577
title. Suits brought in State court involving the Association
shall be deemed to have arisen under Federal law and there-
fore be subject to jurisdiction in the appropriate United
States district court.
(b) EXHAUSTION OF REMEDIES.—An aggrieved person
shall be required to exhaust all available administrative
remedies before the Association and the NAIC before it may
seek judicial review of an Association decision.
(c) STANDARDS OF REVIEW.—The standards set forth
in section 553 of title 5, United States Code, shall be ap-
plied whenever a rule or bylaw of the Association is under
judicial review, and the standards set forth in section 554
of title 5, United States Code, shall be applied whenever
a disciplinary action of the Association is judicially re-
viewed.
SEC. 336. DEFINITIONS.
For purposes of this subtitle, the following definitions
shall apply:
(1) HOME
STATE.—The term ‘‘home State’’
means the State in which the insurance producer
maintains its principal place of residence and is li-
censed to act as an insurance producer.
(2) INSURANCE.—The term ‘‘insurance’’ means
any product, other than title insurance, defined or
578
regulated as insurance by the appropriate State in-
surance regulatory authority.
(3) 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-
licits, negotiates, effects, procures, delivers, renews,
continues or binds policies of insurance or offers ad-
vice, counsel, opinions or services related to insur-
ance.
(4) STATE.—The term ‘‘State’’ includes any
State, the District of Columbia, American Samoa,
Guam, Puerto Rico, and the United States Virgin Is-
lands.
(5) 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.
579
TITLE IV—UNITARY SAVINGS
AND LOAN HOLDING COMPANIES
SEC. 401. PREVENTION OF CREATION OF NEW S&L HOLD-
ING COMPANIES WITH COMMERCIAL AFFILI-
ATES.
Section 10(c) of the Home Owners’ Loan Act (12
U.S.C. 1467a(c)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(9) PREVENTION
OF
NEW
AFFILIATIONS
BE-
TWEEN S&L HOLDING COMPANIES AND COMMERCIAL
FIRMS.—
‘‘(A) IN GENERAL.—Notwithstanding para-
graph (3), no company may directly or indi-
rectly, including through any merger, consolida-
tion, or other type of business combination, ac-
quire control of a savings association after Sep-
tember 3, 1998, unless the company is engaged,
directly or indirectly (including through a sub-
sidiary other than a savings association), only
in activities that are permitted—
‘‘(i) under paragraph (1)(C) or (2); or
‘‘(ii) for financial holding companies
under section 6(c) of the Bank Holding
Company Act of 1956.
580
‘‘(B) PREVENTION OF NEW COMMERCIAL AF-
FILIATIONS.—Notwithstanding paragraph (3),
no savings and loan holding company may en-
gage directly or indirectly (including through a
subsidiary other than a savings association) in
any activity other than as described in clauses
(i) and (ii) of subparagraph (A).
‘‘(C) PRESERVATION OF AUTHORITY OF EX-
ISTING
UNITARY
S&L
HOLDING
COMPANIES.—
Subparagraphs (A) and (B) do not apply with
respect to any company that was a savings and
loan holding company on September 3, 1998, or
that becomes a savings and loan holding com-
pany pursuant to an application pending before
the Office of Thrift Supervision on or before that
date, and that—
‘‘(i) meets and continues to meet the
requirements of paragraph (3); and
‘‘(ii) continues to control not fewer
than 1 savings association that it controlled
on September 3, 1998, or that it acquired
pursuant to an application pending before
the Office of Thrift Supervision on or before
that date, or the successor to such savings
association.
581
‘‘(D) CORPORATE
REORGANIZATIONS
PER-
MITTED.—This paragraph does not prevent a
transaction that—
‘‘(i) involves solely a company under
common control with a savings and loan
holding company from acquiring, directly
or indirectly, control of the savings and
loan holding company or any savings asso-
ciation that is already a subsidiary of the
savings and loan holding company; or
‘‘(ii) involves solely a merger, consoli-
dation, or other type of business combina-
tion as a result of which a company under
common control with the savings and loan
holding company acquires, directly or indi-
rectly, control of the savings and loan hold-
ing company or any savings association
that is already a subsidiary of the savings
and loan holding company.
