I 

109TH CONGRESS 

1ST SESSION H. R. 3426 

To clarify the applicability of State law to national banks and Federal savings 

associations, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 26, 2005 

Mr. GUTIERREZ (for himself, Mr. FRANK of Massachusetts, Ms. LEE, and 

Mrs. MCCARTHY) introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To clarify the applicability of State law to national banks 

and Federal savings associations, 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, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Preservation of Fed5 eralism in Banking Act’’. 

6 TITLE I—NATIONAL BANKS 

7 SEC. 101. STATE LAW PREEMPTION STANDARDS FOR NA8 TIONAL BANKS CLARIFIED. 

9 (a) IN GENERAL.—Chapter One of title LXII of the 

10 Revised Statutes of the United States (12 U.S.C. 21 et 
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1 seq.) is amended by inserting after section 5136B the fol2 lowing new section: 

3 ‘‘SEC. 5136C. STATE LAW PREEMPTION STANDARDS FOR NA4 TIONAL BANKS AND SUBSIDIARIES CLARI5 FIED. 

6 ‘‘(a) STATE CONSUMER LAWS OF GENERAL APPLI7 CATION.— 

8 ‘‘(1) IN GENERAL.—Notwithstanding any other 

9 provision of Federal law, any consumer protection in 

10 State consumer law of general application (including 

11 any law relating to unfair or deceptive acts or prac12 tices, any consumer fraud law and repossession, 

13 foreclosure, and collection) shall apply to any na14 tional bank. 

15 ‘‘(2) NATIONAL BANK DEFINED.—For purposes 

16 of this section, the term ‘national bank’ includes any 

17 Federal branch established in accordance with the 

18 International Banking Act of 1978. 

19 ‘‘(b) STATE LAWS RELATED TO LAWS USED BY NA20 TIONAL BANKS FOR THEIR BENEFIT.—When a national 

21 bank avails itself of a State law for its benefit, all related 

22 consumer protections in State law shall apply. 

23 ‘‘(c) STATE BANKING LAWS ENACTED PURSUANT TO

24 FEDERAL LAW.— 
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1 ‘‘(1) IN GENERAL.—Notwithstanding any other 

2 provision of Federal law and except as provided in 

3 paragraph (2), any State law that— 

4 ‘‘(A) is applicable to State banks; and 

5 ‘‘(B) was enacted pursuant to or in accord6 ance with, and is not inconsistent with, an Act 

7 of Congress, including the Gramm-Leach-Bliley 

8 Act, the Consumer Credit Protection Act, and 

9 the Real Estate Settlement Procedures Act, 

10 that explicitly or by implication, permits States 

11 to exceed or supplement the requirements of 

12 any comparable Federal law, 

13 shall apply to any national bank. 

14 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 

15 apply with respect to any State law if— 

16 ‘‘(A) the State law discriminates against 

17 national banks; or 

18 ‘‘(B) State law is inconsistent with provi19 sions of Federal law other than this title LXII, 

20 but only to the extent of the inconsistency (as 

21 determined in accordance with the provision of 

22 the other Federal Law). 

23 ‘‘(d) STATE LAWS PROTECTING AGAINST PREDA24 TORY MORTGAGE LOANS.—To the extent not otherwise 

25 addressed in this section, State laws providing greater pro-
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1 tection in high cost mortgage loans, however denominated, 

2 both in coverage and content, than is provided under the 

3 Truth in Lending Act (including the provisions amended 

4 by the Home Ownership and Equity Protection Act of 

5 1994) shall apply to any national bank. 

6 ‘‘(e) COMPARABLE FEDERAL REGULATION RE7 QUIRED.—In relation to the regulation of consumer credit 

8 and deposit transactions, the Comptroller may preempt 

9 State law pursuant to this title only when there is a com10 parable Federal statute, or regulations pursuant to a Fed11 eral statute other than this title, expressly governing the 

12 activity, except in relation to interest pursuant to section 

13 5197. 

