II
105TH CONGRESS
2D SESSION
H. R. 3116
IN THE SENATE OF THE UNITED STATES
FEBRUARY 25, 1998
Received
AN ACT
To address the Year 2000 computer problems with regard
to financial institutions, to extend examination parity
to the Director of the Office of Thrift Supervision and
the National Credit Union Administration, and for other
purposes.
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Examination Parity
and Year 2000 Readiness for Financial Institutions Act’’.
SEC. 2. YEAR 2000 READINESS FOR FINANCIAL INSTITU-
TIONS.
(a) FINDINGS.—The Congress finds that—
(1) the Year 2000 computer problem poses a
serious challenge to the American economy, includ-
ing the Nation’s banking and financial services in-
dustries;
(2) thousands of banks, savings associations,
and credit unions rely heavily on internal informa-
tion technology and computer systems, as well as
outside service providers, for mission-critical func-
tions, such as check clearing, direct deposit, account-
ing, automated teller machine networks, credit card
processing, and data exchanges with domestic and
international borrowers, customers, and other finan-
cial institutions; and
(3) Federal financial regulatory agencies must
have sufficient examination authority to ensure that
the safety and soundness of the Nation’s financial
institutions will not be at risk.
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(b) DEFINITIONS.—For purposes of this section—
(1) the terms ‘‘depository institution’’ and
‘‘Federal banking agency’’ have the same meanings
as in section 3 of the Federal Deposit Insurance
Act;
(2) the term ‘‘Federal home loan bank’’ has the
same meaning as in section 2 of the Federal Home
Loan Bank Act;
(3) the term ‘‘Federal reserve bank’’ means a
reserve bank established under the Federal Reserve
Act;
(4) the term ‘‘insured credit union’’ has the
same meaning as in section 101 of the Federal
Credit Union Act; and
(5) the term ‘‘Year 2000 computer problem’’
means, with respect to information technology, any
problem which prevents such technology from accu-
rately processing, calculating, comparing, or se-
quencing date or time data—
(A) from, into, or between—
(i) the 20th and 21st centuries; or
(ii) the years 1999 and 2000; or
(B) with regard to leap year calculations.
(c) SEMINARS AND MODEL APPROACHES TO YEAR
2000 COMPUTER PROBLEM.—
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(1) SEMINARS.—
(A) IN GENERAL.—Each Federal banking
agency and the National Credit Union Adminis-
tration Board shall offer seminars to all deposi-
tory institutions and insured credit unions
under the jurisdiction of such agency on the im-
plication of the Year 2000 computer problem
for—
(i) the safe and sound operations of
such depository institutions and credit
unions; and
(ii) transactions with other financial
institutions, 
including 
Federal 
reserve
banks and Federal home loan banks.
(B) CONTENT AND SCHEDULE.—The con-
tent and schedule of seminars offered pursuant
to subparagraph (A) shall be determined by
each Federal banking agency and the National
Credit Union Administration Board taking into
account the resources and examination prior-
ities of such agency.
(2) MODEL APPROACHES.—
(A) IN GENERAL.—Each Federal banking
agency and the National Credit Union Adminis-
tration Board shall make available to each de-
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pository institution and insured credit union
under the jurisdiction of such agency model ap-
proaches to common Year 2000 computer prob-
lems, such as model approaches with regard to
project management, vendor contracts, testing
regimes, and business continuity planning.
(B) VARIETY OF APPROACHES.—In devel-
oping model approaches to the Year 2000 com-
puter problem pursuant to subparagraph (A),
each Federal banking agency and the National
Credit Union Administration Board shall take
into account the need to develop a variety of ap-
proaches to correspond to the variety of deposi-
tory institutions or credit unions within the ju-
risdiction of the agency.
(3) COOPERATION.—In carrying out this sec-
tion, the Federal banking agencies and the National
Credit Union Administration Board may cooperate
and coordinate their activities with each other, the
Financial Institutions Examination Council, and ap-
propriate organizations representing depository insti-
tutions and credit unions.
