Finance

Please summarize the following pages . The summary must be between 1-4 pages

The pages are part of an act (Dodd Frank ) pass by congress : To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘‘too big to fail’’, to protect
the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.

Be it enacted by the Senate and House of Representatives ofthe United States of America in Congress assembled,

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(1) a discussion of the significant problems faced by con- sumers in shopping f

or obtaining consumer financial products or services;

(2) a justification of the budget request of the previous year;

(3) a list of the significant rules

and

orders adopted by the Bureau, as well as other significant initiatives conducted by the Bureau, during the preceding year and the plan of the Bureau for rules, orders, or other initiatives to be under- taken during the upcoming period;

(4) an analysis of complaints about consumer financial products or services that the Bureau has received and collected in its central database on complaints during the preceding year;

(5) a list, with a brief statement of the issues, of the public supervisory and enforcement actions to which the Bureau was a party during the preceding year;

(6) the actions taken regarding rules, orders, and super- visory actions with respect to covered persons which are not credit unions or depository institutions;

(7) an assessment of significant actions by State attorneys general or State regulators relating to Federal consumer finan- cial law;

(8) an analysis of the efforts of the Bureau to fulfill the fair lending mission of the Bureau; and

(9) an analysis of the efforts of the Bureau to increase workforce and contracting diversity consistent with the proce- dures established by the Office of Minority and Women Inclu- sion.

SEC. 1017. FUNDING; PENALTIES AND FINES.

(a) TRANSFER OF FUNDS FROM BOARD OF GOVERNORS.—

(1) IN GENERAL.—Each year (or quarter of such year), begin-

ning on the designated transfer date, and each quarter there-

after, the Board of Governors shall transfer to the Bureau

from the combined earnings of the Federal Reserve System,

the amount determined by the Director to be reasonably nec-

essary to carry out the authorities of the Bureau under Federal consumer financial law, taking into account such other sums made available to the Bureau from the preceding year (or quarter of such year).

(2) FUNDING CAP.—

(A) IN GENERAL.—Notwithstanding paragraph (1), and

in accordance with this paragraph, the amount that shall

be transferred to the Bureau in each fiscal year shall

not exceed a fixed percentage of the total operating

expenses of the Federal Reserve System, as reported in

the Annual Report, 2009, of the Board of Governors, equal

to—

and

(i)
10 percent of such expenses in fiscal year 2011;

(ii) 11 percent of such expenses in fiscal year 2012;

(iii) 12 percent of such expenses in fiscal year

2013, and in each year thereafter.

(B) ADJUSTMENT OF AMOUNT.—The dollar amount

referred to in subparagraph (A)(iii) shall be adjusted

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annually, using the percent increase, if any, in the employ- ment cost index for total compensation for State and local government workers published by the Federal Government, or the successor index thereto, for the 12-month period ending on September 30 of the year preceding the transfer.

(C) REVIEWABILITY.—Notwithstanding any other provi- sion in this title, the funds derived from the Federal Reserve System pursuant to this subsection shall not be subject to review by the Committees on Appropriations of the House of Representatives and the Senate.

(3) TRANSITION PERIOD.—Beginning on the date of enact- ment of this Act and until the designated transfer date, the Board of Governors shall transfer to the Bureau the amount estimated by the Secretary needed to carry out the authorities granted to the Bureau under Federal consumer financial law, from the date of enactment of this Act until the designated transfer date.

(4) BUDGET AND FINANCIAL MANAGEMENT.—

(A) FINANCIAL OPERATING PLANS AND FORECASTS.—The

Director shall provide to the Director of the Office of

Management and Budget copies of the financial operating

plans and forecasts of the Director, as prepared by the

Director in the ordinary course of the operations of the

Bureau, and copies of the quarterly reports of the financial

condition and results of operations of the Bureau, as pre-

pared by the Director in the ordinary course of the oper-

ations of the Bureau.

(B) FINANCIAL STATEMENTS.—The Bureau shall prepare

annually a statement of—

(i) assets and liabilities and surplus or deficit;

(ii) income and expenses; and

(iii) sources and application of funds.

shall implement and maintain financial management sys-

tems that comply substantially with Federal financial

management systems requirements and applicable Federal

accounting standards.

(D) ASSERTION OF INTERNAL CONTROLS.—The Director

shall provide to the Comptroller General of the United

States an assertion as to the effectiveness of the internal

controls that apply to financial reporting by the Bureau,

using the standards established in section 3512(c) of title

31,

United States Code.

(E) RULE OF CONSTRUCTION.—This subsection may not

be construed as implying any obligation on the part of

the Director to consult with or obtain the consent or approval of the Director of the Office of Management and Budget with respect to any report, plan, forecast, or other information referred to in subparagraph (A) or any jurisdic- tion or oversight over the affairs or operations of the Bureau.

(F) FINANCIAL STATEMENTS.—The financial statements of the Bureau shall not be consolidated with the financial statements of either the Board of Governors or the Federal Reserve System.

(5) AUDIT OF THE

BUREAU.—

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(A) IN GENERAL.—

The Comptroller General shall annually audit the financial transactions of the Bureau in accordance with the United States generally accepted government auditing standards, as may be prescribed by the Comptroller General of the United States. The audit shall be conducted at the place or places where accounts of the Bureau are normally kept. The representatives of the Government Accountability Office shall have access to the personnel and to all books, accounts, documents, papers, records (including electronic records), reports, files, and all other papers, automated data, things, or property belonging to or under the control of or used or employed by the Bureau pertaining to its financial transactions and necessary to facilitate the audit, and such representatives shall be afforded full facilities for verifying transactions with the balances or securities held by depositories, fiscal agents, and custodians. All such books, accounts, docu- ments, records, reports, files, papers, and property of the Bureau shall remain in possession and custody of the Bureau. The Comptroller General may obtain and duplicate any such books, accounts, documents, records, working papers, automated data and files, or other information relevant to such audit without cost to the Comptroller General, and the right of access of the Comptroller General to such information shall be enforceable pursuant to section 716(c) of title 31, United States Code.

(B) REPORT.—The Comptroller General shall submit to the Congress a report of each annual audit conducted under this sub

section.

The report to the Congress shall set forth the scope of the audit and shall include the statement of assets and liabilities and surplus or deficit, the statement of income and expenses, the statement of sources and application of funds, and such comments and information as may be deemed necessary to inform Con- gress of the financial operations and condition of the Bureau, together with such recommendations with respect thereto as the Comptroller General may deem advisable. A copy of each report shall be furnished to the President and to the Bureau at the time submitted to the Congress.

(C) ASSISTANCE AND COSTS.—For the purpose of con- ducting an audit under this subsection, the Comptroller General may, in the discretion of the Comptroller General, employ by contract, without regard to section 3709 of the Revised Statutes of the United States (41 U.S.C. 5), profes- sional services of firms and organizations of certified public accountants for temporary periods or for special purposes. Upon the request of the Comptroller General, the Director of the Bureau shall transfer to the Government Account- ability Office from funds available, the amount requested by the Comptroller General to cover the full costs of any audit and report conducted by the Comptroller General. The Comptroller General shall credit funds transferred to the account established for salaries and expenses of the Government Accountability Office, and such amount shall be available upon receipt and without fiscal year limitation to cover the full costs of the audit and report.

(b) CONSUMER FINANCIAL PROTECTION FUND.—

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(1) SEPARATE FUND IN FEDERAL RESERVE ESTABLISHED.—

There is established in the Federal Reserve a separate fund,

to be known as the ‘‘Bureau of Consumer Financial Protection

Fund’’ (referred to in this section as the ‘‘Bureau Fund’’). The

Bureau Fund shall be maintained and established at a Federal

reserve bank, in accordance with such requirements as the

Board of Governors may impose.

(2) FUND RECEIPTS.—All amounts transferred to the Bureau

under subsection (a) shall be deposited into

the Bureau Fund.

(3) INVESTMENT AUTHORITY.—

(A) AMOUNTS IN BUREAU FUND MAY BE INVESTED.—

The Bureau may request the Board of Governors to direct

the investment of the portion of the Bureau Fund that

is not, in the judgment of the Bureau, required to meet

the current needs of the Bureau.

(B) ELIGIBLE INVESTMENTS.—Investments authorized

by this paragraph shall be made in obligations of the

United States or obligations that are guaranteed as to

principal and interest by the United States, with maturities

suitable to the needs of the Bureau Fund, as determined

by the Bureau.

on, and the proceeds from the sale or redemption of, any

obligations held in the Bureau Fund shall be credited to

the Bureau Fund.

(1) IN GENERAL.—Funds obtained by, transferred to, or

credited to the Bureau Fund shall be immediately available

to the Bureau and under the control of the Director, and shall

remain available until expended, to pay the expenses of the

Bureau in carrying out its duties and responsibilities. The

compensation of the Director and other employees of the Bureau

and all other expenses thereof may be paid from, obtained

by, transferred to, or credited to the Bureau Fund under this

section.

(2) FUNDS THAT ARE NOT GOVERNMENT FUNDS.—Funds

obtained by or transferred to the Bureau Fund shall not be

construed to be Government funds or appropriated monies.

(3) AMOUNTS NOT SUBJECT TO APPORTIONMENT.—Notwith-

standing any other provision of law, amounts in the Bureau

Fund and in the Civil Penalty Fund established under sub-

section (d) shall not be subject to apportionment for purposes

of chapter 15 of title 31, United States Code, or under any

other authority.

(d) PENALTIES AND FINES.—

(1) ESTABLISHMENT OF VICTIMS RELIEF FUND.—There is

established in the Federal Reserve a separate fund, to be known

as the ‘‘Consumer Financial Civil Penalty Fund’’ (referred to

in this section as the ‘‘Civil Penalty Fund’’). The Civil Penalty

Fund shall be maintained and established at a Federal reserve

bank, in accordance with such requirements as the Board of

Governors may impose. If the Bureau obtains a civil penalty

against any person in any judicial or administrative action

under Federal consumer financial laws, the Bureau shall

deposit into the Civil Penalty Fund, the amount of the penalty

collected.

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(2) PAYMENT TO VICTIMS.—Amounts in the Civil Penalty Fund shall be available to the Bureau, without fiscal year limitation, for payments to the victims of activities for which civil penalties have been imposed under the Federal consumer

financial laws.

To the extent that such victims cannot be located or such payments are otherwise not practicable, the Bureau may use such funds for the purpose of consumer education and financial literacy programs.

(e) AUTHORIZATION OF APPROPRIATIONS; ANNUAL REPORT.—

(1) DETERMINATION REGARDING NEED FOR APPROPRIATED FUNDS.—

(A) IN GENERAL.—The Director is authorized to deter- mine that sums available to the Bureau under this section will not be sufficient to carry out the authorities of the Bureau under Federal consumer financial law for the upcoming year.

(B) REPORT REQUIRED.—When making a determination under subparagraph (A), the Director shall prepare a report regarding the funding of the Bureau, including the assets and liabilities of the Bureau, and the extent to which the funding needs of the Bureau are anticipated to exceed the level of the amount set forth in subsection (a)(2). The Director shall submit the report to the President and to the Committee on Appropriations of the Senate and the Committee on Appropriations of the House of Representa- tives.

(2) AUTHORIZATION OF APPROPRIATIONS.—If the Director

makes the determination and submits the report pursuant to paragraph (1), there are hereby authorized to be appropriated to the Bureau, for the purposes of carrying out the authorities granted in Federal consumer financial law, $200,000,000 for each of fiscal years 2010, 2011, 2012, 2013, and 2014.

(3) APPORTIONMENT.—Notwithstanding any other provision of law, the amounts in paragraph (2) shall be subject to appor- tionment under section 1517 of title 31, United States Code, and restrictions that generally apply to the use of appropriated funds in title 31, United States Code, and other laws.

(4) ANNUAL REPORT.—The Director shall prepare and submit a report, on an annual basis, to the Committee on Appropriations of the Senate and the Committee on Appropria- tions of the House of Representatives regarding the financial operating plans and forecasts of the Director, the financial condition and results of operations of the Bureau, and the sources and application of funds of the Bureau, including any funds appropriated in accordance with this subsection.

SEC. 1018. EFFECTIVE DATE.

This subtitle shall become effective on the date of enactment of this

Act.

Subtitle B—General Powers of the Bureau

SEC. 1021. PURPOSE, OBJECTIVES, AND FUNCTIONS.

(a) PURPOSE.—The Bureau shall seek to implement and, where applicable, enforce Federal consumer financial law consistently for the purpose of ensuring that all consumers have access to markets

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for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive.

(b) OBJECTIVES.—The Bureau is authorized to exercise its authorities under Federal consumer financial law for the purposes of ensuring that, with respect to consumer financial products and services—

(1) consumers are provided with timely and understandable information to make responsible decisions about financial trans- actions;

(2) consumers are protected from unfair, deceptive, or abu- sive acts and practices and from discrimination;

(3) outdated, unnecessary, or unduly burdensome regula- tions are regularly identified and addressed in order to reduce unwarranted regulatory burdens;

(4) Federal consumer financial law is enforced consistently, without regard to the status of a person as a depository institu- tion, in order to promote fair competition; and

(5) markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation.

(1) conducting financial education programs;

(2) collecting, investigating, and responding to consumer

complaints;

(3) collecting, researching, monitoring, and publishing

information relevant to the functioning of markets for consumer

financial products and services to identify risks to consumers

and the proper functioning of such markets;

(4) subject to sections 1024 through 1026, supervising cov-

ered persons for compliance with Federal consumer financial

law, and taking appropriate enforcement action to address vio-

lations of Federal consumer financial law;

(5) issuing rules, orders, and guidance implementing Fed-

eral consumer financial law; and

(6) performing such support activities as may be necessary or useful to facilitate the other functions of the Bureau.

SEC. 1022. RULEMAKING AUTHORITY.

(a) IN GENERAL.—

The Bureau is authorized to exercise its authorities under Federal consumer financial law to administer, enforce, and otherwise implement the provisions of Federal con- sumer financial

law.

(b) RULEMAKING, ORDERS, AND GUIDANCE.—

(1) GENERAL AUTHORITY.—The Director may prescribe rules

and issue orders and guidance, as may be necessary or appro-

priate to enable the Bureau to administer and carry out the

purposes and objectives of the Federal consumer financial laws,

and to prevent evasions

thereof.

(2) STANDARDS FOR RULEMAKING.—In prescribing a rule

under the Federal consumer financial laws—

(A) the Bureau shall consider—

(i) the potential benefits and costs to consumers

and covered persons, including the potential reduction

of access by consumers to consumer financial products

or services resulting from such rule; and

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(ii) the impact of proposed rules on covered per- sons, as described in section 1026, and the impact on consumers in rural areas;

(B) the Bureau shall consult with the appropriate prudential regulators or other Federal agencies prior to proposing a rule and during the comment process regarding consistency with prudential, market, or systemic objectives administered by such agencies; and

(C) if, during the consultation process described in subparagraph (B), a prudential regulator provides the Bureau with a written objection to the proposed rule of the Bureau or a portion thereof, the Bureau shall include in the adopting release a description of the objection and the basis for the Bureau decision, if any, regarding such objection, except that nothing in this clause shall be con- strued as altering or limiting the procedures under section 1023 that may apply to any rule prescribed by the Bureau.

