I

104TH CONGRESS

1ST SESSION H. R. 2503

To clarify the authority of States to regulate national bank insurance activity,

to limit the authority of the Comptroller of the Currency to authorize

national banks to engage in new insurance activities, and for other

purposes.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 18, 1995

Mr. SOLOMON (for himself, Mr. BURTON, and Mr. MCINNIS) introduced the

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

A BILL

To clarify the authority of States to regulate national bank

insurance activity, to limit the authority of the Comptroller of the Currency to authorize national banks to engage

in new insurance activities, 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 ‘‘Bank Insurance Regu5 lation Act of 1995’’.
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1 SEC. 2. AUTHORITY OF THE COMPTROLLER OF THE CUR2 RENCY.

3 (a) STATE SUPERVISION.—Chapter 1 of Title LXII

4 of the Revised Statutes of the United States (12 U.S.C.

5 21 et seq.) is amended—

6 (1) by redesignating section 5136A as section

7 5136B; and

8 (2) by inserting after section 5136 (12 U.S.C.

9 24) the following new section:

10 ‘‘SEC. 5136A. STATE SUPERVISION OF INSURANCE.

11 ‘‘(a) STATE LICENSING OF INSURANCE ACTIVI12 TIES.—

13 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

14 no provision of section 5136, any other section of

15 this title, or section 13 of the Federal Reserve Act

16 may be construed as limiting or otherwise impairing

17 the authority of any State to regulate—

18 ‘‘(A) the extent to which, and the manner

19 in which, a national bank may engage within

20 the State in insurance activities pursuant to

21 section 13 of the Federal Reserve Act;

22 ‘‘(B) the manner in which a national bank

23 may engage within the State in insurance ac24 tivities pursuant to section 5136(b)(2)(B) of

25 the Revised Statutes of the United States; or
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1 ‘‘(C) the manner in which a national bank

2 may engage within the State in insurance ac3 tivities pursuant to section 5136(b)(2)(A) of the

4 Revised Statutes of the United States through,

5 and limited to, consumer disclosure require6 ments or licensing requirements, procedures,

7 and qualifications as described in paragraph

8 (2)(C).

9 ‘‘(2) PROHIBITION ON STATE DISCRIMINATION

10 AGAINST NATIONAL BANKS.—Notwithstanding para11 graph (1)—

12 ‘‘(A) PROVIDING INSURANCE AS AGENT OR

13 BROKER.—No State may impose any insurance

14 regulatory requirement relating to providing in15 surance as an agent or broker that treats a na16 tional bank differently than all other persons

17 who are authorized to provide insurance as

18 agents or brokers in such State, unless there is

19 a legitimate and reasonable State regulatory

20 purpose for the requirement for which there is

21 no less restrictive alternative.

22 ‘‘(B) PROVIDING INSURANCE AS PRIN23 CIPAL, AGENT, OR BROKER.—

24 ‘‘(i) No State may impose on a na25 tional bank any insurance regulatory re-
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1 quirement relating to providing insurance

2 as principal, agent, or broker that treats

3 the national bank more restrictively than

4 any other depository institution (as defined

5 in section 3(c)(1) of the Federal Deposit

6 Insurance Act) operating in the State.

7 ‘‘(ii) Nothing in this subparagraph

8 shall affect the validity of a State law

9 that—

10 ‘‘(I) prevents a national bank

11 from engaging in insurance activities

12 within the State to as great an extent

13 as a savings association (as defined in

14 section 3(b)(1) of the Federal Deposit

15 Insurance Act) may engage in such

16 activities within the State; and

17 ‘‘(II) was in effect on June 1,

18 1995.

19 ‘‘(C) LICENSING QUALIFICATIONS AND

20 PROCEDURES.—No State may discriminate

21 against a national bank with respect to the fol22 lowing requirements, procedures, and qualifica23 tions as such requirements, procedures, and

24 qualifications relate to the authority of the na-
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1 tional bank to provide insurance in such State

2 as an agent or broker:

3 ‘‘(i) License application and process4 ing procedures.

5 ‘‘(ii) Character, experience, and edu6 cational qualifications for licenses.

7 ‘‘(iii) Testing and examination re8 quirements for licenses.

9 ‘‘(iv) Fee requirements for licenses.

10 ‘‘(v) Continuing education require11 ments.

12 ‘‘(vi) Types of licenses required.

13 ‘‘(vii) Standards and requirements for

14 renewal of licenses.

15 ‘‘(b) AUTHORITY OF THE COMPTROLLER OF THE

16 CURRENCY.—A national bank may not provide insurance

17 as a principal, agent, or broker except as specifically pro18 vided in this section, the paragraph designated as the

19 ‘Seventh’ of section 5136(a) of this chapter, or section

20 5136(b) of this chapter, or section 13 of the Federal Re21 serve Act.

22 ‘‘(c) PRESERVATION OF FEDERALLY AUTHORIZED

23 BANK ACTIVITIES IN PERMISSIVE STATES.—No provision

24 of this section may be construed as affecting the authority,

25 pursuant to section 13 of the Federal Reserve Act, of a
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1 national bank to act as insurance agent or broker consist2 ent with State law.

