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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4956 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 4956

 To create an open and competitive marketplace for financial services 
which ensures the safety and soundness of the Nation's financial system 
   as well as the availability of innovative financial products and 
services for consumers, business, and government at the lowest possible 
                     cost, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            August 12, 1994

Mr. Neal of North Carolina (for himself, Mr. McCollum, Mr. LaFalce, Mr. 
Frank of Massachusetts, Mr. LaRocco, Mr. Orton, Mr. Dooley, Mr. Ridge, 
 Mr. Baker of Louisiana, and Mr. King) introduced the following bill; 
 which was referred jointly to the Committees on Banking, Finance and 
                 Urban Affairs and Energy and Commerce

_______________________________________________________________________

                                 A BILL

 
 To create an open and competitive marketplace for financial services 
which ensures the safety and soundness of the Nation's financial system 
   as well as the availability of innovative financial products and 
services for consumers, business, and government at the lowest possible 
                     cost, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Financial Services 
Competitiveness Act''.
    (b) Table of Contents.--

Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
Sec. 4. Establishment of a diversified financial services holding 
                            company.
Sec. 5. Compliance with change in control requirements.
Sec. 6. Adequate capitalization.
Sec. 7. Additional provisions relating to regulation of insured 
                            depository institution subsidiaries.
Sec. 8. Insider lending and tying provisions.
Sec. 9. Enforcement and examination; payment system services; 
                            oversight.
Sec. 10. Criminal and civil penalties.
Sec. 11. Technical and conforming amendments.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress hereby finds that--
            (1) outdated laws and regulations inhibit innovation, 
        efficiency, and competition in the financial services industry 
        to the detriment of consumers and providers;
            (2) a new legal framework for financial services must be 
        created which will accord all financial service companies equal 
        opportunity to serve the full range of credit and financial 
        needs in the marketplace;
            (3) expanded product and service opportunities for all 
        components of the financial services industry would strengthen 
        individual intermediaries as well as the overall financial 
        system;
            (4) the rapid globalization of the financial service 
        marketplace and the emerging interdependence of major financial 
        markets further underscore the necessity for modernizing 
        domestic laws to maintain the competitiveness of United States 
        financial markets; and
            (5) the regulation of separate segments, subsidiaries, and 
        affiliates along functional lines without regard to ownership 
        or control would serve national priorities better than the 
        present system.
    (b) Purposes.--The purposes of this Act are as follows:
            (1) To promote the safety and soundness of the Nation's 
        financial system.
            (2) To promote the availability of financial products and 
        services to consumers, businesses, charitable institutions and 
        government in an efficient and cost-effective manner.
            (3) To promote a legal structure governing providers of 
        financial services that permits open and fair competition and 
        affords all financial services companies equal opportunity to 
        serve the full range of credit and financial needs in the 
        marketplace.
            (4) To ensure that domestic financial institutions and 
        companies are able to compete effectively in international 
        financial markets.
            (5) To encourage regulation of financial activities and 
        companies along functional lines without regard to ownership, 
        control, or affiliation.

SEC. 3. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Affiliate.--Except as provided in section 105(e), the 
        term ``affiliate'' means any company which controls, is 
        controlled by, or is under common control with another company.
            (2) Adequately capitalized.--With respect to an insured 
        depository institution, the term ``adequately capitalized'' has 
        the same meaning as in section 38(b) of the Federal Deposit 
        Insurance Act.
            (3) Appropriate federal banking agency.--The term 
        ``appropriate Federal banking agency'' has the same meaning as 
        in section 3(q) of the Federal Deposit Insurance Act.
            (4) Bank holding company.--The term ``bank holding 
        company'' has the same meaning as in section 2(a) of the Bank 
        Holding Company Act of 1956.
            (5) Board.--The term ``Board'' means the Board of Governors 
        of the Federal Reserve System.
            (6) Company.--The term ``company'' has the same meaning as 
        in section 2(b) of the Bank Holding Company Act of 1956.
            (7) Control.--
                    (A) In general.--Except as provided in subparagraph 
                (B) and section 7(e), the term ``control'' has the same 
                meaning as in paragraphs (2) and (3) of section 2(a) of 
                the Bank Holding Company Act of 1956.
                    (B) Exceptions.--
                            (i) Acquisitions incidental to other 
                        business.--No company shall be deemed to 
                        control or to have acquired control of any 
                        other company for purposes of this title by 
                        virtue of the company's ownership of the voting 
                        securities of such other company if the voting 
                        securities were--
                                    (I) acquired or held in an agency, 
                                trust, or other fiduciary capacity 
                                (whether with or without the sole 
                                discretion to vote such securities);
                                    (II) acquired or held in connection 
                                with, or incidental to, the 
                                underwriting of securities if such 
                                securities are held only for such 
                                period of time as will permit the sale 
                                of the securities on a reasonable 
                                basis;
                                    (III) acquired or held in 
                                connection with, or incidental to, 
                                market making, dealing, trading, 
                                brokerage or other securities-related 
                                activities and not with a view to 
                                acquiring, exercising, or transferring 
                                any control over the management of 
                                policies of such company; or
                                    (IV) acquired in securing or 
                                collecting a debt previously contracted 
                                in good faith, until 2 years after the 
                                date of acquisition or for such 
                                additional period of time as the 
                                appropriate Federal banking agency may 
                                permit.
                            (ii) Proxy solicitation.--No company formed 
                        for the sole purpose of participating in a 
                        proxy solicitation shall be deemed to control 
                        another company by virtue of the company's 
                        acquisition of voting rights with respect to 
                        shares of such other company which are acquired 
                        in the course of such solicitation.
            (8) Depository institution holding company.--The term 
        ``depository institution holding company'' has the same meaning 
        as in section 3(w)(1) of the Federal Deposit Insurance Act.
            (9) Diversified financial services holding company.--The 
        term ``diversified financial services holding company'' means a 
        company--
                    (A) that has filed a notice with the Board of such 
                company's intent to become a diversified financial 
                services holding company and comply with the 
                requirements of this Act and has not withdrawn such 
                notice; and
                    (B) which is described in at least 1 of the 
                following clauses:
                            (i) The company controls an insured 
                        depository institution.
                            (ii) The company has, within the preceding 
                        12 months, filed a notice under section 4 to 
                        acquire control of an insured depository 
                        institution or a depository institution holding 
                        company and such notice has not been 
                        disapproved.
                            (iii) The company controls a company which 
                        has, within the preceding 12 months, filed an 
                        application for deposit insurance under section 
                        4 or 5 of the Federal Deposit Insurance Act 
                        which has not been disapproved.
            (10) Financial institution.--The term ``financial 
        institution'' means--
                    (A) any bank (as defined in section 3(a)(1) of the 
                Federal Deposit Insurance Act), savings association (as 
                defined in section 3(b)(1) of such Act), insurance 
                company, finance company, real estate company, 
                investment company (as defined in section 3 of the 
                Investment Company Act of 1940), or investment adviser 
                (as defined in section 202 of the Investment Advisers 
                Act of 1940);
                    (B) any broker, dealer, government securities 
                broker, government securities dealer, municipal 
                securities broker, or municipal securities dealer (as 
                such terms are defined in the Securities Exchange Act 
                of 1934); or
                    (C) any other financial services company that is 
                regulated, supervised, or examined under the laws of 
                any State.
            (11) Insured depository institution.--The term ``insured 
        depository institution'' has the same meaning as in section 
        3(c)(2) of the Federal Deposit Insurance Act.
            (12) Representative.--The term ``representative'' includes 
        any agent, principal, solicitor, broker, director, officer, 
        employee, institution-affiliated party (as defined in section 3 
        of the Federal Deposit Insurance Act), or other representative 
        of any company or insured depository institution or any 
        affiliate of any such company or institution.
            (13) Savings and loan holding company.--The term ``savings 
        and loan holding company'' has the same meaning as in section 
        10(a) of the Home Owners' Loan Act.
            (14) Savings association.--The term ``savings association'' 
        has the same meaning as in section 3(b) of the Federal Deposit 
        Insurance Act.
            (15) State.--The term ``State'' has the same meaning as in 
        section 3(a) of the Federal Deposit Insurance Act.

