Eliminating Corporate Shadow Banking Act of 2019

#2839 | S Congress #116

Last Action: Committee on Banking, Housing, and Urban Affairs. Hearings held. (12/5/2019)

Bill Text Source: Congress.gov

Summary and Impacts
Original Text

Bill Summary

The "Eliminating Corporate Shadow Banking Act" amends the Bank Holding Company Act of 1956 to regulate industrial bank holding companies and their activities. It defines terms, outlines requirements for registration and ownership, and addresses reporting, examinations, and capital requirements. It also discusses licensing requirements for insurance agents, limitations on control, and administrative provisions. The Board of Governors of the Federal Reserve System is responsible for prescribing regulations to carry out these amendments. Additionally, the act prohibits foreign banks from acquiring control of an industrial bank.

Possible Impacts


1. People working as insurance agents for industrial bank holding companies will be affected by the new licensing requirements outlined in the legislation.
2. Individuals who own or are considering investing in industrial bank holding companies will need to comply with the new registration and ownership requirements.
3. Foreign banks will no longer be able to acquire control of industrial banks, impacting their ability to expand their financial operations in the United States.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2839 Introduced in Senate (IS)]

<DOC>






116th CONGRESS
  1st Session
                                S. 2839

 To amend the Bank Holding Company Act of 1956 to regulate industrial 
            bank holding companies, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 12, 2019

  Mr. Kennedy introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
 To amend the Bank Holding Company Act of 1956 to regulate industrial 
            bank holding companies, and for other purposes.

    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 ``Eliminating Corporate Shadow Banking 
Act of 2019''.

SEC. 2. INDUSTRIAL BANK HOLDING COMPANY REGULATION.

    (a) Definitions.--Section 2 of the Bank Holding Company Act of 1956 
(12 U.S.C. 1841) is amended--
            (1) in subsection (c)(2), by redesignating subparagraph (H) 
        as subsection (r), moving that subsection to appear after 
        subsection (q), and adjusting the margins accordingly;
            (2) in subsection (r), as so redesignated--
                    (A) by striking ``(r) An industrial'' and inserting 
                the following:
    ``(r) Industrial Bank.--The term `industrial bank' means an 
industrial''; and
                    (B) in the flush text following subparagraph (B), 
                by striking ``subparagraph'' and inserting 
                ``subsection''; and
            (3) by adding at the end the following:
    ``(s) Covered Industrial Bank Holding Company.--The term `covered 
industrial bank holding company' means any company--
            ``(1) that, before October 1, 2019, controlled (as 
        determined by the Board pursuant to subsection (a)), directly 
        or indirectly, an industrial bank;
            ``(2) that did not acquire control of any other depository 
        institution after October 1, 2019;
            ``(3) with respect to which there is no change in control, 
        directly or indirectly, of any depository institution 
        subsidiary after October 1, 2019, that requires a registration 
        under this section or an application under section 7(j) or 
        18(c) of the Federal Deposit Insurance Act (12 U.S.C. 1817(j), 
        1828(c)), section 3 of this Act, or section 10 of the Home 
        Owners' Loan Act (12 U.S.C. 1467a); and
            ``(4) that was not--
                    ``(A) a bank holding company;
                    ``(B) a savings and loan holding company;
                    ``(C) a company that is subject to this Act 
                pursuant to section 8(a) of the International Banking 
                Act of 1978 (12 U.S.C. 3106(a));
                    ``(D) a holding company regulated by the Securities 
                and Exchange Commission pursuant to section 240.15c3-
                1(a)(7) of title 17, Code of Federal Regulations, as in 
                effect on August 1, 2019; or
                    ``(E) controlled by a company described in 
                subparagraph (A), (B), (C), or (D).
    ``(t) Capital Terms Relating to Covered Industrial Bank Holding 
Companies.--
            ``(1) Adequately capitalized.--With respect to a covered 
        industrial bank holding company, the term `adequately 
        capitalized' means a level of capitalization which meets or 
        exceeds all applicable Federal regulatory capital standards.
            ``(2) Well capitalized.--With respect to a covered 
        industrial bank holding company, the term `well capitalized' 
        means a level of capitalization which meets or exceeds the 
        required capital levels for well capitalized covered industrial 
        bank holding companies established by the Board.''.
    (b) Covered Industrial Bank Holding Company Registration and 
Ownership.--The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et 
seq.) is amended by adding at the end the following:

``SEC. 15. INDUSTRIAL BANK HOLDING COMPANY REGULATION.

