491
terms in section 2 of the Bank Hold-
ing Company Act of 1956.
‘‘(B) WELL CAPITALIZED.—The term
‘well capitalized’ has the same mean-
ing as in section 38 of the Federal De-
posit Insurance Act and, for purposes
of this section, the Comptroller shall
have exclusive jurisdiction to deter-
mine whether a national bank is well
capitalized.
‘‘(C) WELL
MANAGED.—The term
‘well managed’ means—
‘‘(i) in the case of a depository
institution that has been exam-
ined, 
unless 
otherwise 
deter-
mined in writing by the appro-
priate Federal banking agency—
‘‘(I) the achievement of a
composite rating of 1 or 2
under the Uniform Financial
Institutions Rating System (or
an equivalent rating under an
equivalent rating system) in
connection with the most re-
cent examination or subse-
492
quent review of the deposi-
tory institution; and
‘‘(II) at least a rating of 2
for management, if that rating
is given; or
‘‘(ii) in the case of any deposi-
tory institution that has not been
examined, the existence and use
of managerial resources that the
appropriate 
Federal 
banking
agency determines are satisfac-
tory.
‘‘(D) 
OTHER
INCORPORATED
TERMS.—For purposes of this para-
graph, the terms ‘appropriate Federal
banking agency’ and ‘depository insti-
tution’ have the meanings given to
such terms in section 3 of the Federal
Deposit Insurance Act.
‘‘(b) LIMITED EXCLUSIONS FROM COMMUNITY
NEEDS REQUIREMENTS
FOR NEWLY ACQUIRED
DEPOSITORY INSTITUTIONS.—Any depository in-
stitution which becomes affiliated with a na-
tional bank during the 24-month period pre-
ceding the submission of an application to ac-
493
quire a subsidiary under subsection (a)(2),
and any depository institution which becomes
so affiliated after the approval of such appli-
cation, may be excluded for purposes of sub-
section (a)(2)(C) during the 24-month period
beginning on the date of such acquisition if—
‘‘(1) the depository institution has
submitted an affirmative plan to the ap-
propriate Federal banking agency (as de-
fined in section 3 of the Federal Deposit
Insurance Act) to take such action as may
be necessary in order for such institution
to achieve a ‘satisfactory record of meet-
ing community credit needs’, or better, at
the next examination of the institution
under the Community Reinvestment Act
of 1977; and
‘‘(2) the plan has been approved by
the appropriate Federal banking agen-
cy.’’.
(b) LIMITATION ON CERTAIN ACTIVITIES IN
SUBSIDIARIES.—Section 21(a)(1) of the Banking
Act of 1933 (12 U.S.C. 378(a)(1)) is amended—
(1) by inserting ‘‘, or to be a sub-
sidiary of any person, firm, corporation,
494
association, business trust, or similar or-
ganization engaged (unless such sub-
sidiary (A) was lawfully engaged in such
securities activities as of September 15,
1997, or (B) is a nondepository subsidiary
of (i) a foreign bank and is not also a sub-
sidiary of a domestic depository institu-
tion, or (ii) an unincorporated private
bank that is in operation as of the date of
the enactment of the Financial Services
Act of 1999 and is not insured under the
Federal Deposit Insurance Act)’’ after ‘‘to
engage at the same time’’; and
(2) by inserting ‘‘or any subsidiary of
such bank, company, or institution’’ after
‘‘or private bankers’’.
(c) TECHNICAL
AND CONFORMING AMEND-
MENTS.—
(1) ANTITYING.—Section 106(a) of the
Bank Holding Company Act Amendments
of 1970 is amended by adding at the end
the following new sentence: ‘‘For pur-
poses of this section, a subsidiary of a na-
tional bank which engages in activities as
an agent pursuant to section 5136A(a)(2)
495
shall be deemed to be a subsidiary of a
bank holding company, and not a sub-
sidiary of a bank.’’.
(2) SECTION 23B.—Section 23B(a) of the
Federal Reserve Act (12 U.S.C. 371c–1(a))
is amended by adding at the end the fol-
lowing new paragraph:
‘‘(4) SUBSIDIARY
OF
NATIONAL
BANK.—
For purposes of this section, a subsidiary
of a national bank which engages in ac-
tivities as an agent pursuant to section
5136A(a)(2) shall be deemed to be an affil-
iate of the national bank and not a sub-
sidiary of the bank.’’.
(d) CLERICAL AMENDMENT.—The table of
sections for chapter one of title LXII of the Re-
vised 
Statutes 
of 
the 
United 
States 
is
amended—
(1) by redesignating the item relating
to section 5136A as section 5136C; and
(2) by inserting after the item relat-
ing to section 5136 the following new
item:
‘‘5136A. Financial subsidiaries of national banks.’’.
496
SEC. 122. MISREPRESENTATIONS REGARDING DEPOSITORY
INSTITUTION LIABILITY FOR OBLIGATIONS
OF AFFILIATES.
(a) IN GENERAL.—Chapter 47 of title 18,
United States Code, is amended by inserting
after section 1007 the following new section:
‘‘§ 1008. Misrepresentations regarding financial insti-
tution liability for obligations of affiliates
‘‘(a) IN GENERAL.—No institution-affiliated
party of an insured depository institution or
institution-affiliated party of a subsidiary or
affiliate of an insured depository institution
shall fraudulently represent that the institu-
tion is or will be liable for any obligation of
a subsidiary or other affiliate of the institu-
tion.
‘‘(b) CRIMINAL PENALTY.—Whoever violates
subsection (a) shall be fined under this title,
imprisoned for not more than 5 year, or both.
‘‘(c) INSTITUTION-AFFILIATED
PARTY
DE-
FINED.—For purposes of this section, the term
‘institution-affiliated party’ with respect to a
subsidiary or affiliate has the same meaning
as in section 3 of the Federal Deposit Insur-
ance Act, except references to an insured de-
pository institution shall be deemed to be ref-
497
erences to a subsidiary or affiliate of an in-
sured depository institution.
‘‘(d) OTHER DEFINITIONS.—For purposes of
this section, the terms ‘affiliate’, ‘insured de-
pository institution’, and ‘subsidiary’ have
same meanings as in section 3 of the Federal
Deposit Insurance Act.’’.
(b) CLERICAL AMENDMENT.—The table of
sections for chapter 47 of title 18, United
States Code, is amended by inserting after the
item relating to section 1007 the following
new item:
‘‘1008. Misrepresentations regarding financial institution liabil-
ity for obligations of affiliates.’’.
SEC. 123. REPEAL OF STOCK LOAN LIMIT IN FEDERAL RE-
SERVE ACT.
Section 11 of the Federal Reserve Act (12
U.S.C. 248) is amended by striking the para-
graph designated as ‘‘(m)’’ and inserting ‘‘(m)
[Repealed]’’.
498
Subtitle 
D—Wholesale 
Financial
Holding Companies; Wholesale
Financial Institutions
CHAPTER 1—WHOLESALE FINANCIAL
HOLDING COMPANIES
SEC. 131. WHOLESALE FINANCIAL HOLDING COMPANIES
ESTABLISHED.
(a) DEFINITION AND SUPERVISION.—Section
10 of the Bank Holding Company Act of 1956
(12 U.S.C. 1841 et seq.) is amended to read as
follows:
‘‘SEC. 10. WHOLESALE FINANCIAL HOLDING COMPANIES.
‘‘(a) COMPANIES THAT CONTROL WHOLESALE
FINANCIAL INSTITUTIONS.—
‘‘(1) WHOLESALE
FINANCIAL
HOLDING
COMPANY
DEFINED.—The term ‘wholesale
financial holding company’ means any
company that—
‘‘(A) is registered as a bank hold-
ing company;
‘‘(B) is predominantly engaged in
financial activities as defined in sec-
tion 6(f)(2);
‘‘(C) controls 1 or more wholesale
financial institutions;
499
‘‘(D) does not control—
‘‘(i) a bank other than a
wholesale financial institution;
‘‘(ii) an insured bank other
than 
an 
institution 
permitted
under subparagraph (D), (F), or
(G) of section 2(c)(2); or
‘‘(iii) a savings association;
and
‘‘(E) is not a foreign bank (as de-
fined in section 1(b)(7) of the Inter-
national Banking Act of 1978).
‘‘(2) SAVINGS
ASSOCIATION
TRANSITION
PERIOD.—Notwithstanding 
paragraph
(1)(D)(iii), the Board may permit a com-
pany that controls a savings association
and that otherwise meets the require-
ments of paragraph (1) to become super-
vised under paragraph (1), if the com-
pany divests control of any such savings
association within such period not to ex-
ceed 5 years after becoming supervised
under paragraph (1) as permitted by the
Board.
500
‘‘(3) COMPANIES SUPERVISED BY SECURI-
TIES
AND
EXCHANGE
COMMISSION.—Any
wholesale financial institution holding
company for which an election to be sub-
ject to supervision by the Commission is
in effect under section 17(i) of the Securi-
ties Exchange Act of 1934 shall not be
treated as a wholesale financial institu-
tion holding company, and shall not be
subject to supervision by the Board, for
purposes of this Act.
‘‘(b) SUPERVISION BY THE BOARD.—
‘‘(1) IN
GENERAL.—The provisions of
this section shall govern the reporting,
examination, and capital requirements of
wholesale financial holding companies.
‘‘(2) REPORTS.—
‘‘(A) IN GENERAL.—The Board from
time to time may require any whole-
sale financial holding company and
any subsidiary of such company to
submit reports under oath to keep
the Board informed as to—
‘‘(i) the company’s or subsidi-
ary’s activities, financial condi-
501
tion, policies, systems for moni-
toring and controlling financial
and operational risks, and trans-
actions with depository institu-
tion subsidiaries of the holding
company; and
‘‘(ii) the extent to which the
company or subsidiary has com-
plied with the provisions 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 pos-
sible, accept reports in fulfillment
of the Board’s reporting require-
ments under this paragraph that
the wholesale financial holding
company or any subsidiary of
such company has provided or
been required to provide to other
Federal and State supervisors or
to appropriate self-regulatory or-
ganizations.
502
‘‘(ii) AVAILABILITY.—A whole-
sale financial 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).
‘‘(C) EXEMPTIONS FROM REPORTING
REQUIREMENTS.—
‘‘(i) IN
GENERAL.—The Board
may, by regulation or order, ex-
empt any company or class of
companies, under such terms and
conditions and for such periods
as the Board shall provide in such
regulation or order, from the pro-
visions of this paragraph and any
regulation prescribed under this
paragraph.
‘‘(ii) CRITERIA
FOR
CONSIDER-
ATION.—In making any determina-
tion under clause (i) with regard
to any exemption under such
clause, the Board shall consider,
among such other factors as the
503
Board may determine to be ap-
propriate, the following 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) or a foreign regu-
latory authority of a similar
type.
‘‘(II) The primary business
of the company.
‘‘(III) The nature and ex-
tent of the domestic and for-
eign regulation of the activi-
ties of the company.
‘‘(3) EXAMINATIONS.—
‘‘(A) LIMITED USE OF EXAMINATION
AUTHORITY.—The Board may make ex-
aminations of each wholesale finan-
cial holding company and each sub-
sidiary of such company in order to—
‘‘(i) inform the Board regard-
ing the nature of the operations
504
and financial condition of the
wholesale financial holding com-
pany and its subsidiaries;
‘‘(ii) 
inform 
the 
Board
regarding—
‘‘(I) 
the 
financial 
and
operational risks within the
wholesale 
financial 
holding
company system that may af-
fect any depository institution
owned by such holding com-
pany; and
‘‘(II) the systems of the
holding company and its sub-
sidiaries for monitoring and
controlling those risks; and
‘‘(iii) monitor compliance with
the provisions of this Act and
those governing transactions and
relationships between any deposi-
tory institution controlled by the
wholesale financial holding com-
pany and any of the company’s
other subsidiaries.
505
‘‘(B) RESTRICTED FOCUS OF EXAMI-
NATIONS.—The Board shall, to the full-
est extent possible, limit the focus
and scope of any examination of a
wholesale financial holding company
under this paragraph to—
‘‘(i) the holding company; and
‘‘(ii) 
any 
subsidiary 
(other
than an insured depository insti-
tution subsidiary) of the holding
company that, because of the size,
condition, or activities of the sub-
sidiary, the nature or size of
transactions between such sub-
sidiary and any affiliated deposi-
tory institution, or the centraliza-
tion of functions within the hold-
ing company system, could have a
materially adverse effect on the
safety and soundness of any de-
pository institution affiliate of the
holding company.
‘‘(C) DEFERENCE TO BANK EXAMINA-
TIONS.—The Board shall, to the fullest
extent possible, use the reports of ex-
506
amination of depository institutions
made by the Comptroller of the Cur-
rency, the Federal Deposit Insurance
Corporation, the Director of the Of-
fice of Thrift Supervision or the ap-
propriate State depository institution
supervisory authority for the pur-
poses of this section.
‘‘(D) DEFERENCE TO OTHER EXAMI-
NATIONS.—The Board shall, to the full-
est extent possible, address the cir-
cumstances which might otherwise
permit or require an examination by
the Board by forgoing an examination
and by instead reviewing the reports
of examination made of—
‘‘(i) any registered broker or
dealer or any registered invest-
ment adviser by or on behalf of
the Commission; and
‘‘(ii) any licensed insurance
company by or on behalf of any
State government insurance agen-
cy responsible for the supervision
of the insurance company.
507
‘‘(E) CONFIDENTIALITY OF REPORTED
INFORMATION.—
‘‘(i) 
IN
GENERAL.—Notwith-
standing any other provision of
law, the Board shall not be com-
pelled to disclose any nonpublic
information required to be re-
ported under this paragraph, or
any information supplied to the
Board by any domestic or foreign
regulatory agency, that relates to
the financial or operational con-
dition of any wholesale financial
holding company or any sub-
sidiary of such company.
‘‘(ii) 
COMPLIANCE
WITH
RE-
QUESTS FOR INFORMATION.—No pro-
vision of this subparagraph shall
be construed as authorizing the
Board to withhold information
from the Congress, or preventing
the Board from complying with a
request for information from any
other 
Federal 
department 
or
agency for purposes within the
508
scope of such department’s or
agency’s 
jurisdiction, 
or 
from
complying with any order of a
court of competent jurisdiction in
an action brought by the United
States or the Board.
‘‘(iii) 
COORDINATION
WITH
OTHER LAW.—For purposes of sec-
tion 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 section.
