12 U.S.C. § 5331 — Mitigation of risks to financial stability

Page 1846 TITLE 12—BANKS AND BANKING § 5331 nancial activity or practice conducted by bank holding companies or nonbank financial compa- nies under their respective jurisdictions, if the Council determines that the conduct, scope, na- ture, size, scale, concentration, or interconnect- edness of such activity or practice could create or increase the risk of significant liquidity, credit, or other problems spreading among bank holding companies and nonbank financial com- panies, financial markets of the United States, or low-income, minority, or underserved com- munities. (b) Procedure for recommendations to regulators (1) Notice and opportunity for comment The Council shall consult with the primary financial regulatory agencies and provide no- tice to the public and opportunity for com- ment for any proposed recommendation that the primary financial regulatory agencies apply new or heightened standards and safe- guards for a financial activity or practice. (2) Criteria The new or heightened standards and safe- guards for a financial activity or practice rec- ommended under paragraph (1)— (A) shall take costs to long-term economic growth into account; and (B) may include prescribing the conduct of the activity or practice in specific ways (such as by limiting its scope, or applying particular capital or risk management re- quirements to the conduct of the activity) or prohibiting the activity or practice. (c) Implementation of recommended standards (1) Role of primary financial regulatory agency (A) In general Each primary financial regulatory agency may impose, require reports regarding, ex- amine for compliance with, and enforce standards in accordance with this section with respect to those entities for which it is the primary financial regulatory agency. (B) Rule of construction The authority under this paragraph is in addition to, and does not limit, any other authority of a primary financial regulatory agency. Compliance by an entity with ac- tions taken by a primary financial regu- latory agency under this section shall be en- forceable in accordance with the statutes governing the respective jurisdiction of the primary financial regulatory agency over the entity, as if the agency action were taken under those statutes. (2) Imposition of standards The primary financial regulatory agency shall impose the standards recommended by the Council in accordance with subsection (a), or similar standards that the Council deems acceptable, or shall explain in writing to the Council, not later than 90 days after the date on which the Council issues the recommenda- tion, why the agency has determined not to follow the recommendation of the Council. (d) Report to Congress The Council shall report to Congress on— (1) any recommendations issued by the Council under this section; (2) the implementation of, or failure to im- plement, such recommendation on the part of a primary financial regulatory agency; and (3) in any case in which no primary financial regulatory agency exists for the nonbank fi- nancial company conducting financial activi- ties or practices referred to in subsection (a), recommendations for legislation that would prevent such activities or practices from threatening the stability of the financial sys- tem of the United States. (e) Effect of rescission of identification (1) Notice The Council may recommend to the relevant primary financial regulatory agency that a fi- nancial activity or practice no longer requires any standards or safeguards implemented under this section. (2) Determination of primary financial regu- latory agency to continue (A) In general Upon receipt of a recommendation under paragraph (1), a primary financial regu- latory agency that has imposed standards under this section shall determine whether such standards should remain in effect. (B) Appeal process Each primary financial regulatory agency that has imposed standards under this sec- tion shall promulgate regulations to estab- lish a procedure under which entities under its jurisdiction may appeal a determination by such agency under this paragraph that standards imposed under this section should remain in effect. (Pub. L. 111–203, title I, § 120, July 21, 2010, 124 Stat. 1408.) § 5331. Mitigation of risks to financial stability (a) Mitigatory actions If the Board of Governors determines that a bank holding company with total consolidated assets of $250,000,000,000 or more, or a nonbank financial company supervised by the Board of Governors, poses a grave threat to the financial stability of the United States, the Board of Gov- ernors, upon an affirmative vote of not fewer than 2⁄3 of the voting members of the Council then serving, shall— (1) limit the ability of the company to merge with, acquire, consolidate with, or otherwise become affiliated with another company; (2) restrict the ability of the company to offer a financial product or products; (3) require the company to terminate one or more activities; (4) impose conditions on the manner in which the company conducts 1 or more activi- ties; or (5) if the Board of Governors determines that the actions described in paragraphs (1) through (4) are inadequate to mitigate a