Competitive Equality Banking Act of 1987
PL 100-86 (H.R.27), enacted 08/10/1987

101 STAT. 552 
PUBLIC LAW 100-86—AUG. 10, 1987 
Public Law 100-86 
100th Congress 
An Act 
Aug. 10, 1987 
[H.R. 27] 
Competitive 
Equality 
Banking Act of 
1987. 
12 u s e 226 note. 
To regulate nonbank banks, impose a moratorium on certain securities and insurance 
activities by banks, recapitalize the Federal Savings and Loan Insurance Corpora-
tion, allow emergency interstate bank acquisitions, streamline credit union oper-
ations, regulate consumer checkholds, 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 "Competitive 
Equality Banking Act of 1987". 
(b) TABLE OF CONTENTS.— 
TITLE I—FINANCIAL INSTITUTIONS COMPETITIVE EQUALITY 
Sec 
Sec, 
Sec 
Sec 
100. Short title. 
101. Amendments to the Bank Holding Company Act of 1956. 
Sec. 102. Amendments to the Federal Reserve Act. 
Sec. 103. Securities affiliations of nonmember insured banks. 
Sec. 104. Amendments to savings and loan holding company provisions of the 
National Housing Act. 
105. Amendment to the Federal Home Loan Bank Act. 
106. Securities affiliations of FSLIC insured institutions. 
Sec. 107. Mutual holding company amendments. 
Sec. 108. Leasing authority of national banks. 
Sec. 109. NOW accounts. 
Sec. 110. Exemption from affiliate transaction restrictions. 
Sec. 111. Consideration of certain acquisitions. 
TITLE II—MORATORIUM ON CERTAIN NONBANKING ACTIVITIES 
Sec. 201. Moratorium on certain nonbanking activities. 
Sec. 202. Authority of Federal banking agencies. 
. , 
_ 
i 
Sec. 203. Intent of Congress. 
Sec. 204. Amendments to the International Banking Act of 1978. 
Sec. 205. Amendments to the Bank Holding Company Act of 1956. 
TITLE III—FSLIC RECAPITALIZATION 
Sec. 301. Short title. 
Sec. 302. Financing corporation established. 
Sec. 303. Mixed ownership government corporation. 
Sec. 304. Recapitalization of FSLIC. 
Sec. 305. FSLIC authority to charge premiums reduced by amount of financing 
corporation assessments. 
Sec. 306. Miscellaneous provisions. 
Sec. 307. Secondary reserve provisions. 
TITLE IV—THRIFT INDUSTRY RECOVERY PROVISIONS 
Sec. 401. Short title. 
Sec. 402. Thrift institution accounting, appraisal, and reserve standards. 
Sec. 403. Audit of Federal Asset Disposition Association. 
Sec. 404. Thrift industry recovery regulations. 
Sec. 405. Capital instrument purchase program. 
Sec. 406. Minimum capital requirements. 
Sec. 407. Improvements in the supervisory process. 
Sec. 408. Prevention of insolvencies. 
Sec. 409. Feasibility study relating to establishment of asset holding corporation. 
Sec. 410. Notice and disapproval procedure required for all applications to the Bank 
Board. 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 553 
Sec. 411. Guidelines for asset disposition. 
Sec. 412. Expansion of use of underutilized minority thrift institutions. 
Sec. 413. Authority of independent contractors, consultants, and counsel. 
Sec. 414. Extension of forbearance previously provided in the acquisition of trou-
bled thrift institutions. 
Sec. 415. Congressionsd oversight. 
Sec. 416. Sunset. 
TITLE V—FINANCIAL INSTITUTIONS EMERGENCY ACQUISITIONS 
Sec. SOL Short title. 
;o 
Sec. 502. FDIC assisted emergency interstate acquisitions. 
Sec. 503. Bridge banks. 
Sec. 504. Conversions. 
•*-"• 
Sec. 505. Federal depository institutions regulatory agencies not subject to appor- 
• >
• 
tionment of funds provisions. 
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Sec. 506. Federal depository institutions regulatory agencies not subject 
to 
sequestration. 
Sec. 507. Liquidation proceedings. 
Sec. 508. Capital pools. 
Sec. 509. Permanent extension of certain temporary provisions of law; 5 year exten-
sion of net worth certificates. 
»«v:l 
TITLE VI—EXPEDITED FUNDS AVAILABILITY 
Sec. 601. Short title. 
Sec. 602. Definitions. 
Sec. 603. Expedited funds availability schedules. 
Sec. 604. Safeguard exceptions. 
Sec. 605. Disclosure of funds availability policies. 
Sec. 606. Pajmient of interest. 
Sec. 607. Miscellaneous provisions. 
Sec. 608. Effect on State law. 
^ 
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Sec. 609. Regulations and reports by Board. 
Sec. 610. Administrative enforcement. 
Sec. 611. CivU liabUities. 
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Sec. 612. Parity in clearing. 
Sec. 613. Effective dates. 
j 
TITLE Vn—CREDIT UNION AMENDMENTS 
5 
Sec. 701. Short title. 
J 
Sec. 702. Second mortgage and home improvement loans. 
..? 
Sec. 703. Ownership interest. 
Sec. 704. Faithful performance. 
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Sec. 705. Membership officers. 
Sec. 706. Nonparticipation. 
Sec. 707. Property acquisition flexibility. 
Sec. 708. Treatment of NCUAB funds. 
Sec. 709. Technical and clarifying amendments; removal and prohibition authority. 
Sec. 710. Effect of removal or suspension. 
Sec. 711. Imposition of conservatorship. 
Sec. 712. Reduction in State comment waiting period. 
Sec. 713. Authority as conservator. 
Sec. 714. Liquidation proceedings. 
^j 
Sec. 715. Transfer of FTC jurisdiction to NCUAB. 
Sec. 716. Assets which may be pledged. 
TITLE Vra—LOAN LOSS AMORTIZATION 
J 
Sec. 801. Loan loss amortization for agricultural banks. 
TITLE K - F U L L FAITH AND CREDIT OF FEDERALLY INSURED 
DEPOSITORY INSTITUTIONS 
Sec. 901. Reaffirmation of security of funds deposited in federally insured deposi-
tory institutions. 
TITLE X—GOVERNMENT CHECKS 
Sec. 1001. Report on difficulty in cashing Treasury checks. 
Sec. 1002. Time limit on payment of Treasury checks. 
Sec. 1003. Cancellation of Tretisuiy checks. 
Sec. 1004. Limitation on reclamation actions and claims. 
Sec. 1005. Regulations. 
Sec. 1006. Effective date. 
101 STAT. 554 
PUBLIC LAW 100-86—AUG. 10, 1987 
TITLE XI—INTEREST TO CERTAIN DEPOSITORS 
Sec. 1101. Interest to certain depositors. 
TITLE XII—MISCELLANEOUS PROVISIONS 
Sec. 1201. High yield bond study. 
Sec. 1202. Study of competitive issues in the pa}mients mechanism. 
Sec. 1203. Study and reports concerning direct investments. 
Sec. 1204. Adjustable rate mortgage caps. 
Sec. 1205. Separability of provisions. 
' 
Competitive 
TITLE I—FINANCIAL INSTITUTIONS 
KiLnts o
f 
COMPETITIVE EQUALITY 
1987. 
' 
K«?«f, 
.-, 
.;^V .' 
12 use 226 note. SEC. 100. SHORT TITLE. 
This title may be cited as the "Competitive Equality Amendments 
of 1987". 
SEC. 101. AMENDMENTS TO THE BANK HOLDING COMPANY ACT OF 1956. 
(a) DEFINITIONS.— 
(1) AMENDMENT TO DEFINITION OF BANK.—Section 2(c) of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)) is 
amended to read as follows: 
"(c) BANK DEFINED.—For purposes of this Act— 
"(1) IN GENERAL.—Except as provided in paragraph (2), the 
term 'bank* means any of the following: 
"(A) An insured bank as defined in section 3(h) of the 
12 use 1813. 
Federal Deposit Insurance Act. 
"(B) An institution organized under the laws of the 
United States, any State of the United States, the District 
of (]!olumbia, any territory of the United States, Puerto 
Rico, Guam, American Samoa, or the Virgin Islands which 
both— 
"(i) accepts demand deposits or deposits that the 
depositor may withdraw by check or similar means for 
payment to third parties or others; and 
(ii) is engaged in the business of making commercied 
loans. 
"(2) EXCEPTIONS.—The term 'bank' does not include any of the 
following: 
"(A) A foreign bank which would be a bank within the 
meaning of paragraph (1) solely because such bank has an 
insured or uninsured branch in the United States. 
"(B) An insured institution (as defined in subsection (j))-
"(C) An organization that does not do business in the 
United States except as an incident to its activities outside 
the United States. 
"(D) An institution that functions solely in a trust or 
fiduciary capacity, if— 
"(i) all or substantially all of the deposits of such 
institution are in trust funds and are received in a bona 
fide fiduciary capacity; 
"(ii) no deposits of such institution which are insured 
by the Federal Deposit Insurance Corporation are of-
fered or marketed by or through an affiliate of such 
institution; 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 555 
"(iii) such institution does not accept demand de-
posits or deposits that the depositor may withdraw by 
check or similar means for payment to third parties or 
others or make commercial loans; and 
"(iv) such institution does not— 
"(I) obtain payment or pajonent related services 
from any Federal Reserve bank, including any 
service referred to in section 11A of the Federal 
Reserve Act; or 
12 use 248a. 
"(11) exercise discount or borrowing privileges 
pursuant to section 19(b)(7) of the Federal Reserve 
Act. 
12 use 461. 
"(E) A credit union (as described in section 19(b)(lXA)(iv) 
of the Federal Reserve Act). 
"(F) An institution which— 
"(i) engages only in credit card operations; 
"(ii) does not accept demand deposits or deposits that 
the depositor may withdraw by check or similar means 
for payment to third parties or others; 
"(iii) does not accept any savings or time deposit of 
less than $100,000; 
"(iv) maintains only one office that accepts deposits; 
and 
"(v) does not engage in the business of making 
commercial loans. 
"(G) An organization operating under section 25 or sec-
tion 25(a) of the Federal Reserve Act. 
12 use 601-
"(H) An industrial loan company, industrial bank, or 604a, 611-631. 
other similar institution which is— 
"(i) an institution organized under the laws of a State 
which, on March 5, 1987, had in effect or had under 
consideration in such State's legislature a statute 
which required or would require such institution to 
obtain insurance under the Federal Deposit Insurance 
Act— 
12 use 1811 
"(I) which does not accept demand deposits that note. 
the depositor may withdraw by check or similar 
means for pajmtient to third parties; 
"(II) which has total assets of less than 
$100,000,000; or 
"(III) the control of which is not acquired by any 
company after the date of the enactment of the 
Competitive Equality Amendments of 1987; or 
"(ii) an institution which does not, directly, in-
directly, or through an affiliate, engage in any activity 
in which it was not lawfully engaged as of March 5, 
1987, 
except that this subparagraph shall cease to apply to any 
institution which permits any overdraft (including any 
intraday overdraft), or which incurs any such overdraft in 
such institution's account at a Federal Reserve bank, on 
behalf of an affiliate if such overdraft is not the result of an 
inadvertent computer or accounting error that is beyond 
the control of both the institution and the affiliate. 
"(I) The Investors Fiduciary Trust C!ompany, located in 
Kansas City, Missouri, so long as such institution— 
101 STAT. 556 
PUBLIC LAW 100-86—AUG. 10, 1987 
it 
"(i) engages only in trust, fiduciary, and agency 
/- Y 
activities in which it was lawfully engaged on March 5, 
•
• ... 
1987; 
"(ii) engages in such activities only at the same 
number of locations at which such activities were con-
' 
ducted on such date; 
"(iii) does not accept demand deposits other than 
demand deposits which are maintained by such institu-
tion in— 
"(I) a trust or fiduciary capacity; 
': 
"(II) the institution's capacity as a custodian or 
it 
as a pajdng, transfer, shareholder servicing, securi-
./. ;, 
. t ties clearing, escrow, or dividend disbursing agent; 
or 
"(III) any capacity which is incidental to the 
trust or fiduciary activities of the institution; 
'": >i:,. 
"(iv) does not engage in the business of making 
^- ;'.- 
' 
commercial loans; 
"(v) does not exercise discount or borrowing privi-
•>' 
leges pursuant to section 19(bX7) of the Federal Reserve 
12 use 461. 
Act; and 
.. . 
"(vi) is not directly or indirectly controlled by any 
company other than a company which directly or in-
directly controlled such institution on March 5, 1987. 
"(J) A savings bank (as defined in section 3(g) of the 
Post, p. 563. 
- . Federal Deposit Insurance Act) which— 
"(i) is an insured bank (as defined in section 3(h) of 
' ' 
, 
'' 
such Act); 
"(ii) is a subsidiary of the Great Western Financial 
: .TR 
Corporation as a result of an approval in writing by the 
i 
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State bank supervisor of the State of New York before 
June 30,1987; 
• 
"(iii) meets or exceeds the investment requirements 
which an insured institution must meet in order to be a 
qualified thrift lender under section 408(o) of the 
Post, p. 571. 
-. 
National Housing Act; and 
Isr 
"(iv) does not, directly, or through insurance products 
such savings bank receives from or provides to the 
' \ 
Great Western Finemcial Corporation, engage in the 
sale or underwriting of insurance, 
' ." -
5 except that this subparagraph shall cease to apply with 
;.i 
respect to such savings bank or any successor institution if 
any deposits of any other subsidiary or affiliate of the Great 
'"•' 
Western Financial Corporation which are subject to an 
assessment of an insurance premium under subsection (b) 
Post, p. 601. 
or (c) of section 404 of the National Housing Act are, 
directly or indirectly by any device whatsoever, transferred 
to or acquired by such savings bank or any successor 
institution which would have the effect of materially reduc-
ing such premium assessments. The exemption provided by 
r^v 
this subparsigraph shall cease to apply if Great Western 
Financial Corporation uses such savings bank or any 
V . ,.* 
successor institution as a vehicle to move such Corpora-
tion from Federal Savings and Loan Insurance Corporation 
: ' f^tti 
insurance to Federal 
Deposit Insurance 
Corporation 
i n s u r a n c e . 
v^.-o *;,, ^
.
i
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PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 557 
"(3) DISTRICT BANK.—The term 'District bank' means any 
bank operating under the Code of Law for the District of 
Columbia.". 
(2) AMENDMENT TO DEFINITION OF THRIFT INSTITUTION,—Sec-
tion 2(i) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1841(i)) is amended to read as follows: 
"(i) THRIFT INSTITUTION.—For purposes of this Act, the term 'thrift 
institution' means— 
"(1) any domestic building and loan or savings and loan 
association; 
"(2) any cooperative bank without capital stock organized and 
operated for mutual purposes and without profit; 
"(3) any Federal savings bank; and 
"(4) any State-chartered savings bank the holding company of 
which is registered pursuant to section 408 of the National 
Housing Act.". 
Post, p. 571. 
(3) ADDITIONAL DEFINITIONS.—Section 2 of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1841) is amended by adding at 
the end thereof the following new subsections: 
"(j) INSURED INSTITUTION.—For purposes of this Act, the term 
'insured institution' has the meaning given to such term in section 
408(aXl) of the National Housing Act. 
"(k) AFFIUATE.—For purposes of this Act, the term 'affiliate' 
means any company that controls, is controlled by, or is under 
common control with another company. 
"(1) SAVINGS BANK HOLDING COMPANY.—For purposes of this Act, 
the term 'savings bank holding company' means any company 
which controls one or more qualified savings banks if the aggregate 
total assets of such savings banks constitute, upon formation of the 
holding company and at all times thereafter, at least 70 percent of 
the total assets of such company. 
"(m) QUALIFIED SAVINGS BANK.—For purposes of this Act, the 
term 'qualified savings bank'— 
"(1) means any savings bank (as defined in section 3(g) of the 
Federal Deposit Insurance Act) which was organized on or Post, p. 563. 
before March 5,1987; and 
"(2) includes any cooperative bank that is an insured bank (EIS 
defined in section 3(h) of the Federal Deposit Insurance Act) and 
any interim savings bank that is established to facilitate a 
corporate reorganization, or the formation of a holding com-
pany, involving a savings bank described in paragraph (1).". 
(b) IMMEDIATE DIVESTITURE REQUIREMENT.—Section 4(a)(2) of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1843(a)(2)) is amended 
by adding at the end thereof the following sentence: "Notwithstand-
ing any other provision of this paragraph, if any company that 
became a bank holding company as a result of the enactment of the 
Competitive Equality Amendments of 1987 acquired, between 
March 5, 1987, and the date of the enactment of such Amendments, 
an institution that became a bank as a result of the enactment of 
such Amendments, that company shall, upon the enactment of such 
Amendments, immediately come into compliance with the require-
ments of this Act.". 
(c) CERTAIN COMPANIES NOT TREATED AS BANK HOLDING COMPA-
NIES; LIMITATIONS ON CERTAIN BANKS.—Section 4 of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1843) is amended by adding 
at the end thereof the following new subsections: 
101 STAT. 558 
PUBLIC LAW 100-86—AUG. 10, 1987 
"(f) 
CERTAIN 
COMPANIES 
NOT 
TREATED 
AS 
BANK 
HOLDING 
COMPANIES.— 
"(1) IN GENERAL.—Except as provided in paragraph (9), any 
company which— 
"(A) on March 5, 1987, controlled an institution which 
became a bank as a result of the enactment of the Competi-
A} 
tive Equality Amendments of 1987; and 
"(B) was not a bank holding company on the day before 
the date of the enactment of the Competitive Equality 
Amendments of 1987, 
shall not be treated as a bank holding company for purposes of 
this Act solely by virtue of such company's control of such 
institution. 
"(2) Loss OF EXEMPTION.—Paragraph (1) shall cease to apply to 
any company described in such paragraph if— 
q , . 
"(A) such company directly or indirectly— 
"(i) acquires control of an additional bank or an 
insured institution (other than an insured institution 
described in paragraph (10) of this subsection) after 
March 5,1987; or 
:,.. 
"(ii) acquires control of more than 5 percent of the 
shares or assets of an additional bank or an insured 
institution other than— 
"(I) shares acquired in a bona fide fiduciary 
capacity; 
"(II) shares held temporarily pursuant to an 
underwriting commitment in the normal course of 
an underwriting business; 
"(III) shares held in an account solely for trading 
purposes; 
"(IV) loans or other accounts receivable acquired 
.;. 
V 
in the normal course of business; and 
"(V) shares or assets of an insured institution 
described in paragraph (10) of this subsection; or 
"(B) any bank subsidiary of such company fails to comply 
with the restrictions contained in paragraph (3)(B). 
"(3) 
LIMITATION ON BANKS CONTROLLED BY PARAGRAPH (D 
COMPANIES.— 
"(A) FINDINGS.—The Congress finds that banks controlled 
by companies referred to in paragraph (1) may, because of 
relationships with affiliates, be involved in conflicts of in-
terest, concentration of resources, or other effects adverse 
to bank safety and soundness, and may also be able to 
compete unfairly against banks controlled by bank holding 
companies by combining banking services with financial 
services not permissible for bank holding companies. The 
purpose of this paragraph is to minimize any such potential 
adverse effects or inequities by temporarily restricting the 
activities of banks controlled by companies referred to in 
paragraph (1) until such time as the Congress has enacted 
proposals to allow, with appropriate safeguards, all banks 
or bank holding companies to compete on a more equal 
basis with banks controlled by companies referred to in 
paragraph (1) or, alternatively, proposals to permanently 
restrict the activities of banks controlled by companies 
' 
referred to in paragraph (1). 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 559 
"(B) LIMITATIONS.—Until such time as the Congress has 
taken action pursuant to subparagraph (A), a bank con-
trolled by a company described in paragraph (1) shall not— 
"(i) engage in any activity in which such bank was 
not lawfully engaged as of March 5,1987; 
"(ii) offer or market products or services of an affili-
ate that are not permissible for bank holding compa- 
L 
nies to provide under subsection (c)(8), or permit its 
products or services to be offered or marketed by or 
through an affiliate (other than an affiliate that en-
gages only in activities permissible for bank holding 
companies under subsection (c)(8)), unless such products 
or services were being so offered or marketed as of 
March 5, 1987, and then only in the same manner in 
which they were being offered or marketed as of that 
date; 
"(iii) after the date of the enactment of the Competi-
tive Equality Amendments of 1987, permit any over-
draft (including an intraday overdraft), or incur any 
such overdraft in such bank's account at a Federal 
Reserve bank, on behalf of an affiliate, other than an 
overdraft described in subparagraph (C); or 
"(iv) increase its assets at an annual rate of more 
than 7 percent during any 12-month period beginning 
after the end of the 1-year period beginning on the date 
of the enactment of the Competitive Equality Amend-
ments of 1987. 
"(C) PERMISSIBLE OVERDRAFTS DESCRIBED.—For purposes of 
'' 
subparagraph (B)(iii), an overdraft is described in this 
subparagraph i
f
— 
"(i) such overdraft results from an inadvertent com-
puter or accounting error that is beyond the control of 
both the bank and the affiliate; or 
"(ii) such overdraft— 
"(I) is permitted or incurred on behalf of an 
' 
affiliate which is monitored by, reports to, and is 
recognized as a primary dealer by the Federal 
Reserve Bank of New York; and 
"(II) is fully secured, as required by the Board, by 
bonds, notes, or other obligations which are direct 
obligations of the United States or on which the 
principal and interest are fully guaranteed by the 
United States or by securities and obligations eli-
gible for settlement on the Federal Reserve book 
, , 
entry system. 
T J ." 
"(4) DIVESTITURE IN CASE OF LOSS OF EXEMPTION.—If any com-
pany described in paragraph (1) loses the exemption provided 
under such paragraph by operation of paragraph (2), such com-
pany shall divest control of each bank it controls within 180 
days after such company becomes a bank holding company due 
to the loss of such exemption. 
"(5) 
SUBSECTION CEASES TO APPLY UNDER CERTAIN CIR-
CUMSTANCES.—This subsection shall cease to apply to any com-
pany described in paragraph (1) if such company— 
"(A) registers as a bank holding company under section 
5(a) of this Act; 
12 usc 1844. 
101 STAT. 560 
PUBLIC LAW 100-86—AUG. 10, 1987 
Reports. 
12 u s e 1818. 
;i * 
"(B) immediately upon such registration, complies with 
all of the requirements of this Act, and regulations pre-
scribed by the Board pursuant to this Act, including the 
'' 
nonbanking restrictions of this section; and 
"(C) does not, at the time of such registration, control 
* 
b£inks in more than one State, the acquisition of which 
12 use 1842. 
would be prohibited by section 3(d) of this Act if an applica-
tion for such acquisition by such company were filed under 
section 3(a) of this Act. 
"(6) INFORMATION REQUIREMENT.—Each company described in 
paragraph (1) shall, within 60 days after the date of enactment 
of the Competitive Equality Amendments of 1987, provide the 
Board with the name and address of such company, the name 
and address of each bank such company controls, and a descrip-
tion of each such bank's activities. 
"(7) EXAMINATION.—The Board may, from time to time, exam-
-ijs ine a company described in paragraph (1), or a bank controlled 
by such company, or require reports under oath from appro-
priate officers or directors of such company or bank solely for 
purposes of assuring compliance with the provisions of this 
subsection and enforcing such compliance. 
"(8) ENFORCEMENT.— 
"(A) IN GENERAL.—In addition to any other power of the 
Board, the Board may enforce compliance with the provi-
, 
sions of this Act which are applicable to any company 
-bii. i 
described in paragraph (1), and any bank controlled by such 
company, under section 8 of the Federal Deposit Insurance 
^, f 
Act and such company or bank shall be subject to such 
^.j^t 
section (for such purposes) in the same manner and to the 
same extent as if such company or bank were a State 
member insured bank. 
"(B) APPUCATION OF OTHER ACT.—Any violation of this 
Act by any company described in paragraph (1), and any 
bank controlled by such company, may also be treated as a 
violation of the Federal Deposit Insurance Act for purposes 
of subparagraph (A). 
^, .^^ , 
"(C) No EFFECT ON OTHER AUTHORITY.—No prOVision of 
this paragraph shall be construed as limiting any authority 
of the Comptroller of the Currency or the Federal Deposit 
Insurance Corporation. 
"(9) TYING PROVISIONS.—A company described in paragraph 
(1) shall be— 
"(A) treated as a bank holding company for purposes of 
section 106 of the Bank Holding Company Act Amendments 
"' 
V Qf j^gYO and section 22(h) of the Federal Reserve Act and 
any regulation prescribed under any such section; and 
(B) subject to the restrictions of section 106 of the Bank 
Holding dompany Act Amendments of 1970, in connection 
with any transaction involving the products or services of 
such company or affiliate and those of a bank affiliate, as if 
Lt! . a ,, g^gjj company or affiliate were a bank and such bank were 
a subsidiary of a bank holding company. 
5^: 
"(10) EXEMPTION UNAFFECTED BY CERTAIN EMERGENCY ACQUISI-
i n 
TiONS.—For purposes of clauses (i) and (ii)(V) of paragraph (2XA), 
,^ an insured institution is described in this paragraph if^ 
' ' 
"(A) the insured institution was acquired (or any shares 
or assets of such institution were acquired) by a company 
12 use 1811 
note. 
12 use 1971-
1978, 375b. 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 561 
^ 
described in paragraph (1) in an acquisition under section 
408(m) of the National Housing Act; and 
Post, p. 621. 
"(B) either— 
"(i) the insured institution is located in a State in 
S' 
which such company controlled a bank on March 5, 
,,, 
^^ ^ 
1987; or 
: 
"(ii) the insured institution has total assets of 
$500,000,000 or more at the time of such acquisition. 
\ 
"(g) LIMITATIONS ON CERTAIN BANKS.— 
"(1) IN GENERAL.—Notwithstanding any other provision of 
' ' 
this section (other than the last sentence of subsection (a)(2)), a 
* 
;i' 
bank holding company which controls an institution that 
' '-" 
became a bank as a result of the enactment of the Competitive 
Equality Amendments of 1987 may retain control of such 
institution if such institution does not— 
"(A) engage in any activity after the date of the enact-
ment of such Amendments which would have caused such 
• " 
institution to be a bank (as defined in section 2(c), £is in 
effect before such date) if such activities had been engaged 
Ante, p. 554. 
in before such date; or 
, _ 
"(B) increase the number of locations from which such 
institution conducts business after March 5,1987. 
"(2) 
LIMITATIONS 
CEASE 
TO APPLY 
UNDER 
CERTAIN 
CIR-
CUMSTANCES.—The limitations contained in paragraph (1) shall 
cease to apply to a bank described in such paragraph at such 
time as the acquisition of such bank, by the bank holding 
company referred to in such paragraph, would not be prohibited 
under section 3(d) of this Act if— 
12 USC 1842. 
"(A) an application for such acquisition were filed under 
section 3(a) of this Act; and 
"(B) such bank were treated as an additional bank (under 
section 3(d)). 
"(h) TYING PROVISIONS.— 
"(1) APPLICABLE TO CERTAIN EXEMPT INSTITUTIONS AND PARENT 
COMPANIES.—An institution described in subparagraph (D), (F), 
(G), (H), (I), or (J) of section 2(c)(2) shall be treated as a bank, and 
a company that controls such an institution shall be treated as a 
bank holding company, for purposes of section 106 of the Bank 
Holding Company Act Amendments of 1970 and section 22(h) of 
12 use 
the Federal Reserve Act and any regulation prescribed under 1971-1978. 
any such section. 
^^ ^^^ ^'^^^• 
"(2) APPLICABLE WITH RESPECT TO CERTAIN TRANSACTIONS.—A 
company that controls an institution described in subparagraph 
(D), (F), (G), (H), (I), or (J) of section 2(c)(2) and any of such 
company's other affiliates, shall be subject to the tying restric-
tions of section 106 of the Bank Holding Company Act Amend-
ments of 1970 in connection with any transaction involving the 
products or services of such company or affiliate and those of 
such institution, as if such company or affiliate were a bank and 
such institution were a subsidiary of a bank holding company.", 
(d) SAVINGS BANK ACTIVITIES.—Section 3 of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1842) is amended by adding at the 
Post, p. 579. 
end thereof the following new subsection: 
"(f) SAVINGS BANK SUBSIDIARIES OF BANK HOLDING COMPANIES.— 
"(1) IN GENERAL.—Notwithstanding any other provision of 
this Act (other than paragraphs (2) and (3)), any qualified 
savings bank which is a subsidiary of a bank holding company 
101 STAT. 562 
PUBLIC LAW 100-86—AUG. 10, 1987 
12 u s e 1843. 
State and local 
governments. 
Connecticut. 
Massachusetts. 
New York. 
;; may engage, directly or through a subsidiary, in any activity in 
which such savings bank may engage (as a State chartered 
savings bank) pursuant to express, incidental, or implied powers 
under any statute or regulation, or under any judicial 
interpretation of any law, of the State in which such savings 
bank is located. 
% 
"(2) INSURANCE ACTIVITIES.—Except as provided in paragraph 
^,: (3), any insurance activities of any qualified savings bank which 
is a subsidiary of a bank holding company shall be limited to 
insurance activities allowed under section 4(c)(8). 
