed by the Board, on the
activities of investment bank holding companies with respect to the
prevention of systemic risks posed by such activities to the United
States economy.
(d) Enforcement Provisions.--Any violation of this section or the
rules of the Board under this section shall be subject to the
enforcement and penalty provisions of the Bank Holding Company Act of
1956, in the same manner and to the same extent as those provisions are
applicable to violations of that Act by a bank holding company (as
defined in that Act).
(e) Authorization of Appropriations.--There are authorized to be
appropriated to the Board such sums as may be necessary to carry out
this section.
(f) Definitions.--For purposes of this section, the term
``investment bank holding company'' means--
(1) any person other than a natural person that owns or
controls one or more brokers or dealers (as those terms are
defined in section 3 of the Securities Exchange Act of 1934 (15
U.S.C. 78c)); and
(2) the associated persons thereof.
(g) Conforming Amendments.--The Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) is amended--
(1) in section 6(g)(4)(A)(iv) (15 U.S.C. 78f(g)(4)(A)(iv)),
by striking ``and (k)'' and inserting ``and (i)'';
(2) in section 15(b) (15 U.S.C. 78(o)(b))--
(A) in paragraph (11)(B)(vi), by striking ``(h),
and (i)'' and inserting ``and (h)''; and
(B) in paragraph (12)(B)(vi), by striking ``(h),
and (i)'' and inserting ``and (h)'';
(3) in section 15A(k)(4)(C) (15 U.S.C. 78o-3(k)(4)(C)), by
striking ``and (k)'' and inserting ``and (i)''; and
(4) in section 17 (15 U.S.C. 78q)--
(A) by striking subsections (i) and (j); and
(B) by redesignating subsection (k) as subsection
(i).
SEC. 4. REGULATIONS ON CLEARINGHOUSE OPERATIONS AND FRAUDULENT,
DECEPTIVE, AND MANIPULATIVE ACTS.
(a) Rulemaking Required.--Not later than 90 days after the date of
enactment of this Act, the Securities and Exchange Commission, in
consultation with the Board of Governors of the Federal Reserve System
and the Commodity Futures Trading Commission, shall issue final rules--
(1) to designate clearinghouses for credit-default swaps;
and
(2) to prohibit fraudulent, deceptive, or manipulative acts
or practices in connection with credit-default swaps.
(b) Criteria.--Rules of the Commission under this section shall
require that clearinghouses--
(1) are capitalized by participants to a level adequate to
guarantee payments; and
(2) are authorized to assess members for a default fund.
(c) Required Use of Clearinghouses.--Any person that engages in a
credit-default swap transaction shall utilize a clearinghouse
designated by the Commission for such purpose in accordance with the
rules issued under subsection (a).
SEC. 5. ESTABLISHING AN INDEPENDENT, BIPARTISAN COMMISSION.
(a) Commission Establishment.--There is established a temporary
commission to be known as the Commission on Financial Regulatory Reform
(referred to in this section as the ``Commission''). The Commission
shall review the financial regulatory structure and propose a
comprehensive framework for fundamental reform of financial regulation
in the United States.
(b) Functions of the Commission.--
(1) In general.--The Commission shall conduct a top-to-
bottom review of the Nation's existing financial regulatory
structure and the contribution of the current structure to the
stability or instability of financial markets, in order to
develop a comprehensive framework for--
(A) reforming the laws governing our Nation's
financial markets;
(B) strengthening and reconstituting regulatory
agencies; and
(C) improving transparency and oversight.
(2) Analysis.--In the course of its activities, the
Commission shall analyze--
(A) the impact of the financial regulatory
structure on the health and stability of the United
States economy;
(B) the strength, sustainability, and
competitiveness of the Nation's financial institutions;
and
(C) the financial well-being of American taxpayers,
investors, and businesses.
