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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4182 Introduced in House (IH)]

104th CONGRESS
  2d Session
                                H. R. 4182

 To enhance competition in the financial services sector and merge the 
           commercial bank and savings association charters.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           September 25, 1996

  Mrs. Roukema (for herself, Mr. McCollum, Mr. Vento, Mr. Dreier, Ms. 
Furse, Mr. Flake, Mr. King, Mr. Bono,  and Ms. McKinney) introduced the 
  following bill; which was referred to the Committee on Banking and 
Financial Services, and in addition to the Committee on Commerce, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Depository 
Institution Affiliation and Thrift Charter Conversion Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
            TITLE I--FINANCIAL SERVICES HOLDING COMPANY ACT

Sec. 101. Short title.
                     Subtitle A--General Provisions

Sec. 102. Definitions.
Sec. 103. Changes in control of depository institutions.
Sec. 104. Affiliate transactions.
Sec. 105. Capital requirements.
Sec. 106. Interstate acquisitions of insured banks.
Sec. 107. Differential treatment prohibition; laws inconsistent with 
                            this Act.
Sec. 108. Tying and insider lending provisions.
Sec. 109. Reports, examination and enforcement.
Sec. 110. Divestiture.
Sec. 111. Criminal penalties.
Sec. 112. Civil enforcement, cease-and-desist orders, civil money 
                            penalties, removal, and prohibition 
                            authority.
Sec. 113. Judicial review.
Sec. 114. National Financial Services Committee.
    Subtitle B--Securities Activities of Financial Services Holding 
                               Companies

Sec. 121. Limitation on securities activities of depository 
                            institutions affiliated with securities 
                            affiliates.
Sec. 122. Safeguards relating to securities affiliates.
Sec. 123. Joint standards relating to retail sales of certain 
                            nondeposit investment products.
    Subtitle C--Insurance and Real Estate Development Activities of 
                  Financial Services Holding Companies

Sec. 131. Limitation on insurance underwriting and real estate 
                            development activities of depository 
                            institutions.
Sec. 132. Acquisition of preexisting insurance agency by bank holding 
                            companies.
Sec. 133. Existing contracts.
 TITLE II--CONFORMING AMENDMENTS TO OTHER LAWS FOR FINANCIAL SERVICES 
                           HOLDING COMPANIES

Sec. 201. Exemption of financial services holding companies from the 
                            Bank Holding Company Act of 1956.
Sec. 202. Amendment to the Federal Reserve Act.
Sec. 203. Amendments to the Banking Act of 1933.
Sec. 204. Amendments to the Federal Deposit Insurance Act.
Sec. 205. Amendment to the Community Reinvestment Act.
Sec. 206. Amendment to the Federal Power Act.
Sec. 207. Amendment to the Right to Financial Privacy Act.
Sec. 208. Amendments to the International Banking Act.
  TITLE III--FUNCTIONAL REGULATION AMENDMENTS TO SECURITIES LAWS FOR 
                  FINANCIAL SERVICES HOLDING COMPANIES

                  Subtitle A--Broker Dealer Provisions

Sec. 301. Definition of broker.
Sec. 302. Definition of dealer.
Sec. 303. Power to exempt from the definitions of broker and dealer.
Sec. 304. Margin requirements.
               Subtitle B--Investment Company Provisions

Sec. 311. Custody of investment company assets by affiliated bank.
Sec. 312. Lending to an affiliated investment company.
Sec. 313. Independent directors.
Sec. 314. Additional SEC disclosure authority.
Sec. 315. Definition of broker under the Investment Company Act of 
                            1940.
Sec. 316. Definition of dealer under the Investment Company Act of 
                            1940.
Sec. 317. Removal of the exclusion from the definition of investment 
                            adviser for banks that advise investment 
                            companies.
Sec. 318. Definition of broker under the Investment Advisors Act of 
                            1940.
Sec. 319. Definition of dealer under the Investment Advisors Act of 
                            1940.
Sec. 320. Interagency consultation.
Sec. 321. Treatment of bank common trust funds.
Sec. 322. Investment advisers prohibited from having controlling 
                            interest in registered investment company.
Sec. 323. Conforming change in definition.
Sec. 324. Effective date.
TITLE IV--WHOLESALE FINANCIAL INSTITUTIONS OWNED BY FINANCIAL SERVICES 
                           HOLDING COMPANIES

Sec. 401. National wholesale financial institutions.
Sec. 402. State member wholesale financial institutions.
Sec. 403. Amendments to the Federal Deposit Insurance Act.
TITLE V--MERGER OF BANK AND THRIFT CHARTERS, REGULATORS, AND INSURANCE 
                                 FUNDS

               Subtitle A--Conversion of Thrift Charters

Sec. 501. Short title.
Sec. 502. Termination of Federal savings associations; treatment of 
                            State savings associations as banks for 
                            purposes of Federal banking law.
Sec. 503. Treatment of certain activities and affiliations of bank 
                            holding companies resulting from this Act.
Sec. 504. Transition provisions for activities of savings associations 
                            which convert into or become treated as 
                            banks.
Sec. 505. Registration of bank holding companies resulting from 
                            conversions of savings associations to 
                            banks or treatment of savings associations 
                            as banks.
Sec. 506. Additional transition provisions and special rules.
Sec. 507. Technical and conforming amendments.
Sec. 508. References to savings associations and state banks in federal 
                            law.
Sec. 509. Repeal of Home Owners' Loan Act.
Sec. 510. Definitions.
        Subtitle B--Elimination of Office of Thrift Supervision

Sec. 511. Office of Thrift Supervision abolished.
Sec. 512. Determination of transferred functions and employees.
Sec. 513. Savings provisions.
Sec. 514. Cost of funds indexes.
Sec. 515. References in federal law to director of the Office of Thrift 
                            Supervision.
Sec. 516. Reconfiguration of board of directors of FDIC as a result of 
                            removal of director of the Office of Thrift 
                            Supervision.
                   Subtitle C--Merger of BIF and SAIF

Sec. 521. Amendment to Budget Reconciliation Act.
         TITLE VI--NATIONAL MARKET FUNDED LENDING INSTITUTIONS

Sec. 601. National market funded lending institutions.
                       TITLE VII--EFFECTIVE DATE

Sec. 701. Effective date.

SECTION 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that--
            (1) current laws and regulations restrain efficiency, 
        competition, and innovation in the design and delivery of 
        financial services to the disadvantage of consumers;
            (2) restrictions on ownership of depository institutions 
        and affiliations with other business organizations interfere 
        with their ability to attract and retain capital and managerial 
        resources;
            (3) the vulnerability of the financial system and its 
        discrete components is increased and effective monitoring, 
        supervision, and coordination of actions during periods of 
        stress is impeded by fragmented and disparate regulation;
            (4) the thrift charter has become obsolete;
            (5) market demand and safety and soundness considerations 
        warrant the creation of a new charter for uninsured wholesale 
        financial institutions; and
            (6) current laws inhibit the ability of domestic financial 
        markets and intermediaries to respond to the serious 
        competitive challenges presented by foreign intermediaries and 
        the globalization of markets.
    (b) Purposes.--The purposes of this Act are to promote the safety 
and soundness of the Nation's financial system, enhance the quality of 
regulation and supervision of financial intermediaries, and achieve a 
more efficient market and effective regulatory structure by--
            (1) establishing an alternative and comprehensive 
        legislative framework for the creation and regulation of 
        financial services holding companies;
            (2) enhancing the capital adequacy of commercial banks, 
        brokers and dealers, and other financial companies by 
        eliminating prohibitions on common ownership and affiliation 
        within a financial services holding company;
            (3) permitting affiliates to engage in regulated activities 
        subject to functional and equal regulation by the appropriate 
        Federal or State regulator;
            (4) insulating and protecting insured depository 
        institutions through enhanced capital requirements, expanded 
        restrictions on relationships with affiliates, broader 
        examination and enforcement authority, and increased civil and 
        criminal penalties;
            (5) permitting the efficient marketing and distribution of 
        financial services to consumers subject to safeguards against 
        coercive tie-ins and other unfair and abusive practices;
            (6) establishing the National Financial Services Committee 
        to oversee the evolution and supervision of the financial 
        services industry and to report to the Congress;
            (7) eliminating the thrift charter and requiring thrifts to 
        convert to banks, subject to appropriate transition provisions;
            (8) merging the bank and thrift insurance funds; and
            (9) creating new State and Federal charters for uninsured 
        wholesale financial institutions.

            TITLE I--FINANCIAL SERVICES HOLDING COMPANY ACT

SEC. 101. SHORT TITLE.

    This title may be cited as the ``Financial Services Holding Company 
Act''.

                     Subtitle A--General Provisions

SEC. 102. DEFINITIONS.

    For purposes of this Act, the following definitions apply.
    (a) Financial Services Holding Company.--The term ``financial 
services holding company'' means a company that--
            (1) has filed with the National Financial Services 
        Committee a notice stating such company's intent to comply with 
        the requirements of this Act and has not withdrawn such notice;
            (2) controls, acquires control of, or operates a depository 
        institution; and
            (3) is predominantly a financial company.
    (b) Company.--The term ``company'' means any corporation, 
partnership, business, trust, association, or similar organization, or 
any other trust unless by its terms it must terminate within 25 years 
or not later than 21 years and 10 months after the death of individuals 
living on the effective date of the trust, but shall not include any 
corporation the majority of the shares of which are owned by the United 
States or by any State.
    (c) Bank Holding Company.--The term ``bank holding company'' has 
the same meaning as in section 2(a) of the Bank Holding Company Act of 
1956.
    (d) Control.--Except as provided in section 107(e)(2), the term 
``control'' means, directly or indirectly, owns or has the power to 
vote 25 percent or more of any class of voting securities of a company, 
or has the power to elect a majority of the directors of a company, 
except that--
            (1) no company shall be deemed to control or to have 
        acquired control of any other company by virtue of its 
        ownership of the voting securities of such other company--
                    (A) acquired or held in an agency, trust, or other 
                fiduciary capacity, unless the company has sole 
                discretionary authority to exercise voting rights with 
                respect thereto;
                    (B) acquired or held in connection with or 
                incidental to the underwriting of securities if such 
                securities are held only for such period of time as 
                will permit the sale thereof on a reasonable basis; or
                    (C) acquired in securing or collecting a debt 
                previously contracted in good faith, until 2 years 
                after the date of acquisition or for such additional 
                period of time as the appropriate Federal banking 
                agency may permit; and
            (2) no company formed for the sole purpose of participating 
        in a proxy solicitation shall be deemed to be in control of a 
        company by virtue of its acquisition of voting rights with 
        respect to shares of such company acquired in the course of 
        such solicitation.
    (e) Affiliate.--Except as provided in section 107(e)(1), the term 
``affiliate'' of a company means any other company which controls, is 
controlled by, or is under common control with such company.
    (f) Subsidiary.--The term ``subsidiary'' has the same meaning as in 
section 2(d) of the Bank Holding Company Act of 1956.
    (g) Depository Institution and Insured Depository Institution.--
            (1) In general.--The terms ``depository institution'' and 
        ``insured depository institution'' have the same meanings as in 
        section 3 of the Federal Deposit Insurance Act, except that the 
        term ``depository institution'' also means--
                    (A) any wholesale financial institution; and
                    (B) any branch, agency, or commercial lending 
                company operated in the United States by a foreign 
                bank.
            (2) Exception related to foreign banks.--Notwithstanding 
        paragraph (1)(B), the National Financial Services Committee 
        may, for purposes of any section or provision of this Act, 
        exempt from the definition of ``depository institution'' any 
        branch, agency, or commercial lending company operated in the 
        United States by a foreign bank as the Committee deems 
        appropriate, provided that such exemption is--
                    (A) issued by regulation, and
                    (B) consistent with the principles of national 
                treatment and equality of competitive opportunity.
    (h) Lead Depository Institution.--The term ``lead depository 
institution'' means the largest depository institution controlled by 
the financial services holding company, based on a comparison of the 
average total assets controlled by each depository institution during 
the previous 12-month period.
    (i) Wholesale Financial Institution.--The term ``wholesale 
financial institution'' means a national wholesale financial 
institution described in section 5136B of the Revised Statutes of the 
United States or a State member wholesale financial institution 
described in section 9B of the Federal Reserve Act.
    (j) Foreign Bank Terms.--
            (1) In general.--The terms ``agency'', ``branch'', 
        ``foreign bank'', and ``commercial lending company'' have the 
        same meaning as in Section 1(b) of the International Banking 
        Act.
            (2) Commercial lending company operated by a foreign 
        bank.--The term ``commercial lending company operated by a 
        foreign bank'' means a commercial lending company controlled by 
        a foreign bank.
            (3) Branch or agency operated by a foreign bank.--A branch 
        or agency operated by a foreign bank shall be deemed to be 
        controlled by that foreign bank.
    (k) Domestic Branch.--The term ``domestic branch'' has the same 
meaning as in section 3(o) of the Federal Deposit Insurance Act;
    (l) Predominantly a Financial Company.
            (1) In general.--A company is ``predominantly a financial 
        company'' if at least 75 percent of its business (in the United 
        States) is derived from--
                    (A) financial service institutions controlled by 
                such company; or
                    (B) financial activities engaged in by such company 
                or any of its affiliates.
            (2) Foreign bank alternative.--As an alternative to a 
        paragraph (1), a foreign bank, and any company of which a 
        foreign bank is a subsidiary, is ``predominantly a financial 
        company'' if--
                    (A) all of the business of such foreign bank and 
                any such company (including the business of direct and 
                indirect subsidiaries of the foreign bank) in the 
                United States is derived from--
                            (i) financial services institutions 
                        controlled or operated by such foreign bank;
                            (ii) financial activities engaged in by 
                        such foreign bank or any of its affiliates;
                            (iii) companies that, with respect to that 
                        foreign bank, would meet the standard for 
                        investment under sections 2(h)(2) or 4(c)(9) of 
                        the Bank Holding Company Act of 1956 as if that 
                        foreign bank were subject to that Act; or
                            (iv) activities that, with respect to that 
                        foreign bank, would be permissible under 
                        section 4(c)(9) of the Bank Holding Company Act 
                        of 1956 if that foreign bank were subject to 
                        that Act; and
                    (B) the amount of banking business conducted 
                outside the United States by such foreign bank and such 
                company of which that foreign bank is a subsidiary 
                satisfies the standard described in section 2(h)(2) of 
                the Bank Holding Company Act of 1956.
            (3) Reciprocal national treatment.--
                    (A) In general.--A foreign bank that operates a 
                branch, agency or commercial lending company in the 
                United States, and any company that owns or controls 
                such a foreign bank, shall be eligible for the 
                treatment afforded under paragraph (1) and section 
                122(m) only if the home country of such foreign bank or 
                company accords to the United States banks the same 
                competitive opportunities in banking as such country 
                accords to domestic banks of such country.
                    (B) Coordination with nafta.--Subparagraph (A) 
                shall not apply in derogation of any obligation under 
                the North American Free Trade Agreement.
                    (C) Home country defined.--For purposes of 
                subparagraph (A), the term ``home country'' means, with 
                respect to any foreign bank or company referred to in 
                subparagraph (A), the country under the laws of which 
                the foreign bank or company is organized.
            (4) Interpretive authority.--The National Financial 
        Services Committee shall issue regulations describing the 
        method for calculating compliance with the standard described 
        in paragraphs (1) and (2), taking into account such factors as 
        revenues and assets, including assets under management.
            (5) Implementation and authority.--The appropriate Federal 
        banking agency of the lead depository institution of a 
        financial services holding company shall implement and enforce 
        the regulations prescribed pursuant to paragraph (4) with 
        respect to such holding company.
    (m) Financial Services Institution.--The term ``financial services 
institution'' means--
            (1) A depository institution;
            (2) A broker or dealer (as defined in section 3 of the 
        Securities Exchange Act of 1934);
            (3) A futures commission merchant (as defined in section 
        1(a)(12) of the Commodity Exchange Act);
            (4) An investment company (as defined in section 3 of the 
        Investment Company Act of 1940);
            (5) An investment adviser (as defined in section 202(a)(11) 
        of the Investment Act of 1940);
            (6) An insurance company organized or licensed under the 
        law of any State, including a company that only incurs 
        liabilities under annuity contracts, the income on which is tax 
        deferred under Section 72 of the Internal Revenue Code of 1986;
            (7) A trust company organized under the laws of the United 
        States or the laws of any State; or
            (8) A national market funded lending institution organized 
        pursuant to section 5158 of the Revised Statutes of the United 
        States, as added by section 601 of the Depository Institution 
        Affiliation and Thrift Charter Conversion Act;
            (9) Any other type of company that is ``engaged in the 
        business of providing financial services'', as determined by 
        the National Financial Services Committee by rule, regulation, 
        or order.
    (n) Financial Activities.--The term ``financial activities'' means 
any of the following--
            (1) receiving money subject to a deposit or other repayment 
        obligation;
            (2) lending, exchanging, transferring or safeguarding money 
        or other financial assets;
            (3) providing any device or other instrumentality for the 
        transfer of money or other financial assets;
            (4) insuring, guaranteeing or indemnifying against loss, 
        harm, damage, illness, disability or death;
            (5) providing financial, investment or economic advisory or 
        information services, including advising an investment company 
        (as defined in section 3 of the Investment Company Act of 
        1940);
            (6) directly or indirectly acquiring or controlling, 
        whether as principal, on behalf of 1 or more entities 
        (including entities, other than a depository institution or 
        subsidiary of a depository institution, that the financial 
        services holding company controls), or otherwise, shares, 
        assets, or ownership interests (including without limitation 
        debt or equity securities, partnership interests, trust 
        certificates, or other instruments representing ownership) of a 
        company or other entity, whether or not constituting control of 
        such company or entity, engaged in any activity if--
                    (A) the shares, assets, or ownership interests are 
                not acquired or held by a depository institution or a 
                subsidiary of a depository institution;
                    (B) such shares, assets, or ownership interests are 
                acquired and held as part of a bona fide underwriting, 
                investment banking, or insurance company investment 
                activity, which includes investment activities engaged 
                in for the purpose of appreciation and ultimate resale 
                or other disposition of the investment, and such 
                shares, assets, or ownership interest are held for such 
                a period of time as will permit the sale or disposition 
                thereof on a reasonable basis consistent with the 
                nature of such activities; and
                    (C) during the period such shares, assets, or 
                ownership interests are held, the financial services 
                holding company does not actively manage or operate the 
                company or entity except insofar as necessary to 
                achieve the objectives of subparagraph (B);
            (7) arranging, effecting or facilitating financial 
        transactions for the account of third parties;
            (8) underwriting, dealing in or making a market in 
        securities;
            (9) engaging in any activity that is permissible for a bank 
        holding company pursuant to section 4(c)(8) of the Bank Holding 
        Company Act of 1956 by rule, order or regulation;
            (10) engaging in any activity (in the United States) that 
        is--
                    (A) permissible for a bank holding company to 
                engage in outside the United States, and
                    (B) considered a financial activity or banking or 
                financial operation, pursuant to section 4(c)(13) of 
                the Bank Holding Company Act of 1956 or any rule, 
                order, or regulation issued thereunder;
            (11) owning shares of any company that would be permissible 
        for a bank holding company to own pursuant to sections 4(c)(6) 
        and 4(c)(7) of the Bank Holding Company Act of 1956;
            (12) engaging in the functional equivalent of any of the 
        foregoing; or
            (13) engaging in any activity that the National Financial 
        Services Committee determines by rule, order, or regulation to 
        be financial in nature or incidental to such financial 
        activities, taking into account--
                    (A) changes or reasonably expected changes in the 
                marketplace in which financial services holding company 
                compete;
                    (B) changes or reasonably expected changes in the 
                technology by which financial services are delivered; 
                or
                    (C) whether such activity is necessary or 
                appropriate to--
                            (i) allow a financial services holding 
                        company and its affiliates to compete 
                        effectively against any company seeking to 
                        provide financial services in the United 
                        States;
                            (ii) use any available or emerging 
                        technological means to provide financial 
                        services; or
                            (iii) offer customers any available or 
                        emerging technological means for using 
                        financial services.
    (o) Appropriate Federal Banking Agency.--The term ``appropriate 
Federal banking agency'' has the same meaning as in section 3 of the 
Federal Deposit Insurance Act.
    (p) State.--The term ``State'' has the same meaning as in section 3 
of the Federal Deposit Insurance Act.
    (q) Capital Terms.--
            (1) In general.--The terms ``adequately capitalized'' and 
        ``well capitalized'' have the same meanings as in--
                    (A) section 38(b)(1) of the Federal Deposit 
                Insurance Act with respect to an insured depository 
                institution;
                    (B) section 9B(c)(2)(B) of the Federal Reserve Act 
                with respect to a State member wholesale financial 
                institution; and
                    (C) section 5136(B)(e) of the Revised Statutes of 
                the United States with respect to a national wholesale 
                financial institution.
            (2) Foreign bank capital.--With respect to a branch, 
        agency, or commercial lending company operated in the United 
        States by a foreign bank, the terms ``adequately capitalized'' 
        and ``well capitalized'' shall be defined and established by 
        the National Financial Services Committee for purposes of this 
        Act, provided that such capital standards--
                    (A) are comparable to the capital standards that 
                apply to other depository institutions for purposes of 
                this Act; and
                    (B) give due regard to the principle of national 
                treatment and equality of competitive opportunity.
    (r) Securities Affiliate.--The term ``securities affiliate'' means 
a company that--
            (1) is an affiliate of a financial services holding 
        company, other than a depository institution; and
            (2) underwrites or deals in any security; and
            (3) is (or is required to be) registered under the 
        Securities Exchange Act of 1934 as a broker or dealer,
but does not include a company that underwrites or deals exclusively in 
securities that are expressly authorized by section 5136 of the Revised 
Statutes of the United States as permissible for a national bank to 
underwrite or deal in.

SEC. 103. CHANGES IN CONTROL OF DEPOSITORY INSTITUTIONS.

    No financial services holding company acting directly or 
indirectly, or through or in concert with one or more other persons, 
all acquire control of a depository institution, bank holding company, 
or financial services holding company not controlled by such company on 
the date it became a financial services holding company, if such 
acquisition and control occurs through a purchase, assignment, 
transfer, pledge, or other deposition of voting stock of such 
depository institution, bank holding company, or financial services 
holding company, unless the financial services holding company has 
complied with the requirements of section 7(j) of the Federal Deposit 
Insurance Act. Any failure to comply with the preceding requirements 
shall subject the relevant financial services holding company to the 
penalties and other procedures provided in sections 109 through 112, in 
addition to otherwise applicable penalties.

SEC. 104. AFFILIATE TRANSACTIONS.

    (a) Applicability of Sections 23A and 23B of the Federal Reserve 
Act.--
            (1) In general.--The provisions of sections 23A and 23B of 
        the Federal Reserve Act shall be applicable to every depository 
        institution controlled by a financial services holding company 
        in the same manner and to the same extent as if such depository 
        institution were a member bank; and for this purpose, any 
        company which would be an affiliate of a depository institution 
        for purposes of such sections 23A and 23B if such depository 
        institution were a member bank shall be deemed to be an 
        affiliate of such depository institution.
            (2) Applicability to foreign banks.--A depository 
        institution that is a branch, agency or commercial lending 
        company operated in the United States by a foreign bank that is 
        a financial services holding company shall be deemed to satisfy 
        the requirements of paragraph (1) if all of the transactions 
        between the depository institution and any of the following 
        companies affiliated with the depository institution comply 
        with the provisions of Sections 23A and 23B of the Federal 
        Reserve Act in the same manner and to the same extent as if the 
        foreign bank were a member bank--
                    (A) a securities affiliate; and
                    (B) any company that is neither a financial 
                services institution nor primarily engaged in financial 
                activities, other than, with respect to a foreign bank 
                that qualifies as ``predominantly a financial company'' 
                under section 102(l)(2) rather than section 102(l)(1), 
                an affiliate that is held and operated in compliance 
                with the standards of sections 2(h)(2) and 2(h)(4) of 
                the Bank Holding Company Act of 1956 that would apply 
                if the foreign bank were subject to that Act.
    (b) Additional Limitations on Affiliate Transactions.--
            (1) In general.--The appropriate Federal banking agency 
        may, upon a finding of probable harm that cannot adequately be 
        prevented by less burdensome rules and regulations, adopt such 
        rules and regulations, consistent with the purposes of this 
        Act, as may be necessary in order to prevent a depository 
        institution that is controlled or operated by a financial 
        services holding company from engaging in unsafe or unsound 
        practices that involve the financial services holding company 
        or any of its affiliates including, without limitation, unsafe 
        or unsound practices that involve covered transactions, as 
        defined in section 23A of the Federal Reserve Act, and any 
        transactions described in section 23B(a)(2) of the Federal 
        Reserve Act.
            (2) Regulatory activity.--Any rule or regulation adopted 
        pursuant to paragraph (1) shall be adopted in accordance with 
        section 553 of title 5, United States Code, except that the 
        appropriate Federal banking agency shall give interested 
        persons an opportunity for oral presentations of data, views, 
        and arguments, in addition to written submissions.
            (3) Application to prior approved transactions.--Any 
        transaction that was approved by an appropriate Federal banking 
        agency before the date of enactment of this Act shall be exempt 
        from any rules or regulations adopted pursuant to paragraph 
        (1).
    (c) Exceptions.--With the concurrence of the National Financial 
Services Committee, the appropriate Federal banking agency may, by 
rule, regulation or order, exempt any depository institution that is 
controlled by a financial services holding company or class of such 
institutions, or any transaction or class of transactions (including 
transactions with affiliates that are neither located nor doing 
business in the United States) from any requirement under subsection 
(b)(1) or section 23A or 23B of the Federal Reserve Act, 
notwithstanding the provisions of any other law, rule, regulation or 
order, if the appropriate Federal banking agency deems such an 
exemption to be reasonable and not inconsistent with the purposes of 
this Act and in the public interest.
    (d) Safeguards Relating to Nonfinancial Affiliates.--
            (1) In general.--Except as permitted pursuant to 
        regulations issued by the National Financial Services 
        Committee, no depository institution controlled by a financial 
        services holding company shall directly or indirectly extend 
        credit, or issue or enter into a standby letter of credit, 
        indemnity, guarantee, insurance, or other similar facility to 
        or for the benefit of any affiliate that is neither a financial 
        services institution nor primarily engaged in financial 
        activities.
            (2) Execption for certain foreign banks.--A depository 
        institution that is a branch, agency, or commercial lending 
        company operated or controlled by a foreign bank that--
                    (A) is a financial services holding company; and
                    (B) qualifies as ``predominantly a financial 
                company'' under section 102(l)(2) rather than section 
                102(l)(1);
        shall not be subject to the limitation described in paragraph 
        (1) with respect to transactions with affiliates that, with 
        respect to that foreign bank, are held and operated in 
        compliance with the standard for investment under section 
        2(h)(2) of the Bank Holding Company Act of 1956 that would 
        apply if that foreign bank were subject to that Act.
    (e) Primarily Engaged in Financial Activities.--For purposes of 
subsections (a)(2)(B) and (d)(1), the term ``primarily engaged in 
financial activities'' shall be defined by regulation by the National 
Financial Services Committee.

SEC. 105. CAPITAL REQUIREMENTS.

    (a) Well-Capitalized Depository Institutions.--Each depository 
institution that is controlled by a financial services holding company 
shall be well capitalized.
    (b) Actions by Appropriate Federal Banking Agency.--In the event of 
a finding by the appropriate Federal banking agency that a depository 
institution controlled by a financial services holding company is not 
well capitalized, the financial services holding company shall--
            (1) execute an agreement with the appropriate Federal 
        banking agency within 30 days to return the depository 
        institution within a reasonable period of time to being well 
        capitalized; or
            (2) divest control of the depository institution in an 
        orderly manner within 180 days, or such additional period of 
        time as the appropriate Federal banking agency may determine is 
        reasonably required in order to effect such divestiture.
    (c) No Holding Company Capital Requirements.--An appropriate 
Federal banking agency may not impose by regulation, order, agreement, 
or any other means, any requirement pertaining to the capital of a 
financial services holding company.

SEC. 106. INTERSTATE ACQUISITIONS OF INSURED BANKS.

    (a) Insured Banks.--Except as otherwise authorized pursuant to 
section 13(f) of the Federal Deposit Insurance Act, no financial 
services holding company may acquire control of an additional insured 
bank (as such term is defined in section 2(c) of the Bank Holding 
Company Act of 1956) if the acquisition could not be approved by the 
Board of Governors of the Federal Reserve System under any provision of 
section 3(d) of the Bank Holding Company Act of 1956, other than 
subsection (d)(1)(A), if such acquisition were made by a bank holding 
company.
    (b) Treatment of Financial Services Holding Companies and 
Subsidiaries.--For purposes of section 18(r) of the Federal Deposit 
Insurance Act, a financial services holding company shall be treated as 
a bank holding company, and any depository institution affiliate of a 
financial services holding company shall be treated as a bank 
subsidiary.

