I
103D CONGRESS
1ST SESSION
H. R. 2075
To require truth in disclosures for financial intermediaries, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 11, 1993
Mr. SLATTERY introduced the following bill; which was referred jointly to the
Committees on Energy and Commerce and Banking, Finance and Urban
Affairs
A BILL
To require truth in disclosures for financial intermediaries,
and for other purposes.
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 ‘‘Truth in Disclosure
Act’’.
SEC. 2. FINDINGS AND PURPOSE.
(a) FINDINGS.—The Congress hereby finds that eco-
nomic stability would be enhanced, competition between
financial intermediaries would be improved, and the ability
of the consumer to make informed decisions regarding in-
vestment accounts, and to verify accounts, would be
strengthened if there was uniformity in the disclosure of
terms and conditions on which earnings are paid and fees
are assessed in connection with such accounts.
(b) PURPOSE.—It is the purpose of this Act to re-
quire the clear and uniform disclosure of—
(1) the rates of earnings which are payable on
investment accounts by financial intermediaries; and
(2) the fees that are assessable against invest-
ment accounts, so that consumers can make a mean-
ingful comparison between the competing claims of
financial intermediaries with regard to investment
accounts.
SEC. 3. DISCLOSURE OF EARNINGS AND TERMS OF AC-
COUNTS.
(a) IN GENERAL.—Except as provided in subsection
(b), each advertisement, announcement, or solicitation ini-
tiated by any financial intermediary relating to any invest-
ment account offered which includes any reference to a
specific rate payable on amounts invested in such account,
or to a specific yield or rate of earnings on amounts so
invested, shall state the following information, to the ex-
tent applicable, in a clear and conspicuous manner:
(1) The annual percentage yield based on earn-
ings for the latest 7-day period.
(2) The period during which such annual per-
centage yield is in effect.
(3) All minimum account balance and time re-
quirements which must be met in order to earn the
advertised yield (and, in the case of accounts for
which more than 1 yield is stated, each annual per-
centage yield and the account minimum balance re-
quirement associated with each such yield shall be in
close proximity and have equal prominence).
(4) The minimum amount of the initial deposit
which is required to open the account in order to ob-
tain the yield advertised, if such minimum amount
is greater than the minimum balance necessary to
earn the advertised yield.
(5) A statement that regular fees or other con-
ditions could reduce the yield.
(6) A statement if a penalty is required for
early withdrawal or redemption.
(b) BROADCAST AND ELECTRONIC MEDIA AND OUT-
DOOR ADVERTISING EXCEPTION.—The appropriate Fed-
eral agency may, by regulation, exempt advertisements,
announcements, or solicitations made by any broadcast or
electronic medium or outdoor advertising display not on
the premises of the financial intermediary from any disclo-
sure requirements described in paragraph (4) or (5) of
subsection (a) if the agency finds that any such disclosure
would be unnecessarily burdensome.
(c) MISLEADING DESCRIPTIONS.—
(1) No advertisement, announcement, or solici-
tation made by any financial intermediary may refer
to or describe an account as a free or no-cost ac-
count (or words of similar meaning) if—
(A) in order to avoid fees or service
charges for any period—
(i) a minimum balance must be main-
tained in the account during such period;
(ii) the number of transactions during
such period may not exceed a maximum
number; or
(iii) a dollar amount limitation is im-
posed on any type of withdrawal; or
(B) any regular service or transaction fee
is imposed.
(2) Financial intermediaries shall state in a
clear and conspicuous manner in any advertisement,
announcement, or solicitation relating to an invest-
ment account that such investment is not insured by
the Federal Government.
(3) Financial intermediaries shall state in a
large, bold, and conspicuous manner in any adver-
tisement, announcement, or solicitation relating to
an investment account mentioning historical returns
the following: ‘‘These returns are not to be expected
on your investment.’’.
(d) MISLEADING OR INACCURATE ADVERTISEMENTS,
ETC., PROHIBITED.—No financial intermediaries shall
make any advertisement, announcement, or solicitation re-
lating to an investment account that is inaccurate or mis-
leading or that misrepresents its terms and conditions con-
tract.
SEC. 4. ACCOUNT DISCLOSURE.
(a) IN GENERAL.—Each financial intermediary shall
maintain a schedule of fees, charges, interest rates, and
terms and conditions applicable to all products offered by
or through the financial intermediaries, in accordance with
the requirements of this section and regulations which
shall be prescribed. A Federal agency shall specify, in reg-
ulations, which fees, charges, penalties, terms, conditions,
and account restrictions must be included in a disclosure
required under this subsection. A financial intermediary
need not include in such disclosure any information not
specified in such regulation.
(b) INFORMATION ON FEES AND CHARGES.—The
disclosure required under subsection (a) with respect to
any account shall contain the following information:
(e) NOTICE TO INVESTORS AS OF THE EFFECTIVE
DATE OF REGULATIONS.—For any account for which the
financial intermediary delivers an account statement on a
quarterly 
or 
more 
frequent 
basis, 
the 
financial
intermediary shall include on the first of any regularly
scheduled mailing posted or delivered after publication of
regulations issued in final form, a statement that the in-
vestor has the right to request an account disclosure con-
tinuing the terms, charges, and interest rates of the ac-
count, and that the account holder may wish to request
such an account disclosure.
SEC. 7. PAYMENT OF INTEREST.
(a) CALCULATED
ON FULL AMOUNT
OF PRIN-
CIPAL.—Earnings on an interest-earning account at any
financial intermediary shall be calculated on the full
amount of principal in the account for each day of the
stated calculation period at the rate or rates of interest
disclosed pursuant to this Act.
(b) NO PARTICULAR METHOD OF COMPOUNDING IN-
TEREST REQUIRED.—Subsection (a) shall not be con-
strued as prohibiting or requiring the use of any particular
method of compounding or crediting of interest.
(c) DATE BY WHICH INTEREST MUST ACCRUE.—In-
terest on accounts that are subject to this Act shall begin