108TH CONGRESS REPT. 108–152 " HOUSE OF REPRESENTATIVES ! 1st Session Part 2

FINANCIAL SERVICES REGULATORY RELIEF ACT OF 2003

JULY 14, 2003.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. SENSENBRENNER, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

together with 

ADDITIONAL VIEWS 

[To accompany H.R. 1375] 

[Including cost estimate of the Congressional Budget Office]

The Committee on the Judiciary, to whom was referred the bill 

(H.R. 1375) to provide regulatory relief and improve productivity 

for insured depository institutions, and for other purposes, having 

considered the same, reports favorably thereon with an amendment 

and recommends that the bill as amended do pass.

CONTENTS 

Page 

The Amendment ...................................................................................................... 2

Purpose and Summary ............................................................................................ 2

Background and Need for the Legislation ............................................................. 2

Hearings ................................................................................................................... 3

Committee Consideration ........................................................................................ 4

Vote of the Committee ............................................................................................. 4

Committee Oversight Findings ............................................................................... 4

New Budget Authority and Tax Expenditures ...................................................... 4

Congressional Budget Office Cost Estimate .......................................................... 4

Performance Goals and Objectives ......................................................................... 13

Constitutional Authority Statement ...................................................................... 13

Section-by-Section Analysis and Discussion .......................................................... 13

Agency Views ........................................................................................................... 18

Changes in Existing Law Made by the Bill, as Reported ..................................... 28

Markup Transcript .................................................................................................. 28

Additional Views ...................................................................................................... 145

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1See H.R. Rep. No.108–152, Part I (2003). 2See H.R. Rep. No. 107–516, Part II, (2002). 

The amendment adopted by this committee is identical to the 

text reported by the Committee on Financial Services shown in 

their report filed June 12, 2003 (Rept. 108–152, Part 1).

PURPOSE AND SUMMARY

As reported by the Committee on the Judiciary, H.R. 1375, the ‘‘Financial Services Regulatory Relief Act of 2003,’’ is intended to 

alter or eliminate statutory banking provisions in order to reduce 

the growing regulatory burden on insured depository institutions, 

improve their productivity, and to make needed technical corrections to current law. H.R. 1375 contains a broad range of constructive provisions that, taken as a whole, will allow banks and other 

depository institutions to devote more resources to the business of 

lending to consumers and less to the bureaucratic maze of compliance with outdated and unneeded regulations. Reducing the regulatory burden on financial institutions lowers the cost of credit and 

will help restore vibrancy to the national economy. 

BACKGROUND AND NEED FOR THE LEGISLATION

On May 21, 2003, the Committee on Financial Services reported 

H.R. 1375, the ‘‘Financial Services Regulatory Relief Act of 2003.’’ 1

The bill was sequentially referred to the Committee on the Judiciary for a period ending not later than July 14, 2003. The sections 

within the jurisdiction of the Committee on the Judiciary pertain 

to the operation of the Federal courts, claims against the United 

States, and for regulation of the banking industry as it pertains to 

antitrust. This legislation is substantially identical to H.R. 3951, 

the ‘‘Financial Services Regulatory Relief Act of 2002,’’ which was 

reported from the Committee on the Judiciary last Congress.2

Congress has not passed structural reform of America’s banking 

industry since the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) was enacted in 1989. At that time, the national banking industry and the broader economy were recovering 

from a savings and loan crisis which undermined public confidence 

in America’s financial institutions. As a result, Congress enacted 

FIRREA to help restore the integrity and reliability of the banking 

industry. H.R. 1375 addresses many shortcomings in that law. For 

example, economic analysts have estimated that the annual cost of 

compliance with various State and Federal banking regulations is 

nearly $26 billion. While effective regulation of the financial services industry is central to the preservation of public trust in financial institutions, excessive regulation undermines competition and 

consumer choice, results in higher service fees for consumers, and 

stifles innovation among competing institutions. 

H.R. 1375 provides the following regulatory improvements for national banks: (1) removes the prohibition on national and State 

banks expanding across State lines by opening branches; (2) allows 

the use of subordinated debt instruments to meet eligibility requirements for national banks to benefit from subchapter S tax 

treatment; (3) eliminates duplicative and costly reporting requirements on banks regarding lending to bank officials; (4) changes the 

exemption from the prohibition on management interlocks for 

3

banks in metropolitan statistical areas from $20 million in assets 

to $100 million; and (5) streamlines bank merger application regulatory requirements. 

The legislation provides the following regulatory improvements 

for savings associations: (1) gives savings associations parity with 

banks with respect to broker-dealer and investment adviser Securities and Exchange Commission (SEC) registration requirements; 

(2) removes auto lending and small business lending limits and expands business lending limit for Federal thrifts; (3) allows Federal 

thrifts to merge with one or more of their non-thrift subsidiaries 

or affiliates, as national banks; (4) permits Federal thrifts to invest 

in service companies without regard to geographic restrictions; and 

(5) gives Federal thrifts the same authority as national and State 

banks to make investments primarily designed to promote community development. 

H.R. 1375 provides the following regulatory improvements for 

credit unions: (1) allows privately insured credit unions to apply for 

membership to the Federal Home Loan Bank system; (2) expands 

the investment authority of Federal credit unions; (3) permits offering of check cashing and money transfer services to eligible members; (4) increases the limit on investment by Federal credit unions 

in credit union service organizations from 1 percent to 3 percent of 

shares and earnings; and (5) raises the general limit on the term 

of Federal credit union loans from 12 to 15 years, and (6) allows 

for expedited consideration of credit union mergers. 

In addition, H.R. 1375 provides the following regulatory improvements for Federal financial regulatory agencies: (1) provides agencies the discretion to adjust the examination cycle for insured depository institutions to permit the most efficient use of agency resources; (2) allows the agencies to share confidential supervisory 

information concerning an examined institution; (3) modernizes 

agency record keeping requirements to allow use of optically imaged or computer scanned images; (4) clarifies agency authortiy to 

suspend or prohibit individuals charged with certain crimes from 

participation in the affairs of any depository institution and not 

only the institution with which the individual is associated; (5) allows bank examiners to receive credit cards from examined depository institutions if issued under the same terms and conditions as 

generally offered to the public; and (6) authorizes the Federal Deposit Insurance Corporation (FDIC) to take enforcement actions 

and impose civil monetary penalties of up to $1 million per day on 

any individual, corporation, or other entity for misrepresentation of 

FDIC insurance coverage. These improvements will allow financial 

institutions to devote more resources to the business of lending to 

consumers and less to compliance with outdated and unneeded regulations. Reducing the regulatory burden will serve to lower credit 

costs for consumers and help invigorate the national economy. 

HEARINGS

No hearings were held in the Committee on the Judiciary on 

H.R. 1375. 

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COMMITTEE CONSIDERATION

On Wednesday, July 9, 2002, the Committee met in open session 

and ordered favorably reported the bill, H.R. 1375, with an amendment, by voice vote, a quorum being present. The amendment consisted of the text of the bill as reported by the Committee on Financial Services on May 21, 2003. 

VOTE OF THE COMMITTEE

In compliance with clause 3(b) of Rule XIII of the Rules of the 

House of Representatives, the Committee notes that there no recorded votes on H.R. 1375 during the Committee on the Judiciary’s 

consideration of the bill. 

COMMITTEE OVERSIGHT FINDINGS

In compliance with clause 3(c)(1) of Rule XIII of the Rules of the 

House of Representatives, the Committee reports that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of Rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. 

NEW BUDGET AUTHORITY AND TAX EXPENDITURES

Clause 3(c)(2) of House rule XIII is inapplicable because this legislation does not provide new budgetary authority or increased tax 

expenditures. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

In compliance with clause 3(c)(3) of Rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

H.R. 1375, the following estimate and comparison prepared by the 

Director of the Congressional Budget Office under section 402 of 

the Congressional Budget Act of 1974:

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, July 14, 2003. 

Hon. F. JAMES SENSENBRENNER, Jr., Chairman, 

Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1375, the Financial Services Regulatory Relief Act of 2003. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contacts are Kathy Gramp and 

Jenny Lin, who can be reached at 226–2860. 

Sincerely, 

DOUGLAS HOLTZ-EAKIN.

Enclosure

cc: Honorable John Conyers, Jr. 

Ranking Member 

5

H.R. 1375—Financial Services Regulatory Relief Act of 2003. 

SUMMARY

H.R. 1375 would affect the operations of financial institutions 

and the agencies that regulate them. Some provisions would address specific sectors: national banks could more easily operate as 

S corporations or adopt other alternative organizational structures; 

thrift institutions would be given some of the same investment, 

lending, and ownership options available to banks; credit unions 

would have new options for investments, lending, mergers, and 

leasing Federal property; and certain privately insured credit 

unions could become members of the Federal Home Loan Bank system. The bill would provide the Federal Deposit Insurance Corporation (FDIC) with new enforcement authorities and modify regulatory procedures governing certain types of transactions, such as 

the establishment of de novo branches and interstate mergers. It 

would also give agencies more flexibility in sharing data, retaining 

records, and scheduling examinations, and would limit the legal defenses that the United States could use against certain claims for 

monetary damages. 

CBO estimates that enacting this bill would reduce Federal revenues by $37 million over the next 5 years and by a total of $117 

million over the 2004–2013 period. In addition, we estimate that 

direct spending would increase by $17 million over the next 5 years 

and by a total of $22 million over the 2004–2013 period. 

H.R. 1375 contains intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA), but CBO estimates 

that the cost of complying with those requirements would not exceed the intergovernmental threshold established in UMRA ($59 

million in 2003, adjusted annually for inflation). 

H.R. 1375 contains several private-sector mandates. Those mandates would affect certain depository institutions, nondepository institutions that control depository institutions, uninsured banks, 

bank holding companies and their subsidiaries, savings and loan 

association holding companies and their subsidiaries, and Federal 

Home Loan banks. At the same time, the bill would relax some restrictions on the operations of certain financial institutions. CBO 

estimates that the aggregate direct cost of complying with the private-sector mandates in the bill would not exceed the annual 

threshold established in UMRA ($117 million in 2003, adjusted annually for inflation). 

ESTIMATED COST TO THE FEDERAL GOVERNMENT

The estimated budgetary impact of H.R. 1375 is shown in the following table. The costs of this legislation fall within budget function 370 (commerce and housing credit).

6

BASIS OF ESTIMATE

Most of the budgetary impacts of this legislation would result 

from three provisions: section 101, which would make it easier for 

national banks to convert to S corporation status or alternative organization forms; section 214, which would limit the government’s 

legal defenses against certain claims for monetary damages; and 

section 302, which would allow certain Federal credit unions to 

lease Federal land at no charge. For this estimate, CBO assumes 

that H.R. 1375 will be enacted in the fall of 2003. 

H.R. 1375 also would affect the workload at agencies that regulate financial institutions. We estimate that the net change in 

agency spending would not be significant. Based on information 

from each of the agencies, CBO estimates that the change in administrative expenses—both costs and potential savings—would average less than $500,000 a year over the next several years. Expenditures of the Office of the Comptroller of the Currency (OCC), 

the Office of Thrift Supervision (OTS), the National Credit Union 

Administration (NCUA), and the FDIC are classified as direct 

spending and would be covered by fees or insurance premiums paid 

by the institutions they regulate. Any change in spending by the 

Federal Reserve would affect net revenues, while adjustments in 

the budget of the Securities and Exchange Commission (SEC) and 

Federal Trade Commission (FTC) would be subject to appropriation. 

Revenues 

CBO estimates that enacting H.R. 1375 would reduce Federal tax 

revenues collected from national and State-chartered banks and 

would have an insignificant effect on civil and criminal penalties 

collected for violations of the bill’s provisions. 

S Corporation Status. Under this bill, some national banks 

would find it easier to convert from C corporation status to S corVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

CBO75.eps
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poration status. Section 101 would allow directors of national 

banks to be issued subordinated debt to satisfy the requirement 

that directors of a bank own qualifying shares in the bank. This 

provision would effectively reduce the number of shareholders of a 

bank by removing directors from shareholder status, making it 

easier for banks to comply with the 75-shareholder limit that defines eligibility for subchapter S election. 

Income earned by banks taxed as C corporations is subject to the 

corporate income tax, and post-tax income distributed to shareholders is taxed again at individual income tax rates. Income 

earned by banks operating as S corporations is taxed only at the 

personal income tax rates of the banks’ shareholders and is not 

subject to the corporate income tax. The average effective tax rate 

on S corporation income is lower than the average effective tax rate 

on C corporation income. CBO estimates that enacting this provision would reduce revenues by a total of $36 million over the next 

5 years and by $100 million over the 2004–2013 period. 

Based on information from the Federal Reserve Board, the OCC, 

and private trade associations, CBO expects that most of the banks 

that would be affected are small, although banks and bank holding 

companies with assets over $500 million would also be affected. In 

addition, States are likely to amend the rules for State-chartered 

banks to match those for national banks. CBO expects that most 

conversions to Subchapter S status would occur between 2004 and 

2006 and that national banks would convert earlier than Statechartered banks. 

Business Organization Flexibility. Under section 110 of this 

bill, the Comptroller of the Currency could allow national banks to 

organize in noncorporate form, for example as Limited Liability 

Corporations (LLCs) as defined by State law. LLCs generally 

choose to be taxed as partnerships. Only a few States currently 

allow banks to organize as LLCs, however, and the Internal Revenue Service (IRS) currently taxes State-chartered bank-LLCs as C 

corporations. LLCs have more organizational flexibility than S corporations while retaining the corporate characteristic of limited liability. 

Income earned by banks taxed as C corporations is subject to the 

corporate income tax, and post-tax income distributed to shareholders is taxed again at individual income tax rates. Income 

earned by partnerships—like that earned by S corporations—is 

taxed only at the personal income tax rates of the partners and is 

not subject to the corporate income tax. The average effective tax 

rate on partnerships is lower than the average effective tax rate on 

C corporation income but is similar to the average effective tax rate 

on S corporation income. 

Based on information from the OCC, the FDIC, and private trade 

associations, CBO believes that it is quite possible that the OCC 

would alter its regulations to allow national banks to organize in 

noncorporate form. We expect that, over the next decade, most 

States that do not currently allow banks to organize as LLCs will 

begin allowing them to do so in order to be competitive. Under 

H.R.1375, future IRS tax treatment of bank-LLCs is uncertain. 

CBO assumes that the IRS may allow bank-LLCs to be taxed as 

partnerships at some point in the next decade. The estimated revenue effects of section 110 reflect CBO’s estimate of the likelihood 

8

of such IRS actions. CBO anticipates that banks forming as LLCs 

would most likely be newly chartered institutions and that, over 

the next decade, only a very limited number of banks would convert from C corporation or S corporation status to LLCs taxed as 

partnerships. 

CBO estimates that enacting this provision would reduce Federal revenues by a total of $1 million over the next 5 years and by $17 

million over the 2004–2013 period. 

Civil and Criminal Penalties. H.R. 1375 would make all depository institutions—not just insured institutions—subject to certain civil and criminal fines for violating rules regarding breach of 

trust, dishonesty, and certain other crimes. It also would authorize 

the FDIC to take enforcement action or impose civil penalties of up 

to $1 million a day on any individual, corporation, or other entity 

that falsely implies that deposits or other funds are insured by the 

agency. Based on information from the FDIC, CBO expects that enforcement actions would likely deter most individuals or institutions from violating rules regarding breach of trust, dishonesty, or 

certain other crimes. As a result, we estimate that any additional 

penalty collections under those provisions would not be significant. 

Direct Spending 

CBO estimates that enacting H.R. 1375 would increase direct spending by a total of about $15 million over the 2004–2013 period 

to pay for increased litigation costs and larger payments for ‘‘goodwill’’ claims against the government. The bill also would reduce offsetting receipts collected from credit unions that lease Federal facilities, and it could affect the cost of deposit insurance. 

Monetary Damages in Goodwill Cases. Section 214 would 

preclude the use of certain legal defenses in claims for damages 

against the United States arising out of the implementation of the 

Financial Institutions Reform, Recovery, and Enforcement Act of 

1989 (FIRREA). CBO estimates that enacting this provision would 

increase the cost of litigating and resolving such claims by a total 

of $15 million over the next 5 years. 

Background on Goodwill Cases. Under section 214, courts could 

not dismiss a claim arising out of the implementation of FIRREA 

on the basis of res judicata, collateral estoppel, or similar defenses 

if the defense was based on a decision, opinion, or order of judgment entered by any court prior to July 1, 1996. On that date, the 

Supreme Court decided United States v. Winstar Corp., 518 U.S. 

839 (1996), holding that the government became liable for damages 

in breach of contract when the accounting treatment of ‘‘supervisory goodwill’’ that it had previously approved was prevented by 

enactment of FIRREA. About 100 ‘‘goodwill’’ cases against the government are still pending before the courts, with claims totaling 

about $20 billion. CBO estimates that, under current law, such 

claims will cost the government about $1.5 billion over the 2004–

2013 period. Judgments, settlements, and litigation expenses for 

such claims are paid from the FSLIC Resolution Fund, and such 

payments do not require appropriation action. 

By eliminating some defenses currently available to the United 

States in such cases, section 214 would increase the likelihood that 

some claims would reach a hearing on the merits, thereby allowing 

cases to proceed further in the judicial process than may otherwise 

9

be likely. According to the Department of Justice (DOJ) and the 

FDIC, this provision would affect only a few of the goodwill cases; 

claims in the affected cases could total about $200 million. (This 

provision also could affect cases in which the FDIC is the plaintiff 

as the receiver of a failed thrift, but any monetary awards to the 

FDIC would be intragovernmental payments and would have no 

net effect on the Federal budget.) 

Estimated Cost of This Provision. CBO expects that enacting section 214 would increase the cost of litigation and potential settlements or judgments against the United States. Whether those costs 

are large or small would depend on the role those defenses would 

otherwise play in the outcome of each case. For example, the cost 

could be significant if the loss of those defenses resulted in a judgment for plaintiffs on the merits but could be negligible if the judgment were against the plaintiffs. 

For this estimate, CBO assumes that defenses of res judicata and 

collateral estoppel would be just two of several possible defenses 

and other factors affecting awards of monetary damages and that 

barring them would therefore have a small effect on the potential 

costs of such claims. We estimate that enacting this provision 

would increase expected payments for such claims by about $10 

million—or 5 percent of the roughly $200 million in claims that 

might be affected by this provision. Given the pace of such litigation, we expect that those added costs would occur in 2007 and 

2008. In addition, CBO estimates that DOJ’s administrative costs 

would increase by an average of about $1 million a year as a result 

of the added time and workload associated with those cases. This 

estimate is based on historical trends in the cost of litigating such 

claims. 

Nongoodwill Cases. Because section 214 would not limit the affected claims to goodwill cases, this provision also could affect other 

types of claims for monetary damages arising out of the implementation of FIRREA that meet the criteria in the bill. This provision 

could encourage the filing of such claims that were resolved prior 

to July 1, 1996; however, DOJ is currently unaware of any such 

claims. 

Offsetting Receipts From Federal Leases. Section 302 would 

allow Federal agencies to lease land to Federal credit unions without charge under certain conditions. Under existing law, agencies 

may allocate space in Federal buildings without charge if at least 

95 percent of the credit union’s members are or were Federal employees. Some credit unions, primarily those serving military bases, 

have leased Federal land to build a facility. Prior to 1991, leases 

awarded by the Department of Defense (DoD) were free of charge 

and for terms of up to 25 years; a statutory change enacted that 

year limited the term of such leases to 5 years and required the 

lessee to pay a fair market value for the property. According to 

DoD, about 35 credit unions have leased land since 1991 and are 

paying a total of about $525,000 a year to lease Federal property. 

Those proceeds are recorded as offsetting receipts, and any spending of those payments is subject to appropriation. 

CBO expects that enacting this provision would result in a loss 

of offsetting receipts from all credit union leases. Those lessees currently paying a fee would stop making those payments after they 

renew their current leases, all of which should expire within the 

10

next 5 years. In addition, credit unions that have long-term, no-cost 

leases would be able to renew them without becoming subject to 

the fees they otherwise would pay under current law. CBO estimates that enacting this provision would cost a total of about $2 

million over the next 5 years and an average of about $700,000 annually after 2008. 

Deposit Insurance. Several provisions in the bill could affect 

the cost of Federal deposit insurance. For example, the bill would 

streamline the approval process for mergers, branching, and affiliations, which could give eligible institutions the opportunity to diversify and compete more effectively with other financial businesses. In some cases, such efficiencies could reduce the risk of insolvency. It is also possible, however, that some of the new lending 

and investment options could increase the risk of losses to the deposit insurance funds. 

CBO has no clear basis for predicting the direction or the amount 

of any change in spending for insurance that could result from the 

new investment, lending, and operational arrangements authorized 

by this bill. The net budgetary impact of such changes would be 

negligible over time, however, because any increase or decrease in 

costs would be offset by adjustments in the insurance premiums 

paid by banks, thrifts, or credit unions. 

Spending Subject to Appropriation 

Section 201 provides thrift institutions with exemptions from 

broker-dealer and investment-advisor registration requirements 

similar to those accorded banks. Section 313 provides similar exemptions for federally insured credit unions. Based on information 

from the SEC, CBO estimates that the budgetary effects of those 

exemptions would not be significant. 

Section 312 would exempt federally insured credit unions from 

filing certain acquisition or merger notices with the FTC. Under 

current law, the FTC charges filing fees ranging from $45,000 to 

$280,000, depending on the value of the transaction. The collection 

of such fees is contingent on appropriation action. Based on information from the FTC, CBO estimates that this exemption would 

have no significant effect on the amounts collected from such fees. 

ESTIMATED IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS

H.R. 1375 would preempt certain State laws and place new requirements on certain State agencies that regulate financial institutions. Both the preemptions and the new requirements would be 

mandates as defined in UMRA. CBO estimates that the cost of 

those mandates taken together would not exceed the threshold established in UMRA ($59 million in 2003, adjusted annually for inflation). 

Section 209 would preempt certain State securities laws by prohibiting States from requiring agents representing a Federal savings association to register as brokers or dealers if they sell deposit 

products (CDs) issued by the savings association. Such a preemption would impose costs (in the form of lost revenues) on those 

States that currently require such registration. Based on information from representatives of the securities industry and securities 

regulators, CBO estimates that losses to States as a result of this 

prohibition would total less than $1 million a year. 

11

Section 301 would authorize certain privately insured credit 

unions to apply for membership in a Federal Home Loan Bank 

(FHLB). Part of the application process would require State regulators of credit unions to determine whether an applicant is eligible 

for Federal deposit insurance. This requirement would be a mandate, but because the regulators already make that determination 

under State law, the additional cost to comply with the requirement would be minimal. 

Upon becoming members, those credit unions would be eligible 

for loans from the FHLB. To preserve the value of those loans, section 301 would preempt certain State contract laws that otherwise 

would allow defaulting credit unions to avoid certain contractual 

obligations. Because those credit unions are not currently eligible 

for membership in a Federal home loan bank, and accordingly, 

have no contracts for credit, this preemption, while a mandate, 

would impose no costs on State, local, or tribal governments. 

