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‘‘(C) any institution described in section
2(c)(2) (other than subparagraphs (C) and (G)
of such section); or
‘‘(D) any institution that accepts—
‘‘(i) initial deposits of $100,000 or
less, other than on an incidental or occa-
sional basis, or
‘‘(ii) deposits that are insured under
the Federal Deposit Insurance Act.
‘‘(4) NO
DEPOSIT
INSURANCE
FUND
LIABIL-
ITY.—No Federal deposit insurance funds may be
used in connection with the failure of, or any pro-
posed assistance to, a wholesale financial institution
or an investment bank holding company.
‘‘(5) CAPITAL OF IBHC.—
‘‘(A) IN GENERAL.—The Board shall not
impose any capital requirement on investment
bank holding companies or subsidiaries of such
companies (other than depository institutions)
unless any such requirement is based upon ap-
propriate risk-weighing considerations.
‘‘(B) 
APPLICABLE
ACCOUNTING
PRIN-
CIPLES.—In applying any capital standard to
investment bank holding companies, or subsidi-
aries of such companies, the Board shall utilize
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uniform accounting principles consistent with
generally accepted accounting principles in ac-
cordance with section 37(a)(2) of the Federal
Deposit Insurance Act.
‘‘(b) QUALIFICATION OF FOREIGN BANK AS INVEST-
MENT BANK HOLDING COMPANY.—
‘‘(1) IN GENERAL.—Any foreign bank that—
‘‘(A) operates a branch, agency or commer-
cial lending company in the United States (and
any company that owns or controls such foreign
bank), including a foreign bank that does not
own or control a wholesale financial institution;
and
‘‘(B) controls a security affiliate that en-
gages in underwriting corporate equity securi-
ties,
may request a determination from the Board that
such bank or company be treated as an investment
bank holding company.
‘‘(2) CONDITIONS FOR TREATMENT AS AN IN-
VESTMENT
BANK
HOLDING
COMPANY.—A foreign
bank and a company that owns or controls a foreign
bank may not be treated as an investment bank
holding company unless the bank and company meet
and continue to meet the following criteria:
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‘‘(A) NO INSURED DEPOSITS.—No deposits
held directly by a foreign bank or through an
affiliate are insured under the Federal Deposit
Insurance Act.
‘‘(B) CAPITAL
STANDARDS.—The foreign
bank meets risk-based capital standards com-
parable to the capital standards required for a
wholesale financial institution, giving due re-
gard to the principle of national treatment and
equality of competitive opportunity.
‘‘(C) TRANSACTIONS WITH AFFILIATES.—
Transactions between a branch, agency, or com-
mercial lending company subsidiary of the for-
eign bank in the United States, and any securi-
ties affiliate or company in which the foreign
bank (or any company that owns or controls
such foreign bank) has invested pursuant to
subsection (a)(1)(B), comply with the provisions
of sections 23A and 23B of the Federal Reserve
Act in the same manner and to the same extent
as such transactions would be required to com-
ply with such sections if the bank were a mem-
ber bank.
‘‘(3) TREATMENT AS A WHOLESALE FINANCIAL
INSTITUTION.—Any foreign bank which is, or is
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affiliated with a company which is treated as an
investment bank holding company under this
subsection shall be treated as a wholesale financial
institution for purposes of clauses (iii) and (iv) of
subsection (a)(1)(B), subsection (a)(2)(B)(ii), and
section 5(g), except that the Board may adopt such
modifications, conditions, or exemptions as the
Board deems appropriate, giving due regard to the
principle of national treatment and equality of com-
petitive opportunity.
‘‘(4) NONAPPLICABILITY
OF
OTHER
EXEMP-
TION.—Any foreign bank or company which is treat-
ed as an investment bank holding company under
this subsection shall not be eligible for any exemp-
tion described in section 2(h).
‘‘(c) ELIGIBILITY OF FOREIGN BANKS FOR CERTAIN
TREATMENT.—
‘‘(1) RECIPROCAL NATIONAL TREATMENT.—
‘‘(A) IN GENERAL.—A foreign bank that
operates a branch, agency or commercial lend-
ing company in the United States, and any
company that owns or controls such a foreign
bank, shall be eligible for the treatment af-
forded under subsection (b) or section 11(l)
only if the home country of such foreign bank
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or company accords to United States banks the
same competitive opportunities in banking as
such country accords to domestic banks of such
country.
‘‘(B) COORDINATION WITH NAFTA.—Sub-
paragraph (A) shall not apply in derogation of
any obligation under the North American Free
Trade Agreement.
‘‘(C) HOME COUNTRY DEFINED.—For pur-
poses of subparagraph (A), the term ‘home
country’ means, with respect to any foreign
bank or company referred to in subparagraph
(A), the country under the laws of which the
foreign bank or company is organized.
‘‘(2) PREVENTION
OF
EVASION.—No foreign
bank or bank owned by a former United States na-
tional may operate a branch or agency in the United
States if the predominance of the assets of such
bank were acquired in connection with a merger
with, or purchase or assumption of all or substan-
tially all the assets of, a wholesale financial institu-
tion.
‘‘(d) RULE
FOR FINANCIAL SERVICES HOLDING
COMPANIES.—For purposes of section 5(g)(2)(A)(ii), any
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foreign bank (as defined in section 1(b) of the Inter-
national Banking Act of 1978) which is directly or indi-
rectly owned, controlled, or operated by a company that—
‘‘(1) as of January 1, 1995, was registered as
a banking holding company; or
‘‘(2) is a successor to any such bank holding
company,
shall be treated as a wholesale financial institution.’’.
(c) CONFORMING AMENDMENTS.—
(1) EXCEPTION
TO
DEPOSIT
INSURANCE
RE-
QUIREMENT.—Section 3(e) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1842(e)) is
amended by adding at the end the following: ‘‘This
subsection shall not apply to a wholesale financial
institution.’’
(2) Section 3(q)(2)(A) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)(2)(A)) is amend-
ed to read as follows:
‘‘(A) any State member insured bank (ex-
cept a District bank) and wholesale financial in-
stitution as authorized pursuant to section 9B
of the Federal Reserve Act;’’.
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unless the Board has received, from the bank or or-
ganization, full payment of a fee which the Board
shall impose in the manner provided under section
5(h) of the Financial Services Holding Company Act
of 1997.
‘‘(b) GENERAL
REQUIREMENTS
APPLICABLE
TO
WHOLESALE FINANCIAL INSTITUTIONS.—
‘‘(1) FEDERAL RESERVE ACT.—Except as oth-
erwise provided in this section, wholesale financial
institutions shall be member banks and shall be sub-
ject to the provisions of this Act that apply to mem-
ber banks to the same extent and in the same man-
ner as State member insured banks, except that a
wholesale financial institution may terminate mem-
bership under this Act only with the prior written
approval of the Board and on terms and conditions
that the Board determines are appropriate to carry
out the purposes of this Act.
‘‘(2) PROMPT CORRECTIVE ACTION.—A whole-
sale financial institution shall be deemed to be an in-
sured depository institution for purposes of section
38 of the Federal Deposit Insurance Act except
that—
‘‘(A) the relevant capital levels and capital
measures for each capital category shall be the
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levels specified by the Board for wholesale fi-
nancial institutions; and
‘‘(B) all references to the appropriate Fed-
eral banking agency or to the Corporation in
that section shall be deemed to be references to
the Board.
‘‘(3) ENFORCEMENT AUTHORITY.—Subsections
(j) and (k) of section 7, subsections (b) through (n),
(s), (u), and (v) of section 8, and section 19 of the
Federal Deposit Insurance Act shall apply to a
wholesale financial institution in the same manner
and to the same extent as such provisions apply to
State member insured banks and any reference in
such sections to an insured depository institution
shall be deemed to include a reference to a wholesale
financial institution.
‘‘(4) CERTAIN
OTHER
STATUTES
APPLICA-
BLE.—A wholesale financial institution shall be
deemed to be a banking institution, and the Board
shall be the appropriate Federal banking agency for
such bank and all such bank’s affiliates, for pur-
poses of the International Lending Supervision Act.
‘‘(5) BANK MERGER ACT.—A wholesale finan-
cial institution shall be subject to provisions of sec-
tions 18(c) and 44 of the Federal Deposit Insurance
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Act in the same manner and to the same extent the
wholesale financial institution would be subject to
such sections if the institution were a State member
insured bank.
‘‘(6) REGISTRATION FEE.—The Board shall as-
sess an annual registration fee in the manner pro-
vided in section 5(h) of the Financial Services Hold-
ing Company Act of 1997 on each wholesale finan-
cial institution.
‘‘(c) SPECIFIC
REQUIREMENTS
APPLICABLE
TO
WHOLESALE FINANCIAL INSTITUTIONS.—
‘‘(1) LIMITATIONS ON DEPOSITS.—
‘‘(A) MINIMUM AMOUNT.—
‘‘(i) IN GENERAL.—No wholesale fi-
nancial institution may receive initial de-
posits of $100,000 or less, other than on
an incidental and occasional basis.
‘‘(ii) LIMITATION
ON
DEPOSITS
OF
LESS
THAN
$100,000.—No bank may be
treated as a wholesale financial institution
if the total amount of the initial deposits
of $100,000 or less at such bank constitute
more than 5 percent of the bank’s total de-
posits.
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‘‘(B) NO DEPOSIT INSURANCE.—No depos-
its held by a wholesale financial institution shall
be insured deposits under the Federal Deposit
Insurance Act.
‘‘(C) ADVERTISING
AND
DISCLOSURE.—
The Board shall prescribe regulations pertain-
ing to advertising and disclosure by wholesale
financial institutions to ensure that each deposi-
tor is notified that deposits at the wholesale fi-
nancial institution are not federally insured or
otherwise guaranteed by the United States Gov-
ernment.
‘‘(2) SPECIAL CAPITAL REQUIREMENTS APPLI-
CABLE TO WHOLESALE FINANCIAL INSTITUTIONS.—
‘‘(A) MINIMUM CAPITAL LEVELS.—
‘‘(i) IN GENERAL.—The Board shall,
by regulation, adopt capital requirements
for wholesale financial institutions—
‘‘(I) to account for the status of
wholesale financial institutions as in-
stitutions that accept deposits that
are not insured under the Federal De-
posit Insurance Act; and
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‘‘(II) to provide for the safe and
sound operation of the wholesale fi-
nancial institution without undue risk
to creditors or other persons, includ-
ing Federal reserve banks, engaged in
transactions with the bank.
‘‘(ii) 
MINIMUM
TIER
CAPITAL
RATIO.—The minimum ratio of tier 1 cap-
ital to total risk-weighted assets of whole-
sale financial institutions shall be not less
than the level required for a State member
insured bank to be well capitalized unless
the Board determines otherwise, consistent
with safety and soundness.
‘‘(3) ADDITIONAL REQUIREMENTS APPLICABLE
TO WHOLESALE FINANCIAL INSTITUTIONS.—In addi-
tion to any requirement otherwise applicable to State
member banks or applicable, under this section, to
wholesale financial institutions, the Board may pre-
scribe, by regulation or order, for wholesale financial
institutions—
‘‘(A) limitations on transactions with affili-
ates to prevent—
‘‘(i) the transfer of risk to the deposit
insurance funds; or
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‘‘(ii) an affiliate from gaining access
to, or the benefits of, credit from a Federal
reserve bank, including overdrafts at a
Federal reserve bank;
‘‘(B) special clearing balance requirements;
and
‘‘(C) any additional requirements that the
Board determines to be appropriate or nec-
essary to—
‘‘(i) promote the safety and soundness
of the wholesale financial institution or any
insured depository institution affiliate of
the wholesale financial institution;
‘‘(ii) prevent the transfer of risk to
the deposit insurance funds; or
‘‘(iii) protect creditors and other per-
sons, including Federal reserve banks, en-
gaged in transactions with the wholesale fi-
nancial institution.
‘‘(4) EXEMPTIONS FOR WHOLESALE FINANCIAL
INSTITUTIONS.—The Board may, by regulation or
order, exempt any wholesale financial institution
from any provision applicable to a member bank
that is not a wholesale financial institution, if the
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Board finds that such exemption is not inconsistent
with—
‘‘(A) the promotion of the safety and
soundness of the wholesale financial institution
or any insured depository institution affiliate of
the wholesale financial institution;
‘‘(B) the protection of the deposit insur-
ance funds; and
‘‘(C) the protection of creditors and other
persons, including Federal reserve banks, en-
gaged in transactions with the wholesale finan-
cial institution.
‘‘(5) LIMITATION ON TRANSACTIONS BETWEEN
A WHOLESALE FINANCIAL INSTITUTION AND AN IN-
SURED BANK.—For purposes of section 23A(d)(1) of
the Federal Reserve Act, a wholesale financial insti-
tution that is affiliated with an insured bank shall
not be a bank.
‘‘(6) NO EFFECT ON OTHER PROVISIONS.—This
section shall not be construed as limiting the
Board’s authority over member banks under any
other provision of law, or to create any obligation for
any Federal reserve bank to make, increase, renew,
or extend any advance or discount under this Act to
any member bank or other depository institution.
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‘‘(d) CONSERVATORSHIP AUTHORITY.—
‘‘(1) IN GENERAL.—The Board may appoint a
conservator to take possession and control of a
wholesale financial institution to the same extent
and in the same manner as the Comptroller of the
Currency may appoint a conservator for a national
bank under section 203 of the Bank Conservation
Act, and the conservator shall exercise the same
powers, functions, and duties, subject to the same
limitations, as are provided under such Act for con-
servators of national banks.
‘‘(2) BOARD
AUTHORITY.—The Board shall
have the same authority with respect to any con-
servator appointed under paragraph (1) and the
wholesale financial institution for which such con-
servator has been appointed as the Comptroller of
the Currency has under the Bank Conservation Act
with respect to a conservator appointed under such
Act and a national bank for which the conservator
has been appointed.
‘‘(e) EXCLUSIVE
JURISDICTION.—Subsections (c)
and (e) of section 43 of the Federal Deposit Insurance
Act shall not apply to any wholesale financial institution.’’.
(b) VOLUNTARY TERMINATION OF INSURED STATUS
BY CERTAIN INSTITUTIONS.—
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(1) SECTION 8 DESIGNATIONS.—Section 8(a) of
the Federal Deposit Insurance Act (12 U.S.C.
1818(a)) is amended—
(A) by striking paragraph (1); and
(B) 
by 
redesignating 
paragraphs 
(2)
through (9) as paragraphs (1) through (8), re-
spectively.
(2) VOLUNTARY
TERMINATION
OF
INSURED
STATUS.—The Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.) is amended by inserting after
section 8 the following new section:
‘‘§ 8A. Voluntary termination of status as insured de-
pository institution
‘‘(a) IN GENERAL.—Except as provided in subsection
(b), an insured State bank or a national bank may volun-
tarily terminate such bank’s status as an insured deposi-
tory institution in accordance with regulations of the Cor-
poration if—
‘‘(1) the bank provides written notice of the
bank’s intent to terminate such insured status—
‘‘(A) to the Corporation and the Board of
Governors of the Federal Reserve System not
less than 6 months before the effective date of
such termination; and
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‘‘(B) to all depositors at such bank, not
less than 6 months before the effective date of
the termination of such status; and
‘‘(2) either—
‘‘(A) the deposit insurance fund of which
such bank is a member equals or exceeds the
fund’s designated reserve ratio as of the date
the bank provides a written notice under para-
graph (1) and the Corporation determines that
the fund will equal or exceed the applicable des-
ignated reserve ratio for the 2 semiannual as-
sessment periods immediately following such
date; or
‘‘(B) the Corporation and the Board of
Governors of the Federal Reserve System ap-
prove the termination of the bank’s insured sta-
tus and the bank pays an exit fee in accordance
with subsection (e).
‘‘(b) EXCEPTION.—Subsection (a) shall not apply
with respect to—
‘‘(1) an insured savings association;
‘‘(2) an insured branch that is required to be
insured under subsection (a) or (b) of section 6 of
the International Banking Act of 1978; or
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authority of the Corporation and the duties and obli-
gations of an insured depository institution under
this Act during such period, and in the event that
the bank is closed due to an inability to meet the de-
mands of the bank’s depositors during such period,
the Corporation shall have the same powers and
rights with respect to such bank as in the case of
an insured depository institution.
‘‘(g) ADVERTISEMENTS.—
‘‘(1) IN
GENERAL.—A bank that voluntarily
terminates the bank’s insured status under this sec-
tion shall not advertise or hold itself out as having
insured deposits, except that the bank may advertise
the temporary insurance of deposits under sub-
section (f) if, in connection with any such advertise-
ment, the advertisement also states with equal prom-
inence that additions to deposits and new deposits
made after the effective date of the termination are
not insured.
‘‘(2) CERTIFICATES OF DEPOSIT, OBLIGATIONS,
AND
SECURITIES.—Any certificate of deposit or
other obligation or security issued by a State bank
or a national bank after the effective date of the vol-
untary termination of the bank’s insured status
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under this section shall be accompanied by a con-
spicuous, prominently displayed notice that such cer-
tificate of deposit or other obligation or security is
not insured under this Act.
‘‘(h) NOTICE REQUIREMENTS.—
‘‘(1) NOTICE TO THE CORPORATION.—The no-
tice required under subsection (a)(1)(A) shall be in
such form as the Corporation may require.
‘‘(2) NOTICE TO DEPOSITORS.—The notice re-
quired under subsection (a)(1)(B) shall be—
‘‘(A) sent to each depositor’s last address
of record with the bank; and
‘‘(B) in such manner and form as the Cor-
poration finds to be necessary and appropriate
for the protection of depositors.’’.
(3) DEFINITION.—Section 19(b)(1)(A)(i) of the
Federal Reserve Act (12 U.S.C. 461(b)(1)(A)(i)) is
amended after ‘‘such Act’’ by inserting ‘‘, or any
wholesale financial institution as defined in section
9B of this Act’’.
(c) REPORTS
ON DISCOUNTS
AND ADVANCES
TO
WHOLESALE FINANCIAL INSTITUTIONS.—Section 10B of
the Federal Reserve Act (12 U.S.C. 347(b)) is amended
by adding at the end the following new subsection:
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‘‘(c) REPORTS ON DISCOUNTS AND ADVANCES TO
WHOLESALE FINANCIAL INSTITUTIONS.—
‘‘(1) IN GENERAL.—The Board shall submit a
report to the Congress at the end of any year in
which any wholesale financial institution has ob-
tained a discount, advance, or other extension of
credit from a Federal reserve bank.
‘‘(2) CONTENTS.—Any report submitted under
paragraph (1) shall explain the circumstances and
need for any discount, advance, or other extension of
credit to a wholesale financial institution during the
period covered by the report, including the type and
amount of credit extended and the amount of credit
remaining outstanding as of the date of the report.’’.
Subtitle C—Financial Activities
SEC. 121. FINANCIAL ACTIVITIES.
Section 4(c)(8) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1843(c)(8)) is amended—
(1) by striking ‘‘shares of any company’’ and all
that follows through ‘‘for a bank holding company to
provide’’ and inserting ‘‘shares of any company the
activities of which the Board after due notice has de-
termined (by order, regulation, or advisory opinion)
to be financial in nature or incidental to such finan-
cial activities. In determining whether an activity is
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financial in nature or incidental to financial activi-
ties, the Board shall take into account changes or
reasonably expected changes in the marketplace in
which financial services holding companies compete
as well as changes or reasonably expected changes in
the technology by which these services are delivered.
In addition, the Board shall take into account activi-
ties considered financial activities or banking or fi-
nancial operations for purposes of the regulation of
the Board designated as ‘Regulation K’ (12 CFR
211.23(f)(5)(iii)(B)) as in effect on the date of the
enactment of the Financial Services Competitiveness
Act of 1997. Any activity that the Board has deter-
mined, by order or regulation that is in effect on
such date to be so closely related to banking or man-
aging or controlling banks as to be a proper incident
thereto shall be deemed to be of a financial nature
for purposes of this paragraph without further ac-
tion by the Board (subject to the same terms and
conditions contained in such order or regulation, un-
less modified by the Board), but for purposes of this
subsection it shall not be closely related to banking
or managing or controlling banks or financial in na-
ture or incidental to a financial activity for a finan-
cial services holding company to provide’’;
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(2) in the third sentence, by inserting ‘‘and be-
tween activities commenced by affiliates of different
classes of banks’’ before the period at the end; and
(3) by striking the second sentence.