SEC. 107. DIFFERENTIAL TREATMENT PROHIBITION; LAWS INCONSISTENT WITH 
              THIS ACT.

    (a) In General.--Notwithstanding any other Federal law, no State, 
and no Federal or State regulatory agency, including the appropriate 
Federal banking agency, may act by law, rule, regulation, order, or 
otherwise if the effect of such action would be to differentiate 
depository institutions controlled by financial services holding 
companies from any other depository institutions in a manner adverse to 
depository institutions controlled by financial services holding 
companies, or to differentiate financial services holding companies or 
their affiliates from bank holding companies and their affiliates in a 
manner adverse to financial services holding companies or their 
affiliates, except to the extent that the appropriate Federal banking 
agency may act to implement this Act.
    (b) Application of State Laws.--
            (1) Findings.--The Congress finds that:
                    (A) Certain State laws and regulations have the 
                purpose or effect of preventing depository institutions 
                from being or becoming affiliated with, companies or 
                persons engaged in nonbanking activities.
                    (B) Such laws restrain legitimate competition in 
                interstate commerce and deny consumers freedom of 
                choice in selecting financial services.
                    (C) Such restrictions also threaten the long-term 
                safety and soundness of depository institutions by 
                denying them access to capital.
                    (D) Given the preponderant Federal interest in 
                ensuring competition in national markets for financial 
                services and in ensuring the safety and soundness of 
                depository institutions, it is necessary to preempt 
                such anticompetitive State laws and regulations to the 
                extent necessary to permit the formation and efficient 
                operation of financial services holding companies.
                    (E) There is, however, a legitimate and traditional 
                State interest in ensuring that State depository 
                institutions and other State-chartered or licensed 
                companies are operated in a safe and sound manner to 
                serve the interests of the public and consumers.
                    (F) The preemption provided in paragraph (2) is not 
                intended to preempt State laws that concern the 
                regulation, supervision, and examination of State 
                chartered or licensed entities, and that are not 
                inconsistent with the purposes of this Act.
            (2) Preemptions.--
                    (A) Cross-marketing.--Any provision of Federal or 
                State law, rule, regulation, or order that is expressly 
                or impliedly inconsistent with the provisions and 
                purposes of this Act is hereby preempted, including, 
                without limitation, State banking, savings and loan, 
                insurance, real estate, securities, finance company, 
                retail, or other laws which have the purpose or effect 
                of--
                            (i) preventing or impeding depository 
                        institutions or affiliates, agents, principals, 
                        brokers, directors, officers, employees, or 
                        other representatives of such institutions or 
                        affiliates thereof, as a result of the types of 
                        nonbanking activities engaged in directly or 
                        indirectly by such company or any affiliate 
                        thereof or by any agent, principal, solicitor, 
                        broker, director, officer, employee, or other 
                        representative of such company or affiliate 
                        thereof, form being owned or controlled by or 
                        from being affiliated in any way with a 
                        financial services holding company or any 
                        affiliate thereof; or
                            (ii) preventing or impeding depository 
                        institutions or affiliates, agents, principals, 
                        brokers, directors, officers, employees or 
                        other representatives of such institutions or 
                        affiliates thereof from offering or marketing 
                        products or services of their affiliated 
                        financial services holding company or any 
                        affiliate thereof or from having their products 
                        or services offered or marketed by their 
                        affiliated financial services holding company 
                        or any affiliate thereof, or by any agent, 
                        principal, broker, director, officer, employee, 
                        or other representative of such company or 
                        affiliate thereof.
                    (B) Information sharing.--
                            (i) In general.--Notwithstanding any other 
                        provision of law, any depository institution, 
                        or any affiliate or subsidiary of any 
                        depository institution, may share or exchange 
                        information or otherwise transfer information 
                        between or among themselves without any 
                        restriction or limitation if it is clearly and 
                        conspicuously disclosed that the information 
                        may be communicated among such persons and the 
                        consumer is given the opportunity, before the 
                        time that the information is initially 
                        communicated, to direct that such information 
                        not be communicated among such persons.
                            (ii) Definition.--For purposes of this 
                        subsection, the term ``information'' means any 
                        and all data, records, or other information and 
                        material obtained or maintained by any 
                        depository institution or any affiliate or 
                        subsidiary thereof in the ordinary course of 
                        its business that relates in any way to a 
                        person who applies for, maintains, or has 
                        maintained an account or credit relationship 
                        with or applied for, purchased or obtained 
                        other products or services from any depository 
                        institution or any affiliate or subsidiary of 
                        any depository institution, regardless of the 
                        source or manner in which the information is 
                        obtained or furnished.
    (c) Laws Affecting Court Actions.--
            (1) In general.--No State or State regulatory agency may 
        act by law, rule, regulation, or order if the effect of such 
        action would be to impede or prevent a depository institution 
        that is located in another State from qualifying to maintain or 
        defend in court any action which could be maintained or 
        defended under similar circumstances by a company that is 
        located in such other State and that is not a depository 
        institution, if the depository institution does not establish 
        or operate in that State a domestic branch.
            (2) Exception.--Where the maintenance or defense of a court 
        action referred to in paragraph (1) by a company that is 
        located in such other State and that is not a depository 
        institution is subject to certain conditions, the maintenance 
        or defense of such an action by a depository institution 
        located in such other State may be subject to those same 
        conditions, if such conditions are applied in a 
        nondiscriminatory manner to fulfill legitimate State objectives 
        and do not have the effect, directly or indirectly, of denying 
        depository institutions located in other States the opportunity 
        to maintain or defend such actions.
    (d) Other Restrictions.--Except for licensing, marketing, 
compensation, employment, or other requirements applied in a 
nondiscriminatory manner to fulfill legitimate State regulatory 
objectives which are not inconsistent with the purposes of this Act, no 
State may, through legislative, administrative, executive, or judicial 
action, impede or prevent a financial services holding company or 
affiliate thereof from utilizing or compensating any agent (including 
an affiliated depository institution acting in accordance with section 
18(r) of the Federal Deposit Insurance Act), solicitor, broker, 
employee, or other person located in that State and representing in any 
lawful capacity any depository institution or any such financial 
services holding company or such affiliate thereof, provided that if 
any such person is being utilized or compensated for the performance of 
activities on behalf of a depository institution, such activities do 
not result in the establishment or operation by the depository 
institution of a domestic branch at any location other than the main or 
branch offices of such depository institution.
    (e) Definitions.--As used in subsections (b) through (d) only--
            (1) the term ``affiliate'' means a person that directly or 
        indirectly controls or is controlled by, or is under common 
        control with the person specified; and
            (2) the term ``control,'' including the terms ``controlled 
        by'' and ``under common control with,'' means the power, 
        directly or indirectly, to direct the management or policies of 
        a person and shall be presumed to exist if any person, directly 
        or indirectly, owns, controls, or holds with power to vote 10 
        percent or more of the voting securities of any other person.

SEC. 108. TYING AND INSIDER LENDING PROVISIONS.

    (A) In General.--A financial services holding company shall be 
treated as a bank holding company, and any depository institution 
controlled by such financial services holding company shall be treated 
as a bank, for purposes of section 106 of the Bank Holding Company Act 
Amendments of 1970 and section 22(h) of the Federal Reserve Act and any 
regulation prescribed under any such sections.
    (b) Additional Limitations on Tie-In Arrangements.--A financial 
services holding company and any of such company's nonbanking 
subsidiaries shall be subject to the same limitations, if any, 
including any exceptions thereto, as the Board of Governors of the 
Federal Reserve System may by regulation impose on bank holding 
companies and their nonbanking subsidiaries with respect to extending 
credit, leasing or selling property of any kind, providing any service, 
or fixing or varying the consideration for any such transaction subject 
to any condition or requirement that, if imposed by a bank, would 
constitute an unlawful tie-in arrangement under section 106 of the Bank 
Holding Company Act Amendments of 1970.
    (c) Regulatory Authority.--For purposes of this subsection, the 
appropriate Federal banking agency shall exercise the authority 
provided to the Board of Governors of the Federal Reserve System under 
section 106 of the Bank Holding Company Act Amendments of 1970 and 
section 22(h) of the Federal Reserve Act.

SEC. 109. REPORTS, EXAMINATION AND ENFORCEMENT.

    (a) Notice.--
            (1) Timing.--Within 90 days after filing the notice 
        referred to in section 102(a)(1), each financial services 
        holding company shall file a separate notice with the 
        appropriate Federal banking agency for the lead depository 
        institution of such company.
            (2) Form and content.--The notice required by paragraph (1) 
        shall be on forms prescribed by the National Financial Services 
        Committee, and shall include such information under oath or 
        otherwise, with respect to the financial condition, ownership, 
        operation and management of such financial services company and 
        its subsidiaries, and related matters, as the Committee may 
        deem necessary or appropriate for the appropriate Federal 
        banking agency to ascertain and monitor the impact that such 
        financial services holding company and its subsidiaries may 
        have on the safety and soundness of any depository institution 
        affiliated with such financial services holding company or to 
        otherwise carry out the purposes of this Act.
    (b) Reports.--
            (1) In general.--The appropriate Federal banking agency of 
        the lead depository institution of a financial services holding 
        company from time to time may require such holding company and 
        any subsidiary of such company to submit reports under oath to 
        keep such agency informed as to--
                    (A) the company's or the subsidiary's activities, 
                financial condition, policies, systems for monitoring 
                and controlling financial and operational risks, to the 
                extent that the appropriate Federal banking agency has 
                reason to believe that such activities, financial 
                condition, policies, and systems may materially affect 
                the safety and soundness of any depository institution 
                subsidiary of the company;
                    (B) the company's or the subsidiary's transactions 
                with depository institution subsidiaries of the 
                company; and
                    (C) the extent to which the company or subsidiary 
                has complied with the provisions of the Act and 
                regulations prescribed and orders issued under this 
                Act.
            (2) Use of existing report.--
                    (A) In general.--The appropriate Federal banking 
                agency described in paragraph (1) shall, to the fullest 
                extent possible, accept reports in fulfillment of such 
                agency's reporting requirements under this paragraph 
                that a financial services holding company or any 
                subsidiary of such company has been required to provide 
                to other Federal and State supervisors or to 
                appropriate self-regulatory organizations.
                    (B) Availibility.--A financial services holding 
                company or a subsidiary of such company shall provide 
                to the appropriate Federal banking agency described in 
                paragraph (1), at the request of such agency, a report 
                referred to in subparagraph (A).
            (3) The National Financial Services Committee shall 
        prescribe by regulation uniform standards for the form and 
        content of the reports required by this subsection.
            (4) Exemptions from reporting requirements.--
                    (A) In general.--The National Financial Services 
                Committee may, by regulation or order, exempt any 
                company or class of companies, under such terms and 
                conditions and for such periods as the Committee shall 
                provide in such regulation or order, from the 
                provisions of this subsection and any regulations 
                prescribed under this subsection.
                    (B) Criteria for consideration.--In granting any 
                exemption under subparagraph (A), the Committee shall 
                consider, among other factors--
                            (i) whether information of the type 
                        required under this subsection is available 
                        from a supervisory agency (as defined in 
                        section 1101(7) of the Right to Financial 
                        Privacy Act of 1978), the Commodity Futures 
                        Trading Commission, or a foreign regulatory 
                        body of a similar type;
                            (ii) the primary business of the company;
                            (iii) the nature and extent of domestic or 
                        foreign regulation of the company's activities; 
                        and
                            (iv) whether the companies' activities 
                        could pose a significant risk to the safety and 
                        soundness of any depository institution 
                        subsidiary of the financial services holding 
                        company.
    (c) Examinations.--
            (1) In general.--For purposes of this Act, the appropriate 
        Federal banking agency of the lead depository institution of a 
        financial services holding company may examine such holding 
        company, but only to the extent permitted by this subsection.
            (2) Standard for examinations.--The appropriate Federal 
        banking agency for the lead depository institution of a 
        financial services holding company shall not examine such 
        holding company unless--
                    (A) such agency determines, on the basis of all 
                information available to such agency that the 
                operations or activities of the financial services 
                holding company or any subsidiary of such company, or 
                any transaction involving such company or subsidiary 
                and an affiliated depository institution, may pose a 
                material risk to the safety and soundness of any 
                depository institution controlled by such holding 
                company; or
                    (B) such agency is unable to determine from reports 
                the nature of the operations, financial condition, 
                activities, or effectiveness of the risk management 
                systems of the financial services holding company or 
                any subsidiary of such company, or to assess compliance 
                with the provisions of this Act.
            (3) Restricted focus of examinations.--The appropriate 
        Federal banking agency of the lead depository institution of a 
        financial services holding company shall limit the focus and 
        scope of any examination permitted by this subsection to the 
        consolidated holding company, provided, however, that such 
        examination shall not extend to any subsidiary of such holding 
        company (other than a depository institution subsidiary).
            (4) Deference to other bank examinations.--
                    (A) In general.--For purposes of this subsection, 
                the appropriate Federal banking agency of the lead 
                depository institution of the financial services 
                holding company shall, to the fullest extent possible, 
                use the report of examinations of other appropriate 
                Federal banking agencies or the appropriate State 
                depository institution supervisory authority.
                    (B) Applicability to foreign banks.--For purposes 
                of this subsection, with respect to a foreign bank that 
                is a financial services holding company, the 
                appropriate Federal banking agency shall give due 
                regard to the primary authority and responsibility of 
                the foreign bank's home country regulator for 
                supervision and examination of the bank outside the 
                United States and shall seek to minimize additional 
                examination or regulatory burdens on the foreign bank 
                outside of the United States, by coordinating with and 
                relying on examinations of and information from the 
                home country regulator to the fullest extent possible.
            (5) Use of other examinations of regulated subsidiaries.--
        In order to conduct an examination of a consolidation holding 
        company pursuant to this subsection, the appropriate Federal 
        banking agency of the lead depository institution of such 
        company--
                    (A) shall have access to, and may use, the reports 
                of examination made of--
                            (i) any registered broker or dealer by or 
                        on behalf of the Securities Exchange 
                        Commission, and
                            (ii) any other subsidiary that such agency 
                        finds to be comprehensively supervised under 
                        relevant Federal or State law by a Federal or 
                        State agency or authority; and
                    (B) may request any agency that regulates a 
                subsidiary described in clause (i) to examine and 
                provide information concerning any aspect of such 
                subsidiary's activities that the appropriate Federal 
                banking agency deems necessary or appropriate to carry 
                out the purposes of this section, and such other agency 
                shall, to the extent practicable, comply with such 
                request.
            (6) Confidentiality of reported information.--
                    (A) In general.--Notwithstanding any other 
                provision of law, an appropriate Federal banking agency 
                shall not be compelled to disclose any information 
                required to be reported under this subsection, or any 
                information supplied to such agency by any domestic or 
                foreign regulatory agency, that relates to the 
                financial services holding company or any subsidiary of 
                such company.
                    (B) Compliance with requests for information.--No 
                provision of this subparagraph shall be construed as 
                authorizing an appropriate Federal banking agency to 
                withhold information from Congress, or preventing such 
                agency from complying with a request for information 
                from any other Federal department or agency for 
                purposes within the scope of such department's or 
                agency's jurisdiction, or from complying with an order 
                of a court of competent jurisdiction in an action 
                brought by the United States or such agency.
                    (C) Coordination with other law.--For purposes of 
                section 552 of title 5, United States Code, this 
                subparagraph shall be considered to be a statute 
                described in subsection (b)(3)(B) of such section.
                    (D) Designation of confidential information.--In 
                prescribing regulations to carry out the requirements 
                of this subsection, an appropriate Federal banking 
                agency shall designate information described in or 
                obtained pursuant to this paragraph as confidential 
                information.
                    (E) Costs.--The cost of any examination conducted 
                by an appropriate Federal banking agency under this 
                section may be assessed against, and made payable by, 
                such holding company.
    (d) Termination.-- The National Financial Services Committee may at 
any time, upon its own motion or upon application, terminate the status 
of a company as a financial services holding company, if it is 
determined that such company no longer controls or operates any 
depository institutions or otherwise fails to qualify as a financial 
services holding company as defined in this Act.
    (e) No Extension of Insurance Coverage.--In no instance shall the 
benefits of Federal deposit insurance coverage applicable to an insured 
depository institution that is controlled by a financial services 
holding company be extended or interpreted to extend to either such 
financial services holding company or to any other company controlled 
by such financial services holding company that is not an insured 
depository institution.
    (f) Enforcement of Violations.--Whenever it appears to the 
appropriate Federal banking agency of the lead depository institution 
of a financial services holding company that such holding company is 
violating, has violated, or is about to violate any provision of this 
Act or any regulation prescribed under this Act, such agency may, in 
its discretion, apply to the appropriate district court of the United 
States or the United States court of any territory for--
            (1) a temporary or permanent injunction or restraining 
        order enjoining such financial services holding company from 
        violating this Act or any regulation prescribed under this Act; 
        or
            (2) such other equitable relief, including divestiture, as 
        may be necessary to prevent such violation.
    (g) Court Jurisdiction.--The district courts of the United States 
and the United States court in any territory shall have jurisdiction 
and power to issue any injunction or restraining order or grant any 
other relief described in subsection (f). When appropriate, any 
injunction, order, or other equitable relief granted under this 
subparagraph shall be granted without requiring the posting of any 
bond.
    (h) Notice of Violations.--Whenever it appears to a Federal or 
State official or agency with supervisory or examination authority over 
any affiliate of a financial services holding company that such 
affiliate or such financial services holding company is violating, has 
violated, or is about to violate any provision of this Act or any 
regulation prescribed under this Act, such official or agency shall 
promptly notify the appropriate Federal banking agency of the lead 
depository institution of such holding company in order that such 
banking agency, in consultation with the notifying agency, may 
determine whether action under this section is appropriate.

SEC. 110. DIVESTITURE.

    (a) In General.--In addition to all of its other regulatory and 
supervisory powers, if the appropriate Federal banking agency 
determines that a depository institution under its supervision has 
engaged in a continuing course of conduct involving its financial 
services holding company or any affiliate of such holding company which 
has had, or has a significant probability of having, the effect of 
causing such depository institution to be in an unsafe or unsound 
condition, it may make an initial finding that the financial services 
holding company should be required to terminate its control or 
operation of the depository institution. If the appropriate Federal 
banking agency makes such an initial finding, it shall within 3 days so 
notify the financial services holding company controlling or operating 
the depository institution and the National Financial Services 
Committee. Such notice shall provide a statement for the basis of the 
appropriate Federal banking agency's action.
    (b) Hearing Procedures.--Not later than 30 days after receipt of 
the notice described in subsection (a), the financial services holding 
company receiving such notice may request an agency hearing before the 
appropriate Federal banking agency. In such hearing, all issues shall 
be determined pursuant to section 554 of title 5, United States Code. 
The length of the hearing shall be determined by the appropriate 
Federal banking agency, and such hearing may be before a hearing 
examiner appointed by such agency. At the conclusion thereof, the 
appropriate Federal banking agency shall issue a final order, on the 
basis of the record made at such hearing, affirming or reversing the 
initial finding of the appropriate Federal banking agency. A company 
that fails to request an agency hearing under this paragraph shall be 
deemed to have consented to the issuance of a final order affirming the 
initial finding without the necessity of the hearing provided for in 
this paragraph.
    (c) Termination of Control.--If such final order affirms the 
initial finding, the financial services holding company shall, upon 
completion of the judicial review, if any, of the appropriate Federal 
banking agency's final order as provided for in section 113, terminate 
its control or operation of the depository institution involved within 
1 year or such longer period as the appropriate Federal banking deems 
necessary and appropriate to protect the safety and soundness of the 
depository institution or prevent financial disruption.

SEC. 111. CRIMINAL PENALTIES.

    (a) Willful Violations.--Any company or insured depository 
institution which knowingly and willfully participates in a material 
violation of any provision of this Act, or any rule, regulation, or 
order issued by an appropriate Federal banking agency pursuant thereto, 
shall, upon conviction, be fined for each violation not more than the 
greater of $250,000 or an amount equal to one one hundreth of 1 percent 
of the minimum required capital of the lead depository institution of 
the financial services holding company for each day during which the 
violation continues, except that in no case shall any such amount for 
any violation or related series of violations exceed 1 percent of the 
minimum required capital of the lead depository institution.
    (b) Enforcement Against Individuals.--Any natural person who 
knowingly and willfully participates in a material violation of any 
provision of this Act or any rule, regulation, or order issued pursuant 
thereto, shall upon conviction be imprisoned not more than 5 years and 
fined for each violation not more than the greater of $250,000 or 
double the individual's annual compensation at the time the violation 
occurred.
    (c) Enforceability Against Officers and Employees.--Every officer, 
director, employee, and agent of a financial services holding company 
or depository institution also shall be subject to the same penalties 
for false entries in any book, report, or statement of such company or 
depository institution as are applicable to officers, directors, 
employees, and agents of member banks for false entries in any books, 
reports, or statements of member banks under section 1005 of title 18, 
United States Code.
    (d) Enforceability Against Holding Companies.--A financial services 
holding company and its affiliates shall be subject to the provisions 
of title 18, United States Code, to the same extent as a registered 
bank holding company or any affiliate of such a company.

SEC. 112. CIVIL ENFORCEMENT, CEASE-AND-DESIST ORDERS, CIVIL MONEY 
              PENALTIES, REMOVAL, AND PROHIBITION AUTHORITY.

    Subsections (b) through (s) and subsection (u) of section 8 of the 
Federal Deposit Insurance Act shall apply to any financial services 
holding company in the same manner as they apply to an insured 
depository institution. Nothing in subsection (b) or (c) of that 
section 8 shall authorize any Federal banking agency, other than the 
appropriate Federal banking agency, to issue a notice of charges or 
cease-and-desist order against a financial services holding company.

SEC. 113. JUDICIAL REVIEW.

    Any party aggrieved by an appropriate Federal banking agency's 
findings or other actions under this Act may obtain review by the 
United States court of appeals of the circuit wherein such party has 
its principal place of business or the United States Court of Appeals 
for the District of Columbia Circuit, by filing a Notice of Appeal in 
such court within 30 days from the date of such action, and 
simultaneously sending a copy of such notice by registered or certified 
mail to the appropriate Federal banking agency. The appropriate Federal 
banking agency shall promptly certify and file in such court the record 
upon which such action or finding was based. The actions or findings of 
the appropriate Federal banking agency shall be set aside if not 
supported by substantial evidence or if found to violate procedures 
established by this Act. An initial finding by the appropriate Federal 
banking agency under section 110 shall be subject to judicial review 
only in the context of review of a final order under section 110(b).

SEC. 114. NATIONAL FINANCIAL SERVICES COMMITTEE.

    (a) Establishment.--There is established a National Financial 
Services Committee which shall consist of--
            (1) the Secretary of the Treasury;
            (2) the Chairman of the Board of Governors of the Federal 
        Reserve System;
            (3) the Chairman of the Board of Directors of the Federal 
        Deposit Insurance Corporation;
            (4) the Comptroller of the Currency; and
            (5) the Chairman of the Securities and Exchange Commission.
    (b) Member Agencies.--For purposes of this Act, the agencies or 
departments headed by members of the committee shall be referred to as 
``member agencies''.
    (c) Chair.--The Chair of the Committee shall be the Secretary of 
the Treasury.
    (d) Compensation.--Each member of the Committee shall serve without 
additional compensation, but shall be entitled to reasonable expenses 
incurred in carrying out the official duties as such a member.
    (e) Public Meetings.--The Committee shall hold public meetings at 
least annually. All meetings of the Committee shall be conducted in 
conformity with the provisions of section 3(a) of the Government in the 
Sunshine Act (5 U.S.C. 552b). The Committee may not take any action 
unless such action is approved by a majority vote of the members of the 
Committee.
    (f) Secretariat.--The Department of the Treasury shall provide the 
Secretariat for the Committee and shall assume any expenses arising 
from execution of the responsibilities of the Committee, except for 
expenses incurred by employees of any Member of the Committee.
    (g) Access To Records.--For the purpose of carrying out this 
section, the Committee shall have access to all books, accounts, 
records, reports, files, memoranda, papers, things, and property 
belonging to or in use by any appropriate Federal banking agency.
    (h) Functions of the Committee.--
            (1) Uniform principles and standards.--The Committee shall, 
        insofar as is practicable, establish uniform principles and 
        standards applicable to the notices, reports, examinations and 
        supervision of financial services institutions regulated by the 
        member agencies, and to the extent permitted by this Act, 
        financial services holding companies, which principles and 
        standards shall be applied by the member agencies.
            (2) Recommendations.--The Committee shall make 
        recommendations for uniformity in other supervisory matters, 
        such as, but not limited to, identifying financial services 
        institutions and other providers of financial services in need 
        of special supervisory attention, the adequacy of supervisory 
        tools for determining the impact of affiliate operations on 
        insured depository institutions, and the ability of the member 
        agencies to discover possible fraud or questionable practices.
            (3) Recommendations to congress.--The Committee shall, from 
        time to time, recommend to the Congress additional measures to 
        strengthen the separation between insured depository 
        institutions controlled by depository institutions holding 
        companies from the activities of any of their affiliates, 
        including the imposition of additional restrictions on 
        interaffiliate transactions and the strict application of 
        Federal deposit insurance coverage only for the benefit of 
        depositors of insured depository institutions.
    (i) Consultation With State Regulators.--The Committee shall 
consult with the appropriate organizations representing the State 
regulators of banks, savings and loan associations, savings banks, 
securities firms, insurance companies, and other providers of financial 
services, and as deemed appropriate, meet with such State regulators. 
The Committee, when appropriate, shall invite to each public meeting of 
the Committee representatives of such organizations.
    (j) Studies and Recommendations.--The Committee may conduct or 
authorize studies to carry out the purposes of this Act. On the basis 
of such studies, the Committee may make recommendations to the Congress 
and member agencies concerning the implementation of this Act and 
changes in statutes and regulations necessary to promote the strength 
and stability of the Nation's financial system and financial 
institutions, the competitiveness of providers of financial services in 
domestic and international markets, and the purposes of this Act. Not 
later than 1 year after the date of the enactment of this Act, the 
Committee shall report to the Congress on proposals for legislative or 
regulatory actions that will improve the examination process to permit 
better oversight of all insured depository institutions. In particular, 
the Committee shall consider whether the number of, or compensation 
for, examiners employed by the appropriate Federal regulatory agencies 
should be increased.
    (k) Notice Procedures for Determining New Financial Services 
Institutions and New Financial Activities.--
            (1) Notice requirement.--A financial services holding 
        company may request the Committee to determine that--
                    (A) an activity not described in section 102(n) 
                (1)-(12) constitutes a financial activity pursuant to 
                section 102(n)(13); or
                    (B) a company not described in section 102(m) (1)-
                (8) is a financial services institution pursuant to 
                section 102(m)(9),
        by providing the Committee with written notice describing the 
        proposed activity or institution.
            (2) Contents of notice.--The notice submitted to the 
        Committee shall contain such information as the Committee shall 
        prescribe by regulation or by specific request in connection 
        with a particular notice.
            (3) Procedure for committee action.--
                    (a) Notice of disapproval.--Any notice filed under 
                this subsection shall be deemed to be approved by the 
                Committee unless before the end of the 60-day period 
                beginning on the date the Committee receives a complete 
                notice under subparagraph (1), the Committee issues an 
                order determining the activity does not constitute a 
                financial activity or the institution is not a 
                financial services institution and setting forth the 
                reasons for disapproval.
                    (B) Extension of period.--The Committee may extend 
                the 60-day period referred to in subparagraph (A) for 
                an additional 30 days. The Committee may further extend 
                the period with the agreement of the financial services 
                holding company submitting the notice pursuant to this 
                subsection.
            (4) Shorter periods.--The Committee may prescribe 
        regulations which provide for a shorter notice period than the 
        periods described in subparagraphs (A) and (B).
            (5) Incomplete information.--The Committee may determine 
        that an activity or an institution for which notice has been 
        submitted pursuant to this subsection, does not constitute a 
        financial activity or is not a financial services institution, 
        if the financial services holding company submitting such 
        notice neglects, fails, or refuses to furnish the Committee all 
        the information required by the Committee.

    Subtitle B--Securities Activities of Financial Services Holding 
                               Companies

SEC. 121. LIMITATION ON SECURITIES ACTIVITIES OF DEPOSITORY 
              INSTITUTIONS AFFILIATED WITH SECURITIES AFFILIATES.

