I

106TH CONGRESS

1ST SESSION H. R. 1585

To streamline the regulation of depository institutions, to safeguard confidential banking and credit union supervisory information, and for other

purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 27, 1999

Mrs. ROUKEMA introduced the following bill; which was referred to the

Committee on Banking and Financial Services

A BILL

To streamline the regulation of depository institutions, to

safeguard confidential banking and credit union supervisory information, 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 ‘‘Depository Institution Regulatory Streamlining Act of

6 1999’’.

7 (b) TABLE OF CONTENTS.—The table of contents for

8 this Act is as follows:

Sec. 1. Short title; table of contents.
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TITLE I—IMPROVING MONETARY POLICY

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

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

Sec. 103. Study of reserve ratios for deposit insurance funds.

TITLE II—IMPROVING DEPOSITORY INSTITUTION MANAGEMENT

PRACTICES

Subtitle A—National Banks

Sec. 201. Authority to allow more than 25 directors.

Sec. 202. Loans on or purchases by institutions of their own stock.

Sec. 203. Expedited procedures for certain reorganizations.

Subtitle B—Savings Associations

Sec. 211. Noncontrolling investments by savings association holding companies.

Sec. 212. Streamlining thrift service company investment requirements.

Sec. 213. Repeal of dividend notice requirement.

Sec. 214. Updating of authority for community development investments.

Subtitle C—Other Institutions

Sec. 221. Prohibition on accrual to insiders of economic benefits from credit

union conversions.

Sec. 222. Amendments relating to limited purpose banks.

Sec. 223. Business purpose credit extensions.

TITLE III—STREAMLINING FEDERAL BANKING AGENCY REQUIREMENTS AND ELIMINATION OF UNNECESSARY OR OUTDATED REQUIREMENTS

Sec. 301. ‘‘Plain English’’ requirement for Federal banking agency rules.

Sec. 302. Call report simplification.

Sec. 303. Purchased mortgage service rights.

Sec. 304. Judicial review of receivership appointment.

Sec. 305. Elimination of outdated statutory minimum capital requirements.

Sec. 306. Elimination of individual branch capital requirements.

Sec. 307. Amendment to shareholder notice provisions relating to consolidations

and mergers.

Sec. 308. Payment of interest in receiverships with surplus funds.

Sec. 309. Repeal of deposit broker notification and recordkeeping requirement.

Sec. 310. Allowances for certain extensions of credit to executive officers.

Sec. 311. Federal Reserve Act lending limits.

Sec. 312. Repeal of Bank Holding Company Act provision limiting savings

bank life insurance.

Sec. 313. Amendment to section 5137 of the Revised Statutes of the United

States.

TITLE IV—DISCLOSURE SIMPLIFICATION

Sec. 401. Alternative disclosure for variable rate, open-ended home secured

credit.

TITLE V—BANK EXAMINATION REPORT PRIVILEGE ACT
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Sec. 501. Amendment to the Federal Deposit Insurance Act.

Sec. 502. Amendment to Federal Credit Union Act.

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. Waiver of citizenship requirement for national bank directors.

Sec. 604. Technical amendment to prohibition on Comptroller interests in national banks.

Sec. 605. Applicability of limitation to prior investments.

TITLE VII—SPECIAL RESERVE FUNDS

Sec. 701. Abolition of special reserve funds.

1 TITLE I—IMPROVING MONETARY

2 POLICY

3 SEC. 101. PAYMENT OF INTEREST ON RESERVE BALANCES

4 AT FEDERAL RESERVE BANKS.

5 (a) IN GENERAL.—Section 19(b) of the Federal Re6 serve Act (12 U.S.C. 461(b)) is amended by adding at

7 the end the following new paragraph:

8 ‘‘(12) EARNINGS ON RESERVES.—

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

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

11 depository institution may receive earnings to

12 be paid by the Federal reserve bank at least

13 once each calendar quarter at a rate or rates

14 not to exceed the general level of short-term in15 terest rates.

16 ‘‘(B) REGULATIONS RELATING TO PAY17 MENTS AND DISTRIBUTION.—The Board may

18 prescribe regulations concerning—
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1 ‘‘(i) the payment of earnings in ac2 cordance with this paragraph;

3 ‘‘(ii) the distribution of such earnings

4 to the depository institutions which main5 tain balances at such banks or on whose

6 behalf such balances are maintained; and

7 ‘‘(iii) the responsibilities of depository

8 institutions, Federal home loan banks, and

9 the National Credit Union Administration

10 Central Liquidity Facility with respect to

11 the crediting and distribution of earnings

12 attributable to balances maintained, in ac13 cordance with subsection (c)(1)(B), in a

14 Federal reserve bank by any such entity on

15 behalf of depository institutions which are

16 not member banks.’’.

17 (b) AUTHORIZATION FOR PASS THROUGH RESERVES

18 FOR MEMBER BANKS.—Section 19(c)(1)(B) of the Fed19 eral Reserve Act (12 U.S.C. 461(c)(1)(B)) is amended by

20 striking ‘‘which is not a member bank’’.

21 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

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

23 is amended—

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

25 by striking subparagraph (C) and redesignating sub-
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1 paragraphs (D) and (E) as subparagraphs (C) and

2 (D), respectively; and

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

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

5 and inserting ‘‘subsection (b)’’.

6 SEC. 102. AMENDMENTS RELATING TO SAVINGS AND DE7 MAND DEPOSIT ACCOUNTS AT DEPOSITORY

8 INSTITUTIONS.

9 (a) IMMEDIATE INCREASE IN THE NUMBER OF

10 INTERACCOUNT TRANSFERS ALLOWED EACH MONTH.—

11 Section 2 of Public Law 93–100 (12 U.S.C. 1832) is

12 amended—

13 (1) by redesignating subsections (b) and (c) as

14 subsections (c) and (d), respectively; and

15 (2) by inserting after subsection (a) the fol16 lowing:

17 ‘‘(b) INTERACCOUNT TRANSFERS.—

18 ‘‘(1) IN GENERAL.—Notwithstanding any other

19 provision of law, any depository institution may per20 mit the owner of any deposit or account on which in21 terest or dividends are paid to make up to 24 trans22 fers per month, for any purpose, to another account

23 of the owner in the same institution.

24 ‘‘(2) RULE OF CONSTRUCTION.—Nothing in

25 this subsection shall be construed to prevent an ac-
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1 count offered pursuant to this subsection from being

2 considered a transaction account (as defined in sec3 tion 19(b) of the Federal Reserve Act (12 U.S.C.

4 461(b)) for purposes of such Act.’’.

5 (b) NOW ACCOUNTS AUTHORIZED FOR ALL BUSI6 NESSES AFTER 2004.—

7 (1) IN GENERAL.—Effective on the date pro8 vided in paragraph (3), section 2 of Public Law 93–

9 100 (12 U.S.C. 1832(a)(2)) (as amended by sub10 section (a) of this section) is amended to read as fol11 lows:

12 ‘‘SEC. 2. WITHDRAWALS BY NEGOTIABLE OR TRANSFER13 ABLE INSTRUMENTS FOR TRANSFERS TO

14 THIRD PARTIES.

15 ‘‘Notwithstanding any other provision of law, any de16 pository institution (as defined in section 3 of the Federal

17 Deposit Insurance Act) may permit the owner of any de18 posit or account to make withdrawals from such deposit

19 or account by negotiable or transferable instruments for

20 the purpose of making payments to third parties.’’.

