164
(as defined in section 1101(7) of the
Right to Financial Privacy Act of
1978), the Commodity Futures Trad-
ing Commission, or a foreign regu-
latory body of a similar type;
‘‘(II) the primary business of the
company; and
‘‘(III) the nature and extent of
domestic or foreign regulations of the
company’s activities.
‘‘(6) EXAMINATIONS.—
‘‘(A) LIMITED USE OF EXAMINATION AU-
THORITY
FOR
FINANCIAL
SERVICES
HOLDING
COMPANIES.—The Board shall not examine,
under this section, any financial services hold-
ing company described in paragraph (2)(A)(i)
for which an election is in effect under para-
graph (1) or any subsidiary (other than a de-
pository institution) of such holding company
unless—
‘‘(i) the Board determines, on the
basis of all information available to the
Board, that—
‘‘(I) the operations or activities
of the financial services holding com-
165
pany or any subsidiary of such com-
pany, 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 institu-
tion owned by such holding company;
or
‘‘(II) the financial services hold-
ing company does not appear to have
sufficient resources to meet the guar-
antee required under paragraph (2);
or
‘‘(ii) the Board is unable to accom-
plish the purposes described in subsection
(c)(3)(A) without such examinations.
‘‘(B) LIMITED USE OF EXAMINATION AU-
THORITY
FOR
INVESTMENT
BANK
HOLDING
COMPANIES.—The Board shall not examine,
under this section, any investment bank holding
company described in paragraph (2)(A)(ii)
which has an election in effect under paragraph
(1) or any subsidiary (other than a depository
institution) of such holding company unless—
166
‘‘(i) the Board determines that the op-
erations or activities of the investment
bank holding company or any subsidiary of
such company, or any transaction involving
such company or subsidiary and an affili-
ated depository institution, may pose a ma-
terial risk to the safety and soundness of
any depository institution owned by such
holding company; or
‘‘(ii) the Board is unable to determine
from reports the nature of the operations,
financial condition, activities, or effective-
ness of the risk management systems of
the investment bank holding company or
any subsidiary of such company, or to as-
sess compliance with the provisions of this
Act and those governing transactions and
relationships between any depository insti-
tution controlled by the investment bank
holding company and the investment bank
holding company or any of such subsidi-
aries.
‘‘(C) RESTRICTED FOCUS AND DEFERENCE
IN EXAMINATIONS.—The Board shall limit the
focus and scope of any examination, under this
167
section, of a financial services holding company
or investment bank holding company for which
an election is in effect under paragraph (1) or
of any subsidiary (other than a depository insti-
tution) of such holding company and shall defer
to examinations conducted by the Securities Ex-
change Commission or other supervisors in ac-
cordance with subparagraphs (B), (C), and (D)
of subsection (c)(3).’’.
SEC. 125. CONVERSION OF UNITARY SAVINGS AND LOAN
HOLDING COMPANIES TO FINANCIAL SERV-
ICES HOLDING COMPANIES.
The Bank Holding Company Act of 1956 (12 U.S.C.
1841 et seq.) is amended by inserting after section 5 the
following new section:
‘‘SEC. 6. CONVERSION OF UNITARY SAVINGS AND LOAN
HOLDING COMPANIES TO FINANCIAL SERV-
ICES HOLDING COMPANIES.
‘‘(a) STREAMLINED
PROCEDURE
FOR
CONVER-
SION.—
‘‘(1) IN GENERAL.—During the 18-month pe-
riod beginning on the date of the enactment of the
Financial Services Competitiveness and Regulatory
Relief Act of 1995, no approval shall be required
under section 3(a) or paragraph (8) or (13) of sec-
168
tion 4(c) for any qualified savings and loan holding
company to become a financial services holding com-
pany for any company that, both prior to January
1, 1995, and on the date of enactment of the Finan-
cial Services Competitiveness and Regulatory Relief
Act of 1995, is a savings and loan holding company
if the requirements of paragraph (2) are met.
‘‘(2) ELIGIBILITY REQUIREMENTS.—A qualified
savings and loan holding company shall be eligible to
become a financial services holding company pursu-
ant to paragraph (1) if—
‘‘(A) the company becomes a financial
services holding company as the result of the
conversion of a savings association controlled by
such company as of the date of enactment of
the Financial Services Competitiveness and
Regulatory Relief Act of 1995 into a bank;
‘‘(B) the company is adequately capitalized
before and immediately after the conversion re-
ferred to in subparagraph (A);
‘‘(C) all depository institutions controlled
by such company are well capitalized before and
immediately after such conversion;
169
‘‘(D) all depository institutions controlled
by such company are well managed before the
conversion;
‘‘(E) the Board would not be prohibited
under any provision of section 3(d) from ap-
proving the transaction;
‘‘(F) the activities of the company and of
each subsidiary of the company comply with
this Act (and regulations prescribed under this
Act); and
‘‘(G) the company provides the Board with
at least 30 days written notice of the proposed
conversion, and, before the expiration of such
30-day period, the Board has not objected to
the company becoming a financial services hold-
ing company based on the criteria contained in
this subsection.
‘‘(3) QUALIFIED SAVINGS AND LOAN HOLDING
COMPANY
DEFINED.—For purposes of this sub-
section, the term ‘qualified savings and loan holding
company’ means any company which became a sav-
ings and loan holding company before January 1,
1995, and is a savings and loan holding company as
of the date of the enactment of the Financial Serv-
170
ices Competitiveness and Regulatory Relief Act of
1995.