    (a) In General.--A financial services holding company that is 
affiliated with a securities affiliate shall not permit any depository 
institution, or any subsidiary of any depository institution, which is 
controlled by such holding company to engage, directly or indirectly in 
the United States--
            (1) in underwriting securities backed by or representing 
        interests in notes, drafts, acceptances, loans, leases, 
        receivables, other obligations, or pools of any such 
        obligations originated or purchased by the institution or its 
        affiliates; or
            (2) in underwriting or dealing in any other securities,
except securities expressly authorized by section 5136 of the Revised 
Statutes of the United States as permissible for a national bank to 
underwrite or deal in.
    (b) Rule of Construction.--No provision of this section shall be 
construed as permitting a securities affiliate to accept deposits in 
contravention of section 21 of the Banking Act of 1933.
    (c) Definition of Security.--
            (1) In general.--For purposes of this section, the term 
        ``security'' has the meaning given to such term in section 
        3(a)(10) of the Securities Exchange Act of 1934.
            (2) Exceptions.--Notwithstanding any other provision of 
        law, the term ``security'' does not include any of the 
        following for purposes of this section:
                    (A) A contract of insurance.
                    (B) A deposit account, savings account, certificate 
                of deposit, or other deposit instrument issued by a 
                depository institution.
                    (C) A share account issued by a savings association 
                if the account is insured by the Federal Deposit 
                Insurance Corporation.
                    (D) A banker's acceptance.
                    (E) A letter of credit issued by a depository 
                institution.
                    (F) A debit account at a depository institution 
                arising from a credit card or similar arrangement.
                    (G) A loan or loan participation (as determined by 
                the appropriate Federal banking agency), including any 
                debt security issued in connection with sovereign debt 
                restructuring which a bank purchases and sells pursuant 
                to such bank's lending authority.
                    (H) A qualified financial contract (as defined in 
                section 11(e)(8)(d)(i) of the Federal Deposit Insurance 
                Act), as determined by the appropriate Federal Banking 
                agency, after consultation with and consideration of 
                the views of the Securities and Exchange Commission, 
                except that, for purposes of this section such term 
                does not include--
                            (i) any securities contract (as defined in 
                        section 11(e)(8)(D)(ii) of such Act) that is 
                        based on or directly relates to a security that 
                        is not expressly authorized by section 5136 of 
                        the Revised Statutes of the United States as 
                        permissible for a national bank to underwrite 
                        or deal in unless the appropriate Federal 
                        banking agency determines, after consultation 
                        with and consideration of the views of the 
                        Securities and Exchange Commission, that such 
                        securities contract is appropriate for a bank 
                        to underwrite or deal in, taking into account 
                        other qualified financial contracts which a 
                        bank is permitted to underwrite or deal in; and
                            (ii) any agreement, contract, or 
                        transaction which is determined by the Federal 
                        Deposit Insurance Corporation in a regulation 
                        prescribed after the date of the enactment of 
                        this Act to be a qualified financial contract 
                        unless the appropriate Federal banking agency 
                        determines, after consultation with and 
                        consideration of the views of the Securities 
                        and Exchange Commission, that such agreement, 
                        contract, or transaction shall be treated as a 
                        qualified financial contract for purposes of 
                        this section.
            (3) Authority to exempt banking products.--Notwithstanding 
        any other provision of law, the appropriate Federal banking 
        agency may, by regulation or order, exempt a banking product 
        from the definition of security if the appropriate Federal 
        banking agency finds that--
                            (i) the product is available in the course 
                        of a banking business and is more appropriately 
                        regulated as a banking product; and
                            (ii) the exemption is otherwise consistent 
                        with the purposes of this section, the 
                        maintenance of fair and orderly markets, and 
                        the protection of investors.
            (4) Definition for limited purpose.--The fact that a 
        particular instrument is excluded pursuant to paragraph (2) or 
        (3) from the definition of security for purposes of this 
        section shall not be construed as finding or implying that such 
        instrument is or is not a security for purposes of--
                    (A) Federal securities law;
                    (B) section 5136 of the Revised Statutes of the 
                United States; or
                    (C) sections 20, 21, or 32 of the Banking Act of 
                1933 (12 U.S.C. 377, 378, and 78).
            (5) Reservation of authority to chartering authority.--A 
        determination by the appropriate Federal banking agency under 
        this subsection shall not be construed in any way as 
        authorizing a bank to provide any product or service that the 
        bank is not otherwise authorized to provide under relevant law 
        governing the activities and powers of the bank.
            (6) Consultation with commission.--
                    (A) Notice and consultation required.--In 
                determining whether to exempt a banking product 
                pursuant to paragraph (3), the appropriate Federal 
                banking agency shall provide written notice to, consult 
                with, and consider the views of the Securities and 
                Exchange Commission.
                    (B) Response and publication.--If the Securities 
                and Exchange Commission comments in writing on a 
                proposed determination of the appropriate Federal 
                banking agency, such agency shall--
                            (i) respond in writing to such written 
                        comment; and
                            (ii) at the request of such Commission, 
                        publish such comment and response in the 
                        Federal Register at the time the determination 
                        becomes effective.
            (7) Approval of national financial services committee.--
                    (A) In general.--An appropriate Federal banking 
                agency may not issue a regulation or order pursuant to 
                paragraph (3) without the approval of the National 
                Financial Services Committee.
                     (B) Uniform standards.--Any regulation or order 
                subject to the approval of the National Financial 
                Services Committee under paragraph (1) shall be 
                identical for each appropriate Federal banking agency, 
                except as otherwise permitted by such Committee.

SEC. 122. SAFEGUARDS RELATING TO SECURITIES AFFILIATES.

    (a) Extensions of Credit and Asset Purchases Restricted.--
            (1) In general.--No depository institution affiliated with 
        a securities affiliate shall, directly or indirectly, do any of 
        the following:
                    (A) Extend credit in any manner to the securities 
                affiliate.
                    (B) Issue a guarantee, acceptance, or letter of 
                credit, including an endorsement or a standby letter of 
                credit, for the benefit of the securities affiliate.
                    (C) Except as provided in paragraph (3), purchase 
                for its own account, or for the account of any 
                subsidiary of such institution, financial assets of the 
                securities affiliate.
            (2) Exception for clearing securities.--Paragraph (1)(A) 
        shall not apply with respect to an extension of credit by a 
        well capitalized depository institution to acquire or sell 
        securities if the following conditions are met:
                    (A) The extension of credit is incidental to 
                clearing transactions in those securities through the 
                depository institution.
                    (B) Both the principal of and the interest on the 
                extension of credit are fully secured by those 
                securities.
                    (C) Either--
                            (i) the extension of credit is to be repaid 
                        before the close of business on the same 
                        business day; or
                            (ii) all of the following conditions are 
                        satisfied:
                                    (I) The securities cannot, in the 
                                ordinary course of business, be cleared 
                                on that business day.
                                    (II) The extension of credit is to 
                                be repaid before the close of business 
                                on the next business day.
                                    (III) Extensions of credit subject 
                                to this clause, when aggregated with 
                                all other covered transactions between 
                                the institution and all affiliated 
                                securities affiliates do not exceed 10 
                                percent of the institution's capital 
                                stock and surplus.
                    (D) Either--
                            (i) the securities are securities expressly 
                        authorized by section 5136 of the Revised 
                        Statutes of the United States as permissible 
                        for a national bank to underwrite or deal in; 
                        or
                            (ii) the appropriate Federal banking agency 
                        for the depository institution permits 
                        transactions under this paragraph in securities 
                        not described in clause (i) and the securities 
                        affiliate provides the depository institution 
                        with such additional security or other 
                        assurance of performance, if any, as such 
                        agency shall require to prevent such 
                        transactions from posing any appreciable risk 
                        to the institution.
            (3) Exceptions for certain securities purchased for a 
        depository institution's own account.--Paragraph (1)(C) shall 
        not apply with respect to purchases at the current market value 
        (based on reliable and regularly available price quotations, 
        including those readily available on electronic quotation 
        systems) of--
                    (A) securities expressly authorized by section 5136 
                of the Revised Statutes of the United States as 
                permissible for a national bank to underwrite or deal 
                in; or
                    (B) securities that--
                            (i) the securities affiliate has been 
                        marking to market daily; and
                            (ii) are rated investment grade by at least 
                        one nationally recognized statistically rating 
                        organization.
            (4) Other exceptions.--The appropriate Federal banking 
        agency may make exceptions to paragraph (1) for well 
        capitalized depository institutions it regulates if--
                    (A) the transaction is fully secured in accordance 
                with section 23A(c) of the Federal Reserve Act; and
                    (B) the aggregate amount of covered transactions 
                between the institution and all securities affiliates 
                of the financial services holding company, excluding 
                transactions permitted under paragraph (2)(C)(i) or 
                (3)(A), does not exceed 10 percent of the institution's 
                capital stock and surplus.
    (b) Credit Enhancement Restricted.--
            (1) In general.--No depository institution affiliated with 
        a securities affiliate shall, directly or indirectly, extend 
        credit, or issue or enter into a standby letter of credit, 
        asset purchase agreement, indemnity, guarantee, insurance, or 
        other facility, for the purpose of enhancing the marketability 
        of a securities issue underwritten by the securities affiliate.
            (2) Definition of term by board.--The appropriate Federal 
        banking agency shall prescribe a definition for the term ``for 
        the purpose of enhancing the marketability of a securities 
        issue'' for purpose of paragraph (1).
            (3) Exception for bank eligible securities.--Paragraph (1) 
        shall not apply with regard to securities expressly authorized 
        by section 5136 of the Revised Statutes of the United States as 
        permissible for a national bank to underwrite or deal in.
            (4) Application to well capitalized depository 
        institutions.--
                    (A) In general.--A well capitalized depository 
                institution may engage in a transaction described in 
                paragraph (1) if--
                            (i) the depository institution has adopted 
                        appropriate limits on exposure on a 
                        consolidated basis to any single customer whose 
                        securities are underwritten by the securities 
                        affiliate; and
                            (ii) the institution and its securities 
                        affiliate have adopted appropriate procedures, 
                        including maintenance of necessary documentary 
                        records, to assure that any such extension of 
                        credit, standby letter of credit, asset 
                        purchase agreement indemnity, guarantee, 
                        insurance or other facility, is on arm's length 
                        basis.
                    (B) Arm's length transaction described.--An 
                extension of credit may be considered to be on arm's 
                length basis if the terms and conditions are 
                substantially the same as those prevailing at the time 
                for comparable transactions involving securities that 
are not underwritten by the securities affiliate.
                    (C) Compliance with paragraph (1).--The appropriate 
                Federal banking agency may require, by regulation or 
                order, compliance with paragraph (1) by well 
                capitalized depository institutions exempt under this 
                paragraph in order to achieve any purpose specified in 
                subsection (k).
    (c) Prohibition of Financing Purchase of Security Being 
Underwritten.--
            (1) In general.--No financial services holding company or 
        subsidiary of a financial services holding company (other than 
        a securities affiliate) shall knowingly extend or arrange for 
        the extension of credit, directly or indirectly, secured by or 
        for the purpose of purchasing any security while, or for 30 
        days after, that security is the subject of a distribution in 
        which a securities affiliate of that financial services holding 
        company participates as an underwriter or a member of a selling 
        group.
            (2) Reliance on acknowledgement.--For purposes of paragraph 
        (1), a financial services holding company or subsidiary may 
        rely on an express written acknowledgement signed by the 
        borrower that the credit is not secured by or for the purpose 
        of purchasing a security described in this subparagraph.
            (3) Application to bank eligible securities.--Paragraph (1) 
        shall not apply with regard to extensions of credit if the 
        securities are securities expressly authorized by section 5136 
        of the Revised Statutes of the United States as permissible for 
        a national bank to underwrite or deal in.
            (4) Application to well capitalized depository 
        institutions.--The appropriate Federal banking agency may make 
        exceptions, by regulation or order, to paragraph (1) for an 
        extension of credit, after consultation with and considering 
        the views of the Securities and Exchange Commission.
            (5) Consistency with the federal securities laws.--No 
        provision of this subsection shall be construed as permitting a 
        securities affiliate to extend or maintain credit, or arrange 
        for an extension of credit, except in compliance with 
        applicable provisions of the Securities Exchange Act of 1934 
        and the regulations prescribed and interpretations issued under 
        such Act.
    (d) Restriction on Extending Credit To Make Payments on 
Securities.--
            (1) In general.--No depository institution affiliated with 
        a securities affiliate shall, directly or indirectly, extend 
        credit to an issuer of securities underwritten by such 
        securities affiliate for the purpose of paying the principal of 
        those securities or interest or dividends on those securities.
            (2) Exceptions for certain extensions of credit.--Paragraph 
        (1) shall not apply to an extension of credit for a documented 
        purpose (other than paying principal, interest, or dividends) 
        if the timing, maturity, and other terms of the credit, taken 
        as a whole, are substantially different from those of the 
        underwritten securities.
            (3) Exceptions for bank eligible securities.--Paragraph (1) 
        shall not apply with respect to any security expressly 
        authorized by section 5136 of the Revised Statutes of the 
        United States as permissible for a national bank to underwrite 
        or deal in.
            (4) Application to well capitalized depository 
        institutions.--
                    (A) In general.--Paragraph (1) shall not apply with 
                respect to well capitalized depository institutions 
                if--
                            (i) the depository institution has adopted 
                        appropriate limits on exposure on a 
                        consolidated basis to any single customer whose 
                        securities are underwritten by the securities 
                        affiliate; and
                            (ii) the depository institution has adopted 
                        appropriate procedures, including maintenance 
                        of necessary documentary records, to assure 
                        that any extension of credit by the depository 
                        institution to an issuer for the purpose of 
                        paying the principal, interest or dividends on 
                        securities underwritten by the securities 
                        affiliate is on an arm's length basis.
                    (B) Arm's length transaction described.--An 
                extension of credit may be considered to have been made 
                on an arm's length basis if the terms and conditions 
                are substantially the same as those prevailing at the 
                time for comparable transactions with issuers whose 
                securities are not underwritten by the securities 
                affiliate.
                    (C) Compliance with subparagraph (a).--The 
                appropriate Federal banking agency may require by 
                regulation or order, compliance with paragraph (1) by 
                well capitalized depository institutions exempt under 
                this paragraph in order to achieve any purpose 
                specified in subsection (k).
    (e) Common Directors and Senior Executive Officers.--
            (1) In general.--The appropriate Federal banking agency 
        shall, by regulation or order, prescribe the circumstances 
        under which directors and senior executive officers of a 
        securities affiliate may serve at the same time as directors or 
        senior executive officers of any affiliated depository 
        institutions.
            (2) Standards.--The appropriate Federal banking agency, in 
        issuing any regulation or order pursuant to paragraph (1), 
        shall consider appropriate factors including--
                    (A) any burdens imposed by restrictions on director 
                and senior executive officer interlocks;
                    (B) the safety and soundness of depository 
                institutions and securities affiliates;
                    (C) unfair competition in securities activities;
                    (D) improper exchange of customer information; or
                    (E) harm to customers of securities affiliates or 
                depository institutions that could reasonably result 
                from director and senior officer interlocks.
            (3) Exception for small financial services holding 
        companies.--
                    (A) In general.--Notwithstanding paragraph (1), a 
                director or senior executive officer of a securities 
                affiliate may serve at the same time as a director or 
                senior executive officer of an affiliated depository 
                institution if that institution and all affiliated 
                depository institutions have, in the aggregate, total 
                assets of not more than $500,000,000.
                    (B) Inflation adjustment.--The dollar limitation 
                contained in subparagraph (A) shall be adjusted 
                annually after December 31, 1995, by the annual 
                percentage increase in the Consumer Price Index for 
                Urban Wage Earners and Clerical Workers published by 
                the Bureau of Labor Statistics.
            (4) Exception for certain foreign affiliates.--Paragraph 
        (1) shall not prohibit a director or senior executive officer 
        of a securities affiliate from serving at the same time as a 
        director or senior executive officer of an entity which--
                    (A) is organized under section 25 or 25A of the 
                Federal Reserve Act;
                    (B) is an affiliate of such securities affiliate; 
                and
                    (C) principally engages in business outside the 
                United States.
    (f) Disclosure Required by Securities Affiliate.--
            (1) In general.--Pursuant to rules adopted by the 
        Securities and Exchange Commission in consultation with the 
        appropriate Federal banking agencies, a securities affiliate 
        shall conspicuously disclose in writing to each of its 
        customers at the time a securities account is opened, or within 
        a reasonable time thereafter if it is not practicable to 
        provide such notice at that time, that--
                    (A) securities sold, offered, or recommended by the 
                securities affiliate--
                            (i) are not deposits;
                            (ii) are not insured by the Federal Deposit 
                        Insurance Corporation;
                            (iii) are not guaranteed by an affiliated 
                        insured depository institution;
                            (iv) are not otherwise an obligation of an 
                        insured depository institution (unless such is 
                        the case); and
                            (v) with regard to any product that 
                        includes any investment component, are subject 
                        to investment risks including possible loss of 
                        principal invested;
                    (B) the securities affiliate is not an insured 
                depository institution, and is a corporation separate 
                from any insured depository institution; and
                    (C) the securities affiliate may be underwriting or 
                dealing in the securities being sold, offered or 
                recommended, and if so, would have a financial interest 
                in the transaction.
            (2) Form of disclosure.--The disclosures required by 
        paragraph (1) shall be made in clear and concise language 
        that--
                    (A) is readily comprehensible to customers of the 
                securities affiliate; and
                    (B) is designed to promote customer understanding 
                that uninsured investment products are not deposits 
                insured by the Federal Deposit Insurance Corporation.
            (3) Disclosure authority.--Subject to paragraph (2), the 
        Securities and Exchange Commission, after consultation with the 
        appropriate Federal banking agencies may, in its discretion, 
        prescribe disclosures in addition to the disclosures prescribed 
        by paragraph (1).
    (g) Disclosure Required by Depository Institutions.--
            (1) In general.--Pursuant to rules adopted jointly by the 
        appropriate Federal banking agencies in consultation with the 
        Securities and Exchange Commission, no insured depository 
        institution shall knowingly express any opinion on the value 
        of, or the advisability of purchasing or selling, nonbanking 
        products (as defined by the appropriate Federal banking agency) 
        sold by the insured depository institution or any affiliate of 
        an insured depository institution unless the insured depository 
        institution conspicuously discloses in writing to the customer 
        that--
                    (A) the insured depository institution or affiliate 
                (whichever is applicable) is selling the nonbanking 
                product and has a financial interest in the transaction 
                (if such is the case);
                    (B) the nonbanking products--
                            (i) are not deposits;
                            (ii) are not insured by the Federal Deposit 
                        Insurance Corporation;
                            (iii) are not guaranteed by the institution 
                        or any other affiliated insured depository 
                        institution;
                            (iv) are not otherwise an obligation of an 
                        insured depository institution (unless such is 
                        the case); and
                            (v) with regard to any nonbanking product 
                        that includes any investment component, are 
                        subject to investment risks including possible 
                        loss of principal invested; and
                    (C) an affiliate, if involved, is not an insured 
                depository institution (unless such is the case), and 
                is a corporation separate from any insured depository 
                institution (unless such is not the case).
            (2) Form of disclosure.--The disclosures required by 
        paragraph (1) shall be made in clear and concise language 
        that--
                    (A) is readily comprehensible to customers of the 
                insured depository institution, and
                    (B) is designed to promote customer understanding 
                that nonbanking products are not deposits insured by 
                the Federal Deposit Insurance Corporation.
            (3) Customer acknowledgment of disclosure.--
                    (A) In general.--Whenever any insured depository 
                institution or securities affiliate opens an account 
                for the purpose of selling a nondeposit investment 
                product or products to a customer, such insured 
                depository institution or securities affiliate, as the 
                case may be, shall obtain a one-time acknowledgment of 
                receipt by the customer of such disclosures, including 
                the date of receipt with the customer's name, address, 
                and the account number.
                    (B) One-time acknowledgment.--The one-time written 
                acknowledgment required by subparagraph (A) and 
                obtained with respect to one account from a customer 
                shall satisfy the requirement with respect to all other 
                investment accounts opened by that customer at that 
                depository institution or securities affiliate.
                     (C) Timing of acknowledgment.--The one-time 
                acknowledgment required by subparagraph (A) must be 
                obtained within a reasonable time after the account is 
                opened.
                    (D) Special rule for accredited investors.--This 
                paragraph shall not apply to any customer who is, or 
                meets the requirements for, an accredited investor (as 
                defined in section 2(15) of the Securities Act of 
                1933).
             (4) Disclosure authority.--Subject to paragraph (2), the 
        appropriate Federal banking agencies may jointly prescribe, 
        after consultation with the Securities and Exchange Commission, 
        disclosures in addition to the disclosures required by 
        paragraph (1).
    (h) Underwriting Securities Representing Obligations Originated by 
Affiliate Restricted.--A securities affiliate shall not underwrite 
securities secured by or representing an interest in mortgages or other 
obligations originated or purchased by an affiliated depository 
institution or subsidiary of such an institution--
            (1) unless those securities--
                    (A) are rated by at least one unaffiliated, 
                nationally recognized statistical rating organization;
                    (B) are issued or guaranteed by the Federal Home 
                Loan Mortgage Corporation, the Federal National 
                Mortgage Association, or the Government National 
                Mortgage Association; or
                    (C) represent interests in securities described in 
                subparagraph (B); or
            (2) except as permitted by the appropriate Federal banking 
        agency.
    (i) Reciprocal Arrangements Prohibited.--No financial services 
holding company and no subsidiary of a financial services holding 
company may enter into any agreement, understanding, or other 
arrangement under which--
            (1) One financial services holding company (or subsidiary 
        of that financial services holding company) agrees to engage in 
        a transaction with, or on behalf of, another financial services 
        holding company (or subsidiary of that financial services 
        holding company), in exchange for
            (2) the agreement of the second financial services holding 
        company referred to in paragraph (1) (or a subsidiary of that 
        financial services holding company) to engage in any 
        transaction with, or on behalf of, the first financial services 
        holding company referred to in such paragraph (or any 
        subsidiary of that financial services holding company), for the 
        purpose of evading any requirement or restriction of Federal 
        law on transactions between, or for the benefit of, affiliates 
        of financial services holding companies.
    (j) Safeguards Apply to Certain Subsidiaries.--Except as provided 
in this section--
            (1) Securities affiliate.--No subsidiary of a securities 
        affiliate may do anything that this section prohibits the 
        securities affiliate from doing.
            (2) Depository institution.--No subsidiary of a depository 
        institution may do anything that this subsection prohibits the 
        depository institution from doing.
    (k) Authority To Modify and Impose Additional Safeguards; 
Interpretive Authority.--
            (1) In general.--The appropriate Federal banking agency 
        may, by regulation or order--
                    (A) adopt additional limitations, restrictions or 
                conditions on relationships or transactions among 
                depository institutions, their affiliates, and their 
                customers; and
                    (B) make any modification to any limitation, 
                restriction, or condition imposed under this section on 
                relationships or transactions among depository 
                institutions, the affiliates of depository 
                institutions, and the customers of such institutions or 
                affiliates, including modifications in addition to 
                those expressly provided for in this section.
            (2) Standards.--The appropriate Federal banking agency may 
        not exercise authority under paragraph (1) unless such agency 
        finds that such action is consistent with the purposes of this 
        act, including--
                    (A) the avoidance of any significant risk to the 
                safety and soundness of depository institutions or the 
                Federal deposit insurance funds;
                    (B) the enhancement of the financial stability of 
                financial services holding companies;
                    (C) the prevention of the subsidization of 
                securities affiliates by depository institutions;
                    (D) the avoidance of conflicts of interest or other 
                abuses; and
                    (E) the application of the principle of national 
                treatment and equality of competitive opportunity 
                between securities affiliates owned or controlled by 
                domestic financial services holding companies and 
                securities affiliates owned or controlled by foreign 
                banks operating in the United States.
            (3) Biennial review.--Beginning 2 years after the effective 
        date of the Depository Institution Affiliation Act, the 
        appropriate Federal banking agency shall, on a biennial basis--
                    (A) review all restrictions established pursuant to 
                paragraph (1) to determine whether any such 
                restrictions are required any longer to carry out the 
                purposes of this Act; and
                     (B) modify or eliminate any such restriction that 
                such agency determines is no longer required to carry 
                out the purposes of this Act.
    (l) Compliance Programs Required.--
            (1) In general.--Each appropriate Federal banking agency 
        and the Securities and Exchange Commission shall establish a 
        program for--
                    (A) sharing information, including reports of 
                examinations, concerning compliance with this section 
                or the amendments made by title III of the Depository 
                Institution Affiliation and Thrift Charter Conversion 
                Act, by--
                            (i) brokers, dealers, investment advisers, 
                        or investment companies that are registered 
                        with the Securities and Exchange Commission and 
                        that are affiliated with depository 
                        institutions, or are separately identifiable 
                        departments or divisions of depository 
                        institutions registered as investment advisers; 
                        and
                            (ii) depository institutions and their 
                        affiliates;
                    (B) enforcing compliance with this section and the 
                amendments made by this subtitle and paragraphs (4) and 
                (5) of section 3(a) of the Securities Exchange Act of 
                1934 by entities under its supervision; and
                    (C) responding to any complaints from customers 
                about inappropriate cross-marketing of securities 
                products or inadequate disclosure.
            (2) Data collection.--
                    (A) In general.--The appropriate Federal banking 
                agencies, after consultation with and consideration of 
                the views of the Securities and Exchange Commission, 
                shall (except as otherwise provided by the appropriate 
                Federal banking agency after such consultation) require 
                any depository institution that has effected securities 
                transactions pursuant to any exception enumerated in 
                paragraphs (4)(C) and (5)(D) of section 3(a) of the 
                Securities Exchange Act of 1934 to identify the 
                exceptions relied upon and to submit such information 
                necessary to monitor compliance under such paragraphs.
                    (B) Commission access.--The appropriate Federal 
                banking agency shall make any information referred to 
                in subparagraph (A) available to the Securities and 
                Exchange Commission, upon the request of the 
                Commission.
                    (C) Compliance.--In implementing the provisions of 
                this paragraph, the appropriate Federal banking 
                agencies shall ensure that any information requests to 
                depository institutions take into account the size and 
                activities of the institutions and do not cause undue 
                reporting burdens.
            (3) Commission's enforcement authority.--Without limiting 
        in any way the authority of the appropriate Federal banking 
        agencies under this section, the Securities and Exchange 
        Commission shall have the authority to enforce provision of 
        this section against a securities affiliate as if such 
        provision were a provision of the Securities Exchange Act of 
        1934 to the extent that the provision applies with respect to 
        the conduct or activities of the securities affiliate.
            (4) Examination reports.--
                    (A) In general.--The appropriate Federal banking 
                agencies shall, to the fullest extent possible, use the 
                reports of examination of any broker, dealer, 
                investment adviser, or investment company made by or on 
                behalf of the Securities and Exchange Commission and 
                reports made by or on behalf of a registered securities 
                association or national securities exchange, and shall 
                defer to such examinations for compliance with the 
                Federal securities laws.
                    (B) Compliance with section 122 safeguards.--The 
                appropriate Federal banking agencies shall--
                            (i) to the fullest extent possible, use the 
                        reports of examination of any securities 
                        affiliate made by the appropriate Federal 
                        banking agency for such affiliate; and
                            (ii) defer to such examinations for 
                        compliance with the provisions of this section.
            (5) Interpretations of the federal securities laws.--The 
        appropriate Federal banking agencies shall defer to the 
        Securities and Exchange Commission regarding all 
        interpretations and enforcement of the Federal securities laws 
        relating to the application of the Federal securities laws to 
        the activities and conduct of brokers, dealers, investment 
        advisers, and investment companies.
            (6) Notice of certain actions by sec.--The Securities and 
        Exchange Commission shall give notice to the appropriate 
        Federal banking agency upon the commencement of any 
disciplinary or law enforcement proceedings by the Commission and a 
copy of any order entered by the Commission against--
                    (A) any broker, dealer, or investment adviser 
                that--
                            (i) is registered with the Securities and 
                        Exchange Commission; and
                            (ii) is affiliated with, or is a separately 
                        identifiable department or division of, a 
                        depository institution;
                    (B) any investment company registered with the 
                Securities and Exchange Commission that is an affiliate 
                of or is advised by an investment adviser affiliated 
                with a depository institution or by a separately 
                identifiable department or division of a depository 
                institution that is a registered investment adviser; or
                    (C) any financial services holding company, 
                depository institution, or subsidiary of such company 
                or institution, if the proposed action relates to this 
                section or the amendments made by title III of the 
                Depository Institution Affiliation and Thrift Charter 
                Conversion Act.
            (7) Notice of certain actions by appropriate federal 
        banking agencies.--Upon the commencement of any disciplinary or 
        law enforcement proceedings to enforce the provisions of this 
        section by an appropriate Federal banking agency against any 
        broker, dealer, investment adviser, or investment company that 
        is registered under the Federal securities laws and is 
        affiliated with a depository institution or is a separately 
        identifiable department or division of a depository 
        institution, the appropriate Federal banking agency shall give 
        notice to the Securities and Exchange Commission of the 
        proposed action.
            (8) Immediate action allowed before notice.--The notice 
        required under paragraph (6) or (7) may be provided promptly 
        after action by the Securities and Exchange Commission or the 
        appropriate Federal banking agency, if--
                    (A) the Commission determines that the protection 
                of investors requires immediate action by the 
                Commission and prior notice under paragraph (6) is not 
                practical under the circumstances; or
                    (B) the appropriate Federal banking agency 
                determines that concerns for the safety and soundness 
                of a depository institution or its affiliate require 
                immediate action by the agency and prior notice under 
                (7) is not practical under the circumstances.
            (9) Coordinated enforcement action.--The Securities and 
        Exchange Commission and the appropriate Federal banking 
        agencies shall, to the extent practicable, coordinate 
        supervisory actions based on applicable law where the actions 
        are based on the same or related events or practices.
            (10) Investment companies not affiliated with a depository 
        institution.--The appropriate Federal banking agency shall not 
        have authority under this section or any other provision of law 
        to inspect or examine any investment company registered under 
        the Federal securities laws that is not--
                    (A) affiliated with a depository institution; or
                    (B) advised by an investment adviser affiliated 
                with a depository institution or by a separately 
                identifiable department or division of a depository 
                institution that is a registered investment adviser.
            (11) Definition.--For purposes of this subsection, the term 
        ``Federal securities laws'' means the provisions of Federal law 
        governing securities activities that are within the 
        jurisdiction of the Securities and Exchange Commission under 
        the Securities Act of 1933, the Securities Exchange Act of 
        1934, the Investment Company Act of 1940, the Investment 
        Advisers Act of 1940, and the Trust Indenture Act of 1939.
    (m) Foreign Bank Firewalls.--
            (1) In general.--A branch, agency, or commercial lending 
        company that is operated by a foreign bank that is a financial 
        services holding company shall not be subject to the 
        restrictions of any subsection of this section, other than 
        subsections (k) and (l), if--
                    (A) such branch, agency, or commercial lending 
                company accepts no deposits in the United States that 
                are insured under the Federal Deposit Insurance Act;
                    (B) such foreign bank meets risk-based capital 
                standards comparable to the capital standards required 
                for a wholesale financial institution, giving due 
                regard to the principle of national treatment and 
                equality of competitive opportunity; and
                    (C) the home country of such foreign bank satisfies 
                the national treatment standard described in Section 
                102(l)(3).
            (2) Applicability of subsection (k) to foreign banks.--Any 
        limitation, restriction, condition, or modification adopted 
        under subsection (k) may be applied by the appropriate Federal 
        banking agency to--
                    (A) a foreign bank that operates a branch, agency, 
                or commercial lending company described in paragraph 
                (1) (and any company that owns or controls such foreign 
                bank);
                    (B) any branch, agency or commercial lending 
                company operated by such foreign bank in the United 
                States; or
                    (C) any other affiliate of such foreign bank in the 
                United States; if such limitation, restriction, 
                condition, or modification is applied by regulation or 
                order of general applicability under subsection (n)(1) 
                to wholesale financial institutions and their 
                securities affiliates, subject to such modifications, 
                conditions, or exemptions as the appropriate Federal 
                banking agency of such wholesale financial institution 
                deems appropriate, giving due regard to the principle 
                of national treatment and equality of competitive 
                opportunity.
    (n) Firewalls Applicable to Wholesale Financial Institutions and 
National Market Lending Institutions.--
            (1) In general.--A wholesale financial institution, and 
        transactions between a wholesale financial institution and its 
        securities affiliate, shall not be subject to the provisions of 
        this section, except that a wholesale financial institution and 
        its securities affiliate shall be subject to subsections (k) 
        and (l) in the same manner and to the same extent such 
        subsections would apply if the wholesale financial institution 
        were an insured depository institution.
            (2) Prohibition on evasion of firewalls by affiliated 
        insured depository institutions.--An insured depository 
        institution that is affiliated with a wholesale financial 
        institution shall not evade any requirement or restriction 
        imposed by this section by engaging in transactions or 
        arrangements with its affiliated wholesale financial 
        institution.
            (3) Similar treatment for national market lending 
        institutions.--A national market lending institution, as 
        defined in section 5158 of the Revised Statutes of the United 
        States, that is controlled by a financial services holding 
        company shall be subject to this section in the same manner and 
        to the same extent as a wholesale financial institution.
    (o) Authority of National Financial Services Committee.--
            (1) In general.--Except for rules issued pursuant to 
        subsections (f) or (g), no rule, regulation, or order 
        authorized or required by this section shall be issued without 
        the approval of the National Financial Services Committee.
            (2) Uniform standards.--Any regulation, rule, or order 
        subject to the approval of the National Financial Services 
        Committee under paragraph (1) shall be identical for each 
        appropriate Federal banking agency, except as otherwise 
        permitted by such Committee, taking into account existing 
        requirements, coordination of new requirements, minimization of 
        duplicative regulation, the degree of uniformity between 
        regulation of securities affiliates or investment companies 
        affiliated with or advised by depository institutions or their 
        affiliates and other broker dealers or investment companies, 
        and an analysis of any of the benefits to be obtained by any 
        unique regulatory burdens placed on securities affiliates or 
        investment companies affiliated with or advised by depository 
        institutions or their affiliates.