SEC. 4. ESTABLISHMENT OF A DIVERSIFIED FINANCIAL SERVICES HOLDING 
              COMPANY.

    (a) In General.--No person may take any action which causes any 
company to become a diversified financial services holding company 
without submitting prior notice to the Board in accordance with this 
section of such person's intention to establish a diversified financial 
services holding company.
    (b) Notice Requirements and Procedures.--The Board shall establish 
requirements and procedures for the submission of the notice required 
under this section with respect to the establishment of a diversified 
financial services holding company.
    (c) Compliance.--Any diversified financial services holding company 
that fails to comply with this Act and regulations prescribed under 
this Act shall cease to be a diversified financial services holding 
company as of the date of such failure to comply.
    (d) Regulations.--The Board shall prescribe such regulations as the 
Board determines to be appropriate to administer and carry out the 
purposes of this Act.
    (e) Termination of Bank Holding Company Status Upon Filing as 
Diversified Financial Services Holding Company.--Section 2 of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841) is amended by adding at 
the end the following new subsection:
    ``(n) Treatment as Bank Holding Company.--If--
            ``(1) a bank holding company files a notice with the Board 
        of such company's intent to become a diversified financial 
        services holding company and to comply with the requirements of 
        the Financial Services Competitiveness Act; and
            ``(2) all the banks which are controlled directly or 
        indirectly by a bank holding company are insured banks (as 
        defined in section 3(h) of the Federal Deposit Insurance Act) 
        as of the time of the filing of such notice,
such company shall not be treated as a bank holding company for 
purposes of this Act after such filing so long as such notice remains 
in effect.''.
    (f) Termination of S&L Holding Company Status Upon Filing as 
Diversified Financial Services Holding Company.--Section 10 of the Home 
Owners' Loan Act (12 U.S.C. 1467a) is amended by adding at the end the 
following new subsection:
    ``(t) Treatment as S&L Holding Company.--If--
            ``(1) a savings and loan holding company files a notice 
        with the Board of Governors of the Federal Reserve System of 
        such company's intent to become a diversified financial 
        services holding company and to comply with the requirements of 
        the Financial Services Competitiveness Act; and
            ``(2) all the savings associations which are controlled 
        directly or indirectly by a savings and loan holding company 
        are insured depository institutions (as defined in section 3(c) 
        of the Federal Deposit Insurance Act) as of the time of the 
        filing of such notice,
such company shall not be treated as a savings and loan holding company 
for purposes of this Act after such filing so long as such notice 
remains in effect.''.
    (g) Inapplicability of Glass-Steagall to Diversified Financial 
Service Holding Companies.--
            (1) Section 20 of the Banking Act of 1933 (12 U.S.C. 377) 
        is amended by inserting after the 1st undesignated paragraph 
        the following new paragraph:
    ``The provisions of this section shall not apply with respect to 
the affiliation of--
            ``(A) any bank that is an affiliate of a diversified 
        financial services holding company (as defined in section 3 of 
        the Financial Services Competitiveness Act), with
            ``(B) such company or any other affiliate of the 
        company.''.
            (2) Section 32 of the Banking Act of 1933 (12 U.S.C. 78) is 
        amended by inserting after the 1st undesignated paragraph the 
        following new paragraph:
    ``The provisions of this section shall not apply with respect to 
relationships involving--
            ``(A) an affiliate of a diversified financial services 
        holding company (as defined in the Financial Services 
        Competitiveness Act); and
            ``(B) such company or any other affiliate of such 
        company.''.

