IB
Union Calendar No. 358
107TH CONGRESS
2D SESSION
H. R. 3951
[Report No. 107–516, Parts I and II]
To provide regulatory relief and improve productivity for insured depository
institutions, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 13, 2002
Mrs. CAPITO (for herself, Mr. SANDLIN, Mr. OXLEY, and Mr. BACHUS) intro-
duced the following bill; which was referred to the Committee on Finan-
cial Services
JUNE 18, 2002
Reported with an amendment and referred to the Committee on Judiciary for
a period ending not later than July 22, 2002, for consideration of such
provisions of the bill and amendment as fall within the jurisdiction of
that committee pursuant to clause 1(k), rule X
[Strike out all after the enacting clause and insert the part printed in italic]
JULY 22, 2002
Additional sponsors: Mr. GILLMOR, Mr. WAMP, and Mr. BACA
JULY 22, 2002
Reported from the Committee on the Judiciary with amendments; committed
to the Committee of the Whole House on the State of the Union and or-
dered to be printed
[Omit the part struck through in italic and insert the part printed in boldface roman]
[For text of introduced bill, see copy of bill as introduced on March 13, 2002]
A BILL
To provide regulatory relief and improve productivity for
insured depository institutions, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Fi-
nancial Services Regulatory Relief Act of 2002’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—NATIONAL BANK PROVISIONS
Sec. 101. National bank directors.
Sec. 102. Voting in shareholder elections.
Sec. 103. Simplifying dividend calculations for national banks.
Sec. 104. Repeal of obsolete limitation on removal authority of the Comptroller
of the Currency.
Sec. 105. Repeal of intrastate branch capital requirements.
Sec. 106. Clarification of waiver of publication requirements for bank merger no-
tices.
Sec. 107. Capital equivalency deposits for Federal branches and agencies of for-
eign banks.
Sec. 108. Equal treatment for Federal agencies of foreign banks.
Sec. 109. Maintenance of a Federal branch and a Federal agency in the same
State.
TITLE II—SAVINGS ASSOCIATION PROVISIONS
Sec. 201. Parity for savings associations under the Securities Exchange Act of
1934 and the Investment Advisers Act of 1940.
Sec. 202. Investments by Federal savings associations authorized to promote the
public welfare.
Sec. 203. Merger and consolidation of Federal savings associations with non-
depository institution affiliates.
Sec. 204. Repeal of statutory dividend notice requirement for savings association
subsidiaries of savings and loan holding companies.
Sec. 205. Modernizing statutory authority for trust ownership of savings associa-
tions.
Sec. 206. Repeal of overlapping rules governing purchased mortgage servicing
rights.
Sec. 207. Restatement of authority for Federal savings associations to invest in
small business investment companies.
Sec. 208. Removal of limitation on investments in auto loans.
Sec. 209. Selling and offering of deposit products.
Sec. 210. Funeral- and cemetery-related fiduciary services.
Sec. 211. Repeal of qualified thrift lender requirement with respect to out-of-State
branches.
Sec. 212. Small business and other commercial loans.
Sec. 213. Clarifying citizenship of Federal savings associations for Federal court
jurisdiction.
Sec. 214. Clarification of applicability of certain procedural doctrines.
TITLE III—CREDIT UNION PROVISIONS
Sec. 301. Privately insured credit unions authorized to become members of a Fed-
eral home loan bank.
Sec. 302. Leases of land on Federal facilities for credit unions.
Sec. 303. Investments in securities by Federal credit unions.
Sec. 304. Increase in general 12-year limitation of term of Federal credit union
loans to 15 years.
Sec. 305. Increase in 1 percent investment limit in credit union service organiza-
tions.
Sec. 306. Member business loan exclusion for loans to nonprofit religious organi-
zations.
Sec. 307. Check cashing and money transfer services offered within the field of
membership.
Sec. 308. Voluntary mergers involving multiple common-bond credit unions.
Sec. 309. Conversions involving common-bond credit unions.
Sec. 310. Credit union governance.
Sec. 311. Providing the National Credit Union Administration with greater flexi-
bility in responding to market conditions.
Sec. 312. Exemption from premerger notification requirement
of the Clayton Act.
TITLE IV—DEPOSITORY INSTITUTION PROVISIONS
Sec. 401. Easing restrictions on interstate branching and mergers.
Sec. 402. Statute of limitations for judicial review of appointment of a receiver
for depository institutions.
Sec. 403. Reporting requirements relating to insider lending.
Sec. 404. Amendment to provide an inflation adjustment for the small depository
institution exception under the Depository Institution Manage-
ment Interlocks Act.
Sec. 405. Enhancing the safety and soundness of insured depository institutions.
Sec. 406. Investments by insured savings associations in bank service companies
authorized.
Sec. 407. Cross guarantee authority.
Sec. 408. Golden parachute authority and nonbank holding companies.
Sec. 409. Duty of depository institutions to inform customers of certain adverse
actions.
TITLE V—DEPOSITORY INSTITUTION AFFILIATES PROVISIONS
Sec. 501. Clarification of cross marketing provision.
