135
rules and regulations issued there-
under; and
‘‘(II) effects such sales exclu-
sively to an accredited investor, as de-
fined in section 3 of the Securities Act
of 1933.
‘‘(ix) DE
MINIMUS
EXEMPTION.—If
the bank does not have a subsidiary or af-
filiate registered as a broker or dealer
under section 15, the bank effects, other
than in transactions referred to in clauses
(i) through (viii), not more than—
‘‘(I) 800 transactions in any cal-
endar year in securities for which a
ready market exists, and
‘‘(II) 200 other transactions in
securities in any calendar year.
‘‘(x) SAFEKEEPING
AND
CUSTODY
SERVICES.—The bank, as part of cus-
tomary banking activities—
‘‘(I) provides safekeeping or cus-
tody services with respect to securi-
ties, including the exercise of warrants
or other rights on behalf of customers;
136
‘‘(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
one customer to another customer or
securities 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
121(c)(2) of the Financial Services
Holding Company Act; or
‘‘(II) have been exempted by the
appropriate Federal banking agency
pursuant to section 121(c)(3) of such
Act.
137
‘‘(D) EXEMPTION FOR ENTITIES SUBJECT
TO SECTION 15(e).—The term ‘broker’ does not
include a bank that—
‘‘(i) was, immediately prior to the en-
actment of the Depository Institution Af-
filiation Act, subject to section 15(e); and
‘‘(ii) is subject to such restrictions
and requirements as the Commission con-
siders appropriate.’’.
SEC. 302. DEFINITION OF DEALER.
Section 3(a)(5) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(5)) is amended to read as follows:
‘‘(5) DEALER.—
‘‘(A) IN
GENERAL.—The term ‘dealer’
means any person engaged in the business of
buying and selling securities for such person’s
own account through a broker or otherwise.
‘‘(B) EXCEPTION
FOR
PERSON
NOT
EN-
GAGED IN THE BUSINESS OF DEALING.—The
term ‘dealer’ does not include a person that
buys or sells securities for such person’s own
account, either individually or in a fiduciary ca-
pacity, but not as a part of a regular business.
‘‘(C) EXCLUSION
OF
BANKS.—The term
‘dealer’ does not include a bank unless such
138
bank is affiliated with a financial services hold-
ing company, as defined in section 102(a) of
the Financial Services Holding Company Act.
‘‘(D) EXEMPTION FOR CERTAIN BANK AC-
TIVITIES.—A bank shall not be considered to be
a dealer because the bank engages in any of the
following activities under the conditions de-
scribed:
‘‘(i) The bank buys and sells commer-
cial paper, bankers acceptances, exempted
securities (other than municipal securities),
qualified Canadian Government obligations
as defined in section 5136 of the Revised
Statutes, obligations of the Washington
Metropolitan Area Transit Authority which
are guaranteed by the Secretary of Trans-
portation under section 9 of the National
Capital Transportation Act of 1969, obli-
gations of the North American Develop-
ment Bank, and obligations of any local
public agency (as defined in section 110(h)
of the Housing Act of 1949) or any public
agency (as defined in the United States
Housing Act of 1937) that are expressly
authorized by section 5136 of the Revised
139
Statutes of the United States as permis-
sible for a national bank to underwrite or
deal in.
‘‘(ii) The bank buys and sells munici-
pal securities that are expressly authorized
by section 5136 of the Revised Statutes of
the United States as permissible for a na-
tional bank to underwrite or deal in.
‘‘(iii) The bank buys and sells securi-
ties for investment purposes for the bank
or for accounts for which the bank acts as
a trustee or fiduciary.
‘‘(iv) The bank—
‘‘(I) has not been affiliated with
a securities affiliate for purposes of
the Financial Services Holding Com-
pany Act for more than 1 year; and
‘‘(II) engages in the issuance or
sale, through a grantor trust or other-
wise, of securities backed by or rep-
resenting an interest in notes, drafts,
acceptances, loans, leases, receivables,
other obligations, or pools of any such
obligations originated or purchased by
the bank or any affiliate of the bank.
140
‘‘(v) The bank buys and sells products
that—
‘‘(I) are described in section
121(c)(2) of the Financial Services
Holding Company Act; or
‘‘(II) have been exempted by the
appropriate Federal banking agency
pursuant to section 121(c)(3) of such
Act.’’.
SEC. 303. POWER TO EXEMPT FROM THE DEFINITIONS OF
BROKER AND DEALER.
Section 3 of the Securities Exchange Act of 1934 (15
U.S.C. 78c) is amended by adding at the end the follow-
ing:
‘‘(e) EXEMPTION
FROM
THE
DEFINITION
OF
BROKER AND DEALER.—The Commission, by regulation
or order, upon its own motion or upon application, may
conditionally or unconditionally exclude any person or
class of persons from the definitions of ‘broker’ or ‘dealer’,
if the Commission finds that such exclusion is consistent
with the public interest, the protection of investors, and
the purposes of this title.’’.
SEC. 304. MARGIN REQUIREMENTS.
(a) Section 7(d) of the Securities Exchange Act of
1934 (15 U.S.C. 15g(d)) is amended by striking ‘‘or (E)’’
141
and inserting ‘‘(E) to a loan to a broker or dealer by a
member bank or any other person that has entered into
an agreement pursuant to section 8(a) if the proceeds of
the loan are to be used in the ordinary course of the bro-
ker’s or dealer’s business other than for the purpose of
funding the purchase of securities for the account of such
broker or dealer, or (F)’’.
(b) Section 8(a) of the Securities and Exchange Act
of 1934 is amended—
(1) by striking ‘‘nonmember bank’’ and insert-
ing ‘‘person other than a member bank’’; and
(2) by striking ‘‘such bank’’ in the second sen-
tence and inserting ‘‘such person’’.
Subtitle B—Investment Company Provisions
SEC. 311. CUSTODY OF INVESTMENT COMPANY ASSETS BY
AFFILIATED BANK.
(a) MANAGEMENT COMPANIES.—Section 17(f) of the
Investment Company Act of 1940 (15 U.S.C. 80a–17(f))
is amended—
(1) by redesignating paragraphs (1), (2), and
(3) as subparagraphs (A), (B), and (A), (B), and
(C), respectively;
(2) by striking ‘‘(f) Every, registered’’ and in-
serting ‘‘(f) CUSTODY OF SECURITIES.—
(1) Every registered’’;
142
(C) by designating the second, third,
fourth, and fifth sentences of such subsection
as paragraphs (2) through (5), respectively, and
indenting the left margin of such paragraphs
appropriately; and
(D) by adding at the end the following new
paragraph:
‘‘(6) Notwithstanding any provision of this sub-
section, if a bank described in paragraph (1) and af-
filiated with a financial services company, as defined
in section 102(a) of the Financial Services Holding
Company Act, or an affiliated person of such bank,
is an affiliated person, promoter, organizer, or spon-
sor of, or principal underwriter for the registered
company, such bank may serve as custodian under
this subsection in accordance with such rules, regu-
lations, or orders as the Commission may prescribe,
consistent with the protection of investors, after con-
sulting in writing with the appropriate Federal
banking agency, as defined in section 3 of the Fed-
eral Deposit Insurance Act.’’.
(b) UNIT INVESTMENT TRUSTS.—Section 26(a)(1) of
the Investment Company Act of 1940 (15 U.S.C. 80a–
26(a)(1)) is amended by inserting before the semicolon at
143
the end the following: ‘‘, except that, if the trustee or cus-
todian described in this subsection is an affiliated person
of such underwriter or depositor and of a financial services
holding company, as defined in section 102(a) of the Fi-
nancial Services Holding Company Act, the Commission
may adopt rules and regulations or issue orders, consistent
with the protection of investors, prescribing the conditions
under which such trustee or custodian may serve, after
consulting in writing with the appropriate Federal bank-
ing agency (as defined in section 3 of the Federal Deposit
Insurance Act)’’.
(c) FIDUCIARY DUTY OF CUSTODIAN.—Section 36(a)
of the Investment Company Act of 1940 (15 U.S.C. 80a–
35(a)) is amended—
(1) in paragraph (1), by striking ‘‘or’’ at the
end;
(2) in paragraph (2), by striking the period at
the end and inserting ‘‘; or’’; and
(3) by inserting after paragraph (2) the follow-
ing:
‘‘(3) if affiliated with a financial services hold-
ing company, as defined section 102(a) of the Fi-
nancial Services Holding Company Act, as custo-
dian.’’.
144
SEC. 312. LENDING TO AN AFFILIATED INVESTMENT COM-
PANY.
Section 18 of the Investment Company Act of 1940
(15 U.S.C. 80a–18) is amended by adding at the end the
following:
‘‘(l) Notwithstanding any provision of this section, it
shall be unlawful for any affiliated person of a registered
investment company that is affiliated with a financial serv-
ices holding company, as defined in section 102(a) of the
Financial Services Holding Company Act, or any affiliated
person of such a person, to loan money to such investment
company in contravention of such rules, regulations, or or-
ders as the Commission may prescribe in the public inter-
est and consistent with the protection of investors.’’.
SEC. 313. INDEPENDENT DIRECTORS.
(a) IN GENERAL.—Section 2(a)(19)(A) of the Invest-
ment Company Act of 1940 (15 U.S.C. 80a–2(a)(19)(A))
is amended—
(1) by striking clause (v) and inserting the fol-
lowing new clause:
‘‘(v) any person affiliated with a fi-
nancial services holding company (other
than a registered investment company)
that, at any time during the preceding 6
145
months, has executed any portfolio trans-
actions for, engaged in any principal trans-
actions with, or distributed shares for—
‘‘(I) the investment company,
‘‘(II) any other investment com-
pany having the same investment ad-
viser as such investment company or
holding itself out to investors as a re-
lated company for purposes of invest-
ment or investor services, or
‘‘(III) any account over which the
investment company’s investment ad-
viser has brokerage placement discre-
tion,
or any affiliated person of such a person,’’;
(2) by redesignating clause (vi) as clause (vii)
and
(3) by inserting after clause (v) the following
new clause:
‘‘(vi) any person affiliated with a fi-
nancial services holding company (other
than a registered investment company)
that, at any time during the preceding 6
months, has loaned money to—
‘‘(I) the investment company,
146
‘‘(II) any other investment com-
pany having the same investment ad-
viser as such investment company or
holding itself out to investors as a re-
lated company for purposes of invest-
ment or investor services, or
‘‘(III) any account for which the
investment company’s investment ad-
viser has borrowing authority,
or any affiliated person of such a person,
or’’.
(b) AFFILIATION OF DIRECTORS.—Section 10(c) of
the Investment Company Act of 1940 (15 U.S.C. 80a–
10(c)) is amended by striking, ‘‘bank, except’’ and insert-
ing ‘‘bank affiliated with a financial services holding com-
pany (and its subsidiaries) or any single financial services
holding company (and its affiliates and subsidiaries), as
those terms are defined in the Financial Services Holding
Company Act, except’’.
(c) EFFECTIVE DATE.—The provisions of subsection
(a) of this section shall become effective 1 year after the
effective date of this subtitle.
147
SEC. 314. ADDITIONAL SEC DISCLOSURE AUTHORITY.
(a) MISREPRESENTATION.—Section 35(a) of the In-
vestment 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 security of which a
registered investment company is the issuer, to rep-
resent or imply in any manner whatsoever that such
security or company—
‘‘(A) has been guaranteed, sponsored, rec-
ommended, or approved by the United States,
or any agency, instrumentality or officer of the
United States;
‘‘(B) has been insured by the Federal De-
posit Insurance Corporation;
‘‘(C) is guaranteed by or is otherwise an
obligation of any bank or insured depository in-
stitution.
‘‘(2) DISCLOSURES.—Any person that is affili-
ated with an insured depository institution and is-
sues or sells the securities of a registered investment
company shall prominently disclose that the invest-
ment company or any security issued by the invest-
ment company—
148
‘‘(A) is not insured by the Federal Deposit
Insurance Corporation;
‘‘(B) is not guaranteed by an affiliated in-
sured depository institution; and
‘‘(C) is not otherwise an obligation of any
bank or insured depository institution,
in accordance with such rules, regulations, or orders
as the Commission may prescribe as reasonably nec-
essary or appropriate in the public interest for the
protection of investors, after consulting in writing
with the appropriate Federal banking agencies.
‘‘(3) DEFINITIONS.—The terms ‘insured deposi-
tory institution’ and ‘appropriate Federal banking
agency’ have the meanings given to such terms in
section 3 of the Federal Deposit Insurance Act.’’.
(b) DECEPTIVE USE OF NAMES.—Section 35(d) of
the Investment Company Act of 1940 (15 U.S.C. 80a–
34(d)) is amended to read as follows:
‘‘(d)(1) It shall be unlawful for any registered invest-
ment company to adopt as part of the name or title of
such company, or any securities of which it is the issuer,
any word or words that the Commission finds are materi-
ally deceptive or misleading. The Commission may adopt
149
such rules or regulations or issue such orders as are nec-
essary or appropriate to prevent the use of deceptive or
misleading names or titles by investment companies.
‘‘(2) It shall be deceptive and misleading for any reg-
istered investment company—
‘‘(A) that is an affiliated person of a bank that
is affiliated with a financial service holding company,
as defined in section 102(a) of the Financial Serv-
ices Holding Company Act, or an affiliated person of
such person, or
‘‘(B) for which a bank that is affiliated with a
financial service holding company, as defined in sec-
tion 102(a) of the Financial Services Holding Com-
pany Act, or an affiliated person of such a bank,
acts as investment adviser, sponsor, promoter, or
principal underwriter,
to adopt, as part of the name or title such company, or
of any security of which it is an issuer, any word that
is the same or similar to, or a variation of, the name or
title of such bank, in contravention of such rules, regula-
tions, or orders as the Commission may, prescribe as nec-
essary or appropriate in the public interest or for the pro-
tection of investors.’’.
150
SEC. 315. DEFINITION OF BROKER UNDER THE INVEST-
MENT COMPANY ACT OF 1940.
Section 2(a)(6) of the Investment Company Act of
1940 (15 U.S.C. 89a–2(a)(6)) is amended to read as fol-
lows:
‘‘(6) The term ‘broker’ has the same meaning
as in the Securities Exchange Act of 1934, except
that such term does not include any person solely by
reason of the fact that such person is an underwriter
for one or more investment companies.’’.
SEC. 316. DEFINITION OF DEALER UNDER THE INVEST-
MENT COMPANY ACT OF 1940.
Section 2(a)(11) of the Investment Company Act of
1940 (15 U.S.C. 80a–2(a)(11)) is amended to read as fol-
lows:
‘‘(11) The term ‘dealer’ has the same meaning
as in the Securities Exchange Act of 1934, but does
not include an insurance company or investment
company.’’.
SEC. 317. REMOVAL OF THE EXCLUSION FROM THE DEFINI-
TION OF INVESTMENT ADVISER FOR BANKS
THAT ADVISE INVESTMENT COMPANIES.
(a) INVESTMENT ADVISER.—Section 202(a)(11) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b–
2(a)(11)) is amended in subparagraph (A), by striking
151
‘‘investment company’’ and inserting ‘‘investment com-
pany, except that the term ‘investment adviser’ includes
any financial services holding company, as defined in sec-
tion 102(a) of the Financial Services Holding Company
Act, or any bank affiliated with such company, to the ex-
tent that such financial services holding company or bank
acts as an investment adviser to a registered investment
company, or if, in the case of such a bank, such services
are performed through a separately identifiable depart-
ment or division, the department or division, and not the
bank itself, shall be deemed to be the investment adviser’’.
