49–006 

109TH CONGRESS REPT. 109–356 " ! HOUSE OF REPRESENTATIVES 1st Session Part 1 

FINANCIAL SERVICES REGULATORY RELIEF ACT OF 2005 

DECEMBER 17, 2005.—Ordered to be printed 

Mr. OXLEY, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

[To accompany H.R. 3505] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 3505) to provide regulatory relief and improve productivity for insured depository institutions, and for other purposes, 

having considered the same, report favorably thereon with an 

amendment and recommend that the bill as amended do pass. 

CONTENTS 

Page 

Amendment .............................................................................................................. 1 

Purpose and Summary ............................................................................................ 45 

Background and Need for Legislation .................................................................... 45 

Hearings ................................................................................................................... 48 

Committee Consideration ........................................................................................ 48 

Committee Votes ...................................................................................................... 48 

Committee Oversight Findings ............................................................................... 50 

Performance Goals and Objectives ......................................................................... 50 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 50 

Committee Cost Estimate ....................................................................................... 50 

Congressional Budget Office Estimate ................................................................... 50 

Federal Mandates Statement ................................................................................. 57 

Advisory Committee Statement .............................................................................. 57 

Constitutional Authority Statement ...................................................................... 58 

Applicability to Legislative Branch ........................................................................ 58 

Section-by-Section Analysis of the Legislation ...................................................... 58 

Changes in Existing Law Made by the Bill, as Reported ..................................... 78 

AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 


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SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Financial Services Regulatory 

Relief Act of 2005’’. (b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—NATIONAL BANK PROVISIONS 

Sec. 101. National bank directors. 

Sec. 102. Voting in shareholder elections. 

Sec. 103. Simplifying dividend calculations for national banks. 

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

Sec. 105. Repeal of intrastate branch capital requirements. 

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

Sec. 107. Equal treatment for Federal agencies of foreign banks. 

Sec. 108. Maintenance of a Federal branch and a Federal agency in the same State. 

Sec. 109. Business organization flexibility for national banks. 

Sec. 110. Clarification of the main place of business of a national bank. 

Sec. 111. Capital equivalency deposits for Federal branches and agencies of foreign banks. 

Sec. 112. Enhancing the authority for national banks to make community development investments. 

TITLE II—SAVINGS ASSOCIATION PROVISIONS 

Sec. 201. Parity for savings associations under the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940. 

Sec. 202. Investments by Federal savings associations authorized to promote the public welfare. 

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

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

loan holding companies. 

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

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

Sec. 207. Restatement of authority for Federal savings associations to invest in small business investment companies. 

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

Sec. 209. Selling and offering of deposit products. 

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

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

Sec. 212. Small business and other commercial loans. 

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

Sec. 214. Increase in limits on commercial real estate loans. 

Sec. 215. Repeal of one limit on loans to one borrower. 

Sec. 216. Savings association credit card banks. 

Sec. 217. Interstate acquisitions by S&L holding companies. 

Sec. 218. Business organization flexibility for federal savings associations. 

TITLE III—CREDIT UNION PROVISIONS 

Sec. 301. Privately insured credit unions authorized to become members of a Federal home loan bank. 

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

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

Sec. 304. Increase in general 12-year limitation of term of Federal credit union loans to 15 years. 

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

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

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

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

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

Sec. 310. Credit union governance. 

Sec. 311. Providing the National Credit Union Administration with greater flexibility in responding to market 

conditions. 

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

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

Sec. 314. Clarification of definition of net worth under certain circumstances for purposes of prompt corrective 

action. 

Sec. 315. Amendments relating to nonfederally insured credit unions. 

TITLE IV—DEPOSITORY INSTITUTION PROVISIONS 

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

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

Sec. 403. Reporting requirements relating to insider lending. 

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

the Depository Institution Management Interlocks Act. 

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

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

Sec. 407. Cross guarantee authority. 

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

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

Sec. 410. Community reinvestment credit for esops and ewocs. 

Sec. 411. Minority financial institutions. 

TITLE V—DEPOSITORY INSTITUTION AFFILIATES PROVISIONS 

Sec. 501. Clarification of cross marketing provision. 

Sec. 502. Amendment to provide the Federal Reserve Board with discretion concerning the imputation of control of shares of a company by trustees. 

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

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

Sec. 505. Savings associations acting as agents for affiliated depository institutions. 

Sec. 506. Credit card bank investments for the public welfare. 

TITLE VI—BANKING AGENCY PROVISIONS 

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


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Sec. 602. Interagency data sharing. 

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

Sec. 604. Amendment permitting the destruction of old records of a depository institution by the FDIC after 

the appointment of the FDIC as receiver. 

Sec. 605. Modernization of recordkeeping requirement. 

Sec. 606. Streamlining reports of condition. 

Sec. 607. Expansion of eligibility for 18-month examination schedule for community banks. 

Sec. 608. Short form reports of condition for certain community banks. 

Sec. 609. Clarification of extent of suspension, removal, and prohibition authority of Federal banking agencies 

in cases of certain crimes by institution-affiliated parties. 

Sec. 610. Streamlining depository institution merger application requirements. 

Sec. 611. Inclusion of Director of the Office of Thrift Supervision in list of banking agencies regarding insurance 

customer protection regulations. 

Sec. 612. Protection of confidential information received by Federal banking regulators from foreign banking 

supervisors. 

Sec. 613. Prohibition on participation by convicted individual. 

Sec. 614. Clarification that notice after separation from service may be made by an order. 

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

Sec. 616. Changes required to small bank holding company policy statement on assessment of financial and 

managerial factors. 

Sec. 617. Exception to annual privacy notice requirement under the Gramm-Leach-Bliley Act. 

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

Sec. 619. Coordination of State examination authority. 

Sec. 620. Nonwaiver of privileges. 

Sec. 621. Right to Financial Privacy Act of 1978 amendment. 

Sec. 622. Deputy director; succession authority for Director of the Office of Thrift Supervision. 

Sec. 623. Limitation on scope of new agency guidelines. 

TITLE VII—‘‘BSA’’ COMPLIANCE BURDEN REDUCTION 

Sec. 701. Exception from currency transaction reports for seasoned customers. 

Sec. 702. Reduction in inconsistencies in monetary transaction recordkeeping and reporting enforcement and 

examination requirements. 

Sec. 703. Additional reforms relating to monetary transaction and recordkeeping requirements applicable to financial institutions. 

Sec. 704. Study by Comptroller General. 

Sec. 705. Feasibility study required. 

Sec. 706. Annual report by Secretary of the Treasury. 

Sec. 707. Preservation of money services businesses. 

TITLE VIII—CLERICAL AND TECHNICAL AMENDMENTS 

Sec. 801. Clerical amendments to the Home Owners’ Loan Act. 

Sec. 802. Technical corrections to the Federal Credit Union Act. 

Sec. 803. Other technical corrections. 

Sec. 804. Repeal of obsolete provisions of the Bank Holding Company Act of 1956. 

TITLE IX—FAIR DEBT COLLECTION PRACTICES ACT AMENDMENTS 

Sec. 901. Exception for certain bad check enforcement programs. 

Sec. 902. Other amendments. 

TITLE I—NATIONAL BANK PROVISIONS 

SEC. 101. NATIONAL BANK DIRECTORS. 

(a) IN GENERAL.—Section 5146 of the Revised Statutes of the United States (12 

U.S.C. 72) is amended—

(1) by striking ‘‘SEC. 5146. Every director must during’’ and inserting the following: 

‘‘SEC. 5146. REQUIREMENTS FOR BANK DIRECTORS. 

‘‘(a) RESIDENCY REQUIREMENTS.—Every director of a national bank shall, during’’; 

(2) by striking ‘‘total number of directors. Every director must own in his or 

her own right’’ and inserting ‘‘total number of directors. 

‘‘(b) INVESTMENT REQUIREMENT.—

‘‘(1) IN GENERAL.—Every director of a national bank shall own, in his or her 

own right,’’; and 

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

‘‘(2) EXCEPTION FOR SUBORDINATED DEBT IN CERTAIN CASES.—In lieu of the requirements of paragraph (1) relating to the ownership of capital stock in the 

national bank, the Comptroller of the Currency may, by regulation or order, 

permit an individual to serve as a director of a national bank that has elected, 

or notifies the Comptroller of the bank’s intention to elect, to operate as a S 

corporation pursuant to section 1362(a) of the Internal Revenue Code of 1986, 

if that individual holds debt of at least $1,000 issued by the national bank that 

is subordinated to the interests of depositors and other general creditors of the 

national bank.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for chapter one of title LXII of 

the Revised Statutes of the United States (12 U.S.C. 21 et seq.) is amended by striking the item relating to section 5146 and inserting the following new item: 

‘‘5146. Requirements for bank directors.’’. 


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SEC. 102. VOTING IN SHAREHOLDER ELECTIONS. 

Section 5144 of the Revised Statutes of the United States (12 U.S.C. 61) is amended—

(1) by striking ‘‘or to cumulate’’ and inserting ‘‘or, if so provided by the articles of association of the national bank, to cumulate’’; 

(2) by striking the comma after ‘‘his shares shall equal’’; and 

(3) by adding at the end the following new sentence: ‘‘The Comptroller of the 

Currency may prescribe such regulations to carry out the purposes of this section as the Comptroller determines to be appropriate.’’. 

SEC. 103. SIMPLIFYING DIVIDEND CALCULATIONS FOR NATIONAL BANKS. 

(a) IN GENERAL.—Section 5199 of the Revised Statutes of the United States (12 

U.S.C. 60) is amended to read as follows: 

‘‘SEC. 5199. NATIONAL BANK DIVIDENDS. 

‘‘(a) IN GENERAL.—Subject to subsection (b), the directors of any national bank 

may declare a dividend of so much of the undivided profits of the bank as the directors judge to be expedient. 

‘‘(b) APPROVAL REQUIRED UNDER CERTAIN CIRCUMSTANCES.—A national bank may 

not declare and pay dividends in any year in excess of an amount equal to the sum 

of the total of the net income of the bank for that year and the retained net income 

of the bank in the preceding two years, minus any transfers required by the Comptroller of the Currency (including any transfers required to be made to a fund for 

the retirement of any preferred stock), unless the Comptroller of the Currency approves the declaration and payment of dividends in excess of such amount.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for chapter three of title LXII 

of the Revised Statutes of the United States is amended by striking the item relating to section 5199 and inserting the following new item: 

‘‘5199.National bank dividends.’’. 

SEC. 104. REPEAL OF OBSOLETE LIMITATION ON REMOVAL AUTHORITY OF THE COMPTROLLER OF THE CURRENCY. 

Section 8(e)(4) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4)) is 

amended by striking the 5th sentence. 

SEC. 105. REPEAL OF INTRASTATE BRANCH CAPITAL REQUIREMENTS. 

Section 5155(c) of the Revised Statutes of the United States (12 U.S.C. 36(c)) is 

amended—

(1) in the 2nd sentence, by striking ‘‘, without regard to the capital requirements of this section,’’; and 

(2) by striking the last sentence. 

SEC. 106. CLARIFICATION OF WAIVER OF PUBLICATION REQUIREMENTS FOR BANK MERGER 

NOTICES. 

The last sentence of sections 2(a) and 3(a)(2) of the National Bank Consolidation 

and Merger Act (12 U.S.C. 215(a) and 215a(a)(2), respectively) are each amended 

by striking ‘‘Publication of notice may be waived, in cases where the Comptroller 

determines that an emergency exists justifying such waiver, by unanimous action 

of the shareholders of the association or State bank’’ and inserting ‘‘Publication of 

notice may be waived if the Comptroller determines that an emergency exists justifying such waiver or if the shareholders of the association or State bank agree by 

unanimous action to waive the publication requirement for their respective institutions’’. 

SEC. 107. EQUAL TREATMENT FOR FEDERAL AGENCIES OF FOREIGN BANKS. 

The 1st sentence of section 4(d) of the International Banking Act of 1978 (12 

U.S.C. 3102(d)) is amended by inserting ‘‘from citizens or residents of the United 

States’’ after ‘‘deposits’’. 

SEC. 108. MAINTENANCE OF A FEDERAL BRANCH AND A FEDERAL AGENCY IN THE SAME 

STATE. 

Section 4(e) of the International Banking Act of 1978 (12 U.S.C. 3102(e)) is 

amended by inserting ‘‘if the maintenance of both an agency and a branch in the 

State is prohibited under the law of such State’’ before the period at the end. 

SEC. 109. BUSINESS ORGANIZATION FLEXIBILITY FOR NATIONAL BANKS. 

(a) IN GENERAL.—Chapter one of title LXII of the Revised Statutes of the United 

States (12 U.S.C. 21 et seq.) is amended by inserting after section 5136B the following new section: 

‘‘SEC. 5136C. ALTERNATIVE BUSINESS ORGANIZATION. 

‘‘(a) IN GENERAL.—The Comptroller of the Currency may prescribe regulations—


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‘‘(1) to permit a national bank to be organized other than as a body corporate; 

and ‘‘(2) to provide requirements for the organizational characteristics of a national bank organized and operating other than as a body corporate, consistent 

with the safety and soundness of the national bank. ‘‘(b) EQUAL TREATMENT.—Except as provided in regulations prescribed under subsection (a), a national bank that is operating other than as a body corporate shall 

have the same rights and privileges and shall be subject to the same duties, restrictions, penalties, liabilities, conditions, and limitations as a national bank that is organized as a body corporate.’’. (b) TECHNICAL AND CONFORMING AMENDMENT.—Section 5136 of the Revised Statutes of the United States (12 U.S.C. 24) is amended, in the matter preceding the 

paragraph designated as the ‘‘First’’, by inserting ‘‘or other form of business organization provided under regulations prescribed by the Comptroller of the Currency 

under section 5136C’’ after ‘‘a body corporate’’. (c) CLERICAL AMENDMENT.—The table of sections for chapter one of title LXII of 

the Revised Statutes of the United States (12 U.S.C. 21 et seq.) is amended by inserting after the item relating to section 5136B the following new item: 

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

SEC. 110. CLARIFICATION OF THE MAIN PLACE OF BUSINESS OF A NATIONAL BANK. 

Title LXII of the Revised Statutes of the United States is amended— (1) in the paragraph designated the ‘‘Second’’ of section 5134 (12 U.S.C. 22), 

by striking ‘‘The place where its operations of discount and deposit are to be 

carried on’’ and inserting ‘‘The place where the main office of the national bank 

is, or is to be, located’’; and 

(2) in section 5190 (12 U.S.C. 81), by striking ‘‘the place specified in its organization certificate’’ and inserting ‘‘the main office of the national bank’’. 

SEC. 111. CAPITAL EQUIVALENCY DEPOSITS FOR FEDERAL BRANCHES AND AGENCIES OF 

FOREIGN BANKS. 

Section 4(g) of the International Banking Act of 1978 (12 U.S.C. 3102(g)) is 

amended to read as follows: ‘‘(g) CAPITAL EQUIVALENCY DEPOSIT.— ‘‘(1) IN GENERAL.—Upon the opening of a Federal branch or agency of a foreign bank in any State and thereafter, the foreign bank, in addition to any deposit requirements imposed under section 6, shall keep on deposit, in accordance with such regulations as the Comptroller of the Currency may prescribe 

in accordance with paragraph (2), dollar deposits, investment securities, or 

other assets in such amounts as the Comptroller of the Currency determines to 

be necessary for the protection of depositors and other investors and to be consistent with the principles of safety and soundness. ‘‘(2) LIMITATION.—Notwithstanding paragraph (1), regulations prescribed 

under such paragraph shall not permit a foreign bank to keep assets on deposit 

in an amount that is less than the amount required for a State licensed branch 

or agency of a foreign bank under the laws and regulations of the State in 

which the Federal agency or branch is located.’’. 

SEC. 112. ENHANCING THE AUTHORITY FOR NATIONAL BANKS TO MAKE COMMUNITY DEVELOPMENT INVESTMENTS. 

The last sentence in the paragraph designated as the ‘‘Eleventh.’’ of section 5136 

of the Revised Statutes of the United States (12 U.S.C. 24) is amended by striking 

‘‘10 percent’’ each place such term appears and inserting ‘‘15 percent’’. 

TITLE II—SAVINGS ASSOCIATION PROVISIONS 

SEC. 201. PARITY FOR SAVINGS ASSOCIATIONS UNDER THE SECURITIES EXCHANGE ACT OF 

1934 AND THE INVESTMENT ADVISERS ACT OF 1940. 

(a) SECURITIES EXCHANGE ACT OF 1934.—

(1) DEFINITION OF BANK.—Section 3(a)(6) of the Securities Exchange Act of 

1934 (15 U.S.C. 78c(a)(6)) is amended—

(A) in subparagraph (A), by inserting ‘‘or a Federal savings association, 

as defined in section 2(5) of the Home Owners’ Loan Act’’ after ‘‘a banking 

institution organized under the laws of the United States’’; and 

(B) in subparagraph (C)—

(i) by inserting ‘‘or savings association as defined in section 2(4) of 

the Home Owners’ Loan Act,’’ after ‘‘banking institution,’’; and 

(ii) by inserting ‘‘or savings associations’’ after ‘‘having supervision 

over banks’’. 


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(2) INCLUDE OTS UNDER THE DEFINITION OF APPROPRIATE REGULATORY AGENCY

FOR CERTAIN PURPOSES.—Section 3(a)(34) of such Act (15 U.S.C. 78c(a)(34)) is 

amended— (A) in subparagraph (A)— (i) in clause (ii), by striking ‘‘(i) or (iii)’’ and inserting ‘‘(i), (iii), or (iv)’’; 

(ii) by striking ‘‘and’’ at the end of clause (iii); 

(iii) by redesignating clause (iv) as clause (v); and 

(iv) by inserting the following new clause after clause (iii): 

‘‘(iv) the Director of the Office of Thrift Supervision, in the case of 

a savings association (as defined in section 3(b) of the Federal Deposit 

Insurance Act (12 U.S.C. 1813(b))) the deposits of which are insured by 

the Federal Deposit Insurance Corporation, a subsidiary or a department or division of any such savings association, or a savings and loan 

holding company; and’’; 

(B) in subparagraph (B)— (i) in clause (ii), by striking ‘‘(i) or (iii)’’ and inserting ‘‘(i), (iii), or (iv)’’; 

(ii) by striking ‘‘and’’ at the end of clause (iii); 

(iii) by redesignating clause (iv) as clause (v); and 

(iv) by inserting the following new clause after clause (iii): 

‘‘(iv) the Director of the Office of Thrift Supervision, in the case of 

a savings association (as defined in section 3(b) of the Federal Deposit 

Insurance Act (12 U.S.C. 1813(b))) the deposits of which are insured by 

the Federal Deposit Insurance Corporation, or a subsidiary of any such 

savings association, or a savings and loan holding company; and’’; 

(C) in subparagraph (C)—

(i) in clause (ii), by striking ‘‘(i) or (iii)’’ and inserting ‘‘(i), (iii), or (iv)’’; 

(ii) by striking ‘‘and’’ at the end of clause (iii); 

(iii) by redesignating clause (iv) as clause (v); and 

(iv) by inserting the following new clause after clause (iii): 

‘‘(iv) the Director of the Office of Thrift Supervision, in the case of 

a savings association (as defined in section 3(b) of the Federal Deposit 

Insurance Act (12 U.S.C. 1813(b))) the deposits of which are insured by 

the Federal Deposit Insurance Corporation, a savings and loan holding 

company, or a subsidiary of a savings and loan holding company when 

the appropriate regulatory agency for such clearing agency is not the 

Commission; and’’; 

(D) in subparagraph (D)—

(i) by striking ‘‘and’’ at the end of clause (ii); 

(ii) by redesignating clause (iii) as clause (iv); and 

(iii) by inserting the following new clause after clause (ii): 

‘‘(iii) the Director of the Office of Thrift Supervision, in the case of 

a savings association (as defined in section 3(b) of the Federal Deposit 

Insurance Act (12 U.S.C. 1813(b))) the deposits of which are insured by 

the Federal Deposit Insurance Corporation; and’’; 

(E) in subparagraph (F)—

(i) by redesignating clauses (ii), (iii), and (iv) as clauses (iii), (iv), and 

(v), respectively; and 

(ii) by inserting the following new clause after clause (i): 

‘‘(ii) the Director of the Office of Thrift Supervision, in the case of a 

savings association (as defined in section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813(b))) the deposits of which are insured by 

the Federal Deposit Insurance Corporation; and’’; 

(F) by moving subparagraph (H) and inserting such subparagraph after 

subparagraph (G); and 

(G) by adding at the end the following new sentence: ‘‘As used in this 

paragraph, the term ‘savings and loan holding company’ has the meaning 

given it in section 10(a) of the Home Owners’ Loan Act (12 U.S.C. 

1467a(a)).’’. 

(b) INVESTMENT ADVISERS ACT OF 1940.—

(1) DEFINITION OF BANK.—Section 202(a)(2) of the Investment Advisers Act of 

1940 (15 U.S.C. 80b–2(a)(2)) is amended—

(A) in subparagraph (A) by inserting ‘‘or a Federal savings association, as 

defined in section 2(5) of the Home Owners’ Loan Act’’ after ‘‘a banking institution organized under the laws of the United States’’; and 

(B) in subparagraph (C)—

(i) by inserting ‘‘, savings association as defined in section 2(4) of the 

Home Owners’ Loan Act,’’ after ‘‘banking institution’’; and 

(ii) by inserting ‘‘or savings associations’’ after ‘‘having supervision 

over banks’’. 


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(2) CONFORMING AMENDMENTS.—Subsections (a)(1)(A)(i), (a)(1)(B), (a)(2), and 

(b) of section 210A of such Act (15 U.S.C. 80b–10a), as added by section 220 

of the Gramm-Leach-Bliley Act, are each amended by striking ‘‘bank holding 

company’’ each place it occurs and inserting ‘‘bank holding company or savings 

and loan holding company’’. 

(c) CONFORMING AMENDMENT TO THE INVESTMENT COMPANY ACT OF 1940.—Section 10(c) of the Investment Company Act of 1940 (15 U.S.C. 80a–10(c)), as amended 

by section 213(c) of the Gramm-Leach-Bliley Act, is amended by inserting after 

‘‘1956)’’ the following: ‘‘or any one savings and loan holding company (together with 

its affiliates and subsidiaries) (as such terms are defined in section 10 of the Home 

Owners’ Loan Act)’’. 

SEC. 202. INVESTMENTS BY FEDERAL SAVINGS ASSOCIATIONS AUTHORIZED TO PROMOTE 

THE PUBLIC WELFARE. 

(a) IN GENERAL.—Section 5(c)(3) of the Home Owners’ Loan Act (12 U.S.C. 

1464(c)) is amended by adding at the end the following new subparagraph: 

‘‘(D) DIRECT INVESTMENTS TO PROMOTE THE PUBLIC WELFARE.—

‘‘(i) IN GENERAL.—A Federal savings association may make investments designed primarily to promote the public welfare, including the 

welfare of low- and moderate-income communities or families through 

the provision of housing, services, and jobs. 

‘‘(ii) DIRECT INVESTMENTS OR ACQUISITION OF INTEREST IN OTHER

COMPANIES.—Investments under clause (i) may be made directly or by 

purchasing interests in an entity primarily engaged in making such investments. 

‘‘(iii) PROHIBITION ON UNLIMITED LIABILITY.—No investment may be 

made under this subparagraph which would subject a Federal savings 

association to unlimited liability to any person. 

‘‘(iv) SINGLE INVESTMENT LIMITATION TO BE ESTABLISHED BY DIRECTOR.—Subject to clauses (v) and (vi), the Director shall establish, by 

order or regulation, limits on—

‘‘(I) the amount any savings association may invest in any 1 

project; and 

‘‘(II) the aggregate amount of investment of any savings association under this subparagraph. 

‘‘(v) FLEXIBLE AGGREGATE INVESTMENT LIMITATION.—The aggregate 

amount of investments of any savings association under this subparagraph may not exceed an amount equal to the sum of 5 percent of the 

savings association’s capital stock actually paid in and unimpaired and 

5 percent of the savings association’s unimpaired surplus, unless—

‘‘(I) the Director determines that the savings association is adequately capitalized; and 

‘‘(II) the Director determines, by order, that the aggregate 

amount of investments in a higher amount than the limit under 

this clause will pose no significant risk to the affected deposit insurance fund. 

‘‘(vi) MAXIMUM AGGREGATE INVESTMENT LIMITATION.—Notwithstanding clause (v), the aggregate amount of investments of any savings association under this subparagraph may not exceed an amount 

equal to the sum of 15 percent of the savings association’s capital stock 

actually paid in and unimpaired and 15 percent of the savings association’s unimpaired surplus. 

‘‘(vii) INVESTMENTS NOT SUBJECT TO OTHER LIMITATION ON QUALITY OF

INVESTMENTS.—No obligation a Federal savings association acquires or 

retains under this subparagraph shall be taken into account for purposes of the limitation contained in section 28(d) of the Federal Deposit 

Insurance Act on the acquisition and retention of any corporate debt security not of investment grade.’’. 

(b) TECHNICAL AND CONFORMING AMENDMENT.—Section 5(c)(3)(A) of the Home 

Owners’ Loan Act (12 U.S.C. 1464(c)(3)(A)) is amended to read as follows: 

‘‘(A) [Repealed].’’. 

SEC. 203. MERGERS AND CONSOLIDATIONS OF FEDERAL SAVINGS ASSOCIATIONS WITH NONDEPOSITORY INSTITUTION AFFILIATES. 

Section 5(d)(3) of the Home Owners’ Loan Act (12 U.S.C. 1464(d)(3)) is amended—

(1) by redesignating subparagraph (B) as subparagraph (C); and 

(2) by inserting after subparagraph (A) the following new subparagraph: 

‘‘(B) MERGERS AND CONSOLIDATIONS WITH NONDEPOSITORY INSTITUTION

AFFILIATES.—


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‘‘(i) IN GENERAL.—Upon the approval of the Director, a Federal savings association may merge with any nondepository institution affiliate 

of the savings association. 

‘‘(ii) RULE OF CONSTRUCTION.—No provision of clause (i) shall be construed as—

‘‘(I) affecting the applicability of section 18(c) of the Federal Deposit Insurance Act; or 

‘‘(II) granting a Federal savings association any power or any authority to engage in any activity that is not authorized for a Federal savings association under any other provision of this Act or 

any other provision of law.’’. 

SEC. 204. REPEAL OF STATUTORY DIVIDEND NOTICE REQUIREMENT FOR SAVINGS ASSOCIATION SUBSIDIARIES OF SAVINGS AND LOAN HOLDING COMPANIES. 

Section 10(f) of the Home Owners’ Loan Act (12 U.S.C. 1467a(f)) is amended to 

read as follows: 

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

‘‘(1) require a savings association that is a subsidiary of a savings and loan 

holding company to give prior notice to the Director of the intent of the savings 

association to pay a dividend on its guaranty, permanent, or other 

nonwithdrawable stock; and 

‘‘(2) establish conditions on the payment of dividends by such a savings association.’’. 

SEC. 205. MODERNIZING STATUTORY AUTHORITY FOR TRUST OWNERSHIP OF SAVINGS ASSOCIATIONS. 

(a) IN GENERAL.—Section 10(a)(1)(C) of the Home Owners’ Loan Act (12 U.S.C. 

1467a(a)(1)(C)) is amended—

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

(2) by inserting ‘‘or any other trust unless by its terms it must terminate 

within 25 years or not later than 21 years and 10 months after the death of 

individuals living on the effective date of the trust,’’ after ‘‘or similar organization,’’. 

(b) TECHNICAL AND CONFORMING AMENDMENT.—Section 10(a)(3) of the Home 

Owners’ Loan Act (12 U.S.C. 1467a(a)(3)) is amended—

(1) by striking ‘‘does not include—’’ and all that follows through ‘‘any company 

by virtue’’ where such term appears in subparagraph (A) and inserting ‘‘does 

not include any company by virtue’’; 

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

and 

(3) by striking subparagraph (B). 

SEC. 206. REPEAL OF OVERLAPPING RULES GOVERNING PURCHASED MORTGAGE SERVICING 

RIGHTS. 

Section 5(t) of the Home Owners’ Loan Act (12 U.S.C. 1464(t)) is amended—

(1) by striking paragraph (4) and inserting the following new paragraph: 

‘‘(4) [Repealed].’’; and 

(2) in paragraph (9)(A), by striking ‘‘intangible assets, plus’’ and all that follows through the period at the end and inserting ‘‘intangible assets.’’. 

SEC. 207. RESTATEMENT OF AUTHORITY FOR FEDERAL SAVINGS ASSOCIATIONS TO INVEST 

IN SMALL BUSINESS INVESTMENT COMPANIES. 

Subparagraph (D) of section 5(c)(4) of the Home Owners’ Loan Act (12 U.S.C. 

1464(c)(4)) is amended to read as follows: 

‘‘(D) SMALL BUSINESS INVESTMENT COMPANIES.—Any Federal savings association may invest in 1 or more small business investment companies, or 

in any entity established to invest solely in small business investment companies formed under the Small Business Investment Act of 1958, except 

that the total amount of investments under this subparagraph may not at 

any time exceed the amount equal to 5 percent of capital and surplus of 

the savings association.’’. 

SEC. 208. REMOVAL OF LIMITATION ON INVESTMENTS IN AUTO LOANS. 

(a) IN GENERAL.—Section 5(c)(1) of the Home Owners’ Loan Act (12 U.S.C. 

1464(c)(1)) is amended by adding at the end the following new subparagraph: 

‘‘(V) AUTO LOANS.—Loans and leases for motor vehicles acquired for personal, family, or household purposes.’’. 

(b) TECHNICAL AND CONFORMING AMENDMENT RELATING TO QUALIFIED THRIFT INVESTMENTS.—Section 10(m)(4)(C)(ii) of the Home Owners’ Loan Act (12 U.S.C. 

1467a(m)(4)(C)(ii)) is amended by adding at the end the following new subclause: 


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‘‘(VIII) Loans and leases for motor vehicles acquired for personal, 

family, or household purposes.’’. 

SEC. 209. SELLING AND OFFERING OF DEPOSIT PRODUCTS. 

Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(h)) is amended by adding at the end the following new paragraph: 

‘‘(4) SELLING AND OFFERING OF DEPOSIT PRODUCTS.—No law, rule, regulation, 

or order, or other administrative action of any State or political subdivision 

thereof shall directly or indirectly require any individual who is an agent of 1 

Federal savings association (as such term is defined in section 2(5) of the Home 

Owners’ Loan Act (12 U.S.C. 1462(5)) in selling or offering deposit (as such term 

is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(l)) 

products issued by such association to qualify or register as a broker, dealer, 

associated person of a broker, or associated person of a dealer, or to qualify or 

register in any other similar status or capacity, if the individual does not—

‘‘(A) accept deposits or make withdrawals on behalf of any customer of 

the association; 

‘‘(B) offer or sell a deposit product as an agent for another entity that is 

not subject to supervision and examination by a Federal banking agency (as 

defined in section 3(z) of the Federal Deposit Insurance Act (12 U.S.C. 

1813(z)), the National Credit Union Administration, or any officer, agency, 

or other entity of any State which has primary regulatory authority over 

State banks, State savings associations, or State credit unions; 

‘‘(C) offer or sell a deposit product that is not an insured deposit (as defined in section 3(m) of the Federal Deposit Insurance Act (12 U.S.C. 

1813(m))); 

‘‘(D) offer or sell a deposit product which contains a feature that makes 

it callable at the option of such Federal savings association; or 

‘‘(E) create a secondary market with respect to a deposit product or otherwise add enhancements or features to such product independent of those offered by the association.’’. 

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

Section 5(n) of the Home Owners’ Loan Act (12 U.S.C. 1464(n)) is amended by 

adding at the end the following new paragraph: 

‘‘(11) FUNERAL- AND CEMETERY-RELATED FIDUCIARY SERVICES.—

‘‘(A) IN GENERAL.—A funeral director or cemetery operator, when acting 

in such capacity, (or any other person in connection with a contract or other 

agreement with a funeral director or cemetery operator) may engage any 

Federal savings association, regardless of where the association is located, 

to act in any fiduciary capacity in which the savings association has the 

right to act in accordance with this section, including holding funds deposited in trust or escrow by the funeral director or cemetery operator (or by 

such other party), and the savings association may act in such fiduciary capacity on behalf of the funeral director or cemetery operator (or such other 

person). 

‘‘(B) DEFINITIONS.—For purposes of this paragraph, the following definitions shall apply: 

‘‘(i) CEMETERY.—The term ‘cemetery’ means any land or structure 

used, or intended to be used, for the interment of human remains in 

any form. 

‘‘(ii) CEMETERY OPERATOR.—The term ‘cemetery operator’ means any 

person who contracts or accepts payment for merchandise, endowment, 

or perpetual care services in connection with a cemetery. 

‘‘(iii) FUNERAL DIRECTOR.—The term ‘funeral director’ means any person who contracts or accepts payment to provide or arrange—

‘‘(I) services for the final disposition of human remains; or 

‘‘(II) funeral services, property, or merchandise (including cemetery services, property, or merchandise).’’. 

SEC. 211. REPEAL OF QUALIFIED THRIFT LENDER REQUIREMENT WITH RESPECT TO OUT-OFSTATE BRANCHES. 

Section 5(r)(1) of the Home Owners’ Loan Act (12 U.S.C. 1464(r)(1)) is amended 

by striking the last sentence. 

SEC. 212. SMALL BUSINESS AND OTHER COMMERCIAL LOANS. 

(a) ELIMINATION OF LENDING LIMIT ON SMALL BUSINESS LOANS.—Section 5(c)(1) 

of the Home Owners’ Loan Act (12 U.S.C. 1464(c)(1)) is amended by inserting after 

subparagraph (V) (as added by section 208 of this title) the following new subparagraph: 


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‘‘(W) SMALL BUSINESS LOANS.—Small business loans, as defined in regulations which the Director shall prescribe.’’. 

(b) INCREASE IN LENDING LIMIT ON OTHER BUSINESS LOANS.—Section 5(c)(2)(A) of 

the Home Owners’ Loan Act (12 U.S.C. 1464(c)(2)(A)) is amended by striking ‘‘, and 

amounts in excess of 10 percent’’ and all that follows through ‘‘by the Director’’. 

SEC. 213. CLARIFYING CITIZENSHIP OF FEDERAL SAVINGS ASSOCIATIONS FOR FEDERAL 

COURT JURISDICTION. 

Section 5 of the Home Owners’ Loan Act (12 U.S.C. 1464) is amended by adding 

at the end the following new subsection: 

‘‘(x) HOME STATE CITIZENSHIP.—In determining whether a Federal court has diversity jurisdiction over a case in which a Federal savings association is a party, 

the Federal savings association shall be considered to be a citizen only of the States 

in which such savings association has its home office and its principal place of business (if the principal place of business is in a different State than the home office).’’. 

SEC. 214. INCREASE IN LIMITS ON COMMERCIAL REAL ESTATE LOANS. 

Section 5(c)(2)(B)(i) of the Home Owners’ Loan Act (12 U.S.C. 1464(c)(2)(B)(i)) is 

amended by striking ‘‘400 percent’’ and inserting ‘‘500 percent’’. 

SEC. 215. REPEAL OF ONE LIMIT ON LOANS TO ONE BORROWER. 

Subparagraph (A) of section 5(u)(2) of the Home Owners’ Loan Act (12 U.S.C. 

1464(u)(2)(A)) is amended—

(1) by striking subclause (I) of clause (ii); 

(2) by redesignating subclauses (II), (III), (IV), and (V) of clause (ii) as subclauses (I), (II), (III), and (IV), respectively; 

(3) in clause (i)—

(A) by striking ‘‘for any’’ and inserting ‘‘For any’’; and 

(B) by striking ‘‘; or’’ and inserting a period; and 

(4) in clause (ii), by striking ‘‘to develop domestic’’ and inserting ‘‘To develop 

domestic’’. 

SEC. 216. SAVINGS ASSOCIATION CREDIT CARD BANKS. 

Section 10(a)(1)(A) of the Home Owners’ Loan Act (12 U.S.C. 1467a(a)(1)(A)) is 

amended by inserting ‘‘and such term does not include an institution described in 

section 2(c)(2)(F) of the Bank Holding Company Act of 1956 for purposes of subsections (a)(1)(E), (c)(3)(B)(i), (c)(9)(C)(i), and (e)(3)’’ before the period at the end. 

SEC. 217. INTERSTATE ACQUISITIONS BY S&L HOLDING COMPANIES. 

Section 10(e)(3) of the Home Owners’ Loan Act (12 U.S.C. 1467a(e)(3)) is amended—

(1) by redesignating subparagraphs (A), (B), and (C) as subparagraphs (B), 

(C), and (D), respectively; and 

(2) by inserting before subparagraph (B) (as so redesignated) the following 

new subparagraph: 

‘‘(A) such acquisition would be permissible under section 3(d) of the Bank 

Holding Company Act of 1956 if the savings and loan holding company 

were a bank holding company and any savings association to be acquired 

were a bank;’’. 

SEC. 218. BUSINESS ORGANIZATION FLEXIBILITY FOR FEDERAL SAVINGS ASSOCIATIONS. 

(a) IN GENERAL.—Section 5 of the Home Owners’ Loan Act (12 U.S.C. 1464) is 

amended by inserting after subsection (x) (as added by section 213) following new 

subsection: 

‘‘(y) ALTERNATIVE BUSINESS ORGANIZATION.—

‘‘(1) IN GENERAL.—The Director may prescribe regulations that—

‘‘(A) permit a Federal savings association to be organized other than as 

a corporation; and 

‘‘(B) provide requirements for the organizational characteristics of a Federal savings association organized and operating other than as a corporation, consistent with the safety and soundness of the Federal savings association. 

‘‘(2) EQUAL TREATMENT.—Except as otherwise provided in regulations prescribed under subsection (1), a Federal savings association that is operating 

other than as a corporation shall have the same rights and privileges and shall 

be subject to the same duties, restrictions, penalties, liabilities, conditions, and 

limitations as a Federal savings association that is organized as a corporation.’’. 

(b) TECHNICAL AND CONFORMING AMENDMENTS.—

(1) Section 5(a)(1) of the Home Owners’ Loan Act (12 U.S.C. 1464(a)(1)) is 

amended by striking ‘‘organization, incorporation,’’ and inserting ‘‘organization 


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(as a corporation or other form of business organization provided under regulations prescribed by the Director under subsection (x)),’’. (2) The last sentence of section 5(i)(1) of the Home Owners’ Loan Act (12 

U.S.C. 1464(i)(1)) is amended by striking ‘‘incorporated’’ and inserting ‘‘organized’’. (3) Section 5(o)(1) of the Home Owners’ Loan Act (12 U.S.C. 1464(a)(1)) is 

amended by striking ‘‘organization, incorporation,’’ and inserting ‘‘organization 

(as a corporation or other form of business organization provided under regulations prescribed by the Director under subsection (x)),’’. 

TITLE III—CREDIT UNION PROVISIONS 

SEC. 301. PRIVATELY INSURED CREDIT UNIONS AUTHORIZED TO BECOME MEMBERS OF A 

FEDERAL HOME LOAN BANK. 

(a) IN GENERAL.—Section 4(a) of the Federal Home Loan Bank Act (12 U.S.C. 

1424(a)) is amended by adding at the end the following new paragraph: ‘‘(5) CERTAIN PRIVATELY INSURED CREDIT UNIONS.— ‘‘(A) IN GENERAL.—A credit union which has been determined, in accordance with section 43(e)(1) of the Federal Deposit Insurance Act and subject 

to the requirements of subparagraph (B), to meet all eligibility requirements for Federal deposit insurance shall be treated as an insured depository institution for purposes of determining the eligibility of such credit 

union for membership in a Federal home loan bank under paragraphs (1), 

(2), and (3). ‘‘(B) CERTIFICATION BY APPROPRIATE SUPERVISOR.— ‘‘(i) IN GENERAL.—For purposes of this paragraph and subject to 

clause (ii), a credit union which lacks Federal deposit insurance and 

which has applied for membership in a Federal home loan bank may 

be treated as meeting all the eligibility requirements for Federal deposit insurance only if the appropriate supervisor of the State in which 

the credit union is chartered has determined that the credit union 

meets all the eligibility requirements for Federal deposit insurance as 

of the date of the application for membership. ‘‘(ii) CERTIFICATION DEEMED VALID.—If, in the case of any credit 

union to which clause (i) applies, the appropriate supervisor of the 

State in which such credit union is chartered fails to make a determination pursuant to such clause by the end of the 6-month period beginning on the date of the application, the credit union shall be deemed 

to have met the requirements of clause (i). ‘‘(C) SECURITY INTERESTS OF FEDERAL HOME LOAN BANK NOT AVOIDABLE.— Notwithstanding any provision of State law authorizing a conservator or 

liquidating agent of a credit union to repudiate contracts, no such provision 

shall apply with respect to— ‘‘(i) any extension of credit from any Federal home loan bank to any 

credit union which is a member of any such bank pursuant to this 

paragraph; or ‘‘(ii) any security interest in the assets of such credit union securing 

any such extension of credit.’’. (b) COPIES OF AUDITS OF PRIVATE INSURERS OF CERTAIN DEPOSITORY INSTITU- TIONS REQUIRED TO BE PROVIDED TO SUPERVISORY AGENCIES.—Section 43(a)(2) of 

the Federal Deposit Insurance Act (12 U.S.C. 1831t(a)(2)) is amended— (1) by striking ‘‘and’’ at the end of subparagraph (A)(i); 

(2) by striking the period at the end of clause (ii) of subparagraph (A) and 

inserting a semicolon; 

(3) by inserting the following new clauses at the end of subparagraph (A): 

‘‘(iii) in the case of depository institutions described in subsection 

(f)(2)(A) the deposits of which are insured by the private insurer, the 

National Credit Union Administration, not later than 7 days after that 

audit is completed; and 

‘‘(iv) in the case of depository institutions described in subsection 

(f)(2)(A) the deposits of which are insured by the private insurer which 

are members of a Federal home loan bank, the Federal Housing Finance Board, not later than 7 days after that audit is completed.’’; and 

(4) by adding at the end the following new subparagraph: 

‘‘(C) CONSULTATION.—The appropriate supervisory agency of each State in 

which a private deposit insurer insures deposits in an institution described 

in subsection (f)(2)(A) which—

‘‘(i) lacks Federal deposit insurance; and 


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‘‘(ii) has become a member of a Federal home loan bank, 

shall provide the National Credit Union Administration, upon request, with 

the results of any examination and reports related thereto concerning the 

private deposit insurer to which such agency may have in its possession.’’. 

SEC. 302. LEASES OF LAND ON FEDERAL FACILITIES FOR CREDIT UNIONS. 

(a) IN GENERAL.—Section 124 of the Federal Credit Union Act (12 U.S.C. 1770) 

is amended—

(1) by striking ‘‘Upon application by any credit union’’ and inserting ‘‘Notwithstanding any other provision of law, upon application by any credit union’’; 

(2) by inserting ‘‘on lands reserved for the use of, and under the exclusive or 

concurrent jurisdiction of, the United States or’’ after ‘‘officer or agency of the 

United States charged with the allotment of space’’; 

(3) by inserting ‘‘lease land or’’ after ‘‘such officer or agency may in his or its 

discretion’’; and 

(4) by inserting ‘‘or the facility built on the lease land’’ after ‘‘credit union to 

be served by the allotment of space’’. 

(b) CLERICAL AMENDMENT.—The heading for section 124 is amended by inserting 

‘‘OR FEDERAL LAND’’ after ‘‘BUILDINGS’’. 

SEC. 303. INVESTMENTS IN SECURITIES BY FEDERAL CREDIT UNIONS. 

Section 107 of the Federal Credit Union Act (12 U.S.C. 1757) is amended—

(1) in the matter preceding paragraph (1) by striking ‘‘A Federal credit union’’

and inserting ‘‘(a) IN GENERAL.—Any Federal credit union’’; and 

(2) by adding at the end the following new subsection: 

‘‘(b) ADDITIONAL INVESTMENT AUTHORITY.—

‘‘(1) IN GENERAL.—In addition to any investments otherwise authorized, a 

Federal credit union may purchase and hold for its own account such investment securities of investment grade as the Board may authorize by regulation, 

subject to such limitations and restrictions as the Board may prescribe in the 

regulations. 

‘‘(2) PERCENTAGE LIMITATIONS.—

‘‘(A) SINGLE OBLIGOR.—In no event may the total amount of investment 

securities of any single obligor or maker held by a Federal credit union for 

the credit union’s own account exceed at any time an amount equal to 10 

percent of the net worth of the credit union. 

‘‘(B) AGGREGATE INVESTMENTS.—In no event may the aggregate amount 

of investment securities held by a Federal credit union for the credit union’s 

own account exceed at any time an amount equal to 10 percent of the assets 

of the credit union. 

‘‘(3) INVESTMENT SECURITY DEFINED.—

‘‘(A) IN GENERAL.—For purposes of this subsection, the term ‘investment 

security’ means marketable obligations evidencing the indebtedness of any 

person in the form of bonds, notes, or debentures and other instruments 

commonly referred to as investment securities. 

‘‘(B) FURTHER DEFINITION BY BOARD.—The Board may further define the 

term ‘investment security’. 

‘‘(4) INVESTMENT GRADE DEFINED.—The term ‘investment grade’ means with 

respect to an investment security purchased by a credit union for its own account, an investment security that at the time of such purchase is rated in one 

of the 4 highest rating categories by at least 1 nationally recognized statistical 

rating organization. 

‘‘(5) CLARIFICATION OF PROHIBITION ON STOCK OWNERSHIP.—No provision of 

this subsection shall be construed as authorizing a Federal credit union to purchase shares of stock of any corporation for the credit union’s own account, except as otherwise permitted by law.’’. 

SEC. 304. INCREASE IN GENERAL 12-YEAR LIMITATION OF TERM OF FEDERAL CREDIT UNION 

LOANS TO 15 YEARS. 

Section 107(a)(5) of the Federal Credit Union Act (12 U.S.C. 1757(5)) (as so designated by section 303 of this title) is amended—

(1) in the matter preceding subparagraph (A), by striking ‘‘to make loans, the 

maturities of which shall not exceed twelve years except as otherwise provided 

herein’’ and inserting ‘‘to make loans, the maturities of which shall not exceed 

15 years or any longer maturity as the Board may allow, in regulations, except 

as otherwise provided in this Act’’; 

(2) in subparagraph (A)—

(A) by striking clause (ii); 

(B) by redesignating clauses (iii) through (x) as clauses (ii) through (ix), 

respectively; and 


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(C) by inserting ‘‘and’’ after the semicolon at the end of clause (viii) (as 

so redesignated). 

SEC. 305. INCREASE IN 1 PERCENT INVESTMENT LIMIT IN CREDIT UNION SERVICE ORGANIZATIONS. 

Section 107(a)(7)(I) of the Federal Credit Union Act (12 U.S.C. 1757(7)(I)) (as so 

designated by section 303 of this title) is amended by striking ‘‘up to 1 per centum 

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

SEC. 306. MEMBER BUSINESS LOAN EXCLUSION FOR LOANS TO NONPROFIT RELIGIOUS ORGANIZATIONS. 

Section 107A(a) of the Federal Credit Union Act (12 U.S.C. 1757a(a)) is amended 

by inserting ‘‘, excluding loans made to nonprofit religious organizations,’’ after ‘‘total amount of such loans’’. 

SEC. 307. CHECK CASHING AND MONEY TRANSFER SERVICES OFFERED WITHIN THE FIELD 

OF MEMBERSHIP. 

Paragraph (12) of section 107(a) of the Federal Credit Union Act (12 U.S.C. 

1757(12)) (as so designated by section 303 of this title) is amended to read as follows: ‘‘(12) in accordance with regulations prescribed by the Board— ‘‘(A) to sell, to persons in the field of membership, negotiable checks (including travelers checks), money orders, and other similar money transfer 

instruments (including international and domestic electronic fund transfers); and ‘‘(B) to cash checks and money orders and receive international and domestic electronic fund transfers for persons in the field of membership for 

a fee;’’. 

SEC. 308. VOLUNTARY MERGERS INVOLVING MULTIPLE COMMON-BOND CREDIT UNIONS. 

Section 109(d)(2) of the Federal Credit Union Act (12 U.S.C. 1759(d)(2)) is amended— (1) by striking ‘‘or’’ at the end of clause (ii) of subparagraph (B); 

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

and 

(3) by adding at the end the following new subparagraph: ‘‘(D) a merger involving any such Federal credit union approved by the 

Board on or after August 7, 1998.’’. 

SEC. 309. CONVERSIONS INVOLVING COMMON-BOND CREDIT UNIONS. 

Section 109(g) of the Federal Credit Union Act (12 U.S.C. 1759(g)) is amended by 

inserting after paragraph (2) the following new paragraph: ‘‘(3) CRITERIA FOR CONTINUED MEMBERSHIP OF CERTAIN MEMBER GROUPS IN

COMMUNITY CHARTER CONVERSIONS.—In the case of a voluntary conversion of a 

common-bond credit union described in paragraph (1) or (2) of subsection (b) 

into a community credit union described in subsection (b)(3), the Board shall 

prescribe, by regulation, the criteria under which the Board may determine that 

a member group or other portion of a credit union’s existing membership, that 

is located outside the well-defined local community, neighborhood, or rural district that shall constitute the community charter, can be satisfactorily served 

by the credit union and remain within the community credit union’s field of 

membership.’’. 

SEC. 310. CREDIT UNION GOVERNANCE. 

(a) EXPULSION OF MEMBERS FOR JUST CAUSE.—Subsection (b) of section 118 of the 

Federal Credit Union Act (12 U.S.C. 1764(b)) is amended to read as follows: ‘‘(b) POLICY AND ACTIONS OF BOARDS OF DIRECTORS OF FEDERAL CREDIT

UNIONS.—

‘‘(1) EXPULSION OF MEMBERS FOR NONPARTICIPATION OR FOR JUST CAUSE.—The 

board of directors of a Federal credit union may, by majority vote of a quorum 

of directors, adopt and enforce a policy with respect to expulsion from membership, by a majority vote of such board of directors, based on just cause, including disruption of credit union operations, or on nonparticipation by a member 

in the affairs of the credit union. 

‘‘(2) WRITTEN NOTICE OF POLICY TO MEMBERS.—If a policy described in paragraph (1) is adopted, written notice of the policy as adopted and the effective 

date of such policy shall be provided to—

‘‘(A) each existing member of the credit union not less than 30 days prior 

to the effective date of such policy; and 

‘‘(B) each new member prior to or upon applying for membership.’’. 

(b) TERM LIMITS AUTHORIZED FOR BOARD MEMBERS OF FEDERAL CREDIT

UNIONS.—Section 111(a) of the Federal Credit Union Act (12 U.S.C. 1761(a)) is 


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amended by adding at the end the following new sentence: ‘‘The bylaws of a Federal 

credit union may limit the number of consecutive terms any person may serve on 

the board of directors of such credit union.’’. 

(c) REIMBURSEMENT FOR LOST WAGES DUE TO SERVICE ON CREDIT UNION BOARD

NOT TREATED AS COMPENSATION.—Section 111(c) of the Federal Credit Union Act 

(12 U.S.C. 1761(c)) is amended by inserting ‘‘, including lost wages,’’ after ‘‘the reimbursement of reasonable expenses’’. 

SEC. 311. PROVIDING THE NATIONAL CREDIT UNION ADMINISTRATION WITH GREATER FLEXIBILITY IN RESPONDING TO MARKET CONDITIONS. 

Section 107(a)(5)(A)(v)(I) of the Federal Credit Union Act (12 U.S.C. 

1757(5)(A)(vi)(I)) (as so designated by section 303 and redesignated by section 

304(2)(B) of this title) is amended by striking ‘‘six-month period and that prevailing 

interest rate levels’’ and inserting ‘‘6-month period or that prevailing interest rate 

levels’’. 

SEC. 312. EXEMPTION FROM PRE-MERGER NOTIFICATION REQUIREMENT OF THE CLAYTON 

ACT. 

Section 7A(c)(7) of the Clayton Act (15 U.S.C. 18a(c)(7)) is amended by inserting 

‘‘section 205(b)(3) of the Federal Credit Union Act (12 U.S.C. 1785(b)(3)),’’ before ‘‘or 

section 3’’. 

SEC. 313. TREATMENT OF CREDIT UNIONS AS DEPOSITORY INSTITUTIONS UNDER SECURITIES LAWS. 

(a) DEFINITION OF BANK UNDER THE SECURITIES EXCHANGE ACT OF 1934.—Section 

3(a)(6) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(6)) (as amended by 

section 201(a)(1) of this Act) is amended—

(1) by striking ‘‘this title, and (D) a receiver’’ and inserting ‘‘this title, (D) an 

insured credit union (as defined in section 101(7) of the Federal Credit Union 

Act) but only for purposes of paragraphs (4) and (5) of this subsection and only 

for activities otherwise authorized by applicable laws to which such credit 

unions are subject, and (E) a receiver’’; and 

(2) in subparagraph (E) (as so redesignated by paragraph (1) of this subsection) by striking ‘‘(A), (B), or (C)’’ and inserting ‘‘(A), (B), (C), or (D)’’. 

(b) DEFINITION OF BANK UNDER THE INVESTMENT ADVISERS ACT OF 1940.—Section 

202(a)(2) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a)(2)) (as amended by section 201(b)(1) of this Act) is amended—

(1) by striking ‘‘this title, and (D) a receiver’’ and inserting ‘‘this title, (D) an 

insured credit union (as defined in section 101(7) of the Federal Credit Union 

Act) but only for activities otherwise authorized by applicable laws to which 

such credit unions are subject, and (E) a receiver’’; and 

(2) in subparagraph (E) (as so redesignated by paragraph (1) of this subsection) by striking ‘‘(A), (B), or (C)’’ and inserting ‘‘(A), (B), (C), or (D)’’. 

(c) DEFINITION OF APPROPRIATE FEDERAL BANKING AGENCY.—Section 210A(c) of 

the Investment Advisers Act of 1940 (15 U.S.C. 80b–10a(c)) is amended by inserting 

‘‘and includes the National Credit Union Administration Board, in the case of an 

insured credit union (as defined in section 101(7) of the Federal Credit Union Act)’’

before the period at the end. 

SEC. 314. CLARIFICATION OF DEFINITION OF NET WORTH UNDER CERTAIN CIRCUMSTANCES 

FOR PURPOSES OF PROMPT CORRECTIVE ACTION. 

Subparagraph (A) of section 216(o)(2) of the Federal Credit Union Act (12 U.S.C. 

1790d(o)(2)(A)) is amended—

(1) by inserting ‘‘the’’ before ‘‘retained earnings balance’’; and 

(2) by inserting ‘‘, together with any amounts that were previously retained 

earnings of any other credit union with which the credit union has combined’’

before the semicolon at the end. 

SEC. 315. AMENDMENTS RELATING TO NONFEDERALLY INSURED CREDIT UNIONS. 

(a) IN GENERAL.—Subsection (a) of section 43 of the Federal Deposit Insurance 

Act (12 U.S.C. 1831t(a)) is amended by adding at the end the following new paragraph: 

‘‘(3) ENFORCEMENT BY APPROPRIATE STATE SUPERVISOR.—Any appropriate 

State supervisor of a private deposit insurer, and any appropriate State supervisor of a depository institution which receives deposits that are insured by a 

private deposit insurer, may examine and enforce compliance with this subsection under the applicable regulatory authority of such supervisor.’’. 

(b) AMENDMENT RELATING TO DISCLOSURES REQUIRED, PERIODIC STATEMENTS AND

ACCOUNT RECORDS.—Section 43(b)(1) of the Federal Deposit Insurance Act (12 

U.S.C. 1831t(b)(1)) is amended by striking ‘‘or similar instrument evidencing a deposit’’ and inserting ‘‘or share certificate’’. 


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(c) AMENDMENTS RELATING TO DISCLOSURES REQUIRED, ADVERTISING, PREMISES.— Section 43(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1831t(b)(2)) is 

amended to read as follows: ‘‘(2) ADVERTISING; PREMISES.— ‘‘(A) IN GENERAL.—Include clearly and conspicuously in all advertising, 

except as provided in subparagraph (B); and at each station or window 

where deposits are normally received, its principal place of business and all 

its branches where it accepts deposits or opens accounts (excluding automated teller machines or point of sale terminals), and on its main Internet 

page, a notice that the institution is not federally insured. ‘‘(B) EXCEPTIONS.—The following need not include a notice that the institution is not federally insured: ‘‘(i) Statements or reports of financial condition of the depository institution that are required to be published or posted by State or Federal law or regulation. ‘‘(ii) Any sign, document, or other item that contains the name of the 

depository institution, its logo, or its contact information, but only if the 

sign, document, or item does not include any information about the institution’s products or services or information otherwise promoting the 

institution. ‘‘(iii) Small utilitarian items that do not mention deposit products or 

insurance if inclusion of the notice would be impractical.’’. 

(d) AMENDMENTS RELATING TO ACKNOWLEDGMENT OF DISCLOSURE.—Section 

43(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1831t(b)(3)) is amended to 

read as follows: 

‘‘(3) ACKNOWLEDGMENT OF DISCLOSURE.—

‘‘(A) NEW DEPOSITORS OBTAINED OTHER THAN THROUGH A CONVERSION OR

MERGER.—With respect to any depositor who was not a depositor at the depository institution before the effective date of the Financial Services Relief 

Act of 2005, and who is not a depositor as described in subparagraph (B), 

receive any deposit for the account of such depositor only if the depositor 

has signed a written acknowledgement that—

‘‘(i) the institution is not federally insured; and 

‘‘(ii) if the institution fails, the Federal Government does not guarantee that the depositor will get back the depositor’s money. 

‘‘(B) NEW DEPOSITORS OBTAINED THROUGH A CONVERSION OR MERGER.—

With respect to a depositor at a federally insured depository institution that 

converts to, or merges into, a depository institution lacking federal insurance after the effective date of the Financial Services Regulatory Relief Act 

of 2005, receive any deposit for the account of such depositor only if—

‘‘(i) the depositor has signed a written acknowledgement described in 

subparagraph (A); or 

‘‘(ii) the institution makes an attempt, as described in subparagraph 

(D) and sent by mail no later than 45 days after the effective date of 

the conversion or merger, to obtain the acknowledgment. 

‘‘(C) CURRENT DEPOSITORS.—Receive any deposit after the effective date 

of the Financial Services Regulatory Relief Act of 2005 for the account of 

any depositor who was a depositor on that date only if—

‘‘(i) the depositor has signed a written acknowledgement described in 

subparagraph (A); or 

‘‘(ii) the institution makes an attempt, as described in subparagraph 

(D) and sent by mail no later than 45 days after the effective date of 

the Financial Services Regulatory Relief Act of 2005, to obtain the acknowledgment. 

