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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 900 Engrossed in Senate (ES)]

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
106th CONGRESS
  1st Session
                                 S. 900

_______________________________________________________________________

                                 AN ACT

 
To enhance competition in the financial services industry by providing 
a prudential framework for the affiliation of banks, securities firms, 
  insurance companies, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Financial Services 
Modernization Act of 1999''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

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

                        Subtitle A--Affiliations

Sec. 101. Glass-Steagall Act repealed.
Sec. 102. Financial activities.
Sec. 103. Conforming amendments. 
Sec. 104. Operation of State law.
     Subtitle B--Streamlining Supervision of Bank Holding Companies

Sec. 111. Streamlining bank holding company supervision.
Sec. 112. Authority of State insurance regulator and Securities and 
                            Exchange Commission.
Sec. 113. Role of the Board of Governors of the Federal Reserve System.
Sec. 114. Examination of investment companies.
Sec. 115. Equivalent regulation and supervision.
Sec. 116. Interagency consultation.
Sec. 117. Preserving the integrity of FDIC resources.
                Subtitle C--Activities of National Banks

Sec. 121. Authority of national banks to underwrite municipal revenue 
                            bonds.
Sec. 122. Subsidiaries of national banks.
Sec. 123. Agency activities.
Sec. 124. Prohibiting fraudulent representations.
Sec. 125. Insurance underwriting by national banks.
    Subtitle D--National Treatment of Foreign Financial Institutions

Sec. 151. National treatment of foreign financial institutions.
Sec. 152. Representative offices.
                TITLE II--INSURANCE CUSTOMER PROTECTIONS

Sec. 201. Functional regulation of insurance.
Sec. 202. Insurance customer protections.
Sec. 203. Federal and State dispute resolution.
                   TITLE III--REGULATORY IMPROVEMENTS

Sec. 301. Elimination of SAIF and DIF special reserves.
Sec. 302. Expanded small bank access to S corporation treatment.
Sec. 303. Meaningful CRA examinations.
Sec. 304. Financial information privacy protection.
Sec. 305. Cross marketing restriction; limited purpose bank relief; 
                            divestiture.
Sec. 306. ``Plain language'' requirement for Federal banking agency 
                            rules.
Sec. 307. Retention of ``Federal'' in name of converted Federal savings 
                            association.
Sec. 308. Community Reinvestment Act exemption.
Sec. 309. Bank officers and directors as officers and directors of 
                            public utilities.
Sec. 310. Control of bankers' banks.
Sec. 311. Multistate licensing and interstate insurance sales 
                            activities.
Sec. 312. CRA sunshine requirements.
Sec. 313. Interstate branches and agencies of foreign banks.
Sec. 314. Disclosures to consumers under the Truth in Lending Act.
Sec. 315. Approval for purchases of securities.
Sec. 316. Provision of technical assistance to microenterprises
Sec. 317. Federal reserve audits.
Sec. 318. Study and report on advertising practices of online brokerage 
                            services.
Sec. 319. Eligibility of community development financial institution to 
                            borrow from the Federal Home Loan Bank 
                            system.
         TITLE IV--FEDERAL HOME LOAN BANK SYSTEM MODERNIZATION

Sec. 401. Short title.
Sec. 402. Definitions.
Sec. 403. Savings association membership.
Sec. 404. Advances to members; collateral.
Sec. 405. Eligibility criteria.
Sec. 406. Management of banks.
Sec. 407. Resolution Funding Corporation.
Sec. 408. GAO study on Federal Home Loan Bank System capital.
         TITLE V--FUNCTIONAL REGULATION OF BROKERS AND DEALERS

Sec. 501. Definition of broker.
Sec. 502. Definition of dealer.
Sec. 503. Definition and treatment of banking products.
Sec. 504. Qualified investor defined.
Sec. 505. Government securities defined.
Sec. 506. Effective date.
Sec. 507. Rule of construction.
          TITLE VI--UNITARY SAVINGS AND LOAN HOLDING COMPANIES

Sec. 601. Prevention of creation of new S&L holding companies with 
                            commercial affiliates.
Sec. 602. Optional conversion of Federal savings associations.
                       TITLE VII--ATM FEE REFORM

Sec. 701. Short title.
Sec. 702. Electronic fund transfer fee disclosures at any host ATM.
Sec. 703. Disclosure of possible fees to consumers when ATM card is 
                            issued.
Sec. 704. Feasibility study.
Sec. 705. No liability if posted notices are damaged.

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

                        Subtitle A--Affiliations

SEC. 101. GLASS-STEAGALL ACT REPEALED.

    (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. FINANCIAL ACTIVITIES.

    (a) In General.--Section 4 of the Bank Holding Company Act of 1956 
(12 U.S.C. 1843) is amended by adding at the end the following new 
subsections:
    ``(k) Engaging in Activities That Are Financial in Nature.--
            ``(1) In general.--Notwithstanding subsection (a), a bank 
        holding company may engage in any activity, and may acquire and 
        retain the shares of any company engaged in any activity, that 
        the Board, in coordination with the Secretary of the Treasury, 
        determines (by regulation or order) to be financial in nature 
        or incidental to such financial activities.
            ``(2) Coordination between the board and the secretary of 
        the treasury.--
                    ``(A) 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 clause (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.
                    ``(B) 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 clause (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.
            ``(3) Factors to be considered.--The Board shall determine 
        that an activity is financial in nature or incidental to 
        financial activities, if the Board finds that such activity is 
        consistent with--
                    ``(A) the purposes of this Act and the Financial 
                Services Modernization 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) fostering--
                            ``(i) effective competition with any 
                        company seeking to provide financial services 
                        in the United States;
                            ``(ii) the efficient delivery of 
                        information and services that are financial in 
                        nature through the use of technological means, 
                        including any application necessary to protect 
                        the security or efficacy of systems for the 
                        transmission of data or financial transactions; 
                        and
                            ``(iii) the provision to customers of any 
                        available or emerging technological means for 
                        using financial services.
            ``(4) Activities that are financial in nature.--For 
        purposes of this subsection, 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, in any State, in full compliance with the 
                laws and regulations of that State that apply to each 
                type of insurance license or authorization in that 
                State.
                    ``(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 
                Modernization 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 of the United States; and
                            ``(ii) the Board has determined, under 
                        regulations issued pursuant to subsection 
                        (c)(13) (as in effect on the day before the 
                        date of enactment of the Financial Services 
                        Modernization 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 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; and
                            ``(ii) such shares, assets, or ownership 
                        interests are acquired and held by--
                                    (I) a securities affiliate or an 
                                affiliate thereof; or
                                    (II) an affiliate of an insurance 
                                company described in paragraph (I)(ii) 
                                that provides investment advice to an 
                                insurance company and is registered 
                                pursuant to the Investment Advisers Act 
                                of 1940, or an affiliate of such 
                                investment adviser, 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.
                    ``(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 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; and
                            ``(iii) such shares, assets, or ownership 
                        interests represent, as determined by the 
                        insurance authority of the State of domicile of 
                        the insurance company, an investment made in 
                        the ordinary course of business of such 
                        insurance company in accordance with relevant 
                        State law governing such investments.
                    ``(J) Activities that the Board determines (by 
                regulation or order) are complementary to financial 
                activities, or any other service that the Board 
                determines (by regulation or order) not to pose a 
                substantial risk to the safety or soundness of 
                depository institutions or the financial system 
                generally.
            ``(5) Actions required.--
                    ``(A) In general.--The Board shall, by regulation 
                or order, define, consistent with the purposes of this 
                Act, the activities described in subparagraph (B) as 
                financial in nature, and the extent to which such 
                activities are financial in nature or incidental to 
                activities that are financial in nature.
                    ``(B) Activities.--The activities described in this 
                subparagraph are--
                            ``(i) lending, exchanging, transferring, 
                        investing for others, or safeguarding financial 
                        assets other than money or securities;
                            ``(ii) providing any device or other 
                        instrumentality for transferring money or other 
                        financial assets;
                            ``(iii) arranging, effecting, or 
                        facilitating financial transactions for the 
                        account of third parties; and
                            ``(iv) activities that are complementary to 
                        financial activities, or any other service that 
                        the Board determines (by regulation or order) 
                        not to pose a substantial risk to the safety or 
                        soundness of depository institutions or the 
                        financial system generally.
            ``(6) Required notification.--
                    ``(A) In general.--A bank 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 not later than 30 calendar days 
                after commencing the activity or consummating the 
                acquisition, as applicable.
                    ``(B) Approval not required for certain financial 
                activities.--Except as provided in subsection (j) with 
                regard to the acquisition of a savings association, a 
                bank holding company may commence any activity, or 
                acquire any company, pursuant to paragraph (4) or any 
                regulation prescribed or order issued under paragraph 
                (5), without prior approval of the Board.
    ``(l) Conditions for Engaging in Expanded Financial Activities.--
            ``(1) In general.--Notwithstanding subsection (k), a bank 
        holding company may not engage in any activity, or directly or 
        indirectly acquire or retain shares of any company engaged in 
        any activity, under subsection (k), other than activities 
        permissible for a bank holding company under subsection (c)(8), 
        unless--
                    ``(A) all of the insured depository institution 
                subsidiaries of the bank holding company are well 
                capitalized;
                    ``(B) all of the insured depository institution 
                subsidiaries of the bank holding company are well 
                managed; and
                    ``(C) the bank holding company has filed with the 
                Board--
                            ``(i) a declaration that the company elects 
                        to engage in activities or acquire and retain 
                        shares of a company which were not permissible 
                        for a bank holding company to engage in or 
                        acquire before the enactment of the Financial 
                        Services Modernization Act of 1999; and
                            ``(ii) a certification that the company 
                        meets the requirements of subparagraphs (A) and 
                        (B).
            ``(2) Foreign banks.--For purposes of paragraph (1), the 
        Board shall apply comparable capital and management standards 
        to a foreign bank that operates a branch or agency or owns or 
        controls a commercial lending company in the United States, 
        giving due regard to the principle of national treatment and 
        equality of competitive opportunity.
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) the term `well capitalized' has the same 
                meaning as in section 38 of the Federal Deposit 
                Insurance Act;
                    ``(B) 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;
                            ``(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; and
                            ``(iii) the terms `appropriate Federal 
                        banking agency' and `depository institution' 
                        have the same meanings as in section 3 of the 
                        Federal Deposit Insurance Act.
    ``(m) Provisions Applicable to Bank Holding Companies That Fail To 
Meet Certain Requirements.--
            ``(1) In general.--If the Board finds that--
                    ``(A) a bank holding company is engaged, directly 
                or indirectly, in any activity under subsection (k), 
                other than activities that are permissible for a bank 
                holding company under subsection (c)(8); and
                    ``(B) such bank holding company is not in 
                compliance with the requirements of subsection (l),
        the Board shall give notice to the bank holding company to that 
        effect, describing the conditions giving rise to the notice.
            ``(2) Agreement to correct conditions required.--Not later 
        than 45 days after the date of receipt by a bank holding 
        company of a notice given under paragraph (1) (or such 
        additional period as the Board may permit), the bank holding 
        company shall execute an agreement with the Board to comply 
        with the requirements applicable to a bank holding company 
        under subsection (l).
            ``(3) Board may impose limitations.--Until the conditions 
        described in a notice to a bank holding company under paragraph 
        (1) are corrected, the Board may impose such limitations on the 
        conduct or activities of that bank holding company or any 
        affiliate of that company as the Board determines to be 
        appropriate under the circumstances and consistent with the 
        purposes of this Act.
            ``(4) Failure to correct.--If the conditions described in a 
        notice to a bank holding company under paragraph (1) are not 
        corrected within 180 days after the date of receipt by the bank 
        holding company of a notice under paragraph (1), the Board may 
        require such bank holding 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 discretion of the 
        Board, either--
                    ``(A) to divest control of any subsidiary insured 
                depository institutions; or
                    ``(B) to cease to engage in any activity conducted 
                by such bank holding company or its subsidiaries (other 
                than a depository institution or a subsidiary of a 
                depository institution) that is not an activity that is 
                permissible for a bank holding company under subsection 
                (c)(8).
    ``(n) Authority To Retain Commodity Activities and Affiliations.--
Notwithstanding subsection (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 bank holding company 
after the date of enactment of the Financial Services Modernization Act 
of 1999, may continue to 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 September 30, 1997, if--
            ``(1) the bank holding company, or any subsidiary of the 
        bank holding company, lawfully was engaged, directly or 
        indirectly, in any of such activities as of September 30, 1997, 
        in the United States;
            ``(2) the attributed aggregate consolidated assets of the 
        company held by the bank holding company pursuant to this 
        subsection, and not otherwise permitted to be held by a bank 
        holding company, are equal to not more than 5 percent of the 
        total consolidated assets of the bank holding company, except 
        that the Board may increase that percentage by such amounts and 
        under such circumstances as the Board considers appropriate, 
        consistent with the purposes of this Act; and
            ``(3) the bank holding company does not permit--
                    ``(A) any company, the shares of which it owns or 
                controls pursuant to this subsection, to offer or 
                market any product or service of an affiliated insured 
                depository institution; or
                    ``(B) any affiliated insured depository institution 
                to offer or market any product or service of any 
                company, the shares of which are owned or controlled by 
                such bank holding company pursuant to this 
                subsection.''.
    (b) Financial Activities of Bank Holding Companies Ineligible for 
Subsection (k) Powers.--
            (1) In general.--Section 4(c)(8) of the Bank Holding 
        Company Act of 1956 (12 U.S.C. 1843(c)(8)) is amended to read 
        as follows:
            ``(8) shares of any company, the activities of which had 
        been determined by the Board by regulation or order under this 
        paragraph as of the day before the date of enactment of the 
        Financial Services Modernization 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);''.
            (2) Conforming changes to other statutes.--
                    (A) 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,''.
                    (B) 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 at the end 
                and inserting the following: ``as of the day before the 
                date of enactment of the Financial Services 
                Modernization Act of 1999.''.

SEC. 103. CONFORMING AMENDMENTS.

     Section 10(c)(2)(F)(i) of the Home Owners' Loan Act (12 U.S.C. 
1467a(c)(2)(F)(i))is amended--
            (1) by inserting ``is permitted for bank holding companies 
        under subsection (c) or (k) of section 4 of the Bank Holding 
        Company Act of 1956, or which'' after ``(i) which''; and
            (2) by striking ``section 4(c)'' and inserting ``subsection 
        (c) or (k) of section 4''.

SEC. 104. OPERATION OF STATE LAW.