Section 302 would require State regulators of credit unions to 

provide certain information when requested by the NCUA. Because 

this provision would not require States to prepare any additional 

reports, merely to provide them to NCUA upon request, CBO estimates that the cost to States would be minimal. 

Section 401 would expand an existing preemption of State laws 

related to mergers between insured depository institutions chartered in different States. Current law preempts State laws that restrict mergers between insured banks with different home States. 

This section would expand that preemption to cover mergers between insured banks and other insured depository institutions or 

trust companies with different home States. This expansion of a 

preemption would be a mandate under UMRA but would impose 

little or no cost on States. 

Section 401 also would preempt State laws that regulate certain 

fiduciary activities performed by insured banks and other depository institutions. The bill would allow banks and trusts of a State 

(the home State) to locate a branch in another State (the host 

State) as long as the services provided by the branch are not in 

contravention of home State or host State law. Further, if the host 

State allows other types of entities to offer the same services as the 

branch bank or trust seeking to locate in the host State, home 

State approval of the branch would not be in contravention of host 

State law. This provision could preempt laws of the host State but 

would impose no costs on them. 

Section 619 provides that, except where expressly provided in a 

cooperative agreement, only the bank supervisor of the home State 

of an insured State bank may impose supervisory fees on the bank. 

To the extent that State laws permit such charges, this provision 

would preempt State authority. However, based on information 

from the Conference of State Bank Supervisors, under current 

practice, host States rarely if ever charge such fees, and therefore, 

we estimate that enacting this provision would have no significant 

effect on State revenues. 

ESTIMATED IMPACT ON THE PRIVATE SECTOR

H.R. 1375 contains several private-sector mandates as defined by 

UMRA. At the same time, the bill would relax some restrictions on 

the operations of certain financial institutions. CBO estimates that 

12

the aggregate direct costs of mandates in the bill would not exceed 

the annual threshold established in UMRA ($117 million in 2003, 

adjusted annually for inflation). 

Mandates 

The bill would impose mandates on depository institutions controlled by companies other than depository institution holding companies; nondepository institutions that control insured depository 

institutions; uninsured banks; bank holding companies and their 

subsidiaries; savings and loan association holding companies and 

their subsidiaries; and Federal Home Loan Banks. Mandates in the 

bill include an expansion of the authority of the FDIC over certain 

insured depositories and companies that control insured depositories, a prohibition on participation in the affairs of financial institutions of people convicted of certain crimes, and additional reporting requirements for FHLBs. 

Expansion of the FDIC’s Authorities. The Gramm-Leach-Bliley Act allowed new forms of affiliations among depositories and 

other financial services firms. Consequently, insured depository institutions may now be controlled by a company other than a depository institution holding company (DIHC). H.R. 1375 would amend 

current law to give the FDIC certain authorities concerning troubled or failing depository institutions held by those new forms of 

holding companies. 

Under current law, if the FDIC suffers a loss from liquidating or 

selling a failed depository institution, the FDIC has the authority 

to obtain reimbursement from any insured depository institution 

within the same DIHC. Section 407 would expand the scope of the 

FDIC’s reimbursement power to include all insured depository institutions controlled by the same company, not just those controlled 

by the same DIHC. 

The cost of this mandate would depend, among other things, on 

the probability of failure of the additional institutions subject to 

this authority and the probability that the FDIC would incur a loss 

as a result of those failures. The new authority would apply only 

to a handful of depository institutions. Based on information from 

the FDIC, CBO estimates that the cost of this mandate would not 

be substantial. 

In addition, section 408 would allow the FDIC to prohibit or limit 

any company that controls an insured depository from making 

‘‘golden parachute’’ payments or indemnification payments to institution-affiliated parties of troubled or failing insured depositories. 

(Institution-affiliated parties include directors, officers, employees, 

and controlling shareholders. Institution-affiliated parties also include independent contractors such as accountants or lawyers who 

participate in violations of the law or undertake unsound business 

practices that may cause a financial loss to, or adverse effect on, 

the insured depository institution.) 

Based on information from the FDIC, CBO expects that only a 

few institutions would be covered by the new authority. In the 

event that the FDIC exercises this authority, CBO expects that the 

cost to institutions of withholding such payments would be administrative in nature and minimal, if any. 

Prohibitions on Convicted Individuals. Current law prohibits a person convicted of a crime involving dishonesty, a breach 

13

of trust, or money laundering from participating in the affairs of 

an insured depository institution without FDIC approval. The bill 

would extend that prohibition so that uninsured banks, bank holding companies and their subsidiaries, and savings and loan holding 

companies and their subsidiaries could not allow such persons to 

participate in their affairs without the prior written consent of 

their designated Federal banking regulator. 

Assuming that those institutions already screen potential directors, officers, and employees for criminal offenses, the incremental 

cost of complying with this mandate would be small. 

Reporting Requirements for Federal Home Loan Banks.

Section 616 would require the Federal Home Loan Banks to report 

the compensation and expenses paid to directors in their annual reports. CBO expects that the cost of complying with this mandate 

would be minimal. 

PREVIOUS CBO ESTIMATE

On June 11, 2003, CBO transmitted a cost estimate for H.R. 

1375 as ordered reported by the House Committee on Financial 

Services on May 21, 2003. H.R. 1375 as approved by the House 

Committee on the Judiciary is identical to the version of the bill 

reported by the House Committee on Financial Services. 

ESTIMATE PREPARED BY: 

Federal Costs: Kathy Gramp and Jenny Lin (226–2860) 

Federal Revenues: Pam Greene (226–2680) 

Impact on State, Local, and Tribal Governments: Victoria Heid 

Hall (225–3220) 

Impact on the Private Sector: Judith Ruud (226–2940) 

ESTIMATE APPROVED BY: 

Robert A. Sunshine 

Assistant Director for Budget Analysis

G. Thomas Woodward 

Assistant Director for Tax Analysis 

PERFORMANCE GOALS AND OBJECTIVES

H.R. 1375 does not authorize funding. Therefore, clause 3(c)(4) of 

Rule XIII of the Rules of the House of Representatives is inapplicable. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of Rule XIII of the Rules of the House 

of Representatives, the Committee finds the authority for this legislation in article I, section 8 of the Constitution. 

SECTION-BY-SECTION ANALYSIS AND DISCUSSION

The following section-by-section analysis describes the sections of 

H.R. 1375 as reported that fall within the rule X jurisdiction of the 

Committee on the Judiciary. For a description of the other sections 

14

3See H.R. Rep. No.108–152 Part I (2003). 

of the bill, please refer to the report of the Committee on Financial 

Services.3

TITLE I—NATIONAL BANKS

Section 106. Clarification of Waiver of Publication Requirements for 

Bank Merger Notices. 

Section 106 amends the National Bank Consolidation and Merger Act (12 U.S.C. §§ 215(a) and 215(a)(2)) to provide the Comptroller with authority to waive the publication of notice requirement for bank mergers if the Comptroller determines that an emergency justifies such a waiver or if shareholders of the association 

or State bank agree by unanimous action to waive the publication 

requirement for their respective institutions. 

TITLE II—SAVINGS ASSOCIATIONS PROVISIONS

Section 203. Mergers and Consolidations of Federal Savings Associations with Nondepository Institution Affiliates. 

This section amends the Home Owners Loan Act (12 U.S.C. 

§ 1464) to permit a Federal savings association to merge with any 

nondepository institution affiliate of the savings association. 

Section 213. Citizenship of Federal Savings Associations for Determining Federal Court Diversity Jurisdiction. 

This section amends the Home Owners’ Loan Act (12 U.S.C. 

§ 1464) to establish that a Federal savings association shall be considered—for purposes of establishing diversity jurisdiction—a citizen only of the State where the savings association locates its 

main office. Diversity jurisdiction requires complete diversity 

among all parties to a lawsuit, i.e. that all parties be citizens of different States, and for there to be a minimum sum of $75,000 in 

controversy. Since they are chartered by the Federal Government 

and not incorporated in a State, it has been held that federallychartered savings associations that conduct business in more than 

one State are not considered to be a citizen of any State. In contrast, federally-chartered savings associations that confine their 

business to a single State are considered to be a citizen of that 

State. This section will provide parity among federally-chartered 

savings associations. This section also ensures greater parity between federally-chartered savings associations and national banking associations by providing that each is considered to be a citizen 

of the State where it is located for purposes of diversity jurisdiction. 

Section 214. Applicability of Certain Procedural Doctrines. 

This section amends Section 11A(d) of the Federal Deposit Insurance Act (12 U.S.C. § 1821a(d)) by prohibiting courts from dismissing a claim for monetary damages against the United States, 

or any agency or official thereof, where any recovery would be paid 

from the Federal Savings & Loan Insurance Corporation (FSLIC) 

Resolution Fund or any supplements thereto, where liability is alleged to be based upon actions of the FSLIC or the Federal Home 

Loan Bank Board prior to their respective dissolutions, where the 

15

4 518 U.S. 839 (1996). 

claim arose from the implementation of the Financial Institutions 

Reform, Recovery, and Enforcement Act of 1989 (FIRREA), on the 

basis of res judicata, collateral estoppel, or similar issue preclusion 

defenses if the defense is based upon a decision, opinion, or order 

of judgment entered by a court prior to the U.S. Supreme Court’s 

decision in United States v. Winstar.4 During the savings and loan 

crisis of the 1980’s, Federal thrift regulators sought to avoid incurring additional deposit insurance liabilities by encouraging healthy 

thrifts and outside investors to acquire ailing thrifts through ‘‘supervisory mergers.’’ In exchange, the Federal thrift regulators 

pledged to treat a failed thrift’s negative net worth as supervisory 

goodwill and include it in calculating regulatory capital. In 1989, 

Congress enacted FIRREA, prohibiting thrifts from counting supervisory goodwill as regulatory capital. In the 1996 Winstar decision, 

the Supreme Court held that the government entered into contracts with the acquiring thrifts and breached those contracts by 

implementing FIRREA’s prohibitions on including supervisory 

goodwill in calculating regulatory capital. Section 214 seeks to ensure that all institutions entitled to pursue claims against the government under Winstar’s reasoning are afforded an opportunity to 

have their claims adjudicated on the merits. 

TITLE III—CREDIT UNION PROVISIONS

Section 312. Exemption from Pre-merger Notification Requirement 

of the Clayton Act. 

This section amends the Clayton Act to exempt credit unions 

from provisions of the Hart-Scott-Rodino Antitrust Improvements 

Act of 1976 (15 U.S.C. § 18a) which require certain acquired and 

acquiring persons—including federally insured credit unions—to 

file a notification and report form with the Federal Trade Commission (FTC) to provide advance notification of mergers and acquisitions when the value of the transaction exceeds $50 million. 

TITLE IV—DEPOSITORY INSTITUTION PROVISIONS

Section 402. Statute of Limitations for Judicial Review of Appointment of a Receiver for Depository Institutions. 

This section amends the National Bank Receivership Act (12 

U.S.C. § 191), the Federal Deposit Insurance Act (12 U.S.C. 

§ 1821(c)(7)), and the Federal Credit Union Act (12 U.S.C. 

§ 1787(a)(1)), to establish a uniform 30-day statute of limitations for 

national banks, State chartered non-member banks, and credit 

unions to challenge decisions by the Office of the Comptroller of the 

Currency, Federal Deposit Insurance Corporation, and the National 

Credit Union Administration to appoint a receiver. Current law 

generally provides that challenges to a decision by the Federal Deposit Insurance Corporation or the Office of Thrift Supervision to 

appoint a receiver for an insured State bank or savings association 

must be raised within 30 days of the appointment. (See 12 U.S.C. 

§§ 1821(c)(7) & 1464(d)(2)(B)). However, there is no statutory limitation on national banks’ ability to challenge a decision by the Office of the Comptroller of the Currency to appoint a receiver of an 

insured or uninsured national bank. As a result, the general 6-year 

16

5James Madison, Ltd. v. Ludwig 82 F.3d 1085 (1996). 

statute of limitations currently applies to national banks in these 

instances. This protracted time period severely limits the Office of 

the Comptroller of the Currency’s authority to manage insolvent 

national banks that are placed in receivership and the ability of the 

Federal Deposit Insurance Corporation to wind up the affairs of an 

insured national bank in a timely manner with legal certainty.5

TITLE VI—BANKING AGENCY PROVISIONS

Section 607. Streamlining Depository Institution Merger Application 

Requirements. 

This section amends the Federal Deposit Insurance Act (12 

U.S.C. § 1828) to require the Attorney General to provide within 30 

days a report on the competitive factors associated with a depository institution merger to a requesting agency. This section reduces 

this period to 10 days if the requesting agency advises the Attorney 

General that an emergency exists requiring expeditious action. 

Section 609. Shortening of Post-approval Antitrust Review Waiting 

Period for Bank Acquisitions and Mergers with the Agreement 

of the Attorney General. 

Currently, banks and bank holding companies must delay consummating any bank acquisition or merger for at least 15 days 

after the transaction has been approved by a Federal banking 

agency. This waiting period is designed to allow the Attorney General to challenge the transaction, if the Attorney General believes 

the transaction would significantly harm competition. Section 609 

would allow the banking agency to reduce the waiting period to 5 

days, but only in cases where the Attorney General has agreed in 

advance that the acquisition or merger would not have serious 

anti-competitive effects. In such circumstances, a longer waiting period is not needed to allow the Attorney General to review the 

transaction and merely delays the ability of the banking organizations to achieve their business objectives. This section does not 

shorten the time period for private parties to challenge the banking 

agency’s approval of the transaction under the Community Reinvestment Act or banking laws. 

Section 613. Examiners of Financial Institutions. 

This section amends 18 U.S.C. § 212 to establish a fine and a 

prison sentence not more than 1 year, or both, as well as a further 

sum equal to the amount of the credit extended, for an officer, director or employee of a financial institution who extends credit to 

any examiner which the examiner is prohibited from accepting. In 

addition, this section authorizes limited waivers from the prohibition on examiners accepting credit from a bank being examined, if 

the examiner fully discloses the nature and circumstances of the 

loan and receives a determination from the examiner’s employer 

that the loan would not affect the integrity of the examination. Examiners are permitted to receive credit cards on terms and conditions no more favorable to the examiner than those generally applicable to other consumers. 

17

Section 615. Enforcement Against Misrepresentations Regarding 

FDIC Deposit Insurance Coverage. 

This section amends 18 U.S.C. § 709 to authorize the FDIC to 

take enforcement actions and impose civil monetary penalties of up 

to $1 million per day on any individual, corporation, or other entity 

for misrepresentation of FDIC insurance coverage. This section 

does not prohibit the imposition of otherwise applicable sanctions 

for its violation, and sets time periods within which the FDIC may 

assess and recover such civil penalties.

18

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CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

The bill was referred to this committee for consideration of 

such provisions of the bill and amendment as fall within the jurisdiction of this committee pursuant to clause 1(k) of Rule X of the 

Rules of the House of Representatives. The changes made to existing law by the amendment reported by the Committee on Financial 

Services are shown in the report filed by that committee (Rept. 

108–152, Part 1).

MARKUP TRANSCRIPT

BUSINESS MEETING 

WEDNESDAY, JULY 9, 2003

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:00 a.m., in Room 

2141, Rayburn House Office Building, Hon. F. James Sensenbrenner, Jr., [Chairman of the Committee] presiding. 

* * * * *

Chairman SENSENBRENNER. Now pursuant to notice, I call up the 

bill H.R. 1375, the ‘‘Financial Services Regulatory Relief Act of 

2003’’ for purposes of markup and move its favorable recommendation to the House. Without objection, the bill will be considered as 

read and open for amendment at any point. The text of the bill as 

reported by the Committee on Financial Services, which the Members have before them, will be considered as read, considered as 

the original text for purposes of amendment, and open for amendment at any point. 

[The Committee Print for H.R. 1375 follows:]

29 H.L.C.

[COMMITTEE PRINT]

July 7, 2003

[Showing H.R. 1375, As Reported by the Committee on

Financial Services]

108TH CONGRESS

1ST SESSION H. R. 1375

IN THE HOUSE OF REPRESENTATIVES

MARCH 20, 2003

Mrs. CAPITO (for herself, Mr. OXLEY, Mr. BACHUS, and Mr. ROSS) introduced

the following bill; which was referred to the Committee on Financial Services

JUNE , 2003

Reported with an amendment, committed to the Committee of the Whole

House on the State of the Union and ordered to be printed

[Strike out all after the enacting clause and insert the part printed in roman]

[For text of introduced bill, see copy of bill as introduced on March 20, 2003]

A BILL

To provide regulatory relief and improve productivity for

insured depository institutions, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,


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H.L.C.

1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Financial Services Regulatory Relief Act of 2003’’.

4 (b) TABLE OF CONTENTS.—The table of contents for

5 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—NATIONAL BANK PROVISIONS

Sec. 101. National bank directors.

Sec. 102. Voting in shareholder elections.

Sec. 103. Simplifying dividend calculations for national banks.

Sec. 104. Repeal of obsolete limitation on removal authority of the Comptroller

of the Currency.

Sec. 105. Repeal of intrastate branch capital requirements.

Sec. 106. Clarification of waiver of publication requirements for bank merger

notices.

Sec. 107. Capital equivalency deposits for Federal branches and agencies of foreign banks.

Sec. 108. Equal treatment for Federal agencies of foreign banks.

Sec. 109. Maintenance of a Federal branch and a Federal agency in the same

State.

Sec. 110. Business organization flexibility for national banks.

Sec. 111. Clarification of the main place of business of a national bank.

TITLE II—SAVINGS ASSOCIATION PROVISIONS

Sec. 201. Parity for savings associations under the Securities Exchange Act of

1934 and the Investment Advisers Act of 1940.

Sec. 202. Investments by Federal savings associations authorized to promote

the public welfare.

Sec. 203. Mergers and consolidations of Federal savings associations with nondepository institution affiliates.

Sec. 204. Repeal of statutory dividend notice requirement for savings association subsidiaries of savings and loan holding companies.

Sec. 205. Modernizing statutory authority for trust ownership of savings associations.

Sec. 206. Repeal of overlapping rules governing purchased mortgage servicing

rights.

Sec. 207. Restatement of authority for Federal savings associations to invest in

small business investment companies.

Sec. 208. Removal of limitation on investments in auto loans.

Sec. 209. Selling and offering of deposit products.

Sec. 210. Funeral- and cemetery-related fiduciary services.

Sec. 211. Repeal of qualified thrift lender requirement with respect to out-ofstate branches.

Sec. 212. Small business and other commercial loans.

Sec. 213. Clarifying citizenship of Federal savings associations for Federal

court jurisdiction.

Sec. 214. Clarification of applicability of certain procedural doctrines.


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H.L.C.

TITLE III—CREDIT UNION PROVISIONS

Sec. 301. Privately insured credit unions authorized to become members of a

Federal home loan bank.

Sec. 302. Leases of land on Federal facilities for credit unions.

Sec. 303. Investments in securities by Federal credit unions.

Sec. 304. Increase in general 12-year limitation of term of Federal credit union

loans to 15 years.

Sec. 305. Increase in 1 percent investment limit in credit union service organizations.

Sec. 306. Member business loan exclusion for loans to nonprofit religious organizations.

Sec. 307. Check cashing and money transfer services offered within the field of

membership.

Sec. 308. Voluntary mergers involving multiple common-bond credit unions.

Sec. 309. Conversions involving common-bond credit unions.

Sec. 310. Credit union governance.

Sec. 311. Providing the National Credit Union Administration with greater

flexibility in responding to market conditions.

Sec. 312. Exemption from pre-merger notification requirement of the Clayton

Act.

Sec. 313. Treatment of credit unions as depository institutions under securities

laws.

TITLE IV—DEPOSITORY INSTITUTION PROVISIONS

Sec. 401. Easing restrictions on interstate branching and mergers.

Sec. 402. Statute of limitations for judicial review of appointment of a receiver

for depository institutions.

Sec. 403. Reporting requirements relating to insider lending.

Sec. 404. Amendment to provide an inflation adjustment for the small depository institution exception under the Depository Institution

Management Interlocks Act.

Sec. 405. Enhancing the safety and soundness of insured depository institutions.

Sec. 406. Investments by insured savings associations in bank service companies authorized.

Sec. 407. Cross guarantee authority.

Sec. 408. Golden parachute authority and nonbank holding companies.

Sec. 409. Amendments relating to change in bank control.

TITLE V—DEPOSITORY INSTITUTION AFFILIATES PROVISIONS

Sec. 501. Clarification of cross marketing provision.

Sec. 502. Amendment to provide the Federal Reserve Board with discretion

concerning the imputation of control of shares of a company

by trustees.

Sec. 503. Eliminating geographic limits on thrift service companies.

Sec. 504. Clarification of scope of applicable rate provision.

TITLE VI—BANKING AGENCY PROVISIONS

Sec. 601. Waiver of examination schedule in order to allocate examiner resources.

Sec. 602. Interagency data sharing.

Sec. 603. Penalty for unauthorized participation by convicted individual.


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H.L.C.

Sec. 604. Amendment permitting the destruction of old records of a depository

institution by the FDIC after the appointment of the FDIC as

receiver.

Sec. 605. Modernization of recordkeeping requirement.

Sec. 606. Clarification of extent of suspension, removal, and prohibition authority of Federal banking agencies in cases of certain crimes by

institution-affiliated parties.

Sec. 607. Streamlining depository institution merger application requirements.

Sec. 608. Inclusion of Director of the Office of Thrift Supervision in list of

banking agencies regarding insurance customer protection regulations.

Sec. 609. Shortening of post-approval antitrust review period with the agreement of the Attorney General.

Sec. 610. Protection of confidential information received by Federal banking

regulators from foreign banking supervisors.

Sec. 611. Prohibition on the participation in the affairs of bank holding company or Edge Act or agreement corporations by convicted individual.

Sec. 612. Clarification that notice after separation from service may be made

by an order.

Sec. 613. Examiners of financial institutions.

Sec. 614. Parity in standards for institution-affiliated parties.

Sec. 615. Enforcement against misrepresentations regarding FDIC deposit insurance coverage.

Sec. 616. Compensation of Federal home loan bank directors.

Sec. 617. Extension of terms of Federal home loan bank directors.

Sec. 618. Biennial reports on the status of agency employment of minorities

and women.

Sec. 619. Coordination of State examination authority.

TITLE VII—CLERICAL AND TECHNICAL AMENDMENTS

Sec. 701. Clerical amendments to the Home Owners’ Loan Act.

Sec. 702. Technical corrections to the Federal Credit Union Act.

Sec. 703. Other technical corrections.

Sec. 704. Repeal of obsolete provisions of the Bank Holding Company Act of

1956.

1 TITLE I—NATIONAL BANK

2 PROVISIONS

3 SEC. 101. NATIONAL BANK DIRECTORS.

4 Section 5146 of the Revised Statutes of the United

5 States (12 U.S.C. 72) is amended—

6 (1) by striking ‘‘SEC. 5146. Every director

7 must during’’ and inserting the following:


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H.L.C.

1 ‘‘SEC. 5146. REQUIREMENTS FOR BANK DIRECTORS.

