I

103D CONGRESS

1ST SESSION H. R. 962

To increase the amount of credit available to fuel local, regional, and national

economic growth by reducing the regulatory burden imposed upon safe,

sound, and properly managed financial institutions.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 18, 1993

Mr. BEREUTER (for himself and Mr. BACCHUS of Florida) introduced the

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

A BILL

To increase the amount of credit available to fuel local,

regional, and national economic growth by reducing the

regulatory burden imposed upon safe, sound, and properly managed financial institutions.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SEC. 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Economic Growth and Financial Institutions Regulatory

6 Paperwork Reduction Act of 1993’’.

7 (b) TABLE OF CONTENTS.—

TITLE I—REGULATORY IMPACT ON CREDIT AVAILABILITY

Subtitle A—General Provisions
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Sec. 101. Regulation of real estate lending

Sec. 102. Real estate appraisal amendment.

Sec. 103. Public deposits.

Subtitle B—Impact of Accounting and Capital Issues on Credit Availability

Sec. 111. Audit costs.

Sec. 112. Recourse agreements.

Sec. 113. Market value accounting.

Sec. 114. Report on capital standards and their impact on the economy.

Sec. 115. Minimize potential impact of capital standards on credit availability.

Subtitle C—Disincentives to Risk-Taking

Sec. 121. Due process protections.

Sec. 122. Culpability standards for outside directors.

Subtitle D—Miscellaneous Credit Availability Provisions

Sec. 131. Regulatory appeals process.

Sec. 132. Aggregate limits on insider lending.

Sec. 133. Sterile reserves studies.

Sec. 134. Credit card accounts receivable sales.

Sec. 135. Changes to The Federal Home Loan Bank Act to promote credit

availability.

TITLE II—REGULATORY MICROMANAGEMENT

Sec. 201. Regulatory standards.

Sec. 202. Paperwork reduction review.

Sec. 203. Rules on deposit taking.

Sec. 204. Adequate transition period for new regulations.

TITLE III—UNNECESSARY COST, PAPERWORK, AND REGULATION

Subtitle A—General Provisions

Sec. 301. Annual examinations.

Sec. 302. Coordinated examinations.

Sec. 303. Differences in accounting principles.

Sec. 304. Reduction of call report burdens.

Sec. 305. Regulatory review of capital compliance burden.

Sec. 306. Branch closures.

Sec. 307. Bank Secrecy Act amendments.

Sec. 308. Clarifying amendments.

Sec. 309. Limiting potential liability on foreign accounts.

Sec. 310. Repeal out-dated statutory provision.

Subtitle B—Holding Company Efficiencies

Sec. 321. Expedited procedures for forming a bank holding company.

Sec. 322. Exemption of certain holding company formations from registration

under the Securities Act of 1933.

Sec. 323. Expedited procedures for bank holding companies to seek approval to

engage in nonbanking activities.

Sec. 324. Reduction of postapproval waiting period for bank holding company

acquisitions.

Sec. 325. Reduction of postapproval waiting period for bank mergers.
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TITLE IV—CONSUMER INCONVENIENCE, PAPERWORK, AND COST;

OTHER NONSUPERVISORY REFORMS

SUBTITLE A—CONSUMER BENEFITS AND LENDING PROCESS IMPROVEMENTS

Sec. 401. Streamlined lending process for consumer benefit.

Sec. 402. Exemption for certain borrowers.

Sec. 403. Modification of waiver of right of rescission.

Sec. 404. Alternative disclosures for adjustable rate mortgages.

Sec. 405. Exemption for business accounts.

Sec. 406. Elimination of duplicate disclosures for home equity loans.

Subtitle B—Other Nonsupervisory Reforms

Part 1—Expedited Funds Availability and Electronic Transfers

Sec. 411. Availability schedules.

Sec. 412. Definition of a new account.

Sec. 413. Jurisdiction.

Sec. 414. Unauthorized electronic fund transfers.

PART 2—AMENDMENTS TO THE TRUTH IN LENDING ACT

Sec. 421. Liability for unauthorized use of credit cards.

PART 3—HOMEOWNERSHIP AMENDMENTS

Sec. 431. Home mortgage disclosure act exemption.

Sec. 432. Homeownership debt counseling notification.

Sec. 433. Elimination of duplicative data collection.

PART 4—AMENDMENTS TO THE REAL ESTATE SETTLEMENTS PROCEDURES

ACT

Sec. 441. Clarify disclosure requirements.

Sec. 442. Exemption of business loans.

TITLE V—COMMUNITY INVESTMENT

Sec. 501. Community Reinvestment Act amendments.

1 TITLE I—REGULATORY IMPACT ON

2 CREDIT AVAILABILITY

3 Subtitle A—General Provisions

4 SEC. 101. REGULATION OF REAL ESTATE LENDING.

5 Subsection (o) of section 18 of the Federal Deposit

6 Insurance Act (12 U.S.C. 1828(o)) (as added by section

7 304 of the Federal Insurance Corporation Improvement

8 Act of 1991) is amended—
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1 (a) by redesignating paragraph (4) as para2 graph (5); and

3 (b) by inserting new paragraph (4) as follows:

4 ‘‘(4) CONSIDERATION OF PARTICULAR IMPACT.—In

5 prescribing standards under paragraph (1), the appro6 priate Federal banking agencies shall, consistent with

7 safety and soundness,—

8 ‘‘(A) consider the impact that such standards

9 have on the availability of credit for small business,

10 residential, and agricultural purposes, and on low11 and moderate-income communities; and

12 ‘‘(B) minimize the negative impact that these

13 standards have on the availability of credit for such

14 purposes and in such areas.’’

15 SEC. 102. REAL ESTATE APPRAISAL AMENDMENT.

16 Section 1122 of the Financial Institutions Reform,

17 Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351)

18 is amended—

19 (a) by redesignating subsections (b), (c), (d)

20 and (e) as subsections (c), (d), (e) and (f), respec21 tively;

22 (b) by adding the following new subsection (b):

23 ‘‘(b) RECIPROCITY.—The Appraisal Subcommittee

24 shall encourage the States to develop reciprocity agree25 ments among themselves so as to readily authorize ap-
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1 praisers licensed or certified in one State and in good

2 standing with their State appraiser certifying or licensing

3 agency to perform appraisals in another State or States

4 as though they were licensed or certified in that State or

5 States.’’; and

6 (c) by adding at the end of subsection (a)(3) the fol7 lowing new sentence: ‘‘A State appraiser certifying or li8 censing agency shall not impose excessive fees or burden9 some requirements for temporary practice under this sub10 section, as determined by the Appraisal Subcommittee.’’.

11 SEC. 103. PUBLIC DEPOSITS.

12 Section 13(e) of the Federal Deposit Insurance Act

13 (12 U.S.C. 1823(e)) is amended—

14 (a) by inserting ‘‘(1) IN GENERAL.—’’ before

15 ‘‘No agreement which tends’’;

16 (b) by redesignating paragraphs (1), (2), (3)

17 and (4) as subparagraphs (A), (B), (C) and (D) re18 spectively; and

19 (c) by inserting the following new paragraph

20 (2):

21 ‘‘(2) EXCEPTION.—This subsection shall not apply to

22 any agreement permitting or affecting the deposit custody

23 or collateralization of funds of any public entity.’’.
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1 Subtitle B—Impact of Accounting and Capital

2 Issues on Credit Availability

3 SEC. 111. AUDIT COSTS.

4 (a) IN GENERAL.—Section 36 of the Federal Deposit

5 Insurance Act (12 U.S.C. 1831m) (as added by section

6 112 of the Federal Deposit Insurance Corporation Im7 provement Act of 1991) is amended—

8 (1) AUDITOR ATTESTATIONS.—

9 (A) in subsection (a)(2)(A)(ii), by striking

10 ‘‘subsections (c) and (d)’’ and inserting ‘‘sub11 section (c)’’;

12 (B) by striking subsection (c);

13 (C) in subsection (d), by deleting ‘‘(d)’’

14 and inserting ‘‘(c)’’; and

15 (D) by striking subsection (e);

16 (2) DUPLICATIVE REPORTING.—in subsection

17 (i), by striking ‘‘if—(1) services and functions’’ and

18 all that follows through ‘‘or the appropriate Federal

19 banking agency.’’ and inserting ‘‘if services and

20 functions comparable to those required under this

21 section are provided at the holding company level.’’;

22 (3) INDEPENDENT AUDIT COMMITTEES.—

23 (A) in subsection (g)(1)(A), by striking

24 ‘‘entirely’’ and inserting ‘‘the majority of which

25 is’’;
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1 (B) in subsection (g)(1)(C),

2 (i) by inserting ‘‘and’’ after the semi3 colon in clause (i), and by striking ‘‘; and’’

4 in clause (ii) and inserting ‘‘.’’; and

5 (ii) by striking clause (iii);

6 (C) in subsection (g)(1), by inserting the

7 following new subparagraph:

8 ‘‘(D) EXEMPTIVE AUTHORITY.—Each ap9 propriate Federal banking agency shall, by reg10 ulation, exempt from the requirements of this

11 subsection all insured depository institutions

12 which face hardships in retaining competent di13 rectors on their internal audit committees as a

14 result of this subsection. In determining what

15 types of institutions will be exempted, the agen16 cy shall consider such factors as the size of the

17 institution and the availability of competent

18 outside directors in the community.’’; and

19 (4) PUBLIC AVAILABILITY.—In subsection

20 (a)(3), by inserting at the end the following new sen21 tence—‘‘Notwithstanding the previous sentence, the

22 Corporation and the appropriate Federal banking

23 agencies may designate certain information as privi24 leged and confidential and not available to the pub25 lic.’’.
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1 (5) QUARTERLY REPORTS.—In subsection

2 (g)(2), by inserting the following new subparagraph

3 (D)—

4 ‘‘(D) NOTICE TO INSTITUTION.—Upon de5 termining that an institution’s quarterly reports

6 shall be subject to the requirements of subpara7 graph (A), the Corporation shall promptly pro8 vide the institution with written notice of such

9 determination.’’.

