Riegle Community Development and Regulatory Improvement Act of 1994
PL 103-325 (H.R.3474), enacted 09/23/1994

108 STAT. 2160 
PUBLIC LAW 103-325—SEPT. 23, 1994 
Public Law 103-325 
103d Congress 
An Act 
Sept. 23. 1994 
[H.R. 3474] 
Riegle 
Community 
Development 
and 
Regulatory 
Improvement 
Act of 1994. 
12 u s e 4701 
note. 
To reduce administrative requirements for insured depository institutions to the 
extent consistent with safe and sound banking practices, to facilitate the establish-
ment of community development financial institutions, and for other purposes. 
Be it enacted by the Senate and House of Representatives of 
the United States of 
America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the "Riegle Commu-
nity Development and Regulatory Improvement Act of 1994". 
(b) TABLE OF CONTENTS.—The table of contents for this Act 
is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—COMMUNITY DEVELOPMENT AND CONSUMER PROTECTION 
Subtitle A—Community Development Banking and Financial Institutions Act 
Sec. 101. Short title. 
Sec. 102. Findings and purposes. 
Sec. 103. Definitions. 
Sec. 104. Establishment of National Fund for Community Development Banking. 
Sec. 105. Applications for assistance. 
Sec. 106. Community partnerships. 
Sec. 107. Selection of institutions. 
Sec. 108. Assistance provided by the Fund. 
Sec. 109. Training. 
Sec. 110. Encouragement of private entities. 
Sec. 111. Collection and compilation of information. 
Sec. 112. Investment of receipts and proceeds. 
Sec. 113. Capitalization assistance to enhance liquidity. 
Sec. 114. Incentives for depository institution participation. 
Sec. 115. Recordkeeping. 
Sec. 116. Special provisions with respect to institutions that are supervised by Fed-
eral banking agencies. 
Sec. 117. Studies and reports; examination and audit. 
Sec. 118. Inspector General. 
Sec. 119. Enforcement. 
Sec. 120. Community Development Revolving Loan Fund for credit unions. 
Sec. 121. Authorization of appropriations. 
Subtitle B—Home Ownership and Equity Protection 
Sec. 151. Short title. 
Sec. 152. Consumer protections for certain mortgages. 
Sec. 153. Civil Hability. 
Sec. 154. Reverse mortgage disclosure. 
Sec. 155. Regulations. 
Sec. 156. Applicability. 
Sec. 157. Federal Reserve study. 
Sec. 158. Hearings on home equity lending. 
TITLE II—SMALL BUSINESS CAPITAL FORMATION 
Subtitle A—Small Business Loan Securitization 
Sec. 201. Short title. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2161 
Sec. 202. Small business related security. 
Sec. 203. Applicability of margin requirements. 
Sec. 204. Borrowing in the course oi business. 
Sec. 205. Small business related securities as collateral. 
Sec. 206. Investment by depository institutions. 
Sec. 207. Preemption of State law. 
Sec. 208. Insured depository institution capital requirements for transfers of small 
business obligations. 
Sec. 209. Joint study on the impact of additional securities based on pooled obliga-
tions. 
Sec. 210. Consistent use of financial terminology. 
Subtitle B—Small Business Capital Enhancement 
Sec. 251. Findings and purposes. 
Sec. 252. Definitions. 
Sec. 253. Approving States for participation. 
Sec. 254. Participation agreements. 
Sec. 255. Terms of participation agreements. 
Sec. 256. Reports. 
Sec. 257. Reimbursement by the Fund. 
Sec. 258. Reimbursement to the Fund. 
Sec. 259. Regulations. 
Sec. 260. Authorization of appropriations. 
Sec. 261. Effective date. 
TITLE III—PAPERWORK REDUCTION AND REGULATORY IMPROVEMENT 
Sec. 301. Incorporated definitions. 
Sec. 302. Administrative consideration of burden with new regulations. 
Sec. 303. Streamlining of regulatory requirements. 
Sec. 304. Elimination of dupUcative filings. 
Sec. 305. Coordinated and unified examinations. 
Sec. 306. Eighteen-month examination rule for certain small institutions. 
Sec. 307. Call report simplification. 
Sec. 308. Repeal of publication requirements. 
Sec. 309. Regulatory appeals process, ombudsman, and alternative dispute resolu-
tion. 
Sec. 310. Electronic filing of currency transaction reports. 
Sec. 311. Bank Secrecy Act publication requirements. 
Sec. 312. Exemption of business loans from Real Estate Settlement Procedures Act 
requirements. 
Sec. 313. Flexibility in choosing boards of directors. 
Sec. 314. Holding company audit requirements. 
Sec. 315. State regulation of real estate appraisals. 
Sec. 316. Acceleration of effective date for interaffiliate transactions. 
Sec. 317. CoUateralization of public deposits. 
Sec. 318. Modification of regulatory provisions. 
Sec. 319. Expedited procedures. 
Sec. 320. Exemption of certain holding company formations from registration under 
the Securities Act of 1933. 
Sec. 321. Reduction of post-approval waiting periods for certain acquisitions and 
mergers. 
Sec. 322. Bankers' banks. 
Sec. 323. Bank Service Corporation Act amendment. 
Sec. 324. Merger transaction reports. 
Sec. 325. Credit card accounts receivable sales. 
Sec. 326. Limiting potential liability on foreign accounts. 
Sec. 327. GAO reports. 
Sec. 328. Study and report on capital standards and their impact on the economy. 
Sec. 329. Study on the impact of the payment of interest on reserves. 
Sec. 330. Study and report on the consumer credit system. 
Sec. 331. Clarification of provisions relating to administrative autonomy. 
Sec. 332. Exemption for business accounts. 
Sec. 333. Study on check-related fraud. 
Sec. 334. Insider lending. 
Sec. 335. Revisions of standards. 
Sec. 336. Alternative rules for radio advertising. 
Sec. 337. Deposit broker registration. 
Sec. 338. Amendments to the Depository Institution Management Interlocks Act. 
Sec. 339. Adverse information about consumers. 
Sec. 340. Simplified disclosure for existing depositors. 
Sec. 341. Feasibility study of data bank. 
108 STAT. 2162 
PUBLIC LAW 103-325—SEPT. 23, 1994 
Sec. 342. Timely completion of CRA review. 
Sec. 343. Time limit on agency consideration of completed applications. 
Sec. 344. Waiver of right of rescission for certain refinancing transactions. 
Sec. 345. Clarification of RESPA disclosure requirements. 
Sec. 346. Notice procedures for bank holding companies to seek approval to engage 
in certain activities. 
Sec. 347. Commercial mortgage related securities. 
Sec. 348. Clarifying amendment relating to data collection. 
Sec. 349. Guidelines for examinations. 
Sec. 350. Revising regulatory requirenr ents for transfers of all types of assets with 
recourse. 
TITLE IV—MONEY LAUNDERING 
Sec. 401. Short title. 
Sec. 402. Reform of CTR exemption requirements to reduce number and size of re-
ports consistent with effective law enforcement. 
Sec. 403. Single designee for reporting of suspicious transactions. 
Sec. 404. Improvement of identification of money laundering schemes. 
Sec. 405. Negotiable instruments drawn on foreign banks subject to recordkeeping 
and reporting requirements. 
Sec. 406. Imposition of civil money penalties by appropriate Federal banking agen-
cies. 
Sec. 407. Uniform State licensing and regulation of check cashing, currency ex-
change, and money transmitting businesses. 
Sec. 408. Registration of money transmitting businesses to promote effective law 
enforcement. 
Sec. 409. Uniform Federal regulation of casinos. 
Sec. 410. Authority to grant exemptions to States with effective regulation and en-
forcement. 
Sec. 411. Criminal and civil penalties for sti-ucturing domestic and international 
transactions. 
Sec. 412. GAO study of cashiers'checks. 
Sec. 413. Technical amendments and corrections. 
TITLE V—NATIONAL FLOOD INSURANCE REFORM 
Sec. 501. Short title. 
Subtitle A—Definitions 
Sec. 511. Flood Disaster Protection Act of 1973. 
Sec. 512. National Flood Insurance Act of 1968. 
Subtitle B—Compliance and Increased Participation 
Sec. 521. Nonwaiver of flood pvirchase requirement for recipients of Federal disas-
ter assistance. 
Sec. 522 Expanded flood insurance purchase requirements. 
Sec. 523. Escrow of flood insurance payments. 
Sec. 524. Placement of flood insurance by lenders. 
Sec. 525. Penalties for failure to require flood insurance or notify. 
Sec. 526. Fees for determining applicability of flood insurance purchase require-
ments. 
Sec. 527. Notice requirements. 
Sec. 528. Standard hazard determination forms. 
Sec. 529. Examinations regarding compliance. 
Sec. 530. Financial Institutions Examination Council. 
Sec. 531. Clerical amendment. 
Subtitle C—Ratings and Incentives for Community Floodplain Management 
Programs 
Sec. 541. Community rating system and incentives for community floodplain man-
agement. 
Sec. 542. Funding. 
Subtitle D—Mitigation of Flood Risks 
Sec. 551. Repeal of flooded property purchase and loan program. 
Sec. 552. Termination of erosion-threatened structures program. 
Sec. 553. Mitigation assistance program. 
Sec. 554. EstabUshment of National Flood Mitigation Fund. 
Sec. 555. Additional coverage for compliance with land use and control measures. 
Subtitle E—Task Forces 
Sec. 561. Flood Insurance Interagency Task Force. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2163 
Sec. 562. Task Force on Natural and Beneficial Functions of the Floodplain. 
Subtitle F—Miscellaneous Provisions 
Sec. 571. Extension of flood insurance program. 
Sec. 572. Limitation on premium increases. 
Sec. 573. Maximum flood insurance coverage amounts. 
Sec. 574. Flood insurance program arrangements with private insurance entities. 
Sec. 575. Updating of flooa maps. 
Sec. 576. Technical Mapping Advisory Council. 
Sec. 577. Evaluation of erosion hazards. 
Sec. 578. Study of economic effects of charging actuarially based premium rates for 
S
re-FIRM structures, 
ective dates of policies. 
Sec. 580. Agricultural structures. 
Sec. 581. Implementation review by Director. 
Sec. 582. Prohibited flood disaster assistance. 
Sec. 583. Regulations. 
Sec. 584. Relation to State and local laws. 
TITLE VI—MISCELLANEOUS PROVISIONS 
Sec. 601. Oversight hearings. 
Sec. 602. Technical amendments to the Federal banking laws. 
TITLE I—COMMUNITY DEVELOPMENT 
AND CONSUMER PROTECTION 
Subtitle A—Community Development 
Banking and Financial Institutions Act 
SEC. 101. SHORT TITLE. 
This subtitle may be cited as the "Community Development 
Banking and Financial Institutions Act of 1994". 
SEC. 102. FINDINGS AND PURPOSES. 
(a) FINDINGS.—^The Congress finds that— 
(1) many of the Nation's urban, rural, and Native American 
communities face critical social and economic problems arising 
in part from the lack of economic growth, people living in 
poverty, and the lack of employment and other opportunities; 
(2) the restoration and maintenance of the economies of 
these communities will require coordinated development strate-
gies, intensive supportive services, and increased access to 
equity investments and loans for development activities, includ-
ing investment in businesses, housing, commercial real estate, 
human development, and other activities that promote the long-
term economic and social viability of the community; and 
(3) community development financial institutions have 
proven their ability to identify and respond to community needs 
for equity investments, loans, and development services. 
(b) PURPOSE.—^The purpose of this subtitle is to create a 
Community Development Financial Institutions Fund to promote 
economic revitalization and community development through invest-
ment in and assistance to community development financial institu-
tions, including enhancing the liquidity of community development 
financial institutions. 
SEC. 103. DEFINITIONS. 
For purposes of this subtitle, the following definitions shall 
apply: 
Community 
Development 
Banking and 
Financial 
Institutions Act 
of 1994. 
12 u s e 4701 
note. 
12 u s e 4701. 
12 u s e 4702. 
108 STAT. 2164 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(1) ADMINISTRATOR.—The term "Administrator" means the 
Administrator of the Fund appointed under section 104(b). 
(2) APPROPRIATE FEDERAL BANKING AGENCY.—^The term 
"appropriate Federal banking agency" has the same meaning 
as in section 3 of the Federal Deposit Insurance Act, and 
also includes the National Credit Union Administration Board 
with respect to insured credit unions. 
(3) AFFILIATE.—^The term "affiliate" has the same meaning 
as in section 2(k) of the Bank Holding Company Act of 1956. 
(4) BOARD.—^The term "Board" means the Community 
Development Advisory Board established under section 104(d). 
(5) COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION.— 
(A) IN GENERAL.—^The term "community development 
financial institution" means a person (other than an 
individual) that— 
(i) has a primary mission of promoting community 
development; 
(ii) 
serves 
an 
investment 
area 
or 
targeted 
population; 
(iii) provides development services in conjunction 
with equity investments or loans, directly or through 
a subsidiary or affiliate; 
(iv) maintains, through representation on its 
governing board or otherwise, accountability to resi-
dents of its investment area or targeted population; 
and 
(v) is not an agency or instrumentality of the 
United States, or of any State or political subdivision 
of a State. 
(B) 
CONDITIONS 
FOR 
QUALIFICATION 
OF 
HOLDING 
COMPANIES.— 
(i) 
CONSOLIDATED 
TREATMENT.—A depository 
institution holding company may qualify as a commu-
nity development financial institution only if the hold-
ing company and the subsidiaries and affiliates of the 
holding company collectively satisfy the requirements 
of subparagraph (A). 
(ii) EXCLUSION OF SUBSIDIARY OR AFFILIATE FOR 
FAILURE TO MEET CONSOLIDATED TREATMENT RULE.— 
No subsidiary or affiliate of a depository institution 
holding company may qualify as a community develop-
ment financial institution if the holding company and 
the subsidiaries and affiliates of the holding company 
do not collectively meet the requirements of subpara-
graph (A). 
(C) CONDITIONS FOR SUBSIDIARIES.—No subsidiary of 
an insured depository institution may qualify as a commu-
nity development financial institution if the insured deposi-
tory institution and its subsidiaries do not collectively meet 
the requirements of subparagraph (A). 
(6) COMMUNITY PARTNER.—^The term "community partner" 
means a person (other than an individual) that provides loans, 
equity investments, or development services, including a deposi-
tory institution holding company, an insured depository institu-
tion, an insured credit union, a nonprofit organization, a State 
or local government agency, a quasi-governmental entity, and 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2165 
an investment company authorized to operate pursuant to the 
Small Business Investment Act of 1958. 
(7) COMMUNITY PARTNERSHIP.—^The term "community part-
nership" means an agreement between a community develop-
ment financial institution and a community partner to provide 
development services, loans, or equity investments, to an invest-
ment area or targeted population. 
(8) DEPOSITORY INSTITUTION HOLDING COMPANY.—The term 
"depository institution holding company" has the same meaning 
as in section 3 of the Federal Deposit Insurance Act. 
(9) DEVELOPMENT SERVICES.—^The term "development serv-
ices" means activities that promote community development 
and are integral to lending or investment activities, including— 
(A) business planning; 
(B) financial and credit counseling; and 
(C) marketing and management assistance, 
(10) FUND.—The term "Fund" means the Community Devel-
opment Financial Institutions Fund established under section 
104(a). 
(11) INDIAN RESERVATION.—^The term "Indian reservation" 
has the same meaning as in section 4(10) of the Indian Child 
Welfare Act of 1978, and shall include land held by incorporated 
Native groups, regional corporations, and village corporations, 
as defined in or established pursuant to the Alaska Native 
Claims Settlement Act, public domain Indian allotments, and 
former Indian reservations in the State of Oklahoma. 
(12) INDIAN TRIBE.—The term "Indian tribe" means any 
Indian tribe, band, pueblo, nation, or other organized group 
or community, including any Alaska Native village or regional 
or village corporation, as defined in or established pursuant 
to the Alaska Native Claims Settlement Act, which is recog-
nized as eligible for the special programs and services provided 
by the United States to Indians because of their status as 
Indians. 
(13) INSURED COMMUNITY DEVELOPMENT FINANCIAL INSTITU-
TION.—The term "insured community development financial 
institution" means any community development 
financial 
institution that is an insured depository institution or an 
insured credit union. 
(14) INSURED CREDIT UNION.—The term "insured credit 
union" has the same meaning as in section 101(7) of the Federal 
Credit Union Act. 
(15) INSURED DEPOSITORY INSTITUTION.—The term "insured 
depository institution" has the same meaning as in section 
3 of the Federal Deposit Insurance Act. 
(16) 
INVESTMENT AREA.—The term "investment 
area" 
means a geographic area (or areas) including an Indian reserva-
tion that— 
(A)(i) meets objective criteria of economic distress 
developed by the Fund, which may include the percentage 
of low-income families or the extent of poverty, the rate 
of unemployment or underemployment, rural population 
outmigration, lag in population growth, and extent of blight 
and disinvestment; and 
(ii) has significant unmet needs for loans or equity 
investments; or 
108 STAT. 2166 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(B) encompasses or is located in an empowerment zone 
or enterprise community designated under section 1391 
of the Internal Revenue Code of 1986. 
(17) LOW-INCOME.—The term "low-income" means having 
an income, adjusted for family size, of not more than— 
(A) for metropolitan areas, 80 percent of the area 
median income; and 
(B) for nonmetropolitan areas, the greater of— 
(i) 80 percent of the area median income; or 
(ii) 80 percent of the statewide nonmetropolitan 
area median income. 
(18) STATE.—The term "State" has the same meaning as 
in section 3 of the Federal Deposit Insurance Act. 
(19) SUBSIDIARY.—The term "subsidiary" has the same 
meaning as in section 3 of the Federal Deposit Insurance Act, 
except that a community development financial institution that 
is a corporation shall not be considered to be a subsidiary 
of any insured depository institution or depository institution 
holding company that controls less than 25 percent of any 
class of the voting shares of such corporation, and does not 
otherwise control in any manner the election of a majority 
of the directors of the corporation. 
(20) TARGETED POPULATION.—The term "targeted popu-
lation" means individuals, or an identifiable group of individ-
uals, including an Indian tribe, who— 
(A) are low-income persons; or 
(B) otherwise lack adequate access to loans or equity 
investments. 
(21) TRAINING PROGRAM.—The term "training program" 
means the training program operated by the Fund under section 
109. 
12 use 4703. 
SEC. 104. ESTABLISHMENT OF NATIONAL FUND FOR COMMUNITY 
DEVELOPMENT BANKING. 
(a) ESTABLISHMENT.— 
(1) IN GENERAL.—^There is established a corporation to be 
known as the Community Development Financial Institutions 
Fund that shall have the duties and responsibilities specified 
by this subtitle and subtitle B of title II. The Fund shall 
District of 
have succession until dissolved. The offices of the Fund shall 
Columbia. 
ije in Washington, D.C. The Fund shall not be affiliated with 
or be within any other agency or department of the Federal 
Government. 
(2) WHOLLY OWNED GOVERNMENT CORPORATION.—The Fund 
shall be a wholly owned Government corporation in the execu-
tive branch and shall be treated in all respects as an agency 
of the United States, except as otherwise provided in this 
subtitle. 
(b) MANAGEMENT OF FUND.— 
(1) APPOINTMENT OF ADMINISTRATOR.—The management of 
the Fund shall be vested in an Administrator, who shall be 
appointed by the President, by and with the advice and consent 
of the Senate. The Administrator shall not engage in any other 
business or employment during service as the Administrator. 
(2) CHIEF FINANCIAL OFFICER.—The Administrator shall 
appoint a chief financial officer, who shall have the authority 
and functions of an agency Chief Financial Officer under section 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2167 
902 of title 31, United States Code. In the event of a vacancy 
in the position of the Administrator or during the absence 
or disability of the Administrator, the chief financial officer 
shall perform the duties of the position of Administrator. 
(3) OTHER OFFICERS AND EMPLOYEES.—The Administrator 
may appoint such other officers and employees of the Fund 
as the Administrator determines to be necessary or appropriate. 
(4) EXPEDITED HIRING.—During the 2-year period beginning 
on the date of enactment of this Act, the Administrator may— 
(A) appoint and terminate the individuals referred to 
in paragraphs (2) and (3) without regard to the civil service 
laws and regulations; and 
(B) fix the compensation of the individuals referred 
to in paragraph (3) without regard to the provisions of 
chapter 51 and subchapter III of chapter 53 of title 5, 
United States Code, relating to classification of positions 
and General Schedule pay rates, except that the rate of 
pay for such individuals may not exceed the rate payable 
for level V of the Executive Schedule under section 5316 
of such title. 
(c) GENERAL POWERS.—In carrying out the functions of the 
Fund, the Administrator— 
(1) shall have all necessary and proper authority to carry 
out this subtitle and subtitle B of title II; 
(2) shall have the power to adopt, alter, and use a corporate 
seal for the Fund, which shall be judicially noticed; 
(3) may adopt, amend, and repeal bylaws, rules, and regula-
tions governing the manner in which business of the Fund 
may be conducted and such rules and regulations as may 
be necessary or appropriate to implement this subtitle and 
subtitle B of title II; 
(4) may enter into, perform, and enforce such agreements, 
contracts, and transactions as may be deemed necessary or 
appropriate to the conduct of activities authorized under this 
subtitle and subtitle B of title II; 
(5) may determine the character of and necessity for 
expenditures of the Fund and the manner in which they shall 
, be incurred, allowed, and paid; 
(6) may utilize or employ the services of personnel of any 
agency or instrumentality of the United States with the consent 
of the agency or instrumentality concerned on a reimbursable 
or nonreimbursable basis; and 
(7) may execute all instruments necessary or appropriate 
in the exercise of any of the functions of the Fund under 
this subtitle and subtitle B of title II and may delegate to 
the officers of the Fund such of the powers and responsibilities 
of the Administrator as the Administrator deems necessary 
or appropriate for the administration of the Fund. 
(d) ADVISORY BOARD.— 
(1) ESTABLISHMENT.—There is established an advisory 
board to the Fund to be known as the Community Development 
Advisory Board, which shall be operated in accordance with 
the provisions of the Federal Advisory Committee Act, except 
that section 14 of that Act does not apply to the Board. 
(2) MEMBERSHIP.—The Board shall consist of 15 members, 
including— 
(A) the Secretary of Agriculture or his or her designee; 
108 STAT. 2168 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(B) the Secretary of Commerce or his or her designee; 
(C) the Secretary of Housing and Urban Development 
or his or her designee; 
(D) the Secretary of the Interior or his or her designee; 
(E) the Secretary of the Treasury or his or her designee; 
(F) the Administrator of the Small Business Adminis-
tration or his or her designee; and 
(G) 9 private citizens, appointed by the President, who 
shall be selected, to the maximum extent practicable, to 
provide for national geographic representation and racial, 
ethnic, and gender diversity, including— 
(i) 2 individuals who are officers of existing commu-
nity development financial institutions; 
(ii) 2 individuals who are officers of insured deposi-
tory institutions; 
(iii) 2 individuals who are officers of national 
consumer or public interest organizations; 
(iv) 2 individuals who have expertise in community 
development; and 
(v) 1 individual who has personal experience and 
specialized expertise in the unique lending and commu-
nity development issues confronted by Indian tribes 
on Indian reservations. 
(3) CHAIRPERSON.—The members of the Board specified 
in paragraph (2)(G) shall select, by majority vote, a chairperson 
of the Board, who shall serve for a term of 2 years. 
(4) BOARD FUNCTION.—It shall be the function of the Board 
to advise the Administrator on the policies of the Fund regard-
ing activities under this subtitle. The Board shall not advise 
the Administrator on the granting or denial of any particular 
application. 
(5) TERMS OF PRIVATE MEMBERS.— 
(A) IN GENERAL.—Each member of the Board appointed 
under paragraph (2)(G) shall serve for a term of 4 years. 
(B) VACANCIES.—^Any member appointed to fill a 
vacancy occurring prior to the expiration of the term for 
which the previous member was appointed shall be 
appointed for the remainder of such term. Members may 
continue to serve following the expiration of their terms 
until a successor is appointed. 
(6) MEETINGS.—^The Board shall meet at least annually 
and at such other times as requested by the Administrator 
or the chairperson. A majority of the members of the Board 
shall constitute a quorum. 
(7) REIMBURSEMENT FOR EXPENSES.—The members of the 
Board may receive reimbursement for travel, per diem, and 
other necessary expenses incurred in the performance of their 
duties, in accordance with the Federal Advisory Committee 
Act. 
(8) COSTS AND EXPENSES.—^The Fund shall provide to the 
Board all necessary staff and facilities. 
(e) CONFORMING AMENDMENTS.—Section 9101(3) of title 31, 
United States Code, is amended— 
(1) by redesignating subparagraphs (B) through (M) as 
subparagraphs (C) through (N), respectively; and 
(2) by inserting after subparagraph (A) the following new 
subparagraph: 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2169 
"(B) the Community Development Financial Institu-
tions Fund;". 
(f) GOVERNMENT CORPORATION CONTROL ACT EXEMPTION.—Sec-
tion 9107(b) of title 31, United States Code, shall not apply to 
deposits of the Fund made pursuant to section 108. 
(g) LIMITATION OF FUND AND FEDERAL LIABILITY.—^The liability 
of the Fund and the United States Government arising out of 
any investment in a community development financial institution 
in accordance with this subtitle shall be limited to the amount 
of the investment. The Fund shall be exempt from giny assessments 
and other liabilities that may be imposed on controlling or principal 
shareholders by any Federal law or the law of any State, Territory, 
or the District of Columbia. Nothing in this subsection shall affect 
the application of any Federal tax law. 
(h) PROHIBITION ON ISSUANCE OF SECURITIES.—^The Fund may 
not issue stock, bonds, debentures, notes, or other securities. 
(i) COMPENSATION.—Title 5, United States Code, is amended 
in section 5313, by adding at the end the following: 
"Administrator of the Community Development Financial 
Institutions Fund.". 
(j) ASSISTED INSTITUTIONS NOT UNITED STATES INSTRUMENTAL-
ITIES.—^A community development financial institution or other 
organization that receives assistance pursuant to this subtitle shall 
not be deemed to be an agency, department, or instrumentality 
of the United States. 
(k) TRANSITION PERIOD.— 
(1) IN GENERAL.—During the transition period, the Sec-
retary of the Treasury may— 
(A) assist in the establishment of the administrative 
functions of the Fund listed in paragraph (2); and 
(B) hire not more than 6 individuals to serve as employ-
ees of the Fund during the transition period. 
(2) CONTINUED SERVICE.—Individuals hired in accordance 
with paragraph (1)(B) may continue to serve as employees 
of the Fund after the transition period. 
(3) ADMINISTRATIVE FUNCTIONS.—^The administrative func-
tions referred to in paragraph (1)(A) shall be limited to— 
(A) establishing accounting, information, and record-
keeping systems for the Fund; and 
(B) procuring office space, equipment, and supplies. 
(4) EXPEDITED HIRING.—During the transition period, the 
Secretary of the Treasury may— 
(A) appoint and terminate the individuals referred to 
in paragraph (1)(B) without regard to the civil service 
laws and regulations; and 
(B) fix the compensation of the individuals referred 
to in paragraph (1)(B) without regard to the provisions 
of chapter 51 and subchapter III of chapter 53 of title 
5, United States Code, relating to classification of positions 
and General Schedule pay rates, except that the rate of 
pay for such individuals may not exceed the rate payable 
for level V of the Executive Schedule under section 5316 
of such title. 
(5) CERTAIN EMPLOYEES.—During the transition period, 
employees of the Department of the Treasury may only com-
prise less than one-half of the total number of individuals 
hired in accordance with paragraph (1)(B). 
79-194 O—95—14: QL 3 Part 3 
108 STAT. 2170 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(6) TRANSITION EXPENSES.—Amounts previously appro-
priated to the Department of the Treasury may be used to 
pay obligations and expenses of the Fund incurred under this 
section, and such amounts may be reimbursed by the Fund 
to the Department of the Treasury from amounts appropriated 
to the Fund for fiscal year 1995. 
(7) DEFINITION,—For purposes of this subsection, the term 
"transition period" means the period beginning on the date 
of enactment of this Act and ending on the date on which 
the Administrator is appointed. 
12 use 4704. 
SEC. 105. APPUCATIONS FOR ASSISTANCE. 
(a) FORM AND PROCEDURES.—^An application for assistance 
under this subtitle shall be submitted in such form and in accord-
ance with such procedures as the Fund shall establish. 
(b) MINIMUM REQUIREMENTS.—^Except as provided in sections 
106 and 113, the Fund shall require an application— 
(1) to establish that the applicant is, or will be, a commu-
nity development financial institution; 
(2) to include a comprehensive strategic plan for the 
organization that contains— 
(A) a business plan of not less than 5 years in duration 
that demonstrates that the applicant will be properly man-
aged and will have the capacity to operate as a community 
development financial institution that will not be depend-
ent upon assistance from the Fund for continued viability; 
(B) an analysis of the needs of the investment area 
or targeted population and a strategy for how the applicant 
will attempt to meet those needs; 
(C) a plan to coordinate use of assistance from the 
Fund with existing Federal, State, local, and tribal govern-
ment assistance programs, and private sector financial 
services; 
(D) an explanation of how the proposed activities of 
the applicant are consistent with existing economic, 
community, and housing development plans adopted by 
or applicable to an investment area or targeted population; 
and 
(E) a description of how the applicant will coordinate 
with community organizations and financial institutions 
which will provide equity investments, loans, secondary 
markets, or other services to investment areas or targeted 
populations; 
(3) to include a detailed description of the applicant's plans 
and likely sources of funds to match the amount of assistance 
requested from the Fund; 
(4) in the case of an applicant that has previously received 
assistance under this subtitle, to demonstrate that the 
applicant— 
(A) has substantially met its performance goals and 
otherwise carried out its responsibilities under this subtitle 
and the assistance agreement; and 
(B) will expand its operations into a new investment 
area or serve a new targeted population, offer more prod-
ucts or services, or increase the volume of its business; 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2171 
(5) in the case of an applicant with a prior history of 
serving investment areas or targeted populations, to dem-
onstrate that the applicant— 
(A) has a record of success in serving investment areas 
or targeted populations; and 
(B) will expand its operations into a new investment 
area or to serve a new targeted population, offer more 
products or services, or increase the volume of its current 
business; and 
(6) to include such other information as the Fund deems 
appropriate. 
(c) PREAPPLICATION OUTREACH PROGRAM.—The Fund shall pro-
vide an outreach program to identify and provide information to 
potential applicants and may provide technical assistance to poten-
tial applicants, but shall not assist in the preparation of any 
application. 
SEC. 106. COMMUNITY PARTNERSHIPS. 
12 USC 4705. 
(a) APPLICATION.—^An application for assistance may be filed 
jointly by a community development financial institution and a 
community partner to carry out a community partnership. 
(b) APPLICATION REQUIREMENTS.—The Fund shall require a 
community partnership application— 
(1) to meet the minimum requirements established for 
community development financial institutions under section 
105(b), except that the criteria specified in paragraphs (1) and 
(2)(A) of section 105(b) shall not apply to the community 
partner; 
(2) to describe how each coapplicant will participate in 
carrying out the community partnership and how the partner-
ship will enhance activities serving the investment area or 
targeted population; and 
(3) to demonstrate that the community partnership activi-
ties are consistent with the strategic plan submitted by the 
community development financial institution coapplicant. 
(c) SELECTION CRITERIA.—The Fund shall consider a community 
partnership application based on— 
(1) the 
community 
development 
financial 
institution 
coapplicant— 
(A) meeting the minimum selection criteria described 
in section 105; and 
(B) satisfying the selection criteria of section 107; 
(2) the extent to which the community partner coapplicant 
will participate in carrying out the partnership; 
(3) the extent to which the community partnership will 
enhance the likelihood of success of the community development 
financial institution coapplicant's strategic plan; and 
(4) the extent to which service to the investment area 
or targeted population will be better performed by a partnership 
as opposed to the individual community development financial 
institution coapplicant. 
(d) LIMITATION ON DISTRIBUTION OF ASSISTANCE.^Assistance 
provided upon approval of an application under this section shall 
be distributed only to the community development financial institu-
tion coapplicant, and shall not be used to fund any activities carried 
out directly by the community partner or an affiliate or subsidiary 
thereof. 
108 STAT. 2172 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(e) OTHER REQUIREMENTS AND LIMITATIONS.—^All other require-
ments and limitations imposed by this subtitle on a community 
development financial institution assisted under this subtitle shall 
apply (in the manner that the Fund determines to be appropriate) 
to assistance provided to carry out community partnerships. The 
Fund may establish additional guidelines and restrictions on the 
use of Federal funds to carry out community partnerships. 
12 use 4706. 
SEC. 107. SELECTION OF INSTITUTIONS. 
(a) SELECTION CRITERIA.—Except as provided in section 113, 
the Fund shall, in its sole discretion, select community development 
financial institution applicants meeting the requirements of section 
105 for assistance based on— 
(1) the likelihood of success of the applicant in meeting 
the goals of its comprehensive strategic plan; 
(2) the experience and background of the management 
team; 
(3) the extent of need for equity investments, loans, and 
development services within the investment areas or targeted 
populations; 
(4) the extent of economic distress within the investment 
areas or the extent of need within the targeted populations, 
as those factors are measured by objective criteria; 
(5) the extent to which the applicant will concentrate 
its activities on serving its investment areas or targeted 
populations; 
(6) the amount of firm commitments to meet or exceed 
the matching requirements and the likely success of the plan 
for raising the balance of the match; 
(7) the extent to which the matching funds are derived 
from private sources; 
(8) the extent to which the proposed activities will expand 
economic opportunities within the investment areas or the tar-
geted populations; 
(9) whether the applicant is, or will become, an insured 
community development financial institution; 
(10) the extent of support from the investment areas or 
targeted populations; 
(11) the extent to which the applicant is, or will be, commu-
nity-owned or community-governed; 
(12) the extent to which the applicant will increase its 
resources through coordination with other institutions or 
participation in a secondary market; 
(13) in the case of an applicant with a prior history of 
serving investment areas or targeted populations, the extent 
of success in serving them; and 
(14) other factors deemed to be appropriate by the Fund. 
(b) GEOGRAPHIC DIVERSITY.—In selecting applicants for assist-
ance, the Fund shall seek to fund a geographically diverse group 
of applicants, which shall include applicants from metropolitan, 
nonmetropolitan, and rural areas. 
12 use 4707. 
SEC. 108. ASSISTANCE PROVIDED BY THE FXWD. 
(a) FORMS OF ASSISTANCE.— 
(1) IN GENERAL.—^The Fund may provide— 
(A) financial assistance through equity investments, 
deposits, credit union shares, loans, and grants; and 
(B) technical assistance— 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2173 
(i) directly; 
(ii) through grants; or 
(iii) by contracting with organizations that possess 
expertise in community development finance, without 
regard to whether the organizations receive or are 
eligible to receive assistance under this subtitle. 
(2) EQUITY INVESTMENTS.— 
(A) LIMITATION ON EQUITY INVESTMENTS.—The Fund 
shall not own more than 50 percent of the equity of a 
community development financial institution and may not 
control the operations of such institution. The Fund may 
hold only transferable, nonvoting equity investments in 
the institution. Such equity investments may provide for 
convertibility to voting stock upon transfer by the Fund. 
(B) FUND DEEMED NOT TO CONTROL.—Notwithstanding 
any other provision of law, the Fund shall not be deemed 
to control a community development financial institution 
by reason of any assistance provided under this subtitle 
for the purpose of any other applicable law to the extent 
that the Fund complies with subparagraph (A). Nothing 
in this subparagraph shall affect the application of any 
Federal tax law. 
(3) DEPOSITS.—Deposits made pursuant to this section in 
an insured community development financial institution shall 
not be subject to any requirement for collateral or security. 
(4) LIMITATIONS ON OBLIGATIONS.—Direct loan obligations 
may be incurred by the Fund only to the extent that appropria-
tions of budget authority to cover their cost, as defined in 
section 502(5) of the Congressional Budget Act of 1974, are 
made in advance. 
(b) USES OF FINANCIAL ASSISTANCE.— 
(1) IN GENERAL.—Financial assistance made available 
under this subtitle may be used by assisted community develop-
ment financial institutions to serve investment areas or tar-
geted populations by developing or supporting— 
(A) commercial facilities that promote revitalization, 
community stability, or job creation or retention; 
(B) businesses that— 
(i) provide jobs for low-income people or are owned 
by low-income people; or 
(ii) enhance the availability of products and serv-
ices to low-income people; 
(C) community facilities; 
(D) the provision of basic financial services; 
(E) housing that is principally affordable to low-income 
people, except that assistance used to facilitate homeowner-
ship shall only be used for services and lending products— 
(i) that serve low-income people; and 
(ii) that— 
(I) are not provided by other lenders in the 
area; or 
(II) complement the services and lending prod-
ucts provided by other lenders that serve the 
investment area or targeted population; and 
(F) other businesses and activities deemed appropriate 
by the Fund. 
108 STAT. 2174 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(2) LIMITATIONS.—No assistance made available under this 
subtitle may be expended by a community development finan-
cial institution (or an organization receiving assistance under 
section 113) to pay any person to influence or attempt to 
influence any agency, elected official, officer, or employee of 
a State or local government in connection with the making, 
award, extension, continuation, renewal, amendment, or modi-
fication of any State or local government contract, grant, loan, 
or cooperative agreement (as such terms are defined in section 
1352 of title 31, United States Code). 
(c) USES OF TECHNICAL ASSISTANCE.— 
(1) TYPES OF ACTIVITIES.—^Technical assistance may be used 
for activities that enhance the capacity of a community develop-
ment financial institution, such as training of management 
and other personnel and development of programs and invest-
ment or loan products. 
(2) AVAILABILITY OF TECHNICAL ASSISTANCE.—The Fund 
may provide technical assistance, regardless of whether or not 
the recipient also receives financial assistance under this 
section. 
(d) AMOUNT OF ASSISTANCE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
Fund may provide not more than $5,000,000 of assistance, 
in the aggregate, during any 3-year period to any 1 community 
development financial institution and its subsidiaries and 
affiliates. 
(2) EXCEPTION.—^The Fund may provide not more than 
$3,750,000 of assistance in addition to the amount specified 
in paragraph (1) during the same 3-year period to an existing 
community development financial institution that proposes to 
establish a subsidiary or affiliate for the purpose of serving 
an investment area or targeted population outside of any State 
and outside of any metropolitan area presently served by the 
institution, if— 
(A) the subsidiary or affiliate— 
(i) would be a community development financial 
institution; and 
(ii) independently— 
(I) meets the selection criteria described in 
section 105; and 
(II) satisfies the selection criteria of section 
107; and 
(B) no other application for assistance to serve the 
investment area or targeted population has been submitted 
to the Administrator within a reasonable period of time 
preceding the date of receipt of the application at issue. 
(3) TIMING OF ASSISTANCE.—^Assistance may be provided 
as described in paragraphs (1) and (2) in a lump sum or 
over a period of time, as determined by the Fund. 
(e) MATCHING REQUIREMENTS.— 
(1) IN GENERAL.—^Assistance other than technical assist-
ance shall be matched with funds from sources other than 
the Federal Government on the basis of not less than one 
dollar for each dollar provided by the Fund. Such matching 
funds shall be at least comparable in form and value to assist-
ance provided by the Fund. The Fund shall provide no 
assistance (other than technical assistance) until a community 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2175 
development financial institution has secured firm commit-
ments for the matching funds required. 
(2) EXCEPTION.—In the case of an applicant with severe 
constraints on available sources of matching funds, the Fund 
may permit an applicant to comply with the matching require-
ments of paragraph (1) by— 
(A) reducing such matching requirement by 50 percent; 
or 
(B) permitting an applicant to provide matching funds 
in a form to be determined at the discretion of the Fund, 
if such applicant— 
(i) has total assets of less than $100,000; 
(ii) serves nonmetropolitan or rural areas; and 
(iii) is not requesting more than $25,000 in assist-
ance. 
(3) LIMITATION.—^Not more than 25 percent of the total ^ 
funds disbursed in any fiscal year by the Fund may be matched »
^ 
as authorized under paragraph (2). 
(4) CONSTRUCTION OF "FEDERAL GOVERNMENT FUNDS".— 
For purposes of this subsection, notwithstanding 
section 
105(a)(9) of the Housing and Community Development Act of 
1974, funds provided pursuant to such Act shall be considered 
to be Federal Government funds. 
(f) TERMS AND CONDITIONS.— 
(1) SOUNDNESS OF UNREGULATED INSTITUTIONS.—^The Fund 
shall— 
(A) ensure, to the maximum extent practicable, that 
each community development financial institution (other 
than an insured community development financial institu-
tion or depository institution holding company) assisted 
under this subtitle is financially and managerially sound 
and maintains appropriate internal controls; 
(B) require such institution to submit, not less than 
once during each 18-month period, a statement of financial 
condition audited by an independent certified 
public 
accountant as part of the report required by section 
115(e)(1); and 
(C) require that all assistance granted under this sec-
tion is used by the community development 
financial 
institution or community development partnership in a 
manner consistent with the purposes of this subtitle. 
(2) ASSISTANCE AGREEMENT.— 
(A) IN GENERAL.—Before providing any assistance 
under this subtitle, the Fund and each community develop-
ment financial institution to be assisted shall enter into 
an agreement that requires the institution to comply with 
performance goals and abide by other terms and conditions 
pertinent to assistance received under this subtitle. 
(B) PERFORMANCE GOALS.—Performance goals shall be 
negotiated between the Fund and each community develop-
ment financial institution receiving assistance based upon 
the strategic plan submitted pursuant to section 105(b)(2). 
Such goals may be modified with the consent of the parties, 
or as provided in subparagraph (C). Performance goals 
for insured community development financial institutions 
shall be determined in consultation with the appropriate 
Federal banking agency. 
108 STAT. 2176 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(C) SANCTIONS.—^The agreement shall provide that, in 
the event of fraud, mismanagement, noncompliance with 
this subtitle, or noncompliance with the terms of the agree-
ment, the Fund, in its discretion, may— 
(i) require changes to the performance goals 
imposed pursuant to subparagraph (B); 
(ii) require changes to the strategic plan submitted 
pursuant to section 105(b)(2); 
(iii) revoke approval of the application; 
(iv) reduce or terminate assistance; 
(v) require repayment of assistance; 
(vi) bar an applicant from reapplying for assistance 
from the Fund; and 
(vii) take such other actions as the Fund deems 
appropriate. 
(D) 
CONSULTATION WITH TRIBAL GOVERNMENTS.—In 
reviewing the performance of any assisted community 
development financial institution, the investment area of 
which includes an Indian reservation, or the targeted popu-
lation of which includes an Indian tribe, the Fund shall 
consult with, and seek input from, any appropriate tribal 
government. 
(g) AUTHORITY TO SELL EQUITY INVESTMENTS AND LOANS.— 
The Fund may, at any time, sell its equity investments and loans, 
but the Fund shall retain the power to enforce limitations on 
assistance entered into in accordance with the requirements of 
this subtitle until the performance goals related to the investment 
or loan have been met. 
(h) No AUTHORITY TO LIMIT SUPERVISION AND REGULATION.— 
Nothing in this subtitle shall affect any authority of the appropriate 
Federal banking agency to supervise and regulate any institution 
or company. 
12 use 4708. 
SEC. 109. TRAINING. 
(a) IN GENERAL.—^The Fund may operate a training program 
to increase the capacity and expertise of community development 
financial institutions and other members of the financial services 
industry to undertake community development finance activities. 
(b) PROGRAM ACTIVITIES.—The training program shall provide 
educational programs to assist community development financial 
institutions and other members of the financial services industry 
in developing lending and investment products, underwriting and 
servicing loans, managing equity investments, and providing devel-
opment services targeted to areas of economic distress, low-income 
persons, and persons who lack adequate access to loans and equity 
investments. 
(c) PARTICIPATION.—The training program shall be made avail-
able to community development financial institutions and other 
members of the financial services industry that serve or seek to 
serve areas of economic distress, low-income persons, and persons 
who lack adequate access to loans and equity investments. 
(d) CONTRACTING,—The Fund may ofTer the training program 
described in this section directly or through a contract with other 
organizations. The Fund may contract to provide the training pro-
gram through organizations that possess special expertise in 
community development, without regard to whether the organiza-
tions receive or are eligible to receive assistance under this subtitle. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2177 
(e) COORDINATION.—^The Fund shall coordinate with other 
appropriate Federal departments or agencies that operate similar 
training programs in order to prevent duplicative efforts. 
(D REGULATORY FEE FOR PROVIDING TRAINING SERVICES.— 
(1) GENERAL RULE.—^The Fund may, at the discretion of 
the Administrator and in accordance with this subsection, 
assess and collect regulatory fees solely to cover the costs 
of the Fund in providing training services under a training 
program operated in accordance with this section. 
(2) PERSONS SUBJECT TO FEE.—Fees may be assessed under 
paragraph (1) only on persons who participate in the training 
program. 
(3) LIMITATION ON MANNER OF COLLECTION.—Fees may be 
assessed and collected under this subsection only in such man-
ner as may reasonably be expected to result in the collection 
of an aggregate amount of fees during any fiscal year which 
does not exceed the aggregate costs of the Fund for such year 
in providing training services under a training program oper-
ated in accordance with this section 
(4) LIMITATION ON AMOUNT OF FEE.—The amount of any 
fee assessed under this subsection on any person may not 
exceed the amount which is reasonably based on the proportion 
of the training services provided under a training program 
operated in accordance with this section which relate to such 
person. 
SEC. 110. ENCOURAGEMENT OF PRIVATE ENTITIES. 
12 USC 4709. 
The Fund may facilitate the organization of corporations in 
which the Federal Government has no ownership interest. The 
purpose of any such entity shall be to assist community development 
financial institutions in a manner that is complementary to the 
activities of the Fund under this subtitle. Any such entity shall 
be managed exclusively by persons not employed by the Federal 
Government or any agency or instrumentality thereof, or by any 
State or local government or any agency or instrumentality thereof. 
SEC. 111. COLLECTION AND COMPILATION OF INFORMATION. 