    ``(a) Acquisition of Industrial Bank Shares or Assets.--Section 3 
of this Act (other than section 3(c)(3)(B)) shall apply to any covered 
industrial bank holding company in the same manner as that section 
applies to a company that is or would become a bank holding company, 
except that for purposes of applying this subsection--
            ``(1) any reference to a `bank holding company' in such 
        section 3 shall be deemed to be a reference to a `covered 
        industrial bank holding company';
            ``(2) any reference to a `bank' in such section 3 shall be 
        deemed to be a reference to an `industrial bank';
            ``(3) any reference to the `Bank Holding Company Act 
        Amendments of 1970' in such section 3 shall be deemed to be a 
        reference to the `Industrial Bank Holding Company Act of 2019';
            ``(4) any reference to a `home State' in such section 3 
        shall be deemed to be a reference to--
                    ``(A) with respect to a covered industrial bank 
                holding company, the State in which the total deposits 
                of all banking subsidiaries of such company were the 
                largest on the later of--
                            ``(i) October 1, 2019; or
                            ``(ii) the date on which the company 
                        becomes a covered industrial bank holding 
                        company under this section; and
                    ``(B) with respect to an industrial bank, the home 
                State of the bank as determined under section 44(g) of 
                the Federal Deposit Insurance Act (12 U.S.C. 1831u(g));
            ``(5) any reference to a `host State' in such section 3 
        shall be deemed to be a reference to--
                    ``(A) with respect to a covered industrial bank 
                holding company, a State, other than the home State of 
                the company, in which the company controls, or seeks to 
                control, an industrial bank subsidiary; and
                    ``(B) with respect to an industrial bank, the host 
                State of the bank as determined under section 44(g) of 
                the Federal Deposit Insurance Act (12 U.S.C. 1831u(g));
            ``(6) any reference to an `out-of-State bank holding 
        company' in such section 3 shall be deemed to be a reference 
        to, with respect to any State, a covered industrial bank 
        holding company whose home State is another State; and
            ``(7) any reference to an `out-of-State bank' in such 
        section 3 shall be deemed to be a reference to, with respect to 
        any State, an industrial bank whose home State is another 
        State.
    ``(b) Application Process.--An application filed under subsection 
(a) to acquire control of an industrial bank shall be treated as an 
application for a deposit facility for purposes of this Act and any 
other Federal law.
    ``(c) Registration.--
            ``(1) In general.--Each covered industrial bank holding 
        company shall register with the Board on forms prescribed by 
        the Board before the end of the 180-day period beginning on the 
        later of--
                    ``(A) the date the company becomes a covered 
                industrial bank holding company; or
                    ``(B) the date of enactment of this section.
            ``(2) Information to be included.--Each registration 
        submitted under paragraph (1) shall include such information, 
        under oath, with respect to the financial condition, ownership, 
        operations, management, and intercompany relationships of the 
        covered industrial bank holding company and subsidiaries of the 
        covered industrial bank holding company, and other factors 
        (including information described in subsection (d)(1)(C)), as 
        the Board may determine to be appropriate to carry out the 
        purposes of this section.
            ``(3) Extension of time for submitting complete 
        information.--Upon application by a covered industrial bank 
        holding company and subject to such requirements, factors, and 
        evidence as the Board may require, the Board may extend the 
        period described in paragraph (1) within which the covered 
        industrial bank company shall register and file the requisite 
        information.
    ``(d) Reports and Examinations.--
            ``(1) Reports.--
                    ``(A) Reports required.--Each covered industrial 
                bank holding company and each subsidiary of a covered 
                industrial bank holding company, other than an 
                industrial bank, shall file with the Board such reports 
                as may be required by the Board.
                    ``(B) Form and manner.--Reports filed under 
                subparagraph (A) shall be made under oath and shall be 
                in such form and for such periods as the Board may 
                prescribe.
                    ``(C) Information.--Each report filed under 
                subparagraph (A) shall contain such information as the 
                Board may require concerning--
                            ``(i) the operations of the covered 
                        industrial bank holding company and the 
                        subsidiaries of the covered industrial bank 
                        holding company;
                            ``(ii) the financial condition of the 
                        covered industrial bank holding company and the 
