I
103D CONGRESS
2D SESSION
H. R. 4503
To enhance the supervision and regulation of derivatives activities of financial
institutions, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 26, 1994
Mr. GONZALEZ (for himself, Mr. LEACH, Mr. NEAL of North Carolina, Mr.
FRANK of Massachusetts, Mr. KANJORSKI, Mr. HINCHEY, and Mr. KEN-
NEDY) introduced the following bill; which was referred to the Committee
on Banking, Finance and Urban Affairs
A BILL
To enhance the supervision and regulation of derivatives
activities of financial institutions, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Derivatives Safety and Soundness Supervision Act of
1994’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
TITLE I—ENHANCED SUPERVISION OF DERIVATIVES ACTIVITIES
Sec. 101. Increased agency oversight of financial institution activities involving
derivative financial instruments.
Sec. 102. Disclosure of amounts, nature, and terms of derivative financial in-
struments in financial institution call reports.
Sec. 103. Inclusion of FDIC and OCC as principals in interagency task force.
Sec. 104. Training for examiners and assistant examiners.
Sec. 105. State liaisons.
TITLE II—SUPERVISORY IMPROVEMENTS
Sec. 201. Unsafe or unsound practices.
Sec. 202. Confidential emergency management reporting.
Sec. 203. Internal controls.
Sec. 204. Foreign bank supervision.
TITLE III—FINANCIAL INSTITUTION INSOLVENCY REFORMS
Sec. 301. Treatment of certain swap agreements by conservators or receivers of
insured depository institutions.
Sec. 302. Authority of the corporation with respect to failed and failing institu-
tions.
Sec. 303. Amendments relating to transfers of qualified financial contracts.
Sec. 304. Clarifying amendment relating to master agreements.
Sec. 305. Technical amendments relating to qualified financial contracts.
TITLE IV—INTERNATIONAL REGULATORY COOPERATION
Sec. 401. Study of international regulation and supervision of derivatives activi-
ties of financial institutions.
Sec. 402. International negotiations.
TITLE V—GAO STUDY
Sec. 501. Study of speculation and margin and collateral requirements with re-
spect to derivatives activities of financial institutions.
SEC. 2. DEFINITIONS.
For purposes of this Act the following definitions
shall apply:
(1) ACTIVE END-USER.—The term ‘‘active end-
user’’ means any financial institution which buys or
sells a significant amount (as defined by the appro-
priate Federal regulatory agencies) of derivative fi-
nancial instruments, or conducts transactions in a
wide variety of derivative financial instruments.
(2) APPROPRIATE
FEDERAL
BANKING
AGEN-
CY.—The term ‘‘appropriate Federal banking agen-
cy’’ has the same meaning as in section 3(q) of the
Federal Deposit Insurance Act.
(3) 
APPROPRIATE
FEDERAL
REGULATORY
AGENCY.—The term ‘‘appropriate Federal regulatory
agency’’ means—
(A) any appropriate Federal banking agen-
cy, in the case of any insured depository institu-
tion or other entity described in section 3(q) of
the Federal Deposit Insurance Act;
(B) the National Credit Union Administra-
tion, in the case of any insured credit union;
(C) the Office of Federal Housing Enter-
prise Oversight of the Department of Housing
and Urban Development, in the case of any fi-
nancial institution which is subject to the over-
sight of such office;
(D) the Federal Housing Finance Board,
in the case of any Federal home loan bank or
the Office of Finance of the Federal home loan
banks; and
(E) the Board of Governors of the Federal
Reserve System, in the case of any financial in-
stitution which is not described in subpara-
graph (A), (B), (C), or (D).
(4) DEPOSITORY INSTITUTION.—The term ‘‘de-
pository institution’’—
(A) has the same meaning as in section
3(c) of the Federal Deposit Insurance Act; and
(B) includes any Federal credit union and
any State credit union (as such terms are de-
fined in section 101 of the Federal Credit
Union Act).
(5) DERIVATIVES ACTIVITIES.—The term ‘‘de-
rivatives activities’’ means any activity in which a fi-
nancial institution is engaged as a dealer in deriva-
tive financial instruments or as an active end-user.
(6) DERIVATIVE
FINANCIAL
INSTRUMENT.—
The term ‘‘derivative financial instrument’’ means
any appropriate qualified financial contract (as de-
fined in section 11(e)(8)(D) of the Federal Deposit
Insurance Act).
(7) FINANCIAL
INSTITUTION.—The term ‘‘fi-
nancial institution’’—
(A) means—
(i) any depository institution;
(ii) any affiliate of any depository in-
stitution;