,,ii  #aaith ,,congress  #b;d ,session  
,s4 #cgcd  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,january #bi1  
#bjbf,mr4 ,kennedy 7for himself and ,mr4
 ,kim7 introduced the following bill2   
which was read twice and referred to the
 ,committee on ,banking1 ,housing1 and  
,urban ,affairs  ,a ,,bill  ,to address 
applications for deposit insurance      
submitted by industrial banks to the    
,federal ,deposit ,insurance            
,corporation1 and for other purposes4   
#a4 ,short title ,this ,act may be cited
 as the ,close the ,shadow ,banking     
,loophole ,act4  #b4 ,industrial banks  
7a7 ,definitions ,in this section3 7#a7 
,appropriate ,federal banking agency    
,the term appropriate ,federal banking  
agency has the meaning given the term in
 section #c7q7 of the ,federal ,deposit 
,insurance ,act 7#ab ,u4,s4,c4          
#ahac7q774  7#b7 ,corporation ,the term 
,corporation means the ,federal ,deposit
 ,insurance ,corporation4  7#c7         
,industrial bank ,the term industrial   

bank means an entity described in       
section #b7;c77#b77;,h7 of the ,bank    
,holding ,company ,act of #aief 7#ab    
,u4,s4,c4 #ahda7;c77#b77;,h771 as in    
effect on the day before the date of    
enactment of this ,act4  7b7 ,exception 
from definition of bank ,section        
#b7;c77#b77;,h7 of the ,bank ,holding   
,company ,act of #aief 7#ab ,u4,s4,c4   
#ahda7;c77#b77;,h77 is amended1 in the  
matter preceding clause 7i71 by         
inserting after similar institution the 
following3 which has been approved to   
receive deposit insurance from the      
,federal ,deposit ,insurance            
,corporation on or before ,september    
#bc1 #bjba 7or1 with respect to such an 
entity to which section #b7;c7 of the   
,close the ,shadow ,banking ,loophole   
,act applies1 which is in compliance    
with such section #b7;c771 and4  7c7    
,treatment of deposit insurance         
applications pending on ,september #bc1 
#bjba  7#a7 ,in general ,with respect to
 an industrial bank that1 on the date of

 enactment of this ,act1 has an         
application to receive deposit insurance
 pending before the ,corporation that   
was submitted on or before ,september   
#bc1 #bjba1 the ,corporation-- 7,a7     
shall provide for a #ij-;day public     
comment period and a public hearing with
 respect to that application2 and  7,b7 
may only approve that application by a  
#b_/c vote of the members of the ,board 
of ,directors of the ,corporation4  7#b7
 ,deadline for approving application ,if
 the ,corporation does not approve an   
application described in paragraph 7#a7 
before ,september #cj1 #bjbf1 that      
application shall be deemed to have been
 denied4  7#c7 ,rule of construction    
,except to the extent explicitly        
provided in this subsection1 this       
subsection may not be construed to      
affect the authority of the ,corporation
 to consider deposit insurance          
applications under sections #e and #f of
 the ,federal ,deposit ,insurance ,act  
7#ab ,u4,s4,c4 #ahae1 #ahaf74  7d7      

,authority with respect ,to deposit     
insurance applications granted after    
,september #bc1 #bjba  7#a7 ,definitions
 ,in this subsection3  7,a7  ,bank2     
depository institution  ,the terms bank 
and depository institution have the     
meanings given those terms in section #b
 of the ,bank ,holding ,company ,act of 
#aief 7#ab ,u4,s4,c4 #ahda71 as amended 
by this section4  7,b7  ,covered        
industrial loan company  ,the term      
covered industrial loan company means an
 industrial bank that has an application
 to receive deposit insurance from the  
,corporation approved after ,september  
#bc1 #bjba4  7,c7  ,parent company  ,the
 term parent company means an entity    
that has control over a covered         
industrial loan company4  7,d7  ,primary
 financial regulatory agency  ,with     
respect to a parent company1 the term   
primary financial regulatory agency--   
7i7 has the meaning given the term in   
section #b of the ,dodd-,frank ,wall    
,street ,reform and ,consumer           

,protection ,act 7#ab ,u4,s4,c4 #ecja72 
and  7ii7 with respect to a parent      
company for which clause 7i7 does not   
apply1 means the ,corporation4  7#b7    
,authority  ,the primary financial      
regulatory agency with respect to a     
parent company may take any of the      
following actions with respect to the   
parent company3  7,a7 ,conduct such     
examinations of1 and obtain reports     
from1 the parent company or any         
subsidiary of the parent company 7other 
than a bank7 as the agency determines   
necessary or appropriate to assess each 
of the following3  7i7 ,the financial   
condition of the parent company or      
subsidiary4  7ii7 ,the systems of the   
parent company or subsidiary for        
maintaining and controlling financial   
and operating risks4  7iii7 ,the        
transactions of the parent company or   
subsidiary with depository institution  
subsidiaries of the parent company4     
7,b7 ,impose any conditions or          
restrictions on the parent company or   

any subsidiary of the parent company    
7other than a bank71 including          
restricting or prohibiting transactions 
between the parent company or subsidiary
 and any depository institution         
subsidiary of the parent company1 if    
those conditions or restrictions would  
promote the safety and soundness of the 
parent company or any of its depository 
institution subsidiaries4  7e7 ,change  
of control  7#a7 ,in general ,except as 
provided in paragraph 7#b71 the         
appropriate ,federal banking agency     
shall disapprove a change in control1 as
 provided in section #g7;j7 of the      
,federal ,deposit ,insurance ,act 7#ab  
,u4,s4,c4 #ahag7;j771 of an industrial  
bank4  7#b7 ,exceptions ,paragraph 7#a7 
shall not apply to a change in control  
of an industrial bank-- 7,a7 that-- 7i7 
is in danger of default1 as determined  
by the appropriate ,federal banking     
agency1 provided that the entity        
acquiring control of the industrial bank
 is an entity described in clause 7iii72