                        subsidiaries of the covered industrial bank 
                        holding company, together with information on 
                        systems maintained within the covered 
                        industrial bank holding company or within any 
                        subsidiary of the covered industrial bank 
                        holding company for monitoring and controlling 
                        financial and operating risks, and transactions 
                        with insured depository institution 
                        subsidiaries of the covered industrial bank 
                        holding company;
                            ``(iii) compliance by the covered 
                        industrial bank holding company and the 
                        subsidiaries of the covered industrial bank 
                        holding company with all applicable Federal and 
                        State laws; and
                            ``(iv) such other information as the Board 
                        may require.
                    ``(D) Acceptance of existing reports.--For purposes 
                of this paragraph, the Board may accept reports that a 
                covered industrial bank holding company or any 
                subsidiary of a covered industrial bank holding company 
                has provided or has been required to provide to any 
                other Federal or State supervisor or to any appropriate 
                self-regulatory organization.
            ``(2) Examinations.--
                    ``(A) In general.--Each covered industrial bank 
                holding company and each subsidiary of each covered 
                industrial bank holding company (other than an 
                industrial bank) shall be subject to such examinations 
                by the Board as the Board may prescribe for purposes of 
                this section.
                    ``(B) Furnishing reports to other agencies.--
                Examination and other reports made or received under 
                this section may be furnished by the Board to any other 
                appropriate Federal agency or any appropriate State 
                bank supervisor or other State financial supervisory 
                agency.
                    ``(C) Use of reports from other agencies.--The 
                Board may use, for purposes of this subsection, reports 
                of examination made by any other appropriate Federal 
                agency, any appropriate State bank supervisor, or any 
                other State financial supervisory authority with 
                respect to any covered industrial bank holding company 
                or subsidiary of the covered industrial bank holding 
                company, to the extent the Board may determine such use 
                to be feasible for such purposes.
            ``(3) Capital.--
                    ``(A) In general.--The Board may not, by 
                regulation, guideline, order, or otherwise, prescribe 
                or impose any capital or capital adequacy rules, 
                guidelines, standards, or requirements on any 
                functionally regulated affiliate (as defined in section 
                45 of the Federal Deposit Insurance Act (12 U.S.C. 
                1831v)) of any depository institution that is 
                controlled by a covered industrial bank holding company 
                that--
                            ``(i) is not a depository institution; and
                            ``(ii) is--
                                    ``(I) in compliance with the 
                                applicable capital requirements of the 
                                appropriate Federal or State 
                                supervisory agency of the affiliate 
                                (including the Securities and Exchange 
                                Commission or State insurance 
                                authority);
                                    ``(II) properly registered as an 
                                investment adviser--
                                            ``(aa) under the Investment 
                                        Advisers Act of 1940 (15 U.S.C. 
                                        80b-1 et seq.); or
                                            ``(bb) with any State; or
                                    ``(III) is licensed as an insurance 
                                agent with the appropriate State 
                                insurance authority.
                    ``(B) Rule of construction.--Subparagraph (A) shall 
                not be construed as preventing the Board from imposing 
                capital or capital adequacy rules, guidelines, 
                standards, or requirements with respect to--
                            ``(i) activities of a registered investment 
                        adviser other than with respect to investment 
                        advisory activities or activities incidental to 
                        investment advisory activities; or
                            ``(ii) activities of a licensed insurance 
                        agent other than insurance agency activities or 
                        activities incidental to insurance agency 
                        activities.
    ``(e) Access to Information.--
            ``(1) Information provided by board.--Any confidential 
        supervisory information, including examination or other 
