[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 2544 Introduced in Senate (IS)]
<DOC>
115th CONGRESS
2d Session
S. 2544
To stop financial institution crime, require certain officers of
companies to certify that they have conducted due diligence relating to
criminal conduct or civil fraud, create accountability in deferred
prosecution agreements, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 14, 2018
Ms. Warren introduced the following bill; which was read twice and
referred to the Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To stop financial institution crime, require certain officers of
companies to certify that they have conducted due diligence relating to
criminal conduct or civil fraud, create accountability in deferred
prosecution agreements, 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 ``Ending Too Big to Jail Act''.
SEC. 2. STOP FINANCIAL INSTITUTION CRIME.
(a) Findings.--Congress finds the following:
(1) History has shown that the Office of the Special
Inspector General for the Troubled Asset Relief Program
(referred to in this subsection as ``SIGTARP'') has--
(A) served as an effective model for--
(i) recovering taxpayer dollars; and
(ii) bringing accountability by rooting out
waste, fraud, and abuse; and
(B) proven to be a leader in targeting crimes
committed by insiders at financial institutions in
order to protect the interests of the people of the
United States.
(2) The financial crisis in 2008 laid bare one of the
biggest vulnerabilities of the United States, which is fraud
committed by financial institutions. Fraud committed by
financial institutions continues as of the date of enactment of
this Act, which demonstrates that such fraud does not
disappear, but evolves and grows over time, which weakens
financial institutions from the inside.
(3) There is a need for a permanent law enforcement agency
dedicated solely to investigating fraud committed by financial
institutions and insiders at financial institutions because
that type of fraud--
(A) wreaks havoc on the economy of the United
States;
(B) puts the finances of the United States at risk;
and
(C) ruins the lives of individuals in the United
States.
(4) Investigations led by SIGTARP have resulted in criminal
charges against more than 400 defendants, including criminal
charges against nearly 100 bankers. These criminal charges were
related to more than 20 failed banks, with a combined estimated
loss to the deposit insurance fund of $7,000,000,000.
(5) SIGTARP's investigations led to the Department of
Justice enforcement actions against 10 financial institutions,
with 8 having total assets exceeding $100,000,000,000.
(6) SIGTARP has developed unique methods to search for
crime by using industry, financial, and human intelligence,
including fraudulent conduct that contributed to the failure of
financial institutions, or that was either in, or impacted,
financial institutions.
(7) Rather than establishing an entirely new entity, it
makes the most sense for taxpayers to rely on SIGTARP's
understanding of complex bank records and bank operations and
use of intelligence to--
(A) identify anomalies; and
(B) investigate, and root out fraud at, financial
institutions.
(8) The vast expertise of SIGTARP, and the proven results
of SIGTARP with respect to the investigation of crime at
financial institutions, should be used on a permanent basis to
bring accountability and to deter fraud that jeopardizes
financial institutions in the United States, especially
considering the extent to which the people of the United States
rely on those institutions.
(b) Redesignation of the Office of the Special Inspector General
for the Troubled Asset Relief Program and the Special Inspector General
for the Troubled Asset Relief Program.--
(1) In general.--The Emergency Economic Stabilization Act
of 2008 (12 U.S.C. 5211 et seq.) is amended--
(A) by striking ``Special Inspector General for the
Troubled Asset Relief Program'' each place the term
appears and inserting ``Special Inspector General for
Financial Institution Crime'', except where the term is
used to refer to the Special Inspector General for the
Troubled Asset Relief Program Act of 2009;
(B) in section 121 (12 U.S.C. 5231), in the section
heading, by striking ``special inspector general for
the troubled asset relief program'' and inserting
``special inspector general for financial institution
crime''; and
(C) in the table of contents, by striking the item
relating to section 121 and inserting the following:
``Sec. 121. Special Inspector General for Financial Institution
Crime.''.
(2) Technical and conforming amendments.--
(A) Additional appropriations provision.--The
Helping Families Save Their Homes Act of 2009 (Public
Law 111-22; 123 Stat. 1632) is amended--
(i) in section 402 (12 U.S.C. 5231a)--
(I) in the section heading, by
striking ``special inspector general
for the troubled asset relief program''
and inserting ``special inspector
general for financial institution
crime''; and
(II) in subsection (b)(1)(A), by
striking ``Special Inspector General of
the Trouble Asset Relief Program'' and
inserting ``Special Inspector General
for Financial Institution Crime''; and
(ii) in the table of contents, by striking
the item relating to section 402 and inserting
the following:
``Sec. 402. Special Inspector General for Financial Institution
Crime.''.
