I
106TH CONGRESS
1ST SESSION
H. R. 1585
To streamline the regulation of depository institutions, to safeguard confiden-
tial banking and credit union supervisory information, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 27, 1999
Mrs. ROUKEMA introduced the following bill; which was referred to the
Committee on Banking and Financial Services
A BILL
To streamline the regulation of depository institutions, to
safeguard confidential banking and credit union super-
visory information, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Depository Institution Regulatory Streamlining Act of
1999’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—IMPROVING MONETARY POLICY
Sec. 101. Payment of interest on reserve balances at Federal reserve banks.
Sec. 102. Amendments relating to savings and demand deposit accounts at de-
pository institutions.
Sec. 103. Study of reserve ratios for deposit insurance funds.
TITLE II—IMPROVING DEPOSITORY INSTITUTION MANAGEMENT
PRACTICES
Subtitle A—National Banks
Sec. 201. Authority to allow more than 25 directors.
Sec. 202. Loans on or purchases by institutions of their own stock.
Sec. 203. Expedited procedures for certain reorganizations.
Subtitle B—Savings Associations
Sec. 211. Noncontrolling investments by savings association holding companies.
Sec. 212. Streamlining thrift service company investment requirements.
Sec. 213. Repeal of dividend notice requirement.
Sec. 214. Updating of authority for community development investments.
Subtitle C—Other Institutions
Sec. 221. Prohibition on accrual to insiders of economic benefits from credit
union conversions.
Sec. 222. Amendments relating to limited purpose banks.
Sec. 223. Business purpose credit extensions.
TITLE 
III—STREAMLINING 
FEDERAL 
BANKING 
AGENCY 
RE-
QUIREMENTS AND ELIMINATION OF UNNECESSARY OR OUT-
DATED REQUIREMENTS
Sec. 301. ‘‘Plain English’’ requirement for Federal banking agency rules.
Sec. 302. Call report simplification.
Sec. 303. Purchased mortgage service rights.
Sec. 304. Judicial review of receivership appointment.
Sec. 305. Elimination of outdated statutory minimum capital requirements.
Sec. 306. Elimination of individual branch capital requirements.
Sec. 307. Amendment to shareholder notice provisions relating to consolidations
and mergers.
Sec. 308. Payment of interest in receiverships with surplus funds.
Sec. 309. Repeal of deposit broker notification and recordkeeping requirement.
Sec. 310. Allowances for certain extensions of credit to executive officers.
Sec. 311. Federal Reserve Act lending limits.
Sec. 312. Repeal of Bank Holding Company Act provision limiting savings
bank life insurance.
Sec. 313. Amendment to section 5137 of the Revised Statutes of the United
States.
TITLE IV—DISCLOSURE SIMPLIFICATION
Sec. 401. Alternative disclosure for variable rate, open-ended home secured
credit.
TITLE V—BANK EXAMINATION REPORT PRIVILEGE ACT
Sec. 501. Amendment to the Federal Deposit Insurance Act.
Sec. 502. Amendment to Federal Credit Union Act.
TITLE VI—TECHNICAL CORRECTIONS
Sec. 601. Technical correction relating to deposit insurance funds.
Sec. 602. Rules for continuation of deposit insurance for member banks con-
verting charters.
Sec. 603. Waiver of citizenship requirement for national bank directors.
Sec. 604. Technical amendment to prohibition on Comptroller interests in na-
tional banks.
Sec. 605. Applicability of limitation to prior investments.
TITLE VII—SPECIAL RESERVE FUNDS
Sec. 701. Abolition of special reserve funds.
TITLE I—IMPROVING MONETARY
POLICY
SEC. 101. PAYMENT OF INTEREST ON RESERVE BALANCES
AT FEDERAL RESERVE BANKS.