12 USC 4710. 
The Fund shall— 
(1) collect and compile information pertinent to community 
development financial institutions that will assist in creating, 
developing, expanding, and preserving such institutions; and 
(2) make such information available to promote the pur-
poses of this subtitle. 
SEC, 112. INVESTMENT OF RECEIPTS AND PROCEEDS. 
12 USC 4711. 
(a) ESTABLISHMENT OF ACCOUNT.—Any dividends on equity 
investments and proceeds from the disposition of investments, 
deposits, or credit union shares that are received by the Fund 
as a result of assistance provided pursuant to section 108 or 113, 
and any fees received pursuant to section 109(f) shall be deposited 
and accredited to an account of the Fund in the United States 
Treasury (hereafter in this section referred to as "the account") 
established to carry out the purpose of this subtitle. 
(b) INVESTMENTS.—Upon request of the Administrator, the Sec-
retary of the Treasury shall invest amounts deposited in the account 
in public debt securities with maturities suitable to the needs 
of the Fund, as determined by the Administrator, and bearing 
interest at rates determined by the Secretary of the Treasury, 
108 STAT. 2178 
PUBLIC LAW 103-325—SEPT. 23, 1994 
comparable to current market yields on outstanding marketable 
obligations of the United States of similar maturities. 
(c) AVAILABILITY.—^Amounts deposited into the account and 
interest earned on such amounts pursuant to this section shall 
be available to the Fund until expended. 
12 use 4712. 
SEC. 113. CAPITALIZATION ASSISTANCE TO ENHANCE UQUIDITY. 
(a) ASSISTANCE.— 
(1) IN GENERAL.—The Fund may provide assistance for 
the purpose of providing capital to organizations to purchase 
loans or otherwise enhance the liquidity of community develop-
ment financial institutions, i
f
— 
(A) the primary purpose of such organizations is to 
promote community development; and 
(B) any assistance received is matched with funds— 
(i) from sources other than the Federal Govern-
ment; 
(ii) on the basis of not less than one dollar for 
each dollar provided by the Fund; and 
(iii) that are comparable in form and value to 
the assistance provided by the Fund. 
(2) LIMITATION ON OTHER ASSISTANCE.—An organization 
that receives assistance under this section may not receive 
other financial or technical assistance under this subtitle. 
(3) CONSTRUCTION OF FEDERAL GOVERNMENT FUNDS.—For 
purposes of this subsection, notwithstanding section 105(a)(9) 
of the Housing and Community Development Act of 1974, funds 
provided pursuant to such Act shall be considered to be Federal 
Government funds. 
(b) SELECTION.—^The selection of organizations to receive assist-
ance under this section shall be at the discretion of the Fund 
and in accordance with criteria established by the Fund. In 
establishing such criteria, the Fund shall take into account the 
criteria contained in sections 105(b) and 107, as appropriate. 
(c) AMOUNT OF ASSISTANCE.—The Fund may provide a total 
of not more than $5,000,000 of assistance to an organization or 
its subsidiaries or affiliates under this section during any 3-year 
period. Assistance may be provided in a lump sum or over a period 
of time, as determined by the Fund. 
(d) AUDIT AND REPORT REQUIREMENTS.—Organizations that 
receive assistance from the Fund in accordance with this section 
shall— 
(1) submit to the Fund, not less than once in every 18-
month period, financial statements audited by an independent 
certified public accountant, as part of the report required by 
paragraph (2); 
(2) submit an annual report on its activities; and 
Records. 
(3) keep such records as may be necessary to disclose 
the manner in which any assistance under this section is used. 
(e) LIMITATIONS ON LIABILITY.— 
(1) LIABILITY OF FUND.—The liability of the Fund and the 
United States Government arising out of the provision of assist-
ance to any organization in accordance with this section shall 
be limited to the amount of such assistance. The Fund shall 
be exempt from any assessments and any other liabilities that 
may be imposed on controlling or principal shareholders by 
any Federal law or the law of any State, or territory. Nothing 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2179 
in this paragraph shall affect the application of Federal tax 
law. 
(2) LIABILITY OF GOVERNMENT.—This section does not oblige 
the Federal Government, either directly or indirectly, to provide 
any funds to any organization assisted pursuant to this section, 
or to honor, reimburse, or otherwise guarantee any obligation 
or liability of such an organization. This section shall not be 
construed to imply that any such organization or any obliga-
tions or securities of any such organization are backed by 
the full faith and credit of the United States, 
(f) USE OF PROCEEDS.—^Any proceeds from the sale of loans 
by an organization assisted under this section shall be used by 
the seller for community development purposes. 
SEC. 114. INCENTIVES FOR DEPOSITORY INSTITUTION PARTICIPATION. 
12 USC 4713. 
(a) FUNCTION OF ADMINISTRATOR.— 
(1) IN GENERAL.—Of any funds appropriated pursuant to 
the authorization in section 121(a), the funds made available 
for use in carrying out this section in accordance with section 
121(a)(4) shall be administered by the Administrator of the 
Fund, in consultation with— 
(A) the Federal banking agencies (as defined in section 
3 of the Federal Deposit Insurance Act) and the National 
Credit Union Administration; 
(B) the individuals named pursuant to clauses (ii) and 
(iv) of section 104(d)(2)(G); and 
(C) any other representatives of insured depository 
institutions or other persons as the Administrator may 
determine to be appropriate. 
(2) APPLICABILITY OF BANK ENTERPRISE ACT OF 1991.—Sub-
ject to subsection (b) and the consultation requirement of para-
graph (1)— 
(A) section 233 of the Bank Enterprise Act of 1991 
shall be applicable to the Administrator, for purposes of 
this section, in the same manner and to the same extent 
that such section is applicable to the Community Enterprise 
Assessment Credit Board; 
(B) the Administrator shall, for purposes of carrying 
out this section and section 233 of the Bank Enterprise 
Act of 1991— 
(i) have all powers and rights of the Community 
Enterprise Assessment Credit Board under section 233 
of the Bank Enterprise Act of 1991 to administer and 
enforce any provision of such section 233 which is 
applicable to the Administrator under this section; and 
(ii) shall be subject to the same duties and restric-
tions imposed on the Community Enterprise Assess-
ment Credit Board; and 
(C) the Administrator shall— 
(i) have all powers and rights of an appropriate 
Federal banking agency under section 233(b)(2) of the 
Bank Enterprise Act of 1991 to approve or disapprove 
the designation of qualified distressed communities for 
purposes of this section and provide information and 
assistance with respect to any such designation; and 
108 STAT. 2180 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(ii) shall be subject to the same duties imposed 
on the appropriate Federal banking agencies under 
such section 233(b)(2). 
(3) AWARDS.—^The Administrator shall determine the 
amount of assessment credits, and shall make awards of those 
credits. 
(4) REGULATIONS AND GUIDELINES.—The Administrator 
may prescribe such regulations and issue such guidelines as 
the Administrator determines to be appropriate to carry out 
this section. 
(5) EXCEPTIONS TO APPLICABILITY.—Notwithstanding para-
graphs (1) through (4) of this subsection, subsections (a)(1) 
and (e)(2) of section 233 of the Bank Enterprise Act of 1991, 
and any other provision of the Federal Deposit Insurance Act 
relating to the Bank Enterprise Act of 1991, do not apply 
to the Administrator for purposes of this subtitle. 
(b) 
PROVISIONS 
RELATING 
TO ADMINISTRATION OF 
THIS 
SECTION.— 
(1) NEW LIFELINE ACCOUNTS.—In applying section 233 of 
the Bank Enterprise Act of 1991 for purposes of this section, 
the Administrator shall treat the provision of new lifeline 
accounts by an insured depository institution as an activity 
which is qualified to be taken into account under section 
233(a)(2)(A) of such Act. 
(2) DETERMINATION OF ASSESSMENT CREDIT.—For the pur-
pose of this subtitle, section 233(a)(3) of the Bank Enterprise 
Act of 1991 (12 U.S.C. 1834a(a)(3)) shall be appHed by substitut-
ing the following text: 
"(3) AMOUNT OF ASSESSMENT CREDIT.—The amount of an 
assessment credit which may be awarded to an insured deposi-
tory institution to carry out the qualified activities of the 
institution or of the subsidiaries of the institution pursuant 
to this section for any semiannual period shall be equal to 
the sum of— 
"(A) with respect to qualifying activities described in 
paragraph (2)(A), the amount which is equal to— 
"(i) 5 percent of the sum of the amounts deter-
mined under such subparagraph, in the case of an 
institution which is not a community development 
financial institution; or 
"(ii) 15 percent of the sum of the amounts deter-
mined under such subparagraph, in the case of an 
institution which is a community development financial 
institution; and 
"(B) with respect to qualifying activities described in 
paragraph (2)(C), 15 percent of the amounts determined 
under such subparagraph.". 
(3) ADJUSTMENT OF PERCENTAGE.—Section 233(a)(5) of the 
Bank Enterprise Act of 1991 shall be applied for purposes 
of this section by— 
(A) substituting "institutions which are community 
development financial institutions" for "institutions which 
meet the community development organization require-
ments under section 234"; and 
(B) substituting "institutions which are not community 
development financial institutions" for "institutions which 
do not meet such requirements". 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2181 
(4) DESIGNATION OF QDC.—Section 233(b)(2) of the Bank 
Enterprise Act of 1991 shall be applied for purposes of this 
section without regard to subparagraph (A)(ii) of such section 
233(b)(2). 
(5) OPERATION ON ANNUAL BASIS.—The Administrator may, 
in the Administrator's discretion, apply section 233 of the Bank 
Enterprise Act of 1991 for purposes of this section by providing 
community enterprise assessment credits with respect to 
annual periods rather than semiannual periods. 
(6) OUTREACH.—The Administrator shall ensure 
that 
information about the Bank Enterprise Act of 1991 under this 
section is widely disseminated to all interested parties. 
(7) QUALIFIED ACTIVITIES.—For the purpose of this subtitle, 
section 233(a)(2)(A) of the Bank Enterprise Act of 1991 shall 
be applied by inserting "of the increase" after "the amount". 
(c) TECHNICAL AND CONFORMING AMENDMENTS TO THE BANK 
ENTERPRISE ACT OF 1991.— 
(1) ASSISTANCE TO CDFI MAY BE TAKEN INTO ACCOUNT AS 
QUALIFYING ACTIVITY.—Section 233(a)(2) of the Bank Enterprise 
Act of 1991 (12 U.S.C. 1834a(a)(2)) is amended— 
(A) in the material preceding subparagraph (A), by 
striking "shall be eligible" and inserting "may apply for"; 
(B) in subparagraph (A), by striking "financial assist-
ance" and inserting "assistance"; 
(C) by striking "and" at the end of subparagraph (A); 
(D) by striking the period at the end of subparagraph 
(B) and inserting "; and"; and 
(E) by adding at the end the following new subpara-
graph: 
"(C) any increase during the period in the amount 
of new equity investments in community development 
financial institutions.". 
(2) ADDITIONAL ASSISTANCE WHICH MAY BE CONSIDERED AS 
QUALIFYING ACTIVITIES.—Section 233(a)(4) of the Bank Enter-
prise Act of 1991 (12 U.S.C. 1834a(a)(4)) is amended— 
(A) in the material preceding subparagraph (A), by 
striking "financial"; and 
(B) by adding at the end the following new subpara-
graphs: 
"(L) Loans made for the purpose of developing or 
supporting— 
"(i) commercial facilities that enhance revitaliza-
tion, community stability, or job creation and retention 
efforts; 
"(ii) business creation and expansion efforts that— 
"(I) create or retain jobs for low-income people; 
"(II) enhance the availability of products and 
services to low-income people; or 
"(III) create or retain businesses owned by 
low-income people or residents of a targeted area; 
"(iii) community facilities that provide benefits to 
low-income people or enhance community stability; 
"(iv) home ownership opportunities that are afford-
able to low-income households; 
"(v) rental housing that is principally affordable 
to low-income households; and 
"(vi) other activities deemed appropriate by the 
Board. 
108 STAT. 2182 
PUBLIC LAW 103-325—SEPT. 23, 1994 
"(M) The provision of technical assistance to residents 
of qualified distressed communities in managing their per-
sonal finances through consumer education programs either 
sponsored or offered by insured depository institutions. 
"(N) The provision of technical assistance and consult-
ing services to newly formed small businesses located in 
qualified distressed communities. 
"(O) The provision of technical assistance to, or servic-
ing the loans of low- or moderate-income homeowners and 
homeowners located in qualified distressed communities.". 
(3) RESTRICTION ON ADJUSTMENT OF PERCENTAGES.—Sec-
tion 233(a)(5) of the Bank Enterprise Act of 1991 (12 U.S.C. 
1834a(a)(5)) is amended by striking "paragraph (3)" and insert-
ing "paragraph (3)(A)". 
(4) CREDIT LIMITED TO ORIGINATIONS BY INSTITUTIONS.— 
Section 233(a)(6) of the Bank Enterprise Act of 1991 (12 U.S.C. 
1834a(a)(6)) is amended by striking "Investments by any 
insured depository institution in loans and securities" and 
inserting "Loans, financial assistance, and equity investments 
made by any insured depository institution". 
(5) QUANTITATIVE ANALYSIS OF TECHNICAL ASSISTANCE.— 
Section 233(a) of the Bank Enterprise Act of 1991 (12 U.S.C. 
1834a(a)) is amended by adding at the end the following new 
paragraph: 
"(7) QUANTITATIVE ANALYSIS OF TECHNICAL ASSISTANCE.— 
The Board may establish guidelines for analyzing the technical 
assistance described in subparagraphs (M), (N), and (O) of 
paragraph (4) for the purpose of quantifying the results of 
such assistance in determining the amount of any community 
assessment credit under this subsection.". 
(6) PROHIBITION ON DOUBLE FUNDING FOR SAME ACTIVI-
TIES.—Section 233 of the Bank Enterprise Act of 1991 (12 
U.S.C. 1834a) is amended— 
(A) by redesignating subsection (g) as subsection (j); 
and 
(B) by inserting after subsection (f) the following new 
subsection: 
"(g) PROHIBITION ON DOUBLE FUNDING FOR SAME ACTIVITIES.— 
No community development financial institution may receive a 
community enterprise assessment credit if such institution, either 
directly or through a community partnership— 
"(1) has received assistance within the preceding 12-month 
period, or has an application for assistance pending, under 
section 105 of the Community Development Banking and Finan-
cial Institutions Act of 1994; or 
"(2) has ever received assistance, under section 108 of 
the Community Development Banking and Financial Institu-
tions Act of 1994, for the same activity during the same semi-
annual period for which the institution seeks a community 
enterprise assessment credit under this section.". 
(7) ADDITIONAL ADMINISTRATIVE REQUIREMENTS.—Section 
233 of the Bank Enterprise Act of 1991 (12 U.S.C. 1834a) 
is amended by inserting after subsection (g) (as added by para-
graph (6) of this subsection) the following new subsections: 
"(h) PRIORITY OF AWARDS.— 
"(1) QUALIFYING LOANS AND SERVICES.— 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2183 
"(A) IN GENERAL.—If the amount of funds appropriated 
for purposes of carrying out this section for any fiscal 
year are insufficient to award the amount of assessment 
credits for which insured depository institutions have 
applied and are eligible under this section, the Board shall, 
in awarding community enterprise assessment credits for 
qualifying activities under subparagraphs (A) and (B) of 
subsection (a)(2) for any semiannual period for which such 
appropriation is available, determine which institutions 
shall receive an award. 
"(B) PRIORITY FOR SUPPORT OF EFFORTS OF CDFI.— 
The Board shall give priority to institutions that have 
supported the efforts of community development financial 
institutions in the qualified distressed community. 
-
= 
"(C) OTHER FACTORS.—The Board may also consider 
the following factors: 
"(i) DEGREE OF DIFFICULTY.—The degree of dif-
ficulty in carrying out the activities that form the 
basis for the institution's application. 
"(ii) COMMUNITY IMPACT.—The extent to which the 
activities that form the basis for the institution's 
application have benefited the qualified distressed 
community. 
"(iii) INNOVATION.—The degree to which the activi-
ties that form the basis for the institution's application 
have incorporated innovative methods for meeting 
community needs. 
"(iv) LEVERAGE.—^The leverage ratio between the 
dollar amount of the activities that form the basis 
for the institution's application and the amount of the 
assessment credit calculated in accordance with this 
section for such activities. 
"(v) SIZE.—^The amount of total assets of the 
institution. 
"(vi) NEW ENTRY.—Whether the institution had 
provided financial services in the designated distressed 
community before such semiannual period. 
"(vii) NEED FOR SUBSIDY.—^The degree to which 
the qualified activity which forms the basis for the 
application needs enhancement through an assessment 
credit. 
"(viii) EXTENT OF DISTRESS IN COMMUNITY.—The 
degree of poverty and unemployment in the designated 
distressed community, the proportion of the total popu-
lation of the community which are low-income families 
and unrelated individuals, and the extent of other 
adverse economic conditions in such community. 
"(2) QUALIFYING INVESTMENTS.—If the amount of funds 
appropriated for purposes of carrying out this section for any 
fiscal year are insufficient to award the amount of assessment 
credits for which insured depository institutions have applied 
and are eligible under this section, the Board shall, in awarding 
community enterprise assessment credits for qualifying activi-
ties under subsection (a)(2)(C) for any semiannual period for 
which such appropriation is available, determine which institu-
tions shall receive an award based on the leverage ratio between 
the dollar amount of the activities that form the basis for 
108 STAT. 2184 
PUBLIC LAW 103-325—SEPT. 23, 1994 
the institution's application and the amount of the assessment 
credit calculated in accordance with this section for such 
activities. 
"(i) DETERMINATION OF AMOUNT OF ASSESSMENT CREDIT.—Not-
withstanding any other provision of this section, the determination 
of the amount of any community enterprise assessment credit under 
subsection (a)(3) for any insured depository institution for any semi-
annual period shall be made solely at the discretion of the Board. 
No insured depository institution shall be awarded community 
enterprise assessment credits for any semiannual period in excess 
of an amount determined by the Board.". 
(8) ADDITIONAL DEFINITIONS.—Subsection (j) of section 233 
of the Bank Enterprise Act of 1991 (as redesignated by para-
12 use 1834a. 
graph (6) of this subsection) is amended by adding at the 
end the following new paragraphs: 
"(4) COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION.— 
The term 'community development financial institution' has 
the same meaning as in section 103(5) of the Community Devel-
opment Banking and Financial Institutions Act of 1994. 
"(5) AFFILIATE.—^The term 'affiliate' has the same meaning 
as in section 2 of the Bank Holding Company Act of 1956.". 
12 use 4714. 
SEC. 115. RECORDKEEPING. 
(a) IN GENERAL.—^A community development financial institu-
tion receiving assistance from the Fund shall keep such records, 
for such periods as may be prescribed by the Fund and necessary 
to disclose the manner in which any assistance under this subtitle 
is used and to demonstrate compliance with the requirements of 
this subtitle. 
(b) USER PROFILE INFORMATION.—The Fund shall require each 
community development financial institution or other organization 
receiving assistance from the Fund to compile such data, as is 
determined to be appropriate by the Fund, on the gender, race, 
ethnicity, national origin, or other pertinent information concerning 
individuals that utilize the services of the assisted institution to 
ensure that targeted populations and low-income residents of invest-
ment areas are adequately served. 
(c) ACCESS TO RECORDS.—^The Fund shall have access on 
demand, for the purpose of determining compliance with this sub-
title, to any records of a community development financial institu-
tion or other organization that receives assistance from the Fund. 
(d) REVIEW.—Not less than annually, the Fund shall review 
the progress of each assisted community development financial 
institution in carrying out its strategic plan, meeting its perform-
ance goals, and satisfying the terms and conditions of its assistance 
agreement. 
(e) REPORTING.— 
(1) ANNUAL REPORTS.—^The Fund shall require each commu-
nity development financial institution receiving assistance 
under this subtitle to submit an annual report to the Fund 
on its activities, its financial condition, and its success in meet-
ing performance goals, in satisfying the terms and conditions 
of its assistance agreement, and in complying with other 
requirements of this subtitle, in such form and manner as 
the Fund shall specify. 
(2) AVAILABILITY OF REPORTS.—The Fund, after deleting 
or redacting any material as appropriate to protect privacy 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2185 
or proprietary interests, shall make such reports submitted 
under paragraph (1) available for public inspection. 
SEC. 116. SPECIAL PROVISIONS WITH RESPECT TO INSTITUTIONS 12 USC 4715. 
THAT ARE SUPERVISED BY FEDERAL BANKING AGENCIES. 
(a) CONSULTATION WITH APPROPRIATE AGENCIES.—^The Fund 
shall consult with and consider the views of the appropriate Federal 
banking agency prior to providing assistance under this subtitle 
to— 
(1) an insured community development financial institu-
tion; 
(2) any community development financial institution that 
is examined by or subject to the reporting requirements of 
an appropriate Federal banking agency; or 
(3) any community development financial institution that 
has as its community partner an institution that is examined 
by or subject to the reporting requirements of an appropriate 
Federal banking agency. 
(b) REQUESTS FOR INFORMATION, REPORTS, OR RECORDS.— 
(1) IN GENERAL.—Except as provided in paragraph (4), not-
withstanding any other provisions of this subtitle, prior to 
directly requesting information from or imposing reporting or 
recordkeeping requirements on an insured community develop-
ment financial institution or other institution that is examined 
by or subject to the reporting requirements of an appropriate 
Federal banking agency, the Fund shall consult with the appro-
priate Federal banking agency to determine if the information 
requested is available from or may be obtained by such agency 
in the form, format, or detail required by the Fund. 
(2) TIMING OF RESPONSE FROM APPROPRIATE FEDERAL BANK-
ING AGENCY.—If the information, reports, or records requested 
by the Fund pursuant to paragraph (1) are not provided by 
the appropriate Federal banking agency in less than 15 cal-
endar days after the date on which the material is requested, 
the Fund may request the information from or impose the 
recordkeeping or reporting requirements directly on such 
institutions with notice to the appropriate Federal banking 
agency. 
(3) ELIMINATION OF DUPLICATIVE INFORMATION AND REPORT-
ING REQUIREMENTS.—^The Fund shall use any information pro-
vided the appropriate Federal banking agency under this 
section to the extent practicable to eliminate duplicative 
requests for information and reports from, and recordkeeping 
by an insured community development financial institution or 
other institution that is examined by or subject to the reporting 
requirements of an appropriate Federal banking agency. 
(4) EXCEPTION.—Notwithstanding paragraphs (1) and (2), 
the Fund may require an insured community development 
financial institution or other institution that is examined by 
or subject to the reporting requirements of an appropriate 
Federal banking agency to provide information with respect 
to the institution's implementation of its strategic plan or 
compliance with the terms of its assistance agreement under 
this subtitle, after providing notice to the appropriate Federal 
banking agency. 
(c) EXCLUSION FOR EXAMINATION REPORTS.—^Nothing in this 
section shall be construed to permit the Fund to require an insured 
108 STAT. 2186 
PUBLIC LAW 103-325—SEPT. 23, 1994 
community development financial institution or other institution 
that is examined by or subject to the reporting requirements of 
an appropriate Federal banking agency, to obtain, maintain, or 
furnish an examination report of any appropriate Federal banking 
agency or records contained in or related to such a report. 
(d) SHARING OF INFORMATION.—The Fund and the appropriate 
Federal banking agency shall promptly notify each other of material 
concerns about an insured community development financial institu-
tion or other institution that is examined by or subject to the 
reporting requirements of an appropriate Federal banking agency, 
and share appropriate information relating to such concerns. 
(e) DISCLOSURE PROHIBITED.—Neither the Fund nor the appro-
priate Federal banking agency shall disclose confidential informa-
tion obtained pursuant to this section from any party without 
the written consent of that party. 
(f) PRIVILEGE MAINTAINED.—The Fund, the appropriate Federal 
banking agency, and any other party providing information under 
this section shall not be deemed to have waived any privilege 
applicable to any information or data, or any portion thereof, by 
providing such information or data to the other party or by permit-
ting such data or information, or any copies or portions thereof, 
to be used by the other party. 
(g) EXCEPTIONS.—^Nothing in this section shall authorize the 
Fund or the appropriate Federal banking agency to withhold 
information from the Congress or prevent it from complying with 
a request for information from a Federal department or agency 
in compliance with applicable law. 
(h) SANCTIONS.— 
(1) NOTIFICATION.—^The Fund shall notify the appropriate 
Federal banking agency before imposing any sanction pursuant 
to the authority in section 108(f)(2)(C) on an insured community 
development financial institution or other institution that is 
examined by or subject to the reporting requirements of that 
agency. 
(2) EXCEPTIONS.—^The Fund shall not impose a sanction 
referred to in paragraph (1) if the appropriate Federal banking 
agency, in writing, not later than 30 calendar days after receiv-
ing notice from the Fund— 
(A) objects to the proposed sanction; 
(B) determines that the sanction would— 
(i) have a material adverse effect on the safety 
and soundness of the institution; or 
(ii) impede or interfere with an enforcement action 
against that institution by that agency; 
(C) proposes a comparable alternative action; and 
(D) specifically explains— 
(i) the basis for the determination under subpara-
graph (B) and, if appropriate, provides documentation 
to support the determination; and 
(ii) how the alternative action suggested pursuant 
to subparagraph (C) would be as effective as the sanc-
tion proposed by the Fund in securing compliance with 
this subtitle and deterring future noncompliance. 
(i) SAFETY AND SOUNDNESS CONSIDERATIONS.—The Fund and 
each appropriate Federal banking agency shall cooperate and 
respond to requests from each other and from other appropriate 
Federal banking agencies in a manner that ensures the safety 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2187 
and soundness of the insured community development financial 
institution or other institution that is examined by or subject to 
the reporting requirements of an appropriate Federal banking 
agency. 
SEC. 117. STUDIES AND REPORTS; EXAMINATION AND AUDIT. 
12 USC 4716. 
(a) ANNUAL REPORT BY THE FUND.—The Fund shall conduct 
an annual evaluation of the activities carried out by the Fund 
and the community development financial institutions and other 
organizations assisted pursuant to this subtitle, and shall submit 
a report of its findings to the President and the Congress not 
later than 120 days after the end of each fiscal year of the Fund. 
The report shall include financial statements audited in accordance 
with subsection (f). 
(b) OPTIONAL STUDIES.—The Fund may conduct such studies 
as the Fund determines necessary to further the purpose of this 
subtitle and to facilitate investment in distressed communities. 
The findings of any studies conducted pursuant to this subsection 
shall be included in the report required by subsection (a). 
(c) NATIVE AMERICAN LENDING STUDY.— 
(1) IN GENERAL.—^The Fund shall conduct a study on lend-
ing and investment practices on Indian reservations and other 
land held in trust by the United States. Such study shall— 
(A) identify barriers to private financing on such lands; 
and 
(B) identify the impact of such barriers on access to 
capital and credit for Native American populations. 
(2) REPORT.—Not later than 12 months after the date on 
which the Administrator is appointed, the Fund shall submit 
a report to the President and the Congress that— 
(A) contains the findings of the study conducted under 
paragraph (1); 
(B) recommends any necessary statutory and regu-
latory changes to existing Federal programs; and 
(C) makes policy recommendations for community 
development financial 
institutions, insured 
depository 
institutions, secondary market institutions, and other pri-
vate sector capital institutions to better serve such 
populations. 
(d) INVESTMENT, GTOVERNANCE, AND ROLE OF FUND.—Thirty 
months after the appointment and qualification of the Adminis-
trator, the Comptroller General of the United States shall submit 
to the President and the Congress a study evaluating the structure, 
governance, and performance of the Fund. 
(e) CONSULTATION.—In the conduct of the studies required 
under this section, the Fund shall consult, as appropriate, with 
the Comptroller of the Currency, the Federal Deposit Insurance 
Corporation, the Board of Governors of the Federal Reserve System, 
the Federal Housing Finance Board, the Farm Credit Administra-
tion, the Director of the Office of Thrift Supervision, the National 
Credit Union Administration Board, Indian tribal governments, 
community reinvestment organizations, civil rights organizations, 
consumer organizations, financial organizations, and such rep-
resentatives of agencies or other persons, at the discretion of the 
Fund. 
(f) EXAMINATION AND AUDIT.—The financial statements of the ' 
Fund shall be audited in accordance with section 9105 of title 
108 STAT. 2188 
PUBLIC LAW 103-325—SEPT. 23, 1994 
31, United States Code, except that audits required by section 
9105(a) of such title shall be performed annually. 
SEC. 118. INSPECTOR GENERAL. 
(a) ESTABLISHMENT.—Section 11 of the Inspector General Act 
of 1978 (5 U.S.C. App. 11) is amended— 
(1) in paragraph (1), by inserting "; the Administrator 
of the Community Development Financial Institutions Fund;" 
before "and the chief; and 
(2) in paragraph (2), by inserting "the Community Develop-
ment Financial Institutions Fund," after "the Agency for Inter-
national Development,". 
5 use app. 11 
(b) AUTHORIZATION OF APPROPRIATIONS.—^There are authorized 
"°^- 
to be appropriated such sums as may be necessary for the operation 
of the Office of Inspector General established by the amendments 
made by subsection (a). 
12 use 4717. 
SEC. 119. ENFORCEMENT. 
(a) REGULATIONS.— 
(1) IN GENERAL.—^Not later than 180 days after the appoint-
ment and qualification of the Administrator, the Fund shall 
. promulgate such regulations as may be necessary to carry 
out this subtitle. 
(2) REGULATIONS REQUIRED.—^The regulations promulgated 
under paragraph (1) shall include regulations applicable to 
community development financial institutions that are not 
insured depository institutions to— 
(A) prevent conflicts of interest on the part of directors, 
officers, and employees of community development financial 
institutions as the Fund determines to be appropriate; 
and 
(B) establish such standards with respect to loans by 
a community development financial institution to any direc-
tor, officer, or employee of such institution as the Fund 
determines to be appropriate, including loan amount 
limitations. 
(b) ADMINISTRATIVE ENFORCEMENT.—The provisions of this sub-
title, and regulations prescribed and agreements entered into under 
this subtitle, shall be enforced under section 8 of the Federal 
Deposit Insurance Act by the appropriate Federal banking agency, 
in the case of an insured community development financial institu-
tion. A violation of this subtitle, or any regulation prescribed under 
or any agreement entered into under this subtitle, shall be treated 
as a violation of the Federal Deposit Insurance Act. 
(c) CRIMINAL PROVISION.—Section 657 of title 18, United States 
Code, is amended by inserting "or any community development 
financial institution receiving financial assistance under the Riegle 
Community Development and Regulatory Improvement Act of 
1994," after "small business investment company,". 
SEC. 120. COMMUNITY DEVELOPMENT REVOLVING LOAN FUND FOR 
CREDIT UNIONS. 
(a) REPEAL.—Section 120 of the Federal Credit Union Act (12 
U.S.C. 1766) is amended by striking subsection (k). 
(b) REVOLVING LOAN FUND.—^The Federal Credit Union Act 
(12 U.S.C. 1751 et seq.) is amended by inserting after section 
129 the following new section: 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2189 
"SEC. 130. COMMUNITY DEVELOPMENT REVOLVING LOAN FUND FOR 12 USC 1772c-l. 
CREDIT UNIONS. 
"(a) IN GENERAL.—The Board may exercise the authority 
granted to it by the Community Development Credit Union Revolv-
ing Loan Fund Transfer Act, including any additional appropriation 
made or earnings accrued, subject only to this section and to regula-
tions prescribed by the Board. 
"(b) INVESTMENT.—^The Board may invest any idle Fund moneys 
in United States Treasury securities. Any interest accrued on such 
securities shall become a part of the Fund. 
"(c) LOANS.—^The Board may require that any loans made from 
the Fund be matched by increased shares in the borrower credit 
union. 
"(d) INTEREST.—Interest earned by the Fund may be allocated 
by the Board for technical assistance to community development 
credit unions, subject to an appropriations Act. 
"(e) DEFINITION.—^As used in this section, the term 'Fund' means 
the Community Development Credit Union Revolving Loan Fund.". 
SEC. 121. AUTHORIZATION OF APPROPRIATIONS. 
12 USC 4718. 
(a) FUND AUTHORIZATION.— 
(1) IN GENERAL.—^To carry out this subtitle, there are 
authorized to be appropriated to the Fund, to remain available 
until expended— 
(A) $60,000,000 for fiscal year 1995; 
(B) $104,000,000 for fiscal year 1996; 
(C) $107,000,000 for fiscal year 1997; and 
(D) $111,000,000 for fiscal year 1998; 
or such greater sums as may be necessary to carry out this 
subtitle. 
(2) ADMINISTRATIVE EXPENSES.— 
(A) IN GENERAL.—Of amounts authorized to be appro-
priated to the Fund pursuant to this section, not more 
than $5,550,000 may be used by the Fund in each fiscal 
year to pay the administrative costs and expenses of the 
Fund. Costs associated with the training program estab-
lished under section 109 and the technical assistance pro-
gram established under section 108 shall not be considered 
to be administrative expenses for purposes of this 
paragraph. 
(B) CALCULATIONS.—^The amounts referred to in para-
graphs (3) and (4) shall be calculated after subtracting 
the amount referred to in subparagraph (A) of this para-
graph from the total amount appropriated to the Fund 
in accordance with paragraph (1) in any fiscal year. 
(3) CAPITALIZATION ASSISTANCE.—Not more than 5 percent 
of the amounts authorized to be appropriated under paragraph 
(1) may be used as provided in section 113. 
(4) AVAILABILITY FOR FUNDING SECTION 114.—33^3 percent 
of the amounts appropriated to the Fund for any fiscal year 
pursuant to the authorization in paragraph (1) shall be avail-
able for use in carrying out section 114. 
(5) 
SUPPORT OF COMMUNITY 
DEVELOPMENT 
FINANCIAL 
INSTITUTIONS.—^The Administrator shall allocate funds author-
ized under this section, to the maximum extent practicable, 
for 
the support 
of community 
development 
financial 
institutions. 
108 STAT. 2190 
PUBLIC LAW 103-325—SEPT. 23, 1994 
Home 
Ownership 
and Equity 
Protection Act 
of 1994. 
15 u s e 1601 
note. 
(b) COMMUNITY DEVELOPMENT CREDIT UNION REVOLVING LOAN 
FUND.—There are authorized to be appropriated for the purposes 
of the Community Development Credit Union Revolving Loan 
Fund— 
(1) $4,000,000 for fiscal year 1995; 
(2) $2,000,000 for fiscal year 1996; 
(3) $2,000,000 for fiscal year 1997; and 
(4) $2,000,000 for fiscal year 1998. 
(c) BUDGETARY TREATMENT.—^Amounts authorized to be appro-
priated under this section shall be subject to discretionary spending 
caps, as provided in section 601 of the Congressional Budget Act 
of 1974, and therefore shall reduce by an equal amount funds 
made available for other discretionary spending programs. 
Subtitle B—Home Ownership and Equity 
Protection 
SEC. 151. SHORT TITLE. 
This subtitle may be cited as the "Home Ownership and Equity 
Protection Act of 1994". 
SEC. 152. CONSUMER PROTECTIONS FOR CERTAIN MORTGAGES. 
(a) MORTGAGE DEFINITION.—Section 103 of the Truth in Lend-
ing Act (15 U.S.C. 1602) is amended by adding at the end the 
following new subsection: 
"(aa)(l) A mortgage referred to in this subsection means a 
consumer credit transaction that is secured by the consumer's prin-
cipal dwelling, other than a residential mortgage trsinsaction, a 
reverse mortgage transaction, or a transaction under an open end 
credit plan, if— 
"(A) the annual percentage rate at consummation of the 
transaction will exceed by more than 10 percentage points 
the yield on Treasury securities having comparable periods 
of maturity on the fifteenth day of the month immediately 
preceding the month in which the application for the extension 
of credit is received by the creditor; or 
"(B) the total points and fees payable by the consumer 
at or before closing will exceed the greater of— 
"(i) 8 percent of the total loan amount; or 
"(ii) $400. 
"(2)(A) After the 2-year period beginning on the effective date 
of the regulations promulgated under section 155 of the Riegle 
Community Development and Regulatory Improvement Act of 1994, 
and no more frequently than biennially after the first increase 
or decrease under this subparagraph, the Board may by regulation 
increase or decrease the number of percentage points specified 
in paragraph (1)(A), if the Board determines that the increase 
or decrease is— 
"(i) consistent with the consumer protections against abu-
sive lending provided by the amendments made by subtitle 
B of title I of the Riegle Community Development and Regu-
latory Improvement Act of 1994; and 
"(ii) warranted by the need for credit. 
"(B) An increase or decrease under subparagraph (A) may not 
result in the number of percentage points referred to in subpara-
graph (A) being— 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2191 
"(i) less that 8 percentage points; or 
"(ii) greater than 12 percentage points. 
"(C) In determining whether to increase or decrease the number 
of percentage points referred to in subparagraph (A), the Board 
shall consult with representatives of consumers, including low-
income consumers, and lenders. 
"(3) The amount specified in paragraph (l)(B)(ii) shall be 
adjusted annually on January 1 by the annual percentage change 
in the Consumer Price Index, as reported on June 1 of the year 
preceding such adjustment. 
"(4) For purposes of paragraph (1)(B), points and fees shall 
include— 
"(A) all items included in the finance charge, except interest 
or the time-price differential; 
"(B) all compensation paid to mortgage brokers; 
"(C) each of the charges listed in section 106(e) (except 
an escrow for future payment of taxes), unless— 
"(i) the charge is reasonable; 
"(ii) the creditor receives no direct or indirect com-
pensation; and 
"(iii) the charge is paid to a third party unaffiliated 
with the creditor; and 
"(D) such other charges as the Board determines to be 
appropriate. 
"(5) This subsection shall not be construed to limit the rate 
of interest or the finance charge that a person may charge a 
consumer for any extension of credit.". 
(b) MATERIAL DISCLOSURES.—Section 103(u) of the Truth in 
Lending Act (15 U.S.C. 1602(u)) is amended— 
(1) by striking "and the due dates" and inserting "the 
due dates"; and 
(2) by inserting before the period ", and the disclosures 
required by section 129(a)". 
(c) DEFINITION OF CREDITOR CLARIFIED.—Section 103(f) of the 
Truth in Lending Act (15 U.S.C. 1602(f)) is amended by adding 
at the end the following: "Any person who originates 2 or more 
mortgages referred to in subsection (aa) in any 12-month period 
or any person who originates 1 or more such mortgages through 
a mortgage broker shall be considered to be a creditor for purposes 
of this title.". 
(d) DISCLOSURES REQUIRED AND CERTAIN TERMS PROHIBITED.— 
The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended 
by inserting after section 128 the following new section: 
"SEC. 129. REQUIREMENTS FOR CERTAIN MORTGAGES. 
15 USC 1639. 
"(a) DISCLOSURES.— 
"(1) SPECIFIC DISCLOSURES.—In addition to other disclo-
sures required under this title, for each mortgage referred 
to in section 103(aa), the creditor shall provide the following 
disclosures in conspicuous type size: 
"(A) Tou are not required to complete this agreement 
merely because you have received these disclosures or have 
signed a loan application.'. 
"(B) 'If you obtain this loan, the lender will have a 
mortgage on your home. You could lose your home, and 
any money you have put into it, if you do not meet your 
obligations under the loan.'. 
108 STAT. 2192 
PUBLIC LAW 103-325—SEPT. 23, 1994 
"(2) ANNUAL PERCENTAGE RATE.—In addition to the disclo-
sures required under paragraph (1), the creditor shall disclose— 
"(A) in the case of a credit transaction with a fixed 
rate of interest, the annual percentage rate and the amount 
of the regular monthly pajrment; or 
"(B) in the case of any other credit transaction, the 
annual percentage rate of the loan, the amount of the 
regular monthly payment, a statement that the interest 
rate and monthly payment may increase, and the amount 
of the maximum monthly payment, based on the maximum 
interest rate allowed pursuant to section 1204 of the 
Competitive Equality Banking Act of 1987. 
"(b) TIME OF DISCLOSURES.— 
"(1) IN GENERAL.—^The disclosures required by this section 
. 
shall be given not less than 3 business days prior to consumma-
tion of the transaction. 
"(2) NEW DISCLOSURES REQUIRED.— 
"(A) ll* GENERAL.—^After providing the disclosures 
required by this section, a creditor may not change the 
terms of the extension of credit if such changes make 
the disclosures inaccurate, unless new disclosures are pro-
vided that meet the requirements of this section. 
"(B) TELEPHONE DISCLOSURE.—A creditor may provide 
new disclosures pursuant to subparagraph (A) by telephone, 
if— 
"(i) the chahge is initiated by the consumer; and 
"(ii) at the consummation of the transaction under 
which the credit is extended— 
"(I) the creditor provides to the consumer the 
new disclosures, in writing; and 
"(II) the creditor and consumer certify in writ-
ing that the new disclosures were provided by 
telephone, by not later than 3 days prior to the 
date of consummation of the transaction. 
"(3) MODiFlCATlONS.^The Board may, if it finds that such 
action is necessary to permit homeowners to meet bona fide 
personal financial emergencies, prescribe regulations authoriz-
ing the modification or waiver of rights created under this 
subsection, to the extent and under the circumstances set forth 
in those regulations. 
"(c) No PREPAYMENT PENALTY.— 
"(1) IN GENERAL.— 
"(A) LIMITATION ON TERMS.—^A mortgage referred to 
in section 103(aa) may not contain terms under which 
a consumer must pay a prepayment penalty for paying 
all or part of the principal before the date on which the 
principal is due. 
"(B) CONSTRUCTION.—For purposes of this subsection, 
any method of computing a refund of unearned scheduled 
interest is a prepayment penalty if it is less favorable 
to the consumer than the actuarial method (as that term 
is defined in section 933(d) of the Housing and Community 
Development Act of 1992). 
"(2) EXCEPTION.—Notwithstanding paragraph (1), a mort-
gage referred to in section 103(aa) may contain a prepayment 
penalty (including terms calculating a refund by a method 
that is not prohibited under section 933(b) of the Housing 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2193 
and Community Development Act of 1992 for the transaction 
in question) if— 
"(A) at the time the mortgage is consummated— 
"(i) the consumer is not liable for an amount of 
monthly indebtedness payments (including the amount 
of credit extended or to be extended under the trans-
action) that is greater than 50 percent of the monthly 
gross income of the consumer; and 
"(ii) the income and expenses of the consumer are 
verified by a financial statement signed by the 
consumer, by a credit report, and in the case of employ-
ment income, by payment records or by verification 
from the employer of the consumer (which verification 
may be in the form of a copy of a pay stub or other 
payment record supplied by the consumer); 
"(B) the penalty applies only to a prepayment made 
with amounts obtained hy the consumer by means other 
than a refinancing by the creditor under the mortgage, 
or an affiliate of that creditor; 
"(C) the penalty does not apply after the end of the 
5-year period beginning on the date on which the mortgage 
is consummated; and 
"(D) the penalty is not prohibited under 
other 
applicable law. 
"(d) LIMITATIONS AFTER DEFAULT.—A mortgage referred to in 
section 103(aa) may not provide for an interest rate applicable 
after default that is higher than the interest rate that applies 
before default. If the date of maturity of a mortgage referred to 
in subsection 103(aa) is accelerated due to default and the consumer 
is entitled to a rebate of interest, that rebate shall be computed 
by any method that is not less favorable than the actuarial method 
(as that term is defined in section 933(d) of the Housing and 
Community Development Act of 1992). 
"(e) No BALLOON PAYMENTS.—^A mortgage referred to in section 
103(aa) having a term of less than 5 years may not include terms 
under which the aggregate amount of the regular periodic payments 
would not fully amortize the outstanding principal balance. 
"(f) No NEGATIVE AMORTIZATION.—A mortgage referred to in 
section 103(aa) may not include terms under which the outstanding 
principal balance will increase at any time over the course of 
the loan because the regular periodic payments do not cover the 
full amount of interest due. 
"(g) No PREPAID PAYMENTS.—^A mortgage referred to in section 
103(aa) may not include terms under which more than 2 periodic 
payments required under the loan are consolidated and paid in 
advance from the loan proceeds provided to the consumer. 
"(h) PROHIBITION ON EXTENDING CREDIT WITHOUT REGARD TO 
PAYMENT ABILITY OF CONSUMER.—^A creditor shall not engage in 
a pattern or practice of extending credit to consumers under mort-
gages referred to in section 103(aa) based on the consumers' collat-
eral without regard to the consumers' repayment ability, including 
the consumers' current and expected income, current obligations, 
and employment. 
"(i) REQUIREMENTS FOR PAYMENTS UNDER HOME IMPROVEMENT 
CONTRACTS.—^A creditor shall not make a payment to a contractor 
under a home improvement contract from amounts extended as 
credit under a mortgage referred to in section 103(aa), other than— 
108 STAT. 2194 
PUBLIC LAW 103-325—SEPT. 23, 1994 
"(1) in the form of an instrument that is payable to the 
consumer or jointly to the consumer and the contractor; or 
"(2) at the election of the consumer, by a third party 
escrow agent in accordance with terms established in a written 
agreement signed by the consumer, the creditor, and the con-
tractor before the date of payment. 
"(j) CONSEQUENCE OF FAILURE TO COMPLY.—Any mortgage that 
contains a provision prohibited by this section shall be deemed 
a failure to deliver the material disclosures required under this 
title, for the purpose of section 125. 
"(k) DEFINITION.—For purposes of this section, the term 'affili-
ate' has the same meaning as in section 2(k) of the Bank Holding 
Company Act of 1956. 
"(1) DISCRETIONARY REGULATORY AUTHORITY OF BOARD.— 
"(1) EXEMPTIONS.—The Board may, by regulation or order, 
exempt specific mortgage products or categories of mortgages 
from any or all of the prohibitions specified in subsections 
(c) through (i), if the Board finds that the exemption— 
"(A) is in the interest of the borrowing public; and 
"(B) will apply only to products that maintain and 
strengthen home ownership and equity protection. 
