‘‘(iii) activities permitted under sub-
paragraph (A) or (B) of section 10(a)(1);
and
‘‘(iv) other activities that would be
permissible for such company as a finan-
cial services holding company (other than
as an investment bank holding company);
‘‘(B) all insured depository institutions
controlled by such company are well capitalized
and well managed;
‘‘(C) the bank and any affiliate of the bank
that is engaged in securities activities described
in section 10(a) comply with the safeguards
contained in section 11 as if that affiliate were
a securities affiliate; and
‘‘(D) the company has provided at least 60
days prior written notice to the Board and, dur-
ing that period, the Board has not disapproved
the proposal.’’.
(b) AMENDED DIVESTITURE PROCEDURE FOR CER-
TAIN COMPANIES.—Section 4(f)(4) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1843(f)(4)) is amended
by adding at the end the following: ‘‘If any company de-
scribed in paragraph (1) which meets the requirements of
paragraph (3)(D)(i) fails to qualify for the exemption pro-
vided under paragraph (2), such company shall divest, in
accordance with this paragraph, control of each bank the
company controls unless, within 12 months after the date
that the company fails to comply with the provisions of
paragraph (2), the company has corrected the condition
or ceased the activity that led to the failure to comply.’’.
(c) CONVERSION OF CERTAIN NONBANK HOLDING
COMPANIES TO FINANCIAL SERVICES HOLDING COMPA-
NIES.—Section 4(f) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1843(f)) is amended by inserting after
paragraph (14) (as added by subsection (a)(2)) the follow-
ing new paragraph:
‘‘(15) CONVERSION OF CERTAIN COMPANIES TO
FINANCIAL SERVICES HOLDING COMPANIES.—
‘‘(A) IN GENERAL.—During the 18-month
period beginning on the date of the enactment
of the Financial Services Competitiveness and
Regulatory Relief Act of 1995, any company
described in paragraph (1) may become a finan-
cial services holding company if—
‘‘(i) the company (on a consolidated
basis) engages in activities that are finan-
cial (including activities not authorized
under subsection (c)(8)) and predomi-
nantly in—
‘‘(I) banking;
‘‘(II) activities that the Board
has 
determined 
under 
subsection
(c)(8) to be financial in nature or inci-
dental to such financial activities;
‘‘(III) activities permitted under
subparagraph (A) or (B) of section
10(a)(1); and
‘‘(IV) other activities that would
be permissible for such company as a
financial services holding company
(other than an investment bank hold-
ing company);
‘‘(ii) all insured depository institutions
controlled by such company are well cap-
italized and well managed;
‘‘(iii) the company provides written
notice to the Board under sections 4 and
10 at least 60 days before the company be-
comes a financial services holding com-
pany;
‘‘(iv) the Board does not object to
such transaction before the end of such 60-
day period; and
‘‘(v) the Board has received, from the
company, full payment of a fee which the
Board shall impose in accordance with sec-
tion 5(h).
‘‘(B) RETENTION
OF
FINANCIAL
COMPA-
NIES.—
‘‘(i) IN
GENERAL.—Notwithstanding
subsection (a), a company that becomes a
financial services holding company pursu-
ant to subparagraph (A) may retain direct
or indirect ownership or control of voting
shares of any company that engages solely
in activities that the Board finds to be fi-
nancial but which the Board has not au-
thorized under subsection (c)(8) (and such
other financial activities that the Board
has authorized) if the financial services
holding company acquired the shares of
such company, or of each company to
which such company is a successor, before
January 1, 1995.
‘‘(ii) LIMITS ON EXPANSION FOLLOW-
ING REGISTRATION.—A company that be-
comes a financial services holding company
pursuant to this paragraph, and any com-
pany whose shares are owned or controlled
by a financial services holding company
pursuant to this paragraph, shall be sub-
ject to the limitations contained in para-
graphs (2)(C) and (3) of section 4(k) as if
the activities or shares of such company
were conducted or held pursuant to section
4(k)(2).