(a) IN GENERAL.—Section 19(b) of the Federal Re-
serve Act (12 U.S.C. 461(b)) is amended by adding at
the end the following new paragraph:
‘‘(12) EARNINGS ON RESERVES.—
‘‘(A) IN GENERAL.—Balances maintained
at a Federal reserve bank by or on behalf of a
depository institution may receive earnings to
be paid by the Federal reserve bank at least
once each calendar quarter at a rate or rates
not to exceed the general level of short-term in-
terest rates.
‘‘(B) REGULATIONS
RELATING
TO
PAY-
MENTS AND DISTRIBUTION.—The Board may
prescribe regulations concerning—
‘‘(i) the payment of earnings in ac-
cordance with this paragraph;
‘‘(ii) the distribution of such earnings
to the depository institutions which main-
tain balances at such banks or on whose
behalf such balances are maintained; and
‘‘(iii) the responsibilities of depository
institutions, Federal home loan banks, and
the National Credit Union Administration
Central Liquidity Facility with respect to
the crediting and distribution of earnings
attributable to balances maintained, in ac-
cordance with subsection (c)(1)(B), in a
Federal reserve bank by any such entity on
behalf of depository institutions which are
not member banks.’’.
(b) AUTHORIZATION FOR PASS THROUGH RESERVES
FOR MEMBER BANKS.—Section 19(c)(1)(B) of the Fed-
eral Reserve Act (12 U.S.C. 461(c)(1)(B)) is amended by
striking ‘‘which is not a member bank’’.
(c) TECHNICAL AND CONFORMING AMENDMENTS.—
Section 19 of the Federal Reserve Act (12 U.S.C. 461)
is amended—
(1) in subsection (b)(4) (12 U.S.C. 461(b)(4)),
by striking subparagraph (C) and redesignating sub-
paragraphs (D) and (E) as subparagraphs (C) and
(D), respectively; and
(2) 
in 
subsection 
(c)(1)(A) 
(12 
U.S.C.
461(c)(1)(A)), by striking ‘‘subsection (b)(4)(C)’’
and inserting ‘‘subsection (b)’’.
SEC. 102. AMENDMENTS RELATING TO SAVINGS AND DE-
MAND DEPOSIT ACCOUNTS AT DEPOSITORY
INSTITUTIONS.
(a) IMMEDIATE INCREASE
IN
THE NUMBER
OF
INTERACCOUNT TRANSFERS ALLOWED EACH MONTH.—
Section 2 of Public Law 93–100 (12 U.S.C. 1832) is
amended—
(1) by redesignating subsections (b) and (c) as
subsections (c) and (d), respectively; and
(2) by inserting after subsection (a) the fol-
lowing:
‘‘(b) INTERACCOUNT TRANSFERS.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of law, any depository institution may per-
mit the owner of any deposit or account on which in-
terest or dividends are paid to make up to 24 trans-
fers per month, for any purpose, to another account
of the owner in the same institution.
‘‘(2) RULE
OF
CONSTRUCTION.—Nothing in
this subsection shall be construed to prevent an ac-
count offered pursuant to this subsection from being
considered a transaction account (as defined in sec-
tion 19(b) of the Federal Reserve Act (12 U.S.C.
461(b)) for purposes of such Act.’’.
(b) NOW ACCOUNTS AUTHORIZED FOR ALL BUSI-
NESSES AFTER 2004.—
(1) IN GENERAL.—Effective on the date pro-
vided in paragraph (3), section 2 of Public Law 93–
100 (12 U.S.C. 1832(a)(2)) (as amended by sub-
section (a) of this section) is amended to read as fol-
lows:
‘‘SEC. 2. WITHDRAWALS BY NEGOTIABLE OR TRANSFER-
ABLE INSTRUMENTS FOR TRANSFERS TO
THIRD PARTIES.
‘‘Notwithstanding any other provision of law, any de-
pository institution (as defined in section 3 of the Federal
Deposit Insurance Act) may permit the owner of any de-
posit or account to make withdrawals from such deposit
or account by negotiable or transferable instruments for
the purpose of making payments to third parties.’’.
