175
additional requirements or establishes higher standards
for the safe and sound operation and condition of deposi-
tory institutions (as defined in section 3 of the Federal
Deposit Insurance Act) and the protection of consumers
than the requirements imposed or the standards estab-
lished under this Act and the amendments made by this
Act to other provisions of law (including capital standards
and other safeguards placed on affiliates).
SEC. 128. CONFORMING AMENDMENTS TO THE BANK HOLD-
ING COMPANY ACT OF 1956.
(a) SHORT TITLE; TABLE OF CONTENTS.—The first
section of the Bank Holding Company Act of 1956 (12
U.S.C. 1841 nt.) is amended to read as follows:
‘‘SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
‘‘(a) SHORT TITLE.—This Act may be cited as the
‘Financial Services Holding Company Act of 1995’.
‘‘(b) TABLE OF CONTENTS.—The table of contents
for this Act is as follows:
‘‘Sec. 1.
Short title; table of contents.
‘‘Sec. 2.
Definitions.
‘‘Sec. 3.
Acquisition of bank shares or assets.
‘‘Sec. 4.
Interests in nonbanking organizations.
‘‘Sec. 5.
Administration.
‘‘Sec. 6.
Conversion of unitary savings and loan holding companies to financial
services holding companies.
‘‘Sec. 7.
Reservation of rights to States.
‘‘Sec. 8.
Penalties.
‘‘Sec. 9.
Judicial review.
‘‘Sec. 10. Securities activities.
‘‘Sec. 11. Safeguards relating to securities activities.
‘‘Sec. 12. Investment bank holding companies and other financial activities.
‘‘Sec. 13. Saving provision.
‘‘Sec. 14. Separability of provisions.
176
‘‘(c) REFERENCES IN OTHER LAWS.—Any reference
in any Federal or State law to a provision of the Bank
Holding Company Act of 1956 shall be deemed to be a
reference to the corresponding provision of this Act.’’.
(b) DEFINITIONS.—
(1) Subsection (n) of section 2 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841(n))
is amended by inserting ‘‘ ‘depository institution’, ’’
before ‘‘ ‘insured depository institution’ ’’.
(2) Subsection (o) of section 2 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841(o))
is amended—
(A) by striking paragraph (1) and insert-
ing the following new paragraph:
‘‘(1) LEAD
DEPOSITORY
INSTITUTION.—The
term ‘lead depository institution’ means the largest
depository institution controlled by the financial
services holding company, based on a comparison of
the average total assets controlled by each deposi-
tory institution during the previous 12-month pe-
riod.’’; and
(B) by adding at the end the following new
paragraphs:
‘‘(8) INSURED DEPOSITORY INSTITUTION FOR
CERTAIN
SECTIONS.—Notwithstanding subsection
177
(n), the terms ‘depository institution’ and ‘insured
depository institution’ include, for purposes of para-
graph (1) and sections 4(k), 10, and 11, any branch,
agency, or commercial lending company operated in
the United States by a foreign bank.
‘‘(9) WELL MANAGED.—The term ‘well man-
aged’ means—
‘‘(A) in the case of any company or deposi-
tory institution which receives examinations, the
achievement of—
‘‘(i) a CAMEL composite rating of 1
or 2 (or an equivalent rating under an
equivalent rating system) in connection
with the most recent examination or subse-
quent review of such company or institu-
tion; and
‘‘(ii) at least a satisfactory rating for
management, if such rating is given; or
‘‘(B) in the case of a company or deposi-
tory institution that has not received an exam-
ination rating, the existence and use of manage-
rial resources which the Board determines are
satisfactory.’’.
(3) Section 2 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841) (as amended by sec-
178
tion 116(a)(1) of this Act) is amended by inserting
after subsection (o) the following new subsections:
‘‘(p) SECURITIES AFFILIATE.—The term ‘securities
affiliate’ means any company—
‘‘(1) that is (or is required to be) registered
under the Securities Exchange Act of 1934 as a
broker or dealer; and
‘‘(2) the acquisition or retention of the shares
or assets of which the Board has approved under
section 10.
‘‘(q) CAPITAL TERMS.—
‘‘(1) DEPOSITORY INSTITUTIONS.—With respect
to depository institutions, the terms ‘well capital-
ized,’ ‘adequately capitalized’ and ‘undercapitalized’
have the meanings given to such terms in accord-
ance with section 38(b) of the Federal Deposit In-
surance Act.
‘‘(2) FINANCIAL
SERVICES
HOLDING
COM-
PANY.—The following definitions shall apply with re-
spect to financial services holding companies:
‘‘(A) 
ADEQUATELY
CAPITALIZED.—The
term ‘adequately capitalized’ means a level of
capitalization which meets or exceeds the re-
quired minimum level established by the Board
179
for each relevant capital measure for financial
services holding companies.
‘‘(B) WELL CAPITALIZED.—The term ‘well
capitalized’ means a level of capitalization
which meets or exceeds the required capital lev-
els established by the Board for well capitalized
financial services holding companies.
‘‘(3) OTHER CAPITAL TERMS.—The terms ‘tier
1’ and ‘risk-weighted assets’ have the meaning given
those terms in the capital guidelines or regulations
established by the Board for financial services hold-
ing companies.
‘‘(r) FOREIGN BANK TERMS.—For purposes of sub-
sections (s) and (u), sections 4(k), 10, and 11, and sub-
sections (b) and (c) of section 12—
‘‘(1) the terms ‘agency’, ‘branch’, and ‘commer-
cial lending company’ have the same meaning as in
section 1(b) of the International Banking Act of
1978.
‘‘(2) the term ‘foreign bank’ means a foreign
bank (as defined in section 1(b) of the International
Banking Act of 1978) which operates a branch,
agency or commercial lending company, or owns or
controls a bank, in the United States.’’.
180
(c) AMENDMENT
REGARDING
CONDITIONAL
AP-
PROVAL OF NOTICES.—Section 4(a)(2) of the Bank Hold-
ing Company Act of 1956 (12 U.S.C. 1843(a)(2)) is
amended by striking ‘‘paragraph (8)’’ and all that follows
through ‘‘issued by the Board under such paragraph’’ and
inserting ‘‘subsection (c)(8) or section 4(k), 10, or 11,
subject to all the conditions specified in those provisions
or in any order or regulation issued by the Board under
those provisions’’.
(d) AMENDMENT TO NOTICE PROCEDURES.—Section
4(j) of the Bank Holding Company Act of 1956 (12
U.S.C. 1843(j)) (as amended by section 122 of this title)
is amended—
(1) in paragraph (1)(A), by striking ‘‘subsection
(c)(8) or (a)(2)’’ and inserting ‘‘subsection (a)(2),
(c)(8), (c)(15), or (k)’’;
(2) in paragraph (1)(E)—
(A) by striking ‘‘subsection (c)(8) or
(a)(2)’’ and inserting ‘‘subsection (a)(2), (c)(8),
(c)(15), or (k)’’; and
(B) by striking the last sentence and in-
serting the following: ‘‘In no event may the
Board, without the agreement of the financial
services holding company submitting the notice,
extend the notice period under this subpara-
181
graph beyond the period that ends 180 days
after the date that a notice is filed with the
Board or the relevant Federal reserve bank in
accordance with the regulations of the Board.’’;
and
(3) in paragraph (2), by redesignating subpara-
graphs (B) and (C) as subparagraphs (C) and (D),
respectively, and inserting after subparagraph (A)
the following new subparagraph:
‘‘(B) CRITERIA FOR NOTICES INVOLVING
SECURITIES
AFFILIATES.—In considering any
notice that involves the acquisition of shares of
a securities affiliate pursuant to section
4(c)(15), the Board shall apply the criteria and
safeguards contained in this paragraph and in
sections 10 and 11.’’.
(e) ELIMINATION OF OBSOLETE PROVISIONS.—The
Bank Holding Company Act of 1956 (12 U.S.C. 1841
through 1849) is amended—
(1) in section 4(a)(2)—
(A) by striking ‘‘or in the case of a com-
pany’’ and ending ‘‘after December 31, 1980,’’;
and
182
(B) by striking the sentence beginning
‘‘Notwithstanding any other provision of this
paragraph’’;
(2) in section 4(b), by striking ‘‘After two years
from the date of enactment of this Act, no’’ and in-
serting ‘‘No’’; and
(3) in section 5(a)—
(A) by striking ‘‘Within one hundred and
eighty days after the date of enactment of this
Act, or within’’ and inserting ‘‘Within’’; and
(B) by striking ‘‘whichever is later,’’.
(f) CONFORMING AMENDMENTS.—The Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et seq.) is amend-
ed as follows:
(1) In section 3(c)(4), by striking ‘‘one-bank
holding company’’ each place such term appears and
inserting ‘‘1-bank financial services holding com-
pany’’.
(2) In section 3(f)(5), by striking ‘‘bank holding
company’’ the first and second time such term ap-
pears and inserting ‘‘financial services holding com-
pany’’.
(3) In section 4(i)(3)(A), by striking ‘‘is ac-
quired’’ and inserting ‘‘was acquired’’.
183
(4) By striking ‘‘bank holding companies’’ each
place such appears in the following sections and in-
serting ‘‘financial services holding companies’’:
(A) Section 3(d).
(B) Section 4(f).
(C) Section 7(a).
(5) By striking ‘‘bank holding company’s’’ each
place such term appears in section 4(c)(14) and in-
serting ‘‘financial services holding company’s’’.
(6) By striking ‘‘bank holding company’’ each
place such term appears in the following sections
and inserting ‘‘financial services holding company’’:
(A) Subsections (a), (d), (e), (g), (h), and
(o) of section 2.
(B) Subsections (a), (b), (d), (f)(1), (f)(2),
and (f)(3) of section 3.
(C) Subsections (a), (d), (e), (g), (h), and
(j) of section 4.
(D) Clause (ii) in the portion of section
4(c) which precedes paragraph (1) of such sec-
tion.
(E) Paragraphs (2), (3), (7), (8), (10),
(11), (12)(A), and (14) of section 4(c).
(F) Paragraphs (4), (5), and (9) of section
4(f).
184
(G) Paragraphs (1) and (2) of section 4(i).
(H) Sections 5, 7(b), 8, and 11.
(7) In section 4(f)(1), by striking ‘‘bank holding
company’’ the 2d place such term appears and in-
serting ‘‘financial services holding company’’.