"(3) SAVINGS BANK LIFE INSURANCE.—Any qualified savings 
bank permitted, as of March 5, 1987, to engage in the sale or 
underwriting of savings bank life insurance may sell or under-
, write such insurance after such savings bank is a subsidiary of a 
bank holding company if— 
"(A) the savings bank is located in the State of Connecti-
cut, Massachusetts, or New York; 
"(B) such activity is expressly authorized by the law of 
the State in which such savings bank is located; 
"(C) the savings bank retains its character as a savings 
jv .,. ; . bank; 
"(D) such activity is carried out by the savings bank 
..— 
directly and not by— 
"(i) any subsidiary or affiliate of the savings bank; or 
"(ii) the bank holding company which controls such 
savings bank; 
I) 
"(E) such activity is carried out by the savings bank in 
accordance with any residency or employment limitations 
isfki 
,
> set forth in the savings bank life insurance statute in effect 
on March 5, 1987, in the State in which such bank is 
KI>II ' 4 located; and 
"(F) such activity is otherwise carried out in the same 
manner as savings bank life insurance activity is carried 
T , - 
» out in the State in which such bank is located by savings 
banks which are not subsidiaries of any bank holding com-
pany registered under this Act. 
"(4) SUBSECTION SHALL CEASE TO APPLY UNDER CERTAIN CIR-
CUMSTANCES.—If any company which is not a savings bank or a 
savings bank holding company acquires control of a qualified 
savings bank, such savings bank shall cease to engage in any 
activity authorized under paragraph (1) or (3) before the end of 
the 2-year period beginning on the date such company acquires 
control, unless such activity is otherwise authorized pursuant to 
this Act. 
"(5) SPECIAL ASSET AGGREGATION RULE FOR PURPOSES OF PARA-
GRAPH (3).—For the sole purpose of determining whether a 
qualified savings bank may continue to sell and underwrite 
savings bank life insurance in accordance with this subsection 
after control of such savings bank is acquired by a bank holding 
company, the assets of any other bank affiliated with, or under 
contract to affiliate with, such savings bank as of March 5,1987, 
shall be treated as assets of the savings bank in determining 
whether such bank holding company is a savings bank holding 
company.". 
(e) THRIFT INSTITUTIONS' BANK.—Section 2(a)(5)(E) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841(a)(5)(E)) is amended to 
read as follows: 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 563 
"(E) No company is a bank holding company by virtue of its 
ownership or control of any State-chartered bank or trust company 
which— 
"(i) is wholly owned by thrift institutions or savings banks; 
and 
"(ii) is restricted to accepting— 
"(I) deposits from thrift institutions or savings banks; 
* 
"(II) deposits arising out of the corporate business of the 
thrift institutions or savings banks that own the bank or 
; 
trust company; or 
"(III) deposits of public moneys.". 
(f) EFFECT ON STATE AUTHORITY TO REGULATE.—Section 7 of 
the 
Bank Holding Company Act of 1956 (12 U.S.C. 1846) is amended— 
(1) by striking out "The enactment by the Congress of the 
Bank Holding Company Act of 1956 shall not" and inserting in 
lieu thereof "No provision of this Act shall"; and 
(2) by inserting "companies," before "banks". 
(g) AMENDMENT TO FEDERAL DEPOSIT INSURANCE ACT.— 
(1) IN GENERAL.—Section 3(g) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(g)) is amended to read as follows: 
"(g) SAVINGS BANK.—The term 'savings bank' means a bank 
(including a mutual savings bank) which transacts its ordinary 
banking business strictly as a savings bank under State laws impos-
ing special requirements on such banks governing the manner of 
investing their funds and of conducting their business.". 
(2) TECHNICAL AND CONFORMING AMENDMENT.—Section 
27(a) 
of the Federal Deposit Insurance Act is amended by striking out 
"and insured mutual savings banks". 
(h) 1987 AMENDMENT TRANSITION RULE.— 
(1) DELAY IN APPUCATION OF AMENDMENT TO CERTAIN INSTITU-
TIONS.—If^ 
(A) on March 5, 1987, an institution was not a bank (as 
defined in section 2(c) of the Bank Holding Company Act of 
1956), as in effect on such date; and 
(B) any person which had a controlling interest in such 
institution on March 5, 1987, made a public announcement 
before such date that the trsinsfer or other disposition of 
such person's controlling interest in such institution was 
being considered, 
the institution shall not become a bank (for purposes of the 
Bank Holding Company Act of 1956) due to the amendment 
made to such section 2(c) by this section before the date on 
which such institution fails to meet any requirement of para-
graph (2). 
(2) 
REQUIREMENTS FOR APPUCATION OF SUBSECTION.—This 
subsection shall not apply with respect to any institution de-
scribed in paragraph (1) unless— 
(A) the transfer or other disposition of the controlling 
interest referred to in such paragraph is completed, or an 
agreement to make such transfer or other disposition is in 
effect (or is subject only to final approval by the appropriate 
Federal and State regulatory agencies), before the end of 
J;. 
the 180-day period beginning on the date of the enactment 
of this title; 
, 
. 
(B) a written notice by the person acquiring a controlling 
interest in such institution (pursuant to the transfer or 
12 use 1831d. 
12 use 1841 
note. 
Ante, p. 554. 
12 use 1841 
note. 
101 STAT. 564 
PUBLIC LAW 100-86—AUG. 10, 1987 
other disposition described in subparagraph (A)) of such 
person's intention to operate such institution as an institu-
tion described in section 2(c)(2)(F) of the Bank Holding 
Ante, p. 554. 
'*^''^ 
Company Act of 1956, as in effect after the enactment of 
this title is filed with the Board before the end of the 7-day 
period beginning on the later of the date of such transfer (or 
other disposition) or the date of the enactment of this title; 
and 
(C) the operation of such institution as an institution 
described in such section 2(c)(2)(F) begins before the end of 
the 180-day period beginning on the date the transfer (or 
other 
disposition) described in subparagraph 
(A) is 
completed. 
(3) CoNTROLUNG INTEREST.—For purposes of this subsection, a 
person has a controlling interest in any institution if such 
person controls— 
(A) such institution; or 
(B) any company which controls such institution, 
as determined in accordance with the provisions of subsections 
(b) and (g) of section 2 of the Bank Holding Company Act of 
1956. 
^ 
SEC. 102. AMENDMENTS TO THE FEDERAL RESERVE ACT. 
(a) IN GENERAL.—The Federal Reserve Act is amended by insert-
ing after section 23A the following: 
' ^^ 
" 
' 
' 
• ' 
"RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES 
12 use 371C-1. 
"SEC. 23B. (a) IN GENERAL.— 
"(1) TERMS.—A member bank and its subsidiaries may engage 
in any of the transactions described in paragraph (2) only— 
"(A) on terms and under circumstances, including credit 
V- •• 
standards, that are substantially the same, or at least as 
' 
^ ^^* 
favorable to such bank or its subsidiary, as those prevailing 
at the time for comparable transactions with or involving 
other nonaffiliated companies, or 
"(B) in the absence of comparable transactions, on terms 
^ 
and under circumstances, including credit standards, that 
in good faith would be offered to, or would apply to, 
nonaffiliated companies. 
- 
i: 
"(2) TRANSACTIONS COVERED.—Paragraph (1) applies to the 
^ " 
following: 
"(A) Any covered transaction with an affiliate. 
"(B) The sale of securities or other assets to an affiliate, 
aifff 
including assets subject to an agreement to repurchase. 
'A 
"(C) The pajmient of money or the furnishing of services 
to an affiliate under contract, lease, or otherwise. 
"(D) Any transaction in which an affiliate acts as an 
agent or broker or receives a fee for its services to the bank 
or to any other person. 
"(E) Any transaction or series of transactions with a third 
party— 
"(i) if an affiliate has a financial interest in the third 
party, or 
i:.; I'Tf ^ : 
"(ii) if an affiliate is a participant in such transaction 
^^' *
•
- 
or series of transactions. 
ift 
.qq 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 565 
"(3) TRANSACTIONS THAT BENEFIT AN AFFIUATE.—For the pur-
pose of this subsection, any transaction by a member bank or its 
subsidiary with any person shall be deemed to be a transaction 
with an affiliate of such bank if any of the proceeds of the 
transaction are used for the benefit of, or transferred to, such 
affiliate. 
"G)) PROHIBITED TRANSACTIONS.— 
"(1) IN GENERAL.—A member bank or its subsidiary— 
"(A) shall not purchase as fiduciary any securities or 
other assets from any affiliate unless such purchase is 
permitted— 
"(i) under the instrument creating the 
fiduciary 
^''^ 
relationship, 
"(ii) by court order, or 
^'^**- 
"(iii) by law of the jurisdiction governing the fidu-
ciary relationship; and 
*' ' 
"(B) whether acting as principal or fiduciary, shall not 
'^'"^^ 
knowingly purchase or otherwise acquire, during the exist-
ence of any underwriting or selling syndicate, any security 
if a principal underwriter of that security is an affiliate of 
such bank. 
"(2) EXCEPTION.—Subparagraph (B) of paragraph (1) shall not 
apply if the purchase or acquisition of such securities has been 
approved, before such securities are initially offered for sale to 
the public, by a majority of the directors of the bank who are 
not officers or employees of the bank or any affiliate thereof. 
"(3) DEFINITIONS.—For the purpose of this subsection— 
"(A) the term 'security' has the meaning given to such 
term in section 3(a)(10) of the Securities Exchange Act of 
1934; and 
15 USC 78c. 
"(B) the term 'principal underwriter' means any under-
writer who, in connection with a primary distribution of 
g<^{. 
securities— 
"(i) is in privity of contract with the issuer or an 
affiliated person of the issuer; 
"(ii) acting alone or in concert with one or more other 
persons, initiates or directs the formation of an under-
writing syndicate; or 
"(iii) is allowed a rate of gross commission, spread, or 
other profit greater than the rate allowed another 
., /. j ,•__, 
underwriter participating in the distribution. 
"(c) ADVERTISING RESTRICTION.—A member bank or any subsidiary 
or affiliate of a member bank shall not publish any advertisement or 
enter into any agreement stating or suggesting that the bank shall 
in any way be responsible for the obligations of its affiliates. 
"(d) DEFINITIONS.—For the purpose of this section— 
"(1) the term 'affiliate' has the meaning given to such term in 
section 23A (but does not include any company described in 
12 USC 37ic 
section (b)(2) of such section or any bank); 
"(2) the terms 'bank', 'subsidiary', 'person', and 'security' 
(other than security as used in subsection (b)) have the mean-
ings given to such terms in section 23A; and 
"(3) the term 'covered transaction' has the meaning given to 
such term in section 23A (but does not include any transaction 
"
^
'
^ ^" 
which is exempt from such definition under subsection (d) of 
such section). 
•'- -
"
' 
101 STAT. 566 
PUBLIC LAW 100-86—AUG. 10, 1987 
"(e) REGULATIONS.—The Board may prescribe regulations to 
administer and carry out the purposes of this section, including— 
"(1) regulations to further define terms used in this section; 
and 
"(2) regulations to— 
"(A) exempt transactions or relationships from the 
requirements of this section; and 
"(B) exclude any subsidiary of a bank holding company 
from the definition of affiliate for purposes of this section, 
if the Board finds such exemptions or exclusions are in the 
public interest and are consistent with the purposes of this 
section.". 
(b) CONFORMING AMENDMENTS.—Section 18(j) of the Federal De-
posit Insurance Act (12 U.S.C. 18280')) is hereby amended— 
(1) by inserting "and section 23B" after "section 23A" at each 
place it appears in paragraph (1); Eind 
(2) by inserting ", 23B,^' after "23A" in paragraph (3)(A). 
(c) TREATMENT OF EDGE ACT AND AGREEMENT CORPORATIONS FOR 
PURPOSES OF THE BANK HOLDING COMPANY ACT.— 
(1) IN GENERAL.—The paragraph of section 25(a) of the Federal 
12 use 611-631. 
Reserve Act which begins "Except £is otherwise provided in this 
section, a majority" (the 11th full paragraph) (12 U.S.C. 619) is 
amended by adding at the end thereof the following: "Any 
company, other than a bank as defined in section 2 of the Bank 
Ante, pp. 554, 
Holding Company Act of 1956, that after March 5,1987, directly 
557. 
or indirectly acquires control of a corporation organized or 
operating under the provisions of this section or section 25 shall 
be subject to the provisions of the Bank Holding Company Act 
12 use 1841 
of 1956 in the same manner and to the same extent that bank 
note. 
holding companies are subject thereto, except that such com-
pany shall not by reason of this paragraph be deemed a bank 
holding company for the purpose of section 3 of the Bank 
Ante, p. 561; post, 
Holding Company Act of 1956.". 
p 579. 
(2) EXCEPTION.—The amendment made by paragraph (1) does 
12 use 619 note 
^°* ^PPly to ^n acquisition pursuant to the application by 
Midland Bank, pic, London, England, pending before the Board 
of Governors of the Federal Reserve System on July 1, 1987, to 
acquire a corporation organized or operating under section 25(a) 
of the Federal Reserve Act. If Midland Bank, pic, London, 
England, is not otherwise subject to section 4 of the Bank 
Ante, p. 557. 
Holding Company Act of 1956, the financial activities of Mid-
land Bank, pic, London, England, in the United States shall, 
upon the determination of the Board of Governors of the Fed-
eral Reserve System made at any time, be subject to section 4 of 
the Bank Holding Company Act of 1956. 
SEC. 103. SECURITIES AFFILIATIONS OF NONMEMBER INSURED BANKS. 
(a) IN GENERAL.—Section 18(j) of the Federal Deposit Insurance 
,; 
Act (12 U.S.C. 1828(j)) is amended by redesignating paragraph (3) (as 
amended by section 102(b)(2)) and paragraph (4) as paragraphs (4) 
and (5), respectively, and by inserting after paragraph (2) the follow-
ing new paragraph: 
"(3) SECURITIES AFFIUATIONS OF INSURED NONMEMBER BANKS.— 
"(A) IN GENERAL.—The provisions of section 20 of the Banking 
12 use 377. 
Act of 1933 (relating to affiliations between member banks and 
organizations engaged principally in certain securities activi-
12 use 78. 
ties), and the provisions of section 32 of the Banking Act of 1933 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 567 
(relating to certain officer, director, or employee relationships 
involving a member bank and a person or organization pri-
marily engaged in certain securities activities) shall apply to 
every insured nonmember bank in the same manner and to the 
same extent as if such insured nonmember bank were a 
member bank. 
"(B) CONTINUATION OF CERTAIN AFFILIATIONS.—This para-
graph shall not prohibit the continuation of such an affiliation 
or relationship which commenced before March 5, 1987, or the 
establishment of such an officer, director, or employee relation-
ship in connection with any affiliation established before 
March 5, 1987. 
"(C) 2-YEAR PERIOD.—An affiliation or officer, director, or 
employee relationship that becomes unlawful as a result of the 
enactment of this paragraph may continue for a period of 2 
years after the date of enactment of this paragraph. 
"(D) FOREIGN BANKS.—The provisions of this paragraph shall 
not apply to any foreign bank, as defined in section 1(b)(7) of the 
International Banking Act of 1978, solely because it has an 12 USC 3101. 
insured branch in the United States, except that the provisions 
of section 32 of the Banking Act of 1933 shall apply to an 12 use 78. 
insured branch as if it were an insured bank. 
"(E) EXCEPTIONS.—The provisions of this paragraph shall not 
apply to any institution described in subparagraph (D), (F), or (I) 
of section 2(c)(2) of the Bank Holding Company Act of 1956. Ante, p. 554. 
"(F) APPLICABILITY.—This paragraph shall apply during the 
period beginning on March 6, 1987, and ending on March 1, 
1988.". 
(b) TECHNICAL AND CONFORMING AMENDMENT.—Section 18(j)(4)(A) 
of the Federal Deposit Insurance Act (12 U.S.C. 1828(j)) (as redesig-
nated by subsection (a)) is amended by inserting "or any provision of 
section 20 of the Banking Act of 1933," after "or any lawful regula- 
12 use 377. 
tion issued pursuant thereto,". 
SEC. 104. AMENDMENTS TO SAVINGS AND LOAN HOLDING COMPANY 
PROVISIONS OF THE NATIONAL HOUSING ACT. 
(a) DEFINITIONS.—Section 408(a)(1) of the National Housing Act (12 
**^'' 
U.S.C. 1730a(a)(l)) is amended— 
(1) by striking out "and" at the end of subparagraph (I); 
(2) by striking out the period at the end of subparagraph (J) 
and inserting in lieu thereof a semicolon; and 
(3) by adding at the end thereof the following new sub-
paragraphs: 
"(K) the terms 'bank holding company' and 'bank' have 
the meanings given to such terms in subsections (a) and (c), 
respectively, of section 2 of the Bank Holding Company Act 
of 1956; and 
Ante, pp. 554, 
"(L) the term 'acquire' has the meaning given to such 557. 
term in section 13(f)(8)(E) of the Federal Deposit Insurance 
Act.". 
12 use 1823. 
(b) HOLDING COMPANY ACTIVITIES.—Section 408(c) of the National 
Housing Act (12 U.S.C. 1730a(c)) is amended to read as follows: 
"(c) HOLDING COMPANY ACTIVITIES.— 
"(1) PROHIBITED ACTIVITIES.—Except as otherwise provided in 
this subsection, no savings and loan holding company and no 
subsidiary (of such company) which is not an insured institution 
shall— 
101 STAT. 568 
PUBLIC LAW 100-86—AUG. 10, 1987 
"(A) engage in any activity or render any service for or on 
•j^* 
behalf of an insured institution subsidiary for the purpose 
' 
or with the effect of evading any law or regulation ap-
plicable to such insured institution; 
"(B) commence any business activity, other than the 
activities described in paragraph (2), after the date of the 
enactment of the Competitive Equality Amendments of 
1987; or 
"(C) continue any business activity, other than the activi-
^., . 
ties described in paragraph (2), after the later of^ 
"(i) the end of the 2-year period beginning on the date 
jj, 
of the enactment of the Competitive Equality Amend-
3yi * 
ments of 1987; or 
'[n :;, 
"(ii) the date on which such company received ap-
proval under subsection (e) of this section to become a 
savings and loan holding company, 
"(2) EXEMPT ACTIVITIES.—The prohibitions of subparagraphs 
, 
)ti) ,? 
(B) and (C) of paragraph (1) shall not apply to the following 
business activities of any savings and loan holding company or 
^ •; /' 
any subsidiary (of such company) which is not an insured 
institution: 
"(A) Furnishing or performing management services for 
an insured institution subsidiary of such company. 
"(B) Conducting an insurance agency or escrow business. 
"(C) Holding, managing, or liquidating assets owned or 
' " 
acquired from an insured institution subsidiary of such 
company. 
"(D) Holding or managing properties used or occupied by 
an insured institution subsidiary of such company. 
"(E) Acting as trustee under deed of trust. 
li ' "(F) Any other activity— 
"(i) which the Board of Governors of the Federal 
' 
, 
Reserve System, by regulation, has determined to be 
permissible for bank holding companies under section 
12 use 1843. 
v .; 
4(c) of the Bank Holding Company Act of 1956, unless 
the Corporation, by regulation, prohibits or limits any 
. ? . 
such activity for savings and loan holding companies; 
. r 1 
or 
"(ii) in which multiple savings and loan holding 
..» =
, ,. 
companies were authorized (by regulation) to directly 
engage on March 5,1987. 
"(3) CERTAIN UMITATIONS ON ACTIVITIES NOT APPUCABLE TO 
CERTAIN HOLDING COMPANIES.—Notwithstanding paragraphs (4) 
and (6) of this subsection, the limitations contained in subpara-
.,. 
. , 
graphs (B) and (C) of paragraph (1) shall not apply to any 
savings and loan holding company (or any subsidiary of such 
company) which controls— 
'} . 
"(A) only 1 insured institution, if the insured institution 
subsidiary of such company is a qualified thrift lender (as 
determined under subsection (o)); or 
"(B) more than 1 insured institution, if— 
.n ;>? ^ 
"(i) all, or all but 1, of the insured institution subsidi-
• ' 
aries of such company were acquired pursuant to an 
* *
• 
acquisition under subsection (m) of this section or sec-
Post, p. 613. 
tion 406(f); and 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 569 
"(ii) all of the insured institution subsidiaries of such 
company are qualified thrift lenders (as determined 
under subsection (o)). 
"(4) PRIOR APPROVAL OF CERTAIN NEW ACTIVITIES REQUIRED.— 
"(A) IN GENERAL.—No savings and loan holding company 
and no subsidiary (of such company) which is not an in-
sured institution shall commence, either de novo or by an 
acquisition (in whole or in part) of a going concern, any 
activity described in paragraph (2)(F)(i) of this subsection 
without the prior approval of the Corporation. 
"(B) FACTORS TO BE CONSIDERED BY CORPORATION.—In 
considering any application under subparagraph (A) by any 
savings and loan holding company or any subsidiary of any 
such company which is not an insured institution, the 
Corporation shall consider— 
"(i) whether the performance of the activity de-
scribed in such application by the company or the 
subsidiary can reasonably be expected to produce bene-
fits to the public (such as greater convenience, in-
creased competition, or gains in efficiency) that out-
weigh possiJ)le adverse effects of such activity (such as 
undue concentration of resources, decreased or unfair 
competition, conflicts of interest, or unsound financial 
practices); 
"(ii) the mafiagerial resources of the companies in-
volved; and 
"(iii) the adequacy of the financial resources, includ- 
' f}' ,^^ \;^ 
ing capital, of the companies involved. 
"(C) CORPORATION MAY DIFFERENTIATE BETWEEN NEW AND 
ONGOING ACTIVITIES.—In prescribing any regulation or 
considering any application under this paragraph, the Cor-
poration may differentiate between activities commenced 
de novo and activities commenced by the acquisition, in 
whole or in part, of a going concern. 
"(D) APPROVAL OR DISAPPROVAL BY ORDER.—The approval 
or disapproval of any application under this paragraph by 
the Corporation shall be made in an order issued by the 
Corporation containing the reasons for such approval or 
disapproval. 
"(5) GRACE PERIOD TO ACHIEVE COMPUANCE.—If any insured 
institution referred to in paragraph (3) fails to maintain the 
status of such institution as a qualified thrift lender, the Cor-
poration may allow, for good cause shown, any company which 
controls such institution (or any subsidiary of such company 
which is not an insured institution) up to 3 years to comply with 
the limitations contained in paragraph (1)(C). 
"(6) SPECIAL PROVISIONS RELATING TO CERTAIN COMPANIES 
AFFECTED BY 1987 AMENDMENTS.— 
"(A) EXCEPTION TO 2-YEAR GRACE PERIOD FOR ACHIEVING 
COMPLIANCE.—Notwithstanding paragraph 
(l)(C)(i), any 
company which received approval under subsection (e) of 
this section to acquire control of an insured institution 
between March 5, 1987, and the date of the enactment of 
the Competitive Equality Amendments of 1987 shall not 
continue any business activity other than the activities 
described in paragraph (2) after such date of enactment. 
101 STAT. 570 
PUBLIC LAW 100-86—AUG. 10, 1987 
i'!, V 
"(B) EXEMPTION FOR ACTIVITIES LAWFULLY ENGAGED IN 
BEFORE MARCH 5, 1987.—Notwithstanding paragraph (1)(C) 
and subject to subparagraphs (C) and (D), any savings and 
loan holding company which received approval, before 
March 5,1987, under subsection (e) of this section to acquire 
control of an insured institution may engage, directly or 
through any subsidiary (other than an insured institution 
subsidiary of such company), in any activity in which such 
^ 
company or such subsidiary was lawfully engaged on such 
date. 
"(C) TERMINATION OF SUBPARAGRAPH (B) EXEMPTION.— 
The exemption provided under subparagraph (B) for activi-
ties engaged in by any savings and loan holding company or 
a subsidiary of such company (which is not an insured 
institution) which would otherwise be prohibited under 
*
: 
paragraph (1)(C) shall terminate with respect to such activi-
ties of such company or subsidiary upon the occurrence 
(after the date of the enactment of the Competitive Equality 
Amendments of 1987) of any of the following: 
"(i) The savings and loan holding company acquires 
control of a bank or an additional insured institution 
(other than an insured institution acquired pursuant to 
Post, p. 613. 
subsection (m) of this section or section 406(0). 
"(ii) Any insured institution subsidiary of the savings 
and loan holding company fails to qualify as a domestic 
building and loan association under section 7701(a)(19) 
26 use 7701. 
>
-
^
. . 
of the Internal Revenue Code of 1986. 
100 Stat. 2095. 
"({{{) The savings and loan holding company engages 
...;, 
in any business activity— 
"(I) which is not described in paragraph (2); and 
"(II) in which it was not engaged on March 5, 
1987. 
"(iv) Any insured institution subsidiary of the sav-
ings and loan holding company increases the number of 
locations from which such insured institution conducts 
business after March 5, 1987 (other than an increase 
which occurs in connection with a transaction under 
subsection (m) of this section or section 406(f)). 
"(v) Any insured institution subsidiary of the savings 
and loan holding company permits any overdraft 
(including an intraday overdraft), or incurs any such 
overdraft in its account at a Federal Reserve bank, on 
behalf of an affiliate, unless such overdraft is the result 
of an inadvertent computer or accounting error that is 
beyond the control of both the insured institution 
* 
' 
subsidiary and the affiliate. 
"(D) ORDER B
Y CORPORATION T
O TERMINATE SUBPARAGRAPH 
* '' 
(B) ACTIVITY.—Any activity described in subparagraph (B) 
may also be terminated by the Corporation, after oppor-
"
^ 
tunity for hearing, if the Corporation determines, having 
due regard for the purposes of this title, that such action is 
necessary to prevent conflicts of interest or unsound prac-
tices or is in the public interest. 
"(7) FOREIGN SAVINGS AND LOAN HOLDING COMPANY.—Notwith-
standing any other provision of this section, any savings and 
loan holding company organized under the laws of a foreign 
country as of June 1, 1984 (including any subsidiary thereof 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 571 
which is not an insured institution), which controls a single 
insured institution on the date of enactment of the Competitive 
Equality Amendments of 1987 shall not be subject to this 
subsection with respect to any activities of such holding com-
pany which are conducted exclusively in a foreign country.", 
(c) 
REQUIREMENTS FOR TREATMENT AS A QUAUFIED 
THRIFT 
LENDER.— 
(1) IN GENERAL.—Section 408 of the National Housing Act (12 
U.S.C. 1730a) is amended by adding at the end thereof the 
following new subsection: 
"(o) QUAUFIED THRIFT LENDER REQUIREMENTS.— 
"(1) IN GENERAL.—Except as provided in paragraphs (2) and 
(3), any insured institution shall have the status of a qualified 
^ 
thrift lender if— 
"(A) the qualified thrift investments of such insured 
institution equal or exceed 60 percent of the total tangible 
assets of such institution; and 
"(B) the qualified thrift investments of such insured 
institution continue to equal or exceed 60 percent of the 
total tangible assets of such institution on an average basis 
in 3 out of every 4 quarters and 2 out of every 3 years. 
"(2) TRANSITION RULE FOR CERTAIN INSTITUTIONS.— 
"(A) IN GENERAL.—If any insured institution— 
* • - 
"(i) which was chartered as a savings bank or a 
cooperative bank under State law before October 15, 
1982; or 
"(ii) the principal assets of which were acquired from 
* 
an institution which was chartered as a savings bank 
- • 
or a cooperative bank under State law before Octo-
ber 15, 1982, 
meets the requirements of subparagraph (B), such insured 
institution shall be treated as a qualified thrift lender 
during the 10-year period beginning on January 1, 1988. 
"(B) 
SUBPARAGRAPH 
(B) 
REQUIREMENTS.—An insured 
institution meets the requirements of this subparagraph if, 
in the determination of the Corporation— 
"(i) the actual thrift investment percentage of such 
institution does not, after the date of the enactment of 
the Competitive Equality Amendments of 1987, de-
crease below the actual thrift investment percentage of 
such institution on such date of enactment; and 
' 
"(ii) the amount by which— 
"(I) the actual thrift investment percentage of 
' 
such institution at the end of each period described 
in the following table, exceeds 
"(II) the actual thrift investment percentage of 
such institution on such date of enactment, 
is equal to or greater than the applicable percentage (as 
determined under the following table) of the amount by 
which 60 percent exceeds the actual thrift investment 
percentage of such institution on such date of 
enactment: 
The applicable 
"For the following period: 
percentage is: 
The 2V'2-year period beginning on such date of enactment 
25 percent 
The 5-year period beginning on such date of enactment 
50 percent 
The 7y2-year period beginning on such date of enactment 
75 percent 
101 STAT. 572 
PUBLIC LAW 100-86—AUG. 10, 1987 
"(3) EXCEPTIONS GRANTED BY CORPORATION.—Notwithstanding 
paragraph (1), the Corporation may grant such temporary and 
limited exceptions from the minimum actual thrift investment 
percentage requirement contained in such paragraph as the 
Corporation deems necessary if— 
"(A) the Corporation determines that extraordinary cir-
cumstances exist, such as when the effects of high interest 
:: I. . 
rates reduce mortgage demand to such a degree that an 
.>-:* 
insufficient opportunity exists for an insured institution to 
meet such investment requirements; or 
"(B) the Corporation determines that— 
"(i) the grant of any such exception will facilitate an 
Post, pp. 613,575. 
acquisition under section 406(f) or 408(m); and 
"(ii) the acquired institution will comply with the 
r v 
transition requirements of paragraph (2XB). 
