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(b) FDIA.—Section 7(a)(1) of the Federal Deposit In-
surance Act (12 U.S.C. 1817(a)(1)) is amended by striking
the fourth sentence.
(c) FEDERAL RESERVE ACT.—Section 9 of the Federal
Reserve Act (12 U.S.C. 324) is amended in the last sentence
of the sixth undesignated paragraph, by striking ‘‘and shall
be published’’ and all that follows through the end of the
sentence and inserting a period.
SEC. 309. REGULATORY APPEALS PROCESS.
(a) IN GENERAL.—Not later than 180 days after the
date of enactment of this Act, each appropriate Federal
banking agency and the National Credit Union Adminis-
tration Board shall establish an independent intra-agency
appellate process. The process shall be available to review
material supervisory determinations made at insured de-
pository institutions or at insured credit unions that the
agency supervises.
(b) REVIEW PROCESS.—In establishing the independ-
ent appellate process under subsection (a), each agency shall
ensure—
(1) that any appeal of a material supervisory
determination by an insured depository institution or
credit union is heard and decided expeditiously; and
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(2) that appropriate safeguards exist for protect-
ing the appellant from retaliation by agency examin-
ers.
(c) COMMENT PERIOD.—Not later than 90 days after
the date of enactment of this Act, each appropriate Federal
banking agency and the National Credit Union Adminis-
tration shall provide public notice and opportunity for com-
ment on proposed guidelines for the establishment of an ap-
pellate process under this section.
(d) DEFINITIONS.—For purposes of this section—
(1) the term ‘‘material supervisory determina-
tions’’ includes determinations relating to—
(A) examination ratings;
(B) the adequacy of loan loss reserve provi-
sions; and
(C) loan classifications on loans that are
significant to the institution; and
(2) the term ‘‘independent appellate process’’
means a review by an agency official who does not di-
rectly or indirectly report to the agency official who
made the material supervisory determination under
review.
(e) EFFECT ON OTHER AUTHORITY.—Nothing in this
section shall affect the authority of an appropriate Federal
banking agency or the National Credit Union Association
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Board to take enforcement or supervisory action against an
institution.
SEC. 310. ELECTRONIC FILING OF CURRENCY TRANS-
ACTION REPORTS.
Section 123 of the Bank Secrecy Act (12 U.S.C. 1953)
is amended by adding at the end the following new sub-
section:
‘‘(c) ACCEPTANCE
OF AUTOMATED RECORDS.—The
Secretary shall permit an uninsured bank or financial in-
stitution to retain or maintain records referred to in sub-
section (a) in electronic or automated form, subject to terms
and conditions established by the Secretary.’’.
SEC. 311. BANK SECRECY ACT PUBLICATION REQUIRE-
MENTS.
Chapter 53 of title 31, United States Code, is amended
by adding at the end the following new section:
‘‘SEC. 5329. STAFF COMMENTARIES.
‘‘The Secretary shall—
‘‘(1) publish all written rulings interpreting this
chapter; and
‘‘(2) annually issue a staff commentary on the
regulations issued under this chapter.’’.
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SEC. 312. EXEMPTION OF BUSINESS LOANS FROM REAL ES-
TATE SETTLEMENT PROCEDURES ACT RE-
QUIREMENTS.
The Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2601 et seq.) is amended by inserting after section
6 the following new section:
‘‘SEC. 7. EXEMPTED TRANSACTIONS.
‘‘This Act does not apply to credit transactions involv-
ing extensions of credit—
‘‘(1) primarily for business, commercial, or agri-
cultural purposes; or
‘‘(2) to government or governmental agencies or
instrumentalities.’’.
SEC. 313. FLEXIBILITY IN CHOOSING BOARDS OF DIREC-
TORS.
Section 5146 of the Revised Statutes (12 U.S.C. 72)
is amended in the first sentence, by striking ‘‘two thirds’’
and inserting ‘‘a majority’’.
SEC. 314. HOLDING COMPANY AUDIT REQUIREMENTS.
Section 36(i) of the Federal Deposit Insurance Act (12
U.S.C. 1831m(i)) is amended by striking paragraph (2)
and inserting the following:
‘‘(2) the institution—
‘‘(A) has total assets, as of the beginning of
such fiscal year, of less than $5,000,000,000;
‘‘(B) has—
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‘‘(i) total assets, as of the beginning of
such 
fiscal 
year, 
of 
more 
than
$5,000,000,000 
and 
less 
than
$9,000,000,000; and
‘‘(ii) a CAMEL composite rating of 1
or 2 under the Uniform Financial Institu-
tions Rating System (or an equivalent rat-
ing by any such agency under a comparable
rating system) as of the most recent exam-
ination of such institution by the Corpora-
tion or the appropriate Federal banking
agency; or
‘‘(C)(i) has total assets, as of the beginning
of such fiscal year, of more than $9,000,000,000;
and
‘‘(ii) has a CAMEL composite rating of 1
or 2 under the Uniform Financial Institutions
Rating System (or an equivalent rating by any
such agency under a comparable rating system)
as of the most recent examination of such insti-
tution by the Corporation or the appropriate
Federal banking agency.
Notwithstanding paragraph (2)(C), in the case of an in-
sured depository institution that the Corporation deter-
mines to be a large institution, the audit committee of the
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holding company of such an institution shall not include
any large customers of the institution.
‘‘(3) The appropriate Federal banking agency
may require an institution with total assets in excess
of $9,000,000,000 to comply with this section, not-
withstanding the exception provided by this sub-
section, if it determines that such exemption will cre-
ate a significant risk to the affected deposit insurance
fund if applied to that institution.’’.
SEC. 315. STATE REGULATION OF REAL ESTATE APPRAIS-
ALS.
Section 1122 of the Financial Institutions Reform, Re-
covery, and Enforcement Act of 1989 (12 U.S.C. 3351) is
amended—
(1) by redesignating subsections (b) through (e)
as subsections (c) through (f), respectively;
(2) by inserting after subsection (a) the following
new subsection:
‘‘(b) RECIPROCITY.—The Appraisal Subcommittee
shall encourage the States to develop reciprocity agreements
that readily authorize appraisers who are licensed or cer-
tified in one State (and who are in good standing with their
State appraiser certifying or licensing agency) to perform
appraisals in other States.’’; and
(3) in subsection (a)—
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(2) by striking ‘‘No agreement’’ and inserting the
following:
‘‘(1) IN GENERAL.—No agreement’’; and
(3) by adding at the end the following new para-
graph:
‘‘(2) PUBLIC DEPOSITS.—An agreement to pro-
vide for the lawful collateralization of deposits of a
Federal, State, or local governmental entity or of any
depositor referred to in section 11(a)(2) shall not be
deemed to be invalid pursuant to paragraph (1)(B)
solely because such agreement was not executed con-
temporaneously with the acquisition of the collateral
or with any changes in the collateral made in accord-
ance with such agreement.’’.
SEC. 318. ELIMINATION OF STOCK VALUATION PROVISION.
(a) IN GENERAL.—Section 39(b) of the Federal De-
posit Insurance Act (12 U.S.C. 1831p–1(b)), as added by
section 132(a) of the Federal Deposit Insurance Corpora-
tion Improvements Act of 1991) is amended to read as fol-
lows:
‘‘(b) ASSET QUALITY, EARNINGS, AND STOCK VALU-
ATION STANDARDS.—Each appropriate Federal banking
agency shall, for all insured depository institutions and de-
pository institution holding companies, prescribe standards
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relating to asset quality, earnings, and stock valuation that
the agency determines to be appropriate.’’.
(b) ESTABLISHING STANDARDS IN GUIDELINES.—Sec-
tion 39(d) of the Federal Deposit Insurance Act (12 U.S.C.
1831p–1(d)) is amended—
(1) in the subsection heading, by striking ‘‘BY
REGULATION’’; and
(2) in paragraph (1)—
(A) in the first sentence, by inserting ‘‘or
guideline’’ before the period; and
(B) in the second sentence, by inserting ‘‘or
guidelines’’ after ‘‘Such regulations’’.
(c) EFFECTIVE DATE.—The amendments made by sub-
sections (a) and (b) shall be construed to have the same ef-
fective date as section 39 of the Federal Deposit Insurance
Act, as provided in section 132(c) of the Federal Deposit
Insurance Corporation Improvements Act of 1991.
SEC. 319. EXPEDITED PROCEDURES FOR FORMING A BANK
HOLDING COMPANY.
Section 3(a) of the Bank Holding Company Act of
1956 (12 U.S.C. 1842(a)) is amended—
(1) in the second sentence, by striking ‘‘or (B)’’
and inserting ‘‘(B)’’; and
(2) in the second sentence, by inserting before the
period the following: ‘‘; or (C) with 30 days prior no-
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tification to the Board, the acquisition by a company
of control of a bank in a reorganization in which a
person or group of persons exchanges its shares of the
bank for shares of a newly formed bank holding com-
pany and receives, after the reorganization, substan-
tially the same proportional share interest in the
holding company as it held in the bank (except for
changes in shareholders’ interests resulting from the
exercise of dissenting shareholders’ rights under State
or Federal law) if, immediately following the acquisi-
tion, (i) the bank holding company meets the capital
and other financial standards prescribed by the
Board by regulation for such a bank holding com-
pany; (ii) the bank is adequately capitalized (as de-
fined in section 38 of the Federal Deposit Insurance
Act); and (iii) the holding company does not engage
in any activities other than those of banking or man-
aging and controlling banks’’.
SEC. 320. EXEMPTION OF CERTAIN HOLDING COMPANY
FORMATIONS FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933.
Section 4 of the Securities Act of 1933 (15 U.S.C. 77d)
is amended by adding at the end the following new para-
graph:
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‘‘(7) transactions involving offers or sales of eq-
uity securities, in connection with the acquisition of
a bank by a company under section 3(a) of the Bank
Holding Company Act of 1956, if—
‘‘(A) the acquisition occurs solely as part of
a reorganization in which a person or group of
persons exchanges its shares of a bank for shares
of a newly formed bank holding company with
no significant assets other than securities of the
bank and the existing subsidiaries of the bank;
‘‘(B) the shareholders receive, after that re-
organization, substantially the same propor-
tional share interests in the bank holding com-
pany as they held in the bank, except for changes
in shareholders’ interests resulting from lawful
elimination of fractional interests and the exer-
cise of dissenting shareholders’ rights under State
or Federal law;
‘‘(C) the rights and interests of security
holders in the bank holding company are sub-
stantially the same as those in the bank prior to
the transaction, other than as may be required
by law; and
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‘‘(D) the bank holding company has sub-
stantially the same assets and liabilities as the
bank had prior to the transaction.’’.
SEC. 321. REDUCTION OF POST-APPROVAL WAITING PERIOD
FOR 
BANK 
HOLDING 
COMPANY 
ACQUISI-
TIONS.
Section 11(b)(1) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1849(b)(1)) is amended by inserting be-
fore the period at the end of the fourth sentence the follow-
ing: ‘‘or, if the Board has not received any adverse comment
from the Attorney General of the United States relating to
competitive factors, such shorter period of time as may be
prescribed by the Board with the concurrence of the Attor-
ney General, but in no event less than 15 calendar days
after the date of approval’’.
SEC. 322. REDUCTION OF POST-APPROVAL WAITING PERIOD
FOR BANK MERGERS.
Section 18(c)(6) of the Federal Deposit Insurance Act
(12 U.S.C. 1828(c)(6)) is amended by inserting before the
period at the end of the last sentence the following: ‘‘or, if
the agency has not received any adverse comment from the
Attorney General of the United States relating to competi-
tive factors, such shorter period of time as may be pre-
scribed by the agency with the concurrence of the Attorney
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General, but in no event less than 15 calendar days after
the date of approval’’.
SEC. 323. BANKERS’ BANKS.
(a) OWNERSHIP BY BANKERS’ BANKS.—
(1) Paragraph Seventh of section 5136 of the Re-
vised Statutes (12 U.S.C. 24) is amended in the elev-
enth sentence—
(A) by inserting ‘‘or depository institution
holding companies (as defined in section 3 of the
Federal Deposit Insurance Act)’’ after ‘‘(except to
the extent directors’ qualifying shares are re-
quired by law) by depository institutions’’; and
(B) by striking ‘‘services for other deposi-
tory institutions and their officers, directors and
employees’’ and inserting the following: ‘‘services
to or for other depository institutions and the of-
ficers, directors, and employees of such institu-
tions, and in providing correspondent banking
services at the request of other depository institu-
tions (also referred to as a ‘banker’s bank’)’’.
(2) Section 5169(b)(1) of the Revised Statutes
(12 U.S.C. 27(b)(1)) is amended—
(A) by inserting ‘‘or depository institution
holding companies’’ after ‘‘(except to the extent
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directors’ qualifying shares are required by law)
by other depository institutions’’; and
(B) by striking ‘‘services for other deposi-
tory institutions and their officers, directors and
employees’’ and inserting the following: ‘‘services
to or for other depository institutions and the of-
ficers, directors, and employees of such institu-
tions, and in providing correspondent banking
services at the request of other depository institu-
tions (also referred to as a ‘banker’s bank’)’’.
(b) OWNERSHIP BY SAVINGS ASSOCIATIONS.—Section
5(c)(4) of the Home Owners’ Loan Act (12 U.S.C.
1464(c)(4)) is amended by adding at the end the following
new subparagraph:
‘‘(E) BANKERS’ BANKS.—A Federal savings
association may purchase for its own account
shares of stock of a bankers’ bank, described in
Paragraph Seventh of section 5136 of the Revised
Statutes or in section 5169(b) of the Revised
Statutes, on the same terms and conditions as a
national bank may purchase such shares.’’.
(c) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) BANK HOLDING COMPANY ACT.—Section 3(e)
of the Bank Holding Company Act of 1956 (12
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(A) in the first sentence—
(i) by striking ‘‘General and the other
two’’ and inserting ‘‘General, who shall
promptly notify the other’’; and
(ii) by inserting before the period ‘‘of
any such proposed transaction that raises a
significant competitiveness issue’’; and
(B) in the second sentence, by striking ‘‘and
the other two banking agencies’’; and
(2) in paragraph (6), by striking ‘‘and the other
two banking agencies’’.
SEC. 326. CREDIT CARD ACCOUNTS RECEIVABLE SALES.
Section 11(e) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)) is amended by adding at the end the follow-
ing new paragraphs:
‘‘(14) SELLING CREDIT CARD ACCOUNTS RECEIV-
ABLE.—
‘‘(A) 
NOTIFICATION
REQUIRED.—An
undercapitalized insured depository institution
(as defined in section 38) shall notify the Cor-
poration in writing before entering into an
agreement to sell credit card accounts receivable.
‘‘(B) WAIVER BY CORPORATION.—The Cor-
poration may at any time, in its sole discretion
and upon such terms as it may prescribe, waive
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its right to repudiate an agreement to sell credit
card accounts receivable if the Corporation—
‘‘(i) determines that the waiver is in
the best interests of the deposit insurance
fund; and
‘‘(ii) provides a written waiver to the
selling institution.
‘‘(C) EFFECT
OF
WAIVER
ON
SUCCES-
SORS.—
‘‘(i) IN GENERAL.—If, under subpara-
graph (B), the Corporation has waived its
right to repudiate an agreement to sell cred-
it card accounts receivable—
‘‘(I) any provision of the agree-
ment that restricts solicitation of a
credit card customer of the selling in-
stitution, or the use of a credit card
customer list of the institution, shall
bind any receiver or conservator of the
institution; and
‘‘(II) the Corporation shall re-
quire any acquirer of the selling insti-
tution, or of substantially all of the
selling institution’s assets or liabilities,
to agree to be bound by a provision de-
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scribed in subclause (I) as if the
acquirer were the selling institution.
‘‘(ii) EXCEPTION.—Clause (i)(II) does
not—
‘‘(I) restrict the acquirer’s author-
ity to offer any product or service to
any person identified without using a
list of the selling institution’s cus-
tomers in violation of the agreement;
‘‘(II) require the acquirer to re-
strict any preexisting relationship be-
tween the acquirer and a customer; or
‘‘(III) apply to any transaction
in which the acquirer acquires only in-
sured deposits.
‘‘(D) WAIVER NOT ACTIONABLE.—The Cor-
poration shall not, in any capacity, be liable to
any person for damages resulting from the waiv-
er of or failure to waive the Corporation’s right
under this section to repudiate any contract or
lease, including an agreement to sell credit card
accounts receivable. No court shall issue any
order affecting any such waiver or failure to
waive.
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‘‘(E) OTHER AUTHORITY NOT AFFECTED.—
This paragraph does not limit any other author-
ity of the Corporation to waive the Corporation’s
right to repudiate an agreement or lease under
this section.
‘‘(15) CERTAIN CREDIT CARD CUSTOMER LISTS
PROTECTED.—
‘‘(A) IN GENERAL.—If any insured deposi-
tory institution sells credit card accounts receiv-
able under an agreement negotiated at arm’s
length that provides for the sale of the institu-
tion’s credit card customer list, the Corporation
shall prohibit any party to a transaction with
respect to the institution under this section or
section 13 from using the list except as permitted
under the agreement.
‘‘(B) 
FRAUDULENT
TRANSACTIONS
EX-
CLUDED.—Subparagraph (A) does not limit the
Corporation’s authority to repudiate any agree-
ment entered into with the intent to hinder,
delay, or defraud the institution, the institution’s
creditors, or the Corporation.’’.
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SEC. 327. LIMITING POTENTIAL LIABILITY ON FOREIGN AC-
COUNTS.
(a) AMENDMENT TO THE FEDERAL RESERVE ACT.—
The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended
by inserting after section 25B the following new section:
‘‘SEC. 25C. POTENTIAL LIABILITY ON FOREIGN ACCOUNTS.
‘‘A member bank shall not be required to repay any
deposit made at a foreign branch of the bank if the branch
cannot repay the deposit due to—
‘‘(1) an act of war, insurrection or civil strife;
or
‘‘(2) an action by a foreign government or in-
strumentality (whether de jure or de facto) in the
country in which the branch is located,
unless the member bank has expressly agreed in writing to
repay the deposit under those circumstances. The Board and
the Comptroller of the Currency may jointly prescribe such
regulations as they deem necessary to implement this sec-
tion.’’.
(b) CONFORMING AMENDMENTS TO THE FEDERAL DE-
POSIT INSURANCE ACT.—
(1) IN GENERAL.—Section 18 of the Federal De-
posit Insurance Act (12 U.S.C. 1828) is amended by
adding at the end the following new subsection:
‘‘(q) SOVEREIGN RISK.—Section 25C of the Federal
Reserve Act shall apply to every nonmember insured bank
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in the same manner and to the same extent as if the
nonmember insured bank were a member bank.’’.
(2) CONFORMING
AMENDMENT.—Subparagraph
(A) of section 3(l)(5) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(l)(5)) is amended to read as fol-
lows:
‘‘(A) any obligation of a depository institu-
tion which is carried on the books and records of
an office of such bank or savings association lo-
cated outside of any State, unless—
‘‘(i) such obligation would be a deposit
if it were carried on the books and records
of the depository institution, and would be
payable at, an office located in any State;
and
‘‘(ii) the contract evidencing the obliga-
tion provides by express terms, and not by
implication, for payment at an office of the
depository institution located in any State;
and’’.
(c) EXISTING CLAIMS NOT AFFECTED—Section 25C of
the Federal Reserve Act (as added by subsection (a)) shall
not be applied retroactively and shall not be construed to
affect or apply to any claim or cause of action addressed
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the following: ‘‘In the case of a federally related mortgage
loan secured by a subordinate lien on residential property,
disclosures made under section 127A(a) of the Truth in
Lending Act may be used in lieu of the disclosures required
under this section if—
‘‘(1) the disclosures made pursuant to such sec-
tion 127A(a) contain all of the information that is re-
quired under this section; and
‘‘(2) the information is disclosed in a manner
that is no less conspicuous than is required under this
section.’’.
SEC. 330. REPORT ON CAPITAL STANDARDS AND THEIR IM-
PACT ON THE ECONOMY.
(a) IN GENERAL.—Not later than 1 year after the date
of enactment of this Act, the Secretary of the Treasury, after
consultation with the Federal banking agencies, shall report
to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Banking, Finance and
Urban Affairs of the House of Representatives on the effect
of the implementation of risk-based capital standards on—
(1) the safety and soundness of insured deposi-
tory institutions; and
(2) the availability of credit, particularly to con-
sumers and small business concerns.
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(b) RECOMMENDATIONS.—The report required by sub-
section (a) shall contain any recommendations that the Sec-
retary of the Treasury considers relevant.
SEC. 331. STUDIES ON THE IMPACT OF THE PAYMENT OF IN-
TEREST ON RESERVES.
(a) FEDERAL RESERVE STUDY.—Not later than 180
days after the date of enactment of this Act, the Board of
Governors of the Federal Reserve System, in consultation
with the Federal Deposit Insurance Corporation, shall con-
duct a study and report to Congress on—
(1) the necessity, for monetary policy purposes,
of continuing to require insured depository institu-
tions to maintain sterile reserves;
(2) the appropriateness of paying a market rate
of interest to insured depository institutions on sterile
reserves or, in the alternative, providing for payment
of such interest into the appropriate deposit insur-
ance fund;
(3) the monetary impact that the failure to pay
interest on sterile reserves has had on insured deposi-
tory institutions, including an estimate of the total
dollar amount of interest and the potential income
lost by insured depository institutions; and
(4) the impact that the failure to pay interest on
sterile reserves has had on the ability of the banking
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industry to compete with nonbanking providers of fi-
nancial services and with foreign banks.
(b) BUDGETARY IMPACT STUDY.—Not later than 180
days after the date of enactment of this Act, the Director
of the Office of Management and Budget and the Director
of the Congressional Budget Office, in consultation with the
Committees on the Budget of the Senate and the House of
Representatives, shall jointly conduct a study and report
to the Congress on the budgetary impact of—
(1) paying a market rate of interest to insured
depository institutions on sterile reserves; and
(2) paying such interest into the respective
deposit insurance funds.
SEC. 332. STUDY AND REPORT ON STREAMLINED LENDING
PROCESS FOR CONSUMER BENEFIT.
(a) STUDY.—During the 12-month period beginning
on the date of enactment of this Act, the Board of Governors
of the Federal Reserve System, the Comptroller of the Cur-
rency, and the Secretary of Housing and Urban Develop-
ment shall conduct a study of ways to improve the home
mortgage, small business, and consumer lending processes,
consistent with the principles of safety and soundness, so
as to—
(1) reduce consumer burdens, inconvenience, cost,
and delay; and
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(2) minimize cost and burdens on insured
depository institutions, credit unions, and other
lenders.
(b) COMMENTS.—In conducting the study under sub-
section (a), comments shall be solicited from consumer
groups, insured depository institutions, other lenders, and
any other interested parties.
(c) REPORT.—Not later than 12 months after the date
of enactment of this Act, the Board of Governors of the Fed-
eral Reserve System, the Comptroller of the Currency, and
the Secretary of Housing and Urban Development shall sub-
mit a joint report to the Congress indicating any legislative
changes necessary to improve the home mortgage, small
business, and consumer lending processes and including a
summary of comments received pursuant to subsection (b).
SEC. 333. REPEAL OF OUTDATED CHARTER REQUIREMENT
FOR NATIONAL BANKS.