21 (2) REPEAL OF PROHIBITION ON PAYMENT OF

22 INTEREST ON DEMAND DEPOSITS.—

23 (A) FEDERAL RESERVE ACT.—Section 19

24 of the Federal Reserve Act (12 U.S.C. 371a) is

25 amended by striking subsection (i).
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1 (B) HOME OWNERS’ LOAN ACT.—The 1st

2 sentence of section 5(b)(1)(B) of the Home

3 Owners’ Loan Act (12 U.S.C. 1464(b)(1)(B)) is

4 amended by striking ‘‘savings association may

5 not—’’ and all that follows through ‘‘(ii) permit

6 any’’ and inserting ‘‘savings association may

7 not permit any’’.

8 (C) FEDERAL DEPOSIT INSURANCE ACT.—

9 Section 18 of the Federal Deposit Insurance

10 Act (12 U.S.C. 1828) is amended by striking

11 subsection (g).

12 (3) EFFECTIVE DATE.—The amendments made

13 by this subsection shall take effect on October 1,

14 2004.

15 SEC. 103. STUDY OF RESERVE RATIOS FOR DEPOSIT INSUR16 ANCE FUNDS.

17 (a) REVIEW AND RECOMMENDATION.—The Board of

18 Directors of the Federal Deposit Insurance Corporation,

19 in consultation with the Board of Governors of the Federal

20 Reserve System and the Secretary of the Treasury, shall—

21 (1) conduct a study of the adequacy of the de22 posit insurance funds, taking into account—

23 (A) expected operating expenses, case reso24 lution expenditures and income, and the effect
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1 of assessments on members’ earnings and cap2 ital;

3 (B) historical failure rates and loss experi4 ence;

5 (C) recent changes in the law, including

6 statutory changes requiring prompt corrective

7 action, least-cost resolutions, and risk-based as8 sessment systems;

9 (D) the income of such funds from invest10 ments;

11 (E) the potential implication of the Year

12 2000 computer problem (as defined in section

13 2(b)(5) of the Examination Parity and Year

14 2000 Readiness for Financial Institutions Act)

15 and industry consolidation; and

16 (F) the historical experience of the Cor17 poration in providing rebates or credits from

18 any deposit insurance fund; and

19 (2) recommend to the Congress—

20 (A) an appropriate range of reserve ratios

21 between the net worth of any deposit insurance

22 fund and the aggregate amount of insured de23 posits insured by such fund; and

24 (B) an appropriate mechanism for rebating

25 or providing credit from any deposit insurance
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1 fund when the balance of the fund exceeds any

2 applicable reserve ratio.

3 (b) REPORT REQUIRED.—The Board of Directors of

4 the Federal Deposit Insurance Corporation, in consulta5 tion with the Board of Governors of the Federal Reserve

6 System and the Secretary of the Treasury, shall submit

7 a report to the Congress before June 30, 2000,

8 containing—

9 (1) the findings and conclusions of the study re10 quired under subsection (a)(1); and

11 (2) the recommendations required under sub12 section (a)(2).

13 TITLE II—IMPROVING DEPOSI14 TORY INSTITUTION MANAGE15 MENT PRACTICES

16 Subtitle A—National Banks

17 SEC. 201. AUTHORITY TO ALLOW MORE THAN 25 DIREC18 TORS.

19 Section 31 of the Banking Act of 1933 (12 U.S.C.

20 71a) is amended in the first sentence, by inserting before

21 the period ‘‘, except that the Comptroller of the Currency

22 may, by regulation or order, exempt a national banking

23 association from the 25-member limit established by this

24 section’’.
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1 SEC. 202. LOANS ON OR PURCHASES BY INSTITUTIONS OF

2 THEIR OWN STOCK.

3 (a) AMENDMENT TO REVISED STATUTES.—Section

4 5201 of the Revised Statutes of the United States (12

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

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

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

8 association shall make any loan or discount on the security

9 of the shares of its own capital stock.

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

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

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

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

14 contracted for in good faith.’’.

15 (b) AMENDMENT TO FEDERAL DEPOSIT INSURANCE

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

17 (12 U.S.C. 1828) is amended by adding at the end the

18 following new subsection:

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

20 OWN STOCK.—

21 ‘‘(1) GENERAL PROHIBITION.—No insured de22 pository institution shall make any loan or discount

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

24 ‘‘(2) EXCLUSION.—For purposes of this sub25 section, an insured depository institution shall not be

26 deemed to be making a loan or discount on the secu-
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1 rity of the shares of its own capital stock if it ac2 quires the stock to prevent loss upon a debt con3 tracted for in good faith.’’.

4 SEC. 203. EXPEDITED PROCEDURES FOR CERTAIN REORGA5 NIZATIONS.

6 The National Bank Consolidation and Merger Act

7 (12 U.S.C. 215 et seq.) is amended—

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

9 (2) by inserting after section 4 the following

10 new section:

11 ‘‘SEC. 5. EXPEDITED PROCEDURES FOR CERTAIN REORGA12 NIZATIONS.

13 ‘‘(a) IN GENERAL.—A national bank may, with the

14 approval of the Comptroller, pursuant to regulations pre15 scribed by the Comptroller, and upon the affirmative vote

16 of the shareholders of such bank owning at least two17 thirds of the outstanding capital stock of such bank, reor18 ganize so as to become a subsidiary of a bank holding com19 pany or a company that will, upon consummation of such

20 reorganization, become a bank holding company.

21 ‘‘(b) REORGANIZATION PLAN.—A reorganization au22 thorized under subsection (a) shall be carried out in ac23 cordance with a reorganization plan that—

24 ‘‘(1) specifies the manner in which the reorga25 nization shall be carried out;
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1 ‘‘(2) is approved by a majority of the entire

2 board of directors of the bank;

3 ‘‘(3) specifies—

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

5 the bank holding company, or both, or other

6 consideration, to be paid to the shareholders of

7 the reorganizing bank in exchange for their

8 shares of stock of the bank;

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

10 each shareholder to participate in such ex11 change will be determined; and

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

13 will be carried out; and

14 ‘‘(4) is submitted to the shareholders of the re15 organizing bank at a meeting to be held on the call

16 of the directors in accordance with the procedures

17 prescribed in connection with a merger of a national

18 bank under section 3.

19 ‘‘(c) APPLICABILITY OF OTHER CRITERIA.—In con20 sidering a reorganization plan under this section, the

21 Comptroller shall—

22 ‘‘(1) require the national bank to provide notice

23 to the public in accordance with section 18(c)(3) of

24 the Federal Deposit Insurance Act; and
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1 ‘‘(2) apply the same standards and the same

2 criteria as are applicable to a transaction under sec3 tion 18(c) of the Federal Deposit Insurance Act,

4 other than the requirements of paragraphs (4) and

5 (6) of such section.

6 ‘‘(d) RIGHTS OF DISSENTING SHAREHOLDERS.—If,

7 pursuant to this section, a reorganization plan has been

8 approved by the shareholders and the Comptroller, any

9 shareholder of the national bank who has voted against

10 the reorganization at the meeting referred to in subsection

11 (b)(4), or has given notice in writing at or before that

12 meeting to the presiding officer that the shareholder dis13 sents from the reorganization plan, shall be entitled to re14 ceive the value of the shares of the shareholder, as pro15 vided by section 3 for the merger of a national bank.

16 ‘‘(e) EFFECT OF REORGANIZATION.—The corporate

17 existence of a national bank that reorganizes in accord18 ance with this section shall not be deemed to have been

19 affected in any way by reason of such reorganization.

