306
tities engaged in the business of insurance, including pro-
visions imposing premium taxes, regulating insurer sol-
vency or financial condition, establishing guaranty funds
and levying assessments, or requiring claims settlement
practices.
(b) LIABILITY OF THE ASSOCIATION, ITS DIREC-
TORS, OFFICERS, AND EMPLOYEES.—Neither the Associa-
tion nor any of its directors, officers, or employees shall
have any liability to any person for any action taken or
omitted in good faith under or in connection with any mat-
ter subject to this subtitle.
SEC. 332. ELIMINATION OF NAIC OVERSIGHT.
(a) IN GENERAL.—The Association shall be estab-
lished without NAIC oversight and the provisions set forth
in section 324, subsections (a), (b), (c), and (e) of section
328, and sections 329(b) and 330 of this subtitle shall
cease to be effective if, at the end of the 2-year period
beginning on the date on which the provisions of this sub-
title take effect pursuant to section 321—
(1) at least a majority of the States represent-
ing at least 50 percent of the total United States
commercial-lines insurance premiums have not satis-
fied the uniformity or reciprocity requirements of
subsections (a), (b), and (c) of section 321; and
307
(2) the NAIC has not approved the Associa-
tion’s bylaws as required by section 328 or is unable
to operate or supervise the Association, or the Asso-
ciation is not conducting its activities as required
under this Act.
(b) BOARD APPOINTMENTS.—If the repeals required
by subsection (a) are implemented, the following shall
apply:
(1) GENERAL
APPOINTMENT
POWER.—The
President, with the advice and consent of the Sen-
ate, shall appoint the members of the Association’s
Board established under section 326 from lists of
candidates recommended to the President by the
National Association of Insurance Commissioners.
(2) PROCEDURES
FOR
OBTAINING
NATIONAL
ASSOCIATION
OF
INSURANCE
COMMISSIONERS
AP-
POINTMENT RECOMMENDATIONS.—
(A) INITIAL
DETERMINATION
AND
REC-
OMMENDATIONS.—After the date on which the
provisions of subsection (a) take effect, the
NAIC shall, not later than 60 days thereafter,
provide a list of recommended candidates to the
President. If the NAIC fails to provide a list by
that date, or if any list that is provided does
not include at least 14 recommended candidates
308
or comply with the requirements of section
326(c), the President shall, with the advice and
consent of the Senate, make the requisite ap-
pointments without considering the views of the
NAIC.
(B) SUBSEQUENT APPOINTMENTS.—After
the initial appointments, the NAIC shall pro-
vide a list of at least 6 recommended candidates
for the Board to the President by January 15
of each subsequent year. If the NAIC fails to
provide a list by that date, or if any list that
is provided does not include at least 6 rec-
ommended candidates or comply with the re-
quirements of section 326(c), the President,
with the advice and consent of the Senate, shall
make the requisite appointments without con-
sidering the views of the NAIC.
(C) PRESIDENTIAL OVERSIGHT.—
(i) REMOVAL.—If the President deter-
mines that the Association is not acting in
the interests of the public, the President
may remove the entire existing Board for
the remainder of the term to which the
members of the Board were appointed and
appoint, with the advice and consent of the
309
Senate, new members to fill the vacancies
on the Board for the remainder of such
terms.
(ii) SUSPENSION
OF
RULES
OR
AC-
TIONS.—The President, or a person des-
ignated by the President for such purpose,
may suspend the effectiveness of any rule,
or prohibit any action, of the Association
which the President or the designee deter-
mines is contrary to the public interest.
(c) ANNUAL REPORT.—As soon as practicable after
the close of each fiscal year, the Association shall submit
to the President and to the Congress a written report rel-
ative to the conduct of its business, and the exercise of
the other rights and powers granted by this subtitle, dur-
ing such fiscal year. Such report shall include financial
statements setting forth the financial position of the Asso-
ciation at the end of such fiscal year and the results of
its operations (including the source and application of its
funds) for such fiscal year.
SEC. 333. RELATIONSHIP TO STATE LAW.
(a) PREEMPTION OF STATE LAWS.—State laws, reg-
ulations, provisions, or other actions purporting to regu-
late insurance producers shall be preempted as provided
in subsection (b).
310
(b) PROHIBITED ACTIONS.—No State shall—
(1) impede the activities of, take any action
against, or apply any provision of law or regulation
to, any insurance producer because that insurance
producer or any affiliate plans to become, has ap-
plied to become, or is a member of the Association;
(2) impose any requirement upon a member of
the Association that it pay different fees to be li-
censed or otherwise qualified to do business in that
State, including bonding requirements, based on its
residency;
(3) impose any licensing, appointment, integ-
rity, personal or corporate qualifications, education,
training, experience, residency, or continuing edu-
cation requirement upon a member of the Associa-
tion that is different from the criteria for member-
ship in the Association or renewal of such member-
ship, except that counter-signature requirements im-
posed on nonresident producers shall not be deemed
to have the effect of limiting or conditioning a pro-
ducer’s activities because of its residence or place of
operations under this section; or
(4) implement the procedures of such State’s
system of licensing or renewing the licenses of insur-
311
ance producers in a manner different from the au-
thority of the Association under section 325.
