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(5) of section 3(a) of the Securities Exchange Act of
1934. Such recordkeeping requirements shall be suf-
ficient to demonstrate compliance with the terms of
such exceptions and be designed to facilitate compli-
ance with such exceptions. Each appropriate Federal
banking agency shall make any such information
available to the Commission upon request.
‘‘(2) DEFINITIONS.—As used in this subsection
the term ‘Commission’ means the Securities and Ex-
change Commission.’’.
SEC. 206. DEFINITION AND TREATMENT OF BANKING PROD-
UCTS.
(a) DEFINITION OF TRADITIONAL BANKING PROD-
UCT.—
(1) IN GENERAL.—For purposes of paragraphs
(4) and (5) of section 3(a) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)(4), (5)), the
term ‘traditional banking product’ means—
(A) a deposit account, savings account,
certificate of deposit, or other deposit instru-
ment issued by a bank;
(B) a banker’s acceptance;
(C) a letter of credit issued or loan made
by a bank;
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(D) a debit account at a bank arising from
a credit card or similar arrangement;
(E) a participation in a loan which the
bank or an affiliate of the bank (other than a
broker or dealer) funds, participates in, or owns
that is sold—
(i) to qualified investors; or
(ii) to other persons that—
‘‘(I) have the opportunity to re-
view and assess any material informa-
tion, including information regarding
the borrower’s creditworthiness; and
‘‘(II) based on such factors as fi-
nancial sophistication, net worth, and
knowledge and experience in financial
matters, have the capability to evalu-
ate the information available, as de-
termined under generally applicable
banking standards or guidelines; or
(F) any derivative instrument, whether or
not individually negotiated, involving or relating
to—
(i) foreign currencies, except options
on foreign currencies that trade on a na-
tional securities exchange;
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(ii) interest rates, except interest rate
derivative instruments: (I) that are based
on a security or a group or index of securi-
ties (other than government securities or a
group or index of government securities);
(II) that provide for the delivery of one or
more securities (other than government se-
curities); or (III) that trade on a national
securities exchange; or
(iii) commodities, other rates, indices,
or other assets, except derivative instru-
ments: (I) that are securities or that are
based on a group or index of securities
(other than government securities or a
group or index of government securities);
(II) that provide for the delivery of one or
more securities (other than government se-
curities); or (III) that trade on a national
securities exchange.
(2) CLASSIFICATION
LIMITED.—Classification
of a particular product as a traditional banking
product pursuant to this subsection shall not be con-
strued as finding or implying that such product is
or is not a security for any purpose under the secu-
rities laws, or is or is not an account, agreement,
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contract, or transaction for any purpose under the
Commodity Exchange Act.
(3) DEFINITIONS.—For purposes of this sub-
section—
(A) the term ‘‘bank’’ has the meaning pro-
vided in section 3(a)(6) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)(6);
(B) the term ‘‘qualified investor’’ has the
meaning provided in section 3(a)(55) of such
Act;
(C) the term ‘‘government securities’’ has
the meaning provided in section 3(a)(42) of
such Act, and, for purposes of this subsection,
commercial paper, bankers acceptances, and
commercial bills shall be treated in the same
manner as government securities; and
(D) the term ‘‘Federal banking agency’’
has the meaning provided in section 3(z) of the
Federal Deposit Insurance Act (12 U.S.C.
1813(z)).
(b) TREATMENT OF NEW BANKING PRODUCTS FOR
PURPOSES OF BROKER/DEALER REQUIREMENTS.—Sec-
tion 15 of the Securities Exchange Act of 1934 (15 U.S.C.
78o) is amended by adding at the end the following new
subsection:
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‘‘(i) RULEMAKING TO EXTEND REQUIREMENTS TO
NEW BANKING PRODUCTS.—
‘‘(1) 
LIMITATION.—The 
Commission 
shall
not—
‘‘(A) require a bank to register as a broker
or dealer under this section because the bank
engages in any transaction in, or buys or sells,
a new banking product; or
‘‘(B) bring an action against a bank for a
failure to comply with a requirement described
in subparagraph (A);
unless the Commission has imposed such require-
ment by rule or regulation issued in accordance with
this section.
‘‘(2) CRITERIA FOR RULEMAKING.—The Com-
mission shall not impose a requirement under para-
graph (1) of this subsection with respect to any new
banking product unless the Commission determines
that—
‘‘(A) the new banking product is a secu-
rity; and
‘‘(B) imposing such requirement is nec-
essary or appropriate in the public interest and
for the protection of investors, consistent with
the requirements of section 3(f).
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‘‘(3) NEW BANKING PRODUCT.—For purposes
of this subsection, the term ‘new banking product’
means a product that—
‘‘(A) was not subjected to regulation by
the Commission as a security prior to the date
of enactment of this subsection; and
‘‘(B) is not a traditional banking product,
as such term is defined in section 206(a) of the
Financial Services Act of 1998.
‘‘(4) CONSULTATION.—In promulgating rules
under this subsection, the Commission shall consult
with and consider the views of the appropriate regu-
latory agencies concerning the proposed rule and the
impact on the banking industry.’’.
SEC. 207. DERIVATIVE INSTRUMENT AND QUALIFIED IN-
VESTOR DEFINED.
Section 3(a) of the Securities Exchange Act of 1934
is amended by adding at the end the following new para-
graphs:
‘‘(54) DERIVATIVE INSTRUMENT.—
‘‘(A) DEFINITION.—The term ‘derivative
instrument’ means any individually negotiated
contract, agreement, warrant, note, or option
that is based, in whole or in part, on the value
of, any interest in, or any quantitative measure
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or the occurrence of any event relating to, one
or more commodities, securities, currencies, in-
terest or other rates, indices, or other assets,
but does not include a traditional banking prod-
uct, as defined in section 206(a) of the Finan-
cial Services Act of 1998.
‘‘(B) CLASSIFICATION LIMITED.— Classi-
fication of a particular contract as a derivative
instrument pursuant to this paragraph shall not
be construed as finding or implying that such
instrument is or is not a security for any pur-
pose under the securities laws, or is or is not
an account, agreement, contract, or transaction
for any purpose under the Commodity Ex-
change Act.
‘‘(55) QUALIFIED INVESTOR.—
‘‘(A) DEFINITION.—For purposes of this
title and section 206(a)(1)(E) of the Financial
Services Act of 1998, the term ‘qualified inves-
tor’ means—
‘‘(i) any investment company reg-
istered with the Commission under section
8 of the Investment Company Act of 1940;
‘‘(ii) any issuer eligible for an exclu-
sion from the definition of investment com-
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pany pursuant to section 3(c)(7) of the In-
vestment Company Act of 1940;
‘‘(iii) any bank (as defined in para-
graph (6) of this subsection), savings and
loan association (as defined in section 3(b)
of the Federal Deposit Insurance Act),
broker, dealer, insurance company (as de-
fined in section 2(a)(13) of the Securities
Act of 1933), or business development
company (as defined in section 2(a)(48) of
the Investment Company Act of 1940);
‘‘(iv) any small business investment
company licensed by the United States
Small Business Administration under sec-
tion 301(c) or (d) of the Small Business
Investment Act of 1958;
‘‘(v) any State sponsored employee
benefit plan, or any other employee benefit
plan, within the meaning of the Employee
Retirement Income Security Act of 1974,
other than an individual retirement ac-
count, if the investment decisions are made
by a plan fiduciary, as defined in section
3(21) of that Act, which is either a bank,
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savings and loan association, insurance
company, or registered investment adviser;
‘‘(vi) any trust whose purchases of se-
curities are directed by a person described
in clauses (i) through (v) of this subpara-
graph;
‘‘(vii) any market intermediary ex-
empt under section 3(c)(2) of the Invest-
ment Company Act of 1940;
‘‘(viii) any associated person of a
broker or dealer other than a natural per-
son;
‘‘(ix) any foreign bank (as defined in
section 1(b)(7) of the International Bank-
ing Act of 1978); or
‘‘(x) the government of any foreign
country.
‘‘(B) ADDITIONAL
QUALIFICATIONS
DE-
FINED.—For 
purposes 
of 
paragraphs
(4)(B)(vii) and (5)(C)(iii) of this subsection,
and section 206(a)(1)(E) of the Financial Serv-
ices Act of 1998, the term ‘qualified investor’
also means—
‘‘(i) any corporation, company, or
partnership that owns and invests on a dis-
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cretionary basis, not less than $10,000,000
in investments;
‘‘(ii) any natural person who owns
and invests on a discretionary basis, not
less than $10,000,000 in investments;
‘‘(iii) any government or political sub-
division, agency, or instrumentality of a
government who owns and invests on a dis-
cretionary basis not less than $50,000,000
in investments; or
‘‘(iv) any multinational or supra-
national entity or any agency or instru-
mentality thereof.
‘‘(C) ADDITIONAL AUTHORITY.—The Com-
mission may, by rule or order, define a ‘quali-
fied investor’ as any other person, other than a
natural person, taking into consideration such
factors as the person’s financial sophistication,
net worth, and knowledge and experience in fi-
nancial matters.’’.
SEC. 208. GOVERNMENT SECURITIES DEFINED.
Section 3(a)(42) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(42)) is amended—
(1) by striking ‘‘or’’ at the end of subparagraph
(C);
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(2) by striking the period at the end of sub-
paragraph (D) and inserting ‘‘; or’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(E) for purposes of section 15C as ap-
plied to a bank, a qualified Canadian govern-
ment obligation as defined in section 5136 of
the Revised Statutes.’’.
SEC. 209. EFFECTIVE DATE.
This subtitle shall take effect at the end of the 270-
day period beginning on the date of the enactment of this
Act.
SEC. 210. RULE OF CONSTRUCTION.
Nothing in this Act shall supersede, affect, or other-
wise limit the scope and applicability of the Commodity
Exchange Act (7 U.S.C. 1 et seq.).
Subtitle B—Bank Investment
Company Activities
SEC. 211. CUSTODY OF INVESTMENT COMPANY ASSETS BY
AFFILIATED BANK.
(a) MANAGEMENT COMPANIES.—Section 17(f) of the
Investment Company Act of 1940 (15 U.S.C. 80a–17(f))
is amended—
(1) by redesignating paragraphs (1), (2), and
(3) as subparagraphs (A), (B), and (C), respectively;
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(2) by striking ‘‘(f) Every registered’’ and in-
serting the following:
‘‘(f) CUSTODY OF SECURITIES.—
‘‘(1) Every registered’’;
(3) by redesignating the second, third, fourth,
and fifth sentences of such subsection as paragraphs
(2) through (5), respectively, and indenting the left
margin of such paragraphs appropriately; and
(4) by adding at the end the following new
paragraph:
‘‘(6) The Commission may adopt rules and reg-
ulations, and issue orders, consistent with the pro-
tection of investors, prescribing the conditions under
which a bank, or an affiliated person of a bank, ei-
ther of which is an affiliated person, promoter, orga-
nizer, or sponsor of, or principal underwriter for, a
registered management company may serve as custo-
dian of that registered management company.’’.
