287
(4) No State shall implement the procedures of
such State’s system of licensing or renewing the li-
censes of insurance producers in a manner different
from the authority of the Association under section
325.
(b) SAVINGS PROVISION.—Except as provided in sub-
section (a), no provision of this section shall be construed
as altering or affecting the continuing effectiveness of any
law, regulation, provision, or action of any State which
purports to regulate insurance producers, including any
such law, regulation, provision, or action which purports
to regulate unfair trade practices or establish consumer
protections, including, but not limited to, countersignature
laws.
SEC. 334. COORDINATION WITH OTHER REGULATORS.
(a) COORDINATION WITH STATE INSURANCE REGU-
LATORS.—The Association shall have the authority to—
(1) issue uniform insurance producer applica-
tions and renewal applications that may be used to
apply for the issuance or removal of State licenses,
while preserving the ability of each State to impose
such conditions on the issuance or renewal of a li-
cense as are consistent with section 333;
(2) establish a central clearinghouse through
which members of the Association may apply for the
288
issuance or renewal of licenses in multiple States;
and
(3) establish or utilize a national database for
the collection of regulatory information concerning
the activities of insurance producers.
(b) COORDINATION WITH THE NATIONAL ASSOCIA-
TION OF SECURITIES DEALERS.—The Association shall
coordinate with the National Association of Securities
Dealers in order to ease any administrative burdens that
fall on persons that are members of both associations, con-
sistent with the purposes of this subtitle and the Federal
securities laws.
SEC. 335. JUDICIAL REVIEW.
(a) JURISDICTION.—The appropriate United States
district court shall have exclusive jurisdiction over litiga-
tion involving the Association, including disputes between
the Association and its members that arise under this sub-
title. Suits brought in State court involving the Associa-
tion shall be deemed to have arisen under Federal law and
therefore be subject to jurisdiction in the appropriate
United States district court.
(b) EXHAUSTION OF REMEDIES.—An aggrieved per-
son must exhaust all available administrative remedies be-
fore the Association and the NAIC before it may seek judi-
cial review of an Association decision.
289
(c) STANDARDS
OF REVIEW.—The standards set
forth in section 553 of title 5, United States Code, shall
be applied whenever a rule or bylaw of the Association is
under judicial review, and the standards set forth in sec-
tion 554 of title 5, United States Code, shall be applied
whenever a disciplinary action of the Association is judi-
cially reviewed.
SEC. 336. DEFINITIONS.
For purposes of this subtitle, the following definitions
shall apply:
(1) INSURANCE.—The term ‘‘insurance’’ means
any product defined or regulated as insurance by the
appropriate State insurance regulatory authority.
(2) INSURANCE PRODUCER.—The term ‘‘insur-
ance
producer’’
means
any
insurance
agent
or
broker, surplus lines broker, insurance consultant,
limited insurance representative, and any other per-
son that solicits, negotiates, effects, procures, deliv-
ers, renews, continues or binds policies of insurance
or offers advice, counsel, opinions or services related
to insurance.
(3) STATE
LAW.—The term ‘‘State law’’ in-
cludes all laws, decisions, rules, regulations, or other
State action having the effect of law, of any State.
A law of the United States applicable only to the
290
District of Columbia shall be treated as a State law
rather than a law of the United States.
(4) STATE.—The term ‘‘State’’ includes any
State, the District of Columbia, American Samoa,
Guam, Puerto Rico, and the United States Virgin
Islands.
(5) HOME
STATE.—The term ‘‘home State’’
means the State in which the insurance producer
maintains its principal place of residence and is li-
censed to act as an insurance producer.
TITLE
IV—UNITARY
SAVINGS
AND LOAN HOLDING COMPA-
NIES
SEC. 401. TERMINATION OF EXPANDED POWERS FOR NEW
UNITARY S&L HOLDING COMPANIES.
(a) IN GENERAL.—Section 10(c) of the Home Own-
ers’ Loan Act (12 U.S.C. 1467a(c)) is amended by adding
at the end the following new paragraph:
‘‘(9) TERMINATION OF EXPANDED POWERS FOR
NEW UNITARY S&L HOLDING COMPANY.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), paragraph (3) shall not apply with
respect to any company that becomes a savings
and loan holding company pursuant to an appli-
cation filed after March 31, 1998.