SEC. 5. COMPLIANCE WITH CHANGE IN CONTROL REQUIREMENTS.

    (a) In General.--No diversified financial services holding company, 
acting directly or indirectly, or through or in concert with 1 or more 
other persons, may acquire control of an insured depository 
institution, a depository institution holding company, or another 
diversified financial services holding company through a purchase, 
assignment, transfer, pledge or other disposition of voting stock of 
any such institution or company unless the diversified financial 
services holding company has complied with the requirements of section 
7(j) of the Federal Deposit Insurance Act.
    (b) Applicability of Section 7(j) of the Federal Deposit Insurance 
Act.--
            (1) In general.--Section 7(j) of the Federal Deposit 
        Insurance Act shall apply with respect to a diversified 
        financial services holding company for purposes of subsection 
        (a) in the same manner and to the same extent such section 
        applies to any acquiring party described in such section.
            (2) Treatment of acquired company.--In applying section 
        7(j) of the Federal Deposit Insurance Act for purposes of this 
        section--
                    (A) the acquisition of a depository institution 
                holding company or a diversified financial services 
                holding company shall be treated as the acquisition of 
                an insured depository institution; and
                    (B) the appropriate Federal banking agency shall 
                be--
                            (i) in the case of a depository institution 
                        holding company, the appropriate Federal 
                        banking agency designated under section 3(q) of 
                        such Act with respect to the company; and
                            (ii) in the case of a diversified financial 
                        services company, the Board.

SEC. 6. ADEQUATE CAPITALIZATION.