10 (6) by redesignating subsections (f) through (j)

11 as subsections (d) through (h), respectively.

12 (b) EFFECTIVE DATE.—Section 112(b) of the Fed13 eral Deposit Insurance Corporation Improvement Act of

14 1991 is amended by striking ‘‘December 31, 1992’’ and

15 inserting ‘‘December 31, 1993’’.

16 SEC. 112. RECOURSE AGREEMENTS.

17 Section 37(b) of the Federal Deposit Insurance Act

18 (12 U.S.C. 1831n(b)) (as added by section 121 of the Fed19 eral Deposit Insurance Corporation Improvement Act of

20 1991) is amended by adding at the end the following new

21 paragraph (3):

22 ‘‘(3) RECOURSE AGREEMENTS.—Each appro23 priate Federal banking agency shall require insured

24 depository institutions to use accounting principles

25 consistent with generally accepted accounting prin-
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1 ciples in determining, for purposes of compliance

2 with statutory or regulatory requirements, the cap3 ital required to be held against loans sold with re4 course.’’.

5 SEC. 113. MARKET VALUE ACCOUNTING.

6 Section 37(a)(3) of the Federal Deposit Insurance

7 Act (12 U.S.C. 1831n(a)(3)) (as added by section 121 of

8 the Federal Deposit Insurance Corporation Improvement

9 Act of 1991) is amended by striking subparagraph (D).

10 SEC. 114. REPORT ON CAPITAL STANDARDS AND THEIR IM11 PACT ON THE ECONOMY.

12 (a) STUDY.—No later than 90 days after enactment

13 of this Act, the Department of the Treasury, after con14 sultation with the Federal banking agencies, shall report

15 to the House and Senate Banking Committees on the ef16 fect that the implementation of risk based capital stand17 ards, including the Basle international capital standards,

18 is having on—

19 (1) the safety and soundness of insured deposi20 tory institutions;

21 (2) the availability of credit, particularly to in22 dividuals and small businesses; and

23 (3) economic growth.
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1 The report shall contain any recommendations with

2 respect to capital standards that the Department of the

3 Treasury may wish to provide.

4 (b) DEFINITION.—For purposes of this section, the

5 terms ‘‘Federal banking agency’’ and ‘‘insured depository

6 institution’’ have the same meanings as in section 3 of

7 the Federal Deposit Insurance Act.

8 SEC. 115. MINIMIZE POTENTIAL IMPACT OF CAPITAL

9 STANDARDS ON CREDIT AVAILABILITY.

10 Section 305 of the Federal Deposit Insurance Cor11 poration Improvement Act of 1991 (12 U.S.C. 1828 note)

12 is amended—

13 (a) in subsection (b)(1)(A)—

14 (1) by striking clauses (ii) and (iii);

15 (2) by striking ‘‘(A) take adequate account

16 of—(i) interest-rate risk’’ and inserting ‘‘(A)

17 take adequate account of interest-rate risk;

18 and’’.

19 (b) by striking paragraph (3) in subsection (b) and

20 inserting the following new paragraph (3):

21 ‘‘(3) TIMING FOR PRESCRIBING REVISED

22 STANDARDS.—

23 ‘‘(A) INTEREST RATE RISK.—No appro24 priate Federal banking agency shall prescribe

25 final regulations in the Federal Register to im-
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1 plement subparagraph (A) of paragraph (1) of

2 this subsection prior to—

3 ‘‘(i) the implementation of similar

4 standards at an international level; and

5 ‘‘(ii) the establishment of reasonable

6 transition rules, subsequent to the occur7 rence specified in clause (i), to facilitate

8 compliance with those regulations.

9 ‘‘(B) MULTIFAMILY MORTGAGES.—Each

10 appropriate Federal banking agency shall—

11 ‘‘(i) publish final regulations in the

12 Federal Register to implement paragraph

13 (1)(B) not later than 18 months after the

14 date of enactment of this Act; and

15 ‘‘(ii) establish reasonable transition

16 rules to facilitate compliance with those

17 regulations.’’.

18 Subtitle C—Disincentives to Risk-Taking

19 SEC. 121. DUE PROCESS PROTECTIONS.

20 (a) ATTACHMENT OF ASSETS.—

21 (1) INSURED DEPOSITORY INSTITUTIONS.—

22 (A) section 11(d)(19) of the Federal De23 posit Insurance Act (12 U.S.C. 1821(d)(19)) is

24 amended—
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1 (i) in subparagraph (A), by striking

2 ‘‘without regard’’ and all that follows

3 through ‘‘immediate’’; and

4 (ii) in subparagraph (B), by striking

5 ‘‘(as modified with respect to such proceed6 ing by subparagraph (A))’’.

7 (B) section 8(b) of the Federal Deposit In8 surance Act (12 U.S.C. 1818(b)) is amended by

9 redesignating subsection (b)(6)(F) as sub10 section (b)(6)(G), and inserting after subsection

11 (b)(6)(E) the following:

12 ‘‘(F) prohibit such person from withdrawing,

13 transferring, removing, dissipating, or disposing of

14 any funds, assets or other property where injury,

15 loss, or damage to such property is irreparable and

16 immediate; and’’.

17 (C) section 8(i) of the Federal Deposit In18 surance Act (12 U.S.C. 1818(i)) is amended by

19 striking paragraph (4)(B) and inserting the fol20 lowing:

21 ‘‘(B) STANDARD.—Rule 65 of the Federal

22 Rules of Civil Procedure shall apply with respect to

23 any proceeding under this paragraph.’’.

24 (2) CREDIT UNIONS.—
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1 (A) Section 207(b)(2)(H) of the Federal

2 Credit Union Act (12 U.S.C. 1787(b)(2)(H)) is

3 amended—

4 (i) in clause (i), by striking ‘‘without

5 regard’’ and all that follows through ‘‘im6 mediate’’; and

7 (ii) in clause (ii), by striking ‘‘(as

8 modified with respect to such proceeding

9 by clause (i))’’.

10 (B) Section 206(e)(3) of the Federal Cred11 it Union Act (12 U.S.C. 1786(e)(3)) is amend12 ed by redesignating subsection (e)(3)(F) as sub13 section (e)(3)(G), and inserting after subsection

14 (e)(3)(E) the following:

15 ‘‘(F) prohibit such person from withdrawing, trans16 ferring, removing, dissipating, or disposing of any funds,

17 assets or other property where injury, loss, or damage to

18 such property is irreparable and immediate; and’’.

19 SEC. 122. CULPABILITY STANDARDS FOR OUTSIDE DIREC20 TORS.

21 Section 3(u) of the Federal Deposit Insurance Act

22 (12 U.S.C. 1813(u)) is amended—

23 (a) in paragraph (1), by inserting ‘‘(other than

24 an outside director’’) after ‘‘director’’;
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1 (b) in paragraph (3), by inserting ‘‘(other than

2 an outside director’’) after ‘‘any other person’’; and

3 (c) in paragraph (4), by inserting ‘‘or outside

4 director’’ after ‘‘or accountant)’’.

5 SUBTITLE D—MISCELLANEOUS CREDIT AVAILABILITY

6 PROVISIONS

7 SEC. 131. REGULATORY APPEALS PROCESS.

8 (a) IN GENERAL.—Not later than 180 days after the

9 date of enactment of this Act, each appropriate Federal

10 banking agency and the National Credit Union Adminis11 tration shall establish an independent appellate process

12 within its agency responsible for reviewing material super13 visory determinations made at insured depository institu14 tions or credit unions that it supervises.

15 (b) REVIEW PROCESS.—In establishing this inde16 pendent appellate process, each agency shall ensure—

17 (1) that any appeal of a supervisory determina18 tion from any insured depository institution or credit

19 union, or any officer, director, employee or other

20 representative of any insured depository institution

21 or credit union, be heard and decided expeditiously;

22 (2) that appropriate safeguards exist for pro23 tecting the appellant from retaliation by agency ex24 aminers; and
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1 (3) that the ruling agency officer have the au2 thority, where appropriate and as justice so requires,

3 to stay the supervisory determination pending com4 pletion of the appellate process.

5 (c) COMMENT PERIOD.—Each agency shall provide

6 public notice and opportunity for comment on proposed

7 guidelines for an appellate process not later than 90 days

8 after enactment of this Act.

9 (d) DEFINITIONS.—For purposes of this section—

10 (1) the term ‘‘agency’’ shall refer to the appro11 priate Federal banking agency and the National

12 Credit Union Administration;

13 (2) the terms ‘‘insured depository institution’’

14 and ‘‘appropriate Federal banking agency’’ have the

15 same meanings as in section 3 of the Federal De16 posit Insurance Act; and

17 (3) the term ‘‘material supervisory determina18 tion’’ includes determinations relating to exam rat19 ings, the adequacy of loan loss reserve provisions,

20 and loan classifications on loans significant to the

21 institution.

