I

104TH CONGRESS

2D SESSION H. R. 4079

To reduce paperwork and additional regulatory burdens for depository

institutions.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 16, 1996

Mr. LEACH (by request) introduced the following bill; which was referred to

the Committee on Banking and Financial Services

A BILL

To reduce paperwork and additional regulatory burdens for

depository institutions.

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 Institutions Regulatory Relief Act of 1996’’.

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

7 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—REDUCTIONS IN GOVERNMENT OVERREGULATION

Subtitle A—The Home Mortgage Process

Sec. 101. Amendments to the Real Estate Settlement Procedures Act of 1974.
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Sec. 102. Simplification and unification of disclosures required under RESPA

and TILA for mortgage transactions.

Sec. 103. Increased regulatory flexibility under the Truth in Lending Act.

Sec. 104. Reductions in RESPA regulatory burdens; clarifying amendments.

Sec. 105. Disclosures for adjustable rate mortgages.

Sec. 106. Treatment of certain debt cancellation and deficiency waiver contracts.

Sec. 107. Conforming definition of ‘‘application’’ in various consumer credit

laws so as to exclude requests for prequalification.

Sec. 108. Recovery of fees.

Sec. 109. Home ownership debt counseling notification.

Sec. 110. Home Mortgage Disclosure Act.

Sec. 111. Technical corrections.

Subtitle B—Consumer Banking Reforms

Sec. 141. Amendments to the Truth in Savings Act.

Sec. 142. Information sharing.

Sec. 143. Limit on restitution for Truth in Lending violations if safety and

soundness of violator would be affected.

Sec. 144. Applicability of Electronic Fund Transfer Act to certain transactions.

Subtitle C—Equal Credit Opportunity Act Amendments

Sec. 151. Short title.

Sec. 152. Findings and purpose.

Sec. 153. Equal Credit Opportunity Act amendments.

Sec. 154. Fair Credit Reporting Act amendments.

Sec. 155. Incentives for self-testing.

Sec. 156. Consultation by attorney general required in nonreferral cases.

Sec. 157. Effective date.

Subtitle D—Consumer Leasing Act Amendments

Sec. 161. Short title.

Sec. 162. Congressional findings and declaration of purpose.

Sec. 163. Regulations.

Sec. 164. Consumer lease advertising.

Sec. 165. Statutory penalties.

TITLE II—STREAMLINING GOVERNMENT REGULATIONS

Subtitle A—Regulatory Approval Issues

Sec. 201. No prior approval required for well capitalized and well managed financial services holding companies.

Sec. 202. Streamlined bank acquisitions by well capitalized and well managed

banking organizations.

Sec. 203. Eliminate filing and approval requirements for insured depository institutions already controlled by the same holding company.

Sec. 204. Eliminate redundant approval requirement for Oakar transactions.

Sec. 205. Elimination of duplicative requirements imposed upon bank holding

companies and other regulatory relief under the Home Owners’

Loan Act.

Sec. 206. Eliminate requirement that approval be obtained for divestitures.

Sec. 207. Eliminate unnecessary branch applications.
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Sec. 208. Eliminate branch applications and requirements for ATMs and similar facilities.

Sec. 209. Eliminate requirement for approval of investments in bank premises

for well capitalized and well managed banks.

Sec. 210. Eliminate unnecessary filing for officer and director appointments.

Sec. 211. Streamlining process for determining new nonbanking activities.

Sec. 212. Disposition of foreclosed assets.

Sec. 213. Increase in certain credit union loan ceilings.

Subtitle B—Streamlining of Government Regulations; Miscellaneous Provisions

Sec. 221. Eliminate the per-branch capital requirement for national banks and

State member banks.

Sec. 222. Branch closures.

Sec. 223. Amendments to the Depository Institutions Management Interlocks

Act.

Sec. 224. Acceleration of repayment to Treasury.

Sec. 225. Constraints on employee-wide benefit plans and home equity loans.

Sec. 226. Expanded regulatory discretion for small bank examinations.

Sec. 227. Cost reimbursement.

Sec. 228. Identification of foreign nonbank financial institution customers.

Sec. 229. Paperwork reduction review.

Sec. 230. Daily confirmations for hold-in-custody repurchase transactions.

Sec. 231. Required regulatory review of regulations.

Sec. 232. Country risk requirements.

Sec. 233. Audit costs.

Sec. 234. Standards for director and officer liability.

Sec. 235. Foreign bank applications.

Sec. 236. Duplicate examination of foreign banks.

Sec. 237. High-cost mortgages.

Sec. 238. Streamlining FDIC approval of new State bank powers.

Sec. 239. Repeal of call report attestation requirement.

Sec. 240. Authorizing bank service companies to organize as limited liability

partnerships.

Sec. 241. Bank investments in Edge Act and agreement corporations.

Sec. 242. Report on the reconciliation of differences between regulatory accounting principles and generally accepted accounting principles.

Sec. 243. Waivers authorized for residency requirement for national bank directors.

Sec. 244. Consultation among examiners.

Sec. 245. Antitying exemptive authority.

TITLE III—LENDER LIABILITY

Sec. 301. Lender liability.

TITLE IV—ANNUAL STUDY AND REPORT ON IMPACT ON

LENDING TO SMALL BUSINESS

Sec. 401. Annual study and report.

TITLE V—FINANCIAL SERVICE REFORM

Subtitle A—Reform of Holding Company Procedures
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Sec. 501. Streamlined examination and reporting requirements for all financial

services holding companies.

Sec. 502. Holding company supervision for financial services holding companies

engaged primarily in nonbanking activities.

Sec. 503. Conversion of unitary savings and loan holding companies to financial

services holding companies.

Sec. 504. Coordination with State law.

Sec. 505. Conforming amendments to the Bank Holding Company Act of 1956.

Sec. 506. Conforming amendments to the Bank Holding Company Act Amendments of 1970.

Sec. 507. Credit cards for business purposes.

Sec. 508. Prohibitions on certain depository institution associations with Government-sponsored enterprises.

Sec. 509. Provisions applicable to limited purpose banks.

Sec. 510. Discretion of Federal reserve board.

Sec. 511. Qualified family partnerships.

Subtitle B—Interagency Banking and Financial Services Task Force

Sec. 521. Interagency banking and financial services task force.

Sec. 522. Financial services advisory committee.

TITLE VI—DROUGHT RELIEF

Sec. 601. Cooperative efforts between depository institutions and farmers and

ranchers in drought-stricken areas.

TITLE VII—FINANCIAL ACTIVITIES

Sec. 701. Financial activities.

Sec. 702. Retirement certificates of deposits.

Sec. 703. GAO study of State supervision of national bank insurance activities.

Sec. 704. National bank licensing requirements.

TITLE VIII—DEPOSIT INSURANCE FUNDS

Sec. 801. Short title.

Sec. 802. Special assessment to capitalize SAIF.

Sec. 803. Financing Corporation funding.

Sec. 804. Merger of BIF and SAIF.

Sec. 805. Creation of SAIF special reserve.

Sec. 806. Refund of amounts in deposit insurance fund in excess of designated

reserve amount.

Sec. 807. Assessment rates for SAIF members may not be less than assessment

rates for BIF members.

Sec. 808. Assessments authorized only if needed to maintain the reserve ratio

of a deposit insurance fund.

Sec. 809. Treasury study of common depository institution charter.

Sec. 810. Definitions.
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1 TITLE I—REDUCTIONS IN GOV2 ERNMENT OVERREGULATION

3 Subtitle A—The Home Mortgage

4 Process

5 SEC. 101. AMENDMENTS TO THE REAL ESTATE SETTLE6 MENT PROCEDURES ACT OF 1974.

7 (a) EMPLOYEE COMPENSATION.—Section 8(c) of the

8 Real Estate Settlement Procedures Act of 1974 (12

9 U.S.C. 2607) is amended—

10 (1) by redesignating paragraph (5) as para11 graph (6); and

12 (2) by striking ‘‘or’’ at the end of paragraph

13 (4) and inserting ‘‘(5) an employer’s payment to the

14 employer’s own bona fide employees for any referral

15 activities, or’’.

16 (b) INCREASED SCIENTER REQUIREMENT FOR

17 CRIMINAL PENALTY.—Section 8(d) of the Real Estate

18 Settlement Procedures Act of 1974 (12 U.S.C. 2607(d))

19 is amended—

20 (1) in paragraph (1), by inserting ‘‘willfully’’

21 after ‘‘persons who’’; and

22 (2) in paragraph (3), by striking ‘‘was not in23 tentional and’’.

24 (c) REDESIGNATION OF CONTROLLED BUSINESS AR25 RANGEMENTS AS AFFILIATED BUSINESS ARRANGE-
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1 MENTS.—The Real Estate Settlement Procedures Act of

2 1974 (12 U.S.C. 2601 et seq.) is amended—

3 (1) in section 3(7), by striking ‘‘controlled busi4 ness arrangement’’ and inserting ‘‘affiliated business

5 arrangement’’; and

6 (2) in subsections (c)(4) and (d)(6) of section

7 8, by striking ‘‘controlled business arrangements’’

8 and inserting ‘‘affiliated business arrangements’’.

9 (d) DISCLOSURES BY TELEPHONE OR ELECTRONIC

10 MEDIA.—Section 8(c)(4) of the Real Estate Settlement

11 Procedures Act of 1974 (12 U.S.C. 2607(c)(4)(A)) is

12 amended by striking subparagraph (A) and inserting the

13 following ‘‘(A)(i) at or before the time of a face-to-face

14 referral or referral made in writing (or within 3 business

15 days after a referral by telephone, electronic mail, or other

16 electronic media), a written disclosure is made of the exist17 ence of such an arrangement to the person being referred

18 and, in connection with such referral, such person is pro19 vided a written estimate of the charge or range of charges

20 generally made by the provider to which the person is re21 ferred, except that, in the case of a referral made by a

22 lender (including a referral by a lender to an affiliated

23 lender), such written estimate requirement may be deemed

24 to have been satisfied through the provision of the esti25 mates required under section 5(c), as of the time such esti-
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1 mates are provided and (ii) a written receipt of any disclo2 sure required pursuant to clause (i) (without regard to the

3 manner in which the disclosure is made) is obtained before

4 the closing of the transaction,’’.

5 (e) LIMITATION ON CLAIMS ARISING FROM VIOLA6 TIONS OF REQUIREMENTS FOR SERVICING MORTGAGES

7 AND ADMINISTERING ESCROW ACCOUNTS.—Section 16 of

8 the Real Estate Settlement Procedures Act of 1974 (12

9 U.S.C. 2614) is amended—

10 (1) by striking ‘‘section 8 or 9’’ and inserting

11 ‘‘section 6, 8, or 9’’; and

12 (2) by striking ‘‘within one year’’ and inserting

13 ‘‘within 3 years in the case of a violation of section

14 6 and 1 year in the case of a violation of section 8

15 or 9’’.

16 (f) TECHNICAL AND CONFORMING AMENDMENTS.—

17 (1) Section 4(a) of the Real Estate Settlement

18 Procedures Act of 1974 (12 U.S.C. 2603(a)) is

19 amended by striking ‘‘Federal Home Loan Bank

20 Board’’ and inserting ‘‘Director of the Office of

21 Thrift Supervision’’.

22 (2) Section 10(c)(1)(C) of the Real Estate Set23 tlement Procedures Act of 1974 (12 U.S.C.

24 2609(c)(1)(C)) is amended by striking ‘‘Not later

25 than the expiration of the 90-day period beginning
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1 on the date of the enactment of the Cranston-Gon2 zalez National Affordable Housing Act, the’’ and in3 serting ‘‘The’’.

4 (g) REPEAL OF OBSOLETE PROVISIONS.—The Real

5 Estate Settlement Procedures Act of 1974 (12 U.S.C.

6 2601 et seq.) is amended by striking sections 13, 14 and

7 15.

8 SEC. 102. SIMPLIFICATION AND UNIFICATION OF DISCLO9 SURES REQUIRED UNDER RESPA AND TILA

10 FOR MORTGAGE TRANSACTIONS.

11 (a) IN GENERAL.—With respect to credit trans12 actions which are subject to the Real Estate Settlement

13 Procedures Act of 1974 and the Truth in Lending Act,

14 the Board of Governors of the Federal Reserve System

15 and the Secretary of Housing and Urban Development

16 shall take such action as may be necessary before the end

17 of the 3-month period beginning on the date of the enact18 ment of this Act—

19 (1) to simplify the disclosures applicable to such

20 transactions under such Acts, including the timing

21 of the disclosures; and

22 (2) to provide a single format for such disclo23 sures which will satisfy the requirements of each

24 such Act with respect to such transactions.
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1 (b) REGULATIONS.—To the extent that it is nec2 essary to prescribe any regulation in order to effect any

3 changes required to be made under subsection (a), the pro4 posed regulation shall be published in the Federal Register

5 before the end of the 3-month period referred to in sub6 section (a).

7 (c) RECOMMENDATIONS FOR LEGISLATION.—If the

8 Board of Governors of the Federal Reserve System and

9 the Secretary of Housing and Urban Development find

10 that legislative action may be necessary or appropriate in

11 order to simplify and unify the disclosure requirements

12 under the Real Estate Settlement Procedures Act of 1974

13 and the Truth in Lending Act, the Board and the Sec14 retary shall submit a report containing recommendations

15 to the Congress concerning such action.

16 SEC. 103. INCREASED REGULATORY FLEXIBILITY UNDER

17 THE TRUTH IN LENDING ACT.

18 (a) REGULATORY FLEXIBILITY.—Section 104 of the

19 Truth in Lending Act (15 U.S.C. 1603) is amended by

20 adding at the end the following new paragraph:

21 ‘‘(7) Transactions for which the Board, by reg22 ulation, determines that coverage under the Act is

23 not needed to carry out the purposes of the Act.’’.

24 (b) EXEMPTIVE AUTHORITY.—Section 105 of the

25 Truth in Lending Act (15 U.S.C. 1604) is amended—
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1 (1) by redesignating subsections (b), (c), and

2 (d) as subsections (c), (d), and (e), respectively; and

3 (2) by inserting after subsection (a) the follow4 ing new subsection:

5 ‘‘(b) EXEMPTIVE AUTHORITY.—

6 ‘‘(1) IN GENERAL.—The Board may exempt

7 from all or parts of this title any class of trans8 actions for which, in the Board’s judgment, coverage

9 under all or part of this title does not provide a

10 meaningful benefit to consumers in the form of use11 ful information or protection.

12 ‘‘(2) FACTORS TO BE CONSIDERED.—In deter13 mining which classes of transactions to exempt in

14 whole or in part, the Board shall consider, among

15 other factors, the following:

16 ‘‘(A) The amount of the loan or closing

17 costs and whether the disclosures, right of re18 scission, and other provisions are necessary,

19 particularly for small loans.

20 ‘‘(B) Whether the requirements of this title

21 complicate, hinder, or make more expensive the

22 credit process for the class of transactions.

23 ‘‘(C) The status of the borrower, including,

24 the borrowers’ related financial arrangements,

25 the financial sophistication of the borrower rel-
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1 ative to the type of transaction, and the impor2 tance of the credit and related supporting prop3 erty to the borrower.’’.

4 SEC. 104. REDUCTIONS IN RESPA REGULATORY BURDENS;

5 CLARIFYING AMENDMENTS.

6 (a) UNNECESSARY DISCLOSURE.—Section 6(a) of the

7 Real Estate Settlement Procedures Act of 1974 (12

8 U.S.C. 2605) is amended to read as follows:

9 ‘‘(a) DISCLOSURE TO APPLICANT RELATING TO AS10 SIGNMENT, SALE, OR TRANSFER OF LOAN SERVICING.—

11 ‘‘(1) IN GENERAL.—Each person who makes a

12 federally related mortgage loan shall disclose to each

13 person who applies for any such loan, at the time of

14 application for the loan, whether the servicing of any

15 such loan may be assigned, sold, or transferred to

16 any other person at any time while such loan is out17 standing.

18 ‘‘(2) SIGNATURE OF APPLICANT.—Any disclo19 sure of the information required under paragraph

20 (1) shall not be effective for purposes of this section

21 unless the disclosure is accompanied by a written

22 statement, in such form as the Secretary shall de23 velop before the expiration of the 180-day period be24 ginning on the date of the enactment of the Finan25 cial Institutions Regulatory Relief Act of 1996, that
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1 the applicant has read and understood the disclosure

2 and that is evidenced by the signature of the appli3 cant at the place where such statement appears in

4 the application.’’.

5 (b) EFFECTIVE DATE.—The amendments made by

6 subsection (a) shall take effect 180 days after the date

7 of the enactment of this Act.

8 (c) SECOND MORTGAGES.—Section 3(1)(A) of the

9 Real Estate Settlement Procedures Act of 1974 (12

10 U.S.C. 2602(1)(A)) is amended by striking ‘‘or subordi11 nate’’.

12 (d) CONSISTENCY OF RESPA AND TRUTH IN LEND13 ING ACT EXEMPTION OF BUSINESS LOANS.—Section 7 of

14 the Real Estate Settlement Procedures Act of 1974 (12

15 U.S.C. 2606) is amended—

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

17 ‘‘This Act’’; and

18 (2) by inserting at the end the following new

19 subsection:

20 ‘‘(b) INTERPRETATION.—In issuing regulations pur21 suant to section 19(a) of this Act, the Secretary shall en22 sure that, with regard to subsection (a), the exemption

23 for business credit includes all business credit which is ex24 empt from the Truth in Lending Act in accordance with

25 section 226.3(a) of the regulations prescribed by the
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1 Board of Governors of the Federal Reserve System known

2 as ‘regulation Z’ (12 C.F.R. 226.3(a)), as in effect on the

3 date of enactment of the Financial Institutions Regulatory

4 Relief Act of 1996.’’.

5 SEC. 105. DISCLOSURES FOR ADJUSTABLE RATE MORT6 GAGES.

7 (a) IN GENERAL.—Section 127A(a)(2)(G) of the

8 Truth in Lending Act (15 U.S.C. 1637a(a)(2)(G)) is

9 amended by inserting before the semicolon ‘‘, or a state10 ment that the monthly payment may increase or decrease

11 significantly due to increases in the annual percentage

12 rate’’.

13 (b) TECHNICAL AND CONFORMING AMENDMENT.—

14 Section 127A(b)(3) of the Truth in Lending Act (15

15 U.S.C. 1637a(b)(3)) is amended by striking ‘‘required

16 under’’ and inserting ‘‘referred to in’’.

17 (c) ALTERNATIVE TO HISTORICAL EXAMPLE FOR

18 ADJUSTABLE RATE MORTGAGE DISCLOSURES.—Section

19 128 of the Truth in Lending Act (15 U.S.C. 1638) is

20 amended by adding at the end the following new sub21 section:

22 ‘‘(e) DISCLOSURE IN LIEU OF HISTORICAL EXAM23 PLE.—

24 ‘‘(1) IN GENERAL.—Any regulation prescribed

25 by the Board pursuant to section 105(a) which re-
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1 quires disclosures with respect to any consumer

2 credit transaction other than under an open end

3 credit plan—

4 ‘‘(A) which has a term to maturity of more

5 than 1 year and is secured by the principal

6 dwelling of the consumer;

7 ‘‘(B) with respect to which the annual per8 centage rate on any outstanding balance may

9 increase after the extension is made,

10 the regulation shall allow the creditor the option of

11 providing the information described in paragraph (2)

12 with regard to such transaction in lieu of an histori13 cal example that illustrates the effects of interest

14 rate changes implemented in accordance with the

15 terms of the transaction.

16 ‘‘(2) SUBSTITUTE INFORMATION.—The infor17 mation referred to in paragraph (1) is a written no18 tice provided by the creditor that—

19 ‘‘(A) states that the monthly rate of inter20 est on any outstanding balance may increase or

21 decrease substantially in accordance with the

22 terms of the consumer credit transactions; and

23 ‘‘(B) indicates the maximum rate of inter24 est and monthly payment that would apply with

25 respect to a $10,000 loan if such loan had been
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1 originated at a recent rate of interest, as deter2 mined in accordance with regulations prescribed

3 by the Board.’’.

4 (d) ENSURING HONORING OF LOCK-IN PROMISES.—

5 Section 128(b) of the Truth in Lending Act (15 U.S.C.

6 1638(b)) is amended by adding at the end the following

7 new paragraph:

8 ‘‘(3) In the case of a residential mortgage trans9 action, the disclosures under subsection (a) shall include

10 the following:

11 ‘‘(A) The note rate and points, and a state12 ment, if applicable, that these terms are subject to

13 change.

14 ‘‘(B) A statement that the creditor must in15 clude the disclosed note rate and points in the credit

16 agreement unless, in relation to either or both of

17 those terms—

18 ‘‘(i) the disclosure clearly and conspicu19 ously indicates that the term is subject to

20 change, or

21 ‘‘(ii) in the case of any term to which

22 clause (i) does not apply—

23 ‘‘(I) the creditor has clearly and con24 spicuously indicated that the term is condi-
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1 tioned on closing the transaction within a

2 prescribed time;

3 ‘‘(II) the creditor has promptly and

4 clearly communicated to the consumer the

5 information and documentation that the

6 consumer is required to provide to the

7 creditor; and

8 ‘‘(III) the consumer has failed to pro9 vide such information and documentation

10 within a reasonable time after receiving

11 that communication.’’.

12 SEC. 106. TREATMENT OF CERTAIN DEBT CANCELLATION

13 AND DEFICIENCY WAIVER CONTRACTS.

14 Section 106(c) of the Truth in Lending Act (15

15 U.S.C. 1605(c)) is amended to read as follows:

16 ‘‘(c) TREATMENT OF CERTAIN DEBT CANCELLATION

17 AND DEFICIENCY WAIVER CONTRACTS.—

18 ‘‘(1) IN GENERAL.—Charges and premiums for

19 any applicable insurance or product written in con20 nection with any consumer credit transaction shall

21 be included in the finance charge unless a clear and

22 specific statement in writing is furnished by the

23 creditor to the consumer to whom credit is ex24 tended—
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1 ‘‘(A) setting forth the cost of the insurance

2 or product, if obtained from or through the

3 creditor; and

4 ‘‘(B) stating that the consumer to whom

5 credit is extended may choose the person

6 through which the insurance or product is to be

7 obtained.

8 ‘‘(2) APPLICABLE INSURANCE OR PRODUCT DE9 FINED.—For purposes of paragraph (1), the term

10 ‘applicable insurance or product’ means—

11 ‘‘(A) any insurance against—

12 ‘‘(i) loss of or damage to property; or

13 ‘‘(ii) liability arising out of the owner14 ship or use of property; and

15 ‘‘(B) any voluntary insurance or noninsur16 ance product that provides protection against

17 part or all of the debtor’s liability for amounts

18 in excess of the value of the collateral securing

19 the debtor’s obligation.’’.
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1 SEC. 107. CONFORMING DEFINITION OF ‘‘APPLICATION’’ IN

2 VARIOUS CONSUMER CREDIT LAWS SO AS TO

3 EXCLUDE REQUESTS FOR

4 PREQUALIFICATION.

5 (a) HOME MORTGAGE DISCLOSURE ACT.—Section

6 303 of the Home Mortgage Disclosure Act of 1975 (12

7 U.S.C. 2802) is amended—

8 (1) by striking ‘‘For purposes of’’ and inserting

9 ‘‘(a) IN GENERAL.—For purposes of’’;

10 (2) by striking ‘‘and’’ at the end of paragraph

11 (5);

12 (3) by striking the period at the end of para13 graph (6) and inserting ‘‘; and’’; and

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

15 ‘‘(7) subject to subsection (b), the term ‘appli16 cation’—

17 ‘‘(A) means oral or written request for an

18 extension of credit secured or to be secured by

19 an identified parcel of real estate or dwelling

20 that is made in accordance with procedures es21 tablished by the creditor for the type of credit

22 requested; and

23 ‘‘(B) does not include a request by a pro24 spective loan applicant for a preliminary deter25 mination, whether or not a specific parcel of

26 real estate or dwelling is identified, of—
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1 ‘‘(i) the likelihood that the prospective

2 loan applicant would qualify for credit

3 under the standards established by the

4 creditor; or

5 ‘‘(ii) the amount of credit for which

6 the prospective applicant would likely qual7 ify.

8 ‘‘(b) DESIGNATION BY CONSUMER OF REQUEST AS

9 APPLICATION OR PREQUALIFICATION REQUEST.—If an

10 oral or written request by a prospective loan applicant re11 lates to an identified parcel of real estate or dwelling, the

12 applicant may designate whether the request shall be

13 treated by the creditor as an application described in sub14 paragraph (A) of subsection (a)(7) or as a request for a

15 preliminary determination described in subparagraph (B)

16 of subsection (a)(7).’’.

17 (b) REAL ESTATE SETTLEMENT PROCEDURES

18 ACT.—Section 3 of the Real Estate Settlement Procedures

19 Act of 1974 (12 U.S.C. 2602) (as amended by section

20 101(a) of this subtitle) is amended by adding at the end

21 the following new paragraph:

22 ‘‘(11) the term ‘application’ has the meaning

23 given such term in section 303(7) of the Home

24 Mortgage Disclosure Act of 1975.’’.

25 (c) EQUAL CREDIT OPPORTUNITY ACT.—
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1 (1) PREQUALIFICATION REQUEST IS NOT AN

2 APPLICATION.—Section 702 of the Equal Credit Op3 portunity Act (15 U.S.C. 1691a) is amended by add4 ing at the end the following new subsection:

5 ‘‘(h) PREQUALIFICATION REQUESTS.—

6 ‘‘(1) IN GENERAL.—A person who makes a re7 quest described in subparagraph (B) of section

8 303(7) of the Home Mortgage Disclosure Act of

9 1975 shall not be treated as an applicant for pur10 poses of this title, and the request shall not be treat11 ed as an application, unless the request relates to

12 identified real or personal property and such person

13 elects to treat the request as an application.

14 ‘‘(2) PERSON WHO MAKES A PREQUALIFICATION

15 REQUEST DEFINED.—The term ‘person who makes a

16 prequalification request’ means any person described

17 in paragraph (1) who has not elected to be treated

18 as an applicant.

19 ‘‘(3) PREQUALIFICATION REQUEST DEFINED.—

20 The term ‘prequalification request’ means a request

21 described in subparagraph (B) of section 303(7) of

22 the Home Mortgage Disclosure Act of 1975.’’.

23 (2) DISCRIMINATION PROHIBITED AGAINST ANY

24 PERSON WHO MAKES A PREQUALIFICATION RE-
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1 QUEST.—Section 701(a) of the Equal Credit Oppor2 tunity Act (15 U.S.C. 1691(a)) is amended—

3 (A) by inserting ‘‘or any person who makes

4 a prequalification request’’ after ‘‘any appli5 cant’’;

6 (B) in paragraphs (1) and (3), by inserting

7 ‘‘or person’’ after ‘‘the applicant’’; and

8 (C) in paragraph (2), by inserting ‘‘or per9 son’s’’ after ‘‘the applicant’s’’.

10 (3) ADVERSE RESPONSE TO PREQUALIFICATION

11 REQUEST NOT TREATED AS AN ADVERSE ACTION.—

12 The last sentence of section 701(d)(6) of the Equal

13 Credit Opportunity Act (15 U.S.C. 1691(d)(6)) is

14 amended by inserting ‘‘and, in the case of a federally

15 related mortgage loan (as defined in section 3(1) of

16 the Real Estate Settlement Procedures Act of 1974),

17 a creditor’s response to a prequalification request’’

18 before the period.

19 (d) TRUTH IN LENDING ACT.—Section 103 of the

20 Truth in Lending Act (15 U.S.C. 1602) is amended—

21 (1) in the 2d sentence of subsection (g) by in22 serting ‘‘(other than a bailment or lease which is ter23 minable without penalty at any time by the

24 consumer and was entered into in compliance with
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1 such appropriate noncredit disclosures as the Board

2 may prescribe)’’ after ‘‘bailment or lease’’; and

3 (2) by adding at the end the following new sub4 section:

5 ‘‘(cc) APPLICATION.—In the case of any federally re6 lated mortgage loan (as defined in section 3(1) of the Real

7 Estate Settlement Procedures Act of 1974), the term ‘ap8 plication’ has the meaning given to such term in section

9 303(7) of the Home Mortgage Disclosure Act of 1975.’’.

10 (e) FAIR CREDIT REPORTING ACT.—Section 615 of

11 the Fair Credit Reporting Act (15 U.S.C. 1681m) is

12 amended by adding at the end the following new sub13 section:

14 ‘‘(d) CERTAIN PREQUALIFICATION REQUESTS EX15 CLUDED FROM SCOPE OF SECTION.—This section shall

16 not apply with respect to a creditor’s response to a

17 prequalification request (as defined in section 702(h)(3)

18 of the Equal Credit Opportunity Act) with respect to a

19 federally related mortgage loan (as defined in section 3(1)

20 of the Real Estate Settlement Procedures Act of 1974).’’.

21 SEC. 108. RECOVERY OF FEES.

22 Section 125(b) of the Truth in Lending Act (15

23 U.S.C. 1635) is amended—
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1 (1) in the first sentence, by inserting ‘‘, except

2 any charge for an appraisal report or credit report’’

3 after ‘‘other charge’’; and

4 (2) in the second sentence, by striking ‘‘other5 wise’’ and inserting ‘‘as otherwise required under

6 this subsection’’.

7 SEC. 109. HOME OWNERSHIP DEBT COUNSELING NOTIFICA8 TION.

9 Section 106(c) of the Housing and Urban Develop10 ment Act of 1968 (12 U.S.C. 1701x(c)) is amended by

11 striking paragraph (5).

12 SEC. 110. HOME MORTGAGE DISCLOSURE ACT.

13 (a) Section 309 of the Home Mortgage Disclosure

14 Act of 1975 (12 U.S.C. 2808) is amended—

15 (1) in the second sentence, by striking

16 ‘‘$10,000,000’’ and inserting ‘‘$50,000,000’’; and

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

18 sentence: ‘‘The dollar amount in this section shall be

19 adjusted annually after December 31, 1994, by the

20 annual percentage increase in the Consumer Price

21 Index for Urban Wage Earners and Clerical Work22 ers published by the Bureau of Labor Statistics.’’.

23 (b) Section 304 of the Home Mortgage Disclosure

24 Act of 1975 (12 U.S.C. 2803) is amended by adding at

25 the end the following new subsection:
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1 ‘‘(m) OPPORTUNITY TO REDUCE COMPLIANCE BUR2 DEN.—

3 ‘‘(1) A depository institution shall be considered

4 to have satisfied the public availability requirements

5 of subsection (a) if such institution keeps the infor6 mation required under that subsection at its home

7 office and provides notice at the branch locations

8 specified in such subsection that such information is

9 available upon request from the home office of the

10 institution. A home office of the depository institu11 tion receiving a request for such information pursu12 ant to this subsection shall provide the information

13 pertinent to the location of the branch in question

14 within fifteen days of the receipt of the written re15 quest.

16 ‘‘(2) In complying with paragraph (1), a deposi17 tory institution may provide the individual request18 ing such information, at the institution’s choice,

19 with—

20 ‘‘(A) a paper copy of the information re21 quested; or

22 ‘‘(B) if acceptable to the individual, the in23 formation through a form of electronic medium,

24 such as computer disc.’’.
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1 SEC. 111. TECHNICAL CORRECTIONS.

2 Section 139(a) of the Truth in Lending Act (as added

3 by section 4 of the Truth in Lending Act Amendments

4 of 1995) is amended—

5 (1) in the matter preceding paragraph (1), by

6 striking ‘‘subject to this title’’ and inserting ‘‘re7 ferred to in section 106(f)’’; and

8 (2) in paragraph (3)(A), by striking ‘‘may’’ and

9 all that follows through ‘‘charge’’ the first place such

10 term appears.

11 Subtitle B—Consumer Banking

12 Reforms

13 SEC. 141. AMENDMENTS TO THE TRUTH IN SAVINGS ACT.

14 (a) REPEAL.—Section 271 of the Truth in Savings

15 Act (12 U.S.C. 4310) is hereby repealed.

16 (b) ON-PREMISES DISPLAYS.—Section 263(c) of the

17 Truth in Savings Act (12 U.S.C. 4302(c)) is amended—

18 (1) by striking paragraph (2);

19 (2) by striking ‘‘(1) IN GENERAL.—’’; and

20 (3) by redesignating subparagraphs (A) and

21 (B) as paragraphs (1) and (2), respectively, and in22 denting appropriately.

23 (c) DEPOSITORY INSTITUTION DEFINITION.—Section

24 274(6) of the Truth in Savings Act (12 U.S.C. 4313(6))

25 is amended by inserting before the period ‘‘, but does not

26 include any nonautomated credit union that was not re-
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1 quired to comply with the requirements of this title as of

2 the date of enactment of the Economic Growth and Regu3 latory Paperwork Reduction Act of 1995, pursuant to the

4 determination of the National Credit Union Administra5 tion Board’’.

6 (d) TIME DEPOSITS.—Section 266(a)(3) of the Truth

7 in Savings Act (12 U.S.C. 4305(a)(3)) is amended by in8 serting ‘‘has a maturity of more than 30 days’’ after ‘‘de9 posit which’’.

10 SEC. 142. INFORMATION SHARING.

11 Section 18 of the Federal Deposit Insurance Act (12

12 U.S.C. 1828) is amended by adding at the end the follow13 ing new subsection:

14 ‘‘(s) CUSTOMER ACCESS TO PRODUCTS.—

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

16 provision of law, any depository institution, or any

17 affiliate or subsidiary of any depository institution,

18 may share or exchange information or otherwise

19 transfer information between or among themselves

20 without any restriction or limitation if it is clearly

21 and conspicuously disclosed that the information

22 may be communicated among such persons and the

23 consumer is given the opportunity, before the time

24 that the information is initially communicated, to di-
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1 rect that such information not be communicated

2 among such persons.

3 ‘‘(2) DEFINITION.—For purposes of this sub4 section, the term ‘information’ means any and all

5 data, records, or other information and material ob6 tained or maintained by any depository institution or

7 any affiliate or subsidiary thereof in the ordinary

8 course of its business that relates in any way to a

9 person (as such term is defined in section 603(b) of

10 the Fair Credit Reporting Act) who applies for,

11 maintains, or has maintained an account or credit

12 relationship with or applied for, purchased or ob13 tained other products or services from any deposi14 tory institution or any affiliate or subsidiary of any

15 depository institution, regardless of the source of

16 manner in which the information is obtained or fur17 nished.

18 ‘‘(3) RULE OF CONSTRUCTION.—Any depository

19 institution, or any affiliate or subsidiary of any de20 pository institution, relying on this subsection shall

21 not be deemed to be a consumer reporting agency,

22 user, or third party, and the information itself shall

23 not constitute a consumer report, within the mean24 ing of the Fair Credit Reporting Act or other similar

25 law.’’.
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1 SEC. 143. LIMIT ON RESTITUTION FOR TRUTH IN LENDING

2 VIOLATIONS IF SAFETY AND SOUNDNESS OF

3 VIOLATOR WOULD BE AFFECTED.

4 Section 108(e)(3)(A) of the Truth in Lending Act (15

5 U.S.C. 1607(e)(3)(A)) is amended—

6 (1) by striking ‘‘in any such case, the agency

7 may require’’ and inserting ‘‘in any such case, the

8 agency may (i) require’’;

9 (2) by striking ‘‘, except that with respect to

10 any transaction consummated after the effective

11 date of section 608 of the Truth in Lending Sim12 plification and Reform Act, the agency shall’’ and

13 inserting ‘‘; or (ii)’’; and

14 (3) by striking ‘‘reasonable,’’ and inserting

15 ‘‘reasonable if, in the case of an agency referred to

16 in paragraph (1), (2), or (3) of subsection (a), the

17 agency determines that a partial adjustment or the

18 making of partial payments over an extended period

19 is necessary to avoid causing the creditor to become

20 undercapitalized (as determined in accordance with

21 regulations prespellscribed by such agency under

22 section 38 of the Federal Deposit Insurance Act);’’.

23 SEC. 144. APPLICABILITY OF ELECTRONIC FUND TRANSFER

24 ACT TO CERTAIN TRANSACTIONS.

25 (a) STUDY REQUIRED.—The Board of Governors of

26 the Federal Reserve System shall conduct a study of
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1 whether, and the extent to which, the Electronic Fund

2 Transfer Act is applicable to, or should or should not be

3 applicable to, any payment for transactions by a person

4 through the use of value stored on, or assigned to, a card,

5 device, or computer if the card, device, or computer is not

6 used to actually access an account in order to effect the

7 transaction.