SEC. 122. RESERVED.
SEC. 123. STREAMLINED EXAMINATION AND REPORTING
REQUIREMENTS FOR ALL FINANCIAL SERV-
ICES HOLDING COMPANIES.
Section 5(c) of the Bank Holding Company Act of
1956 (12 U.S.C. 1844(c)) is amended to read as follows:
‘‘(c) REPORTS AND EXAMINATIONS.—
‘‘(1) PURPOSES.—
‘‘(A) IN GENERAL.—The purpose of this
subsection is to authorize the Board, through
reports and examinations, to gather information
from a financial services holding company and
the subsidiaries of any such holding company
regarding the structure, activities, and financial
condition of the financial services holding com-
pany and such subsidiaries so that the Board
can monitor risks within the holding company
system that could adversely affect any deposi-
tory institution subsidiary of the holding com-
pany and may monitor and enforce compliance
with this Act.
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‘‘(B) PURPOSE
NOT
TO
IMPOSE
ADDI-
TIONAL BURDENS ON HOLDING COMPANIES.—It
is the intended purpose of this subsection that
the Board shall—
‘‘(i) exercise the Board’s authority to
collect information under this section in a
manner that is the least burdensome to fi-
nancial services holding companies and the
subsidiaries of such companies; and
‘‘(ii) rely, to the fullest extent pos-
sible, on reports prepared for and examina-
tions conducted by or for other Federal
and State supervisors.
‘‘(C) PURPOSE
TO
REQUIRE
CAREFULLY
TAILORED EXAMINATIONS.—It is the intended
purpose of this subsection that the Board shall
tailor the focus and scope of any examination
under this section to a financial services holding
company or to any subsidiary of such company
which, because of financial conditions, activities
operations of such subsidiary, the transactions
between such subsidiary and other affiliates, or
the size of any such subsidiary poses a potential
material risk to a depository institution subsidi-
ary of such holding company.
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‘‘(2) REPORTS.—
‘‘(A) IN GENERAL.—The Board from time
to time may require any financial services hold-
ing company and any subsidiary of such com-
pany to submit reports under oath to keep the
Board informed as to—
‘‘(i) the company’s or the subsidiary’s
activities, financial condition, policies, sys-
tems for monitoring and controlling finan-
cial and operational risks, and transactions
with depository institution subsidiaries of
the holding company; and
‘‘(ii) the extent to which the company
or subsidiary has complied with the provi-
sions of this Act and regulations prescribed
and orders issued under this Act.
‘‘(B) USE OF EXISTING REPORTS.—
‘‘(i) IN GENERAL.—The Board shall,
to the fullest extent possible, accept re-
ports in fulfillment of the Board’s report-
ing requirements under this paragraph
that a financial services holding company
or any subsidiary of such company has
been required to provide to other Federal
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and State supervisors or to appropriate
self-regulatory organizations.
‘‘(ii) AVAILABILITY.—A financial serv-
ices holding company or a subsidiary of
such company shall provide to the Board,
at the request of the Board, a report re-
ferred to in clause (i).
‘‘(3) EXAMINATIONS.—
‘‘(A) LIMITED USE OF EXAMINATION AU-
THORITY.—The Board may make examinations
of each financial services holding company and
each subsidiary of such company in order to—
‘‘(i) inform the Board of the nature of
the operations and financial condition of
the financial services holding company and
such subsidiaries;
‘‘(ii) inform the Board of the—
‘‘(I) financial and operational
risks within the financial services
holding company system that may af-
fect any depository institution owned
by such holding company; and
‘‘(II) the systems of the holding
company and such subsidiaries for
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monitoring 
and 
controlling 
those
risks; and
‘‘(iii) monitor compliance with the
provisions of this Act and those governing
transactions and relationships between any
depository institution controlled by a finan-
cial services holding company and any of
the company’s other subsidiaries.
‘‘(B) RESTRICTED FOCUS OF EXAMINATIONS.—
The Board shall, to the fullest extent possible, limit
the focus and scope of any examination of a finan-
cial services holding company to—
‘‘(i) the holding company; and
‘‘(ii) to any subsidiary (other than a
depository institution subsidiary) of the
holding company which, because of the
size, condition, or activities of the subsidi-
ary, the nature or size of transactions be-
tween such subsidiary and any depository
institution affiliate, or the centralization of
functions within the holding company sys-
tem, could have a materially adverse effect
on the safety and soundness of any deposi-
tory institution affiliate of the subsidiary
or of the holding company.
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‘‘(C) DEFERENCE
TO
BANK
EXAMINA-
TIONS.—The Board shall, to the fullest extent
possible, use the report of examinations of de-
pository institutions made by the Comptroller of
the Currency, the Federal Deposit Insurance
Corporation, the Office of Thrift Supervision or
the appropriate State depository institution su-
pervisory authority for the purposes of this sec-
tion.
‘‘(D) DEFERENCE
TO
OTHER
EXAMINA-
TIONS.—The Board shall, to the fullest extent
possible, use the reports of examination made
of—
‘‘(i) any registered broker or dealer by
or on behalf of the Securities Exchange
Commission,
‘‘(ii) any licensed insurance company
by or on behalf of any state government in-
surance agency responsible for the super-
vision of the insurance company, and
‘‘(iii) any other subsidiary that the
Board finds to be comprehensively super-
vised under relevant Federal or State law
by a Federal or state agency or authority.
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‘‘(E) CONFIDENTIALITY OF REPORTED INFOR-
MATION.—
‘‘(i) IN
GENERAL.—Notwithstanding
any other provision of law, the Board shall
not be compelled to disclose any informa-
tion required to be reported under this
paragraph, or any information supplied to
the Board by any domestic or foreign regu-
latory agency, that relates to the financial
or operational condition of any financial
services holding company or any subsidiary
of such company.
‘‘(ii) COMPLIANCE
WITH
REQUESTS
FOR INFORMATION.—No provision of this
subparagraph shall be construed as author-
izing the Board to withhold information
from Congress, or preventing the Board
from complying with a request for informa-
tion from any other Federal department or
agency for purposes within the scope of
such department’s or agency’s jurisdiction,
or from complying with an order of a court
of competent jurisdiction in an action
brought by the United States or the
Board.
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‘‘(iii) COORDINATION
WITH
OTHER
LAW.—For purposes of section 552 of title
5, United States Code, this subparagraph
shall be considered to be a statute de-
scribed in subsection (b)(3)(B) of such sec-
tion.
‘‘(iv) DESIGNATION OF CONFIDENTIAL
INFORMATION.—In prescribing regulations
to carry out the requirements of this sub-
section, the Board shall designate informa-
tion described in or obtained pursuant to
this paragraph as confidential information.
‘‘(F) COSTS.—The cost of any examination
conducted by the Board under this section may
be assessed against, and made payable by, such
holding company.’’.
SEC. 124. HOLDING COMPANY SUPERVISION FOR FINAN-
CIAL SERVICES HOLDING COMPANIES EN-
GAGED PRIMARILY IN NONBANKING ACTIVI-
TIES.
Section 5 of the Bank Holding Company Act of 1956
(12 U.S.C. 1844) is amended by adding at the end the
following new subsections:
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‘‘(g) REDUCED SUPERVISION OF COMPANIES CON-
TROLLING
PRINCIPALLY
NONDEPOSITORY
INSTITU-
TIONS.—
‘‘(1) ELECTION.—
‘‘(A) IN GENERAL.—Any financial services
holding company that qualifies under paragraph
(2) may make an election to be governed by the
approval, capital, reporting and examination re-
quirements of paragraphs (3), (4), (5) and (6)
by—
‘‘(i) filing a written notice of such
election with the Board; and
‘‘(ii) if applicable, providing a written
guarantee to the Federal Deposit Insur-
ance Corporation pursuant to paragraph
(2).
‘‘(B) EFFECTIVE PERIOD OF ELECTION.—
An election under subparagraph (A) shall re-
main in effect—
‘‘(i) so long as the financial services
holding company continues to qualify
under paragraph (2); or
‘‘(ii) until the financial services hold-
ing company revokes the election.
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‘‘(2) CRITERIA
FOR
ELECTION.—A financial
services holding company may make an election
under paragraph (1) if the company meets all of the
following criteria:
‘‘(A) COMPANY
PRINCIPALLY
CONTROLS
NONDEPOSITORY COMPANIES.—
‘‘(i) FINANCIAL
SERVICES
HOLDING
COMPANIES
WITH
DEPOSITORY
INSTITU-
TIONS.—In the case of a financial services
holding company (other than an invest-
ment bank holding company), the consoli-
dated total risk-weighted assets of all de-
pository institutions and foreign banks (as
defined in section 1(b)(7) of the Inter-
national Banking Act of 1978) controlled
by the financial services holding com-
pany—
‘‘(I) constitute less than 10 per-
cent of the consolidated total risk-
weighted assets of such company; and
‘‘(II) 
are 
less 
than
$5,000,000,000.
‘‘(ii) INVESTMENT
BANK
HOLDING
COMPANIES.—In the case of an investment
bank holding company, the consolidated
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total risk-weighted assets of all wholesale
financial institutions controlled by the in-
vestment bank holding company—
‘‘(I) constitute less than 25 per-
cent of the consolidated total risk-
weighted assets of such company; and
‘‘(II) 
are 
less 
than
$15,000,000,000.
‘‘(iii) INFLATION ADJUSTMENT.—The
dollar limitation contained in clauses
(i)(II) and (ii)(II) shall be adjusted annu-
ally after December 31, 1997, by the an-
nual percentage increase in the Consumer
Price Index for Urban Wage Earners and
Clerical Workers published by the Bureau
of Labor Statistics.
‘‘(iv) AUTHORITY TO INCREASE LIM-
ITS.—The Board may increase any of the
percentages referred to in clauses (i)(I)
and (ii)(I) and the dollar amounts de-
scribed in clauses (i)(II) and (ii)(II) as the
Board may determine to be appropriate.
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‘‘(B) WELL CAPITALIZED INSTITUTIONS.—
Each depository institution controlled by the fi-
nancial services holding company is well capital-
ized.
‘‘(C) WELL MANAGED INSTITUTIONS.—
‘‘(i) IN
GENERAL.—Each depository
institution controlled by the financial serv-
ices holding company received a CAMEL
composite rating of 1 or 2 (or an equiva-
lent rating under an equivalent rating sys-
tem) in the most recent examination of
such institution.
‘‘(ii) EXCLUSION
FOR
NEWLY
AC-
QUIRED INSTITUTIONS.—A depository in-
stitution acquired by a financial services
holding company during the 12-month pe-
riod ending on the date of the election by
such company under paragraph (1) may be
excluded for purposes of clause (i) if the fi-
nancial services holding company has de-
veloped a plan acceptable to the appro-
priate Federal banking agency (for such
institution) to restore the capital and man-
agement of the institution.
‘‘(D) HOLDING COMPANY GUARANTEE.—
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‘‘(i) 
IN
GENERAL.—The 
financial
services holding company provides a writ-
ten guarantee acceptable to the Federal
Deposit Insurance Corporation to maintain
the capital levels of each insured deposi-
tory institution controlled by the financial
services holding company at not less than
the levels required for such institution to
remain well capitalized.
‘‘(ii) LIMITATION ON LIABILITY.—The
liability of a financial services holding com-
pany under a guarantee provided under
this subparagraph shall not exceed an
amount equal to 10 percent of the total
risk-weighted assets of the insured deposi-
tory institution, measured as of the date
that the institution becomes undercapital-
ized.
‘‘(iii) DURATION
OF
GUARANTEE.—
Notwithstanding paragraph (1), a financial
services holding company that has elected
treatment under this subsection shall con-
tinue to be bound by the guarantee made
under this subsection until released in ac-
cordance with this subparagraph.
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‘‘(iv) RELEASE
FROM
LIABILITY.—
The Board shall release a financial services
holding company from the guarantee appli-
cable with respect to any depository insti-
tution subsidiary of such company—
‘‘(I) upon the written request of
the financial services holding company
to revoke the company’s election
under paragraph (1) if the Board de-
termines that each depository institu-
tion controlled by the financial serv-
ices holding company is well capital-
ized and well managed at the time of
such revocation;
‘‘(II) in the case of a financial
services holding company which no
longer meets the requirements of sub-
paragraph (A), upon a determination
by the Board that each depository in-
stitution controlled by the financial
services holding company is well cap-
italized and well managed;
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‘‘(III) upon the written request
of the financial services holding com-
pany following the divestiture of con-
trol of the depository institution in a
transaction that does not require Fed-
eral assistance if the Board deter-
mines that, immediately following the
divestiture, the depository institution
is or will be well capitalized; or
‘‘(IV) upon a determination by
the Board, after consultation with the
Federal Deposit Insurance Corpora-
tion, that, subject to the limit on li-
ability provided in clause (ii), the fi-
nancial services holding company has
fully performed under the guarantee.
‘‘(E) RESPONSIVENESS
TO
COMMUNITY
NEEDS.—The lead insured depository institu-
tion subsidiary of the financial services holding
company and insured depository institutions
controlling at least 80 percent of the aggregate
total risk-weighted assets of insured depository
institutions controlled by the financial services
holding company have achieved a satisfactory
record of meeting community credit needs’, or
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better, during the most recent examination of
such insured depository institutions.
‘‘(3) NO NOTICE OR APPROVAL REQUIRED FOR
CERTAIN PURPOSES UNDER PARAGRAPH (8), (13), OR
(15) OF SECTION 4(c).—
‘‘(A) 
IN
GENERAL.—Notwithstanding
paragraphs (8), (13), and, in the case of an in-
vestment bank holding company, (15) of section
4(c), a financial services holding company that
has in effect an election under paragraph (1),
and any subsidiary of such holding company,
may, without prior notice to, or the approval of,
the Board under paragraph (8), (13), or, in the
case of an investment bank holding company,
(15) of section 4(c), engage de novo in any ac-
tivity, or acquire shares of any company en-
gaged in any activity, if—
‘‘(i) the Board has determined, by
order or regulation in effect at the time
the company or subsidiary commences to
engage in such activity or acquire such
shares, that the activity is permissible for
a financial services holding company or a
subsidiary of such company to engage in
under paragraph (8) or (13) of section 4(c)
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(and regulations prescribed under such
paragraphs); and
‘‘(ii) the activity is conducted in com-
pliance with all conditions and limitations
applicable to such activity under any regu-
lation, order, or advisory opinion pre-
scribed or issued by the Board.
‘‘(B) SUBSEQUENT
NOTICE.—A financial
services holding company that commences to
engage in an activity, or makes an acquisition,
in accordance with subparagraph (A) shall in-
form the Board of such fact, in writing, not
later than 10 days after commencing the activ-
ity or consummating the acquisition.
‘‘(4) CAPITAL.—
‘‘(A) IN GENERAL.—The Board shall not
(by regulation or order), directly or indirectly,
establish or apply minimum capital require-
ments to a financial services holding company
which has in effect an election under paragraph
(1) unless the Board concludes, on the basis of
all information available to the Board, that the
financial services holding company is not main-
taining sufficient financial resources to meet
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fully any guarantee required under paragraph
(2).
‘‘(B) CRITERIA FOR CONSIDERATION.—For
purposes of making a determination under sub-
paragraph (A), the Board shall consider, in ad-
dition to any other relevant considerations, the
financial condition and the adequacy of the cap-
ital of each of the depository institutions con-
trolled by the financial services holding com-
pany.
‘‘(5) REPORTS.—
‘‘(A) IN GENERAL—The reporting require-
ments contained in subsection (c)(2) shall apply
to a financial services holding company which
qualifies under this subsection, to the extent
provided by the Board.
‘‘(B) EXEMPTIONS FROM REPORTING RE-
QUIREMENTS.—
‘‘(i) IN GENERAL. The Board may, by
regulation or order, exempt any company
or class of companies, under such terms
and conditions and for such periods as the
Board shall provide in such regulation or
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order, from the provisions of this para-
graph and any regulations prescribed
under this paragraph.
‘‘(ii) 
CRITERIA
FOR
CONSIDER-
ATION.—In granting any exemption under
clause (i), the Board shall consider, among
other factors—
‘‘(I) whether information of the
type required under this paragraph is
available from a supervisory agency
(as defined in section 1101(7) of the
Right to Financial Privacy Act of
1978), the Commodity Futures Trad-
ing Commission, or a foreign regu-
latory body of a similar type;
‘‘(II) the primary business of the
company; and
‘‘(III) the nature and extent of
domestic or foreign regulations of the
company’s activities.
‘‘(6) EXAMINATIONS.—
‘‘(A) LIMITED USE OF EXAMINATION AU-
THORITY
FOR
FINANCIAL
SERVICES
HOLDING
COMPANIES.—The Board shall not examine,
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under this section, any financial services hold-
ing company described in paragraph (2)(A)(i)
for which an election is in effect under para-
graph (1) or any subsidiary (other than a de-
pository institution) of such holding company
unless—
‘‘(i) the Board determines, on the
basis of all information available to the
Board, that—
‘‘(I) the operations or activities
of the financial services holding com-
pany or any subsidiary of such com-
pany, or any transaction involving
such company or subsidiary and an
affiliated depository institution, may
pose a material risk to the safety and
soundness of any depository institu-
tion owned by such holding company;
or
‘‘(II) the financial services hold-
ing company does not appear to have
sufficient resources to meet the guar-
antee required under paragraph (2);
or
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‘‘(ii) the Board is unable to accom-
plish the purposes describe in subsection
(c)(3)(A) without such examinations.
‘‘(B) LIMITED USE OF EXAMINATION AU-
THORITY
FOR
INVESTMENT
BANK
HOLDING
COMPANIES.—The Board shall not examine,
under this section, any investment bank holding
company described in paragraph (2)(A)(ii)
which has an election in effect under paragraph
(1) or any subsidiary (other than a depository
institution) of such holding company unless—
‘‘(i) the Board determines that the op-
erations or activities of the investment
bank holding company or any subsidiary of
such company, or any transaction involving
such company or subsidiary and an affili-
ated depository institution, may pose a ma-
terial risk to the safety and soundness of
any depository institution owned by such
holding company; or
‘‘(ii) the Board is unable to determine
from reports the nature of the operations,
financial condition, activities, or effective-
ness of the risk management systems of
the investment bank holding company or
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any subsidiary of such company, or to as-
sess compliance with the provisions of this
Act and those governing transactions and
relationships between any depository insti-
tution controlled by the investment bank
holding company and the investment bank
holding company or any of such subsidi-
aries.
‘‘(C) RESTRICTED FOCUS AND DEFERENCE
IN EXAMINATIONS.—The Board shall limit the
focus and scope of any examination, under this
section, of a financial services holding company
or investment bank holding company for which
an election is in effect under paragraph (1) or
of any subsidiary (other than a depository insti-
tution) of such holding company and shall defer
to examinations conducted by the Securities Ex-
change Commission or other supervisors in ac-
cordance with subparagraphs (B), (C), and (D)
of subsection (c)(3).
‘‘(h) CAPITAL REQUIREMENTS FOR HOLDING COM-
PANIES SUBJECT TO DUAL REGULATION.—In determin-
ing whether to establish and the extent of capital require-
ments that apply to a financial services holding company,
the Board shall give due consideration to the activities
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conducted by the holding company and its subsidiaries and
any comparable capital requirements that are imposed on
the holding company by any other State or Federal regu-
latory authority.’’.
SEC. 125. CONVERSION OF UNITARY SAVINGS AND LOAN
HOLDING COMPANIES TO FINANCIAL SERV-
ICES HOLDING COMPANIES.
The Bank Holding Company Act of 1956 (12 U.S.C.
