148
material risk to a depository institution subsidi-
ary of such holding company.
‘‘(2) REPORTS.—
‘‘(A) IN GENERAL.—The Board from time
to time may require any financial services hold-
ing company and any subsidiary of such com-
pany to submit reports under oath to keep the
Board informed as to—
‘‘(i) the company’s or the subsidiary’s
activities, financial condition, policies, sys-
tems for monitoring and controlling finan-
cial and operational risks, and transactions
with depository institution subsidiaries of
the holding company; and
‘‘(ii) the extent to which the company
or subsidiary has complied with the provi-
sions of this Act and regulations prescribed
and orders issued under this Act.
‘‘(B) USE OF EXISTING REPORTS.—
‘‘(i) IN GENERAL.—The Board shall,
to the fullest extent possible, accept re-
ports in fulfillment of the Board’s report-
ing requirements under this paragraph
that a financial services holding company
or any subsidiary of such company has
149
been required to provide to other Federal
and State supervisors or to appropriate
self-regulatory organizations.
‘‘(ii) AVAILABILITY.—A financial serv-
ices holding company or a subsidiary of
such company shall provide to the Board,
at the request of the Board, a report re-
ferred to in clause (i).
‘‘(3) EXAMINATIONS.—
‘‘(A) LIMITED USE OF EXAMINATION AU-
THORITY.—The Board may make examinations
of each financial services holding company and
each subsidiary of such company in order to—
‘‘(i) inform the Board of the nature of
the operations and financial condition of
the financial services holding company and
such subsidiaries;
‘‘(ii) inform the Board of the—
‘‘(I) financial and operational
risks within the financial services
holding company system that may af-
fect any depository institution owned
by such holding company; and
‘‘(II) the systems of the holding
company and such subsidiaries for
150
monitoring 
and 
controlling 
those
risks; and
‘‘(iii) monitor compliance with the
provisions of this Act and those governing
transactions and relationships between any
depository institution controlled by a finan-
cial services holding company and any of
the company’s other subsidiaries.
‘‘(B) RESTRICTED
FOCUS
OF
EXAMINA-
TIONS.—The Board shall, to the fullest extent
possible, limit the focus and scope of any exam-
ination of a financial services holding company
to—
‘‘(i) the holding company; and
‘‘(ii) to any subsidiary (other than a
depository institution subsidiary) of the
holding company which, because of the
size, condition, or activities of the subsidi-
ary, the nature or size of transactions be-
tween such subsidiary and any depository
institution affiliate, or the centralization of
functions within the holding company sys-
tem, could have a materially adverse effect
on the safety and soundness of any deposi-
151
tory institution affiliate of the subsidiary
or of the holding company.
‘‘(C) DEFERENCE
TO
BANK
EXAMINA-
TIONS.—The Board shall, to the fullest extent
possible, use the report of examinations of de-
pository institutions made by the Comptroller of
the Currency, the Federal Deposit Insurance
Corporation, the Office of Thrift Supervision or
the appropriate State depository institution su-
pervisory authority for the purposes of this sec-
tion.
‘‘(D) DEFERENCE
TO
OTHER
EXAMINA-
TIONS.—The Board shall, to the fullest extent
possible, use the reports of examination made
of—
‘‘(i) any registered broker or dealer by
or on behalf of the Securities Exchange
Commission, and
‘‘(ii) any other subsidiary that the
Board finds to be comprehensively super-
vised under relevant Federal or State law
by a Federal or state agency or authority.
‘‘(E) CONFIDENTIALITY OF REPORTED IN-
FORMATION.—
152
‘‘(i) IN
GENERAL.—Notwithstanding
any other provision of law, the Board shall
not be compelled to disclose any informa-
tion required to be reported under this
paragraph, or any information supplied to
the Board by any domestic or foreign regu-
latory agency, that relates to the financial
or operational condition of any financial
services holding company or any subsidiary
of such company.
