678
‘‘(C) is guaranteed by or is other-
wise an obligation of any bank or in-
sured depository institution.
‘‘(2) 
DISCLOSURES.—Any 
person
issuing or selling the securities of a reg-
istered investment company that is ad-
vised by, or sold through, a bank shall
prominently disclose that an investment
in the company is not insured by the Fed-
eral Deposit Insurance Corporation or
any other government agency. The Com-
mission may adopt rules and regulations,
and issue orders, consistent with the pro-
tection of investors, prescribing the man-
ner in which the disclosure under this
paragraph shall be provided.
‘‘(3) DEFINITIONS.—The terms ‘insured
depository institution’ and ‘appropriate
Federal banking agency’ have the same
meanings given as in section 3 of the Fed-
eral Deposit Insurance Act.’’.
679
SEC. 215. DEFINITION OF BROKER UNDER THE INVEST-
MENT COMPANY ACT OF 1940.
Section 2(a)(6) of the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–2(a)(6)) is
amended to read as follows:
‘‘(6) The term ‘broker’ has the same
meaning as in section 3 of 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 invest-
ment companies.’’.
SEC. 216. DEFINITION OF DEALER UNDER THE INVEST-
MENT COMPANY ACT OF 1940.
Section 2(a)(11) of the Investment Com-
pany 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 in-
surance company or investment com-
pany.’’.
680
SEC. 217. REMOVAL OF THE EXCLUSION FROM THE DEFINI-
TION OF INVESTMENT ADVISER FOR BANKS
THAT ADVISE INVESTMENT COMPANIES.
(a) 
INVESTMENT
ADVISER.—Section
202(a)(11)(A) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b–2(a)(11)(A)) is amended
by striking ‘‘investment company’’ and insert-
ing ‘‘investment company, except that the
term ‘investment adviser’ includes any bank
or bank holding company to the extent that
such bank or bank holding company serves or
acts as an investment adviser to a registered
investment company, but if, in the case of a
bank, such services or actions 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:
‘‘(26) The term ‘separately identifiable
department or division’ of a bank means
a unit—
681
‘‘(A) that is under the direct su-
pervision of an officer or officers des-
ignated by the board of directors of
the bank as responsible for the day-
to-day conduct of the bank’s invest-
ment adviser activities for one or
more investment companies, includ-
ing the supervision of all bank em-
ployees engaged in the performance
of such activities; and
‘‘(B) for which all of the records
relating to its investment adviser ac-
tivities 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 
en-
forcement by the Commission of this
Act or the Investment Company Act
of 1940 and rules and regulations pro-
mulgated under this Act or the In-
vestment Company Act of 1940.’’.
682
SEC. 218. DEFINITION OF BROKER UNDER THE INVEST-
MENT ADVISERS ACT OF 1940.
Section 202(a)(3) of the Investment Advis-
ers 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 section 3 of the Securities
Exchange Act of 1934.’’.
SEC. 219. DEFINITION OF DEALER UNDER THE INVEST-
MENT ADVISERS ACT OF 1940.
Section 202(a)(7) of the Investment Advis-
ers 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 section 3 of the Securities
Exchange Act of 1934, but does not in-
clude an insurance company or invest-
ment company.’’.
SEC. 220. 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 IN-
FORMATION.—
683
‘‘(1) The appropriate Federal banking
agency shall provide the Commission
upon request the results of any examina-
tion, reports, records, or other informa-
tion to which such agency may have ac-
cess with respect to the investment advi-
sory activities—
‘‘(A) of any—
‘‘(i) bank holding company;
‘‘(ii) bank; or
‘‘(iii) separately identifiable
department or division of a bank,
that is registered under section 203 of
this title; and
‘‘(B) in the case of a bank holding
company or bank that has a sub-
sidiary or a separately identifiable
department or division registered
under that section, of such bank or
bank holding company.
‘‘(2) The Commission shall provide to
the appropriate Federal banking agency
upon request the results of any examina-
tion, reports, records, or other informa-
tion with respect to the investment advi-
684
sory activities of any bank holding com-
pany, bank, or separately identifiable de-
partment or division of a bank, which is
registered under section 203 of this title.
‘‘(b) EFFECT ON OTHER AUTHORITY.—Noth-
ing in this section shall limit in any respect
the authority of the appropriate Federal
banking agency with respect to such bank
holding company, bank, or department or di-
vision under any other provision of law.
‘‘(c) DEFINITION.—For purposes of this sec-
tion, the term ‘appropriate Federal banking
agency’ shall have the same meaning as in
section 3 of the Federal Deposit Insurance
Act.’’.
SEC. 221. 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 in-
terest or participation in any common trust
fund or similar fund maintained by a bank ex-
clusively for the collective investment and re-
investment of assets contributed thereto by
such bank in its capacity as trustee, executor,
administrator, or guardian’’ and inserting ‘‘or
685
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 Invest-
ment Company Act of 1940’’.
(b) SECURITIES EXCHANGE ACT OF 1934.—
Section 3(a)(12)(A)(iii) of the Securities Ex-
change 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 defini-
tion of the term ‘investment company’
under section 3(c)(3) of the Invest-
ment 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 adminis-
tration of trusts, estates, or other ac-
counts created and maintained for a
fiduciary purpose;
686
‘‘(B) except in connection with the
ordinary advertising of the bank’s fi-
duciary 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. 222. INVESTMENT ADVISERS PROHIBITED FROM HAV-
ING 
CONTROLLING 
INTEREST 
IN 
REG-
ISTERED INVESTMENT COMPANY.
Section 15 of the Investment Company Act
of 1940 (15 U.S.C. 80a–15) is amended by add-
ing at the end the following new subsection:
‘‘(g) CONTROLLING INTEREST IN INVESTMENT
COMPANY PROHIBITED.—
‘‘(1) IN GENERAL.—If an investment ad-
viser to a registered investment company,
or an affiliated person of that investment
adviser, holds a controlling interest in
that registered investment company in a
687
trustee or fiduciary capacity, such person
shall—
‘‘(A) if it holds the shares in a
trustee or fiduciary capacity with re-
spect to any employee benefit plan
subject to the Employee Retirement
Income Security Act of 1974, transfer
the power to vote the shares of the in-
vestment company through to an-
other person acting in a fiduciary ca-
pacity with respect to the plan who is
not an affiliated person of that invest-
ment adviser or any affiliated person
thereof; or
‘‘(B) if it holds the shares in a
trustee or fiduciary capacity with re-
spect to any 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 com-
pany through to—
‘‘(I) the beneficial owners
of the shares;
688
‘‘(II) another person act-
ing in a fiduciary capacity
who is not an affiliated per-
son of that investment adviser
or any affiliated person there-
of; or
‘‘(III) any person author-
ized to receive statements and
information with respect to
the trust who is not an affili-
ated person of that invest-
ment adviser or any affiliated
person thereof;
‘‘(ii) vote the shares of the in-
vestment company held by it in
the same proportion as shares
held by all other shareholders of
the investment company; or
‘‘(iii) vote the shares of the in-
vestment company as otherwise
permitted under such rules, regu-
lations, or orders as the Commis-
sion may prescribe or issue con-
sistent with the protection of in-
vestors.
