II

105TH CONGRESS

1ST SESSION S. 1405

To provide for improved monetary policy and regulatory reform in financial

institution management and activities, to streamline financial regulatory

agency actions, to provide for improved consumer credit disclosure, and

for other purposes.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 7, 1997

Mr. SHELBY (for himself, Mr. MACK, Mr. FAIRCLOTH, Mr. D’AMATO, Mr.

BRYAN, Mr. GRAMS, Mr. KERRY, Mr. BENNETT, Mr. GRAMM, Mr.

HAGEL, Mr. ALLARD, Mr. ENZI, and Ms. MOSELEY-BRAUN) introduced

the following bill; which was read twice and referred to the Committee

on Banking, Housing, and Urban Affairs

A BILL

To provide for improved monetary policy and regulatory reform in financial institution management and activities,

to streamline financial regulatory agency actions, to provide for improved consumer credit disclosure, and for

other purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Financial Regulatory Relief and Economic Efficiency Act

6 of 1997’’.
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1 (b) TABLE OF CONTENTS.—The table of contents for

2 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—IMPROVING MONETARY POLICY AND FINANCIAL

INSTITUTION MANAGEMENT PRACTICES

Sec. 101. Payment of interest on reserves at Federal reserve banks.

Sec. 102. Amendments relating to savings and demand deposit accounts at depository institutions.

Sec. 103. Repeal of savings association liquidity provision.

Sec. 104. Repeal of dividend notice requirement.

Sec. 105. Thrift service companies.

Sec. 106. Elimination of thrift multistate multiple holding company restrictions.

Sec. 107. Noncontrolling investments by savings association holding companies.

Sec. 108. Repeal of deposit broker notification and recordkeeping requirement.

Sec. 109. Uniform regulation of extensions of credit to executive officers.

Sec. 110. Expedited procedures for certain reorganizations.

Sec. 111. National bank directors.

Sec. 112. Amendment to Bank Consolidation and Merger Act.

Sec. 113. Loans on or purchases by institutions of their own stock; affiliations.

Sec. 114. Depository institution management interlocks.

Sec. 115. Purchased mortgage servicing rights.

Sec. 116. Cross marketing restriction; limited purpose bank relief.

Sec. 117. Divestiture requirement.

Sec. 118. Daylight overdrafts incurred by Federal home loan banks.

Sec. 119. Federal home loan bank governance amendments.

Sec. 120. Collateralization of advances to members.

TITLE II—STREAMLINING ACTIVITIES OF INSTITUTIONS

Sec. 201. Updating of authority for community development investments.

Sec. 202. Acceptance of brokered deposits.

Sec. 203. Federal Reserve Act lending limits.

Sec. 204. Eliminate unnecessary restrictions on product marketing.

Sec. 205. Business purpose credit extensions.

Sec. 206. Affinity groups.

Sec. 207. Fair debt collection practices.

Sec. 208. Restriction on acquisitions of other insured depository institutions.

Sec. 209. Mutual holding companies.

Sec. 210. Call report simplification.

TITLE III—STREAMLINING AGENCY ACTIONS

Sec. 301. Scheduled meetings of Affordable Housing Advisory Board.

Sec. 302. Elimination of duplicative disclosure of fair market value of assets

and liabilities.

Sec. 303. Payment of interest in receiverships with surplus funds.

Sec. 304. Repeal of reporting requirement on differences in accounting standards.

Sec. 305. Agency review of competitive factors in Bank Merger Act filings.

Sec. 306. Termination of the Thrift Depositor Protection Oversight Board.

TITLE IV—DISCLOSURE SIMPLIFICATION
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Sec. 401. Alternative compliance method for APR disclosure.

Sec. 402. Alternative compliance methods for advertising credit terms.

TITLE V—MISCELLANEOUS

Sec. 501. Positions of Board of Governors of Federal Reserve System on the

Executive Schedule.

Sec. 502. Consistent coverage for individuals enrolled in a health plan administered by the Federal banking agencies.

Sec. 503. Federal Housing Finance Board.

TITLE VI—TECHNICAL CORRECTIONS

Sec. 601. Technical correction relating to deposit insurance funds.

Sec. 602. Rules for continuation of deposit insurance for member banks converting charters.

Sec. 603. Amendments to the Revised Statutes.

Sec. 604. Conforming change to the International Banking Act.

1 TITLE I—IMPROVING MONETARY

2 POLICY AND FINANCIAL IN3 STITUTION MANAGEMENT

4 PRACTICES

5 SEC. 101. PAYMENT OF INTEREST ON RESERVES AT FED6 ERAL RESERVE BANKS.

7 (a) IN GENERAL.—Section 19(b) of the Federal Re8 serve Act (12 U.S.C. 461(b)) is amended by adding at

9 the end the following new paragraph:

10 ‘‘(12) EARNINGS ON RESERVES.—

11 ‘‘(A) IN GENERAL.—Balances maintained

12 at a Federal reserve bank by or on behalf of a

13 depository institution to meet the reserve re14 quirements of this subsection applicable with re15 spect to such depository institution may receive

16 earnings to be paid by the Federal reserve bank

17 at least once each calendar quarter at a rate or
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1 rates not to exceed the general level of short2 term interest rates.

3 ‘‘(B) REGULATIONS RELATING TO PAY4 MENTS AND DISTRIBUTION.—The Board may

5 prescribe regulations concerning—

6 ‘‘(i) the payment of earnings in ac7 cordance with this paragraph;

8 ‘‘(ii) the distribution of such earnings

9 to the depository institutions which main10 tain balances at such banks or on whose

11 behalf such balances are maintained; and

12 ‘‘(iii) the responsibilities of depository

13 institutions, Federal home loan banks, and

14 the National Credit Union Administration

15 Central Liquidity Facility with respect to

16 the crediting and distribution of earnings

17 attributable to balances maintained, in ac18 cordance with subsection (c)(1)(B), in a

19 Federal reserve bank by any such entity on

20 behalf of depository institutions which are

21 not member banks.’’.

22 (b) AUTHORIZATION FOR PASS THROUGH RESERVES

23 FOR MEMBER BANKS.—Section 19(c)(1)(B) of the Fed24 eral Reserve Act (12 U.S.C. 461(c)(1)(B)) is amended by

25 striking ‘‘which is not a member bank’’.
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1 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

2 Section 19 of the Federal Reserve Act (12 U.S.C. 461)

3 is amended—

4 (1) in subsection (b)(4) (12 U.S.C. 461(b)(4)),

5 by striking subparagraph (C) and redesignating sub6 paragraphs (D) and (E) as subparagraphs (C) and

7 (D), respectively; and

8 (2) in subsection (c)(1)(A) (12 U.S.C.

9 461(c)(1)(A)), by striking ‘‘subsection (b)(4)(C)’’

10 and inserting ‘‘subsection (b)’’.

11 SEC. 102. AMENDMENTS RELATING TO SAVINGS AND DE12 MAND DEPOSIT ACCOUNTS AT DEPOSITORY

13 INSTITUTIONS.

14 (a) NOW ACCOUNTS AUTHORIZED FOR ALL BUSI15 NESSES.—Section 2 of Public Law 93–100 (12 U.S.C.

16 1832) is amended to read as follows:

17 ‘‘SEC. 2. WITHDRAWALS BY NEGOTIABLE OR TRANSFER18 ABLE INSTRUMENTS FOR TRANSFERS TO

19 THIRD PARTIES.

20 ‘‘Notwithstanding any other provision of law, any de21 pository institution (as defined in section 3 of the Federal

22 Deposit Insurance Act) may permit the owner of any de23 posit or account to make withdrawals from such deposit

24 or account by negotiable or transferable instruments for

25 the purpose of making payments to third parties.’’.
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1 (b) REPEAL OF PROHIBITIONS ON PAYMENT OF IN2 TEREST ON DEMAND DEPOSITS.—

3 (1) FEDERAL RESERVE ACT.—Section 19 of the

4 Federal Reserve Act (12 U.S.C. 371a) is amended

5 by striking subsection (i).

6 (2) HOME OWNERS’ LOAN ACT.—The first sen7 tence of section 5(b)(1)(B) of the Home Owners’

8 Loan Act (12 U.S.C. 1464(b)(1)(B)) is amended by

9 striking ‘‘savings association may not—’’ and all

10 that follows through ‘‘(ii) permit any’’ and inserting

11 ‘‘savings association may not permit any’’.

12 (3) FEDERAL DEPOSIT INSURANCE ACT.—Sec13 tion 18 of the Federal Deposit Insurance Act (12

14 U.S.C. 1828) is amended by striking subsection (g).

15 SEC. 103. REPEAL OF SAVINGS ASSOCIATION LIQUIDITY

16 PROVISION.

17 (a) REPEAL OF LIQUIDITY PROVISION.—Section 6 of

18 the Home Owners’ Loan Act (12 U.S.C. 1465) is repealed.

19 (b) CONFORMING AMENDMENTS.—

20 (1) SECTION 5.—Section 5(c)(1)(M) of the

21 Home Owners’ Loan Act (12 U.S.C. 1464(c)(1)(M))

22 is amended to read as follows:

23 ‘‘(M) LIQUIDITY INVESTMENTS.—Invest24 ments identified by the Director, including

25 cash, funds on deposit at a Federal reserve
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1 bank or a Federal home loan bank, or bankers’

2 acceptances.’’.