20 ‘‘(f) APPROVAL UNDER THE BANK HOLDING COM21 PANY ACT OF 1956.—Notwithstanding the preceding pro22 visions of this section, it shall be unlawful for any action

23 to be taken that causes any company to become a bank

24 holding company or any bank to become a subsidiary of

25 a bank holding company, except with the prior approval
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1 of the Board of Governors of the Federal Reserve System

2 pursuant to section 3 of the Bank Holding Company Act

3 of 1956 (12 U.S.C. 1842).’’.

4 Subtitle B—Savings Associations

5 SEC. 211. NONCONTROLLING INVESTMENTS BY SAVINGS

6 ASSOCIATION HOLDING COMPANIES.

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

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

9 (1) by inserting ‘‘, except with the prior written

10 approval of the Director,’’ after ‘‘or to retain’’;

11 (2) by striking ‘‘subsidiary, or in’’ and inserting

12 ‘‘subsidiary. In’’; and

13 (3) by striking ‘‘to so acquire or retain’’ and in14 serting ‘‘it shall be unlawful, and the Director may

15 not authorize such a company, to acquire or retain’’.

16 SEC. 212. STREAMLINING SAVINGS ASSOCIATION SERVICE

17 COMPANY INVESTMENT REQUIREMENTS.

18 Section 5(c)(4)(B) of the Home Owners’ Loan Act

19 (12 U.S.C. 1464(c)(4)(B)) is amended—

20 (1) in the subparagraph heading, by striking

21 ‘‘CORPORATIONS’’ and inserting ‘‘COMPANIES’’; and

22 (2) in the first sentence, by striking ‘‘corpora23 tion organized’’ and all that follows through ‘‘such

24 State.’’ and inserting ‘‘company organized under the

25 laws of any State, if such company’s entire capital
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1 stock is available for purchase only by savings asso2 ciations. For purposes of this subparagraph, the

3 term ‘company’ includes any corporation and any

4 limited liability company (as defined in section

5 1(b)(7) of the Bank Service Company Act).’’.

6 SEC. 213. REPEAL OF DIVIDEND NOTICE REQUIREMENT.

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

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

9 ‘‘(f) [Repealed].’’.

10 SEC. 214. UPDATING OF AUTHORITY FOR COMMUNITY DE11 VELOPMENT INVESTMENTS.

12 Section 5(c) of the Home Owners’ Loan Act (12

13 U.S.C. 1464(c)) is amended—

14 (1) in paragraph (3), by striking subparagraph

15 (A) and redesignating subparagraphs (B) and (C) as

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

17 (2) by adding at the end the following new

18 paragraph:

19 ‘‘(7) COMMUNITY DEVELOPMENT INVEST20 MENTS.—

21 ‘‘(A) IN GENERAL.—Investments in real

22 property and obligations secured by liens on

23 real property for the primary purpose of pro24 moting the public welfare, including the welfare

25 of low- and moderate-income communities or
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1 families (including the provision of housing,

2 services, or jobs), are permitted, subject to sub3 paragraph (B).

4 ‘‘(B) LIMITATIONS.—The aggregate

5 amount of investments of a savings association

6 under subparagraph (A) shall not exceed the

7 sum of 5 percent of the savings association’s

8 capital stock actually paid in and unimpaired

9 and 5 percent of the savings association’s

10 unimpaired surplus fund, unless the Director

11 determines by order that a higher amount will

12 pose no significant risk to the affected deposit

13 insurance fund, and that the savings association

14 is adequately capitalized, in which case the ag15 gregate amount of such investments shall not

16 exceed an amount equal to the sum of 10 per17 cent of the savings association’s capital stock

18 actually paid in and unimpaired and 10 percent

19 of the savings association’s unimpaired surplus

20 fund.’’.
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1 Subtitle C—Other Institutions

2 SEC. 221. PROHIBITION ON ACCRUAL TO INSIDERS OF ECO3 NOMIC BENEFITS FROM CREDIT UNION CON4 VERSIONS.

5 Section 18 of the Federal Deposit Insurance Act (12

6 U.S.C. 1828) is amended by adding at the end the fol7 lowing new subsection:

8 ‘‘(t) PROHIBITION ON ECONOMIC BENEFIT FROM

9 CONVERSION FOR CREDIT UNION OFFICERS, DIRECTORS,

10 AND COMMITTEE MEMBERS.—

11 ‘‘(1) IN GENERAL.—An individual who is or, at

12 any time during the 5-year period preceding any

13 conversion described in paragraph (2), was a direc14 tor, committee member, or senior management offi15 cial of an insured credit union described in subpara16 graph (A) or (B) of such paragraph (in connection

17 with such conversion) may not receive any economic

18 benefit as a result of the conversion with regard to

19 the shares or interests of such director, member, or

20 officer in the former insured credit union or in any

21 resulting insured depository institution.

22 ‘‘(2) COVERED CONVERSIONS.—The following

23 conversions are described in this paragraph for pur24 poses of paragraph (1):
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1 ‘‘(A) The conversion of an insured credit

2 union into an insured depository institution.

3 ‘‘(B) The conversion from the mutual form

4 to the stock form of an insured depository insti5 tution which resulted from a prior conversion of

6 an insured credit union into such insured de7 pository institution.

8 ‘‘(3) DEFINITIONS.—For purposes of this sub9 section, the following definitions shall apply:

10 ‘‘(A) INSURED CREDIT UNION.—The term

11 ‘insured credit union’ has the meaning given to

12 such term in section 101(7) of the Federal

13 Credit Union Act.

14 ‘‘(B) SENIOR MANAGEMENT OFFICIAL.—

15 The term ‘senior management official’ means a

16 chief executive officer, an assistant chief execu17 tive officer, a chief financial officer, and any

18 other senior executive officer (as defined by the

19 appropriate Federal banking agency pursuant

20 to section 32(f)).’’.

21 SEC. 222. AMENDMENTS RELATING TO LIMITED PURPOSE

22 BANKS.

23 Section 4(f) of the Bank Holding Company Act of

24 1956 (12 U.S.C. 1843(f)) is amended—

25 (1) in paragraph (2)(A)(ii)—
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1 (A) by striking ‘‘and’’ at the end of sub2 clause (IX);

3 (B) by inserting ‘‘and’’ after the semicolon

4 at the end of subclause (X); and

5 (C) by inserting after subclause (X) the

6 following new subclause:

7 ‘‘(XI) assets that are derived

8 from, or are incidental to, activities in

9 which institutions described in section

10 2(c)(2)(F) are permitted to engage,’’;

11 (2) in paragraph (2)—

12 (A) by striking ‘‘Paragraph (1) shall cease

13 to apply to any company described in such

14 paragraph if—’’ and inserting ‘‘A company de15 scribed in paragraph (1) shall no longer qualify

16 for the exemption provided under such para17 graph if—’’; and

18 (B) by striking subparagraph (B) and in19 serting the following new subparagraphs:

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

21 engages in any activity in which the bank was

22 not lawfully engaged as of March 5, 1987, un23 less the bank is well managed and well capital24 ized;
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1 ‘‘(C) any bank subsidiary of such company

2 both—

3 ‘‘(i) accepts demand deposits or de4 posits that the depositor may withdraw by

5 check or similar means for payment to

6 third parties; and

7 ‘‘(ii) engages in the business of mak8 ing commercial loans; or

9 ‘‘(D) after the date of the enactment of the

10 Competitive Equality Amendments of 1987, any

11 bank subsidiary of such company permits any

12 overdraft (including any intraday overdraft), or

13 incurs any such overdraft in such bank’s ac14 count at a Federal reserve bank, on behalf of

