515
thereof, and make such reports, as the Com-
mission may require by rule, in order to
keep the Commission informed as to—
‘‘(I) the company’s or affiliate’s
activities, financial condition, policies,
systems for monitoring and controlling
financial and operational risks, and
transactions and relationships between
any broker or dealer affiliate of the su-
pervised investment bank holding com-
pany; and
‘‘(II) the extent to which the com-
pany 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 according to such specifica-
tions (including certification by an inde-
pendent public accountant), as the Commis-
sion may require and shall be provided
promptly at any time upon request by the
Commission. Such records and reports may
include—
516
‘‘(I) a balance sheet and income
statement;
‘‘(II) an assessment of the consoli-
dated capital of the supervised invest-
ment bank holding company;
‘‘(III) an independent auditor’s
report attesting to the supervised in-
vestment bank holding company’s com-
pliance with its internal risk manage-
ment and internal control objectives;
and
‘‘(IV) reports concerning the ex-
tent to which the company or affiliate
has complied with the provisions of
this title and any regulations pre-
scribed and orders issued under this
title.
‘‘(B) USE OF EXISTING REPORTS.—
‘‘(i) IN
GENERAL.—The Commission
shall, to the fullest extent possible, accept re-
ports in fulfillment of the requirements
under this paragraph that the supervised
investment bank holding company or its af-
filiates have been required to provide to an-
517
other appropriate regulatory agency or self-
regulatory organization.
‘‘(ii) AVAILABILITY.—A supervised in-
vestment bank holding company or an affil-
iate of such company shall provide to the
Commission, at the request of the Commis-
sion, any report referred to in clause (i).
‘‘(C) EXAMINATION AUTHORITY.—
‘‘(i) FOCUS OF EXAMINATION AUTHOR-
ITY.—The Commission may make examina-
tions of any supervised investment bank
holding company and any affiliate of such
company in order to—
‘‘(I) inform the Commission re-
garding—
‘‘(aa) the nature of the oper-
ations and financial condition of
the supervised investment bank
holding company and its affili-
ates;
‘‘(bb) the financial and oper-
ational risks within the super-
vised investment bank holding
company that may affect any
broker or dealer controlled by such
518
supervised investment bank hold-
ing company; and
‘‘(cc) the systems of the su-
pervised investment bank holding
company and its affiliates for
monitoring and controlling those
risks; and
‘‘(II) monitor compliance with the
provisions of this subsection, provisions
governing transactions and relation-
ships between any broker or dealer af-
filiated with the supervised investment
bank holding company and any of the
company’s other affiliates, and appli-
cable provisions of subchapter II of
chapter 53, title 31, United States
Code (commonly referred to as the
‘Bank Secrecy Act’) and regulations
thereunder.
‘‘(ii) RESTRICTED FOCUS OF EXAMINA-
TIONS.—The Commission shall limit the
focus and scope of any examination of a su-
pervised investment bank holding company
to—
‘‘(I) the company; and
519
‘‘(II) any affiliate of the company
that, because of its size, condition, or
activities, the nature or size of the
transactions between such affiliate and
any affiliated broker or dealer, or the
centralization of functions within the
holding company system, could, in the
discretion of the Commission, have a
materially adverse effect on the oper-
ational or financial condition of the
broker or dealer.
‘‘(iii) DEFERENCE TO OTHER EXAMI-
NATIONS.—For purposes of this subpara-
graph, the Commission shall, to the fullest
extent possible, use the reports of examina-
tion of 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 made by the appro-
priate regulatory agency, or of a licensed
insurance company made by the appro-
priate State insurance regulator.
‘‘(4) HOLDING COMPANY CAPITAL.—
‘‘(A) AUTHORITY.—If the Commission finds
that it is necessary to adequately supervise in-
520
vestment bank holding companies and their
broker or dealer affiliates consistent with the
purposes of this subsection, the Commission may
adopt capital adequacy rules for supervised in-
vestment bank holding companies.
‘‘(B) METHOD OF CALCULATION.—In devel-
oping rules under this paragraph:
‘‘(i) DOUBLE
LEVERAGE.—The Com-
mission shall consider the use by the super-
vised investment bank holding company of
debt and other liabilities to fund capital in-
vestments in affiliates.
‘‘(ii) 
NO
UNWEIGHTED
CAPITAL
RATIO.—The Commission shall not impose
under this section a capital ratio that is not
based on appropriate 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 ade-
quacy provision on a nonbanking affiliate
(other than a broker or dealer) that is in
compliance with applicable capital require-
521
ments of another Federal regulatory author-
ity or State insurance authority.
‘‘(iv) APPROPRIATE EXCLUSIONS.—The
Commission shall take full account of the
applicable capital requirements of another
Federal regulatory authority or State insur-
ance regulator.
‘‘(C) INTERNAL
RISK
MANAGEMENT
MOD-
ELS.—The Commission may incorporate inter-
nal risk management models into its capital ade-
quacy rules for supervised investment bank hold-
ing companies.
