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and all that follows through ‘‘with respect to’’ and in-
serting ‘‘company which is, or has filed an applica-
tion to become, a depository institution holding com-
pany and which satisfies the consolidated net worth
and consolidated net earnings requirements for a di-
versified savings and loan holding company (as set
forth in section 10(1)(F) of the Home Owners’ Loan
Act, as such section is in effect and interpreted on
such date, which shall be applicable for purposes of
this paragraph without regard to the fact that a de-
pository institution subsidiary of such holding com-
pany has ceased to be a savings association after Jan-
uary 1, 1997) with respect to’’; and
(2) by striking paragraph (9).
(c) AMENDMENTS TO SECTION 207.—Section 207 of
the Depository Institution Management Interlocks Act (12
U.S.C. 3206) is amended—
(1) by striking paragraph (4); and
(2) by redesignating paragraphs (5) and (6) as
paragraphs (4) and (5), respectively.
(d) AMENDMENT TO SECTION 209.—Section 209 of the
Depository Institution Management Interlocks Act (12
U.S.C. 3207) is amended—
(1) by inserting ‘‘and’’ after the comma at the
end of paragraph (3);
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(2) by striking paragraph (4); and
(3) by redesignating paragraph (5) as para-
graph (4).
SEC. 349. AMENDMENT TO THE ECONOMIC GROWTH AND
REGULATORY PAPERWORK REDUCTION ACT
OF 1996.
Section 2227 of the Economic Growth and Regulatory
Paperwork Reduction Act of 1996 (Public Law 104–208)
is amended by striking ‘‘the Director of the Office of Thrift
Supervision,’’.
SEC. 350. AMENDMENT TO THE EMERGENCY HOME FI-
NANCE ACT OF 1970.
Section 305(b) of the Emergency Home Finance Act
of 1970 (12 U.S.C. 1454(b)) is amended by striking ‘‘any
Federal savings and loan association,’’.
SEC. 351. AMENDMENTS TO THE EXPEDITED FUNDS AVAIL-
ABILITY ACT.
Section 610(a) of the Expedited Funds Availability
Act (12 U.S.C. 4009(a)) is amended—
(1) by inserting ‘‘and’’ after the semicolon at the
end of paragraph (1)(C);
(2) by striking paragraph (2); and
(3) by redesignating paragraph (3) as para-
graph (2).
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SEC. 352. AMENDMENTS TO THE FEDERAL CREDIT UNION
ACT.
(a) AMENDMENT TO SECTION 107.—Section 107(7)(D)
of the Federal Credit Union Act (12 U.S.C. 1757(7)(D))
is amended by striking ‘‘the Federal Savings and Loan In-
surance Corporation or’’.
(b) 
AMENDMENT
TO
SECTION
206.—Section
206(g)(7)(A)(ii) of the Federal Credit Union Act (12 U.S.C.
1786(g)(7)(A)(ii)) is amended by striking ‘‘, or as a savings
association under section 8(b)(8) of such Act’’.
SEC. 353. AMENDMENTS TO THE FEDERAL FINANCIAL IN-
STITUTIONS EXAMINATION COUNCIL ACT OF
1978.
(a) AMENDMENT
TO
SECTION
1003(1).—Section
1003(1) of the Federal Financial Institutions Examination
Council Act of 1978 (12 U.S.C. 3302(1)) is amended by
striking ‘‘the Office of Thrift Supervision,’’.
(b) AMENDMENT TO SECTION 1004.—Section 1004(a)
of the Federal Financial Institutions Examination Council
Act of 1978 (12 U.S.C. 3303(a)) is amended—
(1) by inserting ‘‘and’’ after the comma at the
end of paragraph (3);
(2) by striking paragraph (4); and
(3) by redesignating paragraph (5) as para-
graph (4).
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SEC. 354. AMENDMENTS TO THE FINANCIAL INSTITUTIONS
REFORM, 
RECOVERY, 
AND 
ENFORCEMENT
ACT OF 1989.
(a) AMENDMENT TO SECTION 1121.—Section 1121(6)
of the Financial Institutions Reform, Recovery, and En-
forcement Act of 1989 (12 U.S.C. 3350(6)) is amended by
striking ‘‘the Office of Thrift Supervision,’’.
(b) AMENDMENT TO SECTION 1206.—Section 1206 of
the Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989 (12 U.S.C. 1833b) is amended by striking
‘‘and the Office of Thrift Supervision,’’ and inserting ‘‘and’’
before ‘‘the Farm Credit Administration’’.
(c) AMENDMENT TO SECTION 1216.—Section 1216 of
the Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989 (12 U.S.C. 1833e) is amended—
(1) in subsection (a), by striking paragraph (2)
and redesignating paragraphs (3) through (6) as
paragraphs (2) through (5), respectively; and
(2) in subsection (c), by striking ‘‘the Director of
the Office of Thrift Supervision,’’.
SEC. 355. AMENDMENTS TO THE HOME MORTGAGE DISCLO-
SURE ACT OF 1975.
(a) AMENDMENTS TO SECTION 304.—Section 304(h)
of the Home Mortgage Disclosure Act of 1975 (12 U.S.C.
2803(h)) is amended—
(1) by striking paragraph (2);
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(2) in paragraph (5), by striking ‘‘(4)’’ and in-
serting ‘‘(3)’’; and
(3) by redesignating paragraphs (3) through (5)
as paragraphs (2) through (4), respectively.
(b) AMENDMENTS TO SECTION 305.—Section 305(b) of
the Home Mortgage Disclosure Act of 1975 (12 U.S.C.
2804(b)) is amended—
(1) by striking paragraph (2); and
(2) by redesignating paragraphs (3) and (4) as
paragraphs (2) and (3), respectively.
(c) AMENDMENTS TO SECTION 306.—Section 306(b) of
the Home Mortgage Disclosure Act of 1975 (12 U.S.C.
2805(b)) is amended by striking ‘‘shall be enforced under—
’’ and all that follows through ‘‘Federal Deposit Insurance
Corporation’’ and inserting ‘‘under section 8 of the Federal
Deposit Insurance Act (12 U.S.C. 1818) in the case of na-
tional banks, by the Comptroller of the Currency’’.
SEC. 356. AMENDMENTS TO THE HOUSING AND COMMUNITY
DEVELOPMENT ACT OF 1992.
(a) AMENDMENT TO SECTION 1315.—Section 1315(b)
of the Housing and Community Development Act of 1992
(12 U.S.C. 4515(b)) is amended by striking ‘‘, and the Of-
fice of Thrift Supervision’’ and inserting ‘‘and’’ before ‘‘the
Federal Deposit Insurance Corporation’’.
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(b) AMENDMENT
TO
SECTION
1317(c).—Section
1317(c) of the Housing and Community Development Act
of 1992 (12 U.S.C. 4517(c)) is amended by striking ‘‘, or
the Director of the Office of Thrift Supervision’’ and insert-
ing ‘‘or’’ before ‘‘the Federal Deposit Insurance Corpora-
tion’’.
SEC. 357. AMENDMENT TO THE INTERNATIONAL BANKING
ACT OF 1978.
Section 15 of the International Banking Act of 1978
(12 U.S.C. 3109) is amended by striking ‘‘Federal Deposit
Insurance Corporation, and Director of the Office of Thrift
Supervision’’ each place that it appears and inserting ‘‘and
Federal Deposit Insurance Corporation’’.
SEC. 358. AMENDMENTS TO THE NATIONAL HOUSING ACT.
(a) AMENDMENTS TO SECTION 203.—The 1st of the 2
subsections designated as subsection (s) of section 203 of the
National Housing Act (12 U.S.C. 1709(s)) is amended—
(1) by inserting ‘‘and’’ after the semicolon at the
end of paragraph (6);
(2) in paragraph (7)—
(A) by inserting ‘‘(as defined in section 3 of
the Federal Deposit Insurance Act)’’ after ‘‘State
bank’’; and
(B) striking ‘‘; and’’ and inserting a period;
and
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(3) by striking paragraph (8).
(b) AMENDMENT TO SECTION 502.—Section 502 of the
National Housing Act (12 U.S.C. 1701c(c)) is amended by
striking ‘‘and the Director of the Office of Thrift Super-
vision, respectively’’.
SEC. 359. AMENDMENT TO PUBLIC LAW 93–495.
Section 202(a)(12) of Public Law 93–495 (12 U.S.C.
2402(a)(12)) is amended by striking ‘‘thrift, or other busi-
ness entities, including one representative each of commer-
cial banks, mutual savings banks, savings and loan associa-
tions,’’ and inserting ‘‘or other business entities, including
3 representatives from different types of insured depository
institutions (as defined in section 3 of the Federal Deposit
Insurance Act) and 1 representative each of’’.
SEC. 360. AMENDMENT TO THE REAL ESTATE SETTLEMENT
PROCEDURES ACT OF 1974.
The 1st sentence of section 4(a) of the Real Estate Set-
tlement Procedures Act of 1974 (12 U.S.C. 2603(a)) is
amended—
(1) by striking the comma after ‘‘Affairs’’;
(2) by inserting ‘‘and’’ before ‘‘the Federal De-
posit Insurance Corporation’’; and
(3) by striking ‘‘, and the Director of the Office
of Thrift Supervision’’.
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SEC. 361. AMENDMENT TO THE REVISED STATUTES OF THE
UNITED STATES.
Section 324 of the Revised Statutes of the United
States (12 U.S.C. 1) is amended by striking ‘‘The Comptrol-
ler of the Currency shall have the same authority over mat-
ters within the jurisdiction of the Comptroller as the Direc-
tor of the Office of Thrift Supervision has over matters
within the Director’s jurisdiction under section 3(b)(3) of
the Home Owners’ Loan Act’’ and inserting ‘‘The Secretary
of the Treasury may not intervene in any matter or pro-
ceeding before the Comptroller of the Currency (including
agency enforcement actions) unless otherwise specifically
provided by law’’.
SEC. 362. AMENDMENTS TO THE RIEGLE COMMUNITY DE-
VELOPMENT 
AND 
REGULATORY 
IMPROVE-
MENT ACT OF 1994.
(a) AMENDMENT TO SECTION 307.—Section 307(a) of
the Riegle Community Development and Regulatory Im-
provement Act of 1994 (12 U.S.C. 4805(a)) is amended by
striking ‘‘savings association financial reports,’’.
(b) AMENDMENT TO SECTION 117.—Section 117(e) of
the Riegle Community Development and Regulatory Im-
provement Act of 1994 (12 U.S.C. 4716(e)) is amended by
striking ‘‘the Director of the Office of Thrift Supervision,’’.
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SEC. 363. AMENDMENTS TO THE RIGHT TO FINANCIAL PRI-
VACY ACT OF 1978.
Section 1101 of the Right to Financial Privacy Act
of 1978 (12 U.S.C. 3401) is amended—
(1) in paragraph (6)—
(A) by inserting ‘‘and’’ after the semicolon
at the end of subparagraph (A), ;
(B) by striking ‘‘; and’’ at the end of sub-
paragraph (B) and inserting a period; and
(C) by striking subparagraph (C); and
(2) in paragraph (7)—
(A) by striking subparagraph (B); and
(B) by redesignating subparagraphs (C)
through (H) as subparagraphs (B) through (G),
respectively.
SEC. 364. AMENDMENTS TO THE TRUTH IN SAVINGS ACT.
Section 270(a)(1) of the Truth in Savings Act (12
U.S.C. 4309(a)(1)) is amended—
(1) by inserting ‘‘and’’ after the semicolon at the
end of subparagraph (A);
(2) in subparagraph (B)—
(A) by striking ‘‘or (iii)’’ and inserting
‘‘(iii) or (v)’’; and
(B) by striking ‘‘; and’’ and inserting a pe-
riod; and
(3) by striking subparagraph (C).
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SEC. 365. EFFECTIVE DATE.
This subtitle shall become effective 2 years after the
date of enactment of this Act.
Subtitle 
E—Technical 
and 
Con-
forming Amendments to Other
Statutes
SEC. 371. AMENDMENTS TO THE BALANCED BUDGET AND
EMERGENCY DEFICIT CONTROL ACT OF 1985.
(a) 
AMENDMENT
TO
SECTION
250.—Section
250(c)(19) of the Balanced Budget and Emergency Deficit
Control Act of 1985 (2 U.S.C. 900(c)(19)) is amended by
striking ‘‘the Office of Thrift Supervision,’’.
(b) AMENDMENT TO SECTION 256.—Section 256(h)(4)
of the Balanced Budget and Emergency Deficit Control Act
of 1985 (2 U.S.C. 906(h)(4)) is amended—
(1) by striking subparagraphs (C) and (D); and
(2) by redesignating subparagraphs (E) through
(I) as subparagraphs (C) through (G), respectively.
SEC. 372. AMENDMENTS TO THE CONSUMER CREDIT PRO-
TECTION ACT.
(a) AMENDMENTS TO SECTION 108.—Section 108(a)
of the Consumer Credit Protection Act (15 U.S.C. 1607(a))
is amended—
(1) in paragraph (1)(C), by inserting ‘‘(as de-
fined in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813))’’ before ‘‘insured by’’;
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(2) by striking paragraph (2); and
(3) by redesignating paragraphs (3) through (6)
as paragraphs (2) through (5), respectively.
(b) AMENDMENTS TO SECTION 621.—Section 621(b) of
the Consumer Credit Protection Act (15 U.S.C. 1681s(b))
is amended—
(1) in paragraph (1)(C), by inserting ‘‘(as de-
fined in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813))’’ before ‘‘insured by’’;
(2) by striking paragraph (2); and
(3) by redesignating paragraphs (3) through (6)
as paragraphs (2) through (5), respectively.
(c) AMENDMENTS TO SECTION 704.—Section 704(a) of
the Consumer Credit Protection Act (15 U.S.C. 1691c(a))
is amended—
(1) in paragraph (1)(C), by inserting ‘‘(as de-
fined in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813))’’ before ‘‘insured by’’;
(2) by striking paragraph (2); and
(3) by redesignating paragraphs (3) through (9)
as paragraphs (2) through (8), respectively.
(d) AMENDMENTS TO SECTION 814.—Section 814(b) of
the Consumer Credit Protection Act (15 U.S.C. 1692l(b))
is amended—
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(1) in paragraph (1)(C), by inserting ‘‘(as de-
fined in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813))’’ before ‘‘insured by’’;
(2) by striking paragraph (2); and
(3) by redesignating paragraphs (3) through (6)
as paragraphs (2) through (5), respectively.
(e) AMENDMENTS TO SECTION 917.—Section 917(a) of
the Consumer Credit Protection Act (15 U.S.C. 1693o(a))
is amended—
(1) in paragraph (1)(C), by inserting ‘‘(as de-
fined in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813))’’ before ‘‘insured by’’;
(2) by striking paragraph (2); and
(3) by redesignating paragraphs (3) through (5)
as paragraphs (2) through (4), respectively.
SEC. 373. AMENDMENTS TO THE FLOOD DISASTER PROTEC-
TION ACT OF 1973.
(a) AMENDMENT TO SECTION 3.—Section 3(a)(5) of
the Flood Disaster Protection Act of 1973 (42 U.S.C.
4003(a)(5)) is amended by striking ‘‘the Office of Thrift Su-
pervision,’’.
(b) 
AMENDMENT
TO
SECTION
1370.—Section
1370(a)(9) of the Flood Disaster Protection Act of 1973 (42
U.S.C. 4121(a)(9)) is amended by striking ‘‘the Office of
Thrift Supervision,’’.
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SEC. 374. AMENDMENTS TO THE SECURITIES EXCHANGE
ACT OF 1934.
(a) 
AMENDMENTS
TO
SECTION
3.—Section
3(a)(34)(G) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(34)(G)) is amended—
(1) in clause (iii)—
(A) by inserting ‘‘(as defined in section 3 of
the Federal Deposit Insurance Act (12 U.S.C.
1813))’’ before ‘‘insured by’’; and
(B) by striking ‘‘or a Federal savings
bank’’;
(2) by striking clause (iv) and redesignating
clause (v) as clause (iv); and
(3) by striking ‘‘, and the term ‘District of Co-
lumbia savings and loan association’ means any asso-
ciation subject to examination and supervision by the
Office of Thrift Supervision under section 8 of Home
Owners’ Loan Act of 1933’’.
(b) AMENDMENT TO SECTION 15C.—Section 15C(g)(1)
of the Securities Exchange Act of 1934 (15 U.S.C. 78o–
5(g)(1)) is amended by striking ‘‘the Director of the Office
of Thrift Supervision,’’.
SEC. 375. AMENDMENTS TO TITLE 5, UNITED STATES CODE.
(a) 
AMENDMENT
TO
SECTION
3132.—Section
3132(a)(1)(D) of title 5, United States Code, is amended
by striking ‘‘the Office of Thrift Supervision,’’.
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(b) AMENDMENT TO SECTION 5314.—Section 5314 of
title 5, United States Code, is amended by striking ‘‘Direc-
tor of the Office of Thrift Supervision’’.
SEC. 376. AMENDMENTS TO TITLE 18, UNITED STATES
CODE.
(a) AMENDMENT TO SECTION 212.—Section 212 of
title 18, United States Code, is amended by striking ‘‘, by
the Office of Thrift Supervision’’.
(b) AMENDMENT TO SECTION 1006.—Section 1006 of
title 18, United States Code, is amended by striking ‘‘, Of-
fice of Thrift Supervision’’.
(c) AMENDMENT TO SECTION 1014.—Section 1014 of
title 18, United States Code, is amended by striking ‘‘, the
Office of Thrift Supervision’’.
(d) AMENDMENT TO SECTION 1032.—Section 1032 of
title 18, United States Code, is amended by striking ‘‘or
the Director of the Office of Thrift Supervision’’.
SEC. 377. AMENDMENT TO TITLE 31, UNITED STATES CODE.
Section 714(a) of title 31, United States Code, is
amended by striking ‘‘, and the Office of Thrift Super-
vision’’ and inserting ‘‘and’’ before ‘‘the Office of the Comp-
troller’’.
SEC. 378. EFFECTIVE DATE.
This subtitle shall take effect at the end of the 2-year
period beginning onthe date of the enactment of this Act.
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TITLE 
IV—UNIFORM 
MULTI-
STATE LICENSING OF STATE-
LICENSED 
INSURANCE
AGENTS AND BROKERS
SEC. 401. STATE FLEXIBILITY IN MULTISTATE LICENSING
REFORMS.
(a) IN GENERAL.—The provisions of this title shall
take effect if, and only if, by the end of the 3-year period
beginning on the date of the enactment of this Act, a major-
ity of the States have not enacted uniform laws and regula-
tions governing the licensure of individuals and entities au-
thorized to sell and solicit the purchase of insurance within
the State.
(b) UNIFORMITY REQUIRED.—States shall be deemed
to have established the uniformity necessary to satisfy sub-
section (a) if they—
(1) establish uniform criteria regarding the in-
tegrity, personal qualifications, education, training,
and experience, of licensed insurance producers, in-
cluding the qualification and training of sales person-
nel in ascertaining the appropriateness of a particu-
lar insurance product for a prospective customer;
(2) establish uniform continuing education re-
quirements for licensed insurance producers;
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(3) establish uniform ethics course requirements
for licensed insurance producers in conjunction with
the continuing education requirements under para-
graph (2);
(4) establish uniform criteria to ensure that an
insurance product, including any annuity contract,
sold to a consumer is suitable and appropriate for the
consumer based on financial information disclosed by
the consumer; and
(5) do not impose any requirement upon any li-
censed insurance producer that has the effect of limit-
ing or conditioning that producer’s activities because
of its residence or place of operations.
(c) DETERMINATION.—At the end of the 3-year period
beginning on the date of the enactment of this Act, the Na-
tional Association of Insurance Commissioners shall deter-
mine, in consultation with the insurance commissioners or
chief insurance regulatory officials of the States, whether
the uniformity required by subsections (a) and (b) has been
achieved.
(d) CONTINUED APPLICATION.—If at any time after
the end of the 3-year period referred to in subsection (c),
the uniformity required by subsections (a) and (b) no longer
exists, the provisions of this title shall take effect.
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SEC. 402. NATIONAL ASSOCIATION OF REGISTERED AGENTS
AND BROKERS.
(a) ESTABLISHMENT.—There is established a body cor-
porate to be known as the ‘‘National Association of Reg-
istered Agents and Brokers’’ (hereafter in this title referred
to as the ‘‘Association’’).
(b) STATUS.—The Association shall—
(1) be a nonprofit corporation;
(2) have succession until dissolved by an Act of
Congress;
(3) not be an agency or establishment of the
United States Government; and
(4) except as otherwise provided in this Act, be
subject to, and have all the powers conferred upon a
nonprofit corporation by the District of Columbia
Nonprofit Corporation Act (D.C. Code, sec. 29–1001
et seq.).
SEC. 403. PURPOSE.
The purpose of the Association shall be to provide a
mechanism through which uniform licensing, continuing
education, and other insurance producer sales qualification
requirements and conditions can be adopted and applied
on a multistate basis, while preserving the right of States
to license, supervise, and discipline insurance producers
and to prescribe and enforce laws and regulations with re-
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gard to insurance-related consumer protection and unfair
trade practices.
SEC. 404. RELATIONSHIP TO THE FEDERAL GOVERNMENT.
(a) IN GENERAL.—The Association shall be subject to
the supervision and oversight of the National Financial
Services Council (hereafter in this title referred to as the
‘‘Council’’).
(b) RECEIPTS AND DISBURSEMENTS OF ASSOCIATION
NOT INCLUDED IN BUDGET.—Section 406 of the Congres-
sional Budget Act of 1974 (2 U.S.C. 655) is amended by
adding at the end the following new subsection:
‘‘(c) Notwithstanding any other provision of law, the
receipts and disbursements of the National Association of
Registered Agents and Brokers shall not be included for the
purposes of—
‘‘(1) the budget of the United States Government
as submitted by the President;
‘‘(2) the congressional budget and the Congres-
sional Budget and Impoundment Control Act of 1974;
or
‘‘(3) the Balanced Budget and Emergency Deficit
Control Act of 1985.’’.
(c) FUNDS NOT AVAILABLE TO THE UNITED STATES
GOVERNMENT.—The United States Government may not
borrow or pledge funds held by or due to the Association.
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SEC. 405. MEMBERSHIP.
(a) IN GENERAL.—Any State-licensed producer shall
be eligible for membership in the Association.
(b) AUTHORITY TO ESTABLISH MEMBERSHIP CRI-
TERIA.—The Association shall have the authority to estab-
lish membership criteria that—
(1) bear a reasonable relationship to the pur-
poses for which the Association was established; and
(2) do not unfairly limit the access of smaller
agencies to the Association membership.
(c) ESTABLISHMENT OF CLASSES AND CATEGORIES.—
(1) CLASSES OF MEMBERSHIP.—The Association
may establish separate classes of membership, with
separate criteria, if the Association reasonably deter-
mines that performance of different duties requires
different levels of education, training, or experience.
(2) CATEGORIES.—The Association may estab-
lish separate categories of membership for individuals
and for other persons.
(d) MEMBERSHIP CRITERIA.—
(1) IN GENERAL.—The Association may establish
membership criteria to establish the integrity, per-
sonal qualifications, education, training, and experi-
ence of members, and any criteria reasonably inciden-
tal to any such criteria.
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(2) STANDARD.—In establishing criteria under
paragraph (1), the Association shall be guided by the
highest levels set by the States with regard to their
comparable licensing laws.
(e) EFFECT OF MEMBERSHIP.—Membership in the As-
sociation shall operate as licensure in each State in which
the member of the Association pays the licensing fee set by
such State, subject to section 415.
(f) ANNUAL RENEWAL.—Membership in the Associa-
tion shall be renewed on an annual basis and shall be sub-
ject to reasonable continuing education requirements.
(g) SUSPENSION AND REVOCATION.—The Association
may—
(1) inspect and examine the members of the As-
sociation to determine compliance with the criteria
for membership established by the Association; and
(2) suspend or revoke membership upon showing
that—
(A) applicable membership criteria are no
longer being met; or
(B) a member has been subject to discipli-
nary proceedings under the jurisdiction of a
State insurance regulator, and the Association
concludes that retention of membership in the
Association would not be in the public interest.
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(h) OFFICE OF CONSUMER COMPLAINTS.—The Asso-
ciation shall establish and publicize an office with a toll-
free telephone number that shall—
(1) receive and investigate complaints from both
consumers and State insurance regulators related to
members of the Association; and
(2) take any disciplinary actions the Association
considers appropriate to the extent that any such ac-
tion is not inconsistent with State law.
SEC. 406. CORPORATE POWERS.