‘‘(E) AUTHORITY TO PREVENT EVASIONS.—
The Director may issue interpretations, regula-
tions, or orders that the Director determines nec-
essary to administer and carry out the purpose
and prevent evasions of this paragraph, includ-
ing a determination that, notwithstanding the
582
form of a transaction, the transaction would in
substance result in a company acquiring control
of a savings association.’’.
SEC. 402. OPTIONAL CONVERSION OF FEDERAL SAVINGS
ASSOCIATIONS TO NATIONAL BANKS.
Section 5(i) of the Home Owners’ Loan Act (12 U.S.C.
1464(i)) is amended by adding at the end the following new
paragraph:
‘‘(5) CONVERSION TO A NATIONAL BANK.—Not-
withstanding any other provision of law, any Federal
savings association chartered and in operation before
the date of enactment of the Financial Services Act of
1998, with branches in 1 or more States, may con-
vert, with the approval of the Comptroller of the Cur-
rency, into 1 or more national banks, each of which
may encompass one or more of the branches of the
Federal savings association in 1 or more States, but
only if the resulting national bank or banks will meet
any and all financial, management, and capital re-
quirements applicable to a national bank.’’.
SEC. 403. RETENTION OF ‘‘FEDERAL’’ IN NAME OF CON-
VERTED FEDERAL SAVINGS ASSOCIATION.
Section 2 of the Act entitled ‘‘An Act to enable national
banking associations to increase their capital stock and to
change their names or locations’’, approved May 1, 1886
583
(12 U.S.C. 30), is amended by adding at the end the follow-
ing new subsection:
‘‘(d) RETENTION OF ‘FEDERAL’ IN NAME OF CON-
VERTED FEDERAL SAVINGS ASSOCIATION.—
‘‘(1) IN GENERAL.—Notwithstanding subsection
(a) or any other provision of law, any depository in-
stitution the charter of which is converted from that
of a Federal savings association to a national bank
or a State bank after the date of the enactment of the
Financial Services Act of 1998 may retain the term
‘Federal’ in the name of such institution if such de-
pository institution remains an insured depository
institution.
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘depository institution’, ‘insured de-
pository institution’, ‘national bank’, and ‘State
bank’ have the same meanings as in section 3 of the
Federal Deposit Insurance Act.’’.
TITLE V—FINANCIAL
INFORMATION PRIVACY
SEC. 501. FINANCIAL INFORMATION PRIVACY.
The Consumer Credit Protection Act (15 U.S.C. 1601
et seq.) is amended by adding at the end the following:
584
‘‘TITLE X—FINANCIAL INFORMA-
TION PRIVACY PROTECTION
‘‘SEC. 1001. SHORT TITLE; TABLE OF CONTENTS.
‘‘(a) SHORT TITLE.—This title may be cited as the ‘Fi-
nancial Information Privacy Act of 1998’.
‘‘(b) TABLE OF CONTENTS.—The table of contents for
this title is as follows:
‘‘TITLE X—FINANCIAL INFORMATION PRIVACY PROTECTION
‘‘Sec. 1001. Short title; table of contents.
‘‘Sec. 1002. Definitions.
‘‘Sec. 1003. Privacy protection for customer information of financial institutions.
‘‘Sec. 1004. Administrative enforcement.
‘‘Sec. 1005. Civil liability.
‘‘Sec. 1006. Criminal penalty.
‘‘Sec. 1007. Relation to State laws.
‘‘Sec. 1008. Agency guidance.
‘‘SEC. 1002. DEFINITIONS.
‘‘For purposes of this title, the following definitions
shall apply:
‘‘(1) CUSTOMER.—The term ‘customer’ means,
with respect to a financial institution, any person (or
authorized representative of a person) to whom the fi-
nancial institution provides a product or service, in-
cluding that of acting as a fiduciary.