2 ‘‘(a) RESIDENCY REQUIREMENTS.—Every director of

3 a national bank shall, during’’;

4 (2) by striking ‘‘total number of directors.

5 Every director must own in his or her own right’’

6 and inserting ‘‘total number of directors.

7 ‘‘(b) INVESTMENT REQUIREMENT.—

8 ‘‘(1) IN GENERAL.—Every director of a na9 tional bank shall own, in his or her own right,’’; and

10 (3) by adding at the end the following new

11 paragraph:

12 ‘‘(2) EXCEPTION FOR SUBORDINATED DEBT IN

13 CERTAIN CASES.—In lieu of the requirements of

14 paragraph (1) relating to the ownership of capital

15 stock in the national bank, the Comptroller of the

16 Currency may, by regulation or order, permit an in17 dividual to serve as a director of a national bank

18 that has elected, or notifies the Comptroller of the

19 bank’s intention to elect, to operate as a S corpora20 tion pursuant to section 1362(a) of the Internal

21 Revenue Code of 1986, if that individual holds debt

22 of at least $1,000 issued by the national bank that

23 is subordinated to the interests of depositors and

24 other general creditors of the national bank.’’.


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H.L.C.

1 SEC. 102. VOTING IN SHAREHOLDER ELECTIONS.

2 Section 5144 of the Revised Statutes of the United

3 States (12 U.S.C. 61) is amended—

4 (1) by striking ‘‘or to cumulate’’ and inserting

5 ‘‘or, if so provided by the articles of association of

6 the national bank, to cumulate’’;

7 (2) by striking the comma after ‘‘his shares

8 shall equal’’; and

9 (3) by adding at the end the following new sen10 tence: ‘‘The Comptroller of the Currency may pre11 scribe such regulations to carry out the purposes of

12 this section as the Comptroller determines to be ap13 propriate.’’.

14 SEC. 103. SIMPLIFYING DIVIDEND CALCULATIONS FOR NA15 TIONAL BANKS.

16 (a) IN GENERAL.—Section 5199 of the Revised Stat17 utes of the United States (12 U.S.C. 60) is amended to

18 read as follows:

19 ‘‘SEC. 5199. NATIONAL BANK DIVIDENDS.

20 ‘‘(a) IN GENERAL.—Subject to subsection (b), the di21 rectors of any national bank may declare a dividend of

22 so much of the undivided profits of the bank as the direc23 tors judge to be expedient.

24 ‘‘(b) APPROVAL REQUIRED UNDER CERTAIN CIR25 CUMSTANCES.—A national bank may not declare and pay

26 dividends in any year in excess of an amount equal to the


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H.L.C.

1 sum of the total of the net income of the bank for that

2 year and the retained net income of the bank in the pre3 ceding two years, minus any transfers required by the

4 Comptroller of the Currency (including any transfers re5 quired to be made to a fund for the retirement of any

6 preferred stock), unless the Comptroller of the Currency

7 approves the declaration and payment of dividends in ex8 cess of such amount.’’.

9 (b) CLERICAL AMENDMENT.—The table of sections

10 for chapter three of title LXII of the Revised Statutes of

11 the United States is amended by striking the item relating

12 to section 5199 and inserting the following new item:

‘‘5199. National bank dividends.’’.

13 SEC. 104. REPEAL OF OBSOLETE LIMITATION ON REMOVAL

14 AUTHORITY OF THE COMPTROLLER OF THE

15 CURRENCY.

16 Section 8(e)(4) of the Federal Deposit Insurance Act

17 (12 U.S.C. 1818(e)(4)) is amended by striking the 5th

18 sentence.

19 SEC. 105. REPEAL OF INTRASTATE BRANCH CAPITAL RE20 QUIREMENTS.

21 Section 5155(c) of the Revised Statutes of the United

22 States (12 U.S.C. 36(c)) is amended—

23 (1) in the 2nd sentence, by striking ‘‘, without

24 regard to the capital requirements of this section,’’;

25 and


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H.L.C.

1 (2) by striking the last sentence.

2 SEC. 106. CLARIFICATION OF WAIVER OF PUBLICATION RE3 QUIREMENTS FOR BANK MERGER NOTICES.

4 The last sentence of sections 2(a) and 3(a)(2) of the

5 National Bank Consolidation and Merger Act (12 U.S.C.

6 215(a) and 215a(a)(2), respectively) are each amended by

7 striking ‘‘Publication of notice may be waived, in cases

8 where the Comptroller determines that an emergency ex9 ists justifying such waiver, by unanimous action of the

10 shareholders of the association or State bank’’ and insert11 ing ‘‘Publication of notice may be waived if the Comp12 troller determines that an emergency exists justifying such

13 waiver or if the shareholders of the association or State

14 bank agree by unanimous action to waive the publication

15 requirement for their respective institutions’’.

16 SEC. 107. CAPITAL EQUIVALENCY DEPOSITS FOR FEDERAL

17 BRANCHES AND AGENCIES OF FOREIGN

18 BANKS.

19 Section 4(g) of the International Banking Act of

20 1978 (12 U.S.C. 3102(g)) is amended to read as follows:

21 ‘‘(g) CAPITAL EQUIVALENCY DEPOSIT.—

22 ‘‘(1) IN GENERAL.—Upon the opening of a

23 Federal branch or agency of a foreign bank in any

24 State and thereafter, the foreign bank, in addition to

25 any deposit requirements imposed under section 6,


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H.L.C.

1 shall keep on deposit, in accordance with such regu2 lations as the Comptroller of the Currency may pre3 scribe in accordance with paragraph (2), dollar de4 posits, investment securities, or other assets in such

5 amounts as the Comptroller of the Currency deter6 mines to be necessary for the protection of deposi7 tors and other investors and to be consistent with

8 the principles of safety and soundness.

9 ‘‘(2) LIMITATION.—Notwithstanding paragraph

10 (1), regulations prescribed under such paragraph

11 shall not permit a foreign bank to keep assets on de12 posit in an amount that is less than the amount re13 quired for a State licensed branch or agency of a

14 foreign bank under the laws and regulations of the

15 State in which the Federal agency or branch is lo16 cated.’’.

17 SEC. 108. EQUAL TREATMENT FOR FEDERAL AGENCIES OF

18 FOREIGN BANKS.

19 The 1st sentence of section 4(d) of the International

20 Banking Act of 1978 (12 U.S.C. 3102(d)) is amended by

21 inserting ‘‘from citizens or residents of the United States’’

22 after ‘‘deposits’’.


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H.L.C.

1 SEC. 109. MAINTENANCE OF A FEDERAL BRANCH AND A

2 FEDERAL AGENCY IN THE SAME STATE.

3 Section 4(e) of the International Banking Act of

4 1978 (12 U.S.C. 3102(e)) is amended by inserting ‘‘if the

5 maintenance of both an agency and a branch in the State

6 is prohibited under the law of such State’’ before the pe7 riod at the end.

8 SEC. 110. BUSINESS ORGANIZATION FLEXIBILITY FOR NA9 TIONAL BANKS.

10 (a) IN GENERAL.—Chapter one of title LXII of the

11 Revised Statutes of the United States (12 U.S.C. 21 et

12 seq.) is amended by inserting after section 5136B the fol13 lowing new section:

14 ‘‘SEC. 5136C. ALTERNATIVE BUSINESS ORGANIZATION.

15 ‘‘(a) IN GENERAL.—The Comptroller of the Currency

16 may prescribe regulations—

17 ‘‘(1) to permit a national bank to be organized

18 other than as a body corporate; and

19 ‘‘(2) to provide requirements for the organiza20 tional characteristics of a national bank organized

21 and operating other than as a body corporate, con22 sistent with the safety and soundness of the national

23 bank.

24 ‘‘(b) EQUAL TREATMENT.—Except as provided in

25 regulations prescribed under subsection (a), a national

26 bank that is operating other than as a body corporate shall


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H.L.C.

1 have the same rights and privileges and shall be subject

2 to the same duties, restrictions, penalties, liabilities, condi3 tions, and limitations as a national bank that is organized

4 as a body corporate.’’.

5 (b) TECHNICAL AND CONFORMING AMENDMENT.—

6 Section 5136 of the Revised Statutes of the United States

7 (12 U.S.C. 24) is amended, in the matter preceding the

8 paragraph designated as the ‘‘First’’, by inserting ‘‘or

9 other form of business organization provided under regula10 tions prescribed by the Comptroller of the Currency under

11 section 5136C’’ after ‘‘a body corporate’’.

12 (c) CLERICAL AMENDMENT.—The table of sections

13 for chapter one of title LXII of the Revised Statutes of

14 the United States (12 U.S.C. 21 et seq.) is amended by

15 inserting after the item relating to section 5136B the fol16 lowing new item:

‘‘5136C. Alternative business organization.’’.

17 SEC. 111. CLARIFICATION OF THE MAIN PLACE OF BUSI18 NESS OF A NATIONAL BANK.

19 Title LXII of the Revised Statutes of the United

20 States is amended—

21 (1) in the paragraph designated the ‘‘Second’’

22 of section 5134 (12 U.S.C. 22), by striking ‘‘The

23 place where its operations of discount and deposit

24 are to be carried on’’ and inserting ‘‘The place


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1 where the main office of the national bank is, or is

2 to be, located’’; and

3 (2) in section 5190 (12 U.S.C. 81), by striking

4 ‘‘the place specified in its organization certificate’’

5 and inserting ‘‘the main office of the national bank’’.

6 TITLE II—SAVINGS ASSOCIATION

7 PROVISIONS

8 SEC. 201. PARITY FOR SAVINGS ASSOCIATIONS UNDER THE

9 SECURITIES EXCHANGE ACT OF 1934 AND

10 THE INVESTMENT ADVISERS ACT OF 1940.

11 (a) SECURITIES EXCHANGE ACT OF 1934.—

12 (1) DEFINITION OF BANK.—Section 3(a)(6) of

13 the Securities Exchange Act of 1934 (15 U.S.C.

14 78c(a)(6)) is amended—

15 (A) in subparagraph (A), by inserting ‘‘or

16 a Federal savings association, as defined in sec17 tion 2(5) of the Home Owners’ Loan Act’’ after

18 ‘‘a banking institution organized under the laws

19 of the United States’’; and

20 (B) in subparagraph (C)—

21 (i) by inserting ‘‘or savings associa22 tion as defined in section 2(4) of the Home

23 Owners’ Loan Act,’’ after ‘‘banking insti24 tution,’’; and


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H.L.C.

1 (ii) by inserting ‘‘or savings associa2 tions’’ after ‘‘having supervision over

3 banks’’.

4 (2) INCLUDE OTS UNDER THE DEFINITION OF

5 APPROPRIATE REGULATORY AGENCY FOR CERTAIN

6 PURPOSES.—Section 3(a)(34) of such Act (15

7 U.S.C. 78c(a)(34)) is amended—

8 (A) in subparagraph (A)—

9 (i) in clause (ii), by striking ‘‘(i) or

10 (iii)’’ and inserting ‘‘(i), (iii), or (iv)’’;

11 (ii) by striking ‘‘and’’ at the end of

12 clause (iii);

13 (iii) by redesignating clause (iv) as

14 clause (v); and

15 (iv) by inserting the following new

16 clause after clause (iii):

17 ‘‘(iv) the Director of the Office of

18 Thrift Supervision, in the case of a savings

19 association (as defined in section 3(b) of

20 the Federal Deposit Insurance Act (12

21 U.S.C. 1813(b))) the deposits of which are

22 insured by the Federal Deposit Insurance

23 Corporation, a subsidiary or a department

24 or division of any such savings association,


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H.L.C.

1 or a savings and loan holding company;

2 and’’;

3 (B) in subparagraph (B)—

4 (i) in clause (ii), by striking ‘‘(i) or

5 (iii)’’ and inserting ‘‘(i), (iii), or (iv)’’;

6 (ii) by striking ‘‘and’’ at the end of

7 clause (iii);

8 (iii) by redesignating clause (iv) as

9 clause (v); and

10 (iv) by inserting the following new

11 clause after clause (iii):

12 ‘‘(iv) the Director of the Office of

13 Thrift Supervision, in the case of a savings

14 association (as defined in section 3(b) of

15 the Federal Deposit Insurance Act (12

16 U.S.C. 1813(b))) the deposits of which are

17 insured by the Federal Deposit Insurance

18 Corporation, or a subsidiary of any such

19 savings association, or a savings and loan

20 holding company; and’’;

21 (C) in subparagraph (C)—

22 (i) in clause (ii), by striking ‘‘(i) or

23 (iii)’’ and inserting ‘‘(i), (iii), or (iv)’’;

24 (ii) by striking ‘‘and’’ at the end of

25 clause (iii);


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H.L.C.

1 (iii) by redesignating clause (iv) as

2 clause (v); and

3 (iv) by inserting the following new

4 clause after clause (iii):

5 ‘‘(iv) the Director of the Office of

6 Thrift Supervision, in the case of a savings

7 association (as defined in section 3(b) of

8 the Federal Deposit Insurance Act (12

9 U.S.C. 1813(b))) the deposits of which are

10 insured by the Federal Deposit Insurance

11 Corporation, a savings and loan holding

12 company, or a subsidiary of a savings and

13 loan holding company when the appro14 priate regulatory agency for such clearing

15 agency is not the Commission; and’’;

16 (D) in subparagraph (D)—

17 (i) by striking ‘‘and’’ at the end of

18 clause (ii);

19 (ii) by redesignating clause (iii) as

20 clause (iv); and

21 (iii) by inserting the following new

22 clause after clause (ii):

23 ‘‘(iii) the Director of the Office of

24 Thrift Supervision, in the case of a savings

25 association (as defined in section 3(b) of


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16

H.L.C.

1 the Federal Deposit Insurance Act (12

2 U.S.C. 1813(b))) the deposits of which are

3 insured by the Federal Deposit Insurance

4 Corporation; and’’;

5 (E) in subparagraph (F)—

6 (i) by redesignating clauses (ii), (iii),

7 and (iv) as clauses (iii), (iv), and (v), re8 spectively; and

9 (ii) by inserting the following new

10 clause after clause (i):

11 ‘‘(ii) the Director of the Office of

12 Thrift Supervision, in the case of a savings

13 association (as defined in section 3(b) of

14 the Federal Deposit Insurance Act (12

15 U.S.C. 1813(b))) the deposits of which are

16 insured by the Federal Deposit Insurance

17 Corporation; and’’;

18 (F) by moving subparagraph (H) and in19 serting such subparagraph after subparagraph

20 (G); and

21 (G) by adding at the end the following new

22 sentence: ‘‘As used in this paragraph, the term

23 ‘savings and loan holding company’ has the

24 meaning given it in section 10(a) of the Home

25 Owners’ Loan Act (12 U.S.C. 1467a(a)).’’.


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H.L.C.

1 (b) INVESTMENT ADVISERS ACT OF 1940.—

2 (1) DEFINITION OF BANK.—Section 202(a)(2)

3 of the Investment Advisers Act of 1940 (15 U.S.C.

4 80b–2(a)(2)) is amended—

5 (A) in subparagraph (A) by inserting ‘‘or

6 a Federal savings association, as defined in sec7 tion 2(5) of the Home Owners’ Loan Act’’ after

8 ‘‘a banking institution organized under the laws

9 of the United States’’; and

10 (B) in subparagraph (C)—

11 (i) by inserting ‘‘, savings association

12 as defined in section 2(4) of the Home

13 Owners’ Loan Act,’’ after ‘‘banking insti14 tution’’; and

15 (ii) by inserting ‘‘or savings associa16 tions’’ after ‘‘having supervision over

17 banks’’.

18 (2) CONFORMING AMENDMENTS.—Subsections

19 (a)(1)(A)(i), (a)(1)(B), (a)(2), and (b) of section

20 210A of such Act (15 U.S.C. 80b–10a), as added by

21 section 220 of the Gramm-Leach-Bliley Act, are

22 each amended by striking ‘‘bank holding company’’

23 each place it occurs and inserting ‘‘bank holding

24 company or savings and loan holding company’’.


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H.L.C.

1 (c) CONFORMING AMENDMENT TO THE INVESTMENT

2 COMPANY ACT OF 1940.—Section 10(c) of the Investment

3 Company Act of 1940 (15 U.S.C. 80a–10(c)), as amended

4 by section 213(c) of the Gramm-Leach-Bliley Act, is

5 amended by inserting after ‘‘1956)’’ the following: ‘‘or any

6 one savings and loan holding company (together with its

7 affiliates and subsidiaries) (as such terms are defined in

8 section 10 of the Home Owners’ Loan Act)’’.

9 SEC. 202. INVESTMENTS BY FEDERAL SAVINGS ASSOCIA10 TIONS AUTHORIZED TO PROMOTE THE PUB11 LIC WELFARE.

12 (a) IN GENERAL.—Section 5(c)(3) of the Home Own13 ers’ Loan Act (12 U.S.C. 1464(c)) is amended by adding

14 at the end the following new subparagraph:

15 ‘‘(D) DIRECT INVESTMENTS TO PROMOTE

16 THE PUBLIC WELFARE.—

17 ‘‘(i) IN GENERAL.—A Federal savings

18 association may make investments de19 signed primarily to promote the public wel20 fare, including the welfare of low- and

21 moderate-income communities or families

22 through the provision of housing, services,

23 and jobs.

24 ‘‘(ii) DIRECT INVESTMENTS OR ACQUI25 SITION OF INTEREST IN OTHER COMPAVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00046 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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H.L.C.

1 NIES.—Investments under clause (i) may

2 be made directly or by purchasing interests

3 in an entity primarily engaged in making

4 such investments.

5 ‘‘(iii) PROHIBITION ON UNLIMITED LI6 ABILITY.—No investment may be made

7 under this subparagraph which would sub8 ject a Federal savings association to unlim9 ited liability to any person.

10 ‘‘(iv) SINGLE INVESTMENT LIMITA11 TION TO BE ESTABLISHED BY DIREC12 TOR.—Subject to clauses (v) and (vi), the

13 Director shall establish, by order or regula14 tion, limits on—

15 ‘‘(I) the amount any savings as16 sociation may invest in any 1 project;

17 and

18 ‘‘(II) the aggregate amount of in19 vestment of any savings association

20 under this subparagraph.

21 ‘‘(v) FLEXIBLE AGGREGATE INVEST22 MENT LIMITATION.—The aggregate

23 amount of investments of any savings asso24 ciation under this subparagraph may not

25 exceed an amount equal to the sum of 5


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20

H.L.C.

1 percent of the savings association’s capital

2 stock actually paid in and unimpaired and

3 5 percent of the savings association’s

4 unimpaired surplus, unless—

5 ‘‘(I) the Director determines that

6 the savings association is adequately

7 capitalized; and

8 ‘‘(II) the Director determines, by

9 order, that the aggregate amount of

10 investments in a higher amount than

11 the limit under this clause will pose

12 no significant risk to the affected de13 posit insurance fund.

14 ‘‘(vi) MAXIMUM AGGREGATE INVEST15 MENT LIMITATION.—Notwithstanding

16 clause (v), the aggregate amount of invest17 ments of any savings association under

18 this subparagraph may not exceed an

19 amount equal to the sum of 10 percent of

20 the savings association’s capital stock actu21 ally paid in and unimpaired and 10 per22 cent of the savings association’s

23 unimpaired surplus.

24 ‘‘(vii) INVESTMENTS NOT SUBJECT TO

25 OTHER LIMITATION ON QUALITY OF INVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00048 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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H.L.C.

1 VESTMENTS.—No obligation a Federal sav2 ings association acquires or retains under

3 this subparagraph shall be taken into ac4 count for purposes of the limitation con5 tained in section 28(d) of the Federal De6 posit Insurance Act on the acquisition and

7 retention of any corporate debt security

8 not of investment grade.’’.

9 (b) TECHNICAL AND CONFORMING AMENDMENT.—

10 Section 5(c)(3)(A) of the Home Owners’ Loan Act (12

11 U.S.C. 1464(c)(3)(A)) is amended to read as follows:

12 ‘‘(A) [Repealed.]’’.

13 SEC. 203. MERGERS AND CONSOLIDATIONS OF FEDERAL

14 SAVINGS ASSOCIATIONS WITH NONDEPOSI15 TORY INSTITUTION AFFILIATES.

16 Section 5(d)(3) of the Home Owners’ Loan Act (12

17 U.S.C. 1464(d)(3)) is amended—

18 (1) by redesignating subparagraph (B) as sub19 paragraph (C); and

20 (2) by inserting after subparagraph (A) the fol21 lowing new subparagraph:

22 ‘‘(B) MERGERS AND CONSOLIDATIONS

23 WITH NONDEPOSITORY INSTITUTION AFFILI24 ATES.—


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H.L.C.

1 ‘‘(i) IN GENERAL.—Upon the approval

2 of the Director, a Federal savings associa3 tion may merge with any nondepository in4 stitution affiliate of the savings associa5 tion.

6 ‘‘(ii) RULE OF CONSTRUCTION.—No

7 provision of clause (i) shall be construed

8 as—

9 ‘‘(I) affecting the applicability of

10 section 18(c) of the Federal Deposit

11 Insurance Act; or

12 ‘‘(II) granting a Federal savings

13 association any power or any author14 ity to engage in any activity that is

15 not authorized for a Federal savings

16 association under any other provision

17 of this Act or any other provision of

18 law.’’.

19 SEC. 204. REPEAL OF STATUTORY DIVIDEND NOTICE RE20 QUIREMENT FOR SAVINGS ASSOCIATION SUB21 SIDIARIES OF SAVINGS AND LOAN HOLDING

22 COMPANIES.

23 Section 10(f) of the Home Owners’ Loan Act (12

24 U.S.C. 1467a(f)) is amended to read as follows:


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23

H.L.C.

1 ‘‘(f) DECLARATION OF DIVIDEND.—The Director

2 may—

3 ‘‘(1) require a savings association that is a sub4 sidiary of a savings and loan holding company to

5 give prior notice to the Director of the intent of the

6 savings association to pay a dividend on its guar7 anty, permanent, or other nonwithdrawable stock;

8 and

9 ‘‘(2) establish conditions on the payment of

10 dividends by such a savings association.’’.

11 SEC. 205. MODERNIZING STATUTORY AUTHORITY FOR

12 TRUST OWNERSHIP OF SAVINGS ASSOCIA13 TIONS.

14 (a) IN GENERAL.—Section 10(a)(1)(C) of the Home

15 Owners’ Loan Act (12 U.S.C. 1467a(a)(1)(C)) is

16 amended—

17 (1) by striking ‘‘trust,’’ and inserting ‘‘business

18 trust,’’; and

19 (2) by inserting ‘‘or any other trust unless by

20 its terms it must terminate within 25 years or not

21 later than 21 years and 10 months after the death

22 of individuals living on the effective date of the

23 trust,’’ after ‘‘or similar organization,’’.


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24

H.L.C.

1 (b) TECHNICAL AND CONFORMING AMENDMENT.—

2 Section 10(a)(3) of the Home Owners’ Loan Act (12

3 U.S.C. 1467a(a)(3)) is amended—

4 (1) by striking ‘‘does not include—’’ and all

5 that follows through ‘‘any company by virtue’’ where

6 such term appears in subparagraph (A) and insert7 ing ‘‘does not include any company by virtue’’;

8 (2) by striking ‘‘; and’’ at the end of subpara9 graph (A) and inserting a period; and

10 (3) by striking subparagraph (B).