14 ‘‘(f) NO NEGATIVE IMPLICATIONS FOR APPLICA15 BILITY OF OTHER STATE LAWS.—No provision of this 

16 section shall be construed as altering or affecting the ap17 plicability, to national banks, of any State law which is 

18 not described in this section. 

19 ‘‘(g) EFFECT OF TRANSFER OF TRANSACTION.—A 

20 transaction that is not entitled to preemption at the time 

21 of the origination of the transaction does not become enti22 tled to preemption under this title by virtue of its subse23 quent acquisition by a national bank. 

24 ‘‘(h) DENIAL OF PREEMPTION NOT A DEPRIVATION

25 OF A CIVIL RIGHT.—The preemption of any provision of 
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1 the law of any State with respect to any national bank 

2 shall not be treated as a right, privilege, or immunity for 

3 purposes of section 1979 of the Revised Statutes of the 

4 United States (42 U.S.C. 1983). 

5 ‘‘(i) DEFINITION.—For purposes of this section, the 

6 terms ‘includes’ and ‘including’ have the same meaning 

7 as in section 3(t) of the Federal Deposit Insurance Act.’’. 

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

9 for chapter One of title LXII of the Revised Statutes of 

10 the United States is amended by inserting after the item 

11 relating to section 5136B the following new item: 

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

clarified.’’. 

12 SEC. 102. VISITORIAL STANDARDS. 

13 Section 5136C of the Revised Statutes of the United 

14 States (as added by section 101(a) of this Act) is amended 

15 by adding at the end the following new subsections: 

16 ‘‘(j) VISITORIAL POWERS.—No provision of this title 

17 which relates to visitorial powers or otherwise limits or re18 stricts the supervisory, examination, or regulatory author19 ity to which any national bank is subject shall be con20 strued as limiting or restricting the authority of any attor21 ney general (or other chief law enforcement officer) of any 

22 State to bring any action in any court of appropriate juris23 diction— 
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1 ‘‘(1) to enforce any applicable Federal or State 

2 law, as authorized by such law; or 

3 ‘‘(2) on behalf of residents of such State, to en4 force any applicable provision of any Federal or 

5 State law against a national bank, as authorized by 

6 such law, or to seek relief and recover damages for 

7 such residents from any violation of any such law by 

8 any national bank. 

9 ‘‘(k) ENFORCEMENT ACTIONS.—The ability of the 

10 Comptroller to bring an enforcement action under this 

11 title or section 5 of the Federal Trade Commission Act 

12 does not preclude private parties from enforcing rights 

13 granted under Federal or State law in the courts.’’. 

14 SEC. 103. CLARIFICATION OF LAW APPLICABLE TO STATE15 CHARTERED NONDEPOSITORY INSTITUTION 

16 SUBSIDIARIES. 

17 Section 5136C of the Revised Statutes of the United 

18 States (as added by section 101(a) of this Act) is amended 

19 by inserting after subsection (k) (as added by section 102) 

20 the following new subsection: 

21 ‘‘(l) CLARIFICATION OF LAW APPLICABLE TO NON22 DEPOSITORY INSTITUTION SUBSIDIARIES AND AFFILI23 ATES OF NATIONAL BANKS; DEFINITIONS.— 

24 ‘‘(1) IN GENERAL.—No provision of this title 

25 shall be construed as preempting the applicability of 
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1 State law to any State-chartered nondepository insti2 tution, subsidiary, other affiliate, or agent of a na3 tional bank. 

4 ‘‘(2) DEFINITIONS.—For purposes of this sec5 tion, the following definitions shall apply: 

6 ‘‘(A) DEPOSITORY INSTITUTION, SUB7 SIDIARY, AFFILIATE.—The terms ‘depository in8 stitution’, ‘subsidiary’, and ‘affiliate’ have the 

9 same meanings as in section 3 of the Federal 

10 Deposit Insurance Act. 

11 ‘‘(B) NONDEPOSITORY INSTITUTION.—The 

12 term ‘nondepository institution’ means any enti13 ty that is not a depository institution.’’. 