Sec. 502. Amendment to provide the Federal Reserve Board with discretion con-
cerning the imputation of control of shares of a company by
trustees.
Sec. 503. Eliminating geographic limits on thrift service companies.
Sec. 504. Clarification of scope of applicable rate provision.
TITLE VI—BANKING AGENCY PROVISIONS
Sec. 601. Waiver of examination schedule in order to allocate examiner resources.
Sec. 602. Credit card accounts permitted for bank examiners on same terms as
other consumers.
Sec. 603. Interagency data sharing.
Sec. 604. Penalty for unauthorized participation by convicted individual.
Sec. 605. Amendment permitting the destruction of old records of a depository in-
stitution by the FDIC after the appointment of the FDIC as re-
ceiver.
Sec. 606. Modernization of FDIC recordkeeping requirement.
Sec. 607. Repeal of minimum antitrust review period with the agreement of the
Attorney General.
Sec. 608 607. Clarification of extent of suspension, removal, and prohibition au-
thority of Federal banking agencies in cases of certain crimes by
institution-affiliated parties.
Sec. 609 608. Streamlining depository institution merger application require-
ments.
Sec. 610 609. Inclusion of Director of the Office of Thrift Supervision in list of
banking agencies regarding insurance customer protection regu-
lations.
TITLE VII—CLERICAL AND TECHNICAL AMENDMENTS
Sec. 701. Clerical amendments to the Home Owners’ Loan Act.
Sec. 702. Technical corrections to the Federal Credit Union Act.
Sec. 703. Other technical corrections.
TITLE I—NATIONAL BANK
PROVISIONS
SEC. 101. NATIONAL BANK DIRECTORS.
Section 5146 of the Revised Statutes of the United
States (12 U.S.C. 72) is amended—
(1) by striking ‘‘SEC. 5146. Every director must
during’’ and inserting the following:
‘‘SEC. 5146. REQUIREMENTS FOR BANK DIRECTORS.
‘‘(a) RESIDENCY REQUIREMENTS.—Every director of
a national bank shall, during’’;
(2) by striking ‘‘total number of directors. Every
director must own in his or her own right’’ and in-
serting ‘‘total number of directors.
‘‘(b) INVESTMENT REQUIREMENT.—
‘‘(1) IN GENERAL.—Every director of a national
bank shall own, in his or her own right,’’; and
(3) by adding at the end the following new para-
graph:
‘‘(2) EXCEPTION FOR SUBORDINATED DEBT IN
CERTAIN CASES.—In lieu of the requirements of para-
graph (1) relating to the ownership of capital stock
in the national bank, the Comptroller of the Currency
may, by regulation or order, permit an individual to
serve as a director of a national bank that has elected,
or notifies the Comptroller of the bank’s intention to
elect, to operate as a S corporation pursuant to sec-
tion 1362(a) of the Internal Revenue Code of 1986, if
that individual holds debt of at least $1,000 issued by
the national bank that is subordinated to the interests
of depositors and other general creditors of the na-
tional bank.’’.
SEC. 102. VOTING IN SHAREHOLDER ELECTIONS.
Section 5144 of the Revised Statutes of the United
States (12 U.S.C. 61) is amended—
(1) by striking ‘‘or to cumulate’’ and inserting
‘‘or, if so provided by the articles of association of the
national bank, to cumulate’’;
(2) by striking the comma after ‘‘his shares shall
equal’’; and
(3) by adding at the end the following new sen-
tence: ‘‘The Comptroller of the Currency may pre-
scribe such regulations to carry out the purposes of
this section as the Comptroller determines to be ap-
propriate.’’.
SEC. 103. SIMPLIFYING DIVIDEND CALCULATIONS FOR NA-
TIONAL BANKS.
Section 5199 of the Revised Statutes of the United
States (12 U.S.C. 60) is amended to read as follows:
‘‘SEC. 5199. NATIONAL BANK DIVIDENDS.
‘‘(a) IN GENERAL.—Subject to subsection (b), the di-
rectors of any national bank may declare a dividend of so
much of the undivided profits of the bank as the directors
judge to be expedient.
‘‘(b) APPROVAL REQUIRED UNDER CERTAIN CIR-
CUMSTANCES.—A national bank may not declare and pay
dividends in any year in excess of an amount equal to the
sum of the total of the net income of the bank for that year
and the retained net income of the bank in the preceding
two years, minus any transfers required by the Comptroller
of the Currency (including any transfers required to be
made to a fund for the retirement of any preferred stock),
unless the Comptroller of the Currency approves the dec-
laration and payment of dividends in excess of such
amount.’’.
SEC. 104. REPEAL OF OBSOLETE LIMITATION ON REMOVAL
AUTHORITY OF THE COMPTROLLER OF THE
CURRENCY.
Section 8(e)(4) of the Federal Deposit Insurance Act
(12 U.S.C. 1818(e)(4)) is amended by striking the 5th sen-
tence.
SEC. 105. REPEAL OF INTRASTATE BRANCH CAPITAL RE-
QUIREMENTS.