‘‘(D) ALTERNATIVE PROVISION OF NOTICE TO CURRENT DEPOSITORS AND

NEW DEPOSITORS OBTAINED THROUGH A CONVERSION OR MERGER.—

‘‘(i) IN GENERAL.—Transmit to each depositor who has not signed a 

written acknowledgement described in subparagraph (A)—

‘‘(I) a conspicuous card containing the information described in 

clauses (i) and (ii) of subparagraph (A), and a line for the signature 

of the depositor; and 

‘‘(II) accompanying materials requesting the depositor to sign the 

card, and return the signed card to the institution.’’. 

(e) REPEAL OF PROVISION PROHIBITING NONDEPOSITORY INSTITUTIONS FROM ACCEPTING DEPOSITS.—Section 43 of the Federal Deposit Insurance Act (12 U.S.C. 

1831t) is amended—

(1) by striking subsection (e); and 

(2) by redesignating subsections (f) and (g) as subsections (e) and (f), respectively. 


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(f) REPEAL OF PROVISION CONCERNING NONDEPOSITORY INSTITUTIONS

MASQUERADING AS DEPOSITORY INSTITUTIONS AND CLARIFICATION OF DEPOSITORY

INSTITUTIONS COVERED BY THE STATUTE.—Subsection (e)(2) (as so redesignated by 

subsection (e) of this section) of section 43 of the Federal Deposit Insurance Act (12 

U.S.C. 1831t) is amended to read as follows: ‘‘(2) DEPOSITORY INSTITUTION.—The term ‘depository institution’— ‘‘(A) includes any entity described in section 19(b)(1)(A)(iv) of the Federal 

Reserve Act; and ‘‘(B) does not include any national bank, State member bank, or Federal 

branch.’’. (g) REPEAL OF FTC AUTHORITY TO ENFORCE INDEPENDENT AUDIT REQUIREMENT; 

CONCURRENT STATE ENFORCEMENT.—Subsection (f) (as so redesignated by subsection (e) of this section) of section 43 of the Federal Deposit Insurance Act (12 

U.S.C. 1831t) is amended to read as follows: ‘‘(f) ENFORCEMENT.— ‘‘(1) LIMITED FTC ENFORCEMENT AUTHORITY.—Compliance with the requirements of subsections (b) and (c), and any regulation prescribed or order issued 

under any such subsection, shall be enforced under the Federal Trade Commission Act by the Federal Trade Commission. ‘‘(2) BROAD STATE ENFORCEMENT AUTHORITY.— ‘‘(A) IN GENERAL.—Subject to subparagraph (C), an appropriate State supervisor of a depository institution lacking Federal deposit insurance may 

examine and enforce compliance with the requirements of this section, and 

any regulation prescribed under this section. 

‘‘(B) STATE POWERS.—For purposes of bringing any action to enforce compliance with this section, no provision of this section shall be construed as 

preventing an appropriate State supervisor of a depository institution lacking Federal deposit insurance from exercising any powers conferred on such 

official by the laws of such State. 

‘‘(C) LIMITATION ON STATE ACTION WHILE FEDERAL ACTION PENDING.—If 

the Federal Trade Commission has instituted an enforcement action for a 

violation of this section, no appropriate State supervisor may, during the 

pendency of such action, bring an action under this section against any defendant named in the complaint of the Commission for any violation of this 

section that is alleged in that complaint.’’. 

TITLE IV—DEPOSITORY INSTITUTION 

PROVISIONS 

SEC. 401. EASING RESTRICTIONS ON INTERSTATE BRANCHING AND MERGERS. 

(a) DE NOVO INTERSTATE BRANCHES OF NATIONAL BANKS.—

(1) IN GENERAL.—Section 5155(g)(1) of the Revised Statutes of the United 

States (12 U.S.C. 36(g)(1)) is amended by striking ‘‘maintain a branch if—’’ and 

all that follows through the end of subparagraph (B) and inserting ‘‘maintain 

a branch.’’. 

(2) CLERICAL AMENDMENT.—The heading for subsection (g) of section 5155 of 

the Revised Statutes of the United States is amended by striking ‘‘STATE ‘OPT- IN’ ELECTION TO PERMIT’’. 

(b) DE NOVO INTERSTATE BRANCHES OF STATE NONMEMBER BANKS.—

(1) IN GENERAL.—Section 18(d)(4)(A) of the Federal Deposit Insurance Act (12 

U.S.C. 1828(d)(4)(A)) is amended by striking ‘‘maintain a branch if—’’ and all 

that follows through the end of clause (ii) and inserting ‘‘maintain a branch.’’. 

(2) INTERSTATE BRANCHING BY SUBSIDIARIES OF COMMERCIAL FIRMS PROHIBITED.—Section 18(d)(3)) of the Federal Deposit Insurance Act (12 U.S.C. 

1828(d)(3)) is amended by adding at the end the following new subparagraph: 

‘‘(C) INTERSTATE BRANCHING BY SUBSIDIARIES OF COMMERCIAL FIRMS PROHIBITED.—

‘‘(i) IN GENERAL.—If the appropriate State bank supervisor of the 

home State of any industrial loan company, industrial bank, or other 

institution described in section 2(c)(2)(H) of the Bank Holding Company 

Act of 1956, or the appropriate State bank supervisor of any host State 

with respect to such company, bank, or institution, determines that 

such company, bank, or institution is controlled, directly or indirectly, 

by a commercial firm, such company, bank, or institution may not acquire, establish, or operate a branch in such host State. 

‘‘(ii) COMMERCIAL FIRM DEFINED.—For purposes of this subsection, the 

term ‘commercial firm’ means any entity at least 15 percent of the anVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00016 Fmt 6659 Sfmt 6621 E:\HR\OC\HR356P1.XXX HR356P1

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nual gross revenues of which on a consolidated basis, including all affiliates of the entity, were derived from engaging, on an on-going basis, 

in activities that are not financial in nature or incidental to a financial 

activity during at least 3 of the prior 4 calendar quarters. ‘‘(iii) GRANDFATHERED INSTITUTIONS.—Clause (i) shall not apply with 

respect to any industrial loan company, industrial bank, or other institution described in section 2(c)(2)(H) of the Bank Holding Company Act 

of 1956—

‘‘(I) which became an insured depository institution before October 1, 2003 or pursuant to an application for deposit insurance 

which was approved by the Corporation before such date; and ‘‘(II) with respect to which there is no change in control, directly 

or indirectly, of the company, bank, or institution after September 

30, 2003, that requires an application under subsection (c), section 

7(j), section 3 of the Bank Holding Company Act of 1956, or section 

10 of the Home Owners’ Loan Act. ‘‘(iv) TRANSITION PROVISION.—Any divestiture required under this 

subparagraph of a branch in a host State shall be completed as quickly 

as is reasonably possible. ‘‘(v) CORPORATE REORGANIZATIONS PERMITTED.—The acquisition of direct or indirect control of the company, bank, or institution referred to 

in clause (iii)(II) shall not be treated as a ‘change in control’ for purposes of such clause if the company acquiring control is itself directly 

or indirectly controlled by a company that was an affiliate of such company, bank, or institution on the date referred to in clause (iii)(II), and 

remained an affiliate at all times after such date.’’. 

(3) TECHNICAL AND CONFORMING AMENDMENTS.—Section 18(d)(4) of the Federal Deposit Insurance Act (12 U.S.C. 1828(d)(4)) is amended—

(A) in subparagraph (A) by striking ‘‘Subject to subparagraph (B)’’ and inserting ‘‘Subject to subparagraph (B) and paragraph (3)(C)’’; and 

(B) in subparagraphs (D) and (E), by striking ‘‘The term’’ and inserting 

‘‘For purposes of this subsection, the term’’. 

(4) CLERICAL AMENDMENT.—The heading for paragraph (4) of section 18(d) of 

the Federal Deposit Insurance Act is amended by striking ‘‘STATE ‘OPT-IN’ ELECTION TO PERMIT INTERSTATE’’ and inserting ‘‘INTERSTATE’’. 

(c) DE NOVO INTERSTATE BRANCHES OF STATE MEMBER BANKS.—The 3rd undesignated paragraph of section 9 of the Federal Reserve Act (12 U.S.C. 321) is amended 

by adding at the end the following new sentences: ‘‘A State member bank may establish and operate a de novo branch in a host State (as such terms are defined 

in section 18(d) of the Federal Deposit Insurance Act) on the same terms and conditions and subject to the same limitations and restrictions as are applicable to the 

establishment of a de novo branch of a national bank in a host State under section 

5155(g) of the Revised Statutes of the United States or are applicable to an insured 

State nonmember bank under section 18(d)(3) of the Federal Deposit Insurance Act’’. 

Such section 5155(g) shall be applied for purposes of the preceding sentence by substituting ‘Board of Governors of the Federal Reserve System’ for ‘Comptroller of the 

Currency’ and ‘State member bank’ for ‘national bank’.’’. 

(d) INTERSTATE MERGER OF BANKS.—

(1) MERGER OF INSURED BANK WITH ANOTHER DEPOSITORY INSTITUTION OR

TRUST COMPANY.—Section 44(a)(1) of the Federal Deposit Insurance Act (12 

U.S.C. 1831u(a)(1)) is amended—

(A) by striking ‘‘Beginning on June 1, 1997, the’’ and inserting ‘‘The’’; and 

(B) by striking ‘‘insured banks with different home States’’ and inserting 

‘‘an insured bank and another insured depository institution or trust company with a different home State than the resulting insured bank’’. 

(2) NATIONAL BANK TRUST COMPANY MERGER WITH OTHER TRUST COMPANY.—

Subsection (b) of section 4 of the National Bank Consolidation and Merger Act 

(12 U.S.C. 215a–1(b)) is amended to read as follows: 

‘‘(b) MERGER OF NATIONAL BANK TRUST COMPANY WITH ANOTHER TRUST COMPANY.—A national bank that is a trust company may engage in a consolidation or 

merger under this Act with any trust company with a different home State, under 

the same terms and conditions that would apply if the trust companies were located 

within the same State.’’. 

(e) INTERSTATE FIDUCIARY ACTIVITY.—Section 18(d) of the Federal Deposit Insurance Act (12 U.S.C. 1828(d)) is amended by adding at the end the following new 

paragraph: 

‘‘(5) INTERSTATE FIDUCIARY ACTIVITY.—

‘‘(A) AUTHORITY OF STATE BANK SUPERVISOR.—The State bank supervisor 

of a State bank may approve an application by the State bank, when not 


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in contravention of home State or host State law, to act as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary 

capacity in a host State in which State banks or other corporations which 

come into competition with national banks are permitted to act under the 

laws of such host State. 

‘‘(B) NONCONTRAVENTION OF HOST STATE LAW.—Whenever the laws of a 

host State authorize or permit the exercise of any or all of the foregoing 

powers by State banks or other corporations which compete with national 

banks, the granting to and the exercise of such powers by a State bank as 

provided in this paragraph shall not be deemed to be in contravention of 

host State law within the meaning of this paragraph. 

‘‘(C) STATE BANK INCLUDES TRUST COMPANIES.—For purposes of this paragraph, the term ‘State bank’ includes any State-chartered trust company 

(as defined in section 44(g)). 

‘‘(D) OTHER DEFINITIONS.—For purposes of this paragraph, the term 

‘home State’ and ‘host State’ have the meanings given such terms in section 

44.’’. 

(f) TECHNICAL AND CONFORMING AMENDMENTS.—

(1) Section 44 of the Federal Deposit Insurance Act (12 U.S.C. 1831u) is 

amended—

(A) in subsection (a)—

(i) by striking paragraph (4) and inserting the following new paragraph: 

‘‘(4) TREATMENT OF BRANCHES IN CONNECTION WITH CERTAIN INTERSTATE

MERGER TRANSACTIONS.—In the case of an interstate merger transaction which 

involves the acquisition of a branch of an insured depository institution or trust 

company without the acquisition of the insured depository institution or trust 

company, the branch shall be treated, for purposes of this section, as an insured 

depository institution or trust company the home State of which is the State 

in which the branch is located.’’; and 

(ii) by striking paragraphs (5) and (6) and inserting the following new 

paragraph: 

‘‘(5) APPLICABILITY TO INDUSTRIAL LOAN COMPANIES.—No provision of this section shall be construed as authorizing the approval of any transaction involving 

a industrial loan company, industrial bank, or other institution described in section 2(c)(2)(H) of the Bank Holding Company Act of 1956, or the acquisition, establishment, or operation of a branch by any such company, bank, or institution, that is not allowed under section 18(d)(3).’’. 

(B) in subsection (b)—

(i) by striking ‘‘bank’’ each place such term appears in paragraph 

(2)(B)(i) and inserting ‘‘insured depository institution’’; 

(ii) by striking ‘‘banks’’ where such term appears in paragraph (2)(E) 

and inserting ‘‘insured depository institutions or trust companies’’; 

(iii) by striking ‘‘bank affiliate’’ each place such term appears in that 

portion of paragraph (3) that precedes subparagraph (A) and inserting 

‘‘insured depository institution affiliate’’; 

(iv) by striking ‘‘any bank’’ where such term appears in paragraph 

(3)(B) and inserting ‘‘any insured depository institution’’; 

(v) by striking ‘‘bank’’ where such term appears in paragraph (4)(A) 

and inserting ‘‘insured depository institution and trust company’’; and 

(vi) by striking ‘‘all banks’’ where such term appears in paragraph (5) 

and inserting ‘‘all insured depository institutions and trust companies’’; 

(C) in subsection (d)(1), by striking ‘‘any bank’’ and inserting ‘‘any insured 

depository institution or trust company’’; 

(D) in subsection (e)—

(i) by striking ‘‘1 or more banks’’ and inserting ‘‘1 or more insured 

depository institutions’’; and 

(ii) by striking ‘‘paragraph (2), (4), or (5)’’ and inserting ‘‘paragraph 

(2)’’; 

(E) by striking clauses (i) and (ii) of subsection (g)(4)(A) and inserting the 

following new clauses: 

‘‘(i) with respect to a national bank or Federal savings association, 

the State in which the main office of the bank or savings association 

is located; and 

‘‘(ii) with respect to a State bank, State savings association, or Statechartered trust company, the State by which the bank, savings association, or trust company is chartered; and’’; 


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(F) by striking paragraph (5) of subsection (g) and inserting the following 

new paragraph: 

‘‘(5) HOST STATE.—The term ‘host State’ means—

‘‘(A) with respect to a bank, a State, other than the home State of the 

bank, in which the bank maintains, or seeks to establish and maintain, a 

branch; and 

‘‘(B) with respect to a trust company and solely for purposes of section 

18(d)(5), a State, other than the home State of the trust company, in which 

the trust company acts, or seeks to act, in 1 or more fiduciary capacities.’’; 

(G) in subsection (g)(10), by striking ‘‘section 18(c)(2)’’ and inserting 

‘‘paragraph (1) or (2) of section 18(c), as appropriate,’’; and 

(H) in subsection (g), by adding at the end the following new paragraph: 

‘‘(12) TRUST COMPANY.—The term ‘trust company’ means—

‘‘(A) any national bank; 

‘‘(B) any savings association; and 

‘‘(C) any bank, banking association, trust company, savings bank, or other 

banking institution which is incorporated under the laws of any State, 

that is authorized to act in 1 or more fiduciary capacities but is not engaged 

in the business of receiving deposits other than trust funds (as defined in section 3(p)).’’. 

(2) Section 3(d) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(d)) 

is amended—

(A) in paragraph (1)—

(i) by striking subparagraphs (B) and (C); and 

(ii) by redesignating subparagraph (D) as subparagraph (B); and 

(B) in paragraph (5), by striking ‘‘subparagraph (B) or (D)’’ and inserting 

‘‘subparagraph (B)’’. 

(3) Subsection (c) of section 4 of the National Bank Consolidation and Merger 

Act (12 U.S.C. 215a–1(c)) is amended to read as follows: 

‘‘(c) DEFINITIONS.—For purposes of this section, the terms ‘home State’, ‘out-ofState bank’, and ‘trust company’ each have the same meaning as in section 44(g) 

of the Federal Deposit Insurance Act.’’. 

(g) CLERICAL AMENDMENTS.—

(1) The heading for section 44(b)(2)(E) of the Federal Deposit Insurance Act 

(12 U.S.C. 1831u(b)(2)(E)) is amended by striking ‘‘BANKS’’ and inserting ‘‘INSURED DEPOSITORY INSTITUTIONS AND TRUST COMPANIES’’. 

(2) The heading for section 44(e) of the Federal Deposit Insurance Act (12 

U.S.C. 1831u(e)) is amended by striking ‘‘BANKS’’ and inserting ‘‘INSURED DEPOSITORY INSTITUTIONS’’. 

SEC. 402. STATUTE OF LIMITATIONS FOR JUDICIAL REVIEW OF APPOINTMENT OF A RECEIVER FOR DEPOSITORY INSTITUTIONS. 

(a) NATIONAL BANKS.—Section 2 of the National Bank Receivership Act (12 U.S.C. 

191) is amended—

(1) by striking ‘‘SECTION 2. The Comptroller of the Currency’’ and inserting 

the following: 

‘‘SEC. 2. APPOINTMENT OF RECEIVER FOR A NATIONAL BANK. 

‘‘(a) IN GENERAL.—The Comptroller of the Currency’’; and 

(2) by adding at the end the following new subsection: 

‘‘(b) JUDICIAL REVIEW.—If the Comptroller of the Currency appoints a receiver 

under subsection (a), the national bank may, within 30 days thereafter, bring an 

action in the United States district court for the judicial district in which the home 

office of such bank is located, or in the United States District Court for the District 

of Columbia, for an order requiring the Comptroller of the Currency to remove the 

receiver, and the court shall, upon the merits, dismiss such action or direct the 

Comptroller of the Currency to remove the receiver.’’. 

(b) INSURED DEPOSITORY INSTITUTIONS.—Section 11(c)(7) of the Federal Deposit 

Insurance Act (12 U.S.C. 1821(c)(7)) is amended to read as follows: 

‘‘(7) JUDICIAL REVIEW.—If the Corporation is appointed (including the appointment of the Corporation as receiver by the Board of Directors) as conservator 

or receiver of a depository institution under paragraph (4), (9), or (10), the depository institution may, within 30 days thereafter, bring an action in the 

United States district court for the judicial district in which the home office of 

such depository institution is located, or in the United States District Court for 

the District of Columbia, for an order requiring the Corporation to be removed 

as the conservator or receiver (regardless of how such appointment was made), 

and the court shall, upon the merits, dismiss such action or direct the Corporation to be removed as the conservator or receiver.’’. 


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(c) EXPANSION OF PERIOD FOR CHALLENGING THE APPOINTMENT OF A LIQUIDATING

AGENT.—Subparagraph (B) of section 207(a)(1) of the Federal Credit Union Act (12 

U.S.C. 1787(a)(1)) is amended by striking ‘‘10 days’’ and inserting ‘‘30 days’’. 

(d) EFFECTIVE DATE.—The amendments made by subsections (a), (b), and (c) shall 

apply with respect to conservators, receivers, or liquidating agents appointed on or 

after the date of the enactment of this Act. 

SEC. 403. REPORTING REQUIREMENTS RELATING TO INSIDER LENDING. 

(a) REPORTING REQUIREMENTS REGARDING LOANS TO EXECUTIVE OFFICERS OF

MEMBER BANKS.—Section 22(g) of the Federal Reserve Act (12 U.S.C. 375a) is 

amended—

(1) by striking paragraphs (6) and (9); and 

(2) by redesignating paragraphs (7), (8), and (10) as paragraphs (6), (7), and 

(8), respectively. 

(b) REPORTING REQUIREMENTS REGARDING LOANS FROM CORRESPONDENT BANKS

TO EXECUTIVE OFFICERS AND SHAREHOLDERS OF INSURED BANKS.—Section 106(b)(2) 

of the Bank Holding Company Act Amendments of 1970 (12 U.S.C. 1972(2)) is 

amended—

(1) by striking subparagraph (G); and 

(2) by redesignating subparagraphs (H) and (I) as subparagraphs (G) and (H), 

respectively. 

SEC. 404. AMENDMENT TO PROVIDE AN INFLATION ADJUSTMENT FOR THE SMALL DEPOSITORY INSTITUTION EXCEPTION UNDER THE DEPOSITORY INSTITUTION MANAGEMENT INTERLOCKS ACT. 

Section 203(1) of the Depository Institution Management Interlocks Act (12 U.S.C. 

3202(1)) is amended by striking ‘‘$20,000,000’’ and inserting ‘‘$100,000,000’’. 

SEC. 405. ENHANCING THE SAFETY AND SOUNDNESS OF INSURED DEPOSITORY INSTITUTIONS. 

(a) CLARIFICATION RELATING TO THE ENFORCEABILITY OF AGREEMENTS AND CONDITIONS.—The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by 

adding at the end the following new section: 

‘‘SEC. 49. ENFORCEMENT OF AGREEMENTS. 

‘‘(a) IN GENERAL.—Notwithstanding clause (i) or (ii) of section 8(b)(6)(A) or section 

38(e)(2)(E)(i), an appropriate Federal banking agency may enforce, under section 8, 

the terms of—

‘‘(1) any condition imposed in writing by the agency on a depository institution or an institution-affiliated party (including a bank holding company) in connection with any action on any application, notice, or other request concerning 

a depository institution; or 

‘‘(2) any written agreement entered into between the agency and an institution-affiliated party (including a bank holding company). 

‘‘(b) RECEIVERSHIPS AND CONSERVATORSHIPS.—After the appointment of the Corporation as the receiver or conservator for any insured depository institution, the 

Corporation may enforce any condition or agreement described in paragraph (1) or 

(2) of subsection (a) involving such institution or any institution-affiliated party (including a bank holding company), through an action brought in an appropriate 

United States district court.’’. 

(b) PROTECTION OF CAPITAL OF INSURED DEPOSITORY INSTITUTIONS.—Paragraph 

(1) of section 18(u) of the Federal Deposit Insurance Act (12 U.S.C. 1828(u)) is 

amended by striking subparagraph (B) and by redesignating subparagraph (C) as 

subparagraph (B). 

SEC. 406. INVESTMENTS BY INSURED SAVINGS ASSOCIATIONS IN BANK SERVICE COMPANIES 

AUTHORIZED. 

(a) IN GENERAL.—Sections 2 and 3 of the Bank Service Company Act (12 U.S.C. 

1862, 1863) are each amended by striking ‘‘insured bank’’ each place such term appears and inserting ‘‘insured depository institution’’. 

(b) TECHNICAL AND CONFORMING AMENDMENTS.—

(1) Section 1(b)(4) of the Bank Service Company Act (12 U.S.C. 1861(b)(4)) is 

amended—

(A) by inserting ‘‘, except when such term appears in connection with the 

term ‘insured depository institution’,’’ after ‘‘means’’; and 

(B) by striking ‘‘Federal Home Loan Bank Board’’ and inserting ‘‘Director 

of the Office of Thrift Supervision’’. 

(2) Section 1(b) of the Bank Service Company Act (12 U.S.C. 1861(b)) is 

amended—

(A) by striking paragraph (5) and inserting the following new paragraph: 


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‘‘(5) INSURED DEPOSITORY INSTITUTION.—The term ‘insured depository institution’ has the meaning given the term in section 3(c) of the Federal Deposit Insurance Act;’’; 

(B) by striking ‘‘and’’ at the end of paragraph (7); 

(C) by striking the period at the end of paragraph (8) and inserting ‘‘; 

and’’; and 

(D) by adding at the end the following new paragraph: 

‘‘(9) the terms ‘State depository institution’, ‘Federal depository institution’, 

‘State savings association’ and ‘Federal savings association’ have the meanings 

given the terms in section 3 of the Federal Deposit Insurance Act.’’. 

(3) The 1st sentence of section 5(c)(4)(B) of the Home Owners’ Loan Act (12 

U.S.C. 1464(c)(4)(B)) is amended by striking ‘‘by savings associations of such 

State and by Federal associations’’ and inserting ‘‘by State and Federal depository institutions’’. 

(4) Subparagraph (A)(ii) and subparagraph (B)(ii) of section 1(b)(2) of the 

Bank Service Company Act (12 U.S.C. 1861(b)(2)) are each amended by striking 

‘‘insured banks’’ and inserting ‘‘insured depository institutions’’. 

(5) Section 1(b)(8) of the Bank Service Company Act (12 U.S.C. 1861(b)(8)) is 

further amended—

(A) by striking ‘‘insured bank’’ and inserting ‘‘insured depository institution’’; 

(B) by striking ‘‘insured banks’’ each place such term appears and inserting ‘‘insured depository institutions’’; and 

(C) by striking ‘‘the bank’s’’ and inserting ‘‘the depository institution’s’’. 

(6) Section 2 of the Bank Service Company Act (12 U.S.C. 1862) is amended 

by inserting ‘‘or savings associations, other than the limitation on the amount 

of investment by a Federal savings association contained in section 5(c)(4)(B) of 

the Home Owners’ Loan Act’’ after ‘‘relating to banks’’. 

(7) Section 4(b) of the Bank Service Company Act (12 U.S.C. 1864(b)) is 

amended by inserting ‘‘as permissible under subsection (c), (d), or (e) or’’ after 

‘‘Except’’. 

(8) Section 4(c) of the Bank Service Company Act (12 U.S.C. 1864(c)) is 

amended by inserting ‘‘or State savings association’’ after ‘‘State bank’’ each 

place such term appears. 

(9) Section 4(d) of the Bank Service Company Act (12 U.S.C. 1864(d)) is 

amended by inserting ‘‘or Federal savings association’’ after ‘‘national bank’’

each place such term appears. 

(10) Section 4(e) of the Bank Service Company Act (12 U.S.C. 1864(e)) is 

amended to read as follows: 

‘‘(e) A bank service company may perform—

‘‘(1) only those services that each depository institution shareholder or member is otherwise authorized to perform under any applicable Federal or State 

law; and 

‘‘(2) such services only at locations in a State in which each such shareholder 

or member is authorized to perform such services.’’. 

(11) Section 4(f) of the Bank Service Company Act (12 U.S.C. 1864(f)) is 

amended by inserting ‘‘or savings associations’’ after ‘‘location of banks’’. 

(12) Section 5 of the Bank Service Company Act (12 U.S.C. 1865) is amended—

(A) in subsection (a)—

(i) by striking ‘‘insured bank’’ and inserting ‘‘insured depository institution’’; and 

(ii) by striking ‘‘bank’s’’ and inserting ‘‘institution’s’’; 

(B) in subsection (b)—

(i) by striking ‘‘insured bank’’ and inserting ‘‘insured depository institution’’; 

(ii) by inserting ‘‘authorized only’’ after ‘‘performs any service’’; and 

(iii) by inserting ‘‘authorized only’’ after ‘‘perform any activity’’; and 

(C) in subsection (c)—

(i) by striking ‘‘the bank or banks’’ and inserting ‘‘any depository institution’’; and 

(ii) by striking ‘‘capability of the bank’’ and inserting ‘‘capability of 

the depository institution’’. 

(13) Section 7 of the Bank Service Company Act (12 U.S.C. 1867) is amended—

(A) in subsection (b), by striking ‘‘insured bank’’ and inserting ‘‘insured 

depository institution’’; and 

(B) in subsection (c)—


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22 

(i) by striking ‘‘a bank’’ each place such term appears and inserting ‘‘a depository institution’’; and 

(ii) by striking ‘‘the bank’’ each place such term appears and inserting ‘‘the depository institution’’. 

SEC. 407. CROSS GUARANTEE AUTHORITY. 

Subparagraph (A) of section 5(e)(9) of the Federal Deposit Insurance Act (12 

U.S.C. 1815(e)(9)(A)) is amended to read as follows: ‘‘(A) such institutions are controlled by the same company; or’’. 

SEC. 408. GOLDEN PARACHUTE AUTHORITY AND NONBANK HOLDING COMPANIES. 

Subsection (k) of section 18 of the Federal Deposit Insurance Act (12 U.S.C. 

1828(k)) is amended— (1) in paragraph (2)(A), by striking ‘‘or depository institution holding company’’ and inserting ‘‘or covered company’’; 

(2) by striking subparagraph (B) of paragraph (2) and inserting the following 

new subparagraph: ‘‘(B) Whether there is a reasonable basis to believe that the institutionaffiliated party is substantially responsible for— ‘‘(i) the insolvency of the depository institution or covered company; 

‘‘(ii) the appointment of a conservator or receiver for the depository 

institution; or ‘‘(iii) the depository institution’s troubled condition (as defined in the 

regulations prescribed pursuant to section 32(f)).’’; 

(3) in paragraph (2)(F), by striking ‘‘depository institution holding company’’ and inserting ‘‘covered company,’’; 

(4) in paragraph (3) in the matter preceding subparagraph (A), by striking ‘‘depository institution holding company’’ and inserting ‘‘covered company’’; 

(5) in paragraph (3)(A), by striking ‘‘holding company’’ and inserting ‘‘covered 

company’’; 

(6) in paragraph (4)(A)— (A) by striking ‘‘depository institution holding company’’ each place such 

term appears and inserting ‘‘covered company’’; and 

(B) by striking ‘‘holding company’’ each place such term appears (other 

than in connection with the term referred to in subparagraph (A)) and inserting ‘‘covered company’’; 

(7) in paragraph (5)(A), by striking ‘‘depository institution holding company’’ and inserting ‘‘covered company’’; 

(8) in paragraph (5), by adding at the end the following new subparagraph: ‘‘(D) COVERED COMPANY.—The term ‘covered company’ means any depository institution holding company (including any company required to file a 

report under section 4(f)(6) of the Bank Holding Company Act of 1956), or 

any other company that controls an insured depository institution.’’; and 

(9) in paragraph (6)— (A) by striking ‘‘depository institution holding company’’ and inserting ‘‘covered company,’’; and 

(B) by striking ‘‘or holding company’’ and inserting ‘‘or covered company’’. 

SEC. 409. AMENDMENTS RELATING TO CHANGE IN BANK CONTROL. 

Section 7(j) of the Federal Deposit Insurance Act (12 U.S.C. 1817(j)) is amended— (1) in paragraph (1)(D)— (A) by striking ‘‘is needed to investigate’’ and inserting ‘‘is needed— ‘‘(i) to investigate’’; 

(B) by striking ‘‘United States Code.’’ and inserting ‘‘United States Code; or’’; and 

(C) by adding at the end the following new clause: ‘‘(ii) to analyze the safety and soundness of any plans or proposals 

described in paragraph (6)(E) or the future prospects of the institution.’’; and 

(2) in paragraph (7)(C), by striking ‘‘the financial condition of any acquiring 

person’’ and inserting ‘‘either the financial condition of any acquiring person or 

the future prospects of the institution’’. 

SEC. 410. COMMUNITY REINVESTMENT CREDIT FOR ESOPS AND EWOCS. 

Section 804 of the Community Reinvestment Act of 1977 (12 U.S.C. 2903) is 

amended by adding at the end the following new subsection—

‘‘(d) ESTABLISHMENT OF ESOPS AND EWOCS.—

‘‘(1) IN GENERAL.—In assessing and taking into account, under subsection (a), 

the record of a financial institution, the appropriate Federal financial supervisory agency shall consider as a factor activities that support or enable the establishment of employee stock ownership plans or eligible worker-owned coVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00022 Fmt 6659 Sfmt 6621 E:\HR\OC\HR356P1.XXX HR356P1

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operatives, so long as the employer sponsoring the plan or cooperative is at 

least 51 percent owned by employees, including low to moderate income employees. 

‘‘(2) DEFINITIONS.—For purposes of this subsection, the following definitions 

shall apply: 

‘‘(A) EMPLOYEE STOCK OWNERSHIP PLAN.—The term ‘employee stock ownership plan’ has the same meaning as in section 4975(e)(7) of the Internal 

Revenue Code of 1986. 

‘‘(B) ELIGIBLE WORKER-OWNED COOPERATIVE.—The term ‘eligible workerowned cooperative’ has the same meaning as in section 1042(c)(2) of the Internal Revenue Code of 1986.’’. 

SEC. 411. MINORITY FINANCIAL INSTITUTIONS. 

(a) IN GENERAL.—The Federal Deposit Insurance Corporation and the Office of 

Thrift Supervision shall provide such technical assistance to minority financial institutions affected by Hurricane Katrina, Hurricane Rita, and Hurricane Wilma as 

may be appropriate to preserve the present number of minority depository institutions and preserve the minority character in cases involving mergers or acquisitions 

of a minority depository institution consistent with section 308(a) of the Financial 

Institutions Reform, Recovery, and Enforcement Act of 1989. 

(b) MINORITY FINANCIAL INSTITUTION DEFINED.—For purposes of this subsection, 

the term ‘‘minority financial institution’’ has the same meaning as in section 308(b) 

of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. 

TITLE V—DEPOSITORY INSTITUTION 

AFFILIATES PROVISIONS 

SEC. 501. CLARIFICATION OF CROSS MARKETING PROVISION. 

Section 4(n)(5) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(n)(5)) 

is amended—

(1) in subparagraph (B), by striking ‘‘subsection (k)(4)(I)’’ and inserting ‘‘subparagraph (H) or (I) of subsection (k)(4)’’; and 

(2) by adding at the end the following new subparagraph: 

‘‘(C) THRESHOLD OF CONTROL.—Subparagraph (A) shall not apply with respect to a company described or referred to in clause (i) or (ii) of such subparagraph if the financial holding company does not own or control 25 percent or more of the total equity or any class of voting securities of such company.’’. 

SEC. 502. AMENDMENT TO PROVIDE THE FEDERAL RESERVE BOARD WITH DISCRETION CONCERNING THE IMPUTATION OF CONTROL OF SHARES OF A COMPANY BY TRUSTEES. 

Section 2(g)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(g)(2)) 

is amended by inserting ‘‘, unless the Board determines that such treatment is not 

appropriate in light of the facts and circumstances of the case and the purposes of 

this Act’’ before the period at the end. 

SEC. 503. ELIMINATING GEOGRAPHIC LIMITS ON THRIFT SERVICE COMPANIES. 

(a) IN GENERAL.—The 1st sentence of section 5(c)(4)(B) of the Home Owners’ Loan 

Act (12 U.S.C. 1464(c)(4)(B)) (as amended by section 406(b)(3) of this Act) is amended—

(1) by striking ‘‘corporation organized’’ and all that follows through ‘‘is available for purchase’’ and inserting ‘‘company, if the entire capital of the company 

is available for purchase’’; and 

(2) by striking ‘‘having their home offices in such State’’. 

(b) TECHNICAL CORRECTIONS.—

(1) The heading for subparagraph (B) of section 5(c)(4) of the Home Owners’

Loan Act (12 U.S.C. 1464(c)(4)(B)) is amended by striking ‘‘CORPORATIONS’’ and 

inserting ‘‘COMPANIES’’. 

(2) The 2nd sentence of section 5(n)(1) of the Home Owners’ Loan Act (12 

U.S.C. 1464(n)(1)) is amended by striking ‘‘service corporations’’ and inserting 

‘‘service companies’’. 

(3) Section 5(q)(1) of the Home Owners’ Loan Act (12 U.S.C. 1464(q)(1)) is 

amended by striking ‘‘service corporation’’ each place such term appears in subparagraphs (A), (B), and (C) and inserting ‘‘service company’’. 

(4) Section 10(m)(4)(C)(iii)(II) of the Home Owners’ Loan Act (12 U.S.C. 

1467a(m)(4)(C)(iii)(II)) is amended by striking ‘‘service corporation’’ each place 

such term appears and inserting ‘‘service company’’. 


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SEC. 504. CLARIFICATION OF SCOPE OF APPLICABLE RATE PROVISION. 

Section 44(f) of the Federal Deposit Insurance Act (12 U.S.C. 1831u(f)) is amended 

by adding at the end the following new paragraphs: 

‘‘(3) OTHER LENDERS.—In the case of any other lender doing business in the 

State described in paragraph (1), the maximum interest rate or amount of interest, discount points, finance charges, or other similar charges that may be 

charged, taken, received, or reserved from time to time in any loan, discount, 

or credit sale made, or upon any note, bill of exchange, financing transaction, 

or other evidence of debt issued to or acquired by any other lender shall be 

equal to not more than the greater of the rates described in subparagraph (A) 

or (B) of paragraph (1). 

‘‘(4) OTHER LENDER DEFINED.—For purposes of paragraph (3), the term ‘other 

lender’ means any person engaged in the business of selling or financing the 

sale of personal property (and any services incidental to the sale of personal 

property) in such State, except that, with regard to any person or entity described in such paragraph, such term does not include—

‘‘(A) an insured depository institution; or 

‘‘(B) any person or entity engaged in the business of providing a shortterm cash advance to any consumer in exchange for—

‘‘(i) a consumer’s personal check or share draft, in the amount of the 

advance plus a fee, where presentment or negotiation of such check or 

share draft is deferred by agreement of the parties until a designated 

future date; or 

‘‘(ii) a consumer authorization to debit the consumer’s transaction account, in the amount of the advance plus a fee, where such account will 

be debited on or after a designated future date.’’. 

SEC. 505. SAVINGS ASSOCIATIONS ACTING AS AGENTS FOR AFFILIATED DEPOSITORY INSTITUTIONS. 

(a) IN GENERAL.—Section 18(r) of the Federal Deposit Insurance Act (12 U.S.C. 

1828(r)) is amended—

(1) in paragraph (1)—

(A) by striking ‘‘bank subsidiary’’ and inserting ‘‘depository institution 

subsidiary’’; and 

(B) by striking ‘‘bank holding company’’ and inserting ‘‘depository institution holding company’’; 

(2) in paragraph (2), by striking ‘‘a bank acting’’ and inserting ‘‘a depository 

institution acting’’; 

(3) in paragraphs (3) and (5), by striking ‘‘or (6)’’ each place such term appears in each such paragraph; and 

(4) by striking paragraph (6). 

(b) CLERICAL AMENDMENT.—The heading for section 18(r)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1828(r)) is amended by striking ‘‘BANK’’ and inserting 

‘‘DEPOSITORY INSTITUTION’’. 

SEC. 506. CREDIT CARD BANK INVESTMENTS FOR THE PUBLIC WELFARE. 

Section 2(c)(2)(F) of the Bank Holding Company Act of 1956 (12 U.S.C. 

1841(c)(2)(F)) is amended—

(1) in clause (i), by striking ‘‘engages only in credit card operations;’’ and inserting ‘‘engages only in—

‘‘(I) credit card operations; and 

‘‘(II) making investments designed primarily to promote the public welfare, including the welfare of low- and moderate-income communities or families (such as by providing housing, services, or 

jobs), in the manner and to the extent permitted for national banks 

under the paragraph designated the ‘Eleventh’ of section 5136 of 

the Revised Statutes of the United States and regulations prescribed under such paragraph, except that the last sentence of such 

paragraph shall be applied for purposes of this subclause by substituting ‘5 percent’ for ‘15 percent’ each place such term appears; 

’’; and 

(2) in clause (v), by inserting ‘‘, other than making or purchasing loans for 

the purposes described in and to the extent permitted in clause (i)(II))’’ before 

the period at the end. 


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TITLE VI—BANKING AGENCY PROVISIONS 

SEC. 601. WAIVER OF EXAMINATION SCHEDULE IN ORDER TO ALLOCATE EXAMINER RESOURCES. 

Section 10(d) of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended— (1) by redesignating paragraphs (5), (6), (7), (8), (9), and (10) as paragraphs 

(6), (7), (8), (9), (10), and (11), respectively; 

(2) by inserting after paragraph (4), the following new paragraph: 

‘‘(5) WAIVER OF SCHEDULE WHEN NECESSARY TO ACHIEVE SAFE AND SOUND AL- LOCATION OF EXAMINER RESOURCES.—Notwithstanding paragraphs (1), (2), (3), 

and (4), an appropriate Federal banking agency may make adjustments in the 

examination cycle for an insured depository institution if necessary to allocate 

available resources of examiners in a manner that provides for the safety and 

soundness of, and the effective examination and supervision of, insured depository institutions.’’; and 

(3) in paragraphs (8) and (9), as so redesignated, by striking ‘‘paragraph (6)’’ and inserting ‘‘paragraph (7)’’. 

SEC. 602. INTERAGENCY DATA SHARING. 

(a) FEDERAL BANKING AGENCIES.—Section 7(a)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1817(a)(2)) is amended by adding at the end the following new 

subparagraph: ‘‘(C) DATA SHARING WITH OTHER AGENCIES AND PERSONS.—In addition to 

reports of examination, reports of condition, and other reports required to 

be regularly provided to the Corporation (with respect to all insured depository institutions, including a depository institution for which the Corporation has been appointed conservator or receiver) or an appropriate State 

bank supervisor (with respect to a State depository institution) under subparagraph (A) or (B), a Federal banking agency may, in the agency’s discretion, furnish any report of examination or other confidential supervisory information concerning any depository institution or other entity examined by 

such agency under authority of any Federal law, to— ‘‘(i) any other Federal or State agency or authority with supervisory 

or regulatory authority over the depository institution or other entity; ‘‘(ii) any officer, director, or receiver of such depository institution or 

entity; and ‘‘(iii) any other person the Federal banking agency determines to be 

appropriate.’’. (b) NATIONAL CREDIT UNION ADMINISTRATION.—Section 202(a) of the Federal 

Credit Union Act (12 U.S.C. 1782(a)) is amended by adding at the end the following 

new paragraph: ‘‘(8) DATA SHARING WITH OTHER AGENCIES AND PERSONS.—In addition to reports of examination, reports of condition, and other reports required to be regularly provided to the Board (with respect to all insured credit unions, including 

a credit union for which the Corporation has been appointed conservator or liquidating agent) or an appropriate State commission, board, or authority having 

supervision of a State-chartered credit union, the Board may, in the Board’s discretion, furnish any report of examination or other confidential supervisory information concerning any credit union or other entity examined by the Board 

under authority of any Federal law, to— ‘‘(A) any other Federal or State agency or authority with supervisory or 

regulatory authority over the credit union or other entity; 

‘‘(B) any officer, director, or receiver of such credit union or entity; and 

‘‘(C) any other institution-affiliated party of such credit union or entity 

the Board determines to be appropriate.’’. 

SEC. 603. PENALTY FOR UNAUTHORIZED PARTICIPATION BY CONVICTED INDIVIDUAL. 

Section 19 of the Federal Deposit Insurance Act (12 U.S.C. 1829) is amended by 

adding at the end the following new subsection: 

‘‘(c) NONINSURED BANKS.—Subsections (a) and (b) shall apply to a noninsured national bank and a noninsured State member bank, and any agency or noninsured 

branch (as such terms are defined in section 1(b) of the International Banking Act 

of 1978) of a foreign bank as if such bank, branch, or agency were an insured depository institution, except such subsections shall be applied for purposes of this subsection by substituting the agency determined under the following paragraphs for 

‘Corporation’ each place such term appears in such subsections: 

‘‘(1) The Comptroller of the Currency, in the case of a noninsured national 

bank or any Federal agency or noninsured Federal branch of a foreign bank. 


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‘‘(2) The Board of Governors of the Federal Reserve System, in the case of a 

noninsured State member bank or any State agency or noninsured State branch 

of a foreign bank.’’. 

SEC. 604. AMENDMENT PERMITTING THE DESTRUCTION OF OLD RECORDS OF A DEPOSITORY 

INSTITUTION BY THE FDIC AFTER THE APPOINTMENT OF THE FDIC AS RECEIVER. 

Section 11(d)(15)(D) of the Federal Deposit Insurance Act (12 U.S.C. 

1821(d)(15)(D)) is amended—

(1) by striking ‘‘RECORDKEEPING REQUIREMENT.—After the end of the 6-year 

period’’ and inserting ‘‘RECORDKEEPING REQUIREMENT.—

‘‘(i) IN GENERAL.—Except as provided in clause (ii), after the end of 

the 6-year period’’; 

(2) by striking ‘‘to be unnecessary’’ and inserting ‘‘are unnecessary and not 

relevant to any pending or reasonably probable future litigation’’; and 

(3) by adding at the end the following new clause: 

‘‘(ii) OLD RECORDS.—In the case of records of an insured depository 

institution which—

‘‘(I) are at least 10 years old, as of the date the Corporation is 

appointed as the receiver of such depository institution; and 

‘‘(II) are unnecessary and not relevant to any pending or reasonably probable future litigation, as provided in clause (i), 

the Corporation may destroy such records in accordance with clause (i) 

any time after such appointment is final without regard to the 6-year 

period of limitation contained in such clause.’’. 

SEC. 605. MODERNIZATION OF RECORDKEEPING REQUIREMENT. 

Subsection (f) of section 10 of the Federal Deposit Insurance Act (12 U.S.C. 

1820(f)) is amended to read as follows: 

‘‘(f) PRESERVATION OF AGENCY RECORDS.—

‘‘(1) IN GENERAL.—A Federal banking agency may cause any and all records, 

papers, or documents kept by the agency or in the possession or custody of the 

agency to be—

‘‘(A) photographed or microphotographed or otherwise reproduced upon 

film; or 

‘‘(B) preserved in any electronic medium or format which is capable of—

‘‘(i) being read or scanned by computer; and 

‘‘(ii) being reproduced from such electronic medium or format by 

printing or any other form of reproduction of electronically stored data. 

‘‘(2) TREATMENT AS ORIGINAL RECORDS.—Any photographs, microphotographs, 

or photographic film or copies thereof described in paragraph (1)(A) or reproduction of electronically stored data described in paragraph (1)(B) shall be deemed 

to be an original record for all purposes, including introduction in evidence in 

all State and Federal courts or administrative agencies and shall be admissible 

to prove any act, transaction, occurrence, or event therein recorded. 

‘‘(3) AUTHORITY OF THE FEDERAL BANKING AGENCIES.—Any photographs, 

microphotographs, or photographic film or copies thereof described in paragraph 

(1)(A) or reproduction of electronically stored data described in paragraph (1)(B) 

shall be preserved in such manner as the Federal banking agency shall prescribe and the original records, papers, or documents may be destroyed or otherwise disposed of as the Federal banking agency may direct.’’. 

SEC. 606. STREAMLINING REPORTS OF CONDITION. 

Section 7(a) of the Federal Deposit Insurance Act (12 U.S.C. 1817(a)) is amended 

by adding the following new paragraph: 

‘‘(11) STREAMLINING REPORTS OF CONDITION.—

‘‘(A) REVIEW OF INFORMATION AND SCHEDULES.—Before the end of the 1- 

year period beginning on the date of the enactment of the Financial Services Regulatory Relief Act of 2005 and before the end of each 5-year period 

thereafter, each Federal banking agency shall, in consultation with the 

other relevant Federal banking agencies, review the information and schedules that are required to be filed by an insured depository institution in a 

report of condition required under paragraph (3). 

‘‘(B) REDUCTION OR ELIMINATION OF INFORMATION FOUND TO BE UNNECESSARY.—After completing the review required by subparagraph (A), a Federal banking agency, in consultation with the other relevant Federal banking agencies, shall reduce or eliminate any requirement to file information 

or schedules under paragraph (3) (other than information or schedules that 

are otherwise required by law) if the agency determines that the continued 

collection of such information or schedules is no longer necessary or appropriate.’’. 


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SEC. 607. EXPANSION OF ELIGIBILITY FOR 18-MONTH EXAMINATION SCHEDULE FOR COMMUNITY BANKS. 

Paragraph (4)(A) of section 10(d) of the Federal Deposit Insurance Act (12 U.S.C. 

1820(d)) is amended by striking ‘‘$250,000,000’’ and inserting ‘‘$1,000,000,000’’. 

SEC. 608. SHORT FORM REPORTS OF CONDITION FOR CERTAIN COMMUNITY BANKS. 

(a) IN GENERAL.—Section 7(a) of the Federal Deposit Insurance Act (12 U.S.C. 

1817(a)) is amended by inserting after paragraph (11) (as added by section 606 of 

this title) the following new paragraph: ‘‘(12) SHORT FORM REPORTS OF CONDITION FOR COMMUNITY BANKS.— ‘‘(A) IN GENERAL.—With respect to reports of condition required under 

paragraph (3) for each calendar quarter, an insured depository institution 

described in subparagraphs (A), (B), (C), and (D) of section 10(d)(4) may 

submit a short form of any such report of condition in 2 nonsequential 

quarters of any calendar year. 

‘‘(B) SHORT FORM DEFINED.—The term ‘short form’, when used in connection with any report of condition required under paragraph (3), means a report of condition in a format established by the appropriate Federal banking agency, after notice and opportunity for comment, that—

‘‘(i) is significantly and materially less burdensome for the insured 

depository institution to prepare than the format of the report of condition required under paragraph (3); and 

‘‘(ii) provides sufficient material information for the appropriate Federal banking agency to assure the maintenance of the safe and sound 

condition of the depository institution and safe and sound practices.’’. 

(b) REGULATIONS.—Any regulation required to carry out the amendment made by 

subsection (a) shall be published in final form before the end of the 6-month period 

beginning on the date of the enactment of this Act. 

SEC. 609. CLARIFICATION OF EXTENT OF SUSPENSION, REMOVAL, AND PROHIBITION AUTHORITY OF FEDERAL BANKING AGENCIES IN CASES OF CERTAIN CRIMES BY INSTITUTION-AFFILIATED PARTIES. 

(a) INSURED DEPOSITORY INSTITUTIONS.—

(1) IN GENERAL.—Section 8(g)(1) of the Federal Deposit Insurance Act (12 

U.S.C. 1818(g)(1)) is amended—

(A) in subparagraph (A)—

(i) by striking ‘‘is charged in any information, indictment, or complaint, with the commission of or participation in’’ and inserting ‘‘is the 

subject of any information, indictment, or complaint, involving the commission of or participation in’’; 

(ii) by striking ‘‘may pose a threat to the interests of the depository 

institution’s depositors or may threaten to impair public confidence in 

the depository institution,’’ and insert ‘‘posed, poses, or may pose a 

threat to the interests of the depositors of, or threatened, threatens, or 

may threaten to impair public confidence in, any relevant depository institution (as defined in subparagraph (E)),’’; and 

(iii) by striking ‘‘affairs of the depository institution’’ and inserting 

‘‘affairs of any depository institution’’; 

(B) in subparagraph (B)(i), by striking ‘‘the depository institution’’ and inserting ‘‘any depository institution that the subject of the notice is affiliated 

with at the time the notice is issued’’; 

(C) in subparagraph (C)(i)—

(i) by striking ‘‘may pose a threat to the interests of the depository 

institution’s depositors or may threaten to impair public confidence in 

the depository institution,’’ and insert ‘‘posed, poses, or may pose a 

threat to the interests of the depositors of, or threatened, threatens, or 

may threaten to impair public confidence in, and relevant depository 

institution (as defined in subparagraph (E)),’’; and 

(ii) by striking ‘‘affairs of the depository institution’’ and inserting 

‘‘affairs of any depository institution’’; 

(D) in subparagraph (C)(ii), by striking ‘‘affairs of the depository institution’’ and inserting ‘‘affairs of any depository institution’’; 

(E) in subparagraph (D)(i), by striking ‘‘the depository institution’’ and inserting ‘‘any depository institution that the subject of the order is affiliated 

with at the time the order is issued’’; and 

(F) by adding at the end the following new subparagraph: 

‘‘(E) RELEVANT DEPOSITORY INSTITUTION.—For purposes of this subsection, the term ‘relevant depository institution’ means any depository institution of which the party is or was an institution-affiliated party at the 

time—


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‘‘(i) the information, indictment or complaint described in subparagraph (A) was issued; or 

‘‘(ii) the notice is issued under subparagraph (A) or the order is 

issued under subparagraph (C)(i).’’. 

(2) CLERICAL AMENDMENT.—The heading for section 8(g) of the Federal Deposit Insurance Act (12 U.S.C. 1818(g)) is amended to read as follows: 

‘‘(g) SUSPENSION, REMOVAL, AND PROHIBITION FROM PARTICIPATION ORDERS IN THE

CASE OF CERTAIN CRIMINAL OFFENSES.—’’. 

(b) INSURED CREDIT UNIONS.—

(1) IN GENERAL.—Section 206(i)(1) of the Federal Credit Union Act (12 U.S.C. 

1786(i)(1)) is amended—

(A) in subparagraph (A), by striking ‘‘the credit union’’ each place such 

term appears and inserting ‘‘any credit union’’; 

(B) in subparagraph (B)(i), by inserting ‘‘of which the subject of the order 

is, or most recently was, an institution-affiliated party’’ before the period at 

the end; 

(C) in subparagraph (C)—

(i) by striking ‘‘the credit union’’ each place such term appears and 

inserting ‘‘any credit union’’; and 

(ii) by striking ‘‘the credit union’s’’ and inserting ‘‘any credit union’s’’; 

(D) in subparagraph (D)(i), by striking ‘‘upon such credit union’’ and inserting ‘‘upon the credit union of which the subject of the order is, or most 

recently was, an institution-affiliated party’’; and 

(E) by adding at the end the following new subparagraph: 

‘‘(E) CONTINUATION OF AUTHORITY.—The Board may issue an order under 

this paragraph with respect to an individual who is an institution-affiliated 

party at a credit union at the time of an offense described in subparagraph 

(A) without regard to—

‘‘(i) whether such individual is an institution-affiliated party at any 

credit union at the time the order is considered or issued by the Board; 

or 

‘‘(ii) whether the credit union at which the individual was an institution-affiliated party at the time of the offense remains in existence at 

the time the order is considered or issued by the Board.’’. 

(2) CLERICAL AMENDMENT.—Section 206(i) of the Federal Credit Union Act (12 

U.S.C. 1786(i)) is amended by striking ‘‘(i)’’ at the beginning and inserting the 

following new subsection heading: 

‘‘(i) SUSPENSION, REMOVAL, AND PROHIBITION FROM PARTICIPATION ORDERS IN THE

CASE OF CERTAIN CRIMINAL OFFENSES.—’’. 

SEC. 610. STREAMLINING DEPOSITORY INSTITUTION MERGER APPLICATION REQUIREMENTS. 

(a) IN GENERAL.—Paragraph (4) of section 18(c) of the Federal Deposit Insurance 

Act (12 U.S.C. 1828(c)) is amended to read as follows: 

‘‘(4) REPORTS ON COMPETITIVE FACTORS.—

‘‘(A) REQUEST FOR REPORT.—In the interests of uniform standards and 

subject to subparagraph (B), the responsible agency shall, before acting on 

any application for approval of a merger transaction—

‘‘(i) request a report on the competitive factors involved from the Attorney General; and 

‘‘(ii) provide a copy of the request to the Corporation (when the Corporation is not the responsible agency). 

‘‘(B) CONCURRENT CONSIDERATION.—The responsible agency shall not be 

required to make a request under subparagraph (A) before acting on an application for approval of a merger transaction if—

‘‘(i) the agency finds that it must act immediately in order to prevent 

the probable failure of a depository institution involved in the transaction; or 

‘‘(ii) the transaction consists of a merger between an insured depository institution and 1 or more affiliates of the depository institution. 

‘‘(C) FURNISHING OF REPORT.—The report requested under subparagraph 

(A) shall be furnished by the Attorney General to the responsible agency—

‘‘(i) not more than 30 calendar days after the date on which the Attorney General received the request; or 

‘‘(ii) not more than 10 calendar days after such date, if the requesting 

agency advises the Attorney General that an emergency exists requiring expeditious action.’’. 

(b) TECHNICAL AND CONFORMING AMENDMENT.—Section 18(c)(6) of the Federal Deposit Insurance Act (12 U.S.C. 1828(c)(6)) is amended—


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(1) in the second sentence by striking ‘‘banks or savings associations involved’’ and inserting the following: ‘‘insured depository institutions involved, or if the 

proposed merger transaction is solely between an insured depository institution 

and 1 or more of affiliates of the depository institution,’’ and 

(2) by striking the penultimate sentence and inserting the following: ‘‘If the 

agency has advised the Attorney General under paragraph (4)(C)(ii) of the existence of an emergency requiring expeditious action and has requested a report 

on the competitive factors within 10 days, the transaction may not be consummated before the fifth calendar day after the date of approval by the agency.’’. 

SEC. 611. INCLUSION OF DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION IN LIST OF 

BANKING AGENCIES REGARDING INSURANCE CUSTOMER PROTECTION REGULATIONS. 

Section 47(g)(2)(B)(i) of the Federal Deposit Insurance Act (12 U.S.C. 

1831x(g)(2)(B)(i)) is amended by inserting ‘‘the Director of the Office of Thrift Supervision,’’ after ‘‘Comptroller of the Currency,’’. 

SEC. 612. PROTECTION OF CONFIDENTIAL INFORMATION RECEIVED BY FEDERAL BANKING 

REGULATORS FROM FOREIGN BANKING SUPERVISORS. 

Section 15 of the International Banking Act of 1978 (12 U.S.C. 3109) is amended 

by adding at the end the following new subsection: ‘‘(c) CONFIDENTIAL INFORMATION RECEIVED FROM FOREIGN SUPERVISORS.— ‘‘(1) IN GENERAL.—Except as provided in paragraph (3), a Federal banking 

agency shall not be compelled to disclose information received from a foreign 

regulatory or supervisory authority if— ‘‘(A) the Federal banking agency determines that the foreign regulatory 

or supervisory authority has, in good faith, determined and represented to 

such Federal banking agency that public disclosure of the information 

would violate the laws applicable to that foreign regulatory or supervisory 

authority; and ‘‘(B) the relevant Federal banking agency obtained such information pursuant to—

‘‘(i) such procedures as the Federal banking agency may establish for 

use in connection with the administration and enforcement of Federal 

banking laws; or ‘‘(ii) a memorandum of understanding or other similar arrangement 

between the Federal banking agency and the foreign regulatory or supervisory authority. ‘‘(2) TREATMENT UNDER TITLE 5, UNITED STATES CODE.—For purposes of section 552 of title 5, United States Code, this subsection shall be treated as a statute described in subsection (b)(3)(B) of such section. ‘‘(3) SAVINGS PROVISION.—No provision of this section shall be construed as— ‘‘(A) authorizing any Federal banking agency to withhold any information 

from any duly authorized committee of the House of Representatives or the 

Senate; or ‘‘(B) preventing any Federal banking agency from complying with an 

order of a court of the United States in an action commenced by the United 

States or such agency. ‘‘(4) FEDERAL BANKING AGENCY DEFINED.—For purposes of this subsection, the 

term ‘Federal banking agency’ means the Board, the Comptroller, the Federal 

Deposit Insurance Corporation, and the Director of the Office of Thrift Supervision.’’. 