15 an affiliate, other than an overdraft described

16 in paragraph (3).’’; and

17 (3) by striking paragraphs (3) and (4) and in18 serting the following new paragraphs:

19 ‘‘(3) PERMISSIBLE OVERDRAFTS DESCRIBED.—

20 For purposes of paragraph (2)(D), an overdraft is

21 described in this paragraph if—

22 ‘‘(A) such overdraft results from an inad23 vertent computer or accounting error that is be24 yond the control of both the bank and the affil25 iate; or
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1 ‘‘(B) such overdraft—

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

3 of an affiliate which is monitored by, re4 ports to, and is recognized as a primary

5 dealer by the Federal Reserve Bank of

6 New York; and

7 ‘‘(ii) is fully secured, as required by

8 the Board, by bonds, notes, or other obli9 gations which are direct obligations of the

10 United States or on which the principal

11 and interest are fully guaranteed by the

12 United States or by securities and obliga13 tions eligible for settlement on the Federal

14 Reserve book entry system.

15 ‘‘(4) DIVESTITURE IN CASE OF LOSS OF EX16 EMPTION.—If any company described in paragraph

17 (1) fails to continue to qualify for the exemption

18 provided under such paragraph by operation of para19 graph (2), the company shall immediately notify the

20 Board that the company has failed to continue to

21 qualify for such exemption, and the company shall

22 divest control of each bank it controls before the end

23 of the 180-day period beginning on the date that the

24 company receives notice from the Board that the

25 company has failed to continue to qualify for such
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1 exemption, unless before the end of such 180-day pe2 riod, the company has—

3 ‘‘(A) either—

4 ‘‘(i) corrected the condition or ceased

5 the activity that caused the company to

6 fail to continue to qualify for the exemp7 tion; or

8 ‘‘(ii) received approval from the Board

9 of a plan to correct the condition in a

10 timely manner (which shall not exceed 1

11 year); and

12 ‘‘(B) implemented procedures that are rea13 sonably adapted to avoid the reoccurrence of

14 such condition or activity.’’.

15 SEC. 223. BUSINESS PURPOSE CREDIT EXTENSIONS.

16 Section 4 of the Bank Holding Company Act of 1956

17 (12 U.S.C. 1843) is amended by adding at the end the

18 following new subsection:

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

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

21 in section 2(c)(2)(F) or 4(f)(3) which extends credit

22 through credit card accounts for qualified business

23 purposes shall not be treated as engaging in the

24 business of making commercial loans by reason of

25 such extensions of credit.
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1 ‘‘(2) QUALIFIED BUSINESS PURPOSE.—

2 ‘‘(A) IN GENERAL.—The Board shall pre3 scribe regulations defining the term ‘qualified

4 business purposes’ for purposes of this sub5 section.

6 ‘‘(B) CERTAIN BUSINESS PURPOSES EX7 CLUDED.—In defining the term ‘qualified busi8 ness purposes’ under subparagraph (A), the

9 Board—

10 ‘‘(i) may not treat extensions of credit

11 through a credit card account for expendi12 tures for capital improvements, acquisi13 tions of inventory, or other large acquisi14 tions as a qualified business purpose for

15 credit card accounts; and

16 ‘‘(ii) may treat extensions of credit

17 through a credit card account for expendi18 tures involving employee travel, entertain19 ment, and subsistence, purchases involving

20 a small number of items and low-dollar

21 amounts, and other small acquisitions as

22 qualified business purposes for credit card

23 accounts.

24 ‘‘(3) CREDIT CARD DEFINED.—For purposes of

25 this subsection, the term ‘credit card’ has the same
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1 meaning as in section 103 of the Truth In Lending

2 Act.’’.

3 TITLE III—STREAMLINING FED4 ERAL BANKING AGENCY RE5 QUIREMENTS AND ELIMI6 NATION OF UNNECESSARY OR

7 OUTDATED REQUIREMENTS

8 SEC. 301. ‘‘PLAIN ENGLISH’’ REQUIREMENT FOR FEDERAL

9 BANKING AGENCY RULES.

10 (a) IN GENERAL.—Each Federal banking agency

11 shall use plain English in all proposed and final

12 rulemakings published by the agency in the Federal Reg13 ister after January 1, 2000.

14 (b) REPORT.—Not later than June 1, 2001, each

15 Federal banking agency shall submit to the Congress a

16 report that describes how the agency has complied with

17 subsection (a).

18 (c) DEFINITIONS.—For purposes of this section and

19 section 302, the terms ‘‘Federal banking agency’’ and

20 ‘‘State bank supervisor’’ have the meanings given such

21 terms in section 3 of the Federal Deposit Insurance Act.

22 SEC. 302. CALL REPORT SIMPLIFICATION.

23 (a) MODERNIZATION OF CALL REPORT FILING AND

24 DISCLOSURE SYSTEM.—In order to reduce the adminis25 trative requirements pertaining to bank reports of condi-
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1 tion, savings association financial reports, and bank hold2 ing company consolidated and parent-only financial state3 ments, and to improve the timeliness of such reports and

4 statements, the Federal banking agencies (after consulting

5 with State bank supervisors) 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 July 1, 2001, report to the

15 Congress and make recommendations for legislation

16 that would enhance efficiency for filers and users of

17 such reports and statements.

18 (b) UNIFORM REPORTS AND SIMPLIFICATION OF IN19 STRUCTIONS.—The Federal banking agencies (after con20 sulting with State bank supervisors) shall, consistent with

21 the principles of safety and soundness, work jointly—

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

23 information required to be submitted under Federal

24 law to all such agencies in the reports and state25 ments referred to in subsection (a); and
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1 (2) to simplify instructions accompanying such

2 reports and statements and to provide an index to

3 the instructions that is adequate to meet the needs

4 of both filers and users.

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

6 Federal banking agency (after consulting with State bank

7 supervisors) shall—

8 (1) review the information required by sched9 ules supplementing the core information referred to

10 in subsection (b); and

11 (2) eliminate requirements that are not war12 ranted for reasons of safety and soundness or other

13 public purposes.

14 SEC. 303. PURCHASED MORTGAGE SERVICE RIGHTS.

15 Section 475 of the Federal Depository Insurance Cor16 poration Improvement Act of 1991 (12 U.S.C. 1828 note)

17 is amended—

18 (1) in subsection (a)(1), by inserting ‘‘(or such

19 other percentage exceeding 90 percent but not ex20 ceeding 100 percent, as may be determined under

21 subsection (b))’’ after ‘‘90 percent’’; and

22 (2) by redesignating subsections (b) and (c) as

23 subsections (c) and (d), respectively, and by insert24 ing after subsection (a) the following new subsection:
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1 ‘‘(b) AUTHORITY TO DETERMINE PERCENTAGE BY

2 WHICH TO DISCOUNT VALUE OF SERVICING RIGHTS.—

3 ‘‘(1) IN GENERAL.—Notwithstanding subsection

4 (a)(1), the appropriate Federal banking agencies

5 may allow readily marketable purchased mortgage

6 servicing rights to be valued at more than 90 per7 cent of their fair market value but at not more than

8 100 percent of such value, if such agencies jointly

9 make a finding before the end of the 180-day period

10 beginning on the date of the enactment of the De11 pository Institution Regulatory Streamlining Act of

12 1999 that such valuation would not have an adverse

13 affect on the deposit insurance funds or the safety

14 and soundness of insured depository institutions.

15 ‘‘(2) JOINT RULEMAKING.—Any regulations

16 prescribed pursuant to paragraph (1) shall be pre17 scribed jointly by the Federal banking agencies.’’.

