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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10 Placed on Calendar Senate (PCS)]

                                                       Calendar No. 204

106th CONGRESS

  1st Session

                                H. R. 10

_______________________________________________________________________

                                 AN ACT

To enhance competition in the financial services industry by providing 
a prudential framework for the affiliation of banks, securities firms, 
     and other financial service providers, and for other purposes.

                             July 12, 1999

            Received; read twice and placed on the calendar
                                                       Calendar No. 204
106th CONGRESS
  1st Session
                                 H. R. 10

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             July 12, 1999

            Received; read twice and placed on the Calendar

_______________________________________________________________________

                                 AN ACT

 
To enhance competition in the financial services industry by providing 
a prudential framework for the affiliation of banks, securities firms, 
     and other financial service providers, and for other purposes.

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

SECTION 1. SHORT TITLE; PURPOSES; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Financial Services 
Act of 1999''.
    (b) Purposes.--The purposes of this Act are as follows:
            (1) To enhance competition in the financial services 
        industry, in order to foster innovation and efficiency.
            (2) To ensure the continued safety and soundness of 
        depository institutions.
            (3) To provide necessary and appropriate protections for 
        investors and ensure fair and honest markets in the delivery of 
        financial services.
            (4) To avoid duplicative, potentially conflicting, and 
        overly burdensome regulatory requirements through the creation 
        of a regulatory framework for financial holding companies that 
        respects the divergent requirements of each of the component 
        businesses of the holding company, and that is based upon 
        principles of strong functional regulation and enhanced 
        regulatory coordination.
            (5) To reduce and, to the maximum extent practicable, to 
        eliminate the legal barriers preventing affiliation among 
        depository institutions, securities firms, insurance companies, 
        and other financial service providers and to provide a 
        prudential framework for achieving that result.
            (6) To enhance the availability of financial services to 
        citizens of all economic circumstances and in all geographic 
        areas.
            (7) To enhance the competitiveness of United States 
        financial service providers internationally.
            (8) To ensure compliance by depository institutions with 
        the provisions of the Community Reinvestment Act of 1977 and 
        enhance the ability of depository institutions to meet the 
        capital and credit needs of all citizens and communities, 
        including underserved communities and populations.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; purposes; table of contents.
  TITLE I--FACILITATING AFFILIATION AMONG SECURITIES FIRMS, INSURANCE 
                 COMPANIES, AND DEPOSITORY INSTITUTIONS

                        Subtitle A--Affiliations

Sec. 101. Glass-Steagall Act reformed.
Sec. 102. Activity restrictions applicable to bank holding companies 
                            which are not financial holding companies.
Sec. 103. Financial holding companies.
Sec. 104. Operation of State law.
Sec. 105. Mutual bank holding companies authorized.
Sec. 105A. Public meetings for large bank acquisitions and mergers.
Sec. 106. Prohibition on deposit production offices.
Sec. 107. Clarification of branch closure requirements.
Sec. 108. Amendments relating to limited purpose banks.
Sec. 109. GAO study of economic impact on community banks, other small 
                            financial institutions, insurance agents, 
                            and consumers.
Sec. 110. Responsiveness to community needs for financial services.
Sec. 110A. Study of financial modernization's affect on the 
                            accessibility of small business and farm 
                            loans.
  Subtitle B--Streamlining Supervision of Financial Holding Companies

Sec. 111. Streamlining financial holding company supervision.
Sec. 112. Elimination of application requirement for financial holding 
                            companies.
Sec. 113. Authority of State insurance regulator and Securities and 
                            Exchange Commission.
Sec. 114. Prudential safeguards.
Sec. 115. Examination of investment companies.
Sec. 116. Limitation on rulemaking, prudential, supervisory, and 
                            enforcement authority of the Board.
Sec. 117. Equivalent regulation and supervision.
Sec. 118. Prohibition on FDIC assistance to affiliates and 
                            subsidiaries.
Sec. 119. Repeal of savings bank provisions in the Bank Holding Company 
                            Act of 1956.
Sec. 120. Technical amendment.
               Subtitle C--Subsidiaries of National Banks

Sec. 121. Permissible activities for subsidiaries of national banks.
Sec. 122. Safety and soundness firewalls between banks and their 
                            financial subsidiaries.
Sec. 123. Misrepresentations regarding depository institution liability 
                            for obligations of affiliates.
Sec. 124. Repeal of stock loan limit in Federal Reserve Act.
Subtitle D--Wholesale Financial Holding Companies; Wholesale Financial 
                              Institutions

            Chapter 1--Wholesale Financial Holding Companies

Sec. 131. Wholesale financial holding companies established.
Sec. 132. Authorization to release reports.
Sec. 133. Conforming amendments.
              Chapter 2--Wholesale Financial Institutions

Sec. 136. Wholesale financial institutions.
               Subtitle E--Preservation of FTC Authority

Sec. 141. Amendment to the Bank Holding Company Act of 1956 to modify 
                            notification and post-approval waiting 
                            period for section 3 transactions.
Sec. 142. Interagency data sharing.
Sec. 143. Clarification of status of subsidiaries and affiliates.
Sec. 144. Annual GAO report.
                     Subtitle F--National Treatment

Sec. 151. Foreign banks that are financial holding companies.
Sec. 152. Foreign banks and foreign financial institutions that are 
                            wholesale financial institutions.
Sec. 153. Representative offices.
Sec. 154. Reciprocity.
        Subtitle G--Federal Home Loan Bank System Modernization

Sec. 161. Short title.
Sec. 162. Definitions.
Sec. 163. Savings association membership.
Sec. 164. Advances to members; collateral.
Sec. 165. Eligibility criteria.
Sec. 166. Management of banks.
Sec. 167. Resolution Funding Corporation.
Sec. 168. Capital structure of Federal home loan banks.
                       Subtitle H--ATM Fee Reform

Sec. 171. Short title.
Sec. 172. Electronic fund transfer fee disclosures at any host ATM.
Sec. 173. Disclosure of possible fees to consumers when ATM card is 
                            issued.
Sec. 174. Feasibility study.
Sec. 175. No liability if posted notices are damaged.
                 Subtitle I--Direct Activities of Banks

Sec. 181. Authority of national banks to underwrite certain municipal 
                            bonds.
                  Subtitle J--Deposit Insurance Funds

Sec. 186. Study of safety and soundness of funds.
Sec. 187. Elimination of SAIF and DIF special reserves.
                  Subtitle K--Miscellaneous Provisions

Sec. 191. Termination of ``know your customer'' regulations.
Sec. 192. Study and report on Federal electronic fund transfers.
Sec. 193. General Accounting Office study of conflicts of interest.
Sec. 194. Study of cost of all Federal banking regulations.
Sec. 195. Study and report on adapting existing legislative 
                            requirements to online banking and lending.
Sec. 196. Regulation of uninsured State member banks.
Sec. 197. Clarification of source of strength doctrine.
Sec. 198. Interest rates and other charges at interstate branches.
Sec. 198A. Interstate branches and agencies of foreign banks.
Sec. 198B. Fair treatment of women by financial advisers.
                  Subtitle L--Effective Date of Title

Sec. 199. Effective date.
                    TITLE II--FUNCTIONAL REGULATION

                    Subtitle A--Brokers and Dealers

Sec. 201. Definition of broker.
Sec. 202. Definition of dealer.
Sec. 203. Registration for sales of private securities offerings.
Sec. 204. Information sharing.
Sec. 205. Treatment of new hybrid products.
Sec. 206. Definition of excepted banking product.
Sec. 207. Additional definitions.
Sec. 208. Government securities defined.
Sec. 209. Effective date.
Sec. 210. Rule of construction.
             Subtitle B--Bank Investment Company Activities

Sec. 211. Custody of investment company assets by affiliated bank.
Sec. 212. Lending to an affiliated investment company.
Sec. 213. Independent directors.
Sec. 214. Additional SEC disclosure authority.
Sec. 215. Definition of broker under the Investment Company Act of 
                            1940.
Sec. 216. Definition of dealer under the Investment Company Act of 
                            1940.
Sec. 217. Removal of the exclusion from the definition of investment 
                            adviser for banks that advise investment 
                            companies.
Sec. 218. Definition of broker under the Investment Advisers Act of 
                            1940.
Sec. 219. Definition of dealer under the Investment Advisers Act of 
                            1940.
Sec. 220. Interagency consultation.
Sec. 221. Treatment of bank common trust funds.
Sec. 222. Investment advisers prohibited from having controlling 
                            interest in registered investment company.
Sec. 223. Statutory disqualification for bank wrongdoing.
Sec. 224. Conforming change in definition.
Sec. 225. Conforming amendment.
Sec. 226. Church plan exclusion.
Sec. 227. Effective date.
     Subtitle C--Securities and Exchange Commission Supervision of 
                   Investment Bank Holding Companies

Sec. 231. Supervision of investment bank holding companies by the 
                            Securities and Exchange Commission.
    Subtitle D--Disclosure of Customer Costs of Acquiring Financial 
                                Products

Sec. 241. Improved and consistent disclosure.
              Subtitle E--Banks and Bank Holding Companies

Sec. 251. Consultation.
                          TITLE III--INSURANCE

               Subtitle A--State Regulation of Insurance

Sec. 301. State regulation of the business of insurance.
Sec. 302. Mandatory insurance licensing requirements.
Sec. 303. Functional regulation of insurance.
Sec. 304. Insurance underwriting in national banks.
Sec. 305. Title insurance activities of national banks and their 
                            affiliates.
Sec. 306. Expedited and equalized dispute resolution for Federal 
                            regulators.
Sec. 307. Consumer protection regulations.
Sec. 308. Certain State affiliation laws preempted for insurance 
                            companies and affiliates.
Sec. 309. Interagency consultation.
Sec. 310. Definition of State.
             Subtitle B--Redomestication of Mutual Insurers

Sec. 311. General application.
Sec. 312. Redomestication of mutual insurers.
Sec. 313. Effect on State laws restricting redomestication.
Sec. 314. Other provisions.
Sec. 315. Definitions.
Sec. 316. Effective date.
   Subtitle C--National Association of Registered Agents and Brokers

Sec. 321. State flexibility in multistate licensing reforms.
Sec. 322. National Association of Registered Agents and Brokers.
Sec. 323. Purpose.
Sec. 324. Relationship to the Federal Government.
Sec. 325. Membership.
Sec. 326. Board of directors.
Sec. 327. Officers.
Sec. 328. Bylaws, rules, and disciplinary action.
Sec. 329. Assessments.
Sec. 330. Functions of the NAIC.
Sec. 331. Liability of the Association and the directors, officers, and 
                            employees of the Association.
Sec. 332. Elimination of NAIC oversight.
Sec. 333. Relationship to State law.
Sec. 334. Coordination with other regulators.
Sec. 335. Judicial review.
Sec. 336. Definitions.
           Subtitle D--Rental Car Agency Insurance Activities

Sec. 341. Standard of regulation for motor vehicle rentals.
                      Subtitle E--Confidentiality

Sec. 351. Confidentiality of health and medical information.
          TITLE IV--UNITARY SAVINGS AND LOAN HOLDING COMPANIES

Sec. 401. Prohibition on new unitary savings and loan holding 
                            companies.
Sec. 402. Retention of ``Federal'' in name of converted Federal savings 
                            association.
                            TITLE V--PRIVACY

        Subtitle A--Disclosure of Nonpublic Personal Information

Sec. 501. Protection of nonpublic personal information.
Sec. 502. Obligations with respect to disclosures of personal 
                            information.
Sec. 503. Disclosure of institution privacy policy.
Sec. 504. Rulemaking.
Sec. 505. Enforcement.
Sec. 506. Fair Credit Reporting Act amendment.
Sec. 507. Relation to other provisions.
Sec. 508. Study of information sharing among financial affiliates.
Sec. 509. Definitions.
Sec. 510. Effective date.
         Subtitle B--Fraudulent Access to Financial Information

Sec. 521. Privacy protection for customer information of financial 
                            institutions.
Sec. 522. Administrative enforcement.
Sec. 523. Criminal penalty.
Sec. 524. Relation to State laws.
Sec. 525. Agency guidance.
Sec. 526. Reports.
Sec. 527. Definitions.

  TITLE I--FACILITATING AFFILIATION AMONG SECURITIES FIRMS, INSURANCE 
                 COMPANIES, AND DEPOSITORY INSTITUTIONS

                        Subtitle A--Affiliations

SEC. 101. GLASS-STEAGALL ACT REFORMED.

    (a) Section 20 Repealed.--Section 20 of the Banking Act of 1933 (12 
U.S.C. 377) (commonly referred to as the ``Glass-Steagall Act'') is 
repealed.
    (b) Section 32 Repealed.--Section 32 of the Banking Act of 1933 (12 
U.S.C. 78) is repealed.

SEC. 102. ACTIVITY RESTRICTIONS APPLICABLE TO BANK HOLDING COMPANIES 
              WHICH ARE NOT FINANCIAL HOLDING COMPANIES.

    (a) In General.--Section 4(c)(8) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1843(c)(8)) is amended to read as follows:
            ``(8) shares of any company the activities of which had 
        been determined by the Board by regulation or order under this 
        paragraph as of the day before the date of the enactment of the 
        Financial Services Act of 1999, to be so closely related to 
        banking as to be a proper incident thereto (subject to such 
        terms and conditions contained in such regulation or order, 
        unless modified by the Board);''.
    (b) Conforming Changes to Other Statutes.--
            (1) Amendment to the bank holding company act amendments of 
        1970.--Section 105 of the Bank Holding Company Act Amendments 
        of 1970 (12 U.S.C. 1850) is amended by striking ``, to engage 
        directly or indirectly in a nonbanking activity pursuant to 
        section 4 of such Act,''.
            (2) Amendment to the bank service company act.--Section 
        4(f) of the Bank Service Company Act (12 U.S.C. 1864(f)) is 
        amended by striking the period and adding at the end the 
        following: ``as of the day before the date of the enactment of 
        the Financial Services Act of 1999.''.

SEC. 103. FINANCIAL HOLDING COMPANIES.

    (a) In General.--The Bank Holding Company Act of 1956 is amended by 
inserting after section 5 (12 U.S.C. 1844) the following new section:

``SEC. 6. FINANCIAL HOLDING COMPANIES.

    ``(a) Financial Holding Company Defined.--For purposes of this 
section, the term `financial holding company' means a bank holding 
company which meets the requirements of subsection (b).
    ``(b) Eligibility Requirements for Financial Holding Companies.--
            ``(1) In general.--No bank holding company may engage in 
        any activity or directly or indirectly acquire or retain shares 
        of any company under this section unless the bank holding 
        company meets the following requirements:
                    ``(A) All of the subsidiary depository institutions 
                of the bank holding company are well capitalized.
                    ``(B) All of the subsidiary depository institutions 
                of the bank holding company are well managed.
                    ``(C) All of the subsidiary depository institutions 
                of the bank holding company have achieved a rating of 
                `satisfactory record of meeting community credit 
                needs', or better, at the most recent examination of 
                each such institution.
                    ``(D) The company has filed with the Board a 
                declaration that the company elects to be a financial 
                holding company and certifying that the company meets 
                the requirements of subparagraphs (A), (B), and (C).
            ``(2) Foreign banks and companies.--For purposes of 
        paragraph (1), the Board shall establish and apply comparable 
        capital and other operating standards to a foreign bank that 
        operates a branch or agency or owns or controls a bank or 
        commercial lending company in the United States, and any 
        company that owns or controls such foreign bank, giving due 
        regard to the principle of national treatment and equality of 
        competitive opportunity.
            ``(3) Limited exclusions from community needs requirements 
        for newly acquired depository institutions.--Any depository 
        institution acquired by a bank holding company during the 12-
        month period preceding the submission of a notice under 
        paragraph (1)(D) and any depository institution acquired after 
        the submission of such notice may be excluded for purposes of 
        paragraph (1)(C) during the 12-month period beginning on the 
        date of such acquisition if--
                    ``(A) the bank holding company has submitted an 
                affirmative plan to the appropriate Federal banking 
                agency to take such action as may be necessary in order 
                for such institution to achieve a rating of 
                `satisfactory record of meeting community credit 
                needs', or better, at the next examination of the 
                institution; and
                    ``(B) the plan has been accepted by such agency.
    ``(c) Engaging in Activities That Are Financial in Nature.--
            ``(1) Financial activities.--
                    ``(A) In general.--Notwithstanding section 4(a), a 
                financial holding company may engage in any activity, 
                and acquire and retain the shares of any company 
                engaged in any activity, that the Board has determined 
                (by regulation or order and in accordance with 
                subparagraph (B)) to be--
                            ``(i) financial in nature or incidental to 
                        such financial activities; or
                            ``(ii) complementary to activities 
                        authorized under this subsection to the extent 
                        that the amount of such complementary 
                        activities remains small.
                    ``(B) Coordination between the board and the 
                secretary of the treasury.--
                            ``(i) Proposals raised before the board.--
                                    ``(I) Consultation.--The Board 
                                shall notify the Secretary of the 
                                Treasury of, and consult with the 
                                Secretary of the Treasury concerning, 
                                any request, proposal, or application 
                                under this subsection, including a 
                                regulation or order proposed under 
                                paragraph (4), for a determination of 
                                whether an activity is financial in 
                                nature or incidental to such a 
                                financial activity.
                                    ``(II) Treasury view.--The Board 
                                shall not determine that any activity 
                                is financial in nature or incidental to 
                                a financial activity under this 
                                subsection if the Secretary of the 
                                Treasury notifies the Board in writing, 
                                not later than 30 days after the date 
                                of receipt of the notice described in 
                                subclause (I) (or such longer period as 
                                the Board determines to be appropriate 
                                in light of the circumstances) that the 
                                Secretary of the Treasury believes that 
                                the activity is not financial in nature 
                                or incidental to a financial activity.
                            ``(ii) Proposals raised by the treasury.--
                                    ``(I) Treasury recommendation.--The 
                                Secretary of the Treasury may, at any 
                                time, recommend in writing that the 
                                Board find an activity to be financial 
                                in nature or incidental to a financial 
                                activity.
                                    ``(II) Time period for board 
                                action.--Not later than 30 days after 
                                the date of receipt of a written 
                                recommendation from the Secretary of 
                                the Treasury under subclause (I) (or 
                                such longer period as the Secretary of 
                                the Treasury and the Board determine to 
                                be appropriate in light of the 
                                circumstances), the Board shall 
                                determine whether to initiate a public 
                                rulemaking proposing that the subject 
                                recommended activity be found to be 
                                financial in nature or incidental to a 
                                financial activity under this 
                                subsection, and shall notify the 
                                Secretary of the Treasury in writing of 
                                the determination of the Board and, in 
                                the event that the Board determines not 
                                to seek public comment on the proposal, 
                                the reasons for that determination.
            ``(2) Factors to be considered.--In determining whether an 
        activity is financial in nature or incidental to financial 
        activities, the Board shall take into account--
                    ``(A) the purposes of this Act and the Financial 
                Services Act of 1999;
                    ``(B) changes or reasonably expected changes in the 
                marketplace in which bank holding companies compete;
                    ``(C) changes or reasonably expected changes in the 
                technology for delivering financial services; and
                    ``(D) whether such activity is necessary or 
                appropriate to allow a bank holding company and the 
                affiliates of a bank holding company to--
                            ``(i) compete effectively with any company 
                        seeking to provide financial services in the 
                        United States;
                            ``(ii) use any available or emerging 
                        technological means, including any application 
                        necessary to protect the security or efficacy 
                        of systems for the transmission of data or 
                        financial transactions, in providing financial 
                        services; and
                            ``(iii) offer customers any available or 
                        emerging technological means for using 
                        financial services.
            ``(3) Activities that are financial in nature.--The 
        following activities shall be considered to be financial in 
        nature:
                    ``(A) Lending, exchanging, transferring, investing 
                for others, or safeguarding money or securities.
                    ``(B) Insuring, guaranteeing, or indemnifying 
                against loss, harm, damage, illness, disability, or 
                death, or providing and issuing annuities, and acting 
                as principal, agent, or broker for purposes of the 
                foregoing.
                    ``(C) Providing financial, investment, or economic 
                advisory services, including advising an investment 
                company (as defined in section 3 of the Investment 
                Company Act of 1940).
                    ``(D) Issuing or selling instruments representing 
                interests in pools of assets permissible for a bank to 
                hold directly.
                    ``(E) Underwriting, dealing in, or making a market 
                in securities.
                    ``(F) Engaging in any activity that the Board has 
                determined, by order or regulation that is in effect on 
                the date of the enactment of the Financial Services Act 
                of 1999, to be so closely related to banking or 
                managing or controlling banks as to be a proper 
                incident thereto (subject to the same terms and 
                conditions contained in such order or regulation, 
                unless modified by the Board).
                    ``(G) Engaging, in the United States, in any 
                activity that--
                            ``(i) a bank holding company may engage in 
                        outside the United States; and
                            ``(ii) the Board has determined, under 
                        regulations issued pursuant to section 4(c)(13) 
                        of this Act (as in effect on the day before the 
                        date of the enactment of the Financial Services 
                        Act of 1999) to be usual in connection with the 
                        transaction of banking or other financial 
                        operations abroad.
                    ``(H) Directly or indirectly acquiring or 
                controlling, whether as principal, on behalf of one or 
                more entities (including entities, other than a 
                depository institution, that the bank holding company 
                controls) or otherwise, shares, assets, or ownership 
                interests (including without limitation debt or equity 
                securities, partnership interests, trust certificates 
                or other instruments representing ownership) of a 
                company or other entity, whether or not constituting 
                control of such company or entity, engaged in any 
                activity not authorized pursuant to this section if--
                            ``(i) the shares, assets, or ownership 
                        interests are not acquired or held by a 
                        depository institution;
                            ``(ii) such shares, assets, or ownership 
                        interests are acquired and held by an affiliate 
                        of the bank holding company that is a 
                        registered broker or dealer that is engaged in 
                        securities underwriting activities, or an 
                        affiliate of such broker or dealer, as part of 
                        a bona fide underwriting or investment banking 
                        activity, including investment activities 
                        engaged in for the purpose of appreciation and 
                        ultimate resale or disposition of the 
                        investment;
                            ``(iii) such shares, assets, or ownership 
                        interests are held only for such a period of 
                        time as will permit the sale or disposition 
                        thereof on a reasonable basis consistent with 
                        the nature of the activities described in 
                        clause (ii); and
                            ``(iv) during the period such shares, 
                        assets, or ownership interests are held, the 
                        bank holding company does not actively 
                        participate in the day to day management or 
                        operation of such company or entity, except 
                        insofar as necessary to achieve the objectives 
                        of clause (ii).
                    ``(I) Directly or indirectly acquiring or 
                controlling, whether as principal, on behalf of one or 
                more entities (including entities, other than a 
                depository institution or subsidiary of a depository 
                institution, that the bank holding company controls) or 
                otherwise, shares, assets, or ownership interests 
                (including without limitation debt or equity 
                securities, partnership interests, trust certificates 
                or other instruments representing ownership) of a 
                company or other entity, whether or not constituting 
                control of such company or entity, engaged in any 
                activity not authorized pursuant to this section if--
                            ``(i) the shares, assets, or ownership 
                        interests are not acquired or held by a 
                        depository institution or a subsidiary of a 
                        depository institution;
                            ``(ii) such shares, assets, or ownership 
                        interests are acquired and held by an insurance 
                        company that is predominantly engaged in 
                        underwriting life, accident and health, or 
                        property and casualty insurance (other than 
                        credit-related insurance) or providing and 
                        issuing annuities;
                            ``(iii) such shares, assets, or ownership 
                        interests represent an investment made in the 
                        ordinary course of business of such insurance 
                        company in accordance with relevant State law 
                        governing such investments; and
                            ``(iv) during the period such shares, 
                        assets, or ownership interests are held, the 
                        bank holding company does not directly or 
                        indirectly participate in the day-to-day 
                        management or operation of the company or 
                        entity except insofar as necessary to achieve 
                        the objectives of clauses (ii) and (iii).
            ``(4) Authorization of new financial activities.--The Board 
        shall, by regulation or order and in accordance with paragraph 
        (1)(B), define, consistent with the purposes of this Act, the 
        following activities as, and the extent to which such 
        activities are, financial in nature or incidental to activities 
        which are financial in nature:
                    ``(A) Lending, exchanging, transferring, investing 
                for others, or safeguarding financial assets other than 
                money or securities.
                    ``(B) Providing any device or other instrumentality 
                for transferring money or other financial assets.
                    ``(C) Arranging, effecting, or facilitating 
                financial transactions for the account of third 
                parties.
            ``(5) Post-consummation notification.--
                    ``(A) In general.--A financial holding company that 
                acquires any company, or commences any activity, 
                pursuant to this subsection shall provide written 
                notice to the Board describing the activity commenced 
                or conducted by the company acquired no later than 30 
                calendar days after commencing the activity or 
                consummating the acquisition.
                    ``(B) Approval not required for certain financial 
                activities.--Except as provided in section 4(j) with 
                regard to the acquisition of a savings association or 
                in paragraph (6) of this subsection, a financial 
                holding company may commence any activity, or acquire 
                any company, pursuant to paragraph (3) or any 
                regulation prescribed or order issued under paragraph 
                (4), without prior approval of the Board.
            ``(6) Notice required for large combinations.--
                    ``(A) In general.--No financial holding company 
                shall directly or indirectly acquire, and no company 
                that becomes a financial holding company shall directly 
                or indirectly acquire control of, any company in the 
                United States, including through merger, consolidation, 
                or other type of business combination, that--
                            ``(i) is engaged in activities permitted 
                        under this subsection or subsection (g); and
                            ``(ii) has consolidated total assets in 
                        excess of $40,000,000,000,
                unless such holding company has provided notice to the 
                Board, not later than 60 days prior to such proposed 
                acquisition or prior to becoming a financial holding 
                company, and during that time period, or such longer 
                time period not exceeding an additional 60 days, as 
                established by the Board, the Board has not issued a 
                notice disapproving the proposed acquisition or 
                retention.
                    ``(B) Factors for consideration.--In reviewing any 
                prior notice filed under this paragraph, the Board 
                shall take into consideration--
                            ``(i) whether the company is in compliance 
                        with all applicable criteria set forth in 
                        subsection (b) and the provisions of subsection 
                        (d);
                            ``(ii) whether the proposed combination 
                        represents an undue aggregation of resources;
                            ``(iii) whether the proposed combination 
                        poses a risk to the deposit insurance system;
                            ``(iv) whether the proposed combination 
                        poses a risk to State insurance guaranty funds;
                            ``(v) whether the proposed combination can 
                        reasonably be expected to be in the best 
                        interests of depositors or policyholders of the 
                        respective entities;
                            ``(vi) whether the proposed transaction can 
                        reasonably be expected to further the purposes 
                        of this Act and produce benefits to the public; 
                        and
                            ``(vii) whether, and the extent to which, 
                        the proposed combination poses an undue risk to 
                        the stability of the financial system in the 
                        United States.
                    ``(C) Required information.--The Board may 
                disapprove any prior notice filed under this paragraph 
                if the company submitting such notice neglects, fails, 
                or refuses to furnish to the Board all relevant 
                information required by the Board.
                    ``(D) Solicitation of views of other supervisory 
                agencies.--
                            ``(i) In general.--Upon receiving a prior 
                        notice under this paragraph, in order to 
                        provide for the submission of their views and 
                        recommendations, the Board shall give notice of 
                        the proposal to--
                                    ``(I) the appropriate Federal 
                                banking agency of any bank involved;
                                    ``(II) the appropriate functional 
                                regulator of any functionally regulated 
                                nondepository institution (as defined 
                                in section 5(c)(1)(C)) involved; and
                                    ``(III) the Secretary of the 
                                Treasury, the Attorney General, and the 
                                Federal Trade Commission.
                            ``(ii) Timing.--The views and 
                        recommendations of any agency provided notice 
                        under this paragraph shall be submitted to the 
                        Board not later than 30 calendar days after the 
                        date on which notice to the agency was given, 
                        unless the Board determines that another 
                        shorter time period is appropriate.
    ``(d) Provisions Applicable to Financial Holding Companies That 
Fail To Meet Requirements.--
            ``(1) In general.--If the Board finds, after notice from or 
        consultation with the appropriate Federal banking agency, that 
        a financial holding company is not in compliance with the 
        requirements of subparagraph (A), (B), or (C) of subsection 
        (b)(1), the Board shall give notice of such finding to the 
        company.
            ``(2) Agreement to correct conditions required.--Within 45 
        days of receipt by a financial holding company of a notice 
        given under paragraph (1) (or such additional period as the 
        Board may permit), the company shall execute an agreement 
        acceptable to the Board to comply with the requirements 
        applicable to a financial holding company.
            ``(3) Authority to impose limitations.--Until the 
        conditions described in a notice to a financial holding company 
        under paragraph (1) are corrected--
                    ``(A) the Board may impose such limitations on the 
                conduct or activities of the company or any affiliate 
                of the company as the Board determines to be 
                appropriate under the circumstances; and
                    ``(B) the appropriate Federal banking agency may 
                impose such limitations on the conduct or activities of 
                an affiliated depository institution or subsidiary of a 
                depository institution as the appropriate Federal 
                banking agency determines to be appropriate under the 
                circumstances.
            ``(4) Failure to correct.--If, after receiving a notice 
        under paragraph (1), a financial holding company does not--
                    ``(A) execute and implement an agreement in 
                accordance with paragraph (2);
                    ``(B) comply with any limitations imposed under 
                paragraph (3);
                    ``(C) in the case of a notice of failure to comply 
                with subsection (b)(1)(A), restore each depository 
                institution subsidiary to well capitalized status 
                before the end of the 180-day period beginning on the 
                date such notice is received by the company (or such 
                other period permitted by the Board); or
                    ``(D) in the case of a notice of failure to comply 
                with subparagraph (B) or (C) of subsection (b)(1), 
                restore compliance with any such subparagraph by the 
                date the next examination of the depository institution 
                subsidiary is completed or by the end of such other 
                period as the Board determines to be appropriate,
        the Board may require such company, under such terms and 
        conditions as may be imposed by the Board and subject to such 
        extension of time as may be granted in the Board's discretion, 
        to divest control of any depository institution subsidiary or, 
        at the election of the financial holding company, instead to 
        cease to engage in any activity conducted by such company or 
        its subsidiaries pursuant to this section.
            ``(5) Consultation.--In taking any action under this 
        subsection, the Board shall consult with all relevant Federal 
        and State regulatory agencies.
    ``(e) Safeguards for Bank Subsidiaries.--A financial holding 
company shall assure that--
            ``(1) the procedures of the holding company for identifying 
        and managing financial and operational risks within the 
        company, and the subsidiaries of such company, adequately 
        protect the subsidiaries of such company which are insured 
        depository institutions or wholesale financial institution from 
        such risks;
            ``(2) the holding company has reasonable policies and 
        procedures to preserve the separate corporate identity and 
        limited liability of such company and the subsidiaries of such 
        company, for the protection of the company's subsidiary insured 
        depository institutions and wholesale financial institutions; 
        and
            ``(3) the holding company complies with this section.
    ``(f) Authority To Retain Limited Nonfinancial Activities and 
Affiliations.--
            ``(1) In general.--Notwithstanding section 4(a), a company 
        that is not a bank holding company or a foreign bank (as 
        defined in section 1(b)(7) of the International Banking Act of 
        1978) and becomes a financial holding company after the date of 
        the enactment of the Financial Services Act of 1999 may 
        continue to engage in any activity and retain direct or 
        indirect ownership or control of shares of a company engaged in 
        any activity if--
                    ``(A) the holding company lawfully was engaged in 
                the activity or held the shares of such company on 
                September 30, 1997;
                    ``(B) the holding company is predominantly engaged 
                in financial activities as defined in paragraph (2); 
                and
                    ``(C) the company engaged in such activity 
                continues to engage only in the same activities that 
                such company conducted on September 30, 1997, and other 
                activities permissible under this Act.
            ``(2) Predominantly financial.--For purposes of this 
        subsection, a company is predominantly engaged in financial 
        activities if the annual gross revenues derived by the holding 
        company and all subsidiaries of the holding company (excluding 
        revenues derived from subsidiary depository institutions), on a 
        consolidated basis, from engaging in activities that are 
        financial in nature or are incidental to activities that are 
        financial in nature under subsection (c) represent at least 85 
        percent of the consolidated annual gross revenues of the 
        company.
            ``(3) No expansion of grandfathered commercial activities 
        through merger or consolidation.--A financial holding company 
        that engages in activities or holds shares pursuant to this 
        subsection, or a subsidiary of such financial holding company, 
        may not acquire, in any merger, consolidation, or other type of 
        business combination, assets of any other company which is 
        engaged in any activity which the Board has not determined to 
        be financial in nature or incidental to activities that are 
        financial in nature under subsection (c), except this paragraph 
        shall not apply with respect to a company that owns a 
        broadcasting station licensed under title III of the 
        Communications Act of 1934 and the shares of which have been 
        controlled by an insurance company since January 1, 1998.
            ``(4) Continuing revenue limitation on grandfathered 
        commercial activities.--Notwithstanding any other provision of 
        this subsection, a financial holding company may continue to 
        engage in activities or hold shares in companies pursuant to 
        this subsection only to the extent that the aggregate annual 
        gross revenues derived from all such activities and all such 
        companies does not exceed 15 percent of the consolidated annual 
        gross revenues of the financial holding company (excluding 
        revenues derived from subsidiary depository institutions).
            ``(5) Cross marketing restrictions applicable to commercial 
        activities.--A depository institution controlled by a financial 
        holding company shall not--
                    ``(A) offer or market, directly or through any 
                arrangement, any product or service of a company whose 
                activities are conducted or whose shares are owned or 
                controlled by the financial holding company pursuant to 
                this subsection or subparagraph (H) or (I) of 
                subsection (c)(3); or
                    ``(B) permit any of its products or services to be 
                offered or marketed, directly or through any 
                arrangement, by or through any company described in 
                subparagraph (A).
            ``(6) Transactions with nonfinancial affiliates.--A 
        depository institution controlled by a financial holding 
        company may not engage in a covered transaction (as defined by 
        section 23A(b)(7) of the Federal Reserve Act) with any 
        affiliate controlled by the company pursuant to section 10(c), 
        this subsection, or subparagraph (H) or (I) of subsection 
        (c)(3).
            ``(7) Sunset of grandfather.--A financial holding company 
        engaged in any activity, or retaining direct or indirect 
        ownership or control of shares of a company, pursuant to this 
        subsection, shall terminate such activity and divest ownership 
        or control of the shares of such company before the end of the 
        10-year period beginning on the date of the enactment of the 
        Financial Services Act of 1999. The Board may, upon application 
        by a financial holding company, extend such 10-year period by a 
        period not to exceed an additional 5 years if such extension 
        would not be detrimental to the public interest.
    ``(g) Developing Activities.--A financial holding company may 
engage directly or indirectly, or acquire shares of any company 
engaged, in any activity that the Board has not determined to be 
financial in nature or incidental to financial activities under 
subsection (c) if--
            ``(1) the holding company reasonably concludes that the 
        activity is financial in nature or incidental to financial 
        activities;
            ``(2) the gross revenues from all activities conducted 
        under this subsection represent less than 5 percent of the 
        consolidated gross revenues of the holding company;
            ``(3) the aggregate total assets of all companies the 
        shares of which are held under this subsection do not exceed 5 
        percent of the holding company's consolidated total assets;
            ``(4) the total capital invested in activities conducted 
        under this subsection represents less than 5 percent of the 
        consolidated total capital of the holding company;
            ``(5) neither the Board nor the Secretary of the Treasury 
        has determined that the activity is not financial in nature or 
        incidental to financial activities under subsection (c);
            ``(6) the holding company is not required to provide prior 
        written notice of the transaction to the Board under subsection 
        (c)(6); and
            ``(7) the holding company provides written notification to 
        the Board describing the activity commenced or conducted by the 
        company acquired no later than 10 business days after 
        commencing the activity or consummating the acquisition.''.
    (b) Factors For Consideration in Reviewing Application by Financial 
Holding Company to Acquire Bank.--Section 3(c) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1842(c)) is amended by adding at the end 
the following new paragraph:
            ``(6) `Too big to fail' factor.--In considering an 
        acquisition, merger, or consolidation under this section 
        involving a financial holding company or a company that would 
        be any such holding company upon the consummation of the 
        transaction, the Board shall consider whether, and the extent 
        to which, the proposed acquisition, merger, or consolidation 
        poses an undue risk to the stability of the financial system of 
        the United States.''.
    (c) Technical and Conforming Amendments.--
            (1) Section 2 of the Bank Holding Company Act of 1956 (12 
        U.S.C. 1841) is amended by adding at the end the following new 
        subsection:
    ``(p) Insurance Company.--For purposes of sections 5, 6, and 10, 
the term `insurance company' includes any person engaged in the 
business of insurance to the extent of such activities.''.
            (2) Section 4(j) of the Bank Holding Company Act of 1956 
        (12 U.S.C. 1843(j)) is amended--
                    (A) in paragraph (1)(A), by inserting ``or in any 
                complementary activity under section 6(c)(1)(B)'' after 
                ``subsection (c)(8) or (a)(2)''; and
                    (B) in paragraph (3)--
                            (i) by inserting ``, other than any 
                        complementary activity under section 
                        6(c)(1)(B),'' after ``to engage in any 
                        activity''; and
                            (ii) by inserting ``or a company engaged in 
                        any complementary activity under section 
                        6(c)(1)(B)'' after ``insured depository 
                        institution''.
    (d) Report.--
            (1) In general.--By the end of the 4-year period beginning 
        on the date of the enactment of this Act and every 4 years 
        thereafter, the Board of Governors of the Federal Reserve 
        System and the Secretary of the Treasury shall submit a joint 
        report to the Congress containing a summary of new activities 
        which are financial in nature, including grandfathered 
        commercial activities, in which any financial holding company 
        is engaged pursuant to subsection (c)(1) or (f) of section 6 of 
        the Bank Holding Company Act of 1956 (as added by subsection 
        (a)).
            (2) Other contents.--Each report submitted to the Congress 
        pursuant to paragraph (1) shall also contain the following:
                    (A) A discussion of actions by the Board of 
                Governors of the Federal Reserve System and the 
                Secretary of the Treasury, whether by regulation, 
                order, interpretation, or guideline or by approval or 
                disapproval of an application, with regard to 
                activities of financial holding companies which are 
                incidental to activities financial in nature or 
                complementary to such financial activities.
                    (B) An analysis and discussion of the risks posed 
                by commercial activities of financial holding companies 
                to the safety and soundness of affiliate depository 
                institutions.
                    (C) An analysis and discussion of the effect of 
                mergers and acquisitions under section 6 of the Bank 
                Holding Company Act of 1956 on market concentration in 
                the financial services industry.
                    (D) An analysis and discussion, by the Board and 
                the Secretary in consultation with the other Federal 
                banking agencies (as defined in section 3(z) of the 
                Federal Deposit Insurance Act), of the impact of the 
                implementation of this Act, and the amendments made by 
                this Act, on the extent of meeting community credit 
                needs and capital availability under the Community 
                Reinvestment Act of 1977.

SEC. 104. OPERATION OF STATE LAW.