SEC. 123. JOINT STANDARDS RELATING TO RETAIL SALES OF CERTAIN 
              NONDEPOSIT INVESTMENT PRODUCTS.

    (a) In General.--The National Financial Services Committee shall 
prescribe standards applicable to any depository institution which--
            (1) is not registered as a broker under the Securities 
        Exchange Act of 1934;
            (2) effects retail transactions in securities, including 
        securities issued by an investment company or annuities; and
            (3) is affiliated with a financial services holding 
        company.
    (b) Scope of Standards.--The standards required under paragraph (1) 
with respect to retail sales of securities and annuities referred to in 
such paragraph shall, at a minimum, establish requirements with respect 
to--
            (1) sales practices;
            (2) disclosures and advertising in connection with 
        transactions in such securities and annuities, including--
                    (A) the content, form, and timing of any such 
                disclosure; and
                    (B) disclaimers concerning the noninsured status of 
                the security or annuity;
            (3) the compensation of sales personnel with respect to 
        referrals or transactions;
            (4) the training of and qualifications for personnel 
        involved in such transactions, including training in making an 
        accurate judgment about the suitability of a particular 
        investment product for a prospective customer; and
            (5) the setting in which and the circumstances under which 
        transactions may be effected, and referrals made, by sales 
        personnel with respect to such securities and annuities.
    (c) Comparability Requirement.--The standards required under 
paragraph (1) shall be comparable to the standards applicable to 
brokers and dealers registered under the Securities Exchange Act of 
1934 unless the National Financial Services Committee determines that 
implementation of comparable standards is not necessary or appropriate 
for the maintenance of fair and orderly markets or the protection of 
investors or is not in the public interest.

    Subtitle C--Insurance and Real Estate Development Activities of 
                  Financial Services Holding Companies

SEC. 131. LIMITATION ON INSURANCE UNDERWRITING AND REAL ESTATE 
              DEVELOPMENT ACTIVITIES OF DEPOSITORY INSTITUTIONS.

    (a) In General.--No depository institution that is an affiliate of 
a financial services holding company shall directly engage in--
            (1) insurance underwriting (other than credit-related 
        insurance udnerwriting); or
            (2) real estate investment or development, except to the 
        extent that such activities are performed in relation to the 
        premises of the depository institution or in connection with 
        securing or collecting a debt previously contracted in good 
        faith, or would be authorized for a national bank under section 
        5137 of the Revised Statutes of the United States or the first 
        section of the Act of September 28, 1962 (12 U.S.C. 92a).
    (b) Construction.--Nothing contained in this section shall be 
construed to prohibit or impede--
            (1) a financial services holding company or any affiliate 
        of a financial services holding company other than a depository 
        institution from engaging in any of the activities set forth in 
        paragraph (1); or
            (2) any employee of a depository institution that is an 
        affiliate of a financial services holding company from 
        promoting or advertising products or services of an affiliate 
        of such insured depository institution that engages in any of 
        such activities.

SEC. 132. ACQUISITION OF PREEXISTING INSURANCE AGENCY BY BANK HOLDING 
              COMPANIES.

    (a) In General.-- No bank holding company which becomes a financial 
services holding company and no financial services holding company 
which did not at any time prior to becoming such a holding company, 
directly or indirectly, engage in insurance agency activities other 
than activities generally permissible for bank holding companies under 
section 4(c)(8) of the Bank Holding Company Act of 1956, shall commence 
any insurance agency activities not generally permissible for bank 
holding companies under section 4(c)(8) of the Bank Holding Company Act 
of 1956, unless such activities are conducted through an existing 
insurance agency acquired directly or indirectly by such financial 
services holding company or through any successor to such insurance 
agency, and unless such acquired insurance agency shall have been 
actively engaged in such insurance activities during the 2-year period 
preceding the date of such acquisition.

SEC. 133. EXISTING CONTRACTS.

    Nothing in sections 131 or 132 shall require the breach of any 
contract entered into before the date of enactment of this Act.

 TITLE II--CONFORMING AMENDMENTS TO OTHER LAWS FOR FINANCIAL SERVICES 
                           HOLDING COMPANIES

SEC. 201. EXEMPTION OF FINANCIAL SERVICES HOLDING COMPANIES FROM THE 
              BANK HOLDING COMPANY ACT OF 1956.

    Section 2(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1841(c)(2)) is amended by adding at the end the following new 
subparagraphs:
                    ``(K) An insured bank, as defined in section 3 of 
                the Federal Deposit Insurance Act, that is controlled 
                by a financial services holding company, as defined in 
                section 102(a) of the Financial Services Holding 
                Company Act.
                    ``(L) A wholesale financial institution, as defined 
                in section 102(i) of the Financial Services Holding 
                Company Act, that is controlled by a financial services 
                holding company, as defined in section 102(a) of such 
                Act.''.

SEC. 202. AMENDMENT TO THE FEDERAL RESERVE ACT.

    Section 23B(b)(1)(B) of the Federal Reserve Act (12 U.S.C. 371c-
1(b)(1)(B)) is amended by inserting ``and for 30 days thereafter'' 
after ``during the existence of any underwriting or selling 
syndicate''.

SEC. 203. AMENDMENTS TO THE BANKING ACT OF 1933.

    (a) Section 20.--Section 20 of the Banking Act of 1933 (12 U.S.C. 
377) is amended by inserting after the first undesignated paragraph the 
following: ``The provisions of this section shall not apply to a 
financial services holding company or any of its affiliates, as such 
terms are defined in section 102 of the Financial Services Holding 
Company Act.''
    (b) Section 32.--Section 32 of the Banking Act of 1933 (12 U.S.C. 
78) is amended by adding at the end the following: ``This section shall 
not apply so as to prohibit an officer, director, or employee of a 
securities affiliate (as defined in section 102(r) of the Financial 
Services Holding Company Act) from serving at the same time as an 
officer, director, or employee of a member bank affiliated with the 
securities affiliate pursuant to such Act. This section shall not apply 
so as to prohibit an officer, director, or employee of an investment 
company registered under the Investment Company Act of 1940 or an 
investment adviser registered under the Investment Advisers Act of 1940 
from serving at the same time as an officer, director, or employee of a 
member bank that is affiliated with a financial services holding 
company (as defined in section 102(a) of the Financial Services Holding 
Company Act).''.

SEC. 204. AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.

    (a) Section 7.--Section 7(j) of the Federal Deposit Insurance Act 
(12 U.S.C. 1817(j))) is amended--
            (1) in paragraph (8), by striking subparagraph (B) and 
        inserting the following:
                    ``(B) the term `control' means the power, directly 
                or indirectly, to direct the management or policies of 
                a company, or to vote 25 percent or more of any class 
                of voting securities of a company, except that no 
                company shall be deemed to control or to have acquired 
                control of any other company by virtue of its ownership 
                of the voting securities of such other company--
                            ``(i) acquired or held in an agency, trust, 
                        or other fiduciary capacity;
                            ``(ii) acquired or held in connection with 
                        or incidental to--
                                    ``(I) the underwriting of 
                                securities if such securities are held 
                                only for such person of time as will 
                                permit the sale thereof on a reasonable 
                                basis; or
                                    ``(II) market making, dealing, 
                                trading, brokerage, or other 
                                securities-related activities and not 
                                with a view to acquiring, exercising, 
                                or transferring any control over the 
                                management or policies of such company; 
                                or
                            ``(iii) acquired in securing or collecting 
                        a debt previously contracted in good faith, 
                        until 2 years after the date of acquisition, 
                        except that no company formed for the sole 
                        purpose of participating in a proxy 
                        solicitation is in control of a company by 
                        virtue of its acquisition of voting rights with 
                        respect to shares of such company acquired in 
                        the course of such solicitation.''; and
            (2) by adding at the end the following new paragraph:
            ``(19) Definition.--For purposes of this subsection, the 
        term `insured depository institution' shall include--
                    ``(A) any `bank holding company', as that term is 
                defined in section 2 of the Bank Holding Company Act of 
                1956, which has control of any insured bank (as defined 
                in that section 2), and the appropriate Federal banking 
                agency in the case of a bank holding company shall be 
                the Board of Governors of the Federal Reserve System; 
                and
                    ``(B) any `financial services holding company', as 
                that term is defined in section 102(a) of the Financial 
                Services Holding Company Act, which has control of any 
                such insured bank, and the appropriate Federal banking 
                agency in the case of a financial services holding 
                company shall be the appropriate Federal banking agency 
                of the lead depository institution (as defined in 
                section 102(h) of the Financial Services Holding 
                Company Act) of the financial services holding company.
    (b) Section 18.--Section 18(j)(1)(A) of the Federal Deposit 
Insurance Act (12 U.S.C. 1828(j)(1)(A)) is amended by striking 
``Sections'' and inserting ``Subject to section 104(a)(2) of the 
Financial Services Holding Company Act, sections''.
    (c) Appropriate Federal Banking Agency.--
            (1) State member wholesale financial institutions.--Section 
        3(g)(2)(A) of the Federal Deposit Insurance Act (12 U.S.C. 1813 
        (q)(2)(A)) is amended to read as follows:
                    ``(A) any State member insured bank (except a 
                District bank) and State member wholesale financial 
                institution as authorized pursuant to section 9B of the 
                Federal Reserve Act.''.
            (2) National wholesale financial institution.--Section 
        3(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 
        1813(q)(1)) is amended by inserting ``(including any national 
        wholesale financial institution and any national market funded 
        lending institution, as authorized pursuant to sections 5136B 
        and 5158 of the Revised Statutes of the United States)''.
    (d) Securities Company Affiliations of FDIC-Insured Banks.--Section 
18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended by 
adding at the end thereof the following new subsection:
    ``(s) Securities Affiliations of Banks.--
            ``(1) In general.--A bank shall not be an affiliate of any 
        company that, directly or indirectly, acts as an underwriter or 
        dealer of any security, other than--
                    ``(A) a bank;
                    ``(B) a securities affiliate as defined in section 
                102(r) of the Financial Services Holding Company Act; 
                or
                    ``C) a company that underwrites or deals only in 
                securities that are described in section 121 of the 
                Depository Institution Affiliation and Thrift Charter 
                Conversion Act.
            ``(2) Exceptions.--
                    ``(A) Certain banks not included.--For purposes of 
                this subsection, the term `bank' does not include--
                            ``(i) an insured bank described in 
                        subparagraph (D), (F), or (H) of section 
                        2(c)(2) of the Bank Holding Company Act of 
                        1956; and
                            ``(ii) a Federal branch or an insured 
                        branch (as defined in section 3 of the Federal 
                        Deposit Insurance Act).
                    ``(B) Affiliations with edge act and agreement 
                corporations.--Paragraph (1) shall not apply with 
                respect to the affiliation of a bank with a company 
                held pursuant to section 25 or 25A of the Federal 
                Reserve Act or section 4(c)(13) of the Bank Holding 
                Company Act of 1956.
            ``(3) Grandfather provision.--This subsection shall not 
        apply with respect to--
                    ``(A) an affiliation between a bank and a company 
                that underwrites or deals in securities, provided 
                that--
                            ``(i) the affiliation is authorized 
                        pursuant to an order issued by the Board of 
                        Governors of the Federal Reserved System under 
                        section 4(c)(8) of the Bank Holding Company Act 
                        of 1956; and
                            ``(ii) such company complies with the 
                        limitations, restrictions, and conditions, 
                        including the limitation on the revenue that 
                        may be derived from underwriting or dealing 
                        activities, that were generally applicable to 
                        companies that, as of January 1, 1996, were 
                        subject to orders described in clause (i);
                    ``(B) any other lawful affiliation that existed on 
                January 1, 1996; or
                    ``(C) any new affiliation by an insured that has an 
                affiliation that would be prohibited if the affiliation 
                were not covered by subparagraph (B).
            ``(4) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Dealer.--The term `dealer' has the meaning 
                given to such term in section 3(a)(5) of the Securities 
                Exchange Act of 1934.
                    ``(B) Security.--The term `security' has the 
                meaning given to such term in section 121(c) of the 
                Financial Services Holding Company Act.
                    ``(C) Underwriter.--The term `underwriter' has the 
                meaning given to such term in section 2(11) of the 
                Securities Act of 1933.''.

SEC. 205. AMENDMENT TO THE COMMUNITY REINVESTMENT ACT.

    Section 803(3) of the Community Reinvestment Act of 1977 (12 U.S.C. 
2902(3)) is amended--
            (1) by inserting ``or notice, as appropriate'' after ``an 
        application'';
            (2) in subparagraph (E), by striking ``or'' at the end;
            (3) in subparagraph (F), by striking the period at the end 
        and inserting ``; or''; and
            (4) by adding at the end the following new subparagraph:
                    ``(G) the acquisition of an insured depository 
                institution requiring prior notice under section 103 of 
                the Financial Services Holding Company Act.''.

SEC. 206. AMENDMENT TO THE FEDERAL POWER ACT.

    Section 305(b) of the Federal Power Act shall not apply to any 
person now holding, or proposing to hold, at the same time the position 
of officer or director of a public utility and the position of officer 
or director of a bank, trust company, banking association, or firm 
permitted by the Financial Services Holding Company Act to underwrite 
or participate in the marketing of securities of the public utility for 
which the person serves, or proposes to serve, as an officer of 
director.

SEC. 207. AMENDMENT TO THE RIGHT TO FINANCIAL PRIVACY ACT.

    Section 1112(e) of the Right to Financial Privacy Act (12 U.S.C. 
3412(e)) is amended as follows--
            (1) by striking ``this title'' and inserting ``law''; and
            (2) by inserting ``, examination reports,'' after 
        ``financial records''.

SEC. 208. AMENDMENTS TO THE INTERNATIONAL BANKING ACT.

    (a) Exemption From Provisions of Bank Holding Company Act for 
Foreign Banks Qualifying as Financial Services Holding Companies.--
Section 8(a) of the International Banking Act (12 U.S.C. 32016(a)) is 
amended by adding at the end by striking ``provisions.'' and inserting 
the following: ``provisions, except that any such foreign bank or 
company that qualifies and elects to be treated as a financial services 
holding company under the Financial Services Holding Company Act, and 
any affiliate of such financial services holding company, shall not be 
so subject to the provisions of the Bank Holding Company Act of 
1956.''.
    (b) Authority To Terminate Grandfather Rights.--Section 8(c) of the 
International Banking Act of 1978 (12 U.S.C. 3106(c)) is amended by 
adding at the end the following new paragraph:
            ``(3) Parity in conduct of authorized securities 
        activities.--
                    ``(A) In general.--Notwithstanding the provisions 
                of paragraph (1) or any other provision of law, any 
                authority conferred under this subsection on any 
                foreign bank or company with respect to securities 
                activities authorized for bank holding companies in the 
                United States shall terminate 30 days after such 
                foreign bank or company becomes a financial services 
                holding company under the Financial Services Holding 
                Company Act.''.

  TITLE III--FUNCTIONAL REGULATION AMENDMENTS TO SECURITIES LAWS FOR 
                  FINANCIAL SERVICES HOLDING COMPANIES

                  Subtitle A--Broker Dealer Provisions

SEC. 301. DEFINITION OF BROKER.

    Section 3(a)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(4)) is amended to read as follows:
            ``(4) Broker.--
                    ``(A) In general.--The term `broker' means any 
                person engaged in the business of effecting 
                transactions in securities for the account of others.
                    ``(B) Exclusion of banks.--The term `broker' does 
                not include a bank unless such bank is affiliated with 
                a financial services holding company, as defined in 
                section 102(a) of the Financial Services Holding 
                Company Act and--
                            ``(i) publicly solicits the business of 
                        effecting securities transactions for the 
                        account of others; or
                            ``(ii) is compensated for such business by 
                        the payment of commissions or similar 
                        remuneration based on effecting transactions in 
                        securities (other than fees calculated as a 
                        percentage of assets under management) in 
                        excess of the bank's incremental costs directly 
                        attributable to effecting such transactions 
                        (hereafter referred to as `incentive 
                        compensation').
                    ``(C) Exemption for certain bank activities.--A 
                bank shall not be considered to be a broker because the 
                bank engages in any of the following activities under 
                the conditions described:
                            ``(i) Third party brokerage arrangements.--
                        The bank enters into a contractual or other 
                        arrangement with a broker or dealer registered 
                        under this title under which the broker or 
                        dealer offers brokerage services on or off the 
                        premises of the bank if--
                                    ``(I) such broker or dealer is 
                                clearly identified as the person 
                                performing the brokerage services;
                                    ``(II) the broker or dealer 
                                performs brokerage services in an area 
                                that is clearly marked, and unless made 
                                impossible by space or personnel 
                                considerations, physically separate 
                                from the routine deposit-taking 
                                activities of the bank;
                                    ``(III) any materials used by the 
                                bank to advertise or promote generally 
                                the availability of brokerage services 
                                under the contractual or other 
                                arrangement clearly indicate that the 
                                brokerage services are being provided 
                                by the broker or dealer and not by the 
                                bank;
                                    ``(IV) any materials used by the 
                                bank to advertise or promote generally 
                                the availability of brokerage services 
                                under the contractual or other 
                                arrangement are in compliance with the 
                                Federal securities laws before 
                                distribution;
                                    ``(V) bank employees perform only 
                                clerical or ministerial functions in 
                                connection with brokerage actions, 
                                including scheduling appointments with 
                                the associated persons of a broker or 
                                dealer, and on behalf of a broker or 
                                dealer, transmitting orders or handling 
                                customers' funds or securities, except 
                                that bank employees who are not so 
                                qualified may describe in general terms 
                                investment vehicles under the 
                                contractual or other arrangement and 
                                accept customers' orders on behalf of 
                                the broker or dealer if such employees 
                                have received training that is 
                                substantially equivalent to the 
                                training required for personnel 
                                qualified to sell securities pursuant 
                                to the requirements of a self-
                                regulatory organization (as defined in 
                                section 3(a) of the Securities Exchange 
                                Act of 1934);
                                    ``(VI) bank employees do not 
                                directly receive incentive compensation 
                                for any brokerage transaction unless 
                                such employees are associated persons 
                                of a broker or dealer and are qualified 
                                pursuant to the requirements of a self-
                                regulatory organization (as so defined) 
                                except that the bank employees may 
                                receive nominal cash and noncash 
                                compensation for customer referrals if 
                                the cash compensation is a one-time fee 
                                of a fixed dollar amount and the 
                                payment of the fee is not contingent on 
                                whether the referral results in a 
                                transaction;
                                    ``(VII) such services are provided 
                                by the broker or dealer on a basis in 
                                which all customers which receive any 
                                services are fully disclosed to the 
                                broker or dealer; and
                                     ``(VIII) the broker or dealer 
                                informs each customer that the 
                                brokerage services are provided by the 
                                broker or dealer and not by the bank 
                                and that the securities are not 
                                deposits or other obligations of the 
                                bank, are not guaranteed by the bank, 
                                and are not insured by the Federal 
                                Deposit Insurance Corporation.
                            ``(ii) Trust activities.--The bank engages 
                        in trust activities (including effecting 
                        transactions in the course of such trust 
                        activities) permissible for national banks 
                        under the first section of the Act of September 
                        28, 1962, or for State banks under relevant 
                        State trust statutes or law (including 
                        securities safekeeping, self-directed 
                        individual retirement accounts, or managed 
                        agency accounts or other functionally 
                        equivalent accounts of a bank) unless the 
                        bank--
                                    ``(I) publicly solicits brokerage 
                                business, other than by advertising 
                                that it effects transactions in 
                                securities in conjunction with 
                                advertising its other activities; or
                                    ``(II) receives incentive 
                                compensation for such brokerage 
                                activities.
                            ``(iii) Permissible securities 
                        transactions.--The bank effects transactions in 
                        exempted securities, other than municipal 
                        securities, in commercial paper, bankers 
                        acceptances, commercial bills, qualified 
                        Canadian Government obligations as defined in 
                        section 5136 of the Revised Statues, 
                        obligations of the Washington Metropolitan Area 
                        Transit Authority which are guaranteed by the 
                        Secretary of Transportation under section 9 of 
                        the National Capital Transportation Act of 
                        1969, obligations of the North American 
                        Development Bank, and obligations of any local 
                        public agency (as defined in section 110(h) of 
                        the Housing Act of 1949) or any public housing 
                        agency (as defined in the United States Housing 
                        Act of 1937) that are expressly authorized by 
                        section 5136 of the Revised Statutes of the 
                        United States as permissible for a national 
                        bank to underwrite or deal in.
                            ``(iv) Municipal securities.--The bank 
                        effects transactions in municipal securities.
                            ``(v) Employee and shareholder benefit 
                        plans.--The bank effects transactions as part 
                        of any bonus, profit-sharing, pension, 
                        retirement, thrift, savings, incentive, stock 
                        purchase, stock ownership, stock appreciation, 
                        stock option, dividend reinvestment, or similar 
                        plan for employees or shareholders of an issuer 
                        or its subsidiaries.
                            ``(vi) Sweep accounts.--The bank effects 
                        transactions as part of a program for the 
                        investment or reinvestment of bank deposit 
                        funds into any no-load, open-end management 
                        investment company registered under the 
                        Investment Company Act of 1940 that holds 
                        itself out as a money market fund.
                            ``(vii) Affiliate transactions.--The bank 
                        effects transactions for the account of any 
                        affiliate of the bank, as defined in section 
                        102(c) of the Financial Services Holding 
                        Company Act.
                            ``(viii) Private securities offerings.--The 
                        bank--
                                    ``(I) effects sales as part of 
                                primary offering of securities by an 
                                issuer, not involving a public 
                                offering, pursuant to section 3(b), 
                                4(2), or 4(6) of the Securities Act of 
                                1933 and the rules and regulations 
                                issued thereunder; and
                                    ``(II) effects such sales 
                                exclusively to an accredited investor, 
                                as defined in section 3 of the 
                                Securities Act of 1933.
                            ``(ix) De minimus exemption.--If the bank 
                        does not have a subsidiary or affiliate 
                        registered as a broker or dealer under section 
                        15, the bank effects, other than in 
                        transactions referred to in causes (i) through 
                        (viii), not more than--
                                    ``(I) 800 transactions in any 
                                calendar year in securities for which a 
                                ready market exists, and
                                    ``(II) 200 other transactions in 
                                securities in any calendar year.
                            ``(x) Safekeeping and custody services.--
                        The bank, as part of customary banking 
                        activities--
                                    ``(I) provides safekeeping or 
                                custody services with respect to 
                                securities, including the exercise of 
                                warrants or other rights on behalf of 
                                customers;
                                    ``(II) clears or settles 
                                transactions in securities;
                                    ``(III) effects securities lending 
                                or borrowing transactions with or on 
                                behalf of customers as part of services 
                                provided to customers pursuant to 
                                subclauses (I) and (II) or invests cash 
                                collateral pledged in connection with 
                                such transactions; or
                                    ``(IV) holds securities pledged by 
                                one customer to another customer or 
                                securities subject to resale agreements 
                                between customers or facilitates the 
                                pledging or transfer of such securities 
                                by book entry.
                            ``(xi) Banking products.--The bank effects 
                        transactions in products that--
                                    ``(I) are described in section 
                                121(c)(2) of the Financial Services 
                                Holding Company Act; or
                                    ``(II) have been exempted by the 
                                appropriate Federal banking agency 
                                pursuant to section 121(c)(3) of such 
                                Act.
                    ``(D) Exemption for entities subject to section 
                15(e).--The term `broker' does not include a bank 
                that--
                            ``(i) was, immediately prior to the 
                        enactment of the Depository Institution 
                        Affiliation Act of 1995, subject to section 
                        15(e); and
                            ``(ii) is subject to such restrictions and 
                        requirements as the Commission considers 
                        appropriate.''.

SEC. 302. DEFINITION OF DEALER.