‘‘(b) LIMITED RETENTION
OF EXISTING INVEST-
MENTS.—Any holding company which converts to a finan-
cial services holding company in accordance with sub-
section (a) may retain direct or indirect ownership or con-
trol of voting shares of any company as provided in, and
subject to, section 4(k) if—
‘‘(1) the holding company controlled 1 or more
savings associations in accordance with section
10(c)(3) of the Home Owners Loan Act before Jan-
uary 1, 1995, and as of the date of the enactment
of the Financial Services Competitiveness and Regu-
latory Relief Act of 1995;
‘‘(2) the investment in voting shares and the fi-
nancial services holding company meet the require-
ments of section 4(k) (other than paragraph
(1)(A)(iii) of such section); and
‘‘(3) more than 75 percent of the revenues of
the financial services holding company for each of
the 2 calendar years before the date such company
became a financial services holding company involved
securities activities described in subparagraphs (A)
and (B) of section 10(a)(1) and activities that the
171
Board has determined to be permissible under sec-
tion 4(c)(8).
‘‘(c) CONVERSION FEE.—No qualified savings and
loan holding company may become a financial services
holding company pursuant to this section unless the Board
has received, from such company, full payment of a fee
which the Board shall impose in accordance with section
5(h).’’.
SEC. 126. FINANCIAL SERVICES ADVISORY COMMITTEE.
(a) ESTABLISHMENT.—There is hereby established
the Financial Services Advisory Committee (hereinafter in
this section referred to as the ‘‘Committee’’).
(b) MEMBERSHIP.—
(1) IN GENERAL.—The Committee shall consist
of 9 members, appointed as follows from among in-
dividuals who are not officers or employees of the
Federal Government and who are especially qualified
to serve on such committee by virtue of their edu-
cation, training, or experience:
(A) 1 member appointed by the Secretary
of the Treasury.
(B) 2 members appointed by the Comptrol-
ler of the Currency.
(C) 2 members appointed by the Director
of the Office of Thrift Supervision.
172
(D) 2 members appointed by the Board of
Governors of the Federal Reserve System.
(E) 2 members appointed by the Board of
Directors of the Federal Deposit Insurance Cor-
poration.
(2) REPRESENTATION
OF
SMALL
AND
INDE-
PENDENT
DEPOSITORY
INSTITUTIONS.—Of 
the
members appointed under subparagraphs (B), (C),
(D), and (E) of paragraph (1), 1 of the 2 members
appointed under each such paragraph shall be ap-
pointed from among individuals who are especially
qualified to represent the interests of depository in-
stitutions which—
(A) 
have 
total 
assets 
of 
less 
than
$500,000,000; or
(B) are not controlled by any depository
institution holding company.
(c) VACANCIES.—Any vacancy on the Committee
shall be filled in the same manner in which the original
appointment was made.
(d) PAY AND EXPENSES.—Members of the Commit-
tee shall serve without pay, but each member shall be re-
imbursed for expenses incurred in connection with attend-
ance of such members at meetings of the Committee by
173
the agency which appointed such member to the Commit-
tee.
(e) TERMS.—Members shall be appointed for terms
of 1 year.
(f) AUTHORITY OF THE COMMITTEE.—The Commit-
tee may select a chairperson, vice chairperson, and sec-
retary, and adopt methods of procedure, and shall have
power—
(1) to confer with each Federal banking agency
on general and special business conditions and regu-
latory and other matters relating to the financial
services industry in the United States and the im-
pact of this Act, and the amendments made by this
Act, on the financial service industry, especially with
regard to depository institutions described in sub-
section (b)(2); and
(2) to request information from, and to make
recommendations to, each of the Federal banking
agencies with respect to matters within the jurisdic-
tion of such agency.
(g) MEETINGS.—The Committee shall meet at least
2 times each year at the call of the chairperson or a major-
ity of the members.
(h) REPORTS.—The Committee shall submit a semi-
annual written report to the Committee on Banking and
174
Financial Services of the House and to the Committee on
Banking, Housing, and Urban Affairs of the Senate. Such
report shall describe the activities of the Committee for
such semiannual period and contain such recommenda-
tions as the Committee considers appropriate.
(i) PROVISION OF STAFF AND OTHER RESOURCES.—
Each of the Federal banking agencies shall provide the
Committee with the use of such resources, including staff,
as the Committee reasonably shall require to carry out its
duties, including the preparation and submission of re-
ports to Congress, under this section.
(j) DEFINITIONS.—For purposes of this section, the
terms ‘‘insured depository institution’’ and ‘‘Federal bank-
ing agencies’’ have the meaning given to such terms in
section 3 of the Federal Deposit Insurance Act.
(k) FEDERAL ADVISORY COMMITTEE ACT DOES NOT
APPLY.—The Federal Advisory Committee Act shall not
apply to the Committee.
(l) SUNSET.—The Committee shall cease to exist 10
years after the enactment of this section.
SEC. 127. COORDINATION WITH STATE LAW.
Except as specifically provided in section 109, no pro-
vision of this Act, and no amendment made by this Act
to any other provision of law, may be construed as super-
seding any provision of the law of any State which imposes
206
with the protection of investors, prescribing the conditions
under which such trustee or custodian may serve, after
consulting in writing with the appropriate Federal bank-
ing 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 follow-
ing:
‘‘(3) as custodian.’’.
SEC. 212. USE OF UNDERWRITING PROCEEDS.
Section 10(f) of the Investment Company Act of
1940 (15 U.S.C. 80a–10(f)) is amended—
(1) in the 1st sentence, by striking ‘‘issuer) a
principal underwriter’’ and inserting ‘‘issuer)—
‘‘(1) a principal underwriter’’; and
(2) by striking ‘‘for the issuer. The Commis-
sion’’ and inserting ‘‘for the issuer; or
‘‘(2) if the registration statement, or any other
offering document pursuant to which the security is