‘‘(iv) 
DESIGNATION
OF
CON-
FIDENTIAL
INFORMATION.—In pre-
scribing regulations to carry out
the requirements of this sub-
section, the Board shall designate
information described in or ob-
tained pursuant to this paragraph
as confidential information.
‘‘(F) COSTS.—The cost of any ex-
amination conducted by the Board
under this section may be assessed
509
against, and made payable by, the
wholesale financial holding company.
‘‘(4) CAPITAL ADEQUACY GUIDELINES.—
‘‘(A) 
CAPITAL
ADEQUACY
PROVI-
SIONS.—Subject to the requirements
of, and solely in accordance with, the
terms of this paragraph, the Board
may adopt capital adequacy rules or
guidelines 
for 
wholesale 
financial
holding companies.
‘‘(B) METHOD OF CALCULATION.—In
developing rules or guidelines under
this paragraph, the following provi-
sions shall apply:
‘‘(i) FOCUS
ON
DOUBLE
LEVER-
AGE.—The Board shall focus on
the use by wholesale financial
holding companies of debt and
other liabilities to fund capital in-
vestments in subsidiaries.
‘‘(ii) NO
UNWEIGHTED
CAPITAL
RATIO.—The Board shall not, by
regulation, guideline, order, or
otherwise, impose under this sec-
tion a capital ratio that is not
510
based 
on 
appropriate 
risk-
weighting considerations.
‘‘(iii) NO CAPITAL REQUIREMENT
ON
REGULATED
ENTITIES.—The
Board shall not, by regulation,
guideline, 
order 
or 
otherwise,
prescribe or impose any capital
or capital adequacy rules, stand-
ards, guidelines, or requirements
upon any subsidiary that—
‘‘(I) is not a depository in-
stitution; and
‘‘(II) is in compliance with
applicable 
capital 
require-
ments of another Federal reg-
ulatory authority (including
the Securities and Exchange
Commission) or State insur-
ance authority.
‘‘(iv) LIMITATION.—The Board
shall not, by regulation, guideline,
order or otherwise, prescribe or
impose any capital or capital ade-
quacy 
rules, 
standards, 
guide-
lines, or requirements upon any
511
subsidiary that is not a deposi-
tory institution and that is reg-
istered as an investment adviser
under the Investment Advisers
Act of 1940, except that this
clause shall not be construed as
preventing the Board from impos-
ing capital or capital adequacy
rules, guidelines, standards, or re-
quirements with respect to activi-
ties of a registered investment ad-
viser other than investment advi-
sory activities or activities inci-
dental to investment advisory ac-
tivities.
‘‘(v) LIMITATIONS
ON
INDIRECT
ACTION.—In 
developing, 
estab-
lishing, or assessing holding com-
pany capital or capital adequacy
rules, guidelines, standards, or re-
quirements for purposes of this
paragraph, the Board shall not
take into account the activities,
operations, or investments of an
affiliated 
investment 
company
512
registered under the Investment
Company Act of 1940, unless the
investment company is—
‘‘(I) a bank holding com-
pany; or
‘‘(II) controlled by a bank
holding company by reason of
ownership by the bank hold-
ing 
company 
(including
through all of its affiliates) of
25 percent or more of the
shares of the investment com-
pany, and the shares owned
by the bank holding company
have a market value equal to
more than $1,000,000.
‘‘(vi) 
APPROPRIATE
EXCLU-
SIONS.—The Board shall take full
account of—
‘‘(I) the capital require-
ments made applicable to any
subsidiary that is not a depos-
itory institution by another
Federal regulatory authority
513
or State insurance authority;
and
‘‘(II) industry norms for
capitalization of a company’s
unregulated subsidiaries and
activities.
‘‘(vii) INTERNAL
RISK
MANAGE-
MENT MODELS.—The Board may in-
corporate internal risk manage-
ment models of wholesale finan-
cial holding companies into its
capital adequacy guidelines or
rules and may take account of the
extent to which resources of a
subsidiary depository institution
may be used to service the debt
or other liabilities of the whole-
sale financial holding company.
‘‘(c) NONFINANCIAL ACTIVITIES AND INVEST-
MENTS.—
‘‘(1) GRANDFATHERED ACTIVITIES.—
‘‘(A) 
IN
GENERAL.—Notwith-
standing section 4(a), a company that
becomes a wholesale financial hold-
ing company may continue to engage,
514
directly or indirectly, in any activity
and may retain ownership and con-
trol of shares of a company engaged
in any activity if—
‘‘(i) on the date of the enact-
ment of the Financial Services
Act of 1999, such wholesale finan-
cial holding company was law-
fully engaged in that nonfinancial
activity, held the shares of such
company, or had entered into a
contract to acquire shares of any
company engaged in such activ-
ity; and
‘‘(ii) the company engaged in
such activity continues to engage
only in the same activities that
such company conducted on the
date of the enactment of the Fi-
nancial Services Act of 1999, and
other activities permissible under
this Act.
‘‘(B) 
NO
EXPANSION
OF
GRAND-
FATHERED
COMMERCIAL
ACTIVITIES
THROUGH MERGER OR CONSOLIDATION.—
515
A wholesale financial holding com-
pany that engages in activities or
holds shares pursuant to this para-
graph, or a subsidiary of such whole-
sale financial holding company, may
not acquire, in any merger, consolida-
tion, or other type of business com-
bination, assets of any other company
which is engaged in any activity
which the Board has not determined
to be financial in nature or incidental
to activities that are financial in na-
ture under section 6(c).
‘‘(C) LIMITATION TO SINGLE EXEMP-
TION.—No company that engages in
any activity or controls any shares
under subsection (f) of section 6 may
engage in any activity or own any
shares pursuant to this paragraph.
‘‘(2) COMMODITIES.—
‘‘(A) 
IN
GENERAL.—Notwith-
standing section 4(a), a wholesale fi-
nancial holding company which was
predominately engaged as of January
1, 1997, in financial activities in the
516
United States (or any successor to
any such company) may engage in, or
directly or indirectly own or control
shares of a company engaged in, ac-
tivities related to the trading, sale, or
investment in commodities and un-
derlying 
physical 
properties 
that
were not permissible for bank hold-
ing companies to conduct in the
United States as of January 1, 1997, if
such wholesale financial holding com-
pany, or any subsidiary of such hold-
ing company, was engaged directly,
indirectly, or through any such com-
pany in any of such activities as of
January 1, 1997, in the United States.
‘‘(B) LIMITATION.—The attributed
aggregate consolidated assets of a
wholesale financial holding company
held under the authority granted
under this paragraph and not other-
wise permitted to be held by all
wholesale financial holding compa-
nies under this section may not ex-
ceed 5 percent of the total consoli-
517
dated assets of the wholesale finan-
cial holding company, except that the
Board may increase such percentage
of total consolidated assets by such
amounts 
and 
under 
such 
cir-
cumstances as the Board considers
appropriate, consistent with the pur-
poses of this Act.
‘‘(3) CROSS MARKETING RESTRICTIONS.—
A wholesale financial holding company
shall not permit—
‘‘(A) any company whose shares it
owns or controls pursuant to para-
graph (1) or (2) to offer or market any
product or service of an affiliated
wholesale financial institution; or
‘‘(B) any affiliated wholesale fi-
nancial institution to offer or market
any product or service of any com-
pany whose shares are owned or con-
trolled by such wholesale financial
holding company pursuant to such
paragraphs.
‘‘(d) QUALIFICATION
OF FOREIGN BANK
AS
WHOLESALE FINANCIAL HOLDING COMPANY.—
518
‘‘(1) IN
GENERAL.—Any foreign bank,
or any company that owns or controls a
foreign bank, that operates a branch,
agency, or commercial lending company
in the United States, including a foreign
bank or company that owns or controls a
wholesale financial institution, may re-
quest a determination from the Board
that such bank or company be treated as
a wholesale financial holding company
other than for purposes of subsection (c),
subject to such conditions as the Board
considers appropriate, giving due regard
to the principle of national treatment and
equality of competitive opportunity and
the requirements imposed on domestic
banks and companies.
‘‘(2) CONDITIONS FOR TREATMENT AS A
WHOLESALE FINANCIAL HOLDING COMPANY.—
A foreign bank and a company that owns
or controls a foreign bank may not be
treated as a wholesale financial holding
company unless the bank and company
meet and continue to meet the following
criteria:
519
‘‘(A) NO INSURED DEPOSITS.—No de-
posits held directly by a foreign bank
or through an affiliate (other than an
institution 
described 
in 
subpara-
graph (D) or (F) of section 2(c)(2)) are
insured under the Federal Deposit In-
surance Act.
‘‘(B) CAPITAL STANDARDS.—The for-
eign bank meets risk-based capital
standards comparable to the capital
standards required for a wholesale fi-
nancial institution, giving due regard
to the principle of national treatment
and equality of competitive oppor-
tunity.
‘‘(C) 
TRANSACTION
WITH
AFFILI-
ATES.—Transactions 
between 
a
branch, agency, or commercial lend-
ing company subsidiary of the foreign
bank in the United States, and any se-
curities affiliate or company in which
the foreign bank (or any company
that owns or controls such foreign
bank) has invested and which en-
gages in any activity pursuant to sub-
520
section (e) or (g) of section 6, comply
with the provisions of sections 23A
and 23B of the Federal Reserve Act in
the same manner and to the same ex-
tent as such transactions would be re-
quired to comply with such sections
if the bank were a member bank.
‘‘(3) TREATMENT AS A WHOLESALE FINAN-
CIAL
INSTITUTION.—Any 
foreign 
bank
which is, or is affiliated with a company
which is, treated as a wholesale financial
holding company under this subsection
shall be treated as a wholesale financial
institution for purposes of subsections
(c)(1)(C) and (c)(3) of section 9B of the
Federal Reserve Act, and any such for-
eign bank or company shall be subject to
paragraphs (3), (4), and (5) of section
9B(d) of the Federal Reserve Act, except
that the Board may adopt such modifica-
tions, conditions, or exemptions as the
Board deems appropriate, giving due re-
gard to the principle of national treat-
ment and equality of competitive oppor-
tunity.
521
‘‘(4) SUPERVISION
OF
FOREIGN
BANK
WHICH
MAINTAINS
NO
BANKING
PRESENCE
OTHER THAN CONTROL OF A WHOLESALE FI-
NANCIAL INSTITUTION.—A foreign bank that
owns or controls a wholesale financial in-
stitution but does not operate a branch,
agency, or commercial lending company
in the United States (and any company
that owns or controls such foreign bank)
may request a determination from the
Board that such bank or company be
treated as a wholesale financial holding
company, except that such bank or com-
pany shall be subject to the restrictions
of paragraphs (2)(A) and (3) of this sub-
section.
‘‘(5) NO
EFFECT
ON
OTHER
PROVI-
SIONS.—This section shall not be con-
strued as limiting the authority of the
Board under the International Banking
Act of 1978 with respect to the regulation,
supervision, or examination of foreign
banks and their offices and affiliates in
the United States.
522
‘‘(6) APPLICABILITY OF COMMUNITY REIN-
VESTMENT ACT OF 1977.—The branches in
the United States of a foreign bank that
is, or is affiliated with a company that is,
treated as a wholesale financial holding
company shall be subject to section
9B(b)(11) of the Federal Reserve Act as if
the foreign bank were a wholesale finan-
cial institution under such section. The
Board and the Comptroller of the Cur-
rency shall apply the provisions of sec-
tions 803(2), 804, and 807(1) of the Com-
munity Reinvestment Act of 1977 to
branches of foreign banks which receive
only such deposits as are permissible for
receipt by a corporation organized under
section 25A of the Federal Reserve Act, in
the same manner and to the same extent
such sections apply to such a corpora-
tion.’’.
(b) UNINSURED STATE BANKS.—Section 9 of
the Federal Reserve Act (12 U.S.C. 321 et seq.)
is amended by adding at the end the following
new paragraph:
523
‘‘(24) ENFORCEMENT
AUTHORITY
OVER
UNINSURED STATE MEMBER BANKS.—Section
3(u) of the Federal Deposit Insurance Act,
subsections (j) and (k) of section 7 of such
Act, and subsections (b) through (n), (s),
(u), and (v) of section 8 of such Act shall
apply to an uninsured State member
bank in the same manner and to the
same extent such provisions apply to an
insured State member bank and any ref-
erence in any such provision to ‘insured
depository institution’ shall be deemed to
be a reference to ‘uninsured State mem-
ber bank’ for purposes of this para-
graph.’’.
SEC. 132. AUTHORIZATION TO RELEASE REPORTS.
(a) FEDERAL RESERVE ACT.—The last sen-
tence of the eighth undesignated paragraph
of section 9 of the Federal Reserve Act (12
U.S.C. 326) is amended to read as follows: ‘‘The
Board of Governors of the Federal Reserve
System, at its discretion, may furnish reports
of examination or other confidential super-
visory information concerning State member
banks or any other entities examined under
524
any other authority of the Board to any Fed-
eral or State authorities with supervisory or
regulatory authority over the examined enti-
ty, to officers, directors, or receivers of the ex-
amined entity, and to any other person that
the Board determines to be proper.’’.
(b) COMMODITY FUTURES TRADING COMMIS-
SION.—The Right to Financial Privacy Act of
1978 (12 U.S.C. 3401 et seq.) is amended—
(1) in section 1101(7) of the (12 U.S.C.
3401(7))—
(A) 
by 
redesignating 
subpara-
graphs (G) and (H) as subparagraphs
(H) and (I), respectively; and
(B) by inserting after subpara-
graph (F) the following new subpara-
graph:
‘‘(G) 
the 
Commodity 
Futures
Trading Commission; or’’; and
(2) in section 1112(e), by striking ‘‘and
the Securities and Exchange Commis-
sion’’ and inserting ‘‘, the Securities and
Exchange Commission, and the Com-
modity Futures Trading Commission’’.
525
SEC. 133. CONFORMING AMENDMENTS.
(a) BANK HOLDING COMPANY ACT OF 1956.—
(1) DEFINITIONS.—Section 2 of the
Bank Holding Company Act of 1956 (12
U.S.C. 1841) is amended by inserting after
subsection (p) (as added by section
103(b)(1)) the following new subsections:
‘‘(q) WHOLESALE FINANCIAL INSTITUTION.—
The term ‘wholesale financial institution’
means a wholesale financial institution sub-
ject to section 9B of the Federal Reserve Act.
‘‘(r) COMMISSION.—The term ‘Commission’
means the Securities and Exchange Commis-
sion.