(c) SAVINGS PROVISION.—Except as provided in sub-
sections (a) and (b), no provision of this section shall be
construed as altering or affecting the continuing effective-
ness of any law, regulation, provision, or other action of
any State which purports to regulate insurance producers,
including any such law, regulation, provision, or action
which purports to regulate unfair trade practices or estab-
lish consumer protections, including countersignature
laws.
SEC. 334. COORDINATION WITH OTHER REGULATORS.
(a) COORDINATION WITH STATE INSURANCE REGU-
LATORS.—The Association shall have the authority to—
(1) issue uniform insurance producer applica-
tions and renewal applications that may be used to
apply for the issuance or removal of State licenses,
while preserving the ability of each State to impose
such conditions on the issuance or renewal of a li-
cense as are consistent with section 333;
(2) establish a central clearinghouse through
which members of the Association may apply for the
issuance or renewal of licenses in multiple States;
and
312
(3) establish or utilize a national database for
the collection of regulatory information concerning
the activities of insurance producers.
(b) COORDINATION WITH THE NATIONAL ASSOCIA-
TION OF SECURITIES DEALERS.—The Association shall
coordinate with the National Association of Securities
Dealers in order to ease any administrative burdens that
fall on persons that are members of both associations, con-
sistent with the purposes of this subtitle and the Federal
securities laws.
SEC. 335. JUDICIAL REVIEW.
(a) JURISDICTION.—The appropriate United States
district court shall have exclusive jurisdiction over litiga-
tion involving the Association, including disputes between
the Association and its members that arise under this sub-
title. Suits brought in State court involving the Associa-
tion shall be deemed to have arisen under Federal law and
therefore be subject to jurisdiction in the appropriate
United States district court.
(b) EXHAUSTION OF REMEDIES.—An aggrieved per-
son shall be required to exhaust all available administra-
tive remedies before the Association and the NAIC before
it may seek judicial review of an Association decision.
(c) STANDARDS
OF REVIEW.—The standards set
forth in section 553 of title 5, United States Code, shall
313
be applied whenever a rule or bylaw of the Association is
under judicial review, and the standards set forth in sec-
tion 554 of title 5, United States Code, shall be applied
whenever a disciplinary action of the Association is judi-
cially reviewed.
SEC. 336. DEFINITIONS.
For purposes of this subtitle, the following definitions
shall apply:
(1) HOME
STATE.—The term ‘‘home State’’
means the State in which the insurance producer
maintains its principal place of residence and is li-
censed to act as an insurance producer.
(2) INSURANCE.—The term ‘‘insurance’’ means
any product, other than title insurance, defined or
regulated as insurance by the appropriate State in-
surance regulatory authority.
(3) INSURANCE PRODUCER.—The term ‘‘insur-
ance producer’’ means any insurance agent or
broker, surplus lines broker, insurance consultant,
limited insurance representative, and any other per-
son that solicits, negotiates, effects, procures, deliv-
ers, renews, continues or binds policies of insurance
or offers advice, counsel, opinions or services related
to insurance.
314
(4) STATE.—The term ‘‘State’’ includes any
State, the District of Columbia, American Samoa,
Guam, Puerto Rico, and the United States Virgin
Islands.
(5) STATE
LAW.—The term ‘‘State law’’ in-
cludes all laws, decisions, rules, regulations, or other
State action having the effect of law, of any State.
A law of the United States applicable only to the
District of Columbia shall be treated as a State law
rather than a law of the United States.
TITLE 
IV—UNITARY 
SAVINGS
AND LOAN HOLDING COMPA-
NIES
SEC. 401. PREVENTION OF CREATION OF NEW S&L HOLD-
ING COMPANIES WITH COMMERCIAL AFFILI-
ATES.
(a) IN GENERAL.—Section 10(c) of the Home Own-
ers’ Loan Act (12 U.S.C. 1467a(c)) is amended by adding
at the end the following new paragraph:
‘‘(9) PREVENTION OF NEW AFFILIATIONS BE-
TWEEN S&L HOLDING COMPANIES AND COMMERCIAL
FIRMS.—
‘‘(A) IN GENERAL.—Notwithstanding para-
graph (3), no company may directly or indi-
rectly, including through any merger, consolida-
315
tion, or other type of business combination, ac-
quire control of a savings association after Oc-
tober 7, 1998, unless the company is engaged,
directly or indirectly (including through a sub-
sidiary other than a savings association), only
in activities that are permitted—
‘‘(i) under paragraph (1)(C) or (2); or
‘‘(ii) for financial holding companies
under section 6(c) of the Bank Holding
Company Act of 1956.
‘‘(B) PREVENTION OF NEW COMMERCIAL
AFFILIATIONS.—Notwithstanding 
paragraph
(3), no savings and loan holding company may
engage directly or indirectly (including through
a subsidiary other than a savings association)
in any activity other than as described in
clauses (i) and (ii) of subparagraph (A).