291
‘‘(B) EXISTING
UNITARY
S&L
HOLDING
COMPANIES
AND
THE
SUCCESSORS
TO
SUCH
COMPANIES.—Subparagraph
(A)
shall
not
apply, and paragraph (3) shall continue to
apply, to a company (or any subsidiary of such
company) that—
‘‘(i) either—
‘‘(I) acquired 1 or more savings
associations described in paragraph
(3) pursuant to applications at least 1
of which was filed before April 1,
1998; or
‘‘(II) became a savings and loan
holding company by acquiring owner-
ship or control of the company de-
scribed in subclause (I); and
‘‘(ii) continues to control the savings
associations referred to in clause (i)(I) or
the successor to any such savings associa-
tion.’’.
(b) TECHNICAL AND CONFORMING AMENDMENT.—
Section 10(c)(3) of the Home Owners’ Loan Act (12
U.S.C. 1467a(c)(3)) is amended by striking ‘‘Notwith-
standing’’ and inserting ‘‘Except as provided in paragraph
(9) and notwithstanding’’.
292
SEC. 402. RETENTION OF ‘‘FEDERAL’’ IN NAME OF CON-
VERTED FEDERAL SAVINGS ASSOCIATION.
Section 2 of the Act entitled ‘‘An Act to enable na-
tional banking associations to increase their capital stock
and to change their names or locations.’’ and approved
May 1, 1886 (12 U.S.C. 30) is amended by adding at the
end the following new subsection:
‘‘(d) RETENTION OF ‘FEDERAL’ IN NAME OF CON-
VERTED FEDERAL SAVINGS ASSOCIATION.—
‘‘(1) IN GENERAL.—Notwithstanding subsection
(a) or any other provision of law, any depository in-
stitution the charter of which is converted from that
of a Federal savings association to a national bank
or a State bank after the date of the enactment of
the Financial Services Act of 1998 may retain the
term ‘Federal’ in the name of such institution so
long as such depository institution remains an in-
sured depository institution.
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘depository institution’, ‘insured
depository institution’, ‘national bank’, and ‘State
bank’ have the same meanings given to such terms
in section 3 of the Federal Deposit Insurance Act.’’.
293
SECTION 1. SHORT TITLE; PURPOSES; TABLE OF CON-
TENTS.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Fi-
nancial Services Act of 1998’’.
(b) PURPOSES.—The purposes of this Act are as fol-
lows:
(1) To enhance competition in the financial serv-
ices industry, in order to foster innovation and effi-
ciency.
(2) To ensure the continued safety and soundness
of depository institutions.
(3) To provide necessary and appropriate protec-
tions for investors and ensure fair and honest markets
in the delivery of financial services.
(4) To avoid duplicative, potentially conflicting,
and overly burdensome regulatory requirements
through the creation of a regulatory framework for fi-
nancial holding companies that respects the divergent
requirements of each of the component businesses of
the holding company, and that is based upon prin-
ciples of strong functional regulation and enhanced
regulatory coordination.
(5) To reduce and, to the maximum extent prac-
ticable, to eliminate the legal barriers preventing af-
filiation among depository institutions, securities
firms, insurance companies, and other financial serv-
294
ice providers and to provide a prudential framework
for achieving that result.
(6) To enhance the availability of financial serv-
ices to citizens of all economic circumstances and in
all geographic areas.
(7) To enhance the competitiveness of United
States financial service providers internationally.
(8) To ensure compliance by depository institu-
tions with the provisions of the Community Reinvest-
ment Act of 1977 and enhance the ability of deposi-
tory institutions to meet the capital and credit needs
of all citizens and communities, including under-
served communities and populations.
(c) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; purposes; table of contents.
TITLE I—FACILITATING AFFILIATION AMONG SECURITIES FIRMS,
INSURANCE COMPANIES, AND DEPOSITORY INSTITUTIONS
Subtitle A—Affiliations
Sec. 101. Glass-Steagall Act reformed.
Sec. 102. Activity restrictions applicable to bank holding companies which are
not financial holding companies.
Sec. 103. Financial holding companies.
Sec. 104. Operation of State law.
Sec. 105. Mutual bank holding companies authorized.
Sec. 106. Prohibition on deposit production offices.
Sec. 107. Clarification of branch closure requirements.
Sec. 108. Amendments relating to limited purpose banks.
Sec. 109. Reports on ongoing FTC study of consumer privacy issues.
Sec. 110. GAO study of economic impact on community banks and other small
financial institutions.
Subtitle B—Streamlining Supervision of Financial Holding Companies
Sec. 111. Streamlining financial holding company supervision.
295
Sec. 112. Elimination of application requirement for financial holding compa-
nies.