689
‘‘(2) EXEMPTION.—Paragraph (1) shall
not apply to any investment adviser to a
registered investment company, or any
affiliated person of that investment ad-
viser, that holds shares of the investment
company in a trustee or fiduciary capac-
ity if that registered investment company
consists solely of assets held in such ca-
pacities.
‘‘(3) SAFE HARBOR.—No investment ad-
viser to a registered investment company
or any affiliated person of such invest-
ment adviser shall be deemed to have
acted unlawfully or to have breached a fi-
duciary duty under State or Federal law
solely by reason of acting in accordance
with clause (i), (ii), or (iii) of paragraph
(1)(B).’’.
SEC. 
223. 
STATUTORY 
DISQUALIFICATION 
FOR 
BANK
WRONGDOING.
Section 9(a) of the Investment Company
Act of 1940 (15 U.S.C. 80a-9(a)) is amended in
paragraphs (1) and (2) by striking ‘‘securities
dealer, transfer agent,’’ and inserting ‘‘securi-
ties dealer, bank, transfer agent,’’.
690
SEC. 224. CONFORMING CHANGE IN DEFINITION.
Section 2(a)(5) of the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–2(a)(5)) is
amended by striking ‘‘(A) a banking institu-
tion organized under the laws of the United
States’’ and inserting ‘‘(A) a depository insti-
tution (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 1(b) of the International Banking
Act of 1978)’’.
SEC. 225. CONFORMING AMENDMENT.
Section 202 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b–2) is amended by
adding at the end the following new sub-
section:
‘‘(c) CONSIDERATION OF PROMOTION OF EFFI-
CIENCY, COMPETITION, AND
CAPITAL
FORMA-
TION.—Whenever pursuant to this title the
Commission is engaged in rulemaking and is
required to consider or determine whether an
action is necessary or appropriate in the pub-
lic interest, the Commission shall also con-
sider, in addition to the protection of inves-
tors, whether the action will promote effi-
ciency, competition, and capital formation.’’.
691
SEC. 226. EFFECTIVE DATE.
This subtitle shall take effect 90 days after
the date of the enactment of this Act.
Subtitle 
C—Securities 
and 
Ex-
change Commission Supervision
of 
Investment 
Bank 
Holding
Companies
SEC. 231. SUPERVISION OF INVESTMENT BANK HOLDING
COMPANIES BY THE SECURITIES AND EX-
CHANGE COMMISSION.
(a) AMENDMENT.—Section 17 of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78q) is
amended—
(1) by redesignating subsection (i) as
subsection (l); and
(2) by inserting after subsection (h)
the following new subsections:
‘‘(i) INVESTMENT
BANK
HOLDING
COMPA-
NIES.—
‘‘(1) ELECTIVE
SUPERVISION
OF
AN
IN-
VESTMENT
BANK
HOLDING
COMPANY
NOT
HAVING A BANK OR SAVINGS ASSOCIATION AF-
FILIATE.—
‘‘(A) IN
GENERAL.—An investment
bank holding company that is not—
693
applicable to supervised investment
bank holding companies.
‘‘(B) NOTIFICATION OF STATUS AS A
SUPERVISED INVESTMENT BANK HOLDING
COMPANY.—An investment bank hold-
ing company that elects under sub-
paragraph (A) to become supervised
by the Commission shall file with the
Commission a written notice of inten-
tion to become supervised by the
Commission in such form and con-
taining such information and docu-
ments concerning such investment
bank holding company as the Com-
mission, by rule, may prescribe as
necessary or appropriate in further-
ance of the purposes of this section.
Unless the Commission finds that
such supervision is not necessary or
appropriate in furtherance of the
purposes of this section, such super-
vision shall become effective 45 days
after the date of receipt of such writ-
ten notice by the Commission or
within such shorter time period as
694
the Commission, by rule or order,
may determine.
‘‘(2) ELECTION NOT TO BE SUPERVISED
BY THE COMMISSION AS AN INVESTMENT BANK
HOLDING COMPANY.—
‘‘(A) VOLUNTARY
WITHDRAWAL.—A
supervised investment bank holding
company that is supervised pursuant
to paragraph (1) may, upon such
terms and conditions as the Commis-
sion deems necessary or appropriate,
elect not to be supervised by the
Commission by filing a written notice
of withdrawal from Commission su-
pervision. Such notice shall not be-
come effective until one year after re-
ceipt by the Commission, or such
shorter or longer period as the Com-
mission deems necessary or appro-
priate to ensure effective supervision
of the material risks to the super-
vised investment bank holding com-
pany and to the affiliated broker or
dealer, or to prevent evasion of the
purposes of this section.
695
‘‘(B) DISCONTINUATION OF COMMIS-
SION SUPERVISION.—If the Commission
finds that any supervised investment
bank holding company that is super-
vised pursuant to paragraph (1) is no
longer in existence or has ceased to
be an investment bank holding com-
pany, or if the Commission finds that
continued supervision of such a su-
pervised investment bank holding
company is not consistent with the
purposes of this section, the Commis-
sion may discontinue the supervision
pursuant to a rule or order, if any,
promulgated 
by 
the 
Commission
under this section.
‘‘(3) SUPERVISION OF INVESTMENT BANK
HOLDING COMPANIES.—
‘‘(A) RECORDKEEPING AND REPORT-
ING.—
‘‘(i) IN GENERAL.—Every super-
vised investment bank holding
company and each affiliate there-
of shall make and keep for pre-
scribed periods such records, fur-
696
nish copies thereof, and make
such reports, as the Commission
may require by rule, in order to
keep the Commission informed as
to—
‘‘(I) the company’s or af-
filiate’s 
activities, 
financial
condition, 
policies, 
systems
for monitoring and control-
ling financial and operational
risks, and transactions and
relationships 
between 
any
broker or dealer affiliate of
the 
supervised 
investment
bank holding company; and
‘‘(II) the extent to which
the company or affiliate has
complied with the provisions
of this Act and regulations
prescribed and orders issued
under this Act.
‘‘(ii) FORM
AND
CONTENTS.—
Such records and reports shall be
prepared in such form and ac-
cording to such specifications (in-
697
cluding certification by an inde-
pendent public accountant), as
the Commission may require and
shall be provided promptly at any
time upon request by the Com-
mission. Such records and reports
may include—
‘‘(I) a balance sheet and
income statement;
‘‘(II) an assessment of the
consolidated capital of the su-
pervised 
investment 
bank
holding company;
‘‘(III) 
an 
independent
auditor’s report attesting to
the 
supervised 
investment
bank holding company’s com-
pliance with its internal risk
management 
and 
internal
control objectives; and
‘‘(IV) reports concerning
the extent to which the com-
pany or affiliate has complied
with the provisions of this
title and any regulations pre-
698
scribed 
and 
orders 
issued
under this title.
‘‘(B) USE OF EXISTING REPORTS.—
‘‘(i) IN GENERAL.—The Commis-
sion shall, to the fullest extent
possible, accept reports in fulfill-
ment of the requirements under
this paragraph that the super-
vised investment bank holding
company or its affiliates have
been required to provide to an-
other 
appropriate 
regulatory
agency or self-regulatory organi-
zation.