    (a) Affiliations.--
            (1) In general.--Except as provided in paragraph (2), no 
        State may, by statute, regulation, order, interpretation, or 
        other action, prevent or restrict an insured depository 
        institution or wholesale financial institution, or a subsidiary 
        or affiliate thereof, from being affiliated directly or 
        indirectly or associated with any person or entity, as 
        authorized or permitted by this Act or any other provision of 
        Federal law.
            (2) Insurance.--With respect to affiliations between 
        insured depository institutions or wholesale financial 
        institutions, or any subsidiary or affiliate thereof, and 
        persons or entities engaged in the business of insurance, 
        paragraph (1) does not prohibit--
                    (A) any State from requiring any person or entity 
                that proposes to acquire control of an entity that is 
                engaged in the business of insurance and domiciled in 
                that State (hereafter in this subparagraph referred to 
                as the ``insurer'') to furnish to the insurance 
                regulatory authority of that State, not later than 60 
                days before the effective date of the proposed 
                acquisition--
                            (i) the name and address of each person by 
                        whom, or on whose behalf, the affiliation 
                        referred to in this subparagraph is to be 
                        effected (hereafter in this subparagraph 
                        referred to as the ``acquiring party'');
                            (ii) if the acquiring party is an 
                        individual, his or her principal occupation and 
                        all offices and positions held during the 5 
                        years preceding the date of notification, and 
                        any conviction of crimes other than minor 
                        traffic violations during the 10 years 
                        preceding the date of notification;
                            (iii) if the acquiring party is not an 
                        individual--
                                    (I) a report of the nature of its 
                                business operations during the 5 years 
                                preceding the date of notification, or 
                                for such shorter period as such person 
                                and any predecessors thereof shall have 
                                been in existence;
                                    (II) an informative description of 
                                the business intended to be done by the 
                                acquiring party and any subsidiary 
                                thereof; and
                                    (III) a list of all individuals who 
                                are, or who have been selected to 
                                become, directors or executive officers 
                                of the acquiring party or who perform, 
                                or will perform, functions appropriate 
                                to such positions, including, for each 
                                such individual, the information 
                                required by clause (ii);
                            (iv) the source, nature, and amount of the 
                        consideration used, or to be used, in effecting 
                        the merger or other acquisition of control, a 
                        description of any transaction wherein funds 
                        were, or are to be, obtained for any such 
                        purpose, and the identity of persons furnishing 
                        such consideration, except that, if a source of 
                        such consideration is a loan made in the 
                        lender's ordinary course of business, the 
                        identity of the lender shall remain 
                        confidential if the person filing such 
                        statement so requests;
                            (v) fully audited financial information as 
                        to the earnings and financial condition of each 
                        acquiring party for the 5 fiscal years 
                        preceding the date of notification of each such 
                        acquiring party, or for such lesser period as 
                        such acquiring party and any predecessors 
                        thereof shall have been in existence, and 
                        similar unaudited information as of a date not 
                        earlier than 90 days before the date of 
                        notification, except that, in the case of an 
                        acquiring party that is an insurer actively 
                        engaged in the business of insurance, the 
                        financial statements of such insurer need not 
                        be audited, but such audit may be required if 
                        the need therefor is determined by the 
                        insurance regulatory authority of the State;
                            (vi) any plans or proposals that each 
                        acquiring party may have to liquidate such 
                        insurer, to sell its assets, or to merge or 
                        consolidate it with any person or to make any 
                        other material change in its business or 
                        corporate structure or management;
                            (vii) the number of shares of any security 
                        of the insurer that each acquiring party 
                        proposes to acquire, the terms of any offer, 
                        request, invitation, agreement, or acquisition, 
                        and a statement as to the method by which the 
                        fairness of the proposal was arrived at;
                            (viii) the amount of each class of any 
                        security of the insurer that is beneficially 
                        owned or concerning which there is a right to 
                        acquire beneficial ownership by each acquiring 
                        party;
                            (ix) a full description of any contracts, 
                        arrangements, or understandings with respect to 
                        any security of the insurer in which any 
                        acquiring party is involved, including transfer 
                        of any of the securities, joint ventures, loan 
                        or option arrangements, puts or calls, 
                        guarantees of loans, guarantees against loss or 
                        guarantees of profits, division of losses or 
                        profits, or the giving or withholding of 
                        proxies, and identification of the persons with 
                        whom such contracts, arrangements, or 
                        understandings have been entered into;
                            (x) a description of the purchase of any 
                        security of the insurer during the 12-month 
                        period preceding the date of notification by 
                        any acquiring party, including the dates of 
                        purchase, names of the purchasers, and 
                        consideration paid, or agreed to be paid, 
                        therefor;
                            (xi) a description of any recommendations 
                        to purchase any security of the insurer made 
                        during the 12-month period preceding the date 
                        of notification by any acquiring party or by 
                        any person based upon interviews or at the 
                        suggestion of such acquiring party;
                            (xii) copies of all tender offers for, 
                        requests or invitations for tenders of, 
                        exchange offers for and agreements to acquire 
                        or exchange any securities of the insurer and, 
                        if distributed, of additional soliciting 
                        material relating thereto; and
                            (xiii) the terms of any agreement, 
                        contract, or understanding made with any 
                        broker-dealer as to solicitation of securities 
                        of the insurer for tender and the amount of any 
                        fees, commissions, or other compensation to be 
                        paid to broker-dealers with regard thereto;
                    (B) in the case of a person engaged in the business 
                of insurance which is the subject of an acquisition or 
                change or continuation in control, the State of 
                domicile of such person from reviewing or taking action 
                (including approval or disapproval) with regard to the 
                acquisition or change or continuation in control, as 
                long as the State reviews and actions--
                            (i) are completed by the end of the 60-day 
                        period beginning on the later of the date the 
                        State received notice of the proposed action or 
                        the date the State received the information 
                        required under State law regarding such 
                        acquisition or change or continuation in 
                        control;
                            (ii) do not have the effect of 
                        discriminating, intentionally or 
                        unintentionally, against an insured depository 
                        institution or affiliate thereof or against any 
                        other person based upon affiliation with an 
                        insured depository institution; and
                            (iii) are based on standards or 
                        requirements relating to solvency or managerial 
                        fitness;
                    (C) any State from requiring an entity that is 
                acquiring control of an entity that is engaged in the 
                business of insurance and domiciled in that State to 
                maintain or restore the capital requirements of that 
                insurance entity to the level required under the 
                capital regulations of general applicability in that 
                State to avoid the requirement of preparing and filing 
                with the insurance regulatory authority of that State a 
                plan to increase the capital of the entity, except that 
                any determination by the State insurance regulatory 
                authority with respect to such requirement shall be 
                made not later than 60 days after the date of 
                notification under subparagraph (A);
                    (D) any State from taking actions with respect to 
                the receivership or conservatorship of any insurance 
                company;
                    (E) any State from restricting a change in the 
                ownership of stock in an insurance company, or a 
                company formed for the purpose of controlling such 
                insurance company, for a period of not more than 3 
                years beginning on the date of the conversion of such 
                company from mutual to stock form; or
                    (F) any State from requiring an organization which 
                has been eligible at any time since January 1, 1987, to 
                claim the special deduction provided by section 833 of 
                the Internal Revenue Code of 1986 to meet certain 
                conditions in order to undergo, as determined by the 
                State, a reorganization, recapitalization, conversion, 
                merger, consolidation, sale or other disposition of 
                substantial operating assets, demutualization, 
                dissolution, or to undertake other similar actions and 
                which is governed under a State statute enacted on May 
                22, 1998, relating to hospital, medical, and dental 
                service corporation conversions.
            (3) Preservation of state antitrust and general corporate 
        laws.--
                    (A) In general.--Subject to subsection (c) and the 
                nondiscrimination provisions contained in such 
                subsection, no provision in paragraph (1) shall be 
                construed as affecting State laws, regulations, orders, 
                interpretations, or other actions of general 
                applicability relating to the governance of 
                corporations, partnerships, limited liability companies 
                or other business associations incorporated or formed 
                under the laws of that State or domiciled in that 
                State, or the applicability of the antitrust laws of 
                any State or any State law that is similar to the 
                antitrust laws.
                    (B) Definition.--The term ``antitrust laws'' has 
                the same meaning as in subsection (a) of the first 
                section of the Clayton Act, and includes section 5 of 
                the Federal Trade Commission Act to the extent that 
                such section 5 relates to unfair methods of 
                competition.
    (b) Activities.--
            (1) In general.--Except as provided in paragraph (3), and 
        except with respect to insurance sales, solicitation, and cross 
        marketing activities, which shall be governed by paragraph (2), 
        no State may, by statute, regulation, order, interpretation, or 
        other action, prevent or restrict an insured depository 
        institution, wholesale financial institution, or subsidiary or 
        affiliate thereof from engaging directly or indirectly, either 
        by itself or in conjunction with a subsidiary, affiliate, or 
        any other entity or person, in any activity authorized or 
        permitted under this Act.
            (2) Insurance sales.--
                    (A) In general.--In accordance with the legal 
                standards for preemption set forth in the decision of 
                the Supreme Court of the United States in Barnett Bank 
                of Marion County N.A. v. Nelson, 517 U.S. 25 (1996), no 
                State may, by statute, regulation, order, 
                interpretation, or other action, prevent or 
                significantly interfere with the ability of an insured 
                depository institution or wholesale financial 
                institution, or a subsidiary or affiliate thereof, to 
                engage, directly or indirectly, either by itself or in 
                conjunction with a subsidiary, affiliate, or any other 
                party, in any insurance sales, solicitation, or cross-
                marketing activity.
                    (B) Certain state laws preserved.--Notwithstanding 
                subparagraph (A), a State may impose any of the 
                following restrictions, or restrictions which are 
                substantially the same as but no more burdensome or 
                restrictive than those in each of the following 
                clauses:
                            (i) Restrictions prohibiting the rejection 
                        of an insurance policy by an insured depository 
                        institution, wholesale financial institution, 
                        or any subsidiary or affiliate thereof, solely 
                        because the policy has been issued or 
                        underwritten by any person who is not 
                        associated with such insured depository 
                        institution or wholesale financial institution, 
                        or any subsidiary or affiliate thereof, when 
                        such insurance is required in connection with a 
                        loan or extension of credit.
                            (ii) Restrictions prohibiting a requirement 
                        for any debtor, insurer, or insurance agent or 
                        broker to pay a separate charge in connection 
                        with the handling of insurance that is required 
                        in connection with a loan or other extension of 
                        credit or the provision of another traditional 
                        banking product by an insured depository 
                        institution, wholesale financial institution, 
                        or any subsidiary or affiliate thereof, unless 
                        such charge would be required when the insured 
                        depository institution or wholesale financial 
                        institution, or any subsidiary or affiliate 
                        thereof, is the licensed insurance agent or 
                        broker providing the insurance.
                            (iii) Restrictions prohibiting the use of 
                        any advertisement or other insurance 
                        promotional material by an insured depository 
                        institution or wholesale financial institution, 
                        or any subsidiary or affiliate thereof, that 
                        would cause a reasonable person to believe 
                        mistakenly that--
                                    (I) a State or the Federal 
                                Government is responsible for the 
                                insurance sales activities of, or 
                                stands behind the credit of, the 
                                institution, affiliate, or subsidiary; 
                                or
                                    (II) a State, or the Federal 
                                Government guarantees any returns on 
                                insurance products, or is a source of 
                                payment on any insurance obligation of 
                                or sold by the institution, affiliate, 
                                or subsidiary;
                            (iv) Restrictions prohibiting the payment 
                        or receipt of any commission or brokerage fee 
                        or other valuable consideration for services as 
                        an insurance agent or broker to or by any 
                        person, unless such person holds a valid State 
                        license regarding the applicable class of 
                        insurance at the time at which the services are 
                        performed, except that, in this clause, the 
                        term ``services as an insurance agent or 
                        broker'' does not include a referral by an 
                        unlicensed person of a customer or potential 
                        customer to a licensed insurance agent or 
                        broker that does not include a discussion of 
                        specific insurance policy terms and conditions.
                            (v) Restrictions prohibiting any 
                        compensation paid to or received by any 
                        individual who is not licensed to sell 
                        insurance, for the referral of a customer that 
                        seeks to purchase, or seeks an opinion or 
                        advice on, any insurance product to a person 
                        that sells or provides opinions or advice on 
                        such product, based on the purchase of 
                        insurance by the customer.
                            (vi) Restrictions prohibiting the release 
                        of the insurance information of a customer 
                        (defined as information concerning the 
                        premiums, terms, and conditions of insurance 
                        coverage, including expiration dates and rates, 
                        and insurance claims of a customer contained in 
                        the records of the insured depository 
                        institution or wholesale financial institution, 
                        or a subsidiary or affiliate thereof) to any 
                        person or entity other than an officer, 
                        director, employee, agent, subsidiary, or 
                        affiliate of an insured depository institution 
                        or a wholesale financial institution, for the 
                        purpose of soliciting or selling insurance, 
                        without the express consent of the customer, 
                        other than a provision that prohibits--
                                    (I) a transfer of insurance 
                                information to an unaffiliated 
                                insurance company, agent, or broker in 
                                connection with transferring insurance 
                                in force on existing insureds of the 
                                insured depository institution or 
                                wholesale financial institution, or 
                                subsidiary or affiliate thereof, or in 
                                connection with a merger with or 
                                acquisition of an unaffiliated 
                                insurance company, agent, or broker; or
                                    (II) the release of information as 
                                otherwise authorized by State or 
                                Federal law.
                            (vii) Restrictions prohibiting the use of 
                        health information obtained from the insurance 
                        records of a customer for any purpose, other 
                        than for its activities as a licensed agent or 
                        broker, without the express consent of the 
                        customer.
                            (viii) Restrictions prohibiting the 
                        extension of credit or any product or service 
                        that is equivalent to an extension of credit, 
                        lease or sale of property of any kind, or 
                        furnishing of any services or fixing or varying 
                        the consideration for any of the foregoing, on 
                        the condition or requirement that the customer 
                        obtain insurance from an insured depository 
                        institution, wholesale financial institution, a 
                        subsidiary or affiliate thereof, or a 
                        particular insurer, agent, or broker, other 
                        than a prohibition that would prevent any 
                        insured depository institution or wholesale 
                        financial institution, or any subsidiary or 
                        affiliate thereof--
                                    (I) from engaging in any activity 
                                described in this clause that would not 
                                violate section 106 of the Bank Holding 
                                Company Act Amendments of 1970, as 
                                interpreted by the Board of Governors 
                                of the Federal Reserve System; or
                                    (II) from informing a customer or 
                                prospective customer that insurance is 
                                required in order to obtain a loan or 
                                credit, that loan or credit approval is 
                                contingent upon the procurement by the 
                                customer of acceptable insurance, or 
                                that insurance is available from the 
                                insured depository institution or 
                                wholesale financial institution, or any 
                                subsidiary or affiliate thereof.
                            (ix) Restrictions requiring, when an 
                        application by a consumer for a loan or other 
                        extension of credit from an insured depository 
                        institution or wholesale financial institution 
                        is pending, and insurance is offered or sold to 
                        the consumer or is required in connection with 
                        the loan or extension of credit by the insured 
                        depository institution or wholesale financial 
                        institution or any affiliate or subsidiary 
                        thereof, that a written disclosure be provided 
                        to the consumer or prospective customer 
                        indicating that his or her choice of an 
                        insurance provider will not affect the credit 
                        decision or credit terms in any way, except 
                        that the insured depository institution or 
                        wholesale financial institution may impose 
                        reasonable requirements concerning the 
                        creditworthiness of the insurance provider and 
                        scope of coverage chosen.
                            (x) Restrictions requiring clear and 
                        conspicuous disclosure, in writing, where 
                        practicable, to the customer prior to the sale 
                        of any insurance policy that such policy--
                                    (I) is not a deposit;
                                    (II) is not insured by the Federal 
                                Deposit Insurance Corporation;
                                    (III) is not guaranteed by the 
                                insured depository institution or 
                                wholesale financial institution or, if 
                                appropriate, its subsidiaries or 
                                affiliates or any person soliciting the 
                                purchase of or selling insurance on the 
                                premises thereof; and
                                    (IV) where appropriate, involves 
                                investment risk, including potential 
                                loss of principal.
                            (xi) Restrictions requiring that, when a 
                        customer obtains insurance (other than credit 
                        insurance or flood insurance) and credit from 
                        an insured depository institution or wholesale 
                        financial institution, or its subsidiaries or 
                        affiliates, or any person soliciting the 
                        purchase of or selling insurance on the 
                        premises thereof, the credit and insurance 
                        transactions be completed through separate 
                        documents.
                            (xii) Restrictions prohibiting, when a 
                        customer obtains insurance (other than credit 
                        insurance or flood insurance) and credit from 
                        an insured depository institution or wholesale 
                        financial institution or its subsidiaries or 
                        affiliates, or any person soliciting the 
                        purchase of or selling insurance on the 
                        premises thereof, inclusion of the expense of 
                        insurance premiums in the primary credit 
                        transaction without the express written consent 
                        of the customer.
                            (xiii) Restrictions requiring maintenance 
                        of separate and distinct books and records 
                        relating to insurance transactions, including 
                        all files relating to and reflecting consumer 
                        complaints, and requiring that such insurance 
                        books and records be made available to the 
                        appropriate State insurance regulator for 
                        inspection upon reasonable notice.
                    (C) Limitations.--
                            (i) OCC deference.--Section 306(e) does not 
                        apply with respect to any State statute, 
                        regulation, order, interpretation, or other 
                        action regarding insurance sales, solicitation, 
                        or cross marketing activities described in 
                        subparagraph (A) that was issued, adopted, or 
                        enacted before September 3, 1998, and that is 
                        not described in subparagraph (B).
                            (ii) Nondiscrimination.--Subsection (c) 
                        does not apply with respect to any State 
                        statute, regulation, order, interpretation, or 
                        other action regarding insurance sales, 
                        solicitation, or cross marketing activities 
                        described in subparagraph (A) that was issued, 
                        adopted, or enacted before September 3, 1998, 
                        and that is not described in subparagraph (B).
                            (iii) Construction.--Nothing in this 
                        paragraph shall be construed to limit the 
                        applicability of the decision of the Supreme 
                        Court in Barnett Bank of Marion County N.A. v. 
                        Nelson, 116 S. Ct. 1103 (1996) with respect to 
                        a State statute, regulation, order, 
                        interpretation, or other action that is not 
                        described in subparagraph (B).
                            (iv) Limitation on inferences.--Nothing in 
                        this paragraph shall be construed to create any 
                        inference with respect to any State statute, 
                        regulation, order, interpretation, or other 
                        action that is not referred to or described in 
                        this paragraph.
            (3) Insurance activities other than sales.--State statutes, 
        regulations, interpretations, orders, and other actions shall 
        not be preempted under subsection (b)(1) to the extent that 
        they--
                    (A) relate to, or are issued, adopted, or enacted 
                for the purpose of regulating the business of insurance 
                in accordance with the Act of March 9, 1945 (commonly 
                known as the ``McCarran-Ferguson Act'');
                    (B) apply only to persons or entities that are not 
                insured depository institutions or wholesale financial 
                institutions, but that are directly engaged in the 
                business of insurance (except that they may apply to 
                depository institutions engaged in providing savings 
                bank life insurance as principal to the extent of 
                regulating such insurance);
                    (C) do not relate to or directly or indirectly 
                regulate insurance sales, solicitations, or cross-
                marketing activities; and
                    (D) are not prohibited under subsection (c).
            (4) Financial activities other than insurance.--No State 
        statute, regulation, interpretation, order, or other action 
        shall be preempted under subsection (b)(1) to the extent that--
                    (A) it does not relate to, and is not issued and 
                adopted, or enacted for the purpose of regulating, 
                directly or indirectly, insurance sales, solicitations, 
                or cross marketing activities covered under paragraph 
                (2);
                    (B) it does not relate to, and is not issued and 
                adopted, or enacted for the purpose of regulating, 
                directly or indirectly, the business of insurance 
                activities other than sales, solicitations, or cross 
                marketing activities, covered under paragraph (3);
                    (C) it does not relate to securities investigations 
                or enforcement actions referred to in subsection (d); 
                and
                    (D) it--
                            (i) does not distinguish by its terms 
                        between insured depository institutions, 
                        wholesale financial institutions, and 
                        subsidiaries and affiliates thereof engaged in 
                        the activity at issue and other persons or 
                        entities engaged in the same activity in a 
                        manner that is in any way adverse with respect 
                        to the conduct of the activity by any such 
                        insured depository institution, wholesale 
                        financial institution, or subsidiary or 
                        affiliate thereof engaged in the activity at 
                        issue;
                            (ii) as interpreted or applied, does not 
                        have, and will not have, an impact on 
                        depository institutions, wholesale financial 
                        institutions, or subsidiaries or affiliates 
                        thereof engaged in the activity at issue, or 
                        any person or entity affiliated therewith, that 
                        is substantially more adverse than its impact 
                        on other persons or entities engaged in the 
                        same activity that are not insured depository 
                        institutions, wholesale financial institutions, 
                        or subsidiaries or affiliates thereof, or 
                        persons or entities affiliated therewith;
                            (iii) does not effectively prevent a 
                        depository institution, wholesale financial 
                        institution, or subsidiary or affiliate thereof 
                        from engaging in activities authorized or 
                        permitted by this Act or any other provision of 
                        Federal law; and
                            (iv) does not conflict with the intent of 
                        this Act generally to permit affiliations that 
                        are authorized or permitted by Federal law.
    (c) Nondiscrimination.--Except as provided in any restrictions 
described in subsection (b)(2)(B), no State may, by statute, 
regulation, order, interpretation, or other action, regulate the 
insurance activities authorized or permitted under this Act or any 
other provision of Federal law of an insured depository institution or 
wholesale financial institution, or subsidiary or affiliate thereof, to 
the extent that such statute, regulation, order, interpretation, or 
other action--
            (1) distinguishes by its terms between insured depository 
        institutions or wholesale financial institutions, or 
        subsidiaries or affiliates thereof, and other persons or 
        entities engaged in such activities, in a manner that is in any 
        way adverse to any such insured depository institution or 
        wholesale financial institution, or subsidiary or affiliate 
        thereof;
            (2) as interpreted or applied, has or will have an impact 
        on depository institutions or wholesale financial institutions, 
        or subsidiaries or affiliates thereof, that is substantially 
        more adverse than its impact on other persons or entities 
        providing the same products or services or engaged in the same 
        activities that are not insured depository institutions, 
        wholesale financial institutions, or subsidiaries or affiliates 
        thereof, or persons or entities affiliated therewith;
            (3) effectively prevents a depository institution or 
        wholesale financial institution, or subsidiary or affiliate 
        thereof, from engaging in insurance activities authorized or 
        permitted by this Act or any other provision of Federal law; or
            (4) conflicts with the intent of this Act generally to 
        permit affiliations that are authorized or permitted by Federal 
        law between insured depository institutions or wholesale 
        financial institutions, or subsidiaries or affiliates thereof, 
        and persons and entities engaged in the business of insurance.
    (d) Limitation.--Subsections (a) and (b) shall not be construed to 
affect the jurisdiction of the securities commission (or any agency or 
office performing like functions) of any State, under the laws of such 
State--
            (1) to investigate and bring enforcement actions, 
        consistent with section 18(c) of the Securities Act of 1933, 
        with respect to fraud or deceit or unlawful conduct by any 
        person, in connection with securities or securities 
        transactions; or
            (2) to require the registration of securities or the 
        licensure or registration of brokers, dealers, or investment 
        advisers (consistent with section 203A of the Investment 
        Advisers Act of 1940), or the associated persons of a broker, 
        dealer, or investment adviser (consistent with such section 
        203A).
    (e) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Insured depository institution.--The term ``insured 
        depository institution'' includes any foreign bank that 
        maintains a branch, agency, or commercial lending company in 
        the United States.
            (2) State.--The term ``State'' means 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, and the 
        Northern Mariana Islands.

SEC. 105. MUTUAL BANK HOLDING COMPANIES AUTHORIZED.

    Section 3(g)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1842(g)(2)) is amended to read as follows:
            ``(2) Regulations.--A bank holding company organized as a 
        mutual holding company shall be regulated on terms, and shall 
        be subject to limitations, comparable to those applicable to 
        any other bank holding company.''.

SEC. 105A. PUBLIC MEETINGS FOR LARGE BANK ACQUISITIONS AND MERGERS.

    (a) Bank Holding Company Act of 1956.--Section 3(c)(2) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1842(c)(2)) is amended--
            (1) by striking ``factors.--In every case'' and inserting 
        ``factors.--
                    ``(A) In general.--In every case''; and
            (2) by adding at the end the following new subparagraph:
                    ``(B) Public meetings.--In each case involving one 
                or more insured depository institutions each of which 
                has total assets of $1,000,000,000 or more, the Board 
                shall, as necessary and on a timely basis, conduct 
                public meetings in one or more areas where the Board 
                believes, in the sole discretion of the Board, there 
                will be a substantial public impact.''.
    (b) Federal Deposit Insurance Act.--Section 18(c) of the Federal 
Deposit Insurance Act (12 U.S.C. 1828(c)) is amended by adding at the 
end the following new paragraph:
    ``(12) Public Meetings.--In each merger transaction involving one 
or more insured depository institutions each of which has total assets 
of $1,000,000,000 or more, the responsible agency shall, as necessary 
and on a timely basis, conduct public meetings in one or more areas 
where the agency believes, in the sole discretion of the agency, there 
will be a substantial public impact.''.
    (c) National Bank Consolidation and Merger Act.--The National Bank 
Consolidation and Merger Act (12 U.S.C. 215 et seq.) is amended by 
adding at the end the following new section:

``SEC. 6. PUBLIC MEETINGS FOR LARGE BANK CONSOLIDATIONS AND MERGERS.

    ``In each case of a consolidation or merger under this Act 
involving one or more banks each of which has total assets of 
$1,000,000,000 or more, the Comptroller shall, as necessary and on a 
timely basis, conduct public meetings in one or more areas where the 
Comptroller believes, in the sole discretion of the Comptroller, there 
will be a substantial public impact.''.
    (d) Home Owners' Loan Act.--Section 10(e) of the Home Owners' Loan 
Act (12 U.S.C. 1463) is amended by adding at the end the following new 
paragraph:
            ``(7) Public meetings for large depository institution 
        acquisitions and mergers.--In each case involving one or more 
        insured depository institutions each of which has total assets 
        of $1,000,000,000 or more, the Director shall, as necessary and 
        on a timely basis, conduct public meetings in one or more areas 
        where the Director believes, in the sole discretion of the 
        Director, there will be a substantial public impact.''.

SEC. 106. PROHIBITION ON DEPOSIT PRODUCTION OFFICES.

    (a) In General.--Section 109(d) of the Riegle-Neal Interstate 
Banking and Branching Efficiency Act of 1994 (12 U.S.C. 1835a(d)) is 
amended--
            (1) by inserting ``, the Financial Services Act of 1999,'' 
        after ``pursuant to this title''; and
            (2) by inserting ``or such Act'' after ``made by this 
        title''.
    (b) Technical and Conforming Amendment.--Section 109(e)(4) of the 
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (12 
U.S.C. 1835a(e)(4)) is amended by inserting ``and any branch of a bank 
controlled by an out-of-State bank holding company (as defined in 
section 2(o)(7) of the Bank Holding Company Act of 1956)'' before the 
period.

SEC. 107. CLARIFICATION OF BRANCH CLOSURE REQUIREMENTS.

    Section 42(d)(4)(A) of the Federal Deposit Insurance Act (12 U.S.C. 
1831r-1(d)(4)(A)) is amended by inserting ``and any bank controlled by 
an out-of-State bank holding company (as defined in section 2(o)(7) of 
the Bank Holding Company Act of 1956)'' before the period.

SEC. 108. AMENDMENTS RELATING TO LIMITED PURPOSE BANKS.

    (a) In General.--Section 4(f) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1843(f)) is amended--
            (1) in paragraph (2)(A)(ii)--
                    (A) by striking ``and'' at the end of subclause 
                (IX);
                    (B) by inserting ``and'' after the semicolon at the 
                end of subclause (X); and
                    (C) by inserting after subclause (X) the following 
                new subclause:
                                    ``(XI) assets that are derived 
                                from, or are incidental to, consumer 
                                lending activities in which 
                                institutions described in subparagraph 
                                (F) or (H) of section 2(c)(2) are 
                                permitted to engage,'';
            (2) in paragraph (2), by striking subparagraph (B) and 
        inserting the following new subparagraphs:
                    ``(B) any bank subsidiary of such company engages 
                in any activity in which the bank was not lawfully 
                engaged as of March 5, 1987, unless the bank is well 
                managed and well capitalized;
                    ``(C) any bank subsidiary of such company both--
                            ``(i) accepts demand deposits or deposits 
                        that the depositor may withdraw by check or 
                        similar means for payment to third parties; and
                            ``(ii) engages in the business of making 
                        commercial loans (and, for purposes of this 
                        clause, loans made in the ordinary course of a 
                        credit card operation shall not be treated as 
                        commercial loans); or
                    ``(D) after the date of the enactment of the 
                Competitive Equality Amendments of 1987, any bank 
                subsidiary of such company permits any overdraft 
                (including any intraday overdraft), or incurs any such 
                overdraft in such bank's account at a Federal Reserve 
                bank, on behalf of an affiliate, other than an 
                overdraft described in paragraph (3).''; and
            (3) by striking paragraphs (3) and (4) and inserting the 
        following new paragraphs:
            ``(3) Permissible overdrafts described.--For purposes of 
        paragraph (2)(D), an overdraft is described in this paragraph 
        if--
                    ``(A) such overdraft results from an inadvertent 
                computer or accounting error that is beyond the control 
                of both the bank and the affiliate;
                    ``(B) such overdraft--
                            ``(i) is permitted or incurred on behalf of 
                        an affiliate which is monitored by, reports to, 
                        and is recognized as a primary dealer by the 
                        Federal Reserve Bank of New York; and
                            ``(ii) is fully secured, as required by the 
                        Board, by bonds, notes, or other obligations 
                        which are direct obligations of the United 
                        States or on which the principal and interest 
                        are fully guaranteed by the United States or by 
                        securities and obligations eligible for 
                        settlement on the Federal Reserve book entry 
                        system; or
                    ``(C) such overdraft--
                            ``(i) is incurred on behalf of an affiliate 
                        solely in connection with an activity that is 
                        so closely related to banking, or managing or 
                        controlling banks, as to be a proper incident 
                        thereto, to the extent the bank incurring the 
                        overdraft and the affiliate on whose behalf the 
                        overdraft is incurred each document that the 
                        overdraft is incurred for such purpose; and
                            ``(ii) does not cause the bank to violate 
                        any provision of section 23A or 23B of the 
                        Federal Reserve Act, either directly, in the 
                        case of a member bank, or by virtue of section 
                        18(j) of the Federal Deposit Insurance Act, in 
                        the case of a nonmember bank.
            ``(4) Divestiture in case of loss of exemption.--If any 
        company described in paragraph (1) fails to qualify for the 
        exemption provided under such paragraph by operation of 
        paragraph (2), such exemption shall cease to apply to such 
        company and such company shall divest control of each bank it 
        controls before the end of the 180-day period beginning on the 
        date that the company receives notice from the Board that the 
        company has failed to continue to qualify for such exemption, 
        unless before the end of such 180-day period, the company has--
                    ``(A) corrected the condition or ceased the 
                activity that caused the company to fail to continue to 
                qualify for the exemption; and
                    ``(B) implemented procedures that are reasonably 
                adapted to avoid the reoccurrence of such condition or 
                activity.
        The issuance of any notice under this paragraph that relates to 
        the activities of a bank shall not be construed as affecting 
        the authority of the bank to continue to engage in such 
        activities until the expiration of such 180-day period.''.
    (b) Industrial Loan Companies Affiliate Overdrafts.--Section 
2(c)(2)(H) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1841(c)(2)(H)) is amended by inserting before the period at the end ``, 
or that is otherwise permissible for a bank controlled by a company 
described in section 4(f)(1)''.

SEC. 109. GAO STUDY OF ECONOMIC IMPACT ON COMMUNITY BANKS, OTHER SMALL 
              FINANCIAL INSTITUTIONS, INSURANCE AGENTS, AND CONSUMERS.

    (a) Study Required.--The Comptroller General of the United States 
shall conduct a study of the projected economic impact and the actual 
economic impact that the enactment of this Act will have on financial 
institutions, including community banks, registered brokers and dealers 
and insurance companies, which have total assets of $100,000,000 or 
less, insurance agents, and consumers.
    (b) Reports to the Congress.--
            (1) In general.--The Comptroller General of the United 
        States shall submit reports to the Congress, at the times 
        required under paragraph (2), containing the findings and 
        conclusions of the Comptroller General with regard to the study 
        required under subsection (a) and such recommendations for 
        legislative or administrative action as the Comptroller General 
        may determine to be appropriate.
            (2) Timing of reports.--The Comptroller General shall 
        submit--
                    (A) an interim report before the end of the 6-month 
                period beginning after the date of the enactment of 
                this Act;
                    (B) another interim report before the end of the 
                next 6-month period; and
                    (C) a final report before the end of the 1-year 
                period after such second 6-month period,''.

SEC. 110. RESPONSIVENESS TO COMMUNITY NEEDS FOR FINANCIAL SERVICES.

    (a) Study.--The Secretary of the Treasury, in consultation with the 
Federal banking agencies (as defined in section 3(z) of the Federal 
Deposit Insurance Act), shall conduct a study of the extent to which 
adequate services are being provided as intended by the Community 
Reinvestment Act of 1977, including services in low- and moderate-
income neighborhoods and for persons of modest means, as a result of 
the enactment of this Act.
    (b) Report.--Before the end of the 2-year period beginning on the 
date of the enactment of this Act, the Secretary of the Treasury, in 
consultation with the Federal banking agencies, shall submit a report 
to the Congress on the study conducted pursuant to subsection (a) and 
shall include such recommendations as the Secretary determines to be 
appropriate for administrative and legislative action with respect to 
institutions covered under the Community Reinvestment Act of 1977.

SEC. 110A. STUDY OF FINANCIAL MODERNIZATION'S AFFECT ON THE 
              ACCESSIBILITY OF SMALL BUSINESS AND FARM LOANS.

    (a) Study.--The Secretary of the Treasury, in consultation with the 
Federal banking agencies (as defined in Section 3(z) of the Federal 
Deposit Insurance Act), shall conduct a study of the extent to which 
credit is being provided to and for small business and farms, as a 
result of this Act.
    (b) Report.--Before the end of the 5-year period beginning on the 
date of the enactment of this Act, the Secretary, in consultation with 
the Federal banking agencies, shall submit a report to the Congress on 
the study conducted pursuant to subsection (a) and shall include such 
recommendations as the Secretary determines to be appropriate for 
administrative and legislative action.

  Subtitle B--Streamlining Supervision of Financial Holding Companies

SEC. 111. STREAMLINING FINANCIAL HOLDING COMPANY SUPERVISION.

    Section 5(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1844(c)) is amended to read as follows:
    ``(c) Reports and Examinations.--
            ``(1) Reports.--
                    ``(A) In general.--The Board from time to time may 
                require any bank holding company and any subsidiary of 
                such company to submit reports under oath to keep the 
                Board informed as to--
                            ``(i) its financial condition, systems for 
                        monitoring and controlling financial and 
                        operating risks, and transactions with 
                        depository institution subsidiaries of the 
                        holding company; and
                            ``(ii) compliance by the company or 
                        subsidiary with applicable provisions of this 
                        Act.
                    ``(B) Use of existing reports.--
                            ``(i) In general.--The Board shall, to the 
                        fullest extent possible, accept reports in 
                        fulfillment of the Board's reporting 
                        requirements under this paragraph that a bank 
                        holding company or any subsidiary of such 
                        company has provided or been required to 
                        provide to other Federal and State supervisors 
                        or to appropriate self-regulatory 
                        organizations.
                            ``(ii) Availability.--A bank holding 
                        company or a subsidiary of such company shall 
                        provide to the Board, at the request of the 
                        Board, a report referred to in clause (i).
                            ``(iii) Required use of publicly reported 
                        information.--The Board shall, to the fullest 
                        extent possible, accept in fulfillment of any 
                        reporting or recordkeeping requirements under 
                        this Act information that is otherwise required 
                        to be reported publicly and externally audited 
                        financial statements.
                            ``(iv) Reports filed with other agencies.--
                        In the event the Board requires a report from a 
                        functionally regulated nondepository 
                        institution subsidiary of a bank holding 
                        company of a kind that is not required by 
                        another Federal or State regulator or 
                        appropriate self-regulatory organization, the 
                        Board shall request that the appropriate 
                        regulator or self-regulatory organization 
                        obtain such report. If the report is not made 
                        available to the Board, and the report is 
                        necessary to assess a material risk to the bank 
                        holding company or any of its subsidiary 
                        depository institutions or compliance with this 
                        Act, the Board may require such subsidiary to 
                        provide such a report to the Board.
                    ``(C) Definition.--For purposes of this subsection, 
                the term `functionally regulated nondepository 
                institution' means--
                            ``(i) a broker or dealer registered under 
                        the Securities Exchange Act of 1934;
                            ``(ii) an investment adviser registered 
                        under the Investment Advisers Act of 1940, or 
                        with any State, with respect to the investment 
                        advisory activities of such investment adviser 
                        and activities incidental to such investment 
                        advisory activities;
                            ``(iii) an insurance company subject to 
                        supervision by a State insurance commission, 
                        agency, or similar authority; and
                            ``(iv) an entity subject to regulation by 
                        the Commodity Futures Trading Commission, with 
                        respect to the commodities activities of such 
                        entity and activities incidental to such 
                        commodities activities.
            ``(2) Examinations.--
                    ``(A) Examination authority.--
                            ``(i) In general.--The Board may make 
                        examinations of each bank holding company and 
                        each subsidiary of a bank holding company.
                            ``(ii) Functionally regulated nondepository 
                        institution subsidiaries.--Notwithstanding 
                        clause (i), the Board may make examinations of 
                        a functionally regulated nondepository 
                        institution subsidiary of a bank holding 
                        company only if--
                                    ``(I) the Board has reasonable 
                                cause to believe that such subsidiary 
                                is engaged in activities that pose a 
                                material risk to an affiliated 
                                depository institution; or
                                    ``(II) based on reports and other 
                                available information, the Board has 
                                reasonable cause to believe that a 
                                subsidiary is not in compliance with 
                                this Act or with provisions relating to 
                                transactions with an affiliated 
                                depository institution and the Board 
                                cannot make such determination through 
                                examination of the affiliated 
                                depository institution or bank holding 
                                company.
                    ``(B) Limitations on examination authority for bank 
                holding companies and subsidiaries.--Subject to 
                subparagraph (A)(ii), the Board may make examinations 
                under subparagraph (A)(i) of each bank holding company 
                and each subsidiary of such holding company in order 
                to--
                            ``(i) inform the Board of the nature of the 
                        operations and financial condition of the 
                        holding company and such subsidiaries;
                            ``(ii) inform the Board of--
                                    ``(I) the financial and operational 
                                risks within the holding company system 
                                that may pose a threat to the safety 
                                and soundness of any subsidiary 
                                depository institution of such holding 
                                company; and
                                    ``(II) the systems for monitoring 
                                and controlling such risks; and
                            ``(iii) monitor compliance with the 
                        provisions of this Act and those governing 
                        transactions and relationships between any 
                        subsidiary depository institution and its 
                        affiliates.
                    ``(C) Restricted focus of examinations.--The Board 
                shall, to the fullest extent possible, limit the focus 
                and scope of any examination of a bank holding company 
                to--
                            ``(i) the bank holding company; and
                            ``(ii) any subsidiary of the holding 
                        company that, because of--
                                    ``(I) the size, condition, or 
                                activities of the subsidiary; or
                                    ``(II) the nature or size of 
                                transactions between such subsidiary 
                                and any depository institution which is 
                                also a subsidiary of such holding 
                                company,
                        could have a materially adverse effect on the 
                        safety and soundness of any depository 
                        institution affiliate of the holding company.
                    ``(D) Deference to bank examinations.--The Board 
                shall, to the fullest extent possible, use, for the 
                purposes of this paragraph, the reports of examinations 
                of depository institutions made by the appropriate 
                Federal and State depository institution supervisory 
                authority.
                    ``(E) Deference to other examinations.--The Board 
                shall, to the fullest extent possible, address the 
                circumstances which might otherwise permit or require 
                an examination by the Board by forgoing an examination 
                and instead reviewing the reports of examination made 
                of--
                            ``(i) any registered broker or dealer by or 
                        on behalf of the Securities and Exchange 
                        Commission;
                            ``(ii) any investment adviser registered by 
                        or on behalf of either the Securities and 
                        Exchange Commission or any State, whichever is 
                        required by law;
                            ``(iii) any licensed insurance company by 
                        or on behalf of any State regulatory authority 
                        responsible for the supervision of insurance 
                        companies; and
                            ``(iv) any other subsidiary that the Board 
                        finds to be comprehensively supervised by a 
                        Federal or State authority.
            ``(3) Capital.--
                    ``(A) In general.--The Board shall not, by 
                regulation, guideline, order or otherwise, prescribe or 
                impose any capital or capital adequacy rules, 
                guidelines, standards, or requirements on any 
                subsidiary of a financial holding company that is not a 
                depository institution and--
                            ``(i) is in compliance with applicable 
                        capital requirements of another Federal 
                        regulatory authority (including the Securities 
                        and Exchange Commission) or State insurance 
                        authority;
                            ``(ii) is registered as an investment 
                        adviser under the Investment Advisers Act of 
                        1940, or with any State, whichever is required 
                        by law; or
                            ``(iii) is licensed as an insurance agent 
                        with the appropriate State insurance authority.
                    ``(B) Rule of construction.--Subparagraph (A) shall 
                not be construed as preventing the Board from imposing 
                capital or capital adequacy rules, guidelines, 
                standards, or requirements with respect to--
                            ``(i) activities of a registered investment 
                        adviser other than investment advisory 
                        activities or activities incidental to 
                        investment advisory activities; or
                            ``(ii) activities of a licensed insurance 
                        agent other than insurance agency activities or 
                        activities incidental to insurance agency 
                        activities.
                    ``(C) Limitations on indirect action.--In 
                developing, establishing, or assessing holding company 
                capital or capital adequacy rules, guidelines, 
                standards, or requirements for purposes of this 
                paragraph, the Board shall not take into account the 
                activities, operations, or investments of an affiliated 
                investment company registered under the Investment 
                Company Act of 1940, unless the investment company is--
                            ``(i) a bank holding company; or
                            ``(ii) controlled by a bank holding company 
                        by reason of ownership by the bank holding 
                        company (including through all of its 
                        affiliates) of 25 percent or more of the shares 
                        of the investment company, and the shares owned 
                        by the bank holding company have a market value 
                        equal to more than $1,000,000.
            ``(4) Transfer of board authority to appropriate federal 
        banking agency.--
                    ``(A) In general.--In the case of any bank holding 
                company which is not significantly engaged in 
                nonbanking activities, the Board, in consultation with 
                the appropriate Federal banking agency, may designate 
                the appropriate Federal banking agency of the lead 
                insured depository institution subsidiary of such 
                holding company as the appropriate Federal banking 
                agency for the bank holding company.
                    ``(B) Authority transferred.--An agency designated 
                by the Board under subparagraph (A) shall have the same 
                authority as the Board under this Act to--
                            ``(i) examine and require reports from the 
                        bank holding company and any affiliate of such 
                        company (other than a depository institution) 
                        under section 5;
                            ``(ii) approve or disapprove applications 
                        or transactions under section 3;
                            ``(iii) take actions and impose penalties 
                        under subsections (e) and (f) of section 5 and 
                        section 8; and
                            ``(iv) take actions regarding the holding 
                        company, any affiliate of the holding company 
                        (other than a depository institution), or any 
                        institution-affiliated party of such company or 
                        affiliate under the Federal Deposit Insurance 
                        Act and any other statute which the Board may 
                        designate.
                    ``(C) Agency orders.--Section 9 of this Act and 
                section 105 of the Bank Holding Company Act Amendments 
                of 1970 shall apply to orders issued by an agency 
                designated under subparagraph (A) in the same manner 
                such sections apply to orders issued by the Board.
            ``(5) Functional regulation of securities and insurance 
        activities.--The Board shall defer to--
                    ``(A) the Securities and Exchange Commission with 
                regard to all interpretations of, and the enforcement 
                of, applicable Federal securities laws (and rules, 
                regulations, orders, and other directives issued 
                thereunder) relating to the activities, conduct, and 
                operations of registered brokers, dealers, investment 
                advisers, and investment companies;
                    ``(B) the relevant State securities authorities 
                with regard to all interpretations of, and the 
                enforcement of, applicable State securities laws (and 
                rules, regulations, orders, and other directives issued 
                thereunder) relating to the activities, conduct, and 
                operations of brokers, dealers, and investment advisers 
                required to be registered under State law; and
                    ``(C) the relevant State insurance authorities with 
                regard to all interpretations of, and the enforcement 
                of, applicable State insurance laws (and rules, 
                regulations, orders, and other directives issued 
                thereunder) relating to the activities, conduct, and 
                operations of insurance companies and insurance 
                agents.''.

SEC. 112. ELIMINATION OF APPLICATION REQUIREMENT FOR FINANCIAL HOLDING 
              COMPANIES.

    (a) Prevention of Duplicative Filings.--Section 5(a) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1844(a)) is amended by adding 
the following new sentence at the end: ``A declaration filed in 
accordance with section 6(b)(1)(D) shall satisfy the requirements of 
this subsection with regard to the registration of a bank holding 
company but not any requirement to file an application to acquire a 
bank pursuant to section 3.''.
    (b) Divestiture Procedures.--Section 5(e)(1) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1844(e)(1)) is amended--
            (1) by striking ``Financial Institutions Supervisory Act of 
        1966, order'' and inserting ``Financial Institutions 
        Supervisory Act of 1966, at the election of the bank holding 
        company--
            ``(A) order''; and
            (2) by striking ``shareholders of the bank holding company. 
        Such distribution'' and inserting ``shareholders of the bank 
        holding company; or
            ``(B) order the bank holding company, after due notice and 
        opportunity for hearing, and after consultation with the 
        primary supervisor for the bank, which shall be the Comptroller 
        of the Currency in the case of a national bank, and the Federal 
        Deposit Insurance Corporation and the appropriate State 
        supervisor in the case of an insured nonmember bank, to 
        terminate (within 120 days or such longer period as the Board 
        may direct) the ownership or control of any such bank by such 
        company.
The distribution referred to in subparagraph (A)''.

SEC. 113. AUTHORITY OF STATE INSURANCE REGULATOR AND SECURITIES AND 
              EXCHANGE COMMISSION.

    (a) Bank Holding Companies.--Section 5 of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1844) is amended by adding at the end the 
following new subsection:
    ``(g) Authority of State Insurance Regulator and the Securities and 
Exchange Commission.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, any regulation, order, or other action of the Board which 
        requires a bank holding company to provide funds or other 
        assets to a subsidiary insured depository institution shall not 
        be effective nor enforceable with respect to an entity 
        described in subparagraph (A) if--
                    ``(A) such funds or assets are to be provided by--
                            ``(i) a bank holding company that is an 
                        insurance company, a broker or dealer 
                        registered under the Securities Exchange Act of 
                        1934, an investment company registered under 
                        the Investment Company Act of 1940, or an 
                        investment adviser registered by or on behalf 
                        of either the Securities and Exchange 
                        Commission or any State; or
                            ``(ii) an affiliate of the depository 
                        institution which is an insurance company or a 
                        broker or dealer registered under the 
                        Securities Exchange Act of 1934, an investment 
                        company registered under the Investment Company 
                        Act of 1940, or an investment adviser 
                        registered by or on behalf of either the 
                        Securities and Exchange Commission or any 
                        State; and
                    ``(B) the State insurance authority for the 
                insurance company or the Securities and Exchange 
                Commission for the registered broker, dealer, 
                investment adviser (solely with respect to investment 
                advisory activities or activities incidental thereto), 
                or investment company, as the case may be, determines 
                in writing sent to the holding company and the Board 
                that the holding company shall not provide such funds 
                or assets because such action would have a material 
                adverse effect on the financial condition of the 
                insurance company or the broker, dealer, investment 
                company, or investment adviser, as the case may be.
            ``(2) Notice to state insurance authority or sec 
        required.--If the Board requires a bank holding company, or an 
        affiliate of a bank holding company, which is an insurance 
        company or a broker, dealer, investment company, or investment 
        adviser described in paragraph (1)(A) to provide funds or 
        assets to an insured depository institution subsidiary of the 
        holding company pursuant to any regulation, order, or other 
        action of the Board referred to in paragraph (1), the Board 
        shall promptly notify the State insurance authority for the 
        insurance company, the Securities and Exchange Commission, or 
        State securities regulator, as the case may be, of such 
        requirement.
            ``(3) Divestiture in lieu of other action.--If the Board 
        receives a notice described in paragraph (1)(B) from a State 
        insurance authority or the Securities and Exchange Commission 
        with regard to a bank holding company or affiliate referred to 
        in that paragraph, the Board may order the bank holding company 
        to divest the insured depository institution not later than 180 
        days after receiving the notice, or such longer period as the 
        Board determines consistent with the safe and sound operation 
        of the insured depository institution.
            ``(4) Conditions before divestiture.--During the period 
        beginning on the date an order to divest is issued by the Board 
        under paragraph (3) to a bank holding company and ending on the 
        date the divestiture is completed, the Board may impose any 
        conditions or restrictions on the holding company's ownership 
        or operation of the insured depository institution, including 
        restricting or prohibiting transactions between the insured 
        depository institution and any affiliate of the institution, as 
        are appropriate under the circumstances.''.
    (b) Subsidiaries of Depository Institutions.--The Federal Deposit 
Insurance Act (12 U.S.C. 1811 et seq.) is amended by adding at the end 
the following new section:

``SEC. 45. AUTHORITY OF STATE INSURANCE REGULATOR AND SECURITIES AND 
              EXCHANGE COMMISSION.

    ``(a) In General.--Notwithstanding any other provision of law, any 
regulation, order, or other action of the appropriate Federal banking 
agency which requires a subsidiary to provide funds or other assets to 
an insured depository institution shall not be effective nor 
enforceable with respect to an entity described in paragraph (1) if--
            ``(1) such funds or assets are to be provided by a 
        subsidiary which is an insurance company, a broker or dealer 
        registered under the Securities Exchange Act of 1934, an 
        investment company registered under the Investment Company Act 
        of 1940, or an investment adviser registered by or on behalf of 
        either the Securities and Exchange Commission or any State; and
            ``(2) the State insurance authority for the insurance 
        company or the Securities and Exchange Commission for the 
        registered broker or dealer, the investment company, or the 
        investment adviser, as the case may be, determines in writing 
        sent to the insured depository institution and the appropriate 
        Federal banking agency that the subsidiary shall not provide 
        such funds or assets because such action would have a material 
        adverse effect on the financial condition of the insurance 
        company or the broker, dealer, investment company, or 
        investment adviser, as the case may be.
    ``(b) Notice to State Insurance Authority or SEC Required.--If the 
appropriate Federal banking agency requires a subsidiary, which is an 
insurance company, a broker or dealer, an investment company, or an 
investment adviser (solely with respect to investment advisory 
activities or activities incidental thereto) described in subsection 
(a)(1) to provide funds or assets to an insured depository institution 
pursuant to any regulation, order, or other action of the appropriate 
Federal banking agency referred to in subsection (a), the appropriate 
Federal banking agency shall promptly notify the State insurance 
authority for the insurance company, the Securities and Exchange 
Commission, or State securities regulator, as the case may be, of such 
requirement.
    ``(c) Divestiture in Lieu of Other Action.--If the appropriate 
Federal banking agency receives a notice described in subsection (a)(2) 
from a State insurance authority or the Securities and Exchange 
Commission with regard to a subsidiary referred to in that subsection, 
the appropriate Federal banking agency may order the insured depository 
institution to divest the subsidiary not later than 180 days after 
receiving the notice, or such longer period as the appropriate Federal 
banking agency determines consistent with the safe and sound operation 
of the insured depository institution.
    ``(d) Conditions Before Divestiture.--During the period beginning 
on the date an order to divest is issued by the appropriate Federal 
banking agency under subsection (c) to an insured depository 
institution and ending on the date the divestiture is complete, the 
appropriate Federal banking agency may impose any conditions or 
restrictions on the insured depository institution's ownership of the 
subsidiary including restricting or prohibiting transactions between 
the insured depository institution and the subsidiary, as are 
appropriate under the circumstances.''.

SEC. 114. PRUDENTIAL SAFEGUARDS.

    (a) Comptroller of the Currency.--
            (1) In general.--The Comptroller of the Currency may, by 
        regulation or order, impose restrictions or requirements on 
        relationships or transactions between a national bank and a 
        subsidiary of the national bank which the Comptroller finds are 
        consistent with the public interest, the purposes of this Act, 
        title LXII of the Revised Statutes of the United States, and 
        other Federal law applicable to national banks, and the 
        standards in paragraph (2).
            (2) Standards.--The Comptroller of the Currency may 
        exercise authority under paragraph (1) if the Comptroller finds 
        that such action will have any of the following effects:
                    (A) Avoid any significant risk to the safety and 
                soundness of depository institutions or any Federal 
                deposit insurance fund.
                    (B) Enhance the financial stability of banks.
                    (C) Avoid conflicts of interest or other abuses.
                    (D) Enhance the privacy of customers of the 
                national bank or any subsidiary of the bank.
                    (E) Promote the application of national treatment 
                and equality of competitive opportunity between 
                subsidiaries owned or controlled by domestic banks and 
                subsidiaries owned or controlled by foreign banks 
                operating in the United States.
            (3) Review.--The Comptroller of the Currency shall 
        regularly--
                    (A) review all restrictions or requirements 
                established pursuant to paragraph (1) to determine 
                whether there is a continuing need for any such 
                restriction or requirement to carry out the purposes of 
                the Act, including any purpose described in paragraph 
                (2); and
                    (B) modify or eliminate any restriction or 
                requirement the Comptroller finds is no longer required 
                for such purposes.
    (b) Board of Governors of the Federal Reserve System.--
            (1) In general.--The Board of Governors of the Federal 
        Reserve System may, by regulation or order, impose restrictions 
        or requirements on relationships or transactions--
                    (A) between a depository institution subsidiary of 
                a bank holding company and any affiliate of such 
                depository institution (other than a subsidiary of such 
                institution); or
                    (B) between a State member bank and a subsidiary of 
                such bank,
        which the Board finds are consistent with the public interest, 
        the purposes of this Act, the Bank Holding Company Act of 1956, 
        the Federal Reserve Act, and other Federal law applicable to 
        depository institution subsidiaries of bank holding companies 
        or State banks (as the case may be), and the standards in 
        paragraph (2).
            (2) Standards.--The Board of Governors of the Federal 
        Reserve System may exercise authority under paragraph (1) if 
        the Board finds that such action will have any of the following 
        effects:
                    (A) Avoid any significant risk to the safety and 
                soundness of depository institutions or any Federal 
                deposit insurance fund.
                    (B) Enhance the financial stability of bank holding 
                companies.
                    (C) Avoid conflicts of interest or other abuses.
                    (D) Enhance the privacy of customers of the State 
                member bank or any subsidiary of the bank.
                    (E) Promote the application of national treatment 
                and equality of competitive opportunity between nonbank 
                affiliates owned or controlled by domestic bank holding 
                companies and nonbank affiliates owned or controlled by 
                foreign banks operating in the United States.
            (3) Review.--The Board of Governors of the Federal Reserve 
        System shall regularly--
                    (A) review all restrictions or requirements 
                established pursuant to paragraph (1) to determine 
                whether there is a continuing need for any such 
                restriction or requirement to carry out the purposes of 
                the Act, including any purpose described in paragraph 
                (2); and
                    (B) modify or eliminate any restriction or 
                requirement the Board finds is no longer required for 
                such purposes.
            (4) Foreign banks.--
                    (A) In general.--The Board may, by regulation or 
                order, impose restrictions or requirements on 
                relationships or transactions between a branch, agency, 
                or commercial lending company of a foreign bank in the 
                United States and any affiliate in the United States of 
                such foreign bank that the Board finds are consistent 
                with the public interest, the purposes of this Act, the 
                Bank Holding Company Act of 1956, the Federal Reserve 
                Act, and other Federal law applicable to foreign banks 
                and their affiliates in the United States, and the 
                standards in paragraphs (2) and (3).
                    (B) Evasion.--In the event that the Board 
                determines that there may be circumstances that would 
                result in an evasion of this paragraph, the Board may 
                also impose restrictions or requirements on 
                relationships or transactions between a foreign bank 
                outside the United States and any affiliate in the 
                United States of such foreign bank that are consistent 
                with national treatment and equality of competitive 
                opportunity.
    (c) Federal Deposit Insurance Corporation.--
            (1) In general.--The Federal Deposit Insurance Corporation 
        may, by regulation or order, impose restrictions or 
        requirements on relationships or transactions between a State 
        nonmember bank (as defined in section 3 of the Federal Deposit 
        Insurance Act) and a subsidiary of the State nonmember bank 
        which the Corporation finds are consistent with the public 
        interest, the purposes of this Act, the Federal Deposit 
        Insurance Act, or other Federal law applicable to State 
        nonmember banks and the standards in paragraph (2).
            (2) Standards.--The Federal Deposit Insurance Corporation 
        may exercise authority under paragraph (1) if the Corporation 
        finds that such action will have any of the following effects:
                    (A) Avoid any significant risk to the safety and 
                soundness of depository institutions or any Federal 
                deposit insurance fund.
                    (B) Enhance the financial stability of banks.
                    (C) Avoid conflicts of interest or other abuses.
                    (D) Enhance the privacy of customers of the State 
                nonmember bank or any subsidiary of the bank.
                    (E) Promote the application of national treatment 
                and equality of competitive opportunity between 
                subsidiaries owned or controlled by domestic banks and 
                subsidiaries owned or controlled by foreign banks 
                operating in the United States.
            (3) Review.--The Federal Deposit Insurance Corporation 
        shall regularly--
                    (A) review all restrictions or requirements 
                established pursuant to paragraph (1) to determine 
                whether there is a continuing need for any such 
                restriction or requirement to carry out the purposes of 
                the Act, including any purpose described in paragraph 
                (2); and
                    (B) modify or eliminate any restriction or 
                requirement the Corporation finds is no longer required 
                for such purposes.

SEC. 115. EXAMINATION OF INVESTMENT COMPANIES.

    (a) Exclusive Commission Authority.--
            (1) In general.--Except as provided in paragraph (3), the 
        Commission shall be the sole Federal agency with authority to 
        inspect and examine any registered investment company that is 
        not a bank holding company or a savings and loan holding 
        company.
            (2) Prohibition on banking agencies.--Except as provided in 
        paragraph (3), a Federal banking agency may not inspect or 
        examine any registered investment company that is not a bank 
        holding company or a savings and loan holding company.
            (3) Certain examinations authorized.-- Nothing in this 
        subsection prevents the Federal Deposit Insurance Corporation, 
        if the Corporation finds it necessary to determine the 
        condition of an insured depository institution for insurance 
        purposes, from examining an affiliate of any insured depository 
        institution, pursuant to its authority under section 10(b)(4) 
        of the Federal Deposit Insurance Act, as may be necessary to 
        disclose fully the relationship between the depository 
        institution and the affiliate, and the effect of such 
        relationship on the depository institution.
    (b) Examination Results and Other Information.--The Commission 
shall provide to any Federal banking agency, upon request, the results 
of any examination, reports, records, or other information with respect 
to any registered investment company to the extent necessary for the 
agency to carry out its statutory responsibilities.
    (c) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Bank holding company.--The term ``bank holding 
        company'' has the same meaning as in section 2 of the Bank 
        Holding Company Act of 1956.
            (2) Commission.--The term ``Commission'' means the 
        Securities and Exchange Commission.
            (3) Federal banking agency.--The term ``Federal banking 
        agency'' has the same meaning as in section 3(z) of the Federal 
        Deposit Insurance Act.
            (4) Registered investment company.--The term ``registered 
        investment company'' means an investment company which is 
        registered with the Commission under the Investment Company Act 
        of 1940.
            (5) Savings and loan holding company.--The term ``savings 
        and loan holding company'' has the same meaning as in section 
        10(a)(1)(D) of the Home Owners' Loan Act.

SEC. 116. LIMITATION ON RULEMAKING, PRUDENTIAL, SUPERVISORY, AND 
              ENFORCEMENT AUTHORITY OF THE BOARD.

    The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is 
amended by inserting after section 10 the following new section:

``SEC. 10A. LIMITATION ON RULEMAKING, PRUDENTIAL, SUPERVISORY, AND 
              ENFORCEMENT AUTHORITY OF THE BOARD.

    ``(a) Limitation on Direct Action.--
            ``(1) In general.--The Board may not prescribe regulations, 
        issue or seek entry of orders, impose restraints, restrictions, 
        guidelines, requirements, safeguards, or standards, or 
        otherwise take any action under or pursuant to any provision of 
        this Act or section 8 of the Federal Deposit Insurance Act 
        against or with respect to a regulated subsidiary of a bank 
        holding company unless the action is necessary to prevent or 
        redress an unsafe or unsound practice or breach of fiduciary 
        duty by such subsidiary that poses a material risk to--
                    ``(A) the financial safety, soundness, or stability 
                of an affiliated depository institution; or
                    ``(B) the domestic or international payment system.
            ``(2) Criteria for board action.--The Board shall not take 
        action otherwise permitted under paragraph (1) unless the Board 
        finds that it is not reasonably possible to effectively protect 
        against the material risk at issue through action directed at 
        or against the affiliated depository institution or against 
        depository institutions generally.
    ``(b) Limitation on Indirect Action.--The Board may not prescribe 
regulations, issue or seek entry of orders, impose restraints, 
restrictions, guidelines, requirements, safeguards, or standards, or 
otherwise take any action under or pursuant to any provision of this 
Act or section 8 of the Federal Deposit Insurance Act against or with 
respect to a financial holding company or a wholesale financial holding 
company where the purpose or effect of doing so would be to take action 
indirectly against or with respect to a regulated subsidiary that may 
not be taken directly against or with respect to such subsidiary in 
accordance with subsection (a).
    ``(c) Actions Specifically Authorized.--Notwithstanding subsection 
(a), the Board may take action under this Act or section 8 of the 
Federal Deposit Insurance Act to enforce compliance by a regulated 
subsidiary with Federal law that the Board has specific jurisdiction to 
enforce against such subsidiary.
    ``(d) Regulated Subsidiary Defined.--For purposes of this section, 
the term `regulated subsidiary' means any company that is not a bank 
holding company and is--
            ``(1) a broker or dealer registered under the Securities 
        Exchange Act of 1934;
            ``(2) an investment adviser registered by or on behalf of 
        either the Securities and Exchange Commission or any State, 
        whichever is required by law, with respect to the investment 
        advisory activities of such investment adviser and activities 
        incidental to such investment advisory activities;
            ``(3) an investment company registered under the Investment 
        Company Act of 1940;
            ``(4) an insurance company or an insurance agency, with 
        respect to the insurance activities and activities incidental 
        to such insurance activities, subject to supervision by a State 
        insurance commission, agency, or similar authority; or
            ``(5) an entity subject to regulation by the Commodity 
        Futures Trading Commission, with respect to the commodities 
        activities of such entity and activities incidental to such 
        commodities activities.''.