"(4) FAILURE TO MAINTAIN QTL STATUS.—Any insured institu-
tion which fails to maintain its status as a qualified thrift 
lender, as determined by the Corporation, may not thereafter be 
a qualified thrift lender for a period of 5 years. 
(5) DEFINITIONS.—For purposes of this subsection— 
"(A) ACTUAL THRIFT INVESTMENT PERCENTAGE.—The term 
'actual thrift investment percentage' means the percentage 
determined by dividing— 
f 
"(i) the amount of the qualified thrift investments of 
v] , 
an insured institution, by 
"(ii) the total amount of tangible assets of such in-
sured institution. 
"(B) QuAUFiED THRIFT INVESTMENTS.—The term 'qualified 
thrift investments' means, with respect to any insured 
institution, the sum of— 
"(i) the aggregate amount of loans, equity positions, 
or securities held by the insured institution (or any 
subsidiary of such institution) which are related to 
domestic residential real estate or manufactured 
j ft;/, 
housing; 
"(ii) the value of property used by such institution or 
subsidiary in the conduct of the business of such 
institution or subsidiary; 
"(iii) subject to paragraph (6), the liquid assets of the 
type required to be maintained under section 5A of the 
12 use 1425a. 
Federal Home Loan Bank Act; and 
"(iv) subject to paragraph (6), 50 percent of the dollar 
amount of the residential mortgage loans originated by 
such insured institution or subsidiary and sold within 
90 days of origination. 
"(6) LIMITATION ON TREATMENT OF CERTAIN ASSETS AS THRIFT 
INVESTMENTS.—The aggregate amount of the assets described in 
clauses (iii) and (iv) of paragraph (5XB) which may be taken into 
account in determining the amount of the qualified thrift 
investments of any insured institution shall not exceed the 
amount which is equal to 10 percent of the tangible assets of 
such institution. 
"(7) ADDITIONAL TRANSITION RULE.—The insured institution 
described in subsection (rX2XC) shall be treated as a qualified 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 573 
12 use 1730a 
note. 
12 use 1730a 
note. 
thrift lender during the 10-year period beginning on January 1, 
1988, if the requirements of paragraph (2)(B) are met by such 
institution.". 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
shall take effect on January 1,1988. 
(3) REGULATIONS.—The Federal Savings and Loan Insurance 
^ Corporation shall prescribe, under the authority of section 
408(h)(1) of the National Housing Act, regulations to carry out 
12 use 1730a. 
the provisions of the amendment made by paragraph (1) before 
January 1,1988. 
(d) TRANSACTIONS BETWEEN INSURED INSTITUTION SUBSIDIARIES 
AND CERTAIN AFFILIATES.— 
(1) IN GENERAL.—Section 408 of the National Housing Act (12 
U.S.C. 1730a(d)) is amended by adding after subsection (o) (as 
added by subsection (c) of this section) the following new 
subsection: 
"(p) RESTRICTIONS ON ACTIVITIES OF CERTAIN INSURED INSTITUTION 
SUBSIDIARIES.— 
"(1) TRANSACTIONS WITH CERTAIN AFFILIATES.— 
"(A) IN GENERAL.—Transactions between any insured 
i . 
i i 
institution subsidiary of a savings and loan holding com-
pany and any affiliate (of such insured institution subsidi-
ary) which is engaged only in business activities described 
in subsection (c)(2)(F)(i)— 
"(i) shall not be subject to subsection (d); and 
"(ii) shall be subject to the limitations and prohibi-
tions specified in sections 23A and 23B of the Federal 
Reserve Act in the same manner and to the same 
extent as if such insured institution were a member 
bank. 
ii)A , 
"(B) REGULATIONS.—The Corporation may prescribe regu-
lations for the purpose of defining and clarifying the ap-
*r%^i 
plicability of the limitations and prohibitions described in 
subparagraph (A). 
"(2) CROSS-MARKETING PRACTICES.— 
"(A) IN GENERAL.—Notwithstanding any other provision 
of this section, an insured institution subsidiary of a diversi-
fied savings and loan holding company may not offer or 
market products or services of an affiliate that are not 
permissible for bank holding companies to provide under 
section 4(c)(8) of the Bank Holding Company Act of 1956 or 
permit its products or services to be offered or marketed by 
or through an affiliate (other than an affiliate that engages 
only in activities permissible for bank holding companies 
under section 4(c) of that Act), unless such products or 
services were being so offered or marketed as of March 5, 
1987, and then only in the same manner in which they were 
being offered or marketed as of that date. 
"(B) EXCEPTION.—This paragraph shall not apply so as to 
prohibit an insured institution subsidiary of a diversified 
savings and loan holding company from offering or market-
1,, 
ing the products or services of an affiliate or from permit-
ting its products or services to be offered or marketed by or 
-'^ji 
through an affiliate i
f
— 
"(i) the savings and loan holding company is a recip-
rocal interinsurance exchange that acquired control of 
the insured institution before January 1, 1984; and 
12 u s e 371c; 
ante, p. 564. 
12 use 1843. 
101 STAT. 574 
PUBLIC LAW 100-86—AUG. 10, 1987 
Armed Forces. 
"(ii) at least 90 percent of the customers of the 
savings and loan holding company and its subsidiaries 
and affiliates are active or former officers in the United 
States military services or the widows, widowers, di-
vorced spouses, or current or former dependents of 
such officers.". 
(2) TECHNICAL AMENDMENT.—Section 408(d) of the National 
Housing Act (12 U.S.C. 1730a(d)) is amended by striking out "No 
savings and loan" and inserting in lieu thereof "Except as 
provided in subsection (p), no savings and loan". 
(e) TYING RESTRICTIONS.—Section 408 of the National Housing Act 
(12 U.S.C. 1730a) is amended by inserting after subsection (p) (as 
added by subsection (d) of this section) the following new subsection: 
"(q) TYING RESTRICTIONS.— 
"(1) STATE CHARTERED INSURED INSTITUTION SUBSIDIARIES.—A 
State chartered insured institution subsidiary of a savings and 
loan holding company shall be subject to section 5(q) of the 
12 use 1464. 
Home Owners' Loan Act of 1933, and regulations prescribed 
under such subsection, in the same manner and to the same 
12 use 1462. 
extent as an association (as defined in section 2(d) of such Act). 
"(2) HOLDING COMPANIES AND CERTAIN AFFILIATES.—A savings 
and loan holding company and any of its affiliates (other than 
an insured institution) shall be subject to section 5(q) of the 
Home Owners' Loan Act of 1933, and regulations prescribed 
under such subsection, in connection with transactions involv-
ing the products or services of such company or affiliate and 
those of an affiliated insured institution as if such company or 
' 
affiliate were an association (as defined in section 2(d) of such 
' •' 
Act).". 
(f) SAVINGS BANK AS INSURED INSTITUTION.— 
(1) IN GENERAL.—Section 408(n) of the National Housing Act 
(12 U.S.C. 1730a) is amended to read as follows: 
"(n) TREATMENT OF F D I C INSURED STATE SAVINGS BANKS AND 
COOPERATIVE BANKS AS INSURED INSTITUTIONS.— 
"(1) IN GENERAL.—Notwithstanding any other provision of 
law, a savings bank (as defined in section 3(g) of the Federal 
Ante, p. 563. 
Deposit Insurance Act) and a cooperative bank that is an in-
sured bank (as defined in section 3(h) of the Federal Deposit 
Insurance Act) upon application shall be deemed to be an 
insured institution for the purpose of this section, if the Cor-
1 ^ il-f 
poration determines that such bank is a qualified thrift lender 
(as determined under subsection (o)). 
"(2) FAILURE TO MAINTAIN QTL STATUS.—If any savings bank 
'^ 
which is deemed to be an insured institution under paragraph 
(1) subsequently fails to maintain its status as a qualified thrift 
lender, as determined by the Corporation, such bank may not 
thereafter be a qualified thrift lender for a period of 5 years.". 
(2) 
TECHNICAL 
AND 
CONFORMING 
AMENDMENT.—Section 
408(a)(1)(A) 
of 
the 
National 
Housing 
Act 
(12 
U.S.C. 
1730a(a)(l)(A)) is amended by adding before the semicolon at the 
end thereof the following: "and a savings bank which is deemed 
by the Corporation to be an insured institution under sub-
section (n)". 
(g) THRIFT ACQUISITIONS.—Section 408(e)(3) of the National Hous-
12 use 1730a. 
ing Act (12 U.S.C. 1730(e)) is amended to read as follows: 
"(3) INTERSTATE ACQUISITIONS.—No acquisition shall be approved 
by the Corporation under this subsection which will result in the 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 575 
formation by any company, through one or more subsidiaries or 
through one or more transactions, of a multiple savings and loan 
holding company controlling insured institutions in more than one 
State, unless— 
"(A) such company, or an insured institution subsidiary of 
such company, is authorized to acquire control of an insured 
institution subsidiary, or to operate a home or branch office, in 
.. 
the additional State or States pursuant to subsection (m); 
"(B) such company controls an insured institution subsidiary 
. .. ^ 
which operated a home or branch office in the additional State 
or States as of March 5,1987; or 
"(C) the statute laws of the State in which the insured institu-
tion, control of which is to be acquired, is located are such that 
an insured institution chartered by such State could be acquired 
by an insured institution chartered by the State where the 
acquiring insured institution or savings and loan holding com-
pany is located (or by a holding company that controls such a 
State-chartered insured institution), and such statute laws 
specifically authorize such an acquisition by language to that 
effect and not merely by implication.". 
(h) EMERGENCY ACQUISITIONS.—Section 408(m)(l)(A)(i) of the Na-
tional Housing Act (12 U.S.C. 1730a(m)(l)(A)(i)) is amended by insert-
ing "(c)," before "(e)(2)". 
SEC. 105. AMENDMENT TO THE FEDERAL HOME LOAN BANK ACT. 
Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) is Post, p. 601. 
amended by adding at the end thereof the following: 
"(e) REDUCED ELIGIBILITY FOR ADVANCES FOR CERTAIN MEMBERS 
> 
^ 
WHICH ARE NOT QUALIFIED THRIFT LENDERS.— 
"(1) IN GENERAL.—Except as the Board may prescribe, a 
member that is not a qualified thrift lender may not receive 
advances in excess of the amount determined by multiplying— 
"(A) the total amount of advances that such member 
would be eligible to receive in the absence of this subsec-
tion; by 
"(B) such member's actual thrift investment percentage, 
"(2) EXCEPTIONS.—Paragraph (1) does not apply to— 
"(A) a savings bank as defined in section 3(g) of the 
Federal Deposit Insurance Act; 
Ante, p. 563. 
"(B) an insured institution which was chartered prior to 
October 15, 1982, as a savings bank under State law; or 
"(C) an insured institution which acquired its principal 
assets from an institution which was chartered prior to 
October 15,1982, as a savings bank under State law. 
"(3) DEFINITIONS.—As used in this subsection— 
' -
"(A) INSURED INSTITUTION.—The term 'insured institu-
tion' has the same meaning as in section 408(a)(1)(A) of the 
National Housing Act. 
Ante, p. 594. 
"(B) QUALIFIED THRIFT LENDER.—The term 
'qualified 
J 
thrift lender' has the same meaning as in section 408(o) of 
the National Housing Act. 
Ante, p. 571. 
"(C) ACTUAL THRIFT INVESTMENT PERCENTAGE.—The term 
'actual thrift investment percentage' has the same meaning 
as in section 408(o)(5)(A) of the National Housing Act.". 
101 STAT. 576 
PUBLIC LAW 100-86—AUG. 10, 1987 
12 use 377. 
12 use 78. 
Washington. 
Ante, p. 566. 
Minnesota. 
Real property. 
.R'.' 
SEC. 106. SECURITIES AFFILIATIONS OF FSLIC INSURED INSTITUTIONS. 
(a) IN GENERAL.—Section 408 of the National Housing Act (12 
U.S.C. 1730a) is amended by inserting after subsection (q) (as added 
by section 104(e) of this title) the following new subsection: 
"(r) SECURITIES AFFIUATIONS.— 
"(1) IN GENERAL.—The provisions of section 20 of the Banking 
Act of 1933 (relating to affiliations between member banks and 
organizations engaged principally in certain securities activi-
ties) and the provisions of section 32 of the Banking Act of 1933 
(relating to certain officer, director, or employee relationships 
involving a member bank and a person or organization pri-
marily engaged in certain securities activities) shall be ap-
plicable to every insured institution in the same manner and to 
the same extent as if such insured institution were a member 
bank. 
"(2) EXCEPTIONS.—This subsection does not prohibit— 
"(A) the continuation of such an affiliation or relation-
ship which commenced prior to March 5, 1987, or the 
.' 
establishment of such an officer, director, or employee rela-
tionship in connection with any affiliation established 
before such date; 
"(B) the Washington Mutual Savings Bank, located in the 
State of Washington, from acquiring control of one or more 
insured institutions or establishing an officer, director, or 
employee relationship between such an insured institution 
<'i ''• 
and any affiliate of the savings bank referred to in section 
18(j)(3)(B) of the Federal Deposit Insurance Act; 
p.a3P 
"(C) the acquisition of Peoples Savings and Loan Associa-
tion of Owatonna, Minnesota, by Miller and Schroeder 
Holdings, Inc. (or any affiliate of such company), or the 
establishment of any officer, director, or employee relation-
ship between such association and such company or any 
affiliate of such company, including Miller and Schroeder 
< J2 
Financial, Inc.; or 
"(D) such an affiliation or officer, director, or employee 
^g,:^^ 
relationship which results from the acquisition by an 
organization described in paragraph (1) of an insured 
,, i f 
institution under subsection (m) of this section, if such 
institution has total assets of $500,000,000 or more at the 
.y 
time of such acquisition. 
"(3) TWO-YEAR PERIOD.—An affiliation or an officer, director, 
or employee relationship that becomes unlawful as a result of 
the enactment of this subsection may continue for a period of 2 
years after the date of the enactment of this subsection. 
"(4) EXEMPT ACTIVITIES OF CERTAIN INSTITUTIONS.—Nothing in 
this subsection or section 18(j)(3) of the Federal Deposit Insur-
ance Act prohibits an affiliation or an officer, director, or 
employee relationship between an insured institution or an 
institution which is eligible to become a member of a Federal 
Home Loan Bank, and an organization engaged principally in 
the issuance, sale, underwriting, or distribution, at wholesale or 
retail, or through syndicate participation, o
f
— 
.ji' 
«^^) securities representing or secured by interests in 
real estate or real estate loans or pools of real estate loans; 
"(B) interests in partnerships formed primarily to own, 
operate, manage, or invest in real estate; 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 577 
"(C) insurance products deemed to be securities, including 
without limitation variable annuities and variable life 
insurance; 
"(D) securities of an investment company, as such term is 
defined in the Investment Company Act of 1940; and 
15 USC 80a-l. 
i . i. 
"(E) any securities to the extent such issuance, sale, 
underwriting, or distribution is permitted for national 
banks. 
"(5) REGULATIONS.— 
"(A) IN GENERAL.—The Corporation is authorized to issue 
rules and regulations and to publish interpretations govern-
ing the implementation of this subsection, and shall enforce 
•i' • 
the provisions of this subsection. 
"(B) FEDERAL DEPOSIT INSURANCE CORPORATION AUTHOR-
^' ' 
ITY.—For the purpose of paragraph (4), the Federal Deposit 
Insurance Corporation is authorized to issue rules and regu-
lations and publish interpretations with respect to savings 
banks and other institutions subject to section 18(j)(3) of the 
Federal Deposit Insurance Act.". 
Ante, p. 566. 
(b) EXPIRATION DATE.—The amendment made by subsection (a) 12 use I730a 
shall cease to be effective on March 1,1988. 
note. 
SEC. 107. MUTUAL HOLDING COMPANY AMENDMENTS. 
(a) IN GENERAL.—Section 408 of the National Housing Act (12 
*
* 
U.S.C. 1730a) is amended by inserting after subsection (r) (as added 
by section 106(a) of this title) the following new subsection: 
"(s) MUTUAL HOLDING COMPANIES.— 
"(1) IN GENERAL.—Notwithstanding any provision of Federal 
;» Kl' t^i 
law other than this title, an insured institution operating in 
mutual form may reorganize so as to become a holding company 
by— 
"(A) chartering an interim savings institution, the stock 
of which is to be wholly owned by the mutual institution; 
and 
"(B) transferring the substantial part of its assets and 
liabilities, including all of its insured liabilities, to the 
interim savings institution. 
"(2) DIRECTORS AND CERTAIN ACCOUNT HOLDERS' APPROVAL OF 
PLAN REQUIRED.—A reorganization is not authorized under this 
subsection unless— 
"(A) a plan providing for such reorganization has been 
approved by a majority of the board of directors of the 
mutual savings institution; and 
"(B) in the case of an institution in which holders of 
*
» * 
accounts and obligors exercise voting rights, such plan has 
been submitted to and approved by a majority of such 
individuals at a meeting held at the call of the directors in 
accordance with the procedures prescribed by the institu-
tion's charter and bylaws. 
"(3) NOTICE TO THE CORPORATION; DISAPPROVAL PERIOD.— 
"(A) NOTICE REQUIRED.—At least 60 days prior to taking 
any action described in paragraph (1), an insured institu-
tion seeking to establish a mutual holding company shall 
provide written notice to the Corporation. The notice shall 
*' 
contain such relevant information as the Corporation shall 
require by regulation or by specific request in connection 
with any particular notice. 
101 STAT. 578 
PUBLIC LAW 100-86—AUG. 10, 1987 
"(B) TRANSACTION ALLOWED IF NOT DISAPPROVED.—Unless 
the Corporation within such 60-day notice period dis-
approves the proposed holding company formation, or ex-
tends for another 30 days the period during which such 
disapproval may be issued, the insured institution provid-
ing such notice may proceed with the transaction, if the 
requirements of paragraph (2) have been met. 
"(C) GROUNDS FOR DISAPPROVAL.—The Corporation may 
disapprove any proposed holding company formation only 
i ^ -
"(i) such disapproval is necessary to prevent unsafe 
vf 
or unsound practices; 
"(ii) the financial or management resources of the 
insured institution involved warrant disapproval; 
"(iii) the insured institution fails to furnish the 
information required under subparagraph (A); or 
"(iv) the insured institution fails to comply with the 
, 
requirement of paragraph (2). 
;. 
"(D) RETENTION OF CAPITAL ASSETS.—In connection with 
the transaction described in paragraph (1), an insured 
institution may, subject to the approval of the Corporation, 
retain capital assets at the holding company level to the 
extent that such capital exceeds adequate reserves as pre-
12 use 1726. 
scribed pursuant to section 403(b) or the comparable provi-
sions of State or Federal law. 
"(4) OWNERSHIP.—Persons having ownership rights in the 
mutual institution pursuant to section 5G3)(1)(B) of the Home 
12 use 1464. 
Owners' Loan Act of 1933 or State law shall have the same 
ownership rights with respect to the mutual holding company. 
"(5) PERMITTED ACTIVITIES.—A mutual holding company may 
engage only in the following activities: 
"(A) Investing in the stock of an insured institution. 
"(B) Acquiring a mutual institution through the merger 
of such institution into an insured institution subsidiary of 
such holding company or an interim savings institution 
subsidiary of such holding company. 
"(C) Subject to paragraph (6), merging with or acquiring 
another holding company, one of whose subsidiaries is an 
insured institution. 
"(D) Investing in a corporation the capital stock of which 
is available for purchase by an insured institution under 
Federal law or under the law of any State where the 
subsidiary insured institution or institutions have their 
it 
home offices. 
"(E) Engaging in the activities described in subsection 
(c)(2), except subparagraph (B). 
"(6) LIMITATIONS ON CERTAIN ACTIVITIES OF ACQUIRED HOLD-
ING COMPANIES.— 
"(A) NEW ACTIVITIES.—If a mutual holding company ac-
quires or merges with another holding company under 
paragraph (5)(C), the holding company acquired or the hold-
ing company resulting from such merger or acquisition may 
only invest in assets and engage in activities which are 
authorized under paragraph (5). 
"(B) GRACE PERIOD FOR DIVESTING PROHIBITED ASSETS OR 
DISCONTINUING PROHIBITED ACTIVITIES.—Not later than 2 
years following a merger or acquisition described in para-
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 579 
graph (5)(C), the acquired holding company or the holding 
company resulting from such merger or acquisition shall— 
"(i) dispose of any asset which is an asset in which a 
mutual holding company may not invest under para-
graph (5); and 
"(ii) cease any activity which is an activity in which a 
mutual holding company may not engage under para-
graph (5). 
"(7) REGULATION.—Unless the context otherwise requires, a 
:>t:j J: 
mutual holding company shall be subject to the other require-
ments of this section regarding regulation of holding companies. 
"(8) DEFINITIONS.—For purposes of this subsection— 
"(A) MUTUAL HOLDING COMPANY.—The term 'mutual 
holding company' means a corporation organized as a hold-
ing company under this subsection. 
"(B) MUTUAL INSTITUTION.—The term 'mutual institution' 
means— 
"(i) an insured institution; or 
"(ii) a savings bank (as defined in section 3(g) of the 
Federal Deposit Insurance Act), 
Ante, p. 563. 
which is operating in mutual form.", 
(b) AMENDMENT TO THE BANK HOLDING COMPANY ACT.—Section 3 
of the Bank Holding Company Act of 1956 (12 U.S.C. 1842) is Ante, p. 561. 
amended by adding at the end thereof the following: 
"(g) MUTUAL BANK HOLDING COMPANY.— 
"(1) ESTABLISHMENT.—Notwithstanding any provision of Fed-
eral law other than this Act, a savings bank or cooperative bank 
operating in mutual form may reorganize so as to form a 
holding company. 
"(2) REGULATION.—A corporation organized as a holding com-
pany under this subsection shall be regulated on the same terms 
and be subject to the same limitations as any other holding 
company which controls a savings bank.". 
SEC. 108. LEASING AUTHORITY OF NATIONAL BANKS. 
Section 5136 of the Revised Statutes (12 U.S.C. 24) is amended by 
adding at the end thereof the following: 
"Tenth. To invest in tangible personal property, including, 
Real property. 
without limitation, vehicles, manufactured homes, machinery, 
equipment, or furniture, for lease financing transactions on a 
net lease basis, but such investment may not exceed 10 percent 
of the assets of the association.". 
SEC.109. NOW ACCOUNTS. 
Section 2(a)(2) of Public Law 93-100 (12 U.S.C. 1832(a)(2)) is 
" - ^^^^ 
amended by inserting the term "political," immediately after "edu-
cational,". 
SEC. 110. EXEMPTION FROM AFFILIATE TRANSACTION RESTRICTIONS. 
Section 408 of the National Housing Act (12 U.S.C. 1730a) is 
amended by inserting after subsection (s) (as added by section 107(a) 
of this title) the following new subsection: 
"(t) EXEMPTION.— 
"(1) IN GENERAL.—Subject to paragraph (2), but notwithstand-
ing any other provision of law, an insured institution that is a 
subsidiary of an insured institution or insured institutions the 
Q1 1Q4 n
Qft
on . /->T o n
L
101 STAT. 580 
PUBLIC LAW 100-86—AUG. 10, 1987 
voting stock of which is 80 percent owned by the same company 
shall not be subject— 
"(A) to the provisions of subsection (d) of this section as to 
transactions with such parent insured institution or aifili-
ate insured institutions (and their subsidiaries), or 
"(B) to the provisions of subsections (f) and (g). 
"(2) Low QUAUTY ASSETS.—An insured institution (or its 
subsidiary) may not purchase a low quality asset, as such term 
12 use 371c. 
is defined in section 23A of the Federal Reserve Act, from 
another insured institution (or its subsidiary) in a transaction 
exempted by this subsection and any transaction with another 
insured institution (or its subsidiary) under this subsection shall 
be on terms and conditions that are consistent with safe and 
sound financial practices. 
"(3) DEFINITION.—For purposes of this subsection, an 'insured 
r.^ institution' includes an institution that was chartered prior to 
October 15, 1982, as a savings bank or cooperative bank under 
State law and that is or becomes a savings and loan holding 
^ 
company or is or becomes a subsidiary of a savings and loan 
sm ^.v, i i-i^ 
holding company.". 
SEC. 111. CONSIDERATION OF CERTAIN ACQUISITIONS. 
(a) AMENDMENT TO SECTION 408.—Section 408(e) of the National 
Ante, p. 574. 
Housing Act (12 U.S.C. 1730a(e)) is amended— 
(1) by redesignating paragraph (4) as paragraph (5); 
(2) by inserting a new paragraph (4) to read as follows: 
"(4) CONSIDERATION OF LOSS OF CERTAIN TAX BENEFITS.— 
"(A) IN GENERAL.—In each case in which a filing of any 
type is required by this section, or regulations prescribed 
under this section, before the acquisition of stock of an 
insured institution, the Corporation, in evaluating such 
filing, may consider the likelihood that the proposed ac-
quisition will result in the loss or reduction of the tax 
benefits of the insured institution's net operating loss 
carryforwards under section 382 of the Internal Revenue 
26 use 382. 
. 5,; f
. Code of 1986. 
100 Stat. 2095. 
"(g) REQUIRED CONSIDERATION IN CERTAIN CASES.—The 
..a';, 
u3.i 
Corporation shall, with respect to any acquisition, give 
consideration to the likelihood of future loss or reduction of 
the tax benefits of an insured institution's net operating 
loss carryforwards under section 382 of the Internal Reve-
nue Code of 1986 if such net operating loss carryforwards 
result from the insured institution's acquisition of one or 
more insured institutions under subsection (m) of this sec-
Post, p. 613. 
g| 
» tion or section 406(f) or pursuant to acquisitions that are 
-L'i 
otherwise deemed to be supervisory 
cases by 
the 
Corporation. 
"(C) PERMITTED TRANSACTIONS.—Notwithstanding sub-
paragraph (A) or (B), the Corporation may permit— 
"(i) acquisitions in which the proposed acquirer com-
mits itself in writing to maintain the ratio of tangible 
equity capital to liabilities of the insured institution to 
be acquired, as determined in accordance with gen-
;..; 
erally accepted accounting principles, in an amount 
equal to the ratio in existence at the time of filing with 
the Corporation, 
_-->ei-i& 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 581 
"(ii) acquisitions which are approved by the holders 
of a majority of the voting stock of the institution to be 
acquired, or 
"(iii) acquisitions pursuant to subsection (m) of this 
section or section 406(f) or pursuant to acquisitions that 
Post, p. 613. 
are otherwise deemed to be supervisory cases by the 
Corporation.", 
(b) AMENDMENT TO SECTION 407.—Section 407(q) of the National 
Housing Act (12 U.S.C. 1730(q)) is amended— 
(1) by redesignating paragraphs (8) through (18) as paragraphs 
(9) through (19), respectively; 
(2) by inserting a new paragraph (8) to read as follows: 
"(8) CONSIDERATION OF LOSS OP CERTAIN TAX BENEFITS.— 
"(A) IN GENERAL.—In each case in which a filing of any 
type is made under this subsection, or regulations pre-
scribed under this section, before the acquisition of stock of 
an insured institution, the Corporation, in evaluating such 
filing, may consider the likelihood that the proposed ac-
quisition will result in the loss or reduction of the tax 
benefits of an insured institution's net operating loss 
carryforwards under section 382 of the Internal Revenue 
Code of 1986. 
26 use 382. 
xr _j 
"(B) REQUIRED CONSIDERATION IN CERTAIN CASES.—The l
O
O stat. 2095. 
Corporation shall, with respect to any acquisition, give 
-n 
consideration to the likelihood of future loss or reduction of 
the tax benefits of an insured institution's net operating 
loss carrjrforwards under section 382 of the Internal Reve-
nue Code of 1986 if such net operating loss carry forwards 
result from the insured institution's acquisition of one or 
more insured institutions under section 406(f) or 408(m) or 
12 use I730a. 
pursuant to acquisitions that are otherwise deemed to be 
supervisory cases by the Corporation. 
'(C) PERMITTED TRANSACTIONS.—Notwithstanding sub-
paragraph (A) or (B), the Corporation may permit— 
"(i) acquisitions in which the proposed acquirer com-
mits itself in writing to maintain the ratio of tangible 
equity capital to liabilities of the insured institutions to 
be acquired, as determined in accordance with gen-
erally accepted accounting principles, in an amount 
equal to the ratio in existence at the time of filing with 
the Corporation, 
"(ii) acquisitions which are approved by the holders 
of a majority of the voting stock of the institution to be 
acquired, or 
(iii) acquisitions under section 406(f) or 408(m), or 
are acquisitions that are otherwise deemed to be super-
visory cases by the Corporation.". 