‘‘(ii) AVAILABILITY.—A super-
vised investment bank holding
company or an affiliate of such
company shall provide to the
Commission, at the request of the
Commission, any report referred
to in clause (i).
‘‘(C) EXAMINATION AUTHORITY.—
‘‘(i) FOCUS OF EXAMINATION AU-
THORITY.—The Commission may
make examinations of any super-
699
vised investment bank holding
company and any affiliate of such
company in order to—
‘‘(I) inform the Commis-
sion regarding—
‘‘(aa) the nature of the
operations and financial
condition of the super-
vised 
investment 
bank
holding company and its
affiliates;
‘‘(bb) the financial and
operational risks within
the supervised investment
bank 
holding 
company
that 
may 
affect 
any
broker 
or 
dealer 
con-
trolled by such supervised
investment bank holding
company; and
‘‘(cc) the systems of
the supervised investment
bank 
holding 
company
and its affiliates for moni-
700
toring 
and 
controlling
those risks; and
‘‘(II) monitor compliance
with the provisions of this
subsection, 
provisions 
gov-
erning transactions and rela-
tionships between any broker
or dealer affiliated with the
supervised investment bank
holding company and any of
the company’s other affiliates,
and applicable provisions of
subchapter II of chapter 53,
title 31, United States Code
(commonly referred to as the
‘Bank Secrecy Act’) and regu-
lations thereunder.
‘‘(ii) RESTRICTED FOCUS OF EX-
AMINATIONS.—The 
Commission
shall limit the focus and scope of
any examination of a supervised
investment bank holding com-
pany to—
‘‘(I) the company; and
701
‘‘(II) any affiliate of the
company that, because of its
size, condition, or activities,
the nature or size of the
transactions between such af-
filiate 
and 
any 
affiliated
broker or dealer, or the cen-
tralization of functions within
the holding company system,
could, in the discretion of the
Commission, have a materi-
ally adverse effect on the
operational or financial con-
dition of the broker or dealer.
‘‘(iii) DEFERENCE TO OTHER EX-
AMINATIONS.—For purposes of this
subparagraph, 
the 
Commission
shall, to the fullest extent pos-
sible, use the reports of examina-
tion of an institution described in
subparagraph (D), (F), or (G) of
section 2(c)(2), or held under sec-
tion 4(f), of the Bank Holding
Company Act of 1956 made by the
appropriate regulatory agency, or
702
of a licensed insurance company
made by the appropriate State in-
surance regulator.
‘‘(4) HOLDING COMPANY CAPITAL.—
‘‘(A) AUTHORITY.—If the Commis-
sion finds that it is necessary to ade-
quately supervise investment bank
holding companies and their broker
or dealer affiliates consistent with
the purposes of this subsection, the
Commission may adopt capital ade-
quacy rules for supervised invest-
ment bank holding companies.
‘‘(B) METHOD OF CALCULATION.—In
developing rules under this para-
graph:
‘‘(i) 
DOUBLE
LEVERAGE.—The
Commission shall consider the
use by the supervised investment
bank holding company of debt
and other liabilities to fund cap-
ital investments in affiliates.
‘‘(ii) NO
UNWEIGHTED
CAPITAL
RATIO.—The Commission shall not
impose under this section a cap-
703
ital ratio that is not based on ap-
propriate risk-weighting consid-
erations.
‘‘(iii) NO CAPITAL REQUIREMENT
ON
REGULATED
ENTITIES.—The
Commission shall not, by rule,
regulation, guideline, order or
otherwise, 
impose 
any 
capital
adequacy provision on a non-
banking affiliate (other than a
broker or dealer) that is in com-
pliance with applicable capital re-
quirements of another Federal
regulatory authority or State in-
surance authority.
‘‘(iv) 
APPROPRIATE
EXCLU-
SIONS.—The 
Commission 
shall
take full account of the applicable
capital requirements of another
Federal regulatory authority or
State insurance regulator.
‘‘(C) INTERNAL
RISK
MANAGEMENT
MODELS.—The Commission may incor-
porate 
internal 
risk 
management
models into its capital adequacy rules
704
for supervised investment bank hold-
ing companies.
‘‘(5) FUNCTIONAL REGULATION OF BANK-
ING
AND
INSURANCE
ACTIVITIES
OF
SUPER-
VISED
INVESTMENT
BANK
HOLDING
COMPA-
NIES.—The Commission shall defer to—
‘‘(A) the appropriate regulatory
agency with regard to all interpreta-
tions of, and the enforcement of, ap-
plicable banking laws relating to the
activities, conduct, ownership, and
operations of banks, and institutions
described in subparagraph (D), (F),
and (G) of section 2(c)(2), or held
under section 4(f), of the Bank Hold-
ing Company Act of 1956; and
‘‘(B) the appropriate State insur-
ance regulators with regard to all in-
terpretations of, and the enforcement
of, applicable State insurance laws re-
lating to the activities, conduct, and
operations of insurance companies
and insurance agents.
‘‘(6) DEFINITIONS.—For purposes of
this subsection and subsection (j):
705
‘‘(A) The term ‘investment bank
holding company’ means—
‘‘(i) any person other than a
natural person that owns or con-
trols one or more brokers or deal-
ers; and
‘‘(ii) the associated persons of
the investment bank holding com-
pany.
‘‘(B) The term ‘supervised invest-
ment bank holding company’ means
any investment bank holding com-
pany that is supervised by the Com-
mission pursuant to this subsection.
‘‘(C) The terms ‘affiliate’, ‘bank’,
‘bank holding company’, ‘company’,
‘control’, ‘savings association’, and
‘wholesale financial institution’ have
the meanings given to those terms in
section 2 of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1841).
‘‘(D) The term ‘insured bank’ has
the meaning given to that term in
section 3 of the Federal Deposit In-
surance Act.
706
‘‘(E) The term ‘foreign bank’ has
the meaning given to that term in
section 1(b)(7) of the International
Banking Act of 1978.
‘‘(F) The terms ‘person associated
with an investment bank holding
company’ and ‘associated person of
an investment bank holding company’
mean any person directly or indi-
rectly controlling, controlled by, or
under common control with, an in-
vestment bank holding company.
‘‘(j) COMMISSION BACKUP AUTHORITY.—
‘‘(1) 
AUTHORITY.—The 
Commission
may make inspections of any wholesale
financial holding company (as defined in
section 10A(a)(1) of the Bank Holding
Company Act of 1956) that—
‘‘(A) controls a wholesale financial
institution;
‘‘(B) is not a foreign bank; and
‘‘(C) does not control an insured
bank (other than an institution per-
mitted under subparagraph (D), (F),
or (G) of section 2(c)(2), or held under
707
section 4(f), of the Bank Holding Com-
pany Act of 1956) or a savings asso-
ciation,
and any affiliate of such company, for the
purpose of monitoring and enforcing
compliance by the wholesale financial
holding company with the Federal securi-
ties laws.
‘‘(2) 
LIMITATION.—The 
Commission
shall limit the focus and scope of any in-
spection under paragraph (1) to those
transactions, 
policies, 
procedures, 
or
records that are reasonably necessary to
monitor and enforce compliance by the
wholesale financial holding company or
any affiliate with the Federal securities
laws.