"(2) PROHIBITIONS.—The Board, by regulation or order, 
shall prohibit acts or practices in connection with— 
"(A) mortgage loans that the Board finds to be unfair, 
deceptive, or designed to evade the provisions of this sec-
tion; and 
"(B) refinancing of mortgage loans that the Board finds 
to be associated with abusive lending practices, or that 
are otherwise not in the interest of the borrower.". 
(e) CONFORMING AMENDMENTS.— 
(1) TABLE OF SECTIONS.—The table of sections at the begin-
ning of chapter 2 of the Truth in Lending Act is amended 
by striking the item relating to section 129 and inserting the 
following: 
"129. Requirements for certain mortgages.". 
(2) TRUTH IN LENDING ACT.—The Truth in Lending Act 
(15 U.S.C. 1601 et seq.) is amended— 
15 use 1604. 
(A) in the second sentence of section 105(a), by striking 
"These" and inserting "Except in the case of a mortgage 
referred to in section 103(aa), these"; 
15 use 1610. 
(B) in section 111(a)(2), by inserting before the period 
the following: ", and such State-required disclosure may 
not be made in lieu of the disclosures applicable to certain 
mortgages under section 129"; and 
(C) in section 111(b)— 
(i) by striking "This" and inserting "Except as pro-
vided in section 129, this"; and 
(ii) by adding at the end the following: "The provi-
sions of section 129 do not annul, alter, or affect the 
applicability of the laws of any State or exempt any 
person subject to the provisions of section 129 from 
complying with the laws of any State, with respect 
to the requirements for mortgages referred to in section 
103(aa), except to the extent that those State laws 
are inconsistent with any provisions of section 129, 
and then only to the extent of the inconsistency.". 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2195 
SEC. 153. CIVIL LIABILITY. 
(a) DAMAGES.—Section 130(a) of the Truth in Lending Act (15 
U.S.C. 1640(a)) is amended— 
(1) by striking "and" at the end of paragraph (2)(B); 
(2) by striking the period at the end of paragraph (3) 
and inserting "; and"; and 
(3) by inserting after paragraph (3) the following new 
paragraph: 
(4) in the case of a failure to comply with any requirement 
under section 129, an amount equal to the sum of all finance 
charges and fees paid by the consumer, unless the creditor 
demonstrates that the failure to comply is not material.". 
(b) STATE ATTORNEY GENERAL ENFORCEMENT.—Section 130(e) 
of the Truth in Lending Act (15 U.S.C. 1640(e)) is amended by 
adding at the end the following: "An action to enforce a violation 
of section 129 may also be brought by the appropriate State attorney 
general in any appropriate United States district court, or any 
other court of competent jurisdiction, not later than 3 years after 
the date on which the violation occurs. The State attorney general 
shall provide prior written notice of any such civil action to the 
Federal agency responsible for enforcement under section 108 and 
shall provide the agency with a copy of the complaint. If prior 
notice is not feasible, the State attorney general shall provide 
notice to such agency immediately upon instituting the action. 
The Federal agency may— 
"(1) intervene in the action; 
"(2) upon intervening— 
"(A) remove the action to the appropriate United States 
district court, if it was not originally brought there; and 
"(B) be heard on all matters arising in the action; 
and 
"(3) file a petition for appeal.". 
(c) ASSIGNEE LIABILITY.—Section 131 of the Truth in Lending 
Act (15 U.S.C. 1641) is amended by adding at the end the following 
new subsection: 
"(d) RIGHTS UPON ASSIGNMENT OF CERTAIN MORTGAGES.— 
"(1) IN GENERAL.—^Any person who purchases or is other-
wise assigned a mortgage referred to in section 103(aa) shall 
be subject to all claims and defenses with respect to that 
mortgage that the consumer could assert against the creditor 
of the mortgage, unless the purchaser or assignee demonstrates, 
by a preponderance of the evidence, that a reasonable person 
exercising ordinary due diligence, could not determine, based 
on the documentation required by this title, the itemization 
of the amount financed, and other disclosure of disbursements 
that the mortgage was a mortgage referred to in section 103(aa). 
The preceding sentence does not affect rights of a consumer 
under subsection (a), (b), or (c) of this section or any other 
provision of this title. 
"(2) LIMITATION ON DAMAGES.—Notwithstanding any other 
provision of law, relief provided as a result of any action made 
permissible by paragraph (1) may not exceed— 
"(A) with respect to actions based upon a violation 
of this title, the amount specified in section 130; and 
"(B) with respect to all other causes of action, the 
sum of— 
"(i) the amount of all remaining indebtedness; and 
108 STAT. 2196 
PUBLIC LAW 103-325—SEPT. 23, 1994 
"(ii) the total amount paid by the consumer in 
connection with the transaction. 
"(3) OFFSET.—^The amount of damages that may be awarded 
under paragraph (2)(B) shall be reduced by the amount of 
any damages awarded under paragraph (2)(A). 
"(4) NOTICE.—^Any person who sells or otherwise assigns 
a mortgage referred to in section 103(aa) shall include a promi-
nent notice of the potential liability under this subsection as 
determined by the Board.". 
SEC. 154. REVERSE MORTGAGE DISCLOSURE. 
(a) DEFINITION OF REVERSE MORTGAGE.—Section 103 of 
the 
Truth in Lending Act (15 U.S.C. 1602) is amended by adding 
at the end the following new subsection: 
"(bb) The term 'reverse mortgage transaction' means 
a 
nonrecourse transaction in which a mortgage, deed of trust, or 
equivalent consensual security interest is created against the 
consumer's principal dwelling— 
"(1) securing one or more advances; and 
"(2) with respect to which the payment of any principal, 
interest, and shared appreciation or equity is due and payable 
(other than in the case of default) only ^ e r — 
"(A) the transfer of the dwelling; 
"(B) the consumer ceases to occupy the dwelling as 
a principal dwelling; or 
"(C) the death of the consumer.". 
(b) DISCLOSURE.—Chapter 2 of title I of the Truth in Lending 
Act (15 U.S.C. 1631 et seq.) is amended by adding at the end 
the following new section: 
15USC1648. 
"SEC. 138. REVERSE MORTGAGES. 
"(a) IN GENERAL.—In addition to the disclosures required under 
this title, for each reverse mortgage, the creditor shall, not less 
than 3 days prior to consummation of the transaction, disclose 
to the consumer in conspicuous type a good faith estimate of the 
projected total cost of the mortgage to the consumer expressed 
as a table of annual interest rates. Each annual interest rate 
shall be based on a projected total future credit extension balance 
under a projected appreciation rate for the dwelling and a term 
for the mortgage. The disclosure shall include— 
"(1) statements of the annual interest rates for not less 
than 3 projected appreciation rates and not less than 3 credit 
transaction periods, as determined by the Board, including— 
"(A) a short-term reverse mortgage; 
"(B) a term equaling the actuarial life expectancy of 
the consumer; and 
"(C) such longer term as the Board deems appropriate; 
and 
"(2) a statement that the consumer is not obligated to 
complete the reverse mortgage transaction merely because the 
consumer has received the disclosure required under this sec-
tion or has signed an application for the reverse mortgage. 
"(b) PROJECTED TOTAL COST.—In determining the projected 
total cost of the mortgage to be disclosed to the consumer under 
subsection (a), the creditor shall take into account— 
"(1) any shared appreciation or equity that the lender will, 
by contract, be entitled to receive; 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2197 
"(2) all costs and charges to the consumer, including the 
costs of any associated annuity that the consumer elects or 
is required to purchase as part of the reverse mortgage trans-
action; 
"(3) all payments to and for the benefit of the consumer, 
including, in tne case in which an associated annuity is pur-
chased (whether or not required by the lender as a condition 
of making the reverse mortgage), the annuity pa3m[ients 
received by the consumer and financed from the proceeds of 
the loan, instead of the proceeds used to finance the annuity; 
and 
"(4) any limitation on the liability of the consumer under 
reverse mortgage transactions (such as nonrecourse limits and 
equity conservation agreements).". 
(c) HOME EQUITY PLAN EXEMPTION.—Section 137(b) of the 
Truth in Lending Act (15 U.S.C. 1647(b)) is amended by adding 
at the end the following: 
"This subsection does not apply to reverse mortgage transactions.". 
(d) TABLE OF SECTIONS.—^The table of sections at the beginning 
of chapter 2 of the Truth in Lending Act is amended by inserting 
after the item relating to section 137 the following: 
"138. Reverse mortgages.". 
SEC. 155. REGULATIONS. 
Not later than 180 days after the date of enactment of this 
Act, the Board of Governors of the Federal Reserve System shall 
issue such regulations as may be necessary to carry out this subtitle, 
and such regulations shall become effective on the date on which 
disclosure regulations are required to become effective under section 
105(d) of the Truth in Lending Act. 
SEC. 156. APPLICABILITY. 
This subtitle, and the amendments made by this subtitle, shall 
apply to every mortgage referred to in section 103(aa) of the Truth 
in Lending Act (as added by section 152(a) of this Act) consummated 
on or after the date on which regulations issued under section 
155 become effective. 
SEC. 157. FEDERAL RESERVE STUDY. 
During the period beginning 180 days after the date of enact-
ment of this Act and ending 2 years after that date of enactment, 
the Board of Governors of the Federal Reserve System shall conduct 
a study and submit to the Congress a report, including recommenda-
tions for any appropriate legislation, regarding— 
(1) whether a consumer engaging in an open end credit 
transaction (as defined in section 103 of the Truth in Lending 
Act) secured by the consumer's principal dwelling is provided 
adequate protections under Federal law, including section 127A 
of the Truth in Lending Act; and 
(2) whether a more appropriate interest rate index exists 
for purposes of subparagraph (A) of section 103(aa)(l) of the 
Truth in Lending Act (as added by section 152(a) of this Act) 
than the yield on Treasury securities referred to in that 
subparagraph. 
SEC. 158. HEARINGS ON HOME EQUITY LENDING. 
(a) HEARINGS.—^Not less than once during the 3-year period 
beginning on the date of enactment of this Act, and regularly 
15 use 1602 
note. 
15 use 1602 
note. 
15 use 1601 
note. 
Reports. 
15 use 1601 
note. 
108 STAT. 2198 
PUBLIC LAW 103-325—SEPT. 23, 1994 
thereafter, the Board of Governors of the Federal Reserve System, 
in consultation with the Consumer Advisory Council of the Board, 
shall conduct a public hearing to examine the home equity loan 
market and the adequacy of existing regulatory and legislative 
provisions and the provisions of this subtitle in protecting the 
interests of consumers, and low-income consumers in particular. 
(b) PARTICIPATION.—In conducting hearings required by sub-
section (a), the Board of Governors of the Federal Reserve System 
shall solicit participation from consumers, representatives of 
, 
consumers, lenders, and other interested parties. 
TITLE II—SMALL BUSINESS CAPITAL 
FORMATION 
Subtitle A—Small Business Loan 
Securitization 
Small Business 
Loan 
Securitization 
and Secondary 
Market 
Enhancement 
Act of 1994 
SEC. 201. SHORT TITLE. 
15 use 78a note. 
rpj^jg subtitle may be cited as the "Small Business Loan 
Securitization and Secondary Market Enhancement Act of 1994". 
SEC. 202. SMALL BUSINESS RELATED SECURITY. 
Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)) is amended by adding at the end the following new 
paragraph: 
"(53)(A) The term 'small business related security' means 
a security that is rated in 1 of the 4 highest rating categories 
by at least 1 nationally recognized statistical rating organiza-
tion, and either— 
"(i) represents an interest in 1 or more promissory 
notes or leases of personal property evidencing the obliga-
tion of a small business concern and originated by an 
insured depository institution, insured credit union, insur-
ance company, or similar institution which is supervised 
and examined by a Federal or State authority, or a finance 
company or leasing company; or 
"(ii) is secured by an interest in 1 or more promissory 
notes or leases of personal property (with or without 
recourse to the issuer or lessee) and provides for payments 
of principal in relation to payments, or reasonable projec-
tions of payments, on notes or leases described in clause 
(i). 
"(B) For purposes of this paragraph— 
"(i) an 'interest in a promissory note or a lease of 
personal propertj^ includes ownership rights, certificates 
of interest or participation in such notes or leases, and 
rights designed to assure servicing of such notes or leases, 
or the receipt or timely receipt of amounts payable under 
such notes or leases; 
"(ii) the term 'small business concern' means a business 
that meets the criteria for a small business concern estab-
lished by the Small Business Administration under section 
3(a) of the Small Business Act; 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2199 
"(iii) the term 'insured depository institution' has the 
same meaning as in section 3 of the Federal Deposit Insur-
ance Act; and 
"(iv) the term 'insured credit union' has the same megm-
ing as in section 101 of the Federal Credit Union Act.". 
SEC. 203. APPLICABILITY OF MARGIN REQUIREMENTS. 
Section 7(g) of the Securities Exchange Act of 1934 (15 U.S.C. 
78g(g)) is amended by inserting "or a small business related secu-
rity" after "mortgage related security". 
SEC. 204. BORROWING IN THE COURSE OF BUSINESS. 
Section 8(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78h(a)) is amended in the last sentence by inserting "or a small 
business related security" sifter "mortgage related security". 
SEC. 205. SMALL BUSINESS RELATED SECURITIES AS COLLATERAL. 
Clause (ii) of section 11(d)(1) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78k(d)(l)) is amended by inserting "or any 
small business related security" after "mortgage related security". 
SEC. 206. INVESTMENT BY DEPOSITORY INSTITUTIONS. 
(a) HOME OWNERS' LOAN ACT AMENDMENT.—Section 5(c)(1) 
of the Home Owners' Loan Act (12 U.S.C. 1464(c)(1)) is amended 
by adding at the end the following new subparagraph: 
"(S) 
SMALL BUSINESS RELATED SECURITIES.—Invest-
ments in small business related securities (as defined in 
section 3(a)(53) of the Securities Exchange Act of 1934), 
subject to such regulations as the Director may prescribe, 
including regulations concerning the minimum size of the 
issue (at the time of the initial distribution), the minimum 
aggregate sales price, or both.". 
(b) CREDIT UNIONS.—Section 107(15) of the Federal Credit 
Union Act (12 U.S.C. 1757(15)) is amended— 
(1) in subparagraph (A), by striking "or" at the end; 
(2) in subparagraph (B), by inserting "or" at the end; and 
(3) by adding at the end the following new subparagraph: 
"(C) are small business related securities (as defined 
in section 3(a)(53) of the Securities Exchange Act of 1934), 
subject to such regulations as the Board may prescribe, 
including regulations prescribing the minimum size of the 
issue (at the time of the initial distribution), the minimum 
aggregate sales price, or both;". 
(c) N
A
T
I
O
N
A
L BANKING ASSOCIATIONS.—Section 5136 of the 
Revised Statutes (12 U.S.C. 24) is amended in the last sentence 
in the first full paragraph of paragraph Seventh, by striking "or 
(B) are mortgage related securities" and inserting the following: 
"(B) are small business related securities (as defined in section 
3(a)(53) of the Securities Exchange Act of 1934); or (C) are mortgage 
related securities". 
SEC. 207. PREEMPTION OF STATE LAW. 
(a) IN GENERAL.—Section 106(a)(1) of the Secondary Mortgage 
Market Enhancement Act of 1984 (15 U.S.C. 77r-1(a)(1)) is 
amended— 
(1) by striking "or" at the end of subparagraph (B); 
(2) by redesignating subparagraph (C) as subparagraph 
(D); and 
108 STAT. 2200 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(3) by inserting after subparagraph (B) the following new 
subparagraph: 
"(C) small business related securities (as defined in 
section 3(a)(53) of the Securities Exchange Act of 1934), 
or . 
(b) OBLIGATIONS OF THE UNITED STATES.—Section 106(a)(2) 
of the Secondary Mortgage Market Enhancement Act of 1984 (15 
U.S.C. 77r-1(a)(2)) is amended— 
(1) by striking "or" at the end of subparagraph (B); 
(2) by redesignating subparagraph (C) as subparagraph 
(D); and 
(3) by inserting after subparagraph (B) the following new 
subparagraph: 
"(C) small business related securities (as defined in 
section 3(a)(53) of the Securities Exchange Act of 1934), 
or . 
(c) PREEMPTION OF STATE LAWS.—Section 106(c) of the Second-
ary Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r-
1(c)) is amended— 
(1) in the first sentence, by striking "or that" and inserting 
", that"; and 
(2) by inserting ", or that are small business related securi-
ties (as defined in section 3(a)(53) of the Securities Exchange 
Act of 1934)" before "shall be exempt". 
(d) IMPLEMENTATION.—Section 106 of the Secondary Mortgage 
Market Enhancement Act of 1984 (15 U.S.C. 77r-l) is amended 
by adding at the end the following new subsection: 
"(d) IMPLEMENTATION.— 
"(1) LIMITATION.—The provisions of subsections (a) and (b) 
concerning small business related securities shall not apply 
with respect to a particular person, trust, corporation, partner-
ship, association, business trust, or business entity or class 
thereof in any State that, prior to the expiration of 7 years 
after the date of enactment of this subsection, enacts a statute 
that specifically refers to this section and either prohibits or 
provides for a more limited authority to purchase, hold, or 
invest in such small business related securities by any person, 
trust, corporation, partnership, association, business trust, or 
business entity or class thereof than is provided in this section. 
The enactment by any State of any statute of the type described 
in the preceding sentence shall not affect the validity of any 
contractual commitment to purchase, hold, or invest that was 
made prior to such enactment, and shall not require the sale 
or other disposition of any small business related securities 
acquired prior to the date of such enactment. 
"(2) 
STATE 
REGISTRATION OR QUALIFICATION 
REQUIRE-
MENTS.—^Any State may, not later than 7 years after the date 
of enactment of this subsection, enact a statute that specifically 
refers to this section and requires registration or qualification 
of any small business related securities on terms that differ 
from those applicable to any obligation issued by the United 
States.". 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2201 
SEC. 208. INSURED DEPOSITORY INSTITUTION CAPITAL REQUIRE- 
12 USC 1835. 
MENTS FOR TRANSFERS OF SMALL BUSINESS OBLIGA-
TIONS. 
(a) 
ACCOUNTING 
PRINCIPLES.—^The accounting principles 
applicable to the transfer of a small business loan or a lease 
of personal property with recourse contained in reports or state-
ments required to be filed with Federal banking agencies by a 
qualified insured depository institution shall be consistent with 
generally accepted accounting principles. 
(b) CAPITAL AND RESERVE REQUIREMENTS.—^With respect to 
the transfer of a small business loan or lease of personal property 
with recourse that is a sale under generally accepted accounting 
principles, each qualified insured depository institution shall— 
(1) establish and maintain a reserve equal to an amount 
sufficient to meet the reasonable estimated liability of the 
institution under the recourse arrangement; and 
(2) include, for purposes of applicable capital standards 
and other capital measures, only the amount of the retained 
recourse in the risk-weighted assets of the institution. 
(c) QUALIFIED INSTITUTIONS CRITERIA.—An insured depository 
institution is a qualified insured depository institution for purposes 
of this section if, without regard to the accounting principles or 
capital requirements referred to in subsections (a) and (b), the 
institution is— 
(1) well capitalized; or 
(2) with the approval, by regulation or order, of the appro-
priate Federal banking agency, adequately capitalized. 
(d) AGGREGATE AMOUNT OF RECOURSE.—The total outstanding 
amount of recourse retained by a qualified insured depository 
institution with respect to transfers of small business loans and 
leases of personal property under subsections (a) and (b) shall 
not exceed— 
(1) 15 percent of the risk-based capital of the institution; 
or 
(2) such greater amount, as established by the appropriate 
Federal banking agency by regulation or order. 
(e) INSTITUTIONS THAT CEASE TO BE QUALIFIED OR EXCEED 
AGGREGATE LIMITS.—If £in insured depository institution ceases 
to be a qualified insured depository institution or exceeds the limits 
under subsection (d), this section shall remain applicable to any 
transfers of small business loans or leases of personal property 
that occurred during the time that the institution was qualified 
and did not exceed such limit. 
(f) PROMPT CORRECTIVE ACTION NOT AFFECTED.—The capital 
of an insured depository institution shall be computed without 
regard to this section in determining whether the institution is 
adequately 
capitalized, 
undercapitalized, 
significantly 
undercapitalized, or critically undercapitalized under section 38 
of the Federal Deposit Insurance Act. 
(g) REGULATIONS REQUIRED.—Not later than 180 days after 
the date of enactment of this Act each appropriate Federal banking 
agency shall promulgate final regulations implementing this section. 
(h) ALTERNATIVE SYSTEM PERMITTED.— 
(1) IN GENERAL.—At the discretion of the appropriate Fed-
eral banking agency, this section shall not apply if the regula-
tions of the agency provide that the aggregate amount of capital 
and reserves required with respect to the transfer of small 
108 STAT. 2202 
PUBLIC LAW 103-325—SEPT. 23, 1994 
business loans and leases of personal property with recourse 
does not exceed the aggregate amount of capital and reserves 
that would be required under subsection (b). 
(2) EXISTING TRANSACTIONS NOT AFFECTED.—Notwithstand-
ing paragraph (1), this section shall remain in effect with 
respect to transfers of small business loans and leases of per-
sonal property with recourse by qualified insured depository 
institutions occurring before the effective date of regulations 
referred to in paragraph (1). 
(i) DEFINITIONS.—For purposes of this section— 
(1) the term "adequately capitalized" has the same meaning 
as in section 38(b) of the Federal Deposit Insurance Act; 
(2) the term "appropriate Federal banking agency" has 
the same meaning as in section 3 of the Federal Deposit Insur-
ance Act; 
(3) the term "capital standards" has the same meaning 
as in section 38(c) of the Federal Deposit Insurance Act; 
(4) the term "Federal banking agencies" has the same 
meaning as in section 3 of the Federal Deposit Insurance Act; 
(5) the term "insured depository institution" has the same 
meaning as in section 3 of the Federal Deposit Insurance Act; 
(6) the term "other capital measures" has the meaning 
as in section 38(c) of the Federal Deposit Insurance Act; 
(7) the term "recourse" has the meaning given to such 
term under generally accepted accounting principles; 
(8) the term "small business" means a business that meets 
the criteria for a small business concern established by the 
Small Business Administration under section 3(a) of the Small 
Business Act; and 
(9) the term "well capitalized" has the same meaning as 
in section 38(b) of the Federal Deposit Insurance Act. 
15 use 78b note. SEC. 209. JOINT STUDY ON THE IMPACT OF ADDITIONAL SECURITIES 
BASED ON POOLED OBLIGATIONS. 
(a) JOINT STUDY REQUIRED.—The Board and the Commission 
shall conduct a joint study of the impact of the provisions of this 
subtitle (including the amendments made by this subtitle) on the 
credit and securities markets. Such study shall evaluate— 
(1) the impact of the provisions of this subtitle on the 
availability of credit for business and commercial enterprises 
in general, and the availability of credit in particular for— 
(A) businesses in low- and moderate-income areas; 
(B) businesses owned by women and minorities; 
(C) community development efforts; 
(D) community development financial institutions; 
(E) businesses in different geographical regions; and 
(F) a diversity of t3rpes of businesses; 
(2) the structure and operation of the markets that develop 
for small business related securities and commercial mortgage 
related securities, including the types of entities (such as pen-
sion funds and insurance companies) that are significant pur-
chasers of such securities, the extent to which such entities 
are sophisticated investors, the use of credit enhancements 
in obtaining investment-grade ratings, any conflicts of interest 
that arise in such markets, and any adverse effects of such 
markets on commercial real estate ventures, pension funds, 
or pension fund beneficiaries; 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2203 
(3) the extent to which the provisions of this subtitle with 
regard to margin requirements, the number of eligible invest-
ment rating categories, preemption of State law, and the treat-
ment of such securities as government securities for the purpose 
of State investment limitations, affect the structure and oper-
ation of such markets; and 
(4) in view of the findings made pursuant to paragraphs 
(2) and (3), any additional suitability or disclosure requirements 
or other investor protections that should be required. 
(b) REPORTS.— 
(1) IN GENERAL.—^The Board and the Commission shall 
submit to the Congress a report on the results of the study 
required by subsection (a) before the end o
f
-
— 
(A) the 2-year period beginning on the date of enact-
ment of this Act; 
(B) the 4-year period beginning on such date of enact-
ment; and 
(C) the 6-year period beginning on such date of 
enactment. 
(2) CONTENTS OF REPORT.—Each report required under 
paragraph (1) shall contain or be accompanied by such rec-
ommendations for administrative or legislative action as the 
Board and the Commission consider appropriate and may 
include recommendations regarding the need to develop a sys-
tem for reporting additional information concerning invest-
ments by the entities described in subsection (a)(2). 
(c) DEFINITIONS.—^As used in this section— 
(1) the term "Board" means the Board of Governors of 
the Federal Reserve System; and 
(2) the term "Commission" means the Securities and 
Exchange Commission. 
SEC. 210. CONSISTENT USE OF FINANCIAL TERMINOLOGY. 
12 USC 3305 
Not later than 2 years after the date of enactment of this Reports. 
Act, the Financial Institutions Examination Council shall report 
to the Congress on its recommendations for the use of consistent 
financial terminology by depository institutions for small business 
loans or leases of personal property which are sold for the creation 
of small business related securities (as defined in section 3(a)(53)(A) 
of the Securities Exchange Act of 1934). 
Subtitle B—Small Business Capital 
Enhancement 
SEC. 251. FINDINGS AND PURPOSES. 
12 USC 4741. 
(a) FINDINGS.—The Congress finds that— 
(1) small business concerns are a vital part of the economy, 
accounting for the majority of new jobs, new products, and 
new services created in the United States; 
(2) adequate access to debt capital is a critical component 
for small business development, productivity, expcinsion, and 
success in the United States; 
(3) commercial banks are the most important suppliers 
of debt capital to small business concerns in the United States; 
108 STAT. 2204 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(4) commercial banks and other depository institutions have 
various incentives to minimize their risk in financing small 
business concerns; 
(5) as a result of such incentives, many small business 
concerns with economically sound financing needs are unable 
to obtain access to needed debt capital; 
(6) the small business capital access programs implemented 
by certain States are a flexible and efficient tool to assist 
financial institutions in providing access to needed debt capital 
for many small business concerns in a manner consistent with 
safety and soundness regulations; 
(7) a small business capital access program would com-
plement other programs which assist small business concerns 
in obtaining access to capital; and 
(8) Federal policy can stimulate and accelerate efforts by 
States to implement small business capital access programs 
by providing an incentive to States, while leaving the 
administration of such programs to each participating State. 
(b) PURPOSES.—By encouraging States to implement adminis-
tratively efficient capital access programs that encourage commer-
cial banks and other depository institutions to provide access to 
debt capital for a broad portfolio of small business concerns, and 
thereby promote a more efficient and effective debt market, the 
purposes of this subtitle are— 
(1) to promote economic opportunity and growth; 
(2) to create jobs; 
(3) to promote economic efficiency; 
(4) to enhance productivity; and 
,, , 
(5) to spur innovation. 
12 use 4742. 
SEC. 252. DEFINITIONS. 
For purposes of this subtitle— 
(1) the term "Fund" means the Community Development 
Financial Institutions Fund established under section 104; 
(2) the term "appropriate Federal banking agency"— 
(A) has the same meaning as in section 3 of the Federal 
Deposit Insurance Act; and 
(B) includes the National Credit Union Administration 
Board in the case of any credit union the deposits of which 
are insured in accordance with the Federal Credit Union 
Act; 
(3) the term "early loan" means a loan enrolled at a time 
when the aggregate covered amount of loans previously enrolled 
under the Program by a particular participating financial 
institution is less than $5,000,000; 
(4) the term "enrolled loan" means a loan made by a 
participating financial institution that is enrolled by a partici-
pating State in accordance with this subtitle; 
(5) the term "financial institution" means any federally 
chartered or State-chartered commercial bank, savings associa-
tion, savings bank, or credit union; 
(6) the term "participating financial institution" means any 
financial institution that has entered into a participation agree-
ment with a participating State in accordance with section 
254; 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2205 
(7) the term "participating State" means any State that 
has been approved for participation in the Program in accord-
ance with section 253; 
(8) the term "passive real estate ownership" means owner-
ship of real estate for the purpose of deriving income from 
speculation, trade, or rental, except that such term shall not 
include— 
(A) the ownership of that portion of real estate being 
"'-'•' 
used or intended to be used for the operation of the business 
of the owner of the real estate (other than the business 
of passive ownership of real estate); or 
(B) the ownership of real estate for the purpose of 
construction or renovation, until the completion of the 
construction or renovation phase; 
(9) the term "Program" means the Small Business Capital 
Enhancement Program established under this subtitle; 
(10) the term "reserve fund" means a fund, established 
by a participating State, earmarked for a particular participat-
ing financial institution, for the purposes o
f
— 
(A) depositing all required premium charges paid by 
the participating financial institution and by each borrower 
receiving a loan under the Program from a participating 
financial institution; 
(B) depositing contributions made by the participating 
State; and 
(C) covering losses on enrolled loans by disbursing 
accumulated funds; and 
(11) the term "State" means— 
(A) a State of the United States; 
(B) the District of Columbia; 
(C) any political subdivision of a State of the United 
States, which subdivision has a population in excess of 
the population of the least populated State of the United 
States; and 
(D) any other political subdivision of a State of the 
United States that the Fund determines has the capacity 
to participate in the program. 
SEC. 253. APPROVING STATES FOR PARTICIPATION. 
12 USC 4743. 
(a) APPLICATION.—^Any State may apply to the Fund for 
approval to be a participating State under the Program and to 
be eligible for reimbursement by the Fund pursuant to section 
257. 
(b) APPROVAL CRITERIA.—The Fund shall approve a State to 
be a participating State, if— 
(1) a specific department or agency of the State has been 
designated to implement the Program; 
(2) all legal actions necessary to enable such designated 
department or agency to implement the Program have been 
accomplished; 
(3) funds in the amount of at least $1 for every 2 people 
residing in the State (as of the last decennial census for which 
data have been released) are available and have been legally 
committed to contributions by the State to reserve funds, with 
such funds being available without time limit and without 
requiring additional legal action, except that such requirements 
shall not be construed to limit the authority of the State to 
108 STAT. 2206 
PUBLIC LAW 103-325—SEPT. 23, 1994 
take action at a later time that results in the termination 
of its obligation to enroll loans and make contributions to 
reserve funds; 
(4) the State has prescribed a form of participation agree-
ment to be entered into between it and each participating 
financial institution that is consistent with the requirements 
and purposes of this subtitle; and 
(5) the State and the Fund have executed a reimbursement 
agreement that conforms to the requirements of this subtitle. 
(c) EXISTING STATE PROGRAMS.— 
(1) IN GENERAL.—^A State that is not a participating State, 
but that has its own capital access program providing portfolio 
insurance for business loans (based on a separate loss reserve 
fund for each financial institution), may apply at any time 
to the Fund to be approved to be a participating State. The 
Fund shall approve such State to be a participating State, 
and to be eligible for reimbursements by the Fund pursuant 
to section 257, if the State— 
(A) satisfies the requirements of subsections (a) and 
(b); and 
(B) certifies that each affected financial institution has 
satisfied the requirements of section 254. 
(2) APPLICABLE TERMS OF PARTICIPATION.— 
(A) STATUS OF INSTITUTIONS.—If a State is approved 
for participation under paragraph (1), each 
financial 
institution with a participation agreement in effect with 
the participating State shall immediately be considered 
a participating financial institution. Reimbursements may 
be made under section 237 in connection with all contribu-
tions made to the reserve fund by the State in connection 
with lending that occurs on or after the date on which 
the Fund approves the State for participation, 
(B) EFFECTIVE DATE OF PARTICIPATION.—If an amended 
participation agreement that conforms with section 255 
is required in order to secure participation approval by 
the Fund, contributions subject to reimbursement under 
section 257 shall include only those contributions made 
to a reserve fund with respect to loans enrolled on or 
after the date that an amended participation agreement 
between the participating State and the participating finan-
cial institution becomes effective. 
(C) USE OF ACCUMULATED RESERVE FUNDS.—^A State 
that is approved for participation in accordance with this 
subsection may continue to implement the program utiliz-
ing the reserve funds accumulated under the State 
program. 
(d) PRIOR APPROPRIATIONS REQUIREMENT.—The Fund shall not 
approve a State for participation in the Program until at least 
$50,000,000 has been appropriated to the Fund (subject to an appro-
priations Act), without fiscal year limitation, for the purpose of 
making reimbursements pursuant to section 257 and otherwise 
carrying out this subtitle. 
(e) AMENDMENTS TO AGREEMENTS.—If a State that has been 
approved to be a participating State wishes to amend its form 
of participation agreement and continue to be a participating State, 
such State shall submit such amendment for review by the Fund 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2207 
in accordance with subsection (b)(4). Any such amendment shall 
become effective only after it has been approved by the Fund. 
SEC. 254. PARTICIPATION AGREEMENTS. 
12 USC 4744. 
(a) IN GENERAL.—^A participating State may enter into a partici-
pation agreement with any financial institution determined by the 
participating State, after consultation with the appropriate Federal 
banking agency, to have sufficient commercial lending experience 
and financial and managerial capacity to participate in the Program. 
The determination by the State shall not be reviewable by the 
Fund. 
(b) PARTICIPATING FINANCIAL INSTITUTIONS.—Upon entering 
into the participation agreement with the participating State, the 
financial institution shall become a participating financial institu-
tion eligible to enroll loans under the Program. 
SEC. 255. TERMS OF PARTICIPATION AGREEMENTS. 
12 USC 4745. 
(a) IN GENERAL.—The participation agreement to be entered 
into by a participating State and a participating financial institution 
shall include all provisions required by this section, and shall not 
include any provisions inconsistent with the provisions of this 
section. 
(b) ESTABLISHMENT OF SEPARATE RESERVE FUNDS.—A separate 
reserve fund shall be established by the participating State for 
each participating financial institution. All funds credited to a 
reserve fund shall be the exclusive property of the participating 
State. Each reserve fund shall be an administrative account for 
the purposes of— 
(1) receiving all required premium charges to be paid by 
the borrower and participating financial institution and con-
tributions by the participating State; and 
(2) disbursing funds, either to cover losses sustained by 
the participating financial institution in connection with loans 
made under the Program, or as contemplated by subsections 
(d) and (r). 
(c) INVESTMENT AUTHORITY.—Subject to applicable State law, 
the participating State may invest, or cause to be invested, funds 
held in a reserve fund by establishing a deposit account at the 
participating financial institution in the name of the participating 
State. In the event that funds in the reserve fund are not deposited 
in such an account, such funds shall be invested in a form that 
the participating State determines is safe and liquid. 
(d) EARNED INCOME AND INTEREST.—Interest or income earned 
on the funds credited to a reserve fund shall be deemed to be 
part of the reserve fund, except that a participating State may, 
as further specified in the participation agreement, provide author-
ity for the participating State to withdraw some or all of such 
interest or income earned. 
(e) LOAN TERMS AND CONDITIONS.— 
(1) IN GENERAL.—^A loan to be filed for enrollment under 
the Program may be made with such interest rate, fees, and 
other terms and conditions as agreed upon by the participating 
financial 
institution and the borrower, 
consistent 
with 
applicable law. 
(2) LINES OF CREDIT.—If a loan to be filed for enrollment 
is in the form of a line of credit, the amount of the loan 
shall be considered to be the maximum amount that can be 
drawn by the borrower against the line of credit. 
108 STAT. 2208 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(f) ENROLLMENT PROCESS.— 
(1) FILING.— 
(A) IN GENERAL.—^A participating financial institution 
shall file each loan made under the Program for enrollment 
by completing and submitting to the participating State 
a form prescribed by the participating State. 
(B) FORM.—The form referred to in subparagraph (A) 
shall include a representation by the participating financial 
institution that it has complied with the participation 
agreement in enrolling the loan with the State. 
(C) PREMIUM CHARGES.—^Accompanying the completed 
form shall be the nonrefundable premium charges paid 
by the borrower and the participating financial institution, 
or evidence that such premium charges have been deposited 
into the deposit account containing the reserve fund, if 
applicable. 
(D) SUBMISSION.—The participation agreement shall 
require that the items required by this subsection shall 
be submitted to the participating State by the participating 
financial institutions not later than 10 calendar days after 
a loan is made. 
(2) ENROLLMENT BY STATE.—Upon receipt by the participat-
ing State of the filing submitted in accordance with paragraph 
(1), the participating State shall promptly enroll the loan and 
make a matching contribution to the reserve fund in accordance 
with subsection (j)> unless the information submitted indicates 
that the participating financial institution has not complied 
with the participation agreement in enrolling the loan. 
(g) COVERAGE AMOUNT.—In filing a loan for enrollment under 
the Program, the participating financial institution may specify 
an amount to be covered under the Program that is less than 
the full amount of the loan. 
(h) PREMIUM CHARGES.— 
(1) MINIMUM AND MAXIMUM AMOUNTS.—The premium 
charges payable to the reserve fund by the borrower and the 
participating financial institution shall be prescribed by the 
participating financial institution, within minimum and maxi-
mum limits set forth in the participation agreement. The 
participation agreement shall establish minimum and maxi-
mum limits whereby the sum of the premium charges paid 
in connection with a loan by the borrower and the participating 
financial institution is not less than 3 percent nor more than 
7 percent of the amount of the loan covered under the Program. 
(2) ALLOCATION OF PREMIUM CHARGES.—The participation 
agreement shall specify terms for allocating premium charges 
between the borrower and the participating financial institu-
tion. However, if the participating financial institution is 
required to pay any of the premium charges, the participation 
agreement shall authorize the participating financial institution 
to recover from the borrower the cost of the payment of the 
participating financial institution, in any manner on which 
the participating financial institution and the borrower agree. 
(i) RESTRICTIONS.— 
(1) ACTIONS PROHIBITED.—Except as provided in subsection 
(h) and paragraph (2) of this subsection, the participating State 
may not— 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2209 
(A) impose any restrictions or requirements, relating 
to the interest rate, fees, collateral, or other business terms 
and conditions of the loan; or 
(B) condition enrollment of a loan in the Program 
on the review by the State of the risk or creditworthiness 
of a loan. 
(2) EFFECT ON OTHER LAW.—Nothing in this subtitle shall 
affect the applicability of any other law to the conduct by 
a participating financial institution of its business. 
(j) STATE CONTRIBUTIONS.—In enrolling a loan under the Pro-
gram, the participating State shall contribute to the reserve fund 
an amount, as provided for in the participation agreement, which 
shall not be less than the sum of the amount of premium charges 
paid by the borrower and the participating financial institution. 
(k) ELEMENTS OF CLAIMS.— 
(1) FILING.—If a participating financial institution charges 
off all or part of an enrolled loan, such participating financial 
institution may file a claim for reimbursement with the partici-
pating State by submitting a form that— 
(A) includes the representation by the participating 
financial institution that it is filing the claim in accordance 
with the terms of the applicable participation agreement; 
and 
(B) contains such other information as may be required 
,,, 
by the participating State. 
(2) TIMING.—^Any claim filed under paragraph (1) shall 
be filed contemporaneously with the action of the participating 
financial institution to charge off all or part of an enrolled 
loan. The participating financial institution shall determine 
when and how much to charge off on an enrolled loan, in 
a manner consistent with its usual method for making such 
determinations on business loans that are not enrolled loans 
under this subtitle. 
(1) ELEMENTS OF CLAIMS.—^A claim filed by a participating 
financial institution may include the amount of principal charged 
off, not to exceed the covered amount of the loan. Such claim 
may also include accrued interest and out-of-pocket expenses, if 
and to the extent provided for under the participation agreement. 
(m) PAYMENT OF CLAIMS.— 
(1) IN GENERA!..—Except as provided in subsection (n) and 
paragraph (2) of this subsection, upon receipt of a claim filed 
in accordance with this section and the participation agreement, 
the participating State shall promptly pay to the participating 
financial institution, from funds in the reserve fund, the full 
amount of the claim as submitted. 
(2) INSUFFICIENT RESERVE FUNDS.—If there are insufficient 
funds in the reserve fund to cover the entire amount of a 
claim of a participating financial institution, the participating 
State shall pay to the participating financial institution an 
amount equal to the current balance in the reserve fund. If 
the enrolled loan for which the claim has been filed— 
(A) is not an early loan, such payment shall be deemed 
fully to satisfy the claim, and the participating financial 
institution shall have no other or further right to receive 
any amount from the reserve fund with respect to such 
claim; or 
108 STAT. 2210 
PUBLIC LAW 103-325—SEPT. 23, 1994 
f 
(B) is an early loan, such payment shall not be deemed 
fully to satisfy the claim of the participating financial 
institution, and at such time as the remaining balance 
of the claim does not exceed 75 percent of the balance 
in the reserve fund, the participating State shall, upon 
the request of the participating financial institution, pay 
any remaining amount of the claim. 
(n) DENIAL OF CLAIMS.—^A participating State may deny a 
claim if a representation or warranty made by the participating 
financial institution to the participating State at the time that 
the loan was filed for enrollment or at the time that the claim 
was submitted was known by the participating financial institution 
to be false. 
(o) SUBSEQUENT RECOVERY OF CLAIM AMOUNT.—If, subsequent 
to payment of a claim by the participating State, a participating 
financial institution recovers from a borrower any amount for which 
payment of the claim was made, the participating financial institu-
tion shall promptly pay to the participating State for deposit into 
the reserve fund the amount recovered, less any expenses incurred 
by the institution in collection of such amount. 
(p) PARTICIPATION AGREEMENT TERMS.— 
(1) IN GENERAL.—In connection with the filing of a loan 
for enrollment in the Program, the participation agreement— 
(A) shall require the participating financial institution 
to obtain an assurance from each borrower that— 
(i) the proceeds of the loan will be used for a 
business purpose; 
(ii) the loan will not be used to finance passive 
real estate ownership; and 
(iii) the borrower is not— 
(I) an executive officer, director, or principal 
shareholder of the participating financial institu-
tion; 
(II) a member of the immediate family of an 
executive officer, director, or principal shareholder 
of the participating financial institution; or 
(III) a related interest of any such executive 
officer, director, principal shareholder, or member 
of the immediate family; 
(B) shall require the participating financial institution 
to provide assurances to the participating State that the 
loan has not been made in order to place under the protec-
tion of the Program prior debt that is not covered under 
the Program and that is or was owed by the borrower 
to the participating financial institution or to an affiliate 
of the participating financial institution; 
(C) may provide that if— 
(i) a participating financial institution makes a 
loan to a borrower that is a refinancing of a loan 
previously made to the borrower by the participating 
financial institution or an affiliate of the participating 
financial institution; 
(ii) such prior loan was not enrolled in the Pro-
gram; and 
(iii) additional or new financing is extended by 
the participating financial institution as part of the 
refinancing. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2211 
the participating financial institution may file the loan 
for enrollment, with the amount to be covered under the 
Program not to exceed the amount of any additional or 
new financing; and 
(D) may include additional restrictions on the eligibility 
of loans or borrowers that are not inconsistent with the 
provisions and purposes of this subtitle. 
(2) DEFINITIONS.—For purposes of this subsection, the 
terms "executive officer", "director", "principal shareholder", 
"immediate family", and "related interest" refer to the same 
relationship to a participating financial institution as the rela-
tionship described in part 215 of title 12 of the Code of Federal 
Regulations, or any successor to such part. 
(q) TERMINATION CLAUSE.—In each participation agreement, 
the participating State shall reserve for itself the ability to termi-
nate its obligation to enroll loans under the Program. Any such 
termination shall be prospective only, and shall not apply to 
amounts of lo£ins enrolled under the Program prior to such 
termination. 
(r) ALLOWABLE WITHDRAWALS FROM FUND.—The participation 
agreement may provide that, if, for any consecutive period of not 
less than 24 months, the aggregate outstanding balance of all 
enrolled loans for a participating financial institution is continually 
less than the outstanding balance in the reserve fund for that 
participating financial institution, the participating State, in its 
discretion, may withdraw an amount from the reserve fund to 
bring the balance in the reserve fund down to the outstanding 
balance of all such enrolled loans. 
(s) GRANDFATHERED PROVISION.— 
(1) SPECIAL TREATMENT OF PREMIUM CHARGES.—^Notwith-
standing subsection (b) or (d), the participation agreement, 
if explicitly authorized by a statute enacted by the State before 
the date of enactment of this Act, may allow a participating 
financial institution to treat the premium charges paid by the 
participating financial institution and the borrower into the 
reserve fund, and interest or income earned on funds in the 
reserve fund that are deemed to be attributable to such pre-
mium charges, as assets of the participating financial institu-
tion for accounting purposes, subject to withdrawal by the 
participating financial institution only— 
(A) for the pajmient of claims approved by the partici-
pating State in accordance with this section; and 
(B) upon the participating financial institution's with-
drawal from authority to make new loans under the 
Program. 
(2) 
PAYMENT OF POST-WITHDRAWAL CLAIMS.—^After 
any 
withdrawal of assets from the reserve fund pursuant to para-
graph (1)(B), any future claims filed by the participating finan-
cial institution on loans remaining in its capital access program 
portfolio shall only be paid from funds remaining in the reserve 
fund to the extent that, in the aggregate, such claims exceed 
the sum of the amount of such withdrawn assets, and interest 
on that amount, imputed at the same rate as income would 
have accrued had the amount not been withdrawn. 
(3) CONDITIONS FOR TERMINATING SPECIAL AUTHORITY.— 
If the Fund determines that the inclusion in a participation 
agreement of the provisions authorized by this subsection is 
108 STAT. 2212 
PUBLIC LAW 103-325—SEPT. 23, 1994 
resulting in the enrollment of loans under the Program that 
are likely to have been made without assistance provided under 
this subtitle, the Fund may notify the participating State that 
henceforth, the Fund will only make reimbursements to the 
State under section 257 with respect to a loan if the participa-
tion agreement between the participating State and each 
participating financial institution has been amended to conform 
with this section, without exercise of the special authority 
granted by this subsection. 
12 use 4746. 
SEC. 256. REPORTS. 