    Section 3(a)(5) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(5)) is amended to read as follows:
            ``(5) Dealer.--
                    ``(A) In general.--The term `dealer' means any 
                person engaged in the business of buying and selling 
                securities for such person's own account through a 
                broker or otherwise.
                    ``(B) Exception for person not engaged in the 
                business of dealing.--The term `dealer' does not 
                include a person that buys or sells securities for such 
                person's own account, either individually or in a 
                fiduciary capacity, but not as a part of a regular 
                business.
                    ``(C) Exclusion of banks.--The term `dealer' does 
                not include a bank unless such bank is affiliated with 
                a financial services holding company, as defined in 
                section 102(a) of the Financial Services Holding 
                Company Act.
                    ``(D) Exemption for certain bank activities.--A 
                bank shall not be considered to be a dealer because the 
                bank engages in any of the following activities under 
                the conditions described:
                            ``(i) The bank buys and sells commercial 
                        paper, bankers acceptances, exempted securities 
                        (other than municipal securities), qualified 
                        Canadian Government obligations as defined in 
                        section 5136 of the Revised Statutes, 
                        obligations of the Washington Metropolitan Area 
                        Transit Authority which are guaranteed by the 
                        Secretary of Transportation under section 9 of 
                        the National Capital Transportation Act of 
                        1969, obligations of the North American 
                        Development Bank, and obligations of any local 
                        public agency (as defined in section 110(h) of 
                        the Housing Act of 1949) or any public agency 
                        (as defined in the United States Housing Act of 
                        1937) that are expressly authorized by section 
                        5136 of the Revised Statutes of the United 
                        States as permissible for a national bank to 
                        underwrite or deal in.
                            ``(ii) The bank buys and sells municipal 
                        securities that are expressly authorized by 
                        section 5136 of the Revised Statutes of the 
                        United States as permissible for a national 
                        bank to underwrite or deal in.
                            ``(iii) The bank buys and sells securities 
                        for investment purposes for the bank or for 
                        accounts for which the bank acts as a trustee 
                        or fiduciary.
                            ``(iv) The bank--
                                    ``(I) has not been affiliated with 
                                a securities affiliate for purposes of 
                                the Financial Services Holding Company 
                                Act for more than 1 year; and
                                    ``(II) engages in the issuance or 
                                sale, through a grantor trust or 
                                otherwise, of securities backed by or 
                                representing an interest in notes, 
                                drafts, acceptances, loans, leases, 
                                receivables, other obligations, or 
                                pools of any such obligations 
                                originated or purchased by the bank or 
                                any affiliate of the bank.
                            ``(v) The bank buys and sells products 
                        that--
                                    ``(I) are described in section 
                                121(c)(2) of the Financial Services 
                                Holding Company Act; or
                                    ``(II) have been exempted by the 
                                appropriate Federal banking agency 
                                pursuant to section 121(c)(3) of such 
                                Act.''.

SEC. 303. POWER TO EXEMPT FROM THE DEFINITIONS OF BROKER AND DEALER.

    Section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c) is 
amended by adding at the end the following:
    ``(e) Exemption From the Definition of Broker and Dealer.--The 
Commission, by regulation or order, upon its own motion or upon 
application, may conditionally or unconditionally exclude any person or 
class of persons from the definitions of `broker' or `dealer', if the 
Commission finds that such exclusion is consistent with the public 
interest, the protection of investors, and the purposes of this 
title.''.

SEC. 304. MARGIN REQUIREMENTS.

    (a) Section 7(d) of the Securities Exchange Act of 1934 (15 U.S.C. 
15g(d)) is amended by striking ``or (E)'' and inserting ``(E) to a loan 
to a broker or dealer by a member bank or any other person that has 
entered into an agreement pursuant to section 8(a) if the proceeds of 
the loan are to be used in the ordinary course of the broker's or 
dealer's business other than for the purpose of funding the purchase of 
securities for the account of such broker or dealer, or (F)''.
    (b) Section 8(a) of the Securities and Exchange Act of 1934 is 
amended--
            (1) by striking ``nonmember bank'' and inserting ``person 
        other than a member bank''; and
            (2) by striking ``such bank'' in the second sentence and 
        inserting ``such person''.

               Subtitle B--Investment Company Provisions

SEC. 311. CUSTODY OF INVESTMENT COMPANY ASSETS BY AFFILIATED BANK.

    (a) Management Companies.--Section 17(f) of the Investment Company 
Act of 1940 (15 U.S.C. 80a-17(f)) is amended--
            (1) by redesignating paragraphs (1), (2), and (3) as 
        subparagraphs (A), (B), and (A), (B), and (C), respectively;
            (2) by striking ``(f) Every, registered'' and inserting 
        ``(f) Custody of Securities.--
            (1) Every registered'';
                    (C) by designating the second, third, fourth, and 
                fifth sentences of such subsection as paragraphs (2) 
                through (5), respectively, and indenting the left 
                margin of such paragraphs appropriately; and
                    (D) by adding at the end the following new 
                paragraph:
            ``(6) Notwithstanding any provision of this subsection, if 
        a bank described in paragraph (1) and affiliated with a 
        financial services company, as defined in section 102(a) of the 
        Financial Services Holding Company Act, or an affiliated person 
        of such bank, is an affiliated person, promoter, organizer, or 
        sponsor of, or principal underwriter for the registered 
        company, such bank may serve as custodian under this subsection 
        in accordance with such rules, regulations, or orders as the 
        Commission may prescribe, consistent with the protection of 
        investors, after consulting in writing with the appropriate 
        Federal banking agency, as defined in section 3 of the Federal 
        Deposit Insurance Act.''.
    (b) Unit Investment Trusts.--Section 26(a)(1) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-26(a)(1)) is amended by inserting 
before the semicolon at the end the following: ``, except that, if the 
trustee or custodian described in this subsection is an affiliated 
person of such underwriter or depositor and of a financial services 
holding company, as defined in section 102(a) of the Financial Services 
Holding Company Act, the Commission may adopt rules and regulations or 
issue orders, consistent with the protection of investors, prescribing 
the conditions under which such trustee or custodian may serve, after 
consulting in writing with the appropriate Federal banking agency (as 
defined in section 3 of the Federal Deposit Insurance Act)''.
    (c) Fiduciary Duty of Custodian.--Section 36(a) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-35(a)) is amended--
            (1) in paragraph (1), by striking ``or'' at the end;
            (2) in paragraph (2), by striking the period at the end and 
        inserting ``; or''; and
            (3) by inserting after paragraph (2) the following:
            ``(3) if affiliated with a financial services holding 
        company, as defined section 102(a) of the Financial Services 
        Holding Company Act, as custodian.''.

SEC. 312. LENDING TO AN AFFILIATED INVESTMENT COMPANY.

    Section 18 of the Investment Company Act of 1940 (15 U.S.C. 80a-18) 
is amended by adding at the end the following:
    ``(l) Notwithstanding any provision of this section, it shall be 
unlawful for any affiliated person of a registered investment company 
that is affiliated with a financial services holding company, as 
defined in section 102(a) of the Financial Services Holding Company 
Act, or any affiliated person of such a person, to loan money to such 
investment company in contravention of such rules, regulations, or 
orders as the Commission may prescribe in the public interest and 
consistent with the protection of investors.''.

SEC. 313. INDEPENDENT DIRECTORS.

    (a) In General.--Section 2(a)(19)(A) of the Investment Company Act 
of 1940 (15 U.S.C. 80a-2(a)(19)(A)) is amended--
            (1) by striking clause (v) and inserting the following new 
        clause:
                            ``(v) any person affiliated with a 
                        financial services holding company (other than 
                        a registered investment company) that, at any 
                        time during the preceding 6 months, has 
                        executed any portfolio transactions for, 
                        engaged in any principal transactions with, or 
                        distributed shares for--
                                    ``(I) the investment company,
                                    ``(II) any other investment company 
                                having the same investment adviser as 
                                such investment company or holding 
                                itself out to investors as a related 
                                company for purposes of investment or 
                                investor services, or
                                    ``(III) any account over which the 
                                investment company's investment adviser 
                                has brokerage placement discretion,
        or any affiliated person of such a person,'';
            (2) by redesignating clause (vi) as clause (vii) and
            (3) by inserting after clause (v) the following new clause:
                            ``(vi) any person affiliated with a 
                        financial services holding company (other than 
                        a registered investment company) that, at any 
                        time during the preceding 6 months, has loaned 
                        money to--
                                    ``(I) the investment company,
                                    ``(II) any other investment company 
                                having the same investment adviser as 
                                such investment company or holding 
                                itself out to investors as a related 
                                company for purposes of investment or 
                                investor services, or
                                    ``(III) any account for which the 
                                investment company's investment adviser 
                                has borrowing authority,
                        or any affiliated person of such a person, 
                        or''.
    (b) Affiliation of Directors.--Section 10(c) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-10(c)) is amended by striking, 
``bank, except'' and inserting ``bank affiliated with a financial 
services holding company (and its subsidiaries) or any single financial 
services holding company (and its affiliates and subsidiaries), as 
those terms are defined in the Financial Services Holding Company Act 
of 1995, except''.
    (c) Effective Date.--The provisions of subsection (a) of this 
section shall become effective 1 year after the effective date of this 
subtitle.

SEC. 314. ADDITIONAL SEC DISCLOSURE AUTHORITY.

    (a) Misrepresentation.--Section 35(a) of the Investment Company Act 
of 1940 (15 U.S.C. 80a-34(a)) is amended to read as follows:
    ``(a) Misrepresentation of Guarantees.--
            ``(1) In general.--It shall be unlawful for any person, 
        issuing or selling any security of which a registered 
        investment company is the issuer, to represent or imply in any 
        manner whatsoever that such security or company--
                    ``(A) has been guaranteed, sponsored, recommended, 
                or approved by the United States, or any agency, 
                instrumentality or officer of the United States;
                    ``(B) has been insured by the Federal Deposit 
                Insurance Corporation;
                    ``(C) is guaranteed by or is otherwise an 
                obligation of any bank or insured depository 
                institution.
            ``(2) Disclosures.--Any person that is affiliated with an 
        insured depository institution and issues or sells the 
        securities of a registered investment company shall prominently 
        disclose that the investment company or any security issued by 
        the investment company--
                    ``(A) is not insured by the Federal Deposit 
                Insurance Corporation;
                    ``(B) is not guaranteed by an affiliated insured 
                depository institution; and
                    ``(C) is not otherwise an obligation of any bank or 
                insured depository institution,
        in accordance with such rules, regulations, or orders as the 
        Commission may prescribe as reasonably necessary or appropriate 
        in the public interest for the protection of investors, after 
        consulting in writing with the appropriate Federal banking 
        agencies.
            ``(3) Definitions.--The terms `insured depository 
        institution' and `appropriate Federal banking agency' have the 
        meanings given to such terms in section 3 of the Federal 
        Deposit Insurance Act.''.
    (b) Deceptive Use of Names.--Section 35(d) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-34(d)) is amended to read as 
follows:
    ``(d)(1) It shall be unlawful for any registered investment company 
to adopt as part of the name or title of such company, or any 
securities of which it is the issuer, any word or words that the 
Commission finds are materially deceptive or misleading. The Commission 
may adopt such rules or regulations or issue such orders as are 
necessary or appropriate to prevent the use of deceptive or misleading 
names or titles by investment companies.
    ``(2) It shall be deceptive and misleading for any registered 
investment company--
            ``(A) that is an affiliated person of a bank that is 
        affiliated with a financial service holding company, as defined 
        in section 102(a) of the Financial Services Holding Company 
        Act, or an affiliated person of such person, or
            ``(B) for which a bank that is affiliated with a financial 
        service holding company, as defined in section 102(a) of the 
        Financial Services Holding Company Act, or an affiliated person 
        of such a bank, acts as investment adviser, sponsor, promoter, 
        or principal underwriter,
to adopt, as part of the name or title such company, or of any security 
of which it is an issuer, any word that is the same or similar to, or a 
variation of, the name or title of such bank, in contravention of such 
rules, regulations, or orders as the Commission may, prescribe as 
necessary or appropriate in the public interest or for the protection 
of investors.''.

SEC. 315. DEFINITION OF BROKER UNDER THE INVESTMENT COMPANY ACT OF 
              1940.

    Section 2(a)(6) of the Investment Company Act of 1940 (15 U.S.C. 
89a-2(a)(6)) is amended to read as follows:
            ``(6) The term `broker' has the same meaning as in the 
        Securities Exchange Act of 1934, except that such term does not 
        include any person solely by reason of the fact that such 
        person is an underwriter for one or more investment 
        companies.''.

SEC. 316. DEFINITION OF DEALER UNDER THE INVESTMENT COMPANY ACT OF 
              1940.

    Section 2(a)(11) of the Investment Company Act of 1940 (15 U.S.C. 
80a-2(a)(11)) is amended to read as follows:
            ``(11) The term `dealer' has the same meaning as in the 
        Securities Exchange Act of 1934, but does not include an 
        insurance company or investment company.''.

SEC. 317. REMOVAL OF THE EXCLUSION FROM THE DEFINITION OF INVESTMENT 
              ADVISER FOR BANKS THAT ADVISE INVESTMENT COMPANIES.

    (a) Investment Adviser.--Section 202(a)(11) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11)) is amended in 
subparagraph (A), by striking ``investment company'' and inserting 
``investment company, except that the term `investment adviser' 
includes any financial services holding company, as defined in section 
102(a) of the Financial Services Holding Company Act, or any bank 
affiliated with such company, to the extent that such financial 
services holding company or bank acts as an investment adviser to a 
registered investment company, or if, in the case of such a bank, such 
services are performed through a separately identifiable department or 
division, the department or division, and not the bank itself, shall be 
deemed to be the investment adviser''.
    (b) Separately Identifiable Department or Division.--Section 202(a) 
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended 
by adding at the end the following:
            ``(25) The term `separately identifiable department or 
        division' of a bank means a unit--
                    ``(A) that is under the direct supervision of an 
                officer or officers designated by the board of 
                directors of the bank as responsible for the day-to-day 
                conduct of the bank's investment adviser activities for 
                one or more investment companies, including the 
                supervision of all bank employees engaged in the 
                performance of such activities; and
                    ``(B) for which all of the records relating to its 
                investment adviser activities are separately maintained 
                in or extractable from such unit's own facilities or 
                the facilities of the bank, and such records are so 
                maintained or otherwise accessible as to permit 
                independent examination and enforcement of this Act or 
                the Investment Company Act of 1940 and rules and 
                regulations promulgated under this Act or the 
                Investment Company Act of 1940.''.

SEC. 318. DEFINITION OF BROKER UNDER THE INVESTMENT ADVISERS ACT OF 
              1940.

    Section 202(a)(3) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-2(a)(3)) is amended to read as follows:
            ``(3) The term `broker' has the same meaning as in the 
        Securities Exchange Act of 1934.''.

SEC. 319. DEFINITION OF DEALER UNDER THE INVESTMENT ADVISERS ACT OF 
              1940.

    Section 202(a)(7) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-2(a)(7)) is amended to read as follows:
            ``(7) The term `dealer' has the same meaning as in the 
        Securities Exchange Act of 1934, but does not include an 
        insurance company or investment company.''.

SEC. 320. INTERAGENCY CONSULTATION.

    The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is 
amended by inserting after section 210 the following new section:

``SEC. 210A. CONSULTATION.

    ``(a) Examination Results and Other Information.--
            ``(1) The appropriate Federal banking agency shall provide 
        the Commission upon request the results of any examination, 
        reports, records, or other information as each may have access 
        to with respect to the investment advisory activities of any 
        financial services holding company, as defined in section 
        102(a) of the Financial Services Holding Company Act, bank that 
        is affiliated with a financial services holding company, or 
        separately identifiable department or division of a bank, that 
        is registered under section 203 of this title, or, in the case 
        of a financial services holding company or affiliated bank, 
        that has a subsidiary or a separately identifiable department 
        or division registered under that section, to the extent 
        necessary for the Commission to carry out its statutory 
        responsibilities.
            ``(2) The Commission shall provide to the appropriate 
        Federal banking agency upon request the results of any 
        examination, reports, records, or other information with 
        respect to the investment advisory activities of any financial 
        services holding company, bank that is affiliated with a 
        financial services holding company, or separately identifiable 
        department or division of a bank, any of which is registered 
        under section 203 of this title, to the extent necessary for 
        the agency to carry out its statutory responsibilities.
    ``(b) Effect on Other Authority.--Nothing herein shall limit in any 
respect the authority of the appropriate Federal banking agency with 
respect to such financial services holding company, bank that is 
affiliated with a financial services holding company, or department or 
division under any provision of law.
    ``(c) Definition.--For purposes of this section, the term 
`appropriate Federal banking agency' shall have the same meaning as in 
section 3 of the Federal Deposit insurance Act.''

SEC. 321. TREATMENT OF BANK COMMON TRUST FUNDS.

    (a) Securities Act of 1933.--Section 3(a)(2) of the Securities Act 
of 1933 (15 U.S.C. 77c(a)(2)) is amended by striking ``or any interest 
or participation in any common trust fund or similar fund maintained by 
a bank exclusively for the collective investment and reinvestment of 
assets contributed thereto by such bank in its capacity as trustee, 
executor, administrator, or guardian'' and inserting ``or any interest 
or participation in any common trust fund or similar fund that is 
excluded from the definition of the term `investment company' under 
section 3(c)(3) of the Investment Company Act of 1940''.
    (b) Securities Exchange Act of 1934.--Section 3(a)(12)(A)(iii) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(12)(A)(iii) is 
amended to read as follows:
                            ``(iii) any interest or participation in 
                        any common trust fund or similar fund that is 
                        excluded from the definition of the term 
                        `investment company' under section 3(c)(3) of 
                        the Investment Company Act of 1940;''.
    (c) Investment Company Act of 1940.--Section 3(c)(3) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-3(c)(3)) is amended by 
inserting before the period the following: '', if--
                    ``(A) such fund is employed by the bank solely as 
                an aid to the administration of trusts, estates, or 
                other accounts created and maintained for a fiduciary 
                purpose;
                    ``(B) except if the bank is not affiliated with a 
                financial services holding company, as defined in 
                section 102(a) of the Financial Services Holding 
                Company Act, or in connection with the ordinary 
                advertising of the bank's fiduciary services, interests 
                in such fund are not--
                            ``(i) advertised; or
                            ``(ii) offered for sale to the general 
                        public, and
                    ``(C) fees and expenses charged by such fund are 
                not in contravention of fiduciary principles 
                established under applicable Federal or State law.''

SEC. 322. INVESTMENT ADVISERS PROHIBITED FROM HAVING CONTROLLING 
              INTEREST IN REGISTERED INVESTMENT COMPANY.

    Section 15 of the Investment Company Act of 1940 (15 U.S.C. 80a-15) 
is amended by adding at the end the following new subsection:
    ``(g) Controlling Interest in Investment Company Prohibited.--
            ``(1) In general.--If any investment adviser to a 
        registered investment company, or an affiliated person of that 
        investment adviser, holds a controlling interest in that 
        registered investment company in a trustee or fiduciary 
        capacity, such person shall--
                    ``(A) if it holds the shares in a trustee or 
                fiduciary capacity with respect to any employee benefit 
                plan subject to the Employee Retirement Income Security 
                Act of 1974, transfer the power to vote the shares of 
                the investment company through to another person acting 
                in a fiduciary capacity with respect to the plan who is 
                not an affiliated person of that investment adviser or 
                any affiliated person thereof; or
                    ``(B) if it holds the shares in a trustee or 
                fiduciary capacity with respect to any other person or 
                entity other than an employee benefit plan subject to 
                the Employee Retirement Income Security Act of 1974--
                            ``(i) transfer the power to vote the shares 
                        of the investment company through to--
                                    ``(I) the beneficial owners of the 
                                shares;
                                    ``(II) another person acting in a 
                                fiduciary capacity who is not an 
                                affiliated person of that investment 
                                adviser or any affiliated person 
                                thereof; or
                                    ``(III) any person authorized to 
                                receive statements and information with 
                                respect to the trust who is not an 
                                affiliated person of that investment 
                                adviser or any affiliated person 
                                thereof;
                            ``(ii) vote the shares of the investment 
                        company held by it in the same proportion as 
                        shares held by all other shareholders of the 
                        company; or
                            ``(iii) vote the shares of the investment 
                        company as otherwise permitted under such 
                        rules, regulations, or orders as the Commission 
                        may prescribe for the protection of investors.
            ``(2) Exemption.--Paragraph (1) shall not apply to any 
        investment adviser to a registered investment company, or an 
        affiliated person of that investment adviser, if such 
        investment adviser or affiliated person--
                    ``(A) is not affiliated with a financial services 
                holding company, as defined in section 102(a) of the 
                Financial Services Holding Company Act; or
                    ``(B) holds shares of the investment company in a 
                trustee or fiduciary capacity if that registered 
                investment company consists solely of assets held in 
                such capacities.
            ``(3) Safe harbor.--No investment adviser to a registered 
        investment company or any affiliated person of such investment 
        adviser shall be deemed to have acted unlawfully or to have 
        breached a fiduciary duty under State or Federal law solely by 
        reason of acting in accordance with clause (i), (ii), or (iii) 
        of paragraph (1)(B).
            ``(4) Church plan exemption.--Paragraph (1) shall not apply 
        to any investment adviser to a registered investment company, 
        or an affiliated person of that investment adviser, holding 
        shares in such a capacity, if such investment adviser or such 
        affiliated person is an organization described in section 
        414(e)(3)(A) of the Internal Revenue Code of 1986.''.

SEC. 323. CONFORMING CHANGE IN DEFINITION.

    Section 2(a)(5) of the Investment Company Act of 1940 (15 U.S.C. 
80a-2(a)(5)) is amended by striking ``(A) a banking institution under 
the laws of the United States'' and inserting ``(A) a depository 
institution (as defined in section 3 of the Federal Deposit Insurance 
Act) or a branch or agency of a foreign bank (as such terms are defined 
in section 101(b) of the International Banking Act of 1978)''.

SEC. 324. EFFECTIVE DATE.

    This subtitle shall take effect 270 days after the effective date 
of this Title.

TITLE IV--WHOLESALE FINANCIAL INSTITUTIONS OWNED BY FINANCIAL SERVICES 
                           HOLDING COMPANIES

SEC. 401. NATIONAL WHOLESALE FINANCIAL INSTITUTIONS.

    Chapter 1 of Title LXII of the Revised Statutes of the United 
States (12 U.S.C. 21 et seq.) is amended by inserting after section 
5136A the following new section:

``SEC. 5136B. NATIONAL WHOLESALE FINANCIAL INSTITUTIONS.

    ``(a) National Wholesale Financial Institutions.--Any financial 
services holding company (as defined in Section 102(a) of the Financial 
Services Holding Company Act) may apply to the Comptroller of the 
Currency on such forms and in accordance with such procedures as the 
Comptroller may prescribe by regulation, for permission to organize a 
national wholesale financial institution. Upon approval of the 
application, such national wholesale financial institution shall be a 
body corporate, chartered under the laws of the United States by the 
Comptroller. A national wholesale financial institution shall operate 
pursuant to the requirements of this section at the direction of a 
board of directors elected at an organizational meeting, to be held as 
soon as practicable after issuance by the Comptroller of a charter, by 
such financial services holding company for the purpose of electing 
such board of directors and taking such other action necessary, 
pursuant to the charter and the regulations issued by the Comptroller, 
to complete the corporate organization of the national wholesale 
financial institution. Immediately following its election, the board of 
directors shall meet to elect the officers of the national wholesale 
financial institution and to take such other action, as prescribed by 
the Comptroller, to complete the corporate organization of such 
national wholesale financial institution.
    ``(b) Unauthorized Organization Prohibited.--
            ``(1) In general.--No person may organize a national 
        wholesale financial institution, collect money from others for 
        such purpose, or represent himself or herself as authorized to 
        do so and no national wholesale financial institution shall 
        transact any business prior to completion of its organization 
        except as provided in this section and in implementing 
        regulations of the Comptroller.
            ``(2) Insruance termination.--No bank that is insured under 
        the Federal Deposit Insurance Act may become a national 
        wholesale financial institution unless--
                    ``(A) it has met all the requirements under that 
                Act for voluntary termination of deposit insurance; and
                    ``(B) it is affiliated with a financial service 
                holding company, as defined in section 102(a) of the 
                Financial Services Holding Company Act.
    ``(c) Authorized Activities for National Wholesale Financial 
Institution.--Except as otherwise provided in this section, a national 
wholesale financial institution--
            ``(1) may exercise, in accordance with its articles of 
        organization and such regulations as are issued by the 
        Comptroller, all of the powers and privileges of a national 
        banking association formed in accordance with section 5133 of 
        the Revised Statutes of the United States; and
            ``(2) shall be subject to any provision of title LXII of 
        the Revised Statutes of the United States that is applicable to 
        a national banking association that is not a national wholesale 
        financial institution.
    ``(d) Termination.--A national wholesale financial institution may 
terminate its status as a national banking association only with the 
prior written approval of the Comptroller and on terms and conditions 
that the Comptroller determines are appropriate to carry out the 
purposes of this section.
    ``(e) Prompt Corrective Action.--A national wholesale financial 
institution shall be deemed to be an insured depository institution for 
purposes of section 38 of the Federal Deposit Insurance Act except 
that--
            ``(1) the relevant capital levels and capital measures for 
        each capital category shall be the levels specified by the 
        Comptroller for national wholesale financial institutions in 
        accordance with subsection (i)(2);
            ``(2) the provisions applicable to well capitalized insured 
        depository institutions shall be inapplicable to national 
        wholesale financial institutions;
            ``(3) the provisions authorizing or requiring an 
        institution to be placed into receivership shall not apply to a 
        national wholesale financial institution, and, instead, the 
        Comptroller is authorized or required to place the national 
        wholesale financial institution into conservatorship; and
            ``(4) for purposes of applying the provisions of section 38 
        of the Federal Deposit Insurance Act to national wholesale 
        financial institutions, all references to the appropriate 
        Federal banking agency or to the Corporation in that section 
        shall be deemed to be references to the Comptroller.
    ``(f) Enforcement Authority.--Subsections (j) and (k) of section 7, 
subsections (b) through (n), (s), (u), and (v) of section 8, and 
section 19 of the Federal Deposit Insurance Act shall apply to a 
national wholesale financial institution in the same manner and to the 
same extent as such provisions apply to insured national banks and any 
references in such sections to an insured depository institution shall 
be deemed, for purposes of this paragraph, to be a reference to a 
national wholesale financial institution.
    ``(g) Certain Other Statutes Applicable.--A national wholesale 
financial institution shall be deemed to be a banking institution, and 
the Comptroller shall be the appropriate Federal banking agency for 
such bank and all such bank's affiliates, for purposes of the 
International Lending Supervision Act.
    ``(h) Bank Merger Act.--A national wholesale financial institution 
shall be subject to the provisions of sections 18(c) and 44 of the 
Federal Deposit Insurance Act in the same manner and to the same extent 
the national wholesale financial institution would be subject to such 
sections if the institution were an insured national bank.
    ``(i) Specific Requirements Applicable to National Wholesale 
Financial Institutions.--
            ``(1) Limitations on deposits.--
                    ``(A) Minimum amount.--
                            ``(i) In general.--Pursuant to such 
                        regulations as the Comptroller may prescribe, 
                        no national wholesale financial institution may 
                        receive initial deposits of $100,000 or less, 
                        other than on an incidental or occasional 
                        basis.
                            ``(ii) Limitation on deposits of less than 
                        $100,000.--No bank may be treated as a national 
                        wholesale financial institution if the total 
                        amount of the initial deposits of $100,000 or 
                        less at such bank constitutes more than 5 
                        percent of the bank's total deposits.
                    ``(B) No deposit insurance.--No deposits held by a 
                national wholesale financial institution shall be 
                insured deposits under the Federal Deposit Insurance 
                Act.
                    ``(C) Advertising and disclosure.--The Comptroller 
                shall prescribe regulations pertaining to advertising 
                and disclosure by national wholesale financial 
                institutions to ensure that each depositor is notified 
                that deposits at such wholesale financial institution 
                are not federally insured or otherwise guaranteed by 
                the United States Government.
            ``(2) Specific capital requirements applicable to national 
        wholesale financial institutions.--
                    ``(A) Minimum capital levels.--
                            ``(i) In general.--The Comptroller shall, 
                        by regulation, adopt capital requirements for 
                        national wholesale financial institutions to--
                    ``(A) account for the status of national wholesale 
                financial institutions as institutions that accept 
                deposits that are not insured under the Federal Deposit 
                Insurance Act; and
                    ``(B) provide for the safe and sound operation of 
                the national wholesale financial institution without 
                undue risk to creditors or other persons engaged in 
                transactions with such institution.
            ``(2) Minimum tier 1 capital ratio.--The minimum ratio of 
        tier 1 capital to total risk-weighted assets of national 
        wholesale financial institutions shall be not less than the 
        level required for an insured national bank to be well 
        capitalized unless the Comptroller determines otherwise, 
        consistent with safety and soundness.
            ``(3) Capital categories for prompt corrective action.--For 
        purposes of applying section 38 of the Federal Deposit 
        Insurance Act with respect to any national wholesale financial 
        institution, the Comptroller shall, by regulation, establish, 
        for each relevant capital measure specified by the Comptroller 
        under this subsection, the levels at which a national wholesale 
        financial institution is well capitalized, adequately 
        capitalized, undercapitalized, significantly undercapitalized, 
        and critically undercapitalized.
            ``(4) Additional requirements applicable to national 
        wholesale financial institutions.--In addition to any 
        requirement otherwise applicable to State member banks or 
        applicable, under this section, to national wholesale financial 
        institutions, the Comptroller may prescribe, by regulation or 
        order, for national wholesale financial institutions--
                    ``(A) limitations on transaction with affiliates to 
                prevent an affiliate from gaining access to, or the 
                benefits of, credit from a Federal reserve bank, 
                including overdrafts at a Federal reserve bank;
                    ``(B) special clearing balance requirements; and
                    ``(C) any additional requirements that the 
                Comptroller determines to be appropriate or necessary 
                to--
                            ``(i) promote the safety and soundness of 
                        the national wholesale financial institution, 
                        or
                            ``(ii) protect creditors and other persons 
                        engaged in transactions with the national 
                        wholesale financial institution.
            ``(5) Exemptions for national wholesale financial 
        institutions.--The Comptroller may, by regulation or order, 
        exempt any national wholesale financial institution from any 
        provision applicable to a national bank that is not a national 
        wholesale financial institution, if the Comptroller finds that 
        such exemption is not inconsistent with--
                    ``(A) the promotion of the safety and soundness of 
                the national wholesale financial institution; and
                    ``(B) the protection of creditors and other persons 
                engaged in transactions with the national wholesale 
                financial institution.
            ``(6) No effect on other provisions.--This section shall 
        not be construed as limiting the Comptroller's authority over 
        national banks under any other provision of law, or to create 
        any obligation for any Federal reserve bank to make, increase, 
        review, or extend any advances or discount under the Federal 
        Reserve Act to any member bank or other depository institution.
    ``(d) Conservatorship Authority.--The Comptroller may appoint a 
conservator to take possession and control of a national wholesale 
financial institution to the same extent and in the same manner as the 
Comptroller may appoint a conservator for a national bank under section 
203 of the Bank Conservation Act, and the conservator shall exercise 
the same powers, functions, and duties, subject to the same 
limitations, as are provided under such Act for conservators of 
national banks.
    ``(e) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) National wholesale financial institution.--The term 
        `national wholesale financial institution' means a bank that 
        has been approved to become a national wholesale financial 
        institution by the Comptroller under this section pursuant to 
        an application filed under subsection (a).
            ``(2) Deposit.--The term `deposit' has the meaning given to 
        such term by the Comptroller under this Section.
    ``(f) Exclusive Jurisdiction.--Subsections (c) and (e) of section 
43 of the Federal Deposit Insurance Act shall not apply to any national 
wholesale financial institution.''.