‘‘(2) CUSTOMER INFORMATION OF A FINANCIAL
INSTITUTION.—The term ‘customer information of a
financial institution’ means any information main-
tained by a financial institution which is derived
from the relationship between the financial institution
585
and a customer of the financial institution and is
identified with the customer.
‘‘(3) DOCUMENT.—The term ‘document’ means
any information in any form.
‘‘(4) FINANCIAL INSTITUTION.—
‘‘(A) IN GENERAL.—The term ‘financial in-
stitution’ means any institution engaged in the
business of providing financial services to cus-
tomers who maintain a credit, deposit, trust, or
other financial account or relationship with the
institution.
‘‘(B) CERTAIN
FINANCIAL
INSTITUTIONS
SPECIFICALLY
INCLUDED.—The term ‘financial
institution’ includes any depository institution
(as defined in section 19(b)(1)(A) of the Federal
Reserve Act), any loan or finance company, any
credit card issuer or operator of a credit card
system, and any consumer reporting agency that
compiles and maintains files on consumers on a
nationwide basis (as defined in section 603(p)).
‘‘(C) FURTHER
DEFINITION
BY
REGULA-
TION.—The Board of Governors of the Federal
Reserve System may prescribe regulations fur-
ther defining the term ‘financial institution’, in
586
accordance with subparagraph (A), for purposes
of this title.
‘‘SEC. 1003. PRIVACY PROTECTION FOR CUSTOMER INFOR-
MATION OF FINANCIAL INSTITUTIONS.
‘‘(a) PROHIBITION ON OBTAINING CUSTOMER INFOR-
MATION BY FALSE PRETENSES.—It shall be a violation of
this title for any person to obtain or attempt to obtain, or
cause to be disclosed or attempt to cause to be disclosed to
any person, customer information of a financial institution
relating to another person—
‘‘(1) by knowingly making a false, fictitious, or
fraudulent statement or representation to an officer,
employee, or agent of a financial institution with the
intent to deceive the officer, employee, or agent into
relying on that statement or representation for pur-
poses of releasing the customer information;
‘‘(2) by knowingly making a false, fictitious, or
fraudulent statement or representation to a customer
of a financial institution with the intent to deceive
the customer into relying on that statement or rep-
resentation for purposes of releasing the customer in-
formation or authorizing the release of such informa-
tion; or
‘‘(3) by knowingly providing any document to
an officer, employee, or agent of a financial institu-
587
tion, knowing that the document is forged, counterfeit,
lost, or stolen, was fraudulently obtained, or contains
a false, fictitious, or fraudulent statement or represen-
tation, if the document is provided with the intent to
deceive the officer, employee, or agent into relying on
that document for purposes of releasing the customer
information.
‘‘(b) PROHIBITION ON SOLICITATION OF A PERSON TO
OBTAIN CUSTOMER INFORMATION FROM FINANCIAL INSTI-
TUTION UNDER FALSE PRETENSES.—It shall be a violation
of this title to request a person to obtain customer informa-
tion of a financial institution, knowing or consciously
avoiding knowing that the person will obtain, or attempt
to obtain, the information from the institution in any man-
ner described in subsection (a).
‘‘(c) NONAPPLICABILITY
TO
LAW
ENFORCEMENT
AGENCIES.—No provision of this section shall be construed
so as to prevent any action by a law enforcement agency,
or any officer, employee, or agent of such agency, to obtain
customer information of a financial institution in connec-
tion with the performance of the official duties of the
agency.
‘‘(d) NONAPPLICABILITY TO FINANCIAL INSTITUTIONS
IN CERTAIN CASES.—No provision of this section shall be
construed to prevent any financial institution, or any offi-
588
cer, employee, or agent of a financial institution, from ob-
taining customer information of such financial institution
in the course of—
‘‘(1) testing the security procedures or systems of
such institution for maintaining the confidentiality of
customer information;
‘‘(2) investigating allegations of misconduct or
negligence on the part of any officer, employee, or
agent of the financial institution; or
‘‘(3) recovering customer information of the fi-
nancial institution which was obtained or received by
another person in any manner described in subsection
(a) or (b).