‘‘(s) DEPOSITORY INSTITUTION.—The term
‘depository institution’—
‘‘(1) has the meaning given to such
term in section 3 of the Federal Deposit
Insurance Act; and
‘‘(2) includes a wholesale financial in-
stitution.’’.
(2) 
DEFINITION
OF
BANK
INCLUDES
WHOLESALE
FINANCIAL
INSTITUTION.—Sec-
tion 2(c)(1) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(1)) is
526
amended by adding at the end the fol-
lowing new subparagraph:
‘‘(C) A wholesale financial institu-
tion.’’.
(3) INCORPORATED
DEFINITIONS.—Sec-
tion 2(n) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(n)) is amended
by inserting ‘‘ ‘insured bank’,’’ after ‘‘ ‘in
danger of default’,’’.
(4) EXCEPTION
TO
DEPOSIT
INSURANCE
REQUIREMENT.—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 institu-
tion.’’.
(b) FEDERAL DEPOSIT INSURANCE ACT.—Sec-
tion 3(q)(2)(A) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1813(q)(2)(A)) is amended
to read as follows:
‘‘(A) any State member insured
bank (except a District bank) and any
wholesale financial institution sub-
ject to section 9B of the Federal Re-
serve Act;’’.
527
CHAPTER 2—WHOLESALE FINANCIAL
INSTITUTIONS
SEC. 136. WHOLESALE FINANCIAL INSTITUTIONS.
(a) NATIONAL WHOLESALE FINANCIAL INSTI-
TUTIONS.—
(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 section 5136A (as added by
section 121(a) of this title) the following
new section:
‘‘SEC. 5136B. NATIONAL WHOLESALE FINANCIAL INSTITU-
TIONS.
‘‘(a) AUTHORIZATION OF THE COMPTROLLER
REQUIRED.—A national bank may apply to the
Comptroller on such forms and in accordance
with such regulations as the Comptroller may
prescribe, for permission to operate as a na-
tional wholesale financial institution.
‘‘(b) REGULATION.—A national wholesale fi-
nancial institution may exercise, in accord-
ance with such institution’s articles of incor-
poration and regulations issued by the Comp-
troller, all the powers and privileges of a na-
tional bank formed in accordance with sec-
528
tion 5133 of the Revised Statutes of the United
States, subject to section 9B of the Federal Re-
serve Act and the limitations and restrictions
contained therein.
‘‘(c) COMMUNITY
REINVESTMENT
ACT
OF
1977.—A national wholesale financial institu-
tion shall be subject to the Community Rein-
vestment Act of 1977.’’.
(2) CLERICAL
AMENDMENT.—The table
of sections for chapter one of title LXII of
the Revised Statutes of the United States
is amended by inserting after the item re-
lating to section 5136A (as added by sec-
tion 121(d) of this title) the following new
item:
‘‘5136B. National wholesale financial institutions.’’.
(b) WHOLESALE FINANCIAL INSTITUTIONS.—
The Federal Reserve Act (12 U.S.C. 221 et seq.)
is amended by inserting after section 9A the
following new section:
‘‘SEC. 9B. WHOLESALE FINANCIAL INSTITUTIONS.
‘‘(a) APPLICATION
FOR
MEMBERSHIP
AS
WHOLESALE FINANCIAL INSTITUTION.—
‘‘(1) APPLICATION REQUIRED.—
‘‘(A) IN GENERAL.—Any bank may
apply to the Board of Governors of
529
the Federal Reserve System to be-
come a State wholesale financial in-
stitution or to the Comptroller of the
Currency to become a national whole-
sale financial institution and, as a
wholesale 
financial 
institution, 
to
subscribe to the stock of the Federal
reserve bank organized within the
district where the applying bank is
located.
‘‘(B) 
TREATMENT
AS
MEMBER
BANK.—Any application under sub-
paragraph (A) shall be treated as an
application under, and shall be sub-
ject to the provisions of section 9.
‘‘(2) 
INSURANCE
TERMINATION.—No
bank the deposits of which are insured
under the Federal Deposit Insurance Act
may become a wholesale financial institu-
tion unless it has met all requirements
under that Act for voluntary termination
of deposit insurance.
‘‘(b) GENERAL REQUIREMENTS APPLICABLE
TO WHOLESALE FINANCIAL INSTITUTIONS.—
530
‘‘(1) FEDERAL RESERVE ACT.—Except as
otherwise provided in this section, whole-
sale financial institutions shall be mem-
ber banks and shall be subject to the pro-
visions of this Act that apply to member
banks to the same extent and in the same
manner as State member insured banks
or national banks, except that a whole-
sale financial institution may terminate
membership 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
wholesale financial institution shall be
deemed to be an insured depository insti-
tution 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 levels specified
by the Board for wholesale financial
institutions;
531
‘‘(B) subject to subparagraph (A),
all references to the appropriate Fed-
eral banking agency or to the Cor-
poration in that section shall be
deemed to be references to the Comp-
troller of the Currency, in the case of
a national wholesale financial institu-
tion, and to the Board, in the case of
all other wholesale financial institu-
tions; and
‘‘(C) in the case of wholesale fi-
nancial institutions, the purpose of
prompt corrective action shall be to
protect taxpayers and the financial
system from the risks associated with
the operation and activities of whole-
sale financial institutions.
‘‘(3) 
ENFORCEMENT
AUTHORITY.—Sec-
tion 3(u), subsections (j) and (k) of sec-
tion 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 ex-
tent as such provisions apply to State
532
member insured banks or national banks
and any reference in such sections to an
insured depository institution shall be
deemed to include a reference to a whole-
sale financial institution.
‘‘(4) CERTAIN OTHER STATUTES APPLICA-
BLE.—A wholesale financial institution
shall be deemed to be a banking institu-
tion, and the Board shall be the appro-
priate Federal banking agency for such
bank and all such bank’s affiliates, for
purposes of the International Lending
Supervision Act.
‘‘(5) BANK MERGER ACT.—A wholesale
financial institution shall be subject to
sections 18(c) and 44 of the Federal De-
posit Insurance Act in the same manner
and to the same extent the wholesale fi-
nancial institution would be subject to
such sections if the institution were a
State member insured bank or a national
bank.
‘‘(6) 
BRANCHING.—Notwithstanding
any other provision of law, a wholesale fi-
nancial institution may establish and op-
533
erate a branch at any location on such
terms and conditions as established by,
and with the approval of—
‘‘(A) the Board, in the case of a
State-chartered wholesale financial
institution; and
‘‘(B) the Comptroller of the Cur-
rency, in the case of a national bank
wholesale financial institution.
‘‘(7) 
ACTIVITIES
OF
OUT-OF-STATE
BRANCHES OF WHOLESALE FINANCIAL INSTI-
TUTIONS.—
‘‘(A) GENERAL.—A State-chartered
wholesale financial institution shall
be deemed a State bank and an in-
sured State bank and a national
wholesale financial institution shall
be deemed a national bank for pur-
poses of paragraphs (1), (2), and (3) of
section 24(j) of the Federal Deposit
Insurance Act.
‘‘(B) DEFINITIONS.—The following
definitions shall apply solely for pur-
poses of applying paragraph (1):
534
‘‘(i) HOME
STATE.—The term
‘home State’ means, with respect
to a State-chartered wholesale fi-
nancial institution, the State by
which the institution is char-
tered.
‘‘(ii) HOST
STATE.—The term
‘host State’ means a State, other
than the home State of the whole-
sale 
financial 
institution, 
in
which the institution maintains,
or seeks to establish and main-
tain, a branch.
‘‘(iii) OUT-OF-STATE BANK.—The
term ‘out-of-State bank’ means,
with respect to any State, a
wholesale 
financial 
institution
whose home State is another
State.
‘‘(8) DISCRIMINATION REGARDING INTER-
EST RATES.—Section 27 of the Federal De-
posit Insurance Act shall apply to State-
chartered wholesale financial institutions
in the same manner and to the same ex-
tent as such provisions apply to State
535
member insured banks and any reference
in such section to a State-chartered in-
sured depository institution shall be
deemed to include a reference to a State-
chartered wholesale financial institution.
‘‘(9) PREEMPTION
OF
STATE
LAWS
RE-
QUIRING
DEPOSIT
INSURANCE
FOR
WHOLE-
SALE FINANCIAL INSTITUTIONS.—The appro-
priate State banking authority may grant
a charter to a wholesale financial institu-
tion notwithstanding any State constitu-
tion or statute requiring that the institu-
tion obtain insurance of its deposits and
any such State constitution or statute is
hereby preempted solely for purposes of
this paragraph.
‘‘(10) PARITY FOR WHOLESALE FINANCIAL
INSTITUTIONS.—A State bank that is a
wholesale financial institution under this
section shall have all of the rights, pow-
ers, privileges, and immunities (including
those derived from status as a federally
chartered institution) of and as if it were
a national bank, subject to such terms
536
and conditions as established by the
Board.
‘‘(11) COMMUNITY REINVESTMENT ACT OF
1977.—A State wholesale financial institu-
tion shall be subject to the Community
Reinvestment Act of 1977.
‘‘(c) SPECIFIC REQUIREMENTS APPLICABLE
TO WHOLESALE FINANCIAL INSTITUTIONS.—
‘‘(1) LIMITATIONS ON DEPOSITS.—
‘‘(A) MINIMUM AMOUNT.—
‘‘(i) IN GENERAL.—No wholesale
financial institution may receive
initial deposits of $100,000 or less,
other than on an incidental and
occasional basis.
‘‘(ii) LIMITATION
ON
DEPOSITS
OF LESS THAN $100,000.—No whole-
sale financial institution may re-
ceive initial deposits of $100,000
or less if such deposits constitute
more than 5 percent of the insti-
tution’s total deposits.
‘‘(B) NO
DEPOSIT
INSURANCE.—Ex-
cept as otherwise provided in section
8A(f) of the Federal Deposit Insur-
537
ance Act, no deposits held by a whole-
sale financial institution shall be in-
sured deposits under the Federal De-
posit Insurance Act.
‘‘(C) 
ADVERTISING
AND
DISCLO-
SURE.—The Board and the Comp-
troller of the Currency shall pre-
scribe jointly regulations pertaining
to 
advertising 
and 
disclosure 
by
wholesale financial institutions to en-
sure that each depositor is notified
that deposits at the wholesale finan-
cial institution are not federally in-
sured or otherwise guaranteed by the
United States Government.
‘‘(2) MINIMUM CAPITAL LEVELS APPLICA-
BLE
TO
WHOLESALE
FINANCIAL
INSTITU-
TIONS.—The Board shall, by regulation,
adopt capital requirements for wholesale
financial institutions—
‘‘(A) 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
538
‘‘(B) to provide for the safe and
sound operation of the wholesale fi-
nancial institution without undue
risk to creditors or other persons, in-
cluding Federal reserve banks, en-
gaged in transactions with the bank.
‘‘(3) ADDITIONAL REQUIREMENTS APPLI-
CABLE
TO
WHOLESALE
FINANCIAL
INSTITU-
TIONS.—In addition to any requirement
otherwise applicable to State member in-
sured banks or applicable, under this sec-
tion, to wholesale financial institutions,
the Board may impose, by regulation or
order, 
upon 
wholesale 
financial
institutions—
‘‘(A) limitations on transactions,
direct or indirect, with affiliates to
prevent—
‘‘(i) the transfer of risk to the
deposit insurance funds; or
‘‘(ii) an affiliate from gaining
access to, or the benefits of, credit
from a Federal reserve bank, in-
cluding overdrafts at a Federal
reserve bank;
539
‘‘(B) special clearing balance re-
quirements; and
‘‘(C) any additional requirements
that the Board determines to be ap-
propriate or necessary to—
‘‘(i) promote the safety and
soundness of the wholesale finan-
cial institution or any insured de-
pository institution affiliate of the
wholesale financial institution;
‘‘(ii) prevent the transfer of
risk to the deposit insurance
funds; or
‘‘(iii) protect creditors and
other persons, including Federal
reserve banks, engaged in trans-
actions with the wholesale finan-
cial institution.
‘‘(4) EXEMPTIONS
FOR
WHOLESALE
FI-
NANCIAL
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 institu-
540
tion, if the Board finds that such exemp-
tion is not inconsistent with—
‘‘(A) the promotion of the safety
and soundness of the wholesale finan-
cial institution or any insured deposi-
tory institution affiliate of the whole-
sale financial institution;
‘‘(B) the protection of the deposit
insurance funds; and
‘‘(C) the protection of creditors
and other persons, including Federal
reserve banks, engaged in trans-
actions with the wholesale financial
institution.
‘‘(5) LIMITATION
ON
TRANSACTIONS
BE-
TWEEN A WHOLESALE FINANCIAL INSTITUTION
AND
AN
INSURED
BANK.—For purposes of
section 23A(d)(1) of the Federal Reserve
Act, a wholesale financial institution that
is affiliated with an insured bank shall
not be a bank.
‘‘(6) NO
EFFECT
ON
OTHER
PROVI-
SIONS.—This section shall not be con-
strued as limiting the Board’s authority
over member banks or the authority of
541
the Comptroller of the Currency over na-
tional 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 dis-
count under this Act to any member bank
or other depository institution.
‘‘(d) CAPITAL
AND MANAGERIAL REQUIRE-
MENTS.—
‘‘(1) IN GENERAL.—A wholesale finan-
cial institution shall be well capitalized
and well managed.
‘‘(2) NOTICE TO COMPANY.—The Board
shall promptly provide notice to a com-
pany that controls a wholesale financial
institution whenever such wholesale fi-
nancial institution is not well capitalized
or well managed.
‘‘(3) AGREEMENT
TO
RESTORE
INSTITU-
TION.—Within 45 days of receipt of a no-
tice under paragraph (2) (or such addi-
tional period not to exceed 90 days as the
Board may permit), the company shall
execute an agreement acceptable to the
Board to restore the wholesale financial
542
institution to compliance with all of the
requirements of paragraph (1).
‘‘(4) LIMITATIONS UNTIL INSTITUTION RE-
STORED.—Until the wholesale financial in-
stitution is restored to compliance with
all of the requirements of paragraph (1),
the Board may impose such limitations
on the conduct or activities of the com-
pany or any affiliate of the company as
the Board determines to be appropriate
under the circumstances.
‘‘(5) FAILURE TO RESTORE.—If the com-
pany does not execute and implement an
agreement in accordance with paragraph
(3), comply with any limitation imposed
under paragraph (4), restore the whole-
sale financial institution to well capital-
ized status within 180 days after receipt
by the company of the notice described in
paragraph (2), or restore the wholesale fi-
nancial institution to well managed sta-
tus within such period as the Board may
permit, the company shall, under such
terms and conditions as may be imposed
by the Board and subject to such exten-
543
sion of time as may be granted in the
Board’s discretion, divest control of its
subsidiary depository institutions.
