I
104TH CONGRESS
1ST SESSION
H. R. 1362
To reduce paperwork and additional regulatory burdens for depository
institutions.
IN THE HOUSE OF REPRESENTATIVES
MARCH 30, 1995
Mr. BEREUTER (for himself, Mr. LEACH, Mr. MCCOLLUM, Mrs. ROUKEMA,
Mr. ROTH, Mr. BAKER of Louisiana, Mr. LAZIO of New York, Mr.
BACHUS, Mr. ROYCE, Mr. WELLER, Mr. KING, Mr. BONO, Mr. EHRLICH,
Mr. CHRYSLER, Mr. CREMEANS, Mr. WATTS of Oklahoma, Mrs. KELLY,
Mr. BARRETT of Nebraska, Mr. ORTON, Mr. CASTLE, Mr. HEINEMAN,
Mr. LATHAM, Mr. CHRISTENSEN, and Mr. FOX of Pennsylvania) intro-
duced the following bill; which was referred to the Committee on Banking
and Financial Services
A BILL
To reduce paperwork and additional regulatory burdens for
depository institutions.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Financial Institutions Regulatory Relief Act of 1995’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title; Table of contents.
TITLE I—REDUCTIONS IN GOVERNMENT OVERREGULATION
HR 1362 IH
Sec. 155. Consumer lease advertising.
Subtitle F—Federal Home Loan Bank Amendments
Sec. 161. Application for membership in the FHLB system.
Sec. 162. Federal Home Loan Bank external auditors.
TITLE II—STREAMLINING GOVERNMENT REGULATIONS
Subtitle A—Regulatory Approval Issues
Sec. 201. Streamlined nonbanking acquisitions by well capitalized and well
managed banking organizations.
Sec. 202. Streamlined bank acquisitions by well capitalized and well managed
banking organizations.
Sec. 203. Eliminate bank merger act filing and approval requirements for in-
sured depository institutions already controlled by the same
holding company.
Sec. 204. Eliminate redundant approval requirement for Oakar transactions.
Sec. 205. Eliminate duplicative requirements imposed on bank holding compa-
nies under the Home Owners’ Loan Act.
Sec. 206. Eliminate requirement that approval be obtained for divestitures.
Sec. 207. Eliminate unnecessary branch applications.
Sec. 208. Eliminate branch applications/requirements for ATMs and similar fa-
cilities.
Sec. 209. Eliminate requirement for approval of investments in bank premises
for well capitalized and well managed banks.
Sec. 210. Eliminate unnecessary filing for officer and director appointments.
Sec. 211. Streamlining process for determining new nonbanking activities.
Subtitle B—Streamlining of Government Regulations; Miscellaneous Provisions
Sec. 221. Eliminate the per-branch capital requirement for national banks and
State member banks.
Sec. 222. Branch closures.
Sec. 223. Amendments to the Depository Institutions Management Interlocks
Act.
Sec. 224. Consolidation of appraisal subcommittee.
Sec. 225. Eliminate unnecessary and duplicative recordkeeping and reporting
requirements relating to loans to executive officers and permit
participation in employee benefit plans.
Sec. 226. Expanded regulatory discretion for small bank examinations.
Sec. 227. Cost reimbursement.
Sec. 228. Identification of nonbank financial institution customers.
Sec. 229. Paperwork reduction review.
Sec. 230. Repeal of unnecessary reporting requirements.
Sec. 231. Daily confirmations for hold-in-custody repurchase transactions.
Sec. 232. Required regulatory review of regulations.
Sec. 233. Country risk requirements.
Sec. 234. Audit costs.
Sec. 235. Due process protections.
Sec. 236. Culpability standards for outside directors.
Sec. 237. Rules on deposit taking.
Sec. 238. Transition period for new regulations.
Sec. 239. Foreign bank applications.
Sec. 240. Duplicate examination of foreign banks.
Sec. 241. Second mortgages.
HR 1362 IH
TITLE III—LENDER LIABILITY
Sec. 301. Lender Liability.
TITLE I—REDUCTIONS IN GOVERNMENT
OVERREGULATION
Subtitle A—The Home Mortgage Process
SEC. 101. TRANSFER OF RESPA REGULATORY AUTHORITY;
ELIMINATION OF REDUNDANT REGULATORS.