22 SEC. 132. AGGREGATE LIMITS ON INSIDER LENDING.

23 Section 22(h)(5) of the Federal Reserve Act (12

24 U.S.C. 375b(5)) (as amended by section 306 of the Fed-
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1 eral Deposit Insurance Corporation Improvement Act of

2 1991) is amended—

3 (a) by redesignating subparagraph (C) as sub4 paragraph (D);

5 (b) by inserting the following new subparagraph

6 (C):

7 ‘‘(C) SMALL BANK EXCEPTION.—Notwithstanding

8 subparagraph (A), member banks with less than

9 $100,000,000 in deposits may make such extensions of

10 credit in the aggregate to persons specified in subpara11 graph (A) in an amount not to exceed 2 times the bank’s

12 unimpaired capital and unimpaired surplus.’’; and

13 (c) in subparagraph (D), as redesignated, by

14 striking ‘‘less than $100,000,000’’ and inserting

15 ‘‘between $100,000,000 and $250,000,000’’.

16 SEC. 133. STERILE RESERVES STUDIES.

17 (a) FEDERAL RESERVE STUDY.—No later than 90

18 days after enactment of this Act, the Board of Governors

19 of the Federal Reserve System, in consultation with the

20 Federal Deposit Insurance Corporation, shall study and

21 report to Congress on—

22 (1) the necessity, for monetary policy purposes,

23 of continuing to require insured depository institu24 tions to maintain sterile reserves;
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1 (2) the appropriateness of paying insured de2 pository institutions with a market rate of interest

3 on sterile reserves, or in the alternative, providing

4 payment of this interest into the appropriate deposit

5 insurance fund;

6 (3) the monetary impact that the failure to pay

7 interest on sterile reserves has had on insured depos8 itory institutions, including an estimate of the total

9 dollar amount of interest and potential income lost

10 by insured depository institutions;

11 (4) the degree to which the failure to pay inter12 est on sterile reserves has impacted upon economic

13 growth; and

14 (5) the impact that failure to pay interest on

15 sterile reserves has had on the ability of the banking

16 industry to compete with nonbanking providers of fi17 nancial services and with foreign banks.

18 (b) BUDGETARY IMPACT STUDY.—No later than 90

19 days after enactment of this Act, the Office of Manage20 ment and Budget and the Congressional Budget Office,

21 in consultation with the Senate and House Committees on

22 the Budget, shall jointly study and report to Congress on

23 the budgetary impact of—

24 (1) paying insured depository institutions a

25 market rate of interest on sterile reserves; and
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1 (2) paying such interest into the respective de2 posit insurance funds.

3 (c) DEFINITION.—For purposes of this section, the

4 term ‘‘insured depository institution’’ has the same mean5 ing as in section 3 of the Federal Deposit Insurance Act.

6 SEC. 134. CREDIT CARD ACCOUNTS RECEIVABLE SALES.

7 Section 11(e) of the Federal Deposit Insurance Act

8 (12 U.S.C. 1821(e)) is amended by adding at the end the

9 following new paragraphs:

10 ‘‘(14) SELLING CREDIT CARD ACCOUNTS RECEIV11 ABLE.—

12 ‘‘(A) NOTIFICATION REQUIRED.—An

13 undercapitalized insured depository institution (as

14 defined in section 38) shall notify the Corporation in

15 writing before entering into an agreement to sell

16 credit card accounts receivable.

17 ‘‘(B) WAIVER BY CORPORATION.—The Corpora18 tion may at any time, in its sole discretion and upon

19 such terms as it may prescribe, waive its right to re20 pudiate an agreement to sell credit card accounts re21 ceivable if the Corporation—

22 ‘‘(i) determines that the waiver is in the

23 best interests of the deposit insurance fund;

24 and
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1 ‘‘(ii) provides a written waiver to the sell2 ing institution.

3 ‘‘(C) EFFECT OF WAIVER ON SUCCESSORS.—

4 ‘‘(i) IN GENERAL.—If, under subparagraph

5 (B), the Corporation has waived its right to re6 pudiate an agreement to sell credit card ac7 counts receivable—

8 ‘‘(I) any provision of the agreement

9 that restricts solicitation of a credit card

10 customer of the selling institution, or the

11 use of a credit card customer list of the in12 stitution, shall bind any receiver or con13 servator of the institution; and

14 ‘‘(II) the Corporation shall require

15 any acquirer of the selling institution, or of

16 substantially all of the selling institution’s

17 assets or liabilities, to agree to be bound

18 by a provision described in subclause (I) as

19 if the acquirer were the selling institution.

20 ‘‘(ii) EXCEPTION.—Clause (i)(II) does

21 not—

22 ‘‘(I) restrict the acquirer’s authority

23 to offer any product or service to any per24 son identified without using a list of the
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1 selling institution’s customers in violation

2 of the agreement;

3 ‘‘(II) require the acquirer to restrict

4 any preexisting relationship between the

5 acquirer and a customer; or

6 ‘‘(III) apply to any transaction in

7 which the acquirer acquires only insured

8 deposits.

9 ‘‘(D) WAIVER NOT ACTIONABLE.—The Cor10 poration shall not, in any capacity, be liable to any

11 person for damages resulting from waiving or failing

12 to waive the Corporation’s right under this section

13 to repudiate any contract or lease, including an

14 agreement to sell credit card accounts receivable. No

15 court shall issue any order affecting any such waiver

16 or failure to waive.

17 ‘‘(E) OTHER AUTHORITY NOT AFFECTED.—

18 This paragraph does not limit any other authority of

19 the Corporation to waive the Corporation’s right to

20 repudiate an agreement or lease under this section.

21 ‘‘(15) CERTAIN CREDIT CARD CUSTOMER LISTS

22 PROTECTED.—

23 ‘‘(A) IN GENERAL.—If any insured depository

24 institution sells credit card accounts receivable under

25 an agreement negotiated at arm’s length that pro-
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1 vides for the sale of the institution’s credit card cus2 tomer list, the Corporation shall prohibit any party

3 to a transaction with respect to the institution under

4 this section or section 13 from using the list except

5 as permitted under the agreement.

6 ‘‘(B) FRAUDULENT TRANSACTIONS EX7 CLUDED.—Subparagraph (A) does not limit the Cor8 poration’s authority to repudiate any agreement en9 tered into with the intent to hinder, delay, or de10 fraud the institution, the institution’s creditors, or

11 the Corporation.’’.

12 SEC. 135. CHANGES TO THE FEDERAL HOME LOAN BANK

13 ACT TO PROMOTE CREDIT AVAILABILITY

14 (a) Section 10(a) of the Federal Home Loan Bank

15 Act (12 U.S.C. 1430(a)) is amended—

16 (1) by redesignating subparagraphs (4) and (5)

17 as subparagraphs (5) and (6), respectively;

18 (2) in newly redesignated subparagraph (5) (as

19 redesignated by subsection (a)(1) of this section), by

20 inserting ‘‘nonresidential’’ after the first ‘‘Other’’;

21 (3) by inserting new subparagraph (4) as fol22 lows:

23 ‘‘(4) Other residential real estate-related collat24 eral acceptable to the Bank.’’; and
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1 (4) in newly redesignated subparagraph (6) (as

2 redesignated by subsection (a)(1) of this section), by

3 striking ‘‘(4)’’ and inserting ‘‘(5)’’.

4 (b) Section 11(h) of the Federal Home Loan Bank

5 Act (12 U.S.C. 1431(h)) is amended by inserting after

6 ‘‘Federal Home Loan Bank System,’’ the following clause:

7 ‘‘the purchase of participation interests in residential con8 struction loans that are originated by member institutions

9 and that comply with uniform Federal regulations on real

10 estate lending standards under subsection (o) of section

11 1828 of title 12 of the United States Code, the authority

12 to enhance the credit quality of any such participation in13 terests in residential construction loans that the Banks re14 sell,’’.

15 TITLE II—REGULATORY

16 MICROMANAGEMENT

17 SEC. 201. REGULATORY STANDARDS.

18 Section 39 of the Federal Deposit Insurance Act (12

19 U.S.C. 1831s) (as added by section 132 of the Federal

20 Deposit Insurance Corporation Improvement Act of 1991)

21 is amended—

22 (a) in subsection (a), by inserting ‘‘subject to

23 this section’’ after ‘‘all insured depository institu24 tions and depository institution holding companies’’;
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1 (b) in subsection (b), by inserting ‘‘subject to

2 this section’’ after ‘‘all insured depository institu3 tions and depository institution holding companies’’;

4 (c) in subsection (c), by inserting ‘‘subject to

5 this section’’ after ‘‘all insured depository institu6 tions’’;

7 (d) in subsection (e)(1)(A), by inserting ‘‘sub8 ject to this section’’ after ‘‘insured depository insti9 tution or depository institution holding company’’;

10 (e) in subsection (e)(2), by inserting ‘‘subject to

11 this section’’ after ‘‘insured depository institutions

12 or depository institution holding company’’; and

13 (f) by inserting the following new subsection

14 (h):

15 ‘‘(h) APPLICABILITY.—

16 ‘‘(1) IN GENERAL.—This section shall not apply

17 to any adequately capitalized or well capitalized in18 sured depository institution (as defined in section

19 38) which has a CAMEL composite rating of 1 or

20 2 under the Uniform Financial Institution Rating

21 System or an equivalent rating under a comparable

22 system.