(b) UNIT INVESTMENT TRUSTS.—Section 26 of the
Investment Company Act of 1940 (15 U.S.C. 80a–26) is
amended—
(1) by redesignating subsections (b) through (e)
as subsections (c) through (f), respectively; and
(2) by inserting after subsection (a) the follow-
ing new subsection:
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(3) by adding at the end the following new
paragraph:
‘‘(4) to loan money or other property to such
registered company, or to any company controlled by
such registered company, in contravention of such
rules, regulations, or orders as the Commission may
prescribe or issue consistent with the protection of
investors.’’.
SEC. 213. INDEPENDENT DIRECTORS.
(a) IN GENERAL.—Section 2(a)(19)(A) of the Invest-
ment Company Act of 1940 (15 U.S.C. 80a–2(a)(19)(A))
is amended—
(1) by striking clause (v) and inserting the fol-
lowing new clause:
‘‘(v) any person or any affiliated per-
son of a person (other than a registered in-
vestment company) that, at any time dur-
ing the 6-month period preceding the date
of the determination of whether that per-
son or affiliated person is an interested
person, has executed any portfolio trans-
actions for, engaged in any principal trans-
actions with, or distributed shares for—
‘‘(I) the investment company;
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‘‘(II) any other investment com-
pany having the same investment ad-
viser as such investment company or
holding itself out to investors as a re-
lated company for purposes of invest-
ment or investor services; or
‘‘(III) any account over which the
investment company’s investment ad-
viser has brokerage placement discre-
tion,’’;
(2) by redesignating clause (vi) as clause (vii);
and
(3) by inserting after clause (v) the following
new clause:
‘‘(vi) any person or any affiliated per-
son of a person (other than a registered in-
vestment company) that, at any time dur-
ing the 6-month period preceding the date
of the determination of whether that per-
son or affiliated person is an interested
person, has loaned money or other prop-
erty to—
‘‘(I) the investment company;
‘‘(II) any other investment com-
pany having the same investment ad-
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viser as such investment company or
holding itself out to investors as a re-
lated company for purposes of invest-
ment or investor services; or
‘‘(III) any account for which the
investment company’s investment ad-
viser has borrowing authority,’’.
(b) 
CONFORMING
AMENDMENT.—Section
2(a)(19)(B) of the Investment Company Act of 1940 (15
U.S.C. 80a–2(a)(19)(B)) is amended—
(1) by striking clause (v) and inserting the fol-
lowing new clause:
‘‘(v) any person or any affiliated per-
son of a person (other than a registered in-
vestment company) that, at any time dur-
ing the 6-month period preceding the date
of the determination of whether that per-
son or affiliated person is an interested
person, has executed any portfolio trans-
actions for, engaged in any principal trans-
actions with, or distributed shares for—
‘‘(I) any investment company for
which the investment adviser or prin-
cipal underwriter serves as such;
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‘‘(II) any investment company
holding itself out to investors, for pur-
poses of investment or investor serv-
ices, as a company related to any in-
vestment company for which the in-
vestment adviser or principal under-
writer serves as such; or
‘‘(III) any account over which the
investment 
adviser 
has 
brokerage
placement discretion,’’;
(2) by redesignating clause (vi) as clause (vii);
and
(3) by inserting after clause (v) the following
new clause:
‘‘(vi) any person or any affiliated per-
son of a person (other than a registered in-
vestment company) that, at any time dur-
ing the 6-month period preceding the date
of the determination of whether that per-
son or affiliated person is an interested
person, has loaned money or other prop-
erty to—
‘‘(I) any investment company for
which the investment adviser or prin-
cipal underwriter serves as such;
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‘‘(II) any investment company
holding itself out to investors, for pur-
poses of investment or investor serv-
ices, as a company related to any in-
vestment company for which the in-
vestment adviser or principal under-
writer serves as such; or
‘‘(III) any account for which the
investment adviser has borrowing au-
thority,’’.
(c) AFFILIATION OF DIRECTORS.—Section 10(c) of
the Investment Company Act of 1940 (15 U.S.C. 80a–
10(c)) is amended by striking ‘‘bank, except’’ and insert-
ing ‘‘bank (together with its affiliates and subsidiaries) or
any one bank holding company (together with its affiliates
and subsidiaries) (as such terms are defined in section 2
of the Bank Holding Company Act of 1956), except’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect at the end of the 1-year period
beginning on the date of enactment of this subtitle.
SEC. 214. ADDITIONAL SEC DISCLOSURE AUTHORITY.
Section 35(a) of the Investment Company Act of
1940 (15 U.S.C. 80a–34(a)) is amended to read as fol-
lows:
‘‘(a) MISREPRESENTATION OF GUARANTEES.—
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‘‘(1) IN GENERAL.—It shall be unlawful for any
person, issuing or selling any security of which a
registered investment company is the issuer, to rep-
resent or imply in any manner whatsoever that such
security or company—
‘‘(A) has been guaranteed, sponsored, rec-
ommended, or approved by the United States,
or any agency, instrumentality or officer of the
United States;
‘‘(B) has been insured by the Federal De-
posit Insurance Corporation; or
‘‘(C) is guaranteed by or is otherwise an
obligation of any bank or insured depository in-
stitution.
‘‘(2) DISCLOSURES.—Any person issuing or
selling the securities of a registered investment com-
pany that is advised by, or sold through, a bank
shall prominently disclose that an investment in the
company is not insured by the Federal Deposit In-
surance Corporation or any other government agen-
cy. The Commission may adopt rules and regula-
tions, and issue orders, consistent with the protec-
tion of investors, prescribing the manner in which
the disclosure under this paragraph shall be pro-
vided.
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‘‘(3) DEFINITIONS.—The terms ‘insured deposi-
tory institution’ and ‘appropriate Federal banking
agency’ have the meaning given to such terms in
section 3 of the Federal Deposit Insurance Act.’’.
SEC. 215. DEFINITION OF BROKER UNDER THE INVEST-
MENT COMPANY ACT OF 1940.
Section 2(a)(6) of the Investment Company Act of
1940 (15 U.S.C. 80a–2(a)(6)) is amended to read as fol-
lows:
‘‘(6) The term ‘broker’ has the same meaning
as in 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 investment companies.’’.
SEC. 216. DEFINITION OF DEALER UNDER THE INVEST-
MENT COMPANY ACT OF 1940.
Section 2(a)(11) of the Investment Company Act of
1940 (15 U.S.C. 80a–2(a)(11)) is amended to read as fol-
lows:
‘‘(11) The term ‘dealer’ has the same meaning
as in the Securities Exchange Act of 1934, but does
not include an insurance company or investment
company.’’.
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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) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b–
2(a)(11)) is amended in subparagraph (A), by striking
‘‘investment company’’ and inserting ‘‘investment com-
pany, 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 invest-
ment adviser to a registered investment company, but if,
in the case of a bank, such services or actions are per-
formed through a separately identifiable department or di-
vision, 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 depart-
ment or division’ of a bank means a unit—
‘‘(A) that is under the direct supervision of
an officer or officers designated by the board of
directors of the bank as responsible for the day-
to-day conduct of the bank’s investment adviser
activities for one or more investment companies,
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including the supervision of all bank employees
engaged in the performance of such activities;
and
‘‘(B) for which all of the records relating
to its investment adviser activities are sepa-
rately maintained in or extractable from such
unit’s own facilities or the facilities of the bank,
and such records are so maintained or other-
wise accessible as to permit independent exam-
ination and enforcement by the Commission of
this Act or the Investment Company Act of
1940 and rules and regulations promulgated
under this Act or the Investment Company Act
of 1940.’’.
SEC. 218. DEFINITION OF BROKER UNDER THE INVEST-
MENT ADVISERS ACT OF 1940.
Section 202(a)(3) of the Investment Advisers Act of
1940 (15 U.S.C. 80b–2(a)(3)) is amended to read as fol-
lows:
‘‘(3) The term ‘broker’ has the same meaning
as in the Securities Exchange Act of 1934.’’.
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SEC. 219. DEFINITION OF DEALER UNDER THE INVEST-
MENT ADVISERS ACT OF 1940.
Section 202(a)(7) of the Investment Advisers Act of
1940 (15 U.S.C. 80b–2(a)(7)) is amended to read as fol-
lows:
‘‘(7) The term ‘dealer’ has the same meaning as
in the Securities Exchange Act of 1934, but does
not include an insurance company or investment
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 INFORMA-
TION.—
‘‘(1) The appropriate Federal banking agency
shall provide the Commission upon request the re-
sults of any examination, reports, records, or other
information to which such agency may have access
with respect to the investment advisory activities—
‘‘(A) of any—
‘‘(i) bank holding company;
‘‘(ii) bank; or
‘‘(iii) separately identifiable depart-
ment or division of a bank,
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that is registered under section 203 of this title;
and
‘‘(B) in the case of a bank holding com-
pany or bank that has a subsidiary or a sepa-
rately identifiable department or division reg-
istered under that section, of such bank or bank
holding company.
‘‘(2) The Commission shall provide to the ap-
propriate Federal banking agency upon request the
results of any examination, reports, records, or other
information with respect to the investment advisory
activities of any bank holding company, bank, or
separately identifiable department or division of a
bank, any of which is registered under section 203
of this title.
‘‘(b) EFFECT ON OTHER AUTHORITY.—Nothing 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 division
under any provision of law.
‘‘(c) DEFINITION.—For purposes of this section, the
term ‘appropriate Federal banking agency’ shall have the
same meaning as in section 3 of the Federal Deposit In-
surance Act.’’.
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‘‘(A) such fund is employed by the bank
solely as an aid to the administration of trusts,
estates, or other accounts created and main-
tained for a fiduciary purpose;
‘‘(B) except in connection with the ordi-
nary advertising of the bank’s fiduciary serv-
ices, 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 prin-
ciples 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 adding at the end the
following new subsection:
‘‘(g) CONTROLLING INTEREST IN INVESTMENT COM-
PANY PROHIBITED.—
‘‘(1) IN GENERAL.—If an investment adviser to
a registered investment company, or an affiliated
person of that investment adviser, holds a control-
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ling interest in that registered investment company
in a trustee or fiduciary capacity, such person
shall—
‘‘(A) if it holds the shares in a trustee or
fiduciary capacity with respect to any employee
benefit plan subject to the Employee Retire-
ment Income Security Act of 1974, transfer the
power to vote the shares of the investment com-
pany through to another person acting in a fi-
duciary capacity with respect to the plan who is
not an affiliated person of that investment ad-
viser or any affiliated person thereof; or
‘‘(B) if it holds the shares in a trustee or
fiduciary capacity with respect to any person or
entity other than an employee benefit plan sub-
ject to the Employee Retirement Income Secu-
rity Act of 1974—
‘‘(i) transfer the power to vote the
shares of the investment company through
to—
‘‘(I) the beneficial owners of the
shares;
‘‘(II) another person acting in a
fiduciary capacity who is not an affili-
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ated person of that investment adviser
or any affiliated person thereof; or
‘‘(III) any person authorized to
receive statements and information
with respect to the trust who is not an
affiliated person of that investment
adviser or any affiliated person there-
of;
‘‘(ii) vote the shares of the investment
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 invest-
ment company as otherwise permitted
under such rules, regulations, or orders as
the Commission may prescribe or issue
consistent with the protection of investors.
‘‘(2) EXEMPTION.—Paragraph (1) shall not
apply to any investment adviser to a registered in-
vestment company, or any affiliated person of that
investment adviser, that holds shares of the invest-
ment company in a trustee or fiduciary capacity if
that registered investment company consists solely of
assets held in such capacities.