‘‘(C) PRESERVATION
OF
AUTHORITY
OF
EXISTING
UNITARY
S&L
HOLDING
COMPA-
NIES.—Subparagraphs (A) and (B) do not
apply with respect to any company that was a
savings and loan holding company on October
7, 1998, or that becomes a savings and loan
holding company pursuant to an application
316
pending before the Office of Thrift Supervision
on or before that date, and that—
‘‘(i) meets and continues to meet the
requirements of paragraph (3); and
‘‘(ii) continues to control not fewer
than 1 savings association that it con-
trolled on October 7, 1998, or that it ac-
quired pursuant to an application pending
before the Office of Thrift Supervision on
or before that date, or the successor to
such savings association.
‘‘(D) CORPORATE REORGANIZATIONS PER-
MITTED.—This paragraph does not prevent a
transaction that—
‘‘(i) involves solely a company under
common control with a savings and loan
holding company from acquiring, directly
or indirectly, control of the savings and
loan holding company or any savings asso-
ciation that is already a subsidiary of the
savings and loan holding company; or
‘‘(ii) involves solely a merger, consoli-
dation, or other type of business combina-
tion as a result of which a company under
common control with the savings and loan
317
holding company acquires, directly or indi-
rectly, control of the savings and loan hold-
ing company or any savings association
that is already a subsidiary of the savings
and loan holding company.
‘‘(E) 
AUTHORITY
TO
PREVENT
EVA-
SIONS.—The Director may issue interpreta-
tions, regulations, or orders that the Director
determines necessary to administer and carry
out the purpose and prevent evasions of this
paragraph, including a determination that, not-
withstanding the form of a transaction, the
transaction would in substance result in a com-
pany acquiring control of a savings association.
‘‘(F) PRESERVATION OF AUTHORITY FOR
FAMILY TRUSTS.—Subparagraphs (A) and (B)
do not apply with respect to any trust that be-
comes a savings and loan holding company with
respect to a savings association, if—
‘‘(i) not less than 85 percent of the
beneficial ownership interests in the trust
are continuously owned, directly or indi-
rectly, by or for the benefit of members of
the same family, or their spouses, who are
lineal descendants of common ancestors
318
who controlled, directly or indirectly, such
savings association on October 7, 1998, or
a subsequent date pursuant to an applica-
tion pending before the Office of Thrift
Supervision on or before October 7, 1998;
and
‘‘(ii) at the time at which such trust
becomes a savings and loan holding com-
pany, such ancestors or lineal descendants,
or spouses of such descendants, have di-
rectly or indirectly controlled the savings
association continuously since October 7,
1998, or a subsequent date pursuant to an
application pending before the Office of
Thrift Supervision on or before October 7,
1998.’’.
(b) 
CONFORMING
AMENDMENT.—Section
10(o)(5)(E) of the Home Owners’ Loan Act (15 U.S.C.
1467a(o)(5)(E)) is amended by striking ‘‘, except subpara-
graph (B)’’.
SEC. 402. OPTIONAL CONVERSION OF FEDERAL SAVINGS
ASSOCIATIONS TO NATIONAL BANKS.
Section 5(i) of the Home Owners’ Loan Act (12
U.S.C. 1464(i)) is amended by adding at the end the fol-
lowing new paragraph:
319
‘‘(5) CONVERSION TO A NATIONAL BANK.—Not-
withstanding any other provision of law, any Federal
savings association chartered and in operation before
the date of enactment of the Financial Services Act
of 1998, with branches in 1 or more States, may
convert, with the approval of the Comptroller of the
Currency, into 1 or more national banks, each of
which may encompass one or more of the branches
of the Federal savings association in 1 or more
States, but only if the resulting national bank or
banks will meet any and all financial, management,
and capital requirements applicable to a national
bank.’’.
SEC. 403. RETENTION OF ‘‘FEDERAL’’ IN NAME OF CON-
VERTED FEDERAL SAVINGS ASSOCIATION.
Section 2 of the Act entitled ‘‘An Act to enable na-
tional banking associations to increase their capital stock
and to change their names or locations’’, approved May
1, 1886 (12 U.S.C. 30), is amended by adding at the end
the following new subsection:
‘‘(d) RETENTION OF ‘FEDERAL’ IN NAME OF CON-
VERTED FEDERAL SAVINGS ASSOCIATION.—
‘‘(1) IN GENERAL.—Notwithstanding subsection
(a) or any other provision of law, any depository in-
stitution the charter of which is converted from that
320
of a Federal savings association to a national bank
or a State bank after the date of the enactment of
the Financial Services Act of 1998 may retain the
term ‘Federal’ in the name of such institution if
such depository institution remains an insured de-
pository institution.
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘depository institution’, ‘insured
depository institution’, ‘national bank’, and ‘State
bank’ have the same meanings as in section 3 of the
Federal Deposit Insurance Act.’’.