23 ‘‘(2) DISCRETION.—Each appropriate Federal

24 banking agency may waive compliance with the re25 quirements of this section, either partially or fully
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1 and on a case-by-case basis, where such action will

2 not threaten the safety and soundness of the institu3 tion.’’.

4 SEC. 202. PAPERWORK REDUCTION REVIEW.

5 Not later than 180 days after the date of enactment

6 of this Act, each appropriate Federal banking agency, in

7 consultation with insured depository institutions and other

8 interested parties, shall—

9 (a) review the extent to which current regula10 tions require insured depository institutions to

11 produce unnecessary internal written policies; and

12 (b) eliminate such requirements, where appro13 priate.

14 For purposes of this section, the terms ‘‘insured deposi15 tory institution’’ and ‘‘appropriate Federal banking agen16 cy’’ have the same meanings as in section 3 of the Federal

17 Deposit Insurance Act.

18 SEC. 203. RULES ON DEPOSIT TAKING.

19 Section 29(g)(3) of the Federal Deposit Insurance

20 Act (12 U.S.C. 1831f(g)(3)) is amended—

21 (1) by inserting ‘‘undercapitalized’’ after ‘‘in22 cludes any’’; and

23 (2) by inserting ‘‘undercapitalized’’ after ‘‘em24 ployee of any’’.
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1 SEC. 204. ADEQUATE TRANSITION PERIOD FOR NEW REGU2 LATIONS.

3 (a) ADEQUATE TRANSITION PERIOD FOR NEW REG4 ULATIONS.—No new regulation issued by a Federal bank5 ing agency which imposes additional reporting, disclosure

6 or other requirements on insured depository institutions

7 shall be effective prior to 180 days from the date that reg8 ulation becomes final unless—

9 (1) the agency makes a finding that an emer10 gency exists which requires sooner action or that

11 such a delay would have a substantial impact upon

12 the safety and soundness of the industry; or

13 (2) explicitly directed by Congress.

14 (b) DEFINITION.—For purposes of this section, the

15 terms ‘‘Federal banking agency’’ and ‘‘insured depository

16 institution’’ have the same meanings as in section 3 of

17 the Federal Deposit Insurance Act.

18 TITLE III—UNNECESSARY COST,

19 PAPERWORK AND REGULATION

20 Subtitle A—General Provisions

21 SEC. 301. ANNUAL EXAMINATIONS.

22 (a) IN GENERAL.—Section 10 of the Federal Deposit

23 Insurance Act (12 U.S.C. 1820) (as amended by section

24 111 of the Federal Deposit Insurance Corporation Im25 provement Act of 1991) is amended—
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1 (1) SMALL INSTITUTION TREATMENT.—In sub2 section (d), delete paragraph (4) and insert the fol3 lowing new paragraph:

4 (4) 2-YEAR RULE FOR CERTAIN SMALL INSTI5 TUTIONS.—Paragraphs (1), (2), and (3) shall apply

6 with ‘24-month’ substituted for ‘12-month’ if—

7 ‘‘(A) the insured depository institution has

8 total assets of less than $250,000,000;

9 ‘‘(B) the institution is well capitalized, as

10 defined in section 38;

11 ‘‘(C) when the institution was most re12 cently examined, it was found to be well man13 aged, had solid earnings, had been profitable

14 for the previous 2 years, and its composite con15 dition was found to be good;

16 ‘‘(D) the insured depository institution is

17 not currently subject to a formal enforcement

18 order by the appropriate Federal banking agen19 cy; and

20 ‘‘(E) no person acquired control of the in21 stitution during the 12-month period in which

22 a full-scope, on-site examination would be re23 quired but for this paragraph.

24 ‘‘The dollar amount in the preceding sentence shall

25 be adjusted annually after December 31, 1992, by the an-
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1 nual percentage increase in the Consumer Price Index for

2 Urban Wage Earners and Clerical Workers published by

3 the Bureau of Labor Statistics.’’.

4 (2) STATE EXAMINATIONS.—In subsection (d),

5 delete paragraph (3) and insert the following new

6 paragraph:

7 ‘‘(3) STATE EXAMINATIONS ACCEPTABLE.—The

8 examination requirement established under para9 graph (1) may be satisfied by an examination of the

10 insured depository institution conducted by the state

11 during the 12-month period if the appropriate Fed12 eral banking agency determines that the state exam13 ination carries out the purposes of this subsection.’’.

14 (3) CERTAIN DEPOSITORY INSTITUTIONS WITH15 IN HOLDING COMPANIES.—At the end of subsection

16 (d), add the following new paragraph:

17 ‘‘(7) CERTAIN INSTITUTIONS WITHIN DEPOSI18 TORY INSTITUTION HOLDING COMPANIES.—The ap19 propriate Federal banking agency may exempt any

20 insured depository institution owned or controlled by

21 a depository institution owned or controlled by a de22 pository institution holding company from the re23 quirements of this subsection where—

24 ‘‘(A) the agency is satisfied, after review25 ing the holding company’s internal controls and
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1 examination procedures, that adequate controls

2 and procedures exist within the holding com3 pany structure; or

4 ‘‘(B) the insured depository institutions

5 owned or controlled by the depository institu6 tion holding company which hold a substantial

7 majority of the total assets of all insured depos8 itory institution assets owned or controlled by

9 the depository institution holding company have

10 been examined pursuant to the requirements of

11 this subsection.’’.

12 SEC. 302. COORDINATED EXAMINATIONS.

13 (a) COORDINATED STATE AND FEDERAL EXAMINA14 TIONS.—Section 10(d) of the Federal Deposit Insurance

15 Act (12 U.S.C. 1820(d)) (as amended by section 301 of

16 this Act) is amended by inserting after paragraph (7) the

17 following new paragraph:

18 ‘‘(8) COORDINATED EXAMINATIONS.—Each ap19 propriate Federal banking agency shall, to the ex20 tent practicable—

21 ‘‘(A) coordinate all examinations to be con22 ducted by that agency at an insured depository

23 institution; and

24 ‘‘(B) work with other appropriate Federal

25 banking agencies and appropriate State bank
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1 supervisors to coordinate examinations to be

2 conducted at an insured depository institution.

3 so as to minimize the disruptive effects of such examina4 tions on institution operations.’’.

5 (b) TECHNICAL AND CONFORMING AMENDMENT.—

6 Section 3(r) of the Federal Deposit Insurance Act (12

7 U.S.C. 1813 (r)) is amended to read as follows:

8 ‘‘(r) APPROPRIATE STATE BANK SUPERVISOR.—The

9 term ‘appropriate State bank supervisor’ means any offi10 cer, agency, or other entity of any state which has primary

11 regulatory authority over State banks or State savings as12 sociations in such State.’’.

13 SEC. 303. DIFFERENCES IN ACCOUNTING PRINCIPLES.

14 Section 37(a)(2) of the Federal Deposit Insurance

15 Act (12 U.S.C. 1831n(a)(2)) (as added by section 121 of

16 the Federal Deposit Insurance Corporation Improvement

17 Act of 1991) is amended by adding the following new sub18 paragraph (C)—

19 ‘‘(C) MINIMIZE DIFFERENCES.—Notwith20 standing subparagraph (B), each appropriate

21 Federal banking agency and the Corporation

22 shall require insured depository institutions to

23 use accounting principles consistent with gen24 erally accepted accounting principles to the ex25 tent practicable so as to minimize differences
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1 between statements and reports, and thereby

2 reduce the compliance burdens and costs on in3 sured depository institutions.’’.

4 SEC. 304. REDUCTION OF CALL REPORT BURDENS.

5 (a) REGULATORY REVIEW OF CALL REPORT BUR6 DENS.—

7 (1) IN GENERAL.—Within 60 days after the

8 date of enactment of this Act, each appropriate Fed9 eral banking agency shall review the regulatory bur10 den and costs incurred by insured depository institu11 tions during their preparation of reports of condi12 tion.

13 (2) FACTORS TO BE CONSIDERED.—In conduct14 ing its review, each agency shall consider all relevant

15 factors that it deems necessary to correctly deter16 mine the extent of the burden and costs, including—

17 (A) the actual dollar cost to financial insti18 tutions in preparing such reports;

19 (B) the time and resources expended to

20 meet regulatory directives;

21 (C) the frequency in which the agency has

22 modified the type(s) of information required to

23 be reported in such reports and the costs and

24 burdens associated with complying with such

25 modifications; and
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1 (D) the extent to which such costs and

2 burdens, viewed within the overall context of

3 the total regulatory burden and cost incurred

4 by insured depository institutions in their day5 to-day operations, impact upon the availability

6 of credit.

7 (3) CORRECTIVE MEASURES.—After conducting

8 its review, each appropriate Federal banking agency

9 shall revise its call report requirements to remove

10 any unnecessary burdens and costs. Prior to any

11 subsequent modification in call report requirements,

12 each agency shall consider the extent to which such

13 modifications impose unnecessary regulatory burdens

14 and costs upon insured depository institutions.

15 (4) DEFINITIONS.—For purposes of this sec16 tion, the terms ‘‘insured depository institution’’ and

17 ‘‘appropriate Federal banking agency’’ have the

18 same meanings as in section 3 of the Federal De19 posit Insurance Act.