Section 5170 of the Revised Statutes (12 U.S.C. 28)
is repealed.
SEC. 334. INCLUSION OF COMPTROLLER OF THE CUR-
RENCY; CLARIFICATION OF REVISED STAT-
UTES.
(a) PUBLIC LAW 93–425.—Section 111 of Public Law
93–495 (12 U.S.C. 250) is amended by inserting ‘‘the
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Comptroller of the Currency,’’ after ‘‘Federal Deposit Insur-
ance Corporation,’’.
(b) REVISED STATUTES.—
(1) SECTION 5240.—The third paragraph of sec-
tion 5240 of the Revised Statutes (12 U.S.C. 482) is
amended by inserting ‘‘or section 301(f)(1) of title 31,
United States Code,’’ after ‘‘provisions of this sec-
tion’’.
(2) SECTION 324.—Section 324 of the Revised
Statutes (12 U.S.C. 1) is amended by adding at the
end the following: ‘‘The Comptroller of the Currency
shall have the same authority over matters within the
jurisdiction of the Comptroller as the Director of the
Office of Thrift Supervision has over matters within
the Director’s jurisdiction under section 3(b)(3) of the
Home Owners’ Loan Act.’’.
(3) SECTION 5239.—Section 5239 of the Revised
Statutes (12 U.S.C. 93) is amended by inserting at
the end the following new subsection:
‘‘(d) AUTHORITY.—The Comptroller of the Currency
may act in the Comptroller’s own name and through the
Comptroller’s own attorneys in enforcing any provision of
this title, regulations thereunder, or any other law or regu-
lation, or in any action, suit, or proceeding to which the
Comptroller of the Currency is a party.’’.
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SEC. 335. COMMEMORATION OF 1995 SPECIAL OLYMPIC
WORLD GAMES.
(a) COIN SPECIFICATIONS.—
(1) ONE DOLLAR SILVER COINS.—
(A) ISSUANCE.—The Secretary of the Treas-
ury (hereafter in this section referred to as the
‘‘Secretary’’) shall issue not more than 800,000
$1 coins, which shall weigh 26.73 grams, have a
diameter of 1.500 inches, and shall contain 90
percent silver and 10 percent copper.
(B) DESIGN.—The design of the coins issued
under this section shall be emblematic of the
1995 Special Olympics World Games. On each
such coin there shall be a designation of the
value of the coin, an inscription of the year
‘‘1995’’, and inscriptions of the words ‘‘Liberty’’,
‘‘In God We Trust’’, ‘‘United States of America’’,
and ‘‘E Pluribus Unum’’.
(2) LEGAL
TENDER.—The coins issued under
this section shall be legal tender as provided in sec-
tion 5103 of title 31, United States Code.
(3) NUMISMATIC ITEMS.—For purposes of section
5132(a)(1) of title 31, United States Code, all coins
minted under this section shall be considered to be
numismatic items.
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(b) SOURCES OF BULLION.—The Secretary shall ob-
tain silver for the coins minted under this section only from
stockpiles established under the Strategic and Critical Mate-
rials Stock Piling Act.
(c) SELECTION OF DESIGN.—The design for the coins
authorized by this section shall be selected by the Secretary
after consultation with the 1995 Special Olympics World
Games Organizing Committee, Inc. and the Commission of
Fine Arts. As required by section 5135 of title 31, United
States Code, the design shall also be reviewed by the Citizens
Commemorative Coin Advisory Committee.
(d) ISSUANCE OF THE COINS.—
(1) QUALITY OF COINS.—The coins authorized
under this section may be issued in uncirculated and
proof qualities.
(2) MINT FACILITY.—Not more than 1 facility of
the United States Mint may be used to strike any
particular quality of the coins minted under this sec-
tion.
(3) PERIOD FOR ISSUANCE.—The Secretary shall
issue coins minted under this Act during the period
beginning on January 15, 1995, and ending on De-
cember 31, 1995.
(e) SALE OF THE COINS.—
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(1) SALE PRICE.—The coins issued under this
section shall be sold by the Secretary at a price equal
to the sum of the face value of the coins, the surcharge
provided in paragraph (4) with respect to such coins,
and the cost of designing and issuing such coins (in-
cluding labor, materials, dies, use of machinery, over-
head expenses, marketing, and shipping).
(2) BULK
SALES.—The Secretary shall make
bulk sales at a reasonable discount.
(3) PREPAID ORDERS.—The Secretary shall ac-
cept prepaid orders for the coins authorized under
this section prior to the issuance of such coins. Sales
under this subsection shall be at a reasonable dis-
count.
(4) SURCHARGE REQUIRED.—All sales shall in-
clude a surcharge of $10 per coin.
(f) GENERAL WAIVER
OF PROCUREMENT REGULA-
TIONS.—No provision of law governing procurement or
public contracts shall be applicable to the procurement of
goods or services necessary for carrying out the provisions
of this section. Nothing in this subsection shall relieve any
person entering into a contract under the authority of this
section from complying with any law relating to equal em-
ployment opportunity.
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(g) DISTRIBUTION OF SURCHARGES.—The total sur-
charges collected by the Secretary from the sale of the coins
issued under this section shall be promptly paid by the Sec-
retary to the 1995 Special Olympics World Games Organiz-
ing Committee, Inc. Such amounts shall be used to—
(1) provide a world class sporting event for ath-
letes with mental retardation;
(2) demonstrate to a global audience the extraor-
dinary talents, dedication, and courage of persons
with mental retardation; and
(3) underwrite the cost of staging and promoting
the 1995 Special Olympics World Games.
(h) AUDITS.—The Comptroller General of the United
States shall have the right to examine such books, records,
documents, and other data of the 1995 Special Olympics
World Games Organizing Committee, Inc. as may be related
to the expenditure of amounts paid under subsection (g).
(i) FINANCIAL ASSURANCES.—
(1) NO NET COST TO THE GOVERNMENT.—The
Secretary shall take all actions necessary to ensure
that the issuance of the coins authorized by this sec-
tion shall result in no net cost to the United States
Government.
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(2) ADEQUATE
SECURITY
FOR
PAYMENT
RE-
QUIRED.—No coin shall be issued under this section
unless the Secretary has received—
(A) full payment therefore;
(B) security satisfactory to the Secretary to
indemnify the United States for full payment; or
(C) a guarantee of full payment satisfactory
to the Secretary from a depository institution
whose deposits are insured by the Federal De-
posit Insurance Corporation or the National
Credit Union Administration Board.
SEC. 336. EXEMPTION FOR BUSINESS ACCOUNTS.
Section 274(1) of the Truth in Savings Act (12 U.S.C.
4313(1)) is amended to read as follows:
‘‘(1) ACCOUNT.—The term ‘account’ means any
account intended for use by and generally used by
consumers primarily for personal, family, or house-
hold purposes that is offered by a depository institu-
tion into which a consumer deposits funds, including
demand accounts, time accounts, negotiable order of
withdrawal accounts, and share draft accounts.’’.
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SEC. 337. BOARD DISCRETION REGARDING CHECK-RELATED
FRAUD.
Section 604(e) of the Expedited Funds Availability Act
(12 U.S.C. 4003(e)) is amended by adding at the end the
following new paragraph:
‘‘(4) 
PREVENTION
OF
CHECK-RELATED
LOSSES.—
‘‘(A) IN
GENERAL.—The Board may, by
regulation or order, extend the 1-business-day pe-
riod specified in section 603(b)(1), regarding
availability of funds deposited by local checks, to
2 business days if the Board determines that—
‘‘(i) there is a pattern of significant
increases in check-related losses at deposi-
tory institutions attributable to the provi-
sions of this title; and
‘‘(ii) such action is necessary to dimin-
ish the volume of such check-related losses.
‘‘(B) LIMITATION ON OTHER AUTHORITY.—
The authority of the Board under paragraph (1)
shall not apply to the applicability of section
603(b)(1) or the time period specified therein.’’.
SEC. 338. CIVIL LIABILITY UNDER TRUTH IN SAVINGS.
Section 271(a)(2)(A) of the Truth in Savings Act (12
U.S.C. 4310(a)(2)(A)) is amended by inserting ‘‘(other than
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an action based on a violation of section 263)’’ after ‘‘indi-
vidual action’’.
SEC. 339. INSIDER LENDING.
(a) LOANS TO EXECUTIVE OFFICERS BY MEMBER
BANKS.—Section 22(g)(2) of the Federal Reserve Act (12
U.S.C. 375a(g)(2)) is amended by striking ‘‘With the spe-
cific prior approval of its board of directors, a member’’
and inserting ‘‘A member’’.
(b) EXTENSIONS OF CREDIT TO EXECUTIVE OFFI-
CERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS
OF
MEMBER BANKS.—Section 22(h)(8) of the Federal Reserve
Act (12 U.S.C. 375b(h)(8)) is amended—
(1) by striking ‘‘MEMBER BANK.—FOR’’ and in-
serting the following: ‘‘MEMBER BANK.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), for’’; and
(2) by adding at the end the following:
‘‘(B) EXCEPTION.—The Board shall have
the authority by regulation to suspend the appli-
cability of any or all of this subsection, except
for the provisions of paragraph (2), with respect
to any individual who is a director or an execu-
tive officer of a subsidiary of the company that
controls the member bank, if the Board finds
that such individual does not actually partici-
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pate in major policymaking functions of the
member bank.’’.
SEC. 340. REVISIONS OF STANDARDS.
Section 305(b)(1) of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 1828
note) is amended—
(1) in subparagraph (A), by striking ‘‘and’’ at
the end;
(2) in subparagraph (B), by striking the period
at the end and inserting ‘‘; and’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(C) take into account the size and activi-
ties of the institutions and do not cause undue
reporting burdens.’’.
SEC. 341. ALTERNATIVE RULES FOR RADIO ADVERTISING
OF CONSUMER LEASES.
Section 184 of the Truth in Lending Act (15 U.S.C.
1667c) is amended—
(1) by redesignating subsection (b) as subsection
(c); and
(2) by inserting after subsection (a) the following
new subsection:
‘‘(b) RADIO ADVERTISEMENTS.—
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‘‘(1) IN GENERAL.—An advertisement by radio
broadcast to aid, promote, or assist, directly or indi-
rectly, any consumer lease shall be deemed to be in
compliance with the requirements of subsection (a) if
such advertisement clearly and conspicuously—
‘‘(A) states the information required by
paragraphs (1) and (2) of subsection (a);
‘‘(B) states the number, amounts, due dates,
or periods of scheduled payments, and the total
of such payments under the lease; and
‘‘(C) includes—
‘‘(i) a referral to—
‘‘(I) a toll-free telephone number
established in accordance with para-
graph (2) that may be used by consum-
ers to obtain the information required
under subsection (a); or
‘‘(II) a written advertisement
that—
‘‘(aa) appears in a publica-
tion in general circulation in the
community served by the radio
station on which such advertise-
ment is broadcast during the pe-
riod beginning 3 days before any
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such broadcast and ending 10
days after such broadcast; and
‘‘(bb) includes the informa-
tion required to be disclosed under
subsection (a); and
‘‘(ii) the name and dates of any publi-
cation referred to in clause (i)(II); and
‘‘(D) includes any other information which
the Board determines necessary to carry out this
chapter.
‘‘(2) ESTABLISHMENT OF TOLL-FREE NUMBER.—
‘‘(A) IN GENERAL.—In the case of a radio
broadcast advertisement described in paragraph
(1) that includes a referral to a toll-free tele-
phone number, the lessor who offers the consumer
lease shall—
‘‘(i) establish such a toll-free telephone
number not later than the date on which the
advertisement including the referral is
broadcast;
‘‘(ii) maintain such telephone number
for not less than 10 days, beginning on the
date of any such broadcast; and
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‘‘(iii) provide the information required
under subsection (a) with respect to the
lease to any person who calls such number.
‘‘(B) FORM OF INFORMATION.—The infor-
mation required to be provided under subpara-
graph (A)(iii) shall be provided orally or, if re-
quested by the consumer, in written form.
‘‘(3) NO EFFECT ON OTHER LAW.—Nothing in
this subsection shall affect the requirements of Federal
law as such requirements apply to advertisement by
any other medium.’’.
SEC. 342. DEPOSIT BROKER REGISTRATION.
Section 29(g)(3) of the Federal Deposit Insurance Act
(12 U.S.C. 1831f(g)(3)) is amended—
(1) by inserting ‘‘that is not well capitalized’’
after ‘‘includes any insured depository institution’’;
(2) by striking ‘‘of any insured depository’’ and
inserting ‘‘of such’’;
(3) by striking ‘‘(with respect to such deposits)’’;
and
(4) by striking ‘‘having the same type of char-
ter’’.
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SEC. 
343. 
EXTENSION 
OF 
MANAGEMENT 
INTERLOCKS
GRANDFATHER CLAUSE.
Subsections (a) and (b) of section 206 of the Depository
Institution Management Interlocks Act (12 U.S.C. 3205)
are each amended by striking ‘‘15 years’’ and inserting ‘‘20
years’’.
SEC. 344. CLARIFICATION OF PROVISION RELATING TO AD-
MINISTRATIVE AUTONOMY.
Section 3(b)(3) of the Home Owners’ Loan Act (12
U.S.C. 1462a) is amended by striking everything after ‘‘Di-
rector’’ and inserting in lieu thereof ‘‘(including agency
rulemaking proceedings and enforcement actions) unless
otherwise specifically provided by law.’’.
SEC. 345. CONSUMER SURVEYS AND REPORT.
(a) SURVEYS.—Not later than 6 months after the date
of enactment of this Act, the Federal banking agencies (as
defined in section 3 of the Federal Deposit Insurance Act)
and the Secretary of Housing and Urban Development shall
jointly conduct an objective and statistically valid survey
of financial services consumers to determine the general
public awareness of, perceived benefits to consumers of, and
effectiveness of the Federal banking laws under which the
Federal banking agencies and the Department of Housing
and Urban Development operate that are intended for the
protection of such consumers, including—
(1) the Expedited Funds Availability Act;
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(2) the Truth in Lending Act;
(3) the Truth in Savings Act;
(4) the Real Estate Settlement Procedures Act of
1974;
(5) the Home Mortgage Disclosure Act of 1975;
(6) the Equal Credit Opportunity Act;
(7) the Community Reinvestment Act of 1977;
(8) the Home Equity Loan Consumer Protection
Act;
(9) the Fair Credit and Charge Card Disclosure
Act; and
(10) the rules and regulations promulgated
under those banking laws.
(b) CONSULTATION.—In developing such a survey, the
Federal banking agencies and the Secretary of Housing and
Urban Development shall consult with consumer groups, in-
sured depository institutions, other lenders, and any other
interested parties.
(c) INFORMATION FOR SURVEYED CONSUMERS.—The
survey shall provide for distribution to participating con-
sumers a summary explanation of the Federal banking law
being surveyed and how each is currently being imple-
mented.
(d) REPORT.—Not later than 60 days after completion
of its survey under subsection (a), the Federal banking
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agencies and the Secretary of Housing and Urban Develop-
ment shall jointly submit a report of the results of their
survey to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Banking, Fi-
nance and Urban Affairs of the House of Representatives.
SEC. 346. SIMPLIFIED DISCLOSURE FOR EXISTING DEPOSI-
TORS.
(a) IN GENERAL.—Section 43(b)(3) of the Federal De-
posit Insurance Act (12 U.S.C. 1831t(b)(3)) is amended to
read as follows:
‘‘(3) ACKNOWLEDGEMENT OF DISCLOSURE.—
‘‘(A) NEW
DEPOSITORS.—With respect to
any depositor who was not a depositor at the de-
pository institution before June 19, 1994, receive
any deposit for the account of such depositor
only if the depositor has signed a written ac-
knowledgement that—
‘‘(i) the institution is not federally in-
sured; and
‘‘(ii) if the institution fails, the Fed-
eral Government does not guarantee that the
depositor will get back the depositor’s
money.
‘‘(B) CURRENT DEPOSITORS.—Receive any
deposit after the effective date of this paragraph
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for the account of any depositor who was a de-
positor before June 19, 1994, only if—
‘‘(i) the depositor has signed a written
acknowledgement described in subparagraph
(A); or
‘‘(ii) the institution has complied with
the provisions of subparagraph (C) which
are applicable as of the date of the deposit.
‘‘(C) ALTERNATIVE PROVISION OF NOTICE
TO CURRENT DEPOSITORS.—
‘‘(i) IN GENERAL.—Transmit to each
depositor who was a depositor before June
19, 1994, and has not signed a written ac-
knowledgement described in subparagraph
(A)—
‘‘(I) a card containing the infor-
mation described in clauses (i) and (ii)
of subparagraph (A), and a line for the
signature of the depositor; and
‘‘(II) accompanying materials re-
questing the depositor to sign the card,
and return the signed card to the insti-
tution.
‘‘(ii) MANNER
AND
TIMING
OF
NO-
TICE.—
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‘‘(I) FIRST
NOTICE.—Make the
transmission described in clause (i) via
first class mail within 90 days after
June 19, 1994.
‘‘(II) SECOND
NOTICE.—Make a
2d transmission described in clause (i)
via first class mail not less than 30
days and not more than 45 days after
a transmission to the depositor in ac-
cordance with subclause (I), if the in-
stitution has not, by the date of such
mailing, received from the depositor a
card referred to in clause (i)(I) which
has been signed by the depositor.
‘‘(III) THIRD
NOTICE.—Make a
3d transmission described in clause (i)
via first class mail not less than 30
days and not more than 45 days after
a transmission to the depositor in ac-
cordance with subclause (II), if the in-
stitution has not, by the date of such
mailing, received from the depositor a
card referred to in clause (i)(I) which
has been signed by the depositor.’’.
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(b) EFFECTIVE DATE.—Section 43(b)(3) of the Federal
Deposit Insurance Act, as amended by subsection (a), shall
take effect in accordance with section 151(a)(2)(D) of the
Federal Deposit Insurance Corporation Improvement Act
of 1991.
SEC. 347. COMMERCIAL MORTGAGE RELATED SECURITIES.
(a) IN GENERAL.—Section 3(a)(41)(A)(i) of the Secu-
rities Exchange Act of 1934 (15 U.S.C. 78c(a)(41)(A)(i))
is amended —
(1) by striking ‘‘or on a residential’’ and insert-
ing ‘‘on a residential’’; and
(2) by inserting before the semicolon ‘‘, or on one
or more parcels of real estate upon which is located
one or more commercial structures’’.
(b) AMENDMENT TO THE REVISED STATUTES.—Para-
graph Seventh of section 5136 of the Revised Statutes (12
U.S.C. 24) is amended in the twelfth sentence, by striking
‘‘(15 U.S.C. 78c(a)(41))), subject to such regulations’’ and
inserting ‘‘(15 U.S.C. 78c(a)(41)). The exception provided
for the securities described in subparagraphs (A), (B), and
(C) shall be subject to such regulations’’.
(c) REGULATIONS.—Not later than 1 year after the
date of enactment of this Act, the Comptroller of the Cur-
rency shall promulgate final regulations, in accordance
with the thirteenth sentence of Paragraph Seventh of section
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5136 of the Revised Statutes (as amended by subsection (b)),
to carry out the amendments made by this section.
(d) EFFECTIVE DATE.—The amendments made by this
section shall become effective upon the date of promulgation
of final regulations under subsection (c).
(e) STATE OPT OUT.—Notwithstanding the amend-
ments made by this section, a note that is directly secured
by a first lien on one or more parcels of real estate upon
which is located one or more commercial structures shall
not be considered to be a mortgage related security under
section 3(a)(41) of the Securities Exchange Act of 1934 in
any State that, prior to the expiration of 7 years after the
date of enactment of this Act, enacts a statute that specifi-
cally refers to this section and either prohibits or provides
for a more limited authority to purchase, hold, or invest
in such securities by any person, trust, corporation, part-
nership, association, business trust, or business entity or
class thereof than is provided by the amendments made by
this subsection. The enactment by any State of any statute
of the type described in the preceding sentence shall not af-
fect the validity of any contractual commitment to pur-
chase, hold, or invest that was made prior thereto, and shall
not require the sale or other disposition of any securities
acquired prior thereto.
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SEC. 348. OFFSET OF COSTS OF CERTAIN PROGRAMS.
(a) HUD MULTIFAMILY HOUSING DISPOSITION PROC-
ESS.—
(1) FINDINGS.—The Congress finds that—
(A) the portfolio of multifamily housing
project mortgages insured by the FHA is severely
troubled and at risk of default, requiring the Sec-
retary 
to 
increase 
loss 
reserves 
from
$5,500,000,000 in 1991 to $11,900,000,000 in
1992 to cover estimated future losses;
(B) the inventory of multifamily housing
projects owned by the Secretary has more than
tripled since 1989, and, by the end of 1993, may
exceed 75,000 units;
(C) the cost to the Federal Government of
owning and maintaining multifamily housing
projects escalated to approximately $250,000,000
in fiscal year 1992;
(D) the inventory of multifamily housing
projects subject to mortgages held by the Sec-
retary has increased dramatically, to more than
2,400 mortgages, and approximately half of these
mortgages, with over 230,000 units, are delin-
quent;
(E) the inventory of insured and formerly
insured multifamily housing projects is rapidly
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deteriorating, endangering tenants and neighbor-
hoods;
(F) over 5 million families today have a
critical need for housing that is affordable and
habitable; and
(G) the current statutory framework govern-
ing the disposition of multifamily housing
projects effectively impedes the Government’s
ability to dispose of properties, protect tenants,
and ensure that projects are maintained over
time.
(2) MANAGEMENT AND DISPOSITION OF MULTI-
FAMILY
HOUSING
PROJECTS.—Section 203 of the
Housing and Community Development Amendments
of 1978 (12 U.S.C. 1701z–11) is amended to read as
follows:
‘‘SEC. 203. MANAGEMENT AND DISPOSITION OF MULTIFAM-
ILY HOUSING PROJECTS.
‘‘(a) GOALS.—The Secretary of Housing and Urban
Development (in this section referred to as the ‘Secretary’)
shall manage or dispose of multifamily housing projects
that are owned by the Secretary or that are subject to a
mortgage held by the Secretary in a manner that—
‘‘(1) is consistent with the National Housing Act
and this section;
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‘‘(2) will protect the financial interests of the
Federal Government; and
‘‘(3) will, in the least costly fashion among rea-
sonable available alternatives, further the goals of—
‘‘(A) preserving housing so that it can re-
main available to and affordable by low-income
persons;
‘‘(B) preserving and revitalizing residential
neighborhoods;
‘‘(C) maintaining existing housing stock in
a decent, safe, and sanitary condition;
‘‘(D) minimizing the involuntary displace-
ment of tenants;
‘‘(E) maintaining housing for the purpose
of providing rental housing, cooperative housing,
and homeownership opportunities for low-income
persons; and
‘‘(F) minimizing the need to demolish mul-
tifamily housing projects.
The Secretary, in determining the manner in which a
project is to be managed or disposed of, may balance com-
peting goals relating to individual projects in a manner
that will further the purposes of this section.
‘‘(b) DEFINITIONS.—For purposes of this section, the
following definitions shall apply:
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‘‘(1) MULTIFAMILY
HOUSING
PROJECT.—The
term ‘multifamily housing project’ means any multi-
family rental housing project which is, or prior to ac-
quisition by the Secretary was, assisted or insured
under the National Housing Act, or was subject to a
loan under section 202 of the Housing Act of 1959.
