```

[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10 Introduced in House (IH)]

106th CONGRESS
  1st Session
                                 H. R. 10

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.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            January 6, 1999

  Mr. Leach (for himself, Mr. McCollum, Mrs. Roukema, Mr. Baker, Mr. 
    Lazio, Mr. Bachus, Mr. Castle, Mr. King, Mr. Ney, Mr. Cook, Mr. 
 LaTourette, and Mrs. Kelly) introduced the following bill; which was 
  referred to the Committee on Banking and Financial Services, and in 
addition to the Committee on Commerce, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
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. 106. Prohibition on deposit production offices.
Sec. 107. Clarification of branch closure requirements.
Sec. 108. Amendments relating to limited purpose banks.
Sec. 109. Reports on ongoing FTC study of consumer privacy issues.
Sec. 110. GAO study of economic impact on community banks and other 
                            small financial institutions.
  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. Interagency consultation.
Sec. 118. Equivalent regulation and supervision.
Sec. 119. Prohibition on FDIC assistance to affiliates and 
                            subsidiaries.
Sec. 120. Repeal of savings bank provisions in the Bank Holding Company 
                            Act of 1956.
               Subtitle C--Subsidiaries of National Banks

Sec. 121. Permissible activities for subsidiaries of national banks.
Sec. 122. Misrepresentations regarding depository institution liability 
                            for obligations of affiliates.
Sec. 123. 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--Applying the Principles of National Treatment and Equality 
   of Competitive Opportunity to Foreign Banks and Foreign Financial 
                              Institutions

Sec. 151. Applying the principles of national treatment and equality of 
                            competitive opportunity to foreign banks 
                            that are financial holding companies.
Sec. 152. Applying the principles of national treatment and equality of 
                            competitive opportunity to foreign banks 
                            and foreign financial institutions that are 
                            wholesale financial institutions.
Sec. 153. Representative offices.
        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.
                 Subtitle H--Direct Activities of Banks

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

Sec. 186. Study of safety and soundness of funds.
Sec. 187. Elimination of SAIF and DIF special reserves.
                  Subtitle J--Effective Date of Title

Sec. 191. 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. Sales practices and complaint procedures.
Sec. 205. Information sharing.
Sec. 206. Definition and treatment of banking products.
Sec. 207. Derivative instrument and qualified investor defined.
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. Conforming change in definition.
Sec. 224. Conforming amendment.
Sec. 225. 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--Studies

Sec. 241. Study of methods to inform investors and consumers of 
                            uninsured products.
Sec. 242. Study of limitation on fees associated with acquiring 
                            financial products.
                          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. Publication of preemption of State laws.
             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.
          TITLE IV--UNITARY SAVINGS AND LOAN HOLDING COMPANIES

Sec. 401. Prevention of creation of new savings and loan holding 
                            companies with commercial affiliates.
Sec. 402. Retention of ``Federal'' in name of converted Federal savings 
                            association.

  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 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, 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 enactment of the 
        Financial Services Act of 1999.''.

SEC. 103. FINANCIAL HOLDING COMPANIES.

    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) 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) and (B) and 
                paragraph (2).
            ``(2) Community needs requirement.--No bank holding company 
        may become a financial holding company unless 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 under the Community 
        Reinvestment Act of 1977.
            ``(3) 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.
    ``(c) Engaging in Activities That Are Financial in Nature.--
            ``(1) Financial activities.--
                    ``(A) In general.--Notwithstanding section 4(a), a 
                financial holding company and a wholesale 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) to be financial in nature or incidental to 
                such financial activities.
                    ``(B) Coordination between the board and the 
                department 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 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 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 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 1 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 subsidiary of a depository institution;
                            ``(ii) such shares, assets, or ownership 
                        interests are acquired and held by a securities 
                        affiliate or an affiliate thereof as part of a 
                        bona fide underwriting or merchant 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 1 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) Actions required.--The Board shall, by regulation or 
        order, 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 and 
                a wholesale 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 and a wholesale 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 or 
                wholesale financial holding company shall directly or 
                indirectly acquire, and no company that becomes a 
                financial holding company or a wholesale 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 or wholesale 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; and
                            ``(vi) whether the proposed transaction can 
                        reasonably be expected to produce benefits to 
                        the public.
                    ``(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 Department of Justice, 
                                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 that a financial 
        holding company is not in compliance with the requirements of 
        subparagraph (A) or (B) of subsection (b)(1), the Board shall 
        give notice of such finding to the company.
            ``(2) Agreement to correct conditions required.--Not later 
        than 45 days after 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) Board may impose limitations.--Until the conditions 
        described in a notice to a financial holding company under 
        paragraph (1) are corrected, 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.
            ``(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) of subsection (b)(1), 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 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 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
            ``(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).
            ``(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.--An 
        insured depository institution controlled by a financial 
        holding company or wholesale 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 and a 
wholesale 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) the Board has not 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.''.