TITLE II—MORATORIUM ON CERTAIN 
NONBANKING ACTIVITIES 
SEC. 20L MORATORIUM ON CERTAIN NONBANKING ACTIVITIES. 
12 USC 1841 
(a) APPLICABIUTY.—The provisions of this section shall apply "°*® 
during the period beginning on March 6, 1987, and ending on 
March 1, 1988. 
101 STAT. 582 
PUBLIC LAW 100-86—AUG. 10, 1987 
* (b) MORATORIUM.— 
(1) A foreign bank or other company covered by subsection (c) 
of section 8 of the International Banking Act of 1978 (12 U.S.C. 
f 
3106(c)) shall not, under any provision of law which is not 
; 
I >.. 
' 
applicable to domestic bank holding companies, expand any 
activity in which it is engaged pursuant to that subsection by 
acquiring an interest in, or the assets of, a going concern. This 
i 
paragraph shall not apply to any "domestically-controlled affili-
ate covered in 1978" as defined in that subsection. 
* 
(2) A Federal banking agency may not authorize or allow by 
action, inaction, or otherwise any bank holding company or 
subsidiary or affiliate thereof, any foreign bank or other com-
pany subject to the Bank Holding Company Act of 1956 (12 
V 
U.S.C. 1841 et seq.) under section 8(a) of the International 
Banking Act of 1978 (12 U.S.C. 3106(a)), or any insured bank or 
subsidiary or affiliate thereof to engage in the United States to 
any extent whatever— 
(A) in the flotation, underwriting, public sale, dealing in, 
or distribution of securities if that approval would require 
the agency to determine that the entity which would con-
duct such activities would not be engeiged principally in 
::' 
;• 
such activities, 
(B) in any securities activity not legally authorized in 
"^ 
writing prior to March 5,1987, or 
»' 
(C) in the operation of a nondealer marketplace in 
options. 
Subparagraph (B) shall not affect (i) activities in which any 
bank holding company or subsidiary or affiliate thereof, any 
foreign bank or other company subject to the Bank Holding 
. ii 1 ivU f I 
Company Act of 1956 under section 8(a) of the International 
"
" 
Banking Act of 1978, or any insured bank or subsidiary or 
affiliate thereof acts only as an agent; (ii) activities which had 
been lawfully engaged in prior to March 5, 1987; or (iii) sales or 
transactions closed on or before June 30,1987. 
" 
(3) A Federal banking agency may not issue any rule, regula-
^ 
tion, or order that would have the effect of increasing the 
insurance powers of banks, bank holding companies, foreign 
banks or other companies subject to the Bank Holding Company 
'• 
Act of 1956 under section 8(a) of the International Banking Act 
of 1978, or banking or nonbanking subsidiaries thereof with 
respect to any activities in the United States, either with re-
spect to specific banks or bank holding companies or subsidi-
aries thereof or generally beyond those expressly authorized for 
bank holding companies under subparagraphs (A) through (G) 
of section 4(c)(8) of the Bank Holding Company Act of 1956 (12 
'' 
U.S.C. 1843(c)(8)(A) through (G)). 
(4) Except as provided in section 3(f) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1842(f)), as added by section 
101(d) of this Act, the Board of Governors of the Federal Reserve 
System may not approve the acquisition by a bank holding 
company or by a foreign bank or other company subject to the 
Bank Holding Company Act of 1956 under section 8(a) of the 
, 
J 
International Banking Act of 1978, of any company, including a 
State-chartered bank, unless the bank holding company, foreign 
^ 
bank, or other company has agreed to limit the insurance 
activities in the United States of the company to be acquired to 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 583 
those permissible under section 4(c)(8) of the Bank Holding 
Company Act of 1956. This paragraph shall not apply to the 
12 USC 1843. 
acquisition of a State-chartered bank that upon acquisition 
would be subject to the Bank Holding Company Act of 1956, 
pursuant to a reorganization plan under which the stockholders 
of the bank exchange their shares for shares in a newly created 
bank holding company which is not a subsidiary of any other 
company or to the acquisition of a State-chartered bank by a 
bank holding company that on March 6, 1987, controlled one or 
more State-chartered banks that have engaged in insurance 
i 
activities identical to those of the newly acquired institution so 
long as the bank holding company agrees that it will— 
(A) within 2 years of the consummation of its acquisition 
of the State-chartered bank, divest or terminate that bank's 
impermissible insurance activities, and 
(B) limit the bank's insurance activities during that 2-
year period to the renewal of existing policies. 
(5) A national bank or a Federal branch or agency of a foreign 
bank may not expand its insurance agency activities pursuant 
to the Act of September 7, 1916 (12 U.S.C. 92), into places where 
it was not conducting such activities as of March 5, 1987. 
(6) A Federal banking agency may not issue any rule, regula-
tion, or order that would have the effect of increasing real 
estate powers in the United States of banks, bank holding 
companies, foreign banks or other companies subject to the 
Bank Holding Company Act of 1956 under section 8(a) of the 
12 use 1841 
International Banking Act of 1978, or of any banking or non- ^
°
*
v
^
V
c 
banking subsidiaries of any such banks or companies. 
(c) DEFINITIONS.—As used in this section and section 202— 
(1) the term "affiliate" has the same meaning as in section 
2(j)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1841(j)(2)), as added by section 101(a) of this Act; 
(2) the term "bank holding company" has the same meaning 
as in section 2(a) of the Bank Holding Company Act of 1956 (12 
U.S.C. 1841(a)); 
(3) the term "Federal banking agency" has the same meaning 
as the term "appropriate Federal banking agency" has in sec-
tion 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 
1813(q)); and 
(4) the term "insured bank" has the same meaning as in 
section 3(h) of the Federal Deposit Insurance Act (12 U.S.C. 
1813(h)). 
(d) INSURANCE AUTHORITY OF BANKING ORGANIZATIONS.—Nothing 
in this section may be construed to increase or reduce the insurance 
authority of bank holding companies or banking or nonbanking 
subsidiaries thereof or of national banks under current law. 
(e) INSURANCE AUTHORITY OF CERTAIN STATE-CHARTERED BANKS.— 
(1) FREESTANDING STATE-CHARTERED BANKS.—Nothing in this 
section shall be construed to deny any State the authority to 
permit its State-chartered banks that are not controlled by bank 
holding companies from engaging in any insurance activity. 
(2) STATE-CHARTERED SUBSIDIARIES OF BANK HOLDING COMPA-
NIES.—In addition, neither the existence of the moratorium nor 
its expiration shall be construed to increase, decrease, or affect 
in any way the authority of State-chartered bank subsidiaries of 
bank holding companies with respect to insurance activities. 
12 USC 3106. 
101 STAT. 584 
PUBLIC LAW 100-86—AUG. 10, 1987 
12 use 1841 
SEC. 202. AUTHORITY OF FEDERAL BANKING AGENCIES. 
Nothing in section 201 may be construed to prevent a Federal 
banking agency from issuing any rule, regulation, or order pursuant 
to its legal authority in existence on the day preceding the date of 
enactment of this Act to expand the securities, insurance, or real 
estate powers of banks or bank holding companies that are subject 
to the moratorium established under section 201 if the effective date 
of such rule, regulation, or order is delayed until the expiration of 
such moratorium. 
;F > 
12 use 1841 
SEC. 203. INTENT OF CONGRESS. 
(a) COMPREHENSIVE CONGRESSIONAL REVIEW OF BANKING AND 
FINANCIAL LAWS.—It is the intent of the Congress, through 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, to conduct a comprehensive review of our 
banking and financial laws and to make decisions on the need for 
financial restructuring legislation in the light of today's changing 
financial environment both domestic and international before the 
expiration of such moratorium. 
(b) CONGRESSIONAL INTENT NOT TO RENEW OR EXTEND MORATO-
RIUM.—It is the intent of the Congress not to renew or extend the 
moratorium established under section 201 whether or not subse-
quent banking legislation is passed by the Congress. 
SEC. 204. AMENDMENTS TO THE INTERNATIONAL BANKING ACT OF 1978. 
(a) TERMINATION OF CERTAIN NONBANKING ACTIVITIES.—Section 
, . . ^ ^ V 8(c) of the International Banking Act of 1978 (12 U.S.C. 3106(c)) is 
amended by adding at the end thereof the following new paragraph: 
"(2) The authority conferred by this subsection on a foreign bank 
or other company shall terminate 2 years after the date on which 
such foreign bank or other company becomes a 'bank holding com-
pany' as defined in section 2(a) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1841(a)); except that the Board may, upon application 
of such foreign bank or other company, extend the 2-year period for 
not more than one year at a time, if, in its judgment, such an 
extension would not be detrimental to the public interest, but no 
such extensions shall exceed 3 years in the aggregate.". 
(b) CLERICAL AMENDMENT.—Section 8 of the International Bank-
ing Act of 1978 is amended by striking out "(c) After" and inserting 
in lieu thereof "(c)(1) After". 
SEC. 205. AMENDMENTS TO THE BANK HOLDING COMPANY ACT OF 1956. 
(a) EXCEPTION TO NONBANKING PROHIBITIONS.—Section 2(h) of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1841(h)) is amended 
by striking out paragraph (2) and by adding after paragraph (1) the 
following new paragraphs: 
"(2) Except as provided in paragraph (3), the prohibitions of 
section 4 of this Act shall not apply to shares of any company 
organized under the laws of a foreign country (or to shares held by 
such company in any company engaged in the same general line of 
business as the investor company or in a business related to the 
business of the investor company) that is principally engaged in 
business outside the United States if such shares are held or ac-
quired by a bank holding company organized under the laws of a 
foreign country that is principally engaged in the banking business 
outside the United States. For the purpose of this subsection, the 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 585 
term 'section 2(hX2) company' means any company whose shares are 
held pursuant to this paragraph. 
"(3) Nothing in paragraph (2) authorizes a section 2(h)(2) company 
to engage in (or acquire or hold more than 5 percent of the outstand-
ing shares of any class of voting securities of a company engaged in) 
any banking, securities, insurance, or other financial activities, as 
defined by the Board, in the United States. This paragraph does not 
prohibit a section 2(h)(2) company from holding shares that were 
lawfully acquired before the date of enactment of the Competitive 
Equality Banking Act of 1987. 
(4) No domestic office or subsidiary of a bank holding company or 
subsidiary thereof holding shares of a section 2(hX2) company may 
extend credit to a domestic office or subsidiary of such section 2(h)(2) 
company on terms more favorable than those afforded similar 
borrowers in the United States. 
"(5) No domestic banking office or bank subsidiary of a bank 
holding company that controls a section 2(h)(2) company may offer 
or market products or services of such section 2(h)(2) company, or 
permit its products or services to be offered or marketed by or 
through such section 2(h)(2) company, unless such products or serv-
ices were being so offered or marketed as of March 5,1987, and then 
only in the same manner in which they were being offered or 
marketed as of that date.". 
TITLE III—FSLIC RECAPITALIZATION 
SEC. 301. SHORT TITLE. 
This title may be cited as the "Federal Savings and Loan Insur-
ance Corporation Recapitalization Act of 1987". 
SEC. 302. FINANCING CORPORATION ESTABLISHED. 
The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is 
amended by inserting after section 20 the following new section: 
"SEC. 21. FINANCING CORPORATION. 
"(a) EsTABUSHMENT.—Notwithstanding any other provision of 
law, the Board shall charter a corporation to be known as the 
Financing C!orporation. 
"(b) MANAGEMENT OF FINANCING CORPORATION.— 
"(1) DIRECTORATE.—The Financing Corporation shall be under 
the management of a directorate composed of 3 members as 
follows: 
"(A) The Director of the Office of Finance of the Federal 
-, H 
Home Loan Banks (or the head of any successor to such 
office). 
"(B) 2 members selected by the Federal Home Loan Bank 
.}, 
Board from among the presidents of the Federal Home 
Loan Banks. 
"(2) TERMS.—Each member appointed under paragraph (1)(B) 
shall be appointed for a term of 1 year. 
"(3) VACANCY.—If any member leaves the office in which such 
member was serving when appointed to the Directorate— 
"(A) such member's service on the Directorate shall 
terminate on the date such member leaves such office; and 
"(B) the successor to the office of such member shall serve 
the remainder of such member's term. 
Federal Savings 
and 
Loan Insurance 
Corporation 
Recapitalization 
Act of 1987. 
12 u s e 226 note. 
12 u s e 1441. 
101 STAT. 586 
PUBLIC LAW 100-86—AUG. 10, 1987 
^ 
"(4) EQUAL REPRESENTATION OF BANKS.—No president of a 
Federal Home Loan Bank may be appointed to serve an addi-
'0 tional term on the Directorate until such time as the presidents 
''•• of each of the other Federal Home Loan Banks have served as 
'^ many terms on the Directorate as the president of such bank 
• (before the appointment of such president to such additional 
^
^ term). 
J
" 
"(5) CHAIRPERSON.—The Chairman of the Federal Home Loan 
^ Bank Board shall select the chairperson of the Directorate from 
among the 3 members of the Directorate. 
;^ 
"(6) STAFF.— 
"(A) No PAID EMPLOYEES.—The Financing Corporation 
'S, 
shall have no paid employees. 
''^'' 
"(B) POWERS.—The Directorate may, with the approval of 
,; the Board, authorize the officers, employees, or agents of 
^^}!. 
the Federal Home Loan Banks to act for and on behalf of 
;,^^ 
the Financing Corporation in such manner as may be nec-
^^_ 
essary to carry out the functions of the Financing 
Corporation. 
^ 
"(7) ADMINISTRATIVE EXPENSES.— 
. 
"(A) IN GENERAL.—All administrative expenses of the 
Financing Corporation shall be paid by the Federal Home 
Loan Banks. 
"(B) PRO RATA DISTRIBUTION.—The amount each Federal 
• Home Loan Bank shall pay shall be determined by the 
Board by multiplying the total administrative expenses for 
any period by the percentage arrived at by dividing— 
,^ 
"(i) the aggregate amount the Board required such 
bank to invest in the Financing Corporation (as of the 
time of such determination) under paragraphs (4) and 
(5) of subsection (d) (as computed without regard to 
^( 
paragraph (3) or (6) of such subsection); by 
' 
, 
"(ii) the aggregate amount the Board required all 
Federal Home Loan Banks to invest (as of the time of 
such determination) under such paragraphs. 
> ^ 
"(C) ADMINISTRATIVE EXPENSES DEFINED.—For purposes of 
this paragraph, the term 'administrative expenses' does not 
include— 
"(i) issuance costs (as such term is defined in subsec-
.A- 
; tion (g)(5)(A)); 
V '.%<,.... 
"(ii) any interest on (and any redemption premium 
with respect to) any obligation of the Financing Cor-
'-->•• 
poration; or 
"(iii) custodian fees (as such term is defined in subsec-
tion (g)(5)(B)). 
"(8) REGULATION BY BOARD.—The Directorate shall be subject 
to such regulations, orders, and directions as the Board may 
prescribe. 
^ 
"(9) No COMPENSATION FROM FINANCING CORPORATION.—Mem-
bers of the Directorate shall receive no pay, allowances, or 
'i benefits from the Financing Corporation by reason of their 
service on the Directorate. 
"(c) POWERS OF FINANCING CORPORATION.—The Financing Cor-
poration shall have only the following powers, subject to the other 
provisions of this section and such regulations, orders, and direc-
tions as the Board may prescribe: 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 587 
"(1) To issue nonvoting capital stock to the Federal Home 
Loan Banks. 
"(2) To invest in any security issued by the Federal Savings 
and Loan Insurance Corporation under section 402(b) of the 
National Housing Act. 
Post, p. 597. 
"(3) To issue debentures, bonds, or other obligations and to 
borrow, to give security for any amount borrowed, and to pay 
interest on (and any redemption premium with respect to) any 
such obligation or amount. 
"(4) To impose assessments in accordance with subsection (f). 
"(5) To adopt, alter, and use a corporate seal. 
"(6) To have succession until dissolved. 
"(7) To enter into contracts. 
"(8) To sue and be sued in its corporate capacity, and to 
complain and defend in any action brought by or against the 
Financing Corporation in any State or Federal court of com-
petent jurisdiction. 
"(9) To exercise such incidental powers not inconsistent with 
the provisions of this section or section 402(b) of the National 
Housing Act as are necessary or appropriate to carry out the 
provisions of this section. 
'(d) CAPITALIZATION OF FINANCING CORPORATION.— 
"(1) 
PURCHASE OF CAPITAL STOCK BY FEDERAL HOME LOAN 
BANKS.— 
"(A) IN GENERAL.—Each Federal Home Loan Bank shall 
invest in nonvoting capital stock of the Financing Corpora-
tion at such times and in such amounts as the Board may 
prescribe under this subsection. 
"(B) PAR VALUE; TRANSFERABILITY.—Each share of stock 
issued by the Financing Corporation to a Federal Home 
Loan Bank shall have par value in an amount determined 
by the Board and shall be transferable only among the 
Federal Home Loan Banks in the manner and to the extent 
prescribed by the Board at not less than par value. 
"(2) AGGREGATE DOLLAR AMOUNT LIMITATION ON ALL INVEST-
MENTS.—The aggregate amount of funds invested by all Federal 
Home Loan Banks in nonvoting capital stock of the Financing 
Corporation shall not exceed $3,000,000,000. 
"(3) MAXIMUM INVESTMENT AMOUNT LIMITATION FOR EACH FED-
ERAL HOME LOAN BANK.—The cumulative amount of funds in-
vested in nonvoting capital stock of the Financing Corporation 
by each Federal Home Loan Bank shall not exceed the aggre-
gate amount of— 
"(A) the sum of— 
"(i) the reserves maintained by such bank on Decem-
ber 31, 1985, pursuant to the requirement contained in 
the first 2 sentences of section 16; and 
"(ii) the undivided profits (as defined in paragraph 
(7)) of such bank on such date; and 
"(B) the sum of— 
"(i) the amounts added to reserves after December 31, 
1985, pursuant to the requirement contained in the 
first 2 sentences of section 16; and 
"(ii) the undivided profits of such bank accruing after 
such date. 
"(4) PRO RATA DISTRIBUTION OF IST $1,000,000,000 INVESTED IN 
FINANCING CORPORATION BY HOME LOAN BANKS.—With respcct to 
101 STAT. 588 
PUBLIC LAW 100-86—AUG. 10, 1987 
:, T. the first $1,000,000,000 which the Board may require the Fed-
eral Home Loan Banks to invest in capital stock of the Financ-
^o,.' ing Corporation under this subsection, the amount which each 
9ri Federal Home Loan Bank (or any successor to such bank) shall 
"fi"; q ,ss/^ 
invest shall be determined by the Board by applying to the total 
- 
amount of such investment by all such banks the percentage 
appearing in the following table for each such bank: 
"Bank 
Percentage 
Federal Home Loan Bank of Boston 
1.8629 
Federal Home Loan Bank of New York 
9.1006 
Federal Home Loan Bank of Pittsburgh 
4.2702 
Federal Home Loan Bank of Atlanta 
14.4007 
Federal Home Loan Bank of Cincinnati 
8.2653 
Federal Home Loan Bank of Indianapolis 
5.2863 
Federal Home Loan Bank of Chicago 
9.6886 
Federal Home Loan Bank of Des Moines 
6.9301 
Federal Home Loan Bank of Dallas 
8.8181 
Federal Home Loan Bank of Topeka 
5.2706 
Federal Home Loan Bank of San Francisco 
19.9644 
Federal Home Loan Bank of Seattle 
6.1422 
^' 
"(5) 
PRO RATA DISTRIBUTION OF AMOUNTS REQUIRED TO BE 
INVESTED IN EXCESS OF $1,000,000,000.—With rcspect to any 
amount in excess of $1,000,000,000 which the Board may require 
_ ^ the Federal Home Loan Banks to invest in capital stock of the 
Financing Corporation under this subsection, the amount which 
each Federal Home Loan Bank (or any successor to such bank) 
shall invest shall be determined by the Board by multiplying 
, ' such excess amount by the percentage arrived at by dividing— 
^ * 
"(A) the sum of the total assets (as of the most recent 
sJ'jo 
' December 31) held by all insured institutions which are 
members of such bank; by 
"(B) the sum of the total assets (as of such date) held by 
all insured institutions which are members of any Federal 
Home Loan Bank. 
"(6) 
SPECIAL PROVISIONS RELATING TO MAXIMUM AMOUNT 
,-^^ UMITATIONS.— 
"(A) IN GENERAL.—If the amount any Federal Home Loan 
Bank is required to invest in capital stock of the Financing 
Corporation pursuant to a determination by the Board 
.,, , 
under paragraph (5) (or under subparagraph (B) of this 
paragraph) exceeds the maximum investment amount ap-
plicable with respect to such bank under paragraph (3) at 
,:,.., .
^
^ 
the time of such determination (hereinafter in this para-
*""" 
graph referred to as the 'excess amount')— 
"(i) the Board shall require each remaining Federal 
,' ^^ .y" 
: 
Home Loan Bank to invest (in addition to the amount 
,. r 
, 
determined under paragraph (5) for such remaining 
bank and subject to the maximum investment amount 
.•; , 4 ' . 
applicable with respect to such remaining bank under 
paragraph (3) at the time of such determination) in 
such capital stock on behalf of the bank in the amount 
. i, determined under subparagraph (B); 
"(ii) the Board shall require the bank to subsequently 
purchase the excess amount of capital stock from the 
;, ', ^
, , . remaining banks in the manner described in subpara-
graph (C); and 
,'//£. , K 
"(iii) the requirements contained in subparagraphs 
), ; .A 
,? , (D) and (E) relating to the use of net earnings available 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 589 
for dividends shall apply to such bank until the bank 
has purchased all of the excess amount of capital stock. 
"(B) ALLOCATION OF EXCESS AMOUNT AMONG REMAINING 
HOME LOAN BANKS,—The amount each remaining Federal 
Home Loan Bank shall be required to invest under subpara-
graph (AXi) is the amount determined by the Board by 
multipl5dng the excess amount by the percentage arrived at 
by dividing— 
"(i) the amount of capital stock of the Financing 
Corporation held by such remaining bank at the time 
of such determination; by 
"(ii) the aggregate amount of such stock held by all 
remaining banks at such time. 
"(C) PURCHASE PROCEDURE.—The bank on whose behalf 
an investment in capital stock is made under subparagraph 
(AXi) shall purchase, annually and at the issuance price, 
from each remaining bank an amount of such stock deter-
mined by the Board by multipl3ring the amount available 
for such purchases (at the time of such determination) by 
the percentage determined under subparagraph (B) with 
respect to such remaining bank until the aggregate amount 
of such capital stock has been purchased by the bank. 
"(D) LIMITATION ON DIVIDENDS.—The amount of dividends 
which may be paid for any year by a bank on whose behalf 
an investment is made under subparagraph (AXi) shall not 
exceed an amount equal to ¥2 of the net earnings available 
for dividends of the bank for the year. 
"(E) TRANSFER TO ACCOUNT FOR PURCHASE OF STOCK RE-
QUIRED.—Of the net earnings available for dividends for 
any year of a bank on whose behalf an investment is made 
under subparagraph (AXi), such amount as is necessary to 
make the purchases of stock required under subparagraph 
(AXii) shall be placed in a reserve account (established in 
such manner as the Board shall prescribe by regulations) 
the balance in which shall be available only for such pur-
chases. 
"(F) NET EARNINGS AVAILABLE FOR DIVIDENDS DEFINED.— 
For purposes of this paragraph, the term 'net earnings 
available for dividends means the net earnings of a bank 
for any period £is computed after reducing the amount of 
earnings for such period by the amount required to be 
carried (for such period) to reserves maintained by such 
bank pursuant to the first two sentences of section 16 of 
this Act. 
12 use 1436. 
"(7) UNDIVIDED PROFITS DEFINED.—For purposes of paragraph 
(3), the term 'undivided profits' means retained earnings minus 
the sum of— 
"(A) that portion required to be added to reserves main-
tained pursuant to the first two sentences of section 16 of 
this Act; and 
"(B) the dollar amounts held by the respective Federal 
Home Loan Banks in special dividend stabilization reserves 
on December 31, 1985, as determined under the following 
table: 
101 STAT. 590 
PUBLIC LAW 100-86—AUG. 10, 1987 
"Bank 
Dollar amount 
Federal Home Loan Bank of Boston 
$3.2 million 
Federal Home Loan Bank of New York 
7.7 million 
Federal Home Loan Bank of Pittsburgh 
5.2 million 
Federal Home Loan Bank of Atlanta 
12.3 million 
Federal Home Loan Bank of Cincinnati 
5.9 million 
Federal Home Loan Bank of Indianapolis 
37.4 million 
Federal Home Loan Bank of Chicago 
6.0 million 
Federal Home Loan Bank of Des Moines 
32.7 million 
Federal Home Loan Bank of Dallas 
45.0 million 
Federal Home Loan Bank of Topeka 
13.7 million 
Federal Home Loan Bank of San Francisco 
21.9 million 
Federal Home Loan Bank of Seattle 
33.6 million 
"(e) OBUGATIONS OF THE FINANCING CORPORATION.— 
"(1) LIMITATION ON AMOUNT OF OUTSTANDING OBUGATIONS.— 
The aggregate amount of obligations of the Financing Corpora-
tion which may be outstanding at any time (as determined by 
the Board) shall not exceed the lesser of^ 
"(A) an amount equal to the greater of— 
"(i) 5 times the amount of the nonvoting capital stock 
of the Financing Corporation which is outstanding at 
such time; or 
"(ii) the sum of the face amounts (the amount of 
principal payable at maturity) of securities described in 
subsection (g)(2) which are held at such time in the 
segregated account established pursusmt to such 
subsection; or 
"(B) $10,825,000,000. 
"(2) ANNUAL UMITATION ON NET NEW BORROWING.—Net new 
borrowing by the Financing Corporation— 
"(A) shall not exceed an amount equal to $3,750,000,000 
in the 1-year period beginning on the date of the enactment 
of the Federal Savings and Loan Insurance Corporation 
Recapitalization Act of 1987; and 
"(B) shall not exceed an amount equal to $3,750,000,000 in 
each 1-year period beginning after the 1-year period de-
scribed in subparagraph (A). 
"(3) NET PROCEEDS TO BE INVESTED IN CAPITAL OF FSUC.— 
Subject to such terms and conditions as may be approved by the 
Board, the net proceeds of any obligation issued by the Financ-
ing Corporation shall be used to— 
"(A) purchase capiteil certificates or capital stock issued 
by the Federal Savings and Loan Insurance Corporation 
Post, p. 597. 
under section 4020t))(lXA) of the National Housing Act; or 
"(B) refund any previously issued obligation the net pro-
S;:M .; : I 
ceeds of which were invested in the manner described in 
subparagraph (A). 
"(4) LIMITATION ON TERM OF OBUGATIONS.—NO obligation of 
the Financing Corporation may be issued which matures— 
"(A) more than 30 years after the date of issue; or 
"(B) after December 31, 2026. 
"(5) INVESTMENT OF UNITED STATES FUNDS IN OBUGATIONS.— 
Obligations issued under this section by the Financing Corpora-
tion with the approval of the Board shall be lawful investments, 
and may be accepted as security, for all fiduciary, trust, and 
public funds the investment or deposit of which shall be under 
the authority or control of the United States or any officer of 
the United States. 
"(6) MARKET FOR OBUGATIONS.—All persons having the power 
to invest in, sell, underwrite, purchase for their own accounts, 
accept as security, or otherwise deal in obligations of the Fed-
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 591 
eral Home Loan Banks shall also have the power to do so with 
respect to obligations of the Financing Corporation. 
"(7) N o FULL FAITH AND CREDIT OF THE UNITED STATES.— 
Obligations of the Financing Corporation and the interest pay-
able on such obligations shall not be obligations of, or guaran-
teed as to principal or interest by, the Federal Home Loan 
Banks, the United States, or the Federal Savings and Loan 
Insurance Corporation and the obligations shall so plainly state. 
"(8) TAX EXEMPT STATUS.— 
"(A) IN GENERAL.—Except as provided in subparagraph 
(B), obligations of the Financing Corporation shall be 
exempt from tax both as to principal and interest to the 
same extent as any obligation of a Federal Home Loan 
Bank is exempt from tax under section 13. 
12 USC 1433. 
"(B) EXCEPTION.—The Financing Corporation, like the 
Federal Home Loan Banks, shall be treated as an agency of 
the United States for purposes of the first sentence of 
section 3124(b) of title 31, United States Code (relating to 
determination of tax status of interest on obligations). 
"(9) OBLIGATIONS ARE EXEMPT SECURITIES.—Notwithstanding 
paragraph (7), obligations of the Financing Corporation shall be 
>_v, • 
deemed to be exempt securities (within the meaning of laws 
administered by the Securities and Exchange Commission) to 
the same extent as securities which are direct obligations of the 
United States or are guaranteed as to principal or interest by 
the United States. 
