SEC. 2. TABLE OF CONTENTS.
The table of contents for this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
TITLE I—FINANCIAL SERVICES MODERNIZATION
Subtitle A—Affiliations
Sec. 101. Anti-affiliation provisions of ‘‘Glass-Steagall Act’’ repealed.
Sec. 102. Financial activities.
Sec. 103. Limited nonfinancial activities and affiliations permitted.
Sec. 104. Operation of State law.
Sec. 105. Mutual bank holding companies authorized.
Sec. 106. Amendments relating to limited purpose banks.
Subtitle B—Streamlining Supervision of Bank Holding Companies
Sec. 111. Streamlining bank holding company supervision.
Sec. 112. Authority of State insurance regulator and securities and exchange
commission.
Sec. 113. Limitation on rulemaking, prudential, supervisory, and enforcement
authority of the Board.
Sec. 114. Examination of investment companies.
Sec. 115. Equivalent regulation and supervision.
Subtitle C—Subsidiaries of National Banks
Sec. 121. Subsidiaries of national banks authorized to engage in financial ac-
tivities.
Sec. 122. Safety and soundness firewalls between banks and their financial sub-
sidiaries.
Sec. 123. Functional regulation.
Subtitle D—Review of Bank Mergers and Acquisitions
Sec. 131. Amendment to the Bank Holding Company Act of 1956 to modify
notification and post-approval waiting period for section 3
transactions.
Sec. 132. Interagency data sharing.
Sec. 133. Clarification of status of subsidiaries and affiliates.
Sec. 134. Annual GAO report.
Subtitle E—Direct Activities of Banks
Sec. 141. Authority of national banks to underwrite certain municipal bonds.
TITLE II—FUNCTIONAL REGULATION
Subtitle A—Brokers and Dealers
Sec. 201. Definition of broker.
Sec. 202. Definition of dealer.
Sec. 203. Registration for sales of private securities offerings.
Sec. 204. Information sharing.
Sec. 205. Definition and treatment of banking products.
Sec. 206. Derivative instrument and qualified investor defined.
Sec. 207. Government securities defined.
Sec. 208. Effective date.
Sec. 209. Rule of construction.
Subtitle B—Bank Investment Company Activities
Sec. 211. Custody of investment company assets by affiliated bank.
Sec. 212. Lending to an affiliated investment company.
Sec. 213. Independent directors.
Sec. 214. Additional SEC disclosure authority.
Sec. 215. Definition of broker under the Investment Company Act of 1940.
Sec. 216. Definition of dealer under the Investment Company Act of 1940.
Sec. 217. Removal of the exclusion from the definition of investment adviser for
banks that advise investment companies.
Sec. 218. Definition of broker under the Investment Advisers Act of 1940.
Sec. 219. Definition of dealer under the Investment Advisers Act of 1940.
Sec. 220. Interagency consultation.
Sec. 221. Treatment of bank common trust funds.
Sec. 222. Investment advisers prohibited from having controlling interest in
registered investment company.
Sec. 223. Conforming change in definition.
Sec. 224. Conforming amendment.
Sec. 225. Effective date.
Subtitle C—Securities and Exchange Commission Supervision of Investment
Bank Holding Companies
Sec. 231. Supervision of investment bank holding companies by the Securities
and Exchange Commission.
Subtitle D—Studies
Sec. 241. Study of methods to inform investors and consumers of uninsured
products.
Sec. 242. Study of limitation on fees associated with acquiring financial prod-
ucts.
TITLE III—INSURANCE
Sec. 301. State regulation of the business of insurance.
Sec. 302. Mandatory insurance licensing requirements.
Sec. 303. Functional regulation of insurance.
Sec. 304. Insurance underwriting in national banks.
Sec. 305. Title insurance activities of national banks and their affiliates.
Sec. 306. Expedited dispute resolution for Federal regulators.
Sec. 307. Certain State affiliation laws preempted for insurance companies and
affiliates.
TITLE IV—CUSTOMER SERVICE AND EDUCATION
Sec. 401. Customer service and education regulations.
TITLE I—FINANCIAL SERVICES
MODERNIZATION
Subtitle A—Affiliations
SEC. 
101. 
ANTI-AFFILIATION 
PROVISIONS 
OF 
‘‘GLASS-
STEAGALL ACT’’ REPEALED.
(a) SECTION 20 REPEALED.—Section 20 of the
Banking Act of 1933 (12 U.S.C. 377) is repealed.
(b) SECTION 32 REPEALED.—Section 32 of the
Banking Act of 1933 (12 U.S.C. 78) is repealed.