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‘‘(3) SAFE HARBOR.—No investment adviser to
a registered investment company or any affiliated
person of such investment adviser shall be deemed to
have acted unlawfully or to have breached a fidu-
ciary duty under State or Federal law solely by rea-
son of acting in accordance with clause (i), (ii), or
(iii) of paragraph (1)(B).’’.
SEC. 223. CONFORMING CHANGE IN DEFINITION.
Section 2(a)(5) of the Investment Company Act of
1940 (15 U.S.C. 80a–2(a)(5)) is amended by striking
‘‘(A) a banking institution organized under the laws of the
United States’’ and inserting ‘‘(A) a depository institution
(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. 224. 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 subsection:
‘‘(c) CONSIDERATION
OF
PROMOTION
OF
EFFI-
CIENCY, COMPETITION, AND
CAPITAL
FORMATION.—
Whenever pursuant to this title the Commission is en-
gaged in rulemaking and is required to consider or deter-
mine whether an action is necessary or appropriate in the
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public interest, the Commission shall also consider, in ad-
dition to the protection of investors, whether the action
will promote efficiency, competition, and capital forma-
tion.’’.
SEC. 225. 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 Securities Ex-
change 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 follow-
ing new subsections:
‘‘(i) INVESTMENT BANK HOLDING COMPANIES.—
‘‘(1) ELECTIVE
SUPERVISION
OF
AN
INVEST-
MENT
BANK
HOLDING
COMPANY
NOT
HAVING
A
BANK OR SAVINGS ASSOCIATION AFFILIATE.—
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‘‘(A) IN GENERAL.—An investment bank
holding company that is not—
‘‘(i) an affiliate of a wholesale finan-
cial institution, an insured bank (other
than 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), or a sav-
ings association;
‘‘(ii) a foreign bank, foreign company,
or company that is described in section
8(a) of the International Banking Act of
1978; or
‘‘(iii) a foreign bank that controls, di-
rectly or indirectly, a corporation chartered
under section 25A of the Federal Reserve
Act,
may elect to become supervised by filing with
the Commission a notice of intention to become
supervised, pursuant to subparagraph (B) of
this paragraph. Any investment bank holding
company filing such a notice shall be supervised
in accordance with this section and comply with
the rules promulgated by the Commission appli-
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cable to supervised investment bank holding
companies.
‘‘(B) NOTIFICATION OF STATUS AS A SU-
PERVISED
INVESTMENT
BANK
HOLDING
COM-
PANY.—An investment bank holding company
that elects under subparagraph (A) to become
supervised by the Commission shall file with the
Commission a written notice of intention to be-
come supervised by the Commission in such
form and containing such information and doc-
uments concerning such investment bank hold-
ing company as the Commission, by rule, may
prescribe as necessary or appropriate in fur-
therance 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 supervision
shall become effective 45 days after receipt of
such written notice by the Commission or with-
in such shorter time period as the Commission,
by rule or order, may determine.
‘‘(2) ELECTION
NOT
TO
BE
SUPERVISED
BY
THE COMMISSION AS AN INVESTMENT BANK HOLD-
ING COMPANY.—
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‘‘(A) VOLUNTARY
WITHDRAWAL.—A su-
pervised 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
supervision. Such notice shall not become effec-
tive until one year after receipt by the Commis-
sion, or such shorter or longer period as the
Commission deems necessary or appropriate to
ensure effective supervision of the material
risks to the supervised investment bank holding
company and to the affiliated broker or dealer,
or to prevent evasion of the purposes of this
section.
‘‘(B) DISCONTINUATION
OF
COMMISSION
SUPERVISION.—If the Commission finds that
any supervised investment bank holding com-
pany that is supervised pursuant to paragraph
(1) is no longer in existence or has ceased to be
an investment bank holding company, or if the
Commission finds that continued supervision of
such a supervised investment bank holding com-
pany is not consistent with the purposes of this
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section, the Commission may discontinue the
supervision pursuant to a rule or order, if any,
promulgated by the Commission under this sec-
tion.
‘‘(3) SUPERVISION
OF
INVESTMENT
BANK
HOLDING COMPANIES.—
‘‘(A) RECORDKEEPING AND REPORTING.—
‘‘(i) IN GENERAL.—Every supervised
investment bank holding company and
each affiliate thereof shall make and keep
for prescribed periods such records, furnish
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 affiliate’s
activities, financial condition, policies,
systems for monitoring and control-
ling financial and operational risks,
and transactions and relationships be-
tween any broker or dealer affiliate of
the supervised investment bank hold-
ing company; and
‘‘(II) the extent to which the
company or affiliate has complied with
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the provisions of this Act and regula-
tions 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 Com-
mission may require and shall be provided
promptly at any time upon request by the
Commission. Such records and reports may
include—
‘‘(I) a balance sheet and income
statement;
‘‘(II) an assessment of the con-
solidated capital of the supervised in-
vestment bank holding company;
‘‘(III) an independent auditor’s
report attesting to the supervised in-
vestment bank holding company’s
compliance with its internal risk man-
agement and internal control objec-
tives; and
‘‘(IV) reports concerning the ex-
tent to which the company or affiliate
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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
reports 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
another appropriate regulatory agency or
self-regulatory organization.
‘‘(ii) AVAILABILITY.—A supervised in-
vestment bank holding company or an af-
filiate 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
AU-
THORITY.—The Commission may make ex-
aminations of any supervised investment
bank holding company and any affiliate of
such company in order to—
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‘‘(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 supervised investment bank
holding 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, pro-
visions governing transactions and re-
lationships between any broker or
dealer affiliated with the supervised
investment bank holding company and
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any of the company’s other affiliates,
and applicable provisions of sub-
chapter II of chapter 53, title 31,
United States Code (commonly re-
ferred to as the ‘Bank Secrecy Act’)
and regulations thereunder.
‘‘(ii) RESTRICTED FOCUS OF EXAMI-
NATIONS.—The Commission shall limit the
focus and scope of any examination of a
supervised investment bank holding com-
pany to—
‘‘(I) the company; and
‘‘(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
operational or financial condition of
the broker or dealer.
‘‘(iii) DEFERENCE TO OTHER EXAMI-
NATIONS.—For purposes of this subpara-
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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 appropriate regulatory agency, or of a
licensed insurance company made by the
appropriate State insurance regulator.
‘‘(4) HOLDING COMPANY CAPITAL.—
‘‘(A) AUTHORITY.—If the Commission
finds that it is necessary to adequately super-
vise investment 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
investment bank holding companies.
‘‘(B) METHOD OF CALCULATION.—In de-
veloping rules under this paragraph:
‘‘(i) DOUBLE LEVERAGE.—The Com-
mission shall consider the use by the su-
pervised investment bank holding company
of debt and other liabilities to fund capital
investments in affiliates.
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‘‘(ii) 
NO
UNWEIGHTED
CAPITAL
RATIO.—The Commission shall not impose
under this section a capital ratio that is
not based on appropriate risk-weighting
considerations.
‘‘(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-
ments of another Federal regulatory au-
thority or State insurance authority.
‘‘(iv) APPROPRIATE
EXCLUSIONS.—
The Commission shall take full account of
the applicable capital requirements of an-
other Federal regulatory authority or State
insurance regulator.
‘‘(C) INTERNAL RISK MANAGEMENT MOD-
ELS.—The Commission may incorporate inter-
nal risk management models into its capital
adequacy rules for supervised investment bank
holding companies.
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‘‘(5) FUNCTIONAL
REGULATION
OF
BANKING
AND
INSURANCE
ACTIVITIES
OF
SUPERVISED
IN-
VESTMENT BANK HOLDING COMPANIES.—The Com-
mission shall defer to—
‘‘(A) the appropriate regulatory agency
with regard to all interpretations of, and the
enforcement 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
‘‘(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 op-
erations 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
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‘‘(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
Commission pursuant to this subsection.
‘‘(C) The terms ‘affiliate’, ‘bank’, ‘bank
holding company’, ‘company’, ‘control’, and
‘savings association’ have the meanings given to
those terms in section 2 of the Bank Holding
Company 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 Insurance Act.
‘‘(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 ‘‘associ-
ated person of an investment bank holding com-
pany’ means any person directly or indirectly
controlling, controlled by, or under common
control with, an investment bank holding com-
pany.
‘‘(j) COMMISSION BACKUP AUTHORITY.—
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‘‘(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,
and any affiliate of such company, for the purpose
of monitoring and enforcing compliance by the
wholesale financial holding company with the Fed-
eral 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
securities laws.
‘‘(3) DEFERENCE TO EXAMINATIONS.—To the
fullest extent possible, the Commission shall use, for
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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 fi-
nancial holding company that is supervised by
the Board;
‘‘(B) made by or on behalf of any State
regulatory agency responsible for the super-
vision of an insurance company of any licensed
insurance company; and
‘‘(C) made by any Federal or State bank-
ing agency of any bank or institution 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.
‘‘(4) NOTICE.—To the fullest extent possible,
the Commission shall notify the appropriate regu-
latory 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 INFOR-
MATION.—Notwithstanding any other provision of law, the
Commission shall not be compelled to disclose any infor-
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mation required to be reported under subsection (h) or
(i) or any information supplied to the Commission by any
domestic 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 withhold information from Congress, or prevent the
Commission from complying with a request for informa-
tion from any other Federal department or agency or any
self-regulatory organization requesting the information for
purposes within the scope of its jurisdiction, 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 sub-
section (b)(3)(B) of such section 552. In prescribing regu-
lations 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 confidential information for pur-
poses of section 24(b)(2) of this title.’’.
(b) CONFORMING AMENDMENTS.—
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(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
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 ac-
cordance with the Federal Deposit Insur-
ance Act; or
‘‘(iv) the Commission in the case of all
other such institutions.’’.
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(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—Study
SEC. 241. STUDY OF METHODS TO INFORM INVESTORS AND
CONSUMERS OF UNINSURED PRODUCTS.
Within one 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 insti-
tution that accepts federally insured deposits and that, di-
rectly or through a contractual or other arrangement with
a broker, 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 insur-
ance is not insured by the Federal Deposit Insurance Cor-
poration.
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SEC. 242. STUDY OF LIMITATION ON FEES ASSOCIATED
WITH ACQUIRING FINANCIAL PRODUCTS.
Before the end of the 1-year period beginning on the
date of the 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, markups, or other costs incurred
by customers in the acquisition of financial products.
Subtitle E—Disclosure of Customer
Costs of Acquiring Financial
Products
SEC. 251. IMPROVED AND CONSISTENT DISCLOSURE.
(a) REVISED REGULATIONS REQUIRED.—Within one
year after the date of enactment of this Act, each Federal
financial regulatory authority shall prescribe rules, or revi-
sions to its rules, to improve the accuracy, simplicity, and
completeness, and to make more consistent, the disclosure
of information by persons subject to the jurisdiction of
such regulatory authority concerning any commissions,
fees, markups, or other costs incurred by customers in the
acquisition of financial products.
(b) CONSULTATION.—In prescribing rules and revi-
sions under subsection (a), the Federal financial regu-
latory authorities shall consult with each other and with
appropriate State financial regulatory authorities.