(2) REPEAL OF PROHIBITION ON PAYMENT OF
INTEREST ON DEMAND DEPOSITS.—
(A) FEDERAL RESERVE ACT.—Section 19
of the Federal Reserve Act (12 U.S.C. 371a) is
amended by striking subsection (i).
(B) HOME OWNERS’ LOAN ACT.—The 1st
sentence of section 5(b)(1)(B) of the Home
Owners’ Loan Act (12 U.S.C. 1464(b)(1)(B)) is
amended by striking ‘‘savings association may
not—’’ and all that follows through ‘‘(ii) permit
any’’ and inserting ‘‘savings association may
not permit any’’.
(C) FEDERAL DEPOSIT INSURANCE ACT.—
Section 18 of the Federal Deposit Insurance
Act (12 U.S.C. 1828) is amended by striking
subsection (g).
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect on October 1,
2004.
SEC. 103. STUDY OF RESERVE RATIOS FOR DEPOSIT INSUR-
ANCE FUNDS.
(a) REVIEW AND RECOMMENDATION.—The Board of
Directors of the Federal Deposit Insurance Corporation,
in consultation with the Board of Governors of the Federal
Reserve System and the Secretary of the Treasury, shall—
(1) conduct a study of the adequacy of the de-
posit insurance funds, taking into account—
(A) expected operating expenses, case reso-
lution expenditures and income, and the effect
of assessments on members’ earnings and cap-
ital;
(B) historical failure rates and loss experi-
ence;
(C) recent changes in the law, including
statutory changes requiring prompt corrective
action, least-cost resolutions, and risk-based as-
sessment systems;
(D) the income of such funds from invest-
ments;
(E) the potential implication of the Year
2000 computer problem (as defined in section
2(b)(5) of the Examination Parity and Year
2000 Readiness for Financial Institutions Act)
and industry consolidation; and
(F) the historical experience of the Cor-
poration in providing rebates or credits from
any deposit insurance fund; and
(2) recommend to the Congress—
(A) an appropriate range of reserve ratios
between the net worth of any deposit insurance
fund and the aggregate amount of insured de-
posits insured by such fund; and
(B) an appropriate mechanism for rebating
or providing credit from any deposit insurance
fund when the balance of the fund exceeds any
applicable reserve ratio.
(b) REPORT REQUIRED.—The Board of Directors of
the Federal Deposit Insurance Corporation, in consulta-
tion with the Board of Governors of the Federal Reserve
System and the Secretary of the Treasury, shall submit
a report to the Congress before June 30, 2000,
containing—
(1) the findings and conclusions of the study re-
quired under subsection (a)(1); and
(2) the recommendations required under sub-
section (a)(2).
TITLE II—IMPROVING DEPOSI-
TORY INSTITUTION MANAGE-
MENT PRACTICES
Subtitle A—National Banks
SEC. 201. AUTHORITY TO ALLOW MORE THAN 25 DIREC-
TORS.
Section 31 of the Banking Act of 1933 (12 U.S.C.
71a) is amended in the first sentence, by inserting before
the period ‘‘, except that the Comptroller of the Currency
may, by regulation or order, exempt a national banking
association from the 25-member limit established by this
section’’.
rity of the shares of its own capital stock if it ac-
quires the stock to prevent loss upon a debt con-
tracted for in good faith.’’.
SEC. 203. EXPEDITED PROCEDURES FOR CERTAIN REORGA-
NIZATIONS.
The National Bank Consolidation and Merger Act
(12 U.S.C. 215 et seq.) is amended—
(1) by redesignating section 5 as section 7; and
(2) by inserting after section 4 the following
new section:
‘‘SEC. 5. EXPEDITED PROCEDURES FOR CERTAIN REORGA-
NIZATIONS.
‘‘(a) IN GENERAL.—A national bank may, with the
approval of the Comptroller, pursuant to regulations pre-
scribed by the Comptroller, and upon the affirmative vote
of the shareholders of such bank owning at least two-
thirds of the outstanding capital stock of such bank, reor-
ganize so as to become a subsidiary of a bank holding com-
pany or a company that will, upon consummation of such
reorganization, become a bank holding company.
