I
106TH CONGRESS
1ST SESSION
H. R. 823
To modernize and improve the financial services industry.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 24, 1999
Mr. BAKER 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 juris-
diction of the committee concerned
A BILL
To modernize and improve the financial services industry.
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 ‘‘Financial Services
Competitive Enhancement Act’’.
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TITLE I—FINANCIAL SERVICES COMPETITIVE
ENHANCEMENT
SEC. 
101. 
ANTI-AFFILIATION 
PROVISIONS 
OF 
‘‘GLASS-
STEAGALL ACT’’ REPEALED.
(a) SECTION 20 REPEALED.—Section 20 of the
Banking Act of 1933 (12 U.S.C. 377) is repealed.
(b) SECTION 32 REPEALED.—Section 32 of the
Banking Act of 1933 (12 U.S.C. 78) is repealed.
SEC. 102. FINANCIAL ACTIVITIES.
Section 4(c)(8) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1843(c)(8)) is amended to read as
follows:
‘‘(8) shares of any company the activities of
which the Board, in accordance with subsection (l)
has determined (by regulation or order) to be finan-
cial in nature or incidental to such financial activi-
ties and—
‘‘(A) effective 90 days after the date of the
enactment of the Financial Services Competitive
Equality Act, it shall be financial in nature to
provide insurance as principal, agent, or broker
in any State, in full compliance with the laws
and regulations of such State that uniformly
apply to each type of insurance license or au-
thorization in such State, except that in no
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event shall the company, the bank holding com-
pany, or any affiliate of the company or bank
holding company be subject to any State law or
regulation that restricts a bank from having an
affiliate, agent, or employee in such State li-
censed to provide insurance as principal, agent,
or broker; and
‘‘(B) the Board shall prescribe regulations
concerning insurance affiliations that provide
equivalent treatment for all stock and mutual
insurance companies that control or are other-
wise affiliated with a bank and fully accommo-
date and are consistent with State law;’’.
SEC. 103. INSURANCE COMPANY INVESTMENTS.
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) INSURANCE
COMPANY
INVESTMENTS.—Not-
withstanding subsection (a), a bank holding company may
directly or indirectly acquire or control, whether as prin-
cipal, on behalf of 1 or more entities (including any sub-
sidiary of the holding company which is not a depository
institution or subsidiary of a depository institution) or oth-
erwise, shares, assets, or ownership interests (including
without limitation debt or equity securities, partnership
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interests, trust certificates or other instruments represent-
ing ownership) of a company or other entity, whether or
not constituting control of such company or entity, en-
gaged in any activity not authorized pursuant to this sec-
tion if—
‘‘(1) the shares, assets, or ownership interests
are not acquired or held by a depository institution
or a subsidiary of a depository institution;
‘‘(2) such shares, assets, or ownership interests
are acquired and held by an insurance company that
is predominately engaged in underwriting life, acci-
dent and health, or property and casualty insurance
(other than credit-related insurance);
‘‘(3) such shares, assets, or ownership interests
represent an investment made in the ordinary course
of business of such insurance company in accordance
with relevant State law governing such investments;
and
‘‘(4) during the period such shares, assets, or
ownership interests are held, the bank holding com-
pany does not directly or indirectly participate in the
day-to-day management or operation of the company
or entity except insofar as necessary to achieve the
objectives of paragraph (3).’’.
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SEC. 104. FINANCIAL IN NATURE.
Section 4 of the Bank Holding Company Act of 1956
(12 U.S.C. 1843) is amended by inserting after subsection
(k) (as added by section 4 of this Act) the following new
subsection:
‘‘(l) ENGAGING IN ACTIVITIES FINANCIAL IN NA-
TURE.—
‘‘(1) IN
GENERAL.—Notwithstanding section
4(a), a bank holding company may engage in any
activity which the Board has determined (by regula-
tion or order) to be financial in nature or incidental
to such financial activities.
‘‘(2) FACTORS TO BE CONSIDERED.—In deter-
mining whether an activity is financial in nature or
incidental to financial activities, the Board shall take
into account—
‘‘(A) the purposes of this Act and the Fi-
nancial Services Competitive Enhancement Act;
‘‘(B) changes or reasonably expected
changes in the marketplace in which the bank
holding companies compete;
‘‘(C) changes or reasonably expected
changes in the technology for delivering finan-
cial services; and
‘‘(D) whether such activity is necessary or
appropriate to allow a bank holding company
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and the affiliates of a bank holding company
to—
‘‘(i) compete effectively with any com-
pany seeking to provide financial services
in the United States;
‘‘(ii) use any available or emerging
technological means, including any applica-
tion necessary to protect the security or ef-
ficacy of systems for the transmission of
data or financial transactions, in providing
financial services; and
‘‘(iii) offer customers any available or
emerging technological means for using fi-
nancial services.