    (a) Notification.--If an appropriate Federal banking agency finds 
that an insured depository institution subsidiary of a diversified 
financial services holding company is not adequately capitalized (as 
defined by such agency pursuant to section 38 of the Federal Deposit 
Insurance Act), the agency shall immediately provide a written notice 
of such fact to the diversified financial services holding company.
    (b) Bond, Guarantee, Deposit, or Surplus Capital.--
            (1) In general.--In addition to any requirement of section 
        38 of the Federal Deposit Insurance Act applicable to an 
        undercapitalized insured depository institution (as defined 
        pursuant to such section), an appropriate Federal banking 
        agency may require a diversified financial services holding 
        company to which written notice has been provided under 
        subsection (a), with respect to an insured depository 
        institution subsidiary, to--
                    (A) provide a bond, guarantee or similar 
                undertaking, in a form prescribed by the appropriate 
                Federal banking agency;
                    (B) place and maintain on deposit cash or 
                investment securities (calculated on the basis of 
                principal face amount or the fair market value, 
                whichever is lower) in a segregated, earmarked account 
                at the insured depository institution;
                    (C) contribute to the surplus capital of the 
                insured depository institution an amount necessary to 
                adequately capitalize the insured depository 
                institution; or
                    (D) reduce the amount of total assets of the 
                institution,
        until the insured depository institution is adequately 
        capitalized pursuant to an agreement described in subsection 
        (c) or otherwise or the diversified financial services holding 
        company divests control of the insured depository institution 
        pursuant to subsection (d).
            (2) Treatment of contribution.--To the extent that a 
        contribution to surplus is made pursuant to paragraph (1), the 
        contribution shall be segregated from, and not treated as, 
        capital for any purpose unless and until the contribution is 
        applied as a capital contribution pursuant to this section.
            (3) Investment securities.--For purposes of this 
        subsection, the term ``investment securities'' means--
                    (A) any security which may be held by a national 
                bank for the bank's own account pursuant to section 
                5136 of the Revised Statutes of the United States; and
                    (B) may include such other liquid assets as the 
                appropriate Federal banking agency permits under this 
                paragraph.
            (4) Dividends.--Upon receipt of a notice by a diversified 
        financial services holding company pursuant to subsection (a) 
        relating to an insured depository institution controlled by 
        such company--
                    (A) the insured depository institution may not 
                declare or pay a dividend to any shareholder; and
                    (B) the diversified financial services holding 
                company shall immediately return to the institution any 
                dividend received from the institution during the 270-
                day period ending on the date the written notice is 
                received by the company.
    (c) Appointment of Conservator.--
            (1) In general.--If--
                    (A) a diversified financial services holding 
                company fails to comply with any of the requirements of 
                subsection (b); or
                    (B) before the end of the 45-day period beginning 
                on the date a diversified financial services holding 
                company receives a notice pursuant to subsection (a) 
                with respect to an insured depository institution 
                controlled by such company, the company has not--
                            (i) caused the institution to become 
                        adequately capitalized; or
                            (ii) entered into an agreement acceptable 
                        to the appropriate Federal banking agency to 
                        cause the institution to become adequately 
                        capitalized within a reasonable time,
        the appropriate Federal banking agency shall appoint a 
        conservator for the insured depository institution in 
        accordance with the provisions of section 11 of the Federal 
        Deposit Insurance Act.
            (2) Suspension of appointment.--An appropriate Federal 
        banking agency may, in the agency's discretion, suspend the 
        appointment of a conservator under paragraph (1) if--
                    (A) the diversified financial services holding 
                company divests, or agrees to divest, control of the 
                insured depository institution in an orderly manner; 
                and
                    (B) the appropriate Federal banking agency 
                determines that such divestiture will meet the 
                requirements of subsection (d).
            (3) Extension of 45-day period.--The appropriate Federal 
        banking agency may, in the agency's discretion and for good 
        cause shown, extend the 45-day period described in paragraph 
        (1) if the agency determines that the condition of the insured 
        depository institution is not likely to weaken materially 
        during any such extension.
    (d) Divestiture.--
            (1) In general.--If, before the end of the 90-day period 
        beginning on the date a diversified financial services holding 
        company receives a notice pursuant to subsection (a) with 
        respect to an insured depository institution subsidiary, the 
        holding company has not--
                    (A) caused the insured depository institution to 
                become adequately capitalized; or
                    (B) entered into an agreement acceptable to the 
                appropriate Federal banking agency to adequately 
                capitalize the insured depository institution within a 
                reasonable time,
        the appropriate Federal banking agency shall order the 
        diversified financial services holding company to divest 
        control of the institution.
            (2) Extension of 90-day period.--The appropriate Federal 
        banking agency may, in the agency's discretion and for good 
        cause shown, extend the 90-day period described in paragraph 
        (1) if the agency determines that the condition of the insured 
        depository institution is not likely to weaken materially 
        during any such extension.
            (3) Additional capital.--In connection with any divestiture 
        of an insured depository institution pursuant to this 
        subsection or subsection (c)(2) by any diversified financial 
        services holding company and subject to subsection (e), the 
        appropriate Federal banking agency shall order such company to 
        contribute additional capital to such institution or take any 
        other action described in subsection (b) with respect to such 
        institution to the extent necessary for the institution to be 
        adequately capitalized immediately following the consummation 
        of the divestiture.
            (4) Appointment of conservator.--The appropriate Federal 
        banking agency may appoint a conservator for an insured 
        depository institution in accordance with section 11 of the 
        Federal Deposit Insurance Act at any time during the 90-day 
        period described in paragraph (1) or any extension of such 
        period.
    (e) Termination of Conservatorship; Rescission of Divestiture 
Order.--If, at any time after the appointment of a conservator under 
subsection (c) or the issuance of an order under subsection (d) by an 
appropriate Federal banking agency, the insured depository 
institution--
            (1) for which the conservator has been appointed; or
            (2) which is the subject of such order,
becomes adequately capitalized, the appropriate Federal banking agency 
shall terminate such conservatorship or rescind such order, as the case 
may be.
    (f) Aggregate Limit on Required Capital Infusions; Relation to 
Other Laws.--The maximum amount of liability for a diversified 
financial services holding company for any capital assistance pursuant 
to an order issued under this section by an appropriate Federal banking 
agency with respect to any particular insured depository institution 
subsidiary shall not exceed the amounts necessary for the institution 
to become adequately capitalized.
    (g) Judicial Review.--
            (1) In general.--Before the end of the 10-day period 
        beginning on the date of the appointment of a conservator by 
        the appropriate Federal banking agency under this section or 
        the receipt of an order issued by any such agency under 
        subsection (d) with respect to an insured depository 
        institution subsidiary of a diversified financial services 
        holding company, the company may apply to the United States 
        district court for the judicial district in which the principal 
        office of the diversified financial services holding company is 
        located, or the United States District Court for the District 
        of Columbia, for an order requiring the removal of the 
        conservator or for an injunction setting aside, limiting, or 
        suspending the enforcement, operation, or effectiveness of any 
        such order issued.
            (2) Court action.--The court may, upon the merits in any 
        action brought under paragraph (1), dismiss any such action, 
        direct the removal of the conservator, or provide any 
        appropriate relief.
    (h) Capital of Diversified Financial Services Holding Company.--No 
appropriate Federal banking agency may impose by regulation, order, 
agreement, or any other means any requirement pertaining to the capital 
of a diversified financial services holding company.
    (i) Termination of Agreements.--Any agreement entered into pursuant 
to this section between a diversified financial services holding 
company and an appropriate Federal banking agency with respect to the 
capital of an undercapitalized insured depository institution 
subsidiary of such company shall terminate when the institution becomes 
adequately capitalized.

SEC. 7. ADDITIONAL PROVISIONS RELATING TO REGULATION OF INSURED 
              DEPOSITORY INSTITUTION SUBSIDIARIES.