Section 5155(c) of the Revised Statutes of the United
States (12 U.S.C. 36(c)) is amended—
(1) in the 2nd sentence, by striking ‘‘, without
regard to the capital requirements of this section,’’;
and
(2) by striking the last sentence.
SEC. 106. CLARIFICATION OF WAIVER OF PUBLICATION RE-
QUIREMENTS FOR BANK MERGER NOTICES.
The last sentence of sections 2(a) and 3(a)(2) of the
National Bank Consolidation and Merger Act (12 U.S.C.
215(a) and 215a(a)(2), respectively) are each amended by
striking ‘‘Publication of notice may be waived, in cases
where the Comptroller determines that an emergency exists
justifying such waiver, by unanimous action of the share-
holders of the association or State bank’’ and inserting
‘‘Publication of notice may be waived if the Comptroller
determines that an emergency exists justifying such waiver
or if the shareholders of the association or State bank agree
by unanimous action to waive the publication requirement
for their respective institutions’’.
SEC. 107. CAPITAL EQUIVALENCY DEPOSITS FOR FEDERAL
BRANCHES 
AND 
AGENCIES 
OF 
FOREIGN
BANKS.
(a) IN GENERAL.—Section 4(g) of the International
Banking Act of 1978 (12 U.S.C. 3102(g)) is amended to
read as follows:
‘‘(g) CAPITAL EQUIVALENCY DEPOSIT.—
‘‘(1) IN GENERAL.—Upon the opening of a Fed-
eral branch or agency of a foreign bank in any State
and thereafter, the foreign bank, in addition to any
deposit requirements imposed under section 6, shall
keep on deposit investment securities, dollar deposits,
or other similar types of assets approved by the
Comptroller of the Currency in such amounts as the
Comptroller of the Currency determines to be nec-
essary for the protection of depositors and other inves-
tors and to be consistent with the principles of safety
and soundness.
‘‘(2) REGULATIONS
REQUIRED.—The 
Comp-
troller of the Currency shall prescribe such regulations
as the Comptroller determines to be necessary or ap-
propriate for implementing the requirements estab-
lished under paragraph (1), in consultation with the
Financial Institutions Examination Council.
‘‘(3) SUMMARY
OF
CONSULTATION.—In pub-
lishing any proposed or final regulation under para-
graph (2), the Comptroller of the Currency shall in-
clude a description of the issues taken into account in
developing such regulation, a summary of the com-
ments of the Financial Institutions Examination
Council with respect to such regulation, and a state-
ment describing the manner in which such comments
were addressed by the Comptroller.’’.
(b) SUNSET PROVISION.—
(1) IN GENERAL.—The amendment made by sub-
section (a) shall cease to apply as of the date that the
Board of Governors of the Federal Reserve System de-
termines that any State described in paragraph (2)
has in effect a provision of law or regulation applica-
ble to State branches or agencies (of foreign banks) lo-
cated in such State that is essentially equivalent to
the amendment made by subsection (a). As of such
date, section 4(g) of the International Banking Act of
1978 is amended to read as such section was in effect
immediately before the effective date of the amend-
ment made by subsection (a).
(2) DESCRIPTION.—A State referred to in para-
graph (1) is any State in which are located branches
and agencies (of foreign banks) the total assets of
which constitute more than 50 percent of the total as-
sets in the United States of all branches or agencies
of foreign banks.
SEC. 108. EQUAL TREATMENT FOR FEDERAL AGENCIES OF
FOREIGN BANKS.
The 1st sentence of section 4(d) of the International
Banking Act of 1978 (12 U.S.C. 3102(d)) is amended by
inserting ‘‘from citizens or residents of the United States’’
after ‘‘deposits’’.
SEC. 109. MAINTENANCE OF A FEDERAL BRANCH AND A
FEDERAL AGENCY IN THE SAME STATE.
Section 4(e) of the International Banking Act of 1978
(12 U.S.C. 3102(e)) is amended by inserting ‘‘if the mainte-
nance of both an agency and a branch in the State is pro-
hibited under the law of such State’’ before the period at
the end.
TITLE II—SAVINGS ASSOCIATION
PROVISIONS
SEC. 201. PARITY FOR SAVINGS ASSOCIATIONS UNDER THE
SECURITIES EXCHANGE ACT OF 1934 AND THE
INVESTMENT ADVISERS ACT OF 1940.
(a) SECURITIES EXCHANGE ACT OF 1934.—
(1) DEFINITION
OF
BANK.—Section 3(a)(6) of
the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(6)) is amended by striking ‘‘(A) a banking in-
stitution organized under the laws of the United
States’’ and inserting ‘‘(A) a depository institution
(as defined in section 3 of the Federal Deposit Insur-
ance Act) or a branch or agency of a foreign bank (as
such terms are defined in section 1(b) of the Inter-
national Banking Act of 1978)’’.
(2) INCLUDE OTS UNDER THE DEFINITION OF
APPROPRIATE
REGULATORY
AGENCY
FOR
CERTAIN
PURPOSES.—Section 3(a)(34) of such Act (15 U.S.C.