‘‘(3) ACTIVITIES THAT ARE FINANCIAL IN NA-
TURE.—The following activities shall be considered
to be financial in nature:
‘‘(A) Lending, exchanging, transferring, in-
vesting for others, or safeguarding money or se-
curities.
‘‘(B) Insuring, guaranteeing, or indemnify-
ing against loss, harm, damage, illness, disabil-
ity, or death, or providing and issuing annu-
ities, and acting as principal, agent, or broker
for purposes of the foregoing.
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‘‘(C) Providing financial, investment, or
economic advisory services, including advising
an investment company (as defined in section 3
of the Investment Company Act of 1940).
‘‘(D) Issuing or selling instruments rep-
resenting interests in pools of assets permissible
for a bank to hold directly.
‘‘(E) Underwriting, dealing, or making a
market in securities.
‘‘(F) Engaging in any activity that the
Board has determined, by order or regulation
that is in effect on the date of enactment of the
Financial Services Competitive Enhancement
Act, to be so closely related to banking or man-
aging or controlling banks as to be a proper in-
cident thereto (subject to the same terms and
conditions contained in such order or regula-
tion, unless modified by the Board).
‘‘(G) Engaging, in the United States, in
any activity that—
‘‘(i) a bank holding company may en-
gage in outside the United States; and
‘‘(ii) the Board has determined, under
regulations issued pursuant to section
4(c)(13) of this Act (as in effect on the
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day before the date of enactment of the Fi-
nancial Services Competitive Enhancement
Act) to be usual in connection with the
transaction of banking or other financial
operations abroad.
‘‘(H) 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 de-
pository institution, that the bank holding com-
pany controls) or otherwise, shares, assets, or
ownership interests (including without limita-
tion debt or equity securities, partnership inter-
ests, trust certificates or other instruments rep-
resenting ownership) of a company or other en-
tity, whether or not constituting control of such
company or entity, engaged in any activity not
authorized pursuant to this section if—
‘‘(i) the shares, assets, or ownership
interests are not acquired or held by a de-
pository institution or subsidiary of a de-
pository institution;
‘‘(ii) such shares, assets, or ownership
interests are acquired and held by a securi-
ties affiliate or an affiliate thereof as part
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of a bona fide underwriting or merchant
banking activity, including investment ac-
tivities engaged in for the purpose of ap-
preciation and ultimate resale or disposi-
tion of the investment;
‘‘(iii) such shares, assets, or owner-
ship interests, are held for such a period of
time as will permit the sale or disposition
thereof on reasonable basis consistent with
the nature of the activities described in
clause (ii); and
‘‘(iv) during the period such shares,
assets, or ownership interests are held, the
bank holding company does not actively
participate in the day to day management
or operation of such company or entity, ex-
cept insofar as necessary to achieve the ob-
jectives of clause (ii).
‘‘(4) ACTIONS REQUIRED.—The Board shall, by
regulation or order, define, consistent with the pur-
poses of this Act, the following activities as, and the
extent to which such activities are, financial in na-
ture or incidental to activities which are financial in
nature:
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‘‘(A) Lending, exchanging, transferring, in-
vesting for others, or safeguarding financial as-
sets other than money or securities.
‘‘(B) Providing any device or other instru-
mentality for transferring money or other finan-
cial assets;
‘‘(C) Arranging, effecting, or facilitating fi-
nancial transactions for the account of third
parties.
‘‘(5) POST CONSUMMATION NOTIFICATION.—
‘‘(A) IN GENERAL.—A bank holding com-
pany that acquires any company, or commences
any activity, pursuant to this subsection shall
provide written notice to the Board describing
the activity commenced or conducted by the
company acquired no later than 30 calendar
days after commencing the activity or con-
summating the acquisition.
‘‘(B) APPROVAL NOT REQUIRED FOR CER-
TAIN FINANCIAL ACTIVITIES.—Except as pro-
vided in section 4(j) with regard to the acquisi-
tion of a savings association, a bank holding
company may commence any activity, or ac-
quire any company, pursuant to paragraph (3)
or any regulation prescribed or order issued
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under paragraph (4), without prior approval of
the Board.