(a) TRANSFER OF AUTHORITY.—The Real Estate
Settlement Procedures Act (12 U.S.C. 2601 et seq) is
amended—
(1) by striking ‘‘Secretary’’ each time it ap-
pears and inserting ‘‘Board’’, except in sections
3(1)(B)(ii), 3(6) and Section 14 (12 U.S.C.
2602(1)(B)(ii), 2602(6) and 2612, respectively); and
(2) in section 3 by adding at the end thereof a
new paragraph (9) as follows:
‘‘(9) the term ‘Board’ means the Board of Gov-
ernors of the Federal Reserve System.’’.
(b) ELIMINATION OF REDUNDANT REGULATORS.—
The Real Estate Settlement Procedures Act (12 U.S.C.
2601 et seq.)) is amended—
(1) in section 19 by striking subsection (a) and
inserting in lieu thereof the following:
‘‘(a) The Board shall prescribe regulations to carry
out the purpose of this title. These regulations may con-
tain such classifications, differentiations, or other provi-
HR 1362 IH
sions, and may provide for such adjustments and excep-
tions for any class of transactions, as in the judgment of
the Board are necessary or proper to effectuate the pur-
poses of this title, to prevent circumvention or evasion
thereof, or to facilitate compliance therewith. Such regula-
tions shall minimize the burdens and cost imposed upon
creditors and shall ensure that costs, burdens, and com-
plexities to consumers are reduced.’’; and
(2) by inserting after section 19 of the Real Es-
tate Settlement Procedures Act (12 U.S.C. 2617)
the following:
‘‘SEC. 20. ADMINISTRATIVE ENFORCEMENT.
‘‘(a) Compliance with the requirements imposed
under this subtitle shall be enforced under—
‘‘(1) section 8 of the Federal Deposit Insurance
Act, in the case of—
‘‘(A) national banks, and Federal branches
and Federal agencies of foreign banks, by the
Office of the Comptroller of the Currency;
‘‘(B) member banks of the Federal Reserve
System (other than national banks), branches
and agencies of foreign banks (other than Fed-
eral branches, Federal agencies, and insured
State branches of foreign banks), commercial
lending companies owned or controlled by for-
HR 1362 IH
eign banks, and organizations operating under
section 25 and 25A of the Federal Reserve Act,
by the Board; and
‘‘(C) banks insured by the Federal Deposit
Insurance Corporation (other than members of
the Federal Reserve System) and insured State
branches of foreign banks, by the Board of Di-
rectors of the Federal Deposit Insurance Cor-
poration;
‘‘(2) section 8 of the Federal Deposit Insurance
Act, by the Director of the Office of Thrift Super-
vision, in the case of a savings association the depos-
its of which are insured by the Federal Deposit In-
surance Corporation;
‘‘(3) the Federal Credit Union Act, by the Ad-
ministrator of the National Credit Union Adminis-
tration with respect to any Federal credit union;
‘‘(4) the Packers and Stockyards Act of 1921
(except as provided in section 406 of that Act), by
the Secretary of Agriculture with respect to any ac-
tivities subject to that Act; and
‘‘(5) The Farm Credit Act of 1971, by the
Farm Credit Administration with respect to any
Federal land bank, Federal land bank association,
HR 1362 IH
Federal intermediate credit bank, or production
credit association.
The terms used in paragraph (1) that are not defined in
this title or otherwise defined in section 3(s) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the
meaning given to them in section 1(b) of the International
Banking Act of 1978 (12 U.S.C. 3101).
‘‘(b) For the purpose of the exercise by any agency
referred to in subsection (a) of its powers under any Act
referred to in that subsection, a violation of any require-
ment imposed under this title shall be deemed to be a vio-
lation of a requirement imposed under that Act. In addi-
tion to its powers under any provision of law specifically
referred to in subsection (a), each of the agencies referred
to in that subsection may exercise, for the purpose of en-
forcing compliance with any requirement imposed under
this title, any other authority conferred on it by law.