(b) SEPARATELY IDENTIFIABLE DEPARTMENT
OR
DIVISION.—Section 202(a) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b–2(a)) is amended by adding at
the end the following:
‘‘(25) The term ‘separately identifiable depart-
ment or division’ of a bank means a unit—
‘‘(A) that is under the direct supervision of
an officer or officers designated by the board of
directors of the bank as responsible for the day-
to-day conduct of the bank’s investment adviser
activities for one or more investment companies,
including the supervision of all bank employees
engaged in the performance of such activities;
and
152
‘‘(B) for which all of the records relating
to its investment adviser activities are sepa-
rately maintained in or extractable from such
unit’s own facilities or the facilities of the bank,
and such records are so maintained or other-
wise accessible as to permit independent exam-
ination and enforcement of this Act or the In-
vestment Company Act of 1940 and rules and
regulations promulgated under this Act or the
Investment Company Act of 1940.’’.
SEC. 318. DEFINITION OF BROKER UNDER THE INVEST-
MENT ADVISERS ACT OF 1940.
Section 202(a)(3) of the Investment Advisers Act of
1940 (15 U.S.C. 80b–2(a)(3)) is amended to read as fol-
lows:
‘‘(3) The term ‘broker’ has the same meaning
as in the Securities Exchange Act of 1934.’’.
SEC. 319. DEFINITION OF DEALER UNDER THE INVEST-
MENT ADVISERS ACT OF 1940.
Section 202(a)(7) of the Investment Advisers Act of
1940 (15 U.S.C. 80b–2(a)(7)) is amended to read as fol-
lows:
‘‘(7) The term ‘dealer’ has the same meaning as
in the Securities Exchange Act of 1934, but does
153
not include an insurance company or investment
company.’’.
SEC. 320. INTERAGENCY CONSULTATION.
The Investment Advisers Act of 1940 (15 U.S.C.
80b–1 et seq.) is amended by inserting after section 210
the following new section:
‘‘SEC. 210A. CONSULTATION.
‘‘(a) EXAMINATION RESULTS AND OTHER INFORMA-
TION.—
‘‘(1) The appropriate Federal banking agency
shall provide the Commission upon request the re-
sults of any examination, reports, records, or other
information as each may have access to with respect
to the investment advisory activities of any financial
services holding company, as defined in section
102(a) of the Financial Services Holding Company
Act, bank that is affiliated with a financial services
holding company, or separately identifiable depart-
ment or division of a bank, that is registered under
section 203 of this title, or, in the case of a financial
services holding company or affiliated bank, that has
a subsidiary or a separately identifiable department
or division registered under that section, to the ex-
tent necessary for the Commission to carry out its
statutory responsibilities.
154
‘‘(2) The Commission shall provide to the ap-
propriate Federal banking agency upon request the
results of any examination, reports, records, or other
information with respect to the investment advisory
activities of any financial services holding company,
bank that is affiliated with a financial services hold-
ing company, or separately identifiable department
or division of a bank, any of which is registered
under section 203 of this title, to the extent nec-
essary for the agency to carry out its statutory re-
sponsibilities.
‘‘(b) EFFECT
ON
OTHER
AUTHORITY.—Nothing
herein shall limit in any respect the authority of the appro-
priate Federal banking agency with respect to such finan-
cial services holding company, bank that is affiliated with
a financial services holding company, or department or di-
vision under any provision of law.
‘‘(c) DEFINITION.—For purposes of this section, the
term ‘appropriate Federal banking agency’ shall have the
same meaning as in section 3 of the Federal Deposit in-
surance Act.’’
SEC. 321. TREATMENT OF BANK COMMON TRUST FUNDS.
(a) SECURITIES ACT OF 1933.—Section 3(a)(2) of
the Securities Act of 1933 (15 U.S.C. 77c(a)(2)) is
amended by striking ‘‘or any interest or participation in
155
any common trust fund or similar fund maintained by a
bank exclusively for the collective investment and reinvest-
ment of assets contributed thereto by such bank in its ca-
pacity as trustee, executor, administrator, or guardian’’
and inserting ‘‘or any interest or participation in any com-
mon trust fund or similar fund that is excluded from the
definition of the term ‘investment company’ under section
3(c)(3) of the Investment Company Act of 1940’’.
(b) SECURITIES EXCHANGE ACT OF 1934.—Section
3(a)(12)(A)(iii) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(12)(A)(iii) is amended to read as fol-
lows:
‘‘(iii) any interest or participation in
any common trust fund or similar fund
that is excluded from the definition of the
term ‘investment company’ under section
3(c)(3) of the Investment Company Act of
1940;’’.
(c) INVESTMENT COMPANY ACT OF 1940.—Section
3(c)(3) of the Investment Company Act of 1940 (15
U.S.C. 80a–3(c)(3)) is amended by inserting before the
period the following: ’’, if—
‘‘(A) such fund is employed by the bank
solely as an aid to the administration of trusts,
156
estates, or other accounts created and main-
tained for a fiduciary purpose;
‘‘(B) except if the bank is not affiliated
with a financial services holding company, as
defined in section 102(a) of the Financial Serv-
ices Holding Company Act, or in connection
with the ordinary advertising of the bank’s fidu-
ciary services, interests in such fund are not—
‘‘(i) advertised; or
‘‘(ii) offered for sale to the general
public, and
‘‘(C) fees and expenses charged by such
fund are not in contravention of fiduciary prin-
ciples established under applicable Federal or
State law.’’
SEC. 322. INVESTMENT ADVISERS PROHIBITED FROM HAV-
ING 
CONTROLLING 
INTEREST 
IN 
REG-
ISTERED INVESTMENT COMPANY.
Section 15 of the Investment Company Act of 1940
(15 U.S.C. 80a–15) is amended by adding at the end the
following new subsection:
‘‘(g) CONTROLLING INTEREST IN INVESTMENT COM-
PANY PROHIBITED.—
‘‘(1) IN GENERAL.—If any investment adviser
to a registered investment company, or an affiliated
157
person of that investment adviser, holds a control-
ling interest in that registered investment company
in a trustee or fiduciary capacity, such person
shall—
‘‘(A) if it holds the shares in a trustee or
fiduciary capacity with respect to any employee
benefit plan subject to the Employee Retire-
ment Income Security Act of 1974, transfer the
power to vote the shares of the investment com-
pany through to another person acting in a fi-
duciary capacity with respect to the plan who is
not an affiliated person of that investment ad-
viser or any affiliated person thereof; or
‘‘(B) if it holds the shares in a trustee or
fiduciary capacity with respect to any other per-
son or entity other than an employee benefit
plan subject to the Employee Retirement In-
come Security Act of 1974—
‘‘(i) transfer the power to vote the
shares of the investment company through
to—
‘‘(I) the beneficial owners of the
shares;
158
‘‘(II) another person acting in a
fiduciary capacity who is not an affili-
ated person of that investment adviser
or any affiliated person thereof; or
‘‘(III) any person authorized to
receive statements and information
with respect to the trust who is not an
affiliated person of that investment
adviser or any affiliated person there-
of;
‘‘(ii) vote the shares of the investment
company held by it in the same proportion
as shares held by all other shareholders of
the company; or
‘‘(iii) vote the shares of the invest-
ment company as otherwise permitted
under such rules, regulations, or orders as
the Commission may prescribe for the pro-
tection of investors.
‘‘(2) EXEMPTION.—Paragraph (1) shall not
apply to any investment adviser to a registered in-
vestment company, or an affiliated person of that in-
vestment adviser, if such investment adviser or affili-
ated person—
159
‘‘(A) is not affiliated with a financial serv-
ices holding company, as defined in section
102(a) of the Financial Services Holding Com-
pany Act; or
‘‘(B) holds shares of the investment com-
pany in a trustee or fiduciary capacity if that
registered investment company consists solely of
assets held in such capacities.
‘‘(3) SAFE HARBOR.—No investment adviser to
a registered investment company or any affiliated
person of such investment adviser shall be deemed to
have acted unlawfully or to have breached a fidu-
ciary duty under State or Federal law solely by rea-
son of acting in accordance with clause (i), (ii), or
(iii) of paragraph (1)(B).
‘‘(4) CHURCH
PLAN
EXEMPTION.—Paragraph
(1) shall not apply to any investment adviser to a
registered investment company, or an affiliated per-
son of that investment adviser, holding shares in
such a capacity, if such investment adviser or such
affiliated person is an organization described in sec-
tion 414(e)(3)(A) of the Internal Revenue Code of
1986.’’.
160
SEC. 323. CONFORMING CHANGE IN DEFINITION.
Section 2(a)(5) of the Investment Company Act of
1940 (15 U.S.C. 80a–2(a)(5)) is amended by striking
‘‘(A) a banking institution under the laws of the United
States’’ and inserting ‘‘(A) a depository institution (as de-
fined in section 3 of the Federal Deposit Insurance Act)
or a branch or agency of a foreign bank (as such terms
are defined in section 101(b) of the International Banking
Act of 1978)’’.
SEC. 324. EFFECTIVE DATE.
This subtitle shall take effect 270 days after the ef-
fective date of this Title.
TITLE IV—WHOLESALE FINANCIAL INSTI-
TUTIONS OWNED BY FINANCIAL SERV-
ICES HOLDING COMPANIES
SEC. 401. NATIONAL WHOLESALE FINANCIAL INSTITU-
TIONS.
Chapter 1 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 the following new section:
‘‘SEC. 5136B. NATIONAL WHOLESALE FINANCIAL INSTITU-
TIONS.
‘‘(a) NATIONAL WHOLESALE FINANCIAL INSTITU-
TIONS.—Any financial services holding company (as de-
fined in Section 102(a) of the Financial Services Holding
161
Company Act) may apply to the Comptroller of the Cur-
rency on such forms and in accordance with such proce-
dures as the Comptroller may prescribe by regulation, for
permission to organize a national wholesale financial insti-
tution. Upon approval of the application, such national
wholesale financial institution shall be a body corporate,
chartered under the laws of the United States by the
Comptroller. A national wholesale financial institution
shall operate pursuant to the requirements of this section
at the direction of a board of directors elected at an orga-
nizational meeting, to be held as soon as practicable after
issuance by the Comptroller of a charter, by such financial
services holding company for the purpose of electing such
board of directors and taking such other action necessary,
pursuant to the charter and the regulations issued by the
Comptroller, to complete the corporate organization of the
national wholesale financial institution. Immediately fol-
lowing its election, the board of directors shall meet to
elect the officers of the national wholesale financial insti-
tution and to take such other action, as prescribed by the
Comptroller, to complete the corporate organization of
such national wholesale financial institution.
‘‘(b) UNAUTHORIZED ORGANIZATION PROHIBITED.—
‘‘(1) IN GENERAL.—No person may organize a
national 
wholesale 
financial 
institution, 
collect
162
money from others for such purpose, or represent
himself or herself as authorized to do so and no na-
tional wholesale financial institution shall transact
any business prior to completion of its organization
except as provided in this section and in implement-
ing regulations of the Comptroller.
‘‘(2) INSURANCE TERMINATION.—No bank that
is insured under the Federal Deposit Insurance Act
may become a national wholesale financial institu-
tion unless—
‘‘(A) it has met all the requirements under
that Act for voluntary termination of deposit in-
surance; and
‘‘(B) it is affiliated with a financial service
holding company, as defined in section 102(a)
of the Financial Services Holding Company
Act.
‘‘(c) AUTHORIZED
ACTIVITIES
FOR
NATIONAL
WHOLESALE FINANCIAL INSTITUTION.—Except as other-
wise provided in this section, a national wholesale financial
institution—
163
‘‘(1) may exercise, in accordance with its arti-
cles of organization and such regulations as are is-
sued by the Comptroller, all of the powers and privi-
leges of a national banking association formed in ac-
cordance with section 5133 of the Revised Statutes
of the United States; and
‘‘(2) shall be subject to any provision of title
LXII of the Revised Statutes of the United States
that is applicable to a national banking association
that is not a national wholesale financial institution.
‘‘(d) TERMINATION.—A national wholesale financial
institution may terminate its status as a national banking
association only with the prior written approval of the
Comptroller and on terms and conditions that the Comp-
troller determines are appropriate to carry out the pur-
poses of this section.
‘‘(e) PROMPT
CORRECTIVE
ACTION.—A national
wholesale financial institution shall be deemed to be an
insured depository institution for purposes of section 38
of the Federal Deposit Insurance Act except that—
‘‘(1) the relevant capital levels and capital
measures for each capital category shall be the levels
specified by the Comptroller for national wholesale
financial institutions in accordance with subsection
(i)(2);
164
‘‘(2) the provisions applicable to well capitalized
insured depository institutions shall be inapplicable
to national wholesale financial institutions;
‘‘(3) the provisions authorizing or requiring an
institution to be placed into receivership shall not
apply to a national wholesale financial institution,
and, instead, the Comptroller is authorized or re-
quired to place the national wholesale financial insti-
tution into conservatorship; and
‘‘(4) for purposes of applying the provisions of
section 38 of the Federal Deposit Insurance Act to
national wholesale financial institutions, all ref-
erences to the appropriate Federal banking agency
or to the Corporation in that section shall be deemed
to be references to the Comptroller.
‘‘(f) ENFORCEMENT AUTHORITY.—Subsections (j)
and (k) of section 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 national wholesale financial
institution in the same manner and to the same extent
as such provisions apply to insured national banks and
any references in such sections to an insured depository
institution shall be deemed, for purposes of this para-
graph, to be a reference to a national wholesale financial
institution.
165
‘‘(g) CERTAIN OTHER STATUTES APPLICABLE.—A
national wholesale financial institution shall be deemed to
be a banking institution, and the Comptroller shall be the
appropriate Federal banking agency for such bank and all
such bank’s affiliates, for purposes of the International
Lending Supervision Act.
‘‘(h) BANK MERGER ACT.—A national wholesale fi-
nancial institution shall be subject to the provisions of sec-
tions 18(c) and 44 of the Federal Deposit Insurance Act
in the same manner and to the same extent the national
wholesale financial institution would be subject to such
sections if the institution were an insured national bank.
‘‘(i) SPECIFIC REQUIREMENTS APPLICABLE TO NA-
TIONAL WHOLESALE FINANCIAL INSTITUTIONS.—
‘‘(1) LIMITATIONS ON DEPOSITS.—
‘‘(A) MINIMUM AMOUNT.—
‘‘(i) IN GENERAL.—Pursuant to such
regulations as the Comptroller may pre-
scribe, no national wholesale financial in-
stitution may receive initial deposits of
$100,000 or less, other than on an inciden-
tal or occasional basis.
‘‘(ii) LIMITATION
ON
DEPOSITS
OF
LESS
THAN
$100,000.—No bank may be
treated as a national wholesale financial
166
institution if the total amount of the initial
deposits of $100,000 or less at such bank
constitutes more than 5 percent of the
bank’s total deposits.
‘‘(B) NO DEPOSIT INSURANCE.—No depos-
its held by a national wholesale financial insti-
tution shall be insured deposits under the Fed-
eral Deposit Insurance Act.
‘‘(C) ADVERTISING
AND
DISCLOSURE.—
The Comptroller shall prescribe regulations per-
taining to advertising and disclosure by national
wholesale financial institutions to ensure that
each depositor is notified that deposits at such
wholesale financial institution are not federally
insured or otherwise guaranteed by the United
States Government.
‘‘(2) SPECIFIC CAPITAL REQUIREMENTS APPLI-
CABLE TO NATIONAL WHOLESALE FINANCIAL INSTI-
TUTIONS.—
‘‘(A) MINIMUM CAPITAL LEVELS.—
‘‘(i) IN
GENERAL.—The Comptroller
shall, by regulation, adopt capital require-
ments for national wholesale financial in-
stitutions to—
167
‘‘(A) account for the status of national
wholesale financial institutions as institutions
that accept deposits that are not insured under
the Federal Deposit Insurance Act; and
‘‘(B) provide for the safe and sound oper-
ation of the national wholesale financial institu-
tion without undue risk to creditors or other
persons engaged in transactions with such insti-
tution.