SEC. 105. STREAMLINING BANK HOLDING COMPANY SU-
PERVISION.
Section 5(c) of the Bank Holding Company Act of
1956 (12 U.S.C. 1844(c)) is amended to read as follows:
‘‘(c) REPORTS AND EXAMINATIONS.—
‘‘(1) REPORTS.—
‘‘(A) IN GENERAL.—The Board from time
to time may require any bank holding company
and any subsidiary of such company to submit
reports under oath to keep the Board informed
as to—
‘‘(i) its financial condition, systems
for monitoring and controlling financial
and operating risks, and transactions with
depository institution subsidiaries of the
holding company; and
‘‘(ii) compliance by the company or
subsidiary with applicable provisions of
this Act.
‘‘(B) USE OF EXISTING REPORTS.—
‘‘(i) IN GENERAL.—The Board shall,
to the fullest extent possible, accept re-
ports in fulfillment of the Board’s report-
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ing requirements under this paragraph
that a bank holding company or any sub-
sidiary of such company has provided or
been required to provide to other Federal
and State supervisors or to appropriate
self-regulatory organizations.
‘‘(ii) AVAILABILITY.—A bank holding
company or a subsidiary of such company
shall provide to the Board, at the request
of the Board, a report referred to in clause
(i).
‘‘(iii) REQUIRED
USE
OF
PUBLICLY
REPORTED
INFORMATION.—The 
Board
shall, to the fullest extent possible, accept
in fulfillment of any reporting or record-
keeping requirements under this Act infor-
mation that is otherwise required to be re-
ported publicly and externally audited fi-
nancial statements.
‘‘(iv) REPORTS
FILED
WITH
OTHER
AGENCIES.—In the event the Board re-
quires a report from a functionally regu-
lated nondepository institution subsidiary
of a bank holding company of a kind that
is not required by another Federal or State
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regulator or appropriate self-regulatory or-
ganization, the Board shall request that
the appropriate regulator or self-regulatory
organization obtain such report. If the re-
port is not made available to the Board,
and the report is necessary to assess a ma-
terial risk to the bank holding company or
its subsidiary depository institution or
compliance with this Act, the Board may
require such subsidiary to provide such a
report to the Board.
‘‘(C) DEFINITION.—For purposes of this
subsection, the term ‘functionally regulated
nondepository institution’ means—
‘‘(i) a broker or dealer registered
under the Securities Exchange Act of
1934;
‘‘(ii) an investment adviser registered
under the Investment Advisers Act of
1940, with respect to the investment advi-
sory activities of such investment adviser
and activities incidental to such investment
advisory activities;
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‘‘(iii) an insurance company subject to
supervision by a State insurance commis-
sion, agency, or similar authority; and
‘‘(iv) an entity subject to regulation
by the Commodity Futures Trading Com-
mission, with respect to the commodities
activities of such entity and activities inci-
dental to such commodities activities.
‘‘(2) EXAMINATIONS.—
‘‘(A) EXAMINATION AUTHORITY.—
‘‘(i) IN
GENERAL.—The Board may
make examinations of each bank holding
company and each subsidiary of a bank
holding company.
‘‘(ii) 
FUNCTIONALLY
REGULATED
NONDEPOSITORY
INSTITUTION
SUBSIDI-
ARIES.—Notwithstanding clause (i), the
Board may make examinations of a func-
tionally regulated nondepository institution
subsidiary of a bank holding company only
if—
‘‘(I) the Board has reasonable
cause to believe that such subsidiary
is engaged in activities that pose a
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material risk to an affiliated deposi-
tory institution, or
‘‘(II) based on reports and other
available information, the Board has
reasonable cause to believe that a sub-
sidiary is not in compliance with this
Act or with provisions relating to
transactions with an affiliated deposi-
tory institution and the Board cannot
make such determination through ex-
amination of the affiliated depository
institution or bank holding company.
‘‘(B) LIMITATIONS ON EXAMINATION AU-
THORITY FOR BANK HOLDING COMPANIES AND
SUBSIDIARIES.—Subject 
to 
subparagraph
(A)(ii), the Board may make examinations
under subparagraph (A)(i) of each bank holding
company and each subsidiary of such holding
company in order to—
‘‘(i) inform the Board of the nature of
the operations and financial condition of
the holding company and such subsidiaries;
‘‘(ii) inform the Board of—
‘‘(I) the financial and operational
risks within the holding company sys-
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tem that may pose a threat to the
safety and soundness of any subsidi-
ary depository institution of such
holding company; and
‘‘(II) the systems for monitoring
and controlling such risks; and
‘‘(iii) monitor compliance with the
provisions of this Act and those governing
transactions and relationships between any
subsidiary depository institution and its af-
filiates.