"(10) 
MINORITY PARTICIPATION IN PUBLIC OFFERINGS.—The 
Chairman of the Board and the Directorate shall ensure that 
minority owned or controlled commercial banks, investment 
banking firms, underwriters, and bond counsels throughout the 
United States have an opportunity to participate to a significant 
degree in any public offering of obligations issued under this 
.. 
^ .*• 
section. 
'(f) ASSESSMENT AUTHORITY OF THE FINANCING CORPORATION.— 
"(1) IN GENERAL.—The Financing Corporation may, with the 
approval of the Board, assess on each insured institution an 
assessment, except that the aggregate amount assessed under 
this paragraph on any insured institution for any year may not 
exceed an amount equal to Vi2th of 1 percent of the aggregate 
amount of all accounts of insured members of such insured 
institution. 
"(2) 
SUPPLEMENTAL 
ASSESSMENT 
AUTHORIZED.—Upon 
the 
unanimous vote of the Directorate that additional funds are 
needed to pay the interest on the obligations of the Financing 
Corporation because no other funds are available, the Financing 
Corporation may, with the approval of the Board and in addi-
tion to any assessment assessed under paragraph (1), assess on 
each insured institution an assessment, except that the aggre-
gate amount assessed under this paragraph on any insured 
institution for any year may not exceed an amount equal to 
Vsth of 1 percent of the aggregate amount of all accounts of 
insured members of such insured institution. 
"(3) TOTAL AMOUNT OF ASSESSMENTS MAY NOT EXCEED INTEREST 
AND FINANCING COSTS.—The aggregate amount of all assess-
ments assessed under paragraphs (1) and (2) for any year may 
not exceed— 
"(A) the aggregate amount o
f
-
— 
101 STAT. 592 
PUBLIC LAW 100-86—AUG. 10, 1987 
;.«w ? 
"(i) issuance costs (as such term is defined in subsec-
tion (g)(5)(A)) incurred with respect to obligations 
issued during such year; 
^ 
"(ii) interest paid on (and any redemption premium 
paid with respect to) obhgations of the Financing 
Corporation during such year; and 
"(iii) custodian fees (as such term is defined in subsec-
tion (g)(5)(B)) incurred during such year; minus 
"(B) the aggregate amount of any payments under subsec-
* 4. 
tion (g)(4) during such year. 
y. 
"(4) TERMINATION ASSESSMENTS.— 
K 
"(A) ASSESSMENT AUTHORIZED.—The Financing Corpora-
. V . 
tion shall, with the approval of the Board, assess a termi-
• &^i 5 ^^-J y:t 
nation assessment on any insured institution which ceases 
j-> 
to be an insured institution. 
"(B) MAXIMUM AMOUNT OF ASSESSMENT.—The amount of 
i' 
the assessment on any institution under subparagraph (A) 
J -i 
shall be the amount which is equal to the sum of— 
"(i) the amount which is equal to 2 times the last 
annual insurance premium payable by such institution 
12 use 1727. 
under section 404(b) of the National Housing Act 
(including the amount of any assessment imposed 
under paragraph (1) of this subsection in lieu of any 
such premium); and 
"(ii) the amount which is the product of— 
"(I) the aggregate amount of all accounts of in-
^
^ ^ 
'
^ '• 
sured members of such institution (as of the date 
the institution ceases to be an insured institution); 
^ 
and 
"(II) 2 times the rate (expressed as an annual 
rate) at which the supplemental assessment under 
Post, p. 601. 
Rtoi -
x :i>in 
section 404(c) of the National Housing Act was 
assessed against insured institutions by the Fed-
'^^ 
eral Savings and Loan Insurance Corporation in 
>
^ 
1986. 
"(C) REDUCTION IN ASSESSMENT ALLOWED FOR WEAKENED 
INSTITUTIONS.—The amount of any assessment which the 
Financing Corporation may otherwise impose under this 
paragraph on an institution (which ceases to be an insured 
institution) may be reduced by such amount as the Financ-
ing Corporation, with the approval of the Board, may deem 
tKti 
appropriate when— 
"(i) the institution poses a substantial risk to the 
assets of the Federal Savings and Loan Insurance Cor-
poration; and 
"(ii) such reduction is necessary to assist in the sale 
or other disposition of the institution. 
"(D) TIME FOR PAYING ASSESSMENT.— 
"(i) DUE WITHIN 30 DAYS.—If an assessment is im-
posed on an institution under subparagraph (A), the 
to .. it,. 
institution shall be obligated to pay such assessment 
before the end of the 30-day period beginning on the 
date on which such institution ceases to be an insured 
institution. 
Y
i
©
r
t
i »
:
f
^
\ 
"(ii) 
SEMIANNUAL INSTALLMENTS WITH INTEREST.— 
Notwithstanding the requirement of clause (i), an 
institution may elect to pay the amount of any assess-
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 593 
ment imposed under subparagraph (A) in semiannual 
installments during the period beginning no later than 
the end of the 30-day period referred to in clause (i) and 
ending no later than the end of the 2-year period 
beginning on the date such assessment is imposed, 
together with interest accruing on the unpaid balance 
''-''- 
of such amount at a variable rate equal to the sum of^ 
"(I) the bond equivalent yield on 6-month United 
Ar € ; 
States Treasury bills; and 
"(II) 100 basis points. 
"(E) EXIT FEE EQUAUZATION.—If any institution described 
in subparagraph (F) paid any exit fee, or the equivalent 
thereof (as determined by the Corporation), on or before the 
date of the enactment of the Federal Savings and Loan 
Insurance Corporation Recapitalization Act of 1987, the 
Corporation shall repay to such institution an amount 
. ^ . ^ 
equal to the amount by which the amount of such fee 
' " 
exceeds the amount which such institution would be re-
quired to pay if the amount of such fee were determined 
under this paragraph as of the date of the enactment of this 
Act. 
"(F) PROVISIONS APPUCABLE TO CERTAIN INSTITUTIONS.— 
Except as provided in subparagraph (E), no eissessment 
under this paragraph or insurance premium under section 
407(d) of the National Housing Act may be imposed on an Post, p. 602. 
insured institution which, on or before March 31, 1987, 
had— 
"(i) its status as an insured institution terminated 
voluntarily, involuntarily, or by operation of law in 
connection with a conversion into, merger with, ac-
t" 
quisition by, consolidation with, reorganization into, or 
combination by any means with, an institution the 
' 
deposits of which are insured by the Federal Deposit 
Insurance Corporation; 
"(ii) filed an application or notice with any State 
d. 
banking agency or authority, or with the Comptroller 
of the Currency, the Federal Deposit Insurance Cor-
Oif 
poration, the Board of Governors of the Federal Re-
serve System, the Corporation or the Federeil Home 
Loan Bank Board pursuant to a transaction which, 
«. a 
upon consummation thereof, will result in the termi-
nation of the institution's status as an insured institu-
tion in connection with its conversion into, merger 
with, acquisition by, consolidation with, reorganization 
into, or combination by any means with, an institution 
the deposits of which are insured by the Federal De-
posit Insurance Corporation; or 
"(iii) entered into a letter of intent or a written 
^, 
memorandum of understanding, pursuant to a trans-
tjf/t 
action which will result in the termination of the 
' 
institution's status as an insured institution in connec-
tion with its conversion into, merger with, acquisition 
by consolidation with, reorganization into, or combina-
tion by any means with, an institution the deposits of 
which are insured by the Federal Deposit Insurance 
Corporation. 
101 STAT. 594 
PUBLIC LAW 100-86—AUG. 10, 1987 
Michigan. 
"(G) ADDITIONAL PROVISION.—Notwithstanding any other 
provision of law, the Federal Savings and Loan Insurance 
Corporation shall repay to Comerica, Inc. of Detroit, Michi-
gan, an amount equal to any exit fee or equivalent thereof 
paid by Comerica, Inc. 
"(5) PAYMENT TO FINANCING CORPORATION.—All assessments 
assessed by the Financing Corporation under paragraph (1), (2), 
or (4) shall be paid to the Financing Corporation. 
"(g) USE AND DISPOSITION OF ASSETS OF THE FINANCING CORPORA-
TION NOT INVESTED IN F S L I C — 
"(1) IN GENERAL.—Subject to such regulations, restrictions, 
and limitations as may be prescribed by the Board, assets of the 
Financing Corporation, which are not invested in capital certifi-
cates or capital stock issued by the Federal Savings and Loan 
Insurance Corporation under section 402(b)(1)(A) of the National 
Post, p. 597. 
Housing Act, shall be invested in— 
"(A) direct obligations of the United States; 
-rt 
«(g) obligations, participations, or other instruments of, 
or issued by, the Federal National Mortgage Association or 
the Government National Mortgage Association; 
"(C) mortgages, obligations, or other securities for sale by, 
^ ' ' or which have been disposed of by, the Federal Home Loan 
Mortgage Corporation under section 305 or 306 of the Fed-
12 use 1454, 
eral Home Loan Mortgage Corporation Act; or 
1455. 
"(D) any other security in which it is lawful for fiduciary 
and trust funds to be invested under the laws of any State. 
^ 
"(2) 
SEGREGATED ACCOUNT FOR ZERO COUPON INSTRUMENTS 
*
*
*
* HELD TO ASSURE PAYMENT OF PRINCIPAL.—The Financing Cor-
poration shall invest in, and hold in a segregated account, 
noninterest bearing instruments— 
"(A) which are securities described in paragraph (1); and 
" 
"(B) the total of the face amounts (the amount of prin-
cipal payable at maturity) of which is approximately equal 
^^^, ,, 
to the aggregate amount of principal on the obligations of 
^•>x-. i 
^jjg Financing Corporation, 
to assure the repayment of principal on obligations of the 
Financing Corporation. 
"(3) 
DOLLAR AMOUNT UMITATION ON INVESTMENT IN ZERO 
COUPON INSTRUMENTS FOR SEGREGATED ACCOUNT.—The aggre-
gate amount invested by the Financing Corporation under para-
graph (2) shall not exceed $2,200,000,000 (as determined on the 
b£isis of the purcheise price). 
"(4) EXCEPTION FOR PAYMENT OF ISSUANCE COSTS, INTEREST, 
AND CUSTODIAN FEES.—Notwithstanding the requirements of 
I paragraph (1), the assets of the Financing Corporation referred 
to in paragraph (1) which are not invested under paragraph (2) 
may be used to pay— 
"(A) issuance costs; 
"(B) any interest on (and any redemption premium with 
respect to) any obligation of the Financing Corporation; and 
"(C) custodian fees. 
"(5) DEFINITIONS.—For purposes of this subsection— 
"(A) ISSUANCE COSTS.—The term'issuance costs'— 
"(i) means issuance fees and commissions incurred by 
the Financing Corporation in connection with the issu-
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 595 
i %
. i 
ance or servicing of any obligation of the Financing 
Corporation; and 
"(ii) includes legal and accounting expenses, trustee 
and fiscal and paying agent charges, costs incurred in 
L" '.u'" 
connection with preparing and printing offering mate-
rials, and advertising expenses, to the extent that any 
such cost or expense is incurred by the Financing 
Corporation in connection with issuing any obligation. 
"(B) CUSTODIAN FEES.—The term 'custodian fee' means— 
"(i) any fee incurred by the Financing Corporation in 
connection with the transfer of any security to, or the 
maintenance of any security in, the segregated account 
fi -' 
established under paragraph (2); and 
"(ii) any other expense incurred by the Financing 
Corporation in connection with the establishment or 
maintenance of such account. 
"(h) 
MISCELLANEOUS 
PROVISIONS 
RELATING 
TO 
FINANCING 
CORPORATION.— 
• 
"(1) TREATMENT FOR CERTAIN PURPOSES.—Except as provided 
in subsection (e)(8)(B), the Financing Corporation shall be 
treated as a Federal Home Loan Bank for purposes of sections 
" '^ 
13 and 23. 
12 use 1433, 
"(2) FEDERAL RESERVE BANKS AS DEPOSITARIES AND FISCAL 1443. 
AGENTS.—The Federal Reserve banks are authorized to act as 
depositaries for or fiscal agents or custodians of the Financing 
Corporation. 
"(3) 
APPLICABILITY OF CERTAIN PROVISIONS RELATING TO 
GOVERNMENT CORPORATION.—Notwithstanding the fact that no 
Government funds may be invested in the Financing Corpora-
tion, the Financing Corporation shall be treated, for purposes of 
sections 9105, 9107, and 9108 of title 31, United States Code, as a 
mixed-ownership Government corporation which has capital of 
the Government, 
"(i) FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION INDUS-
TRY ADVISORY COMMITTEE.— 
"(1) ESTABLISHMENT.—There is hereby established the Federal 
Savings and Loan Insurance Corporation Industry Advisory 
Committee (hereinafter in this subsection referred to as the 
'Committee'). 
"(2) MEMBERSHIP.— 
"(A) APPOINTMENT.—The Committee shall consist of 13 
members selected as follows: 
"(i) 1 member appointed by the Chairman of the 
Board from among individuals who are officers of in-
sured institutions and who are not members of the 
Board or employees of the Board, the Federal Savings 
and Loan Insurance Corporation, or the Board of Direc-
. j^ 
tors of any Federal Home Loan Bank. 
"(ii) 1 member elected from each Federal Home Loan 
Bank district (by the members of the Board of Directors 
of each such bank who were elected by the members of 
. 
such bank) from among individuals who are officers of 
-,.. . 
insured institutions. 
"(B) TERMS.—Members shall be appointed or elected for 
terms of 1 year. 
101 STAT. 596 
PUBLIC LAW 100-86—AUG. 10, 1987 
Reports. 
Post, p. 603. 
3Jli:> 
:^' 
.AD 
OJ 
i'Ci 
5 use app. 
"(C) 
CHAIRPERSON.—The 
member 
appointed 
under 
subparagraph (A)(i) shall be the chairperson of the 
Committee. 
"(D) VACANCIES.—Any vacancy on the Committee shall 
be filled in the manner in which the original appointment 
was made. 
"(E) PAY AND EXPENSES.—Members of the Committee 
shall serve without pay but each member of the Committee 
shall be reimbursed, in such manner as the Board may 
prescribe by regulation, by the Federal Home Loan Bank 
which elected such member (and, in the case of the member 
appointed by the Chairman of the Board, by the Board) for 
expenses incurred in connection with attendance of such 
members at meetings of the Committee. 
"(F) MEETINGS.—The Committee shall meet from time to 
time at the call of the chairperson or a majority of the 
members. 
"(3) DUTIES OF THE COMMITTEE.—The duties of the Committee 
are as follows: 
"(A) To review the reports and budgets prepared pursu-
ant to section 402(k) of the National Housing Act and any 
other matter which the Board may present for the Commit-
tee's consideration. 
"(B) To confer with the Board on the reports, budgets, 
and other matters reviewed under subparagraph (A). 
"(C) To prepare written comments and recommendations 
for the Board and the Federal Savings and Loan Insurance 
Corporation with respect to the reports, budgets, and other 
matters reviewed under subparagraph (A) (which shall be 
submitted to the Board in a timely manner after each 
meeting). 
"(4) ANNUAL REPORT.— 
"(A) REQUIRED.—Not later than January 15 of each year, 
the Committee shall submit a report to the Committee on 
Banking, Finance and Urban Affairs of the House of Rep-
resentatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate. 
;' 
"(B) (CONTENTS.—The report required under subpara-
graph (A) shall describe the activities of the Committee 
during the preceding year and the reports and rec-
„ 
ommendations made by the Committee to the Board and 
'^ 
the Federal Savings and Loan Insurance Corporation 
during such year. 
"(5) REGULATIONS.—The Board shall prescribe such regula-
tions as the Board determines to be appropriate to avoid con-
flicts of interest with respect to the disclosure to and use by 
members of the Committee of information relating to the Board, 
the Federal Savings and Loan Insurance Corporation, the Fed-
eral Home Loan Banks, and the Federal Asset Disposition 
Association. 
"(6) FEDERAL ADVISORY COMMITTEE ACT DOES NOT APPLY.—The 
Federal Advisory Committee Act shall not apply to the 
Committee. 
"(7) TERMINATION.—The Committee shall terminate when the 
Financing Corporation terminates under subsection (j). 
"(j) TERMINATION OF THE FINANCING CORPORATION.— 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 597 
"(1) IN GENERAL.—The Financing Corporation shall be dis-
solved, as soon as practicable, after the earlier o
f
— 
"(A) the date by which all stock purchased by the Financ-
ing Corporation in the Federal Savings and Loan Insurance 
Corporation has been retired; or 
.,,, 
"(B) December 31, 2026. 
"(2) BOARD AUTHORITY TO CONCLUDE THE AFFAIRS OF FINANCING 
CORPORATION.—Effective on the date of the dissolution of the 
Financing Corporation under paragraph (1), the Board may 
exercise, on behalf of the Financing Corporation, any power of 
the Financing Corporation which the Board determines to be 
necessary to settle and conclude the affairs of the Financing 
Corporation. 
"(k) REGULATIONS.—The Board may prescribe such regulations as 
may be necessary to carry out the provisions of this section, includ-
ing regulations defining terms used in this section. 
(1) DEFINITIONS.—For purposes of this section— 
"(1) INSURED INSTITUTION.—The term 'insured institution' has 
^ 
the meaning given to such term by section 401(a) of the Na-
tional Housing Act. 
12 USC 1724. 
"(2) INSURED MEMBER.—The term 'insured member' has the 
meaning given to such term by section 401(b) of the National 
Housing Act. 
"(3) DIRECTORATE.—The term 'Directorate' means the direc-
, 
torate established in the manner provided in subsection (b)(1) to 
manage the Financing Corporation.". 
SEC. 303. MIXED OWNERSHIP GOVERNMENT CORPORATION. 
Section 9101(2) of title 31, United States Code, is amended by 
adding at the end thereof the following new subparagraph: 
"(K) ThelFinancing Corporation.". 
SEC. 304. RECAPITALIZATION OF FSLIC. 
Section 402(b) of the National Housing Act (12 U.S.C. 1725(b)) is 
amended to read as follows: 
"(b) ISSUANCE AND SALE OF CAPITAL CERTIFICATES AND STOCK TO 
FINANCING CORPORATION.— 
"(1) AUTHORIZATION TO ISSUE.— 
.,, 
"(A) IN GENERAL.—Notwithstanding any other provision 
of law, the Corporation may issue— 
"(i) nonredeemable capital certificates; and 
^ 
"(ii) redeemable nonvoting capital stock. 
"(B) REQUIREMENT RELATING TO AMOUNT OF STOCK.—The 
^j , 
aggregate amount of stock issued by the Corporation under 
^ 
subparagraph (A)(ii) shall be equal to the aggregate amount 
of the investments made by the Federal Home Loan Banks 
in the capital stock of the Financing Corporation under 
section 21 of the Federal Home Loan Bank Act. 
Ante, p. 585. 
"(C) 
CERTIFICATES AND STOCK MAY BE SOLD ONLY TO 
^ 
FINANCING CORPORATION.—Capital certificates and stock 
issued under subparagraph (A) may be sold only to the 
Financing Corporation in the manner and to the extent 
"s.>^ 
provided in section 21 of the Federal Home Loan Bank Act 
and this subsection. 
"(D) PROCEEDS OF SALE ARE PART OF PRIMARY RESERVE.— 
The proceeds of any sale of capital certificates or stock 
under this paragraph shall Be considered part of the pri-
101 STAT. 598 
PUBLIC LAW 100-86—AUG. 10, 1987 
mary reserve established by the Corporation pursuant to 
12 use 1727. 
section 404(a). 
"(E) No DIVIDENDS.—The Corporation shall pay no divi-
dends on any capital certificates or stock issued under this 
paragraph. 
"(2) EQUITY RETURN ACCOUNT.— 
"(A) IN GENERAL.—The Corporation shall establish and 
maintain (until all capital stock issued under subparagraph 
(A)(ii) of paragraph (1) has been paid off and retired) an 
equity return account— 
"(i) which shall consist only of amounts contributed 
in accordance with the requirements of subparagraph 
t^--— 
(B); 
"(ii) which shall not be treated as reserves of the 
" 
Corporation; and 
"(iii) the earnings accruing in which shall be trans-
ferred in the manner provided in subparagraph (D). 
"(B) CONTRIBUTIONS TO ACCOUNT.— 
"(i) No CONTRIBUTION IF RESERVES-TO-ACCOUNTS RATIO 
^ , .. 
IS LESS THAN 0.5 PERCENT.—No Contribution shall be 
-*' 
_,^ ,^, , 
made to the equity reserve account established pursu-
;'':, '", 
ant to subparagraph (A) in any year in which the 
reserves-to-accounts ratio is less than 0.5 percent. 
"(ii) 
ANNUAL CONTRIBUTIONS REQUIRED.—Except as 
provided in clause (i), the Corporation shall make con-
tributions to the equity reserve account established 
pursuant to subparagraph (A)— 
"(I) at the end of each year beginning after 1996 
. 
- , ,«., 
through the final payoff year (as defined in clause 
' 
-
• >
- :\ 
(vii)); and 
"(II) in amounts determined under clauses (iii), 
(iv), (v), and (vi) of this subparagraph, 
"(iii) AMOUNT OF PRIMARY CONTRIBUTION.—The pri-
., . 
mary contribution to the equity return account for any 
year for which a contribution is required to be made 
shall be the amount determined by dividing— 
' "' 
"(I) the aggregate amount of capital stock issued 
by the Corporation and purchased by the Financ-
ing Corporation under paragraph (1)(A); by 
• > ' ' • • • • ' . ' ' • • 
"(II) the number of years between the first year 
beginning after 1996 in which the reserves-to-
accounts ratio is equal to or greater than 0.5 per-
cent and the final payoff year (taking into account 
the first and last year described). 
"(iv) AMOUNT OF ADDITIONAL CONTRIBUTION ALLOWED 
IF RESERVES-TO-ACCOUNTS RATIO DOES NOT EXCEED 1.25 
PERCENT.—In any year in which the reserves-to-ac-
'"*' 
counts ratio is equal to or greater than 1 percent but 
'•'' 
^ 
less than 1.25 percent, the Federal Home Loan Bank 
Board may require the Corporation to make an addi-
tional contribution of an amount not to exceed the 
amount determined by dividing— 
"(I) the investment return amount (as defined in 
clause (viii)) computed at an annual compound rate 
not to exceed 6 percent; by 
. 
' 
"(II) the number of years between the first year 
, 
"^' 
beginning after 1996 in which the reserves-to-
i-i't; 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 599 
accounts ratio was equal to or greater than 1 per-
cent and the final payoff year (taking into account 
the first and last year described). 
"(v) AMOUNT OF ADDITIONAL CONTRIBUTION ALLOWED 
IF RESERVES-TO-ACCOUNTS RATIO DOES NOT EXCEED 1.75 
PERCENT.—In any year in which the reserves-to-ac-
counts ratio is equal to or greater than 1.25 percent but 
less than 1.75 percent, the Federal Home Loan Bank 
v- 
Board may require the Corporation to make an addi-
tional contribution of an amount not to exceed the 
; 
amount determined by dividing— 
"(I) the investment return amount computed at 
an annual compound rate not to exceed 8 percent, 
minus the sum of any amounts contributed under 
clause (iv); by 
"(II) the number of years between the first year 
beginning after 1996 in which the reserves-to-
accounts ratio was equal to or greater than 1.25 
fe, ^ r 
percent and the final payoff year (taking into ac-
count the first and last year described), 
"(vi) AMOUNT OF ADDITIONAL CONTRIBUTION ALLOWED 
IF RESERVES-TO-ACCOUNTS RATIO EXCEEDS 1.75 PERCENT.— 
In any year in which the reserves-to-accounts ratio is 
„ 
equal to or greater than 1.75 percent, the Federal 
Home Loan Bank Board may require the Corporation 
to make an additional contribution of an amount not to 
exceed the amount determined by dividing— 
"(I) the investment return amount computed at 
' ^ 
i ' 
an annual compound rate not to exceed 10 percent, 
;:'. i -3 J si 
minus the sum of any amounts contributed under 
clause (iv) or (v); by 
"(II) the number of years between the first year 
beginning after 1996 in which the reserves-to-
accounts ratio was equal to or greater than 1.75 
percent and the final payoff year (taking into ac-
count the first and last year described). 
*" ' 
"(vii) FINAL PAYOFF YEAR DEFINED.—For purposes of 
this subparagraph, the term 'final payoff year means 
the year of maturity of the last maturing obligation of 
the Financing Corporation (which was issued under 
section 21 of the Federal Home Loan Bank Act and Ante, p. 585. 
matures before January 1, 2027). 
"(viii) INVESTMENT RETURN AMOUNT.—For purposes 
of clauses (iv), (v), and (vi), the term 'investment return 
amount' means the amount which would be realized on 
the aggregate amount invested by the Financing Cor-
poration in capital stock issued by the Corporation 
art I 
under paragraph (1) over the period of the investment 
J 
if the return on the investment is computed at the rate 
described in subclause (I) of the respective clauses. 
-K!A 
"(C) INVESTMENT OF AMOUNTS IN ACCOUNT.—Amounts 
accumulating in the equity return account may be invested 
If;» 
in such manner as the Corporation determines. 
"(D) TRANSFER OF EARNINGS TO PRIMARY RESERVE.—Earn-
r 
ings accruing on any investment (under subparagraph (O) 
of amounts in the equity return account shall be trans-
ferred to the primary reserve account of the Corporation 
101 STAT. 600 
PUBLIC LAW 100-86—AUG. 10, 1987 
12 use 1727. 
\^^'' 
established pursuant to section 404(aj as such earnings are 
'^' 
realized by the Corporation and shall not be treated as 
amounts in the account. 
uM 
«^g^ RETIREMENT OF CAPITAL STOCK USING BALANCE IN 
' . 
ACCOUNT.—Upon maturity of all obligations of the Financ-
ing Corporation under section 21 of the Federal Home Loan 
Ante, p. 585. 
Bank Act, the Corporation shall pay off and retire any 
capital stock issued under paragraph (IXAXii) using only 
,,, 
amounts accumulated in the equity return account. 
"(F) RESERVES-TO-ACCOUNTS RATIO DEFINED.—For purposes 
l« 
of this paragraph, the term 'reserves-to-accounts ratio' 
means, with respect to any year, the amount determined by 
dividing— 
"(i) the amount of reserves of the Corporation (deter-
-•i ;/ *' 
mined as of December 31 of the preceding year); by 
"(ii) the aggregate amount of all accounts of all of its 
insured members (determined as of such date). 
"(3) FINANCING CORPORATION DEFINED.—For purposes of this 
subsection, the term 'Financing Corporation' means the Financ-
ing Corporation established under section 21 of the FedereJ 
Home Loan Bank Act. 
"(4) No REDUCTION OR SUSPENSION OF INSURANCE PREMIUMS 
WHILE S
T
O
C
K IS OUTSTANDING.—Notwithstanding any other 
provision of law, the provisions of subsections (bX2) and (g) of 
section 404 shall not apply as long as any share of capital stock 
issued under paragraph (IXAXii) is outstanding.". 
12 use 1727. 
SEC. 305. FSLIC AUTHORITY TO CHARGE PREMIUMS REDUCED BY 
AMOUNT OF FINANCING CORPORATION ASSESSMENTS. 
Section 404 of the National Housing Act is amended by adding at 
the end thereof the following new subsection: 
"(j) AUTHORITY TO CHARGE PREMIUMS REDUCED BY AMOUNT OF 
FINANCING CORPORATION ASSESSMENTS.—Notwithstanding any other 
provision of this section, the sum of— 
"(1) the amount of any premium required to be paid by any 
insured institution under subsection (bXD; and 
"(2) the amount of any premium authorized to be assessed by 
the Corporation under subsection (c) with respect to such 
., ^ ,, 
institution, 
for any period shall be reduced by the amount of any assessment 
paid for such period by such insured institution to the Financing 
Corporation pursuant to section 21(f) of the Federal Home Loan 
Bank Act.". 
SEC. 306. MISCELLANEOUS PROVISIONS. 
(a) FEDERAL HOME LOAN BANK DIVIDENDS.—Section 16 of 
the 
Federal Home Loan Bank Act (12 U.S.C. 1436) is amended by adding 
at the end thereof the following new subsection: 
"(c) EXCEPTION IN CASE OF LOSSES IN CONNECTION WITH FINANC-
ING CORPORATION STOCK.— 
"(1) IN GENERAL.—Notwithstanding subsection (a) of this sec-
tion, if— 
"(A) a Federal Home Loan Bank incurs a chargeoff or an 
•
^ 
expense in connection with such bank's investment in the 
J
L
W 
stockof the Financing Corporation under section 21; 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 601 
"(B) the Board determines there is an extraordinary need 
for the member institutions of the bank to receive divi-
dends; and 
"(C) the bank has reduced all reserves (other than the 
reserve account required by the first 2 sentences of subsec-
tion (a)) to zero, 
the Board may authorize such bank to declare and pay divi-
dends out of undivided profits (as such term is defined in section 
21(dX7)) or the reserve account required by the first 2 sentences 
Ante, p. 585. 
of subsection (a). 