SEC. 117. EQUIVALENT REGULATION AND SUPERVISION.

    (a) In General.--Notwithstanding any other provision of law, the 
provisions of--
            (1) section 5(c) of the Bank Holding Company Act of 1956 
        (as amended by this Act) that limit the authority of the Board 
        of Governors of the Federal Reserve System to require reports 
        from, to make examinations of, or to impose capital 
        requirements on bank holding companies and their nonbank 
        subsidiaries or that require deference to other regulators; and
            (2) section 10A of the Bank Holding Company Act of 1956 (as 
        added by this Act) that limit whatever authority the Board 
        might otherwise have to take direct or indirect action with 
        respect to bank holding companies and their nonbank 
        subsidiaries,
shall also limit whatever authority that a Federal banking agency (as 
defined in section 3(z) of the Federal Deposit Insurance Act) might 
otherwise have under any statute to require reports, make examinations, 
impose capital requirements or take any other direct or indirect action 
with respect to bank holding companies and their nonbank subsidiaries 
(including nonbank subsidiaries of depository institutions), subject to 
the same standards and requirements as are applicable to the Board 
under such provisions.
    (b) Certain Examinations Authorized.--No provision of this section 
shall be construed as preventing the Federal Deposit Insurance 
Corporation, if the Corporation finds it necessary to determine the 
condition of an insured depository institution for insurance purposes, 
from examining an affiliate of any insured depository institution, 
pursuant to its authority under section 10(b)(4) of the Federal Deposit 
Insurance Act, as may be necessary to disclose fully the relationship 
between the depository institution and the affiliate, and the effect of 
such relationship on the depository institution.

SEC. 118. PROHIBITION ON FDIC ASSISTANCE TO AFFILIATES AND 
              SUBSIDIARIES.

    Section 11(a)(4)(B) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(a)(4)(B)) is amended by striking ``to benefit any shareholder of'' 
and inserting ``to benefit any shareholder, affiliate (other than an 
insured depository institution that receives assistance in accordance 
with the provisions of this Act), or subsidiary of''.

SEC. 119. REPEAL OF SAVINGS BANK PROVISIONS IN THE BANK HOLDING COMPANY 
              ACT OF 1956.

    Section 3(f) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1842(f)) is amended to read as follows:
    ``(f) [Repealed].''.

SEC. 120. TECHNICAL AMENDMENT.

    Section 2(o)(1)(A) of the Bank Holding Company Act of 1956 (12 
U.S.C. 1841(o)(1)(A)) is amended by striking ``section 38(b)'' and 
inserting ``section 38''.

               Subtitle C--Subsidiaries of National Banks

SEC. 121. PERMISSIBLE ACTIVITIES FOR SUBSIDIARIES OF NATIONAL BANKS.

    (a) Financial Subsidiaries of National Banks.--Chapter 1 of title 
LXII of the Revised Statutes of United States (12 U.S.C. 21 et seq.) is 
amended--
            (1) by redesignating section 5136A as section 5136C; and
            (2) by inserting after section 5136 (12 U.S.C. 24) the 
        following new section:

``SEC. 5136A. SUBSIDIARIES OF NATIONAL BANKS.

    ``(a) Subsidiaries of National Banks Authorized To Engage in 
Financial Activities.--
            ``(1) Exclusive authority.--No provision of section 5136 or 
        any other provision of this title LXII of the Revised Statutes 
        of the United States shall be construed as authorizing a 
        subsidiary of a national bank to engage in, or own any share of 
        or any other interest in any company engaged in, any activity 
        that--
                    ``(A) is not permissible for a national bank to 
                engage in directly; or
                    ``(B) is conducted under terms or conditions other 
                than those that would govern the conduct of such 
                activity by a national bank,
        unless a national bank is specifically authorized by the 
        express terms of a Federal statute and not by implication or 
        interpretation to acquire shares of or an interest in, or to 
        control, such subsidiary, such as by paragraph (2) of this 
        subsection and section 25A of the Federal Reserve Act.
            ``(2) Specific authorization to conduct activities which 
        are financial in nature.--Subject to paragraphs (3) and (4), a 
        national bank may control a financial subsidiary, or hold an 
        interest in a financial subsidiary, that is controlled by 
        insured depository institutions or subsidiaries thereof.
            ``(3) Eligibility requirements.--A national bank may 
        control or hold an interest in a company pursuant to paragraph 
        (2) only if--
                    ``(A) the national bank and all depository 
                institution affiliates of the national bank are well 
                capitalized;
                    ``(B) the national bank and all depository 
                institution affiliates of the national bank are well 
                managed;
                    ``(C) the national bank and all depository 
                institution affiliates of such national bank have 
                achieved a rating of `satisfactory record of meeting 
                community credit needs', or better, at the most recent 
                examination of each such bank or institution; and
                    ``(D) the bank has received the approval of the 
                Comptroller of the Currency.
            ``(4) Activity limitations.--In addition to any other 
        limitation imposed on the activity of subsidiaries of national 
        banks, a subsidiary of a national bank may not, pursuant to 
        paragraph (2)--
                    ``(A) engage as principal in insuring, 
                guaranteeing, or indemnifying against loss, harm, 
                damage, illness, disability, or death (other than in 
                connection with credit-related insurance) or in 
                providing or issuing annuities;
                    ``(B) engage in real estate investment or 
                development activities; or
                    ``(C) engage in any activity permissible for a 
                financial holding company under paragraph (3)(I) of 
                section 6(c) of the Bank Holding Company Act of 1956 
                (relating to insurance company investments).
            ``(5) Size factor with regard to free-standing national 
        banks.--Notwithstanding paragraph (2), a national bank which 
        has total assets of $10,000,000,000 or more may not control a 
        subsidiary engaged in financial activities pursuant to such 
        paragraph unless such national bank is a subsidiary of a bank 
        holding company.
            ``(6) Limited exclusions from community needs requirements 
        for newly affiliated depository institutions.--Any depository 
        institution which becomes an affiliate of a national bank 
        during the 12-month period preceding the date of an approval by 
        the Comptroller of the Currency under paragraph (3)(D) for such 
        bank, and any depository institution which becomes an affiliate 
        of the national bank after such date, may be excluded for 
        purposes of paragraph (3)(C) during the 12-month period 
        beginning on the date of such affiliation if--
                    ``(A) the national bank or such depository 
                institution has submitted an affirmative plan to the 
                appropriate Federal banking agency to take such action 
                as may be necessary in order for such institution to 
                achieve a rating of `satisfactory record of meeting 
                community credit needs', or better, at the next 
                examination of the institution; and
                    ``(B) the plan has been accepted by such agency.
            ``(7) Definitions.--For purposes of this section, the 
        following definitions shall apply:
                    ``(A) Company; control; affiliate; subsidiary.--The 
                terms `company', `control', `affiliate', and 
                `subsidiary' have the same meanings as in section 2 of 
                the Bank Holding Company Act of 1956.
                    ``(B) Financial subsidiary.--The term `financial 
                subsidiary' means a company which is a subsidiary of an 
                insured bank and is engaged in financial activities 
                that have been determined to be financial in nature or 
                incidental to such financial activities in accordance 
                with subsection (b) or permitted in accordance with 
                subsection (b)(4), other than activities that are 
                permissible for a national bank to engage in directly 
                or that are authorized under the Bank Service Company 
                Act, section 25 or 25A of the Federal Reserve Act, or 
                any other Federal statute (other than this section) 
                that specifically authorizes the conduct of such 
                activities by its express terms and not by implication 
                or interpretation.
                    ``(C) Well capitalized.--The term `well 
                capitalized' has the same meaning as in section 38 of 
                the Federal Deposit Insurance Act and, for purposes of 
                this section, the Comptroller shall have exclusive 
                jurisdiction to determine whether a national bank is 
                well capitalized.
                    ``(D) Well managed.--The term `well managed' 
                means--
                            ``(i) in the case of a depository 
                        institution that has been examined, unless 
                        otherwise determined in writing by the 
                        appropriate Federal banking agency--
                                    ``(I) the achievement of a 
                                composite rating of 1 or 2 under the 
                                Uniform Financial Institutions Rating 
                                System (or an equivalent rating under 
                                an equivalent rating system) in 
                                connection with the most recent 
                                examination or subsequent review of the 
                                depository institution; and
                                    ``(II) at least a rating of 2 for 
                                management, if that rating is given; or
                            ``(ii) in the case of any depository 
                        institution that has not been examined, the 
                        existence and use of managerial resources that 
                        the appropriate Federal banking agency 
                        determines are satisfactory.
                    ``(E) Incorporated definitions.--The terms 
                `appropriate Federal banking agency' and `depository 
                institution' have the same meanings as in section 3 of 
                the Federal Deposit Insurance Act.
    ``(b) Activities That Are Financial in Nature.--
            ``(1) Financial activities.--
                    ``(A) In general.--For purposes of subsection 
                (a)(7)(B), an activity shall be considered to have been 
                determined to be financial in nature or incidental to 
                such financial activities only if--
                            ``(i) such activity is permitted for a 
                        financial holding company pursuant to section 
                        6(c)(3) of the Bank Holding Company Act of 1956 
                        (to the extent such activity is not otherwise 
                        prohibited under this section or any other 
                        provision of law for a subsidiary of a national 
                        bank engaged in activities pursuant to 
                        subsection (a)(2)); or
                            ``(ii) the Secretary of the Treasury 
                        determines the activity to be financial in 
                        nature or incidental to such financial 
                        activities in accordance with subparagraph (B) 
                        or paragraph (3).
                    ``(B) Coordination between the board and the 
                secretary of the treasury.--
                            ``(i) Proposals raised before the secretary 
                        of the treasury.--
                                    ``(I) Consultation.--The Secretary 
                                of the Treasury shall notify the Board 
                                of, and consult with the Board 
                                concerning, any request, proposal, or 
                                application under this subsection, 
                                including any regulation or order 
                                proposed under paragraph (3), for a 
                                determination of whether an activity is 
                                financial in nature or incidental to 
                                such a financial activity.
                                    ``(II) Board view.--The Secretary 
                                of the Treasury shall not determine 
                                that any activity is financial in 
                                nature or incidental to a financial 
                                activity under this subsection if the 
                                Board notifies the Secretary in 
                                writing, not later than 30 days after 
                                the date of receipt of the notice 
                                described in subclause (I) (or such 
                                longer period as the Secretary 
                                determines to be appropriate in light 
                                of the circumstances) that the Board 
                                believes that the activity is not 
                                financial in nature or incidental to a 
                                financial activity.
                            ``(ii) Proposals raised by the board.--
                                    ``(I) Board recommendation.--The 
                                Board may, at any time, recommend in 
                                writing that the Secretary of the 
                                Treasury find an activity to be 
                                financial in nature or incidental to a 
                                financial activity (other than an 
                                activity which the Board has sole 
                                authority to regulate under 
                                subparagraph (C)).
                                    ``(II) Time period for secretarial 
                                action.--Not later than 30 days after 
                                the date of receipt of a written 
                                recommendation from the Board under 
                                subclause (I) (or such longer period as 
                                the Secretary of the Treasury and the 
                                Board determine to be appropriate in 
                                light of the circumstances), the 
                                Secretary shall determine whether to 
                                initiate a public rulemaking proposing 
                                that the subject recommended activity 
                                be found to be financial in nature or 
                                incidental to a financial activity 
                                under this subsection, and shall notify 
                                the Board in writing of the 
                                determination of the Secretary and, in 
                                the event that the Secretary determines 
                                not to seek public comment on the 
                                proposal, the reasons for that 
                                determination.
                    ``(C) Authority over merchant banking.--The Board 
                shall have sole authority to prescribe regulations and 
                issue interpretations to implement this paragraph with 
                respect to activities described in section 6(c)(3)(H) 
                of the Bank Holding Company Act of 1956.
            ``(2) Factors to be considered.--In determining whether an 
        activity is financial in nature or incidental to financial 
        activities, the Secretary shall take into account--
                    ``(A) the purposes of this Act and the Financial 
                Services Act of 1999;
                    ``(B) changes or reasonably expected changes in the 
                marketplace in which banks compete;
                    ``(C) changes or reasonably expected changes in the 
                technology for delivering financial services; and
                    ``(D) whether such activity is necessary or 
                appropriate to allow a bank and the subsidiaries of a 
                bank to--
                            ``(i) compete effectively with any company 
                        seeking to provide financial services in the 
                        United States;
                            ``(ii) use any available or emerging 
                        technological means, including any application 
                        necessary to protect the security or efficacy 
                        of systems for the transmission of data or 
                        financial transactions, in providing financial 
                        services; and
                            ``(iii) offer customers any available or 
                        emerging technological means for using 
                        financial services.
            ``(3) Authorization of new financial activities.--The 
        Secretary of the Treasury shall, by regulation or order and in 
        accordance with paragraph (1)(B), define, consistent with the 
        purposes of this Act, the following activities as, and the 
        extent to which such activities are, financial in nature or 
        incidental to activities which are financial in nature:
                    ``(A) Lending, exchanging, transferring, investing 
                for others, or safeguarding financial assets other than 
                money or securities.
                    ``(B) Providing any device or other instrumentality 
                for transferring money or other financial assets.
                    ``(C) Arranging, effecting, or facilitating 
                financial transactions for the account of third 
                parties.
            ``(4) Developing activities.--Subject to subsection (a)(2), 
        a financial subsidiary of a national bank may engage directly 
        or indirectly, or acquire shares of any company engaged, in any 
        activity that the Secretary has not determined to be financial 
        in nature or incidental to financial activities under this 
        subsection if--
                    ``(A) the subsidiary reasonably concludes that the 
                activity is financial in nature or incidental to 
                financial activities;
                    ``(B) the gross revenues from all activities 
                conducted under this paragraph represent less than 5 
                percent of the consolidated gross revenues of the 
                national bank;
                    ``(C) the aggregate total assets of all companies 
                the shares of which are held under this paragraph do 
                not exceed 5 percent of the national bank's 
                consolidated total assets;
                    ``(D) the total capital invested in activities 
                conducted under this paragraph represents less than 5 
                percent of the consolidated total capital of the 
                national bank;
                    ``(E) neither the Secretary of the Treasury nor the 
                Board has determined that the activity is not financial 
                in nature or incidental to financial activities under 
                this subsection; and
                    ``(F) the national bank provides written notice to 
                the Secretary of the Treasury describing the activity 
                commenced by the subsidiary or conducted by the company 
                acquired no later than 10 business days after 
                commencing the activity or consummating the 
                acquisition.
    ``(c) Provisions Applicable to National Banks That Fail To Meet 
Requirements.--
            ``(1) In general.--If a national bank or depository 
        institution affiliate is not in compliance with the 
        requirements of subparagraph (A), (B), or (C) of subsection 
        (a)(3), the appropriate Federal banking agency shall notify the 
        Comptroller of the Currency, who shall give notice of such 
        finding to the national bank.
            ``(2) Agreement to correct conditions required.--Not later 
        than 45 days after receipt by a national bank of a notice given 
        under paragraph (1) (or such additional period as the 
        Comptroller of the Currency may permit), the national bank and 
        any relevant affiliated depository institution shall execute an 
        agreement acceptable to the Comptroller of the Currency and the 
        other appropriate Federal banking agencies, if any, to comply 
        with the requirements applicable under subsection (a)(3).
            ``(3) Comptroller of the currency may impose limitations.--
        Until the conditions described in a notice to a national bank 
        under paragraph (1) are corrected--
                    ``(A) the Comptroller of the Currency may impose 
                such limitations on the conduct or activities of the 
                national bank or any subsidiary of the bank as the 
                Comptroller of the Currency determines to be 
                appropriate under the circumstances; and
                    ``(B) the appropriate Federal banking agency may 
                impose such limitations on the conduct or activities of 
                an affiliated depository institution or any subsidiary 
                of the depository institution as such agency determines 
                to be appropriate under the circumstances.
            ``(4) Failure to correct.--If, after receiving a notice 
        under paragraph (1), a national bank and other affiliated 
        depository institutions do not--
                    ``(A) execute and implement an agreement in 
                accordance with paragraph (2);
                    ``(B) comply with any limitations imposed under 
                paragraph (3);
                    ``(C) in the case of a notice of failure to comply 
                with subsection (a)(3)(A), restore the national bank or 
                any depository institution affiliate of the bank to 
                well capitalized status before the end of the 180-day 
                period beginning on the date such notice is received by 
                the national bank (or such other period permitted by 
                the Comptroller of the Currency); or
                    ``(D) in the case of a notice of failure to comply 
                with subparagraph (B) or (C) of subsection (a)(3), 
                restore compliance with any such subparagraph on or 
                before the date on which the next examination of the 
                depository institution subsidiary is completed or by 
                the end of such other period as the Comptroller of the 
                Currency determines to be appropriate,
        the Comptroller of the Currency may require such national bank, 
        under such terms and conditions as may be imposed by the 
        Comptroller of the Currency and subject to such extension of 
        time as may be granted in the Comptroller of the Currency's 
        discretion, to divest control of any subsidiary engaged in 
        activities pursuant to subsection (a)(2) or, at the election of 
        the national bank, instead to cease to engage in any activity 
        conducted by a subsidiary of the national bank pursuant to 
        subsection (a)(2).
            ``(5) Consultation.--In taking any action under this 
        subsection, the Comptroller of the Currency shall consult with 
        all relevant Federal and State regulatory agencies.''.
    (b) Clerical Amendment.--The table of sections for chapter 1 of 
title LXII of the Revised Statutes of the United States is amended--
             (1) by redesignating the item relating to section 5136A as 
        section 5136C; and
             (2) by inserting after the item relating to section 5136 
        the following new item:

``5136A. Subsidiaries of national banks.''.

SEC. 122. SAFETY AND SOUNDNESS FIREWALLS BETWEEN BANKS AND THEIR 
              FINANCIAL SUBSIDIARIES.

    (a) Purposes.--The purposes of this section are--
            (1) to protect the safety and soundness of any insured bank 
        that has a financial subsidiary;
            (2) to apply to any transaction between the bank and the 
        financial subsidiary (including a loan, extension of credit, 
        guarantee, or purchase of assets), other than an equity 
        investment, the same restrictions and requirements as would 
        apply if the financial subsidiary were a subsidiary of a bank 
        holding company having control of the bank; and
            (3) to apply to any equity investment of the bank in the 
        financial subsidiary restrictions and requirements equivalent 
        to those that would apply if--
                    (A) the bank paid a dividend in the same dollar 
                amount to a bank holding company having control of the 
                bank; and
                    (B) the bank holding company used the proceeds of 
                the dividend to make an equity investment in a 
                subsidiary that was engaged in the same activities as 
                the financial subsidiary of the bank.
    (b) Safety and Soundness Firewalls Applicable to Subsidiaries of 
Banks.--The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 
amended by inserting after section 45 (as added by section 113(b) of 
this title) the following new section:

``SEC. 46. SAFETY AND SOUNDNESS FIREWALLS APPLICABLE TO SUBSIDIARIES OF 
              BANKS.

    ``(a) Limiting the Equity Investment of a Bank in a Subsidiary.--
            ``(1) Capital deduction.--In determining whether an insured 
        bank complies with applicable regulatory capital standards--
                    ``(A) the appropriate Federal banking agency shall 
                deduct from the assets and tangible equity of the bank 
                the aggregate amount of the outstanding equity 
                investments of the bank in financial subsidiaries of 
                the bank; and
                    ``(B) the assets and liabilities of such financial 
                subsidiaries shall not be consolidated with those of 
                the bank.
            ``(2) Investment limitation.--An insured bank shall not, 
        without the prior approval of the appropriate Federal banking 
        agency, make any equity investment in a financial subsidiary of 
        the bank if that investment would, when made, exceed the amount 
        that the bank could pay as a dividend without obtaining prior 
        regulatory approval.
            ``(3) Treatment of retained earnings.--The amount of any 
        net earnings retained by a financial subsidiary of an insured 
        depository institution shall be treated as an outstanding 
        equity investment of the bank in the subsidiary for purposes of 
        paragraph (1).
    ``(b) Operational and Financial Safeguards for the Bank.--An 
insured bank that has a financial subsidiary shall maintain procedures 
for identifying and managing any financial and operational risks posed 
by the financial subsidiary.
    ``(c) Maintenance of Separate Corporate Identity and Separate Legal 
Status.--
            ``(1) In general.--Each insured bank shall ensure that the 
        bank maintains and complies with reasonable policies and 
        procedures to preserve the separate corporate identity and 
        legal status of the bank and any financial subsidiary or 
        affiliate of the bank.
            ``(2) Examinations.--The appropriate Federal banking 
        agency, as part of each examination, shall review whether an 
        insured bank is observing the separate corporate identity and 
        separate legal status of any subsidiaries and affiliates of the 
        bank.
    ``(d) Financial Subsidiary Defined.--For purposes of this section, 
the term `financial subsidiary' has the meaning given to such term in 
section 5136A(a)(7)(B) of the Revised Statutes of the United States.
    ``(e) Regulations.--The appropriate Federal banking agencies shall 
jointly prescribe regulations implementing this section.''.
    (c) Transactions Between Financial Subsidiaries and Other 
Affiliates.--Section 23A of the Federal Reserve Act (12 U.S.C. 371c) is 
amended--
            (1) by redesignating subsection (e) as subsection (f); and
            (2) by inserting after subsection (d), the following new 
        subsection:
    ``(e) Rules Relating to Banks With Financial Subsidiaries.--
            ``(1) Financial subsidiary defined.--For purposes of this 
        section and section 23B, the term `financial subsidiary' means 
        a company which is a subsidiary of a bank and is engaged in 
        activities that are financial in nature or incidental to such 
        financial activities pursuant to subsection (a)(2) or (b)(4) of 
        section 5136A of the Revised Statutes of the United States.
            ``(2) Application to transactions between a financial 
        subsidiary of a bank and the bank.--For purposes of applying 
        this section and section 23B to a transaction between a 
        financial subsidiary of a bank and the bank (or between such 
        financial subsidiary and any other subsidiary of the bank which 
        is not a financial subsidiary) and notwithstanding subsection 
        (b)(2) and section 23B(d)(1), the financial subsidiary of the 
        bank--
                    ``(A) shall be an affiliate of the bank and any 
                other subsidiary of the bank which is not a financial 
                subsidiary; and
                    ``(B) shall not be treated as a subsidiary of the 
                bank.
            ``(3) Application to transactions between financial 
        subsidiary and nonbank affiliates.--
                    ``(A) In general.--A transaction between a 
                financial subsidiary and an affiliate of the financial 
                subsidiary shall not be deemed to be a transaction 
                between a subsidiary of a national bank and an 
                affiliate of the bank for purposes of section 23A or 
                section 23B of the Federal Reserve Act.
                    ``(B) Certain affiliates excluded.--For purposes of 
                subparagraph (A) and notwithstanding paragraph (4), the 
                term `affiliate' shall not include a bank, or a 
                subsidiary of a bank, which is engaged exclusively in 
                activities permissible for a national bank to engage in 
                directly or which are authorized by any Federal law 
                other than section 5136A of the Revised Statutes of the 
                United States.
            ``(4) Equity investments excluded subject to the approval 
        of the banking agency.--Subsection (a)(1) shall not apply so as 
        to limit the equity investment of a bank in a financial 
        subsidiary of such bank, except that any investment that 
        exceeds the amount of a dividend that the bank could pay at the 
        time of the investment without obtaining prior approval of the 
        appropriate Federal banking agency and is in excess of the 
        limitation which would apply under subsection (a)(1), but for 
        this paragraph, may be made only with the approval of the 
        appropriate Federal banking agency (as defined in section 3(q) 
        of the Federal Deposit Insurance Act) with respect to such 
        bank.''.
    (d) Antitying.--Section 106(a) of the Bank Holding Company Act 
Amendments of 1970 is amended by adding at the end the following new 
sentence: ``For purposes of this section, a subsidiary of a national 
bank which engages in activities pursuant to subsection (a)(2) or 
(b)(4) of section 5136A of the Revised Statutes of the United States 
shall be deemed to be a subsidiary of a bank holding company, and not a 
subsidiary of a bank.''.

SEC. 123. MISREPRESENTATIONS REGARDING DEPOSITORY INSTITUTION LIABILITY 
              FOR OBLIGATIONS OF AFFILIATES.

    (a) In General.--Chapter 47 of title 18, United States Code, is 
amended by inserting after section 1007 the following new section:
``Sec. 1008. Misrepresentations regarding financial institution 
              liability for obligations of affiliates
    ``(a) In General.--No institution-affiliated party of an insured 
depository institution or institution-affiliated party of a subsidiary 
or affiliate of an insured depository institution shall fraudulently 
represent that the institution is or will be liable for any obligation 
of a subsidiary or other affiliate of the institution.
    ``(b) Criminal Penalty.--Whoever violates subsection (a) shall be 
fined under this title, imprisoned for not more than 5 years, or both.
    ``(c) Institution-Affiliated Party Defined.--For purposes of this 
section, the term `institution-affiliated party' has the same meaning 
as in section 3 of the Federal Deposit Insurance Act and any reference 
in that section shall also be deemed to refer to a subsidiary or 
affiliate of an insured depository institution.
    ``(d) Other Definitions.--For purposes of this section, the terms 
`affiliate', `insured depository institution', and `subsidiary' have 
same meanings as in section 3 of the Federal Deposit Insurance Act.''.
    (b) Clerical Amendment.--The table of sections for chapter 47 of 
title 18, United States Code, is amended by inserting after the item 
relating to section 1007 the following new item:

``1008. Misrepresentations regarding financial institution liability 
                            for obligations of affiliates.''.

SEC. 124. REPEAL OF STOCK LOAN LIMIT IN FEDERAL RESERVE ACT.

    Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended by 
striking the paragraph designated as ``(m)'' and inserting ``(m) 
[Repealed]''.

Subtitle D--Wholesale Financial Holding Companies; Wholesale Financial 
                              Institutions

            CHAPTER 1--WHOLESALE FINANCIAL HOLDING COMPANIES

SEC. 131. WHOLESALE FINANCIAL HOLDING COMPANIES ESTABLISHED.

    Section 10 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841 
et seq.) is amended to read as follows:

``SEC. 10. WHOLESALE FINANCIAL HOLDING COMPANIES.

    ``(a) Companies That Control Wholesale Financial Institutions.--
            ``(1) Wholesale financial holding company defined.--The 
        term `wholesale financial holding company' means any company 
        that--
                    ``(A) is registered as a bank holding company;
                    ``(B) is predominantly engaged in financial 
                activities as defined in section 6(f)(2);
                    ``(C) controls one or more wholesale financial 
                institutions;
                    ``(D) does not control--
                            ``(i) a bank other than a wholesale 
                        financial institution;
                            ``(ii) an insured bank other than an 
                        institution permitted under subparagraph (D), 
                        (F), or (G) of section 2(c)(2); or
                            ``(iii) a savings association; and
                    ``(E) is not a foreign bank (as defined in section 
                1(b)(7) of the International Banking Act of 1978).
            ``(2) Savings association transition period.--
        Notwithstanding paragraph (1)(D)(iii), the Board may permit a 
        company that controls a savings association and that otherwise 
        meets the requirements of paragraph (1) to become supervised 
        under paragraph (1), if the company divests control of any such 
        savings association within such period not to exceed 5 years 
        after becoming supervised under paragraph (1) as permitted by 
        the Board.
    ``(b) Supervision by the Board.--
            ``(1) In general.--The provisions of this section shall 
        govern the reporting, examination, and capital requirements of 
        wholesale financial holding companies.
            ``(2) Reports.--
                    ``(A) In general.--The Board from time to time may 
                require any wholesale financial holding company and any 
                subsidiary of such company to submit reports under oath 
                to keep the Board informed as to--
                            ``(i) the company's or subsidiary's 
                        activities, financial condition, policies, 
                        systems for monitoring and controlling 
                        financial and operational risks, and 
                        transactions with depository institution 
                        subsidiaries of the holding company; and
                            ``(ii) the extent to which the company or 
                        subsidiary has complied with the provisions of 
                        this Act and regulations prescribed and orders 
                        issued under this Act.
                    ``(B) Use of existing reports.--
                            ``(i) In general.--The Board shall, to the 
                        fullest extent possible, accept reports in 
                        fulfillment of the Board's reporting 
                        requirements under this paragraph that the 
                        wholesale financial holding company or any 
                        subsidiary of such company has provided or been 
                        required to provide to other Federal and State 
                        supervisors or to appropriate self-regulatory 
                        organizations.
                            ``(ii) Availability.--A wholesale financial 
                        holding company or a subsidiary of such company 
                        shall provide to the Board, at the request of 
                        the Board, a report referred to in clause (i).
                    ``(C) Exemptions from reporting requirements.--
                            ``(i) In general.--The Board may, by 
                        regulation or order, exempt any company or 
                        class of companies, under such terms and 
                        conditions and for such periods as the Board 
                        shall provide in such regulation or order, from 
                        the provisions of this paragraph and any 
                        regulation prescribed under this paragraph.
                            ``(ii) Criteria for consideration.--In 
                        making any determination under clause (i) with 
                        regard to any exemption under such clause, the 
                        Board shall consider, among such other factors 
                        as the Board may determine to be appropriate, 
                        the following factors:
                                    ``(I) Whether information of the 
                                type required under this paragraph is 
                                available from a supervisory agency (as 
                                defined in section 1101(7) of the Right 
                                to Financial Privacy Act of 1978) or a 
                                foreign regulatory authority of a 
                                similar type.
                                    ``(II) The primary business of the 
                                company.
                                    ``(III) The nature and extent of 
                                the domestic and foreign regulation of 
                                the activities of the company.
            ``(3) Examinations.--
                    ``(A) Limited use of examination authority.--The 
                Board may make examinations of each wholesale financial 
                holding company and each subsidiary of such company in 
                order to--
                            ``(i) inform the Board regarding the nature 
                        of the operations and financial condition of 
                        the wholesale financial holding company and its 
                        subsidiaries;
                            ``(ii) inform the Board regarding--
                                    ``(I) the financial and operational 
                                risks within the wholesale financial 
                                holding company system that may affect 
                                any depository institution owned by 
                                such holding company; and
                                    ``(II) the systems of the holding 
                                company and its subsidiaries for 
                                monitoring and controlling those risks; 
                                and
                            ``(iii) monitor compliance with the 
                        provisions of this Act and those governing 
                        transactions and relationships between any 
                        depository institution controlled by the 
                        wholesale financial holding company and any of 
                        the company's other subsidiaries.
                    ``(B) Restricted focus of examinations.--The Board 
                shall, to the fullest extent possible, limit the focus 
                and scope of any examination of a wholesale financial 
                holding company under this paragraph to--
                            ``(i) the holding company; and
                            ``(ii) any subsidiary (other than an 
                        insured depository institution subsidiary) of 
                        the holding company that, because of the size, 
                        condition, or activities of the subsidiary, the 
                        nature or size of transactions between such 
                        subsidiary and any affiliated depository 
                        institution, or the centralization of functions 
                        within the holding company system, could have a 
                        materially adverse effect on the safety and 
                        soundness of any depository institution 
                        affiliate of the holding company.
                    ``(C) Deference to bank examinations.--The Board 
                shall, to the fullest extent possible, use the reports 
                of examination of depository institutions made by the 
                Comptroller of the Currency, the Federal Deposit 
                Insurance Corporation, the Director of the Office of 
                Thrift Supervision or the appropriate State depository 
                institution supervisory authority for the purposes of 
                this section.
                    ``(D) Deference to other examinations.--The Board 
                shall, to the fullest extent possible, address the 
                circumstances which might otherwise permit or require 
                an examination by the Board by forgoing an examination 
                and by instead reviewing the reports of examination 
                made of--
                            ``(i) any registered broker or dealer or 
                        any registered investment adviser by or on 
                        behalf of the Commission; and
                            ``(ii) any licensed insurance company by or 
                        on behalf of any State government insurance 
                        agency responsible for the supervision of the 
                        insurance company.
                    ``(E) Confidentiality of reported information.--
                            ``(i) In general.--Notwithstanding any 
                        other provision of law, the Board shall not be 
                        compelled to disclose any nonpublic information 
                        required to be reported under this paragraph, 
                        or any information supplied to the Board by any 
                        domestic or foreign regulatory agency, that 
                        relates to the financial or operational 
                        condition of any wholesale financial holding 
                        company or any subsidiary of such company.
                            ``(ii) Compliance with requests for 
                        information.--No provision of this subparagraph 
                        shall be construed as authorizing the Board to 
                        withhold information from the Congress, or 
                        preventing the Board from complying with a 
                        request for information from any other Federal 
                        department or agency for purposes within the 
                        scope of such department's or agency's 
                        jurisdiction, or from complying with any order 
                        of a court of competent jurisdiction in an 
                        action brought by the United States or the 
                        Board.
                            ``(iii) Coordination with other law.--For 
                        purposes of section 552 of title 5, United 
                        States Code, this subparagraph shall be 
                        considered to be a statute described in 
                        subsection (b)(3)(B) of such section.
                            ``(iv) Designation of confidential 
                        information.--In prescribing regulations to 
                        carry out the requirements of this subsection, 
                        the Board shall designate information described 
                        in or obtained pursuant to this paragraph as 
                        confidential information.
                    ``(F) Costs.--The cost of any examination conducted 
                by the Board under this section may be assessed 
                against, and made payable by, the wholesale financial 
                holding company.
            ``(4) Capital adequacy guidelines.--
                    ``(A) Capital adequacy provisions.--Subject to the 
                requirements of, and solely in accordance with, the 
                terms of this paragraph, the Board may adopt capital 
                adequacy rules or guidelines for wholesale financial 
                holding companies.
                    ``(B) Method of calculation.--In developing rules 
                or guidelines under this paragraph, the following 
                provisions shall apply:
                            ``(i) Focus on double leverage.--The Board 
                        shall focus on the use by wholesale financial 
                        holding companies of debt and other liabilities 
                        to fund capital investments in subsidiaries.
                            ``(ii) No unweighted capital ratio.--The 
                        Board shall not, by regulation, guideline, 
                        order, or otherwise, impose under this section 
                        a capital ratio that is not based on 
                        appropriate risk-weighting considerations.
                            ``(iii) No capital requirement on regulated 
                        entities.--The Board shall not, by regulation, 
                        guideline, order or otherwise, prescribe or 
                        impose any capital or capital adequacy rules, 
                        standards, guidelines, or requirements upon any 
                        subsidiary that--
                                    ``(I) is not a depository 
                                institution; and
                                    ``(II) is in compliance with 
                                applicable capital requirements of 
                                another Federal regulatory authority 
                                (including the Securities and Exchange 
                                Commission) or State insurance 
                                authority.
                            ``(iv) Limitation.--The Board shall not, by 
                        regulation, guideline, order or otherwise, 
                        prescribe or impose any capital or capital 
                        adequacy rules, standards, guidelines, or 
                        requirements upon any subsidiary that is not a 
                        depository institution and that is registered 
                        as an investment adviser under the Investment 
                        Advisers Act of 1940, except that this clause 
                        shall not be construed as preventing the Board 
                        from imposing capital or capital adequacy 
                        rules, guidelines, standards, or requirements 
                        with respect to activities of a registered 
                        investment adviser other than investment 
                        advisory activities or activities incidental to 
                        investment advisory activities.
                            ``(v) Limitations on indirect action.--In 
                        developing, establishing, or assessing holding 
                        company capital or capital adequacy rules, 
                        guidelines, standards, or requirements for 
                        purposes of this paragraph, the Board shall not 
                        take into account the activities, operations, 
                        or investments of an affiliated investment 
                        company registered under the Investment Company 
                        Act of 1940, unless the investment company is--
                                    ``(I) a bank holding company; or
                                    ``(II) controlled by a bank holding 
                                company by reason of ownership by the 
                                bank holding company (including through 
                                all of its affiliates) of 25 percent or 
                                more of the shares of the investment 
                                company, and the shares owned by the 
                                bank holding company have a market 
                                value equal to more than $1,000,000.
                            ``(vi) Appropriate exclusions.--The Board 
                        shall take full account of--
                                    ``(I) the capital requirements made 
                                applicable to any subsidiary that is 
                                not a depository institution by another 
                                Federal regulatory authority or State 
                                insurance authority; and
                                    ``(II) industry norms for 
                                capitalization of a company's 
                                unregulated subsidiaries and 
                                activities.
                            ``(vii) Internal risk management models.--
                        The Board may incorporate internal risk 
                        management models of wholesale financial 
                        holding companies into its capital adequacy 
                        guidelines or rules and may take account of the 
                        extent to which resources of a subsidiary 
                        depository institution may be used to service 
                        the debt or other liabilities of the wholesale 
                        financial holding company.
    ``(c) Nonfinancial Activities and Investments.--
            ``(1) Grandfathered activities.--
                    ``(A) In general.--Notwithstanding section 4(a), a 
                company that becomes a wholesale financial holding 
                company may continue to engage, directly or indirectly, 
                in any activity and may retain ownership and control of 
                shares of a company engaged in any activity if--
                            ``(i) on the date of the enactment of the 
                        Financial Services Act of 1999, such wholesale 
                        financial holding company was lawfully engaged 
                        in that nonfinancial activity, held the shares 
                        of such company, or had entered into a contract 
                        to acquire shares of any company engaged in 
                        such activity; and
                            ``(ii) the company engaged in such activity 
                        continues to engage only in the same activities 
                        that such company conducted on the date of the 
                        enactment of the Financial Services Act of 
                        1999, and other activities permissible under 
                        this Act.
                    ``(B) No expansion of grandfathered commercial 
                activities through merger or consolidation.--A 
                wholesale financial holding company that engages in 
                activities or holds shares pursuant to this paragraph, 
                or a subsidiary of such wholesale financial holding 
                company, may not acquire, in any merger, consolidation, 
                or other type of business combination, assets of any 
                other company which is engaged in any activity which 
                the Board has not determined to be financial in nature 
                or incidental to activities that are financial in 
                nature under section 6(c).
                    ``(C) Limitation to single exemption.--No company 
                that engages in any activity or controls any shares 
                under subsection (f) of section 6 may engage in any 
                activity or own any shares pursuant to this paragraph.
            ``(2) Commodities.--
                    ``(A) In general.--Notwithstanding section 4(a), a 
                wholesale financial holding company which was 
                predominately engaged as of January 1, 1997, in 
                financial activities in the United States (or any 
                successor to any such company) may engage in, or 
                directly or indirectly own or control shares of a 
                company engaged in, activities related to the trading, 
                sale, or investment in commodities and underlying 
                physical properties that were not permissible for bank 
                holding companies to conduct in the United States as of 
                January 1, 1997, if such wholesale financial holding 
                company, or any subsidiary of such holding company, was 
                engaged directly, indirectly, or through any such 
                company in any of such activities as of January 1, 
                1997, in the United States.
                    ``(B) Limitation.--The attributed aggregate 
                consolidated assets of a wholesale financial holding 
                company held under the authority granted under this 
                paragraph and not otherwise permitted to be held by all 
                wholesale financial holding companies under this 
                section may not exceed 5 percent of the total 
                consolidated assets of the wholesale financial holding 
                company, except that the Board may increase such 
                percentage of total consolidated assets by such amounts 
                and under such circumstances as the Board considers 
                appropriate, consistent with the purposes of this Act.
            ``(3) Cross marketing restrictions.--A wholesale financial 
        holding company shall not permit--
                    ``(A) any company whose shares it owns or controls 
                pursuant to paragraph (1) or (2) to offer or market any 
                product or service of an affiliated wholesale financial 
                institution; or
                    ``(B) any affiliated wholesale financial 
                institution to offer or market any product or service 
                of any company whose shares are owned or controlled by 
                such wholesale financial holding company pursuant to 
                such paragraphs.
    ``(d) Qualification of Foreign Bank as Wholesale Financial Holding 
Company.--
            ``(1) In general.--Any foreign bank, or any company that 
        owns or controls a foreign bank, that operates a branch, 
        agency, or commercial lending company in the United States, 
        including a foreign bank or company that owns or controls a 
        wholesale financial institution, may request a determination 
        from the Board that such bank or company be treated as a 
        wholesale financial holding company other than for purposes of 
        subsection (c), subject to such conditions as the Board 
        considers appropriate, giving due regard to the principle of 
        national treatment and equality of competitive opportunity and 
        the requirements imposed on domestic banks and companies.
            ``(2) Conditions for treatment as a wholesale financial 
        holding company.--A foreign bank and a company that owns or 
        controls a foreign bank may not be treated as a wholesale 
        financial holding company unless the bank and company meet and 
        continue to meet the following criteria:
                    ``(A) No insured deposits.--No deposits held 
                directly by a foreign bank or through an affiliate 
                (other than an institution described in subparagraph 
                (D) or (F) of section 2(c)(2)) are insured under the 
                Federal Deposit Insurance Act.
                    ``(B) Capital standards.--The foreign bank meets 
                risk-based capital standards comparable to the capital 
                standards required for a wholesale financial 
                institution, giving due regard to the principle of 
                national treatment and equality of competitive 
                opportunity.
                    ``(C) Transaction with affiliates.--Transactions 
                between a branch, agency, or commercial lending company 
                subsidiary of the foreign bank in the United States, 
                and any securities affiliate or company in which the 
                foreign bank (or any company that owns or controls such 
                foreign bank) has invested, directly or indirectly, and 
                which engages in any activity pursuant to subsection 
                (c) or (g) of section 6, comply with the provisions of 
                sections 23A and 23B of the Federal Reserve Act in the 
                same manner and to the same extent as such transactions 
                would be required to comply with such sections if the 
                bank were a member bank.
            ``(3) Treatment as a wholesale financial institution.--Any 
        foreign bank which is, or is affiliated with a company which 
        is, treated as a wholesale financial holding company under this 
        subsection shall be treated as a wholesale financial 
        institution for purposes of subsections (c)(1)(C) and (c)(3) of 
        section 9B of the Federal Reserve Act, and any such foreign 
        bank or company shall be subject to paragraphs (3), (4), and 
        (5) of section 9B(d) of the Federal Reserve Act, except that 
        the Board may adopt such modifications, conditions, or 
        exemptions as the Board deems appropriate, giving due regard to 
        the principle of national treatment and equality of competitive 
        opportunity.
            ``(4) Supervision of foreign bank which maintains no 
        banking presence other than control of a wholesale financial 
        institution.--A foreign bank that owns or controls a wholesale 
        financial institution but does not operate a branch, agency, or 
        commercial lending company in the United States (and any 
        company that owns or controls such foreign bank) may request a 
        determination from the Board that such bank or company be 
        treated as a wholesale financial holding company, except that 
        such bank or company shall be subject to the restrictions of 
        paragraphs (2)(A) and (3) of this subsection.
            ``(5) No effect on other provisions.--This section shall 
        not be construed as limiting the authority of the Board under 
        the International Banking Act of 1978 with respect to the 
        regulation, supervision, or examination of foreign banks and 
        their offices and affiliates in the United States.
            ``(6) Applicability of community reinvestment act of 
        1977.--The branches in the United States of a foreign bank that 
        is, or is affiliated with a company that is, treated as a 
        wholesale financial holding company shall be subject to section 
        9B(b)(11) of the Federal Reserve Act as if the foreign bank 
        were a wholesale financial institution under such section. The 
        Board and the Comptroller of the Currency shall apply the 
        provisions of sections 803(2), 804, and 807(1) of the Community 
        Reinvestment Act of 1977 to branches of foreign banks which 
        receive only such deposits as are permissible for receipt by a 
        corporation organized under section 25A of the Federal Reserve 
        Act, in the same manner and to the same extent such sections 
        apply to such a corporation.''.

SEC. 132. AUTHORIZATION TO RELEASE REPORTS.

    (a) Federal Reserve Act.--The last sentence of the eighth 
undesignated paragraph of section 9 of the Federal Reserve Act (12 
U.S.C. 326) is amended to read as follows: ``The Board of Governors of 
the Federal Reserve System, at its discretion, may furnish reports of 
examination or other confidential supervisory information concerning 
State member banks or any other entities examined under any other 
authority of the Board to any Federal or State authorities with 
supervisory or regulatory authority over the examined entity, to 
officers, directors, or receivers of the examined entity, and to any 
other person that the Board determines to be proper.''.
    (b) Commodity Futures Trading Commission.--The Right to Financial 
Privacy Act of 1978 (12 U.S.C. 3401 et seq.) is amended--
            (1) in section 1101(7) of the (12 U.S.C. 3401(7))--
                    (A) by redesignating subparagraphs (G) and (H) as 
                subparagraphs (H) and (I), respectively; and
                    (B) by inserting after subparagraph (F) the 
                following new subparagraph:
                    ``(G) the Commodity Futures Trading Commission; 
                or''; and
            (2) in section 1112(e), by striking ``and the Securities 
        and Exchange Commission'' and inserting ``, the Securities and 
        Exchange Commission, and the Commodity Futures Trading 
        Commission''.

SEC. 133. CONFORMING AMENDMENTS.

    (a) Bank Holding Company Act of 1956.--
            (1) Definitions.--Section 2 of the Bank Holding Company Act 
        of 1956 (12 U.S.C. 1841) is amended by inserting after 
        subsection (p) (as added by section 103(b)(1)) the following 
        new subsections:
    ``(q) Wholesale Financial Institution.--The term `wholesale 
financial institution' means a wholesale financial institution subject 
to section 9B of the Federal Reserve Act.
    ``(r) Commission.--The term `Commission' means the Securities and 
Exchange Commission.
    ``(s) Depository Institution.--The term `depository institution'--
            ``(1) has the meaning given to such term in section 3 of 
        the Federal Deposit Insurance Act; and
            ``(2) includes a wholesale financial institution.''.
            (2) Definition of bank includes wholesale financial 
        institution.--Section 2(c)(1) of the Bank Holding Company Act 
        of 1956 (12 U.S.C. 1841(c)(1)) is amended by adding at the end 
        the following new subparagraph:
                    ``(C) A wholesale financial institution.''.
            (3) Incorporated definitions.--Section 2(n) of the Bank 
        Holding Company Act of 1956 (12 U.S.C. 1841(n)) is amended by 
        inserting ```insured bank','' after ```in danger of 
        default',''.
            (4) Exception to deposit insurance requirement.--Section 
        3(e) of the Bank Holding Company Act of 1956 (12 U.S.C. 
        1842(e)) is amended by adding at the end the following: ``This 
        subsection shall not apply to a wholesale financial 
        institution.''.
    (b) Federal Deposit Insurance Act.--Section 3(q)(2)(A) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(q)(2)(A)) is amended to 
read as follows:
                    ``(A) any State member insured bank (except a 
                District bank) and any wholesale financial institution 
                subject to section 9B of the Federal Reserve Act;''.

              CHAPTER 2--WHOLESALE FINANCIAL INSTITUTIONS

SEC. 136. WHOLESALE FINANCIAL INSTITUTIONS.

    (a) National Wholesale Financial Institutions.--
            (1) In general.--Chapter 1 of title LXII of the Revised 
        Statutes of the United States (12 U.S.C. 21 et seq.) is amended 
        by inserting after section 5136A (as added by section 121(a) of 
        this title) the following new section:

``SEC. 5136B. NATIONAL WHOLESALE FINANCIAL INSTITUTIONS.

    ``(a) Authorization of the Comptroller Required.--A national bank 
may apply to the Comptroller on such forms and in accordance with such 
regulations as the Comptroller may prescribe, for permission to operate 
as a national wholesale financial institution.
    ``(b) Regulation.--A national wholesale financial institution may 
exercise, in accordance with such institution's articles of 
incorporation and regulations issued by the Comptroller, all the powers 
and privileges of a national bank formed in accordance with section 
5133 of the Revised Statutes of the United States, subject to section 
9B of the Federal Reserve Act and the limitations and restrictions 
contained therein.
    ``(c) Community Reinvestment Act of 1977.--A national wholesale 
financial institution shall be subject to the Community Reinvestment 
Act of 1977.
            (2) Clerical amendment.--The table of sections for chapter 
        1 of title LXII of the Revised Statutes of the United States is 
        amended by inserting after the item relating to section 5136A 
        (as added by section 121(d) of this title) the following new 
        item:

``5136B. National wholesale financial institutions.''.
    (b) Wholesale Financial Institutions.--The Federal Reserve Act (12 
U.S.C. 221 et seq.) is amended by inserting after section 9A the 
following new section:

``SEC. 9B. WHOLESALE FINANCIAL INSTITUTIONS.