‘‘(b) REORGANIZATION PLAN.—A reorganization au-
thorized under subsection (a) shall be carried out in ac-
cordance with a reorganization plan that—
‘‘(1) specifies the manner in which the reorga-
nization shall be carried out;
‘‘(2) is approved by a majority of the entire
board of directors of the bank;
‘‘(3) specifies—
‘‘(A) the amount of cash or securities of
the bank holding company, or both, or other
consideration, to be paid to the shareholders of
the reorganizing bank in exchange for their
shares of stock of the bank;
‘‘(B) the date as of which the rights of
each shareholder to participate in such ex-
change will be determined; and
‘‘(C) the manner in which the exchange
will be carried out; and
‘‘(4) is submitted to the shareholders of the re-
organizing bank at a meeting to be held on the call
of the directors in accordance with the procedures
prescribed in connection with a merger of a national
bank under section 3.
‘‘(c) APPLICABILITY OF OTHER CRITERIA.—In con-
sidering a reorganization plan under this section, the
Comptroller shall—
‘‘(1) require the national bank to provide notice
to the public in accordance with section 18(c)(3) of
the Federal Deposit Insurance Act; and
‘‘(2) apply the same standards and the same
criteria as are applicable to a transaction under sec-
tion 18(c) of the Federal Deposit Insurance Act,
other than the requirements of paragraphs (4) and
(6) of such section.
‘‘(d) RIGHTS OF DISSENTING SHAREHOLDERS.—If,
pursuant to this section, a reorganization plan has been
approved by the shareholders and the Comptroller, any
shareholder of the national bank who has voted against
the reorganization at the meeting referred to in subsection
(b)(4), or has given notice in writing at or before that
meeting to the presiding officer that the shareholder dis-
sents from the reorganization plan, shall be entitled to re-
ceive the value of the shares of the shareholder, as pro-
vided by section 3 for the merger of a national bank.
‘‘(e) EFFECT OF REORGANIZATION.—The corporate
existence of a national bank that reorganizes in accord-
ance with this section shall not be deemed to have been
affected in any way by reason of such reorganization.
‘‘(f) APPROVAL UNDER THE BANK HOLDING COM-
PANY ACT OF 1956.—Notwithstanding the preceding pro-
visions of this section, it shall be unlawful for any action
to be taken that causes any company to become a bank
holding company or any bank to become a subsidiary of
a bank holding company, except with the prior approval
of the Board of Governors of the Federal Reserve System
pursuant to section 3 of the Bank Holding Company Act
of 1956 (12 U.S.C. 1842).’’.
Subtitle B—Savings Associations
SEC. 211. NONCONTROLLING INVESTMENTS BY SAVINGS
ASSOCIATION HOLDING COMPANIES.
Section 10(e)(1)(A)(iii) of the Home Owners’ Loan
Act (12 U.S.C. 1467a(e)(1)(A)(iii) is amended—
(1) by inserting ‘‘, except with the prior written
approval of the Director,’’ after ‘‘or to retain’’;
(2) by striking ‘‘subsidiary, or in’’ and inserting
‘‘subsidiary. In’’; and
(3) by striking ‘‘to so acquire or retain’’ and in-
serting ‘‘it shall be unlawful, and the Director may
not authorize such a company, to acquire or retain’’.
SEC. 212. STREAMLINING SAVINGS ASSOCIATION SERVICE
COMPANY INVESTMENT REQUIREMENTS.
Section 5(c)(4)(B) of the Home Owners’ Loan Act
(12 U.S.C. 1464(c)(4)(B)) is amended—
(1) in the subparagraph heading, by striking
‘‘CORPORATIONS’’ and inserting ‘‘COMPANIES’’; and
(2) in the first sentence, by striking ‘‘corpora-
tion organized’’ and all that follows through ‘‘such
State.’’ and inserting ‘‘company organized under the
laws of any State, if such company’s entire capital
stock is available for purchase only by savings asso-
ciations. For purposes of this subparagraph, the
term ‘company’ includes any corporation and any
limited liability company (as defined in section
1(b)(7) of the Bank Service Company Act).’’.