1841 et seq.) is amended by inserting after section 5 the
following new section:
‘‘§ 6. Conversion of unitary savings and loan holding
companies to financial services holding
companies
‘‘(a) STREAMLINED
PROCEDURE
FOR
CONVER-
SION.—
‘‘(1) IN GENERAL.—During the 18-month pe-
riod beginning on the date of the enactment of the
Financial Services Competitiveness Act of 1997, no
approval shall be required under section 3(a) or
paragraph (8) or (13) of section 4(c) for any quali-
fied savings and loan holding company to become a
financial services holding company for any company
that, both prior to January 1, 1995, and on the date
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of enactment of the Financial Services Competitive-
ness Act of 1997, is a savings and loan holding com-
pany if the requirements of paragraph (2) are met.
‘‘(2) ELIGIBILITY REQUIREMENTS.—A qualified
savings and loan holding company shall be eligible to
become a financial services holding company pursu-
ant to paragraph (1) if—
‘‘(A) the company becomes a financial
services holding company as the result of the
conversion of a savings association controlled by
such company as of the date of enactment of
the Financial Services Competitiveness Act of
1997 into a bank;
‘‘(B) the company is adequately capitalized
before and immediately after the conversion re-
ferred to in subparagraph (A);
‘‘(C) all depository institutions controlled
by such company are well capitalized before and
immediately after such conversion;
‘‘(D) all depository institutions controlled
by such company are well managed before the
conversion;
‘‘(E) the Board would not be prohibited
under any provision of section 3(d) from ap-
proving the transaction;
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‘‘(F) the activities of the company and of
each subsidiary of the company comply with
this Act (and regulations prescribed under this
Act); and
‘‘(G) the company provides the Board with
at least 30 days written notice of the proposed
conversion, and, before the expiration of such
30-day period, the Board has not objected to
the company becoming a financial services hold-
ing company based on the criteria contained in
this subsection.
‘‘(3) QUALIFIED SAVINGS AND LOAN HOLDING
COMPANY
DEFINED.—For purposes of this sub-
section, the term ‘qualified savings and loan holding
company’ means any company which became a sav-
ings and loan holding company before January 1,
1995, and is a savings and loan holding company as
of the date of the enactment of the Financial Serv-
ices Competitiveness Act of 1997.
‘‘(b) CONVERSION FEE.—No qualified savings and
loan holding company may become a financial services
holding company pursuant to this section unless the Board
has received, from such company, full payment of a fee
which the Board shall impose in accordance with section
5(h).’’.
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SEC. 126. RESERVED.
SEC. 127. COORDINATION WITH STATE LAW.
Except as specifically provided in section 109, no pro-
vision of this title, and no amendment made by this title
to any other provision of law, may be construed as super-
seding any provision of the law of any State which imposes
additional requirements or establishes higher standards
for the safe and sound operation and condition of deposi-
tory institutions (as defined in section 3 of the Federal
Deposit Insurance Act) and the protection of consumers
than the requirements imposed or the standards estab-
lished under this title and the amendments made by this
title to other provisions of law (including capital standards
and other safeguards placed on affiliates).
SEC. 128. CONFORMING AMENDMENTS TO THE BANK HOLD-
ING COMPANY ACT OF 1956.
(a) SHORT TITLE; TABLE OF CONTENTS.—The first
section of the Bank Holding Company Act of 1956 (12
U.S.C. 1841 nt.) is amended to read as follows:
‘‘§ 1. Short title; table of contents
‘‘(a) SHORT TITLE.—This Act may be cited as the
‘Financial Services Holding Company Act of 1997’.
‘‘(b) TABLE OF CONTENTS.—The table of contents
for this Act is as follows:
‘‘Sec. 1. Short title; table of contents.
‘‘Sec. 2. Definitions.
‘‘Sec. 3. Acquisition of bank shares or assets.
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‘‘Sec. 4. Interests in nonbanking organizations.
‘‘Sec. 5. Administration.
‘‘Sec. 6. Conversion of unitary savings and loan holding companies to financial
services holding companies.
‘‘Sec. 7. Reservation of rights to States.
‘‘Sec. 8. Penalties.
‘‘Sec. 9. Judicial review.
‘‘Sec. 10. Securities activities.
‘‘Sec. 11. Safeguards relating to securities activities.
‘‘Sec. 12. Investment bank holding companies and other financial activities.
‘‘Sec. 13. Saving provision.
‘‘Sec. 14. Separability of provisions.
‘‘(c) REFERENCES IN OTHER LAWS.—Any reference
in any Federal or State law to a provision of the Bank
Holding Company Act of 1956 shall be deemed to be a
reference to the corresponding provision of this Act.’’.
(d) DEFINITIONS.—
(1) Subsection (n) of section 2 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841(n))
is amended by inserting ‘‘ ‘depository institution’,’’
before ‘‘ ‘insured depository institution’ ’’.
(2) Subsection (o) of section 2 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841(o))
is amended—
(A) by striking paragraph (1) and insert-
ing the following new paragraph:
‘‘(1) LEAD
DEPOSITORY
INSTITUTION.—The
term ‘lead depository institution’ means the largest
depository institution controlled by the financial
services holding company, based on a comparison of
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the average total assets controlled by each deposi-
tory institution during the previous 12-month pe-
riod.’’; and
(B) by adding at the end the following new
paragraphs:
‘‘(8) DEPOSITORY INSTITUTION FOR CERTAIN
SECTIONS.—Notwithstanding subsection (n), the
term ‘depository institution’ includes, for purposes of
paragraph (1) and sections 4(k), 10, and 11, any
branch, agency, or commercial lending company op-
erated in the United States by a foreign bank.
‘‘(9) WELL MANAGED.—The term ‘well man-
aged’ means—
‘‘(A) in the case of any company or deposi-
tory institution which receives examinations, the
achievement of—
‘‘(i) a CAMEL composite rating of 1
or 2 (or an equivalent rating under an
equivalent rating system) in connection
with the most recent examination or subse-
quent review of such company or institu-
tion; and
‘‘(ii) at least a satisfactory rating for
management, if such rating is given; or
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‘‘(B) in the case of a company or deposi-
tory institution that has not received an exam-
ination rating, the existence and use of manage-
rial resources which the Board determines are
satisfactory.’’.
(3) Section 2 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841) (as amended by sec-
tion 116(a)(1) of this Act) is amended by inserting
after subsection (o) the following new subsections:
‘‘(p) SECURITIES AFFILIATE.—The term ‘securities
affiliate’ means any company—
‘‘(1) that is (or is required to be) registered
under the Securities Exchange Act of 1934 as a
broker or dealer; and
‘‘(2) the acquisition or retention of the shares
or assets of which the Board has approved under
section 10.
‘‘(q) CAPITAL TERMS.—
‘‘(1) DEPOSITORY INSTITUTIONS.—With respect
to depository institutions, the terms ‘well capital-
ized,’ ‘adequately capitalized’ and ‘undercapitalized’
have the meanings given to such terms in accord-
ance with section 38(b) of the Federal Deposit In-
surance Act.
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‘‘(2) FINANCIAL
SERVICES
HOLDING
COM-
PANY.—The following definitions shall apply with re-
spect to financial services holding companies:
‘‘(A) 
ADEQUATELY
CAPITALIZED.—The
term ‘adequately capitalized’ means a level of
capitalization which meets or exceeds the re-
quired minimum level established by the Board
for each relevant capital measure for financial
services holding companies.
‘‘(B) WELL CAPITALIZED.—The term ‘well
capitalized’ means a level of capitalization
which meets or exceeds the required capital lev-
els established by the Board for well capitalized
financial services holding companies.
‘‘(3) OTHER CAPITAL TERMS.—The terms ‘tier
1’ and ‘risk-weighted assets’ have the meaning given
those terms in the capital guidelines or regulations
established by the Board for financial services hold-
ing companies.
‘‘(r) FOREIGN BANK TERMS.—For purposes of sub-
sections (s) and (u), sections 4(k), 10, and 11, and sub-
sections (b) and (c) of section 12—
‘‘(1) the terms ‘agency’, ‘branch’, and ‘commer-
cial lending company’ have the same meaning as in
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section 1(b) of the International Banking Act of
1978.
‘‘(2) the term ‘foreign bank’ means a foreign
bank (as defined in section 1(b) of the International
Banking Act of 1978) which operates a branch,
agency or commercial lending company, or owns or
controls a bank, in the United States.’’.
(c) AMENDMENT
REGARDING
CONDITIONAL
AP-
PROVAL OF NOTICES.—Section 4(a)(2) of the Bank Hold-
ing Company Act of 1956 (12 U.S.C. 1843(a)(2)) is
amended by striking ‘‘paragraph (8)’’ and all that follows
through ‘‘issued by the Board under such paragraph’’ and
inserting ‘‘subsection (c)(8) or section 4(k), 10, or 11,
subject to all the conditions specified in those provisions
or in any order or regulation issued by the Board under
those provisions’’.
(d) AMENDMENT TO NOTICE PROCEDURES.—Section
4(j) of the Bank Holding Company Act of 1956 (12
U.S.C. 1843(j)) (as amended by section 122 of this title)
is amended—
(1) in paragraph (1)(A), by striking ‘‘subsection
(c)(8) or (a)(2)’’ and inserting ‘‘subsection (a)(2),
(c)(8), (c)(15), or (k)’’;
(2) in paragraph (1)(E)—
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(A) by striking ‘‘subsection (c)(8) or
(a)(2)’’ and inserting ‘‘subsection (a)(2), (c)(8),
(c)(15), or (k)’’; and
(B) by striking the last sentence and in-
serting the following: ‘‘In no event may the
Board, without the agreement of the financial
services holding company submitting the notice,
extend the notice period under this subpara-
graph beyond the period that ends 180 days
after the date that a notice is filed with the
Board or the relevant Federal reserve bank in
accordance with the regulations of the Board’’;
and
(3) in paragraph (2), by redesignating subpara-
graphs (B) and (C) as subparagraphs (C) and (D),
respectively, and inserting after subparagraph (A)
the following new subparagraph:
‘‘(B) CRITERIA FOR NOTICES INVOLVING
SECURITIES
AFFILIATES.—In considering any
notice that involves the acquisition of shares of
a securities affiliate pursuant to section
4(c)(15), the Board shall apply the criteria and
safeguards contained in this paragraph and in
sections 10 and 11.’’.
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(e) ELIMINATION OF OBSOLETE PROVISIONS.—The
Bank Holding Company Act of 1956 (12 U.S.C. 1841
through 1849) is amended—
(1) in section 4(a)(2)—
(A) by striking ‘‘or in the case of a com-
pany’’ and ending ‘‘after December 31, 1980,’’;
and
(B) by striking the sentence beginning
‘‘Notwithstanding any other provision of this
paragraph’’;
(2) in section 4(b), by striking ‘‘After two years
from the date of enactment of this Act, no’’ and in-
serting ‘‘No’’; and
(3) in section 5(a)—
(A) by striking ‘‘Within one hundred and
eighty days after the date of enactment of this
Act, or within’’ and inserting ‘‘Within’’; and
(B) by striking ‘‘whichever is later,’’.
(f) CONFORMING AMENDMENTS.—The Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et seq.) is amend-
ed as follows:
(1) In section 3(c)(4), by striking ‘‘one-bank
holding company’’ each place such term appears and
inserting ‘‘one-bank financial services holding com-
pany’’.
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(2) In section 3(f)(5), by striking ‘‘bank holding
company’’ the first and second time such term ap-
pears and inserting ‘‘financial services holding com-
pany’’.
(3) In section 4(i)(3)(A), by striking ‘‘is ac-
quired’’ and inserting ‘‘was acquired’’.
(4) By striking ‘‘bank holding companies’’ each
place such term appears in the following sections
and inserting ‘‘financial services holding companies’’:
(A) Section 3(d).
(B) Section 4(f).
(C) Section 7(a).
(5) By striking ‘‘bank holding company’s’’ each
place such term appears in section 4(c)(14) and in-
serting ‘‘financial services holding company’s’’.
(6) By striking ‘‘bank holding company’’ each
place such term appears in the following sections
and inserting ‘‘financial services holding company’’:
(A) Subsections (a), (d), (e), (g), (h), and
(o) of section 2.
(B) Subsections (a), (b), (d), (f)(1), (f)(2),
and (f)(3) of section 3.
(C) Subsections (a), (d), (e), (g), (h), and
(j) of section 4.
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(D) Clause (ii) in the portion of section
4(c) which precedes paragraph (1) of such sec-
tion.
(E) Paragraphs (2), (3), (7), (8), (10),
(11), (12)(A), and (14) of section 4(c).
(F) Paragraphs (4), (5), and (9) of section
4(f).
(G) Paragraphs (1) and (2) of section 4(i).
(H) Sections 5, 7(b), 8, and 11.
(7) In section 4(f)(1), by striking ‘‘bank holding
company’’ the second place such term appears and
inserting ‘‘financial services holding company’’.
(8) In the headings for sections 3(f) and 4(f),
by striking ‘‘BANK HOLDING’’ and inserting ‘‘FI-
NANCIAL SERVICES HOLDING’’.
(9) In the heading for section 2(o)(7), by strik-
ing ‘‘BANK’’ and inserting ‘‘FINANCIAL SERVICES’’.
(g) TREATMENT OF EXISTING BANK HOLDING COM-
PANIES.—Section 2(a)(6) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(a)(6)) is amended by insert-
ing at the end the following: ‘‘Any company that was a
bank holding company on the day before the date of enact-
ment of the Financial Services Competitiveness Act of
1997 shall, for purposes of this chapter, be deemed to have
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been a financial services holding company as of the date
on which the company became a bank holding company.’’.
(h) OTHER REFERENCES.—Any reference in any
Federal law to ‘‘bank holding company’’ or ‘‘bank holding
companies’’ as those terms were defined under the Bank
Holding Company Act of 1956 before the enactment of
this Act shall be deemed to include a reference to ‘‘finan-
cial services holding company’’ and ‘‘financial services
holding companies’’, respectively, as such terms are de-
fined under the Financial Services Holding Company Act
of 1997.
SEC. 129. CONFORMING AMENDMENTS TO THE BANK HOLD-
ING COMPANY ACT AMENDMENTS OF 1970.
Section 106 of the Bank Holding Company Act
Amendments of 1970 (12 U.S.C. 1971 through 1978) is
amended by striking ‘‘bank holding company’’ each place
such term appears and inserting ‘‘financial services hold-
ing company’’.
SEC. 130. CREDIT CARDS FOR BUSINESS PURPOSES.
Section 2(c)(2)(F) of the Bank Holding Company Act
of 1956 (relating to the definition of credit card banks)
is amended—
(1) in clause (i), by inserting ‘‘including the
provision of credit card accounts for business pur-
poses’’ before the semicolon; and
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(2) in clause (v), by inserting ‘‘(other than the
provision of credit card accounts for business pur-
poses in connection with the credit card operations
referred to in clause (i))’’ before the period.
Subtitle D—Interagency Banking
and Financial Services Advisory
Committee
SEC. 141. INTERAGENCY BANKING AND FINANCIAL SERV-
ICES ADVISORY COMMITTEE.
(a) ESTABLISHMENT; COMPOSITION.—There is es-
tablished the Banking and Financial Services Advisory
Committee which shall consist of 6 members as follows:
(1) The Secretary of the Treasury.
(2) The Chairman of the Board of Governors of
the Federal Reserve System.
(3) The Chairperson of the Board of Directors
of the Federal Deposit Insurance Corporation.
(4) The Chairman of the Securities and Ex-
change Commission.
(5) The Chairperson of the Commodities Fu-
tures Trading Commission.
(6) The Comptroller of the Currency.
(b) CHAIRPERSON.—The chairperson of the Commit-
tee shall be the Secretary of the Treasury.
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(c) DESIGNATION OF OFFICERS AND EMPLOYEES.—
The members of the Committee may, from time to time,
designate other officers or employees of their respective
agencies to carry out their duties on the Committee.
(d) COMPENSATION AND EXPENSES.—Each member
of the Committee shall serve without additional compensa-
tion but shall be entitled to reasonable expenses incurred
in carrying out official duties as a member.
(e) FUNCTION OF THE COMMITTEE.—
(1) IN GENERAL.—The Committee shall meet
as appropriate to consider matters of mutual inter-
est to the members and to consider making rec-
ommendations to the Board of Governors of the
Federal Reserve System regarding the types of ac-
tivities that may be financial in nature for purposes
of the Financial Services Holding Company Act and
to the Comptroller of the Currency regarding the
types of activities that may be incidential to banking
for purposes of section 5136 of the Revised Statutes
of the United States.
(2) CONSIDERATION OF RECOMMENDATIONS.—
The Board of Governors of the Federal Reserve Sys-
tem and the Comptroller of the Currency, as appro-
priate, shall take into account any recommendation
made to the respective agency by the Committee
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and, if the agency does not adopt the recommenda-
tion, shall provide a written explanation to the Com-
mittee.
(f) IMPROVING THE SUPERVISION, EFFICIENCY, AND
COMPETITIVENESS OF THE FINANCIAL SERVICES INDUS-
TRY.—
(1) IN GENERAL.—The Committee shall seek to
improve the supervision, efficiency, and competitive-
ness of the financial services industry by making
recommendations for such legislative or administra-
tive action as the Committee determines to be appro-
priate to the Congress, each agency or office rep-
resented by a member on the Committee, and other
agencies or departments of the United States, in-
cluding recommendations for changes in law and in
the regulations, policies, and procedures of any de-
partment or agency.
(2) PRINTING
IN
FEDERAL
REGISTER.—Rec-
ommendations from paragraph (1) shall be printed
in the Federal Register and submitted to the Com-
mittee on Banking and Financial Services of the
House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate.
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Subtitle E—Application and
Registration Fees
SEC. 151. AUTHORITY TO IMPOSE FEES.
Section 5 of the Bank Holding Company Act of 1956
(12 U.S.C. 1844) is amended by inserting after subsection
(g) (as added by section 124 of this Act) the following
new subsection:
‘‘(h) FEES.—In connection with the administration
of this Act, the Board may impose fees on any financial
services holding company, or any company controlled di-
rectly or indirectly by such holding company—
‘‘(1) for such purposes as the Board determines
to be reasonable and appropriate; and
‘‘(2) in amounts, determined by the Board,
which are at least sufficient to meet the Board’s ex-
penses in carrying out this Act with respect to the
activity, application, examination, or other incident
or status (of such company) for which a fee is im-
posed under this subsection.’’.
TITLE II—FUNCTIONAL
REGULATION
Subtitle A—Brokers and Dealers
SEC. 201. DEFINITION OF BROKER.
Section 3(a)(4) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(4)) is amended to read as follows:
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‘‘(4) BROKER.—
‘‘(A) IN
GENERAL.—The term ‘broker’
means any person engaged in the business of
effecting transactions in securities for the ac-
count of others.
‘‘(B) EXCLUSION
OF
BANKS.—The term
‘broker’ does not include a bank unless such
bank—
‘‘(i) publicly solicits the business of
effecting securities transactions for the ac-
count of others; or
‘‘(ii) is compensated for such business
by the payment of commissions or similar
remuneration based on effecting trans-
actions in securities (other than fees cal-
culated as a percentage of assets under
management) in excess of the bank’s incre-
mental 
costs 
directly 
attributable 
to
effecting such transactions (hereafter re-
ferred to as ‘incentive compensation’).