TITLE V—FINANCIAL
INFORMATION PRIVACY
SEC. 501. FINANCIAL INFORMATION PRIVACY.
The Consumer Credit Protection Act (15 U.S.C.
1601 et seq.) is amended by adding at the end the follow-
ing:
‘‘TITLE X—FINANCIAL INFORMA-
TION PRIVACY PROTECTION
‘‘SEC. 1001. SHORT TITLE; TABLE OF CONTENTS.
‘‘(a) SHORT TITLE.—This title may be cited as the
‘Financial Information Privacy Act of 1998’.
‘‘(b) TABLE OF CONTENTS.—The table of contents
for this title is as follows:
‘‘TITLE X—FINANCIAL INFORMATION PRIVACY PROTECTION
‘‘Sec. 1001. Short title; table of contents.
321
‘‘Sec. 1002. Definitions.
‘‘Sec. 1003. Privacy protection for customer information of financial institu-
tions.
‘‘Sec. 1004. Administrative enforcement.
‘‘Sec. 1005. Civil liability.
‘‘Sec. 1006. Criminal penalty.
‘‘Sec. 1007. Relation to State laws.
‘‘Sec. 1008. Agency guidance.
‘‘SEC. 1002. DEFINITIONS.
‘‘For purposes of this title, the following definitions
shall apply:
‘‘(1) CUSTOMER.—The term ‘customer’ means,
with respect to a financial institution, any person (or
authorized representative of a person) to whom the
financial institution provides a product or service,
including that of acting as a fiduciary.
‘‘(2) CUSTOMER INFORMATION OF A FINANCIAL
INSTITUTION.—The term ‘customer information of a
financial institution’ means any information main-
tained by a financial institution which is derived
from the relationship between the financial institu-
tion and a customer of the financial institution and
is identified with the customer.
‘‘(3) DOCUMENT.—The term ‘document’ means
any information in any form.
‘‘(4) FINANCIAL INSTITUTION.—
‘‘(A) IN
GENERAL.—The term ‘financial
institution’ means any institution engaged in
the business of providing financial services to
322
customers who maintain a credit, deposit, trust,
or other financial account or relationship with
the institution.
‘‘(B) CERTAIN
FINANCIAL
INSTITUTIONS
SPECIFICALLY INCLUDED.—The term ‘financial
institution’ includes any depository institution
(as defined in section 19(b)(1)(A) of the Fed-
eral Reserve Act), any loan or finance company,
any credit card issuer or operator of a credit
card system, and any consumer reporting agen-
cy that compiles and maintains files on consum-
ers on a nationwide basis (as defined in section
603(p)).
‘‘(C) FURTHER DEFINITION BY REGULA-
TION.—The Board of Governors of the Federal
Reserve System may prescribe regulations fur-
ther defining the term ‘financial institution’, in
accordance with subparagraph (A), for purposes
of this title.
‘‘SEC. 1003. PRIVACY PROTECTION FOR CUSTOMER INFOR-
MATION OF FINANCIAL INSTITUTIONS.
‘‘(a) PROHIBITION ON OBTAINING CUSTOMER INFOR-
MATION BY FALSE PRETENSES.—It shall be a violation
of this title for any person to obtain or attempt to obtain,
or cause to be disclosed or attempt to cause to be disclosed
323
to any person, customer information of a financial institu-
tion relating to another person—
‘‘(1) by knowingly making a false, fictitious, or
fraudulent statement or representation to an officer,
employee, or agent of a financial institution with the
intent to deceive the officer, employee, or agent into
relying on that statement or representation for pur-
poses of releasing the customer information;
‘‘(2) by knowingly making a false, fictitious, or
fraudulent statement or representation to a cus-
tomer of a financial institution with the intent to de-
ceive the customer into relying on that statement or
representation for purposes of releasing the cus-
tomer information or authorizing the release of such
information; or
‘‘(3) by knowingly providing any document to
an officer, employee, or agent of a financial institu-
tion, knowing that the document is forged, counter-
feit, lost, or stolen, was fraudulently obtained, or
contains a false, fictitious, or fraudulent statement
or representation, if the document is provided with
the intent to deceive the officer, employee, or agent
into relying on that document for purposes of releas-
ing the customer information.
324
‘‘(b) PROHIBITION ON SOLICITATION OF A PERSON
TO OBTAIN CUSTOMER INFORMATION FROM A FINANCIAL
INSTITUTION UNDER FALSE PRETENSES.—It shall be a
violation of this title to request a person to obtain cus-
tomer information of a financial institution, knowing or
consciously avoiding knowing that the person will obtain,
or attempt to obtain, the information from the institution
in any manner described in subsection (a).
‘‘(c) NONAPPLICABILITY
TO LAW ENFORCEMENT
AGENCIES.—No provision of this section shall be con-
strued so as to prevent any action by a law enforcement
agency, or any officer, employee, or agent of such agency,
to obtain customer information of a financial institution
in connection with the performance of the official duties
of the agency.