SEC. 213. REPEAL OF DIVIDEND NOTICE REQUIREMENT.
Section 10(f) of the Home Owners’ Loan Act (12
U.S.C. 1467a(f)) is amended to read as follows:
‘‘(f) [Repealed].’’.
SEC. 214. UPDATING OF AUTHORITY FOR COMMUNITY DE-
VELOPMENT INVESTMENTS.
Section 5(c) of the Home Owners’ Loan Act (12
U.S.C. 1464(c)) is amended—
(1) in paragraph (3), by striking subparagraph
(A) and redesignating subparagraphs (B) and (C) as
subparagraphs (A) and (B), respectively; and
(2) by adding at the end the following new
paragraph:
‘‘(7) 
COMMUNITY
DEVELOPMENT
INVEST-
MENTS.—
‘‘(A) IN
GENERAL.—Investments in real
property and obligations secured by liens on
real property for the primary purpose of pro-
moting the public welfare, including the welfare
of low- and moderate-income communities or
families (including the provision of housing,
services, or jobs), are permitted, subject to sub-
paragraph (B).
‘‘(B) 
LIMITATIONS.—The 
aggregate
amount of investments of a savings association
under subparagraph (A) shall not exceed the
sum of 5 percent of the savings association’s
capital stock actually paid in and unimpaired
and 5 percent of the savings association’s
unimpaired surplus fund, unless the Director
determines by order that a higher amount will
pose no significant risk to the affected deposit
insurance fund, and that the savings association
is adequately capitalized, in which case the ag-
gregate amount of such investments shall not
exceed an amount equal to the sum of 10 per-
cent of the savings association’s capital stock
actually paid in and unimpaired and 10 percent
of the savings association’s unimpaired surplus
fund.’’.
Subtitle C—Other Institutions
SEC. 221. PROHIBITION ON ACCRUAL TO INSIDERS OF ECO-
NOMIC BENEFITS FROM CREDIT UNION CON-
VERSIONS.
Section 18 of the Federal Deposit Insurance Act (12
U.S.C. 1828) is amended by adding at the end the fol-
lowing new subsection:
‘‘(t) PROHIBITION ON ECONOMIC BENEFIT FROM
CONVERSION FOR CREDIT UNION OFFICERS, DIRECTORS,
AND COMMITTEE MEMBERS.—
‘‘(1) IN GENERAL.—An individual who is or, at
any time during the 5-year period preceding any
conversion described in paragraph (2), was a direc-
tor, committee member, or senior management offi-
cial of an insured credit union described in subpara-
graph (A) or (B) of such paragraph (in connection
with such conversion) may not receive any economic
benefit as a result of the conversion with regard to
the shares or interests of such director, member, or
officer in the former insured credit union or in any
resulting insured depository institution.
‘‘(2) COVERED
CONVERSIONS.—The following
conversions are described in this paragraph for pur-
poses of paragraph (1):
‘‘(A) The conversion of an insured credit
union into an insured depository institution.
‘‘(B) The conversion from the mutual form
to the stock form of an insured depository insti-
tution which resulted from a prior conversion of
an insured credit union into such insured de-
pository institution.
‘‘(3) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply:
‘‘(A) INSURED CREDIT UNION.—The term
‘insured credit union’ has the meaning given to
such term in section 101(7) of the Federal
Credit Union Act.
‘‘(B) SENIOR
MANAGEMENT
OFFICIAL.—
The term ‘senior management official’ means a
chief executive officer, an assistant chief execu-
tive officer, a chief financial officer, and any
other senior executive officer (as defined by the
appropriate Federal banking agency pursuant
to section 32(f)).’’.