(B) Exemption from budget reduction.--Section
255(i) of the Balanced Budget and Emergency Deficit
Control Act of 1985 (2 U.S.C. 905(i)) is amended by
striking ``Special Inspector General for the Troubled
Asset Relief Program'' and inserting ``Special
Inspector General for Financial Institution Crime''.
(3) References.--
(A) Office references.--Any reference to the Office
of the Special Inspector General for the Troubled Asset
Relief Program in any law, rule, regulation,
certificate, directive, instruction, or other official
paper in force on the date of enactment of this Act
shall be considered to refer and apply to the Office of
the Special Inspector General for Financial Institution
Crime.
(B) Special inspector general references.--Any
reference to the Special Inspector General for the
Troubled Asset Relief Program in any law, rule,
regulation, certificate, directive, instruction, or
other official paper in force on the date of enactment
of this Act shall be considered to refer and apply to
the Special Inspector General for Financial Institution
Crime.
(c) Duties of Special Inspector General for Financial Institution
Crime.--
(1) In general.--Section 121 of the Emergency Economic
Stabilization Act of 2008 (12 U.S.C. 5231) is amended--
(A) in subsection (b)--
(i) by striking paragraph (3); and
(ii) by redesignating paragraphs (4), (5),
and (6) as paragraphs (3), (4), and (5),
respectively;
(B) by striking subsection (c) and inserting the
following:
``(c) Duties.--
``(1) In general.--It shall be the duty of the Special
Inspector General to conduct, supervise and coordinate--
``(A) investigations of fraudulent conduct in, or
impacting--
``(i) an entity described in any of
subparagraphs (A) through (F) of section
5312(a)(2) of title 31, United States Code;
``(ii) a bank holding company, as defined
in section 2 of the Bank Holding Company Act of
1956 (12 U.S.C. 1841); or
``(iii) a savings and loan holding company,
as defined in section 10(a) of the Home Owners'
Loan Act (12 U.S.C. 1467a(a)); and
``(B) audits and investigations of--
``(i) the purchase, management, and sale of
assets by the Secretary under any program
established by the Secretary under section 101;
and
``(ii) the management by the Secretary of
any program established under section 102,
including by collecting and summarizing the
information described in paragraph (2).
``(2) Information required.--The information described in
this paragraph is the following:
``(A) A description of the categories of troubled
assets purchased or otherwise procured by the
Secretary.
``(B) A listing of the troubled assets purchased in
each such category described in subparagraph (A).
``(C) An explanation of the reasons the Secretary
deemed it necessary to purchase each such troubled
asset.
``(D) A listing of each financial institution from
which those troubled assets were purchased.
``(E) A listing of and detailed biographical
information on each person or entity hired to manage
such troubled assets.
``(F) A current estimate of the total amount of
troubled assets purchased pursuant to any program
established under section 101, the amount of troubled
assets on the books of the Treasury, the amount of
troubled assets sold, and the profit and loss incurred
on each sale or disposition of each such troubled
asset.
``(G) A listing of the insurance contracts issued
under section 102.
``(3) Additional duties.--The Special Inspector General
shall--
``(A) establish, maintain, and oversee such
systems, procedures, and controls as the Special
Inspector General considers appropriate to discharge
the duty under paragraph (1);
``(B) have the duties and responsibilities of
inspectors general under the Inspector General Act of
1978 (5 U.S.C. App.); and
``(C) have the duties necessary to carry out
material loss reviews under section 2(d) of the Ending
Too Big to Jail Act.
``(4) Additional authority.--
``(A) In general.--Except as provided under
subparagraph (B), and in addition to the duties
specified in paragraphs (1) and (2), the Special
Inspector General shall have the authority to conduct,
supervise, and coordinate an audit or investigation of
any action take under this title as the Special
Inspector General determines appropriate.
``(B) Exception.--Subparagraph (A) shall not apply
with respect to any action taken under section 115,
116, 117, or 125.'';
(C) in subsection (e)--
(i) in paragraph (1), by striking
subparagraph (B) and inserting the following:
``(B)(i) Subject to clause (ii), notwithstanding the fact that the
Office of the Special Inspector General for Financial Institutions
Crime Enforcement is not a temporary organization, as defined in
subsection (a) of section 3161 of title 5, United States Code, the
Special Inspector General may exercise the authorities of subsections
(b) through (i) of that section.