(8) In the headings for section 3(f) and 4(f), by
striking ‘‘BANK HOLDING’’ and inserting ‘‘FINAN-
CIAL SERVICES HOLDING’’.
(9) In the heading the heading for section
2(o)(7), by striking ‘‘BANK’’ and inserting ‘‘FINAN-
CIAL SERVICES’’.
(g) TREATMENT OF EXISTING BANK HOLDING COM-
PANIES.—Section 2(a)(6) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(a)(6)) is amended by insert-
ing at the end the following: ‘‘Any company that was a
bank holding company on the day before the date of enact-
ment of the Financial Services Competitiveness and Regu-
latory Relief Act of 1995 shall, for purposes of this chap-
ter, be deemed to have been a financial services holding
company as of the date on which the company became a
bank holding company.’’.
(h) OTHER REFERENCES.—Any reference in any
Federal law to ‘‘bank holding company’’ or ‘‘bank holding
companies’’ as those terms were defined under the Bank
Holding Company Act of 1956 before the enactment of
185
this Act shall be deemed to include a reference to ‘‘finan-
cial services holding company’’ and ‘‘financial services
holding companies’’, respectively, as such terms are de-
fined under the Financial Services Holding Company Act
of 1995.
SEC. 129. CONFORMING AMENDMENTS TO THE BANK HOLD-
ING COMPANY ACT AMENDMENTS OF 1970.
Section 106 of the Bank Holding Company Act
Amendments of 1970 (12 U.S.C. 1971 through 1978) is
amended by striking ‘‘bank holding company’’ each place
such term appears and inserting ‘‘financial services hold-
ing company’’.
SEC. 130. CREDIT CARDS FOR BUSINESS PURPOSES.
Section 2(c)(2)(F) of the Bank Holding Company Act
of 1956 (relating to the definition of credit card banks)
is amended—
(1) in clause (i), by inserting ‘‘including the
provision of credit card accounts for business pur-
poses’’ before the semicolon; and
(2) in clause (v), by inserting ‘‘(other than the
provision of credit card accounts for business pur-
poses in connection with the credit card operations
referred to in clause (i))’’ before the period.
186
SEC. 131. DISPOSITION OF FORECLOSED ASSETS.
Section 4(c)(2) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1843(c)(2)) is amended—
(1) by striking ‘‘for not more than one year at
a time’’; and
(2) by striking ‘‘but no such extensions shall ex-
tend beyond a date five years’’ and inserting ‘‘and,
in the case of a financial services holding company
which has not disposed of such shares within 5 years
of the date such shares were acquired, the Board
may, upon the application of such company, grant
additional exemptions if, in the Board’s judgment,
such extension would not be detrimental to the pub-
lic interest and either the financial services holding
company has made a good faith attempt to dispose
of such shares during such 5-year period or the dis-
posal of such shares during such 5-year period
would have been detrimental to the company, but
the aggregate duration of such extensions shall not
extend 10 years’’.
187
Subtitle D—Interagency Banking
and Financial Services Advisory
Committee
SEC. 141. INTERAGENCY BANKING AND FINANCIAL SERV-
ICES ADVISORY COMMITTEE.
(a) ESTABLISHMENT; COMPOSITION.—There is es-
tablished the Banking and Financial Services Advisory
Committee which shall consist of 6 members as follows:
(1) The Secretary of the Treasury.
(2) The Chairman of the Board of Governors of
the Federal Reserve System.
(3) The Chairperson of the Board of Directors
of the Federal Deposit Insurance Corporation.
(4) The Chairman of the Securities and Ex-
change Commission.
(5) The Chairperson of the Commodities Fu-
tures Trading Commission.
(6) The Comptroller of the Currency.
(b) CHAIRPERSON.—The chairperson of the Commit-
tee shall be the Secretary of the Treasury.
(c) DESIGNATION OF OFFICERS AND EMPLOYEES.—
The members of the Committee may, from time to time,
designate other officers or employees of their respective
agencies to carry out their duties on the Committee.
188
(d) COMPENSATION AND EXPENSES.—Each member
of the Committee shall serve without additional compensa-
tion but shall be entitled to reasonable expenses incurred
in carrying out official duties as a member.
(e) FUNCTION OF THE COMMITTEE.—
(1) IN GENERAL.—The Committee shall meet
as appropriate to consider matters of mutual inter-
est to the members and to consider making rec-
ommendations to the Board of Governors of the
Federal Reserve System regarding the types of ac-
tivities that may be financial in nature for purposes
of the Financial Services Holding Company Act and
to the Comptroller of the Currency regarding the
types of activities that may be incidental to banking
for purposes of section 5136 of the Revised Statutes
of the United States.
(2) CONSIDERATION OF RECOMMENDATIONS.—
The Board of Governors of the Federal Reserve Sys-
tem and the Comptroller of the Currency, as appro-
priate, shall take into account any recommendation
made to the respective agency by the Committee
and, if the agency does not adopt the recommenda-
tion, shall provide a written explanation to the Com-
mittee.
189
(f) IMPROVING THE SUPERVISION, EFFICIENCY, AND
COMPETITIVENESS OF THE FINANCIAL SERVICES INDUS-
TRY.—
(1) IN GENERAL.—The Committee shall seek to
improve the supervision, efficiency, and competitive-
ness of the financial services industry by making
recommendations for such legislative or administra-
tive action as the Committee determines to be appro-
priate to the Congress, each agency or office rep-
resented by a member on the Committee, and other
agencies or departments of the United States, in-
cluding recommendations for changes in law and in
the regulations, policies, and procedures of any de-
partment or agency.
(2) PRINTING
IN
FEDERAL
REGISTER.—Rec-
ommendations from paragraph (1) shall be printed
in the Federal Register and submitted to the Com-
mittee on Banking and Financial Services of the
House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate.
Subtitle E—Application and
Registration Fees
SEC. 151. AUTHORITY TO IMPOSE FEES.
Section 5 of the Bank Holding Company Act of 1956
(12 U.S.C. 1844) is amended by inserting after subsection
190
(g) (as added by section 124 of the bill) the following new
subsection:
‘‘(h) FEES.—In connection with the administration
of this Act, the Board may impose fees on any financial
services holding company, or any company controlled di-
rectly or indirectly by such holding company—
‘‘(1) for such purposes as the Board determines
to be reasonable and appropriate; and
‘‘(2) in amounts, determined by the Board,
which are at least sufficient to meet the Board’s ex-
penses in carrying out this Act with respect to the
activity, application, examination, or other incident
or status (of such company) for which a fee is im-
posed under this subsection.’’.
TITLE II—FUNCTIONAL
REGULATION
Subtitle A—Brokers and Dealers
SEC. 201. DEFINITION OF BROKER.
Section 3(a)(4) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(4)) is amended to read as follows:
‘‘(4) BROKER.—
‘‘(A) IN
GENERAL.—The term ‘broker’
means any person engaged in the business of
effecting transactions in securities for the ac-
count of others.
191
‘‘(B) EXCLUSION
OF
BANKS.—The term
‘broker’ does not include a bank unless such
bank—
‘‘(i) publicly solicits the business of
effecting securities transactions for the ac-
count of others; or
‘‘(ii) is compensated for such business
by the payment of commissions or similar
remuneration based on effecting trans-
actions in securities (other than fees cal-
culated as a percentage of assets under
management) in excess of the bank’s incre-
mental 
costs 
directly 
attributable 
to
effecting such transactions (hereafter re-
ferred to as ‘incentive compensation’).
‘‘(C) EXEMPTION FOR CERTAIN BANK AC-
TIVITIES.—A bank shall not be considered to be
a broker because the bank engages in any of
the following activities under the conditions de-
scribed:
‘‘(i) THIRD
PARTY
BROKERAGE
AR-
RANGEMENTS.—The bank enters into a
contractual or other arrangement with a
broker or dealer registered under this title
under which the broker or dealer offers
192
brokerage services on or off the premises
of the bank if—
‘‘(I) such broker or dealer is
clearly identified as the person per-
forming the brokerage services;
‘‘(II) the broker or dealer per-
forms brokerage services in an area
that is clearly marked and, unless
made impossible by space or personnel
considerations, 
physically 
separate
from the routine deposit-taking activi-
ties of the bank;
‘‘(III) any materials used by the
bank to advertise or promote generally
the availability of brokerage services
under the contractual or other ar-
rangement clearly indicate that the
brokerage services are being provided
by the broker or dealer and not by the
bank;
‘‘(IV) any materials used by the
bank to advertise or promote generally
the availability of brokerage services
under the contractual or other ar-
rangement are in compliance with the
193
Federal securities laws before dis-
tribution;
‘‘(V) bank employees perform
only clerical or ministerial functions in
connection 
with 
brokerage 
trans-
actions, including scheduling appoint-
ments with the associated persons of
a broker or dealer and, on behalf of a
broker or dealer, transmitting orders
or handling customers funds or secu-
rities, except that bank employees who
are not so qualified may describe in
general terms investment vehicles
under the contractual or other ar-
rangement and accept customer or-
ders on behalf of the broker or dealer
if such employees have received train-
ing that is substantially equivalent to
the training required for personnel
qualified to sell securities pursuant to
the requirements of a self-regulatory
organization (as defined in section
3(a) of the Securities Exchange Act of
1934);
194
‘‘(VI) bank employees do not di-
rectly receive incentive compensation
for any brokerage transaction unless
such employees are associated persons
of a broker or dealer and are qualified
pursuant to the requirements of a
self-regulatory organization (as so de-
fined) except that the bank employees
may 
receive 
nominal 
cash 
and
noncash compensation for customer
referrals if the cash compensation is a
1-time fee of a fixed dollar amount
and the payment of the fee is not con-
tingent on whether the referral results
in a transaction;
‘‘(VII) such services are provided
by the broker or dealer on a basis in
which all customers which receive any
services are fully disclosed to the
broker or dealer; and
‘‘(VIII) the broker or dealer in-
forms each customer that the broker-
age services are provided by the
broker or dealer and not by the bank
and that the securities are not depos-
195
its or other obligations of the bank,
are not guaranteed by the bank, and
are not insured by the Federal De-
posit Insurance Corporation.