"(2) REQUIREMENTS OF SECTION 21 NOT AFFECTED.—Notwith-
standing any pajnnent of dividends by any Federal Home Loan 
Bank pursuant to an authorization by the Board under para-
graph (1), the applicable provisions of section 21 shall continue 
to apply with respect to such bank, and to such bank's invest-
ment in the Financing Corporation, in the same manner and to 
the same extent as if such payment had not been made.". 
(b) CONFORMING AMENDMENT.—Section 402(h) of the National 
Housing Act (12 U.S.C. 1725(h)) is amended— 
(1) by striking out "After the effective date" and inserting in 
lieu thereof "(1) After the effective date"; and 
(2) by adding at the end thereof the following new paragraph: 
"(2) The first three sentences of paragraph (1) shall not apply to 
stock issued by the Corporation to the Financing Corporation under 
subsection (bXlXA).". 
(c) LIMITATION ON SPECIAL ASSESSMENT.—Section 404(c) of the 
National Housing Act (12 U.S.C. 1727(c)) is amended— 
(1) by striking out "(c) The Corporation" and inserting in lieu 
thereof "(cXD SPECIAL ASSESSMENT.—Subject to paragraph (2), 
the Corporation"; and 
(2) by adding at the end thereof the following new paragraph: 
"(2) LIMITATIONS ON AMOUNT OP ASSESSMENT.—The amount of any 
additional premium assessed by the Corporation against any insured 
institution under paragraph (1) in any of the following years shall 
not exceed the amount listed in connection with each such year in 
the following table (unless the Federal Home Loan Board deter-
mines that severe pressures on the Corporation exist which neces-
sitate an infusion of additional funds): 
The amount of the additional premium 
"For yean 
may not exceed: 
1987 
%
8 of 1 percent of the total amount of 
the accounts of the insured members 
of such institution; 
, A 
*; 
1988 
yi2 of 1 percent of the total amount of 
the accounts of the insured members 
of such institution; 
1989 
Vie of 1 percent of the total amount of 
the accounts of the insured members 
of such institution; 
1990 
V
4
4 of 1 percent of the total amount of 
the accounts of the insured members 
of such institution; 
1991 
Vis of 1 percent of the total amount of 
the accounts of the insured members 
of such institution.". 
(d) PRIORFTY OF SECURED INTERESTS.—Section 10 of the Federal 
Home Loan Bank Act (12 U.S.C. 1430) is amended by adding at the 
end thereof the following new subsection: 
101 STAT. 602 
PUBLIC LAW 100-86—AUG. 10, 1987 
"(e) PRIORITY OF CERTAIN SECURED INTERESTS.—Notwithstanding 
any other provision of law, any security interest granted to a 
Federal Home Loan Bank by any member of any Federal Home 
Loan Bank or any affiliate of any such member shall be entitled to 
priority over the claims and rights of any party (including any 
receiver, conservator, trustee, or similar party having rights of a 
lien creditor) other than claims and rights that— 
"(1) would be entitled to priority under otherwise applicable 
?^ 1 .: s 
law; and 
"(2) are held by actual bona fide purchasers for value or by 
actual secured parties that are secured by actual perfected 
security interests.". 
(e) COORDINATION OF TERMINATION ASSESSMENT WITH 
FINAL 
INSURANCE PREMIUM.—Section 407(d) of the National Housing Act 
(12 U.S.C. 1730(d)) is amended— 
(1) by striking out "(d)" and inserting in lieu thereof "(d)(1) 
FINAL INSURANCE PREMIUM"; and 
(2) by adding at the end thereof the following new paragraph: 
"(2) EXCEPTION RELATING TO FINAL INSURANCE PREMIUM.—If an 
institution (whose status as an insured institution is terminated) 
pays an assessment to the Financing Corporation under section 
Ante, p. 585. 
21(f)(4) of the Federal Home Loan Bank Act with respect to such 
termination, the institution shall not be obligated to pay the final 
insurance premium described in the third sentence of para-
graph (1).". 
(f) SECTION 404(f) DOES NOT APPLY TO INSTITUTIONS WHICH CEASE 
T
O B
E FSLIC INSURED.—Section 404(f) of the National Housing Act 
(12 U.S.C. 1727(f)) is amended— 
(1) by striking out "(f) I f and inserting in lieu thereof "(f)(1) 
PRO RATA DISTRIBUTION ON TERMINATION OF INSURED STATUS.— 
If; and 
(2) by adding at the end thereof the following new paragraph: 
"(2) EXCEPTION.—In the case of an institution which— 
"(A) ceases to be an insured institution; and 
"(B) is required to pay an assessment to the Financing Cor-
poration under section 21(f)(4) of the Federal Home Loan Bank 
Act with respect to the termination of such insured status, 
paragraph (1), the last sentence of subsection (eXD, and subsection 
(i)(4) shall not apply with respect to such institution.". 
(g) SECONDARY RESERVE.—Section 404 of the National Housing Act 
(12 U.S.C. 1727) is amended by striking out subsection (h). 
12 use 1730 
(h) 1-YEAR PROHIBITION ON TERMINATION OF FSLIC INSURED 
note. 
STATUS.— 
(1) IN GENERAL.—No association or insured institution may 
take any action which would result in the voluntary termi-
nation of its status as an insured institution during the 1-year 
period beginning on the date of the enactment of this Act. 
(2) EXCEPTION.—Paragraph (1) shall not apply with respect to 
any association or institution described in section 21(f)(4)(F) of 
the Federal Home Loan Bank Act (as added by section 302 of 
this title). 
(3) AUTHORITY OF FSLIC TO ARRANGE EMERGENCY ACQUISITIONS 
NOT AFFECTED.—Paragraph (1) shall not affect the authority of 
the Federal Savings and Loan Insurance Corporation to arrange 
for the acquisition of an association or insured institution under 
12 use 1729 
section 406(f) or 408(m) of the National Housing Act. 
1730a. 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 603 
(4) DEFINITIONS.—For purposes of this subsection— 
(A) ASSOCIATION.—The term "association" has the mean-
ing given to such term under section 2(d) of the Home 
Owners' Loan Act of 1933. 
12 use 1462. 
(B) INSURED INSTITUTION.—The term "insured institu-
tion" has the meaning given to such term in section 401(a) 
of the National Housing Act. 
12 use 1724. 
(i) FSLIC REPORT REQUIREMENTS.—Section 402 of the National 
Housing Act is amended by adding at the end thereof the following 
12 use 1725. 
new subsection: 
"(k) REPORTS AND BUDGETS REQUIRED.— 
"(1) QUARTERLY REPORTS AND BUDGETS.—Before the end of the 
2-week period beginning on the first day of each calendar 
quarter, the Corporation shall complete a detailed written 
report and budget describing and explaining— 
"(A) planned or anticipated activities and estimates of 
receipts and expenditures for such calendar quarter; and 
"(B) the activities, receipts, and expenditures for the 
preceding calendar quarter. 
j. 
"(2) SEMIANNUAL REPORT.—Before the end of the 30-day 
period beginning on the first day of each semiannual period, the 
Corporation shall complete a detailed written report and budget 
describing and explaining the activities, receipts, and expendi-
tures for the preceding semiannual period. 
"(3) SUBMISSION OF SEMIANNUAL REPORT TO CONGRESS.—The 
Corporation shall submit a copy of each semiannual report 
required under paragraph (2) to the Committee on Banlang, 
Finance and Urban Affairs of the House of Representatives and 
the Committee on Banking, Housing, and Urban Affairs of the 
Senate. 
"(4) ACTIVITIES, ETC., OF FEDERAL ASSET DISPOSITION ASSOCIA-
TION.—Activities, receipts, and expenditures of the Federal 
Asset Disposition Association (or any successor thereto) shall be 
included in any report or budget required under this subsection. 
"(5) DEFINITIONS.—For purposes of this subsection— 
"(A) ACTIVITIES.—The term 'activities' includes any activ-
ity engaged in with respect to any insured institution in 
financial difficulty. 
"(B) SEMIANNUAL PERIOD.—The term 'semiannual period' 
X):x', ; ' means— 
"(i) the period beginning on January 1 of any cal-
-ijni. 2i 
endar year and ending June 30 of such year; and 
"(ii) the period beginning on July 1 of any calendar 
year and ending December 31 of such year.". 
SEC. 307. SECONDARY RESERVE PROVISIONS. 
(a) OFFSETS AGAINST PREMIUMS AUTHORIZED.—Section 404(e) of the 
National Housing Act (12 U.S.C. 1727(e)) is amended— 
(1) by striking out "(e) The Corporation" and inserting in lieu 
thereof "(e)(1) The Corporation"; and 
(2) by adding at the end thereof the following new paragraph: 
"(2) SECONDARY RESERVE OFFSETS AGAINST PREMIUMS.— 
) 
"(A) OFFSETS IN PREMIUM YEARS BEGINNING BEFORE 1993.— 
Subject to the maximum amount limitation contained in 
subparagraph (B) and notwithstanding any other provision of 
\ 
,, law, an insured institution may offset such institution's pro rata 
share of the statutorily prescribed amount against any pre-
101 STAT. 604 
PUBLIC LAW 100-86—AUG. 10, 1987 
mium assessed against such insured institution under subsec-
tion (c) for any premium year beginning after 1987 and before 
1993. 
• * 
j - 
"(B) ANNUAL MAXIMUM AMOUNT UMITATION.—The amount of 
any offset allowed for any insured institution under subpara-
graph (A) for any premium year referred to in subparagraph (A) 
' 
'' 
shall not exceed an amount which is equal to 20 percent of such 
institution's pro rata share of the statutorily prescribed amount 
'' 
"^ 
(as computed for the calendar year in which such premium year 
begins). 
"(C) OFFSETS IN PREMIUM YEARS BEGINNING AFTER 1992.— 
Notwithstanding any other provision of law, an insured institu-
tion may offset such institution's pro rata share of the statu-
torily prescribed amount against any premium assessed against 
such insured institution under this section for any premium 
• 
year beginning after 1992. 
"(D) STATUTORILY PRESCRIBED AMOUNT DEFINED.—For purposes 
of this paragraph, the term 'statutorily prescribed amount' 
^ 
means— 
"(i) with respect to calendar year 1988, the sum of 
: 
$823,705,000; and 
"(ii) with respect to any calendar year beginning after 
1988, the sum contained in clause (i) minus the aggregate 
amount of offsets made by all insured institutions before 
the beginning of the calendar year for which such computa-
tion is being made. 
"(E) INSURED INSTITUTION'S PRO RATA AMOUNT.—For purposes 
"
: 
of this paragraph, an insured institution's pro rata share of the 
statutorily prescribed amount is the percentage which is equal 
to such institution's pro rata share of the secondary reserve as 
I 
determined under this subsection on the day before the date on 
- 
which the Corporation ceased to recognize the secondary 
reserve. 
"(F) PREMIUM YEAR DEFINED.—For purposes of this paragraph, 
the term 'premium year' means, with respect to any insured 
institution, the 1-year period for which a premium is assessed 
against such insured institution under subsection (b) or (c).". 
(b) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) Section 404(dXl) of the National Housing Act (12 U.S.C. 
I 
1727(d)) is amended— 
(A) by striking out the second sentence of sub-
paragraph (A); 
(B) by striking out paragraph (B); and 
"'' 
(C) by striking out "(1)(A)" and inserting in lieu thereof 
,,,: 
• 
" ( 1 ) " . 
(2) Section 404(g) of the National Housing Act (12 U.S.C. 
1727(g)) is amended by striking out the second sentence. 
T
h
r
i
f
t I
n
d
u
s
t
r
y 
TITLE IV—THRIFT INDUSTRY RECOVERY 
Recovery Act 
PROVISIONS 
12 use 226 note. SEC. 401. SHORT TITLE. 
This title may be cited as the "Thrift Industry Recovery Act". 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 605 
SEC. 402. THRIFT INSTITUTION ACCOUNTING, APPRAISAL, AND RESERVE 
STANDARDS. 
(a) FEDERALLY CHARTERED THRIFTS.—The Home Owners' Loan Act 
12 use 1468. 
of 1933 (12 U.S.C. 1461 et seq.) is amended by redesignating section 9 
as section 11 and by inserting after section 8 the following new 
section: 
"SEC. 9. ACCOUNTING 
PRINCIPLES 
AND 
OTHER 
STANDARDS 
AND 
12 USC 1467. 
REQUIREMENTS. 
"(a) IN GENERAL.—The Board shall prescribe regulations which Regulations. 
make the following provisions applicable to associations for regu-
latory purposes: 
"(1) ASSET CLASSIFICATION SYSTEM.—An asset classification 
system shall be established which is consistent with the asset 
classification system established by the Federal banking agen-
cies, except that such system shall provide that the principal 
supervisory agent of the Board for each Federal home losm bank 
district may, in such agent's discretion— 
"(A) require an £issociation to create additional general 
loss reserves on the basis of an evaluation of such institu-
tion's assets; or 
L>.M- 
"(B) determine whether a restructured loan gisset which 
is in a nonperforming status or with respect to which the 
borrowers have otherwise failed to remain in compliance 
with the repayment terms at the time of such restructuring 
shall be classified. 
"(2) APPRAISAL STANDARD.—An appraisal standard shall be 
established which is consistent with the appraisal standard 
established by the Federal banking agencies. 
"(3) REAPPRAISAL UPON FORECLOSURE.—Generally accepted Real property. 
accounting principles shall apply to any reappraisal of the value 
of property securing any loan or other extension of credit upon 
any foreclosure on such property by an association (or any other 
action by the association in lieu of foreclosure). 
"(4) 
AUTHORIZING USE OF FASB 
15 
FOR TROUBLED DEBT 
RESTRUCTURING.—If— 
"(A) an £issociation engages in troubled debt restructur-
ing with respect to any loan by the association; and 
"(B) the troubled debt restructuring complies with State-
ment of Financial Accounting Standards Numbered 5 and 
Statement of Financial Accounting Standards Numbered 15 
;:>, 
(as issued by the Financial Accounting Standards Board), 
regulatory accounting principles shall allow the association to 
account for the effects of the troubled debt restructuring and to 
account for such association's investment in the original debt 
f./ 
instrument (or other agreement which is subject to such 
restructuring) in the manner provided in such statements. 
Vj 
"(5) CERTAIN LOAN LOSS RESERVES TREATED AS CAPITAL FOR 
x^ 
CERTAIN PURPOSES.—Any amount which an association holds in 
any account as a general loss reserve may be treated, at the 
option of the association, £is capital of the sissociation for pur-
poses of determining regulatory capital or regulatory net worth 
'•^' ' 
with respect to such association, to the extent such treatment is 
consistent with the procedures established by the Federal bank-
ing agencies, 
(b) UNIFORM GAAP ACCOUNTING STANDARDS REQUIRED.— 
ili^ 
101 STAT. 606 
PUBLIC LAW 100-86—AUG. 10, 1987 
Regulations. 
"(D IN GENERAL.—Except as otherwise provided in this sec-
tion, the Board 
shall prescribe, by regulation, 
uniformly 
applicable accounting standards to be used by all associations 
for the purpose of determining compliance with any rule or 
:•: regulation issued by the Board or the Federal Savings and Loan 
Insurance Corporation to the same degree that 
generally 
accepted accounting principles are used to determine compli-
ance with rules and regulations of the Federal 
banking 
agencies. 
"(2) 
EXCEPTION 
FOR CERTAIN 
INSTITUTIONS 
AND TRANS-
ACTIONS.—Notwithstanding the requirement contained in para-
graph (1)(A), the Board may suspend the application of any such 
standard with respect to any association or transaction if— 
"(A) the application of such standard to an association 
and a company that controls such association would result 
in such association and company being treated differently 
than a bank and such bank's holding company considered 
on a consolidated basis; and 
it. vv 
"(B) the transaction was consistent 
with 
generally 
im^^i 
accepted accounting principles when such transaction was 
completed. 
"(c) ASSET EVALUATIONS.—The Board may not require an associa-
tion to establish reserves against, or write down the value of, any 
asset in an amount in excess of the amount which would result from 
an evaluation of such asset which is consistent with generally 
accepted accounting principles, except that evaluations which are 
consistent with the practice of the Federal banking agencies may be 
used for supervisory purposes. 
"(d) ACCOUNTING FOR SUBORDINATED DEBT AND GOODWILL.—No 
> i 
provision of this section shall affect the authority of the Board to 
authorize associations to utilize subordinated debt and goodwill in 
meeting reserve and other regulatory requirements. 
"(e) Loss DEFERRALS.—Notwithstanding any other provision of 
this section— 
"(1) associations may continue, for purposes of determining 
regulatory net worth and capital, to defer and amortize gains 
and losses from the disposition of assets pursuant to regulations 
of the Board in effect before the enactment of the Thrift Indus-
try Recovery Act; and 
"(2) the use of such deferrals and amortizations, consistently 
with the regulations referred to in paragraph (1), shall not 
reduce the ability of an association to comply with any other 
rule issued or regulation prescribed by the Board. 
"(f) FEDERAL BANKING AGENCY DEFINED.—For purposes of this 
section, the term 'Federal banking agency' means the Comptroller 
of the Currency, the Board of Governors of the Federal Reserve 
System, and the Federal Deposit Insurance Corporation.". 
(b) STATE CHARTERED, FEDERALLY INSURED THRIFTS.—Title IV of 
the National Housing Act (12 U.S.C. 1724 et seq.) is amended by 
adding at the end thereof the following new section: 
12USC1730h. 
"SEC. 415. ACCOUNTING PRINCIPLES AND OTHER STANDARDS AND 
REQUIREMENTS. 
Regulations. 
"(a) I N GENERAL.—The Corporation shall prescribe regulations 
which make the following provisions applicable to insured institu-
tions for regulatory purposes: 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 607 
"(1) ASSET CLASSIFICATION SYSTEM.—An asset classification 
system shall be established which is consistent with the asset 
classification system established by the Federal banking agen-
cies, except that such system shall provide the principal super-
visory agent of the Federal Home Loan Bank Board for each 
Federal home loan bank district may, in such agent's 
discretion— 
"(A) require an insured institution to create additional 
general loss reserves on the basis of an evaluation of such 
institution's assets; or 
"(B) determine whether a restructured loan asset which 
is in a nonperforming status or with respect to which the 
borrowers have otherwise failed to remain in compliance 
with the repayment terms at the time of such restructuring 
shall be classified. 
"(2) APPRAISAL STANDARD.—An appraisal standard shall be 
established which is consistent with the appraisal standard 
established by the Federal banking agencies. 
"(3) 
REAPPRAISAL UPON FORECLOSURE.—Generally accepted 
accounting principles shall apply to any reappraisal of the value 
of property securing any loan or other extension of credit upon 
any foreclosure on such property by an insured institution (or 
any other action by the insured institution in lieu of fore-
closure). 
"(4) 
AUTHORIZING USE OF FASB 
15 
FOR TROUBLED DEBT 
RESTRUCTURING.—If— 
"(A) an insured institution engages in troubled debt 
restructuring with respect to any loan by the insured 
institution; and 
"(B) the troubled debt restructuring complies with State-
ment of Financial Accounting Standards Numbered 5 and 
Statement of Financial Accounting Standards Numbered 15 
(as issued by the Financial Accounting Standards Board), 
regulatory accounting principles shall allow the insured institu-
tion to account for the effects of the troubled debt restructuring 
and to account for such insured institution's investment in the 
original debt instrument (or other agreement which is subject to 
such restructuring) in the manner provided in such statements. 
"(5) CERTAIN LOAN LOSS RESERVES TREATED AS CAPITAL FOR 
CERTAIN PURPOSES.—Any amount which an insured institution 
holds in any account as a general loss reserve may be treated, at 
the option of the insured institution, as capital of the insured 
n 
institution for purposes of determining regulatory capital or 
regulatory net worth with respect to such insured institution, to 
the extent such treatment is consistent with the procedures 
established by the Federal banking agencies. 
"(b) UNIFORM GAAP ACCOUNTING STANDARDS REQUIRED.— 
"(1) IN GENERAL.—Except as otherwise provided in this sec- Regulations. 
tion, the Corporation shall prescribe, by regulation, uniformly 
applicable accounting standards to be used by all insured 
institutions for the purpose of determining compliance with any 
^ 
; 
rule or regulation issued by the Corporation or the Federal 
Home Loan Bank Board to the same degree that generally 
accepted accounting principles are used to determine compli-
ance with rules and regulations of the Federal banking 
agencies. 
101 STAT. 608 
PUBLIC LAW 100-86—AUG. 10, 1987 
12 use 1467 
note. 
12 use 1467 
note. 
"(2) 
EXCEPTION 
FOR CERTAIN 
INSTITUTIONS 
AND TRANS-
ACTIONS.—Notwithstanding the requirement contained in para-
graph (1)(A), the Corporation may suspend the appHcation of 
any such standard with respect to any insured institution or 
any transaction i
f
— 
^ 
"(A) the application of such standard to an insured 
J 
institution and a company that controls such insured 
'\ ' 
institution would result in such insured institution and 
company being treated differently than a bank and such 
bank's holding company considered on a consolidated basis; 
' 
and 
' 
"(B) the transaction was consistent with generally 
accepted accounting principles when such transaction was 
^ 
completed. 
"(c) ASSET EVALUATIONS.—The Corporation may not require an 
insured institution to establish reserves against, or write down the 
value of, any asset in an amount in excess of the amount which 
would result from an evaluation of such asset which is consistent 
with generally accepted accounting principles, except that evalua-
tions which are consistent with the practice of the Federal banking 
agencies may be used for supervisory purposes. 
"(d) ACCOUNTING FOR SUBORDINATED DEBT AND GOODWILL.—No 
provision of this section shall affect the authority of the Corporation 
to authorize insured institutions to utilize subordinated debt and 
goodwill in meeting reserve and other regulatory requirements. 
"(e) Loss DEFERRALS.—Notwithstanding any other provision of 
this section— 
"(1) insured institutions may continue, for purposes of deter-
mining regulatory net worth and capital, to defer and amortize 
gains and losses from the disposition of assets pursuant to 
* 
regulations of the Corporation in effect before the enactment of 
the Thrift Industry Recovery Act; and 
* 
"(2) the use of such deferrals and amortizations, consistently 
with the regulations referred to in paragraph (1), shall not 
J
i 
reduce the ability of an insured institution to comply with any 
* 
other rule issued or regulation prescribed by the Corporation. 
•' "(f) FEDERAL BANKING AGENCY DEFINED.—For purposes of this 
section, the term 'Federal banking agency' means the Comptroller 
of the Currency, the Board of Governors of the Federal Reserve 
System, and the Federal Deposit Insurance Corporation.". 
(c) REPORT TO CONGRESS.—Not later than the end of the 90-day 
period beginning on the date of the enactment of this Act— 
(1) the Federal Home Loan Bank Board shall submit a copy of 
'-> the proposed regulations required to be prescribed under the 
'^' 
amendment made by subsection (a) to the Congress; and 
(2) the Federal Savings and Loan Insurance Corporation shall 
submit a copy of the proposed regulations required to be pre-
'^ 
scribed under the amendment made by subsection (b) to the 
Congress. 
(d) EFFECTIVE DATE OF REGULATIONS.— 
(1) IN GENERAL.—Except as provided in paragraph (2), any 
regulation required to be prescribed under the amendment 
made by subsections (a) and (b) shall be implemented not later 
- 
than the end of the 150-day period beginning on the date of the 
^ 
enactment of this Act. 
(2) UNIFORM GAAP ACCOUNTING STANDARDS.— 
-IT 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 609 
f«t; 
(A) IN GENERAL.—Except as provided in subparagraph (B), Effective date. 
the regulations required to be prescribed pursuant to 
subsection (b) of the amendments made by subsections (a) 
and (b) of this section shall take effect on December 31, 
1987. 
(B) COMPLIANCE AT A LATER DATE.—If any association or 
^' 
insured institution demonstrates to the satisfaction of the 
Home Loan Bank Board or the Federal Savings and Loan 
Insurance Corporation, as the case may be, that it is not 
feasible for such association or institution to achieve 
compliance with the regulations referred to in subpara-
graph (A) by the date contained in such subparagraph, the 
Board or Corporation may approve a plan submitted by an 
. 
association or insured institution which allows such associa-
tion or institution to comply with such regulations at a 
later date to the extent such later date is the earlier of— 
(i) the date by which, in the determination of the 
Board or Corporation, it is feasible for such association 
or insured institution to achieve compliance with such 
,. , „, 
regulations; or 
f... 
^..^ December 31,1993. 
SEC. 403. AUDIT OF FEDERAL ASSET DISPOSITION ASSOCIATION. 
Section 9105(a) of title 31, United States Code (relating to audits) 
is amended by inserting at the end thereof the following new 
paragraph: 
"(3XA) Notwithstanding any other provision of law and under 
such regulations as the Comptroller General may prescribe, the 
Comptroller General shall perform a financial audit of the Federal 
Asset Disposition Association on whatever basis the Comptroller 
General determines to be necessary. 
"(B) The Federal Asset Disposition Association shall— 
"(i) make available to the Comptroller General for audit all 
records and property of, or used or managed by, the Association 
> <>^c, 
which may be necessary for the audit; and 
"(ii) provide the Comptroller General with facilities for verify-
ing transactions with the balances or securities held by any 
depositary, fiscal agent, or custodian. 
"(C) For purposes of this paragraph, the term 'Federal Asset 
Disposition Association' means the savings and loan association 
established by the Federal Savings and Loan Insurance Corporation 
under section 406 of the National Housing Act to manage and 12 USC 1729. 
liquidate nonperforming assets on behalf of such Corporation in 
accordance with such section.". 
SEC. 404. THRIFT INDUSTRY RECOVERY REGULATIONS. 
(a) FEDERALLY CHARTERED THRIFTS.—The Home Owners' Loan Act 
of 1933 (12 U.S.C. 1461 et seq.) is amended by adding after section 9 
(as added by section 402(a) of this title) the following new section: 
"SEC. 10. THRIFT INDUSTRY RECOVERY REGULATIONS. 
12 USC 1467a. 
"(a) IN GENERAL.—The Board shall prescribe capital recovery 
regulations for regulating and supervising troubled but well-man-
aged and viable associations in a manner which will maximize the 
long-term viability of the thrift industry at the lowest cost to the 
Federal Savings and Loan Insurance Corporation. 
101 STAT. 610 
PUBLIC LAW 100-86—AUG. 10, 1987 
Minorities. 
Reports. 
.mTi 
"(b) CAPITAL RECOVERY.—The regulations required to be pre-
scribed under subsection (a) shall provide that an association with 
net worth of 0.5 percent or more, as determined in accordance with 
regulatory accounting principles, may be allowed to continue to 
operate and be eligible for capital forbearance i
f
— 
"(1) the Board determines that the association's weak capital 
condition is— 
. 
"(A) primarily the result of losses recognized on, the 
; 
nonperforming status of, or the failure of borrowers to 
otherwise remain in compliance with the repayment terms 
of, loans, or participations in loans, the value of the collat-
eral for which has been adversely affected by economic 
conditions in a designated economically depressed region; 
or 
"(B) primarily the result of losses recognized on, the 
nonperforming status of, or the failure of borrowers to 
otherwise remain in compliance with the repayment terms 
of, loans, or participation in loans, made by a minority 
1
; 
association 50 percent or more of whose loan assets are 
minority loans and 50 percent or more of whose originated 
loans are construction or permanent loans for 1 to 4 family 
residences; 
"(2) the Board determines that the association's weak capital 
I 
condition is not the result of imprudent operating practices, 
,y, 
such as practices that were speculative at the time the practices 
were undertaken, insider abuses, excessive operating expenses, 
dividends paid by the association, or actions taken solely for the 
purpose of qualifying for capital recovery under this subsection; 
"(3) the Board approves a plan submitted by the association 
for increasing such association's capital; and 
"(4) the association— 
"(A) adheres to the plan approved under paragraph (3); 
and 
"(B) submits regular and complete reports on such 
association's progress in meeting the association's goals 
under such plan. 
"(c) ASSOCIATIONS WITH NET WORTH OF LESS THAN 0.5 PERCENT 
MAY 
PARTICIPATE IN 
CAPITAL RECOVERY.—In the 
regulations 
required to be prescribed under subsection (a), the Board may 
provide that a well-managed association with a net worth of less 
than 0.5 percent, as determined in accordance with regulatory 
accounting principles, may, in the discretion of the Board, be al-
lowed to continue to operate and be eligible for capital forbearance 
if— 
"(1) the conditions described in each paragraph of subsection 
(a) have been met with respect to such association; and 
"(2) the association has reasonable and demonstrable pros-
pects of returning to a satisfactory capital level, as determined 
by the Board. 
"(d) DEFINITIONS.—For purposes of this section— 
"(1) DESIGNATED ECONOMICALLY DEPRESSED REGION DEFINED.— 
The term 'designated economically depressed region' means any 
geographical region which the Board determines, by regulation, 
to be a region within which real estate values have suffered 
serious declines due to severe economic conditions, such as a 
decline in energy or agricultural values or prices. 
lii 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 611 
"(2) MINORITY.—The term 'minority' means any Black Amer- 
.., ,
^ .
^ 
ican, Native American, Hispanic American, or Asian American. 