    (a) Differential Treatment Prohibition.--Notwithstanding any other 
Federal law or the law of any State, no Federal regulatory agency and 
no State may take any action pursuant to any law, regulation, order, or 
other authority other than this subtitle if the effect of such action 
would be--
            (1) to differentiate between--
                    (A) insured depository institutions which are 
                controlled by diversified financial services holding 
                companies; and
                    (B) other insured depository institutions,
        in a manner which discriminates against insured depository 
        institutions described in subparagraph (A); or
            (2) to differentiate between--
                    (A) diversified financial services holding 
                companies or affiliates of such companies; and
                    (B) bank holding companies, savings and loan 
                holding companies, or affiliates of any such company
        in a manner which discriminates against diversified financial 
        services holding companies and affiliates of any such company.
    (b) Relation to State Law.--
            (1) In general.--No provision of the law or the 
        constitution of any State, including any State law relating to 
        State banks, savings association, real estate, securities, 
        insurance, finance company, retail or the provision of 
        financial or other services, shall prevent or impede or shall 
        be interpreted or applied by any administrative, executive or 
        judicial authority with the purpose or effect of preventing or 
        impeding--
                    (A) any insured depository institution, any 
                affiliate of any such institution, or any 
                representative of any such institution or affiliate 
                from being acquired, owned, or controlled by, or from 
                being affiliated in any manner with, any company which 
                is or becomes a diversified financial services holding 
                company, or any affiliate of such company, because of--
                            (i) the types of activities engaged in, 
                        directly or indirectly, by such insured 
                        depository institution, any affiliate of such 
                        institution, or any representative of any such 
                        institution or affiliate; or
                            (ii) the types of activities engaged in, 
                        directly or indirectly, by such diversified 
                        financial services holding company, any 
                        affiliate of such company, or any 
                        representative of any such company or 
                        affiliate;
                    (B) any company which is or becomes a diversified 
                financial services holding company, any affiliate of 
                any such company, or any representative of any such 
                company or affiliate from acquiring, owning, or 
                controlling, or being affiliated in any way with, any 
                insured depository institution or any affiliate of any 
                such institution because of--
                            (i) the types of activities engaged in, 
                        directly or indirectly, by any such company or 
                        affiliate, or any representative of any such 
                        company or affiliate; or
                            (ii) the types of activities engaged in, 
                        directly or indirectly, by any such insured 
                        depository institution, any affiliate of any 
                        such institution, or any representative of such 
                        institution or affiliate; or
                    (C) any insured depository institution, any 
                affiliate of any such institution, or any 
                representative of any such institution or affiliate 
                from--
                            (i) offering or marketing products or 
                        services of any affiliated diversified 
                        financial services holding company or any 
                        affiliate of such company; or
                            (ii) from having the products or services 
                        of such insured depository institution, any 
                        affiliate of any such institution, or any 
                        representative of any such institution or 
                        affiliate offered or marketed by such 
                        diversified financial services holding company, 
                        an affiliate of such company, or by any 
                        representative of such company or affiliate.
            (2) Rule of construction.--No provision of paragraph (1) 
        shall be construed as superseding, altering, or otherwise 
        affecting the application of the laws of any State relating to 
        the examination, supervision, or regulation of providers of 
        financial services or the protection of consumers, or as 
        exempting any company which is or becomes a diversified 
        financial services holding company, any affiliate of any such 
        company, or any representative of any such company or 
        affiliate, except to the extent that the intent, purpose, or 
        effect of those laws is inconsistent with this subsection or 
        with the purposes of this Act and then only to the extent of 
        such inconsistency.
            (3) Judicial determination.--Any interested party may 
        institute an action in the United States District Court for the 
        District of Columbia or any other appropriate district court of 
        the United States, including an action for declaratory 
        judgment, as may be appropriate to determine whether and to 
        what extent any provision of the constitution or law of any 
        State is superseded by any provision of this subsection or to 
        enjoin application of any such provision.
    (c) Access to State Courts.--
            (1) In general.--No State may, directly or indirectly, deny 
        an insured depository institution which is not located in that 
        State the right to maintain or defend in a court in that State 
        any action which could be maintained or defended under similar 
        circumstances by a company which--
                    (A) is not located in that State; and
                    (B) is not an insured depository institution.
            (2) Exception for certain institutions.--Paragraph (1) 
        shall not apply in the case of an insured depository 
        institution described in such paragraph which establishes or 
        maintains a domestic branch (as defined in section 3(o) of the 
        Federal Deposit Insurance Act) in the State referred to in such 
        paragraph if the laws of such State do not permit an out-of-
        State insured depository institution to establish a domestic 
        branch in such State.
            (3) Applicability of various conditions.--If the 
        maintenance or defense of an action in the courts of a State by 
        a company which is not located in that State and is not an 
        insured depository institution is subject to conditions which 
        are applied in a nondiscriminatory manner to fulfill legitimate 
        State objectives, the maintenance or defense of such an action 
        by an insured depository institution described in paragraph (1) 
        may be subject to the same conditions to the extent that the 
        conditions do not have the effect, directly or indirectly, of 
        denying the institution the opportunity to maintain or defend 
        such action.
    (d) Representatives.--
            (1) In general.--No State may, directly or indirectly, 
        limit or deny the authority of any diversified financial 
        services holding company or any affiliate of such company to 
        utilize or compensate any representative or other person who is 
        located in that State and is representing such company or 
        affiliate in any lawful capacity.
            (2) Exception for certain laws applied in nondiscriminatory 
        manner.--Paragraph (1) shall not apply with respect to any 
        licensing, marketing, compensation, or employment law or 
        requirement of a State--
                    (A) which is applied in a nondiscriminatory manner 
                to fulfill legitimate State regulatory objectives; and
                    (B) the intent, purpose, or effect of which is not 
                inconsistent with the purposes of this Act.
            (3) Exception for certain activities.--In the case of any 
        State the laws of which do not permit an out-of-State insured 
        depository institution to establish a domestic branch (as 
        defined in section 3(o) of the Federal Deposit Insurance Act) 
        in such State, paragraph (1) shall not apply with respect to 
        the performance of activities in such State by any 
        representative or other person described in paragraph (1) on 
        behalf of an insured depository institution if the performance 
        of such activities at any location within a State other than 
        the main office or any branch office of such insured depository 
        institution would constitute, under any Federal law or the law 
        of the State, the establishment and operation of a domestic 
        branch in the State.
    (e) Affiliate and Control Defined.--Notwithstanding section 3, the 
following definitions shall apply for purposes of this section:
            (1) Affiliate.--The term ``affiliate'' means a person that 
        directly or indirectly controls or is controlled by, or is 
        under common control with another person.
            (2) Control.--
                    (A) In general.--The term ``control'' means the 
                power, directly or indirectly, to direct the management 
                or policies of a person.
                    (B) Presumption.--A person shall be presumed to 
                control another person if the person, directly or 
                indirectly, owns, controls, or holds with power to vote 
                10 percent or more of the voting securities of such 
                other person.

SEC. 8. INSIDER LENDING AND TYING PROVISIONS.