‘‘(2) SUBSIDIZED
PROJECT.—The term ‘sub-
sidized project’ means a multifamily housing project
receiving any of the following types of assistance im-
mediately prior to the assignment of the mortgage on
such project to, or the acquisition of such mortgage
by, the Secretary:
‘‘(A) Below market interest rate mortgage
insurance under the proviso of section 221(d)(5)
of the National Housing Act.
‘‘(B) Interest reduction payments made in
connection with mortgages insured under section
236 of the National Housing Act.
‘‘(C) Direct loans made under section 202 of
the Housing Act of 1959.
‘‘(D) Assistance in the form of—
‘‘(i) rent supplement payments under
section 101 of the Housing and Urban De-
velopment Act of 1965;
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‘‘(ii) 
housing 
assistance 
payments
made under section 23 of the United States
Housing Act of 1937 (as in effect before
January 1, 1975); or
‘‘(iii) housing assistance payments
made under section 8 of the United States
Housing Act of 1937 (excluding payments
made for tenant-based assistance under sec-
tion 8),
if (except for purposes of section 183(c) of the
Housing and Community Development Act of
1987) such assistance payments are made to
more than 50 percent of the units in the project.
‘‘(3) FORMERLY
SUBSIDIZED
PROJECT.—The
term ‘formerly subsidized project’ means a multifam-
ily housing project owned by the Secretary that was
a subsidized project immediately prior to its acquisi-
tion by the Secretary.
‘‘(4) 
UNSUBSIDIZED
PROJECT.—The 
term
‘unsubsidized project’ means a multifamily housing
project owned by the Secretary that is not a sub-
sidized project or a formerly subsidized project.
‘‘(c) MANAGEMENT OR DISPOSITION OF PROPERTY.—
‘‘(1) DISPOSITION TO PURCHASERS.—The Sec-
retary is authorized, in carrying out this section, to
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dispose of a multifamily housing project owned by the
Secretary on a negotiated, competitive bid, or other
basis, on such terms as the Secretary deems appro-
priate considering the low-income character of the
project and the requirements of subsection (a), to a
purchaser determined by the Secretary to be capable
of—
‘‘(A) satisfying the conditions of the disposi-
tion;
‘‘(B) implementing a sound financial and
physical management program that is designed
to enable the project to meet anticipated operat-
ing and repair expenses to ensure that the
project will remain in decent, safe, and sanitary
condition;
‘‘(C) responding to the needs of the tenants
and working cooperatively with tenant organiza-
tions;
‘‘(D) providing adequate organizational
staff and financial resources to the project; and
‘‘(E) meeting such other requirements as the
Secretary may determine.
‘‘(2) CONTRACTING
FOR
MANAGEMENT
SERV-
ICES.—The Secretary is authorized, in carrying out
this section—
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‘‘(A) to contract for management services
for a multifamily housing project that is owned
by the Secretary (or for which the Secretary is
mortgagee in possession), on a negotiated, com-
petitive bid, or other basis at a price determined
by the Secretary to be reasonable, with a man-
ager the Secretary has determined is capable
of—
‘‘(i) implementing a sound financial
and physical management program that is
designed to enable the project to meet an-
ticipated operating and maintenance ex-
penses to ensure that the project will remain
in decent, safe, and sanitary condition;
‘‘(ii) responding to the needs of the ten-
ants and working cooperatively with tenant
organizations;
‘‘(iii) providing adequate organiza-
tional, staff, and other resources to imple-
ment a management program determined
by the Secretary; and
‘‘(iv) meeting such other requirements
as the Secretary may determine; and
‘‘(B) to require the owner of a multifamily
housing project that is subject to a mortgage held
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by the Secretary to contract for management
services for the project in the manner described
in subparagraph (A).
‘‘(d) MAINTENANCE OF HOUSING PROJECTS.—
‘‘(1) HOUSING PROJECTS OWNED BY THE SEC-
RETARY.—In the case of multifamily housing projects
that are owned by the Secretary (or for which the Sec-
retary is mortgagee in possession), the Secretary
shall—
‘‘(A) to the greatest extent possible, main-
tain all such occupied projects in a decent, safe,
and sanitary condition;
‘‘(B) to the greatest extent possible, main-
tain full occupancy in all such projects; and
‘‘(C) maintain all such projects for purposes
of providing rental or cooperative housing.
‘‘(2) HOUSING PROJECTS SUBJECT TO A MORT-
GAGE HELD BY THE SECRETARY.—In the case of any
multifamily housing project that is subject to a mort-
gage held by the Secretary, the Secretary shall require
the owner of the project to carry out the requirements
of paragraph (1).
‘‘(e) REQUIRED ASSISTANCE.—In carrying out the
goal specified in subsection (a)(3)(A), the Secretary shall
take not less than one of the following actions:
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‘‘(1) CONTRACT WITH OWNER.—Enter into con-
tracts under section 8 of the United States Housing
Act of 1937, to the extent budget authority is avail-
able, with owners of multifamily housing projects that
are acquired by a purchaser other than the Secretary
at foreclosure or after sale by the Secretary.
‘‘(A) SUBSIDIZED
OR
FORMERLY
SUB-
SIDIZED PROJECTS RECEIVING CERTAIN ASSIST-
ANCE.—In the case of a subsidized or formerly
subsidized project referred to in subparagraphs
(A) through (C) of subsection (b)(2)—
‘‘(i) the contract shall be sufficient to
assist at least all units covered by an assist-
ance contract under any of the authorities
referred to in subsection (b)(2)(D) before ac-
quisition, unless the Secretary acts pursu-
ant to the provisions of subparagraph (C);
‘‘(ii) in the case of units requiring
project-based rental assistance pursuant to
this paragraph that are occupied by fami-
lies who are not eligible for assistance under
section 8, a contract under this subpara-
graph shall also provide that when a va-
cancy occurs, the owner shall lease the
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available unit to a family eligible for assist-
ance under section 8; and
‘‘(iii) the Secretary shall take actions
to ensure the availability and affordability,
as defined in paragraph (3)(B), for the re-
maining useful life of the project, as defined
by the Secretary, of any unit located in any
project referred to in subparagraphs (A)
through (C) of subsection (b)(2) that does
not otherwise receive project-based assist-
ance under this subparagraph. To carry out
this clause, the Secretary may require pur-
chasers to establish use or rent restrictions
maintaining affordability, as defined in
paragraph (3)(B).
‘‘(B) SUBSIDIZED
OR
FORMERLY
SUB-
SIDIZED
PROJECTS
RECEIVING
OTHER
ASSIST-
ANCE.—In the case of a subsidized or formerly
subsidized project referred to in subsection
(b)(2)(D)—
‘‘(i) the contract shall be sufficient to
assist at least all units in the project that
are covered, or were covered immediately be-
fore foreclosure on or acquisition of the
project by the Secretary, by an assistance
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contract under any of the authorities re-
ferred to in such subsection, unless the Sec-
retary acts pursuant to provisions of sub-
paragraph (C); and
‘‘(ii) in the case of units requiring
project-based rental assistance pursuant to
this paragraph that are occupied by fami-
lies who are not eligible for assistance under
section 8, a contract under this paragraph
shall also provide that when a vacancy oc-
curs, the owner shall lease the available unit
to a family eligible for assistance under sec-
tion 8.
‘‘(C) EXCEPTIONS TO SUBPARAGRAPHS (A)
AND (B).—In lieu of providing project-based as-
sistance under subparagraph (A) or (B), the Sec-
retary may require certain units in unsubsidized
projects to contain use restrictions providing
that such units will be available to and afford-
able by very low-income families for the remain-
ing useful life of the project, as defined by the
Secretary, if—
‘‘(i) the Secretary matches any reduc-
tion in units otherwise required to be as-
sisted with project-based assistance under
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subparagraph (A) or (B) with at least an
equivalent increase in units made affordable
to 
very 
low-income 
persons 
within
unsubsidized projects;
‘‘(ii) low-income tenants residing in
units otherwise requiring project-based as-
sistance under subparagraph (A) or (B)
upon disposition receive section 8 tenant-
based assistance; and
‘‘(iii) the units described in clause (i)
are located within the same market area.
‘‘(D) 
CONTRACT
REQUIREMENTS
FOR
UNSUBSIDIZED PROJECTS.—Notwithstanding ac-
tions taken pursuant to subparagraph (C), in
unsubsidized projects, the contract shall at least
be sufficient to provide—
‘‘(i) project-based rental assistance for
all units that are covered or were covered
immediately before foreclosure or acquisi-
tion by an assistance contract under—
‘‘(I) section 8(b)(2) of the United
States Housing Act of 1937 (as such
section existed before October 1, 1983)
(new construction and substantial re-
habilitation); section 8(b) of such Act
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foreclosure or after sale by the Secretary, enter into
annual contribution contracts with public housing
agencies to provide tenant-based assistance under sec-
tion 8 of the United States Housing Act of 1937 to
all low-income families who are eligible for such as-
sistance on the date that the project is acquired by the
purchaser. The Secretary shall take action under this
paragraph only after making a determination that
there is available in the area an adequate supply of
habitable affordable housing for low-income families.
Actions taken pursuant to this paragraph may be
taken in connection with not more than 10 percent of
the aggregate number of units in subsidized or for-
merly subsidized projects disposed of by the Secretary
annually.
‘‘(3) OTHER ASSISTANCE.—
‘‘(A) IN GENERAL.—In accordance with the
authority provided under the National Housing
Act, reduce the selling price, apply use or rent
restrictions on certain units, or provide other fi-
nancial assistance to the owners of multifamily
housing projects that are acquired by a pur-
chaser other than the Secretary at foreclosure, or
after sale by the Secretary, on terms which will
ensure that—
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‘‘(i) at least those units otherwise re-
quired to receive project-based section 8 as-
sistance pursuant to subparagraphs (A),
(B), or (D) of paragraph (1) are available
to and affordable by low-income persons;
and
‘‘(ii) for the remaining useful life of
the project, as defined by the Secretary,
there shall be in force such use or rent re-
strictions as the Secretary may prescribe.
‘‘(B) DEFINITION.—A unit shall be consid-
ered affordable under this paragraph if—
‘‘(i) for very low-income tenants, the
rent for such unit does not exceed 30 per-
cent of 50 percent of the area median in-
come, as determined by the Secretary, with
adjustments for family size; and
‘‘(ii) for low-income tenants other than
very low-income tenants, the rent for such
unit does not exceed 30 percent of 80 per-
cent of the area median income, as deter-
mined by the Secretary, with adjustments
for family size.
‘‘(C) VERY
LOW-INCOME
TENANTS.—The
Secretary shall provide assistance under section
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8 of the United States Housing Act of 1937 to
any very low-income tenant currently residing
in a unit otherwise required to receive project-
based assistance under section 8, pursuant to
subparagraph (A), (B), or (D) of paragraph (1),
if the rents charged such tenants as a result of
actions taken pursuant to this paragraph exceed
the amount payable as rent under section 3(a) of
the United States Housing Act of 1937.
‘‘(4) TRANSFER FOR USE UNDER OTHER PRO-
GRAMS OF THE SECRETARY.—
‘‘(A) IN GENERAL.—Enter into an agree-
ment providing for the transfer of a multifamily
housing project—
‘‘(i) to a public housing agency for use
of the project as public housing; or
‘‘(ii) to an owner or another appro-
priate entity for use of the project under
section 202 of the Housing Act of 1959 or
under section 811 of the Cranston-Gonzalez
National Affordable Housing Act.
‘‘(B) REQUIREMENTS
FOR
AGREEMENT.—
The agreement described in subparagraph (A)
shall—
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‘‘(i) contain such terms, conditions,
and limitations as the Secretary determines
appropriate, including requirements to as-
sure use of the project under the public
housing, section 202, and section 811 pro-
grams; and
‘‘(ii) ensure that no current tenant will
be displaced as a result of actions taken
under this paragraph.
‘‘(f) OTHER ASSISTANCE.—In addition to the actions
authorized by subsection (e), the Secretary may take any
of the following actions:
‘‘(1) SHORT-TERM
LOANS.—Provide short-term
loans to facilitate the sale of multifamily housing
projects to nonprofit organizations or to public agen-
cies if—
‘‘(A) authority for such loans is provided in
advance in an appropriations Act;
‘‘(B) such loans are for a term of not more
than 5 years;
‘‘(C) the Secretary is presented with satis-
factory documentation, evidencing a commitment
of permanent financing to replace such short-
term loan, from a lender who meets standards set
forth by the Secretary; and
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‘‘(D) the terms of such loans are consistent
with prevailing practices in the marketplace or
the provision of such loans results in no cost to
the Government, as defined in section 502 of the
Congressional Budget Act.
‘‘(2) TENANT-BASED
ASSISTANCE.—In connec-
tion with projects referred to in subsection (e), make
available tenant-based assistance under section 8 of
the United States Housing Act of 1937 to very low-
income families (as defined in section 3(b)(2) of the
United States Housing Act of 1937) that do not other-
wise qualify for project-based assistance.
‘‘(3) ALTERNATIVE USES.—
‘‘(A) IN
GENERAL.—Notwithstanding any
other provision of law, and subject to notice to
and comment from existing tenants, allow not
more than—
‘‘(i) 5 percent of the total number of
units in multifamily housing projects that
are disposed of by the Secretary during any
1-year period to be made available for uses
other than rental or cooperative uses, in-
cluding low-income homeownership oppor-
tunities, or in any particular project, com-
munity space, office space for tenant or
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housing-related service providers or security
programs, or small business uses, if such
uses benefit the tenants of the project; and
‘‘(ii) 5 percent of the total number of
units in multifamily housing projects that
are disposed of by the Secretary during any
1-year period to be used in any manner, if
the Secretary and the unit of general local
government or area-wide governing body de-
termine that such use will further fair hous-
ing, community development, or neighbor-
hood revitalization goals.
‘‘(B) 
DISPLACEMENT
PROTECTION.—The
Secretary shall make available tenant-based rent-
al assistance under section 8 of the United States
Housing Act of 1937 to any tenant displaced as
a result of actions taken by the Secretary pursu-
ant to subparagraph (A), and the Secretary shall
take such actions as the Secretary determines
necessary to ensure the successful use of any ten-
ant-based assistance.
‘‘(g) AUTHORIZATION OF USE OR RENT RESTRICTIONS
IN UNSUBSIDIZED PROJECTS.—In carrying out the goals
specified in subsection (a), the Secretary may require cer-
tain units in unsubsidized projects to contain use or rent
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restrictions providing that such units will be available to
and affordable by very low-income persons for the remain-
ing useful life of the property, as defined by the Secretary.
‘‘(h) CONTRACT REQUIREMENTS.—
‘‘(1) CONTRACT TERM.—
‘‘(A) IN GENERAL.—Contracts for project-
based rental assistance under section 8 of the
United States Housing Act of 1937 provided
pursuant to this section shall be for a term of not
more than 15 years; and
‘‘(B) CONTRACT
TERM
OF
LESS
THAN
YEARS.—Notwithstanding subparagraph (A), to
the extent that units receive project-based assist-
ance for a contract term of less than 15 years,
the Secretary shall require that rents charged to
tenants for such units not exceed the amount
payable for rent under section 3(a) of the United
States Housing Act of 1937 for a period of at
least 15 years.
‘‘(2) CONTRACT RENT.—
‘‘(A) IN GENERAL.—The Secretary shall set
contract rents for section 8 project-based rental
contracts issued under this section at levels that,
in conjunction with other resources available to
the purchaser, provide for the necessary costs of
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rehabilitation of such project and do not exceed
the percentage of the existing housing fair mar-
ket rents for the area (as determined by the Sec-
retary under section 8(c) of the United States
Housing Act of 1937) as the Secretary may pre-
scribe.
‘‘(B) UP-FRONT
GRANTS
AND
LOANS.—If
such an approach is determined to be more cost-
effective, the Secretary may utilize the budget
authority provided for project-based section 8
contracts issued under this section to—
‘‘(i) provide project-based section 8
rental assistance; and
‘‘(ii)(I) provide up-front grants for the
necessary cost of rehabilitation; or
‘‘(II) pay for any cost to the Govern-
ment, as defined in section 502 of the Con-
gressional Budget Act, for loans made pur-
suant to subsection (f)(1).
‘‘(i) DISPOSITION PLAN.—
‘‘(1) IN GENERAL.—Prior to the sale of a multi-
family housing project that is owned by the Secretary,
the Secretary shall develop a disposition plan for the
project that specifies the minimum terms and condi-
tions of the Secretary for disposition of the project,
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the initial sales price that is acceptable to the Sec-
retary, and the assistance that the Secretary plans to
make available to a prospective purchaser in accord-
ance with this section. The initial sales price shall re-
flect the intended use of the property after sale.
‘‘(2) COMMUNITY AND TENANT INPUT INTO DIS-
POSITION PLANS AND SALES.—
‘‘(A) IN
GENERAL.—In carrying out this
section, the Secretary shall develop procedures to
obtain appropriate and timely input into dis-
position plans from officials of the unit of gen-
eral local government affected, the community in
which the project is situated, and the tenants of
the project.
‘‘(B) TENANT
ORGANIZATIONS.—The Sec-
retary shall develop procedures to facilitate,
where feasible and appropriate, the sale of multi-
family housing projects to existing tenant orga-
nizations with demonstrated capacity or to pub-
lic or nonprofit entities which represent or are
affiliated with existing tenant organizations.
‘‘(C) TECHNICAL ASSISTANCE.—
‘‘(i) USE OF FUNDS.—To carry out the
procedures developed under subparagraphs
(A) and (B), the Secretary is authorized to
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provide technical assistance, directly or in-
directly, and to use amounts appropriated
for technical assistance under the Emer-
gency Low Income Housing Preservation
Act of 1987, the Low-Income Housing Pres-
ervation and Resident Homeownership Act
of 1990, subtitle B of title IV of the Cran-
ston-Gonzalez National Affordable Housing
Act, or under this section for the provision
of technical assistance under this section.
‘‘(ii) SOURCE OF FUNDS.—Recipients
of technical assistance funding under the
Emergency Low Income Housing Preserva-
tion Act of 1987, the Low-Income Housing
Preservation and Resident Homeownership
Act of 1990, subtitle B of title IV of the
Cranston-Gonzalez 
National 
Affordable
Housing Act, or under this section shall be
permitted to provide technical assistance to
the extent of such funding under any of
such programs or under this section, not-
withstanding the source of funding.
‘‘(j) RIGHT OF FIRST REFUSAL.—
‘‘(1) PROCEDURE.—
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‘‘(A) NOTIFICATION BY SECRETARY OF THE
ACQUISITION OF TITLE.—Not later than 30 days
after acquiring title to a project, the Secretary
shall notify the unit of general local government
and the State agency or agencies designated by
the Governor of the acquisition of such title.
‘‘(B) EXPRESSION OF INTEREST.—Not later
than 45 days after receiving notification from
the Secretary under subparagraph (A), the unit
of general local government or designated State
agency may submit to the Secretary a prelimi-
nary expression of interest in the project. The
Secretary may take such actions as may be nec-
essary to require the unit of general local govern-
ment or designated State agency to substantiate
such interest.
‘‘(C) TIMELY EXPRESSION OF INTEREST.—
If the unit of general local government or des-
ignated State agency has expressed interest in
the project before the expiration of the 45-day pe-
riod referred to in subparagraph (B), and has
substantiated such interest if requested, the Sec-
retary, upon approval of a disposition plan for
a project, shall notify the unit of general local
government and designated State agency of the
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terms and conditions of the disposition plan and
give the unit of general local government or des-
ignated State agency not more than 90 days
after the date of such notification to make an
offer to purchase the project.
‘‘(D) NO
TIMELY
EXPRESSION
OF
INTER-
EST.—If the unit of general local government or
designated State agency does not express interest
before the expiration of the 45-day period re-
ferred to in subparagraph (B), or does not sub-
stantiate an expressed interest if requested, the
Secretary, upon approval of a disposition plan,
may offer the project for sale to any interested
person or entity.
‘‘(2) ACCEPTANCE OF OFFERS.—Where the Sec-
retary has given the unit of general local government
or designated State agency 90 days to make an offer
to purchase the project, the Secretary shall accept an
offer that complies with the terms and conditions of
the disposition plan. The Secretary may accept an
offer that does not comply with the terms and condi-
tions of the disposition plan if the Secretary deter-
mines that the offer will further the goals specified in
subsection (a) by actions that include extension of the
duration of low-income affordability restrictions or
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otherwise restructuring the transaction in a manner
that enhances the long-term affordability for low-in-
come persons. The Secretary shall, in particular, have
discretion to reduce the initial sales price in exchange
for the extension of low-income affordability restric-
tions beyond the period of assistance contemplated by
the attachment of assistance pursuant to subsection
(e). If the Secretary and the unit of general local gov-
ernment or designated State agency cannot reach
agreement within 90 days, the Secretary may offer
the project for sale to the general public.
‘‘(3) PURCHASE
BY
UNIT
OF
GENERAL
LOCAL
GOVERNMENT OR DESIGNATED STATE AGENCY.—Not-
withstanding any other provision of law, a unit of
general local government (including a public housing
agency) or designated State agency may purchase a
subsidized or formerly subsidized project in accord-
ance with this subsection.
‘‘(4) 
APPLICABILITY.—This 
subsection 
shall
apply to projects that are acquired on or after the ef-
fective date of this subsection. With respect to projects
acquired before such effective date, the Secretary may
apply—
‘‘(A) the requirements of paragraphs (2)
and (3) of section 203(e) as such paragraphs ex-
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isted immediately before the effective date of this
subsection; or
‘‘(B) the requirements of paragraphs (1)
and (2) of this subsection, if the Secretary gives
the unit of general local government or des-
ignated State agency—
‘‘(i) 45 days to express interest in the
project; and
‘‘(ii) if the unit of general local govern-
ment or designated State agency expresses
interest in the project before the expiration
of the 45-day period, and substantiates such
interest if requested, 90 days from the date
of notification of the terms and conditions
of the disposition plan to make an offer to
purchase the project.
‘‘(k) DISPLACEMENT OF TENANTS AND RELOCATION
ASSISTANCE.—
‘‘(1) IN
GENERAL.—Whenever tenants will be
displaced as a result of the disposition of, or repairs
to, a multifamily housing project that is owned by the
Secretary (or for which the Secretary is mortgagee in
possession), the Secretary shall identify tenants who
will be displaced, and shall notify all such tenants of
their pending displacement and of any relocation as-
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sistance which may be available. In the case of a mul-
tifamily housing project that is not owned by the Sec-
retary (and for which the Secretary is not mortgagee
in possession), the Secretary shall require the owner
of the project to carry out the requirements of this
paragraph.
‘‘(2) RIGHTS OF DISPLACED TENANTS.—The Sec-
retary shall assure for any such tenant (who contin-
ues to meet applicable qualification standards) the
right—
‘‘(A) to return, whenever possible, to a re-
paired unit;
‘‘(B) to occupy a unit in another multifam-
ily housing project owned by the Secretary;
‘‘(C) to obtain housing assistance under the
United States Housing Act of 1937; or
‘‘(D) to receive any other available reloca-
tion assistance as the Secretary determines to be
appropriate.