‘‘(3) DEFERENCE TO EXAMINATIONS.—To
the fullest extent possible, the Commis-
sion shall use, for the purposes of this
subsection, the reports of examinations—
‘‘(A) made by the Board of Gov-
ernors of the Federal Reserve System
of any wholesale financial holding
708
company that is supervised by the
Board;
‘‘(B) made of any licensed insur-
ance company by or on behalf of any
State regulatory agency responsible
for the supervision of an insurance
company; and
‘‘(C) made by any Federal or State
banking agency of any bank or insti-
tution described in subparagraph (D),
(F), or (G) of section 2(c)(2), or held
under section 4(f), of the Bank Hold-
ing Company Act of 1956.
‘‘(4) NOTICE.—To the fullest extent
possible, the Commission shall notify the
appropriate regulatory agency prior to
conducting an inspection of a wholesale
financial institution or institution de-
scribed in subparagraph (D), (F), or (G) of
section 2(c)(2), or held under section 4(f),
of the Bank Holding Company Act of
1956.
‘‘(k) AUTHORITY TO LIMIT DISCLOSURE OF
INFORMATION.—Notwithstanding 
any 
other
provision of law, the Commission shall not be
709
compelled to disclose any information re-
quired to be reported under subsection (h) or
(i) or any information supplied to the Com-
mission by any domestic or foreign regulatory
agency that relates to the financial or oper-
ational condition of any associated person of
a broker or dealer, investment bank holding
company, or any affiliate of an investment
bank holding company. Nothing in this sub-
section shall authorize the Commission to
withhold information from Congress, or pre-
vent the Commission from complying with a
request for information from any other Fed-
eral department or agency or any self-regu-
latory organization requesting the informa-
tion for purposes within the scope of its juris-
diction, or complying with an order of a court
of the United States in an action brought by
the United States or the Commission. For pur-
poses of section 552 of title 5, United States
Code, this subsection shall be considered a
statute described in subsection (b)(3)(B) of
such section 552. In prescribing regulations to
carry out the requirements of this subsection,
the Commission shall designate information
710
described in or obtained pursuant to subpara-
graphs (A), (B), and (C) of subsection (i)(5) as
confidential information for purposes of sec-
tion 24(b)(2) of this title.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 3(a)(34) of the Securities
Exchange 
Act 
of 
1934 
(15 
U.S.C.
78c(a)(34)) is amended by adding at the
end the following new subparagraph:
‘‘(H) When used with respect to an
institution 
described 
in 
subpara-
graph (D), (F), or (G) of section
2(c)(2), or held under section 4(f), of
the Bank Holding Company Act of
1956—
‘‘(i) the Comptroller of the
Currency, in the case of a na-
tional bank or a bank in the Dis-
trict of Columbia examined by the
Comptroller of the Currency;
‘‘(ii) the Board of Governors of
the Federal Reserve System, in
the case of a State member bank
of the Federal Reserve System or
any corporation chartered under
711
section 25A of the Federal Re-
serve Act;
‘‘(iii) the Federal Deposit In-
surance Corporation, in the case
of any other bank the deposits of
which are insured in accordance
with the Federal Deposit Insur-
ance Act; or
‘‘(iv) the Commission in the
case of all other such institu-
tions.’’.
(2) Section 1112(e) of the Right to Fi-
nancial Privacy Act of 1978 (12 U.S.C.
3412(e)) is amended—
(A) by striking ‘‘this title’’ and in-
serting ‘‘law’’; and
(B) by inserting ‘‘, examination re-
ports’’ after ‘‘financial records’’.
Subtitle D—Disclosure of Customer
Costs of Acquiring Financial
Products
SEC. 241. IMPROVED AND CONSISTENT DISCLOSURE.
(a) 
REVISED
REGULATIONS
REQUIRED.—
Within one year after the date of enactment
of this Act, each Federal financial regulatory
712
authority shall prescribe rules, or revisions to
its rules, to improve the accuracy, simplicity,
and completeness, and to make more con-
sistent, the disclosure of information by per-
sons subject to the jurisdiction of such regu-
latory authority concerning any commissions,
fees, or other costs incurred by customers in
the acquisition of financial products.
(b) CONSULTATION.—In prescribing rules
and revisions under subsection (a), the Fed-
eral financial regulatory authorities shall
consult with each other and with appropriate
State financial regulatory authorities.
(c) CONSIDERATION
OF
EXISTING
DISCLO-
SURES.—In prescribing rules and revisions
under subsection (a), the Federal financial
regulatory authorities shall consider the suffi-
ciency and appropriateness of then existing
laws and rules applicable to persons subject
to their jurisdiction, and may prescribe ex-
emptions from the rules and revisions re-
quired by subsection (a) to the extent appro-
priate in light of the objective of this section
to increase the consistency of disclosure prac-
tices.
713
(d) ENFORCEMENT.—Any rule prescribed
by a Federal financial regulatory authority
pursuant to this section shall, for purposes of
enforcement, be treated as a rule prescribed
by such regulatory authority pursuant to the
statute 
establishing 
such 
regulatory
authority’s jurisdiction over the persons to
whom such rule applies.
(e) DEFINITION.—As used in this section,
the term ‘‘Federal financial regulatory au-
thority’’ means the Board of Governors of the
Federal Reserve System, the Securities and
Exchange Commission, the Comptroller of the
Currency, the Federal Deposit Insurance Cor-
poration, the Commodity Futures Trading
Commission, and any self-regulatory organi-
zation under the supervision of any of the
foregoing.
TITLE III—INSURANCE
Subtitle A—State Regulation of
Insurance
SEC. 301. STATE REGULATION OF THE BUSINESS OF INSUR-
ANCE.
The Act entitled ‘‘An Act to express the in-
tent of the Congress with reference to the reg-
714
ulation of the business of insurance’’ and ap-
proved March 9, 1945 (15 U.S.C. 1011 et seq.),
commonly referred to as the ‘‘McCarran-Fer-
guson Act’’ remains the law of the United
States.
SEC. 302. MANDATORY INSURANCE LICENSING REQUIRE-
MENTS.
No person shall engage in the business of
insurance in a State as principal or agent un-
less such person is licensed as required by the
appropriate insurance regulator of such State
in accordance with the relevant State insur-
ance law, subject to section 104.
SEC. 303. FUNCTIONAL REGULATION OF INSURANCE.
The insurance activities of any person (in-
cluding a national bank exercising its power
to act as agent under the 11th undesignated
paragraph of section 13 of the Federal Re-
serve Act) shall be functionally regulated by
the States, subject to section 104.
SEC. 
304. 
INSURANCE 
UNDERWRITING 
IN 
NATIONAL
BANKS.
(a) IN GENERAL.—Except as provided in
section 305, a national bank and the subsidi-
aries of a national bank may not provide in-
715
surance in a State as principal except that
this prohibition shall not apply to authorized
products.