‘‘(6) WELL MANAGED DEFINED.—For pur-
poses of this subsection, the term ‘well
managed’ has the same meaning as in
section 2 of the Bank Holding Company
Act of 1956.
‘‘(e) RESOLUTION OF WHOLESALE FINANCIAL
INSTITUTIONS.—
‘‘(1) CONSERVATORSHIP
AND
RECEIVER-
SHIP AUTHORITY.—
‘‘(A) 
APPOINTMENT.—The 
Board
may appoint a conservator or re-
ceiver to take possession and control
of a wholesale financial institution to
the same extent and in the same man-
ner as the Comptroller of the Cur-
rency may appoint a conservator or
receiver for a national bank.
‘‘(B) POWERS.—The conservator or
receiver for a wholesale financial in-
stitution shall exercise the same pow-
ers, functions, and duties, subject to
544
the same limitations, as a conservator
or receiver for a national bank.
‘‘(2) BOARD
AUTHORITY.—The Board
shall have the same authority with re-
spect to any conservator or receiver ap-
pointed under paragraph (1) and the
wholesale financial institution for which
such conservator has been appointed as
the Comptroller of the Currency has with
respect to a conservator or receiver for a
national bank and the national bank for
which the conservator or receiver has
been appointed.
‘‘(3) BANKRUPTCY
PROCEEDINGS.—The
Comptroller of the Currency (in the case
of a national wholesale financial institu-
tion) and the Board may direct the con-
servator or receiver of a wholesale finan-
cial institution to file a petition pursuant
to title 11, United States Code, in which
case, title 11, United States Code, shall
apply to the wholesale financial institu-
tion in lieu of otherwise applicable Fed-
eral or State insolvency law.
545
‘‘(f) EXCLUSIVE JURISDICTION.—Subsections
(c) and (e) of section 43 of the Federal Deposit
Insurance Act shall not apply to any whole-
sale financial institution.’’.
(c) VOLUNTARY TERMINATION
OF INSURED
STATUS BY CERTAIN INSTITUTIONS.—
(1) SECTION
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 (10) as paragraphs (1)
through (9), respectively.
(2) VOLUNTARY
TERMINATION
OF
IN-
SURED
STATUS.—The Federal Deposit In-
surance Act (12 U.S.C. 1811 et seq.) is
amended by inserting after section 8 the
following new section:
‘‘SEC. 8A. VOLUNTARY TERMINATION OF STATUS AS IN-
SURED DEPOSITORY INSTITUTION.
‘‘(a) IN GENERAL.—Except as provided in
subsection (b), an insured State bank or a na-
tional bank may voluntarily terminate such
bank’s status as an insured depository institu-
546
tion in accordance with regulations of the
Corporation if—
‘‘(1) the bank provides written notice
of the bank’s intent to terminate such in-
sured status—
‘‘(A) to the Corporation and the
Board of Governors of the Federal
Reserve System, in the case of an in-
sured State bank, or to the Corpora-
tion and the Comptroller of the Cur-
rency, in the case of an insured na-
tional bank authorized to operate as
a wholesale financial institution, not
less than 6 months before the effec-
tive date of such termination; and
‘‘(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 re-
serve ratio as of the date the bank
provides a written notice under para-
547
graph (1) and the Corporation deter-
mines that the fund will equal or ex-
ceed the applicable designated re-
serve ratio for the 2 semiannual as-
sessment periods immediately fol-
lowing such date; or
‘‘(B) the Corporation and the
Board of Governors of the Federal
Reserve System, in the case of an in-
sured State bank, or the Corporation
and the Comptroller of the Currency,
in the case of an insured national
bank authorized to operate as a
wholesale financial institution, has
approved 
the 
termination 
of 
the
bank’s insured status 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; or
‘‘(2) an insured branch that is re-
quired to be insured under subsection (a)
or (b) of section 6 of the International
Banking Act of 1978.
548
‘‘(c) ELIGIBILITY
FOR
INSURANCE
TERMI-
NATED.—Any bank that voluntarily elects to
terminate the bank’s insured status under
subsection (a) shall not be eligible for insur-
ance on any deposits or any assistance au-
thorized under this Act after the period speci-
fied in subsection (f)(1).
‘‘(d) INSTITUTION MUST BECOME WHOLESALE
FINANCIAL INSTITUTION OR TERMINATE DEPOSIT-
TAKING ACTIVITIES.—Any depository institu-
tion which voluntarily terminates such insti-
tution’s status as an insured depository insti-
tution under this section may not, upon termi-
nation of insurance, accept any deposits un-
less the institution is a wholesale financial in-
stitution subject to section 9B of the Federal
Reserve Act.
‘‘(e) EXIT FEES.—
‘‘(1) IN GENERAL.—Any bank that vol-
untarily terminates such bank’s status as
an insured depository institution under
this section shall pay an exit fee in an
amount that the Corporation determines
is sufficient to account for the institu-
tion’s pro rata share of the amount (if
549
any) which would be required to restore
the relevant deposit insurance fund to
the fund’s designated reserve ratio as of
the date the bank provides a written no-
tice under subsection (a)(1).
‘‘(2) PROCEDURES.—The Corporation
shall prescribe, by regulation, procedures
for assessing any exit fee under this sub-
section.
‘‘(f) TEMPORARY INSURANCE OF DEPOSITS IN-
SURED AS OF TERMINATION.—
‘‘(1) TRANSITION PERIOD.—The insured
deposits of each depositor in a State bank
or a national bank on the effective date
of the voluntary termination of the
bank’s insured status, less all subsequent
withdrawals from any deposits of such
depositor, shall continue to be insured
for a period of not less than 6 months and
not more than 2 years, as determined by
the Corporation. During such period, no
additions to any such deposits, and no
new deposits in the depository institution
made after the effective date of such ter-
550
mination shall be insured by the Cor-
poration.
‘‘(2) TEMPORARY ASSESSMENTS; OBLIGA-
TIONS
AND
DUTIES.—During the period
specified in paragraph (1) with respect to
any bank, the bank shall continue to pay
assessments under section 7 as if the
bank were an insured depository institu-
tion. The bank shall, in all other respects,
be subject to the authority of the Cor-
poration and the duties and obligations
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 demands 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 insti-
tution.
‘‘(g) ADVERTISEMENTS.—
‘‘(1) IN GENERAL.—A bank that volun-
tarily terminates the bank’s insured sta-
tus under this section shall not advertise
or hold itself out as having insured de-
551
posits, except that the bank may adver-
tise the temporary insurance of deposits
under subsection (f) if, in connection
with any such advertisement, the adver-
tisement also states with equal promi-
nence that additions to deposits and new
deposits made after the effective date of
the termination are not insured.
‘‘(2) CERTIFICATES OF DEPOSIT, OBLIGA-
TIONS, 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 voluntary
termination of the bank’s insured status
under this section shall be accompanied
by a conspicuous, prominently displayed
notice that such certificate of deposit or
other obligation or security is not in-
sured under this Act.
‘‘(h) NOTICE REQUIREMENTS.—
‘‘(1) NOTICE TO THE CORPORATION.—The
notice 
required 
under 
subsection
(a)(1)(A) shall be in such form as the Cor-
poration may require.
552
‘‘(2) NOTICE
TO
DEPOSITORS.—The no-
tice required 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 Corporation 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 by inserting ‘‘,
or any wholesale financial institution
subject to section 9B of this Act’’ after
‘‘such Act’’.
(d) TECHNICAL
AND CONFORMING AMEND-
MENTS TO THE BANKRUPTCY CODE.—
(1) BANKRUPTCY
CODE
DEBTORS.—Sec-
tion 109(b)(2) of title 11, United States
Code, is amended by striking ‘‘; or’’ and
inserting the following: ‘‘, except that—
‘‘(A) a wholesale financial institu-
tion established under section 5136B
of the Revised Statutes of the United
States or section 9B of the Federal
553
Reserve Act may be a debtor if a peti-
tion is filed at the direction of the
Comptroller of the Currency (in the
case of a wholesale financial institu-
tion established under section 5136B
of the Revised Statutes of the United
States) or the Board of Governors of
the Federal Reserve System (in the
case of any wholesale financial insti-
tution); and
‘‘(B) 
a 
corporation 
organized
under section 25A of the Federal Re-
serve Act may be a debtor if a peti-
tion is filed at the direction of the
Board of Governors of the Federal
Reserve System; or’’.
(2) 
CHAPTER
DEBTORS.—Section
109(d) of title 11, United States Code, is
amended to read as follows:
‘‘(d) Only a railroad and a person that may
be a debtor under chapter 7 of this title, ex-
cept that a stockbroker, a wholesale financial
institution established under section 5136B of
the Revised Statutes of the United States or
section 9B of the Federal Reserve Act, a cor-
554
poration organized under section 25A of the
Federal Reserve Act, or a commodity broker,
may be a debtor under chapter 11 of this
title.’’.
(3) DEFINITION
OF
FINANCIAL
INSTITU-
TION.—Section 101(22) of title 11, United
States Code, is amended to read as fol-
lows:
‘‘(22) ‘financial institution’ means a
person that is a commercial or savings
bank, industrial savings bank, savings
and loan association, trust company,
wholesale 
financial 
institution 
estab-
lished under section 5136B of the Revised
Statutes of the United States or section
9B of the Federal Reserve Act, or cor-
poration organized under section 25A of
the Federal Reserve Act and, when any
such person is acting as agent or custo-
dian for a customer in connection with a
securities contract, as defined in section
741 of this title, such customer,’’.
(4) SUBCHAPTER V OF CHAPTER 7.—
555
(A) IN
GENERAL.—Section 103 of
title 
11, 
United 
States 
Code, 
is
amended—
(i) 
by 
redesignating 
sub-
sections (e) through (i) as sub-
sections (f) through (j), respec-
tively; and
(ii) by inserting after sub-
section (d) the following:
‘‘(e) Subchapter V of chapter 7 of this title
applies only in a case under such chapter con-
cerning the liquidation of a wholesale finan-
cial institution established under section
5136B of the Revised Statutes of the United
States or section 9B of the Federal Reserve
Act, or a corporation organized under section
25A of the Federal Reserve Act.’’.
(B) 
WHOLESALE
BANK
LIQUIDA-
TION.—Chapter 7 of title 11, United
States Code, is amended by adding at
the end the following:
‘‘SUBCHAPTER V—WHOLESALE BANK
LIQUIDATION
‘‘§ 781. Definitions for subchapter
‘‘In this subchapter—
556
‘‘(1) the term ‘Board’ means the Board
of Governors of the Federal Reserve Sys-
tem;
‘‘(2) the term ‘depository institution’
has the same meaning as in section 3 of
the Federal Deposit Insurance Act, and
includes any wholesale bank;
‘‘(3) the term ‘national wholesale fi-
nancial institution’ means a wholesale fi-
nancial institution established under sec-
tion 5136B of the Revised Statutes of the
United States; and
‘‘(4) the term ‘wholesale bank’ means
a national wholesale financial institution,
a wholesale financial institution estab-
lished under section 9B of the Federal
Reserve Act, or a corporation organized
under section 25A of the Federal Reserve
Act.
‘‘§ 782. Selection of trustee
‘‘Notwithstanding any other provision of
this title, the conservator or receiver who
files the petition shall be the trustee under
this chapter, unless the Comptroller of the
Currency (in the case of a national wholesale
557
financial institution for which it appointed
the conservator or receiver) or the Board (in
the case of any wholesale bank for which it
appointed the conservator or receiver) des-
ignates an alternative trustee. The Comp-
troller of the Currency or the Board (as appli-
cable) may designate a successor trustee, if
required.
‘‘§ 783. Additional powers of trustee
‘‘(a) The trustee under this subchapter has
power, with permission of the court—
‘‘(1) to sell the wholesale bank to a de-
pository institution or consortium of de-
pository institutions (which consortium
may agree on the allocation of the whole-
sale bank among the consortium);
‘‘(2) to merge the wholesale bank with
a depository institution;
‘‘(3) to transfer contracts to the same
extent as could a receiver for a deposi-
tory institution under paragraphs (9) and
(10) of section 11(e) of the Federal De-
posit Insurance Act;
‘‘(4) to transfer assets or liabilities to
a depository institution;
558
‘‘(5) to distribute property not of the
estate, including distributions to cus-
tomers that are mandated by subchapters
III and IV of this chapter; or
‘‘(6) to transfer assets and liabilities
to a bridge bank as provided in para-
graphs (1), (3)(A), (5), (6), and (9) through
(13), and subparagraphs (A) through (H)
and (K) of paragraph (4) of section 11(n)
of the Federal Deposit Insurance Act, ex-
cept that—
‘‘(A) the bridge bank shall be
treated as a wholesale bank for the
purpose of this subsection; and
‘‘(B) any references in any such
provision of law to the Federal De-
posit Insurance Corporation shall be
construed to be references to the ap-
pointing agency and that references
to deposit insurance shall be omitted.
‘‘(b) Any reference in this section to trans-
fers of liabilities includes a ratable transfer of
liabilities within a priority class.
559
‘‘§ 784. Right to be heard
‘‘The Comptroller of the Currency (in the
case of a national wholesale financial institu-
tion), the Board (in the case of any wholesale
bank), or a Federal reserve bank (in the case
of a wholesale bank that is a member of that
bank) may raise and may appear and be heard
on any issue in a case under this subchapter.
‘‘§ 785. Expedited transfers
‘‘The trustee may make a transfer pursu-
ant to section 783 without prior judicial ap-
proval, if the Comptroller of the Currency (in
the case of a national wholesale financial in-
stitution for which it appointed the conser-
vator or receiver) or the Board (in the case of
any wholesale bank for which it appointed
the conservator or receiver) determines that
the transfer would be necessary to avert seri-
ous adverse effects on economic conditions or
financial stability.’’.
(C) CONFORMING AMENDMENT.—The
table of sections for chapter 7 of title
11, United States Code, is amended by
adding at the end the following:
‘‘SUBCHAPTER V—WHOLESALE BANK LIQUIDATION
‘‘781. Definitions for subchapter.
560
‘‘782. Selection of trustee.
‘‘783. Additional powers of trustee.
‘‘784. Right to be heard.
‘‘785. Expedited transfers.’’.