‘‘(ii) TRUST
ACTIVITIES.—The bank
engages 
in 
trust 
activities 
(including
effecting transactions in the course of such
trust activities) permissible for national
banks under the first section of the Act of
September 28, 1962, or for State banks
under relevant State trust statutes or law
(including securities safekeeping, self-di-
rected individual retirement accounts, or
managed agency accounts or other func-
tionally equivalent accounts of a bank) un-
less the bank—
‘‘(I) publicly solicits brokerage
business, other than by advertising
that it effects transactions in securi-
ties in conjunction with advertising its
other trust activities; or
‘‘(II) 
receives 
incentive 
com-
pensation for such brokerage activi-
ties.
196
‘‘(iii) 
PERMISSIBLE
SECURITIES
TRANSACTIONS.—The bank effects trans-
actions in exempted securities, other than
municipal securities, in commercial paper,
bankers 
acceptances, 
commercial 
bills,
qualified Canadian Government obligations
as defined in section 5136 of the Revised
Statues, obligations of the Washington
Metropolitan Area Transit Authority which
are guaranteed by the Secretary of Trans-
portation under section 9 of the National
Capital Transportation Act of 1969, obli-
gations of the North American Develop-
ment Bank, and obligations of any local
public agency (as defined in section 110(h)
of the Housing Act of 1949) or any public
housing agency (as defined in the United
States Housing Act of 1937) that are ex-
pressly authorized by section 5136 of the
Revised Statutes of the United States as
permissible for a national bank to under-
write or deal in.
‘‘(iv) MUNICIPAL
SECURITIES.—The
bank effects transactions in municipal se-
curities.
197
‘‘(v) EMPLOYEE
AND
SHAREHOLDER
BENEFIT PLANS.—The bank effects trans-
actions as part of any bonus, profit-shar-
ing, pension, retirement, thrift, savings, in-
centive, stock purchase, stock ownership,
stock appreciation, stock option, dividend
reinvestment, or similar plan for employees
or shareholders of an issuer or its subsidi-
aries.
‘‘(vi) SWEEP
ACCOUNTS.—The bank
effects transactions as part of a program
for the investment or reinvestment of bank
deposit funds into any no-load, open-end
management investment company reg-
istered under the Investment Company Act
of 1940 that holds itself out as a money
market fund.
‘‘(vii) AFFILIATE
TRANSACTIONS.—
The bank effects transactions for the ac-
count of any affiliate of the bank, as de-
fined in section 2 of the Financial Services
Holding Company Act of 1995.
‘‘(viii) PRIVATE
SECURITIES
OFFER-
INGS.—The bank—
200
‘‘(II) have been exempted by the
Board of Governors of the Federal
Reserve System pursuant to section
10(l)(3)(C) of such Act.
‘‘(D) EXEMPTION FOR ENTITIES SUBJECT
TO SECTION 15(e).—The term ‘broker’ does not
include a bank that—
‘‘(i) was, immediately prior to the en-
actment of the Financial Services Competi-
tiveness and Regulatory Relief Act of
1995, subject to section 15(e); and
‘‘(ii) is subject to such restrictions
and requirements as the Commission con-
siders appropriate.’’.
SEC. 202. DEFINITION OF DEALER.
Section 3(a)(5) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(5)) is amended to read as follows:
‘‘(5) DEALER.—
‘‘(A) IN
GENERAL.—The term ‘dealer’
means any person engaged in the business of
buying and selling securities for such person’s
own account through a broker or otherwise.
‘‘(B) EXCEPTION
FOR
PERSON
NOT
EN-
GAGED IN THE BUSINESS OF DEALING.—The
term ‘dealer’ does not include a person that
201
buys or sells securities for such person’s own
account, either individually or in a fiduciary ca-
pacity, but not as a part of a regular business.
‘‘(C) EXEMPTION FOR CERTAIN BANK AC-
TIVITIES.—A bank shall not be considered to be
a dealer because the bank engages in any of the
following activities under the conditions de-
scribed:
‘‘(i) The bank buys and sells commer-
cial paper, bankers acceptances, exempted
securities (other than municipal securities),
qualified Canadian Government obligations
as defined in section 5136 of the Revised
Statues, obligations of the Washington
Metropolitan Area Transit Authority which
are guaranteed by the Secretary of Trans-
portation under section 9 of the National
Capital Transportation Act of 1969, obli-
gations of the North American Develop-
ment Bank, and obligations of any local
public agency (as defined in section 110(h)
of the Housing Act of 1949) or any public
housing agency (as defined in the United
States Housing Act of 1937) that are ex-
pressly authorized by section 5136 of the
202
Revised Statutes of the United States as
permissible for a national bank to under-
write or deal in.
‘‘(ii) The bank buys and sells munici-
pal securities.
‘‘(iii) The bank buys and sells securi-
ties for investment purposes for the bank
or for accounts for which the bank acts as
a trustee or fiduciary.
‘‘(iv) The bank—
‘‘(I) has not been affiliated with
a securities affiliate under section 10
of the Financial Services Holding
Company Act of 1995 for more than
1 year; and
‘‘(II) engages in the issuance or
sale, through a grantor trust or other-
wise, of securities backed by or rep-
resenting an interest in notes, drafts,
acceptances, loans, leases, receivables,
other obligations, or pools of any such
obligations originated or purchased by
the bank or any affiliate of the bank.
‘‘(v) The bank buys and sells products
that—
203
‘‘(I) are described in section
10(l)(3)(B) of the Financial Services
Holding Company Act of 1995; or
‘‘(II) have been exempted by the
Board of Governors of the Federal
Reserve System pursuant to section
10(l)(3)(C) of such Act.’’.
SEC. 203. POWER TO EXEMPT FROM THE DEFINITIONS OF
BROKER AND DEALER.
Section 3 of the Securities Exchange Act of 1934 (15
U.S.C. 78c) is amended by adding at the end the follow-
ing:
‘‘(e) EXEMPTION FROM DEFINITION OF BROKER OR
DEALER.—The Commission, by regulation or order, upon
its own motion or upon application, may conditionally or
unconditionally exclude any person or class of persons
from the definitions of ‘broker’ or ‘dealer’, if the Commis-
sion finds that such exclusion is consistent with the public
interest, the protection of investors, and the purposes of
this title.’’.
SEC. 204. MARGIN REQUIREMENTS.
(a) Section 7(d) of the Securities Exchange Act of
1934 (15 U.S.C. 15g(d)) is amended by striking ‘‘or (E)’’
and inserting ‘‘(E) to a loan to a broker or dealer by a
member bank or any other person that has entered into
204
an agreement pursuant to section 8(a) if the proceeds of
the loan are to be used in the ordinary course of the bro-
ker’s or dealer’s business other than for the purpose of
funding the purchase of securities for the account of such
broker or dealer, or (F)’’.
(b) Section 8(a) of the Securities and Exchange Act
of 1934 is amended—
(1) by striking ‘‘nonmember bank’’ and insert-
ing ‘‘person other than a member bank’’; and
(2) by striking ‘‘such bank’’ in the second sen-
tence and inserting ‘‘such person’’.
SEC. 205. EFFECTIVE DATE.
This subtitle shall become effective 270 days after the
date of enactment of this Act.
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;
(2) by striking ‘‘(f) Every registered’’ and in-
serting ‘‘(f) CUSTODY OF SECURITIES.—
205
‘‘(1) Every registered’’;
(3) by designating the 2d, 3d, 4th, and 5th sen-
tences 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) Notwithstanding any provision of this sub-
section, if a bank described in paragraph (1) or an
affiliated person of such bank is an affiliated person,
promoter, organizer, or sponsor of, or principal un-
derwriter for the registered company, such bank may
serve as custodian under this subsection in accord-
ance with such rules, regulations, or orders as the
Commission may prescribe, consistent with the pro-
tection of investors, after consulting in writing with
the appropriate Federal banking agency, as defined
in section 3 of the Federal Deposit Insurance Act.’’.
(b) UNIT INVESTMENT TRUSTS.—Section 26(a)(1) of
the Investment Company Act of 1940 (15 U.S.C. 80a–
26(a)(1)) is amended by inserting before the semicolon at
the end the following: ‘‘, except that, if the trustee or cus-
todian described in this subsection is an affiliated person
of such underwriter or depositor, the Commission may
adopt rules and regulations or issue orders, consistent
207
issued, states that any material part of the proceeds
will be used to discharge indebtedness owed to the
adviser of such registered investment company or
any person controlling, controlled by, or under com-
mon control with the adviser.
The Commission’’.
SEC. 213. LENDING TO AN AFFILIATED INVESTMENT COM-
PANY.
Section 18 of the Investment Company Act of 1940
(15 U.S.C. 80a–18) is amended by adding at the end the
following:
‘‘(l) Notwithstanding any provision of this section, it
shall be unlawful for any affiliated person of a registered
investment company or any affiliated person of such a per-
son to loan money to such investment company in con-
travention of such rules, regulations, or orders as the
Commission may prescribe in the public interest and con-
sistent with the protection of investors.’’.
SEC. 214. 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:
208
‘‘(v) any person (other than a reg-
istered investment company) that, at any
time during the preceding 6 months, has
executed any portfolio transactions for, en-
gaged in any principal transactions with,
or distributed shares for—
‘‘(I) the investment company,
‘‘(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,
or any affiliated person of such a person,’’;
(2) by redesignating clause (vi) as clause (vii);
and
(3) by inserting after clause (v) the following
new clause:
‘‘(vi) any person (other than a reg-
istered investment company) that, at any
209
time during the preceding 6 months, has
loaned money to—
‘‘(I) the investment company,
‘‘(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 for which the
investment company’s investment ad-
viser has borrowing authority,
or any affiliated person of such a person,
or’’.
(b) 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 (and its subsidiaries) or any single financial
services holding company (and its affiliates and subsidi-
aries), as those terms are defined in the Financial Services
Holding Company Act of 1995, except’’.
(c) EFFECTIVE DATE.—The provisions of subsection
(a) of this section shall become effective 1 year after the
date of enactment of this subtitle.
210
SEC. 215. ADDITIONAL SEC DISCLOSURE AUTHORITY.
(a) MISREPRESENTATION.—Section 35(a) of the In-
vestment Company Act of 1940 (15 U.S.C. 80a–34(a)) is
amended to read as follows:
‘‘(a) MISREPRESENTATION OF GUARANTEES.—
‘‘(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 shall prominently disclose that the investment
company or any security issued by the investment
company—
‘‘(A) is not insured by the Federal Deposit
Insurance Corporation;
211
‘‘(B) is not guaranteed by an affiliated in-
sured depository institution; and
‘‘(C) is not otherwise an obligation of any
bank or insured depository institution,
in accordance with such rules, regulations, or orders
as the Commission may prescribe as reasonably nec-
essary or appropriate in the public interest for the
protection of investors, after consulting in writing
with the appropriate Federal banking agencies.