‘‘(C) EXEMPTION FOR CERTAIN BANK AC-
TIVITIES.—A bank shall not be considered to be
a broker because the bank engages in any of
the following activities under the conditions de-
scribed:
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‘‘(i) THIRD
PARTY
BROKERAGE
AR-
RANGEMENTS.—The bank enters into a
contractual or other arrangement with a
broker or dealer registered under this title
under which the broker or dealer offers
brokerage services on or off the premises
of the bank if—
‘‘(I) such broker or dealer is
clearly identified as the person per-
forming the brokerage services;
‘‘(II) the broker or dealer per-
forms brokerage services in an area
that is clearly marked and, unless
made impossible by space or personnel
considerations, 
physically 
separate
from the routine deposit-taking activi-
ties of the bank;
‘‘(III) any materials used by the
bank to advertise or promote generally
the availability of brokerage services
under the contractual or other ar-
rangement clearly indicate that the
brokerage services are being provided
by the broker or dealer and not by the
bank;
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‘‘(IV) any materials used by the
bank to advertise or promote generally
the availability of brokerage services
under the contractual or other ar-
rangement are in compliance with the
Federal securities laws before dis-
tribution;
‘‘(V) bank employees perform
only clerical or ministerial functions in
connection 
with 
brokerage 
trans-
actions, including scheduling appoint-
ments with the associated persons of
a broker or dealer and, on behalf of a
broker or dealer, transmitting orders
or handling customers funds or secu-
rities, except that bank employees who
are not so qualified may describe in
general terms investment vehicles
under the contractual or other ar-
rangement and accept customer or-
ders on behalf of the broker or dealer
if such employees have received train-
ing that is substantially equivalent to
the training required for personnel
qualified to sell securities pursuant to
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the requirements of a self-regulatory
organization (as defined in section
3(a) of the Securities Exchange Act of
1934);
‘‘(VI) bank employees do not di-
rectly receive incentive compensation
for any brokerage transaction unless
such employees are associated persons
of a broker or dealer and are qualified
pursuant to the requirements of a
self-regulatory organization (as so de-
fined) except that the bank employees
may 
receive 
nominal 
cash 
and
noncash compensation for customer
referrals if the cash compensation is a
one-time fee of a fixed dollar amount
and the payment of the fee is not con-
tingent on whether the referral results
in a transaction;
‘‘(VII) such services are provided
by the broker or dealer on a basis in
which all customers which receive any
services are fully disclosed to the
broker or dealer; and
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‘‘(VIII) the broker or dealer in-
forms each customer that the broker-
age services are provided by the
broker or dealer and not by the bank
and that the securities are not depos-
its or other obligations of the bank,
are not guaranteed by the bank, and
are not insured by the Federal De-
posit Insurance Corporation.
‘‘(ii) TRUST
ACTIVITIES.—The bank
engages 
in 
trust 
activities 
(including
effecting transactions in the course of such
trust activities) permissible for national
banks under the first section of the Act of
September 28, 1962, or for State banks
under relevant State trust statutes or law
(including securities safekeeping, self-di-
rected individual retirement accounts, or
managed agency accounts or other func-
tionally equivalent accounts of a bank) un-
less the bank—
‘‘(I) publicly solicits brokerage
business, other than by advertising
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that it effects transactions in securi-
ties in conjunction with advertising its
other trust activities; or
‘‘(II) 
receives 
incentive 
com-
pensation for such brokerage activi-
ties.
‘‘(iii) 
PERMISSIBLE
SECURITIES
TRANSACTIONS.—The bank effects trans-
actions in exempted securities, other than
municipal securities, in commercial paper,
bankers 
acceptances, 
commercial 
bills,
qualified Canadian government obligations
as defined in section 5136 of the Revised
Statutes, obligations of the Washington
Metropolitan Area Transit Authority which
are guaranteed by the Secretary of Trans-
portation under section 9 of the National
Capital Transportation Act of 1969, obli-
gations of the North American Develop-
ment Bank, and obligations of any local
public agency (as defined in section 110(h)
of the Housing Act of 1949) or any public
housing agency (as defined in the United
States Housing Act of 1937) that are ex-
pressly authorized by section 5136 of the
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Revised Statutes of the United States as
permissible for a national bank to under-
write or deal in.
‘‘(iv) MUNICIPAL
SECURITIES.—The
bank effects transactions in municipal se-
curities.
‘‘(v) EMPLOYEE
AND
SHAREHOLDER
BENEFIT PLANS.—The bank effects trans-
actions as part of any bonus, profit-shar-
ing, pension, retirement, thrift, savings, in-
centive, stock purchase, stock ownership,
stock appreciation, stock option, dividend
reinvestment, or similar plan for employees
or shareholders of an issuer or its subsidi-
aries.
‘‘(vi) SWEEP
ACCOUNTS.—The bank
effects transactions as part of a program
for the investment or reinvestment of bank
deposit funds into any no-load, open-end
management investment company reg-
istered under the Investment Company Act
of 1940 that holds itself out as a money
market fund.
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‘‘(vii) AFFAILIATE
TRANSACTIONS.—
The bank effects transactions for the ac-
count of any affiliate of the bank, as de-
fined in section 2 of the Financial Services
Holding Company Act of 1997.
‘‘(viii) PRIVATE
SECURITIES
OFFER-
INGS.—The bank—
‘‘(I) effects sales as part of a pri-
mary offering of securities by an is-
suer, not involving a public offering,
pursuant to section 3(b), 4(2), or 4(6)
of the Securities Act of 1933 and the
rules and regulations issued there-
under; and
‘‘(II) effects such sales exclu-
sively to an accredited investor, as de-
fined in section 3 of the Securities Act
of 1933.
‘‘(ix) DE
MINIMUS
EXEMPTION.—If
the bank does not have a subsidiary or af-
filiate registered as a broker or dealer
under section 15, the bank effects, other
than in transactions referred to in clauses
(i) through (viii), not more than—
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‘‘(I) 800 transactions in any cal-
endar year in securities for which a
ready market exists, and
‘‘(II) 200 other transactions in
securities in any calendar year.
‘‘(x) SAFEKEEPING
AND
CUSTODY
SERVICES.—The bank, as part of cus-
tomary banking activities—
‘‘(I) provides safekeeping or cus-
tody services with respect to securi-
ties, including the exercise of warrants
or other rights on behalf of customers;
‘‘(II) clears or settles trans-
actions in securities;
‘‘(III) effects securities lending
or borrowing transactions with or on
behalf of customers as part of services
provided to customers pursuant to
subclauses (I) and (II) or invests cash
collateral pledged in connection with
such transactions; or
‘‘(IV) holds securities pledged by
one customer to another customer or
securities subject to resale agreements
between customers or facilities the
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pledging or transfer of such securities
by book entry.
‘‘(xi) BANKING PRODUCTS.—The bank
effects transactions in products that—
‘‘(I) are described in section
10(l)(3)(B) of the Financial Services
Holding Company Act of 1997; or
‘‘(II) have been exempted by the
Board of Governors of the Federal
Reserve System pursuant to section
10(l)(3)(C) of such Act.
‘‘(D) EXEMPTION FOR ENTITIES SUBJECT
TO SECTION 15(e).—The term ‘broker’ does not
include a bank that—
‘‘(i) was, immediately prior to the en-
actment of the Financial Services Competi-
tiveness Act of 1997, subject to section
15(e); and
‘‘(ii) is subject to such restrictions
and requirements as the Commission con-
siders appropriate.’’.
SEC. 202. DEFINITION OF DEALER.
Section 3(a)(5) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(5)) is amended to read as follows:
‘‘(5) DEALER.—
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‘‘(A) IN
GENERAL.—The term ‘dealer’
means any person engaged in the business of
buying and selling securities for such person’s
own account through a broker or otherwise.
‘‘(B) EXCEPTION
FOR
PERSON
NOT
EN-
GAGED IN THE BUSINESS OF DEALING.—The
term ‘dealer’ does not include a person that
buys or sells securities for such person’s own
account, either individually or in a fiduciary ca-
pacity, but not as a part of a regular business.
‘‘(C) EXEMPTION FOR CERTAIN BANK AC-
TIVITIES.—A bank shall not be considered to be
a dealer because the bank engages in any of the
following activities under the conditions de-
scribed:
‘‘(i) The bank buys and sells commer-
cial paper, bankers acceptances, exempted
securities (other than municipal securities),
qualified Canadian Government obligations
as defined in section 5136 of the Revised
Statutes, obligations of the Washington
Metropolitan Area Transit Authority which
are guaranteed by the Secretary of Trans-
portation under section 9 of the National
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Capital Transportation Act of 1969, obli-
gations of the North American Develop-
ment Bank, and obligations of any local
public agency (as defined in section 110(h)
of the Housing Act of 1949) or any public
housing agency (as defined in the United
States Housing Act of 1937) that are ex-
pressly authorized by section 5136 of the
Revised Statutes of the United States as
permissible for a national bank to under-
write or deal in.
‘‘(ii) The bank buys and sells munici-
pal securities.
‘‘(iii) The bank buys and sells securi-
ties for investment purposes for the bank
or for accounts for which the bank acts as
a trustee or fiduciary.
‘‘(iv) The bank—
‘‘(I) has not been affiliated with
a securities affiliate under section 10
of the Financial Services Holding
Company Act of 1997 for more than
1 year; and
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‘‘(II) engages in the issuance or
sale, through a grantor trust or other-
wise, of securities backed by or rep-
resenting an interest in notes, drafts,
acceptances, loans, leases, receivables,
other obligations, or pools of any such
obligations originated or purchased by
the bank or any affiliate of the bank.
‘‘(v) The bank buys and sells products
that—
‘‘(I) are described in section
10(l)(3)(B) of the Financial Services
Holding Company Act of 1997; or
‘‘(II) have been exempted by the
Board of Governors of the Federal
Reserve System pursuant to section
10(l)(3)(C) of such Act.’’.
SEC. 203. POWER TO EXEMPT FROM THE DEFINITIONS OF
BROKER AND DEALER.
Section 3 of the Securities Exchange Act of 1934 (15
U.S.C. 78c) is amended by adding at the end the follow-
ing:
‘‘(e) EXEMPTION FROM DEFINITION OF BROKER OR
DEALER.—The Commission, by regulation or order, upon
its own motion or upon application, may conditionally or
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unconditionally exclude any person or class of persons
from the definitions of ‘broker’ or ‘dealer’, if the Commis-
sion finds that such exclusion is consistent with the public
interest, the protection of investors, and the purposes of
this title.’’.
SEC. 204. EFFECTIVE DATE.
This subtitle shall become effective 270 days after the
date of enactment of this Act.
Subtitle B—Bank Investment
Company Activities
SEC. 211. CUSTODY OF INVESTMENT COMPANY ASSETS BY
AFFILIATED BANK.
(a) MANAGEMENT COMPANIES.—Section 17(f) of the
Investment Company Act of 1940 (15 U.S.C. 80a–17(f))
is amended—
(1) by redesignating paragraphs (1), (2), and
(3) as subparagraphs (A), (B), and (C), respectively;
(2) by striking ‘‘(f) Every registered’’ and in-
serting
‘‘(f) CUSTODY OF SECURITIES.—
‘‘(1) Every registered’’;
(3) by designating the 2d, 3d, 4th, and 5th sen-
tences of such subsection as paragraphs (2) through
(5), respectively, and indenting the left margin of
such paragraphs appropriately; and
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(4) by adding at the end the following new
paragraph:
‘‘(6) Notwithstanding any provision of this sub-
section, if a bank described in paragraph (1) or an
affiliated person of such bank is an affiliated person,
promoter, organizer, or sponsor of, or principal un-
derwriter for the registered company, such bank may
serve as custodian under this subsection in accord-
ance with such rules, regulations, or orders as the
Commission may prescribe, consistent with the pro-
tection of investors, after consulting in writing with
the appropriate Federal banking agency, as defined
in section 3 of the Federal Deposit Insurance Act.’’.
(b) UNIT INVESTMENT TRUSTS.—Section 26(a)(1) of
the Investment Company Act of 1940 (15 U.S.C. 80a–
6(a)(1)) is amended by inserting before the semicolon at
the end the following: ‘‘, except that, if the trustee or cus-
todian described in this subsection is an affiliated person
of such underwriter or depositor, the Commission may
adopt rules and regulations or issue orders, consistent
with the protection of investors, prescribing the conditions
under which such trustee or custodian may serve, after
consulting in writing with the appropriate Federal bank-
ing agency (as defined in section 3 of the Federal Deposit
Insurance Act)’’.
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(c) FIDUCIARY DUTY OF CUSTODIAN.—Section 36(a)
of the Investment Company Act of 1940 (15 U.S.C. 80a–
35(a)) is amended—
(1) in paragraph (1), by striking ‘‘or’’ at the
end;
(2) in paragraph (2), by striking the period at
the end and inserting ‘‘; or ‘‘; and
(3) by inserting after paragraph (2) the follow-
ing:
‘‘(3) as custodian.’’.
SEC. 212. LENDING TO AN AFFILIATED INVESTMENT COM-
PANY.
Section 18 of the Investment Company Act of 1940
(15 U.S.C. 80a–18) is amended by adding at the end the
following:
‘‘(1) Notwithstanding any provision of this sec-
tion, it shall be unlawful for any affiliated person of
a registered investment company or any affiliated
person of such a person to loan money to such in-
vestment company in contravention of such rules,
regulations, or orders as the Commission may pre-
scribe in the public interest and consistent with the
protection of investors.’’.
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SEC. 213. INDEPENDENT DIRECTORS.
(a) IN GENERAL.—Section 2(a)(19)(A) of the Invest-
ment Company Act of 1940 (15 U.S.C. 80a–2(a)(19)(A))
is amended—
(1) by striking clause (v) and inserting the fol-
lowing new clause:
‘‘(v) any person (other than a reg-
istered investment company) that, at any
time during the preceding 6 months, has
executed any portfolio transactions for, en-
gaged in any principal transactions with,
or distributed shares for—
‘‘(I) the investment company,
‘‘(II) any other investment com-
pany having the same investment ad-
viser as such investment company or
holding itself out to investors as a re-
lated company for purposes of invest-
ment or investor services, or
‘‘(III) any account over which the
investment company’s investment ad-
viser has brokerage placement discre-
tion, or any affiliated person of such
a person,’’;
(2) by redesignating clause (vi) as clause (vii);
and
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(3) by inserting after clause (v) the following
new clause:
‘‘(vi) any person (other than a reg-
istered investment company) that, at any
time during the preceding 6 months, has
loaned money to—
‘‘(I) the investment company,
‘‘(II) any other investment com-
pany having the same investment ad-
viser as such investment company or
holding itself out to investors as a re-
lated company for purposes of invest-
ment or investor services, or
‘‘(III) any account for which the
investment company’s investment ad-
viser has borrowing authority,
or any affiliated person of such a person,
or’’.
(b) 
CONFORMING
AMENDMENT.—Section
2(a)(19)(B) of the Investment Company Act of 1940 (15
U.S.C. 80a–2(a)(19)(B)) is amended—
(1) by striking clause (v) and inserting the fol-
lowing new clause:
‘‘(v) any person (other than a reg-
istered investment company) that, at any
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time during the preceding 6 months, has
executed any portfolio transactions for, en-
gaged in any principal transactions with,
or distributed shares for—
‘‘(I) any investment company for
which the investment adviser or prin-
cipal underwriter serves as such,
‘‘(II) any investment company
holding itself out to investors, for pur-
poses of investment or investor serv-
ices, as a company related to any in-
vestment company for which the in-
vestment adviser or principal under-
writer serves as such, or
‘‘(III) any account over which the
investment 
adviser 
has 
brokerage
placement discretion, or any affiliated
person of such a person,’’;
(2) by redesignating clause (vi) as clause (vii);
and
(3) by inserting after clause (v) the following
new clause:
‘‘(vi) any person (other than a reg-
istered investment company) that, at any
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time during the preceding 6 months, has
loaned money to—
‘‘(I) any investment company for
which the investment adviser or prin-
cipal underwriter serves as such,
‘‘(II) any investment company
holding itself out to investors, for pur-
poses of investment or investor serv-
ices, as a company related to any in-
vestment company for which the in-
vestment adviser or principal under-
writer serves as such, or
‘‘(III) any account for which the
investment adviser has borrowing au-
thority,
or any affiliated person of such a person,
or’’.
(c) AFFILIATION OF DIRECTORS.—Section 10(c) of
the Investment Company Act of 1940 (15 U.S.C. 80a–
10(c)) is amended by striking ‘‘bank, except’’ and insert-
ing ‘‘bank (and its subsidiaries) or any single financial
services holding company (and its affiliates and subsidi-
aries), as those terms are defined in the Financial Services
Holding Company Act of 1997, except’’.
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(d) EFFECTIVE DATE.—The provisions of subsection
(a) of this section shall become effective 1 year after the
date of enactment of this subtitle.
SEC. 214. ADDITIONAL SEC DISCLOSURE AUTHORITY.
(a) MISREPRESENTATION.—Section 35(a) of the In-
vestment Company Act of 1940 (15 U.S.C. 80a–34(a)) is
amended to read as follows:
‘‘(a) MISREPRESENTATION OF GUARANTEES.—
‘‘(1) IN GENERAL.—It shall be unlawful for any
person, issuing or selling any security of which a
registered investment company is the issuer, to rep-
resent or imply in any manner whatsoever that such
security or company—
‘‘(A) has been guaranteed, sponsored, rec-
ommended, or approved by the United States,
or any agency, instrumentality or officer of the
United States;
‘‘(B) has been insured by the Federal De-
posit Insurance Corporation; or
‘‘(C) is guaranteed by or is otherwise an
obligation of any bank or insured depository in-
stitution.
‘‘(2) DISCLOSURES.—Any person issuing or
selling the securities of a registered investment com-
pany shall prominently disclose that the investment
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company or any security issued by the investment
company—
‘‘(A) is not insured by the Federal Deposit
Insurance Corporation;
‘‘(B) is not guaranteed by an affiliated in-
sured depository institution; and
‘‘(C) is not otherwise an obligation of any
bank or insured depository institution,
in accordance with such rules, regulations, or orders
as the Commission may prescribe as reasonably nec-
essary or appropriate in the public interest for the
protection of investors, after consulting in writing
with the appropriate Federal banking agencies.
‘‘(3) DEFINITIONS.—The terms ‘insured deposi-
tory institution’ and ‘appropriate Federal banking
agency’ have the meaning given to such terms in
section 3 of the Federal Deposit Insurance Act.’’.
(b) DECEPTIVE USE OF NAMES.—Section 35(d) of
the Investment Company Act of 1940 (15 U.S.C. 80a–
34(d)) is amended to read as follows:
‘‘(d) It shall be unlawful for any registered invest-
ment company to adopt as part of the name or title of
such company, or of any securities of which it is the issuer,
any word or words that the Commission finds are materi-
ally deceptive or misleading. The Commission may adopt
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such rules or regulations or issue such orders as are nec-
essary or appropriate to prevent the use of deceptive or
misleading names or titles by investment companies.’’.
SEC. 215. DEFINITION OF BROKER UNDER THE INVEST-
MENT COMPANY ACT OF 1940.
Section 2(a)(6) of the Investment Company Act of
1940 (15 U.S.C. 80a–2(a)(6)) is amended to read as fol-
lows:
‘‘(6) The term ‘broker’ has the same meaning as in
the Securities Exchange Act of 1934, except that
such term does not include any person solely by rea-
son of the fact that such person is an underwriter
for one or more investment companies.’’.
SEC. 216. DEFINITION OF DEALER UNDER THE INVEST-
MENT COMPANY ACT OF 1940.
Section 2(a)(11) of the Investment Company Act of
1940 (15 U.S.C. 80a–2(a)(11)) is amended to read as fol-
lows:
‘‘(11) The term ‘dealer’ has the same meaning
as in the Securities Exchange Act of 1934, but does
not include an insurance company or investment
company.’’.
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SEC. 217. REMOVAL OF THE EXCLUSION FROM THE DEFINI-
TION OF INVESTMENT ADVISER FOR BANKS
THAT ADVISE INVESTMENT COMPANIES.
(a) INVESTMENT ADVISER.—Section 202(a)(11) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b–
2(a)(11)) is amended in subparagraph (A), by striking
‘‘investment company’’ and inserting ‘‘investment com-
pany, except that the term ‘investment adviser’ includes
any bank or financial services holding company to the ex-
tent that such bank or financial services holding company
acts as an investment adviser to a registered investment
company, or if, in the case of a bank, such services are
performed through a separately identifiable department or
division, the department or division, and not the bank it-
self, shall be deemed to be the investment adviser’’.