SEC. 102. FINANCIAL ACTIVITIES.
(a) ENGAGING
IN ACTIVITIES FINANCIAL
IN NA-
TURE.—Section 4 of the Bank Holding Company Act of
1956 (12 U.S.C. 1843) is amended by adding at the end
the following new subsections:
‘‘(k) ENGAGING IN ACTIVITIES FINANCIAL IN NA-
TURE.—
‘‘(1) IN GENERAL.—Notwithstanding subsection
(a) and subject to subsection (l) and (m), a bank
holding company may engage in any activity, and ac-
quire and retain the shares of any company engaged
in any activity, which the Board and the Secretary
of the Treasury have jointly determined (by regula-
tion or order) to be financial in nature or incidental
to such financial activities.
‘‘(2) FACTORS TO BE CONSIDERED.—In deter-
mining whether an activity is financial in nature or
incidental to financial activities, the Board and the
Secretary shall take into account—
‘‘(A) the purposes of this Act and the Fi-
nancial Services Modernization Act;
‘‘(B) changes or reasonably expected
changes in the marketplace in which bank hold-
ing companies compete;
‘‘(C) changes or reasonably expected
changes in the technology for delivering finan-
cial services; and
‘‘(D) whether such activity is necessary or
appropriate to allow bank holding companies
and the affiliates of a bank holding company
to—
‘‘(i) compete effectively with any com-
pany seeking to provide financial services
in the United States;
‘‘(ii) use any available or emerging
technological means, including any applica-
tion necessary to protect the security or ef-
ficacy of systems for the transmission of
data or financial transactions, in providing
financial services; and
‘‘(iii) offer customers any available or
emerging technological means for using fi-
nancial services.
‘‘(3) ACTIVITIES THAT ARE FINANCIAL IN NA-
TURE.—The following activities shall be considered
to be financial in nature:
‘‘(A) Lending, exchanging, transferring, in-
vesting for others, or safeguarding money or se-
curities.
‘‘(B) Insuring, guaranteeing, or indemnify-
ing against loss, harm, damage, illness, disabil-
ity, or death, or providing and issuing annu-
ities, and acting as principal, agent, or broker
for purposes of the foregoing, in any State, in
full compliance with the laws and regulations of
such State that apply to each type of insurance
license or authorization in such State, except
that—
‘‘(i) in no event shall the bank holding
company or any affiliate of the bank hold-
ing company be subject to any State law or
regulation that restricts a bank from hav-
ing an affiliate, agent, or employee in such
State licensed to provide insurance as prin-
cipal, agent, or broker; and
‘‘(ii) the Board shall prescribe regula-
tions concerning insurance affiliations that
provide equivalent treatment for all stock
and mutual insurance companies that con-
trol or are otherwise affiliated with a bank
and fully accommodate and are consistent
with State law.
‘‘(C) Providing financial, investment, or
economic advisory services, including advising
an investment company (as defined in section 3
of the Investment Company Act of 1940).
‘‘(D) Issuing or selling instruments rep-
resenting interests in pools of assets permissible
for a bank to hold directly.
‘‘(E) Underwriting, dealing in, or making
a market in securities.
‘‘(F) Engaging in any activity that the
Board has determined, by order or regulation
that is in effect on the date of enactment of the
Financial Services Modernization Act, to be so
closely related to banking or managing or con-
trolling banks as to be a proper incident thereto
(subject to the same terms and conditions con-
tained in such order or regulation, unless modi-
fied by the Board).
‘‘(G) Engaging, in the United States, in
any activity that—
‘‘(i) a bank holding company may en-
gage in outside the United States; and
‘‘(ii) the Board has determined, under
regulations issued pursuant to subsection
(c)(13) (as in effect on the day before the
date of enactment of the Financial Services
Modernization Act) to be usual in connec-
tion with the transaction of banking or
other financial operations abroad.
‘‘(H) Directly or indirectly acquiring or
controlling, whether as principal, on behalf of 1
or more entities (including entities, other than
a depository institution or subsidiary of a de-
pository institution, that the bank holding com-
pany controls) or otherwise, shares, assets, or
ownership interests (including without limita-
tion debt or equity securities, partnership inter-
ests, trust certificates or other instruments rep-
resenting ownership) of a company or other en-
tity, whether or not constituting control of such
company or entity, engaged in any activity not
authorized pursuant to this section if—
‘‘(i) the shares, assets, or ownership
interests are not acquired or held by a de-
pository institution;
‘‘(ii) such shares, assets, or ownership
interests are acquired and held as part of
a bona fide underwriting or merchant
banking activity, including investment ac-
tivities engaged in for the purpose of ap-
preciation and ultimate resale or disposi-
tion of the investment;
‘‘(iii) such shares, assets, or owner-
ship interests, are held for such a period of
time as will permit the sale or disposition
thereof on a reasonable basis consistent
with the nature of the activities described
in clause (ii); and
‘‘(iv) during the period such shares,
assets, or ownership interests are held, the
bank holding company does not actively
participate, directly or indirectly, in the
day to day management or operation of
such company or entity, except insofar as
necessary to achieve the objectives of
clause (ii).