‘‘(2) MINIMUM
TIER
CAPITAL
RATIO.—The
minimum ratio of tier 1 capital to total risk-weight-
ed assets of national wholesale financial institutions
shall be not less than the level required for an in-
sured national bank to be well capitalized unless the
Comptroller determines otherwise, consistent with
safety and soundness.
‘‘(3) CAPITAL CATEGORIES FOR PROMPT COR-
RECTIVE ACTION.—For purposes of applying section
38 of the Federal Deposit Insurance Act with re-
spect to any national wholesale financial institution,
the Comptroller shall, by regulation, establish, for
each relevant capital measure specified by the Comp-
troller under this subsection, the levels at which a
168
national wholesale financial institution is well cap-
italized, adequately capitalized, undercapitalized, sig-
nificantly undercapitalized, and critically under-
capitalized.
‘‘(4) ADDITIONAL REQUIREMENTS APPLICABLE
TO
NATIONAL
WHOLESALE
FINANCIAL
INSTITU-
TIONS.—In addition to any requirement otherwise
applicable to State member banks or applicable,
under this section, to national wholesale financial in-
stitutions, the Comptroller may prescribe, by regula-
tion or order, for national wholesale financial institu-
tions—
‘‘(A) limitations on transaction with affili-
ates to prevent an affiliate from gaining access
to, or the benefits of, credit from a Federal re-
serve bank, including overdrafts at a Federal
reserve bank;
‘‘(B) special clearing balance requirements;
and
‘‘(C) any additional requirements that the
Comptroller determines to be appropriate or
necessary to—
‘‘(i) promote the safety and soundness
of the national wholesale financial institu-
tion, or
170
‘‘(d) CONSERVATORSHIP AUTHORITY.—The Comp-
troller may appoint a conservator to take possession and
control of a national wholesale financial institution to the
same extent and in the same manner as the Comptroller
may appoint a conservator for a national bank under sec-
tion 203 of the Bank Conservation Act, and the conserva-
tor shall exercise the same powers, functions, and duties,
subject to the same limitations, as are provided under such
Act for conservators of national banks.
‘‘(e) DEFINITIONS.—For purposes of this section, the
following definitions shall apply:
‘‘(1) NATIONAL WHOLESALE FINANCIAL INSTI-
TUTION.—The term ‘national wholesale financial in-
stitution’ means a bank that has been approved to
become a national wholesale financial institution by
the Comptroller under this section pursuant to an
application filed under subsection (a).
‘‘(2) DEPOSIT.—The term ‘deposit’ has the
meaning given to such term by the Comptroller
under this section.
‘‘(f) EXCLUSIVE JURISDICTION.—Subsections (c) and
(e) of section 43 of the Federal Deposit Insurance Act
shall not apply to any national wholesale financial institu-
tion.’’.
171
SEC. 402. STATE MEMBER WHOLESALE FINANCIAL INSTITU-
TIONS.
(a) IN GENERAL.—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 WHOLE-
SALE FINANCIAL INSTITUTION.—
‘‘(1) APPLICATION REQUIRED.—
‘‘(A) IN
GENERAL.—Any bank incor-
porated by special law of any State, or orga-
nized under the general laws of any State, may
apply to the Board of Governors of the Federal
Reserve System to become a State member
wholesale financial institution and to subscribe
to the stock of the Federal reserve bank orga-
nized within the district where the applying
bank is located.
‘‘(B) TREATMENT
AS
STATE
MEMBER
BANK.—Any application under subparagraph
(A) shall be treated as an application to become
a State member bank under, and shall be sub-
ject to the provisions of, section 9.
‘‘(2) INSURANCE TERMINATION.—No bank that
is insured under the Federal Deposit Insurance Act
172
may become a State member wholesale financial in-
stitution unless—
‘‘(A) it has met all requirements under
that Act for voluntary termination of deposit in-
surance; and
‘‘(B) is affiliated with a financial services
holding company, as defined in section 102(a)
of the Financial Services Holding Company
Act.
‘‘(b) GENERAL
REQUIREMENTS
APPLICABLE
TO
STATE
MEMBER
WHOLESALE
FINANCIAL
INSTITU-
TIONS.—
‘‘(1) FEDERAL RESERVE ACT.—Except as oth-
erwise provided in this section, State member whole-
sale financial institutions shall be member banks
and shall be subject to the provisions of this Act
that apply to member banks to the same extent and
in the same manner as State member insured banks,
except that a State member wholesale financial insti-
tution may terminate membership under this Act
only with the prior written approval of the Board
and on terms and conditions that the Board deter-
mines are appropriate to carry out the purposes of
this Act.
173
‘‘(2) PROMPT
CORRECTIVE
ACTION.—A State
member wholesale financial institution shall be
deemed to be an insured depository institution for
purposes of section 38 of the Federal Deposit Insur-
ance Act except that—
‘‘(A) the relevant capital levels and capital
measures for each capital category shall be the
levels specified by the Board for State member
wholesale financial institutions in accordance
with subsection (c);
‘‘(B) the provisions applicable to well cap-
italized insured depository institutions shall be
inapplicable to wholesale financial institutions;
‘‘(C) the provisions authorizing or requir-
ing an institution to be placed into receivership
shall not apply to a State member wholesale fi-
nancial institution, and, instead, the Board is
authorized or required, as the case may be, to
terminate the State member wholesale financial
institution’s membership in the Federal Reserve
System or place the bank into conservatorship;
and
174
‘‘(D) for purposes of applying the provi-
sions of section 38 of the Federal Deposit In-
surance Act to State member wholesale finan-
cial institutions, all references to the appro-
priate Federal banking agency or to the Cor-
poration in that section shall be deemed to be
references to the Board.
‘‘(3) ENFORCEMENT AUTHORITY.—Subsections
(j) and (k) of section 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 State
member wholesale financial institution in the same
manner and to the same extent as such provisions
apply to State member insured banks and any ref-
erences in such sections to an insured depository in-
stitution shall be deemed, for purposes of this para-
graph, to be a reference to a State member whole-
sale financial institution.
‘‘(4) CERTAIN
OTHER
STATUTES
APPLICA-
BLE.—A State member wholesale financial institu-
tion shall be deemed to be a banking institution, and
the Board shall be the appropriate Federal banking
agency for such bank and all such bank’s affiliates
for purposes of the International Lending Super-
vision Act.
175
‘‘(5) BANK
MERGER
ACT.—A State member
wholesale financial institution shall be subject to the
provisions of sections 18(c) and 44 of the Federal
Deposit Insurance Act in the same manner and to
the same extent as the State member wholesale fi-
nancial institution would be subject to such sections
if the institution were a State member insured bank.
‘‘(c) SPECIFIC
REQUIREMENTS
APPLICABLE
TO
STATE
MEMBER
WHOLESALE
FINANCIAL
INSTITU-
TIONS.—
‘‘(1) LIMITATIONS ON DEPOSITS.—
‘‘(A) MINIMUM AMOUNT.—
‘‘(i) IN GENERAL.—Pursuant to such
regulations as the Board may prescribe, no
State member wholesale financial institu-
tion 
may 
receive 
initial 
deposits 
of
$100,000 or less, other than on an inciden-
tal or occasional basis.
‘‘(ii) LIMITATION
ON
DEPOSITS
OF
LESS
THAN
$100,000.—No bank may be
treated as a State member wholesale finan-
cial institution if the total amount of the
initial deposits of $100,000 or less at such
bank constitutes more than 5 percent of
the bank’s total deposits.
176
‘‘(B) NO DEPOSIT INSURANCE.—No depos-
its held by a State member wholesale financial
institution shall be insured deposits under the
Federal Deposit Insurance Act.
‘‘(C) ADVERTISING
AND
DISCLOSURE.—
The Board shall prescribe regulations pertain-
ing to advertising and disclosure by State mem-
ber wholesale financial institutions to ensure
that each depositor is notified that deposits at
such wholesale financial institution are not fed-
erally insured or otherwise guaranteed by the
United States Government.
‘‘(2) SPECIAL CAPITAL REQUIREMENTS APPLI-
CABLE TO STATE MEMBER WHOLESALE FINANCIAL
INSTITUTIONS.—
‘‘(A) MINIMUM CAPITAL LEVELS.—
‘‘(i) IN GENERAL.—The Board shall,
by regulation, adopt capital requirements
for State member wholesale financial insti-
tutions—
‘‘(I) to account for the status of
State member wholesale financial in-
stitutions as institutions that accept
deposits that are not insured under
177
the Federal Deposit Insurance Act;
and
‘‘(II) to provide for the safe and
sound operation of the State member
wholesale financial institution without
undue risk to creditors or other per-
sons, including Federal reserve banks,
engaged in transactions with such in-
stitution.
‘‘(ii) 
MINIMUM
TIER
CAPITAL
RATIO.—The minimum ratio of tier 1 cap-
ital to total risk-weighted assets of State
member wholesale financial institutions
shall be not less than the level required for
a State member insured bank to be well
capitalized unless the Board determines
otherwise, consistent with safety and
soundness.
‘‘(B) CAPITAL CATEGORIES FOR PROMPT
CORRECTIVE ACTION.—For purposes of apply-
ing section 38 of the Federal Deposit Insurance
Act with respect to any wholesale financial in-
stitution, the Board shall, by regulation, estab-
lish, for each relevant capital measure specified
178
by the Board under subparagraph (A), the lev-
els at which a State member wholesale financial
institution is well capitalized, adequately cap-
italized, undercapitalized, significantly under-
capitalized, and critically undercapitalized.
‘‘(3) ADDITIONAL REQUIREMENTS APPLICABLE
TO STATE MEMBER WHOLESALE FINANCIAL INSTI-
TUTIONS.—In addition to any requirement otherwise
applicable to State member banks or applicable,
under this section, to State member wholesale finan-
cial institutions, the Board may prescribe, by regula-
tion or order, for State member wholesale financial
institutions—
‘‘(A) limitations on transaction with affili-
ates to prevent an affiliate from gaining access
to, or the benefits of, credit from a Federal re-
serve bank, including overdrafts at a Federal
reserve bank;
‘‘(B) special clearing balance requirements;
and
‘‘(C) any additional requirements that the
Board determines to be appropriate or nec-
essary to—
‘‘(i) promote the safety and soundness
of the wholesale financial institution, or
179
‘‘(ii) protect creditors and other per-
sons, including Federal reserve banks, en-
gaged in transactions with the State mem-
ber wholesale financial institution.
‘‘(4) EXEMPTIONS FOR STATE MEMBER WHOLE-
SALE FINANCIAL INSTITUTIONS.—The Board may,
by regulation or order, exempt any State member
wholesale financial institution from any provision ap-
plicable to a State member bank that is not a State
member wholesale financial institution, if the Board
finds that such exemption is not inconsistent with—
‘‘(A) the promotion of the safety and
soundness of the State member wholesale finan-
cial institution; and
‘‘(B) the protection of creditors and other
persons, including Federal reserve banks, en-
gaged in transactions with the State member
wholesale financial institution.
‘‘(5) NO EFFECT ON OTHER PROVISIONS.—This
section shall not be construed as limiting the
Board’s authority over member banks under any
other provision of law, or to create any obligation for
any Federal reserve bank to make, increase, renew,
or extend any advances or discount under this Act
to any member bank or other depository institution.
180
‘‘(d) CONSERVATORSHIP AUTHORITY.—
‘‘(1) IN GENERAL.—The Board may appoint a
conservator to take possession and control of a State
member wholesale financial institution to the same
extent and in the same manner as the Comptroller
of the Currency may appoint a conservator for a na-
tional bank under section 203 of the Bank Con-
servation Act, and the conservator shall exercise the
same powers, functions, and duties, subject to the
same limitations, as are provided under such Act for
conservators of national banks.
‘‘(2) BOARD
AUTHORITY.—The Board shall
have the same authority with respect to any con-
servator appointed under paragraph (1) and the
State member wholesale financial institution for
which such conservator has been appointed as the
Comptroller of the Currency has under the Bank
Conservation Act with respect to a conservator ap-
pointed under such Act and a national bank for
which the conservator has been appointed.
‘‘(e) DEFINITIONS.—For purposes of this section, the
following definitions shall apply:
‘‘(1) STATE MEMBER WHOLESALE FINANCIAL
INSTITUTION.—The term ‘State member wholesale
financial institution’ means a bank whose application
181
to become a State member wholesale financial insti-
tution and a State member bank has been approved
by the Board under this section.
‘‘(2) DEPOSIT.—The term ‘deposit’ has the
meaning given to such term by the Board under this
Act.
‘‘(3) STATE
MEMBER
INSURED
BANK.—The
term ‘State member insured bank’ means a State
member bank which is an insured bank (as defined
in section 3(h) of the Federal Deposit Insurance
Act).
‘‘(f) EXCLUSIVE JURISDICTION.—Subsections (c) and
(e) of section 43 of the Federal Deposit Insurance Act
shall not apply to any State member wholesale financial
institution.’’.
SEC. 403. AMENDMENTS TO THE FEDERAL DEPOSIT INSUR-
ANCE ACT.
(a) VOLUNTARY TERMINATION OF INSURED STATUS
BY CERTAIN INSTITUTIONS.—
(1) SECTION 8 DESIGNATIONS.—Section 8(a) of
the Federal Deposit Insurance Act (12 U.S.C.
1818(a)) is amended—
(A) by striking paragraph (1); and
182
(B) 
by 
redesignating 
paragraphs 
(2)
through (9) as paragraphs (1) through (8), re-
spectively.
(2) VOLUNTARY
TERMINATION
OF
INSURED
STATUS.—The Federal Deposit Insurance 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 national bank may volun-
tarily terminate such bank’s status as an insured deposi-
tory institution in accordance with regulations of the Cor-
poration if—
‘‘(1) the bank provides written notice of the
bank’s intent to terminate such insured status—
‘‘(A) to the Corporation and either the
Board of Governors of the Federal Reserve Sys-
tem (in the case of a State member bank) or
the Comptroller of the Currency (in the case of
a national bank) not less than 6 months before
the effective 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
183
‘‘(2) either—
‘‘(A) the deposit insurance fund of which
such bank is a member equals or exceeds the
fund’s designated reserve ratio as of the date
the bank provides a written notice under para-
graph (1) and the Corporation determines that
the fund will equal or exceed the applicable des-
ignated reserve ratio for the 2 semiannual as-
sessment periods immediately following such
date; or
‘‘(B) the Corporation and the Board of
Governors of the Federal Reserve System (in
the case of a State member bank) or the Comp-
troller of the Currency (in the case of a na-
tional bank) approve 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;
‘‘(2) an insured branch that is required to be
insured under subsection (a) or (b) of section 6 of
the International Banking Act of 1978; or
‘‘(3) any institution described in section 2(c)(2)
of the Bank Holding Company Act of 1956.
184
‘‘(c) ELIGIBILITY FOR INSURANCE TERMINATED.—
Any bank that voluntarily elects to terminate the bank’s
insured status under subsection (a) shall not be eligible
for insurance on any deposits or any assistance authorized
under this Act after the period specified in subsection
(f)(1).
‘‘(d) INSTITUTION MUST BECOME WHOLESALE FI-
NANCIAL INSTITUTION OR TERMINATE DEPOSIT-TAKING
ACTIVITIES.—Any depository institution which voluntarily
terminates such institution’s status as an insured deposi-
tory institution under this section may not, upon termi-
nation of insurance, accept any deposits unless the institu-
tion is either a State member wholesale financial institu-
tion under section 9B of the Federal Reserve Act, or a
national wholesale financial institution under section
5136B of the Revised Statutes of the United States.
‘‘(e) EXIT FEES.—
‘‘(1) IN GENERAL.—Any bank that voluntarily
terminates such bank’s status as an insured deposi-
tory institution under this section shall pay an exit
fee in an amount that the Corporation determines is
sufficient to account for the institution’s pro rata
share of the amount (if any) which would be re-
quired to restore the relevant deposit insurance fund
to the fund’s designated reserve ratio as of the date
185
the bank provides a written notice under subsection
(a)(1).