    (a) Applicability of Insider Lending Restrictions.--A diversified 
financial services holding company shall be treated as a bank holding 
company for purposes of section 22(h) of the Federal Reserve Act and 
any regulation prescribed under such section.
    (b) Tying.--
            (1) In general.--Any diversified financial services holding 
        company and any subsidiary of such company shall be subject to 
        the restrictions of section 106 of the Bank Holding Company Act 
        Amendments of 1970 in connection with any transaction involving 
        the products or services of such company or subsidiary or an 
        insured depository institution affiliate of such company, in 
        the same manner such section would apply if the company or 
        subsidiary was a bank and the insured depository institution 
        subsidiary was a subsidiary of the bank holding company.
            (2) Subsidiary defined.--For purposes of paragraph (1), the 
        term ``subsidiary'' has the same meaning as in section 2(d) of 
        the Bank Holding Company Act of 1956.

SEC. 9. ENFORCEMENT AND EXAMINATION; PAYMENT SYSTEM SERVICES; 
              OVERSIGHT.

    (a) Administrative Enforcement.--
            (1) In general.--Compliance with the requirements imposed 
        under this Act and regulations prescribed by any appropriate 
        Federal banking agency shall be enforced by the appropriate 
        Federal banking agency under section 8 of the Federal Deposit 
        Insurance Act.
            (2) Additional enforcement powers.--
                    (A) Violation of this act treated as violation of 
                other acts.--For purposes of applying section 8 of the 
                Federal Deposit Insurance Act with respect to any 
                diversified financial services holding company or any 
                affiliate of such company pursuant to paragraph (1), a 
                violation of a requirement imposed under this Act shall 
                be deemed to be a violation of a requirement imposed 
                under section 8 of the Federal Deposit Insurance Act.
                    (B) Enforcement authority under other acts.--In 
                addition to any appropriate Federal banking agency's 
                powers under section 8 of the Federal Deposit Insurance 
                Act, each such agency may exercise, for purposes of 
                enforcing compliance with any requirement imposed under 
                this Act, any other authority conferred on such agency 
                by any other law.
    (b) Examination.--The appropriate Federal banking agency may 
examine the books, records and affairs of, or require reports from, any 
affiliate of an insured depository institution which is a subsidiary of 
a diversified financial services holding company in order to ensure 
compliance with the requirements of this Act.
    (c) Federal Reserve Payment Services.--
            (1) In general.--All Federal reserve bank services 
        described in section 13 of the Federal Reserve Act, the 14th 
        undesignated paragraph of section 16 of such Act, and the 
        Expedited Funds Availability Act shall be available to all 
        insured depository institutions, on the same terms and 
        conditions and subject to the same limitations and 
        restrictions, without regard to the identity of the insured 
        depository institution's affiliates, except to the extent 
        necessary to avoid a material adverse effect on a large dollar 
        payment system.
            (2) Definition.--For purposes of this subsection, the term 
        ``a material adverse effect on a large dollar payment system'' 
        means any activity of an insured depository institution which 
        results in violations of any uniformly applied payment system 
        risk-reduction policy cap or limitation established by the 
        Board of Governors of the Federal Reserve System which--
                    (A) occur during any period consisting of 5 
                consecutive business days; and
                    (B) exceed the median number of violations for all 
                users of the applicable large dollar payment services 
                during that same period.
            (3) Federal reserve enforcement power.--
                    (A) Administrative enforcement.--In the case of an 
                insured depository institution which has engaged in any 
                activity that has resulted in a material adverse effect 
                on a large dollar payment system, the Board of 
                Governors of the Federal Reserve System shall be 
                treated as the appropriate Federal banking agency for 
                such institution with respect to such activity for 
                purposes of subsection (a).
                    (B) Examination.--The Board of Governors of the 
                Federal Reserve System may examine the books, records 
                and affairs of any insured depository institution which 
                has engaged in any activity that has resulted in a 
                material adverse effect on a large dollar payment 
                system, or require reports from any such institution 
                with respect to any such activity.

SEC. 10. CRIMINAL AND CIVIL PENALTIES.