‘‘(I) Directly or indirectly acquiring or con-
trolling, whether as principal, on behalf of 1 or
more entities (including any subsidiary of the
holding company which is not a depository in-
stitution or subsidiary of a depository institu-
tion) or otherwise, shares, assets, or ownership
interests (including without limitation debt or
equity securities, partnership interests, trust
certificates or other instruments representing
ownership) of a company or other entity, wheth-
er or not constituting control of such company
or entity, engaged in any activity not authorized
pursuant to this section if—
‘‘(i) the shares, assets, or ownership
interests are not acquired or held by a de-
pository institution or a subsidiary of a de-
pository institution;
‘‘(ii) such shares, assets, or ownership
interests are acquired and held by an in-
surance company that is predominantly en-
gaged in underwriting life, accident and
health, or property and casualty insurance
(other than credit-related insurance);
‘‘(iii) such shares, assets, or owner-
ship interests represent an investment
made in the ordinary course of business of
such insurance company in accordance
with relevant State law governing such in-
vestments; and
‘‘(iv) during the period such shares,
assets, or ownership interests are held, the
bank holding company does not directly or
indirectly participate in the day-to-day
management or operation of the company
or entity except insofar as necessary to
achieve the objectives of clause (iii).
‘‘(4) ACTIONS REQUIRED.—
‘‘(A) REGULATION OF MERCHANT BANK-
ING.—The Board may prescribe regulations and
issue interpretations to implement paragraph
3(H);
‘‘(B) REGULATION
OF
OTHER
ACTIVI-
TIES.—The Board and the Secretary—
‘‘(i) may jointly prescribe regulations and
issue interpretations under paragraph (3), other
than subparagraph (H); and
‘‘(ii) shall jointly define by regulation the
following activities, to the extent they are con-
sistent with the purposes of this Act, as finan-
cial in nature or incidental to activities that are
financial in nature:
‘‘(I) Lending, exchanging, trans-
ferring, investing for others, or safe-
guarding financial assets other than
money or securities.
‘‘(II) Providing any device or
other instrumentality for transferring
money or other financial assets;
‘‘(III) Arranging, effecting, or fa-
cilitating financial transactions for the
account of third parties.
‘‘(5) NOTIFICATION.—
‘‘(A) COMMENCEMENT
OF
NEW
ACTIV-
ITY.—A bank holding company that commences
any activity pursuant to this subsection shall
provide written notice to the Board describing
the activity commenced or conducted by the
company acquired no later than 30 calendar
days after commencing the activity or con-
summating the acquisition.
‘‘(B) NOTICE
REQUIRED
FOR
ACQUISI-
TIONS.—
‘‘(i) IN GENERAL.—At least 12 busi-
ness days before acquiring shares or assets
of any going concern pursuant to para-
graphs (3), (4), or (5), a bank holding
company shall provide written notice of the
proposal to the Board, unless the Board
determines that no notice or a shorter no-
tice period is appropriate.
‘‘(ii) GROUNDS
FOR
DISAPPROVAL
THE BOARD SHALL NOT APPROVE—
‘‘(I) any acquisition which would
result in a monopoly, or which would
be in furtherance of any combination
or conspiracy to monopolize or at-
tempt to monopolize the business of
financial intermediation in any part of
the United States, or
‘‘(II) any other proposed acquisi-
tion whose effect in any section of the
country may be substantially to lessen
competition, or to tend to create a
monopoly, or which in any other man-
ner would be in restraint of trade, un-
less it finds that the anticompetitive
effects of the proposed transaction are
clearly outweighed in the public inter-
est by the probable effect of the trans-
action in meeting the convenience and
needs of the community to be served.
‘‘(iii) ADDITIONAL INFORMATION AND
EXTENSION OF PERIOD.—Before the expi-
ration of the 12-day period referred to in
clause (i), the Board may require the sub-
mission of additional information and may
extend the 12-day period for no more than
60 calendar days to consider such addi-
tional information.