‘‘(iii) PERIOD
TO
CONFORM
OTHER
ACTIVITIES.—Notwithstanding 
subsection
(a), a company that becomes a financial
services holding company pursuant to sub-
paragraph (A) may retain direct or indi-
rect ownership or control of voting shares
of any company not otherwise permitted
under this section for the period provided
in, and subject to the conditions contained
in, paragraphs (2) and (3) of section 4(k).
‘‘(C) ELECTION
FOR
REDUCED
SUPER-
VISION.—Any company that becomes a financial
services holding company pursuant to subpara-
graph (A) may elect to be governed by the pro-
visions of paragraphs (3), (4), (5), and (6) of
section 5(g), subject to the requirements of
such section, if—
‘‘(i) the company, and any insured de-
pository institution controlled by such com-
pany, meet the requirements of section
5(g) (other than the requirements of para-
graph (2)(A) of such section);
‘‘(ii) the company does not acquire
more than 5 percent of the shares of any
additional depository institution after the
date that such company becomes a finan-
cial services holding company; and
‘‘(iii) no depository institution con-
trolled by such company acquires, estab-
lishes, or operates an additional branch of-
fice after the date that the company be-
comes a financial services holding com-
pany.’’.
SEC. 107. SECURITIES COMPANY AFFILIATIONS OF FDIC–IN-
SURED BANKS.
(a) IN GENERAL.—Section 18 of the Federal Deposit
Insurance Act (12 U.S.C. 1828) is amended by adding at
the end the following new subsections:
‘‘(s) SECURITIES AFFILIATIONS OF BANKS.—
‘‘(1) IN GENERAL.—A bank shall not be an af-
filiate of any company that, directly or indirectly,
acts as an underwriter or dealer of any security,
other than—
‘‘(A) a securities affiliate in accordance
with section 10 of the Financial Services Hold-
ing Company Act of 1995; or
‘‘(B) a company that underwrites or deals
only in securities described in section 10(g) of
the Financial Services Holding Company Act of
1995.
‘‘(2) EXCEPTIONS.—
‘‘(A) CERTAIN BANKS NOT INCLUDED.—
For purposes of this subsection, the term ‘bank’
does not include—
‘‘(i) an insured bank described in sub-
paragraph (D), (F), or (H) of section
2(c)(2) of the Financial Services Holding
Company Act of 1995; and
‘‘(ii) a Federal branch or an insured
branch (as defined in section 3 of the Fed-
eral Deposit Insurance Act).
‘‘(B) AFFILIATIONS WITH EDGE ACT AND
AGREEMENT
CORPORATIONS.—Paragraph (1)
shall not apply with respect to the affiliation of
a bank with a company held pursuant to section
25 or 25A of the Federal Reserve Act or section
4(c)(13) of the Financial Services Holding
Company Act of 1995.
‘‘(3) GRANDFATHER
PROVISION.—This sub-
section shall not apply with respect to—
‘‘(A) an affiliation that existed on January
1, 1995; or
‘‘(B) any new affiliation by an insured
bank that has an affiliation that would be pro-
hibited if the affiliation were not covered by
subparagraph (A).
‘‘(4) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply:
‘‘(A) BROKER.—The term ‘broker’ has the
meaning given to such term in section 3(a)(4)
of the Securities Exchange Act of 1934.
‘‘(B) DEALER.—The term ‘dealer’ has the
meaning given to such term in section 3(a)(5)
of the Securities Exchange Act of 1934.
‘‘(C) SECURITY.—The term ‘security’ has
the meaning given to such term in section 10(l)
of the Financial Services Holding Company Act
of 1995.
‘‘(D) UNDERWRITER.—The term ‘under-
writer’ has the meaning given to such term in
section 2(11) of the Securities Act of 1933.
‘‘(5) AFFILIATE.—For purposes of this sub-
section, a separately identifiable department or divi-
sion (as defined in section 3(a) of the Securities Ex-
change Act of 1934) of a bank shall be deemed to
be a company which is an affiliate of the bank.
