8 of the Federal Deposit Insurance Act, each
such agency may exercise, for purposes of en-
forcing compliance with any requirement im-
posed under this Act, any other authority con-
ferred on such agency by any other law.
(b) EXAMINATION.—The appropriate Federal bank-
ing agency may examine the books, records and affairs
of, or require reports from, any affiliate of an insured de-
pository institution which is a subsidiary of a diversified
financial services holding company in order to ensure com-
pliance with the requirements of this Act.
(c) FEDERAL RESERVE PAYMENT SERVICES.—
(1) IN
GENERAL.—All Federal reserve bank
services described in section 13 of the Federal Re-
serve Act, the 14th undesignated paragraph of sec-
tion 16 of such Act, and the Expedited Funds Avail-
ability Act shall be available to all insured depository
institutions, on the same terms and conditions and
subject to the same limitations and restrictions,
without regard to the identity of the insured deposi-
tory institution’s affiliates, except to the extent nec-
essary to avoid a material adverse effect on a large
dollar payment system.
(2) DEFINITION.—For purposes of this sub-
section, the term ‘‘a material adverse effect on a
large dollar payment system’’ means any activity of
an insured depository institution which results in
violations of any uniformly applied payment system
risk-reduction policy cap or limitation established by
the Board of Governors of the Federal Reserve Sys-
tem which—
(A) occur during any period consisting of
5 consecutive business days; and
(B) exceed the median number of viola-
tions for all users of the applicable large dollar
payment services during that same period.
(3) 
FEDERAL
RESERVE
ENFORCEMENT
POWER.—
(A) ADMINISTRATIVE ENFORCEMENT.—In
the case of an insured depository institution
which has engaged in any activity that has re-
sulted in a material adverse effect on a large
dollar payment system, the Board of Governors
of the Federal Reserve System shall be treated
as the appropriate Federal banking agency for
such institution with respect to such activity for
purposes of subsection (a).
(B) EXAMINATION.—The Board of Gov-
ernors of the Federal Reserve System may ex-
amine the books, records and affairs of any in-
sured depository institution which has engaged
in any activity that has resulted in a material
adverse effect on a large dollar payment system,
or require reports from any such institution
with respect to any such activity.
SEC. 10. CRIMINAL AND CIVIL PENALTIES.
(a) KNOWING AND INTENTIONAL VIOLATIONS.—
(1) IN GENERAL.—Whoever knowingly violates
or participates in a violation of—
(A) any provision of this Act, or any regu-
lation prescribed or order issued by an appro-
priate Federal banking agency pursuant to this
Act;
(B) being a company, violates any regula-
tion prescribed or order issued by the Board
under this Act; or
(C) any written agreement between—
(i) any diversified financial services
holding company or any affiliate of such
company which is not an insured deposi-
tory institution; and
(ii) any appropriate Federal banking
agency,
shall be fined under title 18, United States Code, for
each day during which the violation continues, im-
prisoned for not more than 1 year, or both.
(2) VIOLATIONS WITH INTENT TO DECEIVE, DE-
FRAUD, OR PROFIT.—Whoever, with the intent to
deceive, defraud, or profit significantly, knowingly
commits a violation, or participates in a violation,
described in paragraph (1) shall be fined not more
than $1,000,000 for each day during which the vio-
lation continues, imprisoned for not more than 5
years, or both.
(b) FALSE ENTRY OR STATEMENT.—Each officer, di-
rector, employee, and agent of a diversified financial serv-
ices holding company or any affiliate of any such company
which is not an insured depository institution, shall be
subject to the same penalties for false entries in any book,
report, or statement of such company as are applicable
to officers, directors, employees and agents of member
banks, bank holding companies, and savings and loan
holding companies for false entries in any books, reports,
or statements of member banks, bank holding companies,
and savings and loan holding companies under section
1005 of title 18, United States Code, to the extent that
any such false entry refers in any material way to the af-
fairs of an insured depository institution affiliate of such
company.