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(c) CONSIDERATION OF EXISTING DISCLOSURES.—
In prescribing rules and revisions under subsection (a),
the Federal financial regulatory authorities shall consider
the sufficiency and appropriateness of then existing laws
and rules applicable to persons subject to their jurisdic-
tion, and may prescribe exemptions from the rules and re-
visions required by subsection (a) to the extent appro-
priate in light of the objective of this section to increase
the consistency of disclosure practices.
(d) ENFORCEMENT.—Any rule prescribed by a Fed-
eral 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 jurisdic-
tion over the persons to whom such rule applies.
(e) DEFINITION.—As used in this section, the term
‘‘Federal financial regulatory authority’’ means the Board
of Governors of the Federal Reserve System, the Securi-
ties and Exchange Commission, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the
Commodity Futures Trading Commission, and any self-
regulatory organization under the supervision of any of
the foregoing.
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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.
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
section 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
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may not provide insurance in a State as principal except
that this prohibition shall not apply to authorized prod-
ucts.
(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 na-
tional 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 determination of the
Comptroller of the Currency that national banks
may provide 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;
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(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,
homeowners, mortgage, commercial multiperil,
general liability, professional liability, workers’
compensation, 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;
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(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,
as amended; or
(II) in the event that the product
is not a letter of credit or other simi-
lar extension of credit, a qualified fi-
nancial 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,
as amended, if the bank were subject
to tax as an insurance company under
section 831 of such Code; or
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(3) any annuity contract the income on which
is subject to tax treatment under section 72 of the
Internal Revenue Code of 1986, as amended.
SEC. 305. NEW BANK AGENCY ACTIVITIES ONLY THROUGH
ACQUISITION 
OF 
EXISTING 
LICENSED
AGENTS.
If a national bank or a subsidiary of a national bank
is not providing insurance as agent in a State as of the
date of the enactment of this Act, the national bank and
the subsidiary of the national bank may provide insurance
(which such bank or subsidiary is otherwise authorized to
provide) as agent in such State after such date only by
acquiring a company which has been licensed by the ap-
propriate State regulator to provide insurance as agent in
such State for not less than 2 years before such acquisi-
tion. This section shall cease to have effect 5 years after
the date of the enactment of this Act.
SEC. 306. TITLE INSURANCE ACTIVITIES OF NATIONAL
BANKS AND THEIR AFFILIATES.
(a) AUTHORITY.—
(1) IN GENERAL.—Notwithstanding any other
provision of this Act or any other law, no national
bank, and no subsidiary of a national bank, may en-
gage in any activity involving the underwriting or
sale of title insurance other than title insurance ac-
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tivities in which such national bank or subsidiary
was actively and lawfully engaged 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 any activity involv-
ing the underwriting or sale of title insurance pursu-
ant to paragraph (1).
(3) INSURANCE SUBSIDIARY.—In the case of a
national bank which has a subsidiary which provides
insurance as principal and has no affiliate which
provides insurance as principal and is not a subsidi-
ary, the national bank may not engage in any activ-
ity involving the underwriting or sale of title insur-
ance pursuant to paragraph (1).
(4) AFFILIATE
AND
SUBSIDIARY
DEFINED.—
For purposes of this section, the terms ‘‘affiliate’’
and ‘‘subsidiary’’ have the meaning given such terms
in section 2 of the Bank Holding Company Act of
1956.
(b) PARITY
EXCEPTION.—Notwithstanding sub-
section (a), in the case of any State in which banks orga-
nized under the laws of such State were authorized to sell
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title insurance as agent as of January 1, 1997, a national
bank and a subsidiary of a national bank may sell title
insurance as agent in such State in the same manner and
to the same extent such State banks are authorized to sell
title insurance as agent in such State.
SEC. 307. EXPEDITED AND EQUALIZED DISPUTE RESOLU-
TION FOR FINANCIAL REGULATORS.
(a) FILING IN COURT OF APPEAL.—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 insurance as defined in section 304(c) of this Act,
or whether a State statute, regulation, order, or interpre-
tation regarding any insurance sales or solicitation activity
is properly treated as preempted under Federal law, either
regulator may seek expedited judicial review of such deter-
mination 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 Cir-
cuit by filing a petition for review in such court.
(b) EXPEDITED REVIEW.—The United States court
of appeals in which a petition for review is filed in accord-
ance with paragraph (1) shall complete all action on such
petition, including rendering a judgment, before the end
of the 60-day period beginning on the date such petition
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is filed, unless all parties to such proceeding agree to any
extension of such period.
(c) SUPREME COURT REVIEW.—Any request for
certiori to the Supreme Court of the United States of any
judgment of a United States court of appeals with respect
to a petition for review under this section shall be filed
with the United States Supreme Court as soon as prac-
ticable after such judgment is issued.
(d) STATUTE OF LIMITATION.—No action may be
filed under this section challenging an order, ruling, deter-
mination, or other action of a Federal financial regulator
or State insurance regulator after the later of—
(1) the end of the 12-month period beginning
on the date the first public notice is made of such
order, ruling, or determination in its final form; or
(2) the end of the 6-month period beginning on
the date such order, ruling, or determination takes
effect.
(e) STANDARD OF REVIEW.—The court shall decide
an action filed under this section based on its review on
the merits of all questions presented under State and Fed-
eral law, including the nature of the product or activity
and the history and purpose of its regulation under State
and Federal law, without unequal deference.
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SEC. 308. CONSUMER PROTECTION REGULATIONS.
(a) REGULATIONS REQUIRED.—
(1) IN GENERAL.—The Federal Deposit Insur-
ance Act (12 U.S.C. 1811 et seq.) is amended by
adding at the end the following new section:
‘‘SEC. 45. CONSUMER PROTECTION REGULATIONS.
‘‘(a) REGULATIONS REQUIRED.—
‘‘(1) IN GENERAL.—The Federal banking agen-
cies shall prescribe and publish in final form, before
the end of the 1-year period beginning on the date
of the enactment of this Act, consumer protection
regulations (which the agencies jointly determine to
be appropriate) that—
‘‘(A) apply to retail sales practices, solici-
tations, advertising, or offers of any insurance
product by any insured depository institution or
wholesale financial institution or any person
who is engaged in such activities at an office of
the institution or on behalf of the institution;
and
‘‘(B) are consistent with the requirements
of this Act and provide such additional protec-
tions for consumers to whom such sales, solici-
tations, advertising, or offers are directed as
the agency determines to be appropriate.
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‘‘(2) APPLICABILITY
TO
SUBSIDIARIES.—The
regulations prescribed pursuant to paragraph (1)
shall extend such protections to any subsidiaries of
an insured depository institution, as deemed appro-
priate by the regulators referred to in paragraph (3),
where such extension is determined to be necessary
to ensure the consumer protections provided by this
section.
‘‘(3) CONSULTATION
AND
JOINT
REGULA-
TIONS.—The Federal banking agencies shall consult
with each other and prescribe joint regulations pur-
suant to paragraph (1), after consultation with the
State insurance regulators, as appropriate.
‘‘(b) SALES PRACTICES.—The regulations prescribed
pursuant to subsection (a) shall include anticoercion rules
applicable to the sale of insurance products which prohibit
an insured depository institution from engaging in any
practice that would lead a consumer to believe an exten-
sion of credit, in violation of section 106(b) of the Bank
Holding Company Act Amendments of 1970, is condi-
tional upon—
‘‘(1) the purchase of an insurance product from
the institution or any of its affiliates or subsidiaries;
or
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‘‘(2) an agreement by the consumer not to ob-
tain, or a prohibition on the consumer from obtain-
ing, an insurance product from an unaffiliated en-
tity.
‘‘(c) DISCLOSURES AND ADVERTISING.—The regula-
tions prescribed pursuant to subsection (a) shall include
the following provisions relating to disclosures and adver-
tising in connection with the initial purchase of an insur-
ance product:
‘‘(1) DISCLOSURES.—
‘‘(A) IN GENERAL.—Requirements that the
following disclosures be made orally and in writ-
ing before the completion of the initial sale and,
in the case of clause (iv), at the time of applica-
tion for an extension of credit:
‘‘(i) UNINSURED STATUS.—As appro-
priate, the product is not insured by the
Federal Deposit Insurance Corporation,
the United States Government, or the in-
sured depository 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 associated
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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 insurance
product from the institution in which
the application for credit is pending or
any of its affiliates or subsidiaries; or
‘‘(II) an agreement by the con-
sumer not to obtain, or a prohibition
on the consumer from obtaining, an
insurance product from an unaffili-
ated entity.
‘‘(B) MAKING DISCLOSURE READILY UN-
DERSTANDABLE.—Regulations prescribed under
subparagraph (A) shall encourage the use of
disclosure that is conspicuous, simple, direct,
and readily understandable, such as the follow-
ing:
‘‘(i) ‘NOT FDIC–INSURED’.
‘‘(ii) ‘NOT GUARANTEED BY THE
BANK’.
‘‘(iii) ‘MAY GO DOWN IN VALUE’.
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‘‘(C) ADJUSTMENTS
FOR
ALTERNATIVE
METHODS
OF
PURCHASE.—In prescribing the
requirements under subparagraphs (A) and
(D), necessary adjustments shall be made for
purchase in person, by telephone, or by elec-
tronic media to provide for the most appro-
priate and complete form of disclosure and ac-
knowledgments.
‘‘(D) CONSUMER
ACKNOWLEDGMENT.—A
requirement that an insured depository institu-
tion shall require any person selling an insur-
ance product at any office of, or on behalf of,
the institution to obtain, at the time a con-
sumer receives the disclosures required under
this paragraph or at the time of the initial pur-
chase by the consumer of such product, an ac-
knowledgment by such consumer of the receipt
of the disclosure required under this subsection
with respect to such product.
‘‘(2) 
PROHIBITION
ON
MISREPRESENTA-
TIONS.—A prohibition on any practice, or any adver-
tising, at any office of, or on behalf of, the insured
depository institution, or any subsidiary as appro-
priate, which could mislead any person or otherwise
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cause a reasonable person to reach an erroneous be-
lief with respect to—
‘‘(A) the uninsured nature of any insur-
ance product sold, or offered for sale, by the in-
stitution or any subsidiary of the institution; or
‘‘(B) in the case of a variable annuity or
other insurance product that involves an invest-
ment risk, the investment risk associated with
any such product.
‘‘(d) SEPARATION OF BANKING AND NONBANKING
ACTIVITIES.—
‘‘(1) REGULATIONS
REQUIRED.—The regula-
tions prescribed pursuant to subsection (a) shall in-
clude such provisions as the Federal banking agen-
cies consider appropriate to ensure that the routine
acceptance of deposits and the making of loans is
kept, to the extent practicable, physically segregated
from insurance product activity.
‘‘(2) REQUIREMENTS.—Regulations prescribed
pursuant to paragraph (1) shall include the follow-
ing requirements:
‘‘(A) SEPARATE SETTING.—A clear delin-
eation of the setting in which, and the cir-
cumstances under which, transactions involving
insurance products should be conducted in a lo-
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cation physically segregated from an area where
retail deposits are routinely accepted.
‘‘(B) REFERRALS.—Standards which per-
mit 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 to refer a cus-
tomer who seeks to purchase any insurance
product to a qualified person who sells such
product, only if the person making the referral
receives no more than a one-time nominal fee of
a fixed dollar amount for each referral that
does not depend on whether the referral results
in a transaction.