    (a) State Regulation of the Business of Insurance.--The Act 
entitled ``An Act to express the intent of 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.
    (b) 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 laws, subject to subsections (c), (d), and (e).
    (c) Affiliations.--
            (1) In general.--Except as provided in paragraph (2), no 
        State may, by statute, regulation, order, interpretation, or 
        other action, prevent or restrict the affiliations authorized 
        or permitted by this Act and the amendments made by this Act.
            (2) Insurance.--With respect to affiliations between 
        insured depository 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 
        collecting, reviewing, and taking actions on required 
        applications and other documents or reports as may be necessary 
        concerning proposed acquisitions, changes, or continuations of 
        control of any entity engaged in the business of insurance and 
        domiciled in that State, if the State actions do not have the 
        practical effect of discriminating, either intentionally or 
        unintentionally, against an insured depository institution or a 
        subsidiary or affiliate thereof, or against any person or 
        entity based upon affiliation with an insured depository 
        institution.
    (d) 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 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 and the 
        amendments made by 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 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 that 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 not associated with such insured 
                        depository 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 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 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 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, 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 
                                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 Federal or 
                                State 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, a subsidiary or affiliate thereof, 
                        or a particular insurer, agent, or broker, 
                        other than a prohibition that would prevent any 
                        insured depository 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 any 
                                subsidiary or affiliate thereof.
                            (ix) Restrictions requiring, when an 
                        application by a customer for a loan or other 
                        extension of credit from an insured depository 
                        institution is pending, and insurance is 
                        offered or sold to the customer or is required 
                        in connection with the loan or extension of 
                        credit by the insured depository institution or 
                        any subsidiary or affiliate thereof, that a 
                        written disclosure be provided to the customer 
                        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 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, 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 its 
                        subsidiaries or affiliates, or any person 
                        soliciting the purchase of or selling insurance 
                        on the premises thereof, the credit and 
                        insurance transactions be completed through 
                        separate documents.
                            (xii) Restrictions prohibiting, when a 
                        customer obtains insurance (other than credit 
                        insurance or flood insurance) and credit from 
                        an insured depository institution or 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--
                                    (I) maintenance of separate and 
                                distinct books and records relating to 
                                insurance transactions, including all 
                                files relating to and reflecting 
                                customer complaints; and
                                    (II) 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 203(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 (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).
                            (iii) Construction.--Nothing in this 
                        paragraph shall be construed--
                                    (I) 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 any State statute, 
                                regulation, order, interpretation, or 
                                other action that is not referred to or 
                                described in this paragraph; or
                                    (II) to create any inference with 
                                respect to any State statute, 
                                regulation, order, interpretation, or 
                                other action that is not referred to in 
                                this paragraph.
            (3) Insurance activities other than sales.--State statutes, 
        regulations, interpretations, orders, and other actions shall 
        not be preempted under paragraph (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, 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 (e).
            (4) Financial activities other than insurance.--No State 
        statute, regulation, interpretation, order, or other action 
        shall be preempted under paragraph (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 (f); 
                and
                    (D) it is not prohibited under subsection (e).
    (e) Nondiscrimination.--Except as provided in any restriction 
described in subsection (d)(2)(B), no State may, by statute, 
regulation, order, interpretation, or other action, regulate the 
activities authorized or permitted under this Act and the amendments 
made by this Act, or any other provision of Federal law, of an insured 
depository 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 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 subsidiary or affiliate thereof;
            (2) as interpreted or applied, has or will have an impact 
        on insured depository 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, or subsidiaries or affiliates 
        thereof, or persons or entities affiliated therewith;
            (3) effectively prevents an insured depository institution, 
        or subsidiary or affiliate thereof, from engaging in activities 
        authorized or permitted by this Act and the amendments made by 
        this Act, or any other provision of Federal law; or
            (4) conflicts with the intent of this Act and the 
        amendments made by this Act generally to permit affiliations 
        that are authorized or permitted by Federal law.
    (f) Limitation.--Subsections (c) and (d) shall not be construed to 
affect--
            (1) the jurisdiction of the securities commission (or any 
        agency or office performing like functions) of any State, under 
        the laws of that 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; or
            (2) 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 if such laws, 
        regulations, interpretations, orders, or other actions are not 
        inconsistent with the purposes of this Act to authorize or 
        permit certain affiliations and to remove barriers to such 
        affiliations.
    (g) Certain State Affiliation Laws Preempted for Insurance 
Companies and Affiliates.--Except as provided in subsection (c)(2), no 
State may, by law, regulation, order, interpretation, or otherwise--
            (1) prevent or restrict 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 bank holding company, or to acquire control of an 
        insured depository institution, where the practical effect of 
        such State action would be to discriminate, intentionally or 
        unintentionally, against an insurer, or any affiliate of an 
        insurer, based upon its affiliation with an insured depository 
        institution;
            (2) limit the amount of the assets of an insurer that may 
        be invested in the voting securities of an insured depository 
        institution (or any company that controls such institution), 
        except that the laws of the State of domicile of the insurer 
        may limit the amount of such investment to an amount that is 
        not less than 5 percent of the admitted assets of the insurer; 
        or
            (3) prevent, restrict, 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 the State is the 
        State of domicile of the insurer, except that the appropriate 
        regulatory authority of the State of domicile of the insurer 
        shall consult with the appropriate regulatory authority in 
        other States in which the insurer conducts business, regarding 
        issues affecting the best interests of policyholders.
    (h) Motor Vehicle Rental Agency Activities.--
            (1) Findings.--Congress finds that--
                    (A) in many States, the insurance laws are unclear 
                as to whether personal insurance sales in connection 
                with the short-term rental or leasing of motor vehicles 
                should be licensed by the State as an insurance 
                activity; and
                    (B) in those States that have not yet implemented 
                regulations governing the offer or sale of insurance in 
                connection with the short-term lease or rental of a 
                motor vehicle, a presumption should exist that no 
                insurance license is required in connection with such 
                sales.
            (2) Exception for certain insurance products.--Subsection 
        (b) does not apply to any person or entity who offers or 
        provides insurance ancillary to a short-term lease or rental 
        transaction of a motor vehicle in a State that does not, by 
        statute, rule, or regulation, impose any licensing, 
        appointment, personal or corporate qualifications, or education 
        requirements on such persons or entities.
            (3) Construction.--Nothing in this subsection shall be 
        construed to alter the validity or effect of any State law, or 
        the prospective application of any final State statute, rule, 
        or regulation which, by its specific terms, expressly regulates 
        or exempts from regulation any person or entity who offers or 
        provides insurance ancillary to a short-term lease or rental 
        transaction of a motor vehicle.
            (4) Lease period.--For purposes of this subsection, a 
        person shall be considered to be providing insurance ancillary 
        to a short-term lease or rental transaction of a motor vehicle 
        if the lease or rental transaction is for 60 days or less, and 
        the insurance is provided for a period of consecutive days not 
        exceeding the length of the lease or rental.
            (5) Effect.--This subsection shall remain in effect during 
        the period beginning on the date of enactment of this Act and 
        ending 5 years after that date of enactment.
    (i) Definitions.--For purposes of this section--
            (1) 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);
            (2) the term ``insured depository institution'' has the 
        same meaning as in section 3 of the Federal Deposit Insurance 
        Act; and
            (3) the term ``State'' means any State of the United 
        States, the District of Columbia, any territory of the United 
        States, Puerto Rico, Guam, American Samoa, the Trust Territory 
        of the Pacific Islands, the Virgin Islands, and the Northern 
        Mariana Islands.

     Subtitle B--Streamlining Supervision of Bank Holding Companies

SEC. 111. STREAMLINING BANK 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 a bank holding company and any subsidiary 
                of such company to submit reports under oath to keep 
                the Board informed as to--
                            ``(i) the financial condition of the bank 
                        holding company or subsidiary, systems for 
                        monitoring and controlling financial and 
                        operating risks, and transactions with 
                        depository institution subsidiaries of the bank 
                        holding company; and
                            ``(ii) compliance by the company or 
                        subsidiary with applicable provisions of this 
                        Act.
                    ``(B) Use of existing reports.--
                            ``(i) In general.--For purposes of 
                        compliance with this paragraph, the Board 
                        shall, to the fullest extent possible, accept--
                                    ``(I) reports that a bank holding 
                                company or any subsidiary of such 
                                company has provided or been required 
                                to provide to other Federal or State 
                                supervisors or to appropriate self-
                                regulatory organizations;
                                    ``(II) information that is 
                                otherwise required to be reported 
                                publicly; and
                                    ``(III) externally audited 
                                financial statements.
                            ``(ii) Reports filed with other agencies.--
                        In the event that the Board requires a report 
                        under this subsection from a functionally 
                        regulated subsidiary of a bank holding company 
                        of a kind that is not required by another 
                        Federal or State regulatory authority or an 
                        appropriate self-regulatory organization, the 
                        Board shall request that the appropriate 
                        regulatory authority 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 
                        depository institution subsidiaries or 
                        compliance with this Act, the Board may require 
                        such functionally regulated subsidiary to 
                        provide such a report to the Board.
            ``(2) Examinations.--
                    ``(A) Examination authority for bank holding 
                companies and subsidiaries.--Subject to subparagraph 
                (B), the Board may make examinations of each bank 
                holding company and each subsidiary of such holding 
                company in order--
                            ``(i) to inform the Board of the nature of 
                        the operations and financial condition of the 
                        holding company and such subsidiaries;
                            ``(ii) to 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 depository 
                                institution subsidiary of such holding 
                                company; and
                                    ``(II) the systems for monitoring 
                                and controlling such risks; and
                            ``(iii) to monitor compliance with the 
                        provisions of this Act and those governing 
                        transactions and relationships between any 
                        depository institution subsidiary and its 
                        affiliates.
                    ``(B) Functionally regulated subsidiaries.--
                Notwithstanding subparagraph (A), the Board may make 
                examinations of a functionally regulated 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 the bank 
                        holding company.
                    ``(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 bank holding 
                        company that could have a materially adverse 
                        effect on the safety and soundness of any 
                        depository institution subsidiary of the 
                        holding company due to--
                                    ``(I) the size, condition, or 
                                activities of the subsidiary; or
                                    ``(II) the nature or size of 
                                transactions between the subsidiary and 
                                any depository institution that is also 
                                a subsidiary of the bank holding 
                                company.
                    ``(D) Deference to bank examinations.--The Board 
                shall, to the fullest extent possible, for the purposes 
                of this paragraph, use 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, forego an 
                examination by the Board under this paragraph and 
                instead review 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 may 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 bank holding company that--
                            ``(i) is not an insured depository 
                        institution; and
                            ``(ii) is--
                                    ``(I) in compliance with the 
                                applicable capital requirements of 
                                another Federal regulatory authority 
                                (including the Securities and Exchange 
                                Commission) or State insurance 
                                authority; or
                                    ``(II) 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 with 
                respect to investment advisory activities or activities 
                incidental to investment advisory activities.
                    ``(C) Limitations on indirect action.--In 
                developing, establishing, or assessing bank holding 
                company capital or capital adequacy rules, guidelines, 
                standards, or requirements for purposes of this 
                paragraph, the Board may 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 that 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--
                            ``(i) to examine and require reports from 
                        the bank holding company and any affiliate of 
                        such company (other than a depository 
                        institution) under this section;
                            ``(ii) to approve or disapprove 
                        applications or transactions under section 3;
                            ``(iii) to take actions and impose 
                        penalties under subsections (e) and (f) of this 
                        section and under section 8; and
                            ``(iv) to 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 that 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 as 
                such sections apply to orders issued by the Board.
            ``(5) Functional regulation of securities and insurance 
        activities.--
                    ``(A) Securities activities.--Securities activities 
                conducted in a functionally regulated subsidiary of a 
                bank shall be subject to regulation by the Securities 
                and Exchange Commission, and by relevant State 
                securities authorities, as appropriate, subject to 
                section 104 of the Financial Services Modernization Act 
                of 1999, to the same extent as if they were conducted 
                in a nondepository institution subsidiary of a bank 
                holding company.
                    ``(B) Insurance activities.--Subject to section 104 
                of the Financial Services Modernization Act of 1999, 
                insurance agency and brokerage activities and 
                activities as principal conducted in a functionally 
                regulated subsidiary of a bank shall be subject to 
                regulation by a State insurance authority to the same 
                extent as if they were conducted in a nondepository 
                institution subsidiary of a bank holding company.
            ``(6) Definition.--For purposes of this subsection, the 
        term `functionally regulated subsidiary' means any company--
                    ``(A) that is not a bank holding company; and
                    ``(B) that is--
                            ``(i) a broker or dealer that is registered 
                        under the Securities Exchange Act of 1934;
                            ``(ii) 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;
                            ``(iii) an investment company that is 
                        registered under the Investment Company Act of 
                        1940;
                            ``(iv) an insurance company or insurance 
                        agency that is subject to supervision by a 
                        State insurance commission, agency, or similar 
                        authority; or
                            ``(v) an entity that is 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. 112. 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 that 
        requires a bank holding company to provide funds or other 
        assets to an insured depository institution subsidiary 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 that is a broker or dealer 
                        registered under the Securities Exchange Act of 
                        1934; or
                            ``(ii) an affiliate of the insured 
                        depository institution that is an insurance 
                        company or a broker or dealer registered under 
                        the Securities Exchange Act of 1934; 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 a written notice sent to the 
                bank holding company and to the Board that the bank 
                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, that is an insurance 
        company or a broker or dealer, as described in paragraph 
        (1)(A), to provide funds or assets to an insured depository 
        institution subsidiary of the bank 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 subsidiary not 
        later than 180 days after receiving the notice, or such longer 
        period as the Board determines to be consistent with the safe 
        and sound operation of the insured depository institution.
            ``(4) Conditions before divestiture.--During the period 
        beginning on the date on which an order to divest is issued by 
        the Board under paragraph (3) to a bank holding company and 
        ending on the date on which the divestiture is completed, the 
        Board may impose any conditions or restrictions on ownership or 
        operation by the bank holding company 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.
            ``(5) Rule of construction.--No provision of this 
        subsection may be construed to limit or otherwise affect the 
        regulatory authority, including the scope of the authority, of 
        any Federal agency or department with regard to any entity that 
        is within the jurisdiction of such agency or department.''.

SEC. 113. ROLE OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

    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.--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 functionally regulated subsidiary of a bank holding 
company unless--
            ``(1) 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 insured depository institution; or
                    ``(B) the domestic or international payment system; 
                and
            ``(2) the Board finds that it is not reasonably possible to 
        protect effectively against the material risk at issue through 
        action directed at or against the affiliated insured depository 
        institution or against insured 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 bank holding company where the purpose or effect of doing 
so would be to take action indirectly against or with respect to a 
functionally regulated subsidiary of a bank holding company 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 functionally 
regulated subsidiary of a bank holding company with Federal law that 
the Board has specific jurisdiction to enforce against such subsidiary.
    ``(d) `Functionally Regulated Subsidiary' Defined.--For purposes of 
this section, the term `functionally regulated subsidiary' has the same 
meaning as in section 5(c)(6).''.

SEC. 114. EXAMINATION OF INVESTMENT COMPANIES.