(3) EXEMPTIONS.—

(A) IN GENERAL.—The Bureau, by rule, may condi- tionally or unconditionally exempt any class of covered persons, service providers, or consumer financial products or services, from any provision of this title, or from any rule issued under this title, as the Bureau determines necessary or appropriate to carry out the purposes and objectives of this title, taking into consideration the factors in subparagraph (B).

(B) FACTORS.—In issuing an exemption, as permitted under subparagraph (A), the Bureau shall, as appropriate, take into consideration—

(i) the total assets of the class of covered

persons;

(ii) the volume of transactions involving consumer financial products or services in which the class of covered persons

engages;

and

(iii) existing provisions of law which are applicable to the consumer financial product or service and the extent to which such provisions provide consumers with adequate protections.

(4) EXCLUSIVE RULEMAKING AUTHORITY.—

(A) IN GENERAL.—Notwithstanding any other provi- sions of Federal law and except as provided in section 1061(b)(5), to the extent that a provision of Federal con- sumer financial law authorizes the Bureau and another Federal agency to issue regulations under that provision of law for purposes of assuring compliance with Federal consumer financial law and any regulations thereunder, the Bureau shall have the exclusive authority to prescribe rules subject to those provisions of law.

(B) DEFERENCE.—Notwithstanding any power granted to any Federal agency or to the Council under this title, and subject to section 1061(b)(5)(E), the deference that a court affords to the Bureau with respect to a determina- tion by the Bureau regarding the meaning or interpretation of any provision of a Federal consumer financial law shall be applied as if the Bureau were the only agency authorized to apply, enforce, interpret, or administer the provisions of such Federal consumer financial law.

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(1) IN GENERAL.—In order to support its rulemaking and other functions, the Bureau shall monitor for risks to consumers in the offering or provision of consumer financial products or services, including developments in markets for such prod- ucts or services.

(2) CONSIDERATIONS.—In allocating its resources to perform the monitoring required by this section, the Bureau may con- sider, among other factors—

(A) likely risks and costs to consumers associated with buying or using a type of consumer financial product or service;

(B) understanding by consumers of the risks of a type of consumer financial product or service;

offering or provision of a consumer financial product or service

, including the extent to which the law is likely to adequately protect consumers;

(D) rates of growth in the offering or provision of a consumer financial product or service;

(E) the extent, if any, to which the risks of a consumer financial product or service may disproportionately affect traditionally underserved consumers; or

(F) the types, number, and other pertinent characteris- tics of covered persons that offer or provide the consumer financial product or service.

(3) SIGNIFICANT FINDINGS.—

(A) IN GENERAL.—The Bureau shall publish not fewer than 1 report of significant findings of its monitoring required by this subsection in each calendar year, beginning with the first calendar year that begins at least 1 year after the designated transfer date.

(B) CONFIDENTIAL INFORMATION.—The Bureau may

make public such information obtained by the Bureau under this section as is in the public interest, through aggregated reports or other appropriate formats designed to protect confidential information in accordance with para- graphs (4), (6), (8), and (9).

(4) COLLECTION OF INFORMATION.—

(A) IN GENERAL.—In conducting any monitoring or assessment required by this section, the Bureau shall have the authority to gather information from time to time regarding the organization, business conduct, markets, and activities of covered persons and service providers.

(B) METHODOLOGY.—In order to gather information described in subparagraph (A), the Bureau may—

(i) gather and compile information from a variety of sources, including examination reports concerning covered persons or service providers, consumer com- plaints, voluntary surveys and voluntary interviews of consumers, surveys and interviews with covered per- sons and service providers, and review of available databases; and

(ii) require covered persons and service providers participating in consumer financial services markets to

file with the Bureau, under oath or otherwise, in such form

and within such reasonable period of time as the Bureau may

prescribe by rule or order, annual

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or special reports, or answers in writing to specific questions, furnishing information described in para- graph (4), as necessary for the Bureau to fulfill the monitoring, assessment, and reporting responsibilities imposed by Congress.

(C) LIMITATION.—The Bureau may not use its authori- ties under this paragraph to obtain records from covered persons and service providers participating in consumer financial services markets for purposes of gathering or analyzing the personally identifiable financial information of consumers.

(5) LIMITED INFORMATION GATHERING.—In order to assess

whether a nondepository is a covered person, as defined in

section 1002, the Bureau may require such nondepository to

file with the Bureau, under oath or otherwise, in such form
and within such reasonable period of time as the Bureau may

prescribe by rule or order, annual or special reports, or answers

in writing to specific questions.

(6) CONFIDENTIALITY RULES.—

(A) RULEMAKING.—The Bureau shall prescribe rules

regarding the confidential treatment of information

obtained from persons in connection with the exercise of

its authorities under Federal consumer financial law.

(B) ACCESS BY THE BUREAU TO REPORTS OF OTHER

REGULATORS.—

(i) EXAMINATION AND FINANCIAL CONDITION

REPORTS.—Upon providing reasonable assurances of

confidentiality, the Bureau shall have access to any

report of examination or financial condition made by

a prudential regulator or other Federal agency having

jurisdiction over a covered person or service provider,

and to all revisions made to any such report.

(ii) PROVISION OF OTHER REPORTS TO THE

BUREAU.—In addition to the reports described in clause

(i), a prudential regulator or other Federal agency

having jurisdiction over a covered person or service

provider may, in its discretion, furnish to the Bureau

any other report or other confidential supervisory

information concerning any insured depository institu-

tion, credit union, or other entity examined by such

agency under authority of any provision of Federal

law.

BUREAU.—

(i) EXAMINATION REPORTS.—Upon providing

reasonable assurances of confidentiality, a prudential regulator, a State regulator, or any other Federal agency having jurisdiction over a covered person or service provider shall have access to any report of examination made by the Bureau with respect to such person, and to all revisions made to any such report.

(ii) PROVISION OF OTHER REPORTS TO OTHER REGU-

LATORS.—In addition to the reports described in clause

(i), the Bureau may, in its discretion, furnish to a

prudential regulator or other agency having jurisdic-

tion over a covered person or service provider any

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other report or other confidential supervisory informa- tion concerning such person examined by the Bureau under the authority of any other provision of Federal law.

(7) REGISTRATION.—

(A) IN GENERAL.—The Bureau may prescribe rules regarding registration requirements applicable to a covered person, other than an insured depository institution, insured credit union, or related

person.

(B) REGISTRATION INFORMATION.—Subject to rules pre- scribed by the Bureau, the Bureau may publicly disclose registration information to facilitate the ability of con- sumers to identify covered persons that are registered with the Bureau.

oping and implementing registration requirements under this paragraph, the Bureau shall consult with State agen- cies regarding requirements or systems (including coordi- nated or combined systems for registration), where appro- priate.

(8) PRIVACY CONSIDERATIONS.—In collecting information from any person, publicly releasing information held by the Bureau, or requiring covered persons to publicly report informa- tion, the Bureau shall take steps to ensure that proprietary, personal, or confidential consumer information that is protected from public disclosure under section 552(b) or 552a of title 5, United States Code, or any other provision of law, is not made public under this title.

(9) CONSUMER PRIVACY.—

(A) IN GENERAL.—The Bureau may not obtain from a covered person or service provider any personally identifi- able financial information about a consumer from the finan- cial records of the covered person or service provider, except—

(i) if the financial records are reasonably described in a request by the Bureau and the consumer provides written permission for the disclosure of such informa- tion by the covered person or service provider to the Bureau; or

(ii) as may be specifically permitted or required under other applicable provisions of law and in accord- ance with the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.).

(B) TREATMENT OF COVERED PERSON OR SERVICE PRO-

VIDER.—With respect to the application of any provision of the Right to Financial Privacy Act of 1978, to a disclosure by a covered person or service provider subject to this subsection, the covered person or service provider shall be treated as if it were a ‘‘financial institution’’, as defined in section 1101 of that Act (12 U.S.C. 3401).

(d) ASSESSMENT OF SIGNIFICANT RULES.—

(1) IN GENERAL.—The Bureau shall conduct an assessment of each significant rule or order adopted by the Bureau under Federal consumer financial law. The assessment shall address, among other relevant factors, the effectiveness of the rule or order in meeting the purposes and objectives of this title and the specific goals stated by the Bureau. The assessment shall

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reflect available evidence and any data that the Bureau reason- ably may collect.

(2) REPORTS.—The Bureau shall publish a report of its assessment under this subsection not later than 5 years after the effective date of the subject rule or order.

(3) PUBLIC COMMENT REQUIRED.—Before publishing a report of its assessment, the Bureau shall invite public comment on recommendations for modifying, expanding, or eliminating the newly adopted significant rule or order.

SEC. 1023. REVIEW OF BUREAU REGULATIONS.

(a) REVIEW OF BUREAU REGULATIONS.—On the petition of a member agency of the Council, the Council may set aside a final regulation prescribed by the Bureau, or any provision thereof, if the Council decides, in accordance with subsection (c), that the regulation or provision would put the safety and soundness of the United States banking system or the stability of the financial system of the United States at risk.

(b) PETITION.—

(1) PROCEDURE.—An agency represented by a member of the Council may petition the Council, in writing, and in accord- ance with rules prescribed pursuant to subsection (f), to stay the effectiveness of, or set aside, a regulation if the member agency filing the petition—

(A) has in good faith attempted to work with the Bureau to resolve concerns regarding the effect of the rule on the safety and soundness of the United States banking system or the stability of the financial system of the United

States; and

(B) files the petition with the Council not later than 10 days after the date on which the regulation has been published in the Federal Register.

(2) PUBLICATION.—Any petition filed with the Council under this section shall be published in the Federal Register and transmitted contemporaneously with filing to the Com- mittee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Rep- resentatives.

(1) STAY.—

(A) IN GENERAL.—Upon the request of any member agency, the Chairperson of the Council may stay the effectiveness of a regulation for the purpose of allowing appropriate consideration of the petition by the Council.

(B) EXPIRATION.—A stay issued under this paragraph shall expire on the earlier of—

(i) 90 days after the date of filing of the petition under subsection (b); or

(ii) the date on which the Council makes a decision under paragraph (3).

(2) NO ADVERSE INFERENCE.—After the expiration of any stay imposed under this section, no inference shall be drawn regarding the validity or enforceability of a regulation which was the subject of the petition.

(3) VOTE.—

(A) IN GENERAL.—The decision to issue a stay of, or set aside, any regulation under this section shall be made

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only with the affirmative vote in accordance with subpara- graph (B) of 2⁄3 of the members of the Council then serving.

(B) AUTHORIZATION TO VOTE.—A member of the Council may vote to stay the effectiveness of, or set aside, a final regulation prescribed by the Bureau only if the agency or department represented by that member has—

(i) considered any relevant information provided by the agency submitting the petition and by the Bureau; and

(ii) made an official determination, at a public meeting where applicable, that the regulation which is the subject of the petition would put the safety and soundness of the United States banking system or the stability of the financial system of the United States at risk.

(4) DECISIONS TO SET ASIDE.—

(A) EFFECT OF DECISION.—A decision by the Council to set aside a regulation prescribed by the Bureau, or provision thereof, shall render such regulation, or provision thereof, unenforceable.

(B) TIMELY ACTION REQUIRED.—The Council may not issue a decision to set aside a regulation, or provision thereof, which is the subject of a petition under this section after the expiration of the later of—

(i) 45 days following the date of filing of the peti- tion, unless a stay is issued under paragraph (1); or

(ii) the expiration of a stay issued by the Council under this section.

(C) SEPARATE AUTHORITY.—The issuance of a stay under this section does not affect the authority of the Council to set aside a regulation.

(5) DISMISSAL DUE TO INACTION.—A petition under this section shall be deemed dismissed if the Council has not issued a decision to set aside a regulation, or provision thereof, within the period for timely action under paragraph (4)(B).

(6) PUBLICATION OF DECISION.—Any decision under this subsection to issue a stay of, or set aside, a regulation or provision thereof shall be published by the Council in the Federal Register as soon as practicable after the decision is made, with an explanation of the reasons for the decision.

(7) RULEMAKING PROCEDURES INAPPLICABLE.—The notice

and comment procedures under section 553 of title 5, United States Code, shall not apply to any decision under this section of the Council to issue a stay of, or set aside, a regulation.

(8) JUDICIAL REVIEW OF DECISIONS BY THE COUNCIL.—A

decision by the Council to set aside a regulation prescribed by the Bureau, or provision thereof, shall be subject to review under chapter 7 of title 5, United States Code.

(d) APPLICATION OF OTHER LAW.—Nothing in this section shall be construed as altering, limiting, or restricting the application of any other provision of law, except as otherwise specifically pro- vided in this section, including chapter 5 and chapter 7 of title 5, United States Code, to a regulation which is the subject of a petition filed under this section.

(e) SAVINGS CLAUSE.—Nothing in this section shall be construed as limiting or restricting the Bureau from engaging in a rulemaking in accordance with applicable law.

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(f) IMPLEMENTING RULES.—The Council shall prescribe proce- dural rules to implement this section.

SEC. 1024. SUPERVISION OF NONDEPOSITORY COVERED PERSONS.

(a) SCOPE OF COVERAGE.—

(1) APPLICABILITY.—Notwithstanding any other provision of this title, and except as provided in paragraph (3), this section shall apply to any covered person who—

(A) offers or provides origination, brokerage, or serv- icing of loans secured by real estate for use by consumers primarily for personal, family, or household purposes, or loan modification or foreclosure relief services in connection with such loans;

(B) is a larger participant of a market for other con- sumer financial products or services, as defined by rule in accordance with paragraph (2);

(C) the Bureau has reasonable cause to determine, by order, after notice to the covered person and a reason- able opportunity for such covered person to respond, based on complaints collected through the system under section 1013(b)(3) or information from other sources, that such covered person is engaging, or has engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services;

(D) offers or provides to a consumer any private edu- cation loan, as defined in section 140 of the Truth in Lending Act (15 U.S.C. 1650), notwithstanding section 1027(a)(2)(A) and subject to section 1027(a)(2)(C); or

(E) offers or provides to a consumer a payday loan.

(2) RULEMAKING TO DEFINE COVERED PERSONS SUBJECT TO

THIS SECTION.—The Bureau shall consult with the Federal Trade Commission prior to issuing a rule, in accordance with paragraph (1)(B), to define covered persons subject to this sec- tion. The Bureau shall issue its initial rule not later than 1 year after the designated transfer date.

(3) RULES OF CONSTRUCTION.—

(A) CERTAIN PERSONS EXCLUDED.—This section shall not apply to persons described in section 1025(a) or 1026(a).

(B) ACTIVITY LEVELS.—For purposes of computing activity levels under paragraph (1) or rules issued there- under, activities of affiliated companies (other than insured depository institutions or insured credit unions) shall be aggregated.

(b) SUPERVISION.—

(1) IN GENERAL.—The Bureau shall require reports and conduct examinations on a periodic basis of persons described in subsection (a)(1) for purposes of—

(A) assessing compliance with the requirements of Fed- eral consumer financial law;

(B) obtaining information about the activities and compliance systems or procedures of such

person; and

(2) RISK-BASED SUPERVISION PROGRAM.—The Bureau shall

exercise its authority under paragraph (1) in a manner designed to ensure that such exercise, with respect to persons described in subsection (a)(1), is based on the assessment by the Bureau

H. R. 4173—613

of the risks posed to consumers in the relevant product markets and geographic markets, and taking into consideration, as applicable—

(A) the asset size of the covered person;

(B) the volume of transactions involving consumer

financial products or services in which the covered person

engages;

of such consumer financial products or services;

(D) the extent to which such institutions are subject

to oversight by State authorities for consumer protection;

and

(E) any other factors that the Bureau determines to

be relevant to a class of covered persons.