‘‘(C) QUALIFICATION AND LICENSING RE-
QUIREMENTS.—Standards prohibiting any in-
sured depository institution from permitting
any person to sell or offer for sale any insur-
ance product in any part of any office of the in-
stitution, or on behalf of the institution, unless
such person is appropriately qualified and li-
censed.
‘‘(e) DOMESTIC VIOLENCE DISCRIMINATION PROHI-
BITION.—
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‘‘(1) IN GENERAL.—In the case of an applicant
for, or an insured under, any insurance product de-
scribed 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 domestic violence,
shall not be considered as a criterion in any decision
with regard to insurance underwriting, pricing, re-
newal, or scope of coverage of insurance policies, or
payment of insurance claims, except as required or
expressly permitted under State law.
‘‘(2) SCOPE OF APPLICATION.—The prohibition
contained in paragraph (1) shall apply to any insur-
ance product which is sold or offered for sale, as
principal, agent, or broker, by any insured deposi-
tory institution or any person who is engaged in
such activities at an office of the institution 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 pe-
riod beginning on the date of the enactment of this
Act, the States should enact prohibitions against dis-
crimination with respect to insurance products that
are at least as strict as the prohibitions contained in
paragraph (1).
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‘‘(4) DOMESTIC VIOLENCE DEFINED.—For pur-
poses of this subsection, the term ‘domestic violence’
means the occurrence of 1 or more of the following
acts by a current or former family member, house-
hold member, intimate partner, or caretaker:
‘‘(A) Attempting to cause or causing or
threatening another person physical harm, se-
vere emotional distress, psychological trauma,
rape, or sexual assault.
‘‘(B) Engaging in a course of conduct or
repeatedly committing acts toward another per-
son, including following the person without
proper authority, under circumstances that
place the person in reasonable fear of bodily in-
jury or physical harm.
‘‘(C) Subjecting another person to false
imprisonment.
‘‘(D) Attempting to cause or cause damage
to property so as to intimidate or attempt to
control the behavior of another person.
‘‘(f) CONSUMER GRIEVANCE PROCESS.—The Federal
banking agencies shall jointly establish a consumer com-
plaint mechanism, for receiving and expeditiously address-
ing consumer complaints alleging a violation of regulations
issued under the section, which shall—
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‘‘(1) establish a group within each regulatory
agency to receive such complaints;
‘‘(2) develop procedures for investigating such
complaints;
‘‘(3) develop procedures for informing consum-
ers 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
appropriate.
‘‘(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 or-
ganization, the Municipal Securities Rule-
making Board, or the Secretary of the Treasury
under any Federal securities law; or
‘‘(B) except as provided in paragraph (2),
any authority of any State insurance commis-
sioner or other State authority under any State
law.
‘‘(2) COORDINATION WITH STATE LAW.—
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‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), regulations prescribed by a
Federal banking agency under this section shall
not apply to retail sales, solicitations, advertis-
ing, or offers of any insurance product by any
insured depository institution or wholesale fi-
nancial institution or to any person who is en-
gaged in such activities at an office of such in-
stitution or on behalf of the institution, in a
State where the State has in effect statutes,
regulations, orders, or interpretations, that are
inconsistent with or contrary to the regulations
prescribed by the Federal banking agencies.
‘‘(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 Directors of the
Federal Deposit Insurance Corporation deter-
mine jointly that the protection afforded by
such provision for consumers is greater than
the protection provided by a comparable provi-
sion of the statutes, regulations, orders, or in-
terpretations referred to in subparagraph (A) of
any State, such provision of the regulations pre-
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scribed under this section shall supersede the
comparable provision of such State statute, reg-
ulation, order, or interpretation.
‘‘(h) INSURANCE PRODUCT DEFINED.—For purposes
of this section, the term ‘insurance product’ includes an
annuity contract the income of which is subject to tax
treatment under section 72 of the Internal Revenue Code
of 1986.’’.
SEC. 309. CERTAIN STATE AFFILIATION LAWS PREEMPTED
FOR INSURANCE COMPANIES AND AFFILI-
ATES.
No State may, by law, regulation, order, interpreta-
tion, or otherwise—
(1) prevent or significantly interfere with the
ability of any insurer, or any affiliate of an insurer
(whether such affiliate is organized as a stock com-
pany, mutual holding company, or otherwise), to be-
come a financial holding company or to acquire con-
trol of an insured depository institution;
(2) limit the amount of an insurer’s assets that
may be invested in the voting securities of an in-
sured depository institution (or any company which
controls such institution), except that the laws of an
insurer’s State of domicile may limit the amount of
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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, approve, or disapprove a
plan of reorganization by which an insurer proposes
to reorganize from mutual form to become a stock
insurer (whether as a direct or indirect subsidiary of
a mutual holding company or otherwise) unless such
State is the State of domicile of the insurer.
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, pursuant to the laws of the transferee domicile and
consistent with the standards in subsection (f), the mutual
insurer becomes a stock insurer that is a direct or indirect
subsidiary of a mutual holding company.
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(b) RESULTING DOMICILE.—Upon complying with
the applicable law of the transferee domicile governing
transfers of domicile and completion of a transfer pursu-
ant to this section, the mutual insurer shall cease to be
a domestic insurer in the transferor domicile and, as a
continuation of its corporate existence, shall be a domestic
insurer of the transferee domicile.
(c) LICENSES PRESERVED.—The certificate of au-
thority, agents’ appointments and licenses, rates, approv-
als and other items that a licensed State allows and that
are in existence 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 business of insurance in such licensed State.
(d) EFFECTIVENESS
OF OUTSTANDING POLICIES
AND CONTRACTS.—
(1) IN
GENERAL.—All outstanding insurance
policies and annuities contracts of a redomesticating
insurer shall remain in full force and effect and need
not be endorsed as to the new domicile of the in-
surer, unless so ordered by the State insurance regu-
lator of a licensed State, and then only in the case
of outstanding policies and contracts whose owners
reside in such licensed State.
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(2) FORMS.—
(A) Applicable State law may require a re-
domesticating insurer to file new policy forms
with the State insurance regulator of a licensed
State on or before the effective date of the
transfer.
(B) Notwithstanding subparagraph (A), a
redomesticating insurer may use existing policy
forms with appropriate endorsements to reflect
the new domicile of the redomesticating insurer
until the new policy forms are approved for use
by the State insurance regulator of such li-
censed State.
(e) NOTICE.—A redomesticating insurer shall give
notice of the proposed transfer to the State insurance reg-
ulator of each licensed State and shall file promptly any
resulting amendments to corporate documents required to
be filed by a foreign licensed mutual insurer with the in-
surance regulator of each such licensed State.
(f) PROCEDURAL REQUIREMENTS.—No mutual in-
surer may redomesticate to another State and reorganize
into a mutual holding company pursuant to this section
unless the State insurance regulator of the transferee
domicile determines that the plan of reorganization of the
insurer includes the following requirements:
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(1) APPROVAL BY BOARD OF DIRECTORS AND
POLICYHOLDERS.—The reorganization is approved
by at least a majority of the board of directors of
the mutual insurer and at least a majority of the
policyholders who vote after notice, disclosure of the
reorganization and the effects of the transaction on
policyholder contractual rights, and reasonable op-
portunity to vote, in accordance with such notice,
disclosure, and voting procedures as are approved by
the State insurance regulator of the transferee domi-
cile.
(2) CONTINUED VOTING CONTROL BY POLICY-
HOLDERS; REVIEW OF PUBLIC STOCK OFFERING.—
After the consummation of a reorganization, the pol-
icyholders of the reorganized insurer shall have the
same voting rights with respect to the mutual hold-
ing company as they had before the reorganization
with respect to the mutual insurer. With respect to
an initial public offering of stock, the offering shall
be conducted in compliance with applicable securities
laws and in a manner approved by the State insur-
ance regulator of the transferee domicile.
(3) AWARD OF STOCK OR GRANT OF OPTIONS
TO OFFICERS AND DIRECTORS.—For a period of 6
months after completion of an initial public offering,
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neither a stock holding company nor the converted
insurer shall award any stock options or stock
grants to persons who are elected officers or direc-
tors of the mutual holding company, the stock hold-
ing company, or the converted insurer, except with
respect to any such awards or options to which a
person is entitled as a policyholder and as approved
by the State insurance regulator of the transferee
domicile.
(4) CONTRACTUAL RIGHTS.—Upon reorganiza-
tion into a mutual holding company, the contractual
rights of the policyholders are preserved.
(5) FAIR AND EQUITABLE TREATMENT OF POL-
ICYHOLDERS.—The reorganization is approved as
fair and equitable to the policyholders by the insur-
ance regulator of the transferee domicile.
SEC. 313. EFFECT ON STATE LAWS RESTRICTING REDOMES-
TICATION.
(a) IN GENERAL.—Unless otherwise permitted by
this subtitle, State laws of any transferor domicile that
conflict with the purposes and intent of this subtitle are
preempted, including but not limited to—
(1) any law that has the purpose or effect of
impeding the activities of, taking any action against,
or applying any provision of law or regulation to,
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any insurer or an affiliate of such insurer because
that insurer or any affiliate plans to redomesticate,
or has redomesticated, pursuant to this subtitle;
(2) any law that has the purpose or effect of
impeding the activities of, taking action against, or
applying any provision of law or regulation to, any
insured or any insurance licensee or other inter-
mediary because such person or entity has procured
insurance from or placed insurance with any insurer
or affiliate of such insurer that plans to redomes-
ticate, or has redomesticated, pursuant to this sub-
title, but only to the extent that such law would
treat such insured licensee or other intermediary dif-
ferently than if the person or entity procured insur-
ance from, or placed insurance with, an insured li-
censee or other intermediary which had not redomes-
ticated;
(3) any law that has the purpose or effect of
terminating, because of the redomestication of a mu-
tual insurer pursuant to this subtitle, any certificate
of authority, agent appointment or license, rate ap-
proval, or other approval, of any State insurance
regulator or other State authority in existence imme-
diately prior to the redomestication in any State
other than the transferee domicile.
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(b) DIFFERENTIAL TREATMENT PROHIBITED.—No
State law, regulation, interpretation, or functional equiva-
lent thereof, of a State other than a transferee domicile
may treat a redomesticating or redomesticated insurer or
any affiliate thereof any differently than an insurer oper-
ating in that State that is not a redomesticating or re-
domesticated insurer.