The Association shall have the following powers:
(1) To sue and be sued, in the corporate name
of the Association and through its own counsel in any
Federal court of competent jurisdiction.
(2) To adopt, alter, and use a corporate seal,
which shall be judicially noticed.
(3) To adopt, amend, and repeal, by the Board
of Directors of the Association, such bylaws and rules
as may be necessary or appropriate to carry out the
purposes of this title, including bylaws relating to—
(A) the conduct of business; and
(B) the indemnity of the directors, officers,
and employees of the Association for liabilities
and expenses actually and reasonably incurred
by any such person in connection with the de-
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fense or settlement of an action or suit if such
person acted in good faith and in a manner rea-
sonably believed to be consistent with the pur-
poses of this title.
(4) To adopt, amend, and repeal, by the Board
of Directors of the Association, such rules as may be
necessary or appropriate to carry out the purposes of
this title, including rules relating to—
(A) the definition of terms used in this title,
other than those terms for which a definition is
provided in this title;
(B) the procedures for payment of the as-
sessments imposed by the Association; and
(C) the exercise of all other rights and pow-
ers granted to the Association by this title.
(5) To conduct the business of the Association
(including the carrying on of operations and the
maintenance of offices) and to exercise all other rights
and powers granted to the Association by this title in
any State or other jurisdiction without regard to any
qualification, licensing, or other statutory require-
ment in such State or other jurisdiction.
(6) To lease, purchase, accept gifts or donations
or otherwise acquire, to own, hold, improve, use, or
otherwise deal in or with, and to sell, convey, mort-
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gage, pledge, lease, exchange, or otherwise dispose of
any property, real, personal or mixed, or any interest
in any such property, wherever situated.
(7) To elect or appoint such officers, attorneys,
employees, and agents as may be required, to deter-
mine their qualifications, to define their duties, to fix
their salaries, require bonds for them, and fix the pen-
alty thereof.
(8) To enter into contracts, to execute instru-
ments, to incur liabilities, and to do any and all
other acts and things as may be necessary or inciden-
tal to the conduct of the business of the Association
and the exercise of all other rights and powers grant-
ed to the Association by this title.
(9) To suspend or revoke the membership in the
Association of any member in the manner provided in
this title.
(10) To impose and collect assessments, in the
manner and to the extent provided under this title,
upon the members of the Association to cover the ad-
ministrative expenses of the Association in a manner
that does not unfairly discriminate against smaller
insurance producers.
(11) To submit advice and recommendations to
the Congress, the courts, the National Association of
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Insurance Commissioners, State insurance regulators,
and the Council on matters pertaining to the regula-
tion and practices of insurance producers.
SEC. 407. BOARD OF DIRECTORS.
(a) ESTABLISHMENT.—The management of the Asso-
ciation shall be vested in a board of directors.
(b) POWERS.—
(1) IN GENERAL.—The board of directors shall be
vested with all powers necessary for the management
and administration of the affairs of the Association
and the promotion of the purposes of the Association
as authorized by this title.
(2) SPECIFIED IN BY-LAWS.—The authority of
the board of directors shall be specified in the bylaws
of the Association.
(c) COMPOSITION.—
(1) MEMBERS.—The Board shall be composed of
7 members appointed by the Chairperson of the Coun-
cil from a list of candidates recommended to the
Chairperson by the National Association of Insurance
Commissioners.
(2) REPRESENTATION OF COMMISSIONERS.—At
least 50 percent of the members of the board of direc-
tors shall be composed of members of the National As-
sociation of Insurance Commissioners.
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(d) TERMS.—
(1) IN
GENERAL.—The term of each director
shall, after the initial appointment of the members of
the board of directors, be for 3 years, with 1⁄3 of the
directors to be appointed each year.
(2) NO
TERM
LIMITS.—Directors may be ap-
pointed to serve for any number of terms.
(e) VACANCIES.—A vacancy in the Board shall be filled
in the same manner as the original appointment.
(f) COMPENSATION.—All matters relating to com-
pensation of directors shall be as provided in the bylaws
of the Association.
SEC. 408. OFFICERS.
(a) IN GENERAL.—The officers of the Association shall
consist of a chairperson and a vice chairperson of the board
of directors and a president, secretary, and treasurer of the
Association and may include 1 or more vice presidents and
such other officers and assistant officers as may be deemed
necessary.
(b) MANNER OF SELECTION.—
(1) DESCRIBED IN BYLAWS.—Each officer of the
board of directors and the Association shall be elected
or appointed at such time and in such manner and
for such terms not exceeding 3 years as may be pre-
scribed in the bylaws of the Association.
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(2) DEFAULT PROVISION.—In the absence of any
provision in the bylaws of the Association for the elec-
tion or appointment of the officers of the board of di-
rectors and the Association, all officers shall be elected
or appointed annually by the board of directors.
(3) CRITERIA
FOR
CHAIRPERSON.—Only indi-
viduals who are members of the National Association
of Insurance Commissioners shall be eligible to serve
as the chairperson of the board of directors.
SEC. 409. MEETINGS OF BOARD OF DIRECTORS.
The board of directors shall meet at the call of the
chairperson, or as otherwise provided by the bylaws of the
Association.
SEC. 410. BYLAWS, RULES, AND DISCIPLINARY ACTION.
(a) ADOPTION AND AMENDMENT OF BYLAWS.—
(1) COPY REQUIRED TO BE FILED WITH COUN-
CIL.—The board of directors of the Association shall
file with the Council a copy of the proposed bylaws
and any proposed amendment to the bylaws, accom-
panied by a concise general statement of the basis and
purpose of such proposal.
(2) EFFECTIVE DATE.—Except as provided in
paragraph (3), any proposed bylaw or proposed
amendment shall take effect—
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(A) 30 days after the date of the filing of
a copy with the Council;
(B) upon such later date as the Association
may designate; or
(C) such earlier date as the Council may de-
termine.
(3) DISAPPROVAL BY THE COUNCIL.—Notwith-
standing paragraph (2), a proposed bylaw or amend-
ment shall not take effect if—
(A) the Council disapproves such proposal
as being contrary to the public interest or con-
trary to the purposes of this title and provides
notice to the Association setting forth the reasons
for such disapproval; or
(B) the Council finds that such proposal in-
volves a matter of such significant public interest
that public comment should be obtained, in
which case it may, after notifying the Associa-
tion in writing of such finding, require that the
procedures set forth in subsection (b) be followed
with respect to such proposal, in the same man-
ner as if such proposed bylaw change were a pro-
posed rule change within the meaning of such
paragraph.
(b) ADOPTION AND AMENDMENT OF RULES.—
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(1) FILING PROPOSED REGULATIONS WITH COUN-
CIL.—
(A) IN GENERAL.—The board of directors of
the Association shall file with the Council a copy
of any proposed rule or any proposed amend-
ment to a rule of the Association which shall be
accompanied by a concise general statement of
the basis and purpose of such proposal.
(B) PUBLICATION OF NOTICE.—The Council
shall, upon the filing of any proposal, publish
notice thereof, together with the terms of sub-
stance of such proposal or a description of the
subjects and issues involved.
(C) OPPORTUNITY
FOR
COMMENT.—The
Council shall give interested persons an oppor-
tunity to submit written views and arguments
with respect to such proposal.
(D) OTHER REGULATIONS INEFFECTIVE.—
No proposed rule or amendment shall take effect
unless approved by the Council or otherwise per-
mitted in accordance with this paragraph.
(2) INITIAL CONSIDERATION BY COUNCIL.—With-
in 35 days after the date of publication of notice of
filing of a proposal, or before the end of such longer
period not to exceed 90 days as the Council may des-
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ignate after such date if the Council finds such longer
period to be appropriate and publishes the reasons for
so finding, or as to which the Association consents,
the Council shall—
(A) by order approve such proposed rule or
amendment; or
(B) institute proceedings to determine
whether such proposed rule or amendment should
be modified or disapproved.
(3) COUNCIL PROCEEDINGS.—
(A) IN
GENERAL.—Proceedings instituted
by the Council with respect to a proposed rule or
amendment pursuant to paragraph (2) shall—
(i) include notice of the grounds for
disapproval under consideration;
(ii) provide opportunity for hearing;
and
(iii) be concluded within 180 days
after the date of publication of notice of the
filing of such proposed rule or amendment.
(B) DISPOSITION
OF
PROPOSAL.—At the
conclusion of any proceeding under subpara-
graph (A), the Council shall, by order, approve
or disapprove the proposed rule or amendment.
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(C) EXTENSION
OF
TIME
FOR
CONSIDER-
ATION.—The Council may extend the time for
concluding any proceeding under subparagraph
(A) for—
(i) not more than 60 days if the Coun-
cil finds good cause for such extension and
publishes the reasons for so finding; or
(ii) for such longer period as to which
the Association consents.
(4) STANDARDS FOR REVIEW.—
(A) GROUNDS FOR APPROVAL.—The Council
shall approve a proposed rule or amendment if
the Council finds that the rule or amendment is
in the public interest and is consistent with the
purposes of this Act.
(B) GROUNDS
FOR
DISAPPROVAL.—The
Council shall disapprove a proposed rule or
amendment if the Council finds that the pro-
posed rule or amendment does not meet the
standards for approval in subparagraph (A).
(C) EFFECT OF APPROVAL.—Any proposed
rule or amendment approved by the Council
under this subsection shall have the force and ef-
fect of a regulation prescribed by the Council
under subtitle C of title I of this Act.
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(D) APPROVAL BEFORE END OF NOTICE PE-
RIOD.—The Council shall not approve any pro-
posed rule change before the end of the 30-day
period beginning on the date of publication of
notice in accordance with paragraph (1)(B) un-
less the Council finds good cause for so doing
and publishes the reasons for so finding.
(5) ALTERNATE PROCEDURE.—
(A) IN
GENERAL.—Notwithstanding any
provision of this subsection other than subpara-
graph (B), a proposed rule or amendment may
take effect—
(i) upon the date of filing with the
Council, if such proposed rule or amend-
ment is designated by the Association as re-
lating solely to matters which the Council,
consistent with the public interest and the
purposes of this subsection, determines by
rule do not require the procedures set forth
in this paragraph; or
(ii) upon such date as the Council
shall for good cause determine.
(B) FILING AFTER EFFECTIVE DATE.—Any
proposed rule or amendment which takes effect
under subparagraph (A)(ii) before the proposed
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rule or amendment is filed with the Council shall
be filed promptly with the Council after the effec-
tive date of the rule or amendment and reviewed
in accordance with paragraph (2).
(C) ABROGATION BY COUNCIL.—
(i) IN GENERAL.—At any time within
60 days after the date of filing of any pro-
posed rule or amendment under subpara-
graph (A)(i) or (B)(ii), the Council may
summarily abrogate such rule or amend-
ment and require that the rule or amend-
ment be refiled and reviewed in accordance
with this paragraph, if the Council finds
that such action is necessary or appropriate
in the public interest, for the protection of
insurance producers or policyholders, or
otherwise in furtherance of the purposes of
this title.
(ii) EFFECT OF RECONSIDERATION BY
COUNCIL.—Any action of the Council pur-
suant to clause (i) shall—
(I) not affect the validity or force
of a rule change during the period such
rule or amendment was in effect;
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(II) not be subject to judicial re-
view; and
(III) not be considered to be final
agency action.
(c) ACTION REQUIRED BY THE COUNCIL.—The Coun-
cil may, in accordance with such regulations as the Council
determines to be necessary or appropriate to the public in-
terest or to carry out the purposes of this title, require the
Association to adopt, amend, or repeal any bylaw or regula-
tion of the Association, whenever adopted.
(d) LEGAL EFFECT OF BYLAWS AND RULES.—The by-
laws and rules adopted pursuant to this section shall be
subject to judicial review in the same manner as the regula-
tions of the Council.
(e) DISCIPLINARY ACTION BY THE ASSOCIATION.—
(1) SPECIFICATION OF CHARGES.—In any pro-
ceeding to determine whether membership shall be de-
nied, suspended, revoked, and not renewed (hereafter
in this section referred to as a ‘‘disciplinary action’’),
the Association shall bring specific charges, notify
such member of such charges and give the member an
opportunity to defend against the charges, and keep
a record.
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(2) SUPPORTING STATEMENT.—A determination
to take disciplinary action shall be supported by a
statement setting forth—
(A) any act or practice in which such mem-
ber has been found to have been engaged;
(B) the specific provision of this title, the
rules or regulations under this title, or the rules
of the Association which any such act or practice
is deemed to violate; and
(C) the sanction imposed and the reason for
such sanction.
(f) COUNCIL REVIEW OF DISCIPLINARY ACTION.—
(1) NOTICE TO COUNCIL.—If the Association or-
ders any disciplinary action, the Association shall
promptly notify the Council of such action.
(2) REVIEW BY COUNCIL.—Any disciplinary ac-
tion taken by the Association shall be subject to re-
view by the Council—
(A) on the Council’s own motion; or
(B) upon application by any person ag-
grieved by such action if such application is filed
with the Council not more than 30 days after the
later of—
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(i) the date the notice by the Associa-
tion was filed with the Council pursuant to
paragraph (1); or
(ii) the date the notice of the discipli-
nary action was received by such aggrieved
person.
(3) EFFECT OF REVIEW.—The filing of an appli-
cation to the Council for review of a disciplinary ac-
tion, or the institution of review by the Council on
the Council’s own motion, shall not operate as a stay
of disciplinary action unless the Council otherwise or-
ders.
(4) SCOPE OF REVIEW.—
(A) IN GENERAL.—In any proceeding to re-
view such action, after notice and the oppor-
tunity for hearing, the Council shall—
(i) determine whether the action should
be taken;
(ii) affirm, modify, or rescind the dis-
ciplinary sanction; or
(iii) remand the case to the Association
for further proceedings.
(B) DISMISSAL OF REVIEW.—The Council
may dismiss a proceeding to review disciplinary
action if the Council finds that—
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(i) the specific grounds on which the
action is based exist in fact;
(ii) the action is in accordance with
applicable rules and regulations; and
(iii) such rules and regulations are,
and were, applied in a manner consistent
with the purposes of this Act.
SEC. 411. BORROWING AUTHORITY.
(a) IN GENERAL.—
(1) APPROVAL OF BOARD OF DIRECTORS.—The
Association shall have the authority to borrow as nec-
essary and upon prior approval of the board of direc-
tors.
(2) TERMS AND CONDITIONS.—Any borrowing by
the Association shall be made upon such terms and
conditions as the board of directors determines, except
that any funds so borrowed shall be repaid out of the
assessments as collected.
(3) PLEDGE OF FUTURE ASSESSMENTS.—To se-
cure the payment of principal and interest on any
borrowing by the Association, the board of directors
may pledge future assessments.
(b) NONLIABILITY OF FEDERAL GOVERNMENT.—No
provision of this title may be construed as—
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(1) obligating the United States Government, di-
rectly or indirectly, to provide any funds to any per-
son or entity to honor, reimburse, or otherwise guar-
antee any obligation or liability of the Association; or
(2) implying that any obligations or securities of
the Association are backed by the full faith and credit
of the United States.
SEC. 412. ASSESSMENTS.
(a) INSURANCE PRODUCERS SUBJECT
TO ASSESS-
MENT.—Each insurance producer that is a member of the
Association shall be subject to assessments for the costs of
considering the application by producer, on acceptance as
a member, and annually thereafter.
(b) AMOUNTS DETERMINED
BY ASSOCIATION.—The
amount of any assessment under subsection (a) shall be set
by the Association by rule and shall cover the costs of oper-
ation of the Association.
SEC. 413. FUNCTIONS OF THE COUNCIL.
(a) ADMINISTRATIVE PROCEDURE.—Determinations of
the Council, for purposes of making rules pursuant to sec-
tion 410, shall be made after appropriate notice and oppor-
tunity for a hearing and for submission of views of inter-
ested persons, in accordance with section 553 of title 5,
United States Code.
(b) EXAMINATIONS AND REPORTS.—
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(1) The Council may make such examinations
and inspections of the Association and require the As-
sociation to furnish it with such reports and records
or copies thereof as the Council may consider nec-
essary or appropriate in the public interest or to ef-
fectuate the purposes of this title.
(2) As soon as practicable after the close of each
fiscal year, the Association shall submit to the Coun-
cil a written report relative to the conduct of its busi-
ness, and the exercise of the other rights and powers
granted by this title, during such fiscal year. Such re-
port shall include financial statements setting forth
the financial position of the Association at the end of
such fiscal year and the results of its operations (in-
cluding the source and application of its funds) for
such fiscal year. The financial statements so included
shall be examined by an independent accountant in
the same manner as for the financial reports of feder-
ally certified insurers under this Act, and shall be ac-
companied by the report thereon by such accountant.
The Council shall transmit such report to the Presi-
dent and the Congress with such comment thereon as
the Council determines to be appropriate.
(c) DELEGATION OF POWERS.—
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(1) IN GENERAL.—The Council may delegate the
responsibility for exercising any of the powers under
subsection (b) or section 410(f) to any member agency
of the Council.
(2) OVERSIGHT OF COUNCIL.—The Council shall
have, at all times—
(A) the responsibility to supervise and regu-
late the exercise of any authority delegated under
paragraph (1); and
(B) the final responsibility for the proper
exercise of any such authority.
SEC. 414. LIABILITY OF THE ASSOCIATION AND THE DIREC-
TORS, OFFICERS, AND EMPLOYEES OF THE
ASSOCIATION.
(a) IN GENERAL.—The Association shall not be deemed
to be an insurer or insurance producer within the meaning
of any State law, rule, regulation, or order regulating or
taxing insurers, insurance producers, or other entities en-
gaged in the business of insurance, including provisions im-
posing premium taxes, regulating insurer solvency or fi-
nancial condition, establishing guaranty funds and levying
assessments, or requiring claims settlement practices. The
Association additionally shall be exempt from all taxes, as-
sessments, or other levies imposed by any State, municipal,
county, or local government.
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(b) LIABILITY OF THE ASSOCIATION, ITS DIRECTORS,
OFFICERS, AND EMPLOYEES.—Neither the Association nor
any of its directors, officers, or employees shall have any
liability to any person for any action taken or omitted in
good faith under or in connection with any matter subject
to this title.
SEC. 415. RELATIONSHIP TO STATE LAW.
(a) PREEMPTION OF STATE LAWS.—State laws, regu-
lations, provisions, or actions purporting to regulate insur-
ance producers shall be preempted in the following in-
stances:
(1) No State shall impede the activities of, take
any action against, or apply any provision of law or
regulation to, any insurance producer because that
insurance producer or any affiliate plans to become,
has applied to become, or is, a member of the Associa-
tion.
(2) No State shall impose any requirement upon
a member of the Association that has the effect of lim-
iting or conditioning that member’s activities because
of its residence or place of operations including, but
not limited to, any requirement that a licensed insur-
ance producer be a resident of a particular State, any
requirement that it comply with the conditions of a
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countersignature law, or any requirement that it pay
a different licensing fee based on its residency.
(3) No State shall impose any licensing, integ-
rity, personal qualification, education, training, expe-
rience, or continuing education requirement upon a
member of the Association that is different from the
criteria for membership in the Association or renewal
of such membership.
(4) No State shall implement the procedures of
such State’s system of licensing or renewing the li-
censes of insurance producers in a manner different
from authority of the Association under section 405.
(b) SAVINGS PROVISION.—Except as provided in sub-
section (a), no provision of this section shall be construed
as altering or affecting the continuing effectiveness of any
law, regulation, provision, or action of any State which
purports to regulate insurance producers, including any
such law, regulation, provision, or action which purports
to regulate unfair trade practices or establish consumer pro-
tections.
(c) PREEMPTION AUTHORITY.—If it is unclear whether
State laws or regulations fall into the categories enumerated
in subsection (a), the Council shall have the authority, by
regulation, to define those State laws and regulations that
have been preempted by this Act. The Council shall also
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have the authority to issue, after the opportunity for a hear-
ing on the record, an order that stays the effect of any State
law or regulation which is preempted until the Council can
complete the issuance of a regulation defining such preemp-
tion.
SEC. 416. COORDINATION WITH OTHER REGULATORS.
(a) COORDINATION WITH STATE INSURANCE REGU-
LATORS.—The Association shall have the authority to—
(1) issue uniform insurance producer applica-
tions and renewal applications that may be used to
apply for the issuance or removal of State licenses,
while preserving the ability of each State to impose
such conditions on the issuance or renewal of a license
as are consistent with section 415;
(2) establish a central clearinghouse through
which the members of the Association may apply for
the issuance or renewal of licenses in multiple States;
and
(3) establish or utilize a national database for
the collection of regulatory information concerning
the activities of insurance producers.
(b) COORDINATION WITH THE NATIONAL ASSOCIATION
OF SECURITIES DEALERS.—The Association shall coordi-
nate with the National Association of Securities Dealers in
order to ease any administrative burdens that fall on per-
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sons that are members of both associations, consistent with
the purposes of this title and the Federal securities laws.
SEC. 417. JUDICIAL REVIEW.
(a) JURISDICTION.—The appropriate United States
district court shall have exclusive jurisdiction over litiga-
tion involving the Association, including disputes between
the Association and its members that arise under this title.
Suits brought in State court involving the Association shall
be deemed to have arisen under Federal law and therefore
be subject to jurisdiction in the appropriate United States
district court.
(b) EXHAUSTION OF REMEDIES.—An aggrieved person
must exhaust the administrative remedies before the Asso-
ciation before it may seek judicial review of the Association
decision.
SEC. 418. DEFINITIONS.
For purposes of this title, the following definitions
shall apply:
(1) INSURANCE.—The term ‘‘insurance’’ means
any product defined or regulated as insurance by the
appropriate State insurance regulatory authority.
(2) INSURANCE PRODUCER.—The term ‘‘insur-
ance producer’’ means any insurance agent or broker,
surplus lines broker, insurance consultant, limited in-
surance representative, and any other person that so-
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licits, negotiates, effects, procures, delivers, renews,
continues, or binds policies of insurance or offers ad-
vice, counsel, opinions, or services related to insur-
ance.
(3) STATE LAW.—The term ‘‘State law’’ includes
all laws, decisions, rules, regulations, or other State
action having the effect of law, of any State. A law
of the United States applicable only to the District of
Columbia shall be treated as a State law rather than
a law of the United States.
(4) STATE.—The term ‘‘State’’ includes any
State, the District of Columbia, territory of the Unit-
ed States, and any political subdivision, agency, or
instrumentality thereof.
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as
the ‘‘Financial Services Act of 1997’’.
(b) TABLE OF CONTENTS.—The table of con-
tents for this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—FACILITATING AFFILIATION AMONG SECURITIES
FIRMS, INSURANCE COMPANIES, AND DEPOSITORY IN-
STITUTIONS
Subtitle A—Affiliations
Sec. 101. Glass-Steagall Act reformed.
Sec. 102. Activity restrictions applicable to bank holding com-
panies which are not financial holding compa-
nies.
Sec. 103. Financial holding companies.
Sec. 104. Certain State affiliation laws preempted.
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Sec. 105. Mutual bank holding companies authorized.
Sec. 106. Prohibition on deposit production offices.
Sec. 107. Clarification of branch closure requirements.
Sec. 108. Amendments relating to limited purpose banks.
Subtitle B—Streamlining Supervision of Financial Holding
Companies
Sec. 111. Streamlining financial holding company supervision.
Sec. 112. Elimination of application requirement for financial
holding companies.
Sec. 113. Authority of State insurance regulator and Securities
and Exchange Commission.
Sec. 114. Prudential safeguards.
Sec. 115. Examination of investment companies.
Sec. 116. Limitation on rulemaking, prudential, supervisory,
and enforcement authority of the Board.
Subtitle C—Subsidiaries of National Banks
Sec. 121. Permissible activities for subsidiaries of national
banks.
Sec. 122. Misrepresentations regarding depository institution
liability for obligations of affiliates.
Sec. 123. Repeal of stock loan limit in Federal Reserve Act.
Subtitle D—Investment Bank Holding Companies; Wholesale
Financial Institutions
CHAPTER 1—INVESTMENT BANK HOLDING COMPANIES
Sec. 131. Investment bank holding companies established.
Sec. 132. Authorization to release reports.
Sec. 133. Conforming amendments.
CHAPTER 2—WHOLESALE FINANCIAL INSTITUTIONS
Sec. 136. Wholesale financial institutions.
Subtitle E—Streamlining Antitrust Review of Bank
Acquisitions and Mergers
Sec. 141. Amendments to the Bank Holding Company act of
1956.
Sec. 142. Amendments to the Federal Deposit Insurance Act to
vest in the attorney general sole responsibility for
antitrust review of depository institution merg-
ers.