(3) COORDINATION.—To minimize regulatory burden, the

Bureau shall coordinate its supervisory activities with the

supervisory activities conducted by prudential regulators and

the State bank regulatory authorities, including establishing

their respective schedules for examining persons described in

subsection (a)(1) and requirements regarding reports to be sub-

mitted by such persons.

(4) USE OF EXISTING REPORTS.—The Bureau shall, to the

fullest extent possible, use—

(A) reports pertaining to persons described in sub-

section (a)(1) that have been provided or required to have

been provided to a Federal or State agency; and

(B) information that has been reported publicly.

(5) PRESERVATION OF AUTHORITY.—Nothing in this title

may be construed as limiting the authority of the Director

to require reports from persons described in subsection (a)(1),

as permitted under paragraph (1), regarding information owned

or under the control of such person, regardless of whether

such information is maintained, stored, or processed by another

person.

(6) REPORTS OF TAX LAW NONCOMPLIANCE.—The Bureau

shall provide the Commissioner of Internal Revenue with any

report of examination or related information identifying possible

tax law noncompliance.

(7) REGISTRATION, RECORDKEEPING AND OTHER REQUIRE- MENTS FOR CERTAIN PERSONS.—

(A) IN GENERAL.—The Bureau shall prescribe rules to facilitate supervision of persons described in subsection (a)(1) and assessment and detection of risks to consumers.

(B) RECORDKEEPING.—The Bureau may require a per- son described in subsection (a)(1), to generate, provide, or retain records for the purposes of facilitating supervision of such persons and assessing and detecting risks to con- sumers.

Bureau may prescribe rules regarding a person described

in subsection (a)(1), to ensure that such persons are legiti-

mate entities and are able to perform their obligations

to consumers. Such requirements may include background

checks for principals, officers, directors, or key personnel

and bonding or other appropriate financial requirements.

H. R. 4173—614

(D) CONSULTATION WITH STATE AGENCIES.—In devel-

oping and implementing requirements under this para- graph, the Bureau shall consult with State agencies regarding requirements or systems (including coordinated or combined systems for registration), where appropriate.

(1) THE BUREAU TO HAVE ENFORCEMENT AUTHORITY.—

Except as provided in paragraph (3) and section 1061, with respect to any person described in subsection (a)(1), to the extent that Federal law authorizes the Bureau and another Federal agency to enforce Federal consumer financial law, the Bureau shall have exclusive authority to enforce that Federal consumer financial law.

(2) REFERRAL.—Any Federal agency authorized to enforce a Federal consumer financial law described in paragraph (1) may recommend in writing to the

Bureau that the Bureau initiate an enforcement proceeding

, as the Bureau is authorized by that Federal law or by this title.

(3) COORDINATION WITH THE FEDERAL TRADE COMMISSION.—

(A) IN GENERAL.—The Bureau and the Federal Trade Commission shall negotiate an agreement for coordinating with respect to enforcement actions by each agency regarding the offering or provision of consumer financial products or services by any covered person that is described in subsection (a)(1), or service providers thereto. The agree- ment shall include procedures for notice to the other agency, where feasible, prior to initiating a civil action to enforce any Federal law regarding the offering or provi- sion of consumer financial products or services.

(B) CIVIL ACTIONS.—Whenever a civil action has been filed by, or on behalf of, the Bureau or the Federal Trade Commission for any violation of any provision of Federal law described in subparagraph (A), or any regulation pre- scribed under such provision of law—

(i) the other agency may not, during the pendency of that action, institute a civil action under such provi- sion of law against any defendant named in the com- plaint in such pending action for any violation alleged in the complaint; and

(ii) the Bureau or the Federal Trade Commission may intervene as a party in any such action brought by the other agency, and, upon intervening—

(I) be heard on all matters arising in such enforcement action; and

(II) file petitions for appeal in such actions.

(C) AGREEMENT TERMS.—The terms of any agreement negotiated under subparagraph (A) may modify or super- sede the provisions of subparagraph (B).

(D) DEADLINE.—The agencies shall reach the agree- ment required under subparagraph (A) not later than 6 months after the designated transfer date.

(d) EXCLUSIVE RULEMAKING AND EXAMINATION AUTHORITY.—

Notwithstanding any other provision of Federal law and except as provided in section 1061, to the extent that Federal law author- izes the Bureau and another Federal agency to issue regulations or guidance, conduct examinations, or require reports from a person described in subsection (a)(1) under such law for purposes of

H. R. 4173—615

assuring compliance with Federal consumer financial law and any regulations thereunder, the Bureau shall have the exclusive authority to prescribe rules, issue guidance, conduct examinations, require reports, or issue exemptions with regard to a person described in subsection (a)(1), subject to those provisions of law.

(e) SERVICE PROVIDERS.—A service provider to a person described in subsection (a)(1) shall be subject to the authority of the Bureau under this section, to the same extent as if such service provider were engaged in a service relationship with a bank, and the Bureau were an appropriate Federal banking agency under section 7(c) of the Bank Service Company Act (12 U.S.C. 1867(c)). In conducting

any examination or requiring any report from a service provider

subject to this subsection, the Bureau shall coordinate with the appropriate prudential regulator, as applicable.

(f) PRESERVATION OF FARM CREDIT ADMINISTRATION

AUTHORITY.—No provision of this title may be construed as modi- fying, limiting, or otherwise affecting the authority of the Farm Credit Administration.

SEC. 1025. SUPERVISION OF VERY LARGE BANKS, SAVINGS ASSOCIA- TIONS, AND CREDIT UNIONS.

(a) SCOPE OF COVERAGE.—This section shall apply to any cov- ered person that is—

(1) an insured depository institution with total assets of

more than $10,000,000,000 and any affiliate thereof; or

(2) an insured credit union with total assets of more than

$10,000,000,000 and any affiliate thereof.

(b) SUPERVISION.—

(1) IN GENERAL.—The Bureau shall have exclusive authority to require reports and conduct examinations on a periodic basis of persons described in subsection (a) for purposes of—

(A) assessing compliance with the requirements of Fed- eral consumer financial laws;

(B) obtaining information about the activities subject to such laws and the associated compliance systems or procedures of such persons; and

(2) COORDINATION.—To minimize regulatory burden, the Bureau shall coordinate its supervisory activities with the supervisory activities conducted by prudential regulators and the State bank regulatory authorities, including consultation regarding their respective schedules for examining such persons described in subsection (a) and requirements regarding reports to be submitted by such persons.

(3) USE OF EXISTING REPORTS.—The Bureau shall, to the fullest extent possible, use—

(A) reports pertaining to a person described in sub- section (a) that have been provided or required to have been provided to a Federal or State agency; and

(B) information that has been reported publicly.

(4) PRESERVATION OF AUTHORITY.—Nothing in this title may be construed as limiting the authority of the Director to require reports from a person described in subsection (a), as permitted under paragraph (1), regarding information owned

H. R. 4173—616

or under the control of such person, regardless of whether such information is maintained, stored, or processed by another person.

(5) REPORTS OF TAX LAW NONCOMPLIANCE.—The Bureau

shall provide the Commissioner of Internal Revenue with any
report of examination or related information identifying possible
tax law noncompliance.

(1) THE BUREAU TO HAVE PRIMARY ENFORCEMENT

AUTHORITY.—To the extent that the Bureau and another Fed-

eral agency are authorized to enforce a Federal consumer finan-

cial law, the Bureau shall have primary authority to enforce

that Federal consumer financial law with respect to any person

described in subsection (a).

(2) REFERRAL.—Any Federal agency, other than the Federal

Trade Commission, that is authorized to enforce a Federal

consumer financial law may recommend, in writing, to the

Bureau that the Bureau initiate an enforcement proceeding

with respect to a person described in subsection (a), as the

Bureau is authorized to do by that Federal consumer financial

law.

(3) BACKUP ENFORCEMENT AUTHORITY OF OTHER FEDERAL

AGENCY.—If the Bureau does not, before the end of the 120-

day period beginning on the date on which the Bureau receives

a recommendation under paragraph (2), initiate an enforcement

proceeding, the other agency referred to in paragraph (2) may

initiate an enforcement proceeding, including performing follow

up supervisory and support functions incidental thereto, to

assure compliance with such proceeding.

(d) SERVICE PROVIDERS.—A service provider to a person

described in subsection (a) shall be subject to the authority of

the Bureau under this section, to the same extent as if the Bureau

were an appropriate Federal banking agency under section 7(c)

of the Bank Service Company Act 12 U.S.C. 1867(c). In conducting

any examination or requiring any report from a service provider

subject to this subsection, the Bureau shall coordinate with the

appropriate prudential regulator.

(e) SIMULTANEOUS AND COORDINATED SUPERVISORY ACTION.—

(1) EXAMINATIONS.—A prudential regulator and the Bureau shall, with respect to each insured depository institution, insured

credit union, or other covered person described in sub-

section (a) that is supervised by the prudential regulator and the Bureau, respectively—

(A) coordinate the scheduling of examinations of the insured depository institution, insured credit

union, or other covered person described in subsection (a)

;

(B) conduct simultaneous examinations of each insured depository institution or insured credit union, unless such institution requests examinations to be conducted sepa- rately;

(C) share each draft report of examination with the other agency and permit the receiving agency a reasonable opportunity (which shall not be less than a period of 30 days after the date of receipt) to comment on the draft report before such report is made final; and

H. R. 4173—617

(D) prior to issuing a final report of examination or taking supervisory action, take into consideration concerns, if any, raised in the comments made by the other agency.

(2) COORDINATION WITH STATE BANK SUPERVISORS.—The

Bureau shall pursue arrangements and agreements with State

bank supervisors to coordinate examinations, consistent with

paragraph (1).

(3) AVOIDANCE OF CONFLICT IN SUPERVISION.—

(A) REQUEST.—If the proposed supervisory determina-

tions of the Bureau and a prudential regulator (in this

section referred to collectively as the ‘‘agencies’’) are con-

flicting, an insured depository institution, insured credit

union, or other covered person described in subsection (a)

may request the agencies to coordinate and present a joint

statement of coordinated supervisory action.

(B) JOINT STATEMENT.—The agencies shall provide a

joint statement under subparagraph (A), not later than

30 days after the date of receipt of the request of the

insured depository institution, credit union, or covered per-

son described in subsection (a).

(4) APPEALS TO GOVERNING PANEL.—

(A) IN GENERAL.—If the agencies do not resolve the

conflict or issue a joint statement required by subparagraph

(B), or if either of the agencies takes or attempts to take

any supervisory action relating to the request for the joint

statement without the consent of the other agency, an

insured depository institution, insured credit union, or

other covered person described in subsection (a) may

institute an appeal to a governing panel, as provided in

this subsection, not later than 30 days after the expiration

of the period during which a joint statement is required

to be filed under paragraph (3)(B).

(B) COMPOSITION OF GOVERNING PANEL.—The gov-

erning panel for an appeal under this paragraph shall

be composed of—

(i) a representative from the Bureau and a rep-

resentative of the prudential regulator, both of whom—

(I) have not participated in the material super-

visory determinations under appeal; and

(II) do not directly or indirectly report to the

person who participated materially in the super-

visory determinations under appeal; and

(ii) one individual representative, to be determined

on a rotating basis, from among the Board of Gov-

ernors, the Corporation, the National Credit Union

Administration, and the Office of the Comptroller of

the Currency, other than any agency involved in the

subject dispute.

paragraph—

(i) the insured depository institution, insured

credit union, or other covered person described in sub-

section (a)—

(I) shall include in its appeal all the facts

and legal arguments pertaining to the matter; and

H. R. 4173—618

(II) may, through counsel, employees, or rep- resentatives, appear before the governing panel in person or by telephone; and

(ii) the governing panel—

(I) may request the insured depository institu-

tion, insured credit union, or other covered person

described in subsection (a), the Bureau, or the

prudential regulator to produce additional informa-

tion relevant to the appeal; and

(II) by a majority vote of its members, shall

provide a final determination, in writing, not later

than 30 days after the date of filing of an

informationally complete appeal, or such longer

period as the panel and the insured depository

institution, insured credit union, or other covered

person described in subsection (a) may jointly

agree.

(D) PUBLIC AVAILABILITY OF DETERMINATIONS.—A gov-

erning panel shall publish all information contained in

a determination by the governing panel, with appropriate

redactions of information that would be subject to an

exemption from disclosure under section 552 of title 5,

United States Code.

(E) PROHIBITION AGAINST RETALIATION.—The Bureau

and the prudential regulators shall prescribe rules to pro-

vide safeguards from retaliation against the insured deposi-

tory institution, insured credit union, or other covered per-

son described in subsection (a) instituting an appeal under

this paragraph, as well as their officers and employees.

(F) LIMITATION.—The process provided in this para-

graph shall not apply to a determination by a prudential

regulator to appoint a conservator or receiver for an insured

depository institution or a liquidating agent for an insured

credit union, as the case may be, or a decision to take

action pursuant to section 38 of the Federal Deposit Insur-

ance Act (12 U.S.C. 1831o) or section 212 of the Federal Credit Union Act (112 U.S.C. 1790a), as applicable.

(G) EFFECT ON OTHER AUTHORITY.—Nothing in this section shall modify or limit the authority of the Bureau to interpret, or take enforcement action under, any Federal consumer financial law, or the authority of a prudential regulator to interpret or take enforcement action under any other provision of Federal law for safety and soundness purposes.

SEC. 1026. OTHER BANKS, SAVINGS ASSOCIATIONS, AND CREDIT UNIONS.

(a) SCOPE OF COVERAGE.—This section shall apply to any cov- ered person that is—
(1) an insured depository institution with total assets of

$10,000,000,000 or less; or

(2) an insured credit union with total assets of

$10,000,000,000 or less.

(b) REPORTS.—The Director may require reports from a person

described in subsection (a), as necessary to support the role of

the Bureau in implementing Federal consumer financial law, to

H. R. 4173—619

support its examination activities under subsection (c), and to assess and detect risks to consumers and consumer financial markets.

(1) USE OF EXISTING REPORTS.—The Bureau shall, to the fullest extent possible, use—

(A) reports pertaining to a person described in sub- section (a) that have been provided or required to have been provided to a Federal or State agency; and
(B) information that has been reported publicly.

(2) PRESERVATION OF AUTHORITY.—Nothing in this sub- section may be construed as limiting the authority of the Director from requiring from a person described in subsection (a), as permitted under paragraph (1), information owned or under the control of such person, regardless of whether such information is maintained, stored, or processed by another per- son.

(3) REPORTS OF TAX LAW NONCOMPLIANCE.—The Bureau

shall provide the Commissioner of Internal Revenue with any report of examination or related information identifying possible tax law noncompliance.

(1) IN GENERAL.—The Bureau may, at its discretion, include examiners on a sampling basis of the examinations performed by the prudential regulator to assess compliance with the requirements of Federal consumer financial law of persons described in subsection (a).