Sec. 113. Authority of State insurance regulator and Securities and Exchange
Commission.
Sec. 114. Prudential safeguards.
Sec. 115. Examination of investment companies.
Sec. 116. Limitation on rulemaking, prudential, supervisory, and enforcement
authority of the Board.
Sec. 117. Interagency consultation.
Sec. 118. Equivalent regulation and supervision.
Sec. 119. Prohibition on FDIC assistance to affiliates and subsidiaries.
Subtitle C—Subsidiaries of National Banks
Sec. 121. Permissible activities for subsidiaries of national banks.
Sec. 122. Misrepresentations regarding depository institution liability for obliga-
tions of affiliates.
Sec. 123. Repeal of stock loan limit in Federal Reserve Act.
Subtitle D—Wholesale Financial Holding Companies; Wholesale Financial
Institutions
CHAPTER 1—WHOLESALE FINANCIAL HOLDING COMPANIES
Sec. 131. Wholesale financial holding companies established.
Sec. 132. Authorization to release reports.
Sec. 133. Conforming amendments.
CHAPTER 2—WHOLESALE FINANCIAL INSTITUTIONS
Sec. 136. Wholesale financial institutions.
Subtitle E—Preservation of FTC Authority
Sec. 141. Amendment to the Bank Holding Company Act of 1956 to modify noti-
fication and post-approval waiting period for section 3 trans-
actions.
Sec. 142. Interagency data sharing.
Sec. 143. Clarification of status of subsidiaries and affiliates.
Sec. 144. Annual GAO report.
Subtitle F—Applying the Principles of National Treatment and Equality of
Competitive Opportunity to Foreign Banks and Foreign Financial Institutions
Sec. 151. Applying the principles of national treatment and equality of competi-
tive opportunity to foreign banks that are financial holding com-
panies.
Sec. 152. Applying the principles of national treatment and equality of competi-
tive opportunity to foreign banks and foreign financial institu-
tions that are wholesale financial institutions.
Sec. 153. Representative offices.
Subtitle G—Federal Home Loan Bank System Modernization
Sec. 161. Short title.
Sec. 162. Definitions.
Sec. 163. Savings association membership.
Sec. 164. Advances to members; collateral.
296
Sec. 165. Eligibility criteria.
Sec. 166. Management of banks.
Sec. 167. Resolution Funding Corporation.
Subtitle H—Direct Activities of Banks
Sec. 181. Authority of national banks to underwrite certain municipal bonds.
Subtitle I—Deposit Insurance Funds
Sec. 186. Study of safety and soundness of funds.
Subtitle J—Effective Date of Title
Sec. 191. Effective date.
TITLE II—FUNCTIONAL REGULATION
Subtitle A—Brokers and Dealers
Sec. 201. Definition of broker.
Sec. 202. Definition of dealer.
Sec. 203. Registration for sales of private securities offerings.
Sec. 204. Sales practices and complaint procedures.
Sec. 205. Information sharing.
Sec. 206. Definition and treatment of banking products.
Sec. 207. Derivative instrument and qualified investor defined.
Sec. 208. Government securities defined.
Sec. 209. Effective date.
Sec. 210. Rule of construction.
Subtitle B—Bank Investment Company Activities
Sec. 211. Custody of investment company assets by affiliated bank.
Sec. 212. Lending to an affiliated investment company.
Sec. 213. Independent directors.
Sec. 214. Additional SEC disclosure authority.
Sec. 215. Definition of broker under the Investment Company Act of 1940.
Sec. 216. Definition of dealer under the Investment Company Act of 1940.
Sec. 217. Removal of the exclusion from the definition of investment adviser for
banks that advise investment companies.
Sec. 218. Definition of broker under the Investment Advisers Act of 1940.
Sec. 219. Definition of dealer under the Investment Advisers Act of 1940.
Sec. 220. Interagency consultation.
Sec. 221. Treatment of bank common trust funds.
Sec. 222. Investment advisers prohibited from having controlling interest in reg-
istered investment company.
Sec. 223. Conforming change in definition.
Sec. 224. Conforming amendment.
Sec. 225. Effective date.
Subtitle C—Securities and Exchange Commission Supervision of Investment
Bank Holding Companies
Sec. 231. Supervision of investment bank holding companies by the Securities
and Exchange Commission.
297
Subtitle D—Studies
Sec. 241. Study of methods to inform investors and consumers of uninsured prod-
ucts.
Sec. 242. Study of limitation on fees associated with acquiring financial prod-
ucts.