  7ii7 results from the acquisition of  
voting shares of an issuer that controls
 the industrial bank and the securities 
of which are listed on a national       
securities exchange1 if1 after the      
acquisition1 the acquiring shareholder  
7or group of shareholders acting in     
concert7 holds less than #be percent of 
any class of the voting shares of1 and  
does not otherwise exercise control     
over1 that issuer2 or  7iii7 will be    
controlled1 directly or indirectly1 by  
an entity subject to consolidated       
supervision by the ,board of ,governors 
of the ,federal ,reserve ,system as a-- 
7,i7 bank holding company2  7,,ii7      
savings and loan holding company2 or    
7,,iii7 foreign bank that is treated1 as
 of ,july #a1 #bjbj1 as a bank holding  
company under the ,international        
,banking ,act of #aigh 7#ab ,u4,s4,c4   
#caja et seq472 and  7,b7 that has      
obtained all regulatory approvals       
otherwise required with respect to the  
change in control under any applicable  

,federal or ,state law1 including       
section #g7;j7 of the ,federal ,deposit 
,insurance ,act 7#ab ,u4,s4,c4          
#ahag7;j774  #c4 ,supervision of parent 
companies of industrial loan companies  
,the ,bank ,holding ,company ,act of    
#aief 7#ab ,u4,s4,c4 #ahda et seq47 is  
amended by inserting after section #e   
7#ab ,u4,s4,c4 #ahdd7 the following3    
#f4 ,supervision of parent companies of 
industrial loan companies  7a7          
,definitions ,in this section3 7#a7     
,corporation ,the term ,corporation     
means the ,federal ,deposit ,insurance  
,corporation4  7#b7 ,parent company of  
an industrial loan company ,the term    
parent company of an industrial loan    
company means a company-- 7,a7 that is  
not directly or indirectly subject to a 
primary financial regulatory agency 7as 
defined in section #b of the            
,dodd-,frank ,wall ,street ,reform and  
,consumer ,protection ,act 7#ab         
,u4,s4,c4 #ecja772 and  7,b7 that has   
control over an entity that-- 7i7 is an 

industrial loan company1 industrial     
bank1 or other similar institution2     
7ii7 is not a bank2 and  7iii7 is not a 
person regulated by a ,state insurance  
regulator1 as that term is defined in   
section #ajjb of the ,consumer          
,financial ,protection ,act of #bjaj    
7#ab ,u4,s4,c4 #edha74  7b7 ,authority  
relating to a parent company of an      
industrial loan company  7#a7 ,in       
general ,subject to paragraph 7#b71 the 
,corporation shall have the same        
authority to require a parent company of
 an industrial loan company 7or a       
subsidiary of such a parent company7 to 
make reports and submit to examinations 
as the ,board has with respect to a bank
 holding company or a subsidiary of a   
bank holding company4  7#b7 ,conditions 
,in carrying out the report and         
examination authority described in      
paragraph 7#a7 and with respect to the  
parent company of an industrial loan    
company that has been approved to       
receive deposit insurance from the      

,corporation on or before ,september    
#bc1 #bjba1 the ,corporation shall      
tailor any requirements to the size1    
complexity1 and nature of the business  
of that parent company4  7#c7           
,enforcement ,the ,corporation may1     
using the authorities under section #h  
of the ,federal ,deposit ,insurance ,act
 7#ab ,u4,s4,c4 #ahah71 enforce the     
report and examination authority under  
this section with respect to a parent   
company of an industrial loan company   
7or a subsidiary of such a parent       
company7 to the same extent as the      
,board may enforce the report and       
examination authority of the ,board with
 respect to a bank holding company or a 
subsidiary of a bank holding company4   
7c7 ,rule of construction ,nothing in   
this section may be construed as a      
reduction of the authority of the       
,corporation1 as in effect on the date  
of enactment of this section4  7d7      
,rulemaking ,the ,corporation may issue 
rules to implement this section4  4  #d4

 ,application with respect to contracts 
and other agreements  7a7 ,definition   
,in this section1 the term industrial   
loan company means an industrial loan   
company1 industrial bank1 or other      
similar institution4  7b7 ,application  
,this ,act1 and the amendments made by  
this ,act1 may not be construed to      
affect or impair-- 7#a7 the authority of
 the ,federal ,deposit ,insurance       
,corporation to enter into any agreement
 with a parent company of an industrial 
loan company 7as defined in section #f  
of the ,bank ,holding ,company ,act of  
#aief1 as added by section #c of this   
,act7 or an industrial loan company1 or 
to impose any condition in connection   
with the approval by the ,corporation of
 an application2 or  7#b7 the validity  
of any agreement described in paragraph 
7#a7 entered into before the date of    
enactment of this ,act4