        reports, pertaining to a covered industrial bank holding 
        company furnished by the Board to any other Federal agency or 
        any appropriate State supervisory agency shall remain 
        confidential unless the Board, in writing, otherwise consents.
            ``(2) Deference to depository institution examinations.--
        Any appropriate Federal supervisory agency of a covered 
        industrial bank holding company shall, to the fullest extent 
        possible, rely on examination reports made by the appropriate 
        Federal banking agency and the appropriate State bank 
        supervisor relating to any depository institution subsidiary of 
        the covered industrial bank holding company in lieu of a direct 
        examination.
            ``(3) Information to be provided to board.--
                    ``(A) Request to agency.--Upon request by the 
                Board, an appropriate Federal supervisory agency may 
                provide to the Board information regarding the 
                condition of an industrial bank, any covered industrial 
                bank holding company of the industrial bank, or any 
                other affiliate of any such covered industrial bank 
                holding company that is necessary to assess risk to the 
                industrial bank.
                    ``(B) Availability from holding company directly.--
                Notwithstanding section 45 of the Federal Deposit 
                Insurance Act (12 U.S.C. 1825), section 115 of the 
                Gramm-Leach-Bliley Act (12 U.S.C. 1820a), or any other 
                provision of law (including any regulation), if the 
                information requested under subparagraph (A) is not 
                provided to the Board, and the information is necessary 
                to assess risk to the industrial bank, the Board may 
                require the covered industrial bank holding company or 
                affiliate thereof referred to in such subparagraph with 
                respect to such industrial bank to provide such 
                information to the Board.
            ``(4) Examinations by board.--
                    ``(A) In general.--Subject to subparagraph (B) and 
                notwithstanding section 45 of the Federal Deposit 
                Insurance Act (12 U.S.C. 1831v), section 115 of the 
                Gramm-Leach-Bliley Act (12 U.S.C. 1820a), or any other 
                provision of law (including any regulation), no law 
                shall be construed as preventing the Board from 
                examining an affiliate of an industrial bank as may be 
                necessary to disclose fully the relationship between 
                the industrial bank and the affiliate, and the effect 
                of such relationship on the industrial bank, if the 
                Board finds such examination necessary to determine the 
                condition of an industrial bank.
                    ``(B) Functionally regulated affiliates.--Before 
                the Board may examine any affiliate of an industrial 
                bank that is a broker, a dealer, an investment company, 
                an investment advisor, or an entity that is subject to 
                consolidated supervision by the Securities and Exchange 
                Commission, other than a depository institution, the 
                Board--
                            ``(i) shall request the Commission to 
                        provide the information that the Board is 
                        seeking to obtain through examination; and
                            ``(ii) may proceed with the examination 
                        only if the requested information is not 
                        provided by the Commission in a timely manner.
    ``(f) Limitation on Control.--
            ``(1) In general.--Except as provided in paragraph (3) or 
        (4), no industrial bank may be controlled, directly or 
        indirectly, by a commercial firm.
            ``(2) Commercial firm defined.--For purposes of this 
        section, the term `commercial firm' means any entity that 
        derives any amount of revenue from activities that are not 
        financial in nature, or incidental to a financial activity as 
        defined in section 4(k).
            ``(3) Pre-2019 exclusions for certain industrial banks.--
                    ``(A) Grandfathered institutions.--Paragraph (1) 
                shall not apply with respect to any industrial bank--
                            ``(i) that became an insured depository 
                        institution before October 1, 2019, or pursuant 
                        to an application for deposit insurance that 
                        was approved by the Federal Deposit Insurance 
                        Corporation before such date; and
                            ``(ii) with respect to which there is no 
                        change in control, directly or indirectly, of 
                        the bank after September 30, 2019, that 
                        requires a registration under this section or 
                        an application under section 7(j) or 18(c) of 
                        the Federal Deposit Insurance Act (12 U.S.C. 
                        1817(j), 1828(c)), section 3 of this Act, or 
                        section 10 of the Home Owners' Loan Act (12 
                        U.S.C. 1467a), except a direct or indirect 
                        change of control in which--
                                    ``(I) immediately prior to such 