‘‘(l) MORTGAGE AND PROJECT SALES.—
‘‘(1) IN GENERAL.—The Secretary may not ap-
prove the sale of any loan or mortgage held by the
Secretary (including any loan or mortgage owned by
the Government National Mortgage Association) on
any subsidized project or formerly subsidized project,
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unless such sale is made as part of a transaction that
will ensure that such project will continue to operate
at least until the maturity date of such loan or mort-
gage, in a manner that will provide rental housing on
terms at least as advantageous to existing and future
tenants as the terms required by the program under
which the loan or mortgage was made or insured
prior to the assignment of the loan or mortgage on
such project to the Secretary.
‘‘(2) SALE
OF
CERTAIN
PROJECTS.—The Sec-
retary may not approve the sale of any subsidized
project—
‘‘(A) that is subject to a mortgage held by
the Secretary; or
‘‘(B) if the sale transaction involves the pro-
vision of any additional subsidy funds by the
Secretary or a recasting of the mortgage, unless
such sale is made as part of a transaction that
will ensure that such project will continue to op-
erate at least until the maturity date of the loan
or mortgage, in a manner that will provide rent-
al housing on terms at least as advantageous to
existing and future tenants as the terms required
by the program under which the loan or mort-
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gage was made or insured prior to the proposed
sale of the project.
‘‘(3) MORTGAGE SALES TO STATE AND LOCAL
GOVERNMENTS.—Notwithstanding any provision of
law that may require competitive sales or bidding, the
Secretary may carry out negotiated sales of subsidized
or formerly subsidized mortgages held by the Sec-
retary, without the competitive selection of purchasers
or intermediaries, to units of general local govern-
ment or State agencies, or groups of investors that in-
clude at least one such unit of general local govern-
ment or State agency, if the negotiations are con-
ducted with such agencies, except that—
‘‘(A) the terms of any such sale shall in-
clude the agreement of the purchasing agency or
unit of local government or State agency to act
as mortgagee or owner of a beneficial interest in
such mortgages, in a manner consistent with
maintaining the projects that are subject to such
mortgages for occupancy by the general tenant
group intended to be served by the applicable
mortgage insurance program, including, to the
extent the Secretary determines appropriate, au-
thorizing such unit of local government or State
agency to enforce the provisions of any regu-
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latory agreement or other program requirements
applicable to the related projects; and
‘‘(B) the sales prices for such mortgages
shall be, in the determination of the Secretary,
the best prices that may be obtained for such
mortgages from a unit of general local govern-
ment or State agency, consistent with the expec-
tation and intention that the projects financed
will be retained for use under the applicable
mortgage insurance program for the life of the
initial mortgage insurance contract.
‘‘(4) 
SALE
OF
MORTGAGES
COVERING
UNSUBSIDIZED
PROJECTS.—Notwithstanding 
any
other provision of law, the Secretary may sell mort-
gages held on unsubsidized projects on such terms and
conditions as the Secretary may prescribe.
‘‘(m) REPORT TO CONGRESS.—Not later than June 1
of each year, the Secretary shall submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Banking, Finance and Urban Affairs of
the House of Representatives, a report describing the status
of multifamily housing projects owned by or subject to mort-
gages held by the Secretary, which report shall include—
‘‘(1) the name, address, and size of each project;
‘‘(2) the nature and date of assignment;
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‘‘(3) the status of the mortgage;
‘‘(4) the physical condition of the project;
‘‘(5) an occupancy profile of the project, includ-
ing the income, family size, and race of current resi-
dents as well as the rents paid by such residents;
‘‘(6) the proportion of units in a project that are
vacant;
‘‘(7) the date on which the Secretary became
mortgagee in possession;
‘‘(8) the date and conditions of any foreclosure
sale;
‘‘(9) the date of acquisition by the Secretary;
‘‘(10) the date and conditions of any property
disposition sale;
‘‘(11) a description of actions undertaken pursu-
ant to this section, including—
‘‘(A) a comparison of results between ac-
tions taken after enactment of the Housing and
Community Development Act of 1993 and ac-
tions taken in years prior to such enactment;
‘‘(B) a description of any impediments to
the disposition or management of multifamily
housing projects, together with a recommenda-
tion of proposed legislative or regulatory changes
designed to ameliorate such impediments;
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‘‘(C) a description of actions taken to re-
structure or commence foreclosure on delinquent
multifamily mortgages held by the Department;
and
‘‘(D) a description of actions taken to mon-
itor and prevent the default of multifamily hous-
ing mortgages held by the Federal Housing Ad-
ministration;
‘‘(12) a description of any of the functions per-
formed in connection with this section that are con-
tracted out to public or private entities or to States,
including—
‘‘(A) the costs associated with such delega-
tion;
‘‘(B) the implications of contracting out or
delegating such functions for current Department
field or regional personnel, including anticipated
personnel or work load reductions;
‘‘(C) necessary oversight required by De-
partment personnel, including anticipated per-
sonnel hours devoted to such oversight;
‘‘(D) a description of any authority granted
to such public or private entities or States in
conjunction with the functions that have been
delegated or contracted out or that are not other-
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wise available for use by Department personnel;
and
‘‘(E) the extent to which such public or pri-
vate entities or States include tenants of multi-
family housing projects in the disposition plan-
ning for such projects;
‘‘(13) a description of the activities carried out
under subsection (j) during the preceding year; and
‘‘(14) a description and assessment of the rules,
guidelines, and practices governing the Department’s
management of multifamily housing projects that are
owned by the Secretary (or for which the Secretary is
mortgagee in possession) as well as the steps that the
Secretary has taken or plans to take to improve the
management performance of the Department.’’.
(3) EFFECTIVE DATE.—The Secretary shall, by
notice published in the Federal Register, which shall
take effect upon publication, establish such require-
ments as may be necessary to implement the amend-
ments made by this subsection. The notice shall invite
public comments, and the Secretary shall issue final
regulations based on the initial notice, taking into ac-
count any public comments received.
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(b) REPEAL
OF
THE NATIONAL SMALL BUSINESS
TREE PLANTING PROGRAM.—Section 24 of the Small Busi-
ness Act (15 U.S.C. 651) is repealed.
TITLE IV—MONEY LAUNDERING
SEC. 401. SHORT TITLE.
This title may be cited as the ‘‘Money Laundering
Suppression Act of 1994’’.
SEC. 402. REFORM OF CTR EXEMPTION REQUIREMENTS TO
REDUCE NUMBER AND SIZE OF REPORTS
CONSISTENT 
WITH 
EFFECTIVE 
LAW 
EN-
FORCEMENT.
(a) IN GENERAL.—Section 5313 of title 31, United
States Code, is amended by adding at the end the following
new subsections:
‘‘(d) MANDATORY EXEMPTIONS FROM REPORTING RE-
QUIREMENTS.—
‘‘(1) IN GENERAL.—The Secretary of the Treas-
ury shall exempt, pursuant to section 5318(a)(5), a
depository institution from the reporting require-
ments of subsection (a) (and regulations prescribed
under such subsection) with respect to transactions
between the depository institution and the following
categories of entities:
‘‘(A) Another depository institution.
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‘‘(B) A department or agency of the United
States, any State, or any political subdivision of
any State, including any entity established
under the laws of the United States, any State,
or any political subdivision of any State, or
under an interstate compact between 2 or more
States, which exercises governmental authority
on behalf of the United States, the State, or the
political subdivision.
‘‘(C) Any business or category of business
the reports on which have little or no value for
law enforcement purposes.
‘‘(2) NOTICE OF EXEMPTION.—The Secretary of
the Treasury shall publish in the Federal Register at
such times as the Secretary determines to be appro-
priate (but not less frequently than once during each
year) a list of all the entities whose transactions with
a depository institution are exempt under this sub-
section from the reporting requirements of subsection
(a) (and regulations prescribed under such sub-
section).
‘‘(e) DISCRETIONARY EXEMPTIONS FROM REPORTING
REQUIREMENTS.—
‘‘(1) IN GENERAL.—The Secretary of the Treas-
ury may exempt, pursuant to section 5318(a)(5), a
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depository institution from the reporting require-
ments of subsection (a) (and regulations prescribed
under such subsection) with respect to transactions
between the depository institution and a qualified
business customer of the institution on the basis of in-
formation submitted to the Secretary by the institu-
tion in accordance with procedures which the Sec-
retary shall establish.
‘‘(2) 
QUALIFIED
BUSINESS
CUSTOMER
DE-
FINED.—For purposes of this subsection, the term
‘qualified business customer’ means a business
which—
‘‘(A) maintains a transaction account (as
defined in section 19(b)(1)(C) of the Federal Re-
serve Act) at the depository institution;
‘‘(B) frequently engages in transactions
with the depository institution which are subject
to the reporting requirements of subsection (a)
(and regulations prescribed under such sub-
section); and
‘‘(C) meets criteria which the Secretary de-
termines are sufficient to ensure that the pur-
poses of this subchapter are carried out without
requiring a report with respect to such trans-
actions.
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‘‘(3) CRITERIA FOR EXEMPTION.—The Secretary
of the Treasury shall establish, by regulation, the cri-
teria for granting and maintaining an exemption
under paragraph (1).
‘‘(4) GUIDELINES.—
‘‘(A) IN
GENERAL.—The Secretary of the
Treasury shall establish guidelines for depository
institutions to follow in selecting customers for
an exemption under this subsection.
‘‘(B) CONTENTS.—The guidelines may in-
clude a description of the types of businesses or
an itemization of specific businesses for which no
exemption will be granted under this subsection
to any depository institution.
‘‘(5) ANNUAL
REVIEW.—The Secretary of the
Treasury shall prescribe regulations requiring each
depository institution to—
‘‘(A) review, at least once during each year,
the qualified business customers of such institu-
tion with respect to whom an exemption has been
granted under this subsection; and
‘‘(B) upon the completion of such review, re-
submit information about such customers, with
such modifications as the institution determines
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to be appropriate, to the Secretary for the Sec-
retary’s approval.
‘‘(6) 2-YEAR PHASE-IN PROVISION.—During the
2-year period beginning on the date of enactment of
the Money Laundering Suppression Act of 1994, this
subsection shall be applied by the Secretary on the
basis of such criteria as the Secretary determines to
be appropriate to achieve an orderly implementation
of the requirements of this subsection.
‘‘(f) PROVISIONS APPLICABLE
TO MANDATORY
AND
DISCRETIONARY EXEMPTIONS.—
‘‘(1) LIMITATION ON LIABILITY OF DEPOSITORY
INSTITUTIONS.—No depository institution shall be
subject to any penalty which may be imposed under
this subchapter for the failure of the institution to file
a report with respect to a transaction with a cus-
tomer for whom an exemption has been granted under
subsection (d) or (e), unless the institution—
‘‘(A) knowingly files false or incomplete in-
formation to the Secretary with respect to the
transaction or the customer engaging in the
transaction; or
‘‘(B) has reason to believe at the time the
exemption is granted or the transaction is en-
tered into that the customer or the transaction
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does not meet the criteria established for grant-
ing such exemption.
‘‘(2) COORDINATION WITH OTHER PROVISIONS.—
Any exemption granted by the Secretary of the Treas-
ury under section 5318(a) in accordance with this
section, and any transaction which is subject to such
exemption, shall be subject to any other provision of
law applicable to such exemption, including—
‘‘(A) the authority of the Secretary, under
section 5318(a)(5), to revoke such exemption at
any time; and
‘‘(B) any requirement to report, or any au-
thority to require a report on, any possible viola-
tion of any law or regulation or any suspected
criminal activity.
‘‘(g) DEPOSITORY INSTITUTION DEFINED.—For pur-
poses of this section, the term ‘depository institution’ has
the meaning given to such term in section 19(b)(1)(A) of
the Federal Reserve Act.’’.
(b) REPORT REDUCTION GOAL; REPORTS.—
(1) IN GENERAL.—In implementing the amend-
ment made by subsection (a), the Secretary of the
Treasury shall seek to reduce, within a reasonable pe-
riod of time, the number of reports required to be filed
in the aggregate by depository institutions pursuant
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to section 5313(a) of title 31, United States Code, by
not less than 30 percent of the number filed during
the year preceding the date of enactment of this Act.
(2) INTERIM
REPORT.—The Secretary of the
Treasury shall submit a report to the Congress not
later than the end of the 180-day period beginning on
the date of enactment of this Act on the progress made
by the Secretary in implementing the amendment
made by subsection (a).
(3) ANNUAL
REPORT.—The Secretary of the
Treasury shall submit an annual report to the Con-
gress after the end of each of the first 5 calendar years
which begin after the date of enactment of this Act on
the extent to which the Secretary has reduced the
overall number of currency transaction reports re-
quired to be filed with the Secretary pursuant to sec-
tion 5313(a) of title 31, United States Code, consist-
ently with the purposes of such section and effective
law enforcement.
(c) STREAMLINED
CURRENCY
TRANSACTION
RE-
PORTS.—The Secretary of the Treasury shall take such ac-
tion as may be appropriate to redesign the format of reports
required to be filed by any financial institution (as defined
in section 5312(a)(2) of title 31, United States Code) under
section 5313(a) of title 31, United States Code, to eliminate
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the need to report information which has little or no value
for law enforcement purposes and reduce the time and effort
required to prepare such report for filing by any such fi-
nancial institution under such section.
SEC. 403. SINGLE DESIGNEE FOR REPORTING OF SUS-
PICIOUS TRANSACTIONS.
(a) IN GENERAL.—Section 5318(g) of title 31, United
States Code, is amended by adding at the end the following
new paragraph:
‘‘(4) SINGLE
DESIGNEE
FOR
REPORTING
SUS-
PICIOUS TRANSACTIONS.—
‘‘(A) IN
GENERAL.—In requiring reports
under paragraph (1) of suspicious transactions,
the Secretary of the Treasury shall designate, to
the extent practicable and appropriate, a single
officer or agency of the United States to whom
such reports shall be made.
‘‘(B) DUTY OF DESIGNEE.—The officer or
agency of the United States designated by the
Secretary of the Treasury pursuant to subpara-
graph (A) shall refer any report of a suspicious
transaction to the appropriate law enforcement
or supervisory agency.
‘‘(C) COORDINATION WITH OTHER REPORT-
ING
REQUIREMENTS.—Subparagraph (A) shall
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not be construed as precluding any supervisory
agency for any financial institution from requir-
ing the financial institution to submit any infor-
mation or report to the agency or another agency
pursuant to any provision of law other than this
subsection.
‘‘(D) REPORTS.—
‘‘(i) REPORTS
REQUIRED.—The Sec-
retary of the Treasury shall submit an an-
nual report to the Congress at the times re-
quired under clause (ii) on the number of
suspicious transactions reported to the offi-
cer or agency designated under subpara-
graph (A) during the period covered by the
report and the disposition of such reports.
‘‘(ii) 
TIME
FOR
SUBMITTING
RE-
PORTS.—The first report required under
clause (i) shall be filed before the end of the
1-year period beginning on the date of en-
actment of the Money Laundering Suppres-
sion Act of 1994, and each subsequent re-
port shall be filed, not later than 90 days
after the end of each of the 5 calendar years
which begin after such date of enactment.’’.
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(b) DESIGNATION REQUIRED TO BE MADE EXPEDI-
TIOUSLY.—The initial designation of an officer or agency
of the United States pursuant to the amendment made by
subsection (a) shall be made before the end of the 180-day
period beginning on the date of enactment of this Act.
SEC. 404. IMPROVEMENT OF IDENTIFICATION OF MONEY
LAUNDERING SCHEMES.
(a) ENHANCED TRAINING, EXAMINATIONS, AND RE-
FERRALS BY BANKING AGENCIES.—Before the end of the 6-
month period beginning on the date of enactment of this
Act, each appropriate Federal banking agency shall, in con-
sultation with the Secretary of the Treasury and other ap-
propriate law enforcement agencies—
(1) review and enhance training and examina-
tion procedures to improve the identification of
money laundering schemes involving depository insti-
tutions; and
(2) review and enhance procedures for referring
cases to any other appropriate law enforcement agen-
cy.
(b) IMPROVED REPORTING OF CRIMINAL SCHEMES BY
LAW ENFORCEMENT AGENCIES.—The Secretary of the
Treasury and each appropriate law enforcement agency
shall, on a regular basis, provide information regarding
money laundering schemes and activities involving deposi-
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tory institutions to each appropriate Federal banking agen-
cy to enhance the agency’s ability to examine for and iden-
tify money laundering.
(c) REPORT TO CONGRESS.—Not later than 1 year
after the date of enactment of this Act, the Federal banking
agencies shall jointly submit a report to the Congress on
the progress made in carrying out subsection (a) and the
usefulness of information received pursuant to subsection
(b).
(d) DEFINITIONS.—The terms ‘‘appropriate Federal
banking agency’’ and ‘‘Federal banking agencies’’ have the
same meanings as in section 3 of the Federal Deposit Insur-
ance Act.
SEC. 405. NEGOTIABLE INSTRUMENTS DRAWN ON FOREIGN
BANKS SUBJECT TO RECORDKEEPING AND
REPORTING REQUIREMENTS.
Section 5312(a)(3) of title 31, United States Code, is
amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (A);
(2) by striking the period at the end of subpara-
graph (B) and inserting ‘‘; and’’; and
(3) by adding at the end the following new sub-
paragraph:
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‘‘(C) as the Secretary of the Treasury shall
provide by regulation for purposes of section
5316, checks, drafts, notes, money orders, and
other similar instruments which are drawn on or
by a foreign financial institution and are not in
bearer form.’’.
SEC. 406. IMPOSITION OF CIVIL MONEY PENALTIES BY AP-
PROPRIATE FEDERAL BANKING AGENCIES.
Section 5321 of title 31, United States Code, is amend-
ed by adding at the end the following new subsection:
‘‘(e) DELEGATION
OF ASSESSMENT AUTHORITY
TO
BANKING AGENCIES.—
‘‘(1) IN GENERAL.—The Secretary of the Treas-
ury shall delegate, in accordance with section
5318(a)(1), and subject to such terms and conditions
as the Secretary may impose in accordance with
paragraph (3), any authority of the Secretary to as-
sess a civil money penalty under this section on de-
pository institutions to the appropriate Federal bank-
ing agencies.
‘‘(2) AUTHORITY OF AGENCIES.—Subject to any
term or condition imposed by the Secretary of the
Treasury under paragraph (3), the provisions of this
section shall apply to an appropriate Federal banking
agency to which is delegated any authority of the Sec-
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retary under this section in the same manner such
provisions apply to the Secretary.
‘‘(3) TERMS AND CONDITIONS.—
‘‘(A) IN
GENERAL.—The Secretary of the
Treasury shall prescribe by regulation the terms
and conditions which shall apply to any delega-
tion under paragraph (1).
‘‘(B) MAXIMUM
DOLLAR
AMOUNT.—The
terms and conditions authorized under subpara-
graph (A) may include, in the Secretary’s sole
discretion, a limitation on the amount of any
civil penalty which may be assessed by an ap-
propriate Federal banking agency pursuant to a
delegation under paragraph (1).
‘‘(4) DEFINITIONS.—For purposes of this sub-
section, the terms ‘depository institution’ and ‘Federal
banking agencies’ have the same meanings as in sec-
tion 3 of the Federal Deposit Insurance Act.’’.
SEC. 407. UNIFORM STATE LICENSING AND REGULATION OF
CHECK CASHING, CURRENCY EXCHANGE, AND
MONEY TRANSMITTING BUSINESSES.
(a) UNIFORM LAWS AND ENFORCEMENT.—For pur-
poses of preventing money laundering and protecting the
payment system from fraud and abuse, it is the sense of
the Congress that the several States should—
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(1) establish uniform laws for licensing and reg-
ulating businesses which—
(A) provide check cashing, currency ex-
change, or money transmitting or remittance
services, or issue or redeem money orders, travel-
ers’ checks, and other similar instruments; and
(B) are not depository institutions (as de-
fined in section 19(b)(1)(A) of the Federal Re-
serve Act); and
(2) provide sufficient resources to the appro-
priate State agency to enforce such laws and regula-
tions prescribed pursuant to such laws.
(b) MODEL STATUTE.—It is the sense of the Congress
that the several States should develop, through the auspices
of the National Conference of Commissioners on Uniform
State Laws, the American Law Institute, or such other
forum as the States may determine to be appropriate, a
model statute to carry out the goals described in subsection
(a) which would include the following:
(1) LICENSING REQUIREMENTS.—A requirement
that any business described in subsection (a)(1) be li-
censed and regulated by an appropriate State agency
in order to engage in any such activity within the
State.
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(2) LICENSING
STANDARDS.—A requirement
that—
(A) in order for any business described in
subsection (a)(1) to be licensed in the State, the
appropriate State agency shall review and ap-
prove—
(i) the business record and the capital
adequacy of the business seeking the license;
and
(ii) the competence, experience, integ-
rity, and financial ability of any individ-
ual who—
(I) is a director, officer, or super-
visory employee of such business; or
(II) owns or controls such busi-
ness; and
(B) any record, on the part of any business
seeking the license or any person referred to in
subparagraph (A)(ii), of—
(i) any criminal activity;
(ii) any fraud or other act of personal
dishonesty;
(iii) any act, omission, or practice
which constitutes a breach of a fiduciary
duty; or
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(iv) any suspension or removal, by any
agency or department of the United States
or any State, from participation in the con-
duct of any federally or State licensed or
regulated business;
may be grounds for the denial of any such li-
cense by the appropriate State agency.
(3) PROCEDURES TO ENSURE COMPLIANCE WITH
FEDERAL CASH TRANSACTION REPORTING REQUIRE-
MENTS.—A civil or criminal penalty for operating
any business referred to in paragraph (1) without es-
tablishing and complying with appropriate proce-
dures to ensure compliance with subchapter II of
chapter 53 of title 31, United States Code (relating to
records and reports on monetary instruments trans-
actions).
(4) CRIMINAL
PENALTIES
FOR
OPERATION
OF
BUSINESS WITHOUT A LICENSE.—A criminal penalty
for operating any business referred to in paragraph
(1) without a license within the State after the end
of an appropriate transition period beginning on the
date of enactment of such model statute by the State.
(c) STUDY REQUIRED.—The Secretary of the Treasury
shall conduct a study of—
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(1) the progress made by the several States in de-
veloping and enacting a model statute which—
(A) meets the requirements of subsection (b);
and
(B) furthers the goals of—
(i) preventing money laundering by
businesses which are required to be licensed
under any such model statute; and
(ii) protecting the payment system, in-
cluding the receipt, payment, collection, and
clearing of checks, from fraud and abuse by
such businesses; and
(2) the adequacy of—
(A) the activity of the several States in en-
forcing the requirements of such statute; and
(B) the resources made available to the ap-
propriate State agencies for such enforcement ac-
tivity.
(d) REPORT REQUIRED.—Before the end of the 3-year
period beginning on the date of enactment of this Act and
by the end of each of the first two 1-year periods beginning
after the end of such 3-year period, the Secretary of the
Treasury shall submit a report to the Congress containing
the findings and recommendations of the Secretary in con-
nection with the study under subsection (c), together with
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such recommendations for legislative and administrative
action as the Secretary may determine to be appropriate.
(e) RECOMMENDATIONS
IN CASES
OF INADEQUATE
REGULATION AND ENFORCEMENT BY STATES.—If the Sec-
retary of the Treasury determines that any State has been
unable—
(1) to enact a statute which meets the require-
ments described in subsection (b);
(2) to undertake adequate activity to enforce
such statute; or
(3) to make adequate resources available to the
appropriate State agency for such enforcement activ-
ity;
the report submitted pursuant to subsection (d) shall con-
tain recommendations designed to facilitate enactment and
enforcement of such a statute.