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 any State from--
                    (A) 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) 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);
                    (C) taking actions with respect to the receivership 
                or conservatorship of any insurance company; or
                    (D) 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.
            (3) Preservation of state antitrust and general corporate 
        laws.--
                    (A) In general.--Nothing 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, 116 S. Ct. 1103 (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 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, 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 the 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 
                                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, 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, or 
                        subsidiary or affiliate thereof, 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 any subsidiary or 
                        affiliate thereof, 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, 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.
    (e) Definition.--For purposes of this section, 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. 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, activities 
                                in which institutions described in 
                                section 2(c)(2)(F) 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; or
                    ``(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.
            ``(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.''.
    (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. REPORTS ON ONGOING FTC STUDY OF CONSUMER PRIVACY ISSUES.

    With respect to the ongoing multistage study being conducted by the 
Federal Trade Commission on consumer privacy issues, the Commission 
shall submit to the Congress an interim report on the findings and 
conclusions of the Commission, together with such recommendations for 
legislative and administrative action as the Commission determines to 
be appropriate, at the conclusion of each stage of such study and a 
final report at the conclusion of the study.

SEC. 110. GAO STUDY OF ECONOMIC IMPACT ON COMMUNITY BANKS AND OTHER 
              SMALL FINANCIAL INSTITUTIONS.

    (a) Study Required.--The Comptroller General of the United States 
shall conduct a study of the projected economic impact that the 
enactment of this Act will have on financial institutions which have 
total assets of $100,000,000 or less.
    (b) Report to the Congress.--The Comptroller General of the United 
States shall submit a report to the Congress before the end of the 6-
month period beginning on the date of the date of the enactment of this 
Act 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.

  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;
                                    ``(II) the nature or size of 
                                transactions between such subsidiary 
                                and any depository institution which is 
                                also a subsidiary of such holding 
                                company; or
                                    ``(III) 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.
                    ``(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 registered investment adviser 
                        properly registered by or on behalf of either 
                        the Securities and Exchange Commission or any 
                        State;
                            ``(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; or
                            ``(ii) is properly registered as an 
                        investment adviser under the Investment 
                        Advisers Act of 1940, or with any State.
                    ``(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 activities 
                of a registered investment adviser other than 
                investment advisory activities or activities incidental 
                to investment advisory 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, if the investment company is not--
                            ``(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, where 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 registered brokers, dealers, and 
                investment advisers; 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)(C) 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.

    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 if--
                    ``(A) such funds or assets are to be provided by--
                            ``(i) a bank holding company that is an 
                        insurance company or is a broker or dealer 
                        registered under the Securities Exchange Act of 
                        1934; or
                            ``(ii) an affiliate of the depository 
                        institution which is an insurance company or a 
broker or dealer registered under such Act; and
                    ``(B) the State insurance authority for the 
                insurance company or the Securities and Exchange 
                Commission for the registered broker or dealer, 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 or 
                dealer, 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 or dealer 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 or the Securities and 
        Exchange Commission, 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.''.

SEC. 114. PRUDENTIAL SAFEGUARDS.

    Section 5 of the Bank Holding Company Act of 1956 (12 U.S.C. 1844) 
is amended by inserting after subsection (g) (as added by section 113 
of this subtitle) the following new subsection:
    ``(h) Prudential Safeguards.--
            ``(1) In general.--The Board may, by regulation or order, 
        impose restrictions or requirements on relationships or 
        transactions between a depository institution subsidiary of a 
        bank holding company and any affiliate of such depository 
        institution (other than a subsidiary of such institution) which 
        the Board finds is consistent with the public interest, the 
        purposes of this Act, the Financial Services Act of 1999, the 
        Federal Reserve Act, and other Federal law applicable to 
        depository institution subsidiaries of bank holding companies 
        and the standards in paragraph (2).
            ``(2) Standards.--The Board may exercise authority under 
        paragraph (1) if the Board finds that such action would--
                    ``(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 
                depository institutions; or
                    ``(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 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.--The Board may, by regulation or 
        order, impose restrictions or requirements on relationships or 
        transactions between a foreign bank 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 Financial Services Act of 1999, 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).''.

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) a registered investment adviser, properly registered 
        by or on behalf of either the Securities and Exchange 
        Commission or any State, 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 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. INTERAGENCY CONSULTATION.

    (a) Purpose.--It is the intention of 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. 118. 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; 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 the Federal Deposit Insurance 
Corporation 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.--Nothing in this section shall 
prevent 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. 119. 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''.

               Subtitle C--Subsidiaries of National Banks

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

    (a) Financial Subsidiaries of National Banks.--Chapter one 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 
        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 agency activities 
        which are financial in nature.--A national bank may control a 
        company, or hold an interest in a company that is wholly owned 
        by an insured depository institution or subsidiary thereof, 
        that engages in agency activities that have been determined to 
        be financial in nature or incidental to such financial 
        activities pursuant to and in accordance with section 6(c) of 
        the Bank Holding Company Act of 1956 if--
                    ``(A) the company engages in such activities solely 
                as agent and not directly or indirectly as principal;
                    ``(B) the national bank is well capitalized and 
                well managed;
                    ``(C) all depository institution affiliates of the 
                national bank are well capitalized and well managed; 
                and
                    ``(D) the bank has received the approval of the 
                Comptroller of the Currency.