                                change in control the acquiring company 
                                is a bank holding company, a financial 
                                holding company, a savings and loan 
                                holding company, or a holding company 
                                regulated by the Securities and 
                                Exchange Commission pursuant to section 
                                240.15c3-1(a)(7) of title 17, Code of 
                                Federal Regulations, as in effect on 
                                August 1, 2019;
                                    ``(II) the resulting holding 
                                company is a bank holding company, a 
                                financial holding company, a savings 
                                and loan holding company, or a holding 
                                company regulated by the Securities and 
                                Exchange Commission pursuant to section 
                                240.15c3-1(a)(7) of title 17, Code of 
                                Federal Regulations, as in effect on 
                                October 1, 2019; and
                                    ``(III) the resulting ultimate 
                                holding company is subject to 
                                consolidated supervision by the Board 
                                or a holding company regulated by the 
                                Securities and Exchange Commission 
                                pursuant to section 240.15c3-1(a)(7) of 
                                title 17, Code of Federal Regulations, 
                                as in effect on October 1, 2019.
                    ``(B) Corporate reorganizations permitted.--The 
                acquisition of direct or indirect control of an 
                industrial bank referred to in subparagraph (A)(ii) 
                shall not be treated as a `change in control' for 
                purposes of that subparagraph if--
                            ``(i) the company acquiring control is 
                        itself directly or indirectly controlled by a 
                        company that was an affiliate of the industrial 
                        bank on the date referred to in that 
                        subparagraph, and remains an affiliate at all 
                        times after that date; and
                            ``(ii) the transaction through which the 
                        company acquired control of the industrial bank 
                        constituted solely a corporate reorganization 
                        of a company that controlled the industrial 
                        bank on the date referred to in that 
                        subparagraph.
            ``(4) Pre-2019 exclusions for commercial firms.--
                    ``(A) Grandfathered commercial firms.--Paragraph 
                (1) shall not apply to any commercial firm--
                            ``(i) that became a covered industrial bank 
                        holding company by virtue of acquiring control 
                        of an industrial bank before October 1, 2019;
                            ``(ii) that did not acquire control of any 
                        other depository institution after October 1, 
                        2019;
                            ``(iii) with respect to which there is no 
                        change in control, directly or indirectly, of 
                        any depository institution subsidiary after 
                        October 1, 2019, that requires a registration 
                        under this section or an application under 
                        section 7(j) or 18(c) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1817(j), 1828(c)), 
                        section 3 of this Act, or section 10 of the 
                        Home Owners' Loan Act (12 U.S.C. 1467a); and
                            ``(iv) each industrial bank subsidiary of 
                        which remains in compliance with the 
                        limitations contained in subparagraph (B).
                    ``(B) Activity and branching limitations.--An 
                industrial bank subsidiary of a commercial firm 
                described in clauses (i), (ii), and (iii) of 
                subparagraph (A) is in compliance with the requirements 
                of this subparagraph for purposes of subparagraph 
                (A)(iv) if the industrial bank--
                            ``(i) engages only in activities in which 
                        the industrial bank was engaged on October 1, 
                        2019; and
                            ``(ii) does not acquire, establish, or 
                        operate any branch, deposit production office, 
                        loan production office, automated teller 
                        machine, or remote service unit in any State 
                        other than the home State of the bank or any 
                        host State in which such bank operated branches 
                        on October 1, 2019.
                    ``(C) Corporate reorganizations permitted.--The 
                acquisition of direct or indirect control of a 
                depository institution subsidiary referred to in 
                subparagraph (A)(iii) shall not be treated as a `change 
                in control' for purposes of that subparagraph if--