8 (b) REPORT.—

9 (1) IN GENERAL.—The Board of Governors of

10 the Federal Reserve System shall submit a report on

11 the study required under subsection (a) to the Con12 gress before the end of the 90-day period beginning

13 on the date of the enactment of this Act.

14 (2) CONTENTS.—The report submitted under

15 paragraph (1) shall contain the findings and conclu16 sions of the Board of Governors of the Federal Re17 serve System and such recommendations for legisla18 tive and administrative action as the Board consid19 ers to be appropriate.

20 Subtitle C—Equal Credit

21 Opportunity Act Amendments

22 SEC. 151. SHORT TITLE.

23 This subtitle may be cited as the ‘‘Equal Credit Op24 portunity Act Amendments of 1996’’.
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1 SEC. 152. FINDINGS AND PURPOSE.

2 (a) FINDINGS.—The Congress finds that both the

3 Equal Credit Opportunity Act (15 U.S.C. 1691, et seq.)

4 and the Fair Credit Reporting Act (15 U.S.C. 1681, et

5 seq.) contain requirements that applicants for consumer

6 credit be given certain information in the event that ad7 verse action is taken on the application. These require8 ments differ in both scope and content and for that reason

9 are confusing to both the consumer who receives the infor10 mation and the party required to furnish the information.

11 (b) PURPOSE.—It is the purpose of this subtitle to

12 combine and simplify the adverse action notification re13 quirements of the Equal Credit Opportunity Act and the

14 Fair Credit Reporting Act regarding applications for

15 consumer credit and to make the information that is re16 quired to be furnished more understandable.

17 SEC. 153. EQUAL CREDIT OPPORTUNITY ACT AMEND18 MENTS.

19 (a) NOTICE OF ADVERSE ACTION.—Section

20 701(d)(2)(B) of the Equal Credit Opportunity Act (15

21 U.S.C. 1691(d)(2)(B)) is amended to read as follows:

22 ‘‘(B) giving written notification of adverse

23 action which discloses—

24 ‘‘(i) the applicant’s right to a state25 ment of reasons within 30 days after re-
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1 ceipt by the creditor of a request made

2 within 60 days after such notification;

3 ‘‘(ii) if credit is denied or the charge

4 for such credit is increased either wholly or

5 partly because of information contained in

6 a consumer report from a consumer re7 porting agency—

8 ‘‘(I) that fact and the name, ad9 dress, and telephone number of the

10 consumer reporting agency making

11 the report;

12 ‘‘(II) the consumer’s right to ob13 tain, under section 612, a free copy of

14 a consumer report on the consumer,

15 from the consumer reporting agency

16 referred to in subclause (I) within the

17 30-day period provided under such

18 section; and

19 ‘‘(III) the consumer’s right to

20 dispute, under section 611, with a

21 consumer reporting agency the accu22 racy or completeness of any informa23 tion in a consumer report furnished

24 by the agency.
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1 ‘‘(iii) if credit is denied or the charge

2 for credit is increased either wholly or

3 partly because of information obtained

4 from a person other than a consumer re5 porting agency bearing upon the consum6 er’s credit worthiness, credit standing,

7 credit capacity, character, general reputa8 tion, personal characteristics or mode of

9 living, that fact and the right to receive

10 disclosure of the nature of the information

11 so received, within a reasonable period of

12 time, upon the consumer’s written request

13 for information within 60 days after learn14 ing of such adverse action; and

15 ‘‘(iv) the identity of the person or of16 fice from which such notification may be

17 obtained.

18 Such statement of reasons may be given orally

19 if the written notification advises the applicant

20 of his right to have the statement of reasons

21 confirmed in writing on written request.’’.

22 (b) TECHNICAL AND CONFORMING AMENDMENT.—

23 Section 701(d)(3) of the Equal Credit Opportunity Act

24 (15 U.S.C. 1691(d)(3)) is amended by striking the period

25 at the end and adding the following: ‘‘and, to the extent
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1 applicable, the name, address, and telephone number of

2 the consumer reporting agency identified in accordance

3 with the requirements of subsection (d)(3)(ii) and a state4 ment of the right to obtain disclosure of the nature of the

5 information upon which adverse action was taken as re6 quired by such subsection.’’.

7 (c) REASONABLE PROCEDURES TO ASSURE COMPLI8 ANCE.—Section 706 of the Equal Credit Opportunity Act

9 (15 U.S.C. 1691e) is amended by adding at the end the

10 following new subsection:

11 ‘‘(l) REASONABLE PROCEDURES TO ASSURE COM12 PLIANCE.—No person shall be held liable for any violation

13 of subsection 701(d) if such person shows by a preponder14 ance of the evidence that at the time of the alleged viola15 tion the person maintained reasonable procedures to as16 sure compliance with the provisions of the subsection.’’.

17 SEC. 154. FAIR CREDIT REPORTING ACT AMENDMENTS.

18 (a) Section 615(a) of the Fair Credit Reporting Act

19 (15 U.S.C. 1681m(a)) is amended by striking ‘‘credit or’’

20 each place such term appears.

21 (b) Section 615 of the Fair Credit Reporting Act (15

22 U.S.C. 1681m) is amended by striking subsection (b) and

23 redesignating subsection (c) as subsection (b).

24 (c) Section 615(b) (as redesignated by this section)

25 of the Fair Credit Reporting Act (15 U.S.C. 1681m(b))
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1 is amended by striking ‘‘subsections (a) and (b)’’ and in2 serting ‘‘subsection (a)’’.

3 SEC. 155. INCENTIVES FOR SELF-TESTING.

4 (a) EQUAL CREDIT OPPORTUNITY.—

5 (1) IN GENERAL.—The Equal Credit Oppor6 tunity Act (15 U.S.C. 1691 et seq.) is amended by

7 inserting after section 704 the following new section:

8 ‘‘SEC. 704A. INCENTIVES FOR SELF-TESTING AND SELF9 CORRECTION.

10 ‘‘(a) IN GENERAL.—If a creditor—

11 ‘‘(1) conducts, or authorizes an independent

12 third party to conduct, a self-test of the creditor’s

13 lending or any part of the creditor’s lending oper14 ations in order to determine the level or effectiveness

15 of compliance with this title by the creditor; and

16 ‘‘(2) has identified discriminatory practices and

17 has taken or is taking appropriate corrective actions

18 to address the discrimination,

19 any report or results of such a self-test may not be ob20 tained or used by any applicant, department, or agency

21 in any proceeding or civil action brought under this title.

22 ‘‘(b) RESULTS OF SELF-TESTING.—No provision of

23 this section shall be construed as preventing an applicant,

24 department, or agency from obtaining and using the re-
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1 sults of any self-testing in any proceeding or civil action

2 brought under this title if—

3 ‘‘(1) the creditor or any other entity conducted

4 such activity at the request of a department or agen5 cy;

6 ‘‘(2) the creditor or any other entity, or any

7 person acting on behalf of the creditor or other en8 tity—

9 ‘‘(A) voluntarily releases or discloses all, or

10 any part of, such results; or

11 ‘‘(B) refers to or describes such results as

12 a defense to charges of unlawful discrimination

13 against such creditor, person, or entity; or

14 ‘‘(3) the results are sought by the applicant, de15 partment, or agency by means of a discovery request

16 for the purposes of determining an appropriate pen17 alty or remedy for a violation of this title.

18 ‘‘(c) REGULATIONS.—The appropriate Federal de19 partment or agency shall prescribe regulations, after no20 tice and opportunity for comment, which determine what

21 types of ‘self-tests’ are sufficiently extensive so as to con22 stitute a determination of the level or effectiveness of a

23 creditor’s compliance with this title.’’.
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1 (2) REFERRALS TO THE ATTORNEY GEN2 ERAL.—Section 706(g) of the Equal Credit Oppor3 tunity Act (15 U.S.C. 1691e(g)) is amended—

4 (A) by striking ‘‘(g) The agencies’’ and in5 serting ‘‘(g) REFERRALS TO THE ATTORNEY

6 GENERAL.—

7 ‘‘(1) IN GENERAL.—The agencies’’; and

8 (B) by adding at the end the following new

9 paragraphs:

10 ‘‘(2) LIMITATION ON REFERRALS OF SELF11 TESTING RESULTS.—

12 ‘‘(A) IN GENERAL.—No agency shall be re13 quired to refer any report or results of a self14 test relating to any creditor to the Attorney

15 General if the creditor—

16 ‘‘(i) has already identified discrimina17 tory practices as the result of self-testing

18 instituted by the creditor to determine

19 compliance with this title; and

20 ‘‘(ii) has taken or is taking appro21 priate corrective actions to address the dis22 crimination.

23 ‘‘(3) ENFORCEMENT UNDER OTHER LAWS.—No

24 provision of this section shall be construed as limit-
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1 ing the authority of the agency to enforce the provi2 sions of this title under any other provision of law.’’.

3 (3) REFERRALS TO HUD.—Section 706(k) of

4 the Equal Credit Opportunity Act (15 U.S.C.

5 1691e(k)) is amended by adding at the end the fol6 lowing: ‘‘No such agency shall be required to notify

7 the Secretary of Housing and Urban Development or

8 the applicant that the agency has reason to believe

9 that a violation of this title or the Fair Housing Act

10 occurred if the reason is based on a result of self11 testing instituted by the creditor to determine com12 pliance with this title, and the creditor has already

13 identified the possible violation and has taken or is

14 taking appropriate corrective actions to address the

15 possible violation. No provisions of this section shall

16 be construed as limiting the authority of the agency

17 to enforce the provisions of this title under any other

18 provision of law.’’.

19 (4) CLERICAL AMENDMENT.—The table of sec20 tions for title VII of the Consumer Credit Protection

21 Act is amended by inserting after the item relating

22 to section 704 the following new item:

‘‘704A. Incentives for self-testing and self-correction.’’.

23 (b) FAIR HOUSING.—The Fair Housing Act (42

24 U.S.C. 3601 et seq.) is amended by inserting after section

25 814 the following new section:
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1 ‘‘SEC. 814A. SELF-TESTING ENHANCEMENT.

2 ‘‘(a) IN GENERAL.—If any person—

3 ‘‘(1) conducts, or authorizes an independent

4 third party to conduct, a self-test of that person’s

5 residential real estate related lending activities, or

6 any part of such activities, in order to determine the

7 level or effectiveness of compliance with this title by

8 the person; and

9 ‘‘(2) has identified discriminatory practices and

10 has taken or is taking appropriate corrective actions

11 to address the discrimination,

12 any report or results of such a self-test may not be ob13 tained or used by any aggrieved person, complainant, de14 partment, or agency in any proceeding or civil action

15 brought under this title.

16 ‘‘(b) RESULTS OF SELF-TESTING.—No provision of

17 this section shall be construed as preventing an aggrieved

18 person, complainant, department, or agency from obtain19 ing and using the results of any self-testing as described

20 in subsection (a) in any proceeding or civil action brought

21 under this title if—

22 ‘‘(1) the creditor or any other entity conducted

23 such activity at the request of a department or agen24 cy;
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1 ‘‘(2) the creditor or any other entity, or any

2 person acting on behalf of the creditor or other en3 tity—

4 ‘‘(A) voluntarily releases or discloses all, or

5 any part of, such results; or

6 ‘‘(B) refers to or describes such results as

7 a defense to charges of unlawful discrimination

8 against such creditor, person, or entity; or

9 ‘‘(3) the results are sought by the aggrieved

10 person, complainant, department, or agency by

11 means of a discovery request for the purposes of de12 termining an appropriate penalty or remedy for a

13 violation of this title.

14 ‘‘(c) REGULATIONS.—The appropriate Federal de15 partment or agency shall prescribe regulations, after no16 tice and opportunity for comment, which determine what

17 types of ‘self-tests’ are sufficiently extensive so as to con18 stitute a determination of the level or effectiveness of a

19 creditor’s compliance with this title.’’.

20 SEC. 156. CONSULTATION BY ATTORNEY GENERAL RE21 QUIRED IN NONREFERRAL CASES.

22 (a) EQUAL CREDIT OPPORTUNITY.—Section 706(h)

23 of the Equal Credit Opportunity Act (15 U.S.C. 1691e(h))

24 is amended by adding at the end the following new sen25 tence: ‘‘Before bringing a civil action against any creditor
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1 described in paragraph (1), (2), or (3) of section 704(a),

2 the Attorney General shall consult with the appropriate

3 agency under such paragraph.’’.

4 (b) FAIR HOUSING ACT.—Section 814(a) of the Fair

5 Housing Act (42 U.S.C. 3614(a)) is amended by adding

6 at the end the following new sentence: ‘‘Before bringing

7 a civil action under the preceding sentence against any

8 person or group of persons described in paragraph (1),

9 (2), or (3) of section 704(a) of the Equal Credit Oppor10 tunity Act with respect to a violation of 805(a) of this

11 title, the Attorney General shall consult with the appro12 priate agency under such paragraph.’’.

13 SEC. 157. EFFECTIVE DATE.

14 (a) IN GENERAL.—Except with respect to the re15 quirements of subsection (b), this subtitle shall take effect

16 at the end of the 270-day period beginning on the date

17 of the enactment of this Act.

18 (b) IMPLEMENTING REGULATIONS.—The Board of

19 Governors of the Federal Reserve System shall prescribe

20 regulations to implement this subtitle and such regulations

21 shall be published in final form before the end of the 180-

22 day period beginning on the date of the enactment of this

23 Act.
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1 Subtitle D—Consumer Leasing Act

2 Amendments

3 SEC. 161. SHORT TITLE.

4 This subtitle may be cited as the ‘‘Consumer Leasing

5 Act Amendments of 1996’’.

6 SEC. 162. CONGRESSIONAL FINDINGS AND DECLARATION

7 OF PURPOSE.

8 (a) FINDINGS.—The Congress finds the following:

9 (1) Competition among the various financial in10 stitutions and other firms engaged in the business of

11 consumer leasing is greatest when there is informed

12 use of leasing. The informed use of leasing results

13 from an awareness of the cost of leasing by consum14 ers.

15 (2) There has been a continued trend toward

16 leasing automobiles and other durable goods for

17 consumer use as an alternative to installment credit

18 sales and that leasing product advances have oc19 curred such that lessors have been unable to provide

20 consistent industry-wide disclosures to fully account

21 for the competitive progress that has occurred.

22 (b) PURPOSES.—

23 (1) It is the purpose of this subtitle to assure

24 a simple, meaningful disclosure of leasing terms so

25 that the consumer will be able to compare more
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1 readily the various leasing terms available to the

2 consumer and avoid the uninformed use of leasing,

3 and to protect the consumer against inaccurate and

4 unfair leasing practices.

5 (2) To provide for adequate cost disclosures

6 that reflect the marketplace without impairing com7 petition and the development of new leasing prod8 ucts, it is the purpose of this subtitle to provide the

9 Board with the regulatory authority to assure a sim10 plified, meaningful definition and disclosure of the

11 terms of certain leases of personal property for per12 sonal, family, or household purposes so as to enable

13 the lessee to compare more readily the various lease

14 terms available to the lessee, enable comparison of

15 lease terms with credit terms where appropriate and

16 to assure meaningful and accurate disclosures of

17 lease terms in advertisements.

18 SEC. 163. REGULATIONS.

19 (a) IN GENERAL.—Chapter 5 of title I of the

20 Consumer Credit Protection Act (15 U.S.C. 1601 et seq.)

21 is amended by adding at the end the following new section:

22 ‘‘SEC. 187. REGULATIONS.

23 ‘‘(a) REGULATIONS AUTHORIZED.—

24 ‘‘(1) IN GENERAL.—The Board shall write reg25 ulations or staff commentary, if appropriate, to up-
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1 date and clarify the requirements and definitions for

2 lease disclosures, contracts, and any other specific

3 issues related to consumer leasing which would carry

4 out the purposes of this chapter, to prevent any cir5 cumvention of the chapter, and to facilitate compli6 ance with the requirements of the chapter.

7 ‘‘(2) CLASSIFICATIONS, ADJUSTMENTS.—The

8 regulations prescribed under paragraph (1) may con9 tain classifications and differentiations and may pro10 vide for adjustments and exceptions for any class of

11 transaction.

12 ‘‘(b) MODEL DISCLOSURES.—The Board shall pub13 lish model disclosure forms and clauses to facilitate com14 pliance with the disclosure requirements and to aid the

15 consumer in understanding the transaction. In designing

16 forms, the Board shall consider the use by lessors of data

17 processing or similar automated equipment. Use of the

18 models shall be optional. A lessor who properly uses the

19 material aspects of the models shall be deemed to be in

20 compliance with the disclosure requirements.

21 ‘‘(c) EFFECTIVE DATES.—

22 ‘‘(1) IN GENERAL.—Any regulation of the

23 Board, or any amendment or interpretation of any

24 regulation of the Board, that requires a disclosure

25 different from the disclosures previously required
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1 shall have an effective date of the October 1 that fol2 lows the date of promulgation by at least 6 months.

3 ‘‘(2) LONGER PERIOD.—The Board may, in the

4 Board’s discretion, lengthen the period of time re5 ferred to in paragraph (1) to permit lessors to ad6 just their forms to accommodate new requirements.

7 ‘‘(3) SHORTER PERIOD.—The Board may also

8 shorten the period of time referred to in paragraph

9 (1) if the Board makes a specific finding that such

10 action is necessary to comply with the findings of a

11 court or to prevent unfair or deceptive practices.

12 ‘‘(4) COMPLIANCE BEFORE EFFECTIVE DATE.—

13 Lessors may comply with any newly promulgated

14 disclosure requirement before the effective date of

15 such requirement.’’.

16 (b) CLERICAL AMENDMENT.—The table of sections

17 for chapter 5 of title I of the Consumer Credit Protection

18 Act (15 U.S.C. 1601 et seq.) is amended by inserting after

19 the item relating to section 186 the following new item:

‘‘187. Regulations.’’.

20 SEC. 164. CONSUMER LEASE ADVERTISING.

21 Section 184 of the Consumer Credit Protection Act

22 (15 U.S.C. 1667c) is amended to read as follows:

23 ‘‘SEC. 184. CONSUMER LEASE ADVERTISING.

24 ‘‘(a) IN GENERAL.—If an advertisement for a

25 consumer lease states the amount of any payment or
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1 states that any or no initial payment is required, the ad2 vertisement shall also clearly and conspicuously state the

3 following terms which shall be segregated from all other

4 information and identified as ‘Important Information for

5 Consumers’:

6 ‘‘(1) That the transaction advertised is a lease.

7 ‘‘(2) The total of initial payments required at

8 or before consummation of the lease or delivery of

9 the property, whichever is later.

10 ‘‘(3) Whether a security deposit is required.

11 ‘‘(4) The number, amounts, and timing of

12 scheduled payments.

13 ‘‘(5) The capitalized cost as defined by the

14 Board and stated as a dollar amount that represents

15 either the actual capitalized cost at which the lessor

16 is willing to lease the property or the average cap17 italized cost as a percentage of manufacturer’s sug18 gested retail price of all similar property leased by

19 the advertiser or lessor during the most recent 6-

20 month period ending either December 31, or June

21 30.

22 ‘‘(6) For a lease in which the consumer’s liabil23 ity at the end of the lease term is based on the an24 ticipated residual value of the property, whether an
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1 extra charge may be imposed at the end of the lease

2 term.

3 ‘‘(b) CLEARLY AND CONSPICUOUSLY.—

4 ‘‘(1) The disclosures required by this section

5 shall be given clearly and conspicuously in accord6 ance with the following requirements:

7 ‘‘(A) In print advertisements, the required

8 disclosure shall appear in a type size, shade,

9 contrast, prominence, and location as to be

10 readily noticeable, readable, and comprehensible

11 to an ordinary consumer.

12 ‘‘(B) In advertisements on the Internet,

13 the required disclosures shall appear in a type

14 size, shade, contrast, prominence, and location

15 as to be readily readable and comprehensible to

16 users and shall be separated from marketing

17 and promotional information and easily acces18 sible under the label or heading ‘Important In19 formation for Consumers’.

20 ‘‘(C) In any other form of advertising, the

21 disclosures shall be made in accordance with

22 regulations prescribed by the Board which shall

23 require that the disclosures be made in a simi24 lar manner to the disclosures required under
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1 subparagraphs (A) and (B) to the extent appro2 priate and practicable.

3 ‘‘(c) ADVERTISEMENT FOR LEASE.—No adver4 tisement to promote or assist, directly or indirectly,

5 any consumer lease for personal use of any property

6 shall—

7 ‘‘(1) state that no downpayment is required on

8 the lease when the lessor requires a capitalized cost

9 reduction payment, acquisition fee, property trade10 in, or other payment upon initiation of the lease, ex11 cept that payment of the first monthly payment on

12 the lease, and any refundable deposit shall not be

13 considered a downpayment;

14 ‘‘(2) incorporate within the same advertisement

15 the amounts of any payment, downpayment, or other

16 term pertaining to both a lease transaction and to

17 an alternative installment credit transaction, except

18 with respect to print advertisements where lease in19 formation must be clearly and conspicuously sepa20 rated from nonlease information;

21 ‘‘(3) include the amounts of any payment,

22 downpayment, or other term of leases that the lessor

23 does not customarily provide or will offer only to se24 lected consumers, or the amounts of any payment,

25 downpayment, or other term of leases of property
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1 that the lessor does not have in sufficient quantities

2 to meet reasonably anticipated consumer demand for

3 the property at such advertised terms;

4 ‘‘(4) display any lease term, including the

5 amount of any monthly payment, or downpayment

6 or no downpayment more prominently than the term

7 ‘lease’ or more prominently than the amount of the

8 total payment required to be paid at the inception

9 of the lease; and

10 ‘‘(5) fail to include a prominent statement of

11 the limitations on use of leased property, such as

12 mileage.

13 ‘‘(d) LIMITATION.—Nothing contrary to, inconsistent

14 with, or in mitigation of the required disclosures shall be

15 used in any advertisement in any medium and no audio,

16 videos, or print technique shall be used that is likely to

17 obscure or detract significantly from the communication

18 of the disclosures.

19 ‘‘(e) ADVERTISING MEDIUM NOT LIABLE.—Any

20 owner or personnel of any medium, including the owner

21 of any home page on the Internet, in which an advertise22 ment appears or through which it is disseminated shall

23 not be liable under this section.’’
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1 SEC. 165. STATUTORY PENALTIES.

2 Section 185(a) of the Consumer Credit Protection

3 Act (15 U.S.C. 1667d(a)) is amended by adding at the

4 end the following new sentence: ‘‘Notwithstanding the pre5 ceding sentence, a creditor shall only have liability deter6 mined under section 130(a)(2) for failing to comply with

7 the requirements of paragraph (2), (8), (9), or (10) of sec8 tion 182 or for failing to comply with disclosure require9 ments under State law for any term which the Board has

10 determined to be substantially the same in meaning under

11 section 186 as any of the terms referred to in section

12 182.’’.

13 TITLE II—STREAMLINING

14 GOVERNMENT REGULATIONS

15 Subtitle A—Regulatory Approval

16 Issues

17 SEC. 201. NO PRIOR APPROVAL REQUIRED FOR WELL CAP18 ITALIZED AND WELL MANAGED FINANCIAL

19 SERVICES HOLDING COMPANIES.

20 Section 4(j) of the Bank Holding Company Act of

21 1956 (12 U.S.C. 1843(j)) is amended—

22 (1) in paragraph (1), by striking ‘‘No’’ and in23 serting ‘‘Except as provided in paragraph (3), no’’;

24 and

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

26 paragraphs:
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•HR 4079 IH

1 ‘‘(3) NO NOTICE REQUIRED FOR CERTAIN

2 TRANSACTIONS.—Notwithstanding paragraph (1), no

3 notice under subsection (c)(8) or (a)(2)(B) is re4 quired for a proposal by a financial services holding

5 company to engage in any activity or acquire or re6 tain the shares or assets of any company if the pro7 posal qualifies under paragraph (4).

8 ‘‘(4) CRITERIA FOR STATUTORY APPROVAL.—A

9 proposal qualifies under this paragraph if all of the

10 following criteria are met:

11 ‘‘(A) FINANCIAL CRITERIA.—Both before

12 and immediately after the proposed trans13 action—

14 ‘‘(i) the acquiring financial services

15 holding company is well capitalized;

16 ‘‘(ii) the lead depository institution of

17 such holding company is well capitalized;

18 ‘‘(iii) well capitalized depository insti19 tutions control at least 80 percent of the

20 aggregate total risk-weighted assets of de21 pository institutions controlled by such

22 holding company; and

23 ‘‘(iv) no depository institution con24 trolled by such holding company is under25 capitalized.
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•HR 4079 IH

1 ‘‘(B) MANAGERIAL CRITERIA.—

2 ‘‘(i) WELL MANAGED.—At the time of

3 the transaction, the acquiring financial

4 services holding company, the lead deposi5 tory institution of such holding company,

6 and depository institutions that control at

7 least 80 percent of the aggregate total

8 risk-weighted assets of depository institu9 tions controlled by such holding company

10 are well managed.

11 ‘‘(ii) LIMITATION ON POORLY MAN12 AGED INSTITUTIONS.—No depository insti13 tution which is controlled by the acquiring

14 financial services holding company has re15 ceived any of the lowest 2 composite rat16 ings at the later of the institution’s most

17 recent examination or subsequent review.

18 ‘‘(iii) RECENTLY ACQUIRED INSTITU19 TIONS.—Depository institutions acquired

20 by the financial services holding company

21 during the 12-month period ending on the

22 date of the proposed transaction may be

23 excluded for purposes of clause (ii) if—

24 ‘‘(I) the financial services holding

25 company has developed a plan accept-
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•HR 4079 IH

1 able to the appropriate Federal bank2 ing agency for the institution to re3 store the capital and management of

4 the institution; and

5 ‘‘(II) all such depository institu6 tions represent, in the aggregate, less

7 than 25 percent of the total risk8 weighted assets of all depository insti9 tutions controlled by the financial

10 services holding company.

11 ‘‘(C) ACTIVITIES PERMISSIBLE.—Following

12 consummation of the proposed transaction, the

13 financial services holding company engages di14 rectly or through a subsidiary solely in—

15 ‘‘(i) activities that are permissible

16 under subsection (c)(8), as determined by

17 the Board by any regulation, order, or ad18 visory opinion under such subsection that

19 is in effect at the time of the proposed

20 transaction, subject to all of the restric21 tions, terms, and conditions of such sub22 section and such regulation, order, or advi23 sory opinion; and

24 ‘‘(ii) such other activities as are other25 wise permissible under this Act, subject to
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1 the restrictions, terms and conditions, in2 cluding any prior notice or approval re3 quirements, provided in this Act.

4 ‘‘(D) SIZE OF ACQUISITION.—

5 ‘‘(i) ASSET SIZE.—The book value of

6 the total risk-weighted assets acquired does

7 not exceed 10 percent of the consolidated

8 total risk-weighted assets of the acquiring

9 financial services holding company.

10 ‘‘(ii) CONSIDERATION.—The gross

11 consideration to be paid for the securities

12 or assets does not exceed 15 percent of the

13 consolidated tier 1 capital of the acquiring

14 financial services holding company.

15 ‘‘(E) NOTICE NOT OTHERWISE WAR16 RANTED.—For proposals described in para17 graph (5)(C), the Board has not, before the

18 conclusion of the period described in such para19 graph, advised the financial services holding

20 company that a notice under paragraph (1) is

21 required.

22 ‘‘(F) SPECIAL PROVISION FOR THE ACQUI23 SITION OF SAVINGS ASSOCIATIONS.—In the case

24 of an acquisition of the shares or assets of a

25 savings association in accordance with para-
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1 graph (5), the lead insured depository institu2 tion subsidiary of the acquiring financial serv3 ices holding company and insured depository in4 stitution subsidiaries of such holding company

5 which control at least 80 percent of the aggre6 gate total risk-weighted assets of insured depos7 itory institutions controlled by such holding

8 company, have received a rating of ‘satisfactory’

9 or better in meeting community credit needs

10 pursuant to section 807 of the Community Re11 investment Act of 1977 during the most recent

12 examinations of such depository institutions.

13 ‘‘(5) NOTIFICATION.—

14 ‘‘(A) COMMENCEMENT OF ACTIVITIES AP15 PROVED BY RULE.—A financial services holding

16 company that qualifies under paragraph (4)

17 and proposes to engage de novo, directly or

18 through a subsidiary, in any activity that is per19 missible under subsection (c)(8), as determined

20 by the Board by regulation, may commence that

21 activity without prior notice to the Board.

22 ‘‘(B) SUBSEQUENT NOTICE.—A financial

23 services holding company that commences an

24 activity under subsection (c)(8) without prior

25 notice to the Board shall provide written notice
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1 to the Board no later than 10 business days

2 after commencing the activity.

3 ‘‘(C) ACTIVITIES PERMITTED BY ORDER

4 AND ACQUISITIONS.—

5 ‘‘(i) IN GENERAL.—At least 12 busi6 ness days prior to commencing any activity

7 (other than an activity described in sub8 paragraph (A)) or acquiring shares or as9 sets of any company in a proposal that

10 qualifies under paragraph (4), the financial

11 services holding company shall provide

12 written notice to the Board of the pro13 posal, unless the Board determines that no

14 notice or a shorter notice period is appro15 priate.

16 ‘‘(ii) DESCRIPTION OF PROPOSED AC17 TIVITIES.—A notice under clause (i) shall

18 include a description of the proposed ac19 tivities and the terms of any proposed ac20 quisition.

21 ‘‘(D) ACQUISITIONS OF SAVINGS ASSOCIA22 TIONS.—

23 ‘‘(i) IN GENERAL.—Notwithstanding

24 subparagraphs (A) and (C) and except as

25 provided in clause (ii), a financial services
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1 holding company which proposes to acquire

2 the shares or assets of a savings associa3 tion pursuant to this paragraph shall, at

4 least 30 days before the acquisition—

5 ‘‘(I) provide the Board written

6 notification of the proposal, and

7 ‘‘(II) publish notice of the pro8 posal in a newspaper of general cir9 culation in the affected communities

10 for the purpose of soliciting comments

11 on performance under the Community

12 Reinvestment Act.

13 ‘‘(ii) EXCEPTION IN CASE OF COMPLI14 ANCE WITH APPROVED STRATEGIC PLAN.—

15 Clause (i) shall not apply with respect to

16 a financial services holding company re17 ferred to in such clause if, at the time of

18 the transaction, the lead insured depository

19 institution of such holding company, and

20 insured depository institutions that control

21 at least 80 percent of the aggregate total

22 risk-weighted assets of insured depository

23 institutions controlled by such holding

24 company, have received a rating of ‘satis25 factory’ or better in the most recent eval-
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•HR 4079 IH

1 uation of compliance with strategic plans

2 which have been—

3 ‘‘(I) submitted by such institu4 tions to the appropriate Federal fi5 nancial supervisory agency (as defined

6 in section 803(1) of the Community

7 Reinvestment Act of 1977) in accord8 ance with regulations prescribed

9 under the Community Reinvestment

10 Act of 1977; and

11 ‘‘(II) approved by each such

12 agency.

13 ‘‘(6) ADJUSTMENT OF AMOUNTS.—The Board

14 may, by regulation, adjust the amounts and the

15 manner in which the percentage of depository insti16 tutions is calculated under subparagraph (B)(i),

17 (B)(iii)(II), or (D) of paragraph (4) if the Board de18 termines that any such adjustment is consistent with

19 safety and soundness and the purposes of this Act.

20 ‘‘(7) EXPEDITED PROCEDURE FOR NEW ACTIVI21 TIES.—

22 ‘‘(A) EXPEDITED PREACQUISITION RE23 VIEW.—After the end of the 12-day period re24 ferred to in paragraph (5)(C) and subject to

25 any final ruling under subparagraph (B), a fi-
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1 nancial services holding company may acquire a

2 company engaged in activities that the company

3 believes are financial in nature for purposes of

4 subsection (c)(8) and that the Board has not

5 previously reviewed under such subsection if—

6 ‘‘(i) the proposal qualifies under all of

7 the criteria in paragraph (4) other than

8 paragraph (4)(C);

9 ‘‘(ii) the financial services holding

10 company provides the notice required

11 under paragraph (5)(C), and includes with

12 such notice an explanation of the facts and

13 circumstances that provide a reasonable

14 basis for concluding that the proposed ac15 tivities are financial in nature or incidental

16 to such financial activities; and

17 ‘‘(iii) before the end of such 12-day

18 period, the Board has not—

19 ‘‘(I) required a notice under

20 paragraph (1) with respect to the pro21 posed transaction; or

22 ‘‘(II) advised the financial serv23 ices holding company that the com24 pany has failed to provide a reason25 able basis for concluding that the pro-
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1 posed activities are financial in nature

2 or incidental to such financial activi3 ties.

4 ‘‘(B) POSTACQUISITION REVIEW.—

5 ‘‘(i) NOTICE PROCEDURE.—A finan6 cial services holding company which is per7 mitted to make an acquisition under this

8 paragraph shall file a notice with the

9 Board in accordance with paragraph (1)

10 before the end of the 30-day period begin11 ning on the date of the consummation of

12 the acquisition.

13 ‘‘(ii) LIMITED REVIEW.—The Board’s

14 review of a postconsummation notice re15 quired under this subparagraph shall be

16 limited to determining whether the pro17 posed activities are permissible under sub18 section (c)(8), including whether the pro19 posal meets the criteria in paragraph

20 (2)(A).

21 ‘‘(iii) CONDITIONAL ACTION.—No pro22 vision of this paragraph shall be construed

23 as limiting in any way the authority of the

24 Board under this section to impose condi-
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1 tions on the conduct of any activity or the

2 ownership of any company.

3 ‘‘(iv) DIVESTITURE OF IMPERMIS4 SIBLE ACTIVITIES.—If the Board deter5 mines that any proposed activity is not

6 permissible under subsection (c)(8), the fi7 nancial services holding company shall ter8 minate the activity or divest the company

9 acquired in reliance on this paragraph be10 fore the end of the 2-year period beginning

11 on the date of such determination.

12 ‘‘(C) INITIAL DECISION NOT PREJUDICIAL

13 TO SUBSEQUENT DETERMINATION.—A decision

14 by the Board under subparagraph (A) not to

15 require a notice under paragraph (1) during the

16 12-day period referred to in such subparagraph

17 shall not prejudice the Board’s decision under

18 subparagraph (B).’’.

19 SEC. 202. STREAMLINED BANK ACQUISITIONS BY WELL

20 CAPITALIZED AND WELL MANAGED BANKING

21 ORGANIZATIONS.

22 Section 3 of the Bank Holding Company Act (12

23 U.S.C. 1842) is amended by adding at the end the follow24 ing new subsection:
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1 ‘‘(h) NO APPROVAL REQUIRED FOR CERTAIN TRANS2 ACTIONS.—

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

4 (3) or (5) of subsection (a) and subject to para5 graphs (5) and (6), an acquisition of shares by a

6 registered bank holding company, or a merger or

7 consolidation between registered bank holding com8 panies, shall be deemed approved at the conclusion

9 of the period specified in subparagraph (G) if all of

10 the following conditions have been met:

11 ‘‘(A) FINANCIAL AND MANAGERIAL CRI12 TERIA.—

13 ‘‘(i) WELL CAPITALIZED BANK HOLD14 ING COMPANY.—Both at the time of and

15 immediately after the proposed trans16 action, the acquiring bank holding com17 pany is well capitalized.

18 ‘‘(ii) WELL CAPITALIZED LEAD IN19 SURED DEPOSITORY INSTITUTION.—Both

20 at the time of and immediately after the

21 proposed transaction, the lead insured de22 pository institution of the acquiring bank

23 holding company is well capitalized.

24 ‘‘(iii) CAPITAL OF OTHER INSURED

25 DEPOSITORY INSTITUTIONS.—At the time
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1 of the transaction, well capitalized insured

2 depository institutions control at least 80

3 percent of the aggregate total risk-weight4 ed assets of insured depository institutions

5 controlled by the acquiring bank holding

6 company.

7 ‘‘(iv) NO UNDERCAPITALIZED IN8 SURED DEPOSITORY INSTITUTIONS.—At

9 the time of the transaction, no insured de10 pository institution controlled by the ac11 quiring bank holding company is under12 capitalized.