(b) AUTHORIZED PRODUCTS.—For the pur-
poses of this section, a product is authorized
if—
(1) as of January 1, 1999, the Comp-
troller of the Currency had determined in
writing that national banks may provide
such product as principal, or national
banks were in fact lawfully providing
such product as principal;
(2) no court of relevant jurisdiction
had, by final judgment, overturned a de-
termination of the Comptroller of the
Currency that national banks may pro-
vide such product as principal; and
(3) the product is not title insurance,
or an annuity contract the income of
which is subject to tax treatment under
section 72 of the Internal Revenue Code
of 1986.
(c) DEFINITION.—For purposes of this sec-
tion, the term ‘‘insurance’’ means—
716
(1) any product regulated as insur-
ance as of January 1, 1999, in accordance
with the relevant State insurance law, in
the State in which the product is pro-
vided;
(2) any product first offered after
January 1, 1999, which—
(A) a State insurance regulator
determines shall be regulated as in-
surance in the State in which the
product is provided because the prod-
uct insures, guarantees, or indem-
nifies against liability, loss of life, loss
of health, or loss through damage to
or destruction of property, including,
but not limited to, surety bonds, life
insurance, health insurance, title in-
surance, and property and casualty
insurance (such as private passenger
or 
commercial 
automobile, 
home-
owners, 
mortgage, 
commercial
multiperil, general liability, profes-
sional liability, workers’ compensa-
tion, fire and allied lines, farm own-
ers multiperil, aircraft, fidelity, sur-
717
ety, medical malpractice, ocean ma-
rine, inland marine, and boiler and
machinery insurance); and
(B) is not a product or service of
a bank that is—
(i) a deposit product;
(ii) a loan, discount, letter of
credit, or other extension of cred-
it;
(iii) a trust or other fiduciary
service;
(iv) a qualified financial con-
tract (as defined in or determined
pursuant to section 11(e)(8)(D)(i)
of the Federal Deposit Insurance
Act); or
(v) a financial guaranty, ex-
cept that this subparagraph (B)
shall not apply to a product that
includes an insurance component
such that if the product is offered
or proposed to be offered by the
bank as principal—
(I) it would be treated as a
life insurance contract under
718
section 7702 of the Internal
Revenue Code of 1986; or
(II) in the event that the
product is not a letter of cred-
it or other similar extension
of credit, a qualified financial
contract, or a financial guar-
anty, it would qualify for
treatment for losses incurred
with respect to such product
under section 832(b)(5) of the
Internal 
Revenue 
Code 
of
1986, if the bank were subject
to tax as an insurance com-
pany under section 831 of that
Code; or
(3) any annuity contract, the income
on which is subject to tax treatment
under section 72 of the Internal Revenue
Code of 1986.
SEC. 305. TITLE INSURANCE ACTIVITIES OF NATIONAL
BANKS AND THEIR AFFILIATES.
(a) GENERAL
PROHIBITION.—No national
bank, and no subsidiary of a national bank,
719
may engage in any activity involving the un-
derwriting or sale of title insurance.
(b) 
NONDISCRIMINATION
PARITY
EXCEP-
TION.—
(1) IN GENERAL.—Notwithstanding any
other provision of law (including section
104 of this Act), in the case of any State
in which banks organized under the laws
of such State are authorized to sell title
insurance as agency, a national bank and
a subsidiary of a national bank may sell
title insurance as agent in such State, but
only in the same manner, to the same ex-
tent, and under the same restrictions as
such State banks are authorized to sell
title insurance as agent in such State.
(2) COORDINATION
WITH
‘‘WILDCARD’’
PROVISION.—A State law which authorizes
State banks to engage in any activities in
such State in which a national bank may
engage shall not be treated as a statute
which authorizes State banks to sell title
insurance as agent, for purposes of para-
graph (1).
720
(c) 
GRANDFATHERING
WITH
CONSISTENT
REGULATION.—
(1) IN GENERAL.—Except as provided
in paragraphs (2) and (3) and notwith-
standing subsections (a) and (b), a na-
tional bank, and a subsidiary of a na-
tional bank, may conduct title insurance
activities which such national bank or
subsidiary was actively and lawfully con-
ducting before the date of the enactment
of this Act.
(2) INSURANCE AFFILIATE.—In the case
of a national bank which has an affiliate
which provides insurance as principal
and is not a subsidiary of the bank, the
national bank and any subsidiary of the
national bank may not engage in the un-
derwriting of title insurance pursuant to
paragraph (1).
(3) 
INSURANCE
SUBSIDIARY.—In 
the
case of a national bank which has a sub-
sidiary which provides insurance as prin-
cipal and has no affiliate other than a
subsidiary which provides insurance as
principal, the national bank may not di-
721
rectly engage in any activity involving
the underwriting of title insurance.
(d) ‘‘AFFILIATE’’ 
AND
‘‘SUBSIDIARY’’ DE-
FINED.—For purposes of this section, the
terms ‘‘affiliate’’ and ‘‘subsidiary’’ have the
same meanings as in section 2 of the Bank
Holding Company Act of 1956.
SEC. 306. EXPEDITED AND EQUALIZED DISPUTE RESOLU-
TION FOR FEDERAL REGULATORS.
(a) FILING IN COURT OF APPEALS.—In the
case of a regulatory conflict between a State
insurance regulator and a Federal regulator
as to whether any product is or is not insur-
ance, as defined in section 304(c) of this Act,
or whether a State statute, regulation, order,
or interpretation regarding any insurance
sales or solicitation activity is properly treat-
ed as preempted under Federal law, either
regulator may seek expedited judicial review
of such determination by the United States
Court of Appeals for the circuit in which the
State is located or in the United States Court
of Appeals for the District of Columbia Circuit
by filing a petition for review in such court.
722
(b) EXPEDITED REVIEW.—The United States
Court of Appeals in which a petition for re-
view is filed in accordance with subsection (a)
shall complete all action on such petition, in-
cluding rendering a judgment, before the end
of the 60-day period beginning on the date on
which such petition is filed, unless all parties
to such proceeding agree to any extension of
such period.
(c) SUPREME COURT REVIEW.—Any request
for certiorari to the Supreme Court of the
United States of any judgment of a United
States Court of Appeals with respect to a peti-
tion for review under this section shall be
filed with the Supreme Court of the United
States as soon as practicable after such judg-
ment is issued.
(d) STATUTE
OF LIMITATION.—No petition
may be filed under this section challenging an
order, ruling, determination, or other action
of a Federal regulator or State insurance reg-
ulator after the later of—
(1) the end of the 12-month period be-
ginning on the date on which the first
public notice is made of such order, rul-
723
ing, determination or other action in its
final form; or
(2) the end of the 6-month period be-
ginning on the date on which such order,
ruling, determination, or other action
takes effect.
(e) STANDARD OF REVIEW.—The court shall
decide a petition filed under this section
based on its review on the merits of all ques-
tions presented under State and Federal law,
including the nature of the product or activ-
ity and the history and purpose of its regula-
tion under State and Federal law, without un-
equal deference.