SEC. 222. AMENDMENTS RELATING TO LIMITED PURPOSE
BANKS.
Section 4(f) of the Bank Holding Company Act of
1956 (12 U.S.C. 1843(f)) is amended—
(1) in paragraph (2)(A)(ii)—
(A) by striking ‘‘and’’ at the end of sub-
clause (IX);
(B) by inserting ‘‘and’’ after the semicolon
at the end of subclause (X); and
(C) by inserting after subclause (X) the
following new subclause:
‘‘(XI) assets that are derived
from, or are incidental to, activities in
which institutions described in section
2(c)(2)(F) are permitted to engage,’’;
(2) in paragraph (2)—
(A) by striking ‘‘Paragraph (1) shall cease
to apply to any company described in such
paragraph if—’’ and inserting ‘‘A company de-
scribed in paragraph (1) shall no longer qualify
for the exemption provided under such para-
graph if—’’; and
(B) by striking subparagraph (B) and in-
serting the following new subparagraphs:
‘‘(B) any bank subsidiary of such company
engages in any activity in which the bank was
not lawfully engaged as of March 5, 1987, un-
less the bank is well managed and well capital-
ized;
‘‘(C) any bank subsidiary of such company
both—
‘‘(i) accepts demand deposits or de-
posits that the depositor may withdraw by
check or similar means for payment to
third parties; and
‘‘(ii) engages in the business of mak-
ing commercial loans; or
‘‘(D) after the date of the enactment of the
Competitive Equality Amendments of 1987, any
bank subsidiary of such company permits any
overdraft (including any intraday overdraft), or
incurs any such overdraft in such bank’s ac-
count at a Federal reserve bank, on behalf of
an affiliate, other than an overdraft described
in paragraph (3).’’; and
(3) by striking paragraphs (3) and (4) and in-
serting the following new paragraphs:
‘‘(3) PERMISSIBLE OVERDRAFTS DESCRIBED.—
For purposes of paragraph (2)(D), an overdraft is
described in this paragraph if—
‘‘(A) such overdraft results from an inad-
vertent computer or accounting error that is be-
yond the control of both the bank and the affil-
iate; or
‘‘(B) such overdraft—
‘‘(i) is permitted or incurred on behalf
of an affiliate which is monitored by, re-
ports to, and is recognized as a primary
dealer by the Federal Reserve Bank of
New York; and
‘‘(ii) is fully secured, as required by
the Board, by bonds, notes, or other obli-
gations which are direct obligations of the
United States or on which the principal
and interest are fully guaranteed by the
United States or by securities and obliga-
tions eligible for settlement on the Federal
Reserve book entry system.
‘‘(4) DIVESTITURE IN CASE OF LOSS OF EX-
EMPTION.—If any company described in paragraph
(1) fails to continue to qualify for the exemption
provided under such paragraph by operation of para-
graph (2), the company shall immediately notify the
Board that the company has failed to continue to
qualify for such exemption, and the company shall
divest control of each bank it controls before the end
of the 180-day period beginning on the date that the
company receives notice from the Board that the
company has failed to continue to qualify for such
exemption, unless before the end of such 180-day pe-
riod, the company has—
‘‘(A) either—
‘‘(i) corrected the condition or ceased
the activity that caused the company to
fail to continue to qualify for the exemp-
tion; or
‘‘(ii) received approval from the Board
of a plan to correct the condition in a
timely manner (which shall not exceed 1
year); and
‘‘(B) implemented procedures that are rea-
sonably adapted to avoid the reoccurrence of
such condition or activity.’’.
SEC. 223. BUSINESS PURPOSE CREDIT EXTENSIONS.
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) BUSINESS PURPOSE CREDIT EXTENSIONS.—
‘‘(1) IN GENERAL.—An institution referred to
in section 2(c)(2)(F) or 4(f)(3) which extends credit
through credit card accounts for qualified business
purposes shall not be treated as engaging in the
business of making commercial loans by reason of
such extensions of credit.