``(ii) If the Special Inspector General exercises the authorities
described in clause (i)--
``(I) section 3161(b)(2) of title 5, United States Code
(relating to periods of appointments) shall not apply; and
``(II) with respect to an individual who is hired after the
date of enactment of the Ending Too Big to Jail Act, section
3161(b)(3) of title 5, United States Code, shall not apply
unless that individual is a reemployed annuitant described in
paragraph (5).''; and
(ii) in paragraph (5)--
(I) in subparagraph (A)--
(aa) by striking ``(A)'';
and
(bb) in the first sentence,
by striking ``Except as
provided under subparagraph
(B), if'' and inserting ``If'';
and
(II) by striking subparagraph (B);
(D) by striking subsection (g) and inserting the
following:
``(g) Cooperation and Coordination With Other Entities.--
``(1) Definitions.--In this subsection--
``(A) the term `bank holding company' has the
meaning given the term in section 2 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841);
``(B) the term `financial institutions' means an
entity described in any of subparagraphs (A) through
(F) of section 5312(a)(2) of title 31, United States
Code; and
``(C) the term `savings and loan holding company'
has the meaning given the term in section 10(a) of the
Home Owners' Loan Act (12 U.S.C. 1467a(a)).
``(2) Required coordination.--In carrying out the duties,
responsibilities, and authorities of the Special Inspector
General under this section, the Special Inspector General shall
work with the entities described in paragraph (3), with a view
toward avoiding duplication of effort and ensuring
comprehensive oversight of--
``(A) financial institutions, bank holding
companies, and savings and loan holding companies;
``(B) any fraudulent conduct in, or impacting, an
entity described in subparagraph (A); and
``(C) the Troubled Asset Relief Program.
``(3) Entities.--The entities described in this paragraph
are the following:
``(A) The Inspector General of the Department of
the Treasury.
``(B) The Inspector General of the Federal Deposit
Insurance Corporation.
``(C) The Inspector General of the Securities and
Exchange Commission.
``(D) The Inspector General of the Board of
Governors of the Federal Reserve System and the Bureau
of Consumer Financial Protection.
``(E) The Inspector General of the Federal Housing
Finance Agency.
``(F) The Inspector General of any other entity as
appropriate.'';
(E) in subsection (h), by striking ``until the date
of termination of the Office of the Special Inspector
General for the Troubled Asset Relief Program'';
(F) by striking subsection (i) and inserting the
following:
``(i) Reports.--
``(1) In general.--
``(A) Requirement.--Subject to subparagraph (B),
not later than April 30 and October 31 of each year,
the Special Inspector General shall submit to the
appropriate committees of Congress a semiannual report
with respect to the 6-month period that ends on March
31 and September 30 of that year, respectively.
``(B) Initial report.--The first report submitted
by the Special Inspector General under subparagraph (A)
after the date of enactment of the Ending Too Big to
Jail Act shall be with respect to the first full 6-
month period that ends on March 31 or September 30
after that date of enactment, whichever is earlier.
``(2) Contents.--Each report submitted under paragraph (1)
shall include a summary of, for the period covered by the
report, the relevant actions taken by the Special Inspector
General.
``(3) Rule of construction.--Nothing in this subsection may
be construed to authorize the public disclosure of information
that is--
``(A) specifically prohibited from disclosure by
any other provision of law;
``(B) specifically required by Executive order to
be protected from disclosure in the interest of
national defense or national security or in the conduct
of foreign affairs; or
``(C) a part of an ongoing criminal investigation.
``(4) Public availability.--Except as provided under
paragraph (3), all reports submitted under this subsection
shall be available to the public.'';
(G) in subsection (j), by adding at the end the
following:
``(3) the amounts made available under section 402(c) of the
Public-Private Investment Program Improvement and Oversight Act of 2009
(12 U.S.C. 5231a(c)) shall remain available until expended for any
purpose in furtherance of the mission of the Office of the Special
Inspector General for Financial Institution Crime; and
``(4) the Office of the Special Inspector General for Financial
Institution Crime shall receive annual appropriations from Congress
separate and apart from appropriations made to the U.S. Department of
Treasury. (8) by striking subsection (k).''; and
(H) by striking subsection (k).
(2) Continuing service.--If the individual serving as the
Special Inspector General for the Troubled Asset Relief Program
on the day before the date of enactment of this Act was
appointed to that position by the President, by and with the
advice and consent of the Senate, that individual shall
continue to serve as the Special Inspector General for
Financial Institution Crime.