‘‘(5) FUNCTIONAL REGULATION OF BANKING AND
INSURANCE ACTIVITIES OF SUPERVISED INVESTMENT
BANK HOLDING COMPANIES.—The Commission shall
defer to—
‘‘(A) the appropriate regulatory agency
with regard to all interpretations of, and the en-
forcement of, applicable banking laws relating to
the activities, conduct, ownership, and oper-
ations 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
Holding Company Act of 1956; and
522
‘‘(B) the appropriate State insurance regu-
lators with regard to all interpretations of, and
the enforcement of, applicable State insurance
laws relating to the activities, conduct, and oper-
ations of insurance companies and insurance
agents.
‘‘(6) DEFINITIONS.—For purposes of this sub-
section and subsection (j)—
‘‘(A) the term ‘investment bank holding
company’ means—
‘‘(i) any person other than a natural
person that owns or controls one or more
brokers or dealers; and
‘‘(ii) the associated persons of the in-
vestment bank holding company;
‘‘(B) the term ‘supervised investment bank
holding company’ means any investment bank
holding company that is supervised by the Com-
mission pursuant to this subsection;
‘‘(C) the terms ‘affiliate’, ‘bank’, ‘bank hold-
ing company’, ‘company’, ‘control’, and ‘savings
association’ have the same meanings as in sec-
tion 2 of the Bank Holding Company Act of
1956;
523
‘‘(D) the term ‘insured bank’ has the same
meaning as in section 3 of the Federal Deposit
Insurance Act;
‘‘(E) the term ‘foreign bank’ has the same
meaning as in section 1(b)(7) of the Inter-
national Banking Act of 1978; and
‘‘(F) the terms ‘person associated with an
investment bank holding company’ and ‘associ-
ated person of an investment bank holding com-
pany’ mean any person directly or indirectly
controlling, controlled by, or under common con-
trol with, an investment bank holding company.
‘‘(j) COMMISSION BACKUP AUTHORITY.—
‘‘(1) AUTHORITY.—The Commission may make
inspections of any wholesale financial holding com-
pany that—
‘‘(A) controls a wholesale financial institu-
tion;
‘‘(B) is not a foreign bank; and
‘‘(C) does not control an insured bank
(other than an institution permitted under sub-
paragraph (D), (F), or (G) of section 2(c)(2), or
held under section 4(f), of the Bank Holding
Company Act of 1956) or a savings association,
524
and any affiliate of such company, for the purpose of
monitoring and enforcing compliance by the wholesale
financial holding company with the Federal securities
laws.
‘‘(2) LIMITATION.—The Commission shall limit
the focus and scope of any inspection under para-
graph (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 se-
curities laws.
‘‘(3) DEFERENCE
TO
EXAMINATIONS.—To the
fullest extent possible, the Commission shall use, for
the purposes of this subsection, the reports of exami-
nations—
‘‘(A) made by the Board of Governors of the
Federal Reserve System of any wholesale finan-
cial holding company that is supervised by the
Board;
‘‘(B) made by or on behalf of any State reg-
ulatory agency responsible for the supervision of
an insurance company of any licensed insurance
company; and
‘‘(C) made by any Federal or State banking
agency of any bank or institution described in
525
subparagraph (D), (F), or (G) of section 2(c)(2),
or held under section 4(f), of the Bank Holding
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 whole-
sale financial institution or institution described in
subparagraph (D), (F), or (G) of section 2(c)(2), or
held under section 4(f), of the Bank Holding Com-
pany Act of 1956.
‘‘(k) AUTHORITY TO LIMIT DISCLOSURE OF INFORMA-
TION.—Notwithstanding any other provision of law, the
Commission shall not be compelled to disclose any informa-
tion required to be reported under subsection (h) or (i) or
any information supplied to the Commission by any domes-
tic or foreign regulatory agency that relates to the financial
or operational 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 subsection shall authorize the Commission to with-
hold information from Congress, or prevent the Commission
from complying with a request for information from any
other Federal department or agency or any self-regulatory
organization requesting the information for purposes with-
in the scope of its jurisdiction, or complying with an order
526
of a court of the United States in an action brought by
the United States or the Commission. For purposes of sec-
tion 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 described in or obtained pursuant to
subparagraphs (A), (B), and (C) of subsection (i)(5) as con-
fidential information for purposes of section 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 subparagraphs:
‘‘(H) When used with respect to an institu-
tion described 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—
‘‘(i) the Comptroller of the Currency,
in the case of a national bank or a bank in
the District 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
527
System or any corporation chartered under
section 25A of the Federal Reserve Act;
‘‘(iii) the Federal Deposit Insurance
Corporation, in the case of any other bank
the deposits of which are insured in accord-
ance with the Federal Deposit Insurance
Act; or
‘‘(iv) the Commission in the case of all
other such institutions.’’.