(c) LAWS PROHIBITING OPERATIONS.—If any li-
censed State fails to issue, delays the issuance of, or seeks
to revoke an original or renewal certificate of authority
of a redomesticated insurer immediately following re-
domestication, except on grounds and in a manner consist-
ent with its past practices regarding the issuance of cer-
tificates of authority to foreign insurers that are not re-
domesticating, then the redomesticating insurer shall be
exempt from any State law of the licensed State to the
extent that such State law or the operation of such State
law would make unlawful, or regulate, directly or indi-
rectly, the operation of the redomesticated insurer, except
that such licensed State may require the redomesticated
insurer to—
(1) comply with the unfair claim settlement
practices law of the licensed State;
(2) pay, on a nondiscriminatory basis, applica-
ble premium and other taxes which are levied on li-
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censed insurers or policyholders under the laws of
the licensed State;
(3) register with and designate the State insur-
ance regulator as its agent solely for the purpose of
receiving service of legal documents or process;
(4) submit to an examination by the State in-
surance regulator in any licensed state in which the
redomesticated insurer is doing business to deter-
mine the insurer’s financial condition, if—
(A) the State insurance regulator of the
transferee domicile has not begun an examina-
tion of the redomesticated insurer and has not
scheduled such an examination to begin before
the end of the 1-year period beginning on the
date of the redomestication; and
(B) any such examination is coordinated to
avoid unjustified duplication and repetition;
(5) comply with a lawful order issued in—
(A) a delinquency proceeding commenced
by the State insurance regulator of any licensed
State if there has been a judicial finding of fi-
nancial impairment under paragraph (7); or
(B) a voluntary dissolution proceeding;
(6) comply with any State law regarding decep-
tive, false, or fraudulent acts or practices, except
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that if the licensed State seeks an injunction regard-
ing the conduct described in this paragraph, such in-
junction must be obtained from a court of competent
jurisdiction as provided in section 314(a);
(7) comply with an injunction issued by a court
of competent jurisdiction, upon a petition by the
State insurance regulator alleging that the redomes-
ticating insurer is in hazardous financial condition
or is financially impaired;
(8) participate in any insurance insolvency
guaranty association on the same basis as any other
insurer licensed in the licensed State; and
(9) require a person acting, or offering to act,
as an insurance licensee for a redomesticated insurer
in the licensed State to obtain a license from that
State, except that such State may not impose any
qualification or requirement that discriminates
against a nonresident insurance licensee.
SEC. 314. OTHER PROVISIONS.
(a) JUDICIAL REVIEW.—The appropriate United
States district court shall have exclusive jurisdiction over
litigation arising under this section involving any redomes-
ticating or redomesticated insurer.
(b) SEVERABILITY.—If any provision of this section,
or the application thereof to any person or circumstances,
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is held invalid, the remainder of the section, and the appli-
cation of such provision to other persons or circumstances,
shall not be affected thereby.
SEC. 315. DEFINITIONS.
For purposes of this subtitle, the following definitions
shall apply:
(1) COURT
OF
COMPETENT
JURISDICTION.—
The term ‘‘court of competent jurisdiction’’ means a
court authorized pursuant to section 314(a) to adju-
dicate litigation arising under this subtitle.
(2) DOMICILE.—The term ‘‘domicile’’ means
the State in which an insurer is incorporated, char-
tered, or organized.
(3) INSURANCE LICENSEE.—The term ‘‘insur-
ance licensee’’ means any person holding a license
under State law to act as insurance agent, subagent,
broker, or consultant.
(4) 
INSTITUTION.—The 
term 
‘‘institution’’
means a corporation, joint stock company, limited li-
ability company, limited liability partnership, asso-
ciation, trust, partnership, or any similar entity.
(5) LICENSED
STATE.—The term ‘‘licensed
State’’ means any State, the District of Columbia,
American Samoa, Guam, Puerto Rico, or the United
States Virgin Islands in which the redomesticating
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insurer has a certificate of authority in effect imme-
diately prior to the redomestication.
(6) MUTUAL INSURER.—The term ‘‘mutual in-
surer’’ means a mutual insurer organized under the
laws of any State.
(7) PERSON.—The term ‘‘person’’ means an in-
dividual, institution, government or governmental
agency, State or political subdivision of a State, pub-
lic corporation, board, association, estate, trustee, or
fiduciary, or other similar entity.
(8) POLICYHOLDER.—The term ‘‘policyholder’’
means the owner of a policy issued by a mutual in-
surer, except that, with respect to voting rights, the
term means a member of a mutual insurer or mu-
tual holding company granted the right to vote, as
determined under applicable State law.
(9) REDOMESTICATED
INSURER.—The term
‘‘redomesticated insurer’’ means a mutual insurer
that has redomesticated pursuant to this subtitle.
(10) REDOMESTICATING
INSURER.—The term
‘‘redomesticating insurer’’ means a mutual insurer
that is redomesticating pursuant to this subtitle.
(11) REDOMESTICATION
OR
TRANSFER.—The
terms ‘‘redomestication’’ and ‘‘transfer’’ mean the
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transfer of the domicile of a mutual insurer from
one State to another State pursuant to this subtitle.
(12) STATE
INSURANCE
REGULATOR.—The
term ‘‘State insurance regulator’’ means the prin-
cipal insurance regulatory authority of a State, the
District of Columbia, American Samoa, Guam,
Puerto Rico, or the United States Virgin Islands.
(13) STATE
LAW.—The term ‘‘State law’’
means the statutes of any State, the District of Co-
lumbia, American Samoa, Guam, Puerto Rico, or the
United States Virgin Islands and any regulation,
order, or requirement prescribed pursuant to any
such statute.
(14) 
TRANSFEREE
DOMICILE.—The 
term
‘‘transferee domicile’’ means the State to which a
mutual insurer is redomesticating pursuant to this
subtitle.
(15) 
TRANSFEROR
DOMICILE.—The 
term
‘‘transferor domicile’’ means the State from which a
mutual insurer is redomesticating pursuant to this
subtitle.
SEC. 316. EFFECTIVE DATE.
This subtitle shall take effect on the date of the en-
actment of this Act.
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Subtitle C—National Association of
Registered Agents and Brokers
SEC. 321. STATE FLEXIBILITY IN MULTISTATE LICENSING
REFORMS.
(a) IN GENERAL.—The provisions of this subtitle
shall take effect unless by the end of the 3-year period
beginning on the date of the enactment of this Act at least
a majority of the States—
(1) have enacted uniform laws and regulations
governing the licensure of individuals and entities
authorized to sell and solicit the purchase of insur-
ance within the State; or
(2) have enacted reciprocity laws and regula-
tions governing the licensure of nonresident individ-
uals and entities authorized to sell and solicit insur-
ance within those States.
(b) UNIFORMITY REQUIRED.—States shall be deemed
to have established the uniformity necessary to satisfy
subsection (a)(1) if the States—
(1) establish uniform criteria regarding the in-
tegrity, personal qualifications, education, training,
and experience of licensed insurance producers, in-
cluding the qualification and training of sales per-
sonnel in ascertaining the appropriateness of a par-
ticular insurance product for a prospective customer;
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(2) establish uniform continuing education re-
quirements for licensed insurance producers;
(3) establish uniform ethics course require-
ments for licensed insurance producers in conjunc-
tion with the continuing education requirements
under paragraph (2);
(4) establish uniform criteria to ensure that an
insurance product, including any annuity contract,
sold to a consumer is suitable and appropriate for
the consumer based on financial information dis-
closed by the consumer; and
(5) do not impose any requirement upon any in-
surance producer to be licensed or otherwise quali-
fied to do business as a nonresident that has the ef-
fect of limiting or conditioning that producer’s ac-
tivities because of its residence or place of oper-
ations, except that counter-signature requirements
imposed on nonresident producers shall not be
deemed to have the effect of limiting or conditioning
a producer’s activities because of its residence or
place of operations under this section.
(c) 
RECIPROCITY
REQUIRED.—States 
shall 
be
deemed to have established the reciprocity required to sat-
isfy subsection (a)(2) if the following conditions are met:
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(1) 
ADMINISTRATIVE
LICENSING
PROCE-
DURES.—At least a majority of the States permit a
producer that has a resident license for selling or so-
liciting the purchase of insurance in its home State
to receive a license to sell or solicit the purchase of
insurance in such majority of States as a non-
resident to the same extent such producer is per-
mitted to sell or solicit the purchase of insurance in
its State, without satisfying any additional require-
ments other than submitting—
(A) a request for licensure;
(B) the application for licensure that the
producer submitted to its home State;
(C) proof that the producer is licensed and
in good standing in its home State; and
(D) the payment of any requisite fee to the
appropriate authority,
if the producer’s home State also awards such li-
censes on such a reciprocal basis.
(2) 
CONTINUING
EDUCATION
REQUIRE-
MENTS.—A majority of the States accept an insur-
ance producer’s satisfaction of its home State’s con-
tinuing education requirements for licensed insur-
ance producers to satisfy the States’ own continuing
education requirements if the producer’s home State
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also recognizes the satisfaction of continuing edu-
cation requirements on such a reciprocal basis.
(3) NO
LIMITING
NONRESIDENT
REQUIRE-
MENTS.—A majority of the States do not impose
any requirement upon any insurance producer to be
licensed or otherwise qualified to do business as a
nonresident that has the effect of limiting or condi-
tioning that producer’s activities because of its resi-
dence 
or 
place 
of 
operations, 
except 
that
countersignature requirements imposed on non-
resident producers shall not be deemed to have the
effect of limiting or conditioning a producer’s activi-
ties because of its residence or place of operations
under this section.
(4) RECIPROCAL
RECIPROCITY.—Each of the
States that satisfies paragraphs (1), (2), and (3)
grants reciprocity to residents of all of the other
States that satisfy such paragraphs.
(d) DETERMINATION.—
(1) NAIC DETERMINATION.—At the end of the
3-year period beginning on the date of the enact-
ment of this Act, the National Association of Insur-
ance Commissioners shall determine, in consultation
with the insurance commissioners or chief insurance
regulatory officials of the States, whether the uni-
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formity or reciprocity required by subsections (b)
and (c) has been achieved.
(2) 
JUDICIAL
REVIEW.—The 
appropriate
United States district court shall have exclusive ju-
risdiction over any challenge to the National Asso-
ciation of Insurance Commissioners’ determination
under this section and such court shall apply the
standards set forth in section 706 of title 5, United
States Code, when reviewing any such challenge.
(e) CONTINUED APPLICATION.—If, at any time, the
uniformity or reciprocity required by subsections (b) and
(c) no longer exists, the provisions of this subtitle shall
take effect within 2 years, unless the uniformity or reci-
procity required by those provisions is satisfied before the
expiration of that 2-year period.
(f) SAVINGS PROVISION.—No provision of this sec-
tion shall be construed as requiring that any law, regula-
tion, provision, or action of any State which purports to
regulate insurance producers, including any such law, reg-
ulation, provision, or action which purports to regulate un-
fair trade practices or establish consumer protections, in-
cluding countersignature laws, be altered or amended in
order to satisfy the uniformity or reciprocity required by
subsections (b) and (c), unless any such law, regulation,
provision, or action is inconsistent with a specific require-
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ment of any such subsection and then only to the extent
of such inconsistency.
SEC. 
322. 
NATIONAL 
ASSOCIATION 
OF 
REGISTERED
AGENTS AND BROKERS.
(a) ESTABLISHMENT.—There is established the Na-
tional Association of Registered Agents and Brokers
(hereafter in this subtitle referred to as the ‘‘Associa-
tion’’).
(b) STATUS.—The Association shall—
(1) be a nonprofit corporation;
(2) have succession until dissolved by an Act of
Congress;
(3) not be an agency or establishment of the
United States Government; and
(4) except as otherwise provided in this Act, be
subject to, and have all the powers conferred upon
a nonprofit corporation by the District of Columbia
Nonprofit Corporation Act (D.C. Code, sec. 29y–
1001 et seq.).
SEC. 323. PURPOSE.
The purpose of the Association shall be to provide
a mechanism through which uniform licensing, appoint-
ment, continuing education, and other insurance producer
sales qualification requirements and conditions can be
adopted and applied on a multistate basis, while preserv-
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ing the right of States to license, supervise, and discipline
insurance producers and to prescribe and enforce laws and
regulations with regard to insurance-related consumer
protection and unfair trade practices.