(3) Considerations.--The Commission shall review and
consider all aspects of financial regulation, including the
regulation of--
(A) bank holding companies, financial holding
companies, commercial banks, investment banks, thrifts,
credit unions, and industrial loan companies;
(B) payment and settlement systems;
(C) hedge funds, private equity funds, and the
markets for alternative investments;
(D) special purpose vehicles and off-balance sheet
financing for financial companies;
(E) the securitization of mortgages and other
assets;
(F) exchange-based, electronic, and over-the-
counter markets for financial derivative products;
(G) the mortgage finance industry, including
mortgage brokers and mortgage lending institutions;
(H) equity markets, including short-selling
practices, and commodity futures markets; and
(I) the insurance industry and its role in the
financial markets.
(c) Powers of the Commission.--
(1) In general.--
(A) Hearings and evidence.--The Commission or, on
the authority of the Commission, any subcommittee or
member thereof, may, for the purpose of carrying out
this Act--
(i) hold such hearings and sit and act at
such times and places, take such testimony,
receive such evidence, administer such oaths;
and
(ii) require the attendance and testimony
of such witnesses and the production of such
books, records, correspondence, memoranda,
papers, and documents, as the Commission or
such designated subcommittee or designated
member may determine advisable.
(B) First meeting.--The first meeting of the
Commission shall occur not later than 30 days after the
date of enactment of this Act.
(2) Contracting.--The Commission may, to such extent and in
such amounts as are provided in appropriation Acts, enter into
contracts to enable the Commission to discharge its duties
under this Act.
(3) Information from federal agencies.--
(A) In general.--The Commission is authorized to
secure directly from any executive department, bureau,
agency, board, commission, office, independent
establishment, or instrumentality of the Government,
information, suggestions, estimates, and statistics for
the purposes of this Act. Each department, bureau,
agency, board, commission, office, independent
establishment, or instrumentality shall, to the extent
authorized by law, furnish such information,
suggestions, estimates, and statistics directly to the
Commission, upon request made by the chairman, the
chairman of any subcommittee created by a majority of
the Commission, or any member designated by a majority
of the Commission.
(B) Receipt, handling, storage, and
dissemination.--Information shall only be received,
handled, stored, and disseminated by members of the
Commission and its staff consistent with all applicable
statutes, regulations, and Executive orders.
(4) Assistance from federal agencies.--
(A) General services administration.--The
Administrator of General Services shall provide to the
Commission on a reimbursable basis administrative
support and other services for the performance of the
Commission's functions.
(B) Other departments and agencies.--In addition to
the assistance prescribed in subparagraph (A),
departments and agencies of the United States may
provide to the Commission such services, funds,
facilities, staff, and other support services as they
may determine advisable and as may be authorized by
law.
(5) Gifts.--The Commission may accept, use, and dispose of
gifts or donations of services or property.
(6) Postal services.--The Commission may use the United
States mails in the same manner and under the same conditions
as departments and agencies of the United States.
(d) Non-Applicability of Federal Advisory Committee Act.--
(1) In general.--The Federal Advisory Committee Act (5
U.S.C. App.) shall not apply to the Commission.
(2) Public meetings and release of public versions of
reports.--The Commission shall--
(A) hold public hearings and meetings to the extent
appropriate; and
(B) release public versions of the reports required
under this Act.
(3) Public hearings.--Any public hearings of the Commission
shall be conducted in a manner consistent with the protection
of information provided to or developed for or by the
Commission as required by any applicable statute, regulation,
or Executive order.
(e) Composition.--
(1) In general.--The Commission shall be composed of 12
members, selected not later than 15 days after the date of
enactment of this Act, of whom--
(A) three persons shall be appointed by the
majority leader of the Senate, after consultation with
the Chairman of the Committee on Banking, Housing and
Urban Affairs;
(B) three persons shall be appointed by the
minority leader of the Senate, after consultation with
the ranking minority members of the Committee on
Banking, Housing and Urban Affairs;
(C) three persons shall be appointed by the Speaker
of the House of Representatives, after consultation
with the Chairman of the Committee on Financial
Services; and
(D) three persons shall be appointed by the
minority leader of the House of Representatives, after
consultation with the ranking minority member of the
Committee on Financial Services.