‘‘(3) DEFINITIONS.—The terms ‘insured deposi-
tory institution’ and ‘appropriate Federal banking
agency’ have the meanings given to such terms in
section 3 of the Federal Deposit Insurance Act.’’.
(b) DECEPTIVE USE OF NAMES.—Section 35(d) of
the Investment Company Act of 1940 (15 U.S.C. 80a–
34(d)) is amended to read as follows:
‘‘(d)(1) It shall be unlawful for any registered invest-
ment company to adopt as part of the name or title of
such company, or of any securities of which it is the issuer,
any word or words that the Commission finds are materi-
ally deceptive or misleading. The Commission may adopt
such rules or regulations or issue such orders as are nec-
essary or appropriate to prevent the use of deceptive or
misleading names or titles by investment companies.
212
‘‘(2) It shall be deceptive and misleading for any reg-
istered investment company—
‘‘(A) that is an affiliated person of a bank or
an affiliated person of such a person, or
‘‘(B) for which a bank or an affiliated person
of a bank acts as investment adviser, sponsor, pro-
moter, or principal underwriter,
to adopt, as part of the name or title of such company,
or of any security of which it is an issuer, any word that
is the same or similar to, or a variation of, the name or
title of such bank or affiliated person thereof, in con-
travention of such rules, regulations, or orders as the
Commission may prescribe as necessary or appropriate in
the public interest or for the protection of investors.’’.
SEC. 216. 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 1 or more investment companies.’’.
213
SEC. 217. 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.’’.
SEC. 218. 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 financial services holding company to the ex-
tent that such bank or financial services holding company
acts as an investment adviser to a registered investment
company, or if, in the case of a bank, such services are
performed through a separately identifiable department or
division, the department or division, and not the bank it-
self, shall be deemed to be the investment adviser’’.
(b) SEPARATELY IDENTIFIABLE DEPARTMENT
OR
DIVISION.—Section 202(a) of the Investment Advisers Act
214
of 1940 (15 U.S.C. 80b–2(a)) is amended by adding at
the end the following:
‘‘(25) 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 1 or more investment companies,
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 of this Act or the In-
vestment Company Act of 1940 and rules and
regulations promulgated under this Act or the
Investment Company Act of 1940.’’.
215
SEC. 219. 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.’’.
SEC. 220. 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. 221. 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
216
information as each may have access to with respect
to the investment advisory activities of any financial
services holding company, bank, or separately identi-
fiable department or division of a bank, that is reg-
istered under section 203 of this title, or, in the case
of a financial services holding company or bank, that
has a subsidiary or a separately identifiable depart-
ment or division registered under that section, to the
extent necessary for the Commission to carry out its
statutory responsibilities.
‘‘(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 financial services holding company,
bank, or separately identifiable department or divi-
sion of a bank, any of which is registered under sec-
tion 203 of this title, to the extent necessary for the
agency to carry out its statutory responsibilities.
‘‘(b) EFFECT
ON
OTHER
AUTHORITY.—Nothing
herein shall limit in any respect the authority of the appro-
priate Federal banking agency with respect to such finan-
cial services holding company, bank, or department or di-
vision under any provision of law.
217
‘‘(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.’’.
SEC. 222. TREATMENT OF BANK COMMON TRUST FUNDS.
(a) SECURITIES ACT OF 1933.—Section 3(a)(2) of
the Securities Act of 1933 (15 U.S.C. 77c(a)(2)) is
amended by striking ‘‘or any interest or participation in
any common trust fund or similar fund maintained by a
bank exclusively for the collective investment and reinvest-
ment of assets contributed thereto by such bank in its ca-
pacity as trustee, executor, administrator, or guardian’’
and inserting ‘‘or any interest or participation in any com-
mon trust fund or similar fund that is excluded from the
definition of the term ‘investment company’ under section
3(c)(3) of the Investment Company Act of 1940’’.
(b) SECURITIES EXCHANGE ACT OF 1934.—Section
3(a)(l2)(A)(iii) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(l2)(A)(iii)) is amended to read as fol-
lows:
‘‘(iii) any interest or participation in any
common trust fund or similar fund that is ex-
cluded from the definition of the term ‘invest-
ment company’ under section 3(c)(3) of the In-
vestment Company Act of 1940;’’.
218
(c) INVESTMENT COMPANY ACT OF 1940.—Section
3(c)(3) of the Investment Company Act of 1940 (15
U.S.C. 80a–3(c)(3)) is amended by inserting before the
period the following: ‘‘, if—
‘‘(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. 223. 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:
219
‘‘(g) CONTROLLING INTEREST IN INVESTMENT COM-
PANY PROHIBITED.—
‘‘(1) IN GENERAL.—If any investment adviser
to a registered investment company, or an affiliated
person of that investment adviser, holds a control-
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 other per-
son or entity other than an employee benefit
plan subject to the Employee Retirement In-
come Security Act of 1974—
‘‘(i) transfer the power to vote the
shares of the investment company through
to—
220
‘‘(I) the beneficial owners of the
shares;
‘‘(II) another person acting in a
fiduciary capacity who is not an affili-
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 for the pro-
tection of investors.
‘‘(2) EXEMPTION.—Paragraph (1) shall not
apply to any investment adviser to a registered in-
vestment company, or an affiliated person of that in-
vestment adviser, holding shares of the investment
221
company in a trustee or fiduciary capacity if that
registered investment company consists solely of as-
sets of held in such capacities.
‘‘(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).
‘‘(4) CHURCH
PLAN
EXEMPTION.—Paragraph
(1) shall not apply to any investment adviser to a
registered investment company, or an affiliated per-
son of that investment adviser, holding shares in
such a capacity, if such investment adviser or such
affiliated person is an organization described in sec-
tion 414(e)(3)(A) of the Internal Revenue Code of
1986.’’.
SEC. 224. 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
222
terms are defined in section 101(b) of the International
Banking Act of 1978)’’.
SEC. 225. EFFECTIVE DATE.
This subtitle shall take effect 270 days after the date
of the enactment of this Act.
TITLE III—BANK INSURANCE
ACTIVITIES
SEC. 301. AUTHORITY OF THE COMPTROLLER OF THE CUR-
RENCY.
(a) STATE SUPERVISION.—Chapter 1 of Title LXII
of the Revised Statutes of the United States (12 U.S.C.
21 et seq.) is amended—
(1) by redesignating section 5136A as section
5136C; and
(2) by inserting after section 5136 (12 U.S.C.
24) the following new section:
‘‘SEC. 5136A. STATE SUPERVISION OF INSURANCE.
‘‘(a) STATE LICENSING
OF INSURANCE ACTIVI-
TIES.—
‘‘(1) IN GENERAL.—Subject to paragraph (2)
and subject to the provisions of subsection (f), no
provision of section 5136, any other section of this
title, or section 13 of the Federal Reserve Act may
be construed as limiting or otherwise impairing the
authority of any State to regulate—
223
‘‘(A) the extent to which, and the manner
in which, a national bank may engage within
the State in insurance activities pursuant to
section 5136B of this chapter or section 13 of
the Federal Reserve Act;
‘‘(B) the manner in which a national bank
may engage within the State in insurance ac-
tivities pursuant to section 5136(b)(2)(B) of
the Revised Statutes of the United States; or
‘‘(C) the manner in which a national bank
may engage within the State in insurance ac-
tivities pursuant to section 5136(b)(2)(A) of the
Revised Statutes of the United States through,
and limited to, consumer disclosure require-
ments or licensing requirements, procedures,
and qualifications as described in paragraph
(2)(C).
‘‘(2) PROHIBITION ON STATE DISCRIMINATION
AGAINST NATIONAL BANKS.—Notwithstanding para-
graph (1)—
‘‘(A) PROVIDING INSURANCE AS AGENT OR
BROKER.—No State may impose any insurance
regulatory requirement relating to providing in-
surance as an agent or broker that treats a na-
tional bank differently than all other persons
224
who are authorized to provide insurance as
agents or brokers in such State, unless there is
a legitimate and reasonable State regulatory
purpose for the requirement for which there is
no less restrictive alternative.
‘‘(B) PROVIDING
INSURANCE
AS
PRIN-
CIPAL, AGENT, OR BROKER.—
‘‘(i) No State may impose on a na-
tional bank any insurance regulatory re-
quirement relating to providing insurance
as principal, agent, or broker that treats
the national bank more restrictively than
any other depository institution (as defined
in section 3(c)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. 1813(c)(1)) op-
erating in the State.
‘‘(ii) Nothing in this subparagraph
shall affect the validity of a State law
that—
‘‘(I) prevents a national bank
from engaging in insurance activities
within the State to as great an extent
as a savings association (as defined in
section 3(b)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. 1813(b)(1))
225
may engage in such activities within
the State; and
‘‘(II) was in effect on June 1,
1995.
‘‘(C) LICENSING
QUALIFICATIONS
AND
PROCEDURES.—No State may discriminate
against a national bank with respect to the fol-
lowing requirements, procedures, and qualifica-
tions as such requirements, procedures, and
qualifications relate to the authority of the na-
tional bank to provide insurance in such State
as an agent or broker:
‘‘(i) License application and process-
ing procedures.
‘‘(ii) Character, experience, and edu-
cational qualifications for licenses.
‘‘(iii) Testing and examination re-
quirements for licenses.
‘‘(iv) Fee requirements for licenses.
‘‘(v) Continuing education require-
ments.
‘‘(vi) Types of licenses required.
‘‘(vii) Standards and requirements for
renewal of licenses.
226
‘‘(b) AUTHORITY OF THE COMPTROLLER OF THE
CURRENCY.—A national bank may not provide insurance
as a principal, agent, or broker except as specifically pro-
vided in this section, the paragraph designated as the
‘Seventh’ of section 5136(a) of this chapter, section
5136(b) or 5136B of this chapter, or section 13 of the
Federal Reserve Act.
‘‘(c) PRESERVATION OF FEDERALLY AUTHORIZED
BANK ACTIVITIES IN PERMISSIVE STATES.—No provision
of this section may be construed as affecting the authority,
pursuant to section 5136B of this chapter or section 13
of the Federal Reserve Act, of a national bank to act as
insurance agent or broker consistent with State law.