13 ‘‘(v) WELL MANAGED.—

14 ‘‘(I) IN GENERAL.—At the time

15 of the transaction, the acquiring bank

16 holding company, its lead insured de17 pository institution, and insured de18 pository institutions that control at

19 least 90 percent of the aggregate total

20 risk-weighted assets of insured deposi21 tory institutions controlled by such

22 holding company are well managed.

23 ‘‘(II) NO POORLY MANAGED IN24 STITUTIONS.—Except with respect to

25 insured depository institutions de-
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1 scribed in paragraph (2), no insured

2 depository institution controlled by

3 the acquiring bank holding company

4 has received 1 of the 2 lowest compos5 ite ratings at the later of the institu6 tion’s most recent examination or sub7 sequent review.

8 ‘‘(B) CRA RATINGS.—Except with respect

9 to insured depository institutions described in

10 paragraph (3), the lead insured depository insti11 tution subsidiary of the acquiring financial serv12 ices holding company and insured depository in13 stitution subsidiaries of such holding company

14 which control at least 80 percent of the aggre15 gate total risk-weighted assets of insured depos16 itory institutions controlled by such holding

17 company have received a rating of ‘satisfactory’

18 or better in meeting community credit needs

19 pursuant to section 807 of the Community Re20 investment Act of 1977 during the most recent

21 examinations of such depository institutions.

22 ‘‘(C) COMPETITIVE CRITERIA.—Con23 summation of the proposal complies with guide24 lines established by the Board by regulation,

25 after consultation with the Attorney General,
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1 that identify proposals that are not likely to

2 have a significantly adverse effect on competi3 tion in any relevant market.

4 ‘‘(D) SIZE OF ACQUISITION.—

5 ‘‘(i) ASSET SIZE.—The book value of

6 the total assets to be acquired does not ex7 ceed 10 percent of the consolidated total

8 risk weighted assets of the acquiring bank

9 holding company.

10 ‘‘(ii) CONSIDERATION.—The gross

11 consideration to be paid for the securities

12 or assets does not exceed 15 percent of the

13 consolidated Tier 1 capital of the acquiring

14 bank holding company.

15 ‘‘(E) INTERSTATE ACQUISITIONS.—Board

16 approval of the transaction is not prohibited

17 under subsection (d).

18 ‘‘(F) COMPLIANCE CRITERION.—During

19 the 12-month period ending on the date of the

20 transaction, no administrative enforcement ac21 tion has been commenced, and no cease and de22 sist order has been issued pursuant to section

23 8 of the Federal Deposit Insurance Act, against

24 any bank holding company involved in the

25 transaction or any depository institution sub-
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1 sidiary of any such holding company and no

2 such enforcement action, order, or other admin3 istrative enforcement proceeding is pending as

4 of such date.

5 ‘‘(G) OTHER CONSIDERATIONS.—Board

6 approval of the transaction is not prohibited

7 under subsection (c)(3).

8 ‘‘(H) NOTIFICATION.—The acquiring bank

9 holding company provides written notice of the

10 transaction, including a description of the terms

11 of the transaction, to the Board and the Attor12 ney General, simultaneously, at least 15 busi13 ness days (or such shorter period as permitted

14 by the Board) before the transaction is con15 summated.

16 ‘‘(I) NO BOARD DISAPPROVAL.—Before the

17 end of the 15-day period (or the shorter period)

18 referred to in subparagraph (H), the Board has

19 not required an application under subsection

20 (a).

21 ‘‘(J) PUBLIC NOTICE.—

22 ‘‘(i) IN GENERAL.—Except as pro23 vided in clause (ii), the acquiring financial

24 services holding company publishes notice

25 of the application in a newspaper of gen-
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1 eral circulation in the affected communities

2 at least 30 days before consummation of

3 the transaction.

4 ‘‘(ii) EXCEPTION IN CASE OF COMPLI5 ANCE WITH APPROVED STRATEGIC PLAN.—

6 Clause (i) shall not apply with respect to

7 a financial services holding company re8 ferred to in such clause if, at the time of

9 the transaction, the lead insured depository

10 institution of such holding company, and

11 insured depository institutions that control

12 at least 80 percent of the aggregate total

13 risk-weighted assets of insured depository

14 institutions controlled by such holding

15 company, have received a rating of ‘satis16 factory’ or better in the most recent eval17 uation of compliance with strategic plans

18 which have been—

19 ‘‘(I) submitted by such institu20 tions to the appropriate Federal fi21 nancial supervisory agency (as defined

22 in section 803(1) of the Community

23 Reinvestment Act of 1977) in accord24 ance with regulations prescribed
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1 under the Community Reinvestment

2 Act of 1977; and

3 ‘‘(II) approved by each such

4 agency.

5 ‘‘(2) SPECIAL RULE RELATING TO THE RE6 QUIREMENT FOR WELL MANAGED INSTITUTIONS.—

7 Insured depository institutions which have been ac8 quired by a bank holding company during the 12-

9 month period preceding the date of the transaction

10 may be excluded for purposes of paragraph

11 (1)(A)(v)(II) if—

12 ‘‘(A) the bank holding company has devel13 oped a plan for the institution to restore the

14 capital and management of the institution

15 which is acceptable to the appropriate Federal

16 banking agency; and

17 ‘‘(B) all such insured depository institu18 tions represent, in the aggregate, less than 10

19 percent of the aggregate total risk-weighted as20 sets of all insured depository institutions con21 trolled by the holding company.

22 ‘‘(3) SPECIAL RULE RELATING TO THE RE23 QUIREMENT FOR COMMUNITY INVESTMENT.—In24 sured depository institutions acquired during the 12-

25 month period preceding the date of the transaction
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1 may be excluded for purposes of paragraph (1)(B)

2 if the bank holding company has developed a plan to

3 restore the performance of the institution to at least

4 a ‘satisfactory’ rating under the Community Rein5 vestment Act of 1977 which is acceptable to the ap6 propriate Federal banking agency.

7 ‘‘(4) ADJUSTMENT OF PERCENTAGES.—The

8 Board may by regulation adjust the percentages and

9 the manner in which the percentages of insured de10 pository institutions are calculated under subpara11 graph (A)(v)(I) or (D) of paragraph (1) or para12 graph (2)(B) if the Board determines that such ad13 justment is consistent with safety and soundness

14 and the purposes of this Act.

15 ‘‘(5) ADVICE OF ATTORNEY GENERAL.—The

16 Attorney General shall advise the Board during the

17 period referred to in paragraph (1)(H) in writing if

18 any competitive concerns exist with respect to the

19 transaction.

20 ‘‘(6) WAIVER OF POSTAPPROVAL WAITING PE21 RIOD.—If the Attorney General advises the Board

22 that no competitive concerns exist with respect to

23 the transaction, the provisions of section 11(b) relat24 ing to a postapproval waiting shall not apply with

25 respect to such transaction.’’.
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1 SEC. 203. ELIMINATE FILING AND APPROVAL REQUIRE2 MENTS FOR INSURED DEPOSITORY INSTITU3 TIONS ALREADY CONTROLLED BY THE SAME

4 HOLDING COMPANY.

5 (a) BANK MERGER ACT.—Section 18(c) of the Fed6 eral Deposit Insurance Act (12 U.S.C. 1828(c)) is amend7 ed by adding at the end the following new paragraph:

8 ‘‘(12) The provisions of this subsection shall

9 not apply to any merger, consolidation, acquisition

10 of assets or assumption of liabilities involving only

11 insured depository institutions that are subsidiaries

12 of the same depository institution holding company

13 if—

14 ‘‘(A) the responsible agency would not be

15 prohibited from approving the transaction

16 under section 44, if applicable;

17 ‘‘(B) the acquiring, assuming, or resulting

18 institution complies with all applicable provi19 sions of section 44, if any, as if the merger,

20 consolidation, or acquisition were approved

21 under this subsection;

22 ‘‘(C) either—

23 ‘‘(i) the insured depository institutions

24 involved in the transaction—

25 ‘‘(I) have received a rating of

26 ‘satisfactory’ or better in meeting
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1 community credit needs pursuant to

2 section 807 of the Community Rein3 vestment Act of 1977 during the most

4 recent examination of such institu5 tions; and

6 ‘‘(II) publish notice of the pro7 posed transaction in a newspaper of

8 general circulation in the affected

9 communities at least 30 days before

10 consummation of the transaction; or

11 ‘‘(ii) the insured depository institu12 tions have received a rating of ‘satisfac13 tory’ or better in the most recent evalua14 tion of compliance with strategic plans

15 which have been—

16 ‘‘(I) submitted by the institutions

17 to the appropriate Federal banking

18 agency in accordance with regulations

19 prescribed under the Community Re20 investment Act of 1977; and

21 ‘‘(II) approved by the agency;

22 ‘‘(D) the acquiring, assuming, or resulting

23 institution provides written notification of the

24 transaction to the appropriate Federal banking
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1 agency for the institution at least 20 days prior

2 to consummation of the transaction; and

3 ‘‘(E) after receiving such notice, the agen4 cy does not require the institution to submit an

5 application with respect to such transaction and

6 so notifies the institution.’’.

7 (b) NATIONAL BANK CONSOLIDATION AND MERGER

8 ACT.—

9 (1) CONSOLIDATIONS.—Section 2 of the Na10 tional Bank Consolidation and Merger Act (12

11 U.S.C. 215) is amended—

12 (A) in subsection (a), by adding at the end

13 the following new sentence:

14 ‘‘No approval by the Comptroller of the Currency is re15 quired under this subsection for a transaction which in16 volves the consolidation of banks that, at the time of the

17 consolidation, are all subsidiaries (as defined in section 3

18 of the Federal Deposit Insurance Act) of the same com19 pany.’’; and

20 (B) in subsection (b)—

21 (i) by striking ‘‘, and thereafter the

22 consolidation shall be approved by the

23 Comptroller’’; and

24 (ii) by striking ‘‘when such consolida25 tion is approved by the Comptroller’’.
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1 (2) MERGERS.—Section 3 of the National Bank

2 Consolidation and Merger Act (12 U.S.C. 215a) is

3 amended—

4 (A) in subsection (a), by adding at the end

5 the following new sentence:

6 ‘‘No approval by the Comptroller of the Currency is re7 quired under this subsection for a transaction which in8 volves the merger of banks that, at the time of the merger,

9 are all subsidiaries (as defined in section 3 of the Federal

10 Deposit Insurance Act) of the same company.’’; and

11 (B) in subsection (b)—

12 (i) by striking ‘‘, and thereafter the

13 merger shall be approved by the Comptrol14 ler’’; and

15 (ii) by striking ‘‘when such merger

16 shall be approved by the Comptroller’’.

17 SEC. 204. ELIMINATE REDUNDANT APPROVAL REQUIRE18 MENT FOR OAKAR TRANSACTIONS.

19 (a) IN GENERAL.—Section 5(d)(3) of the Federal

20 Deposit Insurance Act (12 U.S.C. 1815(d)(3)) is amend21 ed—

22 (1) in subparagraph (A), by striking ‘‘with the

23 prior written approval of the responsible agency

24 under section 18(c)(2)’’;

25 (2) in subparagraph (E)—
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1 (A) by striking clause (iv) and inserting

2 the following new clause:

3 ‘‘(iv) A transaction shall not be au4 thorized under this paragraph unless the

5 acquiring, assuming, or resulting deposi6 tory institution will meet all applicable cap7 ital requirements upon consummation of

8 the transaction.’’;

9 (B) by striking clauses (i) and (ii); and

10 (C) by redesignating clauses (iii) and (iv)

11 (as amended by subparagraph (A) of this para12 graph) as clauses (i) and (ii), respectively; and

13 (3) by striking subparagraph (G) and redesig14 nating the subsequent subparagraphs accordingly.

15 (b) TECHNICAL AND CONFORMING AMENDMENT.—

16 Section 5156A(b)(1) of the Revised Statutes of the United

17 States (12 U.S.C. 215c(b)(1)) is amended by striking

18 ‘‘section 5(d)(3) of the Federal Deposit Insurance Act or’’.

19 (c) CLERICAL AMENDMENT.—The heading for sec20 tion 5(d)(3)(E) of the Federal Deposit Insurance Act (12

21 U.S.C. 1815(d)(3)(E)) is amended by striking ‘‘FOR AP22 PROVAL, GENERALLY’’.
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1 SEC. 205. ELIMINATION OF DUPLICATIVE REQUIREMENTS

2 IMPOSED UPON BANK HOLDING COMPANIES

3 AND OTHER REGULATORY RELIEF UNDER

4 THE HOME OWNERS’ LOAN ACT.

5 (a) EXEMPTION FOR BANK HOLDING COMPANIES.—

6 Section 10 of the Home Owners’ Loan Act (12 U.S.C.

7 1467a) is amended by adding at the end the following new

8 subsection:

9 ‘‘(t) EXEMPTION FOR BANK HOLDING COMPA10 NIES.—This section shall not apply to a bank holding com11 pany that is subject to the Bank Holding Company Act

12 of 1956 or any company controlled by such bank holding

13 company (other than a savings association).’’.

14 (b) DEFINITION OF SAVINGS AND LOAN HOLDING

15 COMPANY.—Section 10(a)(1)(D) of the Home Owners’

16 Loan Act (12 U.S.C. 1467a(a)(1)(D)) is amended to read

17 as follows:

18 ‘‘(D) SAVINGS AND LOAN HOLDING COM19 PANY.—

20 ‘‘(i) IN GENERAL.—Except as pro21 vided in clause (ii), the term ‘savings and

22 loan holding company’ means any company

23 which directly or indirectly controls a sav24 ings association or controls any other com25 pany which is a savings and loan holding

26 company.
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1 ‘‘(ii) EXCEPTION FOR BANK HOLDING

2 COMPANY.—The term ‘savings and loan

3 holding company’ does not include any

4 company which is registered under, and

5 subject to, the provisions of the Bank

6 Holding Company Act of 1956, or any

7 company directly or indirectly controlled by

8 such company.’’.

9 (c) AMENDMENTS TO THE BANK HOLDING COMPANY

10 ACT OF 1956.—Section 4(i) of the Bank Holding Com11 pany Act of 1956 (12 U.S.C. 1843(i)) is amended by add12 ing at the end the following new paragraphs:

13 ‘‘(4) SOLICITATION OF VIEWS.—

14 ‘‘(A) NOTICE TO DIRECTOR.—Upon receiv15 ing any application or notice by a bank holding

16 company to acquire directly or indirectly a sav17 ings association under subsection (c)(8), the

18 Board shall solicit the Director’s comments and

19 recommendations with respect to such acquisi20 tion.

21 ‘‘(B) COMMENT PERIOD.—The comments

22 and views of the Director under subparagraph

23 (A) with respect to any acquisition subject to

24 such subparagraph shall be transmitted to the

25 Board within 30 days of the receipt by the Di-
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1 rector of the notice relating to such acquisition

2 (or such shorter period as the Board may speci3 fy if the Board advises the Director that an

4 emergency exists which requires expeditious ac5 tion).

6 ‘‘(5) EXAMINATION.—

7 ‘‘(A) SCOPE.—The Board shall consult

8 with the Director, as appropriate, in establish9 ing the scope of an examination by the Board

10 of a bank holding company that controls di11 rectly or indirectly a savings association.

12 ‘‘(B) ACCESS TO INSPECTION REPORTS.—

13 Upon the request of the Director, the Board

14 shall furnish the Director with a copy of any in15 spection report, additional examination mate16 rials, or supervisory information relating to any

17 bank holding company which directly or indi18 rectly controls a savings association.

19 ‘‘(6) COORDINATION OF ENFORCEMENT EF20 FORTS.—The Board and the Director shall cooper21 ate in any enforcement action against any bank

22 holding company which controls a savings associa23 tion, if the relevant conduct involves such associa24 tion.
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1 ‘‘(7) DIRECTOR DEFINED.—For purposes of

2 this section, the term ‘Director’ means the Director

3 of the Office of Thrift Supervision.’’.

4 (d) ALTERNATIVE TEST.—

5 (1) IN GENERAL.—Section 10(m) of the Home

6 Owners’ Loan Act (12 U.S.C. 1467a(m)) is amend7 ed—

8 (1) in paragraph (1), by striking ‘‘(2) and (7)’’

9 and inserting ‘‘(2), (7), and (8)’’; and

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

11 paragraph:

12 ‘‘(8) ALTERNATIVE TEST.—Any savings asso13 ciation which meets the requirements set forth in

14 section 7701(a)(19)(C) of the Internal Revenue

15 Code of 1986 shall be deemed to be a qualified thrift

16 lender.’’.

17 (2) CONFORMING AMENDMENTS.—Section 5(r)

18 of the Home Owners’ Loan Act (12 U.S.C. 1464(r))

19 is amended—

20 (A) in the 1st sentence of paragraph (1),

21 by inserting ‘‘, qualifies as a qualified thrift

22 lender under section 10(m),’’ after ‘‘Internal

23 Revenue Code of 1986’’;
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1 (B) in the second sentence of paragraph

2 (1), by inserting ‘‘or as a qualified thrift lender

3 under section 10(m)’’ before the period;

4 (C) by striking subparagraph (C) of para5 graph (2) and inserting the following new sub6 paragraph:

7 ‘‘(C) the law of the State in which the

8 branch is or is to be located would permit es9 tablishment of the branch were the association

10 an institution of the savings association or sav11 ings bank type chartered by the State in which

12 the home office of such institution is located;

13 or’’.

14 SEC. 206. ELIMINATE REQUIREMENT THAT APPROVAL BE

15 OBTAINED FOR DIVESTITURES.

16 Section 2(g) of the Bank Holding Company Act of

17 1956 (12 U.S.C. 1841(g)) is amended—

18 (1) by striking paragraph (3);

19 (2) by inserting ‘‘and’’ after the semicolon at

20 the end of paragraph (1); and

21 (3) by striking ‘‘; and’’ at the end of paragraph

22 (2) and inserting a period.
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1 SEC. 207. ELIMINATE UNNECESSARY BRANCH APPLICA2 TIONS.

3 (a) NATIONAL BANK BRANCH APPLICATIONS.—Sec4 tion 5155(i) of the Revised Statutes (12 U.S.C. 36(i)) is

5 amended—

6 (1) by striking ‘‘(i) No branch’’ and inserting

7 ‘‘(i) RELOCATION.—

8 ‘‘(1) APPROVAL REQUIRED.—Except as pro9 vided in paragraph (2), no branch’’; and

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

11 paragraphs:

12 ‘‘(2) NO APPROVAL REQUIRED FOR CERTAIN

13 BRANCHES.—Notwithstanding this subsection or

14 subsection (b) or (c), the consent and approval of

15 the Comptroller of the Currency shall not be re16 quired for a national bank to establish and operate,

17 or to retain and operate, a branch or seasonal agen18 cy if—

19 ‘‘(A) the bank is well capitalized (as de20 fined in section 38 of the Federal Deposit In21 surance Act and regulations prescribed by the

22 Comptroller of the Currency under such sec23 tion);

24 ‘‘(B) the bank received a composite

25 CAMEL rating of ‘1’ or ‘2’ under the Uniform

26 Financial Institutions Rating System (or an
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1 equivalent rating under a comparable rating

2 system) as of its most recent examination;

3 ‘‘(C) either—

4 ‘‘(i) the bank—

5 ‘‘(I) has received a rating of ‘sat6 isfactory’ or better in meeting commu7 nity credit needs pursuant to section

8 807 of the Community Reinvestment

9 Act of 1977 during the most recent

10 examination of such bank; and

11 ‘‘(II) publishes notice of the

12 bank’s intention to establish and oper13 ate, or retain and operate, a branch

14 or seasonal agency at the proposed lo15 cation in a newspaper of general cir16 culation in the affected communities

17 at least 30 days before consummation

18 of the transaction; or

19 ‘‘(ii) the bank has received a rating of

20 ‘satisfactory’ or better in the most recent

21 evaluation of compliance with a strategic

22 plan which has been—

23 ‘‘(I) submitted by the bank to the

24 Comptroller of the Currency in ac25 cordance with regulations prescribed
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1 under the Community Reinvestment

2 Act of 1977; and

3 ‘‘(II) approved by the Comptrol4 ler of the Currency; and

5 ‘‘(D) the Comptroller of the Currency is

6 otherwise authorized to grant approval under

7 this section to such bank to establish and oper8 ate, or to retain and operate, a branch or sea9 sonal agency at the proposed location.

10 ‘‘(3) CERTAIN BRANCHES DEEMED TO HAVE

11 APPROVED APPLICATIONS.—A branch or seasonal

12 agency established by a national bank under para13 graph (2) shall be deemed to have been established

14 and operated pursuant to an application approved

15 under this section.’’.

16 (b) STATE MEMBER BANK BRANCH APPLICA17 TIONS.—The third undesignated paragraph of section 9

18 of the Federal Reserve Act (12 U.S.C. 321) is amended

19 by adding at the end the following: ‘‘Notwithstanding the

20 preceding 2 sentences, the approval of the Board shall not

21 be required for a State member bank to establish and op22 erate a branch or seasonal agency if—

23 ‘‘(A) the State member bank is well-cap24 italized (as defined in section 38 of the Federal
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1 Deposit Insurance Act and regulations pre2 scribed by the Board under such section);

3 ‘‘(B) the State member bank received a

4 composite CAMEL rating of ‘1’ or ‘2’ under the

5 Uniform Financial Institutions Rating System

6 (or an equivalent rating under a comparable

7 rating system);

8 ‘‘(C) either—

9 ‘‘(i) the State member bank—

10 ‘‘(I) has received a rating of ‘sat11 isfactory’ or better in meeting commu12 nity credit needs pursuant to section

13 807 of the Community Reinvestment

14 Act of 1977 during the most recent

15 examinations of such bank; and

16 ‘‘(II) publishes notice of the

17 bank’s intention to establish and oper18 ate, or retain and operate, a branch

19 or seasonal agency at the proposed lo20 cation in a newspaper of general cir21 culation in the affected communities

22 at least 30 days before consummation

23 of the transaction; or

24 ‘‘(ii) the State member bank has re25 ceived a rating of ‘satisfactory’ or better in
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1 the most recent evaluation of compliance

2 with a strategic plan which has been—

3 ‘‘(I) submitted by the bank to the

4 Board in accordance with regulations

5 prescribed under the Community Re6 investment Act of 1977; and

7 ‘‘(II) approved by the Board; and

8 ‘‘(D) the Board is otherwise authorized to

9 grant approval under this section to such State

10 member bank to establish and operate a branch

11 or seasonal agency at the proposed location.

12 A branch or seasonal agency established by a State mem13 ber bank under the previous sentence shall be deemed to

14 have been established and operated pursuant to an appli15 cation approved under this section.’’.

16 (c) STATE NONMEMBER BANK BRANCH APPLICA17 TIONS.—Section 18(d) of the Federal Deposit Insurance

18 Act (12 U.S.C. 1828(d)) is amended by adding at the end

19 the following new paragraphs:

20 ‘‘(5) APPLICATION EXEMPTION FOR CERTAIN

21 BANKS.—Notwithstanding paragraph (1), the con22 sent of the Corporation shall not be required for a

23 State nonmember insured bank to establish and op24 erate any domestic branch if—
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1 ‘‘(A) the bank is well-capitalized (as de2 fined in section 38 and regulations prescribed

3 by the Corporation under such section);

4 ‘‘(B) the bank received a composite

5 CAMEL rating of ‘1’ or ‘2’ under the Uniform

6 Financial Institutions Rating System (or an

7 equivalent rating under a comparable rating

8 system) as of its most recent examination;

9 ‘‘(C) either—

10 ‘‘(i) the bank—

11 ‘‘(I) has received a rating of ‘sat12 isfactory’ or better in meeting commu13 nity credit needs pursuant to section

14 807 of the Community Reinvestment

15 Act of 1977 during the most recent

16 examinations of such bank; and

17 ‘‘(II) publishes notice of the

18 bank’s intention to establish and oper19 ate, or retain and operate, a branch

20 or seasonal agency at the proposed lo21 cation in a newspaper of general cir22 culation in the affected communities

23 at least 30 days before consummation

24 of the transaction; or
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1 ‘‘(ii) the bank has received a rating of

2 ‘satisfactory’ or better in the most recent

3 evaluation of compliance with a strategic

4 plan which has been—

5 ‘‘(I) submitted by the bank to the

6 Corporation in accordance with regu7 lations prescribed under the Commu8 nity Reinvestment Act of 1977; and

9 ‘‘(II) approved by the Corpora10 tion; and

11 ‘‘(D) the Corporation is otherwise author12 ized to give consent under this section to such

13 bank to establish and operate a domestic

14 branch at the proposed location.

15 ‘‘(6) APPROVAL GRANTED.—A branch estab16 lished by a State member bank under paragraph (5)

17 shall be deemed to have been established and oper18 ated pursuant to an application approved under this

19 section.’’.

20 SEC. 208. ELIMINATE BRANCH APPLICATIONS AND RE21 QUIREMENTS FOR ATMs AND SIMILAR FA22 CILITIES.

23 (a) DEFINITION OF BRANCH UNDER NATIONAL

24 BANK ACT.—Section 5155(j) of the Revised Statutes (12

25 U.S.C. 36(j)) is amended—
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1 (1) by striking ‘‘(j) The term’’ and inserting

2 ‘‘(j) BRANCH.—

3 ‘‘(1) IN GENERAL.—The term’’; and

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

5 paragraph:

6 ‘‘(2) CERTAIN PROPRIETARY ATMS AND RE7 MOTE SERVICING UNITS.—The term ‘branch’ does

8 not include any automated teller machine or remote

9 service unit which is owned and operated by a depos10 itory institution—

11 ‘‘(A) primarily for the benefit of the insti12 tution and the affiliates of the institution; and

13 ‘‘(B) which could operate a branch at the

14 location of such machine or unit.’’.

15 (b) DEFINITION OF BRANCH UNDER FEDERAL DE16 POSIT INSURANCE ACT.—Section 3(o) of the Federal De17 posit Insurance Act (12 U.S.C. 1813(o)) is amended—

18 (1) by striking ‘‘(o) The term’’ and inserting

19 ‘‘(o) DEFINITIONS RELATING TO BRANCHES.—

20 ‘‘(1) DOMESTIC BRANCH.—

21 ‘‘(A) IN GENERAL.—The term’’; and

22 (2) by striking ‘‘lent; and the term’’ and insert23 ing ‘‘lent.

24 ‘‘(B) CERTAIN PROPRIETARY ATMS AND

25 REMOTE SERVICING UNITS.—The term ‘domes-
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1 tic branch’ does not include any automated tell2 er machine or remote service unit which is

3 owned and operated by a depository institu4 tion—

5 ‘‘(i) primarily for the benefit of the in6 stitution and the affiliates of the institu7 tion; and

8 ‘‘(ii) which could operate a branch at

9 the location of such machine or unit.

10 ‘‘(2) FOREIGN BRANCH.—The term’’.

11 SEC. 209. ELIMINATE REQUIREMENT FOR APPROVAL OF IN12 VESTMENTS IN BANK PREMISES FOR WELL

13 CAPITALIZED AND WELL MANAGED BANKS.

14 Section 24A of the Federal Reserve Act (12 U.S.C.

15 371d) is amended by inserting before the period in that

16 section the following: ‘‘or, in the case of a bank which re17 ceived a composite CAMEL rating of ‘1’ or ‘2’ under the

18 Uniform Financial Institutions Rating System (or an

19 equivalent rating under a comparable rating system) as

20 of its most recent examination and, both before and imme21 diately following the investment or loan, is well capitalized

22 (as defined under section 38 of the Federal Deposit Insur23 ance Act), the amount which is equal to 150 percent of

24 the capital stock and surplus of such bank’’.
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1 SEC. 210. ELIMINATE UNNECESSARY FILING FOR OFFICER

2 AND DIRECTOR APPOINTMENTS.

3 Section 32(d) of the Federal Deposit Insurance Act

4 (12 U.S.C. 1831i(d)) is amended to read as follows:

5 ‘‘(d) ADDITIONAL INFORMATION.—

6 ‘‘(1) IN GENERAL.—Any notice submitted to an

7 appropriate Federal banking agency with respect to

8 an individual by any insured depository institution

9 or depository institution holding company pursuant

10 to subsection (a) shall include—

11 ‘‘(A) the information described in section

12 7(j)(6)(A) about the individual; and

13 ‘‘(B) such other information as the agency

14 may prescribe by regulation.

15 ‘‘(2) WAIVER.—An appropriate Federal bank16 ing agency may waive the requirement of this section

17 by regulation or on a case-by-case basis consistent

18 with safety and soundness.’’.

19 SEC. 211. STREAMLINING PROCESS FOR DETERMINING

20 NEW NONBANKING ACTIVITIES.

21 Section 4(c)(8) of the Bank Holding Company Act

22 of 1956 (12 U.S.C. 1843(c)(8)) is amended by striking

23 ‘‘and opportunity for hearing’’.

24 SEC. 212. DISPOSITION OF FORECLOSED ASSETS.

25 Section 4(c)(2) of the Bank Holding Company Act

26 of 1956 (12 U.S.C. 1843(c)(2)) is amended—
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1 (1) by striking ‘‘for not more than one year at

2 a time’’; and

3 (2) by striking ‘‘but no such extensions shall ex4 tend beyond a date five years’’ and inserting ‘‘and,

5 in the case of a bank holding company which has

6 not disposed of such shares within 5 years of the

7 date such shares were acquired, the Board may,

8 upon the application of such company, grant addi9 tional exemptions if, in the Board’s judgment, such

10 extension would not be detrimental to the public in11 terest and either the bank holding company has

12 made a good faith attempt to dispose of such shares

13 during such 5-year period or the disposal of such

14 shares during such 5-year period would have been

15 detrimental to the company, but the aggregate dura16 tion of such extensions shall not extend 10 years’’.

17 SEC. 213. INCREASE IN CERTAIN CREDIT UNION LOAN

18 CEILINGS.

19 Section 107(5)(A) of the Federal Credit Union Act

20 (12 U.S.C. 1757(5)(A)) is amended—

21 (1) in clause (iv), by striking ‘‘$10,000’’ and in22 serting ‘‘$50,000’’; and

23 (2) in clause (v), by striking ‘‘$10,000’’ and in24 serting ‘‘$50,000’’.
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1 Subtitle B—Streamlining of Gov2 ernment Regulations; Mis3 cellaneous Provisions

4 SEC. 221. ELIMINATE THE PER-BRANCH CAPITAL REQUIRE5 MENT FOR NATIONAL BANKS AND STATE

6 MEMBER BANKS.

7 Section 5155 of the Revised Statutes (12 U.S.C. 36)

8 is amended—

9 (1) by striking subsection (h); and

10 (2) by redesignating subsections (i) (as amend11 ed by section 207(a) of this Act), (j) (as amended

12 by section 208(a) of this Act), (k), and (l) as sub13 sections (h), (i), (j), and (k), respectively.

14 SEC. 222. BRANCH CLOSURES.

15 (a) IN GENERAL.—Section 42 of the Federal Deposit

16 Insurance Act (12 U.S.C. 1831r–1) is amended by adding

17 at the end the following new subsection:

18 ‘‘(e) SCOPE OF APPLICATION.—

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

20 with respect to—

21 ‘‘(A) an automated teller machine;

22 ‘‘(B) a branch which—

23 ‘‘(i) has been acquired through merg24 er, consolidation, purchase, assumption, or

25 other method; and
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1 ‘‘(ii) is located—

2 ‘‘(I) within 2.5 miles of another

3 branch of the acquiring institution; or

4 ‘‘(II) within a neighborhood cur5 rently being served by another branch

6 of the acquiring institution,

7 if such other branch of the acquiring institution

8 is expected to continue to provide banking serv9 ices to substantially all of the customers cur10 rently served by the branch acquired;

11 ‘‘(C) a branch which is closing and reopen12 ing at a location which is—

13 ‘‘(i) within 2.5 miles of the location of

14 the branch being closed; or

15 ‘‘(ii) within the same neighborhood as

16 the branch being closed,

17 if the branch at the new location is expected to

18 continue to provide banking services to substan19 tially all of the customers served by the branch

20 at the former location;

21 ‘‘(D) a branch that is closed in connection

22 with—

23 ‘‘(i) an emergency acquisition under—

24 ‘‘(I) section 11(n); or
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1 ‘‘(II) subsections (f) or (k) of

2 section 13; or

3 ‘‘(ii) any assistance provided by the

4 Corporation under section 13(c); and

5 ‘‘(E) any other branch closure whose ex6 emption from the notice requirements of this

7 section would not produce a result inconsistent

8 with the purposes of this section.

9 ‘‘(2) REGULATIONS.—The appropriate Federal

10 banking agency shall, by regulation, determine the

11 circumstances under which any exemption under

12 paragraph(1)(E) may be granted.’’.

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

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

15 included in section 42 of the Federal Deposit Insurance

16 Act as of the date of the enactment of the Federal Deposit

17 Insurance Corporation Improvement Act of 1991.

18 SEC. 223. AMENDMENTS TO THE DEPOSITORY INSTITU19 TIONS MANAGEMENT INTERLOCKS ACT.

20 (a) DUAL SERVICE IN SAME AREA, TOWN, OR VIL21 LAGE.—Section 203 of the Depository Institution Man22 agement Interlocks Act (12 U.S.C. 3202) is amended—

23 (1) by inserting ‘‘(a) PROHIBITIONS.—’’ before

24 ‘‘A management official’’; and
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1 (2) by adding after subsection (a) the following

2 new subsection:

3 ‘‘(b) SMALL MARKET SHARE EXEMPTION.—

4 ‘‘(1) IN GENERAL.—This section shall not be

5 construed as prohibiting a management official of a

6 depository institution or depository holding company

7 from serving as a management official of another de8 pository institution or depository holding company

9 not affiliated with such institution or holding com10 pany if the depository institutions or depository

11 holding companies with which the management offi12 cial serves hold, together with all the affiliates of

13 such institutions or holding companies, in the aggre14 gate no more that 20 percent of the deposits in each

15 relevant geographic banking market where offices of

16 the depository institutions or depository holding

17 companies or their affiliates are located.

18 ‘‘(2) RELEVANT GEOGRAPHIC BANKING MARKET

19 DEFINED.—For purposes of paragraph (1), the term

20 ‘relevant geographic banking market’ means—

21 ‘‘(A) the area defined by the boundaries

22 identified by the Board of Governors of the

23 Federal Reserve System;

24 ‘‘(B) if the Board has not defined such

25 boundaries, the area defined by the boundaries
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1 of the Ranally Metropolitan Area in which the

2 office of the depository institution or the depos3 itory institution holding company is located;

4 and

5 ‘‘(C) if the office of such institution or

6 company is not located within a Ranally Metro7 politan Area, the area defined by the county (or

8 an equivalent area of general local government)

9 in which such office is located.’’.

10 (b) DUAL SERVICE AMONG LARGER ORGANIZA11 TIONS.—Section 204 of the Depository Institution Man12 agement Interlocks Act (12 U.S.C. 3203) is amended to

13 read as follows:

14 ‘‘SEC. 204. DUAL SERVICE AMONG LARGER ORGANIZA15 TIONS.

16 ‘‘(a) IN GENERAL.—If a depository institution, de17 pository institution holding company, or depository insti18 tution affiliate of any such institution or company has

19 total assets exceeding $2,500,000,000, a management offi20 cial of such institution, company, or affiliate may not serve

21 as a management official of any other depository institu22 tion, depository institution holding company, or depository

23 institution affiliate of any such institution or company

24 which—
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1 ‘‘(1) is not an affiliate of the institution, com2 pany, or affiliate of which such person is a manage3 ment official; and

4 ‘‘(2) has total assets exceeding $1,500,000,000.

5 ‘‘(b) CPI ADJUSTMENTS.—The dollar amounts in

6 this section shall be adjusted annually after December 31,

7 1994, by the annual percentage increase in the Consumer

8 Price Index for Urban Wage Earners and Clerical Work9 ers published by the Bureau of Labor Statistics.’’.

10 (c) EXTENSION OF GRANDFATHER EXEMPTION.—

11 Section 206 of the Depository Institution Management

12 Interlocks Act (12 U.S.C. 3205) is amended—

13 (1) in subsection (a), by striking ‘‘for a period

14 of, subject to the requirements of subsection (c), 20

15 years after the date of enactment of this title’’;

16 (2) in subsection (b), by striking the 2d sen17 tence; and

18 (3) by striking subsection (c).

