Depository Institution-GSE Affiliation Act of 1998

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Depository Institution-GSE 
Affiliation Act of 1998''.

SEC. 2. CERTAIN AFFILIATION PERMITTED.

    Section 18(s) of the Federal Deposit Insurance Act (12 U.S.C. 
1828(s)) is amended--
            (1) by redesignating paragraph (4) as paragraph (5); and
            (2) by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) Student loans.--
                    ``(A) In general.--This subsection shall not apply 
                to any arrangement between the Holding Company (or any 
                subsidiary of the Holding Company other than the 
                Student Loan Marketing Association) and a depository 
                institution, if the Secretary approves the affiliation 
                and determines that--
                            ``(i) the reorganization of such 
                        Association in accordance with section 440 of 
                        the Higher Education Act of 1965, as amended, 
                        will not be adversely affected by the 
                        arrangement;
                            ``(ii) the dissolution of the Association 
                        pursuant to such reorganization will occur 
                        before the end of the 2-year period beginning 
                        on the date on which such arrangement is 
                        consummated or on such earlier date as the 
                        Secretary deems appropriate: Provided, That the 
                        Secretary may extend this period for not more 
                        than 1 year at a time if the Secretary 
                        determines that such extension is in the public 
                        interest and is appropriate to achieve an 
                        orderly reorganization of the Association or to 
                        prevent market disruptions in connection with 
                        such reorganization, but no such extensions 
                        shall in the aggregate exceed 2 years;
                            ``(iii) the Association will not purchase 
                        or extend credit to, or guarantee or provide 
                        credit enhancement to, any obligation of the 
                        depository institution;
                            ``(iv) the operations of the Association 
                        will be separate from the operations of the 
                        depository institution; and
                            ``(v) until the `dissolution date' (as that 
                        term is defined in section 440 of the Higher 
                        Education Act of 1965, as amended) has 
                        occurred, such depository institution will not 
                        use the trade name or service mark `Sallie Mae' 
                        in connection with any product or service it 
                        offers if the appropriate Federal banking 
                        agency for such depository institution 
                        determines that--
                                    ``(I) the depository institution is 
                                the only institution offering such 
                                product or service using the `Sallie 
                                Mae' name; and
                                    ``(II) such use would result in the 
                                depository institution having an unfair 
                                competitive advantage over other 
                                depository institutions.
                    ``(B) Terms and conditions.--In approving any 
                arrangement referred to in subparagraph (A) the 
                Secretary may impose any terms and conditions on such 
                an arrangement that the Secretary considers 
                appropriate, including--
                            ``(i) imposing additional restrictions on 
                        the issuance of debt obligations by the 
                        Association; or
                            ``(ii) restricting the use of proceeds from 
                        the issuance of such debt.
                    ``(C) Additional limitations.--In the event that 
                the Holding Company (or any subsidiary of the Holding 
                Company) enters into such an arrangement, the value of 
                the Association's `investment portfolio' shall not at 
                any time exceed the lesser of--
                            ``(i) the value of such portfolio on the 
                        date of the enactment of this subsection; or
                            ``(ii) the value of such portfolio on the 
                        date such an arrangement is consummated. The 
                        term `investment portfolio' shall mean all 
                        investments shown on the consolidated balance 
                        sheet of the Association other than--
                                    ``(I) any instrument or assets 
                                described in section 439(d) of the 
                                Higher Education Act of 1965, as 
                                amended;
                                    ``(II) any direct noncallable 
                                obligations of the United States or any 
                                agency thereof for which the full faith 
                                and credit of the United States is 
                                pledged; or
                                    ``(III) cash or cash equivalents.
                    ``(D) Enforcement.--The terms and conditions 
                imposed under subparagraph (B) may be enforced by the 
                Secretary in accordance with section 440 of the Higher 
                Education Act of 1965.
                    ``(E) Definitions.--For purposes of this paragraph, 
                the following definition shall apply--
                            ``(i) Association; holding company.--
                        Notwithstanding any provision in section 3, the 
                        terms `Association' and `Holding Company' have 
                        the same meanings as in section 440(i) of the 
                        Higher Education Act of 1965.
                            ``(ii) Secretary.--The term `Secretary' 
                        means the Secretary of the Treasury.''.

Summary: Depository Institution-GSE Affiliation Act of 1998 - Amends the Federal Deposit Insurance Act to specify circumstances under which the Secretary of the Treasury may:  (1) approve an affiliation between a depository institution and the Student Loan Marketing Association (SALLIE MAE) solely in its reorganized, privatized status as "the Holding Company," not in its status as a government sponsored enterprise (GSE); and (2) impose affiliation terms and conditions, including constraints upon either the issuance of debt obligations by SALLIE MAE in its GSE status, or upon the use of proceeds from such obligations.  (Current law prohibits affiliations between depository institutions and GSEs.) 
Limits the value of the investment portfolio of SALLIE MAE in its GSE status in the event such affiliation should occur to the lesser of:  (1) its value upon enactment of this Act; or (2) its value on the date such affiliation is consummated. 
Grants the Secretary enforcement powers under the Higher Education Act of 1965.