‘‘(ii) COMPLIANCE
WITH
REQUESTS
FOR INFORMATION.—No provision of this
subparagraph shall be construed as author-
izing the Board to withhold information
from Congress, or preventing the Board
from complying with a request for informa-
tion from any other Federal department or
agency for purposes within the scope of
such department’s or agency’s jurisdiction,
or from complying with an order of a court
of competent jurisdiction in an action
brought by the United States or the
Board.
‘‘(iii) COORDINATION
WITH
OTHER
LAW.—For purposes of section 552 of title
153
5, United States Code, this subparagraph
shall be considered to be a statute de-
scribed in subsection (b)(3)(B) of such sec-
tion.
‘‘(iv) DESIGNATION OF CONFIDENTIAL
INFORMATION.—In prescribing regulations
to carry out the requirements of this sub-
section, the Board shall designate informa-
tion described in or obtained pursuant to
this paragraph as confidential information.
‘‘(F) COSTS.—The cost of any examination
conducted by the Board under this section may
be assessed against, and made payable by, such
holding company.’’.
SEC. 124. HOLDING COMPANY SUPERVISION FOR FINAN-
CIAL SERVICES HOLDING COMPANIES EN-
GAGED PRIMARILY IN NONBANKING ACTIVI-
TIES.
Section 5 of the Bank Holding Company Act of 1956
(12 U.S.C. 1844) is amended by adding at the end the
following new subsection:
‘‘(g) REDUCED SUPERVISION OF COMPANIES CON-
TROLLING
PRINCIPALLY
NONDEPOSITORY
INSTITU-
TIONS.—
‘‘(1) ELECTION.—
154
‘‘(A) IN GENERAL.—Any financial services
holding company that qualifies under paragraph
(2) may make an election to be governed by the
approval, capital, reporting and examination re-
quirements of paragraphs (3), (4), (5) and (6)
by—
‘‘(i) filing a written notice of such
election with the Board; and
‘‘(ii) if applicable, providing a written
guarantee to the Federal Deposit Insur-
ance Corporation pursuant to paragraph
(2).
‘‘(B) EFFECTIVE PERIOD OF ELECTION.—
An election under subparagraph (A) shall re-
main in effect—
‘‘(i) so long as the financial services
holding company continues to qualify
under paragraph (2); or
‘‘(ii) until the financial services hold-
ing company revokes the election.
‘‘(2) CRITERIA
FOR
ELECTION.—A financial
services holding company may make an election
under paragraph (1) if the company meets all of the
following criteria:
155
‘‘(A) COMPANY
PRINCIPALLY
CONTROLS
NONDEPOSITORY COMPANIES.—
‘‘(i) FINANCIAL
SERVICES
HOLDING
COMPANIES
WITH
DEPOSITORY
INSTITU-
TIONS.—In the case of a financial services
holding company (other than an invest-
ment bank holding company), the consoli-
dated total risk-weighted assets of all de-
pository institutions and foreign banks (as
defined in section 1(b)(7) of the Inter-
national Banking Act of 1978) controlled
by the financial services holding com-
pany—
‘‘(I) constitute less than 10 per-
cent of the consolidated total risk-
weighted assets of such company; and
‘‘(II) 
are 
less 
than
$5,000,000,000.
‘‘(ii) INVESTMENT
BANK
HOLDING
COMPANIES.—In the case of an investment
bank holding company, the consolidated
total risk-weighted assets of all wholesale
financial institutions controlled by the in-
vestment bank holding company—
156
‘‘(I) constitute less than 25 per-
cent of the consolidated total risk-
weighted assets of such company; and
‘‘(II) 
are 
less 
than
$15,000,000,000.
‘‘(iii) INFLATION ADJUSTMENT.—The
dollar limitation contained in clauses
(i)(II) and (ii)(II) shall be adjusted annu-
ally after December 31, 1995, by the an-
nual percentage increase in the Consumer
Price Index for Urban Wage Earners and
Clerical Workers published by the Bureau
of Labor Statistics.