19 (d) RULES OR REGULATIONS.—Section 209 of the

20 Depository Institution Management Interlocks Act (12

21 U.S.C. 3207) is amended—

22 (1) by striking ‘‘(a) IN GENERAL.—Rules’’ and

23 inserting ‘‘Rules’’;

24 (2) by inserting ‘‘, including rules or regula25 tions which permit service by a management official
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1 which would otherwise be prohibited by section 203

2 or section 204,’’ after ‘‘title’’; and

3 (3) by striking subsections (b) and (c).

4 SEC. 224. ACCELERATION OF REPAYMENT TO TREASURY.

5 The Appraisal Subcommittee of the Financial Institu6 tions Examination Council shall repay to the Secretary of

7 the Treasury the funds specified in section 1108 of Finan8 cial Institutions Reform, Recovery, and Enforcement Act

9 of 1989 by not later than September 30, 1998, and the

10 Secretary shall deposit such funds in the general fund of

11 the Treasury.

12 SEC. 225. CONSTRAINTS ON EMPLOYEE-WIDE BENEFIT

13 PLANS AND HOME EQUITY LOANS.

14 (a) AMENDMENTS TO SECTION 22(h) OF THE FED15 ERAL RESERVE ACT.—

16 (1) EMPLOYEE-WIDE BENEFIT PLANS.—Section

17 22(h)(2) of the Federal Reserve Act (12 U.S.C.

18 375b(2)) is amended—

19 (1) by redesignating subparagraphs (A) through

20 (C) as clauses (i) through (iii), respectively, and in21 denting the left margins of such clauses appro22 priately;

23 (2) by striking ‘‘(2) PREFERENTIAL TERMS

24 PROHIBITED.—’’ and inserting the following:

25 ‘‘(2) PREFERENTIAL TERMS PROHIBITED.—
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1 ‘‘(A) IN GENERAL.—’’; and

2 (3) by adding at the end the following new sub3 paragraph:

4 ‘‘(B) EXCEPTION.—No provision of this

5 paragraph shall be construed as prohibiting any

6 extension of credit made pursuant to a benefit

7 or compensation program—

8 ‘‘(i) that is widely available to employ9 ees of the member bank; and

10 ‘‘(ii) that does not give preference to

11 any officer, director, or principal share12 holder of the member bank, or to any re13 lated interest of such person, over other

14 employees of the member bank.’’.

15 (2) EXCEPTION FOR EXTENSIONS OF CREDIT

16 TO EXECUTIVE OFFICERS AND DIRECTORS OF

17 NONBANK AFFILIATES.—Section 22(h)(8)(B) of the

18 Federal Reserve Act (12 U.S.C. 375b(8)(B)) is

19 amended to read as follows:

20 ‘‘(B) EXCEPTION.—The Board may, by

21 regulation, make exceptions to subparagraph

22 (A) for an executive officer or director of a sub23 sidiary of a company that controls the member

24 bank if—
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1 ‘‘(i) the executive officer or director

2 does not have authority to participate, and

3 does not participate, in major policymaking

4 functions of the member bank; and

5 ‘‘(ii) the assets of such subsidiary do

6 not exceed 10 percent of the consolidated

7 assets of a company that controls the

8 member bank and such subsidiary (and is

9 not controlled by any other company).’’.

10 (3) RECORDKEEPING REQUIREMENTS.—Section

11 22(h)(10) of the Federal Reserve Act (12 U.S.C.

12 375b(10)) is amended by adding at the end the fol13 lowing: ‘‘The Board shall specify by regulation the

14 recordkeeping required of member banks to ensure

15 compliance with this section.’’.

16 (b) UNNECESSARY REPORTING REQUIREMENTS.—

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

18 375a) is amended—

19 (1) by striking paragraph (6);

20 (2) by redesignating paragraphs (7), (8), (9),

21 and (10) as paragraphs (6), (7), (8), and (9), re22 spectively; and

23 (3) in paragraph (8) (as so redesignated by

24 paragraph (1) of this subsection)—
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1 (A) by striking ‘‘include with (but not as

2 part of) each report of condition and copy

3 thereof filed under section 7(a)(3) of the Fed4 eral Deposit Insurance Act’’ and inserting

5 ‘‘submit a semiannual’’; and

6 (B) by striking ‘‘previous report of condi7 tion’’ and inserting ‘‘previous semiannual re8 port’’.

9 (c) AMENDMENTS RELATING TO LOANS TO EXECU10 TIVE OFFICERS.—Section 22(g) of the Federal Reserve

11 Act (12 U.S.C. 375a) (as amended by subsection (a) of

12 this section) is amended—

13 (1) in paragraph (1)(D), by striking ‘‘of any

14 one of the three categories respectively referred to in

15 paragraphs (2), (3), and (4)’’ and inserting ‘‘of any

16 category referred to in paragraph (2), (3), (4), (5),

17 or (6)’’;

18 (2) by redesignating paragraphs (4) and (5) as

19 paragraphs (6) and (7), respectively;

20 (3) by inserting after paragraph (3) the follow21 ing new paragraph:

22 ‘‘(4) HOME EQUITY LINES OF CREDIT.—A

23 member bank may make a revolving open-end exten24 sion of credit to any executive officer of the bank if

25 the credit—
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1 ‘‘(A) does not exceed $100,000; and

2 ‘‘(B) is secured by a dwelling that is owned

3 by such officer and used by the officer as a res4 idence.

5 ‘‘(5) LOANS SECURED BY MARKETABLE AS6 SETS.—A member bank may extend credit to any

7 executive officer of the bank if the credit is secured

8 by readily marketable assets with a fair market

9 value of not less than the amount which is equal to

10 200 percent of any credit so extended.’’; and

11 (4) in paragraph (7) (as so redesignated by

12 paragraph (2) of this subsection) by striking ‘‘(4)’’

13 each place such term appears and inserting ‘‘(6)’’.

14 SEC. 226. EXPANDED REGULATORY DISCRETION FOR

15 SMALL BANK EXAMINATIONS.

16 (a) SMALL BANK SIZE DISCRETION.—Section 10(d)

17 of the Federal Deposit Insurance Act (12 U.S.C. 1820(d))

18 is amended—

19 (1) by redesignating paragraph (9) as para20 graph (10);

21 (2) by redesignating the second of the 2 para22 graphs designated as paragraph (8) as paragraph

23 (9); and
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1 (3) in paragraph (9) (as so redesignated), by

2 striking ‘‘$175,000,000’’ and inserting

3 ‘‘$250,000,000’’.

4 (b) INFLATION ADJUSTMENT.—Section 10(d) of the

5 Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is

6 amended by inserting after paragraph (10) (as so redesig7 nated in subsection (a)(1) of this section) the following

8 new paragraph:

9 ‘‘(11) ANNUAL CPI ADJUSTMENT.—The dollar

10 amount in this section shall be adjusted annually

11 after December 31, 1994, by the annual percentage

12 increase in the Consumer Price Index for Urban

13 Wage Earners and Clerical Workers published by

14 the Bureau of Labor Statistics.’’.

15 (c) COORDINATED FEDERAL AND STATE EXAMINA16 TIONS.—The Federal banking agencies (as defined in sec17 tion 3 of the Federal Deposit Insurance Act) shall submit

18 semiannual reports to the Congress on the progress made

19 by such agencies in implementing the requirements of sec20 tion 10(d)(6) of the Federal Deposit Insurance Act until

21 such agencies submit a final report that—

22 (1) the examination system provided for in such

23 section is in place; and
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1 (2) such system provides for full coordination of

2 examinations of State depository institutions with

3 State bank supervisors.

4 SEC. 227. COST REIMBURSEMENT.

5 Section 1115 of the Right to Financial Privacy Act

6 (12 U.S.C. 3415) is amended by inserting ‘‘(including cor7 porate customers)’’ after ‘‘pertaining to a customer’’.

8 SEC. 228. IDENTIFICATION OF FOREIGN NONBANK FINAN9 CIAL INSTITUTION CUSTOMERS.

10 (a) IN GENERAL.—Section 5327(a)(1) of title 31,

11 United States Code, is amended to read as follows:

12 ‘‘(1) is a financial institution (other than a for13 eign bank (as defined in section 101(b) of the Inter14 national Banking Act of 1978)) which is a foreign

15 person; and’’.

16 (b) TECHNICAL AND CONFORMING AMENDMENT.—

17 The heading for section 5327 of title 31, United States

18 Code, is amended by inserting ‘‘FOREIGN NONBANK’’

19 after ‘‘OF’’.

20 (c) CLERICAL AMENDMENT.—The table of sections

21 for chapter 53 of title 31, United States Code, is amended

22 by striking the item relating to section 5327 and inserting

23 the following new item:

‘‘5327. Identification of foreign nonbank financial institutions.’’.
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1 SEC. 229. PAPERWORK REDUCTION REVIEW.

2 Not later than 180 days after the date of enactment

3 of this Act, each appropriate Federal banking agency and

4 the National Credit Union Administration, in consultation

5 with insured depository institutions, insured credit unions,

6 and other interested parties, shall—

7 (1) review the extent to which current regula8 tions require insured depository institutions and in9 sured credit unions to produce unnecessary internal

10 written policies; and

11 (2) eliminate such requirements, where appro12 priate.

13 For purposes of this section, the terms ‘‘insured deposi14 tory institution’’ and ‘‘appropriate Federal banking agen15 cy’’ have the same meanings as in section 3 of the Federal

16 Deposit Insurance Act and the term ‘‘insured credit

17 union’’ has the same meaning as in section 101(7) of the

18 Federal Credit Union Act.

19 SEC. 230. DAILY CONFIRMATIONS FOR HOLD-IN-CUSTODY

20 REPURCHASE TRANSACTIONS.

21 Before the end of the 1-year period beginning on the

22 date of the enactment of this Act, the Secretary of the

23 Treasury shall revise the regulation under section 15C of

24 the Securities Exchange Act of 1934 relating to the obli25 gations of financial institutions and of brokers and dealer

26 registered under such Act holding custody of securities
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1 subject to a repurchase agreement to confirm, daily and

2 in writing, the securities that are subject to such repur3 chase agreement. Such revision shall permit the

4 counterparty to such agreement to waive in writing the

5 right to obtain such daily written confirmation if the

6 counterparty has received a clear and conspicuous disclo7 sure before entering into any side agreement, in a form

8 prescribed by the Secretary, that adequately informs the

9 counterparty of the benefits of receiving such daily written

10 confirmations.

11 SEC. 231. REQUIRED REGULATORY REVIEW OF REGULA12 TIONS.

13 (a) IN GENERAL.—Not less frequently than once

14 every 10 years, the Financial Institutions Examination

15 Council (hereafter in this section referred to as the ‘‘Coun16 cil’’) and each appropriate Federal banking agency (as de17 fined in section 3(q) of the Federal Deposit Insurance

18 Act) represented on the Council shall conduct a review of

19 all regulations prescribed by the Council or by any such

20 agency, respectively, in order to identify outdated or other21 wise unnecessary regulatory requirements imposed upon

22 insured depository institutions.

23 (b) PROCESS.—In conducting the review under sub24 section (a), the Council or the appropriate Federal bank25 ing agency shall—
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1 (1) categorize the regulations by type (such as

2 consumer regulations, safety and soundness regula3 tions, or such other designations as determined by

4 the Council); and

5 (2) at regular intervals, provide notice and so6 licit public comment on a particular category or cat7 egories of regulations, requesting commentators to

8 identify areas of the regulations that are outdated,

9 unnecessary, or unduly burdensome.

10 (c) COMPLETE REVIEW.—The Council or the appro11 priate Federal banking agency shall ensure that the notice

12 and comment period described in subsection (b)(2) is con13 ducted with respect to all regulations described in sub14 section (a) not less frequently than once every 10 years.

15 (d) REGULATORY RESPONSE.—The Council or the

16 appropriate Federal banking agency shall—

17 (1) publish in the Federal Register a summary

18 of the comments received under this section, identi19 fying significant issues raised and providing com20 ment on such issues; and

21 (2) eliminate unnecessary regulations to the ex22 tent that such action is appropriate.

23 (e) REPORT TO CONGRESS.—Not later than 30 days

24 after carrying out subsection (d)(1), the Council shall pro25 vide to the Congress a report, which shall include—
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1 (1) a summary of any significant issues raised

2 by public comments received by the Council and the

3 appropriate Federal banking agencies under this sec4 tion and the relative merits of such issues; and

5 (2) an analysis of whether the appropriate Fed6 eral banking agency involved is able to address the

7 regulatory burdens associated with such issues by

8 regulation, or whether such burdens must be ad9 dressed by legislative action.

10 SEC. 232. COUNTRY RISK REQUIREMENTS.

11 Subsections (a)(1) and (b) of section 905 of the

12 International Lending Supervision Act of 1983 (12 U.S.C.

13 3904) are amended by striking ‘‘shall’’ and inserting

14 ‘‘may’’.

15 SEC. 233. AUDIT COSTS.

16 (a) IN GENERAL.—

17 (1) AUDITOR ATTESTATIONS.—Section 36 of

18 the Federal Deposit Insurance Act (12 U.S.C.

19 1831m) is amended—

20 (A) by striking subsection (e); and

21 (B) by redesignating subsections (f), (g),

22 (h), (i), and (j) as subsections (e), (f), (g), (h),

23 and (i), respectively.

24 (2) PUBLIC AVAILABILITY.—Section 36(a)(3) of

25 the Federal Deposit Insurance Act (12 U.S.C.
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1 1831m(a)(3)) is amended by inserting at the end the

2 following new sentence: ‘‘Notwithstanding the pre3 ceding sentence, the Corporation and the appro4 priate Federal banking agencies may designate cer5 tain information as privileged and confidential and

6 not available to the public.’’.

7 (b) EXEMPTION FOR WELL-CAPITALIZED AND

8 WELL-MANAGED INSURED DEPOSITORY INSTITU9 TIONS.—Section 36 of the Federal Deposit Insurance Act

10 (12 U.S.C. 1831m) (as amended by subsection (a) of this

11 section) is amended by adding at the end the following

12 new subsection:

13 ‘‘(j) EXEMPTION FOR WELL-CAPITALIZED AND

14 WELL-MANAGED INSURED DEPOSITORY INSTITU15 TIONS.—No provision of this section other than sub16 sections (d) and (f) shall apply with respect to any insured

17 depository institution which has a CAMEL rating of 1 (or

18 an equivalent rating under a equivalent rating system).’’.

19 (c) INDEPENDENT AUDIT COMMITTEES.—Section

20 36(f)(1) of the Federal Deposit Insurance Act (12 U.S.C.

21 1831m(g)(1)) (as so redesignated by subsection (a)(1)(B)

22 of this section) is amended—

23 (1) in subparagraph (A), by striking ‘‘entirely

24 made up of outside directors who are independent of

25 the management of the institution, and who’’ and in-
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serting ‘‘not less than 1 1 ⁄2 of the members of which

2 shall be outside directors and the members of

3 which’’; and

4 (2) by adding at the end the following new sub5 paragraph:

6 ‘‘(D) EXEMPTION AUTHORITY.—

7 ‘‘(i) IN GENERAL.—An appropriate

8 Federal banking agency may, by order or

9 regulation, permit an insured depository

10 institution to maintain an independent

audit committee less than 1 11 ⁄2 of the mem12 bers of which are outside directors, if the

13 agency determines that the institution has

14 encountered hardships in recruiting and

15 retaining a sufficient number of outside di16 rectors to serve on such committee.

17 ‘‘(ii) FACTORS TO BE CONSIDERED.—

18 In determining whether an insured deposi19 tory institution has encountered the hard20 ships referred to in clause (i), the appro21 priate Federal banking agency shall con22 sider factors such as the size of the institu23 tion and the extent to which the institution

24 has made a good faith effort to elect or

25 name additional competent outside direc-
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1 tors to the board of directors of the insti2 tution who may serve on the independent

3 audit committee.’’.

4 SEC. 234. STANDARDS FOR DIRECTOR AND OFFICER LI5 ABILITY.

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

7 (12 U.S.C. 1813(u)) is amended—

8 (1) by redesignating subparagraphs (A), (B),

9 and (C) of paragraph (4) as clauses (i), (ii), and

10 (iii), respectively;

11 (2) by redesignating paragraphs (1), (2), (3),

12 and (4) as subparagraphs (A), (B), (C), and (D), re13 spectively, and indenting the left margin of such

14 subparagraphs appropriately;

15 (3) in subparagraph (A) (as so redesignated),

16 by inserting ‘‘(other than an outside director)’’ after

17 ‘‘director’’;

18 (4) in subparagraph (C) (as so redesignated),

19 by inserting ‘‘(other than an outside director)’’ after

20 ‘‘any other person’’;

21 (5) by striking ‘‘term ‘institution-affiliated

22 party’ means’’ and inserting ‘‘term ‘institution-affili23 ated party’—

24 ‘‘(1) means—’’;
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1 (6) by striking the period at the end of sub2 paragraph (D) of paragraph (1) (as so redesignated)

3 and inserting ‘‘; and’’; and

4 (7) by adding at the end the following new

5 paragraph:

6 ‘‘(2) includes any outside director which the ap7 propriate Federal banking agency determines, on the

8 basis of such factors as the agency (in the agency’s

9 sole discretion) determines to be appropriate, shall

10 be treated as an institution-affiliated party for pur11 poses of section 8, after taking into consideration

12 that an outside director may have a different level

13 of knowledge of the management and operation of

14 an insured depository institution than a director who

15 is not an outside director.’’.

16 SEC. 235. FOREIGN BANK APPLICATIONS.

17 (a) PROVISIONS RELATING TO ESTABLISHMENT OF

18 BANK OFFICES.—Section 7(d) of the International Bank19 ing Act of 1978 (12 U.S.C. 3105(d)) is amended—

20 (1) in paragraph (2), by striking ‘‘The’’ and in21 serting ‘‘Except as provided in paragraph (6), the’’;

22 (2) in paragraph (5), by striking ‘‘Consistent

23 with the standards for approval in paragraph (2),

24 the’’ and inserting ‘‘The’’; and
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1 (3) by adding at the end the following new

2 paragraphs:

3 ‘‘(6) EXCEPTION.—

4 ‘‘(A) IN GENERAL.—If the Board is unable

5 to find under paragraph (2) that a foreign bank

6 is subject to comprehensive supervision or regu7 lation on a consolidated basis by the appro8 priate authorities in its home country, the

9 Board may nevertheless approve an application

10 under paragraph (1) by such foreign bank if—

11 ‘‘(i) the appropriate authorities in the

12 home country of such foreign bank are

13 working to establish arrangements for the

14 consolidated supervision of such bank; and

15 ‘‘(ii) all other factors are consistent

16 with approval.

17 ‘‘(B) ADDITIONAL CONDITIONS.—The

18 Board, after requesting and considering the

19 views of the appropriate State bank supervisor

20 or the Comptroller of the Currency, as the case

21 may be, may impose such conditions or restric22 tions relating to activities or business oper23 ations of the proposed branch, agency, or com24 mercial lending company subsidiary, including
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1 restrictions on sources of funding, as are con2 sidered appropriate in the public interest.

3 ‘‘(C) MODIFICATION OF CONDITIONS.—

4 Any condition or restriction imposed by the

5 Board under this subsection in connection with

6 the approval of an application may be varied or

7 withdrawn where such modification is consistent

8 with the public interest.

9 ‘‘(7) TIME PERIOD FOR BOARD ACTION.—

10 ‘‘(A) FINAL ACTION.—The Board shall

11 take final action on any application under para12 graph (1) within 180 days of receipt of the ap13 plication, except that the Board may extend for

14 an additional 180 days the period within which

15 to take final action on such application, after

16 providing notice of, and the reasons for, the ex17 tension to the applicant foreign bank and any

18 appropriate State bank supervisor or the Comp19 troller of the Currency, as the case may be.

20 ‘‘(B) FAILURE TO SUBMIT INFORMA21 TION.—The Board may deny any application if

22 it has not received information requested from

23 the applicant foreign bank or appropriate au24 thorities in the home country in sufficient time

25 to permit the Board to evaluate such informa-
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1 tion adequately within the time periods for final

2 action set forth in subparagraph (A).

3 ‘‘(C) WAIVER.—A foreign bank may waive

4 the applicability of subparagraph (A) with re5 spect to any such application.’’.

6 (b) PROVISION RELATING TO TERMINATION OF

7 BANK OFFICES.—Section 7(e)(1)(A) of the International

8 Banking Act of 1978 (12 U.S.C. 3105(e)(1)(A)) is amend9 ed—

10 (1) by striking ‘‘(A)’’ and inserting ‘‘(A)(i)’’;

11 (2) by striking ‘‘; or’’ and inserting ‘‘; and’’;

12 and

13 (3) by inserting at the end the following new

14 clause:

15 ‘‘(ii) the appropriate authorities in the

16 home country are not making progress in estab17 lishing arrangements for the comprehensive su18 pervision or regulation of such foreign bank on

19 a consolidated basis; or’’.

20 (c) UNIFORM TERMINATIONS OF FOREIGN BANK OF21 FICES, AGENCIES, BRANCHES, AND SUBSIDIARIES BY THE

22 FEDERAL RESERVE SYSTEM.—

23 (1) IN GENERAL.—Section 7(e)(1) of the Inter24 national Banking Act of 1978 (12 U.S.C.

25 3105(e)(1)) is amended—
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1 (A) by inserting ‘‘or the Comptroller of the

2 Currency’’ after ‘‘State bank supervisor’’;

3 (B) by inserting ‘‘or a Federal branch or

4 agency’’ after ‘‘commercial lending company

5 subsidiary’’ the first place such term appears;

6 and

7 (C) in the last sentence, by inserting ‘‘or

8 a Federal branch or agency’’ after ‘‘commercial

9 lending company subsidiary’’.

10 (2) TECHNICAL AND CONFORMING AMEND11 MENT.—Section 7(e) of the International Banking

12 Act of 1978 (12 U.S.C. 3105(e)) is amended—

13 (A) by striking paragraph (5); and

14 (B) by redesignating paragraphs (6) and

15 (7) as paragraphs (5) and (6), respectively.

16 SEC. 236. DUPLICATE EXAMINATION OF FOREIGN BANKS.

17 Section 7(c)(1) of the International Banking Act of

18 1978 (12 U.S.C. 3105(c)(1)) is amended—

19 (1) by adding after clause (ii) of subparagraph

20 (B) the following new clause:

21 ‘‘(iii) AVOIDANCE OF DUPLICATION.—

22 In exercising its authority under this para23 graph, the Board shall take all reasonable

24 measures to reduce burden and avoid un25 necessary duplication of examinations.’’;
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1 (2) by striking subparagraph (C) and inserting

2 the following:

3 ‘‘(C) ON-SITE EXAMINATION.—Each Fed4 eral branch or agency, and each State branch

5 or agency, of a foreign bank shall be subject to

6 on-site examination by a Federal banking agen7 cy or State bank supervisor as frequently as

8 would a national bank or State bank, respec9 tively, by its appropriate Federal banking agen10 cy.’’; and

11 (3) by amending subparagraph (D) to read as

12 follows:

13 ‘‘(D) COST OF EXAMINATIONS.—The cost

14 of any examination undertaken pursuant to

15 subparagraph (A) shall be assessed against and

16 collected from the foreign bank or the foreign

17 company that controls the foreign bank, as the

18 case may be, but only to the same extent that

19 fees are collected by the Board for examination

20 of any State member insured bank.’’.

21 SEC. 237. HIGH-COST MORTGAGES.

22 (a) FEDERAL RESERVE SURVEY AND STUDY.—

23 (1) IN GENERAL.—During the period beginning

24 180 days after the date of enactment of this Act and

25 ending 2 years after that date of enactment, the
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1 Board of Governors of the Federal Reserve System

2 shall conduct an empirical survey and study and

3 submit to the Congress a report, including rec4 ommendations for the enactment or repeal of any

5 appropriate legislation, regarding the national mar6 ket for mortgages covered under section 103(aa) of

7 the Truth in Lending Act.

8 (2) COMPETITION AND CREDIT AVAILABIL9 ITY.—The survey shall seek to ascertain whether

10 competition in the market for mortgages covered

11 under section 103(aa) of the Truth in Lending Act

12 has been enhanced or impaired by the Home Owner13 ship and Equity Protection Act of 1994, as well as

14 an assessment of the impact of that Act on lenders,

15 consumers, and the secondary mortgage market for

16 refinanced loans and home equity loans, particularly

17 in the area of credit availability.

18 (3) ABUSIVE AND FRAUDULENT PRACTICES.—

19 The survey, which shall include consumers and state

20 regulators, shall also identify both abusive and

21 fraudulent practices in the market for mortgages

22 covered under section 103(aa) of the Truth in Lend23 ing Act, as well as the type of entities and individ24 uals actually responsible for these practices.
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1 (b) REGULATORY TOLERANCES FOR DE MINIMUS

2 CHANGES.—Section 129(b)(2) of the Truth in Lending

3 Act (15 U.S.C. 1639(b)(2)) is amended by adding at the

4 end the following new subparagraph:

5 ‘‘(C) DE MINIMUS CHANGES.—A creditor

6 shall not be required under this section to make

7 any new disclosure under this section as a re8 sult of—

9 ‘‘(i) any change in the regular pay10 ment amount of 2 percent or less from the

11 initially disclosed regular payment amount;

12 or

13 ‘‘(ii) any change in 3d party fees or

14 disbursements which are made to pay off

15 creditors which are financed under the

16 transaction.’’.

17 (c) TIME OF DISCLOSURES.—Section 129(b) of the

18 Truth in Lending Act (15 U.S.C. 1639(b)) is amended

19 by adding at the end the following new paragraph:

20 ‘‘(4) TIME OF DISCLOSURES FOR CERTAIN

21 TRANSACTIONS.—Notwithstanding paragraph (1), in

22 the case of a transaction which is covered under sec23 tion 103(aa) and subject to section 125, the disclo24 sures required by this section may be made by the
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1 creditor at any time before the consummation of the

2 transaction.’’.

3 (d) REMOVAL OF RESTRICTION ON REGULATIONS.—

4 The 2d sentence of section 105(a) of the Truth in Lending

5 Act (15 U.S.C. 1604(a)) is amended by striking ‘‘Except

6 in the case of a mortgage referred to in section 103(aa),

7 these’’ and inserting ‘‘The’’.

8 SEC. 238. STREAMLINING FDIC APPROVAL OF NEW STATE

9 BANK POWERS.

10 (a) IN GENERAL.—Section 24(a) of the Federal De11 posit Insurance Act (12 U.S.C. 1831a(a)) is amended to

12 read as follows:

13 ‘‘(a) ACTIVITIES GENERALLY.—

14 ‘‘(1) IN GENERAL.—An insured State bank may

15 not engage as principal in any type of activity that

16 is not permissible for a national bank unless—

17 ‘‘(A) the bank has given the Corporation

18 written notice of the bank’s intention to engage

19 in such activity at least 60 days before com20 mencing to engage in the activity and within

21 such 60-day period (or within the extended pe22 riod provided under paragraph (2)) the Cor23 poration has not disapproved the activity; and

24 ‘‘(B) the State bank is, and continues to

25 be, in compliance with applicable capital stand-
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1 ards prescribed by the appropriate Federal

2 banking agency.

3 ‘‘(2) EXTENSION OF PERIOD.—The Corporation

4 may extend the 60-day period referred to in para5 graph (1) for issuing a notice of disapproval with re6 spect to any activity for an additional 30 days.

7 ‘‘(3) CONTENTS OF NOTICE.—Any notice sub8 mitted by a State bank under paragraph (1)(A) shall

9 contain such information as the Corporation may re10 quire.

11 ‘‘(4) BASIS FOR DISAPPROVAL.—The Corpora12 tion may disapprove an activity for a State bank

13 under this subsection unless the Corporation deter14 mines that the activity would pose no significant risk

15 to the appropriate insurance fund.’’.

16 (b) SUBSIDIARIES OF INSURED STATE BANKS.—Sec17 tion 24(d)(1) of the Federal Deposit Insurance Act (12

18 U.S.C. 1831a(d)(1)) is amended to read as follows:

19 ‘‘(1) ACTIVITIES GENERALLY.—

20 ‘‘(A) IN GENERAL.—A subsidiary of an in21 sured State bank may not engage as principal

22 in any type of activity that is not permissible

23 for a subsidiary of a national bank unless—

24 ‘‘(i) the subsidiary has given the Cor25 poration written notice of the subsidiary’s
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1 intention to engage in such activity at least

2 60 days before commencing to engage in

3 the activity and within such 60-day period

4 (or within the extended period provided

5 under paragraph (2)) the Corporation has

6 not disapproved the activity; and

7 ‘‘(ii) the bank is, and continues to be,

8 in compliance with applicable capital

9 standards prescribed by the appropriate

10 Federal banking agency.

11 ‘‘(B) EXTENSION OF PERIOD.—The Cor12 poration may extend the 60-day period referred

13 to in subparagraph (A) for issuing a notice of

14 disapproval with respect to any activity for an

15 additional 30 days.

16 ‘‘(C) CONTENTS OF NOTICE.—Any notice

17 submitted by a subsidiary of an insured State

18 bank under subparagraph (A)(i) shall contain

19 such information as the Corporation may re20 quire.

21 ‘‘(D) BASIS FOR DISAPPROVAL.—The Cor22 poration may disapprove an activity for a sub23 sidiary of an insured State bank under this

24 paragraph unless the Corporation determines
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1 that the activity would pose no significant risk

2 to the appropriate insurance fund.’’.

3 SEC. 239. REPEAL OF CALL REPORT ATTESTATION RE4 QUIREMENT.

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

6 161(a)) is amended by striking the 4th sentence.

7 SEC. 240. AUTHORIZING BANK SERVICE COMPANIES TO OR8 GANIZE AS LIMITED LIABILITY PARTNER9 SHIPS.

10 (a) AMENDMENT TO SHORT TITLE.—Section 1 of the

11 Bank Service Corporation Act (12 U.S.C. 1861(a)) is

12 amended by striking subsection (a) and inserting the fol13 lowing new subsection:

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

15 ‘Bank Service Company Act’.’’;

16 (b) AMENDMENTS TO DEFINITIONS.—Section 1(b) of

17 the Bank Service Corporation Act (12 U.S.C. 1861(b)) is

18 amended—

19 (1) by striking paragraph (2) and inserting the

20 following new paragraph:

21 ‘‘(2) the term ‘bank service company’ means—

22 ‘‘(A) any corporation—

23 ‘‘(i) which is organized to perform

24 services authorized by this Act; and
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1 ‘‘(ii) all of the capital stock of which

2 is owned by 1 or more insured banks; and

3 ‘‘(B) any limited liability company—

4 ‘‘(i) which is organized to perform

5 services authorized by this Act; and

6 ‘‘(ii) all of the members of which are

7 1 or more insured banks.’’;

8 (2) in paragraph (6)—

9 (A) by striking ‘‘corporation’’ and inserting

10 ‘‘company’’; and

11 (B) by striking ‘‘and’’ after the semicolon;

12 (3) by redesignating paragraph (7) as para13 graph (8) and inserting after paragraph (6) the fol14 lowing new paragraph:

15 ‘‘(7) the term ‘limited liability company’ means

16 any company organized under the law of a State (as

17 defined in section 3 of the Federal Deposit Insur18 ance Act) which provides that a member or manager

19 of such company is not personally liable for a debt,

20 obligation, or liability of the company solely by rea21 son of being, or acting as, a member or manager of

22 such company; and’’; and

23 (4) in paragraph (8) (as so redesignated)—
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1 (A) by striking ‘‘corporation’’ each place

2 such term appears and inserting ‘‘company’’;

3 and

4 (B) by striking ‘‘capital stock’’ and insert5 ing ‘‘equity’’.

6 (c) AMENDMENTS TO SECTION 2.—Section 2 of the

7 Bank Service Corporation Act (12 U.S.C. 1862) is amend8 ed—

9 (1) by striking ‘‘corporation’’ and inserting

10 ‘‘company’’;

11 (2) by striking ‘‘corporations’’ and inserting

12 ‘‘companies’’; and

13 (3) in the heading for such section, by striking

14 ‘‘CORPORATION’’ and inserting ‘‘COMPANY’’.

15 (d) AMENDMENTS TO SECTION 3.—Section 3 of the

16 Bank Service Corporation Act (12 U.S.C. 1863) is amend17 ed—

18 (1) by striking ‘‘corporation’’ each place such

19 term appears and inserting ‘‘company’’; and

20 (2) in the heading for such section, by striking

21 ‘‘CORPORATION’’ and inserting ‘‘COMPANY’’.

22 (e) AMENDMENTS TO SECTION 4.—Section 4 of the

23 Bank Service Corporation Act (12 U.S.C. 1864) is amend24 ed—
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1 (1) by striking ‘‘corporation’’ each place such

2 term appears and inserting ‘‘company’’;

3 (2) in subsection (b), by inserting ‘‘or mem4 bers’’ after ‘‘shareholders’’ each place such term ap5 pears;

6 (3) in subsections (c) and (d), by inserting ‘‘or

7 member’’ after ‘‘shareholder’’ each place such term

8 appears;

9 (4) in subsection (e)—

10 (A) by inserting ‘‘or members’’ after ‘‘na11 tional bank and State bank shareholders’’;

12 (B) by striking ‘‘its national bank share13 holder or shareholders’’ and inserting ‘‘any

14 shareholder or member of the company which is

15 a national bank’’;

16 (C) by striking ‘‘its State bank shareholder

17 or shareholders’’ and inserting ‘‘any share18 holder or member of the company which is a

19 State bank’’;

20 (D) by striking ‘‘such State bank or

21 banks’’ and inserting ‘‘any such State bank’’;

22 and

23 (E) by inserting ‘‘or members’’ after

24 ‘‘State bank and national bank shareholders’’;
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1 (5) in subsection (f), by inserting ‘‘or providing

2 insurance as principal, agent, or broker (except to

3 the extent permitted under subparagraph (A) or (E)

4 of section 4(c)(8) of the Bank Holding Company Act

5 of 1956)’’ after ‘‘or deposit taking’’; and

6 (6) in the heading for such section, by striking

7 ‘‘CORPORATION’’ and inserting ‘‘COMPANY’’.

8 (f) AMENDMENTS TO SECTION 5.—Section 5 of the

9 Bank Service Corporation Act (12 U.S.C. 1865) is amend10 ed—

11 (1) by striking ‘‘corporation’’ each place such

12 term appears and inserting ‘‘company’’; and

13 (2) in the heading for such section, by striking

14 ‘‘CORPORATIONS’’ and inserting ‘‘COMPANIES’’.

15 (g) AMENDMENTS TO SECTION 6.—Section 6 of the

16 Bank Service Corporation Act (12 U.S.C. 1866) is amend17 ed—

18 (1) by striking ‘‘corporation’’ each place such

19 term appears and inserting ‘‘company’’;

20 (2) by inserting ‘‘or is not a member of’’ after

21 ‘‘does not own stock in’’;

22 (3) by striking ‘‘the nonstockholding institu23 tion’’ and inserting ‘‘such depository institution’’;

24 (4) by inserting ‘‘or is a member of’’ after ‘‘that

25 owns stock in’’;
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1 (5) in paragraphs (1) and (2), by inserting ‘‘or

2 nonmember’’ after ‘‘nonstockholding’’; and

3 (6) in the heading for such section by inserting

4 ‘‘OR NONMEMBERS’’ after ‘‘NONSTOCKHOLDERS’’.

5 (h) AMENDMENTS TO SECTION 7.—Section 7 of the

6 Bank Service Corporation Act (12 U.S.C. 1867) is amend7 ed—

8 (1) by striking ‘‘corporation’’ each place such

9 term appears and inserting ‘‘company’’;

10 (2) in subsection (a)—

11 (A) by inserting ‘‘or principal member’’

12 after ‘‘principal shareholder’’; and

13 (B) by inserting ‘‘or member’’ after ‘‘other

14 shareholder’’; and

15 (3) in the heading for such section, by striking

16 ‘‘CORPORATIONS’’ and inserting ‘‘COMPANIES’’.