    (a) Exclusive Commission Authority.--Except as provided in 
subsection (c), 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.
    (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) Certain Examinations Authorized.--Nothing in this section shall 
prevent the 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 insured depository 
institution and the affiliate, and the effect of such relationship on 
the insured depository institution.
    (d) 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) Corporation.--The term ``Corporation'' means the 
        Federal Deposit Insurance Corporation.
            (3) Commission.--The term ``Commission'' means the 
        Securities and Exchange Commission.
            (4) Federal banking agency.--The term ``Federal banking 
        agency'' has the same meaning as in section 3(z) of the Federal 
        Deposit Insurance Act.
            (5) Registered investment company.--The term ``registered 
        investment company'' means an investment company that is 
        registered with the Commission under the Investment Company Act 
        of 1940.
            (6) 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. 115. 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 holding companies and their functionally 
        regulated subsidiaries or that require deference to other 
        regulators;
            (2) section 5(g) of the Bank Holding Company Act of 1956 
        (as added by this Act) that limit the authority of the Board to 
        require capital from a functionally regulated subsidiary of a 
        holding company to an insured depository institution subsidiary 
        of the holding company and to take certain actions including 
        requiring divestiture of the insured depository institution; 
        and
            (3) 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 holding companies and their functionally regulated 
        subsidiaries,
shall also limit whatever authority that a Federal banking agency (as 
defined in section 3 of the Federal Deposit Insurance Act) might 
otherwise have under applicable Federal law to require reports, make 
examinations, impose capital requirements, or take any other direct or 
indirect action with respect to any functionally regulated subsidiary 
of an insured depository institution, subject to the same standards and 
requirements as are applicable to the Board under those provisions.
    (b) Certain Exemption 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.
    (c) ``Functionally Regulated Subsidiary'' Defined.--For purposes of 
this section, the term ``functionally regulated subsidiary'' has the 
same meaning as in section 5(c)(6) of the Bank Holding Company Act of 
1956, as amended by this Act.

SEC. 116. INTERAGENCY CONSULTATION.

    (a) 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 to that regulator any information of the Board 
        regarding the financial condition, risk management policies, 
        and operations of any bank holding company that controls a 
        company that is engaged in insurance activities and is 
        regulated by that 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 to that regulator any 
        information of the agency regarding any transaction or 
        relationship between a depository institution supervised by 
        that Federal banking agency and any affiliated company that is 
        engaged in insurance activities regulated by the 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 appropriate Federal banking agency, a State 
        insurance regulator may provide any examination or other 
        reports, records, or other information to which the State 
        insurance regulator may have access with respect to a company 
        that--
                    (A) is engaged in insurance activities and is 
                regulated by that insurance regulator; and
                    (B) is an affiliate of an insured depository 
                institution or a bank holding company.
    (b) Consultation.--Before making any determination relating to the 
initial affiliation of, or the continuing affiliation of, an insured 
depository institution or bank 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.
    (c) 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 or bank holding 
company or any affiliate thereof under any provision of law.
    (d) Confidentiality and Privilege.--
            (1) Confidentiality.--The appropriate Federal banking 
        agency may 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 a State 
        insurance regulator shall not constitute a waiver of, or 
        otherwise affect, any privilege to which the information or 
        material is otherwise subject.
    (e) 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; bank holding company.--The terms ``Board'' and 
        ``bank holding company'' have the same meanings as in section 2 
        of the Bank Holding Company Act of 1956.

SEC. 117. PRESERVING THE INTEGRITY OF FDIC RESOURCES.

    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--Activities of National Banks

SEC. 121. AUTHORITY OF NATIONAL BANKS TO UNDERWRITE MUNICIPAL REVENUE 
              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:
    ``The limitations and restrictions contained in this paragraph as 
to dealing in, underwriting, and purchasing investment securities for 
the national bank's own account do 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).''.

SEC. 122. SUBSIDIARIES OF NATIONAL BANKS.

    (a) In General.--Chapter one of title LXII of the Revised Statutes 
of the United States (12 U.S.C. 21 et seq.) is amended--
            (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) Authorization To Conduct in Operating Subsidiaries Certain 
Activities That Are Financial in Nature.--
            ``(1) In general.--Subject to paragraph (2), a national 
        bank may control a financial subsidiary, or hold an interest in 
        a financial subsidiary, only if--
                    ``(A) the consolidated total assets of the national 
                bank do not exceed $1,000,000,000;
                    ``(B) the national bank is not an affiliate of a 
                bank holding company;
                    ``(C) the subject activities are not real estate 
                development or real estate investment activities, 
                unless otherwise expressly authorized by law;
                    ``(D) the national bank and each insured depository 
                institution affiliate of the national bank is well 
                capitalized and well managed; and
                    ``(E) the national bank has received the approval 
                of the Comptroller of the Currency to engage in such 
                activities, which approval shall be based solely upon 
                the factors set forth in subparagraph (D) and factors 
                set forth in subsection (c).
            ``(2) Regulations required.--The Comptroller of the 
        Currency shall, by regulation, prescribe procedures for the 
        enforcement of this section.
    ``(b) Safety and Soundness Fire Walls.--
            ``(1) Capital reduction required.--In determining 
        compliance with applicable capital standards for purposes of 
        subsection (a)(1)(D)--
                    ``(A) the aggregate amount of outstanding equity 
                investments by a national bank in a financial 
                subsidiary shall be deducted from the assets and 
                tangible equity of the national bank; and
                    ``(B) the assets and liabilities of the financial 
                subsidiary shall not be consolidated with those of the 
                national bank.
            ``(2) Investment limitation.--A national bank may not, 
        without the prior approval of the Comptroller of the Currency, 
        make any equity investment in a financial subsidiary of the 
        bank if that investment would, when made, exceed the amount 
        that the national bank could pay as a dividend without 
        obtaining prior regulatory approval.
    ``(c) Safeguards for the Bank.--A national bank that establishes or 
maintains a financial subsidiary shall assure that--
            ``(1) the procedures of the national bank for identifying 
        and managing financial and operational risks within the 
        national bank and financial subsidiary adequately protect the 
        national bank from such risks;
            ``(2) the bank has, for the protection of the national 
        bank, reasonable policies and procedures to preserve the 
        separate corporate identity and limited liability of the 
        national bank and the financial subsidiaries of the national 
        bank; and
            ``(3) the national bank is in compliance with this section.
    ``(d) Streamlining Regulation and Supervision and Encouraging 
Consultation Among Federal and State Regulators.--
            ``(1) In general.--To the extent that a national bank 
        engages in activities that are authorized by subsection (a) 
        through a functionally regulated financial subsidiary, the 
        regulation and supervision of such subsidiary by the 
        Comptroller of the Currency, including its ability to require a 
        contribution of capital or assets to the national bank from 
        that functionally regulated financial subsidiary, shall be 
        limited, as set forth under section 115 of the Financial 
        Services Modernization Act of 1999.
            ``(2) Interagency consultation.--The provisions of section 
        116 of the Financial Services Modernization Act of 1999, 
        relating to interagency consultation, shall apply to the 
        Comptroller of the Currency and the appropriate State 
        regulators of functionally regulated financial subsidiaries of 
        a national bank.
    ``(e) Preservation of Existing Operating Subsidiary Authority.--
Notwithstanding any other provision of this section--
            ``(1) a national bank may retain control of a company, or 
        retain an interest in a company, and conduct through such 
        company any activities lawfully conducted therein as of the 
        date of enactment of the Financial Services Modernization Act 
        of 1999; and
            ``(2) a national bank may own shares of or any other 
        interest in any company that is engaged only in activities that 
        are permissible for the national bank to engage in directly, if 
        such activities are engaged in under the same terms and 
        conditions that would govern the conduct if conducted by a 
        national bank directly.
    ``(f) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Financial subsidiary.--The term `financial 
        subsidiary' means a company that--
                    ``(A) is a subsidiary of a national bank; and
                    ``(B) is engaged as principal in any activity that 
                is permissible for a bank holding company under section 
                4(k) of the Bank Holding Company Act of 1956 and is not 
                permissible for national banks to engage in directly.
            ``(2) Functionally regulated.--The term `functionally 
        regulated financial subsidiary' means a financial subsidiary 
        that is--
                    ``(A) a broker or dealer that is registered under 
                the Securities Exchange Act of 1934;
                    ``(B) an investment adviser that is 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;
                    ``(C) an insurance company that is subject to 
                supervision by a State insurance commission, agency, or 
                similar authority; and
                    ``(D) an entity that is 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.
            ``(3) Subsidiary.--The term `subsidiary' has the same 
        meaning as in section 2 of the Bank Holding Company Act of 
        1956.
            ``(4) Well capitalized.--The term `well capitalized' has 
        the same meaning as in section 38 of the Federal Deposit 
        Insurance Act.
            ``(5) Well managed.--The term `well managed' means--
                    ``(A) 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 such rating is given; or
                    ``(B) 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.
            ``(6) Incorporated definitions.--The terms `appropriate 
        Federal banking agency', `depository institution', and `insured 
        depository institution', have the same meanings as in section 3 
        of the Federal Deposit Insurance Act.''.
    (b) Limiting the Credit Exposure of a National Bank to a Financial 
Subsidiary to the Amount of Permissible Credit Exposure to an 
Affiliate.--Section 23A of the Federal Reserve Act (12 U.S.C. 371c) is 
amended--
            (1) by redesignating subsection (e) as subsection (f); and
            (2) by inserting after subsection (d), the following new 
        subsection:
    ``(e) Rules Relating to National Banks With Financial 
Subsidiaries.--
            ``(1) Financial subsidiary defined.--For purposes of this 
        section and section 23B, the term `financial subsidiary' has 
        the same meaning as in section 5136A(f) of the Revised Statutes 
        of the United States.
            ``(2) Application to transactions between a financial 
        subsidiary of a national bank and the national bank.--For 
        purposes of applying this section and section 23B to a 
        transaction between a financial subsidiary of a national bank 
        and the national bank (or between such financial subsidiary and 
        any other subsidiary of the national bank that is not a 
        financial subsidiary), and notwithstanding subsection (b)(2) of 
        this section or section 23B(d)(1)--
                    ``(A) the financial subsidiary of the national 
                bank--
                            ``(i) shall be deemed to be an affiliate of 
                        the national bank and of any other subsidiary 
                        of the bank that is not a financial subsidiary; 
                        and
                            ``(ii) shall not be deemed to be a 
                        subsidiary of the national bank; and
                    ``(B) a purchase of or investment in equity 
                securities issued by the financial subsidiary shall not 
                be deemed to be a covered transaction.
            ``(3) Application to transactions between financial 
        subsidiary and nonbank affiliates.--
                    ``(A) In general.--A transaction between a 
                financial subsidiary and an affiliate of the financial 
                subsidiary (that is not a subsidiary of a national 
                bank) shall not be deemed to be a transaction between a 
                subsidiary of a national bank and an affiliate of that 
                bank for purposes of section 23A or section 23B.
                    ``(B) Certain affiliates excluded.--For purposes of 
                this paragraph, the term `affiliate' does not include a 
                national bank, or a subsidiary of a national bank that 
                is engaged exclusively in activities permissible for a 
                national bank to engage in directly or agency 
                activities permitted under section 123 of the Financial 
                Services Modernization Act of 1999.''.
    (c) Antitying.--Section 106(a) of the Bank Holding Company Act 
Amendments of 1970 (12 U.S.C. 1971) is amended by adding at the end the 
following: ``For purposes of this section, a financial subsidiary of a 
national bank engaging in activities pursuant to section 5136A(a) of 
the Revised Statutes of the United States shall be deemed to be a 
subsidiary of a bank holding company, and not a subsidiary of a 
bank.''.
    (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 
        relating to section 5136C; and
            (2) by inserting after the item relating to section 5136 
        the following new item:

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

SEC. 123. AGENCY ACTIVITIES.

    A national bank may control a company, or hold an interest in a 
company that engages in agency activities that have been determined by 
the Comptroller of the Currency to be permissible for national banks or 
to be financial in nature or incidental to such financial activities 
(as determined pursuant to section 4(k) of the Bank Holding Company Act 
of 1956) if the company engages in such activities solely as agent and 
not directly or indirectly as principal.

SEC. 124. PROHIBITING FRAUDULENT REPRESENTATIONS.

    (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) Prohibition.--It shall be unlawful for an institution-
affiliated party of an insured depository institution or institution-
affiliated party of a subsidiary or affiliate of an insured depository 
institution to fraudulently represent that the institution is or will 
be liable for any obligation of a subsidiary or other affiliate of the 
institution.
    ``(b) Penalties.--Whoever violates subsection (a) shall be fined 
under this title, imprisoned not more than 1 year, or both.
    ``(c) Institution-Affiliated Party Defined.--For purposes of this 
section, the term `institution-affiliated party' has the same meaning 
as in section 3 of the Federal Deposit Insurance Act, except that 
references to an insured depository institution shall be deemed to 
include 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. 125. INSURANCE UNDERWRITING BY NATIONAL BANKS.

    (a) In General.--
            (1) In general.--Except as provided in paragraph (2), a 
        national bank and the subsidiaries of a national bank may only 
        provide insurance in a State as principal in accordance with 
        section 5136A(a) of the Revised Statutes of the United States, 
        as added by this Act.
            (2) Exception.--A national bank and the subsidiaries of a 
        national bank may provide authorized insurance products as 
        principal without regard to section 5136A(a) of the Revised 
        Statutes of the United States, as added by this Act.
    (b) Authorized Insurance Products.--For purposes of this section, a 
product is an ``authorized insurance product'' if--
            (1) as of January 1, 1999, the Comptroller of the Currency 
        had determined in writing that national banks may provide such 
        product as principal, or national banks were in fact lawfully 
        providing such product as principal;
            (2) no court of relevant jurisdiction had, by final 
        judgment, overturned a determination of the Comptroller of the 
        Currency that national banks may provide such product as 
        principal; and
            (3) the product is not an annuity contract, the income of 
        which is subject to tax treatment under section 72 of the 
        Internal Revenue Code of 1986.
    (c) Definition.--For purposes of this section, the term 
``insurance'' means--
            (1) any product regulated as insurance as of January 1, 
        1999, in accordance with the relevant State insurance law, in 
        the State in which the product is provided;
            (2) any product first offered after January 1, 1999, 
        which--
                    (A) a State insurance regulator determines shall be 
                regulated as insurance in the State in which the 
                product is provided because the product insures, 
                guarantees, or indemnifies against liability, loss of 
                life, loss of health, or loss through damage to or 
                destruction of property, including 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 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; and
            (3) any annuity contract, the income on which is subject to 
        tax treatment under section 72 of the Internal Revenue Code of 
        1986.

    Subtitle D--National Treatment of Foreign Financial Institutions

SEC. 151. NATIONAL TREATMENT OF FOREIGN FINANCIAL INSTITUTIONS.