SEC. 402. STATE MEMBER WHOLESALE FINANCIAL INSTITUTIONS.

    (a) In General.--The Federal Reserve Act (12 U.S.C. 221 et seq.) is 
amended by inserting after section 9A the following new section:

``SEC. 9B. WHOLESALE FINANCIAL INSTITUTIONS.

    ``(a) Application for Membership as Wholesale Financial 
Institution.--
            ``(1) Application required.--
                    ``(A) In general.--Any bank incorporated by special 
                law of any State, or organized under the general laws 
                of any State, may apply to the Board of Governors of 
                the Federal Reserve System to become a State member 
                wholesale financial institution and to subscribe to the 
                stock of the Federal reserve bank organized within the 
                district where the applying bank is located.
                    ``(B) Treatment as state member bank.--Any 
                application under subparagraph (A) shall be treated as 
                an application to become a State member bank under, and 
                shall be subject to the provisions of, section 9.
            ``(2) Insurance termination.--No bank that is insured under 
        the Federal Deposit Insurance Act may become a State member 
        wholesale financial institution unless--
                    ``(A) it has met all requirements under that Act 
                for voluntary termination of deposit insurance; and
                    ``(B) is affiliated with a financial services 
                holding company, as defined in section 102(a) of the 
                Financial Services Holding Company Act.
    ``(b) General Requirements Applicable to State Member Wholesale 
Financial Institutions.--
            ``(1) Federal reserve act.--Except as otherwise provided in 
        this section, State member wholesale financial institutions 
        shall be member banks and shall be subject to the provisions of 
        this Act that apply to member banks to the same extent and in 
        the same manner as State member insured banks, except that a 
        State member wholesale financial institution may terminate 
        membership under this Act only with the prior written approval 
        of the Board and on terms and conditions that the Board 
        determines are appropriate to carry out the purposes of this 
        Act.
            ``(2) Prompt corrective action.--A State member wholesale 
        financial institution shall be deemed to be an insured 
        depository institution for purposes of section 38 of the 
        Federal Deposit Insurance Act except that--
                    ``(A) the relevant capital levels and capital 
                measures for each capital category shall be the levels 
                specified by the Board for State member wholesale 
                financial institutions in accordance with subsection 
                (c);
                    ``(B) the provisions applicable to well capitalized 
                insured depository institutions shall be inapplicable 
                to wholesale financial institutions;
                    ``(C) the provisions authorizing or requiring an 
                institution to be placed into receivership shall not 
                apply to a State member wholesale financial 
                institution, and, instead, the Board is authorized or 
                required, as the case may be, to terminate the State 
                member wholesale financial institution's membership in 
                the Federal Reserve System or place the bank into 
                conservatorship; and
                    ``(D) for purposes of applying the provisions of 
                section 38 of the Federal Deposit Insurance Act to 
                State member wholesale financial institutions, all 
                references to the appropriate Federal banking agency or 
                to the Corporation in that section shall be deemed to 
                be references to the Board.
            ``(3) Enforcement authority.--Subsections (j) and (k) of 
        section 7, subsections (b) through (n), (s), (u), and (v) of 
        section 8, and section 19 of the Federal Deposit Insurance Act 
        shall apply to a State member wholesale financial institution 
        in the same manner and to the same extent as such provisions 
        apply to State member insured banks and any references in such 
        sections to an insured depository institution shall be deemed, 
        for purposes of this paragraph, to be a reference to a State 
        member wholesale financial institution.
            ``(4) Certain other statutes applicable.--A State member 
        wholesale financial institution shall be deemed to be a banking 
        institution, and the Board shall be the appropriate Federal 
        banking agency for such bank and all such bank's affiliates for 
        purposes of the International Lending Supervision Act.
            ``(5) Bank merger act.--A State member wholesale financial 
        institution shall be subject to the provisions of sections 
        18(c) and 44 of the Federal Deposit Insurance Act in the same 
        manner and to the same extent as the State member 
wholesale financial institution would be subject to such sections if 
the institution were a State member insured bank.
    ``(c) Specific Requirements Applicable to State Member Wholesale 
Financial Institutions.--
            ``(1) Limitations on deposits.--
                    ``(A) Minimum amount.--
                            ``(i) In general.--Pursuant to such 
                        regulations as the Board may prescribe, no 
                        State member wholesale financial institution 
                        may receive initial deposits of $100,000 or 
                        less, other than on an incidental or occasional 
                        basis.
                            ``(ii) Limitation on deposits of less than 
                        $100,000.--No bank may be treated as a State 
                        member wholesale financial institution if the 
                        total amount of the initial deposits of 
                        $100,000 or less at such bank constitutes more 
                        than 5 percent of the bank's total deposits.
                    ``(B) No deposit insurance.--No deposits held by a 
                State member wholesale financial institution shall be 
                insured deposits under the Federal Deposit Insurance 
                Act.
                    ``(C) Advertising and disclosure.--The Board shall 
                prescribe regulations pertaining to advertising and 
                disclosure by State member wholesale financial 
                institutions to ensure that each depositor is notified 
                that deposits at such wholesale financial institution 
                are not federally insured or otherwise guaranteed by 
                the United States Government.
            ``(2) Special capital requirements applicable to state 
        member wholesale financial institutions.--
                    ``(A) Minimum capital levels.--
                            ``(i) In general.--The Board shall, by 
                        regulation, adopt capital requirements for 
                        State member wholesale financial institutions--
                                    ``(I) to account for the status of 
                                State member wholesale financial 
                                institutions as institutions that 
                                accept deposits that are not insured 
                                under the Federal Deposit Insurance 
                                Act; and
                                    ``(II) to provide for the safe and 
                                sound operation of the State member 
                                wholesale financial institution without 
                                undue risk to creditors or other 
                                persons, including Federal reserve 
                                banks, engaged in transactions with 
                                such institution.
                            ``(ii) Minimum tier 1 capital ratio.--The 
                        minimum ratio of tier 1 capital to total risk-
                        weighted assets of State member wholesale 
                        financial institutions shall be not less than 
                        the level required for a State member insured 
                        bank to be well capitalized unless the Board 
                        determines otherwise, consistent with safety 
                        and soundness.
                    ``(B) Capital categories for prompt corrective 
                action.--For purposes of applying section 38 of the 
                Federal Deposit Insurance Act with respect to any 
                wholesale financial institution, the Board shall, by 
                regulation, establish, for each relevant capital 
                measure specified by the Board under subparagraph (A), 
                the levels at which a State member wholesale financial 
                institution is well capitalized, adequately 
                capitalized, undercapitalized, significantly 
                undercapitalized, and critically undercapitalized.
            ``(3) Additional requirements applicable to state member 
        wholesale financial institutions.--In addition to any 
        requirement otherwise applicable to State member banks or 
        applicable, under this section, to State member wholesale 
        financial institutions, the Board may prescribe, by regulation 
        or order, for State member wholesale financial institutions--
                    ``(A) limitations on transaction with affiliates to 
                prevent an affiliate from gaining access to, or the 
                benefits of, credit from a Federal reserve bank, 
                including overdrafts at a Federal reserve bank;
                    ``(B) special clearing balance requirements; and
                    ``(C) any additional requirements that the Board 
                determines to be appropriate or necessary to--
                            ``(i) promote the safety and soundness of 
                        the wholesale financial institution, or
                            ``(ii) protect creditors and other persons, 
                        including Federal reserve banks, engaged in 
                        transactions with the State member wholesale 
                        financial institution.
            ``(4) Exemptions for state member wholesale financial 
        institutions.--The Board may, by regulation or order, exempt 
        any State member wholesale financial institution from any 
        provision applicable to a State member bank that is not a State 
        member wholesale financial institution, if the Board finds that 
        such exemption is not inconsistent with--
                    ``(A) the promotion of the safety and soundness of 
                the State member wholesale financial institution; and
                    ``(B) the protection of creditors and other 
                persons, including Federal reserve banks, engaged in 
                transactions with the State member wholesale financial 
                institution.
            ``(5) No effect on other provisions.--This section shall 
        not be construed as limiting the Board's authority over member 
        banks under any other provision of law, or to create any 
        obligation for any Federal reserve bank to make, increase, 
        renew, or extend any advances or discount under this Act to any 
        member bank or other depository institution.
    ``(d) Conservatorship Authority.--
            ``(1) In general.--The Board may appoint a conservator to 
        take possession and control of a State member wholesale 
        financial institution to the same extent and in the same manner 
        as the Comptroller of the Currency may appoint a conservator 
        for a national bank under section 203 of the Bank Conservation 
        Act, and the conservator shall exercise the same powers, 
        functions, and duties, subject to the same limitations, as are 
        provided under such Act for conservators of national banks.
            ``(2) Board authority.--The Board shall have the same 
        authority with respect to any conservator appointed under 
        paragraph (1) and the State member wholesale financial 
        institution for which such conservator has been appointed as 
        the Comptroller of the Currency has under the Bank Conservation 
        Act with respect to a conservator appointed under such Act and 
        a national bank for which the conservator has been appointed.
    ``(e) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) State member wholesale financial institution.--The 
        term `State member wholesale financial institution' means a 
        bank whose application to become a State member wholesale 
        financial institution and a State member bank has been approved 
        by the Board under this section.
            ``(2) Deposit.--The term `deposit' has the meaning given to 
        such term by the Board under this Act.
            ``(3) State member insured bank.--The term `State member 
        insured bank' means a State member bank which is an insured 
        bank (as defined in section 3(h) of the Federal Deposit 
        Insurance Act).
    ``(f) Exclusive Jurisdiction.--Subsections (c) and (e) of section 
43 of the Federal Deposit Insurance Act shall not apply to any State 
member wholesale financial institution.''.

SEC. 403. AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.

    (a) Voluntary Termination of Insured Status by Certain 
Institutions.--
            (1) Section 8 designations.--Section 8(a) of the Federal 
        Deposit Insurance Act (12 U.S.C. 1818(a)) is amended--
                    (A) by striking paragraph (1); and
                    (B) by redesignating paragraphs (2) through (9) as 
                paragraphs (1) through (8), respectively.
            (2) Voluntary termination of insured status.--The Federal 
        Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by 
        inserting after section 8 the following new section:

``SEC. 8A. VOLUNTARY TERMINATION OF STATUS AS INSURED DEPOSITORY 
              INSTITUTION.

    ``(a) In General.--Except as provided in subsection (b), an insured 
State bank or a national bank may voluntarily terminate such bank's 
status as an insured depository institution in accordance with 
regulations of the Corporation if--
            ``(1) the bank provides written notice of the bank's intent 
        to terminate such insured status--
                    ``(A) to the Corporation and either the Board of 
                Governors of the Federal Reserve System (in the case of 
                a State member bank) or the Comptroller of the Currency 
                (in the case of a national bank) not less than 6 months 
                before the effective date of such termination; and
                    ``(B) to all depositors at such bank, not less than 
                6 months before the effective date of the termination 
                of such status; and
            ``(2) either--
                    ``(A) the deposit insurance fund of which such bank 
                is a member equals or exceeds the fund's designated 
                reserve ratio as of the date the bank provides a 
                written notice under paragraph (1) and the Corporation 
                determines that the fund will equal or exceed the 
                applicable designated reserve ratio for the 2 
                semiannual assessment periods immediately following 
                such date; or
                    ``(B) the Corporation and the Board of Governors of 
                the Federal Reserve System (in the case of a State 
                member bank) or the Comptroller of the Currency (in the 
                case of a national bank) approve the termination of the 
                bank's insured status and the bank pays an exit fee in 
                accordance with subsection (e).
    ``(b) Exception.--Subsection (a) shall not apply with respect to--
            ``(1) an insured savings association;
            ``(2) an insured branch that is required to be insured 
        under subsection (a) or (b) of section 6 of the International 
        Banking Act of 1978; or
            ``(3) any institution described in section 2(c)(2) of the 
        Bank Holding Company Act of 1956.
    ``(c) Eligibility for Insurance Terminated.--Any bank that 
voluntarily elects to terminate the bank's insured status under 
subsection (a) shall not be eligible for insurance on any deposits or 
any assistance authorized under this Act after the period specified in 
subsection (f)(1).
    ``(d) Institution Must Become Wholesale Financial Institution or 
Terminate Deposit-Taking Activities.--Any depository institution which 
voluntarily terminates such institution's status as an insured 
depository institution under this section may not, upon termination of 
insurance, accept any deposits unless the institution is either a State 
member wholesale financial institution under section 9B of the Federal 
Reserve Act, or a national wholesale financial institution under 
section 5136B of the Revised Statutes of the United States.
    ``(e) Exit Fees.--
            ``(1) In general.--Any bank that voluntarily terminates 
        such bank's status as an insured depository institution under 
        this section shall pay an exit fee in an amount that the 
        Corporation determines is sufficient to account for the 
        institution's pro rata share of the amount (if any) which would 
        be required to restore the relevant deposit insurance fund to 
        the fund's designated reserve ratio as of the date the bank 
        provides a written notice under subsection (a)(1).
            ``(2) Procedures.--The Corporation shall prescribe, by 
        regulation, procedures for assessing any exit fee under this 
        subsection.
    ``(f) Temporary Insurance of Deposits Insured as of Termination.--
            ``(1) Transition period.--The insured deposits of each 
        depositor in a State bank or a national bank on the effective 
        date of the voluntary termination of the bank's insured status, 
        less all subsequent withdrawals from any deposits of such 
        depositor, shall continue to be insured for a period of not 
        less than 6 months and not more than 2 years, as determined by 
        the Corporation. During such period, no additions to any such 
        deposits, and no new deposits in the depository institution 
        made after the effective date of such termination shall be 
        insured by the Corporation.
            ``(2) Temporary assessments; obligations and duties.--
        During the period specified in paragraph (1) with respect to 
        any bank, the bank shall continue to pay assessments under 
        section 7 as if the bank were an insured depository 
        institution. The bank shall, in all other respects, be subject 
        to the authority of the Corporation and the duties and 
        obligations of an insured depository institution under this Act 
        during such period, and in the event that the bank is closed 
        due to an inability to meet the demands of the bank's 
        depositors during such period, the Corporation shall have the 
        same powers and rights with respect to such bank as in the case 
        of an insured depository institution.
    ``(g) Advertisements.--
            ``(1) In general.--A bank that voluntarily terminates the 
        bank's insured status under this section shall not advertise or 
        hold itself out as having insured deposits, except that the 
        bank may advertise the temporary insurance of deposits under 
        subsection (f) if, in connection with any such advertisement, 
        the advertisement also states with equal prominence that 
        additions to deposits and new deposits made after the effective 
        date of the termination are not insured.
            ``(2) Certificates of deposit, obligations, and 
        securities.--Any certificate of deposit or other obligation or 
        security issued by a State bank or a national bank after the 
        effective date of the voluntary termination of the bank's 
        insured status under this section shall be accompanied by a 
        conspicuous, prominently displayed notice that such certificate 
        of deposit or other obligation or security is not insured under 
        this Act.
    ``(h) Notice Requirements.--
            ``(1) Notice to the corporation.--The notice required under 
        subsection (a)(1)(A) shall be in such form as the Corporation 
        may require.
            ``(2) Notice to depositors.--The notice required under 
        subsection (a)(1)(B) shall be--
                    ``(A) sent to each depositor's last address of 
                record with the bank; and
                    ``(B) in such manner and form as the Corporation 
                finds to be necessary and appropriate for the 
                protection of depositors.''.
    (b) Definition.--Section 19(b)(1)(A)(i) of the Federal Reserve Act 
(12 U.S.C. 461(b)(1)(A)(i)) is amended after ``such Act'' by inserting 
``, or any State member wholesale financial institution as defined in 
section 9B of this Act or any national wholesale financial institution 
as defined in section 5136B of the Revised Statutes of the United 
States''.
    (c) Reports on Discounts and Advances to Wholesale Financial 
Institutions.--Section 10B of the Federal Reserve Act (12 U.S.C. 
347(b)) is amended by adding at the end the following new subsection:
    ``(c) Reports on Discounts and Advances to Wholesale Financial 
Institutions.--
            ``(1) In general.--The Board shall submit a report to the 
        Congress at the end of any year in which any State member 
        wholesale financial institution or national wholesale financial 
        institution (as defined in section 5136B of the Revised 
        Statutes of the United States) has obtained a discount, 
        advance, or other extension of credit from a Federal reserve 
        bank.
            ``(2) Contents.--Any report submitted under paragraph (1) 
        shall explain the circumstances and need for any discount, 
        advance, or other extension of credit to a wholesale financial 
        institution during the period covered by the report, including 
        the type and amount of credit extended and the amount of credit 
        remaining outstanding as of the date of the report.''.

TITLE V--MERGER OF BANK AND THRIFT CHARTERS, REGULATORS, AND INSURANCE 
                                 FUNDS

               Subtitle A--Conversion of Thrift Charters

SEC. 501. SHORT TITLE.

    This title may be cited as the Thrift Charter Conversion Act of 
1996.

SEC. 502. TERMINATION OF FEDERAL SAVINGS ASSOCIATIONS; TREATMENT OF 
              STATE SAVINGS ASSOCIATIONS AS BANKS FOR PURPOSES OF 
              FEDERAL BANKING LAW.

    (a) Termination of Federal Savings Association Charters.--
            (1) In general.--Each Federal savings association shall--
                    (A) convert to a national bank charter;
                    (B) convert to a State depository institution 
                charter; or
                    (C) surrender the charter of such savings 
                association and liquidate the institution.
            (2) Conversion to national bank by operation of law.--If 
        any Federal savings association has not taken any action 
        required under paragraph (1) as of January 1, 1998, the savings 
        association shall--
                    (A) become a national bank on such date by 
                operation of law;
                    (B) immediately file articles of association and an 
                organizational certificate with the Comptroller of the 
                Currency in accordance with sections 5133, 5134, and 
                5135 of the Revised Statutes of the United States; and
                    (C) cease to exist as a Federal savings association 
                as of such date.
            (3) Prohibition on new charters of federal savings 
        associations.--The Director of the Office of Thrift Supervision 
        may not grant any charter for a Federal savings association for 
        which an application was received after the date of the 
        enactment of this Act.
    (b) Treatment of State Savings Associations as Banks for Purposes 
of Federal Banking Law.--
            (1) Amendments to federal deposit insurance act.--Section 3 
        of the Federal Deposit Insurance Act (12 U.S.C. 1813) is 
        amended--
                    (A) by striking paragraph (2) of subsection (a) and 
                inserting the following new paragraph: ``(2) State 
                bank.--
                    ``(A) In general.--The term `State bank' means any 
                bank, banking association, trust company, savings bank, 
                industrial bank (or similar depository institution 
                which the Board of Directors finds to be operating 
                substantially in the same manner as an industrial 
                bank), building and loan association, savings and loan 
                association, homestead association, cooperative bank, 
                or other banking institution--
                            ``(i) which is engaged in the business of 
                        receiving deposits, other than trust funds (as 
                        defined in this section); and
                            ``(ii) which--
                                    ``(I) is incorporated under the 
                                laws of any State;
                                    ``(II) is organized and operating 
                                according to the laws of the State in 
                                which such institution is chartered or 
                                organized; or
                                    ``(III) is operating under the Code 
                                of Law for the District of Columbia 
                                (except a national bank).
                    ``(B) Certain insured banks included.--The term 
                `State bank' includes a cooperative bank or other 
                unincorporated bank the deposits of which were insured 
                by the Corporation on the day before the date of the 
                enactment of the Financial Institutions Reform 
                Recovery, and Enforcement Act of 1989.
                    ``(C) Certain uninsured banks excluded.--The term 
                `State bank' does not include any cooperative bank or 
                other unincorporated bank the deposits of which were 
                not insured by the Corporation on the day before the 
                date of the enactment of the Financial Institutions 
                Reform, Recovery, and Enforcement Act of 1989.''; and
                    (B) in subsection (q)--
                            (i) by inserting ``and'' after the 
                        semicolon at the end of paragraph (2);
                            (ii) by striking ``; and'' at the end of 
                        paragraph (3) and inserting a period; and
                            (iii) by striking paragraph (4).
            (2) Amendments to the bank holding company act of 1956.--
        Section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 
        1841) is amended--
                    (A) by striking subparagraph (E) of subsection 
                (a)(5); and
                    (B) by striking subparagraphs (B) and (J) of 
                subsection (c)(2).
            (3) Amendments to the federal reserve act.--The 2d and 3d 
        paragraphs of the 1st section of the Federal Reserve Act (12 
        U.S.C. 221) are each amended by inserting ``(as defined in 
        section 3(a)(2) of the Federal Deposit Insurance Act)'' after 
        ``State bank''.
    (c) Comparability of Regulation for State-Chartered Depository 
Institutions.--
            (1) Review of state supervision.--The Corporation shall 
        maintain procedures for reviewing, under standards the Board of 
        Directors shall prescribe in regulations, the manner in which 
        State depository institutions are regulated by a State for the 
        purpose of ensuring that State savings associations are no less 
        rigorously regulated by a State than State banks.
            (2) Inadequate state regulations.--If, in connection with a 
        review of State regulation of State depository institutions 
        pursuant to paragraph (2), the Corporation determines that a 
        State regulates savings associations chartered by such State 
        less rigorously than the State regulates banks chartered by 
        such State, the Corporation may take such action under section 
        8(a) of the Federal Deposit Insurance Act as the Corporation 
        determines to be appropriate which shall be effective no later 
        than the end of the 1-year period beginning on the date of such 
        determination.
            (3) Definitions.--The following definitions shall apply for 
        purposes of this subsection:
                    (A) State bank.--The term ``State bank'' has the 
                same meaning as in section 3(a)(2) of the Federal 
                Deposit Insurance Act (as in effect on the date of the 
                enactment of the Thrift Charter Conversion Act of 
                1996).
                    (B) State savings association.--The term ``State 
                savings association'' has the same meaning as in 
                section 3(b)(2) of the Federal Deposit Insurance Act 
                (as in effect on the date of the enactment of the 
                Thrift Charter Conversion Act of 1996).
                    (C) State depository institution.--The term ``State 
                depository institution'' has the same meaning as in 
                section 3(c)(5) of the Federal Deposit Insurance Act.

SEC. 503. TREATMENT OF CERTAIN ACTIVITIES AND AFFILIATIONS OF BANK 
              HOLDING COMPANIES RESULTING FROM THIS ACT.

    Section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843) 
is amended by adding at the end the following new subsection:
    ``(k) Treatment of Companies Resulting From Savings and Loan 
Holding Companies.--
            ``(1) In general.--Notwithstanding any other provision of 
        this section (other than paragraph (5)) or any other provision 
        of Federal law including sections 20 and 32 of the Banking Act 
of 1933, a qualified bank holding company may, after such company 
becomes a bank holding company--
                    ``(A) maintain or enter into any non-banking 
                affiliation which such company was authorized to 
                maintain or enter into as of September 22, 1995, or was 
                authorized to maintain following a merger of insured 
                depository institution subsidiaries pursuant to an 
                application filed no later than such date; and
                    ``(B) engage, directly or through any affiliate 
                described in subparagraph (A) which is not a bank, in 
                any activity in which such company or any affiliate 
                described in subparagraph (A) was authorized to engage 
                as of September 22, 1995, or in which such company was 
                authorized to engage following a merger of insured 
                depository institution subsidiaries pursuant to an 
                application filed no later than such date, if the 
                requirements of paragraph (4) are met.
            ``(2) Qualified bank holding company defined.--For purposes 
        of this subsection, the term `qualified bank holding company' 
        means--
                    ``(A) any company--
                            ``(i) which--
                                    ``(I) as of September 13, 1995, is 
                                a savings and loan holding company; or
                                    ``(II) as of September 30, 1995, 
                                has filed an application to charter a 
                                de novo Federal savings association and 
                                thereafter becomes a savings and loan 
                                holding company by virtue of the 
                                establishment of such savings 
                                association; and
                            ``(ii) which as of the dates referred to in 
                        subclause (I) or (II), as the case may be, is 
                        not a bank holding company and becomes a bank 
                        holding company after such date, or any 
                        subsidiary of such company; and
                    ``(B) any bank holding company which as of 
                September 13, 1995--
                            ``(i) is a savings and loan holding 
                        company; and
                            ``(ii) is exempt from this section pursuant 
                        to an order issued by the Board under 
                        subsection (d).
            ``(3) No loss of subsection (d) exemption.--No qualified 
        bank holding company described in paragraph (2)(B) shall lose 
        the grounds for the exemption under subsection (d) because a 
        savings association which such company controlled, directly or 
        indirectly, as of September 13, 1995, becomes a bank after such 
        date so long as such bank continues to meet the requirements of 
        subparagraphs (A) and (B) of paragraph (4).
            ``(4) Prerequisites for continuation of grandfathered 
        activities and affiliations.--This subsection shall cease to 
        apply with respect to a qualified bank holding company if, at 
        any time after such company first meets the definition of a 
        qualified bank holding company--
                    ``(A) any insured depository institution controlled 
                by such company which, as of the day before the company 
                first meets the definition of a qualified bank holding 
                company--
                            ``(i) was subject to the requirements 
                        contained in section 10(m) of the Home Owners' 
                        Loan Act, as in effect on such date, (and 
                        regulations in effect on such date under such 
                        section) for treatment as a qualified thrift 
                        lender under such section; and
                            ``(ii) was not a savings association 
                        described in section 10(m)(3)(F) of such Act, 
                        as in effect on such date,
                fails to meet any requirement of such section;
                    ``(B) any insured depository institution controlled 
                by such company fails to comply with any limitation or 
                restriction on the type of amounts of loans or 
                investments of the institution to which such 
                institution was subject as of the date of the enactment 
                of the Thrift Charter Conversion Act of 1996, other 
                than any limitation relating to qualified thrift 
                investments under section 10(m) of the Home Owners' 
                Loan Act, as in effect on such date;
                    ``(C) the company or any subsidiary of the company 
                acquires more than 5 percent of the shares or assets of 
                any bank or any savings association (as such term is 
                defined in section 3 of the Federal Deposit Insurance 
                Act, as in effect on the date of the enactment of the 
                Thrift Charter Conversion Act of 1996) after September 
                13, 1995.
            ``(5) Nontransferable.--This subsection shall not apply 
        with respect to any qualified bank holding company if, after 
        September 13, 1995--
                    ``(A) any person not under common control with such 
                company acquires, directly or indirectly, control of 
                the company; or
                    ``(B) the company is the subject of any merger, 
                consolidation, or other similar transaction as a result 
                of which a person not under common control with such 
                company acquires, directly or indirectly, control of 
                such company.
            ``(6) Prohibition on certain insured depository 
        institutions identifying themselves as national banks.--
                    ``(A) In general.--Notwithstanding the requirement 
                of section 5134 of the Revised Statutes of the United 
                States--
                            ``(i) the name of an insured depository 
                        institution subsidiary of a qualified bank 
                        holding company which--
                                    ``(I) as of the date of the 
                                enactment of the Thrift Charter 
                                Conversion Act of 1996, is a savings 
                                and loan holding company described in 
                                section 10(c)(3) of the Home Owners' 
                                Loan Act (as in effect on such date); 
                                and
                                    ``(II) is subject to the 
                                restrictions contained in paragraph 
                                (4),
                        may not include the term ``national''; and
                            ``(ii) such insured depository institution 
                        may not be identified as a national bank on any 
                        sign displayed by the institution or in any 
                        advertisement or other publication of the 
                        institution.
                    ``(B) Depository institution not liable for 
                fraudulent misrepresentation for not representing 
                itself as a national bank.--An insured depository 
                institution which is subject to subparagraph (A) shall 
                not be liable for any civil or criminal penalty under 
                any Federal or State consumer protection law, or in any 
                criminal or civil action, for fraudulently 
                misrepresenting the nature of the charter of the 
                institution, for falsely advertising the status of the 
                institution, for making a false statement with respect 
                to the status of the institution, or for any similar 
                offense by reason of the institution's compliance with 
                such subparagraph.
            ``(7) Enforcement.--In addition to any other power of the 
        Board, the Board may enforce compliance with the provisions of 
        this subsection with respect to any qualified bank holdling 
        company and any bank controlled by such company under section 8 
        of the Federal Deposit Insurance Act.''.