"(3) MINORITY ASSOCIATION.—The term 'minority association' 
means any association of which— 
"(A) more than 50 percent of the ownership or control (of 
such association) is held by minority individuals; and 
"(B) more than 50 percent of the net profit or loss (of such 
association) accrues to minority individuals. 
"(4) MINORITY LOAN.—The term 'minority loan' means any 
obligation or other extension or advance of credit which is made 
to 1 or more minority individuals or to any person which is 
owned or controlled by 1 or more minority individuals.", 
(b) STATE CHARTERED, FEDERALLY INSURED THRIFTS.—Title IV of 
the National Housing Act (12 U.S.C. 1724 et seq.) is amended by 
adding after section 415 (as added by section 402(b) of this title) the 
following new section: 
"SEC. 416. THRIFT INDUSTRY RECOVERY REGULATIONS. 
12 USC 17301. 
"(a) IN GENERAL.—The Corporation shall prescribe capital recov-
ery regulations for regulating and supervising troubled but well-
managed and viable insured institutions in a manner which will 
maximize the long-term viability of the thrift industry at the lowest 
cost to the Corporation. 
"(b) CAPITAL RECOVERY.—The regulations required to be pre-
scribed under subsection (a) shall provide that an insured institution 
with net worth of 0.5 percent or more, as determined in accordance 
with regulatory accounting principles, may be allowed to continue to 
operate and be eligible for capital forbearance i
f
— 
"(1) the Corporation determines that the insured institution's 
weak capital condition is— 
"(A) primarily the result of losses recognized on, the 
nonperforming status of, or the failure of borrowers to 
otherwise remain in compliance with the repayment terms 
of, loans, or participations in loans, the value of the collat-
eral for which has been adversely affected by economic 
conditions in a designated economically depressed region; 
.. 
or 
"(B) primarily the result of losses recognized on, the Minorities. ^'* ^ 
nonperforming status of, or the failure of borrowers to 
otherwise remain in compliance with the repayment terms 
of, loans, or participation in loans, made by a minority 
institution 50 percent or more of whose loan assets are 
r. 
minority loans and 50 percent or more of whose originated 
/
> , 
loans are construction or permanent loans for 1 to 4 family 
residences; 
"(2) the Corporation determines that the insured institution's 
« 
weak capital condition is not the result of imprudent operating 
practices, such as practices that were speculative at the time 
the practices were undertaken, insider abuses, excessive operat-
ing expenses, dividends paid by the insured institution, or ac-
tions taken solely for the purpose of qualifying for capital 
I 
recovery under this subsection; 
i 
"(3) the Corporation approves a plan submitted by the insured 
,, 
institution for increasing such institution's capital; and 
J 
"(4) the insured institution— 
"(A) adheres to the plan approved under paragraph (3); 
; I 
and 
91-194 O - 90 - 21 : QL.3 Part 1 
101 STAT. 612 
PUBLIC LAW 100-86—AUG. 10, 1987 
Reports. 
12 use 1467a 
note. 
12 use 1467a 
note. 
12 u s e 1467a 
note. 
"(B) submits regular and complete reports on such 
institution's progress in meeting the institution's goals 
under such plan. 
"(c) THRIFTS WITH NET WORTH OF LESS THAN 0.5 PERCENT MAY 
PARTICIPATE IN CAPITAL RECOVERY.—In the regulations required to 
be prescribed under subsection (a), the Corporation may provide that 
a well-managed insured institution with a net worth of less than 0.5 
percent, as determined in accordance with regulatory accounting 
principles, may, in the discretion of the Corporation, be allowed to 
continue to operate and be eligible for capital forbearance if— 
"(1) the conditions described in each paragraph of subsection 
^
^ (a) have been met with respect to such insured institution; and 
"(2) the insured institution has reasonable and demonstrable 
^ 
prospects of returning to a satisfactory capital level, as deter-
mined by the Corporation, 
"(d) DEFINITIONS.—For purposes of this section— 
"(1) DESIGNATED ECONOMICALLY DEPRESSED REGION DEFINED.— 
:,, The term 'designated economically depressed region' means any 
geographical region which the Corporation determines, by regu-
lation, to be a region within which real estate values have 
. suffered serious declines due to severe economic conditions, 
such as a decline in energy or agricultural values or prices. 
"(2) MINORITY.—The term 'minority' means any Black Amer-
;, ican. Native American, Hispanic American, or Asian American. 
"(3) MINORITY INSTITUTION.—The term 'minority institution' 
meansany insured institution of which— 
"(A) more than 50 percent of the ownership or control (of 
f..i;4j such insured institution) is held by minority individuals; 
and 
; ' 
"(B) more than 50 percent of the net profit or loss (of such 
insured institution) accrues to minority individuals. 
"(4) MINORITY LOAN.—The term 'minority loan' means any 
obligation or other extension or advance of credit which is made 
to 1 or more minority individuals or to any person which is 
owned or controlled by 1 or more minority individuals.". 
(c) IMPLEMENTATION REPORT TO CONGRESS.—The Federal Home 
Loan Bank Board and the Federal Savings and Loan Insurance 
Corporation shall each submit a report to Congress containing the 
proposed regulations required to be prescribed under subsection (a) 
or (b), as the case may be, not later than the end of the 90-day period 
beginning on the date of the enactment of this Act. 
(d) EFFECTIVE DATE OF REGULATIONS.—The regulations required to 
be prescribed under the amendments made by subsections (a) and (b) 
shall be implemented not later than the end of the 150-day period 
beginning on the date of the enactment of this Act. 
(e) AGENCY STUDY AND REPORT ON, AND CONGRESSIONAL REVIEW 
OF, CAPITAL RECOVERY.— 
(1) STUDY AND REPORT REQUIRED.—Not later than January 
31, 1989, the Federal Home Loan Bank Board and the Federal 
*' 
Savings and Loan Insurance Corporation shall jointly— 
(A) conduct a detailed evaluation of the effectiveness of 
>: ica 1' ^jjg regulations required to be prescribed under the amend-
ments made by subsections (a) and (b) in achieving an 
increased level of capitalization for thrift institutions; and 
'* • ''^' 
(B) submit a report to the Congress containing the find-
ings and conclusions of the Board and the Corporation in 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 613 
• 
connection 
with the study required under 
subpara-
graph (A). 
(2) CONGRESSIONAL REVIEW.—The Committee on Banking, Fi-
nance and Urban Affairs of the House of Representatives and 
' ^ • 
the Committee on Banking, Housing, and Urban Affairs of the 
Senate shall, upon receipt of the report under paragraph (1)(B), 
review the regulations and recommend such revisions to the 
regulations as may be appropriate. 
SEC. 405. CAPITAL INSTRUMENT PURCHASE PROGRAM. 
i ; -
Section 406(f) of the National Housing Act (12 U.S.C. 1729(f)) is 
amended by adding at the end thereof the following new paragraph: 
"(6) CAPITAL INSTRUMENT PURCHASE PROGRAM.— 
"(A) IN GENERAL.—Notwithstanding any other provision of 
Federal law (other than subparagraph (O) and without limita-
tion on any other authority of the Corporation or the Federal 
Home Loan Bank Board, the Corporation may exercise its 
authority to purchase capital instruments in the case of any 
insured institution for which a plan for increasing capital has 
been approved by the Corporation pursuant to section 416 or by Ante, p. 6ii. 
such Board pursuant to section 10 of the Home Owners' Loan 
Act of 1933. 
Ante, p. 609. 
"(B) TERMS AND CONDITIONS.—Except as provided in subpara-
graph (C), the purchEise of capital instruments under subpara-
graph (A) shall be subject to such terms and conditions as the 
Corporation may prescribe. 
"(C) WARRANT REQUIREMENT.— 
"(i) IN GENERAL.—In the case of an insured institution 
with capital stock, the Corporation shall require such 
institution to negotiate with the Corporation warrants for 
the purchase of shares of stock as a condition for the 
purchase of capital instruments by the Corporation, on such 
terms and conditions as the Corporation may prescribe, 
"(ii) MUTUAL INSTITUTIONS.—If any insured institution— 
"(I) which is organized on a mutual basis; and 
"(II) with respect to which the Corporation has pur-
s uo'^ 
chased capital instruments, 
> * 
converts to a stock charter, such insured institution shall 
comply with the requirements of clause (i) immediately 
upon such conversion. 
"(iii) MAXIMUM AMOUNT.—The amount of shares for 
which warrants are negotiated under subparagraph (A) 
.. .^, 
with respect to any insured institution shall not exceed the 
total number of shares outstanding at the time such war-
rants are issued to the Corporation. 
;> 
"(iv) REDEMPTION BY INSURED INSTITUTION.—Upon the full 
1 
i3r • 
redemption of the capital instruments by an insured 
institution, including all accumulated unpaid dividends, the 
i >•:. 
Corporation may, at the discretion of the Corpora-
tion, tender the warrants for redemption by the insured 
institution. 
"(v) PAYMENT ON REDEMPTION.—Upon any redemption of 
warrants under clause (iv), the insured institution shall pay 
the Corporation the difference between the fair market 
c 
value of the warrants on the date of redemption and the 
exercise price of such warrants. 
101 STAT. 614 
PUBLIC LAW 100-86—AUG. 10, 1987 
«.? • 
"(vi) PROCEEDS FROM REDEMPTION OF WARRANTS.—The 
proceeds of any sale or redemption of warrants under 
clause (iv) shall be deposited in and be considered a part of 
12 use 1727. 
the primary reserve established under section 404(a). 
"(D) DIVIDENDS.—Capital instruments purchased by the Cor-
poration under subparagraph (A) shall pay dividends at a 
reasonable rate, as determined by the Corporation, and the rate 
shall be indexed to obligations issued by the Secretary of the 
Treasury under subchapter I of chapter 31 of title 31, United 
31 use 3101. 
States Code. 
"(E) PRIORITY.— 
"(i) IN GENERAL.—In the event of the liquidation or 
reorganization of any insured institution with respect to 
which the Corporation holds capital instruments under this 
paragraph, the Corporation shall have priority over— 
Claims. 
^ 
"(I) any claim, other than a claim described in clause 
, s 
(ii), arising out of any equity interest in such insured 
institution; and 
'^ 
"(II) any right of any holder of an equity interest in 
. 
r 
such insured institution to participate in 
future 
earnings, 
"(ii) DIVIDENDS.— 
' 
"(I) No OTHER DIVIDENDS.—No dividends may be paid 
on any class of equity instruments of any insured 
institution (other than a capital instrument held by the 
Corporation) until all dividends, including accumulated 
unpaid dividends, on the capital instruments are paid. 
"(II) 
PROHIBITION CEASES IF PAYMENT REDEMPTION 
PAYMENTS AND DIVIDENDS ARE CURRENT.—If all pay-
ments on capital instruments held by the Corporation 
with respect to any insured institution, including 
^ 
redemption payments and dividends, are current, divi-
dends on other classes of equity instruments of such 
insured institution may be paid, notwithstanding 
subclause (I).". 
SEC. 406. MINIMUM CAPITAL REQUIREMENTS. 
(a) FEDERALLY CHARTERED THRIFTS.—Section 5 of the Home 
Owners' Loan Act of 1933 (12 U.S.C. 1464) is amended by adding at 
the end thereof the following new subsection: 
"(s) MINIMUM CAPITAL REQUIREMENTS.— 
"(1) IN GENERAL.—Consistent with the purposes of section 908 
12 use 3907. 
of the International Lending Supervision Act of 1983 and the 
capital requirements established pursuant to such section by 
the appropriate Federal banking agencies (as defined in section 
12 use 3902. 
903(1) of such Act), the Board shall require all associations to 
achieve and maintain adequate capital by— 
"(A) establishing minimum levels of capital for associa-
tions; and 
"(B) using such other methods as the Board determines to 
be appropriate. 
"(2) MINIMUM CAPITAL LEVELS MAY BE DETERMINED BY BOARD 
ON CASE-BY-CASE BASIS.—The Board may establish the minimum 
level of capital for an association at such amount or at such 
ratio of capital-to-assets as the Board determines to be nec-
essary or appropriate for such association in light of the particu-
lar circumstances of the association. 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 615 
"(3) UNSAFE OR UNSOUND PRACTICE.—In the Board's discretion, 
the Board may treat the failure of any association to maintain 
capital at or above the minimum level required by the Board 
under this subsection as an unsafe or unsound practice within 
the meaning of subsection (d). 
"(4) DIRECTIVE TO INCREASE CAPITAL.— 
"(A) PLAN MAY BE REQUIRED.—In addition to any other 
action authorized by law, including paragraph (3), the 
Board may issue a directive requiring any association 
which fails to maintain capital at or above the minimum 
level required by the Board to submit and adhere to a plan 
for increasing capital which is acceptable to the Board. 
"(B) ENFORCEMENT OF PLAN.—Any directive issued and 
plan approved under subparagraph (A) shall be enforceable 
under subsection (d)(8) to the same extent and in the same 
manner as an outstanding order which was issued under 
subsection (d)(2) and has become final. 
"(5) PLAN TAKEN INTO ACCOUNT IN OTHER PROCEEDINGS.—The 
Board may— 
"(A) consider an association's progress in adhering to any 
plan required under paragraph (4) whenever such associa-
tion or any affiliate of such association (including any 
company which controls such association) seeks the ap-
proval of the Board for any proposal which would have the 
effect of diverting earnings, diminishing capital, or other-
wise impeding such association's progress in meeting the 
minimum level of capital required by the Board; and 
"(B) disapprove any proposal referred to in subparagraph 
(A) if the Board determines that the proposal would ad-
versely affect the ability of the association to comply with 
such plan.", 
(b) STATE CHARTERED, FEDERALLY INSURED THRIFTS.—Section 407 
of the National Housing Act (12 U.S.C. 1730) is amended by adding 
at the end thereof the following new subsection: 
"(t) MINIMUM CAPITAL REQUIREMENTS.— 
^ ' ' 
"(1) IN GENERAL.—Consistent with the purposes of section 908 
of the International Lending Supervision Act of 1983 and the 
12 USC 3907. 
capital requirements established pursuant to such section by 
the appropriate Federal banking agencies (as defined in section 
903(1) of such Act), the Corporation shall require all insured 
12 usc 3902. 
institutions to achieve and maintain adequate capital by— 
"(A) establishing minimum levels of capital for insured 
institutions; and 
"(B) using such other methods as the Corporation deter-
mines to be appropriate. 
"(2) MINIMUM CAPITAL LEVELS MAY BE DETERMINED BY COR-
PORATION ON CASE-BY-CASE BASIS.—The Corporation may estab-
lish the minimum level of capital for an insured institution at 
such amount or at such ratio of capital-to-assets as the Corpora-
tion determines to be necessary or appropriate for such insured 
institution in light of the particular circumstances of the in-
sured institution. 
"(3) UNSAFE OR UNSOUND PRACTICE.—In the Corporation's 
discretion, the Corporation may treat the failure of any insured 
institution to maintain capital at or above the minimum level 
required by the Corporation under this subsection as an unsafe 
or unsound practice within the meaning of subsection (e). 
101 STAT. 616 
PUBLIC LAW 100-86—AUG. 10, 1987 
"(4) DIRECTIVE TO INCREASE CAPITAL.— 
"(A) PLAN MAY BE REQUIRED.—In addition to any other 
action authorized by law, including paragraph (3), the Cor-
poration may issue a directive requiring any insured 
institution which fails to maintain capital at or above the 
minimum level required by the Corporation to submit and 
adhere to a plan for increasing capital which is acceptable 
3 ; 
to the Corporation. 
"(B) ENFORCEMENT OF PLAN.—Any directive issued and 
plan approved under subparagraph (A) shall be enforceable 
under subsection (k) to the same extent and in the same 
manner as an outstanding order which was issued under 
'• 
subsection (e) and has become final. 
"(5) PLAN TAKEN INTO ACCOUNT IN OTHER PROCEEDINGS.—The 
Corporation may— 
"(A) consider an insured institution's progress in adher-
ing to any plan required under paragraph (4) whenever 
sfii* 
such insured institution or any affiliate of such insured 
institution (including any company which controls such 
insured institution) seeks the approval of the Corporation 
for any proposal which would have the effect of diverting 
V 
earnings, diminishing capital, or otherwise impeding such 
- . 
insured institution's progress in meeting the minimum 
level of capital required by the Corporation; and 
"(B) disapprove any proposal referred to in subparagraph 
•iii.: , 
(A) if the Corporation determines that the proposal would 
adversely affect the ability of the insured institution to 
comply with such plan.". 
12 use 1437 
SEC. 407. IMPROVEMENTS IN THE SUPERVISORY PROCESS. 
(a) ENHANCED FLEXIBIUTY IN THE SUPERVISORY PROCESS.—The 
Federal Home Loan Bank Board (acting as such under the Federal 
Home Loan Bank Act and in the Board's capacity as the board of 
trustees of the Federal Savings and Loan Insurance Corporation 
12 use 1725. 
under section 402(a) of the National Housing Act) shall issue guide-
lines which provide greater flexibility for supervisory agents, 
t ; x. J 
examiners, and other employees and agents of the Board, the Fed-
eral Savings and Loan Insurance Corporation, and the Federal home 
loan banks in applying regulations, standards, and other require-
. ,r V
i , 
ments of the Board or such Corporation with regard to particular 
situations or particular thrift institutions. 
(b) PARTICULAR GUIDEUNES REQUIRED.—The guidelines issued 
under subsection (a) shall contain the following provisions: 
(1) FLEXIBLE APPROVAL PROCESS FOR RENEGOTIATED LOANS.—A 
provision establishing a flexible procedure for obtaining super-
visory approval of the terms of loans renegotiated by thrift 
institutions if a supervisory agreement is in effect between such 
institution and the principal supervisory agent of the Federal 
home loan bank district where such institution is located. 
(2) RECOGNITION OF ADDITIONAL FINANCIAL CAPABILITY OF A 
BORROWER.—A provision permitting examiners and other 
employees and agents of the Board, the Federal Savings and 
Loan Insurance Corporation, and the Federal home loan banks 
I 
to take into account, to the extent consistent with the practices 
of the Federal banking agencies, other financial resources of a 
borrower (in addition to the financial assets of the borrower 
which are pledged to secure a loan) in classifying the assets of 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 617 
the thrift institution which holds a loan made to such borrower 
or with recourse to the borrower. 
(3) APPRAISAL REVIEW.—A provision establishing an appraisal 
review system to avoid overly optimistic or conservative 
appraisals with the goal of achieving appraisals that are more 
consistent in reflecting underlying values. 
(4) l-TO-4 FAMILY RESIDENCES.—A provision eliminating the 
d 
scheduled item system except as such system relates to l-to-4 
family residences. 
(c) DEFINITIONS.—For purposes of subsections (a) and (b)— 
(1) 
THRIFT 
INSTITUTION.—The term 
"thrift 
institution" 
c 
means— 
(A) any association (within the meaning given to such 
term in section 2(d) of the Home Owners' Loan Act of 1933); 
12 use 1462. 
(B) any insured institution (within the meaning given to 
• 
such term in section 401(a) of the National Housing Act); 
12 use 1724. 
*
^
- ' 
and 
(C) any member (within the meaning given to such term 
in section 2(4) of the Federal Home Loan Bank Act). 
12 use 1422. 
•
^ 
(2) BOARD.—The term "Board" means the Federal Home Loan 
* 
Bank Board. 
(3) FEDERAL BANKING AGENCY.—The term "Federal banking 
agency" means the Comptroller of the Currency, the Board of 
Governors of the Federal Reserve System, and the Federal 
Deposit Insurance Corporation. 
(d) NONADVERSARIAL REVIEW OF CERTAIN SUPERVISORY DECI-
SIONS.—The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is 
amended by inserting after section 22 the following new section: 
"SEC. 22A. INFORMAL REVIEW OF CERTAIN SUPERVISORY DECISIONS. 
12 USC 1442a. 
"(a) REVIEW OF CERTAIN SUPERVISORY DECISIONS.—The Board shall 
establish an informal review procedure under which any associa-
tion, insured institution, or member may obtain a review, by the 
principal supervisory agent for the Federal home loan bank district 
in which such association, institution, or member is located, of any 
decision by any examiner or supervisory agent of the Federal home 
loan bank for such district with respect to— 
"(1) the appraisal value of— 
^,, , 
"(A) any loan held by the association, insured institution, 
or member; or 
"(B) any property serving as collateral to secure the 
repayment of any loan (held by the association, institution, 
or member); 
"(2) the classification of any loan held by the association, 
institution, or member; or 
"(3) any requirement imposed on the association, institution, 
or member to establish or to add to a reserve or allowance for a 
possible loss on any loan held by such institution. 
"(b) STANDARDS FOR REVIEW.—The review procedure established 
pursuant to subsection (a) shall provide that the principal super-
visory agent for the appropriate Federal home loan bank district, 
after taking into account the report described in subsection (c)(2) by 
the arbiter (or panel of arbiters), shall approve, modify, or set aside 
any decision for which a review has been requested on the basis of 
the supervisory agent's review of all the facts and the regulations 
applicable to such decision and shall take such action as such agent 
101 STAT. 618 
PUBLIC LAW 100-86—AUG. 10, 1987 
may determine to be necessary or appropriate in light of such 
review. 
"(c) APPOINTMENT OF INDEPENDENT ARBITER.—The review proce-
dure established pursuant to subsection (a) shall provide for the 
appointment (by the principal supervisory agent for the appropriate 
Federal home loan bank district, upon the filing of a request for a 
review under this section by an association, insured institution, or 
member) of an independent arbiter (or, upon the request of such 
association, institution, or member, a panel of independent arbiters) 
who shall— 
"(1) review the decision which is the subject of the review in 
light of all the facts of the case and the regulations applicable to 
such determination; and 
"(2) report the conclusions and recommendations of the 
independent arbiter (or the panel) with respect to the decision 
.. . _ 
under review to the principal supervisory agent for the appro-
priate Federal home loan bank district and the association, 
insured institution, or member. 
"(d) CONSOLIDATION OF REVIEWS OF RELATED DECISIONS.—The prin-
cipal supervisory agent may consolidate requests for review under 
this section of related decisions and conduct a single review of all 
such related decisions. 
"(e) 25-DAY ARBITER REVIEW PERIOD; 20-DAY PSA 
REVIEW 
PERIOD.— 
"(1) ARBITER REVIEW.—The review procedure established 
pursuant to subsection (a) shall provide that any review de-
scribed in subsection (c) by an arbiter (or panel of arbiters) shall 
be completed before the end of the 25-day period beginning on 
the date the request for the review was filed with the principal 
i.. i .:'' . 
supervisory agent. 
"(2) REVIEW BY PSA.—The review procedure established pursu-
ant to subsection (a) shall provide that any review by the 
principal supervisory agent of an arbiter's report described in 
subsection (c)(2) (or the report of a panel of arbiters) shall be 
completed before the end of the 20-day period beginning on the 
date the agent receives such report. 
"(3) ONLY BUSINESS DAYS INCLUDED.—Saturdays, Sundays, and 
holidays shall not be taken into account in determining the 
periods described in paragraphs (1) and (2). 
"(f) CLARIFICATION OF RELATIONSHIP BETWEEN INFORMAL REVIEW 
AND OTHER AVAILABLE REVIEW.— 
"(1) INFORMAL REVIEW NOT EXCLUSIVE.—The informal review 
procedure established pursuant to subsection (a) for reviewing 
any decision referred to in such subsection shall be in addition 
to, and not in lieu of, any other procedure established by law, or 
any regulation of the Board, which provides for formal adminis-
trative or judicial review of such decision. 
"(2) ONLY THE ORIGINAL DECISION IS WITHIN SCOPE OF ADMINIS-
TRATIVE AND JUDICIAL REVIEW.—If any association, insured 
institution, or member seeks administrative or judicial review 
of any examiner or supervisory agent decision for which such 
association, insured institution, or member obtained an infor-
mal review under the procedure established pursuant to subsec-
tion (a), such administrative or judicial review shall be carried 
out— 
"(A) without regard to the fact that such informal review 
was made; and 
. 
,; 
. v . . 
.« - . 
^ 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 619 
"(B) without admitting into evidence, or otherwise taking 
into account, the findings, recommendations, or conclusions 
of the principal supervisory agent and the independent 
arbiter (or the panel of independent arbiters) which con-
ducted the informal review. 
"(3) INFORMAL REVIEW NOT SUBJECT TO FORMAL REVIEW.—The 
findings, recommendations, or conclusions of any principal 
supervisory agent who conducted a review under the procedure 
established pursuant to subsection (a) are not decisions which 
may be subject to review by the Board or any court under any 
regulation of the Board or any law. 
"(g) EXPENSES OF REVIEW BORNE BY ASSOCIATION, INSTITUTION, OR 
MEMBER.—All reasonable expenses incurred as a direct or indirect 
result of any review under the procedure established pursuant to 
subsection (a) shall be paid by the association, insured institution, or 
member which requested the review.". 
SEC. 408. PREVENTION OF INSOLVENCIES. 
Before the end of the 6-month period beginning on the date of the 
enactment of this Act, the Federal Home Loan Bank Board shall 
submit a report to the Congress containing— 
(1) a detailed description of the steps the Board has taken and 
is planning to take to prevent additional failures of thrift 
institutions; and 
(2) such recommendations for legislation as the Board may 
determine to be appropriate. 
SEC. 409. FEASIBILITY STUDY RELATING TO ESTABLISHMENT OF ASSET 
HOLDING CORPORATION. 
(a) STUDY REQUIRED.—The Federal Home Loan Bank Board shall 
study the feasibility of establishing an asset holding corporation to 
relieve thrift institutions of the burden of carrying and maintaining 
troubled real estate assets by providing for the acquisition of such 
assets by such corporation. 
(b) FACTORS TO BE CONSIDERED.—In studying the feasibility of 
establishing an asset holding corporation, the Federal Home Loan 
Bank Board shall— 
(1) estimate the cost of establishing and operating such cor-
poration for the purposes intended; 
(2) consider whether sufficient capital for the establishment 
and operation of the corporation can be obtained from the 
private sector or from the Federal home loan bank system 
without any Government investment in the corporation; 
(3) develop standards for determining the type and condition 
of real estate assets which would be eligible for acquisition by 
such corporation and estimate the total value of such real 
estate; and 
(4) develop a proposal for allowing participating thrift institu-
tions to obtain an equity participation in the corporation. 
(c) REPORT REQUIRED.—The Federal Home Loan Bank Board shall 
prepare and submit to the Committee on Banking, Finance and 
Urban Affairs of the House of Representatives and the Committee 
on Banking, Housing, and Urban Affairs of the Senate, not later 
than 6 months after the date of the enactment of this Act, a report 
containing the findings and conclusions of the Board with respect to 
the study required under subsection (a) and any recommendation of 
Reports.. 
Real property. 
''(•^. 
101 STAT. 620 
PUBLIC LAW 100-86—AUG. 10, 1987 
the Board for legislation which the Board determines may be nec-
essary or appropriate. 
12 u s e 1437 
SEC. 410. NOTICE AND DISAPPROVAL PROCEDURE REQUIRED FOR ALL 
note. 
APPLICATIONS TO THE BANK BOARD. 
(a) IN GENERAL.—The Federal Home Loan Bank Board shall 
promulgate guidelines which provide that with respect to each type 
of completed application (other than an application under section 
408(g) of the National Housing Act) by any person for approval by 
the Federal Home Loan Bank Board or the Federal Savings and 
Loan Insurance Corporation, the application shall be deemed to be 
approved as of the end of the period prescribed under such guide-
lines unless the Board or the Federal Savings and Loan Insurance 
Corporation, as the case may be, approves or disapproves such 
application before the end of such period. 
(b) APPLICATION FOR HOLDING COMPANY INDEBTEDNESS.—Section 
408(g) of the National Housing Act (12 U.S.C. 1730a(g)) is amended 
by adding at the end thereof the following new paragraph: 
"(7) Any completed application under this subsection shall be 
deemed to be approved as of the end of the 60-day period beginning 
on the date such application was filed, unless the Corporation issues 
notice of approval or disapproval of the application before the end of 
such period.". 
(c) REPORT TO CONGRESS.—Before the end of the 60-day period 
beginning on the date of the enactment of this Act, the Federal 
Home Loan Bank Board shall submit to the Committee on Banking, 
Finance and Urban Affairs of the House of Representatives and the 
Committee on Banking, Housing, and Urban Affairs of the Senate a 
report containing the guidelines required to be promulgated under 
subsection (a). 
' 
'' ' ' 
(d) EFFECTIVE DATE.—The guidelines required to be promulgated 
under subsection (a) shall take effect at the end of the 60-day period 
referred to in subsection (c). 
12 u s e 1437 
SEC. 41L GUIDELINES FOR ASSET DISPOSITION. 
* n
^
G 
Reports. 
^^^ later than 6 months after the date of the enactment of this 
Act, the Federal Home Loan Bank Board shall submit to the 
Committee on Banking, Finance and Urban Affairs of the House of 
Representatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate a report containing appropriate new 
guidelines which— 
(1) prevent the dumping of assets over which it has direct or 
indirect control; and 
(2) the Board shall promulgate at the end of such period. 
12 u s e 1437 
SEC. 412. EXPANSION OF USE OF UNDERUTILIZED MINORITY THRIFT 
note. 