17 SEC. 241. BANK INVESTMENTS IN EDGE ACT AND AGREE18 MENT CORPORATIONS.

19 The 10th undesignated paragraph of section 25A of

20 the Federal Reserve Act (12 U.S.C. 618) is amended by

21 striking the last sentence and inserting the following:

22 ‘‘Any national bank may invest in the stock of any cor23 poration organized under this section. The aggregate

24 amount of stock held by any national bank in all corpora25 tions engaged in business of the kind described in this sec-
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1 tion or section 25 shall not exceed an amount equal to

2 10 percent of the capital and surplus of such bank unless

3 the Board determines that the investment of an additional

4 amount by the bank would not be unsafe or unsound and,

5 in any case, shall not exceed an amount equal to 25 per6 cent of the capital and surplus of such bank.’’.

7 SEC. 242. REPORT ON THE RECONCILIATION OF DIF8 FERENCES BETWEEN REGULATORY AC9 COUNTING PRINCIPLES AND GENERALLY AC10 CEPTED ACCOUNTING PRINCIPLES.

11 Before the end of the 180-day period beginning on

12 the date of the enactment of this Act, each appropriate

13 Federal banking agency (as defined in section 3 of the

14 Federal Deposit Insurance Act) shall submit to the Com15 mittee on Banking and Financial Services of the House

16 of Representatives and the Committee on Banking, Hous17 ing, and Urban Affairs of the Senate a report on the ac18 tions taken and to be taken by the agency to eliminate

19 or conform inconsistent or duplicative accounting and re20 porting requirements applicable to reports or statements

21 filed with any such agency by insured depository institu22 tions, as required by section 121 of the Federal Deposit

23 Insurance Corporation Improvement Act of 1991.
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1 SEC. 243. WAIVERS AUTHORIZED FOR RESIDENCY RE2 QUIREMENT FOR NATIONAL BANK DIREC3 TORS.

4 The first sentence of section 5146 of the Revised

5 Statutes of the United States (12 U.S.C. 72) is amended

6 by inserting ‘‘(1) the Comptroller of the Currency may,

7 in the Comptroller’s discretion, waive the residency re8 quirement in the case of any director of a national bank

9 to whom the requirement would otherwise apply, and (2)’’

10 after ‘‘except that’’.

11 SEC. 244. CONSULTATION AMONG EXAMINERS.

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

13 Insurance Act (12 U.S.C. 1820) is amended by adding at

14 the end the following new subsection:

15 ‘‘(j) CONSULTATION AMONG EXAMINERS.—

16 ‘‘(1) IN GENERAL.—Each appropriate Federal

17 banking agency shall take such action as may be

18 necessary to ensure that examiners employed by the

19 agency—

20 ‘‘(A) consult on examination activities with

21 respect to any depository institution; and

22 ‘‘(B) achieve an agreement and resolve any

23 inconsistencies on the recommendations to be

24 given to such institution as a consequence of

25 any examinations.
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1 ‘‘(2) EXAMINER-IN-CHARGE.—Each agency

2 shall consider appointing an examiner-in-charge with

3 respect to a depository institution to ensure con4 sultation on examination activities among all of the

5 agency’s examiners involved in examinations of such

6 institution.’’.

7 (b) COORDINATED AND UNIFIED EXAMINATION

8 FLEXIBILITY.—Section 10(d)(6)(B) of the Federal De9 posit Insurance Act (12 U.S.C. 1820(d)(6)(B)) is amend10 ed by inserting ‘‘or State bank supervisors’’ after ‘‘one of

11 the Federal agencies’’.

12 SEC. 245. ANTITYING EXEMPTIVE AUTHORITY.

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

14 U.S.C. 1464(q)) is amended by adding at the end the fol15 lowing new paragraph:

16 ‘‘(6) EXCEPTIONS.—The Director may, by reg17 ulation or order, permit such exceptions to the pro18 hibitions of this subsection as the Director considers

19 will not be contrary to the purposes of this sub20 section and which conform to exceptions granted by

21 the Board of Governors of the Federal Reserve Sys22 tem pursuant to section 106(b) of the Bank Holding

23 Company Act Amendments of 1970.’’.
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1 TITLE III—LENDER LIABILITY

2 SEC. 301. LENDER LIABILITY.

3 (a) PARTICIPATION IN MANAGEMENT.—

4 (1) IN GENERAL.—It is the sense of Congress

5 that a person who holds indicia of ownership pri6 marily to protect the person’s security interest in a

7 vessel or facility should not be considered to have

8 participated in management, as that term is used in

9 section 101(20) of the Comprehensive Environ10 mental Response, Compensation, and Liability Act

11 of 1980 (42 U.S.C. 9601(20)), unless the person—

12 (A) exercises decisionmaking control over

13 the borrower’s environmental compliance such

14 that the person has undertaken responsibility

15 for the hazardous substance handling or dis16 posal practices of the vessel or facility; or

17 (B) exercises control at a level comparable

18 to that of a manager of the borrower’s vessel or

19 facility such that the person has assumed or

20 manifested responsibility for the overall man21 agement of the vessel or facility encompassing

22 day-to-day decisionmaking over either environ23 mental compliance or over the operational, as

24 opposed to financial and administrative, aspects

25 of the vessel or facility.
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1 (2) OPERATIONAL ASPECTS DEFINED.—In

2 paragraph (1)(B), the term ‘‘operational aspects’’

3 includes functions such as those of a facility or plant

4 manager, operations manager, chief operating offi5 cer, or chief executive officer.

6 (b) EXCLUSIONS.—It is further the sense of Congress

7 that the term ‘‘participation in management’’ as used in

8 such section 101(20) should not include any of the follow9 ing:

10 (1) The mere capacity to influence, or ability to

11 influence, or the unexercised right to control vessel

12 or facility operations.

13 (2) Any act of a security interest holder to re14 quire another person to comply with applicable laws

15 or to respond lawfully to disposal of any hazardous

16 substance.

17 (3) Conducting an act or failing to act prior to

18 the time that a security interest is created in a ves19 sel or facility.

20 (4) Holding a security interest in a vessel or fa21 cility or abandoning or releasing such a security in22 terest.

23 (5) Including in the terms of an extension of

24 credit, or in a contract or security agreement relat25 ing to such an extension, covenants, warranties, or
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1 other terms and conditions that relate to environ2 mental compliance.

3 (6) Monitoring or enforcing the terms and con4 ditions of the extension of credit or security interest.

5 (7) Monitoring or undertaking 1 or more in6 spections of the vessel or facility.

7 (8) Under section 107(d) of the Comprehensive

8 Environmental Response, Compensation, and Liabil9 ity Act of 1980, or under the direction of an on10 scene coordinator, conducting a response action or

11 other lawful means of addressing the release or

12 threatened release of a hazardous substance in con13 nection with the vessel or facility prior to, during, or

14 upon the expiration of the term of the extension of

15 credit.

16 (9) Providing financial or other advice or coun17 seling in an effort to mitigate, prevent, or cure de18 fault or diminution in the value of the vessel or facil19 ity.

20 (10) Restructuring, renegotiating, or otherwise

21 agreeing to alter the terms and conditions of the ex22 tension of credit or security interest or exercising

23 forbearance.

24 (11) Exercising other remedies that may be

25 available under applicable law for the breach of any
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1 term or condition of the extension of credit or secu2 rity agreement.

3 (12) Holding legal or equitable title acquired by

4 a security interest holder through foreclosure or its

5 equivalent primarily to protect a security interest

6 provided that the holder undertakes to sell, re-lease,

7 or otherwise divest the property in a reasonably ex8 peditious manner on commercially reasonable terms,

9 taking into account market conditions and legal and

10 regulatory requirements.

11 (c) SECURITY INTEREST.—It is further the sense of

12 Congress that the term ‘‘security interest’’ as used in such

13 section 101(20) should include rights under a mortgage,

14 deed of trust, assignment, judgment, lien, pledge, security

15 agreement, factoring agreement, lease, or any other right

16 accruing to person to secure the repayment of money, the

17 performance of a duty, or some other obligation.

18 (d) MISCELLANEOUS.—It is further the sense of the

19 Congress that the potential Superfund liability of fidu20 ciaries and the potential Resource Conservation and Re21 covery Act liability of lenders and fiduciaries should be

22 addressed by the Congress.
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1 TITLE IV—ANNUAL STUDY AND

2 REPORT ON IMPACT ON

3 LENDING TO SMALL BUSI4 NESS

5 SEC. 401. ANNUAL STUDY AND REPORT.

6 Not later than 12 months after the date of the en7 actment of this Act, and annually thereafter, the Board

8 of Governors of the Federal Reserve System, the Director

9 of the Office of Thrift Supervision, the Comptroller of the

10 Currency, and the Board of Directors of the Federal De11 posit Insurance Corporation shall jointly conduct a study

12 and submit to the Congress a report on the extent to

13 which this Act and the amendments made by this Act

14 have, through reductions in regulatory burdens, resulted

15 in increased lending to small businesses.

16 TITLE V—FINANCIAL SERVICE

17 REFORM

18 Subtitle A—Reform of Holding

19 Company Procedures

20 SEC. 501. STREAMLINED EXAMINATION AND REPORTING

21 REQUIREMENTS FOR ALL FINANCIAL SERV22 ICES HOLDING COMPANIES.

23 Section 5(c) of the Bank Holding Company Act of

24 1956 (12 U.S.C. 1844(c)) is amended to read as follows—

25 ‘‘(c) REPORTS AND EXAMINATIONS.—
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1 ‘‘(1) PURPOSES.—

2 ‘‘(A) IN GENERAL.—The purpose of this

3 subsection is to authorize the Board, through

4 reports and examinations, to gather information

5 from a financial services holding company and

6 the subsidiaries of any such holding company

7 regarding the structure, activities, and financial

8 condition of the financial services holding com9 pany and such subsidiaries so that the Board

10 can monitor risks within the holding company

11 system that could adversely affect any deposi12 tory institution subsidiary of the holding com13 pany and may monitor and enforce compliance

14 with this Act.

15 ‘‘(B) PURPOSE NOT TO IMPOSE ADDI16 TIONAL BURDENS ON HOLDING COMPANIES.—It

17 is the intended purpose of this subsection that

18 the Board shall—

19 ‘‘(i) exercise the Board’s authority to

20 collect information under this section in a

21 manner that is the least burdensome to fi22 nancial services holding companies and the

23 subsidiaries of such companies; and

24 ‘‘(ii) rely, to the fullest extent pos25 sible, on reports prepared for and examina-
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1 tions conducted by or for other Federal

2 and State supervisors.

3 ‘‘(C) PURPOSE TO REQUIRE CAREFULLY

4 TAILORED EXAMINATIONS.—It is the intended

5 purpose of this subsection that the Board shall

6 tailor the focus and scope of any examination

7 under this section to a financial services holding

8 company or to any subsidiary of such company

9 which, because of financial conditions, activities,

10 operations of such subsidiary, the transactions

11 between such subsidiary and other affiliates, or

12 the size of any such subsidiary poses a potential

13 material risk to a depository institution subsidi14 ary of such holding company.

15 ‘‘(2) REPORTS.—

16 ‘‘(A) IN GENERAL.—The Board from time

17 to time may require any financial services hold18 ing company and any subsidiary of such com19 pany to submit reports under oath to keep the

20 Board informed as to—

21 ‘‘(i) the company’s or the subsidiary’s

22 activities, financial condition, policies, sys23 tems for monitoring and controlling finan24 cial and operational risks, and transactions
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1 with depository institution subsidiaries of

2 the holding company; and

3 ‘‘(ii) the extent to which the company

4 or subsidiary has complied with the provi5 sions of this Act and regulations prescribed

6 and orders issued under this Act.

7 ‘‘(B) USE OF EXISTING REPORTS.—

8 ‘‘(i) IN GENERAL.—The Board shall,

9 to the fullest extent possible, accept re10 ports in fulfillment of the Board’s report11 ing requirements under this paragraph

12 that a financial services holding company

13 or any subsidiary of such company has

14 been required to provide to other Federal

15 and State supervisors or to appropriate

16 self-regulatory organizations.

17 ‘‘(ii) AVAILABILITY.—A financial serv18 ices holding company or a subsidiary of

19 such company shall provide to the Board,

20 at the request of the Board, a report re21 ferred to in clause (i).

22 ‘‘(3) EXAMINATIONS.—

23 ‘‘(A) LIMITED USE OF EXAMINATION AU24 THORITY.—The Board may make examinations
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1 of each financial services holding company and

2 each subsidiary of such company in order to—

3 ‘‘(i) inform the Board of the nature of

4 the operations and financial condition of

5 the financial services holding company and

6 such subsidiaries;

7 ‘‘(ii) inform the Board of the—

8 ‘‘(I) financial and operational

9 risks within the financial services

10 holding company system that may af11 fect any depository institution owned

12 by such holding company; and

13 ‘‘(II) the systems of the holding

14 company and such subsidiaries for

15 monitoring and controlling those

16 risks; and

17 ‘‘(iii) monitor compliance with the

18 provisions of this Act and those governing

19 transactions and relationships between any

20 depository institution controlled by a finan21 cial services holding company and any of

22 the company’s other subsidiaries.

23 ‘‘(B) RESTRICTED FOCUS OF EXAMINA24 TIONS.—The Board shall, to the fullest extent

25 possible, limit the focus and scope of any exam-
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1 ination of a financial services holding company

2 to—

3 ‘‘(i) the holding company; and

4 ‘‘(ii) to any subsidiary (other than a

5 depository institution subsidiary) of the

6 holding company which, because of the

7 size, condition, or activities of the subsidi8 ary, the nature or size of transactions be9 tween such subsidiary and any depository

10 institution affiliate, or the centralization of

11 functions within the holding company sys12 tem, could have a materially adverse effect

13 on the safety and soundness of any deposi14 tory institution affiliate of the subsidiary

15 or of the holding company.

16 ‘‘(C) DEFERENCE TO BANK EXAMINA17 TIONS.—The Board shall, to the fullest extent

18 possible, use the report of examinations of de19 pository institutions made by the Comptroller of

20 the Currency, the Federal Deposit Insurance

21 Corporation, the Office of Thrift Supervision or

22 the appropriate State depository institution su23 pervisory authority for the purposes of this sec24 tion.
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1 ‘‘(D) DEFERENCE TO OTHER EXAMINA2 TIONS.—The Board shall, to the fullest extent

3 possible, use the reports of examination made

4 of—

5 ‘‘(i) any registered broker or dealer by

6 or on behalf of the Securities Exchange

7 Commission, and

8 ‘‘(ii) any other subsidiary that the

9 Board finds to be comprehensively super10 vised under relevant Federal or State law

11 by a Federal or state agency or authority.

12 ‘‘(E) CONFIDENTIALITY OF REPORTED IN13 FORMATION.—

14 ‘‘(i) IN GENERAL.—Notwithstanding

15 any other provision of law, the Board shall

16 not be compelled to disclose any informa17 tion required to be reported under this

18 paragraph, or any information supplied to

19 the Board by any domestic or foreign regu20 latory agency, that relates to the financial

21 or operational condition of any financial

22 services holding company or any subsidiary

23 of such company.

24 ‘‘(ii) COMPLIANCE WITH REQUESTS

25 FOR INFORMATION.—No provision of this
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1 subparagraph shall be construed as author2 izing the Board to withhold information

3 from Congress, or preventing the Board

4 from complying with a request for informa5 tion from any other Federal department or

6 agency for purposes within the scope of

7 such department’s or agency’s jurisdiction,

8 or from complying with an order of a court

9 of competent jurisdiction in an action

10 brought by the United States or the

11 Board.

12 ‘‘(iii) COORDINATION WITH OTHER

13 LAW.—For purposes of section 552 of title

14 5, United States Code, this subparagraph

15 shall be considered to be a statute de16 scribed in subsection (b)(3)(B) of such sec17 tion.

18 ‘‘(iv) DESIGNATION OF CONFIDENTIAL

19 INFORMATION.—In prescribing regulations

20 to carry out the requirements of this sub21 section, the Board shall designate informa22 tion described in or obtained pursuant to

23 this paragraph as confidential information.

24 ‘‘(F) COSTS.—The cost of any examination

25 conducted by the Board under this section may
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1 be assessed against, and made payable by, such

2 holding company.’’.

3 SEC. 502. HOLDING COMPANY SUPERVISION FOR FINAN4 CIAL SERVICES HOLDING COMPANIES EN5 GAGED PRIMARILY IN NONBANKING ACTIVI6 TIES.

7 Section 5 of the Bank Holding Company Act of 1956

8 (12 U.S.C. 1844) is amended by adding at the end the

9 following new subsection:

10 ‘‘(g) REDUCED SUPERVISION OF COMPANIES CON11 TROLLING PRINCIPALLY NONDEPOSITORY INSTITU12 TIONS.—

13 ‘‘(1) ELECTION.—

14 ‘‘(A) IN GENERAL.—Any financial services

15 holding company that qualifies under paragraph

16 (2) may make an election to be governed by the

17 approval, capital, reporting and examination re18 quirements of paragraphs (3), (4), (5) and (6)

19 by—

20 ‘‘(i) filing an application for such elec21 tion with the Board; and

22 ‘‘(ii) if applicable, providing a written

23 guarantee to the Federal Deposit Insur24 ance Corporation pursuant to paragraph

25 (2).
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1 ‘‘(B) EFFECTIVE PERIOD OF ELECTION.—

2 An election under subparagraph (A) shall re3 main in effect—

4 ‘‘(i) so long as the financial services

5 holding company continues to qualify

6 under paragraph (2); or

7 ‘‘(ii) until the financial services hold8 ing company revokes the election.

9 ‘‘(2) CRITERIA FOR ELECTION.—A financial

10 services holding company may make an election

11 under paragraph (1) if the company meets all of the

12 following criteria:

13 ‘‘(A) COMPANY PRINCIPALLY CONTROLS

14 NONDEPOSITORY COMPANIES.—

15 ‘‘(i) FINANCIAL SERVICES HOLDING

16 COMPANIES WITH DEPOSITORY INSTITU17 TIONS.—In the case of a financial services

18 holding company, the consolidated total

19 risk-weighted assets of all depository insti20 tutions and foreign banks (as defined in

21 section 1(b)(7) of the International Bank22 ing Act of 1978) controlled by the financial

23 services holding company—
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1 ‘‘(I) constitute less than 10 per2 cent of the consolidated total risk3 weighted assets of such company; and

4 ‘‘(II) are less than

5 $5,000,000,000.

6 ‘‘(ii) INFLATION ADJUSTMENT.—The

7 dollar limitation contained in clause (i)(II)

8 shall be adjusted annually after December

9 31, 1996, by the annual percentage in10 crease in the Consumer Price Index for

11 Urban Wage Earners and Clerical Workers

12 published by the Bureau of Labor Statis13 tics.

14 ‘‘(iv) AUTHORITY TO INCREASE LIM15 ITS.—The Board may increase the percent16 age referred to in clause (i)(I) and the dol17 lar amount described in clause (i)(II) as

18 the Board may determine to be appro19 priate.

20 ‘‘(B) WELL CAPITALIZED INSTITUTIONS.—

21 Each depository institution controlled by the fi22 nancial services holding company is well capital23 ized.

24 ‘‘(C) WELL MANAGED INSTITUTIONS.—
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1 ‘‘(i) IN GENERAL.—Each depository

2 institution controlled by the financial serv3 ices holding company received a CAMEL

4 composite rating of 1 or 2 (or an equiva5 lent rating under an equivalent rating sys6 tem) in the most recent examination of

7 such institution.

8 ‘‘(ii) EXCLUSION FOR NEWLY AC9 QUIRED INSTITUTIONS.—A depository in10 stitution acquired by a financial services

11 holding company during the 12-month pe12 riod ending on the date of the election by

13 such company under paragraph (1) may be

14 excluded for purposes of clause (i) if the fi15 nancial services holding company has de16 veloped a plan acceptable to the appro17 priate Federal banking agency (for such

18 institution) to restore the capital and man19 agement of the institution.

20 ‘‘(D) HOLDING COMPANY GUARANTEE.—

21 ‘‘(i) IN GENERAL.—The financial

22 services holding company provides a writ23 ten guarantee acceptable to the Federal

24 Deposit Insurance Corporation to maintain

25 the capital levels of each insured deposi-
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1 tory institution controlled by the financial

2 services holding company at not less than

3 the levels required for such institution to

4 remain well capitalized.

5 ‘‘(ii) LIMITATION ON LIABILITY.—The

6 liability of a financial services holding com7 pany under a guarantee provided under

8 this subparagraph shall not exceed an

9 amount equal to 10 percent of the total

10 risk-weighted assets of the insured deposi11 tory institution, measured as of the date

12 that the institution becomes undercapital13 ized.

14 ‘‘(iii) DURATION OF GUARANTEE.—

15 Notwithstanding paragraph (1), a financial

16 services holding company that has elected

17 treatment under this subsection shall con18 tinue to be bound by the guarantee made

19 under this subsection until released in ac20 cordance with this subparagraph.

21 ‘‘(iv) RELEASE FROM LIABILITY.—

22 The Board shall release a financial services

23 holding company from the guarantee appli24 cable with respect to any depository insti25 tution subsidiary of such company—
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1 ‘‘(I) upon the written request of

2 the financial services holding company

3 to revoke the company’s election

4 under paragraph (1) if the Board de5 termines that each depository institu6 tion controlled by the financial serv7 ices holding company is well capital8 ized and well managed at the time of

9 such revocation;

10 ‘‘(II) in the case of a financial

11 services holding company which no

12 longer meets the requirements of sub13 paragraph (A), upon a determination

14 by the Board that each depository in15 stitution controlled by the financial

16 services holding company is well cap17 italized and well managed;

18 ‘‘(III) upon the written request

19 of the financial services holding com20 pany following the divestiture of con21 trol of the depository institution in a

22 transaction that does not require Fed23 eral assistance if the Board deter24 mines that, immediately following the
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1 divestiture, the depository institution

2 is or will be well capitalized; or

3 ‘‘(IV) upon a determination by

4 the Board, after consultation with the

5 Federal Deposit Insurance Corpora6 tion, that, subject to the limit on li7 ability provided in clause (ii), the fi8 nancial services holding company has

9 fully performed under the guarantee.

10 ‘‘(E) RESPONSIVENESS TO COMMUNITY

11 NEEDS.—The lead insured depository institu12 tion subsidiary of the financial services holding

13 company and insured depository institutions

14 controlling at least 80 percent of the aggregate

15 total risk-weighted assets of insured depository

16 institutions controlled by the financial services

17 holding company have achieved a ‘satisfactory

18 record of meeting community credit needs’, or

19 better, during the most recent examination of

20 such insured depository institutions.

21 ‘‘(3) NO NOTICE OR APPROVAL REQUIRED FOR

22 CERTAIN PURPOSES UNDER PARAGRAPHS (8), (13),

23 OR (15) OF SECTION 4(c).—

24 ‘‘(A) IN GENERAL.—Notwithstanding

25 paragraphs (8) and (13) of section 4(c), a fi-
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1 nancial services holding company that has in ef2 fect an election under paragraph (1), and any

3 subsidiary of such holding company, may, with4 out prior notice to, or the approval of, the

5 Board under paragraph (8) or (13) of section

6 4(c), engage de novo in any activity, or acquire

7 shares of any company engaged in any activity,

8 if—

9 ‘‘(i) the Board has determined, by

10 order or regulation in effect at the time

11 the company or subsidiary commences to

12 engage in such activity or acquire such

13 shares, that the activity is permissible for

14 a financial services holding company or a

15 subsidiary of such company to engage in

16 under paragraph (8) or (13) of section 4(c)

17 (and regulations prescribed under such

18 paragraphs); and

19 ‘‘(ii) the activity is conducted in com20 pliance with all conditions and limitations

21 applicable to such activity under any regu22 lation, order, or advisory opinion pre23 scribed or issued by the Board.

24 ‘‘(B) SUBSEQUENT NOTICE.—A financial

25 services holding company that commences to
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1 engage in an activity, or makes an acquisition,

2 in accordance with subparagraph (A) shall in3 form the Board of such fact, in writing, not

4 later than 10 days after commencing the activ5 ity or consummating the acquisition.

6 ‘‘(4) CAPITAL.—

7 ‘‘(A) IN GENERAL.—The Board shall not

8 (by regulation or order), directly or indirectly,

9 establish or apply minimum capital require10 ments to a financial services holding company

11 which has in effect an election under paragraph

12 (1) unless the Board concludes, on the basis of

13 all information available to the Board, that the

14 financial services holding company is not main15 taining sufficient financial resources to meet

16 fully any guarantee required under paragraph

17 (2).

18 ‘‘(B) CRITERIA FOR CONSIDERATION.—For

19 purposes of making a determination under sub20 paragraph (A), the Board shall consider, in ad21 dition to any other relevant considerations, the

22 financial condition and the adequacy of the cap23 ital of each of the depository institutions con24 trolled by the financial services holding com25 pany.
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1 ‘‘(5) REPORTS.—

2 ‘‘(A) IN GENERAL.—The reporting require3 ments contained in subsection (c)(2) shall apply

4 to a financial services holding company which

5 qualifies under this subsection, to the extent

6 provided by the Board.

7 ‘‘(B) EXEMPTIONS FROM REPORTING RE8 QUIREMENTS.—

9 ‘‘(i) IN GENERAL.—The Board may,

10 by regulation or order, exempt any com11 pany or class of companies, under such

12 terms and conditions and for such periods

13 as the Board shall provide in such regula14 tion or order, from the provisions of this

15 paragraph and any regulations prescribed

16 under this paragraph.

17 ‘‘(ii) CRITERIA FOR CONSIDER18 ATION.—In granting any exemption under

19 clause (i), the Board shall consider, among

20 other factors—

21 ‘‘(I) whether information of the

22 type required under this paragraph is

23 available from a supervisory agency

24 (as defined in section 1101(7) of the

25 Right to Financial Privacy Act of
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1 1978), the Commodity Futures Trad2 ing Commission, or a foreign regu3 latory body of a similar type;

4 ‘‘(II) the primary business of the

5 company; and

6 ‘‘(III) the nature and extent of

7 domestic or foreign regulations of the

8 company’s activities.

9 ‘‘(6) EXAMINATIONS.—

10 ‘‘(A) LIMITED USE OF EXAMINATION AU11 THORITY FOR FINANCIAL SERVICES HOLDING

12 COMPANIES.—The Board shall not examine,

13 under this section, any financial services hold14 ing company described in paragraph (2)(A)(i)

15 for which an election is in effect under para16 graph (1) or any subsidiary (other than a de17 pository institution) of such holding company

18 unless—

19 ‘‘(i) the Board determines, on the

20 basis of all information available to the

21 Board, that—

22 ‘‘(I) the operations or activities

23 of the financial services holding com24 pany or any subsidiary of such com25 pany, or any transaction involving
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1 such company or subsidiary and an

2 affiliated depository institution, may

3 pose a material risk to the safety and

4 soundness of any depository institu5 tion owned by such holding company;

6 or

7 ‘‘(II) the financial services hold8 ing company does not appear to have

9 sufficient resources to meet the guar10 antee required under paragraph (2);

11 or

12 ‘‘(ii) the Board is unable to accom13 plish the purposes described in subsection

14 (c)(3)(A) without such examinations.

15 ‘‘(B) RESTRICTED FOCUS AND DEFERENCE

16 IN EXAMINATIONS.—The Board shall limit the

17 focus and scope of any examination, under this

18 section, of a financial services holding company

19 for which an election is in effect under para20 graph (1) or of any subsidiary (other than a de21 pository institution) of such holding company

22 and shall defer to examinations conducted by

23 the Securities Exchange Commission or other

24 supervisors in accordance with subparagraphs

25 (B), (C), and (D) of subsection (c)(3).’’.
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1 SEC. 503. CONVERSION OF UNITARY SAVINGS AND LOAN

2 HOLDING COMPANIES TO FINANCIAL SERV3 ICES HOLDING COMPANIES.

4 (a) IN GENERAL.—The Bank Holding Company Act

5 of 1956 (12 U.S.C. 1841 et seq.) is amended by inserting

6 after section 5 the following new section:

7 ‘‘SEC. 6. CONVERSION OF UNITARY SAVINGS AND LOAN

8 HOLDING COMPANIES TO FINANCIAL SERV9 ICES HOLDING COMPANIES.

10 ‘‘(a) STREAMLINED PROCEDURE FOR CONVER11 SION.—

12 ‘‘(1) IN GENERAL.—During the 18-month pe13 riod beginning on the date of the enactment of the

14 Financial Institutions Regulatory Relief Act of

15 1996, no approval shall be required under section

16 3(a) or paragraph (8) or (13) of section 4(c) for any

17 qualified savings and loan holding company to be18 come a financial services holding company if the re19 quirements of paragraph (2) are met.

20 ‘‘(2) ELIGIBILITY REQUIREMENTS.—A qualified

21 savings and loan holding company shall be eligible to

22 become a financial services holding company pursu23 ant to paragraph (1) if—

24 ‘‘(A) the company becomes a financial

25 services holding company as the result of the

26 conversion of a savings association controlled by
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1 such company as of the date of enactment of

2 the Financial Institutions Regulatory Relief Act

3 of 1996 into a bank;

4 ‘‘(B) the company is adequately capitalized

5 before and immediately after the conversion re6 ferred to in subparagraph (A);

7 ‘‘(C) all depository institutions controlled

8 by such company are well capitalized before and

9 immediately after such conversion;

10 ‘‘(D) all depository institutions controlled

11 by such company are well managed before the

12 conversion;

13 ‘‘(E) the Board would not be prohibited

14 under any provision of section 3(d) from ap15 proving the transaction;

16 ‘‘(F) the activities of the company and of

17 each subsidiary of the company comply with

18 this Act (and regulations prescribed under this

19 Act); and

20 ‘‘(G) the company provides the Board with

21 at least 30 days written notice of the proposed

22 conversion, and, before the expiration of such

23 30-day period, the Board has not objected to

24 the company becoming a financial services hold-
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1 ing company based on the criteria contained in

2 this subsection.

3 ‘‘(3) QUALIFIED SAVINGS AND LOAN HOLDING

4 COMPANY DEFINED.—For purposes of this sub5 section, the term ‘qualified savings and loan holding

6 company’ means any company which became a sav7 ings and loan holding company before January 1,

8 1995, and is a savings and loan holding company as

9 of the date of the enactment of the Financial Insti10 tutions Regulatory Relief Act of 1996.

11 ‘‘(b) LIMITED RETENTION OF EXISTING INVEST12 MENTS.—Any holding company which converts to a finan13 cial services holding company in accordance with sub14 section (a) may retain direct or indirect ownership or con15 trol of voting shares of any company as provided in, and

16 subject to, section 4(k) if—

17 ‘‘(1) the holding company controlled 1 or more

18 savings associations in accordance with section

19 10(c)(3) of the Home Owners Loan Act before Jan20 uary 1, 1995, and as of the date of the enactment

21 of the Financial Institutions Regulatory Relief Act

22 of 1996;

23 ‘‘(2) the investment in voting shares and the fi24 nancial services holding company meet the require25 ments of section 4(k); and
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1 ‘‘(3) more than 75 percent of the revenues of

2 the financial services holding company for each of

3 the 2 calendar years before the date such company

4 became a financial services holding company involved

5 activities that the Board has determined to be per6 missible under section 4(c)(8).’’.

7 (b) OWNERSHIP OF SHARES OF CERTAIN COMPA8 NIES.—Section 4 of the Bank Holding Company Act of

9 1956 (12 U.S.C. 1843) is amended by adding at the end

10 the following new subsection:

11 ‘‘(k) OWNERSHIP OF SHARES OF CERTAIN COMPA12 NIES.—

13 ‘‘(1) NONCONFORMING FINANCIAL COMPA14 NIES.—Notwithstanding subsection (a), a financial

15 services holding company may retain direct or indi16 rect ownership or control of voting shares of any

17 company that—

18 ‘‘(A) engages solely in activities that the

19 Board finds to be financial but which the Board

20 has not authorized under subsection (c)(8) (and

21 such other financial activities that the Board

22 has authorized) if—

23 ‘‘(i) the financial services holding

24 company acquired the shares of a company

25 engaged in such activities or of each com-
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1 pany to which the company engaged in

2 such activities is a successor more than 2

3 years before the date that such financial

4 services holding company becomes a finan5 cial services holding company;

6 ‘‘(ii) the aggregate investment by the

7 financial services holding company in

8 shares of all such companies does not ex9 ceed 10 percent of the total consolidated

10 capital and surplus of the financial services

11 holding company as of the date that the

12 holding company becomes a financial serv13 ices holding company or as of the date of

14 any additional investment by the financial

15 services holding company in such shares;

16 ‘‘(iii) the company engaged in such

17 activities continues to engage only in ac18 tivities that such company conducted as of

19 the date that such financial services hold20 ing company becomes a financial services

21 holding company (or other activities per22 mitted under subsection (c)(8)); and

23 ‘‘(iv) the company was a qualified sav24 ings and loan holding company (as defined

25 in section 6(a)(3)) which became a finan-
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1 cial services holding company in accord2 ance with section 6; or

3 ‘‘(B) engages in activities not authorized

4 under this section if—

5 ‘‘(i) the financial services holding

6 company held the shares of any company

7 engaged in such activities as of the date of

8 the enactment of the Financial Services

9 Competitiveness and Regulatory Relief Act

10 of 1996 and the financial services holding

11 company was then exempt from the provi12 sions of this section pursuant to subsection

13 (d) as of such date;

14 ‘‘(ii) the company engaged in such ac15 tivities continues to engage only in the

16 same general lines of business and related

17 activities that such company conducted as

18 of the date of the enactment of the Finan19 cial Institutions Regulatory Relief Act of

20 1996 (or other activities permitted under

21 subsection (c)); and

22 ‘‘(iii) 80 percent of the aggregate

23 gross revenues of the financial services

24 holding company and the subsidiaries of

25 such holding company as of the date of the
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1 enactment of the Financial Institutions

2 Regulatory Relief Act of 1996 was attrib3 utable to—

4 ‘‘(I) ownership and operation of

5 depository institutions;

6 ‘‘(II) activities that are financial

7 in nature as determined by the Board

8 pursuant to subsection (c)(8); and

9 ‘‘(III) such other activities that

10 would be permissible generally for the

11 holding company as a financial serv12 ices holding company.

13 ‘‘(2) NONFINANCIAL COMPANIES.—

14 ‘‘(A) IN GENERAL.—Notwithstanding sub15 section (a), a financial services holding company

16 may, during the 5-year period beginning on the

17 date that the company becomes a financial serv18 ices holding company, retain direct or indirect

19 ownership or control of voting shares of any

20 company which—

21 ‘‘(i) the financial services holding

22 company owns or controls on the date such

23 holding company becomes a financial serv24 ices holding company; and
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1 ‘‘(ii) a financial services holding com2 pany is not authorized to own or control,

3 directly or indirectly, under section 3 or

4 subsections (a) or (c) of this section.

5 ‘‘(B) EXTENSION OF DIVESTITURE PE6 RIOD.—The Board may extend the period de7 scribed in subparagraph (A) for an additional

8 period not to exceed 5 years if the Board—

9 ‘‘(i) determines that such extension is

10 necessary to avert substantial loss to the

11 financial services holding company; and

12 ‘‘(ii) finds that the financial services

13 holding company has made good faith ef14 forts to divest such shares.

15 ‘‘(C) NO EXPANSION OF NONFINANCIAL

16 COMPANIES PRIOR TO DIVESTITURE.—Unless

17 an acquisition or activity is permitted in accord18 ance with subsection (c) or section 3—

19 ‘‘(i) no financial services holding com20 pany, and no company whose shares are

21 owned or controlled by a financial services

22 holding company in accordance with this

23 paragraph, may acquire any interest in or

24 assets of any other company, and
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1 ‘‘(ii) no company whose shares are

2 owned or controlled by a financial services

3 holding company pursuant to this para4 graph may engage directly or indirectly in

5 any activity that the company did not con6 duct on the day before the financial serv7 ices holding company registered as a finan8 cial services holding company.

9 ‘‘(3) RESTRICTIONS ON JOINT MARKETING.—

10 No depository institution (and no subsidiary of such

11 institution) shall—

12 ‘‘(A) offer or market, directly or indirectly

13 through any arrangement, any product or serv14 ice of any affiliate whose shares are owned or

15 controlled by the financial services holding com16 pany pursuant to this subsection; or

17 ‘‘(B) permit any of such depository institu18 tion’s or subsidiary’s products or services to be

19 offered or marketed, directly or indirectly

20 through any arrangement, by or through any

21 affiliate whose shares are owned or controlled

22 by the financial services holding company pur23 suant to this subsection,

24 unless, in a case involving an affiliate held under

25 this subsection, the product or service is permissible
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1 or authorized for financial services holding compa2 nies to provide under subsection (c)(8).