(e) RESOLUTION OF EDGE CORPORATIONS.—
The 16th undesignated paragraph of section
25A of the Federal Reserve Act (12 U.S.C. 624)
is amended to read as follows:
‘‘(16) APPOINTMENT
OF
RECEIVER
OR
CONSERVATOR.—
‘‘(A) IN GENERAL.—The Board may
appoint a conservator or receiver for
a corporation organized under the
provisions of this section to the same
extent and in the same manner as the
Comptroller of the Currency may ap-
point a conservator or receiver for a
national bank, and the conservator or
receiver for such corporation shall
exercise the same powers, functions,
and duties, subject to the same limita-
tions, as a conservator or receiver for
a national bank.
‘‘(B) EQUIVALENT AUTHORITY.—The
Board shall have the same authority
with respect to any conservator or re-
ceiver appointed for a corporation or-
561
ganized under the provisions of this
section under this paragraph and any
such corporation as the Comptroller
of the Currency has with respect to a
conservator or receiver of a national
bank and the national bank for which
a conservator or receiver has been
appointed.
‘‘(C) 
TITLE
PETITIONS.—The
Board may direct the conservator or
receiver of a corporation organized
under the provisions of this section to
file a petition pursuant to title 11,
United States Code, in which case,
title 11, United States Code, shall
apply to the corporation in lieu of
otherwise applicable Federal or State
insolvency law.’’.
562
Subtitle E—Preservation of FTC
Authority
SEC. 141. AMENDMENT TO THE BANK HOLDING COMPANY
ACT OF 1956 TO MODIFY NOTIFICATION AND
POST-APPROVAL WAITING PERIOD FOR SEC-
TION 3 TRANSACTIONS.
Section 11(b)(1) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1849(b)(1)) is
amended by inserting ‘‘and, if the transaction
also involves an acquisition under section 4 or
section 6, the Board shall also notify the Fed-
eral Trade Commission of such approval’’ be-
fore the period at the end of the first sen-
tence.
SEC. 142. INTERAGENCY DATA SHARING.
To the extent not prohibited by other law,
the Comptroller of the Currency, the Director
of the Office of Thrift Supervision, the Fed-
eral Deposit Insurance Corporation, and the
Board of Governors of the Federal Reserve
System shall make available to the Attorney
General and the Federal Trade Commission
any data in the possession of any such bank-
ing agency that the antitrust agency deems
necessary for antitrust review of any trans-
563
action requiring notice to any such antitrust
agency or the approval of such agency under
section 3, 4, or 6 of the Bank Holding Com-
pany Act of 1956, section 18(c) of the Federal
Deposit Insurance Act, the National Bank
Consolidation and Merger Act, section 10 of
the Home Owners’ Loan Act, or the antitrust
laws.
SEC. 143. CLARIFICATION OF STATUS OF SUBSIDIARIES
AND AFFILIATES.
(a) CLARIFICATION OF FEDERAL TRADE COM-
MISSION JURISDICTION.—Any person which di-
rectly or indirectly controls, is controlled di-
rectly or indirectly by, or is directly or indi-
rectly under common control with, any bank
or savings association (as such terms are de-
fined in section 3 of the Federal Deposit In-
surance Act) and is not itself a bank or sav-
ings association shall not be deemed to be a
bank or savings association for purposes of
the Federal Trade Commission Act or any
other law enforced by the Federal Trade Com-
mission.
(b) SAVINGS PROVISION.—No provision of
this section shall be construed as restricting
564
the authority of any Federal banking agency
(as defined in section 3 of the Federal Deposit
Insurance Act) under any Federal banking
law, including section 8 of the Federal De-
posit Insurance Act.
(c) HART–SCOTT–RODINO AMENDMENTS.—
(1) BANKS.—Section 7A(c)(7) of the
Clayton Act (15 U.S.C. 18a(c)(7)) is amend-
ed by inserting before the semicolon at
the end the following: ‘‘, except that a
portion of a transaction is not exempt
under this paragraph if such portion of
the transaction (A) is subject to section 6
of the Bank Holding Company Act of
1956; and (B) does not require agency ap-
proval under section 3 of the Bank Hold-
ing Company Act of 1956’’.
(2) BANK HOLDING COMPANIES.—Section
7A(c)(8) of the Clayton Act (15 U.S.C.
18a(c)(8)) is amended by inserting before
the semicolon at the end the following: ‘‘,
except that a portion of a transaction is
not exempt under this paragraph if such
portion of the transaction (A) is subject
to section 6 of the Bank Holding Com-
565
pany Act of 1956; and (B) does not re-
quire agency approval under section 4 of
the Bank Holding Company Act of 1956’’.
SEC. 144. ANNUAL GAO REPORT.
(a) IN GENERAL.—By the end of the 1-year
period beginning on the date of the enact-
ment of this Act and annually thereafter, the
Comptroller General of the United States
shall submit a report to the Congress on mar-
ket concentration in the financial services in-
dustry and its impact on consumers.
(b) 
ANALYSIS.—Each 
report 
submitted
under subsection (a) shall contain an analysis
of—
(1) the positive and negative effects of
affiliations between various types of fi-
nancial companies, and of acquisitions
pursuant to this Act and the amendments
made by this Act to other provisions of
law, including any positive or negative
effects on consumers, area markets, and
submarkets thereof or on registered secu-
rities brokers and dealers which have
been purchased by depository institu-
566
tions or depository institution holding
companies;
(2) the changes in business practices
and the effects of any such changes on
the availability of venture capital, con-
sumer credit, and other financial services
or products and the availability of capital
and credit for small businesses; and
(3) the acquisition patterns among de-
pository institutions, depository institu-
tion holding companies, securities firms,
and insurance companies including ac-
quisitions among the largest 20 percent
of firms and acquisitions within regions
or other limited geographical areas.
(c) SUNSET.—This section shall not apply
after the end of the 5-year period beginning
on the date of the enactment of this Act.
Subtitle F—National Treatment
SEC. 151. FOREIGN BANKS THAT ARE FINANCIAL HOLDING
COMPANIES.
Section 8(c) of the International Banking
Act of 1978 (12 U.S.C. 3106(c)) is amended by
adding at the end the following new para-
graph:
567
‘‘(3) TERMINATION
OF
GRANDFATHERED
RIGHTS.—
‘‘(A) IN
GENERAL.—If any foreign
bank or foreign company files a dec-
laration under section 6(b)(1)(D) or
receives a determination under sec-
tion 10(d)(1) of the Bank Holding
Company Act of 1956, any authority
conferred by this subsection on any
foreign bank or company to engage in
any activity which the Board has de-
termined to be permissible for finan-
cial holding companies under section
6 of such Act shall terminate imme-
diately.
‘‘(B) RESTRICTIONS
AND
REQUIRE-
MENTS AUTHORIZED.—If a foreign bank
or company that engages, directly or
through an affiliate pursuant to para-
graph (1), in an activity which the
Board has determined to be permis-
sible for financial holding companies
under section 6 of the Bank Holding
Company Act of 1956 has not filed a
declaration with the Board of its sta-
568
tus as a financial holding company
under such section or received a de-
termination under section 10(d)(1) by
the end of the 2-year period begin-
ning on the date of enactment of the
Financial Services Act of 1999, the
Board, giving due regard to the prin-
ciple of national treatment and equal-
ity of competitive opportunity, may
impose such restrictions and require-
ments on the conduct of such activi-
ties by such foreign bank or company
as are comparable to those imposed
on a financial holding company orga-
nized under the laws of the United
States, including a requirement to
conduct such activities in compliance
with any prudential safeguards estab-
lished under section 5(h) of the Bank
Holding Company Act of 1956.’’.
SEC. 152. FOREIGN BANKS AND FOREIGN FINANCIAL INSTI-
TUTIONS THAT ARE WHOLESALE FINANCIAL
INSTITUTIONS.
Section 8A of the Federal Deposit Insur-
ance Act (as added by section 136(c)(2) of this
569
Act) is amended by adding at the end the fol-
lowing new subsection:
‘‘(i) VOLUNTARY TERMINATION
OF DEPOSIT
INSURANCE.—The provisions on voluntary ter-
mination of insurance in this section shall
apply to an insured branch of a foreign bank
(including a Federal branch) in the same man-
ner and to the same extent as they apply to
an insured State bank or a national bank.’’.
SEC. 153. RECIPROCITY.
(a) NATIONAL TREATMENT REPORTS.—
(1) REPORT REQUIRED IN THE EVENT OF
CERTAIN ACQUISITIONS.—
(A) IN GENERAL.—Whenever a per-
son from a foreign country announces
its intention to acquire or acquires a
bank, 
a 
securities 
underwriter,
broker, or dealer, an investment ad-
viser, or insurance company that
ranks within the top 50 firms in that
line of business in the United States,
the Secretary of Commerce shall,
within the earlier of 6 months of such
announcement or such acquisition
and in consultation with other appro-
570
priate Federal and State agencies,
prepare and submit to the Congress a
report on whether a United States
person would be able, de facto or de
jure, to acquire an equivalent sized
firm in the country in which such
person from a foreign country is lo-
cated.
(B) ANALYSIS
AND
RECOMMENDA-
TIONS.—If a report submitted under
subparagraph (A) states that the
equivalent treatment referred to in
such subparagraph, de facto and de
jure, is not provided in the country
which is the subject of the report, the
Secretary of Commerce, in consulta-
tion with other appropriate Federal
and State agencies, shall include in
the report analysis and recommenda-
tions as to how that country’s laws
and regulations would need to be
changed so that reciprocal treatment
would exist.
(2) REPORT
REQUIRED
BEFORE
FINAN-
CIAL SERVICES NEGOTIATIONS COMMENCE.—
571
The Secretary of Commerce shall, not less
than 6 months before the commencement
of the financial services negotiations of
the World Trade Organization and in con-
sultation with other appropriate Federal
and State agencies, prepare and submit
to the Congress a report containing—
(A) an assessment of the 30 larg-
est financial services markets with
regard to whether reciprocal access
is available in such markets to United
States financial services providers;
and
(B) with respect to any such fi-
nancial services markets in which re-
ciprocal access is not available to
United States financial services pro-
viders, an analysis and recommenda-
tions as to what legislative, regu-
latory, or enforcement changes would
be required to ensure full reciprocity
for such providers.
(3) PERSON OF A FOREIGN COUNTRY DE-
FINED.—For purposes of this subsection,
the term ‘‘person of a foreign country’’
572
means a person, or a person which di-
rectly or indirectly owns or controls that
person, that is a resident of that country,
is organized under the laws of that coun-
try, or has its principal place of business
in that country.
(b) PROVISIONS
APPLICABLE
TO
SUBMIS-
SIONS.—
(1) NOTICE.—Before preparing any re-
port required under subsection (a), the
Secretary of Commerce shall publish no-
tice that a report is in preparation and
seek comment from United States per-
sons.
(2) 
PRIVILEGED
SUBMISSIONS.—Upon
the request of the submitting person, any
comments or related communications re-
ceived by the Secretary with regard to
the report shall, for the purposes of sec-
tion 552 of title 5, of the United States
Code, be treated as commercial informa-
tion obtained from a person that is privi-
leged or confidential, regardless of the
medium in which the information is ob-
tained. 
This 
confidential 
information
573
shall be the property of the Secretary
and shall be privileged from disclosure to
any other person. However, this privilege
shall not be construed as preventing ac-
cess to that confidential information by
the Congress.
(3) PROHIBITION OF UNAUTHORIZED DIS-
CLOSURES.—No person in possession of
confidential information, provided under
this section may disclose that informa-
tion, in whole or in part, except for dis-
closure made in published statistical ma-
terial that does not disclose, either di-
rectly or when used in conjunction with
publicly available information, the con-
fidential information of any person.
Subtitle G—Federal Home Loan
Bank System Modernization
SEC. 161. SHORT TITLE.
This subtitle may be cited as the ‘‘Federal
Home Loan Bank System Modernization Act
of 1999’’.
SEC. 162. DEFINITIONS.
Section 2 of the Federal Home Loan Bank
Act (12 U.S.C. 1422) is amended—
574
(1) in paragraph (1), by striking ‘‘term
‘Board’ means’’ and inserting ‘‘terms ‘Fi-
nance Board’ and ‘Board’ mean’’;
(2) by striking paragraph (3) and in-
serting the following:
‘‘(3) STATE.—The term ‘State’, in addi-
tion to the States of the United States, in-
cludes the District of Columbia, Guam,
Puerto Rico, the United States Virgin Is-
lands, American Samoa, and the Com-
monwealth of the Northern Mariana Is-
lands.’’; and
(3) by adding at the end the following
new paragraph:
‘‘(13) COMMUNITY
FINANCIAL
INSTITU-
TION.—
‘‘(A) IN GENERAL.—The term ‘com-
munity financial institution’ means a
member—
‘‘(i) the deposits of which are
insured under the Federal De-
posit Insurance Act; and
‘‘(ii) that has, as of the date of
the transaction at issue, less than
$500,000,000 in average total as-
575
sets, based on an average of total
assets over the 3 years preceding
that date.
‘‘(B) 
ADJUSTMENTS.—The
$500,000,000 limit referred to in sub-
paragraph (A)(ii) shall be adjusted
annually by the Finance Board, based
on the annual percentage increase, if
any, in the Consumer Price Index for
all urban consumers, as published by
the Department of Labor.’’.
SEC. 163. SAVINGS ASSOCIATION MEMBERSHIP.
Section 5(f) of the Home Owners’ Loan Act
(12 U.S.C. 1464(f)) is amended to read as fol-
lows:
‘‘(f) FEDERAL HOME LOAN BANK MEMBER-
SHIP.—On and after January 1, 1999, a Federal
savings association may become a member of
the Federal Home Loan Bank System, and
shall qualify for such membership in the man-
ner provided by the Federal Home Loan Bank
Act.’’.
576
SEC. 164. ADVANCES TO MEMBERS; COLLATERAL.