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SEC. 3. REGULATION AND EXAMINATION OF SERVICE PRO-
VIDERS.
(a) REGULATION AND EXAMINATION OF SAVINGS AS-
SOCIATION SERVICE COMPANIES.—
(1) AMENDMENT
TO
HOME
OWNERS’ LOAN
ACT.—Section 5(d) of the Home Owners’ Loan Act
(12 U.S.C. 1464(d)) is amended by adding at the
end the following:
‘‘(7) REGULATION AND EXAMINATION OF SAV-
INGS
ASSOCIATION
SERVICE
COMPANIES, SUBSIDI-
ARIES, AND SERVICE PROVIDERS.—
‘‘(A) GENERAL EXAMINATION AND REGU-
LATORY
AUTHORITY.—A service company or
subsidiary that is owned in whole or in part by
a savings association shall be subject to exam-
ination and regulation by the Director to the
same extent as that savings association.
‘‘(B) EXAMINATION
BY
OTHER
BANKING
AGENCIES.—The Director may authorize any
other Federal banking agency that supervises
any other owner of part of the service company
or subsidiary to perform an examination de-
scribed in subparagraph (A).
‘‘(C) APPLICABILITY
OF
SECTION
OF
THE
FEDERAL
DEPOSIT
INSURANCE
ACT.—A
service company or subsidiary that is owned in
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whole or in part by a saving association shall be
subject to the provisions of section 8 of the
Federal Deposit Insurance Act as if the service
company or subsidiary were an insured deposi-
tory institution. In any such case, the Director
shall be deemed to be the appropriate Federal
banking agency, pursuant to section 3(q) of the
Federal Deposit Insurance Act.
‘‘(D) SERVICE PERFORMED BY CONTRACT
OR
OTHERWISE.—Notwithstanding 
subpara-
graph (A), if a savings association, a subsidiary
thereof, or any savings and loan affiliate or en-
tity, as identified by section 8(b)(9) of the Fed-
eral Deposit Insurance Act, that is regularly ex-
amined or subject to examination by the Direc-
tor, causes to be performed for itself, by con-
tract or otherwise, any service authorized under
this Act or, in the case of a State savings asso-
ciation, any applicable State law, whether on or
off its premises—
‘‘(i) such performance shall be subject
to regulation and examination by the Di-
rector to the same extent as if such serv-
ices were being performed by the savings
association on its own premises; and
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‘‘(ii) the savings association shall no-
tify the Director of the existence of the
service relationship not later than 30 days
after the earlier of—
‘‘(I) the date on which the con-
tract is entered into; or
‘‘(II) the date on which the per-
formance of the service is initiated.
‘‘(E) ADMINISTRATION
BY
THE
DIREC-
TOR.—The Director may issue such regulations
and orders, including those issued pursuant to
section 8 of the Federal Deposit Insurance Act,
as may be necessary to enable the Director to
administer and carry out this paragraph and to
prevent evasion of this paragraph.
‘‘(8) DEFINITIONS.—For purposes of this sec-
tion—
‘‘(A) the term ‘service company’ means—
‘‘(i) any corporation—
‘‘(I) that is organized to perform
services authorized by this Act or, in
the case of a corporation owned in
part by a State savings association,
authorized by applicable State law;
and
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‘‘(II) all of the capital stock of
which is owned by 1 or more insured
savings associations; and
‘‘(ii) any limited liability company—
‘‘(I) that is organized to perform
services authorized by this Act or, in
the case of a company, 1 of the mem-
bers of which is a State savings asso-
ciation, authorized by applicable State
law; and
‘‘(II) all of the members of which
are 1 or more insured savings associa-
tions;
‘‘(B) the term ‘limited liability company’
means any company, partnership, trust, or
similar business entity organized under the law
of a State (as defined in section 3 of the Fed-
eral Deposit Insurance Act) that provides that
a member or manager of such company is not
personally liable for a debt, obligation, or liabil-
ity of the company solely by reason of being, or
acting as, a member or manager of such com-
pany; and
‘‘(C) the terms ‘State savings association’
and ‘subsidiary’ have the same meanings as in
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section 3 of the Federal Deposit Insurance
Act.’’.