14 SEC. 104. DATA COLLECTION AND REPORTING. 

15 (a) COLLECTING AND MONITORING CONSUMER COM16 PLAINTS.— 

17 (1) IN GENERAL.—The Comptroller of the Cur18 rency shall record and monitor each complaint re19 ceived directly or indirectly from a consumer regard20 ing a national bank or any subsidiary of a national 

21 bank and record the resolution of the complaint. 

22 (2) FACTORS TO BE INCLUDED.—In carrying 

23 out the requirements of paragraph (1), the Comp24 troller of the Currency shall include— 
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1 (A) the date the consumer complaint was 

2 received; 

3 (B) the nature of the complaint; 

4 (C) when and how the complaint was re5 solved, including a brief description of the ex6 tent, and the results, of the investigation made 

7 by the Comptroller into the complaint, a brief 

8 description of any notices given and inquiries 

9 made to any other Federal or State officer or 

10 agency in the course of the investigation or res11 olution of the complaint, a summary of the en12 forcement action taken upon completion of the 

13 investigation, and a summary of the results of 

14 subsequent periodic reviews by the Comptroller 

15 of the extent and nature of compliance by the 

16 national bank or subsidiary with the enforce17 ment action; and 

18 (D) if the complaint involves any alleged 

19 violation of a State law (whether or not Federal 

20 law preempts the application of such State law 

21 to such national bank) by such bank, a cite to 

22 and a description of the State law that formed 

23 the basis of the complaint. 

24 (b) REPORT TO THE CONGRESS.— 
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1 (1) PERIODIC REPORTS REQUIRED.—The 

2 Comptroller of the Currency shall submit a report 

3 semi-annually to the Congress on the consumer pro4 tection efforts of the Office of the Comptroller of the 

5 Currency. 

6 (2) CONTENTS OF REPORT.—Each report sub7 mitted under paragraph (1) shall include the fol8 lowing: 

9 (A) The total number of consumer com10 plaints received by the Comptroller during the 

11 period covered by the report with respect to al12 leged violations of consumer protection laws by 

13 national banks and subsidiaries of national 

14 banks. 

15 (B) The total number of consumer com16 plaints received during the reporting period that 

17 are based on each of the following: 

18 (i) Each title of the Consumer Credit 

19 Protection Act (reported as a separate ag20 gregate number for each such title). 

21 (ii) The Truth in Savings Act. 

22 (iii) The Right to Financial Privacy 

23 Act of 1978. 

24 (iv) The Expedited Funds Availability 

25 Act. 
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1 (v) The Community Reinvestment Act 

2 of 1977. 

3 (vi) The Bank Protection Act of 1968. 

4 (vii) Title LXII of the Revised Stat5 utes of the United States. 

6 (viii) The Federal Deposit Insurance 

7 Act. 

8 (ix) The Real Estate Settlement Pro9 cedures Act of 1974. 

10 (x) The Home Mortgage Disclosure 

11 Act of 1975. 

12 (xi) Any other Federal law. 

13 (xii) State consumer protection laws 

14 (reported as a separate aggregate number 

15 for each State and each State consumer 

16 protection law). 

17 (xiii) Any other State law (reported 

18 separately for each State and each State 

19 law). 

20 (C) A summary description of the resolu21 tion efforts by the Comptroller for complaints 

22 received during the period covered, including— 

23 (i) the average amount of time to re24 solve each complaint; 
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1 (ii) the median period of time to re2 solve each complaint; 

3 (iii) the average and median time to 

4 resolve complaints in each category of com5 plaints described in each clause of sub6 paragraph (B); and 

7 (iv) a summary description of the 

8 longest outstanding complaint during the 

9 reporting period and the reason for the dif10 ficulty in resolving such complaint in a 

11 more timely fashion. 