(a) IN GENERAL.—Section 10(a) of the Fed-
eral Home Loan Bank Act (12 U.S.C. 1430(a))
is amended—
(1) by redesignating paragraphs (1)
through (4) as subparagraphs (A) through
(D), respectively, and indenting appro-
priately;
(2) by striking ‘‘(a) Each’’ and insert-
ing the following:
‘‘(a) IN GENERAL.—
‘‘(1) ALL ADVANCES.—Each’’;
(3) by striking the 2d sentence and in-
serting the following:
‘‘(2) PURPOSES OF ADVANCES.—A long-
term advance may only be made for the
purposes of—
‘‘(A) providing funds to any mem-
ber for residential housing finance;
and
‘‘(B) providing funds to any com-
munity financial institution for small
business, agricultural, rural develop-
ment, or low-income community de-
velopment lending.’’;
577
(4) by striking ‘‘A Bank’’ and inserting
the following:
‘‘(3) COLLATERAL.—A Bank’’;
(5) in paragraph (3) (as so designated
by paragraph (4) of this subsection)—
(A) in subparagraph (C) (as so re-
designated by paragraph (1) of this
subsection) by striking ‘‘Deposits’’
and inserting ‘‘Cash or deposits’’;
(B) in subparagraph (D) (as so re-
designated by paragraph (1) of this
subsection), by striking the 2d sen-
tence; and
(C) by inserting after subpara-
graph (D) (as so redesignated by
paragraph (1) of this subsection) the
following new subparagraph:
‘‘(E) Secured loans for small busi-
ness, agriculture, rural development,
or low-income community develop-
ment, or securities representing a
whole interest in such secured loans,
in the case of any community finan-
cial institution.’’;
(6) in paragraph (5)—
578
(A) in the 2d sentence, by striking
‘‘and the Board’’;
(B) in the 3d sentence, by striking
‘‘Board’’ and inserting ‘‘Federal home
loan bank’’; and
(C) by striking ‘‘(5) Paragraphs (1)
through (4)’’ and inserting the fol-
lowing:
‘‘(4) ADDITIONAL
BANK
AUTHORITY.—
Subparagraphs (A) through (E) of para-
graph (3)’’; and
(7) by adding at the end the fol-
lowing:
‘‘(5) REVIEW
OF
CERTAIN
COLLATERAL
STANDARDS.—The Board may review the
collateral standards applicable to each
Federal home loan bank for the classes of
collateral described in subparagraphs (D)
and (E) of paragraph (3), and may, if nec-
essary for safety and soundness purposes,
require an increase in the collateral
standards for any or all of those classes
of collateral.
‘‘(6) DEFINITIONS.—For purposes of
this subsection, the terms ‘small busi-
579
ness’, ‘agriculture’, ‘rural development’,
and ‘low-income community development’
shall have the meanings given those
terms by rule or regulation of the Fi-
nance Board.’’.
(b) CLERICAL
AMENDMENT.—The section
heading for section 10 of the Federal Home
Loan Bank Act (12 U.S.C. 1430) is amended to
read as follows:
‘‘SEC. 10. ADVANCES TO MEMBERS.’’.
(c) CONFORMING AMENDMENTS RELATING TO
MEMBERS WHICH ARE NOT QUALIFIED THRIFT
LENDERS—The 1st of the 2 subsections des-
ignated as subsection (e) of section 10 of the
Federal Home Loan Bank Act (12 U.S.C.
1430(e)(1)) is amended—
(1) in the last sentence of paragraph
(1), by inserting ‘‘or, in the case of any
community financial institution, for the
purposes described in subsection (a)(2)’’
before the period; and
(2) in paragraph (5)(C), by inserting
‘‘except that, in determining the actual
thrift investment percentage of any com-
munity financial institution for purposes
580
of this subsection, the total investment of
such member in loans for small business,
agriculture, rural development, or low-in-
come community development, or securi-
ties representing a whole interest in such
loans, shall be treated as a qualified
thrift investment (as defined in such sec-
tion 10(m))’’ before the period.
SEC. 165. ELIGIBILITY CRITERIA.
Section 4(a) of the Federal Home Loan
Bank Act (12 U.S.C. 1424(a)) is amended—
(1) in paragraph (2)(A), by inserting,
‘‘(other than a community financial insti-
tution)’’ after ‘‘institution’’; and
(2) by adding at the end the following
new paragraph:
‘‘(3) LIMITED
EXEMPTION
FOR
COMMU-
NITY
FINANCIAL
INSTITUTIONS.—A commu-
nity financial institution that otherwise
meets the requirements of paragraph (2)
may become a member without regard to
the percentage of its total assets that is
represented 
by 
residential 
mortgage
loans, as described in subparagraph (A)
of paragraph (2).’’.
581
SEC. 166. MANAGEMENT OF BANKS.
(a) BOARD OF DIRECTORS.—Section 7(d) of
the Federal Home Loan Bank Act (12 U.S.C.
1427(d)) is amended—
(1) by striking ‘‘(d) The term’’ and in-
serting the following:
‘‘(d) TERMS OF OFFICE.—The term’’; and
(2) by striking ‘‘shall be two years’’.
(b) COMPENSATION.—Section 7(i) of the
Federal Home Loan Bank Act (12 U.S.C.
1427(i)) is amended by striking ‘‘, subject to
the approval of the board’’.
(c) REPEAL OF SECTIONS 22A AND 27.—The
Federal Home Loan Bank Act (12 U.S.C. 1421
et seq.) is amended by striking sections 22A
(12 U.S.C. 1442a) and 27 (12 U.S.C. 1447).
(d) SECTION 12.—Section 12 of the Federal
Home Loan Bank Act (12 U.S.C. 1432) is
amended—
(1) in subsection (a)—
(A) by striking ‘‘, but, except’’ and
all that follows through ‘‘ten years’’;
(B) by striking ‘‘subject to the ap-
proval of the Board’’ the first place
that term appears;
582
(C) by striking ‘‘and, by its Board
of directors,’’ and all that follows
through ‘‘agent of such bank,’’ and in-
serting ‘‘and, by the board of direc-
tors of the bank, to prescribe, amend,
and repeal by-laws governing the
manner in which its affairs may be
administered, consistent with appli-
cable laws and regulations, as admin-
istered by the Finance Board. No offi-
cer, employee, attorney, or agent of a
Federal home loan bank’’; and
(D) by striking ‘‘Board of direc-
tors’’ where such term appears in the
penultimate sentence and inserting
‘‘board of directors’’; and
(2) in subsection (b), by striking
‘‘loans banks’’ and inserting ‘‘loan banks’’.
(e) POWERS AND DUTIES OF FEDERAL HOUS-
ING FINANCE BOARD.—
(1) ISSUANCE
OF
NOTICES
OF
VIOLA-
TIONS.—Section 
2B(a) 
of 
the 
Federal
Home Loan Bank Act (12 U.S.C. 1422b(a))
is amended by adding at the end the fol-
lowing new paragraphs:
583
‘‘(5) To issue and serve a notice of
charges upon a Federal home loan bank
or upon any executive officer or director
of a Federal home loan bank if, in the de-
termination of the Finance Board, the
bank, executive officer, or director is en-
gaging or has engaged in, or the Finance
Board has reasonable cause to believe
that the bank, executive officer, or direc-
tor is about to engage in, any conduct
that violates any provision of this Act or
any law, order, rule, or regulation or any
condition imposed in writing by the Fi-
nance Board in connection with the
granting of any application or other re-
quest by the bank, or any written agree-
ment entered into by the bank with the
agency, in accordance with the proce-
dures provided in section 1371(c) of the
Federal Housing Enterprises Financial
Safety and Soundness Act of 1992. Such
authority includes the same authority to
take affirmative action to correct condi-
tions resulting from violations or prac-
tices or to limit activities of a bank or
584
any executive officer or director of a
bank as appropriate Federal banking
agencies have to take with respect to in-
sured depository institutions under para-
graphs (6) and (7) of section 8(b) of the
Federal Deposit Insurance Act, and to
have all other powers, rights, and duties
to enforce this Act with respect to the
Federal home loan banks and their exec-
utive officers and directors as the Office
of Federal Housing Enterprise Oversight
has to enforce the Federal Housing En-
terprises Financial Safety and Soundness
Act of 1992, the Federal National Mort-
gage Association Charter Act, or the Fed-
eral Home Loan Mortgage Corporation
Act with respect to the Federal housing
enterprises under the Federal Housing
Enterprises Financial Safety and Sound-
ness Act of 1992.
‘‘(6) To address any insufficiencies in
capital levels resulting from the applica-
tion of section 5(f) of the Home Owners’
Loan Act.
585
‘‘(7) To sue and be sued, by and
through its own attorneys.’’.
(2) TECHNICAL
AMENDMENT.—Section
111 of Public Law 93–495 (12 U.S.C. 250) is
amended by striking ‘‘Federal Home Loan
Bank Board,’’ and inserting ‘‘Director of
the Office of Thrift Supervision, the Fed-
eral Housing Finance Board,’’.
(f) ELIGIBILITY TO SECURE ADVANCES.—
(1) SECTION 9.—Section 9 of the Fed-
eral Home Loan Bank Act (12 U.S.C. 1429)
is amended—
(A) in the 2d sentence, by striking
‘‘with the approval of the Board’’; and
(B) in the 3d sentence, by striking
‘‘, subject to the approval of the
Board,’’.
(2) SECTION 10.—Section 10 of the Fed-
eral Home Loan Bank Act (12 U.S.C. 1430)
is amended—
(A) in subsection (c)—
(i) in the 1st sentence, by
striking ‘‘Board’’ and inserting
‘‘Federal home loan bank’’; and
586
(ii) by striking the 2d sen-
tence;
(B) in subsection (d)—
(i) in the 1st sentence, by
striking ‘‘and the approval of the
Board’’; and
(ii) by striking ‘‘Subject to the
approval of the Board, any’’ and
inserting ‘‘Any’’; and
(C) in subsection (j)(1)—
(i) by striking ‘‘to subsidize
the interest rate on advances’’
and inserting ‘‘to provide sub-
sidies, including subsidized inter-
est rates on advances’’;
(ii) by striking ‘‘Pursuant’’
and inserting the following:
‘‘(A) 
ESTABLISHMENT.—Pursuant’’;
and
(iii) by adding at the end the
following new subparagraph:
‘‘(B) NONDELEGATION OF APPROVAL
AUTHORITY.—Subject to such regula-
tions as the Finance Board may pre-
scribe, the board of directors of each
587
Federal home loan bank may approve
or disapprove requests from members
for Affordable Housing Program sub-
sidies, and may not delegate such au-
thority.’’.
(g) SECTION 16.—Section 16(a) of the Fed-
eral Home Loan Bank Act (12 U.S.C. 1436(a))
is amended—
(1) in the 3d sentence—
(A) by striking ‘‘net earnings’’ and
inserting ‘‘previously retained earn-
ings or current net earnings’’; and
(B) by striking ‘‘, and then only
with the approval of the Federal
Housing Finance Board’’; and
(2) by striking the 4th sentence.
(h) SECTION 18.—Section 18(b) of the Fed-
eral Home Loan Bank Act (12 U.S.C. 1438(b))
is amended by striking paragraph (4).
SEC. 167. RESOLUTION FUNDING CORPORATION.
(a) IN GENERAL.—Section 21B(f)(2)(C) of
the Federal Home Loan Bank Act (12 U.S.C.
1441b(f)(2)(C)) is amended to read as follows:
‘‘(C) PAYMENTS
BY
FEDERAL
HOME
LOAN BANKS.—
588
‘‘(i) IN
GENERAL.—To the ex-
tent that the amounts available
pursuant to subparagraphs (A)
and (B) are insufficient to cover
the amount of interest payments,
each Federal home loan bank
shall pay to the Funding Corpora-
tion in each calendar year, 20.75
percent of the net earnings of
that bank (after deducting ex-
penses relating to section 10(j)
and operating expenses).
‘‘(ii) ANNUAL DETERMINATION.—
The Board annually shall deter-
mine the extent to which the
value of the aggregate amounts
paid by the Federal home loan
banks exceeds or falls short of the
value 
of 
an 
annuity 
of
$300,000,000 per year that com-
mences on the issuance date and
ends on the final scheduled matu-
rity date of the obligations, and
shall select appropriate present
589
value factors for making such de-
terminations.
‘‘(iii) PAYMENT
TERM
ALTER-
ATIONS.—The Board shall extend
or shorten the term of the pay-
ment obligations of a Federal
home loan bank under this sub-
paragraph as necessary to ensure
that the value of all payments
made by the banks is equivalent
to the value of an annuity re-
ferred to in clause (ii).
‘‘(iv) TERM BEYOND MATURITY.—
If the Board extends the term of
payments beyond the final sched-
uled maturity date for the obliga-
tions, each Federal home loan
bank shall continue to pay 20.75
percent of its net earnings (after
deducting expenses relating to
section 10(j) and operating ex-
penses) to the Treasury of the
United States until the value of
all such payments by the Federal
home loan banks is equivalent to
590
the value of an annuity referred
to in clause (ii). In the final year
in which the Federal home loan
banks are required to make any
payment to the Treasury under
this subparagraph, if the dollar
amount represented by 20.75 per-
cent of the net earnings of the
Federal home loan banks exceeds
the remaining obligation of the
banks to the Treasury, the Fi-
nance Board shall reduce the per-
centage pro rata to a level suffi-
cient to pay the remaining obliga-
tion.’’.
(b) EFFECTIVE
DATE.—The amendment
made by subsection (a) shall become effective
on January 1, 1999. Payments made by a Fed-
eral home loan bank before that effective date
shall be counted toward the total obligation
of that bank under section 21B(f)(2)(C) of the
Federal Home Loan Bank Act, as amended by
this section.
591
SEC. 168. CAPITAL STRUCTURE OF FEDERAL HOME LOAN
BANKS.
Section 6 of the Federal Home Loan Bank
Act (12 U.S.C. 1426) is amended to read as fol-
lows:
‘‘SEC. 6. CAPITAL STRUCTURE OF FEDERAL HOME LOAN
BANKS.
‘‘(a) REGULATIONS.—
‘‘(1) CAPITAL
STANDARDS.—Not later
than 1 year after the date of enactment of
the Financial Services Act of 1999, the Fi-
nance Board shall issue regulations pre-
scribing uniform capital standards appli-
cable to each Federal home loan bank,
which shall require each such bank to
meet—
‘‘(A) 
the 
leverage 
requirement
specified in paragraph (2); and
‘‘(B) the risk-based capital re-
quirements, in accordance with para-
graph (3).
‘‘(2) LEVERAGE REQUIREMENT.—
‘‘(A) IN GENERAL.—The leverage re-
quirement shall require each Federal
home loan bank to maintain a min-
imum amount of total capital based
592
on the aggregate on-balance sheet as-
sets of the bank and shall be 5 per-
cent.
‘‘(B) TREATMENT OF STOCK AND RE-
TAINED
EARNINGS.—In 
determining
compliance with the minimum lever-
age ratio established under subpara-
graph (A), the paid-in value of the
outstanding Class B stock shall be
multiplied by 1.5, the paid-in value of
the outstanding Class C stock and the
amount of retained earnings shall be
multiplied by 2.0, and such higher
amounts shall be deemed to be cap-
ital for purposes of meeting the 5 per-
cent minimum leverage ratio.