SEC. 613. PROHIBITION ON PARTICIPATION BY CONVICTED INDIVIDUAL. 

(a) EXTENSION OF AUTOMATIC PROHIBITION.—Section 19 of the Federal Deposit Insurance Act (12 U.S.C. 1829) is amended by inserting after subsection (c) (as added 

by section 603 of this title) the following new subsections: ‘‘(d) BANK HOLDING COMPANIES.—Subsections (a) and (b) shall apply to any company (other than a foreign bank) that is a bank holding company and any organization organized and operated under section 25A of the Federal Reserve Act or operating under section 25 of the Federal Reserve Act as if such bank holding company 

or organization were an insured depository institution, except such subsections shall 

be applied for purposes of this subsection by substituting ‘Board of Governors of the 

Federal Reserve System’ for ‘Corporation’ each place such term appears in such subsections. 

‘‘(e) SAVINGS AND LOAN HOLDING COMPANIES.—Subsections (a) and (b) shall apply 

to any savings and loan holding company and any subsidiary (other than a savings 

association) of a savings and loan holding company as if such savings and loan holding company or subsidiary were an insured depository institution, except such subsections shall be applied for purposes of this subsection by substituting ‘Director of 


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the Office of Thrift Supervision’ for ‘Corporation’ each place such term appears in 

such subsections.’’. (b) ENHANCED DISCRETION TO REMOVE CONVICTED INDIVIDUALS.—Section 

8(e)(2)(A) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(2)(A)) is amended— (1) by striking ‘‘or’’ at the end of clause (ii); 

(2) by striking the comma at the end of clause (iii) and inserting ‘‘; or’’; and 

(3) by adding at the end the following new clause: ‘‘(iv) an institution-affiliated party of a subsidiary (other than a bank) 

of a bank holding company has been convicted of any criminal offense 

involving dishonesty or a breach of trust, or has agreed to enter into 

a pretrial diversion or similar program in connection with a prosecution 

for such an offense,’’. 

SEC. 614. CLARIFICATION THAT NOTICE AFTER SEPARATION FROM SERVICE MAY BE MADE 

BY AN ORDER. 

(a) IN GENERAL.—Section 8(i)(3) of the Federal Deposit Insurance Act (12 U.S.C. 

1818(i)(3)) is amended by inserting ‘‘or order’’ after ‘‘notice’’ each place such term 

appears. 

(b) TECHNICAL AND CONFORMING AMENDMENT.—The heading for section 8(i)(3) of 

the Federal Deposit Insurance Act (12 U.S.C. 1818(i)(3)) is amended by inserting 

‘‘OR ORDER’’ after ‘‘NOTICE’’. 

SEC. 615. ENFORCEMENT AGAINST MISREPRESENTATIONS REGARDING FDIC DEPOSIT INSURANCE COVERAGE. 

(a) IN GENERAL.—Section 18(a) of the Federal Deposit Insurance Act (12 U.S.C. 

1828(a)) is amended by adding at the end the following new paragraph: 

‘‘(4) FALSE ADVERTISING, MISUSE OF FDIC NAMES, AND MISREPRESENTATION TO

INDICATE INSURED STATUS.—

‘‘(A) PROHIBITION ON FALSE ADVERTISING AND MISUSE OF FDIC NAMES.—

No person may—

‘‘(i) use the terms ‘Federal Deposit’, ‘Federal Deposit Insurance’, ‘Federal Deposit Insurance Corporation’, any combination of such terms, or 

the abbreviation ‘FDIC’ as part of the business name or firm name of 

any person, including any corporation, partnership, business trust, association, or other business entity; or 

‘‘(ii) use such terms or any other sign or symbol as part of an advertisement, solicitation, or other document, 

to represent, suggest or imply that any deposit liability, obligation, certificate or share is insured or guaranteed by the Federal Deposit Insurance 

Corporation, if such deposit liability, obligation, certificate, or share is not 

insured or guaranteed by the Corporation. 

‘‘(B) PROHIBITION ON MISREPRESENTATIONS OF INSURED STATUS.—No person may knowingly misrepresent—

‘‘(i) that any deposit liability, obligation, certificate, or share is federally insured, if such deposit liability, obligation, certificate, or share is 

not insured by the Corporation; or 

‘‘(ii) the extent to which or the manner in which any deposit liability, 

obligation, certificate, or share is insured by the Federal Deposit Insurance Corporation, if such deposit liability, obligation, certificate, or 

share is not insured by the Corporation to the extent or in the manner 

represented. 

‘‘(C) AUTHORITY OF FDIC.—The Corporation shall have—

‘‘(i) jurisdiction over any person that violates this paragraph, or aids 

or abets the violation of this paragraph; and 

‘‘(ii) for purposes of enforcing the requirements of this paragraph 

with regard to any person—

‘‘(I) the authority of the Corporation under section 10(c) to conduct investigations; and 

‘‘(II) the enforcement authority of the Corporation under subsections (b), (c), (d) and (i) of section 8, 

as if such person were a state nonmember insured bank. 

‘‘(D) OTHER ACTIONS PRESERVED.—No provision of this paragraph shall be 

construed as barring any action otherwise available, under the laws of the 

United States or any State, to any Federal or State law enforcement agency 

or individual.’’. 

(b) ENFORCEMENT ORDERS.—Section 8(c) of the Federal Deposit Insurance Act (12 

U.S.C. 1818(c)) is amended by adding at the end the following new paragraph: 

‘‘(4) FALSE ADVERTISING OR MISUSE OF NAMES TO INDICATE INSURED STATUS.—

‘‘(A) TEMPORARY ORDER.—


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‘‘(i) IN GENERAL.—If a notice of charges served under subsection (b)(1) 

of this section specifies on the basis of particular facts that any person 

is engaged in conduct described in section 18(a)(4), the Corporation 

may issue a temporary order requiring— ‘‘(I) the immediate cessation of any activity or practice described, 

which gave rise to the notice of charges; and ‘‘(II) affirmative action to prevent any further, or to remedy any 

existing, violation. ‘‘(ii) EFFECT OF ORDER.—Any temporary order issued under this subparagraph shall take effect upon service. ‘‘(B) EFFECTIVE PERIOD OF TEMPORARY ORDER.—A temporary order issued 

under subparagraph (A) shall remain effective and enforceable, pending the 

completion of an administrative proceeding pursuant to subsection (b)(1) in 

connection with the notice of charges— ‘‘(i) until such time as the Corporation shall dismiss the charges specified in such notice; or ‘‘(ii) if a cease-and-desist order is issued against such person, until 

the effective date of such order. ‘‘(C) CIVIL MONEY PENALTIES.—Violations of section 18(a)(4) shall be subject to civil money penalties as set forth in subsection (i) in an amount not 

to exceed $1,000,000 for each day during which the violation occurs or continues.’’. 

(c) TECHNICAL AND CONFORMING AMENDMENTS.—

(1) Section 18(a)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1828(a)) 

is amended—

(A) in the 1st sentence by striking ‘‘of this subsection’’ and inserting ‘‘of 

paragraphs (1) and (2)’’; 

(B) by striking the 2nd sentence; and 

(C) in the 3rd sentence, by striking ‘‘of this subsection’’ and inserting ‘‘of 

paragraphs (1) and (2)’’. 

(2) The heading for subsection (a) of section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828(a)) is amended by striking ‘‘INSURANCE LOGO.—’’ and 

inserting ‘‘REPRESENTATIONS OF DEPOSIT INSURANCE.—’’. 

SEC. 616. CHANGES REQUIRED TO SMALL BANK HOLDING COMPANY POLICY STATEMENT ON 

ASSESSMENT OF FINANCIAL AND MANAGERIAL FACTORS. 

(a) SMALL BANK HOLDING COMPANY POLICY STATEMENT ON ASSESSMENT OF FINANCIAL AND MANAGERIAL FACTORS.—

(1) IN GENERAL.—Before the end of the 6-month period beginning on the date 

of the enactment of this Act, the Board of Governors of the Federal Reserve System shall publish in the Federal Register proposed revisions to the Small Bank 

Holding Company Policy Statement on Assessment of Financial and Managerial 

Factors (12 C.F.R. part 225—appendix C) that provide that the policy shall 

apply to a bank holding company which has pro forma consolidated assets of 

less than $1,000,000,000 and that—

(A) is not engaged in any nonbanking activities involving significant leverage; and 

(B) does not have a significant amount of outstanding debt that is held 

by the general public. 

(2) ADJUSTMENT OF AMOUNT.—The Board of Governors of the Federal Reserve 

System shall annually adjust the dollar amount referred to in paragraph (1) in 

the Small Bank Holding Company Policy Statement on Assessment of Financial 

and Managerial Factors by an amount equal to the percentage increase, for the 

most recent year, in total assets held by all insured depository institutions, as 

determined by the Board. 

(b) INCREASE IN DEBT-TO-EQUITY RATIO OF SMALL BANK HOLDING COMPANY.—Before the end of the 6-month period beginning on the date of the enactment of this 

Act, the Board of Governors of the Federal Reserve System shall publish in the Federal Register proposed revisions to the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors (12 C.F.R. part 225—appendix C) such that the debt-to-equity ratio allowable for a small bank holding company in order to remain eligible to pay a corporate dividend and to remain eligible 

for expedited processing procedures under Regulation Y of the Board of Governors 

of the Federal Reserve System would increase from 1:1 to 3:1. 

SEC. 617. EXCEPTION TO ANNUAL PRIVACY NOTICE REQUIREMENT UNDER THE GRAMMLEACH-BLILEY ACT. 

Section 503 of the Gramm-Leach-Bliley Act (15 U.S.C. 6803) is amended by adding the following new subsections: 

‘‘(c) EXCEPTION TO ANNUAL NOTICE REQUIREMENT.—A financial institution that—


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‘‘(1) provides nonpublic personal information only in accordance with the provisions of subsection (b)(2) or (e) of section 502 or regulations prescribed under 

section 504(b); ‘‘(2) does not share information with affiliates under section 603(d)(2)(A) of 

the Fair Credit Reporting Act; and ‘‘(3) has not changed its policies and practices with regard to disclosing nonpublic personal information from the policies and practices that were disclosed 

in the most recent disclosure sent to consumers in accordance with this subsection, 

shall not be required to provide an annual disclosure under this subsection until 

such time as the financial institution fails to comply with any criteria described in 

paragraph (1), (2), or (3). ‘‘(d) EXCEPTION TO NOTICE REQUIREMENT.—A financial institution shall not be required to provide any disclosure under this section if— ‘‘(1) the financial institution is licensed by a State and is subject to existing 

regulation of consumer confidentiality that prohibits disclosure of nonpublic personal information without knowing and expressed consent of the consumer in 

the form of laws, rules, or regulation of professional conduct or ethics promulgated either by the court of highest appellate authority or by the principal legislative body or regulatory agency or body of any State of the United States, the 

District of Columbia, any territory of the United States, Puerto Rico, Guam, 

American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, 

or the Northern Mariana Islands; or ‘‘(2) the financial institution is licensed by a State and becomes subject to future regulation of consumer confidentiality that prohibits disclosure of nonpublic personal information without knowing and expressed consent of the consumer in the form of laws, rules, or regulation of professional conduct or ethics 

promulgated either by the court of highest appellate authority or by the principal legislative body or regulatory agency or body of any State of the United 

States, the District of Columbia, any territory of the United States, Puerto Rico, 

Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin 

Islands, or the Northern Mariana Islands.’’. 

SEC. 618. BIENNIAL REPORTS ON THE STATUS OF AGENCY EMPLOYMENT OF MINORITIES AND 

WOMEN. 

(a) IN GENERAL.—Before December 31, 2005, and the end of each 2-year period 

beginning after such date, each Federal banking agency shall submit a report to the 

Congress on the status of the employment by the agency of minority individuals and 

women. 

(b) FACTORS TO BE INCLUDED.—The report shall include a detailed assessment of 

each of the following: 

(1) The extent of hiring of minority individuals and women by the agency as 

of the time the report is prepared. 

(2) The successes achieved and challenges faced by the agency in operating 

minority and women outreach programs. 

(3) Challenges the agency may face in finding qualified minority individual 

and women applicants. 

(4) Such other information, findings, and conclusions, and recommendations 

for legislative or agency action, as the agency may determine to be appropriate 

to include in the report. 

(c) DEFINITIONS.—For purposes of this section, the following definitions shall 

apply: 

(1) FEDERAL BANKING AGENCY.—The term ‘‘Federal banking agency’’—

(A) has the same meaning as in section 3(z) of the Federal Deposit Insurance Act; and 

(B) includes the National Credit Union Administration. 

(2) MINORITY.—The term ‘‘minority’’ has the same meaning as in section 

1204(c)(3) of the Financial Institutions Reform, Recovery, and Enforcement Act 

of 1989. 

SEC. 619. COORDINATION OF STATE EXAMINATION AUTHORITY. 

Section 10(h) of the Federal Deposit Insurance Act (12 U.S.C. 1820(h)) is amended 

to read as follows: 

‘‘(h) COORDINATION OF EXAMINATION AUTHORITY.—

‘‘(1) STATE BANK SUPERVISORS OF HOME AND HOST STATES.—

‘‘(A) HOME STATE OF BANK.—The appropriate State bank supervisor of the 

home State of an insured State bank has authority to examine and supervise the bank. 

‘‘(B) HOST STATE BRANCHES.—The State bank supervisor of the home 

State of an insured State bank and any State bank supervisor of an approVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00032 Fmt 6659 Sfmt 6621 E:\HR\OC\HR356P1.XXX HR356P1

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priate host State shall exercise their respective authority to supervise and 

examine the branches of the bank in a host State in accordance with the 

terms of any applicable cooperative agreement between the home State 

bank supervisor and the State bank supervisor of the relevant host State. 

‘‘(C) SUPERVISORY FEES.—Except as expressly provided in a cooperative 

agreement between the State bank supervisors of the home State and any 

host State of an insured State bank, only the State bank supervisor of the 

home State of an insured State bank may levy or charge State supervisory 

fees on the bank. 

‘‘(2) HOST STATE EXAMINATION.—

‘‘(A) IN GENERAL.—With respect to a branch operated in a host State by 

an out-of-State insured State bank that resulted from an interstate merger 

transaction approved under section 44 or that was established in such State 

pursuant to section 5155(g) of the Revised Statutes, the third undesignated 

paragraph of section 9 of the Federal Reserve Act or section 18(d)(4) of this 

Act, the appropriate State bank supervisor of such host State may—

‘‘(i) with written notice to the State bank supervisor of the bank’s 

home State and subject to the terms of any applicable cooperative 

agreement with the State bank supervisor of such home State, examine 

such branch for the purpose of determining compliance with host State 

laws that are applicable pursuant to section 24(j) of this Act, including 

those that govern community reinvestment, fair lending, and consumer 

protection; and 

‘‘(ii) if expressly permitted under and subject to the terms of a cooperative agreement with the State bank supervisor of the bank’s home 

State or if such out-of-State insured State bank has been determined 

to be in a troubled condition by either the State bank supervisor of the 

bank’s home State or the bank’s appropriate Federal banking agency, 

participate in the examination of the bank by the State bank supervisor of the bank’s home State to ascertain that the activities of the 

branch in such host State are not conducted in an unsafe or unsound 

manner. 

‘‘(B) NOTICE OF DETERMINATION.—

‘‘(i) IN GENERAL.—The State bank supervisor of the home State of an 

insured State bank should notify the State bank supervisor of each host 

State of the bank if there has been a final determination that the bank 

is in a troubled condition. 

‘‘(ii) TIMING OF NOTICE.—The State bank supervisor of the home 

State of an insured State bank should provide notice under clause (i) 

as soon as reasonably possible but in all cases within 15 business days 

after the State bank supervisor has made such final determination or 

has received written notification of such final determination. 

‘‘(3) HOST STATE ENFORCEMENT.—If the State bank supervisor of a host State 

determines that a branch of an out-of-State State insured State bank is violating any law of the host State that is applicable to such branch pursuant to 

section 24(j) of this Act, including a law that governs community reinvestment, 

fair lending, or consumer protection, the State bank supervisor of the host State 

or, to the extent authorized by the law of the host State, a host State law enforcement officer may, with written notice to the State bank supervisor of the 

bank’s home State and subject to the terms of any applicable cooperative agreement with the State bank supervisor of the bank’s home State, undertake such 

enforcement actions and proceedings as would be permitted under the law of 

the host State as if the branch were a bank chartered by that host State. 

‘‘(4) COOPERATIVE AGREEMENT.—

‘‘(A) IN GENERAL.—The State bank supervisors from 2 or more States may 

enter into cooperative agreements to facilitate State regulatory supervision 

of State banks, including cooperative agreements relating to the coordination of examinations and joint participation in examinations. For purposes 

of this subsection (h), the term ‘cooperative agreement’ means a written 

agreement that is signed by the home State bank supervisor and host State 

bank supervisor to facilitate State regulatory supervision of State banks 

and includes nationwide or multi-state cooperative agreements and cooperative agreements solely between the home State and host State. 

‘‘(B) RULE OF CONSTRUCTION.—Except for State bank supervisors, no provision of this subsection relating to such cooperative agreements shall be 

construed as limiting in any way the authority of home and host State law 

enforcement officers, regulatory supervisors, or other officials that have not 

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plicable to a branch of an out-of-State insured State bank located in the 

host State pursuant to section 24(j) of this Act. 

‘‘(5) FEDERAL REGULATORY AUTHORITY.—No provision of this subsection shall 

be construed as limiting in any way the authority of any Federal banking agency. 

‘‘(6) STATE TAXATION AUTHORITY NOT AFFECTED.—No provision of this subsection (h) shall be construed as affecting the authority of any State or political 

subdivision of any State to adopt, apply, or administer any tax or method of taxation to any bank, bank holding company, or foreign bank, or any affiliate of 

any bank, bank holding company, or foreign bank, to the extent such tax or tax 

method is otherwise permissible by or under the Constitution of the United 

States or other Federal law. 

‘‘(7) DEFINITIONS.—For purpose of this section, the following definition shall 

apply: 

‘‘(A) HOST STATE, HOME STATE, OUT-OF-STATE BANK.—The terms ‘host 

State’, ‘home State’, and ‘out-of-State bank’ have the same meanings as in 

section 44(g). 

‘‘(B) STATE SUPERVISORY FEES.—The term ‘State supervisory fees’ means 

assessments, examination fees, branch fees, license fees, and all other fees 

that are levied or charged by a State bank supervisor directly upon an insured State bank or upon branches of an insured State bank. 

‘‘(C) TROUBLED CONDITION.—Solely for purposes of subparagraph (2)(B) of 

this subsection (h), an insured State bank has been determined to be in 

‘troubled condition’ if the bank—

‘‘(i) has a composite rating, as determined in its most recent report 

of examination, of 4 or 5 under the Uniform Financial Institutions Ratings System (UFIRS); or 

‘‘(ii) is subject to a proceeding initiated by the Corporation for termination or suspension of deposit insurance; or 

‘‘(iii) is subject to a proceeding initiated by the State bank supervisor 

of the bank’s home State to vacate, revoke, or terminate the charter of 

the bank, or to liquidate the bank, or to appoint a receiver for the bank. 

‘‘(D) FINAL DETERMINATION.—For the purposes of paragraph (2)(B), the 

term ‘final determination’ means the transmittal of a report of examination 

to the bank or transmittal of official notice of proceedings to the bank.’’. 

SEC. 620. NONWAIVER OF PRIVILEGES. 

(a) INSURED DEPOSITORY INSTITUTIONS.—Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended by adding at the end the following new subsection: 

‘‘(x) PRIVILEGES NOT AFFECTED BY DISCLOSURE TO BANKING AGENCY OR SUPERVISOR.—

‘‘(1) IN GENERAL.—The submission by any person of any information to any 

Federal banking agency, State bank supervisor, or foreign banking authority for 

any purpose in the course of any supervisory or regulatory process of such agency, supervisor, or authority shall not be construed as waiving, destroying, or 

otherwise affecting any privilege such person may claim with respect to such 

information under Federal or State law as to any person or entity other than 

such agency, supervisor, or authority. 

‘‘(2) RULE OF CONSTRUCTION.—No provision of paragraph (1) may be construed 

as implying or establishing that—

‘‘(A) any person waives any privilege applicable to information that is 

submitted or transferred under any circumstance to which paragraph (1) 

does not apply; or 

‘‘(B) any person would waive any privilege applicable to any information 

by submitting the information to any Federal banking agency, State bank 

supervisor, or foreign banking authority, but for this subsection.’’. 

(b) INSURED CREDIT UNIONS.—Section 205 of the Federal Credit Union Act (12 

U.S.C.1785) is amended by adding at the end the following new subsection: 

‘‘(j) PRIVILEGES NOT AFFECTED BY DISCLOSURE TO BANKING AGENCY OR SUPERVISOR.—

‘‘(1) IN GENERAL.—The submission by any person of any information to the 

Administration, any State credit union supervisor, or foreign banking authority 

for any purpose in the course of any supervisory or regulatory process of such 

Board, supervisor, or authority shall not be construed as waiving, destroying, 

or otherwise affecting any privilege such person may claim with respect to such 

information under Federal or State law as to any person or entity other than 

such Board, supervisor, or authority. 


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‘‘(2) RULE OF CONSTRUCTION.—No provision of paragraph (1) may be construed 

as implying or establishing that—

‘‘(A) any person waives any privilege applicable to information that is 

submitted or transferred under any circumstance to which paragraph (1) 

does not apply; or 

‘‘(B) any person would waive any privilege applicable to any information 

by submitting the information to the Administration, any State credit union 

supervisor, or foreign banking authority, but for this subsection.’’. 

SEC. 621. RIGHT TO FINANCIAL PRIVACY ACT OF 1978 AMENDMENT. 

Paragraph (1) of section 1101 of the Right to Financial Privacy Act of 1978 (12 

U.S.C. 3401) is amended by inserting ‘‘(including any lender who advances funds on 

pledges of personal property)’’ after ‘‘consumer finance institution’’. 

SEC. 622. DEPUTY DIRECTOR; SUCCESSION AUTHORITY FOR DIRECTOR OF THE OFFICE OF 

THRIFT SUPERVISION. 

(a) ESTABLISHMENT OF POSITION OF DEPUTY DIRECTOR.—Section 3(c)(5) of the 

Home Owners’ Loan Act (12 U.S.C. 1462a(c)(5)) is amended to read as follows: 

‘‘(5) DEPUTY DIRECTOR.—

‘‘(A) IN GENERAL.—The Secretary of the Treasury shall appoint a Deputy 

Director and may appoint up to 3 additional Deputy Directors. 

‘‘(B) FIRST DEPUTY DIRECTOR.—If the Secretary of the Treasury appoints 

more than 1 Deputy Director of the Office, the Secretary shall designate 

one such appointee as the First Deputy Director. 

‘‘(C) DUTIES.—Each Deputy Director appointed under this paragraph 

shall take an oath of office and perform such duties as the Director shall 

direct. 

‘‘(D) COMPENSATION AND BENEFITS.—The Director shall fix the compensation and benefits for each Deputy Director in accordance with this Act.’’. 

(b) SERVICE OF DEPUTY DIRECTOR AS ACTING DIRECTOR.—Section 3(c)(3) of the 

Home Owners’ Loan Act (12 U.S.C. 1462a(c)(3)) is amended—

(1) by striking ‘‘VACANCY.—A vacancy in the position of Director’’ and inserting ‘‘VACANCY.—

‘‘(A) IN GENERAL.—A vacancy in the position of Director’’; and 

(2) by adding at the end the following new subparagraphs: 

‘‘(B) ACTING DIRECTOR.—

‘‘(i) IN GENERAL.—In the event of a vacancy in the position of Director 

or during the absence or disability of the Director, the Deputy Director 

shall serve as Acting Director. 

‘‘(ii) SUCCESSION IN CASE OF 2 OR MORE DEPUTY DIRECTORS.—If there 

are 2 or more Deputy Directors serving at the time a vacancy in the 

position of Director occurs or the absence or disability of the Director 

commences, the First Deputy Director shall serve as Acting Director 

under clause (i) followed by such other Deputy Directors under any 

order of succession the Director may establish. 

‘‘(iii) AUTHORITY OF ACTING DIRECTOR.—Any Deputy Director, while 

serving as Acting Director under this subparagraph, shall be vested 

with all authority, duties, and privileges of the Director under this Act 

and any other provision of Federal law.’’. 

SEC. 623. LIMITATION ON SCOPE OF NEW AGENCY GUIDELINES. 

(a) IN GENERAL.—The provisions of the multi-agency guidance Numbered 2003–

1 issued by the Comptroller of the Currency, the Board of Governors of the Federal 

Reserve System, the Federal Deposit Insurance Corporation, and the Director of the 

Office of Thrift Supervision that relate to minimum credit card payments and negative amortization—

(1) shall only apply to new credit card accounts established by a creditor for 

a consumer after the date of the enactment of this Act under an open end consumer credit plan; and 

(2) shall not apply to any outstanding balance on any credit card account 

under an open end consumer credit plan as of such date of enactment. 

(b) DEFINITIONS.—For purposes of this section, the terms ‘‘credit’’, ‘‘credit card’’, 

‘‘creditor’’, ‘‘consumer’’ and ‘‘open end credit plan’’ have the same meanings as in section 103 of the Truth in Lending Act. 

(c) SUNSET PROVISION.—This section shall not apply after the end of the 3-year 

period beginning on the date of the enactment of this Act. 


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TITLE VII—‘‘BSA’’ COMPLIANCE BURDEN 

REDUCTION 

SEC. 701. EXCEPTION FROM CURRENCY TRANSACTION REPORTS FOR SEASONED CUSTOMERS. 

(a) FINDINGS.—The Congress finds as follows: 

(1) The completion of and filing of currency transaction reports under section 

5313 of title 31, United States Code, poses a compliance burden on the financial 

industry. 

(2) Due to the nature of the transactions or the persons and entities conducting such transactions, certain such reports as currently filed do not appear 

to be relevant to the detection, deterrence, or investigation of financial crimes, 

including money laundering and the financing of terrorism. 

(3) However, the data contained in such reports can provide valuable context 

for the analysis of other data derived pursuant to subchapter II of chapter 53 

of title 31, United States Code, as well as investigative data, which provides invaluable and indispensable information supporting efforts to combat money 

laundering and other financial crimes. 

(4) An exemption from the reporting requirements for certain currency transactions that are of little or no value to ongoing efforts of law enforcement agencies, financial regulatory agencies, and the financial services industry to investigate, detect, or deter financial crimes would serve to balance the burden 

placed on members of the financial services industry with the compelling need 

to produce and provide meaningful information to policy-makers, financial regulators, law enforcement, and intelligence agencies. 

(5) The Secretary of the Treasury has by regulation, and in accordance with 

section 5313 of title 31, United States Code, implemented a process by which 

institutions may seek exemptions from filing certain currency transaction reports based on appropriate circumstances; however, the existing exemption 

process has not adequately balanced the burden on the financial industry with 

the Government’s need for data to support its efforts in combating financial 

crime. 

(6) The act of providing notice to the Secretary of the Treasury of designations 

of exemption provides meaningful information to law enforcement officials on 

exempt customers and enables law enforcement to obtain account information 

through appropriate legal process; the act of providing notice of designations of 

exemption complements other sections of title 31, United States Code, whereby 

law enforcement can locate financial institutions with relevant records relating 

to a person of investigative interest, such as information requests made pursuant to regulations implementing section 314(a) of the USA PATRIOT Act of 

2001. 

(7) A designation of exemption has no effect on requirements for depository 

institutions to apply the full range of anti-money laundering controls as set 

forth in subchapter II of chapter 53 of title 31, United States Code, including 

the requirement to apply the customer identification program pursuant to Section 5326 of subchapter II of chapter 53 of title 31, United States Code, and 

the requirement to identify, monitor, and, if appropriate, report suspicious activity in accordance with section 5318(g) of title 31, United States Code. 

(8) The Federal banking agencies and the Financial Crimes Enforcement Network have recently provided guidance through the Federal Financial Institutions Examination Council Bank Secrecy Act/Anti-Money Laundering Examination Manual on applying appropriate levels of due diligence and identifying suspicious activity by the types of cash-intensive businesses that generally will be 

subject to exemption. 

(b) SEASONED CUSTOMER EXEMPTION.—

(1) IN GENERAL.—Section 5313(e) of title 31, United States Code, is amended 

to read as follows: 

‘‘(e) QUALIFIED CUSTOMER EXEMPTION.—

‘‘(1) IN GENERAL.—The Secretary of the Treasury shall prescribe regulations 

within 270 days of the enactment of the Financial Services Regulatory Relief 

Act of 2005 that exempt any depository institution from filing a report pursuant 

to this section in a transaction for the payment, receipt, or transfer of United 

States coins or currency (or other monetary instruments the Secretary of the 

Treasury prescribes) with a qualified customer of the depository institution. 

‘‘(2) QUALIFIED CUSTOMER DEFINED.—For purposes of this section, the term 

‘qualified customer’, with respect to a depository institution, has such meaning 


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as the Secretary of the Treasury shall prescribe, which shall include any person 

that—‘‘(A) is incorporated or organized under the laws of the United States or 

any State, including a sole proprietorship, or is registered as and eligible 

to do business within the United States or a State; ‘‘(B) has maintained a deposit account with the depository institution for 

at least 12 months; and ‘‘(C) has engaged, using such account, in multiple currency transactions 

that are subject to the reporting requirements of subsection (a). ‘‘(3) REGULATIONS.— ‘‘(A) IN GENERAL.—The Secretary of the Treasury shall prescribe regulations requiring a depository institution to file a 1-time notice of designation 

of exemption for each qualified customer of the depository institution. ‘‘(B) FORM AND CONTENT OF EXEMPTION NOTICE.—The Secretary shall by 

regulation prescribe the form, manner, content, and timing of the qualified 

customer exemption notice; such notice shall include information sufficient 

to identify the qualified customer and its accounts. ‘‘(C) AUTHORITY OF SECRETARY.— ‘‘(i) IN GENERAL.—The Secretary may suspend, reject or revoke any 

qualified customer exemption notice, in accordance with criteria prescribed by the Secretary by regulation. ‘‘(ii) CONDITIONS.—The Secretary may establish conditions, in accordance with criteria prescribed by regulation, under which exempt qualified customers of an insured depository institution that is merged with 

or acquired by another insured depository institution will continue to 

be treated as designated exempt qualified customers of the surviving 

or acquiring institution.’’. (c) 3-YEAR REVIEW AND REPORT.—Before the end of the 3-year period beginning 

on the date of the enactment of this Act, the Secretary of the Treasury, in consultation with the Attorney General, the Secretary of the Department of Homeland Security, the Federal banking agencies, the banking industry, and such other persons 

as the Secretary deems appropriate, shall evaluate the operations and effect of this 

provision and make recommendations to Congress as to any legislative action with 

respect to this provision as the Secretary may determine to be appropriate. 

SEC. 702. REDUCTION IN INCONSISTENCIES IN MONETARY TRANSACTION RECORDKEEPING 

AND REPORTING ENFORCEMENT AND EXAMINATION REQUIREMENTS. 

(a) SENSE OF THE CONGRESS.—It is the sense of the Congress that inconsistencies 

and redundancies among regulations implementing monetary transaction recordkeeping and reporting enforcement programs under section 8 of the Federal Deposit 

Insurance Act, section 206(q) of the Federal Credit Union Act, and chapter II of 

chapter 53 of title 31, United States Code by the Secretary of the Treasury and the 

Federal banking agencies— (1) increase the difficulty depository institutions have in complying with congressional intent in creating such enforcement programs, 

(2) reduce the transparency and clarity of the regulatory regime; 

(3) increase the potential for conflict among the various regulations in the future; and 

(4) contribute to the perception that various agencies involved in the enforcement of the monetary transaction recordkeeping and reporting requirements 

apply such requirements inconsistently. 

(b) AGENCY COORDINATION OF MONETARY TRANSACTION RECORDKEEPING AND RE- PORTING REQUIREMENTS.— (1) ENFORCEMENT PROGRAMS.— (A) FEDERAL DEPOSIT INSURANCE ACT.—Section 8(s) of the Federal Deposit Insurance Act (12 U.S.C. 1818(s)) is amended by adding at the end 

the following new paragraph: ‘‘(4) COORDINATION ON UNIFORM REQUIREMENTS.—In prescribing regulations 

under paragraph (1), the Federal banking agencies, acting through the Financial Institutions Examination Council, shall— ‘‘(A) consult with each other, the National Credit Union Administration 

Board, and the Secretary of the Treasury; and 

‘‘(B) take such action as may be necessary to ensure that the requirements for procedures established pursuant to such regulations, and the examination standards for reviewing such procedures, are congruent and reasonably uniform (taking into account differences in the form and function 

of the institutions subject to such requirements).’’. 

(B) FEDERAL CREDIT UNION ACT.—Section 206(q) of the Federal Credit 

Union Act (12 U.S.C. 1786(q)) is amended by adding at the end the following new paragraph: 


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‘‘(4) COORDINATION ON UNIFORM REQUIREMENTS.—In prescribing regulations 

under paragraph (1), the Board, acting through the Financial Institutions Examination Council, shall— ‘‘(A) consult with the Federal banking agencies and the Secretary of the 

Treasury; and ‘‘(B) take such action as may be necessary to ensure that the requirements for procedures established pursuant to such regulations, and the examination standards for reviewing such procedures, are congruent and reasonably uniform (taking into account differences in the form and function 

of the institutions subject to such requirements).’’. (2) EXAMINATION STANDARDS AND DISPUTES.—Section 1006 of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3305) is 

amended by adding at the end the following new subsection: ‘‘(h) MONETARY TRANSACTION RECORDKEEPING AND REPORTING REQUIREMENTS.— The Council and the Secretary of the Treasury shall jointly establish— ‘‘(1) uniform standards and principles applicable to the examination of financial institutions to ensure compliance with the requirements of subchapter II of 

chapter 53, United States Code, sections 8(s) and 21 of the Federal Deposit Insurance Act, and section 206(q) of the Federal Credit Union Act; and ‘‘(2) a clear policy statement on appropriate processes for resolving examinerinstitution disagreements concerning the application of subchapter II of chapter 

53, United States Code, sections 8(s) and 21 of the Federal Deposit Insurance 

Act, and section 206(q) of the Federal Credit Union Act to financial institutions.’’. (3) EFFECTIVE DATE.—The Federal banking agencies, the National Credit 

Union Administration Board, the Financial Institutions Examination Council, 

and the Secretary of the Treasury shall commence the discussions and consultations required under the amendments made by this subsection as soon as practicable after the date of the enactment of this Act. 

(c) REVIEW OF AND REPORT ON ADDITIONAL REGULATORY OR LEGISLATIVE

CHANGES.— (1) REVIEW REQUIRED.—Before the end of the 6-month period beginning on the 

date of the enactment of this Act, the Secretary of the Treasury shall conduct 

a review of the potential inconsistencies in, or redundancies among, the regulations pertaining to the application of the requirements of subchapter II of chapter 53, United States Code, sections 8(s) and 21 of the Federal Deposit Insurance Act, and section 206(q) of the Federal Credit Union Act to financial institutions. 

(2) REPORT TO CONGRESS AND THE FINANCIAL INSTITUTIONS EXAMINATION

COUNCIL.—Upon completion of the review under paragraph (1), the Secretary of 

the Treasury shall promptly submit a report on the findings and conclusions of 

the Secretary with respect to the review to the Committee on Financial Services 

of the House of Representatives and the Committee on Banking, Housing, and 

Urban Affairs of the Senate, together with such recommendations for legislative 

and administrative actions as the Secretary may determine to be appropriate, 

and shall transmit a copy of such report to the members of the Financial Institutions Examination Council. 

(d) REFORM OF APPLICATION OF MONETARY TRANSACTION RECORDKEEPING AND RE- PORTING REQUIREMENTS TO FINANCIAL INSTITUTIONS.—Before the end of the 9- 

month period beginning on the date of the submission of the report to Congress 

under subsection (c)(2), the Secretary of the Treasury shall prescribe regulations implementing appropriate changes to regulations within the jurisdiction of the Secretary to remedy redundancies or inconsistencies identified in the review by, and 

included in the recommendations of, the Secretary under subsection (c). 

SEC. 703. ADDITIONAL REFORMS RELATING TO MONETARY TRANSACTION AND RECORDKEEPING REQUIREMENTS APPLICABLE TO FINANCIAL INSTITUTIONS. 

(a) NOTIFICATION OF OFFICERS AND DIRECTORS OF FINANCIAL INSTITUTIONS.—Before the end of the 6-month period beginning on the date of the enactment of this 

Act, the Secretary of the Treasury shall— (1) review any regulation, guideline, or guidance of the Secretary, any Federal 

banking agency, or the National Credit Union Administration Board that serves 

as the basis for any requirement to provide notice to any officer or director of 

a depository institution of any suspicious activity report submitted by the depository institution to the Secretary and any such agency or Board; 

(2) modify or eliminate any such requirement of the Secretary that the Secretary determines is not necessary to achieve the purposes of section 5318(g) 

of title 31, United States Code; and 

(3) make a recommendation to any Federal banking agency or the National 

Credit Union Administration Board to modify or eliminate any such requireVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00038 Fmt 6659 Sfmt 6621 E:\HR\OC\HR356P1.XXX HR356P1

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ment of such agency or Board that the Secretary determines is not necessary 

to achieve the purposes of section 5318(g) of title 31, United States Code. 

(b) ELIMINATION OF UNNECESSARY VERIFICATION REQUIREMENTS APPLICABLE TO

THE PURCHASE OF FINANCIAL INSTRUMENTS.—Before the end of the 9-month period 

beginning on the date of the enactment of this Act, the Secretary of the Treasury 

shall—

(1) review all verification of customer identity requirements as they relate to 

the purchases of monetary instruments by customers of depository institutions, 

including the regulations codified in section 103.29(a)(ii) of title 31, Code of Federal Regulations; and 

(2) modify or eliminate any customer identity requirement related to the purchases of monetary instruments by customers of depository institutions codified 

in section 103.29(a)(ii) of title 31, Code of Federal Regulations, that the Secretary determines is unnecessary. 

(c) ELIMINATION OF RECURRING FILINGS OF SUSPICIOUS ACTIVITY REPORTS ON A

SINGLE TRANSACTION.—Before the end of the 9-month period beginning on the date 

of the enactment of this Act, the Secretary of the Treasury, as appropriate, shall 

prescribe regulations, or issue other forms of guidance, that eliminate the need for 

depository institutions to file recurring suspicious activity reports on the same 

transaction unless there has been a subsequent change in any pattern of activity 

involving any person who was connected with the transaction. 

(d) ELECTRONIC ACKNOWLEDGEMENT OF CERTAIN ELECTRONIC FILINGS.—Before 

the end of the 1-year period beginning on the date of the enactment of this Act, the 

Director of the Financial Crimes Enforcement Network shall put into effect a system 

for promptly furnishing an electronic acknowledgement of receipt to any institution 

that files a form with FinCEN under subchapter II of chapter 53 of title 31, United 

States Code, through the Network’s electronic filing system. 

SEC. 704. STUDY BY COMPTROLLER GENERAL. 

(a) STUDY REQUIRED.—The Comptroller General of the United States shall conduct a study on methods and practices which would—

(1) reduce the overall number of currency transaction reports filed with the 

Secretary of the Treasury under section 5313(a) of title 31, United States Code, 

while ensuring that the needs of the Secretary, the Financial Crimes Enforcement Network, law enforcement agencies, and financial institution regulatory 

agencies continue to be met; 

(2) improve financial institution utilization of the current exemption provisions; and 

(3) mitigate the difficulties in the current implementation of such exemption 

provisions that limit the utility of the exemption process for financial institutions. 

(b) REPORT.—Before the end of the 6-month period beginning on the date of the 

enactment of this Act, the Comptroller General shall submit a report to the Committee on Financial Services of the House of Representatives and the Committee on 

Banking, Housing, and Urban Affairs of the Senate on the findings and conclusions 

of the Comptroller General with respect to the study conducted under subsection (a) 

and such recommendations for legislative and administrative action as the Comptroller General may determine to be appropriate. 

SEC. 705. FEASIBILITY STUDY REQUIRED. 

(a) IN GENERAL.—For the purpose of simplifying, and increasing compliance with, 

the various recordkeeping and reporting requirements under subchapter II of chapter 53 of title 31, United States Code, chapter 2 of title I of Public Law 91—508, 

and section 21 of the Federal Deposit Insurance Act, and regulations prescribed 

under such provisions of law, the Secretary of the Treasury (hereafter in this section 

referred to as the ‘‘Secretary’’) shall conduct a study on the feasibility of developing 

and implementing interfaces and templates for use in electronic communications between financial institutions (as defined in section 5312 of title 31, United States 

Code) and the Secretary, the Financial Crimes Enforcement Network, and other 

Federal financial institution regulatory agencies. 

(b) FACTORS TO BE CONSIDERED.—In conducting the study required under subsection (a), the Secretary shall take into account—

(1) any procedures required to be maintained by financial institutions under 

regulations prescribed pursuant to section 5318(a)(2) of title 31 of the United 

States Code and the manner in which the use of interfaces and templates which 

might be developed could lessen the burden of complying with such procedures; 

and 

(2) any exemptions prescribed by the Secretary under paragraph (5) or (6) of 

such section 5318(a) and the manner in which interfaces and templates which 


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might be developed could be programmed to reflect any such exemption for a 

financial institution, transaction, or class of transactions. 

(c) PROTOTYPE AND REPORT REQUIRED.— (1) IN GENERAL.—Before the end of the 1-year period beginning on the date 

of the enactment of this Act, the Secretary shall submit a report to the Congress 

containing a detailed description of the findings and conclusions of the Secretary in connection with the study required under subsection (a), together with 

such recommendations for legislative or administrative action as the Secretary 

may determine to be appropriate. 

(2) PROTOTYPE.—Any recommendation on the feasibility of developing and implementing interfaces and templates for use in electronic communications shall 

be accompanied by prototypes of such interfaces and templates that demonstrate such feasibility. 

(d) DEFINITIONS.—For purposes of this section, the following definitions shall 

apply: 

(1) INTERFACE.—The term ‘‘interface’’ means the point and method of interaction between any 2 or more electronic data storage and communication systems that permits and facilitates active electronic communication between or 

among the systems, including any procedures, codes, and protocols that enable 

the systems to interact. 

(2) TEMPLATE.—The term ‘‘template’’ means a preestablished layout model 

using word processing or other authoring software that ensures that data entered into it will adhere to a consistent format and content scheme when used 

by all parties engaged in electronic communications among each other. 

SEC. 706. ANNUAL REPORT BY SECRETARY OF THE TREASURY. 

(a) FINDINGS.—The Congress finds as follows: 

(1) Financial institutions have too little information about money laundering 

and terrorist financing compliance in other markets. 

(2) The current Financial Action Task Force designation system does not adequately represent the progress countries are making in combatting money laundering. 

(3) Lack of information about the compliance of countries with anti-money 

laundering standards exposes United States financial markets to excessive risk. 

(4) Failure to designate countries that fail to make progress in combatting 

terrorist financing and money laundering eliminates incentives for internal reform. 

(5) The Secretary of the Treasury has an affirmative duty to provide to financial institutions and examiners the best possible information on compliance 

with anti-money laundering and terrorist financing initiatives in other markets. 

(b) REPORT.—Not later than March 1 of each year, the Secretary of the Treasury 

shall submit to the Congress a report that identifies the applicable standards of 

each country against money laundering and states whether that country is a country of primary money laundering concern under section 5318A of title 31, United 

States Code. The report shall include—

(1) information on the effectiveness of each country in meeting its standards 

against money laundering; 

(2) a determination of whether that the efforts of that country to combat 

money laundering and terrorist financing are adequate, improving, or inadequate; and 

(3) the efforts made by the Secretary to provide to the government of each 

such country of concern technical assistance to cease the activities that were the 

basis for the determination that the country was of primary money laundering 

concern. 

(c) DISSEMINATION OF INFORMATION IN REPORT.—The Secretary of the Treasury 

shall make available to the Federal Financial Institutions Examination Council for 

incorporation into the examination process, in consultation with Federal banking 

agencies, and to financial institutions the information contained in the report submitted under subsection (a). Such information shall be made available to financial 

institutions without cost. 

(d) DEFINITION.—For purposes of this section, the term ‘‘financial institution’’ has 

the meaning given that term in section 5312(a)(2) of title 31, United States Code. 

SEC. 707. PRESERVATION OF MONEY SERVICES BUSINESSES. 

(a) FINDINGS.—The Congress finds as follows: 

(1) Title III of the USA PATRIOT ACT provided United States law enforcement agencies with new tools to combat terrorist financing and money laundering. 

(2) The Financial Crimes Enforcement Network in the Department of the 

Treasury (hereafter in this section referred to as ‘‘FinCEN’’ ) has defined money 


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services businesses to include the following 5 distinct types of financial services 

providers as well as the United States Postal Service: 

(A) Currency dealers or exchanges. 

(B) Check cashing services. 

(C) Issuers of travelers’ checks, money orders, or stored value cards. 

(D) Sellers or redeemers of travelers’ checks, money orders, or stored 

value cards. 

(E) Money transmitters. 

(3) Money services businesses have had more difficulty in obtaining and maintaining banking services since the passage of the USA PATRIOT ACT. 

(4) On March 30, 2005, FinCEN and the Federal banking agencies (as defined 

in section 3 of the Federal Deposit Insurance Act) issued a joint statement recognizing the importance of ensuring that money services businesses that comply 

with the law have reasonable access to banking services. 

(5) On April 26, 2005, FinCEN offered guidance to money service businesses 

on obtaining and maintaining banking services by identifying and explaining to 

money services businesses the types of information and documentation they are 

expected to have, and to provide to, depository institutions when conducting 

banking business. 

(6) At the same time, FinCEN and the Federal banking agencies have issued 

joint guidance to depository institutions to—

(A) clarify the requirements of subchapter II of chapter 53 of title 31, 

United States Code, and related provisions of law; and 

(B) set forth the minimum steps that depository institutions should take 

when providing banking services to money services businesses. 

(7) It is in the interest of the United States and its allies in the wars against 

terrorism and drugs to make certain that the international transfer of funds is 

done in a rules-based, formal, and transparent manner and that individuals are 

not forced into utilizing informal underground methods due to a lack of services. 

(b) SENSE OF THE CONGRESS.—It is the sense of the Congress that depository institutions and money services businesses should follow the guidance offered by 

FinCEN for the purpose of giving money services businesses full access to banking 

services and ensuring that money services businesses remain in the mainstream financial system and can be full players in providing important financial services to 

their customers and be fully cooperative in the fight against terrorist financing and 

money laundering. 

TITLE VIII—CLERICAL AND TECHNICAL 

AMENDMENTS 

SEC. 801. CLERICAL AMENDMENTS TO THE HOME OWNERS’ LOAN ACT. 

(a) AMENDMENT TO TABLE OF CONTENTS.—The table of contents in section 1 of the 

Home Owners’ Loan Act (12 U.S.C. 1461) is amended by striking the items relating 

to sections 5 and 6 and inserting the following new items: 

‘‘Sec. 5. Savings associations. 

‘‘Sec. 6. [Repealed.].’’. 

(b) CLERICAL AMENDMENTS TO HEADINGS.—

(1) The heading for section 4(a) of the Home Owners’ Loan Act (12 U.S.C. 

1463(a)) is amended by striking ‘‘(a) FEDERAL SAVINGS ASSOCIATIONS.—’’ and inserting ‘‘(a) GENERAL RESPONSIBILITIES OF THE DIRECTOR.—’’. 

(2) The section heading for section 5 of the Home Owners’ Loan Act (12 

U.S.C. 1464) is amended to read as follows: 

‘‘SEC. 5. SAVINGS ASSOCIATIONS.’’. 

SEC. 802. TECHNICAL CORRECTIONS TO THE FEDERAL CREDIT UNION ACT. 

The Federal Credit Union Act (12 U.S.C. 1751 et seq.) is amended as follows: 

(1) In section 101(3), strike ‘‘and’’ after the semicolon. 

(2) In section 101(5), strike the terms ‘‘account account’’ and ‘‘account accounts’’ each place any such term appears and insert ‘‘account’’. 

(3) In section 107(a)(5)(E) (as so designated by section 303 of this Act), strike 

the period at the end and insert a semicolon. 

(4) In paragraphs (6) and (7) of section 107(a) (as so designated by section 

303 of this Act), strike the period at the end and insert a semicolon. 

(5) In section 107(a)(7)(D) (as so designated by section 303 of this Act), strike 

‘‘the Federal Savings and Loan Insurance Corporation or’’. 


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(6) In section 107(a)(7)(E) (as so designated by section 303 of this Act), strike 

‘‘the Federal Home Loan Bank Board,’’ and insert ‘‘the Federal Housing Finance 

Board,’’. 

(7) In section 107(a)(9) (as so designated by section 303 of this Act), strike 

‘‘subchapter III’’ and insert ‘‘title III’’. 

(8) In section 107(a)(13) (as so designated by section 303 of this Act), strike 

the ‘‘and’’ after the semicolon at the end. 

(9) In section 109(c)(2)(A)(i), strike ‘‘(12 U.S.C. 4703(16))’’. 

(10) In section 120(h), strike ‘‘the Act approved July 30, 1947 (6 U.S.C., secs. 

6–13),’’ and insert ‘‘chapter 93 of title 31, United States Code,’’. 

(11) In section 201(b)(5), strike ‘‘section 116 of’’. 

(12) In section 202(h)(3), strike ‘‘section 207(c)(1)’’ and insert ‘‘section 

207(k)(1)’’. 

(13) In section 204(b), strike ‘‘such others powers’’ and insert ‘‘such other powers’’. 

(14) In section 206(e)(3)(D), strike ‘‘and’’ after the semicolon at the end. 

(15) In section 206(f)(1), strike ‘‘subsection (e)(3)(B)’’ and insert ‘‘subsection 

(e)(3)’’. 

(16) In section 206(g)(7)(D), strike ‘‘and subsection (1)’’. 

(17) In section 206(t)(2)(B), insert ‘‘regulations’’ after ‘‘as defined in’’. 

(18) In section 206(t)(2)(C), strike ‘‘material affect’’ and insert ‘‘material effect’’. 

(19) In section 206(t)(4)(A)(ii)(II), strike ‘‘or’’ after the semicolon at the end. 

(20) In section 206A(a)(2)(A), strike ‘‘regulator agency’’ and insert ‘‘regulatory 

agency’’. 

(21) In section 207(c)(5)(B)(i)(I), insert ‘‘and’’ after the semicolon at the end. 

(22) In the heading for subparagraph (A) of section 207(d)(3), strike ‘‘TO’’ and 

insert ‘‘WITH’’. 

(23) In section 207(f)(3)(A), strike ‘‘category or claimants’’ and insert ‘‘category 

of claimants’’. 

(24) In section 209(a)(8), strike the period at the end and insert a semicolon. 

(25) In section 216(n), insert ‘‘any action’’ before ‘‘that is required’’. 

(26) In section 304(b)(3), strike ‘‘the affairs or such credit union’’ and insert 

‘‘the affairs of such credit union’’. 

(27) In section 310, strike ‘‘section 102(e)’’ and insert ‘‘section 102(d)’’. 

SEC. 803. OTHER TECHNICAL CORRECTIONS. 

(a) Section 1306 of title 18, United States Code, is amended by striking ‘‘5136A’’

and inserting ‘‘5136B’’. 

(b) Section 5239 of the Revised Statutes of the United States (12 U.S.C. 93) is 

amended by redesignating the second of the 2 subsections designated as subsection 

(d) (as added by section 331(b)(3) of the Riegle Community Development and Regulatory Improvement Act of 1994) as subsection (e). 

SEC. 804. REPEAL OF OBSOLETE PROVISIONS OF THE BANK HOLDING COMPANY ACT OF 1956. 

(a) IN GENERAL.—Section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 

1841) is amended—

(1) in subsection (c)(2), by striking subparagraphs (I) and (J); and 

(2) by striking subsection (m) and inserting the following new subsection: 

‘‘(m) [Repealed]’’. 

(b) TECHNICAL AND CONFORMING AMENDMENTS.—Paragraphs (1) and (2) of section 

4(h) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(h)) are each amended by striking ‘‘(G), (H), (I), or (J) of section 2(c)(2)’’ and inserting ‘‘(G), or (H) of 

section 2(c)(2)’’. 

TITLE IX—FAIR DEBT COLLECTION 

PRACTICES ACT AMENDMENTS 

SEC. 901. EXCEPTION FOR CERTAIN BAD CHECK ENFORCEMENT PROGRAMS. 

(a) IN GENERAL.—The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.) 

is amended—

(1) by redesignating section 818 as section 819; and 

(2) by inserting after section 817 the following new section: 

‘‘§ 818. Exception for certain bad check enforcement programs operated by 

private entities 

‘‘(a) IN GENERAL.—If—


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‘‘(1) a State or district attorney establishes, within the jurisdiction of such 

State or district attorney and with respect to alleged bad check violations that 

do not involve a check described in subsection (c), a pretrial diversion program 

for alleged bad check offenders who agree to participate voluntarily in such program to avoid criminal prosecution and are not described in subsection (b); 

‘‘(2) a private entity, that is subject to an administrative support services contract with a State or district attorney and operates under the direction, supervision and control of such State or district attorney, operates the pretrial diversion program described in paragraph (1); and 

‘‘(3) in the course of performing duties delegated to it by a State or district 

attorney under the contract, the private entity referred to in paragraph (2)—

‘‘(A) complies with the penal laws of the State; 

‘‘(B) conforms with the terms of the contract and directives of the State 

or district attorney; 

‘‘(C) does not exercise independent prosecutorial discretion; 

‘‘(D) contacts any alleged offender referred to in paragraph (1) for purposes of participating in a program referred to in such paragraph only—

‘‘(i) as a result of any determination by the State or district attorney 

that sufficient evidence of a bad check violation under State law exists 

and that contact with the alleged offender for purposes of participation 

in the program is appropriate; or 

‘‘(ii) as otherwise permitted in response to evidence of a bad check; 

‘‘(E) includes as part of an initial written communication with an alleged 

offender a clear and conspicuous statement that—

‘‘(i) the alleged offender may dispute the validity of any alleged bad 

check violation through a procedure established and supervised by the 

State or district attorney, together with an explanation of how such a 

dispute may be initiated; and 

‘‘(ii) where the alleged offender knows, or has reasonable cause to believe, that the alleged bad check violation is the result of theft or forgery of the check, identity theft, or other fraud that is not the result 

of the alleged offender’s conduct, the alleged offender may file a crime 

report with the appropriate law enforcement agency and have further 

contacts or restitution efforts suspended until the question of the theft 

or forgery of the check, identity theft, or other fraud has been resolved, 

together with clear instructions on how to file such crime report; and 

‘‘(F) charges only fees in connection with services under the contract 

that—

‘‘(i) have been authorized by the contract with the State or district 

attorney; and 

‘‘(ii) conform with the schedule of reasonable charges for such services which shall be established by the National District Attorney’s Association, after consultation with the Commission and representatives 

of interested business and consumer organizations, 

the private entity shall be treated as an officer of the State and excluded from the 

definition of debt collector, pursuant to the exception provided in section 803(6)(C), 

with respect to the entity’s operation of the program described in paragraph (1) 

under the contract described in paragraph (2). 

‘‘(b) CERTAIN OFFENDERS EXCLUDED.—An alleged bad check offender is described 

in this subsection if a private entity described in subsection (a)(2) can determine 

from available records that such offender—

‘‘(1) was convicted of a bad check offense in the 3 years prior to issuing the 

bad check under consideration; or 

‘‘(2) participated in a pretrial diversion program in the 18 months prior to 

issuing the bad check under consideration. 

‘‘(c) CERTAIN CHECKS EXCLUDED.—A check is described in this subsection if the 

check involves, or is subsequently found to involve—

‘‘(1) a postdated check presented in connection with a payday loan, or other 

similar transaction, where the holder of the check knew that the issuer had insufficient funds at the time the check was made, drawn or delivered; 

‘‘(2) a stop payment order where the issuer acted in good faith and with reasonable cause in stopping payment on the check; 

‘‘(3) a check dishonored because of an adjustment to the issuer’s account by 

the financial institution holding such account without providing notice to the 

person at the time the check was made, drawn or delivered; 

‘‘(4) a check for partial payment of a debt where the holder had previously 

accepted partial payment for such debt; 


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‘‘(5) a check issued by a person who was not competent, or was not of legal 

age, to enter into a legal contractual obligation at the time the check was made, 

drawn or delivered; or ‘‘(6) a check issued to pay an obligation arising from a transaction that was 

illegal in the jurisdiction of the State or district attorney at the time the check 

was made, drawn or delivered. ‘‘(d) DEFINITIONS.—For purposes of this section, the following definitions shall 

apply: ‘‘(1) STATE OR DISTRICT ATTORNEY.—The term ‘State or district attorney’ means the chief elected or appointed prosecuting attorney in a district, county 

(as defined in section 2 of title 1, United States Code), municipality, or comparable jurisdiction, including State attorneys general who act as chief elected 

or appointed prosecuting attorneys in a district, county (as so defined), municipality or comparable jurisdiction, who may be referred to by a variety of titles 

such as district attorneys, prosecuting attorneys, commonwealth’s attorneys, solicitors, county attorneys, and state’s attorneys, and who are responsible for the 

prosecution of State crimes and violations of jurisdiction-specific local ordinances. 

‘‘(2) CHECK.—The term ‘check’ has the same meaning as in section 3(6) of the 

Check Clearing for the 21st Century Act. 

‘‘(3) BAD CHECK.—The term ‘bad check’ means any check that—

‘‘(A) the issuer knew, or should have known, would not be paid upon presentment because the issuer—

‘‘(i) had no account with the drawee financial institution at the time 

the check was made, drawn, or delivered; 

‘‘(ii) had closed the account upon with the check was made or drawn 

prior to the time the check was made, drawn, or delivered; or 

‘‘(iii) used a false or altered check, or false or altered check account 

number; or 

‘‘(B) was refused payment by the financial institution or other drawee for 

lack of sufficient funds and the issuer failed to pay the full amount of the 

check, together with reasonable costs as permitted by State law—

‘‘(i) after receiving written notice from the holder of the check that 

payment was refused by the drawee financial institution to the extent 

that the timing and mode of delivery of such written notice is in compliance with the applicable State law for determining criminal liability 

for bad check offenses; or 

‘‘(ii) in a case in which there are no applicable State law requirements as described in clause (i), within 30 days of receiving written notice, mailed to the issuer by certified mail to the address printed on the 

check, or given at the time the check was made, drawn or delivered or, 

otherwise, at the address where the alleged offender resides or is found, 

from the holder of the check that payment of 1 or more checks was refused by the drawee financial institution.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for the Fair Debt Collection 

Practices Act is amended—

(1) by redesignating the item relating to section 818 as section 819; and 

(2) by inserting after the item relating to section 817 the following new item: 

‘‘818. Exception for certain bad check enforcement programs operated by private entities.’’. 