    (a) Knowing and Intentional Violations.--
            (1) In general.--Whoever knowingly violates or participates 
        in a violation of--
                    (A) any provision of this Act, or any regulation 
                prescribed or order issued by an appropriate Federal 
                banking agency pursuant to this Act;
                    (B) being a company, violates any regulation 
                prescribed or order issued by the Board under this Act; 
                or
                    (C) any written agreement between--
                            (i) any diversified financial services 
                        holding company or any affiliate of such 
                        company which is not an insured depository 
                        institution; and
                            (ii) any appropriate Federal banking 
                        agency,
        shall be fined under title 18, United States Code, for each day 
        during which the violation continues, imprisoned for not more 
        than 1 year, or both.
            (2) Violations with intent to deceive, defraud, or 
        profit.--Whoever, with the intent to deceive, defraud, or 
        profit significantly, knowingly commits a violation, or 
        participates in a violation, described in paragraph (1) shall 
        be fined not more than $1,000,000 for each day during which the 
        violation continues, imprisoned for not more than 5 years, or 
        both.
    (b) False Entry or Statement.--Each officer, director, employee, 
and agent of a diversified financial services holding company or any 
affiliate of any such company which is not an insured depository 
institution, shall be subject to the same penalties for false entries 
in any book, report, or statement of such company as are applicable to 
officers, directors, employees and agents of member banks, bank holding 
companies, and savings and loan holding companies for false entries in 
any books, reports, or statements of member banks, bank holding 
companies, and savings and loan holding companies under section 1005 of 
title 18, United States Code, to the extent that any such false entry 
refers in any material way to the affairs of an insured depository 
institution affiliate of such company.
    (c) Civil Penalty.--
            (1) First tier.--Any person who--
                    (A) violates this Act or any regulation prescribed 
                or order issued by the Board under this Act; or
                    (B) violates any written agreement between such 
                person and the Board;
        shall forfeit and pay a civil penalty of not more than $5,000 
        for each day during which such violation continues.
            (2) Second tier.--Notwithstanding subparagraph (A), if any 
        person--
                    (A) commits any violation described in any clause 
                of subparagraph (A) or breaches any fiduciary duty; and
                    (B) such violation or breach--
                            (i) is part of a pattern of misconduct;
                            (ii) causes or is likely to cause more than 
                        a minimal loss to a depository institution; or
                            (iii) results in pecuniary gain or other 
                        benefit to such person,
        such person shall forfeit and pay a civil penalty of not more 
        than $25,000 for each day during which such violation or breach 
        continues.
            (3) Third tier.--Notwithstanding subparagraphs (A) and (B), 
        if any person--
                    (A) knowingly commits any violation described in 
                subparagraph (A) or breaches any fiduciary duty; and
                    (B) knowingly or recklessly causes a substantial 
                loss to a depository institution or a substantial 
                pecuniary gain or other benefit to such person by 
                reason of such violation or breach,
        such person shall forfeit and pay a civil penalty in an amount 
        not to exceed the applicable maximum amount determined under 
        paragraph (4) for each day during which such violation or 
        breach continues.
            (4) Maximum amounts of penalties for any violation 
        described in subparagraph (c).--The maximum daily amount of any 
        civil penalty which may be assessed pursuant to paragraph (3) 
        for any violation or breach described in such paragraph is--
                    (A) in the case of any person other than an insured 
                depository institution, an amount not to exceed 
                $1,000,000; and
                    (B) in the case of any insured depository 
                institution, an amount not to exceed the lesser of--
                            (i) $1,000,000; or
                            (ii) 1 percent of the total assets of such 
                        institution.
            (5) Assessment.--
                    (A) Written notice.--Any penalty imposed under 
                paragraph (1), (2), or (3) may be assessed and 
                collected by the Board by written notice.
                    (B) Finality of assessment.--If, with respect to 
                any assessment under subparagraph (A), a hearing is not 
                requested pursuant to paragraph (8) within the period 
                of time allowed under such subparagraph, the assessment 
                shall constitute a final and unappealable order.
            (6) Authority to modify or remit penalty.--The Board may 
        compromise, modify, or remit any penalty which the Board may 
        assess or had already assessed under paragraph (1), (2), or 
        (3).
            (7) Mitigating factors.--In determining the amount of any 
        penalty imposed under paragraph (1), (2), or (3), the Board 
        shall take into account the appropriateness of the penalty with 
        respect to--
                    (A) the size of financial resources and good faith 
                of the person charged;
                    (B) the gravity of the violation;
                    (C) the history of previous violations; and
                    (D) such other matters as justice may require.
            (8) Hearing.--The person against whom any penalty is 
        assessed under this paragraph shall be afforded an agency 
        hearing if such person submits a request for such hearing 
        within 20 days after the issuance of the notice of assessment.
            (9) Collection.--
                    (A) Referral.--If any person fails to pay an 
                assessment after any penalty assessed under this 
                subsection has become final, the Board shall recover 
                the amount assessed by action in the appropriate United 
                States district court.
                    (B) Appropriateness of penalty not reviewable.--In 
                any civil action under subparagraph (A), the validity 
                and appropriateness of the penalty shall not be subject 
                to review.
            (10) Disbursement.--All penalties collected under authority 
        of this paragraph shall be deposited into the Treasury.
            (11) Regulations.--The Board shall prescribe regulations 
        establishing such procedures as may be necessary to carry out 
        this paragraph.
    (d) Violate Defined.--For purposes of this section, the term 
``violate'' includes any action (alone or with another or others) for 
or toward causing, bringing about, participating in, counseling, or 
aiding and abetting a violation.