Sec. 143. Information filed by depository institutions; inter-
agency data sharing.
Sec. 144. Applicability of antitrust laws.
Sec. 145. Clarification of status of subsidiaries and affiliates.
Sec. 146. Effective date.
Subtitle F—Applying the Principles of National Treatment
and Equality of Competitive Opportunity to Foreign Banks
and Foreign Financial Institutions
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Sec. 151. Applying the principles of national treatment and
equality of competitive opportunity to foreign
banks that are financial holding companies.
Sec. 152. Applying the principles of national treatment and
equality of competitive opportunity to foreign
banks and foreign financial institutions that are
wholesale financial institutions.
Subtitle G—Effective Date of Title
Sec. 171. Effective date.
TITLE II—FUNCTIONAL REGULATION
Subtitle A—Brokers and Dealers
Sec. 201. Definition of broker.
Sec. 202. Definition of dealer.
Sec. 203. Registration for sales of private securities offerings.
Sec. 204. Grievance process.
Sec. 205. Information sharing.
Sec. 206. Banking products, derivative instrument, and quali-
fied investor defined.
Sec. 207. Government securities defined.
Sec. 208. Effective date.
Subtitle B—Bank Investment Company Activities
Sec. 211. Custody of investment company assets by affiliated
bank.
Sec. 212. Lending to an affiliated investment company.
Sec. 213. Independent directors.
Sec. 214. Additional SEC disclosure authority.
Sec. 215. Definition of broker under the Investment Company
Act of 1940.
Sec. 216. Definition of dealer under the Investment Company
Act of 1940.
Sec. 217. Removal of the exclusion from the definition of in-
vestment adviser for banks that advise invest-
ment companies.
Sec. 218. Definition of broker under the Investment Advisers
Act of 1940.
Sec. 219. Definition of dealer under the Investment Advisers
Act of 1940.
Sec. 220. Interagency consultation.
Sec. 221. Treatment of bank common trust funds.
Sec. 222. Investment advisers prohibited from having control-
ling interest in registered investment company.
Sec. 223. Conforming change in definition.
Sec. 224. Conforming amendment.
Sec. 225. Effective date.
Subtitle C—Securities and Exchange Commission Supervision
of Investment Bank Holding Companies
Sec. 231. Supervision of investment bank holding companies
by the securities and exchange commission.
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Subtitle D—Study
Sec. 241. Study of methods to inform investors and consumers
of uninsured products.
TITLE III—INSURANCE
Subtitle A—State Regulation of Insurance
Sec. 301. State regulation of the business of insurance.
Sec. 302. Mandatory insurance licensing requirements.
Sec. 303. Functional regulation of insurance.
Sec. 304. Insurance underwriting in national banks.
Sec. 305. New bank agency activities only through acquisition
of existing licensed agents.
Sec. 306. Title insurance activities of national banks and their
affiliates.
Sec. 307. Expedited and equalized dispute resolution for finan-
cial regulators.
Sec. 308. Consumer protection regulations.
Sec. 309. Certain State affiliation laws preempted for insur-
ance companies and affiliates.
Subtitle B—Redomestication of Mutual Insurers
Sec. 311. General application.
Sec. 312. Redomestication of mutual insurers.
Sec. 313. Effect on State laws restricting redomestication.
Sec. 314. Other provisions.
Sec. 315. Definitions.
Sec. 316. Effective date.
Subtitle C—National Association of Registered Agents and
Brokers
Sec. 321. State flexibility in multistate licensing reforms.
Sec. 322. National Association of Registered Agents and Bro-
kers.
Sec. 323. Purpose.
Sec. 324. Relationship to the Federal Government.
Sec. 325. Membership.
Sec. 326. Board of directors.
Sec. 327. Officers.
Sec. 328. Bylaws, rules, and disciplinary action.
Sec. 329. Assessments.
Sec. 330. Functions of the NAIC.
Sec. 331. Liability of the association and the directors, officers,
and employees of the association.
Sec. 332. Elimination of naic oversight.
Sec. 333. Relationship to State law.
Sec. 334. Coordination with other regulators.
Sec. 335. Judicial review.
Sec. 336. Definitions.
TITLE IV—MERGER OF BANK AND THRIFT CHARTERS,
REGULATORS, AND INSURANCE FUNDS
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Sec. 401. Short title; definitions.
Subtitle A—Facilitating Conversion of Savings Associations to
Banks
Sec. 411. Conversion to State or national banks.
Sec. 412. Mutual national banks and Federal mutual bank
holding companies authorized.
Sec. 413. Grandfathered activities of savings associations.
Sec. 414. Branches of former savings associations.
Sec. 415. Programs for promoting housing finance.
Sec. 416. Savings and loan holding companies.
Sec. 417. Treatment of references in adjustable rate mortgages.
Sec. 418. Cost of funds indexes.
Subtitle B—Ending Separate Federal Regulation of Savings
Associations and Savings and Loan Holding Companies
Sec. 421. State savings associations treated as State banks
under Federal banking law.
Sec. 422. Home Owners’ Loan Act repealed.
Sec. 423. Conforming amendment reflecting elimination of the
Federal thrift charter and the separate system of
thrift regulation.
Sec. 424. Conforming amendments to the Federal Home Loan
Bank Act.
Sec. 425. Amendments to title 11, United States Code.
Subtitle C—Combining OTS and OCC
Sec. 431. Prohibition of merger or consolidation repealed.
Sec. 432. Secretary of the Treasury required to formulate plans
for combining Office of Thrift Supervision with
Office of the Comptroller of the Currency.
Sec. 433. Office of Thrift Supervision and position of Director
of the Office of Thrift Supervision abolished.
Sec. 434. Reconfiguration of Board of Directors of FDIC as a
result of removal of Director of the Office of
Thrift Supervision.
Sec. 435. Continuation provisions.
Subtitle D—Technical and Conforming Amendments to the
Depository Institution Statutes
Sec. 441. Amendments to the Federal Deposit Insurance Act.
Sec. 442. Amendment to the Bank Holding Company Act of
1956.
Sec. 443. Amendments to the Federal Reserve Act.
Sec. 444. Amendments to Alternative Mortgage Transaction
Parity Act of 1982.
Sec. 445. Amendments to the Bank Protection Act of 1968.
Sec. 446. Amendments to the Community Reinvestment Act of
1977.
Sec. 447. Amendments to the Depository Institutions Deregula-
tion and Monetary Control Act of 1980.
Sec. 448. Amendments to the Depository Institution Manage-
ment Interlocks Act.
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Sec. 449. Amendment to the Economic Growth and Regulatory
Paperwork Reduction Act of 1996.
Sec. 450. Amendment to the Emergency Home Finance Act of
1970.
Sec. 451. Amendments to the Expedited Funds Availability Act.
Sec. 452. Amendments to the Federal Credit Union Act.
Sec. 453. Amendments to the Federal Financial Institutions Ex-
amination Council Act of 1978.
Sec. 454. Amendments to the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989.
Sec. 455. Amendments to the Home Mortgage Disclosure Act of
1975.
Sec. 456. Amendments to the Housing and Community Devel-
opment Act of 1992.
Sec. 457. Amendment to the International Banking Act of 1978.
Sec. 458. Amendments to the National Housing Act.
Sec. 459. Amendment to Public Law 93–495.
Sec. 460. Amendment to the Real Estate Settlement Procedures
Act of 1974.
Sec. 461. Amendment to the Revised Statutes of the United
States.
Sec. 462. Amendments to the Riegle Community Development
and Regulatory Improvement Act of 1994.
Sec. 463. Amendments to the Right to Financial Privacy Act of
1978.
Sec. 464. Amendments to the Truth in Savings Act.
Sec. 465. Effective date.
TITLE I—FACILITATING AFFILI-
ATION 
AMONG 
SECURITIES
FIRMS, INSURANCE COMPA-
NIES, AND DEPOSITORY IN-
STITUTIONS
Subtitle A—Affiliations
SEC. 101. GLASS-STEAGALL ACT REFORMED.
(a) SECTION 20 REPEALED.—Section 20 (12
U.S.C. 377) of the Banking Act of 1933 (com-
monly referred to as the ‘‘Glass-Steagall Act’’)
is repealed.
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(b) SECTION 32 REPEALED.—Section 32 (12
U.S.C. 78) of the Banking Act of 1933 is re-
pealed.
SEC. 102. ACTIVITY RESTRICTIONS APPLICABLE TO BANK
HOLDING COMPANIES WHICH ARE NOT FI-
NANCIAL HOLDING COMPANIES.
(a) IN GENERAL.—Section 4(c)(8) of the
Bank Holding Company Act of 1956 (12 U.S.C.
1843(c)(8)) is amended to read as follows:
‘‘(8) shares of any company the activi-
ties of which had been determined by the
Board by regulation under this para-
graph as of the day before the date of the
enactment of the Financial Services Act
of 1997, to be so closely related to bank-
ing as to be a proper incident thereto
(subject to such terms and conditions
contained in such regulation, unless
modified by the Board);’’.
(b) CONFORMING CHANGES TO OTHER STAT-
UTES.—
(1) AMENDMENT TO THE BANK HOLDING
COMPANY
ACT
AMENDMENTS
OF
1970.—Sec-
tion 105 of the Bank Holding Company
Act Amendments of 1970 (12 U.S.C. 1850)
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is amended by striking ‘‘, to engage di-
rectly or indirectly in a nonbanking ac-
tivity pursuant to section 4 of such Act,’’.
(2) AMENDMENT TO THE BANK SERVICE
COMPANY
ACT.—Section 4(f) of the Bank
Service Company Act (12 U.S.C. 1864(f)) is
amended by striking the period and add-
ing at the end the following: ‘‘as of the
day before the date of enactment of the
Financial Services Act of 1997.’’.
SEC. 103. FINANCIAL HOLDING COMPANIES.
(a) IN GENERAL.—The Bank Holding Com-
pany Act of 1956 is amended by inserting after
section 5 (12 U.S.C. 1844) the following new
section:
‘‘SEC. 6. FINANCIAL HOLDING COMPANIES.
‘‘(a) FINANCIAL
HOLDING
COMPANY
DE-
FINED.—For purposes of this section, the term
‘financial holding company’ means a bank
holding company which meets the require-
ments of subsection (b).
‘‘(b) ELIGIBILITY REQUIREMENTS FOR FINAN-
CIAL HOLDING COMPANIES.—
‘‘(1) IN
GENERAL.—No bank holding
company may engage in any activity or
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directly or indirectly acquire or retain
shares of any company under this section
unless the bank holding company meets
the following requirements:
‘‘(A) All of the subsidiary deposi-
tory institutions of the bank holding
company are well capitalized.
‘‘(B) All of the subsidiary deposi-
tory institutions of the bank holding
company are well managed.
‘‘(C) All of the subsidiary deposi-
tory institutions of the bank holding
company have achieved a rating of
‘satisfactory record of meeting com-
munity credit needs’, or better, at the
most recent examination of each such
institution under the Community Re-
investment Act of 1977.
‘‘(D) The company has filed with
the Board a declaration that the com-
pany elects to be a financial holding
company and certifying that the com-
pany meets the requirements of sub-
paragraphs (A) through (C).
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‘‘(2) FOREIGN BANKS AND COMPANIES.—
For purposes of paragraph (1), the Board
shall establish and apply comparable cap-
ital standards to a foreign bank that op-
erates a branch or agency or owns or
controls a bank or commercial lending
company in the United States, and any
company that owns or controls such for-
eign bank, giving due regard to the prin-
ciple of national treatment and equality
of competitive opportunity.
‘‘(3) LIMITED EXCLUSIONS FROM COMMU-
NITY NEEDS REQUIREMENTS FOR NEWLY AC-
QUIRED DEPOSITORY INSTITUTIONS.—
‘‘(A) IN GENERAL.—If the require-
ments of subparagraph (B) are met,
any depository institution acquired
by a bank holding company during
the 24-month period preceding the
submission of a declaration under
paragraph (1)(D) and any depository
institution acquired after the submis-
sion of such declaration may be ex-
cluded for purposes of paragraph
(1)(C) until the later of—
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‘‘(i) the end of the 24-month
period beginning on the date the
acquisition of the depository in-
stitution by such company is con-
summated; or
‘‘(ii) the date of completion of
the 1st examination of such de-
pository 
institution 
under 
the
Community Reinvestment Act of
1977 which is conducted after the
date of the acquisition of the de-
pository institution.
‘‘(B) REQUIREMENTS.—The require-
ments of this subparagraph are met
with respect to any bank holding
company referred to in subparagraph
(A) if—
‘‘(i) the bank holding company
has submitted an affirmative plan
to the appropriate Federal bank-
ing agency to take such action as
may be necessary in order for
such institution to achieve a rat-
ing 
of 
‘satisfactory 
record 
of
meeting community credit needs’,
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or better, at the next examination
of the institution under the Com-
munity Reinvestment Act of 1977;
and
‘‘(ii) the plan has been ap-
proved by such agency.
‘‘(c) ENGAGING IN ACTIVITIES FINANCIAL IN
NATURE.—
‘‘(1) 
IN
GENERAL.—Notwithstanding
section 4(a), a financial holding company
and a Board supervised investment bank
holding company may engage in any ac-
tivity and acquire and retain the shares
of any company the activities of which
the Board has determined (by regulation
or order) to be financial in nature or inci-
dental to such financial activities.
‘‘(2) FACTORS
TO
BE
CONSIDERED.—In
determining whether an activity is finan-
cial in nature or incidental to financial
activities, the Board shall take into ac-
count—
‘‘(A) the purposes of this Act and
the Financial Services Act of 1997;
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‘‘(B) changes or reasonably ex-
pected changes in the marketplace in
which bank holding companies com-
pete;
‘‘(C) changes or reasonably ex-
pected changes in the technology for
delivering financial services; and
‘‘(D) whether such activity is nec-
essary or appropriate to allow a bank
holding company and the affiliates of
a bank holding company to—
‘‘(i) compete effectively with
any company seeking to provide
financial services in the United
States;
‘‘(ii) 
use 
any 
available 
or
emerging technological means, in-
cluding any application necessary
to protect the security or efficacy
of systems for the transmission of
data or financial transactions, in
providing financial services; and
‘‘(iii) 
offer 
customers 
any
available 
or 
emerging 
techno-
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logical means for using financial
services.
‘‘(3) ACTIVITIES THAT ARE FINANCIAL IN
NATURE.—The following activities shall be
considered to be financial in nature:
‘‘(A) Lending, exchanging, trans-
ferring, investing for others, or safe-
guarding money or securities.
‘‘(B) Insuring, guaranteeing, or in-
demnifying against loss, harm, dam-
age, illness, disability, or death, or
providing and issuing annuities, and
acting as principal, agent, or broker
for purposes of the foregoing.
‘‘(C) Providing financial, invest-
ment, or economic advisory services,
including 
advising 
an 
investment
company (as defined in section 3 of
the Investment Company Act of 1940).
‘‘(D) Issuing or selling instru-
ments representing interests in pools
of assets permissible for a bank to
hold directly.
‘‘(E) Underwriting, dealing in, or
making a market in securities.
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‘‘(F) Engaging in any activity that
the Board has determined, by order
or regulation that is in effect on the
date of enactment of the Financial
Services Act of 1997, to be so closely
related to banking or managing or
controlling banks as to be a proper
incident thereto (subject to the same
terms and conditions contained in
such 
order 
or 
regulation, 
unless
modified by the Board).
‘‘(G) 
Engaging, 
in 
the 
United
States, in any activity that—
‘‘(i) a bank holding company
may engage in outside the United
States; and
‘‘(ii) the Board has deter-
mined, under regulations issued
pursuant to section 4(c)(13) of this
Act (as in effect on the day before
the date of enactment of the Fi-
nancial Services Act of 1997) to be
usual in connection with the
transaction of banking or other fi-
nancial operations abroad.
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‘‘(H) Directly or indirectly acquir-
ing or controlling, whether as prin-
cipal, on behalf of 1 or more entities
(including entities, other than a de-
pository institution or subsidiary of a
depository institution, that the bank
holding company controls) or other-
wise, shares, assets, or ownership in-
terests (including without limitation
debt or equity securities, partnership
interests, trust certificates or other
instruments representing ownership)
of a company or other entity, whether
or not constituting control of such
company or entity, engaged in any ac-
tivity not authorized pursuant to this
section if—
‘‘(i) the shares, assets, or own-
ership interests are not acquired
or held by a depository institu-
tion or subsidiary of a depository
institution;
‘‘(ii) such shares, assets, or
ownership interests are acquired
and held by a securities affiliate
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or an affiliate thereof as part of a
bona fide underwriting or mer-
chant banking activity, including
investment activities engaged in
for the purpose of appreciation
and ultimate resale or disposition
of the investment;
‘‘(iii) such shares, assets, or
ownership interests, are held only
for such a period of time as will
permit the sale or disposition
thereof on a reasonable basis con-
sistent with the nature of the ac-
tivities described in clause (ii);
and
‘‘(iv) during the period such
shares, assets, or ownership inter-
ests are held, the bank holding
company does not actively par-
ticipate in the day to day manage-
ment or operation of such com-
pany or entity, except insofar as
necessary to achieve the objec-
tives of clause (ii).
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‘‘(I) Directly or indirectly acquir-
ing or controlling, whether as prin-
cipal, on behalf of 1 or more entities
(including entities, other than a de-
pository institution or subsidiary of a
depository institution, that the bank
holding company controls) or other-
wise, shares, assets, or ownership in-
terests (including without limitation
debt or equity securities, partnership
interests, trust certificates or other
instruments representing ownership)
of a company or other entity, whether
or not constituting control of such
company or entity, engaged in any ac-
tivity not authorized pursuant to this
section if—
‘‘(i) the shares, assets, or own-
ership interests are not acquired
or held by a depository institu-
tion or a subsidiary of a deposi-
tory institution;
‘‘(ii) such shares, assets, or
ownership interests are acquired
and held by an insurance com-
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pany that is predominantly en-
gaged in underwriting life, acci-
dent and health, or property and
casualty insurance (other than
credit-related insurance);
‘‘(iii) such shares, assets, or
ownership interests represent an
investment made in the ordinary
course of business of such insur-
ance company in accordance with
relevant State law governing such
investments; and
‘‘(iv) during the period such
shares, assets, or ownership inter-
ests are held, the bank holding
company does not directly or in-
directly participate in the day-to-
day management or operation of
the company or entity except in-
sofar as necessary to achieve the
objectives of clauses (ii) and (iii).
‘‘(4) ACTIONS
REQUIRED.—The Board
shall, by regulation or order, define, con-
sistent with the purposes of this Act, the
following activities as, and the extent to
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•HR 10 RH2
which such activities are, financial in na-
ture or incidental to activities which are
financial in nature:
‘‘(A) Lending, exchanging, trans-
ferring, investing for others, or safe-
guarding financial assets other than
money or securities.
‘‘(B) 
Providing 
any 
device 
or
other instrumentality for transferring
money or other financial assets;
‘‘(C) Arranging, effecting, or facili-
tating financial transactions for the
account of third parties.
‘‘(5) 
POST
CONSUMMATION
NOTIFICA-
TION.—
‘‘(A) 
IN
GENERAL.—A 
financial
holding company and a Board super-
vised investment bank holding com-
pany that acquires any company, or
commences any activity, pursuant to
this subsection shall provide written
notice to the Board describing the ac-
tivity commenced or conducted by
the company acquired no later than
30 calendar days after commencing
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•HR 10 RH2
the activity or consummating the ac-
quisition.
‘‘(B) APPROVAL NOT REQUIRED FOR
CERTAIN FINANCIAL ACTIVITIES.—Except
as provided in section 4(j) with re-
gard to the acquisition of a savings
association, a financial holding com-
pany and a Board supervised invest-
ment bank holding company may
commence any activity, or acquire
any company, pursuant to paragraph
(3) or any regulation prescribed or
order issued under paragraph (4),
without prior approval of the Board.
‘‘(d) PROVISIONS APPLICABLE TO FINANCIAL
HOLDING COMPANIES THAT FAIL TO MEET RE-
QUIREMENTS.—
‘‘(1) IN GENERAL.—If the Board finds
that a financial holding company is not
in compliance with the requirements of
subparagraph (A), (B), or (C) of sub-
section (b)(1), the Board shall give notice
of such finding to the company.
‘‘(2) AGREEMENT
TO
CORRECT
CONDI-
TIONS
REQUIRED.—Within 45 days of re-
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ceipt by a financial holding company of a
notice given under paragraph (1) (or such
additional period as the Board may per-
mit), the company shall execute an agree-
ment acceptable to the Board to comply
with the requirements applicable to a fi-
nancial holding company.
‘‘(3) BOARD MAY IMPOSE LIMITATIONS.—
Until the conditions described in a notice
to a financial holding company under
paragraph (1) are corrected, the Board
may impose such limitations on the con-
duct or activities of the company or any
affiliate of the company as the Board de-
termines to be appropriate under the cir-
cumstances.
‘‘(4) FAILURE TO CORRECT.—If, after re-
ceiving a notice under paragraph (1), a fi-
nancial holding company does not—
‘‘(A) execute and implement an
agreement in accordance with para-
graph (2);
‘‘(B) comply with any limitations
imposed under paragraph (3);
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‘‘(C) in the case of a notice of fail-
ure 
to 
comply 
with 
subsection
(b)(1)(A), restore each depository in-
stitution subsidiary to well capital-
ized status before the end of the 180-
day period beginning on the date
such notice is received by the com-
pany (or such other period permitted
by the Board); or
‘‘(D) in the case of a notice of fail-
ure to comply with subparagraph (B)
or (C) of subsection (b)(1), restore
compliance with any such subpara-
graph by the date the next examina-
tion of the depository institution sub-
sidiary is completed or by the end of
such other period as the Board deter-
mines to be appropriate,
the Board may require such company,
under such terms and conditions as may
be imposed by the Board and subject to
such extension of time as may be granted
in the Board’s discretion, to divest con-
trol of any depository institution subsidi-
ary or, at the election of the financial
364
•HR 10 RH2
holding company, instead to cease to en-
gage in any activity conducted by such
company or its subsidiaries pursuant to
this section.
‘‘(5) CONSULTATION.—In taking any ac-
tion under this subsection, the Board
shall consult with all relevant Federal
and State regulatory agencies.
‘‘(e) SAFEGUARDS FOR BANK SUBSIDIARIES.—
A financial holding company shall assure
that—
‘‘(1) the procedures of the holding
company for identifying and managing fi-
nancial and operational risks within the
company, and the subsidiaries of such
company, adequately protect the subsidi-
aries of such company which are insured
depository institutions from such risks;
‘‘(2) the holding company has reason-
able policies and procedures to preserve
the separate corporate identity and lim-
ited liability of such company and the
subsidiaries of such company, for the
protection of the company’s subsidiary
insured depository institutions; and
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‘‘(3) the holding company complies
with this section.
‘‘(f) NONFINANCIAL ACTIVITIES.—
‘‘(1) 
IN
GENERAL.—Notwithstanding
section 4(a), a financial holding company
may engage in activities which are not
(or have not been determined to be) fi-
nancial in nature or incidental to activi-
ties which are financial in nature, or ac-
quire and retain ownership and control
of the shares of a company engaged in
such activities, if—
‘‘(A) the aggregate annual gross
revenues derived from all such activi-
ties and all such companies does not
exceed the lesser of—
‘‘(i) 5 percent of the consoli-
dated annual gross revenues of
the financial holding company; or
‘‘(ii) $500,000,000;
‘‘(B) the consolidated total assets
of any company the shares of which
are acquired by the financial holding
company pursuant to this paragraph
are less than $750,000,000 at the time
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•HR 10 RH2
the shares are acquired by the hold-
ing company; and
‘‘(C) the holding company pro-
vides notice to the Board within 30
days of commencing the activity or
acquiring the ownership or control.
‘‘(2) INCLUSION OF GRANDFATHERED AC-
TIVITIES.—For purposes of determining
the limits contained in paragraph (1)(A),
the gross revenues derived from all ac-
tivities conducted, and companies the
shares of which are held, under sub-
section (g) shall be considered to be de-
rived or held under this subsection.
‘‘(3) FOREIGN
BANKS.—In lieu of the
limitation contained in paragraph (1)(A)
in the case of a foreign bank or a com-
pany that owns or controls a foreign
bank which engages in any activity or ac-
quires or retains ownership or control of
shares of any company pursuant to para-
graph (1), the aggregate annual gross rev-
enues derived from all such activities and
all such companies in the United States
shall not exceed the lesser of—
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•HR 10 RH2
‘‘(A) 5 percent of the consolidated
annual gross revenues of the foreign
bank or company in the United States
derived from any branch, agency,
commercial lending company, or de-
pository institution controlled by the
foreign bank or company and any
subsidiary engaged in the United
States in activities permissible under
section 4 or 6; or
‘‘(B) $500,000,000.