(a) RESERVE FUNDS REPORT.—On or before the last day of 
each calendar quarter, a participating State shall submit to the 
Fund a report of contributions to reserve funds made by the partici-
pating State during the previous calendar quarter. If the participat-
ing State has made contributions to one or more reserve funds 
during the previous quarter, the report shall— 
(1) indicate the total amount of such contributions; 
(2) indicate the amount of contributions which is subject 
to reimbursement, which shall be equal to the total amount 
of contributions, unless one of the limitations contained in 
section 257 is applicable; 
(3) if one of the limitations in section 257 is applicable, 
provide documentation of the applicability of such limitation 
for each loan for which the limitation applies; and 
(4) include a certification by the participating State that— 
(A) the information provided in accordance with para-
graphs (1), (2), and (3) is accurate; 
(B) funds in an amount meeting the minimum require-
ments of section 253(b)(3) continue to be available and 
legally committed to contributions by the State to reserve 
funds, less any amount that has been contributed by the 
State to reserve funds subsequent to the State being 
approved for participation in the Program; 
(C) there has been no unapproved amendment to any 
participation agreement or the form of participation agree-
ments; and 
(D) the participating State is otherwise implementing 
the Program in accordance with this subtitle and regula-
tions issued pursuant to section 259. 
(b) ANNUAL DATA.—Not later than March 31 of each year, 
each participating State shall submit to the Fund annual data 
indicating the number of borrowers financed under the Program, 
the total amount of covered loans, and breakdowns by industry 
type, loan size, annual sales, and number of employees of the 
borrowers financed. 
(c) FORM.—^The reports and data filed pursuant to subsections 
(a) and (b) shall be in such form as the Fund may require. 
12 use 4747. 
SEC. 257. REIMBURSEMENT BY THE FUND. 
(a) REIMBURSEMENTS.—Not later than 30 calendar days after 
receiving a report filed in compliance with section 256, the Fund 
shall reimburse the participating State in an amount equal to 
50 percent of the amount of contributions by the participating 
State to the reserve funds that are subject to reimbursement by 
the Fund pursuant to section 256 and this section. The Fund 
shall reimburse participating States, as it receives reports pursuant 
to section 256(a), until available funds are expended. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2213 
(b) SIZE OF ASSISTED BORROWER.—The Fund shall not provide 
any reimbursement to a participating State with respect to an 
enrolled loan made to a borrower that has 500 or more employees 
at the time that the loan is enrolled in the Program. 
(c) THREE-YEAR MAXIMUM.—^The amount of reimbursement to 
be provided by the Fund to a participating State over any 3-
year period in connection with loans made to any single borrower 
or any group of borrowers among which a common enterprise exists 
shall not exceed $75,000. For purposes of this subsection, "common 
enterprise" shall have the same meaning as in part 32 of title 
12 of the Code of Federal Regulations, or any successor to that 
part. 
(d) LOANS TOTALING LESS THAN $2,000,000.—In connection 
with a loan in which the covered amount of the loan plus the 
covered amount of all previous loans enrolled by a participating 
financial institution does not exceed $2,000,000, the amount of 
reimbursement by the Fund to the participating State shall not 
exceed the lesser of— 
(1) 75 percent of the sum of the premium charges paid 
to the reserve fund by the borrower and the participating 
financial institution; or 
(2) 5.25 percent of the covered amount of the loan. 
(e) LOANS TOTALING MORE THAN $2,000,000.—In connection 
with a loan in which the sum of the covered amounts of all previous 
loans enrolled by the participating financial institution in the Pro-
gram equals or exceeds $2,000,000, the amount of reimbursement 
to be provided by the Fund to the participating State shall not 
exceed the lesser of— 
(1) 50 percent of the sum of the premium charges paid 
by the borrower and the participating financial institution; 
or 
(2) 3.5 percent of the covered amount of the loan. 
(f) OTHER AMOUNTS.—In connection with the enrollment of 
a loan that will cause the aggregate covered amount of all enrolled 
loans to exceed $2,000,000, the amount of reimbursement by the 
Fund to the participating State shall be determined— 
(1) by applying subsection (d) to the portion of the loan, 
which when added to the aggregate covered amount of all 
previously enrolled loans equals $2,000,000; and 
(2) by applying subsection (e) to the balance of the loan. 
SEC. 258. REIMBURSEMENT TO THE FUND. 
12 USC 4748. 
(a) IN GENERAL.—If a participating State withdraws funds from 
a reserve fund pursuant to terms of the participation agreement 
permitted by subsection (d) or (r) of section 255, such participating 
State shall, not later than 15 calendar days after such withdrawal, 
submit to the Fund an amount computed by multiplying the amount 
withdrawn by the appropriate factor, as determined under sub-
section (b). 
(b) FACTOR.—^The appropriate factor shall be obtained by divid-
ing the total amount of contributions that have been made by 
the participating State to all reserve funds which were subject 
to reimbursement— 
(1) by 2; and 
(2) by the total amount of contributions made by the partici-
pating State to all reserve funds, including if applicable, con-
tributions that have been made by the State prior to becoming 
108 STAT. 2214 
PUBLIC LAW 103-325—SEPT. 23, 1994 
a participating State if the State continued its own capital 
access program in accordance with section 253(b). 
(c) USE OF REIMBURSEMENTS.—The Fund may use funds 
reimbursed pursuant to this section to make reimbursements under 
section 257. 
12 use 4749. 
SEC. 259. REGULATIONS. 
The Fund shall promulgate appropriate regulations to imple-
ment this subtitle. 
12 use 4750. 
SEC. 260. AUTHORIZATION OF APPROPRIATIONS. 
(a) AMOUNT.—^There are authorized to be appropriated to the 
Fund $50,000,000 to carry out this subtitle. 
(b) BUDGETARY TREATMENT.—^The amount authorized to be 
appropriated under subsection (a) shall be subject to discretionary 
spending caps, as provided in section 601 of the Congressional 
Budget Act of 1974, and therefore shall reduce by an equal amount 
funds made available for other discretionary spending programs. 
12 use 4741 
SEC. 261. EFFECTIVE DATE. 
This subtitle shall become effective on January 6, 1996. 
TITLE III—PAPERWORK REDUCTION 
AND REGULATORY IMPROVEMENT 
12 use 4801. 
SEC. 301. INCORPORATED DEFINITIONS. 
Unless otherwise specifically provided in this title, for purposes 
of this title— 
(1) the terms "appropriate Federal banking agency", "Fed-
eral banking agencies", "insured depository institution", and 
"State bank supervisor" have the same meanings as in section 
3 of the Federal Deposit Insurance Act; and 
(2) the term "insured credit union" has the same meaning 
as in section 101 of the Federal Credit Union Act. 
12 use 4802. 
SEC. 302. ADMINISTRATIVE CONSIDERATION OF BURDEN WITH NEW 
REGULATIONS. 
(a) AGENCY CONSIDERATIONS.—In determining the effective date 
and administrative compliance requirements for new regulations 
that impose additional reporting, disclosure, or other requirements 
on insured depository institutions, each Federal banking agency 
shall consider, consistent with the principles of safety and sound-
ness and the public interest— 
(1) any administrative burdens that such regulations would 
place on depository institutions, including small depository 
institutions and customers of depository institutions; and 
(2) the benefits of such regulations. 
(b) ADEQUATE TRANSITION PERIOD FOR NEW REGULATIONS.— 
Effective date. 
(1) IN GENERAL.—New regulations and amendments to 
regulations prescribed by a Federal banking agency which 
impose additional reporting, disclosures, or other new require-
ments on insured depository institutions shall take effect on 
the first day of a calendar quarter which begins on or after 
the date on which the regulations are published in final form, 
unless— 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2215 
(A) the agency determines, for good cause published 
with the regulation, that the regulation should become 
effective before such time; 
(B) the regulation is issued by the Board of Grovernors 
of the Federal Reserve System in connection with the 
implementation of monetary policy; or 
(C) the regulation is required to take effect on a date 
other than the date determined under this paragraph 
pursuant to any other Act of Congress. 
(2) EARLY COMPLIANCE.—^Any person who is subject to a 
regulation described in paragraph (1) may comply with the 
regulation before the effective date of the regulation. 
SEC. 303. STREAMLINING OF REGULATORY REQUIREMENTS. 
12 USC 4803. 
(a) REVIEW OF REGULATIONS; REGULATORY UNIFORMITY.—Dur-
ing the 2-year period beginning on the date of enactment of this 
Act, each Federal banking agency shall, consistent with the prin-
ciples of safety and soundness, statutory law and policy, and the 
public interest— 
(1) conduct a review of the regulations and written policies , 
of that agency to— 
(A) streamline and modify those regulations and poli-
cies in order to improve efficiency, reduce unnecessary 
costs, and eliminate unwarranted constraints on credit 
availability; 
• (B) remove inconsistencies and outmoded and duplica-
tive requirements; and 
(C) with respect to regulations prescribed pursuant 
to section 18(o) of the Federal Deposit Insurance Act, con-
sider the impact that such standards have on the availabil-
ity of credit for small business, residential, and agricultural 
purposes, and on low- and moderate-income communities; 
(2) work jointly with the other Federal banking agencies 
to make uniform all regulations and guidelines implementing 
common statutory or supervisory policies; and 
(3) submit a joint report to the Congress at the end of Reports, 
such 2-year period detailing the progress of the agencies in 
carrying out this subsection. 
(b) REVIEW OF DISCLOSURES.—The Board of Governors of the 
Federal Reserve System, in consultation with the consumer advisory • 
council to such Board, consumers, representatives of consumers, 
lenders, and other interested persons, shall— 
(1) review the regulations and written policies of the Board 
with respect to disclosures pursuant to the Truth in Lending 
Act with regard to variable-rate mortgages in order to simplify 
the disclosures, if necessary, and make the disclosures more 
meaningful and comprehensible to consumers; 
(2) implement any necessary regulatory changes, consistent 
with applicable law; and 
(3) not later than 2 years after completion of the review Reports, 
required by paragraph (1), submit a report to the Congress 
on the results of its actions taken in accordance with this 
subsection and any recommended legislative actions. 
SEC. 304. ELIMINATION OF DUPUCATIVE FILINGS. 
12 USC 4804. 
The Federal banking agencies shall work jointly— 
108 STAT. 2216 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(1) to eliminate, to the extent practicable, duplicative or 
otherwise unnecessary requests for information in connection 
with applications or notices to the agencies; and 
(2) to harmonize, to the extent practicable, any inconsistent 
publication and public notice requirements. 
SEC. 305. COORDINATED AND UNIFIED EXAMINATIONS. 
(a) IN GENERAL.—Section 10(d) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1820(d)) is amended by adding at the end 
the following new paragraphs: 
"(6) COORDINATED EXAMINATIONS.—^To minimize the disrup-
tive effects of examinations on the operations of insured deposi-
tory institutions— 
"(A) each appropriate Federal banking agency shall, 
to the extent practicable and consistent with principles 
of safety and soundness and the public interest— 
"(i) coordinate examinations to be conducted by 
that agency at an insured depository institution and 
its affiliates; 
"(ii) coordinate with the other appropriate Federal 
banking agencies in the conduct of such examinations; 
"(iii) work to coordinate with the appropriate State 
bank supervisor— 
"(I) the conduct of all examinations made 
pursuant to this subsection; and 
"(II) the number, types, and frequency of 
reports required to be submitted to such agencies 
and supervisors by insured depository institutions, 
and the type and amount of information required 
to be included in such reports; and 
"(iv) use copies of reports of examinations of 
insured depository institutions made by any other Fed-
eral banking agency or appropriate State bank super-
visor to eliminate duplicative requests for information; 
and 
"(B) not later than 2 years after the date of enactment 
of the Riegle Community Development and Regulatory 
Improvement Act of 1994, the Federal banking agencies 
shall jointly establish and implement a system for deter-
mining which one of the Federal banking agencies shall 
be the lead agency responsible for managing a unified 
examination of each insured depository institution and its 
affiliates, as required by this subsection. 
- 
' 
"(7) 
SEPARATE EXAMINATIONS PERMITTED.—Notwithstand-
ing paragraph (6), each appropriate Federal banking agency 
may conduct a separate examination in an emergency or under 
other exigent circumstances, or when the agency believes that 
a violation of law may have occurred. 
"(8) REPORT.—^At the time the system provided for in para-
graph (6) is established, the Federal banking agencies shall 
submit a joint report describing the system to the Committee 
on Banking, Housing, and Urban Affairs of the Senate and 
the Committee on Banking, Finance and Urban Affairs of the 
House of Representatives. Thereafter, the Federal banking 
agencies shall annually submit a joint report to the Committee 
on Banking, Housing, and Urban Affairs of the Senate and 
the Committee on Banking, Finance and Urban Affairs of the 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2217 
House of Representatives regarding the progress of the agencies 
in implementing the system and indicating areas in which 
enhancements to the system, including legislature improve-
ments, would be appropriate.". 
(b) STATE ACCESS TO FEDERAL AGENCY REPORTS.—The first 
sentence of section 7(a)(2)(A) of the Federal Deposit Insurance Act 
(12 U.S.C. 1817(a)(2)(A)) is amended by inserting "and, with respect 
to any State depository institution, any appropriate State bank 
supervisor for such institution," after 'The Corporation". 
SEC. 306. EIGHTEEN-MONTH EXAMINATION RULE 
FOR CERTAIN 
SMALL INSTITUTIONS. 
(a) IN GENERAL.—Section 10(d)(4) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1820(d)(4)) is amended— 
(1) in subparagraph (A), by striking "$100,000,000" and 
inserting "$250,000,000"; 
(2) in subparagraph (C), by striking "and its composite 
condition was found to be outstanding; and" and inserting 
"and its composite condition— 
"(i) was found to be outstanding; or 
"(ii) was found to be outstanding or good, in the 
case of an insured depository institution that has total 
assets of not more than $100,000,000;"; 
(3) by redesignating subparagraph (D) as subparagraph 
(E); and 
(4) by inserting after subparagraph (C) the following new 
subparagraph: 
"(D) the insured institution is not currently subject 
to a formal enforcement proceeding or order by the Corpora-
tion or the appropriate Federal banking agency; and". 
(b) AGENCY DISCRETION TO RAISE ASSET LIMIT.—Section 10(d) 
of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended 
by adding at the end the following new paragraph: 
"(8) AGENCIES AUTHORIZED TO INCREASE MAXIMUM ASSET 
AMOUNT OF INSTITUTIONS FOR CERTAIN PURPOSES.—^At any time 
after the end of the 2-year period beginning on the date of 
enactment of the Riegle Community Development and Regu-
latory Improvement Act of 1994, the appropriate Federal 
banking agency, in the agency's discretion, may increase the 
maximum amount limitation contained in paragraph (4)(C)(ii), 
by regulation, from $100,000,000 to an amount not to exceed 
$175,000,000 for purposes of such paragraph, if the agency 
determines that the greater amount would be consistent with 
the principles of safety and soundness for insured depository 
institutions.". 
SEC. 307. CALL REPORT SIMPLIFICATION. 
12 USC 4805. 
(a) MODERNIZATION OF CALL REPORT FILING AND DISCLOSURE 
SYSTEM.—In order to reduce the administrative requirements 
pertaining to bank reports of condition, savings association financial 
reports, and bank holding company consolidated and parent-only 
financial statements, and to improve the timeliness of such reports 
and statements, the Federal banking agencies shall— 
(1) work jointly to develop a system under which— 
(A) insured depository institutions and their affiliates 
may file such reports and statements electronically; and 
108 STAT. 2218 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(B) the Federal banking agencies may make such 
reports and statements available to the public electroni-
cally; and 
(2) not later than 1 year after the date of enactment of 
this Act, report to the Congress and make recommendations 
for legislation that would enhance efficiency for filers and users 
of such reports and statements. 
(b) UNIFORM REPORTS AND SIMPLIFICATION OF INSTRUCTIONS.— 
The Federal banking agencies shall, consistent with the principles 
of safety and soundness, work jointly— 
(1) to adopt a single form for the filing of core information 
required to be submitted under Federal law to all such agencies 
in the reports and statements referred to in subsection (a); 
and 
(2) to simplify instructions accompanying such reports and 
statements and to provide an index to the instructions that 
is adequate to meet the needs of both filers and users. 
(c) REVIEW OF CALL REPORT SCHEDULE.—Each Federal banking 
agency shall— 
(1) 
review 
the information 
required 
by 
schedules 
supplementing the core information referred to in subsection 
(b); and 
(2) eliminate requirements that are not warranted for rea-
sons of safety and soundness or other public purposes. 
SEC. 308. REPEAL OF PUBLICATION REQUIREMENTS. 
(a) REVISED STATUTES.—Section 5211 of the Revised Statutes 
(12 U.S.C. 161) is amended— 
(1) in the 5th sentence of subsection (a), by striking "; 
and the statement of resources" and all that follows through 
"as may be required by the Comptroller"; and 
(2) in subsection (c), by striking the 4th sentence. 
(b) FDIA.—Section 7(a)(1) of the Federal Deposit Insurance 
Act (12 U.S.C. 1817(a)(1)) is amended by striking the 4th sentence. 
(c) FEDERAL RESERVE ACT.—Section 9 of the Federal Reserve 
Act (12 U.S.C. 324) is amended in the last sentence of the 6th 
undesignated paragraph, by striking "and shall be published" and 
all that follows through the end of the sentence and inserting 
a period. 
12 use 4806. 
SEC. 309. REGULATORY 
APPEALS 
PROCESS, 
OMBUDSMAN, AND 
ALTERNATIVE DISPUTE RESOLUTION. 
(a) IN GENERAL.—Not later than 180 days after the date of 
enactment of this Act, each appropriate Federal banking agency 
and the National Credit Union Administration Board shall establish 
an independent intra-agency appellate process. The process shall 
be available to review material supervisory determinations made 
at insured depository institutions or at insured credit unions that 
the agency supervises. 
(b) REVIEW PROCESS.—In establishing the independent appel-
late process under subsection (a), each agency shall ensure that— 
(1) any appeal of a material supervisory determination 
by an insured depository institution or insured credit union 
is heard and decided expeditiously; and 
(2) appropriate safeguards exist for protecting the appellant 
from retaliation by agency examiners. 
Public notice. 
(c) COMMENT PERIOD.—^Not later than 90 days after the date 
of enactment of this Act, each appropriate Federal banking agency 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2219 
and the National Credit Union Administration Board shall provide 
public notice and opportunity for comment on proposed guidelines 
for the establishment of an appellate process under this section. 
(d) AGENCY OMBUDSMAN.— 
(1) ESTABLISHMENT REQUIRED.—Not later than 180 days 
after the date of enactment of this Act, each Federal banking 
agency and the National Credit Union Administration Board 
shall appoint an ombudsman. 
(2) DUTIES OF OMBUDSMAN.—The ombudsman appointed 
in accordance with paragraph (1) for any agency shall— 
(A) act as a liaison between the agency and any affected 
person with respect to any problem such party may have 
in dealing with the agency resulting from the regulatory 
activities of the agency; and 
(B) assure that safeguards exist to encourage complain-
ants to come forward and preserve confidentiality. 
(e) ALTERNATIVE DISPUTE RESOLUTION PILOT PROGRAM.— 
(1) IN GENERAL.—Not later than 18 months after the date 
of enactment of this Act, each Federal banking agency and 
the National Credit Union Administration Board shall develop 
and implement a pilot program for using alternative means 
of dispute resolution of issues in controversy (hereafter in this 
section referred to as the "alternative dispute resolution pro-
gram") that is consistent with the requirements of subchapter 
IV of chapter 5 of title 5, United States Code, if the parties 
to the dispute, including the agency, agree to such proceeding. 
(2) STANDARDS.—P^ alternative dispute resolution pilot 
program developed under paragraph (1) shall— 
(A) be fair to all interested parties to a dispute; 
(B) resolve disputes expeditiously; and 
(C) be less costly than traditional means of dispute 
resolution, including litigation. 
(3) INDEPENDENT EVALUATION.—Not later than 18 months 
Reports, 
after the date on which a pilot program is implemented under 
paragraph (1), the Administrative Conference of the United 
States shall submit to the Congress a report containing— 
(A) an evaluation of that pilot program; 
(B) the extent to which the pilot programs meet the 
standards established under paragraph (2); 
(C) the extent to which parties to disputes were offered 
alternative means of dispute resolution and the frequency 
with which the parties, including the agencies, accepted 
or declined to use such means; and 
(D) any recommendations of the Conference to improve 
the alternative dispute resolution procedures of the Federal 
banking agencies and the National Credit Union Adminis-
tration Board. 
(4) IMPLEMENTATION OF PROGRAM.—At any time after 
completion of the evaluation under paragraph (3)(A), any Fed-
eral banking agency and the National Credit Union Administra-
tion Board may implement an alternative dispute resolution 
program throughout the agency, taking into account the results 
of that evaluation. 
(5) COORDINATION WITH EXISTING AGENCY ADR PROGRAMS.— 
(A) EVALUATION REQUIRED.—If any Federal banking 
agency or the National Credit Union Administration main-
tains an alternative dispute resolution program as of the 
108 STAT. 2220 
PUBLIC LAW 103-325—SEPT. 23, 1994 
date of enactment of this Act under any other provision 
of law, the Administrative Conference of the United States 
shall include such program in the evaluation conducted 
under paragraph (3)(A). 
(B) MULTIPLE ADR PROGRAMS.—No provision of this 
section shall be construed as precluding any Federal bank-
ing agency or the National Credit Union Administration 
Board from establishing more than 1 alternative means 
of dispute resolution. 
if) DEFINITIONS.—For purposes of this section, the following 
definitions shall apply: 
(1) MATERIAL SUPERVISORY DETERMINATIONS.—The term 
"material supervisory determinations"— 
(A) includes determinations relating to— 
(i) examination ratings; 
(ii) the adequacy of loan loss reserve provisions; 
and 
(iii) loan classifications on loans that are signifi-
cant to an institution; and 
(B) does not include a determination by a Federal 
banking agency or the National Credit Union Administra-
tion Board to appoint a conservator or receiver for an 
insured depository institution or a liquidating agent for 
an insured credit union, as the case may be, or a decision 
to take action pursuant to section 38 of the Federal Deposit 
Insurance Act or section 212 of the Federal Credit Union 
Act, as appropriate. 
(2) 
INDEPENDENT 
APPELLATE 
PROCESS.—The 
term 
"independent appellate process" means a review by an agency 
official who does not directly or indirectly report to the agency 
official who made the material supervisory determination under 
review. 
(3) 
ALTERNATIVE MEANS OF DISPUTE RESOLUTION.—The 
term "alternative means of dispute resolution" has the meaning 
given to such term in section 571 of title 5, United States 
Code. 
(4) ISSUES IN CONTROVERSY.—The term "issues in con-
troversy" means— 
(A) any final agency decision involving any claim 
against an insured depository institution or insured credit 
union for which the agency has been appointed conservator 
or receiver or for which a liquidating agent has been 
appointed, as the case may be; 
(B) Einy final action taken by an agency in the agency's 
capacity as conservator or receiver for an insured depository 
institution or by the liquidating agent appointed for an 
insured credit union; and 
(C) any other issue for which the appropriate Federal 
banking agency or the National Credit Union Administra-
tion Board determines that alternative means of dispute 
resolution would be appropriate. 
(g) EFFECT ON OTHER AUTHORITY.—^Nothing in this section 
shall affect the authority of an appropriate Federal banking agency 
or the National Credit Union Administration Board to take enforce-
ment or supervisory action. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2221 
SEC. 310. ELECTRONIC FILING OF CURRENCY TRANSACTION REPORTS. 
Section 123 of Public Law 91-508 (12 U.S.C. 1953) is amended 
by adding at the end the following new subsection: 
"(c) ACCEPTANCE OF AUTOMATED RECORDS.—The Secretary shall 
permit an uninsured bank or financial institution to retain or 
maintain records referred to in subsection (a) in electronic or auto-
mated form, subject to terms and conditions established by the 
Secretary.". 
SEC. 311. BANK SECRECY ACT PUBLICATION REQUIREMENTS. 
(a) IN GENERAL.—Subchapter II of chapter 53 of title 31, United 
States Code, is amended by adding at the end the following new 
section: 
"SEC. 5329. STAFF COMMENTARIES. 
"The Secretary shall— 
"(1) publish all written rulings interpreting this subchapter; 
and 
"(2) annually issue a st£iff commentary on the regulations 
issued under this subchapter.". 
(b) CONFORMING AMENDMENT.—The table of sections for chapter 
53 of title 31, United States Code, is amended by inserting after 
the item relating to section 5328 the following new item: 
"5329. Staff commentaries.". 
SEC. 312. EXEMPTION OF BUSINESS LOANS FROM REAL ESTATE 
SETTLEMENT PROCEDURES ACT REQUIREMENTS. 
The Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 
2601 et seq.) is amended by inserting after section 6 the following 
new section: 
"SEC. 7. EXEMPTED TRANSACTIONS. 
12 USC 2606. 
"This Act does not apply to credit transactions involving exten-
sions of credit— 
"(1) primarily for business, commercial, or agricultural pur-
poses; or 
"(2) to government or governmental agencies or instrumen-
talities.". 
SEC. 313. FLEXIBILITY IN CHOOSING BOARDS OF DIRECTORS. 
Section 5146 of the Revised Statutes (12 U.S.C. 72) is amended 
in the 1st sentence, by striking "two thirds" and inserting "a major-
ity". 
SEC. 314. HOLDING COMPANY AUDIT REQUIREMENTS. 
(a) IN GENERAL.—Section 36(i) of the Federal Deposit Insurance 
Act (12 U.S.C. 1831m(i)) is amended— 
(1) by redesignating paragraph (1) as subparagraph (A) 
and indenting appropriately; 
(2) by striking "Except with respect" and inserting the 
following: 
"(1) IN GENERAL.—Except with respect"; and 
(3) by striking paragraph (2) and inserting the following: 
"(B) the institution— 
"(i) has total assets, as of the beginning of such 
fiscal year, of less than $5,000,000,000; or 
"(ii) has— 
108 STAT. 2222 
PUBLIC LAW 103-325—SEPT. 23, 1994 
"(I) total assets, as of the beginning of such 
fiscal year, of $5,000,000,000, or more; and 
"(11) a CAMEL composite rating of 1 or 2 
under the Uniform Financial Institutions Rating 
System (or an equivalent rating by any such 
agency under a comparable rating system) as of 
the most recent examination of such institution 
by the Corporation or the appropriate Federal 
banking agency. 
"(2) LARGE INSTITUTIONS.—For purposes of this subsection, 
in the case of an insured depository institution described in 
paragraph (l)(B)(ii) that the Corporation determines to be a 
large institution, the audit committee of the holding company 
of such an institution shall not include any large customers 
of the institution. 
"(3) APPLICABILITY BASED ON RISK TO FUND.—The appro-
priate Federal banking agency may require an institution with 
total assets in excess of $9,000,000,000 to comply with this 
section, notwithstanding the exemption provided by this sub-
section, if it determines that such exemption would create 
a significant risk to the affected deposit insurance fund if 
applied to that institution.". 
(b) WRITTEN NOTICE OF REQUIREMENT FOR AUDIT OF QUAR-
TERLY REPORTS.—Section 36(g)(2) of the Federal Deposit Insurance 
Act (12 U.S.C. 1831m(g)(2)) is amended by adding at the end 
the following new subparagraph: 
"(D) NOTICE TO INSTITUTION.—The Corporation shall 
promptly notify an insured depository institution, in writ-
ing, of a determination pursuant to subparagraph (A) to 
require a review of such institution's quarterly financial 
reports.". 
SEC. 
315. 
STATE 
REGULATION 
OF 
REAL 
ESTATE 
APPRAISALS. 
Section 1122 of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989 (12 U.S.C. 3351) is amended— 
(1) by redesignating subsections (b) through (e) as sub-
sections (c) through (f), respectively; 
(2) by inserting after subsection (a) the following new 
subsection: 
"(b) RECIPROCITY.—^The Appraisal Subcommittee shall encour-
age the States to develop reciprocity agreements that readily author-
ize appraisers who are licensed or certified in one State (and who 
are in good standing with their State appraiser certifying or licens-
ing agency) to perform appraisals in other States."; and 
(3) in subsection (a)— 
(A) by redesignating paragraphs (1) through (3) as 
subparagraphs (A) through (C); 
(B) by striking "A State" and inserting the following: 
"(1) IN GENERAL.—A State"; and 
(C) by adding at the end the following new paragraph: 
"(2) FEES FOR TEMPORARY PRACTICE.—^A State appraiser 
certifying or licensing agency shall not impose excessive fees 
or burdensome requirements, as determined by the Appraisal 
Subcommittee, for temporary practice under this subsection.". 
note. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2223 
SEC. 316. ACCELERATION OF EFFECTIVE DATE FOR INTERAFFILIATE 
TRANSACTIONS. 
(a) HOME OWNERS' LOAN ACT AMENDMENT.—Section 11(a)(2) 
of the Home Owners' Loan Act (12 U.S.C. 1468(a)(2)) is amended 
by adding at the end the following new subparagraph: 
"(C) TRANSITION RULE FOR WELL CAPITALIZED SAVINGS 
ASSOCIATIONS.— 
"(i) IN GENERAL.—^A savings association that is 
well capitalized (as defined in section 38 of the Federal 
Deposit Insurance Act), as determined without includ-
ing goodwill in calculating core capital, shall be treated 
as a bank for purposes of section 23A(d)(l) and section 
23B of the Federal Reserve Act. 
"(ii) LIABILITY OF COMMONLY CONTROLLED DEPOSI-
TORY INSTITUTIONS.—^Any savings association 
that 
engages under clause (i) in a transaction that would 
not otherwise be permissible under this subsection, 
and any affiliated insured bank that is commonly con-
trolled (as defined in section 5(e)(9) of the Federal 
Deposit Insurance Act), shall be subject to subsection 
(e) of section 5 of the Federal Deposit Insurance Act 
as if paragraph (6) of that subsection did not apply.". 
(b) REPEAL PROVISION.—Effective on January 1, 1995, subpara- 
Effective date, 
graph (C) of section 11(a)(2) of the Home Owners' Loan Act (12 ^^ USC 1468 
U.S.C. 1468(a)(2)) (as added by subsection (a) of this section) is 
repealed. 
SEC. 317. COLLATERALIZATION OF PUBLIC DEPOSITS. 
Section 13(e) of the Federal Deposit Insurance Act (12 U.S.C. 
1823(e)) is amended— 
(1) by redesignating paragraphs (1) through (4) as subpara-
graphs (A) through (D), respectively, and indent appropriately; 
(2) by striking "No agreement" and inserting the following: 
"(1) IN GENERAL.—No agreement"; and 
(3) by adding at the end the following new paragraph: 
"(2) PUBLIC DEPOSITS.—^An agreement to provide for the 
lawful collateralization of deposits of a Federal, State, or local 
governmental entity or of any depositor referred to in section 
11(a)(2) shall not be deemed to be invalid pursuant to para-
graph (1)(B) solely because such agreement was not executed 
contemporaneously with the acquisition of the collateral or 
with any changes in the collateral made in accordance with 
such agreement.". 
SEC. 318. MODIFICATION OF REGULATORY PROVISIONS. 
(a) IN GENERAL.—Section 39(b) of the Federal Deposit Insurance 
Act (12 U.S.C. 1831p-l(b), as added by section 132(a) of the Federal 
Deposit Insurance Corporation Improvement Act of 1991) is 
amended to read as follows: 
"(b) ASSET QUALITY, EARNINGS, AND STOCK VALUATION STAND-
ARDS.—Each appropriate Federal banking agency shall prescribe 
standards, by regulation or guideline, for all insured depository 
institutions relating to asset quality, earnings, and stock valuation 
that the agency determines to be appropriate.". 
(b) ESTABLISHING STANDARDS.—Section 39(d) of the Federal 
Deposit Insurance Act (12 U.S.C. 183Ip-1(d), as added by section 
108 STAT. 2224 
PUBLIC LAW 103-325—SEPT. 23, 1994 
132(a) of the Federal Deposit InsurEince Corporation Improvement 
Act of 1991) is amended— 
(1) in the subsection heading, by striking "BY REGULATION"; 
and 
(2) in paragraph (1)— 
(A) in the 1st sentence, by inserting "or guideline" 
before the period; and 
(B) in the 2d sentence, by inserting "or guidelines" 
after "Such regulations". 
(c) HOLDING COMPANIES EXCLUDED FROM SCOPE OF STAND-
ARDS.—Section 39 of the Federsd Deposit Insurance Act (12 U.S.C. 
1831p-l, as added by section 132(a) of the Federal Deposit Insur-
ance Corporation Improvement Act of 1991) is amended— 
(1) in subsections (a), by striking "and depository institution 
holding companies"; and 
(2) in subsection (e)— 
(A) by striking "or company" each place such term 
appears; 
(B) in paragraphs (1)(A) and (2), by striking "or deposi-
tory institution holding company"; 
(C) in paragraph (1)(A)— 
(i) by striking "or (b) the agency shall require" 
-
^ 
and inserting the following: "or (b>— 
' 
"(i) if such standard is prescribed by regulation 
of the agency, the agency shall require"; and 
(ii) by striking the period at the end and inserting 
the following:"; and 
"(ii) if such standard is prescribed by guideline, 
the agency may require the institution to submit a 
plan described in clause (i)."; and 
(D) in paragraph (l)(C)(i), by striking "and companies". 
12 use I83ip-i 
(d) EFFECTIVE DATE.—The amendments made by this section 
^°^- 
shall be construed to have the same effective date as section 39 
of the Federal Deposit Insurance Act, as provided in section 132(c) 
of the Federal Deposit Insurance Corporation Improvement Act 
of 1991. 
SEC. 319. EXPEDITED PROCEDURES. 
(a) AMENDMENTS TO THE BANK HOLDING COMPANY ACT.—The 
2d sentence of section 3(a) of the Bank Holding Company Act 
of 1956 (12 U.S.C. 1842(a)) is amended— 
(1) by striking "or (B)" and inserting "(B)"; and 
(2) by inserting before the period the following: "; or (C) 
the acquisition, by a company, of control of a bank in a reorga-
nization in which a person or group of persons exchanges 
their shares of the bank for shares of a newly formed bank 
holding company and receives after the reorganization substan-
tially the same proportional share interest in the holding 
company as they held in the bank except for changes in share-
holders' interests resulting from the exercise of dissenting 
shareholders' rights under State or Federal law if— 
"(i) immediately following the acquisition— 
"(I) the bank holding company meets the cap-
ital and other financial standards prescribed by 
the Board by regulation for such a bank holding 
company; and 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2225 
"(II) the bank is adequately capitalized (as 
- 
defined in section 38 of the Federal Deposit Insur-
ance Act); 
"(ii) the holding company does not engage in any 
activities other than those of managing and controlling 
banks as a result of the reorganization; 
"(iii) the company provides 30 days prior notice 
to the Board and the Board does not object to such 
transaction during such 30-day period; and 
"(iv) the holding company will not acquire control 
of any additional bank as a result of the reorganiza-
tion.". 
(b) AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.— 
Section 5(d)(3) of the Federal Deposit Insurance Act (12 U.S.C. 
1815(d)(3)) is amended— 
(1) by striking subparagraph (A) and inserting the follow-
ing: 
"(A) CONVERSIONS ALLOWED.—Notwithstanding para-
graph (2)(A), and subject to the requirements of this para-
graph, any insured depository institution may participate 
in a transaction described in clause (ii), (iii), or (iv) of 
paragraph (2)(B) with the prior written approval of the 
responsible agency under section 18(c)(2)."; 
(2) in subparagraph (E)— 
(A) in clause (i), by striking "(and, in the event the 
acquiring, assuming, or resulting depository institution is 
a Bank Insurance Fund member which is a subsidiary 
of a bank holding company, the Board)"; 
(B) in clause (ii), by striking "or Board"; and 
(C) in clause (iv)— 
(i) by striking ", and the appropriate Federal bank-
ing agency for any depository institution holding 
company,"; 
(ii) by striking "each"; and 
(iii) by striking ", and any depository institution 
holding company which controls such institution,"; 
(3) in subparagraph (F)— 
(A) by striking "The Board" and all that follows through 
"a Bank" and inserting "A Bank"; and 
(B) by striking "unless the Board determines that" 
and inserting "may not be the acquiring, assuming, or 
resulting depository institution in a transaction under 
subparagraph (A) unless"; and 
(4) by striking subparagraph (K). 
SEC. 320. EXEMPTION OF CERTAIN HOLDING COMPANY FORMATIONS 
FROM REGISTRATION UNDER THE SECURITIES ACT OF 
1933. 
Section 3(a) of the Securities Act of 1933 (15 U.S.C. 77c(a)) 
is amended by adding at the end the following new paragraph: 
"(12) Any equity security issued in connection with the 
acquisition by a holding company of a bank under section 
3(a) of the Bank Holding Company Act of 1956 or a savings 
association under section 10(e) of the Home Owners' Loan Act, 
if— 
"(A) the acquisition occurs solely as part of a reorga-
nization in which security holders exchange their shares 
108 STAT. 2226 
PUBLIC LAW 103-325—SEPT. 23, 1994 
of a bank or savings association for shares of a newly 
formed holding company with no significant assets other 
than securities of the bank or savings association and 
the existing subsidiaries of the bank or savings association; 
"(B) the security holders receive, after that reorganiza-
tion, substantially the same proportional share interests 
in the holding company as they held in the bank or savings 
association, except for nominal chsinges in shareholders' 
interests resulting from lawful elimination of fractional 
interests and the exercise of dissenting shareholders' rights 
under State or Federal law; 
"(C) the rights and interests of security holders in 
the holding company are substantially the same as those 
in the bank or savings association prior to the transaction, 
other than as may be required by law; and 
"(D) the holding company nas substantially the same 
assets and liabilities, on a consolidated basis, as the bank 
or savings association had prior to the transaction. 
For purposes of this paragraph, the term 'savings association' 
means a savings association (as defined in section 3(b) of the 
Federal Deposit Insurance Act) the deposits of which are 
insured by the Federal Deposit Insurance Corporation.". 
SEC. 321. REDUCTION OF POST-APPROVAL WAITING PERIODS FOR 
CERTAIN ACQUISITIONS AND MERGERS. 
(a) ACQUISITIONS.—Section 11(b)(1) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1849(b)(1)) is amended by inserting 
before the period at the end of the 4th sentence the following: 
"or, if the Board has not received any adverse comment from the 
Attorney General of the United States relating to competitive fac-
tors, such shorter period of time as may be prescribed by the 
Board with the concurrence of the Attorney General, but in no 
event less than 15 calendar days after the date of approval". 
(b) MERGERS.—Section 18(c)(6) of the Federal Deposit Insurance 
Act (12 U.S.C. 1828(c)(6)) is amended by inserting before the period 
at the end of the last sentence the following: "or, if the agency 
has not received any adverse comment from the Attorney General 
of the United States relating to competitive factors, such shorter 
period of time as may be prescribed by the agency with the concur-
rence of the Attorney General, but in no event less than 15 calendar 
days after the date of approval". 
SEC. 322. BANKERS' BANKS. 
(a) OWNERSHIP BY BANKERS' BANKS.— 
(1) SECTION 5X36.—Paragraph Seventh of section 5136 of 
the Revised Statutes (12 U.S.C. 24) is amended in the 5th 
proviso— 
(A) by inserting "or depository institution holding 
companies (as defined in section 3 of the Federal Deposit 
Insurance Act)" after "(except to the extent directors' 
qualifying shares are required by law) by depository institu-
tions"; and 
(B) by striking "services for other depository institu-
tions and their officers, directors and employees" and 
inserting the following: "services to or for other depository 
institutions, their holding companies, and the officers, 
directors, and employees of such institutions and compa-
nies, and in providing correspondent banking services at 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2227 
the request of other depository institutions or their holding 
companies (also referred to as a 'banker's bank')". 
(2) SECTION 5169.—Section 5169(b)(1) of the Revised Stat-
utes (12 U.S.C. 27(b)(1)) is amended— 
(A) by inserting "or depository institution holding 
companies" after "(except to the extent directors' qualifying 
shares are required by law) by other depository institu-
tions"; and 
(B) by striking "services for other depository institu-
tions ana their officers, directors and employees" and 
inserting the following: "services to or for other depository 
institutions, their holding companies, and the officers, 
directors, and employees of such institutions and compa-
nies, and in providing correspondent banking services at 
the request of other depository institutions or their holding 
companies (also referred to as a 'banker's bank')". 
(b) OWNERSHIP BY SAVINGS ASSOCIATIONS.—Section 5(c)(4) of 
the Home Owners' Loan Act (12 U.S.C. 1464(c)(4)) is amended 
by adding at the end the following new subparagraph: 
"(E) BANKERS' BANKS.—^A Federal savings association 
may purchase for its own account shares of stock of a 
bankers' bank, described in Paragraph Seventh of section 
5136 of the Revised Statutes or in section 5169(b) of the 
Revised Statutes, on the same terms and conditions as 
a national bank may purchase such shares.". 
(c) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) BANK HOLDING COMPANY ACT.—Section 3(e) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1842(e)) is amended 
by striking the 2d sentence. 
(2) MANAGEMENT INTERLOCKS ACT.—Section 202(3)(D) of 
the Depository Institution Management Interlocks Act (12 
U.S.C, 3201(3)(D)) is amended by striking "the voting securi-
ties" the first place such term appears and all that follows 
through the end of the subparagraph and inserting "and is 
a bankers' bank, described in Paragraph Seventh of section 
5136 of the Revised Statutes; or". 
(d) LENDING LIMIT FOR LOANS SECURED BY SECURITIES.—Sec-
tion ll(m) of the Federal Reserve Act (12 U.S.C. 248(m)) is amended 
by striking "10 percentum" each place such term appears and 
inserting "15 percent". 
SEC. 323. BANK SERVICE CORPORATION ACT AMENDMENT. 
Section 5 of the Bank Service Corporation Act (12 U.S.C. 1865) 
is amended— 
(1) in subsection (a), by striking "the prior approval of 
and inserting "prior notice, as determined by"; and 
(2) in subsection (c), by inserting "or whether to approve 
or disapprove any notice" after "approval". 
SEC. 
3
2
4
. 
MERGER 
TRANSACTION 
REPORTS. 
Section 18(c)(4) of the Federal Deposit Insurance Act (12 U.S.C. 
1828(c)(4)) is amended by adding at the end the following: "Notwith-
standing the preceding sentence, a banking agency shall not be 
required to file a report requested by the responsible agency under 
this paragraph if such banking agency advises the responsible 
agency by the applicable date under the preceding sentence that 
the report is not necessary because none of the effects described 
in paragraph (5) are likely to occur as a result of the transaction.". 
108 STAT. 2228 
PUBLIC LAW 103-325—SEPT. 23, 1994 
SEC. 325. CREDIT CARD ACCOUNTS RECEIVABLE SALES. 
Section 11(e) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(e)) is amended by adding at the end the following new 
paragraphs: 
"(14) SELLING CREDIT CARD ACCOUNTS RECEIVABLE.— 
"(A) NOTIFICATION REQUIRED.—An undercapitalized 
insured depository institution (as defined in section 38) 
shall notify the Corporation in writing before entering into 
an agreement to sell credit card accounts receivable. 
"(B) WAIVER BY CORPORATION.—The Corporation may 
at any time, in its sole discretion and upon such terms 
as it may prescribe, waive its right to repudiate an agree-
ment to sell credit card accounts receivable if the Corpora-
tion— 
"(i) determines that the waiver is in the best 
interests of the deposit insurance fund; and 
"(ii) provides a written waiver to the selling 
institution. 
"(C) EFFECT OF WAIVER ON SUCCESSORS.— 
"(i) IN GENERAL.—If, under subparagraph (B), the 
Corporation has waived its right to repudiate an agree-
ment to sell credit card accounts receivable— 
"(I) any provision of the agreement that 
restricts solicitation of a credit card customer of 
the selling institution, or the use of a credit card 
customer list of the institution, shall bind any 
receiver or conservator of the institution; and 
"(II) the Corporation shall require any acquirer 
of the selling institution, or of substantially all 
of the selling institution's assets or liabilities, to 
agree to be bound by a provision described in 
subclause (I) as if the acquirer were the selling 
institution, 
"(ii) EXCEPTION.—Clause (i)(II) does not— 
"(I) restrict the acquirer's authority to offer 
any product or service to any person identified 
without using a list of the selling institution's cus-
tomers in violation of the agreement; 
"(II) require the acquirer to restrict any 
preexisting relationship between the acquirer and 
a customer; or 
"(III) apply to any transaction in which the 
acquirer acquires only insured deposits. 
"(D) WAIVER NOT ACTIONABLE.—The Corporation shall 
not, in any capacity, be liable to any person for damages 
resulting from the waiver of or failure to waive the Corpora-
tion's right under this section to repudiate any contract 
or lease, including an agreement to sell credit card accounts 
receivable. No court shall issue any order affecting any 
such waiver or failure to waive. 
"(E) OTHER AUTHORITY NOT AFFECTED.—This para-
graph does not limit any other authority of the Corporation 
to waive the Corporation's right to repudiate an agreement 
or lease under this section. 
"(15) CERTAIN CREDIT CARD CUSTOMER LISTS PROTECTED.— 
"(A) IN GENERAL.—If any insured depository institution 
sells credit card accounts receivable under an agreement 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2229 
negotiated at arm's length that provides for the sale of 
the institution's credit card customer list, the Corporation 
shall prohibit any party to a transaction with respect to 
the institution under this section or section 13 from using 
the list, except as permitted under the agreement. 
"(B) FRAUDULENT TRANSACTIONS EXCLUDED.—Subpara-
graph (A) does not limit the Corporation's authority to 
repudiate any agreement entered into with the intent to 
hinder, delay, or defraud the institution, the institution's 
creditors, or the Corporation.". 
SEC. 326. LIMITING POTENTIAL LIABILITY ON FOREIGN ACCOUNTS. 
12 USC 633. 
(a) AMENDMENT TO THE FEDERAL RESERVE ACT.—^The Federal 
Reserve Act (12 U.S.C. 221 et seq.) is amended by inserting after 
section 25B the following new section: 
"SEC. 25C. POTENTIAL LIABILITY ON FOREIGN ACCOUNTS. 