‘‘(c) Except to the extent that the enforcement of the
requirements imposed under this title is specifically com-
mitted to some other Government agency under subsection
(a), the Federal Trade Commission shall enforce such re-
quirements. For the purpose of the exercise by the Federal
Trade Commission of its functions and powers under the
Federal Trade Commission Act, a violation of any require-
ment imposed under this title shall be deemed a violation
HR 1362 IH
redesignating subsections (b) through (d) as (c) through
(e) and inserting a new subsection (b) as follows:
‘‘(b) EXEMPTIVE AUTHORITY.—The Board shall ex-
empt from all or parts of this title any class of trans-
actions for which, in the Board’s judgment, coverage
under all or part of this title does not provide a measur-
able benefit to consumers in the form of useful informa-
tion or protection. In determining which classes of trans-
actions to exempt in whole or in part, the Board shall con-
sider, among other factors, the following:
‘‘(1) The amount of the loan or closing costs
and whether the disclosures, right of rescission, and
other provisions are necessary, particularly for small
loans.
‘‘(2) Whether the requirements of this title
complicate, hinder, or make more expensive the cred-
it process for the class of transactions.
‘‘(3) The status of the borrower, including, the
borrowers’ related financial arrangements, the finan-
cial sophistication of the borrower relative to the
type of transaction, and the importance of the credit
and related supporting property to the borrower.’’.
HR 1362 IH
SEC. 104. REDUCTIONS IN RESPA REGULATORY BURDENS;
CLARIFYING AMENDMENTS.
(a) UNNECESSARY DISCLOSURE.—Section 6(a) of the
Real Estate Settlement Procedures Act (12 U.S.C. 2605),
is amended to read as follows:
‘‘(a) DISCLOSURE TO APPLICANT RELATING TO AS-
SIGNMENT, SALE, OR TRANSFER OF LOAN SERVICING.—
‘‘(1) IN GENERAL.—Each person who makes a
federally related mortgage loan shall disclose to each
person who applies for any such loan, at the time of
application for the loan, whether the servicing of any
such loan may be assigned, sold, or transferred to
any other person at any time while such loan is out-
standing.
‘‘(2) SIGNATURE OF APPLICANT.—Any disclo-
sure of the information required under paragraph
(1) shall not be effective for purposes of this section
unless the disclosure is accompanied by a written
statement, in such form as the Secretary shall de-
velop before the expiration of the one hundred and
eighty-day period beginning on the date of enact-
ment, that the applicant has read and understood
the disclosure and that is evidenced by the signature
of the applicant at the place where such statement
appears in the application.’’.
HR 1362 IH
(b) EFFECTIVE DATE.—This subsection shall become
effective one hundred and eighty days after the date of
enactment.
(c) SECOND MORTGAGES.—Section 3(1)(A) of the
Real Estate Settlement Procedures Act (12 U.S.C.
2602(1)(A)), is amended by striking ‘‘or subordinate’’.
(d) CONSISTENCY OF RESPA AND TRUTH IN LEND-
ING ACT EXEMPTION OF BUSINESS LOANS.—Section 7 of
the Real Estate Settlement Procedures Act (12 U.S.C.
2606) is amended—
(1) by inserting ‘‘(a) IN GENERAL.—’’ before
‘‘This Act’’; and
(2) inserting a new subsection (b) as follows:
‘‘(b) INTERPRETATION.—In issuing regulations pur-
suant to section 19(a) of this Act, the Board shall ensure
that with regard to subsection (a), the exemption for busi-
ness credit includes all ‘‘business credit’’ exempted from
the Truth in Lending Act (15 U.S.C. 1601) as that term
has been interpreted by the Board of Governors of the
Federal Reserve System in section 226.3(a) of regulation
Z (12 C.F.R. 226.3(a)) as in effect on the date of enact-
ment.’’.
HR 1362 IH
SEC. 105. ALTERNATIVE DISCLOSURES FOR ADJUSTABLE
RATE MORTGAGES.
(a) Section 127A(a)(2)(G) of the Truth in Lending
Act (15 U.S.C. 1637a(a)(2)(G)) is amended by inserting
before the semicolon ‘‘, or a statement that the monthly
payment may increase or decrease significantly due to in-
creases in the annual percentage rate’’.
(b) Section 128(a) of the Truth in Lending Act (15
U.S.C. 1638(a)) is amended by inserting at the end the
following new paragraph (14):
‘‘(14) In any variable rate residential mortgage
transaction, at the creditors’ option, a statement
that the monthly payment may increase or decrease
substantially, or a historical example illustrating the
effects of interest rate changes implemented accord-
ing to the loan program.’’.
SEC. 106. CERTAIN CHARGES.