3 (2) SECTION 10.—Section 10(m)(4)(B)(iii) of

4 the Home Owners’ Loan Act (12 U.S.C.

5 1467a(m)(4)(B)(iii)) is amended by striking ‘‘liquid

6 assets’’ and all that follows through ‘‘Loan Act,’’

7 and inserting ‘‘cash and marketable securities identi8 fied by the Director,’’.

9 SEC. 104. REPEAL OF DIVIDEND NOTICE REQUIREMENT.

10 Section 10(f) of the Home Owners’ Loan Act (12

11 U.S.C. 1467a(f)) is amended to read as follows:

12 ‘‘(f) [Reserved].’’.

13 SEC. 105. THRIFT SERVICE COMPANIES.

14 (a) STREAMLINING THRIFT SERVICE COMPANY IN15 VESTMENT REQUIREMENTS.—Section 5(c)(4)(B) of the

16 Home Owners’ Loan Act (12 U.S.C. 1464(c)(4)(B)) is

17 amended—

18 (1) in the subparagraph heading, by striking

19 ‘‘CORPORATIONS’’ and inserting ‘‘COMPANIES’’; and

20 (2) in the first sentence, by striking ‘‘corpora21 tion organized’’ and all that follows through ‘‘such

22 State.’’ and inserting ‘‘company, if such company

23 engages or will engage only in activities reasonably

24 related to the activities of financial institutions, as

25 the Director may determine and approve. For pur-
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1 poses of this subparagraph, the term ‘company’ in2 cludes any corporation and any limited liability com3 pany (as defined in section 1(b)(7) of the Bank

4 Service Company Act).’’.

5 (b) REGULATION AND EXAMINATION OF SERVICE

6 PROVIDERS.—Section 5(d) of the Home Owners’ Loan

7 Act (12 U.S.C. 1464(d)) is amended by adding at the end

8 the following new paragraphs:

9 ‘‘(7) REGULATION AND EXAMINATION OF SAV10 INGS ASSOCIATION SERVICE COMPANIES.—

11 ‘‘(A) SERVICE PERFORMED BY CONTRACT

12 OR OTHERWISE.—If a savings association, sub13 sidiary, or any savings and loan affiliate or en14 tity, as identified by section 8(b)(9) of the Fed15 eral Deposit Insurance Act, that is regularly ex16 amined or subject to examination by the Direc17 tor, causes to be performed for itself, by con18 tract or otherwise, any services authorized

19 under this Act or other applicable Federal law,

20 whether on or off its premises—

21 ‘‘(i) such performance shall be subject

22 to regulation and examination by the Di23 rector to the same extent as if such serv24 ices were being performed by the savings

25 association on its own premises;
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1 ‘‘(ii) the Director may authorize any

2 other Federal banking agency (as defined

3 in section 3 of the Federal Deposit Insur4 ance Act) that supervises such subsidiary,

5 savings and loan affiliate, or entity to per6 form an examination referred to in clause

7 (i); and

8 ‘‘(iii) the savings association shall no9 tify the Director of the existence of the

10 service relationship not later than 30 days

11 after the earlier of the date of the making

12 of such service contract or the date of initi13 ation of the service.

14 ‘‘(B) ADMINISTRATION BY THE DIREC15 TOR.—The Director may issue such regulations

16 and orders, including those issued pursuant to

17 section 8 of the Federal Deposit Insurance Act,

18 as may be necessary to enable the Director to

19 administer and carry out this paragraph and to

20 prevent evasion of this paragraph.’’.

21 (c) CONFORMING AMENDMENTS TO SECTION 8 OF

22 THE FEDERAL DEPOSIT INSURANCE ACT.—Section 8 of

23 the Federal Deposit Insurance Act (12 U.S.C. 1818) is

24 amended—
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1 (1) in subsection (b)(9), by striking ‘‘to any

2 service corporation of a savings association and to

3 any subsidiary of such service corporation’’; and

4 (2) in subsection (e)(7)(A)(ii), by striking

5 ‘‘(b)(8)’’ and inserting ‘‘(b)(9)’’.

6 SEC. 106. ELIMINATION OF THRIFT MULTISTATE MULTIPLE

7 HOLDING COMPANY RESTRICTIONS.

8 Section 10(e) of the Home Owners’ Loan Act (12

9 U.S.C. 1467a(e)) is amended—

10 (1) by striking paragraph (3); and

11 (2) by redesignating paragraphs (4), (5), and

12 (6) as paragraphs (3), (4), and (5), respectively.

13 SEC. 107. NONCONTROLLING INVESTMENTS BY SAVINGS

14 ASSOCIATION HOLDING COMPANIES.

15 Section 10(e)(1)(A)(iii) of the Home Owners’ Loan

16 Act (12 U.S.C. 1467a(e)(1)(A)(iii)) is amended—

17 (1) by inserting ‘‘, except with the prior ap18 proval of the Director,’’ after ‘‘or to retain’’; and

19 (2) by striking ‘‘to so acquire or retain’’ and in20 serting ‘‘to acquire, by purchase or otherwise, or to

21 retain’’.

22 SEC. 108. REPEAL OF DEPOSIT BROKER NOTIFICATION AND

23 RECORDKEEPING REQUIREMENT.

24 Section 29A of the Federal Deposit Insurance Act

25 (12 U.S.C. 1831f–1) is repealed.
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1 SEC. 109. UNIFORM REGULATION OF EXTENSIONS OF

2 CREDIT TO EXECUTIVE OFFICERS.

3 Section 22(g)(4) of the Federal Reserve Act (12

4 U.S.C. 375a(4)) is amended by striking ‘‘member bank’s

5 appropriate Federal banking agency’’ and inserting

6 ‘‘Board’’.

7 SEC. 110. EXPEDITED PROCEDURES FOR CERTAIN REORGA8 NIZATIONS.

9 The National Bank Consolidation and Merger Act

10 (12 U.S.C. 215 et seq.) is amended—

11 (1) by redesignating section 5 as section 7; and

12 (2) by inserting after section 4 the following

13 new section:

14 ‘‘SEC. 5. EXPEDITED PROCEDURES FOR CERTAIN REORGA15 NIZATIONS.

16 ‘‘(a) IN GENERAL.—A national banking association

17 may, with the approval of the Comptroller, pursuant to

18 rules and regulations promulgated by the Comptroller, and

19 upon the affirmative vote of the shareholders of such asso20 ciation owning at least two-thirds of its capital stock out21 standing, reorganize so as to become a subsidiary of a

22 bank holding company or a company that will, upon con23 summation of such reorganization, become a bank holding

24 company.
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1 ‘‘(b) REORGANIZATION PLAN.—A reorganization au2 thorized under subsection (a) shall be carried out in ac3 cordance with a reorganization plan that—

4 ‘‘(1) specifies the manner in which the reorga5 nization shall be carried out;

6 ‘‘(2) is approved by a majority of the entire

7 board of directors of the association;

8 ‘‘(3) specifies—

9 ‘‘(A) the amount of cash or securities of

10 the bank holding company, or both, or other

11 consideration, to be paid to the shareholders of

12 the reorganizing association in exchange for

13 their shares of stock of the association;

14 ‘‘(B) the date as of which the rights of

15 each shareholder to participate in such ex16 change will be determined; and

17 ‘‘(C) the manner in which the exchange

18 will be carried out; and

19 ‘‘(4) is submitted to the shareholders of the re20 organizing association at a meeting to be held on the

21 call of the directors in accordance with the proce22 dures prescribed in connection with a merger of a

23 national bank under section 3.

24 ‘‘(c) RIGHTS OF DISSENTING SHAREHOLDERS.—If,

25 pursuant to this section, a reorganization plan has been
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1 approved by the shareholders and the Comptroller, any

2 shareholder of the association who has voted against the

3 reorganization at the meeting referred to in subsection

4 (b)(4), or has given notice in writing at or prior to that

5 meeting to the presiding officer that the shareholder dis6 sents from the reorganization plan, shall be entitled to re7 ceive the value of his or her shares, as provided by section

8 3 for the merger of a national bank.

9 ‘‘(d) EFFECT OF REORGANIZATION.—The corporate

10 existence of an association that reorganizes in accordance

11 with this section shall not be deemed to have been affected

12 in any way by reason of such reorganization.’’.

13 SEC. 111. NATIONAL BANK DIRECTORS.

14 (a) AMENDMENTS TO THE REVISED STATUTES.—

15 Section 5145 of the Revised Statutes (12 U.S.C. 71) is

16 amended—

17 (1) by striking ‘‘for one year’’ and inserting

18 ‘‘for a period of not more than 3 years,’’; and

19 (2) by adding at the end the following: ‘‘In ac20 cordance with regulations issued by the Comptroller

21 of the Currency, an association may adopt bylaws

22 that provide for staggering the terms of its direc23 tors.’’.

24 (b) AMENDMENT TO THE BANKING ACT OF 1933.—

25 Section 31 of the Banking Act of 1933 (12 U.S.C. 71a)
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1 is amended in the first sentence, by inserting before the

2 period ‘‘, except that the Comptroller of the Currency may,

3 by regulation or order, exempt a national banking associa4 tion from the 25-member limit established by this sec5 tion’’.