(2) AGENCY COORDINATION.—The prudential regulator shall—

(A) provide all reports, records, and documentation related to the examination process for any institution included in the sample referred to in paragraph (1) to the Bureau on a timely and continual basis;

(B) involve such Bureau examiner in the entire exam- ination process for such person; and

(C) consider input of the Bureau concerning the scope of an examination, conduct of the examination, the contents of the examination report, the designation of matters requiring attention, and examination ratings.

(d) ENFORCEMENT.—

(1) IN GENERAL.—Except for requiring reports under sub- section (b), the prudential regulator is authorized to enforce the requirements of Federal consumer financial laws and, with respect to a covered person described in subsection (a), shall have exclusive authority (relative to the Bureau) to enforce such laws .

(2) COORDINATION WITH PRUDENTIAL REGULATOR.—

(A) REFERRAL.—When the Bureau has reason to believe that a person described in subsection (a) has engaged in a material violation of a Federal consumer financial law, the Bureau shall notify the prudential regulator in writing and recommend appropriate action to respond.

(B) RESPONSE.—Upon receiving a recommendation under subparagraph (A), the prudential regulator shall pro- vide a written response to the Bureau not later than 60 days thereafter.

(e) SERVICE PROVIDERS.—A service provider to a substantial number of persons described in subsection (a) shall be subject to the authority of the Bureau under section 1025 to the same

H. R. 4173—620

extent as if the Bureau were an appropriate Federal bank agency under section 7(c) of the Bank Service Company Act (12 U.S.C. 1867(c)). When conducting any examination or requiring any report from a service provider subject to this subsection, the Bureau shall coordinate with the appropriate prudential regulator.

SEC. 1027. LIMITATIONS ON AUTHORITIES OF THE BUREAU; PRESERVA- TION OF AUTHORITIES.

(a) EXCLUSION FOR MERCHANTS, RETAILERS, AND OTHER SELLERS OF NONFINANCIAL GOODS OR SERVICES.—

(1) SALE OR BROKERAGE OF NONFINANCIAL GOOD OR

SERVICE.—The Bureau may not exercise any rulemaking, super- visory, enforcement or other authority under this title with respect to a person who is a merchant, retailer, or seller of any nonfinancial good or service and is engaged in the sale or brokerage of such nonfinancial good or service, except to the extent that such person is engaged in offering or providing any consumer financial product or service, or is otherwise sub- ject to any enumerated consumer law or

any law for which authorities are transferred under subtitle

F or H.

(2) OFFERING OR PROVISION OF CERTAIN CONSUMER FINAN- CIAL PRODUCTS OR SERVICES IN CONNECTION WITH THE SALE OR BROKERAGE OF NONFINANCIAL GOOD OR SERVICE.—

(A) IN GENERAL.—Except as provided in subparagraph (B), and subject to subparagraph (C), the Bureau may not exercise any rulemaking, supervisory, enforcement, or other authority under this title with respect to a

merchant, retailer, or seller of nonfinancial goods or

services, but only to the extent that such person—

(i) extends credit directly to a consumer, in a case in which the good or service being provided is not itself a consumer financial product or service (other than credit described in this subparagraph), exclusively for the purpose of enabling that consumer to purchase such nonfinancial good or service directly from the merchant, retailer, or seller;

(ii) directly, or through an agreement with another person, collects debt arising from credit extended as described in clause (i); or

(iii) sells or conveys debt described in clause (i) that is delinquent or otherwise in default.

(B) APPLICABILITY.—Subparagraph (A) does not apply to any credit transaction or collection of debt, other than as described in subparagraph (C)(i), arising from a trans- action described in subparagraph (A)—

(i) in which the merchant, retailer, or seller of nonfinancial goods or services assigns, sells or other- wise conveys to another person such debt owed by the consumer (except for a sale of debt that is delin- quent or otherwise in default, as described in subpara- graph (A)(iii));

(ii) in which the credit extended significantly exceeds the market value of the nonfinancial good or service provided, or the Bureau otherwise finds that the sale of the nonfinancial good or service is done as a subterfuge, so as to evade or circumvent the provisions of this title; or

H. R. 4173—621

(iii) in which the merchant, retailer, or seller of nonfinancial goods or services regularly extends credit and the credit is subject to a finance charge.

(i) IN GENERAL.—Notwithstanding subparagraph

(B), subparagraph (A) shall apply with respect to a

merchant, retailer, or seller of nonfinancial goods or

services that is not engaged significantly in offering

or providing consumer financial products or services.

(ii) EXCEPTION.—Subparagraph (A) and clause (i)

of this subparagraph do not apply to any merchant,

retailer, or seller of nonfinancial goods or services—

(I) if such merchant, retailer, or seller of non-

financial goods or services is engaged in a trans-

action described in subparagraph (B)(i) or (B)(ii);

(II) to the extent that such merchant, retailer, or seller is

subject to any enumerated consumer law or any law for

which authorities are trans- ferred under subtitle F or H, but the Bureau may exercise such authority only with respect to that law.

(D) RULES.—

(i) AUTHORITY OF OTHER AGENCIES.—No provision

of this title shall be construed as modifying, limiting,

or superseding the supervisory or enforcement

authority of the Federal Trade Commission or any

other agency (other than the Bureau) with respect

to credit extended, or the collection of debt arising

from such extension, directly by a merchant or retailer

to a consumer exclusively for the purpose of enabling

that consumer to purchase nonfinancial goods or serv-

ices directly from the merchant or retailer.

(ii) SMALL BUSINESSES.—A merchant, retailer, or

seller of nonfinancial goods or services that would

otherwise be subject to the authority of the Bureau

solely by virtue of the application of subparagraph

(B)(iii) shall be deemed not to be engaged significantly

in offering or providing consumer financial products

or services under subparagraph (C)(i), if such person—

(I) only extends credit for the sale of non-

financial goods or services, as described in

subparagraph (A)(i);

(II) retains such credit on its own accounts

(except to sell or convey such debt that is delin-

quent or otherwise in default); and

(III) meets the relevant industry size threshold

to be a small business concern, based on annual

receipts, pursuant to section 3 of the Small Busi-

ness Act (15 U.S.C. 632) and the implementing

rules thereunder.

(iii) INITIAL YEAR.—A merchant, retailer, or seller

of nonfinancial goods or services shall be deemed to

meet the relevant industry size threshold described

in clause (ii)(III) during the first year of operations

of that business concern if, during that year, the

H. R. 4173—622

receipts of that business concern reasonably are expected to meet that size threshold.

(iv) OTHER STANDARDS FOR SMALL BUSINESS.—With

respect to a merchant, retailer, or seller of nonfinancial goods or services that is a classified on a basis other than annual receipts for the purposes of section 3 of the Small Business Act (15 U.S.C. 632) and the implementing rules thereunder, such merchant, retailer, or seller shall be deemed to meet the relevant industry size threshold described in clause (ii)(III) if such merchant, retailer, or seller meets the relevant industry size threshold to be a small business concern based on the number of employees, or other such applicable measure, established under that Act.

(E) EXCEPTION FROM STATE ENFORCEMENT.—To the

extent that the Bureau may not exercise authority under this subsection with respect to a merchant, retailer, or seller of nonfinancial goods or services, no action by a State attorney general or State regulator with respect to a claim made under this title may be brought under sub- section 1042(a), with respect to an activity described in any of clauses (i) through (iii) of subparagraph (A) by such merchant, retailer, or seller of nonfinancial goods or services.

(b) EXCLUSION FOR REAL ESTATE BROKERAGE ACTIVITIES.—

(1) REAL ESTATE BROKERAGE ACTIVITIES EXCLUDED.—With-

out limiting subsection (a), and except as permitted in para- graph (2), the Bureau may not exercise any rulemaking, super- visory, enforcement, or other authority under this title with respect to a person that is licensed or registered as a real estate broker or real estate agent, in accordance with State law, to the extent that such person—

(A) acts as a real estate agent or broker for a buyer, seller, lessor, or lessee of real property;

(B) brings together parties interested in the sale, pur- chase, lease, rental, or exchange of real property;

(C) negotiates, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property (other than in connection with the provision of financing with respect to any such transaction); or

(D) offers to engage in any activity, or act in any capacity, described in subparagraph (A), (B), or (C).

(2) DESCRIPTION OF ACTIVITIES.—

The Bureau may exercise rulemaking, supervisory, enforcement, or other authority under this title with respect to a person described in paragraph (1) when such person is—

(A) engaged in an activity of offering or providing any consumer financial product or service, except that the Bureau may exercise such authority only with respect to that activity; or

(B) otherwise subject to any enumerated consumer law or any law for

which authorities are transferred under subtitle F or H,

but the Bureau may exercise such authority only with respect to that law.

ULAR HOME RETAILERS.—

H. R. 4173—623

(1) IN GENERAL.—The Director may not exercise any rule- making, supervisory, enforcement, or other authority over a person to the extent that—

(A) such person is not described in paragraph (2);

and

(B) such person—

(i) acts as an agent or broker for a buyer or seller of a manufactured home or a modular home;

(ii) facilitates the purchase by a consumer of a manufactured home or modular home, by negotiating the purchase price or terms of the sales contract (other than providing financing with respect to such trans- action); or

(iii) offers to engage in any activity described in clause (i) or (ii).

(2) DESCRIPTION OF ACTIVITIES.—A person is described in this paragraph to the extent that such person is engaged in the offering or provision of any consumer financial product or service or

is otherwise subject to any enumerated consumer law or

any law for which authorities are transferred under subtitle F or H.

(3) DEFINITIONS.—For purposes of this subsection, the fol- lowing definitions shall apply:

(A) MANUFACTURED HOME.—The term ‘‘manufactured home’’ has the same meaning as in section 603 of the National Manufactured Housing Construction and Safety Standards Act of 1974 (42 U.S.C. 5402).

(B) MODULAR HOME.—The term ‘‘modular home’’ means a house built in a factory in 2 or more modules that meet the State or local building codes where the house will be located, and where such modules are transported to the building site, installed on foundations, and com- pleted.

(d) EXCLUSION FOR ACCOUNTANTS AND TAX PREPARERS.—

(1) IN GENERAL.—Except as permitted in paragraph (2), the Bureau may not exercise any rulemaking, supervisory, enforcement, or other authority over—

(A) any person that is a certified public accountant, permitted to practice as a certified public accounting firm, or certified or licensed for such purpose by a State, or any individual who is employed by or holds an ownership interest with respect to a person described in this subpara- graph, when such person is performing or offering to per- form—

(i) customary and usual accounting activities, including the provision of accounting, tax, advisory, or other services that are subject to the regulatory authority of a State board of accountancy or a Federal authority; or

(ii) other services that are incidental to such cus- tomary and usual accounting activities, to the extent that such incidental services are not offered or pro- vided—

(I) by the person separate and apart from such customary and usual accounting activities; or

(II) to consumers who are not receiving such customary and usual accounting activities; or

H. R. 4173—624

(B) any person, other than a person described in subparagraph (A) that performs income tax

preparation activities for consumers.

(2) DESCRIPTION OF ACTIVITIES.—

(A) IN GENERAL.—Paragraph (1) shall not apply to

any person described in paragraph (1)(A) or (1)(B) to the

extent that such person is engaged in any activity which

is not a customary and usual accounting activity described

in paragraph (1)(A) or incidental thereto but which is the

offering or provision of any consumer financial product

or service, except to the extent that a person described

in paragraph (1)(A) is engaged in an activity which is

a customary and usual accounting activity described in

paragraph (1)(A), or incidental thereto.

(B) NOT A CUSTOMARY AND USUAL ACCOUNTING

ACTIVITY.—For purposes of this subsection, extending or

brokering credit is not a customary and usual accounting

activity, or incidental thereto.

graphs (A) and (B), a person described in paragraph (1)(A)

shall not be deemed to be extending credit, if such person

is only extending credit directly to a consumer, exclusively

for the purpose of enabling such consumer to purchase

services described in clause (i) or (ii) of paragraph (1)(A)

directly from such person, and such credit is—

(i) not subject to a finance charge; and

(ii) not payable by written agreement in more than

4 installments.

(D) OTHER LIMITATIONS.—Paragraph (1) does not apply

to any person described in paragraph (1)(A) or (1)(B) that

is otherwise subject to any enumerated consumer law or
any law for which authorities are transferred under subtitle
F or H.

(e) EXCLUSION FOR PRACTICE OF LAW.—

(1) IN GENERAL.—Except as provided under paragraph (2),

the Bureau may not exercise any supervisory or enforcement

authority with respect to an activity engaged in by an attorney

as part of the practice of law under the laws of a State in

which the attorney is licensed to practice law.

(2) RULE OF CONSTRUCTION.—Paragraph (1) shall not be

construed so as to limit the exercise by the Bureau of any

supervisory, enforcement, or other authority regarding the

offering or provision of a consumer financial product or service

described in any subparagraph of section 1002(5)—

(A) that is not offered or provided as part of, or inci-

dental to, the practice of law, occurring exclusively within the scope of the attorney-client relationship; or

(B) that is otherwise offered or provided by the attorney in question with respect to any consumer who is not receiving legal advice or services from the attorney in connection with such financial product or service.

(3) EXISTING AUTHORITY.—Paragraph (1) shall not be con- strued so as to limit the authority of the Bureau with respect to any attorney, to the extent that such attorney is otherwise subject to any of the enumerated consumer laws or the authori- ties transferred under subtitle F or H.

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(f) EXCLUSION FOR PERSONS REGULATED BY A STATE INSURANCE REGULATOR.—

(1) IN GENERAL.—No provision of this title shall be con-

strued as altering, amending, or affecting the authority of any

State insurance regulator to adopt rules, initiate enforcement

proceedings, or take any other action with respect to a person

regulated by a State insurance regulator. Except as provided in paragraph (2), the Bureau shall have no authority to exercise any power to enforce this title with respect to a person regulated by a State insurance regulator.

(2) DESCRIPTION OF ACTIVITIES.—Paragraph (1) does not apply to any person described in such paragraph to the extent that such person is engaged in the offering or provision of any consumer financial product or service or is otherwise sub- ject to any enumerated consumer

law or any law for which authorities are transferred under subtitle F or H.

(3) STATE INSURANCE AUTHORITY UNDER GRAMM-LEACH-

BLILEY.—Notwithstanding paragraph (2), the Bureau shall not exercise any authorities that are granted a State insurance authority under section 505(a)(6) of the Gramm-Leach-Bliley Act with respect to a person regulated by a State insurance authority.

(g) EXCLUSION FOR EMPLOYEE BENEFIT AND COMPENSATION PLANS AND CERTAIN OTHER ARRANGEMENTS UNDER THE INTERNAL REVENUE CODE OF 1986.—

(1) PRESERVATION OF AUTHORITY OF OTHER AGENCIES.—

No provision of this title shall be construed as altering, amending, or affecting the authority of the Secretary of the Treasury, the Secretary of Labor, or the Commissioner of Internal Revenue to adopt regulations, initiate enforcement proceedings, or take any actions with respect to any specified plan or arrangement.