(b) SEPARATELY IDENTIFIABLE DEPARTMENT
OR
DIVISION.—Section 202(a) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b–2(a)) is amended by adding at
the end the following:
‘‘(25) The term ‘separately identifiable depart-
ment or division’ of a bank means a unit—
‘‘(A) that is under the direct supervision of
an officer or officers designated by the board of
directors of the bank as responsible for the day-
to-day conduct of the bank’s investment adviser
activities for one or more investment companies,
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including the supervision of all bank employees
engaged in the performance of such activities;
and
‘‘(B) for which all of the records relating
to its investment adviser activities are sepa-
rately maintained in or extractable from such
unit’s own facilities or the facilities of the bank,
and such records are so maintained or other-
wise accessible as to permit independent exam-
ination and enforcement of this Act or the In-
vestment Company Act of 1940 and rules and
regulations promulgated under this Act or the
Investment Company Act of 1940.’’.
SEC. 218. DEFINITION OF BROKER UNDER THE INVEST-
MENT ADVISERS ACT OF 1940.
Section 202(a)(3) of the Investment Advisers Act of
1940 (15 U.S.C. 80b–2(a)(3)) is amended to read as fol-
lows:
‘‘(3) The term ‘broker’ has the same meaning
as in the Securities Exchange Act of 1934.’’.
SEC. 219. DEFINITION OF DEALER UNDER THE INVEST-
MENT ADVISERS ACT OF 1940.
Section 202(a)(7) of the Investment Advisers Act of
1940 (15 U.S.C. 80b–2(a)(7)) is amended to read as fol-
lows:
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‘‘(7) The term ‘dealer’ has the same meaning as
in the Securities Exchange Act of 1934, but does
not include an insurance company or investment
company.’’.
SEC. 220. INTERAGENCY CONSULTATION.
The Investment Advisers Act of 1940 (15 U.S.C.
80b–1 et seq.) is amended by inserting after section 210
the following new section:
‘‘§ 210A. Consultation
‘‘(a) EXAMINATION RESULTS AND OTHER INFORMA-
TION.—
‘‘(1) The appropriate Federal banking agency
shall provide the Commission upon request the re-
sults of any examination, reports, records, or other
information as each may have access to with respect
to the investment advisory activities of any financial
services holding company, bank, or separately identi-
fiable department or division of a bank, that is reg-
istered under section 203 of this title, or, in the case
of a financial services holding company or bank, that
has a subsidiary or a separately identifiable depart-
ment or division registered under that section, to the
extent necessary for the Commission to carry out its
statutory responsibilities.
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‘‘(2) The Commission shall provide to the ap-
propriate Federal banking agency upon request the
results of any examination, reports, records, or other
information with respect to the investment advisory
activities of any financial services holding company,
bank, or separately identifiable department or divi-
sion of a bank, any of which is registered under sec-
tion 203 of this title, to the extent necessary for the
agency to carry out its statutory responsibilities.
‘‘(b) EFFECT
ON
OTHER
AUTHORITY.—Nothing
herein shall limit in any respect the authority of the appro-
priate Federal banking agency with respect to such finan-
cial services holding company, bank, or department or di-
vision under any provision of law.
‘‘(c) DEFINITION.—For purposes of this section, the
term ‘appropriate Federal banking agency’ shall have the
same meaning as in section 3 of the Federal Deposit In-
surance Act.’’.
SEC. 221. TREATMENT OF BANK COMMON TRUST FUNDS.
(a) SECURITIES ACT OF 1933.—Section 3(a)(2) of
the Securities Act of 1993 (15 U.S.C. 77c(a)(2)) is
amended by striking ‘‘or any interest or participation in
any common trust fund or similar fund maintained by a
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bank exclusively for the collective investment and reinvest-
ment of assets contributed thereto by such bank in its ca-
pacity as trustee, executor, administrator, or guardian’’
and inserting ‘‘or any interest or participation in any com-
mon trust fund or similar fund that is excluded from the
definition of the term ‘investment company’ under section
3(c)(3) of the Investment Company Act of 1940’’.
(b) SECURITIES EXCHANGE ACT OF 1934.—Section
3(a)(12)(A)(iii) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(12)(A)(iii)) is amended to read as fol-
lows:
‘‘(iii) any interest or participation in
any common trust fund or similar fund
that is excluded from the definition of the
term ‘investment company’ under section
3(c)(3) of the Investment Company Act of
1940;’’.
(c) INVESTMENT COMPANY ACT OF 1940.—Section
3(c)(3) of the Investment Company Act of 1940 (15
U.S.C. 80a–3(c)(3)) is amended by inserting before the
period the following: ‘‘, if—
‘‘(A) such fund is employed by the bank
solely as an aid to the administration of trusts,
estates, or other accounts created and main-
tained for a fiduciary purpose;
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‘‘(B) except in connection with the ordi-
nary advertising of the bank’s fiduciary serv-
ices, interests in such fund are not—
‘‘(i) advertised; or
‘‘(ii) offered for sale to the general
public; and
‘‘(C) fees and expenses charged by such
fund are not in contravention of fiduciary prin-
ciples established under applicable Federal or
State law’’.
SEC. 222. INVESTMENT ADVISERS PROHIBITED FROM HAV-
ING 
CONTROLLING 
INTEREST 
IN 
REG-
ISTERED INVESTMENT COMPANY.
Section 15 of the Investment Company Act of 1940
(15 U.S.C. 80a–15) is amended by adding at the end the
following new subsection:
‘‘(g) CONTROLLING INTEREST IN INVESTMENT COM-
PANY PROHIBITED.—
‘‘(1) IN GENERAL.—If any investment adviser
to a registered investment company, or an affiliated
person of that investment adviser, holds a control-
ling interest in that registered investment company
in a trustee or fiduciary capacity, such person
shall—
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‘‘(A) if it holds the shares in a trustee or
fiduciary capacity with respect to any employee
benefit plan subject to the Employee Retire-
ment Income Security Act of 1974, transfer the
power to vote the shares of the investment com-
pany through to another person acting in a fi-
duciary capacity with respect to the plan who is
not an affiliated person of that investment ad-
viser or any affiliated person thereof; or
‘‘(B) if it holds the shares in a trustee or
fiduciary capacity with respect to any other per-
son or entity other than an employee benefit
plan subject to the Employee Retirement In-
come Security Act of 1974—
‘‘(i) transfer the power to vote the
shares of the investment company through
to—
‘‘(I) the beneficial owners of the
shares;
‘‘(II) another person acting in a
fiduciary capacity who is not an affili-
ated person of that investment adviser
or any affiliated person thereof; or
‘‘(III) any person authorized to
receive statements and information
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with respect to the trust who is not an
affiliated person of that investment
adviser or any affiliated person there-
of;
‘‘(ii) vote the shares of the investment
company held by it in the same proportion
as shares held by all other shareholders of
the investment company; or
‘‘(iii) vote the shares of the invest-
ment company as otherwise permitted
under such rules, regulations, or orders as
the Commission may prescribe for the pro-
tection of investors.
‘‘(2) EXEMPTION.—Paragraph (1) shall not
apply to any investment adviser to a registered in-
vestment company, or an affiliated person of that in-
vestment adviser, holding shares of the investment
company in a trustee or fiduciary capacity if that
registered investment company consists solely of as-
sets held in such capacities.
‘‘(3) SAFE HARBOR.—No investment adviser to
a registered investment company or any affiliated
person of such investment adviser shall be deemed to
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have acted unlawfully or to have breached a fidu-
ciary duty under State or Federal law solely by rea-
son of acting in accordance with clause (i), (ii), or
(iii) of paragraph (1)(B).
‘‘(4) CHURCH
PLAN
EXEMPTION.—Paragraph
(1) shall not apply to any investment adviser to a
registered investment company, or an affiliated per-
son of that investment adviser, holding shares in
such a capacity, if such investment adviser or such
affiliated person is an organization described in sec-
tion 414(e)(3)(A) of the Internal Revenue Code of
1986.’’.
SEC. 223. CONFORMING CHANGE IN DEFINITION.
Section 2(a)(5)) of the Investment Company Act of
1940 (15 U.S.C. 80a–2(a)(5)) is amended by striking
‘‘(A) a banking institution organized under the laws of the
United States’’ and inserting ‘‘(A) a depository institution
(as defined in section 3 of the Federal Deposit Insurance
Act) or a branch or agency of a foreign bank (as such
terms are defined in section 101(b) of the International
Banking Act of 1978)’’.
SEC. 224. EFFECTIVE DATE.
This subtitle shall take effect 90 days after the date
of the enactment of this Act.
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TITLE III—BANK INSURANCE
ACTIVITIES
SEC. 301. NATIONAL BANK AND HOLDING COMPANY INSUR-
ANCE ACTIVITIES.
(a) STATE SUPERVISION.—Chapter 1 of title LXII
of the Revised Statutes of the United States (12 U.S.C.
21 et seq.) is amended—
(1) by redesignating section 5136A as section
5136C; and
(2) by inserting after section 5136 (12 U.S.C.
24) the following new section:
‘‘§ 5136A. State supervision of insurance
‘‘(a) STATE REGULATION OF MANNER IN WHICH IN-
SURANCE IS PROVIDED.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
no provision of section 5136, any other section of
this title, or section 13 of the Federal Reserve Act
may be construed as limiting or otherwise impairing
the authority of any State to regulate—
‘‘(A) the manner (including the manner of
consumer protection) in which a national bank
may provide insurance within the State pursu-
ant to section 5136 or 5136B of this chapter or
section 13 of the Federal Reserve Act; and
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‘‘(B) the manner in which a national bank
may provide annuity contracts within the State
pursuant to section 5136 through, and limited
to, consumer disclosure requirements or licens-
ing requirements, procedures, and qualifica-
tions.
‘‘(2) STANDARD FOR STATE MANNER REGULA-
TION.—Notwithstanding paragraph (1)—
‘‘(A) BARNETT STANDARD FOR PROVIDING
INSURANCE AS AGENT OR BROKER.—No State
may impose any insurance regulatory require-
ment relating to providing insurance or annuity
contracts, as agent or broker, that prevents or
significantly interferes with a national bank’s
exercise of its powers under section 5136, any
other section of this title, or section 13 of the
Federal Reserve Act.
‘‘(B) STANDARD
FOR
PROVIDING
INSUR-
ANCE AS PRINCIPAL.—No State may impose on
a national bank any insurance regulatory re-
quirement relating to providing insurance as
principal that treats or has the effect of treat-
ing the national bank more restrictively than
any other depository institution (as defined in
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section 3(c)(1) of the Federal Deposit Insur-
ance Act) operating in the State.
‘‘(3) STATE VIEWS.—In a determination by the
Comptroller of the Currency whether for purposes of
this subsection any product is insurance or an annu-
ity contract, the Comptroller of the Currency, and
any court reviewing the determination of the Comp-
troller of the Currency, must consider—
‘‘(A) any views of the insurance regulatory
authority of the State in which the product is
provided or to be provided as to whether the
product should be treated as insurance or an
annuity contract, including the insurance regu-
latory authority’s views as to the nature of the
product and the history of its regulation; and
‘‘(B) any other information relevant as to
whether the product should be treated as insur-
ance.
‘‘(b) NATIONAL BANK AUTHORITY.—A national bank
may not provide insurance or annuity contracts as a prin-
cipal, agent, or broker except as provided in this section,
the paragraph designated as the ‘Seventh’ of section
5136(a) of this chapter, 5136B of this chapter, or section
13 of the Federal Reserve Act.’’.
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(b) PRODUCT REGULATION.—Section 5136 of the
Revised Statutes of the United States (12 U.S.C. 24) is
amended—
(1) by striking ‘‘Upon duly making and filing
articles of association’’ and inserting ‘‘(a) IN GEN-
ERAL.—Upon duly making and filing articles of as-
sociation’’; and
(2) by adding at the end of the following new
subsection:
‘‘(b) SCOPE.—
‘‘(1) PRINCIPAL ACTIVITIES.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), a national bank or a subsidiary
thereof may not provide a product in a State as
principal pursuant to subsection (a) if, as of
January 1, 1996, the product was regulated as
insurance, in accordance with the relevant State
insurance law, by the appropriate insurance
regulatory authority of the State in which the
product is to be provided.
‘‘(B) EXCEPTION.—Except for title insur-
ance and annuity contracts as described in
paragraph (4)(A), subparagraph (A) shall not
apply to a product that national banks or sub-
sidiaries thereof had authority to provide as
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principal pursuant to subsection (a) as of Janu-
ary 1, 1996, or to a product that was regulated
as insurance as of January 1, 1996, by the ap-
propriate insurance regulatory authority of the
State in which the product is to be provided but
ceases to be so regulated after the date of en-
actment of the Financial Services Competitive-
ness Act of 1997.
‘‘(2) AGENCY AND BROKERAGE ACTIVITIES.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), a national bank may not provide a
product in a State as agent or broker pursuant
to subsection (a) if, as of January 1, 1996, the
product was regulated as insurance, in accord-
ance with the relevant State insurance law, by
the appropriate insurance regulatory authority
of the State in which the product is to be pro-
vided.
‘‘(B) 
EXCEPTION.—Subparagraph 
(A)
shall not apply to a product that national banks
had authority to provide as agent or broker
pursuant to subsection (a) as of January 1,
1996, or to a product that was regulated as in-
surance as of January 1, 1996, by the appro-
priate insurance regulatory authority of the
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‘‘(B) any other information relevant as to
whether the product should be treated as insur-
ance.
‘‘(4) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) INSURANCE.—The term ‘insurance’
shall include any annuity contract the income
on which is tax deferred under section 72 of the
Internal Revenue Code of 1986.
‘‘(B) PRODUCT.—The term ‘product’ shall
be defined as any product that existed as of
January 1, 1996, and a new form of such prod-
uct that is developed after January 1, 1996.
‘‘(5) AUTHORITY.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, national banks had authority to pro-
vide a product in any State as of January 1,
1996, if on or before such date—
‘‘(i) the Comptroller of the Currency
had determined, in writing, that national
banks may provide the product; or
‘‘(ii) national banks were providing
the product.
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‘‘(B) EXCEPTION.—Notwithstanding sub-
paragraph (A), national banks did not have au-
thority to provide a product in a State as of
January 1, 1996, if on or before such date a
court of relevant jurisdiction for such State
had, by final judgment, overturned a determina-
tion of the Comptroller of the Currency that na-
tional banks may provide such product.’’.
(c) FINANCIAL SERVICES HOLDING COMPANY AC-
TIVITIES.—Section 4(c)(8) of the Financial Services Hold-
ing Company Act of 1997 (12 U.S.C. 1843(c)(8)) is
amended by striking ‘‘approval by the Board prior to Jan-
uary 1, 1971.’’ and inserting the following: ‘‘approval by
the Board prior to January 1, 1971; (H) effective 90 days
after enactment it shall be financial in nature to provide
insurance as principal, agent, or broker in any State, in
full compliance with the laws and regulations of such State
that apply uniformly to each type of insurance license or
authorization in that State, except that in no event shall
the company or the financial services holding company, or
any affiliate of the company or the financial services hold-
ing company, be subject to any State law or regulation
that restricts a bank from having an affiliate, agent, or
employee in that State licensed to provide insurance as
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principal, agent, or broker. The Board shall prescribe reg-
ulations concerning insurance affiliations that provide
equivalent treatment for all stock and mutual insurance
companies that control or are affiliated with a bank, and
fully accommodate and are consistent with State law.’’.
(d) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) The eleventh undesignated paragraph of
section 13 of the Federal Reserve Act (12 U.S.C.
92) is amended by inserting’’, and subject to section
5136A of the Revised Statutes of the United States,
‘‘after’’ the laws of the United States’’.
(2) The paragraph designated the ‘‘Seventh’’ of
section 5136 of the Revised Statutes of the United
States (12 U.S.C. 24) is amended by striking ‘‘sub-
ject to law,’’ and inserting ‘‘subject to subsection
(b), section 5136A, and any other provision of law,’’.
(3) Section 1306 of title 18, United States
Code, is amended by striking ‘‘5136A’’ and inserting
‘‘5136C’’.
(e) CLERICAL AMENDMENT.—The table of sections
for chapter 1 of title LXII of the Revised Statutes of the
United States is amended—
(1) by redesignating the item relating to section
5136A as section 5136C; and
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(2) by inserting after the item relating to sec-
tion 5136 the following new item:
‘‘5136A. State supervision of insurance.’’.
(f) PRESERVATION OF FINANCIAL SERVICES HOLD-
ING COMPANY INSURANCE AUTHORITY.—Except for sub-
section (c), no provision of this section, and no amendment
made by this section to any other provision of law, may
be construed as affecting the authority of a financial serv-
ices holding company to engage in insurance agency activ-
ity pursuant to section 4 of the Financial Services Holding
Company Act of 1997.
(g) PRESERVATION OF STATE BANK INSURANCE AC-
TIVITIES.—
(1) IN GENERAL.—Nothwithstanding section 4
or 7 of the Financial Services Holding Company Act
of 1997, no State law, rule, regulation, or order that
is adopted after the effective date of this Act and
that restricts or impedes a bank from having an af-
filiate, agent, or employee in that State licensed to
provide insurance as principal, agent, or broker, on
the basis of an affiliation between a bank, agent, or
employee and an insurance company, shall apply to
any insured State bank, or any subsidiary of an in-
sured State bank, that was—
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(A) licensed to provide insurance as prin-
cipal, agent, or broker within such State on
April 24, 1996; and
(B) providing such insurance under the
terms of section 24 of the Federal Deposit In-
surance Act.
(2) RULE OF CONSTRUCTION.—No provision of
paragraph (1) shall be construed as preventing a
State from repealing or revising the authority for all
banks or bank subsidiaries chartered by such State
to provide insurance as principal, agent, or broker.
(h) INSURANCE AFFILIATIONS IN NONRESTRICTIVE
STATES.—In the case of an insurance affiliation that is
otherwise permitted in a State in accordance with section
4(c)(8)(H) of the Financial Services Holding Company
Act of 1997, no State law, provision of this section, or
amendment to any other provision of law may be con-
strued as affecting the authority of a national bank to pro-
vide as agent or broker insurance products provided as
principal by the bank’s affiliate.
SEC. 302. NATIONAL BANK COMMUNITY DEVELOPMENT IN-
SURANCE ACTIVITIES.
(a) IN GENERAL.—Chapter 1 of title LXII of the Re-
vised Statutes of the United States (12 U.S.C. 21 et seq.)
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is amended by inserting after section 5136A (as added by
section 301(a)(2) of the Act) the following new section:
‘‘§ 5136B. Insurance sales in empowerment zones
‘‘(a) AUTHORITY TO SELL INSURANCE AS AGENT
FROM EMPOWERMENT ZONES.—The Comptroller of the
Currency may approve an application by a national bank
maintaining a main office or full-service branch in an
empowerment zone to act as an agent or broker from such
office or branch for any fire, life, or other insurance com-
pany authorized to do business in the State in which the
customer is located if—
‘‘(1) the bank provides sufficient evidence that
the availability of competitively priced insurance in
the empowerment zone is inadequate; and
‘‘(2) the insurance is sold only in the
empowerment zone.
‘‘(b) APPLICATION
OF STATE LAW.—State laws
which regulate conducting the business of insurance shall
apply to national banks and their employees that sell in-
surance as agent or broker under this section to the same
extent as such laws apply to other entities and persons
not affiliated with depository institutions except—
‘‘(1) in any case in which the Comptroller of
the Currency determines, after notice to and com-
ment by the appropriate State insurance officials,
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that the application of a State law would have an
unreasonably discriminatory effect upon the sale of
insurance by national banks or their employees in
comparison with the effect the application of the
State law would have with respect to sale of insur-
ance by other entities; or
‘‘(2) when State law by its own terms does not
apply to national banks or employees of such banks.
‘‘(c) AUTHORITY OF COMPTROLLER OF THE CUR-
RENCY.—
‘‘(1) IN
GENERAL.—The Comptroller of the
Currency may prescribe regulations governing sales
of insurance by national banks pursuant to this sec-
tion.
