300
‘‘(b) ELIGIBILITY REQUIREMENTS
FOR FINANCIAL
HOLDING COMPANIES.—
‘‘(1) IN GENERAL.—No bank holding company
may engage in any activity or 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 depository insti-
tutions of the bank holding company are well
capitalized.
‘‘(B) All of the subsidiary depository insti-
tutions of the bank holding company are well
managed.
‘‘(C) All of the subsidiary depository insti-
tutions of the bank holding company have
achieved a rating of ‘satisfactory record of meet-
ing community credit needs’, or better, at the
most recent examination of each such institution
under the Community Reinvestment Act of 1977.
‘‘(D) The company has filed with the Board
a declaration that the company elects to be a fi-
nancial holding company and certifying that the
company meets the requirements of subpara-
graphs (A) through (C).
301
‘‘(2) FOREIGN
BANKS
AND
COMPANIES.—For
purposes of paragraph (1), the Board shall establish
and apply comparable capital and other operating
standards to a foreign bank that operates a branch or
agency or owns or controls a bank or commercial
lending company in the United States, and any com-
pany that owns or controls such foreign bank, giving
due regard to the principle of national treatment and
equality of competitive opportunity.
‘‘(3) LIMITED
EXCLUSIONS
FROM
COMMUNITY
NEEDS REQUIREMENTS FOR NEWLY ACQUIRED DEPOS-
ITORY INSTITUTIONS.—
‘‘(A) IN GENERAL.—If the requirements of
subparagraph (B) are met, any depository insti-
tution acquired by a bank holding company dur-
ing the 24-month period preceding the submis-
sion of a declaration under paragraph (1)(E)
and any depository institution acquired after the
submission of such declaration may be excluded
for purposes of paragraph (1)(C) until the later
of—
‘‘(i) the end of the 24-month period be-
ginning on the date the acquisition of the
depository institution by such company is
consummated; or
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‘‘(ii) the date of completion of the first
examination of such depository institution
under the Community Reinvestment Act of
1977 which is conducted after the date of
the acquisition of the depository institution.
‘‘(B) REQUIREMENTS.—The requirements of
this subparagraph are met with respect to any
bank holding company referred to in subpara-
graph (A) if—
‘‘(i) the bank holding company has
submitted an affirmative plan to the appro-
priate Federal banking agency to take such
action as may be necessary in order for
such institution to achieve a rating of ‘sat-
isfactory record of meeting community cred-
it needs’, or better, at the next examination
of the institution under the Community Re-
investment Act of 1977; and
‘‘(ii) the plan has been approved by
such agency.
‘‘(c) ENGAGING IN ACTIVITIES THAT ARE FINANCIAL
IN NATURE.—
‘‘(1) FINANCIAL ACTIVITIES.—
‘‘(A) IN
GENERAL.—Notwithstanding sec-
tion 4(a), a financial holding company and a
303
wholesale financial holding company may engage
in any activity, and acquire and retain the
shares of any company engaged in any activity,
that the Board has determined (by regulation or
order) to be financial in nature or incidental to
such financial activities.
‘‘(B) COORDINATION BETWEEN THE BOARD
AND THE DEPARTMENT OF THE TREASURY.—
‘‘(i) PROPOSALS RAISED BEFORE THE
BOARD.—
‘‘(I) CONSULTATION.—The Board
shall notify the Secretary of the Treas-
ury of, and consult with the Secretary
of the Treasury concerning, any re-
quest, proposal, or application under
this subsection for a determination of
whether an activity is financial in na-
ture or incidental to such a financial
activity.
‘‘(II) 
TREASURY
VIEW.—The
Board shall not determine that any ac-
tivity is financial in nature or inci-
dental to a financial activity under
this subsection if the Secretary of the
Treasury notifies the Board in writing,
304
not later than 30 days after the date of
receipt of the notice described in sub-
clause (I) (or such longer period as the
Board determines to be appropriate in
light of the circumstances) that the
Secretary of the Treasury believes that
the activity is not financial in nature
or incidental to a financial activity.
‘‘(ii) PROPOSALS
RAISED
BY
THE
TREASURY.—
‘‘(I) 
TREASURY
RECOMMENDA-
TION.—The Secretary of the Treasury
may, at any time, recommend in writ-
ing that the Board find an activity to
be financial in nature or incidental to
a financial activity.
‘‘(II) TIME
PERIOD
FOR
BOARD
ACTION.—Not later than 30 days after
the date of receipt of a written rec-
ommendation from the Secretary of the
Treasury under subclause (I) (or such
longer period as the Secretary of the
Treasury and the Board determine to
be appropriate in light of the cir-
cumstances), the Board shall determine
305
whether to initiate a public rule-
making proposing that the subject rec-
ommended activity be found to be fi-
nancial in nature or incidental to a fi-
nancial activity under this subsection,
and shall notify the Secretary of the
Treasury in writing of the determina-
tion of the Board and, in the event
that the Board determines not to seek
public comment on the proposal, the
reasons for that determination.