6 SEC. 112. AMENDMENT TO BANK CONSOLIDATION AND

7 MERGER ACT.

8 The National Bank Consolidation and Merger Act

9 (12 U.S.C. 215 et seq.) is amended by inserting after sec10 tion 5, as added by section 110 of this Act, the following

11 new section:

12 ‘‘SEC. 6. MERGERS AND CONSOLIDATIONS WITH SUBSIDI13 ARIES AND NONBANK AFFILIATES.

14 ‘‘(a) IN GENERAL.—Upon the approval of the Comp15 troller, a national banking association may merge with 1

16 or more of its subsidiaries or nonbank affiliates.

17 ‘‘(b) SCOPE.—Nothing in this section shall be con18 strued—

19 ‘‘(1) to affect the applicability of section

20 18(c)(1) of the Federal Deposit Insurance Act; or

21 ‘‘(2) to grant a national banking association

22 any power or authority that is not permissible for a

23 national banking association under other applicable

24 provisions of law.
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1 ‘‘(c) REGULATIONS.—The Comptroller shall promul2 gate regulations to implement this section.’’.

3 SEC. 113. LOANS ON OR PURCHASES BY INSTITUTIONS OF

4 THEIR OWN STOCK; AFFILIATIONS.

5 (a) AMENDMENT TO REVISED STATUTES.—Section

6 5201 of the Revised Statutes of the United States (12

7 U.S.C. 83) is amended to read as follows:

8 ‘‘SEC. 5201. LOANS BY BANK ON ITS OWN STOCK.

9 ‘‘(a) GENERAL PROHIBITION.—No national banking

10 association shall make any loan or discount on the security

11 of the shares of its own capital stock.

12 ‘‘(b) EXCLUSION.—For purposes of this section, an

13 association shall not be deemed to be making a loan or

14 discount on the security of the shares of its own capital

15 stock if it acquires the stock to prevent loss upon a debt

16 contracted for in good faith before the date of the loan

17 or discount transaction.’’.

18 (b) AMENDMENT TO FEDERAL DEPOSIT INSURANCE

19 ACT.—Section 18 of the Federal Deposit Insurance Act

20 (12 U.S.C. 1828) is amended by adding at the end the

21 following new subsection:

22 ‘‘(t) LOANS BY INSURED INSTITUTIONS ON THEIR

23 OWN STOCK.—
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1 ‘‘(1) GENERAL PROHIBITION.—No insured de2 pository institution shall make any loan or discount

3 on the security of the shares of its own capital stock.

4 ‘‘(2) EXCLUSION.—For purposes of this sub5 section, an insured depository institution shall not be

6 deemed to be making a loan or discount on the secu7 rity of the shares of its own capital stock if it ac8 quires the stock to prevent loss upon a debt con9 tracted for in good faith before the date of the loan

10 or discount transaction.’’.

11 (c) REMOVAL OF PROHIBITION ON CERTAIN AFFILI12 ATIONS.—Section 18(s)(1) of the Federal Deposit Insur13 ance Act (12 U.S.C. 1828(s)) is amended by striking ‘‘be

14 an affiliate of,’’.

15 SEC. 114. DEPOSITORY INSTITUTION MANAGEMENT INTER16 LOCKS.

17 Section 205(8) of the Depository Institution Manage18 ment Interlocks Act (12 U.S.C. 3204(8)) is amended by

19 striking ‘‘director’’ each place it appears and inserting

20 ‘‘management official’’.

21 SEC. 115. PURCHASED MORTGAGE SERVICING RIGHTS.

22 Section 475(a) of the Federal Deposit Insurance Cor23 poration Improvement Act of 1991 (12 U.S.C. 1828 note)

24 is amended—

25 (1) by striking ‘‘purchased’’;
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1 (2) by striking ‘‘rights’’ each place it appears

2 and inserting ‘‘assets’’; and

3 (3) by striking ‘‘90’’ and inserting ‘‘100’’.

4 SEC. 116. CROSS MARKETING RESTRICTION; LIMITED PUR5 POSE BANK RELIEF.

6 (a) CROSS MARKETING RESTRICTION.—Section 4(f)

7 of the Bank Holding Company Act of 1956 (12 U.S.C.

8 1843(f)) is amended by striking paragraph (3).

9 (b) DAYLIGHT OVERDRAFTS.—Section 4(f) of the

10 Bank Holding Company Act of 1956 (12 U.S.C. 1843(f))

11 is amended by inserting after paragraph (2) the following:

12 ‘‘(3) PERMISSIBLE OVERDRAFTS DESCRIBED.—

13 For purposes of paragraph (2)(C), an overdraft is

14 described in this paragraph if—

15 ‘‘(A) such overdraft results from an inad16 vertent computer or accounting error that is be17 yond the control of both the bank and the affili18 ate;

19 ‘‘(B) such overdraft—

20 ‘‘(i) is permitted or incurred on behalf

21 of an affiliate that is monitored by, reports

22 to, and is recognized as a primary dealer

23 by the Federal Reserve Bank of New York;

24 and
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1 ‘‘(ii) is fully secured, as required by

2 the Board, by bonds, notes, or other obli3 gations that are direct obligations of the

4 United States or on which the principal

5 and interest are fully guaranteed by the

6 United States or by securities and obliga7 tions eligible for settlement on the Federal

8 Reserve book entry system; or

9 ‘‘(C) such overdraft—

10 ‘‘(i) is permitted or incurred by, or on

11 behalf of, an affiliate that is engaged in ac12 tivities that are so closely related to bank13 ing, or managing or controlling banks, as

14 to be a proper incident thereto; and

15 ‘‘(ii) does not cause the bank to vio16 late any provision of section 23A or 23B of

17 the Federal Reserve Act, either directly, in

18 the case of a bank that is a member of the

19 Federal Reserve System, or by virtue of

20 section 18(j) of the Federal Deposit Insur21 ance Act, in the case of a bank that is not

22 a member of the Federal Reserve Sys23 tem.’’.

24 (c) CONFORMING AMENDMENT.—Section 4(f)(2) of

25 the Bank Holding Company Act of 1956 (12 U.S.C.
19

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1 1843(f)(2)) is amended by striking ‘‘Paragraph (1) shall

2 cease to apply to any company described in such para3 graph if—’’ and inserting ‘‘Subject to paragraph (3), a

4 company described in paragraph (1) shall no longer qual5 ify for the exemption provided under that paragraph

6 if—’’.

7 (d) ACTIVITIES LIMITATIONS.—Section 4(f)(2) of the

8 Bank Holding Company Act of 1956 (12 U.S.C.

9 1843(f)(2)) is amended by striking subparagraph (B) and

10 inserting the following:

11 ‘‘(B) any bank subsidiary of such company

12 engages in any activity in which the bank was

13 not lawfully engaged as of March 5, 1987;

14 ‘‘(C) any bank subsidiary of such company

15 that—

16 ‘‘(i) accepts demand deposits or de17 posits that the depositor may withdraw by

18 check or similar means for payment to

19 third parties; and

20 ‘‘(ii) engages in the business of mak21 ing commercial loans (and, for purposes of

22 this clause, loans made in the ordinary

23 course of a credit card operation shall not

24 be treated as commercial loans); or
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1 ‘‘(D) after the date of enactment of the

2 Competitive Equality Amendments of 1987, any

3 bank subsidiary of such company permits any

4 overdraft (including any intraday overdraft), or

5 incurs any such overdraft in the account of the

6 bank at a Federal reserve bank, on behalf of an

7 affiliate, other than an overdraft described in

8 paragraph (3).’’.

9 SEC. 117. DIVESTITURE REQUIREMENT.

10 (a) IN GENERAL.—Section 4(f)(4) of the Bank Hold11 ing Company Act of 1956 (12 U.S.C. 1843(f)(4)) is

12 amended to read as follows:

13 ‘‘(4) DIVESTITURE IN CASE OF LOSS OF EX14 EMPTION.—If any company described in paragraph

15 (1) fails to qualify for the exemption provided under

16 such paragraph by operation of paragraph (2), such

17 exemption shall cease to apply to such company and

18 such company shall divest control of each bank it

19 controls before the end of the 180-day period begin20 ning on the date that the company receives notice

21 from the Board that the company has failed to con22 tinue to qualify for such exemption, unless before

23 the end of such 180-day period, the company has—

24 ‘‘(A) either—
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1 ‘‘(i) corrected the condition or ceased

2 the activity that caused the company to

3 fail to continue to qualify for the exemp4 tion; or

5 ‘‘(ii) submitted a plan to the Board

6 for approval to cease the activity or correct

7 the condition in a timely manner (which

8 shall not exceed 1 year); and

9 ‘‘(B) implemented procedures that are rea10 sonably adapted to avoid the reoccurrence of

11 such condition or activity.’’.

12 (b) TECHNICAL AND CONFORMING AMENDMENT.—

13 Section 4(f)(2) of the Bank Holding Company Act of 1956

14 (12 U.S.C. 1843(f)(2)) is amended by striking ‘‘Para15 graph (1) shall cease to apply to any company described

16 in such paragraph if—’’ and inserting ‘‘A company de17 scribed in paragraph (1) shall no longer qualify for the

18 exemption provided under such paragraph if—’’.