18 SEC. 304. JUDICIAL REVIEW OF RECEIVERSHIP APPOINT19 MENTS.

20 (a) APPOINTMENT FOR NATIONAL BANK.—Section 2

21 of the National Bank Receivership Act (12 U.S.C. 191)

22 is amended—

23 (1) by inserting ‘‘(a) APPOINTMENT OF RE24 CEIVER.—’’ before ‘‘The Comptroller’’; and
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1 (2) by adding at the end the following new sub2 section:

3 ‘‘(b) JUDICIAL REVIEW.—Within 30 days after the

4 appointment under subsection (a) of a receiver for a na5 tional bank, the national bank may bring an action in the

6 United States district court for the judicial district in

7 which the home office of the bank is located, or in the

8 United States District Court for the District of Columbia,

9 for an order requiring the Comptroller to remove the re10 ceiver, and the court shall, on the merits, dismiss the ac11 tion or direct the Comptroller to remove the receiver.’’.

12 (b) APPOINTMENT OF FEDERAL DEPOSIT INSUR13 ANCE CORPORATION.—Section 11(c)(7) of the Federal

14 Deposit Insurance Act (12 U.S.C. 1811(c)(7)) is amended

15 to read as follows:

16 ‘‘(7) JUDICIAL REVIEW.—Within 30 days after

17 the Corporation is appointed as conservator or re18 ceiver for an insured depository institution under

19 paragraph (4), (9), or (10), the institution may

20 bring an action in the United States district court

21 for the judicial district in which the home office of

22 the institution is located, or in the United States

23 District Court for the District of Columbia, for an

24 order requiring the Corporation to be removed as

25 the conservator or receiver, and the court shall, on
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1 the merits, dismiss the action or direct the Corpora2 tion to be removed as the conservator or receiver.’’.

3 SEC. 305. ELIMINATION OF OUTDATED STATUTORY MIN4 IMUM CAPITAL REQUIREMENTS.

5 Section 5138 of the Revised Statutes of the United

6 States (12 U.S.C. 51) is repealed.

7 SEC. 306. ELIMINATION OF INDIVIDUAL BRANCH CAPITAL

8 REQUIREMENTS.

9 Section 5155(c) of the Revised Statutes of the United

10 States (12 U.S.C. 36(c)) is amended—

11 (1) in the second sentence, by striking ‘‘, with12 out regard to the capital requirements of this sec13 tion,’’; and

14 (2) by striking the third sentence.

15 SEC. 307. AMENDMENT TO SHAREHOLDER NOTICE PROVI16 SIONS RELATING TO CONSOLIDATIONS AND

17 MERGERS.

18 (a) Section 2(a) of the Act of August 17, 1950, enti19 tled ‘‘An Act to provide for the conversion of national

20 banking associations into and their merger or consolida21 tion with State banks, and for other purposes.’’ (12 U.S.C.

22 214a(a)) is amended by striking ‘‘registered mail or by

23 certified’’.

24 (b) Sections 2(a) and 3(a)(2) of the National Bank

25 Consolidation and Merger Act (12 U.S.C. 215(a) and
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1 215a(a)(2)) are each amended by striking ‘‘certified or

2 registered’’ each place it appears.

3 SEC. 308. PAYMENT OF INTEREST IN RECEIVERSHIPS WITH

4 SURPLUS FUNDS.

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

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

7 end the following new subparagraph:

8 ‘‘(C) RULEMAKING AUTHORITY OF COR9 PORATION.—The Corporation may prescribe

10 such rules, including definitions of terms, as it

11 deems appropriate to establish the interest rate

12 for or to make payments of postinsolvency in13 terest to creditors holding proven claims against

14 the receivership estates of insured Federal or

15 State depository institutions following satisfac16 tion by the receiver of the principal amount of

17 all creditor claims.’’.

18 SEC. 309. REPEAL OF DEPOSIT BROKER NOTIFICATION AND

19 RECORDKEEPING REQUIREMENT.

20 Section 29A of the Federal Deposit Insurance Act

21 (12 U.S.C. 1831f–1) is repealed.

22 SEC. 310. ALLOWANCES FOR CERTAIN EXTENSIONS OF

23 CREDIT TO EXECUTIVE OFFICERS.

24 Section 22(g) of the Federal Reserve Act (12 U.S.C.

25 375a) is amended—
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1 (1) by redesignating paragraphs (6) through

2 (10) as paragraphs (8) through (12), respectively;

3 (2) by inserting after paragraph (5) the fol4 lowing new paragraphs:

5 ‘‘(6) A member bank may extend to any execu6 tive officer of the bank a home equity line of credit

7 which does not exceed $100,000 and is secured by

8 a lien on the primary residence of the executive offi9 cer, to the extent that the aggregate amount of such

10 lien and all other outstanding extensions of credit

11 secured by liens on such primary residence does not

12 exceed the appraised value of such residence.

13 ‘‘(7) A member bank may extend credit to any

14 executive officer of the bank in an amount not to ex15 ceed the greater of—

16 ‘‘(A) the amount which is the lesser of 2.5

17 percent of the aggregate amount of capital and

18 unimpaired surplus of the bank or $100,000; or

19 ‘‘(B) $25,000,

20 if, at the time the credit is extended, the extension

21 of credit is secured by readily marketable assets that

22 have a fair market value of not less than twice the

23 amount of credit extended.’’; and
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1 (3) in paragraph (8) (as so redesignated by

2 paragraph (1) of this section), by striking ‘‘(3) and

3 (4)’’ and inserting ‘‘(3), (4), (6), and (7)’’.

4 SEC. 311. FEDERAL RESERVE ACT LENDING LIMITS.

5 Section 11(m) of the Federal Reserve Act (12 U.S.C.

6 248(m)) is amended to read as follows:

7 ‘‘(m) [Repealed].’’.

8 SEC. 312. REPEAL OF BANK HOLDING COMPANY ACT PRO9 VISION LIMITING SAVINGS BANK LIFE INSUR10 ANCE.

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

12 1956 (12 U.S.C. 1842(f)) is amended to read as follows:

13 ‘‘(f) [Repealed].’’.

14 SEC. 313. AMENDMENT TO SECTION 5137 OF THE REVISED

15 STATUTES OF THE UNITED STATES.

16 (a) IN GENERAL.—Section 5137 of the Revised Stat17 utes of the United States (12 U.S.C. 29) is amended by

18 adding at the end the following new subsection:

19 ‘‘(d) ADDITIONAL EXTENSION FOR PASSIVE INVEST20 MENTS IN SUBSURFACE RIGHTS AND INTERESTS.—

21 ‘‘(1) IN GENERAL.—With respect to subsurface rights

22 of real estate, and interests in such rights, which a na23 tional bank holds pursuant to the prior approval of the

24 Comptroller of the Currency under subsection (b), the na25 tional bank may apply for, and the Comptroller of the Cur-
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1 rency may approve, possession by the bank of such rights

2 and interests for an additional period not to exceed 5 years

3 if—

4 ‘‘(A) the national bank acquired the prop5 erty pursuant to the paragraphs designated the

6 ‘Second’, ‘Third’, and ‘Fourth’ of subsection

7 (a);

8 ‘‘(B) the national bank—

9 ‘‘(i) holds the rights or interest pas10 sively; and

11 ‘‘(ii) is not engaged in production, ex12 traction, exploration, or other active use of

13 the rights or interests;

14 ‘‘(C) the national bank—

15 ‘‘(i) values the subsurface rights and

16 interests in such rights on the books of the

17 bank for no more than a nominal amount;

18 and

19 ‘‘(i) separately discloses the aggregate

20 amount of earnings from the rights and in21 terests in the annual financial statements

22 of the bank; and

23 ‘‘(D) the Comptroller of the Currency de24 termines that the possession of such rights and
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1 interests is not inconsistent with the safety and

2 soundness of the national bank.