threat to the financial stability of the United States in its recommendation, require the company to sell or otherwise transfer assets or Page 1847 TITLE 12—BANKS AND BANKING § 5333 off-balance-sheet items to unaffiliated enti- ties. (b) Notice and hearing (1) In general The Board of Governors, in consultation with the Council, shall provide to a company described in subsection (a) written notice that such company is being considered for mitiga- tory action pursuant to this section, including an explanation of the basis for, and descrip- tion of, the proposed mitigatory action. (2) Hearing Not later than 30 days after the date of re- ceipt of notice under paragraph (1), the com- pany may request, in writing, an opportunity for a written or oral hearing before the Board of Governors to contest the proposed mitiga- tory action. Upon receipt of a timely request, the Board of Governors shall fix a time (not later than 30 days after the date of receipt of the request) and place at which such company may appear, personally or through counsel, to submit written materials (or, at the discretion of the Board of Governors, in consultation with the Council, oral testimony and oral ar- gument). (3) Decision Not later than 60 days after the date of a hearing under paragraph (2), or not later than 60 days after the provision of a notice under paragraph (1) if no hearing was held, the Board of Governors shall notify the company of the final decision of the Board of Governors, in- cluding the results of the vote of the Council, as described in subsection (a). (c) Factors for consideration The Board of Governors and the Council shall take into consideration the factors set forth in subsection (a) or (b) of section 5323 of this title, as applicable, in making any determination under subsection (a). (d) Application to foreign financial companies The Board of Governors may prescribe regula- tions regarding the application of this section to foreign nonbank financial companies supervised by the Board of Governors and foreign-based bank holding companies— (1) giving due regard to the principle of na- tional treatment and equality of competitive opportunity; and (2) taking into account the extent to which the foreign nonbank financial company or for- eign-based bank holding company is subject on a consolidated basis to home country stand- ards that are comparable to those applied to financial companies in the United States. (Pub. L. 111–203, title I, § 121, July 21, 2010, 124 Stat. 1410; Pub. L. 115–174, title IV, § 401(c)(1)(C), May 24, 2018, 132 Stat. 1358.) Editorial Notes AMENDMENTS 2018—Subsec. (a). Pub. L. 115–174 substituted ‘‘$250,000,000,000’’ for ‘‘$50,000,000,000’’ in introductory provisions. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2018 AMENDMENT Except as otherwise provided, amendment by Pub. L. 115–174 effective 18 months after May 24, 2018, see sec- tion 401(d) of Pub. L. 115–174, set out as a note under section 5365 of this title. CONSTRUCTION OF 2018 AMENDMENT For construction of amendment by Pub. L. 115–174 as applied to certain foreign banking organizations, see section 401(g) of Pub. L. 115–174, set out as a note under section 5365 of this title. § 5332. GAO audit of Council (a) Authority to audit The Comptroller General of the United States may audit the activities of— (1) the Council; and (2) any person or entity acting on behalf of or under the authority of the Council, to the extent that such activities relate to work for the Council by such person or entity. (b) Access to information (1) In general Notwithstanding any other provision of law, the Comptroller General shall, upon request and at such reasonable time and in such rea- sonable form as the Comptroller General may request, have access to— (A) any records or other information under the control of or used by the Council; (B) any records or other information under the control of a person or entity acting on behalf of or under the authority of the Coun- cil, to the extent that such records or other information is relevant to an audit under subsection (a); and (C) the officers, directors, employees, fi- nancial advisors, staff, working groups, and agents and representatives of the Council (as related to the activities on behalf of the Council of such agent or representative), at such reasonable times as the Comptroller General may request. (2) Copies The Comptroller General may make and re- tain copies of such books, accounts, and other records, access to which is granted under this section, as the Comptroller General considers appropriate. (Pub. L. 111–203, title I, § 122, July 21, 2010, 124 Stat. 1411.) § 5333. Study of the effects of size and complexity of financial institutions on capital market ef- ficiency and economic growth (a) Study required (1) In general The Chairperson of the Council shall carry out a study of the economic impact of possible financial services regulatory limitations in- tended to reduce systemic risk. Such study shall estimate the benefits and costs on the ef- ficiency of capital markets, on the financial sector, and on national economic growth, of— (A) explicit or implicit limits on the max- imum size of banks, bank holding compa- nies, and other large financial institutions;