78c(a)(34)) is amended—
(A) in subparagraph (A)—
(i) in clause (ii), by striking ‘‘(i) or
(iii)’’ and inserting ‘‘(i), (iii), or (iv)’’;
(ii) by striking ‘‘and’’ at the end of
clause (iii);
(iii) by redesignating clause (iv) as
clause (v); and
(iv) by inserting the following new
clause after clause (iii):
‘‘(iv) the Director of the Office of
Thrift Supervision, in the case of a savings
association (as defined in section 3(b) of the
Federal Deposit Insurance Act (12 U.S.C.
1813(b))) the deposits of which are insured
by the Federal Deposit Insurance Corpora-
tion, a subsidiary or a department or divi-
sion of any such savings association, or a
savings and loan holding company; and’’;
(B) in subparagraph (B)—
(i) in clause (ii), by striking ‘‘(i) or
(iii)’’ and inserting ‘‘(i), (iii), or (iv)’’;
(ii) by striking ‘‘and’’ at the end of
clause (iii);
(iii) by redesignating clause (iv) as
clause (v); and
(iv) by inserting the following new
clause after clause (iii):
‘‘(iv) the Director of the Office of
Thrift Supervision, in the case of a savings
association (as defined in section 3(b) of the
Federal Deposit Insurance Act (12 U.S.C.
1813(b))) the deposits of which are insured
by the Federal Deposit Insurance Corpora-
tion, or a subsidiary of any such savings
association, or a savings and loan holding
company; and’’;
(C) in subparagraph (C)—
(i) in clause (ii), by striking ‘‘(i) or
(iii)’’ and inserting ‘‘(i), (iii), or (iv)’’;
(ii) by striking ‘‘and’’ at the end of
clause (iii);
(iii) by redesignating clause (iv) as
clause (v); and
(iv) by inserting the following new
clause after clause (iii):
‘‘(iv) the Director of the Office of
Thrift Supervision, in the case of a savings
association (as defined in section 3(b) of the
Federal Deposit Insurance Act (12 U.S.C.
1813(b))) the deposits of which are insured
by the Federal Deposit Insurance Corpora-
tion, a savings and loan holding company,
or a subsidiary of a savings and loan hold-
ing company when the appropriate regu-
latory agency for such clearing agency is
not the Commission; and’’;
(D) in subparagraph (D)—
(i) by striking ‘‘and’’ at the end of
clause (ii);
(ii) by redesignating clause (iii) as
clause (iv); and
(iii) by inserting the following new
clause after clause (ii):
‘‘(iii) the Director of the Office of
Thrift Supervision, in the case of a savings
association (as defined in section 3(b) of the
Federal Deposit Insurance Act (12 U.S.C.
1813(b))) the deposits of which are insured
by the Federal Deposit Insurance Corpora-
tion; and’’;
(E) in subparagraph (F)—
(i) by redesignating clauses (ii), (iii),
and (iv) as clauses (iii), (iv), and (v), re-
spectively; and
(ii) by inserting the following new
clause after clause (i):
‘‘(ii) the Director of the Office of Thrift
Supervision, in the case of a savings asso-
ciation (as defined in section 3(b) of the
Federal Deposit Insurance Act (12 U.S.C.
1813(b))) the deposits of which are insured
by the Federal Deposit Insurance Corpora-
tion; and’’; and
(F) at the end of the last undesignated
paragraph, by inserting the following new sen-
tence: ‘‘As used in this paragraph, the term ‘sav-
ings and loan holding company’ has the mean-
ing given it in section 10(a) of the Home Own-
ers’ Loan Act (12 U.S.C. 1467a(a)).’’.
(b) INVESTMENT ADVISERS ACT OF 1940.—
(1) DEFINITION OF BANK.—Section 202(a)(2) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b–
2(a)(2)) is amended by striking ‘‘(A) a banking insti-
tution organized under the laws of the United States’’
and inserting ‘‘(A) a depository institution (as de-
fined 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)’’.
(2) 
CONFORMING
AMENDMENTS.—Subsections
(a)(1)(A)(i), (a)(1)(B), (a)(2), and (b) of section 210A
of such Act (15 U.S.C. 80b–10a), as added by section
220 of the Gramm-Leach-Bliley Act, are each amend-
ed by striking ‘‘bank holding company’’ each place it
occurs and inserting ‘‘bank holding company or sav-
ings and loan holding company’’.
(c) CONFORMING AMENDMENT TO THE INVESTMENT
COMPANY ACT OF 1940.—Section 10(c) of the Investment
Company Act of 1940 (15 U.S.C. 80a–10(c)), as amended
by section 213(c) of the Gramm-Leach-Bliley Act, is amend-
ed by inserting after ‘‘1956)’’ the following: ‘‘or any one
savings and loan holding company (together with its affili-
ates and subsidiaries) (as such terms are defined in section
10 of the Home Owners’ Loan Act)’’.
SEC. 202. INVESTMENTS BY FEDERAL SAVINGS ASSOCIA-
TIONS AUTHORIZED TO PROMOTE THE PUB-
LIC WELFARE.