    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 4() 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 that 
        the Board has determined to be permissible for bank holding 
        companies under section 4(k) of that 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 that the 
        Board determines to be permissible for bank holding companies 
        under section 4(k) of the Bank Holding Company Act of 1956, has 
        not filed a declaration with the Board of its status as a bank 
        holding company under section 4(l) of that Act by the end of 
        the 2-year period beginning on the date of enactment of the 
        Financial Services Modernization 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 bank 
        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 10A of the Bank Holding Company Act of 1956.''.

SEC. 152. 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.''.

                TITLE II--INSURANCE CUSTOMER PROTECTIONS

SEC. 201. FUNCTIONAL REGULATION OF INSURANCE.

    The insurance activity of any person or entity shall be 
functionally regulated by the States, subject to subsections (c), (d), 
and (e) of section 104.

SEC. 202. INSURANCE CUSTOMER PROTECTIONS.

    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. INSURANCE CUSTOMER PROTECTIONS.

    ``(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 Modernization Act of 1999, customer 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 any 
                person that 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 
                customers to whom such sales, solicitations, 
                advertising, or offers are directed.
            ``(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 Federal banking 
        agencies, where such extension is determined to be necessary to 
        ensure the customer 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 antitying and anticoercion rules 
applicable to the sale of insurance products that prohibit an insured 
depository institution from engaging in any practice that would lead a 
customer 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 customer not to obtain, or a 
        prohibition on the customer 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 
                clauses (iii) and (iv), 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 insurance product that 
                        involves an investment risk, that there is an 
                        investment risk associated with the product, 
                        including possible loss of value.
                            ``(iii) Antitying; anticoercion.--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 customer 
                                not to obtain, or a prohibition on the 
                                customer from obtaining, an insurance 
                                product from an unaffiliated entity.
                            ``(iv) Prohibition on enhanced treatment 
                        due to other purchases or services.--The 
                        processing of an extension of credit or the 
                        delivery of any other financial product or 
                        service will not be expedited depending upon 
                        the purchase by the customer of any additional 
                        product or service from an affiliated person or 
                        entity of the insured depository institution.
                    ``(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) Limitation.--Nothing in this paragraph 
                requires the inclusion of the foregoing disclosures in 
                advertisements of a general nature describing or 
                listing the services or products offered by an 
                institution.
                    ``(D) Meaningful disclosures.--Disclosures shall 
                not be considered to be meaningfully provided under 
                this paragraph if the institution or its representative 
                states that disclosures required by this subsection 
                were available to the customer in printed material 
                available for distribution, where such printed material 
                is not provided and such information is not orally 
                disclosed to the customer.
                    ``(E) Adjustments for alternative methods of 
                purchase.--In prescribing the requirements under 
                subparagraphs (A) and (F), 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.
                    ``(F) Customer 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 
                at which a customer receives the disclosures required 
                under this paragraph or at the time of the initial 
                purchase by the customer of such product, an 
                acknowledgment by such customer 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, that 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 
                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 that 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) 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 commission (or any 
                agency or office performing like functions), or of any 
                State securities commission (or any agency or office 
                performing like functions), or other State authority 
                under any State law.
            ``(2) Coordination with state law.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), insurance customer protection 
                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 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.--
                            ``(i) In general.--If, with respect to any 
                        provision of the regulations prescribed under 
                        this section, the Board of Governors of the 
                        Federal Reserve System, the Comptroller of the 
                        Currency, and the Board of Directors of the 
                        Corporation determine jointly that the 
                        protection afforded by such provision for 
                        customers is greater than the protection 
                        provided by a comparable provision of the 
                        statutes, regulations, orders, or 
                        interpretations referred to in subparagraph (A) 
                        of any State, the appropriate State regulatory 
                        authority shall be notified of such 
                        determination in writing.
                            ``(ii) Considerations.--Before making a 
                        final determination under clause (i), the 
                        Federal agencies referred to in clause (i) 
                        shall give appropriate consideration to 
                        comments submitted by the appropriate State 
                        regulatory authorities relating to the level of 
                        protection afforded to consumers under State 
                        law.
                            ``(iii) Federal preemption and ability of 
                        states to override federal preemption.--If the 
                        Federal agencies referred to in clause (i) 
                        jointly determine that any provision of the 
                        regulations prescribed under this section 
                        affords greater protections than a comparable 
                        State law, rule, regulation, order, or 
                        interpretation, those agencies shall send a 
                        written preemption notice to the appropriate 
                        State regulatory authority to notify the State 
                        that the Federal provision will preempt the 
                        State provision and will become applicable 
                        unless, not later than 3 years after the date 
                        of such notice, the State adopts legislation to 
                        override such preemption.
    ``(f) Non-Discrimination Against Non-Affiliated Agents.--The 
Federal banking agencies shall ensure that the regulations prescribed 
pursuant to subsection (a) shall not have the practical effect of 
discriminating, either intentionally or unintentionally, against any 
person engaged in insurance sales or solicitations that is not 
affiliated with an insured depository institution.''.

SEC. 203. FEDERAL AND STATE DISPUTE RESOLUTION.

    (a) Filing in Court of Appeals.--In the case of a regulatory 
conflict between a State insurance regulator and a Federal regulator 
regarding insurance issues, including whether a State law, rule, 
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 if 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 proceedings 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 subsection (a) 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, according equal deference to the Federal 
regulator and the State insurance regulator.

                   TITLE III--REGULATORY IMPROVEMENTS

SEC. 301. ELIMINATION OF SAIF AND DIF SPECIAL RESERVES.

    (a) SAIF Special Reserve.--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 Reserve.--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).''.
    (c) Effective Date.--This section and the amendments made by this 
section shall become effective on the date of enactment of this Act.

SEC. 302. EXPANDED SMALL BANK ACCESS TO S CORPORATION TREATMENT.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study of--
            (1) possible revisions to the rules governing S 
        corporations, including--
                    (A) increasing the permissible number of 
                shareholders in such corporations;
                    (B) permitting shares of such corporations to be 
                held in individual retirement accounts;
                    (C) clarifying that interest on investments held 
                for safety, soundness, and liquidity purposes should 
                not be considered to be passive income;
                    (D) discontinuation of the treatment of stock held 
                by bank directors as a disqualifying personal class of 
                stock for such corporations; and
                    (E) improving Federal tax treatment of bad debt and 
                interest deductions; and
            (2) what impact such revisions might have on community 
        banks.
    (b) Report to Congress.--Not later than 6 months after the date of 
enactment of this Act, the Comptroller General of the United States 
shall submit a report to the Congress on the results of the study 
conducted under subsection (a).
    (c) Definition.--For purposes of this section, the term ``S 
corporation'' has the same meaning as in section 1361(a)(1) of the 
Internal Revenue Code of 1986.

SEC. 303. MEANINGFUL CRA EXAMINATIONS.

    (a) Compliance.--Notwithstanding any other provision of law, an 
insured depository institution rated as ``satisfactory'' or better in 
its most recent examination under the Community Reinvestment Act of 
1977, and in each such examination during the immediately preceding 36-
month period shall be deemed to be in compliance with the requirements 
of that Act until the completion of a subsequent regularly scheduled 
examination under that Act, unless substantial verifiable information 
arising since the time of its most recent examination under that Act 
demonstrating noncompliance is filed with the appropriate Federal 
banking agency.
    (b) Objections.--
            (1) Agency determination.--The appropriate Federal banking 
        agency shall determine, on a timely basis, whether the 
        information filed by any person under subsection (a) provides 
        sufficient proof that the subject insured depository 
        institution is no longer in compliance with the requirements of 
        the Community Reinvestment Act of 1977, as provided in 
        subsection (a).
            (2) Burden of proof.--A person filing information under 
        subsection (a) shall bear the burden of proving to the 
        satisfaction of the appropriate Federal banking agency, the 
        substantial verifiable nature of that information.
    (c) Definitions.--In this section, 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. 304. FINANCIAL INFORMATION PRIVACY PROTECTION.

    (a) Financial Information Anti-Fraud.--The Consumer Credit 
Protection Act (15 U.S.C. 1601 et seq.) is amended by adding at the end 
the following:

          ``TITLE X--FINANCIAL INFORMATION PRIVACY PROTECTION

``SEC. 1001. SHORT TITLE; TABLE OF CONTENTS.

    ``(a) Short Title.--This title may be cited as the `Financial 
Information Anti-Fraud Act of 1999'.
    ``(b) Table of Contents.--The table of contents for this title is 
as follows:

          ``TITLE X--FINANCIAL INFORMATION PRIVACY PROTECTION

``Sec. 1001. Short title; table of contents.
``Sec. 1002. Definitions.
``Sec. 1003. Privacy protection for customer information of financial 
                            institutions.
``Sec. 1004. Administrative enforcement.
``Sec. 1005. Civil liability.
``Sec. 1006. Criminal penalty.
``Sec. 1007. Relation to State laws.
``Sec. 1008. Agency guidance.

``SEC. 1002. DEFINITIONS.

    ``For purposes of this title, the following definitions shall 
apply:
            ``(1) Customer.--The term `customer' means, with respect to 
        a financial institution, any person (or authorized 
        representative of a person) to whom the financial institution 
        provides a product or service, including that of acting as a 
        fiduciary.
            ``(2) Customer information of a financial institution.--The 
        term `customer information of a financial institution' means 
        any information maintained by a financial institution which is 
        derived from the relationship between the financial institution 
        and a customer of the financial institution and is identified 
        with the customer.
            ``(3) Document.--The term `document' means any information 
        in any form.
            ``(4) Financial institution.--
                    ``(A) In general.--The term `financial institution' 
                means any institution engaged in the business of 
                providing financial services to customers who maintain 
                a credit, deposit, trust, or other financial account or 
                relationship with the institution.
                    ``(B) Certain financial institutions specifically 
                included.--The term `financial institution' includes 
                any depository institution (as defined in section 
                19(b)(1)(A) of the Federal Reserve Act), any loan or 
                finance company, any credit card issuer or operator of 
                a credit card system, and any consumer reporting agency 
                that compiles and maintains files on consumers on a 
                nationwide basis (as defined in section 603(p)).
                    ``(C) Further definition by regulation.--The Board 
                of Governors of the Federal Reserve System may 
                prescribe regulations further defining the term 
                `financial institution', in accordance with 
                subparagraph (A), for purposes of this title.

``SEC. 1003. PRIVACY PROTECTION FOR CUSTOMER INFORMATION OF FINANCIAL 
              INSTITUTIONS.

    ``(a) Prohibition on Obtaining Customer Information by False 
Pretenses.--It shall be a violation of this title for any person to 
obtain or attempt to obtain, or cause to be disclosed or attempt to 
cause to be disclosed to any person, customer information of a 
financial institution relating to another person--
            ``(1) by knowingly making a false, fictitious, or 
        fraudulent statement or representation to an officer, employee, 
        or agent of a financial institution with the intent to deceive 
        the officer, employee, or agent into relying on that statement 
        or representation for purposes of releasing the customer 
        information;
            ``(2) by knowingly making a false, fictitious, or 
        fraudulent statement or representation to a customer of a 
        financial institution with the intent to deceive the customer 
        into relying on that statement or representation for purposes 
        of releasing the customer information or authorizing the 
        release of such information; or
            ``(3) by knowingly providing any document to an officer, 
        employee, or agent of a financial institution, knowing that the 
        document is forged, counterfeit, lost, or stolen, was 
        fraudulently obtained, or contains a false, fictitious, or 
        fraudulent statement or representation, if the document is 
        provided with the intent to deceive the officer, employee, or 
        agent into relying on that document for purposes of releasing 
        the customer information.
    ``(b) Prohibition on Solicitation of a Person To Obtain Customer 
Information From Financial Institution Under False Pretenses.--It shall 
be a violation of this title to request a person to obtain customer 
information of a financial institution, knowing or consciously avoiding 
knowing that the person will obtain, or attempt to obtain, the 
information from the institution in any manner described in subsection 
(a).
    ``(c) Nonapplicability to Law Enforcement Agencies.--No provision 
of this section shall be construed so as to prevent any action by a law 
enforcement agency, or any officer, employee, or agent of such agency, 
to obtain customer information of a financial institution in connection 
with the performance of the official duties of the agency.
    ``(d) Nonapplicability to Financial Institutions in Certain 
Cases.--No provision of this section shall be construed to prevent any 
financial institution, or any officer, employee, or agent of a 
financial institution, from obtaining customer information of such 
financial institution in the course of--
            ``(1) testing the security procedures or systems of such 
        institution for maintaining the confidentiality of customer 
        information;
            ``(2) investigating allegations of misconduct or negligence 
        on the part of any officer, employee, or agent of the financial 
        institution; or
            ``(3) recovering customer information of the financial 
        institution which was obtained or received by another person in 
        any manner described in subsection (a) or (b).
    ``(e) Nonapplicability to Certain Types of Customer Information of 
Financial Institutions.--No provision of this section shall be 
construed to prevent any person from obtaining customer information of 
a financial institution that otherwise is available as a public record 
filed pursuant to the securities laws (as defined in section 3(a)(47) 
of the Securities Exchange Act of 1934).

``SEC. 1004. ADMINISTRATIVE ENFORCEMENT.