‘‘(e) NONAPPLICABILITY TO CERTAIN TYPES OF CUS-
TOMER INFORMATION OF FINANCIAL INSTITUTIONS.—No
provision of this section shall be construed to prevent any
person from obtaining customer information of a financial
institution that otherwise is available as a public record
filed pursuant to the securities laws (as defined in section
3(a)(47) of the Securities Exchange Act of 1934).
‘‘SEC. 1004. ADMINISTRATIVE ENFORCEMENT.
‘‘(a) ENFORCEMENT
BY FEDERAL TRADE COMMIS-
SION.—Except as provided in subsection (b), compliance
with this title shall be enforced by the Federal Trade Com-
mission in the same manner and with the same power and
589
authority as the Commission has under the Fair Debt Col-
lection Practices Act to enforce compliance with that title.
‘‘(b) ENFORCEMENT BY OTHER AGENCIES IN CERTAIN
CASES.—
‘‘(1) IN GENERAL.—Compliance with this title
shall be enforced under—
‘‘(A) section 8 of the Federal Deposit Insur-
ance Act, in the case of—
‘‘(i) national banks, and Federal
branches and Federal agencies of foreign
banks, by the Office of the Comptroller of
the Currency;
‘‘(ii) member banks of the Federal Re-
serve System (other than national banks),
branches and agencies of foreign banks
(other than Federal branches, Federal agen-
cies, and insured State branches of foreign
banks), 
commercial 
lending 
companies
owned or controlled by foreign banks, and
organizations operating under section 25 or
25A of the Federal Reserve Act, by the
Board;
‘‘(iii) banks insured by the Federal De-
posit Insurance Corporation (other than
members of the Federal Reserve System and
590
national nonmember banks) and insured
State branches of foreign banks, by the
Board of Directors of the Federal Deposit
Insurance Corporation; and
‘‘(iv) savings associations the deposits
of which are insured by the Federal Deposit
Insurance Corporation, by the Director of
the Office of Thrift Supervision; and
‘‘(B) the Federal Credit Union Act, by the
Administrator of the National Credit Union Ad-
ministration with respect to any Federal credit
union.
‘‘(2) VIOLATIONS OF THIS TITLE TREATED AS
VIOLATIONS OF OTHER LAWS.—For the purpose of the
exercise by any agency referred to in paragraph (1)
of its powers under any Act referred to in that para-
graph, a violation of this title shall be deemed to be
a violation of a requirement imposed under that Act.
In addition to its powers under any provision of law
specifically referred to in paragraph (1), each of the
agencies referred to in that paragraph may exercise,
for the purpose of enforcing compliance with this title,
any other authority conferred on such agency by law.
‘‘(c) STATE ACTION FOR VIOLATIONS.—
591
‘‘(1) AUTHORITY
OF
STATES.—In addition to
such other remedies as are provided under State law,
if the chief law enforcement officer of a State, or an
official or agency designated by a State, has reason
to believe that any person has violated or is violating
this title, the State—
‘‘(A) may bring an action to enjoin such
violation in any appropriate United States dis-
trict court or in any other court of competent ju-
risdiction;
‘‘(B) may bring an action on behalf of the
residents of the State to recover damages of not
more than $1,000 for each violation; and
‘‘(C) in the case of any successful action
under subparagraph (A) or (B), shall be award-
ed the costs of the action and reasonable attorney
fees as determined by the court.
‘‘(2) RIGHTS OF FEDERAL REGULATORS.—
‘‘(A) PRIOR NOTICE.—The State shall serve
prior written notice of any action under para-
graph (1) upon the Federal Trade Commission
and, in the case of an action which involves a
financial 
institution 
described 
in 
section
1004(b)(1), the agency referred to in such section
with respect to such institution and provide the
592
Federal Trade Commission and any such agency
with a copy of its complaint, except in any case
in which such prior notice is not feasible, in
which case the State shall serve such notice im-
mediately upon instituting such action.