‘‘(iv) AUTHORITY TO INCREASE LIM-
ITS.—The Board may increase any the
percentages referred to in clauses (i)(I)
and (ii)(I) and the dollar amounts de-
scribed in clauses (i)(II) and (ii)(II) as the
Board may determine to be appropriate.
‘‘(B) WELL CAPITALIZED INSTITUTIONS.—
Each depository institution controlled by the fi-
nancial services holding company is well capital-
ized.
‘‘(C) WELL MANAGED INSTITUTIONS.—
157
‘‘(i) IN
GENERAL.—Each depository
institution controlled by the financial serv-
ices holding company received a CAMEL
composite rating of 1 or 2 (or an equiva-
lent rating under an equivalent rating sys-
tem) in the most recent examination of
such institution.
‘‘(ii) EXCLUSION
FOR
NEWLY
AC-
QUIRED INSTITUTIONS.—A depository in-
stitution acquired by a financial services
holding company during the 12-month pe-
riod ending on the date of the election by
such company under paragraph (1) may be
excluded for purposes of clause (i) if the fi-
nancial services holding company has de-
veloped a plan acceptable to the appro-
priate Federal banking agency (for such
institution) to restore the capital and man-
agement of the institution.
‘‘(D) HOLDING COMPANY GUARANTEE.—
‘‘(i) 
IN
GENERAL.—The 
financial
services holding company provides a writ-
ten guarantee acceptable to the Federal
Deposit Insurance Corporation to maintain
the capital levels of each insured deposi-
158
tory institution controlled by the financial
services holding company at not less than
the levels required for such institution to
remain well capitalized.
‘‘(ii) LIMITATION ON LIABILITY.—The
liability of a financial services holding com-
pany under a guarantee provided under
this subparagraph shall not exceed an
amount equal to 10 percent of the total
risk-weighted assets of the insured deposi-
tory institution, measured as of the date
that 
the 
institution 
becomes
undercapitalized.
‘‘(iii) DURATION
OF
GUARANTEE.—
Notwithstanding paragraph (1), a financial
services holding company that has elected
treatment under this subsection shall con-
tinue to be bound by the guarantee made
under this subsection until released in ac-
cordance with this subparagraph.
‘‘(iv) RELEASE
FROM
LIABILITY.—
The Board shall release a financial services
holding company from the guarantee appli-
cable with respect to any depository insti-
tution subsidiary of such company—
159
‘‘(I) upon the written request of
the financial services holding company
to revoke the company’s election
under paragraph (1) if the Board de-
termines that each depository institu-
tion controlled by the financial serv-
ices holding company is well capital-
ized and well managed at the time of
such revocation;
‘‘(II) in the case of a financial
services holding company which no
longer meets the requirements of sub-
paragraph (A), upon a determination
by the Board that each depository in-
stitution controlled by the financial
services holding company is well cap-
italized and well managed;
‘‘(III) upon the written request
of the financial services holding com-
pany following the divestiture of con-
trol of the depository institution in a
transaction that does not require Fed-
eral assistance if the Board deter-
mines that, immediately following the
160
divestiture, the depository institution
is or will be well capitalized; or
‘‘(IV) upon a determination by
the Board, after consultation with the
Federal Deposit Insurance Corpora-
tion, that, subject to the limit on li-
ability provided in clause (ii), the fi-
nancial services holding company has
fully performed under the guarantee.
‘‘(E) RESPONSIVENESS
TO
COMMUNITY
NEEDS.—The lead insured depository institu-
tion subsidiary of the financial services holding
company and insured depository institutions
controlling at least 80 percent of the aggregate
total risk-weighted assets of insured depository
institutions controlled by the financial services
holding company have achieved a ‘satisfactory
record of meeting community credit needs’, or
better, during the most recent examination of
such insured depository institutions.