SEC. 902. OTHER AMENDMENTS. 

(a) LEGAL PLEADINGS.—Section 809 of the Fair Debt Collection Practices Act (15 

U.S.C. 1692g) is amended by adding at the end the following new subsection: 

‘‘(d) LEGAL PLEADINGS.—A communication in the form of a formal pleading in a 

civil action shall not be treated as an initial communication for purposes of subsection (a).’’. 

(b) NOTICE PROVISIONS.—Section 809 of the Fair Debt Collection Practices Act (15 

U.S.C. 1692g) is amended by adding after subsection (d) (as added by subsection (a) 

of this section) the following new subsection: 

‘‘(e) NOTICE PROVISIONS.—The sending or delivery of any form or notice which 

does not request the payment of a debt and is expressly required by any other Federal or State law or regulation, including the Internal Revenue Code of 1986, title 

V of Gramm-Leach-Bliley Act, and any data security breach notice and privacy law 

shall not be treated as a communication in connection with debt collection. ’’. 

(c) ESTABLISHMENT OF RIGHT TO COLLECT WITHIN THE FIRST 30 DAYS.—Section 

809(b) of the Fair Debt Collection Practices Act (15 U.S.C. 1692g(b)) is amended by 

striking ‘‘If the consumer’’ and inserting ‘‘Collection activities and communications 

may continue during any 30-day period referred to in subsection (a). However, if the 

consumer’’. 


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PURPOSE AND SUMMARY

H.R. 3505, the ‘‘Financial Services Regulatory Relief Act of 

2005,’’ is intended to alter or eliminate statutory banking provisions in order to lessen the growing regulatory burden on insured 

depository institutions, as well as make needed technical corrections to current law. H.R. 3505 contains a broad range of constructive provisions that, taken as a whole, will allow banks, thrifts, and 

credit unions to devote more resources to the business of providing 

financial services and less to compliance with outdated and 

unneeded regulations. While effective regulation of the financial 

services industry is central to the preservation of public trust, this 

legislation will benefit consumers and the economy by lowering 

costs and improving productivity. 

BACKGROUND AND NEED FOR LEGISLATION

In 2001, Chairman Oxley requested that Federal and State financial regulators, along with financial industry groups, recommend legislative items that would provide regulatory relief for 

insured depository institutions. The purpose was to lessen the regulatory burden, so banks, thrifts, and credit unions could better 

serve their customers and communities. Subsequently, it was also 

intended to be a counterbalance to the significant compliance responsibilities placed on depository institutions by the USA PATRIOT Act as well as other government efforts to counter terrorist 

financing. 

In 2004, John M. Reich, at the time Vice Chairman of the Federal Deposit Insurance Corporation (FDIC) and head of an interagency task force on reducing regulatory burden, stated that while 

‘‘there are no definitive studies of the total cost of regulation, . . . 

a survey of the evidence by a Federal Reserve Board economist in 

1998 found that total regulatory costs account for 12 to 13 percent 

of banks’ noninterest expense, or about $36 billion in 2003.’’ Reich 

also noted that in the 15 years since the enactment of the Financial 

Institutions Reform, Recovery and Enforcement Act (FIRREA), the 

Federal banking and thrift regulatory agencies had promulgated a 

total of 801 final rules, often requiring ‘‘computers to be reprogrammed, staff retrained, manuals updated and new forms produced.’’ While regulatory burden affects all of the financial services industry, it falls particularly hard on smaller institutions. In a notice 

published in the Federal Register, the Federal banking agencies acknowledged both the disproportionate regulatory burden faced by 

small institutions in relation to their larger counterparts, and the 

limitations of a ‘‘one-size-fits-all’’ approach that subjects small institutions to the same regulatory requirements in every instance 

that are imposed upon much larger institutions: 

When a new regulation is created or an old regulation 

is changed, small institutions must devote a large percentage of their staffs’ time to review the regulation to determine if and how it will affect them. Compliance with a regulation also can take large amounts of time that cannot be 

devoted to serving customers or business planning. In a 

large institution, ensuring regulatory compliance can take 

many more hours; however, those hours make up a much 


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1 68 Fed. Reg. 35589, 35591 (June 16, 2003). 

smaller percentage of the institution’s resources. In situations where a regulation is aimed at an activity engaged 

in primarily by large institutions, the compliance burden 

on small institutions can outweigh its benefit.1

The Committee ultimately approved a comprehensive regulatory 

relief bill (H.R. 1375) that passed the House during the 108th Congress by a vote of 392–25; however, the Senate took no action in 

that Congress. 

On July 28, 2005, Mr. Hensarling and Mr. Moore introduced 

H.R. 3505, a bill which includes virtually all of H.R. 1375, plus 

over 20 new provisions and a new title addressing Bank Secrecy 

Act issues. Previously, other Members introduced legislation to give 

regulatory relief to specific sectors of the financial services industry. On May 3, 2005, Mr. Ryun introduced H.R. 2061, the ‘‘Community Banks Serving Their Communities First Act,’’ containing regulatory and tax relief proposals targeted at small community banks. 

On May 12, 2005, Mr. Royce and Mr. Kanjorski introduced H.R. 

2317, the ‘‘Credit Union Regulatory Improvements Act’’ (CURIA), 

which would modify credit union capital requirements and make 

other changes to credit union powers, governance, and regulatory 

oversight. 

For banks, H.R. 3505 includes these provisions: (1) removes the 

prohibition on national and state banks from expanding across 

state lines by opening branches; (2) allows the use of subordinated 

debt instruments to meet eligibility requirements for national 

banks to benefit from Subchapter S tax treatment; (3) eliminates 

unnecessary and costly reporting requirements on banks regarding 

lending to bank officials; (4) changes the exemption from the prohibition on management interlocks for banks in metropolitan statistical areas from $20 million in assets to $100 million; and (5) 

streamlines bank merger application regulatory requirements. 

For savings associations, the bill includes these provisions: (1) removes lending limits on small business and auto loans and increases the limit on other business loans; (2) gives parity with 

banks with respect to broker-dealer and investment adviser SEC 

registration requirements; (3) allows federal thrifts to merge with 

one or more of their non-thrift subsidiaries or affiliates, the same 

as national banks; (4) increases the aggregate limit on commercial 

real estate loans by federal thrifts from 400 to 500 percent of capital; and (5) gives thrifts the same authority as national banks to 

make investments primarily designed to promote community development. 

For credit unions, the bill includes these provisions: (1) expands 

the investment authority of federal credit unions; (2) increases the 

general limit on the term of federal credit union loans from 12 to 

15 years; (3) increases the limit on investment by federal credit 

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

capital and surplus; (4) permits privately insured credit unions to 

be eligible to join a Federal Home Loan Bank; and (5) eases restrictions on voluntary mergers between healthy credit unions. 

For federal financial regulatory agencies, the bill includes these 

provisions: (1) provides agencies the discretion to adjust the examination cycle for insured depository institutions to use agency reVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00046 Fmt 6659 Sfmt 6602 E:\HR\OC\HR356P1.XXX HR356P1

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sources in the most efficient manner; (2) increases from $250 million to $1 billion the asset size of well-capitalized, well-managed 

banks eligible for an 18-month exam schedule and allows banks 

with less than $1 billion in assets to file short-form call reports; (3) 

authorizes the agencies to share confidential supervisory information concerning an examined institution; (4) modernizes agency recordkeeping requirements to allow use of optically imaged or computer scanned images; and (5) clarifies that agencies may suspend 

or prohibit institution-affiliated parties charged with certain crimes 

from participation in the affairs of any depository institution and 

not only the institution with which the individual is or was associated. 

In addition, H.R. 3505 addresses financial institutions’ concerns 

that some of the work they are being asked to do in the fight 

against financial crimes—money laundering and the financing of 

terror—is unnecessary and in some cases duplicative. Title VII 

seeks to make a number of changes, some statutory and others directing swift regulatory changes, to balance law enforcement’s 

needs with the industry’s very real concerns about excessive burdens. 

A major focus is reducing the number of ‘‘currency transaction 

reports’’ (CTRs) that institutions must file on transactions involving more than $10,000 in cash. While a process currently exists 

under which institutions may be exempted from filing CTRs on legitimate business with large cash-based operations—a Wal-Mart or 

a Target store, for example—the process by which an exemption is 

granted is considered by many to be difficult to use and requires 

annual renewals of the exemption. Section 701 of the bill directs 

a swift rewrite of the regulations governing the exemptions to 

make them easier to navigate so that institutions may be freed 

from filing unnecessary CTRs on ‘‘seasoned customers,’’ and directs 

the Secretary to prescribe regulations under which the filing institution may retain the exemption if the institution is acquired or 

merged. The statutory annual renewal requirement is eliminated. 

The bill contains provisions to ease or eliminate inconsistent or 

duplicative requirements to file Suspicious Activity Reports (SARs), 

which complement Section 705 that directs the Secretary to devise 

computer-based methods of filing required reports electronically; 

particularly in the case of CTRs, virtually all of the hands-on filing 

burden of these non-subjective reports could be eliminated when 

Treasury’s Financial Crimes Enforcement Network (FinCEN) 

adopts such measures. 

Title VII also eliminates inconsistencies in the supervision of institutions’ compliance with filing CTRs and SARs; directs the Government Accountability Office to undertake a further study of ways 

to reduce the burden of filing CTRs; directs the Treasury Secretary 

to file annual reports with Congress detailing the anti-money laundering efforts of each country, specifying those that are of primary 

money-laundering concern and detailing those technical efforts that 

Treasury has taken to help countries leave the list of primary 

money-laundering concerns; and expresses the sense of Congress 

that financial institutions and money-service businesses (MSBs) 

should follow guidance issued Spring, 2005, by FinCEN and the 

Federal banking agencies aimed at keeping MSBs within the mainstream of the financial-services industry. 


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HEARINGS

The Subcommittee on Financial Institutions and Consumer Credit held a hearing on H.R. 3505 on September 22, 2005. The following witnesses testified: Mr. William J. Fox, Director, Financial 

Crimes Enforcement Network; the Honorable Mark W. Olson, Governor, Board of Governors of the Federal Reserve System; Ms. Julie 

L. Williams, First Senior Deputy Comptroller and Chief Counsel, 

Office of the Comptroller of the Currency; Mr. William F. Kroener 

III, General Counsel, Federal Deposit Insurance Corporation; Mr. 

John E. Bowman, Chief Counsel, Office of Thrift Supervision; Mr. 

Robert M. Fenner, General Counsel, National Credit Union Administration; Mr. Randall S. James, Commissioner, Texas Department 

of Banking, on behalf of Conference of State Bank Supervisors; and 

Mr. George Latham, Deputy Commissioner, Credit Unions, Bureau 

of Financial Institutions, Virginia State Corporation Commission, 

on behalf of National Association of State Credit Union Supervisors. 

The Subcommittee on Financial Institutions and Consumer Credit held another hearing on H.R. 3505 on October 18, 2005. The following witnesses testified: Mr. Bradley W. Beal, President and 

Chief Executive Officer, Nevada Federal Credit Union, representing National Association of Federal Credit Unions; Mr. Bradley E. Rock, Chairman, President, and Chief Executive Officer, 

Bank of Smithtown, New York, representing American Bankers Association; Ms. Norma Alexander Hart, President, National Bankers 

Association; Mr. Phillip R. Buell, President and Chief Executive Officer, Superior Federal Credit Union, Lima, Ohio, representing 

Credit Union National Association; and Mr. David Hayes, Chairman, Independent Community Bankers of America. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on November 16, 2005, and ordered H.R. 3505, the Financial Services 

Regulatory Relief Act of 2005, favorably reported to the House as 

amended by a record vote of 67 yeas and 0 nays. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto taken with in conjunction with the consideration of this legislation. A motion by Mr. 

Oxley to report the bill, as amended, to the House with a favorable 

recommendation was agreed to by a record vote of 67 yeas and 0 

nays (Record vote No. FC–9). The names of Members voting for and 

against follow: 

Record Vote No. FC–9 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Oxley ............................... X ........... ............. Mr. Frank (MA) ..................... X ........... .............

Mr. Leach .............................. X ........... ............. Mr. Kanjorski ........................ X ........... .............

Mr. Baker .............................. X ........... ............. Mr. Waters ............................ X ........... .............

Ms. Pryce (OH) ...................... X ........... ............. Mr. Sanders 1 ....................... X ........... .............

Mr. Bachus ........................... X ........... ............. Mrs. Maloney ........................ X ........... .............

Mr. Castle ............................. X ........... ............. Mr. Gutierrez ........................ X ........... .............


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Record Vote No. FC–9—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. King (NY) ........................ X ........... ............. Mr. Vela ́zquez ....................... X ........... .............

Mr. Royce .............................. X ........... ............. Mr. Watt ............................... X ........... .............

Mr. Lucas .............................. X ........... ............. Mr. Ackerman ....................... X ........... .............

Mr. Ney .................................. X ........... ............. Ms. Hooley ............................ X ........... .............

Mrs. Kelly .............................. X ........... ............. Ms. Carson ........................... X ........... .............

Mr. Paul ................................ X ........... ............. Mr. Sherman ........................ X ........... .............

Mr. Gillmor ............................ X ........... ............. Mr. Meeks (NY) .................... X ........... .............

Mr. Ryun (KS) ....................... X ........... ............. Ms. Lee ................................. X ........... .............

Mr. LaTourette ....................... X ........... ............. Mr. Moore (KS) ..................... X ........... .............

Mr. Manzullo ......................... X ........... ............. Mr. Capuano ........................ X ........... .............

Mr. Jones (NC) ...................... X ........... ............. Mr. Ford ................................ X ........... .............

Mrs. Biggert .......................... X ........... ............. Mr. Hinojosa ......................... X ........... .............

Mr. Shays .............................. X ........... ............. Mr. Crowley .......................... X ........... .............

Mr. Fossella .......................... X ........... ............. Mr. Clay ................................ X ........... .............

Mr. Gary G. Miller (CA) ......... X ........... ............. Mr. Israel .............................. X ........... .............

Mr. Tiberi .............................. X ........... ............. Mrs. McCarthy ...................... X ........... .............

Mr. Kennedy (MN) ................. X ........... ............. Mr. Baca .............................. X ........... .............

Mr. Feeney ............................. X ........... ............. Mr. Matheson ....................... X ........... .............

Mr. Hensarling ...................... X ........... ............. Mr. Lynch ............................. X ........... .............

Mr. Garrett (NJ) ..................... X ........... ............. Mr. Miller (NC) ..................... X ........... .............

Ms. Brown-Waite (FL) ........... X ........... ............. Mr. Scott (GA) ...................... X ........... .............

Mr. Barrett (SC) .................... X ........... ............. Mr. Davis (AL) ...................... X ........... .............

Ms. Harris ............................. X ........... ............. Mr. Al Green (TX) ................. X ........... .............

Mr. Renzi ............................... X ........... ............. Mr. Cleaver ........................... X ........... .............

Mr. Gerlach ........................... X ........... ............. Ms. Bean .............................. X ........... .............

Mr. Pearce ............................. ........... ........... ............. Ms. Wasserman Schultz ....... X ........... .............

Mr. Neugebauer .................... X ........... ............. Ms. Moore (WI) ..................... X ........... .............

Mr. Price (GA) ....................... X ........... ............. .............................................. ........... ........... .............

Mr. Fitzpatrick (PA) ............... X ........... ............. .............................................. ........... ........... .............

Mr. Davis (KY) ...................... X ........... ............. .............................................. ........... ........... .............

Mr. McHenry .......................... X ........... ............. .............................................. ........... ........... .............

1Mr. Sanders is an independent, but caucuses with the Democratic Caucus. 

The Committee also considered the following amendments: 

An amendment by Mr. Oxley, No. 1, making technical and 

substantive changes, was AGREED TO by a voice vote. 

An amendment by Mr. Leach, No. 2, dealing with industrial 

loan corporations, was WITHDRAWN. 

An amendment by Mr. Renzi, No. 3, providing exception 

from currency transaction reports for seasoned customers, was 

AGREED TO by a voice vote. 

An amendment by Mr. Kanjorski, No. 4, striking Section 301 

which would authorize privately insured credit unions to become members of a Federal home loan bank, was AGREED TO 

by a voice vote, and then reconsidered by voice vote and was 

NOT AGREED TO by a voice vote. 

An amendment by Mr. Meeks of New York, No. 5, dealing 

with minority financial institutions, was AGREED TO by a 

voice vote. 

An amendment by Mrs. Kelly, No. 6, requiring an annual report by the Secretary of the Treasury, was AGREED TO by a 

voice vote. 

An amendment by Mr. Sanders, No. 7, limiting the scope of 

new agency guidelines, was AGREED TO by a voice vote. 

An amendment by Mr. Meeks of New York, No. 8, regarding 

the preservation of money services businesses, was AGREED 

TO by a voice vote. 


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An amendment by Mr. Kennedy of Minnesota, No. 9, requiring exceptions to notice requirements of financial institutions, 

was AGREED TO by a voice vote. 

An amendment by Mr. Price of Georgia, No. 10, dealing with 

credit monitoring services not treated as credit repair, was 

WITHDRAWN. 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee has held hearings and made 

findings that are reflected in this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee establishes the following performance related goals and objectives for this legislation: 

This legislation makes important changes to banking statutes to 

significantly reduce the burden of outdated and unnecessary laws 

and regulations on banks, savings associations, and credit unions. 

The appropriate banking regulatory agencies will streamline regulatory compliance for insured depository institutions in order to improve the efficiency and productivity of those institutions in providing financial services to consumers. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, December 8, 2005. 

Hon. MICHAEL G. OXLEY, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3505, the Financial Services Regulatory Relief Act of 2005. 


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51 

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

to provide them. The CBO staff contacts are Kathleen Gramp (for 

federal costs), Pam Greene (for revenues), Sarah Puro (for the state 

and local impact), and Judith Ruud (for the private-sector impact). 

Sincerely, 

DONALD B. MARRON

(For Douglas Holtz-Eakin, Director). 

Enclosure. 

H.R. 3505—Financial Services Regulatory Relief Act of 2005 

Summary: H.R. 3505 would affect the operations of financial institutions and the agencies that regulate them. Some provisions 

would address specific sectors: national banks could more easily operate as S corporations or adopt other alternative organizational 

structures; thrift institutions would be given some of the same investment, lending, and ownership options available to banks; credit 

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

and leasing federal property; and certain privately insured credit 

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

would give financial regulatory agencies more flexibility in sharing 

data, retaining records, and scheduling examinations. Finally, the 

bill would direct the Secretary of the Treasury to develop various 

reports, regulations, and programs related to currency transactions. 

CBO estimates that enacting this bill would reduce federal reve- nues by $42 million over the next five years and by a total of $120 

million over the 2006–2015 period. In addition, we estimate that direct spending would increase by $2 million over the next five 

years and by a total of $7 million over the 2006–2015 period. Provisions affecting programs funded by annual appropriations would 

cost another $4 million, CBO estimates, assuming appropriation of 

the necessary amounts. 

H.R. 3505 contains intergovernmental mandates as defined in 

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

that the cost of complying with the requirements would be small 

and would not exceed the threshold established in UMRA ($62 million in 2005, adjusted annually for inflation). 

H.R. 3505 contains several private-sector mandates as defined in 

UMRA. Those mandates would affect some depository institutions 

controlled by commercial firms, certain depository institutions and 

institution-affiliated parties, nondepository institutions that control 

depository institutions, uninsured banks, bank holding companies 

and their subsidiaries, and savings and loan association holding 

companies and their subsidiaries. At the same time, the bill would 

relax some restrictions on the operations of certain financial institutions. CBO estimates that the aggregate direct costs of complying 

with the private-sector mandates in the bill would not exceed the 

annual threshold established by UMRA ($123 million in 2005, adjusted annually for inflation). 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 3505 is shown in the following table. The costs 

of this legislation fall within budget function 370 (commerce and 

housing credit). 


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52 

By fiscal year, in millions of dollars—

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 

CHANGES IN REVENUES 

Estimated Revenues: 1

S Corporation Status .................. ¥3 ¥6 ¥9 ¥10 ¥12 ¥10 ¥11 ¥12 ¥14 ¥15 

Business Organization Flexibility * * * ¥1 ¥1 ¥2 ¥2 ¥3 ¥4 ¥5 

Total .................................. ¥3 ¥6 ¥9 ¥11 ¥13 ¥12 ¥13 ¥15 ¥18 ¥20 

CHANGES IN DIRECT SPENDING 

Estimated Budget Authority ................ * * * 1 1 1 1 1 1 1 

Estimated Outlays ............................... * * * 1 1 1 1 1 1 1 

CHANGES IN SUBJECT TO APPROPRIATION 

Estimated Authorization Level ............ 4 0 0 0 0 0 0 0 0 0 

Estimated Outlays ............................... * 4 0 0 0 0 0 0 0 0 

1 Negative revenues indicate a reduction in revenue collections. 

Note.—*= Revenue loss or spending cost of less than $500,000. 

Basis of estimate: Most of the budgetary impacts of this legislation would result from three provisions: section 101, which would 

make it easier for national banks to convert to S corporation status 

or alternative organization forms; and section 302, which would 

allow certain federal credit unions to lease federal land at no 

charge; and title VII, which would direct the Secretary of the 

Treasury to complete various studies, programs, and regulatory 

proceedings. For this estimate, CBO assumes that H.R. 3505 will 

be enacted near the start of calendar year 2006. 

HR. 3505 also would affect the workload at agencies that regulate financial institutions. We estimate that the net change in 

agency spending would not be significant. Based on information 

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

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

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

spending and would be covered by fees or insurance premiums paid 

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

Federal Reserve would affect net revenues, while adjustments in 

the budgets of the Department of the Treasury, Securities and Exchange Commission (SEC), and Federal Trade Commission (FTC) 

would be subject to appropriation. 

Revenues 

CBO estimates that enacting H.R. 3505 would reduce federal tax 

revenues collected from national and state-chartered banks and 

would have an insignificant effect on civil and criminal penalties 

collected for violations of the bill’s provisions. 

S Corporation Status. Under this bill, some national banks would 

find it easier to convert from C corporation status to S corporation 

status. Section 101 would allow directors of national banks to be 

issued subordinated debt to satisfy the requirement that directors 

of a bank own qualifying shares in the bank. This provision would 

effectively reduce the number of shareholders of a bank by removing directors from shareholder status, making it easier for banks 

to comply with the 100-shareholder limit that defines eligibility for 

subchapter-S election. 


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

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

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

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

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

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

on C-corporation income. CBO estimates that enacting this provision would reduce revenues by a total of $40 million over the next 

five years and by $102 million over the 2006–2015 period. 

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

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

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

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

addition, states are likely to amend the rules for state-chartered 

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

conversions to subchapter-S status would occur between 2006 and 

2008 and that national banks would convert earlier than statechartered banks. 

Business Organization Flexibility. Under section 109 of this bill, 

the Comptroller of the Currency could allow national banks to organize in noncorporate form, for example as Limited Liability Corporations (LLCs) as defined by state law. LLCs generally choose to 

be taxed as partnerships. Only a few states currently allow banks 

to organize as LLCs, however, and the IRS currently taxes statechartered bank-LLCs as C corporations. LLCs provide more organizational flexibility than S corporations while retaining the corporate characteristic of limited liability. 

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

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

Income earned by partnerships—like that earned by S corporations—is taxed only at the personal income-tax rates of the partners and is not subject to the corporate income tax. The average 

effective tax rate on partnerships is lower than the average effective tax rate on C-corporation income but is similar to the average 

effective tax rate on S-corporation Income. 

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

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

would alter its regulations to allow national banks to organize in 

noncorporate form. CBO expects that, over the next decade, most 

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

begin allowing them to do so out of competitiveness concerns. CBO 

also expects that the IRS is likely to reconsider allowing passthrough tax treatment to banks organized as LLCs and may allow 

such tax treatment at some point in the next decade. CBO believes 

that banks forming as LLCs would most likely be newly chartered 

institutions. Over the next decade, only a very limited number of 

banks would convert from C corporation or S corporation status to 

LLCs taxed as partnerships. 

CBO estimates that enacting this provision would reduce revenues by a total of $2 million over the next five years and by $18 

million over the 2006–2015 period. 

Civil and Criminal Penalties. H.R. 3505 would make all depository institutions—not just insured institutions—subject to certain 


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civil and criminal fines for violating rules regarding breach of trust, 

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

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

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

falsely implies that deposits or other funds are insured by the 

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

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

penalty collections under those provisions would not be significant. 

Direct spending 

CBO estimates that enacting H.R. 3505 would increase direct spending by a total of about $7 million over the 2006–2015 period 

by reducing offsetting receipts collected from credit unions that 

lease federal facilities. Enacting the bill also could affect the cost 

of deposit insurance, but CBO has no basis for estimating the 

amount of any change. 

Credit Union Leases. Section 302 would allow federal agencies to 

lease land to federal credit unions without charge under certain 

conditions. Under existing law, agencies may allocate space in federal buildings without charge if at least 95 percent of the credit 

union’s members are or were federal employees. Some credit 

unions, primarily those serving military bases, have leased federal 

land to build a facility. Prior to 1991, leases awarded by the Department of Defense (DoD) were free of charge and for terms of up 

to 25 years; a statutory change enacted that year limited the term 

of such leases to five years and required the lessee to pay a fair 

market value for the property. According to DoD, about 35 credit 

unions have leased land since 1991 and are paying a total of about 

$525,000 a year to lease federal property. Those proceeds are recorded as offsetting receipts, and any spending of those payments 

is subject to appropriation. 

CBO expects that enacting this provision would result in a loss 

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

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

next five years. In addition, credit unions that have long-term, nocost leases would be able to renew them without becoming subject 

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

million over the next five years and an average of about $700,000 

annually after 2010. 

Deposit Insurance. Several provisions in the bill could affect the 

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

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

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

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

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

new investment, lending, and operational arrangements authorized 


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

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

costs would be offset by adjustments in the insurance premiums 

paid by banks, thrifts, or credit unions. 

Spending subject to appropriation 

H.R. 3505 also would affect spending for activities funded by annual appropriations. CBO estimates implementing those provisions 

would cost about $4 million over the 2006–2010 period, assuming 

appropriation of the necessary amounts. 

Title VII would direct the Secretary of the Treasury to develop 

and implement various measures related to the reporting of currency transactions. Based on information from the Treasury, CBO 

estimates that it would cost about $4 million to complete the regulations, reports, and programs required by the bill, assuming appropriation of the necessary amounts. 

In addition, section 201 provides thrift institutions with exemptions from broker-dealer and investment-advisor registration requirements similar to those accorded banks. Section 313 provides 

similar exemptions for federally insured credit unions. Based on information from the SEC, CBO estimates that the budgetary effects 

of those exemptions would not be significant. 

Finally, section 312 would exempt federally insured credit unions 

from filing certain acquisition or merger notices with the FTC. 

Under current law, the FTC charges filing fees ranging from 

$45,000 to $280,000, depending on the value of the transaction. 

The collection of such fees is contingent on appropriation action. 

Based on information from the FTC, CBO estimates that this exemption would have no significant effect on the amounts collected 

from such fees. 

Estimated impact on State, local, and tribal governments: H.R. 

3505 contains intergovernmental mandates as defined in the Unfunded Mandates Reform Act because it would preempt certain 

state laws and place new requirements on certain state agencies 

that regulate financial institutions. CBO estimates that the cost of 

complying with the requirements would be small and would not exceed the threshold established in UMRA ($62 million in 2005, adjusted annually for inflation). 

Provisions in section 209 would preempt certain state securities 

laws by prohibiting states from requiring agents who represent a 

federal savings association to register as brokers or dealers if they 

sell deposit products (CDs) issued by the savings association. Such 

a preemption would impose costs (in the form of lost revenues) on 

those states that currently require such registration. Based on information from representatives of the securities industry and securities regulators, CBO estimates that losses to states as a result of 

this prohibition would total less than $1 million a year. 

Other provisions of the bill would place requirements on state 

regulators of credit unions to review documents related to federal 

deposit insurance and to provide certain information to the NCUA. 

Also, section 401 would extend certain preemptions of state laws 

related to mergers between insured depository institutions chartered in different states and preempt state laws that regulate certain fiduciary activities performed by insured banks and other depository institutions. Section 619 provides that only certain bank 


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supervisors may impose supervisory fees on the bank. Based on information from industry authorities and state entities, CBO estimates that these provisions would impose minimal costs, if any, on 

state, local, and tribal governments. 

Estimated impact on the private sector: H.R. 3505 contains several private-sector mandates as defined by UMRA. At the same 

time, the bill would relax some restrictions on the operations of certain financial institutions. CBO estimates that the aggregate direct 

costs of mandates in the bill would not exceed the annual threshold 

established in UMRA ($123 million in 2005, adjusted annually for 

inflation). 

Mandates in the bill include a prohibition of interstate branching 

by certain depository institutions controlled by commercial firms, 

an expansion of the authority of federal banking agencies over insured depository institutions and institution-affiliated parties with 

respect to safety and soundness enforcement, and restrictions on 

participation in the affairs of financial institutions of people convicted of certain crimes or the subject of certain criminal proceedings. 

Prohibition of interstate branching by subsidiaries commercial 

firms 

The bill would prohibit interstate branching by industrial loan 

companies or industrial banks or certain other depository institutions that are controlled by firms that derive 15 percent or more 

of their revenues from nonfinancial activities. The prohibition 

would not apply to such institutions that became insured depository institutions before October 1, 2003. 

This mandate only applies to a handful of institutions, none of 

which currently operates any branches. While the mandate does 

take away their option to open branches in other states, according 

to government and industry sources, the affected institutions had 

no immediate plans to use the option to branch. Consequently, 

CBO estimates that there would be little or no direct cost to comply 

with this mandate. 

Enhanced safety and soundness enforcement 

The bill would expand some of the authorities of federal banking 

agencies with respect to troubled or failing institutions, and institution-affiliated parties. Based on information from the FDIC, the 

cost to the private sector of these expanded authorities would be 

small. 

The Gramm-Leach-Bliley Act allowed new forms of affiliations 

among depositories and other financial services firms. Consequently, insured depository institutions may now be controlled by 

a company other than a depository institution holding company 

(DIHC). The bill would amend current law to give the FDIC certain 

authorities concerning troubled or failing depository institutions 

held by those new forms of holding companies. 

Cross-Guarantee Authority. Under current law, if the FDIC suffers a loss from liquidating or selling a failed depository institution, 

the FDIC has the authority to obtain reimbursement from any insured depository institution within the same DIHC. Section 407 

would expand the scope of the FDIC’s reimbursement power to inVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00056 Fmt 6659 Sfmt 6602 E:\HR\OC\HR356P1.XXX HR356P1

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clude all insured depository institutions controlled by the same 

company, not just those controlled by the same DIHC. 

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

the probability of failure of the additional institutions subject to 

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

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

to a handful of depository institutions. Based on information from 

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

be substantial. 

Golden Parachute Authority and Nonbank Holding Companies. 

Section 408 would allow the FDIC to prohibit or limit any company 

that controls an insured depository from making ‘‘golden parachute’’ payments or indemnification payments to institution-affiliated parties of troubled or failing insured depositories. (Institutionaffiliated parties include directors, officers, employees, and controlling shareholders. Institution-affiliated parties also include independent contractors such as accountants or lawyers who participate 

in violations of the law or undertake unsound business practices 

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

depository institution.) 

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

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

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

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

Restrictions on convicted individuals 

Current law prohibits a person convicted of a crime involving dishonesty, a breach of trust, or money laundering from participating 

in the affairs of an insured depository institution without FDIC approval. The bill would extend that prohibition so that uninsured 

banks, bank holding companies and their subsidiaries, and savings 

and loan holding companies and their subsidiaries could not allow 

such persons to participate in their affairs without the prior written consent of their designated federal banking regulator. 

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

cost of complying with this mandate would be small. 

Estimate prepared by: Federal Spending: Kathleen Gramp. Federal Revenues: Pam Greene. Impact on State, Local and Tribal 

Governments: Sarah Puro. Impact on the Private Sector: Judith 

Ruud. 

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis; G. Thomas Woodward, Assistant Director for Tax Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 


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CONSTITUTIONAL AUTHORITY STATEMENT

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

of Representatives, the Committee finds that the Constitutional 

Authority of Congress to enact this legislation is provided by Article 1, section 8, clause 1 (relating to the general welfare of the 

United States) and clause 3 (relating to the power to regulate interstate commerce). 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title; table of contents 

This section establishes the short title of the bill, the ‘‘Financial 

Services Regulatory Relief Act of 2005,’’ and provides a table of contents. 

Title I—National Bank Provisions 

Section 101. National bank directors 

Currently, all directors of a national bank must own shares of 

the bank having an aggregate par value of at least $1,000, or an 

equivalent interest in the bank holding company that controls the 

bank. This requirement creates difficulties for some national banks 

that operate or wish to operate in subchapter S form. It effectively 

requires that all directors be shareholders, thus making it difficult 

or impossible for a bank to comply with the 75-shareholder limit 

that defines eligibility for the benefit of subchapter S tax treatment, which avoids double tax on the bank’s earnings. This section 

permits the Office of the Comptroller of the Currency (OCC) to 

allow the use of a debt instrument that is subordinated to all other 

liabilities of the bank to satisfy the qualifying shares requirement 

by directors of banks operating in subchapter S status. Such a subordinated debt instrument would be closely equivalent to an equity 

capital interest, since the directors could only be repaid if all other 

claims of depositors and nondeposit creditors of the bank (including 

the FDIC) were first paid in full, and would therefore ensure that 

directors retain their personal stake in the financial soundness of 

the bank. 

Section 102. Voting in shareholder elections 

Current law imposes mandatory cumulative voting requirements 

on all national banks. This section permits a national bank to provide in its articles of association which method of electing its directors best suits its business goals and needs. A national bank would 

choose whether to allow cumulative voting. 

Section 103. Simplifying dividend calculations for national banks 

This section provides more flexibility than current law to a national bank to pay dividends as deemed appropriate by its board 


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of directors. The current requirement that OCC’s approval is necessary if the dividend exceeds a certain amount is retained. 

Section 104. Repeal of obsolete limitation on removal authority of 

the Comptroller of the Currency 

Under current law all of the federal banking agencies, except for 

the OCC, may remove a person who engages in certain improper 

conduct from the banking business. The determination of whether 

to remove an individual from a national bank is made by the Federal Reserve Board. This section would give OCC the same removal 

authority as the other banking agencies. 

Section 105. Repeal of intrastate branch capital requirements 

Currently, a national bank, in order to establish an intrastate 

branch in a state, must meet the capital requirements imposed by 

the state on state banks seeking to establish intrastate branches. 

This section eliminates this requirement. Branching restrictions 

are already imposed under other provisions of law to limit the operations of a bank if it is in troubled condition. 

Section 106. Clarification of waiver of publication requirements for 

bank merger notices 

This section clarifies that the requirement to publish a notice for 

shareholders that applies in the case of a consolidation or merger 

of a national bank with another bank located within the same state 

may be waived by OCC in emergency situations or by unanimous 

vote of the shareholders. 

Section 107. Equal treatment for Federal agencies of foreign banks 

This section provides that federal agencies of foreign banks have 

the same right as state agencies of foreign banks to receive limited 

foreign source uninsured deposits (deposits that are not from U.S. 

citizens or residents). 

Section 108. Maintenance of a Federal branch and a Federal agency 

in the same State 

Current law prohibits a foreign bank from operating both a federal branch and a federal agency in the same state. This section 

permits a foreign bank to maintain both a branch and an agency 

in those states that do not prohibit a foreign bank from maintaining both. 

Section 109. Business organization flexibility for national banks 

This section allows banks to choose among different forms of 

business organizations, as permitted by the Comptroller of the Currency. For example, if the Comptroller should permit a national 

bank to organize as a limited liability company (LLC), the bank 

may be able to take advantage of the pass-through tax treatment 

for LLCs under certain tax laws and eliminate double taxation, 

under which the same earnings are taxed both at the corporate 

level as income and at the shareholder level as dividends. The LLC 

structure may be particularly attractive for community banks and 

could provide a more flexible structure than a Subchapter S corporation. 


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Section 110. Clarification of the main place of business of a national bank 

This section clarifies where a national bank’s principal place of 

business is located for corporate status purposes. 

Section 111. Capital Equivalency deposits for Federal branches and 

agencies of foreign banks 

Under current law, Federal branches and agencies of foreign 

banks are required to hold capital equivalency deposits (CEDs) in 

Federal Reserve member banks, equal to at least 5 percent of the 

liabilities of the branch or agency. State branches and agencies are 

subject to similar asset pledge requirements, but State banking 

commissioners often have flexibility to adjust the requirement to 

take into account the circumstances of the institution involved. 

This section would give the Comptroller of the Currency similar 

discretion to adjust the amount of the CED; however, OCC may not 

permit a foreign bank to keep assets on deposit in an amount that 

is less than the amount required for a State branch or agency of 

a foreign bank under the laws and regulations of the State in 

which the Federal branch or agency is located. 

Section 112. Enhancing the authority for national banks to make 

community development investments 

Under current law, national banks are authorized to make investments designed primarily to promote the public welfare, including the welfare of low- and moderate-income communities or families, either directly or by purchasing interests in an entity primarily engaged in such investments. Aggregate investments are 

limited to 5 percent of a national bank’s unimpaired capital and 

surplus, unless the Comptroller of the Currency determines that a 

higher amount will pose no significant risk to the deposit insurance 

fund and the bank is adequately capitalized. However, in no case 

may OCC permit a bank’s aggregate investments to exceed 10 percent of unimpaired capital and surplus. This section increases the 

maximum limit from 10 to 15 percent. 

Title II—Savings Association Provisions 

Section 201. Parity for savings associations under the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940 

This section exempts Federal savings associations from the investment adviser and broker-dealer registration requirements to 

the same extent that banks are exempt under the Investment Advisers Act of 1940 and the Securities and Exchange Act of 1934. 

Section 202. Investments by Federal savings associations authorized 

to promote the public welfare 

This section amends the Home Owners’ Loan Act (HOLA) to give 

federal thrift institutions the same authority national banks and 

state member banks have to make investments primarily designed 

to promote the public welfare, directly or indirectly by investing in 

an entity primarily engaged in making public welfare investments. 

The provision establishes an aggregate limit on investments of 5 

percent of a thrift’s capital and surplus, unless the Office of Thrift 

Supervision determines the thrift is adequately capitalized and 


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that a higher amount poses no significant risk to the deposit insurance fund. In no case may the aggregate investments by a thrift 

exceed 15 percent of its capital and surplus, consistent with Section 

112. Thrifts may use this new community development investment 

authority without regard to the prohibition against acquiring or retaining corporate debt that is not of investment grade; no similar 

limit applies to banks. 

Section 203. Mergers and consolidations of Federal savings associations with non-depository institution affiliates 

This section gives federal thrift institutions the authority to 

merge with one or more of their non-thrift affiliates, equivalent to 

recently-enacted authority for national banks. Thrifts would continue to have the authority to merge with other depository institutions, but could not merge with other kinds of entities. 

Section 204. Repeal of statutory dividend notice requirement for 

savings association subsidiaries of savings and loan holding 

companies 

This section eliminates the requirement that any thrift institution owned by a savings and loan holding company must notify 

OTS 30 days before paying a dividend. Instead, OTS would have 

the discretion to require prior notice and could establish reasonable 

conditions on the payment of dividends. 

Section 205. Modernizing statutory authority for trust ownership of 

savings associations 

This section conforms the treatment of trusts that own thrift institutions to the treatment of trusts that own banks. 

Section 206. Repeal of overlapping rules governing purchased mortgage servicing rights 

This section repeals the overlapping, obsolete requirements governing purchased mortgage servicing rights (PMSRs) in the Home 

Owners’ Loan Act. Section 475 of the Federal Deposit Insurance 

Corporation Improvement Act of 1991 will continue to govern the 

valuation of PMSRs for savings associations and other depository 

institutions. Section 475 already permits overriding the valuation 

limit, and repealing this provision will simply eliminate potential 

confusion without sacrificing safety and soundness objectives. 

Section 207. Restatement of authority for Federal savings associations to invest in small business investment companies 

This section restates recently-enacted statutory authority for federal savings associations to invest in small business investment 

companies (SBICs) and entities established to invest solely in 

SBICs. Savings associations are subject to an aggregate 5 percent 

of capital limit on such investments. 

Section 208. Removal of limitation on investments in auto loans 

Federal savings associations are currently limited in making 

automobile loans to 35 percent of total assets. This asset limitation 

is removed by this section. 


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Section 209. Selling and offering of deposit products 

This section exempts insurance agents, who represent a Federal 

savings association in selling FDIC-insured certificate of deposit 

(CD) products, from registering as securities law agents under 

state law. Safeguards are provided, so that agents may not accept 

deposits or make withdrawals for any customer of the savings association, may not sell CDs for any entity that is not subject to federal or state regulation or sell CDs that are not federally insured, 

and may not create a secondary market in CDs or otherwise add 

features to CDs independent of the savings association. 

Section 210. Funeral- and cemetery-related fiduciary services 

This section authorizes a funeral director or cemetery operator to 

engage a Federal savings association to act in any fiduciary capacity, including holding funds deposited in trust or escrow by the funeral director or cemetery operator. 

Section 211. Repeal of qualified thrift lender requirement with respect to out-of-state branches 

Under current law, Federal savings associations must meet the 

qualified thrift lender (QTL) test both as an entity operating regionally or nationally and in each state where there are branches. 

This section eliminates the requirement to meet the QTL test on 

a state-by-state basis, only requiring savings associations to meet 

the test on the basis of entire multi-state operations. 

Section 212. Small business and other commercial loans 

For Federal savings associations, this section eliminates the 

lending limit on small business loans and increases the lending 

limit on other business loans from 10 to 20 percent of assets. 

Section 213. Clarifying citizenship of Federal savings associations 

for Federal court jurisdiction 

This section treats Federal savings associations for purposes of 

Federal court diversity jurisdiction as being a citizen of two states: 

the state in which the thrift has its home office and the state in 

which it has its principal place of business. 

Section 214. Increase in limits on commercial real estate loans 

This section increases the aggregate limit on commercial real estate loans by Federal savings associations from 400 to 500 percent 

of the thrift’s capital. 

Section 215. Repeal of one limit on loans to one borrower 

Under their current loans-to-one-borrower authority, savings as- sociations may lend the lesser of $30 million or 30 percent of 

unimpaired capital and surplus for residential development. This 

section eliminates a provision that imposes a $500,000 per-unit cap 

on the purchase price of residential units financed under this authority. 

Section 216. Savings association credit card banks 

Under current law, a savings and loan holding company cannot 

own a credit card savings association and still be exempt from the 

activity restrictions imposed on companies that control multiple 


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thrifts. However, a savings and loan holding company could charter 

a credit card institution as a national or state bank and still be exempt from the activity restrictions imposed on multiple savings and 

loan holding companies. This section amends the Home Owner’s 

Loan Act to permit a savings and loan holding company to charter 

a credit card savings association and still maintain its exempt status. It also clarifies that a savings association credit card bank continues to be subject to the Qualified Thrift Lender (QTL) test under 

HOLA. 

Section 217. Interstate acquisitions by S&L holding companies 

This section amends the Home Owner’s Loan Act to permit a 

multiple savings association to acquire associations in other states 

under the same rules that apply to bank holding companies under 

the Riegle-Neal Interstate Banking and Branching Efficiency Act of 

1994. 

Section 218. Business organization flexibility for federal savings associations 

Section 109 allows national banks to choose among different 

forms of business organizations, as permitted by the Comptroller of 

the Currency. Such organizations include a limited liability company, whereby the institution may be able to take advantage of the 

pass-through tax treatment for LLCs under certain tax laws and 

eliminate double taxation. This section provides federal thrift institutions the same business organization flexibility. 

Title III—Credit Union Provisions 

Section 301. Privately insured credit unions authorized to become 

members of a Federal Home Loan Bank 

This section permits privately insured credit unions to apply to 

become members of a Federal Home Loan Bank. Currently, only 

federally insured credit unions may become members. The state 

regulator of a privately insured credit union applying for Federal 

Home Loan Bank membership would have to certify that the credit 

union meets the eligibility requirements for federal deposit insurance before it would qualify for membership in the Federal Home 

Loan Bank system. The section clarifies that the Federal Home 

Loan Bank System’s superlien—which gives the System priority in 

the event that one of its borrowers becomes insolvent—remains in 

effect notwithstanding any conflicting state law. The section requires that the statutorily mandated annual audit of any entity 

that provides private deposit insurance to credit unions must be 

submitted to the Federal Housing Finance Board and the National 

Credit Union Administration (NCUA). 

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

This section gives military and civilian authorities responsible for 

buildings erected on federal property the discretion to extend to 

credit unions that finance the construction of credit union facilities 

on federal land real estate leases at minimal charge. 


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Section 303. Investments in securities by Federal credit unions 

The Federal Credit Union Act currently limits the investment 

authority of federal credit unions to loans, government securities, 

deposits in other financial institutions, and certain other limited 

investments. This section provides additional investment authority 

to purchase for the credit union’s own account certain investment 

securities of investment grade. The total amount of the investment 

securities of any one obligor or maker could not exceed 10 percent 

of the credit union’s net worth. 

Section 304. Increase in general 12-year limitation of term of Federal credit union loans to 15 years 

Currently, federal credit unions are authorized to make loans to 

members, to other credit unions, and to credit union service organizations. The Federal Credit Union Act imposes various restrictions 

on these authorities, including a 12-year maturity limit that is subject to limited exceptions. This section would amend the Federal 

Credit Union Act to allow loan maturities up to 15 years, or longer 

terms as permitted by the National Credit Union Administration 

Board. 

Section 305. Increase in 1 percent investment limit in credit union 

service organizations 

The Federal Credit Union Act authorizes federal credit unions to 

invest in organizations providing services to credit unions and credit union members. An individual federal credit union, however, 

may invest in aggregate no more than one percent of its shares and 

undivided earnings in these organizations, commonly known as 

credit union service organizations or CUSOs. This section raises 

the limit to three percent. 

Section 306. Member business loan exclusion for loans to non-profit 

religious organizations 

This section excludes loans or loan participations by federal credit unions to non-profit religious organizations from the member 

business loan limit contained in the Federal Credit Union Act. 

Section 307. Check cashing and money transfer services offered 

within the field of membership 

This section amends the Federal Credit Union Act to allow Federal credit unions to sell negotiable checks, money orders, and 

other similar transfer instruments, including international and domestic electronic fund transfers, to anyone eligible for membership, 

regardless of their membership status. Under current law, a credit 

union is only authorized to provide such services to those who are 

already members. 

Section 308. Voluntary mergers involving multiple common-bond 

credit unions 

In voluntary mergers of multiple bond credit unions, NCUA has 

determined that it must consider not transferring employee groups 

over 3,000 from the merging credit union and requiring such 

groups to spin off and form separate credit unions. This section 

provides that this numerical limitation does not apply in voluntary 

mergers. 


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Section 309. Conversions involving common-bond credit unions 

This section requires that when a single or multiple common 

bond credit union voluntarily merges with or converts to a community credit union, NCUA must establish the criteria whereby it 

may determine that a member group or other portion of a credit 

union’s existing membership, located outside the community, can 

be satisfactorily served and remain within the credit union’s field 

of membership. 

Section 310. Credit union governance 

This section gives federal credit union boards of directors flexibility to expel a member who is disruptive to the operations of the 

credit union, including harassing personnel and creating safety 

concerns, without the need for a two-thirds vote of the membership 

present at a special meeting as required by current law. Federal 

credit unions are authorized to limit the length of service of their 

boards of directors to ensure broader representation from the membership. Finally, this section allows federal credit unions to reimburse board of director volunteers for wages they would otherwise 

forfeit by participating in credit union affairs. 

Section 311. Providing the National Credit Union Administration 

with greater flexibility in responding to market conditions 

Under this section, in determining whether to lift the usury ceiling for federal credit unions, NCUA will consider rising interest 

rates or whether prevailing interest rate levels threaten the safety 

and soundness of individual credit unions. 

Section 312. Exemption from pre-merger notification requirement of 

the Clayton Act 

This section gives federally insured credit unions the same exemption as banks and thrift institutions from pre-merger notification requirements and fees imposed by federal antitrust law. 

Section 313. Treatment of credit unions as depository institutions 

under securities laws 

This section gives federally insured credit unions exemptions, 

similar to those provided banks, from the broker-dealer and investment adviser registration requirements of the Securities and Exchange Act of 1934 and the Investment Advisers Act of 1940. 

Section 314. Clarification of definition of net worth under certain 

circumstances for purposes of prompt corrective action 

This section amends the Federal Credit Union Act’s prompt corrective action requirements by redefining a credit union’s net worth 

as the retained earnings balance of the credit union (as determined 

under generally accepted accounting principles, as under current 

law), together with any amounts that were previously retained 

earnings of any other credit union with which the credit union has 

merged. 

Section 315. Amendments relating to nonfederally insured credit 

unions 

This section amends Section 43 of the Federal Deposit Insurance 

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quirements for depository institutions lacking federal deposit insurance (primarily state-chartered credit unions). The amendments 

update the section’s disclosure provisions, repeal certain provisions 

as inappropriate and unnecessary, ensure that state supervisors of 

the institutions and private insurers can enforce the section, and 

ensure effective Federal Trade Commission (FTC) enforcement. 

Section 43 of the FDIA was added in 1991 by the Federal Deposit 

Insurance Corporation Improvement Act (FDICIA). It was further 

refined in 1994 to allow alternative notifications to customers via 

the mail. From 1993 to 2003, federal appropriations acts barred the 

FTC from expending funds to enforce this section. In FY 2004, the 

spending restriction was lifted, allowing the FTC to enforce this 

provision of law. 

Subsection (a) allows state supervisors of private insurers, and 

appropriate state supervisors of depository institutions that receive 

privately insured deposits in their states, to examine and enforce 

compliance with Section 43’s requirements for private insurer audits. 

Subsection (b) strikes the term ‘‘or similar instrument evidencing 

a deposit’’ and inserts ‘‘or share certificate,’’ clarifying that disclosures are not required on deposit slips. 

Subsection (c) makes minor exemptions to the requirement that 

‘‘all advertising’’ must conspicuously display that the institution is 

not federally insured. Such exemptions include (i) statements or reports of financial condition required by state or federal regulation, 

(ii) signs, documents or logos that do not include any information 

about the institution’s products or services, and (iii) small utilitarian items that do not mention deposit products or insurance if 

inclusion of the notice would be impractical. 

Subsection (d) updates the time frame and improves the disclosure requirements for depositors at privately insured institutions. 

First, the subsection requires that that new depositors, obtained 

other than through a conversion or merger, must sign an acknowledgement card that the institution is not federally insured, and 

that if the institution fails, the federal government does not guarantee that the depositor will get back the depositor’s money. Second, the subsection requires this acknowledgement for new depositors obtained through a conversion or merger. Those depositors 

must sign the acknowledgement or receive a letter within 45 days 

of the conversion seeking to obtain the acknowledgement. NCUA 

regulations governing the conversion and merger process provide 

for extensive disclosure to depositors before the conversion or merger. Finally, customers who are currently in a privately insured institution must receive a new mailing seeking an acknowledgement 

card. 

Subsection (e) repeals the provision prohibiting non-federally insured depository institutions other than banks from using instruments of interstate commerce (such as mail, telephone, or the 

Internet) to accept deposits unless the institution meets all requirements for federal deposit insurance. Enforcement of this provision 

could effectively require many privately insured credit unions to 

cease operations, causing disruption and depositor losses, regardless of whether the credit union’s state regulator deems it financially sound. 


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Subsection (f) repeals the provision allowing the FTC to identify 

entities that are not depository institutions but could reasonably be 

mistaken for depository institutions, thereby subjecting those entities to the requirements of Section 43. Any such entities are already likely either to be subject to another regulatory scheme, such 

as federal securities law, or to be engaging in significant deception 

subject to enforcement under other laws. In either case, Section 

43’s regulatory approach is unnecessary and may create conflicts. 

This subsection excludes uninsured national banks and state member banks from the scope of its coverage. 

Subsection (g) limits FTC enforcement to the disclosure requirements of Section 43 (which are particularly within its purview), 

and expressly authorizes examination and enforcement of Section 

43 by the appropriate state supervisor of an institution’s chartering 

state. In particular, state supervisors may be able readily to incorporate examinations for compliance into their regular examinations, thus providing efficient oversight of the requirements. 

Title IV—Depository Institution Provisions 

Section 401. Easing restrictions on interstate branching and mergers 

This section removes the prohibition in current law on national 

and state banks expanding through de novo interstate branching. 

Currently, banks may expand in this fashion only if a state’s law 

expressly permits interstate branching. This section clarifies that a 

state member bank may establish a de novo interstate branch 

under the same terms and conditions applicable to national banks. 

The authority for a state to prohibit an out-of-state bank or bank 

holding company from acquiring, through merger or acquisition, an 

in-state bank that has not existed for at least five years is eliminated. Insured banks are authorized to acquire by merger or consolidation another insured depository institution (including a savings association) or an uninsured trust company that has a different home state than the acquiring insured bank. Industrial loan 

companies (ILCs) controlled by firms that derive 15 percent or 

more of their consolidated revenues from non-financial activities 

would not be permitted to engage in interstate branching, unless 

the ILC became an insured depository institution prior to October 

1, 2003. 

This section permits a state bank supervisor to authorize state 

trust companies it supervises to act in a fiduciary capacity on an 

interstate basis either with or without interstate offices. Such activities must not be in contravention of state law, but will not be 

deemed to contravene state law to the extent that a host state 

grants to its trust institutions the fiduciary powers sought to be exercised on an interstate basis. This authority parallels existing authority of national banks and national trust companies under the 

National Bank Act. 

Section 402. Statute of limitations for judicial review of appointment of a receiver for depository institutions 

This section provides greater consistency in federal law governing how much time an insured depository institution has to 

challenge the appointment of a receiver. 


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Section 403. Reporting requirements relating to insider lending 

This section eliminates certain reporting requirements currently 

imposed on banks and their executive officers and principal shareholders related to lending by banks to insiders. This would not 

alter restrictions on the ability of banks to make insider loans or 

limit the ability of federal banking agencies to take enforcement action against a bank or its insiders for violation of lending limits. 

Section 404. Amendment to provide an inflation adjustment for the 

small depository institution exception under the Depository Institution Management Interlocks Act 

The Depository Institutions Management Interlocks Act prohibits 

depository organizations from having interlocking management officials, if the depositories are located or have an affiliate located in 

the same metropolitan statistical area, primary metropolitan statistical area, or consolidated metropolitan statistical area. This statutory prohibition does not apply to depository organizations that 

have less than $20 million in assets. This section increases the exemption limit to $100 million in assets. 

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

This section provides that the federal banking agencies may enforce conditions imposed in writing and written agreements in 

which an institution-affiliated party or controlling shareholder 

agrees to provide capital to the depository institution. Transfers to 

depository institutions to bolster their capital will not be reversed 

if the institution-affiliated party or controlling shareholder later becomes bankrupt. This section also clarifies existing FDIC authority 

as receiver or conservator to enforce written conditions or agreements. The agreements referenced in this section are not contracts 

and will not be enforced as such. 

Section 406. Investments by insured savings associations in bank 

service companies authorized 

Bank service companies allow one or more banks to establish a 

subsidiary or participate in a joint venture with other banks to provide banking or related services. Activities are limited to services 

for depository institutions, such as check sorting/posting and bookkeeping. This section permits thrifts to invest in a bank service 

company on the same basis as banks, but otherwise preserves current structure, terms, limits, and conditions. It permits banks to invest in thrift service companies as well. 

This section clarifies that an investor in a bank service company 

must seek Federal Reserve approval to engage in an activity that 

could be authorized only under the Bank Service Company Act’s 

Section 4(f)—that is, activities on the Fed’s Section 4(c)(8) list that 

are beyond what the depository institution can do under its charter. All activities otherwise permissible for an investor in a bank 

service company are subject to the jurisdiction of the institution’s 

appropriate federal bank regulator, according to the terms of the 

Bank Service Company Act or other applicable federal laws. 


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Section 407. Cross guarantee authority 

This section clarifies the scope of cross guarantee liability to include all insured depository institutions commonly controlled by 

the same company. The assessment of liability by the FDIC would 

continue to be only against the insured depository institution commonly controlled with the defaulting institution. 

Section 408. Golden parachute authority and nonbank holding companies 

This section clarifies that the FDIC could prohibit or limit a 

nonbank holding company’s golden parachute payment or indemnification payment to institution-affiliated parties. 

Section 409. Amendments relating to change in bank control 

The Change in Bank Control Act authorizes federal banking 

agencies to disapprove a change-in-control notice within a set period of time. Change-in-control notices are subject to strict time periods for disapproval and extensions of time beyond 45 days are 

available only in limited circumstances. This section allows federal 

banking agencies to extend the time for review of the notice to consider business plan information, which is already collected, and to 

use that information in determining whether to disapprove the notice. 

Section 410. Community reinvestment credit for ESOPS and 

EWOCS 

This section amends the Community Reinvestment Act of 1977 

to permit the appropriate Federal financial supervisory agency to 

consider activities that support or enable the establishment of employee stock ownership plans or eligible worker-owned cooperatives 

for Community Reinvestment Act credit. 

Section 411. Minority financial institutions 

This section requires the Federal Deposit Insurance Corporation 

and the Office of Thrift Supervision to provide technical assistance 

to minority financial institutions affected by Hurricanes Katrina, 

Rita, and Wilma, as appropriate to preserve the present number of 

minority depository institutions and preserve the minority character in mergers or acquisitions of a minority depository institution, consistent with Section 308(a) of the Financial Institutions 

Reform, Recovery, and Enforcement Act of 1989. 

Title V—Depository Institution Affiliates Provisions 

Section 501. Clarification of cross marketing provision 

The cross marketing provisions of the Gramm-Leach-Bliley Act 

were enacted to provide a safeguard against the mixing of banking 

and commerce. Cross marketing could lead to the integration of a 

portfolio company into a bank’s operations, making the portfolio 

company a de facto division of a bank. If, however, the portfolio 

company was not under the control of the financial holding company, it could not function as a division of a subsidiary bank. This 

section provides that the cross marketing prohibition would only 

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tional provisions of Section 2 of the Bank Holding Company Act. 

Cross-marketing arrangements between depository institutions and 

non-financial companies would be authorized when the shares of 

those companies are owned or controlled by a securities firm or its 

affiliate. 