"(a) EXCEPTIONS FROM REPAYMENT REQUIREMENT.—^A member 
bank shall not be required to repay any deposit made at a foreign 
branch of the bank if the branch cannot repay the deposit due 
to— 
"(1) an act of war, insurrection, or civil strife; or 
"(2) an action by a foreign government or instrumentality 
(whether de jure or de facto) in the country in which the 
branch is located; 
unless the member bank has expressly agreed in writing to repay 
the deposit under those circumstances. 
"(b) REGULATIONS.—The Board and the Comptroller of the Cur-
rency may jointly prescribe such regulations as they deem necessary 
to implement this section.". 
(b) 
CONFORMING AMENDMENTS TO THE FEDERAL 
DEPOSIT 
INSURANCE ACT.— 
(1) IN GENERAL.—Section 18 of the Federal Deposit Insur-
ance Act (12 U.S.C. 1828) is amended by inserting after sub-
section (p) the following new subsection: 
"(q) SOVEREIGN RISK.-—Section 25C of the Federal Reserve Act 
shall apply to every nonmember insured bank in the same manner 
and to the same extent as if the nonmember insured bank were 
a member bank.". 
(2) CONFORMING AMENDMENT.—Subparagraph (A) of section 
3(1)(5) of the Federal Deposit Insurance Act (12 U.S.C. 
1813(1)(5)) is amended to read as follows: 
"(A) any obligation of a depository institution which 
is carried on the books and records of an office of such 
bank or savings association located outside of any State, 
unless— 
"(i) such obligation would be a deposit if it were 
carried on the books and records of the depository 
institution, and would be payable at, an office located 
in any State; and 
"(ii) the contract evidencing the obligation provides 
by express terms, and not by implication, for payment 
at an office of the depository institution located in 
any State; and". 
(c) EXISTING CLAIMS NOT AFFECTED.—Section 25C of the Fed- 
12 use 633 note, 
eral Reserve Act (as added by subsection (a)) shall not be applied 
retroactively and shall not be construed to affect or apply to any 
claim or cause of action addressed by that section arising from 
108 STAT. 2230 
PUBLIC LAW 103-325—SEPT. 23, 1994 
events or circumstances that occurred before the date of enactment 
of this Act. 
SEC. 327. GAO REPORTS. 
Section 102(b)(1) of the Federal Deposit Insurance Corporation 
Improvement Act of 1991 (12 U.S.C. 1825 note) is amended to 
read as follows: 
"(1) QUARTERLY REPORTING.—Not later than 90 days after 
the end of any calendar quarter in which the Federal Deposit 
Insurance Corporation (hereafter in this section referred to 
as the 'Corporation') has any obligations pursuant to section 
14 of the Federal Deposit Insurance Act outstanding, the 
Comptroller General of the United States shall submit a report 
on the Corporation's compliance at the end of that quarter 
with section 15(c) of the Federal Deposit Insurance Act to 
the Committee on Banking, Housing, and Urban Affairs of 
the Senate and the Committee on Banking, Finance and Urban 
Affairs of the House of Representatives. Such report shall be 
included in the Comptroller General's audit report for that 
year, as required by section 17 of the Federal Deposit Insurance 
Act.". 
12 u s e 4801 
SEC. 328. STUDY AND REPORT ON CAPITAL STANDARDS AND THEIR 
note. 
IMPACT ON THE ECONOMY. 
(a) IN GENERAL.—^The Secretary of the Treasury, in consultation 
with the Federal banking agencies, shall conduct a study of the 
effect that the implementation of risk-based capital standards for 
depository institutions, including the Basle international capital 
standards, is having on— 
(1) the safety and soundness of insured depository institu-
tions; 
(2) the availability of credit, particularly to individuals 
and small businesses; and 
(3) economic growth. 
(b) REPORT.— 
(1) IN GENERAL.—Before the end of the 1-year period begin-
ning on the date of enactment of this Act, the Secretary of 
the Treasury shall submit a report to the Congress on the 
findings and conclusions of the Secretary with respect to the 
study conducted under subsection (a). 
(2) RECOMMENDATIONS.—^The report shall contain any rec-
ommendations with respect to capital standards that the Sec-
retary of the Treasury may determine to be appropriate. 
Reports. 
SEC. 329. STUDY ON THE IMPACT OF THE PAYMENT OF INTEREST 
12 u s e 4801 
ON RESERVES. 
(a) FEDERAL RESERVE STUDY.—Not later than 180 days after 
the date of enactment of this Act, the Board of Governors of the 
Federal Reserve System, in consultation with the Federal Deposit 
Insurance Corporation and the National Credit Union Administra-
tion Board, shall conduct a study and report to the Congress on— 
(1) the necessity, for monetary policy purposes, of continu-
ing to require insured depository institutions to maintain sterile 
reserves; 
(2) the appropriateness of paying a market rate of interest 
to insured depository institutions on sterile reserves or, in 
the alternative, providing for payment of such interest into 
the appropriate deposit insurance fund; 
note. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2231 
(3) the monetary impact that the failure to pay interest 
on sterile reserves has had on insured depository institutions, 
including an estimate of the total dollar amount of interest 
and the potential income lost by insured depository institutions; 
and 
(4) the impact that the failure to pay interest on sterile 
reserves has had on the ability of the banking industry to 
compete with nonbanking providers of financial services and 
with foreign banks. 
(b) BUDGETARY IMPACT STUDY.—Not later than 180 days after 
the date of enactment of this Act, the Director of the Office of 
Management and Budget and the Director of the Congressional 
Budget Office, in consultation with the Committees on the Budget 
of the Senate and the House of Representatives, shall jointly conduct 
a study and report to the Congress on the budgetary impact of— 
(1) paying a market rate of interest to insured depository 
institutions on sterile reserves; and 
(2) paying such interest into the respective deposit insur-
ance funds. 
SEC. 330. STUDY AND REPORT ON THE CONSUMER CREDIT SYSTEM. 
12 USC 4801 
(a) STUDY.—The Secretary of the Treasury, in consultation 
with the Board of Governors of the Federal Reserve System, the 
Administrator of the Small Business Administration, the Secretary 
of Housing and Urban Development, and the other Federal banking 
agencies, shall conduct a study of the process, including any Federal 
laws, by which credit is made available for consumers and small 
businesses in order to identify procedures, including any Federal 
laws, which have the effect o
f
— 
(1) reducing the amount of credit available for such pur-
poses or the number of persons eligible for such credit; 
(2) increasing the level of consumer inconvenience, cost, 
and time delays in connection with the extension of consumer 
and small business credit without corresponding benefit with 
respect to the protection of consumers or small businesses 
or the safety and soundness of insured depository institutions; 
and 
(3) increasing costs and burdens on insured depository 
institutions, insured credit unions, and other lenders without 
corresponding benefit with respect to the protection of consum-
ers or small business concerns or to the safety and soundness 
of insured institutions. 
(b) REPORT.— 
(1) IN GENERAL.—^Not later than 1 year after the date 
of enactment of this Act, the Secretary of the Treasury shall 
submit a report to the Congress on the findings and conclusions 
of the Secretary with respect to the study conducted under 
subsection (a). 
(2) RECOMMENDATIONS.—The report required by paragraph 
(1) shall contain any recommendations for administrative action 
or statutory changes that the Secretary of the Treasury may 
determine to be appropriate. 
(c) PUBLIC PARTICIPATION.—In conducting the study required 
by subsection (a), comments shall be solicited from consumers, 
representatives of consumers, insured depository institutions, 
insured credit unions, other lenders, and other interested parties. 
108 STAT. 2232 
PUBLIC LAW 103-325—SEPT. 23, 1994 
SEC. 331. CLARIFICATION OF PROVISIONS RELATING TO ADMINISTRA-
TIVE AUTONOMY. 
(a) PUBLIC LAW 93-495.—Section 111 of Public Law 93-495 
(12 U.S.C. 250) is amended by inserting "the Comptroller of the 
Currency," after "Federal Deposit Insurance Corporation,". 
(b) REVISED STATUTES.— 
(1) SECTION 5240.—The third paragraph of section 5240 
of the Revised Statutes (12 U.S.C. 482) is amended by inserting 
"or section 301(0(1) of title 31, United States Code," after 
"provisions of this section". 
(2) SECTION 324.—Section 324 of the Revised Statutes (12 
U.S.C. 1) is amended by adding at the end the following: 
"The Comptroller of the Currency shall have the same authority 
over matters within the jurisdiction of the Comptroller as the 
Director of the Office of Thrift Supervision has over matters 
within the Director's jurisdiction under section 3(b)(3) of the 
Home Owners' Loan Act. The Secretary of the Treasury may 
not delay or prevent the issuance of any rule or the promulga-
tion of any regulation by the Comptroller of the Currency.". 
(3) SECTION 5239.—Section 5239 of the Revised Statutes 
(12 U.S.C. 93) is amended by adding at the end the following 
new subsection: 
"(d) AUTHORITY.—^The Comptroller of the Currency may act 
in the Comptroller's own name and through the Comptroller's own 
attorneys in enforcing any provision of this title, regulations there-
under, or any other law or regulation, or in any action, suit, or 
proceeding to which the Comptroller of the Currency is a party.". 
(c) AMENDMENTS TO THE HOME OWNERS' LOAN ACT.—Section 
3(b) of the Home Owners' Loan Act (12 U.S.C. 1462a(b)) is 
amended— 
(1) in paragraph (3), by striking "unless otherwise provided 
by law" and inserting "(including agency enforcement actions) 
unless otherwise specifically provided by law"; and 
(2) by adding at the end the following new paragraph: 
"(4) BANKING AGENCY RULEMAKING.—The Secretary of the 
Treasury may not delay or prevent the issuance of any rule 
or the promulgation of any regulation by the Director.". 
(d) AMENDMENT TO THE FEDERAL RESERVE ACT.—Section 11 
of the Federal Reserve Act (12 U.S.C. 248) is amended by adding 
at the end the following new subsection: 
"(p) AUTHORITY.—^The Board may act in its own name and 
through its own attorneys in enforcing any provision of this title, 
regulations promulgated hereunder, or any other law or regulation, 
or in any action, suit, or proceeding to which the Board is a 
party and which involves the Board's regulation or supervision 
of any bank, bank holding company (as defined in section 2 of 
the Bank Holding Company Act of 1956), or other entity, or the 
administration of its operations.". 
(e) AMENDMENT TO THE FEDERAL DEPOSIT INSURANCE ACT.— 
Section 9(a) of the Federal Deposit Insurance Act (12 U.S.C. 1819(a)) 
is amended in paragraph Fourth, by inserting "by and through 
its own attorneys," after "complain and defend,". 
SEC. 332. EXEMPTION FOR BUSINESS ACCOUNTS. 
Section 274(1) of the Truth in Savings Act (12 U.S.C. 4313(1)) 
is amended to read as follows: 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2233 
"(1) ACCOUNT.—The term 'account' means any account 
intended for use by and generally used by consumers primarily 
for personal, family, or household purposes that is offered by 
a depository institution into which a consumer deposits funds, 
including demand accounts, time accounts, negotiable order 
of withdrawal accounts, and share draft accounts.". 
SEC. 333. STUDY ON CHECK-RELATED FRAUD. 
12 USC 4801 
(a) STUDY.—The Board of Governors of the Federal Reserve 
System (hereafter in this section referred to as the "Board") shall 
conduct a study on the advisability of extending the 1-business-
day period specified in section 603(b)(1) of the Expedited Funds 
Availability Act, regarding availability of funds deposited by local 
checks, to 2 business days. 
(b) CONSIDERATIONS.—In conducting the study under subsection 
(a), the Board shall consider— 
(1) whether there is a pattern of significant increases in 
check-related losses at depository institutions attributable to 
the provisions of the Expedited Funds Availability Act; and 
(2) whether extension of the time period referred to in 
subsection (a) is necessary to diminish the volume of any such 
check-related losses. 
(c) REPORT TO THE CONGRESS.—Not later than 2 years after 
the date of enactment of this Act, the Board shall submit a report 
to the Congress concerning the results of the study conducted 
under this section and including any recommendations for legisla-
tive action. 
SEC. 334. CVSIDER LENDING. 
(a) LOANS TO EXECUTIVE OFFICERS BY MEMBER BANKS.—Section 
22(g)(2) of the Federal Reserve Act (12 U.S.C. 375a(2)) is amended 
by striking "With the specific prior approval of its board of directors, 
a member" and inserting "A member". 
(b) EXTENSIONS OF CREDIT TO EXECUTIVE OFFICERS, DIRECTORS, 
AND 
PRINCIPAL 
SHAREHOLDERS OF MEMBER 
BANKS.—Section 
22(h)(8) of the Federal Reserve Act (12 U.S.C. 375b(8)) is amended— 
(1) by striking "MEMBER BANK.—FOR" and inserting the 
following: "MEMBER BANK.— 
"(A) IN GENERAL.—For"; and 
(2) by adding at the end the following: 
"(B) EXCEI^ION.—The Board may, by regulation, make 
exceptions to subparagraph (A), except as that subpara-
graph makes applicable paragraph (2), for an executive 
officer or director of a subsidiary of a company that controls 
the member bank, if that executive officer or director does 
not have authority to participate, and does not participate, 
in major policymaking functions of the member bank.". 
SEC. 335. REVISIONS OF STANDARDS. 
Section 305(b)(1) of the Federal Deposit Insurance Corporation 
Improvement Act of 1991 (12 U.S.C. 1828 note) is amended— 
(1) in subparagraph (A), by striking "and" at the end; 
(2) in subparagraph (B), by striking the period at the 
end and inserting "; and"; and 
(3) by adding at the end the following new subparagraph: 
"(C) take into account the size and activities of the 
institutions and do not cause undue reporting burdens.". 
108 STAT. 2234 
PUBLIC LAW 103-325—SEPT. 23, 1994 
SEC. 336. ALTERNATIVE RULES FOR RADIO ADVERTISING. 
(a) AMENDMENT TO THE TRUTH IN LENDING ACT.—Section 184 
of the Truth in Lending Act (15 U.S.C. 1667c) is amended— 
(1) by redesignating subsection (b) as subsection (c); and 
(2) by inserting after subsection (a) the following new 
subsection: 
"(b) RADIO ADVERTISEMENTS.— 
"(1) IN GENERAL.—^An advertisement by radio broadcast 
to aid, promote, or assist, directly or indirectly, any consumer 
lease shall be deemed to be in compliance with the requirements 
of subsection (a) if such advertisement clearly and conspicu-
ously— 
"(A) states the information required by paragraphs 
(1) and (2) of subsection (a); 
"(B) states the number, amounts, due dates or periods 
of scheduled payments, and the total of such payments 
under the lease; 
"(C) includes— 
"(i) a referral to— 
"(I) a toll-free telephone number established 
in accordance with paragraph (2) that may be used 
by consumers to obtain the information required 
under subsection (a); or 
"(II) a written advertisement that— 
"(aa) appears in a publication in general 
circulation in the community served by the 
radio station on which such advertisement is 
broadcast during the period beginning 3 days 
before any such broadcast and ending 10 days 
after such broadcast; and 
"(bb) includes the information required to 
be disclosed under subsection (a); and 
"(ii) the name and dates of any publication referred 
to in clause (i)(II); and 
"(D) includes any other information which the Board 
determines necessary to carry out this chapter. 
"(2) ESTABLISHMENT OF TOLL-FREE NUMBER.— 
"(A) IN GENERAL.—In the case of a radio broadcast 
advertisement described in paragraph (1) that includes a 
referral to a toll-free telephone number, the lessor who 
offers the consumer lease shall— 
"(i) establish such a toll-free telephone number 
not later than the date on which the advertisement 
including the referral is broadcast; 
"(ii) maintain such telephone number for a period 
of not less than 10 days, beginning on the date of 
any such broadcast; and 
"(iii) provide the information required under sub-
section (a) with respect to the lease to any person 
who calls such number. 
"(B) FORM OF INFORMATION.—^The information required 
to be provided under subparagraph (A)(iii) shall be provided 
verbally or, if requested by the consumer, in written form. 
"(3) No EFFECT ON OTHER LAW.—Nothing in this subsection 
shall affect the requirements of Federal law as such require-
ments apply to advertisement by any medium other than radio 
broadcast.". 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2235 
note. 
(b) STUDY OF ADVERTISING RULES.—Not later than 365 days 
^®P°^^.,C«„ 
after the date of enactment of this Act, the Board of Governors H^^ ^^^^'^ 
of the Federal Reserve System shall submit a report to the Congress 
on— 
(1) the current rules applicable to credit advertising; 
(2) how such rules could be modified to increase consumer 
benefit and decrease creditor costs; and 
(3) how such rules could be modified, if at all, for radio 
advertisements without diminishing consumer protection. 
SEC. 337. DEPOSIT BROKER REGISTRATION. 
Section 29(g)(3) of the Federal Deposit Insurance Act (12 U.S.C. 
1831flg)(3)) is amended— 
(1) by inserting "that is not well capitalized (as defined 
in section 38)" after "includes any insured depository institu-
tion"; 
(2) by striking "of any insured depository" and inserting 
"of such"; 
(3) by striking "(with respect to such deposits)"; and 
(4) by striking "having the same type of charter". 
SEC. 338. AMENDMENTS TO THE DEPOSITORY INSTITUTION MANAGE-
MENT INTERLOCKS ACT. 
(a) MANAGEMENT EXEMPTION.—Section 206 of the Depository 
Institution 
Management Interlocks Act (12 U.S.C. 3205) is 
amended— 
(1) in subsections (a) and (b), by striking "15 years after 
the date of enactment of this title" each place it appears and 
inserting ", subject to the requirements of subsection (c), 20 
years after the date of enactment of this title"; and 
(2) by adding at the end the following new subsection: 
"(c) REVIEW OF EXISTING MANAGEMENT INTERLOCKS.—Upon the 
timely filing of a submission by a person petitioning to serve as 
a management official in more than 1 position pursuant to sub-
section (a) or (b), each appropriate Federal depository institutions 
regulatory agency shall, not later than 6 months after the date 
of enactment of this Act— 
"(1) review, on a case-by-case basis, the circumstances 
under which such person has served as a management official 
under the provisions of subsection (a) or (b); and 
"(2) permit the management official to continue to serve 
in such position only if— 
"(A) such person has provided a resolution from the 
boards of directors of each affected depository institution, 
depository holding company, or company described in sub-
section (b), certifying to the appropriate Federal depository 
institutions regulatory agency for each of the institutions 
involved that there is no other qualified candidate from 
the community described in paragraph (1) or (2) of section 
203 who— 
"(i) possesses the level of expertise necessary for 
such service with respect to the affected depository 
institution, depository holding company, or company 
described in subsection (b); and 
"(ii) is willing to serve as a management official 
at the affected depository institution, depository hold-
ing company, or company described in subsection (b); 
ami 
108 STAT. 2236 
PUBLIC LAW 103-325—SEPT. 23, 1994 
"(B) the appropriate Federal depository institutions 
regulatory agency determines that continuation of service 
by the management official does not produce an anti-
competitive effect with respect to each affected depository 
institution, depository holding company, or 
company 
described in subsection (b).". 
(b) AMENDMENTS TO SECTION 209.—Section 209 of the Deposi-
tory Institution Management Interlocks Act (12 U.S.C. 3207) is 
amended— 
(1) by striking "Rules" and inserting "(a) IN GENERAL.— 
Rules"; 
(2) by striking ", including rules or regulations which per-
mit service by a management official which would otherwise 
be prohibited by section 203 or section 204,"; and 
(3) by adding at the end the following new subsections: 
"(b) REGULATORY STANDARDS.—An appropriate Federal deposi-
tory institution regulatory agency may permit, on a case-by-case 
basis, service by a management official which would otherwise 
be prohibited by section 203 or 204 only if— 
"(1) the board of directors of the affected depository institu-
tion, depository institution holding company, or company 
described in section 206(b), provides a resolution to the appro-
priate Federal depository institutions regulatory agency certify-
ing that there is no other candidate from the community 
described in paragraph (1) or (2) of section 203 who— 
"(A) possesses the level of expertise necessary for such 
service with respect to the affected depository institution, 
depository 
institution 
holding 
company, 
or 
company 
described in section 206(b) and is not prohibited from serv-
ice under section 203 or 204; and 
"(B) is willing to serve as a management official at 
the affected depository institution, depository institution 
holding company, or company described in section 206(b); 
and 
"(2) the appropriate Federal depository institutions regu-
latory agency determines that— 
"(A) the management official is critical to the safe 
and sound operations of the affected depository institution, 
depository 
institution 
holding company, 
or 
company 
described in section 206(b); 
"(B) continuation of service by the management official 
does not produce an anticompetitive effect with respect 
to the affected depository institution, depository institution 
holding company, or company described in section 206(b); 
and 
"(C) the management official meets such additional 
requirements as the agency may impose. 
"(c) LIMITED EXCEPTION FOR MANAGEMENT OFFICIAL CONSIGN-
MENT PROGRAM.— 
"(1) IN GENERAL.—Notwithstanding the requirements of 
subsection (b), an appropriate Federal depository institutions 
regulatory agency may establish a program to permit, on a 
case-by-case basis, service by a management official which 
would otherwise be prohibited by section 203 or 204, for a 
period of not more than 2 years, if the agency determines 
that such service would— 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2237 
"(A) improve the provision of credit to low- and mod-
erate-income areas; 
"(B) increase the competitive position of minority- and ' 
woman-owned institutions; or 
"(C) strengthen the management of newly chartered . 
institutions that are in an unsafe or unsound condition. 
"(2) EXTENSION OF SERVICE PERIOD.—The appropriate Fed-
eral depository institutions regulatory agency may extend the 
2-year period referred to in paragraph (1) for one additional 
period of not more than 2 years, subject to making a new < 
determination described in subparagraphs (A) through (C) of 
paragraph (1).". 
SEC. 339, ADVERSE INFORMATION ABOUT CONSUMERS. 
""""^^Section 609(a) of the Fair Credit Reporting Act (15 U.S.C. 
1681g(a)) is amended by adding at the end the following new 
paragraph: 
"(4) The dates, original payees, and amounts of any checks 
upon which is based any adverse characterization of the ' 
consumer, included in the file at the time of the disclosure.". 
SEC. 340. SIMPLIFIED DISCLOSURE FOR EXISTING DEPOSITORS. 
(a) IN GENERAL.—Section 43(b)(3) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1831t(b)(3)) is amended to read as follows: 
"(3) ACKNOWLEDGEMENT OF DISCLOSURE.— 
"(A) NEW DEPOSITORS.—^With respect to any depositor 
who was not a depositor at the depository institution before 
June 19, 1994, receive any deposit for the account of such 
depositor only if the depositor has signed a written 
acknowledgement that— 
"(i) the institution is not federally insured; and 
"(ii) if the institution fails, the Federal Government 
does not guarantee that the depositor will get back 
the depositor's money. 
"(B) CURRENT DEPOSITORS.—Receive any deposit after 
the effective date of this paragraph for the account of 
any depositor who was a depositor before June 19, 1994, 
only i
f
— 
"(i) the depositor has signed a written acknowl-
edgement described in subparagraph (A); or 
"(ii) the institution has complied with the provi-
sions of subparagraph (C) which are applicable as of 
the date of the deposit. 
"(C) ALTERNATIVE PROVISION OF NOTICE TO CURRENT 
DEPOSITORS.— 
"(i) IN GENERAL.—Transmit to each depositor who 
was a depositor before June 19, 1994, and has not 
signed 
a written 
acknowledgement 
described 
in 
subparagraph (A)— 
"(I) 
a 
card 
containing 
the 
information 
described in clauses (i) and (ii) of subparagraph 
(A), and a line for the signature of the depositor; 
and 
"(II) accompanying materials requesting the 
depositor to sign the card, and return the signed 
card to the institution. 
"(ii) MANNER AND TIMING OF NOTICE.— 
108 STAT. 2238 
PUBLIC LAW 103-325—SEPT. 23, 1994 
12 use 1831t 
note. 
12 use 4801 
note. 
Reports. 
12 u s e 4801 
note. 
12 use 4807. 
"(I) FIRST NOTICE.—Make the transmission 
described in clause (i) via first class mail not later 
than September 12, 1994. 
"(11) SECOND NOTICE.—Make a second trans-
mission described in clause (i) via first class mail 
not less than 30 days and not more than 45 days 
after a transmission to the depositor in accordance 
with subclause (I), if the institution has not, by 
the date of such mailing, received from the deposi-
tor a card referred to in clause (i) which has been 
signed by the depositor. 
"(Ill) THIRD NOTICE.—Make a third trans-
mission described in clause (i) via first class mail 
not less than 30 days and not more than 45 days 
after a transmission to the depositor in accordance 
with subclause (II), if the institution has not, by 
the date of such mailing, received from the deposi-
tor a card referred to in clause (i) which has been 
signed by the depositor.". 
(b) EFFECTIVE DATE.—Section 43(b)(3) of the Federal Deposit 
Insurance Act, as amended by subsection (a), shall take effect 
in accordance with section 151(a)(2)(D) of the Federal Deposit Insur-
ance Corporation Improvement Act of 1991. 
SEC. 341. FEASIBILITY STUDY OF DATA BANK. 
(a) IN GENERAL.—Not later than 18 months after the date 
of enactment of this Act, the Federal Financial Institutions Exam-
ination Council shall— 
(1) study the feasibility, including the costs and benefits 
to insured depository institutions, of establishing and maintain-
ing a data bank for reports submitted by any depository institu-
tion to a Federal banking agency; and 
(2) report the results of such study to the Congress. 
(b) ADDITIONAL FACTORS.—The study required under subsection 
(a) shall consider the feasibility o
f
— 
(1) permitting depository institutions to file reports directly 
with the data bank; and 
(2) permitting Federal banking agencies. State bank super-
visors, and the public to obtain access to any appropriate report 
on file with the data bank which such agency or supervisor 
or the public is otherwise authorized to receive. 
SEC. 342. TIMELY COMPLETION OF CRA REVIEW. 
The comprehensive regulatory review of the Community 
Reinvestment Act of 1977 that, as of the date of enactment of 
this Act, is being conducted by the Federal banking agencies, shall 
be completed at the earliest practicable time. 
SEC. 343. TIME LIMIT ON AGENCY CONSIDERATION OF COMPLETED 
APPLICATIONS. 
(a) IN GENERAL.—Each Federal banking agency shall take final 
action on any application to the agency before the end of the 
1-year period beginning on the date on which a completed applica-
tion is received by the agency. 
(b) WAIVER BY APPLICANT AUTHORIZED.—^Any person submitting 
an application to a Federal banking agency may waive the 
applicability of subsection (a) with respect to such application at 
any time. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2239 
SEC. 344. WAIVER OF RIGHT OF RESCISSION FOR CERTAIN REFINANC- 
12 USC 4801 
ING TRANSACTIONS. 
note. 
Not later than 6 months after the date of enactment of this 
Act, the Board of Governors of the Federal Reserve System, in 
consultation with the consumer advisory council to such Board, 
consumers, representatives of consumers, lenders, and other 
interested parties, shall submit recommendations to the Congress 
regarding whether a waiver or modification, at the option of a 
consumer, of the right of rescission under section 125 of the Truth 
in Lending Act with respect to transactions which constitute a 
refinancing or consolidation (with no new advances) of the principal 
balance then due, and any accrued and unpaid finance charges 
of an existing extension of credit by a different creditor secured 
by an interest in the same property, would benefit consumers. 
SEC. 345. CLARIFICATION OF RESPA DISCLOSURE REQUIREMENTS. 
Section 6(a)(1)(B) of the Real Estate Settlement Procedures 
Act of 1974 (12 U.S.C. 2605(a)( 1)(B)) is amended— 
(1) by striking "(B) for each of the most recent" and insert-
ing "(B) at the choice of the person making a federally related 
mortgage loan— 
"(i) for each of the most recent"; 
(2) by redesignating clauses (i) and (ii) as subclauses (I) 
and (II), respectively, and indenting appropriately; 
(3) by striking "and" at the end of subclause (II) (as redesig-
nated by paragraph (2)) and inserting "or"; and 
(4) by inserting after clause (i) (as redesignated by para-
graph (1)) the following new clause: 
"(ii) a statement that the person making the loan 
has previously assigned, sold, or transferred the servic-
ing of federally related mortgage loans; and". 
SEC. 346. NOTICE PROCEDURES FOR BANK HOLDING COMPANIES TO 
SEEK APPROVAL TO ENGAGE IN CERTAIN ACTIVITIES. 
Section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 
1843) is amended— 
(1) by adding at the end the following new subsection: 
"(j) NOTICE PROCEDURES FOR NONBANKING ACTIVITIES.— 
"(1) GENERAL NOTICE PROCEDURE.— 
"(A) NOTICE REQUIREMENT.—NO bank holding company 
may engage in any nonbanking activity or acquire or retain 
ownership or control of the shares of a company engaged 
in activities based on subsection (c)(8) or (a)(2) without 
providing the Board with written notice of the proposed 
transaction or activity at least 60 days before the trans-
action or activity is proposed to occur or commence. 
"(B) CONTENTS OF NOTICE.—The notice submitted to Regulations, 
the Board shall contain such information as the Board 
shall prescribe by regulation or by specific request in 
connection with a particular notice. 
"(C) PROCEDURE FOR AGENCY ACTION.— 
"(i) NOTICE OF DISAPPROVAL.—Any notice filed 
under this subsection shall be deemed to be approved 
by the Board unless, before the end of the 60-day 
period beginning on the date the Board receives a 
complete notice under subparagraph (A), the Board 
108 STAT. 2240 
PUBLIC LAW 103-325—SEPT. 23, 1994 
issues an order disapproving the transaction or activity 
and setting forth the reasons for disapproval. 
"(ii) 
EXTENSION OF 
PERIOD.—The Board may 
extend the 60-day period referred to in clause (i) for 
an additional 30 days. The Board may further extend 
the period with the agreement of the bank holding 
company submitting the notice pursuant to this 
subsection. 
"(iii) DETERMINATION OF PERIOD IN CASE OF PUBLIC 
HEARING.—In the event a hearing is requested or the 
Board determines that a hearing is warranted, the 
Board may extend the notice period provided in this 
subsection for such time as is reasonably necessary 
to conduct a hearing and to evaluate the hearing 
record. Such extension shall not exceed the 91-day 
period beginning on the date that the hearing record 
is complete. 
"(D) APPROVAL BEFORE END OF PERIOD.— 
"(i) IN GENERAL.—^Any transaction or activity may 
commence before the expiration of any period for dis-
approval established under this paragraph if the Board 
issues a written notice of approval. 
"(ii) SHORTER PERIODS BY REGULATION.—The Board 
may prescribe regulations which provide for a shorter 
notice period with respect to particular activities or 
transactions. 
"(E) EXTENSION OF PERIOD.—In the case of any notice 
to engage in, or to acquire or retain ownership or control 
of shares of any company engaged in, any activity pursuant 
to subsection (c)(8) or (a)(2) that has not been previously 
approved by regulation, the Board may extend the notice 
period under this subsection for an additional 90 days. 
The Board may further extend the period with the agree-
ment of the bank holding company submitting the notice 
pursuant to this subsection. 
"(2) GENERAL STANDARDS FOR REVIEW.— 
"(A) CRITERIA.—In connection with a notice under this 
subsection, the Board shall consider whether performance 
of the activity by a bank holding company or a subsidiary 
of such company can reasonably be expected to produce 
benefits to the public, such as greater convenience, 
increased competition, or gains in efficiency, that outweigh 
possible adverse effects, such as undue concentration of 
resources, decreased or unfair competition, conflicts of 
interests, or unsound banking practices. 
"(B) GROUNDS FOR DISAPPROVAL.—The Board may deny 
any proposed transaction or activity for which notice has 
been submitted pursuant to this subsection if the bank 
holding company submitting such notice neglects, fails, or 
refuses to furnish the Board all the information required 
by the Board. 
"(C) CONDITIONAL ACTION.—Nothing in this subsection 
limits the authority of the Board to impose conditions in 
connection with an action under this section."; and 
(2) in subsection (c), by striking the penultimate sentence. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2241 
SEC. 347. COMMERCIAL MORTGAGE RELATED SECURITIES. 
(a) IN GENERAL.—Section 3(a)(41)(A)(i) of the 
Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(41)(A)(i)) is amended— 
(1) by striking "or on a residential" and inserting "on a 
residential"; and 
(2) by inserting before the semicolon ", or on one or more 
parcels of real estate upon which is located one or more commer-
cial structures". 
(b) AMENDMENT TO THE REVISED STATUTES.—Paragraph Sev-
enth of section 5136 of the Revised Statutes (12 U.S.C. 24) is 
amended 
in the twelfth 
sentence, by striking "(15 U.S.C. 
78c(a)(41))), subject to such regulations" and inserting "(15 U.S.C. 
78c(a)(41)). The exception provided for the securities described in 
subparagraphs (A), (B), and (C) shall be subject to such regulations". 
(c) REGULATIONS.—Not later than 1 year after the date of 12 use 24 note. 
enactment of this Act, the Comptroller of the Currency shall promul-
gate final regulations, in accordance with the thirteenth sentence 
of Paragraph Seventh of section 5136 of the Revised Statutes (as 
amended by subsection (b)), to carry out the amendments made 
by this section. 
(d) EFFECTIVE DATE.—^The amendments made by this section 
12 use 24 note, 
shall become effective upon the date of promulgation of final regula-
tions under subsection (c). 
(e) STATE OPT OUT.—^Notwithstanding the amendments made 
15 use 78c note, 
by this section, a note that is directly secured by a first lien 
on one or more parcels of real estate upon which is located one 
or more commercial structures shall not be considered to be a 
mortgage related security under section 3(a)(41) of the Securities 
Exchange Act of 1934 in any State that, prior to the expiration 
of 7 years after the date of enactment of this Act, enacts a statute 
that specifically refers to this section and either prohibits or pro-
vides for a more limited authority to purchase, hold, or invest 
in such securities by any person, trust, corporation, partnership, 
association, business trust, or business entity or class thereof than 
is provided by the amendments made by this subsection. The enact-
ment by any State of any statute of the type described in the 
preceding sentence shall not affect the validity of any contractual 
commitment to purchase, hold, or invest that was made prior there-
to, and shall not require the sale or other disposition of any securi-
ties acquired prior thereto. 
SEC. 348. CLARIFYING AMENDMENT RELATING TO DATA COLLECTION. 
Section 7(a)(9) of the Federal Deposit Insurance Act (12 U.S.C. 
1817(a)(9)) is amended by adding at the end the following: "In 
prescribing reporting and other requirements for the collection of 
actual and accurate information pursuant to this paragraph, the 
Corporation shall minimize the regulatory burden imposed upon 
insured depository institutions that are well capitalized (as defined 
in section 38) while taking into account the benefit of the informa-
tion to the Corporation, including the use of the information to 
enable the Corporation to more accurately determine the total 
amount of insured deposits in each insured depository institution 
for purposes of compliance with this Act.". 
108 STAT. 2242 
PUBLIC LAW 103-325—SEPT. 23, 1994 
SEC. 349. GUIDELINES FOR EXAMINATIONS. 
(a) ADEQUACY OF STATE EXAMINATIONS.—Section 10(d) 
of 
the 
Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended by 
adding at the end the following new paragraph: 
"(9) 
STANDARDS FOR DETERMINING ADEQUACY OF STATE 
EXAMINATIONS.—^The Federal Financial Institutions Examina-
tion Council shall issue guidelines establishing standards to 
be used at the discretion of the appropriate Federal banking 
agency for purposes of making a determination under para-
graph (3).". 
12 use 1820 
(b) EFFECTIVE DATE OF INITIAL GUIDELINES.—The initial guide-
"°*® 
lines required to be issued pursuant to the amendment made by 
subsection (a) shall become effective not later than 1 year after 
the date of enactment of this Act. 
12 use 4808. 
SEC. 350. REVISING REGULATORY REQUIREMENTS FOR TRANSFERS 
OF ALL TYPES OF ASSETS WITH RECOURSE. 
(a) REVIEW AND REVISION OF REGULATIONS.— 
(1) IN GENERAL.—During the 180-day period beginning on 
the date of enactment of this Act, each appropriate Federal 
banking agency shall, consistent with the principles of safety 
and soundness and the public interest— 
(A) review the agency's regulations and written policies 
relating to transfers of assets with recourse by insured 
depository institutions; and 
(B) in consultation with the other Federal banking 
agencies, promulgate regulations that better reflect the 
exposure of an insured depository institution to credit risk 
from transfers of assets with recourse. 
(2) REGULATIONS REQUIRED.—Before the 
end 
of the 
180-
day period beginning on the date of enactment of this Act, 
each appropriate Federal banking agency shall prescribe the 
regulations developed pursuant to paragraph (1)(B). 
(b) REGULATIONS REQUIRED.— 
(1) IN GENERAL.—^After the end of the 180-day period begin-
ning on the date of enactment of this Act, the amount of 
risk-based capital required to be maintained, under regulations 
prescribed by the appropriate Federal banking agency, by any 
insured depository institution with respect to assets transferred 
with recourse by such institution may not exceed the maximum 
amount of recourse for which such institution is contractually 
liable under the recourse agreement. 
(2) EXCEPTION FOR SAFETY AND SOUNDNESS.—The appro-
priate Federal banking agency may require any insured deposi-
tory institution to maintain risk-based capital in an amount 
greater than the amount determined under paragraph (1), if 
the agency determines, by regulation or order, that such higher 
amount is necessary for safety and soundness reasons. 
(c) COORDINATION WITH SECTION 208(b).—This section shall 
not be construed as superseding the applicability of section 208(b). 
(d) DEFINITIONS.—For purposes of this section, the terms 
"appropriate Federal banking agency", "Federal banking agency", 
and "insured depository institution" have the same meanings as 
in section 3 of the Federal Deposit Insurance Act. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2243 
TITLE IV—MONEY LAUNDERING 
SEC. 401. SHORT TITLE. 
This title may be cited as the "Money Laundering Suppression 
Act of 1994". 
SEC. 402. REFORM OF CTR EXEMPTION REQUIREMENTS TO REDUCE 
NUMBER AND SIZE OF REPORTS CONSISTENT WITH EFFEC-
TIVE LAW ENFORCEMENT. 
(a) IN GENERAL.—Section 5313 of title 31, United States Code, 
is amended by adding at the end the following new subsections: 
"(d) 
MANDATORY EXEMPTIONS FROM 
REPORTING 
REQUIRE-
MENTS.— 
"(1) IN GENERAL.—The Secretary of the Treasury shall 
exempt, pursuant to section 5318(a)(6), a depository institution 
from the reporting requirements of subsection (a) with respect 
to transactions between the depository institution and the fol-
lowing categories of entities: 
"(A) Another depository institution. 
"(B) A department or agency of the United States, 
any State, or any political subdivision of any State. 
"(C) Any entity established under the laws of the 
United States, any State, or any political subdivision of 
any State, or under an interstate compact between 2 or 
more States, which exercises governmental authority on 
behalf of the United States or any such State or political 
subdivision. 
"(D) Any business or category of business the reports 
on which have little or no value for law enforcement pur-
poses. 
"(2) NOTICE OF EXEMPTION.—The Secretary of the Treasury 
shall publish in the Federal Register at such times as the 
Secretary determines to be appropriate (but not less frequently 
than once each year) a list of all the entities whose transactions 
with a depository institution are exempt under this subsection 
from the reporting requirements of subsection (a). 
"(e) 
DISCRETIONARY EXEMPTIONS FROM REPORTING REQUIRE-
MENTS.— 
"(1) IN GENERAL.—The Secretary of the Treasury may 
exempt, pursuant to section 5318(a)(6), a depository institution 
from the reporting requirements of subsection (a) with respect 
to transactions between the depository institution and a quali-
fied business customer of the institution on the basis of informa-
tion submitted to the Secretary by the institution in accordance 
with procedures which the Secretary shall establish. 
"(2) QUALIFIED BUSINESS CUSTOMER DEFINED.—For pur-
poses of this subsection, the term 'qualified business customer' 
means a business which— 
"(A) maintains a transaction account (as defined in 
section 19(b)( 1)(C) of the Federal Reserve Act) at the deposi-
tory institution; 
"(B) frequently engages in transactions with the 
depository institution which are subject to the reporting 
requirements of subsection (a); and 
"(C) meets criteria which the Secretary determines are 
sufficient to ensure that the purposes of this subchapter 
Money 
Laundering 
Suppression Act 
of 1994. 
31 u s e 5301 
note. 
Federal 
Register, 
publication. 
108 STAT. 2244 
PUBLIC LAW 103-325—SEPT. 23, 1994 
are carried out without requiring a report with respect 
to such transactions. 
Regulations. 
"(3) CRITERIA FOR EXEMPTION.—The Secretary of the Treas-
ury shall establish, by regulation, the criteria for granting 
and maintaining an exemption under paragraph (1). 
"(4) GUIDELINES.— 
"(A) IN GENERAL.—The Secretary of the Treasury shall 
establish guidelines for depository institutions to follow 
in selecting customers for an exemption under this 
subsection. 
"(B) CONTENTS.—^The guidelines may include a descrip-
tion of the types of businesses or an itemization of specific 
businesses for which no exemption will be granted under 
this subsection to any depository institution. 
Regulations. 
"(5) ANNUAL REVIEW.—The Secretary of the Treasury shall 
prescribe regulations requiring each depository institution to— 
"(A) review, at least once each year, the qualified busi-
ness customers of such institution with respect to whom 
an exemption has been granted under this subsection; and 
"(B) upon the completion of such review, resubmit 
information about such customers, with such modifications 
as the institution determines to be appropriate, to the 
Secretary for the Secretary's approval. 
"(6) 2-YEAR PHASE-IN PROVISION.—During the 2-year period 
beginning on the date of enactment of the Money Laundering 
Suppression Act of 1994, this subsection shall be applied by 
the Secretary on the basis of such criteria as the Secretary 
determines to be appropriate to achieve an orderly implementa-
tion of the requirements of this subsection. 
"(f) PROVISIONS APPLICABLE TO MANDATORY AND DISCRETIONARY 
EXEMPTIONS.— 
"(1) 
LIMITATION ON LIABILITY OF DEPOSITORY INSTITU-
TIONS.—No depository institution shall be subject to any penalty 
which may be imposed under this subchapter for the failure 
of the institution to file a report with respect to a transaction 
with a customer for whom an exemption has been granted 
under subsection (d) or (e) unless the institution— 
"(A) knowingly files false or incomplete information 
to the Secretary with respect to the transaction or the 
customer engaging in the transaction; or 
"(B) has reason to believe at the time the exemption 
is granted or the transaction is entered into that the cus-
tomer or the transaction does not meet the criteria estab-
lished for granting such exemption. 
"(2) COORDINATION WITH OTHER PROVISIONS.—^Any exemp-
tion granted by the Secretary of the Treasury under section 
5318(a) in accordance with this section, and any transaction 
which is subject to such exemption, shall be subject to any 
other provision of law applicable to such exemption, including— 
"(A) the authority of the Secretary, under section 
5318(a)(6), to revoke such exemption at any time; and 
"(B) any requirement to report, or any authority to 
require a report on, any possible violation of any law or 
regulation or any suspected criminal activity. 
"(g) DEPOSITORY INSTITUTION DEFINED.—For purposes of this 
section, the term 'depository institution'— 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2245 
"(1) has the meaning given to such term in section 
19(b)(1)(A) of the Federal Reserve Act; and 
"(2) includes— 
"(A) any branch, agency, or commercial lending com-
pany (as such terms are defined in section Kb) of the 
International Banking Act of 1978); 
"(B) any corporation chartered under section 25A of 
the Federal Reserve Act; and 
"(C) any corporation having an agreement or undertak-
ing with the Board of Governors of the Federal Reserve 
System under section 25 of the Federal Reserve Act.". 
(b) REPORT REDUCTION GOAL; REPORTS.— 
3I use 5313 
(1) IN GENERAL.—In implementing the amendment made 
^°^-
by subsection (a), the Secretary of the Treasury shall seek 
to reduce, within a reasonable period of time, the number 
of reports required to be filed in the aggregate by depository 
institutions pursuant to section 5313(a) of title 31, United 
States Code, by at least 30 percent of the number filed during 
the year preceding the date of enactment of this Act. 
(2) INTERIM REPORT.—^The Secretary of the Treasury shall 
submit a report to the Congress not later than the end of 
the 180-day period beginning on the date of enactment of this 
Act on the progress made by the Secretary in implementing 
the amendment made by subsection (a). 
(3) ANNUAL REPORT.—The Secretary of the Treasury shall 
submit an annual report to the Congress after the end of 
each of the first 5 calendar years which begin after the date 
of enactment of this Act on the extent to which the Secretary 
has reduced the overall number of currency transaction reports 
filed with the Secretary pursuant to section 5313(a) of title 
31, United States Code, consistent with the purposes of such 
section and effective law enforcement. 
(c) STREAMLINED CURRENCY TRANSACTION REPORTS.—The Sec- 3i u s e 5313 
retary of the Treasury shall take such action as may be appropriate 
^°^-
to-
il) redesign the format of reports required to be filed under 
section 5313(a) of title 31, United States Code, by any financial 
institution (as defined in section 5312(a)(2) of such title) to 
eliminate the need to report information which has little or 
no value for law enforcement purposes; and 
(2) reduce the time and effort required to prepare such 
report for filing by any such financial institution under such 
section. 
SEC. 403. SINGLE DESIGNEE FOR REPORTING OF SUSPICIOUS TRANS-
ACTIONS. 
(a) IN GENERAL.—Section 5318(g) of title 31, United States 
Code, is amended by adding at the end the following new paragraph: 
"(4) 
SINGLE 
DESIGNEE 
FOR REPORTING 
SUSPICIOUS 
TRANSACTIONS.— 
"(A) IN GENERAL.—In requiring reports under para-
graph (1) of suspicious transactions, the Secretary of the 
Treasury shall designate, to the extent practicable and 
appropriate, a single officer or agency of the United States 
to whom such reports shall be made. 
"(B) DUTY OF DESIGNEE.—^The officer or agency of the 
United States designated by the Secretary of the Treasury 
108 STAT. 2246 
PUBLIC LAW 103-325—SEPT. 23, 1994 
pursuant to subparagraph (A) shall refer any report of 
a suspicious transaction to any appropriate law enforce-
ment or supervisory agency. 