‘‘(iv) DISAPPROVAL BEFORE END OF
PERIOD.—If, at the end of the 12-day pe-
riod referred to in clause (i) or the end of
any extension of such period pursuant to
clause (iii), as the case may be, the Board
has not issued an order disapproving the
notice, the notice shall be deemed ap-
proved.’’
‘‘(C) APPROVAL NOT REQUIRED FOR CER-
TAIN FINANCIAL ACTIVITIES.—Except as pro-
vided in subsection (j) with regard to the acqui-
sition of a savings association, a bank holding
company may commence any activity pursuant
to paragraph (3) or any regulation prescribed
under paragraph (4), without prior approval of
the Board.
‘‘(l) CONDITIONS FOR ENGAGING IN BROAD RANGE
OF FINANCIAL ACTIVITIES.—Notwithstanding subsection
(k), a bank holding company may not engage in any activ-
ity, or directly or indirectly acquire or retain shares of any
company engaged in any activity, under subsection (k),
other than activities permissible for a bank holding com-
pany under subsection (c)(8), unless the bank holding
company meets the following requirements:
‘‘(1) All of the subsidiary depository institutions
of the bank holding company are well capitalized, as
determined pursuant to section 38 of the Federal
Deposit Insurance Act.
‘‘(2) All of the subsidiary depository institutions
of the bank holding company are well managed, as
determined by the appropriate Federal banking
agency.
‘‘(3) All of the subsidiary depository institutions
of the bank holding company have achieved a rating
of ‘satisfactory record of meeting community credit
needs’, or better, at the most recent examination of
each such institution under the Community Rein-
vestment Act of 1977.
‘‘(4) The company has filed with the Board—
‘‘(A) a declaration that the company elects
to engage in activities or acquire and retain
shares of a company which were not permissible
for a bank holding company to engage in or ac-
quire before the enactment of the Financial
Services Modernization Act; and
‘‘(B) a certification that the company
meets the requirements of paragraphs (1), (2),
and (3).
‘‘(m) PROVISIONS APPLICABLE TO BANK HOLDING
COMPANIES THAT FAIL TO MEET CERTAIN REQUIRE-
MENTS.—
‘‘(1) IN GENERAL.—If—
‘‘(A) a bank holding company is engaged,
directly or indirectly, in any activity under sub-
section (k), other than activities permissible for
a bank holding company under subsection
(c)(8); and
‘‘(B) such company is not in compliance
with the requirements of subsection (l),
the Board shall give notice to the company to that
effect, describing the conditions giving rise to the
notice.
‘‘(2) AGREEMENT TO CORRECT CONDITIONS RE-
QUIRED.—Within 45 days of receipt by a bank hold-
ing company of a notice given under paragraph (1)
(or such additional period as the Board may per-
mit), the company shall execute an agreement with
the Board to comply with the requirements applica-
ble to a bank holding company under subsection (l).
‘‘(3) APPROPRIATE FEDERAL BANKING AGENCY
MAY IMPOSE LIMITATIONS.—Until the conditions de-
scribed in a notice to a bank holding company under
paragraph (1) are corrected, the appropriate Federal
banking agency may impose such limitations on the
conduct or activities of the company or any affiliate
of the company as the agency determines to be ap-
propriate under the circumstances.
‘‘(4) FAILURE TO CORRECT.—If the conditions
described in a notice to a bank holding company
under paragraph (1) are not corrected within 180
days after receipt by the company of notice under
paragraph (1), the Board may require such com-
pany, under such terms and conditions as may be
imposed by the Board and subject to such extension
of time as may be granted in the Board’s discretion,
either—
‘‘(A) to divest control of any subsidiary in-
sured depository institutions; or
‘‘(B) to cease to engage in any activity
conducted by such company or its subsidiaries
(other than a depository institution or a sub-
sidiary of a depository institution) that is not
an activity that is permissible for a bank hold-
ing company under subsection (c)(8).’’.
(b) FINANCIAL ACTIVITIES OF BANK HOLDING COM-
PANIES INELIGIBLE FOR SUBSECTION (k) POWERS.—
(1) IN GENERAL.—Section 4(c)(8) of the Bank
Holding 
Company 
Act 
of 
1956 
(12 
U.S.C.
1843(c)(8)) is amended to read as follows:
‘‘(8) shares of any company the activities of
which had been determined by the Board by regula-
tion under this paragraph as of the day before the
date of the enactment of the Financial Services
Modernization Act, to be so closely related to bank-
ing as to be a proper incident thereto (subject to
such terms and conditions contained in such regula-
tion, unless modified by the Board);’’.