‘‘(d) PRESERVATION OF NATIONAL BANK AUTHOR-
ITY CONSISTENT WITH STATE BANK AUTHORITY.—Ex-
cept as provided in subsection (a)(2)(B), no provision of
this section or section 5136(b)(1) shall have the effect of
enabling a State to deny a national bank authority that
the bank otherwise possesses to provide a product in a
State, including as agent, broker, or principal, where the
bank is not providing the product in the State other than
to an extent and in a manner that a State bank (as de-
fined in section 3(a)(2) of the Federal Deposit Insurance
Act, 12 U.S.C. 1813(a)(2)) is permitted by the law of the
State to provide such product, except that nothing in this
227
subsection shall be construed as granting any new author-
ity to a national bank to provide any product because the
law of the State has authorized State banks to provide
such product.
‘‘(e) DEFINITIONS.—For purposes of this section,
sections 5136 and 5136B, and section 13 of the Federal
Reserve Act, the following definitions shall apply:
‘‘(1) INSURANCE.—The term ‘insurance’ means
any product defined or regulated as insurance, con-
sistent with the relevant State insurance law, by the
insurance regulatory authority of the State in which
such product is sold, solicited, or underwritten, in-
cluding any annuity contract the income on which is
tax deferred under section 72 of the Internal Reve-
nue Code of 1986.
‘‘(2) STATE.—The term ‘State’ has the same
meaning as in section 3(a)(3) of the Federal Deposit
Insurance Act.
‘‘(f) GRANDFATHER PROVISION.—
‘‘(1) IN GENERAL.—Any national bank which—
‘‘(A) before January 1, 1995, was provid-
ing insurance as agent or broker under section
13 of the Federal Reserve Act may provide in-
surance as an agent or broker under such sec-
tion, to no less extent and in a no more restric-
228
tive manner as such bank was providing insur-
ance as agent or broker under such section on
January 1, 1995, notwithstanding contrary
State law, subject to final, controlling judgment
in a pending action; or
‘‘(B) notwithstanding subparagraph (A), is
a party to a pending action and before January
1, 1995, was providing insurance as agent or
broker under section 13 of the Federal Reserve
Act may provide insurance as an agent or
broker under such section notwithstanding con-
trary State law, subject to final, controlling
judgment in such pending action.
‘‘(2) TERMINATION.—This subsection shall
cease to apply with respect to any national bank de-
scribed in paragraph (1) if—
‘‘(A) the bank is subject to an acquisition,
merger, consolidation, or change in control,
other than a transaction to which section
18(c)(12) of the Federal Deposit Insurance Act
applies; or
‘‘(B) any financial services holding com-
pany which directly or indirectly controls such
bank is subject to an acquisition, merger, con-
solidation, or change in control, other than a
229
transaction in which the beneficial ownership of
such financial services holding company or of a
financial services holding company which con-
trols such company does not change as a result
of the transaction.
‘‘(g) PRESERVATION OF BANKING PRODUCTS.—No
provision of this section shall be construed as affecting the
ability of a national bank, or a subsidiary of a national
bank, to engage in any activity, including any activity au-
thorized pursuant to the paragraph designated the ‘‘Sev-
enth’’ of section 5136(a), that is part of, and not merely
incidental to, the business of banking.’’.
(b) INTERPRETIVE AUTHORITY OF THE COMPTROL-
LER OF THE CURRENCY.—Section 5136 of the Revised
Statutes of the United States (12 U.S.C. 24) is amend-
ed—
(1) by striking ‘‘Upon duly making and filing
articles of association’’ and inserting ‘‘(a) IN GEN-
ERAL.—Upon duly making and filing articles of as-
sociation’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) INTERPRETIVE AUTHORITY OF THE COMPTROL-
LER OF THE CURRENCY.—
230
‘‘(1) IN GENERAL.—Subject to paragraph (2),
it shall not be incidental to banking for a national
bank to provide insurance as a principal, agent, or
broker.
‘‘(2) SCOPE
OF
APPLICATION.—Notwithstand-
ing paragraph (1), it shall be incidental to banking
for a national bank to engage in the following activi-
ties:
‘‘(A) Providing, as an agent or broker, any
annuity contract the income on which is tax de-
ferred under section 72 of the Internal Revenue
Code of 1986.
‘‘(B) Providing, as a principal, agent, or
broker, any type of insurance, other than an
annuity or title insurance, which the Comptrol-
ler of the Currency specifically determined, be-
fore May 1, 1995, to be incidental to banking
with respect to national banks, except that
paragraph (1) shall not apply with respect to
any national bank providing title insurance as
an agent if the bank was actively and lawfully
engaged in such activity as an agent as of May
15, 1995.’’.
(c) TECHNICAL AND CONFORMING AMENDMENTS.—
231
(1) The 11th undesignated paragraph of section
13 of the Federal Reserve Act (12 U.S.C. 92) is
amended by inserting ‘‘, and subject to section
5136A of the Revised Statutes of the United
States,’’ after ‘‘the laws of the United States’’.
(2) The paragraph designated the ‘‘Seventh’’ of
section 5136 of the Revised Statutes of the United
States (12 U.S.C. 24) is amended by striking ‘‘sub-
ject to law,’’ and inserting ‘‘subject to subsection
(b), section 5136A, and any other provision of law,’’.
(3) Section 1306 of title 18, United States
Code, is amended by striking ‘‘5136A’’ and inserting
‘‘5136C’’.
(d) CLERICAL AMENDMENT.—The table of sections
for chapter 1 of title LXII of the Revised Statutes of the
United States is amended—
(1) by redesignating the item relating to section
5136A as section 5136C; and
(2) by inserting after the item relating to sec-
tion 5136 the following new item:
‘‘5136A. State supervision of insurance.’’.
(e) PRESERVATION OF FINANCIAL SERVICES HOLD-
ING COMPANY INSURANCE AUTHORITY.—No provision of
this section, and no amendment made by this section to
any other provision of law, may be construed as affecting
the authority of a financial services holding company to
232
engage in insurance agency activity pursuant to section
4(c) of the Financial Services Holding Company Act of
1995.
(f) CONGRESSIONAL PURPOSES; SUNSET PROVISION;
CONGRESSIONAL REVIEW.—
(1) PURPOSES.—The purposes of this section
are to clarify State authority to regulate and super-
vise bank insurance activities (in addition to the
Federal banking agencies) and to place a morato-
rium on further efforts by the Comptroller of the
Currency to authorize national banks to engage in
new insurance powers without rolling back the sta-
tus quo, except that no provision of this section shall
prohibit national banks, or subsidiaries of national
banks, from engaging in any activity, including any
activity authorized pursuant to the paragraph des-
ignated the ‘‘Seventh’’ of section 5136(a), that is
part of, and not merely incidental to, the business
of banking. Accordingly, it is not the purpose of this
section to affect the ability of a national bank (or a
subsidiary of a national bank) to engage in any core
banking activity.
(2) SUNSET
OF
CERTAIN
AUTHORITY.—The
amendments made by this section shall not apply
233
after the end of the 5-year period beginning on the
date of the enactment of this Act.
(3) CONGRESSIONAL
REVIEW
OF
DEVELOP-
MENTS IN, AND THE COMPETITIVENESS OF, THE FI-
NANCIAL SERVICE INDUSTRY.—It is the intent of the
Congress to conduct a thorough and ongoing review
of the competitiveness of, and the relationships be-
tween, the banking, securities, and insurance sectors
of the financial services industry during the 5-year
period described in paragraph (2) for the purpose of
determining whether additional legislation is needed.
SEC. 302. NATIONAL BANK COMMUNITY DEVELOPMENT IN-
SURANCE ACTIVITIES.
(a) IN GENERAL.—Chapter 1 of Title LXII of the
Revised Statutes of the United States (12 U.S.C. 21 et
seq.) is amended by inserting after section 5136A (as
added by section 440(a) of this Act) the following new sec-
tion:
‘‘SEC. 5136B. INSURANCE SALES IN EMPOWERMENT ZONES.
‘‘(a) AUTHORITY TO SELL INSURANCE AS AGENT
FROM EMPOWERMENT ZONES.—The Comptroller of the
Currency may approve an application by a national bank
maintaining a main office or full-service branch in an
empowerment zone to act as an agent or broker from such
office or branch for any fire, life, or other insurance com-
234
pany authorized to do business in the State in which the
customer is located if—
‘‘(1) the bank provides sufficient evidence that
the availability of competitively priced insurance in
the empowerment zone is inadequate; and
‘‘(2) the insurance is sold only in the
empowerment zone.
‘‘(b) APPLICATION
OF STATE LAW.—State laws
which regulate conducting the business of insurance shall
apply to national banks and their employees that sell in-
surance as agent or broker under this section to the same
extent as such laws apply to other entities and persons
not affiliated with depository institutions except—
‘‘(1) in any case in which the Comptroller of
the Currency determines, after notice to and com-
ment by the appropriate State insurance officials,
that the application of a State law would have an
unreasonably discriminatory effect upon the sale of
insurance by national banks or their employees in
comparison with the effect the application of the
State law would have with respect to sale of insur-
ance by other entities; or
‘‘(2) when State law by its own terms does not
apply to national banks or employees of such banks.
235
‘‘(c) AUTHORITY OF COMPTROLLER OF THE CUR-
RENCY.—
‘‘(1) IN
GENERAL.—The Comptroller of the
Currency may prescribe regulations governing sales
of insurance by national banks pursuant to this sec-
tion.
‘‘(2) ENFORCEMENT OF STATE LAW.—The pro-
visions of any State law to which a national bank is
subject under this section shall be enforced with re-
spect to such bank by the Comptroller of the Cur-
rency.
‘‘(d) DEFINITIONS.—
‘‘(1) 
EMPOWERMENT
ZONE.—The 
term
‘empowerment zone’ means an area that meets the
standards for designation as an empowerment zone
or enterprise community under section 1392 of the
Internal Revenue Code of 1986 or an Indian res-
ervation.
‘‘(2) FULL-SERVICE BRANCH.—The term ‘full-
service branch’ means a staffed facility which has
been approved as a branch and offers loan and de-
posit services.