(f) LIMITATION.—
(1) IN GENERAL.—Except as provided
in paragraph (2), subsection (e) shall not
apply to any petition involving the con-
sideration of any State statute, regula-
tion, order, interpretation, or other ac-
tion regarding insurance sales, solicita-
tion, or cross marketing activities de-
scribed in section 104(b)(2)(A) that was
adopted, issued, enacted, or taken before
January 1, 1999, but only to the extent
724
that such petition presents an issue with
regard to—
(A) impeding affiliations between
persons licensed to sell insurance and
insured depository institutions by re-
quiring that all shareholders of a li-
censee be licensed persons even if
such persons do not engage in any ac-
tivities that would otherwise require
licensure, or by imposing any similar
licensure requirement;
(B) limiting the volume or portion
of insurance sales made by an agent
on the basis of whether such sales are
made to customers of affiliates of the
agent; or
(C) requiring any office from
which insurance is sold, or any office
of an entity affiliated or otherwise as-
sociated with such insurance sales of-
fice, must be located in such State.
(2) EXCEPTIONS TO THE LIMITATION.—
(A) IN
GENERAL.—Paragraph (1)
shall not apply with respect to any
State statute, regulation, order, inter-
725
pretation, or other action described
in section 104(b)(2)(B).
(B) RESIDENT INSURANCE AGENT RE-
QUIREMENTS.—Subparagraph 
(C) 
of
paragraph (1) shall not apply with re-
spect to any resident insurance agent
requirement that applies equally to
all sellers of insurance in the State.
SEC. 307. CONSUMER PROTECTION REGULATIONS.
(a) REGULATIONS REQUIRED.—
(1) IN GENERAL.—The Federal banking
agencies shall prescribe and publish in
final form, before the end of the 1-year
period beginning on the date of the en-
actment of this Act, consumer protection
regulations (which the agencies jointly
determine to be appropriate) that—
(A) apply to retail sales practices,
solicitations, advertising, or offers of
any insurance product by any in-
sured depository institution or whole-
sale financial institution or any per-
son who is engaged in such activities
at an office of the institution or on
behalf of the institution; and
726
(B) are consistent with the re-
quirements of this Act and provide
such additional protections for con-
sumers to whom such sales, solicita-
tions, advertising, or offers are di-
rected as the agency determines to be
appropriate.
(2) APPLICABILITY
TO
SUBSIDIARIES.—
The regulations prescribed pursuant to
paragraph (1) shall extend such protec-
tions to any subsidiaries of an insured
depository institution or wholesale finan-
cial institution, as deemed appropriate by
the regulators referred to in paragraph
(3), where such extension is necessary to
ensure the consumer protections pro-
vided by this section.
(3) CONSULTATION AND JOINT REGULA-
TIONS.—The Federal banking agencies
shall consult with each other and pre-
scribe joint regulations pursuant to para-
graph (1), after consultation with the
State insurance regulators, as appro-
priate.
727
(b) SALES
PRACTICES.—The regulations
prescribed pursuant to subsection (a) shall in-
clude anticoercion rules applicable to the sale
of insurance products which prohibit an in-
sured depository institution or wholesale fi-
nancial institution from engaging in any prac-
tice that would lead a consumer to believe an
extension of credit, in violation of section
106(b) of the Bank Holding Company Act
Amendments of 1970, is conditional upon—
(1) the purchase of an insurance
product from the institution or any of its
affiliates or subsidiaries; or
(2) an agreement by the consumer not
to obtain, or a prohibition on the con-
sumer from obtaining, an insurance prod-
uct from an unaffiliated entity.
(c) DISCLOSURES
AND
ADVERTISING.—The
regulations prescribed pursuant to subsection
(a) shall include the following provisions re-
lating to disclosures and advertising in con-
nection with the initial purchase of an insur-
ance product:
(1) DISCLOSURES.—
728
(A) 
IN
GENERAL.—Requirements
that the following disclosures be
made orally and in writing before the
completion of the initial sale and, in
the case of clause (iv), at the time of
application for an extension of credit:
(i) UNINSURED STATUS.—As ap-
propriate, the product is not in-
sured by the Federal Deposit In-
surance Corporation, the United
States Government, or the in-
sured depository institution or
wholesale financial institution.
(ii) INVESTMENT
RISK.—In the
case of a variable annuity or
other insurance product which
involves an investment risk, that
there is an investment risk associ-
ated with the product, including
possible loss of value.
(iv) COERCION.—The approval
of an extension of credit may not
be conditioned on—
(I) the purchase of an in-
surance product from the in-
729
stitution in which the applica-
tion for credit is pending or
any of its affiliates or subsidi-
aries; or
(II) an agreement by the
consumer not to obtain, or a
prohibition on the consumer
from obtaining, an insurance
product from an unaffiliated
entity.
(B) MAKING
DISCLOSURE
READILY
UNDERSTANDABLE.—Regulations 
pre-
scribed under subparagraph (A) shall
encourage the use of disclosure that
is conspicuous, simple, direct, and
readily understandable, such as the
following:
(i) ‘‘NOT FDIC-INSURED’’.
(ii) ‘‘NOT GUARANTEED BY
THE BANK’’.
(iii) 
‘‘MAY 
GO 
DOWN 
IN
VALUE’’.
(iv) ‘‘NOT INSURED BY ANY
GOVERNMENT AGENCY’’.
730
(C) ADJUSTMENTS FOR ALTERNATIVE
METHODS
OF
PURCHASE.—In 
pre-
scribing the requirements under sub-
paragraphs (A) and (D), necessary ad-
justments shall be made for purchase
in person, by telephone, or by elec-
tronic media to provide for the most
appropriate and complete form of dis-
closure and acknowledgements.
(D) 
CONSUMER
ACKNOWLEDGE-
MENT.—A requirement that an insured
depository institution or wholesale fi-
nancial institution shall require any
person selling an insurance product
at any office of, or on behalf of, the
institution to obtain, at the time a
consumer receives the disclosures re-
quired under this paragraph or at the
time of the initial purchase by the
consumer of such product, an ac-
knowledgement by such consumer of
the receipt of the disclosure required
under this subsection with respect to
such product.
731
(2) PROHIBITION
ON
MISREPRESENTA-
TIONS.—A prohibition on any practice, or
any advertising, at any office of, or on be-
half of, the insured depository institution
or wholesale financial institution, or any
subsidiary thereof as appropriate, which
could mislead any person or otherwise
cause a reasonable person to reach an er-
roneous belief with respect to—
(A) the uninsured nature of any
insurance product sold, or offered for
sale, by the institution or any sub-
sidiary of the institution; or
(B) in the case of a variable annu-
ity or other insurance product that
involves an investment risk, the in-
vestment risk associated with any
such product.
(d) SEPARATION
OF
BANKING
AND
NON-
BANKING ACTIVITIES.—
(1) REGULATIONS REQUIRED.—The regu-
lations prescribed pursuant to subsection
(a) shall include such provisions as the
Federal banking agencies consider appro-
priate to ensure that the routine accept-
732
ance of deposits and the making of loans
is kept, to the extent practicable, phys-
ically segregated from insurance product
activity.
(2) REQUIREMENTS.—Regulations pre-
scribed pursuant to paragraph (1) shall
include the following requirements:
(A) SEPARATE SETTING.—A clear de-
lineation of the setting in which, and
the 
circumstances 
under 
which,
transactions 
involving 
insurance
products should be conducted in a lo-
cation physically segregated from an
area where retail deposits are rou-
tinely accepted or loans are made.