12 (3) DISCLOSURE OF REPORT ON OCC

13 WEBSITE.—Each report submitted to the Congress 

14 under this subsection shall be posted, by the Comp15 troller of the Currency, in a timely fashion and 

16 maintained on the website of the Office of the 

17 Comptroller of the Currency on the World Wide 

18 Web. 

19 TITLE II—SAVINGS 

20 ASSOCIATIONS 

21 SEC. 201. STATE LAW PREEMPTION STANDARDS FOR FED22 ERAL SAVINGS ASSOCIATIONS CLARIFIED. 

23 (a) IN GENERAL.—The Home Owners’ Loan Act (12 

24 U.S.C. 1461 et seq.) is amended by inserting after section 

25 5 the following new section: 
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1 ‘‘SEC. 6. STATE LAW PREEMPTION STANDARDS FOR FED2 ERAL SAVINGS ASSOCIATIONS AND AFFILI3 ATES CLARIFIED. 

4 ‘‘(a) STATE CONSUMER LAWS OF GENERAL APPLI5 CATION.—Notwithstanding any other provision of Federal 

6 law, any consumer protection in State consumer law of 

7 general application (including any law relating to unfair 

8 or deceptive acts or practices, any consumer fraud law and 

9 repossession, foreclosure, and collection) shall apply to any 

10 Federal savings association. 

11 ‘‘(b) STATE LAWS RELATED TO LAWS USED BY

12 FEDERAL SAVINGS ASSOCIATIONS FOR THEIR BEN13 EFIT.—When a Federal savings association avails itself of 

14 a State law for its benefit, all related consumer protections 

15 in State law shall apply. 

16 ‘‘(c) STATE BANKING OR THRIFT LAWS ENACTED

17 PURSUANT TO FEDERAL LAW.— 

18 ‘‘(1) IN GENERAL.—Notwithstanding any other 

19 provision of Federal law and except as provided in 

20 paragraph (2), any State law that— 

21 ‘‘(A) is applicable to State savings associa22 tions (as defined in section 3 of the Federal De23 posit Insurance Act); and 

24 ‘‘(B) was enacted pursuant to or in accord25 ance with, and is not inconsistent with, an Act 

26 of Congress, including the Gramm-Leach-Bliley 
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1 Act, the Consumer Credit Protection Act, and 

2 the Real Estate Settlement Procedures Act, 

3 that explicitly or by implication, permits States 

4 to exceed or supplement the requirements of 

5 any comparable Federal law, 

6 shall apply to any Federal savings association. 

7 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 

8 apply with respect to any State law if— 

9 ‘‘(A) the State law discriminates against 

10 Federal savings associations; or 

11 ‘‘(B) the State law is inconsistent with 

12 provisions of Federal law other than this Act, 

13 but only to the extent of the inconsistency (as 

14 determined in accordance with the provision of 

15 the other Federal law). 

16 ‘‘(d) STATE LAWS PROTECTING AGAINST PREDA17 TORY MORTGAGE LOANS.—To the extent not otherwise 

18 addressed in this section, State laws providing greater pro19 tection in high cost mortgage loans, however denominated, 

20 both in coverage and content, than is provided under the 

21 Truth in Lending Act (including the provisions amended 

22 by the Home Ownership and Equity Protection Act of 

23 1994) shall apply to any Federal savings association. 

24 ‘‘(e) COMPARABLE FEDERAL REGULATION RE25 QUIRED.—In relation to the regulation of consumer credit 
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1 and deposit transactions, the Director of the Office of 

2 Thrift Supervision may preempt State law pursuant to 

3 this Act only when there is a comparable Federal statute, 

4 or regulations pursuant to a Federal statute other than 

5 this Act, expressly governing the activity, except in rela6 tion to interest pursuant to section 4(g). 

7 ‘‘(f) NO NEGATIVE IMPLICATIONS FOR APPLICA8 BILITY OF OTHER STATE LAWS.—No provision of this 

9 section shall be construed as altering or affecting the ap10 plicability, to Federal savings associations, of any State 

11 law which is not described in this section. 