(d) Material Loss Reviews.--Notwithstanding any other provision of
law, beginning on the date of enactment of this Act, the Special
Inspector General for Financial Institution Crime shall have the
exclusive authority to perform material loss reviews and has authority
to promulgate regulations related to those reviews. For each review,
the Special Inspector General shall make a written report to the agency
reviewing the agency's supervision of an entity defined in section
121(c)(1)(A) of the Emergency Economic Stabilization Act (12 U.S.C.
5231(c)(1)(A)), as amended by subsection (c)(1)(B) of this section,
which shall ascertain why the entity's problems resulted in a material
loss, and make recommendations for preventing any such loss in the
future.
(e) Authority of Special Inspector General.--Section 121 of the
Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5231) is
amended by adding at the end the following:
``(l) Disclosure.--
``(1) In general.--Without approval of the Special
Inspector General, no person, financial institution (as defined
in section 5312(a) of title 31, United States Code), bank
holding company (as defined in section 2 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841)), savings and loan holding
company (as defined in section 10(a) of the Home Owners' Loan
Act (12 U.S.C. 1467a(a))), or any other entity, including an
entity that lawfully possesses non-public information and
records of the Special Inspector General, may disclose
information and records with respect to the duties of the
Special Inspector General under this section unless--
``(A) the Special Inspector General has approved a
request for that information or those records, as
applicable, under procedures established by the Special
Inspector General; or
``(B)(i) an appropriate court of the United States
has ordered that information or those records, as
applicable, be released; and
``(ii) the Special Inspector General had the
opportunity to oppose the release of the material
described in clause (i) in a proceeding before the
court described in that clause.
``(2) Application of privilege.--No Federal or State
financial institutions regulatory agency, including the Office
of the Comptroller of the Currency, the Board of Governors of
the Federal Reserve System, the Federal reserve banks, the
Federal Deposit Insurance Corporation, the Bureau of Consumer
Financial Protection, the Federal Housing Finance Agency, and
any State banking agency, may, on the basis of any common law
privilege, including the bank examiner privilege, deny the
Special Inspector General access to information or records
after the Special Inspector General has requested that
information or those records, as applicable.''.
SEC. 3. CERTIFICATION.
(a) Definitions.--In this section--
(1) the term ``appropriate entity'' means--
(A) the Special Inspector General for the Troubled
Asset Relief Program or any successor entity; or
(B) if the Program or entity described in
subparagraph (A) does not exist, the Attorney General;
(2) the terms ``bank holding company'' and ``savings and
loan holding company'' has the meanings given those terms in
section 10(a) of the Home Owners' Loan Act (12 U.S.C.
1467a(a)); and
(3) the term ``financial institution'' has the meaning
given the term in section 5312(a) of title 31, United States
Code.
(b) Certification.--The chief executive officer, chief financial
officer, chief operating officer, and chief compliance officer of a
financial institution, a bank holding company, or a savings and loan
holding company with assets greater than $10,000,000,000 shall submit
to the appropriate entity, subject to section 1001 of title 18, United
States Code, an annual certification that the officers have conducted
due diligence and found that there is no criminal conduct or civil
fraud in the financial institution, bank holding company, or savings
and loan holding company, as applicable, that has not been disclosed in
full to the Department of Justice or the applicable regulator. If a
disclosure to the Department of Justice or the applicable regulator has
been made, the certification shall explicitly describe all of the
details of the conduct that has been disclosed, including but not
limited to, the date of disclosure, and the person to whom the
disclosure was made.
(c) Regulations.--Not later than 1 year after the date of enactment
of this Act, the appropriate entity shall promulgate regulations on the
process under which certifications made under subsection (b) shall be
submitted.
(d) Website.--The appropriate entity shall, on the website of the
appropriate entity--
(1) within 90 calendar days following the promulgation of
regulations under subsection (c), and on an annual basis
thereafter, publish a list of all financial institutions, bank
holding companies, and savings and loan holding companies
subject to the upcoming year's annual certification requirement
under subsection (b); and
(2) maintain on the homepage a direct link for the public
to report alleged misconduct pertaining to any entity listed
under paragraph (1).
(e) Effective Date.--Subsection (b) shall take effect on the
effective date of the regulations promulgated under subsection (c).