11 SEC. 206. REPEAL OF OVERLAPPING RULES GOVERNING

12 PURCHASED MORTGAGE SERVICING RIGHTS.

13 Section 5(t) of the Home Owners’ Loan Act (12

14 U.S.C. 1464(t)) is amended—

15 (1) by striking paragraph (4) and inserting the

16 following new paragraph:

17 ‘‘(4) [Repealed.]’’; and

18 (2) in paragraph (9)(A), by striking ‘‘intangible

19 assets, plus’’ and all that follows through the period

20 at the end and inserting ‘‘intangible assets.’’.


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25

H.L.C.

1 SEC. 207. RESTATEMENT OF AUTHORITY FOR FEDERAL

2 SAVINGS ASSOCIATIONS TO INVEST IN SMALL

3 BUSINESS INVESTMENT COMPANIES.

4 Subparagraph (D) of section 5(c)(4) of the Home

5 Owners’ Loan Act (12 U.S.C. 1464(c)(4)) is amended to

6 read as follows:

7 ‘‘(D) SMALL BUSINESS INVESTMENT COM8 PANIES.—Any Federal savings association may

9 invest in 1 or more small business investment

10 companies, or in any entity established to invest

11 solely in small business investment companies

12 formed under the Small Business Investment

13 Act of 1958, except that the total amount of in14 vestments under this subparagraph may not at

15 any time exceed the amount equal to 5 percent

16 of capital and surplus of the savings associa17 tion.’’.

18 SEC. 208. REMOVAL OF LIMITATION ON INVESTMENTS IN

19 AUTO LOANS.

20 (a) IN GENERAL.—Section 5(c)(1) of the Home Own21 ers’ Loan Act (12 U.S.C. 1464(c)(1)) is amended by add22 ing at the end the following new subparagraph:

23 ‘‘(V) AUTO LOANS.—Loans and leases for

24 motor vehicles acquired for personal, family, or

25 household purposes.’’.


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H.L.C.

1 (b) TECHNICAL AND CONFORMING AMENDMENT RE2 LATING TO QUALIFIED THRIFT INVESTMENTS.—Section

3 10(m)(4)(C)(ii) of the Home Owners’ Loan Act (12

4 U.S.C. 1467a(m)(4)(C)(ii)) is amended by adding at the

5 end the following new subclause:

6 ‘‘(VIII) Loans and leases for

7 motor vehicles acquired for personal,

8 family, or household purposes.’’.

9 SEC. 209. SELLING AND OFFERING OF DEPOSIT PRODUCTS.

10 Section 15(h) of the Securities Exchange Act of

11 1934 (15 U.S.C. 78o(h)) is amended by adding at

12 the end the following new paragraph:

13 ‘‘(4) SELLING AND OFFERING OF DEPOSIT

14 PRODUCTS.—No law, rule, regulation, or order, or

15 other administrative action of any State or political

16 subdivision thereof shall directly or indirectly require

17 any individual who is an agent of 1 Federal savings

18 association (as such term is defined in section 2(5)

19 of the Home Owners’ Loan Act (12 U.S.C. 1462(5))

20 in selling or offering deposit (as such term is defined

21 in section 3 of the Federal Deposit Insurance Act

22 (12 U.S.C. 1813(l)) products issued by such associa23 tion to qualify or register as a broker, dealer, associ24 ated person of a broker, or associated person of a


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27

H.L.C.

1 dealer, or to qualify or register in any other similar

2 status or capacity, if the individual does not—

3 ‘‘(A) accept deposits or make withdrawals

4 on behalf of any customer of the association;

5 ‘‘(B) offer or sell a deposit product as an

6 agent for another entity that is not subject to

7 supervision and examination by a Federal bank8 ing agency (as defined in section 3(z) of the

9 Federal Deposit Insurance Act (12 U.S.C.

10 1813(z)), the National Credit Union Adminis11 tration, or any officer, agency, or other entity

12 of any State which has primary regulatory au13 thority over State banks, State savings associa14 tions, or State credit unions;

15 ‘‘(C) offer or sell a deposit product that is

16 not an insured deposit (as defined in section

17 3(m) of the Federal Deposit Insurance Act (12

18 U.S.C. 1813(m)));

19 ‘‘(D) offer or sell a deposit product which

20 contains a feature that makes it callable at the

21 option of such Federal savings association; or

22 ‘‘(E) create a secondary market with re23 spect to a deposit product or otherwise add en24 hancements or features to such product inde25 pendent of those offered by the association.’’.


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H.L.C.

1 SEC. 210. FUNERAL- AND CEMETERY-RELATED FIDUCIARY

2 SERVICES.

3 Section 5(n) of the Home Owners’ Loan Act (12

4 U.S.C. 1464(n)) is amended by adding at the end the fol5 lowing new paragraph:

6 ‘‘(11) FUNERAL- AND CEMETERY-RELATED FI7 DUCIARY SERVICES.—

8 ‘‘(A) IN GENERAL.—A funeral director or

9 cemetery operator, when acting in such capac10 ity, (or any other person in connection with a

11 contract or other agreement with a funeral di12 rector or cemetery operator) may engage any

13 Federal savings association, regardless of where

14 the association is located, to act in any fidu15 ciary capacity in which the savings association

16 has the right to act in accordance with this sec17 tion, including holding funds deposited in trust

18 or escrow by the funeral director or cemetery

19 operator (or by such other party), and the sav20 ings association may act in such fiduciary ca21 pacity on behalf of the funeral director or ceme22 tery operator (or such other person).

23 ‘‘(B) DEFINITIONS.—For purposes of this

24 paragraph, the following definitions shall apply:

25 ‘‘(i) CEMETERY.—The term ‘ceme26 tery’ means any land or structure used, or


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H.L.C.

1 intended to be used, for the interment of

2 human remains in any form.

3 ‘‘(ii) CEMETERY OPERATOR.—The

4 term ‘cemetery operator’ means any person

5 who contracts or accepts payment for mer6 chandise, endowment, or perpetual care

7 services in connection with a cemetery.

8 ‘‘(iii) FUNERAL DIRECTOR.—The term

9 ‘funeral director’ means any person who

10 contracts or accepts payment to provide or

11 arrange—

12 ‘‘(I) services for the final disposi13 tion of human remains; or

14 ‘‘(II) funeral services, property,

15 or merchandise (including cemetery

16 services, property, or merchandise).’’.

17 SEC. 211. REPEAL OF QUALIFIED THRIFT LENDER RE18 QUIREMENT WITH RESPECT TO OUT-OF19 STATE BRANCHES.

20 Section 5(r)(1) of the Home Owners’ Loan Act (12

21 U.S.C. 1464(r)(1)) is amended by striking the last sen22 tence sentence.


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H.L.C.

1 SEC. 212. SMALL BUSINESS AND OTHER COMMERCIAL

2 LOANS.

3 (a) ELIMINATION OF LENDING LIMIT ON SMALL

4 BUSINESS LOANS.—Section 5(c)(1) of the Home Owners’

5 Loan Act (12 U.S.C. 1464(c)(1)) is amended by inserting

6 after subparagraph (V) (as added by section 208 of this

7 title) the following new subparagraph:

8 ‘‘(W) SMALL BUSINESS LOANS.—Small

9 business loans, as defined in regulations which

10 the Director shall prescribe.’’.

11 (b) INCREASE IN LENDING LIMIT ON OTHER BUSI12 NESS LOANS.—Section 5(c)(2)(A) of the Home Owners’

13 Loan Act (12 U.S.C. 1464(c)(2)(A)) is amended by strik14 ing ‘‘, and amounts in excess of 10 percent’’ and all that

15 follows through ‘‘by the Director’’.

16 SEC. 213. CLARIFYING CITIZENSHIP OF FEDERAL SAVINGS

17 ASSOCIATIONS FOR FEDERAL COURT JURIS18 DICTION.

19 Section 5 of the Home Owners’ Loan Act (12 U.S.C.

20 1464) is amended by adding at the end the following new

21 subsection:

22 ‘‘(x) HOME STATE CITIZENSHIP.—In determining

23 whether a Federal court has diversity jurisdiction over a

24 case in which a Federal savings association is a party, the

25 Federal savings association shall be considered to be a citVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00058 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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H.L.C.

1 izen only of the State in which such savings association

2 has its main office.’’.

3 SEC. 214. CLARIFICATION OF APPLICABILITY OF CERTAIN

4 PROCEDURAL DOCTRINES.

5 Section 11A(d) of the Federal Deposit Insurance Act

6 (12 U.S.C. 1821a(d)) is amended—

7 (1) by striking ‘‘LEGAL PROCEEDINGS.—Any

8 judgment’’ and inserting ‘‘LEGAL PROCEEDINGS.—

9 ‘‘(1) IN GENERAL.—Any judgment’’; and

10 (2) by adding at the end the following new

11 paragraph:

12 ‘‘(2) CLARIFICATION OF APPLICABILITY OF

13 CERTAIN PROCEDURAL DOCTRINES.—In any pro14 ceeding seeking a monetary recovery against the

15 United States, or an agency or official thereof, based

16 upon actions of the Federal Savings and Loan In17 surance Corporation prior to its dissolution, or the

18 Federal Home Loan Bank Board prior to its dis19 solution, and arising from the Financial Institutions

20 Reform, Recovery, and Enforcement Act of 1989 or

21 its implementation, and where any monetary recov22 ery in such proceeding would be paid from the

23 FSLIC Resolution Fund or any supplements there24 to, neither the United States Court of Federal

25 Claims, the United States Court of Appeals for the


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H.L.C.

1 Federal Circuit, nor any other court of competent

2 jurisdiction shall dismiss, or affirm on appeal the

3 dismissal of, the claims of any party seeking such

4 monetary recovery, on the basis of res judicata, col5 lateral estoppel, or any similar doctrine, defense, or

6 rule of law, based upon any decision, opinion, or

7 order of judgment entered by any court prior to July

8 1, 1996. Unless some other defense is applicable, in

9 any such proceeding, the United States Court of

10 Federal Claims, the United States Court of Appeals

11 for the Federal Circuit, and any other court of com12 petent jurisdiction shall review the merits of the

13 claims of the party seeking such monetary relief and

14 shall enter judgment accordingly.’’.

15 TITLE III—CREDIT UNION

16 PROVISIONS

17 SEC. 301. PRIVATELY INSURED CREDIT UNIONS AUTHOR18 IZED TO BECOME MEMBERS OF A FEDERAL

19 HOME LOAN BANK.

20 (a) IN GENERAL.—Section 4(a) of the Federal Home

21 Loan Bank Act (12 U.S.C. 1424(a)) is amended by adding

22 at the end the following new paragraph:

23 ‘‘(5) CERTAIN PRIVATELY INSURED CREDIT

24 UNIONS.—


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H.L.C.

1 ‘‘(A) IN GENERAL.—A credit union which

2 has been determined, in accordance with section

3 43(e)(1) of the Federal Deposit Insurance Act

4 and subject to the requirements of subpara5 graph (B), to meet all eligibility requirements

6 for Federal deposit insurance shall be treated

7 as an insured depository institution for pur8 poses of determining the eligibility of such cred9 it union for membership in a Federal home loan

10 bank under paragraphs (1), (2), and (3).

11 ‘‘(B) CERTIFICATION BY APPROPRIATE SU12 PERVISOR.—

13 ‘‘(i) IN GENERAL.—For purposes of

14 this paragraph and subject to clause (ii), a

15 credit union which lacks Federal deposit

16 insurance and which has applied for mem17 bership in a Federal home loan bank may

18 be treated as meeting all the eligibility re19 quirements for Federal deposit insurance

20 only if the appropriate supervisor of the

21 State in which the credit union is char22 tered has determined that the credit union

23 meets all the eligibility requirements for

24 Federal deposit insurance as of the date of

25 the application for membership.


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H.L.C.

1 ‘‘(ii) CERTIFICATION DEEMED

2 VALID.—If, in the case of any credit union

3 to which clause (i) applies, the appropriate

4 supervisor of the State in which such cred5 it union is chartered fails to make a deter6 mination pursuant to such clause by the

7 end of the 6-month period beginning on

8 the date of the application, the credit

9 union shall be deemed to have met the re10 quirements of clause (i).

11 ‘‘(C) SECURITY INTERESTS OF FEDERAL

12 HOME LOAN BANK NOT AVOIDABLE.—Notwith13 standing any provision of State law authorizing

14 a conservator or liquidating agent of a credit

15 union to repudiate contracts, no such provision

16 shall apply with respect to—

17 ‘‘(i) any extension of credit from any

18 Federal home loan bank to any credit

19 union which is a member of any such bank

20 pursuant to this paragraph; or

21 ‘‘(ii) any security interest in the as22 sets of such credit union securing any such

23 extension of credit.’’.

24 (b) COPIES OF AUDITS OF PRIVATE INSURERS OF

25 CERTAIN DEPOSITORY INSTITUTIONS REQUIRED TO BE


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H.L.C.

1 PROVIDED TO SUPERVISORY AGENCIES.—Section

2 43(a)(2) of the Federal Deposit Insurance Act (12 U.S.C.

3 1831t(a)(2)) is amended—

4 (1) by striking ‘‘and’’ at the end of subpara5 graph (A)(i);

6 (2) by striking the period at the end of clause

7 (ii) of subparagraph (A) and inserting a semicolon;

8 (3) by inserting the following new clauses at the

9 end of subparagraph (A):

10 ‘‘(iii) in the case of depository institu11 tions described in subsection (f)(2)(A) the

12 deposits of which are insured by the pri13 vate insurer, the National Credit Union

14 Administration, not later than 7 days after

15 that audit is completed; and

16 ‘‘(iv) in the case of depository institu17 tions described in subsection (f)(2)(A) the

18 deposits of which are insured by the pri19 vate insurer which are members of a Fed20 eral home loan bank, the Federal Housing

21 Finance Board, not later than 7 days after

22 that audit is completed.’’; and

23 (4) by adding at the end the following new sub24 paragraph:


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H.L.C.

1 ‘‘(C) CONSULTATION.—The appropriate

2 supervisory agency of each State in which a pri3 vate deposit insurer insures deposits in an insti4 tution described in subsection (f)(2)(A) which—

5 ‘‘(i) lacks Federal deposit insurance;

6 and

7 ‘‘(ii) has become a member of a Fed8 eral home loan bank,

9 shall provide the National Credit Union Admin10 istration, upon request, with the results of any

11 examination and reports related thereto con12 cerning the private deposit insurer to which

13 such agency may have in its possession.’’.

14 SEC. 302. LEASES OF LAND ON FEDERAL FACILITIES FOR

15 CREDIT UNIONS.

16 (a) IN GENERAL.—Section 124 of the Federal Credit

17 Union Act (12 U.S.C. 1770) is amended—

18 (1) by striking ‘‘Upon application by any credit

19 union’’ and inserting ‘‘Notwithstanding any other

20 provision of law, upon application by any credit

21 union’’;

22 (2) by inserting ‘‘on lands reserved for the use

23 of, and under the exclusive or concurrent jurisdiction

24 of, the United States or’’ after ‘‘officer or agency of


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1 the United States charged with the allotment of

2 space’’;

3 (3) by inserting ‘‘lease land or’’ after ‘‘such of4 ficer or agency may in his or its discretion’’; and

5 (4) by inserting ‘‘or the facility built on the

6 lease land’’ after ‘‘credit union to be served by the

7 allotment of space’’.

8 (b) CLERICAL AMENDMENT.—The heading for sec9 tion 124 is amended by inserting ‘‘OR FEDERAL LAND’’

10 after ‘‘BUILDINGS’’.

11 SEC. 303. INVESTMENTS IN SECURITIES BY FEDERAL CRED12 IT UNIONS.

13 Section 107 of the Federal Credit Union Act (12

14 U.S.C. 1757) is amended—

15 (1) in the matter preceding paragraph (1) by

16 striking ‘‘A Federal credit union’’ and inserting ‘‘(a)

17 IN GENERAL.—Any Federal credit union’’; and

18 (2) by adding at the end the following new sub19 section:

20 ‘‘(b) INVESTMENT FOR THE CREDIT UNION’S OWN

21 ACCOUNT.—

22 ‘‘(1) IN GENERAL.—A Federal credit union may

23 purchase and hold for its own account such invest24 ment securities of investment grade as the Board

25 may authorize by regulation, subject to such limitaVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00065 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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1 tions and restrictions as the Board may prescribe in

2 the regulations.

3 ‘‘(2) PERCENTAGE LIMITATIONS.—

4 ‘‘(A) SINGLE OBLIGOR.—In no event may

5 the total amount of investment securities of any

6 single obligor or maker held by a Federal credit

7 union for the credit union’s own account exceed

8 at any time an amount equal to 10 percent of

9 the net worth of the credit union.

10 ‘‘(B) AGGREGATE INVESTMENTS.—In no

11 event may the aggregate amount of investment

12 securities held by a Federal credit union for the

13 credit union’s own account exceed at any time

14 an amount equal to 10 percent of the assets of

15 the credit union.

16 ‘‘(3) INVESTMENT SECURITY DEFINED.—

17 ‘‘(A) IN GENERAL.—For purposes of this

18 subsection, the term ‘investment security’

19 means marketable obligations evidencing the in20 debtedness of any person in the form of bonds,

21 notes, or debentures and other instruments

22 commonly referred to as investment securities.

23 ‘‘(B) FURTHER DEFINITION BY BOARD.—

24 The Board may further define the term ‘invest25 ment security’.


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1 ‘‘(4) INVESTMENT GRADE DEFINED.—The term

2 ‘investment grade’ means with respect to an invest3 ment security purchased by a credit union for its

4 own account, an investment security that at the time

5 of such purchase is rated in one of the 4 highest rat6 ing categories by at least 1 nationally recognized

7 statistical rating organization.

8 ‘‘(5) CLARIFICATION OF PROHIBITION ON

9 STOCK OWNERSHIP.—No provision of this sub10 section shall be construed as authorizing a Federal

11 credit union to purchase shares of stock of any cor12 poration for the credit union’s own account, except

13 as otherwise permitted by law.’’.

14 SEC. 304. INCREASE IN GENERAL 12-YEAR LIMITATION OF

15 TERM OF FEDERAL CREDIT UNION LOANS TO

16 15 YEARS.

17 Section 107(a)(5) of the Federal Credit Union Act

18 (12 U.S.C. 1757(5)) (as so designated by section 303 of

19 this title) is amended—

20 (1) in the matter preceding subparagraph (A),

21 by striking ‘‘to make loans, the maturities of which

22 shall not exceed twelve years except as otherwise

23 provided herein’’ and inserting ‘‘to make loans, the

24 maturities of which shall not exceed 15 years or any


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H.L.C.

1 longer maturity as the Board may allow, in regula2 tions, except as otherwise provided in this Act’’;

3 (2) in subparagraph (A)—

4 (A) by striking clause (ii);

5 (B) by redesignating clauses (iii) through

6 (x) as clauses (ii) through (ix), respectively; and

7 (C) by inserting ‘‘and’’ after the semicolon

8 at the end of clause (viii) (as so redesignated).

9 SEC. 305. INCREASE IN 1 PERCENT INVESTMENT LIMIT IN

10 CREDIT UNION SERVICE ORGANIZATIONS.

11 Section 107(a)(7)(I) of the Federal Credit Union Act

12 (12 U.S.C. 1757(7)(I)) (as so designated by section 303

13 of this title) is amended by striking ‘‘up to 1 per centum

14 of the total paid’’ and inserting ‘‘up to 3 percent of the

15 total paid’’.

16 SEC. 306. MEMBER BUSINESS LOAN EXCLUSION FOR LOANS

17 TO NONPROFIT RELIGIOUS ORGANIZATIONS.

18 Section 107A(a) of the Federal Credit Union Act (12

19 U.S.C. 1757a(a)) is amended by inserting ‘‘, excluding

20 loans made to nonprofit religious organizations,’’ after

21 ‘‘total amount of such loans’’.


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H.L.C.

1 SEC. 307. CHECK CASHING AND MONEY TRANSFER SERV2 ICES OFFERED WITHIN THE FIELD OF MEM3 BERSHIP.

4 Paragraph (12) of section 107(a) of the Federal

5 Credit Union Act (12 U.S.C. 1757(12)) (as so designated

6 by section 303 of this title) is amended to read as follows:

7 ‘‘(12) in accordance with regulations prescribed

8 by the Board—

9 ‘‘(A) to sell, to persons in the field of

10 membership, negotiable checks (including trav11 elers checks), money orders, and other similar

12 money transfer instruments (including elec13 tronic fund transfers); and

14 ‘‘(B) to cash checks and money orders and

15 receive electronic fund transfers for persons in

16 the field of membership for a fee;’’.

17 SEC. 308. VOLUNTARY MERGERS INVOLVING MULTIPLE

18 COMMON-BOND CREDIT UNIONS.

19 Section 109(d)(2) of the Federal Credit Union Act

20 (12 U.S.C. 1759(d)(2)) is amended—

21 (1) by striking ‘‘or’’ at the end of clause (ii) of

22 subparagraph (B);

23 (2) by striking the period at the end of sub24 paragraph (C) and inserting ‘‘; or’’; and

25 (3) by adding at the end the following new sub26 paragraph:


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H.L.C.

1 ‘‘(D) a merger involving any such Federal

2 credit union approved by the Board on or after

3 August 7, 1998.’’.

4 SEC. 309. CONVERSIONS INVOLVING COMMON-BOND CRED5 IT UNIONS.

6 Section 109(g) of the Federal Credit Union Act (12

7 U.S.C. 1759(g)) is amended by inserting after paragraph

8 (2) the following new paragraph:

9 ‘‘(3) CRITERIA FOR CONTINUED MEMBERSHIP

10 OF CERTAIN MEMBER GROUPS IN COMMUNITY CHAR11 TER CONVERSIONS.—In the case of a voluntary con12 version of a common-bond credit union described in

13 paragraph (1) or (2) of subsection (b) into a com14 munity credit union described in subsection (b)(3),

15 the Board shall prescribe, by regulation, the criteria

16 under which the Board may determine that a mem17 ber group or other portion of a credit union’s exist18 ing membership, that is located outside the well-de19 fined local community, neighborhood, or rural dis20 trict that shall constitute the community charter,

21 can be satisfactorily served by the credit union and

22 remain within the community credit union’s field of

23 membership.’’.


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1 SEC. 310. CREDIT UNION GOVERNANCE.

2 (a) EXPULSION OF MEMBERS FOR JUST CAUSE.—

3 Subsection (b) of section 118 of the Federal Credit Union

4 Act (12 U.S.C. 1764(b)) is amended to read as follows:

5 ‘‘(b) POLICY AND ACTIONS OF BOARDS OF DIREC6 TORS OF FEDERAL CREDIT UNIONS.—

7 ‘‘(1) EXPULSION OF MEMBERS FOR NON8 PARTICIPATION OR FOR JUST CAUSE.—The board of

9 directors of a Federal credit union may, by majority

10 vote of a quorum of directors, adopt and enforce a

11 policy with respect to expulsion from membership,

12 by a majority vote of such board of directors, based

13 on just cause, including disruption of credit union

14 operations, or on nonparticipation by a member in

15 the affairs of the credit union.