    ``(a) Enforcement by Federal Trade Commission.--Except as provided 
in subsection (b), compliance with this title shall be enforced by the 
Federal Trade Commission in the same manner and with the same power and 
authority as the Commission has under the Fair Debt Collection 
Practices Act to enforce compliance with that title.
    ``(b) Enforcement by Other Agencies in Certain Cases.--
            ``(1) In general.--Compliance with this title shall be 
        enforced under--
                    ``(A) section 8 of the Federal Deposit Insurance 
                Act, in the case of--
                            ``(i) national banks, and Federal branches 
                        and Federal agencies of foreign banks, by the 
                        Office of the Comptroller of the Currency;
                            ``(ii) member banks of the Federal Reserve 
                        System (other than national banks), branches 
                        and agencies of foreign banks (other than 
                        Federal branches, Federal agencies, and insured 
                        State branches of foreign banks), commercial 
                        lending companies owned or controlled by 
                        foreign banks, and organizations operating 
                        under section 25 or 25A of the Federal Reserve 
                        Act, by the Board;
                            ``(iii) banks insured by the Federal 
                        Deposit Insurance Corporation (other than 
                        members of the Federal Reserve System and 
                        national nonmember banks) and insured State 
                        branches of foreign banks, by the Board of 
                        Directors of the Federal Deposit Insurance 
                        Corporation; and
                            ``(iv) savings associations the deposits of 
                        which are insured by the Federal Deposit 
                        Insurance Corporation, by the Director of the 
                        Office of Thrift Supervision; and
                    ``(B) the Federal Credit Union Act, by the 
                Administrator of the National Credit Union 
                Administration with respect to any Federal credit 
                union.
            ``(2) Violations of this title treated as violations of 
        other laws.--For the purpose of the exercise by any agency 
        referred to in paragraph (1) of its powers under any Act 
        referred to in that paragraph, a violation of this title shall 
        be deemed to be a violation of a requirement imposed under that 
        Act. In addition to its powers under any provision of law 
        specifically referred to in paragraph (1), each of the agencies 
        referred to in that paragraph may exercise, for the purpose of 
        enforcing compliance with this title, any other authority 
        conferred on such agency by law.
    ``(c) State Action for Violations.--
            ``(1) Authority of states.--In addition to such other 
        remedies as are provided under State law, if the chief law 
        enforcement officer of a State, or an official or agency 
        designated by a State, has reason to believe that any person 
        has violated or is violating this title, the State--
                    ``(A) may bring an action to enjoin such violation 
                in any appropriate United States district court or in 
                any other court of competent jurisdiction;
                    ``(B) may bring an action on behalf of the 
                residents of the State to recover damages of not more 
                than $1,000 for each violation; and
                    ``(C) in the case of any successful action under 
                subparagraph (A) or (B), shall be awarded the costs of 
                the action and reasonable attorney fees as determined 
                by the court.
            ``(2) Rights of federal regulators.--
                    ``(A) Prior notice.--The State shall serve prior 
                written notice of any action under paragraph (1) upon 
                the Federal Trade Commission and, in the case of an 
                action which involves a financial institution described 
                in section 1004(b)(1), the agency referred to in such 
                section with respect to such institution and provide 
                the Federal Trade Commission and any such agency with a 
                copy of its complaint, except in any case in which such 
                prior notice is not feasible, in which case the State 
                shall serve such notice immediately upon instituting 
                such action.
                    ``(B) Right to intervene.--The Federal Trade 
                Commission or an agency described in subsection (b) 
                shall have the right--
                            ``(i) to intervene in an action under 
                        paragraph (1);
                            ``(ii) upon so intervening, to be heard on 
                        all matters arising therein;
                            ``(iii) to remove the action to the 
                        appropriate United States district court; and
                            ``(iv) to file petitions for appeal.
            ``(3) Investigatory powers.--For purposes of bringing any 
        action under this subsection, no provision of this subsection 
        shall be construed as preventing the chief law enforcement 
        officer, or an official or agency designated by a State, from 
        exercising the powers conferred on the chief law enforcement 
        officer or such official by the laws of such State to conduct 
        investigations or to administer oaths or affirmations or to 
        compel the attendance of witnesses or the production of 
        documentary and other evidence.
            ``(4) Limitation on state action while federal action 
        pending.--If the Federal Trade Commission or any agency 
        described in subsection (b) has instituted a civil action for a 
        violation of this title, no State may, during the pendency of 
        such action, bring an action under this section against any 
        defendant named in the complaint of the Federal Trade 
        Commission or such agency for any violation of this title that 
        is alleged in that complaint.

``SEC. 1005. CIVIL LIABILITY.

    ``Any person, other than a financial institution, who fails to 
comply with any provision of this title with respect to any financial 
institution or any customer information of a financial institution 
shall be liable to such financial institution or the customer to whom 
such information relates in an amount equal to the sum of the amounts 
determined under each of the following paragraphs:
            ``(1) Actual damages.--The greater of--
                    ``(A) the amount of any actual damage sustained by 
                the financial institution or customer as a result of 
                such failure; or
                    ``(B) any amount received by the person who failed 
                to comply with this title, including an amount equal to 
                the value of any nonmonetary consideration, as a result 
                of the action which constitutes such failure.
            ``(2) Additional damages.--Such additional amount as the 
        court may allow.
            ``(3) Attorneys' fees.--In the case of any successful 
        action to enforce any liability under paragraph (1) or (2), the 
        costs of the action, together with reasonable attorneys' fees.

``SEC. 1006. CRIMINAL PENALTY.

    ``(a) In General.--Whoever violates, or attempts to violate, 
section 1003 shall be fined in accordance with title 18, United States 
Code, or imprisoned for not more than 5 years, or both.
    ``(b) Enhanced Penalty for Aggravated Cases.--Whoever violates, or 
attempts to violate, section 1003 while violating another law of the 
United States or as part of a pattern of any illegal activity involving 
more than $100,000 in a 12-month period shall be fined twice the amount 
provided in subsection (b)(3) or (c)(3) (as the case may be) of section 
3571 of title 18, United States Code, imprisoned for not more than 10 
years, or both.

``SEC. 1007. RELATION TO STATE LAWS.

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

``SEC. 1008. AGENCY GUIDANCE.

    ``In furtherance of the objectives of this title, each Federal 
banking agency (as defined in section 3(z) of the Federal Deposit 
Insurance Act) shall issue advisories to depository institutions under 
the jurisdiction of the agency, in order to assist such depository 
institutions in deterring and detecting activities proscribed under 
section 1003.''.
    (b) Report to Congress on Financial Privacy.--Not later than 18 
months after the date of enactment of this Act, the Comptroller General 
of the United States, in consultation with the Federal Trade 
Commission, the Federal banking agencies, and other appropriate Federal 
law enforcement agencies, shall submit to the Congress a report on--
            (1) the efficacy and adequacy of the remedies provided in 
        the amendments made by subsection (a) in addressing attempts to 
        obtain financial information by fraudulent means or by false 
        pretenses; and
            (2) any recommendations for additional legislative or 
        regulatory action to address threats to the privacy of 
        financial information created by attempts to obtain information 
        by fraudulent means or false pretenses.
    (c) 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.
    (d) Consumer Grievance Process.--The Federal banking agencies (as 
that term is defined in section 3 of the Federal Deposit Insurance Act) 
shall jointly establish a consumer complaint mechanism, for receiving 
and expeditiously addressing consumer complaints alleging a violation 
of regulations issued under section 45 of the Federal Deposit Insurance 
Act (as added by section 202 of this Act), which mechanism shall--
            (1) establish a group within each Federal banking agency to 
        receive such complaints; and
            (2) develop procedures for--
                    (A) investigating such complaints;
                    (B) informing consumers of rights they may have in 
                connection with such complaints; and
                    (C) addressing concerns raised by such complaints, 
                as appropriate, including procedures for the recovery 
                of losses, to the extent appropriate.

SEC. 305. CROSS MARKETING RESTRICTION; LIMITED PURPOSE BANK RELIEF; 
              DIVESTITURE.

    (a) Cross Marketing Restriction.--Section 4(f) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1843(f)) is amended by striking 
paragraph (3).
    (b) Daylight Overdrafts.--Section 4(f) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1843(f)) is amended by inserting after paragraph 
(2) the following new paragraph:
            ``(3) Permissible overdrafts described.--For purposes of 
        paragraph (2)(C), an overdraft is described in this paragraph 
        if--
                    ``(A) such overdraft results from an inadvertent 
                computer or accounting error that is beyond the control 
                of both the bank and the affiliate;
                    ``(B) such overdraft--
                            ``(i) is permitted or incurred on behalf of 
                        an affiliate that 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 
                        that are direct obligations of the United 
                        States or on which the principal and interest 
                        are fully guaranteed by the United States or by 
                        securities and obligations eligible for 
                        settlement on the Federal Reserve book entry 
                        system; or
                    ``(C) such overdraft--
                            ``(i) is permitted or incurred by, or on 
                        behalf of, an affiliate that is engaged in 
                        activities that are so closely related to 
                        banking, or managing or controlling banks, as 
                        to be a proper incident thereto; and
                            ``(ii) does not cause the bank to violate 
                        any provision of section 23A or 23B of the 
                        Federal Reserve Act, either directly, in the 
                        case of a bank that is a member of the Federal 
                        Reserve System, or by virtue of section 18(j) 
                        of the Federal Deposit Insurance Act, in the 
                        case of a bank that is not a member of the 
                        Federal Reserve System.''.
    (c) 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)''.
    (d) Activities Limitations.--Section 4(f)(2) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1843(f)(2)) is amended--
            (1) by striking ``Paragraph (1) shall cease to apply to any 
        company described in such paragraph if--'' and inserting 
        ``Subject to paragraph (3), a company described in paragraph 
        (1) shall no longer qualify for the exemption provided under 
        that paragraph if--'';
            (2) in subparagraph (A)--
                    (A) in clause (ii)(IX), by striking ``and'' at the 
                end;
                    (B) in clause (ii)(X), by inserting ``and'' after 
                the semicolon;
                    (C) in clause (ii), by inserting after subclause 
                (X) the following:
                                    ``(XI) assets that are derived 
                                from, or incidental to, activities in 
                                which institutions described in section 
                                2(c)(2)(F) or section 2(c)(2)(H) are 
                                permitted to engage;''; and
                    (D) by striking ``or'' at the end; and
            (3) by striking subparagraph (B) and inserting the 
        following:
                    ``(B) any bank subsidiary of such company--
                            ``(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 (except that, for purposes of 
                        this clause, loans made in the ordinary course 
                        of a credit card operation shall not be treated 
                        as commercial loans); or
                    ``(C) after the date of 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 the account of the bank at a Federal 
                reserve bank, on behalf of an affiliate, other than an 
                overdraft described in paragraph (3).''.
    (e) Divestiture Requirement.--Section 4(f)(4) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1843(f)(4)) is amended to read as 
follows:
            ``(4) Divestiture in case of loss of exemption.--If any 
        company described in paragraph (1) fails to qualify for the 
        exemption provided under paragraph (1) 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 on which 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) either--
                            ``(i) corrected the condition or ceased the 
                        activity that caused the company to fail to 
                        continue to qualify for the exemption; or
                            ``(ii) submitted a plan to the Board for 
                        approval to cease the activity or correct the 
                        condition in a timely manner (which shall not 
                        exceed 1 year); and
                    ``(B) implemented procedures that are reasonably 
                adapted to avoid the reoccurrence of such condition or 
                activity.''.

SEC. 306. ``PLAIN LANGUAGE'' REQUIREMENT FOR FEDERAL BANKING AGENCY 
              RULES.

    (a) In General.--Each Federal banking agency shall use plain 
language in all proposed and final rulemakings published by the agency 
in the Federal Register after January 1, 2000.
    (b) Report.--Not later than March 1, 2001, each Federal banking 
agency shall submit to the Congress a report that describes how the 
agency has complied with subsection (a).
    (c) Definitions.--For purposes of this section, the terms ``Federal 
banking agency'' and ``State bank supervisor'' have the same meanings 
as in section 3 of the Federal Deposit Insurance Act.

SEC. 307. 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 enactment of the Financial Services Modernization Act of 
        1999 may retain the term `Federal' in the name of such 
        institution if such 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.''.

SEC. 308. COMMUNITY REINVESTMENT ACT EXEMPTION.

    (a) In General.--No community financial institution shall be 
subject to the Community Reinvestment Act of 1977 (12 U.S.C. 2901 et 
seq.).
    (b) Definition of Community Financial Institution.--As used in this 
section, the term ``community financial institution'' means an insured 
depository institution (as defined in section 3 of the Federal Deposit 
Insurance Act), that has aggregate assets of not more than 
$100,000,000, and that is located in a non-metropolitan area.
    (c) Adjustments.--The dollar amount referred to in subsection (b) 
shall be adjusted annually after December 31, 1999, by the annual 
percentage increase in the Consumer Price Index for Urban Wage Earners 
and Clerical Workers published by the Bureau of Labor Statistics.
    (d) Definition.--For purposes of this section, the term ``non-
metropolitan area'' means any area, no part of which is within an area 
designated as a metropolitan statistical area by the Office of 
Management and Budget.

SEC. 309. BANK OFFICERS AND DIRECTORS AS OFFICERS AND DIRECTORS OF 
              PUBLIC UTILITIES.

    Section 305(b) of the Federal Power Act (16 U.S.C. 825d(b)) is 
amended--
            (1) by striking ``(b) After six'' and inserting the 
        following:
    ``(b) Interlocking Directorates.--
            ``(1) In general.--After 6''; and
            (2) by adding at the end the following:
            ``(2) Applicability.--
                    ``(A) In general.--In the circumstances described 
                in subparagraph (B), paragraph (1) shall not apply to a 
                person that holds or proposes to hold the positions 
                of--
                            ``(i) officer or director of a public 
                        utility; and
                            ``(ii) officer or director of a bank, trust 
                        company, banking association, or firm 
                        authorized by law to underwrite or participate 
                        in the marketing of securities of a public 
                        utility.
                    ``(B) Circumstances.--The circumstances described 
                in this subparagraph are that--
                            ``(i) a person described in subparagraph 
                        (A) does not participate in any deliberations 
                        or decisions of the public utility regarding 
                        the selection of a bank, trust company, banking 
                        association, or firm to underwrite or 
                        participate in the marketing of securities of 
                        the public utility, if the person serves as an 
                        officer or director of a bank, trust company, 
                        banking association, or firm that is under 
                        consideration in the deliberation process;
                            ``(ii) the bank, trust company, banking 
                        association, or firm of which the person is an 
                        officer or director does not engage in the 
                        underwriting of, or participate in the 
                        marketing of, securities of the public utility 
                        of which the person holds the position of 
                        officer or director;
                            ``(iii) the public utility for which the 
                        person serves or proposes to serve as an 
                        officer or director selects underwriters by 
                        competitive procedures; or
                            ``(iv) the issuance of securities the 
                        public utility for which the person serves or 
                        proposes to serve as an officer or director has 
                        been approved by all Federal and State 
                        regulatory agencies having jurisdiction over 
                        the issuance.''.

SEC. 310. CONTROL OF BANKERS' BANKS.

    Section 2(a)(5)(E)(i) of the Bank Holding Company Act of 1956 (12 
U.S.C. 1841(a)(5)(E)(i)) is amended by inserting ``one or more'' before 
``thrift institutions''.

SEC. 311. MULTISTATE LICENSING AND INTERSTATE INSURANCE SALES 
              ACTIVITIES.