‘‘(2) ENFORCEMENT OF STATE LAW.—The pro-
visions of any State law to which a national bank is
subject under this section shall be enforced with re-
spect to such bank by the Comptroller of the Cur-
rency.
‘‘(d) DEFINITIONS.—
‘‘(1) 
EMPOWERMENT
ZONE.—The 
term
‘empowerment zone’ means an area that meets the
standards for designation as an empowerment zone
or enterprise community under section 1392 of the
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Internal Revenue Code of 1986 or an Indian res-
ervation.
‘‘(2) FULL-SERVICE BRANCH.—The term ‘full-
service branch’ means a staffed facility which has
been approved as a branch and offers loan and de-
posit services.
‘‘(3) INDIAN RESERVATION.—The term ‘Indian
reservation’ has the meaning given such term by sec-
tion 168(j)(6) of the Internal Revenue Code of
1986.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 1 of title LXII of the Revised Statutes of the
United States is amended by inserting after the item relat-
ing to section 5136(A) (as added by section 301(e) of this
title) the following new item:
‘‘5136B. Insurance sales in empowerment zones.’’.
SEC. 303. REDOMESTICATION OF MUTUAL LIFE INSURERS.
(a) REDOMESTICATION.—A mutual life insurer orga-
nized under the laws of any State may transfer its domi-
cile to a transferee domicile as a step in a reorganization
in which, pursuant to the laws of the transferee domicile,
the mutual life insurer becomes a stock life insurer, wheth-
er as a direct or indirect subsidiary of a mutual holding
company or otherwise. Upon compliance with the applica-
ble law of the transferee domicile governing transfers of
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domicile and completion of a transfer pursuant to this sec-
tion, the mutual life insurer shall cease to be a domestic
insurer in the transferor domicile and, as a continuation
of its corporate existence, shall be a domestic insurer of
the transferee domicile.
(b) LICENSES, ETC.—The certificate of authority,
agents’ appointments and licenses, rates, approvals and
other items which a licensed State allows and that are in
existence immediately prior to the time a redomesticating
insurer transfers its domicile pursuant to this section shall
continue in full force and effect upon transfer if the in-
surer remains duly qualified to transact the business of
insurance in such licensed State. All outstanding insur-
ance policies and annuity contracts of a redomesticating
insurer shall remain in full force and effect and need not
be endorsed as to the new domicile of the insurer unless
so ordered by the State insurance regulator of a licensed
State, and the only as to those outstanding policies whose
owners reside in such licensed State. Applicable State law
may require a redomesticating insurer to file new policy
forms with the State insurance regulator of a licensed
State on or before the effective date of the transfer, but
a redomesticating insurer may use existing policy forms
with appropriate endorsements to reflect the new domicile
of the redomesticating insurer until the new policy forms
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are approved for use by the State insurance regulator of
such licensed State. A redomesticating insurer shall give
notice of the proposed transfer to the State insurance reg-
ulator of each licensed State and shall file promptly any
resulting amendments to corporate documents required to
be filed by a foreign licensed mutual life insurer with the
insurance regulator of each such licensed State.
(c) PREEMPTION OF STATE LAWS RESTRICTING RE-
DOMESTICATION.—
(1) Any State law conflicting with the provi-
sions of this section is hereby preempted. Without
limiting the generality of the preceding sentence, the
following State laws purporting to regulate redomes-
ticated or redomesticating insurers shall be pre-
empted with respect to such insurers:
(A) Any provision impeding or intended to
impede the activities of, taking any action
against, or applying any provision of law or reg-
ulation to, any insurer or affiliate of such in-
surer because that insurer or any affiliate plans
to redomesticate or has redomesticated pursu-
ant to this section.
(B) Any provision impeding the activities
of, taking any action against, or applying any
provision of law or regulation to, any insured or
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any insurance licensee or other intermediary be-
cause such insured or such insurance licensee
or other intermediary has procured insurance
from or placed insurance with any insurer or
any affiliate of such insurer that plans to re-
domesticate or has redomesticated pursuant to
this section.
(C) any provision purporting to terminate,
by reason of the redomestication of a mutual
life insurer pursuant to this section, any certifi-
cate of authority, agent appointment or license,
rate approval or other approval of any State in-
surance regulator or other State authority in
existence immediately prior to the redomestica-
tion in any State other than the transferee
domicile.
Where a State applies any State law to a redomes-
ticating or redomesticated insurer or insurers (as
well as affiliates of such insurer or insurers) in a
different manner than the State has applied such
law to insurers that are not redomesticating or re-
domesticated insurers, such application of such law
or regulation to the redomesticating or redomes-
ticated insurer or insurers shall be preempted.
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(2) If any licensed State fails to issue, delays
the issuance of, or seeks to revoke an original or re-
newal certificate of authority of a redomesticated in-
surer immediately following redomestication, except
on grounds and in a manner consistent with its past
practices regarding the issuance of certificates of au-
thority to foreign insurers that are not redomesticat-
ing, then the redomesticating insurer shall be ex-
empt from any State law of the licensed State to the
extent that such State law or the operation of such
State law would make unlawful, or regulate, directly
or indirectly, the operation of the redomesticated in-
surer, except that such licensed State may require
the redomesticated insurer to—
(A) comply with the unfair claim settle-
ment practices of law of the licensed State;
(B) pay, on a nondiscriminatory basis, ap-
plicable premium and other taxes which are lev-
ied on licensed insurers or policyholders under
the laws of the licensed State;
(C) register with and designate the State
insurance regulator as its agent solely for the
purpose of receiving service of legal documents
or process;
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by the State insurance regulator alleging that
the redomesticated insurer is in hazardous fi-
nancial condition or is financially impaired;
(H) participate in any insurance insolvency
guaranty association on the same basis as any
other insurer licensed in the licensed State; and
(I) require a person acting, or offering to
act, as an insurance licensee for a redomes-
ticated insurer in the licensed State to obtain a
license from that State, except that such State
may not impose any qualification or require-
ment which discriminates against a nonresident
insurance licensee.
(d) JUDICIAL REVIEW.—The appropriate United
States District Court shall have exclusive jurisdiction over
litigation arising under this section involving any redomes-
ticating or redomesticated company.
(e) SEPARABILITY.—If any provision of this section,
or the application thereof to any person or circumstances,
is held invalid, the remainder of the Act, and the applica-
tion of such provision to other persons or circumstances,
shall not be affected thereby.
(f) DEFINITION.—As used in this Act, unless the con-
text otherwise requires—
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(1) the term ‘‘affiliate’’ means a person that
controls, is controlled by, or is under common con-
trol with, another person;
(2) the term ‘‘control’’, including the terms
‘‘controlling’’, ‘‘controlled by’’ and ‘‘under common
control with’’, means the possession, directly or indi-
rectly, of the power to direct or cause the direction
of the management and policies of an institution,
whether through the ownership of voting securities,
by contract or otherwise;
(3) the term ‘‘court of competent jurisdiction’’
means a court authorized pursuant to subsection (d)
to adjudicate litigation arising under this section;
(4) the term ‘‘domicile’’ means the State in
which an insurer is incorporated, chartered or orga-
nized;
(5) the term ‘‘insurance licensee’’ means any
person who or which holds a license under State law
to act as insurance agent, sub-agent, broker or con-
sultant;
(6) the term ‘‘institution’’ means a corporation,
joint stock company, limited liability company, lim-
ited liability partnership, association, trust, partner-
ship or any similar entity;
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(7) the term ‘‘licensed State’’ means any State,
Puerto Rico or the U.S. Virgin Islands in which the
redomesticating insurer has a certificate of authority
in effect immediately prior to the redomestication;
(8) the term ‘‘mutual life insurer’’ means a mu-
tual life insurer organized under the laws of any
State;
(9) the term ‘‘person’’ means an individual, in-
stitution, government of governmental agency, State
or political subdivision of a State, public corporation,
board, association, estate, trustee, or fiduciary, or
any similar entity;
(10) the term ‘‘redomesticated insurer’’ means
a mutual life insurer that has redomesticated pursu-
ant to this section;
(11) the term ‘‘redomesticating insurer’’ means
a mutual life insurer that is redomesticating pursu-
ant to this section;
(12) the term ‘‘redomestication’’ or ‘‘transfer’’
means the transfer of the domicile of an mutual life
insurer from one State to another State pursuant to
this section;
(13) the term ‘‘State’’ means any State or the
District of Columbia;
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(14) the term ‘‘State insurance regulatory’’
means the principal insurance regulatory authority
of a State of Puerto Rico or the U.S. Virgin Islands;
(15) the term ‘‘State law’’ means the statutes
of any State or of Puerto Rico or the U.S. Virgin
Islands and any regulation, rule, order or require-
ment promulgated pursuant thereto;
(16) the term ‘‘transferee domicile’’ means the
State to which a mutual life insurer is redomesticat-
ing pursuant to the provisions of this section;
(17) the term ‘‘transferor domicile’’ means the
State from which a mutual life insurer is redomes-
ticating pursuant to the provisions of this section;
and
(18) the term ‘‘voting securities’’ means securi-
ties of any class or any ownership interest having
voting power for the election of the board of direc-
tors of a person, other than securities having voting
power only because of the occurrence of a contin-
gency.
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TITLE IV—THRIFT CHARTER
CONVERSION
Subtitle A—Status of Banks and
Savings Associations
SEC. 400. SHORT TITLE.
This title may be cited as the ‘‘Thrift Charter Con-
version Act of 1997.’’
SEC. 401. TERMINATION OF FEDERAL SAVINGS ASSOCIA-
TIONS; TREATMENT OF STATE SAVINGS ASSO-
CIATIONS AS BANKS FOR PURPOSES OF FED-
ERAL BANKING LAW.
(a) TERMINATION OF FEDERAL SAVINGS ASSOCIA-
TION CHARTERS.—
(1) IN GENERAL.—Each Federal savings asso-
ciation shall—
(A) convert to a national bank charter;
(B) convert to a State depository institu-
tion charter; or
(C) surrender the charter of such savings
association and liquidate the institution.
(2) CONVERSION TO NATIONAL BANK BY OPER-
ATION OF LAW.—If any Federal savings association
has not taken any action required under paragraph
(1) as of January 1, 1998, the savings association
shall—
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(A) become a national bank on such date
by operation of law;
(B) immediately file articles of association
and an organizational certificate with the
Comptroller of the Currency in accordance with
sections 5133, 5134, and 5135 of the Revised
Statutes of the United States; and
(C) cease to exist as a Federal savings as-
sociation as of such date.
(3) PROHIBITION ON NEW CHARTERS OF FED-
ERAL SAVINGS ASSOCIATIONS.—The Director of the
Office of Thrift Supervision may not grant any char-
ter for a Federal savings association for which an
application was received after the date of the enact-
ment of this Act.
(b) TREATMENT OF STATE SAVINGS ASSOCIATIONS
AS BANKS FOR PURPOSES OF FEDERAL BANKING LAW.—
(1) AMENDMENTS
TO
FEDERAL
DEPOSIT
IN-
SURANCE ACT.—Section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813) is amended—
(A) by striking paragraph (2) of subsection
(a) and inserting the following new paragraph:
‘‘(2) STATE BANK.—
‘‘(A) IN GENERAL.—The term ‘State bank’
means any bank, banking association, trust
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company, savings bank, industrial bank (or
similar depository institution which the Board
of Directors finds to be operating substantially
in the same manner as an industrial bank),
building and loan association, savings and loan
association, homestead association, cooperative
bank, or other banking institution—
‘‘(i) which is engaged in the business
of receiving deposits, other than trust
funds (as defined in this section); and
‘‘(ii) which—
‘‘(I) is incorporated under the
laws of any State;
‘‘(II) is organized and operating
according to the laws of the State in
which such institution is chartered or
organized; or
‘‘(III) is operating under the
Code of Law for the District of Co-
lumbia (except a national bank).
‘‘(B) 
CERTAIN
INSURED
BANKS
IN-
CLUDED.—The term ‘State bank’ includes any
cooperative bank or other unincorporated bank
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the deposits of which were insured by the Cor-
poration on the day before the date of the en-
actment of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989.
‘‘(C) CERTAIN
UNINSURED
BANKS
EX-
CLUDED.—The term ‘State bank’ does not in-
clude any cooperative bank or other unincor-
porated bank the deposits of which were not in-
sured by the Corporation on the day before the
date of the enactment of the Financial Institu-
tions Reform, Recover, and Enforcement Act of
1989.’’; and
(B) in subsection (q)—
(i) by inserting ‘‘and’’ after the semi-
colon at the end of paragraph (2);
(ii) by striking ‘‘; and’’ at the end of
paragraph (3) and inserting a period; and
(iii) by striking paragraph (4).
(2) AMENDMENTS
TO
THE
BANK
HOLDING
COMPANY ACT OF 1956.—Section 2 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841) is
amended—
(A) by striking subparagraph (E) of sub-
section (a)(5); and
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(B) by striking subparagraphs (B) and (J)
of subsection (c)(2).
(3) AMENDMENTS TO THE FEDERAL RESERVE
ACT.—The second and third paragraphs of the first
section of the Federal Reserve Act (12 U.S.C. 221)
are each amended by inserting ‘‘(as defined in sec-
tion 3(a)(2) of the Federal Deposit Insurance Act)’’
after ‘‘State bank’’.
(c) COMPARABILITY OF REGULATION FOR STATE-
CHARTERED DEPOSITORY INSTITUTIONS.—
(1) REVIEW
OF
STATE
SUPERVISION.—The
Corporation shall maintain procedures for reviewing,
under standards the Board of Directors shall pre-
scribe in regulations, the manner in which State de-
pository institutions are regulated by a State for the
purpose of ensuring that State savings associations
are no less rigorously regulated by a State than
State banks.
(2) INADEQUATE STATE REGULATION.—If, in
connection with a review of State regulation of State
depository institutions pursuant to paragraph (1),
the Corporation determines that a State regulates
savings associations chartered by such State less rig-
orously than the State regulates banks chartered by
such State, the Corporation may take such action
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under section 8(a) of the Federal Deposit Insurance
Act as the Corporation determines to be appropriate
with respect to savings associations chartered by
such State which shall be effective no later than the
end of the 1-year period beginning on the date of
such determination.
(3) DEFINITIONS.—The following definitions
shall apply for purposes of this subsection:
(A) STATE
BANK.—The term ‘‘State
bank’’ has the same meaning as in section
3(a)(2) of the Federal Deposit Insurance Act
(as in effect on the date of the enactment of the
Thrift Charter Conversion Act of 1997).
(B) STATE
SAVINGS
ASSOCIATION.—The
term ‘‘State savings association’’ has the same
meaning as in section 3(b)(2) of the Federal
Deposit Insurance Act (as in effect on the date
of the enactment of the Thrift Charter Conver-
sion Act of 1997).
(C) STATE
DEPOSITORY
INSTITUTION.—
The term ‘‘State depository institution’’ has the
same meaning as in section 3(c)(5) of the Fed-
eral Deposit Insurance Act.
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SEC. 402. TREATMENT OF CERTAIN ACTIVITIES AND AFFILI-
ATIONS OF BANK HOLDING COMPANIES RE-
SULTING FROM THIS ACT.
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 subsection:
‘‘(m) TREATMENT OF COMPANIES RESULTING FROM
SAVINGS AND LOAN HOLDING COMPANIES.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of this section (other than paragraph (5))
or any other provision of Federal law including sec-
tions 20 and 32 of the Banking Act of 1933, a
qualified bank holding company may, after such
company becomes a bank holding company—
‘‘(A) maintain or enter into any non-
banking affiliation which such company was au-
thorized to maintain or enter into as of Janu-
ary 1, 1997, or was authorized to maintain fol-
lowing a merger of insured depository institu-
tion subsidiaries pursuant to an application
filed no later than such date; and
‘‘(B) engage, directly or through any affili-
ate described in subparagraph (A) which is not
a bank, in any activity in which such company
or any affiliate described in subparagraph (A)
was authorized to engage as of January 1,
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1997, or in which such company was authorized
to engage following a merger of insured deposi-
tory institution subsidiaries pursuant to an ap-
plication filed no later than such date, if the re-
quirements of paragraph (4) are met.
‘‘(2) QUALIFIED BANK HOLDING COMPANY DE-
FINED.—For purposes of this subsection, the term
‘qualified bank holding company’ means—
‘‘(A) any company—
‘‘(i) which—
‘‘(I) as of January 1, 1997, is a
savings and loan holding company; or
‘‘(II) as of January 1, 1997, has
filed an application to charter a de
novo Federal savings association and
thereafter becomes a savings and loan
holding company by virtue of the es-
tablishment of such savings associa-
tion; and
‘‘(ii) which as of the date referred to
in subclause (I) or (II), as the case may
be, is not a bank holding company and be-
comes a bank holding company after such
date, or any subsidiary of such company;
and
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‘‘(B) any bank holding company which as
of January 1, 1997—
‘‘(i) is a savings and loan holding
company; and
‘‘(ii) is exempt from this section pur-
suant to an order issued by the Board
under subsection (d).
‘‘(3) NO
LOSS
OF
SUBSECTION (d) EXEMP-
TION.—No qualified bank holding company de-
scribed in paragraph (2)(B) shall lose the grounds
for the exemption under subsection (d) because a
savings association which such company controlled,
directly or indirectly, as of January 1, 1997, be-
comes a bank after such date so long as such bank
continues to meet the requirements of subpara-
graphs (A) and (B) of paragraph (4).
‘‘(4) PREREQUISITES
FOR
CONTINUATION
OF
GRANDFATHERED ACTIVITIES AND AFFILIATIONS.—
This subsection shall cease to apply with respect to
a qualified bank holding company if, at any time
after such company first meets the definition of a
qualified bank holding company—
‘‘(A) any insured depository institution
controlled by such company which, as of the
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day before the company first meets the defini-
tion of a qualified bank holding company—
‘‘(i) was subject to the requirements
contained in section 10(m) of the Home
Owners’ Loan Act, as in effect on such
date, (and regulations in effect on such
date under such section) for treatment as
a qualified thrift lender under such section;
and
‘‘(ii) was not a savings association de-
scribed in section 10(m)(3)(F) of such Act,
as in effect on such date fails to meet any
requirement of such section;
‘‘(B) any insured depository institution
controlled by such company fails to comply with
any limitation or restriction on the type or
amounts of loans or investments of the institu-
tion to which such institution was subject as of
the date of the enactment of the Thrift Charter
Conversion Act of 1997, other than any limita-
tion relating to qualified thrift investments
under section 10(m) of the Home Owners’ Loan
Act, as in effect on such date; or
‘‘(C) the company or any subsidiary of the
company acquires more than 5 percent of the
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shares or assets of any bank or any savings as-
sociation (as such term is defined in section 3
of the Federal Deposit Insurance Act as in ef-
fect on the date of the enactment of the Thrift
Charter Conversion Act of 1997) after January
1, 1997, unless the assets of such bank or sav-
ings association is merged with any insured de-
pository institution which was controlled by
such company before January 1, 1997.
‘‘(5) 
NONTRANSFERABLE.—This 
subsection
shall not apply with respect to any qualified bank
holding company if, after January 1, 1997—
‘‘(A) any person not under common control
with such company acquires, directly or indi-
rectly, control of the company; or
‘‘(B) the company is the subject of any
merger, consolidation, or other similar trans-
action as a result of which a person not under
common control with such company acquires,
directly or indirectly, control of such company.
‘‘(6) ENFORCEMENT.—In addition to any other
power of the Board, the Board may enforce compli-
ance with the provisions of this subsection with re-
spect to any qualified bank holding company and
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any bank controlled by such company under section
8 of the Federal Deposit Insurance Act.’’.
SEC. 403. TRANSITION PROVISIONS FOR ACTIVITIES OF
SAVINGS ASSOCIATIONS WHICH CONVERT
INTO OR BECOME TREATED AS BANKS.
