106
itoring and controlling those risks;
and
‘‘(iii) monitor compliance with the
provisions of this Act and those governing
transactions and relationships between any
depository institution controlled by the
wholesale financial holding company and
any of the company’s other subsidiaries.
‘‘(B) RESTRICTED
FOCUS
OF
EXAMINA-
TIONS.—The Board shall, to the fullest extent
possible, limit the focus and scope of any exam-
ination of a wholesale financial holding com-
pany under this paragraph to—
‘‘(i) the holding company; and
‘‘(ii) any subsidiary (other than an in-
sured depository institution subsidiary) of
the holding company that, because of the
size, condition, or activities of the subsidi-
ary, the nature or size of transactions be-
tween such subsidiary and any affiliated
depository institution, or the centralization
of functions within the holding company
system, could have a materially adverse ef-
fect on the safety and soundness of any de-
108
‘‘(E) CONFIDENTIALITY OF REPORTED IN-
FORMATION.—
‘‘(i) IN
GENERAL.—Notwithstanding
any other provision of law, the Board shall
not be compelled to disclose any nonpublic
information required to be reported under
this paragraph, or any information sup-
plied to the Board by any domestic or for-
eign regulatory agency, that relates to the
financial or operational condition of any
wholesale financial holding company or any
subsidiary of such company.
‘‘(ii) COMPLIANCE
WITH
REQUESTS
FOR INFORMATION.—No provision of this
subparagraph shall be construed as author-
izing the Board to withhold information
from the Congress, or preventing the
Board from complying with a request for
information from any other Federal de-
partment or agency for purposes within the
scope of such department’s or agency’s ju-
risdiction, or from complying with any
order of a court of competent jurisdiction
in an action brought by the United States
or the Board.
109
‘‘(iii) COORDINATION
WITH
OTHER
LAW.—For purposes of section 552 of title
5, United States Code, this subparagraph
shall be considered to be a statute de-
scribed in subsection (b)(3)(B) of such sec-
tion.
‘‘(iv) DESIGNATION OF CONFIDENTIAL
INFORMATION.—In prescribing regulations
to carry out the requirements of this sub-
section, the Board shall designate informa-
tion described in or obtained pursuant to
this paragraph as confidential information.
‘‘(F) COSTS.—The cost of any examination
conducted by the Board under this section may
be assessed against, and made payable by, the
wholesale financial holding company.
‘‘(4) CAPITAL ADEQUACY GUIDELINES.—
‘‘(A) CAPITAL
ADEQUACY
PROVISIONS.—
Subject to the requirements of, and solely in ac-
cordance with, the terms of this paragraph, the
Board may adopt capital adequacy rules or
guidelines for wholesale financial holding com-
panies.
110
‘‘(B) METHOD OF CALCULATION.—In de-
veloping rules or guidelines under this para-
graph, the following provisions shall apply:
‘‘(i) FOCUS ON DOUBLE LEVERAGE.—
The Board shall focus on the use by whole-
sale financial holding companies of debt
and other liabilities to fund capital invest-
ments in subsidiaries.
‘‘(ii) 
NO
UNWEIGHTED
CAPITAL
RATIO.—The Board shall not, by regula-
tion, guideline, order, or otherwise, impose
under this section a capital ratio that is
not based on appropriate risk-weighting
considerations.
‘‘(iii) NO CAPITAL REQUIREMENT ON
REGULATED
ENTITIES.—The Board shall
not, by regulation, guideline, order or oth-
erwise, prescribe or impose any capital or
capital adequacy rules, standards, guide-
lines, or requirements upon any subsidiary
that—
‘‘(I) is not a depository institu-
tion; and
‘‘(II) is in compliance with appli-
cable capital requirements of another
111
Federal regulatory authority (includ-
ing the Securities and Exchange Com-
mission) or State insurance authority.