16 ‘‘(2) WRITTEN NOTICE OF POLICY TO MEM17 BERS.—If a policy described in paragraph (1) is

18 adopted, written notice of the policy as adopted and

19 the effective date of such policy shall be provided

20 to—

21 ‘‘(A) each existing member of the credit

22 union not less than 30 days prior to the effec23 tive date of such policy; and

24 ‘‘(B) each new member prior to or upon

25 applying for membership.’’.


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H.L.C.

1 (b) TERM LIMITS AUTHORIZED FOR BOARD MEM2 BERS OF FEDERAL CREDIT UNIONS.—Section 111(a) of

3 the Federal Credit Union Act (12 U.S.C. 1761(a)) is

4 amended by adding at the end the following new sentence:

5 ‘‘The bylaws of a Federal credit union may limit the num6 ber of consecutive terms any person may serve on the

7 board of directors of such credit union.’’.

8 (c) REIMBURSEMENT FOR LOST WAGES DUE TO

9 SERVICE ON CREDIT UNION BOARD NOT TREATED AS

10 COMPENSATION.—Section 111(c) of the Federal Credit

11 Union Act (12 U.S.C. 1761(c)) is amended by inserting

12 ‘‘, including lost wages,’’ after ‘‘the reimbursement of rea13 sonable expenses’’.

14 SEC. 311. PROVIDING THE NATIONAL CREDIT UNION AD15 MINISTRATION WITH GREATER FLEXIBILITY

16 IN RESPONDING TO MARKET CONDITIONS.

17 Section 107(a)(5)(A)(vi)(I) of the Federal Credit

18 Union Act (12 U.S.C. 1757(5)(A)(vi)(I)) (as so designated

19 by section 303 of this title) is amended by striking ‘‘six20 month period and that prevailing interest rate levels’’ and

21 inserting ‘‘6-month period or that prevailing interest rate

22 levels’’.


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H.L.C.

1 SEC. 312. EXEMPTION FROM PRE-MERGER NOTIFICATION

2 REQUIREMENT OF THE CLAYTON ACT.

3 Section 7A(c)(7) of the Clayton Act (15 U.S.C.

4 18a(c)(7)) is amended by inserting ‘‘section 205(b)(3) of

5 the Federal Credit Union Act (12 U.S.C. 1785(b)(3)),’’

6 before ‘‘or section 3’’.

7 SEC. 313. TREATMENT OF CREDIT UNIONS AS DEPOSITORY

8 INSTITUTIONS UNDER SECURITIES LAWS.

9 (a) DEFINITION OF BANK UNDER THE SECURITIES

10 EXCHANGE ACT OF 1934.—Section 3(a)(6) of the Securi11 ties Exchange Act of 1934 (15 U.S.C. 78c(a)(6)) (as

12 amended by section 201(a)(1) of this Act) is amended—

13 (1) by striking ‘‘this title, and (D) a receiver’’

14 and inserting ‘‘this title, (D) an insured credit union

15 (as defined in section 101(7) of the Federal Credit

16 Union Act) but only for purposes of paragraphs (4)

17 and (5) of this subsection and only for activities oth18 erwise authorized by applicable laws to which such

19 credit unions are subject, and (E) a receiver’’; and

20 (2) in subparagraph (E) (as so redesignated by

21 paragraph (1) of this subsection) by striking ‘‘(A),

22 (B), or (C)’’ and inserting ‘‘(A), (B), (C), or (D)’’.

23 (b) DEFINITION OF BANK UNDER THE INVESTMENT

24 ADVISERS ACT OF 1940.—Section 202(a)(2) of the In25 vestment Advisers Act of 1940 (15 U.S.C. 80b–2(a)(2))


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H.L.C.

1 (as amended by section 201(b)(1) of this Act) is

2 amended—

3 (1) by striking ‘‘this title, and (D) a receiver’’

4 and inserting ‘‘this title, (D) an insured credit union

5 (as defined in section 101(7) of the Federal Credit

6 Union Act) but only for activities otherwise author7 ized by applicable laws to which such credit unions

8 are subject, and (E) a receiver’’; and

9 (2) in subparagraph (E) (as so redesignated by

10 paragraph (1) of this subsection) by striking ‘‘(A),

11 (B), or (C)’’ and inserting ‘‘(A), (B), (C), or (D)’’.

12 (c) DEFINITION OF APPROPRIATE FEDERAL BANK13 ING AGENCY.—Section 210A(c) of the Investment Advis14 ers Act of 1940 (15 U.S.C. 80b–10a(c)) is amended by

15 inserting ‘‘and includes the National Credit Union Admin16 istration Board, in the case of an insured credit union (as

17 defined in section 101(7) of the Federal Credit Union

18 Act)’’ before the period at the end.

19 TITLE IV—DEPOSITORY

20 INSTITUTION PROVISIONS

21 SEC. 401. EASING RESTRICTIONS ON INTERSTATE BRANCH22 ING AND MERGERS.

23 (a) DE NOVO INTERSTATE BRANCHES OF NATIONAL

24 BANKS.—


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H.L.C.

1 (1) IN GENERAL.—Section 5155(g)(1) of the

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

3 36(g)(1)) is amended by striking ‘‘maintain a

4 branch if—’’ and all that follows through the end of

5 subparagraph (B) and inserting ‘‘maintain a

6 branch.’’.

7 (2) CLERICAL AMENDMENT.—The heading for

8 subsection (g) of section 5155 of the Revised Stat9 utes of the United States is amended by striking

10 ‘‘STATE ‘OPT-IN’ ELECTION TO PERMIT’’.

11 (b) DE NOVO INTERSTATE BRANCHES OF STATE

12 NONMEMBER BANKS.—

13 (1) IN GENERAL.—Section 18(d)(4)(A) of the

14 Federal Deposit Insurance Act (12 U.S.C.

15 1828(d)(4)(A)) is amended by striking ‘‘maintain a

16 branch if—’’ and all that follows through the end of

17 clause (ii) and inserting ‘‘maintain a branch.’’.

18 (2) CLERICAL AMENDMENT.—The heading for

19 paragraph (4) of section 18(d) of the Federal De20 posit Insurance Act is amended by striking ‘‘STATE

21 ‘OPT-IN’ ELECTION TO PERMIT INTERSTATE’’ and in22 serting ‘‘INTERSTATE’’.

23 (c) DE NOVO INTERSTATE BRANCHES OF STATE

24 MEMBER BANKS.—The 3rd undesignated paragraph of

25 section 9 of the Federal Reserve Act (12 U.S.C. 321) is


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H.L.C.

1 amended by adding at the end the following new sen2 tences: ‘‘A State member bank may establish and operate

3 a de novo branch in a host State (as such terms are de4 fined in section 18(d) of the Federal Deposit Insurance

5 Act) on the same terms and conditions and subject to the

6 same limitations and restrictions as are applicable to the

7 establishment of a de novo branch of a national bank in

8 a host State under section 5155(g) of the Revised Statutes

9 of the United States. Such section 5155(g) shall be ap10 plied for purposes of the preceding sentence by sub11 stituting ‘Board of Governors of the Federal Reserve Sys12 tem’ for ‘Comptroller of the Currency’ and ‘State member

13 bank’ for ‘national bank’.’’.

14 (d) INTERSTATE MERGER OF BANKS.—

15 (1) MERGER OF INSURED BANK WITH ANOTHER

16 DEPOSITORY INSTITUTION OR TRUST COMPANY.—

17 Section 44(a)(1) of the Federal Deposit Insurance

18 Act (12 U.S.C. 1831u(a)(1)) is amended—

19 (A) by striking ‘‘Beginning on June 1,

20 1997, the’’ and inserting ‘‘The’’; and

21 (B) by striking ‘‘insured banks with dif22 ferent home States’’ and inserting ‘‘an insured

23 bank and another insured depository institution

24 or trust company with a different home State

25 than the resulting insured bank’’.


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H.L.C.

1 (2) NATIONAL BANK TRUST COMPANY MERGER

2 WITH OTHER TRUST COMPANY.—Subsection (b) of

3 section 4 of the National Bank Consolidation and

4 Merger Act (12 U.S.C. 215a–1(b)) is amended to

5 read as follows:

6 ‘‘(b) MERGER OF NATIONAL BANK TRUST COMPANY

7 WITH ANOTHER TRUST COMPANY.—A national bank that

8 is a trust company may engage in a consolidation or merg9 er under this Act with any trust company with a different

10 home State, under the same terms and conditions that

11 would apply if the trust companies were located within the

12 same State.’’.

13 (e) INTERSTATE FIDUCIARY ACTIVITY.—Section

14 18(d) of the Federal Deposit Insurance Act (12 U.S.C.

15 1828(d)) is amended by adding at the end the following

16 new paragraph:

17 ‘‘(5) INTERSTATE FIDUCIARY ACTIVITY.—

18 ‘‘(A) AUTHORITY OF STATE BANK SUPER19 VISOR.—The State bank supervisor of a State

20 bank may approve an application by the State

21 bank, when not in contravention of home State

22 or host State law, to act as trustee, executor,

23 administrator, registrar of stocks and bonds,

24 guardian of estates, assignee, receiver, com25 mittee of estates of lunatics, or in any other fiVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00077 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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1 duciary capacity in a host State in which State

2 banks or other corporations which come into

3 competition with national banks are permitted

4 to act under the laws of such host State.

5 ‘‘(B) NONCONTRAVENTION OF HOST STATE

6 LAW.—Whenever the laws of a host State au7 thorize or permit the exercise of any or all of

8 the foregoing powers by State banks or other

9 corporations which compete with national

10 banks, the granting to and the exercise of such

11 powers by a State bank as provided in this

12 paragraph shall not be deemed to be in con13 travention of host State law within the meaning

14 of this paragraph.

15 ‘‘(C) STATE BANK INCLUDES TRUST COM16 PANIES.—For purposes of this paragraph, the

17 term ‘State bank’ includes any State-chartered

18 trust company (as defined in section 44(g)).

19 ‘‘(D) OTHER DEFINITIONS.—For purposes

20 of this paragraph, the term ‘home State’ and

21 ‘host State’ have the meanings given such

22 terms in section 44.’’.

23 (f) TECHNICAL AND CONFORMING AMENDMENTS.—

24 (1) Section 44 of the Federal Deposit Insurance

25 Act (12 U.S.C. 1831u) is amended—


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H.L.C.

1 (A) in subsection (a)—

2 (i) by striking paragraph (4) and in3 serting the following new paragraph:

4 ‘‘(4) TREATMENT OF BRANCHES IN CONNEC5 TION WITH CERTAIN INTERSTATE MERGER TRANS6 ACTIONS.—In the case of an interstate merger

7 transaction which involves the acquisition of a

8 branch of an insured depository institution or trust

9 company without the acquisition of the insured de10 pository institution or trust company, the branch

11 shall be treated, for purposes of this section, as an

12 insured depository institution or trust company the

13 home State of which is the State in which the

14 branch is located.’’; and

15 (ii) by striking paragraphs (5) and

16 (6);

17 (B) in subsection (b)—

18 (i) by striking ‘‘bank’’ each place such

19 term appears in paragraph (2)(B)(i) and

20 inserting ‘‘insured depository institution’’;

21 (ii) by striking ‘‘banks’’ where such

22 term appears in paragraph (2)(E) and in23 serting ‘‘insured depository institutions or

24 trust companies’’;


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H.L.C.

1 (iii) by striking ‘‘bank affiliate’’ each

2 place such term appears in that portion of

3 paragraph (3) that precedes subparagraph

4 (A) and inserting ‘‘insured depository insti5 tution affiliate’’;

6 (iv) by striking ‘‘any bank’’ where

7 such term appears in paragraph (3)(B)

8 and inserting ‘‘any insured depository in9 stitution’’;

10 (v) by striking ‘‘bank’’ where such

11 term appears in paragraph (4)(A) and in12 serting ‘‘insured depository institution and

13 trust company’’; and

14 (vi) by striking ‘‘all banks’’ where

15 such term appears in paragraph (5) and

16 inserting ‘‘all insured depository institu17 tions and trust companies’’;

18 (C) in subsection (d)(1), by striking ‘‘any

19 bank’’ and inserting ‘‘any insured depository in20 stitution or trust company’’;

21 (D) in subsection (e)—

22 (i) by striking ‘‘1 or more banks’’ and

23 inserting ‘‘1 or more insured depository in24 stitutions’’; and


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H.L.C.

1 (ii) by striking ‘‘paragraph (2), (4), or

2 (5)’’ and inserting ‘‘paragraph (2)’’;

3 (E) by striking clauses (i) and (ii) of sub4 section (g)(4)(A) and inserting the following

5 new clauses:

6 ‘‘(i) with respect to a national bank or

7 Federal savings association, the State in

8 which the main office of the bank or sav9 ings association is located; and

10 ‘‘(ii) with respect to a State bank,

11 State savings association, or State-char12 tered trust company, the State by which

13 the bank, savings association, or trust

14 company is chartered; and’’;

15 (F) by striking paragraph (5) of subsection

16 (g) and inserting the following new paragraph:

17 ‘‘(5) HOST STATE.—The term ‘host State’

18 means—

19 ‘‘(A) with respect to a bank, a State, other

20 than the home State of the bank, in which the

21 bank maintains, or seeks to establish and main22 tain, a branch; and

23 ‘‘(B) with respect to a trust company and

24 solely for purposes of section 18(d)(5), a State,

25 other than the home State of the trust comVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00081 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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1 pany, in which the trust company acts, or seeks

2 to act, in 1 or more fiduciary capacities.’’;

3 (G) in subsection (g)(10), by striking ‘‘sec4 tion 18(c)(2)’’ and inserting ‘‘paragraph (1) or

5 (2) of section 18(c), as appropriate,’’; and

6 (H) in subsection (g), by adding at the end

7 the following new paragraph:

8 ‘‘(12) TRUST COMPANY.—The term ‘trust com9 pany’ means—

10 ‘‘(A) any national bank;

11 ‘‘(B) any savings association; and

12 ‘‘(C) any bank, banking association, trust

13 company, savings bank, or other banking insti14 tution which is incorporated under the laws of

15 any State,

16 that is authorized to act in 1 or more fiduciary ca17 pacities but is not engaged in the business of receiv18 ing deposits other than trust funds (as defined in

19 section 3(p)).’’.

20 (2) Section 3(d) of the Bank Holding Company

21 Act of 1956 (12 U.S.C. 1842(d)) is amended—

22 (A) in paragraph (1)—

23 (i) by striking subparagraphs (B) and

24 (C); and


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H.L.C.

1 (ii) by redesignating subparagraph

2 (D) as subparagraph (B); and

3 (B) in paragraph (5), by striking ‘‘sub4 paragraph (B) or (D)’’ and inserting ‘‘subpara5 graph (B)’’.

6 (3) Subsection (c) of section 4 of the National

7 Bank Consolidation and Merger Act (12 U.S.C.

8 215a–1(c)) is amended to read as follows:

9 ‘‘(c) DEFINITIONS.—For purposes of this section, the

10 terms ‘home State’, ‘out-of-State bank’, and ‘trust com11 pany’ each have the same meaning as in section 44(g) of

12 the Federal Deposit Insurance Act.’’.

13 (g) CLERICAL AMENDMENTS.—

14 (1) The heading for section 44(b)(2)(E) of the

15 Federal Deposit Insurance Act (12 U.S.C.

16 1831u(b)(2)(E)) is amended by striking ‘‘BANKS’’

17 and inserting ‘‘INSURED DEPOSITORY INSTITUTIONS

18 AND TRUST COMPANIES’’.

19 (2) The heading for section 44(e) of the Fed20 eral Deposit Insurance Act (12 U.S.C. 1831u(e)) is

21 amended by striking ‘‘BANKS’’ and inserting ‘‘IN22 SURED DEPOSITORY INSTITUTIONS’’.


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H.L.C.

1 SEC. 402. STATUTE OF LIMITATIONS FOR JUDICIAL REVIEW

2 OF APPOINTMENT OF A RECEIVER FOR DE3 POSITORY INSTITUTIONS.

4 (a) NATIONAL BANKS.—Section 2 of the National

5 Bank Receivership Act (12 U.S.C. 191) is amended—

6 (1) by striking ‘‘SECTION 2. The Comptroller of

7 the Currency’’ and inserting the following:

8 ‘‘SEC. 2. APPOINTMENT OF RECEIVER FOR A NATIONAL

9 BANK.

10 ‘‘(a) IN GENERAL.—The Comptroller of the Cur11 rency’’; and

12 (2) by adding at the end the following new sub13 section:

14 ‘‘(b) JUDICIAL REVIEW.—If the Comptroller of the

15 Currency appoints a receiver under subsection (a), the na16 tional bank may, within 30 days thereafter, bring an ac17 tion in the United States district court for the judicial dis18 trict in which the home office of such bank is located, or

19 in the United States District Court for the District of Co20 lumbia, for an order requiring the Comptroller of the Cur21 rency to remove the receiver, and the court shall, upon

22 the merits, dismiss such action or direct the Comptroller

23 of the Currency to remove the receiver.’’.

24 (b) INSURED DEPOSITORY INSTITUTIONS.—Section

25 11(c)(7) of the Federal Deposit Insurance Act (12 U.S.C.

26 1821(c)(7)) is amended to read as follows:


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H.L.C.

1 ‘‘(7) JUDICIAL REVIEW.—If the Corporation is

2 appointed (including the appointment of the Cor3 poration as receiver by the Board of Directors) as

4 conservator or receiver of a depository institution

5 under paragraph (4), (9), or (10), the depository in6 stitution may, within 30 days thereafter, bring an

7 action in the United States district court for the ju8 dicial district in which the home office of such de9 pository institution is located, or in the United

10 States District Court for the District of Columbia,

11 for an order requiring the Corporation to be re12 moved as the conservator or receiver (regardless of

13 how such appointment was made), and the court

14 shall, upon the merits, dismiss such action or direct

15 the Corporation to be removed as the conservator or

16 receiver.’’.

17 (c) EXPANSION OF PERIOD FOR CHALLENGING THE

18 APPOINTMENT OF A LIQUIDATING AGENT.—Subpara19 graph (B) of section 207(a)(1) of the Federal Credit

20 Union Act (12 U.S.C. 1787(a)(1)) is amended by striking

21 ‘‘10 days’’ and inserting ‘‘30 days’’.

22 (d) EFFECTIVE DATE.—The amendments made by

23 subsections (a), (b), and (c) shall apply with respect to

24 conservators, receivers, or liquidating agents appointed on

25 or after the date of the enactment of this Act.


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H.L.C.

1 SEC. 403. REPORTING REQUIREMENTS RELATING TO IN2 SIDER LENDING.

3 (a) REPORTING REQUIREMENTS REGARDING LOANS

4 TO EXECUTIVE OFFICERS OF MEMBER BANKS.—Section

5 22(g) of the Federal Reserve Act (12 U.S.C. 375a) is

6 amended—

7 (1) by striking paragraphs (6) and (9); and

8 (2) by redesignating paragraphs (7), (8), and

9 (10) as paragraphs (6), (7), and (8), respectively.

10 (b) REPORTING REQUIREMENTS REGARDING LOANS

11 FROM CORRESPONDENT BANKS TO EXECUTIVE OFFI12 CERS AND SHAREHOLDERS OF INSURED BANKS.—Section

13 106(b)(2) of the Bank Holding Company Act Amend14 ments of 1970 (12 U.S.C. 1972(2)) is amended—

15 (1) by striking subparagraph (G); and

16 (2) by redesignating subparagraphs (H) and (I)

17 as subparagraphs (G) and (H), respectively.

18 SEC. 404. AMENDMENT TO PROVIDE AN INFLATION AD19 JUSTMENT FOR THE SMALL DEPOSITORY IN20 STITUTION EXCEPTION UNDER THE DEPOSI21 TORY INSTITUTION MANAGEMENT INTER22 LOCKS ACT.

23 Section 203(1) of the Depository Institution Manage24 ment Interlocks Act (12 U.S.C. 3202(1)) is amended by

25 striking ‘‘$20,000,000’’ and inserting ‘‘$100,000,000’’.


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1 SEC. 405. ENHANCING THE SAFETY AND SOUNDNESS OF IN2 SURED DEPOSITORY INSTITUTIONS.

3 (a) CLARIFICATION RELATING TO THE ENFORCE4 ABILITY OF AGREEMENTS AND CONDITIONS.—The Fed5 eral Deposit Insurance Act (12 U.S.C. 1811 et seq.) is

6 amended by adding at the end the following new section:

7 ‘‘SEC. 49. ENFORCEMENT OF AGREEMENTS.

8 ‘‘(a) IN GENERAL.—Notwithstanding clause (i) or

9 (ii) of section 8(b)(6)(A) or section 38(e)(2)(E), an appro10 priate Federal banking agency may enforce, under section

11 8, the terms of—

12 ‘‘(1) any condition imposed in writing by the

13 agency on a depository institution or an institution14 affiliated party (including a bank holding company)

15 in connection with any action on any application, no16 tice, or other request concerning a depository insti17 tution; or

18 ‘‘(2) any written agreement entered into be19 tween the agency and an institution-affiliated party

20 (including a bank holding company).

21 ‘‘(b) RECEIVERSHIPS AND CONSERVATORSHIPS.—

22 After the appointment of the Corporation as the receiver

23 or conservator for any insured depository institution, the

24 Corporation may enforce any condition or agreement de25 scribed in paragraph (1) or (2) of subsection (a) involving

26 such institution or any institution-affiliated party (includVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00087 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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1 ing a bank holding company), through an action brought

2 in an appropriate United States district court.’’.

3 (b) PROTECTION OF CAPITAL OF INSURED DEPOSI4 TORY INSTITUTIONS.—Paragraph (1) of section 18(u) of

5 the Federal Deposit Insurance Act (12 U.S.C. 1828(u))

6 is amended by striking subparagraph (B) and by redesig7 nating subparagraph (C) as subparagraph (B).

8 SEC. 406. INVESTMENTS BY INSURED SAVINGS ASSOCIA9 TIONS IN BANK SERVICE COMPANIES AU10 THORIZED.

11 (a) IN GENERAL.—Sections 2 and 3 of the Bank

12 Service Company Act (12 U.S.C. 1862, 1863) are each

13 amended by striking ‘‘insured bank’’ each place such term

14 appears and inserting ‘‘insured depository institution’’.