"(C) COORDINATION WITH OTHER REPORTING REQUIRE-
MENTS.—Subparagraph (A) shall not be construed as 
precluding any supervisory agency for any financial institu-
tion from requiring the financial institution to submit any 
information or report to the agency or another agency 
pursuant to any other applicable provision of law.". 
31 use 5318 
(b) REPORTS.— 
"°**- 
(1) REPORTS REQUIRED.—The Secretary of the Treasury 
shall submit an annual report to the Congress at the times 
required under paragraph (2) on the number of suspicious 
transactions reported to the officer or agency designated under 
section 5318(g)(4)(A) of title 31, United States Code, during 
the period covered by the report and the disposition of such 
reports. 
(2) 
TIME 
FOR SUBMITTING 
REPORTS.—The 
1st 
report 
required under paragraph (1) shall be filed before the end 
of the 1-year period beginning on the date of enactment of 
the Money Laundering Suppression Act of 1994 and each subse-
quent report shall be filed within 90 days after the end of 
each of the 5 calendar years which begin after such date of 
enactment. 
31 use 5318 
(c) DESIGNATION REQUIRED TO B E MADE EXPEDITIOUSLY.—The 
"°*®- 
initial designation of an officer or agency of the United States 
pursuant to the amendment made by subsection (a) shall be made 
before the end of the 180-day period beginning on the date of 
enactment of this Act. 
31 use 5318 
SEC. 404. IMPROVEMENT OF IDENTIFICATION OF MONEY LAUNDERING 
note. 
SCHEMES. 
(a) ENHANCED TRAINING, EXAMINATIONS, AND REFERRALS BY 
BANKING AGENCIES.—Before the end of the 6-month period begin-
ning on the date of enactment of this Act, each appropriate Federal 
banking agency shall, in consultation with the Secretary of the 
Treasury and other appropriate law enforcement agencies— 
(1) review and enhance training and examination proce-
dures to improve the identification of money laundering 
schemes involving depository institutions; and 
(2) review and enhance procedures for referring cases to 
any appropriate law enforcement agency. 
(b) IMPROVED REPORTING OF CRIMINAL SCHEMES BY LAW 
ENFORCEMENT AGENCIES.—^The Secretary of the Treasury and each 
appropriate law enforcement agency shall provide, on a regular 
basis, information regarding money laundering schemes and activi-
ties involving depository institutions to each appropriate Federal 
banking agency in order to enhance each agency's ability to examine 
for and identify money laundering activity. 
(c) REPORT TO CONGRESS.—^The Financial Institutions Examina-
tion Council shall submit a report on the progress made in carrying 
out subsection (a) and the usefulness of information received pursu-
ant to subsection (b) to the Congress by the end of the 1-year 
period beginning on the date of enactment of this Act. 
(d) DEFINITION.—For purposes of this section, the term "appro-
priate Federal banking agency" has the same meaning as in section 
3 of the Federal Deposit Insurance Act. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2247 
SEC. 
405. 
NEGOTIABLE INSTRUMENTS DRAWN ON FOREIGN BANKS 
SUBJECT 
TO 
RECORDKEEPING 
AND 
REPORTING 
REQUIRE-
MENTS. 
Section 5312(a)(3) of title 31, United States Code, is amended— 
(1) by striking "and" at the end of subparagraph (A); 
(2) by striking the period at the end of subparagraph (B) 
and inserting "; and"; and 
(3) by adding at the end the following new subparagraph: 
Regulations. 
"(C) as the Secretary of the Treasury shall provide 
by regulation for purposes of section 5316, checks, drafts, 
notes, money orders, and other similar instruments which 
are drawn on or by a foreign financial institution and 
are not in bearer form.". 
SEC. 406. IMPOSITION OF CIVIL MONEY PENALTIES BY APPROPRIATE 
FEDERAL BANKING AGENCIES. 
Section 5321 of title 31, United States Code, is amended by 
adding at the end the following new subsection: 
"(e) 
DELEGATION OF ASSESSMENT AUTHORITY TO BANKING 
AGENCIES.— 
"(1) IN GENERAL.—The Secretary of the Treasury shall dele-
gate, in accordance with section 5318(a)(1) and subject to such 
terms and conditions as the Secretary may impose in accordance 
with paragraph (3), any authority of the Secretary to assess 
a civil money penalty under this section on depository institu-
tions (as defined in section 3 of the Federal Deposit Insurance 
Act) to the appropriate Federal banking agencies (as defined 
in such section 3). 
"(2) AUTHORITY OF AGENCIES.—Subject to any term or 
condition imposed by the Secretary of the Treasury under 
paragraph (3), the provisions of this section shall apply to 
an appropriate Federal banking agency to which is delegated 
any authority of the Secretary under this section in the same . 
manner such provisions apply to the Secretary. 
"(3) TERMS AND CONDITIONS.— 
"(A) IN GENERAL.—The Secretary of the Treasury shall 
prescribe by regulation the terms and conditions which 
shall apply to any delegation under paragraph (1). 
"(B) MAXIMUM DOLLAR AMOUNT.—The terms and condi-
tions authorized under subparagraph (A) may include, in 
the Secretary's sole discretion, a limitation on the amount 
of any civil penalty which may be assessed by an appro-
priate Federal banking agency pursuant to a delegation 
under paragraph (1).". 
SEC. 407. UNIFORM STATE UCENSING AND REGULATION OF CHECK 
31 USC 5311 
CASHING, CURRENCY EXCHANGE, AND MONEY TRANSMIT- 
"o^ 
TING BUSINESSES. 
(a) 
UNIFORM 
LAWS AND ENFORCEMENT.—For purposes 
of 
preventing money laundering and protecting the pajnnent system 
from fraud and abuse, it is the sense of the Congress that the 
several States should— 
(1) establish uniform laws for licensing and regulating 
businesses which— 
(A) provide check cashing, currency exchange, or money 
transmitting or remittance services, or issue or redeem 
108 STAT. 2248 ^ 
PUBLIC LAW 103-325—SEPT. 23, 1994 
money 
orders, 
travelers' checks, 
and 
other 
similar 
instruments; and 
(B) are not depository institutions (as defined in section 
5313(g) of title 31, United States Code); and 
(2) provide sufficient resources to the appropriate State 
agency to enforce such laws and regulations prescribed pursu-
ant to such laws, 
(b) MODEL STATUTE.—It is the sense of the Congress that 
the several States should develop, through the auspices of the 
National Conference of Commissioners on Uniform State Laws, 
the American Law Institute, or such other forum as the States 
may determine to be appropriate, a model statute to carry out 
the goals described in subsection (a) which would include the 
following: 
(1) LICENSING REQUIREMENTS.—^A requirement that any 
business described in subsection (a)(1) be licensed and regulated 
by an appropriate State agency in order to engage in any 
such activity within the State. 
(2) LICENSING STANDARDS.—A requirement that— 
(A) in order for any business described in subsection 
(a)(1) to be licensed in the State, the appropriate State 
agency shall review and approve— 
(i) the business record and the capital adequacy 
of the business seeking the license; and 
(ii) the competence, experience, integrity, and 
financial ability of any individual who— 
(I) is a director, officer, 
or 
supervisory 
employee of such business; or 
(II) owns or controls such business; and 
(B) any record, on the part of any business seeking 
the license or any person referred to in subparagraph 
(A)(ii), of— 
(i) any criminal activity; 
(ii) any fraud or other act of personal dishonesty; 
(iii) any act, omission, or practice which constitutes 
a breach of a fiduciary duty; or 
(iv) any suspension or removal, by any agency 
or department of the United States or any State, from 
participation in the conduct of any federally or State 
licensed or regulated business, 
may be grounds for the denial of any such license by 
the appropriate State agency. 
(3) REPORTING REQUIREMENTS.—^A requirement that any 
business described in subsection (a)(1)— 
(A) disclose to the appropriate State agency the fees 
charged to consumers for services described in subsection 
(a)(1)(A); and 
(B) conspicuously disclose to the public, at each location 
of such business, the fees charged to consumers for such 
services. 
(4) PROCEDURES TO ENSURE COMPLIANCE WITH FEDERAL 
CASH TRANSACTION REPORTING REQUIREMENTS.—^A civil or crimi-
nal penalty for operating any business referred to in paragraph 
(1) without establishing and complying with appropriate proce-
dures to ensure compliance with subchapter II of chapter 53 
of title 31, United States Code (relating to records and reports 
on monetary instruments transactions). 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2249 
(5) CRIMINAL PENALTIES FOR OPERATION OF BUSINESS WITH-
OUT A LICENSE.—^A criminal penalty for operating any business 
referred to in paragraph (1) without a license within the State 
after the end of an appropriate transition period beginning 
on the date of enactment of such model statute by the State. 
(c) STUDY REQUIRED.—^The Secretary of the Treasury shall con-
duct a study of— 
(1) the progress made by the several States in developing 
and enacting a model statute which— 
(A) meets the requirements of subsection (b); and 
(B) furthers the goals of— 
(i) preventing money laundering by businesses 
which are required to be licensed under any such stat-
ute; and 
(ii) protecting the payment system, including the 
receipt, payment, collection, and clearing of checks, 
from fraud and abuse by such businesses; and 
(2) the adequacy o
f
— 
(A) the activity of the several States in enforcing the 
requirements of such statute; and 
(B) the resources made available to the appropriate 
State agencies for such enforcement activity. 
(d) REPORT REQUIRED.—Not later than the end of the 3-year 
period beginning on the date of enactment of this Act and not 
later than the end of each of the first two 1-year periods beginning 
after the end of such 3-year period, the Secretary of the Treasury 
shall submit a report to the Congress containing the findings and 
recommendations of the Secretary in connection with the study 
under subsection (c), together with such recommendations for legis-
lative and administrative action as the Secretary may determine 
to be appropriate. 
(e) RECOMMENDATIONS IN CASES OF INADEQUATE REGULATION 
AND ENFORCEMENT BY STATES.—If the Secretary of the Treasury 
determines that any State has been unable to— 
(1) enact a statute which meets the requirements described 
in subsection (b); 
(2) undertake adequate activity to enforce such statute; 
or 
(3) make adequate resources available to the appropriate 
State agency for such enforcement activity, 
the report submitted pursuant to subsection (d) shall contain rec-
ommendations of the Secretary which are designed to facilitate 
the enactment and enforcement by the State of such a statute. 
(f) FEDERAL FUNDING STUDY.— 
(1) STUDY REQUIRED.—The Secretary of the Treasury shall 
conduct a study to identify possible available sources of Federal 
funding to cover costs which will be incurred by the States 
in carrying out the purposes of this section. 
(2) REPORT.—^The Secretary of the Treasury shall submit 
a report to the Congress on the study conducted pursuant 
to paragraph (1) not later than the end of the 18-month period 
beginning on the date of enactment of this Act. 
SEC. 408. REGISTRATION OF MONEY TRANSMITTING BUSINESSES TO 
PROMOTE EFFECTIVE LAW ENFORCEMENT. 
(a) FINDINGS AND PURPOSES.— 
3i use 5330 
(1) FINDINGS.—The Congress hereby finds the following: "°*®-
108 STAT. 2250 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(A) Money transmitting businesses are subject to the 
recordkeeping and reporting requirements of subchapter 
II of chapter 53 of title 31, United States Code. 
(B) Money transmitting businesses are largely unregu-
lated businesses and are frequently used in sophisticated 
schemes to— 
(i) transfer large amounts of money which are 
the proceeds of unlawful enterprises; and 
(ii) evade the requirements of such subchapter II, 
the Internal Revenue Code of 1986, and other laws 
of the United States. 
(C) Information on the identity of money transmitting 
businesses and the names of the persons who own or con-
trol, or are officers or employees of, a money transmitting 
business would have a high degree of usefulness in crimi-
nal, tax, or regulatory investigations and proceedings. 
(2) PURPOSE.—It is the purpose of this section to establish 
a registration requirement for businesses engaged in providing 
check cashing, currency exchange, or money transmitting or 
remittance services, or issuing or redeeming money orders, 
travelers' checks, and other similar instruments to assist the 
Secretary of the Treasury, the Attorney General, and other 
supervisory and law enforcement agencies to effectively enforce 
the criminal, tax, and regulatory laws and prevent such money 
transmitting businesses from engaging in illegal activities, 
(b) IN GENERAL.—Subchapter II of chapter 53 of title 31, United 
States Code, is amended by adding at the end the following new 
section: 
31 use 5330. 
«
*
§ 5330. Registration of money transmitting businesses 
"(a) 
REGISTRATION 
WITH 
SECRETARY 
OF 
THE 
TREASURY 
REQUIRED.— 
"(1) IN GENERAL.—^Any person who owns or controls a 
money transmitting business shall register the 
business 
(whether or not the business is licensed as a money transmit-
ting business in any State) with the Secretary of the Treasury 
not later than the end of the 180-day period beginning on 
the later of— 
"(A) the date of enactment of the Money Laundering 
Suppression Act of 1994; or 
"(B) the date on which the business is established. 
Regulations. 
"(2) FORM AND MANNER OF REGISTRATION.—Subject to t h e 
requirements of subsection (b), the Secretary of the Treasury 
shall prescribe, by regulation, the form and manner for register-
ing a money transmitting business pursuant to paragraph (1). 
"(3) BUSINESSES REMAIN SUBJECT TO STATE LAW.—This sec-
tion shall not be construed as superseding any requirement 
of State law relating to money transmitting businesses operat-
ing in such State. 
"(4) FALSE AND INCOMPLETE INFORMATION.—The filing of 
false or materially incomplete information in connection with 
the registration of a money transmitting business shall be 
considered as a failure to comply with the requirements of 
this subchapter. 
"(b) CONTENTS OF REGISTRATION.—The registration of a money 
transmitting business under subsection (a) shall include the follow-
ing information: 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2251 
"(1) The name and location of the business. 
"(2) The name and address of each person who— 
"(A) owns or controls the business; 
"(B) is a director or officer of the business; or 
"(C) otherwise participates in the conduct of the affairs 
of the business. 
"(3) The name and address of any depository institution 
at which the business maintains a transaction account (as 
defined in section 19(b)(1)(C) of the Federal Reserve Act). 
"(4) An estimate of the volume of business in the coming 
year (which shall be reported annually to the Secretary). 
"(5) Such other information as the Secretary of the Treas-
ury may require. 
"(c) AGENTS OF MONEY TRANSMITTING BUSINESSES.— 
"(1) MAINTENANCE OF LISTS OF AGENTS OF MONEY TRANSMIT-
TING BUSINESSES.—Pursuant to regulations which the Secretary 
of the Treasury shall prescribe, each money transmitting busi-
ness shall— 
"(A) maintain 
a list containing the names 
and 
addresses of all persons authorized to act as an agent 
for such business in connection with activities described 
in subsection (d)(1)(A) and such other information about 
such agents as the Secretary may require; and 
"(B) make the list and other information available on 
request to any appropriate law enforcement agency. 
"(2) TREATMENT OF AGENT AS MONEY TRANSMITTING BUSI-
NESS.—^The Secretary of the Treasury shall prescribe regula-
tions establishing, on the basis of such criteria as the Secretary 
determines to be appropriate, a threshold point for treating 
an agent of a money transmitting business as a money 
transmitting business for purposes of this section. 
"(d) DEFINITIONS.—For purposes of this section, the following 
definitions shall apply: 
"(1) MONEY TRANSMITTING BUSINESS.—The term 'money 
transmitting business' means any business other than the 
United States Postal Service which— 
"(A) provides check cashing, currency exchange, or 
money transmitting or remittance services, or issues or 
redeems money orders, travelers' checks, and other similar 
instruments; 
"(B) is required to file reports under section 5313; 
and 
"(C) is not a depository institution (as defined in section 
5313(g)). 
"(2) MONEY TRANSMITTING SERVICE.—The term 'money 
transmitting service' includes accepting currency or funds 
denominated in the currency of any country and transmitting 
the currency or funds, or the value of the currency or funds, 
by any means through a financial agency or institution, a 
Federal reserve bank or other facility of the Board of Governors 
of the Federal Reserve System, or an electronic funds transfer 
network. 
"(e) CIVIL PENALTY FOR FAILURE TO COMPLY WITH REGISTRA-
TION REQUIREMENTS.— 
"(1) IN GENERAL.—^Any person who fails to comply with 
any requirement of this section or any regulation prescribed 
Reports. 
Regulations. 
Regulations. 
108 STAT. 2252 
PUBLIC LAW 103-325—SEPT. 23, 1994 
under this section shall be liable to the United States for 
a civil penalty of $5,000 for each such violation. 
"(2) 
CONTINUING 
VIOLATION.—Each 
day 
a 
violation 
described in paragraph (1) continues shall constitute a separate 
violation for purposes of such paragraph. 
"(3) ASSESSMENTS.—^Any penalty imposed under this sub-
section shall be assessed and collected by the Secretary of 
the Treasury in the manner provided in section 5321 and 
any such assessment shall be subject to the provisions of such 
section.". 
(c) CRIMINAL PENALTY FOR FAILURE To COMPLY WITH REG-
ISTRATION REQUIREMENTS.—Section 1960(b)(1) of title 18, United 
States Code, is amended to read as follows: 
"(1) the term 'illegal money transmitting business' means 
a money trsinsmitting business which affects interstate or for-
eign commerce in any manner or degree and— 
"(A) is intentionally operated without an appropriate 
money transmitting license in a State where such operation 
is punishable as a misdemeanor or a felony under State 
law; or 
"(B) fails to comply with the money transmitting busi-
ness registration requirements under section 5330 of title 
31, United States Code, or regulations prescribed under 
such section;". 
(d) CLERICAL AMENDMENT.—The table of sections for chapter 
53 of title 31, United States Code, is amended by inserting after 
the item relating to section 5329 (as added by section 311) the 
following new item: 
"5330. Registration of money transmitting businesses.". 
SEC. 409. UNIFORM FEDERAL REGULATION OF CASINOS. 
Section 5312(a)(2) of title 31, United States Code, is amended— 
(1) by redesignating subparagraphs (X) and (Y) as subpara-
graphs (Y) and (Z), respectively; and 
(2) by inserting after subparagraph (W) the following new 
subparagraph: 
"(X) a casino, gambling casino, or gaming establish-
ment with an annual gaming revenue of more than 
$1,000,000 which— 
"(i) is licensed as a casino, gambling casino, or 
gaming establishment under the laws of any State 
or any political subdivision of any State; or 
"(ii) is an Indian gaming operation conducted 
under or pursuant to the Indian Gaming Regulatory 
Act other than an operation which is limited to class 
I gaming (as defined in section 4(6) of such Act);". 
SEC. 410. AUTHORITY TO GRANT EXEMPTIONS TO STATES WITH EFFEC-
TIVE REGULATION AND ENFORCEMENT. 
(a) IN GENERAL.—Section 5318(a) of title 31, United States 
Code, is amended— 
(1) by striking "and" at the end of paragraph (4); 
(2) by redesignating paragraph (5) as paragraph (6); and 
(3) by inserting after paragraph (4) the following new 
paragraph: 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2253 
"(5) exempt from the requirements of this subchapter any 
class of transactions within any State if the Secretary deter-
mines that— 
"(A) under the laws of such State, that class of trans-
actions is subject to requirements substantially similar to 
those imposed under this subchapter; and 
"(B) there is adequate provision for the enforcement 
of such requirements; and". 
(b) TECHNICAL AND CONFORMING AMENDMENT.—The penul-
timate sentence of section 5318(a)(6) of title 31, United States 
Code (as so redesignated by the amendment made by subsection 
(a) of this section) is amended by inserting "under this paragraph 
or paragraph (5)" after "exemption". 
SEC. 411. CRIMINAL AND CIVIL PENALTIES FOR STRUCTURING DOMES-
TIC AND INTERNATIONAL TRANSACTIONS. 
(a) CRIMINAL PENALTY.—Section 5324 of title 31, United States 
Code, is amended by adding at the end the following new subsection: 
"(c) CRIMINAL PENALTY.— 
"(1) IN GENERAL.—^Whoever violates this section shall be 
fined in accordance with title 18, United States Code, impris-
oned for not more than 5 years, or both. 
"(2) ENHANCED PENALTY FOR AGGRAVATED CASES.—Whoever 
violates this section 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, impris-
oned for not more than 10 years, or both.". 
(b) 
AMENDMENT 
RELATING 
TO CIVIL 
PENALTY.—Section 
5321(a)(4)(A) of title 31, United States Code, is amended by striking 
"willfully". 
(c) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) Subsections (a) and (b) of section 5322 of title 31, 
United States Code, are amended by inserting "or 5324" after 
"section 5315" each place such term appears. 
(2) The following sections are each amended by striking 
"section 5322 of title 31" and inserting "section 5322 or 5324 
of title 31" each place such term appears in such sections: 
(A) Sections 8(g)(l)(A)(ii), 8(w)(l)(B), and ll(c)(5)(M) 12USC1818, 
of the Federal Deposit Insurance Act. 
^^^^• 
(B) Sections 131(a)(2), 206(h)(1)(C), 206(i)(l)(A)(ii), and 12 use I772d, 
206(v)( 1)(B) of the Federal Credit Union Act. 
l"^^^-
(C) Section 5239(d)(1)(B) of the Revised Statutes of 12 use 93. 
the United States (as redesignated by section 413(b)(2) 
of this Act). 
(D) Section 5(w)(l)(B) of the Home Owners' Loan Act. 
12 use 1464. 
(E) Sections 984(a), 986(a), and 1956(g) (the first place 
it appears) of title 18, United States Code. 
SEC. 412. GAO STUDY OF CASHIERS' CHECKS. 
(a) STUDY REQUIRED.—The Comptroller General of the United 
States shall conduct a study to— 
(1) determine the extent to which the practice of issuing 
of cashiers' checks by financial institutions is vulnerable to 
money laundering schemes; 
108 STAT. 2254 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(2) determine the extent to which additional recordkeeping 
requirements should be imposed on financial institutions which 
issue cashiers' checks; and 
(3) analyze such other factors relating to the use and regu-
lation of cashiers' checks as the Comptroller General determines 
to be appropriate. 
(b) REPORT REQUIRED.—Before the end of the 6-month period 
beginning on the date of enactment of this Act, the Comptroller 
General shall submit a report to the Congress containing— 
(1) the findings and conclusions of the Comptroller General 
in connection with the study conducted pursuant to subsection 
(a); and 
(2) such recommendations for legislative and administrative 
action as the Comptroller General may determine to be 
appropriate. 
SEC. 413. TECHNICAL AMENDMENTS AND CORRECTIONS. 
(a) TITLE 31, U.S.C, AMENDMENTS.— 
(1) Section 5321(a)(5)(A) of title 31, United States Code, 
is amended by inserting "any violation of after "causing". 
(2) Section 5324(a) of title 31, United States Code, is 
amended— 
(A) by striking "section 5313(a), section 5325, or the 
regulations issued thereunder or section 5325 or regula-
tions prescribed under such section 5325" each place such 
term appears and inserting "section 5313(a) or 5325 or 
any regulation prescribed under any such section"; and 
(B) by striking "with respect to such transaction". 
(b) AMENDMENTS RELATING TO TITLE 31, U.S.C.— 
(1) Effective as of the date of enactment of the Annunzio-
31 use 5318. 
Wylie Anti-Money Laundering Act, section 1517(b) of such Act 
is amended by striking "5314" and inserting "5318". 
(2) Section 5239 of the Revised Statutes of the United 
12 use 93. 
States is amended by redesignating the 2d subsection (c) (as 
added by section 1502(a) of the Annunzio-Wylie Anti-Money 
Laundering Act) as subsection (d). 
(c) TITLE 18, U.S.C, AMENDMENTS.— 
(1) Section 1956 of title 18, United States Code, is 
amended— 
(A) in subsection (a)(2)— 
(i) by inserting "not more than" before "$500,000"; 
and 
(ii) by striking "transfer." each place such term 
appears and inserting "transfer"; 
(B) in subsection (b)— 
(i) by inserting "or (a)(3)" after "(a)( 1)"; and 
(ii) by striking "transfer." and inserting "transfer"; 
(C) in subsection (c)(7)(B)(iii), by inserting a close 
parenthesis after "1978"; 
(D) in subsection (c)(7)(D), by striking "section 9(c) 
of the Food Stamp Act of 1977" and inserting "section 
15 of the Food Stamp Act of 1977"; 
(E) in subsection (c)(7)(E), by striking the period which 
follows a period; 
(F) in subsection (e), by striking "Evironmental" and 
inserting "Environmental"; and 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2255 
(G) by redesignating subsection (g), the second place 
it appears, as subsection (h). 
(2) Section 1957(f)(1) of title 18, United States Code, is 
amended by striking the comma which follows a comma. 
(d) REPEAL OF OBSOLETE TECHNICAL CORRECTION TO SECTION 
1956 OF TITLE 18, U.S.C—Section 3557(2)(E) of Public Law 101-
647 is repealed, effective on the date of enactment of such Public 
18 USC 1956 
Law. 
and note. 
TITLE V—NATIONAL FLOOD INSURANCE 
REFORM 
National Flood 
Insurance 
Reform Act of 
1994. 
SEC. 501. SHORT TITLE. 
42 USC 4001 
This title may be cited as the "National Flood Insurance Reform 
Act of 1994". 
Subtitle A—^Definitions 
SEC. 511. FLOOD DISASTER PROTECTION ACT OF 1973. 
(a) IN GENERAL.—Section 3(a) of the Flood Disaster Protection 
Act of 1973 (42 U.S.C. 4003(a)) is amended— 
(1) by striking paragraph (5) and inserting the following 
new paragraph: 
"(5) 'Federal entity for lending regulation' means the Board 
of Governors of the Federal Reserve System, the Federal 
Deposit Insurance Corporation, the Comptroller of the Cur-
rency, the Office of Thrift Supervision, the National Credit 
Union Administration, and the Farm Credit Administration, 
and with respect to a particular regulated lending institution 
means the entity primarily responsible for the supervision of 
the institution;"; 
(2) in paragraph (6), by striking the period at the end 
and inserting a semicolon; and 
(3) by inserting after paragraph (6) the following new para-
graphs: 
"(7) 'Federal agency lender' means a Federal agency that 
makes direct loans secured by improved real estate or a mobile 
home, to the extent such agency acts in such capacity; 
"(8) the term 'improved real estate' means real estate upon 
which a building is located; 
"(9) 'lender' means a regulated lending institution or Fed-
eral agency lender; 
"(10) 'regulated lending institution' means any bank, 
savings and loan association, credit union, farm credit bank, 
Federal land bank association, production credit association, 
or similar institution subject to the supervision of a Federal 
entity for lending regulation; and 
"(11) 'servicer' means the person responsible for receiving 
any scheduled periodic payments from a borrower pursuant 
to the terms of a loan, including amounts for taxes, insurance 
premiums, and other charges with respect to the property secur-
ing the loan, and making the payments of principal and interest 
and such other payments with respect to the amounts received 
from the borrower as may be required pursuant to the terms 
of the loan.". 
108 STAT. 2256 
PUBLIC LAW 103-325—SEPT. 23, 1994 
Regulations. 
(b) CONFORMING AMENDMENT.—Section 202(b) of the Flood 
Disaster Protection Act of 1973 (42 U.S.C. 4106(b)) is amended 
by striking "Federal instrumentality described in such section shall 
by regulation require the institutions" and inserting "Federal entity 
for lending regulation shall by regulation require the regulated 
lending institutions described in such section, and each Federal 
agency lender shall issue regulations requiring the Federal agency 
lender,". 
SEC. 512. NATIONAL FLOOD INSURANCE ACT OF 1968. 
(a) IN GENERAL.—Section 1370(a) of the National Flood Insur-
ance Act of 1968 (42 U.S.C. 4121(a)) is amended— 
(1) in paragraph (5), by striking "and" at the end; 
(2) in paragraph (6), by striking the period at the end 
and inserting a semicolon; and 
(3) by inserting after paragraph (6) the following new 
paragraphs: 
"(7) the term 'repetitive loss structure' means a structure 
covered by a contract for flood insurance under this title that 
has incurred flood-related damage on 2 occasions during a 
10-year period ending on the date of the event for which a 
second claim is made, in which the cost of repair, on the 
average, equaled or exceeded 25 percent of the value of the 
structure at the time of each such flood event; 
"(8) the term 'Federal agency lender' means a Federal 
agency that makes direct loans secured by improved real estate 
or a mobile home, to the extent such agency acts in such 
capacity; 
"(9) the term 'Federal entity for lending regulation' means 
the Board of Governors of the Federal Reserve System, the 
Federal Deposit Insurance Corporation, the Comptroller of the 
Currency, the Office of Thrift Supervision, the National Credit 
Union Administration, and the Farm Credit Administration, 
and with respect to a particular regulated lending institution 
means the entity primarily responsible for the supervision of 
the institution; 
"(10) the term 'improved real estate' means real estate 
upon which a building is located; 
"(11) the term 'lender' means a regulated lending institu-
tion or Federal agency lender; 
"(12) the term 'natural and beneficial floodplain functions' 
means— 
"(A) the functions associated with the natural or rel-
atively undisturbed floodplain that (i) moderate flooding, 
retain flood waters, reduce erosion and sedimentation, and 
mitigate the effect of waves and storm surge from storms, 
and (ii) reduce flood related damage; and 
"(B) ancillary beneficial functions, including mainte-
nance of water quality and recharge of ground water, that 
reduce flood related damage; 
"(13) the term 'regulated lending institution' means any 
bank, savings and loan association, credit union, farm credit 
bank. Federal land bank association, production credit associa-
tion, or similar institution subject to the supervision of a 
Federal entity for lending regulation; and 
"(14) the term 'servicer' means the person responsible for 
receiving any scheduled periodic pa3mients from a borrower 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2257 
pursuant to the terms of a loan, including amounts for taxes, 
insurance premiums, and other charges with respect to the 
property securing the loan, and making the payments of prin-
cipal and interest and such other payments with respect to 
the amounts received from the borrower as may be required 
pursuant to the terms of the loan.". 
(b) CONFORMING AMENDMENT.—Section 1322(d) of the National 
Flood Insurance Act of 1968 (42 U.S.C. 4029(d)) is amended by 
striking "federally supervised, approved, regulated or insured finan-
cial institution" and inserting "regulated lending institution or 
Federal agency lender". 
Subtitle B—Compliance and Increased 
Participation 
SEC. 521. NONWAIVER OF FLOOD PURCHASE REQUIREMENT FOR 
RECIPIENTS OF FEDERAL DISASTER ASSISTANCE. 
Section 311(b) of the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act (42 U.S.C. 5154(b)) is amended by adding 
at the end the following new sentence: "The requirements of this 
subsection may not be waived under section 301.". 
SEC. 522. EXPANDED FLOOD INSURANCE PURCHASE REQUIREMENTS. 
(a) IN GENERAL.—Section 102(b) of the Flood Disaster Protec-
tion Act of 1973 (42 U.S.C. 4012a(b)) is amended to read as follows: 
"(b) REQUIREMENT FOR MORTGAGE LOANS.— 
"(1) REGULATED 
LENDING INSTITUTIONS.—Each Federal 
entity for lending regulation (after consultation and coordina-
tion with the Financial Institutions Examination Council estab-
lished under the Federal Financial Institutions Examination 
Council Act of 1974) shall by regulation direct regulated lending 
institutions not to make, increase, extend, or renew any loan 
secured by improved real estate or a mobile home located 
or to be located in an area that has been identified by the 
Director as an area having special flood hazards and in which 
flood insurance has been made available under the National 
Flood Insurance Act of 1968, unless the building or mobile 
home and any personal property securing such loan is covered 
for the term of the loan by flood insurance in an amount 
at least equal to the outstanding principal balance of the loan 
or the maximum limit of coverage made available under the 
Act with respect to the particular type of property, whichever 
is less. 
"(2) FEDERAL AGENCY LENDERS.—A Federal agency lender 
may not make, increase, extend, or renew any loan secured 
by improved real estate or a mobile home located or to be 
located in an area that has been identified by the Director 
as an area having special flood hazards and in which flood 
insurance has been made available under the National Flood 
Insurance Act of 1968, unless the building or mobile home 
and any personal property securing such loan is covered for 
the term of the loan by flood insurance in the amount provided 
in paragraph (1). Each Federal agency lender shall issue any 
regulations necessary to cany out this paragraph. Such regula-
tions shall be consistent with and substantially identical to 
the regulations issued under paragraph (1). 
Loans. 
Real property. 
Regulations. 
108 STAT. 2258 
PUBLIC LAW 103-325—SEPT. 23, 1994 
"(3) GOVERNMENT-SPONSORED ENTERPRISES FOR HOUSING.— 
The Federal National Mortgage Association and the Federal 
Home Loan Mortgage Corporation shall implement procedures 
reasonably designed to ensure that, for any loan that is— 
"(A) secured by improved real estate or a mobile home 
located in an area that has been identified, at the time 
of the origination of the loan or at any time during the 
term of the loan, by the Director as an area having special 
flood hazards and in which flood insurance is available 
under the National Flood Insurance Act of 1968, and 
"(B) purchased by such entity, 
the building or mobile home and any personal property securing 
the loan is covered for the term of the loan by flood insurance 
in the amount provided in paragraph (1). 
"(4) APPLICABILITY.— 
"(A) EXISTING 
COVERAGE.—Except as provided in 
subparagraph (B), paragraph (1) shall apply on the date 
of enactment of the Riegle Community Development and 
Regulatory Improvement Act of 1994. 
"(B) NEW COVERAGE.—Paragraphs (2) and (3) shall 
apply only with respect to any loan made, increased, 
extended, or renewed after the expiration of the 1-year 
period beginning on the date of enactment of the Riegle 
Community Development and Regulatory Improvement Act 
of 1994. Paragraph (1) shall apply with respect to any 
loan made, increased, extended, or renewed by any lender 
supervised by the Farm Credit Administration only after 
the expiration of the period under this subparagraph. 
"(C) CONTINUED EFFECT OF REGULATIONS.—^Notwith-
standing any other provision of this subsection, the regula-
tions to carry out paragraph (1), as in effect immediately 
before the date of enactment of the Riegle Community 
Development and Regulatory Improvement Act of 1994, 
shall continue to apply until the regulations issued to carry 
out paragraph (1) as amended by section 522(a) of such 
Act take effect.", 
(b) EXEMPTION FOR SMALL LOANS.—Section 102(c) of the Flood 
Disaster Protection Act of 1973 (42 U.S.C. 4012a(c)) is amended— 
(1) by striking "(c) Notwithstanding" and inserting the 
following: 
"(c) EXCEPTIONS TO PURCHASE REQUIREMENTS.— 
"(1) STATE-OWNED PROPERTY.—Notwithstanding"; and 
(2) by adding at the end the following new paragraph: 
"(2) SMALL LOANS.—Notwithstanding any other provision 
of this section, subsections (a) and (b) shall not apply to any 
loan having— 
"(A) an original outstanding principal balance of $5,000 
or less; and 
"(B) a repa3anent term of 1 year or less.". 
SEC. 523. ESCROW OF FLOOD INSURANCE PAYMENTS. 
Section 102 of the Flood Disaster Protection Act of 1973 (42 
U.S.C. 4012a) is amended by adding at the end the following new 
subsection: 
"(d) ESCROW OF FLOOD INSURANCE PAYMENTS.— 
"(1) REGULATED 
LENDING INSTITUTIONS.—Each Federal 
entity for lending regulation (after consultation and coordina-
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2259 
tion with the Financial Institutions Examination Council) shall 
by regulation require that, if a regulated lending institution 
requires the escrowing of taxes, insurance premiums, fees, or 
any other charges for a loan secured by residential improved 
real estate or a mobile home, then all premiums and fees 
for flood insurance under the National Flood Insurance Act 
of 1968 for the real estate or mobile home shall be paid to 
the regulated lending institution or other servicer for the loan 
in a manner sufficient to make payments as due for the dura-
tion of the loan. Upon receipt of the premiums, the regulated 
lending institution or servicer of the loan shall deposit the 
premiums in an escrow account on behalf of the borrower. 
Upon receipt of a notice from the Director or the provider 
of the insurance that insurance premiums are due, the regu-
lated lending institution or servicer shall pay from the escrow 
account to the provider of the insurance the amount of insur-
ance premiums owed. 
"(2) FEDERAL AGENCY LENDERS.—Each Federal agency Regulations, 
lender shall by regulation require and provide for escrow and 
payment of any flood insurance premiums and fees relating 
to residential improved real estate and mobile homes securing 
loans made by the Federal agency lender under the cir-
cumstances and in the manner provided under paragraph (1). 
Any regulations issued under this paragraph shall be consistent 
with and substantially identical to the regulations issued under 
paragraph (1). 
"(3) APPLICABILITY OF RESPA.—Escrow accounts established 
pursuant to this subsection shall be subject to the provisions 
of section 10 of the Real Estate Settlement Procedures Act 
of 1974. 
"(4) DEFINITION.—For purposes of this subsection, the term 
'residential improved real estate' means improved real estate 
for which the improvement is a residential building. 
"(5) APPLICABILITY.—^This subsection shall apply only with 
respect to any loan made, increased, extended, or renewed 
after the expiration of the 1-year period beginning on the date 
of enactment of the Riegle Community Development and Regu-
latory Improvement Act of 1994.". 
SEC. 524. PLACEMENT OF FLOOD INSURANCE BY LENDERS. 
Section 102 of the Flood Disaster Protection Act of 1973 (42 
U.S.C. 4012a), as amended by the preceding provisions of this 
title, is further amended by adding at the end the following new 
subsection: 
"(e) PLACEMENT OF FLOOD INSURANCE BY LENDER.— 
"(1) NOTIFICATION TO BORROWER OF LACK OF COVERAGE.— 
If, at the time of origination or at any time during the term 
of a loan secured by improved real estate or by a mobile 
home located in an area that has been identified by the Director 
(at the time of the origination of the loan or at any time 
during the term of the loan) as an area having special flood 
hazards and in which flood insurance is available under the 
National Flood Insurance Act of 1968, the lender or servicer 
for the loan determines that the building or mobile home and 
any personal property securing the loan is not covered by 
flood insurance or is covered by such insurance in an amount 
less than the amount required for the property pursuant to 
108 STAT. 2260 
PUBLIC LAW 103-325—SEPT. 23, 1994 
paragraph (1), (2), or (3) of subsection (b), the lender or servicer 
shall notify the borrower under the loan that the borrower 
should obtain, at the borrower's expense, an amount of flood 
insurance for the building or mobile home and such personal 
property that is not less than the amount under subsection 
(b)(1), for the term of the loan. 
"(2) PURCHASE OF COVERAGE ON BEHALF OF BORROWER.— 
If the borrower fails to purchase such flood insurance within 
45 days after notification under paragraph (1), the lender or 
servicer for the loan shall purchase the insurance on behalf 
of the borrower and may charge the borrower for the cost 
of premiums and fees incurred by the lender or servicer for 
the loan in purchasing the insurance. 
"(3) 
REVIEW OF DETERMINATION REGARDING REQUIRED-
PURCHASE.— 
"(A) IN GENERAL.—The borrower and lender for a loan 
secured by improved real estate or a mobile home may 
jointly request the Director to review a determination of 
whether the building or mobile home is located in an area 
having special flood hazards. Such request shall be sup-
ported by technical information relating to the improved 
real estate or mobile home. Not later than 45 days after 
the Director receives the request, the Director shall review 
the determination and provide to the borrower and the 
lender with a letter stating whether or not the building 
or mobile home is in an area having special flood hazards. 
The determination of the Director shall be final. 
"(B) EFFECT OF DETERMINATION.—Any person to whom 
a borrower provides a letter issued by the Director pursuant 
to subparagraph (A), stating that the building or mobile 
home securing the loan of the borrower is not in an area 
having special flood hazards, shall have no obligation under 
this title to require the purchase of flood insurance for 
such building or mobile home during the period determined 
by the Director, which shall be specified in the letter and 
shall begin on the date on which such letter is provided. 
"(C) 
EFFECT OF FAILURE TO RESPOND.—If a request 
under subparagraph (A) is made in connection with the 
origination of a loan and the Director fails to provide a 
letter under subparagraph (A) before the later of (i) the 
expiration of the 45-day period under such subparagraph, 
or (ii) the closing of the loan, no person shall have an 
obligation under this title to require the purchase of flood 
insurance for the building or mobile home securing the 
loan until such letter is provided. 
"(4) APPLICABILITY.—This subsection shall apply to all loans 
outstanding on or after the date of enactment of the Riegle 
Community Development and Regulatory Improvement Act of 
1994.". 
SEC. 525. PENALTIES FOR FAILURE TO REQUIRE FLOOD INSURANCE 
OR NOTIFY. 
Section 102 of the Flood Disaster Protection Act of 1973 (42 
U.S.C. 4012a), as amended by the preceding provisions of this 
title, is further amended by adding at the end the following new 
subsections: 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2261 
"(f) 
CIVIL MONETARY PENALTIES FOR FAILURE TO REQUIRE 
FLOOD INSURANCE OR NOTIFY.— 
"(1) CIVIL MONETARY PENALTIES AGAINST REGULATED LEND-
ERS.—^Any regulated lending institution that is found to have 
a pattern or practice of committing violations under paragraph 
(2) shall be assessed a civil penalty by the appropriate Federal 
entity for lending regulation in the amount provided under 
paragraph (5). 
"(2) LENDER VIOLATIONS.—The violations referred to in 
paragraph (1) shall include— 
"(A) making, increasing, extending, or renewing loans 
in violation o
f
— 
"(i) the regulations issued pursuant to subsection 
(b) of this section; 
"(ii) the escrow requirements under subsection (d) 
of this section; or 
"(iii) the notice requirements under section 1364 
of the National Flood Insurance Act of 1968; or 
"(B) failure to provide notice or purchase flood insur-
ance coverage in violation of subsection (e) of this section. 
"(3) CIVIL MONETARY PENALTIES AGAINST GSE'S.— 
"(A) IN GENERAL.—If the Federal National Mortgage 
Association or the Federal Home Loan Mortgage Corpora-
tion is found by the Director of the Office of Federal Hous-
ing Enterprise Oversight of the Department of Housing 
and Urban Development to have a pattern or practice 
of purchasing loans in violation of the procedures estab-
lished pursuant to subsection (b)(3), the Director of such 
Office shall assess a civil penalty against such enterprise 
in the amount provided under paragraph (5) of this 
subsection. 
"(B) DEFINITION.—For purposes of this subsection, the 
term 'enterprise' means the Federal National Mortgage 
Association 
or 
the 
Federal 
Home 
Loan 
Mortgage 
Corporation. 
"(4) NOTICE AND HEARING.—^A penalty under this subsection 
may be issued only after notice and an opportunity for a hearing 
on the record. 
"(5) AMOUNT.—^A civil monetary penalty under this sub-
section may not exceed $350 for each violation under paragraph 
(2) or paragraph (3). The total amount of penalties assessed 
under this suijsection against any single regulated lending 
institution or enterprise during any calendar year may not 
exceed $100,000. 
"(6) LENDER COMPLIANCE.—Notwithstanding any State or 
local law, for purposes of this subsection, any regulated lending 
institution that purchases flood insurance or renews a contract 
for flood insurance on behalf of or as an agent of a borrower 
of a loan for which flood insurance is required shall be consid-
ered to have complied with the regulations issued under 
subsection (b). 
"(7) EFFECT OF TRANSFER ON LIABILITY.—^Any sale or other 
transfer of a loan by a regulated lending institution that has 
committed a violation under paragraph (1), that occurs subse-
quent to the violation, shall not affect the liability of the 
transferring lender with respect to any penalty under this 
subsection. A lender shall not be liable for any violations relat-
108 STAT. 2262 
PUBLIC LAW 103-325—SEPT. 23, 1994 
ing to a loan committed by another regulated lending institution 
that previously held the loan. 
"(8) DEPOSIT OF PENALTIES.—^Any penalties collected under 
this subsection shall be paid into the National Flood Mitigation 
Fund under section 1367 of the National Flood Insurance Act 
of 1968. 
"(9) ADDITIONAL PENALTIES.—Any penalty under this sub-
section shall be in addition to any civil remedy or criminal 
penalty otherwise available. 
"(10) 
STATUTE OF LIMITATIONS.^NO penalty may be 
imposed under this subsection after the expiration of the 4-
year period beginning on the date of the occurrence of the 
violation for which the penalty is authorized under this 
subsection. 
"(g) OTHER ACTIONS TO REMEDY PATTERN OF NONCOMPLI-
-ANCE.— 
"(1) AUTHORITY OF FEDERAL ENTITIES FOR LENDING REGULA-
TION.—^A Federal entity for lending regulation may require 
a regulated lending institution to take such remedial actions 
as are necessary to ensure that the regulated lending institution 
complies with the requirements of the national flood insurance 
program if the Federal agency for lending regulation makes 
a determination under paragraph (2) regarding the regulated 
lending institution. 
"(2) 
DETERMINATION OF VIOLATIONS.—A 
determination 
under this paragraph shall be a finding that— 
"(A) the regulated lending institution has engaged in 
a pattern and practice of noncompliance in violation of 
the regulations issued pursuant to subsection (b), (d), or 
(e) or the notice requirements under section 1364 of the 
National Flood Insurance Act of 1968; and 
"(B) the regulated lending institution has not dem-
onstrated measurable improvement in compliance despite 
the assessment of civil monetary penalties under subsection 
(f).". 
SEC. 526. FEES FOR DETERMINING APPUCABILITY OF FLOOD INSUR-
ANCE PURCHASE REQUIREMENTS. 