‘‘(3) INDIAN RESERVATION.—The term ‘Indian
reservation’ has the meaning given such term by sec-
236
tion 168(j)(6) of the Internal Revenue Code of
1986.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 1 of title LXII of the Revised Statutes of the
United States is amended by inserting after the item relat-
ing to section 5136A (as added by section 440(d) of this
title) the following new item:
‘‘5136B. Insurance sales in empowerment zones.’’.
TITLE IV—REDUCTIONS IN GOV-
ERNMENT OVERREGULATION
Subtitle A—The Home Mortgage
Process
SEC. 401. REGULATORY AUTHORITY OVER DISCLOSURES
AND 
ESCROW 
ACCOUNTS 
UNDER 
RESPA
TRANSFERRED 
TO 
FEDERAL 
RESERVE
BOARD.
(a) IN GENERAL.—Sections 4, 5, 6, and 10(d) of the
Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2601 et seq.) are amended by striking ‘‘Secretary’’
each place such term appears and inserting ‘‘Board’’.
(b) CLARIFICATION OF PURPOSE.—Section 2(b)(2) of
the Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2601(b)(2)) is amended by inserting the following
before the semicolon at the end: ‘‘without—
‘‘(A) directly regulating settlement services
prices; or
237
‘‘(B) directly regulating wages to bona fide
employees that are not designed as a subterfuge
to facilitate kickbacks among affiliated compa-
nies’’.
(c) BOARD DEFINED.—Section 3 of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2602) is
amended—
(1) by striking ‘‘and’’ at the end of paragraph
(7);
(2) by striking the period at the end of para-
graph (8) and inserting ‘‘; and’’; and
(3) by adding at the end the following new
paragraph:
‘‘(9) the term ‘Board’ means the Board of Gov-
ernors of the Federal Reserve System.’’.
(d) NEGOTIATED REGULATIONS UNDER SECTIONS 8
AND 9.—Section 8 of the Real Estate Settlement Proce-
dures Act of 1974 (12 U.S.C. 2607) is amended by adding
at the end the following new subsection:
‘‘(e) NEGOTIATED REGULATIONS.—
‘‘(1) IN
GENERAL.—The Secretary may not
publish a proposed or final regulation under this sec-
tion and section 9 after the date of the enactment
of the Financial Services Competitiveness and Regu-
latory Relief Act of 1995 unless the Secretary has
238
used the negotiated rulemaking procedure estab-
lished under subchapter III of chapter 5 of title 5,
United States Code, to attempt to negotiate and de-
velop the rule.
‘‘(2) CONSISTENCY WITH PURPOSE.—Any regu-
lation prescribed in accordance with paragraph (1)
shall be consistent with the purposes of this title as
set forth in section 2.’’.
(e) ADMINISTRATIVE ENFORCEMENT OF PROHIBI-
TION AGAINST KICKBACKS AND UNEARNED FEES.—Sec-
tion 8 of the Real Estate Settlement Procedures Act of
1974 (12 U.S.C. 2607) is amended by adding after sub-
section (e) (as added by subsection (d) of this section) the
following new subsection:
‘‘(f) ADMINISTRATIVE ENFORCEMENT.—
‘‘(1) IN
GENERAL.—Compliance with the re-
quirements of this section and sections 9 and 12
shall be enforced under this Act—
‘‘(A) in the case of an insured depository
institution (as defined in section 3 of the Fed-
eral Deposit Insurance Act), by the appropriate
Federal banking agency (as defined in such sec-
tion);
‘‘(B) in the case of an insured credit union
(as defined in section 101(7) of the Federal
239
Credit Union Act), by the National Credit
Union Administration;
‘‘(C) in the case of a financial services
holding company (as defined in section 2 of the
Financial Services Holding Company Act of
1995) and any affiliate of any such holding
company (other than an insured depository in-
stitution), by the Board;
‘‘(D) in the case of a savings and loan
holding company (as defined in section 10 of
the Home Owners’ Loan Act) and any affiliate
of any such holding company (other than an in-
sured depository institution), by the Director of
the Office of Thrift Supervision; and
‘‘(E) in the case of any other person, by
the Secretary.
‘‘(2) SPECIAL
RULES
RELATING
TO
DETER-
MINATION OF APPROPRIATE REGULATOR.—
‘‘(A) CASES
OF
MORE
THAN
APPRO-
PRIATE REGULATOR.—If, under paragraph (1),
a company may be regulated by more than 1
agency, the Board shall determine which agency
shall be the responsible agency, notwithstanding
paragraph (1).
240
‘‘(B) CASES INVOLVING JOINT VENTURES,
PARTNERSHIPS, AND OTHER AFFILIATED BUSI-
NESS ARRANGEMENTS.—If any insured deposi-
tory institution is involved in a joint venture,
partnership, or other affiliated business ar-
rangement with any person who is not an in-
sured depository institution, the agency respon-
sible for enforcing this section and sections 9
and 12 with respect to such insured depository
institution shall be the agency with such re-
sponsibility with respect to such joint venture,
partnership, or other affiliated business ar-
rangement.
‘‘(3) INTERAGENCY
COOPERATION
AND
EN-
FORCEMENT GUIDELINES.—All the agencies referred
to in any subparagraph of paragraph (1) shall co-
operate with each other to develop enforcement
guidelines and other means for achieving effective
compliance with this section and sections 9 and 12.
‘‘(4) PREFERENCE
FOR
CIVIL
ENFORCEMENT
OVER CRIMINAL ENFORCEMENT.—As part of the co-
operative efforts required under paragraph (3), the
agencies referred to in paragraph (1) shall consider
means for achieving compliance with this section and
section 9 through the exercise of administrative en-
241
forcement authority under this subsection without
resorting to criminal enforcement actions under sub-
section (d) except in appropriate cases.
‘‘(5) EFFECTIVE
DATE.—Paragraphs (1) and
(2) shall not take effect until joint interagency co-
operation and enforcement guidelines are adopted by
all the agencies to which paragraphs (1) and (2)
apply and the enforcement authority of the Sec-
retary with respect to this section and sections 9 and
12 shall continue until such paragraphs take ef-
fect.’’.
(f) INCREASED SCIENTER REQUIREMENT FOR CRIMI-
NAL PENALTY.—Section 8(d) of the Real Estate Settle-
ment Procedures Act of 1974 (12 U.S.C. 2607(d)) is
amended—
(1) in paragraph (1), by inserting ‘‘willfully’’
after ‘‘persons who’’; and
(2) in paragraph (3), by striking ‘‘was not in-
tentional and’’.
(g) REDESIGNATION OF CONTROLLED BUSINESS AR-
RANGEMENTS
AS
AFFILIATED
BUSINESS
ARRANGE-
MENTS.—The Real Estate Settlement Procedures Act of
1974 (12 U.S.C. 2601 et seq.) is amended—
243
(4) Section 16 of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2614) is amend-
ed by striking ‘‘Secretary,’’ and inserting ‘‘Board, an
agency referred to in any subparagraph of section
8(f)(1),’’.
(5) Section 18 of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2616) is amend-
ed—
(A) by striking ‘‘Secretary is authorized
to’’ and inserting ‘‘Board and Secretary may
jointly’’;
(B) by striking ‘‘Secretary’’ each place
such term appears other than the 1st place and
inserting ‘‘Board and Secretary’’; and
(C) by striking ‘‘determines that such
laws’’ and inserting ‘‘determine that such
laws’’.
(6) Section 19(a) of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2617(a)) is
amended to read as follows:
‘‘(a) REGULATIONS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the Secretary and the Board may prescribe such
regulations, make such interpretations, and grant
such reasonable exemptions for classes of trans-
244
actions, as may be necessary to achieve the purposes
of this Act.
‘‘(2) APPLICATION.—
‘‘(A) BOARD.—The authority of the Board
under paragraph (1) shall apply with respect
to—
‘‘(i) sections 4, 5, 6, 10, and 12; and
‘‘(ii) sections 3, 7, 17, and 18 to the
extent such sections are applicable with re-
spect to the sections described in clause (i).
‘‘(B) SECRETARY.—The authority of the
Secretary under paragraph (1) shall apply with
respect to—
‘‘(i) sections 8 and 9; and
‘‘(ii) sections 3, 7, 17, and 18 to the
extent such sections are applicable with re-
spect to the sections described in clause
(i).’’.
(7) Section 19(b) of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2617(b)) is
amended by inserting ‘‘, the Board,’’ after ‘‘the Sec-
retary’’.
(8) Section 19(c) of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2617(c)) is
amended—
245
(A) in paragraph (1)—
(i) by striking ‘‘Secretary’’ the 1st
place such term appears and inserting
‘‘Board, with respect to any action to en-
force section 4, 5, 6, or 10, and each agen-
cy referred to in any subparagraph of sec-
tion 8(f)(1), with respect to any action to
enforce section 8, 9, or 12,’’; and
(ii) by striking ‘‘Secretary’’ each place
such term appears other than the 1st place
and inserting ‘‘Board or such other agen-
cy’’; and
(B) in paragraph (2), by striking ‘‘Sec-
retary’’ and inserting ‘‘Board or an agency re-
ferred to in any subparagraph of section
8(f)(1)’’.
(9) The heading for section 19 of the Real Es-
tate Settlement Procedures Act of 1974 (12 U.S.C.
2617) is amended to read as follows:
‘‘AUTHORITY OF THE SECRETARY AND THE FEDERAL
RESERVE BOARD’’.
(i) REPEAL OF OBSOLETE PROVISIONS.—The Real
Estate Settlement Procedures Act of 1974 (12 U.S.C.
2601 et seq.) is amended by striking sections 13, 14, and
15.
246
SEC. 402. SIMPLIFICATION AND UNIFICATION OF DISCLO-
SURES REQUIRED UNDER RESPA AND TILA
FOR MORTGAGE TRANSACTIONS.
(a) IN GENERAL.—With respect to credit trans-
actions which are subject to the Real Estate Settlement
Procedures Act of 1974 and the Truth in Lending Act,
the Board of Governors of the Federal Reserve System
shall take such action as may be necessary before the end
of the 3-month period beginning on the date of the enact-
ment of this Act—
(1) to simplify the disclosures applicable to such
transactions under such Acts, including the timing
of the disclosures; and
(2) to provide a single format for such disclo-
sures which will satisfy the requirements of each
such Act with respect to such transactions.
(b) REGULATIONS.—To the extent that it is nec-
essary to prescribe any regulation in order to effect any
changes required to be made under subsection (a), the pro-
posed regulation shall be published in the Federal Register
before the end of the 3-month period referred to in sub-
section (a).