19 SEC. 118. DAYLIGHT OVERDRAFTS INCURRED BY FEDERAL

20 HOME LOAN BANKS.

21 The Federal Reserve Act (12 U.S.C. 221 et seq.) is

22 amended by inserting after section 11A the following new

23 section:
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1 ‘‘SEC. 11B. DAYLIGHT OVERDRAFTS INCURRED BY FED2 ERAL HOME LOAN BANKS.

3 ‘‘(a) IN GENERAL.—Any policy or regulation adopted

4 by the Board governing payment system risk or intraday

5 credit shall—

6 ‘‘(1) include—

7 ‘‘(A) the establishment of net debit caps

8 appropriate to the credit quality of each Fed9 eral Home Loan Bank; and

10 ‘‘(B) the imposition of normal fees for day11 light overdrafts, calculated in the same manner

12 as fees for other users; or

13 ‘‘(2) exempt Federal Home Loan Banks from

14 such policy or regulation.

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

16 term ‘Federal Home Loan Bank’ has the same meaning

17 as in section 2 of the Federal Home Loan Bank Act.’’.

18 SEC. 119. FEDERAL HOME LOAN BANK GOVERNANCE

19 AMENDMENTS.

20 The Federal Home Loan Bank Act (12 U.S.C. 1421

21 et seq.) is amended—

22 (1) in section 7(i) (12 U.S.C. 1427(i)), by strik23 ing ‘‘, subject to the approval of the board’’;

24 (2) in section 12(a) (12 U.S.C. 1432(a))—

25 (A) by striking ‘‘, but, except’’ and all that

26 follows through ‘‘ten years’’;
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•S 1405 IS

1 (B) by striking ‘‘and by its board of direc2 tors’’ and all that follows through ‘‘enjoyed sub3 ject to the approval of the Board’’ and inserting

4 ‘‘and, by its board of directors, to prescribe,

5 amend, and repeal bylaws governing the man6 ner in which its affairs may be administered,

7 consistent with this Act’’; and

8 (C) by adding at the end the following: ‘‘A

9 Federal home loan bank shall not be required

10 to submit to the board of directors of the bank

11 for its approval, budget or business plans, in12 cluding annual operating and capital budgets,

13 strategic plans, or business plans.’’;

14 (3) in section 9 (12 U.S.C. 1429)—

15 (A) in the second sentence, by striking

16 ‘‘with the approval of the Board’’; and

17 (B) in the third sentence, by striking ‘‘,

18 subject to the approval of the Board,’’;

19 (4) in section 10(a)(5) (12 U.S.C.

20 1430(a)(5))—

21 (A) by striking ‘‘and the Board’’; and

22 (B) by striking ‘‘by the Board’’ and insert23 ing ‘‘by the Federal home loan bank’’.
24

•S 1405 IS

1 (5) in section 10(c) (12 U.S.C. 1430(c)), by

2 striking ‘‘Board’’ and inserting ‘‘Federal home loan

3 bank’’;

4 (6) in section 10(d) (12 U.S.C. 1430(d))—

5 (A) by striking ‘‘and the approval of the

6 Board’’; and

7 (B) by striking ‘‘Subject to the approval of

8 the Board, any’’ and inserting ‘‘Any’’; and

9 (7) in section 16(a) (12 U.S.C. 1436(a)), by

10 striking ‘‘, and then only with the approval of the

11 Federal Housing Finance Board’’.

12 SEC. 120. COLLATERALIZATION OF ADVANCES TO MEM13 BERS.

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

15 (12 U.S.C. 1430(a)) is amended—

16 (1) by striking paragraph (1) and inserting the

17 following:

18 ‘‘(1) Fully disbursed, whole first mortgages on

19 improved residential property that are not more than

20 90 days delinquent, mortgages on improved residen21 tial property insured or guaranteed by the United

22 States Government or any agency thereof, or securi23 ties representing a whole interest in such mort24 gages.’’; and
25

•S 1405 IS

1 (2) in paragraph (4), by striking ‘‘If an ad2 vance’’ and all that follows through ‘‘is appro3 priate.’’.

4 TITLE II—STREAMLINING

5 ACTIVITIES OF INSTITUTIONS

6 SEC. 201. UPDATING OF AUTHORITY FOR COMMUNITY DE7 VELOPMENT INVESTMENTS.

8 Section 5(c)(3)(A) of the Home Owners’ Loan Act

9 (12 U.S.C. 1464(c)(3)(A)) is amended by striking ‘‘lo10 cated’’ and all that follows through ‘‘1974’’ and inserting

11 ‘‘for the primary purpose of promoting the public welfare,

12 including the welfare of low- and moderate-income com13 munities or families (including the provision of housing,

14 services, or jobs)’’.

15 SEC. 202. ACCEPTANCE OF BROKERED DEPOSITS.

16 Section 29 of the Federal Deposit Insurance Act (12

17 U.S.C. 1831f) is amended—

18 (1) by striking subsections (e) and (h);

19 (2) by redesignating subsections (f) through (g)

20 as subsections (e) through (f), respectively;

21 (3) in subsection (f), as redesignated, by strik22 ing paragraph (3) and redesignating paragraph (4)

23 as paragraph (3); and

24 (4) by adding at the end the following new sub25 section:
26

•S 1405 IS

1 ‘‘(g) DEPOSIT SOLICITATIONS RESTRICTED.—

2 ‘‘(1) IN GENERAL.—An insured depository in3 stitution may not solicit deposits by offering rates of

4 interest that are significantly higher than the na5 tional rate of interest on insured deposits, as estab6 lished by the Corporation, if—

7 ‘‘(A) the institution is undercapitalized or

8 adequately capitalized, as those terms are de9 fined in section 38; or

10 ‘‘(B) the Corporation has been appointed

11 conservator for the institution.

12 ‘‘(2) EXCLUSION.—Paragraph (1) does not

13 apply to an insured depository institution that is

14 well capitalized, as defined in section 38.’’.

15 SEC. 203. FEDERAL RESERVE ACT LENDING LIMITS.

16 Section 11 of the Federal Reserve Act (12 U.S.C.

17 248) is amended—

18 (1) by striking subsection (m); and

19 (2) by redesignating subsection (o) as sub20 section (m).

21 SEC. 204. ELIMINATE UNNECESSARY RESTRICTIONS ON

22 PRODUCT MARKETING.

23 Section 106(b) of the Bank Holding Company Act

24 Amendments of 1970 (12 U.S.C. 1972) is amended—

25 (1) by striking paragraph (1);
27

•S 1405 IS

1 (2) in paragraph (2)—

2 (A) by striking ‘‘(2)’’; and

3 (B) by redesignating subparagraphs (A)

4 through (I) as paragraphs (1) through (9), re5 spectively;

6 (3) in paragraph (6), as redesignated—

7 (A) by redesignating clauses (i) through

8 (ix) as subparagraphs (A) through (I), respec9 tively;

10 (B) by striking ‘‘clause (i)’’ each place it

11 appears and inserting ‘‘subparagraph (A)’’;

12 (C) in subparagraph (B), as redesig13 nated—

14 (i) by redesignating subclauses (I) and

15 (II) as clauses (i) and (ii), respectively;

16 (ii) by striking ‘‘(aa)’’ each place it

17 appears and inserting ‘‘(I)’’;

18 (iii) by striking ‘‘(bb)’’ each place it

19 appears and inserting ‘‘(II)’’; and

20 (iv) by striking ‘‘(cc)’’ each place it

21 appears and inserting ‘‘(III)’’;

22 (D) in subparagraph (C), as redesig23 nated—
28

•S 1405 IS

1 (i) by striking ‘‘clauses (i) and (ii)’’

2 and inserting ‘‘subparagraphs (A) and

3 (B)’’;

4 (ii) by redesignating subclauses (I)

5 and (II) as clauses (i) and (ii), respec6 tively;

7 (iii) in clause (i), as redesignated, by

8 redesignating items (aa) through (cc) as

9 subclauses (I) through (III), respectively;

10 and

11 (iv) by striking ‘‘clause (iv)’’ and in12 serting ‘‘subparagraph (D)’’;

13 (E) in subparagraph (D), as redesig14 nated—

15 (i) by striking ‘‘clause (iii)’’ each place

16 it appears and inserting ‘‘subparagraph

17 (C)’’;

18 (ii) by redesignating subclauses (I)

19 and (II) as clauses (i) and (ii), respec20 tively;

21 (iii) by striking ‘‘(aa)’’ and inserting

22 ‘‘(I)’’; and

23 (iv) by striking ‘‘(bb)’’ and inserting

24 ‘‘(II)’’; and
29

•S 1405 IS

1 (F) in subparagraph (E), as redesig2 nated—

3 (i) by striking ‘‘(ii) or (iii)’’ and in4 serting ‘‘(B), or (C)’’; and

5 (ii) by redesignating subclauses (I)

6 through (III) as clauses (i) through (iii),

7 respectively;

8 (4) in paragraph (7), as redesignated—

9 (A) by redesignating clauses (i) and (ii) as

10 subparagraphs (A) and (B), respectively; and

11 (B) in subparagraph (A), as redesig12 nated—

13 (i) by redesignating paragraphs (1)

14 through (4) as clauses (i) through (iv), re15 spectively;

16 (ii) by striking ‘‘(a)’’ each place it ap17 pears and inserting ‘‘(I)’’;

18 (iii) by striking ‘‘(b)’’ each place it ap19 pears and inserting ‘‘(II)’’; and

20 (iv) by striking ‘‘(c)’’ each place it ap21 pears and inserting ‘‘(III)’’;

22 (5) by striking ‘‘this paragraph’’ each place it

23 appears and inserting ‘‘this subsection’’; and

24 (6) by striking ‘‘this subparagraph’’ each place

25 it appears and inserting ‘‘this paragraph’’.
30

•S 1405 IS

1 SEC. 205. BUSINESS PURPOSE CREDIT EXTENSIONS.

2 Section 4 of the Bank Holding Company Act of 1956

3 (12 U.S.C. 1843) is amended by adding at the end the

4 following new subsection:

5 ‘‘(k) BUSINESS PURPOSE CREDIT EXTENSIONS.—

6 ‘‘(1) IN GENERAL.—An institution referred to

7 in section 2(c)(2)(F) or 4(f)(3) may engage in the

8 provision of credit card accounts for business pur9 poses, including the issuance of such accounts to

10 small businesses.