Section 102 of the Flood Disaster Protection Act of 1973 (42 
U.S.C. 4012a) as amended by the preceding provisions of this title, 
is further amended by adding at the end the following new sub-
section: 
"(h) FEE FOR DETERMINING LOCATION.—^Notwithstanding any 
other Federal or State law, any person who makes a loan secured 
by improved real estate or a mobile home or any servicer for 
such a loan may charge a reasonable fee for the costs of determining 
whether the building or mobile home securing the loan is located 
in an area having special flood hazards, but only in accordance 
with the following requirements: 
"(1) BORROWER FEE.—^The borrower under such a loan may 
be charged the fee, but only if the determination— 
"(A) is made pursuant to the making, increasing, 
extending, or renewing of the loan that is initiated by 
the borrower; 
"(B) is made pursuant to a revision or updating under 
section 1360(f) of the floodplain areas and flood-risk zones 
or publication of a notice or compendia under subsection 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2263 
(h) or (i) of section 1360 that affects the area in which 
the improved real estate or mobile home securing the loan 
is located or that, in the determination of the Director, 
may reasonably be considered to require a determination 
under this subsection; or 
"(C) results in the purchase of flood insurance coverage 
pursuant to the requirement under subsection (e)(2). 
"(2) PURCHASER OR TRANSFEREE FEE.—The purchaser or 
transferee of such a loan may be charged the fee in the case 
ofsale or transfer of the loan." 
SEC. 527. NOTICE REQUIREMENTS. 
Section 1364 of the National Flood Insurance Act of 1968 (42 
U.S.C. 4104a) is amended to read as follows: 
NOTICE REQUIREMENTS 
"SEC. 1364. 
(a) NOTIFICATION OF SPECIAL FLOOD HAZARDS.— 
"(1) REGULATED LENDING INSTITUTIONS.—Each Federal 
entity for lending regulation (after consultation and coordina-
tion with the Financial Institutions Examination Council) shall 
by regulation require regulated lending institutions, as a condi-
tion of making, increasing, extending, or renewing any loan 
secured by improved real estate or a mobile home that the 
regulated lending institution determines is located or is to 
be located in an area that has been identified by the Director 
under this title or the Flood Disaster Protection Act of 1973 
as an area having special flood hazards, to notify the purchaser 
or lessee (or obtain satisfactory assurances that the seller or 
lessor has notified the purchaser or lessee) and the servicer 
of the loan of such special flood hazards, in writing, a reasonable 
period in advance of the signing of the purchase agreement, 
lease, or other documents involved in the transaction. The 
regulations shall also require that the regulated lending institu-
tion retain a record of the receipt of the notices by the purchaser 
or lessee and the servicer. 
"(2) FEDERAL AGENCY LENDERS.—Each Federal agency 
lender shall by regulation require notification in the manner 
provided under paragraph (1) with respect to any loan that 
is made by the Federal agency lender and secured by improved 
real estate or a mobile home located or to be located in an 
area that has been identified by the Director under this title 
or the Flood Disaster Protection Act of 1973 as an area having 
special flood hazards. Any regulations issued under this para-
graph shall be consistent with and substantially identical to 
the regulations issued under paragraph (1). 
"(3) CONTENTS OF NOTICE.—^Written notification required 
under this subsection shall include— 
"(A) a warning, in a form to be established by the 
Director, stating that the building on the improved real 
estate securing the loan is located, or the mobile home 
securing the loan is or is to be located, in an area having 
special flood hazards; 
"(B) a description of the flood insurance purchase 
requirements under section 102(b) of the Flood Disaster 
Protection Act of 1973; 
Records. 
Regulations. 
108 STAT. 2264 
PUBLIC LAW 103-325—SEPT. 23, 1994 
"(C) a statement that flood insurance coverage may 
be purchased under the national flood insurance program 
and is also available from private insurers; and 
"(D) any other information that the Director considers 
necessary to carry out the purposes of the national flood 
insurance program. 
"(b) NOTIFICATION OF CHANGE OF SERVICER.— 
Regulations. 
"(1) LENDING INSTITUTIONS.—Each Federal entity for lend-
ing regulation (after consultation and coordination with the 
Financial Institutions Examination Council) shall by regulation 
require regulated lending institutions, in connection with the 
making, increasing, extending, renewing, selling, or transfer-
ring any loan described in subsection (a)(1), to notify the Direc-
tor (or the designee of the Director) in writing during the 
term of the loan of the servicer of the loan. Such institutions 
shall also notify the Director (or such designee) of any change 
in the servicer of the loan, not later than 60 days after the 
effective date of such change. The regulations under this sub-
section shall provide that upon any change in the servicing 
of a loan, the duty to provide notification under this subsection 
shall transfer to the transferee servicer of the loan. 
Regulations. 
«(2) FEDERAL AGENCY LENDERS.—Each Federal agency 
lender shall by regulation provide for notification in the manner 
provided under paragraph (1) with respect to any loan described 
in subsection (a)(1) that is made by the Federal agency lender. 
Any regulations issued under this paragraph shall be consistent 
with and substantially identical to the regulations issued under 
paragraph (1) of this subsection. 
"(c) NOTIFICATION OF EXPIRATION OF INSURANCE.—The Director 
(or the designee of the Director) shall, not less than 45 days before 
the expiration of any contract for flood insurance under this title, 
issue notice of such expiration by first class mail to the owner 
of the property covered by the contract, the servicer of any loan 
secured by the property covered by the contract, and (if known 
to the Director) the owner of the loan.". 
SEC. 
5
2
8
. 
STANDARD 
HAZARD 
DETERMINATION 
FORMS. 
Chapter III of the National Flood Insurance Act of 1968 (42 
U.S.C. 4101 et seq.) is amended by adding at the end the following 
new section: 
"STANDARD HAZARD DETERMINATION FORMS 
42 use 4104b. 
"SEC. 1365. (a) DEVELOPMENT.—The Director, in consultation 
with representatives of the mortgage and lending industry, the 
Federal entities for lending regulation, the Federal agency lenders, 
and any other appropriate individuals, shall develop a standard 
form for determining, in the case of a loan secured by improved 
real estate or a mobile home, whether the building or mobile home 
is located in an area identified by the Director as an area having 
special flood hazards and in which flood insurance under this title 
Regulations. 
is available. The form shall be established by regulations issued 
not later than 270 days after the date of enactment of the Riegle 
Community Development and Regulatory Improvement Act of 1994. 
"(b) DESIGN AND CONTENTS.— 
*' 
"(1) PURPOSE.—^The form under subsection (a) shall be 
designed to facilitate compliance with the flood insurance pur-
chase requirements of this title. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2265 
"(2) CONTENTS.—^The form shall require identification of 
the type of flood-risk zone in which the building or mobile 
home is located, the complete map and panel numbers for 
the improved real estate or property on which the mobile home 
is located, the community identification number and community 
participation status (for purposes of the national flood insurance 
program) of the community in which the improved real estate 
or such property is located, and the date of the map used 
for the determination, with respect to flood hazard information 
on file with the Director. If the building or mobile home is 
not located in an area having special flood hazards the form 
shall require a statement to such effect and shall indicate 
the complete map and panel numbers of the improved real 
estate or property on which the mobile home is located. If 
the complete map and panel numbers are not available because 
the building or mobile home is not located in a community 
that is participating in the national flood insurance program 
or because no map exists for the relevant area, the form shall 
require a statement to such effect. The form shall provide 
for inclusion or attachment of any relevant documents indicat-
ing revisions or amendments to maps. 
"(c) REQUIRED USE.—^The Federal entities for lending regulation 
Regulations, 
shall by regulation require the use of the form under this section 
by regulated lending institutions. Each Federal agency lender shall 
by regulation provide for the use of the form with respect to any 
loan made by such Federal agency lender. The Federal National 
Mortgage Association and the Federal Home Loan Mortgage Cor-
poration and the Government National Mortgage Association shall 
require the use of the form with respect to any loan purchased 
by such entities. A lender or other person may comply with the 
requirement under this subsection by using the form in a printed, 
computerized, or electronic manner. 
"(d) 
GUARANTEES REGARDING INFORMATION.—In providing 
information regarding special flood hazards on the form developed 
under this section, any lender (or other person required to use 
the form) who makes, increases, extends, or renews a loan secured 
by improved real estate or a mobile home may provide for the 
acquisition or determination of such information to be made by 
a person other than such lender (or other person), only to the 
extent such person guarantees the accuracy of the information. 
"(e) 
RELIANCE ON PREVIOUS DETERMINATION.—Any person 
increasing, extending, renewing, or purchasing a loan secured by 
improved real estate or a mobile home may rely on a previous 
determination of whether the building or mobile home is located 
in an area having special flood hazards (and shall not be liable 
for any error in such previous determination), if the previous deter-
mination was made not more than 7 years before the date of 
the transaction and the basis for the previous determination has 
been set forth on a form under this section, unless— 
"(1) map revisions or updates pursuant to section 1360(f) 
after such previous determination have resulted in the building 
or mobile home being located in an area having special flood 
hazards; or 
"(2) the person contacts the Director to determine when 
the most recent map revisions or updates affecting such prop-
erty occurred and such revisions and updates have occurred 
after such previous determination. 
79-194 O—95—17 : QL3Part3 
108 STAT. 2266 
PUBLIC LAW 103-325—SEPT. 23, 1994 
Regulations. 
"(0 EFFECTIVE DATE.—^The regulations under this section 
requiring use of the form established pursuant to this section shall 
be issued together with the regulations required under subsection 
(a) and shall take effect upon the expiration of the 180-day period 
beginning on such issuance.". 
SEC. 529. EXAMINATIONS REGARDING COMPLIANCE. 
(a) AMENDMENT TO FEDERAL DEPOSIT INSURANCE ACT.—Section 
10 of the Federal Deposit Insurance Act (12 U.S.C. 1820) is amended 
by adding at the end the following new subsection: 
"(i) FLOOD INSURANCE COMPLIANCE BY INSURED DEPOSITORY 
INSTITUTIONS.— 
"(1) EXAMINATIONS.—The appropriate Federal banking 
agency shall, during each scheduled on-site examination 
required by this section, determine whether the insured deposi-
tory institution is complying with the requirements of the 
national flood insurance program. 
"(2) REPORT.— 
"(A) REQUIREMENT.—^Not later than 1 year after the 
date of enactment of the Riegle Community Development 
and Regulatory Improvement Act of 1994 and biennially 
thereafter for the next 4 years, each appropriate Federal 
banking agency shall submit a report to the Congress on 
compliance by insured depository institutions with the 
requirements of the national flood insurance program. 
"(B) CONTENTS.—Each report submitted under this 
paragraph shall include a description of the methods used 
to determine compliance, the number of institutions exam-
ined during the reporting year, a listing and total number 
of institutions found not to be in compliance, actions taken 
to correct incidents of noncompliance, and an analysis of 
compliance, including a discussion of any trends, patterns, 
and problems, and recommendations regarding reasonable 
actions to improve the efficiency of the examinations proc-
esses.". 
(b) AMENDMENT TO FEDERAL CREDIT UNION ACT.—Section 204 
of the Federal Credit Union Act (12 U.S.C. 1784) is amended 
by adding at the end the following new subsection: 
"(e) 
FLOOD 
INSURANCE 
COMPLIANCE BY INSURED 
CREDIT 
UNIONS.— 
"(1) EXAMINATION.—The Board shall, during each examina-
tion conducted under this section, determine whether the 
insured credit union is complying with the requirements of 
the national flood insurance program. 
"(2) REPORT.— 
"(A) REQUIREMENT.—Not later than 1 year after the 
date of enactment of the Riegle Community Development 
and Regulatory Improvement Act of 1994 and biennially 
thereafter for the next 4 years, the Board shall submit 
a report to the Congress on compliance by insured credit 
unions with the requirements of the national flood insur-
ance program. 
"(B) CONTENTS.—^The report shall include a description 
of the methods used to determine compliance, the number 
of insured credit unions examined during the reporting 
J 
year, a listing and total number of insured credit unions 
found not to be in compliance, actions taken to correct 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2267 
incidents of noncompliance, and an analysis of compliance, 
including a discussion of any trends, patterns, and prob-
lems, and recommendations regarding reasonable actions 
to improve the efficiency of the examinations processes.". 
(c) AMENDMENT TO FEDERAL HOUSING ENTERPRISES FINANCIAL 
SAFETY AND SOUNDNESS ACT OF 1992.—Section 1319B(a) of the 
Federal Housing Enterprises Financial Safety and Soundness Act 
of 1992 (12 U.S.C. 4521(a)) is amended— 
(1) in paragraph (2), by striking "and" at the end; 
(2) in paragraph (3), by striking the period at the end 
and inserting "; and"; and 
(3) by adding at the end the following new paragraph: 
"(4) a description of— 
"(A) whether the procedures established by each enter-
prise pursuant to section 102(b)(3) of the Flood Disaster 
Protection Act of 1973 are adequate and being complied 
with, and 
"(B) the results and conclusions of any examination, 
'"•'- 
as determined necessary by the Director, to determine the 
compliance of the enterprises with the requirements of 
section 102(b)(3) of such Act, which shall include a descrip-
tion of the methods used to determine compliance and 
the types sind sources of deficiencies (if any), and identify 
any corrective measures that have been taken to remedy 
any such deficiencies, 
except that the information described in this paragraph shall 
be included only in each of the first, third, and fifth annual 
reports under this subsection required to be submitted after 
the expiration of the 1-year period beginning on the date of 
enactment of the Riegle Community Development and Regu-
latory Improvement Act of 1994.". 
SEC. 530. FINANCIAL INSTITUTIONS EXAMINATION COUNCIL. 
Section 1006 of the Federal Financial Institutions Examination 
Council Act of 1978 (12 U.S.C. 3305) is amended by adding at 
the end the following new subsection: 
"(g) FLOOD INSURANCE.—The Council shall consult with and 
assist the Federal entities for lending regulation, as such term 
is defined in section 1370(a) of the National Flood Insurance Act 
of 1968, in developing and coordinating uniform standards and 
requirements for use by regulated lending institutions under the 
national flood insurance program.". 
SEC. 531. CLERICAL AMENDMENT. 
Section 102 of the Flood Disaster Protection Act of 1973 (42 
U.S.C. 4012a) is amended by striking the section heading and 
inserting the following new section heading: 
108 STAT. 2268 
PUBLIC LAW 103-325—SEPT. 23, 1994 
"FLOOD INSURANCE PURCHASE AND COMPLIANCE REQUIREMENTS AND 
ESCROW ACCOUNTS". 
Subtitle C—Ratings and Incentives for 
Community Floodplain Management Pro-
grams 
SEC. 541. COMMUNITY RATING SYSTEM AND INCENTIVES FOR COMMU-
NITY FLOODPLAIN MANAGEMENT. 
Section 1315 of the National Flood Insurance Act of 1968 (42 
U.S.C. 4022) is amended— 
(1) by striking "After December" and inserting the 
following: 
"(a) REQUIREMENT FOR PARTICIPATION IN FLOOD INSURANCE 
PROGRAM.— 
"(1) IN GENERAL.—After December"; and 
(2) by adding at the end the following new subsection: 
"(b) COMMUNITY RATING SYSTEM AND INCENTIVES FOR COMMU-
NITY FLOODPLAIN MANAGEMENT.— 
"(1) AUTHORITY AND GOALS.—The Director shall carry out 
a community rating system program, under which communities 
participate voluntarily— 
"(A) to provide incentives for measures that reduce 
the risk of flood or erosion damage that exceed the criteria 
set forth in section 1361 and evaluate such measures; 
"(B) to encourage adoption of more effective measures 
that protect natural and beneficial floodplain functions; 
"(C) to encourage floodplain and erosion management; 
and 
"(D) to promote the reduction of Federal flood insurance 
losses. 
"(2) INCENTIVES.—^The program shall provide incentives in 
the form of credits on premium rates for flood insurance cov-
erage in communities that the Director determines have 
adopted and enforced measures that reduce the risk of flood 
and erosion damage that exceed the criteria set forth in section 
1361. In providing incentives under this paragraph, the Director 
may provide for credits to flood insurance premium rates in 
communities that the Director determines have implemented 
measures that 
protect natural 
and beneficial 
floodplain 
functions. 
"(3) CREDITS.—^The credits on premium rates for flood 
insurance coverage shall be based on the estimated reduction 
in flood and erosion damage risks resulting from the measures 
adopted by the community under this program. If a community 
has received mitigation assistance under section 1366, the cred-
its shall be phased in a manner, determined by the Director, 
to recover the amount of such assistance provided for the 
community. 
"(4) REPORTS.—Not later than 2 years after the date of 
enactment of the Riegle Community Development and Regu-
latory Improvement Act of 1994 and not less than every 2 
years thereafter, the Director shall submit a report to the 
Congress regarding the program under this subsection. Each 
report shall include an analysis of the cost-effectiveness of 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2269 
the program, any other accompHshments or shortcomings of 
the program, and any recommendations of the Director for 
legislation regarding the program.". 
SEC. 542. FUNDING. 
Section 1310(a) of the National Flood Insurance Act of 1968 
(42 U.S.C. 4017(a)) is amended— 
(1) in paragraph (4), by striking "and" at the end; 
(2) in paragraph (5), by striking the period at the end 
and inserting a semicolon; and 
(3) by adding after paragraph (5) the following new 
paragraph: 
"(6) for carrying out the program under section 1315(b);". 
Subtitle D—Mitigation of Flood Risks 
SEC. 551. REPEAL OF FLOODED PROPERTY PURCHASE AND LOAN 
PROGRAM. 
(a) REPEAL.—Section 1362 of the National Flood Insurance 
Act of 1968 (42 U.S.C. 4103) is hereby repealed. 
(b) TRANSITION PHASE.—^Notwithstanding subsection (a), during 
the 1-year period beginning on the date of enactment of this Act, 
the Director of the Federal Emergency Management Agency may 
enter into loan and purchase commitments as provided under sec-
tion 1362 of the National Flood Insurance Act of 1968 (as in effect 
immediately before the enactment of this Act). 
(c) SAVINGS PROVISION.—Notwithstanding subsection (a), the 
42USC4103 
Director shall take any action necessary to comply with any pur- 
^°^-
chase or loan commitment entered into before the expiration of 
the period referred to in subsection (b) pursuant to authority under 
section 1362 of the National Flood Insurance Act of 1968 or sub-
section (b). 
SEC. 552. TERMINATION OF EROSION-THREATENED STRUCTURES 
PROGRAM. 
(a) IN GENERAL.—Section 1306 of the National Flood Insurance 
Act of 1968 (42 U.S.C. 4013) is amended by striking subsection 
(0. 
(b) TRANSITION PHASE.—^Notwithstanding subsection (a), during 
42 use 4013 
the 1-year period beginning on the date of enactment of this Act, 
"°^-
the Director of the Federal Emergency Management Agency may 
pay amounts under flood insurance contracts for demolition or 
relocation of structures as provided in section 1306(c) of the 
National Flood Insurance Act of 1968 (as in effect immediately 
before the enactment of this Act). 
(c) SAVINGS PROVISION.—Notwithstanding subsection (a), the 
42USC4013 
Director shall take any action necessary to msike payments under 
^°^-
flood insurance contracts pursuant to any commitments made before 
the expiration of the period referred to in subsection (b) pursuant 
to the authority under section 1306(c) of the National Flood Insur-
ance Act of 1968 or subsection (b). 
(d) 
REPEAL OF FINDINGS PROVISION.—Section 1302 
of 
the 
National Flood Insurance Act of 1968 (42 U.S.C. 4001) is amended 
by striking subsection (g). 
108 STAT. 2270 
PUBLIC LAW 103-325—SEPT. 23, 1994 
SEC. 553. MITIGATION ASSISTANCE PROGRAM. 
(a) IN GENERAL,—Chapter III of the National Flood Insurance 
Act of 1968 (42 U.S.C. 4101 et seq.), as amended by the preceding 
provisions of this title, is further amended by adding at the end 
the following new section: 
"MITIGATION ASSISTANCE 
42 use 4104c. 
"SEC. 1366. (a) AUTHORITY.—The Director shall carry out a 
program to provide financial assistance to States and communities, 
using amounts made available from the National Flood Mitigation 
Fund under section 1367, for planning and carrying out activities 
designed to reduce the risk of flood damage to structures covered 
under contracts for flood insurance under this title. Such financial 
assistance shall be made available to States and communities in 
the form of grants under subsection (b) for planning assistance 
and in the form of grants under this section for carrying out 
mitigation activities. 
"(b) PLANNING ASSISTANCE GRANTS.— 
"(1) IN GENERAL.—^The Director may make grants under 
this subsection to States and communities to assist in develop-
ing mitigation plans under subsection (c). 
"(2) FUNDING.—Of any amounts made available from the 
National Flood Mitigation Fund for use under this section 
in any fiscal year, the Director may use not more than 
$1,500,000 to provide planning assistance grants under this 
subsection. 
"(3) LIMITATIONS.— 
"(A) TIMING.—^A grant under this subsection may be 
awarded to a State or community not more than once 
every 5 years and each grant may cover a period of 1 
to 3 years. 
"(B) SINGLE GRANTEE AMOUNT.—A grant for planning 
assistance may not exceed— 
"(i) $150,000, to any State; or 
"(ii) $50,000, to any community. 
"(C) CUMULATIVE STATE GRANT AMOUNT.—The sum 
of 
the amounts of grants made under this subsection in any 
fiscal year to any one State and all communities located 
in such State may not exceed $300,000. 
"(c) ELIGIBILITY FOR MITIGATION ASSISTANCE.—To be eligible 
to receive financial assistance under this section for mitigation 
activities, a State or community shall develop, and have approved 
by the Director, a flood risk mitigation plan (in this section referred 
to as a 'mitigation plan'), that describes the mitigation activities 
to be carried out with assistance provided under this section, is 
consistent with the criteria established by the Director under section 
1361, and provides protection against flood losses to structures 
for which contracts for flood insurance are available under this 
title. The mitigation plan shall be consistent with a comprehensive 
strategy for mitigation activities for the area affected by the mitiga-
tion plan, that has been adopted by the State or community follow-
ing a public hearing. 
"(d) NOTIFICATION OF APPROVAL AND GRANT AWARD.— 
"(1) IN GENERAL.—The Director shall notify a State or 
community submitting a mitigation plan of the approval or 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2271 
disapproval of the plan not later than 120 days after submission 
of the plan. 
"(2) NOTIFICATION OF DISAPPROVAL.—If the Director does 
not approve a mitigation plan submitted under this subsection, 
the Director shall notify, in writing, the State or community 
submitting the plan of the reasons for such disapproval. 
"(e) ELIGIBLE MITIGATION ACTIVITIES.— 
"(1) USE OF AMOUNTS.—^Amounts provided under this sec-
tion (other than under subsection (b)) may be used only for 
mitigation activities specified in a mitigation plan approved 
by the Director under subsection (d). The Director shall provide 
assistance under this section to the extent amounts are avail-
able in the National Flood Mitigation Fund pursuant to 
appropriation Acts, subject only to the absence of approvable 
mitigation plans. 
"(2) DETERMINATION OF ELIGIBLE PLANS.—The Director may 
approve only mitigation plans that specify mitigation activities 
that the Director determines are technically feasible and cost-
effective and only such plans that propose activities that are 
cost-beneficial to the National Flood Mitigation Fund. 
"(3) STANDARD FOR APPROVAL.—The Director shall approve 
mitigation plans meeting the requirements for approval under 
paragraph (1) that will be most cost-beneficial to the National 
Flood Mitigation Fund. 
"(4) PRIORITY.—^The Director shall make every effort to 
provide mitigation assistance under this section for mitigation 
plans proposing activities for repetitive loss structures and 
structures that have incurred substantial damage. 
"(5) ELIGIBLE ACTIVITIES.—The Director shall determine 
whether mitigation activities described in a mitigation plan 
submitted under subsection (d) comply with the requirements 
under paragraph (1). Such activities may include— 
"(A) demolition or relocation of any structure located 
on land that is along the shore of a lake or other body 
of water and is certified by an appropriate State or local 
land use authority to be subject to imminent collapse or 
subsidence as a result of erosion or flooding; 
"(B) elevation, relocation, demolition, or floodproofing 
of structures (including public structures) located in areas 
having special flood hazards or other areas of flood risk; 
"(C) acquisition by States and communities of prop-
erties (including public properties) located in areas having 
special flood hazards or other areas of flood risk and prop-
erties substantially damaged by flood, for public use, as 
the Director determines is consistent with sound land 
management and use in such area; 
"(D) minor physical mitigation efforts that do not dupli-
cate the flood prevention activities of other Federal agencies 
and that lessen the frequency or severity of flooding and 
decrease predicted flood damages, which shall not include 
major flood control projects such as dikes, levees, seawalls, 
groins, and jetties unless the Director specifically deter-
mines in approving a mitigation plan that such activities 
are the most cost-effective mitigation activities for the 
National Flood Mitigation Fund; 
"(E) beach nourishment activities; 
108 STAT. 2272 
PUBLIC LAW 103-325—SEPT. 23, 1994 
"(F) the provision of technical assistance by States 
to communities and individuals to conduct eligible mitiga-
tion activities; 
"(G) other activities that the Director considers appro-
priate and specifies in regulation; and 
"(H) other mitigation activities not described in sub-
paragraphs (A) through (F) or the regulations issued under 
subparagraph (G), that are described in the mitigation 
plan of a State or community. 
"(f) LIMITATIONS ON AMOUNT OF ASSISTANCE.— 
"(1) AMOUNT.—^The sum of the amounts of mitigation assist-
ance provided under this section during any 5-year period may 
not exceed— 
"(A) $10,000,000, to any State; or 
"(B) $3,300,000, to any community. 
"(2) GEOGRAPHIC.—^The sum of the amounts of mitigation 
assistance provided under this section during any 5-year period 
to any one State and all communities located in such State 
may not exceed $20,000,000. 
"(3) WAIVER.—^The Director may waive the dollar amount 
limitations under paragraphs (1) and (2) for any State or 
community for £my 5-year period during which a major disaster 
or emergency declared by the President (pursuant to the Robert 
T. Stafford Disaster Relief and Emergency Assistance Act) as 
a result of flood conditions is in effect with respect to areas 
in the State or community. 
"(g) MATCHING REQUIREMENT.— 
"(1) IN GENERAL.—^The Director may not provide mitigation 
assistance under this section to a State or community in an 
amount exceeding 3 times the amount that the State or commu-
nity certifies, as the Director shall require, that the State 
or community will contribute from non-Federal funds to develop 
a mitigation plan under subsection (c) and to carry out mitiga-
tion activities under the approved mitigation plan. In no case 
shall any in-kind contribution by any State or community 
exceed one-half of the amount of non-Federal funds contributed 
by the State or community. 
"(2) NON-FEDERAL FUNDS.—For purposes of this subsection, 
the term 'non-Federal funds' includes State or local agency 
funds, in-kind contributions, any salary paid to staff to carry 
out the mitigation activities of the recipient, the value of the 
time and services contributed by volunteers to carry out such 
activities (at a rate determined by the Director), and the value 
of any donated material or building and the value of any 
lease on a building. 
"(h) OVERSIGHT OF MITIGATION PLANS.—The Director shall con-
duct oversight of recipients of mitigation assistance under this 
section to ensure that the assistance is used in compliance with 
the approved mitigation plans of the recipients and that matching 
funds certified under subsection (g) are used in accordance with 
such certification, 
"(i) RECAPTURE.— 
"(1) NONCOMPLIANCE WITH PLAN.—If the Director deter-
mines that a State or community that has received mitigation 
assistance under this section has not carried out the mitigation 
activities as set forth in the mitigation plan, the Director shall 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2273 
recapture any unexpended amounts and deposit the amounts 
in the National Flood Mitigation Fund under section 1367. 
"(2) FAILURE TO PROVIDE MATCHING FUNDS.—If the Director 
determines that a State or community that has received mitiga-
tion assistance under this section has not provided matching 
funds in the amount certified under subsection (g), the Director 
shall recapture any unexpended amounts of mitigation assist-
ance exceeding 3 times the amount of such matching funds 
actually provided and deposit the amounts in the National 
Flood Mitigation Fund under section 1367. 
"(j) REPORTS.—Not later than 1 year after the date of enactment 
of the Riegle Community Development and Regulatory Improvement 
Act of 1994 and biennially thereafter, the Director shall submit 
a report to the Congress describing the status of mitigation activities 
carried out with assistance provided under this section. 
"(k) DEFINITION OF COMMUNITY.—For purposes of this section, 
the term 'community' means— 
"(1) a political subdivision that (A) has zoning and building 
code jurisdiction over a particular area having special flood 
hazards, and (B) is participating in the national flood insurance 
program; or 
"(2) a political subdivision of a State, or other authority, 
that is designated to develop and administer a mitigation plan 
by political subdivisions, all of which meet the requirements 
of paragraph (1).". 
(b) REGULATIONS.—Not later than 6 months after the date 
42USC4i04c 
of enactment of this Act, the Director of the Federal Emergency 
"°**-
Management Agency shall issue regulations to carry out section 
1366 of the National Flood Insurance Act of 1968, as added by 
subsection (a). 
SEC. 554. ESTABLISHMENT OF NATIONAL FLOOD MITIGATION FUND. 
(a) IN GENERAL.—Chapter III of the National Flood Insurance 
Act of 1968 (42 U.S.C. 4101 et seq.), as amended by the preceding 
provisions of this title, is further amended by adding at the end 
the following new section: 
"NATIONAL FLOOD MITIGATION FUND 
"SEC. 1367. (a) ESTABLISHMENT AND AVAILABILITY.—The Direc- 
12 use 4i04d 
tor shall establish in the Treasury of the United States a fund 
"°^-
to be known as the National Flood Mitigation Fund, which shall 
be credited with amounts described in subsection (b) and shall 
be available, to the extent provided in appropriation Acts, for provid-
ing assistance under section 1366. 
"(b) CREDITS.—The National Flood Mitigation Fund shall be 
credited with— 
"(1) amounts from the National Flood Insurance Fund, 
in amounts not exceeding— 
"(A) $10,000,000 in the fiscal year ending September 
30, 1994; 
"(B) $15,000,000 in the fiscal year ending Septem-
ber 30, 1995; 
"(C) $20,000,000 in the fiscal year ending September 
30, 1996; and 
"(D) $20,000,000 in each fiscal year thereafter; 
"(2) any penalties collected under section 102(f) of the Flood 
Disaster Protection Act of 1973; and 
108 STAT. 2274 
PUBLIC LAW 103-325—SEPT. 23, 1994 
"(3) any amounts recaptured under section 1366(i). 
"(c) INVESTMENT.—If the Director determines that the amounts 
in the National Flood Mitigation Fund are in excess of amounts 
needed under subsection (a), the Director may invest any excess 
amounts the Director determines advisable in interest-bearing 
obligations issued or guaranteed by the United States. 
"(d) REPORT.—^The Director shall submit a report to the Con-
gress not later than the expiration of the 1-year period beginning 
on the date of enactment of this Act and not less than once during 
each successive 2-year period thereafter. The report shall describe 
the status of the Fund and any activities carried out with amounts 
from the Fund.". 
(b) 
NATIONAL 
FLOOD 
INSURANCE 
FUND 
AS 
SEPARATE 
ACCOUNT.—Section 1310(a) of the Nationed Flood Insurance Act 
of 1968 (42 U.S.C. 4017(a)) is amended— 
(1) in the matter preceding paragraph (1)— 
(A) by striking "is authorized to" and inserting "shall"; 
and 
(B) by inserting after "which shall be" the following: 
"an account separate from any other accounts or funds 
available to the Director and shall be"; and 
(2) by adding after paragraph (6) (as added by the preceding 
provisions of this title) the following new paragraph: 
"(7) for transfers to the National Flood Mitigation Fund, 
but only to the extent provided in section 1367(b)(1); and". 
SEC. 555. ADDITIONAL COVERAGE FOR COMPLIANCE WITH LAND USE 
AND CONTROL MEASURES. 
(a) IN GENERAL.—Section 1304 of the National Flood Insurance 
Act of 1968 (42 U.S.C. 4011) is amended— 
(1) by redesignating subsection (b) as subsection (c); and 
(2) by inserting after subsection (a) the following new sub-
section: 
"(b) ADDITIONAL COVERAGE FOR COMPLIANCE WITH LAND USE 
AND CONTROL MEASURES.—^The national flood insurance program 
established pursuant to subsection (a) shall enable the purchase 
of insurance to cover the cost of compliance with land use and 
control measures established under section 1361 for— 
"(1) properties that are repetitive loss structures; 
"(2) properties that have flood damage in which the cost 
of repairs equals or exceeds 50 percent of the value of the 
structure at the time of the flood event; and 
"(3) properties that have sustained flood damage on mul-
tiple occasions, if the Director determines that it is cost-effective 
and in the best interests of the National Flood Insurance Fund 
to require compliance with the land use and control measures. 
The Director shall impose a surcharge on each insured of not 
more than $75 per policy to provide cost of compliance coverage 
in accordance with the provisions of this subsection.". 
42 use 4011 
(b) APPLICABILITY.—^The provisions of subsection (a) shall apply 
^°^- 
only to properties that sustain flood-related damage after the date 
of enactment of this Act. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2275 
Subtitle E—Task Forces 
SEC. 561. FLOOD INSURANCE INTERAGENCY TASK FORCE. 
42 USC 4011 
(a) ESTABLISHMENT.—^There is hereby established an inter-
agency task force to be known as the Flood Insurance Task Force 
(in this section referred to as the "Task Force"). 
(b) MEMBERSHIP.— 
(1) IN GENERAL.—The Task Force shall be composed of 
10 members, who shall be the designees of— 
(A) the Federal Insurance Administrator; 
(B) the Federal Housing Commissioner; 
(C) the Secretary of Veterans Affairs; 
(D) 
the 
Administrator 
of 
the 
Farmers 
Home 
Administration; 
(E) 
the 
Administrator 
of 
the 
Small 
Business 
Administration; 
(F) the Chairman of the Board of Directors of the 
Farm Credit Administration; 
(G) a designee of the Financial Institutions Examina-
tion Council; 
(H) the Director of the Office of Federal Housing Enter-
prise Oversight; 
(I) the chairman of the Board of Directors of the 
Federal Home Loan Mortgage Corporation; and 
(J) the chairman of the Board of Directors of the 
Federal National Mortgage Association. 
(2) QUALIFICATIONS.—Members of the Task Force shall be 
designated for membership on the Task Force by reason of 
demonstrated 
knowledge 
and 
competence 
regarding 
the 
national flood insurance program. 
(c) DUTIES.—^The Task Force shall carry out the following 
duties: 
(1) 
RECOMMENDATIONS OF STANDARDIZED 
ENFORCEMENT 
PROCEDURES.—Make recommendations to the head of each Fed-
eral agency and enterprise referred to under subsection (b)(1) 
regarding establishment or adoption of standardized enforce-
ment procedures among such agencies and corporations respon-
sible for enforcing compliance with the requirements under 
the national flood insurance program to ensure fullest possible 
compliance with such requirements. 
(2) STUDY OF COMPLIANCE ASSISTANCE.—Conduct a study 
of the extent to which Federal agencies and the secondary 
mortgage market can provide assistance in ensuring compliance 
with the requirements under the national flood insurance pro-
gram and submit to the Congress a report describing the study 
and any conclusions. 
(3) STUDY OF COMPLIANCE MODEL.—Conduct a study of 
the extent to which existing programs of Federal agencies and 
corporations for compliance with the requirements under the 
national flood insurance program can serve as a model for 
other Federal agencies responsible for enforcing compliance, 
and submit to the Congress a report describing the study and 
any conclusions. 
(4) RECOMMENDATIONS FOR ENFORCEMENT AND COMPLIANCE 
PROCEDURES.—Develop recommendations regarding enforce-
108 STAT. 2276 
PUBLIC LAW 103-325—SEPT. 23, 1994 
ment and compliance procedures, based on the studies and 
findings of the Task Force, and publish such recommendations. 
(5) STUDY OF DETERMINATION FEES.—Conduct a study of— 
(A) the reasonableness of fees charged pursuant to 
102(h) of the Flood Disaster Protection Act of 1973 for 
costs of determining whether the property securing a loan 
is located in an area having special flood hazards; and 
(B) whether the fees charged pursuant to such section 
by lenders and servicers are greater than the amounts 
paid by such lenders and servicers to persons actually 
conducting such determinations and the extent to which 
the fees exceed such amounts. 
(d) NONCOMPENSATION.—Members of the Task Force shall 
receive no additional pay by reason of their service on the Task 
Force. 
(e) CHAIRPERSON.—The members of the Task Force shall elect 
one member as chairperson of the Task Force. 
if) MEETINGS AND ACTION.—The Task Force shall meet at the 
call of the chairman or a majority of the members of the Task 
Force and may take action by a vote of the majority of the members. 
The Federal Insurance Administrator shall coordinate and call the 
initial meeting of the Task Force. 
(g) OFFICERS.—^The chairperson of the Task Force may appoint 
any officers to carry out the duties of the Task Force under sub-
section (c). 
(h) STAFF OF FEDERAL AGENCIES.—^Upon request of the chair-
person of the Task Force, the head of any of the Federal agencies 
and entities referred to under subsection (b)(1) may detail, on 
a nonreimbursable basis, any of the personnel of such agency to 
the Task Force to assist the Task Force in carrying out its duties 
under this section. 
(i) POWERS.—In carrying out this section, the Task Force may 
hold hearings, sit and act at times and places, take testimony, 
receive evidence and assistance, provide information, and conduct 
research as the Task Force considers appropriate, 
(j) TERMINATION,—^The Task Force shall terminate upon the 
expiration of the 24-month period beginning upon the designation 
of the last member to be designated under subsection (b)(1), 
42 use 4102 
SEC. 562. TASK FORCE ON NATURAL AND BENEFICLVL FUNCTIONS 
note. 
OF THE FLOODPLAIN. 
(a) ESTABLISHMENT,—There is hereby established an inter-
agency task force to be known as the Task Force on Natural 
and Beneficial Functions of the Floodplain (in this section referred 
to as the "Task Force"). 
(b) MEMBERSHIP,—^The Task Force shall be composed of 5 mem-
bers, who shall be the designees of— 
(1) the Under Secretary of Commerce for Ocegms and 
Atmosphere; 
(2) the Director of the United States Fish and Wildlife 
Service; 
(3) the Administrator of the Environmental Protection 
Agency; 
(4) the Secretary of the Army, acting through the Chief 
of Engineers; and 
(5) the Director of the Federal Emergency Management 
Agency, 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2277 
(c) DUTIES.—The Task Force shall— 
(1) conduct a study to— 
(A) identify the natural and beneficial fiinctions of 
the floodplain that reduce flood-related losses; £ind 
(B) develop recommendations on how to reduce flood 
losses by protecting the natural and beneficial functions 
of the floodplain; and 
(2) make the information and recommendations under sub-
paragraphs (A) and (B) publicly available. 
(d) NONCOMPENSATION.—^Members of the Task Force shall 
receive no additional pay by reason of their service on the Task 
Force. 
(e) CHAIRPERSON.—^The members of the Task Force shall elect 
one member as chairperson of the Task Force. 
(f) MEETINGS AND ACTION.—The Task Force shall meet at the 
call of the chairperson or a majority of the members of the Task 
Force and may take action by a vote of the majority of the members. 
The Federal Insurance Administrator shall coordinate and call the 
initial meeting of the Task Force. 
(g) OFFICERS.—^The chairperson of the Task Force may appoint 
any officers to carry out the duties of the Task Force under sub-
section (c). 
(h) STAFF OF FEDERAL AoENCiES.^Upon request of the chair-
person of the Task Force, the head of any of the Federal agencies 
and entities referred to under subsection (b) may detail, on a 
nonreimbursable basis, any of the personnel of such agency to 
the Task Force to assist the Task Force in carrying out its duties 
under this section. 
(i) POWERS.—In carrying out this section, the Task Force may 
hold hearings, sit and act at times and places, take testimony, 
receive evidence and assistance, provide information, and conduct . 
research as the Task Force considers appropriate. 
(j) TERMINATION.—The Task Force shall terminate upon the 
expiration of the 24-month period beginning upon the designation 
of the last member to be designated under subsection (b). 
Subtitle F—Miscellaneous Provisions 
SEC. 571. EXTENSION OF FLOOD INSURANCE PROGRAM. 
(a) IN GENERAL.—Section 1319 of the National Flood Insurance 
Act of 1968 (42 U.S.C. 4026) is amended by striking "Septem-
ber 30, 1995" and inserting "September 30, 1996". 
(b) EMERGENCY 
IMPLEMENTATION.—Section 1336(a) of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4056(a)) is 
amended by striking "September 30, 1995" and inserting "Septem-
ber 30, 1996". 
SEC. 572. LIMITATION ON PREMIUM INCREASES. 
(a) 
PROPERTY-SPECIFIC 
LIMITATION.—Section 
1308 
of 
the 
National Flood Insurance Act of 1968 (42 U.S.C. 4013(b)) is 42USC4015. 
amended— 
(1) in subsection (c), by striking "Notwithstanding any other 
provision of this title" and inserting "Subject only to the limita-
tion under subsection (e)"; and 
(2) by inserting after subsection (d) the following new sub-
section: 
108 STAT. 2278 
PUBLIC LAW 103-325—SEPT. 23, 1994 
"(e) ANNUAL LIMITATION ON PREMIUM INCREASES.—^Notwith-
standing any other provision of this title, the chargeable risk pre-
mium rates for flood insurance under this title for any properties 
within any single risk classification may not be increased by an 
amount that would result in the average of such rate increases 
for properties within the risk classification during any 12-month 
period exceeding 10 percent of the average of the risk premium 
rates for properties within the risk classification 
upon the 
commencement of such 12-month period.". 
(b) REPEAL OF PROGRAM-WIDE LIMITATION.—Subsection (d) of 
section 541 of the Housing and Community Development Act of 
1987 (42 U.S.C. 4015 note) is hereby repealed. 
SEC. 573. MAXIMUM FLOOD INSURANCE COVERAGE AMOUNTS. 
(a) IN GENERAL.—Section 1306(b) of the National Flood Insur-
ance Act of 1968 (42 U.S.C. 4013(b)) is amended as follows: 
(1) RESIDENTIAL PROPERTY.—In paragraph (2), by striking 
"an amount of $150,000 under the provisions of this clause" 
and inserting the following: "a total amount (including such 
Hmits specified in paragraph (l)(A)(i)) of $250,000". 
(2) RESIDENTIAL PROPERTY CONTENTS.—In paragraph (3), 
by striking "an amount of $50,000 under the provisions of 
this clause" and inserting the following: "a total amount (includ-
ing such limits specified in paragraph (l)(A)(ii)) of $100,000". 
(3) NONRESIDENTIAL PROPERTY AND CONTENTS.—By striking 
paragraph (4) and inserting the following new paragraph: 
"(4) in the case of any nonresidential property, including 
churches, for which the risk premium rate is determined in 
accordance with the provisions of section 1307(a)(1), additional 
flood insurance in excess of the limits specified in subpara-
graphs (B) and (C) of paragraph (1) shall be made available 
to every insured upon renewal and every applicant for insur-
ance, in respect to any single structure, up to a total amount 
(including such limit specified in subparagraph (B) or (C) of 
paragraph (1), as applicable) of $500,000 for each structure 
and $500,000 for any contents related to each structure; and". 
(b) REMOVAL OF CEILING ON COVERAGE REQUIRED.—Section 
1306(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 
4013(b)) is amended— 
(1) in paragraph (5), by striking "; and" at the end and 
inserting a period; and 
(2) by striking paragraph (6). 
SEC. 574. FLOOD INSURANCE PROGRAM ARRANGEMENTS WITH PRI-
VATE INSURANCE ENTITIES. 
Section 1345(b) of the National Flood Insurance Act of 1968 
(42 U.S.C. 4081(b)) is amended by striking the period at the end 
and inserting the following: "and without regard to the provisions 
of the Federal Advisory Committee Act (5 U.S.C. App.).". 
SEC. 575. UPDATING OF FLOOD MAPS. 
Section 1360 of the National Flood Insurance Act of 1968 (42 
U.S.C. 4101) is amended by adding at the end the following new 
subsections: 
"(e) REVIEW OF FLOOD MAPS.—Once during each 5-year period 
(the 1st such period beginning on the date of enactment of the 
Riegle Community Development and Regulatory Improvement Act 
of 1994) or more often as the Director determines necessary, the 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2279 
Director shall assess the need to revise and update all floodplain 
areas and flood risk zones identified, delineated, or established 
under this section, based on an analysis of all natural hazards 
affecting flood risks. 
"(f) UPDATING FLOOD MAPS.—^The Director shall revise and 
update any floodplain areas and flood-risk zones— 
"(1) upon the determination of the Director, according to 
the assessment under subsection (e), that revision and updating 
are necessary for the areas and zones; or 
"(2) upon the request from any State or local government 
stating that specific floodplain areas or flood-risk zones in the 
State or locality need revision or updating, if sufficient technical 
data justifying the request is submitted and the unit of govern-
ment making the request agrees to provide funds in an amount 
determined by the Director, but which may not exceed 50 
percent of the cost of carrying out the requested revision or 
update. 
"(g) AVAILABILITY OF FLOOD MAPS.—^To promote compliance 
with the requirements of this title, the Director shall make flood 
insurance rate maps and related information available free of charge 
to the Federal entities for lending regulation, Federal agency lend-
ers, State agencies directly responsible for coordinating the national 
flood insurance program, and appropriate representatives of commu-
nities participating in the national flood insurance program, and 
at a reasonable cost to all other persons. Any receipts resulting 
from this subsection shall be deposited in the National Hood Insur-
ance Fund, pursuant to section 1310(b)(6). 
"(h) NOTIFICATION OF FLOOD MAP CHANGES.—The Director shall 
cause notice to be published in the Federal Register (or shall provide 
notice by another comparable method) of any change to flood insur-
ance map panels and any change to flood insurance map panels 
issued in the form of a letter of map amendment or a letter of 
map revision. Such notice shall be published or otherwise provided 
not later than 30 days after the map change or revision becomes 
effective. Notice by any method other than publication in the Fed-
eral Register shall include all pertinent information, provide for 
regular and frequent distribution, and be at least as accessible 
to map users as notice in the Federal Register. All notices under 
this subsection shall include information on how to obtain copies 
of the changes or revisions. 