    ``(a) Application for Membership as Wholesale Financial 
Institution.--
            ``(1) Application required.--
                    ``(A) In general.--Any bank may apply to the Board 
                of Governors of the Federal Reserve System to become a 
                State wholesale financial institution, or to the 
                Comptroller of the Currency to become a national 
                wholesale financial institution, and, as a wholesale 
                financial institution, to subscribe to the stock of the 
                Federal Reserve bank organized within the district 
                where the applying bank is located.
                    ``(B) Treatment as member bank.--Any application 
                under subparagraph (A) shall be treated as an 
                application under, and shall be subject to the 
                provisions of, section 9.
            ``(2) Insurance termination.--No bank the deposits of which 
        are insured under the Federal Deposit Insurance Act may become 
        a wholesale financial institution unless it has met all 
        requirements under that Act for voluntary termination of 
        deposit insurance.
    ``(b) General Requirements Applicable to Wholesale Financial 
Institutions.--
            ``(1) Federal reserve act.--Except as otherwise provided in 
        this section, wholesale financial institutions shall be member 
        banks and shall be subject to the provisions of this Act that 
        apply to member banks to the same extent and in the same manner 
        as State member insured banks or national banks, except that a 
        wholesale financial institution may terminate membership under 
        this Act only with the prior written approval of the Board and 
        on terms and conditions that the Board determines are 
        appropriate to carry out the purposes of this Act.
            ``(2) Prompt corrective action.--A wholesale financial 
        institution shall be deemed to be an insured depository 
        institution for purposes of section 38 of the Federal Deposit 
        Insurance Act except that--
                    ``(A) the relevant capital levels and capital 
                measures for each capital category shall be the levels 
                specified by the Board for wholesale financial 
                institutions;
                    ``(B) subject to subparagraph (A), all references 
                to the appropriate Federal banking agency or to the 
                Corporation in that section shall be deemed to be 
                references to the Comptroller of the Currency, in the 
                case of a national wholesale financial institution, and 
                to the Board, in the case of all other wholesale 
                financial institutions; and
                    ``(C) in the case of wholesale financial 
                institutions, the purpose of prompt corrective action 
                shall be to protect taxpayers and the financial system 
                from the risks associated with the operation and 
                activities of wholesale financial institutions.
            ``(3) Enforcement authority.--Section 3(u), subsections (j) 
        and (k) of section 7, subsections (b) through (n), (s), (u), 
        and (v) of section 8, and section 19 of the Federal Deposit 
        Insurance Act shall apply to a wholesale financial institution 
        in the same manner and to the same extent as such provisions 
        apply to State member insured banks or national banks, as the 
        case may be, and any reference in such sections to an insured 
        depository institution shall be deemed to include a reference 
        to a wholesale financial institution.
            ``(4) Certain other statutes applicable.--A wholesale 
        financial institution shall be deemed to be a banking 
        institution, and the Board shall be the appropriate Federal 
        banking agency for such bank and all such bank's affiliates, 
        for purposes of the International Lending Supervision Act.
            ``(5) Bank merger act.--A wholesale financial institution 
        shall be subject to sections 18(c) and 44 of the Federal 
        Deposit Insurance Act in the same manner and to the same extent 
        the wholesale financial institution would be subject to such 
        sections if the institution were a State member insured bank or 
        a national bank.
            ``(6) Branching.--Notwithstanding any other provision of 
        law, a wholesale financial institution may establish and 
        operate a branch at any location on such terms and conditions 
        as established by, and with the approval of--
                    ``(A) the Board, in the case of a State-chartered 
                wholesale financial institution; and
                    ``(B) the Comptroller of the Currency, in the case 
                of a national bank wholesale financial institution.
            ``(7) Activities of out-of-state branches of wholesale 
        financial institutions.--A State-chartered wholesale financial 
        institution shall be deemed to be a State bank and an insured 
        State bank for purposes of paragraphs (1), (2), and (3) of 
        section 24(j) of the Federal Deposit Insurance Act.
            ``(8) Discrimination regarding interest rates.--Section 27 
        of the Federal Deposit Insurance Act shall apply to State-
        chartered wholesale financial institutions in the same manner 
        and to the same extent as such provisions apply to State member 
        insured banks and any reference in such section to a State-
        chartered insured depository institution shall be deemed to 
        include a reference to a State-chartered wholesale financial 
        institution.
            ``(9) Preemption of state laws requiring deposit insurance 
        for wholesale financial institutions.--The appropriate State 
        banking authority may grant a charter to a wholesale financial 
        institution notwithstanding any State constitution or statute 
        requiring that the institution obtain insurance of its deposits 
        and any such State constitution or statute is hereby preempted 
        solely for purposes of this paragraph.
            ``(10) Parity for wholesale financial institutions.--A 
        State bank that is a wholesale financial institution under this 
        section shall have all of the rights, powers, privileges, and 
        immunities (including those derived from status as a federally 
        chartered institution) of and as if it were a national bank, 
        subject to such terms and conditions as established by the 
        Board.
            ``(11) Community reinvestment act of 1977.--A State 
        wholesale financial institution shall be subject to the 
        Community Reinvestment Act of 1977.
    ``(c) Specific Requirements Applicable to Wholesale Financial 
Institutions.--
            ``(1) Limitations on deposits.--
                    ``(A) Minimum amount.--
                            ``(i) In general.--No wholesale financial 
                        institution may receive initial deposits of 
                        $100,000 or less, other than on an incidental 
                        and occasional basis.
                            ``(ii) Limitation on deposits of less than 
                        $100,000.--No wholesale financial institution 
                        may receive initial deposits of $100,000 or 
                        less if such deposits constitute more than 5 
                        percent of the institution's total deposits.
                    ``(B) No deposit insurance.--Except as otherwise 
                provided in section 8A(f) of the Federal Deposit 
                Insurance Act, no deposits held by a wholesale 
                financial institution shall be insured deposits under 
                the Federal Deposit Insurance Act.
                    ``(C) Advertising and disclosure.--The Board and 
                the Comptroller of the Currency shall prescribe jointly 
                regulations pertaining to advertising and disclosure by 
                wholesale financial institutions to ensure that each 
                depositor is notified that deposits at the wholesale 
                financial institution are not federally insured or 
                otherwise guaranteed by the United States Government.
            ``(2) Minimum capital levels applicable to wholesale 
        financial institutions.--The Board shall, by regulation, adopt 
        capital requirements for wholesale financial institutions--
                    ``(A) to account for the status of wholesale 
                financial institutions as institutions that accept 
                deposits that are not insured under the Federal Deposit 
                Insurance Act; and
                    ``(B) to provide for the safe and sound operation 
                of the wholesale financial institution without undue 
                risk to creditors or other persons, including Federal 
                Reserve banks, engaged in transactions with the bank.
            ``(3) Additional requirements applicable to wholesale 
        financial institutions.--In addition to any requirement 
        otherwise applicable to State member insured banks or 
        applicable, under this section, to wholesale financial 
        institutions, the Board may impose, by regulation or order, 
        upon wholesale financial institutions--
                    ``(A) limitations on transactions, direct or 
                indirect, with affiliates to prevent--
                            ``(i) the transfer of risk to the deposit 
                        insurance funds; or
                            ``(ii) an affiliate from gaining access to, 
                        or the benefits of, credit from a Federal 
                        Reserve bank, including overdrafts at a Federal 
                        Reserve bank;
                    ``(B) special clearing balance requirements; and
                    ``(C) any additional requirements that the Board 
                determines to be appropriate or necessary to--
                            ``(i) promote the safety and soundness of 
                        the wholesale financial institution or any 
                        insured depository institution affiliate of the 
                        wholesale financial institution;
                            ``(ii) prevent the transfer of risk to the 
                        deposit insurance funds; or
                            ``(iii) protect creditors and other 
                        persons, including Federal Reserve banks, 
                        engaged in transactions with the wholesale 
                        financial institution.
            ``(4) Exemptions for wholesale financial institutions.--The 
        Board may, by regulation or order, exempt any wholesale 
        financial institution from any provision applicable to a member 
        bank that is not a wholesale financial institution, if the 
        Board finds that such exemption is consistent with--
                    ``(A) the promotion of the safety and soundness of 
                the wholesale financial institution or any insured 
                depository institution affiliate of the wholesale 
                financial institution;
                    ``(B) the protection of the deposit insurance 
                funds; and
                    ``(C) the protection of creditors and other 
                persons, including Federal Reserve banks, engaged in 
                transactions with the wholesale financial institution.
            ``(5) Limitation on transactions between a wholesale 
        financial institution and an insured bank.--For purposes of 
        section 23A(d)(1) of the Federal Reserve Act, a wholesale 
        financial institution that is affiliated with an insured bank 
        shall not be a bank.
            ``(6) No effect on other provisions.--This section shall 
        not be construed as limiting the Board's authority over member 
        banks or the authority of the Comptroller of the Currency over 
        national banks under any other provision of law, or to create 
        any obligation for any Federal Reserve bank to make, increase, 
        renew, or extend any advance or discount under this Act to any 
        member bank or other depository institution.
    ``(d) Capital and Managerial Requirements.--
            ``(1) In general.--A wholesale financial institution shall 
        be well capitalized and well managed.
            ``(2) Notice to company.--The Board shall promptly provide 
        notice to a company that controls a wholesale financial 
        institution whenever such wholesale financial institution is 
        not well capitalized or well managed.
            ``(3) Agreement to restore institution.--Not later than 45 
        days after the date of receipt of a notice under paragraph (2) 
        (or such additional period not to exceed 90 days as the Board 
        may permit), the company shall execute an agreement acceptable 
        to the Board to restore the wholesale financial institution to 
        compliance with all of the requirements of paragraph (1).
            ``(4) Limitations until institution restored.--Until the 
        wholesale financial institution is restored to compliance with 
        all of the requirements of paragraph (1), the Board may impose 
        such limitations on the conduct or activities of the company or 
        any affiliate of the company as the Board determines to be 
        appropriate under the circumstances.
            ``(5) Failure to restore.--If the company does not execute 
        and implement an agreement in accordance with paragraph (3), 
        comply with any limitation imposed under paragraph (4), restore 
        the wholesale financial institution to well capitalized status 
        not later than 180 days after the date of receipt by the 
        company of the notice described in paragraph (2), or restore 
        the wholesale financial institution to well managed status 
        within such period as the Board may permit, the company shall, 
        under such terms and conditions as may be imposed by the Board 
        subject to such extension of time as may be granted in the 
        discretion of the Board, divest control of its subsidiary 
        depository institutions.
            ``(6) Well managed defined.--For purposes of this 
        subsection, the term `well managed' has the same meaning as in 
        section 2 of the Bank Holding Company Act of 1956.
    ``(e) Resolution of Wholesale Financial Institutions.--
            ``(1) Conservatorship or receivership.--
                    ``(A) Appointment.--The Board may appoint a 
                conservator or receiver to take possession and control 
                of a wholesale financial institution to the same extent 
                and in the same manner as the Comptroller of the 
                Currency may appoint a conservator or receiver for a 
                national bank.
                    ``(B) Powers.--The conservator or receiver for a 
                wholesale financial institution shall exercise the same 
                powers, functions, and duties, subject to the same 
                limitations, as a conservator or receiver for a 
                national bank.
            ``(2) Board authority.--The Board shall have the same 
        authority with respect to any conservator or receiver appointed 
        under paragraph (1), and the wholesale financial institution 
        for which it has been appointed, as the Comptroller of the 
        Currency has with respect to a conservator or receiver for a 
        national bank and the national bank for which the conservator 
        or receiver has been appointed.
            ``(3) Bankruptcy proceedings.--The Comptroller of the 
        Currency (in the case of a national wholesale financial 
        institution) or the Board may direct the conservator or 
        receiver of a wholesale financial institution to file a 
        petition pursuant to title 11, United States Code, in which 
        case, title 11, United States Code, shall apply to the 
        wholesale financial institution in lieu of otherwise applicable 
        Federal or State insolvency law.
    ``(f) Board Backup Authority.--
            ``(1) Notice to the comptroller.--Before taking any action 
        under section 8 of the Federal Deposit Insurance Act involving 
        a wholesale financial institution that is chartered as a 
        national bank, the Board shall notify the Comptroller and 
        recommend that the Comptroller take appropriate action. If the 
        Comptroller fails to take the recommended action or to provide 
        an acceptable plan for addressing the concerns of the Board 
        before the close of the 30-day period beginning on the date of 
        receipt of the formal recommendation from the Board, the Board 
        may take such action.
            ``(2) Exigent circumstances.--Notwithstanding paragraph 
        (1), the Board may exercise its authority without regard to the 
        time period set forth in paragraph (1) where the Board finds 
        that exigent circumstances exist and the Board notifies the 
        Comptroller of the Board's action and of the exigent 
        circumstances.
    ``(g) Exclusive Jurisdiction.--Subsections (c) and (e) of section 
43 of the Federal Deposit Insurance Act shall not apply to any 
wholesale financial institution.''.
    (c) Voluntary Termination of Insured Status by Certain 
Institutions.--
            (1) Section 8 designations.--Section 8(a) of the Federal 
        Deposit Insurance Act (12 U.S.C. 1818(a)) is amended--
                    (A) by striking paragraph (1); and
                    (B) by redesignating paragraphs (2) through (10) as 
                paragraphs (1) through (9), respectively.
            (2) Voluntary termination of insured status.--The Federal 
        Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by 
        inserting after section 8 the following new section:

``SEC. 8A. VOLUNTARY TERMINATION OF STATUS AS INSURED DEPOSITORY 
              INSTITUTION.

    ``(a) In General.--Except as provided in subsection (b), an insured 
State bank or a national bank may voluntarily terminate such bank's 
status as an insured depository institution in accordance with 
regulations of the Corporation if--
            ``(1) the bank provides written notice of the bank's intent 
        to terminate such insured status--
                    ``(A) to the Corporation and the Board of Governors 
                of the Federal Reserve System, in the case of an 
                insured State bank, or to the Corporation and the 
                Comptroller of the Currency, in the case of an insured 
                national bank authorized to operate as a wholesale 
                financial institution, not less than 6 months before 
                the effective date of such termination; and
                    ``(B) to all depositors at such bank, not less than 
                6 months before the effective date of the termination 
                of such status; and
            ``(2) either--
                    ``(A) the deposit insurance fund of which such bank 
                is a member equals or exceeds the fund's designated 
                reserve ratio as of the date the bank provides a 
                written notice under paragraph (1) and the Corporation 
                determines that the fund will equal or exceed the 
                applicable designated reserve ratio for the 2 
                semiannual assessment periods immediately following 
                such date; or
                    ``(B) the Corporation and the Board of Governors of 
                the Federal Reserve System, in the case of an insured 
                State bank, or the Corporation and the Comptroller of 
                the Currency, in the case of an insured national bank 
                authorized to operate as a wholesale financial 
                institution, has approved the termination of the bank's 
                insured status and the bank pays an exit fee in 
                accordance with subsection (e).
    ``(b) Exception.--Subsection (a) shall not apply with respect to--
            ``(1) an insured savings association; or
            ``(2) an insured branch that is required to be insured 
        under subsection (a) or (b) of section 6 of the International 
        Banking Act of 1978.
    ``(c) Eligibility for Insurance Terminated.--Any bank that 
voluntarily elects to terminate the bank's insured status under 
subsection (a) shall not be eligible for insurance on any deposits or 
any assistance authorized under this Act after the period specified in 
subsection (f)(1).
    ``(d) Institution Must Become Wholesale Financial Institution or 
Terminate Deposit-Taking Activities.--Any depository institution which 
voluntarily terminates such institution's status as an insured 
depository institution under this section may not, upon termination of 
insurance, accept any deposits unless the institution is a wholesale 
financial institution subject to section 9B of the Federal Reserve Act.
    ``(e) Exit Fees.--
            ``(1) In general.--Any bank that voluntarily terminates 
        such bank's status as an insured depository institution under 
        this section shall pay an exit fee in an amount that the 
        Corporation determines is sufficient to account for the 
        institution's pro rata share of the amount (if any) which would 
        be required to restore the relevant deposit insurance fund to 
        the fund's designated reserve ratio as of the date the bank 
        provides a written notice under subsection (a)(1).
            ``(2) Procedures.--The Corporation shall prescribe, by 
        regulation, procedures for assessing any exit fee under this 
        subsection.
    ``(f) Temporary Insurance of Deposits Insured as of Termination.--
            ``(1) Transition period.--The insured deposits of each 
        depositor in a State bank or a national bank on the effective 
        date of the voluntary termination of the bank's insured status, 
        less all subsequent withdrawals from any deposits of such 
        depositor, shall continue to be insured for a period of not 
        less than 6 months and not more than 2 years, as determined by 
        the Corporation. During such period, no additions to any such 
        deposits, and no new deposits in the depository institution 
        made after the effective date of such termination shall be 
        insured by the Corporation.
            ``(2) Temporary assessments; obligations and duties.--
        During the period specified in paragraph (1) with respect to 
        any bank, the bank shall continue to pay assessments under 
        section 7 as if the bank were an insured depository 
        institution. The bank shall, in all other respects, be subject 
        to the authority of the Corporation and the duties and 
        obligations of an insured depository institution under this Act 
        during such period, and in the event that the bank is closed 
        due to an inability to meet the demands of the bank's 
        depositors during such period, the Corporation shall have the 
        same powers and rights with respect to such bank as in the case 
        of an insured depository institution.
    ``(g) Advertisements.--
            ``(1) In general.--A bank that voluntarily terminates the 
        bank's insured status under this section shall not advertise or 
        hold itself out as having insured deposits, except that the 
        bank may advertise the temporary insurance of deposits under 
        subsection (f) if, in connection with any such advertisement, 
        the advertisement also states with equal prominence that 
        additions to deposits and new deposits made after the effective 
        date of the termination are not insured.
            ``(2) Certificates of deposit, obligations, and 
        securities.--Any certificate of deposit or other obligation or 
        security issued by a State bank or a national bank after the 
        effective date of the voluntary termination of the bank's 
        insured status under this section shall be accompanied by a 
        conspicuous, prominently displayed notice that such certificate 
        of deposit or other obligation or security is not insured under 
        this Act.
    ``(h) Notice Requirements.--
            ``(1) Notice to the corporation.--The notice required under 
        subsection (a)(1)(A) shall be in such form as the Corporation 
        may require.
            ``(2) Notice to depositors.--The notice required under 
        subsection (a)(1)(B) shall be--
                    ``(A) sent to each depositor's last address of 
                record with the bank; and
                    ``(B) in such manner and form as the Corporation 
                finds to be necessary and appropriate for the 
                protection of depositors.''.
            (3) Definition.--Section 19(b)(1)(A)(i) of the Federal 
        Reserve Act (12 U.S.C. 461(b)(1)(A)(i)) is amended by inserting 
        ``, or any wholesale financial institution subject to section 
        9B of this Act'' after ``such Act''.
    (d) Technical and Conforming Amendments to the Bankruptcy Code.--
            (1) Bankruptcy code debtors.--Section 109(b)(2) of title 
        11, United States Code, is amended by striking ``; or'' and 
        inserting the following: ``, except that--
                    ``(A) a wholesale financial institution established 
                under section 5136B of the Revised Statutes of the 
                United States or section 9B of the Federal Reserve Act 
                may be a debtor if a petition is filed at the direction 
                of the Comptroller of the Currency (in the case of a 
                wholesale financial institution established under 
                section 5136B of the Revised Statutes of the United 
                States) or the Board of Governors of the Federal 
                Reserve System (in the case of any wholesale financial 
                institution); and
                    ``(B) a corporation organized under section 25A of 
                the Federal Reserve Act may be a debtor if a petition 
                is filed at the direction of the Board of Governors of 
                the Federal Reserve System; or''.
            (2) Chapter 7 debtors.--Section 109(d) of title 11, United 
        States Code, is amended to read as follows:
    ``(d) Only a railroad and a person that may be a debtor under 
chapter 7 of this title, except that a stockbroker, a wholesale 
financial institution established under section 5136B of the Revised 
Statutes of the United States or section 9B of the Federal Reserve Act, 
a corporation organized under section 25A of the Federal Reserve Act, 
or a commodity broker, may be a debtor under chapter 11 of this 
title.''.
            (3) Definition of financial institution.--Section 101(22) 
        of title 11, United States Code, is amended to read as follows:
            ``(22) `financial institution' means a person that is a 
        commercial or savings bank, industrial savings bank, savings 
        and loan association, trust company, wholesale financial 
        institution established under section 5136B of the Revised 
        Statutes of the United States or section 9B of the Federal 
        Reserve Act, or corporation organized under section 25A of the 
        Federal Reserve Act and, when any such person is acting as 
        agent or custodian for a customer in connection with a 
        securities contract, as defined in section 741 of this title, 
        such customer,''.
            (4) Subchapter v of chapter 7.--
                    (A) In general.--Section 103 of title 11, United 
                States Code, is amended--
                            (i) by redesignating subsections (e) 
                        through (i) as subsections (f) through (j), 
                        respectively; and
                            (ii) by inserting after subsection (d) the 
                        following:
    ``(e) Subchapter V of chapter 7 of this title applies only in a 
case under such chapter concerning the liquidation of a wholesale 
financial institution established under section 5136B of the Revised 
Statutes of the United States or section 9B of the Federal Reserve Act, 
or a corporation organized under section 25A of the Federal Reserve 
Act.''.
                    (B) Wholesale bank liquidation.--Chapter 7 of title 
                11, United States Code, is amended by adding at the end 
                the following:

               ``SUBCHAPTER V--WHOLESALE BANK LIQUIDATION

``Sec. 781. Definitions for subchapter
    ``In this subchapter--
            ``(1) the term `Board' means the Board of Governors of the 
        Federal Reserve System;
            ``(2) the term `depository institution' has the same 
        meaning as in section 3 of the Federal Deposit Insurance Act, 
        and includes any wholesale bank;
            ``(3) the term `national wholesale financial institution' 
        means a wholesale financial institution established under 
        section 5136B of the Revised Statutes of the United States; and
            ``(4) the term `wholesale bank' means a national wholesale 
        financial institution, a wholesale financial institution 
        established under section 9B of the Federal Reserve Act, or a 
        corporation organized under section 25A of the Federal Reserve 
        Act.
``Sec. 782. Selection of trustee
    ``(a) Notwithstanding any other provision of this title, the 
conservator or receiver who files the petition shall be the trustee 
under this chapter, unless the Comptroller of the Currency (in the case 
of a national wholesale financial institution for which it appointed 
the conservator or receiver) or the Board (in the case of any wholesale 
bank for which it appointed the conservator or receiver) designates an 
alternative trustee. The Comptroller of the Currency or the Board (as 
applicable) may designate a successor trustee, if required.
    ``(b) Whenever the Comptroller of the Currency or the Board 
appoints or designates a trustee, chapter 3 and sections 704 and 705 of 
this title shall apply to the Comptroller or the Board, as applicable, 
in the same way and to the same extent that they apply to a United 
States trustee.
``Sec. 783. Additional powers of trustee
    ``(a) The trustee under this subchapter has power to distribute 
property not of the estate, including distributions to customers that 
are mandated by subchapters III and Iv of this chapter.
    ``(b) The trustee under this subchapter may, after notice and a 
hearing--
            ``(1) sell the wholesale bank to a depository institution 
        or consortium of depository institutions (which consortium may 
        agree on the allocation of the wholesale bank among the 
        consortium);
            ``(2) merge the wholesale bank with a depository 
        institution;
            ``(3) transfer contracts to the same extent as could a 
        receiver for a depository institution under paragraphs (9) and 
        (10) of section 11(e) of the Federal Deposit Insurance Act;
            ``(4) transfer assets or liabilities to a depository 
        institution;
            ``(5) transfer assets and liabilities to a bridge bank as 
        provided in paragraphs (1), (3)(A), (5), (6), and (9) through 
        (13), and subparagraphs (A) through (H) and (K) of paragraph 
        (4) of section 11(n) of the Federal Deposit Insurance Act, 
        except that--
                    ``(A) the bridge bank shall be treated as a 
                wholesale bank for the purpose of this subsection; and
                    ``(B) any references in any such provision of law 
                to the Federal Deposit Insurance Corporation shall be 
                construed to be references to the appointing agency and 
                that references to deposit insurance shall be omitted.
    ``(c) Any reference in this section to transfers of liabilities 
includes a ratable transfer of liabilities within a priority class.
``Sec. 784. Right to be heard
    ``The Comptroller of the Currency (in the case of a national 
wholesale financial institution), the Board (in the case of any 
wholesale bank), or a Federal Reserve bank (in the case of a wholesale 
bank that is a member of that bank) may raise and may appear and be 
heard on any issue in a case under this subchapter.
                    (C) Conforming amendment.--The table of sections 
                for chapter 7 of title 11, United States Code, is 
                amended by adding at the end the following:

               ``SUBCHAPTER V--WHOLESALE BANK LIQUIDATION

``781. Definitions for subchapter.
``782. Selection of trustee.
``783. Additional powers of trustee.
``784. Right to be heard.''.
    (e) Resolution of Edge Corporations.--The sixteenth undesignated 
paragraph of section 25A of the Federal Reserve Act (12 U.S.C. 624) is 
amended to read as follows:
            ``(16) Appointment of receiver or conservator.--
                    ``(A) In general.--The Board may appoint a 
                conservator or receiver for a corporation organized 
                under the provisions of this section to the same extent 
                and in the same manner as the Comptroller of the 
                Currency may appoint a conservator or receiver for a 
                national bank, and the conservator or receiver for such 
                corporation shall exercise the same powers, functions, 
                and duties, subject to the same limitations, as a 
                conservator or receiver for a national bank.
                    ``(B) Equivalent authority.--The Board shall have 
                the same authority with respect to any conservator or 
                receiver appointed for a corporation organized under 
                the provisions of this section under this paragraph and 
                any such corporation as the Comptroller of the Currency 
                has with respect to a conservator or receiver of a 
                national bank and the national bank for which a 
                conservator or receiver has been appointed.
                    ``(C) Title 11 petitions.--The Board may direct the 
                conservator or receiver of a corporation organized 
                under the provisions of this section to file a petition 
                pursuant to title 11, United States Code, in which 
                case, title 11, United States Code, shall apply to the 
                corporation in lieu of otherwise applicable Federal or 
                State insolvency law.''.

               Subtitle E--Preservation of FTC Authority

SEC. 141. AMENDMENT TO THE BANK HOLDING COMPANY ACT OF 1956 TO MODIFY 
              NOTIFICATION AND POST-APPROVAL WAITING PERIOD FOR SECTION 
              3 TRANSACTIONS.

    Section 11(b)(1) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1849(b)(1)) is amended by inserting ``and, if the transaction also 
involves an acquisition under section 4 or section 6, the Board shall 
also notify the Federal Trade Commission of such approval'' before the 
period at the end of the first sentence.

SEC. 142. INTERAGENCY DATA SHARING.

    To the extent not prohibited by other law, the Comptroller of the 
Currency, the Director of the Office of Thrift Supervision, the Federal 
Deposit Insurance Corporation, and the Board of Governors of the 
Federal Reserve System shall make available to the Attorney General and 
the Federal Trade Commission any data in the possession of any such 
banking agency that the antitrust agency deems necessary for antitrust 
review of any transaction requiring notice to any such antitrust agency 
or the approval of such agency under section 3, 4, or 6 of the Bank 
Holding Company Act of 1956, section 18(c) of the Federal Deposit 
Insurance Act, the National Bank Consolidation and Merger Act, section 
10 of the Home Owners' Loan Act, or the antitrust laws.

SEC. 143. CLARIFICATION OF STATUS OF SUBSIDIARIES AND AFFILIATES.

    (a) Clarification of Federal Trade Commission Jurisdiction.--Any 
person which directly or indirectly controls, is controlled directly or 
indirectly by, or is directly or indirectly under common control with, 
any bank or savings association (as such terms are defined in section 3 
of the Federal Deposit Insurance Act) and is not itself a bank or 
savings association shall not be deemed to be a bank or savings 
association for purposes of the Federal Trade Commission Act or any 
other law enforced by the Federal Trade Commission.
    (b) Savings Provision.--No provision of this section shall be 
construed as restricting the authority of any Federal banking agency 
(as defined in section 3 of the Federal Deposit Insurance Act) under 
any Federal banking law, including section 8 of the Federal Deposit 
Insurance Act.
    (c) Hart-Scott-Rodino Amendments.--
            (1) Banks.--Section 7A(c)(7) of the Clayton Act (15 U.S.C. 
        18a(c)(7)) is amended by inserting before the semicolon at the 
        end the following: ``, except that a portion of a transaction 
        is not exempt under this paragraph if such portion of the 
        transaction (A) is subject to section 6 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''.
            (2) Bank holding companies.--Section 7A(c)(8) of the 
        Clayton Act (15 U.S.C. 18a(c)(8)) is amended by inserting 
        before the semicolon at the end the following: ``, except that 
        a portion of a transaction is not exempt under this paragraph 
        if such portion of the transaction (A) is subject to section 6 
        of the Bank Holding Company Act of 1956; and (B) does not 
        require agency approval under section 4 of the Bank Holding 
        Company Act of 1956''.

SEC. 144. ANNUAL GAO REPORT.

    (a) In General.--By the end of the 1-year period beginning on the 
date of the enactment of this Act and annually thereafter, the 
Comptroller General of the United States shall submit a report to the 
Congress on market concentration in the financial services industry and 
its impact on consumers.
    (b) Analysis.--Each report submitted under subsection (a) shall 
contain an analysis of--
            (1) the positive and negative effects of affiliations 
        between various types of financial companies, and of 
        acquisitions pursuant to this Act and the amendments made by 
        this Act to other provisions of law, including any positive or 
        negative effects on consumers, area markets, and submarkets 
        thereof or on registered securities brokers and dealers which 
        have been purchased by depository institutions or depository 
        institution holding companies;
            (2) the changes in business practices and the effects of 
        any such changes on the availability of venture capital, 
        consumer credit, and other financial services or products and 
        the availability of capital and credit for small businesses; 
        and
            (3) the acquisition patterns among depository institutions, 
        depository institution holding companies, securities firms, and 
        insurance companies including acquisitions among the largest 20 
        percent of firms and acquisitions within regions or other 
        limited geographical areas.
    (c) Sunset.--This section shall not apply after the end of the 5-
year period beginning on the date of the enactment of this Act.

                     Subtitle F--National Treatment

SEC. 151. FOREIGN BANKS THAT ARE FINANCIAL HOLDING COMPANIES.

    Section 8(c) of the International Banking Act of 1978 (12 U.S.C. 
3106(c)) is amended by adding at the end the following new paragraph:
            ``(3) Termination of grandfathered rights.--
                    ``(A) In general.--If any foreign bank or foreign 
                company files a declaration under section 6(b)(1)(D) or 
                receives a determination under section 10(d)(1) of the 
                Bank Holding Company Act of 1956, any authority 
                conferred by this subsection on any foreign bank or 
                company to engage in any activity which the Board has 
                determined to be permissible for financial holding 
                companies under section 6 of such Act shall terminate 
                immediately.
                    ``(B) Restrictions and requirements authorized.--If 
                a foreign bank or company that engages, directly or 
                through an affiliate pursuant to paragraph (1), in an 
                activity which the Board has determined to be 
                permissible for financial holding companies under 
                section 6 of the Bank Holding Company Act of 1956 has 
                not filed a declaration with the Board of its status as 
                a financial holding company under such section or 
                received a determination under section 10(d)(1) by the 
                end of the 2-year period beginning on the date of the 
                enactment of the Financial Services Act of 1999, the 
                Board, giving due regard to the principle of national 
                treatment and equality of competitive opportunity, may 
                impose such restrictions and requirements on the 
                conduct of such activities by such foreign bank or 
                company as are comparable to those imposed on a 
                financial holding company organized under the laws of 
                the United States, including a requirement to conduct 
                such activities in compliance with any prudential 
                safeguards established under section 114 of the 
                Financial Services Act.''.

SEC. 152. FOREIGN BANKS AND FOREIGN FINANCIAL INSTITUTIONS THAT ARE 
              WHOLESALE FINANCIAL INSTITUTIONS.

    Section 8A of the Federal Deposit Insurance Act (as added by 
section 136(c)(2) of this Act) is amended by adding at the end the 
following new subsection:
    ``(i) Voluntary Termination of Deposit Insurance.--The provisions 
on voluntary termination of insurance in this section shall apply to an 
insured branch of a foreign bank (including a Federal branch) in the 
same manner and to the same extent as they apply to an insured State 
bank or a national bank.''.

SEC. 153. REPRESENTATIVE OFFICES.

    (a) Definition of ``Representative Office''.--Section 1(b)(15) of 
the International Banking Act of 1978 (12 U.S.C. 3101(15)) is amended 
by striking ``State agency, or subsidiary of a foreign bank'' and 
inserting ``or State agency''.
    (b) Examinations.--Section 10(c) of the International Banking Act 
of 1978 (12 U.S.C. 3107(c)) is amended by adding at the end the 
following: ``The Board may also make examinations of any affiliate of a 
foreign bank conducting business in any State if the Board deems it 
necessary to determine and enforce compliance with this Act, the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841 et seq.), or other 
applicable Federal banking law.''.

SEC. 154. RECIPROCITY.

    (a) National Treatment Reports.--
            (1) Report required in the event of certain acquisitions.--
                    (A) In general.--Whenever a person from a foreign 
                country announces its intention to acquire or acquires 
                a bank, a securities underwriter, broker, or dealer, an 
                investment adviser, or insurance company that ranks 
                within the top 50 firms in that line of business in the 
                United States, the Secretary of Commerce, in the case 
                of an insurance company, or the Secretary of the 
                Treasury, in the case of a bank, a securities 
                underwriter, broker, or dealer, or an investment 
                adviser, shall, within the earlier of 6 months of such 
                announcement or such acquisition and in consultation 
                with other appropriate Federal and State agencies, 
                prepare and submit to the Congress a report on whether 
                a United States person would be able, de facto or de 
                jure, to acquire an equivalent sized firm in the 
                country in which such person from a foreign country is 
                located.
                    (B) Analysis and recommendations.--If a report 
                submitted under subparagraph (A) states that the 
                equivalent treatment referred to in such subparagraph, 
                de facto and de jure, is not provided in the country 
                which is the subject of the report, the Secretary of 
                Commerce or the Secretary of the Treasury, as the case 
                may be and in consultation with other appropriate 
                Federal and State agencies, shall include in the report 
                analysis and recommendations as to how that country's 
                laws and regulations would need to be changed so that 
                reciprocal treatment would exist.
            (2) Report required before financial services negotiations 
        commence.--The Secretary of Commerce, with respect to insurance 
        companies, and the Secretary of the Treasury, with respect to 
        banks, securities underwriters, brokers, dealers, and 
        investment advisers, shall, not less than 6 months before the 
        commencement of the financial services negotiations of the 
        World Trade Organization and in consultation with other 
        appropriate Federal and State agencies, prepare and submit to 
        the Congress a report containing--
                    (A) an assessment of the 30 largest financial 
                services markets with regard to whether reciprocal 
                access is available in such markets to United States 
                financial services providers; and
                    (B) with respect to any such financial services 
                markets in which reciprocal access is not available to 
                United States financial services providers, an analysis 
                and recommendations as to what legislative, regulatory, 
                or enforcement changes would be required to ensure full 
                reciprocity for such providers.
            (3) Person of a foreign country defined.--For purposes of 
        this subsection, the term ``person of a foreign country'' means 
        a person, or a person which directly or indirectly owns or 
        controls that person, that is a resident of that country, is 
        organized under the laws of that country, or has its principal 
        place of business in that country.
    (b) Provisions Applicable to Submissions.--
            (1) Notice.--Before preparing any report required under 
        subsection (a), the Secretary of Commerce or the Secretary of 
        the Treasury, as the case may be, shall publish notice that a 
        report is in preparation and seek comment from United States 
        persons.
            (2) Privileged submissions.--Upon the request of the 
        submitting person, any comments or related communications 
        received by the Secretary of Commerce or the Secretary of the 
        Treasury, as the case may be, with regard to the report shall, 
        for the purposes of section 552 of title 5, of the United 
        States Code, be treated as commercial information obtained from 
        a person that is privileged or confidential, regardless of the 
        medium in which the information is obtained. This confidential 
        information shall be the property of the Secretary and shall be 
        privileged from disclosure to any other person. However, this 
        privilege shall not be construed as preventing access to that 
        confidential information by the Congress.
            (3) Prohibition of unauthorized disclosures.--No person in 
        possession of confidential information, provided under this 
        section may disclose that information, in whole or in part, 
        except for disclosure made in published statistical material 
        that does not disclose, either directly or when used in 
        conjunction with publicly available information, the 
        confidential information of any person.

        Subtitle G--Federal Home Loan Bank System Modernization

SEC. 161. SHORT TITLE.

    This subtitle may be cited as the ``Federal Home Loan Bank System 
Modernization Act of 1999''.

SEC. 162. DEFINITIONS.

    Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422) is 
amended--
            (1) in paragraph (1), by striking ``term `Board' means'' 
        and inserting ``terms `Finance Board' and `Board' mean'';
            (2) by striking paragraph (3) and inserting the following:
            ``(3) State.--The term `State', in addition to the States 
        of the United States, includes the District of Columbia, Guam, 
        Puerto Rico, the United States Virgin Islands, American Samoa, 
        and the Commonwealth of the Northern Mariana Islands.''; and
            (3) by adding at the end the following new paragraph:
            ``(13) Community financial institution.--
                    ``(A) In general.--The term `community financial 
                institution' means a member--
                            ``(i) the deposits of which are insured 
                        under the Federal Deposit Insurance Act; and
                            ``(ii) that has, as of the date of the 
                        transaction at issue, less than $500,000,000 in 
                        average total assets, based on an average of 
                        total assets over the 3 years preceding that 
                        date.
                    ``(B) Adjustments.--The $500,000,000 limit referred 
                to in subparagraph (A)(ii) shall be adjusted annually 
                by the Finance Board, based on the annual percentage 
                increase, if any, in the Consumer Price Index for all 
                urban consumers, as published by the Department of 
                Labor.''.

SEC. 163. SAVINGS ASSOCIATION MEMBERSHIP.

    Section 5(f) of the Home Owners' Loan Act (12 U.S.C. 1464(f)) is 
amended to read as follows:
    ``(f) Federal Home Loan Bank Membership.--On and after January 1, 
1999, a Federal savings association may become a member of the Federal 
Home Loan Bank System, and shall qualify for such membership in the 
manner provided by the Federal Home Loan Bank Act.''.

SEC. 164. ADVANCES TO MEMBERS; COLLATERAL.

    (a) In General.--Section 10(a) of the Federal Home Loan Bank Act 
(12 U.S.C. 1430(a)) is amended--
            (1) by redesignating paragraphs (1) through (4) as 
        subparagraphs (A) through (D), respectively, and indenting 
        appropriately;
            (2) by striking ``(a) Each'' and inserting the following:
    ``(a) In General.--
            ``(1) All advances.--Each'';
            (3) by striking the second sentence and inserting the 
        following:
            ``(2) Purposes of advances.--A long-term advance may only 
        be made for the purposes of--
                    ``(A) providing funds to any member for residential 
                housing finance; and
                    ``(B) providing funds to any community financial 
                institution for small business, agricultural, rural 
                development, or low-income community development 
                lending.'';
            (4) by striking ``A Bank'' and inserting the following:
            ``(3) Collateral.--A Bank'';
            (5) in paragraph (3) (as so designated by paragraph (4) of 
        this subsection)--
                    (A) in subparagraph (C) (as so redesignated by 
                paragraph (1) of this subsection) by striking 
                ``Deposits'' and inserting ``Cash or deposits'';
                    (B) in subparagraph (D) (as so redesignated by 
                paragraph (1) of this subsection), by striking the 
                second sentence; and
                    (C) by inserting after subparagraph (D) (as so 
                redesignated by paragraph (1) of this subsection) the 
                following new subparagraph:
                    ``(E) Secured loans for small business, 
                agriculture, rural development, or low-income community 
                development, or securities representing a whole 
                interest in such secured loans, in the case of any 
                community financial institution.'';
            (6) in paragraph (5)--
                    (A) in the second sentence, by striking ``and the 
                Board'';
                    (B) in the third sentence, by striking ``Board'' 
                and inserting ``Federal home loan bank''; and
                    (C) by striking ``(5) Paragraphs (1) through (4)'' 
                and inserting the following:
            ``(4) Additional bank authority.--Subparagraphs (A) through 
        (E) of paragraph (3)''; and
            (7) by adding at the end the following:
            ``(5) Review of certain collateral standards.--The Board 
        may review the collateral standards applicable to each Federal 
        home loan bank for the classes of collateral described in 
        subparagraphs (D) and (E) of paragraph (3), and may, if 
        necessary for safety and soundness purposes, require an 
        increase in the collateral standards for any or all of those 
        classes of collateral.
            ``(6) Definitions.--For purposes of this subsection, the 
        terms `small business', `agriculture', `rural development', and 
        `low-income community development' shall have the meanings 
        given those terms by rule or regulation of the Finance 
        Board.''.
    (b) Clerical Amendment.--The section heading for section 10 of the 
Federal Home Loan Bank Act (12 U.S.C. 1430) is amended to read as 
follows:

``SEC. 10. ADVANCES TO MEMBERS.''.

    (c) Conforming Amendments Relating to Members Which Are Not 
Qualified Thrift Lenders--The first of the 2 subsections designated as 
subsection (e) of section 10 of the Federal Home Loan Bank Act (12 
U.S.C. 1430(e)(1)) is amended--
            (1) in the last sentence of paragraph (1), by inserting 
        ``or, in the case of any community financial institution, for 
        the purposes described in subsection (a)(2)'' before the 
        period; and
            (2) in paragraph (5)(C), by inserting ``except that, in 
        determining the actual thrift investment percentage of any 
        community financial institution for purposes of this 
        subsection, the total investment of such member in loans for 
        small business, agriculture, rural development, or low-income 
        community development, or securities representing a whole 
        interest in such loans, shall be treated as a qualified thrift 
        investment (as defined in such section 10(m))'' before the 
        period.

SEC. 165. ELIGIBILITY CRITERIA.

    Section 4(a) of the Federal Home Loan Bank Act (12 U.S.C. 1424(a)) 
is amended--
            (1) in paragraph (2)(A), by inserting, ``(other than a 
        community financial institution)'' after ``institution''; and
            (2) by adding at the end the following new paragraph:
            ``(3) Limited exemption for community financial 
        institutions.--A community financial institution that otherwise 
        meets the requirements of paragraph (2) may become a member 
        without regard to the percentage of its total assets that is 
        represented by residential mortgage loans, as described in 
        subparagraph (A) of paragraph (2).''.

SEC. 166. MANAGEMENT OF BANKS.

    (a) Board of Directors.--Section 7(d) of the Federal Home Loan Bank 
Act (12 U.S.C. 1427(d)) is amended--
            (1) by striking ``(d) The term'' and inserting the 
        following:
    ``(d) Terms of Office.--The term''; and
            (2) by striking ``shall be two years''.
    (b) Compensation.--Section 7(i) of the Federal Home Loan Bank Act 
(12 U.S.C. 1427(i)) is amended by striking ``, subject to the approval 
of the board''.
    (c) Repeal of Sections 22A and 27.--The Federal Home Loan Bank Act 
(12 U.S.C. 1421 et seq.) is amended by striking sections 22A (12 U.S.C. 
1442a) and 27 (12 U.S.C. 1447).
    (d) Section 12.--Section 12 of the Federal Home Loan Bank Act (12 
U.S.C. 1432) is amended--
            (1) in subsection (a)--
                    (A) by striking ``, but, except'' and all that 
                follows through ``ten years'';
                    (B) by striking ``subject to the approval of the 
                Board'' the first place that term appears;
                    (C) by striking ``and, by its Board of directors,'' 
                and all that follows through ``agent of such bank,'' 
                and inserting ``and, by the board of directors of the 
                bank, to prescribe, amend, and repeal by-laws governing 
                the manner in which its affairs may be administered, 
                consistent with applicable laws and regulations, as 
                administered by the Finance Board. No officer, 
                employee, attorney, or agent of a Federal home loan 
                bank''; and
                    (D) by striking ``Board of directors'' where such 
                term appears in the penultimate sentence and inserting 
                ``board of directors''; and
            (2) in subsection (b), by striking ``loans banks'' and 
        inserting ``loan banks''.
    (e) Powers and Duties of Federal Housing Finance Board.--
            (1) Issuance of notices of violations.--Section 2B(a) of 
        the Federal Home Loan Bank Act (12 U.S.C. 1422b(a)) is amended 
        by adding at the end the following new paragraphs:
            ``(5) To issue and serve a notice of charges upon a Federal 
        home loan bank or upon any executive officer or director of a 
        Federal home loan bank if, in the determination of the Finance 
        Board, the bank, executive officer, or director is engaging or 
        has engaged in, or the Finance Board has reasonable cause to 
        believe that the bank, executive officer, or director is about 
        to engage in, any conduct that violates any provision of this 
        Act or any law, order, rule, or regulation or any condition 
        imposed in writing by the Finance Board in connection with the 
        granting of any application or other request by the bank, or 
        any written agreement entered into by the bank with the agency, 
        in accordance with the procedures provided in section 1371(c) 
        of the Federal Housing Enterprises Financial Safety and 
        Soundness Act of 1992. Such authority includes the same 
        authority to take affirmative action to correct conditions 
        resulting from violations or practices or to limit activities 
        of a bank or any executive officer or director of a bank as 
        appropriate Federal banking agencies have to take with respect 
        to insured depository institutions under paragraphs (6) and (7) 
        of section 8(b) of the Federal Deposit Insurance Act, and to 
        have all other powers, rights, and duties to enforce this Act 
        with respect to the Federal home loan banks and their executive 
        officers and directors as the Office of Federal Housing 
        Enterprise Oversight has to enforce the Federal Housing 
        Enterprises Financial Safety and Soundness Act of 1992, the 
        Federal National Mortgage Association Charter Act, or the 
        Federal Home Loan Mortgage Corporation Act with respect to the 
        Federal housing enterprises under the Federal Housing 
        Enterprises Financial Safety and Soundness Act of 1992.
            ``(6) To address any insufficiencies in capital levels 
        resulting from the application of section 5(f) of the Home 
        Owners' Loan Act.
            ``(7) To sue and be sued, by and through its own 
        attorneys.''.
            (2) Technical amendment.--Section 111 of Public Law 93-495 
        (12 U.S.C. 250) is amended by striking ``Federal Home Loan Bank 
        Board,'' and inserting ``Director of the Office of Thrift 
        Supervision, ``the Federal Housing Finance Board,''.
    (f) Eligibility To Secure Advances.--
            (1) Section 9.--Section 9 of the Federal Home Loan Bank Act 
        (12 U.S.C. 1429) is amended--
                    (A) in the second sentence, by striking ``with the 
                approval of the Board''; and
                    (B) in the third sentence, by striking ``, subject 
                to the approval of the Board,''.
            (2) Section 10.--Section 10 of the Federal Home Loan Bank 
        Act (12 U.S.C. 1430) is amended--
                    (A) in subsection (c)--
                            (i) in the first sentence, by striking 
                        ``Board'' and inserting ``Federal home loan 
                        bank''; and
                            (ii) by striking the second sentence;
                    (B) in subsection (d)--
                            (i) in the first sentence, by striking 
                        ``and the approval of the Board''; and
                            (ii) by striking ``Subject to the approval 
                        of the Board, any'' and inserting ``Any''; and
                    (C) in subsection (j)(1)--
                            (i) by striking ``to subsidize the interest 
                        rate on advances'' and inserting ``to provide 
                        subsidies, including subsidized interest rates 
                        on advances'';
                            (ii) by striking ``Pursuant'' and inserting 
                        the following:
                    ``(A) Establishment.--Pursuant''; and
                            (iii) by adding at the end the following 
                        new subparagraph:
                    ``(B) Nondelegation of approval authority.--Subject 
                to such regulations as the Finance Board may prescribe, 
                the board of directors of each Federal home loan bank 
                may approve or disapprove requests from members for 
                Affordable Housing Program subsidies, and may not 
                delegate such authority.''.
    (g) Section 16.--Section 16(a) of the Federal Home Loan Bank Act 
(12 U.S.C. 1436(a)) is amended--
            (1) in the third sentence--
                    (A) by striking ``net earnings'' and inserting 
                ``previously retained earnings or current net 
                earnings''; and
                    (B) by striking ``, and then only with the approval 
                of the Federal Housing Finance Board''; and
            (2) by striking the fourth sentence.
    (h) Section 18.--Section 18(b) of the Federal Home Loan Bank Act 
(12 U.S.C. 1438(b)) is amended by striking paragraph (4).

SEC. 167. RESOLUTION FUNDING CORPORATION.

    (a) In General.--Section 21B(f)(2)(C) of the Federal Home Loan Bank 
Act (12 U.S.C. 1441b(f)(2)(C)) is amended to read as follows:
                    ``(C) Payments by federal home loan banks.--
                            ``(i) In general.--To the extent that the 
                        amounts available pursuant to subparagraphs (A) 
                        and (B) are insufficient to cover the amount of 
                        interest payments, each Federal home loan bank 
                        shall pay to the Funding Corporation in each 
                        calendar year, 20.75 percent of the net 
                        earnings of that bank (after deducting expenses 
                        relating to section 10(j) and operating 
                        expenses).
                            ``(ii) Annual determination.--The Board 
                        annually shall determine the extent to which 
                        the value of the aggregate amounts paid by the 
                        Federal home loan banks exceeds or falls short 
                        of the value of an annuity of $300,000,000 per 
                        year that commences on the issuance date and 
                        ends on the final scheduled maturity date of 
                        the obligations, and shall select appropriate 
                        present value factors for making such 
                        determinations.
                            ``(iii) Payment term alterations.--The 
                        Board shall extend or shorten the term of the 
                        payment obligations of a Federal home loan bank 
                        under this subparagraph as necessary to ensure 
                        that the value of all payments made by the 
                        banks is equivalent to the value of an annuity 
                        referred to in clause (ii).
                            ``(iv) Term beyond maturity.--If the Board 
                        extends the term of payments beyond the final 
                        scheduled maturity date for the obligations, 
                        each Federal home loan bank shall continue to 
                        pay 20.75 percent of its net earnings (after 
                        deducting expenses relating to section 10(j) 
                        and operating expenses) to the Treasury of the 
                        United States until the value of all such 
                        payments by the Federal home loan banks is 
                        equivalent to the value of an annuity referred 
                        to in clause (ii). In the final year in which 
                        the Federal home loan banks are required to 
                        make any payment to the Treasury under this 
                        subparagraph, if the dollar amount represented 
                        by 20.75 percent of the net earnings of the 
                        Federal home loan banks exceeds the remaining 
                        obligation of the banks to the Treasury, the 
                        Finance Board shall reduce the percentage pro 
                        rata to a level sufficient to pay the remaining 
                        obligation.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
become effective on January 1, 1999. Payments made by a Federal home 
loan bank before that effective date shall be counted toward the total 
obligation of that bank under section 21B(f)(2)(C) of the Federal Home 
Loan Bank Act, as amended by this section.

SEC. 168. CAPITAL STRUCTURE OF FEDERAL HOME LOAN BANKS.

    Section 6 of the Federal Home Loan Bank Act (12 U.S.C. 1426) is 
amended to read as follows:

``SEC. 6. CAPITAL STRUCTURE OF FEDERAL HOME LOAN BANKS.