‘‘(2) PROCEDURES.—The Corporation shall pre-
scribe, by regulation, procedures for assessing any
exit fee under this subsection.
‘‘(f) TEMPORARY INSURANCE OF DEPOSITS INSURED
AS OF TERMINATION.—
‘‘(1) TRANSITION PERIOD.—The insured depos-
its of each depositor in a State bank or a national
bank on the effective date of the voluntary termi-
nation of the bank’s insured status, less all subse-
quent withdrawals from any deposits of such deposi-
tor, 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 de-
posits in the depository institution made after the ef-
fective date of such termination shall be insured by
the Corporation.
‘‘(2) TEMPORARY ASSESSMENTS; OBLIGATIONS
AND DUTIES.—During the period specified in para-
graph (1) with respect to any bank, the bank shall
continue to pay assessments under section 7 as if
the bank were an insured depository institution. The
bank shall, in all other respects, be subject to the
186
authority of the Corporation and the duties and obli-
gations 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 de-
mands 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 institution.
‘‘(g) ADVERTISEMENTS.—
‘‘(1) IN
GENERAL.—A bank that voluntarily
terminates the bank’s insured status under this sec-
tion shall not advertise or hold itself out as having
insured deposits, except that the bank may advertise
the temporary insurance of deposits under sub-
section (f) if, in connection with any such advertise-
ment, the advertisement also states with equal prom-
inence that additions to deposits and new deposits
made after the effective date of the termination are
not insured.
‘‘(2) CERTIFICATES OF DEPOSIT, OBLIGATIONS,
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 vol-
untary termination of the bank’s insured status
187
under this section shall be accompanied by a con-
spicuous, prominently displayed notice that such cer-
tificate of deposit or other obligation or security is
not insured under this Act.
‘‘(h) NOTICE REQUIREMENTS.—
‘‘(1) NOTICE TO THE CORPORATION.—The no-
tice required under subsection (a)(1)(A) shall be in
such form as the Corporation may require.
‘‘(2) NOTICE TO DEPOSITORS.—The notice re-
quired 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 Cor-
poration finds to be necessary and appropriate
for the protection of depositors.’’.
(b) DEFINITION.—Section 19(b)(1)(A)(i) of the Fed-
eral Reserve Act (12 U.S.C. 461(b)(1)(A)(i)) is amended
after ‘‘such Act’’ by inserting ‘‘, or any State member
wholesale financial institution as defined in section 9B of
this Act or any national wholesale financial institution as
defined in section 5136B of the Revised Statutes of the
United States’’.
(c) REPORTS
ON DISCOUNTS
AND ADVANCES
TO
WHOLESALE FINANCIAL INSTITUTIONS.—Section 10B of
188
the Federal Reserve Act (12 U.S.C. 347(b)) is amended
by adding at the end the following new subsection:
‘‘(c) REPORTS ON DISCOUNTS AND ADVANCES TO
WHOLESALE FINANCIAL INSTITUTIONS.—
‘‘(1) IN GENERAL.—The Board shall submit a
report to the Congress at the end of any year in
which any State member wholesale financial institu-
tion or national wholesale financial institution (as
defined in section 5136B of the Revised Statutes of
the United States) has obtained a discount, advance,
or other extension of credit from a Federal reserve
bank.
‘‘(2) CONTENTS.—Any report submitted under
paragraph (1) shall explain the circumstances and
need for any discount, advance, or other extension of
credit to a wholesale financial institution during the
period covered by the report, including the type and
amount of credit extended and the amount of credit
remaining outstanding as of the date of the report.’’.
189
TITLE V—MERGER OF BANK AND THRIFT
CHARTERS, REGULATORS, AND INSUR-
ANCE FUNDS
Subtitle A—Conversion of Thrift Charters
SEC. 501. SHORT TITLE.
This title may be cited as the Thrift Charter Conver-
sion Act of 1997.
SEC. 502. TERMINATION OF FEDERAL SAVINGS ASSOCIA-
TIONS; TREATMENT OF STATE SAVINGS ASSO-
CIATIONS AS BANKS FOR PURPOSES OF FED-
ERAL BANKING LAW.
(a) TERMINATION OF FEDERAL SAVINGS ASSOCIA-
TION CHARTERS.—
(1) IN
GENERAL.—No later than June 30,
1998, each Federal savings association shall—
(A) convert to a national bank charter;
(B) convert to a State depository institu-
tion; or
(C) surrender the charter of such savings
association and liquidate the institution.
(2) CONVERSION TO NATIONAL BANK BY OPER-
ATION OF LAW.—
(A) IN GENERAL.—Except as provided in
paragraph (1), the requirement under para-
graph (1)(A) for a Federal savings association
190
to convert shall be deemed to have been satis-
fied by operation of law effective 15 days after
such association has delivered a conversion reg-
istration statement to the Comptroller of the
Currency.
(B) POWERS, PRIVILEGES, DUTIES, AND
LIABILITIES.—After the conversion of a Federal
savings association to a national bank by oper-
ation of law, such national bank shall, except as
otherwise specified by law, have the same pow-
ers and privileges and shall be subject to the
same duties, liabilities, and regulation as an in-
stitution originally organized as a national bank
under Federal law.
(3) CONVERSION REGISTRATION STATEMENT.—
A conversion registration statement shall include the
following:
(A) A copy of the resolution approved by
a majority of the full board of directors of the
Federal savings association resolving to convert
the association into a national bank.
191
(B) A certification by the secretary of a
Federal savings association attesting to the re-
ceipt of any required affirmative vote of share-
holders necessary to convert the Federal sav-
ings association into a national bank.
(C) A copy of the most recent charter and
bylaws of the Federal savings association cer-
tified by the Office of Thrift Supervision.
(D) Articles of association and an organi-
zational certificate in accordance with sections
5133, 5134, and 5135 of the Revised Statutes
of the United States, except that—
(i) a Federal savings association may
include in such articles any provisions in
the most recent Federal charter under
which it operated as a Federal savings as-
sociation; and
(ii) references to capital stock, shares,
shareholders, and related terms in such
sections of the Revised Statutes of the
United States shall not apply to a mutual
savings association converting to a national
bank organized in mutual form.
(4) EFFECTIVE DATE OF CONVERSION TO NA-
TIONAL BANK.—
192
(A) If the Comptroller of the Currency de-
termines that a conversion registration state-
ment includes all of the documents described in
subsection (a)(3) (A) through (D), the Comp-
troller of the Currency shall issue a certificate,
under the Comptroller’s hand and official seal,
that such association has complied with all the
provisions required herein to be complied with,
and that such association is authorized to com-
mence the business of banking effective 15 days
after the date of delivery of the conversion reg-
istration statement. Such converted association
may include in its bylaws as a national bank
any provisions in the most recent bylaws under
which it operated as a Federal savings associa-
tion.
(B) If the Comptroller of the Currency de-
termines that a conversion registration state-
ment does not include all of the documents de-
scribed in subsection (a)(3) (A) through (D),
the Comptroller shall advise the Federal savings
association, before the end of the 15-day period
beginning on the date of delivery, to resubmit
a new statement with the required documents
193
to initiate a new 15-day period. A Federal sav-
ings association shall not otherwise be required
to take any additional action beyond those spec-
ified in subsection (a) (2) and (3) in order to
satisfy the requirement of subsection (a)(1)(A).
(5) TERMINATION
OF
SAVINGS
ASSOCIATION
CHARTER.—Upon conversion of a Federal savings
association to a national bank or State bank pursu-
ant to the requirements of paragraph (1), the asso-
ciation’s charter as a savings association shall auto-
matically terminate and be canceled.
(6) NO FEES OR CHARGES.—A Federal savings
association that converts to a national bank or State
bank pursuant to the requirements of paragraph (1)
shall not be required to pay any application fee, ex-
amination fee, assessment, or other charge to any
Federal agency in connection with such conversion.
(7) SHARE CONVERSION.—Notwithstanding any
other provision of law, upon conversion of a Federal
savings association organized in stock form to a na-
tional bank or State bank pursuant to the require-
ments of paragraph (1), the shares of such stock
savings association shall automatically convert into
shares of such national bank or State bank, each for
the same value as they were and with the same
194
terms and conditions as they contained immediately
before the conversion.
(8) DIRECTORS AND OFFICERS.—
(A) IN
GENERAL.—Notwithstanding any
other provision of law, upon conversion of a
Federal savings association to a national bank
or State bank pursuant to the requirements of
paragraph (1), each person who was a director
or officer of such association before such con-
version may continue to serve as and be elected
a director or officer of such national bank or
State bank.
(B) TREATMENT
FOR
CERTAIN
PUR-
POSES.—For purposes of section 32 of the Fed-
eral Deposit Insurance Act, a national bank or
State bank which converted from a savings as-
sociation pursuant to the requirements of para-
graph (1) shall not be treated as having been
chartered less than 2 years or having undergone
a change in control within the preceding 2
years solely because of its conversion into a na-
tional bank or State bank.
(9) FAILURE TO OBTAIN A CHARTER.—
195
(A) IN
GENERAL.—Any Federal savings
association that has not complied with para-
graph (1) by June 30, 1998, shall as of that
date be subject to all laws, regulations, and or-
ders applicable to a national bank, and the
Comptroller of the Currency may determine the
terms and conditions upon which the savings
association converts into a national bank.
(B) CONTINUING FAILURE TO COMPLY.—A
Federal savings association’s continuing failure
to comply with paragraph (1) may, in the dis-
cretion of the Comptroller of the Currency, be
considered an unsafe or unsound condition to
transact business, or a violation of law under
section 11 of the Federal Deposit Insurance
Act.
(10) ASSOCIATION
CONVERTING
IN
UNSAFE
AND UNSOUND CONDITION.—If the Comptroller of
the Currency determines that a Federal savings as-
sociation is operating in an unsafe and unsound con-
dition, the Comptroller may determine the terms and
conditions upon which such association converts into
a national bank.
(b) TREATMENT OF STATE SAVINGS ASSOCIATIONS
AS BANKS FOR PURPOSES OF FEDERAL BANKING LAW.—
196
(1) AMENDMENTS
TO
FEDERAL
DEPOSIT
IN-
SURANCE ACT.—Section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813) is amended—
(A) by striking paragraph (2) of subsection
(a) and inserting the following new paragraph:
‘‘(2) STATE BANK.—
‘‘(A) IN GENERAL.—The term ‘State bank’
means any bank, banking association, trust
company, savings bank, industrial bank (or
similar depository institution which the Board
of Directors finds to be operating substantially
in the same manner as an industrial bank),
building and loan association, savings and loan
association, homestead association, cooperative
bank, or other banking institution—
‘‘(i) which is engaged in the business
of receiving deposits, other than trust
funds (as defined in this section); and
‘‘(ii) which—
‘‘(I) is incorporated under the
laws of any State;
‘‘(II) is organized and operating
according to the laws of the State in
which such institution is chartered or
organized; or
197
‘‘(III) is operating under the
Code of Law for the District of Co-
lumbia (except a national bank).
‘‘(B) 
CERTAIN
INSURED
BANKS
IN-
CLUDED.—The term ‘State bank’ includes a co-
operative bank or other unincorporated bank
the deposits of which were insured by the Cor-
poration on the day before the date of the en-
actment of the Financial Institutions Reform
Recovery, and Enforcement Act of 1989.
‘‘(C) CERTAIN
UNINSURED
BANKS
EX-
CLUDED.—The term ‘State bank’ does not in-
clude any cooperative bank or other unincor-
porated bank the deposits of which were not in-
sured by the Corporation on the day before the
date of the enactment of the Financial Institu-
tions Reform, Recovery, and Enforcement Act
of 1989.’’; and
(B) in subsection (q)—
(i) by inserting ‘‘and’’ after the semi-
colon at the end of paragraph (2);
(ii) by striking ‘‘; and’’ at the end of
paragraph (3) and inserting a period; and
(iii) by striking paragraph (4).
198
(2) AMENDMENTS
TO
THE
BANK
HOLDING
COMPANY
ACT
OF
1956.—Section 2 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841) is
amended—
(A) by striking subparagraph (E) of sub-
section (a)(5); and
(B) by striking subparagraphs (B) and (J)
of subsection (c)(2).
(3) AMENDMENTS TO THE FEDERAL RESERVE
ACT.—The 2d and 3d paragraphs of the 1st section
of the Federal Reserve Act (12 U.S.C. 221) are each
amended by inserting ‘‘(as defined in section 3(a)(2)
of the Federal Deposit Insurance Act)’’ after ‘‘State
bank’’.
(c) COMPARABILITY OF REGULATION FOR STATE-
CHARTERED DEPOSITORY INSTITUTIONS.—
(1) REVIEW
OF
STATE
SUPERVISION.—The
Corporation shall maintain procedures for reviewing,
under standards the Board of Directors shall pre-
scribe in regulations, the manner in which State de-
pository institutions are regulated by a State for the
purpose of ensuring that State savings associations
are no less rigorously regulated by a State than
State banks.
199
(2) INADEQUATE STATE REGULATIONS.—If, in
connection with a review of State regulation of State
depository institutions pursuant to paragraph (2),
the Corporation determines that a State regulates
savings associations chartered by such State less rig-
orously than the State regulates banks chartered by
such State, the Corporation may take such action
under section 8(a) of the Federal Deposit Insurance
Act as the Corporation determines to be appropriate
which shall be effective no later than the end of the
1-year period beginning on the date of such deter-
mination.
(3) DEFINITIONS.—The following definitions
shall apply for purposes of this subsection:
(A) STATE
BANK.—The term ‘‘State
bank’’ has the same meaning as in section
3(a)(2) of the Federal Deposit Insurance Act
(as in effect on the date of the enactment of the
Thrift Charter Conversion Act of 1997).
(B) STATE
SAVINGS
ASSOCIATION.—The
term ‘‘State savings association’’ has the same
meaning as in section 3(b)(2) of the Federal
Deposit Insurance Act (as in effect on the date
of the enactment of the Thrift Charter Conver-
sion Act of 1997).
200
(C) STATE
DEPOSITORY
INSTITUTION.—
The term ‘‘State depository institution’’ has the
same meaning as in section 3(c)(5) of the Fed-
eral Deposit Insurance Act.
SEC. 503. TREATMENT OF CERTAIN ACTIVITIES AND AFFILI-
ATIONS OF BANK HOLDING COMPANIES RE-
SULTING FROM THIS ACT.
Section 4 of the Bank Holding Company Act of 1956
(12 U.S.C. 1843) is amended by adding at the end the
following new subsection:
‘‘(k) TREATMENT OF COMPANIES RESULTING FROM
SAVINGS AND LOAN HOLDING COMPANIES.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of this section (other than paragraph (5))
or any other provision of Federal law including sec-
tions 20 and 32 of the Banking Act of 1933, a
qualified bank holding company may, after such
company becomes a bank holding company—
‘‘(A) maintain or enter into any non-bank-
ing affiliation which such company was author-
ized to maintain or enter into as of the date of
the enactment of the Depository Institution Af-
filiation and Thrift Charter Conversion Act or
was authorized to maintain following a merger
of insured depository institution subsidiaries
201
pursuant to an application filed no later than
such date; and
‘‘(B) engage, directly or through any affili-
ate described in subparagraph (A) which is not
a bank, in any activity in which such company
or any affiliate described in subparagraph (A)
was authorized to engage as of such date of en-
actment, or in which such company was author-
ized to engage following a merger of insured de-
pository institution subsidiaries pursuant to an
application filed no later than such date, if the
requirements of paragraph (4) are met.