            ``(3) Community needs requirement.--A national bank may not 
        acquire control of, or an interest in, any company under 
        paragraph (2) unless the national bank, and all depository 
        institution affiliates of the 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 under the Community Reinvestment Act of 
        1977.
            ``(4) 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) 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.
                    ``(C) 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.
                    ``(D) 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) Limitation on Certain Activities in Subsidiaries.--Section 
21(a)(1) of the Banking Act of 1933 (12 U.S.C. 378(a)(1)) is amended--
            (1) by inserting ``, or to be a subsidiary of any person, 
        firm, corporation, association, business trust, or similar 
        organization engaged (unless such subsidiary (A) was engaged in 
        such securities activities as of September 15, 1997, or (B) is 
        a nondepository subsidiary of (i) a foreign bank and is not 
        also a subsidiary of a domestic depository institution, or (ii) 
        an unincorporated private bank that is not insured under the 
        Federal Deposit Insurance Act),'' after ``to engage at the same 
        time''; and
            (2) by inserting ``or any subsidiary of such bank, company, 
        or institution'' after ``or private bankers''.
    (c) Technical and Conforming Amendments.--
            (1) 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 as an 
        agent pursuant to section 5136A(a)(2) shall be deemed to be a 
        subsidiary of a bank holding company, and not a subsidiary of a 
        bank.''.
            (2) Section 23b.--Section 23B(a) of the Federal Reserve Act 
        (12 U.S.C. 371c-1(a)) is amended by adding at the end the 
        following new paragraph:
            ``(4) Subsidiary of national bank.--For purposes of this 
        section, a subsidiary of a national bank which engages in 
        activities as an agent pursuant to section 5136A(a)(2) shall be 
        deemed to be an affiliate of the national bank and not a 
        subsidiary of the bank.''.
    (d) Clerical Amendment.--The table of sections for chapter one 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. Financial subsidiaries of national banks.''.

SEC. 122. 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 1 year, or both.
    ``(c) Institution-Affiliated Party Defined.--For purposes of this 
section, the term `institution-affiliated party' with respect to a 
subsidiary or affiliate has the same meaning as in section 3 of the 
Federal Deposit Insurance Act, except that references to an insured 
depository institution shall be deemed to be references 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. 123. 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.

    (a) Definition and Supervision.--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 1 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) Certain subsidiaries.--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, if the investment company is not--
                                    ``(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, where 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 deems 
        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 and which engages in any 
                activity authorized only as a result of the application 
                of 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 foreign 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 paragraphs (1)(C) and (3) of section 9B(c) 
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.''.
    (b) Uninsured State 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. 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) (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) (12 U.S.C. 3412(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. 1842) is amended by adding at the end the 
        following new subsections:
    ``(p) Wholesale Financial Institution.--The term `wholesale 
financial institution' means a wholesale financial institution subject 
to section 9B of the Federal Reserve Act.
    ``(q) Commission.--The term `Commission' means the Securities and 
Exchange Commission.
    ``(r) Depository Institution.--The term `depository institution'--
            ``(1) has the same meaning as 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 
                as authorized pursuant 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 one of title LXII of the Revised 
        Statutes of the United States (12 U.S.C. 21 et seq.) is amended 
        by inserting after section 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 
        one 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) State 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 
                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, 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; and
                    ``(B) all references to the appropriate Federal 
                banking agency or to the Corporation in that section 
                shall be deemed to be references to the Board.
            ``(3) Enforcement authority.--Subsections (j) and (k) of 
        section 7, subsections (b) through (n), (s), 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 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.
            ``(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 the Board and, in the case of a State-
        chartered wholesale financial institution, with the approval of 
        the Board, and, in the case of a national bank wholesale 
        financial institution, with the approval of the Comptroller of 
        the Currency.
            ``(7) Activities of out-of-state branches of wholesale 
        financial institutions.--
                    ``(A) General.--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, and a national wholesale 
                financial institution shall be deemed to be a national 
                bank for purposes of section 5155(f) of the Revised 
                Statutes of the United States.
                    ``(B) Definitions.--The following definitions shall 
                apply solely for purposes of applying paragraph (1):
                            ``(i) Home state.--The term `home State' 
                        means--
                                    ``(I) with respect to a national 
                                wholesale financial institution, the 
                                State in which the main office of the 
                                institution is located; and
                                    ``(II) with respect to a State-
                                chartered wholesale financial 
                                institution, the State by which the 
                                institution is chartered.
                            ``(ii) Host state.--The term `host State' 
                        means a State, other than the home State of the 
                        wholesale financial institution, in which the 
                        institution maintains, or seeks to establish 
                        and maintain, a branch.