11 ‘‘(2) DEFINITION.—For purposes of this sub12 section, the term ‘credit card’ has the same meaning

13 as in section 103 of the Truth In Lending Act (15

14 U.S.C. 1602).’’.

15 SEC. 206. AFFINITY GROUPS.

16 (a) DEFINITIONS.—For purposes of this section—

17 (1) the term ‘‘affinity group’’ means any per18 son, other than an individual, that—

19 (A) is established for a common objective

20 or purpose;

21 (B) is not established by 1 or more settle22 ment service providers for the principal purpose

23 of endorsing the products or services of a settle24 ment service provider;
31

•S 1405 IS

1 (C) the common objective or purpose of

2 which is not principally the conduct of settle3 ment services; and

4 (D) does not consist of member organiza5 tions whose principal business is providing set6 tlement services; and

7 (2) the terms ‘‘person’’, ‘‘settlement services’’,

8 and ‘‘thing of value’’ have the meanings given those

9 terms in section 3 of the Real Estate Settlement

10 Procedures Act of 1974 (12 U.S.C. 2602).

11 (b) MARKETING MODERNIZATION.—Notwithstanding

12 any other provision of law, it shall not be unlawful to make

13 a payment or otherwise transfer any thing of value to an

14 affinity group for or in connection with an endorsement

15 (written or oral), either through an advertisement or

16 through a communication addressed to a consumer by

17 name or by mailing address, of the products or services

18 of a settlement service provider, if disclosure is clearly

19 made at the time of the first written communication with

20 the consumer of the fact that a payment has been made

21 or may be made or any other thing of value may accrue

22 to the affinity group for the endorsement.
32

•S 1405 IS

1 SEC. 207. FAIR DEBT COLLECTION PRACTICES.

2 (a) EXEMPTION FOR COMMUNICATIONS INVOLVING

3 LEGAL PROCEEDINGS.—Section 803 of the Fair Debt Col4 lection Practices Act (15 U.S.C. 1692a) is amended—

5 (1) in paragraph (2)—

6 (A) by striking ‘‘communication’ means

7 the’’ and inserting the following: ‘‘communica8 tion’—

9 ‘‘(A) means the’’; and

10 (B) by striking the period at the end and

11 inserting the following: ‘‘; and

12 ‘‘(B) does not include communications

13 made pursuant to the Federal Rules of Civil

14 Procedure, in the case of a proceeding in a

15 State court, the rules of civil procedure avail16 able under the laws of that State, or a non17 judicial foreclosure proceeding.’’; and

18 (2) in paragraph (5)—

19 (A) by striking ‘‘debt’ means any’’ and in20 serting the following: ‘‘debt’—

21 ‘‘(A) means any’’;

22 (B) by striking the period at the end and

23 inserting the following: ‘‘; and

24 ‘‘(B) does not include a draft drawn on a

25 bank for a sum certain, payable on demand and

26 signed by the maker.’’.
33

•S 1405 IS

1 (b) COLLECTION ACTIVITY FOLLOWING INITIAL NO2 TICE.—Section 809 of the Fair Debt Collection Practices

3 Act (15 U.S.C. 1692(g)) is amended by adding at the end

4 the following new subsection:

5 ‘‘(d) CONTINUATION DURING PERIOD.—Collection

6 activities and communications may continue during the

7 30-day period described in subsection (a) unless the

8 consumer requests the cessation of such activities.’’.

9 (c) DEFINITION OF ‘‘COMMUNICATION’’.—Section

10 803 of the Fair Debt Collection Practices Act (15 U.S.C.

11 1692a) is amended—

12 (1) by striking ‘‘title—’’ and inserting ‘‘title,

13 the following definitions shall apply:’’; and

14 (2) in paragraph (2)—

15 (A) by striking ‘‘term ‘communication’

16 means’’ and inserting ‘‘term ‘communication’—

17 ‘‘(A) means’’;

18 (B) by striking the period at the end and

19 inserting ‘‘; and

20 ‘‘(B) does not include any communication

21 made or action taken to collect on loans made,

22 insured, or guaranteed under the Higher Edu23 cation Act of 1965.’’.
34

•S 1405 IS

1 SEC. 208. RESTRICTION ON ACQUISITIONS OF OTHER IN2 SURED DEPOSITORY INSTITUTIONS.

3 Section 4(f)(12) of the Bank Holding Company Act

4 of 1956 (12 U.S.C. 1843(f)(12)) is amended—

5 (1) in subparagraph (A), by striking ‘‘or’’ at

6 the end;

7 (2) in subparagraph (B), by striking the period

8 at the end and inserting ‘‘; or’’; and

9 (3) by adding at the end the following new sub10 paragraph:

11 ‘‘(C) in an acquisition in which the insured

12 institution has been found to be undercapital13 ized by the appropriate Federal or State au14 thority.’’.

15 SEC. 209. MUTUAL HOLDING COMPANIES.

16 Section 10(o) of the Home Owners’ Loan Act (12

17 U.S.C. 1467a(o)) is amended—

18 (1) by striking paragraph (1) and inserting the

19 following:

20 ‘‘(1) REORGANIZATION.—A savings association

21 operating in mutual form may reorganize so as to

22 become a holding company—

23 ‘‘(A) by chartering a savings association,

24 the stock of which is to be wholly owned, except

25 as otherwise provided in this section, directly or

26 indirectly by the mutual association and by
35

•S 1405 IS

1 transferring the substantial part of its assets

2 and liabilities, by merger or otherwise, including

3 all of its insured liabilities, to the interim sav4 ings association;

5 ‘‘(B) by converting to a stock association

6 charter and simultaneously forming a subsidi7 ary stock holding company that owns 100 per8 cent of the voting stock of the converting asso9 ciation; or

10 ‘‘(C) in any other manner approved by the

11 Director, including by the formation of a sub12 sidiary stock holding company, transferring as13 sets and liabilities by merger or otherwise to

14 the subsidiary stock holding company, or

15 through the use of one or more interim institu16 tions.’’;

17 (2) in paragraph (3)(D)—

18 (A) by striking ‘‘savings association’’ and

19 inserting ‘‘the mutual holding company or sub20 sidiary stock holding company’’;

21 (B) by striking ‘‘such capital’’ and insert22 ing ‘‘the capital of the association’’;

23 (C) by striking ‘‘association’s’’; and

24 (D) by inserting ‘‘of the association’’ be25 fore ‘‘established’’;
36

•S 1405 IS

1 (3) in paragraph (5)—

2 (A) by inserting ‘‘or subsidiary stock hold3 ing company’’ before ‘‘may engage’’;

4 (B) in subparagraph (A)—

5 (i) by inserting ‘‘or acquiring’’ after

6 ‘‘Investing in’’; and

7 (ii) by inserting ‘‘, savings bank, or

8 bank’’ before the period; and

9 (C) in subparagraph (C), by inserting ‘‘or

10 bank’’ before the period;

11 (4) by striking paragraph (7) and inserting the

12 following:

13 ‘‘(7) CHARTERING AND REGULATION.—

14 ‘‘(A) IN GENERAL.—A mutual holding

15 company shall be chartered by the Director,

16 and a subsidiary stock holding company may be

17 chartered under State law, and such holding

18 companies shall be subject to such regulations

19 as the Director may prescribe. Unless the con20 text otherwise requires, a mutual holding com21 pany shall be subject to the other requirements

22 of this section regarding regulation of holding

23 companies.