Section 502. Amendment to provide the Federal Reserve Board with 

discretion concerning the imputation of control of shares of a 

company by trustees 

Currently, any shares held by a trust for the benefit of a bank 

holding company, or its shareholders, members, or employees are 

deemed to be controlled by the company. This is intended to prevent a bank holding company from evading restrictions on the acquisition of shares of banks and nonbanking companies by having 

such shares acquired by a trust controlled by the company, either 

directly or through its management, shareholders, or employees. 

This section allows the Federal Reserve Board to waive this socalled attribution rule in circumstances where the Board determines such action is appropriate. 

Section 503. Eliminating geographic limits on thrift service companies 

This section permits federal thrift institutions to invest in service 

companies without regard to geographic restrictions. 

Section 504. Clarification of scope of applicable rate provision 

Currently, an insured depository institution chartered with a 

home office in a state that has a constitutional usury ceiling may 

charge an interest rate on loans equal to the rate charged by national banks or federal savings associations located in the state. 

This section permits finance companies located in these states to 

charge the same rates as national and state banks. 

Section 505. Savings associations acting as agents for affiliated depository institutions 

This section amends the Federal Deposit Insurance Act to give 

Federal savings associations the same authority as banks to act as 

agents for their affiliated depository institutions. 

Section 506. Credit card bank investments for the public welfare 

This section permits credit card banks to make an investment if 

the investment primarily benefits low- and moderate-income individuals, low- and moderate-income areas, or other areas targeted 

by a governmental entity for redevelopment, or if the investment 

would receive consideration as a ‘‘qualified investment’’ subject to 

appropriate regulation. Such investments would have to be consistent with the safe and sound operations of an institution and 

cannot exceed 5% of an institution’s capital and surplus. 

Title VI—Banking Agency Provisions 

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

This section permits the appropriate federal banking agencies to 

adjust the examination cycle of insured depository institutions to 


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ensure that examiner resources are allocated in a manner that provides for the safety and soundness of insured depository institutions. This section permits the agencies, when necessary for safety 

and soundness purposes, to adjust their mandatory examination 

schedules to use their resources in the most efficient manner. 

Section 602. Interagency data sharing 

The Gramm-Leach-Bliley Act gave the Federal Reserve Board 

authority to provide confidential supervisory information concerning an examined entity to another supervisory authority, an officer, director, or receiver of the examined entity, or any other person determined by the supervisory agency to be appropriate. This 

section gives the same authority to all federal banking agencies. 

Section 603. Penalty for unauthorized participation by convicted individual 

A person convicted of a crime involving dishonesty or a breach 

of trust may not participate in the affairs of an insured depository 

institution without FDIC approval. Certain special purpose banks 

and foreign banking institutions operate without insured status 

(e.g., trust banks and foreign branches). This section extends the 

prohibition to include uninsured national and state member banks 

and uninsured offices of foreign banks. 

Section 604. Amendment permitting the destruction of old records 

of a depository institution by the FDIC after the appointment of 

the FDIC as receiver 

This section modifies the requirement for retention of old records 

of a failed insured depository institution when a receiver is appointed. The FDIC is authorized to destroy records that are more 

than ten years old at the time of its appointment as receiver, so 

long as the records are unnecessary and not relevant to any pending or reasonably probable future litigation, and unless directed not 

to do so by a court or a government agency or prohibited by law. 

Section 605. Modernization of recordkeeping requirement 

This section allows federal banking agencies to rely upon records 

preserved electronically, such as optically imaged or computer 

scanned images. Currently, agencies are permitted to use photographic records in place of original records for all purposes, including introduction into evidence in courts. This section gives agencies 

the flexibility to rely on appropriate new technology, while maintaining the requirement that agencies prescribe the manner of the 

preservation of records, to ensure their reliability, regardless of the 

technology used. 

Section 606. Streamlining reports of condition 

This section directs the federal banking agencies, within one year 

of date of enactment and every five years thereafter, to review the 

information and schedules that depository institutions are required 

to file in Reports of Condition (call reports) and reduce or eliminate 

any requirement where the agencies determine that the collection 

of such information is no longer necessary or appropriate. 


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Section 607. Expansion of eligibility for 18–month examination 

schedule for community banks 

This section amends the Federal Deposit Insurance Act to in- crease from $250 million to $1 billion the asset size of well-capitalized, well-managed institutions eligible for the extended 18–month 

examination schedule. 

Section 608. Short form reports of condition for certain community 

banks 

This section authorizes well-capitalized, well-managed insured depository institutions with less than $1 billion in assets to file 

‘‘short form’’ call reports in any two non-sequential quarters of a 

calendar year. The federal banking agencies are directed to develop 

a short form report of condition that is significantly and materially 

less burdensome for insured depository institutions to prepare than 

the long form call report, while also providing sufficient material 

information for the agencies to assure the continued safety and 

soundness of institutions. 

Section 609. Clarification of extent of suspension, removal, and prohibition authority of Federal banking agencies in cases of certain crimes by institution-affiliated parties 

This section clarifies that the appropriate federal banking agency 

may suspend or prohibit individuals who are the subject of criminal 

proceedings from participation in the affairs of any depository institution and not only the insured depository with which the institution affiliated party is or was associated. The agency may also use 

the prohibition authority even when the institution with which the 

individuals were associated ceases to exist. 

Section 610. Streamlining depository institution merger application 

requirements 

This section streamlines merger application requirements by 

eliminating the requirement that each federal banking agency 

must request a competitive factors report from the other three federal banking agencies as well as from the Attorney General. The 

amendment decreases the number to two, with the Attorney General continuing to be required to consider the competitive factors 

involved in each merger transaction and the FDIC, as insurer, receiving notice even where it is not the appropriate banking agency 

for the particular merger. Federal banking agencies are not required to request a competitive factors report if they find that they 

must act on a merger application immediately to prevent the probable failure of a depository institution involved in the transaction, 

or the transaction consists of a merger between an insured depository institution and one or more of its affiliates. 

Section 611. Inclusion of Director of the Office of Thrift Supervision 

in list of banking agencies regarding insurance customer protection regulations 

The four federal banking agencies are required by current law to 

publish insurance customer protection regulations. OTS has the 

same responsibilities in this connection as FDIC, OCC, and the 

Federal Reserve Board, with one exception, i.e., current law provides for preemption of state law in certain circumstances, if the 


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banking agencies, except for OTS, jointly determine the federal protections are greater than comparable state protections. This section 

adds OTS to the list of banking agencies responsible for making the 

preemption determination. 

Section 612. Protection of confidential information received by Federal banking regulators from foreign banking supervisors 

This section is intended to facilitate the sharing of information 

by ensuring that federal banking agencies may hold confidential 

any nonpublic supervisory information obtained from a foreign regulatory authority. This would not affect the ability of Congress or 

a defendant in an action instituted by a banking agency to obtain 

such information. 

Section 613. Prohibition on the participation by convicted individual 

This section would prohibit a person convicted of a criminal offense involving dishonesty, a breach of trust, or money laundering 

from participating in the affairs of a bank holding company or an 

Edge or Agreement Corporation, without the consent of the Federal 

Reserve Board, and from participating in the affairs of a savings 

and loan holding company or any of its nonthrift subsidiaries, without the consent of the Office of Thrift Supervision. Foreign banks 

and nonbank subsidiaries of a bank holding company are excluded. 

Section 614. Clarification that notice after separation from service 

may be made by an order 

The Federal Deposit Insurance Act ensures that federal banking 

agencies may take enforcement action against a person for conduct 

that occurred during his or her affiliation with a banking organization, even if the person resigns. Because such enforcement actions 

may take the form of both notices and orders, this section clarifies 

that those protections apply regardless of how the enforcement action is styled. 

Section 615. Enforcement against misrepresentations regarding 

FDIC deposit insurance coverage 

This section authorizes the FDIC to take enforcement actions 

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

any individual, corporation, or other entity for misrepresentation of 

FDIC insurance coverage. 

Section 616. Changes required to small bank holding company policy statement assessment of financial and managerial factors 

This section directs the Federal Reserve Board to publish proposed revisions to the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors that provide that: (1) the policy shall apply to a bank holding company with 

pro forma consolidated assets of less than $1 billion that meets 

specified criteria; and (2) the debt-to-equity ratio allowable for a 

small bank holding company to remain eligible to pay a corporate 

dividend and for expedited processing procedures under the Board’s 

regulation Y would increase from 1:1 to 3:1. 


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Section 617. Exception to annual privacy notice requirement under 

the Gramm-Leach-Bliley Act 

This section amends title V of the Gramm-Leach-Bliley Act to exempt financial institutions from providing the annual privacy notice required by that title if the institution discloses nonpublic personal information to third parties only in accordance with the exceptions specified in Gramm-Leach-Bliley, does not share certain 

consumer report information with affiliates under the Fair Credit 

Reporting Act, and has not changed its policies and practices with 

regard to disclosing nonpublic personal information since sending 

its last privacy notice to consumers. It further exempts professionals currently categorized by the Federal Reserve Board as financial institutions, such as certified public accountants, if they 

are subject to state laws that prohibit them from disclosing nonpublic information. 

Section 618. Biennial reports on the status of agency employment of 

minorities and women 

Before December 31, 2005 and the end of each two-year period 

thereafter, each of the federal banking agencies will submit a report to Congress on the status of the employment by the agency of 

minority individuals and women. 

Section 619. Coordination of State examination authority 

This section is intended to improve coordination of supervision of 

multi-state state-chartered banks, by clarifying how state-chartered 

institutions with branches in more than one state are examined. 

While giving primacy of supervision to the chartering or home 

state, this section requires the home state bank supervisor to abide 

by any written cooperative agreement relating to coordination of 

exams and joint participation in exams, with the host state supervisor where an out-of-state branch is located. Unless otherwise permitted by a cooperative agreement, only the home state supervisor 

may charge state supervisory fees on the bank. If a branch in a 

host state resulted from certain interstate merger transactions, the 

host state supervisor may, with written notice to the home state 

supervisor, examine the branch for compliance with host state consumer protection laws. If permitted by a cooperative agreement or 

if the out-of-state bank is in a troubled condition, the host state supervisor may participate in the examination of the bank by the 

home state supervisor to ascertain that branch activities are not 

conducted in an unsafe or unsound manner. If the host state supervisor determines that a branch is violating host state consumer 

protection laws, the supervisor may, with written notice to the 

home state supervisor, undertake enforcement actions. This section 

does not limit in any way the authority of federal banking regulators and does not affect state taxation authority. 

Section 620. Non-waiver of privileges 

This section provides that when a depository institution submits 

information to a Federal, State, or foreign regulator as part of the 

supervisory or regulatory process, the institution does not waive 

any privilege it may claim with respect to that information as to 

any person or entity other than the regulator to which the information was disclosed. 


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Section 621. Right to Financial Privacy Act of 1978 amendment 

This section amends the Right to Financial Privacy Act to include in the definition of a ‘‘financial institution’’ for purposes of 

that Act ‘‘any lender who advances funds on pledges of personal 

property.’’

Section 622. Succession authority for Director of the Office of Thrift 

Supervision 

During a vacancy, Office of Thrift Supervision succession currently occurs through the process of the Vacancies Act, which limits the time period an acting director may serve. OTS is the only 

federal financial regulator that could be exposed to a vacancy problem. This section is based on long-standing authority for the Office 

of the Comptroller of the Currency and gives a designated deputy 

director authority to perform the functions of the director during a 

planned or sudden vacancy in the office of the director. 

Section 623. Limitation on scope of new agency guidelines 

This section requires that regulatory guidance, issued by the 

Comptroller of the Currency, Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of Thrift Supervision, related to minimum credit card payments and negative amortization 

only applies to new credit card accounts, not to existing balances, 

based on the date of enactment and to sunset in three years. 

Title VII—‘‘BSA’’ Compliance Burden Reduction 

Section 701. Exception from currency transaction reports for seasoned customers 

This section states a series of congressional findings recognizing 

that while currency transaction reports (CTRs) filed by financial institutions provide law enforcement with useful analytical and investigative data regarding money laundering and other financial 

crimes, filing them imposes a compliance burden on those same institutions. The findings also recognize that the current system for 

exempting financial institutions from filing CTRs on transactions 

that have minimal value to law enforcement ‘‘has not adequately 

balanced the burden on the financial industry with the government’s need for data to support its efforts in combating financial 

crime.’’ The section strikes the current statutory requirement that financial institutions renew existing CTR exemptions for ‘‘qualified business customers’’ on an annual basis, and instead directs the Treasury Secretary to prescribe, within nine months, regulations that 

allow the exemption of an institution from the filing of CTRs on 

transactions with ‘‘qualified customers’’ of the institution. Such customers are defined as those that are incorporated under Federal or 

State law or registered to do business within the U.S., have maintained an account at the institution for at least a year and have 

engaged, through that account, in ‘‘multiple’’ currency transactions 

that are subject to CTR reporting requirements. Regulations are to 

be promulgated that ensure the application for the exemption contains adequate identifying information and clear conditions under 

which the exemption could be rejected or revoked by the Secretary. 

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isting filing exemption in the case of a merger or acquisition of the 

institution that has received the filing exemption. 

Finally, within three years the Secretary, in consultation with 

the Attorney General, the Secretary of Homeland Security, the 

Federal banking agencies, the banking industry and such others as 

the Secretary chooses, is directed to study the operation and effects 

of this section and report the findings of this review to Congress 

along with any recommendations for further legislative action. 

Section 702. Reduction in inconsistencies in monetary transaction 

recordkeeping and reporting and examination requirements 

This section expresses the sense of Congress that inconsistencies 

in record-keeping and reporting requirements for monetary transactions reduce the usefulness of the reports and contribute to the 

impression that there are inconsistencies in the federal banking 

agencies’ supervision of compliance with the requirements. Additionally, the section requires the federal banking agencies, through 

the Federal Financial Institutions Examination Council (FFIEC), to 

ensure that BSA examination procedures are ‘‘congruent and reasonably uniform’’ across agencies. The Treasury is directed to review within six months and promptly report to Congress and the 

FFIEC any legislative or administrative recommendations to accomplish these goals, and promulgate within nine months of the report any appropriate regulatory changes within its jurisdiction. 

Section 703. Additional reforms relating to monetary transactions 

and recordkeeping 

This section requires the Secretary of the Treasury to review and 

make any appropriate modification to regulations requiring the notification of financial institution directors and officers of the filing 

of each Bank Security Act filing; review the current requirement to 

verify and record the identity of the purchaser of monetary instruments over $3,000 in value and make appropriate changes to reduce redundancy with other customer-verification regulations; 

issue appropriate guidance or a regulation eliminating the need to 

file multiple Suspicious Activity Reports (SARs) on the same transaction ‘‘unless there has been a subsequent change in any pattern 

of activity involving any person who was connected with the transaction;’’ and requires the Financial Crimes Enforcement Network 

(FinCEN) to create a system providing electronic acknowledgement 

of receipt of a SAR. 

Section 704. Study by Comptroller General 

This section requires the Government Accountability Office to 

study and report to Congress on ways to reduce the number of currency transaction reports filed with Treasury; improve financial institution use of the current CTR exemptions; and reduce the difficulties financial institutions have in taking advantage of the exemptions. 

Section 705. Feasibility study required 

This section requires the Secretary of the Treasury to conduct a 

study on the feasibility of developing and implementing improvements to the electronic filing of required anti-money laundering 

forms, to lessen the burdens of complying with recordkeeping and 


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reporting requirements, and requires the Secretary to produce prototypes of any software or other computer interface that would assist in that effort. 

Section 706. Annual report by Secretary of the Treasury 

This section requires the Treasury Secretary to report to Congress annually, by March 1, on the anti-money laundering standards of each country, stating whether or not each country is a primary money laundering concern, as per Section 5318A of Title 31, 

United States Code. The report is to include information on the effectiveness of each country’s anti-money laundering efforts in meeting its standards; a determination of whether such efforts are or 

are not adequate, or if they are improving; and an indication of any 

efforts made by the Secretary to provide technical assistance to the 

government of each country of concern. The report is to be made 

available to Federal banking regulators, for incorporation into examinations, and to financial institutions at no cost. 

Section 707. Preservation of money services businesses 

This section expresses the sense of Congress that depository institutions and money-service businesses (MSBs) should follow guidance issued in the spring of 2005 by FinCEN and the Federal 

banking regulators that was intended to help keep MSBs in the 

mainstream of the financial-services sector. 

Title VIII—Clerical and Technical Amendments 

Section 801. Clerical amendments to the Home Owners’ Loan Act 

This section corrects the table of contents for HOLA. The Financial Regulatory Relief and Economic Efficiency Act of 2000 repealed 

section 6 of HOLA but did not conform the table of contents. The 

section also corrects the captions for sections 4(a) and 5 of HOLA, 

to eliminate confusion over the scope of the sections. 

Section 802. Technical corrections to the Federal Credit Union Act 

This section makes technical, clean-up amendments to the Federal Credit Union Act. 

Section 803. Other technical corrections 

This section makes technical corrections to Title 18, United 

States Code. 

Section 804. Repeal of obsolete provisions of the Bank Holding Company Act of 1956 

This section eliminates certain outdated provisions of the Bank 

Holding Company Act that no longer have any effect. 

Title IX—Fair Debt Collection Practices Act Amendments 

Section 901. Exception for certain bad check enforcement programs 

This section extends the current Fair Debt Collection Practices 

Act exemption for debt collection activities by state and local agencies to private entities that operate bad check pre-trial diversion 

programs on behalf of, and under the supervision of, state and local 

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sources and providing offenders with an alternative to criminal 

prosecution. Eligible pre-trial diversion programs would be limited 

in terms of the types of bad check violations that can be included 

in the programs, and must conform with other requirements in the 

amendment relating to allowable fees, consumer notice, and providing appropriate procedures to dispute alleged bad check offenses. 

Section 902. Other amendments 

This section specifies that a communication, in the form of a formal pleading in a civil action, shall not be treated as an initial 

communication for purposes of informing a consumer of their right 

to dispute and obtain validation of an alleged debt, as required by 

the Fair Debt Collection Practices Act, and that the sending or delivery of any form or notice which does not request the payment of 

a debt, and is expressly required by any other federal or state law 

or regulation, shall not be treated as a communication in connection with debt collection, and codifies the Federal Trade Commission’s formal advisory opinion regarding the proper interpretation 

of the FDCPA, by clarifying that collection activities and communications by a debt collector may continue during the 30-day notice 

period, unless the consumer notifies the debt collector that the debt 

is in dispute. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

TITLE LXII OF THE REVISED STATUTES OF THE UNITED 

STATES 

NATIONAL BANKS. 

C H A P T E R O N E. 

ORGANIZATION AND POWERS. 

Sec. 

5133. Formation of national banking associations. 

* * * * * * * 

ø5146. Requisite qualifications of directors.¿ 

5146. Requirements for Bank Directors. 

* * * * * * * 

5136C. Alternative business organization. 

* * * * * * * 

SEC. 5134. The persons uniting to form such an association shall, 

under their hands, make an organization certificate, which shall 

specifically state: 

First. * * * 

Second. øThe place where its operations of discount and deposit 

are to be carried on¿ The place where the main office of the naVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00078 Fmt 6659 Sfmt 6601 E:\HR\OC\HR356P1.XXX HR356P1

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tional bank is, or is to be, located, designating the State, Territory, 

or district, and the particular county and city, town, or village. 

* * * * * * * 

SEC. 5136. Upon duly making and filing articles of association 

and an organization certificate, the association shall become, as 

from the date of the execution of its organization certificate, a body 

corporate or other form of business organization provided under 

regulations prescribed by the Comptroller of the Currency under section 5136C, and as such, and in the name designated in the organization certificate, it shall have power— First. * * * 

* * * * * * * 

Eleventh. To make investments designed primarily to promote the public welfare, including the welfare of low- and moderate-income communities or families (such as by providing 

housing, services, or jobs). A national banking association may 

make such investments directly or by purchasing interests in 

an entity primarily engaged in making such investments. An 

association shall not make any such investment if the investment would expose the association to unlimited liability. The 

Comptroller of the Currency shall limit an association’s investments in any 1 project and an association’s aggregate investments under this paragraph. An association’s aggregate investments under this paragraph shall not exceed an amount equal 

to the sum of 5 percent of the association’s capital stock actually paid in and unimpaired and 5 percent of the association’s 

unimpaired surplus fund, unless the Comptroller determines 

by order that the higher amount will pose no significant risk 

to the affected deposit insurance fund, and the association is 

adequately capitalized. In no case shall an association’s aggregate investments under this paragraph exceed an amount 

equal to the sum of ø10 percent¿ 15 percent of the association’s 

capital stock actually paid in and unimpaired and ø10 percent¿ 

15 percent of the association’s unimpaired surplus fund. 

* * * * * * * 

SEC. 5136C. ALTERNATIVE BUSINESS ORGANIZATION. 

(a) IN GENERAL.—The Comptroller of the Currency may prescribe 

regulations— (1) to permit a national bank to be organized other than as 

a body corporate; and 

(2) to provide requirements for the organizational characteristics of a national bank organized and operating other than as 

a body corporate, consistent with the safety and soundness of 

the national bank. 

(b) EQUAL TREATMENT.—Except as provided in regulations prescribed under subsection (a), a national bank that is operating other 

than as a body corporate shall have the same rights and privileges 

and shall be subject to the same duties, restrictions, penalties, liabilities, conditions, and limitations as a national bank that is organized as a body corporate. 

* * * * * * * 

SEC. 5144. In all elections of directors, each shareholder shall 

have the right to vote the number of shares owned by him for as 


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many persons as there are directors to be elected, øor to cumulate¿ 

or, if so provided by the articles of association of the national bank, 

to cumulate such shares and give one candidate as many votes as 

the number of directors multiplied by the number of his shares 

shall equalø,¿ or to distribute them on the same principle among 

as many candidates as he shall think fit; and in deciding all other 

questions at meetings of shareholders, each shareholder shall be 

entitled to one vote on each share of stock held by him; except that 

(1) this shall not be construed as limiting the voting rights of holders of preferred stock under the terms and provisions of articles of 

association, or amendments thereto, adopted pursuant to the provisions of section 302(a) of the Emergency Banking and Bank Conservation Act, approved March 9, 1933, as amended; (2) in the election of directors, shares of its own stock held by a national bank 

as sole trustee, whether registered in its own name as such trustee 

or in the name of its nominee, shall not be voted by the registered 

owner unless under the terms of the trust the manner in which 

such shares shall be voted may be determined by a donor or beneficiary of the trust and unless such donor or beneficiary actually directs how such shares shall be voted; and (3) shares of its own 

stock held by a national bank and one or more persons as trustees 

may be voted by such other person or persons, as trustees, in the 

same manner as if he or they were the sole trustee. Shareholders 

may vote by proxies duly authorized in writing; but no officer, 

clerk, teller, or bookkeeper of such bank shall act as proxy; and no 

shareholder whose liability is past due and unpaid shall be allowed 

to vote. Whenever shares of stock cannot be voted by reason of 

being held by the bank as sole trustee such shares shall be excluded in determining whether matters voted upon by the shareholders were adopted by the requisite percentage of shares. The 

Comptroller of the Currency may prescribe such regulations to carry 

out the purposes of this section as the Comptroller determines to be 

appropriate. 

* * * * * * * 

øSEC. 5146. Every director must during¿ 

SEC. 5146. REQUIREMENTS FOR BANK DIRECTORS. 

(a) RESIDENCY REQUIREMENTS.—Every director of a national 

bank shall, during his whole term of service, be a citizen of the 

United States, and at least a majority of the directors must have 

resided in the State, Territory, or District in which the association 

is located, or within one hundred miles of the location of the office 

of the association, for at least one year immediately preceding their 

election, and must be residents of such State or within a one-hundred-mile territory of the location of the association during their 

continuance in office, except that the Comptroller may, in the discretion of the Comptroller, waive the requirement of residency, and 

waive the requirement of citizenship in the case of not more than 

a minority of the øtotal number of directors. Every director must 

own in his or her own right¿ total number of directors. 

(b) INVESTMENT REQUIREMENT.— (1) IN GENERAL.—Every director of a national bank shall 

own, in his or her own right, either shares of the capital stock 

of the association of which he or she is a director the aggregate 

par value of which is not less than $1,000, or an equivalent inVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00080 Fmt 6659 Sfmt 6601 E:\HR\OC\HR356P1.XXX HR356P1

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terest, as determined by the Comptroller of the Currency, in 

any company which has control over such association within 

the meaning of section 2 of the Bank Holding Company Act of 

1956 (12 U.S.C. 1841). If the capital of the bank does not exceed $25,000, every director must own in his or her own right 

either shares of such capital stock the aggregate par value of 

which is not less than $500, or an equivalent interest, as determined by the Comptroller of the Currency, in any company 

which has control over such association within the meaning of 

section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 

1841). Any director who ceases to be the owner of the required 

number of shares of the stock, or who becomes in any other 

manner disqualified, shall thereby vacate his place. 

(2) EXCEPTION FOR SUBORDINATED DEBT IN CERTAIN CASES.—

In lieu of the requirements of paragraph (1) relating to the ownership of capital stock in the national bank, the Comptroller of 

the Currency may, by regulation or order, permit an individual 

to serve as a director of a national bank that has elected, or notifies the Comptroller of the bank’s intention to elect, to operate 

as a S corporation pursuant to section 1362(a) of the Internal 

Revenue Code of 1986, if that individual holds debt of at least 

$1,000 issued by the national bank that is subordinated to the 

interests of depositors and other general creditors of the national bank. 

* * * * * * * 

SEC. 5155. The conditions upon which a national banking association may retain or establish and operate a branch or branches 

are the following: 

(a) * * * 

* * * * * * * 

(c) A national banking association may, with the approval of the 

Comptroller of the Currency, establish and operate new branches: 

(1) Within the limits of the city, town or village in which said association is situated, if such establishment and operation are at the 

time expressly authorized to State banks by the law of the State 

in question; and (2) at any point within the State in which said association is situated, if such establishment and operation are at the 

time authorized to State banks by the statute law of the State in 

question by language specifically granting such authority affirmatively and not merely by implication or recognition, and subject to 

the restrictions as to location imposed by the law of the State on 

State banks. In any State in which State banks are permitted by 

statute law to maintain branches within county or greater limits, 

if no bank is located and doing business in the place where the proposed agency is to be located, any national banking association situated in such State may, with the approval of the Comptroller of 

the Currency, establish and operateø, without regard to the capital 

requirements of this section,¿ a seasonal agency in any resort community within the limits of the county in which the main office of 

such association is located, for the purpose of receiving and paying 

out deposits, issuing and cashing checks and drafts, and doing 

business incident thereto: Provided, That any permit issued under 

this sentence shall be revoked upon the opening of a State or national bank in such community. øExcept as provided in the immeVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00081 Fmt 6659 Sfmt 6601 E:\HR\OC\HR356P1.XXX HR356P1

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diately preceding sentence, no such association shall establish a 

branch outside of the city, town, or village in which it is situated 

unless it has a combined capital stock and surplus equal to the 

combined amount of capital stock and surplus, if any, required by 

the law of the State in which such association is situated for the 

establishment of such branches by State banks, or, if the law of 

such State requires only a minimum capital stock for the establishment of such branches by State banks, unless such association has 

not less than an equal amount of capital stock.¿ 

* * * * * * * 

(g) øSTATE ‘‘OPT-IN’’ ELECTION TO PERMIT¿ INTERSTATE BRANCH- ING THROUGH DE NOVO BRANCHES.—

(1) IN GENERAL.—Subject to paragraph (2), the Comptroller 

of the Currency may approve an application by a national bank 

to establish and operate a de novo branch in a State (other 

than the bank’s home State) in which the bank does not 

ømaintain a branch if—

ø(A) there is in effect in the host State a law that—

ø(i) applies equally to all banks; and 

ø(ii) expressly permits all out-of-State banks to establish de novo branches in such State; and 

ø(B) the conditions established in, or made applicable to 

this paragraph by, paragraph (2) are met.¿ maintain a 

branch. 

* * * * * * * 

C H A P T E R T H R E E. 

REGULATION OF THE BANKING BUSINESS. 

Sec. 

5190. Place of business of banking associations. 

* * * * * * * 

ø5199. Dividends.¿ 

5199. National bank dividends. 

* * * * * * * 

SEC. 5190. The general business of each national banking association shall be transacted in øthe place specified in its organization certificate¿ the main office of the national bank and in the 

branch or branches, if any, established or maintained by it in accordance with the provisions of section 5155 of the Revised Statutes, as amended by this Act. 

* * * * * * * 

øSEC. 5199. (a) The directors of any national banking association 

may, quarterly, semiannually or annually, declare a dividend of so 

much of the undivided profits of the association, subject to the limitations in subsection (b), as they shall judge expedient, except that 

until the surplus fund of such association shall equal its common 

capital, no dividends shall be declared unless there has been carried to the surplus fund not less than one-tenth part of the association’s net income of the preceding half year in the case of quarterly 

or semiannual dividends, or not less than one-tenth part of its net 

income of the preceding two consecutive half-year periods in the 

case of annual dividends: Provided, That for the purposes of this 


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section, any amounts paid into a fund for the retirement of any 

preferred stock of any such association out of its net income for 

such period or periods shall be deemed to be additions to its surplus fund if, upon the retirement of such preferred stock, the 

amounts so paid into such retirement fund may then properly be 

carried to surplus. In any such case the association shall be obligated to transfer to surplus the amounts so paid into such retirement fund on account of the preferred stock as such stock is retired. 

ø(b) The approval of the Comptroller of the Currency shall be required if the total of all dividends declared by such association in 

any calendar year shall exceed the total of its net income of that 

year combined with its retained net income of the preceding two 

years, less any required transfers to surplus or a fund for the retirement of any preferred stock.¿ 

SEC. 5199. NATIONAL BANK DIVIDENDS. 

(a) IN GENERAL.—Subject to subsection (b), the directors of any 

national bank may declare a dividend of so much of the undivided 

profits of the bank as the directors judge to be expedient. 

(b) APPROVAL REQUIRED UNDER CERTAIN CIRCUMSTANCES.—A 

national bank may not declare and pay dividends in any year in 

excess of an amount equal to the sum of the total of the net income 

of the bank for that year and the retained net income of the bank 

in the preceding two years, minus any transfers required by the 

Comptroller of the Currency (including any transfers required to be 

made to a fund for the retirement of any preferred stock), unless the 

Comptroller of the Currency approves the declaration and payment 

of dividends in excess of such amount. 

* * * * * * * 

C H A P T E R F O U R. 

DISSOLUTION AND RECEIVERSHIP. 

* * * * * * * 

SEC. 5239. (a) * * * 

* * * * * * * 

ø(d)¿ (e) AUTHORITY.—The Comptroller of the Currency may act 

in the Comptroller’s own name and through the Comptroller’s own 

attorneys in enforcing any provision of this title, regulations thereunder, or any other law or regulation, or in any action, suit, or proceeding to which the Comptroller of the Currency is a party. 

* * * * * * * 

FEDERAL DEPOSIT INSURANCE ACT 

* * * * * * * 

SEC. 5. DEPOSIT INSURANCE. 

(a) * * * 

* * * * * * * 

(e) LIABILITY OF COMMONLY CONTROLLED DEPOSITORY INSTITUTIONS.—


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(1) * * * 

* * * * * * * 

(9) COMMONLY CONTROLLED DEFINED.—For purposes of this 

subsection, depository institutions are commonly controlled if— ø(A) such institutions are controlled by the same depository institution holding company (including any company 

required to file reports pursuant to section 4(f)(6) of the 

Bank Holding Company Act of 1956); or¿ 

(A) such institutions are controlled by the same company; 

or 

* * * * * * * 

SEC. 7. (a)(1) * * * 

(2)(A) * * * 

* * * * * * * 

(C) DATA SHARING WITH OTHER AGENCIES AND PER- SONS.—In addition to reports of examination, reports of 

condition, and other reports required to be regularly provided to the Corporation (with respect to all insured depository institutions, including a depository institution for 

which the Corporation has been appointed conservator or 

receiver) or an appropriate State bank supervisor (with respect to a State depository institution) under subparagraph 

(A) or (B), a Federal banking agency may, in the agency’s 

discretion, furnish any report of examination or other confidential supervisory information concerning any depository 

institution or other entity examined by such agency under 

authority of any Federal law, to— (i) any other Federal or State agency or authority 

with supervisory or regulatory authority over the depository institution or other entity; 

(ii) any officer, director, or receiver of such depository 

institution or entity; and 

(iii) any other person the Federal banking agency determines to be appropriate. 

* * * * * * * 

(11) STREAMLINING REPORTS OF CONDITION.—

(A) REVIEW OF INFORMATION AND SCHEDULES.—Before 

the end of the 1-year period beginning on the date of the 

enactment of the Financial Services Regulatory Relief Act 

of 2005 and before the end of each 5-year period thereafter, 

each Federal banking agency shall, in consultation with the 

other relevant Federal banking agencies, review the information and schedules that are required to be filed by an insured depository institution in a report of condition required under paragraph (3). 

(B) REDUCTION OR ELIMINATION OF INFORMATION FOUND

TO BE UNNECESSARY.—After completing the review required 

by subparagraph (A), a Federal banking agency, in consultation with the other relevant Federal banking agencies, 

shall reduce or eliminate any requirement to file information or schedules under paragraph (3) (other than information or schedules that are otherwise required by law) if the 

agency determines that the continued collection of such inVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00084 Fmt 6659 Sfmt 6603 E:\HR\OC\HR356P1.XXX HR356P1

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formation or schedules is no longer necessary or appropriate. 

(12) SHORT FORM REPORTS OF CONDITION FOR COMMUNITY

BANKS.—

(A) IN GENERAL.—With respect to reports of condition required under paragraph (3) for each calendar quarter, an 

insured depository institution described in subparagraphs 

(A), (B), (C), and (D) of section 10(d)(4) may submit a short 

form of any such report of condition in 2 nonsequential 

quarters of any calendar year. 

(B) SHORT FORM DEFINED.—The term ‘‘short form’’, when 

used in connection with any report of condition required 

under paragraph (3), means a report of condition in a format established by the appropriate Federal banking agency, 

after notice and opportunity for comment, that— (i) is significantly and materially less burdensome 

for the insured depository institution to prepare than 

the format of the report of condition required under 

paragraph (3); and 

(ii) provides sufficient material information for the 

appropriate Federal banking agency to assure the 

maintenance of the safe and sound condition of the depository institution and safe and sound practices. 

* * * * * * * 

(j)(1) No person, acting directly or indirectly or through or in concert with one or more other persons, shall acquire control of any 

insured depository institution through a purchase, assignment, 

transfer, pledge, or other disposition of voting stock of such insured 

depository institution unless the appropriate Federal banking agency has been given sixty days’ prior written notice of such proposed 

acquisition and within that time period the agency has not issued 

a notice disapproving the proposed acquisition or, in the discretion 

of the agency, extending for an additional 30 days the period during which such a disapproval may issue.The period for disapproval 

under the preceding sentence may be extended not to exceed 2 additional times for not more than 45 days each time if—

(A) * * * 

* * * * * * * 

(D) the agency determines that additional time øis needed to 

investigate¿ is needed—

(i) to investigate and determine that no acquiring 

party has a record of failing to comply with the requirements of subchapter II of chapter 53 of title 31, 

øUnited States Code.¿ United States Code; or 

(ii) to analyze the safety and soundness of any plans 

or proposals described in paragraph (6)(E) or the future prospects of the institution. 

* * * * * * * 

(7) The appropriate Federal banking agency may disapprove any 

proposed acquisition if—

(A) * * * 

* * * * * * * 


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(C) øthe financial condition of any acquiring person¿ either 

the financial condition of any acquiring person or the future 

prospects of the institution is such as might jeopardize the financial stability of the bank or prejudice the interests of the 

depositors of the bank; 

* * * * * * * 

SEC. 8. (a) * * * 

* * * * * * * 

(c)(1) * * * 

* * * * * * * 

(4) FALSE ADVERTISING OR MISUSE OF NAMES TO INDICATE IN- SURED STATUS.— (A) TEMPORARY ORDER.— (i) IN GENERAL.—If a notice of charges served under 

subsection (b)(1) of this section specifies on the basis of 

particular facts that any person is engaged in conduct 

described in section 18(a)(4), the Corporation may issue 

a temporary order requiring— (I) the immediate cessation of any activity or 

practice described, which gave rise to the notice of 

charges; and 

(II) affirmative action to prevent any further, or 

to remedy any existing, violation. 

(ii) EFFECT OF ORDER.—Any temporary order issued 

under this subparagraph shall take effect upon service. 

(B) EFFECTIVE PERIOD OF TEMPORARY ORDER.—A temporary order issued under subparagraph (A) shall remain 

effective and enforceable, pending the completion of an administrative proceeding pursuant to subsection (b)(1) in 

connection with the notice of charges— (i) until such time as the Corporation shall dismiss 

the charges specified in such notice; or 

(ii) if a cease-and-desist order is issued against such 

person, until the effective date of such order. 

(C) CIVIL MONEY PENALTIES.—Violations of section 

18(a)(4) shall be subject to civil money penalties as set forth 

in subsection (i) in an amount not to exceed $1,000,000 for 

each day during which the violation occurs or continues. 

* * * * * * * 

(e) REMOVAL AND PROHIBITION AUTHORITY.—

(1) * * * 

(2) SPECIFIC VIOLATIONS.—

(A) IN GENERAL.—Whenever the appropriate Federal 

banking agency determines that—

(i) * * * 

(ii) an officer or director of an insured depository institution has knowledge that an institution-affiliated 

party of the insured depository institution has violated 

any such provision or any provision of law referred to 

in subsection (g)(1)(A)(ii); øor¿ 

(iii) an officer or director of an insured depository institution has committed any violation of the Depository Institution Management Interlocks Actø,¿; or 


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(iv) an institution-affiliated party of a subsidiary 

(other than a bank) of a bank holding company has 

been convicted of any criminal offense involving dishonesty or a breach of trust, or has agreed to enter into 

a pretrial diversion or similar program in connection 

with a prosecution for such an offense, 

* * * * * * * 

(4) A notice of intention to remove an institution-affiliated party 

from office or to prohibit such party from participating in the conduct of the affairs of an insured depository institution, shall contain a statement of the facts constituting grounds therefor, and 

shall fix a time and place at which a hearing will be held thereon. 

Such hearing shall be fixed for a date not earlier than thirty days 

nor later than sixty days after the date of service of such notice, 

unless an earlier or a later date is set by the agency at the request 

of (A) such party, and for good cause shown, or (B) the Attorney 

General of the United States. Unless such party shall appear at the 

hearing in person or by a duly authorized representative, such 

party shall be deemed to have consented to the issuance of an 

order of such removal or prohibition. In the event of such consent, 

or if upon the record made at any such hearing the agency shall 

find that any of the grounds specified in such notice have been established, the agency may issue such orders of suspension or removal from office, or prohibition from participation in the conduct 

of the affairs of the depository institution, as it may deem appropriate. In any action brought under this section by the Comptroller 

of the Currency in respect to any such party with respect to a national banking association or a District depository institution, the 

findings and conclusions of the Administrative Law Judge shall be 

certified to the Board of Governors of the Federal Reserve System 

for the determination of whether any order shall issue. øAny such 

order shall become effective at the expiration of thirty days after 

service upon such depository institution and such party (except in 

the case of an order issued upon consent, which shall become effective at the time specified therein).¿ Such order shall remain effective and enforceable except to such extent as it is stayed, modified, 

terminated, or set aside by action of the agency or a reviewing 

court. 

* * * * * * * 

ø(g)¿ 

(g) SUSPENSION, REMOVAL, AND PROHIBITION FROM PARTICIPATION ORDERS IN THE CASE OF CERTAIN CRIMINAL OFFENSES.—

(1) SUSPENSION OR PROHIBITION.—

(A) IN GENERAL.—Whenever any institution-affiliated 

party øis charged in any information, indictment, or complaint, with the commission of or participation in¿ is the 

subject of any information, indictment, or complaint, involving the commission of or participation in—

(i) a crime involving dishonesty or breach of trust 

which is punishable by imprisonment for a term exceeding one year under State or Federal law, or 

(ii) a criminal violation of section 1956, 1957, or 

1960 of title 18, United States Code, or section 5322 

or 5324 of title 31, United States Code, 


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the appropriate Federal banking agency may, if continued 

service or participation by such party ømay pose a threat 

to the interests of the depository institution’s depositors or 

may threaten to impair public confidence in the depository 

institution,¿ posed, poses, or may pose a threat to the interests of the depositors of, or threatened, threatens, or may 

threaten to impair public confidence in, any relevant depository institution (as defined in subparagraph (E)), by written notice served upon such party, suspend such party 

from office or prohibit such party from further participation in any manner in the conduct of the øaffairs of the depository institution¿ affairs of any depository institution. (B) PROVISIONS APPLICABLE TO NOTICE.— (i) COPY.—A copy of any notice under subparagraph 

(A) shall also be served upon øthe depository institution¿ any depository institution that the subject of the 

notice is affiliated with at the time the notice is issued. 

* * * * * * * 

(C) REMOVAL OR PROHIBITION.— (i) IN GENERAL.—If a judgment of conviction or an 

agreement to enter a pretrial diversion or other similar program is entered against an institution-affiliated 

party in connection with a crime described in subparagraph (A)(i), at such time as such judgment is not subject to further appellate review, the appropriate Federal banking agency may, if continued service or participation by such party ømay pose a threat to the interests of the depository institution’s depositors or 

may threaten to impair public confidence in the depository institution,¿ posed, poses, or may pose a threat to 

the interests of the depositors of, or threatened, threatens, or may threaten to impair public confidence in, 

and relevant depository institution (as defined in subparagraph (E)), issue and serve upon such party an 

order removing such party from office or prohibiting 

such party from further participation in any manner 

in the conduct of the øaffairs of the depository institution¿ affairs of any depository institution without the 

prior written consent of the appropriate agency. 

(ii) REQUIRED FOR CERTAIN OFFENSES.—In the case 

of a judgment of conviction or agreement against an 

institution-affiliated party in connection with a violation described in subparagraph (A)(ii), the appropriate 

Federal banking agency shall issue and serve upon 

such party an order removing such party from office or 

prohibiting such party from further participation in 

any manner in the conduct of the øaffairs of the depository institution¿ affairs of any depository institution 

without the prior written consent of the appropriate 

agency. 

(D) PROVISIONS APPLICABLE TO ORDER.— (i) COPY.—A copy of any order under subparagraph 

(C) shall also be served upon øthe depository institution¿ any depository institution that the subject of the 

order is affiliated with at the time the order is issued, 


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whereupon the institution-affiliated party who is subject to the order (if a director or an officer) shall cease 

to be a director or officer of such depository institution. 

* * * * * * * 

(E) RELEVANT DEPOSITORY INSTITUTION.—For purposes 

of this subsection, the term ‘‘relevant depository institution’’

means any depository institution of which the party is or 

was an institution-affiliated party at the time—

(i) the information, indictment or complaint described in subparagraph (A) was issued; or 

(ii) the notice is issued under subparagraph (A) or 

the order is issued under subparagraph (C)(i). 

* * * * * * * 

(i)(1) * * * 

* * * * * * * 

(3) NOTICE OR ORDER UNDER THIS SECTION AFTER SEPARATION FROM SERVICE.—The resignation, termination of employment or participation, or separation of an institution-affiliated 

party (including a separation caused by the closing of an insured depository institution) shall not affect the jurisdiction 

and authority of the appropriate Federal banking agency to 

issue any notice or order and proceed under this section 

against any such party, if such notice or order is served before 

the end of the 6-year period beginning on the date such party 

ceased to be such a party with respect to such depository institution (whether such date occurs before, on, or after the date 

of the enactment of this paragraph). 

* * * * * * * 

(s) COMPLIANCE WITH MONETARY TRANSACTION RECORDKEEPING

AND REPORT REQUIREMENTS.— (1) * * * 

* * * * * * * 

(4) COORDINATION ON UNIFORM REQUIREMENTS.—In prescribing regulations under paragraph (1), the Federal banking 

agencies, acting through the Financial Institutions Examination Council, shall—

(A) consult with each other, the National Credit Union 

Administration Board, and the Secretary of the Treasury; 

and 

(B) take such action as may be necessary to ensure that 

the requirements for procedures established pursuant to 

such regulations, and the examination standards for reviewing such procedures, are congruent and reasonably 

uniform (taking into account differences in the form and 

function of the institutions subject to such requirements). 

* * * * * * * 

SEC. 10. (a) * * * 

* * * * * * * 

(d) ANNUAL ON-SITE EXAMINATIONS OF ALL INSURED DEPOSITORY

INSTITUTIONS REQUIRED.—


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(1) * * * 

* * * * * * * 

(4) 18-MONTH RULE FOR CERTAIN SMALL INSTITUTIONS.—Paragraphs (1), (2), and (3) shall apply with ‘‘18-month’’ substituted 

for ‘‘12-month’’ if— (A) the insured depository institution has total assets of 

less than ø$250,000,000¿ $1,000,000,000; 

* * * * * * * 

(5) WAIVER OF SCHEDULE WHEN NECESSARY TO ACHIEVE SAFE

AND SOUND ALLOCATION OF EXAMINER RESOURCES.—Notwithstanding paragraphs (1), (2), (3), and (4), an appropriate Federal banking agency may make adjustments in the examination 

cycle for an insured depository institution if necessary to allocate available resources of examiners in a manner that provides 

for the safety and soundness of, and the effective examination 

and supervision of, insured depository institutions. 

ø(5)¿ (6) CERTAIN GOVERNMENT-CONTROLLED INSTITUTIONS

EXEMPTED.—Paragraph (1) does not apply to—

(A) * * * 

* * * * * * * 

ø(6)¿ (7) COORDINATED EXAMINATIONS.—To minimize the disruptive effects of examinations on the operations of insured depository institutions— (A) * * * 

* * * * * * * 

ø(7)¿ (8) SEPARATE EXAMINATIONS PERMITTED.—Notwithstanding øparagraph (6)¿ paragraph (7), each appropriate Federal banking agency may conduct a separate examination in an 

emergency or under other exigent circumstances, or when the 

agency believes that a violation of law may have occurred. 

ø(8)¿ (9) REPORT.—At the time the system provided for in 

øparagraph (6)¿ paragraph (7) is established, the Federal 

banking agencies shall submit a joint report describing the system to the Committee on Banking, Housing, and Urban Affairs 

of the Senate and the Committee on Banking, Finance and 

Urban Affairs of the House of Representatives. Thereafter, the 

Federal banking agencies shall annually submit a joint report 

to the Committee on Banking, Housing, and Urban Affairs of 

the Senate and the Committee on Banking, Finance and Urban 

Affairs of the House of Representatives regarding the progress 

of the agencies in implementing the system and indicating 

areas in which enhancements to the system, including legislature improvements, would be appropriate. 

ø(9)¿ (10) STANDARDS FOR DETERMINING ADEQUACY OF STATE

EXAMINATIONS.—The Federal Financial Institutions Examination Council shall issue guidelines establishing standards to be 

used at the discretion of the appropriate Federal banking agency for purposes of making a determination under paragraph 

(3). 

ø(10)¿ (11) AGENCIES AUTHORIZED TO INCREASE MAXIMUM

ASSET AMOUNT OF INSTITUTIONS FOR CERTAIN PURPOSES.—At 

any time after the end of the 2-year period beginning on the 

date of enactment of the Riegle Community Development and 


cchase on PROD1PC60 with REPORTS
91 

Regulatory Improvement Act of 1994, the appropriate Federal 

banking agency, in the agency’s discretion, may increase the 

maximum amount limitation contained in paragraph (4)(C)(ii), 

by regulation, from $100,000,000 to an amount not to exceed 

$250,000,000 for purposes of such paragraph, if the agency determines that the greater amount would be consistent with the 

principles of safety and soundness for insured depository institutions. 

* * * * * * * 

ø(f) The Corporation may cause any and all records, papers, or 

documents kept by it or in its possession or custody to be photographed or microphotographed or otherwise reproduced upon film, 

which photographic film shall comply with the minimum standards 

of quality approved for permanent photographic records by the National Bureau of Standards. Such photographs, microphotographs, 

or photographic film or copies thereof shall be deemed to be an 

original record for all purposes, including introduction in evidence 

in all State and Federal courts or administrative agencies and shall 

be admissible to prove any act, transaction, occurrence, or event 

therein recorded. Such photographs, microphotographs, or reproduction shall be preserved in such manner as the Board of Directors of the Corporation shall prescribe and the original records, papers, or documents may be destroyed or otherwise disposed of as 

the Board shall direct.¿ 

(f) PRESERVATION OF AGENCY RECORDS.— (1) IN GENERAL.—A Federal banking agency may cause any 

and all records, papers, or documents kept by the agency or in 

the possession or custody of the agency to be— (A) photographed or microphotographed or otherwise reproduced upon film; or 

(B) preserved in any electronic medium or format which 

is capable of— (i) being read or scanned by computer; and 

(ii) being reproduced from such electronic medium or 

format by printing or any other form of reproduction of 

electronically stored data. 

(2) TREATMENT AS ORIGINAL RECORDS.—Any photographs, 

microphotographs, or photographic film or copies thereof described in paragraph (1)(A) or reproduction of electronically 

stored data described in paragraph (1)(B) shall be deemed to be 

an original record for all purposes, including introduction in 

evidence in all State and Federal courts or administrative agencies and shall be admissible to prove any act, transaction, occurrence, or event therein recorded. 

(3) AUTHORITY OF THE FEDERAL BANKING AGENCIES.—Any 

photographs, microphotographs, or photographic film or copies 

thereof described in paragraph (1)(A) or reproduction of electronically stored data described in paragraph (1)(B) shall be 

preserved in such manner as the Federal banking agency shall 

prescribe and the original records, papers, or documents may be 

destroyed or otherwise disposed of as the Federal banking agency may direct. 

* * * * * * * 

ø(h) COORDINATION OF EXAMINATION AUTHORITY.—


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ø(1) IN GENERAL.—The appropriate State bank supervisor of 

a host State may examine a branch operated in such State by 

an out-of-State insured State bank that resulted from an interstate merger transaction approved under section 44 or a 

branch established in such State pursuant to section 5155(g) of 

the Revised Statutes or section 18(d)(4)— ø(A) for the purpose of determining compliance with host 

State laws, including those that govern banking, community reinvestment, fair lending, consumer protection, and 

permissible activities; and 

ø(B) to ensure that the activities of the branch are not 

conducted in an unsafe or unsound manner. 

ø(2) ENFORCEMENT.—If the State bank supervisor of a host 

State determines that there is a violation of the law of the host 

State concerning the activities being conducted by a branch described in paragraph (1) or that the branch is being operated 

in an unsafe and unsound manner, the State bank supervisor 

of the host State or, to the extent authorized by the law of the 

host State, a State law enforcement officer may undertake 

such enforcement actions and proceedings as would be permitted under the law of the host State as if the branch were 

a bank chartered by that host State. 

ø(3) COOPERATIVE AGREEMENT.—The State bank supervisors 

from 2 or more States may enter into cooperative agreements 

to facilitate State regulatory supervision of State banks, including cooperative agreements relating to the coordination of 

examinations and joint participation in examinations. 

ø(4) FEDERAL REGULATORY AUTHORITY.—No provision of this 

subsection shall be construed as limiting in any way the authority of an appropriate Federal banking agency to examine 

or to take any enforcement actions or proceedings against any 

bank or branch of a bank for which the agency is the appropriate Federal banking agency.¿ 

(h) COORDINATION OF EXAMINATION AUTHORITY.—

(1) STATE BANK SUPERVISORS OF HOME AND HOST STATES.— (A) HOME STATE OF BANK.—The appropriate State bank 

supervisor of the home State of an insured State bank has 

authority to examine and supervise the bank. 

(B) HOST STATE BRANCHES.—The State bank supervisor 

of the home State of an insured State bank and any State 

bank supervisor of an appropriate host State shall exercise 

their respective authority to supervise and examine the 

branches of the bank in a host State in accordance with the 

terms of any applicable cooperative agreement between the 

home State bank supervisor and the State bank supervisor 

of the relevant host State. 

(C) SUPERVISORY FEES.—Except as expressly provided in 

a cooperative agreement between the State bank supervisors 

of the home State and any host State of an insured State 

bank, only the State bank supervisor of the home State of 

an insured State bank may levy or charge State supervisory 

fees on the bank. 

(2) HOST STATE EXAMINATION.—

(A) IN GENERAL.—With respect to a branch operated in a 

host State by an out-of-State insured State bank that reVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00092 Fmt 6659 Sfmt 6603 E:\HR\OC\HR356P1.XXX HR356P1

cchase on PROD1PC60 with REPORTS
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sulted from an interstate merger transaction approved 

under section 44 or that was established in such State pursuant to section 5155(g) of the Revised Statutes, the third 

undesignated paragraph of section 9 of the Federal Reserve 

Act or section 18(d)(4) of this Act, the appropriate State 

bank supervisor of such host State may— (i) with written notice to the State bank supervisor of 

the bank’s home State and subject to the terms of any 

applicable cooperative agreement with the State bank 

supervisor of such home State, examine such branch 

for the purpose of determining compliance with host 

State laws that are applicable pursuant to section 24(j) 

of this Act, including those that govern community reinvestment, fair lending, and consumer protection; and 

(ii) if expressly permitted under and subject to the 

terms of a cooperative agreement with the State bank 

supervisor of the bank’s home State or if such out-ofState insured State bank has been determined to be in 

a troubled condition by either the State bank supervisor of the bank’s home State or the bank’s appropriate Federal banking agency, participate in the examination of the bank by the State bank supervisor of the 

bank’s home State to ascertain that the activities of the 

branch in such host State are not conducted in an unsafe or unsound manner. 

(B) NOTICE OF DETERMINATION.— (i) IN GENERAL.—The State bank supervisor of the 

home State of an insured State bank should notify the 

State bank supervisor of each host State of the bank if 

there has been a final determination that the bank is 

in a troubled condition. 

(ii) TIMING OF NOTICE.—The State bank supervisor of 

the home State of an insured State bank should provide notice under clause (i) as soon as reasonably possible but in all cases within 15 business days after the 

State bank supervisor has made such final determination or has received written notification of such final 

determination. 

(3) HOST STATE ENFORCEMENT.—If the State bank supervisor 

of a host State determines that a branch of an out-of-State 

State insured State bank is violating any law of the host State 

that is applicable to such branch pursuant to section 24(j) of 

this Act, including a law that governs community reinvestment, 

fair lending, or consumer protection, the State bank supervisor 

of the host State or, to the extent authorized by the law of the 

host State, a host State law enforcement officer may, with written notice to the State bank supervisor of the bank’s home State 

and subject to the terms of any applicable cooperative agreement with the State bank supervisor of the bank’s home State, 

undertake such enforcement actions and proceedings as would 

be permitted under the law of the host State as if the branch 

were a bank chartered by that host State. 

(4) COOPERATIVE AGREEMENT.—

(A) IN GENERAL.—The State bank supervisors from 2 or 

more States may enter into cooperative agreements to faciliVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00093 Fmt 6659 Sfmt 6603 E:\HR\OC\HR356P1.XXX HR356P1

cchase on PROD1PC60 with REPORTS
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tate State regulatory supervision of State banks, including 

cooperative agreements relating to the coordination of examinations and joint participation in examinations. For 

purposes of this subsection (h), the term ‘‘cooperative agreement’’ means a written agreement that is signed by the 

home State bank supervisor and host State bank supervisor 

to facilitate State regulatory supervision of State banks and 

includes nationwide or multi-state cooperative agreements 

and cooperative agreements solely between the home State 

and host State. 

(B) RULE OF CONSTRUCTION.—Except for State bank supervisors, no provision of this subsection relating to such 

cooperative agreements shall be construed as limiting in 

any way the authority of home and host State law enforcement officers, regulatory supervisors, or other officials that 

have not signed such cooperative agreements to enforce host 

State laws that are applicable to a branch of an out-ofState insured State bank located in the host State pursuant 

to section 24(j) of this Act. 

(5) FEDERAL REGULATORY AUTHORITY.—No provision of this 

subsection shall be construed as limiting in any way the authority of any Federal banking agency. 

(6) STATE TAXATION AUTHORITY NOT AFFECTED.—No provision 

of this subsection (h) shall be construed as affecting the authority of any State or political subdivision of any State to adopt, 

apply, or administer any tax or method of taxation to any bank, 

bank holding company, or foreign bank, or any affiliate of any 

bank, bank holding company, or foreign bank, to the extent 

such tax or tax method is otherwise permissible by or under the 

Constitution of the United States or other Federal law. 

(7) DEFINITIONS.—For purpose of this section, the following 

definition shall apply: 

(A) HOST STATE, HOME STATE, OUT-OF-STATE BANK.—The 

terms ‘‘host State’’, ‘‘home State’’, and ‘‘out-of-State bank’’

have the same meanings as in section 44(g). 

(B) STATE SUPERVISORY FEES.—The term ‘‘State supervisory fees’’ means assessments, examination fees, branch 

fees, license fees, and all other fees that are levied or 

charged by a State bank supervisor directly upon an insured State bank or upon branches of an insured State 

bank. 

(C) TROUBLED CONDITION.—Solely for purposes of subparagraph (2)(B) of this subsection (h), an insured State 

bank has been determined to be in ‘‘troubled condition’’ if 

the bank—

(i) has a composite rating, as determined in its most 

recent report of examination, of 4 or 5 under the Uniform Financial Institutions Ratings System (UFIRS); 

or 

(ii) is subject to a proceeding initiated by the Corporation for termination or suspension of deposit insurance; or 

(iii) is subject to a proceeding initiated by the State 

bank supervisor of the bank’s home State to vacate, reVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00094 Fmt 6659 Sfmt 6603 E:\HR\OC\HR356P1.XXX HR356P1

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voke, or terminate the charter of the bank, or to liquidate the bank, or to appoint a receiver for the bank. 

(D) FINAL DETERMINATION.—For the purposes of paragraph (2)(B), the term ‘‘final determination’’ means the 

transmittal of a report of examination to the bank or transmittal of official notice of proceedings to the bank. 