‘‘(d) NONAPPLICABILITY
TO FINANCIAL INSTITU-
TIONS IN CERTAIN CASES.—No provision of this section
shall be construed to prevent any financial institution, or
any officer, employee, or agent of a financial institution,
from obtaining customer information of such financial in-
stitution in the course of—
‘‘(1) testing the security procedures or systems
of such institution for maintaining the confidential-
ity of customer information;
325
‘‘(2) investigating allegations of misconduct or
negligence on the part of any officer, employee, or
agent of the financial institution; or
‘‘(3) recovering customer information of the fi-
nancial institution which was obtained or received by
another person in any manner described in sub-
section (a) or (b).
‘‘(e) NONAPPLICABILITY
TO CERTAIN TYPES
OF
CUSTOMER
INFORMATION
OF
FINANCIAL
INSTITU-
TIONS.—No provision of this section shall be construed to
prevent any person from obtaining customer information
of a financial institution that otherwise is available as a
public record filed pursuant to the securities laws (as de-
fined in section 3(a)(47) of the Securities Exchange Act
of 1934).
‘‘SEC. 1004. ADMINISTRATIVE ENFORCEMENT.
‘‘(a) ENFORCEMENT BY FEDERAL TRADE COMMIS-
SION.—Except as provided in subsection (b), compliance
with this title shall be enforced by the Federal Trade Com-
mission in the same manner and with the same power and
authority as the Commission has under the Fair Debt Col-
lection Practices Act to enforce compliance with that title.
‘‘(b) ENFORCEMENT BY OTHER AGENCIES IN CER-
TAIN CASES.—
326
‘‘(1) IN GENERAL.—Compliance with this title
shall be enforced under—
‘‘(A) section 8 of the Federal Deposit In-
surance Act, in the case of—
‘‘(i) national banks, and Federal
branches and Federal agencies of foreign
banks, by the Office of the Comptroller of
the Currency;
‘‘(ii) member banks of the Federal
Reserve System (other than national
banks), branches and agencies of foreign
banks (other than Federal branches, Fed-
eral agencies, and insured State branches
of foreign banks), commercial lending com-
panies owned or controlled by foreign
banks, and organizations operating under
section 25 or 25A of the Federal Reserve
Act, by the Board;
‘‘(iii) banks insured by the Federal
Deposit Insurance Corporation (other than
members of the Federal Reserve System
and national nonmember banks) and in-
sured State branches of foreign banks, by
the Board of Directors of the Federal De-
posit Insurance Corporation; and
327
‘‘(iv) savings associations the deposits
of which are insured by the Federal De-
posit Insurance Corporation, by the Direc-
tor of the Office of Thrift Supervision; and
‘‘(B) the Federal Credit Union Act, by the
Administrator of the National Credit Union Ad-
ministration with respect to any Federal credit
union.
‘‘(2) VIOLATIONS OF THIS TITLE TREATED AS
VIOLATIONS OF OTHER LAWS.—For the purpose of
the exercise by any agency referred to in paragraph
(1) of its powers under any Act referred to in that
paragraph, a violation of this title shall be deemed
to be a violation of a requirement imposed under
that Act. In addition to its powers under any provi-
sion of law specifically referred to in paragraph (1),
each of the agencies referred to in that paragraph
may exercise, for the purpose of enforcing compli-
ance with this title, any other authority conferred on
such agency by law.
‘‘(c) STATE ACTION FOR VIOLATIONS.—
‘‘(1) AUTHORITY OF STATES.—In addition to
such other remedies as are provided under State
law, if the chief law enforcement officer of a State,
or an official or agency designated by a State, has
328
reason to believe that any person has violated or is
violating this title, the State—
‘‘(A) may bring an action to enjoin such
violation in any appropriate United States dis-
trict court or in any other court of competent
jurisdiction;
‘‘(B) may bring an action on behalf of the
residents of the State to recover damages of not
more than $1,000 for each violation; and
‘‘(C) in the case of any successful action
under subparagraph (A) or (B), shall be award-
ed the costs of the action and reasonable attor-
ney fees as determined by the court.
‘‘(2) RIGHTS OF FEDERAL REGULATORS.—
‘‘(A) PRIOR
NOTICE.—The State shall
serve prior written notice of any action under
paragraph (1) upon the Federal Trade Commis-
sion and, in the case of an action which involves
a financial institution described in section
1004(b)(1), the agency referred to in such sec-
tion with respect to such institution and provide
the Federal Trade Commission and any such
agency with a copy of its complaint, except in
any case in which such prior notice is not fea-
329
sible, in which case the State shall serve such
notice immediately upon instituting such action.
‘‘(B) RIGHT TO INTERVENE.—The Federal
Trade Commission or an agency described in
subsection (b) shall have the right—
‘‘(i) to intervene in an action under
paragraph (1);
‘‘(ii) upon so intervening, to be heard
on all matters arising therein;
‘‘(iii) to remove the action to the ap-
propriate United States district court; and
‘‘(iv) to file petitions for appeal.