3 ‘‘(2) AUTHORITY OF COMPTROLLER OF THE

4 CURRENCY TO REQUIRE DIVESTITURE.—The Comp5 troller of the Currency may order, at any time, a na6 tional bank which holds subsurface rights of real es7 tate, and interests in such rights, pursuant to para8 graph (1) to divest such rights and interests if the

9 Comptroller determines that continued ownership of

10 such rights or interests is detrimental to the na11 tional bank.’’.

12 (b) TECHNICAL AMENDMENTS TO REDESIGNATE

13 UNDESIGNATED PARAGRAPHS AS SUBSECTIONS.—Section

14 5137 of the Revised Statutes of the United States (12

15 U.S.C. 29) is amended—

16 (1) in the 1st undesignated paragraph by strik17 ing ‘‘5137. A national banking association may pur18 chase’’ and inserting the following:

19 ‘‘SEC. 5137. POWER TO HOLD REAL ESTATE.

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

21 may purchase’’;

22 (2) in the 3d undesignated paragraph, by strik23 ing ‘‘For real estate in the possession of a national

24 banking association upon application’’ and inserting

25 the following:
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1 ‘‘(b) EXTENSION OF DIVESTMENT PERIOD AUTHOR2 IZED FOR INELIGIBLE REAL ESTATE.—For real estate in

3 the possession of a national banking association upon ap4 plication’’; and

5 (3) in the 4th undesignated paragraph, by

6 striking ‘‘Notwithstanding the five-year holding limi7 tation of this section’’ and inserting the following:

8 ‘‘(c) EXTENSION OF HOLDING PERIOD UNDER CER9 TAIN CIRCUMSTANCES.—Notwithstanding the 5-year hold10 ing period limitation contained in subsection (a)’’.

11 TITLE IV—DISCLOSURE

12 SIMPLIFICATION

13 SEC. 401. ALTERNATIVE DISCLOSURE FOR VARIABLE RATE,

14 OPEN-ENDED HOME SECURED CREDIT.

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

16 (15 U.S.C. 1637a) is amended by inserting ‘‘or, at the

17 option of the creditor, a statement that periodic payments

18 may substantially increase or decrease’’ before the semi19 colon.
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1 TITLE V—BANK EXAMINATION

2 REPORT PRIVILEGE ACT

3 SEC. 501. AMENDMENT TO THE FEDERAL DEPOSIT INSUR4 ANCE ACT.

5 The Federal Deposit Insurance Act (12 U.S.C. 1811

6 et seq.) is amended by adding at the end the following

7 new section:

8 ‘‘SEC. 45. BANK SUPERVISORY PRIVILEGE.

9 ‘‘(a) DEFINITIONS.—For purposes of this section, the

10 following definitions shall apply:

11 ‘‘(1) DEPOSITORY INSTITUTION.—The term ‘de12 pository institution’ includes—

13 ‘‘(A) any institution which is treated in the

14 same manner as an insured depository institu15 tion under paragraph (3), (4), (5), or (9) of

16 section 8(b); and

17 ‘‘(B) any subsidiary or other affiliate of an

18 insured depository institution or an institution

19 described in subparagraph (A).

20 ‘‘(2) SUPERVISORY PROCESS.—The term ‘su21 pervisory process’ means any activity engaged in by

22 a Federal banking agency to carry out the official

23 responsibilities of the agency with regard to the reg24 ulation or supervision of depository institutions.
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1 ‘‘(3) CONFIDENTIAL SUPERVISORY INFORMA2 TION.—Subject to paragraph (4), the term ‘con3 fidential supervisory information’ means any of the

4 following information, or any portion of any such in5 formation, which is treated as, or considered to be,

6 confidential information by a Federal banking agen7 cy, regardless of the medium in which the informa8 tion is conveyed or stored:

9 ‘‘(A) Any report of examination, inspec10 tion, visitation, or investigation, and informa11 tion prepared or collected by a Federal banking

12 agency in connection with the supervisory proc13 ess, including any computer file, work paper, or

14 similar document.

15 ‘‘(B) Any correspondence of communica16 tion from a Federal banking agency to a deposi17 tory institution as part of an examination, in18 spection, visitation, or investigation by a Fed19 eral banking agency.

20 ‘‘(C) Any correspondence, communication,

21 or document, including any compliance and

22 other reports, created by a depository institu23 tion in response to any request, inquiry, or di24 rective from a Federal banking agency in con25 nection with any examination, inspection, visita-
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1 tion, or investigation and provided to a Federal

2 banking agency.

3 ‘‘(D) Any record of a Federal banking

4 agency to the extent it contains information de5 rived from any report, correspondence, commu6 nication or other information described in sub7 paragraph (A), (B), or (C).

8 (4) ORDINARY BUSINESS RECORDS EX9 CLUDED.—The term ‘confidential supervisory infor10 mation’ shall not include any book or record in the

11 possession of the depository institution routinely pre12 pared by the depository institution and maintained

13 in the ordinary course of business or any informa14 tion required to be made publicly available by any

15 Federal law or regulation.

16 ‘‘(b) BANK SUPERVISORY PRIVILEGE.—

17 ‘‘(1) PRIVILEGE ESTABLISHED.—

18 ‘‘(A) IN GENERAL.—All confidential super19 visory information shall be the property of the

20 Federal banking agency that created or re21 quested the information and shall be privileged

22 from disclosure to any other person.

23 ‘‘(B) PROHIBITION ON UNAUTHORIZED

24 DISCLOSURES.—No person in possession of con25 fidential supervisory information may disclose
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1 such information, in whole or in part, without

2 the prior authorization of the Federal banking

3 agency that created or requested the informa4 tion, except for a disclosure made in published

5 statistical material that does not disclose, either

6 directly or when used in conjunction with pub7 licly available information, the affairs of any

8 person.

9 ‘‘(C) AGENCY WAIVER.—The Federal

10 banking agency may waive, in whole or in part,

11 in the discretion of the agency, any privilege es12 tablished under this paragraph.

13 ‘‘(2) EXCEPTION.—No provision of paragraph

14 (1) shall be construed as preventing access to con15 fidential supervisory information by duly authorized

16 committees of the United States Congress or the

17 Comptroller General of the United States.

18 ‘‘(c) TREATMENT OF STATE AND FOREIGN SUPER19 VISORY INFORMATION.—In any proceeding before a court

20 of the United States, in which a person seeks to compel

21 production or disclosure by a State bank supervisor, for22 eign bank regulatory or supervisory authority, Federal

23 banking agency, or other person, of information or a docu24 ment prepared or collected by a State bank supervisor or

25 foreign bank regulatory or supervisory authority that
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1 would, had they been prepared or collected by a Federal

2 banking agency, be confidential supervisory information

3 for purposes of this section, the information or document

4 shall be privileged to the same extent that the information

5 and documents of Federal banking agencies are privileged

6 under this Act.

7 ‘‘(d) OTHER PRIVILEGES NOT WAIVED BY DISCLO8 SURE TO BANKING AGENCY.—The submission by a depos9 itory institution of any information to a Federal banking

10 agency, a State bank supervisor, or a foreign banking au11 thority for any purpose in the course of the supervisory

12 process of such agency or supervisor shall not be construed

13 as waiving, destroying, or otherwise affecting any privilege

14 such institution may claim with respect to such informa15 tion under Federal or State law.