* * * * * * * 

SEC. 11. (a) * * * 

* * * * * * * 

(c) APPOINTMENT OF CORPORATION AS CONSERVATOR OR

RECEIVER.— (1) * * * 

* * * * * * * 

ø(7) JUDICIAL REVIEW.—If the Corporation appoints itself as 

conservator or receiver under paragraph (4), the insured State 

depository institution may, within 30 days thereafter, bring an 

action in the United States district court for the judicial district in which the home office of such institution is located, or 

in the United States District Court for the District of Columbia, for an order requiring the Corporation to remove itself as 

such conservator or receiver, and the court shall, upon the 

merits, dismiss such action or direct the Corporation to remove 

itself as such conservator or receiver.¿ 

(7) JUDICIAL REVIEW.—If the Corporation is appointed (including the appointment of the Corporation as receiver by the 

Board of Directors) as conservator or receiver of a depository institution under paragraph (4), (9), or (10), the depository institution may, within 30 days thereafter, bring an action in the 

United States district court for the judicial district in which the 

home office of such depository institution is located, or in the 

United States District Court for the District of Columbia, for an 

order requiring the Corporation to be removed as the conservator or receiver (regardless of how such appointment was 

made), and the court shall, upon the merits, dismiss such action or direct the Corporation to be removed as the conservator 

or receiver. 

* * * * * * * 

(d) POWERS AND DUTIES OF CORPORATION AS CONSERVATOR OR

RECEIVER.—

(1) * * * 

* * * * * * * 

(15) ACCOUNTING AND RECORDKEEPING REQUIREMENTS.—

(A) * * * 

* * * * * * * 

(D) øRECORDKEEPING REQUIREMENT.—After the end of 

the 6-year period¿ RECORDKEEPING REQUIREMENT.—

(i) IN GENERAL.—Except as provided in clause (ii), 

after the end of the 6-year period beginning on the date 

the Corporation is appointed as receiver of an insured 

depository institution, the Corporation may destroy 

any records of such institution which the Corporation, 

in the Corporation’s discretion, determines øto be unVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00095 Fmt 6659 Sfmt 6601 E:\HR\OC\HR356P1.XXX HR356P1

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necessary¿ are unnecessary and not relevant to any 

pending or reasonably probable future litigation unless 

directed not to do so by a court of competent jurisdiction or governmental agency, or prohibited by law. 

(ii) OLD RECORDS.—In the case of records of an insured depository institution which— (I) are at least 10 years old, as of the date the 

Corporation is appointed as the receiver of such 

depository institution; and 

(II) are unnecessary and not relevant to any 

pending or reasonably probable future litigation, 

as provided in clause (i), 

the Corporation may destroy such records in accordance with clause (i) any time after such appointment is 

final without regard to the 6-year period of limitation 

contained in such clause. 

* * * * * * * 

SEC. 18. (a) øINSURANCE LOGO.—¿ REPRESENTATIONS OF DEPOSIT

INSURANCE.— (1) * * * 

* * * * * * * 

(3) REGULATIONS.—The Corporation shall prescribe regulations to carry out the purposes øof this subsection¿ of paragraphs (1) and (2), including regulations governing the manner 

of display or use of such signs, except that the size of the sign 

prescribed under paragraph (1) shall be similar to that prescribed under paragraph (2)(A). øInitial regulations under this 

subsection shall be prescribed on the date of enactment of the 

Financial Institutions Recovery, Reform, and Enforcement Act 

of 1989.¿ For each day an insured depository institution continues to violate any provisions øof this subsection¿ of paragraphs (1) and (2) or any lawful provisions of said regulations, it shall be subject to a penalty of not more than $100, which 

the Corporation may recover for its use. 

(4) FALSE ADVERTISING, MISUSE OF FDIC NAMES, AND MISREPRESENTATION TO INDICATE INSURED STATUS.—

(A) PROHIBITION ON FALSE ADVERTISING AND MISUSE OF

FDIC NAMES.—No person may—

(i) use the terms ‘‘Federal Deposit’’, ‘‘Federal Deposit 

Insurance’’, ‘‘Federal Deposit Insurance Corporation’’, 

any combination of such terms, or the abbreviation 

‘‘FDIC’’ as part of the business name or firm name of 

any person, including any corporation, partnership, 

business trust, association, or other business entity; or 

(ii) use such terms or any other sign or symbol as 

part of an advertisement, solicitation, or other document, 

to represent, suggest or imply that any deposit liability, obligation, certificate or share is insured or guaranteed by the 

Federal Deposit Insurance Corporation, if such deposit liability, obligation, certificate, or share is not insured or 

guaranteed by the Corporation. 

(B) PROHIBITION ON MISREPRESENTATIONS OF INSURED

STATUS.—No person may knowingly misrepresent—


cchase on PROD1PC60 with REPORTS
97 

(i) that any deposit liability, obligation, certificate, or 

share is federally insured, if such deposit liability, obligation, certificate, or share is not insured by the Corporation; or 

(ii) the extent to which or the manner in which any 

deposit liability, obligation, certificate, or share is insured by the Federal Deposit Insurance Corporation, if 

such deposit liability, obligation, certificate, or share is 

not insured by the Corporation to the extent or in the 

manner represented. 

(C) AUTHORITY OF FDIC.—The Corporation shall have—

(i) jurisdiction over any person that violates this 

paragraph, or aids or abets the violation of this paragraph; and 

(ii) for purposes of enforcing the requirements of this 

paragraph with regard to any person—

(I) the authority of the Corporation under section 

10(c) to conduct investigations; and 

(II) the enforcement authority of the Corporation 

under subsections (b), (c), (d) and (i) of section 8, 

as if such person were a state nonmember insured bank. 

(D) OTHER ACTIONS PRESERVED.—No provision of this 

paragraph shall be construed as barring any action otherwise available, under the laws of the United States or any 

State, to any Federal or State law enforcement agency or 

individual. 

* * * * * * * 

(c)(1) * * * 

* * * * * * * 

ø(4) In the interests of uniform standards, before acting on any 

application for approval of a merger transaction, the responsible 

agency, unless it finds that it must act immediately in order to prevent the probable failure of one of the banks or savings associations 

involved, shall request reports on the competitive factors involved 

from the Attorney General and the other Federal banking agencies 

referred to in this subsection. The reports shall be furnished within 

thirty calendar days of the date on which they are requested, or 

within ten calendar days of such date if the requesting agency advises the Attorney General and the other Federal banking agencies 

that an emergency exists requiring expeditious action. Notwithstanding the preceding sentence, a banking agency shall not be required to file a report requested by the responsible agency under 

this paragraph if such banking agency advises the responsible 

agency by the applicable date under the preceding sentence that 

the report is not necessary because none of the effects described in 

paragraph (5) are likely to occur as a result of the transaction.¿ 

(4) REPORTS ON COMPETITIVE FACTORS.— (A) REQUEST FOR REPORT.—In the interests of uniform 

standards and subject to subparagraph (B), the responsible 

agency shall, before acting on any application for approval 

of a merger transaction—

(i) request a report on the competitive factors involved from the Attorney General; and 


cchase on PROD1PC60 with REPORTS
98 

(ii) provide a copy of the request to the Corporation 

(when the Corporation is not the responsible agency). 

(B) CONCURRENT CONSIDERATION.—The responsible agency shall not be required to make a request under subparagraph (A) before acting on an application for approval of 

a merger transaction if—

(i) the agency finds that it must act immediately in 

order to prevent the probable failure of a depository institution involved in the transaction; or 

(ii) the transaction consists of a merger between an 

insured depository institution and 1 or more affiliates 

of the depository institution. 

(C) FURNISHING OF REPORT.—The report requested under 

subparagraph (A) shall be furnished by the Attorney General to the responsible agency—

(i) not more than 30 calendar days after the date on 

which the Attorney General received the request; or 

(ii) not more than 10 calendar days after such date, 

if the requesting agency advises the Attorney General 

that an emergency exists requiring expeditious action. 

* * * * * * * 

(6) The responsible agency shall immediately notify the Attorney 

General of any approval by it pursuant to this subsection of a proposed merger transaction. If the agency has found that it must act 

immediately to prevent the probable failure of one of the øbanks 

or savings associations involved¿ insured depository institutions involved, or if the proposed merger transaction is solely between an 

insured depository institution and 1 or more of affiliates of the depository institution, and reports on the competitive factors have 

been dispensed with, the transaction may be consummated immediately upon approval by the agency. øIf the agency has advised 

the Attorney General and the other Federal banking agencies of 

the existence of an emergency requiring expeditious action and has 

requested reports on the competitive factors within ten days, the 

transaction may not be consummated before the fifth calendar day 

after the date of approval by the agency.¿ If the agency has advised 

the Attorney General under paragraph (4)(C)(ii) of the existence of 

an emergency requiring expeditious action and has requested a report on the competitive factors within 10 days, the transaction may 

not be consummated before the fifth calendar day after the date of 

approval by the agency. In all other cases, the transaction may not 

be consummated before the thirtieth calendar day after the date of 

approval by the agency or, if the agency has not received any adverse comment from the Attorney General of the United States relating to competitive factors, such shorter period of time as may be 

prescribed by the agency with the concurrence of the Attorney General, but in no event less than 15 calendar days after the date of 

approval. 

* * * * * * * 

(d)(1) * * * 

* * * * * * * 

(3) EXCLUSIVE AUTHORITY FOR ADDITIONAL BRANCHES.—


cchase on PROD1PC60 with REPORTS
99 

(A) * * * 

* * * * * * * 

(C) INTERSTATE BRANCHING BY SUBSIDIARIES OF COMMERCIAL FIRMS PROHIBITED.—

(i) IN GENERAL.—If the appropriate State bank supervisor of the home State of any industrial loan company, industrial bank, or other institution described in 

section 2(c)(2)(H) of the Bank Holding Company Act of 

1956, or the appropriate State bank supervisor of any 

host State with respect to such company, bank, or institution, determines that such company, bank, or institution is controlled, directly or indirectly, by a commercial firm, such company, bank, or institution may not 

acquire, establish, or operate a branch in such host 

State. 

(ii) COMMERCIAL FIRM DEFINED.—For purposes of 

this subsection, the term ‘‘commercial firm’’ means any 

entity at least 15 percent of the annual gross revenues 

of which on a consolidated basis, including all affiliates of the entity, were derived from engaging, on an 

on-going basis, in activities that are not financial in 

nature or incidental to a financial activity during at 

least 3 of the prior 4 calendar quarters. 

(iii) GRANDFATHERED INSTITUTIONS.—Clause (i) 

shall not apply with respect to any industrial loan 

company, industrial bank, or other institution described in section 2(c)(2)(H) of the Bank Holding Company Act of 1956—

(I) which became an insured depository institution before October 1, 2003 or pursuant to an application for deposit insurance which was approved by the Corporation before such date; and 

(II) with respect to which there is no change in 

control, directly or indirectly, of the company, 

bank, or institution after September 30, 2003, that 

requires an application under subsection (c), section 7(j), section 3 of the Bank Holding Company 

Act of 1956, or section 10 of the Home Owners’

Loan Act. 

(iv) TRANSITION PROVISION.—Any divestiture required under this subparagraph of a branch in a host 

State shall be completed as quickly as is reasonably 

possible. 

(v) CORPORATE REORGANIZATIONS PERMITTED.—The 

acquisition of direct or indirect control of the company, 

bank, or institution referred to in clause (iii)(II) shall 

not be treated as a ‘‘change in control’’ for purposes of 

such clause if the company acquiring control is itself 

directly or indirectly controlled by a company that was 

an affiliate of such company, bank, or institution on 

the date referred to in clause (iii)(II), and remained an 

affiliate at all times after such date. 

(4) øSTATE ‘‘OPT-IN’’ ELECTION TO PERMIT INTERSTATE¿ INTERSTATE BRANCHING THROUGH DE NOVO BRANCHES.—


cchase on PROD1PC60 with REPORTS
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(A) IN GENERAL.—øSubject to subparagraph (B)¿ Subject 

to subparagraph (B) and paragraph (3)(C), the Corporation 

may approve an application by an insured State nonmember bank to establish and operate a de novo branch in 

a State (other than the bank’s home State) in which the 

bank does not ømaintain a branch if—

ø(i) there is in effect in the host State a law that—

ø(I) applies equally to all banks; and 

ø(II) expressly permits all out-of-State banks to 

establish de novo branches in such State; and 

ø(ii) the conditions established in, or made applicable to this paragraph by, subparagraph (B) are met.¿ 

maintain a branch. 

* * * * * * * 

(D) HOME STATE DEFINED.—øThe term¿ For purposes of 

this subsection, the term ‘‘home State’’ means the State by 

which a State bank is chartered. 

(E) HOST STATE DEFINED.—øThe term¿ For purposes of 

this subsection, the term ‘‘host State’’ means, with respect 

to a bank, a State, other than the home State of the bank, 

in which the bank maintains, or seeks to establish and 

maintain, a branch. 

(5) INTERSTATE FIDUCIARY ACTIVITY.—

(A) AUTHORITY OF STATE BANK SUPERVISOR.—The State 

bank supervisor of a State bank may approve an application by the State bank, when not in contravention of home 

State or host State law, to act as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, 

assignee, receiver, committee of estates of lunatics, or in any 

other fiduciary capacity in a host State in which State 

banks or other corporations which come into competition 

with national banks are permitted to act under the laws of 

such host State. 

(B) NONCONTRAVENTION OF HOST STATE LAW.—Whenever 

the laws of a host State authorize or permit the exercise of 

any or all of the foregoing powers by State banks or other 

corporations which compete with national banks, the granting to and the exercise of such powers by a State bank as 

provided in this paragraph shall not be deemed to be in 

contravention of host State law within the meaning of this 

paragraph. 

(C) STATE BANK INCLUDES TRUST COMPANIES.—For purposes of this paragraph, the term ‘‘State bank’’ includes any 

State-chartered trust company (as defined in section 44(g)). 

(D) OTHER DEFINITIONS.—For purposes of this paragraph, the term ‘‘home State’’ and ‘‘host State’’ have the 

meanings given such terms in section 44. 

* * * * * * * 

(k) AUTHORITY TO REGULATE OR PROHIBIT CERTAIN FORMS OF

BENEFITS TO INSTITUTION-AFFILIATED PARTIES.—

(1) * * * 

(2) FACTORS TO BE TAKEN INTO ACCOUNT.—The Corporation 

shall prescribe, by regulation, the factors to be considered by 


cchase on PROD1PC60 with REPORTS
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the Corporation in taking any action pursuant to paragraph (1) 

which may include such factors as the following: 

(A) Whether there is a reasonable basis to believe that 

the institution-affiliated party has committed any fraudulent act or omission, breach of trust or fiduciary duty, or 

insider abuse with regard to the depository institution øor 

depository institution holding company¿ or covered company that has had a material affect on the financial condition of the institution. 

ø(B) Whether there is a reasonable basis to believe that 

the institution-affiliated party is substantially responsible 

for the insolvency of the depository institution or depository institution holding company, the appointment of a 

conservator or receiver for the depository institution, or 

the depository institution’s troubled condition (as defined 

in the regulations prescribed pursuant to section 32(f)).¿ 

(B) Whether there is a reasonable basis to believe that the 

institution-affiliated party is substantially responsible for— (i) the insolvency of the depository institution or covered company; 

(ii) the appointment of a conservator or receiver for 

the depository institution; or 

(iii) the depository institution’s troubled condition (as 

defined in the regulations prescribed pursuant to section 32(f)). 

* * * * * * * 

(F) The length of time the party was affiliated with the 

insured depository institution or ødepository institution 

holding company¿ covered company, and the degree to 

which—

(i) * * * 

* * * * * * * 

(3) CERTAIN PAYMENTS PROHIBITED.—No insured depository 

institution or ødepository institution holding company¿ covered 

company may prepay the salary or any liability or legal expense of any institution-affiliated party if such payment is 

made—

(A) in contemplation of the insolvency of such institution 

or øholding company¿ covered company or after the commission of an act of insolvency; and 

* * * * * * * 

(4) GOLDEN PARACHUTE PAYMENT DEFINED.—For purposes of 

this subsection—

(A) IN GENERAL.—The term ‘‘golden parachute payment’’

means any payment (or any agreement to make any payment) in the nature of compensation by any insured depository institution or ødepository institution holding company¿ covered company for the benefit of any institutionaffiliated party pursuant to an obligation of such institution or øholding company¿ covered company that—

(i) is contingent on the termination of such party’s 

affiliation with the institution or øholding company¿ 

covered company; and 


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(ii) is received on or after the date on which—

(I) the insured depository institution or ødepository institution holding company¿ covered company, or any insured depository institution subsidiary of such øholding company¿ covered company, is insolvent; 

* * * * * * * 

(5) OTHER DEFINITIONS.—For purposes of this subsection—

(A) INDEMNIFICATION PAYMENT.—Subject to paragraph 

(6), the term ‘‘indemnification payment’’ means any payment (or any agreement to make any payment) by any insured depository institution or ødepository institution 

holding company¿ covered company for the benefit of any 

person who is or was an institution-affiliated party, to pay 

or reimburse such person for any liability or legal expense 

with regard to any administrative proceeding or civil action instituted by the appropriate Federal banking agency 

which results in a final order under which such person—

(i) * * * 

* * * * * * * 

(D) COVERED COMPANY.—The term ‘‘covered company’’

means any depository institution holding company (including any company required to file a report under section 

4(f)(6) of the Bank Holding Company Act of 1956), or any 

other company that controls an insured depository institution. 

(6) CERTAIN COMMERCIAL INSURANCE COVERAGE NOT TREATED

AS COVERED BENEFIT PAYMENT.—No provision of this subsection shall be construed as prohibiting any insured depository institution or ødepository institution holding company¿ 

covered company, from purchasing any commercial insurance 

policy or fidelity bond, except that, subject to any requirement 

described in paragraph (5)(A)(iii), such insurance policy or 

bond shall not cover any legal or liability expense of the institution øor holding company¿ or covered company which is described in paragraph (5)(A). 

* * * * * * * 

(r) SUBSIDIARY DEPOSITORY INSTITUTIONS AS AGENTS FOR CERTAIN AFFILIATES.—

(1) IN GENERAL.—Any øbank subsidiary¿ depository institution subsidiary of a øbank holding company¿ depository institution holding company may receive deposits, renew time deposits, close loans, service loans, and receive payments on loans 

and other obligations as an agent for a depository institution 

affiliate. 

(2) øBANK¿ DEPOSITORY INSTITUTION ACTING AS AGENT IS

NOT A BRANCH.—Notwithstanding any other provision of law, 

øa bank acting¿ a depository institution acting as an agent in 

accordance with paragraph (1) for a depository institution affiliate shall not be considered to be a branch of the affiliate. 

(3) PROHIBITIONS ON ACTIVITIES.—A depository institution 

may not—


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103 

(A) conduct any activity as an agent under paragraph (1) 

øor (6)¿ which such institution is prohibited from conducting as a principal under any applicable Federal or 

State law; or 

(B) as a principal, have an agent conduct any activity 

under paragraph (1) øor (6)¿ which the institution is prohibited from conducting under any applicable Federal or 

State law. 

* * * * * * * 

(5) AGENCY RELATIONSHIP REQUIRED TO BE CONSISTENT WITH

SAFE AND SOUND BANKING PRACTICES.—An agency relationship 

between depository institutions under paragraph (1) øor (6)¿ 

shall be on terms that are consistent with safe and sound 

banking practices and all applicable regulations of any appropriate Federal banking agency. 

ø(6) AFFILIATED INSURED SAVINGS ASSOCIATIONS.—An insured savings association which was an affiliate of a bank on 

July 1, 1994, may conduct activities as an agent on behalf of 

such bank in the same manner as an insured bank affiliate of 

such bank may act as agent for such bank under this subsection to the extent such activities are conducted only in—

ø(A) any State in which—

ø(i) the bank is not prohibited from operating a 

branch under any provision of Federal or State law; 

and 

ø(ii) the savings association maintained an office or 

branch and conducted business as of July 1, 1994; or 

ø(B) any State in which—

ø(i) the bank is not expressly prohibited from operating a branch under a State law described in section 

44(a)(2); and 

ø(ii) the savings association maintained a main office and conducted business as of July 1, 1994.¿ 

* * * * * * * 

(u) LIMITATION ON CLAIMS.—

(1) IN GENERAL.—No person may bring a claim against any 

Federal banking agency (including in its capacity as conservator or receiver) for the return of assets of an affiliate or controlling shareholder of the insured depository institution transferred to, or for the benefit of, an insured depository institution 

by such affiliate or controlling shareholder of the insured depository institution, or a claim against such Federal banking 

agency for monetary damages or other legal or equitable relief 

in connection with such transfer, if at the time of the transfer—

(A) * * * 

ø(B) the insured depository institution is undercapitalized (as defined in section 38 of this Act); and¿ 

ø(C)¿ (B) for that portion of the transfer that is made by 

an entity covered by section 5(g) of the Bank Holding Company Act of 1956 or section 45 of this Act, the Federal 


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banking agency has followed the procedure set forth in 

such section. 

* * * * * * * 

(x) PRIVILEGES NOT AFFECTED BY DISCLOSURE TO BANKING AGEN- CY OR SUPERVISOR.— (1) IN GENERAL.—The submission by any person of any information to any Federal banking agency, State bank supervisor, 

or foreign banking authority for any purpose in the course of 

any supervisory or regulatory process of such agency, supervisor, or authority shall not be construed as waiving, destroying, or otherwise affecting any privilege such person may claim 

with respect to such information under Federal or State law as 

to any person or entity other than such agency, supervisor, or 

authority. 

(2) RULE OF CONSTRUCTION.—No provision of paragraph (1) 

may be construed as implying or establishing that— (A) any person waives any privilege applicable to information that is submitted or transferred under any circumstance to which paragraph (1) does not apply; or 

(B) any person would waive any privilege applicable to 

any information by submitting the information to any Federal banking agency, State bank supervisor, or foreign 

banking authority, but for this subsection. 

SEC. 19. PENALTY FOR UNAUTHORIZED PARTICIPATION BY CONVICTED INDIVIDUAL. 

(a) * * * 

* * * * * * * 

(c) NONINSURED BANKS.—Subsections (a) and (b) shall apply to 

a noninsured national bank and a noninsured State member bank, 

and any agency or noninsured branch (as such terms are defined 

in section 1(b) of the International Banking Act of 1978) of a foreign 

bank as if such bank, branch, or agency were an insured depository 

institution, except such subsections shall be applied for purposes of 

this subsection by substituting the agency determined under the following paragraphs for ‘‘Corporation’’ each place such term appears 

in such subsections: 

(1) The Comptroller of the Currency, in the case of a noninsured national bank or any Federal agency or noninsured 

Federal branch of a foreign bank. 

(2) The Board of Governors of the Federal Reserve System, in 

the case of a noninsured State member bank or any State agency or noninsured State branch of a foreign bank. 

(d) BANK HOLDING COMPANIES.—Subsections (a) and (b) shall 

apply to any company (other than a foreign bank) that is a bank 

holding company and any organization organized and operated 

under section 25A of the Federal Reserve Act or operating under section 25 of the Federal Reserve Act as if such bank holding company 

or organization were an insured depository institution, except such 

subsections shall be applied for purposes of this subsection by substituting ‘‘Board of Governors of the Federal Reserve System’’ for 

‘‘Corporation’’ each place such term appears in such subsections. 

(e) SAVINGS AND LOAN HOLDING COMPANIES.—Subsections (a) 

and (b) shall apply to any savings and loan holding company and 

any subsidiary (other than a savings association) of a savings and 


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loan holding company as if such savings and loan holding company 

or subsidiary were an insured depository institution, except such 

subsections shall be applied for purposes of this subsection by substituting ‘‘Director of the Office of Thrift Supervision’’ for ‘‘Corporation’’ each place such term appears in such subsections. 

* * * * * * * 

SEC. 43. DEPOSITORY INSTITUTIONS LACKING FEDERAL DEPOSIT INSURANCE. 

(a) ANNUAL INDEPENDENT AUDIT OF PRIVATE DEPOSIT INSUR- ERS.—(1) * * * 

(2) PROVIDING COPIES OF AUDIT REPORT.— (A) PRIVATE DEPOSIT INSURER.—The private deposit 

insurer shall provide a copy of the audit report— (i) to each depository institution the deposits of 

which are insured by the private deposit insurer, not 

later than 14 days after the audit is completed; øand¿ 

(ii) to the appropriate supervisory agency of each 

State in which such an institution receives deposits, 

not later than 7 days after the audit is completedø.¿; 

(iii) in the case of depository institutions described in 

subsection (f)(2)(A) the deposits of which are insured by 

the private insurer, the National Credit Union Administration, not later than 7 days after that audit is completed; and 

(iv) in the case of depository institutions described in 

subsection (f)(2)(A) the deposits of which are insured by 

the private insurer which are members of a Federal 

home loan bank, the Federal Housing Finance Board, 

not later than 7 days after that audit is completed. 

* * * * * * * 

(C) CONSULTATION.—The appropriate supervisory agency 

of each State in which a private deposit insurer insures deposits in an institution described in subsection (f)(2)(A) 

which—

(i) lacks Federal deposit insurance; and 

(ii) has become a member of a Federal home loan 

bank, 

shall provide the National Credit Union Administration, 

upon request, with the results of any examination and reports related thereto concerning the private deposit insurer 

to which such agency may have in its possession. 

(3) ENFORCEMENT BY APPROPRIATE STATE SUPERVISOR.—Any 

appropriate State supervisor of a private deposit insurer, and 

any appropriate State supervisor of a depository institution 

which receives deposits that are insured by a private deposit insurer, may examine and enforce compliance with this subsection 

under the applicable regulatory authority of such supervisor. 

(b) DISCLOSURE REQUIRED.—Any depository institution lacking 

Federal deposit insurance shall, within the United States, do the 

following: 

(1) PERIODIC STATEMENTS; ACCOUNT RECORDS.—Include conspicuously in all periodic statements of account, on each signature card, and on each passbook, certificate of deposit, øor 


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similar instrument evidencing a deposit¿ or share certificate a 

notice that the institution is not federally insured, and that if 

the institution fails, the Federal Government does not guarantee that depositors will get back their money. 

ø(2) ADVERTISING; PREMISES.—Include conspicuously in all 

advertising and at each place where deposits are normally received a notice that the institution is not federally insured. 

ø(3) ACKNOWLEDGEMENT OF DISCLOSURE.— ø(A) NEW DEPOSITORS.—With respect to any depositor 

who was not a depositor at the depository institution before June 19, 1994, receive any deposit for the account of 

such depositor only if the depositor has signed a written 

acknowledgement that— ø(i) the institution is not federally insured; and 

ø(ii) if the institution fails, the Federal Government 

does not guarantee that the depositor will get back the 

depositor’s money. 

ø(B) CURRENT DEPOSITORS.—Receive any deposit after 

the effective date of this paragraph for the account of any 

depositor who was a depositor before June 19, 1994, only 

if— ø(i) the depositor has signed a written acknowledgement described in subparagraph (A); or 

ø(ii) the institution has complied with the provisions 

of subparagraph (C) which are applicable as of the 

date of the deposit. 

ø(C) ALTERNATIVE PROVISION OF NOTICE TO CURRENT DE- POSITORS.— ø(i) IN GENERAL.—Transmit to each depositor who 

was a depositor before June 19, 1994, and has not 

signed a written acknowledgement described in subparagraph (A)—

ø(I) a card containing the information described 

in clauses (i) and (ii) of subparagraph (A), and a 

line for the signature of the depositor; and 

ø(II) accompanying materials requesting the depositor to sign the card, and return the signed 

card to the institution. 

ø(ii) MANNER AND TIMING OF NOTICE.— ø(I) FIRST NOTICE.—Make the transmission described in clause (i) via first class mail not later 

than September 12, 1994. 

ø(II) SECOND NOTICE.—Make a second transmission described in clause (i) via first class mail 

not less than 30 days and not more than 45 days 

after a transmission to the depositor in accordance 

with subclause (I), if the institution has not, by 

the date of such mailing, received from the depositor a card referred to in clause (i) which has been 

signed by the depositor. 

ø(III) THIRD NOTICE.—Make a third transmission described in clause (i) via first class mail 

not less than 30 days and not more than 45 days 

after a transmission to the depositor in accordance 

with subclause (II), if the institution has not, by 


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the date of such mailing, received from the depositor a card referred to in clause (i) which has been 

signed by the depositor.¿ 

(2) ADVERTISING; PREMISES.—

(A) IN GENERAL.—Include clearly and conspicuously in 

all advertising, except as provided in subparagraph (B); 

and at each station or window where deposits are normally 

received, its principal place of business and all its branches 

where it accepts deposits or opens accounts (excluding automated teller machines or point of sale terminals), and on 

its main Internet page, a notice that the institution is not 

federally insured. 

(B) EXCEPTIONS.—The following need not include a notice that the institution is not federally insured: 

(i) Statements or reports of financial condition of the 

depository institution that are required to be published 

or posted by State or Federal law or regulation. 

(ii) Any sign, document, or other item that contains 

the name of the depository institution, its logo, or its 

contact information, but only if the sign, document, or 

item does not include any information about the institution’s products or services or information otherwise 

promoting the institution. 

(iii) Small utilitarian items that do not mention deposit products or insurance if inclusion of the notice 

would be impractical. 

(3) ACKNOWLEDGMENT OF DISCLOSURE.—

(A) NEW DEPOSITORS OBTAINED OTHER THAN THROUGH A

CONVERSION OR MERGER.—With respect to any depositor 

who was not a depositor at the depository institution before 

the effective date of the Financial Services Relief Act of 

2005, and who is not a depositor as described in subparagraph (B), receive any deposit for the account of such depositor only if the depositor has signed a written acknowledgement that—

(i) the institution is not federally insured; and 

(ii) if the institution fails, the Federal Government 

does not guarantee that the depositor will get back the 

depositor’s money. 

(B) NEW DEPOSITORS OBTAINED THROUGH A CONVERSION

OR MERGER.—With respect to a depositor at a federally insured depository institution that converts to, or merges into, 

a depository institution lacking federal insurance after the 

effective date of the Financial Services Regulatory Relief 

Act of 2005, receive any deposit for the account of such depositor only if—

(i) the depositor has signed a written acknowledgement described in subparagraph (A); or 

(ii) the institution makes an attempt, as described in 

subparagraph (D) and sent by mail no later than 45 

days after the effective date of the conversion or merger, 

to obtain the acknowledgment. 

(C) CURRENT DEPOSITORS.—Receive any deposit after the 

effective date of the Financial Services Regulatory Relief 


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Act of 2005 for the account of any depositor who was a depositor on that date only if— (i) the depositor has signed a written acknowledgement described in subparagraph (A); or 

(ii) the institution makes an attempt, as described in 

subparagraph (D) and sent by mail no later than 45 

days after the effective date of the Financial Services 

Regulatory Relief Act of 2005, to obtain the acknowledgment. 

(D) ALTERNATIVE PROVISION OF NOTICE TO CURRENT DE- POSITORS AND NEW DEPOSITORS OBTAINED THROUGH A CON- VERSION OR MERGER.— (i) IN GENERAL.—Transmit to each depositor who has 

not signed a written acknowledgement described in 

subparagraph (A)— (I) a conspicuous card containing the information described in clauses (i) and (ii) of subparagraph (A), and a line for the signature of the depositor; and 

(II) accompanying materials requesting the depositor to sign the card, and return the signed 

card to the institution. 

* * * * * * * 

ø(e) ELIGIBILITY FOR FEDERAL DEPOSIT INSURANCE.— ø(1) IN GENERAL.—Except as permitted by the Federal Trade 

Commission, in consultation with the Federal Deposit Insurance Corporation, no depository institution (other than a bank, 

including an unincorporated bank) lacking Federal deposit insurance may use the mails or any instrumentality of interstate 

commerce to receive or facilitate receiving deposits, unless the 

appropriate supervisor of the State in which the institution is 

chartered has determined that the institution meets all eligibility requirements for Federal deposit insurance, including— ø(A) in the case of an institution described in section 

19(b)(1)(A)(iv) of the Federal Reserve Act, all eligibility requirements set forth in the Federal Credit Union Act and 

regulations of the National Credit Union Administration; 

and 

ø(B) in the case of any other institution, all eligibility requirements set forth in this Act and regulations of the Corporation. 

ø(2) AUTHORITY OF FDIC AND NCUA NOT AFFECTED.—No determination under paragraph (1) shall bind, or otherwise affect 

the authority of, the National Credit Union Administration or 

the Corporation.¿ 

ø(f)¿ (e) DEFINITIONS.—For purposes of this section: 

(1) * * * 

ø(2) DEPOSITORY INSTITUTION.—The term ‘‘depository institution’’ includes— ø(A) any entity described in section 19(b)(1)(A)(iv) of the 

Federal Reserve Act; and 

ø(B) any entity that, as determined by the Federal Trade 

Commission— ø(i) is engaged in the business of receiving deposits; 

and 


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ø(ii) could reasonably be mistaken for a depository 

institution by the entity’s current or prospective customers.¿ 

(2) DEPOSITORY INSTITUTION.—The term ‘‘depository institution’’—

(A) includes any entity described in section 19(b)(1)(A)(iv) 

of the Federal Reserve Act; and 

(B) does not include any national bank, State member 

bank, or Federal branch. 

ø(g) ENFORCEMENT.—Compliance with the requirements of this 

section, and any regulation prescribed or order issued under this 

section, shall be enforced under the Federal Trade Commission Act 

by the Federal Trade Commission.¿ 

(f) ENFORCEMENT.—

(1) LIMITED FTC ENFORCEMENT AUTHORITY.—Compliance 

with the requirements of subsections (b) and (c), and any regulation prescribed or order issued under any such subsection, 

shall be enforced under the Federal Trade Commission Act by 

the Federal Trade Commission. 

(2) BROAD STATE ENFORCEMENT AUTHORITY.—

(A) IN GENERAL.—Subject to subparagraph (C), an appropriate State supervisor of a depository institution lacking 

Federal deposit insurance may examine and enforce compliance with the requirements of this section, and any regulation prescribed under this section. 

(B) STATE POWERS.—For purposes of bringing any action 

to enforce compliance with this section, no provision of this 

section shall be construed as preventing an appropriate 

State supervisor of a depository institution lacking Federal 

deposit insurance from exercising any powers conferred on 

such official by the laws of such State. 

(C) LIMITATION ON STATE ACTION WHILE FEDERAL ACTION

PENDING.—If the Federal Trade Commission has instituted 

an enforcement action for a violation of this section, no appropriate State supervisor may, during the pendency of 

such action, bring an action under this section against any 

defendant named in the complaint of the Commission for 

any violation of this section that is alleged in that complaint. 

SEC. 44. INTERSTATE BANK MERGERS. 

(a) APPROVAL OF INTERSTATE MERGER TRANSACTIONS AUTHORIZED.—

(1) IN GENERAL.—øBeginning on June 1, 1997, the¿ The responsible agency may approve a merger transaction under section 18(c) between øinsured banks with different home States¿ 

an insured bank and another insured depository institution or 

trust company with a different home State than the resulting 

insured bank, without regard to whether such transaction is 

prohibited under the law of any State. 

* * * * * * * 

ø(4) INTERSTATE MERGER TRANSACTIONS INVOLVING ACQUISI- TIONS OF BRANCHES.—

ø(A) IN GENERAL.—An interstate merger transaction 

may involve the acquisition of a branch of an insured bank 


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without the acquisition of the bank only if the law of the 

State in which the branch is located permits out-of-State 

banks to acquire a branch of a bank in such State without 

acquiring the bank. 

ø(B) TREATMENT OF BRANCH FOR PURPOSES OF THIS SECTION.—In the case of an interstate merger transaction 

which involves the acquisition of a branch of an insured 

bank without the acquisition of the bank, the branch shall 

be treated, for purposes of this section, as an insured bank 

the home State of which is the State in which the branch 

is located. 

ø(5) PRESERVATION OF STATE AGE LAWS.—

ø(A) IN GENERAL.—The responsible agency may not approve an application pursuant to paragraph (1) that would 

have the effect of permitting an out-of-State bank or outof-State bank holding company to acquire a bank in a host 

State that has not been in existence for the minimum period of time, if any, specified in the statutory law of the 

host State. 

ø(B) SPECIAL RULE FOR STATE AGE LAWS SPECIFYING A

PERIOD OF MORE THAN 5 YEARS.—Notwithstanding subparagraph (A), the responsible agency may approve a 

merger transaction pursuant to paragraph (1) involving 

the acquisition of a bank that has been in existence at 

least 5 years without regard to any longer minimum period of time specified in a statutory law of the host State. 

ø(6) SHELL BANKS.—For purposes of this subsection, a bank 

that has been chartered solely for the purpose of, and does not 

open for business prior to, acquiring control of, or acquiring all 

or substantially all of the assets of, an existing bank or branch 

shall be deemed to have been in existence for the same period 

of time as the bank or branch to be acquired.¿ 

(4) TREATMENT OF BRANCHES IN CONNECTION WITH CERTAIN

INTERSTATE MERGER TRANSACTIONS.—In the case of an interstate merger transaction which involves the acquisition of a 

branch of an insured depository institution or trust company 

without the acquisition of the insured depository institution or 

trust company, the branch shall be treated, for purposes of this 

section, as an insured depository institution or trust company 

the home State of which is the State in which the branch is located. 

(5) APPLICABILITY TO INDUSTRIAL LOAN COMPANIES.—No provision of this section shall be construed as authorizing the approval of any transaction involving a industrial loan company, 

industrial bank, or other institution described in section 

2(c)(2)(H) of the Bank Holding Company Act of 1956, or the acquisition, establishment, or operation of a branch by any such 

company, bank, or institution, that is not allowed under section 

18(d)(3). 

(b) PROVISIONS RELATING TO APPLICATION AND APPROVAL PROCESS.—

(1) * * * 

(2) CONCENTRATION LIMITS.—

(A) * * * 


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(B) STATEWIDE CONCENTRATION LIMITS OTHER THAN WITH

RESPECT TO INITIAL ENTRIES.—The responsible agency may 

not approve an application for an interstate merger transaction if—

(i) any øbank¿ insured depository institution involved in the transaction (including all insured depository institutions which are affiliates of any such 

øbank¿ insured depository institution) has a branch in 

any State in which any other øbank¿ insured depository institution involved in the transaction has a 

branch; and 

* * * * * * * 

(E) EXCEPTION FOR CERTAIN øBANKS¿ INSURED DEPOSITORY INSTITUTIONS AND TRUST COMPANIES.—This paragraph shall not apply with respect to any interstate merger transaction involving only affiliated øbanks¿ insured depository institutions or trust companies. 

(3) COMMUNITY REINVESTMENT COMPLIANCE.—In determining 

whether to approve an application for an interstate merger 

transaction in which the resulting bank would have a branch 

or øbank affiliate¿ insured depository institution affiliate immediately following the transaction in any State in which the 

bank submitting the application (as the acquiring bank) had no 

branch or øbank affiliate¿ insured depository institution affiliate immediately before the transaction, the responsible agency 

shall—

(A) * * * 

(B) take into account the most recent written evaluation 

under section 804 of the Community Reinvestment Act of 

1977 of øany bank¿ any insured depository institution 

which would be an affiliate of the resulting bank; and 

* * * * * * * 

(4) ADEQUACY OF CAPITAL AND MANAGEMENT SKILLS.—The responsible agency may approve an application for an interstate 

merger transaction pursuant to subsection (a) only if—

(A) each øbank¿ insured depository institution and trust 

company involved in the transaction is adequately capitalized as of the date the application is filed; and 

* * * * * * * 

(5) SURRENDER OF CHARTER AFTER MERGER TRANSACTION.—

The charters of øall banks¿ all insured depository institutions 

and trust companies involved in an interstate merger transaction, other than the charter of the resulting bank, shall be 

surrendered, upon request, to the Federal banking agency or 

State bank supervisor which issued the charter. 

* * * * * * * 

(d) OPERATIONS OF THE RESULTING BANK.—

(1) CONTINUED OPERATIONS.—A resulting bank may, subject 

to the approval of the appropriate Federal banking agency, retain and operate, as a main office or a branch, any office that 

øany bank¿ any insured depository institution or trust company 

involved in an interstate merger transaction was operating as 


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a main office or a branch immediately before the merger transaction. 

* * * * * * * 

(e) EXCEPTION FOR øBANKS¿ INSURED DEPOSITORY INSTITUTIONS

IN DEFAULT OR IN DANGER OF DEFAULT.—If an application under 

subsection (a)(1) for approval of a merger transaction which involves ø1 or more banks¿ 1 or more insured depository institutions 

in default or in danger of default or with respect to which the Corporation provides assistance under section 13(c), the responsible 

agency may approve such application without regard to subsection 

(b), or øparagraph (2), (4), or (5)¿ paragraph (2) of subsection (a). 

(f) APPLICABLE RATE AND OTHER CHARGE LIMITATIONS.— (1) * * * 

* * * * * * * 

(3) OTHER LENDERS.—In the case of any other lender doing 

business in the State described in paragraph (1), the maximum 

interest rate or amount of interest, discount points, finance 

charges, or other similar charges that may be charged, taken, 

received, or reserved from time to time in any loan, discount, 

or credit sale made, or upon any note, bill of exchange, financing transaction, or other evidence of debt issued to or acquired 

by any other lender shall be equal to not more than the greater 

of the rates described in subparagraph (A) or (B) of paragraph 

(1). 

(4) OTHER LENDER DEFINED.—For purposes of paragraph (3), 

the term ‘‘other lender’’ means any person engaged in the business of selling or financing the sale of personal property (and 

any services incidental to the sale of personal property) in such 

State, except that, with regard to any person or entity described 

in such paragraph, such term does not include— (A) an insured depository institution; or 

(B) any person or entity engaged in the business of providing a short-term cash advance to any consumer in exchange for—

(i) a consumer’s personal check or share draft, in the 

amount of the advance plus a fee, where presentment 

or negotiation of such check or share draft is deferred 

by agreement of the parties until a designated future 

date; or 

(ii) a consumer authorization to debit the consumer’s 

transaction account, in the amount of the advance plus 

a fee, where such account will be debited on or after a 

designated future date. 

(g) DEFINITIONS.—For purposes of this section, the following definitions shall apply: 

(1) * * * 

* * * * * * * 

(4) HOME STATE.—The term ‘‘home State’’—

(A) means— ø(i) with respect to a national bank, the State in 

which the main office of the bank is located; and 

ø(ii) with respect to a State bank, the State by 

which the bank is chartered; and¿ 


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(i) with respect to a national bank or Federal savings 

association, the State in which the main office of the 

bank or savings association is located; and 

(ii) with respect to a State bank, State savings association, or State-chartered trust company, the State by 

which the bank, savings association, or trust company 

is chartered; and 

* * * * * * * 

ø(5) HOST STATE.—The term ‘‘host State’’ means, with respect to a bank, a State, other than the home State of the 

bank, in which the bank maintains, or seeks to establish and 

maintain, a branch.¿ 

(5) HOST STATE.—The term ‘‘host State’’ means— (A) with respect to a bank, a State, other than the home 

State of the bank, in which the bank maintains, or seeks 

to establish and maintain, a branch; and 

(B) with respect to a trust company and solely for purposes of section 18(d)(5), a State, other than the home State 

of the trust company, in which the trust company acts, or 

seeks to act, in 1 or more fiduciary capacities. 

* * * * * * * 

(10) RESPONSIBLE AGENCY.—The term ‘‘responsible agency’’

means the agency determined in accordance with øsection 

18(c)(2)¿ paragraph (1) or (2) of section 18(c), as appropriate, 

with respect to a merger transaction. 

* * * * * * * 

(12) TRUST COMPANY.—The term ‘‘trust company’’ means—

(A) any national bank; 

(B) any savings association; and 

(C) any bank, banking association, trust company, savings bank, or other banking institution which is incorporated under the laws of any State, 

that is authorized to act in 1 or more fiduciary capacities but 

is not engaged in the business of receiving deposits other than 

trust funds (as defined in section 3(p)). 

* * * * * * * 

SEC. 47. INSURANCE CUSTOMER PROTECTIONS. 

(a) * * * 

* * * * * * * 

(g) EFFECT ON OTHER AUTHORITY.—

(1) * * * 

(2) COORDINATION WITH STATE LAW.—

(A) * * * 

(B) PREEMPTION.—

(i) IN GENERAL.—If, with respect to any provision of 

the regulations prescribed under this section, the 

Board of Governors of the Federal Reserve System, the 

Comptroller of the Currency, the Director of the Office 

of Thrift Supervision, and the Board of Directors of the 

Corporation determine jointly that the protection afforded by such provision for customers is greater than 

the protection provided by a comparable provision of 


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114 

the statutes, regulations, orders, or interpretations referred to in subparagraph (A) of any State, the appropriate State regulatory authority shall be notified of 

such determination in writing. 

* * * * * * * 

SEC. 49. ENFORCEMENT OF AGREEMENTS. 

(a) IN GENERAL.—Notwithstanding clause (i) or (ii) of section 

8(b)(6)(A) or section 38(e)(2)(E)(i), an appropriate Federal banking 

agency may enforce, under section 8, the terms of— (1) any condition imposed in writing by the agency on a depository institution or an institution-affiliated party (including 

a bank holding company) in connection with any action on any 

application, notice, or other request concerning a depository institution; or 

(2) any written agreement entered into between the agency 

and an institution-affiliated party (including a bank holding 

company). 

(b) RECEIVERSHIPS AND CONSERVATORSHIPS.—After the appointment of the Corporation as the receiver or conservator for any insured depository institution, the Corporation may enforce any condition or agreement described in paragraph (1) or (2) of subsection (a) 

involving such institution or any institution-affiliated party (including a bank holding company), through an action brought in an appropriate United States district court. 

NATIONAL BANK CONSOLIDATION AND MERGER ACT 

SEC. 2. CONSOLIDATION OF BANKS WITHIN THE SAME STATE. 

(a) IN GENERAL.—Any national bank or any bank incorporated 

under the laws of any State may, with the approval of the Comptroller, be consolidated with one or more national banking associations located in the same State under the charter of a national 

banking association on such terms and conditions as may be lawfully agreed upon by a majority of the board of directors of each 

association or bank proposing to consolidate, and be ratified and 

confirmed by the affirmative vote of the shareholders of each such 

association or bank owning at least two-thirds of its capital stock 

outstanding, or by a greater proportion of such capital stock in the 

case of such State bank if the laws of the State where it is organized so require, at a meeting to be held on the call of the directors 

after publishing notice of the time, place, and object of the meeting 

for four consecutive weeks in a newspaper of general circulation 

published in the place where the association or bank is located, or, 

if there is no such newspaper, then in the paper of general circulation published nearest thereto, and after sending such notice to 

each shareholder of record by certified or registered mail at least 

ten days prior to the meeting, except to those shareholders who 

specifically waive notice, but any additional notice shall be given 

to the shareholders of such State bank which may be required by 

the laws of the State where it is organized. øPublication of notice 

may be waived, in cases where the Comptroller determines that an 

emergency exists justifying such waiver, by unanimous action of 

the shareholders of the association or State bank¿ Publication of 

notice may be waived if the Comptroller determines that an emerVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00114 Fmt 6659 Sfmt 6601 E:\HR\OC\HR356P1.XXX HR356P1

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gency exists justifying such waiver or if the shareholders of the association or State bank agree by unanimous action to waive the publication requirement for their respective institutions. 

* * * * * * * 

SEC. 3. (a) One or more national banking associations or one or 

more State banks, with the approval of the Comptroller, under an 

agreement not inconsistent with this Act, may merge into a national banking association located within the same State, under the 

charter of the receiving association. The merger agreement shall—

(1) be agreed upon in writing by a majority of the board of 

directors of each association or State bank participating in the 

plan of merger; 

(2) be ratified and confirmed by the affirmative vote of the 

shareholders of each such association or State bank owning at 

least two-thirds of its capital stock outstanding, or by a greater 

proportion of such capital stock in the case of a State bank if 

the laws of the State where it is organized so require, at a 

meeting to be held on the call of the directors, after publishing 

notice of the time, place, and object of the meeting for four consecutive weeks in a newspaper of general circulation published 

in the place where the association or State bank is located, or, 

if there is no such newspaper, then in the newspaper of general circulation published nearest thereto, and after sending 

such notice to each shareholder of record by certified or registered mail at least ten days prior to the meeting, except to 

those shareholders who specifically waive notice, but any additional notice shall be given to the shareholders of such State 

bank which may be required by the laws of the State where 

it is organized. øPublication of notice may be waived, in cases 

where the Comptroller determines that an emergency exists 

justifying such waiver, by unanimous action of the shareholders of the association or State bank¿ Publication of notice 

may be waived if the Comptroller determines that an emergency 

exists justifying such waiver or if the shareholders of the association or State bank agree by unanimous action to waive the 

publication requirement for their respective institutions; 

* * * * * * * 

SEC. 4. INTERSTATE CONSOLIDATIONS AND MERGERS. 

(a) * * * 

ø(b) SCOPE OF APPLICATION.—Subsection (a) shall not apply with 

respect to any consolidation or merger before June 1, 1997, unless 

the home State of each bank involved in the transaction has in effect a law described in section 44(a)(3) of the Federal Deposit Insurance Act. 

ø(c) DEFINITIONS.—The terms ‘‘home State’’ and ‘‘out-of-State 

bank’’ have the same meaning as in section 44(f) of the Federal Deposit Insurance Act.¿ 

(b) MERGER OF NATIONAL BANK TRUST COMPANY WITH ANOTHER

TRUST COMPANY.—A national bank that is a trust company may engage in a consolidation or merger under this Act with any trust 

company with a different home State, under the same terms and 

conditions that would apply if the trust companies were located 

within the same State. 


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(c) DEFINITIONS.—For purposes of this section, the terms ‘‘home 

State’’, ‘‘out-of-State bank’’, and ‘‘trust company’’ each have the same 

meaning as in section 44(g) of the Federal Deposit Insurance Act. 

* * * * * * * 

INTERNATIONAL BANKING ACT OF 1978 

* * * * * * * 

FEDERAL BRANCHES AND AGENCIES

SEC. 4. (a) * * * 

* * * * * * * 

(d) Notwithstanding any other provision of this section, a foreign 

bank shall not receive deposits from citizens or residents of the 

United States or exercise fiduciary powers at any Federal agency. 

A foreign bank may, however, maintain at a Federal agency for the 

account of others credit balances incidental to, or arising out of, the 

exercise of its lawful powers. 

(e) No foreign bank may maintain both a Federal branch and a 

Federal agency in the same State if the maintenance of both an 

agency and a branch in the State is prohibited under the law of 

such State. 

* * * * * * * 

ø(g)(1) Upon the opening of a Federal branch or agency in any 

State and thereafter, a foreign bank, in addition to any deposit requirements imposed under section 6 of this Act, shall keep on deposit, in accordance with such rules and regulations as the Comptroller may prescribe, with a member bank designated by such foreign bank, dollar deposits or investment securities of the type that 

may be held by national banks for their own accounts pursuant to 

paragraph ‘‘Seventh’’ of section 5136 of the Revised Statutes, as 

amended, in an amount as hereinafter set forth. Such depository 

bank shall be located in the State where such branch or agency is 

located and shall be approved by the Comptroller if it is a national 

bank and by the Board of Governors of the Federal Reserve System 

if it is a State Bank. 

ø(2) The aggregate amount of deposited in investment securities 

(calculated on the basis of principal amount or market value, 

whichever is lower) and dollar deposits for each branch or agency 

established and operating under this section shall be not less than 

the greater of (1) that amount of capital (but not surplus) which 

would be required of a national bank being organized at this location, or (2) 5 per centum of the total liabilities of such branch or 

agency, including acceptances, but excluding (A) accrued expenses, 

and (B) amounts due and other liabilities to offices, branches, agencies, and subsidiaries of such foreign bank. The Comptroller may 

require that the assets deposited pursuant to this subsection shall 

be maintained in such amounts as he may from time to time deem 

necessary or desirable, for the maintenance of a sound financial 

condition, the protection of depositors, and the public interest, but 

such additional amount shall in no event be greater than would be 

required to conform to generally accepted banking practices as 


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manifested by banks in the area in which the branch or agency is 

located. 

ø(3) The deposit shall be maintained with any such member 

bank pursuant to a deposit agreement in such form and containing 

such limitations and conditions as the Comptroller may prescribe. 

So long as it continues business in the ordinary course such foreign 

bank shall, however, be permitted to collect income on the securities and funds so deposited and from time to time examine and exchange such securities. 

ø(4) Subject to such conditions and requirements as may be prescribed by the Comptroller, each foreign bank shall hold in each 

State in which it has a Federal branch or agency, assets of such 

types and in such amount as the Comptroller may prescribe by 

general or specific regulation or ruling as necessary or desirable for 

the maintenance of a sound financial condition, the protection of 

depositors, creditors and the public interest. In determining compliance with any such prescribed asset requirements, the Comptroller 

shall give credit to (A) assets required to be maintained pursuant 

to paragraphs (1) and (2) of this subsection, (B) reserves required 

to be maintained pursuant to section 7(a) of this Act, and (C) assets 

pledged, and surety bonds payable, to the Federal Deposit Insurance Corporation to secure the payment of domestic deposits. The 

Comptroller may prescribe different asset requirements for 

branches or agencies in different States, in order to ensure competitive equality of Federal branches and agencies with State 

branches and agencies and domestic banks in those States.¿ 

(g) CAPITAL EQUIVALENCY DEPOSIT.— (1) IN GENERAL.—Upon the opening of a Federal branch or 

agency of a foreign bank in any State and thereafter, the foreign 

bank, in addition to any deposit requirements imposed under 

section 6, shall keep on deposit, in accordance with such regulations as the Comptroller of the Currency may prescribe in accordance with paragraph (2), dollar deposits, investment securities, or other assets in such amounts as the Comptroller of the 

Currency determines to be necessary for the protection of depositors and other investors and to be consistent with the principles 

of safety and soundness. 

(2) LIMITATION.—Notwithstanding paragraph (1), regulations 

prescribed under such paragraph shall not permit a foreign 

bank to keep assets on deposit in an amount that is less than 

the amount required for a State licensed branch or agency of a 

foreign bank under the laws and regulations of the State in 

which the Federal agency or branch is located. 

* * * * * * * 

SEC. 15. COOPERATION WITH FOREIGN SUPERVISORS. 

(a) * * * 

* * * * * * * 

(c) CONFIDENTIAL INFORMATION RECEIVED FROM FOREIGN SUPER- VISORS.—

(1) IN GENERAL.—Except as provided in paragraph (3), a Federal banking agency shall not be compelled to disclose information received from a foreign regulatory or supervisory authority 

if—


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(A) the Federal banking agency determines that the foreign regulatory or supervisory authority has, in good faith, 

determined and represented to such Federal banking agency that public disclosure of the information would violate 

the laws applicable to that foreign regulatory or supervisory 

authority; and 

(B) the relevant Federal banking agency obtained such 

information pursuant to— (i) such procedures as the Federal banking agency 

may establish for use in connection with the administration and enforcement of Federal banking laws; or 

(ii) a memorandum of understanding or other similar arrangement between the Federal banking agency 

and the foreign regulatory or supervisory authority. 

(2) TREATMENT UNDER TITLE 5, UNITED STATES CODE.—For 

purposes of section 552 of title 5, United States Code, this subsection shall be treated as a statute described in subsection 

(b)(3)(B) of such section. 

(3) SAVINGS PROVISION.—No provision of this section shall be 

construed as—

(A) authorizing any Federal banking agency to withhold 

any information from any duly authorized committee of the 

House of Representatives or the Senate; or 

(B) preventing any Federal banking agency from complying with an order of a court of the United States in an 

action commenced by the United States or such agency. 

(4) FEDERAL BANKING AGENCY DEFINED.—For purposes of this 

subsection, the term ‘‘Federal banking agency’’ means the 

Board, the Comptroller, the Federal Deposit Insurance Corporation, and the Director of the Office of Thrift Supervision. 

* * * * * * * 

SECURITIES EXCHANGE ACT OF 1934 

DEFINITIONS AND APPLICATION OF TITLE

SEC. 3. (a) When used in this title, unless the context otherwise 

requires—

(1) * * * 

* * * * * * * 

(6) The term ‘‘bank’’ means (A) a banking institution organized under the laws of the United States or a Federal savings 

association, as defined in section 2(5) of the Home Owners’

Loan Act, (B) a member bank of the Federal Reserve System, 

(C) any other banking institution, or savings association as defined in section 2(4) of the Home Owners’ Loan Act, whether incorporated or not, doing business under the laws of any State 

or of the United States, a substantial portion of the business 

of which consists of receiving deposits or exercising fiduciary 

powers similar to those permitted to national banks under the 

authority of the Comptroller of the Currency pursuant to the 

first section of Public Law 87–722 (12 U.S.C. 92a), and which 

is supervised and examined by State or Federal authority having supervision over banks or savings associations, and which 


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is not operated for the purpose of evading the provisions of 

øthis title, and (D) a receiver¿ this title, (D) an insured credit 

union (as defined in section 101(7) of the Federal Credit Union 

Act) but only for purposes of paragraphs (4) and (5) of this subsection and only for activities otherwise authorized by applicable laws to which such credit unions are subject, and (E) a receiver, conservator, or other liquidating agent of any institution 

or firm included in clauses ø(A), (B), or (C)¿ (A), (B), (C), or (D) 

of this paragraph. 

* * * * * * * 

(34) The term ‘‘appropriate regulatory agency’’ means— (A) When used with respect to a municipal securities 

dealer: 

(i) the Comptroller of the Currency, in the case of a 

national bank, or a subsidiary or a department or division of any such bank; 

(ii) the Board of Governors of the Federal Reserve 

System, in the case of a State member bank of the 

Federal Reserve System, a subsidiary or a department 

or division thereof, a bank holding company, a subsidiary of a bank holding company which is a bank 

other than a bank specified in clause ø(i) or (iii)¿ (i), 

(iii), or (iv) of this subparagraph, or a subsidiary or a 

department or division of such subsidiary; 

(iii) the Federal Deposit Insurance Corporation, in 

the case of a bank insured by the Federal Deposit Insurance Corporation (other than a member of the Federal Reserve System), or a subsidiary or department or 

division thereof; øand¿ 

(iv) the Director of the Office of Thrift Supervision, 

in the case of a savings association (as defined in section 3(b) of the Federal Deposit Insurance Act (12 

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

the Federal Deposit Insurance Corporation, a subsidiary or a department or division of any such savings 

association, or a savings and loan holding company; 

and 

ø(iv)¿ (v) the Commission in the case of all other 

municipal securities dealers. 

(B) When used with respect to a clearing agency or 

transfer agent: 

(i) * * * 

(ii) the Board of Governors of the Federal Reserve 

System, in the case of a State member bank of the 

Federal Reserve System, a subsidiary thereof, a bank 

holding company, or a subsidiary of a bank holding 

company which is a bank other than a bank specified 

in clause ø(i) or (iii)¿ (i), (iii), or (iv) of this subparagraph; 

(iii) the Federal Deposit Insurance Corporation, in 

the case of a bank insured by the Federal Deposit Insurance Corporation (other than a member of the Federal Reserve System), or a subsidiary thereof; øand¿ 

(iv) the Director of the Office of Thrift Supervision, 

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tion 3(b) of the Federal Deposit Insurance Act (12 

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

the Federal Deposit Insurance Corporation, or a subsidiary of any such savings association, or a savings 

and loan holding company; and 

ø(iv)¿ (v) the Commission in the case of all other 

clearing agencies and transfer agents. 