    (a) Findings.--Congress finds that--
            (1) the States regulate the business of insurance, 
        including the licensing of insurance agents and brokers;
            (2) the current State insurance licensing system requires 
        insurance agents and brokers to obtain licenses on a line-by-
        line, class-by-class, producer-by-producer, State-by-State 
        basis;
            (3) in the commercial and industrial insurance arena, this 
        State-based system usually requires a single agent or broker to 
        hold scores of licenses if that agent or broker intends to sell 
        or broker insurance on a nationwide basis;
            (4) because of the duplicative licensing requirements both 
        within States and from State to State, a single insurance agent 
        or broker must satisfy literally hundreds of administrative 
        filing requirements to become fully licensed to engage in the 
        sale of a full range of insurance products on a nationwide 
        basis;
            (5) these administrative requirements appear to be 
        essentially unrelated to any requisite standards of 
        professionalism;
            (6) many States impose certain requirements on insurance 
        agents and brokers that pose an undue, discriminatory burden on 
        nonresident agents, including some States that ban solicitation 
        of insurance clients by nonresident agents and brokers;
            (7) many States impose anticompetitive post-licensure 
        requirements on nonresident agents and brokers, including 
        countersignature laws that require an agent or broker servicing 
        the needs of an out-of-State client to have any insurance 
        policy that is sold ``countersigned'' by a resident agent;
            (8) in some cases, such countersignature laws also require 
        a nonresident agent or broker to pay at least half of any 
        commission earned in a State in which the agent or broker is 
        not a resident to a resident agent or broker; and
            (9) such duplicative and onerous filing requirements and 
        anticompetitive burdens inhibit interstate commerce, constitute 
        unjustifiable trade barriers, greatly undermine the competition 
        that this Act seeks to foster.
    (b) Sense of Congress.--It is the sense of the Congress that--
            (1) by the end of the 36-month period beginning on the date 
        of enactment of this Act, the States should--
                    (A) implement uniform insurance agent and broker 
                licensing application and qualification requirements 
                that result in a fully reciprocal licensing system; and
                    (B) eliminate any pre- or post-licensure 
                requirements that have the practical effect of 
                discriminating, directly or indirectly, against 
                nonresident insurance agents or brokers;
            (2) if such actions are not taken, Congress should take 
        steps to directly rectify the problems identified in subsection 
        (a); and
            (3) any entity established by the Congress to so rectify 
        the problems should be under the supervision and oversight of 
        the National Association of Insurance Commissioners.

SEC. 312. CRA SUNSHINE REQUIREMENTS.

    (a) Disclosure and Reporting.--The Federal Deposit Insurance Act 
(12 U.S.C. 1811 et seq.), is amended by adding at the end thereof the 
following new section:

``SEC. 46. CRA SUNSHINE REQUIREMENTS.

    ``(a) Public Disclosure of Agreements.--Any agreement entered into 
by an insured depository institution or affiliate with a 
nongovernmental entity or person made pursuant to or in connection with 
the Community Reinvestment Act involving funds or other resources of 
such insured depository institution or affiliate shall be in its 
entirety fully disclosed, and the full text thereof made available to 
the appropriate Federal banking agency with supervisory responsibility 
over the insured depository institution and to the public and shall 
obligate each party to comply with the provisions of this section.
    ``(b) Annual Report of Activity.--Each party to the agreement shall 
report, as applicable, to the appropriate Federal banking agency with 
supervisory responsibility over the insured depository institution, no 
less frequently than once each year, such information as the Federal 
banking agency may by rule require relating to the following actions 
taken by the party pursuant to an agreement described in subsection (a) 
during the previous 12-month period--
            ``(1) payments, fees or loans made to any party to the 
        agreement or received from any party to the agreement and the 
        terms and conditions of the same; and
            ``(2) aggregate data on loans, investments and services 
        provided by each party in its community or communities pursuant 
        to the agreement; and
            ``(3) such other pertinent matters as determined by rule by 
        the appropriate Federal banking agency with supervisory 
        responsibility over the insured depository institution.
The Federal banking agency shall ensure that the regulations 
implementing this section do not impose an undue burden on the parties 
and that proprietary and confidential information is protected.
    ``(c) Existing Agreements.--The requirements of subsection (b) (1), 
(2), and (3) shall be deemed to be fulfilled with respect to any 
agreement made prior to May 5, 1999.
    ``(d) Secondary Agreements.--Any agreement made on or after May 5, 
1999 pursuant to an agreement described in subsection (a) also is 
subject to the requirements of subsections (a) and (b).
    ``(e) Definitions.--
            ``(1) Agreement.--As used in this section, the term 
        `agreement' refers to any written contract, written 
        arrangement, or other written understanding with a value in 
        excess of $10,000 annually, or a group of substantively related 
        contracts with an aggregate value of $10,000 annually, made 
        pursuant to or in connection with the Community Reinvestment 
        Act of 1977, at least one party to which is an insured 
        depository institution or affiliate thereof, or entity owned or 
        controlled by an insured depository institution or affiliate, 
        whether organized on a profit or not-for-profit basis. The term 
        `agreement' shall not include any specific contract or 
        commitment for a loan or extension of credit to individuals, 
        businesses, farms, or other entities, where the purpose of the 
        loan or extension of credit does not include any re-lending of 
        the borrowed funds to other parties.
            ``(2) Appropriate federal banking agency and insured 
        depository institution.--As used in this section, the terms 
        `appropriate Federal banking agency' and `insured depository 
        institution' have the same meanings as defined in section 3 of 
        this Act.
    ``(d) Violations.--Any violation of the provisions of this section 
shall be considered a violation of this Act. If the party to the 
agreement that is not an insured depository institution or affiliate 
fails to comply with this section, the agreement shall not be 
enforceable after being given notice and a reasonable period of time to 
perform or comply.
    ``(e) Limitation.--Nothing in this section is intended to provide 
any authority upon any appropriate Federal banking agency to enforce 
the provisions of the agreements that are subject to the requirements 
of subsection (a).
    ``(f) Regulations.--Each appropriate Federal banking agency shall 
prescribe regulations requiring procedures reasonably designed to 
assure and monitor compliance with the requirements of this section.''.

SEC. 313. INTERSTATE BRANCHES AND AGENCIES OF FOREIGN BANKS.

    Section 5 of the International Banking Act of 1978, as amended (12 
U.S.C. 3103), is amended by striking subsection (a)(7) and substituting 
the following:

``(7) ADDITIONAL AUTHORITY FOR INTERSTATE BRANCHES AND AGENCIES OF 
              FOREIGN BANKS; UPGRADES OF CERTAIN FOREIGN BANK AGENCIES 
              AND BRANCHES

    ``Notwithstanding paragraphs (1) and (2), a foreign bank may--
            ``(A) with the approval of the Board and the Comptroller of 
        the Currency, establish and operate a Federal branch or Federal 
        agency or, with the approval of the Board and the appropriate 
        State bank supervisor, a State branch or State agency in any 
        State outside the foreign bank's home State if--
                    ``(i) the establishment and operation of such 
                branch or agency is permitted by the State in which the 
                branch or agency is to be established; and
                    ``(ii) in the case of a Federal or State branch, 
                the branch receives only such deposits as would be 
                permitted for a corporation organized under section 25A 
                of the Federal Reserve Act (12 U.S.C. 611 et seq.); or
            ``(B) with the approval of the Board and the relevant 
        licensing authority (the Comptroller in the case of a Federal 
        branch or the appropriate State supervisor in the case of a 
        State branch), upgrade an agency, or a branch of the type 
        referred to in subsection (a)(7)(A)(ii), located in a State 
        outside the foreign bank's home State, into a Federal or State 
        branch if the establishment and operation of such branch is 
        permitted by such State and--
                    ``(i) such agency or branch was in operation in 
                such State on the day before September 29, 1994, or
                    ``(ii) such agency or branch has been in operation 
                in such State for a period of time that meets the 
                State's minimum age requirement permitted under section 
                1831u(a)(5) of title 12, United States Code.''.

SEC. 314. DISCLOSURES TO CONSUMERS UNDER THE TRUTH IN LENDING ACT.

    (a) Disclosure of Late Payment Deadlines and Penalties.--Section 
127(b) of the Truth in Lending Act (15 U.S.C. 1637(b)) is amended by 
adding at the end the following:
            ``(12) If a charge is to be imposed due to the failure of 
        the obligor to make payment on or before a required payment due 
        date, the date that payment is due or, if different, the date 
        on which a late payment fee will be charged, shall be stated 
        prominently in a conspicuous location on the billing statement, 
        together with the amount of the charge to be imposed if payment 
        is made after such date.''.
    (b) Disclosures Related to ``Teaser Rates''.--Section 127(c) (15 
U.S.C. 1637(c)) is amended by inserting after paragraph (5) (as so 
redesignated by section 4 of this Act) the following:
            ``(6) Additional notice concerning `teaser rates'.--
                    ``(A) In general.--An application or solicitation 
                for a credit card for which a disclosure is required 
                under this subsection shall contain the disclosure 
                contained in subparagraph (B) or (C), as appropriate, 
                if the application or solicitation offers, for an 
                introductory period of less than 1 year, an annual 
                percentage rate of interest that--
                            ``(i) is less than the annual percentage 
                        rate of interest that will apply after the end 
                        of the introductory period; or
                            ``(ii) in the case of an annual percentage 
                        rate that varies in accordance with an index, 
                        is less than the current annual percentage rate 
                        under the index that will apply after the end 
                        of such period.
                    ``(B) Fixed annual percentage rate.--If the annual 
                percentage rate that will apply after the end of the 
                introductory period will be a fixed rate, the 
                application or solicitation shall include the following 
                disclosure: `The annual percentage rate of interest 
                applicable during the introductory period is not the 
                annual percentage rate that will apply after the end of 
                the introductory period. The permanent annual 
                percentage rate will apply after [insert applicable 
                date] and will be [insert applicable percentage 
                rate].'.
                    ``(C) Variable annual percentage rate.--If the 
                annual percentage rate that will apply after the end of 
                the introductory period will vary in accordance with an 
                index, the application or solicitation shall include 
                the following disclosure: `The annual percentage rate 
                of interest applicable during the introductory period 
                is not the annual percentage rate that will apply after 
                the end of the introductory period. The permanent 
                annual percentage rate will be determined by an index, 
                and will apply after [insert applicable date]. If the 
                index that will apply after such date were applied to 
                your account today, the annual percentage rate would be 
                [insert applicable percentage rate].'.
                    ``(D) Conditions for introductory rates.--If the 
                annual percentage rate of interest that will apply 
                during the introductory period described in 
                subparagraph (A) is revocable or otherwise conditioned 
                upon any action by the obligor, including any failure 
                by the obligor to pay the minimum payment amount or 
                finance charge or to make any payment by the stated 
                monthly payment due date, the application or 
                solicitation shall include disclosure of--
                            ``(i) the conditions that the obligor must 
                        meet to retain the annual percentage rate of 
                        interest during the introductory period; and
                            ``(ii) the annual percentage rate of 
                        interest that will apply as a result of the 
                        failure of the obligor to meet such conditions.
                    ``(E) Form of disclosure.--The disclosures required 
                under this paragraph shall be made in a clear and 
                conspicuous manner, in a prominent fashion.''.

SEC. 315. APPROVAL FOR PURCHASES OF SECURITIES.

    Section 23B(b)(2) of the Federal Reserve Act (12 U.S.C. 371c-1) is 
amended to read as follows:
    ``Subparagraph (B) of paragraph (1) shall not apply if the purchase 
or acquisition of such securities has been approved, before such 
securities are initially offered for sale to the public, by a majority 
of the directors of the bank based on a determination that the purchase 
is a sound investment for the bank irrespective of the fact that an 
affiliate of the bank is a principal underwriter of the securities.''.

SEC. 316. PROVISION OF TECHNICAL ASSISTANCE TO MICROENTERPRISES.

    (a) In General.--Title I of the Riegle Community Development and 
Regulatory Improvement Act of 1994 (12 U.S.C. 4701 et seq.) is amended 
by adding at the end the following:

    ``Subtitle C--Microenterprise Technical Assistance and Capacity 
                            Building Program

``SEC. 171. SHORT TITLE.

    ``This subtitle may be cited as the `Program for Investment in 
Microentrepreneurs Act of 1999', also referred to as the `PRIME Act'.

``SEC. 172. DEFINITIONS.

    ``For purposes of this subtitle--
            ``(1) the term `Administrator' has the same meaning as in 
        section 103;
            ``(2) the term `capacity building services' means services 
        provided to an organization that is, or is in the process of 
        becoming a microenterprise development organization or program, 
        for the purpose of enhancing its ability to provide training 
        and services to disadvantaged entrepreneurs;
            ``(3) the term `collaborative' means 2 or more nonprofit 
        entities that agree to act jointly as a qualified organization 
        under this subtitle;
            ``(4) the term `disadvantaged entrepreneur' means a 
        microentrepreneur that is--
                    ``(A) a low-income person;
                    ``(B) a very low-income person; or
                    ``(C) an entrepreneur that lacks adequate access to 
                capital or other resources essential for business 
                success, or is economically disadvantaged, as 
                determined by the Administrator;
            ``(5) the term `Fund' has the same meaning as in section 
        103;
            ``(6) the term `Indian tribe' has the same meaning as in 
        section 103;
            ``(7) the term `intermediary' means a private, nonprofit 
        entity that seeks to serve microenterprise development 
        organizations and programs as authorized under section 175;
            ``(8) the term `low-income person' has the same meaning as 
        in section 103;
            ``(9) the term `microentrepreneur' means the owner or 
        developer of a microenterprise;
            ``(10) the term `microenterprise' means a sole 
        proprietorship, partnership, or corporation that--
                    ``(A) has fewer than 5 employees; and
                    ``(B) generally lacks access to conventional loans, 
                equity, or other banking services;
            ``(11) the term `microenterprise development organization 
        or program' means a nonprofit entity, or a program administered 
        by such an entity, including community development corporations 
        or other nonprofit development organizations and social service 
        organizations, that provides services to disadvantaged 
        entrepreneurs or prospective entrepreneurs;
            ``(12) the term `training and technical assistance' means 
        services and support provided to disadvantaged entrepreneurs or 
        prospective entrepreneurs, such as assistance for the purpose 
        of enhancing business planning, marketing, management, 
        financial management skills, and assistance for the purpose of 
        accessing financial services; and
            ``(13) the term `very low-income person' means having an 
        income, adjusted for family size, of not more than 150 percent 
        of the poverty line (as defined in section 673(2) of the 
        Community Services Block Grant Act (42 U.S.C. 9902(2), 
        including any revision required by that section).

``SEC. 173. ESTABLISHMENT OF PROGRAM.

    ``The Administrator shall establish a microenterprise technical 
assistance and capacity building grant program to provide assistance 
from the Fund in the form of grants to qualified organizations in 
accordance with this subtitle.

``SEC. 174. USES OF ASSISTANCE.

    ``A qualified organization shall use grants made under this 
subtitle--
            ``(1) to provide training and technical assistance to 
        disadvantaged entrepreneurs;
            ``(2) to provide training and capacity building services to 
        microenterprise development organizations and programs and 
        groups of such organizations to assist such organizations and 
        programs in developing microenterprise training and services;
            ``(3) to aid in researching and developing the best 
        practices in the field of microenterprise and technical 
        assistance programs for disadvantaged entrepreneurs; and
            ``(4) for such other activities as the Administrator 
        determines are consistent with the purposes of this subtitle.

``SEC. 175. QUALIFIED ORGANIZATIONS.