                            ``(iii) Out-of-state bank.--The term `out-
                        of-State bank' means, with respect to any 
                        State, a wholesale financial institution whose 
                        home State is another State.
            ``(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 shall 
                prescribe 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 not inconsistent 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 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 
        and subject to such extension of time as may be granted in the 
        Board's discretion, 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 for 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 
        for a wholesale financial institution 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) and 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) 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 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 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
    ``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.
``Sec. 783. Additional powers of trustee
    ``(a) The trustee under this subchapter has power, with permission 
of the court--
            ``(1) to 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) to merge the wholesale bank with a depository 
        institution;
            ``(3) to 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) to transfer assets or liabilities to a depository 
        institution;
            ``(5) to distribute property not of the estate, including 
        distributions to customers that are mandated by subchapters III 
        and IV of this chapter; or
            ``(6) to 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.
    ``(b) 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.
``Sec. 785. Expedited transfers
    ``The trustee may make a transfer pursuant to section 783 without 
prior judicial approval, if 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) 
determines that the transfer would be necessary to avert serious 
adverse effects on economic conditions or financial stability.''.
                    (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:

``781. Definitions for subchapter.
``782. Selection of trustee.
``783. Additional powers of trustee.
``784. Right to be heard.
``785. Expedited transfers.''.
    (e) Resolution of Edge Corporations.--Section 25A(16) of the 
Federal Reserve Act (12 U.S.C. 624(16)) 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 Amendment.--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 thereof the following: ``, except that a portion of a 
transaction is not exempt under this paragraph if such portion of the 
transaction (A) requires notice under section 6 of the Bank Holding 
Company Act of 1956; and (B) does not require approval under section 3 
or 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.

Subtitle F--Applying the Principles of National Treatment and Equality 
   of Competitive Opportunity to Foreign Banks and Foreign Financial 
                              Institutions

SEC. 151. APPLYING THE PRINCIPLES OF NATIONAL TREATMENT AND EQUALITY OF 
              COMPETITIVE OPPORTUNITY TO 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)(C) of 
                the Bank Holding Company Act of 1956, 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 
                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 5(h) of the Bank 
                Holding Company Act of 1956.''.

SEC. 152. APPLYING THE PRINCIPLES OF NATIONAL TREATMENT AND EQUALITY OF 
              COMPETITIVE OPPORTUNITY TO 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.''.

        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.

    (a) Federal Home Loan Bank 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.''.
    (b) Withdrawal.--Section 6(e) of the Federal Home Loan Bank Act (12 
U.S.C. 1426(e)) is amended by striking ``Any member other than a 
Federal savings and loan association may withdraw'' and inserting ``Any 
member may withdraw''.

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 businesses, 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--Section 10(e)(1) of the Federal Home Loan 
Bank Act (12 U.S.C. 1430(e)(1)) is amended in the second sentence, by 
inserting before the period ``or, in the case of any community 
financial institution, for the purposes described in subsection 
(a)(2)''.

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'' each 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'' each place 
                that term appears 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 inserting ``Federal Housing 
        Finance Board,'' after ``Director of the Office of Thrift 
        Supervision,''.
    (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) in the second sentence, by striking 
                        ``held by'' and all that follows before the 
                        period;
                    (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.

                 Subtitle H--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 1 or more 
states, or any public agency or authority of any state or political 
subdivision of a state, if the national banking association is well 
capitalized (as defined in section 38 of the Federal Deposit Insurance 
Act).''.

                  Subtitle I--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 J--Effective Date of Title

SEC. 191. 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 270-
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 of the following activities under 
                the conditions described:
                            ``(i) Third party brokerage arrangements.--
                        The bank enters into a contractual or other 
                        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 contractual or other 
                                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 contractual or other 
                                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 
                                range of investment vehicles available 
                                from the bank and the broker or dealer 
                                under the contractual or other 
                                arrangement;
                                    ``(VI) bank employees do not 
                                directly 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 in a customary custodian or 
                                trustee capacity; 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 capacity, or effects 
                        transactions in a fiduciary capacity in its 
                        trust department or other department that is 
                        regularly examined by bank examiners for 
                        compliance with fiduciary principles and 
                        standards, and (in either case)--
                                    ``(I) is primarily compensated for 
                                such transactions 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, consistent with fiduciary 
                                principles and standards; and
                                    ``(II) does not publicly 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 part of 
                                its transfer agency activities, 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 
                                subsidiaries, 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 primarily of 
                                        administration fees, or flat or 
                                        capped per order processing 
                                        fees, or both.
                                    ``(II) Dividend reinvestment 
                                plans.--The bank effects transactions, 
                                as part of its transfer agency 
                                activities, 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 primarily of 
                                        administration fees, or flat or 
                                        capped per order processing 
                                        fees, or both.