‘‘(C) RESTRICTED
FOCUS
OF
EXAMINA-
TIONS.—The Board shall, to the fullest extent
possible, limit the focus and scope of any exam-
ination of a bank holding company to—
‘‘(i) the bank holding company; and
‘‘(ii) any subsidiary of the holding
company that, because of—
‘‘(I) the size, condition, or activi-
ties of the subsidiary; or
‘‘(II) the nature or size of trans-
actions between such subsidiary and
any depository institution which is
also a subsidiary of such holding com-
pany,
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could have a materially adverse effect on
the safety and soundness of any depository
institution affiliate of the holding company.
‘‘(D) DEFERENCE
TO
BANK
EXAMINA-
TIONS.—The Board shall, to the fullest extent
possible, use for the purposes of this paragraph,
the reports of examinations of depository insti-
tutions made by the appropriate Federal and
State depository institution supervisory author-
ity.
‘‘(E) DEFERENCE
TO
OTHER
EXAMINA-
TIONS.—The Board shall, to the fullest extent
possible, address the circumstances which might
otherwise permit or require an examination by
the Board by forgoing an examination and in-
stead reviewing the reports of examination
made of—
‘‘(i) any registered broker or dealer or
registered investment adviser by or on be-
half of the Securities and Exchange Com-
mission;
‘‘(ii) any licensed insurance company
by or on behalf of any state regulatory au-
thority responsible for the supervision of
insurance companies; and
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‘‘(iii) any other subsidiary that the
Board finds to be comprehensively super-
vised by a Federal or State authority.
‘‘(3) CAPITAL.—
‘‘(A) IN GENERAL.—The Board shall not,
by regulation, guideline, order or otherwise pre-
scribe or impose any capital or capital adequacy
rules, guidelines, standards, or requirements on
any subsidiary of a bank holding company that
is not a depository institution and—
‘‘(i) is in compliance with applicable
capital requirements of another Federal
regulatory authority (including the Securi-
ties and Exchange Commission) or State
insurance authority; or
‘‘(ii) is registered as an investment
adviser under the Investment Advisers Act
of 1940.
‘‘(B) RULE OF CONSTRUCTION.—Subpara-
graph (A) shall not be construed as preventing
the Board from imposing capital or capital ade-
quacy rules, guidelines, standards, or require-
ments with respect to activities of a registered
investment adviser other than investment advi-
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sory activities or activities incidental to invest-
ment advisory activities.
‘‘(4) TRANSFER OF BOARD AUTHORITY TO AP-
PROPRIATE FEDERAL BANKING AGENCY.—
‘‘(A) IN
GENERAL.—In the case of any
bank holding company which is not significantly
engaged in nonbanking activities, the Board, in
consultation with the appropriate Federal bank-
ing agency, may designate the appropriate Fed-
eral banking agency of the lead insured deposi-
tory institution subsidiary of such holding com-
pany as the appropriate Federal banking agen-
cy for the bank holding company.
‘‘(B) 
AUTHORITY
TRANSFERRED.—An
agency designated by the Board under subpara-
graph (A) shall have the same authority as the
Board under this Act to—
‘‘(i) examine and require reports from
the bank holding company and any affiliate
of such company (other than a depository
institution) under section 5;
‘‘(ii) approve or disapprove applica-
tions or transactions under section 3;
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‘‘(iii) take actions and impose pen-
alties under subsections (e) and (f) of sec-
tion 5 and section 8; and
‘‘(iv) take actions regarding the hold-
ing company, any affiliate of the holding
company (other than a depository institu-
tion), or any institution-affiliated party of
such company or affiliate under the Fed-
eral Deposit Insurance Act and any other
statute which the Board may designate.
‘‘(C) AGENCY ORDERS.—Section 9 (of this
Act) and section 105 of the Bank Holding
Company Act Amendments of 1970 shall apply
to orders issued by an agency designated under
subparagraph (A) in the same manner such sec-
tions apply to orders issued by the Board.