SEC. 11. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Bank Holding Company Act of 1956.--
            (1) Section 2(a)(1) of the Bank Holding Company Act of 1956 
        (12 U.S.C. 1841(a)(1)) is amended by inserting ``or subsection 
        (n)'' after ``paragraph (5) of this subsection''.
            (2) Section 2(c)(2) of the Bank Holding Company Act of 1956 
        (12 U.S.C. 1841(c)) is amended by adding at the end the 
        following new subparagraph:
                    ``(K) An insured bank (as defined in section 3(h) 
                of the Federal Deposit Insurance Act) which is not 
                controlled by any company other than a diversified 
                financial services holding company (as defined in the 
                Financial Services Competitiveness Act).''.
            (3) Section 5(d) of the Bank Holding Company Act of 1956 
        (12 U.S.C. 1844(d)) is amended by inserting ``or the Financial 
        Services Competitiveness Act'' after ``this Act''.
    (b) Amendment to the Bank Holding Company Act Amendments of 1970.--
Section 106(b) of the Bank Holding Company Act Amendments of 1970 (12 
U.S.C. 1972) is amended--
            (1) by adding at the end the following new paragraphs:
            ``(3) Exemption for certain tying arrangements.--A bank 
        shall not be prohibited from providing a loan, discount, 
        deposit, or trust service, or fixing or varying the 
        consideration of any of the foregoing, on the condition or 
        requirement that--
                    ``(A) the customer shall obtain or provide some 
                additional loan, discount, deposit, or trust service 
                from, or to, such bank or from, or to, such bank 
                holding company of such bank or from, or to, any 
                subsidiary of such bank holding company; or
                    ``(B) the customer provide some additional credit, 
                property, or service to such bank, or to such bank 
                holding company of such bank, or to any subsidiary of 
                such bank holding company, if such additional credit, 
                property, or service is related to and usually provided 
                in connection with a loan, discount, deposit, or trust 
                service.
            ``(4) Exceptions by regulation or order.--The Board may, by 
        regulation or order, permit such exceptions to the prohibitions 
        contained in paragraph (1) as the Board considers will not be 
        contrary to the purposes of this title.'';
            (2) in paragraph (1), by striking ``(1) A bank'' and 
        inserting ``(1) In general.--Except as provided in paragraph 
        (3), a bank'';
            (3) in paragraph (1)(A) by striking ``other than a loan, 
        discount, deposit, or trust service'';
            (4) in paragraph (1)(C) by striking ``other than those 
        related to and usually provided in connection with a loan, 
        discount, deposit or trust service''; and
            (5) by striking the last sentence of paragraph (1).
    (c) Amendments to the Federal Reserve Act.--Section 23A of the 
Federal Reserve Act (12 U.S.C. 371c) is amended by--
            (1) inserting at the end of subsection (a) the following 
        new paragraph:
            ``(5) Certain loans not treated as transactions with 
        affiliates.--Notwithstanding paragraph (2), a loan or extension 
        of credit shall not be deemed to be made to any affiliate, for 
        purposes of this section, if--
                    ``(A) the member bank approves such loan or 
                extension of credit in accordance with substantially 
                the same standards and procedures and on substantially 
                the same terms that it applies to similar loans or 
                extensions of credit the proceeds of which are not 
                transferred to or for the benefit of an affiliate; and
                    ``(B) such loan or extension of credit is not made 
                for the purposes of evading any of the requirements of 
                this section.''; and
            (2) by adding at the end the following new subsection:
    ``(f) Coordination With Financial Services Competitiveness Act.--
The provisions of this section shall be subject to section 102 of the 
Financial Services Competitiveness Act.''.
    (d) Amendments to the Federal Deposit Insurance Act.--
            (1) Section 7(j)(8) of the Federal Deposit Insurance Act 
        (12 U.S.C. 1817(j)(8)) is amended to read as follows:
            ``(8) Control defined.--
                    ``(A) In general.--For purposes of this subsection, 
                the term ``control'' has the same meaning as in section 
                2(a) of the Bank Holding Company Act of 1956.
                    ``(B) Exception for securities acquired in certain 
                capacities.--For purposes of this subsection, no 
                company shall be deemed to control or to have acquired 
                control of any other company by virtue of the company's 
                ownership of the voting securities of such other 
                company which were--
                            ``(i) acquired or held in an agency, trust, 
                        or other fiduciary capacity (whether with or 
                        without the sole discretion to vote such 
                        securities);
                            ``(ii) acquired or held in connection with 
                        or incidental to--
                                    ``(I) the underwriting of 
                                securities if such securities are held 
                                only for such period of time as will 
                                permit the sale thereof on a reasonable 
                                basis; or
                                    ``(II) acquired or held in 
                                connection with or incidental to market 
                                making, dealing, trading, brokerage or 
                                other securities related activities and 
                                not with a view to acquiring, 
                                exercising or transferring any control 
                                over the management or policies of such 
                                company; or
                            ``(iii) acquired in securing or collecting 
                        a debt previously contracted in good faith, 
                        during the 2-year period beginning on the date 
                        of such acquisition or for such additional time 
                        (not exceeding 3 years) as the appropriate 
                        Federal banking agency may permit if the 
                        appropriate Federal banking agency determines 
                        that such extension will not be detrimental to 
                        the public interest.
                    ``(C) Exception for companies formed for proxy 
                solicitations.--For purposes of this subsection, no 
                company formed for the sole purpose of participating in 
                a proxy solicitation shall be deemed to control or to 
                have acquired control of any other company by virtue of 
                the company's acquisition of voting rights with respect 
                to shares of such other company which were acquired in 
                the course of such solicitation.''.
            (2) Paragraph (9) of section 5(e) of the Federal Deposit 
        Insurance Act (12 U.S.C. 1815 (e)(9)) is amended--
                    (A) by striking ``or'' at the end of subparagraph 
                (A);
                    (B) by redesignating subparagraph (B) as 
                subparagraph (C); and
                    (C) by inserting after subparagraph (A) the 
                following new subparagraph:
            ``(B) such institutions are controlled by the same 
        diversified financial services holding company (as defined in 
        section 3(a) of the Financial Services Competitiveness Act); 
        or''.
            (3) Section 3(u) of the Federal Deposit Insurance Act (12 
        U.S.C. section 1813(u)) is amended--
                    (A) in paragraph (1), by inserting ``, a 
                diversified financial services holding company,'' after 
                ``bank holding company''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(7) Diversified financial services holding company.--The 
        term `diversified financial services holding company'' has the 
        same meaning as in section 3(9) of the Financial Services 
        Competitiveness Act.''.
    (e) Amendment to the Clayton Act.--Section 7A(c)(8) of the Clayton 
Act (15 U.S.C. 18a(C)(8)), is amended by striking ``of 1933 (12 U.S.C. 
1464)'' and inserting ``(12 U.S.C. 1464) or transactions which require 
agency notification under section 4 of the Financial Services 
Competitiveness Act or section 7(j) of the Federal Deposit Insurance 
Act''.
    (f) Amendments to the Community Reinvestment Act.--Section 803(3) 
of the Community Reinvestment Act (12 U.S.C. 2902(3)) is amended--
            (1) by inserting ``or notice, as the case may be,'' after 
        ``an application'';
            (2) by striking ``or'' at the end of subparagraph (E);
            (3) by striking the period at the end of subparagraph (F) 
        and inserting ``; or''; and
            (4) by adding at the end the following new subparagraph:
                    ``(G) the acquisition of an insured bank or an 
                insured institution requiring prior notice under 
                section 4 of the Financial Services Competitiveness 
                Act.''.
                                 <all>
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