15 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

16 (1) Section 1(b)(4) of the Bank Service Com17 pany Act (12 U.S.C. 1861(b)(4)) is amended—

18 (A) by inserting ‘‘, except when such term

19 appears in connection with the term ‘insured

20 depository institution’,’’ after ‘‘means’’; and

21 (B) by striking ‘‘Federal Home Loan Bank

22 Board’’ and inserting ‘‘Director of the Office of

23 Thrift Supervision’’.

24 (2) Section 1(b) of the Bank Service Company

25 Act (12 U.S.C. 1861(b)) is amended—


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1 (A) by striking paragraph (5) and insert2 ing the following new paragraph:

3 ‘‘(5) INSURED DEPOSITORY INSTITUTION.—The

4 term ‘insured depository institution’ has the mean5 ing given the term in section 3(c) of the Federal De6 posit Insurance Act;’’;

7 (B) by striking ‘‘and’’ at the end of para8 graph (7);

9 (C) by striking the period at the end of

10 paragraph (8) and inserting ‘‘; and’’; and

11 (D) by adding at the end the following new

12 paragraph:

13 ‘‘(9) the terms ‘State depository institution’,

14 ‘Federal depository institution’, ‘State savings asso15 ciation’ and ‘Federal savings association’ have the

16 meanings given the terms in section 3 of the Federal

17 Deposit Insurance Act.’’.

18 (3) The 1st sentence of section 5(c)(4)(B) of

19 the Home Owners’ Loan Act (12 U.S.C.

20 1464(c)(4)(B)) is amended by striking ‘‘by savings

21 associations of such State and by Federal associa22 tions’’ and inserting ‘‘by State and Federal deposi23 tory institutions’’.

24 (4) Subparagraph (A)(ii) and subparagraph

25 (B)(ii) of section 1(b)(2) of the Bank Service ComVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00089 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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1 pany Act (12 U.S.C. 1861(b)(2)) are each amended

2 by striking ‘‘insured banks’’ and inserting ‘‘insured

3 depository institutions’’.

4 (5) Section 1(b)(8) of the Bank Service Com5 pany Act (12 U.S.C. 1861(b)(8)) is further

6 amended—

7 (A) by striking ‘‘insured bank’’ and insert8 ing ‘‘insured depository institution’’

9 (B) by striking ‘‘insured banks’’ each place

10 such term appears and inserting ‘‘insured de11 pository institutions’’; and

12 (C) by striking ‘‘the bank’s’’ and inserting

13 ‘‘the depository institution’s’’.

14 (6) Section 2 of the Bank Service Company Act

15 (12 U.S.C. 1862) is amended by inserting ‘‘or sav16 ings associations, other than the limitation on the

17 amount of investment by a Federal savings associa18 tion contained in section 5(c)(4)(B) of the Home

19 Owners’ Loan Act’’ after ‘‘relating to banks’’.

20 (7) Section 4(c) of the Bank Service Company

21 Act (12 U.S.C. 1864(c)) is amended by inserting ‘‘or

22 State savings association’’ after ‘‘State bank’’ each

23 place such term appears.

24 (8) Section 4(d) of the Bank Service Company

25 Act (12 U.S.C. 1864(d)) is amended by inserting


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1 ‘‘or Federal savings association’’ after ‘‘national

2 bank’’ each place such term appears.

3 (9) Section 4(e) of the Bank Service Company

4 Act (12 U.S.C. 1864(e)) is amended to read as fol5 lows:

6 ‘‘(e) A bank service company may perform—

7 ‘‘(1) only those services that each depository in8 stitution shareholder or member is otherwise author9 ized to perform under any applicable Federal or

10 State law; and

11 ‘‘(2) such services only at locations in a State

12 in which each such shareholder or member is author13 ized to perform such services.’’.

14 (10) Section 4(f) of the Bank Service Company

15 Act (12 U.S.C. 1864(f)) is amended by inserting ‘‘or

16 savings associations’’ after ‘‘location of banks’’.

17 (11) Section 5 of the Bank Service Company

18 Act (12 U.S.C. 1865) is amended—

19 (A) in subsection (a)—

20 (i) by striking ‘‘insured bank’’ and in21 serting ‘‘insured depository institution’’;

22 and

23 (ii) by striking ‘‘bank’s’’ and inserting

24 ‘‘institution’s’’.


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1 (B) in subsection (b), by striking ‘‘insured

2 bank’’ and inserting ‘‘insured depository insti3 tution’’; and

4 (C) in subsection (c)—

5 (i) by striking ‘‘the bank or banks’’

6 and inserting ‘‘any depository institution’’;

7 and

8 (ii) by striking ‘‘capability of the

9 bank’’ and inserting ‘‘capability of the de10 pository institution’’.

11 (12) Section 7 of the Bank Service Company

12 Act (12 U.S.C. 1867) is amended—

13 (A) in subsection (b), by striking ‘‘insured

14 bank’’ and inserting ‘‘insured depository insti15 tution’’; and

16 (B) in subsection (c)—

17 (i) by striking ‘‘a bank’’ each place

18 such term appears and inserting ‘‘a deposi19 tory institution’’; and

20 (ii) by striking ‘‘the bank’’ each place

21 such term appears and inserting ‘‘the de22 pository institution’’.


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1 SEC. 407. CROSS GUARANTEE AUTHORITY.

2 Subparagraph (A) of section 5(e)(9) of the Federal

3 Deposit Insurance Act (12 U.S.C. 1815(e)(9)(A)) is

4 amended to read as follows:

5 ‘‘(A) such institutions are controlled by the

6 same company; or’’.

7 SEC. 408. GOLDEN PARACHUTE AUTHORITY AND NONBANK

8 HOLDING COMPANIES.

9 Subsection (k) of section 18 of the Federal Deposit

10 Insurance Act (12 U.S.C. 1828(k)) is amended—

11 (1) in paragraph (2)(A), by striking ‘‘or deposi12 tory institution holding company’’ and inserting ‘‘or

13 covered company’’;

14 (2) by striking subparagraph (B) of paragraph

15 (2) and inserting the following new subparagraph:

16 ‘‘(B) Whether there is a reasonable basis

17 to believe that the institution-affiliated party is

18 substantially responsible for—

19 ‘‘(i) the insolvency of the depository

20 institution or covered company;

21 ‘‘(ii) the appointment of a conservator

22 or receiver for the depository institution; or

23 ‘‘(iii) the depository institution’s trou24 bled condition (as defined in the regula25 tions prescribed pursuant to section

26 32(f)).’’;


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1 (3) in paragraph (2)(F), by striking ‘‘depository

2 institution holding company’’ and inserting ‘‘covered

3 company,’’;

4 (4) in paragraph (3) in the matter preceding

5 subparagraph (A), by striking ‘‘depository institu6 tion holding company’’ and inserting ‘‘covered com7 pany’’;

8 (5) in paragraph (3)(A), by striking ‘‘holding

9 company’’ and inserting ‘‘covered company’’;

10 (6) in paragraph (4)(A)—

11 (A) by striking ‘‘depository institution

12 holding company’’ each place such term appears

13 and inserting ‘‘covered company’’; and

14 (B) by striking ‘‘holding company’’ each

15 place such term appears (other than in connec16 tion with the term referred to in subparagraph

17 (A)) and inserting ‘‘covered company’’;

18 (7) in paragraph (5)(A), by striking ‘‘depository

19 institution holding company’’ and inserting ‘‘covered

20 company’’;

21 (8) in paragraph (5), by adding at the end the

22 following new subparagraph:

23 ‘‘(D) COVERED COMPANY.—The term ‘cov24 ered company’ means any depository institution

25 holding company (including any company reVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00094 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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1 quired to file a report under section 4(f)(6) of

2 the Bank Holding Company Act of 1956), or

3 any other company that controls an insured de4 pository institution.’’; and

5 (9) in paragraph (6)—

6 (A) by striking ‘‘depository institution

7 holding company’’ and inserting ‘‘covered com8 pany,’’; and

9 (B) by striking ‘‘or holding company’’ and

10 inserting ‘‘or covered company’’.

11 SEC. 409. AMENDMENTS RELATING TO CHANGE IN BANK

12 CONTROL.

13 Section 7(j) of the Federal Deposit Insurance Act (12

14 U.S.C. 1817(j)) is amended—

15 (1) in paragraph (1)(D)—

16 (A) by striking ‘‘is needed to investigate’’

17 and inserting ‘‘is needed—

18 ‘‘(i) to investigate’’;

19 (B) by striking ‘‘United States Code.’’ and

20 inserting ‘‘United States Code; or’’; and

21 (C) by adding at the end the following new

22 clause:

23 ‘‘(ii) to analyze the safety and sound24 ness of any plans or proposals described in


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1 paragraph (6)(E) or the future prospects

2 of the institution.’’; and

3 (2) in paragraph (7)(C), by striking ‘‘the finan4 cial condition of any acquiring person’’ and inserting

5 ‘‘either the financial condition of any acquiring per6 son or the future prospects of the institution’’.

7 TITLE V—DEPOSITORY INSTITU8 TION AFFILIATES PROVI9 SIONS

10 SEC. 501. CLARIFICATION OF CROSS MARKETING PROVI11 SION.

12 Section 4(n)(5) of the Bank Holding Company Act

13 of 1956 (12 U.S.C. 1843(n)(5)) is amended—

14 (1) in subparagraph (B), by striking ‘‘sub15 section (k)(4)(I)’’ and inserting ‘‘subparagraph (H)

16 or (I) of subsection (k)(4)’’; and

17 (2) by adding at the end the following new sub18 paragraph:

19 ‘‘(C) THRESHOLD OF CONTROL.—Subpara20 graph (A) shall not apply with respect to a

21 company described or referred to in clause (i)

22 or (ii) of such subparagraph if the financial

23 holding company does not own or control 25

24 percent or more of the total equity or any class

25 of voting securities of such company.’’.


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1 SEC. 502. AMENDMENT TO PROVIDE THE FEDERAL RE2 SERVE BOARD WITH DISCRETION CON3 CERNING THE IMPUTATION OF CONTROL OF

4 SHARES OF A COMPANY BY TRUSTEES.

5 Section 2(g)(2) of the Bank Holding Company Act

6 of 1956 (12 U.S.C. 1841(g)(2)) is amended by inserting

7 ‘‘, unless the Board determines that such treatment is not

8 appropriate in light of the facts and circumstances of the

9 case and the purposes of this Act’’ before the period at

10 the end.

11 SEC. 503. ELIMINATING GEOGRAPHIC LIMITS ON THRIFT

12 SERVICE COMPANIES.

13 (a) IN GENERAL.—The 1st sentence of section

14 5(c)(4)(B) of the Home Owners’ Loan Act (12 U.S.C.

15 1464(c)(4)(B)) (as amended by section 406(b)(3) of this

16 Act) is amended—

17 (1) by striking ‘‘corporation organized’’ and all

18 that follows through ‘‘is available for purchase’’ and

19 inserting ‘‘company, if the entire capital of the com20 pany is available for purchase’’; and

21 (2) by striking ‘‘having their home offices in

22 such State’’.

23 (b) TECHNICAL CORRECTIONS.—

24 (1) The heading for subparagraph (B) of sec25 tion 5(c)(4) of the Home Owners’ Loan Act (12


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1 U.S.C. 1464(c)(4)(B)) is amended by striking ‘‘COR2 PORATIONS’’ and inserting ‘‘COMPANIES’’.

3 (2) The 2nd sentence of section 5(n)(1) of the

4 Home Owners’ Loan Act (12 U.S.C. 1464(n)(1)) is

5 amended by striking ‘‘service corporations’’ and in6 serting ‘‘service companies’’.

7 (3) Section 5(q)(1) of the Home Owners’ Loan

8 Act (12 U.S.C. 1464(q)(1)) is amended by striking

9 ‘‘service corporation’’ each place such term appears

10 in subparagraphs (A), (B), and (C) and inserting

11 ‘‘service company’’.

12 (4) Section 10(m)(4)(C)(iii)(II) of the Home

13 Owners’ Loan Act (12 U.S.C.

14 1467a(m)(4)(C)(iii)(II)) is amended by striking

15 ‘‘service corporation’’ each place such term appears

16 and inserting ‘‘service company’’.

17 SEC. 504. CLARIFICATION OF SCOPE OF APPLICABLE RATE

18 PROVISION.

19 Section 44(f) of the Federal Deposit Insurance Act

20 (12 U.S.C. 1831u(f)) is amended by adding at the end

21 the following new paragraphs:

22 ‘‘(3) OTHER LENDERS.—In the case of any

23 other lender doing business in the State described in

24 paragraph (1), the maximum interest rate or

25 amount of interest, discount points, finance charges,


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1 or other similar charges that may be charged, taken,

2 received, or reserved from time to time in any loan,

3 discount, or credit sale made, or upon any note, bill

4 of exchange, financing transaction, or other evidence

5 of debt issued to or acquired by any other lender

6 shall be equal to not more than the greater of the

7 rates described in subparagraph (A) or (B) of para8 graph (1).

9 ‘‘(4) OTHER LENDER DEFINED.—For purposes

10 of paragraph (3), the term ‘other lender’ means any

11 person engaged in the business of selling or financ12 ing the sale of personal property (and any services

13 incidental to the sale of personal property) in such

14 State, except that, with regard to any person or en15 tity described in such paragraph, such term does not

16 include—

17 ‘‘(A) an insured depository institution; or

18 ‘‘(B) any person or entity engaged in the

19 business of providing a short-term cash advance

20 to any consumer in exchange for—

21 ‘‘(i) a consumer’s personal check or

22 share draft, in the amount of the advance

23 plus a fee, where presentment or negotia24 tion of such check or share draft is deVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00099 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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1 ferred by agreement of the parties until a

2 designated future date; or

3 ‘‘(ii) a consumer authorization to

4 debit the consumer’s transaction account,

5 in the amount of the advance plus a fee,

6 where such account will be debited on or

7 after a designated future date.’’.

8 TITLE VI—BANKING AGENCY

9 PROVISIONS

10 SEC. 601. WAIVER OF EXAMINATION SCHEDULE IN ORDER

11 TO ALLOCATE EXAMINER RESOURCES.

12 Section 10(d) of the Federal Deposit Insurance Act

13 (12 U.S.C. 1820(d)) is amended—

14 (1) by redesignating paragraphs (5), (6), (7),

15 (8), (9), and (10) as paragraphs (6), (7), (8), (9),

16 (10), and (11), respectively;

17 (2) by inserting after paragraph (4), the fol18 lowing new paragraph:

19 ‘‘(5) WAIVER OF SCHEDULE WHEN NECESSARY

20 TO ACHIEVE SAFE AND SOUND ALLOCATION OF EX21 AMINER RESOURCES.—Notwithstanding paragraphs

22 (1), (2), (3), and (4), an appropriate Federal bank23 ing agency may make adjustments in the examina24 tion cycle for an insured depository institution if

25 necessary to allocate available resources of examVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00100 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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1 iners in a manner that provides for the safety and

2 soundness of, and the effective examination and su3 pervision of, insured depository institutions.’’; and

4 (3) in paragraphs (8) and (9), as so redesig5 nated, by striking ‘‘paragraph (6)’’ and inserting

6 ‘‘paragraph (7)’’.

7 SEC. 602. INTERAGENCY DATA SHARING.

8 (a) FEDERAL BANKING AGENCIES.—Section 7(a)(2)

9 of the Federal Deposit Insurance Act (12 U.S.C.

10 1817(a)(2)) is amended by adding at the end the following

11 new subparagraph:

12 ‘‘(C) DATA SHARING WITH OTHER AGEN13 CIES AND PERSONS.—In addition to reports of

14 examination, reports of condition, and other re15 ports required to be regularly provided to the

16 Corporation (with respect to all insured deposi17 tory institutions, including a depository institu18 tion for which the Corporation has been ap19 pointed conservator or receiver) or an appro20 priate State bank supervisor (with respect to a

21 State depository institution) under subpara22 graph (A) or (B), a Federal banking agency

23 may, in the agency’s discretion, furnish any re24 port of examination or other confidential super25 visory information concerning any depository


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1 institution or other entity examined by such

2 agency under authority of any Federal law,

3 to—

4 ‘‘(i) any other Federal or State agen5 cy or authority with supervisory or regu6 latory authority over the depository institu7 tion or other entity;

8 ‘‘(ii) any officer, director, or receiver

9 of such depository institution or entity;

10 and

11 ‘‘(iii) any other person the Federal

12 banking agency determines to be appro13 priate.’’.

14 (b) NATIONAL CREDIT UNION ADMINISTRATION.—

15 Section 202(a) of the Federal Credit Union Act (12

16 U.S.C. 1782(a)) is amended by adding at the end the fol17 lowing new paragraph:

18 ‘‘(8) DATA SHARING WITH OTHER AGENCIES

19 AND PERSONS.—In addition to reports of examina20 tion, reports of condition, and other reports required

21 to be regularly provided to the Board (with respect

22 to all insured credit unions, including a credit union

23 for which the Corporation has been appointed con24 servator or liquidating agent) or an appropriate

25 State commission, board, or authority having superVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00102 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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1 vision of a State-chartered credit union, the Board

2 may, in the Board’s discretion, furnish any report

3 of examination or other confidential supervisory in4 formation concerning any credit union or other enti5 ty examined by the Board under authority of any

6 Federal law, to—

7 ‘‘(A) any other Federal or State agency or

8 authority with supervisory or regulatory author9 ity over the credit union or other entity;

10 ‘‘(B) any officer, director, or receiver of

11 such credit union or entity; and

12 ‘‘(C) any other institution-affiliated party

13 of such credit union or entity the Board deter14 mines to be appropriate.’’.

15 SEC. 603. PENALTY FOR UNAUTHORIZED PARTICIPATION

16 BY CONVICTED INDIVIDUAL.

17 Section 19 of the Federal Deposit Insurance Act (12

18 U.S.C. 1829) is amended by adding at the end the fol19 lowing new subsection:

20 ‘‘(c) NONINSURED BANKS.—Subsections (a) and (b)

21 shall apply to a noninsured national bank and a non22 insured State member bank, and any agency or non23 insured branch (as such terms are defined in section 1(b)

24 of the International Banking Act of 1978) of a foreign

25 bank as if such bank, branch, or agency were an insured


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1 depository institution, except such subsections shall be ap2 plied for purposes of this subsection by substituting the

3 agency determined under the following paragraphs for

4 ‘Corporation’ each place such term appears in such sub5 sections:

6 ‘‘(1) The Comptroller of the Currency, in the

7 case of a noninsured national bank or any Federal

8 agency or noninsured Federal branch of a foreign

9 bank.

10 ‘‘(2) The Board of Governors of the Federal

11 Reserve System, in the case of a noninsured State

12 member bank or any State agency or noninsured

13 State branch of a foreign bank.’’.

14 SEC. 604. AMENDMENT PERMITTING THE DESTRUCTION OF

15 OLD RECORDS OF A DEPOSITORY INSTITU16 TION BY THE FDIC AFTER THE APPOINTMENT

17 OF THE FDIC AS RECEIVER.

18 Section 11(d)(15)(D) of the Federal Deposit Insur19 ance Act (12 U.S.C. 1821(d)(15)(D)) is amended—

20 (1) by striking ‘‘RECORDKEEPING REQUIRE21 MENT.—After the end of the 6-year period’’ and in22 serting ‘‘RECORDKEEPING REQUIREMENT.—

23 ‘‘(i) IN GENERAL.—Except as pro24 vided in clause (ii), after the end of the 6-

25 year period’’; and


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1 (2) by adding at the end the following new

2 clause:

3 ‘‘(ii) OLD RECORDS.—In the case of

4 records of an insured depository institution

5 which are at least 10 years old as of the

6 date the Corporation is appointed as the

7 receiver of such depository institution, the

8 Corporation may destroy such records in

9 accordance with clause (i) any time after

10 such appointment is final without regard

11 to the 6-year period of limitation contained

12 in such clause.’’.

13 SEC. 605. MODERNIZATION OF RECORDKEEPING REQUIRE14 MENT.

15 Subsection (f) of section 10 of the Federal Deposit

16 Insurance Act (12 U.S.C. 1820(f)) is amended to read as

17 follows:

18 ‘‘(f) PRESERVATION OF AGENCY RECORDS.—

19 ‘‘(1) IN GENERAL.—A Federal banking agency

20 may cause any and all records, papers, or documents

21 kept by the agency or in the possession or custody

22 of the agency to be—

23 ‘‘(A) photographed or microphotographed

24 or otherwise reproduced upon film; or


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1 ‘‘(B) preserved in any electronic medium

2 or format which is capable of—

3 ‘‘(i) being read or scanned by com4 puter; and

5 ‘‘(ii) being reproduced from such elec6 tronic medium or format by printing or

7 any other form of reproduction of elec8 tronically stored data.

9 ‘‘(2) TREATMENT AS ORIGINAL RECORDS.—Any

10 photographs, microphotographs, or photographic

11 film or copies thereof described in paragraph (1)(A)

12 or reproduction of electronically stored data de13 scribed in paragraph (1)(B) shall be deemed to be

14 an original record for all purposes, including intro15 duction in evidence in all State and Federal courts

16 or administrative agencies and shall be admissible to

17 prove any act, transaction, occurrence, or event

18 therein recorded.

19 ‘‘(3) AUTHORITY OF THE FEDERAL BANKING

20 AGENCIES.—Any photographs, microphotographs, or

21 photographic film or copies thereof described in

22 paragraph (1)(A) or reproduction of electronically

23 stored data described in paragraph (1)(B) shall be

24 preserved in such manner as the Federal banking

25 agency shall prescribe and the original records, paVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00106 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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1 pers, or documents may be destroyed or otherwise

2 disposed of as the Federal banking agency may di3 rect.’’.

4 SEC. 606. CLARIFICATION OF EXTENT OF SUSPENSION, RE5 MOVAL, AND PROHIBITION AUTHORITY OF

6 FEDERAL BANKING AGENCIES IN CASES OF

7 CERTAIN CRIMES BY INSTITUTION-AFFILI8 ATED PARTIES.

9 (a) INSURED DEPOSITORY INSTITUTION.—

10 (1) IN GENERAL.—Section 8(g)(1) of the Fed11 eral Deposit Insurance Act (12 U.S.C. 1818(g)(1))

12 is amended—

13 (A) in subparagraph (A), by striking ‘‘the

14 depository’’ each place such term appears and

15 inserting ‘‘any depository’’;

16 (B) in subparagraph (B)(i), by inserting

17 ‘‘of which the subject of the order is an institu18 tion-affiliated party’’ before the period at the

19 end;

20 (C) in subparagraph (C), by striking ‘‘the

21 depository’’ each place such term appears and

22 inserting ‘‘any depository’’;

23 (D) in subparagraph (D)(i), by inserting

24 ‘‘of which the subject of the order is an instituVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00107 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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1 tion-affiliated party’’ after ‘‘upon the depository

2 institution’’; and

3 (E) by adding at the end the following new

4 subparagraph:

5 ‘‘(E) CONTINUATION OF AUTHORITY.—A

6 Federal banking agency may issue an order

7 under this paragraph with respect to an indi8 vidual who is an institution-affiliated party at a

9 depository institution at the time of an offense

10 described in subparagraph (A) without regard

11 to—

12 ‘‘(i) whether such individual is an in13 stitution-affiliated party at any depository

14 institution at the time the order is consid15 ered or issued by the agency; or

16 ‘‘(ii) whether the depository institu17 tion at which the individual was an institu18 tion-affiliated party at the time of the of19 fense remains in existence at the time the

20 order is considered or issued by the agen21 cy.’’.

