I
105TH CONGRESS
1ST SESSION
H. R. 1900
To provide for adequate consumer protection in the provision of financial
services, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 17, 1997
Mr. LAFALCE (for himself, Mr. GONZALEZ, Mr. VENTO, Mr. SCHUMER, Mr.
FRANK of Massachusetts, Ms. WATERS, Mrs. MALONEY of New York,
Mr. GUTIERREZ, Ms. ROYBAL-ALLARD, Ms. VELA´ZQUEZ, Mr. HINCHEY,
Mr. ACKERMAN, Mr. JACKSON of Illinois, Ms. KILPATRICK, Ms. CARSON,
Mr. TORRES, and Mr. SANDERS) introduced the following bill; which was
referred to the Committee on Banking and Financial Services
A BILL
To provide for adequate consumer protection in the provision
of financial services, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Depository Institution
Consumer Protection Act of 1997’’.
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SEC. 2. CONSUMER PROTECTION REGULATIONS REQUIRED.
(a) IN GENERAL.—The Federal Deposit Insurance
Act (12 U.S.C. 1811 et seq.) is amended by adding at
the end the following new section:
‘‘SEC. 45. CONSUMER PROTECTION REGULATIONS.
‘‘(a) REGULATIONS REQUIRED.—
‘‘(1) IN
GENERAL.—Each Federal banking
agency shall prescribe and publish in final form not
later than six months after the date of enactment of
this section of consumer protection regulations
which—
‘‘(A) apply to sales, solicitations, advertis-
ing or offers of any nondeposit product by any
retail depository institution, any affiliate or
subsidiary of a retail depository institution, or
any person who is engaged in such activities at
an office of the institution or on behalf of the
institution; and
‘‘(B) meet the requirements of this section
and provide such additional protections for con-
sumers to whom such sales, solicitations, adver-
tising or offers are directed as the agency deter-
mines to be appropriate.
‘‘(2) CONSULTATION
AND
JOINT
REGULA-
TIONS.—The Federal banking agencies shall consult
with each other and the SEC regarding the regula-
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tions required to be prescribed pursuant to para-
graph (1) and to the greatest extent practicable shall
prescribe such regulations jointly.
‘‘(3) NONDEPOSIT
PRODUCT
DEFINED.—For
purposes of this section, the term ‘nondeposit prod-
uct’—
‘‘(A) means any investment and insurance
product which is not an insured deposit;
‘‘(B) includes shares issued by a registered
investment company; and
‘‘(C) does not include—
‘‘(i) any loan or any other extension
of credit by an insured depository institu-
tion;
‘‘(ii) any letter of credit; or
‘‘(iii) any other instrument or insur-
ance or investment product specifically ex-
cluded from the definition of such term by
regulations prescribed jointly by the Fed-
eral banking agencies, to the extent nec-
essary to carry out the purpose of this Act.
‘‘(b) SALES PRACTICES.—The regulations prescribed
pursuant to subsection (a) shall include the following pro-
visions relating to sales practices in connection with the
sale of nondeposit products:
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‘‘(1) ANTICOERCION RULES.—
‘‘(A) IN
GENERAL.—Anticoercion rules
prohibiting depository institutions from making
any extension of credit conditional upon:
‘‘(i) the purchase of a nondeposit
product from the same retail depository in-
stitutions, or an affiliate, subsidiary or
agent of that retail depository institution;
or
‘‘(ii) an agreement by the consumer
not to obtain, or a prohibition on the
consumer from obtaining, a nondeposit
product from an unaffiliated entity.
‘‘(B) 
PRODUCT
MARKETING.—Specific
rules prohibiting depository institutions, or
their affiliates, subsidiaries or agents from mar-
keting nondeposit products to consumers while
applications for extensions of credit from the
depository institution are pending, unless such
marketing is done by mail, separate and dis-
tinct from any processing, discussion or provi-
sion of information regarding the application
for an extension of credit.
‘‘(2) SUITABILITY OF PRODUCT.—
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‘‘(A) IN GENERAL.—Standards to ensure
that a nondeposit product sold to a consumer
is suitable and appropriate for the consumer
based on financial information disclosed by the
consumer.
‘‘(B) RULES OF FAIR PRACTICE.—In pre-
scribing the standards under subparagraph (A)
with respect to the sale of investments, the
Federal banking agencies shall take into ac-
count the Rules of Fair Practice of the Na-
tional Association of Securities Dealers.
‘‘(c) DISCLOSURES AND ADVERTISING.—The regula-
tions prescribed pursuant to subsection (a) shall include
the following provisions relating to disclosures and adver-
tising in connection with the sale of nondeposit products:
‘‘(1)(A) DISCLOSURES.—Requirements that the
following disclosures be made orally and in writing
before the completion of the sale and, additionally,
in the case of subparagraph (iv), at the time of ap-
plication for an extension of credit:
‘‘(i) UNINSURED STATUS.—The product is
not insured by the Federal Deposit Insurance
Corporation or the United States Government.
‘‘(ii) INSURANCE PRODUCT.—In the case of
an insurance policy which is sold by the retail
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depository institution, affiliate, subsidiary or
other person as agent, the product is not guar-
anteed by the retail depository institution.
‘‘(iii) INVESTMENT RISK.—In the case of
an investment product, there is an investment
risk associated with the product, including pos-
sible loss of principal.
‘‘(iv) COERCION.—The approval, by the re-
tail depository institution, of an extension of
credit may not be conditioned on:
‘‘(I) the purchase of a nondeposit
product which is sold by the retail deposi-
tory institution, affiliate, or other person
as agent; or
‘‘(II) an agreement by the consumer
not to obtain, or a prohibition on the
consumer from obtaining, a nondeposit
product from an unaffiliated entity.
‘‘(B) ADJUSTMENTS FOR ALTERNATIVE METH-
ODS
OF
PURCHASE.—In prescribing the require-
ments under subparagraph (A), necessary adjust-
ments shall be made for purchase in person, by tele-
phone or by electronic media to provide for the most
appropriate and complete form of disclosure.
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‘‘(C) CONSUMER ACKNOWLEDGEMENT.—A re-
quirement that a retail depository institution shall
require any person selling a nondeposit product at
any office of, or on behalf of, the institution to ob-
tain, at the time of the initial purchase by the
consumer of such product, a separate statement,
signed and dated by the consumer, which contains
the declaration that the purchaser has received the
disclosure required under this subsection with re-
spect to such product. Notwithstanding any rule of
evidence, written acknowledgement of receipt of any
disclosures by a person to whom such information is
required to be given does no more than create a re-
buttable presumption of delivery thereof.
‘‘(2) 
PROHIBITION
ON
MISREPRESENTA-
TIONS.—A prohibition on any practice, or any adver-
tising, at any office of, or on behalf of, the retail de-
pository institution which could mislead any person
or otherwise cause a reasonable person to reach an
erroneous belief with respect to—
‘‘(i) the uninsured nature of any non-
deposit product sold, or offered for sale by the
institution or any affiliate or agent of the insti-
tution; or