                                    ``(III) Issuer plans.--The bank 
                                effects transactions, as part of its 
                                transfer agency activities, in the 
                                securities of an issuer as part of a 
                                plan or program 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 primarily 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 bank 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 of the bank (as defined in section 2 
                        of the Bank Holding Company Act of 1956) 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 
                                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.
                                    ``(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) 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) Banking products.--The bank effects 
                        transactions in traditional banking products, 
                        as defined in section 206(a) of the Financial 
                        Services Act of 1999.
                            ``(x) De minimis exception.--The bank 
                        effects, other than in transactions referred to 
                        in clauses (i) through (ix), 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) No effect of bank exemptions on other 
                commission authority.--The exception to being 
                considered a broker for a bank engaged in activities 
                described in subparagraphs (B) and (C) shall not affect 
                the authority of the Commission under any other 
                provision of this Act or any other securities law.
                    ``(E) 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); 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 
                        otherwise, of securities backed by or 
                        representing an interest in notes, drafts, 
                        acceptances, loans, leases, receivables, other 
                        obligations, or pools of any such obligations 
                        predominantly originated by the bank, or a 
                        syndicate of banks of which the bank is a 
                        member, or an affiliate of any such bank other 
                        than a broker or dealer.
                            ``(iv) Banking products.--The bank buys or 
                        sells traditional banking products, as defined 
                        in section 206(a) 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;
                                    ``(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 
enactment of this Act, engaged in effecting such sales.''.

SEC. 204. SALES PRACTICES AND COMPLAINT PROCEDURES.

    Section 18 of the Federal Deposit Insurance Act is amended by 
adding at the end the following new subsection:
    ``(s) Sales Practices and Complaint Procedures With Respect to Bank 
Securities Activities.--
            ``(1) Regulations required.--Each Federal banking agency 
        shall prescribe and publish in final form, not later than 6 
        months after the date of enactment of the Financial Services 
        Act of 1999, regulations which apply to retail transactions, 
        solicitations, advertising, or offers of any security by any 
        insured depository institution or any affiliate thereof other 
        than a registered broker or dealer or an individual acting on 
        behalf of such a broker or dealer who is an associated person 
        of such broker or dealer. Such regulations shall include--
                    ``(A) requirements that sales practices comply with 
                just and equitable principles of trade that are 
                substantially similar to the Rules of Fair Practice of 
                the National Association of Securities Dealers; and
                    ``(B) requirements prohibiting (i) conditioning an 
                extension of credit on the purchase or sale of a 
                security; and (ii) any conduct leading a customer to 
                believe that an extension of credit is conditioned upon 
                the purchase or sale of a security.
            ``(2) Procedures required.--The appropriate Federal banking 
        agencies shall jointly establish procedures and facilities for 
        receiving and expeditiously processing complaints against any 
        bank or employee of a bank arising in connection with the 
        purchase or sale of a security by a customer, including a 
        complaint alleging a violation of the regulations prescribed 
        under paragraph (1), but excluding a complaint involving an 
        individual acting on behalf of such a broker or dealer who is 
        an associated person of such broker or dealer. The use of any 
        such procedures and facilities by such a customer shall be at 
        the election of the customer. Such procedures shall include 
        provisions to refer a complaint alleging fraud to the 
        Securities and Exchange Commission and appropriate State 
        securities commissions.
            ``(3) Required actions.--The actions required by the 
        Federal banking agencies under paragraph (2) shall include the 
        following:
                    ``(A) establishing a group, unit, or bureau within 
                each such agency to receive such complaints;
                    ``(B) developing and establishing procedures for 
                investigating, and permitting customers to investigate, 
                such complaints;
                    ``(C) developing and establishing procedures for 
                informing customers of the rights they may have in 
                connection with such complaints;
                    ``(D) developing and establishing procedures that 
                allow customers a period of at least 6 years to make 
                complaints and that do not require customers to pay the 
                costs of the proceeding; and
                    ``(E) developing and establishing procedures for 
                resolving such complaints, including procedures for the 
                recovery of losses to the extent appropriate.
            ``(4) Consultation and joint regulations.--The Federal 
        banking agencies shall consult with each other and prescribe 
        joint regulations pursuant to paragraphs (1) and (2), after 
        consultation with the Securities and Exchange Commission.
            ``(5) Procedures in addition to other remedies.--The 
        procedures and remedies provided under this subsection shall be 
        in addition to, and not in lieu of, any other remedies 
        available under law.
            ``(6) Definition.--As used in this subsection--
                    ``(A) the term `security' has the same meaning as 
                in section 3(a)(10) of the Securities Exchange Act of 
                1934;
                    ``(B) the term `registered broker or dealer' has 
                the same meaning as in section 3(a)(48) of the 
                Securities Exchange Act of 1934; and
                    ``(C) the term `associated person' has the same 
                meaning as in section 3(a)(18) of the Securities 
                Exchange Act of 1934.''.

SEC. 205. 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. 206. DEFINITION AND TREATMENT OF BANKING PRODUCTS.