(a) THIRD PARTY FEES.—Section 106(a) of the
Truth in Lending Act (15 U.S.C. 1605(a)) is amended
by adding after the second sentence the following new sen-
tence: ‘‘The finance charge shall not include fees and
amounts imposed by third parties not affiliated with the
creditor (including settlement agents, attorneys, and es-
crow and title companies) if the creditor does not expressly
require the imposition of the charges and does not retain
the charges.’’.
HR 1362 IH
(b) TAXES
ON SECURITY INSTRUMENTS
OR EVI-
DENCES
OF
INDEBTEDNESS.—Section 106(d) of the
Truth in Lending Act (15 U.S.C. 1605(d)) is amended
by adding at the end the following new paragraph:
‘‘(3) Any tax levied on security instruments or
on documents evidencing indebtedness if the pay-
ment of such taxes is a precondition for recording
the instrument securing the evidence of indebted-
ness.’’.
(c) PREPARATION OF LOAN DOCUMENTS.—Section
106(e)(2) of the Truth in Lending Act (15 U.S.C.
1605(e)(2)) is amended to read as follows:
‘‘(2) Fees for preparation of loan-related docu-
ments and attending or conducting settlement.’’.
(d) FEES RELATING TO PEST INFESTATIONS, IN-
SPECTIONS, AND HAZARDS.—Section 106(e)(5) of the
Truth in Lending Act (15 U.S.C. 1605(e)(5)) is amended
by inserting ‘‘, including fees related to pest infestations,
premises and structural inspections, and flood hazards’’
before the period.
SEC. 107. EXEMPTIONS FROM RESCISSION.
(a) CERTAIN REFINANCING.—Section 125(e) of the
Truth in Lending Act (15 U.S.C. 1635(e)) is amended—
(1) by striking ‘‘or’’ at the end of paragraph
(3);
HR 1362 IH
(2) by striking the period at the end of para-
graph (4) and inserting instead ‘‘; or’’; and
(3) by adding at the end the following new
paragraph:
‘‘(5) a transaction, other than a mortgage re-
ferred to in section 103(aa), which—
‘‘(A) is secured by a first lien, in any
amount; and
‘‘(B) constitutes a refinancing or consoli-
dation of an existing extension of credit.’’.
(b) TECHNICAL AND CONFORMING AMENDMENT.—
Section 125(e)(2) of the Truth in Lending Act (15 U.S.C.
1635(e)(2)) is amended by inserting ‘‘, other than a trans-
action described in subsection (e)(5),’’ after ‘‘a refinancing
or consolidation (with no new advances).’’.
SEC. 108. TOLERANCES; BASIS OF DISCLOSURES.
(a) TOLERANCES FOR ACCURACY.—Section 106 of
the Truth in Lending Act (15 U.S.C. 1605) is amended
by adding at the end the following new subsection:
‘‘(f) TOLERANCES FOR ACCURACY.—In connection
with credit transactions not under an open end credit plan
that are secured by real property or a dwelling, the disclo-
sure of the finance charge and other disclosures affected
by any finance charge shall be treated as being accurate
for purposes of this title if the amount disclosed as the
HR 1362 IH
tion he maintained reasonable procedures to assure com-
pliance with the provisions of the subsection.’’.
SEC. 144. FAIR CREDIT REPORTING ACT AMENDMENTS.
(a) Section 615(a) of the Fair Credit Reporting Act
(15 U.S.C. 1681m(a)) is amended by striking ‘‘credit or’’
each time such term appears.
(b) Section 615 of the Fair Credit Reporting Act (15
U.S.C. 1681m) is amended by striking subsection (b) and
redesignating subsection (c) as subsection (b).
(c) Section 615(b) (as redesignated by this section)
of the Fair Credit Reporting Act (15 U.S.C. 1681m(b))
is amended by striking ‘‘subsections (a) and (b)’’ and in-
serting ‘‘subsection (a)’’.
SEC. 145. INCENTIVES FOR SELF-TESTING.
(a) EQUAL
CREDIT
OPPORTUNITY.—The Equal
Credit Opportunity Act (15 U.S.C. 1691 et seq.) is
amended—
(1) by inserting after section 704 the following
new section:
‘‘SEC. 704A. SELF-TESTING ENHANCEMENT.
‘‘Whenever a creditor conducts, or authorizes an
independent third party to conduct, a test or review of
the creditor’s lending or any part of its lending operations
in order to determine the level or effectiveness of compli-
ance with this Act by the creditor, then any report or re-