TITLE III—INSURANCE
Subtitle A—State Regulation of Insurance
Sec. 301. State regulation of the business of insurance.
Sec. 302. Mandatory insurance licensing requirements.
Sec. 303. Functional regulation of insurance.
Sec. 304. Insurance underwriting in national banks.
Sec. 305. Title insurance activities of national banks and their affiliates.
Sec. 306. Expedited and equalized dispute resolution for financial regulators.
Sec. 307. Consumer protection regulations.
Sec. 308. Certain State affiliation laws preempted for insurance companies and
affiliates.
Subtitle B—National Association of Registered Agents and Brokers
Sec. 321. State flexibility in multistate licensing reforms.
Sec. 322. National Association of Registered Agents and Brokers.
Sec. 323. Purpose.
Sec. 324. Relationship to the Federal Government.
Sec. 325. Membership.
Sec. 326. Board of Directors.
Sec. 327. Officers.
Sec. 328. Bylaws, rules, and disciplinary action.
Sec. 329. Assessments.
Sec. 330. Functions of the NAIC.
Sec. 331. Liability of the Association and the directors, officers, and employees
of the Association.
Sec. 332. Elimination of NAIC oversight.
Sec. 333. Relationship to State law.
Sec. 334. Coordination with other regulators.
Sec. 335. Judicial review.
Sec. 336. Definitions.
TITLE IV—UNITARY SAVINGS AND LOAN HOLDING COMPANIES
Sec. 401. Prevention of creation of new savings and loan holding companies with
commercial affiliates.
Sec. 402. Optional conversion of Federal savings associations to national banks.
Sec. 403. Retention of ‘‘Federal’’ in name of converted Federal savings associa-
tion.
TITLE V—FINANCIAL INFORMATION PRIVACY
Sec. 501. Financial information privacy.
Sec. 502. Report to Congress on financial privacy.
TITLE VI—MISCELLANEOUS
Sec. 601. Grand jury proceedings.
298
Sec. 602. Sense of the Committee on Banking, Housing, and Urban Affairs of the
Senate.
Sec. 603. Investments in Government sponsored enterprises.
Sec. 604. Repeal of savings bank provisions in the Bank Holding Company Act
of 1956.
TITLE I—FACILITATING AFFILI-
ATION 
AMONG 
SECURITIES
FIRMS, 
INSURANCE 
COMPA-
NIES, AND DEPOSITORY IN-
STITUTIONS
Subtitle A—Affiliations
SEC. 101. GLASS-STEAGALL ACT REFORMED.
(a) SECTION 20 REPEALED.—Section 20 (12 U.S.C.
377) of the Banking Act of 1933 (commonly referred to as
the ‘‘Glass-Steagall Act’’) is repealed.
(b) SECTION 32 REPEALED.—Section 32 (12 U.S.C.
78) of the Banking Act of 1933 is repealed.
SEC. 102. ACTIVITY RESTRICTIONS APPLICABLE TO BANK
HOLDING COMPANIES WHICH ARE NOT FI-
NANCIAL HOLDING COMPANIES.
(a) IN GENERAL.—Section 4(c)(8) of the Bank Hold-
ing Company Act of 1956 (12 U.S.C. 1843(c)(8)) is amend-
ed to read as follows:
‘‘(8) shares of any company the activities of
which had been determined by the Board by regula-
tion under this paragraph as of the day before the
date of the enactment of the Financial Services Act of
1998, to be so closely related to banking as to be a
324
(1) IN GENERAL.—Except as provided in para-
graph (2), no State may, by statute, regulation, order,
interpretation, or other action, prevent or restrict an
insured depository institution or wholesale financial
institution, or a subsidiary or affiliate thereof, from
being affiliated directly or indirectly or associated
with any person or entity, as authorized or permitted
by this Act or any other provision of Federal law.
(2) INSURANCE.—With respect to affiliations be-
tween insured depository institutions or wholesale fi-
nancial institutions, or any subsidiary or affiliate
thereof, and persons or entities engaged in the busi-
ness of insurance, paragraph (1) does not prohibit
any State from—
(A) requiring any person or entity that pro-
poses to acquire control of an entity that is en-
gaged in the business of insurance and domiciled
in that State (hereafter in this subparagraph re-
ferred to as the ‘‘insurer’’) to furnish to the in-
surance regulatory authority of that State, on or
before the date on which notification is given
under section 7(a) of the Clayton Act (15 U.S.C.
18(a))—
(i) the name and address of each per-
son by whom, or on whose behalf, the affili-