SEC. 324. RELATIONSHIP TO THE FEDERAL GOVERNMENT.
The Association shall be subject to the supervision
and oversight of the National Association of Insurance
Commissioners (hereafter in this subtitle referred to as the
‘‘NAIC’’) and shall not be an agency or an instrumentality
of the United States Government.
SEC. 325. MEMBERSHIP.
(a) ELIGIBILITY.—
(1) IN GENERAL.—Any State-licensed insurance
producer shall be eligible to become a member in the
Association.
(2) INELIGIBILITY FOR SUSPENSION OR REV-
OCATION OF LICENSE.—Notwithstanding paragraph
(1), a State-licensed insurance producer shall not be
eligible to become a member if a State insurance
regulator has suspended or revoked such producer’s
license in that State during the 3-year preceding the
date such producer applies for membership.
(3) RESUMPTION OF ELIGIBILITY.—Paragraph
(2) shall cease to apply to any insurance producer
if—
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(A) the State insurance regulator renews
the license of such producer in the State in
which the license was suspended or revoked; or
(B) the suspension or revocation is subse-
quently overturned.
(b) AUTHORITY TO ESTABLISH MEMBERSHIP CRI-
TERIA.—The Association shall have the authority to estab-
lish membership criteria that—
(1) bear a reasonable relationship to the pur-
poses for which the Association was established; and
(2) do not unfairly limit the access of smaller
agencies to the Association membership.
(c) 
ESTABLISHMENT
OF
CLASSES
AND
CAT-
EGORIES.—
(1) CLASSES OF MEMBERSHIP.—The Associa-
tion may establish separate classes of membership,
with separate criteria, if the Association reasonably
determines that performance of different duties re-
quires different levels of education, training, or expe-
rience.
(2) CATEGORIES.—The Association may estab-
lish separate categories of membership for individ-
uals and for other persons. The establishment of any
such categories of membership shall be based either
on the types of licensing categories that exist under
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State laws or on the aggregate amount of business
handled by an insurance producer. No special cat-
egories of membership, and no distinct membership
criteria, shall be established for members which are
insured depository institutions or wholesale financial
institutions or for their employees, agents, or affili-
ates.
(d) MEMBERSHIP CRITERIA.—
(1) IN GENERAL.—The Association may estab-
lish criteria for membership which shall include
standards for integrity, personal qualifications, edu-
cation, training, and experience.
(2) MINIMUM STANDARD.—In establishing cri-
teria under paragraph (1), the Association shall con-
sider the highest levels of insurance producer quali-
fications established under the licensing laws of the
States.
(e) EFFECT OF MEMBERSHIP.—Membership in the
Association shall entitle the member to licensure in each
State for which the member pays the requisite fees, includ-
ing licensing fees and, where applicable, bonding require-
ments, set by such State.
(f) ANNUAL RENEWAL.—Membership in the Associa-
tion shall be renewed on an annual basis.
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(g) CONTINUING EDUCATION.—The Association shall
establish, as a condition of membership, continuing edu-
cation requirements which shall be comparable to or great-
er than the continuing education requirements under the
licensing laws of a majority of the States.
(h) SUSPENSION AND REVOCATION.—The Associa-
tion may—
(1) inspect and examine the records and offices
of the members of the Association to determine com-
pliance with the criteria for membership established
by the Association; and
(2) suspend or revoke the membership of an in-
surance producer if—
(A) the producer fails to meet the applica-
ble membership criteria of the Association; or
(B) the producer has been subject to dis-
ciplinary action pursuant to a final adjudicatory
proceeding under the jurisdiction of a State in-
surance regulator, and the Association con-
cludes that retention of membership in the As-
sociation would not be in the public interest.
(i) OFFICE OF CONSUMER COMPLAINTS.—
(1) IN GENERAL.—The Association shall estab-
lish an office of consumer complaints that shall—
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(A) receive and investigate complaints
from both consumers and State insurance regu-
lators related to members of the Association;
and
(B) recommend to the Association any dis-
ciplinary actions that the office considers appro-
priate, to the extent that any such rec-
ommendation is not inconsistent with State law.
(2) RECORDS AND REFERRALS.—The office of
consumer complaints of the Association shall—
(A) maintain records of all complaints re-
ceived in accordance with paragraph (1) and
make such records available to the NAIC and
to each State insurance regulator for the State
of residence of the consumer who filed the com-
plaint; and
(B) refer, when appropriate, any such com-
plaint to any appropriate State insurance regu-
lator.
(3) TELEPHONE AND OTHER ACCESS.—The of-
fice of consumer complaints shall maintain a toll-free
telephone number for the purpose of this subsection
and, as practicable, other alternative means of com-
munication with consumers, such as an Internet
home page.
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SEC. 326. BOARD OF DIRECTORS.
(a) ESTABLISHMENT.—There is established the
board of directors of the Association (hereafter in this sub-
title referred to as the ‘‘Board’’) for the purpose of govern-
ing and supervising the activities of the Association and
the members of the Association.
(b) POWERS.—The Board shall have such powers and
authority as may be specified in the bylaws of the Associa-
tion.
(c) COMPOSITION.—
(1) MEMBERS.—The Board shall be composed
of 7 members appointed by the NAIC.
(2) REQUIREMENT.—At least 4 of the members
of the Board shall have significant experience with
the regulation of commercial lines of insurance in at
least 1 of the 20 States in which the greatest total
dollar amount of commercial-lines insurance is
placed in the United States.
(3) INITIAL BOARD MEMBERSHIP.—
(A) IN GENERAL.—If, by the end of the 2-
year period beginning on the date of the enact-
ment of this Act, the NAIC has not appointed
the initial 7 members of the Board of the Asso-
ciation, the initial Board shall consist of the 7
State insurance regulators of the 7 States with
the greatest total dollar amount of commercial-
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lines insurance in place as of the end of such
period.
(B) ALTERNATE COMPOSITION.—If any of
the State insurance regulators described in sub-
paragraph (A) declines to serve on the Board,
the State insurance regulator with the next
greatest total dollar amount of commercial-lines
insurance in place, as determined by the NAIC
as of the end of such period, shall serve as a
member of the Board.
(C) INOPERABILITY.—If fewer than 7
State insurance regulators accept appointment
to the Board, the Association shall be estab-
lished without NAIC oversight pursuant to sec-
tion 332.
(d) TERMS.—The term of each director shall, after
the initial appointment of the members of the Board, be
for 3 years, with 1⁄3 of the directors to be appointed each
year.
(e) BOARD VACANCIES.—A vacancy on the Board
shall be filled in the same manner as the original appoint-
ment of the initial Board for the remainder of the term
of the vacating member.
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(f) MEETINGS.—The Board shall meet at the call of
the chairperson, or as otherwise provided by the bylaws
of the Association.
SEC. 327. OFFICERS.
(a) IN GENERAL.—
(1) POSITIONS.—The officers of the Association
shall consist of a chairperson and a vice chairperson
of the Board, a president, secretary, and treasurer
of the Association, and such other officers and as-
sistant officers as may be deemed necessary.
(2) MANNER OF SELECTION.—Each officer of
the Board and the Association shall be elected or ap-
pointed at such time and in such manner and for
such terms not exceeding 3 years as may be pre-
scribed in the bylaws of the Association.
(b) CRITERIA FOR CHAIRPERSON.— Only individuals
who are members of the National Association of Insurance
Commissioners shall be eligible to serve as the chairperson
of the board of directors.
SEC. 328. BYLAWS, RULES, AND DISCIPLINARY ACTION.
(a) ADOPTION AND AMENDMENT OF BYLAWS.—
(1) COPY REQUIRED TO BE FILED WITH THE
NAIC.—The board of directors of the Association
shall file with the NAIC a copy of the proposed by-
laws or any proposed amendment to the bylaws, ac-
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companied by a concise general statement of the
basis and purpose of such proposal.
(2) EFFECTIVE DATE.—Except as provided in
paragraph (3), any proposed bylaw or proposed
amendment shall take effect—
(A) 30 days after the date of the filing of
a copy with the NAIC;
(B) upon such later date as the Associa-
tion may designate; or
(C) such earlier date as the NAIC may de-
termine.
(3) DISAPPROVAL
BY
THE
NAIC.—Notwith-
standing paragraph (2), a proposed bylaw or amend-
ment shall not take effect if, after public notice and
opportunity to participate in a public hearing—
(A) the NAIC disapproves such proposal as
being contrary to the public interest or contrary
to the purposes of this subtitle and provides no-
tice to the Association setting forth the reasons
for such disapproval; or
(B) the NAIC finds that such proposal in-
volves a matter of such significant public inter-
est that public comment should be obtained, in
which case it may, after notifying the Associa-
tion in writing of such finding, require that the
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procedures set forth in subsection (b) be fol-
lowed with respect to such proposal, in the
same manner as if such proposed bylaw change
were a proposed rule change within the mean-
ing of such paragraph.
(b) ADOPTION AND AMENDMENT OF RULES.—
(1) FILING PROPOSED REGULATIONS WITH THE
NAIC.—
(A) IN GENERAL.—The board of directors
of the Association shall file with the NAIC a
copy of any proposed rule or any proposed
amendment to a rule of the Association which
shall be accompanied by a concise general state-
ment of the basis and purpose of such proposal.
(B) OTHER RULES AND AMENDMENTS IN-
EFFECTIVE.—No proposed rule or amendment
shall take effect unless approved by the NAIC
or otherwise permitted in accordance with this
paragraph.
(2) INITIAL CONSIDERATION BY THE NAIC.—
Within 35 days after the date of publication of no-
tice of filing of a proposal, or before the end of such
longer period not to exceed 90 days as the NAIC
may designate after such date if the NAIC finds
such longer period to be appropriate and sets forth
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its reasons for so finding, or as to which the Asso-
ciation consents, the NAIC shall—
(A) by order approve such proposed rule or
amendment; or
(B) institute proceedings to determine
whether such proposed rule or amendment
should be modified or disapproved.
(3) NAIC PROCEEDINGS.—
(A) IN GENERAL.—Proceedings instituted
by the NAIC with respect to a proposed rule or
amendment pursuant to paragraph (2) shall—
(i) include notice of the grounds for
disapproval under consideration;
(ii) provide opportunity for hearing;
and
(iii) be concluded within 180 days
after the date of the Association’s filing of
such proposed rule or amendment.
(B) DISPOSITION OF PROPOSAL.—At the
conclusion of any proceeding under subpara-
graph (A), the NAIC shall, by order, approve or
disapprove the proposed rule or amendment.
(C) EXTENSION OF TIME FOR CONSIDER-
ATION.—The NAIC may extend the time for
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concluding any proceeding under subparagraph
(A) for—
(i) not more than 60 days if the
NAIC finds good cause for such extension
and sets forth its reasons for so finding; or
(ii) for such longer period as to which
the Association consents.
(4) STANDARDS FOR REVIEW.—
(A) GROUNDS FOR APPROVAL.—The NAIC
shall approve a proposed rule or amendment if
the NAIC finds that the rule or amendment is
in the public interest and is consistent with the
purposes of this Act.