16 ‘‘(e) DISCOVERY AND DISCLOSURE OF INFORMA17 TION.—

18 ‘‘(1) INFORMATION AVAILABLE ONLY FROM

19 BANKING AGENCY.—

20 ‘‘(A) IN GENERAL.—A person seeking dis21 covery or disclosure, in whole or in part, of con22 fidential supervisory information may not seek

23 to obtain such information through subpoena,

24 discovery procedures, or other process from any

25 person, except that such information may be
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1 sought in accordance with this section from the

2 Federal banking agency that created or re3 quested the information.

4 ‘‘(B) REQUESTS SUBMITTED TO BANKING

5 AGENCY.—Any request for discovery or disclo6 sure of confidential supervisory information

7 shall be made to the Federal banking agency

8 that created or requested the information,

9 which shall determine within a reasonable time

10 period whether to disclose such information

11 pursuant to procedures and criteria established

12 in regulations.

13 ‘‘(2) EXCLUSIVE FEDERAL COURT JURISDIC14 TION OVER DISPUTES.—

15 ‘‘(A) IN GENERAL.—Federal courts shall

16 have exclusive jurisdiction over actions or pro17 ceedings in which any party seeks to compel

18 disclosure of confidential supervisory informa19 tion.

20 ‘‘(B) JUDICIAL REVIEW.—Judicial review

21 of the final action of a Federal banking agency

22 with regard to the disposition of a request for

23 confidential supervisory information shall be be24 fore a district court of the United States of
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1 competent jurisdiction, subject to chapter 7 of

2 part I of title 5, United States Code.

3 ‘‘(C) RIGHT TO APPEAL.—Any court order

4 that compels production of confidential super5 visory information may be immediately appealed

6 by the Federal banking agency and the order

7 compelling production shall be automatically

8 stayed, pending the outcome of such appeal.

9 ‘‘(f) SUBPOENAS.—

10 ‘‘(1) AUTHORITY TO INTERVENE.—In the case

11 of any action or proceeding to compel compliance

12 with a subpoena, order, discovery request, or other

13 judicial or administrative process with respect to any

14 confidential supervisory information relating to any

15 depository institution, a Federal banking agency and

16 the depository institution may intervene in such ac17 tion or proceeding for the purpose of—

18 ‘‘(A) enforcing the limitations established

19 in paragraph (1) of subsections (b) and (e);

20 ‘‘(B) seeking the withdrawal of any com21 pulsory process with respect to such informa22 tion; and

23 ‘‘(C) registering appropriate objections

24 with respect to the action or proceeding to the
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1 extent the action or proceeding relates to or in2 volves such information.

3 ‘‘(2) RIGHT TO APPEAL.—Any court order that

4 compels production of confidential supervisory infor5 mation may be immediately appealed by the Federal

6 banking agency and the order compelling production

7 shall be automatically stayed, pending the outcome

8 of such appeal.

9 ‘‘(g) REGULATIONS.—

10 ‘‘(1) AUTHORITY TO PRESCRIBE.—Each Fed11 eral banking agency may prescribe such regulations

12 as the agency considers to be appropriate, after con13 sultation with the other Federal banking agencies

14 and the National Credit Union Administration

15 Board, to carry out the purposes of this section.

16 ‘‘(2) AUTHORITY TO REQUIRE NOTICE.—Any

17 regulations prescribed by a Federal banking agency

18 under paragraph (1) may require any person in pos19 session of confidential supervisory information to no20 tify the Federal banking agency whenever the person

21 is served with a subpoena, order, discovery request,

22 or other judicial or administrative process requiring

23 the personal attendance of such person as a witness

24 or requiring the production of such information in

25 any proceeding.
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1 ‘‘(h) ACCESS IN ACCORDANCE WITH REGULATIONS

2 AND ORDERS.—Notwithstanding any other provision of

3 this section, the Federal banking agency may, without

4 waiving any privilege, authorize access to confidential su5 pervisory information for any appropriate governmental,

6 law enforcement, or public purpose in accordance with

7 agency regulations or orders.’’.

8 SEC. 502. AMENDMENT TO THE FEDERAL CREDIT UNION

9 ACT.

10 Title II of the Federal Credit Union Act (12 U.S.C.

11 1781 et seq.) is amended by adding at the end the fol12 lowing new section:

13 ‘‘SEC. 215. CREDIT UNION SUPERVISORY PRIVILEGE.

14 ‘‘(a) DEFINITIONS.—For purposes of this section, the

15 following definitions shall apply:

16 ‘‘(1) SUPERVISORY PROCESS.—The term ‘su17 pervisory process’ means any activity engaged in by

18 the Administration to carry out the official respon19 sibilities of the Administration with regard to the

20 regulation or supervision of credit unions.

21 ‘‘(2) CONFIDENTIAL SUPERVISORY INFORMA22 TION.—The term ‘confidential supervisory informa23 tion’ means any of the following information, or any

24 portion of any such information, which is treated as,

25 or considered to be, confidential information by the
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1 Administration, regardless of the medium in which

2 the information is conveyed or stored:

3 ‘‘(A) Any report of examination, inspec4 tion, visitation, or investigation, and informa5 tion prepared or collected by the Administration

6 in connection with the supervisory process, in7 cluding any computer file, work paper, or simi8 lar document.

9 ‘‘(B) Any correspondence or communica10 tion from the Administration to a credit union

11 arising from or relating to an examination, in12 spection, visitation, or investigation by the Ad13 ministration.

14 ‘‘(C) Any correspondence, communication,

15 or document, including any compliance and

16 other reports, created by a credit union in re17 sponse to any request, inquiry, or directive from

18 the Administration in connection with any ex19 amination, inspection, visitation, or investiga20 tion and provided to the Administration, other

21 than any book or record in the possession of the

22 credit union routinely prepared by the credit

23 union and maintained in the ordinary course of

24 business or any information required to be
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1 made publicly available by any Federal law or

2 regulation.

3 ‘‘(D) Any record of the Administration to

4 the extent it contains information derived from

5 any report, correspondence, communication or

6 other information described in subparagraph

7 (A), (B), or (C).

8 ‘‘(b) CREDIT UNION SUPERVISORY PRIVILEGE.—

9 ‘‘(1) PRIVILEGE ESTABLISHED.—

10 ‘‘(A) IN GENERAL.—All confidential super11 visory information shall be the property of the

12 Administration and shall be privileged from dis13 closure to any other person.

14 ‘‘(B) PROHIBITION ON UNAUTHORIZED

15 DISCLOSURES.—No person in possession of con16 fidential supervisory information may disclose

17 such information, in whole or in part, without

18 the prior authorization of the Administration,

19 except for a disclosure made in published statis20 tical material that does not disclose, either di21 rectly or when used in conjunction with publicly

22 available information, the affairs of any person.

23 ‘‘(C) AGENCY WAIVERS.—The Board may

24 waive, in whole or in part, in the discretion of
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1 the Board, any privilege established under this

2 paragraph.