(2) ACTIVITIES NOT CONSTITUTING THE OFFERING OR PROVI- SION OF ANY CONSUMER FINANCIAL PRODUCT OR SERVICE.—For

purposes of this title, a person shall not be treated as having engaged in the offering or provision of any consumer financial product or service solely because such person is—

(A) a specified plan or arrangement;

(B) engaged in the activity of establishing or maintaining, for the benefit of employees of such person (or for members of an employee organization), any specified plan or arrangement; or

(C) engaged in the activity of establishing or maintaining a qualified tuition program under section 529(b)(1) of the Internal Revenue Code of 1986 offered by a State or other prepaid tuition program offered by a State.

(3) LIMITATION ON BUREAU AUTHORITY.—

(A) IN GENERAL.—Except as provided under subpara- graphs (B) and (C), the Bureau may not exercise any rule- making or enforcement authority with respect to products or services that relate to any specified plan or arrangement.

(B) BUREAU ACTION PURSUANT TO AGENCY REQUEST.—

(i) AGENCY REQUEST.—The Secretary and the Sec- retary of Labor may jointly issue a written request to the Bureau regarding implementation of appropriate consumer protection standards under this title with

H. R. 4173—626

respect to the provision of services relating to any specified plan or arrangement.

(ii) AGENCY RESPONSE.—In response to a request by the Bureau, the Secretary and the Secretary of Labor shall jointly issue a written response, not later than 90 days after receipt of such request, to grant or deny the request of the Bureau regarding implementation of appropriate consumer protection standards under this title with respect to the provision of services relating to any specified plan or arrange- ment.

(iii) SCOPE OF BUREAU ACTION.—Subject to a request or response pursuant to clause (i) or clause

(ii) by the agencies made under this subparagraph, the Bureau may exercise rulemaking authority, and may act to enforce a rule prescribed pursuant to such request or response, in accordance with the provisions of this title. A request or response made by the Sec- retary and the Secretary of Labor under this subpara- graph shall describe the basis for, and scope of, appro- priate consumer protection standards to be imple- mented under this title with respect to the provision of services relating to any specified plan or arrange- ment.

extent that a person engaged in providing products or

services relating to any specified plan or arrangement is

subject to any enumerated consumer law or any law for
which authorities are transferred under subtitle F or H,

subparagraph (A) shall not apply with respect to that law.

(4) SPECIFIED PLAN OR ARRANGEMENT.—For purposes of

this subsection, the term ‘‘specified plan or arrangement’’ means

any plan, account, or arrangement described in section 220,

223, 401(a), 403(a), 403(b), 408, 408A, 529, or 530 of the Internal

Revenue Code of 1986, or any employee benefit or compensation

plan or arrangement, including a plan that is subject to title

I of the Employee Retirement Income Security Act of 1974,

or any prepaid tuition program offered by a State.

(h) PERSONS REGULATED BY A STATE SECURITIES COMMISSION.—

(1) IN GENERAL.—No provision of this title shall be con-

strued as altering, amending, or affecting the authority of any

securities commission (or any agency or office performing like

functions) of any State to adopt rules, initiate enforcement

proceedings, or take any other action with respect to a person

regulated by any securities commission (or any agency or office

performing like functions) of any State. Except as permitted in paragraph (2) and subsection (f), the Bureau shall have no authority to exercise any power to enforce this title with respect to a person regulated by any securities commission (or any agency or office performing like functions) of any State, but only to the extent that the person acts in such regulated capacity.

(2) DESCRIPTION OF ACTIVITIES.—Paragraph (1) shall not apply to any person to the extent such person is engaged in the offering or provision of any consumer financial product or service, or is otherwise subject to any enumerated consumer

H. R. 4173—627

law or any law for which authorities are transferred under subtitle F or H.

(i) EXCLUSION FOR PERSONS REGULATED BY THE COMMISSION.—

(1) IN GENERAL.—No provision of this title may be con- strued as altering, amending, or affecting the authority of the Commission to adopt rules, initiate enforcement proceedings, or take any other action with respect to a person regulated by the Commission. The Bureau shall have no authority to exercise any power to enforce this title with respect to a person regulated by the Commission.

(2) CONSULTATION AND COORDINATION.—Notwithstanding

paragraph (1), the Commission shall consult and coordinate, where feasible, with the Bureau with respect to any rule (including any advance notice of proposed rulemaking) regarding an investment product or service that is the same type of product as, or that competes directly with, a consumer financial product or service that is subject to the jurisdiction of the Bureau under this title or under any other law. In carrying out this paragraph, the agencies shall negotiate an agreement to establish procedures for such coordination, including procedures for providing advance notice to the Bureau when the Commission is initiating a rulemaking.

(j) EXCLUSION FOR PERSONS REGULATED BY THE COMMODITY FUTURES TRADING COMMISSION.—

(1) IN GENERAL.—No provision of this title shall be con- strued as altering, amending, or affecting the authority of the Commodity Futures Trading Commission to adopt rules, initiate enforcement proceedings, or take any other action with respect to a person regulated by the Commodity Futures Trading Commission. The Bureau shall have no authority to exercise any power to enforce this title with respect to a person regulated by the Commodity Futures Trading Commission.

(2) CONSULTATION AND COORDINATION.—Notwithstanding

paragraph (1), the Commodity Futures Trading Commission shall consult and coordinate with the Bureau with respect to any rule (including any advance notice of proposed rule- making) regarding a product or service that is the same type of product as, or that competes directly with, a consumer finan- cial product or service that is subject to the jurisdiction of the Bureau under this title or under any other law.

(k) EXCLUSION FOR PERSONS REGULATED BY THE FARM CREDIT ADMINISTRATION.—

(1) IN GENERAL.—No provision of this title shall be con- strued as altering, amending, or affecting the authority of the Farm Credit Administration to adopt rules, initiate enforcement proceedings, or take any other action with respect to a person regulated by the Farm Credit Administration. The Bureau shall have no authority to exercise any power to enforce this title with respect to a person regulated by the Farm Credit Adminis- tration.

(2) DEFINITION.—For purposes of this subsection, the term ‘‘person regulated by the Farm Credit Administration’’ means any Farm Credit System institution that is chartered and sub- ject to the provisions of the Farm Credit Act of 1971 (12

U.S.C. 2001 et seq.).

(l) EXCLUSION FOR ACTIVITIES RELATING TO CHARITABLE CON-

TRIBUTIONS.—

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(1) IN GENERAL.—The Director and the Bureau may not exercise any rulemaking, supervisory, enforcement, or other authority, including authority to order penalties, over any activities related to the solicitation or making of voluntary contributions to a tax-exempt organization as recognized by the Internal Revenue Service, by any agent, volunteer, or rep- resentative of such organizations to the extent the organization, agent, volunteer, or representative thereof is soliciting or pro- viding advice, information, education, or instruction to any donor or potential donor relating to a contribution to the organization.

(2) LIMITATION.—The exclusion in paragraph (1) does not apply to other activities not described in paragraph (1) that are the offering or provision of any consumer financial product or service, or are otherwise subject to any enumerated consumer law or any law for which authorities are transferred under subtitle F or H.

(m) INSURANCE.—The Bureau may not define as a financial product or service, by regulation or otherwise, engaging in the business of insurance.

(n) LIMITED AUTHORITY OF THE BUREAU.—Notwithstanding sub- sections (a) through (h) and (l), a person subject to or described in one or more of such provisions—

(1) may be a service provider; and

(2) may be subject to requests from, or requirements

imposed by, the Bureau regarding information in order to carry

out the responsibilities and functions of the Bureau and in

accordance with section 1022, 1052, or 1053.

(o) NO AUTHORITY TO IMPOSE USURY LIMIT.—No provision of

this title shall be construed as conferring authority on the Bureau

to establish a usury limit applicable to an extension of credit offered

or made by a covered person to a consumer, unless explicitly author-

ized by law.

(p) ATTORNEY GENERAL.—No provision of this title, including

section 1024(c)(1), shall affect the authorities of the Attorney Gen-

eral under otherwise applicable provisions of law.

(q) SECRETARY OF THE TREASURY.—No provision of this title

shall affect the authorities of the Secretary, including with respect

to prescribing rules, initiating enforcement proceedings, or taking

other actions with respect to a person that performs income tax

preparation activities for consumers.

(r) DEPOSIT INSURANCE AND SHARE INSURANCE.—Nothing in

this title shall affect the authority of the Corporation under the

Federal Deposit Insurance Act or the National Credit Union

Administration Board under the Federal Credit Union Act as to

matters related to deposit insurance and share insurance, respec-

tively.

(s) FAIR HOUSING ACT.—No provision of this title shall be

construed as affecting any authority arising under the Fair Housing

Act.

SEC. 1028. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRATION.

(a) STUDY AND REPORT.—The Bureau shall conduct a study of, and shall provide a report to Congress concerning, the use of agreements providing for arbitration of any future dispute

H. R. 4173—629

between covered persons and consumers in connection with the offering or providing of consumer financial products or services.

(b) FURTHER AUTHORITY.—The Bureau, by regulation, may pro- hibit or impose conditions or limitations on the use of an agreement between a covered person and a consumer for a consumer financial product or service providing for arbitration of any future dispute between the parties, if the Bureau finds that such a prohibition or imposition of conditions or limitations is in the public interest and for the protection of consumers. The findings in such rule shall be consistent with the study conducted under subsection (a).

(c) LIMITATION.—The authority described in subsection (b) may not be construed to prohibit or restrict a consumer from entering into a voluntary arbitration agreement with a covered person after a dispute has arisen.

(d) EFFECTIVE DATE.—Notwithstanding any other provision of law, any regulation prescribed by the Bureau under subsection

(b) shall apply, consistent with the terms of the regulation, to any agreement between a consumer and a covered person entered into after the end of the 180-day period beginning on the effective date of the regulation, as established by the Bureau.

SEC. 1029. EXCLUSION FOR AUTO DEALERS.

(a) SALE, SERVICING, AND LEASING OF MOTOR VEHICLES

EXCLUDED.—Except as permitted in subsection (b), the Bureau may not exercise any rulemaking, supervisory, enforcement or any other authority, including any authority to order assessments, over a motor vehicle dealer that is predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.

(b) CERTAIN FUNCTIONS EXCEPTED.—Subsection (a) shall not apply to any person, to the extent that such person—

(1) provides consumers with any services related to residen- tial or commercial mortgages or self-financing transactions involving real property;

(2) operates a line of business—

(A) that involves the extension of retail credit or retail leases involving motor vehicles; and

(B) in which—

(i) the extension of retail credit or retail leases are provided directly to consumers; and

(ii) the contract governing such extension of retail credit or retail leases is not routinely assigned to an unaffiliated third party finance or leasing source; or

(3) offers or provides a consumer financial product or service not involving or related to the sale, financing, leasing, rental, repair, refurbishment, maintenance, or other servicing of motor vehicles, motor vehicle parts, or any related or ancillary product or service.

Except as provided in subsections (b) and (d), nothing in this title, including subtitle F, shall be construed as modifying, limiting, or superseding the operation of any provision of Federal law, or otherwise affecting the authority of the Board of Governors, the Federal Trade Commission, or any other Federal agency, with respect to a person described in subsection (a).

(d) FEDERAL TRADE COMMISSION AUTHORITY.—Notwithstanding

section 18 of the Federal Trade Commission Act, the Federal Trade

H. R. 4173—630

Commission is authorized to prescribe rules under sections 5 and 18(a)(1)(B) of the Federal Trade Commission Act. in accordance with section 553 of title 5, United States Code, with respect to a person described in subsection (a).

(e) COORDINATION WITH OFFICE OF SERVICE MEMBER

AFFAIRS.—The Board of Governors and the Federal Trade Commis- sion shall coordinate with the Office of Service Member Affairs, to ensure that—

(1) service members and their families are educated and empowered to make better informed decisions regarding con- sumer financial products and services offered by motor vehicle dealers, with a focus on motor vehicle dealers in the proximity of military installations; and

(2) complaints by service members and their families con- cerning such motor vehicle dealers are effectively monitored and responded to, and where appropriate, enforcement action is pursued by the authorized agencies.

(f) DEFINITIONS.—For purposes of this section, the following definitions shall apply:

(1) MOTOR VEHICLE.—The term ‘‘motor vehicle’’ means—

(A) any self-propelled vehicle designed for transporting persons or property on a street, highway, or other road;

(B) recreational boats and marine equipment;

(D) motor homes, recreational vehicle trailers, and slide-in campers, as those terms are defined in sections

571.3 and 575.103 (d) of title 49, Code of Federal Regula- tions, or any successor thereto; and

(E) other vehicles that are titled and sold through dealers.

(2) MOTOR VEHICLE DEALER.—The term ‘‘motor vehicle dealer’’ means any person or resident in the United States, or any territory of the United States, who—

(A) is licensed by a State, a territory of the United States, or the District of Columbia to engage in the sale of motor vehicles; and

(B) takes title to, holds an ownership in, or takes physical custody of motor vehicles.

SEC. 1029A. EFFECTIVE DATE.

This subtitle shall become effective on the designated transfer date, except that sections 1022, 1024, and 1025(e) shall become effective on the date of enactment of this Act.

Subtitle C—Specific Bureau Authorities

SEC. 1031. PROHIBITING UNFAIR, DECEPTIVE, OR ABUSIVE ACTS OR PRACTICES.

(a) IN GENERAL.—The Bureau may take any action authorized under subtitle E to prevent a covered person or service provider from committing or engaging in an unfair, deceptive, or abusive act or practice under Federal law in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service.

(b) RULEMAKING.—The Bureau may prescribe rules applicable to a covered person or service provider identifying as unlawful

H. R. 4173—631

unfair, deceptive, or abusive acts or practices in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service. Rules under this section may include requirements for the purpose of preventing such acts or practices.

(1) IN GENERAL.—The Bureau shall have no authority under this section to declare an act or practice in connection with a transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service, to be unlawful on the grounds that such act or practice is unfair, unless the Bureau has a reasonable basis to conclude that—

(A) the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers; and

(B) such substantial injury is not outweighed by countervailing benefits to consumers or to competition.

(2) CONSIDERATION OF PUBLIC POLICIES.—In determining

whether an act or practice is unfair, the Bureau may consider established public policies as evidence to be considered with all other evidence. Such public policy considerations may not serve as a primary basis for such determination.

(d) ABUSIVE.—The Bureau shall have no authority under this section to declare an act or practice abusive in connection with the provision of a consumer financial product or service, unless the act or practice—

(1) materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or

(2) takes unreasonable advantage of—

(A) a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service;

(B) the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service; or

consumer.

(e) CONSULTATION.—In prescribing rules under this section, the Bureau shall consult with the Federal banking agencies, or other Federal agencies, as appropriate, concerning the consistency of the proposed rule with prudential, market, or systemic objectives administered by such agencies.

(f) CONSIDERATION OF SEASONAL INCOME.—The rules of the

Bureau under this section shall provide, with respect to an extension of credit secured by residential real estate or a dwelling, if docu- mented income of the borrower, including income from a small business, is a repayment source for an extension of credit secured by residential real estate or a dwelling, the creditor may consider the seasonality and irregularity of such income in the underwriting of and scheduling of payments for such credit.

SEC. 1032. DISCLOSURES.

(a) IN GENERAL.—The Bureau may prescribe rules to ensure that the features of any consumer financial product or service, both initially and over the term of the product or service, are

H. R. 4173—632

fully, accurately, and effectively disclosed to consumers in a manner that permits consumers to understand the costs, benefits, and risks associated with the product or service, in light of the facts and circumstances.