(2) CONFORMING CHANGES TO OTHER STAT-
UTES.—
(A) AMENDMENT TO THE BANK HOLDING
COMPANY ACT AMENDMENTS OF 1970.—Section
105 of the Bank Holding Company Act Amend-
ments of 1970 (12 U.S.C. 1850) is amended by
striking ‘‘, to engage directly or indirectly in a
nonbanking activity pursuant to section 4 of
such Act,’’.
(B) AMENDMENTS TO THE HOMEOWNERS
LOAN ACT.—
(i) Section 10(c)(2)(F)(i) of the Home
Owners Loan Act is amended—
(I) by inserting ‘‘is permitted for
bank holding companies under sub-
sections (c) or (k) of section 4 of the
Bank Holding company Act of 1956,
or which’’ after ‘‘(i) which’’; and
(II) by striking ‘‘section 4(c)’’
and inserting ‘‘such subsections’’.
(ii) Section 10(o)(5) of the Home
Owners Loan Act is amended by striking
‘‘, except subparagraph (B)’’.
SEC. 103. LIMITED NONFINANCIAL ACTIVITIES AND AFFILI-
ATIONS PERMITTED.
Section 4 of the Bank Holding Company Act of 1956
(12 U.S.C. 1843) is amended by inserting after subsection
(m) (as added by section 3(a) of this Act) the following
new subsection:
‘‘(n) NONFINANCIAL ACTIVITIES.—
‘‘(1) IN GENERAL.—Notwithstanding subsection
(a), a bank holding company may engage in activi-
ties which are not (or have not been determined to
be) financial in nature or incidental to activities
which are financial in nature, or acquire and retain
ownership and control of the shares of a company
engaged in such activities, if—
‘‘(A) the aggregate annual gross revenues
derived from all such activities and all such
companies does not exceed 15 percent of the
consolidated annual gross revenues of the bank
holding company;
‘‘(B) the consolidated total assets of any
company the shares of which are acquired by
the bank holding company pursuant to this
paragraph are less than $750,000,000 at the
time the shares are acquired by the holding
company; and
‘‘(C) the holding company provides notice
to the Board within 30 days of commencing the
activity or acquiring the ownership or control.
‘‘(2) FOREIGN BANKS.—In lieu of the limitation
contained in paragraph (1)(A) in the case of a for-
eign bank or a company that owns or controls a for-
eign bank which engages in any activity or acquires
or retains ownership or control of shares of any
company pursuant to paragraph (1), the aggregate
annual gross revenues derived from all such activi-
ties and all such companies in the United States
shall not exceed 15 percent of the consolidated an-
nual gross revenues of the foreign bank or company
in the United States derived from any branch, agen-
cy, commercial lending company, or depository insti-
tution controlled by the foreign bank or company
and any subsidiary engaged in the United States in
activities permissible under this section.
‘‘(3) NONAPPLICABILITY
OF
OTHER
EXEMP-
TION.—Any foreign bank or company that owns or
controls a foreign bank which engages in any activ-
ity or acquires or retains ownership or control of
shares of any company pursuant to this subsection
shall not be eligible for any exception described in
section 2(h).
‘‘(4) TRANSACTIONS WITH NONFINANCIAL AF-
FILIATES.—An insured depository institution con-
trolled by a bank holding company may not engage
in a covered transaction (as defined by section
23A(b)(7) of the Federal Reserve Act) with any af-
filiate controlled by the company pursuant to this
subsection or subparagraph (H) or (I) of subsection
(k)(3).’’.
SEC. 104. OPERATION OF STATE LAW.
(a) AFFILIATIONS.—
(1) IN GENERAL.—Except as provided in para-
graph (2), no State may, by statute, regulation,
order, interpretation, or other action, prevent or re-
strict an insured depository institution, or a subsidi-
ary or affiliate thereof, from being affiliated directly
or indirectly or associated with any person or entity,
as authorized or permitted by this Act or any other
provision of Federal law.