                            ``(i) the company acquiring control is 
                        itself directly or indirectly controlled by a 
                        company that was an affiliate of such 
                        subsidiary on the date referred to in that 
                        subparagraph, and remains an affiliate at all 
                        times after that date; and
                            ``(ii) the transaction through which the 
                        company acquired control of the depository 
                        institution constituted solely a corporate 
                        reorganization of a company that controlled the 
                        depository institution on the date referred to 
                        in that subparagraph.
    ``(g) Procedures and Timing for Termination of Activities or 
Divestiture.--
            ``(1) Transition provision.--
                    ``(A) In general.--Any covered industrial bank 
                holding company that fails to comply with the 
                provisions of subsection (f) shall divest its ownership 
                or control of each industrial bank subsidiary of the 
                covered industrial bank holding company not later than 
                the end of the 2-year period beginning on the first 
                date that the covered industrial bank holding company 
                ceased to comply with subsection (f).
                    ``(B) Extension of time period.--
                            ``(i) In general.--Upon application by a 
                        covered industrial bank holding company, the 
                        appropriate Federal supervisory agency of the 
                        covered industrial bank holding company may 
                        extend the 2-year period referred to in 
                        subparagraph (A) with respect to the covered 
                        industrial bank holding company for not more 
                        than 1 year if, in the judgment of the Federal 
                        supervisory agency, the extension would not be 
                        detrimental to the public interest.
                            ``(ii) Factors.--In making any decision to 
                        grant an extension under clause (i) to a 
                        covered industrial bank holding company, the 
                        appropriate Federal supervisory agency of the 
                        covered industrial bank holding company shall 
                        consider whether--
                                    ``(I) the covered industrial bank 
                                holding company has made a good faith 
                                effort to divest those interests; and
                                    ``(II) such extension is necessary 
                                to avert substantial loss to the 
                                covered industrial bank holding 
                                company.
            ``(2) Conditions before divestiture.--During the 2-year 
        period referred to in paragraph (1)(A) with respect to any 
        covered industrial bank holding company and any extension of 
        that period, the appropriate Federal supervisory agency may 
        impose any conditions or restrictions on the covered industrial 
        bank holding company or any subsidiary of the covered 
        industrial bank holding company (other than a bank), including 
        restricting or prohibiting transactions between the covered 
        industrial bank holding company or subsidiary and any 
        depository institution subsidiary of the covered industrial 
        bank holding company, as are appropriate under the 
        circumstances.
            ``(3) Termination of activities or divestiture of nonbank 
        subsidiaries constituting serious risk.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this section, the appropriate Federal 
                supervisory agency may, whenever such agency has 
                reasonable cause to believe that the continuation by a 
                covered industrial bank holding company of any activity 
                or of ownership or control of any nonbank subsidiary of 
                the covered industrial bank holding company, other than 
                a nonbank subsidiary of a depository institution, 
                constitutes a serious risk to the financial safety, 
                soundness, or stability of a depository institution 
                subsidiary of the covered industrial bank holding 
                company and is inconsistent with sound banking 
                principles or with the purposes of this section, at the 
                election of the covered industrial bank holding 
                company--
                            ``(i) order the covered industrial bank 
                        holding company or any nonbank subsidiary of 
                        the covered industrial bank holding company, 
                        after due notice and opportunity for hearing, 
                        and after considering the views of the 
                        appropriate Federal banking agency and, if 
                        applicable, appropriate State bank supervisor, 
                        to terminate those activities or to terminate 
                        (within 120 days or such longer period as the 
                        appropriate Federal supervisory agency may 
                        direct in unusual circumstances) the ownership 