20 (b) REPEAL OF PUBLICATION REQUIREMENTS.—

21 (1) The 5th sentence of section 5211(a) of the

22 Revised Statutes (12 U.S.C. 161(a)) is amended by

23 striking ’’; and the statement of resources and liabil24 ities in the same form in which it is made to the

25 Comptroller shall be published in a newspaper’’ and
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1 all that follows through the period and inserting a

2 period.

3 (2) Section 5211(c) of the Revised Statutes (12

4 U.S.C. 161(c) is amended by striking the 4th sen5 tence.

6 (3) Section 7(a)(1) of the Federal Deposit In7 surance Act is amended by striking the 4th sentence.

8 (4) The last sentence of the 6th undesignated

9 paragraph of section 9 of the Federal Reserve Act

10 (12 U.S.C. 324) is amended by striking ‘‘and shall

11 be published’’ and all that follows through the end

12 of the sentence and inserting a period.

13 (c) AMENDMENT RELATING TO NATIONAL BANKS.—

14 Section 5211(a) of the Revised Statutes (12 U.S.C.

15 161(a)) is amended by adding at the end the following

16 sentence: ‘‘Any change in the form of report of condition

17 made under this subsection shall be effective only once in

18 a particular calendar year, and only after at least 6

19 months from the date that notice of the change is pub20 lished in the Federal Register, except that such change

21 may be effective on a subsequent date or after less notice

22 if the Comptroller makes a specific finding that an addi23 tional change in the form or a shorter advance-notice pe24 riod is necessary because of an emergency or change in

25 Federal law.’’.
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1 (d) AMENDMENT RELATING TO STATE NONMEMBER

2 INSURED BANKS.—Section 7(a) of the Federal Deposit

3 Insurance Act (12 U.S.C. 1817(a)) is amended by adding

4 at the end the following new paragraph:

5 ‘‘(10) TRANSITION PERIOD FOR CHANGES IN

6 REPORT REQUIREMENTS.—Any change in the form

7 of reports of condition made under this subsection

8 shall be effective only once in a particular calendar

9 year, and only after at least 6 months from the date

10 that notice of the change is published in the Federal

11 Register, except that such a change may be effective

12 on a subsequent date or after less notice if the

13 Board of Directors makes a specific finding that an

14 additional change in the form or a shorter advance15 notice period is necessary because of an emergency

16 or change in Federal law.’’.

17 (e) AMENDMENT RELATING TO STATE MEMBER

18 BANKS.—The 6th undesignated paragraph of section 9 of

19 the Federal Reserve Act (12 U.S.C. 324) is amended by

20 adding at the end the following sentence: ‘‘Any change in

21 the form of report of condition made under this subsection

22 shall be effective only once in a particular calendar year,

23 and only after at least 6 months from the date that notice

24 of the change is published in the Federal Register, except

25 that such a change may be effective on a subsequent date
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1 or after less notice if the Board of Governors of the Fed2 eral Reserve System makes a specific finding that an addi3 tional change in the form or a shorter advance-notice pe4 riod is necessary because of an emergency or change in

5 Federal law.’’.

6 (f) AMENDMENT RELATING TO SAVINGS ASSOCIA7 TION.—Section 5(v) of the Home Owners’ Loan Act (12

8 U.S.C. 1464(v) is amended by adding at the end the fol9 lowing new paragraph:

10 ‘‘(9) TRANSITION PERIOD FOR CHANGES IN RE11 PORT REQUIREMENTS.—Any change in the form of

12 reports of condition made under this subsection shall

13 be effective only once in a particular calendar year,

14 and only after at least 6 months from the date that

15 notice of the change is published in the Federal Reg16 ister, except that such a change may be effective on

17 a subsequent date or after less notice if the Director

18 makes a specific finding that an additional change in

19 the form or a shorter advance-notice period is nec20 essary because of an emergency or change in Fed21 eral law.’’.

22 (g) AMENDMENT RELATING TO CREDIT UNIONS.—

23 Section 202(a)(1) of the Federal Credit Union Act (12

24 U.S.C. 1782(a)(1)) is amended by adding at the end the

25 following sentence: ‘‘Any change in the form of reports
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1 of condition made under this subsection shall be effective

2 only once in a particular calendar year, and only after at

3 least 6 months from the date that notice of the change

4 is published in the Federal Register, except that such a

5 change may be effective on a subsequent date or after less

6 notice if the Board makes a specific finding that an addi7 tional change in the form or a shorter advance-notice pe8 riod is necessary because of an emergency or change in

9 Federal law.’’.

10 SEC. 305. REGULATORY REVIEW OF CAPITAL COMPLIANCE

11 BURDEN.

12 Not later than 180 days after the date of enactment

13 of this Act, the Federal Financial Institutions Examina14 tion Council, in consultation with insured depository insti15 tutions and other interested parties, shall—

16 (a) review the extent to which current compliance re17 quirements associated with risk-based capital rules have

18 an unnecessarily costly and burdensome effect on commu19 nity banks; and

20 (b) where appropriate, reduce such costs and bur21 dens.

22 For purposes of this section, the term ‘‘insured de23 pository institution’’ has the same meaning as in section

24 3 of the Federal Deposit Insurance Act.
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1 SEC. 306. BRANCH CLOSURES.

2 Section 39 of the Federal Deposit Insurance Act (12

3 U.S.C. 1831p) (as added by section 228 of the Federal

4 Deposit Insurance Corporation Improvement Act of 1991)

5 is amended by adding at the end the following new sub6 sections:

7 ‘‘(d) DEFINITIONS.—For purposes of this section, the

8 term ‘‘branch’’ shall not include:

9 ‘‘(1) automated teller machines;

10 ‘‘(2) a branch acquired through merger, consoli11 dation, purchase, assumption or other method that

12 is located in a local market area currently served by

13 another branch of the acquiring institution;

14 ‘‘(3) a branch that is closed and reopened in

15 another location within the same local market area

16 which would continue to provide banking services to

17 substantially all of the customers currently served by

18 the branch that is closed;

19 ‘‘(4) a branch that is closed in connection

20 with—

21 ‘‘(A) an emergency acquisition under—

22 ‘‘(i) section 11(n); or

23 ‘‘(ii) subsections (f) or (k) of section

24 13; or

25 ‘‘(B) any assistance provided by the Cor26 poration under section 13(c); and
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1 ‘‘(5) any other branch closure whose exemption

2 from the notice requirements of this section would

3 not produce a result inconsistent with the purposes

4 of this section. The appropriate Federal banking

5 agency shall, by regulation, determine the cir6 cumstances under which such exemptions will be

7 granted.

8 ‘‘(e) EFFECTIVE DATE.—The amendments made by

9 this section shall become effective on the date of enact10 ment of the Federal Deposit Insurance Corporation Im11 provement Act of 1991.’’.

12 SEC. 307. BANK SECRECY ACT AMENDMENTS.

13 (a) STAFF COMMENTARIES.—Title 31 of the United

14 States Code is amended to add the following new section

15 5327:

16 ‘‘SEC. 5327. STAFF COMMENTARIES.

17 ‘‘The Secretary of the Treasury shall review all regu18 lations promulgated under this title on an annual basis

19 and seek comment from the public pursuant to this review.

20 The Secretary shall publish all written rulings interpreting

21 this title, as well as a staff commentary to the regulations

22 issued under this title. This commentary shall be issued

23 on an annual basis.’’.

24 (b) LOG REQUIREMENTS.—Section 5325(a)(1) of

25 title 31 of the United States Code is amended—
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1 (1) by striking subparagraphs (A) and (B); and

2 (2) by inserting the following new paragraph

3 (1):

4 ‘‘(1) the individual has a transaction account

5 with such financial institution and the financial in6 stitution verifies that fact through a signature card

7 or other information maintained by such institution

8 in connection with the account of such individual.’’.

9 (c) EXEMPTION PROCESS.—Section 5318(a)(5) of

10 title 31 of the United States Code is amended—

11 (1) by inserting ‘‘or exception’’ after ‘‘an appro12 priate exemption’’; and

13 (2) by inserting ‘‘only after receiving comments

14 from the entities covered by this chapter. The Sec15 retary must take into account the effect that

16 changes to the exemption or exception process will

17 have on the cost and efficiency of the reporting proc18 ess.’’ after the words ‘‘under this subchapter’’.

19 (d) CUSTOMER FILINGS.—Section 5313(a) of title 31

20 of the United States Code is amended by striking ‘‘, the

21 institution and any other participant in the transaction

22 the Secretary may prescribe shall file a report’’ and insert23 ing ‘‘the person who participates in the transaction shall

24 file a report’’.
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1 (e) INFLATION ADJUSTMENTS ON CTR AMOUNTS.—

2 Section 5313(a) of title 31 of the United States Code is

3 amended by inserting after the second sentence the follow4 ing new sentence: ‘‘The Secretary must review the report5 ing requirements mentioned above by September 1 of each

6 calendar year to determine if the reporting amount pre7 scribed by the Secretary should be adjusted to account for

8 inflation, cost effectiveness of the requirement or the use9 fulness for law enforcement purposes. The Secretary must

10 submit a written report to the Congress each year disclos11 ing how the reporting threshold decision was reached. The

12 report must include an analysis of how the change will

13 affect domestic financial institutions.’’.