‘‘(3) INVESTIGATORY
POWERS.—For purposes
of bringing any action under this subsection, no pro-
vision of this subsection shall be construed as pre-
venting the chief law enforcement officer, or an offi-
cial or agency designated by a State, from exercising
the powers conferred on the chief law enforcement
officer or such official by the laws of such State to
conduct investigations or to administer oaths or af-
firmations or to compel the attendance of witnesses
or the production of documentary and other evi-
dence.
‘‘(4) LIMITATION
ON
STATE
ACTION
WHILE
FEDERAL ACTION PENDING.—If the Federal Trade
330
Commission or any agency described in subsection
(b) has instituted a civil action for a violation of this
title, no State may, during the pendency of such ac-
tion, bring an action under this section against any
defendant named in the complaint of the Federal
Trade Commission or such agency for any violation
of this title that is alleged in that complaint.
‘‘SEC. 1005. CIVIL LIABILITY.
‘‘Any person, other than a financial institution, who
fails to comply with any provision of this title with respect
to any financial institution or any customer information
of a financial institution shall be liable to such financial
institution or the customer to whom such information re-
lates in an amount equal to the sum of the amounts deter-
mined under each of the following paragraphs:
‘‘(1) ACTUAL DAMAGES.—The greater of—
‘‘(A) the amount of any actual damage
sustained by the financial institution or cus-
tomer as a result of such failure; or
‘‘(B) any amount received by the person
who failed to comply with this title, including
an amount equal to the value of any nonmone-
tary consideration, as a result of the action
which constitutes such failure.
331
‘‘(2) ADDITIONAL DAMAGES.—Such additional
amount as the court may allow.
‘‘(3) ATTORNEYS’ FEES.—In the case of any
successful action to enforce any liability under para-
graph (1) or (2), the costs of the action, together
with reasonable attorneys’ fees.
‘‘SEC. 1006. CRIMINAL PENALTY.
‘‘(a) IN GENERAL.—Whoever violates, or attempts to
violate, section 1003 shall be fined in accordance with title
18, United States Code, or imprisoned for not more than
5 years, or both.
‘‘(b) 
ENHANCED
PENALTY
FOR
AGGRAVATED
CASES.—Whoever violates, or attempts to violate, section
1003 while violating another law of the United States or
as part of a pattern of any illegal activity involving more
than $100,000 in a 12-month period shall be fined twice
the amount provided in subsection (b)(3) or (c)(3) (as the
case may be) of section 3571 of title 18, United States
Code, imprisoned for not more than 10 years, or both.
‘‘SEC. 1007. RELATION TO STATE LAWS.
‘‘(a) IN GENERAL.—This title shall not be construed
as superseding, altering, or affecting the statutes, regula-
tions, orders, or interpretations in effect in any State, ex-
cept to the extent that such statutes, regulations, orders,
332
or interpretations are inconsistent with the provisions of
this title, and then only to the extent of the inconsistency.
‘‘(b) GREATER PROTECTION UNDER STATE LAW.—
For purposes of this section, a State statute, regulation,
order, or interpretation is not inconsistent with the provi-
sions of this title if the protection such statute, regulation,
order, or interpretation affords any person is greater than
the protection provided under this title.
‘‘SEC. 1008. AGENCY GUIDANCE.
‘‘In furtherance of the objectives of this title, each
Federal banking agency (as defined in section 3(z) of the
Federal Deposit Insurance Act) shall issue advisories to
depository institutions under the jurisdiction of the agen-
cy, in order to assist such depository institutions in deter-
ring and detecting activities proscribed under section
1003.’’.
SEC. 502. REPORT TO CONGRESS ON FINANCIAL PRIVACY.
Not later than 18 months after the date of enactment
of this Act, the Comptroller General of the United States,
in consultation with the Federal Trade Commission, the
Federal banking agencies, and other appropriate Federal
law enforcement agencies, shall submit to the Congress a
report on—
(1) the efficacy and adequacy of the remedies
provided in the amendments made by section 501 in
333
addressing attempts to obtain financial information
by fraudulent means or by false pretenses; and
(2) any recommendations for additional legisla-
tive or regulatory action to address threats to the
privacy of financial information created by attempts
to obtain information by fraudulent means or false
pretenses.
TITLE VI—MISCELLANEOUS
SEC. 601. GRAND JURY PROCEEDINGS.
Section 3322(b) of title 18, United States Code, is
amended—
(1) in paragraph (1), by inserting ‘‘Federal or
State’’ before ‘‘financial institution’’; and
(2) in paragraph (2), by inserting ‘‘at any time
during or after the completion of the investigation of
the grand jury,’’ before ‘‘upon’’.
SEC. 602. SENSE OF THE COMMITTEE ON BANKING, HOUS-
ING, AND URBAN AFFAIRS OF THE SENATE.