(C) When used with respect to a participant or applicant 

to become a participant in a clearing agency or a person 

requesting or having access to services offered by a clearing agency: 

(i) * * * 

(ii) the Board of Governors of the Federal Reserve 

System in the case of a State member bank of the Federal Reserve System, a bank holding company, or a 

subsidiary of a bank holding company, or a subsidiary 

of a bank holding company which is a bank other than 

a bank specified in clause ø(i) or (iii)¿ (i), (iii), or (iv) 

of this subparagraph when the appropriate regulatory 

agency for such clearing agency is not the Commission; 

(iii) the Federal Deposit Insurance Corporation, in 

the case of a bank insured by the Federal Deposit Insurance Corporation (other than a member of the Federal Reserve System) when the appropriate regulatory 

agency for such clearing agency is not the Commission; øand¿ 

(iv) the Director of the Office of Thrift Supervision, 

in the case of a savings association (as defined in section 3(b) of the Federal Deposit Insurance Act (12 

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

the Federal Deposit Insurance Corporation, a savings 

and loan holding company, or a subsidiary of a savings and loan holding company when the appropriate 

regulatory agency for such clearing agency is not the 

Commission; and 

ø(iv)¿ (v) the Commission in all other cases. 

(D) When used with respect to an institutional investment manager which is a bank the deposits of which are 

insured in accordance with the Federal Deposit Insurance 

Act: 

(i) * * * 

(ii) the Board of Governors of the Federal Reserve 

System, in the case of any other member bank of the 

Federal Reserve System; øand¿ 

(iii) the Director of the Office of Thrift Supervision, 

in the case of a savings association (as defined in section 3(b) of the Federal Deposit Insurance Act (12 

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

the Federal Deposit Insurance Corporation; and 

ø(iii)¿ (iv) the Federal Deposit Insurance Corporation, in the case of any other insured bank. 

* * * * * * * 

(F) When used with respect to a person exercising investment discretion with respect to an account: 


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(i) the Comptroller of the Currency, in the case of a 

national bank; 

(ii) the Director of the Office of Thrift Supervision, in 

the case of a savings association (as defined in section 

3(b) of the Federal Deposit Insurance Act (12 U.S.C. 

1813(b))) the deposits of which are insured by the Federal Deposit Insurance Corporation; and 

ø(ii)¿ (iii) the Board of Governors of the Federal Reserve System in the case of any other member bank of 

the Federal Reserve System; 

ø(iii)¿ (iv) the Federal Deposit Insurance Corporation, in the case of any other bank the deposits of 

which are insured in accordance with the Federal Deposit Insurance Act; and 

ø(iv)¿ (v) the Commission in the case of all other 

such persons. 

* * * * * * * 

(H) When used with respect to an institution described 

in subparagraph (D), (F), or (G) of section 2(c)(2), or held 

under section 4(f), of the Bank Holding Company Act of 

1956—

(i) * * * 

* * * * * * * 

As used in this paragraph, the terms ‘‘bank holding company’’

and ‘‘subsidiary of a bank holding company’’ have the meanings given them in section 2 of the Bank Holding Company Act 

of 1956, and the term ‘‘District of Columbia savings and loan 

association’’ means any association subject to examination and 

supervision by the Office of Thrift Supervision under section 8 

of the Home Owners’ Loan Act of 1933. As used in this paragraph, the term ‘‘savings and loan holding company’’ has the 

meaning given it in section 10(a) of the Home Owners’ Loan Act 

(12 U.S.C. 1467a(a)). 

* * * * * * * 

REGISTRATION AND REGULATION OF BROKERS AND DEALERS

SEC. 15. (a) * * * 

* * * * * * * 

(h) LIMITATIONS ON STATE LAW.—

(1) * * * 

* * * * * * * 

(4) SELLING AND OFFERING OF DEPOSIT PRODUCTS.—No law, 

rule, regulation, or order, or other administrative action of any 

State or political subdivision thereof shall directly or indirectly 

require any individual who is an agent of 1 Federal savings association (as such term is defined in section 2(5) of the Home 

Owners’ Loan Act (12 U.S.C. 1462(5)) in selling or offering deposit (as such term is defined in section 3 of the Federal Deposit 

Insurance Act (12 U.S.C. 1813(l)) products issued by such association to qualify or register as a broker, dealer, associated person of a broker, or associated person of a dealer, or to qualify 


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or register in any other similar status or capacity, if the individual does not— (A) accept deposits or make withdrawals on behalf of any 

customer of the association; 

(B) offer or sell a deposit product as an agent for another 

entity that is not subject to supervision and examination by 

a Federal banking agency (as defined in section 3(z) of the 

Federal Deposit Insurance Act (12 U.S.C. 1813(z)), the National Credit Union Administration, or any officer, agency, 

or other entity of any State which has primary regulatory 

authority over State banks, State savings associations, or 

State credit unions; 

(C) offer or sell a deposit product that is not an insured 

deposit (as defined in section 3(m) of the Federal Deposit 

Insurance Act (12 U.S.C. 1813(m))); 

(D) offer or sell a deposit product which contains a feature that makes it callable at the option of such Federal 

savings association; or 

(E) create a secondary market with respect to a deposit 

product or otherwise add enhancements or features to such 

product independent of those offered by the association. 

* * * * * * * 

INVESTMENT ADVISERS ACT OF 1940 

* * * * * * * 

TITLE II—INVESTMENT ADVISERS 

* * * * * * * 

DEFINITIONS

SEC. 202. (a) When used in this title, unless the context otherwise requires, the following definitions shall apply: 

(1) * * * 

(2) ‘‘Bank’’ means (A) a banking institution organized under 

the laws of the United States or a Federal savings association, 

as defined in section 2(5) of the Home Owners’ Loan Act, (B) 

a member bank of the Federal Reserve System, (C) any other 

banking institution, savings association as defined in section 

2(4) of the Home Owners’ Loan Act, or trust company, whether 

incorporated or not, doing business under the laws of any State 

or of the United States, a substantial portion of the business 

of which consists of receiving deposits or exercising fiduciary 

powers similar to those permitted to national banks under the 

authority of the Comptroller of the Currency, and which is supervised and examined by State or Federal authority having 

supervision over banks or savings associations, and which is 

not operated for the purpose of evading the provisions of øthis 

title, and (D) a receiver¿ this title, (D) an insured credit union 

(as defined in section 101(7) of the Federal Credit Union Act) 

but only for activities otherwise authorized by applicable laws 

to which such credit unions are subject, and (E) a receiver, conservator, or other liquidating agent of any institution or firm 


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included in clauses ø(A), (B), or (C)¿ (A), (B), (C), or (D) of this 

paragraph. 

* * * * * * * 

SEC. 210A. CONSULTATION. 

(a) EXAMINATION RESULTS AND OTHER INFORMATION.—

(1) The appropriate Federal banking agency shall provide the 

Commission upon request the results of any examination, reports, records, or other information to which such agency may 

have access—

(A) with respect to the investment advisory activities of 

any—

(i) bank holding company or savings and loan holding company; 

* * * * * * * 

(B) in the case of a bank holding company or savings 

and loan holding company or bank that has a subsidiary 

or a separately identifiable department or division registered under that section, with respect to the investment 

advisory activities of such bank or bank holding company 

or savings and loan holding company. 

(2) The Commission shall provide to the appropriate Federal 

banking agency upon request the results of any examination, 

reports, records, or other information with respect to the investment advisory activities of any bank holding company or 

savings and loan holding company, bank, or separately identifiable department or division of a bank, which is registered 

under section 203 of this title. 

* * * * * * * 

(b) EFFECT ON OTHER AUTHORITY.—Nothing in this section shall 

limit in any respect the authority of the appropriate Federal banking agency with respect to such bank holding company or savings 

and loan holding company (or affiliates or subsidiaries thereof), 

bank, or subsidiary, department, or division or a bank under any 

other provision of law. 

(c) DEFINITION.—For purposes of this section, the term ‘‘appropriate Federal banking agency’’ shall have the same meaning as 

given in section 3 of the Federal Deposit Insurance Act and includes the National Credit Union Administration Board, in the case 

of an insured credit union (as defined in section 101(7) of the Federal Credit Union Act). 

* * * * * * * 

SECTION 10 OF THE INVESTMENT COMPANY ACT OF 

1940 

AFFILIATIONS OF DIRECTORS

SEC. 10. (a) * * * 

* * * * * * * 

(c) No registered investment company shall have a majority of its 

board of directors consisting of persons who are officers, directors, 

or employees of any one bank (together with its affiliates and subVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00123 Fmt 6659 Sfmt 6601 E:\HR\OC\HR356P1.XXX HR356P1

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sidiaries) or any one bank holding company (together with its affiliates and subsidiaries) (as such terms are defined in section 2 of the 

Bank Holding Company Act of 1956) or any one savings and loan 

holding company (together with its affiliates and subsidiaries) (as 

such terms are defined in section 10 of the Home Owners’ Loan Act), except that, if on March 15, 1940, any registered investment company had a majority of its directors consisting of persons who are 

directors, officers, or employees of any one bank, such company 

may continue to have the same percentage of its board of directors 

consisting of persons who are directors, officers, or employees of 

such bank. 

* * * * * * * 

HOME OWNERS’ LOAN ACT 

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

This Act may be cited as the ‘‘Home Owners’ Loan Act’’. 

TABLE OF CONTENTS 

Sec. 1. Short title and table of contents. 

* * * * * * * 

øSec. 5. Federal savings associations. 

øSec. 6. Liquid asset requirements.¿ 

Sec. 5. Savings associations. 

Sec. 6. [Repealed.] 

* * * * * * * 

SEC. 3. DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION. 

(a) * * * 

* * * * * * * 

(c) APPOINTMENT; TERM.—

(1) * * * 

* * * * * * * 

(3) øVACANCY.—A vacancy in the position of Director¿ 

(A) IN GENERAL.—A vacancy in the position of Director 

which occurs before the expiration of the term for which a 

Director was appointed shall be filled in the manner established in paragraph (1) and the Director appointed to fill 

such vacancy shall be appointed only for the remainder of 

such term. 

(B) ACTING DIRECTOR.— (i) IN GENERAL.—In the event of a vacancy in the position of Director or during the absence or disability of 

the Director, the Deputy Director shall serve as Acting 

Director. 

(ii) SUCCESSION IN CASE OF 2 OR MORE DEPUTY DIRECTORS.—If there are 2 or more Deputy Directors 

serving at the time a vacancy in the position of Director 

occurs or the absence or disability of the Director commences, the First Deputy Director shall serve as Acting 

Director under clause (i) followed by such other Deputy 

Directors under any order of succession the Director 

may establish. 


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(iii) AUTHORITY OF ACTING DIRECTOR.—Any Deputy 

Director, while serving as Acting Director under this 

subparagraph, shall be vested with all authority, duties, and privileges of the Director under this Act and 

any other provision of Federal law. 

* * * * * * * 

ø(5) TRANSITIONAL PROVISION.—Notwithstanding paragraphs 

(1) and (2), the Chairman of the Federal Home Loan Bank 

Board on the date of enactment of the Financial Institutions 

Reform, Recovery, and Enforcement Act of 1989, shall be the 

Director until the date on which that individual’s term as 

Chairman of the Federal Home Loan Bank Board would have 

expired.¿ 

(5) DEPUTY DIRECTOR.— (A) IN GENERAL.—The Secretary of the Treasury shall appoint a Deputy Director and may appoint up to 3 additional Deputy Directors. 

(B) FIRST DEPUTY DIRECTOR.—If the Secretary of the 

Treasury appoints more than 1 Deputy Director of the Office, the Secretary shall designate one such appointee as the 

First Deputy Director. 

(C) DUTIES.—Each Deputy Director appointed under this 

paragraph shall take an oath of office and perform such 

duties as the Director shall direct. 

(D) COMPENSATION AND BENEFITS.—The Director shall 

fix the compensation and benefits for each Deputy Director 

in accordance with this Act. 

* * * * * * * 

SEC. 4. SUPERVISION OF SAVINGS ASSOCIATIONS. 

ø(a) FEDERAL SAVINGS ASSOCIATIONS.—¿ (a) GENERAL RESPONSIBILITIES OF THE DIRECTOR.—

(1) * * * 

* * * * * * * 

øSEC. 5. FEDERAL SAVINGS ASSOCIATIONS.¿ 

SEC. 5. SAVINGS ASSOCIATIONS. 

(a) IN GENERAL.—In order to provide thrift institutions for the 

deposit of funds and for the extension of credit for homes and other 

goods and services, the Director is authorized, under such regulations as the Director may prescribe—

(1) to provide for the øorganization, incorporation,¿ organization (as a corporation or other form of business organization 

provided under regulations prescribed by the Director under 

subsection (x)), examination, operation, and regulation of associations to be known as Federal savings associations (including 

Federal savings banks), and 

* * * * * * * 

(c) LOANS AND INVESTMENTS.—To the extent specified in regulations of the Director, a Federal savings association may invest in, 

sell, or otherwise deal in the following loans and other investments: 

(1) LOANS OR INVESTMENTS WITHOUT PERCENTAGE OF ASSETS

LIMITATION.—Without limitation as a percentage of assets, the 

following are permitted: 


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(A) * * * 

* * * * * * * 

(V) AUTO LOANS.—Loans and leases for motor vehicles 

acquired for personal, family, or household purposes. 

(W) SMALL BUSINESS LOANS.—Small business loans, as 

defined in regulations which the Director shall prescribe. 

(2) LOANS OR INVESTMENTS LIMITED TO A PERCENTAGE OF ASSETS OR CAPITAL.—The following loans or investments are permitted, but only to the extent specified: 

(A) COMMERCIAL AND OTHER LOANS.—Secured or unsecured loans for commercial, corporate, business, or agricultural purposes. The aggregate amount of loans made under 

this subparagraph may not exceed 20 percent of the total 

assets of the Federal savings associationø, and amounts in 

excess of 10 percent of such total assets may be used 

under this subparagraph only for small business loans, as 

that term is defined by the Director¿. 

(B) NONRESIDENTIAL REAL PROPERTY LOANS.—

(i) IN GENERAL.—Loans on the security of liens upon 

nonresidential real property. Except as provided in 

clause (ii), the aggregate amount of such loans shall 

not exceed ø400¿ 500 percent of the Federal savings 

association’s capital, as determined under subsection 

(t). 

* * * * * * * 

(3) LOANS OR INVESTMENTS LIMITED TO 5 PERCENT OF ASSETS.—The following loans or investments are permitted, but 

not to exceed 5 percent of assets of a Federal savings association for each subparagraph: 

ø(A) COMMUNITY DEVELOPMENT INVESTMENTS.—Investments in real property and obligations secured by liens on 

real property located within a geographic area or neighborhood receiving concentrated development assistance by a 

local government under title I of the Housing and Community Development Act of 1974. No investment under this 

subparagraph in such real property may exceed an aggregate of 2 percent of the assets of the Federal savings association.¿ 

(A) [Repealed]. 

* * * * * * * 

(D) DIRECT INVESTMENTS TO PROMOTE THE PUBLIC WEL- FARE.—

(i) IN GENERAL.—A Federal savings association may 

make investments designed primarily to promote the 

public welfare, including the welfare of low- and moderate-income communities or families through the provision of housing, services, and jobs. 

(ii) DIRECT INVESTMENTS OR ACQUISITION OF INTER- EST IN OTHER COMPANIES.—Investments under clause 

(i) may be made directly or by purchasing interests in 

an entity primarily engaged in making such investments. 


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(iii) PROHIBITION ON UNLIMITED LIABILITY.—No investment may be made under this subparagraph which 

would subject a Federal savings association to unlimited liability to any person. 

(iv) SINGLE INVESTMENT LIMITATION TO BE ESTAB- LISHED BY DIRECTOR.—Subject to clauses (v) and (vi), 

the Director shall establish, by order or regulation, limits on—

(I) the amount any savings association may invest in any 1 project; and 

(II) the aggregate amount of investment of any 

savings association under this subparagraph. 

(v) FLEXIBLE AGGREGATE INVESTMENT LIMITATION.—

The aggregate amount of investments of any savings 

association under this subparagraph may not exceed 

an amount equal to the sum of 5 percent of the savings 

association’s capital stock actually paid in and 

unimpaired and 5 percent of the savings association’s 

unimpaired surplus, unless—

(I) the Director determines that the savings association is adequately capitalized; and 

(II) the Director determines, by order, that the 

aggregate amount of investments in a higher 

amount than the limit under this clause will pose 

no significant risk to the affected deposit insurance 

fund. 

(vi) MAXIMUM AGGREGATE INVESTMENT LIMITA- TION.—Notwithstanding clause (v), the aggregate 

amount of investments of any savings association 

under this subparagraph may not exceed an amount 

equal to the sum of 15 percent of the savings association’s capital stock actually paid in and unimpaired 

and 15 percent of the savings association’s unimpaired 

surplus. 

(vii) INVESTMENTS NOT SUBJECT TO OTHER LIMITA- TION ON QUALITY OF INVESTMENTS.—No obligation a 

Federal savings association acquires or retains under 

this subparagraph shall be taken into account for purposes of the limitation contained in section 28(d) of the 

Federal Deposit Insurance Act on the acquisition and 

retention of any corporate debt security not of investment grade. 

(4) OTHER LOANS AND INVESTMENTS.—The following additional loans and other investments to the extent authorized 

below: 

(A) * * * 

(B) SERVICE øCORPORATIONS¿ COMPANIES.—Investments 

in the capital stock, obligations, or other securities of any 

øcorporation organized under the laws of the State in 

which the Federal savings association’s home office is located, if such corporation’s entire capital stock is available 

for purchase¿ company, if the entire capital of the company 

is available for purchase only øby savings associations of 

such State and by Federal associations having their home 

offices in such State¿ by State and Federal depository instiVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00127 Fmt 6659 Sfmt 6601 E:\HR\OC\HR356P1.XXX HR356P1

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128 

tutions. No Federal savings association may make any investment under this subparagraph if the association’s aggregate outstanding investment under this subparagraph 

would exceed 3 percent of the association’s assets. Not less 

than one-half of the investment permitted under this subparagraph which exceeds 1 percent of the association’s assets shall be used primarily for community, inner-city, and 

community development purposes. 

* * * * * * * 

ø(D) SMALL BUSINESS INVESTMENT COMPANIES.—A Federal savings association may invest in stock, obligations, or 

other securities of any small business investment company 

formed pursuant to section 301(d) of the Small Business 

Investment Act of 1958 for the purpose of aiding members 

of a Federal home loan bank. A Federal savings association may not make any investment under this subparagraph if its aggregate outstanding investment under this 

subparagraph would exceed 1 percent of the assets of such 

savings association.¿ 

(D) SMALL BUSINESS INVESTMENT COMPANIES.—Any Federal savings association may invest in 1 or more small 

business investment companies, or in any entity established 

to invest solely in small business investment companies 

formed under the Small Business Investment Act of 1958, 

except that the total amount of investments under this subparagraph may not at any time exceed the amount equal to 

5 percent of capital and surplus of the savings association. 

* * * * * * * 

(d) REGULATORY AUTHORITY.— (1) * * * 

* * * * * * * 

(3) REGULATIONS.—

(A) * * * 

(B) MERGERS AND CONSOLIDATIONS WITH NONDEPOSITORY

INSTITUTION AFFILIATES.—

(i) IN GENERAL.—Upon the approval of the Director, 

a Federal savings association may merge with any 

nondepository institution affiliate of the savings association. 

(ii) RULE OF CONSTRUCTION.—No provision of clause 

(i) shall be construed as—

(I) affecting the applicability of section 18(c) of 

the Federal Deposit Insurance Act; or 

(II) granting a Federal savings association any 

power or any authority to engage in any activity 

that is not authorized for a Federal savings association under any other provision of this Act or 

any other provision of law. 

ø(B)¿ (C) FDIC OR RTC AS CONSERVATOR OR RECEIVER.—

In any case where the Federal Deposit Insurance Corporation or the Resolution Trust Corporation is the conservator 

or receiver, any regulations prescribed by the Director 

shall be consistent with any regulations prescribed by the 


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Federal Deposit Insurance Corporation pursuant to the 

Federal Deposit Insurance Act. 

* * * * * * * 

(i) CONVERSIONS.—

(1) IN GENERAL.—Any savings association which is, or is eligible to become, a member of a Federal home loan bank may 

convert into a Federal savings association (and in so doing may 

change directly from the mutual form to the stock form, or 

from the stock form to the mutual form). Such conversion shall 

be subject to such regulations as the Director shall prescribe. 

Thereafter such Federal savings association shall be entitled to 

all the benefits of this section and shall be subject to examination and regulation to the same extent as other associations 

øincorporated¿ organized pursuant to this Act. 

* * * * * * * 

(n) TRUSTS.—

(1) PERMITS.—The Director may grant by special permit to a 

Federal savings association applying therefor the right to act 

as trustee, executor, administrator, guardian, or in any other 

fiduciary capacity in which State banks, trust companies, or 

other corporations which compete with Federal savings associations are permitted to act under the laws of the State in 

which the Federal savings association is located. Subject to the 

regulations of the Director, øservice corporations¿ service companies may invest in State or federally chartered corporations 

which are located in the State in which the home office of the 

Federal savings association is located and which are engaged 

in trust activities. 

* * * * * * * 

(11) FUNERAL- AND CEMETERY-RELATED FIDUCIARY SERVICES.—

(A) IN GENERAL.—A funeral director or cemetery operator, 

when acting in such capacity, (or any other person in connection with a contract or other agreement with a funeral 

director or cemetery operator) may engage any Federal savings association, regardless of where the association is located, to act in any fiduciary capacity in which the savings 

association has the right to act in accordance with this section, including holding funds deposited in trust or escrow 

by the funeral director or cemetery operator (or by such 

other party), and the savings association may act in such 

fiduciary capacity on behalf of the funeral director or cemetery operator (or such other person). 

(B) DEFINITIONS.—For purposes of this paragraph, the 

following definitions shall apply: 

(i) CEMETERY.—The term ‘‘cemetery’’ means any land 

or structure used, or intended to be used, for the interment of human remains in any form. 

(ii) CEMETERY OPERATOR.—The term ‘‘cemetery operator’’ means any person who contracts or accepts payment for merchandise, endowment, or perpetual care 

services in connection with a cemetery. 


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(iii) FUNERAL DIRECTOR.—The term ‘‘funeral director’’ means any person who contracts or accepts payment to provide or arrange—

(I) services for the final disposition of human remains; or 

(II) funeral services, property, or merchandise 

(including cemetery services, property, or merchandise). 

(o) CONVERSION OF STATE SAVINGS BANKS.—(1) Subject to the 

provisions of this subsection and under regulations of the Director, 

the Director may authorize the conversion of a State-chartered savings bank that is a Bank Insurance Fund member into a Federal 

savings bank, if such conversion is not in contravention of State 

law, and provide for the øorganization, incorporation,¿ organization 

(as a corporation or other form of business organization provided 

under regulations prescribed by the Director under subsection (x)), 

operation, examination, and regulation of such institution. 

* * * * * * * 

(q) TYING ARRANGEMENTS.—(1) A savings association may not in 

any manner extend credit, lease, or sell property of any kind, or 

furnish any service, or fix or vary the consideration for any of the 

foregoing, on the condition or requirement—

(A) that the customer shall obtain additional credit, property, 

or service from such savings association, or from any øservice 

corporation¿ service company or affiliate of such association, 

other than a loan, discount, deposit, or trust service; 

(B) that the customer provide additional credit, property, or 

service to such association, or to any øservice corporation¿ 

service company or affiliate of such association, other than 

those related to and usually provided in connection with a 

similar loan, discount, deposit, or trust service; and 

(C) that the customer shall not obtain some other credit, 

property, or service from a competitor of such association, or 

from a competitor of any øservice corporation¿ service company 

or affiliate of such association, other than a condition or requirement that such association shall reasonably impose in 

connection with credit transactions to assure the soundness of 

credit. 

* * * * * * * 

(r) OUT-OF-STATE BRANCHES.—(1) No Federal savings association 

may establish, retain, or operate a branch outside the State in 

which the Federal savings association has its home office, unless 

the association qualifies as a domestic building and loan association under section 7701(a)(19) of the Internal Revenue Code of 1986 

or meets the asset composition test imposed by subparagraph (C) 

of that section on institutions seeking so to qualify, or qualifies as 

a qualified thrift lender, as determined under section 10(m) of this 

Act. øNo out-of-State branch so established shall be retained or operated unless the total assets of the Federal savings association attributable to all branches of the Federal savings association in that 

State would qualify the branches as a whole, were they otherwise 

eligible, for treatment as a domestic building and loan association 


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under section 7701(a)(19) or as a qualified thrift lender, as determined under section 10(m) of this Act, as applicable.¿ 

* * * * * * * 

(t) CAPITAL STANDARDS.—

(1) * * * 

* * * * * * * 

ø(4) SPECIAL RULES FOR PURCHASED MORTGAGE SERVICING

RIGHTS.—

ø(A) IN GENERAL.—Notwithstanding paragraphs (1)(C) 

and (9), the standards prescribed under paragraph (1) may 

permit a savings association to include in calculating capital for the purpose of the leverage limit and risk-based 

capital requirement prescribed under paragraph (1), on 

terms no less stringent than under both the capital standards applicable to State nonmember banks and (except as 

to the amount that may be included in calculating capital) 

the capital standards applicable to national banks, 90 percent of the fair market value of readily marketable purchased mortgage servicing rights. 

ø(B) TANGIBLE CAPITAL REQUIREMENT.—Notwithstanding 

paragraphs (1)(C) and (9)(C), the standards prescribed 

under paragraph (1) may permit a savings association to 

include in calculating capital for the purpose of the tangible capital requirement prescribed under paragraph (1), 

on terms no less stringent than under both the capital 

standards applicable to State nonmember banks and (except as to the amount that may be included in calculating 

capital) the capital standards applicable to national banks, 

90 percent of the fair market value of readily marketable 

purchased mortgage servicing rights. 

ø(C) PERCENTAGE LIMITATION PRESCRIBED BY FDIC.—Notwithstanding paragraph (1)(C) and subparagraphs (A) and 

(B) of this paragraph— ø(i) for the purpose of subparagraph (A), the maximum amount of purchased mortgage servicing rights 

that may be included in calculating capital under the 

leverage limit and the risk-based capital requirement 

prescribed under paragraph (1) may not exceed the 

amount that could be included if the savings association were an insured State nonmember bank; and 

ø(ii) for the purpose of subparagraph (B), the Corporation shall prescribe a maximum percentage of the 

tangible capital requirement that savings associations 

may satisfy by including purchased mortgage servicing 

rights in calculating such capital. 

ø(D) QUARTERLY VALUATION.—The fair market value of 

purchased mortgage servicing rights shall be determined 

not less often than quarterly.¿ 

(4) [Repealed]. 

* * * * * * * 

(9) DEFINITIONS.—For purposes of this subsection—

(A) CORE CAPITAL.—Unless the Director prescribes a 

more stringent definition, the term ‘‘core capital’’ means 


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core capital as defined by the Comptroller of the Currency 

for national banks, less any unidentifiable øintangible assets, plus any purchased mortgage servicing rights excluded from the Comptroller’s definition of capital but included in calculating the core capital of savings associations pursuant to paragraph (4).¿ intangible assets. 

* * * * * * * 

(u) LIMITS ON LOANS TO ONE BORROWER.—

(1) * * * 

(2) SPECIAL RULES.—

(A) Notwithstanding paragraph (1), a savings association 

may make loans to one borrower under one of the following clauses: 

(i) øfor¿ For any purpose, not to exceed $500,000ø; 

or¿. 

(ii) øto¿ To develop domestic residential housing 

units, not to exceed the lesser of $30,000,000 or 30 

percent of the savings association’s unimpaired capital 

and unimpaired surplus, if— ø(I) the purchase price of each single family 

dwelling unit the development of which is financed under this clause does not exceed 

$500,000;¿ 

ø(II)¿ (I) the savings association is and continues to be in compliance with the fully phasedin capital standards prescribed under subsection 

(t); 

ø(III)¿ (II) the Director, by order, permits the 

savings association to avail itself of the higher 

limit provided by this clause; 

ø(IV)¿ (III) loans made under this clause to all 

borrowers do not, in aggregate, exceed 150 percent 

of the savings association’s unimpaired capital 

and unimpaired surplus; and 

ø(V)¿ (IV) such loans comply with all applicable 

loan-to-value requirements. 

* * * * * * * 

(x) HOME STATE CITIZENSHIP.—In determining whether a Federal 

court has diversity jurisdiction over a case in which a Federal savings association is a party, the Federal savings association shall be 

considered to be a citizen only of the States in which such savings 

association has its home office and its principal place of business 

(if the principal place of business is in a different State than the 

home office). 

(y) ALTERNATIVE BUSINESS ORGANIZATION.—

(1) IN GENERAL.—The Director may prescribe regulations 

that—

(A) permit a Federal savings association to be organized 

other than as a corporation; and 

(B) provide requirements for the organizational characteristics of a Federal savings association organized and operating other than as a corporation, consistent with the 

safety and soundness of the Federal savings association. 


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(2) EQUAL TREATMENT.—Except as otherwise provided in regulations prescribed under subsection (1), a Federal savings association that is operating other than as a corporation shall 

have the same rights and privileges and shall be subject to the 

same duties, restrictions, penalties, liabilities, conditions, and 

limitations as a Federal savings association that is organized 

as a corporation. 

* * * * * * * 

SEC. 10. REGULATION OF HOLDING COMPANIES. 

(a) DEFINITIONS.— (1) IN GENERAL.—As used in this section, unless the context 

otherwise requires— (A) SAVINGS ASSOCIATION.—The term ‘‘savings association’’ includes a savings bank or cooperative bank which is 

deemed by the Director to be a savings association under 

subsection (l) and such term does not include an institution 

described in section 2(c)(2)(F) of the Bank Holding Company Act of 1956 for purposes of subsections (a)(1)(E), 

(c)(3)(B)(i), (c)(9)(C)(i), and (e)(3). 

* * * * * * * 

(C) COMPANY.—The term ‘‘company’’ means any corporation, partnership, øtrust,¿ business trust, joint-stock company, or similar organization, or any other trust unless by 

its terms it must terminate within 25 years or not later 

than 21 years and 10 months after the death of individuals 

living on the effective date of the trust, but does not include 

the Federal Deposit Insurance Corporation, the Resolution 

Trust Corporation, any Federal home loan bank, or any 

company the majority of the shares of which is owned by 

the United States or any State, or by an instrumentality 

of the United States or any State. 

* * * * * * * 

(3) EXCLUSIONS.—Notwithstanding any other provision of 

this subsection, the term ‘‘savings and loan holding company’’ ødoes not include— ø(A) any company by virtue¿ does not include any company by virtue of its ownership or control of voting shares 

of a savings association or a savings and loan holding company acquired in connection with the underwriting of securities if such shares are held only for such period of time 

(not exceeding 120 days unless extended by the Director) 

as will permit the sale thereof on a reasonable basisø; 

and¿. ø(B) any trust (other than a pension, profit-sharing, 

shareholders’, voting, or business trust) which controls a 

savings association or a savings and loan holding company 

if such trust by its terms must terminate within 25 years 

or not later than 21 years and 10 months after the death 

of individuals living on the effective date of the trust, and 

is (i) in existence on June 26, 1967, or (ii) a testamentary 

trust created on or after June 26, 1967.¿ 

* * * * * * * 

(e) ACQUISITIONS.—


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(1) * * * 

* * * * * * * 

(3) INTERSTATE ACQUISITIONS.—No acquisition shall be approved by the Director under this subsection which will result 

in the formation by any company, through one or more subsidiaries or through one or more transactions, of a multiple savings and loan holding company controlling savings associations 

in more than one State, unless— (A) such acquisition would be permissible under section 

3(d) of the Bank Holding Company Act of 1956 if the savings and loan holding company were a bank holding company and any savings association to be acquired were a 

bank; 

ø(A)¿ (B) such company, or a savings association subsidiary of such company, is authorized to acquire control of 

a savings association subsidiary, or to operate a home or 

branch office, in the additional State or States pursuant to 

section 13(k) of the Federal Deposit Insurance Act; 

ø(B)¿ (C) such company controls a savings association 

subsidiary which operated a home or branch office in the 

additional State or States as of March 5, 1987; or 

ø(C)¿ (D) the statutes of the State in which the savings 

association to be acquired is located permit a savings association chartered by such State to be acquired by a savings 

association chartered by the State where the acquiring 

savings association or savings and loan holding company is 

located or by a holding company that controls such a State 

chartered savings association, and such statutes specifically authorize such an acquisition by language to that effect and not merely by implication. 

* * * * * * * 

ø(f) DECLARATION OF DIVIDEND.—Every subsidiary savings association of a savings and loan holding company shall give the Director not less than 30 days’ advance notice of the proposed declaration by its directors of any dividend on its guaranty, permanent, or 

other nonwithdrawable stock. Such notice period shall commence to 

run from the date of receipt of such notice by the Director. Any 

such dividend declared within such period, or without the giving of 

such notice to the Director, shall be invalid and shall confer no 

rights or benefits upon the holder of any such stock.¿ 

(f) DECLARATION OF DIVIDEND.—The Director may—

(1) require a savings association that is a subsidiary of a savings and loan holding company to give prior notice to the Director of the intent of the savings association to pay a dividend on 

its guaranty, permanent, or other nonwithdrawable stock; and 

(2) establish conditions on the payment of dividends by such 

a savings association. 

* * * * * * * 

(m) QUALIFIED THRIFT LENDER TEST.—

(1) * * * 

* * * * * * * 

(4) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply: 


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(A) * * * 

* * * * * * * 

(C) QUALIFIED THRIFT INVESTMENTS.— (i) * * * 

(ii) ASSETS INCLUDIBLE WITHOUT LIMIT.—The following assets are described in this clause for purposes 

of clause (i): 

(I) * * * 

* * * * * * * 

(VIII) Loans and leases for motor vehicles acquired for personal, family, or household purposes. 

(iii) ASSETS INCLUDIBLE SUBJECT TO PERCENTAGE RE- STRICTION.—The following assets are described in this 

clause for purposes of clause (i): 

(I) * * * 

(II) Investments in the capital stock or obligations of, and any other security issued by, any 

øservice corporation¿ service company if such 

øservice corporation¿ service company derives at 

least 80 percent of its annual gross revenues from 

activities directly related to purchasing, refinancing, constructing, improving, or repairing domestic residential real estate or manufactured 

housing. 

* * * * * * * 

SECTION 4 OF THE FEDERAL HOME LOAN BANK ACT 

ELIGIBILITY OF MEMBERS AND NONMEMBER BORROWERS

SEC. 4. (a) CRITERIA FOR ELIGIBILITY.— (1) * * * 

* * * * * * * 

(5) CERTAIN PRIVATELY INSURED CREDIT UNIONS.—

(A) IN GENERAL.—A credit union which has been determined, in accordance with section 43(e)(1) of the Federal 

Deposit Insurance Act and subject to the requirements of 

subparagraph (B), to meet all eligibility requirements for 

Federal deposit insurance shall be treated as an insured 

depository institution for purposes of determining the eligibility of such credit union for membership in a Federal 

home loan bank under paragraphs (1), (2), and (3). 

(B) CERTIFICATION BY APPROPRIATE SUPERVISOR.—

(i) IN GENERAL.—For purposes of this paragraph and 

subject to clause (ii), a credit union which lacks Federal deposit insurance and which has applied for membership in a Federal home loan bank may be treated 

as meeting all the eligibility requirements for Federal 

deposit insurance only if the appropriate supervisor of 

the State in which the credit union is chartered has determined that the credit union meets all the eligibility 

requirements for Federal deposit insurance as of the 

date of the application for membership. 


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(ii) CERTIFICATION DEEMED VALID.—If, in the case of 

any credit union to which clause (i) applies, the appropriate supervisor of the State in which such credit 

union is chartered fails to make a determination pursuant to such clause by the end of the 6-month period 

beginning on the date of the application, the credit 

union shall be deemed to have met the requirements of 

clause (i). 

(C) SECURITY INTERESTS OF FEDERAL HOME LOAN BANK

NOT AVOIDABLE.—Notwithstanding any provision of State 

law authorizing a conservator or liquidating agent of a 

credit union to repudiate contracts, no such provision shall 

apply with respect to— (i) any extension of credit from any Federal home 

loan bank to any credit union which is a member of 

any such bank pursuant to this paragraph; or 

(ii) any security interest in the assets of such credit 

union securing any such extension of credit. 

* * * * * * * 

FEDERAL CREDIT UNION ACT 

* * * * * * * 

TITLE I—FEDERAL CREDIT UNIONS 

DEFINITIONS

SEC. 101. As used in this Act—

(1) * * * 

* * * * * * * 

(3) the term ‘‘Administration’’ means the National Credit 

Union Administration; øand¿ 

* * * * * * * 

(5) The terms ‘‘member account’’ and ‘‘account’’ mean a 

share, share certificate, or share draft øaccount account¿ account of a member of a credit union of a type approved by the 

Board which evidences money or its equivalent received or held 

by a credit union in the usual course of business and for which 

it has given or is obligated to give credit to the account of the 

member, and, in the case of a credit union serving predominantly low-income members (as defined by the Board), such 

terms (when referring to the account of a nonmember served 

by such credit union) mean a share, share certificate, or share 

draft øaccount account¿ account of such nonmember which is 

of a type approved by the Board and evidences money or its 

equivalent received or held by such credit union in the usual 

course of business and for which it has given or is obligated to 

give credit to the account of such nonmember, and such terms 

mean share, share certificate, or share draft øaccount accounts¿ account of nonmember credit unions and nonmember 

units of Federal, State, or local governments and political subdivisions thereof enumerated in section 207 of this Act, and 

such terms mean custodial accounts established for loans sold 


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in whole or in part pursuant to section 107(13): Provided, That 

for purposes of insured State credit unions, reference in this 

paragraph to ‘‘share’’, ‘‘share certificate’’, or ‘‘share draft’’ accounts includes, as determined by the Board, the equivalent of 

such accounts under State law; 

* * * * * * * 

POWERS

SEC. 107. øA Federal credit union¿ (a) IN GENERAL.—Any Federal credit union shall have succession in its corporate name during 

its existence and shall have power— (1) * * * 

* * * * * * * 

(5) øto make loans, the maturities of which shall not exceed 

twelve years except as otherwise provided herein¿ to make 

loans, the maturities of which shall not exceed 15 years or any 

longer maturity as the Board may allow, in regulations, except 

as otherwise provided in this Act, and extend lines of credit to 

its members, to other credit unions, and to credit union organizations and to participate with other credit unions, credit 

union organizations, or financial organizations in making loans 

to credit union members in accordance with the following: 

(A) Loans to members shall be made in conformity with 

criteria established by the board of directors: Provided, 

That—

(i) * * * 

ø(ii) a loan to finance the purchase of a mobile 

home, which shall be secured by a first lien on such 

mobile home, to be used by the credit union member 

as his residence, or a second mortgage loan secured by 

a residential dwelling which is the residence of a credit union member shall have a maturity not to exceed 

15 years or any longer term which the Board may 

allow;¿ 

ø(iii)¿ (ii) a loan secured by the insurance or guarantee of, or with advance commitment to purchase the 

loan by, the Federal Government, a State government, 

or any agency of either may be made for the maturity 

and under the terms and conditions specified in the 

law under which such insurance, guarantee, or commitment is provided; 

ø(iv)¿ (iii) a loan or aggregate of loans to a director 

or member of the supervisory or credit committee of 

the credit union making the loan which exceeds 

$20,000 plus pledged shares, be approved by the board 

of directors; 

ø(v)¿ (iv) loans to other members for which directors 

or members of the supervisory or credit committee act 

as guarantor or endorser be approved by the board of 

directors when such loans standing alone or when 

added to any outstanding loan or loans of the guarantor or endorser exceeds $20,000; 

ø(vi)¿ (v) the rate of interest may not exceed 15 per 

centum per annum on the unpaid balance inclusive of 


cchase on PROD1PC60 with REPORTS
138 

all finance charges, except that the Board may establish— (I) after consultation with the appropriate committees of the Congress, the Department of Treasury, and the Federal financial institution regulatory agencies, an interest rate ceiling exceeding 

such 15 per centum per annum rate, for periods 

not to exceed 18 months, if it determines that 

money market interest rates have risen over the 

preceding øsix-month period and that prevailing 

interest rate levels¿ 6-month period or that prevailing interest rate levels threaten the safety and 

soundness of individual credit unions as evidenced 

by adverse trends in liquidity, capital, earnings, 

and growth; and 

* * * * * * * 

ø(vii)¿ (vi) the taking, receiving, reserving, or charging of a rate of interest greater than is allowed by this 

paragraph, when knowingly done, shall be deemed a 

forfeiture of the entire interest which the note, bill, or 

other evidence of debt carries with it, or which has 

been agreed to be paid thereon. If such greater rate of 

interest has been paid, the person by whom it has 

been paid, or his legal representatives, may recover 

back from the credit union taking or receiving the 

same, in an action in the nature of an action of debt, 

the entire amount of interest paid; but such action 

must be commenced within two years from the time 

the usurious collection was made; 

ø(viii)¿ (vii) a borrower may repay his loan, prior to 

maturity in whole or in part on any business day without penalty, except that on a first or second mortgage 

loan a Federal credit union may require that any partial prepayments (I) be made on the date monthly installments are due, and (II) be in the amount of that 

part of one or more monthly installments which would 

be applicable to principal; 

ø(ix)¿ (viii) loans shall be paid or amortized in accordance with rules and regulations prescribed by the 

Board after taking into account the needs or conditions of the borrowers, the amounts and duration of 

the loans, the interests of the members and the credit 

unions, and such other factors as the Board deems relevant; and 

ø(x)¿ (ix) loans must be approved by the credit committee or a loan officer, but no loan may be made to 

any member if, upon the making of that loan, the 

member would be indebted to the Federal credit union 

upon loans made to him in an aggregate amount 

which would exceed 10 per centum of the credit 

union’s unimpaired capital and surplus. 

* * * * * * * 

(E) Participation loans with other credit unions, credit 

union organizations, or financial organizations shall be in 


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139 

accordance with written policies of the board of directors: 

Provided, That a credit union which originates a loan for 

which participation arrangements are made in accordance 

with this subsection shall retain an interest of at least 10 

per centum of the face amount of the loanø.¿; 

(6) to receive from its members, from other credit unions, 

from an officer, employee, or agent of those nonmember units 

of Federal, Indian tribal, State, or local governments and political subdivisions thereof enumerated in section 207 of this Act 

and in the manner so prescribed, from the central liquidity facility, and from nonmembers in the case of credit unions serving predominately low-income members (as defined by the 

Board) payments, representing equity, on— (A) * * * 

* * * * * * * 

subject to such terms, rates, and conditions as may be established by the board of directors, within limitations prescribed 

by the Boardø.¿; 

(7) to invest its funds (A) in loans exclusively to members; 

(B) in obligations of the United States of America, or securities 

fully guaranteed as to principal and interest thereby; (C) in accordance with rules and regulations prescribed by the Board, 

in loans to other credit unions in the total amount not exceeding 25 per centum of its paid-in and unimpaired capital and 

surplus; (D) in shares or accounts of savings and loan associations or mutual savings banks, the accounts of which are insured by øthe Federal Savings and Loan Insurance Corporation or¿ the Federal Deposit Insurance Corporation; (E) in obligations issued by banks for cooperatives, Federal land banks, 

Federal intermediate credit banks, Federal home loan banks, 

øthe Federal Home Loan Bank Board,¿ the Federal Housing 

Finance Board, or any corporation designated in section 101 of 

the Government Corporation Control Act as a wholly owned 

Government corporation; or in obligations, participations, or 

other instruments of or issued by, or fully guaranteed as to 

principal and interest by, the Federal National Mortgage Association or the Government National Mortgage Association; or 

in mortgages, obligations, or other securities which are or ever 

have been sold by the Federal Home Loan Mortgage Corporation pursuant to section 305 or section 306 of the Federal 

Home Loan Mortgage Corporation Act; or in obligations, participations, securities, or other instruments of, or issued by, or 

fully guaranteed as to principal and interest by any other 

agency of the United States and a Federal credit union may 

issue and sell securities which are guaranteed pursuant to section 306(g) of the National Housing Act; (F) in participation 

certificates evidencing beneficial interests in obligations, or in 

the right to receive interest and principal collections therefrom, 

which obligations have been subjected by one or more Government agencies to a trust or trusts for which any executive department, agency, or instrumentality of the United States (or 

the head thereof) has been named to act as trustee; (G) in 

shares or deposits of any central credit union in which such investments are specifically authorized by the board of directors 

of the Federal credit union making the investment; (H) in 


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140 

shares, share certificates, or share deposits of federally insured 

credit unions; (I) in the shares, stocks, or obligations of any 

other organization, providing services which are associated 

with the routine operations of credit unions, øup to 1 per centum of the total paid¿ up to 3 percent of the total paid in and 

unimpaired capital and surplus of the credit union with the approval of the Board: Provided, however, That such authority 

does not include the power to acquire control directly or indirectly, of another financial institution, nor invest in shares, 

stocks or obligations of an insurance company, trade association, liquidity facility or any other similar organization, corporation, or association, except as otherwise expressly provided 

by this Act; (J) in the capital stock of the National Credit 

Union Central Liquidity Facility (K) investments in obligations 

of, or issued by, any State or political subdivision thereof (including any agency, corporation, or instrumentality of a State 

or political subdivision), except that no credit union may invest 

more than 10 per centum of its unimpaired capital and surplus 

in the obligations of any one issuer (exclusive of general obligations of the issuer)ø.¿; 

* * * * * * * 

(9) to borrow, in accordance with such rules and regulations 

as may be prescribed by the Board, from any source, in an aggregate amount not exceeding, except as authorized by the 

Board in carrying out the provisions of øsubchapter¿ title III, 

50 per centum of its paid-in and unimpaired capital and surplus: Provided, That any Federal credit union may discount 

with or sell to any Federal intermediate credit bank any eligible obligations up to the amount of its paid-in and unimpaired 

capital; 

* * * * * * * 

ø(12) in accordance with rules and regulations prescribed by 

the Board, to sell to members negotiable checks (including 

travelers checks), money orders, and other similar money 

transfer instruments, and to cash checks and money orders for 

members, for a fee;¿ 

(12) in accordance with regulations prescribed by the Board—

(A) to sell, to persons in the field of membership, negotiable checks (including travelers checks), money orders, 

and other similar money transfer instruments (including 

international and domestic electronic fund transfers); and 

(B) to cash checks and money orders and receive international and domestic electronic fund transfers for persons 

in the field of membership for a fee; 

(13) in accordance with rules and regulations prescribed by 

the Board, to purchase, sell, pledge, or discount or otherwise 

receive or dispose of, in whole or in part, any eligible obligations (as defined by the Board) of its members and to purchase 

from any liquidating credit union notes made by individual 

members of the liquidating credit union at such prices as may 

be agreed upon by the board of directors of the liquidating 

credit union and the board of directors of the purchasing credit 

union, but no purchase may be made under authority of this 

paragraph if, upon the making of that purchase, the aggregate 


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141 

of the unpaid balances of notes purchased under authority of 

this paragraph would exceed 5 per centum of the unimpaired 

capital and surplus of the credit union; øand¿ 

* * * * * * * 

(b) ADDITIONAL INVESTMENT AUTHORITY.— (1) IN GENERAL.—In addition to any investments otherwise 

authorized, a Federal credit union may purchase and hold for 

its own account such investment securities of investment grade 

as the Board may authorize by regulation, subject to such limitations and restrictions as the Board may prescribe in the regulations. 

(2) PERCENTAGE LIMITATIONS.— (A) SINGLE OBLIGOR.—In no event may the total amount 

of investment securities of any single obligor or maker held 

by a Federal credit union for the credit union’s own account 

exceed at any time an amount equal to 10 percent of the net 

worth of the credit union. 

(B) AGGREGATE INVESTMENTS.—In no event may the aggregate amount of investment securities held by a Federal 

credit union for the credit union’s own account exceed at 

any time an amount equal to 10 percent of the assets of the 

credit union. 

(3) INVESTMENT SECURITY DEFINED.— (A) IN GENERAL.—For purposes of this subsection, the 

term ‘‘investment security’’ means marketable obligations 

evidencing the indebtedness of any person in the form of 

bonds, notes, or debentures and other instruments commonly referred to as investment securities. 

(B) FURTHER DEFINITION BY BOARD.—The Board may 

further define the term ‘‘investment security’’. (4) INVESTMENT GRADE DEFINED.—The term ‘‘investment 

grade’’ means with respect to an investment security purchased 

by a credit union for its own account, an investment security 

that at the time of such purchase is rated in one of the 4 highest 

rating categories by at least 1 nationally recognized statistical 

rating organization. 

(5) CLARIFICATION OF PROHIBITION ON STOCK OWNERSHIP.— No provision of this subsection shall be construed as authorizing a Federal credit union to purchase shares of stock of any 

corporation for the credit union’s own account, except as otherwise permitted by law. 

SEC. 107A. LIMITATION ON MEMBER BUSINESS LOANS. 

(a) IN GENERAL.—On and after the date of enactment of this section, no insured credit union may make any member business loan 

that would result in a total amount of such loans, excluding loans 

made to nonprofit religious organizations, outstanding at that credit union at any one time equal to more than the lesser of—

(1) * * * 

* * * * * * * 

MEMBERSHIP

SEC. 109. (a) * * * 

* * * * * * * 


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(c) EXCEPTIONS.—

(1) * * * 

(2) EXCEPTION FOR UNDERSERVED AREAS.—Notwithstanding 

subsection (b), in the case of a Federal credit union, the field 

of membership category of which is described in subsection 

(b)(2), the Board may allow the membership of the credit union 

to include any person or organization within a local community, neighborhood, or rural district if—

(A) the Board determines that the local community, 

neighborhood, or rural district—

(i) is an ‘‘investment area’’, as defined in section 

103(16) of the Community Development Banking and 

Financial Institutions Act of 1994 ø(12 U.S.C. 

4703(16))¿, and meets such additional requirements as 

the Board may impose; and 

* * * * * * * 

(d) MULTIPLE COMMON-BOND CREDIT UNION GROUP

REQUIREMENTS.—

(1) * * * 

(2) EXCEPTIONS.—In the case of any Federal credit union, the 

field of membership category of which is described in subsection (b)(2), the numerical limitation in paragraph (1) of this 

subsection shall not apply with respect to—

(A) * * * 

(B) any group transferred from another credit union—

(i) * * * 

(ii) by the Board in the Board’s capacity as 

conservator or liquidating agent with respect to that 

other credit union; øor¿ 

(C) any group transferred in connection with a 

voluntary merger, having received conditional approval by 

the Administration of the merger application prior to October 25, 1996, but not having consummated the merger 

prior to October 25, 1996, if the merger is consummated 

not later than 180 days after the date of enactment of the 

Credit Union Membership Access Actø.¿; or 

(D) a merger involving any such Federal credit union approved by the Board on or after August 7, 1998. 

* * * * * * * 

(g) REGULATIONS REQUIRED FOR COMMUNITY CREDIT UNIONS.—

(1) * * * 

* * * * * * * 

(3) CRITERIA FOR CONTINUED MEMBERSHIP OF CERTAIN MEMBER GROUPS IN COMMUNITY CHARTER CONVERSIONS.—In the 

case of a voluntary conversion of a common-bond credit union 

described in paragraph (1) or (2) of subsection (b) into a community credit union described in subsection (b)(3), the Board 

shall prescribe, by regulation, the criteria under which the 

Board may determine that a member group or other portion of 

a credit union’s existing membership, that is located outside the 

well-defined local community, neighborhood, or rural district 

that shall constitute the community charter, can be satisfacVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00142 Fmt 6659 Sfmt 6603 E:\HR\OC\HR356P1.XXX HR356P1

cchase on PROD1PC60 with REPORTS
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torily served by the credit union and remain within the community credit union’s field of membership. 

* * * * * * * 

MANAGEMENT

SEC. 111. (a) The management of a Federal credit union shall be 

by a board of directors, a supervisory committee, and where the bylaws so provide, a credit committee. The board shall consist of an 

odd number of directors, at least five in number, to be elected annually by and from the members as the bylaws provide. Any vacancy occurring on the board shall be filled until the next annual 

election by appointment by the remainder of the directors. The bylaws of a Federal credit union may limit the number of consecutive 

terms any person may serve on the board of directors of such credit 

union. 

* * * * * * * 

(c) No member of the board or of any other committee shall, as 

such, be compensated, except that reasonable health, accident, 

similar insurance protection, and the reimbursement of reasonable 

expenses, including lost wages, incurred in the execution of the duties of the position shall not be considered compensation. 

* * * * * * * 

EXPULSION AND WITHDRAWAL

SEC. 118. (a) * * * 

ø(b) The board of directors of a Federal credit union may, by majority vote of a quorum of directors, adopt and enforce a policy with 

respect to expulsion from membership based on nonparticipation by 

a member in the affairs of the credit union. In establishing its policy, the board should consider a member’s failure to vote in annual 

credit union elections or failure to purchase shares from, obtain a 

loan from, or lend to the Federal credit union. If such a policy is 

adopted, written notice of the policy as adopted and the effective 

date of such policy shall be mailed to each member of the credit 

union at the member’s current address appearing on the records of 

the credit union not less than thirty days prior to the effective date 

of such policy. In addition, each new member shall be provided 

written notice of any such policy prior to or upon applying for 

membership.¿ 

(b) POLICY AND ACTIONS OF BOARDS OF DIRECTORS OF FEDERAL

CREDIT UNIONS.—

(1) EXPULSION OF MEMBERS FOR NONPARTICIPATION OR FOR

JUST CAUSE.—The board of directors of a Federal credit union 

may, by majority vote of a quorum of directors, adopt and enforce a policy with respect to expulsion from membership, by a 

majority vote of such board of directors, based on just cause, including disruption of credit union operations, or on nonparticipation by a member in the affairs of the credit union. 

(2) WRITTEN NOTICE OF POLICY TO MEMBERS.—If a policy described in paragraph (1) is adopted, written notice of the policy 

as adopted and the effective date of such policy shall be provided to—


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(A) each existing member of the credit union not less than 

30 days prior to the effective date of such policy; and 

(B) each new member prior to or upon applying for membership. 

* * * * * * * 

CERTAIN POWERS OF BOARD

SEC. 120. (a) * * * 

* * * * * * * 

(h) The Board is authorized, empowered, and directed to require 

that every person appointed or elected by any Federal credit union 

to any position requiring the receipt, payment, or custody of money 

or other personal property owned by a Federal credit union, or in 

its custody or control as collateral or otherwise, give bond in a corporate surety company holding a certificate of authority from the 

Secretary of the Treasury under øthe Act approved July 30, 1947 

(6 U.S.C., secs. 6–13),¿ chapter 93 of title 31, United States Code, 

as an acceptable surety on Federal bonds. Any such bond or bonds 

shall be in a form approved by the Board with a view to providing 

surety coverage to the Federal credit union with reference to loss 

by reason of acts of fraud or dishonesty including forgery, theft, 

embezzlement, wrongful abstraction, or misapplication on the part 

of the person, directly or through connivance with others, and such 

other surety coverages as the Board may determine to be reasonably appropriate or as elsewhere required by this Act. Any such 

bond or bonds shall be in such an amount in relation to the money 

or other personal property involved or in relation to the assets of 

the Federal credit union as the Board may from time to time prescribe by regulation for the purpose of requiring reasonable coverage. In lieu of individual bonds the Board may approve the use 

of a form of schedule or blanket bond which covers all of the officers and employees of a Federal credit union whose duties include 

the receipt, payment, or custody of money or other personal property for or on behalf of the Federal credit union. The Board may 

also approve the use of a form of excess coverage bond whereby a 

Federal credit union may obtain an amount of coverage in excess 

of the basic surety coverage. 

* * * * * * * 

SPACE IN FEDERAL BUILDINGS OR FEDERAL LAND

SEC. 124. øUpon application by any credit union¿ Notwithstanding any other provision of law, upon application by any credit 

union organized under State law or by any Federal credit union organized in accordance with the terms of this Act, which application 

shall be addressed to the officer or agency of the United States 

charged with the allotment of space on lands reserved for the use 

of, and under the exclusive or concurrent jurisdiction of, the United 

States or in the Federal buildings in the community or district in 

which such credit union does business, such officer or agency may 

in his or its discretion lease land or allot space to such credit union 

without charge for rent or services if at least 95 percent of the 

membership of the credit union to be served by the allotment of 

space or the facility built on the lease land is composed of persons 


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who either are presently Federal employees or were Federal employees at the time of admission into the credit union, and members of their families, and if space is available. For the purpose of 

this section, the term ‘‘services’’ includes, but is not limited to, the 

providing of lighting, heating, cooling, electricity, office furniture, 

office machines and equipment, telephone service (including installation lines and equipment and other expenses associated with telephone service), and security systems (including installation of and 

other expenses associated with security systems). Where there is 

an agreement for the payment of costs associated with the provision of space or services, nothing in title 31, United States Code, 

or any other provision of law, shall be construed to prohibit or restrict payment by reimbursement to the miscellaneous receipts or 

other appropriate account of the Treasury. 

* * * * * * * 

TITLE II—SHARE INSURANCE 

INSURANCE OF MEMBER ACCOUNTS AND ELIGIBILITY PROVISIONS

SEC. 201. (a) * * * 

(b) Application for insurance of member accounts shall be made 

immediately by each Federal credit union and may be made at any 

time by a State credit union or a credit union operating under the 

jurisdiction of the Department of Defense. Applications for such insurance shall be in such form as the Board shall provide and shall 

contain an agreement by the applicant—

(1) * * * 

* * * * * * * 

(5) to maintain such regular reserves as may be required by 

the laws of the State, district, territory, or other jurisdiction 

pursuant to which it is organized and operated, in the case of 

a State-chartered credit union, or as may be required by øsection 116 of¿ this Act, in the case of a Federal credit union; 

* * * * * * * 

REPORTS OF CONDITION; CERTIFIED STATEMENTS; PREMIUMS FOR

INSURANCE

SEC. 202. (a)(1) * * * 

* * * * * * * 

(8) DATA SHARING WITH OTHER AGENCIES AND PERSONS.—In 

addition to reports of examination, reports of condition, and 

other reports required to be regularly provided to the Board 

(with respect to all insured credit unions, including a credit 

union for which the Corporation has been appointed conservator or liquidating agent) or an appropriate State commission, 

board, or authority having supervision of a State-chartered 

credit union, the Board may, in the Board’s discretion, furnish 

any report of examination or other confidential supervisory information concerning any credit union or other entity examined 

by the Board under authority of any Federal law, to—


cchase on PROD1PC60 with REPORTS
146 

(A) any other Federal or State agency or authority with 

supervisory or regulatory authority over the credit union or 

other entity; 

(B) any officer, director, or receiver of such credit union 

or entity; and 

(C) any other institution-affiliated party of such credit 

union or entity the Board determines to be appropriate. 