‘‘(4) INDEXING
REVENUE
TEST.—After
December 31, 1998, the Board shall annu-
ally adjust the dollar amount contained
in paragraphs (1)(A) and (3) by the an-
nual 
percentage 
increase 
in 
the
Consumer Price Index for Urban Wage
Earners and Clerical Workers published
by the Bureau of Labor Statistics.
‘‘(5) NONAPPLICABILITY
OF
OTHER
EX-
EMPTION.—Any foreign bank or company
that owns or controls a foreign bank
which engages in any activity or acquires
or retains ownership or control of shares
of any company pursuant to this sub-
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section shall not be eligible for any ex-
ception described in section 2(h).
‘‘(g) AUTHORITY TO RETAIN LIMITED NON-
FINANCIAL ACTIVITIES AND AFFILIATIONS.—
‘‘(1) 
IN
GENERAL.—Notwithstanding
subsection (f)(1) and section 4(a), a com-
pany that is not a bank holding company
or a foreign bank (as defined in section
1(b)(7) of the International Banking Act
of 1978) and becomes a financial holding
company after the date of the enactment
of the Financial Services Act of 1997 may
continue to engage in any activity and re-
tain direct or indirect ownership or con-
trol of shares of a company engaged in
any activity if—
‘‘(A) the holding company lawfully
was engaged in the activity or held
the shares of such company on Sep-
tember 30, 1997;
‘‘(B) the holding company is pre-
dominantly engaged in financial ac-
tivities as defined in paragraph (2);
and
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•HR 10 RH2
‘‘(C) the company engaged in such
activity continues to engage only in
the same activities that such com-
pany conducted on September 30,
1997, and other activities permissible
under this Act.
‘‘(2) PREDOMINANTLY
FINANCIAL.—For
purposes of this subsection, a company is
predominantly engaged in financial ac-
tivities if, as of the day before the com-
pany becomes a financial holding com-
pany, the annual gross revenues derived
by the holding company and all subsidi-
aries of the holding company, on a con-
solidated basis, from engaging in activi-
ties that are financial in nature or are in-
cidental to activities that are financial in
nature under subsection (c) represent at
least 85 percent of the consolidated an-
nual gross revenues of the company.
‘‘(3) NO EXPANSION OF GRANDFATHERED
COMMERCIAL
ACTIVITIES
THROUGH
MERGER
OR
CONSOLIDATION.—A financial holding
company that engages in activities or
holds shares pursuant to this subsection,
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or a subsidiary of such financial holding
company, may not acquire, in any merg-
er, consolidation, or other type of busi-
ness combination, assets of any other
company which is engaged in any activ-
ity which the Board has not determined
to be financial in nature or incidental to
activities that are financial in nature
under subsection (c).
‘‘(4) CROSS
MARKETING
RESTRICTIONS
APPLICABLE TO COMMERCIAL ACTIVITIES.—A
depository institution controlled by a fi-
nancial holding company shall not—
‘‘(A) offer or market, directly or
through any arrangement, any prod-
uct or service of a company whose ac-
tivities 
are 
conducted 
or 
whose
shares are owned or controlled by the
financial holding company pursuant
to this subsection, subsection (f), or
subparagraph (H) or (I) of subsection
(c)(3); or
‘‘(B) permit any of its products or
services to be offered or marketed, di-
rectly or through any arrangement,
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by or through any company described
in subparagraph (A).
‘‘(5) TRANSACTIONS WITH NONFINANCIAL
AFFILIATES.—An insured depository insti-
tution controlled by a financial holding
company may not engage in a covered
transaction 
(as 
defined 
by 
section
23A(b)(7) of the Federal Reserve Act)
with any affiliate controlled by the com-
pany pursuant to this subsection or sub-
paragraph (H) or (I) of subsection (c)(3).
‘‘(h) DEVELOPING ACTIVITIES.—A financial
holding company and a Board supervised in-
vestment bank holding company may engage,
or directly or indirectly or acquire shares of
any company engaged, in any activity that the
Board has not determined to be financial in
nature or incidental to financial activities
under subsection (c) if—
‘‘(1) the holding company reasonably
concludes that the activity is financial in
nature or incidental to financial activi-
ties;
‘‘(2) the gross revenues from all ac-
tivities conducted under this subsection
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represent less than 5 percent of the con-
solidated gross revenues of the holding
company;
‘‘(3) the aggregate total assets of all
companies the shares of which are held
under this subsection do not exceed 5
percent of the holding company’s consoli-
dated total assets;
‘‘(4) the total capital invested in ac-
tivities conducted under this subsection
represents less than 5 percent of the con-
solidated total capital of the holding com-
pany;
‘‘(5) the Board has not previously de-
termined that the activity is not financial
in nature or incidental to financial activi-
ties under subsection (c); and
‘‘(6) the holding company provides
written notification to the Board describ-
ing the activity commenced or conducted
by the company acquired no later than 10
business days after commencing the ac-
tivity or consummating the acquisition.’’.
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SEC. 104. CERTAIN STATE AFFILIATION LAWS PREEMPTED.
(a) IN GENERAL.—Section 7 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1846)
is amended by adding at the end the following
new subsection:
‘‘(c) PREEMPTION
OF CERTAIN STATE RE-
STRICTIONS.—
‘‘(1) AFFILIATIONS.—No State may by
law, regulation, order, interpretation, or
otherwise, prevent or restrict an insured
depository institution or a wholesale fi-
nancial institution from being affiliated
with an entity (including an entity en-
gaged in insurance activities) as author-
ized by this Act or section 17(i) of the Se-
curities Exchange Act of 1934.
‘‘(2) CERTAIN ACTIVITIES CONDUCTED IN
CONJUNCTION
WITH
AFFILIATES.—No State
may by law, regulation, order, interpreta-
tion, or otherwise, prevent a national
bank or a wholesale financial institution
from engaging, or significantly interfere
with the ability of such national bank or
wholesale financial institution to engage,
directly or indirectly, or in conjunction
with an affiliate referred to in paragraph
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(1), in any activity as authorized under
section 6 or 10 of this Act or section 17(i)
of the Securities Exchange Act of 1934.’’.
(b) TECHNICAL
AND CONFORMING AMEND-
MENT.—Section 7(a) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1846(a)) is amend-
ed by striking ‘‘No provision’’ and inserting
‘‘Except as provided in subsection (c), no pro-
vision’’.
SEC. 105. MUTUAL BANK HOLDING COMPANIES AUTHOR-
IZED.
(a) IN GENERAL.—Section 3(g)(2) of the
Bank Holding Company Act of 1956 (12 U.S.C.
1842(g)(2)) is amended to read as follows:
‘‘(2) REGULATIONS.—A bank holding
company organized as a mutual holding
company shall be regulated on terms, and
shall be subject to limitations, com-
parable to those applicable to any other
bank holding company.’’.
SEC. 106. PROHIBITION ON DEPOSIT PRODUCTION OF-
FICES.
(a) IN GENERAL.—Section 109(d) of the Rie-
gle-Neal Interstate Banking and Branching
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Efficiency Act of 1994 (12 U.S.C. 1835a(d)) is
amended—
(1) by inserting ‘‘, the Financial Serv-
ices Act of 1997,’’ after ‘‘pursuant to this
title’’; and
(2) by inserting ‘‘or such Act’’ after
‘‘made by this title’’.
(b) TECHNICAL
AND CONFORMING AMEND-
MENT.—Section 109(e)(4) of the Riegle-Neal
Interstate Banking and Branching Efficiency
Act of 1994 (12 U.S.C. 1835a(e)(4)) is amended
by inserting ‘‘and any branch of a bank con-
trolled by an out-of-State bank holding com-
pany (as defined in section 2(o)(7) of the Bank
Holding Company Act of 1956)’’ before the pe-
riod.
SEC. 107. CLARIFICATION OF BRANCH CLOSURE REQUIRE-
MENTS.
Section 42(d)(4)(A) of the Federal Deposit
Insurance Act (12 U.S.C. 1831r–1(d)(4)(A)) is
amended by inserting ‘‘and any bank con-
trolled by an out-of-State bank holding com-
pany (as defined in section 2(o)(7) of the Bank
Holding Company Act of 1956)’’ before the pe-
riod.
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SEC. 108. 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
subclause (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 de-
rived from, or are incidental
to, activities in which institu-
tions 
described 
in 
section
2(c)(2)(F) are permitted to en-
gage,’’;
(2) in paragraph (2), by striking sub-
paragraph (B) and inserting the following
new subparagraphs:
‘‘(B) any bank subsidiary of such
company engages in any activity in
which the bank was not lawfully en-
gaged as of March 5, 1987, unless the
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•HR 10 RH2
bank is well managed and well cap-
italized;
‘‘(C) any bank subsidiary of such
company both—
‘‘(i) accepts demand deposits
or deposits that the depositor
may withdraw by check or similar
means for payment to third par-
ties; and
‘‘(ii) engages in the business
of making commercial loans (and,
for purposes of this clause, loans
made in the ordinary course of a
credit card operation shall not be
treated as commercial loans); or
‘‘(D) after the date of the enact-
ment of the Competitive Equality
Amendments of 1987, any bank sub-
sidiary of such company permits any
overdraft 
(including 
any 
intraday
overdraft), or incurs any such over-
draft in such bank’s account at a Fed-
eral reserve bank, on behalf of an af-
filiate, other than an overdraft de-
scribed in paragraph (3).’’; and
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(3) by striking paragraphs (3) and (4)
and inserting the following new para-
graphs:
‘‘(3) 
PERMISSIBLE
OVERDRAFTS
DE-
SCRIBED.—For 
purposes 
of 
paragraph
(2)(D), an overdraft is described in this
paragraph if—
‘‘(A) such overdraft results from
an inadvertent computer or account-
ing error that is beyond the control of
both the bank and the affiliate; or
‘‘(B) such overdraft—
‘‘(i) is permitted or incurred
on behalf of an affiliate which is
monitored by, reports to, and is
recognized as a primary dealer by
the Federal Reserve Bank of New
York; and
‘‘(ii) is fully secured, as re-
quired by the Board, by bonds,
notes, or other obligations which
are direct obligations of the Unit-
ed States or on which the prin-
cipal and interest are fully guar-
anteed by the United States or by
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•HR 10 RH2
securities and obligations eligible
for settlement on the Federal Re-
serve book entry system.
‘‘(4) DIVESTITURE IN CASE OF LOSS OF
EXEMPTION.—If any company described in
paragraph (1) fails to qualify for the ex-
emption provided under such paragraph
by operation of paragraph (2), such ex-
emption shall cease to apply to such com-
pany and such company shall divest con-
trol 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 ex-
emption, unless before the end of such
180-day period, the company has—
‘‘(A) corrected the condition or
ceased the activity that caused the
company to fail to continue to qualify
for the exemption; and
‘‘(B) implemented procedures that
are reasonably adapted to avoid the
reoccurrence of such condition or ac-
tivity.’’.
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Subtitle 
B—Streamlining 
Super-
vision 
of 
Financial 
Holding
Companies
SEC. 111. STREAMLINING FINANCIAL HOLDING COMPANY
SUPERVISION.
Section 5(c) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1844(c)) is amended to
read as follows:
‘‘(c) REPORTS AND EXAMINATIONS.—
‘‘(1) REPORTS.—
‘‘(A) IN GENERAL.—The Board from
time to time may require any bank
holding company and any subsidiary
of such company to submit reports
under oath to keep the Board in-
formed as to—
‘‘(i) its financial condition,
systems for monitoring and con-
trolling financial and operating
risks, and transactions with de-
pository institution subsidiaries
of the holding company; and
‘‘(ii) compliance by the com-
pany or subsidiary with applica-
ble provisions of this Act.
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•HR 10 RH2
‘‘(B) USE OF EXISTING REPORTS.—
‘‘(i) IN
GENERAL.—The Board
shall, to the fullest extent pos-
sible, accept reports in fulfillment
of the Board’s reporting require-
ments under this paragraph that
a bank holding company or any
subsidiary of such company has
provided or been required to pro-
vide to other Federal and State
supervisors or to appropriate self-
regulatory organizations.
‘‘(ii) 
AVAILABILITY.—A 
bank
holding company or a subsidiary
of such company shall provide to
the Board, at the request of the
Board, a report referred to in
clause (i).
‘‘(iii) REQUIRED
USE
OF
PUB-
LICLY
REPORTED
INFORMATION.—
The Board shall, to the fullest ex-
tent possible, accept in fulfillment
of any reporting or recordkeeping
requirements under this Act in-
formation that is otherwise re-
382
•HR 10 RH2
quired to be reported publicly
and externally audited financial
statements.
‘‘(iv) 
REPORTS
FILED
WITH
OTHER AGENCIES.—In the event the
Board requires a report from a
functionally regulated nondeposi-
tory institution subsidiary of a
bank holding company of a kind
that is not required by another
Federal or State regulator or ap-
propriate self-regulatory organi-
zation, the Board shall request
that the appropriate regulator or
self-regulatory organization ob-
tain such report. If the report is
not made available to the Board,
and the report is necessary to as-
sess a material risk to the bank
holding company or its subsidiary
depository institution or compli-
ance with this Act, the Board may
require such subsidiary to pro-
vide such a report to the Board.
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•HR 10 RH2
‘‘(C) DEFINITION.—For purposes of
this subsection, the term ‘functionally
regulated nondepository institution’
means—
‘‘(i) a broker or dealer reg-
istered under the Securities Ex-
change Act of 1934;
‘‘(ii) an investment adviser
registered under the Investment
Advisers Act of 1940, with respect
to the investment advisory activi-
ties of such investment adviser
and activities incidental to such
investment advisory activities;
‘‘(iii) an insurance company
subject to supervision by a State
insurance commission, agency, or
similar authority; and
‘‘(iv) an entity subject to regu-
lation by the Commodity Futures
Trading Commission, with respect
to the commodities activities of
such entity and activities inciden-
tal to such commodities activities.
‘‘(2) EXAMINATIONS.—
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‘‘(A) EXAMINATION AUTHORITY.—
‘‘(i) IN
GENERAL.—The Board
may make examinations of each
bank holding company and each
subsidiary of a bank holding com-
pany.
‘‘(ii) FUNCTIONALLY REGULATED
NONDEPOSITORY
INSTITUTION
SUB-
SIDIARIES.—Notwithstanding
clause (i), the Board may make
examinations of a functionally
regulated nondepository institu-
tion subsidiary of a bank holding
company only if—
‘‘(I) the Board has reason-
able cause to believe that
such subsidiary is engaged in
activities that pose a material
risk to an affiliated deposi-
tory institution, or
‘‘(II) based on reports and
other available information,
the 
Board 
has 
reasonable
cause to believe that a sub-
sidiary is not in compliance
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•HR 10 RH2
with this Act or with provi-
sions relating to transactions
with an affiliated depository
institution and the Board can-
not make such determination
through examination of the
affiliated depository institu-
tion or bank holding com-
pany.
‘‘(B) LIMITATIONS
ON
EXAMINATION
AUTHORITY FOR BANK HOLDING COMPA-
NIES
AND
SUBSIDIARIES.—Subject to
subparagraph (A)(ii), the Board may
make examinations under subpara-
graph (A)(i) of each bank holding
company and each subsidiary of such
holding company in order to—
‘‘(i) inform the Board of the
nature of the operations and fi-
nancial condition of the holding
company and such subsidiaries;
‘‘(ii) inform the Board of—
‘‘(I) 
the 
financial 
and
operational risks within the
holding company system that
386
•HR 10 RH2
may pose a threat to the safe-
ty and soundness of any sub-
sidiary depository institution
of such holding company; and
‘‘(II) the systems for mon-
itoring and controlling such
risks; and
‘‘(iii) monitor compliance with
the provisions of this Act and
those governing transactions and
relationships between any sub-
sidiary depository institution and
its affiliates.
‘‘(C) RESTRICTED FOCUS OF EXAMI-
NATIONS.—The Board shall, to the full-
est extent possible, limit the focus
and scope of any examination of a
bank holding company to—
‘‘(i) the bank holding com-
pany; and
‘‘(ii) any subsidiary of the
holding company that, because
of—
‘‘(I) the size, condition, or
activities of the subsidiary;
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•HR 10 RH2
‘‘(II) the nature or size of
transactions 
between 
such
subsidiary and any depository
institution which is also a
subsidiary of such holding
company; or
‘‘(III) the centralization of
functions within the holding
company system,
could have a materially adverse
effect on the safety and sound-
ness of any depository institution
affiliate of the holding company.
‘‘(D) DEFERENCE TO BANK EXAMINA-
TIONS.—The Board shall, to the fullest
extent possible, use, for the purposes
of this paragraph, the reports of ex-
aminations of depository institutions
made by the appropriate Federal and
State depository institution super-
visory authority.
‘‘(E) DEFERENCE TO OTHER EXAMI-
NATIONS.—The Board shall, to the full-
est extent possible, address the cir-
cumstances which might otherwise
388
•HR 10 RH2
permit or require an examination by
the Board by forgoing an examination
and instead reviewing the reports of
examination made of—
‘‘(i) any registered broker or
dealer or registered investment
adviser by or on behalf of the Se-
curities and Exchange Commis-
sion;
‘‘(ii) any licensed insurance
company by or on behalf of any
state regulatory authority respon-
sible for the supervision of insur-
ance companies; and
‘‘(iii) 
any 
other 
subsidiary
that the Board finds to be com-
prehensively supervised by a Fed-
eral or State authority.
‘‘(3) CAPITAL.—
‘‘(A) IN GENERAL.—The Board shall
not, by regulation, guideline, order or
otherwise, prescribe or impose any
capital or capital adequacy rules,
guidelines, 
standards, 
or 
require-
ments on any subsidiary of a finan-
389
•HR 10 RH2
cial holding company that is not a de-
pository institution and—
‘‘(i) is in compliance with ap-
plicable capital requirements of
another Federal regulatory au-
thority (including the Securities
and Exchange Commission) or
State insurance authority; or
‘‘(ii) is registered as an invest-
ment adviser under the Invest-
ment Advisers Act of 1940.
‘‘(B) RULE OF CONSTRUCTION.—Sub-
paragraph (A) shall not be construed
as preventing the Board from impos-
ing capital or capital adequacy rules,
guidelines, 
standards, 
or 
require-
ments with respect to activities of a
registered investment adviser other
than investment advisory activities or
activities incidental to investment ad-
visory activities.
‘‘(4) TRANSFER OF BOARD AUTHORITY TO
APPROPRIATE FEDERAL BANKING AGENCY.—
‘‘(A) IN
GENERAL.—In the case of
any bank holding company which is
390
•HR 10 RH2
not significantly engaged in non-
banking activities, the Board, in con-
sultation with the appropriate Fed-
eral banking agency, may designate
the 
appropriate 
Federal 
banking
agency of the lead insured depository
institution subsidiary of such holding
company as the appropriate Federal
banking agency for the bank holding
company.
‘‘(B) AUTHORITY TRANSFERRED.—An
agency 
designated 
by 
the 
Board
under subparagraph (A) shall have
the same authority as the Board
under this Act to—
‘‘(i) examine and require re-
ports from the bank holding com-
pany and any affiliate of such
company (other than a depository
institution) under section 5;
‘‘(ii) approve or disapprove
applications 
or 
transactions
under section 3;
‘‘(iii) take actions and impose
penalties under subsections (e)
391
•HR 10 RH2
and (f) of section 5 and section 8;
and
‘‘(iv) take actions regarding
the holding company, any affiliate
of the holding company (other
than a depository institution), or
any institution-affiliated party of
such company or affiliate under
the Federal Deposit Insurance
Act and any other statute which
the Board may designate.
‘‘(C) AGENCY
ORDERS.—Section 9
(of this Act) and section 105 of the
Bank Holding Company Act Amend-
ments of 1970 shall apply to orders is-
sued by an agency designated under
subparagraph (A) in the same manner
such sections apply to orders issued
by the Board.
‘‘(5) FUNCTIONAL REGULATION OF SECU-
RITIES
AND
INSURANCE
ACTIVITIES.—The
Board shall defer to—
‘‘(A) the Securities and Exchange
Commission with regard to all inter-
pretations of, and the enforcement of,
392
•HR 10 RH2
applicable Federal securities laws re-
lating to the activities, conduct, and
operations 
of 
registered 
brokers,
dealers, investment advisers, and in-
vestment companies; and
‘‘(B) the relevant State insurance
authorities with regard to all inter-
pretations of, and the enforcement of,
applicable State insurance laws relat-
ing to the activities, conduct, and op-
erations of insurance companies and
insurance agents.’’.
SEC. 112. ELIMINATION OF APPLICATION REQUIREMENT
FOR FINANCIAL HOLDING COMPANIES.
(a) PREVENTION OF DUPLICATIVE FILINGS.—
Section 5(a) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1844(a)) is amended by
adding the following new sentence at the end:
‘‘A declaration filed in accordance with sec-
tion 6(b)(1)(D) shall satisfy the requirements
of this subsection with regard to the registra-
tion of a bank holding company but not any
requirement to file an application to acquire
a bank pursuant to section 3.’’.
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•HR 10 RH2
(b) 
DIVESTITURE
PROCEDURES.—Section
5(e)(1) of the Bank Holding Company Act of
1956 (12 U.S.C. 1844(e)(1)) is amended—
(1) by striking ‘‘Financial Institutions
Supervisory Act of 1966, order’’ and in-
serting 
‘‘Financial 
Institutions 
Super-
visory Act of 1966, at the election of the
bank holding company—
‘‘(A) order’’; and
(2) by striking ‘‘shareholders of the
bank holding company. Such distribu-
tion’’ and inserting ‘‘shareholders of the
bank holding company; or
‘‘(B) order the bank holding company,
after due notice and opportunity for
hearing, and after consultation with the
bank’s primary supervisor, which shall be
the Comptroller of the Currency in the
case of a national bank, and the Federal
Deposit Insurance Corporation and the
appropriate State supervisor in the case
of an insured nonmember bank, to termi-
nate (within 120 days or such longer pe-
riod as the Board may direct) the owner-
394
•HR 10 RH2
ship or control of any such bank by such
company.
‘‘The distribution referred to in subparagraph
(A)’’.
SEC. 113. AUTHORITY OF STATE INSURANCE REGULATOR
AND SECURITIES AND EXCHANGE COMMIS-
SION.
Section 5 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1844) is amended by add-
ing at the end the following new subsection:
‘‘(g) AUTHORITY OF STATE INSURANCE REGU-
LATOR AND THE SECURITIES AND EXCHANGE COM-
MISSION.—
‘‘(1) 
IN
GENERAL.—Notwithstanding
any other provision of law, any regula-
tion, order, or other action of the Board
which requires a bank holding company
to provide funds or other assets to a sub-
sidiary insured depository institution
shall not be effective nor enforceable if—
‘‘(A) such funds or assets are to be
provided by—
‘‘(i) a bank holding company
that is an insurance company or
is a broker or dealer registered
395
•HR 10 RH2
under the Securities Exchange
Act of 1934; or
‘‘(ii) an affiliate of the deposi-
tory institution which is an insur-
ance company or a broker or
dealer registered under such Act;
and
‘‘(B) the State insurance authority
for the insurance company or the Se-
curities and Exchange Commission
for the registered broker or dealer, as
the case may be, determines in writ-
ing sent to the holding company and
the Board that the holding company
shall not provide such funds or assets
because such action would have a
material adverse effect on the finan-
cial condition of the insurance com-
pany or the broker or dealer, as the
case may be.
‘‘(2) NOTICE
TO
STATE
INSURANCE
AU-
THORITY OR SEC REQUIRED.—If the Board
requires a bank holding company, or an
affiliate of a bank holding company,
which is an insurance company or a
396
•HR 10 RH2
broker or dealer described in paragraph
(1)(A) to provide funds or assets to an in-
sured depository institution subsidiary of
the holding company pursuant to any
regulation, order, or other action of the
Board referred to in paragraph (1), the
Board shall promptly notify the State in-
surance authority for the insurance com-
pany or the Securities and Exchange
Commission, as the case may be, of such
requirement.
‘‘(3) DIVESTITURE IN LIEU OF OTHER AC-
TION.—If the Board receives a notice de-
scribed in paragraph (1)(B) from a State
insurance authority or the Securities and
Exchange Commission with regard to a
bank holding company or affiliate re-
ferred to in such paragraph, the Board
may order the bank holding company to
divest the insured depository institution
within 180 days of receiving notice or
such longer period as the Board deter-
mines consistent with the safe and sound
operation of the insured depository insti-
tution.