(a) IN GENERAL.—Section 5(c)(3) of the Home Own-
ers’ Loan Act (12 U.S.C. 1464(c)) is amended by adding
at the end the following new subparagraph:
‘‘(E) DIRECT
INVESTMENTS
TO
PROMOTE
THE PUBLIC WELFARE.—
‘‘(i) IN GENERAL.—A Federal savings
association may make investments designed
primarily to promote the public welfare, in-
cluding the welfare of low- and moderate-in-
come communities or families through the
provision of housing, services, and jobs.
‘‘(ii) DIRECT INVESTMENTS OR ACQUI-
SITION
OF
INTEREST
IN
OTHER
COMPA-
NIES.—Investments under clause (i) may be
made directly or by purchasing interests in
an entity primarily engaged in making
such investments.
‘‘(iii) PROHIBITION ON UNLIMITED LI-
ABILITY.—No investment may be made
under this subparagraph which would sub-
ject a Federal savings association to unlim-
ited liability to any person.
‘‘(iv) SINGLE INVESTMENT LIMITATION
TO BE ESTABLISHED BY DIRECTOR.—Sub-
ject to clauses (v) and (vi), the Director
shall establish, by order or regulation, lim-
its on—
‘‘(I) the amount any savings asso-
ciation may invest in any 1 project;
and
‘‘(II) the aggregate amount of in-
vestment of any savings association
under this subparagraph.
‘‘(v) FLEXIBLE
AGGREGATE
INVEST-
MENT LIMITATION.—The aggregate amount
of investments of any savings association
under this subparagraph may not exceed an
amount equal to the sum of 5 percent of the
savings association’s capital stock actually
paid in and unimpaired and 5 percent of
the savings association’s unimpaired sur-
plus, unless—
‘‘(I) the Director determines that
the savings association is adequately
capitalized; and
‘‘(II) the Federal Deposit Insur-
ance Corporation determines, by order,
that the aggregate amount of invest-
ments in a higher amount than the
limit under this clause will pose no
significant risk to the affected deposit
insurance fund.
‘‘(vi) MAXIMUM
AGGREGATE
INVEST-
MENT LIMITATION.—Notwithstanding clause
(v), the aggregate amount of investments of
any savings association under this subpara-
graph may not exceed an amount equal to
the sum of 10 percent of the savings associa-
tion’s capital stock actually paid in and
unimpaired and 10 percent of the savings
association’s unimpaired surplus.
‘‘(vii) INVESTMENTS NOT SUBJECT TO
OTHER LIMITATION ON QUALITY OF INVEST-
MENTS.—No obligation a Federal savings
association acquires or retains under this
subparagraph shall be taken into account
for purposes of the limitation contained in
section 28(d) of the Federal Deposit Insur-
ance Act on the acquisition and retention of
any corporate debt security not of invest-
ment grade.’’.
(b) TECHNICAL AND CONFORMING AMENDMENT.—Sec-
tion 5(c)(3)(A) of the Home Owners’ Loan Act (12 U.S.C.
1464(c)(3)(A)) is amended to read as follows:
‘‘(A) [Repealed.]’’.
SEC. 203. MERGERS AND CONSOLIDATIONS OF FEDERAL
SAVINGS ASSOCIATIONS WITH NONDEPOSI-
TORY INSTITUTION AFFILIATES.
Section 5(d)(3) of the Home Owners’ Loan Act (12
U.S.C. 1464(d)(3)) is amended—
(1) by redesignating subparagraph (B) as sub-
paragraph (C); and
(2) by inserting after subparagraph (A) the fol-
lowing new subparagraph:
‘‘(B) MERGERS AND CONSOLIDATIONS WITH
NONDEPOSITORY INSTITUTION AFFILIATES.—
‘‘(i) IN GENERAL.—Upon the approval
of the Director, a Federal savings associa-
tion may merge with any nondepository in-
stitution affiliate of the savings association.
‘‘(ii) RULE
OF
CONSTRUCTION.—No
provision of clause (i) shall be construed
as—
‘‘(I) affecting the applicability of
section 18(c) of the Federal Deposit In-
surance Act; or
‘‘(II) granting a Federal savings
association any power or any author-
ity to engage in any activity that is
not authorized for a Federal savings
association under any other provision
of this Act or any other provision of
law.’’.
SEC. 204. REPEAL OF STATUTORY DIVIDEND NOTICE RE-
QUIREMENT FOR SAVINGS ASSOCIATION SUB-
SIDIARIES OF SAVINGS AND LOAN HOLDING
COMPANIES.
Section 10(f) of the Home Owners’ Loan Act (12
U.S.C. 1467a(f)) is amended to read as follows:
‘‘(f) DECLARATION
OF
DIVIDEND.—The Director
may—
‘‘(1) require a savings association that is a sub-
sidiary of a savings and loan holding company to
give prior notice to the Director of the intent of the
savings association to pay a dividend on its guar-
anty, permanent, or other nonwithdrawable stock;
and
‘‘(2) establish conditions on the payment of divi-
dends by such a savings association.’’.
SEC. 205. MODERNIZING STATUTORY AUTHORITY FOR
TRUST OWNERSHIP OF SAVINGS ASSOCIA-
TIONS.