(c) RECOMMENDATIONS FOR LEGISLATION.—If the
Board of Governors of the Federal Reserve System finds
that legislative action may be necessary or appropriate in
order to simplify and unify the disclosure requirements
247
under the Real Estate Settlement Procedures Act of 1974
and the Truth in Lending Act, the Board shall submit
a report containing recommendations to the Congress con-
cerning such action.
SEC. 403. INCREASED REGULATORY FLEXIBILITY UNDER
THE TRUTH IN LENDING ACT.
(a) REGULATORY FLEXIBILITY.—Section 104 of the
Truth in Lending Act (15 U.S.C. 1603) is amended by
adding at the end the following new paragraph:
‘‘(7) Transactions for which the Board, by reg-
ulation, determines that coverage under the Act is
not needed to carry out the purposes of the Act.’’.
(b) EXEMPTIVE AUTHORITY.—Section 105 of the
Truth in Lending Act (15 U.S.C. 1604) is amended—
(1) by redesignating subsections (b), (c), and
(d) as subsections (c), (d), and (e), respectively; and
(2) by inserting after subsection (a) the follow-
ing new subsection:
‘‘(b) EXEMPTIVE AUTHORITY.—
‘‘(1) IN
GENERAL.—The Board shall exempt
from all or parts of this title any class of trans-
actions for which, in the Board’s judgment, coverage
under all or part of this title does not provide a
measurable benefit to consumers in the form of use-
ful information or protection.
248
‘‘(2) FACTORS TO BE CONSIDERED.—In deter-
mining which classes of transactions to exempt in
whole or in part, the Board shall consider, among
other factors, the following:
‘‘(A) The amount of the loan or closing
costs and whether the disclosures, right of re-
scission, and other provisions are necessary,
particularly for small loans.
‘‘(B) Whether the requirements of this title
complicate, hinder, or make more expensive the
credit process for the class of transactions.
‘‘(C) The status of the borrower, including,
the borrowers’ related financial arrangements,
the financial sophistication of the borrower rel-
ative to the type of transaction, and the impor-
tance of the credit and related supporting prop-
erty to the borrower.’’.
SEC. 404. REDUCTIONS IN RESPA REGULATORY BURDENS;
CLARIFYING AMENDMENTS.
(a) UNNECESSARY DISCLOSURE.—Section 6(a) of the
Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2605) is amended to read as follows:
‘‘(a) DISCLOSURE TO APPLICANT RELATING TO AS-
SIGNMENT, SALE, OR TRANSFER OF LOAN SERVICING.—
249
‘‘(1) IN GENERAL.—Each person who makes a
federally related mortgage loan shall disclose to each
person who applies for any such loan, at the time of
application for the loan, whether the servicing of any
such loan may be assigned, sold, or transferred to
any other person at any time while such loan is out-
standing.
‘‘(2) SIGNATURE OF APPLICANT.—Any disclo-
sure of the information required under paragraph
(1) shall not be effective for purposes of this section
unless the disclosure is accompanied by a written
statement, in such form as the Secretary shall de-
velop before the expiration of the 180-day period be-
ginning on the date of the enactment of the Finan-
cial Services Competitiveness and Regulatory Relief
Act of 1995, that the applicant has read and under-
stood the disclosure and that is evidenced by the sig-
nature of the applicant at the place where such
statement appears in the application.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect 180 days after the date
of the enactment of this Act.
(c) SECOND MORTGAGES.—Section 3(1)(A) of the
Real Estate Settlement Procedures Act of 1974 (12
250
U.S.C. 2602(1)(A)) is amended by striking ‘‘or subordi-
nate’’.
(d) CONSISTENCY OF RESPA AND TRUTH IN LEND-
ING ACT EXEMPTION OF BUSINESS LOANS.—Section 7 of
the Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2606) is amended—
(1) by inserting ‘‘(a) IN GENERAL.—’’ before
‘‘This Act’’; and
(2) by inserting at the end the following new
subsection:
‘‘(b) INTERPRETATION.—In issuing regulations pur-
suant to section 19(a) of this Act, the Board shall ensure
that, with regard to subsection (a), the exemption for busi-
ness credit includes all business credit which is exempt
from the Truth in Lending Act in accordance with section
226.3(a) of the regulations prescribed by the Board known
as ‘regulation Z’ (12 C.F.R. 226.3(a)), as in effect on the
date of enactment of the Financial Services Competitive-
ness and Regulatory Relief Act of 1995.’’.
SEC. 405. DISCLOSURES FOR ADJUSTABLE RATE MORT-
GAGES.
(a) IN GENERAL.—Section 127A(a)(2)(G) of the
Truth in Lending Act (15 U.S.C. 1637a(a)(2)(G)) is
amended by inserting before the semicolon ‘‘, or a state-
ment that the monthly payment may increase or decrease
251
significantly due to increases in the annual percentage
rate’’.
(b) TECHNICAL AND CONFORMING AMENDMENT.—
Section 127A(b)(3) of the Truth in Lending Act (15
U.S.C. 1637a(b)(3)) is amended by striking ‘‘required
under’’ and inserting ‘‘referred to in’’.
(c) ALTERNATIVE TO HISTORICAL EXAMPLE.—Sec-
tion 128(a) of the Truth in Lending Act (15 U.S.C.
1638(a)) is amended by inserting at the end the following
new paragraph:
‘‘(14) In any variable rate transaction secured
by the consumer’s principal dwelling with a term
greater than 1 year, at the creditors’ option, a state-
ment that the monthly payment may increase or de-
crease substantially, or a historical example illustrat-
ing the effects of interest rate changes implemented
according to the loan program.’’.
(d) ENSURING HONORING OF LOCK-IN PROMISES.—
Section 128(b) of the Truth in Lending Act (15 U.S.C.
1638(b)) is amended by adding at the end the following
new paragraph:
‘‘(3) In the case of a residential mortgage trans-
action, the disclosures under subsection (a) shall include
the following:
252
‘‘(A) The note rate and points, and a state-
ment, if applicable, that these terms are subject to
change.
‘‘(B) A statement that the creditor must in-
clude the disclosed note rate and points in the credit
agreement unless, in relation to either or both of
those terms—
‘‘(i) the disclosure clearly and conspicu-
ously indicates that the term is subject to
change, or
‘‘(ii) in the case of any term to which
clause (i) does not apply—
‘‘(I) the creditor has clearly and con-
spicuously indicated that the term is condi-
tioned on closing the transaction within a
prescribed time;
‘‘(II) the creditor has promptly and
clearly communicated to the consumer the
information and documentation that the
consumer is required to provide to the
creditor; and
‘‘(III) the consumer has failed to pro-
vide such information and documentation
within a reasonable time after receiving
that communication.’’.
253
SEC. 406. TREATMENT OF CERTAIN DEBT CANCELLATION
AND DEFICIENCY WAIVER CONTRACTS.
Section 106(c) of the Truth in Lending Act (15
U.S.C. 1605(c)) is amended to read as follows:
‘‘(c) TREATMENT OF CERTAIN DEBT CANCELLATION
AND DEFICIENCY WAIVER CONTRACTS.—Charges or pre-
miums for any insurance or for any voluntary
noninsurance product, written in connection with any
consumer credit transaction, that provides protections
against loss of or damage to property or against part or
all of the debtor’s liability for amounts in excess of the
value of the collateral securing the debtor’s obligation, or
against liability arising out of the ownership or use of
property, shall be included in the finance charge unless
a clear and specific statement in writing is furnished by
the creditor to the person to whom the credit is extended,
setting forth the cost of the insurance or product if ob-
tained from or through the creditor, and stating that the
person to whom credit is extended may choose the person
through which the insurance or product is to be ob-
tained.’’.
SEC. 407. RECOVERY OF FEES.
Section 125(b) of the Truth in Lending Act (15
U.S.C. 1635) is amended—
254
(1) in the 1st sentence, by inserting ‘‘, except
any charge for an appraisal report or credit report’’
after ‘‘other charge’’; and
(2) in the 2d sentence, by striking ‘‘otherwise’’
and inserting ‘‘as otherwise required under this sub-
section’’.
SEC. 408. HOME OWNERSHIP DEBT COUNSELING NOTIFICA-
TION.
Section 106(c) of the Housing and Urban Develop-
ment Act of 1968 (12 U.S.C. 1701x(c)) is amended by
striking paragraph (5).
SEC. 409. HOME MORTGAGE DISCLOSURE ACT.
(a) Section 309 of the Home Mortgage Disclosure
Act of 1975 (12 U.S.C. 2808) is amended—
(1) 
in 
the 
2d 
sentence, 
by 
striking
‘‘$10,000,000’’ and inserting ‘‘$50,000,000’’; and
(2) by inserting at the end the following new
sentences: ‘‘The Board may also, by regulation, ex-
empt from the provisions of this Act institutions
specified in section 303(2)(A) which have total as-
sets as of their last full fiscal year of $50,000,000
or greater where the burden of complying with this
Act on such institutions outweighs the usefulness of
the information required to be disclosed. The exemp-
tions provided under this section shall not be appli-
255
cable to an institution which the Board, by order,
has found a reasonable basis to believe is not fulfill-
ing its obligations to serve the housing needs of the
communities and neighborhoods in which it is lo-
cated. An institution subject to such an order shall
be required to comply with the requirements of this
Act for loans made after the time that the order is
issued at such time and for such period as the
Board deems appropriate. The dollar amount in this
section shall be adjusted annually after December
31, 1994, by the annual percentage increase in the
Consumer Price Index for Urban Wage Earners and
Clerical Workers published by the Bureau of Labor
Statistics.’’.
(b) Section 304 of the Home Mortgage Disclosure
Act of 1975 (12 U.S.C. 2803) is amended by adding at
the end the following new subsection:
‘‘(m) OPPORTUNITY TO REDUCE COMPLIANCE BUR-
DEN.—
‘‘(1) A depository institution shall be considered
to have satisfied the public availability requirements
of subsection (a) if such institution keeps the infor-
mation required under that subsection at its home
office and provides notice at the branch locations
specified in such subsection that such information is
256
available upon request from the home office of the
institution. A home office of the depository institu-
tion receiving a request for such information pursu-
ant to this subsection shall provide the information
pertinent to the location of the branch in question
within fifteen days of the receipt of the written re-
quest.