‘‘(2) QUALIFIED BANK HOLDING COMPANY DE-
FINED.—For purposes of this subsection, the term
‘qualified bank holding company’ means—
‘‘(A) any company—
‘‘(i) which—
‘‘(I) as of the date of the enact-
ment of the Depository Institution Af-
filiation and Thrift Charter Conver-
sion Act, is a savings and loan holding
company; or
202
‘‘(II) as of such date of enact-
ment, has filed an application to char-
ter a de novo Federal savings associa-
tion and thereafter becomes a savings
and loan holding company by virtue of
the establishment of such savings as-
sociation; and
‘‘(ii) which as of the dates referred to
in subclause (I) or (II), as the case may
be, is not a bank holding company and be-
comes a bank holding company after such
date, or any subsidiary of such company;
and
‘‘(B) any bank holding company which as
of the date of the enactment of the Depository
Institution Affiliation and Thrift Charter Con-
version Act—
‘‘(i) is a savings and loan holding
company; and
‘‘(ii) is exempt from this section pur-
suant to an order issued by the Board
under subsection (d).
‘‘(3) NO
LOSS
OF
SUBSECTION (d) EXEMP-
TION.—No qualified bank holding company de-
scribed in paragraph (2)(B) shall lose the grounds
203
for the exemption under subsection (d) because a
savings association which such company controlled,
directly or indirectly, as of the date of the enactment
of the Depository Institution Affiliation and Thrift
Charter Conversion Act, becomes a bank after such
date so long as such bank continues to meet the re-
quirements of subparagraphs (A) and (B) of para-
graph (4).
‘‘(4) PREREQUISITES
FOR
CONTINUATION
OF
GRANDFATHERED ACTIVITIES AND AFFILIATIONS.—
‘‘(A) IN GENERAL.—This subsection shall
cease to apply with respect to a qualified bank
holding company if, at any time after such com-
pany first meets the definition of a qualified
bank holding company—
‘‘(i) any insured depository institution
controlled by such company which, as of
the day before the company first meets the
definition of a qualified bank holding com-
pany—
‘‘(I) was subject to the require-
ments contained in section 10(m) of
the Home Owners’ Loan Act, as in ef-
fect on such date, (and regulations in
204
effect on such date under such sec-
tion) for treatment as a qualified
thrift lender under such section; and
‘‘(II) was not a savings associa-
tion described in section 10(m)(3)(F)
of such Act, as in effect on such date,
fails to meet any requirement of such sec-
tion;
‘‘(ii) any insured depository institu-
tion controlled by such company fails to
comply with any limitation or restriction
on the type of amounts of loans or invest-
ments of the institution to which such in-
stitution was subject as of the date of the
enactment of the Thrift Charter Conver-
sion Act of 1997, other than any limitation
relating to qualified thrift investments
under section 10(m) of the Home Owners’
Loan Act, as in effect on such date, unless
such failure to comply is the 1st such fail-
ure and the institution returns to compli-
ance within 60 days of having learned or
been notified of such noncompliance;
205
‘‘(iii) the company or any subsidiary
of the company acquires more than 5 per-
cent of the shares or assets of any bank or
any savings association (as such term is
defined in section 3 of the Federal Deposit
Insurance Act, as in effect on the date of
the enactment of the Depository Institu-
tion Affiliation and Thrift Charter Conver-
sion Act) after such date of enactment.
‘‘(B) REQUALIFICATION
AS
QUALIFIED
THRIFT LENDER.—
‘‘(i) NOTIFICATION OF INTENTION TO
REQUALIFY.—If an institution referred to
in subparagraph (A)(i) notifies—
‘‘(I) the Board; or
‘‘(II) in the case of an institution
which is controlled by a financial serv-
ices holding company, the appropriate
Federal banking agency for such com-
pany’s lead depository institution (as
defined by the Financial Services
Holding Company Act),
within 15 days of having learned of such
institution’s failure to meet such require-
ments, of the intention of the institution to
206
requalify as a qualified thrift lender pursu-
ant to the requirements of such section,
the institution shall be deemed not to have
failed to meet the requirements for treat-
ment as a qualified thrift lender for pur-
poses of this paragraph.
‘‘(ii) FAILURE TO REQUALIFY.—If an
institution referred to in clause (i) notifies
an agency described in subclause (I) or
(II) of clause (i) in accordance with such
clause and thereafter fails to requalify as
a qualified thrift lender within 1 year from
the date of the institution’s initial failure
to meet such requirements, the institution
shall be deemed to have failed to meet such
requirements at the end of such 1-year pe-
riod.
‘‘(iii) 1 ELECTION TO REQUALIFY.—
An institution referred to in clause (i) may
elect to requalify as a qualified thrift lend-
er under this subparagraph only once.
‘‘(5) 
NONTRANSFERABLE.—This 
subsection
shall not apply with respect to any qualified bank
holding company if, after the date of the enactment
207
of the Depository Institution Affiliation and Thrift
Charter Conversion Act—
‘‘(A) any person not under common control
with such company acquires, directly or indi-
rectly, control of the company; or
‘‘(B) the company is the subject of any
merger, consolidation, or other similar trans-
action as a result of which a person not under
common control with such company acquires,
directly or indirectly, control of such company.
‘‘(6) PROHIBITION ON CERTAIN INSURED DE-
POSITORY INSTITUTIONS IDENTIFYING THEMSELVES
AS NATIONAL BANKS.—
‘‘(A) IN
GENERAL.—Notwithstanding the
requirement of section 5134 of the Revised
Statutes of the United States—
‘‘(i) the name of an insured depository
institution subsidiary of a qualified bank
holding company which—
‘‘(I) as of the date of the enact-
ment of the Thrift Charter Conversion
Act of 1997, is a savings and loan
holding company described in section
10(c)(3) of the Home Owners’ Loan
Act (as in effect on such date); and
208
‘‘(II) is subject to the restrictions
contained in paragraph (4),
may not include the term ‘‘national’’; and
‘‘(ii) such insured depository institu-
tion may not be identified as a national
bank on any sign displayed by the institu-
tion or in any advertisement or other pub-
lication of the institution.
‘‘(B) DEPOSITORY INSTITUTION NOT LIA-
BLE
FOR
FRAUDULENT
MISREPRESENTATION
FOR
NOT
REPRESENTING
ITSELF
AS
A
NA-
TIONAL BANK.—An insured depository institu-
tion which is subject to subparagraph (A) shall
not be liable for any civil or criminal penalty
under any Federal or State consumer protection
law, or in any criminal or civil action, for fraud-
ulently misrepresenting the nature of the char-
ter of the institution, for falsely advertising the
status of the institution, for making a false
statement with respect to the status of the in-
stitution, or for any similar offense by reason of
the institution’s compliance with such subpara-
graph.
209
‘‘(7) ENFORCEMENT.—In addition to any other
power of the Board, the Board may enforce compli-
ance with the provisions of this subsection with re-
spect to any qualified bank holding company and
any bank controlled by such company under section
8 of the Federal Deposit Insurance Act.’’.
SEC. 504. TRANSITION PROVISIONS FOR ACTIVITIES OF
SAVINGS ASSOCIATIONS WHICH CONVERT
INTO OR BECOME TREATED AS BANKS.
(a) IN GENERAL.—Notwithstanding any other provi-
sion of Federal law, any insured depository institution
which, as of the date of the enactment of the Depository
Institution Affiliation and Thrift Charter Conversion Act,
is a savings association (as defined in section 3(b) of the
Federal Depository Insurance Act (as in effect on such
date)) and after such date converts to a national or State
bank charter or becomes treated as a State bank pursuant
to the amendment made by section 502(b), may continue
to engage, directly or indirectly, in any activity in which
such institution was lawfully engaged as of such date dur-
ing the 2-year period beginning on the effective date of
such conversion or the effective date of such amendments,
as the case may be.
(b) TWO 1-YEAR EXTENSIONS AUTHORIZED.—The
2-year period described in subsection (a) with respect to
210
any insured depository institution may be extended for
such institution not to exceed two additional times for not
more than 1 year each time if the appropriate Federal
banking agency determines that such extension is nec-
essary to avert substantial loss to the institution and is
otherwise consistent with the safety and soundness of the
institution.
SEC. 505. REGISTRATION OF BANK HOLDING COMPANIES
RESULTING FROM CONVERSIONS OF SAV-
INGS ASSOCIATIONS TO BANKS OR TREAT-
MENT OF SAVINGS ASSOCIATIONS AS BANKS.
Section 3 of the Bank Holding Company Act of 1956
(12 U.S.C. 1842) is amended by adding at the end the
following new subsections:
‘‘(h) REGISTRATION OF CERTAIN BANK HOLDING
COMPANIES.—A company which, as of September 13,
1995, is a savings and loan holding company (as defined
in section 10(a)(1)(D) of the Home Owners’ Loan Act,
as in effect on such date) and is not a bank holding com-
pany shall not be required to obtain the approval of the
Board under subsection (a) to become a bank holding com-
pany after September 13, 1995, as a result of the conver-
sion of any insured depository institution subsidiary of
such company into a bank or by virtue of the treatment
of any insured depository institution subsidiary of such
211
company as a bank pursuant to the amendments made
by the Thrift Charter Conversion Act of 1997, if such
company—
‘‘(1) registers as a bank holding company with
the Board in accordance with section 5(a); and
‘‘(2) does not acquire, directly or indirectly,
ownership or control of any additional insured de-
pository institution or other company in connection
with such conversion or treatment.
‘‘(i) REGULATION OF QUALIFIED BANK HOLDING
COMPANIES.—The Board shall regulate qualified bank
holding companies (as defined in section 4(k)(2)) in a
manner consistent with—
‘‘(1) the regulation of such companies by the
Director of the Office of Thrift Supervision before
the date of the enactment of the Depository Institu-
tion Affiliation and Thrift Charter Conversion Act;
and
‘‘(2) the safety and soundness of insured depos-
itory institution subsidiaries of such companies.
‘‘(j) OPPORTUNITY TO BECOME A BANK HOLDING
COMPANY OR A FINANCIAL SERVICES HOLDING COM-
PANY.—
‘‘(1) ELECTION.—A company described in sub-
section (h) may elect to conform the activities of the
212
company to those activities permitted for a bank
holding company or a financial services holding com-
pany.
‘‘(2) TRANSITION PERIOD.—A company which
makes an election under paragraph (1) shall have a
6-month period beginning on the date of the enact-
ment of the Depository Institution Affiliation and
Thrift Charter Conversion Act to conform the activi-
ties of the company to those permitted for a bank
holding company or a financial services holding com-
pany, as the case may be.
‘‘(3) EXEMPTION
DURING
TRANSITION
PE-
RIOD.—During the 6-month period described in
paragraph (2), a company which makes an election
under paragraph (1) shall be exempt from the re-
quirements imposed on a qualified bank holding
company.’’.
SEC. 506. ADDITIONAL TRANSITION PROVISIONS AND SPE-
CIAL RULES.
(a) MUTUAL NATIONAL BANKS AUTHORIZED; CON-
VERSION OF MUTUAL SAVINGS ASSOCIATIONS INTO NA-
TIONAL BANKS.—
(1) IN GENERAL.—Chapter one of title LXII of
the Revised Statutes of the United States (12
213
U.S.C. 21 et seq.) is amended by inserting after sec-
tion 5133 the following new section:
‘‘SEC. 5133A. MUTUAL NATIONAL BANKS.
‘‘(a) IN GENERAL.—Notwithstanding the paragraph
designated the ‘‘Third’’ of section 5134, the Comptroller
of the Currency may charter national banks organized in
the mutual form either de novo or through a conversion
of any stock national or State bank (as defined in section
3 of the Federal Deposit Insurance Act) or any State mu-
tual bank or credit union, subject to regulations prescribed
by the Comptroller of the Currency in accordance with this
section.
‘‘(b) REGULATIONS.—
‘‘(1) TRANSITION RULES.—National banks or-
ganized in the mutual form shall be subject to the
regulations of the Director of the Office of Thrift
Supervision governing corporate organization, gov-
ernance, and conversion of mutual institutions, as in
effect on September 13, 1995, including parts 543,
544, 546, 563b, and 563c) of chapter V of title 12
of the Code of Federal Regulations (as in effect on
such date), during the 3-year period beginning on
the date of the enactment of the Thrift Charter Con-
version Act of 1997.
214
‘‘(2) REGULATIONS OF THE COMPTROLLER.—
The Comptroller of the Currency shall prescribe ap-
propriate regulations for national banks organized in
the mutual form, effective as of the end of the 3-
year period referred to in paragraph (1).
‘‘(3) APPLICABILITY
OF
CAPITAL
STOCK
RE-
QUIREMENTS.—The Comptroller of the Currency
shall prescribe regulations regarding the manner in
which requirements of title LXII of the Revised
Statutes of the United States with respect to capital
stock, and limitations imposed on national banks
under such title based on capital stock, shall apply
to national banks organized in mutual form pursu-
ant to subsection (a).
‘‘(c) CONVERSIONS.—
‘‘(1) 
CONVERSION
TO
STOCK
NATIONAL
BANK.—Subject to such regulations as the Comp-
troller of the Currency may prescribe for the protec-
tion of depositors’ rights and for any other purpose
the Comptroller of the Currency may consider ap-
propriate, any national bank which is organized in
mutual form pursuant to paragraph (1) may reorga-
nize as a stock national bank.
‘‘(2) CONVERSIONS TO STATE BANKS.—Any na-
tional mutual bank may convert to a State bank
215
charter in accordance with regulations prescribed by
the Comptroller of the Currency and applicable
State law.’’.
(2) MUTUAL
BANK
HOLDING
COMPANIES.—
Subsection (g) of section 3 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1842(g)) is
amended to read as follows:
‘‘(g) MUTUAL BANK HOLDING COMPANIES.—
‘‘(1) IN
GENERAL.—A national mutual bank
may reorganize so as to become a holding company
by—
‘‘(A) chartering an interim national bank,
the stock of which is to be wholly owned, except
as otherwise provided in this section by the na-
tional mutual bank; and
‘‘(B) transferring the substantial part of
the national mutual bank’s assets and liabil-
ities, including all of the bank’s insured liabil-
ities, to the interim national bank.
‘‘(2) DIRECTORS AND CERTAIN ACCOUNT HOLD-
ERS’’ APPROVAL
OF
PLAN
REQUIRED.—A reorga-
nization is not authorized under this subsection un-
less—
‘‘(A) a plan providing for such reorganiza-
tion has been approved by a majority of the
216
board of directors of the national mutual bank;
and
‘‘(B) in the case of a national mutual bank
in which holders of accounts and obligers exer-
cise voting rights, such plan has been submitted
to an approved by a majority of such individ-
uals at a meeting held at the call of the direc-
tors in accordance with the procedures pre-
scribed by the bank’s charter and bylaws.
‘‘(3) NOTICE TO THE BOARD; DISAPPROVAL PE-
RIOD.—
‘‘(A) NOTICE REQUIRED.—
‘‘(i) IN GENERAL.—At least 60 days
before taking any action described in para-
graph (1), a national mutual bank seeking
to establish a mutual holding company
shall provide written notice to the Board.
‘‘(ii) CONTENTS OF NOTICE.—The no-
tice shall contain such relevant information
as the Board shall require by regulation or
by specific request in connection with any
particular notice.
‘‘(B) TRANSACTION ALLOWED IF NOT DIS-
APPROVED.—Unless the Board within such 60-
day notice period disapproves the proposed
217
holding company formation, or extends for an-
other 30 days the period during which such dis-
approval may be issued, the national mutual
bank providing such notice may proceed with
the transaction, if the requirements of para-
graph (2) have been met.
‘‘(C) GROUNDS
FOR
DISAPPROVAL.—The
Board may disapprove any proposed holding
company formation only if—
‘‘(i) such disapproval is necessary to
prevent unsafe or unsound practices;
‘‘(ii) the financial or management re-
sources of the national mutual bank in-
volved warrant disapproval;
‘‘(iii) the national mutual bank fails
to furnish the information required under
subparagraph (A); or
‘‘(iv) the national mutual bank fails to
comply with the requirement of paragraph
(2).