12 ‘‘(g) EFFECT OF TRANSFER OF TRANSACTION.—A 

13 transaction that is not entitled to preemption at the time 

14 of the origination of the transaction does not become enti15 tled to preemption under this Act by virtue of its subse16 quent acquisition by a Federal savings association. 

17 ‘‘(h) DENIAL OF PREEMPTION NOT A DEPRIVATION

18 OF A CIVIL RIGHT.—The preemption of any provision of 

19 the law of any State with respect to any Federal savings 

20 association shall not be treated as a right, privilege, or 

21 immunity for purposes of section 1979 of the Revised 

22 Statutes of the United States (42 U.S.C. 1983). 

23 ‘‘(i) DEFINITION.—For purposes of this section, the 

24 terms ‘includes’ and ‘including’ have the same meaning 

25 as in section 3(t) of the Federal Deposit Insurance Act.’’. 
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1 (b) CLERICAL AMENDMENT.—The table of sections 

2 for the Home Owners’ Loan Act (12 U.S.C. 1461 et seq.) 

3 is amended by striking the item relating to section 6 and 

4 inserting the following new item: 

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

5 SEC. 202. VISITORIAL STANDARDS. 

6 Section 6 of the Home Owners’ Loan Act (as added 

7 by section 201(a) of this title) is amended by adding at 

8 the end the following new subsections: 

9 ‘‘(j) VISITORIAL POWERS.—No provision of this Act 

10 shall be construed as limiting or restricting the authority 

11 of any attorney general (or other chief law enforcement 

12 officer) of any State to bring any action in any court of 

13 appropriate jurisdiction— 

14 ‘‘(1) to enforce any applicable Federal or State 

15 law, as authorized by such law; or 

16 ‘‘(2) on behalf of residents of such State, to en17 force any applicable provision of any Federal or 

18 State law against a Federal savings association, as 

19 authorized by such law, or to seek relief and recover 

20 damages for such residents from any violation of any 

21 such law by any Federal savings association. 

22 ‘‘(k) ENFORCEMENT ACTIONS.—The ability of the 

23 Director of the Office of Thrift Supervision to bring an 

24 enforcement action under this Act or section 5 of the Fed-
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1 eral Trade Commission Act does not preclude private par2 ties from enforcing rights granted under Federal or State 

3 law in the courts.’’. 

4 SEC. 203. CLARIFICATION OF LAW APPLICABLE TO STATE5 CHARTERED NONDEPOSITORY INSTITUTION 

6 SUBSIDIARIES. 

7 Section 6 of the Home Owners’ Loan Act (as added 

8 by section 201(a) of this title) is amended by inserting 

9 after subsection (k) (as added by section 202) the fol10 lowing new subsection: 

11 ‘‘(l) CLARIFICATION OF LAW APPLICABLE TO NON12 DEPOSITORY INSTITUTION AFFILIATES OF FEDERAL SAV13 INGS ASSOCIATIONS.— 

14 ‘‘(1) IN GENERAL.—No provision of this Act 

15 shall be construed as preempting the applicability of 

16 State law to any State-chartered nondepository insti17 tution, subsidiary, other affiliate, or agent of a Fed18 eral savings association. 

19 ‘‘(2) DEFINITIONS.—For purposes of this sec20 tion, the following definitions shall apply: 

21 ‘‘(A) DEPOSITORY INSTITUTION, SUB22 SIDIARY, AFFILIATE.—The terms ‘depository in23 stitution’, ‘subsidiary’, and ‘affiliate’ have the 

24 same meanings as in section 3 of the Federal 

25 Deposit Insurance Act. 
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1 ‘‘(B) NONDEPOSITORY INSTITUTION.—The 

2 term ‘nondepository institution’ means any enti3 ty that is not a depository institution.’’. 