22 (2) CLERICAL AMENDMENT.—Section 8(g) of

23 the Federal Deposit Insurance Act (12 U.S.C.

24 1818(g)) is amended by striking ‘‘(g)’’ and inserting

25 the following new subsection heading:


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1 ‘‘(g) SUSPENSION, REMOVAL, AND PROHIBITION

2 FROM PARTICIPATION ORDERS IN THE CASE OF CERTAIN

3 CRIMINAL OFFENSES.—’’.

4 (b) INSURED CREDIT UNIONS.—

5 (1) IN GENERAL.—Section 206(i)(1) of the

6 Federal Credit Union Act (12 U.S.C. 1786(i)(1)) is

7 amended—

8 (A) in subparagraph (A), by striking ‘‘the

9 credit union’’ each place such term appears and

10 inserting ‘‘any credit union’’;

11 (B) in subparagraph (B)(i), by inserting

12 ‘‘of which the subject of the order is, or most

13 recently was, an institution-affiliated party’’ be14 fore the period at the end;

15 (C) in subparagraph (C), by striking ‘‘the

16 credit union’’ each place such term appears and

17 inserting ‘‘any credit union’’;

18 (D) in subparagraph (D)(i), by striking

19 ‘‘upon such credit union’’ and inserting ‘‘upon

20 the credit union of which the subject of the

21 order is, or most recently was, an institution-af22 filiated party’’; and

23 (E) by adding at the end the following new

24 subparagraph:


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1 ‘‘(E) CONTINUATION OF AUTHORITY.—The

2 Board may issue an order under this paragraph

3 with respect to an individual who is an institu4 tion-affiliated party at a credit union at the

5 time of an offense described in subparagraph

6 (A) without regard to—

7 ‘‘(i) whether such individual is an in8 stitution-affiliated party at any credit

9 union at the time the order is considered

10 or issued by the Board; or

11 ‘‘(ii) whether the credit union at

12 which the individual was an institution-af13 filiated party at the time of the offense re14 mains in existence at the time the order is

15 considered or issued by the Board.’’.

16 (2) CLERICAL AMENDMENT.—Section 206(i) of

17 the Federal Credit Union Act (12 U.S.C. 1786(i)) is

18 amended by striking ‘‘(i)’’ at the beginning and in19 serting the following new subsection heading:

20 ‘‘(i) SUSPENSION, REMOVAL, AND PROHIBITION

21 FROM PARTICIPATION ORDERS IN THE CASE OF CERTAIN

22 CRIMINAL OFFENSES.—’’.


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1 SEC. 607. STREAMLINING DEPOSITORY INSTITUTION MERG2 ER APPLICATION REQUIREMENTS.

3 (a) IN GENERAL.—Paragraph (4) of section 18(c) of

4 the Federal Deposit Insurance Act (12 U.S.C. 1828(c))

5 is amended to read as follows:

6 ‘‘(4) REPORTS ON COMPETITIVE FACTORS.—

7 ‘‘(A) REQUEST FOR REPORT.—In the in8 terests of uniform standards, before acting on

9 any application for approval of a merger trans10 action, the responsible agency, unless the agen11 cy finds that it must act immediately in order

12 to prevent the probable failure of a depository

13 institution involved, shall—

14 ‘‘(i) request a report on the competi15 tive factors involved from the Attorney

16 General; and

17 ‘‘(ii) provide a copy of the request to

18 the Corporation (when the Corporation is

19 not the responsible agency).

20 ‘‘(B) FURNISHING OF REPORT.—The re21 port requested under subparagraph (A) shall be

22 furnished by the Attorney General to the re23 sponsible agency—

24 ‘‘(i) not more than 30 calendar days

25 after the date on which the Attorney Gen26 eral received the request; or


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1 ‘‘(ii) not more than 10 calendar days

2 after such date, if the requesting agency

3 advises the Attorney General that an emer4 gency exists requiring expeditious action.’’.

5 (b) TECHNICAL AND CONFORMING AMENDMENT.—

6 The penultimate sentence of section 18(c)(6) of the Fed7 eral Deposit Insurance Act (12 U.S.C. 1828(c)(6)) is

8 amended to read as follows: ‘‘If the agency has advised

9 the Attorney General under paragraph (4)(B) of the exist10 ence of an emergency requiring expeditious action and has

11 requested a report on the competitive factors within 10

12 days, the transaction may not be consummated before the

13 fifth calendar day after the date of approval by the agen14 cy.’’.

15 SEC. 608. INCLUSION OF DIRECTOR OF THE OFFICE OF

16 THRIFT SUPERVISION IN LIST OF BANKING

17 AGENCIES REGARDING INSURANCE CUS18 TOMER PROTECTION REGULATIONS.

19 Section 47(g)(2)(B)(i) of the Federal Deposit Insur20 ance Act (12 U.S.C. 1831x(g)(2)(B)(i)) is amended by in21 serting ‘‘the Director of the Office of Thrift Supervision,’’

22 after ‘‘Comptroller of the Currency,’’.


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1 SEC. 609. SHORTENING OF POST-APPROVAL ANTITRUST RE2 VIEW PERIOD WITH THE AGREEMENT OF THE

3 ATTORNEY GENERAL.

4 (a) ANTITRUST REVIEWS UNDER THE BANK HOLD5 ING COMPANY ACT OF 1956.—The 4th sentence of section

6 11(b) of the Bank Holding Company Act of 1956 (12

7 U.S.C. 1849(b) is amended by striking ‘‘15 calendar

8 days’’ and inserting ‘‘5 calendar days’’.

9 (b) ANTITRUST REVIEWS UNDER THE FEDERAL DE10 POSIT INSURANCE ACT.—The last sentence of section

11 18(c)(6) of the Federal Deposit Insurance Act (12 U.S.C.

12 1828(c)(6)) is amended by striking ‘‘15 calendar days’’

13 and inserting ‘‘5 calendar days’’.

14 SEC. 610. PROTECTION OF CONFIDENTIAL INFORMATION

15 RECEIVED BY FEDERAL BANKING REGU16 LATORS FROM FOREIGN BANKING SUPER17 VISORS.

18 Section 15 of the International Banking Act of 1978

19 (12 U.S.C. 3109) is amended by adding at the end the

20 following new subsection:

21 ‘‘(c) CONFIDENTIAL INFORMATION RECEIVED FROM

22 FOREIGN SUPERVISORS.—

23 ‘‘(1) IN GENERAL.—Except as provided in

24 paragraph (3), a Federal banking agency may not be

25 compelled to disclose information received from a

26 foreign regulatory or supervisory authority if—


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1 ‘‘(A) the foreign regulatory or supervisory

2 authority has, in good faith, determined and

3 represented to such Federal banking agency

4 that public disclosure of the information would

5 violate the laws applicable to that foreign regu6 latory or supervisory authority; and

7 ‘‘(B) the relevant Federal banking agency

8 obtained such information pursuant to—

9 ‘‘(i) such procedures as the Federal

10 banking agency may establish for use in

11 connection with the administration and en12 forcement of Federal banking laws; or

13 ‘‘(ii) a memorandum of understanding

14 or other similar arrangement between the

15 Federal banking agency and the foreign

16 regulatory or supervisory authority.

17 ‘‘(2) TREATMENT UNDER TITLE 5, UNITED

18 STATES CODE.—For purposes of section 552 of title

19 5, United States Code, this subsection shall be treat20 ed as a statute described in subsection (b)(3)(B) of

21 such section.

22 ‘‘(3) SAVINGS PROVISION.—No provision of this

23 section shall be construed as—

24 ‘‘(A) authorizing any Federal banking

25 agency to withhold any information from any


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1 duly authorized committee of the House of Rep2 resentatives or the Senate; or

3 ‘‘(B) preventing any Federal banking

4 agency from complying with an order of a court

5 of the United States in an action commenced by

6 the United States or such agency.

7 ‘‘(4) FEDERAL BANKING AGENCY DEFINED.—

8 For purposes of this subsection, the term ‘Federal

9 banking agency’ means the Board, the Comptroller,

10 the Federal Deposit Insurance Corporation, and the

11 Director of the Office of Thrift Supervision.’’.

12 SEC. 611. PROHIBITION ON PARTICIPATION BY CONVICTED

13 INDIVIDUAL.

14 Section 19 of the Federal Deposit Insurance Act (12

15 U.S.C. 1829) is amended by inserting after subsection (c)

16 (as added by section 603 of this title) the following new

17 subsections:

18 ‘‘(d) BANK HOLDING COMPANIES.—Subsections (a)

19 and (b) shall apply to any bank holding company, any sub20 sidiary (other than a bank) of a bank holding company,

21 and any organization organized and operated under sec22 tion 25A of the Federal Reserve Act or operating under

23 section 25 of the Federal Reserve Act as if such bank

24 holding company, subsidiary, or organization were an in25 sured depository institution, except such subsections shall


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1 be applied for purposes of this subsection by substituting

2 ‘Board of Governors of the Federal Reserve System’ for

3 ‘Corporation’ each place such term appears in such sub4 sections.

5 ‘‘(e) SAVINGS AND LOAN HOLDING COMPANIES.—

6 Subsections (a) and (b) shall apply to any savings and

7 loan holding company and any subsidiary (other than a

8 savings association) of a savings and loan holding com9 pany as if such savings and loan holding company or sub10 sidiary were an insured depository institution, except such

11 subsections shall be applied for purposes of this subsection

12 by substituting ‘Director of the Office of Thrift Super13 vision’ for ‘Corporation’ each place such term appears in

14 such subsections.’’.

15 SEC. 612. CLARIFICATION THAT NOTICE AFTER SEPARA16 TION FROM SERVICE MAY BE MADE BY AN

17 ORDER.

18 (a) IN GENERAL.—Section 8(i)(3) of the Federal De19 posit Insurance Act (12 U.S.C. 1818(i)(3)) is amended by

20 inserting ‘‘or order’’ after ‘‘notice’’ each place such term

21 appears.

22 (b) TECHNICAL AND CONFORMING AMENDMENT.—

23 The heading for section 8(i)(3) of the Federal Deposit In24 surance Act (12 U.S.C. 1818(i)(3)) is amended by insert25 ing ‘‘OR ORDER’’ after ‘‘NOTICE’’.


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1 SEC. 613. EXAMINERS OF FINANCIAL INSTITUTIONS.

2 (a) OFFER OF CREDIT TO BANK EXAMINER.—Sec3 tion 212 of title 18, United States Code, is amended to

4 read as follows:

5 ‘‘§ 212. Offer of credit to bank examiner

6 ‘‘(a) Subject to section 213(b), whoever being an offi7 cer, director or employee of a financial institution extends

8 credit to any examiner which the examiner is prohibited

9 from accepting under section 213 shall be fined under this

10 title or imprisoned not more than one year, or both; and

11 may be fined a further sum equal to the amount of the

12 credit extended.

13 ‘‘(b) For purposes of this section, the following defini14 tions shall apply:

15 ‘‘(1) The term ‘financial institution’ does not

16 include a credit union, a Federal reserve bank, a

17 Federal home loan bank, or a depository institution

18 holding company.

19 ‘‘(2) The term ‘examiner’ means any person—

20 ‘‘(A) appointed by a Federal financial in21 stitution regulatory agency or pursuant to the

22 laws of any State to examine a financial institu23 tion; or

24 ‘‘(B) elected under the law of any State to

25 conduct examinations of any financial institu26 tion.


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1 ‘‘(3) The term ‘Federal financial institution

2 regulatory agency’ means—

3 ‘‘(A) the Comptroller of the Currency;

4 ‘‘(B) the Board of Governors of the Fed5 eral Reserve System;

6 ‘‘(C) the Director of the Office of Thrift

7 Supervision;

8 ‘‘(D) the Federal Deposit Insurance Cor9 poration;

10 ‘‘(E) the Federal Housing Finance Board;

11 ‘‘(F) the Farm Credit Administration;

12 ‘‘(G) the Farm Credit System Insurance

13 Corporation; and

14 ‘‘(H) the Small Business Administration.’’.

15 (b) ACCEPTANCE OF CREDIT BY A BANK EXAM16 INER.—Section 213 of title 18, United States Code, is

17 amended to read as follows:

18 ‘‘§ 213. Acceptance of credit by bank examiner

19 ‘‘(a) Whoever, being an examiner, accepts an exten20 sion of credit from any financial institution that the exam21 iner examines or has authority to examine, or from any

22 person connected with any such financial institution, shall

23 be fined under this title or imprisoned not more than one

24 year, or both; and may be fined a further sum equal to


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1 the amount of the credit extended, and shall be disquali2 fied from holding office as such examiner.

3 ‘‘(b) Notwithstanding subsection (a) or section 212,

4 a Federal financial institution regulatory agency may, by

5 regulation or by order on a case-by-case basis, permit a

6 financial institution to extend credit to an examiner, and

7 permit an examiner to accept an extension of credit from

8 a financial institution, if the agency determines that the

9 extension of credit would not likely affect the integrity of

10 any examination of a financial institution. Before pre11 scribing regulations or issuing any order under this sub12 section, a Federal financial institution regulatory agency

13 shall consult with each other Federal financial institution

14 regulatory agency with regard to any such regulation or

15 order. Any regulation prescribed by a Federal financial in16 stitution regulatory agency under this subsection, may ex17 empt certain classes or categories of credit from the scope

18 of this section or section 212, and shall provide procedures

19 for examiners and financial institutions to request case20 by-case exemption orders under this subsection, subject to

21 subsection (c).

22 ‘‘(c) In considering any request by a financial institu23 tion or examiner for a case-by-case exemption order under

24 subsection (b), a Federal financial institution regulatory


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1 agency shall consider such factors as the agency deter2 mines to be appropriate, including—

3 ‘‘(1) whether the terms and conditions of the

4 credit being offered the examiner are generally com5 parable to those offered by the financial institution

6 in connection with similar types of credit extended

7 to other customers in similar circumstances;

8 ‘‘(2) the nature and extent of any other rela9 tionship the examiner has with the financial institu10 tion or any officer, director, or employee of the fi11 nancial institution;

12 ‘‘(3) the proximity in time between any exam13 ination of the financial institution in which the ex14 aminer participated, or is scheduled to participate,

15 and the extension, or the offer of an extension, of

16 credit;

17 ‘‘(4) whether there are any other circumstances

18 involving the transaction, or the proposed trans19 action, that may be perceived as providing the exam20 iner with preferential treatment; and

21 ‘‘(5) any other fact or circumstance the agency

22 may consider to be appropriate under the cir23 cumstances.

24 ‘‘(d) Notwithstanding subsection (a) or section 212,

25 an examiner employed by a Federal financial institution


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1 regulatory agency may apply for and receive a credit card,

2 or otherwise be approved as a cardholder, under any credit

3 card account under an open end consumer credit plan, to

4 the extent the terms and conditions applicable with respect

5 to such account, and any credit extended under such ac6 count, are no more favorable generally to the examiner

7 than the terms and conditions that are generally applica8 ble to credit card accounts offered by the same financial

9 institution to other cardholders under open end consumer

10 credit plans.

11 ‘‘(e) For purposes of this section, the following defini12 tions shall apply:

13 ‘‘(1) The terms ‘examiner’, ‘Federal financial

14 institution regulatory agency’, and ‘financial institu15 tion’ have the same meaning as in section 212.

16 ‘‘(2) The term ‘credit’ means the right granted

17 by a creditor to a debtor to defer payment of debt

18 or to incur debt and defer its payment.

19 ‘‘(3) The term ‘creditor’ refers only to a person

20 who both (A) regularly extends, whether in connec21 tion with loans, sales of property or services, or oth22 erwise, consumer credit which is payable by agree23 ment in more than four installments or for which

24 the payment of a finance charge is or may be re25 quired, and (B) is the person to whom the debt arisVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00121 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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1 ing from the consumer credit transaction is initially

2 payable on the face of the evidence of indebtedness

3 or, if there is no such evidence of indebtedness, by

4 agreement. Notwithstanding the preceding sentence,

5 in the case of an open-end credit plan involving a

6 credit card, the card issuer and any person who hon7 ors the credit card and offers a discount which is a

8 finance charge are creditors.

9 ‘‘(4) The term ‘consumer’, when used with ref10 erence to an open end credit plan, means a credit

11 plan under which the party to whom credit is offered

12 or extended is a natural person, and the money,

13 property, or services which are the subject of any

14 transaction under the plan are primarily for per15 sonal, family, or household purposes.

16 ‘‘(5) The term ‘open end credit plan’ means a

17 plan under which the creditor reasonably con18 templates repeated transactions, which prescribes

19 the terms of such transactions, and which provides

20 for a finance charge which may be computed from

21 time to time on the outstanding unpaid balance. A

22 credit plan which is an open end credit plan within

23 the meaning of the preceding sentence is an open

24 end credit plan even if credit information is verified

25 from time to time.


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1 ‘‘(6) The term ‘credit card’ means any card,

2 plate, coupon book or other credit device existing for

3 the purpose of obtaining money, property, labor, or

4 services on credit.

5 ‘‘(7) The term ‘cardholder’ means any person to

6 whom a credit card is issued or any person who has

7 agreed with the card issuer to pay obligations aris8 ing from the issuance of a credit card to another

9 person.

10 ‘‘(8) The term ‘card issuer’ means any person

11 who issues a credit card, or the agent of such person

12 with respect to such card.’’.

13 (c) CLERICAL AMENDMENTS.—The table of sections

14 for chapter 11 of title 18, United States Code, is amended

15 by striking the items relating to sections 212 and 213 and

16 inserting the following new items:

‘‘212. Offer of credit to bank examiner.

‘‘213. Acceptance of credit by bank examiner.’’.

17 SEC. 614. PARITY IN STANDARDS FOR INSTITUTION-AFFILI18 ATED PARTIES.

19 Section 3(u)(4) of the Federal Deposit Insurance Act

20 (12 U.S.C. 1813(u)(4)) is amended by striking ‘‘know21 ingly or recklessly’’.


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1 SEC. 615. ENFORCEMENT AGAINST MISREPRESENTATIONS

2 REGARDING FDIC DEPOSIT INSURANCE COV3 ERAGE.

4 (a) IN GENERAL.—Section 18(a) of the Federal De5 posit Insurance Act (12 U.S.C. 1828(a)) is amended by

6 adding at the end the following new paragraph:

7 ‘‘(4) FALSE ADVERTISING, MISUSE OF FDIC

8 NAMES, AND MISREPRESENTATION TO INDICATE IN9 SURED STATUS.—

10 ‘‘(A) PROHIBITION ON FALSE ADVER11 TISING AND MISUSE OF FDIC NAMES.—No per12 son may—

13 ‘‘(i) use the terms ‘Federal Deposit’,

14 ‘Federal Deposit Insurance’, ‘Federal De15 posit Insurance Corporation’, any combina16 tion of such terms, or the abbreviation

17 ‘FDIC’ as part of the business name or

18 firm name of any person, including any

19 corporation, partnership, business trust,

20 association, or other business entity; or

21 ‘‘(ii) use such terms or any other sign

22 or symbol as part of an advertisement, so23 licitation, or other document,

24 to represent, suggest or imply that any deposit

25 liability, obligation, certificate or share is in26 sured or guaranteed by the Federal Deposit InVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00124 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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1 surance Corporation, if such deposit liability,

2 obligation, certificate, or share is not insured or

3 guaranteed by the Corporation.

4 ‘‘(B) PROHIBITION ON MISREPRESENTA5 TIONS OF INSURED STATUS.—No person may

6 knowingly misrepresent—

7 ‘‘(i) that any deposit liability, obliga8 tion, certificate, or share is federally in9 sured, if such deposit liability, obligation,

10 certificate, or share is not insured by the

11 Corporation; or

12 ‘‘(ii) the extent to which or the man13 ner in which any deposit liability, obliga14 tion, certificate, or share is insured by the

15 Federal Deposit Insurance Corporation, if

16 such deposit liability, obligation, certificate,

17 or share is not insured by the Corporation

18 to the extent or in the manner represented.

19 ‘‘(C) AUTHORITY OF FDIC.—The Corpora20 tion shall have—

21 ‘‘(i) jurisdiction over any person that

22 violates this paragraph, or aids or abets

23 the violation of this paragraph; and


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1 ‘‘(ii) for purposes of enforcing the re2 quirements of this paragraph with regard

3 to any person—

4 ‘‘(I) the authority of the Cor5 poration under section 10(c) to con6 duct investigations; and

7 ‘‘(II) the enforcement authority

8 of the Corporation under subsections

9 (b), (c), (d) and (i) of section 8,

10 as if such person were a state nonmember in11 sured bank.

12 ‘‘(D) OTHER ACTIONS PRESERVED.—No

13 provision of this paragraph shall be construed

14 as barring any action otherwise available, under

15 the laws of the United States or any State, to

16 any Federal or State law enforcement agency or

17 individual.’’.

18 (b) ENFORCEMENT ORDERS.—Section 8(c) of the

19 Federal Deposit Insurance Act (12 U.S.C. 1818(c)) is

20 amended by adding at the end the following new para21 graph:

22 ‘‘(4) FALSE ADVERTISING OR MISUSE OF

23 NAMES TO INDICATE INSURED STATUS.—

24 ‘‘(A) TEMPORARY ORDER.—


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1 ‘‘(i) IN GENERAL.—If a notice of

2 charges served under subsection (b)(1) of

3 this section specifies on the basis of par4 ticular facts that any person is engaged in

5 conduct described in section 18(a)(4), the

6 Corporation may issue a temporary order

7 requiring—

8 ‘‘(I) the immediate cessation of

9 any activity or practice described,

10 which gave rise to the notice of

11 charges; and

12 ‘‘(II) affirmative action to pre13 vent any further, or to remedy any ex14 isting, violation.

15 ‘‘(ii) EFFECT OF ORDER.—Any tem16 porary order issued under this subpara17 graph shall take effect upon service.

18 ‘‘(B) EFFECTIVE PERIOD OF TEMPORARY

19 ORDER.—A temporary order issued under sub20 paragraph (A) shall remain effective and en21 forceable, pending the completion of an admin22 istrative proceeding pursuant to subsection

23 (b)(1) in connection with the notice of

24 charges—


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1 ‘‘(i) until such time as the Corpora2 tion shall dismiss the charges specified in

3 such notice; or

4 ‘‘(ii) if a cease-and-desist order is

5 issued against such person, until the effec6 tive date of such order.

7 ‘‘(C) CIVIL MONEY PENALTIES.—Violations

8 of section 18(a)(4) shall be subject to civil

9 money penalties as set forth in subsection (i) in

10 an amount not to exceed $1,000,000 for each

11 day during which the violation occurs or con12 tinues.’’.

13 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

14 (1) Section 18(a)(3) of the Federal Deposit In15 surance Act (12 U.S.C. 1828(a)) is amended—

16 (A) in the 1st sentence by striking ‘‘of this

17 subsection’’ and inserting ‘‘of paragraphs (1)

18 and (2)’’;

19 (B) by striking the 2nd sentence; and

20 (C) in the 3rd sentence, by striking ‘‘of

21 this subsection’’ and inserting ‘‘of paragraphs

22 (1) and (2)’’.