    ``For purposes of eligibility for assistance under this subtitle, a 
qualified organization shall be--
            ``(1) a nonprofit microenterprise development organization 
        or program (or a group or collaborative thereof) that has a 
        demonstrated record of delivering microenterprise services to 
        disadvantaged entrepreneurs;
            ``(2) an intermediary;
            ``(3) a microenterprise development organization or program 
        that is accountable to a local community, working in 
        conjunction with a State or local government or Indian tribe; 
        or
            ``(4) an Indian tribe acting on its own, if the Indian 
        tribe can certify that no private organization or program 
        referred to in this paragraph exists within its jurisdiction.

``SEC. 176. ALLOCATION OF ASSISTANCE; SUBGRANTS.

    ``(a) Allocation of Assistance.--
            ``(1) In general.--The Administrator shall allocate 
        assistance from the Fund under this subtitle to ensure that--
                    ``(A) activities described in section 174(1) are 
                funded using not less than 75 percent of amounts made 
                available for such assistance; and
                    ``(B) activities described in section 174(2) are 
                funded using not less than 15 percent of amounts made 
                available for such assistance.
            ``(2) Limit on individual assistance.--No single 
        organization or entity may receive more than 10 percent of the 
        total funds appropriated under this subtitle in a single fiscal 
        year.
    ``(b) Targeted Assistance.--The Administrator shall ensure that not 
less than 50 percent of the grants made under this subtitle are used to 
benefit very low-income persons, including those residing on Indian 
reservations.
    ``(c) Subgrants Authorized.--
            ``(1) In general.--A qualified organization receiving 
        assistance under this subtitle may provide grants using that 
        assistance to qualified small and emerging microenterprise 
        organizations and programs, subject to such rules and 
        regulations as the Administrator determines to be appropriate.
            ``(2) Limit on administrative expenses.--Not more than 7.5 
        percent of assistance received by a qualified organization 
        under this subtitle may be used for administrative expenses in 
        connection with the making of subgrants under paragraph (1).
    ``(d) Diversity.--In making grants under this subtitle, the 
Administrator shall ensure that grant recipients include both large and 
small microenterprise organizations, serving urban, rural, and Indian 
tribal communities and racially and ethnically diverse populations.

``SEC. 177. MATCHING REQUIREMENTS.

    ``(a) In General.--Financial assistance under this subtitle shall 
be matched with funds from sources other than the Federal Government on 
the basis of not less than 50 percent of each dollar provided by the 
Fund.
    ``(b) Sources of Matching Funds.--Fees, grants, gifts, funds from 
loan sources, and in-kind resources of a grant recipient from public or 
private sources may be used to comply with the matching requirement in 
subsection (a).
    ``(c) Exception.--
            ``(1) In general.--In the case of an applicant for 
        assistance under this subtitle with severe constraints on 
        available sources of matching funds, the Administrator may 
        reduce or eliminate the matching requirements of subsection 
        (a).
            ``(2) Limitation.--Not more than 10 percent of the total 
        funds made available from the Fund in any fiscal year to carry 
        out this subtitle may be excepted from the matching 
        requirements of subsection (a), as authorized by paragraph (1) 
        of this subsection.

``SEC. 178. APPLICATIONS FOR ASSISTANCE.

    ``An application for assistance under this subtitle shall be 
submitted in such form and in accordance with such procedures as the 
Fund shall establish.

``SEC. 179. RECORDKEEPING.

    ``The requirements of section 115 shall apply to a qualified 
organization receiving assistance from the Fund under this subtitle as 
if it were a community development financial institution receiving 
assistance from the Fund under subtitle A.

``SEC. 180. AUTHORIZATION.

    ``In addition to funds otherwise authorized to be appropriated to 
the Fund to carry out this title, there are authorized to be 
appropriated to the Fund to carry out this subtitle--
            ``(1) $15,000,000 for fiscal year 2000;
            ``(2) $15,000,000 for fiscal year 2001;
            ``(3) $15,000,000 for fiscal year 2002; and
            ``(4) $15,000,000 for fiscal year 2003.

``SEC. 181. IMPLEMENTATION.

    ``The Administrator shall, by regulation, establish such 
requirements as may be necessary to carry out this subtitle.''.
    (b) Administrative Expenses.--Section 121(a)(2)(A) of the Riegle 
Community Development and Regulatory Improvement Act of 1994 (12 U.S.C. 
4718(a)(2)(A)) is amended--
            (1) by striking ``$5,550,000'' and inserting 
        ``$6,100,000''; and
            (2) in the first sentence, by inserting before the period 
        ``, including costs and expenses associated with carrying out 
        subtitle C''.
    (c) Conforming Amendments.--Section 104(d) of the Riegle Community 
Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4703(d)) 
is amended--
            (1) in paragraph (2)--
                    (A) by striking ``15'' and inserting ``17'';
                    (B) in subparagraph (G)--
                            (i) by striking ``9'' and inserting ``11'';
                            (ii) by redesignating clauses (iv) and (v) 
                        as clauses (v) and (vi), respectively; and
                            (iii) by inserting after clause (iii) the 
                        following:
                            ``(iv) 2 individuals who have expertise in 
                        microenterprises and microenterprise 
                        development;''; and
            (2) in paragraph (4), in the first sentence, by inserting 
        before the period ``and subtitle C''.

SEC. 317. FEDERAL RESERVE AUDITS.

    (a) In General.--The Federal Reserve Act (12 U.S.C. 221 et seq.) is 
amended by inserting after section 11A the following:

``SEC. 11B. ANNUAL INDEPENDENT AUDITS OF FEDERAL RESERVE BANKS.

    ``(a) Audit Required.--Each Federal reserve bank shall annually 
obtain an audit of the financial statements of each Federal reserve 
bank (which shall have been prepared in accordance with generally 
accepted accounting principles) using generally accepted auditing 
standards from an independent auditor that meets the requirements of 
subsection (b).
    ``(b) Auditor's Qualifications.--The independent auditor referred 
to in subsection (a) shall--
            ``(1) be a certified public accountant who is independent 
        of the Federal Reserve System; and
            ``(2) meet any other qualifications that the Board may 
        establish.
    ``(c) Certification Required.--In each audit required under 
subsection (a), the auditor shall certify to the Federal reserve bank 
and to the Board that the auditor--
            ``(1) is a certified public accountant and is independent 
        of the Federal Reserve System; and
            ``(2) conducted the audit using generally accepted auditing 
        standards.
    ``(d) Certification by Federal Reserve Bank.--Not later than 30 
days after the completion of each audit required under subsection (a), 
the Federal reserve bank shall provide to the Comptroller General of 
the United States--
            ``(1) a certification that--
                    ``(A) the Federal reserve bank has obtained the 
                audit required under subsection (a);
                    ``(B) the Federal reserve bank has received the 
                certifications of the auditor required under subsection 
                (c); and
                    ``(C) the audit fully complies with subsection (a).
    ``(e) Detection of Illegal Acts.--
            ``(1) Audit procedures.--Each audit required by this 
        section shall include procedures designed to provide reasonable 
        assurance of detecting illegal acts that would have a direct 
        and material effect on the determination of financial statement 
        amounts.
            ``(2) Reporting possible illegalities.--If, in the course 
        of conducting an audit required by this section, the 
        independent auditor detects or otherwise becomes aware of 
        information indicating that an illegal act (whether or not 
        perceived to have an effect on the financial statements of the 
        Federal reserve bank) has or may have occurred, the auditor--
                    ``(A) shall determine whether it is likely that the 
                illegal act has occurred; and
                    ``(B) shall, if the auditor determines that the 
                illegal act is likely to have occurred--
                            ``(i) determine and consider the possible 
                        effect of the illegal act on the financial 
                        statements of the Federal reserve bank; and
                            ``(ii) as soon as practicable, inform the 
                        Board that the illegal act is likely to have 
                        occurred.
            ``(3) Report to congress.--The independent auditor under 
        this section shall, as soon as practicable, directly report its 
        conclusions to the Committee on Governmental Affairs of the 
        Senate and the Committee on Government Reform of the House of 
        Representatives with regard to any possible illegal act that 
        has been detected or has otherwise come to the attention of the 
        auditor during the course of the audit required by this 
        section, if, after determining that the Board is adequately 
        informed with respect to such possible illegal act, the auditor 
        concludes that--
                    ``(A) the possible illegal act has a direct and 
                material effect on the financial statements of the 
                Federal reserve bank;
                    ``(B) the Board has not taken timely and 
                appropriate remedial actions with respect to the 
                possible illegal act; and
                    ``(C) the failure to take remedial action is 
                reasonably expected to warrant departure from a 
                standard report of the auditor when made, or warrant 
                resignation from the audit engagement.
            ``(4) Resignation of auditor.--If an independent auditor 
        resigns from its engagement to audit a Federal reserve bank 
        under paragraph (3), the auditor shall furnish to the Committee 
        on Governmental Affairs of the Senate and the Committee on 
        Government Reform of the House of Representatives, not later 
        than 1 business day after such resignation, a copy of the 
        report of the auditor (or documentation of any oral report 
        given).
    ``(f) Recordkeeping.--To facilitate compliance with this section, 
each Federal reserve bank shall--
            ``(1) ensure that the books, records, and accounts of the 
        Federal reserve bank are maintained and kept in sufficient 
        detail to accurately and fairly reflect the transactions and 
        dispositions of the assets of the bank;
            ``(2) devise and maintain a system of internal controls 
        sufficient to provide reasonable assurance that transactions 
        are recorded as necessary to permit preparation of financial 
        statements in conformity with generally accepted accounting 
        principles and to maintain accountability for assets;
            ``(3) ensure that access to assets of the Federal reserve 
        bank is permitted only in accordance with the general or 
        specific authorization of the Board; and
            ``(4) ensure that--
                    ``(A) the recorded accountability for assets is 
                compared with the existing assets at reasonable 
                intervals; and
                    ``(B) appropriate action is taken with respect to 
                any differences.
    ``(g) Reports to Board, Congress.--Not later than April 30 of each 
year, each Federal reserve bank shall submit a copy of each audit 
conducted under this section to the Board, and to the Committee on 
Governmental Affairs of the Senate and the Committee on Government 
Reform of the House of Representatives.

``SEC. 11C. INDEPENDENT AUDITS OF FEDERAL RESERVE SYSTEM AND FEDERAL 
              RESERVE BOARD.

    ``(a) Audit of Reserve System.--The Board shall annually obtain an 
audit of the consolidated financial statements of the Federal Reserve 
System (which shall have been prepared in accordance with generally 
accepted accounting principles) from an independent auditor, using 
generally accepted auditing standards, based on reports of audits of 
Federal reserve banks submitted to the Board under section 11B(g) and 
the audit of the Board under subsection (b) of this section.
    ``(b) Audit of Board.--
            ``(1) In general.--The Board shall annually obtain an audit 
        of the financial statements of the Board (which shall have been 
        prepared in accordance with generally accepted accounting 
        principles) from an independent auditor, using generally 
        accepted auditing standards.
            ``(2) Priced services audit.--
                    ``(A) In general.--As part of each audit of the 
                Board required by this subsection, the auditor shall--
                            ``(i) audit the calculation of the private 
                        sector adjustment factor established by the 
                        Board pursuant to section 11A(c)(3) for the 
                        year that is the subject of the audit; and
                            ``(ii) audit the pro forma balance sheet 
                        and income statement for the services described 
                        in section 11A(b), including the determination 
                        of revenue, expenses, and income before income 
                        taxes for each service listed in that section 
                        (in accordance with the criteria specified in 
                        section 11A(c)(3)).
                    ``(B) Report to the board.--The auditor shall 
                report the results of the audit under subparagraph 
                (A)(ii) to the Board in written form.
            ``(3) Limitation.--The evaluations and audits required by 
        this subsection shall not include deliberations, decisions, or 
        actions on monetary policy matters, including discount 
        authority under section 13, reserves of national banks, 
        securities credit, interest on deposits, and open market 
        operations.
    ``(c) Auditor's Qualifications.--An independent auditor referred to 
in this section shall--
            ``(1) be a certified public accountant and be independent 
        of the Federal Reserve System; and
            ``(2) meet any other qualifications that the Board may 
        establish.
    ``(d) Certification Required.--In each audit required under this 
section, the auditor shall certify to the Board that the auditor--
            ``(1) is a certified public accountant and is independent 
        of the Federal Reserve System; and
            ``(2) conducted the audit using generally accepted auditing 
        standards.
    ``(e) Detection of Illegal Acts.--
            ``(1) Audit procedures.--Each audit required by this 
        section shall include procedures designed to provide reasonable 
        assurance of detecting illegal acts that would have a direct 
        and material affect on the determination of financial statement 
        amounts.
            ``(2) Reporting possible illegalities.--If, in the course 
        of conducting an audit of the Federal Reserve System or the 
        Board as required by this section, the independent auditor 
        detects or otherwise becomes aware of information indicating 
        that an illegal act (whether or not perceived to have an effect 
        on the financial statements of the Federal reserve bank) has or 
        may have occurred, the auditor--
                    ``(A) shall determine whether it is likely that the 
                illegal act has occurred; and
                    ``(B) shall, if the auditor determines that the 
                illegal act is likely to have occurred--
                            ``(i) determine and consider the possible 
                        effect of the illegal act on the financial 
                        statements of the Federal Reserve System or the 
                        Board, as applicable; and
                            ``(ii) as soon as practicable, inform the 
                        Board that the illegal act is likely to have 
                        occurred.
            ``(3) Report to congress.--An independent auditor under 
        this section shall directly report, as soon as practicable, its 
        conclusions to the Committee on Governmental Affairs of the 
        Senate and the Committee on Government Reform of the House of 
        Representatives, with regard to any possible illegal act that 
        has been detected or has otherwise come to the attention of the 
        auditor during the course of an audit of the Federal Reserve 
        System or the Board required by this section, if, after 
        determining that the Board is adequately informed with respect 
        to such possible illegal act, the auditor concludes that--
                    ``(A) the possible illegal act has a direct and 
                material effect on the financial statements of the 
                Federal Reserve System or the Board, as applicable;
                    ``(B) the Board has not taken timely and 
                appropriate remedial actions with respect to the 
                possible illegal act; and
                    ``(C) the failure to take remedial action is 
                reasonably expected to warrant departure from a 
                standard report of the auditor when made, or warrant 
                resignation from the audits engagement.
            ``(4) Resignation of auditor.--If an independent auditor 
        resigns from its engagement to audit the Federal Reserve System 
        or the Board under paragraph (3), the auditor shall furnish to 
        the Committee on Governmental Affairs of the Senate and the 
        Committee on Government Reform of the House of Representatives, 
        not later than 1 business day after such resignation, a copy of 
        the report of the auditor (or documentation of any oral report 
        given).
    ``(f) Recordkeeping.--To facilitate compliance with this section, 
the Board shall--
            ``(1) ensure that the books, records, and accounts of the 
        Board are maintained and kept in sufficient detail to 
        accurately and fairly reflect the transactions and dispositions 
        of assets;
            ``(2) devise and maintain a system of internal controls 
        sufficient to provide reasonable assurance that transactions 
        are recorded as necessary to permit preparation of financial 
        statements in conformity with generally accepted accounting 
        principles and to maintain accountability for assets;
            ``(3) ensure that access to assets of the Board is 
        permitted only in accordance with general or specific 
        authorization of the Board; and
            ``(4) ensure that--
                    ``(A) the recorded accountability for assets is 
                compared with the existing assets at reasonable 
                intervals; and
                    ``(B) appropriate action is taken with respect to 
                any differences.
    ``(g) Reports to Congress.--Not later than May 31 of each year, the 
Board shall make available all audits and reports required by this 
section to the Committee on Governmental Affairs of the Senate and the 
Committee on Government Reform of the House of Representatives.''.
    (b) Federal Reserve Requirements.--
            (1) Clarification of fee schedule requirements.--
                    (A) In general.--Section 11A(b) of the Federal 
                Reserve Act (12 U.S.C. 248a(b)) is amended--
                            (i) by redesignating paragraphs (7) and (8) 
                        as paragraphs (8) and (9), respectively; and
                            (ii) by inserting after paragraph (6) the 
                        following:
            ``(7) transportation of paper checks in the clearing 
        process;''.
                    (B) Publication of revised schedule.--Not later 
                than 60 days after the date of enactment of this Act, 
                the Board of Governors of the Federal Reserve System 
                shall publish a revision of the schedule of fees 
                required under section 11A of the Federal Reserve Act 
                that reflects the changes made in the schedule in 
                accordance with the amendments made by subparagraph (A) 
                of this paragraph.
            (2) Clarification of applicable pricing criteria.--Section 
        11A(c) of the Federal Reserve Act (12 U.S.C. 248a(c)) is 
        amended by striking paragraph (3) and inserting the following:
            ``(3)(A) In each fiscal year, fees shall be established for 
        each service provided by the Federal reserve banks on the basis 
        of all direct and indirect costs actually incurred (excluding 
        the effect of any pension cost credit) in providing each of the 
        services, including interest on items credited prior to actual 
        collection, overhead, and an allocation of imputed costs, which 
        takes into account the taxes that would have been paid and the 
        return on capital that would have been provided had the 
        services been provided by a private business firm.
            ``(B) The pricing principles referred to in subparagraph 
        (A) shall be carried out with due regard to competitive factors 
        and the provision of an adequate level of such services 
        nationwide.
            ``(C)(i) Not later than 1 year after the date of enactment 
        of the Financial Services Modernization Act of 1999, and not 
        less frequently than once every 3 years thereafter, the Board 
        shall conduct a comprehensive review of the methodology used to 
        calculate the private sector adjustment factor pursuant to 
        section 11A(c)(3), including a public notice and comment 
        period.
            ``(ii) In conducting the review under clause (i), the Board 
        shall publish in the Federal Register all elements of the 
        methodology in use by the Board in the calculation of the 
        private sector adjustment factor pursuant to section 11A(c)(3) 
        provide notice and solicit public comment on the methodology, 
        requesting commentators to identify areas of the methodology 
        that are outdated, inappropriate, unnecessary, or that 
        contribute to an inaccurate result in the calculation of the 
        private sector adjustment factor.
            ``(iii) The Board shall--
                    ``(I) publish in the Federal Register a summary of 
                the comments received under this subparagraph, 
                identifying significant issues raised; and
                    ``(II) provide comment on such issues and make 
                changes to the methodology to the extent that the Board 
                considers to be appropriate.
            ``(iv) Not later than 30 days after the completion of each 
        review under clause (i), the Board shall submit to Congress a 
        report which shall include--
                    ``(I) a summary of any significant issues raised by 
                public comments received by the Board under this 
                subparagraph and the relative merits of such issues; 
                and
                    ``(II) an analysis of whether the Board is able to 
                address the concerns raised, or whether such concerns 
                should be addressed by legislation.''.