(f) FEDERAL FUNDING STUDY.—
(1) STUDY
REQUIRED.—The Secretary of the
Treasury shall conduct a study to identify possible
available sources of Federal funding to cover costs to
the States to implement this section.
(2) REPORT.—The Secretary of the Treasury
shall submit a report to the Congress on the study
conducted pursuant to paragraph (1) before the end
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of the 18-month period beginning on the date of en-
actment of this Act.
SEC. 408. REGISTRATION OF MONEY TRANSMITTING BUSI-
NESSES TO PROMOTE EFFECTIVE LAW EN-
FORCEMENT.
(a) FINDINGS AND PURPOSES.—
(1) FINDINGS.—The Congress finds the following:
(A) Money transmitting businesses are sub-
ject to the recordkeeping and reporting require-
ments of subchapter II of chapter 53 of title 31,
United States Code.
(B) Money transmitting businesses are
largely unregulated businesses and are frequently
used in sophisticated schemes to—
(i) transfer large amounts of money
which are the proceeds of unlawful enter-
prises; and
(ii) evade the requirements of sub-
chapter II of chapter 53 of title 31, United
States Code, the Internal Revenue Code of
1986, and other laws of the United States.
(C) Information on the identity of money
transmitting businesses and the names of the
persons who own or control, or are officers or
employees of, a money transmitting business
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would have a high degree of usefulness in crimi-
nal, tax, or regulatory investigations and pro-
ceedings.
(2) PURPOSE.—It is the purpose of this section
to establish a registration requirement for businesses
engaged in providing check cashing, currency ex-
change, or money transmitting or remittance services,
or issuing or redeeming money orders, travelers’
checks, and other similar instruments to assist the
Secretary of the Treasury, the Attorney General, and
other supervisory and law enforcement agencies to ef-
fectively enforce the criminal, tax, and regulatory
laws and prevent such money transmitting businesses
from engaging in illegal activities.
(b) IN GENERAL.—Subchapter II of chapter 53 of title
31, United States Code, is amended by adding at the end
the following new section:
‘‘§ 5329. Registration of money transmitting businesses
‘‘(a) REGISTRATION WITH SECRETARY OF THE TREAS-
URY REQUIRED.—
‘‘(1) IN
GENERAL.—Any person who owns or
controls a money transmitting business which is not
a depository institution (as defined in section
19(b)(1)(A) of the Federal Reserve Act) shall register
the business (whether or not the business is licensed
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as a money transmitting business in any State) with
the Secretary of the Treasury before the end of the
180-day period beginning on the later of—
‘‘(A) the date of enactment of this section;
or
‘‘(B) the date the business is established.
‘‘(2) FORM AND MANNER OF REGISTRATION.—
Subject to the requirements of subsection (b), the Sec-
retary of the Treasury shall prescribe, in regulations,
the form and manner for registering a money trans-
mitting business pursuant to paragraph (1).
‘‘(3) BUSINESSES
REMAIN
SUBJECT
TO
STATE
LAW.—This section shall not be construed as supersed-
ing any requirement of State law relating to money
transmitting businesses operating in such State.
‘‘(4) FALSE AND INCOMPLETE INFORMATION.—
The filing of false or materially incomplete informa-
tion in connection with the registration of a money
transmitting business shall be considered as a failure
to comply with the requirements of this subsection.
‘‘(b) CONTENTS OF REGISTRATION.—The registration
of a money transmitting business under subsection (a) shall
include the following information:
‘‘(1) The name and location of the business.
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‘‘(2) The name and address of each person
who—
‘‘(A) owns or controls the business;
‘‘(B) is a director or officer of the business;
or
‘‘(C) otherwise participates in the conduct
of the affairs of the business.
‘‘(3) The name and address of any depository in-
stitution at which the business maintains a trans-
action account (as defined in section 19(b)(1)(C) of
the Federal Reserve Act).
‘‘(4) An estimate of the volume of business to be
reported annually.
‘‘(5) Such other information as the Secretary of
the Treasury may require.
‘‘(c) AGENTS
OF
MONEY
TRANSMITTING
BUSI-
NESSES.—
‘‘(1) MAINTENANCE
OF
LISTS
OF
AGENTS
OF
MONEY
TRANSMITTING
BUSINESSES.—Pursuant to
regulations which the Secretary of the Treasury shall
prescribe, each money transmitting business shall—
‘‘(A) maintain a list containing the names
and addresses of all persons authorized to act as
an agent for such business in connection with ac-
tivities described in subsection (d)(1)(A) and
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such other information about such agents as the
Secretary may require; and
‘‘(B) make the list and other information
available on request to any appropriate law en-
forcement agency.
‘‘(2) TREATMENT OF AGENT AS MONEY TRANS-
MITTING BUSINESS.—The Secretary of the Treasury
shall prescribe regulations establishing, on the basis of
such criteria as the Secretary determines to be appro-
priate, a threshold point for treating an agent of a
money transmitting business as a money transmit-
ting business for purposes of this section.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) MONEY
TRANSMITTING
BUSINESS.—The
term ‘money transmitting business’ means any busi-
ness other than the United States Postal Service
which—
‘‘(A) provides check cashing, currency ex-
change, or money transmitting or remittance
services, or issues or redeems money orders, trav-
elers’ checks, and other similar instruments;
‘‘(B) is required to file reports under section
5313; and
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‘‘(C) is not a depository institution (as de-
fined in section 19(b)(1)(A) of the Federal Re-
serve Act).
‘‘(2) MONEY TRANSMITTING SERVICE.—The term
‘money transmitting service’ includes accepting cur-
rency or funds denominated in the currency of any
country and transmitting the currency or funds, or
the value of the currency or funds, by any means
through a financial agency or institution, a Federal
reserve bank or other facility of the Board of Gov-
ernors of the Federal Reserve System, or an electronic
funds transfer network.
‘‘(e) CIVIL PENALTY FOR FAILURE TO COMPLY WITH
REGISTRATION REQUIREMENTS.—
‘‘(1) IN
GENERAL.—Any person who fails to
comply with the money transmitting business reg-
istration requirements under subsection (a) or regula-
tions prescribed under such subsection shall be liable
to the United States for a civil penalty of $5,000 for
each such violation.
‘‘(2) CONTINUING VIOLATION.—Each day a vio-
lation described in paragraph (1) continues shall con-
stitute a separate violation for purposes of such para-
graph.
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‘‘(3) 
ASSESSMENTS.—Any 
penalty 
imposed
under this subsection shall be assessed and collected by
the Secretary of the Treasury in the manner provided
in section 5321 and any such assessment shall be sub-
ject to the provisions of such section.’’.
(c) CRIMINAL PENALTY FOR FAILURE TO COMPLY
WITH REGISTRATION REQUIREMENTS.—Section 1960(b)(1)
of title 18, United States Code, is amended to read as fol-
lows:
‘‘(1) the term ‘illegal money transmitting busi-
ness’ means a money transmitting business which af-
fects interstate or foreign commerce in any manner or
degree and—
‘‘(A) is intentionally operated without an
appropriate money transmitting license in a
State where such operation is punishable as a
misdemeanor or a felony under State law; or
‘‘(B) fails to comply with the money trans-
mitting business registration requirements under
section 5329 of title 31, United States Code, or
regulations prescribed under such section;’’.
(d) CIVIL FORFEITURE.—Section 981(a)(1)(A) of title
18, United States Code, is amended by striking ‘‘or of sec-
tion 1956 or 1957 of this title,’’ and inserting ‘‘, of section
1956, 1957, or 1960 of this title,’’.
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(e) CLERICAL AMENDMENT.—The table of sections for
chapter 53 of title 31, United States Code, is amended by
inserting after the item relating to section 5328 the follow-
ing new item:
‘‘5329. Registration of money transmitting businesses.’’.
SEC. 409. CRIMINAL AND CIVIL PENALTY FOR STRUCTUR-
ING DOMESTIC AND INTERNATIONAL TRANS-
ACTIONS.
(a) CRIMINAL PENALTY.—Section 5324 of title 31,
United States Code, is amended by adding at the end the
following new subsection:
‘‘(c) CRIMINAL PENALTY.—
‘‘(1) IN GENERAL.—Whoever violates this section
shall be fined in accordance with title 18, United
States Code, imprisoned for not more than 5 years,
or both.
‘‘(2) ENHANCED
PENALTY
FOR
AGGRAVATED
CASES.—Whoever violates this section while violating
another law of the United States or as part of a pat-
tern of any illegal activity involving more than
$100,000 in a 12-month period shall be fined twice
the amount provided in subsection (b)(3) or (c)(3) (as
the case may be) of section 3571 of title 18, United
States Code, imprisoned for not more than 10 years,
or both.’’.
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(b) AMENDMENT RELATING TO CIVIL PENALTY.—Sec-
tion 5321(a)(4)(A) of title 31, United States Code, is
amended by striking ‘‘willfully’’.
(c) TECHNICAL AND CONFORMING AMENDMENT.—Sub-
sections (a) and (b) of section 5322 of title 31, United States
Code, are amended by inserting ‘‘or 5324’’ after ‘‘section
5315’’ each place such term appears.
SEC. 410. GAO STUDY OF CASHIERS’ CHECKS.
(a) STUDY REQUIRED.—The Comptroller General of
the United States shall conduct a study to determine—
(1) the extent to which the practice of issuing of
cashiers’ checks by financial institutions is vulnerable
to money laundering schemes;
(2) the extent to which additional recordkeeping
requirements should be imposed on financial institu-
tions which issue cashiers’ checks; and
(3) such other factors relating to the use and reg-
ulation of cashiers’ checks as the Comptroller General
determines to be appropriate.
(b) REPORT REQUIRED.—Before the end of the 180-
day period beginning on the date of enactment of this Act,
the Comptroller General shall submit a report to the Con-
gress containing—
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(1) the findings and conclusions in connection
with the study conducted pursuant to subsection (a);
and
(2) such recommendations for legislative and ad-
ministrative action as the Comptroller General may
determine to be appropriate.
TITLE V—FAIR TRADE IN
FINANCIAL SERVICES
SEC. 501. SHORT TITLE.
This title may be cited as the ‘‘Fair Trade in Finan-
cial Services Act of 1994’’.
SEC. 502. EFFECTUATING THE PRINCIPLE OF NATIONAL
TREATMENT FOR BANKING ORGANIZATIONS.
The International Banking Act of 1978 (12 U.S.C.
3101 et seq.) is amended by adding at the end the following
new section:
‘‘SEC. 18. NATIONAL TREATMENT.
‘‘(a) PURPOSE.—The purpose of this section is to en-
courage foreign countries to accord national treatment to
United States banking organizations that operate or seek
to operate in those countries.
‘‘(b) IDENTIFYING COUNTRIES THAT DENY NATIONAL
TREATMENT TO UNITED STATES BANKS OR BANK HOLD-
ING COMPANIES.—The Secretary shall identify the extent
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to which foreign countries deny national treatment to Unit-
ed States banking organizations—
‘‘(1) according to the most recent report under
section 3602 of the Omnibus Trade and Competitive-
ness Act of 1988 (or update thereof); or
‘‘(2) based on more recent information that the
Secretary deems appropriate.
‘‘(c) DETERMINING WHETHER DENIAL OF NATIONAL
TREATMENT HAS SIGNIFICANT ADVERSE EFFECT.—
‘‘(1) IN GENERAL.—The Secretary shall deter-
mine whether the denial of national treatment to
United States banking organizations by a foreign
country identified under subsection (b) has a signifi-
cant adverse effect on such organizations.
‘‘(2) FACTORS TO BE CONSIDERED.—In deter-
mining whether and to what extent a foreign country
denies national treatment to United States banking
organizations, and in determining the effect of any
such denial on such banking organizations, the Sec-
retary shall consider appropriate factors, including—
‘‘(A) the size of the foreign country’s mar-
kets for the financial services involved, and the
extent to which United States banking organiza-
tions operate or seek to operate in those markets;
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‘‘(B) the extent to which United States
banking organizations may participate in devel-
oping regulations, guidelines, or other policies
regarding new products, services, and markets in
the foreign country;
‘‘(C) the extent to which the foreign country
issues written regulations, guidelines, or other
policies applicable to United States banking or-
ganizations operating or seeking to operate in
the foreign country that are—
‘‘(i) prescribed after adequate notice
and opportunity for comment;
‘‘(ii) readily available to the public;
and
‘‘(iii) prescribed in accordance with
objective standards that effectively prevent
arbitrary and capricious determinations;
‘‘(D) the extent to which United States
banking organizations may offer foreign ex-
change services in the foreign country; and
‘‘(E) the effects of the regulatory policies of
the foreign country on—
‘‘(i) the lending policies of the central
bank of that country;
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‘‘(ii) capital requirements applicable
in that country;
‘‘(iii) the regulation of deposit interest
rates by that country;
‘‘(iv) restrictions on the operation and
establishment of branches in that country;
and
‘‘(v) restrictions on access to automated
teller machine networks in that country.
‘‘(d) PUBLICATION OF DETERMINATION.—
‘‘(1) IN GENERAL.—If the Secretary determines
under subsection (c) that the denial of national treat-
ment to United States banking organizations by a
foreign country has a significant adverse effect on
such organizations, the Secretary—
‘‘(A) may, after initiating negotiations in
accordance with subsection (g), and after con-
sultation in accordance with subsection (i), pub-
lish that determination in the Federal Register;
‘‘(B) shall, not less frequently than annu-
ally, in consultation with any department or
agency that the Secretary deems appropriate, re-
view each such determination to determine
whether it should be rescinded; and
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‘‘(C) shall inform State bank supervisors of
the publication of that determination.
‘‘(2) EXCEPTION FOR COUNTRIES THAT ARE PAR-
TIES TO CERTAIN AGREEMENTS GOVERNING FINAN-
CIAL SERVICES.—Paragraph (1) shall not apply to a
foreign country to the extent that any authority
under that paragraph would permit action to be
taken that would be inconsistent with a bilateral or
multilateral agreement (including any dispute resolu-
tion procedures contained in such agreement) that
governs financial services that—
(A) the President entered into with that
country; and
(B) the Senate and House of Representa-
tives approved;
before the date of enactment of this section.
‘‘(e) SANCTIONS.—
‘‘(1) ACTION BY SECRETARY OF TREASURY.—
‘‘(A) IN
GENERAL.—The Secretary may,
after consultation in accordance with subsection
(i), recommend to the appropriate Federal bank-
ing agency that such agency deny or suspend
consideration of a request for authorization filed
after the date of publication of a determination
under subsection (d)(1) by a person of a foreign
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country listed in such publication if the Sec-
retary determines that—
‘‘(i) such action would assist the Unit-
ed States in negotiations to eliminate dis-
crimination against United States banking
organizations;
‘‘(ii) negotiations undertaken pursuant
to subsection (g) are not likely to result in
an agreement that eliminates the denial of
national treatment; or
‘‘(iii) the country has not adequately
adhered to an agreement reached as a result
of negotiations undertaken pursuant to sub-
section (g).
‘‘(B) EXERCISE OF AUTHORITY.—The au-
thority of subparagraph (A) shall be exercised
according to the specific direction (if any) of the
President.
‘‘(C) COMPLIANCE
EXCEPTIONS.—The ap-
propriate Federal banking agency shall comply
with the recommendation of the Secretary made
under subparagraph (A), unless the agency deter-
mines, in writing, and transmits such deter-
mination to the Secretary and to the Congress,
that such recommendation—
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‘‘(i) would likely result in a serious
impairment to the safe and sound operation
of the United States banking system; or
‘‘(ii) would compromise the ability of a
Federal banking agency to resolve a failing
or failed financial institution because a for-
eign banking institution otherwise barred
by an action under subparagraph (A) rep-
resents the only bona fide reasonable offer
available to the Federal banking agency.
‘‘(2) NO AFFECT ON CERTAIN AGREEMENTS.—
The exercise of authority under this subsection does
not affect any obligation of the United States to pur-
sue dispute resolution procedures pursuant to any
international agreement governing financial services,
approved by the House of Representatives and the
Senate, with respect to a dispute arising out of any
obligation under that agreement.
‘‘(f) EXEMPTIONS FROM SANCTIONS.—
‘‘(1) IN
GENERAL.—Subsection (e) does not
apply to the subsidiaries in the United States of a
person of a foreign country if the Secretary deter-
mines that the banking laws and regulations of the
foreign country, as actually applied, meet or exceed—
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‘‘(A) the standards for treatment of subsidi-
aries of United States banking organizations
contained in the Second Banking Directive, and
in any amendment to the Second Banking Direc-
tive, if the Secretary determines that such
amendment—
‘‘(i) does not restrict any operation,
activity, or authority to expand any oper-
ation or activity, permitted under those
standards, of any subsidiary in the foreign
country of any such bank or bank holding
company; or
‘‘(ii) is in accordance with national
treatment of subsidiaries of such banking
organizations; or
‘‘(B) any set of standards that, taken as a
whole, is no less favorable to United States bank-
ing organizations than the standards referred to
in subparagraph (A).
‘‘(2) STANDARDS
FOR
EXERCISE
OF
DISCRE-
TION.—In exercising any discretion under this sub-
section, the Secretary shall consider, with respect to
a bank, foreign bank, branch, agency, commercial
lending company, or other affiliated entity that is a
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person of a foreign country and that is operating in
the United States—
‘‘(A) the extent to which the foreign country
is progressing toward according national treat-
ment to United States banking organizations;
and
‘‘(B) whether the foreign country permits
United States banking organizations to expand
their activities in that country, even if that
country determined that the United States did
not accord national treatment to the banking or-
ganizations of that country.
‘‘(g) NEGOTIATIONS.—
‘‘(1) IN GENERAL.—The Secretary—
‘‘(A) shall initiate negotiations with any
foreign country with respect to which a deter-
mination made under subsection (c)(1) is in
effect; and
‘‘(B) may initiate negotiations with any
foreign country which denies national treatment
to United States banking organizations to ensure
that the foreign country accords national treat-
ment to such organizations.
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‘‘(2) EXCEPTIONS.—Paragraph (1) does not re-
quire the Secretary to initiate negotiations with a for-
eign country if the Secretary—
‘‘(A) determines that the negotiations—
‘‘(i) would be so unlikely to result in
progress toward according national treat-
ment to United States banking organiza-
tions as to be a waste of effort; or
‘‘(ii) would impair the economic inter-
ests of the United States; and
‘‘(B) gives written notice of that determina-
tion to the chairperson and the ranking minority
member of the Committee on Banking, Housing,
and Urban Affairs of the Senate and of the Com-
mittee on Banking, Finance and Urban Affairs
of the House of Representatives.
‘‘(h) REPORT.—
‘‘(1) CONTENTS OF REPORT.—Not later than De-
cember 1, 1994, and biennially thereafter, the Sec-
retary shall submit to the Congress a report that—
‘‘(A) specifies the foreign countries identi-
fied under subsection (b);
‘‘(B) if a determination is published under
subsection (d)(1) with respect to the foreign
country, provides the reasons therefor;
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‘‘(C) if the Secretary has not made or has
rescinded such a determination with respect to
the foreign country, provides the reasons therefor;
‘‘(D) describes the results of any negotia-
tions conducted under subsection (g)(1) with the
foreign country; and
‘‘(E) discusses the effectiveness of this sec-
tion in achieving the purpose of this section.
‘‘(2) SUBMISSION OF REPORT.—The report re-
quired by paragraph (1) may be submitted as part of
a report or update submitted under section 3602 of
the Omnibus Trade and Competitiveness Act of 1988.
‘‘(i) CONSULTATION.—Consultation in accordance
with this subsection means consultation with the Secretary
of State, the Secretary of Commerce, the United States
Trade Representative, and the appropriate Federal banking
agency.
‘‘(j) DEFINITIONS.—For purposes of this section, the
following definitions shall apply:
‘‘(1) APPROPRIATE
FEDERAL
BANKING
AGEN-
CY.—The term ‘appropriate Federal banking agen-
cy’—
‘‘(A) in the case of a noninsured State bank
or branch and a representative office of a foreign
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bank, means the Board of Governors of the Fed-
eral Reserve System; and
‘‘(B) in any other case, has the same mean-
ing as in section 3 of the Federal Deposit Insur-
ance Act.
‘‘(2) BANKING ORGANIZATION.—The term ‘bank-
ing organization’ means—
‘‘(A) a depository institution, as defined in
section 3 of the Federal Deposit Insurance Act,
including a branch or subsidiary thereof;
‘‘(B) a bank holding company, as defined in
section 2 of the Bank Holding Company Act of
1956;
‘‘(C) any company required to file informa-
tion pursuant to section 4(f)(6) of the Bank
Holding Company Act of 1956;
‘‘(D) a savings and loan holding company,
as defined in section 10(a)(1)(D) of the Home
Owners’ Loan Act; and
‘‘(E) any nonbank financial entity, the pri-
mary purpose of which is to provide credit or fi-
nancing, regardless of whether such entity ac-
cepts deposits.
‘‘(3) NATIONAL TREATMENT.—A foreign country
accords ‘national treatment’ to United States banking
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organizations if it offers them the same competitive
opportunities (including effective market access) as
are available to its domestic banking organizations in
like circumstances.
‘‘(4) PERSON
OF
A
FOREIGN
COUNTRY.—The
term ‘person of a foreign country’ means—
‘‘(A) a person organized under the laws of
the foreign country;
‘‘(B) a person that has its principal place
of business in the foreign country;
‘‘(C) an individual who is—
‘‘(i) a citizen of the foreign country, or
‘‘(ii) domiciled in the foreign country;
and
‘‘(D) a person that is directly or indirectly
controlled by a person or persons described in
subparagraph (A) or (B), or by an individual or
individuals described in subparagraph (C).
‘‘(5) REQUEST FOR AUTHORIZATION.—The term
‘request for authorization’—
‘‘(A) means an application, registration,
notice, or other request to commence a financial
service or establish a financial services office that
is required under title LXII of the Revised Stat-
utes, the International Banking Act of 1978, the
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Federal Reserve Act, the Home Owners’ Loan
Act, or the Bank Holding Company Act of 1956;
and
‘‘(B) does not include any such request by
a company described in section 2(h)(2) of the
Bank Holding Company Act of 1956.
‘‘(6) SECOND
BANKING
DIRECTIVE.—The term
‘Second Banking Directive’ means the Second Council
Directive of December 15, 1989, on the Coordination
of Laws, Regulations, and Administrative Provisions
Relating to the Taking Up and Pursuit of the Busi-
ness of Credit Institutions and Amending Directive
77/780/EEC (89/646/EEC).
‘‘(7) SECRETARY.—The term ‘Secretary’ means
the Secretary of the Treasury.’’.
SEC. 503. EFFECTUATING THE PRINCIPLE OF NATIONAL
TREATMENT 
FOR 
SECURITIES 
ORGANIZA-
TIONS.
(a) PURPOSE.—The purpose of this section is to en-
courage foreign countries to accord national treatment to
United States securities organizations that operate or seek
to operate in those countries.