24 ‘‘(B) CONVERSION TO STATE CHARTER.—

25 A mutual holding company organized pursuant
37

•S 1405 IS

1 to paragraph (1) may convert its charter to a

2 State mutual holding company charter.

3 ‘‘(C) CONVERSION TO FEDERAL CHAR4 TER.—Notwithstanding any other provision of

5 Federal law, a mutual holding company orga6 nized under State law may convert its State

7 mutual holding company charter to a Federal

8 mutual holding company charter.’’;

9 (5) in paragraph (8)—

10 (A) in subparagraph (A), by inserting ‘‘or

11 subsidiary stock holding company’’ after ‘‘com12 pany’’; and

13 (B) by striking subparagraph (B) and in14 serting the following:

15 ‘‘(B) ISSUANCE OF SHARES.—This section

16 shall not prohibit a savings association or sub17 sidiary stock holding company chartered as part

18 of a transaction described in paragraph (1)

19 from—

20 ‘‘(i) issuing any nonvoting shares or

21 less than 50 percent of the voting share of

22 such association or subsidiary stock hold23 ing company to any person other than the

24 mutual holding company;
38

•S 1405 IS

1 ‘‘(ii) issuing all of the voting shares of

2 such association to a subsidiary stock hold3 ing company, if more than 50 percent of

4 the voting shares of the subsidiary stock

5 holding company are owned by the mutual

6 holding company; and

7 ‘‘(iii) issuing to any person other than

8 the mutual holding company, in connection

9 with the formation of the mutual holding

10 company or at a later date, a separate

11 class of voting shares, the rights and pref12 erences of which are identical to those of

13 the class of voting shares issued to the mu14 tual holding company, except with respect

15 to the payment of dividends.

16 ‘‘(C) MUTUAL SAVINGS ASSOCIATION.—In

17 the case of a mutual savings association in

18 which holders of accounts or obligors exercise

19 voting rights, such holders of accounts or obli20 gors shall have the right to subscribe on a pri21 ority basis for voting shares of the subsidiary

22 stock holding company or savings association

23 chartered pursuant to paragraph (1), pursuant

24 to regulations of the Director, but only with re25 spect to the voting shares issued in connection
39

•S 1405 IS

1 with the initial reorganization pursuant to para2 graph (1). The priority subscription rights ap3 plicable to voting shares issued to the mutual

4 holding company in connection with the initial

5 reorganization pursuant to paragraph (1) shall

6 be exercisable at such time as the shares are

7 subsequently sold by the subsidiary savings as8 sociation or subsidiary stock holding com9 pany.’’;

10 (6) in paragraph (9)(A)(i)(I), by inserting ‘‘, di11 rectly or indirectly,’’ after ‘‘owned’’; and

12 (7) in paragraph (10)—

13 (A) by striking ‘‘subsection—’’ and insert14 ing ‘‘subsection, the following definitions shall

15 apply:’’; and

16 (B) by adding at the end the following:

17 ‘‘(D) SUBSIDIARY STOCK HOLDING COM18 PANY.—The term ‘subsidiary stock holding

19 company’ means a stock holding company orga20 nized under applicable State law, that is wholly21 owned, except as otherwise provided in this sec22 tion, by the mutual holding company.’’.

23 SEC. 210. CALL REPORT SIMPLIFICATION.

24 (a) MODERNIZATION OF CALL REPORT FILING AND

25 DISCLOSURE SYSTEM.—In order to reduce the adminis-
40

•S 1405 IS

1 trative requirements pertaining to bank reports of condi2 tion, savings association financial reports, and bank hold3 ing company consolidated and parent-only financial state4 ments, and to improve the timeliness of such reports and

5 statements, the Federal banking agencies shall—

6 (1) work jointly to develop a system under

7 which—

8 (A) insured depository institutions and

9 their affiliates may file such reports and state10 ments electronically; and

11 (B) the Federal banking agencies may

12 make such reports and statements available to

13 the public electronically; and

14 (2) not later than 1 year after the date of en15 actment of this Act, report to the Congress and

16 make recommendations for legislation that would en17 hance efficiency for filers and users of such reports

18 and statements.

19 (b) UNIFORM REPORTS AND SIMPLIFICATION OF IN20 STRUCTIONS.—The Federal banking agencies shall, con21 sistent with the principles of safety and soundness, work

22 jointly—

23 (1) to adopt a single form for the filing of core

24 information required to be submitted under Federal
41

•S 1405 IS

1 law to all such agencies in the reports and state2 ments referred to in subsection (a); and

3 (2) to simplify instructions accompanying such

4 reports and statements and to provide an index to

5 the instructions that is adequate to meet the needs

6 of both filers and users.

7 (c) REVIEW OF CALL REPORT SCHEDULE.—Each

8 Federal banking agency shall—

9 (1) review the information required by sched10 ules supplementing the core information referred to

11 in subsection (b); and

12 (2) eliminate requirements that are not war13 ranted for reasons of safety and soundness or other

14 public purposes.

15 TITLE III—STREAMLINING

16 AGENCY ACTIONS

17 SEC. 301. SCHEDULED MEETINGS OF AFFORDABLE HOUS18 ING ADVISORY BOARD.

19 Section 14(b)(6)(A) of the Resolution Trust Corpora20 tion Completion Act (12 U.S.C. 1831q note) is amended—

21 (1) by striking ‘‘4 times a year, or more fre22 quently if requested’’ and inserting ‘‘2 times a year,

23 or as requested’’; and

24 (2) by striking ‘‘In each year’’ and all that fol25 lows through ‘‘located.’’.
42

•S 1405 IS

1 SEC. 302. ELIMINATION OF DUPLICATIVE DISCLOSURE OF

2 FAIR MARKET VALUE OF ASSETS AND LIABIL3 ITIES.

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

5 Act (12 U.S.C. 1831n(a)(3)) is amended by striking sub6 paragraph (D).

7 SEC. 303. PAYMENT OF INTEREST IN RECEIVERSHIPS WITH

8 SURPLUS FUNDS.

9 Section 11(d)(10) of the Federal Deposit Insurance

10 Act (12 U.S.C. 1821(d)(10)) is amended by adding at the

11 end the following new subparagraph:

12 ‘‘(C) RULEMAKING AUTHORITY OF COR13 PORATION.—The Corporation may prescribe

14 such rules, including definitions of terms, as it

15 deems appropriate to establish the interest rate

16 for or to make payments of postinsolvency in17 terest to creditors holding proven claims against

18 the receivership estates of insured Federal or

19 State depository institutions following satisfac20 tion by the receiver of the principal amount of

21 all creditor claims.’’.

22 SEC. 304. REPEAL OF REPORTING REQUIREMENT ON DIF23 FERENCES IN ACCOUNTING STANDARDS.

24 Section 37 of the Federal Deposit Insurance Act (12

25 U.S.C. 1831n) is amended by striking subsection (c).
43

•S 1405 IS

1 SEC. 305. AGENCY REVIEW OF COMPETITIVE FACTORS IN

2 BANK MERGER ACT FILINGS.

3 (a) REPORT REQUIRED.—Section 18(c)(4) of the

4 Federal Deposit Insurance Act (12 U.S.C. 1828(c)(4)) is

5 amended by striking ‘‘request reports’’ and all that follows

6 through the end of the paragraph and inserting the follow7 ing: ‘‘request a report on the competitive factors involved

8 from the Attorney General. The report shall be furnished

9 not later than 30 calendar days after the date on which

10 it is requested, or not later than 10 calendar days after

11 such date if the requesting agency advises the Attorney

12 General that an emergency exists requiring expeditious ac13 tion.’’.

14 (b) TIMING OF TRANSACTION.—Section 18(c)(6) of

15 the Federal Deposit Insurance Act (12 U.S.C. 1828(c)(6))

16 is amended by striking the third sentence and inserting

17 the following: ‘‘If the agency has advised the Attorney

18 General of the existence of an emergency requiring expedi19 tious action and has requested a report on the competitive

20 factors within 10 days, the transaction may not be con21 summated before the fifth calendar day after the date of

22 approval by the agency.’’.

23 (c) EVALUATION OF COMPETITIVE EFFECT.—

24 (1) AMENDMENTS TO BANK HOLDING COMPANY

25 ACT OF 1956.—Section 3(c) of the Bank Holding
44

•S 1405 IS

1 Company Act of 1956 (12 U.S.C. 1842(c)) is

2 amended—

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

4 paragraph:

5 ‘‘(6) EVALUATION OF COMPETITIVE EFFECT.—

6 The Board may not disapprove of a transaction pur7 suant to paragraph (1)(B) unless the Board takes

8 into account—

9 ‘‘(A) competition from institutions, other

10 than depository institutions (as defined in sec11 tion 3 of the Federal Deposit Insurance Act),

12 that provide financial services;

13 ‘‘(B) efficiencies and cost savings that the

14 transaction may create;

15 ‘‘(C) deposits of the participants in the

16 transaction that are not derived from the rel17 evant market;

18 ‘‘(D) the capacity of savings associations

19 to make small business loans;

20 ‘‘(E) lending by institutions other than de21 pository institutions to small businesses; and

22 ‘‘(F) such other factors as the Board

23 deems relevant.’’; and
45

•S 1405 IS

1 (B) in paragraph (1), by striking ‘‘re2 straint or trade’’ and inserting ‘‘restraint of

3 trade’’.