‘‘(5) FUNCTIONAL REGULATION OF SECURITIES
AND INSURANCE ACTIVITIES.—The Board shall defer
to—
‘‘(A) the Securities and Exchange Commis-
sion with regard to all interpretations of, and
the enforcement of, applicable Federal securi-
ties laws relating to the activities, conduct, and
operations of registered brokers, dealers, invest-
ment advisers, and investment companies; and
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‘‘(B) the relevant State insurance authori-
ties with regard to all interpretations of, and
the enforcement of, applicable State insurance
laws relating to the activities, conduct, and op-
erations of insurance companies and insurance
agents.’’.
SEC. 106. AMENDMENT TO DIVESTITURE PROCEDURES.
Section 5(e)(1) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1844(e)(1)) is amended—
(1) by striking ‘‘Financial Institutions Super-
visory Act of 1966, order’’ and inserting ‘‘Financial
Institutions Supervisory Act of 1966, at the election
of the bank holding company—
‘‘(A) order’’; and
(2) by striking ‘‘shareholders of the bank hold-
ing company. Such distribution’’ and inserting
‘‘shareholders of the bank holding company; or
‘‘(B) order the bank holding company,
after due notice and opportunity for hearing,
and after consultation with the bank’s primary
supervisor, which shall be the Comptroller of
the Currency in the case of a national bank and
the Federal Deposit Insurance Corporation and
the appropriate State supervisor in the case of
an insured nonmember bank, to terminate
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(within 120 days or such longer period as the
Board may direct) the ownership or control of
any such bank by such company.
‘‘The distribution referred to in subparagraph (A)’’.
SEC. 107. AUTHORITY OF STATE INSURANCE REGULATOR
AND SECURITIES AND EXCHANGE COMMIS-
SION.
Section 5 of the Bank Holding Company Act of 1956
(12 U.S.C. 1844) is amended by adding at the end the
following new subsection:
‘‘(g) AUTHORITY OF STATE INSURANCE REGULATOR
AND THE SECURITIES AND EXCHANGE COMMISSION.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of law, any regulation, order, or other ac-
tion of the Board which requires a bank holding
company to provide funds or other assets to a sub-
sidiary insured depository institution shall not be ef-
fective nor enforceable if—
‘‘(A) such funds or assets are to be pro-
vided by—
‘‘(i) a bank holding company that is
an insurance company or is a broker or
dealer registered under the Securities Ex-
change Act of 1934; or
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‘‘(ii) an affiliate of the depository in-
stitution which is an insurance company or
a broker or dealer registered under such
Act; and
‘‘(B) the State insurance authority for the
insurance company or the Securities and Ex-
change Commission for the registered broker or
dealer, as the case may be, determines in writ-
ing sent to the holding company and the Board
that the holding company shall not provide such
funds or assets because such action would have
a material adverse effect on the financial condi-
tion of the insurance company or the broker or
dealer, as the case may be.
‘‘(2) NOTICE TO STATE INSURANCE AUTHORITY
OF SEC REQUIRED.—If the Board requires a bank
holding company, or an affiliate of a bank holding
company, which is an insurance company or a
broker or dealer described in paragraph (1)(A) to
provide funds or assets to an insured depository in-
stitution subsidiary of the holding company pursuant
to any regulation, order, or other action of the
Board referred to in paragraph (1), the Board shall
promptly notify the State insurance authority for the
insurance company or the Securities and Exchange
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Commission, as the case may be, of such require-
ment.
‘‘(3) DIVESTITURE
IN
LIEU
OF
OTHER
AC-
TION.—If the Board receives a notice described in
paragraph (1)(B) from a State insurance authority
or the Securities and Exchange Commission with re-
gard to a bank holding company or affiliate referred
to in such paragraph, the Board may order the bank
holding company to divest the insured depository in-
stitution within 180 days of receiving notice or such
longer period as the Board determines consistent
with the safe and sound operation of the insured de-
pository institution.
‘‘(4) CONDITIONS BEFORE DIVESTITURE.—Dur-
ing the period beginning on the date an order to di-
vest is issued by the Board under paragraph (3) to
a bank holding company and ending on the date the
divestiture is completed, the Board may impose any
conditions or restrictions on the holding company’s
ownership or operation of the insured depository in-
stitution, including restricting or prohibiting trans-
actions between the insured depository institution
and any affiliate of the institution, as are appro-
priate under the circumstances.’’.
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SEC. 108. PRUDENTIAL SAFEGUARDS.