(2) INSURANCE.—With respect to affiliations
between insured depository institutions, or any sub-
sidiary or affiliate thereof, and persons or entities
engaged in the business of insurance, paragraph (1)
does not prohibit any State from—
(A) requiring any person or entity that
proposes to acquire control of an entity that is
engaged in the business of insurance and domi-
ciled in that State (hereafter in this subpara-
graph referred to as the ‘‘insurer’’) to furnish
to the insurance regulatory authority of that
State, not later than 60 days before the effec-
tive date of the proposed acquisition—
(i) the name and address of each per-
son by whom, or on whose behalf, the af-
filiation referred to in this subparagraph is
to be effected (hereafter in this subpara-
graph referred to as the ‘‘acquiring
party’’);
(ii) if the acquiring party is an indi-
vidual, his or her principal occupation and
all offices and positions held during the 5
years preceding the date of notification,
and any conviction of crimes other than
minor traffic violations during the 10 years
preceding the date of notification;
(iii) if the acquiring party is not an
individual—
(I) a report of the nature of its
business operations during the 5 years
preceding the date of notification, or
for such shorter period as such person
and any predecessors thereof shall
have been in existence;
(II) an informative description of
the business intended to be done by
the acquiring party and any subsidi-
ary thereof; and
(III) a list of all individuals who
are, or who have been selected to be-
come, directors or executive officers of
the acquiring party or who perform,
or will perform, functions appropriate
to such positions, including, for each
such individual, the information re-
quired by clause (ii);
(iv) the source, nature, and amount of
the consideration used, or to be used, in ef-
fecting the merger or other acquisition of
control, a description of any transaction
wherein funds were, or are to be, obtained
for any such purpose, and the identity of
persons furnishing such consideration, ex-
cept that, if a source of such consideration
is a loan made in the lender’s ordinary
course of business, the identity of the lend-
er shall remain confidential if the person
filing such statement so requests;
(v) fully audited financial information
as to the earnings and financial condition
of each acquiring party for the 5 fiscal
years preceding the date of notification of
each such acquiring party, or for such less-
er period as such acquiring party and any
predecessors thereof shall have been in ex-
istence, and similar unaudited information
as of a date not earlier than 90 days be-
fore the date of notification, except that, in
the case of an acquiring party that is an
insurer actively engaged in the business of
insurance, the financial statements of such
insurer need not be audited, but such audit
may be required if the need therefor is de-
termined by the insurance regulatory au-
thority of the State;
(vi) any plans or proposals that each
acquiring party may have to liquidate such
insurer, to sell its assets, or to merge or
consolidate it with any person or to make
any other material change in its business
or corporate structure or management;
(vii) the number of shares of any se-
curity of the insurer that each acquiring
party proposes to acquire, the terms of any
offer, request, invitation, agreement, or ac-
quisition, and a statement as to the meth-
od by which the fairness of the proposal
was arrived at;
(viii) the amount of each class of any
security of the insurer that is beneficially
owned or concerning which there is a right
to acquire beneficial ownership by each ac-
quiring party;
(ix) a full description of any contracts,
arrangements, or understandings with re-
spect to any security of the insurer in
which any acquiring party is involved, in-
cluding transfer of any of the securities,
joint ventures, loan or option arrange-
ments, puts or calls, guarantees of loans,
guarantees against loss or guarantees of
profits, division of losses or profits, or the
giving or withholding of proxies, and iden-
tification of the persons with whom such
contracts, arrangements, or understand-
ings have been entered into;
(x) a description of the purchase of
any security of the insurer during the 12-
month period preceding the date of notifi-
cation by any acquiring party, including
the dates of purchase, names of the pur-
chasers, and consideration paid, or agreed
to be paid, therefor;
(xi) a description of any recommenda-
tions to purchase any security of the in-
surer made during the 12-month period
preceding the date of notification by any
acquiring party or by any person based
upon interviews or at the suggestion of
such acquiring party;
(xii) copies of all tender offers for, re-
quests or invitations for tenders of, ex-
change offers for and agreements to ac-
quire or exchange any securities of the in-
surer and, if distributed, of additional so-
liciting material relating thereto; and
(xiii) the terms of any agreement,
contract, or understanding made with any
broker-dealer as to solicitation of securities
of the insurer for tender and the amount
of any fees, commissions, or other com-
pensation to be paid to broker-dealers with
regard thereto;
(B) requiring an entity that is acquiring
control of an entity that is engaged in the busi-
ness of insurance and domiciled in that State to
maintain or restore the capital requirements of
that insurance entity to the level required under
the capital regulations of general applicability
in that State to avoid the requirement of pre-
paring and filing with the insurance regulatory
authority of that State a plan to increase the
capital of the entity, except that any determina-
tion by the State insurance regulatory authority
with respect to such requirement shall be made
not later than 60 days after the date of notifi-
cation under subparagraph (A);
(C) taking actions with respect to the re-
ceivership or conservatorship of any insurance
company; or
(D) restricting a change in the ownership
of stock in an insurance company, or a com-
pany formed for the purpose of controlling such
insurance company, for a period of not more
than 3 years beginning on the date of the con-
version of such company from mutual to stock
form.