(a) IN GENERAL.—Section 10(a)(1)(C) of the Home
Owners’ 
Loan 
Act 
(12 
U.S.C. 
1467a(a)(1)(C)) 
is
amended—
(1) by striking ‘‘trust,’’ and inserting ‘‘business
trust,’’; and
(2) by inserting ‘‘or any other trust unless by its
terms it must terminate within 25 years or not later
than 21 years and 10 months after the death of indi-
viduals living on the effective date of the trust,’’ after
‘‘or similar organization,’’.
(b) TECHNICAL AND CONFORMING AMENDMENT.—Sec-
tion 10(a)(3) of the Home Owners’ Loan Act (12 U.S.C.
1467a(a)(3)) is amended—
(1) by striking ‘‘does not include—’’ and all that
follows through ‘‘any company by virtue’’ where such
term appears in subparagraph (A) and inserting
‘‘does not include any company by virtue’’;
(2) by striking ‘‘; and’’ at the end of subpara-
graph (A) and inserting a period; and
(3) by striking subparagraph (B).
SEC. 206. REPEAL OF OVERLAPPING RULES GOVERNING
PURCHASED MORTGAGE SERVICING RIGHTS.
Section 5(t) of the Home Owners’ Loan Act (12 U.S.C.
1464(t)) is amended—
(1) by striking paragraph (4) and inserting the
following new paragraph:
‘‘(4) [Repealed.]’’; and
(2) in paragraph (9)(A), by striking ‘‘intangible
assets, plus’’ and all that follows through the period
at the end and inserting ‘‘intangible assets.’’.
SEC. 207. RESTATEMENT OF AUTHORITY FOR FEDERAL SAV-
INGS ASSOCIATIONS TO INVEST IN SMALL
BUSINESS INVESTMENT COMPANIES.
Subparagraph (D) of section 5(c)(4) of the Home Own-
ers’ Loan Act (12 U.S.C. 1464(c)(4)) is amended to read
as follows:
‘‘(D) SMALL BUSINESS INVESTMENT COMPA-
NIES.—Any Federal savings association may in-
vest in 1 or more small business investment com-
panies, or in any entity established to invest
solely in small business investment companies
formed under the Small Business Investment Act
of 1958, except that the total amount of invest-
ments under this subparagraph may not at any
time exceed the amount equal to 5 percent of
capital and surplus of the savings association.’’.
SEC. 208. REMOVAL OF LIMITATION ON INVESTMENTS IN
AUTO LOANS.
(a) IN GENERAL.—Section 5(c)(1) of the Home Own-
ers’ Loan Act (12 U.S.C. 1464(c)(1)) is amended by adding
at the end the following new subparagraph:
‘‘(V) AUTO LOANS.—Loans and leases for
motor vehicles acquired for personal, family, or
household purposes.’’.
(b) TECHNICAL AND CONFORMING AMENDMENT RE-
LATING
TO QUALIFIED THRIFT INVESTMENTS.—Section
10(m)(4)(C)(ii) of the Home Owners’ Loan Act (12 U.S.C.
1467a(m)(4)(C)(ii)) is amended by adding at the end the
following new subclause:
‘‘(VIII) Loans and leases for
motor vehicles acquired for personal,
family, or household purposes.’’.
SEC. 209. SELLING AND OFFERING OF DEPOSIT PRODUCTS.
Section 15(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(h)) is amended by adding at the
end the following new paragraph:
‘‘(4) SELLING AND OFFERING OF DEPOSIT PROD-
UCTS.—No law, rule, regulation, or order, or other
administrative action of any State or political sub-
division thereof shall directly or indirectly require
any agent who represents 1 Federal savings associa-
tion (as such term is defined in section 2(5) of the
Home Owners’ Loan Act (12 U.S.C. 1462(5)) in sell-
ing or offering deposit (as such term is defined in sec-
tion 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813(l)) products issued by such association to
qualify or register as a broker, dealer, associated per-
son of a broker, or associated person of a dealer, or
to qualify or register in any other similar status or
capacity.’’.
SEC. 210. FUNERAL- AND CEMETERY-RELATED FIDUCIARY
SERVICES.
Section 5(n) of the Home Owners’ Loan Act (12 U.S.C.
1464(n)) is amended by adding at the end the following
new paragraph:
‘‘(11) FUNERAL- AND CEMETERY-RELATED FIDU-
CIARY SERVICES.—
‘‘(A) IN GENERAL.—A funeral director or
cemetery operator, when acting in such capacity,
(or any other person in connection with a con-
tract or other agreement with a funeral director
or cemetery operator) may engage any Federal
savings association, regardless of where the asso-
ciation is located, to act in any fiduciary capac-
ity in which the savings association has the right
to act in accordance with this section, including
holding funds deposited in trust or escrow by the
funeral director or cemetery operator (or by such
other party), and the savings association may
act in such fiduciary capacity on behalf of the
funeral director or cemetery operator (or such
other person).
‘‘(B) DEFINITIONS.—For purposes of this
paragraph, the following definitions shall apply:
‘‘(i) CEMETERY.—The term ‘cemetery’
means any land or structure used, or in-
tended to be used, for the internment of
human remains in any form.