(a) IN GENERAL.—Notwithstanding any other provi-
sion of Federal law, any insured depository institution
which, as of January 1, 1997, is a savings association (as
defined in section 3(b) of the Federal Deposit Insurance
Act (as in effect on such date)) and after such date con-
verts to a national or State bank charter or becomes treat-
ed as a State bank pursuant to the amendment made by
section 401(b) may continue to engage, directly or indi-
rectly, in any activity in which such institution was law-
fully engaged as of such date during the 2-year period be-
ginning on the effective date of such conversion or the ef-
fective date of such amendments, as the case may be.
(b) TWO 1-YEAR EXTENSIONS AUTHORIZED.—The
2-year period described in subsection (a) with respect to
any insured depository institution may be extended for
such institution not to exceed two additional times for not
more than 1 year each time if the appropriate Federal
banking agency determines that such extension is nec-
essary to avert substantial loss to the institution and is
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otherwise consistent with the safety and soundness of the
institution.
SEC. 404. REGISTRATION OF BANK HOLDING COMPANIES
RESULTING FROM CONVERSIONS OF SAV-
INGS ASSOCIATIONS TO BANKS OR TREAT-
MENT OF SAVINGS ASSOCIATIONS AS BANKS.
Section 3 of the Bank Holding Company Act of 1956
(12 U.S.C. 1842) is amended by adding at the end of the
following new subsections:
‘‘(h) REGISTRATION OF CERTAIN BANK HOLDING
COMPANIES.—A company which, as of January 1, 1997,
is a savings and loan holding company (as defined in sec-
tion 10(a)(1)(D) of Home Owners’ Loan Act (as in effect
on such date) and is not a bank holding company shall
not be required to obtain the approval of the Board under
subsection (a) to become a bank holding company after
January 1, 1997, as a result of the conversion of any in-
sured depository institution subsidiary of such company
into a bank or by virtue of the treatment of any insured
depository institution subsidiary of such company as a
bank pursuant to the amendments made by the Thrift
Charter Conversion Act of 1997, if such company—
‘‘(1) registers as a bank holding company with
the Board in accordance with section 5(a); and
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‘‘(2) does not acquire, directly or indirectly,
ownership or control of any additional insured de-
pository institution or other company in connection
with such conversion or treatment.’’.
SEC. 405. ADDITIONAL TRANSITION PROVISIONS AND SPE-
CIAL RULES.
(a) MUTUAL NATIONAL BANKS AUTHORIZED; CON-
VERSION OF MUTUAL SAVINGS ASSOCIATIONS INTO NA-
TIONAL BANKS.—
(1) IN GENERAL.—Chapter one of title LXII of
the Revised Statutes of the United States (12
U.S.C. 21 et seq.) is amended by inserting after sec-
tion 5133 the following new section:
‘‘§ 5133A. Mutual national banks
‘‘(a) IN GENERAL.—Notwithstanding the paragraph
designated the ‘‘Third’’ of section 5134, the Comptroller
of the Currency may charter national banks organized in
the mutual form either de novo or through a conversion
of any stock national or State bank (as defined in section
3 of the Federal Deposit Insurance Act) or any State mu-
tual bank or credit union, subject to regulations prescribed
by the Comptroller of the Currency in accordance with this
section.
‘‘(b) REGULATIONS.—
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‘‘(1) TRANSITION RULES.—National banks or-
ganized in the mutual form shall be subject to the
regulations of the Director of the Office of Thrift
Supervision governing corporate organization, gov-
ernance, and conversion of mutual institutions, as in
effect on January 1, 1997, including parts 543, 544,
546, 563b, and 563c of chapter V of title 12 of the
Code of Federal Regulations (as in effect on such
date), during the 3-year period beginning on the
date of the enactment of the Thrift Charter Conver-
sion Act of 1997.
‘‘(2) REGULATIONS OF THE COMPTROLLER.—
The Comptroller of the Currency shall prescribe ap-
propriate regulations for national banks organized in
the mutual form, effective as of the end of the 3-
year period referred to in paragraph (1).
‘‘(3) APPLICABILITY
OF
CAPITAL
STOCK
RE-
QUIREMENTS.—The Comptroller of the Currency
shall prescribe regulations regarding the manner in
which requirements of title LXII of the Revised
Statutes of the United States with respect to capital
stock, and limitations imposed on national banks
under such title based on capital stock, shall apply
to national banks organized in mutual form pursu-
ant to subsection(a).
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‘‘(c) CONVERSIONS.—
‘‘(1) 
CONVERSION
TO
STOCK
NATIONAL
BANK.—Subject to such regulations as the Comp-
troller of the Currency may prescribe for the protec-
tion of depositors’ rights and for any other purpose
the Comptroller of the Currency may consider ap-
propriate, any national bank which is organized in
mutual form pursuant to paragraph (1) may reorga-
nize as a stock national bank.
‘‘(2) CONVERSIONS TO STATE BANKS.—Any na-
tional mutual bank may convert to a State bank
charter in accordance with regulations prescribed by
the Comptroller of the Currency and applicable
State law.’’.
(2) MUTUAL
BANK
HOLDING
COMPANIES.—
Subsection (g) of section 3 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1842(g)) is
amended to read as follows:
‘‘(g) MUTUAL BANK HOLDING COMPANIES.—
‘‘(1) IN
GENERAL.—A national mutual bank
may reorganize so as to become a holding company
by—
‘‘(A) chartering an interim national bank,
the stock of which is to be wholly owned, except
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as otherwise provided in this section, by the na-
tional mutual bank; and
‘‘(B) transferring the substantial part of
the national mutual bank’s assets and liabil-
ities, including all of the bank’s insured liabil-
ities, to the interim national bank.
‘‘(2) DIRECTORS AND CERTAIN ACCOUNT HOLD-
ERS’ APPROVAL OF PLAN REQUIRED.—A reorganiza-
tion is not authorized under this subsection unless—
‘‘(A) a plan providing for such reorganiza-
tion has been approved by a majority of the
board of directors of the national mutual bank;
and
‘‘(B) in the case of a national mutual bank
in which holders of accounts and obligors exer-
cise voting rights, such plan has been submitted
to and approved by a majority of such individ-
uals at a meeting held at the call of the direc-
tors in accordance with the procedures pre-
scribed by the bank’s charter and bylaws.
‘‘(3) NOTICE TO THE BOARD; DISAPPROVAL PE-
RIOD.—
‘‘(A) NOTICE REQUIRED.—
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‘‘(i) IN GENERAL.—At least 60 days
before taking any action described in para-
graph (1), a national mutual bank seeking
to establish a mutual holding company
shall provide written notice to the Board.
‘‘(ii) CONTENTS OF NOTICE.—The no-
tice shall contain such relevant information
as the Board shall require by regulation or
by specific request in connection with any
particular notice.
‘‘(B) TRANSACTION ALLOWED IF NOT DIS-
APPROVED.—Unless the Board within such 60-
day notice period disapproves the proposed
holding company formation, or extends for an-
other 30 days the period during which such dis-
approval may be issued, the national mutual
bank providing such notice may proceed with
the transaction, if the requirements of para-
graph (2) have been met.
‘‘(C) GROUNDS
FOR
DISAPPROVAL.—The
Board may disapprove any proposed holding
company formation only if—
‘‘(i) such disapproval is necessary to
prevent unsafe or unsound practices.
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‘‘(ii) the financial or management re-
sources of the national mutual bank in-
volved warrant disapproval;
‘‘(iii) the national mutual bank fails
to furnish the information required under
subparagraph (A); or
‘‘(iv) the national mutual bank fails to
comply with the requirement of paragraph
(2).
‘‘(D) RETENTION OF CAPITAL ASSETS.—In
connection with the transaction described in
paragraph (1), a national mutual bank, subject
to the approval of the Board, retain capital as-
sets at the holding company level to the extent
that the capital retained at the holding com-
pany is in excess of the amount of capital re-
quired in order for the interim national bank to
meet all relevant capital standards established
by the Comptroller of the Currency for national
banks.
‘‘(4) OWNERSHIP.—
‘‘(A) IN GENERAL.—Persons having own-
ership rights in the national mutual bank under
section 5133A of the Revised Statutes of the
United States (including paragraph 575.5 of
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chapter V of title 12 of the Code of Federal
Regulations, as in effect on January 1, 1997,
and applicable to national mutual banks pursu-
ant to such section) or State law shall have the
same ownership rights with respect to the mu-
tual holding company.
‘‘(B) HOLDERS OF CERTAIN ACCOUNTS.—
Holders of savings, demand, or other accounts
of—
‘‘(i) a national bank chartered as part
of a transaction described in paragraph
(1); or
‘‘(ii) a mutual bank acquired pursuant
to paragraph (5)(B), shall have the same
ownership rights with respect to the mu-
tual holding company as persons described
in subparagraph (A) of this paragraph.
‘‘(5) PERMITTED ACTIVITIES.—A mutual hold-
ing company may engage only in the following activi-
ties:
‘‘(A) Investing in the stock of a national or
State bank.
‘‘(B) Acquiring a mutual bank through the
merger of such bank into a national bank sub-
sidiary of such holding company or an interim
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national bank subsidiary of such holding com-
pany.
‘‘(C) Subject to paragraph (6), merging
with or acquiring another holding company, one
of whose subsidiaries is a national mutual bank.
‘‘(D) Investing in a corporation the capital
stock of which is available for purchase by a na-
tional mutual bank under Federal law or under
the law of any State where the home office of
any subsidiary bank is located.
‘‘(E) Engaging in the activities permitted
under section 4(c).
‘‘(6) LIMITATIONS ON CERTAIN ACTIVITIES OF
ACQUIRED HOLDING COMPANIES.—
‘‘(A) NEW ACTIVITIES.—If a mutual hold-
ing company acquires or merges with another
holding company under paragraph (5)(C), the
holding company acquired or the holding com-
pany resulting from such merger or acquisition
may only invest in assets and engage in activi-
ties which are authorized under paragraph (5).
‘‘(B) GRACE PERIOD FOR DIVESTING PRO-
HIBITED ASSETS OR DISCONTINUING PROHIB-
ITED ACTIVITIES.—Not later than 2 years fol-
lowing a merger or acquisition described in
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paragraph (5)(C), the acquired holding com-
pany or the holding company resulting from
such merger or acquisition shall—
‘‘(i) dispose of any asset which is an
asset in which a mutual holding company
may not invest under paragraph (5); and
‘‘(ii) cease any activity which is an ac-
tivity in which a mutual holding company
may not engage under paragraph (5).
‘‘(7) 
CHARTERING
AND
OTHER
REQUIRE-
MENTS.—
‘‘(A) IN
GENERAL.—A mutual holding
company shall be chartered by the Board and
shall be subject to such regulations as the
Board may prescribe.
‘‘(B) OTHER REQUIREMENTS.—Unless the
context otherwise requires, a mutual holding
company shall be subject to the other require-
ments of this Act regarding regulation of hold-
ing companies.
‘‘(8) CAPITAL IMPROVEMENT.—
‘‘(A) PLEDGE OF STOCK OF SAVINGS ASSO-
CIATION
SUBSIDIARY.—This section shall not
prohibit a mutual holding company from pledg-
ing all or a portion of the stock of a national
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bank chartered as part of a transaction de-
scribed in paragraph (1) to raise capital for
such bank.
‘‘(B) ISSUANCE OF NONVOTING SHARES.—
No provision of this Act shall be construed as
prohibiting a national bank chartered as part of
a transaction described in paragraph (1) from
issuing any nonvoting shares or less than 50
percent of the voting shares of such bank to
any person other than the mutual holding com-
pany.
‘‘(9) INSOLVENCY AND LIQUIDATION.—
‘‘(A) IN GENERAL.—Notwithstanding any
provision of law, upon—
‘‘(i) the default of any national
bank—
‘‘(I) the stock of which is owned
by any mutual holding company; and
‘‘(II) which was chartered in a
transaction described in paragraph
(1);
‘‘(ii) the default of a mutual holding
company; or
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‘‘(iii) a foreclosure on a pledge by a
mutual holding company described in para-
graph (8)(A), a trustee shall be appointed
receiver of such mutual holding company
and such trustee shall have the authority
to liquidate the assets of, and satisfy the
liabilities of, such mutual holding company
pursuant to title 11, United States Code.
‘‘(B) DISTRIBUTION OF NET PROCEEDS.—
Except as provided in subparagraph (C), the
net proceeds of any liquidation of any mutual
holding company pursuant to subparagraph (A)
shall be transferred to persons who hold owner-
ship interests in such mutual holding company.
‘‘(C) RECOVERY BY CORPORATION.—If the
Corporation incurs a loss as a result of the de-
fault of any depository institution subsidiary of
a mutual holding company which is liquidated
pursuant to subparagraph (A), the Corporation
shall succeed to the ownership interests of the
depositors of such depository institution in the
mutual holding company, to the extent of the
Corporation’s loss.
‘‘(10) STATE
MUTUAL
BANK
HOLDING
COM-
PANY.—
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‘‘(A) IN GENERAL.—Notwithstanding any
provision of Federal law, a State bank operat-
ing in mutual form may reorganize so as to
form a holding company under State law.
‘‘(B) REGULATION
OF
STATE
MUTUAL
HOLDING COMPANY.—A corporation organized
as a holding company in accordance with sub-
paragraph (A) shall be regulated on the same
terms and be subject to the same limitations as
any other holding company which controls a
bank.
‘‘(11) REGULATIONS.—
‘‘(A) TRANSITION
RULES.—Mutual bank
holding companies organized under this sub-
section shall be subject to the regulations of the
Director of the Office of Thrift Supervision gov-
erning corporate organization, governance, and
conversion of mutual institutions, as in effect
on January 1, 1997, including part 575 of
chapter V of title 12 of the Code of Federal
Regulations (as in effect on such date), during
the 3-year period beginning on the date of the
enactment of the Thrift Charter Conversion Act
of 1997.
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‘‘(B) REGULATIONS OF THE BOARD.—The
Board shall prescribe appropriate regulations
for mutual holding companies, effective at the
end of the 3-year period referred to in subpara-
graph (A).
‘‘(12) NO CHANGE OF CONTROL.—Any second
stage conversion of a mutual holding company to full
stock form shall not be deemed to be a change of
control if, in connection with such conversion, no
company, directly or indirectly, acquires control of
such mutual holding company or any successor to
such company.
‘‘(13) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply:
‘‘(A) MUTUAL
HOLDING
COMPANY.—The
term ‘mutual holding company’ means a cor-
poration organized as a holding company under
this subsection.
‘‘(B) 
DEFAULT.—The 
term 
‘default’
means an adjudication or other official deter-
mination of a court of competent jurisdiction or
other public authority pursuant to which a con-
servator, receiver, or other legal custodian is
appointed.
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‘‘(C) NATIONAL MUTUAL BANK.—The term
‘national mutual bank’ means a national bank
organized in mutual form under section 5133A
of the Revised Statutes of the United States.’’.
(3) LIMITATION ON FEDERAL REGULATION OF
STATE
BANKS.—Except as otherwise provided in
Federal law, the Comptroller of the Currency, Board
of Governors of the Federal Reserve System, and
Federal Deposit Insurance Corporation may not
adopt or enforce any regulation which contravenes
the corporate governance rules prescribed by State
law or regulation for State banks unless the Comp-
troller, Board, or Corporation finds that such Fed-
eral regulation is necessary to assure the safety and
soundness of such State banks.
(4) CONVERSIONS OF MUTUAL SAVINGS ASSO-
CIATIONS TO MUTUAL NATIONAL BANKS BY OPER-
ATION OF LAW.—Notwithstanding any other provi-
sion of Federal or State law, any savings association
(as defined in section 3 of the Federal Deposit In-
surance Act (as in effect on January 1, 1997))
which is organized in mutual form as of the date of
the enactment of this Act may become a national
mutual bank by operation of law if the association—
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(A) files the articles of association and or-
ganization certificate with the Comptroller of
the Currency before January 1, 1998, in ac-
cordance with chapter one of title LXII of the
Revised Statutes of the United States; and
(B) provides such other document or infor-
mation as the Comptroller of the Currency may
prescribe in regulations consistent with this sec-
tion and section 5133A of the Revised Statutes
of the United States (as added by paragraph
(1) of this subsection).
(b) 
MEMBERSHIP
IN
FEDERAL
HOME
LOAN
BANKS.—Any insured depository institution which—
(1) as of the date of the enactment of this Act,
is a Federal savings association which, pursuant to
section 6(e) of the Federal Home Loan Bank Act,
may not voluntarily withdraw from membership in a
Federal home loan bank; and
(2) after such date converts from a Federal
savings association to a national bank,
shall continue to be subject to the prohibition under such
section on voluntary withdrawal from such membership as
though such bank were still a Federal savings association
until the bank ceases to be a national bank.
(c) BRANCHES.—
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(1) IN GENERAL.—Notwithstanding any provi-
sion of the Federal Deposit Insurance Act, the Bank
Holding Company Act of 1956, or any other Federal
or State law, any depository institution which—
(A) as of the date of the enactment of this
Act, is a savings association; and
(B) becomes a bank before January 1,
1998, or, pursuant to the amendments made by
this subsection, is treated as a bank as of such
date under the Federal Deposit Insurance Act,
and any depository institution or bank holding
company which acquires such depository institu-
tion, may continue, after the depository institu-
tion becomes or commences to be treated as a
bank, to operate any branch or agency which
the savings association was operating as a
branch or agency or was in the process of es-
tablishing as a branch or agency on January 1,
1997.
(2) NO
ADDITIONAL
BRANCHES.—Paragraph
(1) shall not be construed as authorizing the estab-
lishment, acquisition, or operation of any additional
branch of a depository institution, or the conversion
of any agency to a branch, in any State by virtue
of the operation by such institution of a branch or
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agency in such State pursuant to such paragraph ex-
cept to the extent such establishment, acquisition,
operation, or conversion is permitted under the Fed-
eral Deposit Insurance Act, Bank Holding Company
Act of 1956, and any other applicable Federal or
State law.
(3) ESTABLISHING A BRANCH OR AGENCY.—
For purposes of paragraph (1), a savings association
shall be treated as having been in the process of es-
tablishing a branch or agency as of January 1,
1997, if, as of such date, the savings association—
(A) had received approval from the Direc-
tor of the Office of Thrift Supervision to estab-
lish such branch or agency;
(B) had pending with the Director of the
Office of Thrift Supervision an application or
notice to establish such branch or agency;
(C) had a legal and contractual obligation
to establish such branch or agency;
(D) had received authority from the appro-
priate Federal banking agency to establish such
branch in connection with the assumption of li-
abilities or an acquisition of an insured deposi-
tory institution pursuant to subsection (f) or
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(k) of section 13 of the Federal Deposit Insur-
ance Act or section 408(m) of the National
Housing Act (as in effect before the date of the
enactment of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989); or
(E) in the case of a well capitalized deposi-
tory institution, is able to demonstrate to the
appropriate Federal banking agency that the
savings association—
(i) had made a significant financial
commitment; and
(ii) had taken legally binding action or
incurred a contractual obligation, in fur-
therance of the establishment of such
branch or agency.
(d) TRANSITION PROVISION RELATING TO LIMITA-
TIONS ON LOANS TO ONE BORROWER.—Section 5200 of
the Revised Statutes of the United States (12 U.S.C. 84)
is amended by adding at the end the following new sub-
section:
‘‘(e) TRANSITION PROVISION FOR SAVINGS ASSOCIA-
TIONS CONVERTING TO NATIONAL BANKS.—In the case
of any depository institution which, as of January 1, 1997,
is a savings association (as defined in section 3(b) of the
Federal Deposit Insurance Act (as in effect on such date))
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and becomes a national bank on or before January 1,
1998, any loan, or legally binding commitment to make
a loan, made or entered into by such institution which is
outstanding on the date the institution becomes a national
bank may continue to be held without regard to any limi-
tation contained in this section during the 3-year period
beginning on such date.’’.