                        or control by the covered industrial bank 
                        holding company or nonbank subsidiary of the 
                        depository institution subsidiary either by 
                        sale or by distribution of the shares of the 
                        depository institution subsidiary, in 
                        accordance with subparagraph (B), to the 
                        shareholders of the covered industrial bank 
                        holding company; or
                            ``(ii) order the covered industrial bank 
                        holding company, after due notice and 
                        opportunity for hearing, and after consultation 
                        with the appropriate State bank supervisor for 
                        the industrial bank controlled by the covered 
                        industrial bank holding company, to terminate 
                        (within 120 days or such longer period as the 
                        appropriate Federal supervisory agency may 
                        direct) the ownership or control of any such 
                        industrial bank by the covered industrial bank 
                        holding company.
                    ``(B) Pro rata distribution.--Any distribution to 
                shareholders referred to in clause (i) shall be pro 
                rata with respect to all of the shareholders of the 
                distributing covered industrial bank holding company, 
                and the distributing covered industrial bank holding 
                company shall not make any charge to any shareholder in 
                connection with that distribution.
            ``(4) Holding company responsibility.--
                    ``(A) Source of strength.--Notwithstanding section 
                45 of the Federal Deposit Insurance Act (12 U.S.C. 
                1831v), a covered industrial bank holding company--
                            ``(i) shall serve as a source of financial 
                        and managerial strength to the subsidiary banks 
                        of the covered industrial bank holding company 
                        in the same manner as required under section 
                        38A of the Federal Deposit Insurance Act (12 
                        U.S.C. 1831o-1); and
                            ``(ii) shall not conduct the operations of 
                        the covered industrial bank holding company in 
                        an unsafe or unsound manner.
                    ``(B) Implementation.--The appropriate Federal 
                supervisory agency of a covered industrial bank holding 
                company shall implement the requirements under 
                subparagraph (A) with respect to that industrial bank 
                holding company.
    ``(h) Foreign Bank Ownership.--After October 1, 2019, no foreign 
bank may acquire, directly or indirectly, control of an industrial 
bank.
    ``(i) Administrative Provisions.--
            ``(1) Agent for service of process.--The Board may require 
        any covered industrial bank holding company, or persons 
        connected with the covered industrial bank holding company if 
        it is not a corporation, to execute and file a prescribed form 
        of irrevocable appointment of agent for service of process.
            ``(2) Release from registration.--The Board may at any 
        time, upon a motion by the Board or upon application, release a 
        registered covered industrial bank holding company from any 
        registration previously made by the covered industrial bank 
        holding company, if the Board determines that the covered 
        industrial bank holding company no longer controls any 
        industrial bank.
    ``(j) Definition.--In this section:
            ``(1) Appropriate federal supervisory agency.--The term 
        `appropriate Federal supervisory agency' means, with respect to 
        a company that controls an industrial bank--
                    ``(A) the Board, in the case of a company that is a 
                bank holding company, a company that is a covered 
                industrial bank holding company, a company that is a 
                savings and loan holding company, or a company that is 
                subject to this Act pursuant to section 8(a) of the 
                International Banking Act of 1978 (12 U.S.C. 3106(a)); 
                or
                    ``(B) the Securities and Exchange Commission, in 
                the case of a company that is regulated by the 
                Commission pursuant to section 240.15c3-1(a)(7) of 
                title 17, Code of Federal Regulations, as in effect on 
                August 1, 2019.
            ``(2) Rule of construction.--Under the definition of the 
        term `appropriate Federal supervisory agency' in paragraph (1), 
        more than 1 agency may be an appropriate Federal supervisory 
        agency with respect to any given company that controls an 
        industrial bank.''.
    (c) Enforcement.--Section 8 of the Federal Deposit Insurance Act 
(12 U.S.C. 1818) is amended--
            (1) in subsection (b), by adding at the end the following:
            ``(11) Industrial bank holding companies.--This subsection 
        and subsections (c) through (s) and subsection (u) of this 
        section shall apply to any covered industrial bank holding 
        company and to any subsidiary (other than a depository 
        institution) of a covered industrial bank holding company in 