‘‘(ii) CEMETERY OPERATOR.—The term
‘cemetery operator’ means any person who
contracts or accepts payment for merchan-
dise, endowment, or perpetual care services
in connection with a cemetery.
‘‘(iii) FUNERAL DIRECTOR.—The term
‘funeral director’ means any person who
contracts or accepts payment to provide or
arrange—
‘‘(I) services for the final disposi-
tion of human remains; or
‘‘(II) funeral services, property, or
merchandise (including cemetery serv-
ices, property, or merchandise).’’.
SEC. 211. REPEAL OF QUALIFIED THRIFT REQUIREMENT
WITH RESPECT TO OUT-OF-STATE BRANCHES.
Section 5(r)(1) of the Home Owners’ Loan Act (12
U.S.C. 1464(r)(1)) is amended by striking the ultimate sen-
tence.
SEC. 212. SMALL BUSINESS AND OTHER COMMERCIAL
LOANS.
(a) ELIMINATION OF LENDING LIMIT ON SMALL BUSI-
NESS LOANS.—Section 5(c)(1) of the Home Owners’ Loan
Act (12 U.S.C. 1464(c)(1)) is amended by inserting after
subparagraph (V) (as added by section 208 of this title)
the following new subparagraph:
‘‘(W) 
SMALL
BUSINESS
LOANS.—Small
business loans, as defined in regulations which
the Director shall prescribe.’’
(b) INCREASE IN LENDING LIMIT ON OTHER BUSINESS
LOANS.—Section 5(c)(2)(A) of the Home Owners’ Loan Act
(12 U.S.C. 1464(c)(2)(A)) is amended by striking ‘‘, and
amounts in excess of 10 percent’’ and all that follows
through ‘‘by the Director’’.
SEC. 213. CLARIFYING CITIZENSHIP OF FEDERAL SAVINGS
ASSOCIATIONS FOR FEDERAL COURT JURIS-
DICTION.
Section 5 of the Home Owners’ Loan Act (12 U.S.C.
1464) is amended by adding at the end the following new
subsection:
‘‘(x) HOME STATE CITIZENSHIP.—In determining
whether a Federal court has diversity jurisdiction over a
case in which a Federal savings association is a party, the
Federal savings association shall be considered to be a cit-
izen only of the State in which such savings association
has its main office.’’.
SEC. 214. CLARIFICATION OF APPLICABILITY OF CERTAIN
PROCEDURAL DOCTRINES.
Section 11A(d) of the Federal Deposit Insurance Act
(12 U.S.C. 1821a(d)) is amended—
(1) by striking ‘‘LEGAL PROCEEDINGS.—Any
judgment’’ and inserting ‘‘LEGAL PROCEEDINGS.—
‘‘(1) IN GENERAL.—Any judgment’’; and
(2) by adding at the end the following new para-
graph:
‘‘(2) CLARIFICATION OF APPLICABILITY OF CER-
TAIN PROCEDURAL DOCTRINES.—In any proceeding
seeking a monetary recovery against the United
States, or an agency or official thereof, based upon
actions of the Federal Savings and Loan Insurance
Corporation prior to its dissolution, or the Federal
Home Loan Bank Board prior to its dissolution, and
arising from the Financial Institutions Reform, Re-
covery, and Enforcement Act of 1989 or its implemen-
tation, and where any monetary recovery in such pro-
ceeding would be paid from the FSLIC Resolution
Fund or any supplements thereto, neither the United
States Court of Federal Claims, the United States
Court of Appeals for the Federal Circuit, nor any
other court of competent jurisdiction shall dismiss, or
affirm on appeal the dismissal of, the claims of any
party seeking such monetary recovery, on the basis of
res judicata, collateral estoppel, or any similar doc-
trine, defense, or rule of law, based upon any deci-
sion, opinion, or order of judgment entered by any
court prior to July 1, 1996. Unless some other defense
is applicable, in any such proceeding, the United
States Court of Federal Claims, the United States
Court of Appeals for the Federal Circuit, and any
other court of competent jurisdiction shall review the
merits of the claims of the party seeking such mone-
tary relief and shall enter judgment accordingly.’’.
TITLE III—CREDIT UNION
PROVISIONS
SEC. 301. PRIVATELY INSURED CREDIT UNIONS AUTHOR-
IZED TO BECOME MEMBERS OF A FEDERAL
HOME LOAN BANK.
(a) IN GENERAL.—Section 4(a) of the Federal Home
Loan Bank Act (12 U.S.C. 1424(a)) is amended by adding
at the end the following new paragraph:
‘‘(5) CERTAIN
PRIVATELY
INSURED
CREDIT
UNIONS.—
‘‘(A) IN GENERAL.—A credit union which
has been determined, in accordance with section
43(e)(1) of the Federal Deposit Insurance Act
and subject to the requirements of subparagraph
(B), to meet all eligibility requirements for Fed-
eral deposit insurance shall be treated as an in-
sured depository institution for purposes of de-
termining the eligibility of such credit union for
membership in a Federal home loan bank under
paragraphs (1), (2), and (3).