(b) IDENTIFYING COUNTRIES THAT DENY NATIONAL
TREATMENT TO UNITED STATES SECURITIES ORGANIZA-
TIONS.—The Secretary shall identify whether and to what
233
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extent foreign countries deny national treatment to United
States securities organizations—
(1) according to the most recent report under sec-
tion 3602 of the Omnibus Trade and Competitiveness
Act of 1988 (or update thereof); or
(2) based upon more recent information that the
Secretary deems appropriate.
(c) DETERMINING WHETHER DENIAL OF NATIONAL
TREATMENT HAS SIGNIFICANT ADVERSE EFFECT.—The
Secretary shall determine whether the denial of national
treatment to United States securities organizations by a
foreign country identified under subsection (b) has a sig-
nificant adverse effect on such organizations.
(d) PUBLICATION OF DETERMINATION.—
(1) IN GENERAL.—If the Secretary determines
under subsection (c) that the denial of national treat-
ment to United States securities organizations by a
foreign country has a significant adverse effect on
such organizations, the Secretary—
(A) may, after initiating negotiations in
accordance with subsection (f), and after con-
sultation in accordance with subsection (h), pub-
lish that determination in the Federal Register;
and
234
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(B) shall, not less frequently than annually,
in consultation with any department or agency
that the Secretary deems appropriate, review
each such determination to determine whether it
should be rescinded.
(2) EXCEPTION FOR COUNTRIES THAT ARE PAR-
TIES TO CERTAIN AGREEMENTS GOVERNING FINAN-
CIAL SERVICES.—Paragraph (1) shall not apply to a
foreign country to the extent that any authority
under that paragraph would permit action to be
taken that would be inconsistent with a bilateral or
multilateral agreement (including any dispute resolu-
tion procedures contained in such agreement) that
governs financial services that—
(A) the President entered into with that country;
and
(B) the Senate and House of Representatives ap-
proved;
before the date of enactment of this section.
(e) SANCTIONS.—
(1) ACTION BY SECRETARY OF TREASURY.—
(A) IN GENERAL.—The Secretary may, after
consultation in accordance with subsection (h),
recommend to the Commission that the Commis-
sion deny or suspend consideration of a request
235
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for authorization filed after the date of publica-
tion of a determination under subsection (d)(1)
by a person of a foreign country listed in such
publication if the Secretary determines that—
(i) such action would assist the United
States in negotiations to eliminate dis-
crimination against United States securi-
ties organizations;
(ii) negotiations undertaken pursuant
to subsection (f) are not likely to result in
an agreement that eliminates the denial of
national treatment; or
(iii) the country has not adequately
adhered to an agreement reached as a result
of negotiations undertaken pursuant to sub-
section (f).
(B) EXERCISE
OF
AUTHORITY.—The au-
thority of subparagraph (A) shall be exercised
according to the specific direction (if any) of the
President.
(C) COMMISSION ACTION.—The Commission
shall deny or suspend consideration of a request
for authorization in accordance with the rec-
ommendation of the Secretary made under sub-
paragraph (A), unless such recommendation
236
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would likely result in a serious adverse impact
on—
(i) the maintenance of fair and orderly
securities markets; or
(ii) the protection of investors.
(D) AUTHORITY UPON DENIAL OF AUTHOR-
IZATION.—
(i) IN GENERAL.—In connection with
the denial of a request for authorization
under subparagraph (A), the Commission
may order—
(I) disposition of any controlling
interest 
referred 
to 
in 
subsection
(i)(9)(B)(i);
(II) closure of any office referred
to in subsection (i)(9)(B)(ii); or
(III) termination of any advisory
relationship referred to in subpara-
graphs (C) and (D) of subsection
(i)(9).
(ii) PENALTY FOR NONCOMPLIANCE.—
The Commission may revoke the underlying
registration under Federal securities laws of
any person who fails to comply with an
order issued under clause (i).
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(2) NOTICE REQUIRED TO FILE REQUESTS FOR
AUTHORIZATION.—
(A) IN
GENERAL.—If a determination is
published under subsection (d)(1) with respect to
a foreign country, no person of that foreign
country may file a request for authorization un-
less such person files notice of such request si-
multaneously with the Commission and the Sec-
retary, not less than 90 days in advance of the
action that is the subject of the request, in such
form and containing such information as the
Commission may prescribe by rule.
(B) NOTIFYING SECRETARY.—The Commis-
sion shall promptly notify the Secretary of any
notice received under subparagraph (A).
(C) EXTENDING 90-DAY PERIOD.—The Com-
mission may, by order, extend for an additional
180 days the period during which the Commis-
sion may consider a notice received under sub-
paragraph (A).
(3) STANDARDS
FOR
EXERCISE
OF
DISCRE-
TION.—In exercising any discretion under this sub-
section, the Secretary shall consider, with respect to
a securities organization that is controlled, directly or
indirectly, by a person of a foreign country—
238
HR 3474 EAS
(A) the extent to which the foreign country
is progressing toward according national treat-
ment to United States securities organizations;
and
(B) whether the foreign country permits
United States securities organizations to expand
their activities in that country, even if that
country determined that the United States did
not accord national treatment to securities orga-
nizations of that country.
(f) NEGOTIATIONS.—
(1) IN GENERAL.—The Secretary—
(A) shall initiate negotiations with any for-
eign country with respect to which a determina-
tion under subsection (c)(1) is in effect; and
(B) may initiate negotiations with any for-
eign country which denies national treatment to
United States securities organizations to ensure
that the foreign country accords national treat-
ment to such organizations.
(2) EXCEPTIONS.—Paragraph (1) does not re-
quire the Secretary to initiate negotiations with a for-
eign country if the Secretary—
(A) determines that the negotiations—
239
HR 3474 EAS
(i) would be so unlikely to result in
progress toward according national treat-
ment to United States securities organiza-
tions as to be a waste of effort; or
(ii) would impair the economic inter-
ests of the United States; and
(B) gives written notice of that determina-
tion to the chairperson and the ranking minority
member of the Committee on Banking, Housing,
and Urban Affairs of the Senate and of the Com-
mittee of Energy and Commerce of the House of
Representatives.
(g) REPORT.—
(1) CONTENTS OF REPORT.—Not later than De-
cember 1, 1994, and biennially thereafter, the Sec-
retary shall submit to the Congress a report that—
(A) specifies the foreign countries identified
under subsection (b);
(B) if a determination is published under
subsection (d)(1) with respect to the foreign
country, provides the reasons therefor;
(C) if the Secretary has not made, or has
rescinded, a determination under subsection
(d)(1) with respect to the foreign country, pro-
vides the reasons therefor;
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(D) describes the results of any negotiations
conducted under subsection (f)(1) with the for-
eign country; and
(E) discusses the effectiveness of this section
in achieving the purpose of this section.
(2) SUBMISSION
OF
REPORT.—The report re-
quired by paragraph (1) may be submitted as part of
a report or update submitted under section 3602 of
the Omnibus Trade and Competitiveness Act of 1988.
(h) CONSULTATION.—Consultation in accordance with
this subsection means consultation with the Secretary of
State, the Secretary of Commerce, the United States Trade
Representative, and the Commission.
(i) DEFINITIONS.—For purposes of this section, the fol-
lowing definitions shall apply:
(1) BROKER.—The term ‘‘broker’’ has the same
meaning as in section 3(a)(4) of the Securities Ex-
change Act of 1934.
(2) 
COMMISSION.—The 
term 
‘‘Commission’’
means the Securities and Exchange Commission.
(3) CONTROL.—The terms ‘‘directly or indirectly
controlled by’’ and ‘‘controlled, directly or indirectly’’
shall have the meanings given to such terms in rules
or regulations issued by the Secretary of the Treasury,
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not later than 6 months after the date of enactment
of this Act, after consultation with the Commission.
(4) DEALER.—The term ‘‘dealer’’ has the same
meaning as in section 3(a)(5) of the Securities Ex-
change Act of 1934.
(5) INVESTMENT
ADVISER.—The term ‘‘invest-
ment adviser’’ has the same meaning as in section
202(a)(11) of the Investment Advisers Act of 1940.
(6) INVESTMENT COMPANY.—The term ‘‘invest-
ment company’’ has the same meaning as in section
3 of the Investment Company Act of 1940.
(7) NATIONAL TREATMENT.—A foreign country
accords ‘‘national treatment’’ to United States securi-
ties organizations if it offers them the same competi-
tive opportunities (including effective market access)
as are available to its domestic securities organiza-
tions in like circumstances.
(8) PERSON OF A FOREIGN COUNTRY.—The term
‘‘person of a foreign country’’ means—
(A) a person organized under the laws of
the foreign country;
(B) a person that has its principal place of
business in the foreign country;
(C) an individual who is—
(i) a citizen of the foreign country; or
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(ii) domiciled in the foreign country;
(D) a person that is directly or indirectly
controlled by one or more persons described in
subparagraph (A), (B), or (C); and
(E) an investment company, an investment
adviser of which is a person described in any of
subparagraphs (A) through (D).
(9) REQUEST FOR AUTHORIZATION.—The term
‘‘request for authorization’’ means—
(A) an application to register under section
15(b), 15B, or 15C of the Securities Exchange
Act of 1934, or section 203(c) of the Investment
Advisers Act of 1940, including an application
to succeed to the business of a registered entity;
(B) an amendment to a registration state-
ment referred to in subparagraph (A) that re-
flects—
(i) the acquisition of control of the reg-
istered entity; or
(ii) the addition of a United States of-
fice by the registered entity;
(C) a registration statement filed by an in-
vestment company under section 8(b) of the In-
vestment Company Act of 1940, if a person of a
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foreign country will serve as an investment ad-
viser to the investment company; and
(D) an amendment to an investment com-
pany registration statement filed under section
8(b) of the Investment Company Act of 1940 that
reflects the retention of a person of a foreign
country as an investment adviser.
(10) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of the Treasury.
(11) SECURITIES ORGANIZATION.—The term ‘‘se-
curities organization’’ means a broker, a dealer, an
investment company, or an investment adviser.
SEC. 504. EFFECTUATING THE PRINCIPLE OF NATIONAL
TREATMENT FOR INSURERS AND REINSUR-
ERS.
(a) PURPOSE.—The purpose of this section is to en-
courage foreign countries to accord national treatment to
United States insurers and reinsurers that operate or seek
to operate in those countries.
(b) IDENTIFYING COUNTRIES THAT DENY NATIONAL
TREATMENT TO UNITED STATES INSURERS OR REINSUR-
ERS.—The President or the President’s designee shall iden-
tify whether and to what extent foreign countries deny na-
tional treatment to United States insurers or reinsurers—
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HR 3474 EAS
(1) according to the most recent report under sec-
tion 3602 of the Omnibus Trade and Competitiveness
Act of 1988 (or update thereof); or
(2) based on more recent information that the
President deems appropriate.
(c) DETERMINING WHETHER DENIAL OF NATIONAL
TREATMENT HAS SIGNIFICANT ADVERSE EFFECT.—
(1) IN GENERAL.—The President shall determine
whether the denial of national treatment to United
States insurers or reinsurers by a foreign country
identified under subsection (b) has a significant ad-
verse effect on such organizations.
(2) FACTORS TO BE CONSIDERED.—In deter-
mining whether and to what extent a foreign country
denies national treatment to United States insurers
or reinsurers, and in determining the effect of any
such denial on such insurers or reinsurers, the Presi-
dent shall consider appropriate factors, including—
(A) the size of the foreign country’s markets
for the financial services involved, and the extent
to which United States insurers or reinsurers op-
erate or seek to operate in those markets;
(B) the extent to which United States insur-
ers or reinsurers may participate in developing
regulations, guidelines, or other policies regard-
245
HR 3474 EAS
ing new products, services, and markets in the
foreign country;
(C) the extent to which the foreign country
issues written regulations, guidelines, or other
policies applicable to United States insurers or
reinsurers operating or seeking to operate in the
foreign country that are—
(i) prescribed after adequate notice and
opportunity for comment;
(ii) readily available to the public; and
(iii) prescribed in accordance with ob-
jective standards that effectively prevent ar-
bitrary and capricious determinations;
(D) the effects of the regulatory policies of
the foreign country on—
(i) the licensing policies of the insur-
ance regulator of that country;
(ii) capital requirements applicable in
that country;
(iii) restrictions on acquisitions or
joint ventures and operations thereof by in-
surers or reinsurers in that country; and
(iv) restrictions on the operation and
establishment of branches in that country.
(d) PUBLICATION OF DETERMINATION.—
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(1) IN GENERAL.—If the President determines
under subsection (c) that the denial of national treat-
ment to United States insurers or reinsurers by a for-
eign country has a significant adverse effect on such
organizations, the President—
(A) may, after initiating negotiations in
accordance with subsection (f) publish that deter-
mination in the Federal Register;
(B) shall, not less frequently than annually,
in consultation with any department or agency
that the President deems appropriate, review
each such determination to determine whether it
should be rescinded; and
(C) shall inform State insurance commis-
sioners of the publication of that determination.
(2) EXCEPTION FOR COUNTRIES THAT ARE PAR-
TIES TO CERTAIN AGREEMENTS GOVERNING FINAN-
CIAL SERVICES.—Paragraph (1) shall not apply to a
foreign country to the extent that any authority
under that paragraph would permit action to be
taken that would be inconsistent with a bilateral or
multilateral agreement including any dispute resolu-
tion procedures contained in such agreement that gov-
erns financial services, including insurance, that—
247
HR 3474 EAS
(A) the President entered into with that
country; and
(B) the Senate and the House of Represent-
atives approved;
before the date of enactment of this section.
(e) SANCTIONS.—
(1) ACTIONS BY THE PRESIDENT.—
(A) IN GENERAL.—The President may rec-
ommend to the State insurance commissioners
that they deny a foreign insurer’s or reinsurer’s
request for authorization which is filed after the
date of publication of a determination under
subsection (d)(1) by a person of a foreign coun-
try listed in such publication if the President de-
termines that—
(i) such action would assist the United
States in negotiations to eliminate dis-
crimination against United States insurers
or reinsurers;
(ii) negotiations undertaken pursuant
to subsection (f) are not likely to result in
an agreement that eliminates the denial of
national treatment; or
(iii) the country has not adequately
adhered to an agreement reached as a result
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of negotiations undertaken pursuant to sub-
section (f).
(B) EXERCISE
OF
AUTHORITY.—If the
President delegates his authority under section
504(b), the designee’s authority under subpara-
graph (A) shall be exercised according to the spe-
cific direction (if any) of the President.
(C) 
COMPLIANCE
EXCEPTIONS.—If 
the
State insurance commissioners do not act within
90 days on the President’s recommendations in
subsection (A), or if the President determines
that the procedure outlined in subsection (A) is
either inappropriate or impractical to achieve
the purpose of this section, the President may
take such action as he or she considers necessary
and appropriate to encourage foreign countries
to accord national treatment to United States
insurers and reinsurers that operate or seek to
operate in those countries.
(2) STANDARDS
FOR EXERCISE
OF DISCRE-
TION.—In exercising any discretion under subsection
(e), the President shall consider, with respect to an
insurer or reinsurer, branch, or other affiliated entity
that is a person of a foreign country and is operating
in the United States—
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(A) the extent to which the foreign country
is progressing toward according national treat-
ment to United States insurers or reinsurers;
and
(B) whether the foreign country permits
United States insurers or reinsurers to expand
their activities in that country, even if that
country determined that the United States did
not accord national treatment to the insurers or
reinsurers of that country.
(f) NEGOTIATIONS.—
(1) IN GENERAL.—The President—
(A) shall initiate negotiations with any for-
eign country with respect to which a determina-
tion made under subsection (c)(1) is in effect;
and
(B) may initiate negotiations with any for-
eign country which denies national treatment to
United States insurers or reinsurers to ensure
that the foreign country accords national treat-
ment to such insurers or reinsurers.
(2) EXCEPTIONS.—Paragraph (1) does not re-
quire the President to initiate negotiations with a for-
eign country if the President—
(A) determines that the negotiations—
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(i) would be so unlikely to result in
progress toward according national treat-
ment to United States insurers or reinsurers
as to be a waste of effort; or
(ii) would impair the economic inter-
ests of the United States; and
(B) gives written notice of that determina-
tion to the chairperson and the ranking minority
member of the appropriate Senate and House
committees.
(g) REPORT.—
(1) CONTENTS OF REPORT.—Not later than De-
cember 1, 1994, and biennially thereafter, the Presi-
dent shall submit to the Congress a report that—
(A) specifies the foreign countries identified
under subsection (b);
(B) if a determination is published under
subsection (d)(1) with respect to the foreign
country, provides the reasons therefor;
(C) if the President has not made or has re-
scinded such a determination with respect to the
foreign country, provides the reasons therefor;
(D) describes the results of any negotiations
conducted under subsection (g)(1) with the for-
eign country; and
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(E) discusses the effectiveness of this section
in achieving the purpose of this section.
(2) SUBMISSION
OF
REPORT.—The report re-
quired by paragraph (1) may be submitted as part of
a report or update submitted under section 3602 of
the Omnibus Trade and Competitiveness Act of 1988.
(h) DEFINITIONS.—For purposes of this section, the
following definitions shall apply:
(1) INSURER.—The term ‘‘insurer’’ means a
party to a contract of insurance who assumes the risk
and undertakes to indemnify the insured, or pay a
certain sum on the happening of a specified contin-
gency.
(2) NATIONAL TREATMENT.—A foreign country
accords ‘‘national treatment’’ to United States insur-
ers and reinsurers if it offers them the same competi-
tive opportunities (including effective market access)
as are available to its domestic insurers or reinsurers.
(3) PERSON OF A FOREIGN COUNTRY.—The term
‘‘person of a foreign country’’ means—
(A) a person organized under the laws of
the foreign country;
(B) a person that has its principal place of
business in the foreign country;
(C) an individual who is—
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(i) a citizen of the foreign country, or
(ii) domiciled in the foreign country;
and
(D) a person that is directly or indirectly
controlled by a person or persons described in
subparagraph (A) or (B), or by an individual or
individuals described in subparagraph (C).
(4) PRESIDENT.—The term ‘‘President’’ means
the President of the United States or the President’s
designee.
(5) REINSURER.—The term ‘‘reinsurer’’ means
an insurer which contracts to indemnify a ceding in-
surer for all or part of a risk originally undertaken
by the ceding insurer.
(6) REQUEST FOR AUTHORIZATION.—The term
‘‘request for authorization’’ means—
(A) an application, registration, notice, or
other request to commence engaging in the busi-
ness of insurance in a State; or
(B) an application, registration, notice, or
other request for renewal of authorization to en-
gage in the business of insurance in a State.
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SEC. 505. FINANCIAL INTERDEPENDENCE STUDY.
Subtitle G of title III of the Omnibus Trade and Com-
petitiveness Act of 1988 (22 U.S.C. 5351 et seq.) is amended
by adding at the end the following new section:
‘‘SEC. 3605. FINANCIAL INTERDEPENDENCE STUDY.
‘‘(a) INVESTIGATION REQUIRED.—The Secretary, in
consultation and coordination with the Securities and Ex-
change Commission, the Federal banking agencies, and any
other appropriate Federal department or agency designated
by the Secretary, shall conduct an investigation to deter-
mine—
‘‘(1) the extent of the interdependence of the fi-
nancial services sectors of the United States and for-
eign countries—
‘‘(A) whose financial services institutions
provide financial services in the United States;
or
‘‘(B) whose persons have substantial owner-
ship interests in United States financial services
institutions; and
‘‘(2) the economic, strategic, and other con-
sequences of that interdependence for the United
States.
‘‘(b) REPORT.—
‘‘(1) REPORT
REQUIRED.—Not later than 3
years after the date of enactment of this section, the
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Secretary shall submit a report on the results of the
investigation under subsection (a) to the President,
the Congress, the Securities and Exchange Commis-
sion, the Federal banking agencies, and any other ap-
propriate Federal agency or department, as des-
ignated by the Secretary.
‘‘(2) CONTENTS
OF
REPORT.—The report re-
quired under paragraph (1) shall—
‘‘(A) describe the activities and estimate the
scope of financial services activities conducted by
United States financial services institutions in
foreign markets (differentiated according to
major foreign markets);
‘‘(B) describe the activities and estimate the
scope of financial services activities conducted by
foreign financial services institutions in the
United States (differentiated according to the
most significant home countries or groups of
home countries);
‘‘(C) estimate the number of jobs created in
the United States by financial services activities
conducted by foreign financial services institu-
tions and the number of jobs created in foreign
countries by financial service activities con-
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‘‘(H) describe the extent to which United
States companies rely on financing by or
through foreign financial services institutions
and the consequences of such reliance (including
disclosure of proprietary information) for the in-
dustrial competitiveness and national security of
the United States;
‘‘(I) describe the extent to which foreign fi-
nancial services institutions, in purchasing high
technology products such as computers and tele-
communications equipment, favor manufacturers
from their home countries over United States
manufacturers; and
‘‘(J) contain other appropriate information
relating to the results of the investigation re-
quired by subsection (a).
‘‘(c) DEFINITIONS.—For purposes of this section the
following definitions shall apply:
‘‘(1) DEPOSITORY INSTITUTION AND DEPOSITORY
INSTITUTION HOLDING COMPANY.—The terms ‘deposi-
tory institution’ and ‘depository institution holding
company’ have the same meanings as in section 3 of
the Federal Deposit Insurance Act.
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‘‘(2) FEDERAL BANKING AGENCIES.—The term
‘Federal banking agencies’ has the same meaning as
in section 3 of the Federal Deposit Insurance Act.
‘‘(3) FINANCIAL
SERVICES
INSTITUTION.—The
term ‘financial services institution’ means—
‘‘(A) a broker, dealer, underwriter, clearing
agency, transfer agent, or information processor
with respect to securities, including government
and municipal securities;
‘‘(B) an investment company, investment
manager, investment adviser, indenture trustee,
or any depository institution, insurance com-
pany, or other organization operating as a fidu-
ciary, trustee, underwriter, or other financial
services provider;
‘‘(C) any depository institution or deposi-
tory institution holding company; and
‘‘(D) any other entity providing financial
services.
‘‘(4) SECRETARY.—The term ‘Secretary’ means
the Secretary of the Treasury.’’.
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SEC. 506. FEDERAL RESERVE REPORT ON THE FOREIGN
BANK SUPERVISION ENHANCEMENT ACT OF
1991.
The Federal Reserve shall submit to the House and
Senate Banking Committees within 60 days of enactment
of this legislation a report on the Foreign Bank Supervision
Enhancement Act of 1991 including:
(a) the number of applicants received and from
what countries;
(b) the number of applications approved and
from what countries;
(c) the amount of time taken on each application
between receipt and approval or rejection of the ap-
plication;
(d) other agencies involved in the approval proc-
ess, how much time is taken by those agencies, and
any problems encountered with these agencies;
(e) coordination of processing applications and
length of time for processing between the regional
bank’s and the Federal Reserve Board’s staffs;
(f) efforts to define consolidated home country su-
pervision on an international basis, and
(g) suggestions for streamlining the process.
SEC. 507. CONFORMING AMENDMENTS.
(a) REPORTS ON FOREIGN TREATMENT OF UNITED
STATES FINANCIAL INSTITUTIONS.—Section 3602 of the
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Omnibus Trade and Competitiveness Act of 1988 (22
U.S.C. 5352) is amended—
(1) in the first sentence, by inserting ‘‘with up-
dates on significant developments every 2 years fol-
lowing submission of the 1994 report,’’ before ‘‘the
Secretary of the Treasury’’; and
(2) by adding at the end the following: ‘‘For pur-
poses of this section, a foreign country denies national
treatment to United States entities unless the foreign
country offers such entities the same competitive op-
portunities (including effective market access) as are
available to the domestic entities of the foreign coun-
try.’’.