397
•HR 10 RH2
‘‘(4) CONDITIONS BEFORE DIVESTITURE.—
During the period beginning on the date
an order to divest is issued by the Board
under paragraph (3) to a bank holding
company and ending on the date the di-
vestiture is completed, the Board may im-
pose any conditions or restrictions on the
holding company’s ownership or oper-
ation of the insured depository institu-
tion, including restricting or prohibiting
transactions between the insured deposi-
tory institution and any affiliate of the
institution, as are appropriate under the
circumstances.’’.
SEC. 114. PRUDENTIAL SAFEGUARDS.
Section 5 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1844) is amended by in-
serting after subsection (g) (as added by sec-
tion 113 of this subtitle) the following new
subsection:
‘‘(h) PRUDENTIAL SAFEGUARDS.—
‘‘(1) IN GENERAL.—The Board may, by
regulation or order, impose restrictions
or 
requirements 
on 
relationships 
or
transactions between a depository insti-
398
•HR 10 RH2
tution subsidiary of a bank holding com-
pany and any affiliate of such depository
institution (other than a subsidiary of
such institution) which the Board finds is
consistent with the public interest, the
purposes of this Act, the Financial Serv-
ices Act of 1997, the Federal Reserve Act,
and other Federal law applicable to de-
pository institution subsidiaries of bank
holding companies and the standards in
paragraph (2).
‘‘(2) STANDARDS.—The Board may ex-
ercise authority under paragraph (1) if
the Board finds that such action will
have any of the following effects:
‘‘(A) Avoid any significant risk to
the safety and soundness of deposi-
tory institutions or any Federal de-
posit insurance fund.
‘‘(B) Enhance the financial stabil-
ity of bank holding companies.
‘‘(C) Avoid conflicts of interest or
other abuses.
‘‘(D) Enhance the privacy of cus-
tomers of depository institutions.
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•HR 10 RH2
‘‘(E) Promote the application of
national treatment and equality of
competitive 
opportunity 
between
nonbank affiliates owned or con-
trolled by domestic bank holding
companies 
and 
nonbank 
affiliates
owned or controlled by foreign banks
operating in the United States.
‘‘(3) REVIEW.—The Board shall regu-
larly—
‘‘(A) review all restrictions or re-
quirements established pursuant to
paragraph (1) to determine whether
there is a continuing need for any
such restriction or requirement to
carry out the purposes of the Act, in-
cluding any purpose described in
paragraph (2); and
‘‘(B) modify or eliminate any re-
striction or requirement the Board
finds is no longer required for such
purposes.’’.
SEC. 115. EXAMINATION OF INVESTMENT COMPANIES.
(a) EXCLUSIVE COMMISSION AUTHORITY.—
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•HR 10 RH2
(1) 
IN
GENERAL.—The 
Commission
shall be the sole Federal agency with au-
thority to inspect and examine any reg-
istered investment company that is not a
bank holding company.
(2) PROHIBITION
ON
BANKING
AGEN-
CIES.—A Federal banking agency may not
inspect or examine any registered invest-
ment company that is not a bank holding
company.
(b) EXAMINATION RESULTS AND OTHER IN-
FORMATION.—The Commission shall provide to
any Federal banking agency, upon request,
the results of any examination, reports,
records, or other information with respect to
any registered investment company to the ex-
tent necessary for the agency to carry out its
statutory responsibilities.
(c) DEFINITIONS.—For purposes of this sec-
tion, the following definitions shall apply:
(1) BANK HOLDING COMPANY.—The term
‘‘bank holding company’’ has the meaning
given to such term in section 2 of the
Bank Holding Company Act of 1956.
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•HR 10 RH2
(2) COMMISSION.—The term ‘‘Commis-
sion’’ means the Securities and Exchange
Commission.
(3) FEDERAL
BANKING
AGENCY.—The
term ‘‘Federal banking agency’’ has the
meaning given to such term in section
3(z) of the Federal Deposit Insurance Act.
(4) 
REGISTERED
INVESTMENT
COM-
PANY.—The term ‘‘registered investment
company’’ means an investment company
which is registered with the Commission
under the Investment Company Act of
1940.
SEC. 116. LIMITATION ON RULEMAKING, PRUDENTIAL, SU-
PERVISORY, AND ENFORCEMENT AUTHORITY
OF THE BOARD.
The Bank Holding Company Act of 1956
(12 U.S.C. 1841 et seq.) is amended by insert-
ing after section 10 the following new section:
‘‘SEC. 10A. LIMITATION ON RULEMAKING, PRUDENTIAL, SU-
PERVISORY, AND ENFORCEMENT AUTHORITY
OF THE BOARD.
‘‘(a) LIMITATION ON DIRECT ACTION.—
‘‘(1) IN GENERAL.—The Board may not
prescribe regulations, issue or seek entry
402
•HR 10 RH2
of orders, impose restraints, restrictions,
guidelines, requirements, safeguards, or
standards, or otherwise take any action
under or pursuant to any provision of
this Act or section 8 of the Federal De-
posit Insurance Act against or with re-
spect to a regulated subsidiary of a bank
holding company unless the action is nec-
essary to prevent or redress an unsafe or
unsound practice or breach of fiduciary
duty by such subsidiary that poses a ma-
terial risk to—
‘‘(A) the financial safety, sound-
ness, or stability of an affiliated de-
pository institution; or
‘‘(B) the domestic or international
payment system.
‘‘(2) CRITERIA FOR BOARD ACTION.—The
Board shall not take action otherwise
permitted under paragraph (1) unless the
Board finds that it is not reasonably pos-
sible to effectively protect against the
material risk at issue through action di-
rected at or against the affiliated deposi-
403
•HR 10 RH2
tory institution or against depository in-
stitutions generally.
‘‘(b) LIMITATION ON INDIRECT ACTION.—The
Board may not prescribe regulations, issue or
seek entry of orders, impose restraints, re-
strictions, 
guidelines, 
requirements, 
safe-
guards, or standards, or otherwise take any
action under or pursuant to any provision of
this Act or section 8 of the Federal Deposit In-
surance Act against or with respect to a finan-
cial holding company or an investment bank
holding company where the purpose or effect
of doing so would be to take action indirectly
against or with respect to a regulated subsidi-
ary that may not be taken directly against or
with respect to such subsidiary in accordance
with subsection (a).
‘‘(c) ACTIONS SPECIFICALLY AUTHORIZED.—
Notwithstanding subsection (a), the Board
may take action under this Act or section 8 of
the Federal Deposit Insurance Act to enforce
compliance by a regulated subsidiary with
Federal law that the Board has specific juris-
diction to enforce against such subsidiary.
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‘‘(d) REGULATED SUBSIDIARY DEFINED.—For
purposes of this section, the term ‘regulated
subsidiary’ means any company that is not a
bank holding company and is—
‘‘(1) a broker or dealer registered
under the Securities Exchange Act of
1934;
‘‘(2) an investment adviser registered
under the Investment Advisers Act of
1940, with respect to the investment advi-
sory activities of such investment adviser
and activities incidental to such invest-
ment advisory activities;
‘‘(3) an investment company reg-
istered under the Investment Company
Act of 1940;
‘‘(4) an insurance company or an in-
surance agency subject to supervision by
a State insurance commission, agency, or
similar authority; or
‘‘(5) an entity subject to regulation by
the Commodity Futures Trading Commis-
sion, with respect to the commodities ac-
tivities of such entity and activities inci-
dental to such commodities activities.’’.
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Subtitle C—Subsidiaries of
National Banks
SEC. 121. PERMISSIBLE ACTIVITIES FOR SUBSIDIARIES OF
NATIONAL BANKS.
(a) FINANCIAL SUBSIDIARIES
OF NATIONAL
BANKS.—Chapter one of title LXII of the Re-
vised Statutes of United States (12 U.S.C. 21
et seq.) is amended—
(1) by redesignating section 5136A as
section 5136C; and
(2) by inserting after section 5136 (12
U.S.C. 24) the following new section:
‘‘SEC. 5136A. SUBSIDIARIES OF NATIONAL BANKS.
‘‘(a) SUBSIDIARIES OF NATIONAL BANKS AU-
THORIZED
TO
ENGAGE
IN
FINANCIAL
ACTIVI-
TIES.—
‘‘(1) EXCLUSIVE AUTHORITY.—No provi-
sion of section 5136 or any other provi-
sion of this title LXII of the Revised Stat-
utes shall be construed as authorizing a
subsidiary of a national bank to engage
in, or own any share of any company en-
gaged in, any activity that—
‘‘(A) is not permissible for a na-
tional bank to engage in directly; or
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‘‘(B) is conducted under terms or
conditions 
other 
than 
those 
that
would govern the conduct of such ac-
tivity by a national bank,
unless a national bank is specifically au-
thorized by the express terms of a Fed-
eral statute and not by implication or in-
terpretation to acquire shares of or con-
trol such subsidiary, such as by para-
graph (2) of this subsection and section
25A of the Federal Reserve Act.
‘‘(2) SPECIFIC
AUTHORIZATION
TO
CON-
DUCT INSURANCE AGENCY ACTIVITIES.—A na-
tional bank may control a company en-
gaged in general insurance agency activi-
ties if—
‘‘(A) the national bank is well cap-
italized and well managed, and has
achieved a rating of satisfactory or
better at the most recent examination
of the bank under the Community Re-
investment Act of 1977;
‘‘(B) all depository institution af-
filiates of the national bank are well
capitalized and well managed, and
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have achieved a rating of satisfactory
or better at the most recent examina-
tion of each such depository institu-
tion under the Community Reinvest-
ment Act of 1977; and
‘‘(C) the bank has received the ap-
proval of the Comptroller of the Cur-
rency.
‘‘(3) DEFINITIONS.—
‘‘(A) COMPANY; CONTROL; SUBSIDI-
ARY.—The terms ‘company’, ‘control’,
and ‘subsidiary’ have the meanings
given to such terms in section 2 of the
Bank Holding Company Act of 1956.
‘‘(B) WELL CAPITALIZED.—The term
‘well capitalized’ has the same mean-
ing as in section 38 of the Federal De-
posit Insurance Act and, for purposes
of this section, the Comptroller shall
have exclusive jurisdiction to deter-
mine whether a national bank is well
capitalized.
‘‘(C) WELL
MANAGED.—The term
‘well managed’ means—
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‘‘(i) in the case of a bank that
has been examined, unless other-
wise determined in writing by the
Comptroller—
‘‘(I) the achievement of a
composite rating of 1 or 2
under the Uniform Financial
Institutions Rating System (or
an equivalent rating under an
equivalent rating system) in
connection with the most re-
cent examination or subse-
quent review of the bank; and
‘‘(II) at least a rating of 2
for management, if that rating
is given; or
‘‘(ii) in the case of any na-
tional bank that has not been ex-
amined, the existence and use of
managerial resources that the
Comptroller determines are satis-
factory.
‘‘(b) LIMITED EXCLUSIONS FROM COMMUNITY
NEEDS REQUIREMENTS
FOR NEWLY ACQUIRED
DEPOSITORY INSTITUTIONS.—Any depository in-
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stitution which becomes affiliated with a na-
tional bank during the 24-month period pre-
ceding the submission of an application to ac-
quire a subsidiary under subsection (a)(2),
and any depository institution which becomes
so affiliated after the approval of such appli-
cation, may be excluded for purposes of sub-
section (a)(2)(B) during the 24-month period
beginning on the date of such acquisition if—
‘‘(1) the depository institution has
submitted an affirmative plan to the ap-
propriate Federal banking agency (as de-
fined in section 3 of the Federal Deposit
Insurance Act) to take such action as may
be necessary in order for such institution
to achieve a ‘satisfactory record of meet-
ing community credit needs’, or better, at
the next examination of the institution
under the Community Reinvestment Act
of 1977; and
‘‘(2) the plan has been approved by
the appropriate Federal banking agen-
cy.’’.
(b) LIMITATION ON CERTAIN ACTIVITIES IN
SUBSIDIARIES.—Section 21(a)(1) of the Banking
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Act of 1933 (12 U.S.C. 378(a)(1)) is amended by
inserting ‘‘, or to be a subsidiary of any per-
son, firm, corporation, association, business
trust, or similar organization engaged (unless
such subsidiary was engaged in such securi-
ties activities as of September 15, 1997),’’ after
‘‘to engage at the same time’’.
(c) TECHNICAL
AND CONFORMING AMEND-
MENTS.—
(1) ANTITYING.—Section 106(a) of the
Bank Holding Company Act Amendments
of 1970 is amended by adding at the end
the following new sentence: ‘‘For pur-
poses of this section, a subsidiary of a na-
tional bank which engages in activities as
an agent pursuant to section 5136A(a)(2)
shall be deemed to be a subsidiary of a
bank holding company, and not a subsidi-
ary of a bank.’’.
(2) SECTION 23B.—Section 23B(a) of the
Federal Reserve Act (12 U.S.C. 371c–1(a))
is amended by adding at the end the fol-
lowing new paragraph:
‘‘(4) INSURANCE
SUBSIDIARY
OF
NA-
TIONAL
BANK.—For purposes of this sec-
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tion, a subsidiary of a national bank
which engages in activities as an agent
pursuant to section 5136A(a)(2) shall be
deemed to be an affiliate of the national
bank and not a subsidiary of the bank.’’
(d) CLERICAL AMENDMENT.—The table of
sections for chapter one of title LXII of the Re-
vised Statutes of the United States is amend-
ed—
(1) by redesignating the item relating
to section 5136A as section 5136C; and
(2) by inserting after the item relat-
ing to section 5136 the following new
item:
‘‘5136A. Financial subsidiaries of national banks.’’.
SEC. 122. MISREPRESENTATIONS REGARDING DEPOSITORY
INSTITUTION LIABILITY FOR OBLIGATIONS
OF AFFILIATES.
(a) IN GENERAL.—Chapter 47 of title 18,
United States Code, is amended by inserting
after section 1007 the following new section:
‘‘§ 1008. Misrepresentations regarding financial insti-
tution liability for obligations of affiliates
‘‘(a) IN GENERAL.—No institution-affiliated
party of an insured depository institution or
institution-affiliated party of a subsidiary or
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affiliate of an insured depository institution
shall fraudulently represent that the institu-
tion is or will be liable for any obligation of
a subsidiary or other affiliate of the institu-
tion.
‘‘(b) CRIMINAL PENALTY.—Whoever violates
subsection (a) shall be fined under this title,
imprisoned for not more than 1 year, or both.
‘‘(c) INSTITUTION-AFFILIATED
PARTY
DE-
FINED.—For purposes of this section, the term
‘institution-affiliated party’ with respect to a
subsidiary or affiliate has the same meaning
as in section 3 except references to an insured
depository institution shall be deemed to be
references to a subsidiary or affiliate of an in-
sured depository institution.
‘‘(d) OTHER DEFINITIONS.—For purposes of
this section, the terms ‘affiliate’, ‘insured de-
pository institution’, and ‘subsidiary’ have
same meanings as in section 3 of the Federal
Deposit Insurance Act.’’.
(b) CLERICAL AMENDMENT.—The table of
sections for chapter 47 of title 18, United
States Code, is amended by inserting after the
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•HR 10 RH2
item relating to section 1007 the following
new item:
‘‘1008. Misrepresentations regarding financial institution liabil-
ity for obligations of affiliates.’’.
SEC. 123. REPEAL OF STOCK LOAN LIMIT IN FEDERAL RE-
SERVE ACT.
Section 11 of the Federal Reserve Act (12
U.S.C. 248) is amended by striking the para-
graph designated as ‘‘(m)’’ and inserting ‘‘(m)
[Repealed]’’.
Subtitle D—Investment Bank Hold-
ing Companies; Wholesale Fi-
nancial Institutions
CHAPTER 1—INVESTMENT BANK
HOLDING COMPANIES
SEC. 131. INVESTMENT BANK HOLDING COMPANIES ESTAB-
LISHED.
(a) DEFINITION AND SUPERVISION.—Section
10 of the Bank Holding Company Act of 1956
(12 U.S.C. 1841 et seq.) is amended to read as
follows:
‘‘SEC. 10. INVESTMENT BANK HOLDING COMPANIES.
‘‘(a) COMPANIES THAT CONTROL WHOLESALE
FINANCIAL INSTITUTIONS.—
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‘‘(1) IN GENERAL.—Any company shall
be supervised in accordance with this
section if the company—
‘‘(A) either—
‘‘(i) is substantially engaged in
the securities business, as pro-
vided in paragraph (2); or
‘‘(ii) was, as of the date of the
enactment of the Financial Serv-
ices Act of 1997, a bank holding
company;
‘‘(B) controls 1 or more wholesale
financial institutions;
‘‘(C) does not control—
‘‘(i) a bank other than a
wholesale financial institution;
‘‘(ii) an insured bank other
than 
an 
institution 
permitted
under subparagraph (D), (F), or
(G) of section 2(c)(2); or
‘‘(iii) a savings association;
and
‘‘(D) is not a foreign bank (as de-
fined in section 1(b)(7) of the Inter-
national Banking Act of 1978).
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‘‘(2) SUBSTANTIALLY ENGAGED IN SECU-
RITIES
BUSINESS.—A company shall be
treated as being substantially engaged in
the securities business for purposes of
this section if—
‘‘(A) the company controls 1 or
more registered securities brokers or
dealers; and
‘‘(B) either—
‘‘(i) the annual total consoli-
dated net revenues derived by the
company 
and 
its 
subsidiaries
from effecting transactions in or
buying and selling securities as a
broker or dealer represent at
least 35 percent of the annual
total consolidated net revenues of
the company; or
‘‘(ii) the registered brokers or
dealers controlled by the com-
pany have in the aggregate total
consolidated equity capital and
qualifying 
subordinated 
debt
(based on an average for the 4
preceding calendar quarters) of
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•HR 10 RH2
more than $750,000,000 and such
total equity capital and qualifying
subordinated debt does not fall
below $500,000,000 (based on an
average for the 4 preceding cal-
endar quarters).
‘‘(3) SAVINGS
ASSOCIATION
TRANSITION
PERIOD.—Notwithstanding 
paragraph
(1)(C)(iii), the Board may permit a com-
pany that controls a savings association
and that otherwise meets the require-
ments of paragraph (1) to become super-
vised under paragraph (1), if the com-
pany divests control of any such savings
association within such period not to ex-
ceed 5 years after becoming supervised
under paragraph (1) as permitted by the
Board.
‘‘(b) COMPANIES SUPERVISED BY SECURITIES
AND EXCHANGE COMMISSION.—
‘‘(1) IN GENERAL.—Except as provided
in paragraph (3), any company that is de-
scribed in subsection (a)(1) shall be sub-
ject to supervision by the Commission
under section 17(i) of the Securities Ex-
417
•HR 10 RH2
change Act of 1934 and not by the Board
and shall, for purposes of this Act, be
treated as an SEC supervised investment
bank holding company, if the company—
‘‘(A) is substantially engaged in
the securities business, as provided in
subsection (a)(2); and
‘‘(B) controls 1 or more wholesale
financial institutions that in the ag-
gregate have—
‘‘(i) consolidated risk-weight-
ed assets that on an annual basis
are less than $15,000,000,000; and
‘‘(ii) annual gross revenues
that represent less than 25 per-
cent of the consolidated annual
gross revenues of the company.
‘‘(2) DOLLAR AMOUNT.—
‘‘(A) RISK-WEIGHTED
ASSETS.—For
purposes of paragraph (1)(A), the con-
solidated risk-weighted assets of a
wholesale financial institution shall—
‘‘(i) be based on the average
consolidated risk-weighted assets
418
•HR 10 RH2
of the institution for the four pre-
vious calendar quarters; and
‘‘(ii) 
include 
risk-weighted
claims on affiliates only to the ex-
tent such claims, in the aggregate,
exceed 
the 
aggregate 
risk—
weighted claims of affiliates on
the wholesale financial institu-
tion.
‘‘(B) TREATMENT OF SUBSIDIARIES.—
For purposes of subparagraph (A)(ii),
the term ‘‘affiliates’’ shall not include
any subsidiary of the wholesale finan-
cial institution.
‘‘(C) INDEXED GROWTH.—The dollar
amount contained in paragraph (1)(A)
shall be adjusted annually after De-
cember 31, 1998, by the annual per-
centage increase in the Consumer
Price Index for Urban Wage Earners
and Clerical Workers published by
the Bureau of Labor Statistics.
‘‘(3) ELECTION.—
‘‘(A) FILING.—An SEC supervised
investment bank holding company
419
•HR 10 RH2
may elect to be supervised by the
Board and not the Commission by fil-
ing with the Board the notice of with-
drawal 
described 
in 
section
17(i)(3)(B) of the Securities Exchange
Act of 1934.
‘‘(B) EFFECTIVE DATE OF TRANSFER
OF AUTHORITY.—If a company files an
election under subparagraph (A), the
Board shall, subject to any condi-
tions, restrictions or limitations as
the Board deems necessary or appro-
priate after consultation with the
Commission, assume full supervisory
authority and responsibility for the
company under this Act immediately
upon the effectiveness of the compa-
ny’s notice of withdrawal under sec-
tion 17(i) of the Securities Exchange
Act of 1934.
‘‘(C) RETENTION OF JURISDICTION.—
The filing of a notice under subpara-
graph (A) or under section 17(i) of the
Securities Exchange Act of 1934 shall
not affect the jurisdiction and author-
420
•HR 10 RH2
ity of the Commission to take any ac-
tion authorized by this section or the
Federal securities laws against any
person with respect to any action (or
failure to act) that occurs before the
transfer of supervisory authority to
the Board.
‘‘(4) REVOCATION OF ELECTION.—
‘‘(A) FILING.—
‘‘(i) IN
GENERAL.—An invest-
ment 
bank 
holding 
company
that—
‘‘(I) has filed an election
under paragraph (3)(A):
‘‘(II) meets the require-
ments of paragraph (1); and
‘‘(III) is substantially en-
gaged in the securities busi-
ness, 
as 
provided 
in 
sub-
section (a)(2),
may revoke its election to be su-
pervised by the Board and there-
by become supervised by the
Commission by filing with the
Board and the Commission a no-
421
•HR 10 RH2
tice of revocation in such form as
the Board may prescribe.
‘‘(ii) CONDITIONS.—Any revoca-
tion filed under clause (i) shall be
subject to any conditions, restric-
tions or limitations as the Board
finds to be necessary or appro-
priate after consultation with the
Commission.
‘‘(B) EFFECTIVE DATE OF TRANSFER
OF
AUTHORITY.—If 
the 
investment
bank holding company files a notice
under subparagraph (A), the Board
shall discontinue supervision of the
investment bank holding company on
the later of—
‘‘(i) the end of the 45-day pe-
riod beginning on the date of re-
ceipt by the Board and the Com-
mission of the notice of revoca-
tion; or
‘‘(ii) such shorter or longer pe-
riod as the Board shall determine,
after consultation with the Com-
mission, is necessary or appro-
422
•HR 10 RH2
priate to prevent evasion of the
purposes of this Act.
‘‘(C) RETENTION OF JURISDICTION.—
The filing of a notice under subpara-
graph (A) shall not affect the jurisdic-
tion and authority of the Board to
take any action authorized by this
section against any person with re-
spect to any action (or failure to act)
that occurs before the transfer of su-
pervisory authority to the Commis-
sion.
‘‘(D) LIMITATION ON REVOCATIONS.—
Without the consent of the Board and
the Commission, an investment bank
holding company may file a revoca-
tion of election under subparagraph
(A) only once during any 5-year pe-
riod.
‘‘(5) LIMITED TREATMENT AS BANK HOLD-
ING COMPANIES.—Notwithstanding section
2(a), an SEC supervised investment bank
holding company shall not be a bank
holding company except for purposes of—
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‘‘(A) section 2(g), section 3, section
5(f), section 7, section 8, and section
11 of this Act;
‘‘(B) section 3, section 7(j) and
subsections (b) through (n), (s), (u)
and (v) of section 8 of the Federal De-
posit Insurance Act; and
‘‘(C) 
section 
106 
of 
the 
1970
Amendments to the Bank Holding
Company Act.
‘‘(c) 
COMPANIES
SUPERVISED
BY
THE
BOARD.—
‘‘(1) BOARD
SUPERVISION.—Any com-
pany described in subsection (a)(1) that is
not supervised by the Commission under
section 17(i) of the Securities Exchange
Act of 1934 shall be supervised by the
Board and shall, for purposes of this Act,
be a Board supervised investment bank
holding company.