(b) MODEL DISCLOSURES.—

(1) IN GENERAL.—Any final rule prescribed by the Bureau under this section requiring disclosures may include a model form that may be used at the option of the covered person for provision of the required disclosures.

(2) FORMAT.—A model form issued pursuant to paragraph

(1) shall contain a clear and conspicuous disclosure that, at a minimum—

(A) uses plain language comprehensible to consumers;

(B) contains a clear format and design, such as an easily readable type font; and

(3) CONSUMER TESTING.—Any model form issued pursuant to this subsection shall be validated through consumer testing.

(c) BASIS FOR RULEMAKING.—In prescribing rules under this section, the Bureau shall consider available evidence about con- sumer awareness, understanding of, and responses to disclosures or communications about the risks, costs, and benefits of consumer financial products or services.

(d) SAFE HARBOR.—Any covered person that uses a model form included with a rule issued under this section shall be deemed to be in compliance with the disclosure requirements of this section with respect to such model form.

(e) TRIAL DISCLOSURE PROGRAMS.—

(1) IN GENERAL.—The Bureau may permit a covered person to conduct a trial program that is limited in time and scope, subject to specified standards and procedures, for the purpose of providing trial disclosures to consumers that are designed to improve upon any model form issued pursuant to subsection (b)(1), or any other model form issued to implement an enumer- ated statute, as applicable.

(2) SAFE HARBOR.—The standards and procedures issued by the Bureau shall be designed to encourage covered persons to conduct trial disclosure programs. For the purposes of admin- istering this subsection, the Bureau may establish a limited period during which a covered person conducting a trial disclo- sure program shall be deemed to be in compliance with, or may be exempted from, a requirement of a rule or an enumer- ated consumer law.

(3) PUBLIC DISCLOSURE.—The rules of the Bureau shall provide for public disclosure of trial disclosure programs, which public disclosure may be limited, to the extent necessary to encourage covered persons to conduct effective trials.

(f) COMBINED MORTGAGE LOAN DISCLOSURE.—Not later than

1 year after the designated transfer date, the Bureau shall propose for public comment rules and model disclosures that combine the disclosures required under the Truth in Lending Act and sections

4 and 5 of the Real Estate Settlement Procedures Act of 1974, into a single, integrated disclosure for mortgage loan transactions covered by those laws, unless the Bureau determines that any proposal issued by the Board of Governors and the Secretary of Housing and Urban Development carries out the same purpose.

H. R. 4173—633

SEC. 1033. CONSUMER RIGHTS TO ACCESS INFORMATION.

(a) IN GENERAL.—Subject to rules prescribed by the Bureau, a covered person shall make available to a consumer, upon request, information in the control or possession of the covered person con- cerning the consumer financial product or service that the consumer obtained from such covered person, including information relating to any transaction, series of transactions, or to the account including costs, charges and usage data. The information shall be made available in an electronic form usable by consumers.

(b) EXCEPTIONS.—A covered person may not be required by this section to make available to the consumer—

(1) any confidential commercial information, including an algorithm used to derive credit scores or other risk scores or predictors;

(2) any information collected by the covered person for the purpose of preventing fraud or money laundering, or

detecting, or making any report regarding other unlawful or

potentially unlawful conduct;

(3) any information required to be kept confidential by

any other provision of law; or

(4) any information that the covered person cannot retrieve

in the ordinary course of its business with respect to that

information.

shall be construed to impose any duty on a covered person to

maintain or keep any information about a consumer.

(d) STANDARDIZED FORMATS FOR DATA.—The Bureau, by rule,

shall prescribe standards applicable to covered persons to promote

the development and use of standardized formats for information,

including through the use of machine readable files, to be made

available to consumers under this section.

(e) CONSULTATION.—The Bureau shall, when prescribing any

rule under this section, consult with the Federal banking agencies

and the Federal Trade Commission to ensure, to the extent appro-

priate, that the rules—

(1) impose substantively similar requirements on covered

persons;

(2) take into account conditions under which covered per-

sons do business both in the United States and in other coun-

tries; and

(3) do not require or promote the use of any particular

technology in order to develop systems for compliance.

SEC. 1034. RESPONSE TO CONSUMER COMPLAINTS AND INQUIRIES.

(a) TIMELY REGULATOR RESPONSE TO CONSUMERS.—The Bureau

shall establish, in consultation with the appropriate Federal regu-

latory agencies, reasonable procedures to provide a timely response

to consumers, in writing where appropriate, to complaints against,

or inquiries concerning, a covered person, including—

(1) steps that have been taken by the regulator in response

to the complaint or inquiry of the consumer;

(2) any responses received by the regulator from the covered

person; and

(3) any follow-up actions or planned follow-up actions by

the regulator in response to the complaint or inquiry of the

consumer.

H. R. 4173—634

(b) TIMELY RESPONSE TO REGULATOR BY COVERED PERSON.—

A covered person subject to supervision and primary enforcement by the Bureau pursuant to section 1025 shall provide a timely response, in writing where appropriate, to the Bureau, the pruden- tial regulators, and any other agency having jurisdiction over such covered person concerning a consumer complaint or inquiry, including—

(1) steps that have been taken by the covered person to respond to the complaint or inquiry of the consumer;

(2) responses received by the covered person from the con- sumer; and

(3) follow-up actions or planned follow-up actions by the covered person to respond to the complaint or inquiry of the consumer.

(1) IN GENERAL.—A covered person subject to supervision and primary enforcement by the Bureau pursuant to section 1025 shall, in a timely manner, comply with a consumer request for information in the control or possession of such covered person concerning the consumer financial product or service that the consumer obtained from such covered person, including supporting written documentation, concerning the account of the consumer.

(2) EXCEPTIONS.—A covered person subject to supervision and primary enforcement by the Bureau pursuant to section 1025, a prudential regulator, and any other agency having jurisdiction over a covered person subject to supervision and primary enforcement by the Bureau pursuant to section 1025 may not be required by this section to make available to the consumer—

(A) any confidential commercial information, including an algorithm used to derive credit scores or other risk scores or predictors;

(B) any information collected by the covered person for the purpose of preventing fraud or money laundering, or detecting or making any report regarding other unlawful or potentially unlawful conduct;

(D) any nonpublic or confidential information, including confidential supervisory information.

(d) AGREEMENTS WITH OTHER AGENCIES.—The Bureau shall

enter into a memorandum of understanding with any affected Fed- eral regulatory agency regarding procedures by which any covered person, and the prudential regulators, and any other agency having jurisdiction over a covered person, including the Secretary of the Department of Housing and Urban Development and the Secretary of Education, shall comply with this section.

SEC. 1035. PRIVATE EDUCATION LOAN OMBUDSMAN.

(a) ESTABLISHMENT.—The Secretary, in consultation with the Director, shall designate a Private Education Loan Ombudsman (in this section referred to as the ‘‘Ombudsman’’) within the Bureau, to provide timely assistance to borrowers of private education loans.

(b) PUBLIC INFORMATION.—The Secretary and the Director shall disseminate information about the availability and functions of the Ombudsman to borrowers and potential borrowers, as well

H. R. 4173—635

as institutions of higher education, lenders, guaranty agencies, loan servicers, and other participants in private education student loan programs.

(1) in accordance with regulations of the Director, receive, review, and attempt to resolve informally complaints from bor- rowers of loans described in subsection (a), including, as appro- priate, attempts to resolve such complaints in collaboration with the Department of Education and with institutions of higher education, lenders, guaranty agencies, loan servicers, and other participants in private education loan programs;

(2) not later than 90 days after the designated transfer date, establish a memorandum of understanding with the stu- dent loan ombudsman established under section 141(f) of the Higher Education Act of 1965 (20 U.S.C. 1018(f)), to ensure coordination in providing assistance to and serving borrowers seeking to resolve complaints related to their private education or Federal student loans;

(3) compile and analyze data on borrower complaints regarding private education loans; and

(4) make appropriate recommendations to the Director, the Secretary, the Secretary of Education, the Committee on Banking, Housing, and Urban Affairs and the Committee on Health, Education, Labor, and Pensions of the Senate and the Committee on Financial Services and the Committee on Education and Labor of the House of Representatives.

(d) ANNUAL REPORTS.—

(1) IN GENERAL.—The Ombudsman shall prepare an annual report that describes the activities, and evaluates the effective- ness of the Ombudsman during the preceding year.

(2) SUBMISSION.—The report required by paragraph (1) shall be submitted on the same date annually to the Secretary, the Secretary of Education, the Committee on Banking, Housing, and Urban Affairs and the Committee on Health, Education, Labor, and Pensions of the Senate and the Com- mittee on Financial Services and the Committee on Education and Labor of the House of Representatives.

(e) DEFINITIONS.—For purposes of this section, the terms ‘‘pri- vate education loan’’ and ‘‘institution of higher education’’ have the same meanings as in section 140 of the Truth in Lending Act (15 U.S.C. 1650).

SEC. 1036. PROHIBITED ACTS.

(a) IN GENERAL.—It shall be unlawful for—

(1) any covered person or service provider—

(A) to offer or provide to a consumer any financial product or service not in conformity with Federal consumer financial law, or otherwise commit any act or omission in violation of a Federal consumer financial law; or

(B) to engage in any unfair, deceptive, or abusive act or practice;

(2) any covered person or service provider to fail or refuse, as required by Federal consumer financial law, or any rule or order issued by the Bureau thereunder—

(A) to permit access to or copying of records;

(B) to establish or maintain records; or

H. R. 4173—636

(3) any person to knowingly or recklessly provide substan- tial assistance to a covered person or service provider in viola- tion of the provisions of section 1031, or any rule or order issued thereunder, and notwithstanding any provision of this title, the provider of such substantial assistance shall be deemed to be in violation of that section to the same extent as the person to whom such assistance is provided.

(b) EXCEPTION.—No person shall be held to have violated sub- section (a)(1) solely by virtue of providing or selling time or space to a covered person or service provider placing an advertisement.

SEC. 1037. EFFECTIVE DATE.

This subtitle shall take effect on the designated transfer date.

Subtitle D—Preservation of State Law

SEC. 1041. RELATION TO STATE LAW.

(a) IN GENERAL.—

(1) RULE OF CONSTRUCTION.—This title, other than sections 1044 through 1048, may not be construed as annulling, altering, or affecting, or exempting any person subject to the provisions of this title from complying with, the statutes, regulations, orders, or interpretations in effect in any State, except to the extent that any such provision of law is inconsistent with the provisions of this title, and then only to the extent of the inconsistency.

(2) GREATER PROTECTION UNDER STATE LAW.—For purposes

of this subsection, a statute, regulation, order, or interpretation in effect in any State is not inconsistent with the provisions of this title if the protection that such statute, regulation, order, or interpretation affords to consumers is greater than the protection provided under this title. A determination regarding whether a statute, regulation, order, or interpretation in effect in any State is inconsistent with the provisions of this title may be made by the Bureau on its own motion or in response to a nonfrivolous petition initiated by any interested person.

(b) RELATION TO OTHER PROVISIONS OF ENUMERATED CON-

SUMER LAWS THAT RELATE TO STATE LAW.—No provision of this title, except as provided in section 1083, shall be construed as modifying, limiting, or superseding the operation of any provision of an enumerated consumer law that relates to the application of a law in effect in any State with respect to such Federal law.

RESPONSE TO STATE ACTION.—

(1) NOTICE OF PROPOSED RULE REQUIRED.—The Bureau

shall issue a notice of proposed rulemaking whenever a majority of the States has enacted a resolution in support of the establishment or modification of a consumer protection regula- tion by the Bureau.

(2) BUREAU CONSIDERATIONS REQUIRED FOR ISSUANCE OF

FINAL REGULATION.—Before prescribing a final regulation based upon a notice issued pursuant to paragraph (1), the Bureau shall take into account whether—

H. R. 4173—637

(A) the proposed regulation would afford greater protec- tion to consumers than any existing regulation;

(B) the intended benefits of the proposed regulation for consumers would outweigh any increased costs or inconveniences for consumers, and would not discriminate unfairly against any category or class of consumers; and

(C) a Federal banking agency has advised that the proposed regulation is likely to present an unacceptable safety and soundness risk to insured depository institu- tions.

(3) EXPLANATION OF CONSIDERATIONS.—The Bureau—

(A) shall include a discussion of the considerations

required in paragraph (2) in the Federal Register notice

of a final regulation prescribed pursuant to this subsection;

and

(B) whenever the Bureau determines not to prescribe a final regulation, shall publish an explanation of such determination in the Federal Register, and provide a copy of such explanation to each State that enacted a resolution in support of the proposed regulation, the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Rep- resentatives.

(4) RESERVATION OF AUTHORITY.—No provision of this sub- section shall be construed as limiting or restricting the authority of the Bureau to enhance consumer protection stand- ards established pursuant to this title in response to its own motion or in response to a request by any other interested person.

(5) RULE OF CONSTRUCTION.—No provision of this sub- section shall be construed as exempting the Bureau from com- plying with subchapter II of chapter 5 of title 5, United States Code.

(6) DEFINITION.—For purposes of this subsection, the term ‘‘consumer protection regulation’’ means a regulation that the Bureau is authorized to prescribe under the Federal consumer

financial laws.

SEC. 1042. PRESERVATION OF ENFORCEMENT POWERS OF STATES.

(a) IN GENERAL.—

(1) ACTION BY STATE.—Except as provided in paragraph

(2), the attorney general (or the equivalent thereof) of any

State may bring a civil action in the name of such State

in any district court of the United States in that State or

in State court that is located in that State and that has jurisdic-

tion over the defendant, to enforce provisions of this title or

regulations issued under this title, and to secure remedies

under provisions of this title or remedies otherwise provided

under other law. A State regulator may bring a civil action

or other appropriate proceeding to enforce the provisions of

this title or regulations issued under this title with respect

to any entity that is State-chartered, incorporated, licensed,

or otherwise authorized to do business under State law (except

as provided in paragraph (2)), and to secure remedies under

provisions of this title or remedies otherwise provided under

other provisions of law with respect to such an entity.

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(2) ACTION BY STATE AGAINST NATIONAL BANK OR FEDERAL SAVINGS ASSOCIATION TO ENFORCE RULES.—

(A) IN GENERAL.—Except as permitted under subpara- graph (B), the attorney general (or equivalent thereof) of any State may not bring a civil action in the name of such State against a national bank or Federal savings association to enforce a provision of this title.

(B) ENFORCEMENT OF RULES PERMITTED.—The attorney

general (or the equivalent thereof) of any State may bring

a civil action in the name of such State against a national

bank or Federal savings association in any district court

of the United States in the State or in State court that

is located in that State and that has jurisdiction over

the defendant to enforce a regulation prescribed by the

Bureau under a provision of this title and to secure rem-

edies under provisions of this title or remedies otherwise

provided under other law.

(3) RULE OF CONSTRUCTION.—No provision of this title shall

be construed as modifying, limiting, or superseding the oper-

ation of any provision of an enumerated consumer law that

relates to the authority of a State attorney general or State

regulator to enforce such Federal law.