(3) PRESERVATION OF STATE ANTITRUST AND
GENERAL CORPORATE LAWS.—
(A) IN GENERAL.—Nothing in paragraph
(1) shall be construed as affecting State laws,
regulations, orders, interpretations, or other ac-
tions of general applicability relating to the gov-
ernance of corporations, partnerships, limited li-
ability companies or other business associations
incorporated or formed under the laws of that
State or domiciled in that State, or the applica-
bility of the antitrust laws of any State or any
State law that is similar to the antitrust laws.
(B) DEFINITION.—The term ‘‘antitrust
laws’’ has the same meaning as in subsection
(a) of the first section of the Clayton Act, and
includes section 5 of the Federal Trade Com-
mission Act to the extent that such section 5
relates to unfair methods of competition.
(b) ACTIVITIES.—
(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), no State may, by statute, regu-
lation, order, interpretation, or other action, prevent
or restrict an insured depository institution or any
subsidiary or affiliate of an insured depository insti-
tution from engaging directly or indirectly, either by
itself or in conjunction with a subsidiary, affiliate, or
any other entity or person, in any activity authorized
or permitted under this Act.
(2) 
INSURANCE
ACTIVITIES
OTHER
THAN
SALES.—State statutes, regulations, interpretations,
orders, and other actions shall not be preempted
under subsection (b)(1) to the extent that they—
(A) relate to, or are issued, adopted, or en-
acted for the purpose of regulating the business
of insurance in accordance with the Act of
March 9, 1945 (commonly known as the
‘‘McCarran-Ferguson Act’’);
(B) apply only to persons or entities that
are not insured depository institutions, but that
are directly engaged in the business of insur-
ance (except that they may apply to depository
institutions engaged in providing savings bank
life insurance as principal to the extent of regu-
lating such insurance);
(C) do not relate to or directly or indirectly
regulate insurance sales, solicitations, or cross-
marketing activities; and
(D) are not prohibited under subsection
(c).
(3) FINANCIAL ACTIVITIES OTHER THAN INSUR-
ANCE.—No State statute, regulation, interpretation,
order, or other action shall be preempted under sub-
section (b)(1) to the extent that—
(A) it does not relate to, and is not issued
and adopted, or enacted for the purpose of reg-
ulating, directly or indirectly, insurance sales,
solicitations, or cross marketing activities;
(B) it does not relate to, and is not issued
and adopted, or enacted for the purpose of reg-
ulating, directly or indirectly, the business of in-
surance activities other than sales, solicitations,
or cross marketing activities;
(C) it does not relate to securities inves-
tigations or enforcement actions referred to in
subsection (d); and
(D) it—
(i) does not distinguish by its terms
between insured depository institutions and
subsidiaries and affiliates thereof engaged
in the activity at issue and other persons
or entities engaged in the same activity in
a manner that is in any way adverse with
respect to the conduct of the activity by
any such insured depository institution or
subsidiary or affiliate thereof engaged in
the activity at issue;
(ii) as interpreted or applied, does not
have, and will not have, an impact on de-
pository institutions or subsidiaries or af-
filiates thereof engaged in the activity at
issue, or any person or entity affiliated
therewith, that is substantially more ad-
verse than its impact on other persons or
entities engaged in the same activity that
are not insured depository institutions, or
subsidiaries or affiliates thereof, or persons
or entities affiliated therewith;
(iii) does not effectively prevent a de-
pository institution, or a subsidiary or af-
filiate thereof, from engaging in activities
authorized or permitted by this Act or any
other provision of Federal law; and
(iv) does not conflict with the intent
of this Act generally to permit affiliations
that are authorized or permitted by Fed-
eral law.
(4) CONSTRUCTION.—No provision of this sub-
section shall be construed to limit the applicability of
the decision of the Supreme Court in Barnett Bank
of Marion County N.A. v. Nelson, 116 S. Ct. 1103
(1996) with respect to a State statute, regulation,
order, interpretation, or other action.