‘‘(B) RIGHT TO INTERVENE.—The Federal
Trade Commission or an agency described in
subsection (b) shall have the right—
‘‘(i) to intervene in an action under
paragraph (1);
‘‘(ii) upon so intervening, to be heard
on all matters arising therein;
‘‘(iii) to remove the action to the ap-
propriate United States district court; and
‘‘(iv) to file petitions for appeal.
‘‘(3) INVESTIGATORY POWERS.—For purposes of
bringing any action under this subsection, no provi-
sion of this subsection shall be construed as prevent-
ing the chief law enforcement officer, or an official or
agency designated by a State, from exercising the
powers conferred on the chief law enforcement officer
or such official by the laws of such State to conduct
investigations or to administer oaths or affirmations
or to compel the attendance of witnesses or the pro-
duction of documentary and other evidence.
594
tary consideration, as a result of the action
which constitutes such failure.
‘‘(2) ADDITIONAL
DAMAGES.—Such additional
amount as the court may allow.
‘‘(3) ATTORNEYS’ FEES.—In the case of any suc-
cessful action to enforce any liability under para-
graph (1) or (2), the costs of the action, together with
reasonable attorneys’ fees.
‘‘SEC. 1006. CRIMINAL PENALTY.
‘‘(a) IN GENERAL.—Whoever violates, or attempts to
violate, section 1003 shall be fined in accordance with title
18, United States Code, or imprisoned for not more than
5 years, or both.
‘‘(b) ENHANCED PENALTY FOR AGGRAVATED CASES.—
Whoever violates, or attempts to violate, section 1003 while
violating another law of the United States or as part of
a pattern of any illegal activity involving more than
$100,000 in a 12-month period shall be fined twice the
amount provided in subsection (b)(3) or (c)(3) (as the case
may be) of section 3571 of title 18, United States Code,
imprisoned for not more than 10 years, or both.
‘‘SEC. 1007. RELATION TO STATE LAWS.
‘‘(a) IN GENERAL.—This title shall not be construed
as superseding, altering, or affecting the statutes, regula-
tions, orders, or interpretations in effect in any State, ex-
595
cept to the extent that such statutes, regulations, orders, or
interpretations are inconsistent with the provisions of this
title, and then only to the extent of the inconsistency.
‘‘(b) GREATER PROTECTION UNDER STATE LAW.—For
purposes of this section, a State statute, regulation, order,
or interpretation is not inconsistent with the provisions of
this title if the protection such statute, regulation, order,
or interpretation affords any person is greater than the pro-
tection provided under this title.
‘‘SEC. 1008. AGENCY GUIDANCE.
‘‘In furtherance of the objectives of this title, each Fed-
eral banking agency (as defined in section 3(z) of the Fed-
eral Deposit Insurance Act) shall issue advisories to deposi-
tory institutions under the jurisdiction of the agency, in
order to assist such depository institutions in deterring and
detecting activities proscribed under section 1003.’’.
SEC. 502. REPORT TO CONGRESS ON FINANCIAL PRIVACY.
Not later than 18 months after the date of enactment
of this Act, the Comptroller General of the United States,
in consultation with the Federal Trade Commission, the
Federal banking agencies, and other appropriate Federal
law enforcement agencies, shall submit to the Congress a
report on—
(1) the efficacy and adequacy of the remedies
provided in the amendments made by section 501 in
596
addressing attempts to obtain financial information
by fraudulent means or by false pretenses; and
(2) any recommendations for additional legisla-
tive or regulatory action to address threats to the pri-
vacy of financial information created by attempts to
obtain information by fraudulent means or false pre-
tenses.
TITLE VI—MISCELLANEOUS
SEC. 601. GRAND JURY PROCEEDINGS.
Section 3322(b) of title 18, United States Code, is
amended—
(1) in paragraph (1), by inserting ‘‘Federal or
State’’ before ‘‘financial institution’’; and
(2) in paragraph (2), by inserting ‘‘at any time
during or after the completion of the investigation of
the grand jury,’’ before ‘‘upon’’.
SEC. 602. SENSE OF THE COMMITTEE ON BANKING, HOUS-
ING, AND URBAN AFFAIRS OF THE SENATE.
