Text: H.R.2660 — 111th Congress (2009-2010)All Information (Except Text)

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Introduced in House (06/02/2009)


111th CONGRESS
1st Session
H. R. 2660


To amend the Federal Deposit Insurance Act to require the appropriate Federal banking agencies to prescribe capital standards for certain special purpose entities.


IN THE HOUSE OF REPRESENTATIVES

June 2, 2009

Mr. Ellison introduced the following bill; which was referred to the Committee on Financial Services


A BILL

To amend the Federal Deposit Insurance Act to require the appropriate Federal banking agencies to prescribe capital standards for certain special purpose entities.

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

SECTION 1. Short title.

This Act may be cited as the “Regulatory Capital Enhancement Act of 2009”.

SEC. 2. Regulation of Special purpose entities.

The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by inserting after section 38 the following new section:

“SEC. 38A Capital standards for certain special purpose entities.

“(a) In general.—Each appropriate Federal banking agency shall prescribe capital standards, including a leverage limit and a risk-based capital requirement, for special purpose entities, or similar types of vehicles or entities, that are sponsored by insured depository institutions regulated by such agency. Such capital standards shall conform, to the extent practicable, with the capital standards prescribed for such institution under section 38(c).

“(b) Additional measures.—An appropriate Federal banking agency may, by regulation, establish any additional relevant capital measures for special purpose entities, or similar types of vehicles or entities, that are sponsored by insured depository institutions that such agency determines necessary to guard against the risk that such special purpose entities, or similar types of vehicles or entities, become undercapitalized.

“(c) Determination of sponsorship.—For purposes of subsection (a), a special purpose entity, or similar type of vehicle or entity, is sponsored by an insured depository institution if the finances of the special purpose entity, or similar type of vehicle or entity, and the insured depository institution are intertwined such that the failure of the special purpose entity, or similar type of vehicle or entity, would have a significant impact on the insured depository institution.

“(d) Special purpose entity defined.—The appropriate Federal banking agencies shall jointly define the term ‘special purpose entity’ for purposes of this section. In defining such term, the appropriate Federal banking agencies shall focus on trusts and other legal entities established by or for an insured depository institution to fulfill narrow, specific, or temporary objectives, including—

“(1) the holding of financial assets transferred during a securitization process;

“(2) issuing applicable securities representing claims on such assets;

“(3) receiving and reinvesting cash flows from such assets; and

“(4) distributing proceeds to holders of the securities.”.