‘‘(3) RISK-BASED CAPITAL STANDARDS.—
‘‘(A) IN
GENERAL.—Each Federal
home loan bank shall maintain per-
manent capital in an amount that is
sufficient, as determined in accord-
ance with the regulations of the Fi-
nance Board, to meet—
593
‘‘(i) the credit risk to which
the Federal home loan bank is
subject; and
‘‘(ii) the market risk, includ-
ing interest rate risk, to which
the Federal home loan bank is
subject, based on a stress test es-
tablished by the Finance Board
that rigorously tests for changes
in market variables, including
changes in interest rates, rate vol-
atility, and changes in the shape
of the yield curve.
‘‘(B) 
CONSIDERATION
OF
OTHER
RISK-BASED
STANDARDS.—In 
estab-
lishing the risk-based standard under
subparagraph 
(A)(ii), 
the 
Finance
Board shall take due consideration of
any risk-based capital test estab-
lished pursuant to section 1361 of the
Federal Housing Enterprises Finan-
cial Safety and Soundness Act of 1992
(12 U.S.C. 4611) for the enterprises (as
defined in that Act), with such modi-
fications as the Finance Board deter-
594
mines to be appropriate to reflect dif-
ferences in operations between the
Federal home loan banks and those
enterprises.
‘‘(4) 
OTHER
REGULATORY
REQUIRE-
MENTS.—The regulations issued by the Fi-
nance Board under paragraph (1) shall—
‘‘(A) permit each Federal home
loan bank to issue, with such rights,
terms, and preferences, not incon-
sistent with this Act and the regula-
tions issued hereunder, as the board
of directors of that bank may ap-
prove, any 1 or more of—
‘‘(i) Class A stock, which shall
be redeemable in cash and at par
6 months following submission by
a member of a written notice of
its intent to redeem such shares;
‘‘(ii) Class B stock, which shall
be redeemable in cash and at par
5 years following submission by a
member of a written notice of its
intent to redeem such shares; and
595
‘‘(iii) Class C stock, which
shall be nonredeemable;
‘‘(B) provide that the stock of a
Federal home loan bank may be
issued to and held by only members
of the bank, and that a bank may not
issue any stock other than as pro-
vided in this section;
‘‘(C) prescribe the manner in
which stock of a Federal home loan
bank may be sold, transferred, re-
deemed, or repurchased; and
‘‘(D) provide the manner of dis-
position of outstanding stock held by,
and the liquidation of any claims of
the Federal home loan bank against,
an institution that ceases to be a
member of the bank, through merger
or otherwise, or that provides notice
of intention to withdraw from mem-
bership in the bank.
‘‘(5) DEFINITIONS OF CAPITAL.—For pur-
poses of determining compliance with the
capital standards established under this
subsection—
596
‘‘(A) permanent capital of a Fed-
eral home loan bank shall include (as
determined in accordance with gen-
erally 
accepted 
accounting 
prin-
ciples)—
‘‘(i) the amounts paid for the
Class C stock and any other non-
redeemable stock approved by
the Finance Board;
‘‘(ii) the amounts paid for the
Class B stock, in an amount not to
exceed 1 percent of the total as-
sets of the bank; and
‘‘(iii) the retained earnings of
the bank; and
‘‘(B) total capital of a Federal
home loan bank shall include—
‘‘(i) permanent capital;
‘‘(ii) the amounts paid for the
Class A stock, Class B stock (ex-
cluding any amount treated as
permanent capital under subpara-
graph (5)(A)(ii)), or any other
class of redeemable stock ap-
proved by the Finance Board;
597
‘‘(iii) consistent with generally
accepted accounting principles,
and subject to the regulation of
the Finance Board, a general al-
lowance for losses, which may not
include any reserves or allow-
ances made or held against spe-
cific assets; and
‘‘(iv) any other amounts from
sources available to absorb losses
incurred by the bank that the Fi-
nance Board determines by regu-
lation to be appropriate to in-
clude in determining total capital.
‘‘(6) 
TRANSITION
PERIOD.—Notwith-
standing any other provisions of this Act,
the requirements relating to purchase
and retention of capital stock of a Fed-
eral home loan bank by any member
thereof in effect on the day before the
date of enactment of the Federal Home
Loan Bank System Modernization Act of
1999, shall continue in effect with respect
to each Federal home loan bank until the
regulations required by this subsection
598
have taken effect and the capital struc-
ture plan required by subsection (b) has
been approved by the Finance Board and
implemented by such bank.
‘‘(b) CAPITAL STRUCTURE PLAN.—
‘‘(1) APPROVAL
OF
PLANS.—Not later
than 270 days after the date of publica-
tion by the Finance Board of final regula-
tions in accordance with subsection (a),
the board of directors of each Federal
home loan bank shall submit for Finance
Board approval a plan establishing and
implementing a capital structure for such
bank that—
‘‘(A) the board of directors deter-
mines is best suited for the condition
and operation of the bank and the in-
terests of the members of the bank;
‘‘(B) meets the requirements of
subsection (c); and
‘‘(C) meets the minimum capital
standards and requirements estab-
lished under subsection (a) and other
regulations prescribed by the Fi-
nance Board.
599
‘‘(2) APPROVAL OF MODIFICATIONS.—The
board of directors of a Federal home loan
bank shall submit to the Finance Board
for approval any modifications that the
bank proposes to make to an approved
capital structure plan.
‘‘(c) CONTENTS OF PLAN.—The capital struc-
ture plan of each Federal home loan bank
shall contain provisions addressing each of
the following:
‘‘(1) MINIMUM INVESTMENT.—
‘‘(A) IN
GENERAL.—Each capital
structure plan of a Federal home loan
bank shall require each member of
the bank to maintain a minimum in-
vestment in the stock of the bank, the
amount of which shall be determined
in a manner to be prescribed by the
board of directors of each bank and
to be included as part of the plan.
‘‘(B) INVESTMENT ALTERNATIVES.—
‘‘(i) 
IN
GENERAL.—In 
estab-
lishing the minimum investment
required for each member under
subparagraph (A), a Federal home
600
loan bank may, in its discretion,
include any 1 or more of the re-
quirements referred to in clause
(ii), or any other provisions ap-
proved by the Finance Board.
‘‘(ii) 
AUTHORIZED
REQUIRE-
MENTS.—A requirement is referred
to in this clause if it is a require-
ment for—
‘‘(I) 
a 
stock 
purchase
based on a percentage of the
total assets of a member; or
‘‘(II) 
a 
stock 
purchase
based on a percentage of the
outstanding 
advances 
from
the bank to the member.
‘‘(C) MINIMUM AMOUNT.—Each cap-
ital structure plan of a Federal home
loan bank shall require that the min-
imum stock investment established
for members shall be set at a level
that is sufficient for the bank to meet
the minimum capital requirements
established by the Finance Board
under subsection (a).
601
‘‘(D) ADJUSTMENTS TO MINIMUM RE-
QUIRED
INVESTMENT.—The 
capital
structure plan of each Federal home
loan bank shall impose a continuing
obligation on the board of directors
of the bank to review and adjust the
minimum 
investment 
required 
of
each member of that bank, as nec-
essary to ensure that the bank re-
mains in compliance with applicable
minimum capital levels established
by the Finance Board, and shall re-
quire 
each 
member 
to 
comply
promptly with any adjustments to the
required minimum investment.
‘‘(2) TRANSITION RULE.—
‘‘(A) 
IN
GENERAL.—The 
capital
structure plan of each Federal home
loan bank shall specify the date on
which it shall take effect, and may
provide for a transition period of not
longer than 3 years to allow the bank
to come into compliance with the cap-
ital requirements prescribed under
subsection (a), and to allow any insti-
602
tution that was a member of the bank
on the date of enactment of the Fi-
nancial Services Act of 1999, to come
into compliance with the minimum
investment required pursuant to the
plan.
‘‘(B) INTERIM
PURCHASE
REQUIRE-
MENTS.—The capital structure plan of
a Federal home loan bank may allow
any member referred to in subpara-
graph (A) that would be required by
the terms of the capital structure
plan to increase its investment in the
stock of the bank to do so in periodic
installments during the transition pe-
riod.
‘‘(3) DISPOSITION OF SHARES.—The cap-
ital structure plan of a Federal home loan
bank shall provide for the manner of dis-
position of any stock held by a member of
that bank that terminates its membership
or that provides notice of its intention to
withdraw from membership in that bank.
‘‘(4) CLASSES OF STOCK.—
603
‘‘(A) 
IN
GENERAL.—The 
capital
structure plan of a Federal home loan
bank shall afford each member of
that bank the option of maintaining
its required investment in the bank
through the purchase of any com-
bination of classes of stock author-
ized by the board of directors of the
bank and approved by the Finance
Board in accordance with its regula-
tions.
‘‘(B) RIGHTS REQUIREMENT.—A Fed-
eral home loan bank shall include in
its capital structure plan provisions
establishing terms, rights, and pref-
erences, including minimum invest-
ment, dividends, voting, and liquida-
tion preferences of each class of stock
issued by the bank, consistent with
Finance Board regulations and mar-
ket requirements.
‘‘(C) REDUCED
MINIMUM
INVEST-
MENT.—The capital structure plan of a
Federal home loan bank may provide
for a reduced minimum stock invest-
604
ment for any member of that bank
that elects to purchase Class B, Class
C, or any other class of nonredeem-
able stock, in a manner that is con-
sistent with meeting the minimum
capital requirements of the bank, as
established by the Finance Board.
‘‘(D) LIQUIDATION OF CLAIMS.—The
capital structure plan of a Federal
home loan bank shall provide for the
liquidation in an orderly manner, as
determined by the bank, of any claim
of that bank against a member, in-
cluding claims for any applicable pre-
payment fees or penalties resulting
from prepayment of advances prior to
stated maturity.
‘‘(5) 
LIMITED
TRANSFERABILITY
OF
STOCK.—The capital structure plan of a
Federal home loan bank shall—
‘‘(A) provide that—
‘‘(i) any stock issued by that
bank shall be available only to,
held only by, and tradable only
among members of that bank and
605
between that bank and its mem-
bers; and
‘‘(ii) a bank has no obligation
to 
repurchase 
its 
outstanding
Class C stock but may do so, pro-
vided it is consistent with Fi-
nance Board regulations and is at
a price that is mutually agreeable
to the bank and the member; and
‘‘(B) establish standards, criteria,
and requirements for the issuance,
purchase, transfer, retirement, and
redemption of stock issued by that
bank.
‘‘(6) BANK REVIEW OF PLAN.—Before fil-
ing a capital structure plan with the Fi-
nance Board, each Federal home loan
bank shall conduct a review of the plan
by—
‘‘(A) an independent certified pub-
lic accountant, to ensure, to the ex-
tent possible, that implementation of
the plan would not result in any
write-down of the redeemable bank
stock investment of its members; and
606
‘‘(B) at least 1 major credit rating
agency, to determine, to the extent
possible, whether implementation of
the plan would have any material ef-
fect on the credit ratings of the bank.
‘‘(d) TERMINATION OF MEMBERSHIP.—
‘‘(1) 
VOLUNTARY
WITHDRAWAL.—Any
member may withdraw from a Federal
home loan bank by providing written no-
tice to the bank of its intent to do so. The
applicable stock redemption notice peri-
ods shall commence upon receipt of the
notice by the bank. Upon the expiration
of the applicable notice period for each
class of redeemable stock, the member
may surrender such stock to the bank,
and shall be entitled to receive in cash
the par value of the stock. During the ap-
plicable notice periods, the member shall
be entitled to dividends and other mem-
bership rights commensurate with con-
tinuing stock ownership.
‘‘(2) INVOLUNTARY WITHDRAWAL.—
‘‘(A) IN GENERAL.—The board of di-
rectors of a Federal home loan bank
607
may terminate the membership of
any institution if, subject to Finance
Board 
regulations, 
it 
determines
that—
‘‘(i) the member has failed to
comply with a provision of this
Act or any regulation prescribed
under this Act; or
‘‘(ii) the member has been de-
termined to be insolvent, or oth-
erwise subject to the appointment
of a conservator, receiver, or
other legal custodian, by a State
or Federal authority with regu-
latory and supervisory responsi-
bility for the member.
‘‘(B) STOCK DISPOSITION.—An insti-
tution, the membership of which is
terminated in accordance with sub-
paragraph (A)—
‘‘(i) shall surrender redeem-
able stock to the Federal home
loan bank, and shall receive in
cash the par value of the stock,
upon the expiration of the appli-
608
cable notice period under sub-
section (a)(4)(A);
‘‘(ii) shall receive any divi-
dends declared on its redeemable
stock, during the applicable no-
tice 
period 
under 
subsection
(a)(4)(A); and
‘‘(iii) shall not be entitled to
any other rights or privileges ac-
corded to members after the date
of the termination.
‘‘(C) COMMENCEMENT OF NOTICE PE-
RIOD.—With respect to an institution,
the membership of which is termi-
nated in accordance with subpara-
graph (A), the applicable notice pe-
riod under subsection (a)(4) for each
class of redeemable stock shall com-
mence on the earlier of—
‘‘(i) the date of such termi-
nation; or
‘‘(ii) the date on which the
member has provided notice of its
intent to redeem such stock.
609
‘‘(3) LIQUIDATION
OF
INDEBTEDNESS.—
Upon the termination of the membership
of an institution for any reason, the out-
standing indebtedness of the member to
the bank shall be liquidated in an orderly
manner, as determined by the bank and,
upon the extinguishment of all such in-
debtedness, the bank shall return to the
member all collateral pledged to secure
the indebtedness.
‘‘(e) REDEMPTION OF EXCESS STOCK.—
‘‘(1) IN
GENERAL.—A Federal home
loan bank, in its sole discretion, may re-
deem or repurchase, as appropriate, any
shares of Class A or Class B stock issued
by the bank and held by a member that
are in excess of the minimum stock in-
vestment required of that member.
‘‘(2) EXCESS
STOCK.—Shares of stock
held by a member shall not be deemed to
be ‘excess stock’ for purposes of this sub-
section by virtue of a member’s submis-
sion of a notice of intent to withdraw
from membership or termination of its
membership in any other manner.
610
‘‘(3) PRIORITY.—A Federal home loan
bank may not redeem any excess Class B
stock prior to the end of the 5-year notice
period, unless the member has no Class A
stock outstanding that could be re-
deemed as excess.