    ``(a) Regulations.--
            ``(1) Capital standards.--Not later than 1 year after the 
        date of the enactment of the Financial Services Act of 1999, 
        the Finance Board shall issue regulations prescribing uniform 
        capital standards applicable to each Federal home loan bank, 
        which shall require each such bank to meet--
                    ``(A) the leverage requirement specified in 
                paragraph (2); and
                    ``(B) the risk-based capital requirements, in 
                accordance with paragraph (3).
            ``(2) Leverage requirement.--
                    ``(A) In general.--The leverage requirement shall 
                require each Federal home loan bank to maintain a 
                minimum amount of total capital based on the aggregate 
                on-balance sheet assets of the bank and shall be 5 
                percent.
                    ``(B) Treatment of stock and retained earnings.--In 
                determining compliance with the minimum leverage ratio 
                established under subparagraph (A), the paid-in value 
                of the outstanding Class B stock shall be multiplied by 
                1.5, the paid-in value of the outstanding Class C stock 
                and the amount of retained earnings shall be multiplied 
                by 2.0, and such higher amounts shall be deemed to be 
                capital for purposes of meeting the 5 percent minimum 
                leverage ratio.
            ``(3) Risk-based capital standards.--
                    ``(A) In general.--Each Federal home loan bank 
                shall maintain permanent capital in an amount that is 
                sufficient, as determined in accordance with the 
                regulations of the Finance Board, to meet--
                            ``(i) the credit risk to which the Federal 
                        home loan bank is subject; and
                            ``(ii) the market risk, including interest 
                        rate risk, to which the Federal home loan bank 
                        is subject, based on a stress test established 
                        by the Finance Board that rigorously tests for 
                        changes in market variables, including changes 
                        in interest rates, rate volatility, and changes 
                        in the shape of the yield curve.
                    ``(B) Consideration of other risk-based 
                standards.--In establishing the risk-based standard 
                under subparagraph (A)(ii), the Finance Board shall 
                take due consideration of any risk-based capital test 
                established pursuant to section 1361 of the Federal 
                Housing Enterprises Financial Safety and Soundness Act 
                of 1992 (12 U.S.C. 4611) for the enterprises (as 
                defined in that Act), with such modifications as the 
                Finance Board determines to be appropriate to reflect 
                differences in operations between the Federal home loan 
                banks and those enterprises.
            ``(4) Other regulatory requirements.--The regulations 
        issued by the Finance Board under paragraph (1) shall--
                    ``(A) permit each Federal home loan bank to issue, 
                with such rights, terms, and preferences, not 
                inconsistent with this Act and the regulations issued 
                hereunder, as the board of directors of that bank may 
                approve, any one or more of--
                            ``(i) Class A stock, which shall be 
                        redeemable in cash and at par 6 months 
                        following submission by a member of a written 
                        notice of its intent to redeem such shares;
                            ``(ii) Class B stock, which shall be 
                        redeemable in cash and at par 5 years following 
                        submission by a member of a written notice of 
                        its intent to redeem such shares; and
                            ``(iii) Class C stock, which shall be 
                        nonredeemable;
                    ``(B) provide that the stock of a Federal home loan 
                bank may be issued to and held by only members of the 
                bank, and that a bank may not issue any stock other 
                than as provided in this section;
                    ``(C) prescribe the manner in which stock of a 
                Federal home loan bank may be sold, transferred, 
                redeemed, or repurchased; and
                    ``(D) provide the manner of disposition of 
                outstanding stock held by, and the liquidation of any 
                claims of the Federal home loan bank against, an 
                institution that ceases to be a member of the bank, 
                through merger or otherwise, or that provides notice of 
                intention to withdraw from membership in the bank.
            ``(5) Definitions of capital.--For purposes of determining 
        compliance with the capital standards established under this 
        subsection--
                    ``(A) permanent capital of a Federal home loan bank 
                shall include (as determined in accordance with 
                generally accepted accounting principles)--
                            ``(i) the amounts paid for the Class C 
                        stock and any other nonredeemable stock 
                        approved by the Finance Board;
                            ``(ii) the amounts paid for the Class B 
                        stock, in an amount not to exceed 1 percent of 
                        the total assets of the bank; and
                            ``(iii) the retained earnings of the bank; 
                        and
                    ``(B) total capital of a Federal home loan bank 
                shall include--
                            ``(i) permanent capital;
                            ``(ii) the amounts paid for the Class A 
                        stock, Class B stock (excluding any amount 
                        treated as permanent capital under subparagraph 
                        (5)(A)(ii)), or any other class of redeemable 
                        stock approved by the Finance Board;
                            ``(iii) consistent with generally accepted 
                        accounting principles, and subject to the 
                        regulation of the Finance Board, a general 
                        allowance for losses, which may not include any 
                        reserves or allowances made or held against 
                        specific assets; and
                            ``(iv) any other amounts from sources 
                        available to absorb losses incurred by the bank 
                        that the Finance Board determines by regulation 
                        to be appropriate to include in determining 
                        total capital.
            ``(6) Transition period.--Notwithstanding any other 
        provisions of this Act, the requirements relating to purchase 
        and retention of capital stock of a Federal home loan bank by 
        any member thereof in effect on the day before the date of the 
        enactment of the Federal Home Loan Bank System Modernization 
        Act of 1999, shall continue in effect with respect to each 
        Federal home loan bank until the regulations required by this 
        subsection have taken effect and the capital structure plan 
        required by subsection (b) has been approved by the Finance 
        Board and implemented by such bank.
    ``(b) Capital Structure Plan.--
            ``(1) Approval of plans.--Not later than 270 days after the 
        date of publication by the Finance Board of final regulations 
        in accordance with subsection (a), the board of directors of 
        each Federal home loan bank shall submit for Finance Board 
        approval a plan establishing and implementing a capital 
        structure for such bank that--
                    ``(A) the board of directors determines is best 
                suited for the condition and operation of the bank and 
                the interests of the members of the bank;
                    ``(B) meets the requirements of subsection (c); and
                    ``(C) meets the minimum capital standards and 
                requirements established under subsection (a) and other 
                regulations prescribed by the Finance Board.
            ``(2) Approval of modifications.--The board of directors of 
        a Federal home loan bank shall submit to the Finance Board for 
        approval any modifications that the bank proposes to make to an 
        approved capital structure plan.
    ``(c) Contents of Plan.--The capital structure plan of each Federal 
home loan bank shall contain provisions addressing each of the 
following:
            ``(1) Minimum investment.--
                    ``(A) In general.--Each capital structure plan of a 
                Federal home loan bank shall require each member of the 
                bank to maintain a minimum investment in the stock of 
                the bank, the amount of which shall be determined in a 
                manner to be prescribed by the board of directors of 
                each bank and to be included as part of the plan.
                    ``(B) Investment alternatives.--
                            ``(i) In general.--In establishing the 
                        minimum investment required for each member 
                        under subparagraph (A), a Federal home loan 
                        bank may, in its discretion, include any one or 
                        more of the requirements referred to in clause 
                        (ii), or any other provisions approved by the 
                        Finance Board.
                            ``(ii) Authorized requirements.--A 
                        requirement is referred to in this clause if it 
                        is a requirement for--
                                    ``(I) a stock purchase based on a 
                                percentage of the total assets of a 
                                member; or
                                    ``(II) a stock purchase based on a 
                                percentage of the outstanding advances 
                                from the bank to the member.
                    ``(C) Minimum amount.--Each capital structure plan 
                of a Federal home loan bank shall require that the 
                minimum stock investment established for members shall 
                be set at a level that is sufficient for the bank to 
                meet the minimum capital requirements established by 
                the Finance Board under subsection (a).
                    ``(D) Adjustments to minimum required investment.--
                The capital structure plan of each Federal home loan 
                bank shall impose a continuing obligation on the board 
                of directors of the bank to review and adjust the 
                minimum investment required of each member of that 
                bank, as necessary to ensure that the bank remains in 
                compliance with applicable minimum capital levels 
                established by the Finance Board, and shall require 
                each member to comply promptly with any adjustments to 
                the required minimum investment.
            ``(2) Transition rule.--
                    ``(A) In general.--The capital structure plan of 
                each Federal home loan bank shall specify the date on 
                which it shall take effect, and may provide for a 
                transition period of not longer than 3 years to allow 
                the bank to come into compliance with the capital 
                requirements prescribed under subsection (a), and to 
                allow any institution that was a member of the bank on 
                the date of the enactment of the Financial Services Act 
                of 1999, to come into compliance with the minimum 
                investment required pursuant to the plan.
                    ``(B) Interim purchase requirements.--The capital 
                structure plan of a Federal home loan bank may allow 
                any member referred to in subparagraph (A) that would 
                be required by the terms of the capital structure plan 
                to increase its investment in the stock of the bank to 
                do so in periodic installments during the transition 
                period.
            ``(3) Disposition of shares.--The capital structure plan of 
        a Federal home loan bank shall provide for the manner of 
        disposition of any stock held by a member of that bank that 
        terminates its membership or that provides notice of its 
        intention to withdraw from membership in that bank.
            ``(4) Classes of stock.--
                    ``(A) In general.--The capital structure plan of a 
                Federal home loan bank shall afford each member of that 
                bank the option of maintaining its required investment 
                in the bank through the purchase of any combination of 
                classes of stock authorized by the board of directors 
                of the bank and approved by the Finance Board in 
                accordance with its regulations.
                    ``(B) Rights requirement.--A Federal home loan bank 
                shall include in its capital structure plan provisions 
                establishing terms, rights, and preferences, including 
                minimum investment, dividends, voting, and liquidation 
                preferences of each class of stock issued by the bank, 
                consistent with Finance Board regulations and market 
                requirements.
                    ``(C) Reduced minimum investment.--The capital 
                structure plan of a Federal home loan bank may provide 
                for a reduced minimum stock investment for any member 
                of that bank that elects to purchase Class B, Class C, 
                or any other class of nonredeemable stock, in a manner 
                that is consistent with meeting the minimum capital 
                requirements of the bank, as established by the Finance 
                Board.
                    ``(D) Liquidation of claims.--The capital structure 
                plan of a Federal home loan bank shall provide for the 
                liquidation in an orderly manner, as determined by the 
                bank, of any claim of that bank against a member, 
                including claims for any applicable prepayment fees or 
                penalties resulting from prepayment of advances prior 
                to stated maturity.
            ``(5) Limited transferability of stock.--The capital 
        structure plan of a Federal home loan bank shall--
                    ``(A) provide that--
                            ``(i) any stock issued by that bank shall 
                        be available only to, held only by, and 
                        tradable only among members of that bank and 
                        between that bank and its members; and
                            ``(ii) a bank has no obligation to 
                        repurchase its outstanding Class C stock but 
                        may do so, provided it is consistent with 
                        Finance Board regulations and is at a price 
                        that is mutually agreeable to the bank and the 
                        member; and
                    ``(B) establish standards, criteria, and 
                requirements for the issuance, purchase, transfer, 
                retirement, and redemption of stock issued by that 
                bank.
            ``(6) Bank review of plan.--Before filing a capital 
        structure plan with the Finance Board, each Federal home loan 
        bank shall conduct a review of the plan by--
                    ``(A) an independent certified public accountant, 
                to ensure, to the extent possible, that implementation 
                of the plan would not result in any write-down of the 
                redeemable bank stock investment of its members; and
                    ``(B) at least one major credit rating agency, to 
                determine, to the extent possible, whether 
                implementation of the plan would have any material 
                effect on the credit ratings of the bank.
    ``(d) Termination of Membership.--
            ``(1) Voluntary withdrawal.--Any member may withdraw from a 
        Federal home loan bank by providing written notice to the bank 
        of its intent to do so. The applicable stock redemption notice 
        periods shall commence upon receipt of the notice by the bank. 
        Upon the expiration of the applicable notice period for each 
        class of redeemable stock, the member may surrender such stock 
        to the bank, and shall be entitled to receive in cash the par 
        value of the stock. During the applicable notice periods, the 
        member shall be entitled to dividends and other membership 
        rights commensurate with continuing stock ownership.
            ``(2) Involuntary withdrawal.--
                    ``(A) In general.--The board of directors of a 
                Federal home loan bank may terminate the membership of 
                any institution if, subject to Finance Board 
                regulations, it determines that--
                            ``(i) the member has failed to comply with 
                        a provision of this Act or any regulation 
                        prescribed under this Act; or
                            ``(ii) the member has been determined to be 
                        insolvent, or otherwise subject to the 
                        appointment of a conservator, receiver, or 
                        other legal custodian, by a State or Federal 
                        authority with regulatory and supervisory 
                        responsibility for the member.
                    ``(B) Stock disposition.--An institution, the 
                membership of which is terminated in accordance with 
                subparagraph (A)--
                            ``(i) shall surrender redeemable stock to 
                        the Federal home loan bank, and shall receive 
                        in cash the par value of the stock, upon the 
                        expiration of the applicable notice period 
                        under subsection (a)(4)(A);
                            ``(ii) shall receive any dividends declared 
                        on its redeemable stock, during the applicable 
                        notice period under subsection (a)(4)(A); and
                            ``(iii) shall not be entitled to any other 
                        rights or privileges accorded to members after 
                        the date of the termination.
                    ``(C) Commencement of notice period.--With respect 
                to an institution, the membership of which is 
                terminated in accordance with subparagraph (A), the 
                applicable notice period under subsection (a)(4) for 
                each class of redeemable stock shall commence on the 
                earlier of--
                            ``(i) the date of such termination; or
                            ``(ii) the date on which the member has 
                        provided notice of its intent to redeem such 
                        stock.
            ``(3) Liquidation of indebtedness.--Upon the termination of 
        the membership of an institution for any reason, the 
        outstanding indebtedness of the member to the bank shall be 
        liquidated in an orderly manner, as determined by the bank and, 
        upon the extinguishment of all such indebtedness, the bank 
        shall return to the member all collateral pledged to secure the 
        indebtedness.
    ``(e) Redemption of Excess Stock.--
            ``(1) In general.--A Federal home loan bank, in its sole 
        discretion, may redeem or repurchase, as appropriate, any 
        shares of Class A or Class B stock issued by the bank and held 
        by a member that are in excess of the minimum stock investment 
        required of that member.
            ``(2) Excess stock.--Shares of stock held by a member shall 
        not be deemed to be `excess stock' for purposes of this 
        subsection by virtue of a member's submission of a notice of 
        intent to withdraw from membership or termination of its 
        membership in any other manner.
            ``(3) Priority.--A Federal home loan bank may not redeem 
        any excess Class B stock prior to the end of the 5-year notice 
        period, unless the member has no Class A stock outstanding that 
        could be redeemed as excess.
    ``(f) Impairment of Capital.--If the Finance Board or the board of 
directors of a Federal home loan bank determines that the bank has 
incurred or is likely to incur losses that result in or are expected to 
result in charges against the capital of the bank, the bank shall not 
redeem or repurchase any stock of the bank without the prior approval 
of the Finance Board while such charges are continuing or are expected 
to continue. In no case may a bank redeem or repurchase any applicable 
capital stock if, following the redemption, the bank would fail to 
satisfy any minimum capital requirement.
    ``(g) Rejoining After Divestiture of All Shares.--
            ``(1) In general.--Except as provided in paragraph (2), and 
        notwithstanding any other provision of this Act, an institution 
        that divests all shares of stock in a Federal home loan bank 
        may not, after such divestiture, acquire shares of any Federal 
        home loan bank before the end of the 5-year period beginning on 
        the date of the completion of such divestiture, unless the 
        divestiture is a consequence of a transfer of membership on an 
        uninterrupted basis between banks.
            ``(2) Exception for withdrawals from membership before 
        1998.--Any institution that withdrew from membership in any 
        Federal home loan bank before December 31, 1997, may acquire 
        shares of a Federal home loan bank at any time after that date, 
        subject to the approval of the Finance Board and the 
        requirements of this Act.
    ``(h) Treatment of Retained Earnings.--
            ``(1) In general.--The holders of the Class C stock of a 
        Federal home loan bank, and any other classes of nonredeemable 
        stock approved by the Finance Board (to the extent provided in 
        the terms thereof), shall own the retained earnings, surplus, 
        undivided profits, and equity reserves, if any, of the bank.
            ``(2) No nonredeemable classes of stock.--If a Federal home 
        loan bank has no outstanding Class C or other such 
        nonredeemable stock, then the holders of any other classes of 
        stock of the bank then outstanding shall have ownership in, and 
        a private property right in, the retained earnings, surplus, 
        undivided profits, and equity reserves, if any, of the bank.
            ``(3) Exception.--Except as specifically provided in this 
        section or through the declaration of a dividend or a capital 
        distribution by a Federal home loan bank, or in the event of 
        liquidation of the bank, a member shall have no right to 
        withdraw or otherwise receive distribution of any portion of 
        the retained earnings of the bank.
            ``(4) Limitation.--A Federal home loan bank may not make 
        any distribution of its retained earnings unless, following 
        such distribution, the bank would continue to meet all 
        applicable capital requirements.''.

                       Subtitle H--ATM Fee Reform

SEC. 171. SHORT TITLE.

    This subtitle may be cited as the ``ATM Fee Reform Act of 1999''.

SEC. 172. ELECTRONIC FUND TRANSFER FEE DISCLOSURES AT ANY HOST ATM.

    Section 904(d) of the Electronic Fund Transfer Act (15 U.S.C. 
1693b(d)) is amended by adding at the end the following new paragraph:
            ``(3) Fee disclosures at automated teller machines.--
                    ``(A) In general.--The regulations prescribed under 
                paragraph (1) shall require any automated teller 
                machine operator who imposes a fee on any consumer for 
                providing host transfer services to such consumer to 
                provide notice in accordance with subparagraph (B) to 
                the consumer (at the time the service is provided) of--
                            ``(i) the fact that a fee is imposed by 
                        such operator for providing the service; and
                            ``(ii) the amount of any such fee.
                    ``(B) Notice requirements.--
                            ``(i) On the machine.--The notice required 
                        under clause (i) of subparagraph (A) with 
                        respect to any fee described in such 
                        subparagraph shall be posted in a prominent and 
                        conspicuous location on or at the automated 
                        teller machine at which the electronic fund 
                        transfer is initiated by the consumer; and
                            ``(ii) On the screen.--The notice required 
                        under clauses (i) and (ii) of subparagraph (A) 
                        with respect to any fee described in such 
                        subparagraph shall appear on the screen of the 
                        automated teller machine, or on a paper notice 
                        issued from such machine, after the transaction 
                        is initiated and before the consumer is 
                        irrevocably committed to completing the 
                        transaction.
                    ``(C) Prohibition on fees not properly disclosed 
                and explicitly assumed by consumer.--No fee may be 
                imposed by any automated teller machine operator in 
                connection with any electronic fund transfer initiated 
                by a consumer for which a notice is required under 
                subparagraph (A), unless--
                            ``(i) the consumer receives such notice in 
                        accordance with subparagraph (B); and
                            ``(ii) the consumer elects to continue in 
                        the manner necessary to effect the transaction 
                        after receiving such notice.
                    ``(D) Definitions.--For purposes of this paragraph, 
                the following definitions shall apply:
                            ``(i) Electronic fund transfer.--The term 
                        `electronic fund transfer' includes a 
                        transaction which involves a balance inquiry 
                        initiated by a consumer in the same manner as 
                        an electronic fund transfer, whether or not the 
                        consumer initiates a transfer of funds in the 
                        course of the transaction.
                            ``(ii) Automated teller machine operator.--
                        The term `automated teller machine operator' 
                        means any person who--
                                    ``(I) operates an automated teller 
                                machine at which consumers initiate 
                                electronic fund transfers; and
                                    ``(II) is not the financial 
                                institution which holds the account of 
                                such consumer from which the transfer 
                                is made.
                            ``(iii) Host transfer services.--The term 
                        `host transfer services' means any electronic 
                        fund transfer made by an automated teller 
                        machine operator in connection with a 
                        transaction initiated by a consumer at an 
                        automated teller machine operated by such 
                        operator.''.

SEC. 173. DISCLOSURE OF POSSIBLE FEES TO CONSUMERS WHEN ATM CARD IS 
              ISSUED.

    Section 905(a) of the Electronic Fund Transfer Act (15 U.S.C. 
1693c(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (8);
            (2) by striking the period at the end of paragraph (9) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (9) the following new 
        paragraph:
            ``(10) a notice to the consumer that a fee may be imposed 
        by--
                    ``(A) an automated teller machine operator (as 
                defined in section 904(d)(3)(D)(ii)) if the consumer 
                initiates a transfer from an automated teller machine 
                which is not operated by the person issuing the card or 
                other means of access; and
                    ``(B) any national, regional, or local network 
                utilized to effect the transaction.''.

SEC. 174. FEASIBILITY STUDY.

    (a) In General.--The Comptroller General of the United States shall 
conduct a study of the feasibility of requiring, in connection with any 
electronic fund transfer initiated by a consumer through the use of an 
automated teller machine--
            (1) a notice to be provided to the consumer before the 
        consumer is irrevocably committed to completing the 
        transaction, which clearly states the amount of any fee which 
        will be imposed upon the consummation of the transaction by--
                    (A) any automated teller machine operator (as 
                defined in section 904(d)(3)(D)(ii) of the Electronic 
                Fund Transfer Act) involved in the transaction;
                    (B) the financial institution holding the account 
                of the consumer;
                    (C) any national, regional, or local network 
                utilized to effect the transaction; and
                    (D) any other party involved in the transfer; and
            (2) the consumer to elect to consummate the transaction 
        after receiving the notice described in paragraph (1).
    (b) Factors To Be Considered.--In conducting the study required 
under subsection (a) with regard to the notice requirement described in 
such subsection, the Comptroller General shall consider the following 
factors:
            (1) The availability of appropriate technology.
            (2) Implementation and operating costs.
            (3) The competitive impact any such notice requirement 
        would have on various sizes and types of institutions, if 
        implemented.
            (4) The period of time which would be reasonable for 
        implementing any such notice requirement.
            (5) The extent to which consumers would benefit from any 
        such notice requirement.
            (6) Any other factor the Comptroller General determines to 
        be appropriate in analyzing the feasibility of imposing any 
        such notice requirement.
    (c) Report to the Congress.--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 Congress containing--
            (1) the findings and conclusions of the Comptroller General 
        in connection with the study required under subsection (a); and
            (2) the recommendation of the Comptroller General with 
        regard to the question of whether a notice requirement 
        described in subsection (a) should be implemented and, if so, 
        how such requirement should be implemented.

SEC. 175. NO LIABILITY IF POSTED NOTICES ARE DAMAGED.

    Section 910 of the Electronic Fund Transfer Act (15 U.S.C 1693h) is 
amended by adding at the end the following new subsection:
    ``(d) Exception for Damaged Notices.--If the notice required to be 
posted pursuant to section 904(d)(3)(B)(i) by an automated teller 
machine operator has been posted by such operator in compliance with 
such section and the notice is subsequently removed, damaged, or 
altered by any person other than the operator of the automated teller 
machine, the operator shall have no liability under this section for 
failure to comply with section 904(d)(3)(B)(i).''.

                 Subtitle I--Direct Activities of Banks

SEC. 181. AUTHORITY OF NATIONAL BANKS TO UNDERWRITE CERTAIN MUNICIPAL 
              BONDS.

    The paragraph designated the Seventh of section 5136 of the Revised 
Statutes of the United States (12 U.S.C. 24(7)) is amended by adding at 
the end the following new sentence: ``In addition to the provisions in 
this paragraph for dealing in, underwriting or purchasing securities, 
the limitations and restrictions contained in this paragraph as to 
dealing in, underwriting, and purchasing investment securities for the 
national bank's own account shall not apply to obligations (including 
limited obligation bonds, revenue bonds, and obligations that satisfy 
the requirements of section 142(b)(1) of the Internal Revenue Code of 
1986) issued by or on behalf of any State or political subdivision of a 
State, including any municipal corporate instrumentality of one or more 
States, or any public agency or authority of any State or political 
subdivision of a State, if the national bank is well capitalized (as 
defined in section 38 of the Federal Deposit Insurance Act).''.

                  Subtitle J--Deposit Insurance Funds

SEC. 186. STUDY OF SAFETY AND SOUNDNESS OF FUNDS.

    (a) Study Required.--The Board of Directors of the Federal Deposit 
Insurance Corporation shall conduct a study of the following issues 
with regard to the Bank Insurance Fund and the Savings Association 
Insurance Fund:
            (1) Safety and soundness.--The safety and soundness of the 
        funds and the adequacy of the reserve requirements applicable 
        to the funds in light of--
                    (A) the size of the insured depository institutions 
                which are resulting from mergers and consolidations 
                since the effective date of the Riegle-Neal Interstate 
                Banking and Branching Efficiency Act of 1994; and
                    (B) the affiliation of insured depository 
                institutions with other financial institutions pursuant 
                to this Act and the amendments made by this Act.
            (2) Concentration levels.--The concentration levels of the 
        funds, taking into account the number of members of each fund 
        and the geographic distribution of such members, and the extent 
        to which either fund is exposed to higher risks due to a 
        regional concentration of members or an insufficient membership 
        base relative to the size of member institutions.
            (3) Merger issues.--Issues relating to the planned merger 
        of the funds, including the cost of merging the funds and the 
        manner in which such costs will be distributed among the 
        members of the respective funds.
    (b) Report Required.--
            (1) In general.--Before the end of the 9-month period 
        beginning on the date of the enactment of this Act, the Board 
        of Directors of the Federal Deposit Insurance Corporation shall 
        submit a report to the Congress on the study conducted pursuant 
        to subsection (a).
            (2) Contents of report.--The report shall include--
                    (A) detailed findings of the Board of Directors 
                with regard to the issues described in subsection (a);
                    (B) a description of the plans developed by the 
                Board of Directors for merging the Bank Insurance Fund 
                and the Savings Association Insurance Fund, including 
                an estimate of the amount of the cost of such merger 
                which would be borne by Savings Association Insurance 
                Fund members; and
                    (C) such recommendations for legislative and 
                administrative action as the Board of Directors 
                determines to be necessary or appropriate to preserve 
                the safety and soundness of the deposit insurance 
                funds, reduce the risks to such funds, provide for an 
                efficient merger of such funds, and for other purposes.
    (c) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Insured depository institution.--The term ``insured 
        depository institution'' has the same meaning as in section 
        3(c) of the Federal Deposit Insurance Act.
            (2) BIF and SAIF members.--The terms ``Bank Insurance Fund 
        member'' and ``Savings Association Insurance Fund member'' have 
        the same meanings as in section 7(l) of the Federal Deposit 
        Insurance Act.

SEC. 187. ELIMINATION OF SAIF AND DIF SPECIAL RESERVES.

    (a) SAIF Special Reserves.--Section 11(a)(6) of the Federal Deposit 
Insurance Act (12 U.S.C. 1821(a)(6)) is amended by striking 
subparagraph (L).
    (b) DIF Special Reserves.--Section 2704 of the Deposit Insurance 
Funds Act of 1996 (12 U.S.C. 1821 note) is amended--
            (1) by striking subsection (b); and
            (2) in subsection (d)--
                    (A) by striking paragraph (4);
                    (B) in paragraph (6)(C)(i), by striking ``(6) and 
                (7)'' and inserting ``(5), (6), and (7)''; and
                    (C) in paragraph (6)(C), by striking clause (ii) 
                and inserting the following:
                            ``(ii) by redesignating paragraph (8) as 
                        paragraph (5).''.

                  Subtitle K--Miscellaneous Provisions

SEC. 191. TERMINATION OF ``KNOW YOUR CUSTOMER'' REGULATIONS.

    (a) In General.--None of the proposed regulations described in 
subsection (b) may be published in final form and, to the extent any 
such regulation has become effective before the date of the enactment 
of this Act, such regulation shall cease to be effective as of such 
date.
    (b) Proposed Regulations Described.--The proposed regulations 
referred to in subsection (a) are as follows:
            (1) The regulation proposed by the Comptroller of the 
        Currency to amend part 21 of title 12 of the Code of Federal 
        Regulations, as published in the Federal Register on December 
        7, 1998.
            (2) The regulation proposed by the Director of the Office 
        of Thrift Supervision to amend part 563 of title 12 of the Code 
        of Federal Regulations, as published in the Federal Register on 
        December 7, 1998.
            (3) The regulation proposed by the Board of Governors of 
        the Federal Reserve System to amend parts 208, 211, and 225 of 
        title 12 of the Code of Federal Regulations, as published in 
        the Federal Register on December 7, 1998.
            (4) The regulation proposed by the Federal Deposit 
        Insurance Corporation to amend part 326 of title 12 of the Code 
        of Federal Regulations, as published in the Federal Register on 
        December 7, 1998.

SEC. 192. STUDY AND REPORT ON FEDERAL ELECTRONIC FUND TRANSFERS.

    (a) Study.--The Secretary of the Treasury shall conduct a 
feasibility study to determine--
            (1) whether all electronic payments issued by Federal 
        agencies could be routed through the Regional Finance Centers 
        of the Department of the Treasury for verification and 
        reconciliation;
            (2) whether all electronic payments made by the Federal 
        Government could be subjected to the same level of 
        reconciliation as United States Treasury checks, including 
        matching each payment issued with each corresponding deposit at 
        financial institutions;
            (3) whether the appropriate computer security controls are 
        in place in order to ensure the integrity of electronic 
        payments;
            (4) the estimated costs of implementing, if so recommended, 
        the processes and controls described in paragraphs (1), (2), 
        and (3); and
            (5) a possible timetable for implementing those processes 
        if so recommended.
    (b) Report to Congress.--Not later than October 1, 2000, the 
Secretary of the Treasury shall submit a report to Congress containing 
the results of the study required by subsection (a).
    (c) Definition.--For purposes of this section, the term 
``electronic payment'' means any transfer of funds, other than a 
transaction originated by check, draft, or similar paper instrument, 
which is initiated through an electronic terminal, telephonic 
instrument, or computer or magnetic tapes so as to order, instruct, or 
authorize a debit or credit to a financial account.

SEC. 193. GENERAL ACCOUNTING OFFICE STUDY OF CONFLICTS OF INTEREST

    (a) Study Required.--The Comptroller General of the United States 
shall conduct a study analyzing the conflict of interest faced by the 
Board of Governors of the Federal Reserve System between its role as a 
primary regulator of the banking industry and its role as a vendor of 
services to the banking and financial services industry.
    (b) Specific Conflict Required to Be Addressed.--In the course of 
the study required under subsection (a), the Comptroller General shall 
address the conflict of interest faced by the Board of Governors of the 
Federal Reserve System between the role of the Board as a regulator of 
the payment system, generally, and its participation in the payment 
system as a competitor with private entities who are providing payment 
services.
    (c) Report to Congress.--Before the end of the 1-year period 
beginning on the date of the enactment of this Act, the Comptroller 
General shall submit a report to the Congress containing the findings 
and conclusions of the Comptroller General in connection with the study 
required under this section, together with such recommendations for 
such legislative or administrative actions as the Comptroller General 
may determine to be appropriate, including recommendations for 
resolving any such conflict of interest.

SEC. 194. STUDY OF COST OF ALL FEDERAL BANKING REGULATIONS.

    (a) In General.--In accordance with the finding in the Board of 
Governors of the Federal Reserve System Staff Study Numbered 171 
(April, 1998) that ``Further research covering more and different types 
of regulations and regulatory requirements is clearly needed to make 
informed decisions about regulations'', the Board of Governors of the 
Federal Reserve System, in consultation with the other Federal banking 
agencies (as defined in section 3 of the Federal Deposit Insurance Act) 
shall conduct a comprehensive study of the total annual costs and 
benefits of all Federal financial regulations and regulatory 
requirements applicable to banks.
    (b) Report Required.--Before the end of the 2-year period beginning 
on the date of the enactment of this Act, the Board of Governors of the 
Federal Reserve System shall submit a comprehensive report to the 
Congress containing the findings and conclusions of the Board in 
connection with the study required under subsection (a) and such 
recommendations for legislative and administrative action as the Board 
may determine to be appropriate.

SEC. 195. STUDY AND REPORT ON ADAPTING EXISTING LEGISLATIVE 
              REQUIREMENTS TO ONLINE BANKING AND LENDING.

    (a) Study Required.--The Federal banking agencies shall conduct a 
study of banking regulations regarding the delivery of financial 
services, including those regulations that may assume that there will 
be person-to-person contact during the course of a financial services 
transaction, and report their recommendations on adapting those 
existing requirements to online banking and lending.
    (b) Report Required.--Within 1 year of the date of the enactment of 
this Act, the Federal banking agencies shall submit a report to the 
Congress on the findings and conclusions of the agencies with respect 
to the study required under subsection (a), together with such 
recommendations for legislative or regulatory action as the agencies 
may determine to be appropriate.
    (c) Definition.--For purposes of this section, the term ``Federal 
banking agencies'' means each Federal banking agency (as defined in 
section 3(z) of the Federal Deposit Insurance Act).

SEC. 196. REGULATION OF UNINSURED STATE MEMBER BANKS.

    Section 9 of the Federal Reserve Act (12 U.S.C. 321 et seq.) is 
amended by adding at the end the following new paragraph:
            ``(24) Enforcement authority over uninsured state member 
        banks.--Section 3(u) of the Federal Deposit Insurance Act, 
        subsections (j) and (k) of section 7 of such Act, and 
        subsections (b) through (n), (s), (u), and (v) of section 8 of 
        such Act shall apply to an uninsured State member bank in the 
        same manner and to the same extent such provisions apply to an 
        insured State member bank and any reference in any such 
        provision to `insured depository institution' shall be deemed 
        to be a reference to `uninsured State member bank' for purposes 
        of this paragraph.''.

SEC. 197. CLARIFICATION OF SOURCE OF STRENGTH DOCTRINE.

    Section 18 of the Federal Deposit Insurance Act (21 U.S.C. 1828) is 
amended by adding at the end the following new subsection:
    ``(t) Limitation on Claims.--
            ``(1) In general.--Notwithstanding any other provision of 
        law other than paragraph (2), no person shall have any claim 
        for monetary damages or return of assets or other property 
        against any Federal banking agency (including in its capacity 
        as conservator or receiver) relating to the transfer of money, 
        assets, or other property to increase the capital of an insured 
        depository institution by any depository institution holding 
        company or controlling shareholder for such depository 
        institution, or any affiliate or subsidiary of such depository 
        institution, if at the time of the transfer--
                    ``(A) the insured depository institution is subject 
                to any direction issued in writing by a Federal banking 
                agency to increase its capital;
                    ``(B) the depository institution is 
                undercapitalized, significantly undercapitalized, or 
                critically undercapitalized (as defined in section 38 
                of this Act); and
                    ``(C) 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 banking agency has followed the procedure 
                set forth in such section.
            ``(2) Exception.--No provision of this subsection shall be 
        construed as limiting--
                    ``(A) the right of an insured depository 
                institution, a depository institution holding company, 
                or any other agency or person to seek direct review of 
                an order or directive issued by a Federal banking 
                agency under this Act, the Bank Holding Company Act of 
                1956, the National Bank Receivership Act, the Bank 
                Conservation Act, or the Home Owners' Loan Act;
                    ``(B) the rights of any party to a contract 
                pursuant to section 11(e) of this Act; or
                    ``(C) the rights of any party to a contract with a 
                depository institution holding company or a subsidiary 
                of a depository institution holding company (other than 
                an insured depository institution).''.

SEC. 198. INTEREST RATES AND OTHER CHARGES AT INTERSTATE BRANCHES.

    Section 44 of the Federal Deposit Insurance Act (12 U.S.C. 1831u) 
is amended--
            (1) by redesignating subsection (f) as subsection (g); and
            (2) by inserting after subsection (e) the following:
    ``(f) Applicable Rate and Other Charge Limitations.--
            ``(1) In general.--Except as provided for in paragraph (3), 
        upon the establishment of a branch of any insured depository 
        institution in a host State under this section, 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 or discount 
        made or upon any note, bill of exchange, financing transaction, 
        or other evidence of debt by any insured depository institution 
        in such State shall be equal to not more than the greater of--
                    ``(A) the maximum interest rate or amount of 
                interest, discount points, finance charges, or other 
                similar charges that may be charged, taken, received, 
                or reserved in a similar transaction under the 
                constitution, statutory, or other lows of the home 
                State of the insured depository institution 
                establishing any such branch, without reference to this 
                section, as such maximum interest rate or amount of 
                interest may change from time to time; or
                    ``(B) the maximum rate or amount of interest, 
                discount points, finance charges, or other similar 
                charges that may be charged, taken, received, or 
                reserved in a similar transaction by an insured 
                depository institution under the constitution, 
                statutory, or other laws of the host State, without 
                reference to this section.
            ``(2) Preemption.--The limitations established under 
        paragraph (1) shall apply only in any State that has a 
        constitutional provision that sets a maximum lawful rate of 
        interest on any contract at not more than 5 percent per annum 
        above the Federal Reserve Discount Rate or 90-day commercial 
        paper in effect in the Federal Reserve Bank in the Federal 
        Reserve District in which the State is located.
            ``(3) Rule of construction.--No provision of this 
        subsection shall be construed as superseding section 501 of the 
        Depository Institutions Deregulation and Monetary Control Act 
        of 1980.

SEC. 198A. INTERSTATE BRANCHES AND AGENCIES OF FOREIGN BANKS.

    Section 5(a)(7) of the International Banking Act of 1978 (12 U.S.C. 
3103(a)(7)), is amended to read as follows:
            ``(7) Additional authority for interstate branches and 
        agencies of foreign banks, upgrades of certain foreign bank 
        agencies and branches.--Notwithstanding paragraphs (1) and (2), 
        a foreign bank may--
                    ``(A) with the approval of the Board and the 
                Comptroller of the Currency, establish and operate a 
                Federal branch or Federal agency or, with the approval 
                of the Board and the appropriate State bank supervisor, 
                a State branch or State agency in any State outside the 
                foreign bank's home State if--
                            ``(i) the establishment and operation of 
                        such branch or agency is permitted by the State 
                        in which the branch or agency is to be 
                        established; and
                            ``(ii) in the case of a Federal or State 
                        branch, the branch receives only such deposits 
                        as would be permitted for a corporation 
                        organized under section 25A of the Federal 
                        Reserve Act (12 U.S.C. 611 et seq.); or
                    ``(B) with the approval of the Board and the 
                relevant licensing authority (the Comptroller in the 
                case of a Federal branch or the appropriate State 
                supervisor in the case of a State branch), upgrade an 
                agency, or a branch of the type referred to in 
                subparagraph (A)(ii), located in a State outside the 
                foreign bank's home State, into a Federal or State 
                branch if--
                            ``(i) the establishment and operation of 
                        such branch is permitted by such State; and
                            ``(ii) such agency or branch--
                                    ``(I) was in operation in such 
                                State on the day before September 29, 
                                1994; or
                                    ``(II) has been in operation in 
                                such State for a period of time that 
                                meets the State's minimum age 
                                requirement permitted under section 
                                44(a)(5) of the Federal Deposit 
                                Insurance Act.''.

SEC. 198B. FAIR TREATMENT OF WOMEN BY FINANCIAL ADVISERS.

    (a) Findings.--The Congress finds as follows:
            (1) Women's stature in society has risen considerably, as 
        they are now able to vote, own property, and pursue independent 
        careers, and are granted equal protection under the law.
            (2) Women are at least as fiscally responsible as men, and 
        more than half of all women have sole responsibility for 
        balancing the family checkbook and paying the bills.
            (3) Estate planners, trust officers, investment advisers, 
        and other financial planners and advisers still encourage the 
        unjust and outdated practice of leaving assets in trust for the 
        category of wives and daughters, along with senile parents, 
        minors, and mentally incompetent children.
            (4) Estate planners, trust officers, investment advisers, 
        and other financial planners and advisers still use sales 
        themes and tactics detrimental to women by stereotyping women 
        as uncomfortable handling money and needing protection from 
        their own possible errors of judgment and ``fortune hunters''.
    (b) Sense of the Congress.--It is the sense of the Congress that 
estate planners, trust officers, investment advisers, and other 
financial planners and advisers should--
            (1) eliminate examples in their training materials which 
        portray women as incapable and foolish; and
            (2) develop fairer and more balanced presentations that 
        eliminate outmoded and stereotypical examples which lead 
        clients to take actions that are financially detrimental to 
        their wives and daughters.

                  Subtitle L--Effective Date of Title

SEC. 199. EFFECTIVE DATE.

    Except with regard to any subtitle or other provision of this title 
for which a specific effective date is provided, this title and the 
amendments made by this title shall take effect at the end of the 180-
day period beginning on the date of the enactment of this Act.

                    TITLE II--FUNCTIONAL REGULATION

                    Subtitle A--Brokers and Dealers

SEC. 201. DEFINITION OF BROKER.

    Section 3(a)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(4)) is amended to read as follows:
            ``(4) Broker.--
                    ``(A) In general.--The term `broker' means any 
                person engaged in the business of effecting 
                transactions in securities for the account of others.
                    ``(B) Exception for certain bank activities.--A 
                bank shall not be considered to be a broker because the 
                bank engages in any one or more of the following 
                activities under the conditions described:
                            ``(i) Third party brokerage arrangements.--
                        The bank enters into a contractual or other 
                        written arrangement with a broker or dealer 
                        registered under this title under which the 
                        broker or dealer offers brokerage services on 
                        or off the premises of the bank if--
                                    ``(I) such broker or dealer is 
                                clearly identified as the person 
                                performing the brokerage services;
                                    ``(II) the broker or dealer 
                                performs brokerage services in an area 
                                that is clearly marked and, to the 
                                extent practicable, physically separate 
                                from the routine deposit-taking 
                                activities of the bank;
                                    ``(III) any materials used by the 
                                bank to advertise or promote generally 
                                the availability of brokerage services 
                                under the arrangement clearly indicate 
                                that the brokerage services are being 
                                provided by the broker or dealer and 
                                not by the bank;
                                    ``(IV) any materials used by the 
                                bank to advertise or promote generally 
                                the availability of brokerage services 
                                under the arrangement are in compliance 
                                with the Federal securities laws before 
                                distribution;
                                    ``(V) bank employees (other than 
                                associated persons of a broker or 
                                dealer who are qualified pursuant to 
                                the rules of a self-regulatory 
                                organization) perform only clerical or 
                                ministerial functions in connection 
                                with brokerage transactions including 
                                scheduling appointments with the 
                                associated persons of a broker or 
                                dealer, except that bank employees may 
                                forward customer funds or securities 
                                and may describe in general terms the 
                                types of investment vehicles available 
                                from the bank and the broker or dealer 
                                under the arrangement;
                                    ``(VI) bank employees do not 
                                receive incentive compensation for any 
                                brokerage transaction unless such 
                                employees are associated persons of a 
                                broker or dealer and are qualified 
                                pursuant to the rules of a self-
                                regulatory organization, except that 
                                the bank employees may receive 
                                compensation for the referral of any 
                                customer if the compensation is a 
                                nominal one-time cash fee of a fixed 
                                dollar amount and the payment of the 
                                fee is not contingent on whether the 
                                referral results in a transaction;
                                    ``(VII) such services are provided 
                                by the broker or dealer on a basis in 
                                which all customers which receive any 
                                services are fully disclosed to the 
                                broker or dealer;
                                    ``(VIII) the bank does not carry a 
                                securities account of the customer 
                                except as permitted under clause (ii) 
                                or (viii) of this subparagraph; and
                                    ``(IX) the bank, broker, or dealer 
                                informs each customer that the 
                                brokerage services are provided by the 
                                broker or dealer and not by the bank 
                                and that the securities are not 
                                deposits or other obligations of the 
                                bank, are not guaranteed by the bank, 
                                and are not insured by the Federal 
                                Deposit Insurance Corporation.
                            ``(ii) Trust activities.--The bank effects 
                        transactions in a trustee or fiduciary capacity 
                        in its trust department, or another department 
                        where the trust or fiduciary activity is 
                        regularly examined by bank examiners under the 
                        same standards and in the same way as such 
                        activities are examined in the trust 
                        department, and--
                                    ``(I) is chiefly compensated for 
                                such transactions, consistent with 
                                fiduciary principles and standards, on 
                                the basis of an administration or 
                                annual fee (payable on a monthly, 
                                quarterly, or other basis), a 
                                percentage of assets under management, 
                                or a flat or capped per order 
                                processing fee equal to not more than 
                                the cost incurred by the bank in 
                                connection with executing securities 
                                transactions for trustee and fiduciary 
                                customers, or any combination of such 
                                fees; and
                                    ``(II) does not solicit brokerage 
                                business, other than by advertising 
                                that it effects transactions in 
                                securities in conjunction with 
                                advertising its other trust activities.
                            ``(iii) Permissible securities 
                        transactions.--The bank effects transactions 
                        in--
                                    ``(I) commercial paper, bankers 
                                acceptances, or commercial bills;
                                    ``(II) exempted securities;
                                    ``(III) qualified Canadian 
                                government obligations as defined in 
                                section 5136 of the Revised Statutes, 
                                in conformity with section 15C of this 
                                title and the rules and regulations 
                                thereunder, or obligations of the North 
                                American Development Bank; or
                                    ``(IV) any standardized, credit 
                                enhanced debt security issued by a 
                                foreign government pursuant to the 
                                March 1989 plan of then Secretary of 
                                the Treasury Brady, used by such 
                                foreign government to retire 
                                outstanding commercial bank loans.
                            ``(iv) Certain stock purchase plans.--
                                    ``(I) Employee benefit plans.--The 
                                bank effects transactions, as a 
                                registered transfer agent (including as 
                                a registrar of stocks), in the 
                                securities of an issuer as part of any 
                                pension, retirement, profit-sharing, 
                                bonus, thrift, savings, incentive, or 
                                other similar benefit plan for the 
                                employees of that issuer or its 
                                affiliates (as defined in section 2 of 
                                the Bank Holding Company Act of 1956), 
                                if--
                                            ``(aa) the bank does not 
                                        solicit transactions or provide 
                                        investment advice with respect 
                                        to the purchase or sale of 
                                        securities in connection with 
                                        the plan; and
                                            ``(bb) the bank's 
                                        compensation for such plan or 
                                        program consists chiefly of 
                                        administration fees, or flat or 
                                        capped per order processing 
                                        fees, or both.
                                    ``(II) Dividend reinvestment 
                                plans.--The bank effects transactions, 
                                as a registered transfer agent 
                                (including as a registrar of stocks), 
                                in the securities of an issuer as part 
                                of that issuer's dividend reinvestment 
                                plan, if--
                                            ``(aa) the bank does not 
                                        solicit transactions or provide 
                                        investment advice with respect 
                                        to the purchase or sale of 
                                        securities in connection with 
                                        the plan;
                                            ``(bb) the bank does not 
                                        net shareholders' buy and sell 
                                        orders, other than for programs 
                                        for odd-lot holders or plans 
                                        registered with the Commission; 
                                        and
                                            ``(cc) the bank's 
                                        compensation for such plan or 
                                        program consists chiefly of 
                                        administration fees, or flat or 
                                        capped per order processing 
                                        fees, or both.
                                    ``(III) Issuer plans.--The bank 
                                effects transactions, as a registered 
                                transfer agent (including as a 
                                registrar of stocks), in the securities 
                                of an issuer as part of that issuer's 
                                plan for the purchase or sale of that 
                                issuer's shares, if--
                                            ``(aa) the bank does not 
                                        solicit transactions or provide 
                                        investment advice with respect 
                                        to the purchase or sale of 
                                        securities in connection with 
                                        the plan or program;
                                            ``(bb) the bank does not 
                                        net shareholders' buy and sell 
                                        orders, other than for programs 
                                        for odd-lot holders or plans 
                                        registered with the Commission; 
                                        and
                                            ``(cc) the bank's 
                                        compensation for such plan or 
                                        program consists chiefly of 
                                        administration fees, or flat or 
                                        capped per order processing 
                                        fees, or both.
                                    ``(IV) Permissible delivery of 
                                materials.--The exception to being 
                                considered a broker for a bank engaged 
                                in activities described in subclauses 
                                (I), (II), and (III) will not be 
                                affected by a bank's delivery of 
                                written or electronic plan materials to 
                                employees of the issuer, shareholders 
                                of the issuer, or members of affinity 
                                groups of the issuer, so long as such 
                                materials are--
                                            ``(aa) comparable in scope 
                                        or nature to that permitted by 
                                        the Commission as of the date 
                                        of the enactment of the 
                                        Financial Services Act of 1999; 
                                        or
                                            ``(bb) otherwise permitted 
                                        by the Commission.
                            ``(v) Sweep accounts.--The bank effects 
                        transactions as part of a program for the 
                        investment or reinvestment of deposit funds 
                        into any no-load, open-end management 
                        investment company registered under the 
                        Investment Company Act of 1940 that holds 
                        itself out as a money market fund.
                            ``(vi) Affiliate transactions.--The bank 
                        effects transactions for the account of any 
                        affiliate (as defined in section 2 of the Bank 
                        Holding Company Act of 1956) of the bank other 
                        than--
                                    ``(I) a registered broker or 
                                dealer; or
                                    ``(II) an affiliate that is engaged 
                                in merchant banking, as described in 
                                section 6(c)(3)(H) of the Bank Holding 
                                Company Act of 1956.
                            ``(vii) Private securities offerings.--The 
                        bank--
                                    ``(I) effects sales as part of a 
                                primary offering of securities not 
                                involving a public offering, pursuant 
                                to section 3(b), 4(2), or 4(6) of the 
                                Securities Act of 1933 or the rules and 
                                regulations issued thereunder;
                                    ``(II) at any time after the date 
                                that is 1 year after the date of the 
                                enactment of the Financial Services Act 
                                of 1999, is not affiliated with a 
                                broker or dealer that has been 
                                registered for more than 1 year in 
                                accordance with this Act, and engages 
                                in dealing, market making, or 
                                underwriting activities, other than 
                                with respect to exempted securities; 
                                and
                                    ``(III) effects transactions 
                                exclusively with qualified investors.
                            ``(viii) Safekeeping and custody 
                        activities.--
                                    ``(I) In general.--The bank, as 
                                part of customary banking activities--
                                            ``(aa) provides safekeeping 
                                        or custody services with 
                                        respect to securities, 
                                        including the exercise of 
                                        warrants and other rights on 
                                        behalf of customers;
                                            ``(bb) facilitates the 
                                        transfer of funds or 
                                        securities, as a custodian or a 
                                        clearing agency, in connection 
                                        with the clearance and 
                                        settlement of its customers' 
                                        transactions in securities;
                                            ``(cc) effects securities 
                                        lending or borrowing 
                                        transactions with or on behalf 
                                        of customers as part of 
                                        services provided to customers 
                                        pursuant to division (aa) or 
                                        (bb) or invests cash collateral 
                                        pledged in connection with such 
                                        transactions; or
                                            ``(dd) holds securities 
                                        pledged by a customer to 
                                        another person or securities 
                                        subject to purchase or resale 
                                        agreements involving a 
                                        customer, or facilitates the 
                                        pledging or transfer of such 
                                        securities by book entry or as 
                                        otherwise provided under 
                                        applicable law, if the bank 
                                        maintains records separately 
                                        identifying the securities and 
                                        the customer.
                                    ``(II) Exception for carrying 
                                broker activities.--The exception to 
                                being considered a broker for a bank 
                                engaged in activities described in 
                                subclause (I) shall not apply if the 
                                bank, in connection with such 
                                activities, acts in the United States 
                                as a carrying broker (as such term, and 
                                different formulations thereof, are 
                                used in section 15(c)(3) of this title 
                                and the rules and regulations 
                                thereunder) for any broker or dealer, 
                                unless such carrying broker activities 
                                are engaged in with respect to 
                                government securities (as defined in 
                                paragraph (42) of this subsection).
                            ``(ix) Excepted banking products.--The bank 
                        effects transactions in excepted banking 
                        products, as defined in section 206 of the 
                        Financial Services Act of 1999.
                            ``(x) Municipal securities.--The bank 
                        effects transactions in municipal securities.
                            ``(xi) De minimis exception.--The bank 
                        effects, other than in transactions referred to 
                        in clauses (i) through (x), not more than 500 
                        transactions in securities in any calendar 
                        year, and such transactions are not effected by 
                        an employee of the bank who is also an employee 
                        of a broker or dealer.
                    ``(C) Broker dealer execution.--The exception to 
                being considered a broker for a bank engaged in 
                activities described in clauses (ii), (iv), and (viii) 
                of subparagraph (B) shall not apply if the activities 
                described in such provisions result in the trade in the 
                United States of any security that is a publicly traded 
                security in the United States, unless--
                            ``(i) the bank directs such trade to a 
                        registered broker or dealer for execution;
                            ``(ii) the trade is a cross trade or other 
                        substantially similar trade of a security 
                        that--
                                    ``(I) is made by the bank or 
                                between the bank and an affiliated 
                                fiduciary; and
                                    ``(II) is not in contravention of 
                                fiduciary principles established under 
                                applicable Federal or State law; or
                            ``(iii) the trade is conducted in some 
                        other manner permitted under rules, 
                        regulations, or orders as the Commission may 
                        prescribe or issue.
                    ``(D) Fiduciary capacity.--For purposes of 
                subparagraph (B)(ii), the term `fiduciary capacity' 
                means--
                            ``(i) in the capacity as trustee, executor, 
                        administrator, registrar of stocks and bonds, 
                        transfer agent, guardian, assignee, receiver, 
                        or custodian under a uniform gift to minor act, 
                        or as an investment adviser if the bank 
                        receives a fee for its investment advice;
                            ``(ii) in any capacity in which the bank 
                        possesses investment discretion on behalf of 
                        another; or
                            ``(iii) in any other similar capacity.
                    ``(F) Exception for entities subject to section 
                15(e).--The term `broker' does not include a bank 
                that--
                            ``(i) was, immediately prior to the 
                        enactment of the Financial Services Act of 
                        1999, subject to section 15(e) of this title; 
                        and
                            ``(ii) is subject to such restrictions and 
                        requirements as the Commission considers 
                        appropriate.''.