14 SEC. 308. CLARIFYING AMENDMENTS.

15 (a) DATA COLLECTIONS.—Section 7(a)(8) of the

16 Federal Deposit Insurance Act (12 U.S.C. 1817(a)(8)) (as

17 amended by Section 141(c) of the Federal Deposit Insur18 ance Corporation Improvement Act of 1991) is amended

19 to add at the end the following new sentence: ‘‘In prescrib20 ing reporting and other requirements pursuant to this

21 paragraph, the Corporation shall minimize the regulatory

22 burden imposed upon insured depository institutions.’’;
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1 SEC. 309. LIMITING POTENTIAL LIABILITY ON FOREIGN AC2 COUNTS.

3 (a) AMENDMENT TO THE FEDERAL RESERVE ACT.—

4 Section 25 of the Federal Reserve Act (12 U.S.C. 601 et

5 seq.) is amended by adding at the end the following:

6 ‘‘(11) LIMITATIONS ON LIABILITY.—A member

7 bank shall not be required to repay any deposit

8 made at a foreign branch of the bank if the branch

9 cannot repay the deposit due to—

10 ‘‘(i) an act of war, insurrection or civil

11 strife, or

12 ‘‘(ii) an action by a foreign government or

13 instrumentality (whether de jure or de facto) in

14 the country in which the branch is located,

15 unless the member bank has expressly agreed in

16 writing to repay the deposit under those cir17 cumstances. The Board is authorized to prescribe

18 such regulations as it deems necessary to implement

19 this paragraph.’’.

20 (b) AMENDMENTS TO THE FEDERAL DEPOSIT IN21 SURANCE ACT.—

22 (1) Section 18 of the Federal Deposit Insurance

23 Act (12 U.S.C. 1828) is amended by adding at the

24 end the following:

25 ‘‘( ) SOVEREIGN RISK.—(1) Section 25(11) of the

26 Federal Reserve Act shall apply to every nonmember in-
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1 sured bank in the same manner and to the same extent

2 as if the nonmember insured bank were a member bank.’’.

3 (2) CONFORMING AMENDMENT.—Subparagraph

4 (A) of Section 3(1)(5) of the Federal Deposit Insur5 ance Act (12 U.S.C. 1813(l)(5)) is amended to read

6 as follows:

7 ‘‘(A) any obligation of a depository institu8 tion which is carried on the books and records

9 of an office of such bank or savings association

10 located outside of any State unless—

11 ‘‘(i) such obligation would be a deposit

12 if it were carried on the books and records

13 of the depository institution, and payable

14 at, an office located in any State; and

15 ‘‘(ii) the contract evidencing the obli16 gation provides by express terms, and not

17 by implication, for payment at an office of

18 the depository institution located in any

19 State; and’’.

20 (c) EXISTING CLAIMS NOT AFFECTED.—The amend21 ments made by this section shall not be construed to affect

22 any claim arising from events (described in section 25(11)

23 of the Federal Reserve Act, as added by subsection (a))

24 that occurred before the date of enactment of this section.
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1 SEC. 310. REPEAL OUT-DATED STATUTORY PROVISION.

2 Section 5204 of the Revised Statutes (12 U.S.C. 56)

3 is amended—

4 (1) in the second sentence, by striking ‘‘deduct5 ing therefrom its losses and bad debts’’ and insert6 ing ‘‘subject to other provisions of law’’; and

7 (2) by striking the third sentence.

8 SUBTITLE B—HOLDING COMPANY EFFICIENCIES

9 SEC. 321. EXPEDITED PROCEDURES FOR FORMING A BANK

10 HOLDING COMPANY.

11 Section 3(a) of the Bank Holding Company Act of

12 1956 (12 U.S.C. 1842(a)) is amended—

13 (1) by striking out ‘‘or (B)’’ and inserting in

14 lieu thereof ‘‘(B),’’; and

15 (2) by inserting before the period at the end of

16 the second sentence the following: ‘‘, or (C) with 30

17 days prior notification to the Board, the acquisition

18 by a company of control of a bank in a reorganiza19 tion in which a person or group of persons exchange

20 their shares of the bank for shares of a newly

21 formed bank holding company and receive, after the

22 reorganization, substantially the same proportional

23 share interest in the holding company as they held

24 in the bank except for changes in shareholders’ in25 terests resulting from the exercise of dissenting

26 shareholders’ rights under State or Federal law if,
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1 immediately following the acquisition, the bank hold2 ing company meets the capital and other financial

3 standards prescribed by the Board by regulation for

4 such a bank holding company and the holding com5 pany does not engage in any activities other than

6 those of banking or managing and controlling banks.

7 In promulgating regulations pursuant to this sub8 section, the Board shall not require more capital for

9 the subsidiary bank immediately following the reor10 ganization than is required for a similarly sized bank

11 that is not a subsidiary of a bank holding com12 pany.’’.

13 SEC. 322. EXEMPTION OF CERTAIN HOLDING COMPANY

14 FORMATIONS FROM REGISTRATION UNDER

15 THE SECURITIES ACT OF 1933.

16 Section 4 of the Securities Act of 1933 (15 U.S.C.

17 77d) is amended by adding at the end thereof the follow18 ing new paragraph:

19 ‘‘(7) transactions involving offers or sales of eq20 uity securities, in connection with the acquisition of

21 a bank by a company under section 3(a) of the Bank

22 Holding Company Act of 1956 (12 U.S.C. 1842(A)),

23 if the acquisition occurs solely as part of a reorga24 nization in which a person or group of persons ex25 change their shares of a bank for shares of a newly
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1 formed bank holding company and receive, after that

2 reorganization, substantially the same proportional

3 share interests in the bank holding company as they

4 held in the bank, except for changes in shareholders’

5 interests resulting from the exercise of dissenting

6 shareholders’ rights under State or Federal law.’’.

7 SEC. 323. EXPEDITED PROCEDURES FOR BANK HOLDING

8 COMPANIES TO SEEK APPROVAL TO ENGAGE

9 IN NONBANKING ACTIVITIES.

10 Paragraph (8) of section 4(c) for the Bank Holding

11 Company Act of 1956 (12 U.S.C. 1843(c)) is amended—

12 (1) by redesignating clauses (i) and (ii) of sub13 paragraphs (C), (D), and (E) as subclauses (I) and

14 (II), respectively;

15 (2) by redesignating subparagraphs (A) through

16 (G), and any cross references thereto as clauses (i)

17 through (vii), respectively; and

18 (3) by striking out all that precedes ‘‘purposes

19 of this subsection it is not’’ and inserting in lieu

20 thereof the following:

21 ‘‘(8)(A) ACTIVITIES CLOSELY RELATED TO

22 BANKING.—In accordance with the limitations and

23 requirements contained in subparagraphs (B) and

24 (C) of this paragraph, shares of any company whose

25 activities the Board has determined (by order or reg-
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1 ulation) to be so closely related to banking or man2 aging or controlling banks as to be a proper incident

3 thereto.

4 ‘‘(B) NOTICE REQUIREMENTS.

5 ‘‘(i) No bank holding company shall

6 engage in any activity or acquire the

7 shares of a company pursuant to this para8 graph, either de novo or by an acquisition

9 in whole or in part of a going concern, un10 less the Board has been given sixty days

11 prior written notice of that proposal and,

12 within that period, the Board has not is13 sued an order—

14 ‘‘(I) disapproved the proposal, or

15 ‘‘(II) extending the time period

16 in accordance with clause (iii) below.

17 ‘‘(ii)(I) An acquisition may be made

18 prior to the expiration of the disapproval

19 period if the Board issues a written state20 ment of its intent not to disapprove the

21 proposal.

22 ‘‘(II) The Board shall publish in

23 the Federal Register notice of receipt

24 of a notice under this paragraph in25 volving insurance or any other non-
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1 banking activity not previously deter2 mined by the Board (by order or reg3 ulation) to be closely related to bank4 ing, and provide a reasonable period

5 for public comment. The Board shall

6 issue an order involving any such no7 tice prior to the commencement of the

8 proposed insurance or new activity.

9 ‘‘(III) No notice under this para10 graph is required for a bank holding

11 company to establish de novo an office

12 to engage in any activity previously

13 authorized for that bank holding com14 pany under this paragraph or to

15 change location of an office engaged

16 in that activity.

17 ‘‘(iii) The notice submitted to the

18 Board shall contain such information as

19 the Board shall prescribe by regulation or

20 by specific request in connection with a

21 particular notice, except that the Board

22 may require only such information as may

23 be relevant to the nature and scope of the

24 proposed activity and to the Board’s eval25 uation of the notice under the criteria
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1 specified in clause (iv). If the Board re2 quires additional relevant information be3 yond that provided in the notice, the Board

4 may by order extend the time period pro5 vided in clause (i) of this subparagraph

6 until it has received that information, and

7 the activity that is the subject of the notice

8 may be commenced within sixty days of the

9 date of that receipt unless the Board is10 sues a disapproval order as provided in

11 clause (i). Such an extension order is

12 reviewable under section 9 of this Act.

13 ‘‘(iv) In determining whether to dis14 approve a notice under this paragraph, the

15 Board shall consider whether the perform16 ance of the activity described in the notice

17 by a bank holding company or subsidiary

18 thereof can reasonably be expected to

19 produce benefits to the public, such as

20 greater convenience, increased competition,

21 or gains in efficiency, that outweigh pos22 sible adverse effects, such as undue con23 centration of resources, decreased or unfair

24 competition, conflicts or interests, or un25 sound banking practices. In orders and
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1 regulations under this paragraph, the

2 Board may differentiate between activities

3 commenced de novo and activities com4 menced by the acquisition, in whole or in

5 part, of a going concern.