(2) Section 1112(e) of the Right to Financial
Privacy Act of 1978 (12 U.S.C. 3412(e)) is amend-
ed—
(A) by striking ‘‘this title’’ and inserting
‘‘law’’; and
(B) by inserting ‘‘, examination reports’’
after ‘‘financial records’’.
Subtitle D—Studies
SEC. 241. STUDY OF METHODS TO INFORM INVESTORS AND
CONSUMERS OF UNINSURED PRODUCTS.
Not later than 1 year after the date of enactment of
this Act, the Comptroller General of the United States shall
submit a report to the Congress regarding the efficacy, costs,
and benefits of requiring that any depository institution
that accepts federally insured deposits and that, directly or
through a contractual or other arrangement with a broker,
528
dealer, or agent, buys from, sells to, or effects transactions
for retail investors in securities or consumers of insurance
to inform such investors and consumers through the use of
a logo or seal that the security or insurance is not insured
by the Federal Deposit Insurance Corporation.
SEC. 242. STUDY OF LIMITATION ON FEES ASSOCIATED
WITH ACQUIRING FINANCIAL PRODUCTS.
Not later than 1 year after the date of enactment of
this Act, the Comptroller General of the United States shall
submit a report to the Congress regarding the efficacy and
benefits of uniformly limiting any commissions, fees, mark-
ups, or other costs incurred by customers in the acquisition
of financial products.
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 intent of the
Congress with reference to the regulation of the business of
insurance’’ and approved March 9, 1945 (15 U.S.C. 1011
et seq.), commonly referred to as the ‘‘McCarran-Ferguson
Act’’) remains the law of the United States.
529
SEC. 302. MANDATORY INSURANCE LICENSING REQUIRE-
MENTS.
No person or entity shall provide insurance in a State
as principal or agent unless such person or entity is li-
censed as required by the appropriate insurance regulator
of such State in accordance with the relevant State insur-
ance law, subject to section 104 of this Act.
SEC. 303. FUNCTIONAL REGULATION OF INSURANCE.
The insurance sales activity of any person or entity
shall be functionally regulated by the States, subject to sec-
tion 104 of this Act.
SEC. 304. INSURANCE UNDERWRITING IN NATIONAL BANKS.
(a) IN GENERAL.—Except as provided in section 306,
a national bank and the subsidiaries of a national bank
may not provide insurance in a State as principal except
that this prohibition shall not apply to authorized products.
(b) AUTHORIZED PRODUCTS.—For the purposes of this
section, a product is authorized if—
(1) as of January 1, 1997, the Comptroller of the
Currency had determined in writing that national
banks may provide such product as principal, or na-
tional banks were in fact lawfully providing such
product as principal;
(2) no court of relevant jurisdiction had, by final
judgment, overturned a determination of the Comp-
530
troller of the Currency that national banks may pro-
vide such product as principal; and
(3) the product is not title insurance, or an an-
nuity 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 section, the
term ‘‘insurance’’ means—
(1) any product regulated as insurance as of
January 1, 1997, in accordance with the relevant
State insurance law, in the State in which the prod-
uct is provided;
(2) any product first offered after January 1,
1997, which—
(A) a State insurance regulator determines
shall be regulated as insurance in the State in
which the product is provided because the prod-
uct insures, guarantees, or indemnifies 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 insurance, and
property and casualty insurance (such as pri-
vate passenger or commercial automobile, home-
owners, mortgage, commercial multiperil, general
531
liability, professional liability, workers’ com-
pensation, fire and allied lines, farm owners
multiperil, aircraft, fidelity, surety, medical
malpractice, ocean marine, 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 credit;
(iii) a trust or other fiduciary service;
(iv) a qualified financial contract (as
defined in or determined pursuant to sec-
tion 11(e)(8)(D)(i) of the Federal Deposit
Insurance Act); or
(v) a financial guaranty, except that
this subparagraph (B) shall not apply to a
product that includes an insurance compo-
nent such that if the product is offered or
proposed to be offered by the bank as prin-
cipal—
(I) it would be treated as a life
insurance contract under section 7702
of the Internal Revenue Code of 1986;
or
532
(II) in the event that the product
is not a letter of credit or other similar
extension of credit, a qualified finan-
cial contract, or a financial guaranty,
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 insur-
ance company 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 In-
ternal Revenue Code of 1986.
SEC. 305. TITLE INSURANCE ACTIVITIES OF NATIONAL
BANKS AND THEIR AFFILIATES.
(a) AUTHORITY.—Notwithstanding any other provi-
sion of this Act or any other law, no national bank, and
no subsidiary of a national bank, may engage in any activ-
ity involving the underwriting of title insurance, other than
title insurance underwriting activities in which such na-
tional bank or subsidiary was actively and lawfully en-
gaged before the date of the enactment of this Act.
(b) INSURANCE AFFILIATE.—In the case of a national
bank which has an affiliate which provides insurance as