SEC. 202. DEFINITION OF DEALER.

    Section 3(a)(5) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(5)) is amended to read as follows:
            ``(5) Dealer.--
                    ``(A) In general.--The term `dealer' means any 
                person engaged in the business of buying and selling 
                securities for such person's own account through a 
                broker or otherwise.
                    ``(B) Exception for person not engaged in the 
                business of dealing.--The term `dealer' does not 
                include a person that buys or sells securities for such 
                person's own account, either individually or in a 
                fiduciary capacity, but not as a part of a regular 
                business.
                    ``(C) Exception for certain bank activities.--A 
                bank shall not be considered to be a dealer because the 
                bank engages in any of the following activities under 
                the conditions described:
                            ``(i) Permissible securities 
                        transactions.--The bank buys or sells--
                                    ``(I) commercial paper, bankers 
                                acceptances, or commercial bills;
                                    ``(II) exempted securities;
                                    ``(III) qualified Canadian 
                                government obligations as defined in 
                                section 5136 of the Revised Statutes of 
                                the United States, in conformity with 
                                section 15C of this title and the rules 
                                and regulations thereunder, or 
                                obligations of the North American 
                                Development Bank; or
                                    ``(IV) any standardized, credit 
                                enhanced debt security issued by a 
                                foreign government pursuant to the 
                                March 1989 plan of then Secretary of 
                                the Treasury Brady, used by such 
                                foreign government to retire 
                                outstanding commercial bank loans.
                            ``(ii) Investment, trustee, and fiduciary 
                        transactions.--The bank buys or sells 
                        securities for investment purposes--
                                    ``(I) for the bank; or
                                    ``(II) for accounts for which the 
                                bank acts as a trustee or fiduciary.
                            ``(iii) Asset-backed transactions.--The 
                        bank engages in the issuance or sale to 
                        qualified investors, through a grantor trust or 
                        other separate entity, of securities backed by 
                        or representing an interest in notes, drafts, 
                        acceptances, loans, leases, receivables, other 
                        obligations (other than securities of which the 
                        bank is not the issuer), or pools of any such 
                        obligations predominantly originated by--
                                    ``(I) the bank;
                                    ``(II) an affiliate of any such 
                                bank other than a broker or dealer; or
                                    ``(III) a syndicate of banks of 
                                which the bank is a member, if the 
                                obligations or pool of obligations 
                                consists of mortgage obligations or 
                                consumer-related receivables.
                            ``(iv) Excepted banking products.--The bank 
                        buys or sells excepted banking products, as 
                        defined in section 206 of the Financial 
                        Services Act of 1999.
                            ``(v) Derivative instruments.--The bank 
                        issues, buys, or sells any derivative 
                        instrument to which the bank is a party--
                                    ``(I) to or from a qualified 
                                investor, except that if the instrument 
                                provides for the delivery of one or 
                                more securities (other than a 
                                derivative instrument or government 
                                security), the transaction shall be 
                                effected with or through a registered 
                                broker or dealer; or
                                    ``(II) to or from other persons, 
                                except that if the derivative 
                                instrument provides for the delivery of 
                                one or more securities (other than a 
                                derivative instrument or government 
                                security), or is a security (other than 
                                a government security), the transaction 
                                shall be effected with or through a 
                                registered broker or dealer; or
                                    ``(III) to or from any person if 
                                the instrument is neither a security 
                                nor provides for the delivery of one or 
                                more securities (other than a 
                                derivative instrument).''.

SEC. 203. REGISTRATION FOR SALES OF PRIVATE SECURITIES OFFERINGS.

    Section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
3) is amended by inserting after subsection (i) the following new 
subsection:
    ``(j) Registration for Sales of Private Securities Offerings.--A 
registered securities association shall create a limited qualification 
category for any associated person of a member who effects sales as 
part of a primary offering of securities not involving a public 
offering, pursuant to section 3(b), 4(2), or 4(6) of the Securities Act 
of 1933 and the rules and regulations thereunder, and shall deem 
qualified in such limited qualification category, without testing, any 
bank employee who, in the six month period preceding the date of the 
enactment of this Act, engaged in effecting such sales.''.

SEC. 204. INFORMATION SHARING.

    Section 18 of the Federal Deposit Insurance Act is amended by 
adding at the end the following new subsection:
    ``(t) Recordkeeping Requirements.--
            ``(1) Requirements.--Each appropriate Federal banking 
        agency, after consultation with and consideration of the views 
        of the Commission, shall establish recordkeeping requirements 
        for banks relying on exceptions contained in paragraphs (4) and 
        (5) of section 3(a) of the Securities Exchange Act of 1934. 
        Such recordkeeping requirements shall be sufficient to 
        demonstrate compliance with the terms of such exceptions and be 
        designed to facilitate compliance with such exceptions. Each 
        appropriate Federal banking agency shall make any such 
        information available to the Commission upon request.
            ``(2) Definitions.--As used in this subsection the term 
        `Commission' means the Securities and Exchange Commission.''.

SEC. 205. TREATMENT OF NEW HYBRID PRODUCTS.

    Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o) 
is amended by adding at the end the following new subsection:
    ``(i) Rulemaking to Extend Requirements to New Hybrid Products.--
            ``(1) Limitation.--The Commission shall not--
                    ``(A) require a bank to register as a broker or 
                dealer under this section because the bank engages in 
                any transaction in, or buys or sells, a new hybrid 
                product; or
                    ``(B) bring an action against a bank for a failure 
                to comply with a requirement described in subparagraph 
                (A),
        unless the Commission has imposed such requirement by rule or 
        regulation issued in accordance with this section.
            ``(2) Criteria for rulemaking.--The Commission shall not 
        impose a requirement under paragraph (1) of this subsection 
        with respect to any new hybrid product unless the Commission 
        determines that--
                    ``(A) the new hybrid product is a security; and
                    ``(B) imposing such requirement is necessary or 
                appropriate in the public interest and for the 
                protection of investors, consistent with the 
                requirements of section 3(f).
            ``(3) Considerations.--In making a determination under 
        paragraph (2), the Commission shall consider--
                    ``(A) the nature of the new hybrid product; and
                    ``(B) the history, purpose, extent, and 
                appropriateness of the regulation of the new hybrid 
                product under the Federal securities laws and under the 
                Federal banking laws.
            ``(4) Consultation.--In promulgating rules under this 
        subsection, the Commission shall consult with and consider the 
        views of the Board of Governors of the Federal Reserve System 
        regarding the nature of the new hybrid product, the history, 
        purpose, extent, and appropriateness of the regulation of the 
        new product under the Federal banking laws, and the impact of 
        the proposed rule on the banking industry.
            ``(5) New hybrid product.--For purposes of this subsection, 
        the term `new hybrid product' means a product that--
                    ``(A) was not subjected to regulation by the 
                Commission as a security prior to the date of the 
                enactment of this subsection; and
                    ``(B) is not an excepted banking product, as such 
                term is defined in section 206 of the Financial 
                Services Act of 1999.''.

SEC. 206. DEFINITION OF EXCEPTED BANKING PRODUCT.

    (a) Definition of Excepted Banking Product.--For purposes of 
paragraphs (4) and (5) of section 3(a) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78c(a) (4), (5)), the term ``excepted banking 
product'' means--
            (1) a deposit account, savings account, certificate of 
        deposit, or other deposit instrument issued by a bank;
            (2) a banker's acceptance;
            (3) a letter of credit issued or loan made by a bank;
            (4) a debit account at a bank arising from a credit card or 
        similar arrangement;
            (5) a participation in a loan which the bank or an 
        affiliate of the bank (other than a broker or dealer) funds, 
        participates in, or owns that is sold--
                    (A) to qualified investors; or
                    (B) to other persons that--
                            (i) have the opportunity to review and 
                        assess any material information, including 
                        information regarding the borrower's 
                        creditworthiness; and
                            (ii) based on such factors as financial 
                        sophistication, net worth, and knowledge and 
                        experience in financial matters, have the 
                        capability to evaluate the information 
                        available, as determined under generally 
                        applicable banking standards or guidelines; or
            (6) a derivative instrument that involves or relates to--
                    (A) currencies, except options on currencies that 
                trade on a national securities exchange;
                    (B) interest rates, except interest rate derivative 
                instruments that--
                            (i) are based on a security or a group or 
                        index of securities (other than government 
                        securities or a group or index of government 
                        securities);
                            (ii) provide for the delivery of one or 
                        more securities (other than government 
                        securities); or
                            (iii) trade on a national securities 
                        exchange; or
                    (C) commodities, other rates, indices, or other 
                assets, except derivative instruments that--
                            (i) are securities or that are based on a 
                        group or index of securities (other than 
                        government securities or a group or index of 
                        government securities);
                            (ii) provide for the delivery of one or 
                        more securities (other than government 
                        securities); or
                            (iii) trade on a national securities 
                        exchange.
    (b) Classification Limited.--Classification of a particular product 
as an excepted banking product pursuant to this section shall not be 
construed as finding or implying that such product is or is not a 
security for any purpose under the securities laws, or is or is not an 
account, agreement, contract, or transaction for any purpose under the 
Commodity Exchange Act.
    (c) Incorporated Definitions.--For purposes of this section--
            (1) the terms ``bank'', ``qualified investor'', and 
        ``securities laws'' have the same meanings given in section 
        3(a) of the Securities Exchange Act of 1934, as amended by this 
        Act; and
            (2) the term ``government securities'' has the meaning 
        given in section 3(a)(42) of such Act (as amended by this Act), 
        and, for purposes of this section, commercial paper, bankers 
        acceptances, and commercial bills shall be treated in the same 
        manner as government securities.

SEC. 207. ADDITIONAL DEFINITIONS.

    Section 3(a) of the Securities Exchange Act of 1934 is amended by 
adding at the end the following new paragraphs:
            ``(54) Derivative instrument.--
                    ``(A) Definition.--The term `derivative instrument' 
                means any individually negotiated contract, agreement, 
                warrant, note, or option that is based, in whole or in 
                part, on the value of, any interest in, or any 
                quantitative measure or the occurrence of any event 
                relating to, one or more commodities, securities, 
                currencies, interest or other rates, indices, or other 
                assets, but does not include an excepted banking 
                product, as defined in paragraphs (1) through (5) of 
                section 206(a) of the Financial Services Act of 1999.
                    ``(B) Classification limited.--Classification of a 
                particular contract as a derivative instrument pursuant 
                to this paragraph shall not be construed as finding or 
                implying that such instrument is or is not a security 
                for any purpose under the securities laws, or is or is 
                not an account, agreement, contract, or transaction for 
                any purpose under the Commodity Exchange Act.
            ``(55) Qualified investor.--
                    ``(A) Definition.--For purposes of this title, the 
                term `qualified investor' means--
                            ``(i) any investment company registered 
                        with the Commission under section 8 of the 
                        Investment Company Act of 1940;
                            ``(ii) any issuer eligible for an exclusion 
                        from the definition of investment company 
                        pursuant to section 3(c)(7) of the Investment 
                        Company Act of 1940;
                            ``(iii) any bank (as defined in paragraph 
                        (6) of this subsection), savings association 
                        (as defined in section 3(b) of the Federal 
                        Deposit Insurance Act), broker, dealer, 
                        insurance company (as defined in section 
                        2(a)(13) of the Securities Act of 1933), or 
                        business development company (as defined in 
                        section 2(a)(48) of the Investment Company Act 
                        of 1940);
                            ``(iv) any small business investment 
                        company licensed by the United States Small 
                        Business Administration under section 301 (c) 
                        or (d) of the Small Business Investment Act of 
                        1958;
                            ``(v) any State sponsored employee benefit 
                        plan, or any other employee benefit plan, 
                        within the meaning of the Employee Retirement 
                        Income Security Act of 1974, other than an 
                        individual retirement account, if the 
                        investment decisions are made by a plan 
                        fiduciary, as defined in section 3(21) of that 
                        Act, which is either a bank, savings and loan 
                        association, insurance company, or registered 
                        investment adviser;
                            ``(vi) any trust whose purchases of 
                        securities are directed by a person described 
                        in clauses (i) through (v) of this 
                        subparagraph;
                            ``(vii) any market intermediary exempt 
                        under section 3(c)(2) of the Investment Company 
                        Act of 1940;
                            ``(viii) any associated person of a broker 
                        or dealer other than a natural person;
                            ``(ix) any foreign bank (as defined in 
                        section 1(b)(7) of the International Banking 
                        Act of 1978);
                            ``(x) the government of any foreign 
                        country;
                            ``(xi) any corporation, company, or 
                        partnership that owns and invests on a 
                        discretionary basis, not less than $10,000,000 
                        in investments;
                            ``(xii) any natural person who owns and 
                        invests on a discretionary basis, not less than 
                        $10,000,000 in investments;
                            ``(xiii) any government or political 
                        subdivision, agency, or instrumentality of a 
                        government who owns and invests on a 
                        discretionary basis not less than $50,000,000 
                        in investments; or
                            ``(xiv) any multinational or supranational 
                        entity or any agency or instrumentality 
                        thereof.
                    ``(B) Additional authority.--The Commission may, by 
                rule or order, define a `qualified investor' as any 
                other person, taking into consideration such factors as 
                the financial sophistication of the person, net worth, 
                and knowledge and experience in financial matters.''.

SEC. 208. GOVERNMENT SECURITIES DEFINED.

    Section 3(a)(42) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(42)) is amended--
            (1) by striking ``or'' at the end of subparagraph (C);
            (2) by striking the period at the end of subparagraph (D) 
        and inserting ``; or''; and
            (3) by adding at the end the following new subparagraph:
                    ``(E) for purposes of sections 15, 15C, and 17A as 
                applied to a bank, a qualified Canadian government 
                obligation as defined in section 5136 of the Revised 
                Statutes of the United States.''.

SEC. 209. EFFECTIVE DATE.

    This subtitle shall take effect at the end of the 270-day period 
beginning on the date of the enactment of this Act.

SEC. 210. RULE OF CONSTRUCTION.

    Nothing in this Act shall supersede, affect, or otherwise limit the 
scope and applicability of the Commodity Exchange Act (7 U.S.C. 1 et 
seq.).

             Subtitle B--Bank Investment Company Activities

SEC. 211. CUSTODY OF INVESTMENT COMPANY ASSETS BY AFFILIATED BANK.

    (a) Management Companies.--Section 17(f) of the Investment Company 
Act of 1940 (15 U.S.C. 80a-17(f)) is amended--
            (1) by redesignating paragraphs (1), (2), and (3) as 
        subparagraphs (A), (B), and (C), respectively;
            (2) by striking ``(f) Every registered'' and inserting the 
        following:
    ``(f) Custody of Securities.--
            ``(1) Every registered'';
            (3) by redesignating the second, third, fourth, and fifth 
        sentences of such subsection as paragraphs (2) through (5), 
        respectively, and indenting the left margin of such paragraphs 
        appropriately; and
            (4) by adding at the end the following new paragraph:
            ``(6) The Commission may adopt rules and regulations, and 
        issue orders, consistent with the protection of investors, 
        prescribing the conditions under which a bank, or an affiliated 
        person of a bank, either of which is an affiliated person, 
        promoter, organizer, or sponsor of, or principal underwriter 
        for, a registered management company may serve as custodian of 
        that registered management company.''.
    (b) Unit Investment Trusts.--Section 26 of the Investment Company 
Act of 1940 (15 U.S.C. 80a-26) is amended--
            (1) by redesignating subsections (b) through (e) as 
        subsections (c) through (f), respectively; and
            (2) by inserting after subsection (a) the following new 
        subsection:
    ``(b) The Commission may adopt rules and regulations, and issue 
orders, consistent with the protection of investors, prescribing the 
conditions under which a bank, or an affiliated person of a bank, 
either of which is an affiliated person of a principal underwriter for, 
or depositor of, a registered unit investment trust, may serve as 
trustee or custodian under subsection (a)(1).''.
    (c) Fiduciary Duty of Custodian.--Section 36(a) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-35(a)) is amended--
            (1) in paragraph (1), by striking ``or'' at the end;
            (2) in paragraph (2), by striking the period at the end and 
        inserting ``; or''; and
            (3) by inserting after paragraph (2) the following:
            ``(3) as custodian.''.

SEC. 212. LENDING TO AN AFFILIATED INVESTMENT COMPANY.

    Section 17(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-
17(a)) is amended--
            (1) by striking ``or'' at the end of paragraph (2);
            (2) by striking the period at the end of paragraph (3) and 
        inserting ``; or''; and
            (3) by adding at the end the following new paragraph:
            ``(4) to loan money or other property to such registered 
        company, or to any company controlled by such registered 
        company, in contravention of such rules, regulations, or orders 
        as the Commission may prescribe or issue consistent with the 
        protection of investors.''.

SEC. 213. INDEPENDENT DIRECTORS.

    (a) In General.--Section 2(a)(19)(A) of the Investment Company Act 
of 1940 (15 U.S.C. 80a-2(a)(19)(A)) is amended--
            (1) by striking clause (v) and inserting the following new 
        clause:
                            ``(v) any person or any affiliated person 
                        of a person (other than a registered investment 
                        company) that, at any time during the 6-month 
                        period preceding the date of the determination 
                        of whether that person or affiliated person is 
                        an interested person, has executed any 
                        portfolio transactions for, engaged in any 
                        principal transactions with, or distributed 
                        shares for--
                                    ``(I) the investment company;
                                    ``(II) any other investment company 
                                having the same investment adviser as 
                                such investment company or holding 
                                itself out to investors as a related 
                                company for purposes of investment or 
                                investor services; or
                                    ``(III) any account over which the 
                                investment company's investment adviser 
                                has brokerage placement discretion,'';
            (2) by redesignating clause (vi) as clause (vii); and
            (3) by inserting after clause (v) the following new clause:
                            ``(vi) any person or any affiliated person 
                        of a person (other than a registered investment 
                        company) that, at any time during the 6-month 
                        period preceding the date of the determination 
                        of whether that person or affiliated person is 
                        an interested person, has loaned money or other 
                        property to--
                                    ``(I) the investment company;
                                    ``(II) any other investment company 
                                having the same investment adviser as 
                                such investment company or holding 
                                itself out to investors as a related 
                                company for purposes of investment or 
                                investor services; or
                                    ``(III) any account for which the 
                                investment company's investment adviser 
                                has borrowing authority,''.
    (b) Conforming Amendment.--Section 2(a)(19)(B) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-2(a)(19)(B)) is amended--
            (1) by striking clause (v) and inserting the following new 
        clause:
                            ``(v) any person or any affiliated person 
                        of a person (other than a registered investment 
                        company) that, at any time during the 6-month 
                        period preceding the date of the determination 
                        of whether that person or affiliated person is 
                        an interested person, has executed any 
                        portfolio transactions for, engaged in any 
                        principal transactions with, or distributed 
                        shares for--
                                    ``(I) any investment company for 
                                which the investment adviser or 
                                principal underwriter serves as such;
                                    ``(II) any investment company 
                                holding itself out to investors, for 
                                purposes of investment or investor 
                                services, as a company related to any 
                                investment company for which the 
                                investment adviser or principal 
                                underwriter serves as such; or
                                    ``(III) any account over which the 
                                investment adviser has brokerage 
                                placement discretion,'';
            (2) by redesignating clause (vi) as clause (vii); and
            (3) by inserting after clause (v) the following new clause:
                            ``(vi) any person or any affiliated person 
                        of a person (other than a registered investment 
                        company) that, at any time during the 6-month 
                        period preceding the date of the determination 
                        of whether that person or affiliated person is 
                        an interested person, has loaned money or other 
                        property to--
                                    ``(I) any investment company for 
                                which the investment adviser or 
                                principal underwriter serves as such;
                                    ``(II) any investment company 
                                holding itself out to investors, for 
                                purposes of investment or investor 
                                services, as a company related to any 
                                investment company for which the 
                                investment adviser or principal 
                                underwriter serves as such; or
                                    ``(III) any account for which the 
                                investment adviser has borrowing 
                                authority,''.
    (c) Affiliation of Directors.--Section 10(c) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-10(c)) is amended by striking 
``bank, except'' and inserting ``bank (together with its affiliates and 
subsidiaries) 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), except''.
    (d) Effective Date.--The amendments made by this section shall take 
effect at the end of the 1-year period beginning on the date of the 
enactment of this subtitle.

SEC. 214. ADDITIONAL SEC DISCLOSURE AUTHORITY.

    Section 35(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-
34(a)) is amended to read as follows:
    ``(a) Misrepresentation of Guarantees.--
            ``(1) In general.--It shall be unlawful for any person, 
        issuing or selling any security of which a registered 
        investment company is the issuer, to represent or imply in any 
        manner whatsoever that such security or company--
                    ``(A) has been guaranteed, sponsored, recommended, 
                or approved by the United States, or any agency, 
                instrumentality or officer of the United States;
                    ``(B) has been insured by the Federal Deposit 
                Insurance Corporation; or
                    ``(C) is guaranteed by or is otherwise an 
                obligation of any bank or insured depository 
                institution.
            ``(2) Disclosures.--Any person issuing or selling the 
        securities of a registered investment company that is advised 
        by, or sold through, a bank shall prominently disclose that an 
        investment in the company is not insured by the Federal Deposit 
        Insurance Corporation or any other government agency. The 
        Commission may adopt rules and regulations, and issue orders, 
        consistent with the protection of investors, prescribing the 
        manner in which the disclosure under this paragraph shall be 
        provided.
            ``(3) Definitions.--The terms `insured depository 
        institution' and `appropriate Federal banking agency' have the 
        same meanings given in section 3 of the Federal Deposit 
        Insurance Act.''.

SEC. 215. DEFINITION OF BROKER UNDER THE INVESTMENT COMPANY ACT OF 
              1940.

    Section 2(a)(6) of the Investment Company Act of 1940 (15 U.S.C. 
80a-2(a)(6)) is amended to read as follows:
            ``(6) The term `broker' has the same meaning given in 
        section 3 of the Securities Exchange Act of 1934, except that 
        such term does not include any person solely by reason of the 
        fact that such person is an underwriter for one or more 
        investment companies.''.

SEC. 216. DEFINITION OF DEALER UNDER THE INVESTMENT COMPANY ACT OF 
              1940.

    Section 2(a)(11) of the Investment Company Act of 1940 (15 U.S.C. 
80a-2(a)(11)) is amended to read as follows:
            ``(11) The term `dealer' has the same meaning given in the 
        Securities Exchange Act of 1934, but does not include an 
        insurance company or investment company.''.

SEC. 217. REMOVAL OF THE EXCLUSION FROM THE DEFINITION OF INVESTMENT 
              ADVISER FOR BANKS THAT ADVISE INVESTMENT COMPANIES.

    (a) Investment Adviser.--Section 202(a)(11)(A) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11)(A)) is amended by striking 
``investment company'' and inserting ``investment company, except that 
the term `investment adviser' includes any bank or bank holding company 
to the extent that such bank or bank holding company serves or acts as 
an investment adviser to a registered investment company, but if, in 
the case of a bank, such services or actions are performed through a 
separately identifiable department or division, the department or 
division, and not the bank itself, shall be deemed to be the investment 
adviser''.
    (b) Separately Identifiable Department or Division.--Section 202(a) 
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended 
by adding at the end the following:
            ``(26) The term `separately identifiable department or 
        division' of a bank means a unit--
                    ``(A) that is under the direct supervision of an 
                officer or officers designated by the board of 
                directors of the bank as responsible for the day-to-day 
                conduct of the bank's investment adviser activities for 
                one or more investment companies, including the 
                supervision of all bank employees engaged in the 
                performance of such activities; and
                    ``(B) for which all of the records relating to its 
                investment adviser activities are separately maintained 
                in or extractable from such unit's own facilities or 
                the facilities of the bank, and such records are so 
                maintained or otherwise accessible as to permit 
                independent examination and enforcement by the 
                Commission of this Act or the Investment Company Act of 
                1940 and rules and regulations promulgated under this 
                Act or the Investment Company Act of 1940.''.

SEC. 218. DEFINITION OF BROKER UNDER THE INVESTMENT ADVISERS ACT OF 
              1940.

    Section 202(a)(3) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-2(a)(3)) is amended to read as follows:
            ``(3) The term `broker' has the same meaning given in 
        section 3 of the Securities Exchange Act of 1934.''.

SEC. 219. DEFINITION OF DEALER UNDER THE INVESTMENT ADVISERS ACT OF 
              1940.

    Section 202(a)(7) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-2(a)(7)) is amended to read as follows:
            ``(7) The term `dealer' has the same meaning given in 
        section 3 of the Securities Exchange Act of 1934, but does not 
        include an insurance company or investment company.''.

SEC. 220. INTERAGENCY CONSULTATION.

    The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is 
amended by inserting after section 210 the following new section:

``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 with respect to the investment advisory 
        activities--
                    ``(A) of any--
                            ``(i) bank holding company;
                            ``(ii) bank; or
                            ``(iii) separately identifiable department 
                        or division of a bank,
                that is registered under section 203 of this title; and
                    ``(B) in the case of a bank holding company or bank 
                that has a subsidiary or a separately identifiable 
                department or division registered under that section, 
                of such bank or bank 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, 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, bank, or department 
or division under any other provision of law.
    ``(c) Definition.--For purposes of this section, the term 
`appropriate Federal banking agency' shall have the same meaning given 
in section 3 of the Federal Deposit Insurance Act.''.

SEC. 221. TREATMENT OF BANK COMMON TRUST FUNDS.

    (a) Securities Act of 1933.--Section 3(a)(2) of the Securities Act 
of 1933 (15 U.S.C. 77c(a)(2)) is amended by striking ``or any interest 
or participation in any common trust fund or similar fund maintained by 
a bank exclusively for the collective investment and reinvestment of 
assets contributed thereto by such bank in its capacity as trustee, 
executor, administrator, or guardian'' and inserting ``or any interest 
or participation in any common trust fund or similar fund that is 
excluded from the definition of the term `investment company' under 
section 3(c)(3) of the Investment Company Act of 1940''.
    (b) Securities Exchange Act of 1934.--Section 3(a)(12)(A)(iii) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(12)(A)(iii)) is 
amended to read as follows:
                    ``(iii) any interest or participation in any common 
                trust fund or similar fund that is excluded from the 
                definition of the term `investment company' under 
                section 3(c)(3) of the Investment Company Act of 
                1940;''.
    (c) Investment Company Act of 1940.--Section 3(c)(3) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-3(c)(3)) is amended by 
inserting before the period the following: ``, if--
                    ``(A) such fund is employed by the bank solely as 
                an aid to the administration of trusts, estates, or 
                other accounts created and maintained for a fiduciary 
                purpose;
                    ``(B) except in connection with the ordinary 
                advertising of the bank's fiduciary services, interests 
                in such fund are not--
                            ``(i) advertised; or
                            ``(ii) offered for sale to the general 
                        public; and
                    ``(C) fees and expenses charged by such fund are 
                not in contravention of fiduciary principles 
                established under applicable Federal or State law''.

SEC. 222. INVESTMENT ADVISERS PROHIBITED FROM HAVING CONTROLLING 
              INTEREST IN REGISTERED INVESTMENT COMPANY.

    Section 15 of the Investment Company Act of 1940 (15 U.S.C. 80a-15) 
is amended by adding at the end the following new subsection:
    ``(g) Controlling Interest in Investment Company Prohibited.--
            ``(1) In general.--If an investment adviser to a registered 
        investment company, or an affiliated person of that investment 
        adviser, holds a controlling interest in that registered 
        investment company in a trustee or fiduciary capacity, such 
        person shall--
                    ``(A) if it holds the shares in a trustee or 
                fiduciary capacity with respect to any employee benefit 
                plan subject to the Employee Retirement Income Security 
                Act of 1974, transfer the power to vote the shares of 
                the investment company through to another person acting 
                in a fiduciary capacity with respect to the plan who is 
                not an affiliated person of that investment adviser or 
                any affiliated person thereof; or
                    ``(B) if it holds the shares in a trustee or 
                fiduciary capacity with respect to any person or entity 
                other than an employee benefit plan subject to the 
                Employee Retirement Income Security Act of 1974--
                            ``(i) transfer the power to vote the shares 
                        of the investment company through to--
                                    ``(I) the beneficial owners of the 
                                shares;
                                    ``(II) another person acting in a 
                                fiduciary capacity who is not an 
                                affiliated person of that investment 
                                adviser or any affiliated person 
                                thereof; or
                                    ``(III) any person authorized to 
                                receive statements and information with 
                                respect to the trust who is not an 
                                affiliated person of that investment 
                                adviser or any affiliated person 
                                thereof;
                            ``(ii) vote the shares of the investment 
                        company held by it in the same proportion as 
                        shares held by all other shareholders of the 
                        investment company; or
                            ``(iii) vote the shares of the investment 
                        company as otherwise permitted under such 
                        rules, regulations, or orders as the Commission 
                        may prescribe or issue consistent with the 
                        protection of investors.
            ``(2) Exemption.--Paragraph (1) shall not apply to any 
        investment adviser to a registered investment company, or any 
        affiliated person of that investment adviser, that holds shares 
        of the investment company in a trustee or fiduciary capacity if 
        that registered investment company consists solely of assets 
        held in such capacities.
            ``(3) Safe harbor.--No investment adviser to a registered 
        investment company or any affiliated person of such investment 
        adviser shall be deemed to have acted unlawfully or to have 
        breached a fiduciary duty under State or Federal law solely by 
        reason of acting in accordance with clause (i), (ii), or (iii) 
        of paragraph (1)(B).''.

SEC. 223. STATUTORY DISQUALIFICATION FOR BANK WRONGDOING.

    Section 9(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-
9(a)) is amended in paragraphs (1) and (2) by striking ``securities 
dealer, transfer agent,'' and inserting ``securities dealer, bank, 
transfer agent,''.

SEC. 224. CONFORMING CHANGE IN DEFINITION.

    Section 2(a)(5) of the Investment Company Act of 1940 (15 U.S.C. 
80a-2(a)(5)) is amended by striking ``(A) a banking institution 
organized under the laws of the United States'' and inserting ``(A) a 
depository institution (as defined in section 3 of the Federal Deposit 
Insurance Act) or a branch or agency of a foreign bank (as such terms 
are defined in section 1(b) of the International Banking Act of 
1978)''.

SEC. 225. CONFORMING AMENDMENT.

    Section 202 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
2) is amended by adding at the end the following new subsection:
    ``(c) Consideration of Promotion of Efficiency, Competition, and 
Capital Formation.--Whenever pursuant to this title the Commission is 
engaged in rulemaking and is required to consider or determine whether 
an action is necessary or appropriate in the public interest, the 
Commission shall also consider, in addition to the protection of 
investors, whether the action will promote efficiency, competition, and 
capital formation.''.

SEC. 226. CHURCH PLAN EXCLUSION.

    Section 3(c)(14) of the Investment Company Act of 1940 (15 U.S.C. 
80a-3(c)(14)) is amended--
            (1) by redesignating clauses (i) and (ii) of subparagraph 
        (B) as subclauses (I) and (II), respectively;
            (2) by redesignating subparagraphs (A) and (B) as clauses 
        (i) and (ii), respectively;
            (3) by inserting ``(A)'' after ``(14)''; and
            (4) by adding at the end the following new subparagraph:
            ``(B) If a registered investment company would be excluded 
        from the definition of investment company under this subsection 
        but for the fact that some of the company's assets do not 
        satisfy the condition of subparagraph (A)(ii) of this 
        paragraph, then any investment adviser to the company or 
        affiliated person of such investment adviser shall not be 
        subject to the requirements of section 15(g)(1)(B) with respect 
        to shares of the investment company.''.

SEC. 227. EFFECTIVE DATE.

    This subtitle shall take effect 90 days after the date of the 
enactment of this Act.

     Subtitle C--Securities and Exchange Commission Supervision of 
                   Investment Bank Holding Companies

SEC. 231. SUPERVISION OF INVESTMENT BANK HOLDING COMPANIES BY THE 
              SECURITIES AND EXCHANGE COMMISSION.

    (a) Amendment.--Section 17 of the Securities Exchange Act of 1934 
(15 U.S.C. 78q) is amended--
            (1) by redesignating subsection (i) as subsection (k); and
            (2) by inserting after subsection (h) the following new 
        subsection:
    ``(i) Investment Bank Holding Companies.--
            ``(1) Elective supervision of an investment bank holding 
        company not having a bank or savings association affiliate.--
                    ``(A) In general.--An investment bank holding 
                company that is not--
                            ``(i) an affiliate of a wholesale financial 
                        institution, an insured bank (other than 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), or a savings association;
                            ``(ii) a foreign bank, foreign company, or 
                        company that is described in section 8(a) of 
                        the International Banking Act of 1978; or
                            ``(iii) a foreign bank that controls, 
                        directly or indirectly, a corporation chartered 
                        under section 25A of the Federal Reserve Act,
                may elect to become supervised by filing with the 
                Commission a notice of intention to become supervised, 
                pursuant to subparagraph (B) of this paragraph. Any 
                investment bank holding company filing such a notice 
                shall be supervised in accordance with this section and 
                comply with the rules promulgated by the Commission 
                applicable to supervised investment bank holding 
                companies.
                    ``(B) Notification of status as a supervised 
                investment bank holding company.--An investment bank 
                holding company that elects under subparagraph (A) to 
                become supervised by the Commission shall file with the 
                Commission a written notice of intention to become 
                supervised by the Commission in such form and 
                containing such information and documents concerning 
                such investment bank holding company as the Commission, 
                by rule, may prescribe as necessary or appropriate in 
                furtherance of the purposes of this section. Unless the 
                Commission finds that such supervision is not necessary 
                or appropriate in furtherance of the purposes of this 
                section, such supervision shall become effective 45 
                days after the date of receipt of such written notice 
                by the Commission or within such shorter time period as 
                the Commission, by rule or order, may determine.
            ``(2) Election not to be supervised by the commission as an 
        investment bank holding company.--
                    ``(A) Voluntary withdrawal.--A supervised 
                investment bank holding company that is supervised 
                pursuant to paragraph (1) may, upon such terms and 
                conditions as the Commission deems necessary or 
                appropriate, elect not to be supervised by the 
                Commission by filing a written notice of withdrawal 
                from Commission supervision. Such notice shall not 
                become effective until 1 year after receipt by the 
                Commission, or such shorter or longer period as the 
                Commission deems necessary or appropriate to ensure 
                effective supervision of the material risks to the 
                supervised investment bank holding company and to the 
                affiliated broker or dealer, or to prevent evasion of 
                the purposes of this section.
                    ``(B) Discontinuation of commission supervision.--
                If the Commission finds that any supervised investment 
                bank holding company that is supervised pursuant to 
                paragraph (1) is no longer in existence or has ceased 
                to be an investment bank holding company, or if the 
                Commission finds that continued supervision of such a 
                supervised investment bank holding company is not 
                consistent with the purposes of this section, the 
                Commission may discontinue the supervision pursuant to 
                a rule or order, if any, promulgated by the Commission 
                under this section.
            ``(3) Supervision of investment bank holding companies.--
                    ``(A) Recordkeeping and reporting.--
                            ``(i) In general.--Every supervised 
                        investment bank holding company and each 
                        affiliate thereof shall make and keep for 
                        prescribed periods such records, furnish copies 
                        thereof, and make such reports, as the 
                        Commission may require by rule, in order to 
                        keep the Commission informed as to--
                                    ``(I) the company's or affiliate's 
                                activities, financial condition, 
                                policies, systems for monitoring and 
                                controlling financial and operational 
                                risks, and transactions and 
                                relationships between any broker or 
                                dealer affiliate of the supervised 
                                investment bank holding company; and
                                    ``(II) the extent to which the 
                                company or affiliate has complied with 
                                the provisions of this Act and 
                                regulations prescribed and orders 
                                issued under this Act.
                            ``(ii) Form and contents.--Such records and 
                        reports shall be prepared in such form and 
                        according to such specifications (including 
                        certification by an independent public 
                        accountant), as the Commission may require and 
                        shall be provided promptly at any time upon 
                        request by the Commission. Such records and 
                        reports may include--
                                    ``(I) a balance sheet and income 
                                statement;
                                    ``(II) an assessment of the 
                                consolidated capital of the supervised 
                                investment bank holding company;
                                    ``(III) an independent auditor's 
                                report attesting to the supervised 
                                investment bank holding company's 
                                compliance with its internal risk 
                                management and internal control 
                                objectives; and
                                    ``(IV) reports concerning the 
                                extent to which the company or 
                                affiliate has complied with the 
                                provisions of this title and any 
                                regulations prescribed and orders 
                                issued under this title.
                    ``(B) Use of existing reports.--
                            ``(i) In general.--The Commission shall, to 
                        the fullest extent possible, accept reports in 
                        fulfillment of the requirements under this 
                        paragraph that the supervised investment bank 
                        holding company or its affiliates have been 
                        required to provide to another appropriate 
                        regulatory agency or self-regulatory 
                        organization.
                            ``(ii) Availability.--A supervised 
                        investment bank holding company or an affiliate 
                        of such company shall provide to the 
                        Commission, at the request of the Commission, 
                        any report referred to in clause (i).
                    ``(C) Examination authority.--
                            ``(i) Focus of examination authority.--The 
                        Commission may make examinations of any 
                        supervised investment bank holding company and 
                        any affiliate of such company in order to--
                                    ``(I) inform the Commission 
                                regarding--
                                            ``(aa) the nature of the 
                                        operations and financial 
                                        condition of the supervised 
                                        investment bank holding company 
                                        and its affiliates;
                                            ``(bb) the financial and 
                                        operational risks within the 
                                        supervised investment bank 
                                        holding company that may affect 
                                        any broker or dealer controlled 
                                        by such supervised investment 
                                        bank holding company; and
                                            ``(cc) the systems of the 
                                        supervised investment bank 
                                        holding company and its 
                                        affiliates for monitoring and 
                                        controlling those risks; and
                                    ``(II) monitor compliance with the 
                                provisions of this subsection, 
                                provisions governing transactions and 
                                relationships between any broker or 
                                dealer affiliated with the supervised 
                                investment bank holding company and any 
                                of the company's other affiliates, and 
                                applicable provisions of subchapter II 
                                of chapter 53, title 31, United States 
                                Code (commonly referred to as the `Bank 
                                Secrecy Act') and regulations 
                                thereunder.
                            ``(ii) Restricted focus of examinations.--
                        The Commission shall limit the focus and scope 
                        of any examination of a supervised investment 
                        bank holding company to--
                                    ``(I) the company; and
                                    ``(II) any affiliate of the company 
                                that, because of its size, condition, 
                                or activities, the nature or size of 
                                the transactions between such affiliate 
                                and any affiliated broker or dealer, or 
                                the centralization of functions within 
                                the holding company system, could, in 
                                the discretion of the Commission, have 
                                a materially adverse effect on the 
                                operational or financial condition of 
                                the broker or dealer.
                            ``(iii) Deference to other examinations.--
                        For purposes of this subparagraph, the 
                        Commission shall, to the fullest extent 
                        possible, use the reports of examination of 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 made by the appropriate regulatory 
                        agency, or of a licensed insurance company made 
                        by the appropriate State insurance regulator.
            ``(4) Holding company capital.--
                    ``(A) Authority.--If the Commission finds that it 
                is necessary to adequately supervise investment bank 
                holding companies and their broker or dealer affiliates 
                consistent with the purposes of this subsection, the 
                Commission may adopt capital adequacy rules for 
                supervised investment bank holding companies.
                    ``(B) Method of calculation.--In developing rules 
                under this paragraph:
                            ``(i) Double leverage.--The Commission 
                        shall consider the use by the supervised 
                        investment bank holding company of debt and 
                        other liabilities to fund capital investments 
                        in affiliates.
                            ``(ii) No unweighted capital ratio.--The 
                        Commission shall not impose under this section 
                        a capital ratio that is not based on 
                        appropriate risk-weighting considerations.
                            ``(iii) No capital requirement on regulated 
                        entities.--The Commission shall not, by rule, 
                        regulation, guideline, order or otherwise, 
                        impose any capital adequacy provision on a 
                        nonbanking affiliate (other than a broker or 
                        dealer) that is in compliance with applicable 
                        capital requirements of another Federal 
                        regulatory authority or State insurance 
                        authority.
                            ``(iv) Appropriate exclusions.--The 
                        Commission shall take full account of the 
                        applicable capital requirements of another 
                        Federal regulatory authority or State insurance 
                        regulator.
                    ``(C) Internal risk management models.--The 
                Commission may incorporate internal risk management 
                models into its capital adequacy rules for supervised 
                investment bank holding companies.
            ``(5) Functional regulation of banking and insurance 
        activities of supervised investment bank holding companies.--
        The Commission shall defer to--
                    ``(A) the appropriate regulatory agency with regard 
                to all interpretations of, and the enforcement of, 
                applicable banking laws relating to the activities, 
                conduct, ownership, and operations of banks, and 
                institutions described in subparagraph (D), (F), and 
                (G) of section 2(c)(2), or held under section 4(f), of 
                the Bank Holding Company Act of 1956; and
                    ``(B) the appropriate State insurance regulators 
                with regard to all interpretations of, and the 
                enforcement of, applicable State insurance laws 
                relating to the activities, conduct, and operations of 
                insurance companies and insurance agents.
            ``(6) Definitions.--For purposes of this subsection:
                    ``(A) The term `investment bank holding company' 
                means--
                            ``(i) any person other than a natural 
                        person that owns or controls one or more 
                        brokers or dealers; and
                            ``(ii) the associated persons of the 
                        investment bank holding company.
                    ``(B) The term `supervised investment bank holding 
                company' means any investment bank holding company that 
                is supervised by the Commission pursuant to this 
                subsection.
                    ``(C) The terms `affiliate', `bank', `bank holding 
                company', `company', `control', `savings association', 
                and `wholesale financial institution' have the same 
                meanings given in section 2 of the Bank Holding Company 
                Act of 1956 (12 U.S.C. 1841).
                    ``(D) The term `insured bank' has the same meaning 
                given in section 3 of the Federal Deposit Insurance 
                Act.
                    ``(E) The term `foreign bank' has the same meaning 
                given in section 1(b)(7) of the International Banking 
                Act of 1978.
                    ``(F) The terms `person associated with an 
                investment bank holding company' and `associated person 
                of an investment bank holding company' mean any person 
                directly or indirectly controlling, controlled by, or 
                under common control with, an investment bank holding 
                company.''.
    ``(j) Authority To Limit Disclosure of Information.--
Notwithstanding any other provision of law, the Commission shall not be 
compelled to disclose any information required to be reported under 
subsection (h) or (i) or any information supplied to the Commission by 
any domestic or foreign regulatory agency that relates to the financial 
or operational condition of any associated person of a broker or 
dealer, investment bank holding company, or any affiliate of an 
investment bank holding company. Nothing in this subsection shall 
authorize the Commission to withhold information from Congress, or 
prevent the Commission from complying with a request for information 
from any other Federal department or agency or any self-regulatory 
organization requesting the information for purposes within the scope 
of its jurisdiction, or complying with an order of a court of the 
United States in an action brought by the United States or the 
Commission. For purposes of section 552 of title 5, United States Code, 
this subsection shall be considered a statute described in subsection 
(b)(3)(B) of such section 552. In prescribing regulations to carry out 
the requirements of this subsection, the Commission shall designate 
information described in or obtained pursuant to subparagraphs (A), 
(B), and (C) of subsection (i)(5) as confidential information for 
purposes of section 24(b)(2) of this title.''.
    (b) Conforming Amendments.--
            (1) Section 3(a)(34) of the Securities Exchange Act of 1934 
        (15 U.S.C. 78c(a)(34)) is amended by adding at the end the 
        following new subparagraph:
                    ``(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) the Comptroller of the Currency, in 
                        the case of a national bank or a bank in the 
                        District of Columbia examined by the 
                        Comptroller of the Currency;
                            ``(ii) the Board of Governors of the 
                        Federal Reserve System, in the case of a State 
                        member bank of the Federal Reserve System or 
                        any corporation chartered under section 25A of 
                        the Federal Reserve Act;
                            ``(iii) 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; or
                            ``(iv) the Commission in the case of all 
                        other such institutions.''.
            (2) Section 1112(e) of the Right to Financial Privacy Act 
        of 1978 (12 U.S.C. 3412(e)) is amended--
                    (A) by striking ``this title'' and inserting 
                ``law''; and
                    (B) by inserting ``, examination reports'' after 
                ``financial records''.

    Subtitle D--Disclosure of Customer Costs of Acquiring Financial 
                                Products

SEC. 241. IMPROVED AND CONSISTENT DISCLOSURE.

    (a) Revised Regulations Required.--Within 1 year after the date of 
the enactment of this Act, each Federal financial regulatory authority 
shall prescribe rules, or revisions to its rules, to improve the 
accuracy, simplicity, and completeness, and to make more consistent, 
the disclosure of information by persons subject to the jurisdiction of 
such regulatory authority concerning any commissions, fees, or other 
costs incurred by customers in the acquisition of financial products.
    (b) Consultation.--In prescribing rules and revisions under 
subsection (a), the Federal financial regulatory authorities shall 
consult with each other and with appropriate State financial regulatory 
authorities.
    (c) Consideration of Existing Disclosures.--In prescribing rules 
and revisions under subsection (a), the Federal financial regulatory 
authorities shall consider the sufficiency and appropriateness of then 
existing laws and rules applicable to persons subject to their 
jurisdiction, and may prescribe exemptions from the rules and revisions 
required by subsection (a) to the extent appropriate in light of the 
objective of this section to increase the consistency of disclosure 
practices.
    (d) Enforcement.--Any rule prescribed by a Federal financial 
regulatory authority pursuant to this section shall, for purposes of 
enforcement, be treated as a rule prescribed by such regulatory 
authority pursuant to the statute establishing such regulatory 
authority's jurisdiction over the persons to whom such rule applies.
    (e) Definition.--As used in this section, the term ``Federal 
financial regulatory authority'' means the Board of Governors of the 
Federal Reserve System, the Securities and Exchange Commission, the 
Comptroller of the Currency, the Federal Deposit Insurance Corporation, 
the Commodity Futures Trading Commission, and any self-regulatory 
organization under the supervision of any of the foregoing.

              Subtitle E--Banks and Bank Holding Companies

SEC. 251. CONSULTATION.

    (a) In General.--The Securities and Exchange Commission shall 
consult and coordinate comments with the appropriate Federal banking 
agency before taking any action or rendering any opinion with respect 
to the manner in which any insured depository institution or depository 
institution holding company reports loan loss reserves in its financial 
statement, including the amount of any such loan loss reserve.
    (b) Definitions.--For purposes of subsection (a), the terms 
``insured depository institution'', ``depository institution holding 
company'', and ``appropriate Federal banking agency'' have the same 
meaning as in section 3 of the Federal Deposit Insurance Act.

                          TITLE III--INSURANCE

               Subtitle A--State Regulation of Insurance

SEC. 301. STATE REGULATION OF THE BUSINESS OF INSURANCE.

    The Act entitled ``An Act to express the intent of the Congress 
with reference to the regulation of the business of insurance'' and 
approved March 9, 1945 (15 U.S.C. 1011 et seq.), commonly referred to 
as the ``McCarran-Ferguson Act'' remains the law of the United States.

SEC. 302. MANDATORY INSURANCE LICENSING REQUIREMENTS.

    No person shall engage in the business of insurance in a State as 
principal or agent unless such person is licensed as required by the 
appropriate insurance regulator of such State in accordance with the 
relevant State insurance law, subject to section 104.

SEC. 303. FUNCTIONAL REGULATION OF INSURANCE.

    The insurance activities of any person (including a national bank 
exercising its power to act as agent under the eleventh undesignated 
paragraph of section 13 of the Federal Reserve Act) shall be 
functionally regulated by the States, subject to section 104.

SEC. 304. INSURANCE UNDERWRITING IN NATIONAL BANKS.

    (a) In General.--Except as provided in section 305, a national bank 
and the subsidiaries of a national bank may not provide insurance in a 
State as principal except that this prohibition shall not apply to 
authorized products.
    (b) Authorized Products.--For the purposes of this section, a 
product is authorized if--
            (1) as of January 1, 1999, the Comptroller of the Currency 
        had determined in writing that national banks may provide such 
        product as principal, or national banks were in fact lawfully 
        providing such product as principal;
            (2) no court of relevant jurisdiction had, by final 
        judgment, overturned a determination of the Comptroller of the 
        Currency that national banks may provide such product as 
        principal; and
            (3) the product is not title insurance, or an annuity 
        contract the income of which is subject to tax treatment under 
        section 72 of the Internal Revenue Code of 1986.
    (c) Definition.--For purposes of this section, the term 
``insurance'' means--
            (1) any product regulated as insurance as of January 1, 
        1999, in accordance with the relevant State insurance law, in 
        the State in which the product is provided;
            (2) any product first offered after January 1, 1999, 
        which--
                    (A) a State insurance regulator determines shall be 
                regulated as insurance in the State in which the 
                product is provided because the product insures, 
                guarantees, or indemnifies against liability, loss of 
                life, loss of health, or loss through damage to or 
                destruction of property, including, but not limited to, 
                surety bonds, life insurance, health insurance, title 
                insurance, and property and casualty insurance (such as 
                private passenger or commercial automobile, homeowners, 
                mortgage, commercial multiperil, general liability, 
                professional liability, workers' compensation, fire and 
                allied lines, farm owners multiperil, aircraft, 
                fidelity, surety, medical malpractice, ocean marine, 
                inland marine, and boiler and machinery insurance); and
                    (B) is not a product or service of a bank that is--
                            (i) a deposit product;
                            (ii) a loan, discount, letter of credit, or 
                        other extension of credit;
                            (iii) a trust or other fiduciary service;
                            (iv) a qualified financial contract (as 
                        defined in or determined pursuant to section 
                        11(e)(8)(D)(i) of the Federal Deposit Insurance 
                        Act); or
                            (v) a financial guaranty, except that this 
                        subparagraph (B) shall not apply to a product 
                        that includes an insurance component such that 
                        if the product is offered or proposed to be 
                        offered by the bank as principal--
                                    (I) it would be treated as a life 
                                insurance contract under section 7702 
                                of the Internal Revenue Code of 1986; 
                                or
                                    (II) in the event that the product 
                                is not a letter of credit or other 
                                similar extension of credit, a 
                                qualified financial contract, or a 
                                financial guaranty, it would qualify 
                                for treatment for losses incurred with 
                                respect to such product under section 
                                832(b)(5) of the Internal Revenue Code 
                                of 1986, if the bank were subject to 
                                tax as an insurance company under 
                                section 831 of that Code; or
            (3) any annuity contract, the income on which is subject to 
        tax treatment under section 72 of the Internal Revenue Code of 
        1986.