(B) REFERRALS.—Standards which
permit any person accepting deposits
from, or making loans to, the public
in an area where such transactions
are routinely conducted in an insured
depository institution or wholesale fi-
nancial institution to refer a cus-
tomer who seeks to purchase any in-
surance product to a qualified person
who sells such product, only if the
733
person making the referral receives
no more than a one-time nominal fee
of a fixed dollar amount for each re-
ferral that does not depend on wheth-
er the referral results in a trans-
action.
(C) QUALIFICATION
AND
LICENSING
REQUIREMENTS.—Standards 
prohib-
iting any insured depository institu-
tion or wholesale financial institution
from permitting any person to sell or
offer for sale any insurance product
in any part of any office of the insti-
tution, or on behalf of the institution,
unless such person is appropriately
qualified and licensed.
(e) DOMESTIC
VIOLENCE
DISCRIMINATION
PROHIBITION.—
(1) IN GENERAL.—In the case of an ap-
plicant for, or an insured under, any in-
surance product described in paragraph
(2), the status of the applicant or insured
as a victim of domestic violence, or as a
provider of services to victims of domes-
tic violence, shall not be considered as a
734
criterion in any decision with regard to
insurance underwriting, pricing, renewal,
or scope of coverage of insurance poli-
cies, or payment of insurance claims, ex-
cept as required or expressly permitted
under State law.
(2) SCOPE OF APPLICATION.—The prohi-
bition contained in paragraph (1) shall
apply to any insurance product which is
sold or offered for sale, as principal,
agent, or broker, by any insured deposi-
tory institution or wholesale financial in-
stitution or any person who is engaged in
such activities at an office of the institu-
tion or on behalf of the institution.
(3) SENSE OF THE CONGRESS.—It is the
sense of the Congress that, by the end of
the 30-month period beginning on the
date of the enactment of this Act, the
States should enact prohibitions against
discrimination with respect to insurance
products that are at least as strict as the
prohibitions contained in paragraph (1).
(4) DOMESTIC VIOLENCE DEFINED.—For
purposes of this subsection, the term ‘‘do-
735
mestic violence’’ means the occurrence of
1 or more of the following acts by a cur-
rent or former family member, household
member, intimate partner, or caretaker:
(A) Attempting to cause or caus-
ing or threatening another person
physical harm, severe emotional dis-
tress, psychological trauma, rape, or
sexual assault.
(B) Engaging in a course of con-
duct or repeatedly committing acts
toward another person, including fol-
lowing the person without proper au-
thority, 
under 
circumstances 
that
place the person in reasonable fear of
bodily injury or physical harm.
(C) Subjecting another person to
false imprisonment.
(D) Attempting to cause or cause
damage to property so as to intimi-
date or attempt to control the behav-
ior of another person.
(f) CONSUMER GRIEVANCE PROCESS.—The
Federal banking agencies shall jointly estab-
lish a consumer complaint mechanism, for re-
736
ceiving and expeditiously addressing con-
sumer complaints alleging a violation of regu-
lations issued under the section, which shall—
(1) establish a group within each reg-
ulatory agency to receive such com-
plaints;
(2) develop procedures for inves-
tigating such complaints;
(3) develop procedures for informing
consumers of rights they may have in
connection with such complaints; and
(4) develop procedures for addressing
concerns raised by such complaints, as
appropriate, including procedures for the
recovery of losses to the extent appro-
priate.
(g) EFFECT ON OTHER AUTHORITY.—
(1) IN GENERAL.—No provision of this
section shall be construed as granting,
limiting, or otherwise affecting—
(A) any authority of the Securities
and Exchange Commission, any self-
regulatory organization, the Munic-
ipal Securities Rulemaking Board, or
737
the Secretary of the Treasury under
any Federal securities law; or
(B) except as provided in para-
graph (2), any authority of any State
insurance 
commissioner 
or 
other
State authority under any State law.
(2) COORDINATION WITH STATE LAW.—
(A) IN
GENERAL.—Except as pro-
vided in subparagraph (B), regula-
tions prescribed by a Federal banking
agency under this section shall not
apply to retail sales, solicitations, ad-
vertising, or offers of any insurance
product by any insured depository in-
stitution or wholesale financial insti-
tution or to any person who is en-
gaged in such activities at an office of
such institution or on behalf of the
institution, in a State where the State
has in effect statutes, regulations, or-
ders, or interpretations, that are in-
consistent with or contrary to the
regulations prescribed by the Federal
banking agencies.
738
(B) PREEMPTION.—If, with respect
to any provision of the regulations
prescribed under this section, the
Board of Governors of the Federal
Reserve System, the Comptroller of
the Currency, and the Board of Direc-
tors of the Federal Deposit Insurance
Corporation determine jointly that
the protection afforded by such provi-
sion for consumers is greater than
the protection provided by a com-
parable provision of the statutes, reg-
ulations, orders, or interpretations
referred to in subparagraph (A) of
any State, such provision of the regu-
lations prescribed under this section
shall supersede the comparable provi-
sion of such State statute, regulation,
order, or interpretation.
(h) DEFINITIONS.—For purposes of this sec-
tion, the following definitions shall apply:
(1) 
APPROPRIATE
FEDERAL
BANKING
AGENCY; 
INSURED
DEPOSITORY
INSTITU-
TION.—The terms ‘‘appropriate Federal
banking agency’’ and ‘‘insured depository
739
institution’’ have the same meanings as in
section 3 of the Federal Deposit Insur-
ance Act.
(2) INSURANCE
PRODUCT.—The term
‘‘insurance product’’ includes an annuity
contract the income of which is subject to
tax treatment under section 72 of the In-
ternal Revenue Code of 1986.
(3) 
WHOLESALE
FINANCIAL
INSTITU-
TION.—The term ‘‘wholesale financial in-
stitution’’ means a wholesale financial in-
stitution subject to section 9B of the Fed-
eral Reserve Act.
SEC. 308. CERTAIN STATE AFFILIATION LAWS PREEMPTED
FOR INSURANCE COMPANIES AND AFFILI-
ATES.
Except as provided in section 104(a)(2), no
State may, by law, regulation, order, interpre-
tation, or otherwise—
(1) prevent or significantly interfere
with the ability of any insurer, or any af-
filiate of an insurer (whether such affil-
iate is organized as a stock company, mu-
tual holding company, or otherwise), to
become a financial holding company or to
740
acquire control of an insured depository
institution;
(2) limit the amount of an insurer’s
assets that may be invested in the voting
securities of an insured depository insti-
tution (or any company which controls
such institution), except that the laws of
an insurer’s State of domicile may limit
the amount of such investment to an
amount that is not less than 5 percent of
the insurer’s admitted assets; or
(3) prevent, significantly interfere
with, or have the authority to review, ap-
prove, or disapprove a plan of reorga-
nization by which an insurer proposes to
reorganize from mutual form to become a
stock insurer (whether as a direct or in-
direct subsidiary of a mutual holding
company or otherwise) unless such State
is the State of domicile of the insurer.
SEC. 309. INTERAGENCY CONSULTATION.