Section 5 of the Bank Holding Company Act of 1956
(12 U.S.C. 1844) is amended by inserting after subsection
(g) (as added by section 8 of this Act) the following new
subsection:
‘‘(h) PRUDENTIAL SAFEGUARDS.—
‘‘(1) IN GENERAL.—The Board may, by regula-
tion or order, impose restrictions or requirements on
relationships or transactions between a depository
institution subsidiary of a bank holding company
and any affiliate of such depository institution (other
than a subsidiary of such institution) which the
Board finds is consistent with the public interest,
the purposes of this Act, the Financial Services
Competitive Enhancement Act, the Federal Reserve
Act, and other Federal law applicable to depository
institution subsidiaries of bank holding companies
and the standards in paragraph (2).
‘‘(2) STANDARDS.—The Board may exercise au-
thority under paragraph (1) if the Board finds that
such action will have any of the following effects:
‘‘(A) Avoid any significant risk to the safe-
ty and soundness of depository institutions or
any Federal deposit insurance fund.
‘‘(B) Enhance the financial stability of
bank holding companies.
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‘‘(C) Avoid conflicts of interest or other
abuses.
‘‘(D) Enhance the privacy of customers of
depository institutions.
‘‘(E) Promote the application of national
treatment and equality of competitive oppor-
tunity between nonbank affiliates owned or con-
trolled by domestic bank holding companies and
nonbank affiliates owned or controlled by for-
eign banks operating in the United States.
‘‘(3) REVIEW.—The Board shall regularly—
‘‘(A) review all restrictions or requirements
established pursuant to paragraph (1) to deter-
mine whether there is a continuing need for any
such restriction or requirement to carry out the
purposes of the Act, including any purpose de-
scribed in paragraph (2); and
‘‘(B) modify or eliminate any restriction or
requirement the Board finds is no longer re-
quired for such purposes.’’.
SEC. 109. EXAMINATION OF INVESTMENT COMPANIES.
(a) EXCLUSIVE COMMISSION AUTHORITY.—
(1) IN GENERAL.—The Commission shall be the
sole agency with authority to inspect and examine
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any registered investment company that is not a
bank holding company.
(2) PROHIBITION ON BANKING AGENCIES.—A
Federal banking agency may not inspect or examine
any registered investment company that is not a
bank holding company.
(b) EXAMINATION RESULTS AND OTHER INFORMA-
TION.—The Commission shall provide to any Federal
banking agency, upon request, the results of any examina-
tion, reports, records, or other information with respect
to any registered investment company to the extent nec-
essary for the agency to carry out its statutory responsibil-
ities.
(c) DEFINITION.—For purposes of this section, the
following definitions shall apply:
(1) BANK
HOLDING
COMPANY.—The term
‘‘bank holding company’’ has the meaning given to
such term in section 2 of the Bank Holding Com-
pany Act of 1956.
(2) COMMISSION.—The term ‘‘Commission’’
means the Securities and Exchange Commission.
(3) FEDERAL
BANKING
AGENCY.—The term
‘‘Federal banking agency’’ has the meaning given to
such term in section 3(z) of the Federal Deposit In-
surance Act.
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(4) REGISTERED INVESTMENT COMPANY.—The
term ‘‘registered investment company’’ means an in-
vestment company which is registered with the Com-
mission under the Investment Company Act of 1940.
SEC. 110. LIMITATION ON RULEMAKING, PRUDENTIAL, SU-
PERVISORY, AND ENFORCEMENT AUTHORITY
OF THE BOARD.
The Bank Holding Company Act of 1956 (12 U.S.C.
1841 et seq.) is amended by inserting after section 10 the
following new section:
‘‘SEC. 10A. LIMITATION ON RULEMAKING, PRUDENTIAL, SU-
PERVISORY, AND ENFORCEMENT AUTHORITY
OF THE BOARD.
‘‘(a) LIMITATION ON DIRECT ACTION.—
‘‘(1) IN GENERAL.—The Board may not pre-
scribe regulations, issue or seek entry of orders, im-
pose restraints, restrictions, guidelines, require-
ments, safeguards, or standards, or otherwise take
any action under or pursuant to any provisions of
this Act or section 8 of the Federal Deposit Insur-
ance Act against or with respect to a regulated sub-
sidiary of a bank holding company unless the action
is necessary to prevent or redress an unsafe or un-
sound practice or breach of fiduciary duty by such
subsidiary that poses a material risk to—