SEC. 504. TRANSITION PROVISIONS FOR ACTIVITIES OF SAVINGS ASSOCIATIONS 
              WHICH CONVERT INTO OR BECOME TREATED AS BANKS.

    (a) In General.--Notwithstanding any other provision of Federal 
law, any insured depository institution which, as of September 13, 
1995, is a savings association (as defined in section 3(b) of the 
Federal Depository Insurance Act (as in effect on such date)) and after 
such date converts to a national or State bank charter or becomes 
treated as a State bank pursuant to the amendment made by section 
502(b), may continue to engage, directly or indirectly, in any activity 
in which such institution was lawfully engaged as of such date during 
the 2-year period beginning on the effective date of such conversion or 
the effective date of such amendments, as the case may be.
    (b) Two 1-Year Extensions Authorized.--The 2-year period described 
in subsection (a) with respect to any insured depository institution 
may be extended for such institution not to exceed two additional times 
for not more than 1 year each time if the appropriate Federal banking 
agency determines that such extension is necessary to avert substantial 
loss to the institution and is otherwise consistent with the safety and 
soundness of the institution.

SEC. 505. REGISTRATION OF BANK HOLDING COMPANIES RESULTING FROM 
              CONVERSIONS OF SAVINGS ASSOCIATIONS TO BANKS OR TREATMENT 
              OF SAVINGS ASSOCIATIONS AS BANKS.

    Section 3 of the Bank Holding Company Act of 1956 (12 U.S.C. 1842) 
is amended by adding at the end the following new subsections:
    ``(h) Registration of Certain Bank Holding Companies.--A company 
which, as of September 13, 1995, is a savings and loan holding company 
(as defined in section 10(a)(1)(D) of the Home Owners' Loan Act, as in 
effect on such date) and is not a bank holding company shall not be 
required to obtain the approval of the Board under subsection (a) to 
become a bank holding company after September 13, 1995, as a result of 
the conversion of any insured depository institution subsidiary of such 
company into a bank or by virtue of the treatment of any insured 
depository institution subsidiary of such company as a bank pursuant to 
the amendments made by the Thrift Charter Conversion Act of 1996, if 
such company--
            ``(1) registers as a bank holding company with the Board in 
        accordance with section 5(a); and
            ``(2) does not acquire, directly or indirectly, ownership 
        or control of any additional insured depository institution or 
        other company in connection with such conversion or treatment.
    ``(i) Regulation of Qualified Bank Holding Companies.--The Board 
shall regulate qualified bank holding companies (as defined in section 
4(k)(2)) in a manner consistent with--
            ``(1) the regulation of such companies by the Director of 
        the Office of Thrift Supervision before the date of the 
        enactment of the Thrift Charter Conversion Act of 1996; and
            ``(2) the safety and soundness of insured depository 
        institution subsidiaries of such companies.''.

SEC. 506. ADDITIONAL TRANSITION PROVISIONS AND SPECIAL RULES.

    (a) Mutual National Banks Authorized; Conversion of Mutual Savings 
Associations Into National Banks.--
            (1) In general.--Chapter one of title LXII of the Revised 
        Statutes of the United States (12 U.S.C. 21 et seq.) is amended 
        by inserting after section 5133 the following new section:

``SEC. 5133A. MUTUAL NATIONAL BANKS.

    ``(a) In General.--Notwithstanding the paragraph designated the 
``Third'' of sectin 5134, the Comptroller of the Currency may charter 
national banks organized in the mutual form either de novo or through a 
conversion of any stock national or State bank (as defined in section 3 
of the Federal Deposit Insurance Act) or any State mutual bank or 
credit union, subject to regulations prescribed by the Comptroller of 
the Currency in accordance with this section.
    ``(b) Regulations.--
            ``(1) Transition rules.--National banks organized in the 
        mutual form shall be subject to the regulations of the Director 
        of the Office of Thrift Supervision governing corporate 
        organization, governance, and conversion of mutual 
        institutions, as in effect on September 13, 1995, including 
        parts 543, 544, 546, 563b, and 563c) of chapter V of title 12 
        of the Code of Federal Regulations (as in effect on such date), 
        during the 3-year period beginning on the date of the enactment 
        of the Thrift Charter Conversion Act of 1996.
            ``(2) Regulations of the comptroller.--The Comptroller of 
        the Currency shall prescribe appropriate regulations for 
        national banks organized in the mutual form, effective as of 
        the end of the 3-year period referred to in paragraph (1).
            ``(3) Applicability of capital stock requirements.--The 
        Comptroller of the Currency shall prescribe regulations 
        regarding the manner in which requirements of title LXII of the 
        Revised Statutes of the United States with respect to capital 
        stock, and limitations imposed on national banks under such 
        title based on capital stock, shall apply to national banks 
        organized in mutual form pursuant to subsection (a).
    ``(c) Conversions.--
            ``(1) Conversion to stock national bank.--Subject to such 
        regulations as the Comptroller of the Currency may prescribe 
        for the protection of depositors' rights and for any other 
        purpose the Comptroller ofthe Currency may consider 
        appropriate, any national bank which is organized in mutual 
        form pursuant to paragraph (1) may reorganize as a stock 
        national bank.
            ``(2) Conversions to state banks.--Any national mutual bank 
        may convert to a State bank charter in accordance with 
        regulations prescribed by the Comptroller of the Currency and 
        applicable State law.''.
            (2) Mutual bank holding companies.--Subsection (g) of 
        section 3 of the Bank Holding Company Act of 1956 (12 U.S.C. 
        1842(g)) is amended to read as follows:
    ``(g) Mutual Bank Holding Companies.--
            ``(1) In general.--A national mutual bank may reorganize so 
        as to become a holding company by--
                    ``(A) chartering an interim national bank, the 
                stock of which is to be wholly owned, except as 
                otherwise provided in this section by the national 
                mutual bank; and
                    ``(B) transferring the substantial part of the 
                national mutual bank's assets and liabilities, inclding 
                all of the bank's insured liabilities, to the interim 
                national bank.
            ``(2) Directors and certain account holders'' approval of 
        plan required.--A reorganization is not authorized under this 
        subsection unless--
                    ``(A) a plan providing for such reorganization has 
                been approved by a majority of the board of directors 
                of the national mutual bank; and
                    ``(B) in the case of a national mutual bank in 
                which holders of accounts and obligers exercise voting 
                rights, such plan has been submited to an approved by a 
                majority of such individuals at a meeting held at the 
                call of the directors in accordance with the procedures 
                prescribed by the bank's charter and bylaws.
            ``(3) Notice to the board; disapproval period.--
                    ``(A) Notice required.--
                            ``(i) In general.--At least 60 days before 
                        taking any action described in paragraph (1), a 
                        national mutual bank seeking to establish a 
                        mutual holding company shall provide written 
                        notice to the Board.
                            ``(ii) Contents of notice.--The notice 
                        shall contain such relevant information as the 
                        Board shall require by regulation or by 
                        specific request in connection with any 
                        particular notice.
                    ``(B) Transaction allowed if not disapproved.--
                Unless the Board within such 60-day notice period 
                disapproves the proposed holding company formation, or 
                extends for another 30 days the period during which 
                such disapproval may be issued, the national mutual 
                bank providing such notice may proceed with the 
                transaction, if the requirements of paragraph (2) have 
                been met.
                    ``(C) Grounds for disapproval.--The Board may 
                disapprove any proposed holding company formation only 
                if--
                            ``(i) such disapproval is necessary to 
                        prevent unsafe or unsound practices;
                            ``(ii) the financial or management 
                        resources of the national mutual bank involved 
                        warrant disapproval;
                            ``(iii) the national mutual bank fails to 
                        furnish the information required under 
                        subparagraph (A); or
                            ``(iv) the national mutual bank fails to 
                        comply with the requirement of paragraph (2).
                    ``(D) Retention of capital assets.--In connection 
                with the transaction described in paragraph (1), a 
                national mutual bank may, subject to the approval of 
                the Board, retain capital assets at the holding company 
                level to the extent that the capital retained at the 
                holding company is in excess of the amount of capital 
                required in order for the interim national bank to meet 
                all relevant capital standards established by the 
                Comptroller of the Currency for national banks.
            ``(4) Ownership.--
                    ``(A) In general.--Persons having ownership rights 
                in the national mutual bank under section 5133A of the 
                Revised Statutes of the United States (including 
                paragraph 575.5 of chapter V of title 12 of the Code of 
                Federal Regulations, as in effect on September 13, 
                1995, and applicable to national mutual banks pursuant 
                to such section) or State law shall have the same 
                ownership rights with respect to the mutual holding 
                company.
                    ``(B) Holders of certain accounts.--Holders of 
                savings, demand, or other accounts of--
                            ``(i) a national bank chartered as part of 
                        a transaction described in paragraph (1); or
                            ``(ii) a mutual bank acquired pursuant to 
                        paragraph (5)(B),
                shall have the same ownership rights with respect to 
                the mutual holding company as persons described in 
                subparagraph (A) of this paragraph.
            ``(5) Permitted activities.--A mutual holding company may 
        engage only in the following activities:
                    ``(A) Investing in the stock of a national or State 
                bank.
                    ``(B) Acquiring a mutual bank through the merger of 
                such bank into a national bank subsidiary of such 
                holding company or an interim national bank subsidiary 
                of such holding company.
                    ``(C) Subject to paragraph (6), merging with or 
                acquiring another holding company, one of whose 
                subsidiaries is a national mutual bank.
                    ``(D) Investing in a corporation the capital stock 
                of which is available for purchase by a national mutual 
                bank under Federal law or under the law of any State 
                where the home office of any subsidiary bank is 
                located.
                    ``(E) Engaging in the activities permitted under 
                section 4(c).
            ``(6) Limitations on certain activities of acquired holding 
        companies.--
                    ``(A) New activities.--If a mutual holding company 
                acquires or merges with another holding company under 
                paragraph (5)(C), the holding company acquired or the 
                holding company resulting from such merger or 
                acquisition may only invest in assets and engage in 
                activities which are authorized under paragraph (5).
                    ``(B) Grace period for divesting prohibited or 
                discontinuing prohibited activities.--Not later than 2 
                years following a merger or acquisition described in 
                paragraph (5)(C), the acquired holding company or the 
                holding company resulting from such merger or 
                acquisition shall--
                            ``(i) dispose of any asset which is an 
                        asset in which a mutual holding company may not 
                        invest under paragraph (5); and
                            ``(ii) cease any activity which is an 
                        activity in which a mutual holding company may 
                        not engage under paragraph (5).
            ``(7) Chartering and other requirements.--
                    ``(A) In general.--A mutual holding company shall 
                be chartered by the Board and shall be subject to such 
                regulations as the Board may prescribe.
                    ``(B) Other requirements.--Unless the context 
                otherwise required, a mutual holding company shall be 
                subject to the other requirements of this Act regarding 
                regulation of holding companies.
            ``(8) Capital improvement.--
                    ``(A) Pledge of stock of savings association 
                subsidiary.--This section shall not prohibit a mutual 
                holding company from pledging all or a portion of the 
                stock of a national bank chartered as part of a 
                transaction described in paragraph (1) to raise capital 
                for such bank.
                    ``(B) Issuance of nonvoting shares.--No provision 
                of this Act shall be construed as prohibiting a 
                national bank chartered as part of a transaction 
                described in paragraph (1) from issuing any nonvoting 
                shares or less than 50 percent of the voting shares of 
                such bank to any person other than the mutual holding 
                company.
            ``(9) Insolvency and liquidation.--
                    ``(A) In general.--Notwithstanding any provision of 
                law, upon--
                            ``(i) the default of any national bank--
                                    ``(I) the stock of which is owned 
                                by any mutual holding company; and
                                    ``(II) which was chartered in a 
                                transaction described in paragraph (1);
                            ``(ii) the default of a mutual holding 
                        company; or
                            ``(iii) a foreclosure on a pledge by a 
                        mutual holding company described in paragraph 
                        (8)(A),
                A trustee shall be appointed receiver of such mutual 
                holding company and such trustee shall have the 
                authority to liquidate the assets of, and satisfy the 
                liabilities of, such mutual holding company pursuant to 
                title 11, United States Code.
                    ``(B) Distribution of net proceeds.--Except as 
                provided in subparagraph (C), the net proceeds of any 
                liquidation of any mutual holding company pursuant to 
                subparagraph (A) shall be transferred to persons who 
                hold ownership interests in such mutual holding 
                company.
                    ``(C) Recovery by federal deposit insurance 
                corporation.--If the Federal Deposit Insurance 
                Corporation incurs a loss as a result of the default of 
                any depository institution subsidiary of a mutual 
                holding company which is liquidated pursuant to 
                subparagraph (A), the Federal Deposit Insurance 
                Corporation shall succeed to the ownership interest of 
                the depositors of such depository institution in the 
                mutual holding company, to the extent of the Federal 
                Deposit Insurance Corporation's loss.
            ``(10) State mutual bank holding company.--
                    ``(A) In general.--Notwithstanding any provision of 
                Federal law, a State bank operating in mutual form may 
                reorganize so as to form a holding company under State 
                law.
                    ``(B) Regulation of state mutual holding company.--
                A corporation organized as a holding company in 
                accordance with subparagraph (A) shall be regulated on 
                the same terms and be subject to the same limitations 
                as any other holding company which controls a bank.
            ``(11) Regulations.--
                    ``(A) Transition rules.--Mutual bank holding 
                companies organized under this subsection shall be 
                subject to the regulations of the Director of the 
                Office of Thrift Supervision governing corporate 
                organization, governance, and conversion of mutual 
                institutions, as in effect on September 13, 1995, 
                including part 575 of chapter V of title 12 of the Code 
                of Federal Regulations (as in effect on such date), 
                during the 3-year period beginning on the date of the 
                enactment of the Thrift Charter Conversion Act of 1996.
                    ``(B) Regulations of the board.--The Board shall 
                prescribe appropriate regulations for mutual holding 
                companies, effective at the end of the 3-year period 
                referred to in subparagraph (A).
            ``(12) No change of control.--Any second stage conversion 
        of a mutual holding company to full stock form shall not be 
        deemed to be a change of control if, in connection with such 
        conversion, no company, directly or indirectly, acquires 
        control of such mutual holding company or any successor to such 
        company.
            ``(13) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Mutual holding company.--The term `mutual 
                holding company' means a corporation organized as a 
                holding company under this subsection.
                    ``(B) Default.--The term `default' means an 
                adjudication or other official determination of a court 
                of competent jurisdiction or other public authority 
                pursuant to which a conservator, receiver, or other 
                legal custodian is appointed.
                    ``(C) National mutual bank.--The term `national 
                mutual bank' means a national bank organized in mutual 
                form under section 5133A of the Revised Statutes of the 
                United States.''.
            (3) Limitation on federal regulation of state banks.--
        Except as otherwise provide in Federal law, the Comptroller of 
        the Currency, Board of Governors of the Federal Reserve System, 
        and Federal Deposit Insurance Corporation may not adopt or 
        enforce any regulation which contravenes the corporation 
        governance rules prescribed by State law or regulation for 
        State banks unless the Comptroller, Board, or Corporation finds 
        that such Federal regulation is necessary to assure the safety 
        and soundness of such State banks.
            (4) Conversions of mutual savings association to mutual 
        national banks by operation of law.--Notwithstanding any other 
        provision of Federal or State law, any savings association (as 
        defined in section 3 of the Federal Deposit Insurance Act (as 
        in effect on September 13, 1995)) which is organized in mutual 
        form as of the date of the enactment of this Act may become a 
        national mutual bank by operation of law if the association--
                    (A) files the articles of association and 
                organization certificate with the Comptroller of the 
                Currency before January 1, 1998, in accordance with 
                chapter one of the LXII of the Revised Statutes of the 
                United States; and
                    (B) provides such other document or information as 
                the Comptroller of the Currency may prescribe in 
                regulations consistent with this section and section 
                5133A of the Revised Statutes of the United States (as 
                added by paragraph (1) of this subsection).
    (b) Membership in Federal Home Loan Banks.--Any insured depository 
institution which--
            (1) as of the date of the enactment of this Act, is a 
        Federal savings association which, pursuant to section 6(e) of 
        the Federal Home Loan Bank Act, may not voluntarily withdraw 
        from membership in a federal home loan bank; and
            (2) after such date converts from a Federal savings 
        association to a national bank, shall continue to be subject to 
        the prohibition under such section on voluntary withdrawal from 
        such membership as though such bank were still a Federal 
        savings association until the bank ceases to be a national 
        bank.
    (c) Branches.--
            (1) In general.--Notwithstanding any provision of the 
        Federal Deposit Insurance Act, the Bank Holding Company Act of 
        1956, or any other Federal or State law, any depository 
        institution which--
                    (A) as of the date of the enactment of this Act, is 
                a savings association; and
                    (B) becomes a bank before January 1, 1998, or, 
                pursuant to the amendments made by this subsection, is 
                treated as a bank as of such date under the Federal 
                Deposit Insurance Act,
        and any depository institution or bank holding company which 
        acquires such depository institution, may continue, after the 
        depository institution becomes or commences to be treated as a 
        bank, to operate any branch or agency which the savings 
        association was operating as a branch or agency or was in the 
        process of establishing as a branch or agency on September 13, 
        1995.
            (2) No additional branches.--Paragraph (1) shall not be 
        construed as authorizing the establishment, acquisition, or 
        operation of any additional branch of a depository institution, 
        or the conversion of any agency to a branch, in any State by 
        virtue of the operation by such institution of a branch or 
        agency in such State pursuant to such paragraph except to the 
        extent such establishment, acquisition, operation, or 
        conversion is permitted under the Federal Deposit Insurance 
        Act, Bank Holding Company Act of 1956, and any other applicable 
        Federal or State law.
            (3) Establishing a branch of agency.--For purposes of 
        paragraph (1), a savings association shall be treated as having 
        been in the process of establishing a branch or agency as of 
        September 13, 1995, if, as of such date, the savings 
        association--
                    (A) had received approval from the Director of the 
                Office of Thrift Supervision to establish such branch 
                or agency;
                    (B) had pending with the Director of the Office of 
                Thrift Supervision an application or notice to 
                establish such branch or agency;
                    (C) had a legal and contractual obligation to 
                establish such branch or agency;
                    (D) had received authority from the appropriate 
                Federal banking agency to establish such branch in 
                connection with the assumption of liabilities or an 
                acquisition of an insured depository institution 
                pursuant to subsection (f) or (k) of section 13 of the 
                Federal Deposit Insurance Act or section 408(m) of the 
                National Housing Act (as in effect before the date of 
                the enactment of the Financial Institutions Reform, 
                Recovery, and Enforcement Act of 1989); or
                    (E) in the case of a well capitalized depository 
                institution, is able to demonstrate to the appropriate 
                Federal banking agency that the savings association--
                            (i) had made a significant financial 
                        commitment; and
                            (ii) had taken legally binding action or 
                        incurred a contractual obligation, in 
                        furtherance of the establishment of such branch 
                        or agency.
    (d) Transition Provision Relating to Limitations on Loans to One 
Borrower.--Section 5200 of the Revised Statutes of the United States 
(12 U.S.C. 84) is amended by adding at the end the following new 
subsection:
    ``(e) Transition Provisions for Savings Associations Converting to 
National Banks.--In the case of any depository institution which, as of 
September 13, 1995, is a savings association (as defined in section 
3(b) of the Federal Deposit Insurance Act (as in effect on such date)) 
and becomes a national bank on or before January 1, 1998, any loan, or 
legally binding commitment to make a loan, made or entered into by such 
institution becomes a national bank may continue to be held without 
regard to any limitation contained in this section during the 3-year 
period beginning on such date.''.
    (e) Rights and Authority of Banks Resulting From Conversions of 
Savings Associations.--
            (1) In general.--Upon conversion of a savings association 
        to a national or State bank in accordance with this Act and the 
        amendments made by this title or other provisions of law--
                    (A) the national or State bank shall succeed to all 
                rights, benefits, privileges, powers and franchises, 
                and be subject to all the obligations, duties, 
                restrictions, and disabilities, of such savings 
                association under any contract, agreement, document, or 
                instrument in effect at the time of such conversion to 
                which such savings association was a party; and
                    (B) any reference to the savings association in any 
                such contract, agreement, document, or instrument shall 
                be deemed to be a reference to such national or State 
                bank.
                    (2) Treatment of bank or savings association.--If 
                the application of paragraph (1) with respect to any 
                national or State bank referred to in such paragraph 
                would--
                    (A) be inconsistent or in conflict with any 
                contract, agreement, document, or instrument described 
                in such paragraph;
                    (B) constitute a default under the contract, 
                agreement, document, or instrument;
                    (C) cause such national or State bank to be in 
                default or breach under any provision of the contract, 
                agreement, document, or instrument, the national or 
                State bank shall be deemed to be, and treated as, a 
                savings association for purposes of the contract, 
                agreement, document, or instrument.
    (f) Transfer and Grandfather of Mutual Holdings Companies.--
            (1)  Supervision and regulation of mutual holdings 
        companies.--
                    (A) In general.--The supervision and regulation of 
                any mutual holding company in existence as of the date 
                of the enactment of this Act is hereby transferred to 
                the Board of Governors of the Federal Reserve System.
                    (B) Transition rules.--Mutual bank holding 
                companies described in subparagraph (A) shall be 
                subject to the regulations of the Director of the 
                Office of Thrift Supervision, as in effect on September 
                13, 1995, including part 575 of chapter V of title 12 
                of the Code of Federal Regulations (as in effect on 
                such date), during the 3-year period beginning on the 
                date of the enactment of the Thrift Charter Conversion 
                Act of 1996.
            (2) Grandfather of existing federal mutual holding 
        companies.--
                    (A) In general.--Any Federal mutual holding company 
                in existence as of the date of the enactment of this 
                Act shall be subject to section 4(k) of the Bank 
                Holding Company Act of 1956 (as added by section 2222 
                of this title).
                    (B) Treatment under 4(k).--Any treatment of a 
                Federal mutual holding company under section 4(k) shall 
                not be construed as a change in control unless, as a 
                result of the transaction, the holding company no 
                longer controls the entity.

SEC. 507. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Amendments to the Federal Deposit Insurance Act.--
            (1) Section 3(z) of the Federal Deposit Insurance Act (12 
        U.S.C. 1813(z)) is amended by striking ``, the Director of the 
        Office of Thrift Supervision''.
            (2) Section 8(b) of the Federal Deposit Insurance Act (12 
        U.S.C. 1818(b)) is amended by striking paragraph (9).
            (3) Section 13 of the Federal Deposit Insurance Act (12 
        U.S.C. 1823) is amended by striking subsection (k).
            (4) Subsections (c)(2) and (i)(2) of section 18 of the 
        Federal Deposit Insurance Act (12 U.S.C. 1828) are each 
        amended--
                    (A) in the subparagraph (B), by inserting ``and'' 
                after the semicolon;
                    (B) in subparagraph (C), by striking ``; and'' and 
                inserting a period; and
                    (C) by striking subparagraph (D).
            (5) Section 18 of the Federal Deposit Insurance Act (12 
        U.S.C. 1828) is amended by striking subsection (m).
            (6) The Federal Deposit Insurance Act (12 U.S.C. 1811 et 
        seq.) is amended by striking 28.
    (b) Amendments to the Bank Holding Company Act of 1956.--
            (1) Section 2 of the Bank Holding Company Act of 1956 (12 
        U.S.C. 1841) is amended by striking subsections (i) and (j).
            (2) Section 4(c)(8) of the Bank Holding Company Act of 1956 
        (12 U.S.C. 1843(c)(8)) is amended by striking the sentence 
        preceding the penultimate sentence.
            (3) Section 4(f) of the Bank Holding Company Act of 1956 
        (12 U.S.C. 1843(f) is amended--
                    (A) in paragraph (2)(A)(i), by striking ``or an 
                insured institution'' and all that follows through ``of 
                this subsection)'';
                    (B) in paragraph (2)(A)(ii)--
                            (i) by striking ``or a savings 
                        association'' where such term appears in the 
                        portion of such paragraph which precedes 
                        subclause (I));
                            (ii) by inserting ``and'' at the end of 
                        subclause (VI);
                            (iii) by striking subclauses (VIII), (IX), 
                        and (X); and
                            (iv) by striking ``(V), and (VIII)'', where 
                        such term appears in the portion of such 
                        paragraph which appears after the end of 
                        subclause (VII), and inserting ``and (V)''; and
                    (C) by striking paragraphs (10), (11), (12), and 
                (13).
            (4) Section 4(i) of the Bank Holding Company Act of 1956 
        (12 U.S.C. 1843(i)) is amended--
                    (A) by striking paragraphs (1) and (2); and
                    (B) in paragraph (3)(A), by striking ``any Federal 
                savings association'' and all that follows through the 
                period at the end of such paragraph and inserting 
                ``such association was authorized to engage under this 
                section as of September 15, 1995.''
    (c) Other Technical and Conforming Amendments.--
            (1) Section 804(a) of the Alternative Mortgage Transaction 
        Parity Act of 1982 (12 U.S.C. 3803) is amended.--
                    (A) in the portion of such subsection which 
                precedes paragraph (1)--
                            (i) by striking ``, and other nonfederally 
                        chartered housing creditors,''; and
                            (ii) by inserting ``and in order to permit 
                        other nonfederally chartered housing creditors 
                        to make, purchase, and enforce alternative 
                        mortgage transactions,'' after ``enforcing 
                        alternative mortgage transactions,''; and
                    (B) in paragraph (1), by inserting ``(as such term 
                is defined in section 3(a) of the Federal Deposit 
                Insurance Act)'' after ``with respect to banks''.
            (2) Section 205 of the Depository Institution Management 
        Interlock Act (12 U.S.C. 3204) is amended.--
                    (A) in the portion of paragraph (8)(A) which 
                precedes clause (i), by striking ``diversified 
                savings'' and all that follows through ``with respect 
                to'' and inserting ``depository institution holding 
                company which, as of September 13, 1995, and at all 
                times thereafter, satisfies the consolidated net worth 
                and consolidated net earnings requirements for a 
                diversified savings and loan holding company (as set 
                forth in section 10(1)(F) of Home Owners' Loan Act, as 
                such section is in effect on such date, which shall be 
                applicable for purposes of this paragraph without 
                regard to the fact that a depository institution 
                subsidiary of such holding company has ceased to be a 
                savings association after September 13, 1995) with 
                respect to''; and
                    (B) by striking paragraph (9).
            (3) Section 19(b)(1)(A) of the Federal Reserve Act (12 
        U.S.C. 461(b)(1)(A)) is amended--
                    (A) by inserting ``and'' after the semicolon at the 
                end of clause (v); and
                    (B) by striking clause (vi).
            (4) Subparagraphs (A), (B), and (C) of section 10(e)(5) of 
        the Federal Home Loan Bank Act (12 U.S.C. 1430(e)(5)) are each 
        amended by inserting before the period at the end ``(as such 
        section is in effect on September 13, 1995)''.