(a) PURPOSE.—It is the intention of Con-
gress that the Board of Governors of the Fed-
eral Reserve System, as the umbrella super-
visor for financial holding companies, and the
741
State insurance regulators, as the functional
regulators of companies engaged in insurance
activities, coordinate efforts to supervise com-
panies that control both a depository institu-
tion and a company engaged in insurance ac-
tivities regulated under State law. In par-
ticular, Congress believes that the Board and
the State insurance regulators should share,
on a confidential basis, information relevant
to the supervision of companies that control
both a depository institution and a company
engaged in insurance activities, including in-
formation regarding the financial health of
the consolidated organization and informa-
tion regarding transactions and relationships
between insurance companies and affiliated
depository institutions. The appropriate Fed-
eral banking agencies for depository institu-
tions should also share, on a confidential
basis, information with the relevant State in-
surance regulators regarding transactions
and relationships between depository institu-
tions and affiliated companies engaged in in-
surance activities. The purpose of this section
is to encourage this coordination and con-
742
fidential sharing of information, and to there-
by improve both the efficiency and the quality
of the supervision of financial holding compa-
nies and their affiliated depository institu-
tions and companies engaged in insurance ac-
tivities.
(b) EXAMINATION RESULTS AND OTHER IN-
FORMATION.—
(1) INFORMATION OF THE BOARD.—Upon
the request of the appropriate insurance
regulator of any State, the Board may
provide any information of the Board re-
garding the financial condition, risk man-
agement policies, and operations of any
financial holding company that controls a
company that is engaged in insurance ac-
tivities and is regulated by such State in-
surance regulator, and regarding any
transaction or relationship between such
an insurance company and any affiliated
depository institution. The Board may
provide any other information to the ap-
propriate State insurance regulator that
the Board believes is necessary or appro-
priate to permit the State insurance regu-
743
lator to administer and enforce applica-
ble State insurance laws.
(2) BANKING
AGENCY
INFORMATION.—
Upon the request of the appropriate in-
surance regulator of any State, the appro-
priate Federal banking agency may pro-
vide any information of the agency re-
garding any transaction or relationship
between a depository institution super-
vised by such Federal banking agency
and any affiliated company that is en-
gaged in insurance activities regulated
by such State insurance regulator. The
appropriate Federal banking agency may
provide any other information to the ap-
propriate State insurance regulator that
the agency believes is necessary or ap-
propriate to permit the State insurance
regulator to administer and enforce ap-
plicable State insurance laws.
(3) STATE
INSURANCE
REGULATOR
IN-
FORMATION.—Upon the request of the
Board or the appropriate Federal bank-
ing agency, a State insurance regulator
may provide any examination or other re-
744
ports, records, or other information to
which such insurance regulator may
have access with respect to a company
which—
(A) is engaged in insurance activi-
ties and regulated by such insurance
regulator; and
(B) is an affiliate of an insured de-
pository institution, wholesale finan-
cial institution, or financial holding
company.
(c) CONSULTATION.—Before making any de-
termination relating to the initial affiliation
of, or the continuing affiliation of, an insured
depository institution, wholesale financial in-
stitution, or financial holding company with
a company engaged in insurance activities,
the appropriate Federal banking agency shall
consult with the appropriate State insurance
regulator of such company and take the views
of such insurance regulator into account in
making such determination.
(d) EFFECT ON OTHER AUTHORITY.—Nothing
in this section shall limit in any respect the
authority of the appropriate Federal banking
745
agency with respect to an insured depository
institution, wholesale financial institution, or
bank holding company or any affiliate thereof
under any provision of law.
(e) CONFIDENTIALITY AND PRIVILEGE.—
(1) 
CONFIDENTIALITY.—The 
appro-
priate Federal banking agency shall not
provide any information or material that
is 
entitled 
to 
confidential 
treatment
under applicable Federal banking agency
regulations, or other applicable law, to a
State insurance regulator unless such
regulator agrees to maintain the informa-
tion or material in confidence and to take
all reasonable steps to oppose any effort
to secure disclosure of the information or
material by the regulator. The appro-
priate Federal banking agency shall treat
as confidential any information or mate-
rial obtained from a State insurance reg-
ulator that is entitled to confidential
treatment under applicable State regula-
tions, or other applicable law, and take
all reasonable steps to oppose any effort
746
to secure disclosure of the information or
material by the Federal banking agency.
(2) PRIVILEGE.—The provision pursu-
ant to this section of information or ma-
terial by a Federal banking agency or
State insurance regulator shall not con-
stitute a waiver of, or otherwise affect,
any privilege to which the information or
material is otherwise subject.
(f) DEFINITIONS.—For purposes of this sec-
tion, the following definitions shall apply:
(1) 
APPROPRIATE
FEDERAL
BANKING
AGENCY; 
INSURED
DEPOSITORY
INSTITU-
TION.—The terms ‘‘appropriate Federal
banking agency’’ and ‘‘insured depository
institution’’ have the same meanings as in
section 3 of the Federal Deposit Insur-
ance Act.
(2) BOARD; FINANCIAL
HOLDING
COM-
PANY; AND
WHOLESALE
FINANCIAL
INSTITU-
TION.—The 
terms 
‘‘Board’’, 
‘‘financial
holding company’’, and ‘‘wholesale finan-
cial institution’’ have the same meanings
as in section 2 of the Bank Holding Com-
pany Act of 1956.
747
SEC. 310. DEFINITION OF STATE.
For purposes of this subtitle, the term
‘‘State’’ means any State of the United States,
the District of Columbia, any territory of the
United States, Puerto Rico, Guam, American
Samoa, the Trust Territory of the Pacific Is-
lands, the Virgin Islands, and the Northern
Mariana Islands.
Subtitle B—Redomestication of
Mutual Insurers
SEC. 311. GENERAL APPLICATION.
This subtitle shall only apply to a mutual
insurance company in a State which has not
enacted a law which expressly establishes
reasonable terms and conditions for a mutual
insurance company domiciled in such State to
reorganize into a mutual holding company.
SEC. 312. REDOMESTICATION OF MUTUAL INSURERS.
(a) REDOMESTICATION.—A mutual insurer
organized under the laws of any State may
transfer its domicile to a transferee domicile
as a step in a reorganization in which, pursu-
ant to the laws of the transferee domicile and
consistent with the standards in subsection
(f), the mutual insurer becomes a stock in-
748
surer that is a direct or indirect subsidiary of
a mutual holding company.
(b) 
RESULTING
DOMICILE.—Upon 
com-
plying with the applicable law of the trans-
feree domicile governing transfers of domicile
and completion of a transfer pursuant to this
section, the mutual insurer shall cease to be
a domestic insurer in the transferor domicile
and, as a continuation of its corporate exist-
ence, shall be a domestic insurer of the trans-
feree domicile.
(c) LICENSES PRESERVED.—The certificate
of authority, agents’ appointments and li-
censes, rates, approvals and other items that
a licensed State allows and that are in exist-
ence immediately prior to the date that a re-
domesticating insurer transfers its domicile
pursuant to this subtitle shall continue in full
force and effect upon transfer, if the insurer
remains duly qualified to transact the busi-
ness of insurance in such licensed State.
(d) EFFECTIVENESS OF OUTSTANDING POLI-
CIES AND CONTRACTS.—
(1) IN
GENERAL.—All outstanding in-
surance policies and annuities contracts