(c) NONDISCRIMINATION.—No State may, by statute,
regulation, order, interpretation, or other action, regulate
the insurance activities authorized or permitted under this
Act or any other provision of Federal law of an insured
depository institution, or a subsidiary or affiliate thereof,
to the extent that such statute, regulation, order, interpre-
tation, or other action—
(1) distinguishes by its terms between insured
depository institutions, or subsidiaries or affiliates
thereof, and other persons or entities engaged in
such activities, in a manner that is in any way ad-
verse to any such insured depository institution, or
subsidiary or affiliate thereof;
(2) as interpreted or applied, has or will have
an impact on depository institutions, or subsidiaries
or affiliates thereof, that is substantially more ad-
verse than its impact on other persons or entities
providing the same products or services or engaged
in the same activities that are not insured depository
institutions, or subsidiaries or affiliates thereof, or
persons or entities affiliated therewith;
(3) effectively prevents a depository institution,
or subsidiary or affiliate thereof, from engaging in
insurance activities authorized or permitted by this
Act or any other provision of Federal law; or
(4) conflicts with the intent of this Act gen-
erally to permit affiliations that are authorized or
permitted by Federal law between insured depository
institutions, or subsidiaries or affiliates thereof, and
persons and entities engaged in the business of in-
surance.
(d) LIMITATION.—Subsections (a) and (b) shall not
be construed to affect the jurisdiction of the securities
commission (or any agency or office performing like func-
tions) of any State, under the laws of such State, to inves-
tigate and bring enforcement actions, consistent with sec-
tion 18(c) of the Securities Act of 1933, with respect to
fraud or deceit or unlawful conduct by any person, in con-
nection with securities or securities transactions.
(e) DEFINITION.—For purposes of this section, the
term ‘‘State’’ means any State of the United States, the
District of Columbia, any territory of the United States,
Puerto Rico, Guam, American Samoa, the Trust Territory
of the Pacific Islands, the Virgin Islands, and the North-
ern Mariana Islands.
SEC. 105. MUTUAL BANK HOLDING COMPANIES AUTHOR-
IZED.
Section 3(g)(2) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1842(g)(2)) is amended to read as
follows:
‘‘(2) REGULATIONS.—A bank holding company
organized as a mutual holding company shall be reg-
ulated on terms, and shall be subject to limitations,
comparable to those applicable to any other bank
holding company.’’.
SEC. 106. AMENDMENTS RELATING TO LIMITED PURPOSE
BANKS.
(a) IN GENERAL.—Section 4(f) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1843(f)) is amended—
(1) in paragraph (2)(A)(ii)—
(A) by striking ‘‘and’’ at the end of sub-
clause (IX);
(B) by inserting ‘‘and’’ after the semicolon
at the end of subclause (X); and
(C) by inserting after subclause (X) the
following new subclause:
‘‘(XI) consumer loan assets that
are derived from, or are incidental to,
activities in which institutions de-
scribed in subparagraph (F) or (H) of
section 2(c)(2) are permitted to en-
gage,’’;
(2) in paragraph (2), by striking subparagraph
(B) and inserting the following new subparagraphs:
‘‘(B) any bank subsidiary of such company
engages in any activity in which the bank was
not lawfully engaged as of March 5, 1987, un-
less the bank is well managed and well capital-
ized;
‘‘(C) any bank subsidiary of such company
both—
‘‘(i) accepts demand deposits or de-
posits that the depositor may withdraw by
check or similar means for payment to
third parties; and
‘‘(ii) engages in the business of mak-
ing commercial loans (and, for purposes of
this clause, loans made in the ordinary
course of a credit card operation shall not
be treated as commercial loans); or
‘‘(D) after the date of the enactment of the
Competitive Equality Amendments of 1987, any
bank subsidiary of such company permits any
overdraft (including any intraday overdraft), or
incurs any such overdraft in such bank’s ac-
count at a Federal reserve bank, on behalf of
an affiliate, other than an overdraft described
in paragraph (3).’’; and
(3) by striking paragraphs (3) and (4) and in-
serting the following new paragraphs:
‘‘(3) PERMISSIBLE OVERDRAFTS DESCRIBED.—
For purposes of paragraph (2)(D), an overdraft is
described in this paragraph if—
‘‘(A) such overdraft results from an inad-
vertent computer or accounting error that is be-
yond the control of both the bank and the affili-
ate; or
‘‘(B) such overdraft—
‘‘(i) is permitted or incurred on behalf
of an affiliate which is monitored by, re-
ports to, and is recognized as a primary
dealer by the Federal Reserve Bank of
New York; and
‘‘(ii) is fully secured, as required by
the Board, by bonds, notes, or other obli-
gations which are direct obligations of the
United States or on which the principal
and interest are fully guaranteed by the
United States or by securities and obliga-
tions eligible for settlement on the Federal
Reserve book entry system.
‘‘(4) DIVESTITURE IN CASE OF LOSS OF EX-
EMPTION.—If any company described in paragraph
(1) fails to qualify for the exemption provided under
such paragraph by operation of paragraph (2), such