        the same manner as those subsections apply to State nonmember 
        insured banks.'';
            (2) in subsection (h)(2), by striking ``Any party to'' and 
        inserting ``Any party aggrieved by an order of any appropriate 
        Federal supervisory agency under section 15 of the Bank Holding 
        Company Act of 1956 or any party to''; and
            (3) in subsection (i), by striking ``or 39'' each place 
        that term appears and inserting ``, 39, or section 15 of the 
        Bank Holding Company Act of 1956''.
    (d) Prompt Corrective Action.--Section 38(f)(2)(H) of the Federal 
Deposit Insurance Act (12 U.S.C. 1831o(f)(2)(H)) is amended--
            (1) in the subparagraph heading, by inserting ``or 
        industrial bank holding company'' after ``company'';
            (2) by striking ``Prohibiting any bank'' and inserting the 
        following:
                            ``(i) Bank holding company.--Prohibiting 
                        any bank''; and
            (3) by adding at the end the following:
                            ``(ii) Industrial bank holding company.--
                        Prohibiting any covered industrial bank holding 
                        company having control of the insured 
                        depository institution from making any capital 
                        distribution without the prior approval of the 
                        Board.''.
    (e) Technical and Conforming Amendments.--
            (1) Bank holding company act of 1956.--Section 14(a)(2) of 
        the Bank Holding Company Act of 1956 (12 U.S.C. 1852(a)(2)) is 
        amended--
                    (A) in subparagraph (E), by striking ``and'' at the 
                end; and
                    (B) by inserting after subparagraph (F) the 
                following:
                    ``(G) a covered industrial bank holding company; 
                and''.
            (2) Federal deposit insurance act.--Section 3 of the 
        Federal Deposit Insurance Act (12 U.S.C. 1813) is amended--
                    (A) in subsection (a), by adding at the end the 
                following:
            ``(4) Industrial bank.--The term `industrial bank' has the 
        meaning given the term in section 2 of the Bank Holding Company 
        Act of 1956 (12 U.S.C. 1841).'';
                    (B) in subsection (q)(3)--
                            (i) in subparagraph (F), by striking 
                        ``and'' at the end;
                            (ii) in subparagraph (G), by striking the 
                        period and inserting ``; and''; and
                            (iii) by inserting after subparagraph (G) 
                        the following:
                    ``(H) any covered industrial bank holding company, 
                and any subsidiary of an industrial bank holding 
                company (other than a depository institution).''; and
                    (C) in subsection (w)--
                            (i) in paragraph (1), by striking ``or a 
                        savings and loan holding company'' and 
                        inserting ``, a savings and loan holding 
                        company, or a covered industrial bank holding 
                        company''; and
                            (ii) by adding at the end the following:
            ``(8) Covered industrial bank holding company.--The term 
        `covered industrial bank holding company' has the meaning given 
        the term in section 2 of the Bank Holding Company Act of 1956 
        (12 U.S.C. 1841).''.
            (3) Gramm-leach bliley act.--Section 115 of the Gramm-
        Leach-Bliley Act (12 U.S.C. 1820a) is amended--
                    (A) in subsection (a), by striking ``or'' after 
                ``bank holding company'' and inserting ``, covered 
                industrial bank holding company, or''; and
                    (B) in subsection (d)--
                            (i) by redesignating paragraphs (5), (6), 
                        and (7) as paragraphs (6), (7), and (8), 
                        respectively; and
                            (ii) by inserting after paragraph (4) the 
                        following:
            ``(5) Covered industrial bank holding company.--The term 
        `covered industrial bank holding company' has the meaning given 
        the term in section 2 of the Bank Holding Company Act of 1956 
        (12 U.S.C. 1841).''.
            (4) Home mortgage disclosure act of 1975.--Section 
        304(g)(1) of the Home Mortgage Disclosure Act of 1975 (12 
        U.S.C. 2803(g)(1)) is amended by inserting ``, covered 
        industrial bank holding company (as defined in section 2 of the 
        Bank Holding Company Act of 1956 (12 U.S.C. 1841),'' after 
        ``bank holding company''.
            (5) Right to financial privacy act of 1978.--Section 
        1101(6) of the Right to Financial Privacy Act of 1978 (12 
        U.S.C. 3401(6)) is amended--
                    (A) in subparagraph (A), by striking ``and'' at the 
                end; and
                    (B) by adding at the end the following:
                    ``(C) any covered industrial bank holding company 
                (as defined in section 2 of the Bank Holding Company 
                Act of 1956 (12 U.S.C. 1841)); and''.

SEC. 3. REGULATIONS.

    The Board of Governors of the Federal Reserve System shall 
prescribe such regulations as the Board determines to be appropriate to 
carry out the amendments made by this Act.
                                 <all>