4 (2) AMENDMENTS TO FEDERAL DEPOSIT IN5 SURANCE ACT.—Section 18(c)(5) of the Federal De6 posit Insurance Act (12 U.S.C. 1828(c)(5)) is

7 amended—

8 (A) by redesignating subparagraphs (A)

9 and (B) as clauses (i) and (ii), respectively;

10 (B) by inserting ‘‘(A)’’ after ‘‘(5)’’;

11 (C) by striking ‘‘In every case’’ and insert12 ing the following:

13 ‘‘(B) In every case under this subsection’’; and

14 (D) by adding at the end the following:

15 ‘‘(C) The responsible agency may not dis16 approve of a transaction pursuant to subparagraph

17 (A), unless the agency takes into account—

18 ‘‘(i) competition from institutions that pro19 vide financial services;

20 ‘‘(ii) efficiencies and cost savings that the

21 transaction may create;

22 ‘‘(iii) deposits of the participants in the

23 transaction that are not derived from the rel24 evant markets;
46

•S 1405 IS

1 ‘‘(iv) the capacity of the institutions to

2 make small business loans;

3 ‘‘(v) lending by institutions other than de4 pository institutions to small businesses; and

5 ‘‘(vi) such other factors as the responsible

6 agency deems relevant.’’.

7 SEC. 306. TERMINATION OF THE THRIFT DEPOSITOR PRO8 TECTION OVERSIGHT BOARD.

9 (a) IN GENERAL.—Effective 3 months after the date

10 of enactment of this Act, the Thrift Depositor Protection

11 Oversight Board established under section 21A of the

12 Federal Home Loan Bank Act (hereafter in this section

13 referred to as the ‘‘Board’’) is terminated.

14 (b) DISPOSITION OF AFFAIRS.—

15 (1) IN GENERAL.—Effective on the date of en16 actment of this Act, the Chairman of the Board (or

17 the designee of the Chairman) may exercise on be18 half of the Board any power of the Board necessary

19 to settle and conclude the affairs of the Board.

20 (2) AVAILABILITY OF FUNDS.—Funds available

21 to the Board shall be available to the Chairman of

22 the Board to pay expenses incurred in carrying out

23 paragraph (1).

24 (c) SAVINGS PROVISION.—
47

•S 1405 IS

1 (1) EXISTING RIGHTS, DUTIES, AND OBLIGA2 TIONS NOT AFFECTED.—Nothing in this Act affects

3 the validity of any right, duty, or obligation of the

4 United States, the Board, the Resolution Trust Cor5 poration, or any other person, that—

6 (A) arises under or pursuant to the Fed7 eral Home Loan Bank Act, or any other provi8 sion of law applicable with respect to the

9 Board; and

10 (B) existed on the day before the effective

11 date of the termination of the Board under this

12 Act.

13 (2) CONTINUATION OF SUITS.—No action or

14 other proceeding commenced by or against the

15 Board with respect to any function of the Board

16 shall abate by reason of the enactment of this Act.

17 (3) LIABILITIES.—All liabilities arising out of

18 the operation of the Board during the period begin19 ning on August 9, 1989, and ending on the date

20 that is 3 months after the date of enactment of this

21 Act shall remain the direct liabilities of the United

22 States. The Secretary of the Treasury shall not be

23 substituted for the Board as a party to any such ac24 tion or proceeding.
48

•S 1405 IS

1 (4) CONTINUATIONS OF ORDERS, RESOLUTIONS,

2 DETERMINATIONS, AND REGULATIONS PERTAINING

3 TO THE RESOLUTION FUNDING CORPORATION.—

4 (A) IN GENERAL.—Each order, resolution,

5 determination, and regulation regarding the

6 Resolution Funding Corporation shall continue

7 in effect according to its terms until modified,

8 terminated, set aside, or superseded in accord9 ance with applicable law, if such order, resolu10 tion, determination, or regulation—

11 (i) was issued, made, and prescribed,

12 or allowed to become effective by the

13 Board or by a court of competent jurisdic14 tion, in the performance of functions trans15 ferred by this Act; and

16 (ii) is in effect on the date that is 3

17 months after the date of enactment of this

18 Act.

19 (B) ENFORCEABILITY.—All orders, resolu20 tions, determinations, and regulations pertain21 ing to the Resolution Funding Corporation are

22 enforceable by and against—

23 (i) the United States prior to the ef24 fective date of the transfer of responsibil-
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1 ities to the Secretary of the Treasury

2 under this Act; and

3 (ii) the Secretary of the Treasury on

4 and after the effective date of the transfer

5 of responsibilities to the Secretary of the

6 Treasury under this Act.

7 (d) TRANSFER OF CERTAIN RESOLUTION FUNDING

8 CORPORATION RESPONSIBILITIES TO SECRETARY OF

9 TREASURY.—Effective 3 months after the date of enact10 ment of this Act, the authorities and duties of the Board

11 under sections 21A(a)(6)(I) and 21B of the Federal Home

12 Loan Bank Act are transferred to the Secretary of the

13 Treasury (or the designee of the Secretary).

14 (e) MEMBERSHIP OF THE AFFORDABLE HOUSING

15 ADVISORY BOARD.—Effective on the date of enactment of

16 this Act, section 14(b)(2) of the Resolution Trust Cor17 poration Completion Act (12 U.S.C. 1831q note) is

18 amended by striking subparagraph (C) and redesignating

19 subparagraphs (D) and (E) as subparagraphs (C) and

20 (D), respectively.
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1 TITLE IV—DISCLOSURE

2 SIMPLIFICATION

3 SEC. 401. ALTERNATIVE COMPLIANCE METHOD FOR APR

4 DISCLOSURE.

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

6 (15 U.S.C. 1637a(a)(2)(G)) is amended by inserting be7 fore the semicolon ‘‘or, at the option of the creditor, a

8 statement that the periodic payments may increase or de9 crease substantially’’.

10 SEC. 402. ALTERNATIVE COMPLIANCE METHODS FOR AD11 VERTISING CREDIT TERMS.

12 (a) DOWNPAYMENT AMOUNTS.—Section 144(d) of

13 the Truth in Lending Act (15 U.S.C. 1664(d)) is amend14 ed—

15 (1) by striking ‘‘or the number of installments

16 or the period of repayment, then’’; and

17 (2) by inserting ‘‘or’’ before ‘‘the dollar’’.

18 (b) ALTERNATIVE DISCLOSURES.—Chapter 3 of the

19 Truth in Lending Act (15 U.S.C. 1661 et seq.) is amended

20 by adding at the end the following new section:

21 ‘‘SEC. 148. ALTERNATIVE DISCLOSURES.

22 ‘‘(a) IN GENERAL.—A radio or television advertise23 ment to aid, promote, or assist, directly or indirectly, any

24 extension of consumer credit may satisfy the disclosure re25 quirements in sections 143, 144(d), 147(a), or 147(e), by
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1 complying with all of the requirements in subsections (b)

2 and (c) of this section.

3 ‘‘(b) INFORMATION TO BE DISCLOSED.—A radio or

4 television advertisement referred to in subsection (a) com5 plies with this subsection if it clearly and conspicuously

6 sets forth, in such form and manner as the Board may

7 require—

8 ‘‘(1) the annual percentage rate of any finance

9 charge, and with respect to an open-end credit plan,

10 the simple interest rate or the periodic rate in addi11 tion to the annual percentage rate;

12 ‘‘(2) whether the interest rate may vary;

13 ‘‘(3) if the advertisement states an introductory

14 rate (or states with respect to a variable-rate plan

15 an initial rate that is not based on the index and

16 margin used to make later rate adjustments)—

17 ‘‘(A) with equal prominence, the annual

18 percentage rate that will be in effect after the

19 introductory or initial rate period expires (or

20 for a variable-rate plan, a reasonably current

21 annual percentage rate that would have been in

22 effect using the index and margin); and

23 ‘‘(B) the period during which the introduc24 tory or initial rate will remain in effect;
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1 ‘‘(4) the amount of any annual fee for an open2 end credit plan;

3 ‘‘(5) a telephone number established in accord4 ance with subsection (c) that may be used by con5 sumers to obtain all of the information otherwise re6 quired to be disclosed pursuant to sections 143 and

7 144(d), and subsections (a) and (e) of section 147;

8 and

9 ‘‘(6) a statement that the consumer may use

10 the telephone number established in accordance with

11 subsection (c) to obtain further details about addi12 tional terms and costs associated with the offer of

13 credit.

14 ‘‘(c) REQUIREMENTS FOR TELEPHONE NUMBERS.—

15 In the case of an advertisement described in subsection

16 (b) that refers to a telephone number—

17 ‘‘(1) the creditor shall establish the telephone

18 number for a broadcast area not later than the date

19 on which the advertisement is first broadcast in that

20 area;

21 ‘‘(2) the required information shall be available

22 by telephone for a broadcast area for a period of not

23 less than 10 days following the date of the final

24 broadcast of the advertisement in that area;
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1 ‘‘(3) the creditor shall provide all of the infor2 mation that is otherwise required pursuant to sec3 tions 143 and 144(d), and subsections (a) and (e)

4 of section 147 orally by telephone or, if requested by

5 the consumer, in written form; and

6 ‘‘(4) the consumer shall obtain the required in7 formation by telephone without incurring any long8 distance charges.’’.