3 ‘‘(2) EXCEPTION.—No provision of paragraph

4 (1) shall be construed as preventing access to con5 fidential supervisory information by duly authorized

6 committees of the United States Congress or the

7 Comptroller General of the United States.

8 ‘‘(c) OTHER PRIVILEGES NOT WAIVED BY DISCLO9 SURE TO ADMINISTRATION.—The submission by a credit

10 union of any information to the Administration or a State

11 credit union supervisor for any purpose in the course of

12 the supervisory process of the Administration or such su13 pervisor shall not be construed as waiving, destroying, or

14 otherwise affecting any privilege such institution may

15 claim with respect to such information under Federal or

16 State law.

17 ‘‘(d) DISCOVERY AND DISCLOSURE OF INFORMA18 TION.—

19 ‘‘(1) INFORMATION AVAILABLE ONLY FROM AD20 MINISTRATION.—

21 ‘‘(A) IN GENERAL.—A person seeking dis22 covery or disclosure, in whole or in part, of con23 fidential supervisory information may not seek

24 to obtain such information through subpoena,

25 discovery procedures, or other process from any
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1 person, except that such information may be

2 sought in accordance with this section from the

3 Administration.

4 ‘‘(B) REQUEST SUBMITTED TO ADMINIS5 TRATION.—Any request for discovery or disclo6 sure of confidential supervisory information

7 shall be made in the Administration, which

8 shall determine within a reasonable time period

9 whether to disclose such information pursuant

10 to procedures and criteria established in regula11 tions.

12 ‘‘(2) EXCLUSIVE FEDERAL COURT JURISDIC13 TION OVER DISPUTES.—

14 ‘‘(A) IN GENERAL.—Federal courts shall

15 have exclusive jurisdiction over actions or pro16 ceedings in which any party seeks to compel

17 disclosure of confidential supervisory informa18 tion.

19 ‘‘(B) JUDICIAL REVIEW.—Judicial review

20 of the final action of the Administration with

21 regard to the disposition of a request for con22 fidential supervisory information shall be before

23 a district court of the United States of com24 petent jurisdiction, subject to chapter 7 of part

25 I of title 5, United States Code.
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1 ‘‘(C) RIGHT TO APPEAL.—Any court order

2 that compels production of confidential super3 visory information may be immediately appealed

4 by the Administration and the order compelling

5 production shall be automatically stayed, pend6 ing the outcome of such appeal.

7 ‘‘(e) SUBPOENAS.—

8 ‘‘(1) AUTHORITY TO INTERVENE.—In the case

9 of any action or proceeding to compel compliance

10 with a subpoena, order, discover request, or other ju11 dicial or administrative process with respect to any

12 confidential supervisory information relating to any

13 credit union, the Administration and the credit

14 union may intervene in such action or proceeding for

15 the purpose of—

16 ‘‘(A) enforcing the limitations established

17 in paragraph (1) of subsections (b) and (d);

18 ‘‘(B) seeking the withdrawal of any com19 pulsory process with respect to such informa20 tion; and

21 ‘‘(C) registering appropriate objections

22 with respect to the action or proceeding to the

23 extent the action or proceeding relates to or in24 volves such information.
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1 ‘‘(2) RIGHT TO APPEAL.—Any court order that

2 compels production of confidential supervisory infor3 mation may be immediately appealed by the Admin4 istration and the order compelling production shall

5 be automatically stayed, pending the outcome of

6 such appeal.

7 ‘‘(f) REGULATIONS.—

8 ‘‘(1) AUTHORITY TO PRESCRIBE.—The Board

9 may prescribe such regulations as the Board con10 siders to be appropriate, after consultation with the

11 Federal banking agencies (as defined in section 3 of

12 the Federal Deposit Insurance Act), to carry out the

13 purposes of this section.

14 ‘‘(2) AUTHORITY TO REQUIRE NOTICE.—Any

15 regulations prescribed by the Administration under

16 paragraph (1) may require any person in possession

17 of confidential supervisory information to notify the

18 Administration whenever the person is served with a

19 subpoena, order, discovery request, or other judicial

20 or administrative process requiring the personal at21 tendance of such person as a witness or requiring

22 the production of such information in any pro23 ceeding.

24 ‘‘(g) ACCESS IN ACCORDANCE WITH REGULATIONS

25 AND ORDERS.—Notwithstanding any other provision of
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1 this section, the Administration may, without waiving any

2 privilege, authorize access to confidential supervisory in3 formation for any appropriate governmental, law enforce4 ment, or public purpose in accordance with agency regula5 tions or orders.’’.

6 TITLE VI—TECHNICAL

7 CORRECTIONS

8 SEC. 601. TECHNICAL CORRECTION RELATING TO DEPOSIT

9 INSURANCE FUNDS.

10 (a) IN GENERAL.—Section 2707 of the Deposit In11 surance Funds Act of 1996 (12 U.S.C. 1821 note; Public

12 Law 104–208; 110 Stat. 3009–496) is amended by strik13 ing ‘‘7(b)(2)(C)’’ and inserting ‘‘7(b)(2)(E)’’.

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

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

16 date as section 2707 of the Deposit Insurance Funds Act

17 of 1996.

18 SEC. 602. RULES FOR CONTINUATION OF DEPOSIT INSUR19 ANCE FOR MEMBER BANKS CONVERTING

20 CHARTERS.

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

22 (12 U.S.C. 1818(o)) is amended in the second sentence,

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

24 ‘‘subsection (c) or (d) of section 4’’.
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1 SEC. 603. WAIVER OF CITIZENSHIP REQUIREMENT FOR NA2 TIONAL BANK DIRECTORS.

3 Section 5146 of the Revised Statutes of the United

4 States (12 U.S.C. 72) is amended in the 1st sentence, by

5 inserting before the period ‘‘, and waive the requirement

6 of citizenship in the case of not more than a minority of

7 the total number of directors of a national bank which

8 is an affiliate (as defined in section 3(w)(6) of the Federal

9 Deposit Insurance Act) of a foreign bank’’.

10 SEC. 604. TECHNICAL AMENDMENT TO PROHIBITION ON

11 COMPTROLLER INTERESTS IN NATIONAL

12 BANKS.

13 Section 329 of the Revised Statutes of the United

14 States (12 U.S.C. 11) is amended by striking ‘‘to be inter15 ested in any association issuing national currency under

16 the laws of the United States’’ and inserting ‘‘to hold an

17 interest in any national bank’’.

18 SEC. 605. APPLICABILITY OF LIMITATION TO PRIOR IN19 VESTMENTS.

20 (a) IN GENERAL.—Section 18(s) of the Federal De21 posit Insurance Act (12 U.S.C. 1828(s)) is amended by

22 adding at the end the following new paragraph:

23 ‘‘(5) CERTAIN INVESTMENTS.—Paragraph (1)

24 shall not apply to investments lawfully made before

25 April 11, 1996, by a depository institution in a Gov26 ernment-sponsored enterprise.’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply as if such amendment had been

3 included in the amendment made by section 2615(b) of

4 the Economic Growth and Regulatory Paperwork Reduc5 tion Act of 1996 as of the effective date of such section.

6 TITLE VII—SPECIAL RESERVE

7 FUNDS

8 SEC. 701. ABOLITION OF SPECIAL RESERVE FUNDS.

9 (a) SAIF SPECIAL RESERVE.—Section 11(a)(6) of

10 the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(6))

11 is amended by striking subparagraph (L).

12 (b) SPECIAL RESERVE OF THE DEPOSIT INSURANCE

13 FUND.—Section 2704 of the Deposit Insurance Funds

14 Act of 1996 is amended—

15 (1) by striking subsection (b);

16 (2) by striking paragraph (4) of subsection (d);

17 (3) in subsection (d)(6)(C)(i), by striking ‘‘(6)

18 and (7)’’ and inserting ‘‘(5), (6), and (7)’’; and

19 (4) in subsection (d)(6)(C)(ii), by striking ‘‘(6)’’

20 and inserting ‘‘(5)’’.

21 (c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply as if such amendments had been

23 included in the Deposit Insurance Funds Act of 1996 as

24 of the date of the enactment of such Act.

Æ