STREAMLINING BANK HOLDING COMPANY SUPERVISION.

SEC. 111. STREAMLINING BANK HOLDING COMPANY SUPERVISION. Section 5(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)) is amended to read as follows: “(c) Reports and Examinations.— “(1) Reports.— “(A) In general.—The Board, from time to time, may require a bank holding company and any subsidiary of such company to submit reports under oath to keep the Board informed as to— “(i) its financial condition, systems for monitoring and controlling financial and operating risks, and transactions with depository institution subsidiaries of the bank holding company; and113 STAT. 1363 “(ii) compliance by the company or subsidiary with applicable provisions of this Act or any other Federal law that the Board has specific jurisdiction to enforce against such company or subsidiary. “(B) Use of existing reports.— “(i) In general.—For purposes of compliance with this paragraph, the Board shall, to the fullest extent possible, accept— “(I) reports that a bank holding company or any subsidiary of such company has provided or been required to provide to other Federal or State supervisors or to appropriate self-regulatory organizations; “(II) information that is otherwise required to be reported publicly; and “(III) externally audited financial statements, “(ii) Availability.—A bank holding company or a subsidiary of such company shall provide to the Board, at the request of the Board, a report referred to in clause (i). “(iii) Reports filed with other agencies.— “(I) In general.—In the event that the Board requires a report under this subsection from a functionally regulated subsidiary of a bank holding company of a kind that is not required by another Federal or State regulatory authority or an appropriate self-regulatory organization, the Board shall first request that the appropriate regulatory authority or self-regulatory organization obtain such report. “(II) Availability from other subsidiary.—If the report is not made available to the Board, and the report is necessary to assess a material risk to the bank holding company or any of its depository institution subsidiaries or compliance with this Act or any other Federal law that the Board has specific jurisdiction to enforce against such company or subsidiary or the systems described in paragraph (2)(A)(ii)(II), the Board may require such functionally regulated subsidiary to provide such a report to the Board. “(2) Examinations.— “(A) Examination authority for bank holding companies and subsidiaries.—Subject to subparagraph (B), the Board may make examinations of each bank holding company and each subsidiary of such holding company in order— “(i) to inform the Board of the nature of the operations and financial condition of the holding company and such subsidiaries; “(ii) to inform the Board of— “(I) the financial and operational risks within the holding company system that may pose a threat to the safety and soundness of any depository institution subsidiary of such holding company; and113 STAT. 1364 “(II) the systems for monitoring and controlling such risks; and “(iii) to monitor compliance with the provisions of this Act or any other Federal law that the Board has specific jurisdiction to enforce against such company or subsidiary and those governing transactions and relationships between any depository institution subsidiary and its affiliates. “(B) Functionally regulated subsidiaries.—Notwithstanding subparagraph (A), the Board may make examinations of a functionally regulated subsidiary of a bank holding company only if— “(i) the Board has reasonable cause to believe that such subsidiary is engaged in activities that pose a material risk to an affiliated depository institution; “(ii) the Board reasonably determines, after reviewing relevant reports, that examination of the subsidiary is necessary to adequately inform the Board of the systems described in subparagraph (A)(ii)(II); or “(iii) based on reports and other available information, the Board has reasonable cause to believe that a subsidiary is not in compliance with this Act or any other Federal law that the Board has specific jurisdiction to enforce against such subsidiary, including provisions relating to transactions with an affiliated depository institution, and the Board cannot make such determination through examination of the affiliated depository institution or the bank holding company. “(C) Restricted focus of examinations.—The Board shall, to the fullest extent possible, limit the focus and scope of any examination of a bank holding company to— “(i) the bank holding company; and “(ii) any subsidiary of the bank holding company that could have a materially adverse effect on the safety and soundness of any depository institution subsidiary of the holding company due to— “(I) the size, condition, or activities of the subsidiary; or “(II) the nature or size of transactions between the subsidiary and any depository institution that is also a subsidiary of the bank holding company. “(D) Deference to bank examinations.