(a) FINDINGS.—The Committee on Banking, Hous-
ing, and Urban Affairs of the Senate finds that—
(1) financial modernization legislation should
benefit small institutions as well as large institu-
tions;
(2) the Congress made the subchapter S elec-
tion of the Internal Revenue Code of 1986, available
334
to banks in 1996, reflecting a desire by the Congress
to reduce the tax burden on community banks;
(3) large numbers of community banks have
elected or expressed interest in the subchapter S
election; and
(4) the Committee on Banking, Housing, and
Urban Affairs of the Senate recognizes that some
obstacles remain for community banks wishing to
make the subchapter S election.
(b) SENSE OF THE COMMITTEE.—It is the sense of
the Committee on Banking, Housing, and Urban Affairs
of the Senate that—
(1) the small business tax provisions of the In-
ternal Revenue Code of 1986, should be more widely
available to community banks;
(2) legislation should be passed to amend the
Internal Revenue Code of 1986, to—
(A) increase the allowed number of S cor-
poration shareholders;
(B) permit S corporation stock to be held
in individual retirement accounts;
(C) clarify that interest on investments
held for safety, soundness, and liquidity pur-
poses should not be considered to be passive in-
come;
335
(D) provide that bank director stock is not
treated as a disqualifying second class of stock
for S corporations; and
(E) improve the tax treatment of bad debt
and interest deductions; and
(3) the legislation described in paragraph (2)
should be adopted by the Congress in conjunction
with any financial modernization legislation.
SEC. 603. INVESTMENTS IN GOVERNMENT SPONSORED EN-
TERPRISES.
Section 18(s) of the Federal Deposit Insurance Act
(12 U.S.C. 1828(s)) is amended—
(1) by redesignating paragraph (4) as para-
graph (5); and
(2) by inserting after paragraph (3) the follow-
ing:
‘‘(4) CERTAIN
INVESTMENTS.—Paragraph (1)
shall not apply with respect to investments lawfully
made before April 11, 1996, by a depository institu-
tion in any Government sponsored enterprise.’’.
SEC. 604. REPEAL OF SAVINGS BANK PROVISIONS IN THE
BANK HOLDING COMPANY ACT OF 1956.
Section 3(f) of the Bank Holding Company Act of
1956 (12 U.S.C. 1842(f)) is amended to read as follows:
‘‘(f) [Repealed].’’.
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SEC. 605. SERVICE OF MEMBERS OF THE BOARD OF GOV-
ERNORS OF THE FEDERAL RESERVE SYSTEM.
Notwithstanding the first undesignated paragraph of
section 10 of the Federal Reserve Act, the vice chairman
of the Board of Governors of the Federal Reserve System
may serve as a member of the District of Columbia Finan-
cial Responsibility and Management Assistance Authority
established by section 101 of the District of Columbia Fi-
nancial Responsibility and Management Assistance Act of
1995.
SEC. 606. PROVISION OF TECHNICAL ASSISTANCE TO
MICROENTERPRISES.
(a) IN GENERAL.—Title I of the Riegle Community
Development and Regulatory Improvement Act of 1994
(12 U.S.C. 4701 et seq.) is amended by adding at the end
the following new subtitle:
‘‘Subtitle C—Microenterprise Tech-
nical Assistance and Capacity
Building Program
‘‘SEC. 171. SHORT TITLE.
‘‘This subtitle may be cited as the ‘Program for In-
vestment in Microentrepreneurs Act of 1998’, also re-
ferred to as the ‘PRIME Act’.
‘‘SEC. 172. DEFINITIONS.
‘‘For purposes of this subtitle—
338
development organizations and programs as author-
ized under section 175;
‘‘(8) the term ‘low-income person’ has the same
meaning as in section 103;
‘‘(9) the term ‘microentrepreneur’ means the
owner or developer of a microenterprise;
‘‘(10) the term ‘microenterprise’ means a sole
proprietorship, partnership, or corporation that—
‘‘(A) has fewer than 5 employees; and
‘‘(B) generally lacks access to conventional
loans, equity, or other banking services;
‘‘(11) the term ‘microenterprise development or-
ganization or program’ means a nonprofit entity, or
a program administered by such an entity, including
community development corporations or other non-
profit development organizations and social service
organizations, that provides services to disadvan-
taged entrepreneurs or prospective entrepreneurs;
‘‘(12) the term ‘training and technical assist-
ance’ means services and support provided to dis-
advantaged entrepreneurs or prospective entre-
preneurs, such as assistance for the purpose of en-
hancing business planning, marketing, management,
financial management skills, and assistance for the
purpose of accessing financial services; and
339
‘‘(13) the term ‘very low-income person’ means
having an income, adjusted for family size, of not
more than 150 percent of the poverty line (as de-
fined in section 673(2) of the Community Services
Block Grant Act (42 U.S.C. 9902(2), including any
revision required by that section).
‘‘SEC. 173. ESTABLISHMENT OF PROGRAM.
‘‘The Administrator shall establish a microenterprise
technical assistance and capacity building grant program
to provide assistance from the Fund in the form of grants
to qualified organizations in accordance with this subtitle.