(a) FINDINGS.—The Committee on Banking, Housing,
and Urban Affairs of the Senate finds that—
(1) financial modernization legislation should
benefit small institutions as well as large institutions;
(2) the Congress made the subchapter S election
of the Internal Revenue Code of 1986, available to
597
banks in 1996, reflecting a desire by the Congress to
reduce the tax burden on community banks;
(3) large numbers of community banks have
elected or expressed interest in the subchapter S elec-
tion; and
(4) the Committee on Banking, Housing, and
Urban Affairs of the Senate recognizes that some ob-
stacles remain for community banks wishing to make
the subchapter S election.
(b) SENSE OF THE COMMITTEE.—It is the sense of the
Committee on Banking, Housing, and Urban Affairs of the
Senate that—
(1) the small business tax provisions of the Inter-
nal Revenue Code of 1986, should be more widely
available to community banks;
(2) legislation should be passed to amend the In-
ternal Revenue Code of 1986, to—
(A) increase the allowed number of S cor-
poration shareholders;
(B) permit S corporation stock to be held in
individual retirement accounts;
(C) clarify that interest on investments held
for safety, soundness, and liquidity purposes
should not be considered to be passive income;
598
(D) provide that bank director stock is not
treated as a disqualifying second class of stock
for S corporations; and
(E) improve the tax treatment of bad debt
and interest deductions; and
(3) the legislation described in paragraph (2)
should be adopted by the Congress in conjunction with
any financial modernization legislation.
SEC. 603. INVESTMENTS IN GOVERNMENT SPONSORED EN-
TERPRISES.
Section 18(s) of the Federal Deposit Insurance Act (12
U.S.C. 1828(s)) is amended—
(1) by redesignating paragraph (4) as para-
graph (6); and
(2) by inserting after paragraph (3) the follow-
ing:
‘‘(4) CERTAIN
INVESTMENTS.—Paragraph (1)
shall not apply with respect to investments lawfully
made before April 11, 1996, by a depository institu-
tion in any Government sponsored enterprise.
‘‘(5) STUDENT LOANS.—
‘‘(A) IN
GENERAL.—This subsection does
not apply to any arrangement between a Hold-
ing Company (or any subsidiary of the Holding
Company other than the Student Loan Market-
599
ing Association) and a depository institution, if
the Secretary approves the affiliation and deter-
mines that—
‘‘(i) the wind-down of the Association
in accordance with the requirements of sec-
tion 440 of the Higher Education Act of
1965, will not be adversely affected by the
arrangement;
‘‘(ii) the Association will not extend
credit to, or guarantee or provide credit en-
hancement to any obligation of, the deposi-
tory institution; and
‘‘(iii) the operations of the Association
will be separate from the operations of the
depository institution.
‘‘(B) TERMS AND CONDITIONS.—In approv-
ing an affiliation referred to in subparagraph
(A), the Secretary may impose any terms and
conditions on such affiliation that the Secretary
considers appropriate, including—
‘‘(i) requiring the Association to pro-
vide a binding plan to dissolve before Sep-
tember 30, 2008;
600
‘‘(ii) imposing additional restrictions
on the issuance of debt obligations by the
Association; or
‘‘(iii) restricting the use of proceeds
from the issuance of such debt.
‘‘(C) ENFORCEMENT.—Terms and condi-
tions imposed under subparagraph (B) may be
enforced by the Secretary in accordance with sec-
tion 440 of the Higher Education Act of 1965.
‘‘(D) DEFINITIONS.—In this paragraph—
‘‘(i) the terms ‘Association’ and ‘Hold-
ing Company’ have the same meanings as
in section 440(i) of the Higher Education
Act of 1965; and
‘‘(ii) the term ‘Secretary’ means the
Secretary of the Treasury.’’.
SEC. 604. REPEAL OF SAVINGS BANK PROVISIONS IN THE
BANK HOLDING COMPANY ACT OF 1956.
Section 3(f) of the Bank Holding Company Act of 1956
(12 U.S.C. 1842(f)) is amended to read as follows:
‘‘(f) [Reserved].’’.