(b) INVESTMENT ADVISERS ACT OF 1940.—
(1) DEFINITION OF BANK.—Section 202(a)(2) 
of the Investment Advisers Act of 1940 (15 U.S.C. 
80b–2(a)(2)) is amended—
(A) in subparagraph (A) by inserting ‘‘or 
a Federal savings association, as defined in sec-
tion 2(5) of the Home Owners’ Loan Act’’ after 
‘‘a banking institution organized under the laws 
of the United States’’; and 
(B) in subparagraph (C)—
(i) by inserting ‘‘, savings association 
as defined in section 2(4) of the Home 
Owners’ Loan Act,’’ after ‘‘banking insti-
tution’’; and 
(ii) by inserting ‘‘or savings associa-
tions’’ after ‘‘having supervision over 
banks’’. 
(2) CONFORMING
AMENDMENTS.—Subsections 
(a)(1)(A)(i), (a)(1)(B), (a)(2), and (b) of section 
210A of such Act (15 U.S.C. 80b–10a), as added by 
section 220 of the Gramm-Leach-Bliley Act, are 
each amended by striking ‘‘bank holding company’’ 
each place it occurs and inserting ‘‘bank holding 
company or savings and loan holding company’’.
(c) CONFORMING AMENDMENT TO THE INVESTMENT 
COMPANY ACT OF 1940.—Section 10(c) of the Investment 
Company Act of 1940 (15 U.S.C. 80a–10(c)), as amended 
by section 213(c) of the Gramm-Leach-Bliley Act, is 
amended by inserting after ‘‘1956)’’ the following: ‘‘or any 
one savings and loan holding company (together with its 
affiliates and subsidiaries) (as such terms are defined in 
section 10 of the Home Owners’ Loan Act)’’. 
SEC. 202. INVESTMENTS BY FEDERAL SAVINGS ASSOCIA-
TIONS AUTHORIZED TO PROMOTE THE PUB-
LIC WELFARE. 
(a) IN GENERAL.—Section 5(c)(3) of the Home Own-
ers’ Loan Act (12 U.S.C. 1464(c)) is amended by adding 
at the end the following new subparagraph: 
‘‘(D) DIRECT INVESTMENTS TO PROMOTE 
THE PUBLIC WELFARE.—
‘‘(i) IN GENERAL.—A Federal savings 
association may make investments de-
signed primarily to promote the public wel-
fare, including the welfare of low- and 
moderate-income communities or families 
through the provision of housing, services, 
and jobs. 
‘‘(ii) DIRECT INVESTMENTS OR ACQUI-
SITION
OF
INTEREST
IN
OTHER
COMPA-
NIES.—Investments under clause (i) may 
be made directly or by purchasing interests 
in an entity primarily engaged in making 
such investments. 
‘‘(iii) PROHIBITION ON UNLIMITED LI-
ABILITY.—No investment may be made 
under this subparagraph which would sub-
ject a Federal savings association to unlim-
ited liability to any person. 
‘‘(iv) SINGLE
INVESTMENT
LIMITA-
TION
TO
BE
ESTABLISHED
BY
DIREC-
TOR.—Subject to clauses (v) and (vi), the 
Director shall establish, by order or regula-
tion, limits on—
‘‘(I) the amount any savings as-
sociation may invest in any 1 project; 
and 
‘‘(II) the aggregate amount of in-
vestment of any savings association 
under this subparagraph. 
‘‘(v) FLEXIBLE AGGREGATE INVEST-
MENT
LIMITATION.—The 
aggregate 
amount of investments of any savings asso-
ciation under this subparagraph may not 
exceed an amount equal to the sum of 5
percent of the savings association’s capital 
stock actually paid in and unimpaired and 
5 percent of the savings association’s 
unimpaired surplus, unless—
‘‘(I) the Director determines that 
the savings association is adequately 
capitalized; and 
‘‘(II) the Director determines, by 
order, that the aggregate amount of 
investments in a higher amount than 
the limit under this clause will pose 
no significant risk to the affected de-
posit insurance fund. 
‘‘(vi) MAXIMUM AGGREGATE INVEST-
MENT
LIMITATION.—Notwithstanding 
clause (v), the aggregate amount of invest-
ments of any savings association under 
this subparagraph may not exceed an 
amount equal to the sum of 10 percent of 
the savings association’s capital stock actu-
ally paid in and unimpaired and 10 per-
cent 
of 
the 
savings 
association’s 
unimpaired surplus. 
‘‘(vii) INVESTMENTS NOT SUBJECT TO 
OTHER
LIMITATION
ON
QUALITY
OF
IN-
VESTMENTS.—No obligation a Federal sav-
ings association acquires or retains under 
this subparagraph shall be taken into ac-
count for purposes of the limitation con-
tained in section 28(d) of the Federal De-
posit Insurance Act on the acquisition and 
retention of any corporate debt security 
not of investment grade.’’. 
(b) TECHNICAL AND CONFORMING AMENDMENT.—
Section 5(c)(3)(A) of the Home Owners’ Loan Act (12 
U.S.C. 1464(c)(3)(A)) is amended to read as follows: 
‘‘(A) [Repealed.]’’. 
SEC. 203. MERGERS AND CONSOLIDATIONS OF FEDERAL 
SAVINGS ASSOCIATIONS WITH NONDEPOSI-
TORY INSTITUTION AFFILIATES. 
Section 5(d)(3) of the Home Owners’ Loan Act (12 
U.S.C. 1464(d)(3)) is amended—
(1) by redesignating subparagraph (B) as sub-
paragraph (C); and 
(2) by inserting after subparagraph (A) the fol-
lowing new subparagraph: 
‘‘(B) MERGERS
AND
CONSOLIDATIONS 
WITH
NONDEPOSITORY
INSTITUTION
AFFILI-
ATES.—