(2) CONFORMING AMENDMENTS TO SECTION 8
OF THE FEDERAL DEPOSIT INSURANCE ACT.—Sec-
tion 8 of the Federal Deposit Insurance Act (12
U.S.C. 1818) is amended—
(A) in subsection (b)(9), by striking ‘‘to
any service corporation of a savings association
and to any subsidiary of such service corpora-
tion’’;
(B) in subsection (e)(7)(A)(ii), by striking
‘‘(b)(8)’’ and inserting ‘‘(b)(9)’’; and
(C) in subsection (j)(2), by striking
‘‘(b)(8)’’ and inserting ‘‘(b)(9)’’.
(b) REGULATION AND EXAMINATION OF SERVICE
PROVIDERS FOR CREDIT UNIONS.—Title II of the Federal
Credit Union Act (12 U.S.C. 1781 et seq.) is amended
by inserting after section 206 the following new section:
‘‘SEC. 206A. REGULATION AND EXAMINATION OF CREDIT
UNION ORGANIZATIONS AND SERVICE PRO-
VIDERS.
‘‘(a) REGULATION AND EXAMINATION OF CREDIT
UNION ORGANIZATIONS.—
‘‘(1) GENERAL
EXAMINATION
AND
REGU-
LATORY AUTHORITY.—A credit union organization
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shall be subject to examination and regulation by the
Board to the same extent as that insured credit
union.
‘‘(2) EXAMINATION BY OTHER BANKING AGEN-
CIES.—The Board may authorize to make an exam-
ination of a credit union organization in accordance
with paragraph (1)—
‘‘(A) any Federal regulator agency that su-
pervises any activity of a credit union organiza-
tion; or
‘‘(B) any Federal banking agency that su-
pervises any other person who maintains an
ownership interest in a credit union organiza-
tion.
‘‘(b) APPLICABILITY
OF SECTION 206.—A credit
union organization shall be subject to the provisions of
section 206 as if the credit union organization were an
insured credit union.
‘‘(c) SERVICE PERFORMED BY CONTRACT OR OTHER-
WISE.—Notwithstanding subsection (a), if an insured
credit union or a credit union organization that is regu-
larly examined or subject to examination by the Board,
causes to be performed for itself, by contract or otherwise,
any service authorized under this Act, or in the case of
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a State credit union, any applicable State law, whether
on or off its premises—
‘‘(1) such performance shall be subject to regu-
lation and examination by the Board to the same ex-
tent as if such services were being performed by the
insured credit union or credit union organization
itself on its own premises; and
‘‘(2) the insured credit union or credit union or-
ganization shall notify the Board of the existence of
the service relationship not later than 30 days after
the earlier of—
‘‘(A) the date on which the contract is en-
tered into; or
‘‘(B) the date on which the performance of
the service is initiated.
‘‘(d) ADMINISTRATION BY THE BOARD.—The Board
may issue such regulations and orders as may be nec-
essary to enable the Board to administer and carry out
this section and to prevent evasion of this section.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) the term ‘credit union organization’ means
any entity that—
‘‘(A) is not a credit union;
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‘‘(B) is an entity in which an insured cred-
it union may lawfully hold an ownership inter-
est or investment; and
‘‘(C) is owned in whole or in part by an in-
sured credit union; and
‘‘(2) the term ‘Federal banking agency’ has the
same meaning as in section 3 of the Federal Deposit
Insurance Act.
‘‘(f) EXPIRATION OF AUTHORITY.—This section and
all powers and authority of the Board under this section
shall cease to be effective as of December 31, 2001.’’.
Passed the House of Representatives February 24,
1998.
Attest:
ROBIN H. CARLE,
Clerk.