‘‘(B) CERTIFICATION BY APPROPRIATE SU-
PERVISOR.—
‘‘(i) IN
GENERAL.—For purposes of
this paragraph and subject to clause (ii), a
credit union which lacks Federal deposit in-
surance and which has applied for member-
ship in a Federal home loan bank may be
treated as meeting all the eligibility require-
ments for Federal deposit insurance only if
the appropriate supervisor of the State in
which the credit union is chartered has de-
termined that the credit union meets all the
eligibility requirements for Federal deposit
insurance as of the date of the application
for membership.
‘‘(ii) 
CERTIFICATION
DEEMED
VALID.—If, in the case of any credit union
to which clause (i) applies, the appropriate
supervisor of the State in which such credit
union is chartered fails to make a deter-
mination pursuant to such clause by the
end of the 6-month period beginning on the
date of the application, the credit union
shall be deemed to have met the require-
ments of clause (i).
‘‘(C) SECURITY
INTERESTS
OF
FEDERAL
HOME
LOAN
BANK
NOT
AVOIDABLE.—Notwith-
standing any provision of State law authorizing
a conservator or liquidating agent of a credit
union to repudiate contracts, no such provision
shall apply with respect to—
‘‘(i) any extension of credit from any
Federal home loan bank to any credit union
which is a member of any such bank pursu-
ant to this paragraph; or
‘‘(ii) any security interest in the assets
of such credit union securing any such ex-
tension of credit.’’.
(b) COPIES OF AUDITS OF PRIVATE INSURERS OF
CERTAIN DEPOSITORY INSTITUTIONS REQUIRED
TO BE
PROVIDED TO SUPERVISORY AGENCIES.—Section 43(a)(2)
of the Federal Deposit Insurance Act (12 U.S.C.
1831t(a)(2)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (A)(i);
(2) by striking the period at the end of clause
(ii) of subparagraph (A) and inserting a semicolon;
(3) by inserting the following new clauses at the
end of subparagraph (A):
‘‘(iii) in the case of depository institu-
tions described in subsection (f)(2)(A) the
deposits of which are insured by the private
insurer, the National Credit Union Admin-
istration, not later than 7 days after that
audit is completed; and
‘‘(iv) in the case of depository institu-
tions described in subsection (f)(2)(A) the
deposits of which are insured by the private
insurer which are members of a Federal
home loan bank, the Federal Housing Fi-
nance Board, not later than 7 days after
that audit is completed.’’; and
(4) by adding at the end of such section 43(a)(2)
the following new subparagraph:
‘‘(C) CONSULTATION.—The appropriate su-
pervisory agency of each State in which a pri-
vate deposit insurer insures deposits in an insti-
tution described in subsection (f)(2)(A) which—
‘‘(i) lacks Federal deposit insurance;
and
‘‘(ii) has become a member of a Fed-
eral home loan bank,
shall provide the National Credit Union Admin-
istration, upon request, with the results of any
examination and reports related thereto con-
cerning the private deposit insurer to which such
agency may have in its possession.’’.
SEC. 302. LEASES OF LAND ON FEDERAL FACILITIES FOR
CREDIT UNIONS.
(a) IN GENERAL.—Section 124 of the Federal Credit
Union Act (12 U.S.C. 1770) is amended—
(1) by striking ‘‘Upon application by any credit
union’’ and inserting ‘‘Notwithstanding any other
provision of law, upon application by any credit
union’’;
(2) by inserting ‘‘on lands reserved for the use of,
and under the exclusive or concurrent jurisdiction of,
the United States or’’ after ‘‘officer or agency of the
United States charged with the allotment of space’’;
(3) by inserting ‘‘lease land or’’ after ‘‘such offi-
cer or agency may in his or its discretion’’; and
(4) by inserting ‘‘or the facility built on the lease
land’’ after ‘‘credit union to be served by the allot-
ment of space’’.
(b) CLERICAL AMENDMENT.—The heading for section
124 is amended by inserting ‘‘OR FEDERAL LAND’’ after
‘‘BUILDINGS’’.
SEC. 303. INVESTMENTS IN SECURITIES BY FEDERAL CRED-
IT UNIONS.
Section 107 of the Federal Credit Union Act (12
U.S.C. 1757) is amended—
(1) in the matter preceding paragraph (1) by
striking ‘‘A Federal credit union’’ and inserting ‘‘(a)
IN GENERAL.—Any Federal credit union’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) INVESTMENT FOR THE CREDIT UNION’S OWN AC-
COUNT.—
‘‘(1) IN GENERAL.—A Federal credit union may
purchase and hold for its own account such invest-
ment securities of investment grade as the Board may
authorize by regulation, subject to such limitations
and restrictions as the Board may prescribe in the
regulations.
‘‘(2) PERCENTAGE
LIMITATION.—In no event
may the total amount of investment securities of any
single obligor or maker held by a Federal credit union
for the credit union’s own account exceed at any time
an amount equal to 10 percent of the net worth of the
credit union.
‘‘(3) INVESTMENT SECURITY DEFINED.—
‘‘(A) IN
GENERAL.—For purposes of this
subsection, the term ‘investment security’ means