‘‘SEC. 174. USES OF ASSISTANCE.
‘‘A qualified organization shall use grants made
under this subtitle—
‘‘(1) to provide training and technical assist-
ance to disadvantaged entrepreneurs;
‘‘(2) to provide training and capacity building
services to microenterprise development organiza-
tions and programs and groups of such organiza-
tions to assist such organizations and programs in
developing microenterprise training and services;
‘‘(3) to aid in researching and developing the
best practices in the field of microenterprise and
technical assistance programs for disadvantaged en-
trepreneurs; and
340
‘‘(4) for such other activities as the Adminis-
trator determines are consistent with the purposes of
this subtitle.
‘‘SEC. 175. QUALIFIED ORGANIZATIONS.
‘‘For purposes of eligibility for assistance under this
subtitle, a qualified organization shall be—
‘‘(1) a nonprofit microenterprise development
organization or program (or a group or collaborative
thereof) that has a demonstrated record of delivering
microenterprise services to disadvantaged entre-
preneurs;
‘‘(2) an intermediary;
‘‘(3) a microenterprise development organiza-
tion or program that is accountable to a local com-
munity, working in conjunction with a State or local
government or Indian tribe; or
‘‘(4) an Indian tribe acting on its own, if the
Indian tribe can certify that no private organization
or program referred to in this paragraph exists with-
in its jurisdiction.
‘‘SEC. 176. ALLOCATION OF ASSISTANCE; SUBGRANTS.
‘‘(a) ALLOCATION OF ASSISTANCE.—
‘‘(1) IN GENERAL.—The Administrator shall al-
locate assistance from the Fund under this subtitle
to ensure that—
341
‘‘(A) activities described in section 174(1)
are funded using not less than 75 percent of
amounts made available for such assistance;
and
‘‘(B) activities described in section 174(2)
are funded using not less than 15 percent of
amounts made available for such assistance.
‘‘(2) LIMIT ON INDIVIDUAL ASSISTANCE.—No
single organization or entity may receive more than
10 percent of the total funds appropriated under
this subtitle in a single fiscal year.
‘‘(b) TARGETED ASSISTANCE.—The Administrator
shall ensure that not less than 50 percent of the grants
made under this subtitle are used to benefit very low-in-
come persons, including those residing on Indian reserva-
tions.
‘‘(c) SUBGRANTS AUTHORIZED.—
‘‘(1) IN GENERAL.—A qualified organization re-
ceiving assistance under this subtitle may provide
grants using that assistance to qualified small and
emerging microenterprise organizations and pro-
grams, subject to such rules and regulations as the
Administrator determines to be appropriate.
‘‘(2) LIMIT ON ADMINISTRATIVE EXPENSES.—
Not more than 7.5 percent of assistance received by
342
a qualified organization under this subtitle may be
used for administrative expenses in connection with
the making of subgrants under paragraph (1).
‘‘(d) DIVERSITY.—In making grants under this sub-
title, the Administrator shall ensure that grant recipients
include both large and small microenterprise organiza-
tions, serving urban, rural, and Indian tribal communities
and racially and ethnically diverse populations.
‘‘SEC. 177. MATCHING REQUIREMENTS.
‘‘(a) IN GENERAL.—Financial assistance under this
subtitle shall be matched with funds from sources other
than the Federal Government on the basis of not less than
50 percent of each dollar provided by the Fund.
‘‘(b) SOURCES OF MATCHING FUNDS.—Fees, grants,
gifts, funds from loan sources, and in-kind resources of
a grant recipient from public or private sources may be
used to comply with the matching requirement in sub-
section (a).
‘‘(c) EXCEPTION.—
‘‘(1) IN GENERAL.—In the case of an applicant
for assistance under this subtitle with severe con-
straints on available sources of matching funds, the
Administrator may reduce or eliminate the matching
requirements of subsection (a).
343
‘‘(2) LIMITATION.—Not more than 10 percent
of the total funds made available from the Fund in
any fiscal year to carry out this subtitle may be ex-
cepted from the matching requirements of subsection
(a), as authorized by paragraph (1) of this sub-
section.
‘‘SEC. 178. APPLICATIONS FOR ASSISTANCE.
‘‘An application for assistance under this subtitle
shall be submitted in such form and in accordance with
such procedures as the Fund shall establish.
‘‘SEC. 179. RECORDKEEPING.
‘‘The requirements of section 115 shall apply to a
qualified organization receiving assistance from the Fund
under this subtitle as if it were a community development
financial institution receiving assistance from the Fund
under subtitle A.
‘‘SEC. 180. AUTHORIZATION.
‘‘In addition to funds otherwise authorized to be ap-
propriated to the Fund to carry out this title, there are
authorized to be appropriated to the Fund to carry out
this subtitle—
‘‘(1) $15,000,000 for fiscal year 2000;
‘‘(2) $25,000,000 for fiscal year 2001;
‘‘(3) $30,000,000 for fiscal year 2002; and
‘‘(4) $35,000,000 for fiscal year 2003.