‘‘(2) In complying with paragraph (1), a deposi-
tory institution may provide the individual request-
ing such information, at the institution’s choice,
with—
‘‘(A) a paper copy of the information re-
quested; or
‘‘(B) if acceptable to the individual, the in-
formation through a form of electronic medium,
such as computer disc.’’.
Subtitle B—Community
Reinvestment Act Amendments
SEC. 421. EXPRESSION OF CONGRESSIONAL INTENT.
Subsection (b) of section 802 of the Community Rein-
vestment Act of 1977 (12 U.S.C. 2901) is amended to
read as follows:
‘‘(b) It is the purpose of this title to require each ap-
propriate Federal financial supervisory agency to use its
authority, when examining financial institutions, to en-
257
courage such institutions to help meet the credit needs of
the local communities in which they are chartered consist-
ent with the safe and sound operation of such institutions.
When examining financial institutions, a supervisory agen-
cy shall not impose additional burden, recordkeeping, or
reporting upon such institutions.’’.
SEC. 422. INCREASED INCENTIVES FOR LENDING TO LOW-
AND MODERATE-INCOME COMMUNITIES.
(a) IN GENERAL.—Section 804(b) of the Community
Reinvestment Act of 1977 (12 U.S.C. 2903(b)) is amend-
ed to read as follows:
‘‘(b) POSITIVE CONSIDERATION OF CERTAIN LOANS
AND INVESTMENTS.—In assessing and taking into ac-
count the records of a regulated financial institution under
subsection (a), the appropriate Federal financial super-
visory agency shall—
‘‘(1) consider as a positive factor, consistent
with the safe and sound operation of the institution,
the institution’s investment in or loan to—
‘‘(A) any minority depository institution or
women’s depository institution (as such terms
are defined in section 808(b)) or any low-in-
come credit union;
‘‘(B) any joint venture or other entity or
project which promotes the public welfare in
258
any distressed community (as defined by such
agency) whether or not the distressed commu-
nity is located in the local community in which
the regulated financial institution is chartered
to do business; and
‘‘(C) targeted low- and moderate-income
communities, including real property loans to
such communities; and
‘‘(2) consider equally with other factors capital
investment, loan participation, and other ventures
undertaken by the institution in cooperation with—
‘‘(A) minority- and women-owned financial
institutions and low-income credit unions to the
extent that these activities help meet the credit
needs of the local communities in which such
institutions are chartered; and
‘‘(B) community development corporations
in extending credit and other financial services
principally to low- and moderate-income persons
and small businesses to the extent that such
community development corporations help meet
the credit needs of the local communities served
by the majority-owned institution.’’.
(b) AMENDMENT TO DEFINITIONS.—Section 803 of
the Community Reinvestment Act of 1977 (12 U.S.C.
259
2902) is amended by inserting after paragraph (5) (as
added by section 425(b) of this subtitle) the following new
paragraph:
‘‘(6) STATE
BANK
SUPERVISOR.—The term
‘State bank supervisor’ has the same meaning as in
section 3(r) of the Federal Deposit Insurance Act.’’.
(c) TECHNICAL CORRECTION.—The 1st of the 2
paragraphs designated as paragraph (2) of section 803 of
the Community Reinvestment Act of 1977 (12 U.S.C.
2902) is amended to read as follows:
‘‘(D) the Director of the Office of Thrift
Supervision with respect to any savings associa-
tion (the deposits of which are insured by the
Federal Deposit Insurance Corporation) and
any savings and loan holding company (other
than a company which is a financial services
holding company);’’.
SEC. 
423. 
PROHIBITION 
ON 
ADDITIONAL 
REPORTING
UNDER CRA.
Section 806 of the Community Reinvestment Act of
1977 (12 U.S.C. 2905) is amended to read as follows:
‘‘SEC. 806. REGULATIONS.
‘‘(a) IN GENERAL.—
‘‘(1) 
PUBLICATION
REQUIREMENT.—Regula-
tions to carry out the purposes of this title shall be
260
published by each appropriate Federal financial su-
pervisory agency.
‘‘(2) PROHIBITION
ON
ADDITIONAL
RECORD-
KEEPING.—Regulations prescribed and policy state-
ments, commentary, examiner guidance, or other su-
pervisory material issued under this title shall not
impose any additional recordkeeping on a financial
institution.
‘‘(3) PROHIBITION
ON
LOAN
DATA
COLLEC-
TION.—No loan data may be required to be collected
and reported by a financial institution and no such
data may be made public by any Federal financial
supervisory agency under this title.’’.
SEC. 424. TECHNICAL AMENDMENT.
Section 807(b)(1)(B) of the Community Reinvest-
ment Act (12 U.S.C. 2906) is amended by striking ‘‘The
information’’ and inserting ‘‘In the case of a regulated fi-
nancial institution that maintains domestic branches in 2
or more States, the information’’.
SEC. 425. CRA CONGRESSIONAL OVERSIGHT.
(a) SENSE OF CONGRESS RELATING TO AGGRESSIVE
OVERSIGHT.—It is the sense of the Congress that the ap-
propriate committees of the House of Representatives and
the Senate should exercise aggressive oversight of the
adoption and implementation of any regulation by any ap-
261
propriate Federal financial supervisory agency under the
Community Reinvestment Act of 1977 after the date of
the enactment of this Act.
(b) AGENCY REPORTS REQUIRED.—
(1) IN GENERAL.—Each appropriate Federal fi-
nancial supervisory agency shall submit a report to
the Congress by December 31, 1996, and by Decem-
ber 31, 1997, on the implementation of all regula-
tions prescribed by such agency under the Commu-
nity Reinvestment Act of 1977 after the date of the
enactment of this Act.
(2) REQUIREMENTS
RELATING
TO
PREPARA-
TION OF REPORTS.—In preparing each report re-
quired under paragraph (1), each appropriate Fed-
eral financial supervisory agency shall—
(A) solicit and include comments from reg-
ulated financial institutions with respect to the
regulations which are the subject of the report;
and
(B) include quantifiable measures of the
cost savings achieved under the regulations
which are the subject of the report and the ef-
fectiveness of such regulations in achieving the
purposes of the Community Reinvestment Act
of 1977.
262
(3) DEFINITIONS.—For purposes of this sec-
tion, the terms ‘‘appropriate Federal financial super-
visory agency’’ and ‘‘regulated financial institution’’
have the same meanings as in section 803 of the
Community Reinvestment Act of 1977.
SEC. 426. CONSULTATION AMONG EXAMINERS.
Section 10 of the Federal Deposit Insurance Act (12
U.S.C. 1820) is amended by adding at the end the follow-
ing new subsection:
‘‘(j) CONSULTATION AMONG EXAMINERS.—
‘‘(1) IN GENERAL.—Each appropriate Federal
banking agency shall take such action as may be
necessary to ensure that examiners employed by the
agency—
‘‘(A) consult on examination activities with
respect to any depository institution; and
‘‘(B) achieve an agreement and resolve any
inconsistencies on the recommendations to be
given to such institution as a consequence of
any examinations.
‘‘(2) 
EXAMINER-IN-CHARGE.—Each 
agency
shall consider appointing an examiner-in-charge with
respect to a depository institution to ensure con-
sultation on examination activities among all of the
263
agency’s examiners involved in examinations of such
institution.’’.
SEC. 427. LIMITATION ON REGULATIONS.
Section 806 of the Community Reinvestment Act of
1977 (12 U.S.C. 2905) (as amended by section 423) is
amended by adding at the end the following new sub-
sections:
‘‘(b) LIMITATION ON REGULATIONS.—No regulation
may be prescribed under this title by any Federal agency
which would—
‘‘(1) require any regulated financial institution
to—
‘‘(A) make any loan or enter into any
other agreement on the basis of any discrimina-
tory criteria prohibited under any law of the
United States; or
‘‘(B) make any loan to, or enter into any
other agreement with, any uncreditworthy per-
son that would jeopardize the safety and sound-
ness of such institution; or
‘‘(2) prevent or hinder in any way a financial
institution’s full responsibility to provide credit to all
segments of the community.
‘‘(c) ENCOURAGE LOANS TO CREDITWORTHY BOR-
ROWERS.—Regulations prescribed under this title shall en-
264
courage regulated financial institutions to make loans and
extend credit to all creditworthy persons, consistent with
safety and soundness.’’.
Subtitle C—Consumer Banking
Reforms
SEC. 441. TRUTH IN SAVINGS.
(a) PURPOSE.—Section 262 of the Truth in Savings
Act (12 U.S.C. 4301) is amended to read as follows:
‘‘SEC. 262. PURPOSE.
‘‘It is the purpose of this subtitle to ensure that con-
sumers can make a meaningful comparison between the
competing claims of depository institutions with regard to
deposit accounts by requiring that institutions offering in-
terest-bearing accounts pay interest on the full amount of
principal each day in a consumer deposit account at the
rate agreed to be paid by the institution.’’.
(b) PROHIBITION ON MISLEADING OR INACCURATE
ADVERTISEMENTS
AND DISCLOSURES.—Section 263 is
amended to read as follows:
‘‘SEC. 263. PROHIBITION ON MISLEADING OR INACCURATE
ADVERTISEMENTS AND DISCLOSURES.
‘‘No depository institution or deposit broker shall
make any advertisement, announcement, solicitation or
disclosure relating to a deposit account that is inaccurate
or misleading, including any inaccurate or misleading de-
265
scription of a free or no-cost account, or that misrepre-
sents its deposit contracts.’’.
(c) ACCOUNT INFORMATION UPON OPENING AN AC-
COUNT.—Section 264 of the Truth in Savings Act (12
U.S.C. 4304) is amended to read as follows:
‘‘SEC. 264. ACCOUNT INFORMATION.
‘‘(a) IN GENERAL.—Each depository institution shall
disclose fees, charges, penalties, and interest rates applica-
ble to each class of accounts offered by the institution in
accordance with this section.
‘‘(b) INFORMATION ON FEES AND CHARGES.—Each
depository institution shall disclose the following informa-
tion with respect to any account to a consumer at the time
the account is opened, or at such earlier time as a
consumer may request (and no additional information may
be required to be disclosed under this subtitle by regula-
tion or otherwise with respect to such account):
‘‘(1) A description of all fees, periodic service
charges, penalties, and interest rates which may be
charged or assessed against the account (or against
the account holder in connection with such account),
the amount of any such fees, charges, or penalties
(or the method by which such amount will be cal-
culated), and the conditions under which any such
amount will be assessed.