‘‘(2) IN
GENERAL.—The provisions of
this section shall govern the reporting,
examination, and capital requirements of
Board supervised investment bank hold-
ing companies.
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‘‘(3) REPORTS.—
‘‘(A) IN GENERAL.—The Board from
time to time may require any Board
supervised investment bank holding
company and any subsidiary of such
company to submit reports under
oath to keep the Board informed as
to—
‘‘(i) the company’s or subsidi-
ary’s activities, financial condi-
tion, policies, systems for mon-
itoring and controlling financial
and operational risks, and trans-
actions with depository institu-
tion subsidiaries of the holding
company; and
‘‘(ii) the extent to which the
company or subsidiary has com-
plied with the provisions of this
Act and regulations prescribed
and orders issued under this Act.
‘‘(B) USE OF EXISTING REPORTS.—
‘‘(i) IN
GENERAL.—The Board
shall, to the fullest extent pos-
sible, accept reports in fulfillment
425
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of the Board’s reporting require-
ments under this paragraph that
the investment bank holding com-
pany or any subsidiary of such
company has provided or been re-
quired to provide to other Fed-
eral and State supervisors or to
appropriate self-regulatory orga-
nizations.
‘‘(ii) AVAILABILITY.—An invest-
ment bank holding company or a
subsidiary of such company shall
provide to the Board, at the re-
quest of the Board, a report re-
ferred to in clause (i).
‘‘(C) EXEMPTIONS FROM REPORTING
REQUIREMENTS.—
‘‘(i) IN
GENERAL.—The Board
may, by regulation or order, ex-
empt any company or class of
companies, under such terms and
conditions and for such periods
as the Board shall provide in such
regulation or order, from the pro-
visions of this paragraph and any
426
•HR 10 RH2
regulation prescribed under this
paragraph.
‘‘(ii) CRITERIA
FOR
CONSIDER-
ATION.—In making any determina-
tion under clause (i) with regard
to any exemption under such
clause, the Board shall consider,
among such other factors as the
Board may determine to be ap-
propriate, the following factors:
‘‘(I) Whether information
of the type required under
this paragraph is available
from a supervisory agency (as
defined in section 1101(7) of
the Right to Financial Privacy
Act of 1978) or a foreign regu-
latory authority of a similar
type.
‘‘(II) The primary business
of the company.
‘‘(III) The nature and ex-
tent of the domestic and for-
eign regulation of the activi-
ties of the company.
427
•HR 10 RH2
‘‘(4) EXAMINATIONS.—
‘‘(A) LIMITED USE OF EXAMINATION
AUTHORITY.—The Board may make ex-
aminations of each Board supervised
investment bank holding company
and each subsidiary of such company
in order to—
‘‘(i) inform the Board regard-
ing the nature of the operations
and financial condition of the in-
vestment bank holding company
and its subsidiaries;
‘‘(ii) inform the Board regard-
ing—
‘‘(I) 
the 
financial 
and
operational risks within the
investment bank holding com-
pany system that may affect
any 
depository 
institution
owned by such holding com-
pany; and
‘‘(II) the systems of the
holding company and its sub-
sidiaries for monitoring and
controlling those risks; and
428
•HR 10 RH2
‘‘(iii) monitor compliance with
the provisions of this Act and
those governing transactions and
relationships between any deposi-
tory institution controlled by the
investment bank holding com-
pany and any of the company’s
other subsidiaries.
‘‘(B) RESTRICTED FOCUS OF EXAMI-
NATIONS.—The Board shall, to the full-
est extent possible, limit the focus
and scope of any examination of an
investment bank holding company
under this paragraph to—
‘‘(i) the holding company; and
‘‘(ii) 
any 
subsidiary 
(other
than an insured depository insti-
tution subsidiary) of the holding
company that, because of the size,
condition, or activities of the sub-
sidiary, the nature or size of
transactions between such sub-
sidiary and any affiliated deposi-
tory institution, or the centraliza-
tion of functions within the hold-
429
•HR 10 RH2
ing company system, could have a
materially adverse effect on the
safety and soundness of any de-
pository institution affiliate of the
holding company.
‘‘(C) DEFERENCE TO BANK EXAMINA-
TIONS.—The Board shall, to the fullest
extent possible, use the reports of ex-
amination of depository institutions
made by the Comptroller of the Cur-
rency, the Federal Deposit Insurance
Corporation, the Director of the Of-
fice of Thrift Supervision or the ap-
propriate State depository institution
supervisory authority for the pur-
poses of this section.
‘‘(D) DEFERENCE TO OTHER EXAMI-
NATIONS.—The Board shall, to the full-
est extent possible, address the cir-
cumstances which might otherwise
permit or require an examination by
the Board by forgoing an examination
and by instead reviewing the reports
of examination made of—
430
•HR 10 RH2
‘‘(i) any registered broker or
dealer or any registered invest-
ment adviser by or on behalf of
the Commission; and
‘‘(ii) any licensed insurance
company by or on behalf of any
State government insurance agen-
cy responsible for the supervision
of the insurance company.
‘‘(E) CONFIDENTIALITY OF REPORTED
INFORMATION.—
‘‘(i) 
IN
GENERAL.—Notwith-
standing any other provision of
law, the Board shall not be com-
pelled to disclose any nonpublic
information required to be re-
ported under this paragraph, or
any information supplied to the
Board by any domestic or foreign
regulatory agency, that relates to
the financial or operational con-
dition of any investment bank
holding company or any subsidi-
ary of such company.
431
•HR 10 RH2
‘‘(ii) 
COMPLIANCE
WITH
RE-
QUESTS FOR INFORMATION.—No pro-
vision of this subparagraph shall
be construed as authorizing the
Board to withhold information
from the Congress, or preventing
the Board from complying with a
request for information from any
other 
Federal 
department 
or
agency for purposes within the
scope of such department’s or
agency’s 
jurisdiction, 
or 
from
complying with any order of a
court of competent jurisdiction in
an action brought by the United
States or the Board.
‘‘(iii) 
COORDINATION
WITH
OTHER LAW.—For purposes of sec-
tion 552 of title 5, United States
Code, this subparagraph shall be
considered to be a statute de-
scribed in subsection (b)(3)(B) of
such section.
‘‘(iv) 
DESIGNATION
OF
CON-
FIDENTIAL
INFORMATION.—In pre-
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•HR 10 RH2
scribing regulations to carry out
the requirements of this sub-
section, the Board shall designate
information described in or ob-
tained pursuant to this paragraph
as confidential information.
‘‘(F) COSTS.—The cost of any ex-
amination conducted by the Board
under this section may be assessed
against, and made payable by, the in-
vestment bank holding company.
‘‘(5) CAPITAL ADEQUACY GUIDELINES.—
‘‘(A) 
CAPITAL
ADEQUACY
PROVI-
SIONS.—Subject to the requirements
of, and solely in accordance with, the
terms of this paragraph, the Board
may adopt capital adequacy rules or
guidelines for Board supervised in-
vestment bank holding companies.
‘‘(B) METHOD OF CALCULATION.—In
developing rules or guidelines under
this paragraph, the following provi-
sions shall apply:
‘‘(i) FOCUS
ON
DOUBLE
LEVER-
AGE.—The Board shall focus on
433
•HR 10 RH2
the use by investment bank hold-
ing companies of debt and other
liabilities to fund capital invest-
ments in subsidiaries.
‘‘(ii) NO
UNWEIGHTED
CAPITAL
RATIO.—The Board shall not, by
regulation, guideline, order, or
otherwise, impose under this sec-
tion a capital ratio that is not
based 
on 
appropriate 
risk-
weighting considerations.
‘‘(iii) NO CAPITAL REQUIREMENT
ON
REGULATED
ENTITIES.—The
Board shall not, by regulation,
guideline, 
order 
or 
otherwise,
prescribe or impose any capital
or capital adequacy rules, stand-
ards, guidelines, or requirements
upon any subsidiary that—
‘‘(I) is not a depository in-
stitution; and
‘‘(II) is in compliance with
applicable 
capital 
require-
ments of another Federal reg-
ulatory authority (including
434
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the Securities and Exchange
Commission) or State insur-
ance authority.
‘‘(iv) LIMITATION.—The Board
shall not, by regulation, guideline,
order or otherwise, prescribe or
impose any capital or capital ade-
quacy 
rules, 
standards, 
guide-
lines, or requirements upon any
subsidiary that is not a deposi-
tory institution and that is reg-
istered as an investment adviser
under the Investment Advisers
Act of 1940, except that this
clause shall not be construed as
preventing the Board from impos-
ing capital or capital adequacy
rules, guidelines, standards, or re-
quirements with respect to activi-
ties of a registered investment ad-
viser other than investment advi-
sory activities or activities inci-
dental to investment advisory ac-
tivities.
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‘‘(v) 
APPROPRIATE
EXCLU-
SIONS.—The Board shall take full
account of—
‘‘(I) the capital require-
ments made applicable to any
subsidiary that is not a depos-
itory institution by another
Federal regulatory authority
or State insurance authority;
and
‘‘(II) industry norms for
capitalization of a company’s
unregulated subsidiaries and
activities.
‘‘(vi) INTERNAL
RISK
MANAGE-
MENT MODELS.—The Board may in-
corporate internal risk manage-
ment models of investment bank
holding companies into its capital
adequacy guidelines or rules and
may take account of the extent to
which resources of a subsidiary
depository 
institution 
may 
be
used to service the debt or other
436
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liabilities of the investment bank
holding company.
‘‘(d) NONFINANCIAL ACTIVITIES AND INVEST-
MENTS.—
‘‘(1) AUTHORITY FOR LIMITED AMOUNTS
OF NEW ACTIVITIES AND INVESTMENTS.—
‘‘(A) IN
GENERAL.—Notwithstand-
ing section 4(a), a Board supervised
investment bank holding company
may engage in activities which are
not (or have not been determined to
be) financial in nature or incidental
to activities which are financial in
nature, or acquire and retain owner-
ship and control of the shares of a
company engaged in such activities
if—
‘‘(i) 
the 
aggregate 
annual
gross revenues derived from all
such activities and of all such
companies does not exceed 5 per-
cent of the consolidated annual
gross revenues of the investment
bank holding company or, in the
case of a foreign bank or any
437
•HR 10 RH2
company that owns or controls a
foreign bank, the aggregate an-
nual gross revenues derived from
any such activities in the United
States does not exceed 5 percent
of the consolidated annual gross
revenues of the foreign bank or
company in the United States de-
rived from any branch, agency,
commercial lending company, or
depository institution controlled
by the foreign bank or company
and any subsidiary engaged in
the United States in activities
permissible under section 4 or 6
or this subsection;
‘‘(ii) the consolidated total as-
sets of any company the shares of
which are acquired pursuant to
this 
subsection 
are 
less 
than
$750,000,000 
at 
the 
time 
the
shares are acquired by the invest-
ment bank holding company; and
‘‘(iii) such company provides
notice to the Board within 30
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days of commencing the activity
or acquiring the ownership or
control.
‘‘(B) INCLUSION OF GRANDFATHERED
ACTIVITIES.—For purposes of deter-
mining compliance with the limits
contained in subparagraph (A), the
gross revenues derived from all ac-
tivities conducted and companies the
shares of which are held under para-
graph (2) shall be considered to be
derived or held under this paragraph.
‘‘(C) REPORT.—No later than 5
years after the date of enactment of
the Financial Services Act of 1997, the
Board shall submit to the Congress a
report regarding the activities con-
ducted and companies held pursuant
to 
this 
paragraph 
or 
section
17(i)(7)(C) of the Securities Exchange
Act of 1934 and the effect, if any, that
affiliations permitted under those
provisions have had on affiliated de-
pository institutions. The report shall
include recommendations regarding
439
•HR 10 RH2
the appropriateness of retaining, in-
creasing, or decreasing the limits con-
tained in those provisions. In prepar-
ing the report, the Board shall con-
sult with and incorporate the views
of the Commission.
‘‘(2) GRANDFATHERED ACTIVITIES.—
‘‘(A) IN
GENERAL.—Notwithstand-
ing paragraph (1)(A) and section 4(a),
a company that becomes an invest-
ment bank holding company may con-
tinue to engage, directly or indirectly,
in any activity and may retain owner-
ship and control of shares of a com-
pany engaged in any activity if—
‘‘(i) on the date of the enact-
ment of the Financial Services
Act of 1997, such investment bank
holding company was lawfully en-
gaged in that nonfinancial activ-
ity, held the shares of such com-
pany, or had entered into a con-
tract to acquire shares of any
company engaged in such activ-
ity; and
440
•HR 10 RH2
‘‘(ii) the company engaged in
such activity continues to engage
only in the same activities that
such company conducted on the
date of the enactment of the Fi-
nancial Services Act of 1997, and
other activities permissible under
this Act.
‘‘(B) 
NO
EXPANSION
OF
GRAND-
FATHERED
COMMERCIAL
ACTIVITIES
THROUGH MERGER OR CONSOLIDATION.—
An investment bank holding company
that engages in activities or holds
shares pursuant to this paragraph, or
a subsidiary of such investment bank
holding company, may not acquire, in
any merger, consolidation, or other
type of business combination, assets
of any other company which is en-
gaged in any activity which the
Board has not determined to be fi-
nancial in nature or incidental to ac-
tivities that are financial in nature
under section 6(c).
441
•HR 10 RH2
‘‘(C) LIMITATION TO SINGLE EXEMP-
TION.—No company that engages in
any activity or controls any shares
under subsection (f) or (g) of section
6 may engage in any activity or own
any shares pursuant to this para-
graph or paragraph (1).
‘‘(3) COMMODITIES.—
‘‘(A) IN
GENERAL.—Notwithstand-
ing section 4(a), an investment bank
holding company which was predomi-
nately engaged as of January 1, 1997,
in securities activities in the United
States (or any successor to any such
company) may engage in, or directly
or indirectly own or control shares of
a company engaged in, activities re-
lated to the trading, sale, or invest-
ment in commodities and underlying
physical properties that were not per-
missible for bank holding companies
to conduct in the United States as of
January 1, 1997, if such investment
bank holding company, or any sub-
sidiary of such holding company, was
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engaged 
directly, 
indirectly, 
or
through any such company in any of
such activities as of January 1, 1997,
in the United States.
‘‘(B) 
LIMITATION.—Notwithstand-
ing paragraph (1)(A)(i), the attributed
aggregate investment by an invest-
ment bank holding company in activi-
ties permitted under this paragraph
and not otherwise permitted for all
bank holding companies under this
Act may not exceed 5 percent of the
capital of the investment bank hold-
ing company, except that the Board
may increase such percentage of cap-
ital by such amounts and under such
circumstances as the Board considers
appropriate, consistent with the pur-
poses of this Act.
‘‘(C) 
ATTRIBUTED
INVESTMENT
AMOUNT.—For purposes of subpara-
graph (B), the amount of the invest-
ment by an investment bank holding
company which are attributable to
activities described in such subpara-
443
•HR 10 RH2
graph shall be determined pursuant
to regulations issued by the Board
which attribute capital on the basis
of such activities in relation to all ac-
tivities of the company.
‘‘(4) CROSS MARKETING RESTRICTIONS.—
A Board supervised investment bank
holding company shall not permit—
‘‘(A) any company whose shares it
owns or controls pursuant to para-
graph (1), (2), or (3) to offer or market
any product or service of an affiliated
wholesale financial institution; or
‘‘(B) any affiliated wholesale fi-
nancial institution to offer or market
any product or service of any com-
pany whose shares are owned or con-
trolled by such investment bank hold-
ing company pursuant to such para-
graphs.
‘‘(e) QUALIFICATION OF FOREIGN BANK AS IN-
VESTMENT BANK HOLDING COMPANY.—
‘‘(1) IN
GENERAL.—Any foreign bank,
or any company that owns or controls a
foreign bank, that—
444
•HR 10 RH2
‘‘(A) operates a branch, agency, or
commercial lending company in the
United States, including a foreign
bank or company that owns or con-
trols a wholesale financial institution;
and
‘‘(B) owns, controls, or is affiliated
with a security affiliate that engages
in underwriting corporate equity se-
curities,
may request a determination from the
Board that such bank or company be
treated as a Board supervised investment
bank holding company for purposes of
subsection (d).
‘‘(2) CONDITIONS FOR TREATMENT AS AN
INVESTMENT
BANK
HOLDING
COMPANY.—A
foreign bank and a company that owns or
controls a foreign bank may not be treat-
ed as an investment bank holding com-
pany unless the bank and company meet
and continue to meet the following cri-
teria:
‘‘(A) NO INSURED DEPOSITS.—No de-
posits held directly by a foreign bank
445
•HR 10 RH2
or through an affiliate are insured
under the Federal Deposit Insurance
Act.
‘‘(B) CAPITAL STANDARDS.—The for-
eign bank meets risk-based capital
standards comparable to the capital
standards required for a wholesale fi-
nancial institution, giving due regard
to the principle of national treatment
and equality of competitive oppor-
tunity.
‘‘(C) 
TRANSACTION
WITH
AFFILI-
ATES.—Transactions 
between 
a
branch, agency, or commercial lend-
ing company subsidiary of the foreign
bank in the United States, and any se-
curities affiliate or company in which
the foreign bank (or any company
that owns or controls such foreign
bank) has invested pursuant to sub-
section (d) comply with the provi-
sions of sections 23A and 23B of the
Federal Reserve Act in the same man-
ner and to the same extent as such
transactions would be required to
446
•HR 10 RH2
comply with such sections if the bank
were a member bank.
‘‘(3) TREATMENT AS A WHOLESALE FINAN-
CIAL
INSTITUTION.—Any 
foreign 
bank
which is, or is affiliated with a company
which is, treated as an investment bank
holding company under this subsection
shall be treated as a wholesale financial
institution for purposes of subsection
(d)(4) of this section and subsections
(c)(1)(C) and (c)(3) of section 9B of the
Federal Reserve Act, and any such for-
eign bank or company shall be subject to
paragraphs (3), (4), and (5) of section
9B(d) of the Federal Reserve Act, except
that the Board may adopt such modifica-
tions, conditions, or exemptions as the
Board deems appropriate, giving due re-
gard to the principle of national treat-
ment and equality of competitive oppor-
tunity.
‘‘(4) NONAPPLICABILITY
OF
OTHER
EX-
EMPTION.—Any foreign bank or company
which is treated as an investment bank
holding company under this subsection
447
•HR 10 RH2
shall not be eligible for any exception de-
scribed in section 2(h).
‘‘(5) SUPERVISION
OF
FOREIGN
BANK
WHICH
MAINTAINS
NO
BANKING
PRESENCE
OTHER THAN CONTROL OF A WHOLESALE FI-
NANCIAL INSTITUTION.—A foreign bank that
owns or controls a wholesale financial in-
stitution but does not operate a branch,
agency, or commercial lending company
in the United States (and any company
that owns or controls such foreign bank)
may request a determination from the
Board that such bank or company be
treated as a Board supervised investment
bank holding company for purposes of
subsection (d), except that such bank or
company shall be subject to the restric-
tions of paragraph (4) of this subsection.
‘‘(6) NO
EFFECT
ON
OTHER
PROVI-
SIONS.—This section shall not be con-
strued as limiting the authority of the
Board under the International Banking
Act of 1978 with respect to the regulation,
supervision, or examination of foreign
448
•HR 10 RH2
banks and their offices and affiliates in
the United States.
‘‘(7) APPLICABILITY OF COMMUNITY REIN-
VESTMENT ACT OF 1977.—The branches in
the United States of a foreign bank that
is, or is affiliated with a company that is,
treated as a Board supervised investment
bank holding company shall be subject to
section 9B(b)(11) of the Federal Reserve
Act as if the foreign bank were a whole-
sale financial institution under such sec-
tion. The Board and the Comptroller of
the Currency shall apply the provisions
of sections 803(2), 804, and 807(1) of the
Community Reinvestment Act of 1977 to
branches of foreign banks which receive
only such deposits as are permissible for
receipt by a corporation organized under
section 25A of the Federal Reserve Act, in
the same manner and to the same extent
such sections apply to such a corpora-
tion.
‘‘(f) BOARD BACKUP ENFORCEMENT AND EX-
AMINATION AUTHORITY.—
‘‘(1) ENFORCEMENT AUTHORITY.—
449
•HR 10 RH2
‘‘(A) IN GENERAL.—The Board may
take any action or initiate any inves-
tigation or proceeding under this Act
or the Federal Deposit Insurance Act
involving any SEC supervised invest-
ment bank holding company, any sub-
sidiary of such a company, or any in-
stitution-affiliated party of such a
company or subsidiary for the pur-
pose of enforcing compliance with the
applicable provisions of this Act, the
1970 Amendments to the Bank Hold-
ing Company Act of 1956, section 17(i)
of the Securities Exchange Act of
1934, the Federal Deposit Insurance
Act, or the Federal Reserve Act.
‘‘(B) PRIOR CONSULTATION AND OP-
PORTUNITY TO CORRECT.—
‘‘(i) NOTICE
OF
PROPOSED
AC-
TION.—At least 30 days before ini-
tiating any action, investigation,
or proceeding under this sub-
section (or such shorter period as
the Board and Commission may
agree), the Board shall provide
450
•HR 10 RH2
the Commission with notice of the
Board’s proposed action, an ex-
planation of the basis for such
proposed 
action, 
and 
a 
rec-
ommendation for Commission ac-
tion.
‘‘(ii) BOARD
ACTION.—If, after
receipt of notice under clause (i),
the Commission does not take the
actions 
recommended 
by 
the
Board or other actions deemed
appropriate by the Board, the
Board may initiate an action, in-
vestigation or proceeding under
this subsection.
‘‘(iii) 
EXIGENT
CIR-
CUMSTANCES.—The Board may ex-
ercise its authority under para-
graph (1)(A) without regard to the
time period set forth in clause (i)
if the Board finds that such ac-
tion is necessary or appropriate
in light of exigent circumstances.
‘‘(2) BACKUP EXAMINATION.—
451
•HR 10 RH2
‘‘(A) 
IN
GENERAL.—In 
cir-
cumstances where examinations of
Board supervised bank holding com-
panies and subsidiaries of such hold-
ing companies by the Board are per-
missible under subparagraphs (A)
and (B) of section 5(c)(2), the Board
may make examinations of any SEC
supervised investment bank holding
company and any subsidiary of such
company for the purpose of monitor-
ing and enforcing compliance by the
company or any subsidiary of such
company with the laws described in
subparagraph (E).
‘‘(B) 
RESTRICTED
FOCUS.—The
Board shall limit the focus and scope
of any examination permitted under
subparagraph (A) to those trans-
actions, policies, procedures, systems,
or records that are reasonably nec-
essary to monitor and enforce compli-
ance by the company or any subsidi-
ary of the company with the laws de-
scribed in subparagraph (E).
452
•HR 10 RH2
‘‘(C) DEFERENCE TO OTHER EXAMI-
NATIONS.—To the fullest extent pos-
sible, the Board shall address the cir-
cumstances which might otherwise
permit or require an examination by
the Board by forgoing an examination
and instead reviewing the reports of
examinations made of—
‘‘(i) any registered broker or
dealer or registered investment
adviser by or on behalf of the
Commission; and
‘‘(ii) any licensed insurance
company by or on behalf of any
State government insurance agen-
cy responsible for the supervision
of the insurance company.
‘‘(D) NOTIFICATION.—To the fullest
extent possible, the Board shall notify
the Commission before conducting
any examination of a SEC supervised
investment bank holding company.
‘‘(E) DEFINITION.—For purposes of
this subsection, the laws described in
this subparagraph are this Act, sec-
453
•HR 10 RH2
tion 17(i) of the Securities Exchange
Act of 1934, and all Federal laws for
which the Board has enforcement au-
thority with respect to State member
banks or bank holding companies or
their subsidiaries.
‘‘(g) INFORMATION
SHARING.—The Board
and the Comptroller of the Currency (in the
case of a national wholesale financial institu-
tion) shall, upon request by the Commission,
provide to the Commission such reports,
records, or other information, including re-
ports of examination or other confidential su-
pervisory information, that the Board or the
Comptroller 
has 
available 
concerning 
a
wholesale financial institution (or any sub-
sidiary of a wholesale financial institution)
that is controlled by a SEC supervised invest-
ment bank holding company to assist the
Commission in carrying out its responsibil-
ities under this Act or the Federal securities
laws.
‘‘(h) 
DEFERENCE
TO
COMMISSION.—The
Board shall defer to the Commission with re-
gard to all interpretations of, and the enforce-
454
•HR 10 RH2
ment of, applicable Federal securities laws re-
lating to the activities, conduct and oper-
ations of registered brokers, dealers, invest-
ment advisers, and investment companies.