    (a) Definition of Traditional 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 ``traditional 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; and
            (6) any derivative instrument, whether or not individually 
        negotiated, involving or relating to--
                    (A) foreign currencies, except options on foreign 
                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) Amendment to the Securities Exchange Act of 1934.--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) Transactions Involving Hybrid Products.--
            ``(1) Commission authority.--
                    ``(A) In general.--The Commission may, after 
                consultation with the Board, determine, by regulation 
                published in the Federal Register, that a bank that 
                effects transactions in, or buys or sells, a new 
                product should be subject to the registration 
                requirements of this section.
                    ``(B) Limitation.--The Commission may not impose 
                the registration requirements of this section on any 
                bank that effects transactions in, or buys or sells, a 
                product under this subsection unless the Commission 
                determines in the regulations described in subparagraph 
                (A) that--
                            ``(i) the subject product is a new product;
                            ``(ii) the subject product is a security; 
                        and
                            ``(iii) imposing the registration 
                        requirements of this section is necessary or 
                        appropriate in the public interest and for the 
                        protection of investors.
            ``(2) Objection to commission regulation.--
                    ``(A) Filing of petition for review.--The Board, or 
                any aggrieved party, may obtain review of any final 
                regulation described in paragraph (1) in the United 
                States Court of Appeals for the District of Columbia 
                Circuit by filing in such court, not later than 60 days 
                after the date of publication of the final regulation, 
                a written petition requesting that the regulation be 
                set aside.
                    ``(B) Transmittal of petition and record.--A copy 
                of a petition described in subparagraph (A) shall be 
                transmitted as soon as possible by the Clerk of the 
                Court to an officer or employee of the Commission 
                designated for that purpose. Upon receipt of the 
                petition, the Commission shall file with the court the 
                regulation under review and any documents referred to 
                therein, and any other relevant materials prescribed by 
                the court.
                    ``(C) Exclusive jurisdiction.--On the date of the 
                filing of the petition under subparagraph (A), the 
                court has jurisdiction, which becomes exclusive on the 
                filing of the materials set forth in subparagraph (B), 
                to affirm and enforce or to set aside the regulation at 
                issue.
                    ``(D) Standard of review.--
                            ``(i) In general.--The court shall 
                        determine to affirm and enforce or set aside a 
                        regulation of the Commission under this 
                        subsection, based on the determination of the 
                        court as to whether the subject product--
                                    ``(I) is a new product, as defined 
                                in this subsection;
                                    ``(II) is a security; and
                                    ``(III) would be more appropriately 
                                regulated under the Federal securities 
                                laws or the Federal banking laws, 
                                giving equal deference to the views of 
                                the Commission and the Board.
                            ``(ii) Considerations.--In making a 
                        determination under clause (i)(III), the court 
                        shall consider--
                                    ``(I) the nature of the subject new 
                                product;
                                    ``(II) the history, purpose, 
                                extent, and appropriateness of the 
                                regulation of the new product under the 
                                Federal securities laws; and
                                    ``(III) the history, purpose, 
                                extent, and appropriateness of the 
                                regulation of the new product under the 
                                Federal banking laws.
                    ``(E) Judicial stay.--The filing of a petition by 
                the Board or an aggrieved party pursuant to 
                subparagraph (A) shall operate as a judicial stay, 
                until the date on which the court makes a final 
                determination under this paragraph, of--
                            ``(i) any Commission requirement that a 
                        bank register as a broker or dealer under this 
                        section, because the bank engages in any 
                        transaction in, or buys or sells, the new 
                        product that is the subject of the petition; 
                        and
                            ``(ii) any Commission action against a bank 
                        for a failure to comply with a requirement 
                        described in clause (i).
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) the term `Board' means the Board of Governors 
                of the Federal Reserve System; and
                    ``(B) the term `new product' means a product or 
                instrument offered or provided by a bank that--
                            ``(i) was not subject to regulation by the 
                        Commission as a security under this Act before 
                        the date of enactment of this subsection; and
                            ``(ii) is not a traditional banking 
                        product, as defined in paragraphs (1) through 
                        (6) of section 206(a) of the Financial Services 
                        Act of 1999.''.
    (c) Classification Limited.--Classification of a particular product 
or instrument as a traditional banking product pursuant to this section 
or the amendments made by this section shall not be construed as 
finding or implying that such product or 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.
    (d) No Limitation on Other Authority To Challenge.--Nothing in this 
section or the amendments made by this section shall affect the right 
or authority of the Board of Governors of the Federal Reserve System, 
any appropriate Federal banking agency, or any interested party under 
any other provision of law to object to or seek judicial review as to 
whether a product or instrument is or is not appropriately classified 
as a traditional banking product under paragraphs (1) through (6) of 
section 206(a).