(c) CIVIL PENALTY.—
(1) FIRST TIER.—Any person who—
(A) violates this Act or any regulation pre-
scribed or order issued by the Board under this
Act; or
(B) violates any written agreement be-
tween such person and the Board;
shall forfeit and pay a civil penalty of not more than
$5,000 for each day during which such violation con-
tinues.
(2) SECOND TIER.—Notwithstanding subpara-
graph (A), if any person—
(A) commits any violation described in any
clause of subparagraph (A) or breaches any fi-
duciary duty; and
(B) such violation or breach—
(i) is part of a pattern of misconduct;
(ii) causes or is likely to cause more
than a minimal loss to a depository institu-
tion; or
(iii) results in pecuniary gain or other
benefit to such person,
such person shall forfeit and pay a civil penalty of
not more than $25,000 for each day during which
such violation or breach continues.
(3) THIRD
TIER.—Notwithstanding subpara-
graphs (A) and (B), if any person—
(A) knowingly commits any violation de-
scribed in subparagraph (A) or breaches any fi-
duciary duty; and
(B) knowingly or recklessly causes a sub-
stantial loss to a depository institution or a
substantial pecuniary gain or other benefit to
such person by reason of such violation or
breach,
such person shall forfeit and pay a civil penalty in
an amount not to exceed the applicable maximum
amount determined under paragraph (4) for each
day during which such violation or breach continues.
(4) MAXIMUM
AMOUNTS
OF
PENALTIES
FOR
ANY
VIOLATION
DESCRIBED
IN
SUBPARAGRAPH
(C).—The maximum daily amount of any civil pen-
alty which may be assessed pursuant to paragraph
(3) for any violation or breach described in such
paragraph is—
(A) in the case of any person other than
an insured depository institution, an amount
not to exceed $1,000,000; and
(B) in the case of any insured depository
institution, an amount not to exceed the lesser
of—
(i) $1,000,000; or
(ii) 1 percent of the total assets of
such institution.
(5) ASSESSMENT.—
(A) WRITTEN NOTICE.—Any penalty im-
posed under paragraph (1), (2), or (3) may be
assessed and collected by the Board by written
notice.
(B) FINALITY OF ASSESSMENT.—If, with
respect to any assessment under subparagraph
(A), a hearing is not requested pursuant to
paragraph (8) within the period of time allowed
under such subparagraph, the assessment shall
constitute a final and unappealable order.
(6) AUTHORITY
TO
MODIFY
OR
REMIT
PEN-
ALTY.—The Board may compromise, modify, or
remit any penalty which the Board may assess or
had already assessed under paragraph (1), (2), or
(3).
(7) MITIGATING FACTORS.—In determining the
amount of any penalty imposed under paragraph
(1), (2), or (3), the Board shall take into account
the appropriateness of the penalty with respect to—
(A) the size of financial resources and good
faith of the person charged;
(B) the gravity of the violation;
(C) the history of previous violations; and
(D) such other matters as justice may re-
quire.
(8) HEARING.—The person against whom any
penalty is assessed under this paragraph shall be af-
forded an agency hearing if such person submits a
request for such hearing within 20 days after the is-
suance of the notice of assessment.
(9) COLLECTION.—
(A) REFERRAL.—If any person fails to pay
an assessment after any penalty assessed under
this subsection has become final, the Board
shall recover the amount assessed by action in
the appropriate United States district court.
(B) APPROPRIATENESS OF PENALTY NOT
REVIEWABLE.—In any civil action under sub-
paragraph (A), the validity and appropriateness
of the penalty shall not be subject to review.
(10) DISBURSEMENT.—All penalties collected
under authority of this paragraph shall be deposited
into the Treasury.
(11) REGULATIONS.—The Board shall prescribe
regulations establishing such procedures as may be
necessary to carry out this paragraph.
(d) VIOLATE DEFINED.—For purposes of this sec-
tion, the term ‘‘violate’’ includes any action (alone or with
another or others) for or toward causing, bringing about,
participating in, counseling, or aiding and abetting a viola-
tion.
SEC. 11. TECHNICAL AND CONFORMING AMENDMENTS.