SEC. 305. TITLE INSURANCE ACTIVITIES OF NATIONAL BANKS AND THEIR 
              AFFILIATES.

    (a) General Prohibition.--No national bank, and no subsidiary of a 
national bank, may engage in any activity involving the underwriting or 
sale of title insurance.
    (b) Nondiscrimination Parity Exception.--
            (1) In general.--Notwithstanding any other provision of law 
        (including section 104 of this Act), in the case of any State 
        in which banks organized under the laws of such State are 
        authorized to sell title insurance as agency, a national bank 
        and a subsidiary of a national bank may sell title insurance as 
        agent in such State, but only in the same manner, to the same 
        extent, and under the same restrictions as such State banks are 
        authorized to sell title insurance as agent in such State.
            (2) Coordination with ``wildcard'' provision.--A State law 
        which authorizes State banks to engage in any activities in 
        such State in which a national bank may engage shall not be 
        treated as a statute which authorizes State banks to sell title 
        insurance as agent, for purposes of paragraph (1).
    (c) Grandfathering With Consistent Regulation.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (3) and notwithstanding subsections (a) and (b), a national 
        bank, and a subsidiary of a national bank, may conduct title 
        insurance activities which such national bank or subsidiary was 
        actively and lawfully conducting before the date of the 
        enactment of this Act.
            (2) Insurance affiliate.--In the case of a national bank 
        which has an affiliate which provides insurance as principal 
        and is not a subsidiary of the bank, the national bank and any 
        subsidiary of the national bank may not engage in the 
        underwriting of title insurance pursuant to paragraph (1).
            (3) Insurance subsidiary.--In the case of a national bank 
        which has a subsidiary which provides insurance as principal 
        and has no affiliate other than a subsidiary which provides 
        insurance as principal, the national bank may not directly 
        engage in any activity involving the underwriting of title 
        insurance.
    (d) ``Affiliate'' and ``Subsidiary'' Defined.--For purposes of this 
section, the terms ``affiliate'' and ``subsidiary'' have the same 
meanings as in section 2 of the Bank Holding Company Act of 1956.
    (e) Rule of Construction.--No provision of this Act or any other 
Federal law shall be construed as superseding or affecting a State law 
which was in effect before the date of the enactment of this Act and 
which prohibits title insurance from being offered, provided, or sold 
in such State, or from being underwritten with respect to real property 
in such State, by any person whatsoever.

SEC. 306. EXPEDITED AND EQUALIZED DISPUTE RESOLUTION FOR FEDERAL 
              REGULATORS.

    (a) Filing in Court of Appeals.--In the case of a regulatory 
conflict between a State insurance regulator and a Federal regulator as 
to whether any product is or is not insurance, as defined in section 
304(c) of this Act, or whether a State statute, regulation, order, or 
interpretation regarding any insurance sales or solicitation activity 
is properly treated as preempted under Federal law, either regulator 
may seek expedited judicial review of such determination by the United 
States Court of Appeals for the circuit in which the State is located 
or in the United States Court of Appeals for the District of Columbia 
Circuit by filing a petition for review in such court.
    (b) Expedited Review.--The United States Court of Appeals in which 
a petition for review is filed in accordance with subsection (a) shall 
complete all action on such petition, including rendering a judgment, 
before the end of the 60-day period beginning on the date on which such 
petition is filed, unless all parties to such proceeding agree to any 
extension of such period.
    (c) Supreme Court Review.--Any request for certiorari to the 
Supreme Court of the United States of any judgment of a United States 
Court of Appeals with respect to a petition for review under this 
section shall be filed with the Supreme Court of the United States as 
soon as practicable after such judgment is issued.
    (d) Statute of Limitation.--No petition may be filed under this 
section challenging an order, ruling, determination, or other action of 
a Federal regulator or State insurance regulator after the later of--
            (1) the end of the 12-month period beginning on the date on 
        which the first public notice is made of such order, ruling, 
        determination or other action in its final form; or
            (2) the end of the 6-month period beginning on the date on 
        which such order, ruling, determination, or other action takes 
        effect.
    (e) Standard of Review.--The court shall decide a petition filed 
under this section based on its review on the merits of all questions 
presented under State and Federal law, including the nature of the 
product or activity and the history and purpose of its regulation under 
State and Federal law, without unequal deference.

SEC. 307. CONSUMER PROTECTION REGULATIONS.

    The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 
amended by inserting after section 46 (as added by section 122(b) of 
this Act) the following new section:

``SEC. 47. CONSUMER PROTECTION REGULATIONS.

    ``(a) Regulations Required.--
            ``(1) In general.--The Federal banking agencies shall 
        prescribe and publish in final form, before the end of the 1-
        year period beginning on the date of the enactment of the 
        Financial Services Act of 1999, consumer protection regulations 
        (which the agencies jointly determine to be appropriate) that--
                    ``(A) apply to retail sales practices, 
                solicitations, advertising, or offers of any insurance 
                product by any insured depository institution or 
                wholesale financial institution or any person who is 
                engaged in such activities at an office of the 
                institution or on behalf of the institution; and
                    ``(B) are consistent with the requirements of this 
                Act and provide such additional protections for 
                consumers to whom such sales, solicitations, 
                advertising, or offers are directed as the agency 
                determines to be appropriate.
            ``(2) Applicability to subsidiaries.--The regulations 
        prescribed pursuant to paragraph (1) shall extend such 
        protections to any subsidiaries of an insured depository 
        institution, as deemed appropriate by the regulators referred 
        to in paragraph (3), where such extension is determined to be 
        necessary to ensure the consumer protections provided by this 
        section.
            ``(3) Consultation and joint regulations.--The Federal 
        banking agencies shall consult with each other and prescribe 
        joint regulations pursuant to paragraph (1), after consultation 
        with the State insurance regulators, as appropriate.
    ``(b) Sales Practices.--The regulations prescribed pursuant to 
subsection (a) shall include anticoercion rules applicable to the sale 
of insurance products which prohibit an insured depository institution 
from engaging in any practice that would lead a consumer to believe an 
extension of credit, in violation of section 106(b) of the Bank Holding 
Company Act Amendments of 1970, is conditional upon--
            ``(1) the purchase of an insurance product from the 
        institution or any of its affiliates; or
            ``(2) an agreement by the consumer not to obtain, or a 
        prohibition on the consumer from obtaining, an insurance 
        product from an unaffiliated entity.
    ``(c) Disclosures and Advertising.--The regulations prescribed 
pursuant to subsection (a) shall include the following provisions 
relating to disclosures and advertising in connection with the initial 
purchase of an insurance product:
            ``(1) Disclosures.--
                    ``(A) In general.--Requirements that the following 
                disclosures be made orally and in writing before the 
                completion of the initial sale and, in the case of 
                clause (iii), at the time of application for an 
                extension of credit:
                            ``(i) Uninsured status.--As appropriate, 
                        the product is not insured by the Federal 
                        Deposit Insurance Corporation, the United 
                        States Government, or the insured depository 
                        institution.
                            ``(ii) Investment risk.--In the case of a 
                        variable annuity or other insurance product 
                        which involves an investment risk, that there 
                        is an investment risk associated with the 
                        product, including possible loss of value.
                            ``(iii) Coercion.--The approval of an 
                        extension of credit may not be conditioned on--
                                    ``(I) the purchase of an insurance 
                                product from the institution in which 
                                the application for credit is pending 
                                or any of its affiliates or 
                                subsidiaries; or
                                    ``(II) an agreement by the consumer 
                                not to obtain, or a prohibition on the 
                                consumer from obtaining, an insurance 
                                product from an unaffiliated entity.
                    ``(B) Making disclosure readily understandable.--
                Regulations prescribed under subparagraph (A) shall 
                encourage the use of disclosure that is conspicuous, 
                simple, direct, and readily understandable, such as the 
                following:
                            ``(i) `NOT FDIC--INSURED'.
                            ``(ii) `NOT GUARANTEED BY THE BANK'.
                            ``(iii) `MAY GO DOWN IN VALUE'.
                            ``(iv) `NOT INSURED BY ANY GOVERNMENT 
                        AGENCY'.
                    ``(C) Adjustments for alternative methods of 
                purchase.--In prescribing the requirements under 
                subparagraphs (A) and (D), necessary adjustments shall 
                be made for purchase in person, by telephone, or by 
                electronic media to provide for the most appropriate 
                and complete form of disclosure and acknowledgments.
                    ``(D) Consumer acknowledgment.--A requirement that 
                an insured depository institution shall require any 
                person selling an insurance product at any office of, 
                or on behalf of, the institution to obtain, at the time 
                a consumer receives the disclosures required under this 
                paragraph or at the time of the initial purchase by the 
                consumer of such product, an acknowledgment by such 
                consumer of the receipt of the disclosure required 
                under this subsection with respect to such product.
            ``(2) Prohibition on misrepresentations.--A prohibition on 
        any practice, or any advertising, at any office of, or on 
        behalf of, the insured depository institution, or any 
        subsidiary as appropriate, which could mislead any person or 
        otherwise cause a reasonable person to reach an erroneous 
        belief with respect to--
                    ``(A) the uninsured nature of any insurance product 
                sold, or offered for sale, by the institution or any 
                subsidiary of the institution;
                    ``(B) in the case of a variable annuity or other 
                insurance product that involves an investment risk, the 
                investment risk associated with any such product; or
                    ``(C) in the case of an institution or subsidiary 
                at which insurance products are sold or offered for 
                sale, the fact that--
                            ``(i) the approval of an extension of 
                        credit to a customer by the institution or 
                        subsidiary may not be conditioned on the 
                        purchase of an insurance product by such 
                        customer from the institution or subsidiary; 
                        and
                            ``(ii) the customer is free to purchase the 
                        insurance product from another source.''.
    ``(d) Separation of Banking and Nonbanking Activities.--
            ``(1) Regulations required.--The regulations prescribed 
        pursuant to subsection (a) shall include such provisions as the 
        Federal banking agencies consider appropriate to ensure that 
        the routine acceptance of deposits is kept, to the extent 
        practicable, physically segregated from insurance product 
        activity.
            ``(2) Requirements.--Regulations prescribed pursuant to 
        paragraph (1) shall include the following:
                    ``(A) Separate setting.--A clear delineation of the 
                setting in which, and the circumstances under which, 
                transactions involving insurance products should be 
                conducted in a location physically segregated from an 
                area where retail deposits are routinely accepted.
                    ``(B) Referrals.--Standards which permit any person 
                accepting deposits from the public in an area where 
                such transactions are routinely conducted in an insured 
                depository institution to refer a customer who seeks to 
                purchase any insurance product to a qualified person 
                who sells such product, only if the person making the 
                referral receives no more than a one-time nominal fee 
                of a fixed dollar amount for each referral that does 
                not depend on whether the referral results in a 
                transaction.
                    ``(C) Qualification and licensing requirements.--
                Standards prohibiting any insured depository 
                institution from permitting any person to sell or offer 
                for sale any insurance product in any part of any 
                office of the institution, or on behalf of the 
                institution, unless such person is appropriately 
                qualified and licensed.
    ``(e) Domestic Violence Discrimination Prohibition.--
            ``(1) In general.--In the case of an applicant for, or an 
        insured under, any insurance product described in paragraph 
        (2), the status of the applicant or insured as a victim of 
        domestic violence, or as a provider of services to victims of 
        domestic violence, shall not be considered as a criterion in 
        any decision with regard to insurance underwriting, pricing, 
        renewal, or scope of coverage of insurance policies, or payment 
        of insurance claims, except as required or expressly permitted 
        under State law.
            ``(2) Scope of application.--The prohibition contained in 
        paragraph (1) shall apply to any insurance product which is 
        sold or offered for sale, as principal, agent, or broker, by 
        any insured depository institution or wholesale financial 
        institution or any person who is engaged in such activities at 
        an office of the institution or on behalf of the institution.
            ``(3) Sense of the congress.--It is the sense of the 
        Congress that, by the end of the 30-month period beginning on 
        the date of the enactment of this Act, the States should enact 
        prohibitions against discrimination with respect to insurance 
        products that are at least as strict as the prohibitions 
        contained in paragraph (1).
            ``(4) Domestic violence defined.--For purposes of this 
        subsection, the term `domestic violence' means the occurrence 
        of one or more of the following acts by a current or former 
        family member, household member, intimate partner, or 
        caretaker:
                    ``(A) Attempting to cause or causing or threatening 
                another person physical harm, severe emotional 
                distress, psychological trauma, rape, or sexual 
                assault.
                    ``(B) Engaging in a course of conduct or repeatedly 
                committing acts toward another person, including 
                following the person without proper authority, under 
                circumstances that place the person in reasonable fear 
                of bodily injury or physical harm.
                    ``(C) Subjecting another person to false 
                imprisonment.
                    ``(D) Attempting to cause or cause damage to 
                property so as to intimidate or attempt to control the 
                behavior of another person.
    ``(f) Consumer Grievance Process.--The Federal banking agencies 
shall jointly establish a consumer complaint mechanism, for receiving 
and expeditiously addressing consumer complaints alleging a violation 
of regulations issued under the section, which shall--
            ``(1) establish a group within each regulatory agency to 
        receive such complaints;
            ``(2) develop procedures for investigating such complaints;
            ``(3) develop procedures for informing consumers of rights 
        they may have in connection with such complaints; and
            ``(4) develop procedures for addressing concerns raised by 
        such complaints, as appropriate, including procedures for the 
        recovery of losses to the extent appropriate.
    ``(g) Effect on Other Authority.--
            ``(1) In general.--No provision of this section shall be 
        construed as granting, limiting, or otherwise affecting--
                    ``(A) any authority of the Securities and Exchange 
                Commission, any self-regulatory organization, the 
                Municipal Securities Rulemaking Board, or the Secretary 
                of the Treasury under any Federal securities law; or
                    ``(B) except as provided in paragraph (2), any 
                authority of any State insurance commissioner or other 
                State authority under any State law.
            ``(2) Coordination with state law.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), regulations prescribed by a Federal 
                banking agency under this section shall not apply to 
                retail sales, solicitations, advertising, or offers of 
                any insurance product by any insured depository 
                institution or wholesale financial institution or to 
                any person who is engaged in such activities at an 
                office of such institution or on behalf of the 
                institution, in a State where the State has in effect 
                statutes, regulations, orders, or interpretations, that 
                are inconsistent with or contrary to the regulations 
                prescribed by the Federal banking agencies.
                    ``(B) Preemption.--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, and the Board 
                of Directors of the Federal Deposit Insurance 
                Corporation determine jointly that the protection 
                afforded by such provision for consumers is greater 
                than the protection provided by a comparable provision 
                of the statutes, regulations, orders, or 
                interpretations referred to in subparagraph (A) of any 
                State, such provision of the regulations prescribed 
                under this section shall supersede the comparable 
                provision of such State statute, regulation, order, or 
                interpretation.
    ``(h) Insurance Product Defined.--For purposes of this section, the 
term `insurance product' includes an annuity contract the income of 
which is subject to tax treatment under section 72 of the Internal 
Revenue Code of 1986.''.

SEC. 308. CERTAIN STATE AFFILIATION LAWS PREEMPTED FOR INSURANCE 
              COMPANIES AND AFFILIATES.

    Except as provided in section 104(a)(2), no State may, by law, 
regulation, order, interpretation, or otherwise--
            (1) prevent or significantly interfere with the ability of 
        any insurer, or any affiliate of an insurer (whether such 
        affiliate is organized as a stock company, mutual holding 
        company, or otherwise), to become a financial holding company 
        or to acquire control of an insured depository institution;
            (2) limit the amount of an insurer's assets that may be 
        invested in the voting securities of an insured depository 
        institution (or any company which controls such institution), 
        except that the laws of an insurer's State of domicile may 
        limit the amount of such investment to an amount that is not 
        less than 5 percent of the insurer's admitted assets; or
            (3) prevent, significantly interfere with, or have the 
        authority to review, approve, or disapprove a plan of 
        reorganization by which an insurer proposes to reorganize from 
        mutual form to become a stock insurer (whether as a direct or 
        indirect subsidiary of a mutual holding company or otherwise) 
        unless such State is the State of domicile of the insurer.

SEC. 309. INTERAGENCY CONSULTATION.

    (a) Purpose.--It is the intention of the Congress that the Board of 
Governors of the Federal Reserve System, as the umbrella supervisor for 
financial holding companies, and the State insurance regulators, as the 
functional regulators of companies engaged in insurance activities, 
coordinate efforts to supervise companies that control both a 
depository institution and a company engaged in insurance activities 
regulated under State law. In particular, Congress believes that the 
Board and the State insurance regulators should share, on a 
confidential basis, information relevant to the supervision of 
companies that control both a depository institution and a company 
engaged in insurance activities, including information regarding the 
financial health of the consolidated organization and information 
regarding transactions and relationships between insurance companies 
and affiliated depository institutions. The appropriate Federal banking 
agencies for depository institutions should also share, on a 
confidential basis, information with the relevant State insurance 
regulators regarding transactions and relationships between depository 
institutions and affiliated companies engaged in insurance activities. 
The purpose of this section is to encourage this coordination and 
confidential sharing of information, and to thereby improve both the 
efficiency and the quality of the supervision of financial holding 
companies and their affiliated depository institutions and companies 
engaged in insurance activities.
    (b) Examination Results and Other Information.--
            (1) Information of the board.--Upon the request of the 
        appropriate insurance regulator of any State, the Board may 
        provide any information of the Board regarding the financial 
        condition, risk management policies, and operations of any 
        financial holding company that controls a company that is 
        engaged in insurance activities and is regulated by such State 
        insurance regulator, and regarding any transaction or 
        relationship between such an insurance company and any 
        affiliated depository institution. The Board may provide any 
        other information to the appropriate State insurance regulator 
        that the Board believes is necessary or appropriate to permit 
        the State insurance regulator to administer and enforce 
        applicable State insurance laws.
            (2) Banking agency information.--Upon the request of the 
        appropriate insurance regulator of any State, the appropriate 
        Federal banking agency may provide any information of the 
        agency regarding any transaction or relationship between a 
        depository institution supervised by such Federal banking 
        agency and any affiliated company that is engaged in insurance 
        activities regulated by such State insurance regulator. The 
        appropriate Federal banking agency may provide any other 
        information to the appropriate State insurance regulator that 
        the agency believes is necessary or appropriate to permit the 
        State insurance regulator to administer and enforce applicable 
        State insurance laws.
            (3) State insurance regulator information.--Upon the 
        request of the Board or the appropriate Federal banking agency, 
        a State insurance regulator may provide any examination or 
        other reports, records, or other information to which such 
        insurance regulator may have access with respect to a company 
        which--
                    (A) is engaged in insurance activities and 
                regulated by such insurance regulator; and
                    (B) is an affiliate of an insured depository 
                institution, wholesale financial institution, or 
                financial holding company.
    (c) Consultation.--Before making any determination relating to the 
initial affiliation of, or the continuing affiliation of, an insured 
depository institution, wholesale financial institution, or financial 
holding company with a company engaged in insurance activities, the 
appropriate Federal banking agency shall consult with the appropriate 
State insurance regulator of such company and take the views of such 
insurance regulator into account in making such determination.
    (d) Effect on Other Authority.--Nothing in this section shall limit 
in any respect the authority of the appropriate Federal banking agency 
with respect to an insured depository institution, wholesale financial 
institution, or bank holding company or any affiliate thereof under any 
provision of law.
    (e) Confidentiality and Privilege.--
            (1) Confidentiality.--The appropriate Federal banking 
        agency shall not provide any information or material that is 
        entitled to confidential treatment under applicable Federal 
        banking agency regulations, or other applicable law, to a State 
        insurance regulator unless such regulator agrees to maintain 
        the information or material in confidence and to take all 
        reasonable steps to oppose any effort to secure disclosure of 
        the information or material by the regulator. The appropriate 
        Federal banking agency shall treat as confidential any 
        information or material obtained from a State insurance 
        regulator that is entitled to confidential treatment under 
        applicable State regulations, or other applicable law, and take 
        all reasonable steps to oppose any effort to secure disclosure 
        of the information or material by the Federal banking agency.
            (2) Privilege.--The provision pursuant to this section of 
        information or material by a Federal banking agency or State 
        insurance regulator shall not constitute a waiver of, or 
        otherwise affect, any privilege to which the information or 
        material is otherwise subject.
    (f) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Appropriate federal banking agency; insured depository 
        institution.--The terms ``appropriate Federal banking agency'' 
        and ``insured depository institution'' have the same meanings 
        as in section 3 of the Federal Deposit Insurance Act.
            (2) Board; financial holding company; and wholesale 
        financial institution.--The terms ``Board'', ``financial 
        holding company'', and ``wholesale financial institution'' have 
        the same meanings as in section 2 of the Bank Holding Company 
        Act of 1956.

SEC. 310. DEFINITION OF STATE.

    For purposes of this subtitle, the term ``State'' means 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, and the Northern Mariana 
Islands.

             Subtitle B--Redomestication of Mutual Insurers

SEC. 311. GENERAL APPLICATION.

    This subtitle shall only apply to a mutual insurance company in a 
State which has not enacted a law which expressly establishes 
reasonable terms and conditions for a mutual insurance company 
domiciled in such State to reorganize into a mutual holding company.

SEC. 312. REDOMESTICATION OF MUTUAL INSURERS.

    (a) Redomestication.--A mutual insurer organized under the laws of 
any State may transfer its domicile to a transferee domicile as a step 
in a reorganization in which, pursuant to the laws of the transferee 
domicile and consistent with the standards in subsection (f), the 
mutual insurer becomes a stock insurer that is a direct or indirect 
subsidiary of a mutual holding company.
    (b) Resulting Domicile.--Upon complying with the applicable law of 
the transferee domicile governing transfers of domicile and completion 
of a transfer pursuant to this section, the mutual insurer shall cease 
to be a domestic insurer in the transferor domicile and, as a 
continuation of its corporate existence, shall be a domestic insurer of 
the transferee domicile.
    (c) Licenses Preserved.--The certificate of authority, agents' 
appointments and licenses, rates, approvals and other items that a 
licensed State allows and that are in existence immediately prior to 
the date that a redomesticating insurer transfers its domicile pursuant 
to this subtitle shall continue in full force and effect upon transfer, 
if the insurer remains duly qualified to transact the business of 
insurance in such licensed State.
    (d) Effectiveness of Outstanding Policies and Contracts.--
            (1) In general.--All outstanding insurance policies and 
        annuities contracts of a redomesticating insurer shall remain 
        in full force and effect and need not be endorsed as to the new 
        domicile of the insurer, unless so ordered by the State 
        insurance regulator of a licensed State, and then only in the 
        case of outstanding policies and contracts whose owners reside 
        in such licensed State.
            (2) Forms.--
                    (A) Applicable State law may require a 
                redomesticating insurer to file new policy forms with 
                the State insurance regulator of a licensed State on or 
                before the effective date of the transfer.
                    (B) Notwithstanding subparagraph (A), a 
                redomesticating insurer may use existing policy forms 
                with appropriate endorsements to reflect the new 
                domicile of the redomesticating insurer until the new 
                policy forms are approved for use by the State 
                insurance regulator of such licensed State.
    (e) Notice.--A redomesticating insurer shall give notice of the 
proposed transfer to the State insurance regulator of each licensed 
State and shall file promptly any resulting amendments to corporate 
documents required to be filed by a foreign licensed mutual insurer 
with the insurance regulator of each such licensed State.
    (f) Procedural Requirements.--No mutual insurer may redomesticate 
to another State and reorganize into a mutual holding company pursuant 
to this section unless the State insurance regulator of the transferee 
domicile determines that the plan of reorganization of the insurer 
includes the following requirements:
            (1) Approval by board of directors and policyholders.--The 
        reorganization is approved by at least a majority of the board 
        of directors of the mutual insurer and at least a majority of 
        the policyholders who vote after notice, disclosure of the 
        reorganization and the effects of the transaction on 
        policyholder contractual rights, and reasonable opportunity to 
        vote, in accordance with such notice, disclosure, and voting 
        procedures as are approved by the State insurance regulator of 
        the transferee domicile.
            (2) Continued voting control by policyholders; review of 
        public stock offering.--After the consummation of a 
        reorganization, the policyholders of the reorganized insurer 
        shall have the same voting rights with respect to the mutual 
        holding company as they had before the reorganization with 
        respect to the mutual insurer. With respect to an initial 
        public offering of stock, the offering shall be conducted in 
        compliance with applicable securities laws and in a manner 
        approved by the State insurance regulator of the transferee 
        domicile.
            (3) Award of stock or grant of options to officers and 
        directors.--For a period of 6 months after completion of an 
        initial public offering, neither a stock holding company nor 
        the converted insurer shall award any stock options or stock 
        grants to persons who are elected officers or directors of the 
        mutual holding company, the stock holding company, or the 
        converted insurer, except with respect to any such awards or 
        options to which a person is entitled as a policyholder and as 
        approved by the State insurance regulator of the transferee 
        domicile.
            (4) Contractual rights.--Upon reorganization into a mutual 
        holding company, the contractual rights of the policyholders 
        are preserved.
            (5) Fair and equitable treatment of policyholders.--The 
        reorganization is approved as fair and equitable to the 
        policyholders by the insurance regulator of the transferee 
        domicile.

SEC. 313. EFFECT ON STATE LAWS RESTRICTING REDOMESTICATION.

    (a) In General.--Unless otherwise permitted by this subtitle, State 
laws of any transferor domicile that conflict with the purposes and 
intent of this subtitle are preempted, including but not limited to--
            (1) any law that has the purpose or effect of impeding the 
        activities of, taking any action against, or applying any 
        provision of law or regulation to, any insurer or an affiliate 
        of such insurer because that insurer or any affiliate plans to 
        redomesticate, or has redomesticated, pursuant to this 
        subtitle;
            (2) any law that has the purpose or effect of impeding the 
        activities of, taking action against, or applying any provision 
        of law or regulation to, any insured or any insurance licensee 
        or other intermediary because such person has procured 
        insurance from or placed insurance with any insurer or 
        affiliate of such insurer that plans to redomesticate, or has 
        redomesticated, pursuant to this subtitle, but only to the 
        extent that such law would treat such insured licensee or other 
        intermediary differently than if the person procured insurance 
        from, or placed insurance with, an insured licensee or other 
        intermediary which had not redomesticated;
            (3) any law that has the purpose or effect of terminating, 
        because of the redomestication of a mutual insurer pursuant to 
        this subtitle, any certificate of authority, agent appointment 
        or license, rate approval, or other approval, of any State 
        insurance regulator or other State authority in existence 
        immediately prior to the redomestication in any State other 
        than the transferee domicile.
    (b) Differential Treatment Prohibited.--No State law, regulation, 
interpretation, or functional equivalent thereof, of a State other than 
a transferee domicile may treat a redomesticating or redomesticated 
insurer or any affiliate thereof any differently than an insurer 
operating in that State that is not a redomesticating or redomesticated 
insurer.
    (c) Laws Prohibiting Operations.--If any licensed State fails to 
issue, delays the issuance of, or seeks to revoke an original or 
renewal certificate of authority of a redomesticated insurer 
immediately following redomestication, except on grounds and in a 
manner consistent with its past practices regarding the issuance of 
certificates of authority to foreign insurers that are not 
redomesticating, then the redomesticating insurer shall be exempt from 
any State law of the licensed State to the extent that such State law 
or the operation of such State law would make unlawful, or regulate, 
directly or indirectly, the operation of the redomesticated insurer, 
except that such licensed State may require the redomesticated insurer 
to--
            (1) comply with the unfair claim settlement practices law 
        of the licensed State;
            (2) pay, on a nondiscriminatory basis, applicable premium 
        and other taxes which are levied on licensed insurers or 
        policyholders under the laws of the licensed State;
            (3) register with and designate the State insurance 
        regulator as its agent solely for the purpose of receiving 
        service of legal documents or process;
            (4) submit to an examination by the State insurance 
        regulator in any licensed state in which the redomesticated 
        insurer is doing business to determine the insurer's financial 
        condition, if--
                    (A) the State insurance regulator of the transferee 
                domicile has not begun an examination of the 
                redomesticated insurer and has not scheduled such an 
                examination to begin before the end of the 1-year 
                period beginning on the date of the redomestication; 
                and
                    (B) any such examination is coordinated to avoid 
                unjustified duplication and repetition;
            (5) comply with a lawful order issued in--
                    (A) a delinquency proceeding commenced by the State 
                insurance regulator of any licensed State if there has 
                been a judicial finding of financial impairment under 
                paragraph (7); or
                    (B) a voluntary dissolution proceeding;
            (6) comply with any State law regarding deceptive, false, 
        or fraudulent acts or practices, except that if the licensed 
        State seeks an injunction regarding the conduct described in 
        this paragraph, such injunction must be obtained from a court 
        of competent jurisdiction as provided in section 314(a);
            (7) comply with an injunction issued by a court of 
        competent jurisdiction, upon a petition by the State insurance 
        regulator alleging that the redomesticating insurer is in 
        hazardous financial condition or is financially impaired;
            (8) participate in any insurance insolvency guaranty 
        association on the same basis as any other insurer licensed in 
        the licensed State; and
            (9) require a person acting, or offering to act, as an 
        insurance licensee for a redomesticated insurer in the licensed 
        State to obtain a license from that State, except that such 
        State may not impose any qualification or requirement that 
        discriminates against a nonresident insurance licensee.

SEC. 314. OTHER PROVISIONS.

    (a) Judicial Review.--The appropriate United States district court 
shall have exclusive jurisdiction over litigation arising under this 
section involving any redomesticating or redomesticated insurer.
    (b) Severability.--If any provision of this section, or the 
application thereof to any person or circumstances, is held invalid, 
the remainder of the section, and the application of such provision to 
other persons or circumstances, shall not be affected thereby.

SEC. 315. DEFINITIONS.

    For purposes of this subtitle, the following definitions shall 
apply:
            (1) Court of competent jurisdiction.--The term ``court of 
        competent jurisdiction'' means a court authorized pursuant to 
        section 314(a) to adjudicate litigation arising under this 
        subtitle.
            (2) Domicile.--The term ``domicile'' means the State in 
        which an insurer is incorporated, chartered, or organized.
            (3) Insurance licensee.--The term ``insurance licensee'' 
        means any person holding a license under State law to act as 
        insurance agent, subagent, broker, or consultant.
            (4) Institution.--The term ``institution'' means a 
        corporation, joint stock company, limited liability company, 
        limited liability partnership, association, trust, partnership, 
        or any similar entity.
            (5) Licensed state.--The term ``licensed State'' means any 
        State, the District of Columbia, American Samoa, Guam, Puerto 
        Rico, or the United States Virgin Islands in which the 
        redomesticating insurer has a certificate of authority in 
        effect immediately prior to the redomestication.
            (6) Mutual insurer.--The term ``mutual insurer'' means a 
        mutual insurer organized under the laws of any State.
            (7) Person.--The term ``person'' means an individual, 
        institution, government or governmental agency, State or 
        political subdivision of a State, public corporation, board, 
        association, estate, trustee, or fiduciary, or other similar 
        entity.
            (8) Policyholder.--The term ``policyholder'' means the 
        owner of a policy issued by a mutual insurer, except that, with 
        respect to voting rights, the term means a member of a mutual 
        insurer or mutual holding company granted the right to vote, as 
        determined under applicable State law.
            (9) Redomesticated insurer.--The term ``redomesticated 
        insurer'' means a mutual insurer that has redomesticated 
        pursuant to this subtitle.
            (10) Redomesticating insurer.--The term ``redomesticating 
        insurer'' means a mutual insurer that is redomesticating 
        pursuant to this subtitle.
            (11) Redomestication or transfer.--The terms 
        ``redomestication'' and ``transfer'' mean the transfer of the 
        domicile of a mutual insurer from one State to another State 
        pursuant to this subtitle.
            (12) State insurance regulator.--The term ``State insurance 
        regulator'' means the principal insurance regulatory authority 
        of a State, the District of Columbia, American Samoa, Guam, 
        Puerto Rico, or the United States Virgin Islands.
            (13) State law.--The term ``State law'' means the statutes 
        of any State, the District of Columbia, American Samoa, Guam, 
        Puerto Rico, or the United States Virgin Islands and any 
        regulation, order, or requirement prescribed pursuant to any 
        such statute.
            (14) Transferee domicile.--The term ``transferee domicile'' 
        means the State to which a mutual insurer is redomesticating 
        pursuant to this subtitle.
            (15) Transferor domicile.--The term ``transferor domicile'' 
        means the State from which a mutual insurer is redomesticating 
        pursuant to this subtitle.

SEC. 316. EFFECTIVE DATE.

    This subtitle shall take effect on the date of the enactment of 
this Act.

   Subtitle C--National Association of Registered Agents and Brokers

SEC. 321. STATE FLEXIBILITY IN MULTISTATE LICENSING REFORMS.

     (a) In General.--The provisions of this subtitle shall take effect 
unless, not later than 3 years after the date of the enactment of this 
Act, at least a majority of the States--
            (1) have enacted uniform laws and regulations governing the 
        licensure of individuals and entities authorized to sell and 
        solicit the purchase of insurance within the State; or
            (2) have enacted reciprocity laws and regulations governing 
        the licensure of nonresident individuals and entities 
        authorized to sell and solicit insurance within those States.
    (b) Uniformity Required.--States shall be deemed to have 
established the uniformity necessary to satisfy subsection (a)(1) if 
the States--
            (1) establish uniform criteria regarding the integrity, 
        personal qualifications, education, training, and experience of 
        licensed insurance producers, including the qualification and 
        training of sales personnel in ascertaining the appropriateness 
        of a particular insurance product for a prospective customer;
            (2) establish uniform continuing education requirements for 
        licensed insurance producers;
            (3) establish uniform ethics course requirements for 
        licensed insurance producers in conjunction with the continuing 
        education requirements under paragraph (2);
            (4) establish uniform criteria to ensure that an insurance 
        product, including any annuity contract, sold to a consumer is 
        suitable and appropriate for the consumer based on financial 
        information disclosed by the consumer; and
            (5) do not impose any requirement upon any insurance 
        producer to be licensed or otherwise qualified to do business 
        as a nonresident that has the effect of limiting or 
        conditioning that producer's activities because of its 
        residence or place of operations, except that counter-signature 
        requirements imposed on nonresident producers shall not be 
        deemed to have the effect of limiting or conditioning a 
        producer's activities because of its residence or place of 
        operations under this section.
    (c) Reciprocity Required.--States shall be deemed to have 
established the reciprocity required to satisfy subsection (a)(2) if 
the following conditions are met:
            (1) Administrative licensing procedures.--At least a 
        majority of the States permit a producer that has a resident 
        license for selling or soliciting the purchase of insurance in 
        its home State to receive a license to sell or solicit the 
        purchase of insurance in such majority of States as a 
        nonresident to the same extent that such producer is permitted 
        to sell or solicit the purchase of insurance in its State, if 
        the producer's home State also awards such licenses on such a 
        reciprocal basis, without satisfying any additional 
        requirements other than submitting--
                    (A) a request for licensure;
                    (B) the application for licensure that the producer 
                submitted to its home State;
                    (C) proof that the producer is licensed and in good 
                standing in its home State; and
                    (D) the payment of any requisite fee to the 
                appropriate authority.
            (2) Continuing education requirements.--A majority of the 
        States accept an insurance producer's satisfaction of its home 
        State's continuing education requirements for licensed 
        insurance producers to satisfy the States' own continuing 
        education requirements if the producer's home State also 
        recognizes the satisfaction of continuing education 
        requirements on such a reciprocal basis.
            (3) No limiting nonresident requirements.--A majority of 
        the States do not impose any requirement upon any insurance 
        producer to be licensed or otherwise qualified to do business 
        as a nonresident that has the effect of limiting or 
        conditioning that producer's activities because of its 
        residence or place of operations, except that countersignature 
        requirements imposed on nonresident producers shall not be 
        deemed to have the effect of limiting or conditioning a 
        producer's activities because of its residence or place of 
        operations under this section.
            (4) Reciprocal reciprocity.--Each of the States that 
        satisfies paragraphs (1), (2), and (3) grants reciprocity to 
        residents of all of the other States that satisfy such 
        paragraphs.
    (d) Determination.--
            (1) NAIC determination.--At the end of the 3-year period 
        beginning on the date of the enactment of this Act, the 
        National Association of Insurance Commissioners shall 
        determine, in consultation with the insurance commissioners or 
        chief insurance regulatory officials of the States, whether the 
        uniformity or reciprocity required by subsections (b) and (c) 
        has been achieved.
            (2) Judicial review.--The appropriate United States 
        district court shall have exclusive jurisdiction over any 
        challenge to the National Association of Insurance 
        Commissioners' determination under this section and such court 
        shall apply the standards set forth in section 706 of title 5, 
        United States Code, when reviewing any such challenge.
    (e) Continued Application.--If, at any time, the uniformity or 
reciprocity required by subsections (b) and (c) no longer exists, the 
provisions of this subtitle shall take effect 2 years after the date on 
which such uniformity or reciprocity ceases to exist, unless the 
uniformity or reciprocity required by those provisions is satisfied 
before the expiration of that 2-year period.
    (f) Savings Provision.--No provision of this section shall be 
construed as requiring that any law, regulation, provision, or action 
of any State which purports to regulate insurance producers, including 
any such law, regulation, provision, or action which purports to 
regulate unfair trade practices or establish consumer protections, 
including countersignature laws, be altered or amended in order to 
satisfy the uniformity or reciprocity required by subsections (b) and 
(c), unless any such law, regulation, provision, or action is 
inconsistent with a specific requirement of any such subsection and 
then only to the extent of such inconsistency.
    (g) Uniform Licensing.--Nothing in this section shall be construed 
to require any State to adopt new or additional licensing requirements 
to achieve the uniformity necessary to satisfy subsection (a)(1).

SEC. 322. NATIONAL ASSOCIATION OF REGISTERED AGENTS AND BROKERS.

    (a) Establishment.--There is established the National Association 
of Registered Agents and Brokers (hereafter in this subtitle referred 
to as the ``Association'').
    (b) Status.--The Association shall--
            (1) be a nonprofit corporation;
            (2) have succession until dissolved by an Act of Congress;
            (3) not be an agent or instrumentality of the United States 
        Government; and
            (4) except as otherwise provided in this Act, be subject 
        to, and have all the powers conferred upon a nonprofit 
        corporation by the District of Columbia Nonprofit Corporation 
        Act (D.C. Code, sec. 29y-1001 et seq.).

SEC. 323. PURPOSE.

    The purpose of the Association shall be to provide a mechanism 
through which uniform licensing, appointment, continuing education, and 
other insurance producer sales qualification requirements and 
conditions can be adopted and applied on a multistate basis, while 
preserving the right of States to license, supervise, and discipline 
insurance producers and to prescribe and enforce laws and regulations 
with regard to insurance-related consumer protection and unfair trade 
practices.

SEC. 324. RELATIONSHIP TO THE FEDERAL GOVERNMENT.

    The Association shall be subject to the supervision and oversight 
of the National Association of Insurance Commissioners (hereafter in 
this subtitle referred to as the ``NAIC'').

SEC. 325. MEMBERSHIP.

    (a) Eligibility.--
            (1) In general.--Any State-licensed insurance producer 
        shall be eligible to become a member in the Association.
            (2) Ineligibility for suspension or revocation of 
        license.--Notwithstanding paragraph (1), a State-licensed 
        insurance producer shall not be eligible to become a member if 
        a State insurance regulator has suspended or revoked such 
        producer's license in that State during the 3-year period 
        preceding the date on which such producer applies for 
        membership.
            (3) Resumption of eligibility.--Paragraph (2) shall cease 
        to apply to any insurance producer if--
                    (A) the State insurance regulator renews the 
                license of such producer in the State in which the 
                license was suspended or revoked; or
                    (B) the suspension or revocation is subsequently 
                overturned.
    (b) Authority To Establish Membership Criteria.--The Association 
shall have the authority to establish membership criteria that--
            (1) bear a reasonable relationship to the purposes for 
        which the Association was established; and
            (2) do not unfairly limit the access of smaller agencies to 
        the Association membership.
    (c) Establishment of Classes and Categories.--
            (1) Classes of membership.--The Association may establish 
        separate classes of membership, with separate criteria, if the 
        Association reasonably determines that performance of different 
        duties requires different levels of education, training, or 
        experience.
            (2) Categories.--The Association may establish separate 
        categories of membership for individuals and for other persons. 
        The establishment of any such categories of membership shall be 
        based either on the types of licensing categories that exist 
        under State laws or on the aggregate amount of business handled 
        by an insurance producer. No special categories of membership, 
        and no distinct membership criteria, shall be established for 
        members which are insured depository institutions or wholesale 
        financial institutions or for their employees, agents, or 
        affiliates.
    (d) Membership Criteria.--
            (1) In general.--The Association may establish criteria for 
        membership which shall include standards for integrity, 
        personal qualifications, education, training, and experience.
            (2) Minimum standard.--In establishing criteria under 
        paragraph (1), the Association shall consider the highest 
        levels of insurance producer qualifications established under 
        the licensing laws of the States.
    (e) Effect of Membership.--Membership in the Association shall 
entitle the member to licensure in each State for which the member pays 
the requisite fees, including licensing fees and, where applicable, 
bonding requirements, set by such State.
    (f) Annual Renewal.--Membership in the Association shall be renewed 
on an annual basis.
    (g) Continuing Education.--The Association shall establish, as a 
condition of membership, continuing education requirements which shall 
be comparable to or greater than the continuing education requirements 
under the licensing laws of a majority of the States.
    (h) Suspension and Revocation.--The Association may--
            (1) inspect and examine the records and offices of the 
        members of the Association to determine compliance with the 
        criteria for membership established by the Association; and
            (2) suspend or revoke the membership of an insurance 
        producer if--
                    (A) the producer fails to meet the applicable 
                membership criteria of the Association; or
                    (B) the producer has been subject to disciplinary 
                action pursuant to a final adjudicatory proceeding 
                under the jurisdiction of a State insurance regulator, 
                and the Association concludes that retention of 
                membership in the Association would not be in the 
                public interest.
    (i) Office of Consumer Complaints.--
            (1) In general.--The Association shall establish an office 
        of consumer complaints that shall--
                    (A) receive and investigate complaints from both 
                consumers and State insurance regulators related to 
                members of the Association; and
                    (B) recommend to the Association any disciplinary 
                actions that the office considers appropriate, to the 
                extent that any such recommendation is not inconsistent 
                with State law.
            (2) Records and referrals.--The office of consumer 
        complaints of the Association shall--
                    (A) maintain records of all complaints received in 
                accordance with paragraph (1) and make such records 
                available to the NAIC and to each State insurance 
                regulator for the State of residence of the consumer 
                who filed the complaint; and
                    (B) refer, when appropriate, any such complaint to 
                any appropriate State insurance regulator.
            (3) Telephone and other access.--The office of consumer 
        complaints shall maintain a toll-free telephone number for the 
        purpose of this subsection and, as practicable, other 
        alternative means of communication with consumers, such as an 
        Internet home page.

SEC. 326. BOARD OF DIRECTORS.

    (a) Establishment.--There is established the board of directors of 
the Association (hereafter in this subtitle referred to as the 
``Board'') for the purpose of governing and supervising the activities 
of the Association and the members of the Association.
    (b) Powers.--The Board shall have such powers and authority as may 
be specified in the bylaws of the Association.
    (c) Composition.--
            (1) Members.--The Board shall be composed of seven members 
        appointed by the NAIC.
            (2) Requirement.--At least four of the members of the Board 
        shall have significant experience with the regulation of 
        commercial lines of insurance in at least 1 of the 20 States in 
        which the greatest total dollar amount of commercial-lines 
        insurance is placed in the United States.
            (3) Initial board membership.--
                    (A) In general.--If, by the end of the 2-year 
                period beginning on the date of the enactment of this 
                Act, the NAIC has not appointed the initial seven 
                members of the Board of the Association, the initial 
                Board shall consist of the seven State insurance 
                regulators of the seven States with the greatest total 
                dollar amount of commercial-lines insurance in place as 
                of the end of such period.
                    (B) Alternate composition.--If any of the State 
                insurance regulators described in subparagraph (A) 
                declines to serve on the Board, the State insurance 
                regulator with the next greatest total dollar amount of 
                commercial-lines insurance in place, as determined by 
                the NAIC as of the end of such period, shall serve as a 
                member of the Board.
                    (C) Inoperability.--If fewer than seven State 
                insurance regulators accept appointment to the Board, 
                the Association shall be established without NAIC 
                oversight pursuant to section 332.
    (d) Terms.--The term of each director shall, after the initial 
appointment of the members of the Board, be for 3 years, with one-third 
of the directors to be appointed each year.
    (e) Board Vacancies.--A vacancy on the Board shall be filled in the 
same manner as the original appointment of the initial Board for the 
remainder of the term of the vacating member.
    (f) Meetings.--The Board shall meet at the call of the chairperson, 
or as otherwise provided by the bylaws of the Association.

SEC. 327. OFFICERS.

    (a) In General.--
            (1) Positions.--The officers of the Association shall 
        consist of a chairperson and a vice chairperson of the Board, a 
        president, secretary, and treasurer of the Association, and 
        such other officers and assistant officers as may be deemed 
        necessary.
            (2) Manner of selection.--Each officer of the Board and the 
        Association shall be elected or appointed at such time and in 
        such manner and for such terms not exceeding 3 years as may be 
        prescribed in the bylaws of the Association.
    (b) Criteria for Chairperson.--Only individuals who are members of 
the NAIC shall be eligible to serve as the chairperson of the board of 
directors.

SEC. 328. BYLAWS, RULES, AND DISCIPLINARY ACTION.

    (a) Adoption and Amendment of Bylaws.--
            (1) Copy required to be filed with the naic.--The board of 
        directors of the Association shall file with the NAIC a copy of 
        the proposed bylaws or any proposed amendment to the bylaws, 
        accompanied by a concise general statement of the basis and 
        purpose of such proposal.
            (2) Effective date.--Except as provided in paragraph (3), 
        any proposed bylaw or proposed amendment shall take effect--
                    (A) thirty days after the date of the filing of a 
                copy with the NAIC;
                    (B) upon such later date as the Association may 
                designate; or
                    (C) upon such earlier date as the NAIC may 
                determine.
            (3) Disapproval by the naic.--Notwithstanding paragraph 
        (2), a proposed bylaw or amendment shall not take effect if, 
        after public notice and opportunity to participate in a public 
        hearing--
                    (A) the NAIC disapproves such proposal as being 
                contrary to the public interest or contrary to the 
                purposes of this subtitle and provides notice to the 
                Association setting forth the reasons for such 
                disapproval; or
                    (B) the NAIC finds that such proposal involves a 
                matter of such significant public interest that public 
                comment should be obtained, in which case it may, after 
                notifying the Association in writing of such finding, 
                require that the procedures set forth in subsection (b) 
                be followed with respect to such proposal, in the same 
                manner as if such proposed bylaw change were a proposed 
                rule change within the meaning of such subsection.
    (b) Adoption and Amendment of Rules.--
            (1) Filing proposed regulations with the naic.--
                    (A) In general.--The board of directors of the 
                Association shall file with the NAIC a copy of any 
                proposed rule or any proposed amendment to a rule of 
                the Association which shall be accompanied by a concise 
                general statement of the basis and purpose of such 
                proposal.
                    (B) Other rules and amendments ineffective.--No 
                proposed rule or amendment shall take effect unless 
                approved by the NAIC or otherwise permitted in 
                accordance with this paragraph.
            (2) Initial consideration by the naic.--Not later than 35 
        days after the date of publication of notice of filing of a 
        proposal, or before the end of such longer period not to exceed 
        90 days as the NAIC may designate after such date, if the NAIC 
        finds such longer period to be appropriate and sets forth its 
        reasons for so finding, or as to which the Association 
        consents, the NAIC shall--
                    (A) by order approve such proposed rule or 
                amendment; or
                    (B) institute proceedings to determine whether such 
                proposed rule or amendment should be modified or 
                disapproved.
            (3) NAIC proceedings.--
                    (A) In general.--Proceedings instituted by the NAIC 
                with respect to a proposed rule or amendment pursuant 
                to paragraph (2) shall--
                            (i) include notice of the grounds for 
                        disapproval under consideration;
                            (ii) provide opportunity for hearing; and
                            (iii) be concluded not later than 180 days 
                        after the date of the Association's filing of 
                        such proposed rule or amendment.
                    (B) Disposition of proposal.--At the conclusion of 
                any proceeding under subparagraph (A), the NAIC shall, 
                by order, approve or disapprove the proposed rule or 
                amendment.
                    (C) Extension of time for consideration.--The NAIC 
                may extend the time for concluding any proceeding under 
                subparagraph (A) for--
                            (i) not more than 60 days if the NAIC finds 
                        good cause for such extension and sets forth 
                        its reasons for so finding; or
                            (ii) for such longer period as to which the 
                        Association consents.
            (4) Standards for review.--
                    (A) Grounds for approval.--The NAIC shall approve a 
                proposed rule or amendment if the NAIC finds that the 
                rule or amendment is in the public interest and is 
                consistent with the purposes of this Act.
                    (B) Approval before end of notice period.--The NAIC 
                shall not approve any proposed rule before the end of 
                the 30-day period beginning on the date on which the 
                Association files proposed rules or amendments in 
                accordance with paragraph (1), unless the NAIC finds 
                good cause for so doing and sets forth the reasons for 
                so finding.
            (5) Alternate procedure.--
                    (A) In general.--Notwithstanding any provision of 
                this subsection other than subparagraph (B), a proposed 
                rule or amendment relating to the administration or 
                organization of the Association shall take effect--
                            (i) upon the date of filing with the NAIC, 
                        if such proposed rule or amendment is 
                        designated by the Association as relating 
                        solely to matters which the NAIC, consistent 
                        with the public interest and the purposes of 
                        this subsection, determines by rule do not 
                        require the procedures set forth in this 
                        paragraph; or
                            (ii) upon such date as the NAIC shall for 
                        good cause determine.
                    (B) Abrogation by the naic.--
                            (i) In general.--At any time within 60 days 
                        after the date of filing of any proposed rule 
                        or amendment under subparagraph (A)(i) or 
                        clause (ii) of this subparagraph, the NAIC may 
                        repeal such rule or amendment and require that 
                        the rule or amendment be refiled and reviewed 
                        in accordance with this paragraph, if the NAIC 
                        finds that such action is necessary or 
                        appropriate in the public interest, for the 
                        protection of insurance producers or 
                        policyholders, or otherwise in furtherance of 
                        the purposes of this subtitle.
                            (ii) Effect of reconsideration by the 
                        naic.--Any action of the NAIC pursuant to 
                        clause (i) shall--
                                    (I) not affect the validity or 
                                force of a rule change during the 
                                period such rule or amendment was in 
                                effect; and
                                    (II) not be considered to be a 
                                final action.
    (c) Action Required by the NAIC.--The NAIC may, in accordance with 
such rules as the NAIC determines to be necessary or appropriate to the 
public interest or to carry out the purposes of this subtitle, require 
the Association to adopt, amend, or repeal any bylaw, rule or amendment 
of the Association, whenever adopted.
    (d) Disciplinary Action by the Association.--
            (1) Specification of charges.--In any proceeding to 
        determine whether membership shall be denied, suspended, 
        revoked, or not renewed (hereafter in this section referred to 
        as a ``disciplinary action''), the Association shall bring 
        specific charges, notify such member of such charges, give the 
        member an opportunity to defend against the charges, and keep a 
        record.
            (2) Supporting statement.--A determination to take 
        disciplinary action shall be supported by a statement setting 
        forth--
                    (A) any act or practice in which such member has 
                been found to have been engaged;
                    (B) the specific provision of this subtitle, the 
                rules or regulations under this subtitle, or the rules 
                of the Association which any such act or practice is 
                deemed to violate; and
                    (C) the sanction imposed and the reason for such 
                sanction.
    (e) NAIC Review of Disciplinary Action.--
            (1) Notice to the naic.--If the Association orders any 
        disciplinary action, the Association shall promptly notify the 
        NAIC of such action.
            (2) Review by the naic.--Any disciplinary action taken by 
        the Association shall be subject to review by the NAIC--
                    (A) on the NAIC's own motion; or
                    (B) upon application by any person aggrieved by 
                such action if such application is filed with the NAIC 
                not more than 30 days after the later of--
                            (i) the date the notice was filed with the 
                        NAIC pursuant to paragraph (1); or
                            (ii) the date the notice of the 
                        disciplinary action was received by such 
                        aggrieved person.
    (f) Effect of Review.--The filing of an application to the NAIC for 
review of a disciplinary action, or the institution of review by the 
NAIC on the NAIC's own motion, shall not operate as a stay of 
disciplinary action unless the NAIC otherwise orders.
    (g) Scope of Review.--
            (1) In general.--In any proceeding to review such action, 
        after notice and the opportunity for hearing, the NAIC shall--
                    (A) determine whether the action should be taken;
                    (B) affirm, modify, or rescind the disciplinary 
                sanction; or
                    (C) remand to the Association for further 
                proceedings.
            (2) Dismissal of review.--The NAIC may dismiss a proceeding 
        to review disciplinary action if the NAIC finds that--
                    (A) the specific grounds on which the action is 
                based exist in fact;
                    (B) the action is in accordance with applicable 
                rules and regulations; and
                    (C) such rules and regulations are, and were, 
                applied in a manner consistent with the purposes of 
                this subtitle.