3 ‘‘(4) DEPOSITORY INSTITUTION DEFINED.—For

4 purposes of paragraph (3), the term ‘depository in5 stitution’ includes a foreign bank.’’.

6 SEC. 504. COORDINATION WITH STATE LAW.

7 No provision of this title, and no amendment made

8 by this title to any other provision of law, may be con9 strued as superseding any provision of the law of any

10 State which imposes additional requirements or estab11 lishes higher standards for the safe and sound operation

12 and condition of depository institutions (as defined in sec13 tion 3 of the Federal Deposit Insurance Act) and the pro14 tection of consumers than the requirements imposed or the

15 standards established under this title and the amendments

16 made by this title to other provisions of law (including cap17 ital standards and other safeguards placed on affiliates).

18 SEC. 505. CONFORMING AMENDMENTS TO THE BANK HOLD19 ING COMPANY ACT OF 1956.

20 (a) SHORT TITLE; TABLE OF CONTENTS.—The first

21 section of the Bank Holding Company Act of 1956 (12

22 U.S.C. 1841 note) is amended to read as follows:

23 ‘‘SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

25 ‘Financial Services Holding Company Act of 1996’.
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1 ‘‘(b) TABLE OF CONTENTS.—The table of contents

2 for this Act is as follows:

‘‘Sec. 1. Short title; table of contents.

‘‘Sec. 2. Definitions.

‘‘Sec. 3. Acquisition of bank shares or assets.

‘‘Sec. 4. Interests in nonbanking organizations.

‘‘Sec. 5. Administration.

‘‘Sec. 6. Conversion of unitary savings and loan holding companies to financial

services holding companies.

‘‘Sec. 7. Reservation of rights to States.

‘‘Sec. 8. Penalties.

‘‘Sec. 9. Judicial review.

‘‘Sec. 11. Saving provision.

‘‘Sec. 12. Separability of provisions.

3 ‘‘(c) REFERENCES IN OTHER LAWS.—Any reference

4 in any Federal or State law to a provision of the Bank

5 Holding Company Act of 1956 shall be deemed to be a

6 reference to the corresponding provision of this Act.’’.

7 (b) DEFINITIONS.—

8 (1) Subsection (n) of section 2 of the Bank

9 Holding Company Act of 1956 (12 U.S.C. 1841(n))

10 is amended by inserting ‘‘ ‘depository institution’, ’’

11 before ‘‘ ‘insured depository institution’ ’’.

12 (2) Subsection (o) of section 2 of the Bank

13 Holding Company Act of 1956 (12 U.S.C. 1841(o))

14 is amended—

15 (A) by striking paragraph (1) and insert16 ing the following new paragraph:

17 ‘‘(1) LEAD DEPOSITORY INSTITUTION.—The

18 term ‘lead depository institution’ means the largest

19 depository institution controlled by the financial

20 services holding company, based on a comparison of
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1 the average total assets controlled by each deposi2 tory institution during the previous 12-month pe3 riod.’’; and

4 (B) by adding at the end the following new

5 paragraphs:

6 ‘‘(8) DEPOSITORY INSTITUTION FOR CERTAIN

7 SECTIONS.—Notwithstanding subsection (n), the

8 term ‘depository institution’ includes, for purposes of

9 paragraph (1), any branch, agency, or commercial

10 lending company operated in the United States by a

11 foreign bank.

12 ‘‘(9) WELL MANAGED.—The term ‘well man13 aged’ means—

14 ‘‘(A) in the case of any company or deposi15 tory institution which receives examinations, the

16 achievement of—

17 ‘‘(i) a CAMEL composite rating of 1

18 or 2 (or an equivalent rating under an

19 equivalent rating system) in connection

20 with the most recent examination or subse21 quent review of such company or institu22 tion; and

23 ‘‘(ii) at least a satisfactory rating for

24 management, if such rating is given; or
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1 ‘‘(B) in the case of a company or deposi2 tory institution that has not received an exam3 ination rating, the existence and use of manage4 rial resources which the Board determines are

5 satisfactory.’’.

6 (3) Section 2 of the Bank Holding Company

7 Act of 1956 (12 U.S.C. 1841) is amended by adding

8 at the end the following new subsections:

9 ‘‘(p) CAPITAL TERMS.—

10 ‘‘(1) DEPOSITORY INSTITUTIONS.—With respect

11 to depository institutions, the terms ‘well capital12 ized,’ ‘adequately capitalized’ and ‘undercapitalized’

13 have the meanings given to such terms in accord14 ance with section 38(b) of the Federal Deposit In15 surance Act.

16 ‘‘(2) FINANCIAL SERVICES HOLDING COM17 PANY.—The following definitions shall apply with re18 spect to financial services holding companies:

19 ‘‘(A) ADEQUATELY CAPITALIZED.—The

20 term ‘adequately capitalized’ means a level of

21 capitalization which meets or exceeds the re22 quired minimum level established by the Board

23 for each relevant capital measure for financial

24 services holding companies.
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1 ‘‘(B) WELL CAPITALIZED.—The term ‘well

2 capitalized’ means a level of capitalization

3 which meets or exceeds the required capital lev4 els established by the Board for well capitalized

5 financial services holding companies.

6 ‘‘(3) OTHER CAPITAL TERMS.—The terms ‘tier

7 1’ and ‘risk-weighted assets’ have the meaning given

8 those terms in the capital guidelines or regulations

9 established by the Board for financial services hold10 ing companies.

11 ‘‘(q) FOREIGN BANK TERMS.—For purposes of sub12 section (o)—

13 ‘‘(1) the terms ‘agency’, ‘branch’, and ‘commer14 cial lending company’ have the same meaning as in

15 section 1(b) of the International Banking Act of

16 1978; and

17 ‘‘(2) the term ‘foreign bank’ means a foreign

18 bank (as defined in section 1(b) of the International

19 Banking Act of 1978) which operates a branch,

20 agency or commercial lending company, or owns or

21 controls a bank, in the United States.’’.

22 (c) AMENDMENT REGARDING CONDITIONAL AP23 PROVAL OF NOTICES.—Section 4(a)(2) of the Bank Hold24 ing Company Act of 1956 (12 U.S.C. 1843(a)(2)) is

25 amended by striking ‘‘paragraph (8)’’ and all that follows
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1 through ‘‘issued by the Board under such paragraph’’ and

2 inserting ‘‘subsection (c)(8), subject to all the conditions

3 specified in such subsection or in any order or regulation

4 issued by the Board under such subsection’’.

5 (d) AMENDMENT TO NOTICE PROCEDURES.—Section

6 4(j) of the Bank Holding Company Act of 1956 (12

7 U.S.C. 1843(j)) (as amended by section 201 of this title)

8 is amended—

9 (1) in paragraph (1)(A), by striking ‘‘subsection

10 (c)(8) or (a)(2)’’ and inserting ‘‘subsection (a)(2) or

11 (c)(8)’’; and

12 (2) in paragraph (1)(E)—

13 (A) by striking ‘‘subsection (c)(8) or

14 (a)(2)’’ and inserting ‘‘subsection (a)(2) or

15 (c)(8)’’; and

16 (B) by striking the last sentence and in17 serting the following: ‘‘In no event may the

18 Board, without the agreement of the financial

19 services holding company submitting the notice,

20 extend the notice period under this subpara21 graph beyond the period that ends 180 days

22 after the date that a notice is filed with the

23 Board or the relevant Federal reserve bank in

24 accordance with the regulations of the Board.’’.
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1 (e) ELIMINATION OF OBSOLETE PROVISIONS.—The

2 Bank Holding Company Act of 1956 (12 U.S.C. 1841

3 through 1849) is amended—

4 (1) in section 4(a)(2)—

5 (A) by striking ‘‘or in the case of a com6 pany’’ and ending ‘‘after December 31, 1980,’’;

7 and

8 (B) by striking the sentence beginning

9 ‘‘Notwithstanding any other provision of this

10 paragraph’’;

11 (2) in section 4(b), by striking ‘‘After two years

12 from the date of enactment of this Act, no’’ and in13 serting ‘‘No’’; and

14 (3) in section 5(a)—

15 (A) by striking ‘‘Within one hundred and

16 eighty days after the date of enactment of this

17 Act, or within’’ and inserting ‘‘Within’’; and

18 (B) by striking ‘‘whichever is later,’’.

19 (f) CONFORMING AMENDMENTS.—The Bank Holding

20 Company Act of 1956 (12 U.S.C. 1841 et seq.) is amend21 ed as follows:

22 (1) In section 3(c)(4), by striking ‘‘one-bank

23 holding company’’ each place such term appears and

24 inserting ‘‘1-bank financial services holding com25 pany’’.
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1 (2) In section 3(f)(5), by striking ‘‘bank holding

2 company’’ the first and second time such term ap3 pears and inserting ‘‘financial services holding com4 pany’’.

5 (3) In section 4(i)(3)(A), by striking ‘‘is ac6 quired’’ and inserting ‘‘was acquired’’.

7 (4) By striking ‘‘bank holding companies’’ each

8 place such appears in the following sections and in9 serting ‘‘financial services holding companies’’:

10 (A) Section 3(d).

11 (B) Section 4(f).

12 (C) Section 7(a).

13 (5) By striking ‘‘bank holding company’s’’ each

14 place such term appears in section 4(c)(14) and in15 serting ‘‘financial services holding company’s’’.

16 (6) By striking ‘‘bank holding company’’ each

17 place such term appears in the following sections

18 and inserting ‘‘financial services holding company’’:

19 (A) Subsections (a), (d), (e), (g), (h), and

20 (o) of section 2.

21 (B) Subsections (a), (b), (d), (f)(1), (f)(2),

22 and (f)(3) of section 3.

23 (C) Subsections (a), (d), (e), (g), (h), and

24 (j) of section 4.
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1 (D) Clause (ii) in the portion of section

2 4(c) which precedes paragraph (1) of such sec3 tion.

4 (E) Paragraphs (2), (3), (7), (8), (10),

5 (11), (12)(A), and (14) of section 4(c).

6 (F) Paragraphs (4), (5), and (9) of section

7 4(f).

8 (G) Paragraphs (1) and (2) of section 4(i).

9 (H) Sections 5, 7(b), 8, and 11.

10 (7) In section 4(f)(1), by striking ‘‘bank holding

11 company’’ the second place such term appears and

12 inserting ‘‘financial services holding company’’.

13 (8) In the headings for section 3(f) and 4(f), by

14 striking ‘‘BANK HOLDING’’ and inserting ‘‘FINAN15 CIAL SERVICES HOLDING’’.

16 (9) In the heading the heading for section

17 2(o)(7), by striking ‘‘BANK’’ and inserting ‘‘FINAN18 CIAL SERVICES’’.

19 (g) TREATMENT OF EXISTING BANK HOLDING COM20 PANIES.—Section 2(a)(6) of the Bank Holding Company

21 Act of 1956 (12 U.S.C. 1841(a)(6)) is amended by insert22 ing at the end the following: ‘‘Any company that was a

23 bank holding company on the day before the date of enact24 ment of the Financial Institutions Regulatory Relief Act

25 of 1996 shall, for purposes of this Act, be deemed to be
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1 a financial services holding company as of the date on

2 which the company became a bank holding company.’’.

3 (h) OTHER REFERENCES.—Any reference in any

4 Federal law to ‘‘bank holding company’’ or ‘‘bank holding

5 companies’’ as those terms were defined under the Bank

6 Holding Company Act of 1956 before the enactment of

7 this Act shall be deemed to include a reference to ‘‘finan8 cial services holding company’’ and ‘‘financial services

9 holding companies’’, respectively, as such terms are de10 fined under the Financial Services Holding Company Act

11 of 1996.

12 SEC. 506. CONFORMING AMENDMENTS TO THE BANK HOLD13 ING COMPANY ACT AMENDMENTS OF 1970.

14 Section 106 of the Bank Holding Company Act

15 Amendments of 1970 (12 U.S.C. 1971 through 1978) is

16 amended by striking ‘‘bank holding company’’ each place

17 such term appears and inserting ‘‘financial services hold18 ing company’’.

19 SEC. 507. CREDIT CARDS FOR BUSINESS PURPOSES.

20 Section 2(c)(2)(F) of the Bank Holding Company Act

21 of 1956 (relating to the definition of credit card banks)

22 is amended—

23 (1) in clause (i), by inserting ‘‘including the

24 provision of credit card accounts for business pur25 poses’’ before the semicolon; and
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1 (2) in clause (v), by inserting ‘‘(other than the

2 provision of credit card accounts for business pur3 poses in connection with the credit card operations

4 referred to in clause (i))’’ before the period.

5 SEC. 508. PROHIBITIONS ON CERTAIN DEPOSITORY INSTI6 TUTION ASSOCIATIONS WITH GOVERNMENT7 SPONSORED ENTERPRISES.

8 (a) CREDIT UNIONS.—Section 201 of the Federal

9 Credit Union Act (12 U.S.C. 1781) is amended by adding

10 at the end the following new subsection:

11 ‘‘(e) PROHIBITION ON CERTAIN ASSOCIATIONS.—

12 ‘‘(1) IN GENERAL.—No insured credit union

13 may be sponsored by or accept financial support, di14 rectly or indirectly, from any Government-sponsored

15 enterprise, if the credit union includes the customers

16 of the Government-sponsored enterprise in the field

17 of membership of the credit union.

18 ‘‘(2) ROUTINE BUSINESS FINANCING.—Para19 graph (1) shall not apply with respect to advances

20 or other forms of financial assistance generally pro21 vided by a Government-sponsored enterprise in the

22 ordinary course of business of the enterprise.

23 ‘‘(3) GOVERNMENT-SPONSORED ENTERPRISE

24 DEFINED.—For purposes of this subsection, the

25 term ‘Government-sponsored enterprise’ has the
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1 meaning given to such term in section 1404(e)(1)(A)

2 of the Financial Institutions Reform, Recovery, and

3 Enforcement Act of 1989.’’.

4 (b) BANKS AND SAVINGS ASSOCIATIONS.—Section 18

5 of the Federal Deposit Insurance Act (12 U.S.C. 1828)

6 is amended by adding at the end the following new sub7 section:

8 ‘‘(s) PROHIBITION ON CERTAIN AFFILIATIONS.—

9 ‘‘(1) IN GENERAL.—No depository institution

10 may be an affiliate of, be sponsored by, or accept fi11 nancial support, directly or indirectly, from any Gov12 ernment-sponsored enterprise.

13 ‘‘(2) EXCEPTION FOR MEMBERS OF A FEDERAL

14 HOME LOAN BANK.—Paragraph (1) shall not apply

15 with respect to the membership of a depository insti16 tution in a Federal home loan bank.

17 ‘‘(3) ROUTINE BUSINESS FINANCING.—Para18 graph (1) shall not apply with respect to advances

19 or other forms of financial assistance provided by a

20 Government-sponsored enterprise pursuant to the

21 statutes governing such enterprise.

22 ‘‘(4) GOVERNMENT-SPONSORED ENTERPRISE

23 DEFINED.—For purposes of this subsection, the

24 term ‘Government-sponsored enterprise’ has the

25 meaning given to such term in section 1404(e)(1)(A)
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1 of the Financial Institutions Reform, Recovery, and

2 Enforcement Act of 1989.’’.

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

4 this section shall apply on and after January 1, 1996.

5 SEC. 509. PROVISIONS APPLICABLE TO LIMITED PURPOSE

6 BANKS.

7 (a) EXCEPTION TO RESTRICTION ON ASSET GROWTH

8 OF NONBANK BANKS.—

9 (1) IN GENERAL.—Section 4(f)(3) of the Bank

10 Holding Company Act of 1956 (12 U.S.C.

11 1843(f)(3)) is amended by adding at the end the fol12 lowing new subparagraph:

13 ‘‘(D) EXCEPTION TO RESTRICTION ON

14 ASSET GROWTH, ACTIVITIES, AND CERTAIN

15 CROSS-MARKETING RESTRICTIONS.—

16 ‘‘(i) QUALIFICATION FOR EXCEPTION

17 FROM GROWTH RESTRICTION.—A bank

18 controlled by a company described in para19 graph (1) shall not be subject to the limi20 tation contained in subparagraph (B)(iv) if

21 the company meets the requirements of

22 this subparagraph and the requirements of

23 paragraph (14).

24 ‘‘(ii) QUALIFICATION FOR EXCEPTION

25 FROM ACTIVITIES RESTRICTION.—Notwith-
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1 standing subparagraph (B)(i), a bank con2 trolled by a company described in para3 graph (1) that meets the requirements of

4 clause (i) may engage in an activity au5 thorized under applicable law (other than

6 an activity that would have resulted in the

7 institution being a bank for purposes of

8 this Act, as in effect on the day before the

9 date of the enactment of the Competitive

10 Equality Banking Act of 1987, based on

11 the activities each bank conducted on

12 March 5, 1987, as reported to the Board)

13 if such bank, at least 60 days before com14 mencing such activity, has notified the

15 Board of the bank’s intention to commence

16 such activity and either—

17 ‘‘(I) the Board has notified such

18 bank that the Board will not dis19 approve the proposed activity as un20 safe or unsound; or

21 ‘‘(II) the Board has not, within

22 60 days after receiving such notice,

23 disapproved the proposal on the basis

24 of such criteria.
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1 ‘‘(iii) QUALIFICATION FOR EXCEPTION

2 FROM CROSS-MARKETING RESTRICTION.—

3 Notwithstanding subparagraph (B)(ii), a

4 bank controlled by a company described in

5 paragraph (1) that meets the requirements

6 of clause (i) may offer or market products

7 or services of an affiliate or permit the

8 bank’s products or services to be offered or

9 marketed in connection with products or

10 services of an affiliate if such products or

11 services are offered or marketed only to

12 the extent permissible for banks or finan13 cial services holding companies to provide

14 by law, regulation, or order under sub15 section (c)(8).

16 ‘‘(iv) EXCEPTION FROM DIVESTITURE

17 REQUIREMENT FOR BANKS RESTORED TO

18 WELL CAPITALIZED LEVEL.—If any bank

19 controlled by a company that meets the re20 quirements of clause (i) ceases to be well

21 capitalized, the company shall divest con22 trol of such bank in accordance with para23 graph (4) unless—

24 ‘‘(I) within 12 months after the

25 date the bank ceases to be well cap-
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1 italized, the capital of the bank is re2 stored to the well capitalized level;

3 and

4 ‘‘(II) after the end of such 12-

5 month period, the bank remains well

6 capitalized, subject to the capital res7 toration requirements in subclause (I).

8 ‘‘(v) ACTION REQUIRED IF BANK

9 CEASES TO BE ADEQUATELY CAPITAL10 IZED.—If any bank controlled by a com11 pany that meets the requirements of clause

12 (i) ceases to be adequately capitalized, the

13 company shall, within 30 days after the

14 date as of which the bank ceases to be ade15 quately capitalized—

16 ‘‘(I) execute an agreement with

17 the Board to divest control of such

18 bank in accordance with paragraph

19 (4); or

20 ‘‘(II) restore the capital of the

21 bank to at least the adequately cap22 italized level.’’.

23 (2) QUALIFICATIONS FOR COMPANIES UNDER

24 PARAGRAPH (3)(D).—Section 4(f) of the Bank Hold25 ing Company Act of 1956 (12 U.S.C. 1843(f)) is
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1 amended by adding at the end the following new

2 paragraph:

3 ‘‘(14) QUALIFICATIONS FOR COMPANIES UNDER

4 PARAGRAPH (3)(D).—A company meets the require5 ments of paragraph (3)(D)(i) if—

6 ‘‘(A) the company (based on consolidated

7 revenues) engages predominantly in activities

8 that are financial in nature (including activities

9 not authorized under subsection (c)(8)) or are

10 incidental to such financial activities;

11 ‘‘(B) all insured depository institutions

12 controlled by such company are well capitalized

13 and well managed; and

14 ‘‘(C) the company has provided at least 60

15 days prior written notice to the Board and, dur16 ing that period, the Board has not disapproved

17 the proposal.’’.

18 (b) AMENDED DIVESTITURE PROCEDURE FOR CER19 TAIN COMPANIES.—Section 4(f)(4) of the Bank Holding

20 Company Act of 1956 (12 U.S.C. 1843(f)(4)) is amended

21 by adding at the end the following: ‘‘If any company de22 scribed in paragraph (1) which meets the requirements of

23 paragraph (3)(D)(i) fails to qualify for the exemption pro24 vided under paragraph (2), such company shall divest, in

25 accordance with this paragraph, control of each bank the
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1 company controls unless, within 12 months after the date

2 that the company fails to comply with the provisions of

3 paragraph (2), the company has corrected the condition

4 or ceased the activity that led to the failure to comply.’’.

5 (c) CONVERSION OF CERTAIN NONBANK HOLDING

6 COMPANIES TO FINANCIAL SERVICES HOLDING COMPA7 NIES.—Section 4(f) of the Bank Holding Company Act

8 of 1956 (12 U.S.C. 1843(f)) is amended by inserting after

9 paragraph (14) (as added by subsection (a)(2)) the follow10 ing new paragraph:

11 ‘‘(15) CONVERSION OF CERTAIN COMPANIES TO

12 FINANCIAL SERVICES HOLDING COMPANIES.—

13 ‘‘(A) IN GENERAL.—During the 18-month

14 period beginning on the date of the enactment

15 of the Financial Institutions Regulatory Relief

16 Act of 1996, any company described in para17 graph (1) may become a financial services hold18 ing company if—

19 ‘‘(i) the company (on a consolidated

20 basis) engages predominantly in activities

21 that are financial in nature (including ac22 tivities not authorized under subsection

23 (c)(8)) or are incidental to such financial

24 activities;
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1 ‘‘(ii) all insured depository institutions

2 controlled by such company are well cap3 italized and well managed;

4 ‘‘(iii) the company provides written

5 notice to the Board under section 4 at

6 least 60 days before the company becomes

7 a financial services holding company; and

8 ‘‘(iv) the Board does not object to

9 such transaction before the end of such 60-

10 day period; and

11 ‘‘(B) RETENTION OF FINANCIAL COMPA12 NIES.—

13 ‘‘(i) IN GENERAL.—Notwithstanding

14 subsection (a), a company that becomes a

15 financial services holding company pursu16 ant to subparagraph (A) may retain direct

17 or indirect ownership or control of voting

18 shares of any company that engages solely

19 in activities that the Board finds to be fi20 nancial but which the Board has not au21 thorized under subsection (c)(8) (and such

22 other financial activities that the Board

23 has authorized) if the financial services

24 holding company acquired the shares of

25 such company, or of each company to
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1 which such company is a successor, before

2 January 1, 1995.

3 ‘‘(ii) LIMITS FOLLOWING REGISTRA4 TION.—A company that becomes a finan5 cial services holding company pursuant to

6 this paragraph, and any company whose

7 shares are owned or controlled by a finan8 cial services holding company pursuant to

9 this paragraph, shall be subject to the limi10 tations contained in paragraph (3) of sec11 tion 4(k) as if the activities or shares of

12 such company were conducted or held pur13 suant to section 4(k)(2).

14 ‘‘(iii) PERIOD TO CONFORM OTHER

15 ACTIVITIES.—Notwithstanding subsection

16 (a), a company that becomes a financial

17 services holding company pursuant to sub18 paragraph (A) may retain direct or indi19 rect ownership or control of voting shares

20 of any company not otherwise permitted

21 under this section for the period provided

22 in, and subject to the conditions contained

23 in, paragraphs (2) and (3) of section 4(k).

24 ‘‘(C) ELECTION FOR REDUCED SUPER25 VISION.—Any company that becomes a financial
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1 services holding company pursuant to subpara2 graph (A) may elect to be governed by the pro3 visions of paragraphs (3), (4), (5), and (6) of

4 section 5(g), subject to the requirements of

5 such section, if—

6 ‘‘(i) the company, and any insured de7 pository institution controlled by such com8 pany, meet the requirements of section

9 5(g) (other than the requirements of para10 graph (2)(A) of such section);

11 ‘‘(ii) the company does not acquire

12 more than 5 percent of the shares of any

13 additional depository institution after the

14 date that such company becomes a finan15 cial services holding company; and

16 ‘‘(iii) no depository institution con17 trolled by such company acquires, estab18 lishes, or operates an additional branch of19 fice after the date that the company be20 comes a financial services holding com21 pany.’’.

22 SEC. 510. DISCRETION OF FEDERAL RESERVE BOARD.

23 (a) APPLICATIONS.—Section 3 of the Bank Holding

24 Company Act of 1956 (12 U.S.C. 1842) is amended by

25 adding at the end the following new subsection:
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1 ‘‘(h) DISCRETION WITH REGARD TO APPLICA2 TIONS.—In the case of an application by an entity which

3 is subject to this section because such entity owns or con4 trols 5 percent or more of the voting stock of a bank hold5 ing company, the Board may—

6 ‘‘(1) waive the filing requirement under this

7 section with respect to applications by such entity if

8 the Board determines that no regulatory purpose

9 would be served by such filing requirement; and

10 ‘‘(2) adjust the manner in which the Board may

11 require any company to seek the Board’s approval

12 under subsection (a) for a proposed action or the

13 manner in which the Board reviews any such pro14 posed action, including—

15 ‘‘(A) adjustments with regard to the types

16 and amount of information which the Board

17 may require to be included in any type of appli18 cation or proposal submitted for the Board’s

19 approval under subsection (a); and

20 ‘‘(B) waiver of any requirement for an ap21 plication, or reducing the scope of an applica22 tion, (including an application by a corporation

23 of a central or provincial government) in any

24 case in which the Board determines that—
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1 ‘‘(i) an applicant does not and will not

2 exercise significant managerial control

3 over, or otherwise holds a purely passive

4 investment in the voting securities of, a

5 bank or another bank holding company,

6 notwithstanding the fact that the applicant

7 directly or indirectly owns, controls, or has

8 the power to vote more than 5 percent of

9 any class of voting securities of such bank

10 or other bank holding company; or

11 ‘‘(ii) requiring an application, or re12 quiring an extensive application, by an en13 tity, in connection with the application by

14 a bank holding company subsidiary of such

15 entity to acquire a bank, would not serve

16 any legitimate regulatory need of the

17 Board in rendering a decision with regard

18 to the application of such bank holding

19 company subsidiary.’’.

20 (b) COLLATERAL.—Section 11(m) of the Federal Re21 serve Act (12 U.S.C. 248) is amended—

22 (1) by striking ‘‘not less than six of’’

23 (2) by inserting a comma after ‘‘its members’’;

24 (3) by striking ‘‘but no such loan shall be made

25 by any such bank to any person in an amount in ex-
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1 cess of 15 percent of the unimpaired capital and

2 surplus of such bank: Provided, That’’ and inserting

3 ‘‘except that’’; and

4 (4) by striking ‘‘15 percent on loans to any per5 son’’.

6 SEC. 511. QUALIFIED FAMILY PARTNERSHIPS.

7 Section 2 of the Bank Holding Company Act of 1956

8 (12 U.S.C. 1841) is amended—

9 (1) in subsection (b), by inserting ‘‘, and shall

10 not include a qualified family partnership’’ after ‘‘by

11 any State’’; and

12 (2) by inserting after subsection (q) (as added

13 by section 505(b)(3) of this subtitle) the following

14 new subsection:

15 ‘‘(r) QUALIFIED FAMILY PARTNERSHIP.—For pur16 poses of this Act, the term ‘qualified family partnership’

17 means a general or limited partnership which the Board

18 determines—

19 ‘‘(1) does not directly control any banks, except

20 through a registered bank holding company;

21 ‘‘(2) does not control more than 1 registered

22 bank holding company;

23 ‘‘(3) does not engage in any business activity,

24 except indirectly through ownership of other busi25 ness entities;
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1 ‘‘(4) has no investments other than those per2 mitted for a bank holding company pursuant to sec3 tion 4(c);

4 ‘‘(5) is not obligated on any debt, either directly

5 or as a guarantor;

6 ‘‘(6) has partners, all of whom are either—

7 ‘‘(A) individuals related to each other by

8 blood, marriage (including former marriage), or

9 adoption; or

10 ‘‘(B) trusts for the primary benefit of indi11 viduals so related; and

12 ‘‘(7) has filed with the Board a statement

13 which includes—

14 ‘‘(A) the basis for the eligibility of the

15 partnership under paragraph (6);

16 ‘‘(B) a list of the existing activities and in17 vestments of the partnership;

18 ‘‘(C) a commitment to comply with this

19 subsection;

20 ‘‘(D) a commitment to comply with section

21 7 of the Federal Deposit Insurance Act with re22 spect to any acquisition of control of an insured

23 depository institution occurring after the date

24 of enactment of this subsection; and

25 ‘‘(E) a commitment to be subject to—
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1 ‘‘(i) examination by the Board to as2 sure compliance with this subsection; and

3 ‘‘(ii) section 8 of the Federal Deposit

4 Insurance Act,

5 to the same extent as if the qualified family

6 partnership were a bank holding company.’’.

7 Subtitle B—Interagency Banking

8 and Financial Services Task Force

9 SEC. 521. INTERAGENCY BANKING AND FINANCIAL SERV10 ICES TASK FORCE.

11 (a) ESTABLISHMENT; COMPOSITION.—There is here12 by established the Banking and Financial Services Task

13 Force (hereafter in this subtitle referred to as the ‘‘Task

14 Force’’) which shall consist of 7 members as follows:

15 (1) The Secretary of the Treasury.

16 (2) The Chairman of the Board of Governors of

17 the Federal Reserve System.

18 (3) The Chairperson of the Board of Directors

19 of the Federal Deposit Insurance Corporation.

20 (4) The Chairman of the Securities and Ex21 change Commission.

22 (5) The Chairperson of the Commodities Fu23 tures Trading Commission.

24 (6) The Comptroller of the Currency.
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1 (7) A State bank supervisor (as defined in sec2 tion 3(r) of the Federal Deposit Insurance Act) se3 lected by the chairperson of the task force.

4 (b) CHAIRPERSON.—The chairperson of the Task

5 Force shall be the Secretary of the Treasury.

6 (c) DESIGNATION OF OFFICERS AND EMPLOYEES.—

7 The members of the Task Force may, from time to time,

8 designate other officers or employees of their respective

9 agencies to carry out their duties on the Task Force.

10 (d) COMPENSATION AND EXPENSES.—Each member

11 of the Task Force shall serve without additional com12 pensation but shall be entitled to reasonable expenses in13 curred in carrying out official duties as a member.

14 (e) FUNCTION OF THE TASK FORCE.—

15 (1) IN GENERAL.—The Task Force shall meet

16 as appropriate to consider matters of mutual inter17 est to the members and to consider making rec18 ommendations to the Board of Governors of the

19 Federal Reserve System regarding the types of ac20 tivities that may be financial in nature for purposes

21 of the Financial Services Holding Company Act and

22 to the Comptroller of the Currency regarding the

23 types of activities that may be incidental to banking

24 for purposes of section 5136 of the Revised Statutes

25 of the United States.
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1 (2) CONSIDERATION OF RECOMMENDATIONS.—

2 The Board of Governors of the Federal Reserve Sys3 tem and the Comptroller of the Currency, as appro4 priate, shall take into account any recommendation

5 made to the respective agency by the Task Force

6 and, if the agency does not adopt the recommenda7 tion, shall provide a written explanation to the Task

8 Force.

9 (f) IMPROVING THE SUPERVISION, EFFICIENCY, AND

10 COMPETITIVENESS OF THE FINANCIAL SERVICES INDUS11 TRY.—

12 (1) IN GENERAL.—The Task Force shall seek

13 to improve the supervision, efficiency, and competi14 tiveness of the financial services industry by making

15 recommendations for such legislative or administra16 tive action as the Task Force determines to be ap17 propriate to the Congress, each agency or office rep18 resented by a member on the Task Force, and other

19 agencies or departments of the United States, in20 cluding recommendations for changes in law and in

21 the regulations, policies, and procedures of any de22 partment or agency.

23 (2) PRINTING IN FEDERAL REGISTER.—Rec24 ommendations from paragraph (1) shall be printed

25 in the Federal Register and submitted to the Com-
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1 mittee on Banking and Financial Services of the

2 House of Representatives and the Committee on

3 Banking, Housing, and Urban Affairs of the Senate.

4 SEC. 522. FINANCIAL SERVICES ADVISORY COMMITTEE.

5 (a) ESTABLISHMENT.—There is hereby established

6 the Financial Services Advisory Committee (hereinafter in

7 this section referred to as the ‘‘Committee’’) to the Task

8 Force.

9 (b) MEMBERSHIP.—

10 (1) IN GENERAL.—The Committee shall consist

11 of 9 members, appointed as follows from among in12 dividuals who are not officers or employees of the

13 Federal Government and who are especially qualified

14 to serve on such committee by virtue of their edu15 cation, training, or experience:

16 (A) 1 member appointed by the Secretary

17 of the Treasury.

18 (B) 2 members appointed by the Comptrol19 ler of the Currency.

20 (C) 2 members appointed by the Director

21 of the Office of Thrift Supervision.

22 (D) 2 members appointed by the Board of

23 Governors of the Federal Reserve System.
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1 (E) 2 members appointed by the Board of

2 Directors of the Federal Deposit Insurance Cor3 poration.

4 (2) REPRESENTATION OF SMALL AND INDE5 PENDENT DEPOSITORY INSTITUTIONS.—Of the

6 members appointed under subparagraphs (B), (C),

7 (D), and (E) of paragraph (1), 1 of the 2 members

8 appointed under each such paragraph shall be ap9 pointed from among individuals who are especially

10 qualified to represent the interests of depository in11 stitutions which—

12 (A) have total assets of less than

13 $500,000,000; or

14 (B) are not controlled by any depository

15 institution holding company.

16 (c) VACANCIES.—Any vacancy on the Committee

17 shall be filled in the same manner in which the original

18 appointment was made.

19 (d) PAY AND EXPENSES.—Members of the Commit20 tee shall serve without pay, but each member shall be re21 imbursed for expenses incurred in connection with attend22 ance of such members at meetings of the Committee by

23 the agency which appointed such member to the Commit24 tee.
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1 (e) TERMS.—Members shall be appointed for terms

2 of 3 years.

3 (f) AUTHORITY OF THE COMMITTEE.—The Commit4 tee may select a chairperson, vice chairperson, and sec5 retary, and adopt methods of procedure, and shall have

6 power—

7 (1) to confer with each member of the Task

8 Force on general and special business conditions and

9 regulatory and other matters relating to the finan10 cial services industry in the United States; and

11 (2) to request information from, and to make

12 recommendations to, each Federal agency or office

13 represented on the Task Force with respect to mat14 ters within the jurisdiction of such agency or office.

15 (g) MEETINGS.—The Committee shall meet annually

16 at the call of the chairperson or a majority of the mem17 bers.

18 (h) REPORTS.—The Committee shall submit an an19 nual written report to the Committee on Banking and Fi20 nancial Services of the House and to the Committee on

21 Banking, Housing, and Urban Affairs of the Senate. Such

22 report shall describe the activities of the Committee for

23 such annual period and contain such recommendations as

24 the Committee considers appropriate.
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1 (i) PROVISION OF STAFF AND OTHER RESOURCES.—

2 Each of the Federal banking agencies shall provide the

3 Committee with the use of such resources, including staff,

4 as the Committee reasonably shall require to carry out its

5 duties, including the preparation and submission of re6 ports to Congress, under this section.

7 (j) DEFINITION.—For purposes of this section, the

8 term ‘‘insured depository institution’’ has the meaning

9 given to such term in section 3 of the Federal Deposit

10 Insurance Act.

11 (k) FEDERAL ADVISORY COMMITTEE ACT DOES NOT

12 APPLY.—The Federal Advisory Committee Act shall not

13 apply to the Committee.

14 (l) SUNSET.—The Committee shall cease to exist on

15 the earlier of—

16 (1) the abolition of the Task Force; or

17 (2) the end of the 10-year period beginning on

18 the date of the enactment of this Act.

19 TITLE VI—DROUGHT RELIEF

20 SEC. 601. COOPERATIVE EFFORTS BETWEEN DEPOSITORY

21 INSTITUTIONS AND FARMERS AND RANCH22 ERS IN DROUGHT-STRICKEN AREAS.

23 (a) FINDINGS.—The Congress hereby finds the fol24 lowing:
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1 (1) Severe drought is being experienced in the

2 Plains and the Southwest portions of our country.

3 (2) Soil erosion is becoming a critical issue as

4 the dry season approaches and summer winds may

5 rob these fields of nutrient-rich topsoil.