‘‘(i) CONSULTATION.—The Board shall con-
sult with the Commission concerning the ex-
ercise of the Board’s authority and respon-
sibility under section 6(c) to assure, to the
fullest extent possible, the consistency of in-
terpretation and the maintenance of competi-
tive equality.’’.
(b) UNINSURED STATE BANKS.—Section 9 of
the Federal Reserve Act (U.S.C. 321 et seq.) is
amended by adding at the end the following
new paragraph:
‘‘(24) ENFORCEMENT
AUTHORITY
OVER
UNINSURED STATE MEMBER BANKS.—Section
3(u) of the Federal Deposit Insurance Act,
subsections (j) and (k) of section 7 of such
Act, and subsections (b) through (n), (s),
(u), and (v) of section 8 of such Act shall
apply to an uninsured State member
bank in the same manner and to the
same extent such provisions apply to an
insured State member bank and any ref-
455
•HR 10 RH2
erence in any such provision to ‘insured
depository institution’ shall be deemed to
be a reference to ‘uninsured State mem-
ber bank’ for purposes of this para-
graph.’’.
SEC. 132. AUTHORIZATION TO RELEASE REPORTS.
(a) FEDERAL RESERVE ACT.—The last sen-
tence of the 8th undesignated paragraph of
section 9 of the Federal Reserve Act (12 U.S.C.
326) is amended to read as follows: ‘‘The
Board of Governors of the Federal Reserve
System, at its discretion, may furnish reports
of examination or other confidential super-
visory information concerning State member
banks or any other entities examined under
any other authority of the Board to any Fed-
eral or State authorities with supervisory or
regulatory authority over the examined en-
tity, to officers, directors, or receivers of the
examined entity, and to any other person that
the Board determines to be proper.’’.
(b) COMMODITY FUTURES TRADING COMMIS-
SION.—
456
•HR 10 RH2
(1) Section 1101(7) of the Right to Fi-
nancial Privacy Act of 1978 (12 U.S.C.
3401(7)) is amended—
(A) 
by 
redesignating 
subpara-
graphs (G) and (H) as subparagraphs
(H) and (I), respectively; and
(B) by inserting after subpara-
graph (F) the following new subpara-
graph:
‘‘(G) 
the 
Commodity 
Futures
Trading Commission; or’’ and
(2) Section 1112(e) of the Right to Fi-
nancial Privacy Act (12 U.S.C. 3412(e)) is
amended by striking ‘‘and the Securities
and Exchange Commission’’ and inserting
‘‘, the Securities and Exchange Commis-
sion, and the Commodity Futures Trad-
ing Commission’’.
SEC. 133. CONFORMING AMENDMENTS.
(a) BANK HOLDING COMPANY ACT OF 1956.—
(1) DEFINITIONS.—Section 2 of the
Bank Holding Company Act of 1956 (12
U.S.C. 1842) is amended by adding at the
end the following new subsections:
457
•HR 10 RH2
‘‘(p) WHOLESALE FINANCIAL INSTITUTION.—
The term ‘wholesale financial institution’
means a wholesale financial institution sub-
ject to section 9B of the Federal Reserve Act.
‘‘(q) COMMISSION.—The term ‘Commission’
means the Securities and Exchange Commis-
sion.
‘‘(r) DEPOSITORY INSTITUTION.—The term
‘depository institution’—
‘‘(1) has the meaning given to such
term in section 3 of the Federal Deposit
Insurance Act; and
‘‘(2) includes a wholesale financial in-
stitution.’’.
(2) 
DEFINITION
OF
BANK
INCLUDES
WHOLESALE
FINANCIAL
INSTITUTION.—Sec-
tion 2(c)(1) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(1)) is
amended by adding at the end the follow-
ing new subparagraph:
‘‘(C) A wholesale financial institu-
tion.’’.
(3) INCORPORATED
DEFINITIONS.—Sec-
tion 2(n) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(n)) is amended
458
•HR 10 RH2
by inserting ‘‘ ‘insured bank’,’’ after ‘‘ ‘in
danger of default’,’’.
(4) EXCEPTION
TO
DEPOSIT
INSURANCE
REQUIREMENT.—Section 3(e) of the Bank
Holding Company Act of 1956 (12 U.S.C.
1842(e)) is amended by adding at the end
the following: ‘‘This subsection shall not
apply to a wholesale financial institu-
tion.’’
(b) FEDERAL DEPOSIT INSURANCE ACT.—Sec-
tion 3(q)(2)(A) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1813(q)(2)(A)) is amended
to read as follows:
‘‘(A) any State member insured
bank (except a District bank) and any
wholesale financial institution as au-
thorized pursuant to section 9B of the
Federal Reserve Act;’’.
CHAPTER 2—WHOLESALE FINANCIAL
INSTITUTIONS
SEC. 136. WHOLESALE FINANCIAL INSTITUTIONS.
(a) NATIONAL WHOLESALE FINANCIAL INSTI-
TUTIONS.—
(1) IN GENERAL.—Chapter one of title
LXII of the Revised Statutes of the United
459
•HR 10 RH2
States (12 U.S.C. 21 et seq.) is amended by
inserting after section 5136A the follow-
ing new section:
‘‘SEC. 5136B. NATIONAL WHOLESALE FINANCIAL INSTITU-
TIONS.
‘‘(a) AUTHORIZATION OF THE COMPTROLLER
REQUIRED.—A national bank may apply to the
Comptroller on such forms and in accordance
with such regulations as the Comptroller may
prescribe, for permission to operate as a na-
tional wholesale financial institution.
‘‘(b) REGULATION.—A national wholesale fi-
nancial institution may exercise, in accord-
ance with such institution’s articles of incor-
poration and regulations issued by the Comp-
troller, all the powers and privileges of a na-
tional bank formed in accordance with sec-
tion 5133 of the Revised Statutes of the United
States, subject to section 9B of the Federal Re-
serve Act and the limitations and restrictions
contained therein.
‘‘(c) COMMUNITY
REINVESTMENT
ACT
OF
1977.—A national wholesale financial institu-
tion shall be subject to the Community Rein-
vestment Act of 1977.
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•HR 10 RH2
‘‘(d) EXAMINATION REPORTS.—The Comp-
troller of the Currency shall, to the fullest ex-
tent possible, use the report of examinations
made by the Board of Governors of the Fed-
eral Reserve System of a wholesale financial
institution.’’.
(2) CLERICAL
AMENDMENT.—The table
of sections for chapter one of title LXII of
the Revised Statutes of the United States
is amended by inserting after the item re-
lating to section 5136A (as added by sec-
tion 121(d) of this title) the following new
item:
‘‘5136B. National wholesale financial institutions.’’.
(b) STATE WHOLESALE FINANCIAL INSTITU-
TIONS.—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
WHOLESALE FINANCIAL INSTITUTION.—
‘‘(1) APPLICATION REQUIRED.—
‘‘(A) IN GENERAL.—Any bank may
apply to the Board of Governors of
the Federal Reserve System to be-
come a wholesale financial institution
461
•HR 10 RH2
and, as a wholesale financial institu-
tion, to subscribe to the stock of the
Federal reserve bank organized with-
in the district where the applying
bank is located.
‘‘(B) 
TREATMENT
AS
MEMBER
BANK.—Any application under sub-
paragraph (A) shall be treated as an
application under, and shall be sub-
ject to the provisions of, section 9.
‘‘(2) 
INSURANCE
TERMINATION.—No
bank the deposits of which are insured
under the Federal Deposit Insurance Act
may become a wholesale financial institu-
tion unless it has met all requirements
under that Act for voluntary termination
of deposit insurance.
‘‘(b) GENERAL REQUIREMENTS APPLICABLE
TO WHOLESALE FINANCIAL INSTITUTIONS.—
‘‘(1) FEDERAL RESERVE ACT.—Except as
otherwise provided in this section, whole-
sale financial institutions shall be mem-
ber banks and shall be subject to the pro-
visions of this Act that apply to member
banks to the same extent and in the same
462
•HR 10 RH2
manner as State member insured banks,
except that a wholesale financial institu-
tion may terminate membership under
this Act only with the prior written ap-
proval of the Board and on terms and
conditions that the Board determines are
appropriate to carry out the purposes of
this Act.
‘‘(2) PROMPT
CORRECTIVE
ACTION.—A
wholesale financial institution shall be
deemed to be an insured depository insti-
tution for purposes of section 38 of the
Federal Deposit Insurance Act except
that—
‘‘(A) the relevant capital levels
and capital measures for each capital
category shall be the levels specified
by the Board for wholesale financial
institutions; and
‘‘(B) all references to the appro-
priate Federal banking agency or to
the Corporation in that section shall
be deemed to be references to the
Board.
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‘‘(3) ENFORCEMENT
AUTHORITY.—Sub-
sections (j) and (k) of section 7, sub-
sections (b) through (n), (s), and (v) of
section 8, and section 19 of the Federal
Deposit Insurance Act shall apply to a
wholesale financial institution in the
same manner and to the same extent as
such provisions apply to State member
insured banks and any reference in such
sections to an insured depository institu-
tion shall be deemed to include a ref-
erence to a wholesale financial institu-
tion.
‘‘(4) CERTAIN OTHER STATUTES APPLICA-
BLE.—A wholesale financial institution
shall be deemed to be a banking institu-
tion, and the Board shall be the appro-
priate Federal banking agency for such
bank and all such bank’s affiliates, for
purposes of the International Lending
Supervision Act.
‘‘(5) BANK MERGER ACT.—A wholesale
financial institution shall be subject to
sections 18(c) and 44 of the Federal De-
posit Insurance Act in the same manner
464
•HR 10 RH2
and to the same extent the wholesale fi-
nancial institution would be subject to
such sections if the institution were a
State member insured bank.
‘‘(6) 
BRANCHING.—Notwithstanding
any other provision of law, a wholesale fi-
nancial institution may establish and op-
erate a branch at any location on such
terms and conditions as established by
the Board and, in the case of a State-
chartered wholesale financial institution,
with the approval of the Board, and, in
the case of a national bank wholesale fi-
nancial institution, with the approval of
the Comptroller of the Currency.
‘‘(7) 
ACTIVITIES
OF
OUT-OF-STATE
BRANCHES OF WHOLESALE FINANCIAL INSTI-
TUTIONS.—
‘‘(A) GENERAL.—A State-chartered
wholesale financial institution shall
be deemed a State bank and an in-
sured State bank and a national
wholesale financial institution shall
be deemed a national bank for pur-
poses of paragraphs (1), (2), and (3) of
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section 24(j) of the Federal Deposit
Insurance Act.
‘‘(B) DEFINITIONS.—The following
definitions shall apply solely for pur-
poses of applying paragraph (1):
‘‘(i) HOME
STATE.—The term
‘home State’ means—
‘‘(I) with respect to a na-
tional wholesale financial in-
stitution, the State in which
the main office of the institu-
tion is located; and
‘‘(II) with respect to a
State-chartered wholesale fi-
nancial institution, the State
by which the institution is
chartered.
‘‘(ii) HOST
STATE.—The term
‘host State’ means a State, other
than the home State of the whole-
sale 
financial 
institution, 
in
which the institution maintains,
or seeks to establish and main-
tain, a branch.
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‘‘(iii) OUT-OF-STATE BANK.—The
term ‘out-of-State bank’ means,
with respect to any State, a
wholesale 
financial 
institution
whose home State is another
State.
‘‘(8) DISCRIMINATION REGARDING INTER-
EST RATES.—Section 27 of the Federal De-
posit Insurance Act (12 U.S.C. 1831d)
shall apply to State-chartered wholesale
financial institutions in the same manner
and to the same extent as such provisions
apply to State member insured banks and
any reference in such section to a State-
chartered insured depository institution
shall be deemed to include a reference to
a State-chartered wholesale financial in-
stitution.
‘‘(9) PREEMPTION
OF
STATE
LAWS
RE-
QUIRING
DEPOSIT
INSURANCE
FOR
WHOLE-
SALE FINANCIAL INSTITUTIONS.—The appro-
priate State banking authority may grant
a charter to a wholesale financial institu-
tion notwithstanding any State constitu-
tion or statute requiring that the institu-
467
•HR 10 RH2
tion obtain insurance of its deposits and
any such State constitution or statute is
hereby preempted solely for purposes of
this paragraph.
‘‘(10) PARITY FOR WHOLESALE FINANCIAL
INSTITUTIONS.—A State bank that is a
wholesale financial institution under this
section shall have all of the rights, pow-
ers, privileges, and immunities (including
those derived from status as a federally
chartered institution) of and as if it were
a national bank, subject to such terms
and conditions as established by the
Board.
‘‘(11) COMMUNITY REINVESTMENT ACT OF
1977.—A State wholesale financial institu-
tion shall be subject to the Community
Reinvestment Act of 1977.
‘‘(c) SPECIFIC REQUIREMENTS APPLICABLE
TO WHOLESALE FINANCIAL INSTITUTIONS.—
‘‘(1) LIMITATIONS ON DEPOSITS.—
‘‘(A) MINIMUM AMOUNT.—
‘‘(i) IN GENERAL.—No wholesale
financial institution may receive
initial deposits of $100,000 or less,
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•HR 10 RH2
other than on an incidental and
occasional basis.
‘‘(ii) LIMITATION
ON
DEPOSITS
OF LESS THAN $100,000.—No whole-
sale financial institution may re-
ceive initial deposits of $100,000
or less if such deposits constitute
more than 5 percent of the insti-
tution’s total deposits.
‘‘(B) NO
DEPOSIT
INSURANCE.—No
deposits held by a wholesale financial
institution shall be insured deposits
under the Federal Deposit Insurance
Act.
‘‘(C) 
ADVERTISING
AND
DISCLO-
SURE.—The Board shall prescribe reg-
ulations 
pertaining 
to 
advertising
and disclosure by wholesale financial
institutions to ensure that each de-
positor is notified that deposits at the
wholesale financial institution are
not federally insured or otherwise
guaranteed by the United States Gov-
ernment.
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•HR 10 RH2
‘‘(2) MINIMUM CAPITAL LEVELS APPLICA-
BLE
TO
WHOLESALE
FINANCIAL
INSTITU-
TIONS.—The Board shall, by regulation,
adopt capital requirements for wholesale
financial institutions—
‘‘(A) to account for the status of
wholesale financial institutions as in-
stitutions that accept deposits that
are not insured under the Federal De-
posit Insurance Act; and
‘‘(B) to provide for the safe and
sound operation of the wholesale fi-
nancial institution without undue
risk to creditors or other persons, in-
cluding Federal reserve banks, en-
gaged in transactions with the bank.
‘‘(3) ADDITIONAL REQUIREMENTS APPLI-
CABLE
TO
WHOLESALE
FINANCIAL
INSTITU-
TIONS.—In addition to any requirement
otherwise applicable to State member in-
sured banks or applicable, under this sec-
tion, to wholesale financial institutions,
the Board may impose, by regulation or
order, upon wholesale financial institu-
tions—
470
•HR 10 RH2
‘‘(A) limitations on transactions,
direct or indirect, with affiliates to
prevent—
‘‘(i) the transfer of risk to the
deposit insurance funds; or
‘‘(ii) an affiliate from gaining
access to, or the benefits of, credit
from a Federal reserve bank, in-
cluding overdrafts at a Federal
reserve bank;
‘‘(B) special clearing balance re-
quirements; and
‘‘(C) any additional requirements
that the Board determines to be ap-
propriate or necessary to—
‘‘(i) promote the safety and
soundness of the wholesale finan-
cial institution or any insured de-
pository institution affiliate of the
wholesale financial institution;
‘‘(ii) prevent the transfer of
risk to the deposit insurance
funds; or
‘‘(iii) protect creditors and
other persons, including Federal
471
•HR 10 RH2
reserve banks, engaged in trans-
actions with the wholesale finan-
cial institution.
‘‘(4) EXEMPTIONS
FOR
WHOLESALE
FI-
NANCIAL
INSTITUTIONS.—The Board may,
by regulation or order, exempt any
wholesale financial institution from any
provision applicable to a member bank
that is not a wholesale financial institu-
tion, if the Board finds that such exemp-
tion is not inconsistent with—
‘‘(A) the promotion of the safety
and soundness of the wholesale finan-
cial institution or any insured deposi-
tory institution affiliate of the whole-
sale financial institution;
‘‘(B) the protection of the deposit
insurance funds; and
‘‘(C) the protection of creditors
and other persons, including Federal
reserve banks, engaged in trans-
actions with the wholesale financial
institution.
‘‘(5) LIMITATION
ON
TRANSACTIONS
BE-
TWEEN A WHOLESALE FINANCIAL INSTITUTION
472
•HR 10 RH2
AND
AN
INSURED
BANK.—For purposes of
section 23A(d)(1) of the Federal Reserve
Act, a wholesale financial institution that
is affiliated with an insured bank shall
not be a bank.
‘‘(6) NO
EFFECT
ON
OTHER
PROVI-
SIONS.—This section shall not be con-
strued as limiting the Board’s authority
over member banks under any other pro-
vision of law, or to create any obligation
for any Federal reserve bank to make, in-
crease, renew, or extend any advance or
discount under this Act to any member
bank or other depository institution.
‘‘(d) CAPITAL
AND MANAGERIAL REQUIRE-
MENTS.—
‘‘(1) IN GENERAL.—A wholesale finan-
cial institution controlled by a company
that is subject to section 17(i) of the Secu-
rities Exchange Act of 1934 or section 10
of the Bank Holding Company Act of 1956
must be well capitalized and well man-
aged.
‘‘(2) NOTICE TO COMPANY.—The Board
shall promptly provide notice to a com-
473
•HR 10 RH2
pany described in paragraph (1) when-
ever any wholesale financial institution
controlled by such company is not well
capitalized or well managed.
‘‘(3) AGREEMENT
TO
RESTORE
INSTITU-
TION.—Within 45 days of receipt of a no-
tice under paragraph (2) (or such addi-
tional period not to exceed 90 days as the
Board may permit), the company shall
execute an agreement acceptable to the
Board to restore the wholesale financial
institution to compliance with all of the
requirements of paragraph (1).
‘‘(4) LIMITATIONS UNTIL INSTITUTION RE-
STORED.—Until the wholesale financial in-
stitution is restored to compliance with
all of the requirements of paragraph (1),
the Board may impose such limitations
on the conduct or activities of the com-
pany or any affiliate of the company as
the Board determines to be appropriate
under the circumstances.
‘‘(5) FAILURE TO RESTORE.—If the com-
pany does not execute and implement an
agreement in accordance with paragraph
474
•HR 10 RH2
(3), comply with any limitation imposed
under paragraph (4), restore the whole-
sale financial institution to well capital-
ized status within 180 days after receipt
by the company of the notice described in
paragraph (2), or restore the wholesale fi-
nancial institution to well managed sta-
tus within such period as the Board may
permit, the company shall, under such
terms and conditions as may be imposed
by the Board and subject to such exten-
sion of time as may be granted in the
Board’s discretion, divest control of its
subsidiary depository institutions.
‘‘(6) NOTICE TO COMMISSION REGARDING
DIVESTITURES.—The Board shall notify the
Commission if (A) a wholesale financial
institutions controlled by a company sub-
ject to section 17(i) of the Securities Ex-
change Act of 1934 is not well capitalized
or well managed, or (B) such a company
is required to divest control of a subsidi-
ary wholesale financial institution under
this subsection.
475
•HR 10 RH2
‘‘(7) DEFINITIONS.—For purposes of
this subsection, the following definitions
shall apply:
‘‘(A) WELL
MANAGED.—The term
‘well managed’ has the same meaning
as in section 2 of the Bank Holding
Company Act of 1956.
‘‘(B) COMMISSION.—The term ‘Com-
mission’ means the Securities and Ex-
change Commission.
‘‘(e) CONSERVATORSHIP AUTHORITY.—
‘‘(1) IN GENERAL.—The Board may ap-
point a conservator to take possession
and control of a wholesale financial insti-
tution to the same extent and in the same
manner as the Comptroller of the Cur-
rency may appoint a conservator for a
national bank under section 203 of the
Bank Conservation Act, and the con-
servator 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 re-
476
•HR 10 RH2
spect to any conservator appointed under
paragraph (1) and the wholesale financial
institution for which such conservator
has been appointed as the Comptroller of
the Currency has under the Bank Con-
servation Act with respect to a conserva-
tor appointed under such Act and a na-
tional bank for which the conservator
has been appointed.
‘‘(f) EXCLUSIVE JURISDICTION.—Subsections
(c) and (e) of section 43 of the Federal Deposit
Insurance Act shall not apply to any whole-
sale financial institution.’’.
(c) VOLUNTARY TERMINATION
OF INSURED
STATUS BY CERTAIN INSTITUTIONS.—
(1) SECTION
DESIGNATIONS.—Section
8(a) of the Federal Deposit Insurance Act
(12 U.S.C. 1818(a)) is amended—
(A) by striking paragraph (1); and
(B) by redesignating paragraphs
(2) through (10) as paragraphs (1)
through (9), respectively.
(2) VOLUNTARY
TERMINATION
OF
IN-
SURED
STATUS.—The Federal Deposit In-
surance Act (12 U.S.C. 1811 et seq.) is
477
•HR 10 RH2
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 na-
tional bank may voluntarily terminate such
bank’s status as an insured depository institu-
tion in accordance with regulations of the
Corporation if—
‘‘(1) the bank provides written notice
of the bank’s intent to terminate such in-
sured status—
‘‘(A) to the Corporation and the
Board of Governors of the Federal
Reserve 
System 
not 
less 
than 
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
‘‘(2) either—
‘‘(A) the deposit insurance fund of
which such bank is a member equals
478
•HR 10 RH2
or exceeds the fund’s designated re-
serve ratio as of the date the bank
provides a written notice under para-
graph (1) and the Corporation deter-
mines that the fund will equal or ex-
ceed the applicable designated re-
serve ratio for the 2 semiannual as-
sessment periods immediately follow-
ing such date; or
‘‘(B) the Corporation and the
Board of Governors of the Federal
Reserve System approved the termi-
nation of the bank’s insured status
and the bank pays an exit fee in ac-
cordance with subsection (e).
‘‘(b) EXCEPTION.—Subsection (a) shall not
apply with respect to—
‘‘(1) an insured savings association; or
‘‘(2) an insured branch that is re-
quired to be insured under subsection (a)
or (b) of section 6 of the International
Banking Act of 1978.
‘‘(c) ELIGIBILITY
FOR
INSURANCE
TERMI-
NATED.—Any bank that voluntarily elects to
terminate the bank’s insured status under
479
•HR 10 RH2
subsection (a) shall not be eligible for insur-
ance on any deposits or any assistance au-
thorized under this Act after the period speci-
fied in subsection (f)(1).
‘‘(d) INSTITUTION MUST BECOME WHOLESALE
FINANCIAL INSTITUTION OR TERMINATE DEPOSIT-
TAKING ACTIVITIES.—Any depository institu-
tion which voluntarily terminates such insti-
tution’s status as an insured depository insti-
tution under this section may not, upon termi-
nation of insurance, accept any deposits un-
less the institution is a wholesale financial in-
stitution subject to section 9B of the Federal
Reserve Act.
‘‘(e) EXIT FEES.—
‘‘(1) IN GENERAL.—Any bank that vol-
untarily terminates such bank’s status as
an insured depository institution under
this section shall pay an exit fee in an
amount that the Corporation determines
is sufficient to account for the institu-
tion’s pro rata share of the amount (if
any) which would be required to restore
the relevant deposit insurance fund to
the fund’s designated reserve ratio as of
480
•HR 10 RH2
the date the bank provides a written no-
tice under subsection (a)(1).
‘‘(2) PROCEDURES.—The Corporation
shall prescribe, by regulation, procedures
for assessing any exit fee under this sub-
section.
‘‘(f) TEMPORARY INSURANCE OF DEPOSITS IN-
SURED AS OF TERMINATION.—
‘‘(1) TRANSITION PERIOD.—The insured
deposits of each depositor in a State bank
or a national bank on the effective date
of the voluntary termination of the
bank’s insured status, less all subsequent
withdrawals from any deposits of such
depositor, 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 deposits in the depository institution
made after the effective date of such ter-
mination shall be insured by the Cor-
poration.
‘‘(2) TEMPORARY ASSESSMENTS; OBLIGA-
TIONS
AND
DUTIES.—During the period
481
•HR 10 RH2
specified in paragraph (1) with respect to
any bank, the bank shall continue to pay
assessments under section 7 as if the
bank were an insured depository institu-
tion. The bank shall, in all other respects,
be subject to the authority of the Cor-
poration and the duties and obligations
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 demands 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 insti-
tution.