4 SEC. 204. DATA COLLECTION AND REPORTING. 

5 (a) COLLECTING AND MONITORING CONSUMER COM6 PLAINTS.— 

7 (1) IN GENERAL.—The Director of the Office of 

8 Thrift Supervision shall record and monitor each 

9 complaint received directly or indirectly from a con10 sumer regarding a Federal savings association or 

11 any subsidiary of a Federal savings association and 

12 record the resolution of the complaint. 

13 (2) FACTORS TO BE INCLUDED.—In carrying 

14 out the requirements of paragraph (1), the Director 

15 of the Office of Thrift Supervision shall include— 

16 (A) the date the consumer complaint was 

17 received; 

18 (B) the nature of the complaint; 

19 (C) when and how the complaint was re20 solved, including a brief description of the ex21 tent, and the results, of the investigation made 

22 by the Director into the complaint, a brief de23 scription of any notices given and inquiries 

24 made to any other Federal or State officer or 

25 agency in the course of the investigation or res-
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1 olution of the complaint, a summary of the en2 forcement action taken upon completion of the 

3 investigation, and a summary of the results of 

4 subsequent periodic reviews by the Comptroller 

5 of the extent and nature of compliance by the 

6 Federal savings association or subsidiary with 

7 the enforcement action; and 

8 (D) if the complaint involves any alleged 

9 violation of a State law (whether or not Federal 

10 law preempts the application of such State law 

11 to such Federal savings association) by such 

12 savings association, a cite to and a description 

13 of the State law that formed the basis of the 

14 complaint. 

15 (b) REPORT TO THE CONGRESS.— 

16 (1) PERIODIC REPORTS REQUIRED.—The Direc17 tor of the Office of Thrift Supervision shall submit 

18 a report semi-annually to the Congress on the con19 sumer protection efforts of the Office of Thrift Su20 pervision. 

21 (2) CONTENTS OF REPORT.—Each report sub22 mitted under paragraph (1) shall include the fol23 lowing: 

24 (A) The total number of consumer com25 plaints received by the Director during the pe-
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1 riod covered by the report with respect to al2 leged violations of consumer protection laws by 

3 Federal savings associations and subsidiaries of 

4 Federal savings associations. 

5 (B) The total number of consumer com6 plaints received during the reporting period that 

7 are based on each of the following: 

8 (i) Each title of the Consumer Credit 

9 Protection Act (reported as a separate ag10 gregate number for each such title). 

11 (ii) The Truth in Savings Act. 

12 (iii) The Right to Financial Privacy 

13 Act of 1978. 

14 (iv) The Expedited Funds Availability 

15 Act. 

16 (v) The Community Reinvestment Act 

17 of 1977. 

18 (vi) The Bank Protection Act of 1968. 

19 (vii) The Home Owners’ Loan Act. 

20 (viii) The Federal Deposit Insurance 

21 Act. 

22 (ix) The Real Estate Settlement Pro23 cedures Act of 1974. 

24 (x) The Home Mortgage Disclosure 

25 Act of 1975. 
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1 (xi) Any other Federal law. 

2 (xii) State consumer protection laws 

3 (reported as a separate aggregate number 

4 for each State and each State consumer 

5 protection law). 

6 (xiii) Any other State law (reported 

7 separately for each State and each State 

8 law). 

9 (C) A summary description of the resolu10 tion efforts by the Director for complaints re11 ceived during the period covered, including— 

12 (i) the average amount of time to re13 solve each complaint; 

14 (ii) the median period of time to re15 solve each complaint; 

16 (iii) the average and median time to 

17 resolve complaints in each category of com18 plaints described in each clause of sub19 paragraph (B); and 

20 (iv) a summary description of the 

21 longest outstanding complaint during the 

22 reporting period and the reason for the dif23 ficulty in resolving such complaint in a 

24 more timely fashion. 
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1 (3) DISCLOSURE OF REPORT ON OTS

2 WEBSITE.—Each report submitted to the Congress 

3 under this subsection shall be posted, by the Direc4 tor of the Office of Thrift Supervision, in a timely 

5 fashion and maintained on the website of the Office 

6 of Thrift Supervision on the World Wide Web. 

Æ