(b) CONSULTATION REQUIRED.—

(1) NOTICE.—

(A) IN GENERAL.—Before initiating any action in a

court or other administrative or regulatory proceeding

against any covered person as authorized by subsection

(a) to enforce any provision of this title, including any

regulation prescribed by the Bureau under this title, a

State attorney general or State regulator shall timely pro-

vide a copy of the complete complaint to be filed and

written notice describing such action or proceeding to the

Bureau and the prudential regulator, if any, or the designee

thereof.

(B) EMERGENCY ACTION.—If prior notice is not prac-

ticable, the State attorney general or State regulator shall

provide a copy of the complete complaint and the notice

to the Bureau and the prudential regulator, if any, imme-

diately upon instituting the action or proceeding.

under this paragraph shall, at a minimum, describe—

(i) the identity of the parties;

(ii) the alleged facts underlying the proceeding;

and

(iii) whether there may be a need to coordinate

the prosecution of the proceeding so as not to interfere with any action, including any rulemaking, undertaken by the Bureau, a prudential regulator, or another Fed- eral agency.

(2) BUREAU RESPONSE.—In any action described in para- graph (1), the Bureau may—

(A) intervene in the action as a party;

(B) upon intervening—

(i) remove the action to the appropriate United

States district court, if the action was not originally

brought there; and

and

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(ii) be heard on all matters arising in the action;

(c) REGULATIONS.—The Bureau shall prescribe regulations to implement the requirements of this section and, from time to time, provide guidance in order to further coordinate actions with the State attorneys general and other regulators.

(d) PRESERVATION OF STATE AUTHORITY.—

(1) STATE CLAIMS.—No provision of this section shall be construed as altering, limiting, or affecting the authority of a State attorney general or any other regulatory or enforcement agency or authority to bring an action or other regulatory proceeding arising solely under the law in effect in that State.

(2) STATE SECURITIES REGULATORS.—No provision of this title shall be construed as altering, limiting, or affecting the authority of a State securities commission (or any agency or

office performing like functions) under State law to adopt rules, initiate enforcement proceedings, or take any other action with respect to a person regulated by such commission or authority.

(3) STATE INSURANCE REGULATORS.—No provision of this title shall be construed as altering, limiting, or affecting the authority of a State insurance commission or State insurance regulator under State law to adopt rules, initiate enforcement proceedings, or take any other action with respect to a person regulated by such commission or regulator.

SEC. 1043. PRESERVATION OF EXISTING CONTRACTS.

This title, and regulations, orders, guidance, and interpretations prescribed, issued, or established by the Bureau, shall not be con- strued to alter or affect the applicability of any regulation, order, guidance, or interpretation prescribed, issued, and established by the Comptroller of the Currency or the Director of the Office of Thrift Supervision regarding the applicability of State law under Federal banking law to any contract entered into on or before the date of enactment of this Act, by national banks, Federal savings associations, or subsidiaries thereof that are regulated and supervised by the Comptroller of the Currency or the Director of the Office of Thrift Supervision, respectively.

SEC. 1044. STATE LAW PREEMPTION STANDARDS FOR NATIONAL BANKS AND SUBSIDIARIES CLARIFIED.

(a) IN GENERAL.—Chapter one of title LXII of the Revised Statutes of the United States (12 U.S.C. 21 et seq.) is amended by inserting after section 5136B the following new section:

‘‘SEC. 5136C. STATE LAW PREEMPTION STANDARDS FOR NATIONAL BANKS AND SUBSIDIARIES CLARIFIED.

‘‘(a) DEFINITIONS.—For purposes of this section, the following definitions shall apply:

‘‘(1) NATIONAL BANK.—The term ‘national bank’ includes— ‘‘(A) any bank organized under the laws of the United

States; and

‘‘(B) any Federal branch established in accordance with the International Banking Act of 1978.

‘‘(2) STATE CONSUMER FINANCIAL LAWS.—The term ‘State

consumer financial law’ means a State law that does not directly or indirectly discriminate against national banks and that

H. R. 4173—640

directly and specifically regulates the manner, content, or terms and conditions of any financial transaction (as may be author- ized for national banks to engage in), or any account related thereto, with respect to a consumer.

‘‘(3) OTHER DEFINITIONS.—The terms ‘affiliate’, ‘subsidiary’, ‘includes’, and ‘including’ have the same meanings as in section 3 of the Federal Deposit Insurance Act.

‘‘(b) PREEMPTION STANDARD.—

‘‘(1) IN GENERAL.—State consumer financial laws are pre-

empted, only if—

‘‘(A) application of a State consumer financial law

would have a discriminatory effect on national banks, in

comparison with the effect of the law on a bank chartered

by that State;

‘‘(B) in accordance with the legal standard for preemp-

tion in the decision of the Supreme Court of the United

States in Barnett Bank of Marion County, N. A. v. Nelson,

Florida Insurance Commissioner, et al., 517 U.S. 25 (1996),

the State consumer financial law prevents or significantly

interferes with the exercise by the national bank of its

powers; and any preemption determination under this

subparagraph may be made by a court, or by regulation

or order of the Comptroller of the Currency on a case-

by-case basis, in accordance with applicable law; or

‘‘(C) the State consumer financial law is preempted

by a provision of Federal law other than this title.

‘‘(2) SAVINGS CLAUSE.—This title and section 24 of the

Federal Reserve Act (12 U.S.C. 371) do not preempt, annul,

or affect the applicability of any State law to any subsidiary

or affiliate of a national bank (other than a subsidiary or

affiliate that is chartered as a national bank).

‘‘(3) CASE-BY-CASE BASIS.—

‘‘(A) DEFINITION.—As used in this section the term

‘case-by-case basis’ refers to a determination pursuant to

this section made by the Comptroller concerning the impact

of a particular State consumer financial law on any national

bank that is subject to that law, or the law of any other

State with substantively equivalent terms.

‘‘(B) CONSULTATION.—When making a determination

on a case-by-case basis that a State consumer financial

law of another State has substantively equivalent terms

as one that the Comptroller is preempting, the Comptroller

shall first consult with the Bureau of Consumer Financial

Protection and shall take the views of the Bureau into

account when making the determination.

‘‘(4) RULE OF CONSTRUCTION.—This title does not occupy the field in any area of State law.

‘‘(5) STANDARDS OF REVIEW.—

‘‘(A) PREEMPTION.—A court reviewing any determina-

tions made by the Comptroller regarding preemption of

a State law by this title or section 24 of the Federal

Reserve Act (12 U.S.C. 371) shall assess the validity of

such determinations, depending upon the thoroughness evi-

dent in the consideration of the agency, the validity of

the reasoning of the agency, the consistency with other

valid determinations made by the agency, and other factors

H. R. 4173—641

‘‘(B) SAVINGS CLAUSE.—Except as provided in subpara- graph (A), nothing in this section shall affect the deference that a court may afford to the Comptroller in making determinations regarding the meaning or interpretation of title LXII of the Revised Statutes of the United States or other Federal laws.

‘‘(6) COMPTROLLER DETERMINATION NOT DELEGABLE.—Any

regulation, order, or determination made by the Comptroller

of the Currency under paragraph (1)(B) shall be made by the

Comptroller, and shall not be delegable to another officer or

employee of the Comptroller of the Currency.

‘‘(c) SUBSTANTIAL EVIDENCE.—No regulation or order of the

Comptroller of the Currency prescribed under subsection (b)(1)(B),

shall be interpreted or applied so as to invalidate, or otherwise

declare inapplicable to a national bank, the provision of the State

consumer financial law, unless substantial evidence, made on the

record of the proceeding, supports the specific finding regarding

the preemption of such provision in accordance with the legal

standard of the decision of the Supreme Court of the United States

in Barnett Bank of Marion County, N.A. v. Nelson, Florida Insur-

ance Commissioner, et al., 517 U.S. 25 (1996).

‘‘(d) PERIODIC REVIEW OF PREEMPTION DETERMINATIONS.—

‘‘(1) IN GENERAL.—The Comptroller of the Currency shall

periodically conduct a review, through notice and public com-

ment, of each determination that a provision of Federal law

preempts a State consumer financial law. The agency shall

conduct such review within the 5-year period after prescribing

or otherwise issuing such determination, and at least once

during each 5-year period thereafter. After conducting the

review of, and inspecting the comments made on, the deter-

mination, the agency shall publish a notice in the Federal

determination or a proposal to amend the determination. Any

such notice of a proposal to amend a determination and the

subsequent resolution of such proposal shall comply with the

procedures set forth in subsections (a) and (b) of section 5244

of the Revised Statutes of the United States (12 U.S.C. 43

(a), (b)).

‘‘(2) REPORTS TO CONGRESS.—At the time of issuing a review

conducted under paragraph (1), the Comptroller of the Currency

shall submit a report regarding such review to the Committee

on Financial Services of the House of Representatives and

the Committee on Banking, Housing, and Urban Affairs of

the Senate. The report submitted to the respective committees shall address whether the agency intends to continue, rescind, or propose to amend any determination that a provision of Federal law preempts a State consumer financial law, and the reasons therefor.

‘‘(e) APPLICATION OF STATE CONSUMER FINANCIAL LAW TO

SUBSIDIARIES AND AFFILIATES.—Notwithstanding any provision of

this title or section 24 of Federal Reserve Act (12 U.S.C. 371),

a State consumer financial law shall apply to a subsidiary or

affiliate of a national bank (other than a subsidiary or affiliate

that is chartered as a national bank) to the same extent that

H. R. 4173—642

the State consumer financial law applies to any person, corporation, or other entity subject to such State law.

‘‘(f) PRESERVATION OF POWERS RELATED TO CHARGING

INTEREST.—No provision of this title shall be construed as altering or otherwise affecting the authority conferred by section 5197 of the Revised Statutes of the United States (12 U.S.C. 85) for the charging of interest by a national bank at the rate allowed by the laws of the State, territory, or district where the bank is located, including with respect to the meaning of ‘interest’ under such provision.

‘‘(g) TRANSPARENCY OF OCC PREEMPTION DETERMINATIONS.—

The Comptroller of the Currency shall publish and update no less frequently than quarterly, a list of preemption determinations by the Comptroller of the Currency then in effect that identifies the activities and practices covered by each determination and the requirements and constraints determined to be preempted.’’.

(b) CLERICAL AMENDMENT.—The table of sections for chapter one of title LXII of the Revised Statutes of the United States is amended by inserting after the item relating to section 5136B the following new item:

‘‘Sec. 5136C. State law preemption standards for national banks and subsidiaries clarified.’’.

SEC. 1045. CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY INSTITUTION SUBSIDIARIES.

Section 5136C of the Revised Statutes of the United States (as added by this subtitle) is amended by adding at the end the following:

‘‘(h) CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY INSTITUTION SUBSIDIARIES AND AFFILIATES OF NATIONAL BANKS.—

‘‘(1) DEFINITIONS.—For purposes of this subsection, the terms ‘depository institution’, ‘subsidiary’, and ‘affiliate’ have the same meanings as in section 3 of the Federal Deposit Insurance Act.

‘‘(2) RULE OF CONSTRUCTION.—No provision of this title or section 24 of the Federal Reserve Act (12 U.S.C. 371) shall be construed as preempting, annulling, or affecting the applica- bility of State law to any subsidiary, affiliate, or agent of a national bank (other than a subsidiary, affiliate, or agent that is chartered as a national bank).’’.

SEC. 1046. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS ASSOCIATIONS AND SUBSIDIARIES CLARIFIED.

(a) IN GENERAL.—The Home Owners’ Loan Act (12 U.S.C. 1461 et seq.) is amended by inserting after section 5 the following new section:

‘‘SEC. 6. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS ASSOCIATIONS CLARIFIED.

‘‘(a) IN GENERAL.—Any determination by a court or by the Director or any successor officer or agency regarding the relation of State law to a provision of this Act or any regulation or order prescribed under this Act shall be made in accordance with the laws and legal standards applicable to national banks regarding the preemption of State law.

‘‘(b) PRINCIPLES OF CONFLICT PREEMPTION APPLICABLE.—Not-

withstanding the authorities granted under sections 4 and 5, this

Act does not occupy the field in any area of State law.’’.

H. R. 4173—643

(b) CLERICAL AMENDMENT.—The table of sections for the Home Owners’ Loan Act (12 U.S.C. 1461 et seq.) is amended by striking the item relating to section 6 and inserting the following new item:

‘‘Sec. 6. State law preemption standards for Federal savings associations and subsidiaries clarified.’’.

SEC. 1047. VISITORIAL STANDARDS FOR NATIONAL BANKS AND SAVINGS ASSOCIATIONS.

(a) NATIONAL BANKS.—Section 5136C of the Revised Statutes of the United States (as added by this subtitle) is amended by adding at the end the following:

‘‘(i) VISITORIAL POWERS.—

‘‘(1) IN GENERAL.—In accordance with the decision of the Supreme Court of the United States in Cuomo v. Clearing House Assn., L. L. C. (129 S. Ct. 2710 (2009)), no provision of this title which relates to visitorial powers or otherwise limits or restricts the visitorial authority to which any national bank is subject shall be construed as limiting or restricting the authority of any attorney general (or other chief law enforce- ment officer) of any State to bring an action against a national bank in a court of appropriate jurisdiction to enforce an applicable law and to seek relief as authorized by such law. ‘‘(j) ENFORCEMENT ACTIONS.—The ability of the Comptroller

of the Currency to bring an enforcement action under this title or section 5 of the Federal Trade Commission Act does not preclude any private party from enforcing rights granted under Federal or State law in the courts.’’.

(b) SAVINGS ASSOCIATIONS.—Section 6 of the Home Owners’ Loan Act (as added by this title) is amended by adding at the end the following:

‘‘(c) VISITORIAL POWERS.—The provisions of sections 5136C(i) of the Revised Statutes of the United States shall apply to Federal savings associations, and any subsidiary thereof, to the same extent and in the same manner as if such savings associations, or subsidi- aries thereof, were national banks or subsidiaries of national banks, respectively.’’

‘‘(d) ENFORCEMENT ACTIONS.—The ability of the Comptroller of the Currency to bring an enforcement action under this Act or section 5 of the Federal Trade Commission Act does not preclude any private party from enforcing rights granted under Federal or State law in the courts.’’.

SEC. 1048. EFFECTIVE DATE.

This subtitle shall become effective on the designated transfer date.

Subtitle E—Enforcement Powers

SEC. 1051. DEFINITIONS.

For purposes of this subtitle, the following definitions shall apply:

(1) BUREAU INVESTIGATION.—The term ‘‘Bureau investiga- tion’’ means any inquiry conducted by a Bureau investigator for the purpose of ascertaining whether any person is or has

H. R. 4173—644

been engaged in any conduct that is a violation, as defined in this section.

(2) BUREAU INVESTIGATOR.—The term ‘‘Bureau investi- gator’’ means any attorney or investigator employed by the Bureau who is charged with the duty of enforcing or carrying into effect any Federal consumer financial law.

(3) CUSTODIAN.—The term ‘‘custodian’’ means the custodian or any deputy custodian designated by the Bureau.

(4) DOCUMENTARY MATERIAL.—The term ‘‘documentary material’’ includes the original or any copy of any book, docu- ment, record, report, memorandum, paper, communication, tab- ulation, chart, logs, electronic files, or other data or data com- pilations stored in any medium.

(5) VIOLATION.—The term ‘‘violation’’ means any act or omission that, if proved, would constitute a violation of any provision of Federal consumer financial law.