(2) Qualifications.--An individual appointed may not be an
officer or employee of the Federal Government or any State or
local government. It is the sense of Congress that individuals
appointed to the Commission should have national recognition as
financial sector experts, and may include former government
officials, private market participants, and representatives of
the academic community,
(3) Officers.--Officers of the Commission are to be chosen
by the Commission's membership.
(f) Final Report of Commission.--Not later than 120 days after the
date of the enactment of this Act, the Commission shall submit to the
President and Congress a final report containing such findings,
conclusions, and recommendations for corrective measures as have been
agreed to by a majority of committee members.
(g) Compensation of Commission Staff.--
(1) In general.--
(A) Appointment and compensation.--The chairman, in
consultation with vice chairman, in accordance with
rules agreed upon by the Commission, may appoint and
fix the compensation of a staff director and such other
personnel as may be necessary to enable the Commission
to carry out its functions, without regard to the
provisions of title 5, United States Code, governing
appointments in the competitive service, and without
regard to the provisions of chapter 51 and subchapter
III of chapter 53 of such title relating to
classification and General Schedule pay rates, except
that no rate of pay fixed under this subsection may
exceed the equivalent of that payable for a position at
level V of the Executive Schedule under section 5316 of
title 5, United States Code.
(B) Personnel as federal employees.--
(i) In general.--The executive director and
any personnel of the Commission who are
employees shall be employees under section 2105
of title 5, United States Code, for purposes of
chapters 63, 81, 83, 84, 85, 87, 89, and 90 of
that title.
(ii) Members of commission.--Subparagraph
(A) shall not be construed to apply to members
of the Commission.
(2) Detailees.--Any Federal Government employee may be
detailed to the Commission without reimbursement from the
Commission, and such detailee shall retain the rights, status,
and privileges of his or her regular employment without
interruption.
(3) Consultant services.--The Commission is authorized to
procure the services of experts and consultants in accordance
with section 3109 of title 5, United States Code, but at rates
not to exceed the daily rate paid a person occupying a position
at level IV of the Executive Schedule under section 5315 of
title 5, United States Code.
(h) Compensation and Travel Expenses.--
(1) Compensation.--Each member of the Commission may be
compensated at not to exceed the daily equivalent of the annual
rate of basic pay in effect for a position at level IV of the
Executive Schedule under section 5315 of title 5, United States
Code, for each day during which that member is engaged in the
actual performance of the duties of the Commission.
(2) Travel expenses.--While away from their homes or
regular places of business in the performance of services for
the Commission, members of the Commission shall 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.
(i) Reports of Commission; Termination.--
(1) Interim reports.--The Commission may submit to the
President and Congress interim reports containing such
findings, conclusions, and recommendations for corrective
measures as have been agreed to by a majority of Commission
members.
(2) Final report.--Not later than 6 months after the date
of the enactment of this Act, the Commission shall submit to
the President and Congress a final report containing such
findings, conclusions, and recommendations for corrective
measures as have been agreed to by a majority of Commission
members.
(3) Termination.--
(A) In general.--The Commission, and all the
authorities of this Act, shall terminate 60 days after
the date on which the final report is submitted under
paragraph (2).
(B) Administrative activities before termination.--
The Commission may use the 60-day period referred to in
subparagraph (A) for the purpose of concluding its
activities, including providing testimony to committees
of Congress concerning its reports and disseminating
the final report.
(j) Funding.--
(1) Transfer from the department of the treasury tarp
program.--Of the amounts authorized to be appropriated by this
Act and made available in Public Law for the Troubled Asset
Relief Program established under the Emergency Economic
Stabilization Act of 2008, not to exceed $5,000,000 shall be
available for transfer to the Commission for purposes of the
activities of the Commission under this Act, and including
assistance for participating Federal agencies.
(2) Duration of availability.--Amounts made available to
the Commission under paragraph (1) shall remain available until
the termination of the Commission.
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