(e) RIGHTS AND AUTHORITY OF BANKS RESULTING
FROM CONVERSIONS OF SAVINGS ASSOCIATIONS.—
(1) IN GENERAL.—Upon conversion of a sav-
ings association to a national or State bank in ac-
cordance with this Act and the amendments made
by this title or other provisions of law—
(A) the national or State bank shall suc-
ceed to all rights, benefits, privileges, powers
and franchises, and be subject to all the obliga-
tions, duties, restrictions, and disabilities, of
such savings association under any contract,
agreement, document, or instrument in effect at
the time of such conversion to which such sav-
ings association was a party; and
(B) any reference to the savings associa-
tion in any such contract, agreement, docu-
ment, or instrument shall be deemed to be a
reference to such national or State bank.
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(2) TREATMENT OF BANK OR SAVINGS ASSOCIA-
TION.—If the application of paragraph (1) with re-
spect to any national or State bank referred to in
such paragraph would—
(A) be inconsistent or in conflict with any
contract, agreement, document, or instrument
described in such paragraph;
(B) constitute a default under the con-
tract, agreement, document, or instrument;
(C) cause such national or State bank to
be in default or breach under any provision of
the contract, agreement, document, or instru-
ment, the national or State bank shall be
deemed to be, and treated as, a savings associa-
tion for purposes of the contract, agreement,
document, or instrument.
(f) TRANSFER
AND GRANDFATHER
OF MUTUAL
HOLDING COMPANIES.—
(1) SUPERVISION AND REGULATION OF MUTUAL
HOLDING COMPANIES.—
(A) IN
GENERAL.—The supervision and
regulation of any mutual holding company in
existence as of the date of the enactment of this
Act is hereby transferred to the Board of Gov-
ernors of the Federal Reserve System.
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(B) TRANSITION
RULES.—Mutual bank
holding companies described in subparagraph
(A) shall be subject to the regulations of the
Director of the Office of Thrift Supervision, as
in effect on January 1, 1997, including part
575 of chapter V of title 12 of the Code of Fed-
eral Regulations (as in effect on such date),
during the 3-year period beginning on the date
of the enactment of the Thrift Charter Conver-
sion Act of 1997.
(2) GRANDFATHER OF EXISTING FEDERAL MU-
TUAL HOLDING COMPANIES.—
(A) IN
GENERAL.—Any Federal mutual
holding company in existence as of the date of
the enactment of this Act shall be subject to
section 4(m) of the Bank Holding Company Act
of 1956 (as added by section 402 of this title).
(B) 
TREATMENT
UNDER
4(m).—Any
treatment of a Federal mutual holding company
under section 4(m) shall not be construed as a
change in control unless, as a result of the
transaction, the holding company no longer con-
trols the entity.
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SEC. 406. TECHNICAL AND CONFORMING AMENDMENTS.
(a) AMENDMENTS TO THE FEDERAL DEPOSIT IN-
SURANCE ACT.—
(1) Section 3(z) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1813(z)) is amended by strik-
ing ‘‘, the Director of the Office of Thrift Super-
vision,’’.
(2) Section 8(b) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1818(b)) is amended by strik-
ing paragraph (9).
(3) Section 13 of the Federal Deposit Insurance
Act (12 U.S.C. 1823) is amended by striking sub-
section (k).
(4) Subsections (c)(2) and (i)(2) of section 18
of the Federal Deposit Insurance Act (12 U.S.C.
1828) are each amended—
(A) in subparagraph (B), by inserting
‘‘and’’ after the semicolon;
(B) in subparagraph (C), by striking ‘‘;
and’’ and inserting a period; and
(C) by striking subparagraph (D).
(5) Section 18 of the Federal Deposit Insurance
Act (12 U.S.C. 1828) is amended by striking sub-
section (m).
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(6) The Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.) is amended by striking section
28.
(b) AMENDMENTS TO THE BANK HOLDING COMPANY
ACT OF 1956.—
(1) Section 2 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841) is amended by strik-
ing subsections (i) and (j).
(2) Section 4(c)(8) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1843(c)(8)) is amend-
ed by striking the sentence preceding the penul-
timate sentence.
(3) Section 4(f) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1843(f)) is amended—
(A) in paragraph (2)(A)(i), by striking ‘‘or
an insured institution’’ and all that follows
through ‘‘of this subsection)’’;
(B) in paragraph (2)(A)(ii)—
(i) by striking ‘‘or a savings associa-
tion’’ where such term appears in the por-
tion of such paragraph which precedes sub-
clause (I));
(ii) by inserting ‘‘and’’ at the end of
subclause (VI);
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(iii) by striking subclauses (VIII),
(IX), and (X); and
(iv) by striking ‘‘(V), and (VIII)’’,
where such term appears in the portion of
such paragraph which appears after the
end of subclause (VII), and inserting ‘‘and
(V)’’; and
(C) by striking paragraphs (10), (11),
(12), and (13).
(4) Section 4(i) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1843(i)) is amended—
(A) by striking paragraphs (1) and (2);
and
(B) in paragraph (3)(A), by striking ‘‘any
Federal savings association’’ and all that fol-
lows through the period at the end of such
paragraph and inserting ‘‘such association was
authorized to engage under this section as of
September 15, 1995.’’.
(c) OTHER TECHNICAL AND CONFORMING AMEND-
MENTS.—
(1) Section 804(a) of the Alternative Mortgage
Transaction Parity Act of 1982 (12 U.S.C. 3803) is
amended—
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(A) in the portion of such subsection which
precedes paragraph (1)—
(i) by striking ‘‘, and other nonfeder-
ally chartered housing creditors,’’; and
(ii) by inserting ‘‘and in order to per-
mit other nonfederally chartered housing
creditors to make, purchase, and enforce
alternative mortgage transactions,’’ after
‘‘enforcing alternative mortgage trans-
actions,’’; and
(B) in paragraph (1), by inserting ‘‘(as
such term is defined in section 3(a) of the Fed-
eral Deposit Insurance Act)’’ after ‘‘with re-
spect to banks’’.
(2) Section 205 of the Depository Institution
Management Interlocks Act (12 U.S.C. 3204) is
amended—
(A) in the portion of paragraph (8)(A)
which precedes clause (i), by striking ‘‘diversi-
fied savings’’ and all that follows through ‘‘with
respect to’’ and inserting ‘‘depository institution
holding company which, as of January 1, 1997,
and at all times thereafter, satisfies the consoli-
dated net worth and consolidated net earnings
requirements for a diversified savings and loan
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holding company (as set forth in section
10(1)(F) of Home Owners’ Loan Act, as such
section is in effect on such date, and in regula-
tions in effect on such date, which shall be ap-
plicable for purposes of this paragraph without
regard to the fact that a depository institution
subsidiary of such holding company has ceased
to be a savings association after January 1,
1997) with respect to’’; and
(B) by striking paragraph (9).
(3) Section 19(b)(1)(A) of the Federal Reserve
Act (12 U.S.C. 461(b)(1)(A)) is amended—
(A) by inserting ‘‘and’’ after the semicolon
at the end of clause (v); and
(B) by striking clause (vi).
(4) Subparagraphs (A), (B), and (C) of section
10(e)(5) of the Federal Home Loan Bank Act (12
U.S.C. 1430(e)(5)) are each amended by inserting
before the period at the end ‘‘(as such section is in
effect on January 1, 1997)’’.
SEC. 407. REFERENCES TO SAVINGS ASSOCIATIONS AND
STATE BANKS IN FEDERAL LAW.
Effective January 1, 1998, any reference in any Fed-
eral banking law to—
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(1) the term ‘‘savings association’’ shall be
deemed to be a reference to a bank as defined in
section 3(a) of the Federal Deposit Insurance Act;
and
(2) the term ‘‘State bank’’ shall be deemed to
include any depository institution included in the
definition of such term in section 3(a)(2) of such
Act.
SEC. 408. REPEAL OF HOME OWNERS’ LOAN ACT.
Effective January 1, 1998, the Home Owners’ Loan
Act (12 U.S.C. 1461 et seq.) is hereby repealed.
SEC. 409. EFFECTIVE DATE; DEFINITIONS.
(a) EFFECTIVE DATE.—The amendments made by
this subtitle shall take effect on January 1, 1998.
(b) DEFINITIONS.—For purposes of this title, the
terms ‘‘appropriate Federal banking agency’’, ‘‘bank hold-
ing company’’, ‘‘depository institution’’, ‘‘Federal savings
association’’, ‘‘insured depository institution’’, ‘‘savings
association’’, and ‘‘State bank’’ have the same meanings
as in section 3 of the Federal Deposit Insurance Act (as
in effect on the date of the enactment of this Act).
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Subtitle B—Transfer of Functions,
Personnel, and Property
SEC. 421. REORGANIZATION OF OTS INTO OCC.
Effective on the date of enactment, section 321(e) of
title 31, United States Code, is amended to read as fol-
lows:
‘‘(e) OTS ABOLISHED.—No later than 30 days after
the enactment of the Thrift Charter Conversion Act of
1997, the Secretary of the Treasury shall merge the Office
of Thrift Supervision with the Office of the Comptroller
of the Currency.’’
SEC. 422. SAVINGS PROVISIONS.
(a) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS
NOT AFFECTED.—No provision of this title shall be con-
strued as affecting the validity of any right, duty, or obli-
gation of the United States, the Director of the Office of
Thrift Supervision, or any person, which existed on the
day before the date upon which the position of Director
of the Office of Thrift Supervision and the Office of Thrift
Supervision are abolished.
(b) CONTINUATION OF SUITS.—No action or other
proceeding commenced by or against the Director of the
Office of Thrift Supervision shall abate by reason of enact-
ment of this title, except that, effective January 1, 1998,
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the Comptroller of the Currency, the Federal Deposit In-
surance Corporation, or the Board of Governors of the
Federal Reserve System, as the case may be, shall be sub-
stituted as a party to any such action or proceeding.
(c) CONTINUATION OF ADMINISTRATIVE RULES.—
All orders, resolutions, determinations, regulations, inter-
pretative rules, other interpretations, guidelines, proce-
dures, supervisory and enforcement actions, and other ad-
visory material (other than any regulation implementing
or prescribed pursuant to section 3(f) of the Home Own-
ers’ Loan Act (as in effect on January 1, 1997)) which—
(1) have been issued, made, prescribed, or per-
mitted to become effective by the Office of Thrift
Supervision, and
(2) are in effect on December 31, 1997, (or be-
come effective after such date pursuant to the terms
of the order, resolution, determination, rule, other
interpretation, guideline, procedure, supervisory or
enforcement action, and other advisory material, as
in effect on such date), shall—
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(A) continue in effect according to the
terms of such orders, resolutions, determina-
tions, regulations, interpretative rules, other in-
terpretations, guidelines, procedures, super-
visory or enforcement actions, or other advisory
material;
(B) be administered by the Comptroller of
the Currency, the Federal Deposit Insurance
Corporation, or the Board of Governors of the
Federal Reserve System; and
(C) be enforceable by or against the Comp-
troller of the Currency, the Federal Deposit In-
surance Corporation, or the Board of Governors
of the Federal Reserve System until modified,
terminated, set aside, or superseded in accord-
ance with applicable law by the Comptroller,
Corporation, or Board, by any court of com-
petent jurisdiction, or by operation of law.
(d) TREATMENT OF REFERENCES IN ADJUSTABLE
RATE MORTGAGES ISSUED BEFORE FIRREA.—
(1) REFERENCES IN PRIOR LAW.—For purposes
of section 402(e) of Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C.
1437 note), any reference in such section to—
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(A) the Director of the Office of Thrift Su-
pervision shall be deemed to be a reference to
the Secretary of the Treasury; and
(B) a Savings Association Insurance Fund
member shall be deemed to be a reference to an
insured depository institution (as defined in sec-
tion 3 of the Federal Deposit Insurance Act).
(e) TREATMENT OF REFERENCES IN ADJUSTABLE
RATE
MORTGAGE
INSTRUMENTS
ISSUED
AFTER
FIRREA.—
(1) IN GENERAL.—For purposes of adjustable
rate mortgage instruments that are in effect as of
the date of enactment of this Act, any reference in
the instrument to the Director of the Office of
Thrift Supervision or Savings Association Insurance
Fund members shall be treated as a reference to the
Secretary of the Treasury or insured depository in-
stitutions (as defined in section 3 of the Federal De-
posit Insurance Act), as appropriate.
(2) SUBSTITUTION FOR INDEXES.—If any index
used to calculate the applicable interest rate on any
adjustable rate mortgage instrument is no longer
calculated and made available as a direct or indirect
result of the enactment of this title, any index—
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(A) made available by the Secretary of the
Treasury; or
(B) determined by the Secretary of the
Treasury, pursuant to paragraph (4), to be sub-
stantially similar to the index which is no
longer calculated or made available,
may be substituted by the holder of any such adjust-
able rate mortgage instrument upon notice to the
borrower.
(3) AGENCY
ACTION
REQUIRED
TO
PROVIDE
CONTINUED AVAILABILITY OF INDEXES.—Promptly
after the enactment of this subsection, the Secretary
of the Treasury, the Chairperson of the Federal De-
posit Insurance Corporation, and the Comptroller of
the Currency shall take such action as may be nec-
essary to assure that the indexes prepared by the
Director of the Office of Thrift Supervision imme-
diately before the enactment of this subsection and
used to calculate the interest rate on adjustable rate
mortgage instruments continue to be available.
(4) REQUIREMENTS RELATING TO SUBSTITUTE
INDEXES.—If any agency can no longer make avail-
able an index pursuant to paragraph (3), an index
that is substantially similar to such index may be
substituted for such index for purposes of paragraph
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(2) if the Secretary of the Treasury determines,
after notice and opportunity for comment, that—
(A) the new index is based upon data sub-
stantially similar to that of the original index;
and
(B) the substitution of the new index will
result in an interest rate substantially similar to
the rate in effect at the time the original index
became unavailable.
SEC. 423. COST OF FUNDS INDEXES.
(a) COST OF FUNDS INDEX DEFINED.—The term
‘‘cost of funds index’’ means any index that is published
by a Federal home loan bank and is based, in whole or
in part, upon the cost of funds of such bank’s members.
(b) CALCULATIONS BASED ON TYPE OF CHARTER
AND INSURANCE FUND MEMBERSHIP OF MEMBERS.—If
any cost of funds index includes data based on charter
type, insurance fund membership, or other similar charac-
teristics of members of a Federal home loan bank, such
index shall be calculated after the date of the enactment
of this Act using data only from insured depository insti-
tutions which were bank members and whose data was in-
cluded in such index on or before such date of enactment.
(c) ACQUISITION OF DATA.—
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(1) IN GENERAL.—Each insured depository in-
stitution the data from which is required to compile
a cost of funds index in accordance with subsection
(b) shall provide the Federal home loan bank which
maintains the index such information as may be nec-
essary, and in such form as may be appropriate, for
the bank to calculate and publish the index.
(2) ENFORCEMENT BY BANKING AGENCIES.—
Each appropriate Federal banking agency shall take
such action as may be necessary to ensure that in-
sured depository institutions which are required to
provide information to any Federal home loan bank
under paragraph (1) furnish such information on a
timely basis and in the form required by the bank.
(3) TREATMENT OF INSTITUTIONS.—Notwith-
standing any other provision of law, and insured de-
pository institution which furnishes information to a
Federal home loan bank pursuant to this section for
use in compiling a cost of funds index shall not be
deemed to control, directly or indirectly, such index.
(d) CERTAIN DATA EXCLUDED.—Notwithstanding
subsections (b) and (c), no cost of funds index shall in-
clude any data from any insured depository institution
which results from the merger, consolidation, or other
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combination of a member of a Federal home loan bank
with a nonmember of any such bank if—
(1) the total assets of the nonmember exceed
the total assets of the bank member at the time of
such merger, consolidation, or other combination; or
(2) in the case of a merger, consolidation, or
other merger in which a member of a Federal home
loan bank is the resulting insured depository institu-
tion, the combined ratio of the average amount of
single-family loan balances to average total assets of
all insured depository institutions involved in such
merger, consolidation, or other combination for the
12-month period ending on the date of such trans-
action is less than 70 percent.
(e) OTHER DEFINITIONS.—For purposes of this sec-
tion, the terms ‘‘appropriate Federal banking agency’’ and
‘‘insured depository institution’’ shall have the same
meanings as in section 3 of the Federal Deposit Insurance
Act.
SEC. 424. REFERENCES IN FEDERAL LAW TO DIRECTOR OF
THE OFFICE OF THRIFT SUPERVISION.
Effective January 1, 1998, any reference in any Fed-
eral law to the Director of the Office of Thrift Supervision
or the Office of Thrift Supervision shall be deemed to be
a reference to the appropriate Federal banking agency (as
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defined in section 3(q) of the Federal Deposit Insurance
Act).
SEC. 425. RECONFIGURATION OF FDIC BOARD OF DIREC-
TORS AS A RESULT OF REMOVAL OF DIREC-
TOR OF THE OFFICE OF THRIFT SUPER-
VISION.
(a) IN GENERAL.—Section 2(a)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1812(a)(1)) is amended
to read as follows:
‘‘(1) IN
GENERAL.—The management of the
Corporation shall be vested in a Board of Directors
consisting of 5 members—
‘‘(A) 1 of whom shall be the Comptroller of
the Currency; and
‘‘(B) 4 of whom shall be appointed by the
President, by and with the advice and consent
of the Senate, from among individuals who are
citizens of the United States, 1 of whom shall
have State bank supervisory experience.’’.
(b) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Section 2(d)(2) of the Federal Deposit Insurance Act
(12 U.S.C. 1812(d)(2)) is amended—
(A) by striking ‘‘or the office of Director of the
Office of Thrift Supervision’’;
(B) by striking ‘‘or such Director’’;
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(C) by striking ‘‘or the acting Director of the
Office of Thrift Supervision, as the case may be’’;
and
(D) by striking ‘‘or Director’’.
(2) Section 2(f)(2) of the Federal Deposit Insurance
Act (12 U.S.C. 1812(f)(2)) is amended by striking ‘‘or of
the Office of Thrift Supervision’’.
(c) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) shall take effect on January 1,
1998.
Subtitle C—Merger of Deposit
Insurance Funds
SEC. 431. MERGER OF THE BIF AND SAIF.
Section 2704(c) of the Omnibus Consolidation Appro-
priations Act, 1997 is amended to read as follows:
‘‘(c) EFFECTIVE
DATE.—This section and the
amendments made by this section shall become effective
on January 1, 1999, if the FDIC determines that—
(1) the merger of the Bank Insurance Fund
and Savings Association Insurance Fund is in the
public interest;
(2) the reserve ratios of both funds are equal to
or greater than their designated reserve ratios; and
(3) a significant number of savings associations
have converted to state or national bank charters.’’
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TITLE V—TECHNICAL
CORRECTIONS
SEC. 501. FOREIGN BANK RESIDENCY REQUIREMENTS.
Section 5146 of the Revised Statutes is amended in
the first sentence by inserting ‘‘and, in the case of an asso-
ciation which is a subsidiary or affiliate of a foreign bank,
the Comptroller may in his discretion waive the require-
ment of citizenship in the case of not more than a minority
of the total number of directors’’ before the period.
SEC. 502. INTERSTATE BRANCHING.
Subsection 24(j) of the Federal Deposit Insurance
Act is hereby amended to read as follows:
‘‘(j) ACTIVITIES OF BRANCHES OF OUT-OF-STATE
BANKS.—
‘‘(1) APPLICATION OF HOST STATE LAW.—The
laws of a host state, including laws regarding com-
munity reinvestment, consumer protection, fair lend-
ing, and establishment of intrastate branches, shall
apply to any branch in the host State of an out-of-
State State bank to the same extent as such State
laws apply to a branch in the host State of an out-
of-State national bank.
‘‘(2) ACTIVITIES
OF
BRANCHES.—An insured
State bank that establishes a branch in a host State
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may conduct any activity at such branch that is per-
missible under the laws of the home State of such
bank, if such activity is permissible either for a bank
chartered by the host State (subject to the restric-
tions in this section) or for a branch in the host
State of an out-of-State national bank.
‘‘(3) DEFINITIONS.—The terms ‘host State’,
‘home State’, and ‘out-of-State bank’ have the same
meanings as in section 44(f).’’.
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