9 TITLE V—MISCELLANEOUS

10 SEC. 501. POSITIONS OF BOARD OF GOVERNORS OF FED11 ERAL RESERVE SYSTEM ON THE EXECUTIVE

12 SCHEDULE.

13 (a) IN GENERAL.—

14 (1) POSITIONS AT LEVEL I OF THE EXECUTIVE

15 SCHEDULE.—Section 5312 of title 5, United States

16 Code, is amended by adding at the end the follow17 ing:

18 ‘‘Chairman, Board of Governors of the Federal

19 Reserve System.’’.

20 (2) POSITIONS AT LEVEL II OF THE EXECUTIVE

21 SCHEDULE.—Section 5313 of title 5, United States

22 Code, is amended—

23 (A) by striking ‘‘Chairman, Board of Gov24 ernors of the Federal Reserve System.’’; and

25 (B) by adding at the end the following:
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1 ‘‘Members, Board of Governors of the Federal

2 Reserve System.’’.

3 (3) POSITIONS AT LEVEL III OF THE EXECU4 TIVE SCHEDULE.—Section 5314 of title 5, United

5 States Code, is amended by striking ‘‘Members,

6 Board of Governors of the Federal Reserve Sys7 tem.’’.

8 (b) EFFECTIVE DATE.—This section and the amend9 ments made by this section shall take effect on the first

10 day of the first pay period for the Chairman and Members

11 of the Board of Governors of the Federal Reserve System

12 beginning on or after the date of enactment of this section.

13 SEC. 502. CONSISTENT COVERAGE FOR INDIVIDUALS EN14 ROLLED IN A HEALTH PLAN ADMINISTERED

15 BY THE FEDERAL BANKING AGENCIES.

16 (a) ENROLLMENT IN CHAPTER 89 PLAN.—For pur17 poses of chapter 89 of title 5, United States Code, any

18 period of enrollment shall be deemed to be a period of en19 rollment in a health benefits plan under chapter 89 of such

20 title, if such enrollment is—

21 (1) in a health benefits plan administered by

22 the Federal Deposit Insurance Corporation before

23 the termination of such plan on January 3, 1998; or

24 (2) subject to subsection (c), in a health bene25 fits plan (not under chapter 89 of such title) with
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1 respect to which the eligibility of any employees or

2 retired employees of the Board of Governors of the

3 Federal Reserve System terminates on January 3,

4 1998.

5 (b) ENROLLMENT; CONTINUED COVERAGE.—

6 (1) ENROLLMENT.—Subject to subsection (c),

7 any individual who, on January 3, 1998, is enrolled

8 in a health benefits plan described in paragraph (1)

9 or (2) of subsection (a) may enroll in an approved

10 health benefits plan under chapter 89 of title 5,

11 United States Code, either as an individual or for

12 self and family, if, after taking into account the pro13 visions of subsection (a), such individual—

14 (A) meets the requirements of that chapter

15 89 for eligibility to become so enrolled as an

16 employee, annuitant, or former spouse (within

17 the meaning of that chapter); or

18 (B) would meet the requirements of that

19 chapter 89 if, to the extent such requirements

20 involve either retirement system under such

21 title 5, such individual satisfies similar require22 ments or provisions of the Retirement Plan for

23 Employees of the Federal Reserve System.

24 (2) DETERMINATIONS.—Any determination

25 under paragraph (1)(B) shall be made under guide-
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1 lines established by the Office of Personnel Manage2 ment in consultation with the Board of Governors of

3 the Federal Reserve System.

4 (3) CONTINUED COVERAGE.—Subject to sub5 section (c), any individual who, on January 3, 1998,

6 is entitled to continued coverage under a health ben7 efits plan described in paragraph (1) or (2) of sub8 section (a) shall be deemed to be entitled to contin9 ued coverage under section 8905a of title 5, United

10 States Code, but only for the same remaining period

11 as would have been allowable under the health bene12 fits plan in which such individual was enrolled on

13 January 3, 1998, if—

14 (A) the individual had remained enrolled in

15 that plan; and

16 (B) that plan did not terminate, or the eli17 gibility of such individual with respect to that

18 plan did not terminate, as described in sub19 section (a).

20 (4) COMPARABLE TREATMENT.—Subject to

21 subsection (c), any individual (other than an individ22 ual under paragraph (3)) who, on January 3, 1998,

23 is covered under a health benefits plan described in

24 paragraph (1) or (2) of subsection (a) as an unmar25 ried dependent child, but who does not then qualify
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1 for coverage under chapter 89 of title 5, United

2 States Code, as a family member (within the mean3 ing of that chapter) shall be deemed to be entitled

4 to continued coverage under section 8905a of that

5 title, to the same extent and in the same manner as

6 if such individual had, on January 3, 1998, ceased

7 to meet the requirements for being considered an

8 unmarried dependent child of an enrollee under such

9 chapter.

10 (5) EFFECTIVE DATE.—Coverage under chapter

11 89 of title 5, United States Code, pursuant to an en12 rollment under this section shall become effective on

13 January 4, 1998.

14 (c) ELIGIBILITY FOR FEHBP LIMITED TO INDIVID15 UALS LOSING ELIGIBILITY UNDER FORMER HEALTH

16 PLAN.—Nothing in subsection (a)(2) or any paragraph of

17 subsection (b) (to the extent that paragraph (2) relates

18 to the plan described in subsection (a)(2)) shall be consid19 ered to apply with respect to any individual whose eligi20 bility for coverage under the plan does not involuntarily

21 terminate on January 3, 1998.

22 (d) TRANSFERS TO THE EMPLOYEES HEALTH BENE23 FITS FUND.—The Federal Deposit Insurance Corporation

24 and the Board of Governors of the Federal Reserve Sys25 tem shall transfer to the Employees Health Benefits
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1 Fund, under section 8909 of title 5, United States Code,

2 amounts determined by the Director of the Office of Per3 sonnel Management, after consultation with the Federal

4 Deposit Insurance Corporation and the Board of Gov5 ernors of the Federal Reserve System, to be necessary to

6 reimburse the Fund for the cost of providing benefits

7 under this section not otherwise paid for by the individuals

8 covered by this section. The amounts so transferred shall

9 be held in the Fund and used by the Office of Personnel

10 Management in addition to amounts available under sec11 tion 8906(g)(1) of title 5, United States Code.

12 (e) ADMINISTRATION AND REGULATIONS.—The Of13 fice of Personnel Management—

14 (1) shall administer the provisions of this sec15 tion to provide for—

16 (A) a period of notice and open enrollment

17 for individuals affected by this section; and

18 (B) no lapse of health coverage for individ19 uals who enroll in a health benefits plan under

20 chapter 89 of title 5, United States Code, in ac21 cordance with this section; and

22 (2) may prescribe regulations to implement this

23 section.
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1 SEC. 503. FEDERAL HOUSING FINANCE BOARD.

2 Section 2A(b)(2) of the Federal Home Loan Bank

3 Act (12 U.S.C. 1422a(b)(2)) is amended—

4 (1) by striking subparagraph (B); and

5 (2) by redesignating subparagraphs (C) and

6 (D) as subparagraphs (B) and (C), respectively.

7 TITLE VI—TECHNICAL

8 CORRECTIONS

9 SEC. 601. TECHNICAL CORRECTION RELATING TO DEPOSIT

10 INSURANCE FUNDS.

11 (a) IN GENERAL.—Section 2707 of the Deposit In12 surance Funds Act of 1996 (Public Law 104–208; 110

13 Stat. 3009–496) is amended by striking ‘‘7(b)(2)(C)’’ and

14 inserting ‘‘7(b)(2)(E)’’.

15 (b) EFFECTIVE DATE.—The amendment made by

16 subsection (a) shall be deemed to have the same effective

17 date as section 2707 of the Deposit Insurance Funds Act

18 of 1996.

19 SEC. 602. RULES FOR CONTINUATION OF DEPOSIT INSUR20 ANCE FOR MEMBER BANKS CONVERTING

21 CHARTERS.

22 Section 8(o) of the Federal Deposit Insurance Act

23 (12 U.S.C. 1818(o)) is amended in the second sentence,

24 by striking ‘‘subsection (d) of section 4’’ and inserting

25 ‘‘subsection (c) or (d) of section 4’’.
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1 SEC. 603. AMENDMENTS TO THE REVISED STATUTES.

2 (a) WAIVER OF CITIZENSHIP REQUIREMENT FOR

3 NATIONAL BANK DIRECTORS.—Section 5146 of the Re4 vised Statutes of the United States (12 U.S.C. 72) is

5 amended in the first sentence, by inserting before the pe6 riod ‘‘, and waive the requirement of citizenship in the case

7 of not more than a minority of the total number of direc8 tors’’.

9 (b) TECHNICAL AMENDMENT TO THE REVISED

10 STATUTES.—Section 329 of the Revised Statutes of the

11 United States (12 U.S.C. 11) is amended by striking ‘‘to

12 be interested in any association issuing national currency

13 under the laws of the United States’’ and inserting ‘‘to

14 hold an interest in any national bank’’.

15 (c) REPEAL OF UNNECESSARY CAPITAL AND SUR16 PLUS REQUIREMENT.—Section 5138 of the Revised Stat17 utes of the United States (12 U.S.C. 51) is repealed.

18 SEC. 604. CONFORMING CHANGE TO THE INTERNATIONAL

19 BANKING ACT.

20 Section 4(b) of the International Banking Act of

21 1978 (12 U.S.C. 3102(b)) is amended in the second sen22 tence, by striking paragraph (1) and by redesignating

23 paragraphs (2) through (4) as paragraphs (1) through

24 (3), respectively.

Æ