  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 in section 4 k of the bank holding company act of 1956 12 usc 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    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 usc 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 usc 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 usc 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 usc 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 usc 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    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 usc 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 usc 1841 for institutions described in  a section 2 a 5 e of the bank holding company act of 1956 12 usc 1841 a 5 e   b section 2 a 5 f of the bank holding company act of 1956 12 usc 1841 a 5 f   c section 2 c 2 d of the bank holding company act of 1956 12 usc 1841 c 2 d   d section 2 c 2 f of the bank holding company act of 1956 12 usc 1841 c 2 f   e section 2 c 2 h of the bank holding company act of 1956 12 usc 1841 c 2 h and   f section 2 c 2 b of the bank holding company act of 1956 12 usc 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 usc 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 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     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 usc 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  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 usc 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  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 usc 1841 et seq is amended  1 in section 5 c 5 b 12 usc 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 usc 1848a    d acquisitions of banks section 3 c of the bank holding company act of 1956 12 usc 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 usc 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 usc 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 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 usc 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 usc 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 usc 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 usc 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 usc 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 usc 1844 c 5     2 examination section 10 b of the home owners loan act 12 usc 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        i definition of the term savings and loan holding company section 10 a 1 d ii of the home owners loan act 12 usc 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 usc 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 usc 1841 c 2 d or   iii a company described in subsection c 9 c solely by virtue of such companys 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    sec 605 assuring consistent oversight of permissible activities of depository institution subsidiaries of holding companies  a in general the federal deposit insurance act 12 usc 1811 et seq is amended by inserting after section 25 the following new section  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   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 60-day 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   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   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    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 usc 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 usc 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 usc 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 usc 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    sec 607 standards for interstate acquisitions  a acquisition of banks section 3 d 1 a of the bank holding company act of 1956 12 usc 1842 d 1 a is amended by striking adequately capitalized and adequately managed and inserting well capitalized and well managed   b interstate bank mergers section 44 b 4 b of the federal deposit insurance act 12 usc 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    sec 608 enhancing existing restrictions on bank transactions with affiliates  a affiliate transactions section 23a of the federal reserve act 12 usc 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 usc 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   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  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 usc 371c1 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 usc 1468 is amended by adding at the end the following  d exemptions  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    sec 609 eliminating exceptions for transactions with financial subsidiaries  a amendment section 23a e of the federal reserve act 12 usc 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 usc 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    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 usc 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 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 usc 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  a amendment section 18 of the federal deposit insurance act 12 usc 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 usc 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 usc 214 et seq is amended by adding at the end the following  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 usc 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 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 usc 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 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 usc 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 usc 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  a extensions of credit section 22 h 9 d i of the federal reserve act 12 usc 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 usc 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    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 usc 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 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 usc 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    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 usc 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 usc 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 usc 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 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 usc 1811 et seq is amended by inserting after section 38 12 usc 1831o the following  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  a amendment section 17 of the securities exchange act of 1934 15 usc 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   2 the term foreign bank has the same meaning as in section 1 b 7 of the international banking act of 1978 12 usc 3101 7   3 the term insured bank has the same meaning as in section 3 of the federal deposit insurance act 12 usc 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 usc 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 usc 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 usc 3106 a   v a foreign bank that controls, directly or indirectly, a corporation chartered under section 25a of the federal reserve act 12 usc 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 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 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 usc 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, 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 usc 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 usc 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 usc 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 usc 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 usc 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 usc 1841 et seq is amended by adding at the end the following  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 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 self-interest 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   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 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 the provisions of the farm credit act of 1971 12 usc 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-making-related 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 usc 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 usc 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, 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 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   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 agencys 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 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 usc 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 usc 371c1 , 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 usc 371c-1 as if the counterparty were an affiliate of the banking entity    4 application to nonbank financial companies supervised by the board the appropriate federal banking agencies, 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 usc 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 usc 248a or   ii exercise discount or borrowing privileges pursuant to section 19 b 7 of the federal reserve act 12 usc 461 b 7     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 usc 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 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 usc 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 usc 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     sec 621 conflicts of interest  a in general the securities act of 1933 15 usc 77a et seq is amended by inserting after section 27a the following  sec 27b conflicts of interest relating to certain securitizations  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 section 3 of the securities and exchange act of 1934 15 usc 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 usc 1841 et seq is amended by adding at the end the following  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  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 usc 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 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        sec 623 interstate merger transactions  a interstate merger transactions section 18 c of the federal deposit insurance act 12 usc 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 usc 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   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 usc 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 usc 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 usc 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 usc 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 as in section 3 of the federal deposit insurance act 12 usc 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 usc 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 usc 1464 and subject to actions authorized by section 5 d of the home owners loan act 12 usc 1464 d       sec 625 treatment of dividends by certain mutual holding companies  a in general section 10 o of the home owners loan act 12 usc 1467a o is amended by adding at the end the following  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-tax-qualified 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  i reorganized into a mutual holding company under subsection o   ii issued minority stock either from its mid-tier 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 usc 1461 et seq is amended by inserting after section 10 12 usc 1467a the following new section  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 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 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  a repeal of prohibition on payment of interest on demand deposits  1 federal reserve act section 19 i of the federal reserve act 12 usc 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 usc 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 usc 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 usc 1841 c 2 f v is amended by inserting before the 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    