(f) Enforcement.--
(1) Injunctions.--When the Secretary of the Treasury
believes a person has violated, is violating, or will violate
this section or a regulation prescribed under this section, the
Secretary may bring a civil action in the appropriate district
court of the United States or appropriate United States court
of a territory or possession of the United States to enjoin the
violation or to enforce compliance with the section or
regulation. An injunction or temporary restraining order shall
be issued without bond.
(2) Civil penalties.--
(A) In general.--A chief executive officer, chief
financial officer, chief operating officer, and chief
compliance officer of a financial institution, a bank
holding company, or a savings and loan holding company,
willfully violating this section or a regulation
prescribed under this section is liable to the United
States Government for a civil penalty of not more than
$25,000.
(B) Negligence.--
(i) In general.--The Secretary of the
Treasury may impose a civil money penalty of
not more than $500 on any chief executive
officer, chief financial officer, chief
operating officer, and chief compliance officer
of a financial institution, a bank holding
company, or a savings and loan holding company
who negligently violates any provision of this
section or any regulation prescribed under this
section.
(ii) Pattern of negligent activity.--If any
chief executive officer, chief financial
officer, chief operating officer, and chief
compliance officer of a financial institution,
a bank holding company, or a savings and loan
holding company engages in a pattern of
negligent violations of any provision of this
section or any regulation prescribed under this
section, the Secretary of the Treasury may, in
addition to any penalty imposed under clause
(i) with respect to any such violation, impose
a civil money penalty of not more than $50,000
on the chief executive officer, chief financial
officer, chief operating officer, and chief
compliance officer of a financial institution,
a bank holding company, or a savings and loan
holding company.
(3) Criminal penalties.--
(A) In general.--A chief executive officer, chief
financial officer, chief operating officer, and chief
compliance officer of a financial institution, a bank
holding company, or a savings and loan holding company
willfully violating this section or a regulation
prescribed under this section shall be fined not more
than $250,000, or imprisoned for not more than 5 years,
or both.
(B) Other laws.--A chief executive officer, chief
financial officer, chief operating officer, and chief
compliance officer of a financial institution, a bank
holding company, or a savings and loan holding company
willfully violating this section or a regulation
prescribed under this section while violating another
law of the United States or as part of a pattern of any
illegal activity involving more than $100,000 in a 12-
month period, shall be fined not more than $500,000,
imprisoned for not more than 10 years, or both.
SEC. 4. ACCOUNTABILITY IN DEFERRED PROSECUTION AGREEMENTS.
Section 3161(h)(2) of title 18, United States Code, is amended--
(1) by striking ``Any'' and inserting ``(A) Any''; and
(2) by adding at the end the following:
``(B)(i) If the defendant described in subparagraph (A) is
a person other than an individual, the court may not approve an
agreement described in that subparagraph unless the court
determines that the agreement is in the public interest,
including extending the term of such an agreement.
``(ii) In making the determination under clause (i), the
court shall consider--
``(I) whether any reforms required under the
agreement are likely to prevent similar unlawful
behavior in the future;
``(II) whether any penalties under the agreement
are sufficient to compensate victims and deter future
unlawful actions; and
``(III) if the defendant has previously been
convicted or entered into a deferred prosecution
agreement with the Government in connection with
related activity, the court may not, without good
cause, approve such an agreement.
``(iii) Any period of delay during which the court is
making the determination under this subparagraph shall be
included in the period of delay described in subparagraph (A).
``(C)(i) The court may, on its own or on motion of any
party or of an independent monitor, if one is appointed
pursuant to an agreement described in subparagraph (A), review
the implementation or termination of the agreement, and take
any appropriate action, to assure that the implementation or
termination is in the public interest.
``(ii) The court may order a party or an independent
monitor to file evidence with the court to aid the court in
making the determination under clause (i).
``(D)(i) Except as provided in clause (ii), the Attorney
General shall make available on the public website of the
Department of Justice--
``(I) the text of any agreement described in
subparagraph (A) between an attorney for the Government
and a defendant that is a person other than an
individual; and
``(II) all the terms and conditions of any
agreement or understanding between an independent
monitor appointed pursuant to the agreement described
in subclause (I) and the defendant.
``(ii) The information described in clause (i) and
subparagraph (C)(ii) shall not be made publicly available if,
upon petition by any interested party, the court finds that
there is good cause to not make such information public,
including that the information is proprietary, confidential, a
trade secret, or meets the requirements of rule 49.1 of the
Federal Rules of Criminal Procedure.''.
<all>