‘‘(iv) CERTAIN
SUBSIDIARIES.—The
Board shall not, by regulation, guideline,
order or otherwise, prescribe or impose any
capital or capital adequacy rules, stand-
ards, guidelines, or requirements upon any
subsidiary that is not a depository institu-
tion and that is registered as an invest-
ment adviser under the Investment Advis-
ers Act of 1940, except that this clause
shall not be construed as preventing the
Board from imposing capital or capital
adequacy rules, guidelines, standards, or
requirements with respect to activities of a
registered investment adviser other than
investment advisory activities or activities
incidental to investment advisory activities.
‘‘(v) LIMITATIONS ON INDIRECT AC-
TION.—In developing, establishing, or as-
sessing holding company capital or capital
adequacy rules, guidelines, standards, or
requirements for purposes of this para-
graph, the Board shall not take into ac-
112
count the activities, operations, or invest-
ments of an affiliated investment company
registered under the Investment Company
Act of 1940, if the investment company is
not—
‘‘(I) a bank holding company; or
‘‘(II) controlled by a bank hold-
ing company by reason of ownership
by the bank holding company (includ-
ing through all of its affiliates) of 25
percent or more of the shares of the
investment company, where the shares
owned by the bank holding company
have a market value equal to more
than $1,000,000.
‘‘(vi) APPROPRIATE
EXCLUSIONS.—
The Board shall take full account of—
‘‘(I) the capital requirements
made applicable to any subsidiary that
is not a depository institution by an-
other Federal regulatory authority or
State insurance authority; and
‘‘(II) industry norms for capital-
ization of a company’s unregulated
subsidiaries and activities.
113
‘‘(vii) INTERNAL RISK MANAGEMENT
MODELS.—The Board may incorporate in-
ternal risk management models of whole-
sale financial holding companies into its
capital adequacy guidelines or rules and
may take account of the extent to which
resources of a subsidiary depository insti-
tution may be used to service the debt or
other liabilities of the wholesale financial
holding company.
‘‘(c) NONFINANCIAL
ACTIVITIES
AND
INVEST-
MENTS.—
‘‘(1) GRANDFATHERED ACTIVITIES.—
‘‘(A) IN GENERAL.—Notwithstanding sec-
tion 4(a), a company that becomes a wholesale
financial holding company may continue to en-
gage, directly or indirectly, in any activity and
may retain ownership and control of shares of
a company engaged in any activity if—
‘‘(i) on the date of the enactment of
the Financial Services Act of 1998, such
wholesale financial holding company was
lawfully engaged in that nonfinancial activ-
ity, held the shares of such company, or
had entered into a contract to acquire
120
ity of the Board under the International Banking
Act of 1978 with respect to the regulation, super-
vision, or examination of foreign banks and their of-
fices and affiliates in the United States.’’.
(b) UNINSURED STATE BANKS.—Section 9 of the
Federal Reserve Act (12 U.S.C. 321 et seq.) is amended
by adding at the end the following new paragraph:
‘‘(24) ENFORCEMENT AUTHORITY OVER UNIN-
SURED STATE MEMBER BANKS.—Section 3(u) of the
Federal Deposit Insurance Act, subsections (j) and
(k) of section 7 of such Act, and subsections (b)
through (n), (s), (u), and (v) of section 8 of such
Act shall apply to an uninsured State member bank
in the same manner and to the same extent such
provisions apply to an insured State member bank
and any reference in any such provision to ‘insured
depository institution’ shall be deemed to be a ref-
erence to ‘uninsured State member bank’ for pur-
poses of this paragraph.’’.
SEC. 132. AUTHORIZATION TO RELEASE REPORTS.
(a) FEDERAL RESERVE ACT.—The last sentence of
the eighth undesignated paragraph of section 9 of the
Federal Reserve Act (12 U.S.C. 326) is amended to read
as follows: ‘‘The Board of Governors of the Federal Re-
serve System, at its discretion, may furnish reports of ex-