(a) BANK HOLDING COMPANY ACT OF 1956.—
(1) Section 2(a)(1) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1841(a)(1)) is amend-
ed by inserting ‘‘or subsection (n)’’ after ‘‘paragraph
(5) of this subsection’’.
(2) Section 2(c)(2) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1841(c)) is amended
by adding at the end the following new subpara-
graph:
‘‘(K) An insured bank (as defined in sec-
tion 3(h) of the Federal Deposit Insurance Act)
which is not controlled by any company other
than a diversified financial services holding
company (as defined in the Financial Services
Competitiveness Act).’’.
(3) Section 5(d) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1844(d)) is amended by in-
serting ‘‘or the Financial Services Competitiveness
Act’’ after ‘‘this Act’’.
(b) AMENDMENT TO THE BANK HOLDING COMPANY
ACT AMENDMENTS OF 1970.—Section 106(b) of the Bank
Holding Company Act Amendments of 1970 (12 U.S.C.
1972) is amended—
(1) by adding at the end the following new
paragraphs:
‘‘(3) EXEMPTION
FOR
CERTAIN
TYING
AR-
RANGEMENTS.—A bank shall not be prohibited from
providing a loan, discount, deposit, or trust service,
or fixing or varying the consideration of any of the
foregoing, on the condition or requirement that—
‘‘(A) the customer shall obtain or provide
some additional loan, discount, deposit, or trust
service from, or to, such bank or from, or to,
such bank holding company of such bank or
from, or to, any subsidiary of such bank hold-
ing company; or
‘‘(B) the customer provide some additional
credit, property, or service to such bank, or to
such bank holding company of such bank, or to
any subsidiary of such bank holding company,
if such additional credit, property, or service is
related to and usually provided in connection
with a loan, discount, deposit, or trust service.
‘‘(4) 
EXCEPTIONS
BY
REGULATION
OR
ORDER.—The Board may, by regulation or order,
permit such exceptions to the prohibitions contained
in paragraph (1) as the Board considers will not be
contrary to the purposes of this title.’’;
(2) in paragraph (1), by striking ‘‘(1) A bank’’
and inserting ‘‘(1) IN GENERAL.—Except as pro-
vided in paragraph (3), a bank’’;
(3) in paragraph (1)(A) by striking ‘‘other than
a loan, discount, deposit, or trust service’’;
(4) in paragraph (1)(C) by striking ‘‘other than
those related to and usually provided in connection
with a loan, discount, deposit or trust service’’; and
(5) by striking the last sentence of paragraph
(1).
(c) AMENDMENTS
TO
THE
FEDERAL
RESERVE
ACT.—Section 23A of the Federal Reserve Act (12 U.S.C.
371c) is amended by—
(1) inserting at the end of subsection (a) the
following new paragraph:
‘‘(5) CERTAIN LOANS NOT TREATED AS TRANS-
ACTIONS WITH AFFILIATES.—Notwithstanding para-
graph (2), a loan or extension of credit shall not be
deemed to be made to any affiliate, for purposes of
this section, if—
‘‘(A) the member bank approves such loan
or extension of credit in accordance with sub-
stantially the same standards and procedures
and on substantially the same terms that it ap-
plies to similar loans or extensions of credit the
proceeds of which are not transferred to or for
the benefit of an affiliate; and
‘‘(B) such loan or extension of credit is not
made for the purposes of evading any of the re-
quirements of this section.’’; and
(2) by adding at the end the following new sub-
section:
‘‘(f) COORDINATION WITH FINANCIAL SERVICES
COMPETITIVENESS ACT.—The provisions of this section
shall be subject to section 102 of the Financial Services
Competitiveness Act.’’.
(d) AMENDMENTS TO THE FEDERAL DEPOSIT IN-
SURANCE ACT.—
(1) Section 7(j)(8) of the Federal Deposit In-
surance Act (12 U.S.C. 1817(j)(8)) is amended to
read as follows:
‘‘(8) CONTROL DEFINED.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, the term ‘‘control’’ has the same
meaning as in section 2(a) of the Bank Holding
Company Act of 1956.