6 (3) Without immediate assistance, ranchers and

7 farmers would be forced to cull their herds bringing

8 tremendous volatility in the beef market.

9 (4) The American people will feel the impact of

10 this drought in their pocketbooks through higher

11 prices for grain products.

12 (5) The communities in drought-stricken areas

13 are suffering and borrowers may have difficulty

14 meeting their obligations to financial institutions.

15 (6) Congress has already passed the Depository

16 Institutions Disaster Relief Act of 1992 which allows

17 financial institutions to make emergency exceptions

18 to the appraisal requirement in times of national dis19 asters.

20 (b) SENSE OF THE CONGRESS.—It is the sense of

21 the Congress that financial institutions and Federal bank

22 regulators should work cooperatively with farmers and

23 ranchers in communities affected by drought conditions to

24 allow financial obligations to be met without imposing

25 undue burdens.
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1 TITLE VII—FINANCIAL

2 ACTIVITIES

3 SEC. 701. FINANCIAL ACTIVITIES.

4 Section 4(c)(8) of the Bank Holding Company Act

5 of 1956 (12 U.S.C. 1843(c)(8)) is amended—

6 (1) by striking ‘‘shares of any company’’ and all

7 that follows through ‘‘broker’’ and inserting ‘‘shares

8 of any company the activities of which the Board

9 after due notice has determined (by order, regula10 tion, or advisory opinion) to be financial in nature

11 or incidental to such financial activities. In deter12 mining whether an activity is financial in nature or

13 incidental to financial activities, the Board shall take

14 into account changes or reasonably expected changes

15 in the marketplace in which financial services hold16 ing companies compete as well as changes or reason17 ably expected changes in the technology by which

18 these services are delivered. In addition, the Board

19 shall take into account activities considered financial

20 activities or banking or financial operations for pur21 poses of the regulation of the Board designated as

22 ‘Regulation K’ (12 C.F.R. 211.23 (f)(5)(iii)(B)) as

23 in effect on the date of the enactment of the Finan24 cial Institutions Regulatory Relief Act of 1996. Any

25 activity that the Board has determined, by order or
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1 regulation that is in effect on such date to be so

2 closely related to banking or managing or controlling

3 banks as to be a proper incident thereto shall be

4 deemed to be of a financial nature for purposes of

5 this paragraph without further action by the Board

6 (subject to the same terms and conditions contained

7 in such order or regulation, unless modified by the

8 Board), but for purposes of this subsection it shall

9 not be closely related to banking or managing or

10 controlling banks or financial in nature or incidental

11 to a financial activity for a financial services holding

12 company to provide any annuity contract the income

13 on which is tax-deferred under section 72 of the In14 ternal Revenue Code of 1986 as a principal, agent,

15 or broker, or to provide insurance as a principal,

16 agent, or broker’’;

17 (2) by striking the second sentence; and

18 (3) by inserting after the period at the end of

19 the 1st sentence the following new sentence: ‘‘For

20 purposes of subparagraphs (A) through (F), the

21 term ‘insurance agency activity’, and for purposes of

22 subparagraph (G), the term ‘activity’ includes pro23 viding any annuity contract as agent or broker.’’.
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1 SEC. 702. RETIREMENT CERTIFICATES OF DEPOSITS.

2 (a) IN GENERAL.—Section 3(l)(5) of the Federal De3 posit Insurance Act (12 U.S.C. 1813(l)(5) is amended—

4 (1) in subparagraph (A), by striking ‘‘and’’ at

5 the end;

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

7 at the end and inserting ‘‘; and’’; and

8 (3) by adding at the end the following new sub9 paragraph:

10 ‘‘(C) any liability of an insured depository

11 institution that arises under an annuity con12 tract, the income of which is tax deferred under

13 section 72 of the Internal Revenue Code of

14 1986.’’.

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

16 subsection (a) shall apply to any liability of an insured

17 depository that arises under an annuity contract issued

18 on or after the date of enactment of this Act.

19 SEC. 703. GAO STUDY OF STATE SUPERVISION OF NA20 TIONAL BANK INSURANCE ACTIVITIES.

21 (a) STUDY REQUIRED.—The Comptroller General of

22 the United States shall conduct a study to determine

23 whether the supervision by State insurance regulators of

24 insurance activities of national banks is adequate or com25 parable to the supervision of nonbank activities.
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1 (b) CONSULTATION.—In conducting the study pursu2 ant to subsection (a), the Comptroller General shall con3 sult with State insurance regulators, Federal and State

4 banking regulators, and representatives of insurance asso5 ciations, banking associations, and consumer groups.

6 (c) REPORT.—Before the end of the 180-day period

7 beginning on the date of the enactment of this Act, the

8 Comptroller General shall submit a report to the Congress

9 on the findings and conclusions of the Comptroller General

10 together with such recommendations as the Comptroller

11 General determines to be appropriate.

12 SEC. 704. NATIONAL BANK LICENSING REQUIREMENTS.

13 (a) IN GENERAL.—Chapter 1 of title LXII of the Re14 vised Statutes of the United States (12 U.S.C. 21 et seq.)

15 is amended—

16 (1) by redesignating section 5136A as section

17 5136B; and

18 (2) by inserting after section 5136 (12 U.S.C.

19 24) the following new section:

20 ‘‘SEC. 5136A. NATIONAL BANK LICENSING REQUIREMENTS.

21 ‘‘National banks shall comply with applicable non22 discriminatory State—

23 ‘‘(1) licensing requirements establishing char24 acter, experience, and educational qualifications for

25 individuals selling insurance as agents;
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1 ‘‘(2) testing and continuing education require2 ments for individuals selling insurance as agents;

3 and

4 ‘‘(3) standards and requirements for types of li5 censes and for license renewals that apply to individ6 uals selling insurance as agents.

7 ‘‘(b) RULE OF CONSTRUCTION.—No provision of this

8 section shall be construed as affecting the applicability or

9 nonapplicability of other Federal laws or State laws to the

10 insurance activities of national banks.’’.

11 (b) CLERICAL AMENDMENT.—The table of sections

12 for chapter 1 of title LXII of the Revised Statutes of the

13 United States is amended—

14 (1) by redesignating the item relating to section

15 5136A as section 5136B; and

16 (2) by inserting after the item relating to sec17 tion 5136 the following new item:

‘‘5136A. National bank licensing requirements.’’.

18 (c) TECHNICAL AND CONFORMING AMENDMENT.—

19 Section 1306 of title 18, United States Code, is amended

20 by striking ‘‘5136A’’ and inserting ‘‘5136B’’.

21 TITLE VIII—DEPOSIT

22 INSURANCE FUNDS

23 SEC. 801. SHORT TITLE.

24 This title may be cited as the ‘‘Deposit Insurance

25 Funds Act of 1996’’.
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1 SEC. 802. SPECIAL ASSESSMENT TO CAPITALIZE SAIF.

2 (a) IN GENERAL.—Except as provided in subsections

3 (f) and (k), the Board of Directors of the Federal Deposit

4 Insurance Corporation shall impose a special assessment

5 on the SAIF-assessable deposits of each insured deposi6 tory institution in accordance with assessment regulations

7 of the Corporation at a rate applicable to all such institu8 tions that the Board of Directors, in its sole discretion,

9 determines (after taking into account the adjustments de10 scribed in subsections (g), (h), and (j)) will cause the Sav11 ings Association Insurance Fund to achieve the designated

12 reserve ratio on the first business day of the 1st month

13 beginning after the date of the enactment of this Act.

14 (b) FACTORS TO BE CONSIDERED.—In carrying out

15 subsection (a), the Board of Directors shall base its deter16 mination on—

17 (1) the monthly Savings Association Insurance

18 Fund balance most recently calculated;

19 (2) data on insured deposits reported in the

20 most recent reports of condition filed not later than

21 70 days before the date of enactment of this Act by

22 insured depository institutions; and

23 (3) any other factors that the Board of Direc24 tors deems appropriate.

25 (c) DATE OF DETERMINATION.—For purposes of

26 subsection (a), the amount of the SAIF-assessable depos-
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1 its of an insured depository institution shall be determined

2 as of March 31, 1995.

3 (d) DATE PAYMENT DUE.—Except as provided in

4 subsection (g), the special assessment imposed under this

5 section shall be—

6 (1) due on the first business day of the 1st

7 month beginning after the date of the enactment of

8 this Act; and

9 (2) paid to the Corporation on the later of—

10 (A) the first business day of the 1st month

11 beginning after such date of enactment; or

12 (B) such other date as the Corporation

13 shall prescribe, but not later than 60 days after

14 the date of enactment of this Act.

15 (e) ASSESSMENT DEPOSITED IN SAIF.—Notwith16 standing any other provision of law, the proceeds of the

17 special assessment imposed under this section shall be de18 posited in the Savings Association Insurance Fund.

19 (f) EXEMPTIONS FOR CERTAIN INSTITUTIONS.—

20 (1) EXEMPTION FOR WEAK INSTITUTIONS.—

21 The Board of Directors may, by order, in its sole

22 discretion, exempt any insured depository institution

23 that the Board of Directors determines to be weak,

24 from paying the special assessment imposed under

25 this section if the Board of Directors determines
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1 that the exemption would reduce risk to the Savings

2 Association Insurance Fund.

3 (2) GUIDELINES REQUIRED.—Not later than 30

4 days after the date of enactment of this Act, the

5 Board of Directors shall prescribe guidelines setting

6 forth the criteria that the Board of Directors will

7 use in exempting institutions under paragraph (1).

8 Such guidelines shall be published in the Federal

9 Register.

10 (3) EXEMPTION FOR CERTAIN NEWLY CHAR11 TERED AND OTHER DEFINED INSTITUTIONS.—

12 (A) IN GENERAL.—In addition to the insti13 tutions exempted from paying the special as14 sessment under paragraph (1), the Board of

15 Directors shall exempt any insured depository

16 institution from payment of the special assess17 ment if the institution—

18 (i) was in existence on October 1,

19 1995, and held no SAIF-assessable depos20 its before January 1, 1993;

21 (ii) is a Federal savings bank which—

22 (I) was established de novo in

23 April 1994 in order to acquire the de24 posits of a savings association which
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1 was in default or in danger of default;

2 and

3 (II) received minority interim

4 capital assistance from the Resolution

5 Trust Corporation under section

6 21A(w) of the Federal Home Loan

7 Bank Act in connection with the ac8 quisition of any such savings associa9 tion; or

10 (iii) is a savings association, the de11 posits of which are insured by the Savings

12 Association Insurance Fund, which—

13 (I) before January 1, 1987, was

14 chartered as a Federal savings bank

15 insured by the Federal Savings and

16 Loan Insurance Corporation for the

17 purpose of acquiring all or substan18 tially all of the assets and assuming

19 all or substantially all of the deposit

20 liabilities of a national bank in a

21 transaction consummated after July

22 1, 1986; and

23 (II) as of the date of that trans24 action, had assets of less than

25 $150,000,000.
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1 (B) DEFINITION.—For purposes of this

2 paragraph, an institution shall be deemed to

3 have held SAIF-assessable deposits before Jan4 uary 1, 1993, if—

5 (i) it directly held SAIF-assessable de6 posits before that date; or

7 (ii) it succeeded to, acquired, pur8 chased, or otherwise holds any SAIF-as9 sessable deposits as of the date of enact10 ment of this Act that were SAIF-assess11 able deposits before January 1, 1993.

12 (4) EXEMPT INSTITUTIONS REQUIRED TO PAY

13 ASSESSMENTS AT FORMER RATES.—

14 (A) PAYMENTS TO SAIF AND DIF.—Any in15 sured depository institution that the Board of

16 Directors exempts under this subsection from

17 paying the special assessment imposed under

18 this section shall pay semiannual assessments—

19 (i) during calendar years 1996, 1997,

20 and 1998, into the Savings Association In21 surance Fund, based on SAIF-assessable

22 deposits of that institution, at assessment

23 rates calculated under the schedule in ef24 fect for Savings Association Insurance

25 Fund members on June 30, 1995; and
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1 (ii) during calendar year 1999—

2 (I) into the Deposit Insurance

3 Fund, based on SAIF-assessable de4 posits of that institution as of Decem5 ber 31, 1998, at assessment rates cal6 culated under the schedule in effect

7 for Savings Association Insurance

8 Fund members on June 30, 1995; or

9 (II) in accordance with clause (i),

10 if the Bank Insurance Fund and the

11 Savings Association Insurance Fund

12 are not merged into the Deposit In13 surance Fund.

14 (B) OPTIONAL PRO RATA PAYMENT OF

15 SPECIAL ASSESSMENT.—This paragraph shall

16 not apply with respect to any insured depository

17 institution (or successor insured depository in18 stitution) that has paid, during any calendar

19 year from 1997 through 1999, upon such terms

20 as the Corporation may announce, an amount

21 equal to the product of—

22 (i) 16.7 percent of the special assess23 ment that the institution would have been

24 required to pay under subsection (a), if the
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1 Board of Directors had not exempted the

2 institution; and

3 (ii) the number of full semiannual pe4 riods remaining between the date of the

5 payment and December 31, 1999.

6 (g) SPECIAL ELECTION FOR CERTAIN INSTITUTIONS

7 FACING HARDSHIP AS A RESULT OF THE SPECIAL AS8 SESSMENT.—

9 (1) ELECTION AUTHORIZED.—If—

10 (A) an insured depository institution, or

11 any depository institution holding company

12 which, directly or indirectly, controls such insti13 tution, is subject to terms or covenants in any

14 debt obligation or preferred stock outstanding

15 on September 13, 1995; and

16 (B) the payment of the special assessment

17 under subsection (a) would pose a significant

18 risk of causing such depository institution or

19 holding company to default or violate any such

20 term or covenant,

21 the depository institution may elect, with the ap22 proval of the Corporation, to pay such special as23 sessment in accordance with paragraphs (2) and (3)

24 in lieu of paying such assessment in the manner re25 quired under subsection (a).
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1 (2) FIRST ASSESSMENT.—An insured deposi2 tory institution which makes an election under para3 graph (1) shall pay an assessment in an amount

4 equal to 50 percent of the amount of the special as5 sessment that would otherwise apply under sub6 section (a), by the date on which such special assess7 ment is payable under subsection (d).

8 (3) SECOND ASSESSMENT.—An insured deposi9 tory institution which makes an election under para10 graph (1) shall pay a second assessment, by the date

11 established by the Board of Directors in accordance

12 with paragraph (4), in an amount equal to the prod13 uct of 51 percent of the rate determined by the

14 Board of Directors under subsection (a) for deter15 mining the amount of the special assessment and the

16 SAIF-assessable deposits of the institution on March

17 31, 1996, or such other date in calendar year 1996

18 as the Board of Directors determines to be appro19 priate.

20 (4) DUE DATE OF SECOND ASSESSMENT.—The

21 date established by the Board of Directors for the

22 payment of the assessment under paragraph (3) by

23 a depository institution shall be the earliest prac24 ticable date which the Board of Directors determines

25 to be appropriate, which is at least 15 days after the
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1 date used by the Board of Directors under para2 graph (3).

3 (5) SUPPLEMENTAL SPECIAL ASSESSMENT.—

4 An insured depository institution which makes an

5 election under paragraph (1) shall pay a supple6 mental special assessment, at the same time the pay7 ment under paragraph (3) is made, in an amount

8 equal to the product of—

9 (A) 50 percent of the rate determined by

10 the Board of Directors under subsection (a) for

11 determining the amount of the special assess12 ment; and

13 (B) 95 percent of the amount by which the

14 SAIF-assessable deposits used by the Board of

15 Directors for determining the amount of the 1st

16 assessment under paragraph (2) exceeds, if any,

17 the SAIF-assessable deposits used by the Board

18 for determining the amount of the second as19 sessment under paragraph (3).

20 (h) ADJUSTMENT OF SPECIAL ASSESSMENT FOR

21 CERTAIN BANK INSURANCE FUND MEMBER BANKS.—

22 (1) IN GENERAL.—For purposes of computing

23 the special assessment imposed under this section

24 with respect to a Bank Insurance Fund member

25 bank, the amount of any deposits of any insured de-
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1 pository institution which section 5(d)(3) of the Fed2 eral Deposit Insurance Act treats as insured by the

3 Savings Association Insurance Fund shall be re4 duced by 20 percent—

5 (A) if the adjusted attributable deposit

6 amount of the Bank Insurance Fund member

7 bank is less than 50 percent of the total domes8 tic deposits of that member bank as of June 30,

9 1995; or

10 (B) if, as of June 30, 1995, the Bank In11 surance Fund member—

12 (i) had an adjusted attributable de13 posit amount equal to less than 75 percent

14 of the total assessable deposits of that

15 member bank;

16 (ii) had total assessable deposits

17 greater than $5,000,000,000; and

18 (iii) was owned or controlled by a

19 bank holding company that owned or con20 trolled insured depository institutions hav21 ing an aggregate amount of deposits in22 sured or treated as insured by the Bank

23 Insurance Fund greater than the aggre24 gate amount of deposits insured or treated
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1 as insured by the Savings Association In2 surance Fund.

3 (2) ADJUSTED ATTRIBUTABLE DEPOSIT

4 AMOUNT.—For purposes of this subsection, the ‘‘ad5 justed attributable deposit amount’’ shall be deter6 mined in accordance with section 5(d)(3)(C) of the

7 Federal Deposit Insurance Act.

8 (i) ADJUSTMENT TO THE ADJUSTED ATTRIBUTABLE

9 DEPOSIT AMOUNT FOR CERTAIN BANK INSURANCE FUND

10 MEMBER BANKS.—Section 5(d)(3) of the Federal Deposit

11 Insurance Act (12 U.S.C. 1815(d)(3)) is amended—

12 (1) in subparagraph (C), by striking ‘‘The ad13 justed attributable deposit amount’’ and inserting

14 ‘‘Except as provided in subparagraph (K), the ad15 justed attributable deposit amount’’; and

16 (2) by adding at the end the following new sub17 paragraph:

18 ‘‘(K) ADJUSTMENT OF ADJUSTED ATTRIB19 UTABLE DEPOSIT AMOUNT.—The amount deter20 mined under subparagraph (C)(i) for deposits

21 acquired by March 31, 1995, shall be reduced

22 by 20 percent for purposes of computing the

23 adjusted attributable deposit amount for the

24 payment of any assessment for any semiannual

25 period that begins after the date of the enact-
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1 ment of the Deposit Insurance Funds Act of

2 1996 (other than the special assessment im3 posed under section 802(a) of such Act), for a

4 Bank Insurance Fund member bank that, as of

5 June 30, 1995—

6 ‘‘(i) had an adjusted attributable de7 posit amount that was less than 50 percent

8 of the total deposits of that member bank;

9 or

10 ‘‘(ii)(I) had an adjusted attributable

11 deposit amount equal to less than 75 per12 cent of the total assessable deposits of that

13 member bank;

14 ‘‘(II) had total assessable deposits

15 greater than $5,000,000,000; and

16 ‘‘(III) was owned or controlled by a

17 bank holding company that owned or con18 trolled insured depository institutions hav19 ing an aggregate amount of deposits in20 sured or treated as insured by the Bank

21 Insurance Fund greater than the aggre22 gate amount of deposits insured or treated

23 as insured by the Savings Association In24 surance Fund.’’.
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1 (j) ADJUSTMENT OF SPECIAL ASSESSMENT FOR

2 CERTAIN SAVINGS ASSOCIATIONS.—

3 (1) SPECIAL ASSESSMENT REDUCTION.—For

4 purposes of computing the special assessment im5 posed under this section, in the case of any con6 verted association, the amount of any deposits of

7 such association which were insured by the Savings

8 Association Insurance Fund as of March 31, 1995,

9 shall be reduced by 20 percent.

10 (2) CONVERTED ASSOCIATION.—For purposes

11 of this subsection, the term ‘‘converted association’’

12 means—

13 (A) any Federal savings association—

14 (i) that is a member of the Savings

15 Association Insurance Fund and that has

16 deposits subject to assessment by that

17 fund which did not exceed $4,000,000,000,

18 as of March 31, 1995; and

19 (ii) that had been, or is a successor by

20 merger, acquisition, or otherwise to an in21 stitution that had been, a State savings

22 bank, the deposits of which were insured

23 by the Federal Deposit Insurance Corpora24 tion before August 9, 1989, that converted

25 to a Federal savings association pursuant
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1 to section 5(i) of the Home Owners’ Loan

2 Act before January 1, 1985;

3 (B) a State depository institution that is a

4 member of the Savings Association Insurance

5 Fund that had been a State savings bank be6 fore October 15, 1982, and was a Federal sav7 ings association on August 9, 1989;

8 (C) an insured bank that—

9 (i) was established de novo in order to

10 acquire the deposits of a savings associa11 tion in default or in danger of default;

12 (ii) did not open for business before

13 acquiring the deposits of such savings as14 sociation; and

15 (iii) was a Savings Association Insur16 ance Fund member before the date of en17 actment of this Act; and

18 (D) an insured bank that—

19 (i) resulted from a savings association

20 before December 19, 1991, in accordance

21 with section 5(d)(2)(G) of the Federal De22 posit Insurance Act; and

23 (ii) had an increase in its capital in

24 conjunction with the conversion in an

25 amount equal to more than 75 percent of
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1 the capital of the institution on the day be2 fore the date of the conversion.

3 (k) EXEMPTION FOR CERTAIN INSTITUTIONS PAYING

4 EXIT AND ENTRANCE FEES.—The Board of Directors of

5 the Federal Deposit Insurance Corporation may, in the

6 sole discretion of the Board of Directors, exempt any in7 sured depository institution from paying the special as8 sessment imposed under subsection (a) if—

9 (1) the institution participated in a conversion

10 transaction pursuant to section 5(d)(2)(C) of the

11 Federal Deposit Insurance Act during the period be12 ginning on March 31, 1995, and ending on the date

13 of the enactment of this Act;

14 (2) exit and entrance fees have been assessed in

15 connection with such conversion transaction in ac16 cordance with subparagraphs (E) and (F) of section

17 5(d)(2) of the Federal Deposit Insurance Act; and

18 (3) as of the date of the enactment of this Act,

19 the institution—

20 (A) has paid, in whole or in part, the

21 amount of such exit and entrance fees; and

22 (B) is obligated to pay the balance of any

23 unpaid portion of any such fee in accordance

24 with a schedule agreed to by such Corporation.
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1 (l) TREATMENT OF EXISTING INSURED INSTITU2 TIONS FOR PURPOSES OF STATE AGE LAWS.—Section

3 3(d)(1)(B) of the Bank Holding Company Act of 1956

4 (12 U.S.C. 1842(d)(1)(B)) is amended by adding at the

5 end the following new clause:

6 ‘‘(iii) INAPPLICABILITY TO CONVER7 SIONS OF INSURED INSTITUTIONS.—Not8 withstanding clause (i), the Board may ap9 prove, pursuant to subparagraph (A), the

10 acquisition of a bank which has been

11 formed as the result of the conversion of

12 an existing insured institution subsidiary

13 of a savings and loan holding company to

14 a bank charter, if the existing insured de15 pository institution subsidiary, directly or

16 through 1 or more predecessor insured in17 stitutions (whether by merger, acquisition,

18 or otherwise), has been in existence for at

19 least 5 years before such acquisition.’’.

20 (m) DEPOSIT OF FEES INTO SAIF.—

21 (1) IN GENERAL.—Section 5(d)(2)(E)(i) of the

22 Federal Deposit Insurance Act (12 U.S.C.

23 1815(d)(2)(E)(i)) is amended by striking ‘‘subpara24 graph (F)) which—’’ and all that follows through

25 the semicolon at the end and inserting ‘‘subpara-
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1 graph (F)) which shall be deposited in the Savings

2 Association Insurance Fund before the calculation of

3 the special assessment under section 802 of the De4 posit Insurance Funds Act of 1996;’’.

5 (2) TREATMENT OF PRIOR FEES.—All fees col6 lected by the Federal Deposit Insurance Corporation

7 pursuant to section 5(d)(2)(E)(i) of the Federal De8 posit Insurance Act before the date of the enactment

9 of this Act which are held by the Corporation as of

10 such date shall be deposited in the Savings Associa11 tion Insurance Fund in accordance with such sec12 tion, as amended by paragraph (1) of this sub13 section.

14 SEC. 803. FINANCING CORPORATION FUNDING.

15 (a) IN GENERAL.—Section 21 of the Federal Home

16 Loan Bank Act (12 U.S.C. 1441) is amended—

17 (1) in subsection (f)(2)—

18 (A) in the matter immediately preceding

19 subparagraph (A)—

20 (i) by striking ‘‘To the extent the

21 amounts available pursuant to paragraph

22 (1) are insufficient to cover the amount of

23 interest payments, issuance costs, and cus24 todial fees,’’ and inserting ‘‘In addition to
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1 the amounts obtained pursuant to para2 graph (1),’’;

3 (ii) by striking ‘‘Savings Association

4 Insurance Fund member’’ and inserting

5 ‘‘insured depository institution’’; and

6 (iii) by striking ‘‘members’’ and in7 serting ‘‘institutions’’; and

8 (B) by striking ‘‘, except that—’’ and all

9 that follows through the end of the paragraph

10 and inserting ‘‘, except that—

11 ‘‘(A) the assessments imposed on insured

12 depository institutions with respect to any BIF13 assessable deposit shall be assessed at a rate

equal to 1 14 ⁄5 of the rate of the assessments im15 posed on insured depository institutions with

16 respect to any SAIF-assessable deposit; and

17 ‘‘(B) no limitation under clause (i) or (iii)

18 of section 7(b)(2)(A) of the Federal Deposit In19 surance Act shall apply for purposes of this

20 paragraph.’’; and

21 (2) in subsection (k)—

22 (A) by striking ‘‘section—’’ and inserting

23 ‘‘section, the following definitions shall apply:’’;

24 (B) by striking paragraph (1);
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1 (C) by redesignating paragraphs (2) and

2 (3) as paragraphs (1) and (2), respectively; and

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

4 paragraphs:

5 ‘‘(3) INSURED DEPOSITORY INSTITUTION.—The

6 term ‘insured depository institution’ has the same

7 meaning as in section 3 of the Federal Deposit In8 surance Act

9 ‘‘(4) DEPOSIT TERMS.—

10 ‘‘(A) BIF-ASSESSABLE DEPOSITS.—The

11 term ‘BIF-assessable deposit’ means a deposit

12 that is subject to assessment for purposes of

13 the Bank Insurance Fund under the Federal

14 Deposit Insurance Act (including a deposit that

15 is treated as a deposit insured by the Bank In16 surance Fund under section 5(d)(3) of the Fed17 eral Deposit Insurance Act).

18 ‘‘(B) SAIF-ASSESSABLE DEPOSIT.—The

19 term ‘SAIF-assessable deposit’ has the meaning

20 given to such term in section 810 of the De21 posit Insurance Funds Act of 1996.’’.

22 (b) CONFORMING AMENDMENT.—Section 7(b)(2) of

23 the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2))

24 is amended by striking subparagraph (D).

25 (c) EFFECTIVE DATE.—
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1 (1) IN GENERAL.—Subsections (a) and (c) and

2 the amendments made by such subsections shall

3 apply with respect to semiannual periods which

4 begin after December 31, 1996.

5 (2) TERMINATION OF CERTAIN ASSESSMENT

6 RATES.—Subparagraph (A) of section 21(f)(2) of

7 the Federal Home Loan Bank Act (as amended by

8 subsection (a)) shall not apply after the earlier of—

9 (A) December 31, 1999; or

10 (B) the date as of which the last savings

11 association ceases to exist.

12 (d) PROHIBITION ON DEPOSIT SHIFTING.—

13 (1) IN GENERAL.—Effective as of the date of

14 the enactment of this Act and ending on the date

15 provided in subsection (c)(2) of this section, the

16 Comptroller of the Currency, the Board of Directors

17 of the Federal Deposit Insurance Corporation, the

18 Board of Governors of the Federal Reserve System,

19 and the Director of the Office of Thrift Supervision

20 shall take such actions as are necessary, including

21 enforcement actions, denial of applications, or impo22 sition of entrance and exit fees as if such trans23 actions qualified as conversion transactions pursuant

24 to section 5(d) of the Federal Deposit Insurance

25 Act, to prevent insured depository institutions and
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1 depository institution holding companies from facili2 tating or encouraging the shifting of deposits from

3 SAIF-assessable deposits to BIF-assessable deposits

4 (as defined in section 21(k) of the Federal Home

5 Loan Bank Act) for the purpose of evading the as6 sessments imposed on insured depository institutions

7 with respect to SAIF-assessable deposits under sec8 tion 7(b) of the Federal Deposit Insurance Act and

9 section 21(f)(2) of the Federal Home Loan Bank

10 Act.

11 (2) REGULATIONS.—The Board of Directors of

12 the Federal Deposit Insurance Corporation may

13 issue regulations, including regulations defining

14 terms used in paragraph (1), to prevent the shifting

15 of deposits described in such paragraph.

16 (3) RULE OF CONSTRUCTION.—No provision of

17 this subsection shall be construed as prohibiting con18 duct or activity of any insured depository institution

19 which—

20 (A) is undertaken in the ordinary course of

21 business of such depository institution; and

22 (B) is not directed towards the depositors

23 of an insured depository institution affiliate (as

24 defined in section 2(k) of the Financial Services
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1 Holding Company Act of 1996) of such deposi2 tory institution.

3 SEC. 804. MERGER OF BIF AND SAIF.

4 (a) IN GENERAL.—

5 (1) MERGER.—The Bank Insurance Fund and

6 the Savings Association Insurance Fund shall be

7 merged into the Deposit Insurance Fund established

8 by section 11(a)(4) of the Federal Deposit Insurance

9 Act, as amended by this section.

10 (2) DISPOSITION OF ASSETS AND LIABIL11 ITIES.—All assets and liabilities of the Bank Insur12 ance Fund and the Savings Association Insurance

13 Fund shall be transferred to the Deposit Insurance

14 Fund.

15 (3) NO SEPARATE EXISTENCE.—The separate

16 existence of the Bank Insurance Fund and the Sav17 ings Association Insurance Fund shall cease.

18 (b) SPECIAL RESERVE OF THE DEPOSIT INSURANCE

19 FUND.—

20 (1) IN GENERAL.—Immediately before the

21 merger of the Bank Insurance Fund and the Sav22 ings Association Insurance Fund, if the reserve ratio

23 of the Savings Association Insurance Fund exceeds

24 the designated reserve ratio, the amount by which

25 that reserve ratio exceeds the designated reserve
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1 ratio shall be placed in the Special Reserve of the

2 Deposit Insurance Fund, established under section

3 11(a)(5) of the Federal Deposit Insurance Act, as

4 amended by this section.

5 (2) DEFINITION.—For purposes of this sub6 section, the term ‘‘reserve ratio’’ means the ratio of

7 the net worth of the Savings Association Insurance

8 Fund to the aggregate estimated amount of deposits

9 insured by the Savings Association Insurance Fund.

10 (c) EFFECTIVE DATE.—This section and the amend11 ments made by this section shall become effective on Janu12 ary 1, 1999, if no insured depository institution is a sav13 ings association on that date.

14 (d) TECHNICAL AND CONFORMING AMENDMENTS.—

15 (1) DEPOSIT INSURANCE FUND.—Section

16 11(a)(4) of the Federal Deposit Insurance Act (12

17 U.S.C. 1821(a)(4)) is amended—

18 (A) by redesignating subparagraph (B) as

19 subparagraph (C);

20 (B) by striking subparagraph (A) and in21 serting the following:

22 ‘‘(A) ESTABLISHMENT.—There is estab23 lished the Deposit Insurance Fund, which the

24 Corporation shall—

25 ‘‘(i) maintain and administer;
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1 ‘‘(ii) use to carry out its insurance

2 purposes in the manner provided by this

3 subsection; and

4 ‘‘(iii) invest in accordance with section

5 13(a).

6 ‘‘(B) USES.—The Deposit Insurance Fund

7 shall be available to the Corporation for use

8 with respect to Deposit Insurance Fund mem9 bers.’’; and

10 (C) by striking ‘‘(4) GENERAL PROVISIONS

11 RELATING TO FUNDS.—’’ and inserting the fol12 lowing:

13 ‘‘(4) ESTABLISHMENT OF THE DEPOSIT INSUR14 ANCE FUND.—’’.

15 (2) OTHER REFERENCES.—Section 11(a)(4)(C)

16 of the Federal Deposit Insurance Act (12 U.S.C.

17 1821(a)(4)(C), as redesignated by paragraph (1) of

18 this subsection) is amended by striking ‘‘Bank In19 surance Fund and the Savings Association Insur20 ance Fund’’ and inserting ‘‘Deposit Insurance

21 Fund’’.

22 (3) DEPOSITS INTO FUND.—Section 11(a)(4) of

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

24 1821(a)(4)) is amended by adding at the end the

25 following new subparagraph:
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1 ‘‘(D) DEPOSITS.—All amounts assessed

2 against insured depository institutions by the

3 Corporation shall be deposited in the Deposit

4 Insurance Fund.’’.

5 (4) SPECIAL RESERVE OF DEPOSITS.—Section

6 11(a)(5) of the Federal Deposit Insurance Act (12

7 U.S.C. 1821(a)(5)) is amended to read as follows:

8 ‘‘(5) SPECIAL RESERVE OF DEPOSIT INSUR9 ANCE FUND.—

10 ‘‘(A) ESTABLISHMENT.—

11 ‘‘(i) IN GENERAL.—There is estab12 lished a Special Reserve of the Deposit In13 surance Fund, which shall be administered

14 by the Corporation and shall be invested in

15 accordance with section 13(a).

16 ‘‘(ii) LIMITATION.—The Corporation

17 shall not provide any assessment credit, re18 fund, or other payment from any amount

19 in the Special Reserve.

20 ‘‘(B) EMERGENCY USE OF SPECIAL RE21 SERVE.—Notwithstanding subparagraph (A)(ii),

22 the Corporation may, in its sole discretion,

23 transfer amounts from the Special Reserve to

24 the Deposit Insurance Fund, for the purposes

25 set forth in paragraph (4), only if—
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1 ‘‘(i) the reserve ratio of the Deposit

2 Insurance Fund is less than 50 percent of

3 the designated reserve ratio; and

4 ‘‘(ii) the Corporation expects the re5 serve ratio of the Deposit Insurance Fund

6 to remain at less than 50 percent of the

7 designated reserve ratio for each of the

8 next 4 calendar quarters.

9 ‘‘(C) EXCLUSION OF SPECIAL RESERVE IN

10 CALCULATING RESERVE RATIO.—Notwithstand11 ing any other provision of law, any amounts in

12 the Special Reserve shall be excluded in cal13 culating the reserve ratio of the Deposit Insur14 ance Fund under section 7.’’.

15 (5) FEDERAL HOME LOAN BANK ACT.—Section

16 21B(f)(2)(C)(ii) of the Federal Home Loan Bank

17 Act (12 U.S.C. 1441b(f)(2)(C)(ii)) is amended—

18 (A) in subclause (I), by striking ‘‘to Sav19 ings Associations Insurance Fund members’’

20 and inserting ‘‘to insured depository institu21 tions, and their successors, which were Savings

22 Association Insurance Fund members on Sep23 tember 1, 1995’’; and

24 (B) in subclause (II), by striking ‘‘to Sav25 ings Associations Insurance Fund members’’
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1 and inserting ‘‘to insured depository institu2 tions, and their successors, which were Savings

3 Association Insurance Fund members on Sep4 tember 1, 1995’’.

5 (6) REPEALS.—

6 (A) SECTION 3.—Section 3(y) of the Fed7 eral Deposit Insurance Act (12 U.S.C. 1813(y))

8 is amended to read as follows:

9 ‘‘(y) DEFINITIONS RELATING TO THE DEPOSIT IN10 SURANCE FUND.—

11 ‘‘(1) DEPOSIT INSURANCE FUND.—The term

12 ‘Deposit Insurance Fund’ means the fund estab13 lished under section 11(a)(4).

14 ‘‘(2) RESERVE RATIO.—The term ‘reserve ratio’

15 means the ratio of the net worth of the Deposit In16 surance Fund to aggregate estimated insured depos17 its held in all insured depository institutions.