‘‘(D) RETENTION OF CAPITAL ASSETS.—In
connection with the transaction described in
paragraph (1), a national mutual bank may,
subject to the approval of the Board, retain
capital assets at the holding company level to
218
the extent that the capital retained at the hold-
ing company is in excess of the amount of cap-
ital required in order for the interim national
bank to meet all relevant capital standards es-
tablished by the Comptroller of the Currency
for national banks.
‘‘(4) OWNERSHIP.—
‘‘(A) IN GENERAL.—Persons having own-
ership rights in the national mutual bank under
section 5133A of the Revised Statutes of the
United States (including paragraph 575.5 of
chapter V of title 12 of the Code of Federal
Regulations, as in effect on September 13,
1995, and applicable to national mutual banks
pursuant to such section) or State law shall
have the same ownership rights with respect to
the mutual holding company.
‘‘(B) HOLDERS OF CERTAIN ACCOUNTS.—
Holders of savings, demand, or other accounts
of—
‘‘(i) a national bank chartered as part
of a transaction described in paragraph
(1); or
‘‘(ii) a mutual bank acquired pursuant
to paragraph (5)(B),
219
shall have the same ownership rights with re-
spect to the mutual holding company as persons
described in subparagraph (A) of this para-
graph.
‘‘(5) PERMITTED ACTIVITIES.—A mutual hold-
ing company may engage only in the following activi-
ties:
‘‘(A) Investing in the stock of a national or
State bank.
‘‘(B) Acquiring a mutual bank through the
merger of such bank into a national bank sub-
sidiary of such holding company or an interim
national bank subsidiary of such holding com-
pany.
‘‘(C) Subject to paragraph (6), merging
with or acquiring another holding company, one
of whose subsidiaries is a national mutual bank.
‘‘(D) Investing in a corporation the capital
stock of which is available for purchase by a na-
tional mutual bank under Federal law or under
the law of any State where the home office of
any subsidiary bank is located.
‘‘(E) Engaging in the activities permitted
under section 4(c).
220
‘‘(F) Engaging in the activities permitted
for financial services holding companies under
the Financial Services Holding Company Act, if
such company elects to be a financial services
holding company.
‘‘(6) LIMITATIONS ON CERTAIN ACTIVITIES OF
ACQUIRED HOLDING COMPANIES.—
‘‘(A) NEW ACTIVITIES.—If a mutual hold-
ing company acquires or merges with another
holding company under paragraph (5)(C), the
holding company acquired or the holding com-
pany resulting from such merger or acquisition
may only invest in assets and engage in activi-
ties which are authorized under paragraph (5).
‘‘(B) GRACE PERIOD FOR DIVESTING PRO-
HIBITED OR DISCONTINUING PROHIBITED AC-
TIVITIES.—Not later than 2 years following a
merger or acquisition described in paragraph
(5)(C), the acquired holding company or the
holding company resulting from such merger or
acquisition shall—
‘‘(i) dispose of any asset which is an
asset in which a mutual holding company
may not invest under paragraph (5); and
221
‘‘(ii) cease any activity which is an ac-
tivity in which a mutual holding company
may not engage under paragraph (5).
‘‘(7) 
CHARTERING
AND
OTHER
REQUIRE-
MENTS.—
‘‘(A) IN
GENERAL.—A mutual holding
company shall be chartered by the Board and
shall be subject to such regulations as the
Board may prescribe.
‘‘(B) OTHER REQUIREMENTS.—Unless the
context otherwise required, a mutual holding
company shall be subject to the other require-
ments of this Act regarding regulation of hold-
ing companies.
‘‘(8) CAPITAL IMPROVEMENT.—
‘‘(A) PLEDGE OF STOCK OF SAVINGS ASSO-
CIATION
SUBSIDIARY.—This section shall not
prohibit a mutual holding company from pledg-
ing all or a portion of the stock of a national
bank chartered as part of a transaction de-
scribed in paragraph (1) to raise capital for
such bank.
‘‘(B) ISSUANCE OF NONVOTING SHARES.—
No provision of this Act shall be construed as
prohibiting a national bank chartered as part of
222
a transaction described in paragraph (1) from
issuing any nonvoting shares or less than 50
percent of the voting shares of such bank to
any person other than the mutual holding com-
pany.
‘‘(9) INSOLVENCY AND LIQUIDATION.—
‘‘(A) IN GENERAL.—Notwithstanding any
provision of law, upon—
‘‘(i) the default of any national
bank—
‘‘(I) the stock of which is owned
by any mutual holding company; and
‘‘(II) which was chartered in a
transaction described in paragraph
(1);
‘‘(ii) the default of a mutual holding
company; or
‘‘(iii) a foreclosure on a pledge by a
mutual holding company described in para-
graph (8)(A),
A trustee shall be appointed receiver of such
mutual holding company and such trustee shall
have the authority to liquidate the assets of,
223
and satisfy the liabilities of, such mutual hold-
ing company pursuant to title 11, United States
Code.
‘‘(B) DISTRIBUTION OF NET PROCEEDS.—
Except as provided in subparagraph (C), the
net proceeds of any liquidation of any mutual
holding company pursuant to subparagraph (A)
shall be transferred to persons who hold owner-
ship interests in such mutual holding company.
‘‘(C) RECOVERY BY FEDERAL DEPOSIT IN-
SURANCE
CORPORATION.—If the Federal De-
posit Insurance Corporation incurs a loss as a
result of the default of any depository institu-
tion subsidiary of a mutual holding company
which is liquidated pursuant to subparagraph
(A), the Federal Deposit Insurance Corporation
shall succeed to the ownership interest of the
depositors of such depository institution in the
mutual holding company, to the extent of the
Federal Deposit Insurance Corporation’s loss.
‘‘(10) STATE
MUTUAL
BANK
HOLDING
COM-
PANY.—
224
‘‘(A) IN GENERAL.—Notwithstanding any
provision of Federal law, a State bank operat-
ing in mutual form may reorganize so as to
form a holding company under State law.
‘‘(B) REGULATION
OF
STATE
MUTUAL
HOLDING COMPANY.—A corporation organized
as a holding company in accordance with sub-
paragraph (A) shall be regulated on the same
terms and be subject to the same limitations as
any other holding company which controls a
bank.
‘‘(11) REGULATIONS.—
‘‘(A) TRANSITION
RULES.—Mutual bank
holding companies organized under this sub-
section shall be subject to the regulations of the
Director of the Office of Thrift Supervision gov-
erning corporate organization, governance, and
conversion of mutual institutions, as in effect
on September 13, 1995, including part 575 of
chapter V of title 12 of the Code of Federal
Regulations (as in effect on such date), during
the 3-year period beginning on the date of the
enactment of the Thrift Charter Conversion Act
of 1997.
225
‘‘(B) REGULATIONS OF THE BOARD.—The
Board shall prescribe appropriate regulations
for mutual holding companies, effective at the
end of the 3-year period referred to in subpara-
graph (A).
‘‘(12) NO CHANGE OF CONTROL.—Any second
stage conversion of a mutual holding company to full
stock form shall not be deemed to be a change of
control if, in connection with such conversion, no
company, directly or indirectly, acquires control of
such mutual holding company or any successor to
such company.
‘‘(13) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply:
‘‘(A) MUTUAL
HOLDING
COMPANY.—The
term ‘mutual holding company’ means a cor-
poration organized as a holding company under
this subsection.
‘‘(B) 
DEFAULT.—The 
term 
‘default’
means an adjudication or other official deter-
mination of a court of competent jurisdiction or
other public authority pursuant to which a con-
servator, receiver, or other legal custodian is
appointed.
226
‘‘(C) NATIONAL MUTUAL BANK.—The term
‘national mutual bank’ means a national bank
organized in mutual form under section 5133A
of the Revised Statutes of the United States.’’.
(3) LIMITATION ON FEDERAL REGULATION OF
STATE BANKS.—Except as otherwise provide in Fed-
eral law, the Comptroller of the Currency, Board of
Governors of the Federal Reserve System, and Fed-
eral Deposit Insurance Corporation may not adopt
or enforce any regulation which contravenes the cor-
poration governance rules prescribed by State law or
regulation for State banks unless the Comptroller,
Board, or Corporation finds that such Federal regu-
lation is necessary to assure the safety and sound-
ness of such State banks.
(4) CONVERSIONS OF MUTUAL SAVINGS ASSO-
CIATION TO MUTUAL NATIONAL BANKS BY OPER-
ATION OF LAW.—Notwithstanding any other provi-
sion of Federal or State law, any savings association
(as defined in section 3 of the Federal Deposit In-
surance Act (as in effect on September 13, 1995))
which is organized in mutual form as of the date of
the enactment of this Act may become a national
mutual bank by operation of law if the association—
227
(A) files the articles of association and or-
ganization certificate with the Comptroller of
the Currency before January 1, 1998, in ac-
cordance with chapter one of the LXII of the
Revised Statutes of the United States; and
(B) provides such other document or infor-
mation as the Comptroller of the Currency may
prescribe in regulations consistent with this sec-
tion and section 5133A of the Revised Statutes
of the United States (as added by paragraph
(1) of this subsection).
(b) 
MEMBERSHIP
IN
FEDERAL
HOME
LOAN
BANKS.—Any insured depository institution which—
(1) as of the date of the enactment of this Act,
is a Federal savings association which, pursuant to
section 6(e) of the Federal Home Loan Bank Act,
may not voluntarily withdraw from membership in a
federal home loan bank; and
(2) after such date converts from a Federal
savings association to a national bank, shall continue
to be subject to the prohibition under such section
on voluntary withdrawal from such membership as
though such bank were still a Federal savings asso-
ciation until the bank ceases to be a national bank.
(c) BRANCHES.—
228
(1) IN GENERAL.—Notwithstanding any provi-
sion of the Federal Deposit Insurance Act, the Bank
Holding Company Act of 1956, or any other Federal
or State law, any depository institution which—
(A) as of the date of the enactment of this
Act, is a savings association; and
(B) becomes a bank before January 1,
1998, or, pursuant to the amendments made by
this subsection, is treated as a bank as of such
date under the Federal Deposit Insurance Act,
and any depository institution or bank holding com-
pany which acquires such depository institution, may
continue, after the depository institution becomes or
commences to be treated as a bank, to operate any
branch or agency which the savings association was
operating as a branch or agency or was in the proc-
ess of establishing as a branch or agency on January
7, 1997.
(2) NO
ADDITIONAL
BRANCHES.—Paragraph
(1) shall not be construed as authorizing the estab-
lishment, acquisition, or operation of any additional
branch of a depository institution, or the conversion
of any agency to a branch, in any State by virtue
of the operation by such institution of a branch or
229
agency in such State pursuant to such paragraph ex-
cept to the extent such establishment, acquisition,
operation, or conversion is permitted under the Fed-
eral Deposit Insurance Act, Bank Holding Company
Act of 1956, and any other applicable Federal or
State law.
(3) ESTABLISHING A BRANCH OF AGENCY.—
For purposes of paragraph (1), a savings association
shall be treated as having been in the process of es-
tablishing a branch or agency as of January 7,
1997, if, as of such date, the savings association—
(A) had received approval from the Direc-
tor of the Office of Thrift Supervision to estab-
lish such branch or agency;
(B) had pending with the Director of the
Office of Thrift Supervision an application or
notice to establish such branch or agency;
(C) had a legal and contractual obligation
to establish such branch or agency;
(D) had received authority from the appro-
priate Federal banking agency to establish such
branch in connection with the assumption of li-
abilities or an acquisition of an insured deposi-
tory institution pursuant to subsection (f) or
230
(k) of section 13 of the Federal Deposit Insur-
ance Act or section 408(m) of the National
Housing Act (as in effect before the date of the
enactment of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989); or
(E) in the case of a well capitalized deposi-
tory institution, is able to demonstrate to the
appropriate Federal banking agency that the
savings association—
(i) had made a significant financial
commitment; and
(ii) had taken legally binding action or
incurred a contractual obligation, in fur-
therance of the establishment of such
branch or agency.
(d) TRANSITION PROVISION RELATING TO LIMITA-
TIONS ON LOANS TO ONE BORROWER.—Section 5200 of
the Revised Statutes of the United States (12 U.S.C. 84)
is amended by adding at the end the following new sub-
section:
‘‘(e) TRANSITION PROVISIONS FOR SAVINGS ASSO-
CIATIONS CONVERTING TO NATIONAL BANKS.—In the
case of any depository institution which, as of the date
of the enactment of the Depository Institution Affiliation
231
and Thrift Charter Conversion Act, is a savings associa-
tion (as defined in section 3(b) of the Federal Deposit In-
surance Act (as in effect on such date)) and becomes a
national bank on or before January 1, 1998, any loan,
or legally binding commitment to make a loan, made or
entered into by such institution becomes a national bank
may continue to be held without regard to any limitation
contained in this section and any such loan may be re-
newed, modified or extended after the savings association
becomes a national bank except that any increase in the
aggregate amount of funds disbursed under such loan
shall be subject to prior approval by the Comptroller of
the Currency.’’.
(e) RIGHTS AND AUTHORITY OF BANKS RESULTING
FROM CONVERSIONS OF SAVINGS ASSOCIATIONS.—
(1) IN GENERAL.—Upon conversion of a sav-
ings association to a national or State bank in ac-
cordance with this Act and the amendments made
by this title or other provisions of law—
(A) the national or State bank shall suc-
ceed to all rights, benefits, privileges, powers
and franchises, and be subject to all the obliga-
tions, duties, restrictions, and disabilities, of
such savings association under any contract,
agreement, document, or instrument in effect at
232
the time of such conversion to which such sav-
ings association was a party; and
(B) any reference to the savings associa-
tion in any such contract, agreement, docu-
ment, or instrument shall be deemed to be a
reference to such national or State bank.
(2) TREATMENT OF BANK OR SAVINGS ASSOCIA-
TION.—If the application of paragraph (1) with re-
spect to any national or State bank referred to in
such paragraph would—
(A) be inconsistent or in conflict with any
contract, agreement, document, or instrument
described in such paragraph;
(B) constitute a default under the con-
tract, agreement, document, or instrument;
(C) cause such national or State bank to
be in default or breach under any provision of
the contract, agreement, document, or instru-
ment, the national or State bank shall be
deemed to be, and treated as, a savings associa-
tion for purposes of the contract, agreement,
document, or instrument.
(f) TRANSFER
AND GRANDFATHER
OF MUTUAL
HOLDINGS COMPANIES.—
233
(1) SUPERVISION AND REGULATION OF MUTUAL
HOLDINGS COMPANIES.—
(A) IN
GENERAL.—The supervision and
regulation of any mutual holding company in
existence as of the date of the enactment of this
Act is hereby transferred to the Board of Gov-
ernors of the Federal Reserve System.
(B) TRANSITION
RULES.—Mutual bank
holding companies described in subparagraph
(A) shall be subject to the regulations of the
Director of the Office of Thrift Supervision, as
in effect on September 13, 1995, including part
575 of chapter V of title 12 of the Code of Fed-
eral Regulations (as in effect on such date),
during the 3-year period beginning on the date
of the enactment of the Thrift Charter Conver-
sion Act of 1997.
(2) GRANDFATHER OF EXISTING FEDERAL MU-
TUAL HOLDING COMPANIES.—
(A) IN
GENERAL.—Any Federal mutual
holding company in existence as of the date of
the enactment of this Act shall be subject to
section 4(k) of the Bank Holding Company Act
of 1956 (as added by section 2222 of this title).
234
(B) TREATMENT UNDER 4(K).—Any treat-
ment of a Federal mutual holding company
under section 4(k) shall not be construed as a
change in control unless, as a result of the
transaction, the holding company no longer con-
trols the entity.