SEC. 318. STUDY AND REPORT ON ADVERTISING PRACTICES OF ONLINE BROKERAGE 
              SERVICES.

    (a) Study.--The Securities and Exchange Commission (hereafter in 
this section referred to as the ``Commission''), in consultation with 
the National Association of Securities Dealers and other interested 
parties, shall conduct a study of--
            (1) the nature and content of advertising by online 
        brokerage services in all media, including television, on the 
        Internet, radio, and in print;
            (2) if such advertising influences investors and potential 
        investors to make investment decisions, and if such advertising 
        improperly influences those investors and potential investors 
        to make inappropriate investment decisions;
            (3) whether such advertising properly discloses the risks 
        associated with trading and investing in the capital markets; 
        and
            (4) whether--
                    (A) there are appropriate regulatory mechanisms in 
                place to prevent any improper or deceptive advertising; 
                and
                    (B) the Commission has or needs additional 
                resources or authority to actively participate in such 
                regulation.
    (b) Report.--Not later than 180 days after the date of enactment of 
this Act, the Commission shall submit a report to the Congress on the 
results of the study conducted under subsection (a), together with any 
recommendations for changes that it considers necessary to protect 
investors and potential investors from improper or deceptive 
advertising.

SEC. 319. ELIGIBILITY OF COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION TO 
              BORROW FROM THE FEDERAL HOME LOAN BANK SYSTEM.

    Section 10b of the Federal Home Loan Bank Act (12 U.S.C. 1430b) is 
amended--
            (1) in subsection (a) by striking the second sentence and 
        inserting the following two sentences: ``Such mortgagees must 
        be (i) chartered institutions having succession and (ii) 
        subject to the inspection and supervision of some governmental 
        agency or a community development financial institution (other 
        than an insured depository institution or a subsidiary thereof) 
        that, at the time the advance is made, is certified under the 
        Community Development Banking and Financial Institutions Act of 
        1994. The principal activity of such mortgagees in the mortgage 
        field must consist of lending their own funds and any advances 
        may be subject to the same collateralization requirements as 
        applied to other nonmember borrowers.'';
            (2) in the last sentence of subsection (a) by replacing the 
        word ``such'' with ``the same'' and by replacing the phrase 
        ``shall be determined by the board'' with the phrase ``are 
        comparable extensions of credit to members''; and
            (3) in subsection (b) by inserting in the first sentence 
        between the words ``agency'' and ``for'' the following phrase: 
        ``or a certified community development financial institution''.

         TITLE IV--FEDERAL HOME LOAN BANK SYSTEM MODERNIZATION

SEC. 401. SHORT TITLE.

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

SEC. 402. 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. 403. 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 June 1, 
2000, 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 if, on the date of withdrawal there is in effect a 
certification by the Finance Board that the withdrawal will not cause 
the Federal Home Loan Bank System to fail to meet its obligation under 
section 21B(f)(2)(C) to contribute to the debt service for the 
obligations issued by the Resolution Funding Corporation''.

SEC. 404. 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, small farms, and 
                small agri-businesses.'';
            (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, 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', `small farm', and `small 
        agri-business' 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.''.

SEC. 405. 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'';
            (2) in the matter immediately following paragraph (2)(C)--
                    (A) by striking ``An insured'' and inserting the 
                following:
            ``(3) Certain institutions.--An insured''; and
                    (B) by striking ``preceding sentence'' and 
                inserting ``paragraph (2)''; and
            (3) by adding at the end the following new paragraph:
            ``(4) 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. 406. 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 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; and
                    (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''.
    (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. 407. 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 payment obligations 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 June 1, 2000. Payments made by a Federal Home Loan 
Bank before that effective date shall be counted toward the total 
obligation of that Bank under section 21B(f)(2)(C) of the Federal Home 
Loan Bank Act, as amended by this section.

SEC. 408. GAO STUDY ON FEDERAL HOME LOAN BANK SYSTEM CAPITAL.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study of--
            (1) possible revisions to the capital structure of the 
        Federal Home Loan Bank System, including the need for--
                    (A) more permanent capital;
                    (B) a statutory leverage ratio; and
                    (C) a risk-based capital structure; and
            (2) what impact such revisions might have on the operations 
        of the Federal Home Loan Bank System, including the obligation 
        of the Federal Home Loan Bank System under section 21B(f)(2)(C) 
        of the Federal Home Loan Bank Act.
    (b) Report to Congress.--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 on the results of the study 
conducted under subsection (a).

         TITLE V--FUNCTIONAL REGULATION OF BROKERS AND DEALERS

SEC. 501. DEFINITION OF BROKER.

    (a) It is the intention of this Act subject to carefully defined 
exceptions which do not undermine the dominant principle of functional 
regulation to ensure that securities transactions effected by a bank 
are regulated by securities regulators, notwithstanding any other 
provision of this Act.
    (b) 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 
                                of the bank 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 that 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 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 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.
                            ``(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 the bank does not 
                                solicit transactions or provide 
                                investment advice with respect to the 
                                purchase or sale of securities in 
                                connection with the plan.
                                    ``(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; and
                                            ``(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.
                                    ``(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; and
                                            ``(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.
                                    ``(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 delivery of written or 
                                electronic plan materials by a bank 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 
                                        Modernization 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 4(k)(4)(H) of the Bank Holding 
                                Company Act of 1956.
                            ``(vii) Private securities offerings.--The 
                        bank 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.
                            ``(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 503(a) of the Financial 
                        Services Modernization 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) Execution by broker or dealer.--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 such 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 title or any other securities law.
                    ``(E) Fiduciary capacity.--For purposes of 
                subparagraph (B)(ii) of this paragraph and paragraph 
                (5)(C), 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, either under a uniform gift to 
                        minor act or for an individual retirement 
                        account, or as an investment adviser if the 
                        bank receives a fee for its investment advice 
                        or services, or as a service provider to any 
                        pension, retirement, profit sharing, bonus, 
                        thrift, savings, incentive, or other similar 
                        benefit plan;
                            ``(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, on the day before the date of 
                        enactment of the Financial Services 
                        Modernization Act of 1999, subject to section 
                        15(e); and
                            ``(ii) is subject to such restrictions and 
                        requirements as the Commission considers 
                        appropriate.''.

SEC. 502. 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 in a trustee capacity or 
                                fiduciary capacity.
                            ``(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 503(a) of the Financial Services 
                        Modernization Act of 1999.''.

SEC. 503. DEFINITION AND TREATMENT OF BANKING PRODUCTS.

    (a) Definition of Traditional Banking Product.--For purposes of 
this title and paragraphs (4) and (5) of section 3(a) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(4), (5)), as amended by this 
title, 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 swap agreement (as defined in section 
        11(e)(8)(D)(vi) of the Federal Deposit Insurance Act), 
        including credit swaps and equity swaps, unless the appropriate 
        Federal banking agency determines that credit swaps and equity 
        swaps shall not be included in the definition of such term.
    (b) Transactions Involving Hybrid Products.--
            (1) Commission authority.--The Commission may, with the 
        concurrence of 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.
            (2) 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, with the concurrence of the 
        Board, determines in the regulations described in paragraph (1) 
        that--
                    (A) the subject product is a new product;
                    (B) the subject product is a security; and
                    (C) imposing the registration requirements of this 
                section is necessary or appropriate in the public 
                interest and for the protection of investors.
    (c) Classification Limited.--Classification of a particular product 
or instrument as a traditional banking product pursuant to 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 shall affect the right or authority of the Board, 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 subsection (a).
    (e) Other 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 ``Commission'' means the Securities and 
        Exchange Commission;
            (5) 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;
            (6) 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 the Federal securities laws before 
                the date of enactment of this Act; and
                    (ii) is not a traditional banking product; and
            (7) the term ``qualified investor'' has the same meaning as 
        in section 3(a)(54) of the Securities Exchange Act of 1934, as 
        added by this title.

SEC. 504. 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) Qualified investor.--
                    ``(A) Definition.--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)), 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 Small Business 
                        Administration under subsection (c) or (d) of 
                        section 301 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 that is 
                        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 not described in subparagraph (A), taking 
                into consideration such factors as the financial 
                sophistication of the person, net worth, and knowledge 
                and experience in financial matters.''.

SEC. 505. 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 of the 
                United States.''.

SEC. 506. EFFECTIVE DATE.

    This title shall become effective at the end of the 1-year period 
beginning on the date of enactment of this Act.

SEC. 507. RULE OF CONSTRUCTION.

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

          TITLE VI--UNITARY SAVINGS AND LOAN HOLDING COMPANIES

SEC. 601. 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 May 4, 1999, unless the company is 
                engaged, directly or indirectly (including through a 
                subsidiary other than a savings association), only in 
                activities that are permitted--
                            ``(i) under paragraph (1)(C) or (2) of this 
                        subsection; or
                            ``(ii) for financial holding companies 
                        under section 4(k) 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 May 4, 1999, or 
                that becomes a savings and loan holding company 
                pursuant to an application pending before the Office 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 May 
                        4, 1999, or that it acquired pursuant to an 
                        application pending before the Office 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 May 4, 1999, or a subsequent 
                        date, pursuant to an application pending before 
                        the Office on or before May 4, 1999; 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 May 4, 1999, or a subsequent 
                        date, pursuant to an application pending before 
                        the Office on or before May 4, 1999.''.
    (b) Conforming Amendment.--Section 10(o)(5)(E) of the Home Owners' 
Loan Act (15 U.S.C. 1467a(o)(5)(E)) is amended by striking ``, except 
subparagraph (B)'' and inserting ``or (c)(9)(A)(ii)''.

SEC. 602. OPTIONAL CONVERSION OF FEDERAL SAVINGS ASSOCIATIONS.

    Section 5(i) of the Home Owners' Loan Act (12 U.S.C. 1464(i)) is 
amended by adding at the end the following new paragraph:
            ``(5) Conversion to national bank.--Notwithstanding any 
        other provision of law, any Federal savings association 
        chartered and in operation prior to the date of enactment of 
        the Financial Services Modernization Act of 1999, with branches 
        in one or more States, may convert, at its option, with the 
        approval of the Comptroller of the Currency, into one or more 
        National banks, each of which may encompass one or more of the 
        branches of the Federal savings association in one or more 
        States; but only if the resulting National bank or banks will 
        meet any and all financial, management, and capital 
        requirements applicable to National banks.''.

                       TITLE VII--ATM FEE REFORM

SEC. 701. SHORT TITLE.

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

SEC. 702. ELECTRONIC FUND TRANSFER FEE DISCLOSURES AT ANY HOST ATM.

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

SEC. 703. DISCLOSURE OF POSSIBLE FEES TO CONSUMERS WHEN ATM CARD IS 
              ISSUED.

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

SEC. 704. FEASIBILITY STUDY.

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

SEC. 705. NO LIABILITY IF POSTED NOTICES ARE DAMAGED.

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

            Passed the Senate May 6, 1999.

            Attest:

                                                             Secretary.
106th CONGRESS

  1st Session

                                 S. 900

_______________________________________________________________________

                                 AN ACT

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

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