    (e) Incorporated Definitions.--For purposes of this section--
            (1) the term ``appropriate Federal banking agency'' has the 
        same meaning as in section 3 of the Federal Deposit Insurance 
        Act;
            (2) the term ``bank'' has the same meaning as in section 
        3(a)(6) of the Securities Exchange Act of 1934;
            (3) the term ``Board'' means the Board of Governors of the 
        Federal Reserve System;
            (4) the term ``government securities'' has the same meaning 
        as in section 3(a)(42) of the Securities Exchange Act of 1934, 
        and, for purposes of this subsection, commercial paper, bankers 
        acceptances, and commercial bills shall be treated in the same 
        manner as government securities; and
            (5) the term ``qualified investor'' has the same meaning as 
        in section 3(a)(55) of the Securities Exchange Act of 1934, as 
        amended by this Act.

SEC. 207. DERIVATIVE INSTRUMENT AND QUALIFIED INVESTOR DEFINED.

    Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)) 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 a traditional banking 
                product, as defined in 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 section 15C as applied to a 
                bank, a qualified Canadian government obligation as 
                defined in section 5136 of the Revised Statutes.''.

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) Services as trustee or custodian.--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 
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 as 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 as 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 as in section 
        3 of 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) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11)) is amended in 
subparagraph (A), 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 as 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 as 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, any of 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 provision of law.
    ``(c) Definition.--For purposes of this section, the term 
`appropriate Federal banking agency' has the same meaning as 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. 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. 224. 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. 225. 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 (l); and
            (2) by inserting after subsection (h) the following new 
        subsections:
    ``(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 one 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 and 
        subsection (j)--
                    ``(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', and `savings 
                association' have the same meanings as in section 2 of 
                the Bank Holding Company Act of 1956;
                    ``(D) the term `insured bank' has the same meaning 
                as in section 3 of the Federal Deposit Insurance Act;
                    ``(E) the term `foreign bank' has the same meaning 
                as in section 1(b)(7) of the International Banking Act 
                of 1978; and
                    ``(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) Commission Backup Authority.--
            ``(1) Authority.--The Commission may make inspections of 
        any wholesale financial holding company that--
                    ``(A) controls a wholesale financial institution;
                    ``(B) is not a foreign bank; and
                    ``(C) does not control an insured bank (other than 
                an institution permitted under 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,
        and any affiliate of such company, for the purpose of 
        monitoring and enforcing compliance by the wholesale financial 
        holding company with the Federal securities laws.
            ``(2) Limitation.--The Commission shall limit the focus and 
        scope of any inspection under paragraph (1) to those 
        transactions, policies, procedures, or records that are 
        reasonably necessary to monitor and enforce compliance by the 
        wholesale financial holding company or any affiliate with the 
        Federal securities laws.
            ``(3) Deference to examinations.--To the fullest extent 
        possible, the Commission shall use, for the purposes of this 
        subsection, the reports of examinations--
                    ``(A) made by the Board of Governors of the Federal 
                Reserve System of any wholesale financial holding 
                company that is supervised by the Board;
                    ``(B) made by or on behalf of any State regulatory 
                agency responsible for the supervision of an insurance 
                company of any licensed insurance company; and
                    ``(C) made by any Federal or State banking agency 
                of any bank or 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.
            ``(4) Notice.--To the fullest extent possible, the 
        Commission shall notify the appropriate regulatory agency prior 
        to conducting an inspection of a wholesale financial 
        institution or 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.
    ``(k) 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 subparagraphs:
                    ``(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--Studies

SEC. 241. STUDY OF METHODS TO INFORM INVESTORS AND CONSUMERS OF 
              UNINSURED PRODUCTS.

    Not later than 1 year after the date of enactment of this Act, the 
Comptroller General of the United States shall submit a report to the 
Congress regarding the efficacy, costs, and benefits of requiring that 
any depository institution that accepts federally insured deposits and 
that, directly or through a contractual or other arrangement with a 
broker, dealer, or agent, buys from, sells to, or effects transactions 
for retail investors in securities or consumers of insurance to inform 
such investors and consumers through the use of a logo or seal that the 
security or insurance is not insured by the Federal Deposit Insurance 
Corporation.

SEC. 242. STUDY OF LIMITATION ON FEES ASSOCIATED WITH ACQUIRING 
              FINANCIAL PRODUCTS.

    Not later than 1 year after the date of enactment of this Act, the 
Comptroller General of the United States shall submit a report to the 
Congress regarding the efficacy and benefits of uniformly limiting any 
commissions, fees, markups, or other costs incurred by customers in the 
acquisition of financial products.

                          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 or entity shall provide insurance in a State as principal 
or agent unless such person or entity 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 sales activity of any person or entity 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, 1997, 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, 
        1997, 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, 1997, 
        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) Authority.--Notwithstanding any other provision of this Act or 
any other law, no national bank, and no subsidiary of a national bank, 
may engage in any activity involving the underwriting of title 
insurance, other than title insurance underwriting activities in which 
such national bank or subsidiary was actively and lawfully engaged 
before the date of the enactment of this Act.
    (b) 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 any activity involving the underwriting 
of title insurance pursuant to subsection (a).
