I
104TH CONGRESS
2D SESSION
H. R. 2981
To amend the Bank Holding Company Act of 1956 to provide investment
opportunities for small bank holding companies.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 28, 1996
Mr. BAKER of Louisiana introduced the following bill; which was referred to
the Committee on Banking and Financial Services
A BILL
To amend the Bank Holding Company Act of 1956 to pro-
vide investment opportunities for small bank holding
companies.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Entrepreneurial In-
vestment Act of 1996’’.
SEC. 2. EQUITY CAPITAL INVESTMENTS BY SMALLER BANK
HOLDING COMPANIES.
Section 4(c) of the Bank Holding Company Act of
1956 (12 U.S.C. 1843(c)) is amended by adding at the
end thereof the following new paragraph:
HR 2981 IH
capital of each insured depository institu-
tion controlled by the bank holding com-
pany;
‘‘(v) the shares do not represent 25
percent or more of any class of voting
shares of any company;
‘‘(vi) the shares are not acquired or
held by a depository institution or a sub-
sidiary of a depository institution; and
‘‘(vii) the bank holding company does
not actively manage or operate the com-
pany.
‘‘(B) RESTRICTIONS
ON
JOINT
MARKET-
ING.—No depository institution (and no sub-
sidiary of such depository institution) shall—
‘‘(i) offer or market, directly or indi-
rectly through any arrangement, any prod-
uct or service of any company whose
shares are owned or controlled by the bank
holding company pursuant to this para-
graph; or
‘‘(ii) permit any of such depository in-
stitution’s (or subsidiary’s) products or
services to be offered or marketed, directly
or indirectly through any arrangement, by
HR 2981 IH
or through any company whose shares are
owned or controlled by the bank holding
company pursuant to this paragraph.
‘‘(C) ONE-TIME PRIOR APPROVAL.—Prior
to making any investments under this para-
graph, the bank holding company must obtain
approval from the Board to engage in invest-
ment activities under this paragraph.
‘‘(D) ACCOUNTING REQUIREMENTS.—
‘‘(i) AGGREGATE VALUE OF INVEST-
MENTS.—The value of all investments
made under this paragraph shall be com-
puted quarterly and shall be the lower of
the initial cost of the shares or the book
value of the shares.
‘‘(ii) 
MARK-TO-MARKET.—For 
pur-
poses of determining compliance with the
limitations in this paragraph, the value of
any shares held under this paragraph shall
be determined—
‘‘(I) by treating the shares as
having been sold by the bank holding
company for the fair market value of
such shares as of the date of such de-
termination; or
HR 2981 IH
‘‘(II) in the case of any shares
which are not traded in any market or
on any exchange, the value of any
such shares shall be the lower of the
cost of the shares to the bank holding
company at the time of the acquisition
of such shares or the book value of
the shares.
‘‘(E) ACQUISITION OF SHARES IN EXCESS
OF LIMITATION THROUGH SATISFACTION OF A
PRIOR DEBT.—
‘‘(i) NOT SUBJECT TO LIMITATIONS.—
The acquisition of voting shares of any
company in satisfaction of a debt which
was previously contracted in good faith
shall not be subject to the limitations con-
tained in this paragraph and any shares so
acquired shall not be taken into account
under this paragraph in connection with
any other acquisition of shares by the bank
holding company under this paragraph.
‘‘(ii) DIVESTITURE REQUIRED.—Not-
withstanding any other provision of law,
any voting shares of any company which
are acquired in satisfaction of a debt which
HR 2981 IH
was previously contracted in good faith at
a time when such company was a company
referred to in this paragraph shall be di-
vested before the end of the 3-year period
beginning on the date of such acquisition.
‘‘(F) AUTHORITY OF THE BOARD.—
‘‘(i) IN
GENERAL.—No provision of
this paragraph shall be construed as limit-
ing the authority of the Board to—
‘‘(I) supervise and regulate the
investments in voting shares of any
company; or
‘‘(II) require the divestiture of a
bank holding company or any of its
subsidiaries of shares of any company
whenever the Board determines such
action to be appropriate in order to
preserve the safety and soundness of
any insured depository institution.
‘‘(ii) BANK
WITH
FALLING
CAPITAL
LEVELS.—If, at any time, the aggregate
amount of the investments in shares made
under this paragraph exceeds the amount
described in subparagraph (A)(iv) due to a
decrease in the capital levels of any insured