SEC. 508. REFERENCES TO SAVINGS ASSOCIATIONS AND STATE BANKS IN FEDERAL 
              LAW.

    Effective January 1, 1998, any reference in any Federal banking law 
to--
            (1) the term ``savings association'' shall be deemed to be 
        a reference to a bank as defined in section 3(a) of the Federal 
        Deposit Insurance Act; and
            (2) the term ``State bank'' shall be deemed to include any 
        depository institution included in the definition of such term 
        in section 3(a)(2) of such Act.

SEC. 509. REPEAL OF HOME OWNERS' LOAN ACT.

    The Home Owners' Loan Act (12 U.S.C. 1461 et seq.) is hereby 
repealed.

SEC. 510. DEFINITIONS.

    For purposes of this subtitle, the terms ``appropriate Federal 
banking agency'', ``bank holding company'', ``depository institution'', 
``Federal savings association'', ``insured depository institution'', 
``savings association'', and ``State bank'' have the same meanings as 
in section 3 of the Federal Deposit Insurance Act (as in effect on the 
date of the enactment of this Act).

      Subtitle B--Elimination of Office of The Thrift Supervision

SEC. 511. OFFICE OF THRIFT SUPERVISION ABOLISHED.

    Effective January 1, 1998, the Office of Thrift Supervision and the 
position of Director of the Office of Thrift Supervision are hereby 
abolished.

SEC. 512. DETERMINATION OF TRANSFERRED FUNCTIONS AND EMPLOYEES.

    (a) All Office of Thrift Supervision Employees Shall Be 
Transferred.--All employees of the Office of Thrift Supervision shall 
be identified for transfer under subsection (b) to the Office of the 
Comptroller of the Currency, the Federal Deposit Insurance Corporation, 
or the Board of Governors of the Federal Reserve System.
    (b) Functions and Employees Transferred.--
            (1) In general.--The Director of the Office of Thrift 
        Supervision, the Comptroller of the Currency, the Chairperson 
        of the Federal Deposit Insurance Corporation, and the Chairman 
        of the Board of Governors of the Federal Reserve System shall 
        jointly determine the functions or activities of the Office of 
        Thrift Supervision, and the number of employees of such Office 
        necessary to perform or support such functions or activities, 
        which are transferred from the Office to the Office of the 
        Comptroller of the Currency, the Federal Deposit Insurance 
        Corporation, or the Board of Governors of the Federal Reserve 
        System, as the case may be.
            (2) Allocation of employees.--The Comptroller of the 
        Currency, the Chairperson of the Federal Deposit Insurance 
        Corporation, and the Chairman of the Board of Governors of the 
        Federal Reserve System shall allocate the employees of the 
        Office of Thrift Supervision consistent with the number 
        determined pursuant to paragraph (1) in a manner which such 
        Comptroller, Chairperson, and Chairman, in their sole 
        discretion, deem equitable except that, within work units, the 
        agency preferences of individual employees shall be 
        accommodated as far as possible.
    (c) Rights of Employees of the Office of Thrift Supervision.--All 
employees of the Office of Thrift Supervision who are identified for 
transfer under subsection (b) shall be entitled to the following 
rights:
            (1) Each employee so identified shall be transferred to the 
        appropriate agency or entity for employment no later than the 
        earlier of the end of the 60-day period beginning on the date 
        such employees are identified for transfer under subsection (b) 
        or January 1, 1998, and such transfer shall be deemed a 
        transfer of function for the purpose of section 3503 of title 
        5, United States Code.
            (2) Each transferred employee holding a permanent position 
        shall not be involuntarily separated or reduced in grade or 
        compensation for 1 year after the date of transfer, except for 
        cause or, if the employee is a temporary employee, separated in 
        accordance with the terms of the appointment.
            (3) If any agency or entity to which employees are 
        transferred determines, after the end of the 1-year period 
        beginning on the date the transfer of functions to such agency 
        or entity is completed, that a reorganization of the combined 
        work force is required, that reorganization shall be deemed a 
        ``major reorganization'' for purposes of affording affected 
        employees retirement under section 833(d)(2) or 8414(b)(1)(B) 
        of title 5, United States Code.
    (d) Disposition of Affairs.--
            (1) In general.--In winding up the affairs of the Office of 
        Thrift Supervision, the Director of the Office of Thrift 
        Supervision shall consult and cooperate with the Comptroller of 
        the Currency, the Federal Deposit Insurance Corporation, and 
        the Board of Governors of the Federal Reserve System, as the 
        case may be, to facilitate the orderly transfer of the 
        functions to such Comptroller, Corporation, or Board.
            (2) Continuing authority of director of the office of 
        thrift supervision.--Except as provided in paragraph (1), no 
        provision of this subtitle shall be construed as affecting the 
        authority vested in the Director of the Office of Thrift 
        Supervision before the date of enactment of this Act which is 
        necessary to carry out the duties of the position until the 
        date upon which the position of Director of the Office of 
        Thrift Supervision is abolished.
            (3) Continuation of agency services.--Any agency, 
        department, or other instrumentality of the United States, or 
        any successor to any such agency, department or 
        instrumentality, which was providing support services to the 
        Director of the Office of Thrift Supervision on the day before 
        the date such position is abolished shall--
                    (A) continue to provide such services on a 
                reimbursable basis, in accordance with the terms of the 
                arrangement pursuant to which such services were 
                provided until the arrangement is modified or 
                terminated in accordance with such terms, except that 
                effective January 1, 1998, the Comptroller of the 
                Currency, the Federal Deposit Insurance Corporation, or 
                the Board of Governors of the Federal Reserve System, 
                as the case may be, shall be substituted for the 
                Director of the Office of Thrift Supervision as a party 
                to the arrangement; and
                    (B) consult with the Comptroller, the Corporation, 
                or the Board to coordinate and facilitate a prompt and 
                reasonable transition.
    (e) Transfer of Property.--Effective January 1, 1998, all property 
of the Office of Thrift Supervision shall be transferred to the 
Comptroller of the Currency, the Federal Deposit Insurance Corporation, 
or the Board of Governors of the Federal Reserve System, as determined 
in accordance with subsections (a) and (b).

SEC. 513. SAVINGS PROVISIONS.

    (a) Existing Rights, Duties, and Obligations Not Affected.--No 
provision of this title shall be construed as affecting the validity of 
any right, duty or obligation of the United States, the Director of the 
Office of Thrift Supervision, or any person, which existed on the day 
before the date upon which the position of Director of the Office of 
Thrift Supervision and the Office of Thrift Supervision are abolished.
    (b) Continuation of Suite.--No action or other proceeding commenced 
by or against the Director of the Office of Thrift Supervision shall 
abate by reason of enactment of this title, except that, effective 
January 1, 1998, the Comptroller of the Currency, the Federal Deposit 
Insurance Corporation, or the Board of Governors of the Federal Reserve 
System, as the case may be, shall be substituted as a party to any such 
action or proceeding.
    (c) Continuation of Administrative Rules.--All orders, resolutions, 
determinations, regulations, interpretative rules, other 
interpretations, guidelines, procedures, supervisory and enforcement 
actions, and other advisory material (other than any regulation 
implementing or prescribed pursuant to section 3(f) of the Home Owners' 
Loan Act (as in effect on September 13, 1995)) which--
            (1) have been issued, made, prescribed, or permitted to 
        become effective by the Office of Thrift Supervision, and
            (2) are in effect on December 31, 1997 (or become effective 
        after such date pursuant to the terms of the order, resolution, 
        determination, rule, other interpretation, guideline, 
        procedure, supervisory or enforcement action, and other 
        advisory material, as in effect on such date), shall--
                    (A) continue in effect according to the terms of 
                such orders, resolutions, determinations, regulations, 
                interpretative rules, other interpretations, 
                guidelines, procedures, supervisory or enforcement 
                actions, or other advisory material;
                    (B) be administered by the Comptroller of the 
                Currency, the Federal Deposit Insurance Corporation, or 
                the Board of Governors of the Federal Reserve System; 
                and
                    (C) be enforceable by or against the Comptroller of 
                the Currency, the Federal Deposit Insurance 
                Corporation, or the Board of Governors of the Federal 
                Reserve System until modified, terminated, set aside, 
                or superseded in accordance with applicable law by the 
                Comptroller, Corporation, or Board, by any court of 
                competent jurisdiction, or by operation of law.
    (d) Treatment of References in Adjustable Rate Mortgages Issued 
Before FIRREA.--
            (1) References in prior law.--For purposes of section 
        402(e) of Financial Institutions Reform, Recovery, and 
        Enactment Act of 1989 (12 U.S.C. 1437 note), any reference in 
        such section to--
                    (A) the Director of the Office of Thrift 
                Supervision shall be deemed to be a reference to the 
                Secretary of the Treasury; and
                    (B) a Savings Association Insurance Fund member 
                shall be deemed to be a reference to an insured 
                depository institution (as defined in section 3 of the 
                Federal Deposit Insurance Act).
    (e) Treatment of References in Adjustable Rate Mortgages 
Instruments Issued After FIRREA.--
            (1) In general.--For purposes of adjustable rate mortgage 
        instruments that are in effect as of the date of enactment of 
        this Act, any reference in the instrument to the Director of 
        the Office of Thrift Supervision or Savings Association 
        Insurance Fund members shall be treated as a reference to the 
        Secretary of the Treasury or insured depository institutions 
        (as defined in section 3 of the Federal Deposit Insurance Act), 
        as appropriate.
            (2) Substitution for indexes.--If any index used to 
        calculate the applicable interest rate on any adjustable rate 
        mortgage instrument is no longer calculated and made available 
        as a direct or indirect result of the enactment of this title, 
        any index--
                    (A) made available by the Secretary of the 
                Treasury; or
                    (B) determined by the Secretary of the Treasury, 
                pursuant to paragraph (4), to be substantially similar 
                to the index which is no longer calculated or made 
                available,
        may be substituted by the holder of any such adjustable rate 
        mortgage instrument upon notice to the borrower.
            (3) Agency action required to provide continued 
        availability of indexes.--Promptly after the enactment of this 
        subsection, the Secretary of the Treasury, the Chairperson of 
        the Federal Deposit Insurance Corporation, and the Comptroller 
        of the Currency shall take such action as may be necessary to 
        assure that the indexes prepared by the Director of the Office 
        of Thrift Supervision immediately before the enactment of this 
        subsection and used to calculate the interest rate on 
        adjustable rate mortgage instruments continue to be available.
            (4) Requirements relating to substitute indexes.--If any 
        agency can no longer make available an index pursuant to 
        paragraph (3), an index that is substantially similar to such 
        index may be substituted for such index for purposes of 
        paragraph (2) if the Secretary of the Treasury determines, 
        after notice and opportunity for comment, that--
                    (A) the new index is based upon data substantially 
                similar to that of the original index; and
                    (B) the substitution of the new index will result 
                in an interest rate substantially similar to the rate 
                in effect at the time the original index became 
                unavailable.

SEC, 514. COST OF FUNDS INDEXES.

    (a) Cost of Funds Index Defined.--The term ``cost of funds 
indexed'' means any index that is published by a Federal home loan bank 
and is based, in whole or in part, upon the cost of funds of such 
bank's members.
    (b) Calculations Based on Type of Charter and Insurance Fund 
Membership of Members.-- If any cost of funds index includes data based 
on charter type, insurance fund membership, or other similar 
characteristics of members of a Federal home loan ban, such index shall 
be calculated after the date of the enactment of this Act using data 
only from insured depository institutions which were bank members and 
whose data was included in such index on or before such date of 
enactment.
    (c) Acquisition of Data.--
            (1) In general.--Each insured depository institution the 
        data from which is required to compile a cots of funds index in 
        accordance with subsection (b) shall provide to the Federal 
        home loan bank which maintains the index such information as 
        may be necessary, and in such form as may be appropriate, for 
        the bank to calculate and publish the index.
            (2) Enforcement by banking agencies.--Each appropriate 
        Federal banking agency shall take such action as may be 
        necessary to ensure that insured depository institutions which 
        are required to provide information to any Federal home loan 
        bank under paragraph (1) furnish such information on a timely 
        basis and in the form required by the bank.
            (3) Treatment of institutions.--Notwithstanding any other 
        provision of law, an insured depository institution which 
        furnishes information to a Federal home loan bank pursuant to 
        this section for use in compiling a cost of funds index shall 
        not be deemed to control, directly, or indirectly, such index.
    (d) Certain Data Excluded.--Notwithstanding subsections (b) and 
(c), no cost of funds index shall include any data from any insured 
depository institution which results from the merger, consolidation, or 
other combination of a member of a Federal home loan bank with a 
nonmember of any such bank if--
            (1) the total assets of the nonmember exceed the total 
        assets of the bank member at the time of such merger, 
        consolidation, or other combination; or
            (2) in the case of a merger, consolidation, or other merger 
        in which a member of a Federal home loan bank is the resulting 
        insured depository institution, combined ration of the average 
        amount of single-family loan balances to average total assets 
        of all insured depository institutions involved in such merger, 
        consolidation, or other combination for the 12-months period 
        ending on the date of such transaction is less than 70 percent.
    (e) Other Definitions.--For purposes of this section, the terms 
``appropriate Federal banking agency'' and ``insured depository 
institution'' shall have the same meanings as in section 3 of the 
Federal Deposit Insurance Act.

SEC. 515. REFERENCES IN FEDERAL LAW TO DIRECTOR OF THE OFFICE OF THRIFT 
              SUPERVISION.

    Effective January 1, 1998, any reference in any Federal law to the 
Director of the office of Thrift Supervision or the Office of Thrift 
supervision shall be deemed to be a reference to the appropriate 
Federal banking agency (as defined in section 3(q) of the Federal 
Deposit insurance Act).

SEC. 516. RECONFIGURATION OF BOARD OF DIRECTORS OF FDIC AS A RESULT OF 
              REMOVAL OF DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION.

    (a) In General.--Section 2(a)(1) of the Federal Deposit Insurance 
Act (12 U.S.C. 1812(a)(1)) is amended to read as follows:
            ``(1) In general.--The management of the Corporation shall 
        be vested in a Board of Directors consisting of 5 members--
                    (A) 1 of whom shall be the Comptroller of the 
                Currency; and
                    (B) 4 of whom shall be appointed by the President, 
                and with the advice and consent of the Senate, from 
                among individuals who are citizens of the United 
                States, 1 of whom shall have State bank supervisory 
                experience''.
    (b) Technical and Conforming Amendments.--
            (1) Section 2(d)(2) of the Federal Deposit Insurance Act 
        (12 U.S.C. 1812(d)(2)) is amended--
                    (A) by striking ``or the Office of Director of the 
                Office of Thrift Supervision'';
                    (B) by striking ``or such Director'';
                    (C) by striking ``or the acting Director of the 
                Office of Thrift Supervision, as the case may be''; and
                    (D) by striking ``or Director''.
            (2) Section 2(f)(2) of the Federal Deposit Insurance Act 
        (12 U.S.C. 1812(f)(2)) is amended by striking ``or of the 
        Office of Thrift Supervision''.
    (c) Effective Date.--The amendments made by subsections (a) and (b) 
shall take effect on January 1, 1998.

                   Subtitle C--Merger of BIF and SAIF

SEC. 521. AMENDMENT TO BUDGET RECONCILIATION ACT.

    Section 2013(c) of the Budget Reconciliation Act is amended to read 
as follows:
    ``(c) Effective Date.--This section and the amendments made by this 
section shall become effective on January 1, 1997.''.

         TITLE VI--NATIONAL MARKET FUNDING LENDING INSTITUTIONS

SEC. 601. NATIONAL MARKET FUNDED LENDING INSTITUTIONS.

    Chapter 1 of title LXII of the Revised Statutes of the United 
States is amended by adding the following section:

``SEC. 5158. NATIONAL MARKET FUNDED LENDING INSTITUTIONS.

    ``(a) National Market Funded Lending Institutions.--
            ``(1) Organization of national market funded lending 
        institutions.--Any company (as defined in section 2(b) of the 
        Bank Holding Company Act of 1956 (12 U.S.C. 1841(b)) or any 
        number of natural persons, not less in any case than five, may 
        apply to the Comptroller of the Currency on such forms and in 
        accordance with such procedures as the Comptroller may 
        prescribe by regulation, for permission to organize a national 
        market funded lending institution. Upon approval of the 
        application, such national market funded lending institution 
        shall be a body corporate, chartered under the laws of the 
        United States by the Comptroller. All national market funded 
        lending institutions shall operate pursuant to the requirements 
        of this section at the direction of a board of directors 
        elected at an organizational meeting to be held as soon as 
        practicable after issuance by the Comptroller of a charter by 
        such company or such natural persons for the purpose of 
        electing such board of directors and taking such other action 
        necessary, pursuant to the charter and the regulations issued 
        by the Comptroller, to complete the corporate organization of 
        the national market funded lending institution. Immediately 
        following their election, the board of directors shall meet to 
elect officers of the national market funded lending institution and to 
take such other action, as prescribed by the Comptroller, to complete 
the corporate organization of such national market funded lending 
institution.
            ``(2) Unauthorized organization prohibited.--No company or 
        person may organize a national market funded lending 
        institution, collect money from others for such purpose, or 
        represent itself, himself, or herself as authorized to do so 
        and no national market funded lending institution shall 
        transact any business prior to completion of its organization 
        except as provided in this Act and in implementing regulations 
        of the Comptroller.
            ``(3) Authorized activities for national market-funded 
        lending institution.--Subject to the provisions of paragraphs 
        (4) and (5) of this subsection, and subsections (b) and (c) of 
        this section, a national market funded lending institution may 
        exercise, in accordance with its articles of organization and 
        such regulations as are issued by the Comptroller, all of the 
        powers and privileges of a national banking association formed 
        in accordance with section 5133 of the Revised Statutes (12 
        U.S.C. 21).
            ``(4) Prohibition of taking deposits or receiving federal 
        deposit insurance.--No national market funded lending 
        institution may--
                    (A) become an ``insured depository institution'' 
                within the meaning of section 3(c)(2) of the Federal 
                Deposit Insurance Act (12 U.S.C. 1813(c)(2)) or 
                acquire, directly or indirectly through a subsidiary, 
                control of such an insured depository institution;
                    (B) accept any deposits as defined in section 
                (3)(l)(1) of the Federal Deposit Insurance Act (12 
                U.S.C. 1813(l)(1);
                    (C) advertise or hold itself out as having deposits 
                insured by the Federal Deposit Insurance Corporation.
            ``(5) Prohibition on access to discount window.--No 
        national market funded lending institution may exercise 
        discount borrowing privileges pursuant to section 19*b)(7) of 
        the Federal Reserve Act.
            ``(6) Prohibition on access to payments system.--No 
        national market funded lending institution may obtain payment 
        or payment related services from any Federal Reserve bank, 
        including any service referred to in section 11A of the Federal 
        Reserve Act.
            ``(7) Capital.--The capital of national market funded 
        lending institution shall be maintained at all times at such 
        level and in such manner as may be prescribed by the 
        Comptroller by regulation.
            ``(8) Prohibition on identification as a bank.--
                    ``(A) In general.--Notwithstanding the requirement 
                of section 5134 of the Revised Statutes of the United 
                States--
                            ``(i) the name of a national market lending 
                        institution may not include the term ``bank''; 
                        and
                            ``(ii) such institution may not be 
                        identified as a bank on any sign displayed by 
                        the institution or in any advertisement or 
                        other publication of the institution.
                    ``(B) Depository institution not liable for 
                fraudulent misrepresentation for not representing 
                itself as a bank.--A national market lending 
                institution shall not be liable for any civil or 
                criminal penalty under any Federal or State consumer 
                protection law, or in any criminal or civil action, for 
                falsely advertising the status of the institution, for 
                making a false statement with respect to the status of 
                the institution, or for any similar offense by reason 
                of the institution's compliance with this paragraph.
            ``(9) Implementing regulations.--The Comptroller shall 
        promulgate such regulations as may be necessary to implement 
        the provisions of this section.
    ``(b) Regulation and Supervision of National Market Funded Lending 
Institution.--
            ``(1) Authority vested in comptroller of the currency.--
        Notwithstanding any other provision of law, the authority to 
        regulate and supervise the activities of national market 
        funding lending institutions shall be vested exclusively in the 
        Comptroller of the Currency.
            ``(2) Examination.--Each national market funded lending 
        institution and each subsidiary thereof shall be subject to 
        such examinations and to such reporting and recordkeeping 
requirements as the Comptroller may prescribe. The cost of examinations 
shall be assessed against and paid by such national market funded 
lending institution. Examiners appointed by the Comptroller for the 
purposes of this Act shall be subject to the same requirements, 
responsibilities, and penalties as are applicable to examiners under 
the Federal Reserve Act and title LXII of the Revised Statutes and 
shall have, in the exercise of functions under this Act, the same 
powers and privileges as are vested in such examiners by law. If any 
national market funded lending institution fails to pay any assessment 
required under this subsection within 60 days of such assessment, or 
refuses to permit any examiner appointed by the Comptroller to make an 
examination, or refuses to provide any information required to be 
disclosed by regulation or in the course of any examination, or submits 
or publishes any false or misleading report or information, the 
Comptroller may assess against such national market funded lending 
institution civil penalty of not more than $5,000 for each day any such 
failure or refusal continues. And such civil penalty shall be assessed 
by the Comptroller in a manner prescribed in subparagraphs (E), (F), 
(G), (I) and (J) of section 8(i)(2) of the Federal Deposit Insurance 
Act, for penalties imposed by such section, and such assessment shall 
also be subject to the provisions of subparagraph (H) of that section 
and of section 8(h) of that Act.
            ``(3) Enforcement.--
                    ``(A) Capital.--If any national market funded 
                lending institution fails to maintain capital at or 
                above the minimum level prescribed by the Comptroller's 
                regulations, the Comptroller may issue a directive 
                requiring the national market funded lending 
                institution to submit and adhere to a plan for 
                increasing capital which is acceptable to the 
                Comptroller. Any such directive, and such plan when 
                approved by the Comptroller, shall be enforceable as 
                provided in this paragraph.
                    ``(B) Cease-and-desist authority.--If a national 
                market funded lending institution subject to a capital 
                directive issued pursuant to subparagraph (A) fails to 
                submit or adhere to a plan for increasing capital which 
                is acceptable to the Comptroller, or if the Comptroller 
                has reasonable cause to believe that any national 
                market funded lending institution has accepted any 
                deposit or has taken action which has caused it to 
                become an ``insured depository institution'' within the 
                meaning of section 3(c)(2) of the Federal Deposit 
                Insurance Act or has represented to any person that any 
                amount accepted by such national market funded lending 
                institution is an ``insured deposit'' within the 
                meaning of section 3(m) of Federal Deposit Insurance 
                Act, the Comptroller may issue and serve upon such 
                national market funded lending institution a notice of 
                charges which shall contain a statement of the facts 
                constituting the alleged violation or violations of 
                this Act and shall fix a time and a place at which a 
                hearing will be held to determine whether an order to 
                cease-and-desist therefrom should be issued against the 
                national market funded lending institution. Such 
                hearing shall be fixed for a date not earlier than 30 
                days nor later than 60 days after service of such 
                notice unless an earlier or later date is set by the 
                Comptroller at the request of the national market 
                funded lending institution. Unless the institution so 
                served shall appear at the hearing, it shall be deemed 
                to have consented to the issuance of the cease-and-
                desist order. In the event of such consent, or if upon 
                the record made at any such hearing the Comptroller 
                shall find that any violation or violations specified 
                in the notice of charges has or have been established, 
                the Comptroller may issue an order to cease-and-desist 
                from any such violation or violations and, in an 
                appropriate case as determined by the Comptroller in 
                his or her discretion, to take affirmative action to 
                correct the conditions resulting from any such 
                violation or violations. Such order shall become 
                effective at the expiration of 30 days after service 
                thereof upon the national market funded lending 
                institution (except in the case of a cease-and-desist 
                order issued upon consent, which shall become effective 
                at the time specified therein), and shall remain 
                effective and enforceable, as provided therein except 
                as stayed, modified, terminated or set aside by action 
                of the Comptroller or reviewing court. Any hearing 
                provided for in this subsection and judicial review of 
                any final cease-and-desist order (other than a cease-
                and-desist order issued upon consent, which shall be 
                unreviewable) shall be in accordance with the 
                provisions of section 8(h) of the Federal Deposit 
                Insurance Act.
                    ``(C) Civil money penalty.--Any person who 
                violates, or has caused a national market funded 
                lending institution to violate any cease-and-desist 
                order issued pursuant to subparagraph (B) shall forfeit 
                and pay a civil penalty of not more than $100,000 for 
each day during which such violation continues. Any such civil penalty 
shall be assessed and collected by the Comptroller in the manner 
provided in subparagraphs (E), (F), (G), (I), and (J) of section 
8(i)(2) of the Federal Deposit Insurance Act, and any such assessment 
shall be subject to the provisions of subparagraph (H) of that section 
and of section 8(h) of that Act.
                    ``(D) Charter revocation.--If the Comptroller 
                determines that any national market funded lending 
                institution has violated any cease-and-desist order 
                which was issued under subparagraph (B) of this 
                paragraph and which has become final, the Comptroller 
                may, in addition to or in lieu of any other remedies 
                provided by law, issue an order revoking the charter of 
                such national market funded lending institution. Any 
                order revoking the charter of a national market funded 
                lending institution shall be effected within 20 days of 
                service upon such national market funded lending 
                institution unless stayed, modified, terminated or set 
                aside by a court in proceedings authorized in this 
                subparagraph. The national market funded lending 
                institution shall give notice of such revocation order 
                to each of its depositors in such manner and at such 
                times as the Comptroller may deem necessary and may 
                order for the protection of the depositors. Any 
                national market funded lending institution served with 
                an order revoking its charter, may, within 10 days of 
                the date of service of such order, apply to the United 
                States District Court for the District of Columbia or 
                the United States District Court for the judicial 
                district in which the home office of such national 
                market funded lending institution is located for an 
                injunction setting aside, limiting, modifying, or 
                suspending the enforcement, operation, or effectiveness 
                of such order, and such court shall have jurisdiction 
                to issue such injunction. Failure to seek judicial 
                review within such 10 day period shall constitute a 
                waiver thereof and shall constitute consent by the 
                national market funded lending institution or any 
                company which controls such national market funded 
                lending institution to the issuance of a final order of 
                revocation of its charter.
    ``(c) Criminal Penalties.--
            ``(1) Unauthorized organization.--Any person who violates 
        the provisions of this title or any regulation or order issued 
        by the Comptroller pursuant hereto by knowingly organizing a 
        national market funded lending institution, collecting money 
        from others for such purpose, or representing himself or 
        herself as authorized to do so, or transacting business as a 
        national market lending institution, without a validly issued 
        and unrevoked charter from the Comptroller of the Currency, or, 
        in the case of a national market funded lending institution 
        which has had its charter revoked, by failing to give notice to 
        depositors of charter revocation when and as directed by the 
        Comptroller under this section, shall be imprisoned not more 
        than one year, fined not more than $100,000 for each day during 
        which such violation continues, or both.
            ``(2) Violation of activities limitation.--Whoever violates 
        this section by knowingly causing a national market funded 
        lending institution to accept any deposit or by representing to 
        any person that any deposit accepted by such national market 
        funded lending institution is an ``insured deposit'' within the 
        meaning of section 3(m) of Federal Deposit Insurance Act (12 
        U.S.C. 1813(m)) shall be imprisoned not more than 5 years, 
        fined not more than $500,000 per day for each day during which 
        such violation continues, or both.
            ``(3) Violation defined.--For purposes of this section, the 
        term ``violation'' includes any action (alone or with another 
        or others) for or toward causing, bringing about, participating 
        in, counseling or aiding or abetting a violation.
    ``(d) Voluntary Liquidation.--A national market funded lending 
institution may go into voluntary liquidation and be closed by a vote 
of its shareholders owning two-thirds of its stock, pursuant to 
sections 5220 and 5221 of the Revised States (12 U.S.C. 181, 182).
    ``(e) Conservatorship.--The Comptroller may appoint a conservator 
to take possession and control of a national market funded lending 
institution pursuant to the Bank Conservation Act (12 U.S.C. 201 et 
seq.).
    ``(f) Conversions of Depository Institutions Into National Market 
Funded Lending Institutions.--Any depository institution (as defined in 
section 3(c)(1) of the Federal Deposit Insurance Act) may, by the vote 
of its shareholders owning not less than two-thirds of the stock of 
such depository institution, and with the approval of the Comptroller 
upon such terms as he or she shall determine are necessary to further 
the purposes of this section, be converted into a national market 
funded lending institution, provided, however that said conversion 
shall not be in contravention of any applicable State law. Such 
national market funded lending institution shall have the same powers 
and privileges and shall be subject to the same duties, liabilities and 
regulations in all respects, as national market funded lending 
institutions originally organized under this section.''.

                       TITLE VII--EFFECTIVE DATE

SEC. 701. EFFECTIVE DATE.

    This Act shall become effective on January 1, 1997.
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