23 (2) The heading for subsection (a) of section 18

24 of the Federal Deposit Insurance Act (12 U.S.C.

25 1828(a)) is amended by striking ‘‘INSURANCE


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1 LOGO.—’’ and inserting ‘‘REPRESENTATIONS OF DE2 POSIT INSURANCE.—’’.

3 SEC. 616. COMPENSATION OF FEDERAL HOME LOAN BANK

4 DIRECTORS.

5 Section 7(i) of the Federal Home Loan Bank Act (12

6 U.S.C. 1427(i)) is amended to read as follows:

7 ‘‘(i) DIRECTORS’ COMPENSATION.—

8 ‘‘(1) IN GENERAL.—Each Federal home loan

9 bank may pay the directors on the board of directors

10 of the bank reasonable compensation for the time re11 quired of such directors, and reasonable expenses in12 curred by the directors, in connection with service on

13 the board of directors, in accordance with resolutions

14 adopted by the board of directors and subject to the

15 approval of the board.

16 ‘‘(2) ANNUAL REPORT BY THE BOARD.—Infor17 mation regarding compensation and expenses paid

18 by the Federal home loan banks to the directors on

19 the boards of directors of the banks shall be included

20 in the annual report submitted to the Congress by

21 the Board pursuant to section 2B(d).’’.

22 SEC. 617. EXTENSION OF TERMS OF FEDERAL HOME LOAN

23 BANK DIRECTORS.

24 (a) IN GENERAL.—Section 7(d) of the Federal Home

25 Loan Bank Act (12 U.S.C. 1427(d)) is amended—


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1 (1) in the first sentence, by striking ‘‘3 years’’

2 and inserting ‘‘4 years’’; and

3 (2) in the 2nd sentence—

4 (A) by striking ‘‘Federal Home Loan Bank

5 System Modernization Act of 1999’’ and insert6 ing ‘‘Financial Services Regulatory Relief Act

7 of 2003’’; and

8 (B) by striking ‘‘1/3’’ and inserting ‘‘1/4’’.

9 (b) PROSPECTIVE APPLICATION.—The amendment

10 made by subsection (a) shall not apply to the term of office

11 in which any director of a Federal home loan bank is serv12 ing as of the date of the enactment of this Act, including

13 any director elected or appointed to fill a vacancy in any

14 such term of office.

15 SEC. 618. BIENNIAL REPORTS ON THE STATUS OF AGENCY

16 EMPLOYMENT OF MINORITIES AND WOMEN.

17 (a) IN GENERAL.—Before December 31, 2003, and

18 the end of each 2-year period beginning after such date,

19 each Federal banking agency shall submit a report to the

20 Congress on the status of the employment by the agency

21 of minority individuals and women.

22 (b) FACTORS TO BE INCLUDED.—The report shall

23 include a detailed assessment of each of the following:


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1 (1) The extent of hiring of minority individuals

2 and women by the agency as of the time the report

3 is prepared.

4 (2) The successes achieved and challenges faced

5 by the agency in operating minority and women out6 reach programs.

7 (3) Challenges the agency may face in finding

8 qualified minority individual and women applicants.

9 (4) Such other information, findings, and con10 clusions, and recommendations for legislative or

11 agency action, as the agency may determine to be

12 appropriate to include in the report.

13 (c) DEFINITIONS.—For purposes of this section, the

14 following definitions shall apply:

15 (1) FEDERAL BANKING AGENCY.—The term

16 ‘‘Federal banking agency’’—

17 (A) has the same meaning as in section

18 3(z) of the Federal Deposit Insurance Act; and

19 (B) includes the National Credit Union

20 Administration.

21 (2) MINORITY.—The term ‘‘minority’’ has the

22 same meaning as in section 1204(c)(3) of the Finan23 cial Institutions Reform, Recovery, and Enforcement

24 Act of 1989.


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1 SEC. 619. COORDINATION OF STATE EXAMINATION AU2 THORITY.

3 Section 10(h) of the Federal Deposit Insurance Act

4 (12 U.S.C. 1820(h)) is amended to read as follows:

5 ‘‘(h) COORDINATION OF EXAMINATION AUTHOR6 ITY.—

7 ‘‘(1) IN GENERAL.—The appropriate State

8 bank supervisor of the home State of an insured

9 State bank has authority to examine and supervise

10 the bank. The State bank supervisor of the home

11 State of an insured State bank shall exercise its au12 thority to supervise and examine the branches of the

13 bank in a host State in accordance with the terms

14 of any applicable cooperative agreement between the

15 home State bank supervisor and the State bank su16 pervisor of the relevant host State. Except as ex17 pressly provided in a cooperative agreement between

18 the State bank supervisors of the home State and

19 host State(s) of an insured State bank, only the

20 State bank supervisor of the home State of an in21 sured State bank may levy or charge State super22 visory fees on the bank.

23 ‘‘(2) HOST STATE EXAMINATION.—With respect

24 to a branch operated in a host State by an out-of25 State insured State bank that resulted from an

26 interstate merger transaction approved under section


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1 44 or that was established in such State pursuant

2 to section 5155(g) of the Revised Statutes, the third

3 undesignated paragraph of section 9 of the Federal

4 Reserve Act or section 18(d)(4) of this Act, the ap5 propriate State bank supervisor of such host State

6 may—

7 ‘‘(A) with written notice to the State bank

8 supervisor of the bank’s home State and subject

9 to the terms of any applicable cooperative

10 agreement with the State bank supervisor of

11 such home State, examine such branch for the

12 purpose of determining compliance with host

13 State laws that are applicable pursuant to sec14 tion 24(j) of this Act, including those that gov15 ern community reinvestment, fair lending, and

16 consumer protection; and

17 ‘‘(B) if expressly permitted under and sub18 ject to the terms of a cooperative agreement

19 with the State bank supervisor of the bank’s

20 home State or if such out-of-State insured

21 State bank has been determined to be in a trou22 bled condition by either the State bank super23 visor of the bank’s home State or the bank’s

24 appropriate Federal banking agency, participate

25 in the examination of the bank by the State


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H.L.C.

1 bank supervisor of the bank’s home State to as2 certain that the activities of the branch in such

3 host State are not conducted in an unsafe or

4 unsound manner. The State bank supervisor of

5 the home State of an insured State bank shall

6 notify the State bank supervisor of each host

7 State of the bank if there has been a final de8 termination that the bank is in a troubled con9 dition. The State bank supervisor of the bank’s

10 home State shall provide such notice as soon as

11 reasonably possible but in all cases within 15

12 business days after the State bank supervisor

13 has made such final determination or has re14 ceived written notification of such final deter15 mination.

16 ‘‘(3) HOST STATE ENFORCEMENT.—If the State

17 bank supervisor of a host State determines that a

18 branch of an out-of-State State insured State bank

19 is violating any law of the host State that is applica20 ble to such branch pursuant to section 24(j) of this

21 Act, including a law that governs community rein22 vestment, fair lending, or consumer protection, the

23 State bank supervisor of the host State or, to the ex24 tent authorized by the law of the host State, a host

25 State law enforcement officer may, with written noVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00134 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

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H.L.C.

1 tice to the State bank supervisor of the bank’s home

2 State and subject to the terms of any applicable co3 operative agreement with the State bank supervisor

4 of the bank’s home State, undertake such enforce5 ment actions and proceedings as would be permitted

6 under the law of the host State as if the branch

7 were a bank chartered by that host State.

8 ‘‘(4) COOPERATIVE AGREEMENT.—The State

9 bank supervisors from 2 or more States may enter

10 into cooperative agreements to facilitate State regu11 latory supervision of State banks, including coopera12 tive agreements relating to the coordination of ex13 aminations and joint participation in examinations.

14 For purposes of this subsection (h), the term ‘‘coop15 erative agreement’’ means a written agreement that

16 is signed by the home State bank supervisor and

17 host State bank supervisor to facilitate State regu18 latory supervision of State banks and includes na19 tionwide or multi-state cooperative agreements and

20 cooperative agreements solely between the home

21 State and host State. Except for State bank super22 visors, no provision of this subsection (h) relating to

23 such cooperative agreements shall be construed as

24 limiting in any way the authority of home and host

25 State law enforcement officers, regulatory superVerDate Jan 31 2003 18:40 Jul 15, 2003 Jkt 019006 PO 00000 Frm 00135 Fmt 6659 Sfmt 6601 E:\HR\OC\HR152P2.XXX HR152P2

C1375.AED
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108

H.L.C.

1 visors, or other officials that have not signed such

2 cooperative agreements to enforce host State laws

3 that are applicable to a branch of an out-of-State in4 sured State bank located in the host State pursuant

5 to section 24(j) of this Act.

6 ‘‘(5) FEDERAL REGULATORY AUTHORITY.—No

7 provision of this subsection shall be construed as

8 limiting in any way the authority of any Federal

9 banking agency.

10 ‘‘(6) STATE TAXATION AUTHORITY NOT AF11 FECTED.—No provision of this subsection (h) shall

12 be construed as affecting the authority of any State

13 or political subdivision of any State to adopt, apply,

14 or administer any tax or method of taxation to any

15 bank, bank holding company, or foreign bank, or

16 any affiliate of any bank, bank holding company, or

17 foreign bank, to the extent such tax or tax method

18 is otherwise permissible by or under the Constitution

19 of the United States or other Federal law.

20 ‘‘(7) DEFINITIONS.—For purpose of this sec21 tion, the following definition shall apply:

22 ‘‘(A) The terms ‘host State’, ‘home State’,

23 and ‘out-of-State bank’ have the same meanings

24 as in section 44(g).


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H.L.C.

1 ‘‘(B) The term ‘State supervisory fees’

2 means assessments, examination fees, branch

3 fees, license fees, and all other fees that are lev4 ied or charged by a State bank supervisor di5 rectly upon an insured State bank or upon

6 branches of an insured State bank.

7 ‘‘(C) Solely for purposes of subparagraph

8 (2)(B) of this subsection (h), an insured State

9 bank has been determined to be in ‘troubled

10 condition’ if the bank—

11 ‘‘(i) has a composite rating, as deter12 mined in its most recent report of exam13 ination, of 4 or 5 under the Uniform Fi14 nancial Institutions Ratings System

15 (UFIRS); or

16 ‘‘(ii) is subject to a proceeding initi17 ated by the Corporation for termination or

18 suspension of deposit insurance; or

19 ‘‘(iii) is subject to a proceeding initi20 ated by the State bank supervisor of the

21 bank’s home State to vacate, revoke, or

22 terminate the charter of the bank, or to

23 liquidate the bank, or to appoint a receiver

24 for the bank.


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110

H.L.C.

1 ‘‘(D) For the purposes of paragraph

2 (2)(B), the term ‘final determination’ means

3 the transmittal of a Report of Examination to

4 the bank or transmittal of official notice of pro5 ceedings to the bank.’’.

6 TITLE VII—CLERICAL AND

7 TECHNICAL AMENDMENTS

8 SEC. 701. CLERICAL AMENDMENTS TO THE HOME OWNERS’

9 LOAN ACT.

10 (a) AMENDMENT TO TABLE OF CONTENTS.—The

11 table of contents in section 1 of the Home Owners’ Loan

12 Act (12 U.S.C. 1461) is amended by striking the items

13 relating to sections 5 and 6 and inserting the following

14 new items:

‘‘Sec. 5. Savings associations.

‘‘Sec. 6. [Repealed.]’’.

15 (b) CLERICAL AMENDMENTS TO HEADINGS.—

16 (1) The heading for section 4(a) of the Home

17 Owners’ Loan Act (12 U.S.C. 1463(a)) is amended

18 by striking ‘‘(a) FEDERAL SAVINGS ASSOCIA19 TIONS.—’’ and inserting ‘‘(a) GENERAL RESPON20 SIBILITIES OF THE DIRECTOR.—’’.

21 (2) The section heading for section 5 of the

22 Home Owners’ Loan Act (12 U.S.C. 1464) is

23 amended to read as follows:


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111

H.L.C.

1 ‘‘SEC. 5. SAVINGS ASSOCIATIONS.’’.

2 SEC. 702. TECHNICAL CORRECTIONS TO THE FEDERAL

3 CREDIT UNION ACT.

4 The Federal Credit Union Act (12 U.S.C. 1751 et

5 seq.) is amended as follows:

6 (1) In section 101(3), strike ‘‘and’’ after the

7 semicolon.

8 (2) In section 101(5), strike the terms ‘‘account

9 account’’ and ‘‘account accounts’’ each place any

10 such term appears and insert ‘‘account’’.

11 (3) In section 107(a)(5)(E) (as so designated

12 by section 303 of this Act), strike the period at the

13 end and insert a semicolon.

14 (4) In paragraphs (6) and (7) of section 107(a)

15 (as so designated by section 303 of this Act), strike

16 the period at the end and insert a semicolon.

17 (5) In section 107(a)(7)(D) (as so designated

18 by section 303 of this Act), strike ‘‘the Federal Sav19 ings and Loan Insurance Corporation or’’.

20 (6) In section 107(a)(7)(E) (as so designated

21 by section 303 of this Act), strike ‘‘the Federal

22 Home Loan Bank Board,’’ and insert ‘‘the Federal

23 Housing Finance Board,’’.

24 (7) In section 107(a)(9) (as so designated by

25 section 303 of this Act), strike ‘‘subchapter III’’ and

26 insert ‘‘title III’’.


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112

H.L.C.

1 (8) In section 107(a)(13) (as so designated by

2 section 303 of this Act), strike the ‘‘and’’ after the

3 semicolon at the end.

4 (9) In section 109(c)(2)(A)(i), strike ‘‘(12

5 U.S.C. 4703(16))’’.

6 (10) In section 120(h), strike ‘‘under the Act

7 approved July 30, 1947 (6 U.S.C., secs. 6–13),’’ and

8 insert ‘‘chapter 93 of title 31, United States Code,’’.

9 (11) In section 201(b)(5), strike ‘‘section 116

10 of’’.

11 (12) In section 202(h)(3), strike ‘‘section

12 207(c)(1)’’ and insert ‘‘section 207(k)(1)’’.

13 (13) In section 204(b), strike ‘‘such others pow14 ers’’ and insert ‘‘such other powers’’.

15 (14) In section 206(e)(3)(D), strike ‘‘and’’ after

16 the semicolon at the end.

17 (15) In section 206(f)(1), strike ‘‘subsection

18 (e)(3)(B)’’ and insert ‘‘subsection (e)(3)’’.

19 (16) In section 206(g)(7)(D), strike ‘‘and sub20 section (1)’’.

21 (17) In section 206(t)(2)(B), insert ‘‘regula22 tions’’ after ‘‘as defined in’’.

23 (18) In section 206(t)(2)(C), strike ‘‘material

24 affect’’ and insert ‘‘material effect’’.


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113

H.L.C.

1 (19) In section 206(t)(4)(A)(ii)(II), strike ‘‘or’’

2 after the semicolon at the end.

3 (20) In section 206A(a)(2)(A), strike ‘‘regulator

4 agency’’ and insert ‘‘regulatory agency’’.

5 (21) In section 207(c)(5)(B)(i)(I), insert ‘‘and’’

6 after the semicolon at the end.

7 (22) In section 207(c)(8)(D)(ii)(I), insert a

8 closing parenthesis after ‘‘Act of 1934’’.

9 (23) In the heading for subparagraph (A) of

10 section 207(d)(3), strike ‘‘TO’’ and insert ‘‘WITH’’.

11 (24) In section 207(f)(3)(A), strike ‘‘category

12 or claimants’’ and insert ‘‘category of claimants’’.

13 (25) In section 209(a)(8), strike the period at

14 the end and insert a semicolon.

15 (26) In section 216(n), insert ‘‘any action’’ be16 fore ‘‘that is required’’.

17 (27) In section 304(b)(3), strike ‘‘the affairs or

18 such credit union’’ and insert ‘‘the affairs of such

19 credit union’’.

20 (28) In section 310, strike ‘‘section 102(e)’’ and

21 insert ‘‘section 102(d)’’.

22 SEC. 703. OTHER TECHNICAL CORRECTIONS.

23 (a) Section 1306 of title 18, United States Code, is

24 amended by striking ‘‘5136A’’ and inserting ‘‘5136B’’.


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H.L.C.

1 (b) Section 5239 of the Revised Statutes of the

2 United States (12 U.S.C. 93) is amended by redesignating

3 the second of the 2 subsections designated as subsection

4 (d) (as added by section 331(b)(3) of the Riegle Commu5 nity Development and Regulatory Improvement Act of

6 1994) as subsection (e).

7 SEC. 704. REPEAL OF OBSOLETE PROVISIONS OF THE BANK

8 HOLDING COMPANY ACT OF 1956.

9 (a) IN GENERAL.—Section 2 of the Bank Holding

10 Company Act of 1956 (12 U.S.C. 1841) is amended—

11 (1) in subsection (c)(2), by striking subpara12 graphs (I) and (J); and

13 (2) by striking subsection (m) and inserting the

14 following new subsection:

15 ‘‘(m) [Repealed]’’.

16 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

17 Paragraphs (1) and (2) of section 4(h) of the Bank Hold18 ing Company Act of 1956 (12 U.S.C. 1843(h)) are each

19 amended by striking ‘‘(G), (H), (I), or (J) of section

20 2(c)(2)’’ and inserting ‘‘(G), or (H) of section 2(c)(2)’’.


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Chairman SENSENBRENNER. The Chair has a long-winded statement which he will put in the record, without objection. 

[The statement of Mr. Sensenbrenner follows:]

PREPARED STATEMENT OF THE HONORABLE F. JAMES SENSENBRENNER, JR., A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF WISCONSIN

The ‘‘Financial Services Regulatory Relief Act of 2003’’ was reported by the Committee on Financial Services on May 21, 2003 and was sequentially referred to the 

Judiciary Committee for a period ending not later than July 14, 2003. This legislation is nearly identical to H.R. 3951, the ‘‘Financial Services Regulatory Relief Act 

of 2002,’’ which was reported from this Committee last Congress. 

H.R. 1375 makes several changes to existing law to provide a measure of relief 

to highly regulated financial institutions. The legislation contains regulatory improvements for savings associations, credit unions, and federal financial regulatory 

agencies. 

The following sections contain matters within the Rule X jurisdiction of the Judiciary Committee: Section 106 of the legislation clarifies bank merger notice requirements, while Section 203 of the bill allows a Federal savings association to merge 

with any nondepository institution affiliate of the savings association. 

Section 213 of the legislation ensures that all federal thrifts are considered to be 

a citizen of a State for purposes of establishing diversity jurisdiction. This provision 

extends to federal savings associations that operate across State lines the same possibility of establishing diversity jurisdiction currently enjoyed by national banks, 

State-chartered banks, and savings associations. Currently, federally-chartered savings associations that conduct businesses in more than one State may, under some 

circumstances, be considered to not be a citizen of any State in which they operate. 

Section 214 of the legislation requires federal courts to ensure that all institutions 

having claims for relief under the Supreme Court’s 1996 Winstar decision be permitted to have those claims considered on the merits. The provision is an equitable 

one. 

It is intended to ensure that financial institutions which took over failed thrifts 

in the 1980’s only after receiving specific material assurances from federal regulators—terms that the Supreme Court ruled were later breached by the federal government—have the ability to present their claims for breach of contract in federal 

court. 

Section 312 of the legislation, would exempt credit unions from having to file 

Hart-Scott-Rodino pre-merger antitrust review. 

Section 402 establishes a uniform 30-day statute of limitations on various financial institutions to appeal decisions by the Comptroller, FDIC, and National Credit 

Union Administration to appoint a receiver. 

Section 607 streamlines merger applications for depository institutions while Section 609 would shorten the post-approval process during which banks can complete 

merging or acquiring another bank if the Attorney General agrees in advance that 

the acquisition or merger would not have serious anticompetitive effects. Finally, 

Section 615 would allow for the imposition of up to $1 million a day fine on any 

individual or corporation for misrepresentation of FDIC insurance coverage. 

H.R. 1375 represents meaningful reform of a financial services industry in need 

of structural regulatory modernization, and I urge your support. 

I now turn to Mr. Conyers for his opening remarks.

Chairman SENSENBRENNER. Without objection, all Members may 

put statements in the record. And are there amendments? The gentlewoman from California, do you have an amendment to this bill? 

[No response.] 

Chairman SENSENBRENNER. Okay. Are there amendments? 

If not, the Chair notes the presence of a reporting quorum. All 

those in favor of reporting the bill favorably will say aye? Opposed, 

no? 

The ayes appear to have it. The ayes have it, and the bill is reported favorably. 

Without objection, the Chairman is authorized to move to go to 

conference pursuant to House rules. Without objection, the staff is 

directed to make any technical and conforming changes, and all 

144

Members will be given 2 days as provided by House rules in which 

to submit additional, dissenting, supplemental, or minority views. 

And the Committee is recessed until 10:00 a.m. tomorrow. 

[Whereupon, at 4:54 p.m., the Committee was recessed, to reconvene at 10:00 a.m., Thursday, July 10, 2003.] 

(145)

ADDITIONAL VIEWS

We generally support the version of H.R. 1375 as reported out of 

the Committee on the Judiciary, but we have one reservation about 

a provision that was not addressed at the Committee markup. Section 609 of H.R. 1375 amends section 11(b) of the Bank Holding 

Company Act of 1956, 12 U.S.C. § 1849(b), and section 18(c)(6) of 

the Federal Deposit Insurance Act, 12 U.S.C. § 1828(c)(6), by reducing the minimum waiting period from 15 calendar days to five calendar days for banks and bank holding companies to merge with 

or acquire other banks or bank holding companies. Although no 

amendment was offered at the Committee, we feel that this provision should be struck from the bill. 

Community organizations have raised concerns about this provision, which reduces to 5 days the pre-merger, mandatory 15-day 

waiting period with the Attorney General’s approval. During the 

course of a bank merger process, both the Federal financial supervisory agency and the Department of Justice review the merger 

proposal for competitive concerns. After a Federal banking agency 

approves a merger, DOJ has 30 days to decide whether to challenge the merger approval on antitrust grounds. At a minimum, 

the merging banks must now wait 15 days before completing their 

merger. Currently, banking law allows third parties (other than 

Federal banking agencies or DOJ) to file suit during the post-approval waiting period. As proposed, section 609 would reduce the 

minimum 15-day waiting period to 5 days when DOJ indicates it 

will not file suit challenging the merger approval order. 

We believe this provision is anti-Community Reinvestment Act 

(‘‘CRA’’) and strips the organizations’ right to seek judicial review 

of Federal bank merger approval orders. Without such review, community organizations will be deprived of impartial means and 

mechanisms for ensuring that CRA performance obligations are 

taken into account when considering merger approvals. Community-based organizations use such suits to obtain information about 

the merger and ensure that the merger will not result in disproportionate branch closures in low-income or minority communities. We 

believe they play an important role in the public interest and 

would like to reaffirm our desire that the mandatory 15-day waiting period remain and that section 609 be struck from the bill.

JOHN CONYERS, JR. 

MAXINE WATERS. 

WILLIAM D. DELAHUNT. 

TAMMY BALDWIN. 

LINDA T. SA ́ NCHEZ.

Æ