—The Board shall, to the fullest extent possible, for the purposes of this paragraph, use the reports of examinations of depository institutions made by the appropriate Federal and State depository institution supervisory authority. “(E) Deference to other examinations.—The Board shall, to the fullest extent possible, forego an examination by the Board under this paragraph and instead review the reports of examination made of— “(i) any registered broker or dealer by or on behalf of the Securities and Exchange Commission; “(ii) any registered investment adviser properly registered by or on behalf of either the Securities and Exchange Commission or any State;113 STAT. 1365 “(iii) any licensed insurance company by or on behalf of any State regulatory authority responsible for the supervision of insurance companies; and “(iv) any other subsidiary that the Board finds to be comprehensively supervised by a Federal or State authority. “(3) Capital.— “(A) In general.—The Board may not, by regulation, guideline, order, or otherwise, prescribe or impose any capital or capital adequacy rules, guidelines, standards, or requirements on any functionally regulated subsidiary of a bank holding company that— “(i) is not a depository institution; and “(ii) is— “(I) in compliance with the applicable capital requirements of its Federal regulatory authority (including the Securities and Exchange Commission) or State insurance authority; “(II) properly registered as an investment adviser under the Investment Advisers Act of 1940, or with any State; or “(III) is licensed as an insurance agent with the appropriate State insurance authority. “(B) Rule of construction.—Subparagraph (A) shall not be construed as preventing the Board from imposing capital or capital adequacy rules, guidelines, standards, or requirements with respect to— “(i) activities of a registered investment adviser other than with respect to investment advisory activities or activities incidental to investment advisory activities; or “(ii) activities of a licensed insurance agent other than insurance agency activities or activities incidental to insurance agency activities. “(C) Limitations of indirect actions.—In developing, establishing, or assessing bank holding company capital or capital adequacy rules, guidelines, standards, or requirements for purposes of this paragraph, the Board may not take into account the activities, operations, or investments of an affiliated investment company registered under the Investment Company Act of 1940, unless the investment company is— “(i) a bank holding company; or “(ii) controlled by a bank holding company by reason of ownership by the bank holding company (including through all of its affiliates) of 25 percent or more of the shares of the investment company, and the shares owned by the bank holding company have a market value equal to more than $1,000,000. “(4) Functional regulation of securities and insurance activities.— “(A) Securities activities.—Securities activities conducted in a functionally regulated subsidiary of a depository institution shall be subject to regulation by the Securities and Exchange Commission, and by relevant State securities authorities, as appropriate, subject to section 104 of the Gramm-Leach-Bliley Act, to the same extent as if they 113 STAT. 1366were conducted in a nondepository institution subsidiary of a bank holding company. “(B) Insurance activities.—Subject to section 104 of the Gramm-Leach-Bliley Act, insurance agency and brokerage activities and activities as principal conducted in a functionally regulated subsidiary of a depository institution shall be subject to regulation by a State insurance authority to the same extent as if they were conducted in a nondepository institution subsidiary of a bank holding company. “(5) Definition.—For purposes of this subsection, the term ‘functionally regulated subsidiary’ means any company— “(A) that is not a bank holding company or a depository institution; and “(B) that is— “(i) a broker or dealer that is registered under the Securities Exchange Act of 1934; “(ii) a registered investment adviser, properly registered by or on behalf of either the Securities and Exchange Commission or any State, with respect to the investment advisory activities of such investment adviser and activities incidental to such investment advisory activities; “(iii) an investment company that is registered under the Investment Company Act of 1940; “(iv) an insurance company, with respect to insurance activities of the insurance company and activities incidental to such insurance activities, that is subject to supervision by a State insurance regulator; or “(v) an entity that is subject to regulation by the Commodity Futures Trading Commission, with respect to the commodities activities of such entity and activities incidental to such commodities activities.”.