‘‘(t) BROKER-DEALER REGISTRATION.—An insured
bank may not use the United States mails or any means
or instrumentality of interstate commerce to act as a
broker or dealer without registration under the Securities
Exchange Act of 1934—
‘‘(1) except to the extent permitted under the
circumstances described in paragraph (4) or (5) of
section 3(a) of such Act; or
‘‘(2) unless otherwise exempt from registrations
as a broker or dealer pursuant to regulations pre-
scribed by the Securities and Exchange Commission.
‘‘(u) EXAMINATION REPORTS.—The Federal banking
agencies shall, to the fullest extent possible, use the re-
ports of examination of any broker, dealer, investment ad-
viser, or investment company made by or on behalf of the
Securities and Exchange Commission and reports made
by or on behalf of a registered securities association or
national securities exchange and shall defer to such exam-
ination for compliance with Federal securities laws.
‘‘(v) INTERPRETATIONS OF THE FEDERAL SECURI-
TIES LAWS.—The appropriate Federal banking agencies
shall defer to the Securities and Exchange Commission re-
garding all interpretations and enforcement of the Federal
securities laws relating to the application of the Federal
securities laws to the activities and conduct of brokers,
dealers, investment advisers, and investment companies.’’.
(b) STUDY OF RISKS TO DEPOSIT INSURANCE SYS-
TEM.—
(1) STUDY
REQUIRED.—During the 6-month
period beginning 18 months after the date of the en-
actment of the Financial Services Competitiveness
and Regulatory Relief Act of 1995, the Federal De-
posit Insurance Corporation shall conduct a study of
the risks posed to the deposit insurance funds by—
(A) the affiliation of insured depository in-
stitutions with securities affiliates and other in-
stitutions described in subsection (s)(1) of sec-
tion 18 of the Federal Deposit Insurance Act
(as added by subsection (a) of this section); or
(B) any activity described in section 10(a)
(as added by section 103(a) of this Act) of the
Financial Services Holding Company Act of
1995 (as so redesignated by section 128(a) of
this Act) in which insured depository institu-
tions may engage in accordance with any provi-
sion of Federal or State law.
(2) REPORT TO CONGRESS AND GAO.—
(A) IN GENERAL.—Before the end of the
6-month period described in paragraph (1), the
Federal Deposit Insurance Corporation shall
submit a report to the Congress on the findings
and conclusions of the Corporation with respect
to the study conducted under such paragraph,
together with such conclusions for administra-
tive or legislative action as the Corporation may
determine to be appropriate.
(B) DETAILS OF SPECIFIC RISKS.—If the
Federal Deposit Insurance Corporation con-
cludes that certain kinds of activities not spe-
cifically authorized by statute for insured de-
pository institutions before the date of the en-
actment of this Act, or the affiliation of insured
depository institutions with securities affiliates
engaged in certain kinds of securities activities,
pose a greater risk to the deposit insurance
funds than activities specifically authorized by
statute for national banks before January 1,
1995, the report submitted under subparagraph
(A) shall contain a detailed explanation of the
basis for such conclusion.
(C) TRANSMITTAL TO GAO.—The Federal
Deposit Insurance Corporation shall transmit a
copy of the report referred to in paragraph (1)
to the Comptroller General.
(3) ACTION BY FDIC.—If the Federal Deposit
Insurance Corporation concludes that any activity or
affiliation with respect to insured depository institu-
tions poses a greater risk to any deposit insurance
fund than the risk posed by activities specifically au-
thorized by statute for national banks before Janu-
ary 1, 1995, the Federal Deposit Insurance Corpora-
tion shall treat such conclusion as a factor to be
considered in setting semiannual assessments under
section 7(b)(2)(A) of the Federal Deposit Insurance
Act.
(4) EVALUATION
OF
REPORT
BY
GAO.—The
Comptroller General shall—
(A) evaluate the report transmitted by the
Federal Deposit Insurance Corporation to the
Comptroller General under paragraph (2); and
(B) submit a report to the Congress on
such evaluation, including a discussion on the
methodology used by the Corporation to assess
risks posed by nonbanking activities to the de-
posit insurance funds.
SEC. 108. AUTHORITY TO TERMINATE GRANDFATHER
RIGHTS UNDER THE INTERNATIONAL BANK-
ING ACT OF 1978.