3 ‘‘(d) PRESERVATION OF NATIONAL BANK AUTHOR4 ITY CONSISTENT WITH STATE BANK AUTHORITY.—Ex5 cept as provided in subsection (a)(2)(B), no provision of

6 this section or section 5136(b)(1) shall have the effect of

7 enabling a State to deny a national bank authority that

8 the bank otherwise possesses to provide a product in a

9 State, including as agent, broker, or principal, where the

10 bank is not providing the product in the State other than

11 to an extent and in a manner that a State bank (as de12 fined in section 3(a)(2) of the Federal Deposit Insurance

13 Act) is permitted by the law of the State to provide such

14 product, except that nothing in this subsection shall be

15 construed as granting any new authority to a national

16 bank to provide any product because the law of the State

17 has authorized State banks to provide such product.

18 ‘‘(e) DEFINITIONS.—For purposes of this section,

19 section 5136, and section 13 of the Federal Reserve Act,

20 the following definitions shall apply:

21 ‘‘(1) INSURANCE.—The term ‘insurance’ means

22 any product defined or regulated as insurance, con23 sistent with the relevant State insurance law, by the

24 insurance regulatory authority of the State in which

25 such product is sold, solicited, or underwritten, in-
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1 cluding any annuity contract the income on which is

2 tax deferred under section 72 of the Internal Reve3 nue Code of 1986.

4 ‘‘(2) STATE.—The term ‘State’ has the same

5 meaning as in section 3(a)(3) of the Federal Deposit

6 Insurance Act.

7 ‘‘(f) GRANDFATHER PROVISION.—

8 ‘‘(1) IN GENERAL.—Any national bank which,

9 before January 1, 1995, was providing insurance as

10 agent or broker under section 13 of the Federal Re11 serve Act may provide insurance as an agent or

12 broker under such section, to no less extent and in

13 a no more restrictive manner as such bank was pro14 viding insurance as agent or broker under such sec15 tion on January 1, 1995, notwithstanding contrary

16 State law, subject to final, controlling judgment in

17 a pending action.

18 ‘‘(2) TERMINATION.—This subsection shall

19 cease to apply with respect to any national bank de20 scribed in paragraph (1) if—

21 ‘‘(A) the bank is subject to an acquisition,

22 merger, consolidation, or change in control,

23 other than a transaction to which section

24 18(c)(12) of the Federal Deposit Insurance Act

25 applies; or
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1 ‘‘(B) any bank holding company which di2 rectly or indirectly controls such bank is subject

3 to an acquisition, merger, consolidation, or

4 change in control, other than a transaction in

5 which the beneficial ownership of such bank

6 holding company or of a bank holding company

7 which controls such company does not change

8 as a result of the transaction.’’.

9 (b) INTERPRETIVE AUTHORITY OF THE COMPTROL10 LER OF THE CURRENCY.—Section 5136 of the Revised

11 Statutes of the United States (12 U.S.C. 24) is amend12 ed—

13 (1) by striking ‘‘Upon duly making and filing

14 articles of association’’ and inserting ‘‘(a) IN GEN15 ERAL.—Upon duly making and filing articles of as16 sociation’’; and

17 (2) by adding at the end the following new sub18 section:

19 ‘‘(b) INTERPRETIVE AUTHORITY OF THE COMPTROL20 LER OF THE CURRENCY.—

21 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

22 it shall not be incidental to banking for a national

23 bank to provide insurance as a principal, agent, or

24 broker.
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1 ‘‘(2) SCOPE OF APPLICATION.—Notwithstand2 ing paragraph (1), it shall be incidental to banking

3 for a national bank to engage in the following activi4 ties:

5 ‘‘(A) Providing, as an agent or broker, any

6 annuity contract the income on which is tax de7 ferred under section 72 of the Internal Revenue

8 Code of 1986.

9 ‘‘(B) Providing, as a principal, agent, or

10 broker, any type of insurance, other than an

11 annuity or title insurance, which the Comptrol12 ler of the Currency specifically determined, be13 fore May 1, 1995, to be incidental to banking

14 with respect to national banks.’’.

15 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

16 (1) The 11th undesignated paragraph of section

17 13 of the Federal Reserve Act (12 U.S.C. 92) is

18 amended by inserting ‘‘, and subject to section

19 5136A of the Revised Statutes of the United

20 States,’’ after ‘‘the laws of the United States’’.

21 (2) The paragraph designated the ‘‘Seventh’’ of

22 section 5136 of the Revised Statutes of the United

23 States (12 U.S.C. 24) is amended by striking ‘‘sub24 ject to law,’’ and inserting ‘‘subject to subsection

25 (b), section 5136A, and any other provision of law,’’.
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1 (3) Section 1306 of title 18, United States

2 Code, is amended by striking ‘‘5136A’’ and inserting

3 ‘‘5136B’’.

4 (d) CLERICAL AMENDMENT.—The table of sections

5 for chapter 1 of title LXII of the Revised Statutes of the

6 United States is amended—

7 (1) by redesignating the item relating to section

8 5136A as section 5136B; and

9 (2) by inserting after the item relating to sec10 tion 5136 the following new item:

‘‘5136A. State supervision of insurance.’’.

11 (e) PRESERVATION OF BANK HOLDING COMPANY IN12 SURANCE AUTHORITY.—No provision of this section, and

13 no amendment made by this section to any other provision

14 of law, may be construed as affecting the authority of a

15 bank holding company to engage in insurance agency ac16 tivity pursuant to section 4(c) of the Bank Holding Com17 pany Act of 1956.

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