(g) TREATMENT OF INSTITUTIONS SPECIALIZING IN
HOUSING FINANCE.—Section 18(o)(2) of the Federal De-
posit Insurance Act (12 U.S.C. 1828(o)(2)) is amended
by adding at the end the following new subparagraph:
‘‘(C) TREATMENT OF INSTITUTIONS SPE-
CIALIZING IN HOUSING FINANCE.—No deposi-
tory institution shall be subject to regulatory
criticism, enforcement action of any type, or in-
creased capital requirements by the appropriate
Federal banking agency based on credit con-
centration concerns resulting from maintaining
a portfolio that reflects the institution’s spe-
cialization in residential housing finance.’’.
SEC. 507. TECHNICAL AND CONFORMING AMENDMENTS.
(a) AMENDMENTS TO THE FEDERAL DEPOSIT IN-
SURANCE ACT.—
235
(1) Section 3(z) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1813(z)) is amended by strik-
ing ‘‘, the Director of the Office of Thrift Super-
vision’’.
(2) Section 8(b) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1818(b)) is amended by strik-
ing paragraph (9).
(3) Section 13 of the Federal Deposit Insurance
Act (12 U.S.C. 1823) is amended by striking sub-
section (k).
(4) Subsections (c)(2) and (i)(2) of section 18
of the Federal Deposit Insurance Act (12 U.S.C.
1828) are each amended—
(A) in the subparagraph (B), by inserting
‘‘and’’ after the semicolon;
(B) in subparagraph (C), by striking ‘‘;
and’’ and inserting a period; and
(C) by striking subparagraph (D).
(5) Section 18 of the Federal Deposit Insurance
Act (12 U.S.C. 1828) is amended by striking sub-
section (m).
(6) The Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.) is amended by striking 28.
(b) AMENDMENTS TO THE BANK HOLDING COMPANY
ACT OF 1956.—
236
(1) Section 2 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841) is amended by strik-
ing subsections (i) and (j).
(2) Section 4(c)(8) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1843(c)(8)) is amend-
ed by striking the sentence preceding the penul-
timate sentence.
(3) Section 4(f) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1843(f) is amended—
(A) in paragraph (2)(A)(i), by striking ‘‘or
an insured institution’’ and all that follows
through ‘‘of this subsection)’’;
(B) in paragraph (2)(A)(ii)—
(i) by striking ‘‘or a savings associa-
tion’’ where such term appears in the por-
tion of such paragraph which precedes sub-
clause (I));
(ii) by inserting ‘‘and’’ at the end of
subclause (VI);
(iii) by striking subclauses (VIII),
(IX), and (X); and
(iv) by striking ‘‘(V), and (VIII)’’,
where such term appears in the portion of
such paragraph which appears after the
237
end of subclause (VII), and inserting ‘‘and
(V)’’; and
(C) by striking paragraphs (10), (11),
(12), and (13).
(4) Section 4(i) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1843(i)) is amended—
(A) by striking paragraphs (1) and (2);
and
(B) in paragraph (3)(A), by striking ‘‘any
Federal savings association’’ and all that fol-
lows through the period at the end of such
paragraph and inserting ‘‘such association was
authorized to engage under this section as of
September 15, 1995.’’
(c) OTHER TECHNICAL AND CONFORMING AMEND-
MENTS.—
(1) Section 804(a) of the Alternative Mortgage
Transaction Parity Act of 1982 (12 U.S.C. 3803) is
amended.—
(A) in the portion of such subsection which
precedes paragraph (1)—
(i) by striking ‘‘, and other nonfeder-
ally chartered housing creditors,’’; and
(ii) by inserting ‘‘and in order to per-
mit other nonfederally chartered housing
238
creditors to make, purchase, and enforce
alternative mortgage transactions,’’ after
‘‘enforcing alternative mortgage trans-
actions,’’; and
(B) in paragraph (1), by inserting ‘‘(as
such term is defined in section 3(a) of the Fed-
eral Deposit Insurance Act)’’ after ‘‘with re-
spect to banks’’.
(2) Section 205 of the Depository Institution
Management Interlock Act (12 U.S.C. 3204) is
amended.—
(A) in the portion of paragraph (8)(A)
which precedes clause (i), by striking ‘‘diversi-
fied savings’’ and all that follows through ‘‘with
respect to’’ and inserting ‘‘depository institution
holding company which, as of September 13,
1995, and at all times thereafter, satisfies the
consolidated net worth and consolidated net
earnings requirements for a diversified savings
and loan holding company (as set forth in sec-
tion 10(1)(F) of Home Owners’ Loan Act, as
such section is in effect on such date, which
239
shall be applicable for purposes of this para-
graph without regard to the fact that a deposi-
tory institution subsidiary of such holding com-
pany has ceased to be a savings association
after September 13, 1995) with respect to’’;
and
(B) by striking paragraph (9).
(3) Section 19(b)(1)(A) of the Federal Reserve
Act (12 U.S.C. 461(b)(1)(A)) is amended—
(A) by inserting ‘‘and’’ after the semicolon
at the end of clause (v); and
(B) by striking clause (vi).
(4) Subparagraphs (A), (B), and (C) of section
10(e)(5) of the Federal Home Loan Bank Act (12
U.S.C. 1430(e)(5)) are each amended by inserting
before the period at the end ‘‘(as such section is in
effect on September 13, 1995)’’.
SEC. 508. REFERENCES TO SAVINGS ASSOCIATIONS AND
STATE BANKS IN FEDERAL LAW.
Effective January 1, 1998, any reference in any Fed-
eral banking law to—
(1) the term ‘‘savings association’’ shall be
deemed to be a reference to a bank as defined in
section 3(a) of the Federal Deposit Insurance Act;
and
240
(2) the term ‘‘State bank’’ shall be deemed to
include any depository institution included in the
definition of such term in section 3(a)(2) of such
Act.
SEC. 509. REPEAL OF HOME OWNERS’ LOAN ACT.
The Home Owners’ Loan Act (12 U.S.C. 1461 et
seq.) is hereby repealed.
SEC. 510. DEFINITIONS.
For purposes of this subtitle, the terms ‘‘appropriate
Federal banking agency’’, ‘‘bank holding company’’, ‘‘de-
pository institution’’, ‘‘Federal savings association’’, ‘‘in-
sured depository institution’’, ‘‘savings association’’, and
‘‘State bank’’ have the same meanings as in section 3 of
the Federal Deposit Insurance Act (as in effect on the
date of the enactment of this Act).
Subtitle B—Elimination of Office of The
Thrift Supervision
SEC. 511. OFFICE OF THRIFT SUPERVISION ABOLISHED.
Effective January 1, 1998, the Office of Thrift Su-
pervision and the position of Director of the Office of
Thrift Supervision are hereby abolished.
241
SEC. 512. DETERMINATION OF TRANSFERRED FUNCTIONS
AND EMPLOYEES.
(a) ALL OFFICE OF THRIFT SUPERVISION EMPLOY-
EES SHALL BE TRANSFERRED.—All employees of the Of-
fice of Thrift Supervision shall be identified for transfer
under subsection (b) to the Office of the Comptroller of
the Currency, the Federal Deposit Insurance Corporation,
or the Board of Governors of the Federal Reserve System.
(b) FUNCTIONS AND EMPLOYEES TRANSFERRED.—
(1) IN GENERAL.—The Director of the Office of
Thrift Supervision, the Comptroller of the Currency,
the Chairperson of the Federal Deposit Insurance
Corporation, and the Chairman of the Board of Gov-
ernors of the Federal Reserve System shall jointly
determine the functions or activities of the Office of
Thrift Supervision, and the number of employees of
such Office necessary to perform or support such
functions or activities, which are transferred from
the Office to the Office of the Comptroller of the
Currency, the Federal Deposit Insurance Corpora-
tion, or the Board of Governors of the Federal Re-
serve System, as the case may be.
242
(2) ALLOCATION OF EMPLOYEES.—The Comp-
troller of the Currency, the Chairperson of the Fed-
eral Deposit Insurance Corporation, and the Chair-
man of the Board of Governors of the Federal Re-
serve System shall allocate the employees of the Of-
fice of Thrift Supervision consistent with the num-
ber determined pursuant to paragraph (1) in a man-
ner which such Comptroller, Chairperson, and Chair-
man, in their sole discretion, deem equitable except
that, within work units, the agency preferences of
individual employees shall be accommodated as far
as possible.
(c) RIGHTS
OF EMPLOYEES
OF
THE OFFICE
OF
THRIFT SUPERVISION.—All employees of the Office of
Thrift Supervision who are identified for transfer under
subsection (b) shall be entitled to the following rights:
(1) Each employee so identified shall be trans-
ferred to the appropriate agency or entity for em-
ployment no later than the earlier of the end of the
60-day period beginning on the date such employees
are identified for transfer under subsection (b) or
January 1, 1998, and such transfer shall be deemed
a transfer of function for the purpose of section
3503 of title 5, United States Code.
243
(2) Each transferred employee holding a perma-
nent position shall not be involuntarily separated or
reduced in grade or compensation for 1 year after
the date of transfer, except for cause or, if the em-
ployee is a temporary employee, separated in accord-
ance with the terms of the appointment.
(3) If any agency or entity to which employees
are transferred determines, after the end of the 1-
year period beginning on the date the transfer of
functions to such agency or entity is completed, that
a reorganization of the combined work force is re-
quired, that reorganization shall be deemed a ‘‘major
reorganization’’ for purposes of affording affected
employees retirement under section 833(d)(2) or
8414(b)(1)(B) of title 5, United States Code.
(d) DISPOSITION OF AFFAIRS.—
(1) IN GENERAL.—In winding up the affairs of
the Office of Thrift Supervision, the Director of the
Office of Thrift Supervision shall consult and co-
operate with the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, and the
Board of Governors of the Federal Reserve System,
as the case may be, to facilitate the orderly transfer
of the functions to such Comptroller, Corporation,
or Board.
244
(2) CONTINUING AUTHORITY OF DIRECTOR OF
THE OFFICE OF THRIFT SUPERVISION.—Except as
provided in paragraph (1), no provision of this sub-
title shall be construed as affecting the authority
vested in the Director of the Office of Thrift Super-
vision before the date of enactment of this Act which
is necessary to carry out the duties of the position
until the date upon which the position of Director of
the Office of Thrift Supervision is abolished.
(3) CONTINUATION
OF
AGENCY
SERVICES.—
Any agency, department, or other instrumentality of
the United States, or any successor to any such
agency, department or instrumentality, which was
providing support services to the Director of the Of-
fice of Thrift Supervision on the day before the date
such position is abolished shall—
(A) continue to provide such services on a
reimbursable basis, in accordance with the
terms of the arrangement pursuant to which
such services were provided until the arrange-
ment is modified or terminated in accordance
with such terms, except that effective January
1, 1998, the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, or the
245
Board of Governors of the Federal Reserve Sys-
tem, as the case may be, shall be substituted
for the Director of the Office of Thrift Super-
vision as a party to the arrangement; and
(B) consult with the Comptroller, the Cor-
poration, or the Board to coordinate and facili-
tate a prompt and reasonable transition.
(e) TRANSFER OF PROPERTY.—Effective January 1,
1998, all property of the Office of Thrift Supervision shall
be transferred to the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, or the Board of
Governors of the Federal Reserve System, as determined
in accordance with subsections (a) and (b).
SEC. 513. SAVINGS PROVISIONS.
(a) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS
NOT AFFECTED.—No provision of this title shall be con-
strued as affecting the validity of any right, duty or obliga-
tion of the United States, the Director of the Office of
Thrift Supervision, or any person, which existed on the
day before the date upon which the position of Director
of the Office of Thrift Supervision and the Office of Thrift
Supervision are abolished.
(b) CONTINUATION OF SUITE.—No action or other
proceeding commenced by or against the Director of the
246
Office of Thrift Supervision shall abate by reason of enact-
ment of this title, except that, effective January 1, 1998,
the Comptroller of the Currency, the Federal Deposit In-
surance Corporation, or the Board of Governors of the
Federal Reserve System, as the case may be, shall be sub-
stituted as a party to any such action or proceeding.
(c) CONTINUATION OF ADMINISTRATIVE RULES.—
All orders, resolutions, determinations, regulations, inter-
pretative rules, other interpretations, guidelines, proce-
dures, supervisory and enforcement actions, and other ad-
visory material (other than any regulation implementing
or prescribed pursuant to section 3(f) of the Home Own-
ers’ Loan Act (as in effect on September 13, 1995))
which—
(1) have been issued, made, prescribed, or per-
mitted to become effective by the Office of Thrift
Supervision, and
(2) are in effect on December 31, 1997 (or be-
come effective after such date pursuant to the terms
of the order, resolution, determination, rule, other
interpretation, guideline, procedure, supervisory or
enforcement action, and other advisory material, as
in effect on such date), shall—
247
(A) continue in effect according to the
terms of such orders, resolutions, determina-
tions, regulations, interpretative rules, other in-
terpretations, guidelines, procedures, super-
visory or enforcement actions, or other advisory
material;
(B) be administered by the Comptroller of
the Currency, the Federal Deposit Insurance
Corporation, or the Board of Governors of the
Federal Reserve System; and
(C) be enforceable by or against the Comp-
troller of the Currency, the Federal Deposit In-
surance Corporation, or the Board of Governors
of the Federal Reserve System until modified,
terminated, set aside, or superseded in accord-
ance with applicable law by the Comptroller,
Corporation, or Board, by any court of com-
petent jurisdiction, or by operation of law.
(d) TREATMENT OF REFERENCES IN ADJUSTABLE
RATE MORTGAGES ISSUED BEFORE FIRREA.—
(1) REFERENCES IN PRIOR LAW.—For purposes
of section 402(e) of Financial Institutions Reform,
Recovery, and Enactment Act of 1989 (12 U.S.C.
1437 note), any reference in such section to—
248
(A) the Director of the Office of Thrift Su-
pervision shall be deemed to be a reference to
the Secretary of the Treasury; and
(B) a Savings Association Insurance Fund
member shall be deemed to be a reference to an
insured depository institution (as defined in sec-
tion 3 of the Federal Deposit Insurance Act).
(e) TREATMENT OF REFERENCES IN ADJUSTABLE
RATE
MORTGAGES
INSTRUMENTS
ISSUED
AFTER
FIRREA.—
(1) IN GENERAL.—For purposes of adjustable
rate mortgage instruments that are in effect as of
the date of enactment of this Act, any reference in
the instrument to the Director of the Office of
Thrift Supervision or Savings Association Insurance
Fund members shall be treated as a reference to the
Secretary of the Treasury or insured depository in-
stitutions (as defined in section 3 of the Federal De-
posit Insurance Act), as appropriate.
(2) SUBSTITUTION FOR INDEXES.—If any index
used to calculate the applicable interest rate on any
adjustable rate mortgage instrument is no longer
calculated and made available as a direct or indirect
result of the enactment of this title, any index—
249
(A) made available by the Secretary of the
Treasury; or
(B) determined by the Secretary of the
Treasury, pursuant to paragraph (4), to be sub-
stantially similar to the index which is no
longer calculated or made available,
may be substituted by the holder of any such adjust-
able rate mortgage instrument upon notice to the
borrower.
(3) AGENCY
ACTION
REQUIRED
TO
PROVIDE
CONTINUED AVAILABILITY OF INDEXES.—Promptly
after the enactment of this subsection, the Secretary
of the Treasury, the Chairperson of the Federal De-
posit Insurance Corporation, and the Comptroller of
the Currency shall take such action as may be nec-
essary to assure that the indexes prepared by the
Director of the Office of Thrift Supervision imme-
diately before the enactment of this subsection and
used to calculate the interest rate on adjustable rate
mortgage instruments continue to be available.
(4) REQUIREMENTS RELATING TO SUBSTITUTE
INDEXES.—If any agency can no longer make avail-
able an index pursuant to paragraph (3), an index
that is substantially similar to such index may be
substituted for such index for purposes of paragraph
250
(2) if the Secretary of the Treasury determines,
after notice and opportunity for comment, that—
(A) the new index is based upon data sub-
stantially similar to that of the original index;
and
(B) the substitution of the new index will
result in an interest rate substantially similar to
the rate in effect at the time the original index
became unavailable.