SEC. 329. ASSESSMENTS.

    (a) Insurance Producers Subject to Assessment.--The Association may 
establish such application and membership fees as the Association finds 
necessary to cover the costs of its operations, including fees made 
reimbursable to the NAIC under subsection (b), except that, in setting 
such fees, the Association may not discriminate against smaller 
insurance producers.
    (b) NAIC Assessments.--The NAIC may assess the Association for any 
costs that the NAIC incurs under this subtitle.

SEC. 330. FUNCTIONS OF THE NAIC.

    (a) Administrative Procedure.--Determinations of the NAIC, for 
purposes of making rules pursuant to section 328, shall be made after 
appropriate notice and opportunity for a hearing and for submission of 
views of interested persons.
    (b) Examinations and Reports.--
            (1) Examinations.--The NAIC may make such examinations and 
        inspections of the Association and require the Association to 
        furnish to the NAIC such reports and records or copies thereof 
        as the NAIC may consider necessary or appropriate in the public 
        interest or to effectuate the purposes of this subtitle.
            (2) Report by association.--As soon as practicable after 
        the close of each fiscal year, the Association shall submit to 
        the NAIC a written report regarding the conduct of its 
        business, and the exercise of the other rights and powers 
        granted by this subtitle, during such fiscal year. Such report 
        shall include financial statements setting forth the financial 
        position of the Association at the end of such fiscal year and 
        the results of its operations (including the source and 
        application of its funds) for such fiscal year. The NAIC shall 
        transmit such report to the President and the Congress with 
        such comment thereon as the NAIC determines to be appropriate.

SEC. 331. LIABILITY OF THE ASSOCIATION AND THE DIRECTORS, OFFICERS, AND 
              EMPLOYEES OF THE ASSOCIATION.

    (a) In General.--The Association shall not be deemed to be an 
insurer or insurance producer within the meaning of any State law, 
rule, regulation, or order regulating or taxing insurers, insurance 
producers, or other entities engaged in the business of insurance, 
including provisions imposing premium taxes, regulating insurer 
solvency or financial condition, establishing guaranty funds and 
levying assessments, or requiring claims settlement practices.
    (b) Liability of the Association, Its Directors, Officers, and 
Employees.--Neither the Association nor any of its directors, officers, 
or employees shall have any liability to any person for any action 
taken or omitted in good faith under or in connection with any matter 
subject to this subtitle.

SEC. 332. ELIMINATION OF NAIC OVERSIGHT.

    (a) In General.--The Association shall be established without NAIC 
oversight and the provisions set forth in section 324, subsections (a), 
(b), (c), and (e) of section 328, and sections 329(b) and 330 of this 
subtitle shall cease to be effective if, at the end of the 2-year 
period beginning on the date on which the provisions of this subtitle 
take effect pursuant to section 321--
            (1) at least a majority of the States representing at least 
        50 percent of the total United States commercial-lines 
        insurance premiums have not satisfied the uniformity or 
        reciprocity requirements of subsections (a), (b), and (c) of 
        section 321; and
            (2) the NAIC has not approved the Association's bylaws as 
        required by section 328 or is unable to operate or supervise 
        the Association, or the Association is not conducting its 
        activities as required under this Act.
    (b) Board Appointments.--If the repeals required by subsection (a) 
are implemented, the following shall apply:
            (1) General appointment power.--The President, with the 
        advice and consent of the Senate, shall appoint the members of 
        the Association's Board established under section 326 from 
        lists of candidates recommended to the President by the 
        National Association of Insurance Commissioners.
            (2) Procedures for obtaining national association of 
        insurance commissioners appointment recommendations.--
                    (A) Initial determination and recommendations.--
                After the date on which the provisions of subsection 
                (a) take effect, the NAIC shall, not later than 60 days 
                thereafter, provide a list of recommended candidates to 
                the President. If the NAIC fails to provide a list by 
                that date, or if any list that is provided does not 
                include at least 14 recommended candidates or comply 
                with the requirements of section 326(c), the President 
                shall, with the advice and consent of the Senate, make 
                the requisite appointments without considering the 
                views of the NAIC.
                    (B) Subsequent appointments.--After the initial 
                appointments, the NAIC shall provide a list of at least 
                six recommended candidates for the Board to the 
                President by January 15 of each subsequent year. If the 
                NAIC fails to provide a list by that date, or if any 
                list that is provided does not include at least six 
                recommended candidates or comply with the requirements 
                of section 326(c), the President, with the advice and 
                consent of the Senate, shall make the requisite 
                appointments without considering the views of the NAIC.
                    (C) Presidential oversight.--
                            (i) Removal.--If the President determines 
                        that the Association is not acting in the 
                        interests of the public, the President may 
                        remove the entire existing Board for the 
                        remainder of the term to which the members of 
                        the Board were appointed and appoint, with the 
                        advice and consent of the Senate, new members 
                        to fill the vacancies on the Board for the 
                        remainder of such terms.
                            (ii) Suspension of rules or actions.--The 
                        President, or a person designated by the 
                        President for such purpose, may suspend the 
                        effectiveness of any rule, or prohibit any 
                        action, of the Association which the President 
                        or the designee determines is contrary to the 
                        public interest.
    (c) Annual Report.--As soon as practicable after the close of each 
fiscal year, the Association shall submit to the President and to the 
Congress a written report relative to the conduct of its business, and 
the exercise of the other rights and powers granted by this subtitle, 
during such fiscal year. Such report shall include financial statements 
setting forth the financial position of the Association at the end of 
such fiscal year and the results of its operations (including the 
source and application of its funds) for such fiscal year.

SEC. 333. RELATIONSHIP TO STATE LAW.

    (a) Preemption of State Laws.--State laws, regulations, provisions, 
or other actions purporting to regulate insurance producers shall be 
preempted as provided in subsection (b).
    (b) Prohibited Actions.--No State shall--
            (1) impede the activities of, take any action against, or 
        apply any provision of law or regulation to, any insurance 
        producer because that insurance producer or any affiliate plans 
        to become, has applied to become, or is a member of the 
        Association;
            (2) impose any requirement upon a member of the Association 
        that it pay different fees to be licensed or otherwise 
        qualified to do business in that State, including bonding 
        requirements, based on its residency;
            (3) impose any licensing, appointment, integrity, personal 
        or corporate qualifications, education, training, experience, 
        residency, or continuing education requirement upon a member of 
        the Association that is different from the criteria for 
        membership in the Association or renewal of such membership, 
        except that counter-signature requirements imposed on 
        nonresident producers shall not be deemed to have the effect of 
        limiting or conditioning a producer's activities because of its 
        residence or place of operations under this section; or
            (4) implement the procedures of such State's system of 
        licensing or renewing the licenses of insurance producers in a 
        manner different from the authority of the Association under 
        section 325.
    (c) Savings Provision.--Except as provided in subsections (a) and 
(b), no provision of this section shall be construed as altering or 
affecting the continuing effectiveness of any law, regulation, 
provision, or other action of any State which purports to regulate 
insurance producers, including any such law, regulation, provision, or 
action which purports to regulate unfair trade practices or establish 
consumer protections, including countersignature laws.

SEC. 334. COORDINATION WITH OTHER REGULATORS.

    (a) Coordination With State Insurance Regulators.--The Association 
shall have the authority to--
            (1) issue uniform insurance producer applications and 
        renewal applications that may be used to apply for the issuance 
        or removal of State licenses, while preserving the ability of 
        each State to impose such conditions on the issuance or renewal 
        of a license as are consistent with section 333;
            (2) establish a central clearinghouse through which members 
        of the Association may apply for the issuance or renewal of 
        licenses in multiple States; and
            (3) establish or utilize a national database for the 
        collection of regulatory information concerning the activities 
        of insurance producers.
    (b) Coordination With the National Association of Securities 
Dealers.--The Association shall coordinate with the National 
Association of Securities Dealers in order to ease any administrative 
burdens that fall on persons that are members of both associations, 
consistent with the purposes of this subtitle and the Federal 
securities laws.

SEC. 335. JUDICIAL REVIEW.

    (a) Jurisdiction.--The appropriate United States district court 
shall have exclusive jurisdiction over litigation involving the 
Association, including disputes between the Association and its members 
that arise under this subtitle. Suits brought in State court involving 
the Association shall be deemed to have arisen under Federal law and 
therefore be subject to jurisdiction in the appropriate United States 
district court.
    (b) Exhaustion of Remedies.--An aggrieved person shall be required 
to exhaust all available administrative remedies before the Association 
and the NAIC before it may seek judicial review of an Association 
decision.
    (c) Standards of Review.--The standards set forth in section 553 of 
title 5, United States Code, shall be applied whenever a rule or bylaw 
of the Association is under judicial review, and the standards set 
forth in section 554 of title 5, United States Code, shall be applied 
whenever a disciplinary action of the Association is judicially 
reviewed.

SEC. 336. DEFINITIONS.

    For purposes of this subtitle, the following definitions shall 
apply:
            (1) Home state.--The term ``home State'' means the State in 
        which the insurance producer maintains its principal place of 
        residence and is licensed to act as an insurance producer.
            (2) Insurance.--The term ``insurance'' means any product, 
        other than title insurance, defined or regulated as insurance 
        by the appropriate State insurance regulatory authority.
            (3) Insurance producer.--The term ``insurance producer'' 
        means any insurance agent or broker, surplus lines broker, 
        insurance consultant, limited insurance representative, and any 
        other person that solicits, negotiates, effects, procures, 
        delivers, renews, continues or binds policies of insurance or 
        offers advice, counsel, opinions or services related to 
        insurance.
            (4) State.--The term ``State'' includes any State, the 
        District of Columbia, American Samoa, Guam, Puerto Rico, and 
        the United States Virgin Islands.
            (5) State law.--The term ``State law'' includes all laws, 
        decisions, rules, regulations, or other State action having the 
        effect of law, of any State. A law of the United States 
        applicable only to the District of Columbia shall be treated as 
        a State law rather than a law of the United States.

           Subtitle D--Rental Car Agency Insurance Activities

SEC. 341. STANDARD OF REGULATION FOR MOTOR VEHICLE RENTALS.

    (a) Protection Against Retroactive Application of Regulatory and 
Legal Action.--Except as provided in subsection (b), during the 3-year 
period beginning on the date of the enactment of this Act, it shall be 
a presumption that no State law imposes any licensing, appointment, or 
education requirements on any person who solicits the purchase of or 
sells insurance connected with, and incidental to, the lease or rental 
of a motor vehicle.
    (b) Preeminence of State Insurance Law.--No provision of this 
section shall be construed as altering the validity, interpretation, 
construction, or effect of--
            (1) any State statute;
            (2) the prospective application of any court judgment 
        interpreting or applying any State statute; or
            (3) the prospective application of any final State 
        regulation, order, bulletin, or other statutorily authorized 
        interpretation or action,
which, by its specific terms, expressly regulates or exempts from 
regulation any person who solicits the purchase of or sells insurance 
connected with, and incidental to, the short-term lease or rental of a 
motor vehicle.
    (c) Scope of Application.--This section shall apply with respect 
to--
            (1) the lease or rental of a motor vehicle for a total 
        period of 90 consecutive days or less; and
            (2) insurance which is provided in connection with, and 
        incidentally to, such lease or rental for a period of 
        consecutive days not exceeding the lease or rental period.
    (d) Motor Vehicle Defined.--For purposes of this section, the term 
``motor vehicle'' has the meaning given to such term in section 13102 
of title 49, United States Code.

                      Subtitle E--Confidentiality

SEC. 351. CONFIDENTIALITY OF HEALTH AND MEDICAL INFORMATION.

    (a) In General.--A company which underwrites or sells annuities 
contracts or contracts insuring, guaranteeing, or indemnifying against 
loss, harm, damage, illness, disability, or death (other than credit-
related insurance) and any subsidiary or affiliate thereof shall 
maintain a practice of protecting the confidentiality of individually 
identifiable customer health and medical and genetic information and 
may disclose such information only--
            (1) with the consent, or at the direction, of the customer;
            (2) for insurance underwriting and reinsuring policies, 
        account administration, reporting, investigating, or preventing 
        fraud or material misrepresentation, processing premium 
        payments, processing insurance claims, administering insurance 
        benefits (including utilization review activities), providing 
        information to the customer's physician or other health care 
        provider, participating in research projects, enabling the 
        purchase, transfer, merger, or sale of any insurance-related 
        business, or as otherwise required or specifically permitted by 
        Federal or State law; or
            (3) in connection with--
                    (A) the authorization, settlement, billing, 
                processing, clearing, transferring, reconciling, or 
                collection of amounts charged, debited, or otherwise 
                paid using a debit, credit, or other payment card or 
                account number, or by other payment means;
                    (B) the transfer of receivables, accounts, or 
                interest therein;
                    (C) the audit of the debit, credit, or other 
                payment information;
                    (D) compliance with Federal, State, or local law;
                    (E) compliance with a properly authorized civil, 
                criminal, or regulatory investigation by Federal, 
                State, or local authorities as governed by the 
                requirements of this section; or
                    (F) fraud protection, risk control, resolving 
                customer disputes or inquiries, communicating with the 
                person to whom the information relates, or reporting to 
                consumer reporting agencies.
    (b) State Actions for Violations.--In addition to such other 
remedies as are provided under State law, if the chief law enforcement 
officer of a State, State insurance regulator, or an official or agency 
designated by a State, has reason to believe that any person has 
violated or is violating this title, the State may bring an action to 
enjoin such violation in any appropriate United States district court 
or in any other court of competent jurisdiction.
    (c) Effective Date; Sunset.--
            (1) Effective date.--Except as provided in paragraph (2), 
        subsection (a) shall take effect on February 1, 2000.
            (2) Sunset.--Subsection (a) shall not take effect if, or 
        shall cease to be effective on and after the date on which, 
        legislation is enacted that satisfies the requirements in 
        section 264(c)(1) of the Health Insurance Portability and 
        Accountability Act of 1996 (Public Law 104-191; 110 Stat. 
        2033).
    (d) Consultation.--While subsection (a) is in effect, State 
insurance regulatory authorities, through the National Association of 
Insurance Commissioners, shall consult with the Secretary of Health and 
Human Services in connection with the administration of such 
subsection.

          TITLE IV--UNITARY SAVINGS AND LOAN HOLDING COMPANIES

SEC. 401. PROHIBITION ON NEW UNITARY SAVINGS AND LOAN HOLDING 
              COMPANIES.

    (a) In General.--Section 10(c) of the Home Owners' Loan Act (12 
U.S.C. 1467a(c)) is amended by adding at the end the following new 
paragraph:
            ``(9) Termination of expanded powers for new unitary 
        holding company.--
                    ``(A) In general.--Subject to subparagraph (B) and 
                notwithstanding paragraph (3), no company may directly 
                or indirectly, including through any merger, 
                consolidation, or other type of business combination, 
                acquire control of a savings association after March 4, 
                1999, unless the company is engaged, directly or 
                indirectly (including through a subsidiary other than a 
                savings association), only in activities that are 
                permitted--
                            ``(i) under paragraph (1)(C) or (2); or
                            ``(ii) for financial holding companies 
                        under section 6(c) of the Bank Holding Company 
                        Act of 1956.
                    ``(B) Existing unitary holding companies and the 
                successors to such companies.--Subparagraph (A) shall 
                not apply, and paragraph (3) shall continue to apply, 
                to a company (or any subsidiary of such company) that--
                            ``(i) either--
                                    ``(I) acquired one or more savings 
                                associations described in paragraph (3) 
                                pursuant to applications at least one 
                                of which was filed on or before March 
                                4, 1999; or
                                    ``(II) subject to subparagraph (C), 
                                became a savings and loan holding 
                                company by acquiring control of the 
                                company described in subclause (I); and
                            ``(ii) continues to control the savings 
                        association referred to in clause (i)(II) or 
                        the successor to any such savings association.
                    ``(C) Notice process for nonfinancial activities by 
                a successor unitary holding company.--
                            ``(i) Notice required.--Subparagraph (B) 
                        shall not apply to any company described in 
                        subparagraph (B)(i)(II) which engages, directly 
                        or indirectly, in any activity other than 
                        activities described in clauses (i) and (ii) of 
                        subparagraph (A), unless--
                                    ``(I) in addition to an application 
                                to the Director under this section to 
                                become a savings and loan holding 
                                company, the company submits a notice 
                                to the Board of Governors of the 
                                Federal Reserve System of such 
                                nonfinancial activities in the same 
                                manner as a notice of nonbanking 
                                activities is filed with the Board 
                                under section 4(j) of the Bank Holding 
                                Company Act of 1956; and
                                    ``(II) before the end of the 
                                applicable period under such section 
                                4(j), the Board either approves or does 
                                not disapprove of the continuation of 
                                such activities by such company, 
                                directly or indirectly, after becoming 
                                a savings and loan holding company.
                            ``(ii) Procedure.--Section 4(j) of the Bank 
                        Holding Company Act of 1956, including the 
                        standards for review, shall apply to any notice 
                        filed with the Board under this subparagraph in 
                        the same manner as it applies to notices filed 
                        under such section.''.
    (b) Technical and Conforming Amendment.--Section 10(c)(3) of the 
Home Owners' Loan Act (12 U.S.C. 1467a(c)(3)) is amended by striking 
``Notwithstanding'' and inserting ``Except as provided in paragraph (9) 
and notwithstanding''.
    (c) Conforming Amendment.--Section 10(o)(5) of the Home Owners' 
Loan Act (12 U.S.C. 1467a(o)(5)) is amended--
            (1) in subparagraph (E), by striking ``, except 
        subparagraph (B)''; and
            (2) by adding at the end the following new subparagraph:
                    ``(F) In the case of a mutual holding company which 
                is a savings and loan holding company described in 
                subsection (c)(3), engaging in the activities permitted 
                for financial holding companies under section 6(c) of 
                the Bank Holding Company Act of 1956.''.

SEC. 402. RETENTION OF ``FEDERAL'' IN NAME OF CONVERTED FEDERAL SAVINGS 
              ASSOCIATION.

    Section 2 of the Act entitled ``An Act to enable national banking 
associations to increase their capital stock and to change their names 
or locations'', approved May 1, 1886 (12 U.S.C. 30), is amended by 
adding at the end the following new subsection:
    ``(d) Retention of `Federal' in Name of Converted Federal Savings 
Association.--
            ``(1) In general.--Notwithstanding subsection (a) or any 
        other provision of law, any depository institution the charter 
        of which is converted from that of a Federal savings 
        association to a national bank or a State bank after the date 
        of the enactment of the Financial Services Act of 1999 may 
        retain the term `Federal' in the name of such institution if 
        such depository institution remains an insured depository 
        institution.
            ``(2) Definitions.--For purposes of this subsection, the 
        terms `depository institution', `insured depository 
        institution', `national bank', and `State bank' have the same 
        meanings as in section 3 of the Federal Deposit Insurance 
        Act.''.

                            TITLE V--PRIVACY

        Subtitle A--Disclosure of Nonpublic Personal Information

SEC. 501. PROTECTION OF NONPUBLIC PERSONAL INFORMATION.

    (a) Privacy Obligation Policy.--It is the policy of the Congress 
that each financial institution has an affirmative and continuing 
obligation to respect the privacy of its customers and to protect the 
security and confidentiality of those customers' nonpublic personal 
information.
    (b) Financial Institutions Safeguards.--In furtherance of the 
policy in subsection (a), each agency or authority described in section 
505(a) shall establish appropriate standards for the financial 
institutions subject to their jurisdiction relating to administrative, 
technical, and physical safeguards--
            (1) to insure the security and confidentiality of customer 
        records and information;
            (2) to protect against any anticipated threats or hazards 
        to the security or integrity of such records; and
            (3) to protect against unauthorized access to or use of 
        such records or information which could result in substantial 
        harm or inconvenience to any customer.

SEC. 502. OBLIGATIONS WITH RESPECT TO DISCLOSURES OF PERSONAL 
              INFORMATION.

    (a) Notice Requirements.--Except as otherwise provided in this 
subtitle, a financial institution may not, directly or through any 
affiliate, disclose to a nonaffiliated third party any nonpublic 
personal information, unless such financial institution provides or has 
provided to the consumer a notice that complies with section 503(b).
    (b) Opt Out.--
            (1) In general.--A financial institution may not disclose 
        nonpublic personal information to nonaffiliated third parties 
        unless--
                    (A) such financial institution clearly and 
                conspicuously discloses to the consumer, in writing or 
                in electronic form (or other form permitted by the 
                regulations prescribed under section 504), that such 
                information may be disclosed to such third parties;
                    (B) the consumer is given the opportunity, before 
                the time that such information is initially disclosed, 
                to direct that such information not be disclosed to 
                such third parties; and
                    (C) the consumer is given an explanation of how the 
                consumer can exercise that nondisclosure option.
            (2) Exception.--This subsection shall not prevent a 
        financial institution from providing nonpublic personal 
        information to a nonaffiliated third party to perform services 
        or functions on behalf of the financial institution, including 
        marketing of the financial institution's own products or 
        services or financial products or services offered pursuant to 
        joint agreements between two or more financial institutions 
        that comply with the requirements imposed by the regulations 
        prescribed under section 504, if the financial institution 
        fully discloses the providing of such information and enters 
        into a contractual agreement with the third party that requires 
        the third party to maintain the confidentiality of such 
        information.
    (c) Limits on Reuse of Information.--Except as otherwise provided 
in this subtitle, a nonaffiliated third party that receives from a 
financial institution nonpublic personal information under this section 
shall not, directly or through an affiliate of such receiving third 
party, disclose such information to any other person that is a 
nonaffiliated third party of both the financial institution and such 
receiving third party, unless such disclosure would be lawful if made 
directly to such other person by the financial institution.
    (d) Limitations on the Sharing of Account Number Information for 
Marketing Purposes.--A financial institution shall not disclose an 
account number or similar form of access number or access code for a 
credit card account, deposit account, or transaction account of a 
consumer to any nonaffiliated third party for use in telemarketing, 
direct mail marketing, or other marketing through electronic mail to 
the consumer.
    (e) General Exceptions.--Subsections (a) and (b) shall not prohibit 
the disclosure of nonpublic personal information--
            (1) as necessary to effect, administer, or enforce a 
        transaction requested or authorized by the consumer, or in 
        connection with--
                    (A) servicing or processing a financial product or 
                service requested or authorized by the consumer;
                    (B) maintaining or servicing the consumer's account 
                with the financial institution; or
                    (C) a proposed or actual securitization, secondary 
                market sale (including sales of servicing rights), or 
                similar transaction related to a transaction of the 
                consumer;
            (2) with the consent or at the direction of the consumer;
            (3) to protect the confidentiality or security of its 
        records pertaining to the consumer, the service or product, or 
        the transaction therein, or to protect against or prevent 
        actual or potential fraud, unauthorized transactions, claims, 
        or other liability, for required institutional risk control, or 
        for resolving customer disputes or inquiries, or to persons 
        holding a beneficial interest relating to the consumer, or to 
        persons acting in a fiduciary capacity on behalf of the 
        consumer;
            (4) to provide information to insurance rate advisory 
        organizations, guaranty funds or agencies, applicable rating 
        agencies of the financial institution, persons assessing the 
        institution's compliance with industry standards, and the 
        institution's attorneys, accountants, and auditors;
            (5) to the extent specifically permitted or required under 
        other provisions of law and in accordance with the Right to 
        Financial Privacy Act of 1978, to law enforcement agencies 
        (including a Federal functional regulator, a State insurance 
        authority, or the Federal Trade Commission), self-regulatory 
        organizations, or for an investigation on a matter related to 
        public safety;
            (6) to a consumer reporting agency in accordance with the 
        Fair Credit Reporting Act, or in accordance with 
        interpretations of such Act by the Board of Governors of the 
        Federal Reserve System or the Federal Trade Commission, 
        including interpretations published as commentary (16 CFR 601-
        622);
            (7) in connection with a proposed or actual sale, merger, 
        transfer, or exchange of all or a portion of a business or 
        operating unit if the disclosure of nonpublic personal 
        information concerns solely consumers of such business or unit; 
        or
            (8) to comply with Federal, State, or local laws, rules, 
        and other applicable legal requirements; to comply with a 
        properly authorized civil, criminal, or regulatory 
        investigation or subpoena by Federal, State, or local 
        authorities; or to respond to judicial process or government 
        regulatory authorities having jurisdiction over the financial 
        institution for examination, compliance, or other purposes as 
        authorized by law.

SEC. 503. DISCLOSURE OF INSTITUTION PRIVACY POLICY.

    (a) Disclosure Required.--A financial institution shall clearly and 
conspicuously disclose to each consumer, at the time of establishing 
the customer relationship with the consumer and not less than annually, 
in writing or in electronic form (or other form permitted by the 
regulations prescribed under section 504), its policies and practices 
with respect to protecting the nonpublic personal information of 
consumers in accordance with the rules prescribed under section 504.
    (b) Information to be Included.--The disclosure required by 
subsection (a) shall include--
            (1) the policy and practices of the institution with 
        respect to disclosing nonpublic personal information to 
        nonaffiliated third parties, other than agents of the 
        institution, consistent with section 502 of this subtitle, and 
        including--
                    (A) the categories of persons to whom the 
                information is or may be disclosed, other than the 
                persons to whom the information may be provided 
                pursuant to section 502(e); and
                    (B) the practices and policies of the institution 
                with respect to disclosing of nonpublic personal 
                information of persons who have ceased to be customers 
                of the financial institution;
            (2) the categories of nonpublic personal information that 
        are collected by the financial institution;
            (3) the policies that the institution maintains to protect 
        the confidentiality and security of nonpublic personal 
        information in accordance with section 501; and
            (4) the disclosures required, if any, under section 
        603(d)(2)(A)(iii) of the Fair Credit Reporting Act.

SEC. 504. RULEMAKING.

    (a) Regulatory Authority.--The Federal banking agencies, the 
National Credit Union Association, the Secretary of the Treasury, and 
the Securities and Exchange Commission, shall jointly prescribe, after 
consultation with the Federal Trade Commission, and representatives of 
State insurance authorities designated by the National Association of 
Insurance Commissioners, such regulations as may be necessary to carry 
out the purposes of this subtitle. Such regulations shall be prescribed 
in accordance with applicable requirements of the title 5, United 
States Code, and shall be issued in final form within 6 months after 
the date of enactment of this Act.
    (b) Authority to Grant Exceptions.--The regulations prescribed 
under subsection (a) may include such additional exceptions to 
subsections (a) and (b) of section 502 as are deemed consistent with 
the purposes of this subtitle.

SEC. 505. ENFORCEMENT.

    (a) In General.--This subtitle and the rules prescribed thereunder 
shall be enforced by the Federal functional regulators, the State 
insurance authorities, and the Federal Trade Commission with respect to 
financial institutions subject to their jurisdiction under applicable 
law, as follows:
            (1) Under section 8 of the Federal Deposit Insurance Act, 
        in the case of--
                    (A) national banks, Federal branches and Federal 
                agencies of foreign banks, and any subsidiaries of such 
                entities, by the Office of the Comptroller of the 
                Currency;
                    (B) member banks of the Federal Reserve System 
                (other than national banks), branches and agencies of 
                foreign banks (other than Federal branches, Federal 
                agencies, and insured State branches of foreign banks), 
                commercial lending companies owned or controlled by 
                foreign banks, organizations operating under section 25 
                or 25A of the Federal Reserve Act, bank holding 
                companies and their nonbank subsidiaries or affiliates 
                (except broker-dealers, affiliates providing insurance, 
                investment companies, and investment advisers), by the 
                Board of Governors of the Federal Reserve System;
                    (C) banks insured by the Federal Deposit Insurance 
                Corporation (other than members of the Federal Reserve 
                System), insured State branches of foreign banks, and 
                any subsidiaries of such entities, by the Board of 
                Directors of the Federal Deposit Insurance Corporation; 
                and
                    (D) savings association the deposits of which are 
                insured by the Federal Deposit Insurance Corporation, 
                and any subsidiaries of such a savings association, by 
                the Director of the Office of Thrift Supervision.
            (2) Under the Federal Credit Union Act, by the 
        Administrator of the National Credit Union Administration with 
        respect to any Federal or state chartered credit union, and any 
        subsidiaries of such an entity.
            (3) Under the Farm Credit Act of 1971, by the Farm Credit 
        Administration with respect to the Federal Agricultural 
        Mortgage Corporation, any Federal land bank, Federal land bank 
        association, Federal intermediate credit bank, or production 
        credit association.
            (4) Under the Securities Exchange Act of 1934, by the 
        Securities and Exchange Commission with respect to any broker-
        dealer.
            (5) Under the Investment Company Act of 1940, by the 
        Securities and Exchange Commission with respect to investment 
        companies.
            (6) Under the Investment Advisers Act of 1940, by the 
        Securities and Exchange Commission with respect to investment 
        advisers registered with the Commission under such Act.
            (7) Under Federal Housing Enterprises Financial Safety and 
        Soundness Act of 1992 (12 U. S. C. 4501 et seq.), by the Office 
        of Federal Housing Enterprise Oversight with respect to the 
        Federal National Mortgage Association and the Federal Home Loan 
        Mortgage Corporation.
            (8) Under the Federal Home Loan Bank Act, by the Federal 
        Housing Finance Board with respect to Federal home loan banks.
            (9) Under State insurance law, in the case of any person 
        engaged in providing insurance, by the State insurance 
        authority of the State in which the person is domiciled, 
        subject to section 104 of this Act.
            (10) Under the Federal Trade Commission Act, by the Federal 
        Trade Commission for any other financial institution that is 
        not subject to the jurisdiction of any agency or authority 
        under paragraphs (1) through (9) of this subsection.
    (b) Enforcement of Section 501.--
            (1) In general.--Except as provided in paragraph (2), the 
        agencies and authorities described in subsection (a) shall 
        implement the standards prescribed under section 501(b) in the 
        same manner, to the extent practicable, as standards prescribed 
        pursuant to subsection (a) of section 39 of the Federal Deposit 
        Insurance Act are implemented pursuant to such section.
            (2) Exception.--The agencies and authorities described in 
        paragraphs (4), (5), (6), (9), and (10) of subsection (a) shall 
        implement the standards prescribed under section 501(b) by rule 
        with respect to the financial institutions subject to their 
        respective jurisdictions under subsection (a).
    (c) Definitions.--The terms used in subsection (a)(1) that are not 
defined in this subtitle or otherwise defined in section 3(s) of the 
Federal Deposit Insurance Act shall have the meaning given to them in 
section 1(b) of the International Banking Act of 1978.

SEC. 506. FAIR CREDIT REPORTING ACT AMENDMENT.

    (a) Amendment.--Section 621 of the Fair Credit Reporting Act (15 
U.S.C. 1681s) is amended--
            (1) in subsection (d), by striking everything following the 
        end of the second sentence; and
            (2) by striking subsection ``(e)'' and inserting in lieu 
        thereof the following:
    ``(e) Regulatory Authority.--
            ``(1) The Federal banking agencies referred to in 
        paragraphs (1) and (2) of subsection (b) shall jointly 
        prescribe such regulations as necessary to carry out the 
        purposes of this Act with respect to any persons identified 
        under paragraphs (1) and (2) of subsection (b), or to the 
        holding companies and affiliates of such persons.
            ``(2) The Administrator of the National Credit Union 
        Administration shall prescribe such regulations as necessary to 
        carry out the purposes of this Act with respect to any persons 
        identified under paragraph (3) of subsection (b).''.
    (b) Conforming Amendment.--Section 621(a) of the Fair Credit 
Reporting Act (15 U.S.C. 1681s(a)) is amended by striking paragraph 
(4).

SEC. 507. RELATION TO OTHER PROVISIONS.

    This subtitle shall not apply to any information to which subtitle 
D of title III applies.

SEC. 508. STUDY OF INFORMATION SHARING AMONG FINANCIAL AFFILIATES.

    (a) In General.--The Secretary of the Treasury, in conjunction with 
the Federal functional regulators and the Federal Trade Commission, 
shall conduct a study of information sharing practices among financial 
institutions and their affiliates. Such study shall include--
            (1) the purposes for the sharing of confidential customer 
        information with affiliates or with nonaffiliated third 
        parties;
            (2) the extent and adequacy of security protections for 
        such information;
            (3) the potential risks for customer privacy of such 
        sharing of information;
            (4) the potential benefits for financial institutions and 
        affiliates of such sharing of information;
            (5) the potential benefits for customers of such sharing of 
        information;
            (6) the adequacy of existing laws to protect customer 
        privacy;
            (7) the adequacy of financial institution privacy policy 
        and privacy rights disclosure under existing law;
            (8) the feasibility of different approaches, including opt-
        out and opt-in, to permit customers to direct that confidential 
        information not be shared with affiliates and nonaffiliated 
        third parties; and
            (9) the feasibility of restricting sharing of information 
        for specific uses or of permitting customers to direct the uses 
        for which information may be shared.
    (b) Consultation.--The Secretary shall consult with representatives 
of State insurance authorities designated by the National Association 
of Insurance Commissioners, and also with financial services industry, 
consumer organizations and privacy groups, and other representatives of 
the general public, in formulating and conducting the study required by 
subsection (a).
    (c) Report.--Before the end of the 6-month period beginning on the 
date of the enactment of this Act, the Secretary shall submit a report 
to the Congress containing the findings and conclusions of the study 
required under subsection (a), together with such recommendations for 
legislative or administrative action as may be appropriate.

SEC. 509. DEFINITIONS.

    As used in this subtitle:
            (1) Federal banking agency.--The term ``Federal banking 
        agency'' has the meanings given to such terms in section 3 of 
        the Federal Deposit Insurance Act.
            (2) Federal functional regulator.--The term ``Federal 
        functional regulator'' means--
                    (A) the Board of Governors of the Federal Reserve 
                System;
                    (B) the Office of the Comptroller of the Currency;
                    (C) the Board of Directors of the Federal Deposit 
                Insurance Corporation;
                    (D) the Director of the Office of Thrift 
                Supervision;
                    (E) the National Credit Union Administration Board;
                    (F) the Farm Credit Administration; and
                    (G) the Securities and Exchange Commission.
            (3) Financial institution.--The term ``financial 
        institution'' means any institution the business of which is 
        engaging in financial activities or activities that are 
        incidental to financial activities, as described in section 
        6(c) of the Bank Holding Company Act of 1956.
            (4) Nonpublic personal information.--
                    (A) The term ``nonpublic personal information'' 
                means personally identifiable financial information--
                            (i) provided by a consumer to a financial 
                        institution;
                            (ii) resulting from any transaction with 
                        the consumer or the service performed for the 
                        consumer; or
                            (iii) otherwise obtained by the financial 
                        institution.
                    (B) Such term does not include publicly available 
                information, as such term is defined by the regulations 
                prescribed under section 504.
                    (C) Notwithstanding subparagraph (B), such term 
                shall include any list, description, or other grouping 
                of consumers (and publicly available information 
                pertaining to them) that is derived using any 
                personally identifiable information other than publicly 
                available information.
            (5) Nonaffiliated third parties.--The term ``nonaffiliated 
        third parties'' means any entity that is not an affiliate of, 
        or related by common ownership or affiliated by corporate 
        control with, the financial institution, but does not include a 
        joint employee of such institution.
            (6) Affiliate.--The term ``affiliate'' means any company 
        that controls, is controlled by, or is under common control 
        with another company.
            (7) Necessary to effect, administer, or enforce.--The term 
        ``as necessary to effect, administer or enforce the 
        transaction'' means--
                    (A) the disclosure is required, or is a usual, 
                appropriate or acceptable method, to carry out the 
                transaction or the product or service business of which 
                the transaction is a part, and record or service or 
                maintain the consumer's account in the ordinary course 
                of providing the financial service or financial 
                product, or to administer or service benefits or claims 
                relating to the transaction or the product or service 
                business of which it is a part, and includes--
                            (i) providing the consumer or the 
                        consumer's agent or broker with a confirmation, 
                        statement, or other record of the transaction, 
                        or information on the status or value of the 
                        financial service or financial product; and
                            (ii) the accrual or recognition of 
                        incentives or bonuses associated with the 
                        transaction that are provided by the financial 
                        institution or any other party;
                    (B) the disclosure is required, or is one of the 
                lawful or appropriate methods, to enforce the rights of 
                the financial institution or of other persons engaged 
                in carrying out the financial transaction, or providing 
                the product or service;
                    (C) the disclosure is required, or is a usual, 
                appropriate, or acceptable method, for insurance 
                underwriting at the consumer's request or for 
                reinsurance purposes, or for any of the following 
                purposes as they relate to a consumer's insurance: 
                account administration, reporting, investigating, or 
                preventing fraud or material misrepresentation, 
                processing premium payments, processing insurance 
                claims, administering insurance benefits (including 
                utilization review activities), participating in 
                research projects, or as otherwise required or 
                specifically permitted by Federal or State law; or
                    (D) the disclosure is required, or is a usual, 
                appropriate or acceptable method, in connection with--
                            (i) the authorization, settlement, billing, 
                        processing, clearing, transferring, 
                        reconciling, or collection of amounts charged, 
                        debited, or otherwise paid using a debit, 
                        credit or other payment card, check, or account 
                        number, or by other payment means;
                            (ii) the transfer of receivables, accounts 
                        or interests therein; or
                            (iii) the audit of debit, credit or other 
                        payment information.
            (8) State insurance authority.--The term ``State insurance 
        authority'' means, in the case of any person engaged in 
        providing insurance, the State insurance authority of the State 
        in which the person is domiciled.
            (9) Consumer.--The term ``consumer'' means an individual 
        who obtains, from a financial institution, financial products 
        or services which are to be used primarily for personal, 
        family, or household purposes, and also means the legal 
        representative of such an individual.
            (10) Joint agreement.--The term ``joint agreement'' means a 
        formal written contract pursuant to which two or more financial 
        institutions jointly offer, endorse, or sponsor a financial 
        product or service, and any payments between the parties are 
        based on business or profit generated.

SEC. 510. EFFECTIVE DATE.

    This subtitle shall take effect 6 months after the date on which 
the rules under section 503 are promulgated, except--
            (1) to the extent that a later date is specified in such 
        rules; and
            (2) that section 506 shall be effective upon enactment.

         Subtitle B--Fraudulent Access to Financial Information

SEC. 521. PRIVACY PROTECTION FOR CUSTOMER INFORMATION OF FINANCIAL 
              INSTITUTIONS.

    (a) Prohibition on Obtaining Customer Information by False 
Pretenses.--It shall be a violation of this subtitle for any person to 
obtain or attempt to obtain, or cause to be disclosed or attempt to 
cause to be disclosed to any person, customer information of a 
financial institution relating to another person--
            (1) by making a false, fictitious, or fraudulent statement 
        or representation to an officer, employee, or agent of a 
        financial institution;
            (2) by making a false, fictitious, or fraudulent statement 
        or representation to a customer of a financial institution; or
            (3) by providing any document to an officer, employee, or 
        agent of a financial institution, knowing that the document is 
        forged, counterfeit, lost, or stolen, was fraudulently 
        obtained, or contains a false, fictitious, or fraudulent 
        statement or representation.
    (b) Prohibition on Solicitation of a Person To Obtain Customer 
Information From Financial Institution Under False Pretenses.--It shall 
be a violation of this subtitle to request a person to obtain customer 
information of a financial institution, knowing that the person will 
obtain, or attempt to obtain, the information from the institution in 
any manner described in subsection (a).
    (c) Nonapplicability to Law Enforcement Agencies.--No provision of 
this section shall be construed so as to prevent any action by a law 
enforcement agency, or any officer, employee, or agent of such agency, 
to obtain customer information of a financial institution in connection 
with the performance of the official duties of the agency.
    (d) Nonapplicability to Financial Institutions in Certain Cases.--
No provision of this section shall be construed so as to prevent any 
financial institution, or any officer, employee, or agent of a 
financial institution, from obtaining customer information of such 
financial institution in the course of--
            (1) testing the security procedures or systems of such 
        institution for maintaining the confidentiality of customer 
        information;
            (2) investigating allegations of misconduct or negligence 
        on the part of any officer, employee, or agent of the financial 
        institution; or
            (3) recovering customer information of the financial 
        institution which was obtained or received by another person in 
        any manner described in subsection (a) or (b).
    (e) Nonapplicability to Insurance Institutions for Investigation of 
Insurance Fraud.--No provision of this section shall be construed so as 
to prevent any insurance institution, or any officer, employee, or 
agency of an insurance institution, from obtaining information as part 
of an insurance investigation into criminal activity, fraud, material 
misrepresentation, or material nondisclosure that is authorized for 
such institution under State law, regulation, interpretation, or order.
    (f) Nonapplicability to Certain Types of Customer Information of 
Financial Institutions.--No provision of this section shall be 
construed so as to prevent any person from obtaining customer 
information of a financial institution that otherwise is available as a 
public record filed pursuant to the securities laws (as defined in 
section 3(a)(47) of the Securities Exchange Act of 1934).
    (g) Nonapplicability to Collection of Child Support Judgments.--No 
provision of this section shall be construed to prevent any State-
licensed private investigator, or any officer, employee, or agent of 
such private investigator, from obtaining customer information of a 
financial institution, to the extent reasonably necessary to collect 
child support from a person adjudged to have been delinquent in his or 
her obligations by a Federal or State court, and to the extent that 
such action by a State-licensed private investigator is not unlawful 
under any other Federal or State law or regulation, and has been 
authorized by an order or judgment of a court of competent 
jurisdiction.

SEC. 522. ADMINISTRATIVE ENFORCEMENT.

    (a) Enforcement by Federal Trade Commission.--Compliance with this 
subtitle shall be enforced by the Federal Trade Commission in the same 
manner and with the same power and authority as the Commission has 
under the title VIII, the Fair Debt Collection Practices Act, to 
enforce compliance with such title.
    (b) Notice of Actions.--The Federal Trade Commission shall--
            (1) notify the Securities and Exchange Commission whenever 
        the Federal Trade Commission initiates an investigation with 
        respect to a financial institution subject to regulation by the 
        Securities and Exchange Commission;
            (2) notify the Federal banking agency (as defined in 
        section 3(z) of the Federal Deposit Insurance Act) whenever the 
        Commission initiates an investigation with respect to a 
        financial institution subject to regulation by such Federal 
        banking agency; and
            (3) notify the appropriate State insurance regulator 
        whenever the Commission initiates an investigation with respect 
        to a financial institution subject to regulation by such 
        regulator.

SEC. 523. CRIMINAL PENALTY.

    (a) In General.--Whoever knowingly and intentionally violates, or 
knowingly and intentionally attempts to violate, section 521 shall be 
fined in accordance with title 18, United States Code, or imprisoned 
for not more than 5 years, or both.
    (b) Enhanced Penalty for Aggravated Cases.--Whoever violates, or 
attempts to violate, section 521 while violating another law of the 
United States or as part of a pattern of any illegal activity involving 
more than $100,000 in a 12-month period shall be fined twice the amount 
provided in subsection (b)(3) or (c)(3) (as the case may be) of section 
3571 of title 18, United States Code, imprisoned for not more than 10 
years, or both.

SEC. 524. RELATION TO STATE LAWS.

    (a) In General.--This subtitle shall not be construed as 
superseding, altering, or affecting the statutes, regulations, orders, 
or interpretations in effect in any State, except to the extent that 
such statutes, regulations, orders, or interpretations are inconsistent 
with the provisions of this subtitle, and then only to the extent of 
the inconsistency.
    (b) Greater Protection Under State Law.--For purposes of this 
section, a State statute, regulation, order, or interpretation is not 
inconsistent with the provisions of this subtitle if the protection 
such statute, regulation, order, or interpretation affords any person 
is greater than the protection provided under this subtitle as 
determined by the Commission, on its own motion or upon the petition of 
any interested party.

SEC. 525. AGENCY GUIDANCE.

    In furtherance of the objectives of this subtitle, each Federal 
banking agency (as defined in section 3(z) of the Federal Deposit 
Insurance Act) and the Securities and Exchange Commission or self-
regulatory organizations, as appropriate, shall review regulations and 
guidelines applicable to financial institutions under their respective 
jurisdictions and shall prescribe such revisions to such regulations 
and guidelines as may be necessary to ensure that such financial 
institutions have policies, procedures, and controls in place to 
prevent the unauthorized disclosure of customer financial information 
and to deter and detect activities proscribed under section 521.

SEC. 526. REPORTS.

    (a) Report to the Congress.--Before the end of the 18-month period 
beginning on the date of the enactment of this Act, the Comptroller 
General, in consultation with the Federal Trade Commission, Federal 
banking agencies, the Securities and Exchange Commission, appropriate 
Federal law enforcement agencies, and appropriate State insurance 
regulators, shall submit to the Congress a report on the following:
            (1) The efficacy and adequacy of the remedies provided in 
        this subtitle in addressing attempts to obtain financial 
        information by fraudulent means or by false pretenses.
            (2) Any recommendations for additional legislative or 
        regulatory action to address threats to the privacy of 
        financial information created by attempts to obtain information 
        by fraudulent means or false pretenses.
    (b) Annual Report by Administering Agencies.--The Federal Trade 
Commission and the Attorney General shall submit to Congress an annual 
report on number and disposition of all enforcement actions taken 
pursuant to this subtitle.

SEC. 527. DEFINITIONS.

    For purposes of this subtitle, the following definitions shall 
apply:
            (1) Customer.--The term ``customer'' means, with respect to 
        a financial institution, any person (or authorized 
        representative of a person) to whom the financial institution 
        provides a product or service, including that of acting as a 
        fiduciary.
            (2) Customer information of a financial institution.--The 
        term ``customer information of a financial institution'' means 
        any information maintained by or for a financial institution 
        which is derived from the relationship between the financial 
        institution and a customer of the financial institution and is 
        identified with the customer.
            (3) Document.--The term ``document'' means any information 
        in any form.
            (4) Financial institution.--
                    (A) In general.--The term ``financial institution'' 
                means any institution engaged in the business of 
                providing financial services to customers who maintain 
                a credit, deposit, trust, or other financial account or 
                relationship with the institution.
                    (B) Certain financial institutions specifically 
                included.--The term ``financial institution'' includes 
                any depository institution (as defined in section 
                19(b)(1)(A) of the Federal Reserve Act), any broker or 
                dealer, any investment adviser or investment company, 
                any insurance company, any loan or finance company, any 
                credit card issuer or operator of a credit card system, 
                and any consumer reporting agency that compiles and 
                maintains files on consumers on a nationwide basis (as 
                defined in section 603(p)).
                    (C) Securities institutions.--For purposes of 
                subparagraph (B)--
                            (i) the terms ``broker'' and ``dealer'' 
                        have the meanings provided in section 3 of the 
                        Securities Exchange Act of 1934 (15 U.S.C. 
                        78c);
                            (ii) the term ``investment adviser'' has 
                        the meaning provided in section 202(a)(11) of 
                        the Investment Advisers Act of 1940 (15 U.S.C. 
                        80b-2(a)); and
                            (iii) the term ``investment company'' has 
                        the meaning provided in section 3 of the 
                        Investment Company Act of 1940 (15 U.S.C. 80a-
                        3).
                    (D) Further definition by regulation.--The Federal 
                Trade Commission, after consultation with Federal 
                banking agencies and the Securities and Exchange 
                Commission, may prescribe regulations clarifying or 
                describing the types of institutions which shall be 
                treated as financial institutions for purposes of this 
                subtitle.

            Passed the House of Representatives July 1, 1999.

            Attest:

                                                 JEFF TRANDAHL,

                                                                 Clerk.
```