‘‘(3) NO NOTICE OR APPROVAL REQUIRED FOR
CERTAIN PURPOSES UNDER PARAGRAPHS (8), (13),
OR (15) OF SECTION 4(c).—
‘‘(A) 
IN
GENERAL.—Notwithstanding
paragraphs (8), (13), and, in the case of an in-
161
vestment bank holding company, (15) of section
4(c), a financial services holding company that
has in effect an election under paragraph (1),
and any subsidiary of such holding company,
may, without prior notice to, or the approval of,
the Board under paragraph (8), (13), or, in the
case of an investment bank holding company,
(15) of section 4(c), engage de novo in any ac-
tivity, or acquire shares of any company en-
gaged in any activity, if—
‘‘(i) the Board has determined, by
order or regulation in effect at the time
the company or subsidiary commences to
engage in such activity or acquire such
shares, that the activity is permissible for
a financial services holding company or a
subsidiary of such company to engage in
under paragraph (8) or (13) of section 4(c)
(and regulations prescribed under such
paragraphs); and
‘‘(ii) the activity is conducted in com-
pliance with all conditions and limitations
applicable to such activity under any regu-
lation, order, or advisory opinion pre-
scribed or issued by the Board.
162
‘‘(B) SUBSEQUENT
NOTICE.—A financial
services holding company that commences to
engage in an activity, or makes an acquisition,
in accordance with subparagraph (A) shall in-
form the Board of such fact, in writing, not
later than 10 days after commencing the activ-
ity or consummating the acquisition.
‘‘(4) CAPITAL.—
‘‘(A) IN GENERAL.—The Board shall not
(by regulation or order), directly or indirectly,
establish or apply minimum capital require-
ments to a financial services holding company
which has in effect an election under paragraph
(1) unless the Board concludes, on the basis of
all information available to the Board, that the
financial services holding company is not main-
taining sufficient financial resources to meet
fully any guarantee required under paragraph
(2).
‘‘(B) CRITERIA FOR CONSIDERATION.—For
purposes of making a determination under sub-
paragraph (A), the Board shall consider, in ad-
dition to any other relevant considerations, the
financial condition and the adequacy of the cap-
ital of each of the depository institutions con-
163
trolled by the financial services holding com-
pany.
‘‘(5) REPORTS.—
‘‘(A) IN GENERAL.—The reporting require-
ments contained in subsection (c)(2) shall apply
to a financial services holding company which
qualifies under this subsection, to the extent
provided by the Board.
‘‘(B) EXEMPTIONS FROM REPORTING RE-
QUIREMENTS.—
‘‘(i) IN GENERAL.—The Board may,
by regulation or order, exempt any com-
pany or class of companies, under such
terms and conditions and for such periods
as the Board shall provide in such regula-
tion or order, from the provisions of this
paragraph and any regulations prescribed
under this paragraph.
‘‘(ii) 
CRITERIA
FOR
CONSIDER-
ATION.—In granting any exemption under
clause (i), the Board shall consider, among
other factors—
‘‘(I) whether information of the
type required under this paragraph is
available from a supervisory agency
199
‘‘(I) provides safekeeping or cus-
tody services with respect to securi-
ties, including the exercise of warrants
or other rights on behalf of customers;
‘‘(II) clears or settles trans-
actions in securities;
‘‘(III) effects securities lending
or borrowing transactions with or on
behalf of customers as part of services
provided to customers pursuant to
subclauses (I) and (II) or invests cash
collateral pledged in connection with
such transactions; or
‘‘(IV) holds securities pledged by
1 customer to another customer or se-
curities subject to resale agreements
between customers or facilitates the
pledging or transfer of such securities
by book entry.
‘‘(xi) BANKING PRODUCTS.—The bank
effects transactions in products that—
‘‘(I) are described in section
10(l)(3)(B) of the Financial Services
Holding Company Act of 1995; or