6 ‘‘(c) The Board shall by order set forth the reasons

7 for any disapproval or determination not to disapprove a

8 notice under this paragraph.

9 ‘‘(C) INSURANCE ACTIVITIES NOT CLOSELY

10 RELATED TO BANKING.—For’’.

11 SEC. 324. REDUCTION OF POST-APPROVAL WAITING PE12 RIOD FOR BANK HOLDING COMPANY ACQUI13 SITIONS.

14 Section 11(b)(1) of the Bank Holding Company Act

15 of 1956 (12 U.S.C. 1849(b)(1)) is amended by adding be16 fore the period at the end of the fourth sentence thereof

17 the following: ‘‘or if no adverse comment has been received

18 regarding section 4(c)(8(C) or section 4(j) of this act, such

19 shorter period of time as may be prescribed by the Board

20 with the concurrence of the Attorney General, but in no

21 event less than five days.’’.

22 SEC. 325. REDUCTION OF POST-APPROVAL WAITING PE23 RIOD FOR BANK MERGERS.

24 Section 18(c)(6) of the Federal Deposit Insurance

25 Act (12 U.S.C. 1828(c)(6)) is amended by inserting before
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1 the period at the end of the last sentence thereof the fol2 lowing: ‘‘or such shorter period of time as may be pre3 scribed by the agency with the concurrence of the Attorney

4 General, but in no event less than five days.’’.

5 TITLE IV—CONSUMER INCONVENIENCE,

6 PAPERWORK, AND COST; OTHER NON7 SUPERVISORY REFORMS

8 Subtitle A—Consumer Benefits and Lending

9 Process Improvements

10 SEC. 401. STREAMLINED LENDING PROCESS FOR

11 CONSUMER BENEFIT.

12 (a) FEDERAL RESERVE STUDY.—Within 12 months

13 of enactment of this Act, the Board of Governors of the

14 Federal Reserve System, in consultation with the Depart15 ment of Housing and Urban Development, shall conduct

16 a study and report to Congress on ways to streamline the

17 credit-granting process.

18 (b) FOCUS.—In carrying out subsection (a), the

19 Board shall—

20 (1) identify ways to streamline the home mort21 gage, small business and consumer lending processes

22 so as to—

23 (A) reduce consumer inconvenience, cost

24 and time delays; and
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1 (B) minimize cost and burdens on insured

2 depository institutions and credit unions;

3 (2) take such regulatory action, as appropriate,

4 to meet the objectives of paragraph (1); and

5 (3) provide Congress with legislative rec6 ommendations on changes necessary to carry out the

7 purposes of this section.

8 (c) COMMENT.—In carrying out the objectives of this

9 section, the Board shall solicit comments from other Fed10 eral banking agencies, consumer groups, insured deposi11 tory institutions, credit unions, and other interested par12 ties.

13 (d) DEFINITION.—For purposes of this section, the

14 term ‘‘insured depository institution’’ has the same mean15 ing as in section 3 of the Federal Deposit Insurance Act.

16 SEC. 402. EXEMPTION FOR CERTAIN BORROWERS.

17 Section 104 of the Truth in Lending Act (15 U.S.C.

18 1603) is amended by adding at the end the following:

19 ‘‘(7) Credit transactions involving consumers

20 who earn more than $200,000 annually or have net

21 assets in excess of $1,000,000 at the time of such

22 transaction.’’.
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1 SEC. 403. MODIFICATION OF WAIVER OF RIGHT OF RESCIS2 SION.

3 Section 125(d) of the Truth in Lending Act (15

4 U.S.C. 1635(d)) is amended by striking ‘‘, if it finds that

5 such action is necessary in order to permit homeowners

6 to meet bona fide personal financial emergencies,’’.

7 SEC. 404. ALTERNATIVE DISCLOSURES FOR ADJUSTABLE

8 RATE MORTGAGES

9 (a) Section 127A(a)(2)(G) of the Truth in Lending

10 Act (15 U.S.C. 1637a(a)(2)(G)) is amended by inserting

11 before the semicolon ‘‘, or a statement that the monthly

12 payment may increase or decrease significantly due to in13 creases in the annual percentage rate’’.

14 (b) In section 128(a) of the Truth in Lending Act

15 (15 U.S.C. 1638(a), insert at the end the following new

16 paragraph (14):

17 ‘‘(14) In any variable rate residential mortgage

18 transaction, at the creditors’ option, a statement

19 that the monthly payment may increase or decrease

20 substantially, or an historical example illustrating

21 the effects of interest rate changes implemented ac22 cording to the loan program.’’.

23 SEC. 405. EXEMPTION FOR BUSINESS ACCOUNTS.

24 Section 274 of the Truth in Savings Act (15 U.S.C.

25 4313) is amended by striking subsection (1) and inserting

26 the following in its place:
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1 ‘‘(1) The term ‘account’ means any account in2 tended for use by and generally used by consumers

3 primarily for personal, family, or household purposes

4 by a depository institution into which a customer de5 posits funds, including demand accounts, time ac6 counts, negotiable order of withdrawal accounts, and

7 share draft accounts.’’.

8 SEC. 406. ELIMINATION OF DUPLICATE DISCLOSURES FOR

9 HOME EQUITY LOANS.

10 Section 4 of the Real Estate Settlement Procedures

11 Act (12 U.S.C. 2603) is amended by inserting in sub12 section (a) after the first sentence: ‘‘except that for feder13 ally related mortgage loans secured by a subordinate lien

14 on residential property subject to section 127A(a) of the

15 Truth in Lending Act (15 U.S.C. 1637a(a)), the disclo16 sures of section 127A(a) of the Truth in Lending Act (15

17 U.S.C. 1637a(a)) may be used in place of the standard

18 real estate settlement form.’’

19 Subtitle B—Other Non-Supervisory Reforms

20 Part 1—Expedited Funds Availability and Electronic

21 Transfers

22 SEC. 411. AVAILABILITY SCHEDULES.

23 (a) TREASURY CHECKS.—Section 603(a)(2)(A) of

24 the Expedited Funds Availability Act (12 U.S.C.

25 4002(a)(2)(A)) is amended—
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1 (1) by redesignating clauses (i) and (ii) as

2 clauses (ii) and (iii), respectively; and

3 (2) by inserting before clause (ii), as redesig4 nated, the following:

5 ‘‘(i) is deposited in a receiving depository

6 institution which is staffed by individuals em7 ployed by such institutions;’’

8 (b) ON-US ITEMS.—Section 603(a)(2)(E) of the Ex9 pedited Availability Act (12 U.S.C. 4002(a)(2)(E)) is

10 amended by inserting ‘‘is staffed by individuals employed

11 by such institutions’’ after ‘‘branch of a depository institu12 tion’’.

13 (c) LOCAL CHECKS.—Section 603(b)(1) of the Expe14 dited Funds Availability Act (12 U.S.C. 4002(b)(1)) is

15 amended by striking ‘‘one business day’’ and inserting

16 ‘‘two business days’’.

17 SEC. 412. DEFINITION OF A NEW ACCOUNT.

18 Section 604(a) of Expedited Funds Availability Act

19 (12 U.S.C. 4003(a)) is amended by striking ‘‘thirty-day

20 period’’ and inserting ‘‘ninety-day period’’.

21 SEC. 413. JURISDICTION.

22 Section 611(f) of the Expedited Funds Availability

23 Act (12 U.S.C. 4010(f)) is amended in the first sentence

24 by inserting ‘‘or other entities participating in the pay25 ments system, including States and political subdivisions
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1 thereof on which checks are drawn.’’ after ‘‘depository in2 stitutions’’.

3 SEC. 414. UNAUTHORIZED ELECTRONIC FUND TRANSFERS.

4 Section 909(a)(1) of Electronic Fund Transfer Act

5 (15 U.S.C. 1693g(a)(1)) is amended by inserting ‘‘(or in

6 cases where the cardholder has substantially contributed

7 to the unauthorized use, including writing on or keeping

8 with the card or other means of access a personal identi9 fication or other security code, $500)’’ after ‘‘$50’’.

10 Part 2—Amendments to the Truth In Lending Act

11 SEC. 421. LIABILITY FOR UNAUTHORIZED USE OF CREDIT

12 CARDS.

13 Section 133(a) of the Truth in Lending Act (15

14 U.S.C. 1643(a)) is amended—

15 (1) by redesignating paragraph (2) as para16 graph (3); and

17 (2) by inserting after paragraph (1) the follow18 ing:

19 ‘‘(2)(A) Notwithstanding paragraph (1), a card20 holder shall be liable for the unauthorized use of a

21 credit card if—

22 ‘‘(i) the liability is in excess of $50; and

23 ‘‘(ii) the cardholder fails to notify the card

24 issuer of any unauthorized transaction which

25 appears on the statement of the cardholder’s
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1 account in connection with an extension of

2 consumer credit within 60 days of the receipt of

3 such statement.

4 ‘‘(B) The liability described in subparagraph

5 (A) shall not apply if the cardholder demonstrates

6 that the failure to timely notify the card issuer of

7 the unauthorized use was due to extenuating cir8 cumstances such as extended travel or hospitaliza9 tion, and notice was provided at the earliest possible

10 time thereafter.