"(i) COMPENDIA OF FLOOD MAP CHANGES.—Every 6 months, 
the Director shall publish separately in their entirety within a 
compendium, all changes and revisions to flood insurance map 
panels and all letters of map amendment and letters of map revision 
for which notice was published in the Federal Register or otherwise 
provided during the preceding 6 months. The Director shall make 
such compendia available, free of charge, to Federal entities for 
lending regulation. Federal agency lenders, and States and commu-
nities participating in the national flood insurance program pursu-
ant to section 1310 and at cost to all other parties. Any receipts 
resulting from this subsection shall be deposited in the National 
Flood Insurance Fund, pursuant to section 1310(b)(6). 
"(j) PROVISION OF INFORMATION.—In the implementation of revi-
sions to and updates of flood insurance rate maps, the Director 
shall share information, to the extent appropriate, with the Under 
Secretary of Commerce for Oceans and Atmosphere and representa-
tives from State coastal zone management programs.". 
Federal 
Register, 
publication. 
Public 
information. 
108 STAT. 2280 
PUBLIC LAW 103-325—SEPT. 23, 1994 
42 use 4101 
SEC. 576. TECHNICAL MAPPDVG ADVISORY COUNCIL. 
(a) ESTABLISHMENT.—There is established a council to be known 
as the Technical Mapping Advisory Council (in this section referred 
to as the "Council"). 
(b) MEMBERSHIP.— 
(1) IN GENERAL.—^The Council shall consist of the Director 
of the Federal Emergency Management Agency (in this section 
referred to as the "Director"), or the Director's designee, and 
10 additional members to be appointed by the Director or 
the designee of the Director, who shall be— 
(A) the Under Secretary of Commerce for Oceans and 
Atmosphere (or his or her designee); 
(B) a member of recognized surveying and mapping 
professional associations and organizations; 
(C) a member of recognized professional engineering 
associations and organizations; 
(D) a member of recognized professional associations 
or organizations representing flood hazard determination 
firms; 
(E) a representative of the United States Geologic 
Survey; 
(F) a representative of State geologic survey programs; 
(G) a representative of State national flood insurance 
coordination offices; 
(H) a representative of a regulated lending institution; 
(I) a representative of the Federal Home Loan Mort-
gage Corporation; and 
(J) a representative of the Federal National Mortgage 
Association. 
(2) QUALIFICATIONS.—Members of the Council shall be 
appointed based on their demonstrated knowledge and com-
petence regarding surveying, cartography, remote sensing, 
geographic information systems, or the technical aspects of 
preparing and using flood insurance rate maps. 
(c) DUTIES.—The Council shall— 
(1) make recommendations to the Director on how to 
improve in a cost-effective manner the accuracy, general qual-
ity, ease of use, and distribution and dissemination of flood 
insurance rate maps; 
(2) recommend to the Director mapping standards and 
guidelines for flood insurance rate maps; and 
Reports. 
(3) submit an annual report to the Director that contains— 
(A) a description of the activities of the Council; 
(B) an evaluation of the status and performance of 
flood insurance rate maps and mapping activities to revise 
and update flood insurance rate maps, as established 
pursuant to the amendment made by section 675; and 
(C) a summary of recommendations made by the Coun-
cil to the Director. 
(d) CHAIRPERSON.—^The members of the Council shall elect 1 
member to serve as the chairperson of the Council (in this section 
referred to as the "Chairperson"). 
(e) COORDINATION.—To ensure that the Council's recommenda-
tions are consistent to the maximum extent practicable with 
national digital spatial data collection and management standards, 
, the Chairperson shall consult with the Chairperson of the Federal 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2281 
Geographic Data Committee (established pursuant to 0MB Circular 
A-16). 
(f) COMPENSATION.—Members of the Council shall receive no 
additional compensation by reason of their service on the Council. 
(g) MEETINGS AND ACTIONS.— 
(1) IN GENERAL.—The Council shall meet not less than 
twice each year at the request of the Chairperson or a majority 
of its members and may take action by a vote of the majority 
of the members. 
(2) INITIAL MEETING.—^The Director, or a person designated 
by the Director, shall request and coordinate the initial meeting 
of the Council. 
(h) OFFICERS.—^The Chairperson may appoint officers to assist 
in carrying out the duties of the Council under subsection (c). 
(i) STAFF OF FEMA.—Upon the request of the Chairperson, 
the Director may detail, on a nonreimbursable basis, personnel 
of the Federal Emergency Management Agency to assist the Council 
in carrying out its duties. 
(j) POWERS.—In carrying out this section, the Council may 
hold hearings, receive evidence and assistance, provide information, 
and conduct research as it considers appropriate. 
(k) TERMINATION.—^The Council shall terminate 5 years after 
the date on which all members of the Council have been appointed 
under subsection (b)(1). 
SEC. 577. EVALUATION OF EROSION HAZARDS. 
42 USC 4001 
(a) REPORT REQUIREMENT.—The Director of the Federal Emer-
gency Management Agency (in this section referred to as the "Direc-
tor") shall submit a report under this section to the Congress 
that— 
(1) lists all communities that are likely to be identified 
as having erosion hazard areas; 
(2) estimates the amount of flood insurance claims under 
the national flood insurance program that are attributable to 
erosion; 
(3) states the amount of flood insurance claims under such 
program that are attributable to claims under section 1306(c) 
of the National Flood Insurance Act of 1968; 
(4) assesses the full economic impact of erosion on the 
National Flood Insurance Fund; and 
(5) determines the costs and benefits of expenditures nec-
essary from the National Flood Insurance Fund to complete 
mapping of erosion hazard areas. 
(b) ESTIMATE OF FLOOD CLAIMS.—In developing the estimate 
under subsection (a)(2)— 
(1) the Director may map a statistically valid and represent-
ative number of communities with erosion hazard areas 
throughout the United States, including coastal. Great Lakes, 
and, if technologically feasible, riverine areas; and 
(2) the Director shall take into consideration the efforts 
of State and local governments to assess, measure, and reduce 
erosion hazards. 
(c) ECONOMIC IMPACT.— 
(1) IN GENERAL.—^The assessment under subsection (a)(4) 
shall assess the economic impact of— 
(A) erosion on communities listed pursuant to sub-
section (a)(1); 
108 STAT. 2282 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(B) the denial of flood insurance for all structures 
in communities listed pursuant to subsection (a)(1); 
(C) the denial of flood insurance for structures that 
are newly constructed in whole in communities listed 
pursuant to subsection (a)(1); 
(D) the establishment of (i) actuarial rates for existing 
structures in communities listed pursuant to subsection 
/ 
(a)( 1), and (ii) actuarial rates for such structures in connec-
tion with the denial of flood insurance as described in 
subparagraph (C); 
(E) the establishment of actuarial rates for structures 
newly constructed in whole in erosion hazard areas in 
communities listed pursuant to subsection (a)(1); 
(F) the denial of flood insurance pursuant to existing 
requirements for coverage under the national flood insur-
ance program; 
(G) erosion hazard assessment, measurement, and 
management activities undertaken by State and local 
governments, 
including 
building 
restrictions, 
beach 
nourishment, construction of sea walls and levees, and 
other activities that reduce the risk of damage due to 
erosion; and 
(H) the mapping and identifying of communities (or 
subdivisions thereof) having erosion hazard areas. 
(2) SCOPE.—In assessing the economic impact of the activi-
ties under subparagraphs (A) through (H) of paragraph (1), 
the assessment under subsection (a)(4) shall address such 
impact on all significant economic factors, including the impact 
on— 
(A) the value of residential and commercial properties 
in communities with erosion hazards; 
(B) community tax revenues due to potential changes 
in property values or commercial activity; 
(C) employment, including the potential loss or gain 
of existing and new jobs in the community; 
(D) existing businesses and future economic develop-
ment; 
(E) the estimated cost of Federal and State disaster 
assistance to flood victims; and 
(F) the mapping and identifying of communities (or 
subdivisions thereof) having erosion hazard areas. 
(3) PREPARATION.—^The assessment required under sub-
section (a)(4) shall be conducted by a private independent entity 
selected by the Director. The private entity shall consult with 
a statistically valid and representative number of communities 
listed 
pursuant 
to subsection 
(a)(1) in 
conducting 
the 
assessment. 
(d) COSTS AND BENEFITS OF MAPPING.—^The determination 
under subsection (a)(5) shall— 
(1) determine the costs and benefits of mapping erosion 
hazard areas, based upon the Director's estimate of the actual 
and prospective amount of flood insurance claims attributable 
to erosion; 
(2) if the Director determines that the savings to the 
National Flood Insurance Fund will exceed the cost of mapping 
erosion hazard areas, further assess whether using flood insur-
ance premiums for costs of mapping erosion hazard areas is 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2283 
cost-beneficial compared to alternative uses of such amounts, 
including— 
(A) fiinding the mitigation assistance program under 
section 1366 of the National Flood Insurance Act of 1968 
(as added by section 553 of this Act); 
(B) funding the program under section 1304(b) of the 
National Flood Insurance Act of 1968 (as added by section 
555(a) of this Act) that provides additional coverage under 
the national flood insurance program for compliance with 
land use and control measures; and 
(C) reviewing, revising, and updating flood insurance 
rate maps under subsections (e) and (f) of section 1360 
of the National Flood Insurance Act of 1968 (as added 
by the amendment made by section 575 of this Act); 
(3) if the Director determines under subsection (b)(1) that 
mapping of riverine areas for erosion hazard areas is techno-
logically feasible, determine the costs and benefits of conducting 
the mapping of erosion hazards in riverine areas (A) separately 
from the mapping of other erosion hazard areas, and (B) 
together with the mapping of other such areas; 
(4) if the Director determines that the savings to the 
National Flood Insurance Fund will exceed the cost of mapping 
erosion hazard areas in riverine areas, assess whether using 
flood insurance premiums for costs of mapping erosion hazard 
areas in riverine areas is cost-beneficial compared to alternative 
uses of such amounts, including the uses under subparagraphs 
(A) through (C) of paragraph (2); and 
(5) determine the costs and benefits of mapping erosion, 
other than those directly related to the financial condition 
of the National Flood Insurance Program, and the costs of 
not mapping erosion. 
(e) DEFINITION.—For purposes of this section, the term "erosion 
hazard area" means, based on erosion rate information and other 
historical data available, an area where erosion or avulsion is 
likely to result in damage to or loss of buildings and infrastructure 
within a 60-year period. 
(f) CONSULTATION.—In preparing the report under this section, 
the Director shall consult with— 
(1) representatives from State coastal zone management 
programs approved under section 306 of the Coastal Zone 
Management Act of 1972; 
(2) the Administrator of the National Oceanic 
and 
Atmospheric Administration; and 
(3) any other persons, officials, or entities that the Director 
considers appropriate. 
(g) SUBMISSION.— The Director shall submit the report to the Reports. 
Congress as soon as practicable, but not later than 2 years after 
the date of enactment of this Act. 
(h) AVAILABILITY OF NATIONAL FLOOD INSURANCE FUND.—Sec-
tion 1310(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 
4017(a)) is amended— 
(1) in the matter preceding paragraph (1), by inserting 
"(except as otherwise provided in this section)" after "without 
fiscal year limitation"; and 
(2) by inserting after paragraph (7) (as added by the preced-
ing provisions of this title) the following new paragraph: 
108 STAT. 2284 
PUBLIC LAW 103-325—SEPT. 23, 1994 
"(8) for costs of preparing the report under section 577 
of the Riegle Community Development and Regulatory Improve-
ment Act of 1994, except that the fund shall be available 
for the purpose under this paragraph in an amount not to 
exceed an aggregate of $5,000,000 over the 2-year period begin-
ning on the date of enactment of the Riegle Community Devel-
opment and Regulatory Improvement Act of 1994.". 
42 use 4014 
SEC. 578. STUDY OF ECONOMIC EFFECTS OF CHARGING ACTUARIALLY 
note. 
BASED PREMIUM RATES FOR PRE-FIRM STRUCTURES. 
(a) STUDY.—The Director of the Federal Emergency Manage-
ment Agency (in this section referred to as the "Director") shall 
conduct a study of the economic effects that would result from 
increasing premium rates for flood insurance coverage made avail-
able under the national flood insurance program for pre-FIRM 
structures to the full actuarial risk based premium rate determined 
under section 1307(a)(1) of the National Flood Insurance Act of 
1968 for the area in which the property is located. In conducting 
the study, the Director shall— 
(1) determine each area that would be subject to such 
increased premium rates; and 
(2) for each such area, determine— 
(A) the amount by which premium rates would be 
increased; 
(B) the number and types of properties affected and 
the number and types of properties covered by flood insur-
ance under this title likely to cancel such insurance if 
the rate increases were made; 
(C) the effects that the increased premium rates would 
have on land values and property taxes; and 
(D) any other effects that the increased premium rates 
would have on the economy and homeowners. 
(b) DEFINITION OF PRE-FIRM STRUCTURE.—For purposes of sub-
section (a), the term "pre-FIRM structure" means a structure that 
was not constructed or substantially improved after the later of— 
(1) December 31, 1974; or 
(2) the effective date of the initial rate map published 
by the Director under section 1360(a)(2) of the National Flood 
Insurance Act of 1968 for the area in which such structure 
is located. 
(c) REPORT.—^The Director shall submit a report to the Congress 
describing and explaining the findings of the study conducted under 
this section. The report shall be submitted not later than 12 months 
after the date of enactment of this Act. 
SEC. 579. EFFECTIVE DATES OF POLICIES. 
(a) 30-DAY DELAY.—Section 1306 of the National Flood Insur-
ance Act of 1968 (42 U.S.C. 4013), as amended by the preceding 
provisions of this title, is further amended by adding at the end 
the following new subsection: 
"(c) EFFECTIVE DATE OF POLICIES.— 
"(1) WAITING PERIOD.—Except as provided in paragraph 
(2), coverage under a new contract for flood insurance coverage 
under this title entered into after the date of enactment of 
the Riegle Community Development and Regulatory Improve-
ment Act of 1994, and any modification to coverage under 
an existing flood insurance contract made after such date, 
shall become effective upon the expiration of the 30-day period 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2285 
beginning on the date that all obligations for such coverage 
(including completion of the application and pa3rnient of any 
initial premiums owed) are satisfactorily completed. 
"(2) EXCEPTION.—The provisions of paragraph (1) shall not 
apply to— 
"(A) the initial purchase of flood insurance coverage 
under this title when the purchase of insurance is in 
connection with the making, increasing, extension, or 
renewal of a loan; or 
"(B) the initial purchase of flood insurance coverage 
pursuant to a revision or updating of floodplain areas or 
flood-risk zones under section 1360(f), if such purchase 
occurs during the 1-year period beginning upon publication 
of notice of the revision or updating under section 1360(h).". 
(b) STUDY.—The Director of the Federal Emergency Manage-
ment Agency shall conduct a study to determine the appropriateness 
of existing requirements regarding the effective date and time of 
coverage under flood insurance contracts obtained through the 
national flood insurance program. In conducting the study, the Reports. 
Director shall determine whether any delay between the time of 
purchase of flood insurance coverage and the time of initial effective-
ness of the coverage should differ for various classes of properties 
(based upon the type of property, location of the property, or any 
other factors related to the property) or for various circumstances 
under which such insurance was purchased. Not later than the 
expiration of the 6-month period beginning on the date of enactment 
of this Act, the Director shall submit to the Congress a report 
on the results of the study. 
SEC. 
580. 
AGRICULTURAL 
STRUCTURES. 
Section 1315(a) of the National Flood Insurance Act of 1968 
(42 U.S.C. 4022(a)), as amended by the preceding provisions of 
this title, is further amended by adding at the end the following 
new paragraph: 
"(2) AGRICULTURAL STRUCTURES.— 
"(A) 
ACTIVITY RESTRICTIONS.—^Notwithstanding 
any 
other provision of law, the adequate land use and control 
measures required to be adopted in an area (or subdivision 
thereof) pursuant to paragraph (1) may provide, at the 
discretion of the appropriate State or local authority, for 
the repair and restoration to predamaged conditions of 
an agricultural structure that— 
"(i) is a repetitive loss structure; or 
"(ii) has incurred flood-related damage to the 
extent that the cost of restoring the structure to its 
predamaged condition would equal or exceed 50 percent 
of the market value of the structure before the damage 
occurred. 
"(B) PREMIUM RATES AND COVERAGE.—TO the extent 
applicable, an agricultural structure repaired or restored 
pursuant to subparagraph (A) shall pay chargeable pre-
mium rates established under section 1308 at the estimated 
risk premium rates under section 1307(a)(1). If resources 
are available, the Director shall provide technical assist-
ance and counseling, upon request of the owner of the 
structure, regarding wet flood-proofing and other flood dam-
age reduction measures for agricultural structures. The 
108 STAT. 2286 
PUBLIC LAW 103-325—SEPT. 23, 1994 
Director shall not be required to make flood insurance 
coverage available for such an agricultural structure unless 
the structure is wet flood-proofed through permanent or 
contingent measures appliea to the structure or its contents 
that prevent or provide resistance to damage from flooding 
by allowing flood waters to pass through the structure, 
as determined by the Director. 
"(C) PROHIBITION ON DISASTER RELIEF.—Notwithstand-
ing any other provision of law, any agricultural structure 
repaired or restored pursuant to subparagraph (A) shall 
not be eligible for disaster relief assistance under any pro-
gram administered by the Director or any other Federal 
agency. 
"(D) DEFINITIONS.—For purposes of this paragraph— 
"(i) the term 'agricultural structure' means any 
structure used exclusively in connection with the 
production, harvesting, storage, raising, or drying of 
agricultural commodities; and 
"(ii) the term 'agricultural commodities' means 
agricultural commodities and livestock.". 
SEC. 581. IMPLEMENTATION REVIEW BY DIRECTOR. 
Section 1320 of the National Flood Insurance Act of 1968 (42 
U.S.C. 4027) is amended— 
(1) by striking "The Director" and inserting "(a) IN GEN-
ERAL.—The Director"; and 
(2) by adding at the end the following new subsection: 
Reports. 
«(b) EFFECTS OF FLOOD INSURANCE PROGRAM.—The Director 
shall include, as part of the biennial report submitted under sub-
section (a), a chapter reporting on the effects on the flood insurance 
program observed through implementation of requirements under 
the Riegle Community Development and Regulatory Improvement 
Act of 1994.". 
42 use 5154a. 
SEC. 582. PROmBITED FLOOD DISASTER ASSISTANCE. 
(a) GENERAL PROHIBITION.—^Notwithstanding any other provi-
sion of law, no Federal disaster relief assistance made available 
in a flood disaster area may be used to make a payment (including 
any loan assistance payment) to a person for repair, replacement, 
or restoration for damage to any personal, residential, or commercial 
property if that person at any time has received flood disaster 
assistance that was conditional on the person first having obtained 
flood insurance under applicable Federal law and subsequently 
having failed to obtain and maintain flood insurance as required 
under applicable Federal law on such property. 
(b) TRANSFER OF PROPERTY.— 
(1) DUTY TO NOTIFY.—In the event of the transfer of any 
property described in paragraph (3), the transferor shall, not 
later than the date on which such transfer occurs, notify the 
transferee in writing of the requirements to— 
(A) obtain 
flood 
insurance 
in 
accordance 
with 
applicable Federal law with respect to such property, if 
the property is not so insured as of the date on which 
the property is transferred; and 
(B) maintain flood insurance in accordance with 
applicable Federal law with respect to such property. 
Such written notification shall be contained in documents 
evidencing the transfer of ownership of the property. 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2287 
(2) FAILURE TO NOTIFY.—If a transferor described in para-
graph (1) fails to make a notification in accordance with such 
paragraph and, subsequent to the transfer of the property— 
(A) the transferee fails to obtain or maintain flood 
insurance in accordance with applicable Federal law with 
respect to the property, 
(B) the property is damaged by a flood disaster, and 
(C) Federal disaster relief assistance is provided for 
the repair, replacement, or restoration of the property as 
a result of such damage, 
the transferor shall be required to reimburse the Federal 
Government in an amount equal to the amount of the Federal 
disaster relief assistance provided with respect to the property. 
(3) PROPERTY DESCRIBED.—For purposes of paragraph (1), 
a property is described in this paragraph if it is personal, 
commercial, or residential property for which Federal disaster 
relief assistance made available in a flood disaster area has 
been provided, prior to the date on which the property is 
transferred, for repair, replacement, or restoration of the prop-
erty, if such assistance was conditioned upon obtaining flood 
insurance in accordance with applicable Federal law with 
respect to such property. 
(c) AMENDMENT TO THE FLOOD DISASTER PROTECTION ACT OF 
1973.—Section 102(a) of the Flood Disaster Protection Act of 1973 
(42 U.S.C. 4012a(a)) is amended— 
(1) by striking ", during the anticipated economic or useful 
life of the proiect,"; and 
(2) by adding at the end the following: "The requirement 
of maintaining flood insurance shall apply during the life of 
the property, regardless of transfer of ownership of such prop-
erty.". 
(d) DEFINITION.—For purposes of this section, the term "flood 
disaster area" means an area v/ith respect to which— 
(1) the Secretary of Agriculture finds, or has found, to 
have been substantially affected by a natural disaster in the 
United States pursuant to section 321(a) of the Consolidated 
Farm and Rural Development Act (7 U.S.C. 1961(a)); or 
(2) the President declares, or has declared, the existence 
of a major disaster or emergency pursuant to the Robert T. 
Stafford Disaster Relief ana Emergency Assistance Act (42 
U.S.C. 5121 et seq.),, as a result of flood conditions existing 
in or affecting that area. 
(e) EFFECTIVE DATE.—This section and the amendments made 
by this section shall apply to disasters declared after the date 
of enactment of this Act. 
SEC. 583. REGULATIONS. 
42 USC 4001 
The Director of the Federal Emergency Management Agency 
and any appropriate Federal agency may each issue any regulations 
necessary to carry out the applicable provisions of this title and 
the applicable amendments made by this title. 
SEC. 584. RELATION TO STATE AND LOCAL LAWS. 
42 USC 4001 
This title and the amendments made by this title may not 
be construed to preempt, annul, alter, amend, or exempt any person 
from compliance with any law, ordinance, or regulation of any 
State or local government with respect to land use, management, 
or control. 
108 STAT. 2288 
PUBLIC LAW 103-325—SEPT. 23, 1994 
TITLE VI—GENERAL PROVISIONS 
George J. 
Mitchell. 
Bob Dole. 
Robert B. Fiske, 
Jr. 
12 use 1813. 
12 u s e 1815. 
12 u s e 1817. 
SEC. 601. OVERSIGHT HEARINGS. 
It is the sense of the Senate that— 
(a) Congress has a constitutional obhgation to conduct over-
sight of matters relating to the operations of the Government, 
including matters related to any governmental investigations 
which may, from time to time, be undertaken. 
(b) The Majority Leader and the Republican Leader should 
meet and determine the appropriate timetable, procedures, and 
forum for appropriate Congressional oversight, including hear-
ings on all matters related to "Madison Guaranty Savings and 
Loan Association ('MGS&L'), Whitewater Development Corpora-
tion and Capital Management Services Inc. ('CMS').". 
(c) No witness called to testify at these hearings shall 
be granted immunity under sections 6002 and 6005 of title 
18, United States Code, over the objection of Special Counsel 
Robert B. Fiske, Jr. 
(d) The hearings should be structured and sequenced in 
such a manner that in the judgment of the Leaders they would 
not interfere with the ongoing investigation of Special Counsel 
Robert B. Fiske, Jr. 
SEC. 602. TECHNICAL AMENDMENTS TO THE FEDERAL BANKING LAWS. 
(a) FEDERAL DEPOSIT INSURANCE ACT AMENDMENTS.—^The Fed-
eral Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended— 
(1) in section 3— 
(A) in subsection (i)(l), by striking "(ll)(h)" and insert-
ing "(ll)(m)"; 
(B) in subsection (1)(4), by striking "bank's or" and 
inserting "a bank's or a"; and 
(C) in subsection (q)(2)(E), by striking "Depository 
Institutions Supervisory Act" and inserting "Financial 
Institutions Supervisory Act of 1966"; 
(2) in section 5(b)(5), by striking the semicolon at the 
end and inserting a comma; 
(3) in section 5(e)(4), by redesignating clauses (i) and (ii) 
as subparagraphs (A) and (B) respectively, and indenting 
appropriately; 
(4) in section 7(a)(3), by striking "Chairman of the" before 
"Director of the Office of Thrift Supervision"; 
(5) in section 7(b)(3)(C), by striking the first period at 
the end; 
(6) in section 7(j)(2)(A), in the third sentence— 
(A) by striking "this section (j)(2)" and inserting "this 
paragraph"; and 
(B) by striking "this subsection (j)(2)" and inserting 
"this paragraph"; 
(7) in section 7(j)(7)(A), by striking "monoplize" and insert-
ing "monopolize"; 
(8) in section 7(1)(7), by striking "the ratio of the value 
of and inserting "the ratio of"; 
(9) in section 7(m)(5)(A) by striking "savings association 
institution" and inserting "such institution"; 
(10) in section 7(m)(7), by inserting "the" before "Federal"; 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2289 
(11) in section 8(a)(3), by striking "subparagraph (B) of 12USC1818. 
this subsection" and inserting "paragraph (2)(B)"; 
(12) in section 8(a)(7)— 
(A) by inserting a comma after "Board of Directors"; 
and 
(B) by striking "the period the period" and inserting 
"the period"; 
(13) in section 8(b)(4), by striking "subparagraph (3)" and 
inserting "paragraph (3)"; 
(14) in section 8(c)(2), by striking "injuction" and inserting 
"injunction"; 
(15) in section 8(g)(2), by striking "depository institution" 
each place such term appears and inserting "bank"; 
(16) in section 8(o)-— 
(A) in the second sentence, by striking "subsection 
(b)" and inserting "subsection (d)"; and 
(B) by striking "board of directors" each place such 
term appears and inserting "Board of Directors"; 
(17) in section 8(p), by striking "banking" each place such 
term appears and inserting "depository"; 
(18) in section 8(r)(2), by striking "therof and inserting 
"thereof; 
(19) in section 10(b)(1), by striking "claim" and inserting 
12 USC 1820. 
"claims"; 
(20) in section 10(b)(2)(B), by adding "and" at the end; 
(21) in the section heading for paragraph (4) of section 
12 USC 1821. 
11(a), by striking "PROVISIONS" and inserting "PROVISIONS"; 
(22) in section ll(d)(2)(B)(iii), by striking "is" and inserting 
"are"; 
(23) in section ll(d)(8)(B)(ii), by inserting "provide" before 
"a statement"; 
(24) in section ll(d)(14)(B), by striking "statute of limita-
tion" and inserting "statute of limitations"; 
(25) in section ll(d)(16)(B)(iv), by striking "dispositions" 
and inserting "disposition"; 
(26) in section ll(e)(8)(D)(v)(I), by inserting a closing paren-
thesis after "1934"; 
(27) in section ll(e)(12)(B), by striking "directors or officers" 
and inserting "director's or officer's"; 
(28) in section 11(f)(3)(A), by striking "TO" in the heading 
and inserting "WITH"; 
(29) in the second sentence of section ll(i)(3)(A), by striking 
"other claimant or category or claimants" and inserting "other 
claimant or category of claimants"; 
(30) in section ll(n)(4)(E)(i), by adding "and" at the end; 
(31) in section ll(n)(12)(A), by striking "subparagraphs" 
and inserting "subparagraph"; 
(32) in the second sentence of section ll(q)(l), by striking 
"decided" and inserting "held"; 
(33) in section ll(u)(3)(B), by striking "subsection (c)(9)" 
and inserting "section 40(p)"; 
(34) in section 13(c)( 1)(B)— 
12 USC 1823. 
(A) by striking "a in default insured bank" and insert-
ing "an insured bank in default"; and 
(B) by striking "such in default insured bank" and 
inserting "such insured bank"; 
(35) in section 13(c)(2)(A)— 
108 STAT. 2290 
PUBLIC LAW 103-325—SEPT. 23, 1994 
12 u s e 1S23. 
12 u s e 1825. 
12 u s e 1828. 
12 use 1829a. 
12 u s e 1829b. 
12 u s e 1831b. 
12 u s e 1831e. 
(A) by striking "with an insured institution" and insert-
ing "with another insured depository institution"; and 
(B) by striking "by an insured institution" and inserting 
"by another insured depository institution"; 
(36) in section 13(f)(2)(B)(i), by striking "the in default 
insured bank" and inserting "the insured bank in default"; 
(37) in section 13(f)(2)(E)(iii), by striking "of of and insert-
ing "of; 
(38) in section 13(f)(3), )y striking "eLOSiNG" in the heading 
and inserting "DEFAULT"; 
(39) in section 13(f)(6)(A), by striking "bank that has in 
default" and inserting "bank that is in default"; 
(40) in section 13(f)(6)(B)(i), by striking the semicolon at 
the end and inserting a period; 
(41) in section 13(f)(7)— 
(A) in subparagraph (A), by striking "or" at the end; 
and 
(B) in subparagraph (B), by striking the period at 
the end and inserting "; or"; 
(42) in section 13(f)( 12)(A), by striking "is less than" and 
inserting "are less than"; 
(43) in section 15(c)(1), by striking "OBLIGATIONS LIABIL-
ITIES" in the heading and inserting "OBLIGATIONS, GUARANTEES, 
AND LIABILITIES"; 
(44) in section 18(b), by striking ", if such bank shall 
deposit" and inserting "if the insured depository institution 
deposits"; 
(45) in section 18(c)(1)(B), by inserting "or" at the end; 
(46) in section 18(c)(4), by striking "other two banking 
agencies" each place such term appears and inserting "other 
Federal banking agencies"; 
(47) in section 18(c)(6), by striking "other two banking 
agencies" and inserting "other Federal banking agencies"; 
(48) in section 18(c)(9), by striking "with the following 
information:" and inserting "with—"; 
(49) in section 18(f)— 
(A) by striking "such bank" and inserting "such insured 
depository institution"; and 
(B) by striking "the bank" and inserting "the insured 
depository institution"; 
(50) in section 18(k)(4)(A)(ii)(II), by striking "or" at the 
end; 
(51) in section 20(a)(3), by inserting "or" at the end; 
(52) in section 21(c), by striking "the bank" and inserting 
"the insured depository institution"; 
(53) in section 21(d)(2), by striking "the bank" and inserting 
"the insured depository institution"; 
(54) in section 21(e), by striking "the bank" and inserting 
"the insured depository institution"; 
(55) in section 25(a), by striking "the bank" each place 
it appears and inserting "the insured depository institution, 
insured branch, or bank"; 
(56) in section 28(c)(2)(A)(i) by striking ", or" and inserting 
";or"; 
(57) in section 28(d)(4)(C), by striking "subparagraphs" and 
inserting "subparagraph"; 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2291 
(58) in section 28(e)(4), by striking "any other" and insert- 
12 USC I831e. 
ing "and any other"; 
(59) in section 30(e)(1)(A), by striking "venders" and insert- 
12 USC 1831g. 
ing "the vendors"; 
(60) in section 31(b)(1), by striking "Board of Directors" 
12 USC 1831h. 
and inserting "board of directors"; 
(61) in section 33(c)(1), by striking the comma at the end 
12 USC 1831j. 
and inserting a semicolon; 
(62) in section 34(a)( l)(A)(iii)— 
12 USC 1831k. 
(A) by striking "sections" and inserting "section"; and 
(B) by striking "and" and inserting "or"; 
(63) in section 34(a)(2), by adding a period at the end; i2USCl83lo. 
(64) in section 38(f)(6), by striking "Commisssion" and 
inserting "Commission"; 
(65) in section 
40(c)(4)(A), by striking 
"subsections 
l2USC183lq. 
(p)(12)(B) and (C)" and inserting "subparagraphs (B) and (C) 
of subsection (p)(12)"; and 
(66) in section 40(d)(8)(A), by striking "meeting" and insert-
ing "meeting the". 
(b) FEDERAL HOME LOAN BANK ACT.—Section 21A of 
the 
Federal Home Loan Bank Act (12 U.S.C. 1441a) is amended— 
(1) in subsection (a)(ll), by striking "a United States Dis-
trict Court" and inserting "a United States district court"; 
(2) in subsection (b)(ll)(B)(iii), by striking the comma after 
"chapter 5"; 
(3) in subsection (b)(ll)(E)(iv)(II), by striking "knowledg-
able" and inserting "knowledgeable"; 
(4) in subsection (b)(ll)(G), by inserting "ADVISORY PERSON-
NEL.—" before "The Corporation shall"; 
(5) in subsection (r)(4), by striking "subsection.—" and 
inserting "subsection, the following definitions shall apply:"; 
(6) in subsection (s)(2), by striking "subsection—" and 
inserting "subsection, the following definitions shall apply:"; 
and 
(7) in subsection (u)(5), by striking "subsection—" and 
inserting "subsection, the following definitions shall apply:", 
(c) RESOLUTION TRUST CORPORATION COMPLETION ACT.—Sec-
tion 21(a) of the Resolution Trust Corporation Completion Act (107 
Stat. 2406) is amended— 
12 USC 183lj. 
(1) by striking "33(a)" and inserting "33"; 
(2) by striking "1831j(a)" and inserting "1831J"; 
(3) in paragraph (1), by striking "paragraph (1)" and insert-
ing "subsection (a)(1)"; and 
(4) in paragraph (2), by striking "paragraph (2)" and insert-
ing "subsection (a)(2)". 
(d) FEDERAL RESERVE ACT.—Section 7(a) of the Federal Reserve 
Act (12 U.S.C. 289) is amended— 
(1) in paragraph (1)(B), by inserting "(A)" after "subpara-
graph"; and 
(2) in paragraph (2), by striking "subparagraph (A)" and 
inserting "paragraph (1)(A)". 
(e) REPEAL OF PROVISIONS IN THE REVISED STATUTES.—The 
following sections of the Revised Statutes are hereby repealed: 
(1) Section 5170 (12 U.S.C. 28). 
(2) Section 5203 (12 U.S.C. 87). 
(3) Section 5206 (12 U.S.C. 88). 
(4) Section 5196 (12 U.S.C. 89). 
108 STAT. 2292 
PUBLIC LAW 103-325—SEPT. 23, 1994 
5) Section 5158 (12 U.S.C. 102). 
6) Section 5159 (12 U.S.C. 101a). 
7) Section 5172 (12 U.S.C. 104). 
8) Section 5173 (12 U.S.C. 107). 
9) Section 5174 (12 U.S.C. 108). 
10) Section 5182 (12 U.S.C. 109). 
11) Section 5183 (12 U.S.C. 110). 
12) Section 5195 (12 U.S.C. 123). 
13) Section 5184 (12 U.S.C. 124). 
14) Section 5226 (12 U.S.C. 131). 
15) Section 5227 (12 U.S.C. 132). 
16) Section 5228 (12 U.S.C. 133). 
17) Section 5229 (12 U.S.C. 134). 
18) Section 5230 (12 U.S.C. 137). 
19) Section 5231 (12 U.S.C. 138). 
20) Section 5232 (12 U.S.C. 135). 
21) Section 5233 (12 U.S.C. 136). 
22) Section 5185 (12 U.S.C. 151). 
23) Section 5186 (12 U.S.C. 152). 
24) Section 5160 (12 U.S.C. 168). 
25) Section 5161 (12 U.S.C. 169). 
26) Section 5162 (12 U.S.C. 170). 
27) Section 5163 (12 U.S.C. 171). 
28) Section 5164 (12 U.S.C. 172). 
29) Section 5165 (12 U.S.C. 173). 
30) Section 5166 (12 U.S.C. 174). 
31) Section 5167 (12 U.S.C. 175). 
32) Section 5222 (12 U.S.C. 183). 
33) Section 5223 (12 U.S.C. 184). 
34) Section 5224 (12 U.S.C. 185). 
35) Section 5225 (12 U.S.C. 186). 
36) Section 5237 (12 U.S.C. 195). 
(f) 
REPEAL 
OF OTHER 
OBSOLETE 
PROVISIONS 
IN 
BANKING 
LAWS.—^The following provisions of law are hereby repealed: 
1) Section 26 of the Federal Deposit Insurance Act (12 
U.S.C. 1831c). 
2) Section 12 of the Act entitled "An Act To define and 
fix the standard of value, to maintain the parity of all forms 
of money issued or coined by the United States, to refund 
the public debt, and for other purposes." and approved March 
14, 1900 (12 U.S.C. 101). 
(3) Section 3 of the Act entitled "An Act To amend the 
laws relating to the denominations of circulating notes by 
national banks and to permit the issuance of notes of small 
denominations, and for other purposes." and approved October 
5, 1917 (12 U.S.C. 103). 
(4) The following sections of the Act entitled "An Act fixing 
the amount of United States notes, providing for a redistribu-
tion of the national-bank currency, and for other purposes." 
and approved June 20, 1874: 
(A) Section 5 (12 U.S.C. 105). 
(B) Section 3 (12 U.S.C. 121). 
(C) Section 8 (12 U.S.C. 126). 
(D) Section 4 (12 U.S.C. 176). 
(5) The following sections of the Act entitled "An Act to 
enable national-banking associations to extend their corporate 
existence, and for other purposes." and approved July 12, 1882: 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2293 
(A) Section 8 (12 U.S.C. 177). 
(B) Section 9 (12 U.S.C. 178). 
(6) The Act entitled "An Act to amend the national bank 
act in providing for the redemption of national bank notes 
stolen from or lost by banks of issue." and approved July 
28, 1892 (12 U.S.C. 125). 
(7) The Act entitled "An Act authorizing the conversion 
of national gold banks." and approved February 14, 1880 (12 
U.S.C. 153). 
(g) AMENDMENTS TO OTHER LAWS.— 
(1) The 8th paragraph of the 4th undesignated paragraph 
of section 4 of the Federal Reserve Act (12 U.S.C. 341) is 
amended by striking "Comptroller of the Currency" and insert-
ing "Secretary of the Treasury". 
(2) Section 11(d) of the Federal Reserve Act (12 U.S.C. 
248(d)) is amended— 
(A) by striking "bureau under the charge of the 
Comptroller of the Currency" and inserting "Secretary of 
the Treasury"; and 
(B) by striking "Comptroller" and inserting "Secretary 
of the Treasury". 
(3) The 1st sentence of the 8th undesignated paragraph 
of section 16 of the Federal Reserve Act (12 U.S.C. 418) is 
amended by striking "the Comptroller of the Currency shall 
under the direction of the Secretary of the Treasury," and 
inserting "the Secretary of the Treasury shall". 
(4) The 9th undesignated paragraph of section 16 of the 
Federal Reserve Act (12 U.S.C. 419) is amended to read as 
follows: 
"When such notes have been prepared, the notes shall 
be delivered to the Board of Governors of the Federal Reserve 
System subject to the order of the Secretary of the Treasury 
for the delivery of such notes in accordance with this Act.". 
(5) The 10th undesignated paragraph of section 16 of the 
Federal Reserve Act (12 U.S.C. 420) is amended— 
(A) by striking "Comptroller of the Currency" and 
inserting "Secretary of the Treasury"; and 
(B) by striking "Federal Reserve Board" and inserting 
"Board of Grovernors of the Federal Reserve System". 
(6) The 11th undesignated paragraph of section 16 of the 
Federal Reserve Act (12 U.S.C. 421) is amended to read as 
follows: 
"The Secretary of the Treasury may examine the plates, 
| 
dies, bed pieces, and other material used in the printing of 
| 
Federal Reserve notes and issue regulations relating to such 
examinations.". 
(7) The 6th undesignated paragraph of section 18 of the 
Federal Reserve Act (38 Stat. 269) is amended— 
12 USC 445. 
(A) by striking "Comptroller of the Currency" each 
place it appears and inserting "Secretary of the Treasury"; 
and 
(B) in the 7th sentence, by striking "Comptroller" and 
inserting "Secretary of the Treasury". 
(8) The Act entitled "An Act to provide for the redemption 
of national-bank notes, Federal Reserve bank notes, and Fed-
eral Reserve notes which cannot be identified as to the bank 
of issue." and approved June 13, 1933, is amended— 
108 STAT. 2294 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(A) in the 1st section (12 U.S.C. 121a)— 
(i) by striking "whenever any national-bank notes, 
Federal Reserve bank notes," and inserting "whenever 
any Federal Reserve bank notes"; and 
(ii) by striking ", and the notes, other than Federal 
Reserve notes, so redeemed shall be forwarded to the 
Comptroller of the Currency for cancellation and 
destruction"; and 
(B) in section 2 (12 U.S.C. 122a)— 
(i) by striking "National-bank notes and"; and 
(ii) by striking "national-bank notes and". 
(9) The 1st section of the Act entitled "An Act making 
appropriations for sundry civil expenses of the Government 
for the fiscal year ending June thirtieth, eighteen hundred 
and seventy-six, and for other purposes." and approved March 
12 use 106. 
3, 1875, is amended in the 1st paragraph which appears under 
the heading "NATIONAL CURRENCY" by striking "Secretary of 
the Treasury: Provided, That" and all that follows through 
the period and inserting "Secretary of the Treasury.". 
(10) The Act entitled "An Act to simplify the accounts 
of the Treasurer of the United States, and for other purposes." 
and approved October 10, 1940 (12 U.S.C. 177a) is amended 
by striking all after the enacting clause and inserting the 
following: "That the cost of transporting and redeeming 
outstanding national bank notes and Federal Reserve bank 
notes as may be presented to the Treasurer of the United 
States for redemption shall be paid from the regular annual 
appropriation for the Department of the Treasury.". 
(11) Section 5234 of the Revised Statutes (12 U.S.C. 192) 
is amended by striking "has refused to pay its circulating 
notes as therein mentioned, and". 
(12) Section 5236 of the Revised Statutes (12 U.S.C. 194) 
is amended by striking ", after full provision has been first 
made for refunding to the United States any deficiency in 
redeeming the notes of such association". 
(13) Section 5238 of the Revised Statutes (12 U.S.C. 196) 
is amended by striking the 1st sentence. 
(14) Section 5119(b)(2) of title 31, United States Code, 
is amended by adding at the end the following: "The Secretary 
shall not be required to reissue United States currency notes 
upon redemption.". 
(h) AMENDMENTS TO OUTDATED DIVIDEND PROVISIONS.— 
(1) WITHDRAWAL OF CAPITAL.—Section 5204 of the Revised 
Statutes (12 U.S.C. 56) is amended— 
(A) in the 2d sentence, by striking "net profits then 
on hand, deducting therefrom its losses and bad debts" 
and inserting "undivided profits, subject to other applicable 
provisions of law"; and 
(B) by striking the 3d sentence. 
(2) 
DECLARATION OF DIVIDENDS.—Section 
5199 
of 
the 
Revised Statutes (12 U.S.C. 60) is amended— 
(A) in the 1st sentence, by striking "net profits of 
the association" and inserting "undivided profits of the 
association, subject to the limitations in subsection (b),"; 
(B) by striking "net profits" each subsequent place 
such term appears and inserting "net income"; and 
(C) by striking subsection (c). 
PUBLIC LAW 103-325—SEPT. 23, 1994 
108 STAT. 2295 
(i) CLERICAL AMENDMENTS.— 
(1) The table of sections for chapter 1 of title LXII of 
the Revised Statutes of the United States is amended— 
(A) by inserting after the item relating to section 5156 
the following new item: 
"5156A. Mergers, consolidations, and other acquisitions authorized."; 
and 
(B) by striking the items relating to sections 5141 
and 5151. 
(2) The table of sections for chapter 2 of title LXII of 
the Revised Statutes of the United States is amended by strik-
ing the item relating to each of the following sections: 
12 USC 28, 
(A) Section 5158. 
fS^iTipT' 
(B) Section 5159. 
}S~152 
(C) Section 5160. 
165-175,'58L 
(D) Section 5161. 
(E) Section 5162. 
(F) Section 5163. 
(G) Section 5164. 
(H) Section 5165. 
(I) Section 5166. 
(J) Section 5167. 
(K) Section 5170. 
(L) Section 517 L 
(M) Section 5172. 
(N) Section 5173. 
(0) Section 5174. 
(?) Section 5175. 
(Q) Section 5176. 
(R) Section 5177. 
(S) Section 5178. 
(T) Section 5179. 
(U) Section 5180. 
(V) Section 5181. 
(W) Section 5182. 
(X) Section 5183. 
(Y) Section 5184. 
(Z) Section 5185. 
(AA) Section 5186. 
(BB) Section 5187. 
(CO Section 5188. 
(DD) Section 5189. 
(3) The table of sections for chapter 3 of title LXII of 
the Revised Statutes of the United States is amended by strik-
ing the item relating to each of the following sections: 
12 USC 82, 
(A) Section 5193. 
f l A P ' 
(B) Section 5194. 
163,592. 
(C) Section 5195. 
(D) Section 5196. 
(E) Section 5202. 
(F) Section 5203. 
(G) Section 5206. 
(H) Section 5209. 
(1) Section 5212. 
(4) The table of sections for chapter 4 of title LXII of 
the Revised Statutes of the United States is amended— 
108 STAT. 2296 
PUBLIC LAW 103-325—SEPT. 23, 1994 
(A) by inserting after the item relating to section 5239 
the following new item: 
"5239A. Regulatory authority."; 
and 
(B) by striking the items relating to the following sec-
12 use 131-138, 
tions: 
183-186,195, 
(i) Section 5222. 
5^^- 
(ii) Section 5223. 
(iii) Section 5224. 
(iv) Section 5225. 
(v) Section 5226. 
(vi) Section 5227. 
(vii) Section 5228. 
(viii) Section 5229. 
(ix) Section 5230. 
(x) Section 523 L 
(xi) Section 5232. 
(xii) Section 5233. 
(xiii) Section 5237. 
(xiv) Section 5243. 
Approved September 23, 1994. 
LEGISLATIVE HISTORY—H.R. 3474 (S. 1275): 
HOUSE REPORTS: No. 103-652 (Comm. of Conference). 
SENATE REPORTS: No. 103-169 accompanying S. 1275 (Comm. on Banking, Housing, 
and Urban Affairs). 
CONGRESSIONAL RECORD: 
Vol. 139 (1993): Nov. 21, considered and passed House. 
Vol. 140 (1994): Mar. 16, 17, considered and passed Senate, amended, in lieu of 
S. 1275. 
Aug. 4, House agreed to conference report. 
Aug. 9, Senate agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 30 (1994): 
Sept. 23, Presidential remarks.