Section 8(c) of the International Banking Act of
1978 (12 U.S.C. 3106(c)) is amended by adding at the
end the following new paragraph:
‘‘(3) PARITY IN CONDUCT OF AUTHORIZED SE-
CURITIES ACTIVITIES.—
‘‘(A) IN
GENERAL.—Notwithstanding the
provisions of paragraph (1) or any other provi-
sion of law, any authority conferred under this
subsection on any foreign bank or company
with respect to securities activities authorized
for financial services holding companies in the
United States shall terminate 30 days following
approval by the Board of an application by such
foreign bank or company under section 10 of
the Financial Services Holding Company Act of
1995.
‘‘(B) AUTHORITY
TO
IMPOSE
CONDI-
TIONS.—If a foreign bank or company that en-
gages directly or through an affiliate in any se-
curities activity pursuant to paragraph (1) has
not received approval by the Board under sec-
tion 10 of the Financial Services Holding Com-
pany Act of 1995 to control a securities affiliate
by the end of the 3-year period beginning on
the effective date of such Act, the Board may
impose such limitations and restrictions, includ-
ing the termination of any activities conducted
under paragraph (1) or a requirement that such
activities be conducted in compliance with the
safeguards of section 11 of such Act, as the
Board considers appropriate consistent with the
purposes of this Act and the Financial Services
Holding Company Act of 1995.’’.
SEC. 109. EFFECT ON STATE LAWS PROHIBITING THE AF-
FILIATION OF BANKS AND SECURITIES COM-
PANIES.
(a) IN GENERAL.—Section 7 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1846) is amended by
adding at the end the following new subsection:
‘‘(c) AFFILIATIONS AND ACTIVITIES.—No State may
prohibit or limit—
‘‘(1) the affiliation of a bank or financial serv-
ices holding company with a securities affiliate solely
because the securities affiliate is engaged in activi-
ties described in subparagraph (A) or (B) of section
10(a)(1); or
‘‘(2) the insurance or other activities of a sub-
sidiary of a financial services holding company solely
because the financial services holding company is no
longer exempt under this Act pursuant to section
4(d).’’.
(b) BANK ACTIVITIES.—No provision of this Act, and
no amendment made by this Act to any other provision
of law (other than section 10 or 11 of the Financial Serv-
ices Holding Company Act of 1995 (as added by sections
103 and 104 of this Act), section 18(s) of the Federal
Deposit Insurance Act (as added by section 107 of this
Act), or any amendments made by title II of this Act),
may be construed as affecting the authority of any bank
to engage in any activity authorized for such bank under
the law of such bank’s home State (as defined in section
2(o)(4) of the Financial Services Holding Company Act
of 1995).
SEC. 110. INTERAGENCY AGREEMENT RELATING TO RETAIL
SALES OF CERTAIN NONDEPOSIT INVEST-
MENT PRODUCTS.
Section 18 of the Federal Deposit Insurance Act (12
U.S.C. 1828) is amended by inserting after subsection (u)
(as added by section 107 of this Act) the following new
subsection:
‘‘(v) JOINT STANDARDS RELATING TO RETAIL SALES
OF CERTAIN NONDEPOSIT INVESTMENT PRODUCTS.—
‘‘(1) IN
GENERAL.—The appropriate Federal
banking agencies shall jointly prescribe, after con-
sulting with and considering the views of the Securi-
ties and Exchange Commission, standards applicable
to any depository institution which—
‘‘(A) is not registered as a broker under
the Securities Exchange Act of 1934; and
‘‘(B) effects transactions in securities, in-
cluding securities issued by an investment com-
pany or annuities.
‘‘(2) SCOPE
OF
STANDARDS.—The standards
required under paragraph (1) with respect to securi-
ties and annuities referred to in such paragraph
shall, at a minimum, establish requirements with re-
spect to—
‘‘(A) sales practices;
‘‘(B) disclosures and advertising in connec-
tion with transactions in such securities and an-
nuities, including—
‘‘(i) the content, form, and timing of
any such disclosure; and