‘‘(f) IMPAIRMENT
OF CAPITAL.—If the Fi-
nance Board or the board of directors of a
Federal home loan bank determines that the
bank has incurred or is likely to incur losses
that result in or are expected to result in
charges against the capital of the bank, the
bank shall not redeem or repurchase any
stock of the bank without the prior approval
of the Finance Board while such charges are
continuing or are expected to continue. In no
case may a bank redeem or repurchase any
applicable capital stock if, following the re-
demption, the bank would fail to satisfy any
minimum capital requirement.
‘‘(g) REJOINING AFTER DIVESTITURE OF ALL
SHARES.—
‘‘(1) IN GENERAL.—Except as provided
in paragraph (2), and notwithstanding
any other provision of this Act, an insti-
611
tution that divests all shares of stock in a
Federal home loan bank may not, after
such divestiture, acquire shares of any
Federal home loan bank before the end of
the 5-year period beginning on the date
of the completion of such divestiture, un-
less the divestiture is a consequence of a
transfer of membership on an uninter-
rupted basis between banks.
‘‘(2) 
EXCEPTION
FOR
WITHDRAWALS
FROM MEMBERSHIP BEFORE 1998.—Any insti-
tution that withdrew from membership
in any Federal home loan bank before
December 31, 1997, may acquire shares of
a Federal home loan bank at any time
after that date, subject to the approval of
the Finance Board and the requirements
of this Act.
‘‘(h) TREATMENT OF RETAINED EARNINGS.—
‘‘(1) IN GENERAL.—The holders of the
Class C stock of a Federal home loan
bank, and any other classes of non-
redeemable stock approved by the Fi-
nance Board (to the extent provided in
the terms thereof), shall own the retained
612
earnings, surplus, undivided profits, and
equity reserves, if any, of the bank.
‘‘(2) NO
NONREDEEMABLE
CLASSES
OF
STOCK.—If a Federal home loan bank has
no outstanding Class C or other such
nonredeemable stock, then the holders of
any other classes of stock of the bank
then outstanding shall have ownership
in, and a private property right in, the re-
tained earnings, surplus, undivided prof-
its, and equity reserves, if any, of the
bank.
‘‘(3) EXCEPTION.—Except as specifi-
cally provided in this section or through
the declaration of a dividend or a capital
distribution by a Federal home loan
bank, or in the event of liquidation of the
bank, a member shall have no right to
withdraw or otherwise receive distribu-
tion of any portion of the retained earn-
ings of the bank.
‘‘(4) LIMITATION.—A Federal home loan
bank may not make any distribution of
its retained earnings unless, following
such distribution, the bank would con-
613
tinue to meet all applicable capital re-
quirements.’’.
Subtitle H—ATM Fee Reform
SEC. 171. SHORT TITLE.
This subtitle may be cited as the ‘‘ATM
Fee Reform Act of 1999’’.
SEC. 172. ELECTRONIC FUND TRANSFER FEE DISCLOSURES
AT ANY HOST ATM.
Section 904(d) of the Electronic Fund
Transfer Act (15 U.S.C. 1693b(d)) is amended
by adding at the end the following new para-
graph:
‘‘(3) FEE
DISCLOSURES
AT
AUTOMATED
TELLER MACHINES.—
‘‘(A) IN GENERAL.—The regulations
prescribed under paragraph (1) shall
require any automated teller machine
operator who imposes a fee on any
consumer for providing host transfer
services to such consumer to provide
notice in accordance with subpara-
graph (B) to the consumer (at the
time the service is provided) of—
614
‘‘(i) the fact that a fee is im-
posed by such operator for pro-
viding the service; and
‘‘(ii) the amount of any such
fee.
‘‘(B) NOTICE REQUIREMENTS.—
‘‘(i) ON THE MACHINE.—The no-
tice required under clause (i) of
subparagraph (A) with respect to
any fee described in such sub-
paragraph shall be posted in a
prominent and conspicuous loca-
tion on or at the automated teller
machine at which the electronic
fund transfer is initiated by the
consumer; and
‘‘(ii) ON THE SCREEN.—The no-
tice required under clauses (i)
and (ii) of subparagraph (A) with
respect to any fee described in
such subparagraph shall appear
on the screen of the automated
teller machine, or on a paper no-
tice issued from such machine,
after the transaction is initiated
615
and before the consumer is irrev-
ocably committed to completing
the transaction.
‘‘(C) PROHIBITION
ON
FEES
NOT
PROPERLY
DISCLOSED
AND
EXPLICITLY
ASSUMED
BY
CONSUMER.—No fee may
be imposed by any automated teller
machine operator in connection with
any electronic fund transfer initiated
by a consumer for which a notice is
required under subparagraph (A),
unless—
‘‘(i) 
the 
consumer 
receives
such notice in accordance with
subparagraph (B); and
‘‘(ii) the consumer elects to
continue in the manner necessary
to effect the transaction after re-
ceiving such notice.
‘‘(D) DEFINITIONS.—For purposes
of this paragraph, the following defi-
nitions shall apply:
‘‘(i) ELECTRONIC
FUND
TRANS-
FER.—The term ‘electronic fund
transfer’ includes a transaction
616
which involves a balance inquiry
initiated by a consumer in the
same manner as an electronic
fund transfer, whether or not the
consumer initiates a transfer of
funds in the course of the trans-
action.
‘‘(ii) AUTOMATED
TELLER
MA-
CHINE OPERATOR.—The term ‘auto-
mated teller machine operator’
means any person who—
‘‘(I) 
operates 
an 
auto-
mated 
teller 
machine 
at
which consumers initiate elec-
tronic fund transfers; and
‘‘(II) is not the financial
institution which holds the
account 
of 
such 
consumer
from which the transfer is
made.
‘‘(iii) 
HOST
TRANSFER
SERV-
ICES.—The 
term 
‘host 
transfer
services’ means any electronic
fund transfer made by an auto-
mated teller machine operator in
617
connection with a transaction ini-
tiated by a consumer at an auto-
mated teller machine operated by
such operator.’’.
SEC. 173. DISCLOSURE OF POSSIBLE FEES TO CONSUMERS
WHEN ATM CARD IS ISSUED.
Section 905(a) of the Electronic Fund
Transfer Act (15 U.S.C. 1693c(a)) is amended—
(1) by striking ‘‘and’’ at the end of
paragraph (8);
(2) by striking the period at the end
of paragraph (9) and inserting ‘‘; and’’;
and
(3) by inserting after paragraph (9)
the following new paragraph:
‘‘(10) a notice to the consumer that a
fee may be imposed by—
‘‘(A) an automated teller machine
operator 
(as 
defined 
in 
section
904(d)(3)(D)(ii)) if the consumer initi-
ates a transfer from an automated
teller machine which is not operated
by the person issuing the card or
other means of access; and
618
‘‘(B) any national, regional, or
local network utilized to effect the
transaction.’’.
SEC. 174. FEASIBILITY STUDY.
(a) IN GENERAL.—The Comptroller General
of the United States shall conduct a study of
the feasibility of requiring, in connection with
any electronic fund transfer initiated by a
consumer through the use of an automated
teller machine—
(1) a notice to be provided to the con-
sumer before the consumer is irrevocably
committed to completing the transaction,
which clearly states the amount of any
fee which will be imposed upon the con-
summation of the transaction by—
(A) any automated teller machine
operator 
(as 
defined 
in 
section
904(d)(2)(D)(ii) of the Electronic Fund
Transfer Act) involved in the trans-
action;
(B) the financial institution hold-
ing the account of the consumer;
619
(C) any national, regional, or local
network utilized to effect the trans-
action; and
(D) any other party involved in
the transfer; and
(2) the consumer to elect to consum-
mate the transaction after receiving the
notice described in paragraph (1).
(b) FACTORS TO BE CONSIDERED.—In con-
ducting the study required under subsection
(a) with regard to the notice requirement de-
scribed in such subsection, the Comptroller
General shall consider the following factors:
(1) The availability of appropriate
technology.
(2) 
Implementation 
and 
operating
costs.
(3) The competitive impact any such
notice requirement would have on var-
ious sizes and types of institutions, if im-
plemented.
(4) The period of time which would be
reasonable for implementing any such
notice requirement.
620
(5) The extent to which consumers
would benefit from any such notice re-
quirement.
(6) Any other factor the Comptroller
General determines to be appropriate in
analyzing the feasibility of imposing any
such notice requirement.
(c) REPORT TO THE CONGRESS.—Before the
end of the 6-month period beginning on the
date of the enactment of this Act, the Comp-
troller General shall submit a report to the
Congress containing—
(1) the findings and conclusions of
the Comptroller General in connection
with the study required under subsection
(a); and
(2) the recommendation of the Comp-
troller General with regard to the ques-
tion of whether a notice requirement de-
scribed in subsection (a) should be imple-
mented and, if so, how such requirement
should be implemented.
621
SEC. 175. NO LIABILITY IF POSTED NOTICES ARE DAM-
AGED.
Section 910 of the Electronic Fund Trans-
fer Act (15 U.S.C 1693h) is amended by adding
at the end the following new subsection:
‘‘(d) EXCEPTION FOR DAMAGED NOTICES.—If
the notice required to be posted pursuant to
section 904(d)(3)(B)(i) by an automated teller
machine operator has been posted by such op-
erator in compliance with such section and
the notice is subsequently removed, damaged,
or altered by any person other than the oper-
ator of the automated teller machine, the op-
erator shall have no liability under this sec-
tion for failure to comply with section
904(d)(3)(B)(i).’’.
SEC. 176. EFFECTIVE DATE.
The amendments made by this subtitle
shall take effect at the end of the 270-day pe-
riod beginning on the date of the enactment
of this Act.
622
Subtitle I—Direct Activities of
Banks
SEC. 181. AUTHORITY OF NATIONAL BANKS TO UNDER-
WRITE CERTAIN MUNICIPAL BONDS.
The paragraph designated the Seventh of
section 5136 of the Revised Statutes of the
United States (12 U.S.C. 24(7)) is amended by
adding at the end the following new sentence:
‘‘In addition to the provisions in this para-
graph for dealing in, underwriting or pur-
chasing securities, the limitations and restric-
tions contained in this paragraph as to deal-
ing in, underwriting, and purchasing invest-
ment securities for the national bank’s own
account shall not apply to obligations (includ-
ing limited obligation bonds, revenue bonds,
and obligations that satisfy the requirements
of section 142(b)(1) of the Internal Revenue
Code of 1986) issued by or on behalf of any
State or political subdivision of a State, in-
cluding any municipal corporate instrumen-
tality of 1 or more States, or any public agen-
cy or authority of any State or political sub-
division of a State, if the national bank is well
623
capitalized (as defined in section 38 of the
Federal Deposit Insurance Act).’’.
Subtitle J—Deposit Insurance
Funds
SEC. 186. STUDY OF SAFETY AND SOUNDNESS OF FUNDS.
(a) STUDY REQUIRED.—The Board of Direc-
tors of the Federal Deposit Insurance Cor-
poration shall conduct a study of the fol-
lowing issues with regard to the Bank Insur-
ance Fund and the Savings Association Insur-
ance Fund:
(1) SAFETY AND SOUNDNESS.—The safe-
ty and soundness of the funds and the
adequacy of the reserve requirements ap-
plicable to the funds in light of—
(A) the size of the insured deposi-
tory institutions which are resulting
from 
mergers 
and 
consolidations
since the effective date of the Riegle-
Neal Interstate Banking and Branch-
ing Efficiency Act of 1994; and
(B) the affiliation of insured de-
pository institutions with other finan-
cial institutions pursuant to this Act
624
and the amendments made by this
Act.
(2) CONCENTRATION LEVELS.—The con-
centration levels of the funds, taking into
account the number of members of each
fund and the geographic distribution of
such members, and the extent to which
either fund is exposed to higher risks due
to a regional concentration of members
or an insufficient membership base rel-
ative to the size of member institutions.
(3) MERGER ISSUES.—Issues relating to
the planned merger of the funds, includ-
ing the cost of merging the funds and the
manner in which such costs will be dis-
tributed among the members of the re-
spective funds.
(b) REPORT REQUIRED.—
(1) IN GENERAL.—Before the end of the
9-month period beginning on the date of
the enactment of this Act, the Board of
Directors of the Federal Deposit Insur-
ance Corporation shall submit a report to
the Congress on the study conducted pur-
suant to subsection (a).
625
(2) CONTENTS OF REPORT.—The report
shall include—
(A) detailed findings of the Board
of Directors with regard to the issues
described in subsection (a);
(B) a description of the plans de-
veloped by the Board of Directors for
merging the Bank Insurance Fund
and the Savings Association Insur-
ance Fund, including an estimate of
the amount of the cost of such merger
which would be borne by Savings As-
sociation Insurance Fund members;
and
(C) such recommendations for
legislative and administrative action
as the Board of Directors determines
to be necessary or appropriate to pre-
serve the safety and soundness of the
deposit insurance funds, reduce the
risks to such funds, provide for an ef-
ficient merger of such funds, and for
other purposes.
(c) DEFINITIONS.—For purposes of this sec-
tion, the following definitions shall apply:
677
defined in section 2 of the Bank Holding Com-
pany Act of 1956), except’’.
(d) EFFECTIVE
DATE.—The amendments
made by this section shall take effect at the
end of the 1-year period beginning on the date
of enactment of this subtitle.
SEC. 214. ADDITIONAL SEC DISCLOSURE AUTHORITY.
Section 35(a) of the Investment 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 se-
curity of which a registered investment
company is the issuer, to represent or
imply in any manner whatsoever that
such security or company—
‘‘(A) has been guaranteed, spon-
sored, recommended, or approved by
the United States, or any agency, in-
strumentality or officer of the United
States;
‘‘(B) has been insured by the Fed-
eral Deposit Insurance Corporation;
or
692
‘‘(i) an affiliate of an insured
bank (other than an institution
described in subparagraph (D),
(F), or (G) of section 2(c)(2), or
held under section 4(f), of the
Bank Holding Company Act of
1956), or a savings association;
‘‘(ii) a foreign bank, foreign
company, or company that is de-
scribed in section 8(a) of the
International 
Banking 
Act 
of
1978; or
‘‘(iii) a foreign bank that con-
trols, directly or indirectly, a cor-
poration chartered under section
25A of the Federal Reserve Act,
may elect to become supervised by fil-
ing with the Commission a notice of
intention to become supervised, pur-
suant to subparagraph (B) of this
paragraph. 
Any 
investment 
bank
holding company filing such a notice
shall be supervised in accordance
with this section and comply with the
rules promulgated by the Commission