SEC. 1052. INVESTIGATIONS AND ADMINISTRATIVE DISCOVERY.

(a) JOINT INVESTIGATIONS.—

(1) IN GENERAL.—The Bureau or, where appropriate, a Bureau investigator, may engage in joint investigations and requests for information, as authorized under this title.

(2) FAIR LENDING.—The authority under paragraph (1) includes matters relating to fair lending, and where appro- priate, joint investigations with, and requests for information from, the Secretary of Housing and Urban Development, the Attorney General of the United States, or both.

(b) SUBPOENAS.—

(1) IN GENERAL.—The Bureau or a Bureau investigator may issue subpoenas for the attendance and testimony of wit- nesses and the production of relevant papers, books, documents, or other material in connection with hearings under this title.

(2) FAILURE TO OBEY.—In the case of contumacy or refusal to obey a subpoena issued pursuant to this paragraph and served upon any person, the district court of the United States for any district in which such person is found, resides, or transacts business, upon application by the Bureau or a Bureau investigator and after notice to such person, may issue an order requiring such person to appear and give testimony or to appear and produce documents or other material.

(3) CONTEMPT.—Any failure to obey an order of the court under this subsection may be punished by the court as a contempt thereof.

(1) IN GENERAL.—Whenever the Bureau has reason to believe that any person may be in possession, custody, or control of any documentary material or tangible things, or may have any information, relevant to a violation, the Bureau may, before the institution of any proceedings under the Federal consumer financial law, issue in writing, and cause to be served upon such person, a civil investigative demand requiring such person to—

(A) produce such documentary material for inspection and copying or reproduction in the form or medium requested by the Bureau;

(B) submit such tangible things;

H. R. 4173—645

(D) give oral testimony concerning documentary mate- rial, tangible things, or other information; or

(E) furnish any combination of such material, answers, or testimony.

(2) REQUIREMENTS.—Each civil investigative demand shall state the nature of the conduct constituting the alleged violation which is under investigation and the provision of law applicable to such violation.

(3) PRODUCTION OF DOCUMENTS.—Each civil investigative demand for the production of documentary material shall—

(A) describe each class of documentary material to be produced under the demand with such definiteness and certainty as to permit such material to be fairly identified;

(B) prescribe a return date or dates which will provide a reasonable period of time within which the material so demanded may be assembled and made available for inspection and copying or reproduction; and

(4) PRODUCTION OF THINGS.—Each civil investigative demand for the submission of tangible things shall—

(A) describe each class of tangible things to be sub- mitted under the demand with such definiteness and cer- tainty as to permit such things to be fairly identified;

(B) prescribe a return date or dates which will provide a reasonable period of time within which the things so demanded may be assembled and submitted; and

(5) DEMAND FOR WRITTEN REPORTS OR ANSWERS.—Each civil

investigative demand for written reports or answers to ques-

tions shall—

(A) propound with definiteness and certainty the

reports to be produced or the questions to be answered;

(B) prescribe a date or dates at which time written

reports or answers to questions shall be submitted; and

answers shall be submitted.

(6) ORAL TESTIMONY.—Each civil investigative demand for

the giving of oral testimony shall—

(A) prescribe a date, time, and place at which oral

testimony shall be commenced; and

(B) identify a Bureau investigator who shall conduct

the investigation and the custodian to whom the transcript

of such investigation shall be submitted.

(7) SERVICE.—Any civil investigative demand issued, and any enforcement petition filed, under this section may be served—

(A) by any Bureau investigator at any place within the territorial jurisdiction of any court of the United States; and

(B) upon any person who is not found within the terri- torial jurisdiction of any court of the United States—

(i) in such manner as the Federal Rules of Civil Procedure prescribe for service in a foreign nation; and

H. R. 4173—646

(ii) to the extent that the courts of the United States have authority to assert jurisdiction over such person, consistent with due process, the United States District Court for the District of Columbia shall have the same jurisdiction to take any action respecting compliance with this section by such person that such district court would have if such person were personally within the jurisdiction of such district court.

(8) METHOD OF SERVICE.—Service of any civil investigative demand or any enforcement petition filed under this section may be made upon a person, including any legal entity, by—

(A) delivering a duly executed copy of such demand or petition to the individual or to any partner, executive officer, managing agent, or general agent of such person, or to any agent of such person authorized by appointment or by law to receive service of process on behalf of such person;

(B) delivering a duly executed copy of such demand or petition to the principal office or place of business of the person to be served; or

(C) depositing a duly executed copy in the United States mails, by registered or certified mail, return receipt requested, duly addressed to such person at the principal office or place of business of such person.

(9) PROOF OF SERVICE.—

(A) IN GENERAL.—A verified return by the individual serving any civil investigative demand or any enforcement petition filed under this section setting forth the manner of such service shall be proof of such service.

(B) RETURN RECEIPTS.—In the case of service by reg- istered or certified mail, such return shall be accompanied by the return post office receipt of delivery of such demand or enforcement petition.

(10) PRODUCTION OF DOCUMENTARY MATERIAL.—The

production of documentary material in response to a civil inves- tigative demand shall be made under a sworn certificate, in such form as the demand designates, by the person, if a natural person, to whom the demand is directed or, if not a natural person, by any person having knowledge of the facts and cir- cumstances relating to such production, to the effect that all of the documentary material required by the demand and in the possession, custody, or control of the person to whom the demand is directed has been produced and made available to

the custodian.

(11) SUBMISSION OF TANGIBLE THINGS.—The submission of

tangible things in response to a civil investigative demand shall be made under a sworn certificate, in such form as the demand designates, by the person to whom the demand is directed or, if not a natural person, by any person having knowledge of the facts and circumstances relating to such production, to the effect that all of the tangible things required by the demand and in the possession, custody, or control of the person to whom the demand is directed have been submitted to the custodian.

(12) SEPARATE ANSWERS.—Each reporting requirement or question in a civil investigative demand shall be answered separately and fully in writing under oath, unless it is objected

H. R. 4173—647

to, in which event the reasons for the objection shall be stated in lieu of an answer, and it shall be submitted under a sworn certificate, in such form as the demand designates, by the person, if a natural person, to whom the demand is directed or, if not a natural person, by any person responsible for answering each reporting requirement or question, to the effect that all information required by the demand and in the posses- sion, custody, control, or knowledge of the person to whom the demand is directed has been submitted.

(13) TESTIMONY.—

(A) IN GENERAL.—

(i) OATH AND RECORDATION.—The examination of any person pursuant to a demand for oral testimony served under this subsection shall be taken before an officer authorized to administer oaths and affirma- tions by the laws of the United States or of the place at which the examination is held. The officer before whom oral testimony is to be taken shall put the witness on oath or affirmation and shall personally, or by any individual acting under the direction of and in the presence of the officer, record the testimony of the witness.

(ii) TRANSCRIPTION.—The testimony shall be taken stenographically and transcribed.

(iii) TRANSMISSION TO CUSTODIAN.—After the testi- mony is fully transcribed, the officer investigator before whom the testimony is taken shall promptly transmit a copy of the transcript of the testimony to the custo- dian.

(B) PARTIES PRESENT.—Any Bureau investigator before whom oral testimony is to be taken shall exclude from the place where the testimony is to be taken all other persons, except the person giving the testimony, the attorney for that person, the officer before whom the testi- mony is to be taken, an investigator or representative of an agency with which the Bureau is engaged in a joint investigation, and any stenographer taking such testimony.

(C) LOCATION.—The oral testimony of any person taken pursuant to a civil investigative demand shall be taken in the judicial district of the United States in which such person resides, is found, or transacts business, or in such other place as may be agreed upon by the Bureau investi- gator before whom the oral testimony of such person is to be taken and such person.

(D) ATTORNEY REPRESENTATION.—

(i) IN GENERAL.—Any person compelled to appear under a civil investigative demand for oral testimony pursuant to this section may be accompanied, rep- resented, and advised by an attorney.

(ii) AUTHORITY.—The attorney may advise a person described in clause (i), in confidence, either upon the request of such person or upon the initiative of the attorney, with respect to any question asked of such person.

(iii) OBJECTIONS.—A person described in clause (i), or the attorney for that person, may object on the record to any question, in whole or in part, and such

H. R. 4173—648

person shall briefly state for the record the reason for the objection. An objection may properly be made, received, and entered upon the record when it is claimed that such person is entitled to refuse to answer the question on grounds of any constitutional or other legal right or privilege, including the privilege against self-incrimination, but such person shall not otherwise object to or refuse to answer any question, and such person or attorney shall not otherwise interrupt the oral examination.

(iv) REFUSAL TO ANSWER.—If a person described in clause (i) refuses to answer any question—

(I) the Bureau may petition the district court of the United States pursuant to this section for an order compelling such person to answer such question; and

(II) if the refusal is on grounds of the privilege against self-incrimination, the testimony of such person may be compelled in accordance with the provisions of section 6004 of title 18, United States Code.

(E) TRANSCRIPTS.—For purposes of this subsection—

(i) after the testimony of any witness is fully tran-

scribed, the Bureau investigator shall afford the wit-

ness (who may be accompanied by an attorney) a

reasonable opportunity to examine the transcript;

(ii) the transcript shall be read to or by the witness,

unless such examination and reading are waived by

the witness;

(iii) any changes in form or substance which the

witness desires to make shall be entered and identified

upon the transcript by the Bureau investigator, with

a statement of the reasons given by the witness for

making such changes;

(iv) the transcript shall be signed by the witness,

unless the witness in writing waives the signing, is

ill, cannot be found, or refuses to sign; and

(v) if the transcript is not signed by the witness

during the 30-day period following the date on which

the witness is first afforded a reasonable opportunity

to examine the transcript, the Bureau investigator

shall sign the transcript and state on the record the

fact of the waiver, illness, absence of the witness, or

the refusal to sign, together with any reasons given

for the failure to sign.

(F) CERTIFICATION BY INVESTIGATOR.—The Bureau

investigator shall certify on the transcript that the witness

was duly sworn by him or her and that the transcript

is a true record of the testimony given by the witness,

and the Bureau investigator shall promptly deliver the

transcript or send it by registered or certified mail to

the custodian.

(G) COPY OF TRANSCRIPT.—The Bureau investigator

shall furnish a copy of the transcript (upon payment of

reasonable charges for the transcript) to the witness only,

except that the Bureau may for good cause limit such

H. R. 4173—649

witness to inspection of the official transcript of his testi- mony.

(H) WITNESS FEES.—Any witness appearing for the taking of oral testimony pursuant to a civil investigative demand shall be entitled to the same fees and mileage which are paid to witnesses in the district courts of the United States.

(d) CONFIDENTIAL TREATMENT OF DEMAND MATERIAL.—

(1) IN GENERAL.—Documentary materials and tangible things received as a result of a civil investigative demand shall be subject to requirements and procedures regarding con- fidentiality, in accordance with rules established by the Bureau.

(2) DISCLOSURE TO CONGRESS.—No rule established by the Bureau regarding the confidentiality of materials submitted to, or otherwise obtained by, the Bureau shall be intended to prevent disclosure to either House of Congress or to an appropriate committee of the Congress, except that the Bureau is permitted to adopt rules allowing prior notice to any party that owns or otherwise provided the material to the Bureau and had designated such material as confidential.

(e) PETITION FOR ENFORCEMENT.—

(1) IN GENERAL.—Whenever any person fails to comply with any civil investigative demand duly served upon him under this section, or whenever satisfactory copying or repro- duction of material requested pursuant to the demand cannot be accomplished and such person refuses to surrender such material, the Bureau, through such officers or attorneys as it may designate, may file, in the district court of the United States for any judicial district in which such person resides, is found, or transacts business, and serve upon such person, a petition for an order of such court for the enforcement of this section.

(2) SERVICE OF PROCESS.—All process of any court to which application may be made as provided in this subsection may be served in any judicial district.

(f) PETITION FOR ORDER MODIFYING OR SETTING ASIDE DEMAND.—

(1) IN GENERAL.—Not later than 20 days after the service of any civil investigative demand upon any person under sub- section (b), or at any time before the return date specified in the demand, whichever period is shorter, or within such period exceeding 20 days after service or in excess of such return date as may be prescribed in writing, subsequent to service, by any Bureau investigator named in the demand, such person may file with the Bureau a petition for an order by the Bureau modifying or setting aside the demand.

(2) COMPLIANCE DURING PENDENCY.—The time permitted for compliance with the demand in whole or in part, as deter- mined proper and ordered by the Bureau, shall not run during the pendency of a petition under paragraph (1) at the Bureau, except that such person shall comply with any portions of the demand not sought to be modified or set aside.

(3) SPECIFIC GROUNDS.—A petition under paragraph (1) shall specify each ground upon which the petitioner relies in seeking relief, and may be based upon any failure of the demand to comply with the provisions of this section, or upon any constitutional or other legal right or privilege of such person.

H. R. 4173—650

(g)

CUSTODIAL CONTROL.—At any time during which any custo- dian is in custody or control of any documentary material, tangible things, reports, answers to questions, or transcripts of oral testi- mony given by any person in compliance with any civil investigative demand, such person may file, in the district court of the United States for the judicial district within which the office of such custo- dian is situated, and serve upon such custodian, a petition for an order of such court requiring the performance by such custodian of any duty imposed upon him by this section or rule promulgated by the Bureau.

(h) JURISDICTION OF COURT.—

(1) IN GENERAL.—Whenever any petition is filed in any district court of the United States under this section, such court shall have jurisdiction to hear and determine the matter so presented, and to enter such order or orders as may be required to carry out the provisions of this section.

(2) APPEAL.—Any final order entered as described in para- graph (1) shall be subject to appeal pursuant to section 1291 of title 28, United States Code.

SEC. 1053. HEARINGS AND ADJUDICATION PROCEEDINGS.

(a) IN GENERAL.—The Bureau is authorized to conduct hearings and adjudication proceedings with respect to any person in the manner prescribed by chapter 5 of title 5, United States Code in order to ensure or enforce compliance with—

(1) the provisions of this title, including any rules pre- scribed by the Bureau under this title; and

(2) any other Federal law that the Bureau is authorized to enforce, including an enumerated consumer law, and any regulations or order prescribed thereunder, unless such Federal law specifically limits the Bureau from conducting a hearing or adjudication proceeding and only to the extent of such limita- tion.

(b) SPECIAL RULES FOR CEASE-AND-DESIST PROCEEDINGS.—

(1) ORDERS AUTHORIZED.—

(A) IN GENERAL.—If, in the opinion of the Bureau, any covered person or service provider is engaging or has engaged in an activity that violates a law, rule, or any condition imposed in writing on the person by the Bureau, the Bureau may, subject to sections 1024, 1025, and 1026, issue and serve upon the covered person or service provider a notice of charges in respect thereof.

(B) CONTENT OF NOTICE.—The notice under subpara- graph (A) shall contain a statement of the facts constituting the alleged violation or violations, and shall fix a time and place at which a hearing will be held to determine whether an order to cease and desist should issue against the covered person or service provider, such hearing to be held not earlier than 30 days nor later than 60 days after the date of service of such notice, unless an earlier or a later date is set by the Bureau, at the request of any party so served.

(C) CONSENT.—Unless the party or parties served under subparagraph (B) appear at the hearing personally or by a duly authorized representative, such person shall be deemed to have consented to the issuance of the cease- and-desist order.

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