11 ‘‘(C) the liability described in subparagraph (A)

12 shall only apply where the card issuer has provided

13 prior notice to the cardholder of such liability.’’.

14 Part 3—Homeownership Amendments

15 SEC. 431. HOME MORTGAGE DISCLOSURE ACT EXEMPTION.

16 The Home Mortgage Disclosure Act of 1975 (12

17 U.S.C. 2801 et. seq.) is amended in section 309 (12

18 U.S.C. 2808) by inserting at the end the following new

19 sentence: ‘‘The amount of total assets in the preceding

20 sentence shall be adjusted yearly on January 1 by the an21 nual percentage change in the Consumer Price Index re22 ported for the previous June 1.’’.
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1 SEC. 432. HOMEOWNERSHIP DEBT COUNSELING NOTIFICA2 TION.

3 Section 106(c)(5) of the Housing and Urban Devel4 opment Act of 1968 (12 U.S.C. 1701x(c)(5)) is amended:

5 (a) by inserting at the end the following new subpara6 graph (F):

7 ‘‘(F) AFFECT ON FORECLOSURE PROCEED8 INGS.— Failure of a creditor to comply with the

9 requirements of this subsection shall in no way

10 affect foreclosure proceedings under state law.’’;

11 and

12 (b) in subparagraph (B),—

13 (1) by inserting ‘‘(i)’’ before ‘‘The notification

14 required’’ and by renumbering clauses (i) and (ii) as

15 subclauses (I) and (II), respectively;

16 (2) by inserting the following new clause (ii)—

17 ‘‘(ii) Creditors shall not be required to

18 provide the notification required under

19 subparagraph (A) more than once annu20 ally.’’.

21 SEC. 433. ELIMINATION OF DUPLICATIVE DATA COLLEC22 TION.

23 Effective 6 months after the date of enactment of this

24 Act, no Federal banking agency shall require any institu25 tion for which it is the appropriate Federal banking agen26 cy (as defined in section 3(q) of the Federal Deposit In-
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1 surance Act) to prepare, file, or maintain any form for

2 the purpose of collection, analysis, or maintenance of ap3 propriate data to further the purposes of, or to fulfill the

4 requirements of, the Fair Housing Act, other than a form

5 for data collection, analysis, or maintenance required

6 under the Home Mortgage Disclosure Act of 1975.

7 Part 4—Amendments to the Real Estate Settlements

8 Procedures Act

9 SEC. 411. CLARIFY DISCLOSURE REQUIREMENTS.

10 Section 6 of the Real Estate Settlement Procedures

11 Act of 1974 (12 U.S.C. 2605) is amended—

12 (a) in subsection (a)(1)(B)—

13 (1) by inserting ‘‘at the choice of the per14 son making a federally related mortgage loan—

15 (i)’’ after ‘‘(B)’’;

16 (2) by redesignating clauses (i) and (ii) as

17 subclauses (I) and (II), respectively, and by

18 striking ‘‘and’’ at the end of newly redesignated

19 subclause (II) and inserting ‘‘or’’; and

20 (3) by inserting the following new clause

21 (ii):

22 ‘‘(ii) a statement that the person mak23 ing the loan has previously assigned, sold,

24 or transferred the servicing of federally re25 lated mortgage loans; and’’.
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1 (b) in subsection (a)(2), by inserting at the end

2 the following new sentence: ‘‘Notwithstanding the

3 previous sentences of this paragraph, the Secretary

4 shall also permit any person originating the loan, at

5 the choice of such person, to provide instead of the

6 percentage estimates required to be disclosed under

7 this paragraph a statement that the servicing may

8 be assigned, sold or transferred during the twelve9 month period beginning upon origination.’’.

10 SEC. 442. EXEMPTION OF BUSINESS LOANS.

11 The Real Estate Settlement Procedures Act of 1974

12 (12 U.S.C. 2601) is amended:

13 (1) by redesignating sections 4 (as amended by

14 Section 406 of this Act) through 19 as sections 5

15 through 20, respectively; and

16 (2) by inserting the following new section 4:

17 ‘‘SEC. 4. EXEMPTED TRANSACTIONS.—This title

18 does not apply to the following:

19 ‘‘(1) Credit transactions involving extensions of

20 credit primarily for business, commercial, or agricul21 tural purposes, or to government or governmental

22 agencies or instrumentalities, or to organizations; or

23 ‘‘(2) Credit transactions to finance or refinance

24 agricultural property (such as farms, ranches, aqua25 culture, or vineyards) constituting 25 or more acres
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1 regardless of whether the loan in part involves a lien

2 including residential property.’’.

3 TITLE V—COMMUNITY INVESTMENT

4 SEC. 501. COMMUNITY REINVESTMENT ACT AMENDMENTS.

5 (a) COMPLIANCE BURDENS.—Section 804 of the

6 Community Reinvestment Act of 1977 (12 U.S.C. 2903)

7 is amended—

8 (1) in paragraph (1), by striking ‘‘; and’’ and

9 inserting ‘‘;’’;

10 (2) in paragraph (2), by striking ‘‘.’’ and insert11 ing ‘‘; and’’; and

12 (3) by adding at the end the following new

13 paragraph (3):

14 ‘‘(3) minimize the regulatory paperwork bur15 dens and costs associated with compliance with this

16 Act, giving appropriate consideration and recogni17 tion to such factors as the nature and scope of the

18 institution’s business, its location and area of serv19 ice, and such other factors as may be appropriate.’’.

20 (b) SAFE HARBOR.—The Community Reinvestment

21 Act of 1977 (12 U.S.C. 2901 et seq.) is hereby amended

22 by adding the following new section:

23 ‘‘SEC. 809. SAFE HARBOR.—Notwithstanding section

24 804(2), an application for a deposit facility by—
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1 ‘‘(a) a regulated financial institution shall not

2 be denied on the basis of such institution’s compli3 ance with this Act if such institution received a rat4 ing in its last evaluation under Section 804 of ‘Out5 standing’ in its record of meeting community credit

6 needs, as provided in Section 807(b); or

7 ‘‘(b) a depository institution holding company,

8 as defined in section 3(w) of the Federal Deposit In9 surance Act (12 U.S.C. 1813(w)), shall not be de10 nied if—

11 ‘‘(1) regulated financial institution subsidi12 aries representing, in the aggregate, two-thirds

13 of the holding company’s regulated financial in14 stitution assets received a rating in their last

15 evaluation under section 804 of ‘Outstanding’;

16 and

17 ‘‘(2) the remaining regulated financial in18 stitution subsidiaries received a rating in their

19 last evaluation under section 804 of at least

20 ‘Satisfactory’.’’.

21 (c) INCREASED INCENTIVES TO LENDING TO LOW22 AND MODERATE-INCOME COMMUNITIES.—Section 804 of

23 the Community Reinvestment Act of 1977 (12 U.S.C.

24 2903) (as amended by section 501(a) of this Act) is

25 amended—
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1 (1) in paragraph (2), by striking ‘‘; and’’ and

2 inserting ‘‘;’’;

3 (2) in paragraph (3), by striking ‘‘.’’ and insert4 ing ‘‘; and’’; and

5 (3) by adding at the end the following new

6 paragraph (4):

7 ‘‘(4) provide the institution with credit, for

8 purposes of satisfying the requirements of this

9 Act, for investments in, and loans to,—

10 ‘‘(A) minority depository institutions and

11 women’s depository institutions (as defined in

12 section 808(b)); and

13 ‘‘(B) joint ventures or other entities or

14 projects which provide benefits to distressed

15 communities, as such term is defined by the ap16 propriate Federal financial supervisory agency,

17 ‘‘whether those minority or women’s depository institu18 tions, or those communities, are located within or outside

19 of the service area of the regulated financial institution.’’.

20 (d) SPECIAL PURPOSE BANKS.—The Community Re21 investment Act of 1977 (12 U.S.C. 2901 et seq.) is hereby

22 amended—

23 (1) in Section 803 (12 U.S.C. 2902), by insert24 ing the following new paragraph (5):
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1 ‘‘(5) the term ‘‘special purpose banks’’ means a

2 bank that does not generally accept retail deposits,

3 such as credit card banks and trust banks.’’; and

4 (2) in Section 804 (12 U.S.C. 2903) (as

5 amended by sections 501(a) and 501(c) of this

6 Act)—

7 (A) by inserting ‘‘(a)’’ before ‘‘In connec8 tion with’’;

9 (B) by inserting at the end the following

10 new subsection (b):

11 ‘‘(b) In conducting assessments pursuant to sub12 section (a) at special purpose banks, each appropriate

13 Federal financial supervisory agency shall take into con14 sideration the nature of business such banks are involved

15 in and develop standards under which such banks may be

16 deemed to have complied with the requirements of this Act

17 which are consistent with the specific nature of such busi18 nesses.’’.

19 (e) STATE EXAMS.—The Community Reinvestment

20 Act of 1977 (12 U.S.C. 2901 et seq.) is hereby amended

21 by adding after section 809 (as added by section 501(b))

22 the following new section:

23 ‘‘SEC. 810. STATE EXAMS.—The appropriate Federal

24 financial supervisory agency may accept examinations con25 ducted by State supervisory agencies pursuant to com-
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1 parable State community reinvestment laws in order to

2 satisfy the requirements of this Act.’’.

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