18 ‘‘(3) DESIGNATED RESERVE RATIO.—The des19 ignated reserve ratio of the Deposit Insurance Fund

20 for each year shall be—

21 ‘‘(A) 1.25 percent of estimated insured de22 posits; or

23 ‘‘(B) a higher percentage of estimated in24 sured deposits that the Board of Directors de25 termines to be justified for that year by cir-
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1 cumstances raising a significant risk of sub2 stantial future losses to the fund.

3 (B) SECTION 7.—Section 7 of the Federal

4 Deposit Insurance Act (12 U.S.C. 1817) is

5 amended—

6 (i) by striking subsection (l);

7 (ii) by redesignating subsections (m)

8 and (n) as subsections (l) and (m), respec9 tively;

10 (iii) in subsection (b)(2), by striking

11 subparagraphs (B) and (F), and by redes12 ignating subparagraphs (C), (E), (G), and

13 (H) as subparagraphs (B) through (E), re14 spectively.

15 (C) SECTION 11.—Section 11(a) of the

16 Federal Deposit Insurance Act (12 U.S.C.

17 1821(a)) is amended—

18 (i) by striking paragraphs (6) and (7);

19 and

20 (ii) by redesignating paragraph (8) as

21 paragraph (6).

22 (7) SECTION 5136 OF THE REVISED STAT23 UTES.—The paragraph designated the ‘‘Eleventh’’ of

24 section 5136 of the Revised Statutes (12 U.S.C. 24)

25 is amended in the fifth sentence, by striking ‘‘af-
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•HR 4079 IH

1 fected deposit insurance fund’’ and inserting ‘‘De2 posit Insurance Fund’’.

3 (8) INVESTMENTS PROMOTING PUBLIC WEL4 FARE; LIMITATIONS ON AGGREGATE INVEST5 MENTS.—The twenty-third undesignated paragraph

6 of section 9 of the Federal Reserve Act (12 U.S.C.

7 338a) is amended in the 4th sentence, by striking

8 ‘‘affected deposit insurance fund’’ and inserting

9 ‘‘Deposit Insurance Fund’’.

10 (9) ADVANCES TO CRITICALLY UNDERCAPITAL11 IZED DEPOSITORY INSTITUTIONS.—Section

12 10B(b)(3)(A)(ii) of the Federal Reserve Act (12

13 U.S.C. 347b(b)(3)(A)(ii)) is amended by striking

14 ‘‘any deposit insurance fund in’’ and inserting ‘‘the

15 Deposit Insurance Fund of’’.

16 (10) AMENDMENTS TO THE BALANCED BUDGET

17 AND EMERGENCY DEFICIT CONTROL ACT OF 1985.—

18 Section 255(g)(1)(A) of the Balanced Budget and

19 Emergency Deficit Control Act of 1985 (2 U.S.C.

20 905(g)(1)(A)) is amended—

21 (A) by striking ‘‘Bank Insurance Fund’’

22 and inserting ‘‘Deposit Insurance Fund’’; and

23 (B) by striking ‘‘Federal Deposit Insur24 ance Corporation, Savings Association Insur25 ance Fund;’’.
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1 (11) FURTHER AMENDMENTS TO THE FEDERAL

2 HOME LOAN BANK ACT.—The Federal Home Loan

3 Bank Act (12 U.S.C. 1421 et seq.) is amended—

4 (A) in section 11(k) (12 U.S.C.

5 1431(k))—

6 (i) in the subsection heading, by strik7 ing ‘‘SAIF’’ and inserting ‘‘THE DEPOSIT

8 INSURANCE FUND’’; and

9 (ii) by striking ‘‘Savings Association

10 Insurance Fund’’ each place such term ap11 pears and inserting ‘‘Deposit Insurance

12 Fund’’;

13 (B) in section 21A(b)(4)(B) (12 U.S.C.

14 1441a(b)(4)(B)), by striking ‘‘affected deposit

15 insurance fund’’ and inserting ‘‘Deposit Insur16 ance Fund’’;

17 (C) in section 21A(b)(6)(B) (12 U.S.C.

18 1441a(b)(6)(B))—

19 (i) in the subparagraph heading, by

20 striking ‘‘SAIF-INSURED BANKS’’ and in21 serting ‘‘CHARTER CONVERSIONS’’; and

22 (ii) by striking ‘‘Savings Association

23 Insurance Fund member’’ and inserting

24 ‘‘savings association’’;
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1 (D) in section 21A(b)(10)(A)(iv)(II) (12

2 U.S.C. 1441a(b)(10)(A)(iv)(II)), by striking

3 ‘‘Savings Association Insurance Fund’’ and in4 serting ‘‘Deposit Insurance Fund’’;

5 (E) in section 21B(e) (12 U.S.C.

6 1441b(e))—

7 (i) in paragraph (5), by inserting ‘‘as

8 of the date of funding’’ after ‘‘Savings As9 sociation Insurance Fund members’’ each

10 place such term appears;

11 (ii) by striking paragraph (7); and

12 (iii) by redesignating paragraph (8) as

13 paragraph (7); and

14 (F) in section 21B(k) (12 U.S.C.

15 1441b(k))—

16 (i) by striking paragraph (8); and

17 (ii) by redesignating paragraphs (9)

18 and (10) as paragraphs (8) and (9), re19 spectively.

20 (12) AMENDMENTS TO THE HOME OWNERS’

21 LOAN ACT.—The Home Owners’ Loan Act (12

22 U.S.C. 1461 et seq.) is amended—

23 (A) in section 5—
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1 (i) in subsection (c)(5)(A), by striking

2 ‘‘that is a member of the Bank Insurance

3 Fund’’;

4 (ii) in subsection (c)(6), by striking

5 ‘‘As used in this subsection—’’ and insert6 ing ‘‘For purposes of this subsection, the

7 following definitions shall apply:’’;

8 (iii) in subsection (o)(1), by striking

9 ‘‘that is a Bank Insurance Fund member’’;

10 (iv) in subsection (o)(2)(A), by strik11 ing ‘‘a Bank Insurance Fund member until

12 such time as it changes its status to a Sav13 ings Association Insurance Fund member’’

14 and inserting ‘‘insured by the Deposit In15 surance Fund’’;

16 (v) in subsection (t)(5)(D)(iii)(II), by

17 striking ‘‘affected deposit insurance fund’’

18 and inserting ‘‘Deposit Insurance Fund’’;

19 (vi) in subsection (t)(7)(C)(i)(I), by

20 striking ‘‘affected deposit insurance fund’’

21 and inserting ‘‘Deposit Insurance Fund’’;

22 and

23 (vii) in subsection (v)(2)(A)(i), by

24 striking ‘‘, the Savings Association Insur-
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•HR 4079 IH

1 ance Fund’’ and inserting ‘‘or the Deposit

2 Insurance Fund’’; and

3 (B) in section 10—

4 (i) in subsection (e)(1)(A)(iii)(VII), by

5 adding ‘‘or’’ at the end;

6 (ii) in subsection (e)(1)(A)(iv), by

7 adding ‘‘and’’ at the end;

8 (iii) in subsection (e)(1)(B), by strik9 ing ‘‘Savings Association Insurance Fund

10 or Bank Insurance Fund’’ and inserting

11 ‘‘Deposit Insurance Fund’’;

12 (iv) in subsection (e)(2), by striking

13 ‘‘Savings Association Insurance Fund or

14 the Bank Insurance Fund’’ and inserting

15 ‘‘Deposit Insurance Fund’’; and

16 (v) in subsection (m)(3), by striking

17 subparagraph (E), and by redesignating

18 subparagraphs (F), (G), and (H) as sub19 paragraphs (E), (F), and (G), respectively.

20 (13) AMENDMENTS TO THE NATIONAL HOUSING

21 ACT.—The National Housing Act (12 U.S.C. 1701

22 et seq.) is amended—

23 (A) in section 317(b)(1)(B) (12 U.S.C.

24 1723i(b)(1)(B)), by striking ‘‘Bank Insurance

25 Fund for banks or through the Savings Asso-
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•HR 4079 IH

1 ciation Insurance Fund for savings associa2 tions’’ and inserting ‘‘Deposit Insurance Fund’’;

3 and

4 (B) in section 526(b)(1)(B)(ii) (12 U.S.C.

5 1735f–14(b)(1)(B)(ii)), by striking ‘‘Bank In6 surance Fund for banks and through the Sav7 ings Association Insurance Fund for savings as8 sociations’’ and inserting ‘‘Deposit Insurance

9 Fund’’.

10 (14) FURTHER AMENDMENTS TO THE FEDERAL

11 DEPOSIT INSURANCE ACT.—The Federal Deposit In12 surance Act (12 U.S.C. 1811 et seq.) is amended—

13 (A) in section 3(a)(1) (12 U.S.C.

14 1813(a)(1)), by striking subparagraph (B) and

15 inserting the following:

16 ‘‘(B) includes any former savings associa17 tion.’’;

18 (B) in section 5(b)(5) (12 U.S.C.

19 1815(b)(5)), by striking ‘‘the Bank Insurance

20 Fund or the Savings Association Insurance

21 Fund;’’ and inserting ‘‘Deposit Insurance

22 Fund,’’;

23 (C) in section 5(d) (12 U.S.C. 1815(d)),

24 by striking paragraphs (2) and (3);
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•HR 4079 IH

1 (D) in section 5(d)(1) (12 U.S.C.

2 1815(d)(1))—

3 (i) in subparagraph (A), by striking

4 ‘‘reserve ratios in the Bank Insurance

5 Fund and the Savings Association Insur6 ance Fund’’ and inserting ‘‘the reserve

7 ratio of the Deposit Insurance Fund’’;

8 (ii) by striking subparagraph (B) and

9 inserting the following:

10 ‘‘(2) FEE CREDITED TO THE DEPOSIT INSUR11 ANCE FUND.—The fee paid by the depository insti12 tution under paragraph (1) shall be credited to the

13 Deposit Insurance Fund.’’;

14 (iii) by striking ‘‘(1) UNINSURED IN15 STITUTIONS.—’’; and

16 (iv) by redesignating subparagraphs

17 (A) and (C) as paragraphs (1) and (3), re18 spectively, and moving the margins 2 ems

19 to the left;

20 (E) in section 5(e) (12 U.S.C. 1815(e))—

21 (i) in paragraph (5)(A), by striking

22 ‘‘Bank Insurance Fund or the Savings As23 sociation Insurance Fund’’ and inserting

24 ‘‘Deposit Insurance Fund’’;

25 (ii) by striking paragraph (6); and
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•HR 4079 IH

1 (iii) by redesignating paragraphs (7),

2 (8), and (9) as paragraphs (6), (7), and

3 (8), respectively;

4 (F) in section 6(5) (12 U.S.C. 1816(5)),

5 by striking ‘‘Bank Insurance Fund or the Sav6 ings Association Insurance Fund’’ and inserting

7 ‘‘Deposit Insurance Fund’’;

8 (G) in section 7(b) (12 U.S.C. 1817(b))—

9 (i) in paragraph (1)(D), by striking

10 ‘‘each deposit insurance fund’’ and insert11 ing ‘‘the Deposit Insurance Fund’’;

12 (ii) in clauses (i)(I) and (iv) of para13 graph (2)(A), by striking ‘‘each deposit in14 surance fund’’ each place such term ap15 pears and inserting ‘‘the Deposit Insurance

16 Fund’’;

17 (iii) in paragraph (2)(A)(iii), by strik18 ing ‘‘a deposit insurance fund’’ and insert19 ing ‘‘the Deposit Insurance Fund’’;

20 (iv) by striking clause (iv) of para21 graph (2)(A);

22 (v) in paragraph (2)(C) (as redesig23 nated by paragraph (6)(B) of this sub24 section)—
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•HR 4079 IH

1 (I) by striking ‘‘any deposit in2 surance fund’’ and inserting ‘‘the De3 posit Insurance Fund’’; and

4 (II) by striking ‘‘that fund’’ each

5 place such term appears and inserting

6 ‘‘the Deposit Insurance Fund’’;

7 (vi) in paragraph (2)(D) (as redesig8 nated by paragraph (6)(B) of this sub9 section)—

10 (I) in the subparagraph heading,

11 by striking ‘‘FUNDS ACHIEVE’’ and in12 serting ‘‘FUND ACHIEVES’’; and

13 (II) by striking ‘‘a deposit insur14 ance fund’’ and inserting ‘‘the Deposit

15 Insurance Fund’’;

16 (vii) in paragraph (3)—

17 (I) in the paragraph heading, by

18 striking ‘‘FUNDS’’ and inserting

19 ‘‘FUND’’;

20 (II) by striking ‘‘members of that

21 fund’’ where such term appears in the

22 portion of subparagraph (A) which

23 precedes clause (i) of such subpara24 graph and inserting ‘‘insured deposi25 tory institutions’’;
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•HR 4079 IH

1 (III) by striking ‘‘that fund’’

2 each place such term appears (other

3 than in connection with term amended

4 in subclause (II) of this clause) and

5 inserting ‘‘the Deposit Insurance

6 Fund’’;

7 (IV) in subparagraph (A), by

8 striking ‘‘Except as provided in para9 graph (2)(F), if’’ and inserting ‘‘If’’;

10 (V) in subparagraph (A), by

11 striking ‘‘any deposit insurance fund’’

12 and inserting ‘‘the Deposit Insurance

13 Fund’’; and

14 (VI) by striking subparagraphs

15 (C) and (D) and inserting the follow16 ing:

17 ‘‘(C) AMENDING SCHEDULE.—The Cor18 poration may, by regulation, amend a schedule

19 promulgated under subparagraph (B).’’; and

20 (viii) in paragraph (6)—

21 (I) by striking ‘‘any such assess22 ment’’ and inserting ‘‘any such assess23 ment is necessary’’;

24 (II) by striking ‘‘(A) is nec25 essary—’’;
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•HR 4079 IH

1 (III) by striking subparagraph

2 (B);

3 (IV) by redesignating clauses (i),

4 (ii), and (iii) as subparagraphs (A),

5 (B), and (C), respectively, and moving

6 the margins 2 ems to the left; and

7 (V) in subparagraph (C) (as re8 designated), by striking ‘‘; and’’ and

9 inserting a period;

10 (H) in section 11(f)(1) (12 U.S.C.

11 1821(f)(1)), by striking ‘‘, except that—’’ and

12 all that follows through the end of the para13 graph and inserting a period;

14 (I) in section 11(i)(3) (12 U.S.C.

15 1821(i)(3))—

16 (i) by striking subparagraph (B);

17 (ii) by redesignating subparagraph

18 (C) as subparagraph (B); and

19 (iii) in subparagraph (B) (as redesig20 nated), by striking ‘‘subparagraphs (A)

21 and (B)’’ and inserting ‘‘subparagraph

22 (A)’’;

23 (J) in section 11A(a) (12 U.S.C.

24 1821a(a))—
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1 (i) in paragraph (2), by striking ‘‘LI2 ABILITIES.—’’ and all that follows through

3 ‘‘Except’’ and inserting ‘‘LIABILITIES.—

4 Except’’;

5 (ii) by striking paragraph (2)(B); and

6 (iii) in paragraph (3), by striking ‘‘the

7 Bank Insurance Fund, the Savings Asso8 ciation Insurance Fund,’’ and inserting

9 ‘‘the Deposit Insurance Fund’’;

10 (K) in section 11A(b) (12 U.S.C.

11 1821a(b)), by striking paragraph (4);

12 (L) in section 11A(f) (12 U.S.C.

13 1821a(f)), by striking ‘‘Savings Association In14 surance Fund’’ and inserting ‘‘Deposit Insur15 ance Fund’’;

16 (M) in section 13 (12 U.S.C. 1823)—

17 (i) in subsection (a)(1), by striking

18 ‘‘Bank Insurance Fund, the Savings Asso19 ciation Insurance Fund,’’ and inserting

20 ‘‘Deposit Insurance Fund, the Special Re21 serve of the Deposit Insurance Fund,’’;

22 (ii) in subsection (c)(4)(E)—

23 (I) in the subparagraph heading,

24 by striking ‘‘FUNDS’’ and inserting

25 ‘‘FUND’’; and
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1 (II) in clause (i), by striking

2 ‘‘any insurance fund’’ and inserting

3 ‘‘the Deposit Insurance Fund’’;

4 (iii) in subsection (c)(4)(G)(ii)—

5 (I) by striking ‘‘appropriate in6 surance fund’’ and inserting ‘‘Deposit

7 Insurance Fund’’;

8 (II) by striking ‘‘the members of

9 the insurance fund (of which such in10 stitution is a member)’’ and inserting

11 ‘‘insured depository institutions’’;

12 (III) by striking ‘‘each mem13 ber’s’’ and inserting ‘‘each insured de14 pository institution’s’’; and

15 (IV) by striking ‘‘the member’s’’

16 each place such term appears and in17 serting ‘‘the institution’s’’;

18 (iv) in subsection (c), by striking

19 paragraph (11);

20 (v) in subsection (h), by striking

21 ‘‘Bank Insurance Fund’’ and inserting

22 ‘‘Deposit Insurance Fund’’;

23 (vi) in subsection (k)(4)(B)(i), by

24 striking ‘‘Savings Association Insurance
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•HR 4079 IH

1 Fund’’ and inserting ‘‘Deposit Insurance

2 Fund’’; and

3 (vii) in subsection (k)(5)(A), by strik4 ing ‘‘Savings Association Insurance Fund’’

5 and inserting ‘‘Deposit Insurance Fund’’;

6 (N) in section 14(a) (12 U.S.C. 1824(a))

7 in the 5th sentence—

8 (i) by striking ‘‘Bank Insurance Fund

9 or the Savings Association Insurance

10 Fund’’ and inserting ‘‘Deposit Insurance

11 Fund’’; and

12 (ii) by striking ‘‘each such fund’’ and

13 inserting ‘‘the Deposit Insurance Fund’’;

14 (O) in section 14(b) (12 U.S.C. 1824(b)),

15 by striking ‘‘Bank Insurance Fund or Savings

16 Association Insurance Fund’’ and inserting

17 ‘‘Deposit Insurance Fund’’;

18 (P) in section 14(c) (12 U.S.C. 1824(c)),

19 by striking paragraph (3);

20 (Q) in section 14(d) (12 U.S.C.

21 1824(d))—

22 (i) by striking ‘‘BIF’’ each place such

23 term appears and inserting ‘‘DIF’’; and
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1 (ii) by striking ‘‘Bank Insurance

2 Fund’’ each place such term appears and

3 inserting ‘‘Deposit Insurance Fund’’;

4 (R) in section 15(c)(5) (12 U.S.C.

5 1825(c)(5))—

6 (i) by striking ‘‘the Bank Insurance

7 Fund or Savings Association Insurance

8 Fund, respectively’’ each place such term

9 appears and inserting ‘‘the Deposit Insur10 ance Fund’’; and

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

12 ‘‘the Bank Insurance Fund or the Savings

13 Association Insurance Fund, respectively’’

14 and inserting ‘‘the Deposit Insurance

15 Fund’’;

16 (S) in section 17(a) (12 U.S.C. 1827(a))—

17 (i) in the subsection heading, by strik18 ing ‘‘BIF, SAIF,’’ and inserting ‘‘THE DE19 POSIT INSURANCE FUND’’; and

20 (ii) in paragraph (1), by striking ‘‘the

21 Bank Insurance Fund, the Savings Asso22 ciation Insurance Fund,’’ each place such

23 term appears and inserting ‘‘the Deposit

24 Insurance Fund’’;
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•HR 4079 IH

1 (T) in section 17(d) (12 U.S.C. 1827(d)),

2 by striking ‘‘the Bank Insurance Fund, the

3 Savings Association Insurance Fund,’’ each

4 place such term appears and inserting ‘‘the De5 posit Insurance Fund’’;

6 (U) in section 18(m)(3) (12 U.S.C.

7 1828(m)(3))—

8 (i) by striking ‘‘Savings Association

9 Insurance Fund’’ each place such term ap10 pears and inserting ‘‘Deposit Insurance

11 Fund’’; and

12 (ii) in subparagraph (C), by striking

13 ‘‘or the Bank Insurance Fund’’;

14 (V) in section 18(p) (12 U.S.C. 1828(p)),

15 by striking ‘‘deposit insurance funds’’ and in16 serting ‘‘Deposit Insurance Fund’’;

17 (W) in section 24 (12 U.S.C. 1831a) in

18 subsections (a)(1) and (d)(1)(A), by striking

19 ‘‘appropriate deposit insurance fund’’ each

20 place such term appears and inserting ‘‘Deposit

21 Insurance Fund’’;

22 (X) in section 28 (12 U.S.C. 1831e), by

23 striking ‘‘affected deposit insurance fund’’ each

24 place such term appears and inserting ‘‘Deposit

25 Insurance Fund’’;
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•HR 4079 IH

1 (Y) by striking section 31 (12 U.S.C.

2 1831h);

3 (Z) in section 36(i)(3) (12 U.S.C.

4 1831m(i)(3)) by striking ‘‘affected deposit in5 surance fund’’ and inserting ‘‘Deposit Insur6 ance Fund’’;

7 (AA) in section 38(a) (12 U.S.C.

8 1831o(a)) in the subsection heading, by striking

9 ‘‘FUNDS’’ and inserting ‘‘FUND’’;

10 (BB) in section 38(k) (12 U.S.C.

11 1831o(k))—

12 (i) in paragraph (1), by striking ‘‘a

13 deposit insurance fund’’ and inserting ‘‘the

14 Deposit Insurance Fund’’; and

15 (ii) in paragraph (2)(A)—

16 (I) by striking ‘‘A deposit insur17 ance fund’’ and inserting ‘‘The De18 posit Insurance Fund’’; and

19 (II) by striking ‘‘the deposit in20 surance fund’s outlays’’ and inserting

21 ‘‘the outlays of the Deposit Insurance

22 Fund’’; and

23 (CC) in section 38(o) (12 U.S.C.

24 1831o(o))—
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1 (i) by striking ‘‘ASSOCIATIONS.—’’

2 and all that follows through ‘‘Subsections

3 (e)(2)’’ and inserting ‘‘ASSOCIATIONS.—

4 Subsections (e)(2)’’;

5 (ii) by redesignating subparagraphs

6 (A), (B), and (C) as paragraphs (1), (2),

7 and (3), respectively, and moving the mar8 gins 2 ems to the left; and

9 (iii) in paragraph (1) (as redesig10 nated), by redesignating clauses (i) and (ii)

11 as subparagraphs (A) and (B), respec12 tively, and moving the margins 2 ems to

13 the left.

14 (15) AMENDMENTS TO THE FINANCIAL INSTI15 TUTIONS REFORM, RECOVERY, AND ENFORCEMENT

16 ACT OF 1989.—The Financial Institutions Reform,

17 Recovery, and Enforcement Act is amended—

18 (A) in section 951(b)(3)(B) (12 U.S.C.

19 1833a(b)(3)(B)), by striking ‘‘Bank Insurance

20 Fund, the Savings Association Insurance

21 Fund,’’ and inserting ‘‘Deposit Insurance

22 Fund’’; and

23 (B) in section 1112(c)(1)(B) (12 U.S.C.

24 3341(c)(1)(B)), by striking ‘‘Bank Insurance

25 Fund, the Savings Association Insurance
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•HR 4079 IH

1 Fund,’’ and inserting ‘‘Deposit Insurance

2 Fund’’.

3 (16) AMENDMENT TO THE BANK ENTERPRISE

4 ACT OF 1991.—Section 232(a)(1) of the Bank Enter5 prise Act of 1991 (12 U.S.C. 1834(a)(1)) is amend6 ed by striking ‘‘section 7(b)(2)(H)’’ and inserting

7 ‘‘section 7(b)(2)(G)’’.

8 (17) AMENDMENT TO THE BANK HOLDING

9 COMPANY ACT.—Section 2(j)(2) of the Bank Hold10 ing Company Act of 1956 (12 U.S.C. 1841(j)(2)) is

11 amended by striking ‘‘Savings Association Insurance

12 Fund’’ and inserting ‘‘Deposit Insurance Fund’’.

13 SEC. 805. CREATION OF SAIF SPECIAL RESERVE.

14 Section 11(a)(6) of the Federal Deposit Insurance

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

16 end the following new subparagraph:

17 ‘‘(L) ESTABLISHMENT OF SAIF SPECIAL RE18 SERVE.—

19 ‘‘(i) ESTABLISHMENT.—If, on January 1,

20 1999, the reserve ratio of the Savings Associa21 tion Insurance Fund exceeds the designated re22 serve ratio, there is established a Special Re23 serve of the Savings Association Insurance

24 Fund, which shall be administered by the Cor-
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•HR 4079 IH

1 poration and shall be invested in accordance

2 with section 13(a).

3 ‘‘(ii) AMOUNTS IN SPECIAL RESERVE.—If,

4 on January 1, 1999, the reserve ratio of the

5 Savings Association Insurance Fund exceeds

6 the designated reserve ratio, the amount by

7 which the reserve ratio exceeds the designated

8 reserve ratio shall be placed in the Special Re9 serve of the Savings Association Insurance

10 Fund established by clause (i).

11 ‘‘(iii) LIMITATION.—The Corporation shall

12 not provide any assessment credit, refund, or

13 other payment from any amount in the Special

14 Reserve of the Savings Association Insurance

15 Fund.

16 ‘‘(iv) EMERGENCY USE OF SPECIAL RE17 SERVE.—Notwithstanding clause (iii), the Cor18 poration may, in its sole discretion, transfer

19 amounts from the Special Reserve of the Sav20 ings Association Insurance Fund to the Savings

21 Association Insurance Fund for the purposes

22 set forth in paragraph (4), only if—

23 ‘‘(I) the reserve ratio of the Savings

24 Association Insurance Fund is less than 50

25 percent of the designated reserve ratio; and
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•HR 4079 IH

1 ‘‘(II) the Corporation expects the re2 serve ratio of the Savings Association In3 surance Fund to remain at less than 50

4 percent of the designated reserve ratio for

5 each of the next 4 calendar quarters.

6 ‘‘(v) EXCLUSION OF SPECIAL RESERVE IN

7 CALCULATING RESERVE RATIO.—Notwithstand8 ing any other provision of law, any amounts in

9 the Special Reserve of the Savings Association

10 Insurance Fund shall be excluded in calculating

11 the reserve ratio of the Savings Association In12 surance Fund.’’.

13 SEC. 806. REFUND OF AMOUNTS IN DEPOSIT INSURANCE

14 FUND IN EXCESS OF DESIGNATED RESERVE

15 AMOUNT.

16 Subsection (e) of section 7 of the Federal Deposit In17 surance Act (12 U.S.C. 1817(e)) is amended to read as

18 follows:

19 ‘‘(e) REFUNDS.—

20 ‘‘(1) OVERPAYMENTS.—In the case of any pay21 ment of an assessment (including any assessment

22 made pursuant to section 802 of the Deposit Insur23 ance Funds Act of 1996) by an insured depository

24 institution in excess of the amount due to the Cor25 poration, the Corporation may—
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•HR 4079 IH

1 ‘‘(A) refund the amount of the excess pay2 ment to the insured depository institution; or

3 ‘‘(B) credit such excess amount toward the

4 payment of subsequent semiannual assessments

5 until such credit is exhausted.

6 ‘‘(2) BALANCE IN INSURANCE FUND IN EXCESS

7 OF DESIGNATED RESERVE.—

8 ‘‘(A) IN GENERAL.—Subject to subpara9 graphs (B) and (C), if, as of the end of any

10 semiannual assessment period beginning after

11 the date of the enactment of the Deposit Insur12 ance Funds Act of 1996, the amount of the ac13 tual reserves in—

14 ‘‘(i) the Bank Insurance Fund (until

15 the merger of such fund into the Deposit

16 Insurance Fund pursuant to section 804 of

17 the Deposit Insurance Funds Act of 1996);

18 ‘‘(ii) the Savings Association Insur19 ance Fund (until the merger of such fund

20 into the Deposit Insurance Fund pursuant

21 to section 804 of the Deposit Insurance

22 Funds Act of 1996); or

23 ‘‘(iii) the Deposit Insurance Fund

24 (after the establishment of such fund),
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1 exceeds the balance required to meet the des2 ignated reserve ratio applicable with respect to

3 such fund, such excess amount shall be re4 funded to insured depository institutions by the

5 Corporation on such basis as the Board of Di6 rectors determines to be appropriate, taking

7 into account the factors considered under the

8 risk-based assessment system.

9 ‘‘(B) REFUND NOT TO EXCEED PREVIOUS

10 SEMIANNUAL ASSESSMENT.—

11 ‘‘(i) IN GENERAL.—The amount of

12 any refund under this paragraph to any

13 member of a deposit insurance fund for

14 any semiannual assessment period may not

15 exceed the total amount of assessments

16 paid by such member to the insurance

17 fund with respect to such period.

18 ‘‘(ii) SPECIAL ASSESSMENT.—The

19 amount of any refund under this para20 graph to any Savings Association Insur21 ance Fund member which is attributable to

22 the special assessment imposed under sec23 tion 802 of the Deposit Insurance Funds

24 Act of 1996 may not exceed the total

25 amount of assessments paid by such mem-
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1 ber to the Savings Association Insurance

2 Fund with respect to such assessment.

3 ‘‘(C) REFUND LIMITATION FOR CERTAIN

4 INSTITUTIONS.—No refund may be made under

5 this paragraph with respect to the amount of

6 any assessment paid for any semiannual assess7 ment period by any insured depository institu8 tion described in clause (v) of subsection

9 (b)(2)(A).’’.

10 SEC. 807. ASSESSMENT RATES FOR SAIF MEMBERS MAY

11 NOT BE LESS THAN ASSESSMENT RATES FOR

12 BIF MEMBERS.

13 Section 7(b)(2)(C) of the Federal Deposit Insurance

14 Act (12 U.S.C. 1817(b)(2)(E), as redesignated by section

15 4(d)(6) of this Act) is amended—

16 (1) by striking ‘‘and’’ at the end of clause (i);

17 (2) by striking the period at the end of clause

18 (ii) and inserting ‘‘; and’’; and

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

20 clause:

21 ‘‘(iii) notwithstanding any other provi22 sion of this subsection, during the period

23 beginning on the date of enactment of the

24 Deposit Insurance Funds Act of 1996, and

25 ending on December 31, 1998, the assess-
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1 ment rate for a Savings Association Insur2 ance Fund member may not be less than

3 the assessment rate for a Bank Insurance

4 Fund member that poses a comparable

5 risk to the deposit insurance fund.’’.

6 SEC. 808. ASSESSMENTS AUTHORIZED ONLY IF NEEDED TO

7 MAINTAIN THE RESERVE RATIO OF A DE8 POSIT INSURANCE FUND.

9 (a) IN GENERAL.—Section 7(b)(2)(A)(i) of the Fed10 eral Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)(i))

11 is amended in the matter preceding subclause (I) by in12 serting ‘‘when necessary, and only to the extent nec13 essary’’ after ‘‘insured depository institutions’’.

14 (b) LIMITATION ON ASSESSMENT.—Section

15 7(b)(2)(A)(iii) of the Federal Deposit Insurance Act (12

16 U.S.C. 1817(b)(2)(A)(iii)) is amended to read as follows:

17 ‘‘(iii) LIMITATION ON ASSESSMENT.—

18 Except as provided in clause (v), the Board

19 of Directors shall not set semiannual as20 sessments with respect to a deposit insur21 ance fund in excess of the amount need22 ed—

23 ‘‘(I) to maintain the reserve ratio

24 of the fund at the designated reserve

25 ratio; or
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1 ‘‘(II) if the reserve ratio is less

2 than the designated reserve ratio, to

3 increase the reserve ratio to the des4 ignated reserve ratio.’’.

5 (c) EXCEPTION TO LIMITATION ON ASSESSMENTS.—

6 Section 7(b)(2)(A) of the Federal Deposit Insurance Act

7 (12 U.S.C. 1817(b)(2)(A)) is amended by adding at the

8 end the following new clause:

9 ‘‘(v) EXCEPTION TO LIMITATION ON

10 ASSESSMENTS.—The Board of Directors

11 may set semiannual assessments in excess

12 of the amount permitted under clauses (i)

13 and (iii) with respect to insured depository

14 institutions that exhibit financial, oper15 ational, or compliance weaknesses ranging

16 from moderately severe to unsatisfactory,

17 or are not well capitalized, as that term is

18 defined in section 38.’’.

19 SEC. 809. TREASURY STUDY OF COMMON DEPOSITORY IN20 STITUTION CHARTER.

21 (a) STUDY REQUIRED.—The Secretary of the Treas22 ury shall conduct a study of all issues which the Secretary

23 considers to be relevant with respect to the development

24 of a common charter for all insured depository institutions

25 (as defined in section 3 of the Federal Deposit Insurance
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1 Act) and the abolition of separate and distinct charters

2 between banks and savings associations.

3 (b) REPORT TO THE CONGRESS.—

4 (1) IN GENERAL.—The Secretary of the Treas5 ury shall submit a report to the Congress on or be6 fore March 31, 1997, containing the findings and

7 conclusions of the Secretary in connection with the

8 study conducted pursuant to subsection (a).

9 (2) DETAILED ANALYSIS AND RECOMMENDA10 TIONS.—The report under paragraph (1) shall in11 clude—

12 (A) a detailed analysis of each issue the

13 Secretary considered relevant to the subject of

14 the study;

15 (B) recommendations of the Secretary with

16 regard to the establishment of a common char17 ter for insured depository institutions (as de18 fined in section 3 of the Federal Deposit Insur19 ance Act); and

20 (C) such recommendations for legislative

21 and administrative action as the Secretary de22 termines to be appropriate to implement the

23 recommendations of the Secretary under sub24 paragraph (B).
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1 SEC. 810. DEFINITIONS.

2 For purposes of this title, the following definitions

3 shall apply:

4 (1) BANK INSURANCE FUND.—The term ‘‘Bank

5 Insurance Fund’’ means the fund established pursu6 ant to section (11)(a)(5)(A) of the Federal Deposit

7 Insurance Act, as that section existed on the day be8 fore the date of enactment of this Act.

9 (2) BIF MEMBER, SAIF MEMBER.—The terms

10 ‘‘Bank Insurance Fund member’’ and ‘‘Savings As11 sociation Insurance Fund member’’ have the same

12 meanings as in section 7(l) of the Federal Deposit

13 Insurance Act.

14 (3) VARIOUS BANKING TERMS.—The terms

15 ‘‘bank’’, ‘‘Board of Directors’’, ‘‘Corporation’’, ‘‘in16 sured depository institution’’, ‘‘Federal savings asso17 ciation’’, ‘‘savings association’’, ‘‘State savings

18 bank’’, and ‘‘State depository institution’’ have the

19 same meanings as in section 3 of the Federal De20 posit Insurance Act.

21 (4) DEPOSIT INSURANCE FUND.—The term

22 ‘‘Deposit Insurance Fund’’ means the fund estab23 lished under section 11(a)(4) of the Federal Deposit

24 Insurance Act (as amended by section 804(d) of this

25 title).
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1 (5) DEPOSITORY INSTITUTION HOLDING COM2 PANY.—The term ‘‘depository institution holding

3 company’’ has the same meaning as in section 3 of

4 the Federal Deposit Insurance Act.

5 (6) DESIGNATED RESERVE RATIO.—The term

6 ‘‘designated reserve ratio’’ has the same meaning as

7 in section 7(b)(2)(A)(iv) of the Federal Deposit In8 surance Act.

9 (7) SAIF.—The term ‘‘Savings Association In10 surance Fund’’ means the fund established pursuant

11 to section 11(a)(6)(A) of the Federal Deposit Insur12 ance Act, as that section existed on the day before

13 the date of enactment of this Act.

14 (8) SAIF-ASSESSABLE DEPOSIT.—The term

15 ‘‘SAIF-assessable deposit’’—

16 (A) means a deposit that is subject to as17 sessment for purposes of the Savings Associa18 tion Insurance Fund under the Federal Deposit

19 Insurance Act (including a deposit that is treat20 ed as insured by the Savings Association Insur21 ance Fund under section 5(d)(3) of the Federal

22 Deposit Insurance Act); and

23 (B) includes any deposit described in sub24 paragraph (A) which is assumed after March

25 31, 1995, if the insured depository institution,
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1 the deposits of which are assumed, is not an in2 sured depository institution when the special as3 sessment is imposed under section 2(a).

Æ