‘‘(B) EXCEPTION
FOR
SECURITIES
AC-
QUIRED
IN
CERTAIN
CAPACITIES.—For pur-
poses of this subsection, no company shall be
deemed to control or to have acquired control of
any other company by virtue of the company’s
ownership of the voting securities of such other
company which were—
‘‘(i) acquired or held in an agency,
trust, or other fiduciary capacity (whether
with or without the sole discretion to vote
such securities);
‘‘(ii) acquired or held in connection
with or incidental to—
‘‘(I) the underwriting of securi-
ties if such securities are held only for
such period of time as will permit the
sale thereof on a reasonable basis; or
‘‘(II) acquired or held in connec-
tion with or incidental to market mak-
ing, dealing, trading, brokerage or
other securities related activities and
not with a view to acquiring, exercis-
ing or transferring any control over
the management or policies of such
company; or
‘‘(iii) acquired in securing or collect-
ing a debt previously contracted in good
faith, during the 2-year period beginning
on the date of such acquisition or for such
additional time (not exceeding 3 years) as
the appropriate Federal banking agency
may permit if the appropriate Federal
banking agency determines that such ex-
tension will not be detrimental to the pub-
lic interest.
‘‘(C) EXCEPTION FOR COMPANIES FORMED
FOR PROXY SOLICITATIONS.—For purposes of
this subsection, no company formed for the sole
purpose of participating in a proxy solicitation
shall be deemed to control or to have acquired
control of any other company by virtue of the
company’s acquisition of voting rights with re-
spect to shares of such other company which
were acquired in the course of such solicita-
tion.’’.
(2) Paragraph (9) of section 5(e) of the Federal
Deposit Insurance Act (12 U.S.C. 1815 (e)(9)) is
amended—
(A) by striking ‘‘or’’ at the end of subpara-
graph (A);
(B) by redesignating subparagraph (B) as
subparagraph (C); and
(C) by inserting after subparagraph (A)
the following new subparagraph:
‘‘(B) such institutions are controlled by the
same diversified financial services holding company
(as defined in section 3(a) of the Financial Services
Competitiveness Act); or’’.
(3) Section 3(u) of the Federal Deposit Insur-
ance Act (12 U.S.C. section 1813(u)) is amended—
(A) in paragraph (1), by inserting ‘‘, a di-
versified financial services holding company,’’
after ‘‘bank holding company’’; and
(B) by adding at the end the following new
paragraph:
‘‘(7) DIVERSIFIED FINANCIAL SERVICES HOLD-
ING COMPANY.—The term ‘diversified financial serv-
ices holding company’’ has the same meaning as in
section 3(9) of the Financial Services Competitive-
ness Act.’’.
(e) AMENDMENT TO THE CLAYTON ACT.—Section
7A(c)(8) of the Clayton Act (15 U.S.C. 18a(C)(8)), is
amended by striking ‘‘of 1933 (12 U.S.C. 1464)’’ and in-
serting ‘‘(12 U.S.C. 1464) or transactions which require
agency notification under section 4 of the Financial Serv-
ices Competitiveness Act or section 7(j) of the Federal De-
posit Insurance Act’’.
(f) AMENDMENTS TO THE COMMUNITY REINVEST-
MENT ACT.—Section 803(3) of the Community Reinvest-
ment Act (12 U.S.C. 2902(3)) is amended—
(1) by inserting ‘‘or notice, as the case may
be,’’ after ‘‘an application’’;
(2) by striking ‘‘or’’ at the end of subparagraph
(E);
(3) by striking the period at the end of sub-
paragraph (F) and inserting ‘‘; or’’; and
(4) by adding at the end the following new sub-
paragraph:
‘‘(G) the acquisition of an insured bank or
an insured institution requiring prior notice
under section 4 of the Financial Services Com-
petitiveness Act.’’.
Æ
HR 4956 IH——2
HR 4956 IH——3
HR 4956 IH——4