SEC, 514. COST OF FUNDS INDEXES.
(a) COST OF FUNDS INDEX DEFINED.—The term
‘‘cost of funds indexed’’ means any index that is published
by a Federal home loan bank and is based, in whole or
in part, upon the cost of funds of such bank’s members.
(b) CALCULATIONS BASED ON TYPE OF CHARTER
AND INSURANCE FUND MEMBERSHIP OF MEMBERS.— If
any cost of funds index includes data based on charter
type, insurance fund membership, or other similar charac-
teristics of members of a Federal home loan ban, such
index shall be calculated after the date of the enactment
of this Act using data only from insured depository insti-
tutions which were bank members and whose data was in-
cluded in such index on or before such date of enactment.
(c) ACQUISITION OF DATA.—
251
(1) IN GENERAL.—Each insured depository in-
stitution the data from which is required to compile
a cots of funds index in accordance with subsection
(b) shall provide to the Federal home loan bank
which maintains the index such information as may
be necessary, and in such form as may be appro-
priate, for the bank to calculate and publish the
index.
(2) ENFORCEMENT BY BANKING AGENCIES.—
Each appropriate Federal banking agency shall take
such action as may be necessary to ensure that in-
sured depository institutions which are required to
provide information to any Federal home loan bank
under paragraph (1) furnish such information on a
timely basis and in the form required by the bank.
(3) TREATMENT OF INSTITUTIONS.—Notwith-
standing any other provision of law, an insured de-
pository institution which furnishes information to a
Federal home loan bank pursuant to this section for
use in compiling a cost of funds index shall not be
deemed to control, directly, or indirectly, such index.
(d) CERTAIN DATA EXCLUDED.—Notwithstanding
subsections (b) and (c), no cost of funds index shall in-
clude any data from any insured depository institution
which results from the merger, consolidation, or other
252
combination of a member of a Federal home loan bank
with a nonmember of any such bank if—
(1) the total assets of the nonmember exceed
the total assets of the bank member at the time of
such merger, consolidation, or other combination; or
(2) in the case of a merger, consolidation, or
other merger in which a member of a Federal home
loan bank is the resulting insured depository institu-
tion, combined ration of the average amount of sin-
gle-family loan balances to average total assets of all
insured depository institutions involved in such
merger, consolidation, or other combination for the
12-months period ending on the date of such trans-
action is less than 70 percent.
(e) OTHER DEFINITIONS.—For purposes of this sec-
tion, the terms ‘‘appropriate Federal banking agency’’ and
‘‘insured depository institution’’ shall have the same
meanings as in section 3 of the Federal Deposit Insurance
Act.
SEC. 515. REFERENCES IN FEDERAL LAW TO DIRECTOR OF
THE OFFICE OF THRIFT SUPERVISION.
Effective January 1, 1998, any reference in any Fed-
eral law to the Director of the office of Thrift Supervision
or the Office of Thrift supervision shall be deemed to be
a reference to the appropriate Federal banking agency (as
253
defined in section 3(q) of the Federal Deposit insurance
Act).
SEC. 516. RECONFIGURATION OF BOARD OF DIRECTORS OF
FDIC AS A RESULT OF REMOVAL OF DIREC-
TOR OF THE OFFICE OF THRIFT SUPER-
VISION.
(a) IN GENERAL.—Section 2(a)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1812(a)(1)) is amended
to read as follows:
‘‘(1) IN
GENERAL.—The management of the
Corporation shall be vested in a Board of Directors
consisting of 5 members—
(A) 1 of whom shall be the Comptroller of
the Currency; and
(B) 4 of whom shall be appointed by the
President, and with the advice and consent of
the Senate, from among individuals who are
citizens of the United States, 1 of whom shall
have State bank supervisory experience’’.
(b) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Section 2(d)(2) of the Federal Deposit In-
surance Act (12 U.S.C. 1812(d)(2)) is amended—
(A) by striking ‘‘or the Office of Director
of the Office of Thrift Supervision’’;
(B) by striking ‘‘or such Director’’;
254
(C) by striking ‘‘or the acting Director of
the Office of Thrift Supervision, as the case
may be’’; and
(D) by striking ‘‘or Director’’.
(2) Section 2(f)(2) of the Federal Deposit In-
surance Act (12 U.S.C. 1812(f)(2)) is amended by
striking ‘‘or of the Office of Thrift Supervision’’.
(c) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) shall take effect on January 1,
1998.
Subtitle C—Merger of BIF and SAIF
SEC. 521. AMENDMENT TO ECONOMIC GROWTH AND REGU-
LATORY PAPERWORK REDUCTION ACT OF
1996.
Section 2704(c) of the Economic Growth and Regu-
latory Paperwork Reduction Act of 1996 is amended to
read as follows:
‘‘(c) EFFECTIVE
DATE.—This section and the
amendments made by this section shall become effective
on the date of the enactment of the Depository Institution
Affiliation and Thrift Charter Conversion Act.’’.
255
TITLE VI—NATIONAL MARKET FUNDING
LENDING INSTITUTIONS
SEC. 601. NATIONAL MARKET FUNDED LENDING INSTITU-
TIONS.
Chapter 1 of title LXII of the Revised Statutes of
the United States is amended by adding the following sec-
tion:
‘‘SEC. 5158. NATIONAL MARKET FUNDED LENDING INSTITU-
TIONS.
‘‘(a) NATIONAL MARKET FUNDED LENDING INSTI-
TUTIONS.—
‘‘(1) ORGANIZATION
OF
NATIONAL
MARKET
FUNDED
LENDING
INSTITUTIONS.—Any company
(as defined in section 2(b) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(b)) or any
number of natural persons, not less in any case than
five, may apply to the Comptroller of the Currency
on such forms and in accordance with such proce-
dures as the Comptroller may prescribe by regula-
tion, for permission to organize a national market
funded lending institution. Upon approval of the ap-
plication, such national market funded lending insti-
tution shall be a body corporate, chartered under the
laws of the United States by the Comptroller. All
256
national market funded lending institutions shall op-
erate pursuant to the requirements of this section at
the direction of a board of directors elected at an or-
ganizational meeting to be held as soon as prac-
ticable after issuance by the Comptroller of a charter
by such company or such natural persons for the
purpose of electing such board of directors and tak-
ing such other action necessary, pursuant to the
charter and the regulations issued by the Comptrol-
ler, to complete the corporate organization of the na-
tional market funded lending institution. Imme-
diately following their election, the board of directors
shall meet to elect officers of the national market
funded lending institution and to take such other ac-
tion, as prescribed by the Comptroller, to complete
the corporate organization of such national market
funded lending institution.
‘‘(2) UNAUTHORIZED
ORGANIZATION
PROHIB-
ITED.—No company or person may organize a na-
tional market funded lending institution, collect
money from others for such purpose, or represent it-
self, himself, or herself as authorized to do so and
no national market funded lending institution shall
257
transact any business prior to completion of its or-
ganization except as provided in this Act and in im-
plementing regulations of the Comptroller.
‘‘(3) AUTHORIZED ACTIVITIES FOR NATIONAL
MARKET-FUNDED
LENDING
INSTITUTION.—Subject
to the provisions of paragraphs (4) and (5) of this
subsection, and subsections (b) and (c) of this sec-
tion, a national market funded lending institution
may exercise, in accordance with its articles of orga-
nization and such regulations as are issued by the
Comptroller, all of the powers and privileges of a na-
tional banking association formed in accordance with
section 5133 of the Revised Statutes (12 U.S.C. 21).
‘‘(4) PROHIBITION
OF
TAKING
DEPOSITS
OR
RECEIVING FEDERAL DEPOSIT INSURANCE.—No na-
tional market funded lending institution may—
(A) become an ‘‘insured depository institu-
tion’’ within the meaning of section 3(c)(2) of
the Federal Deposit Insurance Act (12 U.S.C.
1813(c)(2)) or acquire, directly or indirectly
through a subsidiary, control of such an insured
depository institution;
(B) accept any deposits as defined in sec-
tion (3)(l)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(l)(1);
258
(C) advertise or hold itself out as having
deposits insured by the Federal Deposit Insur-
ance Corporation.
‘‘(5) PROHIBITION
ON
ACCESS
TO
DISCOUNT
WINDOW.—No national market funded lending insti-
tution may exercise discount borrowing privileges
pursuant to section 19(b)(7) of the Federal Reserve
Act.
‘‘(6) PROHIBITION ON ACCESS TO PAYMENTS
SYSTEM.—No national market funded lending insti-
tution may obtain payment or payment related serv-
ices from any Federal Reserve bank, including any
service referred to in section 11A of the Federal Re-
serve Act.
‘‘(7) CAPITAL.—The capital of national market
funded lending institution shall be maintained at all
times at such level and in such manner as may be
prescribed by the Comptroller by regulation.
‘‘(8) PROHIBITION
ON
IDENTIFICATION
AS
A
BANK.—
‘‘(A) In general.—Notwithstanding the re-
quirement of section 5134 of the Revised Stat-
utes of the United States—
259
‘‘(i) the name of a national market
lending institution may not include the
term ‘‘bank’’; and
‘‘(ii) such institution may not be iden-
tified as a bank on any sign displayed by
the institution or in any advertisement or
other publication of the institution.
‘‘(B) DEPOSITORY INSTITUTION NOT LIA-
BLE
FOR
FRAUDULENT
MISREPRESENTATION
FOR NOT REPRESENTING ITSELF AS A BANK.—
A national market lending institution shall not
be liable for any civil or criminal penalty under
any Federal or State consumer protection law,
or in any criminal or civil action, for falsely ad-
vertising the status of the institution, for mak-
ing a false statement with respect to the status
of the institution, or for any similar offense by
reason of the institution’s compliance with this
paragraph.
‘‘(9) 
IMPLEMENTING
REGULATIONS.—The
Comptroller shall promulgate such regulations as
may be necessary to implement the provisions of this
section.
‘‘(b) REGULATION AND SUPERVISION OF NATIONAL
MARKET FUNDED LENDING INSTITUTION.—
260
‘‘(1) AUTHORITY VESTED IN COMPTROLLER OF
THE CURRENCY.—Notwithstanding any other provi-
sion of law, the authority to regulate and supervise
the activities of national market funding lending in-
stitutions shall be vested exclusively in the Comptrol-
ler of the Currency.
‘‘(2) EXAMINATION.—Each national market
funded lending institution and each subsidiary there-
of shall be subject to such examinations and to such
reporting and recordkeeping requirements as the
Comptroller may prescribe. The cost of examinations
shall be assessed against and paid by such national
market funded lending institution. Examiners ap-
pointed by the Comptroller for the purposes of this
Act shall be subject to the same requirements, re-
sponsibilities, and penalties as are applicable to ex-
aminers under the Federal Reserve Act and title
LXII of the Revised Statutes and shall have, in the
exercise of functions under this Act, the same pow-
ers and privileges as are vested in such examiners
by law. If any national market funded lending insti-
tution fails to pay any assessment required under
this subsection within 60 days of such assessment,
or refuses to permit any examiner appointed by the
Comptroller to make an examination, or refuses to
261
provide any information required to be disclosed by
regulation or in the course of any examination, or
submits or publishes any false or misleading report
or information, the Comptroller may assess against
such national market funded lending institution civil
penalty of not more than $5,000 for each day any
such failure or refusal continues. And such civil pen-
alty shall be assessed by the Comptroller in a man-
ner prescribed in subparagraphs (E), (F), (G), (I)
and (J) of section 8(i)(2) of the Federal Deposit In-
surance Act, for penalties imposed by such section,
and such assessment shall also be subject to the pro-
visions of subparagraph (H) of that section and of
section 8(h) of that Act.
‘‘(3) ENFORCEMENT.—
‘‘(A) CAPITAL.—If any national market
funded lending institution fails to maintain cap-
ital at or above the minimum level prescribed
by the Comptroller’s regulations, the Comptrol-
ler may issue a directive requiring the national
market funded lending institution to submit
and adhere to a plan for increasing capital
which is acceptable to the Comptroller. Any
such directive, and such plan when approved by
262
the Comptroller, shall be enforceable as pro-
vided in this paragraph.
‘‘(B) CEASE-AND-DESIST
AUTHORITY.—If
a national market funded lending institution
subject to a capital directive issued pursuant to
subparagraph (A) fails to submit or adhere to
a plan for increasing capital which is acceptable
to the Comptroller, or if the Comptroller has
reasonable cause to believe that any national
market funded lending institution has accepted
any deposit or has taken action which has
caused it to become an ‘‘insured depository in-
stitution’’ within the meaning of section 3(c)(2)
of the Federal Deposit Insurance Act or has
represented to any person that any amount ac-
cepted by such national market funded lending
institution is an ‘‘insured deposit’’ within the
meaning of section 3(m) of the Federal Deposit
Insurance Act, the Comptroller may issue and
serve upon such national market funded lending
institution a notice of charges which shall con-
tain a statement of the facts constituting the
alleged violation or violations of this Act and
shall fix a time and a place at which a hearing
will be held to determine whether an order to
263
cease-and-desist therefrom should be issued
against the national market funded lending in-
stitution. Such hearing shall be fixed for a date
not earlier than 30 days nor later than 60 days
after service of such notice unless an earlier or
later date is set by the Comptroller at the re-
quest of the national market funded lending in-
stitution. Unless the institution so served shall
appear at the hearing, it shall be deemed to
have consented to the issuance of the cease-and-
desist order. In the event of such consent, or
if upon the record made at any such hearing
the Comptroller shall find that any violation or
violations specified in the notice of charges has
or have been established, the Comptroller may
issue an order to cease-and-desist from any
such violation or violations and, in an appro-
priate case as determined by the Comptroller in
his or her discretion, to take affirmative action
to correct the conditions resulting from any
such violation or violations. Such order shall be-
come effective at the expiration of 30 days after
service thereof upon the national market funded
lending institution (except in the case of a
cease-and-desist order issued upon consent,
264
which shall become effective at the time speci-
fied therein), and shall remain effective and en-
forceable, as provided therein except as stayed,
modified, terminated or set aside by action of
the Comptroller or reviewing court. Any hearing
provided for in this subsection and judicial re-
view of any final cease-and-desist order (other
than a cease-and-desist order issued upon con-
sent, which shall be unreviewable) shall be in
accordance with the provisions of section 8(h)
of the Federal Deposit Insurance Act.
‘‘(C) CIVIL MONEY PENALTY.—Any person
who violates, or has caused a national market
funded lending institution to violate any cease-
and-desist order issued pursuant to subpara-
graph (B) shall forfeit and pay a civil penalty
of not more than $100,000 for each day during
which such violation continues. Any such civil
penalty shall be assessed and collected by the
Comptroller in the manner provided in subpara-
graphs (E), (F), (G), (I), and (J) of section
8(i)(2) of the Federal Deposit Insurance Act,
and any such assessment shall be subject to the
provisions of subparagraph (H) of that section
and of section 8(h) of that Act.
265
‘‘(D) 
CHARTER
REVOCATION.—If 
the
Comptroller determines that any national mar-
ket funded lending institution has violated any
cease-and-desist order which was issued under
subparagraph (B) of this paragraph and which
has become final, the Comptroller may, in addi-
tion to or in lieu of any other remedies provided
by law, issue an order revoking the charter of
such national market funded lending institu-
tion. Any order revoking the charter of a na-
tional market funded lending institution shall
be effected within 20 days of service upon such
national market funded lending institution un-
less stayed, modified, terminated or set aside by
a court in proceedings authorized in this sub-
paragraph. The national market funded lending
institution shall give notice of such revocation
order to each of its depositors in such manner
and at such times as the Comptroller may deem
necessary and may order for the protection of
the depositors. Any national market funded
lending institution served with an order revok-
ing its charter, may, within 10 days of the date
of service of such order, apply to the United