(b) NEGOTIATIONS TO PROMOTE FAIR TRADE IN FI-
NANCIAL SERVICES.—Section 3603(a)(1) of the Omnibus
Trade and Competitiveness Act of 1988 (22 U.S.C.
5353(a)(1)) is amended by inserting ‘‘effective’’ before ‘‘ac-
cess’’.
(c) PRIMARY DEALERS IN GOVERNMENT DEBT IN-
STRUMENTS.—Section 3502(b)(1) of the Omnibus Trade
and Competitiveness Act of 1988 (22 U.S.C. 5342(b)(1)) is
amended—
(1) by striking ‘‘does not accord to’’ and insert-
ing ‘‘does not offer’’; and
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(2) by striking ‘‘as such country accords to’’ and
inserting ‘‘(including effective market access) as are
available to’’.
(d) CONFORMING AMENDMENTS TO THE SECURITIES
EXCHANGE ACT OF 1934.—
(1) SECTION 15.—Section 15(b)(1) of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78o(b)(1)) is
amended by adding at the end the following: ‘‘The
Commission may suspend consideration, deny reg-
istration, issue an order, or revoke registration, as
provided in section 403(e)(1) of the Fair Trade in Fi-
nancial Services Act of 1994.’’.
(2) SECTION 15B.—Section 15B(a)(2) of the Se-
curities Exchange Act of 1934 (15 U.S.C. 78o–
4(a)(2)) is amended by adding at the end the follow-
ing: ‘‘The Commission may suspend consideration,
deny registration, issue an order, or revoke registra-
tion, as provided in section 403(e)(1) of the Fair
Trade in Financial Services Act of 1994.’’.
(3) SECTION 15C.—Section 15C(a)(2) of the Se-
curities Exchange Act of 1934 (15 U.S.C. 78o–
5(a)(2)) is amended by adding at the end the follow-
ing: ‘‘The Commission may suspend consideration,
deny registration, issue an order, or revoke registra-
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tion, as provided in section 403(e)(1) of the Fair
Trade in Financial Services Act of 1994.’’.
(e) CONFORMING AMENDMENT TO THE INVESTMENT
COMPANY ACT OF 1940.—Section 8 of the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–8) is amended by adding
at the end the following new subsection:
‘‘(g) The Commission may suspend consideration,
deny registration, issue an order, or revoke registration, as
provided in section 403(e)(1) of the Fair Trade in Finan-
cial Services Act of 1994.’’.
(f) CONFORMING AMENDMENT TO THE INVESTMENT
ADVISERS ACT OF 1940.—Section 203(c)(2) of the Invest-
ment Advisers Act of 1940 (15 U.S.C. (c)(2)) is amended
by adding at the end the following: ‘‘The Commission may
suspend consideration, deny registration, issue an order, or
revoke registration, as provided in section 403(e)(1) of the
Fair Trade in Financial Services Act of 1994.’’.
TITLE VI—NATIONAL FLOOD
INSURANCE REFORM
SEC. 601. SHORT TITLE.
This title may be cited as the ‘‘National Flood Insur-
ance Reform Act of 1994’’.
SEC. 602. CONGRESSIONAL FINDINGS.
The Congress finds that—
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(1) the 4 principal objectives of the National
Flood Insurance Program are to limit increasing
flood control and disaster relief expenditures, to pro-
vide a prefunded mechanism to more fully indemnify
victims of flood-related disasters, to limit unwise de-
velopment in floodplains, and to provide affordable
Federal flood insurance for structures located in areas
of special flood hazards;
(2) since 1968, the National Flood Insurance
Program has reduced the need for taxpayer funded
disaster assistance and has been a factor in motivat-
ing local government mitigation efforts.
(3) repetitively damaged properties represent a
substantial problem for the National Flood Insurance
Program, with over 40 percent of all flood insurance
claims made on properties that have been damaged
more than once;
(4) the problem of erosion warrants greater anal-
ysis;
(5) reforms in the National Flood Insurance Pro-
gram are essential to increase participation in the
Program, make the Program more actuarially sound,
decrease the risk of losses to the United States Treas-
ury, and address the problem of properties repet-
itively damaged by floods;
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(6) a Federal flood insurance program that com-
bines predisaster mitigation efforts together with an
insurance and compliance program will reduce the
physical and economic effects of flood-related damage
on the Federal Government, State and local govern-
ments, and individuals;
(7) requiring regulated lending institutions, gov-
ernment agencies, and government-sponsored enter-
prises to make sure that flood insurance coverage is
purchased on all properties in areas of special flood
hazards in participating communities will increase
compliance with the program, and increase the pool
of funds, thereby decreasing the impact on the Na-
tional Flood Insurance Fund of individual flood
events;
(8) incentives in the form of reduced premium
rates for flood insurance under the National Flood In-
surance Program should be provided in communities
that have adopted and enforced exemplary or particu-
larly effective measures for comprehensive floodplain
management; and
(9) these community-based, individual mitiga-
tion, and loss prevention methods and incentives
should be incorporated into the National Flood Insur-
ance Program.
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SEC. 603. DEFINITION.
As used in this title, the term ‘‘Director’’ means the
Director of the Federal Emergency Management Agency.
Subtitle A—Definitions
SEC. 611. FLOOD DISASTER PROTECTION ACT OF 1973.
(a) IN GENERAL.—Section 3(a) of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4003(a)) is amended—
(1) by striking paragraph (5) and inserting the
following new paragraph:
‘‘(5) ‘Federal entity for lending regulation’
means the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation,
the Comptroller of the Currency, the Office of Thrift
Supervision, the National Credit Union Administra-
tion Board, and the Farm Credit Administration,
and with respect to a particular regulated lending in-
stitution means the entity primarily responsible for
the supervision of the institution;’’;
(2) in paragraph (6), by striking the period at
the end and inserting a semicolon; and
(3) by inserting after paragraph (6) the follow-
ing new paragraphs:
‘‘(7) ‘regulated lending institution’ means a
bank, savings association, credit union, farm credit
bank, Federal land bank association, production cred-
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it association, or similar institution subject to the su-
pervision of a Federal entity for lending regulation;
‘‘(8) ‘Federal agency lender’ means the Federal
Housing Administration, the Farmers Home Admin-
istration, the Small Business Administration, and the
Veterans’ Administration, when such agency makes
loans secured by improved real estate or a manufac-
tured home; and
‘‘(9) ‘servicer’ means a person who receives any
scheduled periodic payments from a borrower pursu-
ant to the terms of any loan secured by a lien on real
property, and who makes the payments of principal
and interest and such other payments with respect to
the amounts received from the borrower as may be re-
quired.’’.
(b) CONFORMING AMENDMENTS.—
(1) REQUIREMENTS TO PURCHASE FLOOD INSUR-
ANCE.—Section 102(b) of the Flood Disaster Protec-
tion Act of 1973 (42 U.S.C. 4012a(b)) is amended by
striking ‘‘(b) Each Federal instrumentality respon-
sible for the supervision, approval, regulation, or in-
suring of banks, savings and loan associations, or
similar institutions shall by regulation direct such in-
stitutions’’ and inserting the following:
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‘‘(b) 
FLOOD
INSURANCE
PURCHASE
REQUIRE-
MENTS.—Each Federal entity for lending regulation shall
by regulation direct regulated lending institutions’’.
(2) EFFECT OF NONPARTICIPATION IN FLOOD IN-
SURANCE
PROGRAM.—Section 202(b) of the Flood
Disaster Protection Act of 1973 (42 U.S.C. 4106(b))
is amended by striking ‘‘Federal instrumentality de-
scribed in such section shall by regulation require the
institutions’’ and inserting ‘‘Federal entity for lend-
ing regulation (with respect to regulated lending in-
stitutions)’’.
SEC. 612. NATIONAL FLOOD INSURANCE ACT OF 1968.
(a) IN GENERAL.—Section 1370(a) of the National
Flood Insurance Act of 1968 (42 U.S.C. 4121(a)) is amend-
ed—
(1) in paragraph (5), by striking ‘‘and’’ at the
end;
(2) in paragraph (6), by striking the period at
the end and inserting a semicolon; and
(3) by adding at the end the following new para-
graphs:
‘‘(7) the term ‘Federal entity for lending regula-
tion’ means the Board of Governors of the Federal Re-
serve System, the Federal Deposit Insurance Corpora-
tion, the Comptroller of the Currency, the Office of
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‘‘(B) ancillary beneficial functions, includ-
ing maintenance of water quality, and recharge
of ground water
that reduce flood related damage;
‘‘(11) the term ‘erosion control measures’ means
a community’s efforts to control erosion through non-
structural and structural projects;
‘‘(12) the term ‘repetitive loss structure’ means
an insured property that has incurred flood-related
damage on 2 occasions during a 10-year period end-
ing on the date of the event for which a second claim
is made, in which the cost of repair, on the average,
equaled or exceeded 25 percent of the value of the
structure at the time of each flood event;
‘‘(13) the term ‘cost of compliance with land use
and control measures’ means—
‘‘(A) the cost of elevating or floodproofing a
structure so that the structure is in compliance
with the minimum performance standards
adopted by the State or community pursuant to
section 1315 of the National Flood Insurance Act
of 1968, or
‘‘(B) the cost of relocation or demolition of
the structure if the Director demonstrates that
the structure will collapse or subside as a result
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of erosion within 30 years based on State erosion
data;
‘‘(14) the term ‘servicer’ means any person who
receives any scheduled periodic payments from a bor-
rower pursuant to the terms of any loan secured by
a lien on real property, and who makes the payments
of principal and interest and such other payments
with respect to the amounts received from the bor-
rower as may be required.’’.
(b) CONFORMING AMENDMENT.—Section 1322(d) of
the National Flood Insurance Act of 1968 (42 U.S.C.
4029(d)) is amended by striking ‘‘federally supervised, ap-
proved, regulated or insured financial institution’’ and in-
serting ‘‘regulated lending institution’’.
Subtitle B—Compliance and
Increased Participation
SEC. 621. EXPANDED FLOOD INSURANCE PURCHASE RE-
QUIREMENTS.
(a) IN GENERAL.—Section 102(b) of the Flood Disas-
ter Protection Act of 1973 (42 U.S.C. 4012a(b)), as amend-
ed by section 611(b)(1), is amended—
(1) by striking ‘‘Each Federal entity’’ and in-
serting the following:
‘‘(1) IN GENERAL.—Each Federal entity’’;
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(2) by inserting before ‘‘shall by regulation’’ the
following: ‘‘(after consultation and coordination with
the Federal Financial Institutions Examination
Council established under the Federal Financial In-
stitutions Examination Council Act of 1974)’’; and
(3) by adding at the end the following new para-
graphs:
‘‘(2) PROCEDURES
IMPLEMENTED
BY
FNMA,
FHLMC, AND FAMC.—The Federal National Mortgage
Association, the Federal Home Loan Mortgage Cor-
poration, and the Federal Agricultural Mortgage Cor-
poration shall implement procedures reasonably de-
signed to assure that each loan that is—
‘‘(A) secured by improved real estate or a
manufactured home located in an area that has
been identified at the time of the origination of
the loan by the Director as an area of special
flood hazards and in which flood insurance is
available under the National Flood Insurance
Act of 1968; and
‘‘(B) purchased by any such entity;
is covered for the term of the loan by flood insurance
in the amount provided in paragraph (1).
‘‘(3) PROCEDURES IMPLEMENTED BY FEDERAL
AGENCY LENDERS.—Each Federal agency lender shall
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implement procedures reasonably designed to assure
that all property—
‘‘(A) that secures loans that the Federal
agency lender makes, increases, extends, or re-
news; and
‘‘(B) that is improved by real estate or a
manufactured home located in an area that has
been identified at the time of the origination of
the loan by the Director as an area of special
flood hazards and in which flood insurance is
available under the National Flood Insurance
Act of 1968;
is covered for the term of the loan by flood insurance
in the amount provided in paragraph (1).
‘‘(4) DEFINITION.—For purposes of this section
property improved by real estate means insurable im-
provements on that property.’’.
(b) EFFECTIVE DATE.—The provisions of this section
shall apply to all transactions occurring after the expira-
tion of the 1-year period beginning on the date of enactment
of this title.
SEC. 622. ESCROW OF FLOOD INSURANCE PAYMENTS.
(a) IN GENERAL.—Section 102 of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4012a) is amended by
adding at the end the following new subsection:
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‘‘(d) ESCROW OF FLOOD INSURANCE PAYMENTS.—
‘‘(1) BY REGULATED LENDING INSTITUTIONS.—
Each Federal entity for lending regulation, after con-
sultation and coordination with the Federal Finan-
cial Institutions Examination Council, shall by regu-
lation require that, if a regulated lending institution
requires the escrowing of taxes, insurance premiums,
fees, or any other charges for a loan secured by resi-
dential real estate or manufactured homes, all charges
for flood insurance under this title for the property
shall be paid by the borrower to the institution for the
duration of the period during which the regulated
lending institution maintains an escrow account.
Upon receipt of a notice from the Director or the pro-
vider of the insurance that insurance premiums, fees,
or other charges are due, the institution shall pay
from the escrow account to the provider of the insur-
ance the amount of insurance premiums, fees, or other
charges owed.
‘‘(2) BY FEDERAL AGENCY LENDERS.—If a Fed-
eral agency lender requires the escrowing of taxes, in-
surance premiums, fees, or any other charges, then
any charges for flood insurance under this title for the
residential real estate or the manufactured home shall
be paid by the borrower to the Federal agency lender
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for the duration of the period during which the Fed-
eral agency lender maintains an escrow account.
Upon receipt of a notice from the Director or the pro-
vider of the insurance that insurance premiums, fees,
or other charges are due, the Federal agency lender
shall pay from the escrow account to the provider of
the insurance the amount of insurance premiums, fees
or other charges owed.
‘‘(3) APPLICABILITY OF REAL ESTATE SETTLE-
MENT PROCEDURES ACT.—Escrow accounts used to
collect flood insurance premiums, fees, or other
charges under this subsection shall be subject to the
provisions of section 10 of the Real Estate Settlement
Procedures Act of 1974.’’.
(b) APPLICABILITY.—Section 102(d) of the Flood Dis-
aster Protection Act of 1973, as added by subsection (a),
shall apply with respect to any loan made, increased, ex-
tended, or renewed after the expiration of the 1-year period
beginning on the date of enactment of this title.
SEC. 623. NOTICE REQUIREMENTS.
Section 1364 of the National Flood Insurance Act of
1968 (42 U.S.C. 4104a) is amended to read as follows:
‘‘SEC. 1364. NOTICE REQUIREMENTS.
‘‘(a) LENDING INSTITUTIONS.—Each Federal entity
for lending regulation, after consultation and coordination
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with the Federal Financial Institutions Examination
Council, shall by regulation require that before a regulated
lending institution makes, increases, extends, or renews a
loan secured by improved real estate or a manufactured
home located in an area that has been identified by the Di-
rector as an area of special flood hazards, the institution
shall notify the borrower of the special flood hazards and
of the need to purchase and maintain flood insurance.
‘‘(b) FEDERAL AGENCY LENDERS.—Before a Federal
agency lender makes, increases, extends, or renews a loan
secured by improved real estate or a manufactured home
located in an area that has been identified by the Director
as an area of special flood hazards, the Federal agency lend-
er shall notify the borrower of the special flood hazards and
of the need to purchase and maintain flood insurance.
‘‘(c) PARTICIPATING
COMMUNITIES.—The Director
shall by regulation require each participating community,
upon receiving the semiannual list prepared by the Director
of all revisions to and updates of flood insurance rate maps
made during the preceding 6 months, to determine whether
any properties in their community have been affected, and
to provide annual notice by mail, notice by publication,
notice on tax assessments, or notice by other reasonable
method, to regulated lending institutions that are known
to lend in the community, and to the owners of all prop-
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erties newly determined to be, or no longer to be, in an
area of special flood hazards, of the flood insurance pur-
chase requirements under section 102(b).
‘‘(d) CONTENTS OF NOTICE.—Notification required by
this section shall include a warning, in a form to be estab-
lished by the Director, stating that the real estate or manu-
factured home securing the loan is located in an area of
special flood hazards, a description of the flood insurance
purchase requirements under section 102(b), a statement
that flood insurance coverage may be purchased under the
National Flood Insurance Program and may also be avail-
able from private insurers, and any other information that
the Director considers necessary to carry out the purposes
of the National Flood Insurance Program.’’.
SEC. 624. PLACEMENT OF FLOOD INSURANCE BY REGU-
LATED 
LENDING 
INSTITUTION, 
FEDERAL
AGENCY LENDER, OR SERVICER.
(a) REQUIRED ACTIONS BY LENDER.—Section 102 of
the Flood Disaster Protection Act of 1973 (42 U.S.C.
4012a), as amended by section 622(a), is amended by add-
ing at the end the following new subsection:
‘‘(e) REQUIRED ACTIONS BY LENDER.—
‘‘(1) NOTIFICATION TO BORROWER OF LACK OF
COVERAGE.—If, at the time of origination or at any
other time during the term of a loan secured by im-
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proved real estate or by a manufactured home located
in an area that has been identified by the Director
as an area of special flood hazards and in which flood
insurance is available under this title, a regulated
lending institution, Federal agency lender, or servicer
determines that the building or manufactured home
and any personal property securing the loan held or
serviced by the regulated lending institution, Federal
agency lender, or servicer is not covered by flood in-
surance, in an amount not less than the amount re-
quired by subsection (b)(1), the regulated lending in-
stitution, Federal agency lender, or servicer shall no-
tify the borrower, in a form to be established by the
Director, that the borrower should obtain, at the bor-
rower’s expense, an amount of flood insurance that is
not less than the amount required by subsection
(b)(1), for the term of the loan. If, not later than 45
days after receiving such notification, the borrower
fails to purchase such flood insurance, the regulated
lending institution, Federal agency lender, or servicer
shall purchase the insurance on behalf of the borrower
and may charge the borrower for the cost of premiums
and fees incurred by the regulated lending institution,
Federal agency lender, or servicer in purchasing the
insurance.
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‘‘(2) REVIEW.—
‘‘(A) BY THE DIRECTOR.—A borrower may
request, based upon the submission of supporting
technical data, that the Director review a deter-
mination that the improved real estate or manu-
factured home securing the loan is located in an
area of special flood hazards. Not later than 45
days after the Director receives the request, the
Director shall review the determination and pro-
vide the borrower with a letter stating whether or
not the property is in an area of special flood
hazards. The determination of the Director shall
be final. If the Director fails to respond to a re-
quest within 45 days, the property shall be
deemed not to be located in an area having spe-
cial flood hazards.
‘‘(B) INSURANCE NOT REQUIRED.—If a per-
son is provided by the borrower with a letter is-
sued by the Director pursuant to subparagraph
(A) during the preceding 1-year period, stating
that the property is not in an area of special
flood hazards, such person shall have no obliga-
tion under this title to require the purchase of
flood insurance on the property.’’.
(b) APPLICABILITY.—
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(1) IN GENERAL.—Except as provided in para-
graph (2), section 102(e) of the Flood Disaster Protec-
tion Act of 1973, as added by subsection (a), shall
apply to all loans outstanding on or after the date of
enactment of this title.
(2) LOANS REGULATED BY THE FARM CREDIT
ADMINISTRATION.—With respect to loans held by in-
stitutions regulated by the Farm Credit Administra-
tion, section 102(e) of the Flood Disaster Protection
Act of 1973, as added by subsection (a), shall apply
only to loans originating on or after the date of enact-
ment of this title.
SEC. 625. STANDARD FLOOD HAZARD DETERMINATION
FORMS.
(a) IN GENERAL.—Chapter III of the National Flood
Insurance Act of 1968 (42 U.S.C. 4101 et seq.) is amended
by adding at the end the following new section:
‘‘SEC. 1365. STANDARD FLOOD HAZARD DETERMINATION
FORMS.
‘‘(a) DEVELOPMENT.—The Director, in consultation
with the Federal entities for lending regulation, and after
notice and comment, shall develop a standard flood hazard
determination form (hereafter in this section referred to as
the ‘determination form’) for use in connection with loans
secured by improved real estate or a manufactured home
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located in an area of special flood hazards and in which
flood insurance is available under this title. The determina-
tion form may be maintained in a printed, computerized,
or electronic manner.
‘‘(b) DESIGN
AND CONTENTS.—The determination
form shall state whether the property is in an area of spe-
cial flood hazards, the risk premium rate classification es-
tablished for the special flood hazard area in which the
property is located, the complete map and panel numbers
for the property, and the date of the map used for the deter-
mination. If the complete map and panel numbers for the
property are not available because the property is not lo-
cated in a community that is participating in the National
Flood Insurance Program or because no map exists for the
relevant area, the determination form shall so state.
‘‘(c) REQUIRED USE.—Each Federal entity for lending
regulation shall by regulation require the use of the deter-
mination form by regulated lending institutions. Each Fed-
eral agency lender shall by regulation provide for the use
of the determination form. The Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation,
and the Federal Agricultural Mortgage Corporation shall
require use of the determination form by any person from
whom they purchase loans.
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‘‘(d) GUARANTEES REGARDING INFORMATION.—In re-
cording information on a determination form, a person
may rely on information provided by a third party to the
extent that the third party guarantees the accuracy of the
information.
‘‘(e) RELIANCE
ON PREVIOUS DETERMINATION.—A
person or institution increasing, extending, renewing, or
purchasing a loan may rely on a previous determination
as to whether property is in a special flood hazard area,
if the previous determination was made not more than 5
years before the date of the transaction, and the basis for
the previous determination has been set forth on a deter-
mination form.’’.
(b) APPLICABILITY.—Section 1365 of the National
Flood Insurance Act of 1968, as added by subsection (a),
shall apply to all loans originated on or after the expiration
of the 6-month period beginning on the date the standard
flood hazard determination form is finalized by the Direc-
tor.
SEC. 626. EXAMINATIONS REGARDING COMPLIANCE BY
REGULATED LENDING INSTITUTIONS.
(a) AMENDMENT TO FEDERAL DEPOSIT INSURANCE
ACT.—Section 10 of the Federal Deposit Insurance Act (12
U.S.C. 1820) is amended by adding at the end the following
new subsection:
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‘‘(h) FLOOD HAZARD INSURANCE COMPLIANCE BY IN-
SURED DEPOSITORY INSTITUTIONS REQUIRED.—
‘‘(1) EXAMINATIONS.—The appropriate Federal
banking agency shall, during each scheduled on-site
examination required by this section, determine
whether the insured depository institution is comply-
ing with the requirements of the National Flood In-
surance Program.
‘‘(2) REPORT.—Not later than 1 year after the
date of enactment of the National Flood Insurance
Reform Act of 1994, and biannually thereafter for the
next 4 years, each appropriate Federal banking agen-
cy shall submit a report to Congress on compliance
by insured depository institutions with the require-
ments of the National Flood Insurance Program. The
report shall include a description of the methods used
to determine compliance, the number of institutions
examined during the reporting year, a listing and
total number of institutions found to be in non-
compliance, actions taken to correct incidents of non-
compliance, and an analysis of compliance, including
a discussion of any trends, patterns, and problems,
and recommendations regarding reasonable actions to
improve the efficiency of the examinations processes.’’.