    (c) Insurance Subsidiary.--In the case of a national bank which has 
a subsidiary which provides insurance as principal and has no affiliate 
which provides insurance as principal and is not a subsidiary, the 
national bank may not engage in any activity involving the underwriting 
of title insurance pursuant to subsection (a).
    (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.

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 action 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 an action 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 adding at the end the following new section:

``SEC. 45. 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 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 subsidiaries; 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'.
                    ``(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 paragraph 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; or
                    ``(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.
    ``(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 requirements:
                    ``(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 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 the Financial Services Act of 
        1999, 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 1 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 with 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 causing 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 this section, which mechanism 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. PUBLICATION OF PREEMPTION OF STATE LAWS.

    Section 5244 of the Revised Statutes of the United States (12 
U.S.C. 43) is amended--
            (1) by inserting ``or Federal savings association'' after 
        ``national bank'' each place that term appears; and
            (2) in subsection (c)(3)(B)(i), by inserting ``or savings 
        associations'' after ``banks''.

             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 or entity 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 or entity 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 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 7 members 
        appointed by the NAIC.
            (2) Requirement.--At least 4 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 enactment of this Act, 
                the NAIC has not appointed the initial 7 members of the 
                Board of the Association, the initial Board shall 
                consist of the 7 State insurance regulators of the 7 
                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 7 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 \1/3\ 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) 30 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 
                6 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 6 
                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.

          TITLE IV--UNITARY SAVINGS AND LOAN HOLDING COMPANIES

SEC. 401. PREVENTION OF CREATION OF NEW S&L HOLDING COMPANIES WITH 
              COMMERCIAL AFFILIATES.

    (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) Prevention of new affiliations between s&l holding 
        companies and commercial firms.--
                    ``(A) In general.--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 October 7, 1998, 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) Prevention of new commercial affiliations.--
                Notwithstanding paragraph (3), no savings and loan 
                holding company may engage directly or indirectly 
                (including through a subsidiary other than a savings 
                association) in any activity other than as described in 
                clauses (i) and (ii) of subparagraph (A).
                    ``(C) Preservation of authority of existing unitary 
                s&l holding companies.--Subparagraphs (A) and (B) do 
                not apply with respect to any company that was a 
                savings and loan holding company on October 7, 1998, or 
                that becomes a savings and loan holding company 
                pursuant to an application pending before the Office of 
Thrift Supervision on or before that date, and that--
                            ``(i) meets and continues to meet the 
                        requirements of paragraph (3); and
                            ``(ii) continues to control not fewer than 
                        1 savings association that it controlled on 
                        October 7, 1998, or that it acquired pursuant 
                        to an application pending before the Office of 
                        Thrift Supervision on or before that date, or 
                        the successor to such savings association.
                    ``(D) Corporate reorganizations permitted.--This 
                paragraph does not prevent a transaction that--
                            ``(i) involves solely a company under 
                        common control with a savings and loan holding 
                        company from acquiring, directly or indirectly, 
                        control of the savings and loan holding company 
                        or any savings association that is already a 
                        subsidiary of the savings and loan holding 
                        company; or
                            ``(ii) involves solely a merger, 
                        consolidation, or other type of business 
                        combination as a result of which a company 
                        under common control with the savings and 
loan holding company acquires, directly or indirectly, control of the 
savings and loan holding company or any savings association that is 
already a subsidiary of the savings and loan holding company.
                    ``(E) Authority to prevent evasions.--The Director 
                may issue interpretations, regulations, or orders that 
                the Director determines necessary to administer and 
                carry out the purpose and prevent evasions of this 
                paragraph, including a determination that, 
                notwithstanding the form of a transaction, the 
                transaction would in substance result in a company 
                acquiring control of a savings association.
                    ``(F) Preservation of authority for family 
                trusts.--Subparagraphs (A) and (B) do not apply with 
                respect to any trust that becomes a savings and loan 
                holding company with respect to a savings association, 
                if--
                            ``(i) not less than 85 percent of the 
                        beneficial ownership interests in the trust are 
                        continuously owned, directly or indirectly, by 
                        or for the benefit of members of the same 
                        family, or their spouses, who are lineal 
                        descendants of common ancestors who controlled, 
                        directly or indirectly, such savings 
                        association on October 7, 1998, or a subsequent 
                        date pursuant to an application pending before 
                        the Office of Thrift Supervision on or before 
                        October 7, 1998; and
                            ``(ii) at the time at which such trust 
                        becomes a savings and loan holding company, 
                        such ancestors or lineal descendants, or 
                        spouses of such descendants, have directly or 
                        indirectly controlled the savings association 
                        continuously since October 7, 1998, or a 
                        subsequent date pursuant to an application 
                        pending before the Office of Thrift Supervision 
                        on or before October 7, 1998.''.
    (b) Conforming Amendment.--Section 10(o)(5) of the Home Owners' 
Loan Act (15 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 
                under subsection (c)(9)(A)(ii).''.

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.''.
                                 <all>
```