‘‘(g) ADVERTISEMENTS.—
‘‘(1) IN GENERAL.—A bank that volun-
tarily terminates the bank’s insured sta-
tus under this section shall not advertise
or hold itself out as having insured de-
posits, except that the bank may adver-
tise the temporary insurance of deposits
under subsection (f) if, in connection
with any such advertisement, the adver-
482
•HR 10 RH2
tisement also states with equal promi-
nence that additions to deposits and new
deposits made after the effective date of
the termination are not insured.
‘‘(2) CERTIFICATES OF DEPOSIT, OBLIGA-
TIONS, AND SECURITIES.—Any certificate of
deposit or other obligation or security is-
sued by a State bank or a national bank
after the effective date of the voluntary
termination of the bank’s insured status
under this section shall be accompanied
by a conspicuous, prominently displayed
notice that such certificate of deposit or
other obligation or security is not in-
sured under this Act.
‘‘(h) NOTICE REQUIREMENTS.—
‘‘(1) NOTICE TO THE CORPORATION.—The
notice 
required 
under 
subsection
(a)(1)(A) shall be in such form as the Cor-
poration may require.
‘‘(2) NOTICE
TO
DEPOSITORS.—The no-
tice required under subsection (a)(1)(B)
shall be—
‘‘(A) sent to each depositor’s last
address of record with the bank; and
483
•HR 10 RH2
‘‘(B) in such manner and form as
the Corporation finds to be necessary
and appropriate for the protection of
depositors.’’.
(3) DEFINITION.—Section 19(b)(1)(A)(i)
of the Federal Reserve Act (12 U.S.C.
461(b)(1)(A)(i)) is amended by inserting ‘‘,
or any wholesale financial institution
subject to section 9B of this Act’’ after
‘‘such Act’’.
Subtitle E—Streamlining Antitrust
Review of Bank Acquisitions
and Mergers
SEC. 141. AMENDMENTS TO THE BANK HOLDING COMPANY
ACT OF 1956.
(a) AMENDMENTS TO SECTION 3 TO REQUIRE
FILING OF APPLICATION COPIES WITH ANTITRUST
AGENCIES.—Section 3 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1842) is
amended—
(1) in subsection (b) by inserting after
paragraph (2) the following new para-
graph:
‘‘(3) REQUIREMENT
TO
FILE
INFORMA-
TION WITH ANTITRUST AGENCIES.—Any ap-
484
•HR 10 RH2
plicant seeking prior approval of the
Board to engage in an acquisition trans-
action under this section must file simul-
taneously with the Attorney General and,
if the transaction also involves an acqui-
sition under section 4 or 6, the Federal
Trade Commission copies of any docu-
ments regarding the proposed trans-
action required by the Board.’’; and
(2) in subsection (c)—
(A) by striking paragraph (1); and
(B) by redesignating paragraphs
(2) through (5) as paragraphs (1)
through (4), respectively.
(b) AMENDMENTS TO SECTION 11 TO MODIFY
JUSTICE DEPARTMENT NOTIFICATION AND POST-
APPROVAL
WAITING
PERIOD
FOR
SECTION
TRANSACTIONS.—Section 11 of the Bank Hold-
ing Company Act of 1956 (12 U.S.C. 1849) is
amended—
(1) in subsection (b)(1)—
(A) by striking ‘‘, if the Board has
not received any adverse comment
from the Attorney General of the
485
•HR 10 RH2
United States relating to competitive
factors,’’;
(B) by striking ‘‘as may be pre-
scribed by the Board with the concur-
rence of the Attorney General, but in
no event less than 15 calendar days
after the date of approval.’’ and in-
serting ‘‘as may be prescribed by the
appropriate antitrust agency.’’; and
(C) by striking the 3d to last sen-
tence and the penultimate sentence;
and
(2) by striking subsections (c) and (e)
and redesignating subsections (d) and (f)
as subsections (c) and (d), respectively.
(c) DEFINITIONS.—Section 2(o) of the Bank
Holding Company Act of 1956 (12 U.S.C.
1841(o)) is amended by adding at the end the
following new paragraphs:
‘‘(8) ANTITRUST
AGENCIES.—The term
‘antitrust agencies’ means the Attorney
General and the Federal Trade Commis-
sion.
‘‘(9) APPROPRIATE ANTITRUST AGENCY.—
With respect to a particular transaction,
486
•HR 10 RH2
the term ‘appropriate antitrust agency’
means the antitrust agency engaged in
reviewing the competitive effects of such
transaction.’’.
SEC. 142. AMENDMENTS TO THE FEDERAL DEPOSIT INSUR-
ANCE ACT TO VEST IN THE ATTORNEY GEN-
ERAL SOLE RESPONSIBILITY FOR ANTITRUST
REVIEW OF DEPOSITORY INSTITUTION MERG-
ERS.
Section 18(c) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1828) is amended—
(1) in paragraph (3)(C) by striking
‘‘during a period at least as long as the
period allowed for furnishing reports
under paragraph (4) of this subsection’’;
(2) by striking paragraph (4) and in-
serting the following new paragraph:
‘‘(4) FACTORS
TO
BE
CONSIDERED.—In
determining whether to approve a trans-
action, the responsible agency shall in
every case take into consideration the fi-
nancial and managerial resources and fu-
ture prospects of the existing and pro-
posed institutions, and the convenience
487
•HR 10 RH2
and needs of the community to be
served.’’;
(3) by striking paragraph (5) and in-
serting the following new paragraph:
‘‘(5) NOTICE
TO
ATTORNEY
GENERAL.—
The responsible agency shall immediately
notify the Attorney General of any ap-
proval by it pursuant to this subsection
of a proposed merger transaction. If the
responsible agency has found that it must
act immediately in order to prevent the
probable failure of one of the banks in-
volved, the transaction may be con-
summated immediately upon approval by
the agency. If the responsible agency has
notified the other Federal banking agen-
cies referred to in this section of the ex-
istence of an emergency requiring expe-
ditious action and has required the sub-
mission of views and recommendations
within 10 days, the transaction may not
be consummated before the 5th calendar
day after the date of approval of the re-
sponsible agency. In all other cases, the
transaction may not be consummated be-
488
•HR 10 RH2
fore the 30th calendar day after the date
of approval by the agency, or such short-
er period of time as may be prescribed by
the Attorney General.’’;
(4) by striking paragraph (6) and re-
designating paragraphs (7) through (11)
as paragraphs (6) through (10), respec-
tively;
(5) in subparagraph (A) of paragraph
(6) (as so redesignated by paragraph (4)
of this section)—
(A) by striking ‘‘(5)’’ and inserting
‘‘(4)’’; and
(B) by striking ‘‘(6)’’ and inserting
‘‘(5)’’;
(C) by striking ‘‘In any such ac-
tion, the court shall review de novo
the issues presented.’’;
(6) in paragraph (6) (as so redesig-
nated by paragraph (4) of this section)—
(A) by striking subparagraphs (B)
and (D); and
(B) 
by 
redesignating 
subpara-
graph (C) as subparagraph (B);
489
•HR 10 RH2
(7) in paragraph (8) (as so redesig-
nated by paragraph (4) of this section)—
(A) by inserting ‘‘and’’ after the
semicolon at the end of subparagraph
(A):
(B) by striking subparagraph (B);
and
(C) 
by 
redesignating 
subpara-
graph (C) as subparagraph (B); and
(8) by inserting after paragraph (10)
(as so redesignated by paragraph (4) of
this section) the following new para-
graph:
‘‘(11) REQUIREMENT
TO
FILE
INFORMA-
TION WITH ATTORNEY GENERAL.—Any appli-
cant seeking prior written approval of
the responsible Federal banking agency
to engage in a merger transaction under
this subsection shall file simultaneously
with the Attorney General copies of any
documents regarding the proposed trans-
action required by the Federal banking
agency.’’.
490
•HR 10 RH2
SEC. 143. INFORMATION FILED BY DEPOSITORY INSTITU-
TIONS; INTERAGENCY DATA SHARING.
(a) FORMAT OF NOTICE.—
(1) IN
GENERAL.—Notice of any pro-
posed transaction for which approval is
required under section 3 of the Bank
Holding Company Act of 1956 or section
18(c) of the Federal Deposit Insurance
Act shall be in a format designated and
required by the appropriate Federal
banking agency (as defined in section 3
of the Federal Deposit Insurance Act)
and shall contain a section on the likely
competitive effects of the proposed trans-
action.
(2) DESIGNATION BY AGENCY.—The ap-
propriate Federal banking agency, with
the concurrence of the antitrust agencies,
shall designate and require the form and
content of the competitive effects section.
(3) NOTICE OF SUSPENSION.—Upon noti-
fication by the appropriate antitrust
agency that the competitive effects sec-
tion of an application is incomplete, the
appropriate 
Federal 
banking 
agency
shall notify the applicant that the agency
491
•HR 10 RH2
will suspend processing of the applica-
tion until the appropriate antitrust agen-
cy notifies the agency that the applica-
tion is complete.
(4) EMERGENCY
ACTION.—This provi-
sion shall not affect the appropriate Fed-
eral banking agency’s authority to act im-
mediately—
(A) to prevent the probable fail-
ure of 1 of the banks involved; or
(B) to reduce or eliminate a post
approval waiting period in case of an
emergency requiring expeditious ac-
tion.
(5) EXEMPTION FOR CERTAIN FILINGS.—
With the concurrence of the antitrust
agencies, the appropriate Federal bank-
ing agency may exempt classes of per-
sons, acquisitions, or transactions that
are not likely to violate the antitrust laws
from the requirement that applicants file
a competitive effects section.
(b) INTERAGENCY DATA SHARING REQUIRE-
MENT.—
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(1) IN
GENERAL.—To the extent not
prohibited by other law, the Federal
banking agencies shall make available to
the antitrust agencies any data in their
possession that the antitrust agencies
deem necessary for antitrust reviews of
transactions requiring approval under
section 3 of the Bank Holding Company
Act of 1956 or section 18(c) of the Federal
Deposit Insurance Act.
(2) CONTINUATION OF DATA COLLECTION
AND
ANALYSIS.—The 
Federal 
banking
agencies shall continue to provide mar-
ket analysis, deposit share information,
and other relevant information for deter-
mining market competition as needed by
the Attorney General in the same manner
such agencies provided analysis and in-
formation under section 18(c) of the Fed-
eral Deposit Insurance Act and 3(c) of the
Bank Holding Company Act of 1956 (as
such sections were in effect on the day
before the date of the enactment of this
Act) and shall continue to collect infor-
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mation necessary or useful for such anal-
ysis.
(c) DEFINITIONS.—For purposes of this sec-
tion, the following definitions shall apply:
(1) ANTITRUST
AGENCIES.—The term
‘‘antitrust agencies’’ means the Attorney
General and the Federal Trade Commis-
sion.
(2) APPROPRIATE ANTITRUST AGENCY.—
With respect to a particular transaction,
the term ‘‘appropriate antitrust agency’’
means the antitrust agency engaged in
reviewing the competitive effects of such
transaction.
SEC. 144. APPLICABILITY OF ANTITRUST LAWS.
No provision of this subtitle shall be con-
strued as affecting—
(1) the applicability of antitrust laws
(as defined in section 11(d) of the Bank
Holding Company Act of 1956; as so re-
designated pursuant to this subtitle); or
(2) the applicability, if any, of any
State law which is similar to the antitrust
laws.
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SEC. 145. CLARIFICATION OF STATUS OF SUBSIDIARIES
AND AFFILIATES.
(a) CLARIFICATION OF FEDERAL TRADE COM-
MISSION JURISDICTION.—Any person which di-
rectly or indirectly controls, is controlled di-
rectly or indirectly by, or is directly or indi-
rectly under common control with, any bank
or savings association (as such terms are de-
fined in section 3 of the Federal Deposit In-
surance Act) and is not itself a bank or sav-
ings association shall not be deemed to be a
bank or savings association for purposes of
the Federal Trade Commission Act or any
other law enforced by the Federal Trade Com-
mission.
(b) SAVINGS PROVISION.—No provision of
this section shall be construed as restricting
the authority of any Federal banking agency
(as defined in section 3 of the Federal Deposit
Insurance Act) under any Federal banking
law, including section 8 of the Federal De-
posit Insurance Act.
SEC. 146. EFFECTIVE DATE.
This subtitle shall take effect 6 months
after the date of enactment of this Act.
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Subtitle F—Applying the Principles
of 
National 
Treatment 
and
Equality of Competitive Oppor-
tunity to Foreign Banks and
Foreign Financial Institutions
SEC. 151. APPLYING THE PRINCIPLES OF NATIONAL TREAT-
MENT AND EQUALITY OF COMPETITIVE OP-
PORTUNITY TO FOREIGN BANKS THAT ARE
FINANCIAL HOLDING COMPANIES.
Section 8(c) of the International Banking
Act of 1978 (12 U.S.C. 3106(c)) is amended by
adding at the end the following new para-
graph:
‘‘(3) TERMINATION
OF
GRANDFATHERED
RIGHTS.—
‘‘(A) IN
GENERAL.—If any foreign
bank or foreign company files a dec-
laration under section 6(b)(1)(D) or
which 
receives 
a 
determination
under section 10(e)(1) of the Bank
Holding Company Act of 1956, any au-
thority conferred by this subsection
on any foreign bank or company to
engage in any activity which the
Board has determined to be permis-
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sible for financial holding companies
under section 6 of such Act shall ter-
minate immediately.
‘‘(B) RESTRICTIONS
AND
REQUIRE-
MENTS AUTHORIZED.—If a foreign bank
or company that engages, directly or
through an affiliate pursuant to para-
graph (1), in an activity which the
Board has determined to be permis-
sible for financial holding companies
under section 6 of the Bank Holding
Company Act of 1956 has not filed a
declaration with the Board of its sta-
tus as a financial holding company
under such section or received a de-
termination under section 10(e)(1) by
the end of the 2-year period begin-
ning on the date of enactment of the
Financial Services Act of 1997, the
Board, giving due regard to the prin-
ciple of national treatment and equal-
ity of competitive opportunity, may
impose such restrictions and require-
ments on the conduct of such activi-
ties by such foreign bank or company
497
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as are comparable to those imposed
on a financial holding company orga-
nized under the laws of the United
States, including a requirement to
conduct such activities in compliance
with any prudential safeguards estab-
lished under section 5(h) of the Bank
Holding Company Act of 1956.’’.
SEC. 152. APPLYING THE PRINCIPLES OF NATIONAL TREAT-
MENT AND EQUALITY OF COMPETITIVE OP-
PORTUNITY TO FOREIGN BANKS AND FOR-
EIGN FINANCIAL INSTITUTIONS THAT ARE
WHOLESALE FINANCIAL INSTITUTIONS.
Section 8A of the Federal Deposit Insur-
ance Act (as added by section 136(c)(2) of this
Act) is amended by adding at the end the fol-
lowing new subsection:
‘‘(i) VOLUNTARY TERMINATION
OF DEPOSIT
INSURANCE.—The provisions on voluntary ter-
mination of insurance in this section shall
apply to an insured branch of a foreign bank
(including a Federal branch) in the same man-
ner and to the same extent as they apply to
an insured State bank or a national bank.’’.
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Subtitle G—Effective Date of Title
SEC. 171. EFFECTIVE DATE.
Except with regard to any subtitle or
other provision of this title for which a spe-
cific effective date is provided, this title and
the amendments made by this title shall take
effect at the end of the 270-day period begin-
ning on the date of the enactment of this Act.
TITLE II—FUNCTIONAL
REGULATION
Subtitle A—Brokers and Dealers
SEC. 201. DEFINITION OF BROKER.
Section 3(a)(4) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(4)) is amended to
read as follows:
‘‘(4) BROKER.—
‘‘(A) 
IN
GENERAL.—The 
term
‘broker’ means any person engaged in
the business of effecting transactions
in securities for the account of oth-
ers.
‘‘(B) EXCEPTION FOR CERTAIN BANK
ACTIVITIES.—A bank shall not be con-
sidered to be a broker because the
bank engages in any of the following
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activities under the conditions de-
scribed:
‘‘(i) THIRD
PARTY
BROKERAGE
ARRANGEMENTS.—The bank enters
into a contractual or other ar-
rangement with a broker or deal-
er registered under this title
under which the broker or dealer
offers brokerage services on or off
the premises of the bank if—
‘‘(I) such broker or dealer
is clearly identified as the
person performing the bro-
kerage services;
‘‘(II) the broker or dealer
performs brokerage services
in an area that is clearly
marked and, to the extent
practicable, physically sepa-
rate from the routine deposit-
taking activities of the bank;
‘‘(III) any materials used
by the bank to advertise or
promote generally the avail-
ability of brokerage services
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under 
the 
contractual 
or
other arrangement clearly in-
dicate 
that 
the 
brokerage
services are being provided
by the broker or dealer and
not by the bank;
‘‘(IV) any materials used
by the bank to advertise or
promote generally the avail-
ability of brokerage services
under 
the 
contractual 
or
other 
arrangement 
are 
in
compliance with the Federal
securities 
laws 
before 
dis-
tribution;
‘‘(V) 
bank 
employees
(other than associated per-
sons of a broker or dealer
who are qualified pursuant to
the rules of a self-regulatory
organization) 
perform 
only
clerical or ministerial func-
tions in connection with bro-
kerage transactions including
scheduling appointments with
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•HR 10 RH2
the associated persons of a
broker or dealer, except that
bank employees may forward
customer funds or securities
and may describe in general
terms the range of investment
vehicles available from the
bank and the broker or dealer
under 
the 
contractual 
or
other arrangement;
‘‘(VI) bank employees do
not directly receive incentive
compensation for any broker-
age transaction unless such
employees are associated per-
sons of a broker or dealer and
are qualified pursuant to the
rules of a self-regulatory orga-
nization, except that the bank
employees may receive com-
pensation for the referral of
any 
customer 
if 
the 
com-
pensation is a nominal one-
time cash fee of a fixed dollar
amount and the payment of
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•HR 10 RH2
the fee is not contingent on
whether the referral results
in a transaction;
‘‘(VII) such services are
provided by the broker or
dealer on a basis in which all
customers which receive any
services are fully disclosed to
the broker or dealer;
‘‘(VIII) the bank does not
carry a securities account of
the customer except in a cus-
tomary custodian or trustee
capacity; and
‘‘(IX) the bank, broker, or
dealer informs each customer
that the brokerage services
are provided by the broker or
dealer and not by the bank
and that the securities are not
deposits or other obligations
of the bank, are not guaran-
teed by the bank, and are not
insured by the Federal De-
posit Insurance Corporation.
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‘‘(ii) 
TRUST
ACTIVITIES.—The
bank—
‘‘(I) effects transactions in
a trustee capacity and is pri-
marily compensated based on
a percentage of assets under
management; or
‘‘(II) is an insured bank
and—
‘‘(aa) 
effects 
trans-
actions in a fiduciary ca-
pacity in its trust depart-
ment in connection with
the provision of invest-
ment advice or the exer-
cise of investment discre-
tion;
‘‘(bb) is primarily com-
pensated based on a per-
centage of assets under
management, 
and 
does
not receive incentive com-
pensation for such broker-
age activities;
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‘‘(cc) does not publicly
solicit brokerage business,
other than by advertising
that it effects transactions
in securities in conjunc-
tion with advertising its
other trust activities; and
‘‘(dd) such services are
not provided by an em-
ployee of the bank who is
also an employee of a
broker or dealer.
‘‘(iii) PERMISSIBLE
SECURITIES
TRANSACTIONS.—The bank effects
transactions in—
‘‘(I) 
commercial 
paper,
bankers acceptances, or com-
mercial bills;
‘‘(II) exempted securities,
other than transactions in
municipal revenue bonds that
a national bank is not explic-
itly authorized to buy or sell
for its own account by the
Seventh paragraph of section
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5136 of the Revised Statutes
of the United States (as in ef-
fect on September 1, 1997)
without percentage limitation
on the amount of the invest-
ment for its own account;
‘‘(III) qualified Canadian
government obligations as de-
fined in section 5136 of the
Revised Statutes, in conform-
ity with section 15C of this
title and the rules and regula-
tions thereunder, or obliga-
tions of the North American
Development Bank; or
‘‘(IV) 
any 
standardized,
credit enhanced debt security
issued by a foreign govern-
ment pursuant to the March
1989 plan of then Secretary of
the Treasury Brady, used by
such foreign government to
retire outstanding commercial
bank loans.
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‘‘(iv) EMPLOYEE
AND
SHARE-
HOLDER BENEFIT PLANS.—The bank
effects transactions in—
‘‘(I) the securities of an is-
suer as part of any pension,
retirement, 
profit-sharing,
bonus, thrift, savings, incen-
tive, or other similar benefit
plan for the employees of that
issuer or its subsidiaries, if
the bank does not—
‘‘(aa) 
solicit 
trans-
actions; or
‘‘(bb) receive any com-
pensation directly or indi-
rectly from employees for
effecting 
such 
trans-
actions, other than a flat
per order processing fee
that does not exceed the
bank’s incremental costs
directly 
attributable 
to
effecting 
such 
trans-
actions; or
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•HR 10 RH2
‘‘(II) the securities of an
issuer as part of that issuer’s
dividend 
reinvestment 
and
stock purchase plan for its
shareholders, if the bank does
not—
‘‘(aa) 
solicit 
trans-
actions;
‘‘(bb) receive any com-
pensation directly or indi-
rectly from shareholders
for effecting such trans-
actions, other than a flat
per order processing fee
that does not exceed the
bank’s incremental costs
directly 
attributable 
to
effecting 
such 
trans-
actions; or
‘‘(cc) net shareholders’
buy and sell orders.
‘‘(v) 
SWEEP
ACCOUNTS.—The
bank effects transactions as part
of a program for the investment
or reinvestment of bank deposit
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•HR 10 RH2
funds into any no-load, open-end
management investment company
registered under the Investment
Company Act of 1940 that holds
itself out as a money market fund.
‘‘(vi) 
AFFILIATE
TRANS-
ACTIONS.—The bank effects trans-
actions for the account of any af-
filiate of the bank (as defined in
section 2 of the Bank Holding
Company 
Act 
of 
1956) 
other
than—
‘‘(I) a registered broker or
dealer; or
‘‘(II) an affiliate that is en-
gaged in merchant banking,
as 
described 
in 
section
17(i)(7)(B)(ii)(VIII) of this title.
‘‘(vii) PRIVATE
SECURITIES
OF-
FERINGS.—The bank—
‘‘(I) effects sales as part of
a primary offering of securi-
ties not involving a public of-
fering, pursuant to section
3(b), 4(2), or 4(6) of the Securi-
509
•HR 10 RH2
ties Act of 1933 or the rules
and regulations issued there-
under;
‘‘(II) at any time after one
year after the date of enact-
ment of the Financial Services
Act of 1997, is not affiliated
with a broker or dealer that
has been registered for more
than one year; and
‘‘(III) effects transactions
exclusively with qualified in-
vestors.
‘‘(viii) SAFEKEEPING
AND
CUS-
TODY SERVICES.—The bank—
‘‘(I) provides safekeeping
or custody services with re-
spect to securities that are
pledged by one customer to
another customer in connec-
tion with a repurchase agree-
ment or similar financing ar-
rangement;
‘‘(II) facilitates the trans-
fer of funds or securities, as a
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•HR 10 RH2
custodian or a clearing agen-
cy, in connection with the
clearance and settlement of
its customers’ transactions in
securities; or
‘‘(III) effects or facilitates
the lending or borrowing of
securities with or on behalf of
its customers as part of serv-
ices provided to those cus-
tomers pursuant to subclause
(I) or (II).
‘‘(ix) BANKING PRODUCTS.—The
bank effects transactions in bank-
ing products, as defined in para-
graph (54) of this subsection.
‘‘(x) DE
MINIMIS
EXCEPTION.—
The bank effects, other than in
transactions 
referred 
to 
in
clauses (i) through (ix), not more
than 500 transactions in securi-
ties in any calendar year, and
such transactions are not effected
by an employee of the bank who
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is also an employee of a broker or
dealer.
‘‘(C) EXCEPTION FOR ENTITIES SUB-
JECT
TO
SECTION
15(e).—The 
term
‘broker’ does not include a bank
that—
‘‘(i) was, immediately prior to
the enactment of the Financial
Services Act of 1997, subject to
section 15(e); and
‘‘(ii) is subject to such restric-
tions and requirements as the
Commission 
considers 
appro-
priate.’’.
SEC. 202. 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 ‘deal-
er’ means any person engaged in the
business of buying and selling securi-
ties for such person’s own account
through a broker or otherwise.