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(b) AMENDMENT TO THE FEDERAL CREDIT UNION
ACT.—Section 204 of the Federal Credit Union Act (12
U.S.C. 1784) is amended by adding at the end the following
new subsection:
‘‘(e) FLOOD HAZARD INSURANCE COMPLIANCE BY IN-
SURED CREDIT UNIONS REQUIRED.—
‘‘(1) EXAMINATION.—The Board shall, during
each examination conducted under this section, deter-
mine whether the insured credit union is complying
with the requirements of the National Flood Insur-
ance Program.
‘‘(2) REPORT.—Not later than 1 year after the
date of enactment of the National Flood Insurance
Reform Act of 1994, and biannually thereafter for the
next 4 years, the Board shall submit a report to Con-
gress on compliance by insured credit unions with the
requirements of the National Flood Insurance Pro-
gram. The report shall include a description of the
methods used to determine compliance, the number of
insured credit unions examined during the reporting
year, a listing and total number of insured credit
unions found to be in noncompliance, actions taken
to correct incidents of noncompliance, and an analy-
sis of compliance, including a discussion of any
trends, patterns, and problems, and recommendations
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regarding reasonable actions to improve the efficiency
of the examinations processes.’’.
SEC. 627. PENALTIES AND CORRECTIVE ACTIONS FOR FAIL-
URE TO REQUIRE FLOOD INSURANCE, ES-
CROW, OR NOTIFY.
Section 102 of the Flood Disaster Protection Act of
1973 (42 U.S.C. 4012a), as amended by sections 622 and
624, is amended by adding at the end the following new
subsections:
‘‘(f) CIVIL PENALTIES.—
‘‘(1) IN GENERAL.—A regulated lending institu-
tion that is found to have a pattern or practice of vio-
lating this section may be assessed a civil penalty by
the appropriate Federal entity for lending regulation
of not more than $350 for each such violation. A pen-
alty under this subsection may be issued only after
notice and an opportunity for a hearing on the
record.
‘‘(2) TOTAL AMOUNT.—The total amount of pen-
alties assessed under this subsection against a single
regulated lending institution for any calendar year
may not exceed $100,000.
‘‘(3) SALES
OR
TRANSFERS.—The subsequent
sale or other transfer of a loan by a regulated lending
institution that has committed a violation of this sec-
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tion shall not affect the liability of the transferring
institution with respect to any penalty under this
subsection. An institution shall not be liable for a vio-
lation relating to a loan committed by another insti-
tution that previously held the loan.
‘‘(4) 3-YEAR LIMIT.—No penalty may be imposed
under this subsection after the expiration of the 3-
year period beginning on the date of the occurrence
of the violation.
‘‘(g) ADDITIONAL ACTIONS.—If a Federal entity for
lending regulation determines—
‘‘(1) that a regulated lending institution has
demonstrated a pattern and practice of noncompli-
ance in violation of the regulations issued pursuant
to subsection (b) or subsection (d) or the notice re-
quirements under section 1364 of the National Flood
Insurance Act of 1968; and
‘‘(2) that the regulated lending institution has
not demonstrated measurable improvement in compli-
ance despite the issuance of penalties under subsection
(f);
the agency may require the regulated lending institution
to take such remedial actions as are necessary to ensure
that the regulated lending institution is in satisfactory com-
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pliance with the requirements of the National Flood Insur-
ance Program.’’.
SEC. 628. FINANCIAL INSTITUTIONS EXAMINATION COUN-
CIL.
Section 1006 of the Federal Financial Institutions Ex-
amination Council Act of 1978 (12 U.S.C. 3305) is amend-
ed by adding at the end the following new subsection:
‘‘(g) FLOOD INSURANCE.—The Council shall consult
with and assist the Federal entities for lending regulation,
as such term is defined in section 1370(a)(7) of the National
Flood Insurance Act of 1968, in developing and coordinat-
ing uniform standards and requirements for use by regu-
lated lending institutions under the National Flood Insur-
ance Program.’’.
SEC. 629. CONFORMING AMENDMENT.
The section heading for section 102 of the Flood Disas-
ter Protection Act of 1973 (42 U.S.C. 4012a) is amended
to read as follows:
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‘‘FLOOD INSURANCE PURCHASE AND COMPLIANCE
REQUIREMENTS AND ESCROW ACCOUNTS’’.
Subtitle C—Ratings and Incentives
for Community Floodplain Man-
agement Programs
SEC. 631. COMMUNITY RATING SYSTEM AND INCENTIVES
FOR 
COMMUNITY 
FLOODPLAIN 
MANAGE-
MENT.
(a) REQUIREMENT FOR PARTICIPATION IN FLOOD IN-
SURANCE PROGRAM.—Section 1315 of the National Flood
Insurance Act of 1968 (42 U.S.C. 4022) is amended—
(1) by striking the section heading and inserting
the following:
‘‘SEC. 1315. STATE AND LOCAL LAND USE CONTROLS.’’;
(2) by striking ‘‘After December’’ and inserting
the following:
‘‘(a) REQUIREMENT FOR PARTICIPATION IN FLOOD IN-
SURANCE PROGRAM.—After December’’; and
(3) by adding at the end the following new sub-
section:
‘‘(b) COMMUNITY RATING SYSTEM AND INCENTIVES
FOR COMMUNITY FLOODPLAIN MANAGEMENT.—
‘‘(1) AUTHORITY
AND
GOALS.—The Director
shall carry out a community rating system program
to evaluate the measures adopted by communities vol-
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untarily participating in the community rating sys-
tem, to provide incentives for measures to reduce the
risk of flood or erosion damage that exceed the criteria
set forth in section 1361, to encourage adoption of
more effective measures to protect natural and bene-
ficial floodplain functions, floodplain and erosion
management, and to promote the reduction of Federal
flood insurance losses.
‘‘(2) INCENTIVES.—The program shall provide
incentives in the form of credits on premium rates for
flood insurance coverage in communities that the Di-
rector determines have adopted and enforced measures
to reduce the risk of flood and erosion damage that
exceed the criteria set forth in section 1361. In pro-
viding incentives under this paragraph, the Director
may provide for credits to flood insurance premium
rates in communities that the Director determines
have—
‘‘(A) implemented measures to protect natu-
ral and beneficial floodplain functions; and
‘‘(B) adopted erosion control measures.
‘‘(3) CREDITS.—The credits on premium rates
for flood insurance coverage shall be based on the esti-
mated reduction in flood and erosion damage risks re-
sulting from the measures adopted by the community
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under this program. If a community has received
mitigation assistance under section 1366, the credits
shall be phased-in as determined by the Director.’’.
(b) REPORTS.—Two years after the date of enactment
of this title and biannually thereafter, the Director shall
submit a report to the Congress regarding the program
under section 1315(a) of the National Flood Insurance Act
of 1968. Each report shall include an analysis of the cost-
effectiveness and other accomplishments and shortcomings
of the program and any recommendations of the Director
for legislation regarding the program.
SEC. 632. FUNDING.
Section 1310(a) of the National Flood Insurance Act
of 1968 (42 U.S.C. 4017(a)) is amended—
(1) in paragraph (4), by striking ‘‘and’’ at the
end;
(2) in paragraph (5), by striking the period at
the end and inserting a semicolon; and
(3) by adding after paragraph (5) the following
new paragraph:
‘‘(6) for carrying out the program under section
1315(b);’’.
SEC. 633. REASONABLE FEES.
A lender may charge a borrower a reasonable fee for
making a flood insurance determination.
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Subtitle D—Mitigation of Flood and
Erosion Risks
SEC. 641. MITIGATION ASSISTANCE IN FEDERAL INSUR-
ANCE ADMINISTRATION.
Section 1105(a) of the Housing and Urban Develop-
ment Act of 1968 (42 U.S.C. 4129) is amended—
(1) by striking ‘‘(a) There is hereby’’ and insert-
ing the following:
‘‘(a) ESTABLISHMENT.—There is hereby’’; and
(2) by striking subsection (b) and inserting the
following:
‘‘(b) COORDINATION OF MITIGATION ACTIVITIES.—The
Director shall coordinate all mitigation activities, includ-
ing the administration of the program for mitigation assist-
ance under section 1367. These activities shall include the
development and implementation of various mitigation ac-
tivities and techniques, the provision of advice and assist-
ance regarding mitigation to States, communities, and in-
dividuals, including planning assistance under section
1367(d), coordination with other Federal flood and erosion
mitigation efforts, and coordination with State and local
governments and public and private agencies and organiza-
tions for collection and dissemination of information re-
garding erosion.’’.
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SEC. 642. AUTHORIZATION OF NATIONAL FLOOD AND ERO-
SION MITIGATION FUNDS UNDER SECTION
1362.
Chapter III of the National Flood Insurance Act of
1968 (42 U.S.C. 4101 et seq.), as amended by section 625,
is amended by adding at the end the following new section:
‘‘SEC. 1366. NATIONAL FLOOD AND EROSION MITIGATION
PROGRAM.
‘‘(a) EXPENDITURES.—For flood and erosion mitiga-
tion activities authorized under section 1367, the Director
may expend from the National Flood Insurance Fund—
‘‘(1) up to $10,000,000 in the fiscal year ending
September 30, 1994;
‘‘(2) up to $15,000,000 in the fiscal year ending
September 30, 1995;
‘‘(3) up to $20,000,000 in the fiscal year ending
September 30, 1996;
‘‘(4) up to $20,000,000 in each fiscal year there-
after; and
‘‘(5) any amounts recaptured under section
1367(i).
‘‘(b) REPORT.—Not later than 1 year after the date
of enactment of the National Flood Insurance Reform Act
of 1994 and biannually thereafter, the Director shall submit
a report to the Congress describing the status of flood and
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erosion mitigation activities carried out with funds author-
ized under this section.’’.
SEC. 643. STATE AND COMMUNITY MITIGATION ASSISTANCE
PROGRAM.
(a) IN GENERAL.—Chapter III of the National Flood
Insurance Act of 1968 (42 U.S.C. 4101 et seq.), as amended
by sections 625 and 642, is amended by adding at the end
the following new section:
‘‘SEC. 1367. STATE AND COMMUNITY MITIGATION ASSIST-
ANCE.
‘‘(a) AUTHORITY.—The Director shall develop and im-
plement a financial assistance program with amounts made
available under section 1366 to States and communities for
planning and activities designed to reduce the risk of flood
and erosion damage to insured structures and to protect
natural and beneficial floodplain functions.
‘‘(b) MITIGATION PLAN REQUIREMENT.—To be eligible
to receive financial mitigation assistance, a State or com-
munity shall develop, and have approved by the Director,
a flood and erosion risk mitigation plan (hereafter in this
section referred to as a ‘mitigation plan’), that is consistent
with the criteria established by the Director under section
1361. The mitigation plan shall include a comprehensive
strategy for mitigation activities adopted by the State or
community following a public hearing.
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‘‘(c) NOTIFICATION OF APPROVAL.—Not later than 120
days after the submission of a mitigation plan, the Director
shall notify the State or community submitting the plan
of the Director’s approval or disapproval of the plan. If the
Director does not approve a plan, the Director shall notify
the State or community in writing of the reasons for such
disapproval.
‘‘(d) PLANNING ASSISTANCE.—
‘‘(1) IN
GENERAL.—The Director shall make
planning assistance available to States and commu-
nities for developing mitigation plans.
‘‘(2) FUNDING.—From any amounts made avail-
able for use under section 1366 of the National Flood
Insurance Act of 1968 in any fiscal year, the Director
may use not more than $1,500,000 to provide plan-
ning assistance grants to States or communities to de-
velop mitigation plans under this subsection.
‘‘(3) LIMITATIONS.—
‘‘(A) TIMING.—A grant for planning assist-
ance may be awarded to a State or community
once every 5 years and each grant may cover a
period of 1 to 3 years.
‘‘(B) AMOUNT.—A grant for planning as-
sistance may not exceed—
‘‘(i) $150,000, to any State; or
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‘‘(ii) $50,000, to any community.
‘‘(C) 
GEOGRAPHIC.—Not 
more 
than
$300,000 may be awarded to any 1 State and all
communities located in that State for planning
assistance in each fiscal year.
‘‘(e) ELIGIBLE MITIGATION ACTIVITIES.—The Director
shall determine eligibility for assistance under this section
for mitigation activities that shall be technically feasible
and cost-effective. These activities may include—
‘‘(1) 
elevation, 
relocation, 
demolition, 
or
floodproofing of structures;
‘‘(2) the construction, repair, or restoration of
levees, seawalls, and other structures that reduce the
risk of flood damage;
‘‘(3) erosion control measures including beach
nourishment;
‘‘(4) acquisition by States and communities of
property substantially damaged by flood for public
use as the Director determines is consistent with
sound land management and use in such area; and
‘‘(5) the provision of technical assistance by
States to communities and individuals to conduct eli-
gible mitigation activities.
‘‘(f) LIMITATIONS ON MITIGATION ASSISTANCE.—
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‘‘(1) AMOUNT.—The amount of mitigation assist-
ance provided under subsection (e) may not exceed in
any 5-year period—
‘‘(A) $10,000,000, to any State; or
‘‘(B) $3,300,000, to any community.
‘‘(2) GEOGRAPHIC.—Not more than $20,000,000
may be awarded to any 1 State and all communities
located in that State for mitigation assistance in any
5-year period.
‘‘(g) MATCHING REQUIREMENT.—The Director may
provide mitigation assistance to a State or community in
an amount not to exceed 3 times the amount that the State
or community certifies, as the Director shall require, that
the State or community will contribute from other funds
to carry out mitigation planning under subsection (d) and
eligible activities under subsection (e).
‘‘(h) OVERSIGHT OF MITIGATION PLANS.—The Direc-
tor shall conduct oversight of recipients of mitigation assist-
ance to ensure that the mitigation assistance is used in com-
pliance with approved plans.
‘‘(i) RECAPTURE.—If the Director determines that a
State or community that has received mitigation assistance
has not carried out the mitigation activities as set forth
in the mitigation plan, the Director shall recapture any un-
expended amounts and deposit the amounts in the Fund.
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‘‘(j) DEFINITION OF COMMUNITY.—For purposes of
this section, the term ‘community’ means a political sub-
division that has zoning and building code jurisdiction over
a particular area of special flood hazards, and that is par-
ticipating in the National Flood Insurance Program.
‘‘(k) PREFERENCES FOR MITIGATION GRANTS TO COM-
MUNITIES.—
‘‘(1) COST-BENEFIFICIAL PLANS.—In providing
mitigation grants to communities under this section,
the Director shall give preference to communities with
mitigation plans that are the most cost-beneficial to
the Flood Insurance Fund.
‘‘(2) ADDITIONAL CRITERIA.—Subject to para-
graph (1), the Director will also give preference to
communities that—
‘‘(A) have the highest rates of participation
by property owners in the Federal flood insur-
ance program;
‘‘(B) have qualified for credits on premium
rates under section 1315(b); and
‘‘(C) have experienced repetitive losses that
have been most costly to the Fund.’’.
(b) REGULATIONS.—Not later than 6 months after date
of enactment of this title, the Director shall issue regulations
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implementing section 1367 of the National Flood Insurance
Act of 1968, as added by subsection (a).
SEC. 644. REPEAL OF PROGRAM FOR PURCHASE OF CER-
TAIN INSURED PROPERTIES.
(a) REPEAL.—Section 1362 of the National Flood In-
surance Act of 1968 (42 U.S.C. 4103) is repealed.
(b) TRANSITION.—Notwithstanding the repeal under
subsection (a), the Director may continue to purchase prop-
erty under subsections (a) and (b) of section 1362 of the
National Flood Insurance Act of 1968, as such section ex-
isted immediately before the date of enactment of this title,
for a period of 1 year beginning on the date of enactment
of this title.
SEC. 645. TERMINATION OF EROSION THREATENED STRUC-
TURES PROGRAM.
(a) IN GENERAL.—Section 1306 of the National Flood
Insurance Act of 1968 (42 U.S.C. 4013) is amended by
striking subsection (c).
(b) TRANSITION.—The Director may pay amounts
under flood insurance contracts for demolition or relocation
of structures as provided in section 1306(c) of the National
Flood Insurance Act of 1968 (as in effect immediately before
the date of enactment of this title) only during the 1-year
period beginning on the date of enactment of this title.
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SEC. 646. CONGRESSIONAL FINDINGS AND DECLARATION
OF PURPOSE UNDER THE NATIONAL FLOOD
INSURANCE ACT OF 1968.
Section 1302 of the National Flood Insurance Act of
1968 (42 U.S.C. 4001) is amended by striking subsection
(g).
Subtitle E—Flood Insurance Task
Force
SEC. 651. FLOOD INSURANCE INTERAGENCY TASK FORCE.
(a) ESTABLISHMENT.—There is established an inter-
agency task force to be known as the Flood Insurance Task
Force (hereafter in this title referred to as the ‘‘Task
Force’’).
(b) MEMBERSHIP.—
(1) IN GENERAL.—The Task Force shall consist
of 13 members, who shall be the designees of—
(A) the Director;
(B) the Federal Housing Commissioner;
(C) the Secretary of Veterans Affairs;
(D) the Administrator of the Farmers Home
Administration;
(E) the Administrator of the Small Busi-
ness Administration;
(F) each member of the Federal Financial
Institutions Examination Council;
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(G) the chairman of the Board of Directors
of the Federal Home Loan Mortgage Corpora-
tion;
(H) the chairman of the Board of Directors
of the Federal National Mortgage Association;
and
(I) the chairman of the Federal Agricultural
Mortgage Corporation.
(2) QUALIFICATIONS.—Members of the Task
Force shall be designated for membership on the Task
Force by reason of demonstrated knowledge and com-
petence regarding the National Flood Insurance Pro-
gram.
(c) DUTIES.—The Task Force shall—
(1) make recommendations to the head of each
Federal agency and corporation referred to under sub-
section (b)(1) regarding the establishment or adoption
of standardized enforcement procedures among such
agencies and corporations responsible for enforcing
compliance with the requirements under the National
Flood Insurance Program to ensure the fullest possible
compliance with such requirements;
(2) study the extent to which Federal agencies
and the secondary mortgage market can provide as-
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sistance in ensuring compliance with the require-
ments under the National Flood Insurance Program;
(3) study the extent to which existing programs
of Federal agencies and corporations for compliance
with the requirements under the National Flood In-
surance Program can serve as a model for other Fed-
eral agencies responsible for enforcing compliance,
and submit to the Congress a report describing the
study and any conclusions;
(4) study—
(A) the extent to which the flood insurance
premium rate structure could be revised to—
(i) minimize existing premium rate
subsidies;
(ii) reduce or eliminate disaster assist-
ance payments in high-risk erosion areas;
(iii) incorporate premium rate adjust-
ments for erosion hazards; and
(iv) account for catastrophic loss
events; and
(B) how changes in the premium rate struc-
ture could potentially impact other Federal dis-
aster assistance programs;
(5) propose strategies to establish an actuarial-
based premium structure to account for all insurable
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risks identified under the National Flood Insurance
Act of 1968, as amended by this title; and
(6) develop guidelines regarding enforcement and
compliance procedures, based on the studies and find-
ings of the Task Force and publishing the guidelines
in a usable format.
(d) REPORTS.—Not later than 2 years after the date
of enactment of this title, the Task Force shall transmit to
the Congress a report describing its studies and any conclu-
sions.
(e) COMPENSATION.—Members of the Task Force shall
receive no additional compensation by reason of their serv-
ice on the Task Force.
(f) CHAIRPERSON.—The Director shall select 1 member
to serve as the chairperson of the Task Force (hereafter in
this section referred to as the ‘‘Chairperson’’).
(g) MEETINGS AND ACTION.—The Task Force shall
meet at the call of the Chairperson or a majority of the
members of the Task Force and may take action by a vote
of the majority of the members. The Federal Insurance Ad-
ministrator shall coordinate and call the initial meeting of
the Task Force.
(h) OFFICERS.—The Chairperson may appoint officers
to carry out the duties of the Task Force under subsection
(c).
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(i) STAFF OF FEDERAL AGENCIES.—Upon the request
of the Chairperson, the head of any of the Federal agencies
and corporations referred to in subsection (b)(1) may detail,
on a nonreimbursable basis, any of the personnel of the
agency to the Task Force to assist the Task Force in carry-
ing out its duties under this title.
(j) POWERS.—In carrying out this section, the Task
Force may hold hearings, sit and act at times and places,
take testimony, receive evidence and assistance, provide in-
formation, and conduct research as the Task Force considers
appropriate.
(k) TERMINATION.—The Task Force shall terminate 2
years after the date on which all members of the Task Force
have been designated under subsection (b)(1).
Subtitle F—Miscellaneous
Provisions
SEC. 
661. 
MAXIMUM 
FLOOD 
INSURANCE 
COVERAGE
AMOUNTS.
(a) IN GENERAL.—Section 1306(b) of the National
Flood Insurance Act of 1968 (42 U.S.C. 4013(b)) is amend-
ed—
(1) in paragraph (1)(A)—
(A) by inserting ‘‘and’’ at the end of clause
(i); and
(B) by striking clause (iii);
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(2) by striking subparagraph (B) of paragraph
(1) and inserting the following new subparagraph:
‘‘(B) in the case of any nonresidential prop-
erty, including churches—
‘‘(i) $100,000 aggregate liability for
each structure; and
‘‘(ii) $100,000 aggregate liability for
any contents related to each structure;’’;
(3) by striking subparagraph (C) of paragraph
(1);
(4) in paragraph (2), by striking ‘‘so as to en-
able’’ and all that follows through the end of the para-
graph and inserting ‘‘up to an amount, including the
limits specified in clause (i) of paragraph (1)(A), of
$250,000 multiplied by the number of dwelling units
in the building;’’;
(5) in paragraph (3), by striking ‘‘so as to en-
able’’ and all that follows through the end of the para-
graph and inserting ‘‘up to an amount of $90,000 for
any single-family dwelling and $240,000 for any resi-
dential structure containing more than one dwelling
unit;’’; and
(6) by striking paragraph (4) and inserting the
following new paragraph:
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‘‘(4) in the case of any nonresidential property,
including churches, additional flood insurance in ex-
cess of the limits specified in clauses (i) and (ii) of
paragraph (1)(B) shall be made available to every in-
sured upon renewal and every applicant for insur-
ance up to an amount of $2,400,000 for each struc-
ture and $2,400,000 for any contents related to each
structure; and’’.
(b) ACTUARIAL RISK PREMIUMS ON REPETITIVE LOSS
STRUCTURES.—Section 1306(b) of the National Flood In-
surance Act of 1968 (42 U.S.C. 4013(b)) is amended—
(1) in paragraph (5), by striking ‘‘and’’ at the
end; and
(2) by striking paragraph (6) and inserting the
following new paragraph:
‘‘(6) upon determining that a property is a re-
petitive loss structure, and after making a payment
to the insured under section 1304(e), the Director
shall charge the applicable risk premium rate for
flood insurance based on consideration of the risk in-
volved and accepted actuarial principles under sec-
tion 1307(a)(1), except that the Director may not in-
crease the premium rate above the level authorized in
paragraph (7); and’’.