(B) APPROVAL BEFORE END OF NOTICE
PERIOD.—The NAIC shall not approve any pro-
posed rule before the end of the 30-day period
beginning on the date the Association files pro-
posed rules or amendments in accordance with
paragraph (1) unless the NAIC finds good
cause for so doing and sets forth the reasons
for so finding.
(5) ALTERNATE PROCEDURE.—
(A) IN
GENERAL.—Notwithstanding any
provision of this subsection other than subpara-
graph (B), a proposed rule or amendment relat-
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ing to the administration or organization of the
Association may take effect—
(i) upon the date of filing with the
NAIC, if such proposed rule or amendment
is designated by the Association as relating
solely to matters which the NAIC, consist-
ent with the public interest and the pur-
poses of this subsection, determines by rule
do not require the procedures set forth in
this paragraph; or
(ii) upon such date as the NAIC shall
for good cause determine.
(B) ABROGATION BY THE NAIC.—
(i) IN GENERAL.—At any time within
60 days after the date of filing of any pro-
posed rule or amendment under subpara-
graph (A)(i) or (B)(ii), the NAIC may re-
peal such rule or amendment and require
that the rule or amendment be refiled and
reviewed in accordance with this para-
graph, if the NAIC finds that such action
is necessary or appropriate in the public
interest, for the protection of insurance
producers or policyholders, or otherwise in
furtherance of the purposes of this subtitle.
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(ii) EFFECT OF RECONSIDERATION BY
THE NAIC.—Any action of the NAIC pur-
suant to clause (i) shall—
(I) not affect the validity or force
of a rule change during the period
such rule or amendment was in effect;
and
(II) not be considered to be final
action.
(c) ACTION REQUIRED BY THE NAIC.—The NAIC
may, in accordance with such rules as the NAIC deter-
mines to be necessary or appropriate to the public interest
or to carry out the purposes of this subtitle, require the
Association to adopt, amend, or repeal any bylaw, rule or
amendment of the Association, whenever adopted.
(d) DISCIPLINARY ACTION BY THE ASSOCIATION.—
(1) SPECIFICATION OF CHARGES.—In any pro-
ceeding to determine whether membership shall be
denied, suspended, revoked, and not renewed (here-
after in this section referred to as a ‘‘disciplinary ac-
tion’’), the Association shall bring specific charges,
notify such member of such charges and give the
member an opportunity to defend against the
charges, and keep a record.
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(2) SUPPORTING
STATEMENT.—A determina-
tion to take disciplinary action shall be supported by
a statement setting forth—
(A) any act or practice in which such
member has been found to have been engaged;
(B) the specific provision of this subtitle,
the rules or regulations under this subtitle, or
the rules of the Association which any such act
or practice is deemed to violate; and
(C) the sanction imposed and the reason
for such sanction.
(e) NAIC REVIEW OF DISCIPLINARY ACTION.—
(1) NOTICE TO THE NAIC.—If the Association
orders any disciplinary action, the Association shall
promptly notify the NAIC of such action.
(2) REVIEW BY THE NAIC.—Any disciplinary
action taken by the Association shall be subject to
review by the NAIC—
(A) on the NAIC’s own motion; or
(B) upon application by any person ag-
grieved by such action if such application is
filed with the NAIC not more than 30 days
after the later of—
(i) the date the notice was filed with
the NAIC pursuant to paragraph (1); or
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(ii) the date the notice of the discipli-
nary action was received by such aggrieved
person.
(f) EFFECT OF REVIEW.—The filing of an applica-
tion to the NAIC for review of a disciplinary action, or
the institution of review by the NAIC on the NAIC’s own
motion, shall not operate as a stay of disciplinary action
unless the NAIC otherwise orders.
(g) SCOPE OF REVIEW.—
(A) IN GENERAL.—In any proceeding to
review such action, after notice and the oppor-
tunity for hearing, the NAIC shall—
(i) determine whether the action
should be taken;
(ii) affirm, modify, or rescind the dis-
ciplinary sanction; or
(iii) remand to the Association for
further proceedings.
(B) DISMISSAL
OF
REVIEW.—The NAIC
may dismiss a proceeding to review disciplinary
action if the NAIC finds that—
(i) the specific grounds on which the
action is based exist in fact;
(ii) the action is in accordance with
applicable rules and regulations; and
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(iii) such rules and regulations are,
and were, applied in a manner consistent
with the purposes of this Act.
SEC. 329. ASSESSMENTS.
(a) INSURANCE PRODUCERS SUBJECT TO ASSESS-
MENT.—The Association may establish such application
and membership fees as the Association finds necessary
to cover the costs of its operations, including fees made
reimbursable to the NAIC under subsection (b), except
that, in setting such fees, the Association may not dis-
criminate against smaller insurance producers.
(b) NAIC ASSESSMENTS.—The NAIC may assess the
Association for any costs it incurs under this subtitle.
SEC. 330. FUNCTIONS OF THE NAIC.
(a) ADMINISTRATIVE PROCEDURE.—Determinations
of the NAIC, for purposes of making rules pursuant to
section 328, shall be made after appropriate notice and
opportunity for a hearing and for submission of views of
interested persons.
(b) EXAMINATIONS AND REPORTS.—
(1) The NAIC may make such examinations
and inspections of the Association and require the
Association to furnish it with such reports and
records or copies thereof as the NAIC may consider
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necessary or appropriate in the public interest or to
effectuate the purposes of this subtitle.
(2) As soon as practicable after the close of
each fiscal year, the Association shall submit to the
NAIC a written report regarding the conduct of its
business, and the exercise of the other rights and
powers granted by this subtitle, during such fiscal
year. Such report shall include financial statements
setting forth the financial position of the Association
at the end of such fiscal year and the results of its
operations (including the source and application of
its funds) for such fiscal year. The NAIC shall
transmit such report to the President and the Con-
gress with such comment thereon as the NAIC de-
termines to be appropriate.
SEC. 331. LIABILITY OF THE ASSOCIATION AND THE DIREC-
TORS, OFFICERS, AND EMPLOYEES OF THE
ASSOCIATION.
(a) IN GENERAL.—The Association shall not be
deemed to be an insurer or insurance producer within the
meaning of any State law, rule, regulation, or order regu-
lating or taxing insurers, insurance producers, or other en-
tities engaged in the business of insurance, including pro-
visions imposing premium taxes, regulating insurer sol-
vency or financial condition, establishing guaranty funds
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and levying assessments, or requiring claims settlement
practices.
(b) LIABILITY OF THE ASSOCIATION, ITS DIREC-
TORS, OFFICERS, AND EMPLOYEES.—Neither the Associa-
tion nor any of its directors, officers, or employees shall
have any liability to any person for any action taken or
omitted in good faith under or in connection with any mat-
ter subject to this subtitle.
SEC. 332. ELIMINATION OF NAIC OVERSIGHT.
(a) IN GENERAL.—The Association shall be estab-
lished without NAIC oversight and the provisions set forth
in section 324, subsections (a), (b), (c), and (e) of section
328, and sections 329(b) and 330 of this subtitle shall
cease to be effective if, at the end of the 2-year period
after the date on which the provisions of this subtitle take
effect pursuant to section 321—
(1) at least a majority of the States represent-
ing at least 50 percent of the total United States
commercial-lines insurance premiums have not satis-
fied the uniformity or reciprocity requirements of
subsections (a) and (b) of section 321; and
(2) the NAIC has not approved the Associa-
tion’s bylaws as required by section 328, the NAIC
is unable to operate or supervise the Association, or
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the Association is not conducting its activities as re-
quired under this Act.
(b) BOARD APPOINTMENTS.—If the repeals required
by subsection (a) are implemented—
(1) GENERAL
APPOINTMENT
POWER.—The
President, with the advice and consent of the United
States Senate, shall appoint the members of the As-
sociation’s Board established under section 326 from
lists of candidates recommended to the President by
the National Association of Insurance Commis-
sioners.
(2) PROCEDURES
FOR
OBTAINING
NATIONAL
ASSOCIATION
OF
INSURANCE
COMMISSIONERS
AP-
POINTMENT RECOMMENDATIONS.—
(A) INITIAL
DETERMINATION
AND
REC-
OMMENDATIONS.—After the date on which the
provisions of part a of this section take effect,
then the National Association of Insurance
Commissioners shall have 60 days to provide a
list of recommended candidates to the Presi-
dent. If the National Association of Insurance
Commissioners fails to provide a list by that
date, or if any list that is provided does not in-
clude at least 14 recommended candidates or
comply with the requirements of section 326(c),
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the President shall, with the advice and consent
of the United States Senate, make the requisite
appointments without considering the views of
the NAIC.
(B) SUBSEQUENT APPOINTMENTS.—After
the initial appointments, the National Associa-
tion of Insurance Commissioners shall provide a
list of at least 6 recommended candidates for
the Board to the President by January 15 of
each subsequent year. If the National Associa-
tion of Insurance Commissioners fails to pro-
vide a list by that date, or if any list that is
provided does not include at least 6 rec-
ommended candidates or comply with the re-
quirements of section 326(c), the President,
with the advice and consent of the Senate, shall
make the requisite appointments without con-
sidering the views of the NAIC.
(C) PRESIDENTIAL OVERSIGHT.—
(i) REMOVAL.—If the President deter-
mines that the Association is not acting in
the interests of the public, the President
may remove the entire existing Board for
the remainder of the term to which the
members of the Board were appointed and
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appoint, with the advice and consent of the
Senate, new members to fill the vacancies
on the Board for the remainder of such
terms.
(ii) SUSPENSION
OF
RULES
OR
AC-
TIONS.—The President, or a person des-
ignated by the President for such purpose,
may suspend the effectiveness of any rule,
or prohibit any action, of the Association
which the President or the designee deter-
mines is contrary to the public interest.
(d) ANNUAL REPORT.—As soon as practicable after
the close of each fiscal year, the Association shall submit
to the President and to Congress a written report relative
to the conduct of its business, and the exercise of the other
rights and powers granted by this subtitle, during such
fiscal year. Such report shall include financial statements
setting forth the financial position of the Association at
the end of such fiscal year and the results of its operations
(including the source and application of its funds) for such
fiscal year.
SEC. 333. RELATIONSHIP TO STATE LAW.
(a) PREEMPTION OF STATE LAWS.—State laws, reg-
ulations, provisions, or actions purporting to regulate in-
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surance producers shall be preempted in the following in-
stances:
(1) No State shall impede the activities of, take
any action against, or apply any provision of law or
regulation to, any insurance producer because that
insurance producer or any affiliate plans to become,
has applied to become, or is a member of the Asso-
ciation.
(2) No State shall impose any requirement
upon a member of the Association that it pay dif-
ferent fees to be licensed or otherwise qualified to do
business in that State, including bonding require-
ments, based on its residency.
(3) No State shall impose any licensing, ap-
pointment, integrity, personal or corporate qualifica-
tions, education, training, experience, residency, or
continuing education requirement upon a member of
the Association that is different than the criteria for
membership in the Association or renewal of such
membership, except that counter-signature require-
ments imposed on nonresident producers shall not be
deemed to have the effect of limiting or conditioning
a producer’s activities because of its residence or
place of operations under this section.
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(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
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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.
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(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
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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.
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‘‘(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’’.
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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.’’.
Passed the House of Representatives May 13, 1998.
Attest:
ROBIN H. CARLE,
Clerk.