* * * * * * * 

(h) DEFINITIONS.—For purposes of this section, the following definitions shall apply: 

(1) * * * 

* * * * * * * 

(3) INSURED SHARES.—The term ‘‘insured shares’’, when applied to this section, includes share, share draft, share certificate, and other similar accounts as determined by the Board, 

but does not include amounts exceeding the insured account 

limit set forth in øsection 207(c)(1)¿ section 207(k)(1). 

* * * * * * * 

EXAMINATION OF INSURED CREDIT UNIONS

SEC. 204. (a) * * * 

(b) In connection with examinations of insured credit unions, or 

with other types of investigations to determine compliance with applicable law and regulations, the Board, or its designated representatives, shall have power to administer oaths and affirmations, to examine and to take and preserve testimony under oath 

as to any matter in respect of the affairs of any such credit union, 

and to issue subpenas and subpenas duces tecum and to exercise 

such øothers¿ other powers as are set forth in section 206(p) and, 

for the enforcement thereof, to apply to the United States district 

court for the judicial district or the United States court in any territory in which the principal office of the credit union is located or 

in which the witness resides or carries on business. Such courts 

shall have jurisdiction and power to order and require compliance 

with any such subpena. 

* * * * * * * 

REQUIREMENTS GOVERNING INSURED CREDIT UNIONS

SEC. 205. (a) * * * 

* * * * * * * 

(j) PRIVILEGES NOT AFFECTED BY DISCLOSURE TO BANKING AGENCY OR SUPERVISOR.—

(1) IN GENERAL.—The submission by any person of any information to the Administration, any State credit union supervisor, or foreign banking authority for any purpose in the 

course of any supervisory or regulatory process of such Board, 

supervisor, or authority shall not be construed as waiving, destroying, or otherwise affecting any privilege such person may 

claim with respect to such information under Federal or State 

law as to any person or entity other than such Board, supervisor, or authority. 


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(2) RULE OF CONSTRUCTION.—No provision of paragraph (1) 

may be construed as implying or establishing that— (A) any person waives any privilege applicable to information that is submitted or transferred under any circumstance to which paragraph (1) does not apply; or 

(B) any person would waive any privilege applicable to 

any information by submitting the information to the Administration, any State credit union supervisor, or foreign 

banking authority, but for this subsection. 

TERMINATION OF INSURANCE; CEASE-AND-DESIST PROCEEDINGS; SUSPENSION AND/OR REMOVAL OF DIRECTORS, OFFICERS, AND COMMITTEE MEMBERS; TAKING POSSESSION OF COMMITTEE MEMBERS

SEC. 206. (a) * * * 

* * * * * * * 

(e)(1) * * * 

* * * * * * * 

(3) AFFIRMATIVE ACTION TO CORRECT CONDITIONS RESULTING

FROM VIOLATIONS OR PRACTICES.—The authority to issue an 

order under this subsection and subsection (f) which requires 

an insured credit union or any institution-affiliated party to 

take affirmative action to correct any conditions resulting from 

any violation or practice with respect to which such order is 

issued includes the authority to require such insured credit 

union or such party to—

(A) * * * 

* * * * * * * 

(D) dispose of any loan or asset involved; øand¿ 

* * * * * * * 

(f)(1) Whenever the Board shall determine that the violation or 

threatened violation or the unsafe or unsound practice or practices, 

specified in the notice of charges served upon the credit union or 

any institution-affiliated party pursuant to paragraph (1) of subsection (e) of this section, or the continuation thereof, is likely to 

cause insolvency or significant dissipation of assets or earnings of 

the credit union, or is likely to weaken the condition of the credit 

union or otherwise prejudice the interests of its insured members 

prior to the completion of the proceedings conducted pursuant to 

paragraph (1) of subsection (e) of this section, the Board may issue 

a temporary order requiring the credit union or such party to cease 

and desist from any such violation or practice and to take affirmative action to prevent such insolvency, dissipation, condition, or 

prejudice pending completion of such proceedings. Such order may 

include any requirement authorized under øsubsection (e)(3)(B)¿ 

subsection (e)(3). Such order shall become effective upon service 

upon the credit union or institution-affiliated party and, unless set 

aside, limited, or suspended by a court in proceedings authorized 

by paragraph (2) of this subsection, shall remain effective and enforceable pending the completion of the administrative proceedings 

pursuant to such notice and until such time as the Administration 

shall dismiss the charges specified in such notice, or if a cease-andVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00147 Fmt 6659 Sfmt 6601 E:\HR\OC\HR356P1.XXX HR356P1

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desist order is issued against the credit union or such party, until 

the effective date of such order. 

* * * * * * * 

(g) REMOVAL AND PROHIBITION AUTHORITY.— (1) * * * 

* * * * * * * 

(7) INDUSTRYWIDE PROHIBITION.— (A) * * * 

* * * * * * * 

(D) APPROPRIATE FEDERAL FINANCIAL INSTITUTIONS REG- ULATORY AGENCY DEFINED.—For purposes of this paragraph øand subsection (1)¿, the term ‘‘appropriate Federal 

financial institutions regulatory agency’’ means— (i) * * * 

* * * * * * * 

ø(i)¿ (i) SUSPENSION, REMOVAL, AND PROHIBITION FROM PARTICI- PATION ORDERS IN THE CASE OF CERTAIN CRIMINAL OFFENSES.—

(1) SUSPENSION OR PROHIBITION AUTHORIZED.—

(A) IN GENERAL.—Whenever any institution-affiliated 

party is charged in any information, indictment, or complaint, with the commission of or participation in—

(i) * * * 

* * * * * * * 

the Board may, if continued service or participation by 

such party may pose a threat to the interests of the credit 

union’s members or may threaten to impair public confidence in øthe¿ any credit union, by written notice served 

upon such party, suspend such party from office or prohibit such party from further participation in any manner 

in the conduct of the affairs of øthe¿ any credit union. 

(B) PROVISIONS APPLICABLE TO NOTICE.—

(i) COPY.—A copy of any notice under subparagraph 

(A) shall also be served upon the credit union of which 

the subject of the order is, or most recently was, an institution-affiliated party. 

* * * * * * * 

(C) REMOVAL OR PROHIBITION.—

(i) IN GENERAL.—If a judgment of conviction or an 

agreement to enter a pretrial diversion or other similar program is entered against an institution-affiliated 

party in connection with a crime described in subparagraph (A)(i), at such time as such judgment is not subject to further appellate review, the Board may, if continued service or participation by such party may pose 

a threat to the interests of øthe¿ any credit union’s 

members or may threaten to impair public confidence 

in øthe¿ any credit union, issue and serve upon such 

party an order removing such party from office or prohibiting such party from further participation in any 

manner in the conduct of the affairs of øthe¿ any credit union without the prior written consent of the 

Board. 


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(ii) REQUIRED FOR CERTAIN OFFENSES—In the case of 

a judgment of conviction or agreement against an institution-affiliated party in connection with a violation 

described in subparagraph (A)(ii), the Board shall 

issue and serve upon such party an order removing 

such party from office or prohibiting such party from 

further participation in any manner in the conduct of 

the affairs of øthe¿ any credit union without the prior 

written consent of the Board. 

(D) PROVISIONS APPLICABLE TO ORDER.— (i) COPY.—A copy of any order under subparagraph 

(C) shall also be served øupon such credit union¿ upon 

the credit union of which the subject of the order is, or 

most recently was, an institution-affiliated party, whereupon such party (if a director or an officer) shall 

cease to be a director or officer of such credit union. 

* * * * * * * 

(E) CONTINUATION OF AUTHORITY.—The Board may issue 

an order under this paragraph with respect to an individual who is an institution-affiliated party at a credit 

union at the time of an offense described in subparagraph 

(A) without regard to— (i) whether such individual is an institution-affiliated party at any credit union at the time the order is 

considered or issued by the Board; or 

(ii) whether the credit union at which the individual 

was an institution-affiliated party at the time of the offense remains in existence at the time the order is considered or issued by the Board. 

* * * * * * * 

(q) COMPLIANCE WITH MONETARY TRANSACTION RECORDKEEPING

AND REPORT REQUIREMENTS.—

(1) * * * 

* * * * * * * 

(4) COORDINATION ON UNIFORM REQUIREMENTS.—In prescribing regulations under paragraph (1), the Board, acting 

through the Financial Institutions Examination Council, 

shall—

(A) consult with the Federal banking agencies and the 

Secretary of the Treasury; and 

(B) take such action as may be necessary to ensure that 

the requirements for procedures established pursuant to 

such regulations, and the examination standards for reviewing such procedures, are congruent and reasonably 

uniform (taking into account differences in the form and 

function of the institutions subject to such requirements). 

* * * * * * * 

(t) REGULATION OF CERTAIN FORMS OF BENEFITS TO INSTITUTIONAFFILIATED PARTIES.—

(1) * * * 

(2) FACTORS TO BE TAKEN INTO ACCOUNT.—The Board shall 

prescribe, by regulation, the factors to be considered by the 


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Board in taking any action pursuant to paragraph (1) which 

may include such factors as the following: 

(A) * * * 

(B) Whether there is a reasonable basis to believe that 

the institution-affiliated party is substantially responsible 

for the insolvency of the credit union, the appointment of 

a conservator or liquidating agent for the credit union, or 

the credit union’s troubled condition (as defined in regulations prescribed by the Board pursuant to paragraph 

(4)(A)(ii)(III)). 

(C) Whether there is a reasonable basis to believe that 

the institution-affiliated party has materially violated any 

applicable Federal or State banking law or regulation that 

has had a material øaffect¿ effect on the financial condition 

of the credit union. 

* * * * * * * 

(4) GOLDEN PARACHUTE PAYMENT DEFINED.—For purposes of 

this subsection— (A) IN GENERAL.—The term ‘‘golden parachute payment’’ means any payment (or any agreement to make any payment) in the nature of compensation by any credit union 

for the benefit of any institution-affiliated party pursuant 

to an obligation of such credit union that— (i) * * * 

(ii) is received on or after the date on which— (I) * * * 

(II) any conservator or liquidating agent is appointed for such credit union; øor¿ 

* * * * * * * 

SEC. 206A. REGULATION AND EXAMINATION OF CREDIT UNION ORGANIZATIONS AND SERVICE 

PROVIDERS. 

(a) REGULATION AND EXAMINATION OF CREDIT UNION ORGANIZATIONS.—

(1) * * * 

(2) EXAMINATION BY OTHER BANKING AGENCIES.—The Board 

may authorize to make an examination of a credit union organization in accordance with paragraph (1)—

(A) any Federal øregulator¿ regulatory agency that supervises any activity of a credit union organization; or 

* * * * * * * 

PAYMENT OF INSURANCE

SEC. 207. (a)(1)(A) * * * 

(B) Not later than ø10¿ 30 days after the date on which the 

Board closes a credit union for liquidation pursuant to paragraph 

(1), or accepts appointment as liquidating agent pursuant to subsection (b), such insured credit union may apply to the United 

States district court for the judicial district in which the principal 

office of such insured credit union is located or the United States 

District Court for the District of Columbia, for an order requiring 

the Board to show cause why it should not be prohibited from continuing such liquidation. Except as otherwise provided in this subVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00150 Fmt 6659 Sfmt 6601 E:\HR\OC\HR356P1.XXX HR356P1

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paragraph, no court may take any action for or toward the removal 

of any liquidating agent or, except at the instance of the Board, restrain or affect the exercise of powers or functions of a liquidating 

agent. 

* * * * * * * 

(c) PROVISIONS RELATING TO CONTRACTS ENTERED INTO BEFORE

APPOINTMENT OF CONSERVATOR OR LIQUIDATING AGENT.—

(1) * * * 

* * * * * * * 

(5) LEASES UNDER WHICH THE CREDIT UNION IS THE LESSOR.—

(A) * * * 

(B) PROVISIONS APPLICABLE TO LESSEE REMAINING IN

POSSESSION.—If any lessee under a lease described in subparagraph (A) remains in possession of a leasehold interest 

pursuant to clause (ii) of such subparagraph—

(i) the lessee—

(I) shall continue to pay the contractual rent 

pursuant to the terms of the lease after the date 

of the repudiation of such lease; and 

* * * * * * * 

(d) PAYMENT OF INSURED DEPOSITS.—

(1) * * * 

* * * * * * * 

(3) RESOLUTION OF DISPUTES.—

(A) RESOLUTIONS IN ACCORDANCE øTO¿ WITH BOARD REGULATIONS.—In the case of any disputed claim relating to 

any insured deposit or any determination of insurance coverage with respect to any deposit, the Board may resolve 

such disputed claim in accordance with regulations prescribed by the Board establishing procedures for resolving 

such claims. 

* * * * * * * 

(f) VALUATION OF CLAIMS IN DEFAULT.—

(1) * * * 

* * * * * * * 

(3) ADDITIONAL PAYMENTS AUTHORIZED.—

(A) IN GENERAL.—The Board may, in its discretion and 

in the interests of minimizing its losses, use its own resources to make additional payments or credit additional 

amounts to or with respect to or for the account of any 

claimant or category of claimants. The Board shall not be 

obligated, as a result of having made any such payment or 

credited any such amount to or with respect to or for the 

account of any claimant or category of claimants, to make 

payments to any other claimant or category øor¿ of claimants. 

* * * * * * * 


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ADMINISTRATIVE PROVISIONS

SEC. 209. (a) In carrying out the purposes of this title, the Board 

may—

(1) * * * 

* * * * * * * 

(8) make examinations of and require information and reports from insured credit unions, as provided in this titleø.¿; 

* * * * * * * 

SEC. 216. PROMPT CORRECTIVE ACTION. 

(a) * * * 

* * * * * * * 

(n) OTHER AUTHORITY NOT AFFECTED.—This section does not 

limit any authority of the Board or a State to take action in addition to (but not in derogation of) any action that is required under 

this section. 

(o) DEFINITIONS.—For purposes of this section the following definitions shall apply: 

(1) * * * 

(2) NET WORTH.—The term ‘‘net worth’’—

(A) with respect to any insured credit union, means the 

retained earnings balance of the credit union, as determined under generally accepted accounting principles, together with any amounts that were previously retained 

earnings of any other credit union with which the credit 

union has combined; and 

* * * * * * * 

TITLE III—CENTRAL LIQUIDITY FACILITY 

* * * * * * * 

MEMBERSHIP

SEC. 304. (a) * * * 

(b) A credit union or group of credit unions, primarily serving 

other credit unions, may be an Agent member of the Facility by—

(1) * * * 

* * * * * * * 

(3) agreeing to comply with rules and regulations the Board 

shall prescribe with respect to, but not limited to, management 

quality, asset and liability safety and soundness, internal operating and control practices and procedures, and participation of 

natural persons in the affairs øor¿ of such credit union or credit union group; and 

* * * * * * * 

ANNUAL REPORT

SEC. 310. The annual report required by øsection 102(e)¿ section 

102(d) shall include a full report of the activities of the Facility. 

* * * * * * * 


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SECTION 7A OF THE CLAYTON ACT 

SEC. 7A. (a) * * * 

* * * * * * * 

(c) The following classes of transactions are exempt from the requirements of this section— (1) * * * 

* * * * * * * 

(7) transactions which require agency approval under section 

10(e) of the Home Owners’ Loan Act, section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. 1828(c)), section 205(b)(3) 

of the Federal Credit Union Act (12 U.S.C. 1785(b)(3)), or section 3 of the Bank Holding Company Act of 1956 (12 U.S.C. 

1842), except that a portion of a transaction is not exempt 

under this paragraph if such portion of the transaction (A) is 

subject to section 4(k) of the Bank Holding Company Act of 

1956; and (B) does not require agency approval under section 

3 of the Bank Holding Company Act of 1956; 

* * * * * * * 

FEDERAL RESERVE ACT 

* * * * * * * 

STATE BANKS AS MEMBERS. 

SEC. 9. Any bank incorporated by special law of any State, or organized under the general laws of any State or of the United 

States, including Morris Plan banks and other incorporated banking institutions engaged in similar business, desiring to become a 

member of the Federal Reserve System, may make application to 

the Board of Governors of the Federal Reserve System, under such 

rules and regulations as it may prescribe, for the right to subscribe 

to the stock of the Federal reserve bank organized within the district in which the applying bank is located. Such application shall 

be for the same amount of stock that the applying bank would be 

required to subscribe to as a national bank. For the purposes of 

membership of any such bank the terms ‘‘capital’’ and ‘‘capital 

stock’’ shall include the amount of outstanding capital notes and 

debentures legally issued by the applying bank and purchased by 

the Reconstruction Finance Corporation. The Board of Governors of 

the Federal Reserve System, subject to the provisions of this Act 

and to such conditions as it may prescribe pursuant thereto may 

permit the applying bank to become a stockholder of such Federal 

reserve bank. 

* * * * * * * 

Any such State bank which, at the date of the approval of this 

Act, has established and is operating a branch or branches in conformity with the State law, may retain and operate the same while 

remaining or upon becoming a stockholder of such Federal reserve 

bank; but no such State bank may retain or acquire stock in a Federal reserve bank except upon relinquishment of any branch or 

branches established after the date of the approval of this Act beyond the limits of the city, town, or village in which the parent 


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bank is situated. Provided, however, That nothing herein contained 

shall prevent any State member bank from establishing and operating branches in the United States or any dependency or insular 

possession thereof or in any foreign country, on the same terms 

and conditions and subject to the same limitations and restrictions 

as are applicable to the establishment of branches by national 

banks except that the approval of the Board of Governors of the 

Federal Reserve System, instead of the Comptroller of the Currency, shall be obtained before any State member bank may hereafter establish any branch and before any State bank hereafter admitted to membership may retain any branch established after 

February 25, 1927, beyond the limits of the city, town, or village 

in which the parent bank is situated. The approval of the Board 

shall likewise be obtained before any State member bank may establish any new branch within the limits of any such city, town, 

or village. A State member bank may establish and operate a de 

novo branch in a host State (as such terms are defined in section 

18(d) of the Federal Deposit Insurance Act) on the same terms and 

conditions and subject to the same limitations and restrictions as 

are applicable to the establishment of a de novo branch of a national bank in a host State under section 5155(g) of the Revised 

Statutes of the United States or are applicable to an insured State 

nonmember bank under section 18(d)(3) of the Federal Deposit Insurance Act’’. Such section 5155(g) shall be applied for purposes of 

the preceding sentence by substituting ‘‘Board of Governors of the 

Federal Reserve System’’ for ‘‘Comptroller of the Currency’’ and ‘‘State member bank’’ for ‘‘national bank’’. 

* * * * * * * 

SEC. 22. (d) * * * 

* * * * * * * 

(g)(1) * * * 

* * * * * * * 

ø(6) Whenever an executive officer of a member bank becomes indebted to any bank or banks (other than the one of which he is an 

officer) on account of extensions of credit of any one of the three 

categories respectively referred to in paragraphs (2), (3) and (4) in 

an aggregate amount greater than the aggregate amount of credit 

of the same category that could lawfully be extended to him by the 

bank, he shall make a written report to the board of directors of 

the bank, stating the date and amount of each such extension of 

credit, the security therefor, and the purposes for which the proceeds have been or are to be used.¿ 

ø(7)¿ (6) This subsection does not prohibit any executive officer 

of a member bank from endorsing or guaranteeing for the protection of the bank any loan or other asset previously acquired by the 

bank in good faith or from incurring any indebtedness to the bank 

for the purpose of protecting the bank against loss or giving financial assistance to it. 

ø(8)¿ (7) Each day that any extension of credit in violation of this 

subsection exists is a continuation of the violation for the purposes 

of section 8 of the Federal Deposit Insurance Act. 

ø(9) Each member bank shall include with (but not as part of) 

each report of condition and copy thereof filed under section 7(a)(3) 


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155 

of the Federal Deposit Insurance Act a report of all loans under authority of this subsection made by the bank since its previous report of condition.¿ 

ø(10)¿ (8) The Board of Governors of the Federal Reserve System 

may prescribe such rules and regulations, including definitions of 

terms, as it deems necessary to effectuate the purposes and to prevent evasions of this subsection. 

* * * * * * * 

BANK HOLDING COMPANY ACT OF 1956 

* * * * * * * 

DEFINITIONS

SEC. 2. (a) * * * 

* * * * * * * 

(c) BANK DEFINED.—For purposes of this Act— (1) * * * 

(2) EXCEPTIONS.—The term ‘‘bank’’ does not include any of 

the following: 

(A) * * * 

* * * * * * * 

(F) An institution, including an institution that accepts 

collateral for extensions of credit by holding deposits under 

$100,000, and by other means which— (i) øengages only in credit card operations;¿ engages 

only in—

(I) credit card operations; and 

(II) making investments designed primarily to 

promote the public welfare, including the welfare 

of low- and moderate-income communities or families (such as by providing housing, services, or 

jobs), in the manner and to the extent permitted for 

national banks under the paragraph designated 

the ‘‘Eleventh’’ of section 5136 of the Revised Statutes of the United States and regulations prescribed under such paragraph, except that the last 

sentence of such paragraph shall be applied for 

purposes of this subclause by substituting ‘‘5 percent’’ for ‘‘15 percent’’ each place such term appears; 

* * * * * * * 

(v) does not engage in the business of making commercial loans, other than making or purchasing loans 

for the purposes described in and to the extent permitted in clause (i)(II)). 

* * * * * * * 

ø(I) The Investors Fiduciary Trust Company, located in 

Kansas City, Missouri, so long as such institution— ø(i) engages only in trust, fiduciary, and agency activities in which it was lawfully engaged on March 5, 

1987; 


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ø(ii) engages in such activities only at the same 

number of locations at which such activities were conducted on such date; 

ø(iii) does not accept demand deposits other than demand deposits which are maintained by such institution in—

ø(I) a trust or fiduciary capacity; 

ø(II) the institution’s capacity as a custodian or 

as a paying, transfer, shareholder servicing, securities clearing, escrow, or dividend disbursing 

agent; or 

ø(III) any capacity which is incidental to the 

trust or fiduciary activities of the institution; 

ø(iv) does not engage in the business of making commercial loans; 

ø(v) does not exercise discount or borrowing privileges pursuant to section 19(b)(7) of the Federal Reserve Act; and 

ø(vi) is not directly or indirectly controlled by any 

company other than a company which directly or indirectly controlled such institution on March 5, 1987. 

ø(J) A savings bank (as defined in section 3(g) of the 

Federal Deposit Insurance Act) which— ø(i) is an insured bank (as defined in section 3(h) of 

such Act); 

ø(ii) is a subsidiary of the Great Western Financial 

Corporation as a result of an approval in writing by 

the State bank supervisor of the State of New York before June 30, 1987; 

ø(iii) meets or exceeds the investment requirements 

which an insured institution must meet in order to be 

a qualified thrift lender under section 408(o) of the 

National Housing Act; and 

ø(iv) does not, directly, or through insurance products such savings bank receives from or provides to 

the Great Western Financial Corporation, engage in 

the sale or underwriting of insurance, 

except that this subparagraph shall cease to apply with respect to such savings bank or any successor institution if 

any deposits of any other subsidiary or affiliate of the 

Great Western Financial Corporation which are subject to 

an assessment of an insurance premium under subsection 

(b) or (c) of section 404 of the National Housing Act are, 

directly or indirectly by any device whatsoever, transferred 

to or acquired by such savings bank or any successor institution which would have the effect of materially reducing 

such premium assessments. The exemption provided by 

this subparagraph shall cease to apply if Great Western 

Financial Corporation uses such savings bank or any successor institution as a vehicle to move such Corporation 

from Federal Savings and Loan Insurance Corporation insurance to Federal Deposit Insurance Corporation insurance.¿ 

* * * * * * * 

(g) For the purposes of this Act—


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157 

(1) * * * 

(2) shares held or controlled directly or indirectly by trustees 

for the benefit of (A) a company, (B) the shareholders or members of a company, or (C) the employees (whether exclusively 

or not) of a company, shall be deemed to be controlled by such 

company, unless the Board determines that such treatment is 

not appropriate in light of the facts and circumstances of the 

case and the purposes of this Act. 

* * * * * * * 

ø(m) QUALIFIED SAVINGS BANK.—For purposes of this Act, the 

term ‘‘qualified savings bank’’—

ø(1) means any savings bank (as defined in section 3(g) of 

the Federal Deposit Insurance Act) which was organized on or 

before March 5, 1987; and 

ø(2) includes any cooperative bank that is an insured bank 

(as defined in section 3(h) of the Federal Deposit Insurance 

Act) and any interim savings bank that is established to facilitate a corporate reorganization, or the formation of a holding 

company, involving a savings bank described in paragraph 

(1).¿ 

(m) [Repealed] 

* * * * * * * 

ACQUISITION OF BANK SHARES OR ASSETS

SEC. 3. (a) * * * 

* * * * * * * 

(d) INTERSTATE BANKING.—

(1) APPROVALS AUTHORIZED.—

(A) * * * 

ø(B) PRESERVATION OF STATE AGE LAWS.—

ø(i) IN GENERAL.—Notwithstanding subparagraph 

(A), the Board may not approve an application pursuant to such subparagraph that would have the effect 

of permitting an out-of-State bank holding company to 

acquire a bank in a host State that has not been in 

existence for the minimum period of time, if any, specified in the statutory law of the host State. 

ø(ii) SPECIAL RULE FOR STATE AGE LAWS SPECIFYING

A PERIOD OF MORE THAN 5 YEARS.—Notwithstanding 

clause (i), the Board may approve, pursuant to subparagraph (A), the acquisition of a bank that has been 

in existence for at least 5 years without regard to any 

longer minimum period of time specified in a statutory 

law of the host State. 

ø(C) SHELL BANKS.—For purposes of this subsection, a 

bank that has been chartered solely for the purpose of, and 

does not open for business prior to, acquiring control of, or 

acquiring all or substantially all of the assets of, an existing bank shall be deemed to have been in existence for the 

same period of time as the bank to be acquired.¿ 

ø(D)¿ (B) EFFECT ON STATE CONTINGENCY LAWS.—No 

provision of this subsection shall be construed as affecting 

the applicability of a State law that makes an acquisition 


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of a bank contingent upon a requirement to hold a portion 

of such bank’s assets available for call by a State-sponsored housing entity established pursuant to State law, 

if— (i) * * * 

* * * * * * * 

(5) EXCEPTION FOR BANKS IN DEFAULT OR IN DANGER OF DEFAULT.—The Board may approve an application pursuant to 

paragraph (1)(A) which involves—

(A) * * * 

(B) an acquisition with respect to which assistance is 

provided under section 13(c) of the Federal Deposit Insurance Act; 

without regard to subparagraph (B) øor (D)¿ of paragraph (1) 

or paragraph (2) or (3). 

* * * * * * * 

INTERESTS IN NONBANKING ORGANIZATIONS

SEC. 4. (a) * * * 

* * * * * * * 

(h) TYING PROVISIONS.—

(1) APPLICABLE TO CERTAIN EXEMPT INSTITUTIONS AND PARENT COMPANIES.—An institution described in subparagraph 

(D), (F), ø(G), (H), (I), or (J) of section 2(c)(2)¿ (G), or (H) of 

section 2(c)(2) shall be treated as a bank, and a company that 

controls such an institution shall be treated as a bank holding 

company, for purposes of section 106 of the Bank Holding Company Act Amendments of 1970 and section 22(h) of the Federal 

Reserve Act and any regulation prescribed under any such section. 

(2) APPLICABLE WITH RESPECT TO CERTAIN TRANSACTIONS.—A 

company that controls an institution described in subparagraph (D), (F), ø(G), (H), (I), or (J) of section 2(c)(2)¿ (G), or (H) 

of section 2(c)(2) and any of such company’’s other affiliates, 

shall be subject to the tying 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 affiliate and those of such institution, as if 

such company or affiliate were a bank and such institution 

were a subsidiary of a bank holding company. 

* * * * * * * 

(n) AUTHORITY TO RETAIN LIMITED NONFINANCIAL ACTIVITIES

AND AFFILIATIONS.—

(1) * * * 

* * * * * * * 

(5) CROSS MARKETING RESTRICTIONS APPLICABLE TO COMMERCIAL ACTIVITIES.—

(A) * * * 

(B) RULE OF CONSTRUCTION.—Subparagraph (A) shall 

not be construed as prohibiting an arrangement between a 

depository institution and a company owned or controlled 

pursuant to øsubsection (k)(4)(I)¿ subparagraph (H) or (I) 


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159 

of subsection (k)(4) for the marketing of products or services through statement inserts or Internet websites if— (i) * * * 

* * * * * * * 

(C) THRESHOLD OF CONTROL.—Subparagraph (A) shall 

not apply with respect to a company described or referred 

to in clause (i) or (ii) of such subparagraph if the financial 

holding company does not own or control 25 percent or 

more of the total equity or any class of voting securities of 

such company. 

* * * * * * * 

SECTION 2 OF THE NATIONAL BANK RECEIVERSHIP ACT 

øSECTION 2. The Comptroller of the Currency¿ 

SEC. 2. APPOINTMENT OF RECEIVER FOR A NATIONAL BANK. 

(a) IN GENERAL.—The Comptroller of the Currency may, without 

prior notice or hearings, appoint a receiver for any national bank 

(and such receiver shall be the Federal Deposit Insurance Corporation if the national bank is an insured bank (as defined in section 

3(h) of the Federal Deposit Insurance Act)) if the Comptroller determines, in the Comptroller’s discretion, that—

(1) * * * 

* * * * * * * 

(b) JUDICIAL REVIEW.—If the Comptroller of the Currency appoints a receiver under subsection (a), the national bank may, within 30 days thereafter, bring an action in the United States district 

court for the judicial district in which the home office of such bank 

is located, or in the United States District Court for the District of 

Columbia, for an order requiring the Comptroller of the Currency 

to remove the receiver, and the court shall, upon the merits, dismiss 

such action or direct the Comptroller of the Currency to remove the 

receiver. 

* * * * * * * 

SECTION 106 OF THE BANK HOLDING COMPANY ACT 

AMENDMENTS OF 1970 

SEC. 106. (a) * * * 

(b)(1) * * * 

(2)(A) * * * 

* * * * * * * 

ø(G)(i) Each executive officer and each stockholder of record who 

directly or indirectly owns, controls, or has the power to vote more 

than 10 per centum of any class of voting securities of an insured 

bank shall make a written report to the board of directors of such 

bank for any year during which such executive officer or shareholder has outstanding an extension of credit from a bank which 

maintains a corresponding account in the name of such bank. Such 

report shall include the following information: 


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ø(1) the maximum amount of indebtedness to the bank maintaining the correspondent account during such year of (a) such 

executive officer or stockholder of record, (b) each company controlled by such executive officer or stockholder, or (c) each political or campaign committee the funds or services of which 

will benefit such executive officer or stockholder, or which is 

controlled by such executive officer or stockholder; 

ø(2) the amount of indebtedness to the bank maintaining the 

correspondent account outstanding as of a date not more than 

ten days prior to the date of filing of such report of (a) such 

executive officer or stockholder of record, (b) each company controlled by such executive officer or stockholder, or (c) each political or campaign committee the funds or services of which 

will benefit such executive officer or stockholder; 

ø(3) the range of interest rates charged on such indebtedness 

of such executive officer or stockholder of record; and 

ø(4) the terms and conditions of such indebtedness of such 

executive officer or stockholder of record. 

ø(ii) The appropriate Federal banking agencies are authorized to 

issue rules and regulations, including definitions of terms, to require the reporting and public disclosure of information by any 

bank or executive officer or principal shareholder thereof concerning any extension of credit by a correspondent bank to the reporting bank’s executive officers or principal shareholders, or the 

related interests of such persons.¿ 

ø(H)¿ (G) For the purpose of this paragraph— (i) * * * 

* * * * * * * 

ø(I)¿ (H) NOTICE UNDER THIS SECTION AFTER SEPARATION FROM

SERVICE.—The resignation, termination of employment or participation, or separation of an institution-affiliated party (within the 

meaning of section 3(u) of the Federal Deposit Insurance Act) with 

respect to such a bank (including a separation caused by the closing of such a bank) shall not affect the jurisdiction and authority 

of the appropriate Federal banking agency to issue any notice and 

proceed under this section against any such party, if such notice is 

served before the end of the 6-year period beginning on the date 

such party ceased to be such a party with respect to such bank 

(whether such date occurs before, on, or after the date of the enactment of this subparagraph). 

* * * * * * * 

SECTION 203 OF THE DEPOSITORY INSTITUTION 

MANAGEMENT INTERLOCKS ACT 

SEC. 203. A management official of a depository institution or a 

depository holding company may not serve as a management official of any other depository institution or depository holding company not affiliated therewith if an office of one of the institutions 

or any depository institution that is an affiliate of such institutions 

is located within either—

(1) the same primary metropolitan statistical area, the same 

metropolitan statistical area, or the same consolidated metropolitan statistical area that is not comprised of designated priVerDate Aug 31 2005 23:12 Dec 20, 2005 Jkt 049002 PO 00000 Frm 00160 Fmt 6659 Sfmt 6601 E:\HR\OC\HR356P1.XXX HR356P1

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mary metropolitan statistical areas as defined by the Office of 

Management and Budget, except in the case of depository institutions with less than ø$20,000,000¿ $100,000,000 in assets in 

which case the provision of paragraph (2) shall apply, as that 

in which an office of the other institution or any depository institution that is an affiliate of such institution is located, or 

* * * * * * * 

BANK SERVICE COMPANY ACT 

SHORT TITLE AND DEFINITIONS

SECTION 1. 

(a) * * * 

(b) For the purpose of this Act—

(1) * * * 

(2) the term ‘‘bank service company’’ means—

(A) any corporation—

(i) * * * 

(ii) all of the capital stock of which is owned by 1 or 

more øinsured banks¿ insured depository institutions; 

and 

(B) any limited liability company—

(i) * * * 

(ii) all of the members of which are 1 or more øinsured banks¿ insured depository institutions. 

* * * * * * * 

(4) the term ‘‘depository institution’’ means, except when such 

term appears in connection with the term ‘‘insured depository 

institution’’, an insured bank, a financial institution subject to 

examination by the øFederal Home Loan Bank Board¿ Director 

of the Office of Thrift Supervision or the National Credit Union 

Administration Board, or a financial institution the accounts or 

deposits of which are insured or guaranteed under State law 

and are eligible to be insured by the Federal Deposit Insurance 

Corporation, the Federal Savings and Loan Insurance Corporation, or the National Credit Union Administration Board; 

ø(5) the term ‘‘insured bank’’ shall have the meaning provided in section 3(h) of the Federal Deposit Insurance Act (12 

U.S.C. 1813(h));¿ 

(5) INSURED DEPOSITORY INSTITUTION.—The term ‘‘insured 

depository institution’’ has the meaning given the term in section 3(c) of the Federal Deposit Insurance Act; 

* * * * * * * 

(7) the term ‘‘limited liability company’’ means any company, 

partnership, trust, or similar business entity organized under 

the law of a State (as defined in section 3 of the Federal Deposit Insurance Act) which provides that a member or manager 

of such company is not personally liable for a debt, obligation, 

or liability of the company solely by reason of being, or acting 

as, a member or manager of such company; øand¿ 

(8) the term ‘‘principal investor’’ means the øinsured bank¿ 

insured depository institution that has the largest dollar 


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amount invested in the equity of a bank service company. In 

any case where two or more øinsured banks¿ insured depository institutions have equal dollar amounts invested in a bank 

service company, the company shall, prior to commencing operations, select one of the øinsured banks¿ insured depository institutions as its principal investor and shall notify øthe bank’s¿ 

the depository institution’s appropriate Federal banking agency 

of that choice within 5 business days of its selectionø.¿; and 

(9) the terms ‘‘State depository institution’’, ‘‘Federal depository institution’’, ‘‘State savings association’’ and ‘‘Federal savings association’’ have the meanings given the terms in section 

3 of the Federal Deposit Insurance Act. 

AMOUNT OF INVESTMENT IN BANK SERVICE COMPANY

SEC. 2. Notwithstanding any limitation or prohibition otherwise 

imposed by any provision of law exclusively relating to banks or 

savings associations, other than the limitation on the amount of investment by a Federal savings association contained in section 

5(c)(4)(B) of the Home Owners’ Loan Act, an øinsured bank¿ insured depository institution may invest not more than 10 per centum of paid-in and unimpaired capital and unimpaired surplus in 

a bank service company. No øinsured bank¿ insured depository institution shall invest more than 5 per centum of its total assets in 

bank service companies. 

PERMISSIBLE BANK SERVICE COMPANY ACTIVITIES FOR DEPOSITORY

INSTITUTIONS

SEC. 3. Without regard to the provisions of sections 4 and 5 of 

this Act, an øinsured bank¿ insured depository institution may invest in a bank service company that performs, and a bank service 

company may perform, the following services only for depository institutions: check and deposit sorting and posting, computation and 

posting of interest and other credits and charges, preparation and 

mailing of checks, statements, notices, and similar items, or any 

other clerical, bookkeeping, accounting, statistical, or similar functions performed for a depository institution. 

PERMISSIBLE BANK SERVICE COMPANY ACTIVITIES FOR OTHER

PERSONS

SEC. 4. (a) * * * 

(b) Except as permissible under subsection (c), (d), or (e) or with 

the prior approval of the Board under section 5(b) of this Act in accordance with subsection (f) of this section—

(1) * * * 

* * * * * * * 

(c) A bank service company in which a State bank or State savings association is a shareholder or member shall perform only 

those services that such State bank or State savings association 

shareholder or member is authorized to perform under the law of 

the State in which such State bank or State savings association operates and shall perform such services only at locations in the 

State in which such State bank or State savings association shareholder or member could be authorized to perform such services. 


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(d) A bank service company in which a national bank or Federal 

savings association is a shareholder or member shall perform only 

those services that such national bank or Federal savings association shareholder or member is authorized to perform under the law 

of the United States and shall perform such services only at locations in the State at which such national bank or Federal savings 

association shareholder or member could be authorized to perform 

such services. 

ø(e) A bank service company that has both national bank and 

State bank shareholders or members shall perform only those services that may lawfully be performed by both any shareholder or 

member of the company which is a national bank under the law 

of the United States and any shareholder or member of the company which is a State bank under the law of the State in which 

any such State bank operate and shall perform such services only 

at locations in the State at which both its State bank and national 

bank shareholders or members could be authorized to perform such 

services.¿ 

(e) A bank service company may perform— (1) only those services that each depository institution shareholder or member is otherwise authorized to perform under any 

applicable Federal or State law; and 

(2) such services only at locations in a State in which each 

such shareholder or member is authorized to perform such services. 

(f) Notwithstanding the other provisions of this section or any 

other provision of law, other than the provisions of Federal and 

State branching law regulating the geographic location of banks or 

savings associations to the extent that those laws are applicable to 

an activity authorized by this subsection, a bank service company 

may perform at any geographic location any service, other than deposit taking, that the Board has determined, by regulation, to be 

permissible for a bank holding company under section 4(c)(8) of the 

Bank Holding Company Act. 

PRIOR APPROVAL FOR INVESTMENTS IN BANK SERVICE COMPANIES

SEC. 5. (a) No øinsured bank¿ insured depository institution shall 

invest in the capital stock of a bank service company that performs 

any service under authority of subsection (c), (d), or (e) of section 

4 of this Act without prior notice, as determined by the øbank’s¿ 

institution’s appropriate Federal banking agency. 

(b) No øinsured bank¿ insured depository institution shall invest 

in the capital stock of a bank service company that performs any 

service authorized only under authority of section 4(f) of this Act 

and no bank service company shall perform any activity authorized 

only under section 4(f) of this Act without the prior approval of the 

Board. 

(c) In determining whether to approve or deny any application 

for prior approval or whether to approve or disapprove any notice 

under this section, the Board or the appropriate Federal banking 

agency, as the case may be, is authorized to consider the financial 

and managerial resources and future prospects of øthe bank or 

banks¿ any depository institution and bank service company involved, including the financial øcapability of the bank¿ capability 

of the depository institution to make a proposed investment under 


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164 

this Act, and possible adverse effects such as undue concentration 

of resources, unfair or decreased competition, conflicts of interest, 

or unsafe or unsound banking practices. 

* * * * * * * 

REGULATION AND EXAMINATION OF BANK SERVICE COMPANIES

SEC. 7. (a) * * * 

(b) A bank service company shall be subject to the provisions of 

section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) as 

if the bank service company were an øinsured bank¿ insured depository institution. For this purpose, the appropriate Federal 

banking agency shall be the appropriate Federal banking agency of 

the principal investor of the bank service company. 

(c) Notwithstanding subsection (a) of this section, whenever øa 

bank¿ a depository institution that is regularly examined by an appropriate Federal banking agency, or any subsidiary or affiliate of 

such øa bank¿ a depository institution that is subject to examination by that agency, causes to be performed for itself, by contract 

or otherwise, any services authorized under this Act, whether on 

or off its premises—

(1) such performance shall be subject to regulation and examination by such agency to the same extent as if such services were being performed by øthe bank¿ the depository institution itself on its own premises, and 

(2) øthe bank¿ the depository institution shall notify such 

agency of the existence of the service relationship within thirty 

days after the making of such service contract or the performance of the service, whichever occurs first. 

* * * * * * * 

SECTION 804 OF THE COMMUNITY REINVESTMENT ACT 

OF 1977 

SEC. 804. (a) * * * 

* * * * * * * 

(d) ESTABLISHMENT OF ESOPS AND EWOCS.— (1) IN GENERAL.—In assessing and taking into account, under 

subsection (a), the record of a financial institution, the appropriate Federal financial supervisory agency shall consider as a 

factor activities that support or enable the establishment of employee stock ownership plans or eligible worker-owned cooperatives, so long as the employer sponsoring the plan or cooperative 

is at least 51 percent owned by employees, including low to 

moderate income employees. 

(2) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply: 

(A) EMPLOYEE STOCK OWNERSHIP PLAN.—The term ‘‘employee stock ownership plan’’ has the same meaning as in 

section 4975(e)(7) of the Internal Revenue Code of 1986. 

(B) ELIGIBLE WORKER-OWNED COOPERATIVE.—The term 

‘‘eligible worker-owned cooperative’’ has the same meaning 


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as in section 1042(c)(2) of the Internal Revenue Code of 

1986. 

* * * * * * * 

SECTION 503 OF THE GRAMM-LEACH-BLILEY ACT 

SEC. 503. DISCLOSURE OF INSTITUTION PRIVACY POLICY. 

(a) * * * 

* * * * * * * 

(c) EXCEPTION TO ANNUAL NOTICE REQUIREMENT.—A financial 

institution that—

(1) provides nonpublic personal information only in accordance with the provisions of subsection (b)(2) or (e) of section 502 

or regulations prescribed under section 504(b); 

(2) does not share information with affiliates under section 

603(d)(2)(A) of the Fair Credit Reporting Act; and 

(3) has not changed its policies and practices with regard to 

disclosing nonpublic personal information from the policies and 

practices that were disclosed in the most recent disclosure sent 

to consumers in accordance with this subsection, 

shall not be required to provide an annual disclosure under this 

subsection until such time as the financial institution fails to comply with any criteria described in paragraph (1), (2), or (3). 

(d) EXCEPTION TO NOTICE REQUIREMENT.—A financial institution 

shall not be required to provide any disclosure under this section 

if—

(1) the financial institution is licensed by a State and is subject to existing regulation of consumer confidentiality that prohibits disclosure of nonpublic personal information without 

knowing and expressed consent of the consumer in the form of 

laws, rules, or regulation of professional conduct or ethics promulgated either by the court of highest appellate authority or 

by the principal legislative body or regulatory agency or body 

of any State of the United States, the District of Columbia, any 

territory of the United States, Puerto Rico, Guam, American 

Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, or the Northern Mariana Islands; or 

(2) the financial institution is licensed by a State and becomes subject to future regulation of consumer confidentiality 

that prohibits disclosure of nonpublic personal information 

without knowing and expressed consent of the consumer in the 

form of laws, rules, or regulation of professional conduct or ethics promulgated either by the court of highest appellate authority or by the principal legislative body or regulatory agency or 

body of any State of the United States, the District of Columbia, 

any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, or the Northern Mariana Islands. 


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SECTION 1101 OF THE RIGHT TO FINANCIAL PRIVACY 

ACT OF 1978 

DEFINITIONS

SEC. 1101. For the purpose of this title, the term—

(1) ‘‘financial institution’’, except as provided in section 1114, 

means any office of a bank, savings bank, card issuer as defined in section 103 of the Consumers Credit Protection Act (15 

U.S.C. 1602(n)), industrial loan company, trust company, savings association, building and loan, or homestead association 

(including cooperative banks), credit union, or consumer finance institution (including any lender who advances funds on 

pledges of personal property), located in any State or territory 

of the United States, the District of Columbia, Puerto Rico, 

Guam, American Samoa, or the Virgin Islands; 

* * * * * * * 

SECTION 5313 OF TITLE 31, UNITED STATES CODE 

§ 5313. Reports on domestic coins and currency transactions 

(a) * * * 

* * * * * * * 

ø(e) DISCRETIONARY EXEMPTIONS FROM REPORTING REQUIRE- MENTS.—

ø(1) IN GENERAL.—The Secretary of the Treasury may exempt, pursuant to section 5318(a)(6), a depository institution 

from the reporting requirements of subsection (a) with respect 

to transactions between the depository institution and a qualified business customer of the institution on the basis of information submitted to the Secretary by the institution in accordance with procedures which the Secretary shall establish. 

ø(2) QUALIFIED BUSINESS CUSTOMER DEFINED.—For purposes 

of this subsection, the term ‘‘qualified business customer’’ means a business which— ø(A) maintains a transaction account (as defined in section 19(b)(1)(C) of the Federal Reserve Act) at the depository institution; 

ø(B) frequently engages in transactions with the depository institution which are subject to the reporting requirements of subsection (a); and 

ø(C) meets criteria which the Secretary determines are 

sufficient to ensure that the purposes of this subchapter 

are carried out without requiring a report with respect to 

such transactions. 

ø(3) CRITERIA FOR EXEMPTION.—The Secretary of the Treasury shall establish, by regulation, the criteria for granting and 

maintaining an exemption under paragraph (1). 

ø(4) GUIDELINES.— ø(A) IN GENERAL.—The Secretary of the Treasury shall 

establish guidelines for depository institutions to follow in 

selecting customers for an exemption under this subsection. 


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167 

ø(B) CONTENTS.—The guidelines may include a description of the types of businesses or an itemization of specific 

businesses for which no exemption will be granted under 

this subsection to any depository institution. 

ø(5) ANNUAL REVIEW.—The Secretary of the Treasury shall 

prescribe regulations requiring each depository institution to—

ø(A) review, at least once each year, the qualified business customers of such institution with respect to whom 

an exemption has been granted under this subsection; and 

ø(B) upon the completion of such review, resubmit information about such customers, with such modifications as 

the institution determines to be appropriate, to the Secretary for the Secretary’s approval. 

ø(6) 2-YEAR PHASE-IN PROVISION.—During the 2-year period 

beginning on the date of enactment of the Money Laundering 

Suppression Act of 1994, this subsection shall be applied by 

the Secretary on the basis of such criteria as the Secretary determines to be appropriate to achieve an orderly implementation of the requirements of this subsection.¿ 

(e) QUALIFIED CUSTOMER EXEMPTION.—

(1) IN GENERAL.—The Secretary of the Treasury shall prescribe regulations within 270 days of the enactment of the Financial Services Regulatory Relief Act of 2005 that exempt any 

depository institution from filing a report pursuant to this section in a transaction for the payment, receipt, or transfer of 

United States coins or currency (or other monetary instruments 

the Secretary of the Treasury prescribes) with a qualified customer of the depository institution. 

(2) QUALIFIED CUSTOMER DEFINED.—For purposes of this section, the term ‘‘qualified customer’’, with respect to a depository 

institution, has such meaning as the Secretary of the Treasury 

shall prescribe, which shall include any person that—

(A) is incorporated or organized under the laws of the 

United States or any State, including a sole proprietorship, 

or is registered as and eligible to do business within the 

United States or a State; 

(B) has maintained a deposit account with the depository 

institution for at least 12 months; and 

(C) has engaged, using such account, in multiple currency transactions that are subject to the reporting requirements of subsection (a). 

(3) REGULATIONS.—

(A) IN GENERAL.—The Secretary of the Treasury shall 

prescribe regulations requiring a depository institution to 

file a 1-time notice of designation of exemption for each 

qualified customer of the depository institution. 

(B) FORM AND CONTENT OF EXEMPTION NOTICE.—The 

Secretary shall by regulation prescribe the form, manner, 

content, and timing of the qualified customer exemption notice; such notice shall include information sufficient to 

identify the qualified customer and its accounts. 

(C) AUTHORITY OF SECRETARY.—

(i) IN GENERAL.—The Secretary may suspend, reject 

or revoke any qualified customer exemption notice, in 


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accordance with criteria prescribed by the Secretary by 

regulation. 

(ii) CONDITIONS.—The Secretary may establish conditions, in accordance with criteria prescribed by regulation, under which exempt qualified customers of an 

insured depository institution that is merged with or 

acquired by another insured depository institution will 

continue to be treated as designated exempt qualified 

customers of the surviving or acquiring institution. 

* * * * * * * 

SECTION 1006 OF THE FEDERAL FINANCIAL 

INSTITUTIONS EXAMINATION COUNCIL ACT OF 1978 

FUNCTIONS OF THE COUNCIL

SEC. 1006. (a) * * * 

* * * * * * * 

(h) MONETARY TRANSACTION RECORDKEEPING AND REPORTING

REQUIREMENTS.—The Council and the Secretary of the Treasury 

shall jointly establish— (1) uniform standards and principles applicable to the examination of financial institutions to ensure compliance with the 

requirements of subchapter II of chapter 53, United States 

Code, sections 8(s) and 21 of the Federal Deposit Insurance Act, 

and section 206(q) of the Federal Credit Union Act; and 

(2) a clear policy statement on appropriate processes for resolving examiner-institution disagreements concerning the application of subchapter II of chapter 53, United States Code, 

sections 8(s) and 21 of the Federal Deposit Insurance Act, and 

section 206(q) of the Federal Credit Union Act to financial institutions. 

SECTION 1306 OF TITLE 18, UNITED STATES CODE 

§ 1306. Participation by financial institutions 

Whoever knowingly violates section ø5136A¿ 5136B of the Revised Statutes of the United States, section 9A of the Federal Reserve Act, or section 20 of the Federal Deposit Insurance Act shall 

be fined under this title or imprisoned not more than one year, or 

both. 

FAIR DEBT COLLECTION PRACTICES ACT 

TITLE VIII—DEBT COLLECTION PRACTICES 

Sec. 

801. Short title. 

* * * * * * * 

818. Exception for certain bad check enforcement programs operated by private entities. 

ø818¿ 819. Effective date. 

* * * * * * * 


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§ 801. Short title 

This title may be cited as the ‘‘Fair Debt Collection Practices 

Act’’. 

* * * * * * * 

§ 809. Validation of debts 

(a) * * * 

(b) øIf the consumer¿ Collection activities and communications 

may continue during any 30-day period referred to in subsection (a). 

However, if the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, 

or any portion thereof, is disputed, or that the consumer requests 

the name and address of the original creditor, the debt collector 

shall cease collection of the debt, or any disputed portion thereof, 

until the debt collector obtains verification of the debt or a copy of 

a judgment, or the name and address of the original creditor, and 

a copy of such verification or judgment, or name and address of the 

original creditor, is mailed to the consumer by the debt collector. 

* * * * * * * 

(d) LEGAL PLEADINGS.—A communication in the form of a formal 

pleading in a civil action shall not be treated as an initial communication for purposes of subsection (a). 

(e) NOTICE PROVISIONS.—The sending or delivery of any form or 

notice which does not request the payment of a debt and is expressly 

required by any other Federal or State law or regulation, including 

the Internal Revenue Code of 1986, title V of Gramm-Leach-Bliley 

Act, and any data security breach notice and privacy law shall not 

be treated as a communication in connection with debt collection. 

* * * * * * * 

§ 818. Exception for certain bad check enforcement programs 

operated by private entities 

(a) IN GENERAL.—If—

(1) a State or district attorney establishes, within the jurisdiction of such State or district attorney and with respect to alleged bad check violations that do not involve a check described 

in subsection (c), a pretrial diversion program for alleged bad 

check offenders who agree to participate voluntarily in such 

program to avoid criminal prosecution and are not described in 

subsection (b); 

(2) a private entity, that is subject to an administrative support services contract with a State or district attorney and operates under the direction, supervision and control of such State 

or district attorney, operates the pretrial diversion program described in paragraph (1); and 

(3) in the course of performing duties delegated to it by a 

State or district attorney under the contract, the private entity 

referred to in paragraph (2)—

(A) complies with the penal laws of the State; 

(B) conforms with the terms of the contract and directives 

of the State or district attorney; 

(C) does not exercise independent prosecutorial discretion; 


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(D) contacts any alleged offender referred to in paragraph 

(1) for purposes of participating in a program referred to in 

such paragraph only—

(i) as a result of any determination by the State or 

district attorney that sufficient evidence of a bad check 

violation under State law exists and that contact with 

the alleged offender for purposes of participation in the 

program is appropriate; or 

(ii) as otherwise permitted in response to evidence of 

a bad check; 

(E) includes as part of an initial written communication 

with an alleged offender a clear and conspicuous statement 

that—

(i) the alleged offender may dispute the validity of 

any alleged bad check violation through a procedure 

established and supervised by the State or district attorney, together with an explanation of how such a dispute may be initiated; and 

(ii) where the alleged offender knows, or has reasonable cause to believe, that the alleged bad check violation is the result of theft or forgery of the check, identity theft, or other fraud that is not the result of the alleged offender’s conduct, the alleged offender may file 

a crime report with the appropriate law enforcement 

agency and have further contacts or restitution efforts 

suspended until the question of the theft or forgery of 

the check, identity theft, or other fraud has been resolved, together with clear instructions on how to file 

such crime report; and 

(F) charges only fees in connection with services under 

the contract that—

(i) have been authorized by the contract with the 

State or district attorney; and 

(ii) conform with the schedule of reasonable charges 

for such services which shall be established by the National District Attorney’s Association, after consultation 

with the Commission and representatives of interested 

business and consumer organizations, 

the private entity shall be treated as an officer of the State and excluded from the definition of debt collector, pursuant to the exception provided in section 803(6)(C), with respect to the entity’s operation of the program described in paragraph (1) under the contract 

described in paragraph (2). 

(b) CERTAIN OFFENDERS EXCLUDED.—An alleged bad check offender is described in this subsection if a private entity described in 

subsection (a)(2) can determine from available records that such offender—

(1) was convicted of a bad check offense in the 3 years prior 

to issuing the bad check under consideration; or 

(2) participated in a pretrial diversion program in the 18 

months prior to issuing the bad check under consideration. 

(c) CERTAIN CHECKS EXCLUDED.—A check is described in this 

subsection if the check involves, or is subsequently found to involve—


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(1) a postdated check presented in connection with a payday 

loan, or other similar transaction, where the holder of the check 

knew that the issuer had insufficient funds at the time the 

check was made, drawn or delivered; 

(2) a stop payment order where the issuer acted in good faith 

and with reasonable cause in stopping payment on the check; 

(3) a check dishonored because of an adjustment to the 

issuer’s account by the financial institution holding such account without providing notice to the person at the time the 

check was made, drawn or delivered; 

(4) a check for partial payment of a debt where the holder 

had previously accepted partial payment for such debt; 

(5) a check issued by a person who was not competent, or was 

not of legal age, to enter into a legal contractual obligation at 

the time the check was made, drawn or delivered; or 

(6) a check issued to pay an obligation arising from a transaction that was illegal in the jurisdiction of the State or district 

attorney at the time the check was made, drawn or delivered. 

(d) DEFINITIONS.—For purposes of this section, the following definitions shall apply: 

(1) STATE OR DISTRICT ATTORNEY.—The term ‘‘State or district attorney’’ means the chief elected or appointed prosecuting 

attorney in a district, county (as defined in section 2 of title 1, 

United States Code), municipality, or comparable jurisdiction, 

including State attorneys general who act as chief elected or appointed prosecuting attorneys in a district, county (as so defined), municipality or comparable jurisdiction, who may be referred to by a variety of titles such as district attorneys, prosecuting attorneys, commonwealth’s attorneys, solicitors, county 

attorneys, and state’s attorneys, and who are responsible for the 

prosecution of State crimes and violations of jurisdiction-specific local ordinances. 

(2) CHECK.—The term ‘‘check’’ has the same meaning as in 

section 3(6) of the Check Clearing for the 21st Century Act. 

(3) BAD CHECK.—The term ‘‘bad check’’ means any check 

that—

(A) the issuer knew, or should have known, would not be 

paid upon presentment because the issuer—

(i) had no account with the drawee financial institution at the time the check was made, drawn, or delivered; 

(ii) had closed the account upon with the check was 

made or drawn prior to the time the check was made, 

drawn, or delivered; or 

(iii) used a false or altered check, or false or altered 

check account number; or 

(B) was refused payment by the financial institution or 

other drawee for lack of sufficient funds and the issuer 

failed to pay the full amount of the check, together with 

reasonable costs as permitted by State law—

(i) after receiving written notice from the holder of 

the check that payment was refused by the drawee financial institution to the extent that the timing and 

mode of delivery of such written notice is in compliance 


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with the applicable State law for determining criminal 

liability for bad check offenses; or 

(ii) in a case in which there are no applicable State 

law requirements as described in clause (i), within 30 

days of receiving written notice, mailed to the issuer by 

certified mail to the address printed on the check, or 

given at the time the check was made, drawn or delivered or, otherwise, at the address where the alleged offender resides or is found, from the holder of the check 

that payment of 1 or more checks was refused by the 

drawee financial institution. 

§ ø818¿ 819. Effective date 

This title takes effect upon the expiration of six months after the 

date of its enactment, but section 809 shall apply only with respect 

to debts for which the initial attempt to collect occurs after such 

effective date. 

* * * * * * * 

Æ 


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