‘‘(2) FACTORS TO BE CONSIDERED.—In deter-
mining whether an activity is financial in nature or
incidental to financial activities, the Board shall take
into account—
‘‘(A) the purposes of this Act and the Fi-
nancial Services Act of 1998;
‘‘(B) changes or reasonably expected changes
in the marketplace in which bank holding com-
panies compete;
‘‘(C) changes or reasonably expected changes
in the technology for delivering financial serv-
ices; and
‘‘(D) whether such activity is necessary or
appropriate to allow a bank holding company
306
and the affiliates of a bank holding company
to—
‘‘(i) compete effectively with any com-
pany seeking to provide financial services
in the United States;
‘‘(ii) use any available or emerging
technological means, including any applica-
tion necessary to protect the security or effi-
cacy of systems for the transmission of data
or financial transactions, in providing fi-
nancial services; and
‘‘(iii) offer customers any available or
emerging technological means for using fi-
nancial services.
‘‘(3) ACTIVITIES THAT ARE FINANCIAL IN NA-
TURE.—The following activities shall be considered to
be financial in nature:
‘‘(A) Lending, exchanging, transferring, in-
vesting for others, or safeguarding money or se-
curities.
‘‘(B) Insuring, guaranteeing, or indemnify-
ing against loss, harm, damage, illness, disabil-
ity, or death, or providing and issuing annu-
ities, and acting as principal, agent, or broker
for purposes of the foregoing.
307
‘‘(C) Providing financial, investment, 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 instruments rep-
resenting interests in pools of assets permissible
for a bank to hold directly.
‘‘(E) Underwriting, dealing in, or making a
market in securities.
‘‘(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 1998, 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 en-
gage in outside the United States; and
‘‘(ii) the Board has determined, under
regulations issued pursuant to section
4(c)(13) of this Act (as in effect on the day
308
before the date of enactment of the Finan-
cial Services Act of 1998) to be usual in
connection with the transaction of banking
or other financial operations abroad.
‘‘(H) Directly or indirectly acquiring or
controlling, whether as principal, on behalf of 1
or more entities (including entities, other than a
depository institution or subsidiary of a deposi-
tory institution, that the bank holding company
controls) or otherwise, shares, assets, or owner-
ship interests (including without limitation debt
or equity securities, partnership interests, trust
certificates or other instruments representing
ownership) of a company or other entity, wheth-
er or not constituting control of such company or
entity, engaged in any activity not authorized
pursuant to this section if—
‘‘(i) the shares, assets, or ownership in-
terests are not acquired or held by a deposi-
tory institution or subsidiary of a deposi-
tory institution;
‘‘(ii) such shares, assets, or ownership
interests are acquired and held by a securi-
ties affiliate or an affiliate thereof as part
of a bona fide underwriting or merchant
309
banking activity, including investment ac-
tivities engaged in for the purpose of appre-
ciation 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 consistent with
the nature of the activities described in
clause (ii); and
‘‘(iv) during the period such shares, as-
sets, or ownership interests are held, the
bank holding company does not actively
participate in the day to day management
or operation of such company or entity, ex-
cept insofar as necessary to achieve the ob-
jectives of clause (ii).
‘‘(I) Directly or indirectly acquiring or con-
trolling, whether as principal, 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 con-
trols) or otherwise, shares, assets, or ownership
interests (including without limitation debt or
equity securities, partnership interests, trust cer-
310
tificates or other instruments representing own-
ership) of a company or other entity, whether or
not constituting control of such company or en-
tity, engaged in any activity not authorized pur-
suant to this section if—
‘‘(i) the shares, assets, or ownership in-
terests are not acquired or held by a deposi-
tory institution or a subsidiary of a deposi-
tory institution;
‘‘(ii) such shares, assets, or ownership
interests are acquired and held by an insur-
ance company that is predominantly en-
gaged in underwriting life, accident 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 in-
surance company in accordance with rel-
evant State law governing such investments;
and
‘‘(iv) during the period such shares, as-
sets, or ownership interests are held, the
bank holding company does not directly or
indirectly participate in the day-to-day
492
SEC. 208. GOVERNMENT SECURITIES DEFINED.
Section 3(a)(42) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(42)) is amended—
(1) by striking ‘‘or’’ at the end of subparagraph
(C);
(2) by striking the period at the end of subpara-
graph (D) and inserting ‘‘; or’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(E) for purposes of section 15C as applied
to a bank, a qualified Canadian government ob-
ligation as defined in section 5136 of the Revised
Statutes.’’.
SEC. 209. EFFECTIVE DATE.
This subtitle shall take effect at the end of the 270-
day period beginning on the date of the enactment of this
Act.
SEC. 210. RULE OF CONSTRUCTION.
Nothing in this Act shall supersede, affect, or otherwise
limit the scope and applicability of the Commodity Ex-
change Act (7 U.S.C. 1 et seq.).