INSTITUTIONS. 
(a) CONSULTATION ON EXPANDED USE.—The Secretary of the Treas-
ury shall consult with the Federal Home Loan Bank Board and the 
Federal Savings and Loan Insurance Corporation on methods for 
increasing the use of underutilized minority thrift institutions as 
depositaries or financial agents of Federal agencies. 
(b) DESIGNATION OF MINORITY THRIFT INSTITUTIONS INVOLVED IN 
CAPITAL RECOVERY PROGRAM AS UNDERUTILIZED THRIFT.—If the Fed-
eral Home Loan Bank Board approves any plan submitted under 
regulations prescribed under section 10 of the Home Owners' Loan 
Ante, p. 609. 
Act of 1933 (as added by section 404(a) of this title) or section 416 of 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 621 
the National Housing Act (as added by section 404(c) of this title) by Ante, p. 6ii. 
any minority institution (as defined in each such section), such 
minority institution shall be designated by the Board as an 
underutilized thrift institution for purposes of increasing the use of 
such association as a depositary or financial agent of other Federal 
' 
j ' 
agencies. 
(c) REPORT TO CONGRESS.—Before the end of the 6-month period 
beginning on the date of the enactment of this Act, the Secretary of 
the Treasury, the Federal Home Loan Bank Board, and the Federal 
Savings and Loan Insurance Corporation shall each submit a report 
to the Congress on actions taken by such Secretary or agency 
- • 
pursuant to subsection (a) or (b). 
.. • 
(d) THRIFT INSTITUTION DEFINED.—For purposes of this section, the 
term "thrift institution" has the meaning given to such term in 
section 407(c)(1). 
SEC. 413. AUTHORITY OF INDEPENDENT CONTRACTORS, CONSULTANTS, 
AND COUNSEL. 
(a) FEDERALLY CHARTERED THRIFT INSTITUTIONS.—Section 5(d)(6) of 
the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(d)(6)) (relating to 
appointments of receivers and conservators) is amended by adding 
at the end thereof the following new subparagraph: 
"(E) DISCLOSURE REQUIREMENT FOR THOSE ACTING ON BEHALF OF 
CONSERVATOR.—A conservator shall require that any independent 
contractor, consultant, or counsel employed by the conservator in 
connection with the conservatorship of an association pursuant to 
this section shall fully disclose to all parties with which such 
contractor, consultant, or counsel is negotiating, any limitation on 
the authority of such contractor, consultant, or counsel to make 
legally binding representations on behalf of the conservator.". 
(b) FEDERALLY INSURED STATE CHARTERED THRIFT INSTITUTIONS.— 
Section 406(b) of the National Housing Act (12 U.S.C. 1730) (relating 
to involuntary termination of insurance) is amended by adding at 
the end thereof the following new paragraph: 
"(4) DISCLOSURE REQUIREMENT FOR THOSE ACTING ON BEHALF OF 
CORPORATION.—The Corporation shall require that any independent 
contractor, consultant, or counsel employed by the Corporation in 
connection with the management or liquidation of an insured 
institution shall fully disclose to all parties with which such contrac-
tor, consultant, or counsel is negotiating, any limitation on the 
authority of such contractor, consultant, or counsel to make legally 
binding representations on behalf of the Corporation.". 
SEC. 414. EXTENSION OF FORBEARANCE PREVIOUSLY PROVIDED IN THE 
ACQUISITION OF TROUBLED THRIFT INSTITUTIONS. 
Section 408(m)(l)(A) of the National Housing Act (12 U.S.C. 
1730a(m)(l)(A)) is amended by adding at the end thereof the follow-
ing new clause: 
"(iv) If, in connection with a merger, consolidation, transfer, or 
acquisition of an insured institution under this subparagraph before 
March 31, 1987, forbearance measures have been included in the 
agreement governing the supervisory action with respect to such 
transaction, the period of forbearance in such agreement shall be 
extended for an additional 5 years upon a showing by the acquiring 
or resulting insured institution that any failure to meet any require-
ment, restriction, or limitation specified in such agreement with 
respect to any such forbearance measure is attributable to the assets 
101 STAT. 622 
PUBLIC LAW 100-86—AUG. 10, 1987 
12 u s e 1437 
note. 
Ante, p. 616. 
Reports. 
Reports. 
or liabilities (of the acquired or merged insured institution) which 
were acquired by or assumed by the acquiring or resulting insured 
institution.". 
SEC. 415. CONGRESSIONAL OVERSIGHT. 
(a) 
BANKING 
COMMITTEE REVIEW 
OF 
PANEL 
ACTIONS.—The 
Committee on Banking, Finance and Urban Affairs of the House of 
Representatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate shall monitor and review the actions 
taken by each review panel established pursuant to the amendment 
made by section 407(d) of this Act. 
(b) OTHER CONGRESSIONAL OVERSIGHT.—The Federal Home Loan 
Bank Board shall submit a report to the Committee on Banking, 
Finance and Urban Affairs of the House of Representatives, at the 
end of the 6-month period beginning on the date of the enactment of 
this title, at the end of the 1-year period beginning on such date, and 
on an annual basis after the end of such 1-year period, containing— 
(1) a description of the Board's existing manpower and talent; 
(2) an estimate of the Board's projected manpower and talent 
needs for the year, including the cost of such projected needs; 
(3) a description and explanation of the goals and objectives, 
of the Board and all its related entities (including the Federal 
Asset Disposition Association), for the coming year and the 
management strategies to be employed by such entities in 
accomplishing such goals and objectives; 
(4) a summary of the operations, receipts, expenses, and 
expenditures, of the Board and all its related entities (including 
the Federal Asset Disposition Association), during the preceding 
year; and 
(5) a summary of the operations and the aggregate receipts, 
expenses, and expenditures of any other person not referred to 
in paragraph (4), including receivers, conservators, accountants, 
attorneys, and consultants, who is engaged in any activity on 
behalf of the Board or any other entity which is referred to in 
such paragraph, to the extent such operations, receipts, ex-
penses, and expenditures are in connection with such activity. 
(c) APPEARANCE.—The Federal Home Loan Bank Board and the 
Federal Savings and Loan Insurance Corporation shall, before the 
beginning of each fiscal year, appear before the Committee on 
Banking, Finance and Urban Affairs of the House of Representa-
tives and the Committee on Banking, Housing, and Urban Affairs of 
the Senate to describe and explain each such agency's plans and 
proposals with respect to administrative expenses for such fiscal 
year. 
(d) 
GUIDELINES FOR EMPLOYMENT OF OUTSIDE ACCOUNTANTS, 
ATTORNEYS, CONSERVATORS, AND OTHER CONSULTANTS.—Before the 
end of the 6-month period beginning on the date of the enactment of 
this Act, the Federal Home Loan Bank Board shall submit to the 
Committee on Banking, Finance and Urban Affairs of the House of 
Representatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate a report containing guidelines to im-
prove the management of and control over all outside accountants, 
attorneys, conservators, consultants, and other persons whose serv-
ices are employed by the Board, the Federal Savings and Loan 
Insurance Corporation, the Federal Asset Disposition Association, 
the principal supervisory agent for any Federal home loan bank 
district, or any other entity created, owned, or controlled by the 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 623 
Board in connection with any function for which the Board has 
direct or indirect regulatory or supervisory responsibility. 
SEC. 416. SUNSET. 
(a) IN GENERAL.—The following provisions shall ceeise to be effec-
tive on the date that a notice is published in the Federal Register by 
the Financing Corporation pursuant to subsection (b): 
(1) Paragraphs (2), (3), and (5) of— 
(A) section 9(a) of the Home Owners' Loan Act of 1933; 
•i, 
and 
(B) section 415(a) of the National Housing Act, 
(as added by subsections (a) and (b), respectively, of section 402 
of this title). 
(2) Section 10 of the Home Owners' Loan Act of 1933 and 
section 416 of the National Housing Act (as added by subsec-
tions (a) and (b), respectively, of section 404 of this title). 
(3) Paragraph (6) of section 406(f) of the National Housing Act 
(as added by section 405 of this title). 
(4) Section 22A of the Federal Home Loan Bank Act (as added 
by section 407(d) of this title). 
(5) Section 411 of this title. 
(b) NOTICE OF COMPLETION OF NET NEW BORROWING BY FINANCING 
CORPORATION.—When the Financing Corporation established pursu-
ant to section 21 of the Federal Home Loan Bank Act has completed 
all net new borrowing under such section, the Financing Corpora-
tion shall publish a notice of such fact in the Federal Register. 
(c) SAVINGS PROVISION.—The termination by subsection (a) of the 
effectiveness of any provision described in such subsection shall not 
be construed to affect or limit any authority of the Federal Home 
Loan Bank Board or the Federal Savings and Loan Insurance 
Corporation to prescribe any regulation or engage in any activity 
with respect to any association or insured institution under any 
other provision of law. 
12 u s e 1441 
note. 
Federal 
Register, 
publication. 
Ante, pp. 605, 
606. 
Ante, pp. 609, 
611. 
Ante, p. 613. 
Ante, p. 617. 
Ante, p. 620. 
Federal 
Register, 
publication. 
Ante, p. 585. 
TITLE V—FINANCIAL INSTITUTIONS 
EMERGENCY ACQUISITIONS 
SEC. 501. SHORT TITLE. 
This title may be cited as the "Financial Institutions Emergency 
Acquisitions Amendments of 1987". 
SEC. 502. FDIC ASSISTED EMERGENCY INTERSTATE ACQUISITIONS. 
(a) GENERAL PROVISIONS.—Section 13(f)(1) of the Federal Deposit 
Insurance Act (12 U.S.C. 1823(f)(1)) is amended to read as follows: 
"(f) ASSISTED EMERGENCY INTERSTATE ACQUISITIONS.—(1) This 
subsection shall apply only to an acquisition of an insured bank or a 
holding company by an out-of-State bank or out-of-State holding 
company for which the Corporation provides assistance under 
subsection (c).". 
(b) EMERGENCY INTERSTATE ACQUISITIONS OF BANKS IN DANGER OF 
CLOSING.—Section 13(f)(3) of the Federal Deposit Insurance Act (12 
U.S.C. 1823(f)(3)) is amended to read as follows: 
"(3) EMERGENCY INTERSTATE ACQUISITIONS OF INSURED BANKS IN 
DANGER OF CLOSING.— 
Financial 
Institutions 
Emergency 
Acquisitions 
Amendments of 
1987. 
12 u s e 1811 
note. 
101 STAT. 624 
PUBLIC LAW 100-86—AUG. 10, 1987 
"(A) ACQUISITION OF INSURED BANKS IN DANGER OF CLOSING.— 
One or more out-of-State banks or out-of-State holding compa-
nies may acquire and retain all or part of the shares or assets of, 
or otherwise acquire and retain— 
"(i) an insured bank in danger of closing which has total 
assets of $500,000,000 or more; or 
'''" 
"(ii) 2 or more affiliated insured banks in danger of 
^
^
^ 
. closing which have aggregate total assets of $500,000,000 or 
r*6k; 
more, if the aggregate total assets of such banks is equal to 
or greater than 33 percent of the aggregate total assets of 
all affiliated insured banks. 
2C' 
"(B) ACQUISITION OF A HOLDING COMPANY OR OTHER BANK 
f 
AFFILIATE.—If one or more out-of-State banks or out-of-State 
' 
holding companies acquire 1 or more affiliated insured banks 
under subparagraph (A) the aggregate total assets of which is 
' 
i,; 
equal to or greater than 33 percent of the aggregate total assets 
of all affiliated insured banks, any such out-of-State bank or 
q 
out-of-State holding company may also, as part of the same 
^ ' transaction, acquire and retain the shares or assets of, or other-
\,.\ 
wise acquire and retain— 
»^o 
"(i) the holding company which controls the affiliated 
insured banks so acquired; or 
' y-'' 
"(ii) any other affiliated insured bank. 
/ 
' 
"(C) REQUEST FOR ASSISTANCE BY CORPORATE BOARD OF DIREC-
TORS.—The Corporation may assist an acquisition or merger 
authorized under subparagraph (A) only if the board of directors 
or trustees of each insured bank in danger of closing which is 
being acquired has requested in writing that the Corporation 
assist the acquisition or merger. 
"(D) CERTAIN ACQUISITIONS AUTHORIZED AFTER ASSISTANCE IS 
PROVIDED.—Notwithstanding paragraph (1), i
f
— 
"(i) at any time after the date of the enactment of the 
Financial Institutions Emergency Acquisitions Amend-
ments of 1987, the Corporation provides any assistance 
.. under subsection (c) to an insured bank; and 
"
* 
"(ii) at the time such assistance is granted, the insured 
,'. 
bank, the holding company which controls the insured bank 
> 
(if any), or any affiliated insured bank is eligible to be 
•*y . 
acquired by an out-of-State bank or out-of-State holding 
company under this paragraph, 
J, J; 
the insured bank, the holding company, and such other affili-
ated insured bank shall remain eligible, subject to such terms 
and conditions as the Corporation (in the Corporation's discre-
tion) may impose, to be acquired by an out-of-State bank or out-
of-State holding company under this paragraph as long as any 
portion of such assistance remains outstanding. 
"(E) STATE BANK SUPERVISOR APPROVAL.—The Corporation 
may take no final action in connection with any acquisition 
under this paragraph unless the State bank supervisor of the 
State in which the bank in danger of closing is located approves 
the acquisition. 
"(F) OTHER REQUIREMENTS NOT AFFECTED.—This paragraph 
does not affect any other requirement under Federal or State 
law for regulatory approval of an acquisition under this 
paragraph. 
"(G) ACQUISITION MAY BE CONDITIONED ON RECEIPT OF CONSID-
ERATION FOR CORPORATION'S ASSISTANCE.—Any acquisition de-
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 625 
scribed in subparagraph (D) may be conditioned on the receipt 
of such consideration for the Corporation's assistance as the 
Board of Directors deems appropriate.". 
(c) SPECIAL PROVISIONS APPUCABLE TO EMERGENCY INTERSTATE 
ACQUISITIONS.— 
(1) COORDINATION WITH CERTAIN STATE LAWS.—Section 13(f)(4) 
of the Federal Deposit Insurance Act (12 U.S.C. 1823(f)(4)) is 
amended— 
(A) by redesignating clauses (i), (ii), and (iii) as subpara-
graphs (A), (B), and (C), respectively; 
(B) by amending subparagraph (A) (as so redesignated) to 
read as follows: 
"(A) ACQUISITIONS NOT SUBJECT TO CERTAIN OTHER LAWS.—Sec-
tion 3(d) of the Bank Holding Company Act of 1956, any provision of 12 USC 1842. 
State law, the constitution of any State, and section 408(e)(3) of the 
12 use I730a. 
National Housing Act shall not apply to prohibit any acquisition 
under paragraph (2) or (3), except that an out-of-State bank may 
make such an acquisition only if such ownership is otherwise specifi-
cally authorized.'; and 
(C) by adding at the end thereof the following new sub-
paragraphs: 
"(D) SUBSEQUENT NONEMERGENCY INTERSTATE ACQUISITIONS SUB-
JECT T
O STATE LAW.— 
"(i) IN GENERAL.—Any out-of-State bank holding company 
which acquires control of an insured bank in any State under 
paragraph (2) or (3) may acquire any other insured bank and 
establish branches in such State to the same extent as a bank 
holding company whose insured bank subsidiaries' operations 
are principally conducted in such State may acquire any other 
insured bank or establish branches. 
"(ii) DELAYED DATE OF APPUCABILTTY.—Clause (i) shall not 
apply with respect to any out-of-State bank holding company 
referred to in such clause before the earlier of— 
•
^ 
^ - 
"(I) the end of the 2-year period beginning on the date the 
acquisition referred to in such clause with respect to such 
company is consummated; or 
"(II) the end of any period established under State law 
' 
• 
during which such out-of-State bank holding company may 
not be treated as a bank holding company whose insured 
bank subsidiaries' operations are principally conducted in 
such State for purposes of acquiring other insured banks or 
establishing bank branches, 
"(iii) DETERMINATION OP PRINCIPALLY CONDUCTED.—For pur-
poses of this subparagraph, the State in which the operations of 
a holding company's insured bank subsidiaries are principally 
conducted is the State determined under section 3(d) of the 
Bank Holding Company Act of 1956 with respect to such holding 
company. 
"(E) CERTAIN STATE INTERSTATE BANKING LAWS INAPPLICABLE.— 
Any holding company which acquires control of any insured bank or 
holding company under paragraph (2) or (3) or subparagraph (D) of 
this paragraph shall not, by reason oif such acquisition, be required 
under the law of any State to divest any other insured bank or be 
prevented from acquiring any other bank or holding company.". 
(2) RECIPROCAL BANK PACTS AND MINORITY BANK OWNERSHIP 
TAKEN INTO ACCOUNT IN BIDDING PRIORITIES.—Section 13(fX6) of 
101 STAT. 626 
PUBLIC LAW 100-86—AUG. 10, 1987 
the Federal Deposit Insurance Act (12 U.S.C. 1823(f)(6)) is 
amended— 
(A) in subparagraph (B), by striking out clause (ii) and all 
that follows through clause (iv) and inserting in lieu thereof 
the following new clauses: 
"(ii) Second, between depository institutions of the same 
type— 
"(I) in different States which by statute specifically au-
« 
thorize such acquisitions; or 
"(II) in the absence of such statutes, in different States 
which are contiguous, 
"(iii) Third, between depository institutions of the same type 
in different States other than the States described in clause (ii). 
* 
"(iv) Fourth, between depository institutions of different types 
in the same State. 
"(v) Fifth, between depository institutions of different types— 
"(I) in different States which by statute specifically au-
;
v 
thorize such acquisitions; or 
"(II) in the absence of such statutes, in different States 
j , 
which are contiguous. 
"(vi) Sixth, between depository institutions of different types 
in different States other than the States described in clause 
(v).";and 
(B) by amending subparagraph (C) to read as follows: 
"(C) MINORITY BANK PRIORITY.—In the case of a minority-con-
trolled bank, the Corporation shall seek an offer from other minor-
ity-controlled banks before proceeding with the bidding priorities set 
forth in subparagraph (B).". 
(3) REAFFIRMATION OF THE RULE THAT NO ASSISTANCE IS AU-
THORIZED FOR NONBANK SUBSIDIARIES OF HOLDING COMPANIES.— 
Section 13(f) of the Federal Deposit Insurance Act (12 U.S.C. 
1823(f)) is amended by adding at the end thereof the following 
new paragraph: 
"(9) No ASSISTANCE AUTHORIZED FOR NONBANK SUBSIDIARIES OF 
HOLDING COMPANIES.— 
"(A) IN GENERAL.—The Corporation shall not provide any 
assistance to a subsidiary of a holding company which is not an 
insured bank in connection with any acquisition under this 
subsection. 
"(B) INTERMEDIATE HOLDING COMPANY PERMITTED.—This para-
graph does not prohibit an intermediate holding company from 
being a conduit for assistance ultimately intended for an in-
sured bank.". 
(4) REPORTS REQUIRED.—Section 13(f) of the Federal Deposit 
Insurance Act (12 U.S.C. 1823(f)) is amended by adding after 
paragraph (9) (as added by paragraph (3) of this subsection) the 
following new paragraph: 
"(10) ANNUAL REPORT.— 
"(A) REQUIRED.—In its annual report to Congress the Corpora-
tion shall include a report on the acquisitions under this subsec-
tion during the preceding year. 
"(B) CONTENTS.—The report required under subparagraph (A) 
shall contain the following information: 
"(i) The number of acquisitions under this subsection. 
; V 
"(ii) A brief description of each such acquisition and the 
.
^
~ 
circumstances under which such acquisition occurred.". 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 627 
(5) DETERMINATION OF TOTAL ASSETS.—Section 13(f) of the 
Federal Deposit Insurance Act (12 U.S.C. 1823(f)) is amended by 
adding after paragraph (10) (as added by paragraph (4) of this 
subsection) the following new paragraph: 
"(11) DETERMINATION OF TOTAL ASSETS.—For purposes of this 
subsection, the total assets of any insured bank shall be determined 
on the basis of the most recent report of condition of such bank 
which is available at the time of such determination.". 
(d) BANK IN DANGER OF CLOSING DEFINED.—Section 13(f)(8) of the 
Federal Deposit Insurance Act (12 U.S.C. 1823(f)(8)) is amended— 
(1) by adding at the end thereof the following new subpara-
graph: 
"(D) the term 'bank in danger of closing' means an insured 
bank with respect to which the appropriate Federal or State 
chartering authority certifies in writing that— 
"(i)(I) the bank is not likely to be able to meet the 
demands of such bank's depositors or pay the obligations of 
' 
the bank in the normal course of business, and 
"(II) there is no reasonable prospect that the bank will be 
able to meet such demands or pay such obligations without 
Federal assistance; or 
"(ii)(I) the bank has incurred or is likely to incur losses 
that will deplete all or substantially all of the capital of the 
bank, and 
"(II) there is no reasonable prospect for the replenish-
ment of the bank's capital without Federal assistance;"; 
(2) by striking out "and" at the end of subparagraph (B); and 
(3) by striking out the period at the end of subparagraph (C) 
and inserting in lieu thereof a semicolon. 
^ 
(e) ACQUIRE DEFINED.—Section 13(f)(8) of the Federal Deposit 
Insurance Act (12 U.S.C. 1823(f)(8)) is amended by adding after 
subparagraph (D) (as added by subsection (d) of this section) the 
following new subparagraph: 
"(E) the term 'acquire' means to acquire, directly or 
indirectly, ownership or control through— 
"(i) an acquisition of shares; 
"(ii) an acquisition of assets or assumption of liabilities; 
"(iii) a merger or consolidation; or 
"(iv) any similar transaction;". 
(D AFFIUATED INSURED BANK DEFINED.—Section 13(fK8) of the 
Federal Deposit Insurance Act (12 U.S.C. 1823(f)(8)) is amended by 
adding after subparagraph (E) (as added by subsection (e) of this 
section) the following new subparagraph: 
"(F) the term affiliated insured bank' means— 
"(i) when used in connection with a reference to a holding 
company, an insured bank which is a subsidiary of such 
holding company; and 
"(ii) when used in connection with a reference to 2 or 
more insured banks, insured banks which are subsidiaries 
of the same holding company; and". 
(g) SUBSIDIARY DEFINED.—Section 13(f)(8) of the Federal Deposit 
Insurance Act (12 U.S.C. 1823(fK8)) is amended by adding after 
subparagraph (F) (as added by subsection (f) of this section) the 
following new subparagraph: 
"(G) the term 'subsidiary' has the meaning given to such term 
in section 2(d) of the Bank Holding Company Act of 1956.". 12 USC 1841. 
(h) WAIVER OF NOTICE AND HEARING REQXJIREMENTS.— 
101 STAT. 628 
PUBLIC LAW 100-86—AUG. 10, 1987 
(1) APPLICATION RELATING TO ACQUISITIONS.—Section 3(b) of 
the Bank Holding Company Act of 1956 (12 U.S.C. 1842(b)) is 
amended— 
(A) by striking out "(b) Upon" and inserting in lieu 
thereof "(b)(1) NOTICE AND HEARING 
REQUIREMENTS.— 
;,, , 
Upon"; and 
(B) by adding at the end thereof the following new 
paragraph: 
"(2) WAIVER IN CASE OF BANK IN DANGER OF CLOSING.—If the 
Board receives a certification described in section 13(f)(8)(D) of the 
Ante, p. 627. 
Federal Deposit Insurance Act from the appropriate Federal or 
State chartering authority that a bank is in danger of closing, the 
Board may dispense with the notice and hearing requirements of 
paragraph (1) with respect to any application received by the Board 
relating to the acquisition of such bank, the bank holding company 
which controls such bank, or any other affiliated bank.". 
(2) APPLICATION RELATING TO NONBANKING ACTIVITIES.—Sec-
f 
tion 4(c)(8) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1843(c)(8)) is amended by striking out the semicolon at the end 
and inserting in lieu thereof a period and the following new 
< 
sentences: "If an application is filed under this paragraph in 
f 
connection with an application to make an acquisition pursuant 
to section 13(f) of the Federal Deposit Insurance Act, the Board 
may dispense with the notice and hearing requirement of this 
j 
paragraph and the Board may approve or deny the application 
Federal 
Under this paragraph without notice or hearing. If an applica-
Register, 
tion described in the preceding sentence is approved, the Board 
publication. 
gj^^jj publish in the Federal Register, not later than 7 days after 
such approval is granted, the order approving the application 
and a description of the nonbanking activities involved in the 
- 
acquisition;". 
(3) EARLY ANTITRUST REVIEW IN CASE OF EMERGENCY ACQUISI-
TION OF FAIUNG BANK.—Section 11(b) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1849(b)) is amended— 
(A) by striking out "(b) The Board" and inserting in lieu 
!fa^. 
thereof "(b) ANTITRUST REVIEW.— 
"(1) I N GENERAL.—The Board"; 
,, , 
(B) by moving all that follows 2 ems to the right; and 
* ' 
' 
(C) by adding at the end thereof t h e following new 
"' 
paragraph: 
"(2) SECTION 13(f) CASES.—(A) If— 
"(i) the Federal Deposit Insurance Corporation learns 
that a bank insured by such Corporation is in danger of 
J' 
closing; and 
"(ii) the Corporation is considering assisting the acquisi-
tion of such bank and its affiliated banks by another bank 
or holding company under section 13(f) of the Federal De-
posit Insurance Act and such acquisition is subject to the 
approval of the Board under section 3 of this Act, 
the Corporation shall immediately notify the Board of such 
facts. 
"(B) Upon receipt of notice from the Federal Deposit Insur-
ance Corporation under subparagraph (A) or at such earlier 
time as deemed appropriate by the Board, the Board shall 
immediately notify the Attorney General of the United States of 
the facts concerning the possible acquisition. 
l i ' 
tS' 
.it>c= 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 629 
"(C) Within 5 days of receiving notice under subparagraph (B), 
the Attorney General shall notify the Board in writing of the 
Attorney General's preliminary finding as to the consistency of 
the possible acquisition with the antitrust laws. 
"(D) The Board may reduce or eliminate the post-approval 
waiting period established under paragraph (1) for an acquisi-
tion to which this paragraph applies, except that such period 
may not be eliminated or reduced to less than 5 days without 
the concurrence of the Attorney General.". 
(i) TECHNICAL AND CONFORMING AMENDMENTS.—Section 13(f) 
of 
the Federal Deposit Insurance Act (12 U.S.C. 1823(f)) is amended— 
(1) in paragraph (5), by striking out "to permit"; and 
(2) in paragraph (6)(A)— 
(A) by striking out "where the closed bank" and inserting 
in lieu thereof' where the bank"; and 
' ' 
(B) by striking out "in-State bank holding company" and 
inserting in lieu thereof "in-State holding company". 
SEC. 503. BRIDGE BANKS. 
(a) EsTABUSHMENT OF BRIDGE BANKS.—Section 11 of the Federal 
Deposit Insurance Act (12 U.S.C. 1821) is amended— 
(1) in subsection (h) by striking out "(h) As soon as" and 
inserting in lieu thereof "(h) NEW BANKS.—(1) As soon as"; 
(2) by redesignating subsections (i), (j), (k), and (1) as para-
graphs (2), (3), (4), and (5) of subsection (h), respectively; and 
(3) by inserting after subsection (h)(5) (as redesignated by 
paragraph (2)) the following new subsection: 
"(i) BRIDGE BANKS.— 
"(1) EsTABUSHMENT.—When an insured bank is closed, the 
Corporation, in the Corporation's discretion and subject to the 
conditions established in paragraph (2), may establisn a bridge 
bank to— 
"(A) assume the deposits of the closed bank; 
"(B) assume such other liabilities of the closed bank as 
the Corporation, in the Corporation's discretion, may deter-
mine to be appropriate; 
,, 
"(C) purchase such assets of the closed bank as the Cor-
poration, in the Corporation's discretion, may determine to 
be appropriate; and 
r 
, _
> 
. 
"(D) perform any other temporary function which the 
r ;
>
• « 
Corporation may prescribe in accordance with this Act. 
"(2) CONDITIONS.—A bridge bank may be established under 
paragraph (1) only if the Board of Directors determines that— 
"(A) the amount which is reasonably necessary to orga-
nize and operate such bridge bank will not exceed the 
amount which is reasonably necessary to save the cost of 
liquidating, including paying the insured accounts of, the 
' 
closed bank or banks; 
"(B) the continued operation of such insured bank is 
essential to provide adequate banking services in the 
' ' 
community where such bank is located; or 
"(C) that the continued operation of such insured bank is 
in the best interest of the depositors of the closed bank and 
the public. 
h,, 
"(3) TRANSFER OF ASSETS AND LIABILITIES.— 
' *'• 
"(A) IN GENERAL.—Upon the organization of a bridge 
bank pursuant to this subsection, the Corporation, as re-
;«;jeM Si 
101 STAT. 630 
PUBLIC LAW 100-86—AUG. 10, 1987 
ceiver, or any other receiver appointed with respect to the 
closed insured bank may, subject to the approval of any 
such transfer by a court of competent jurisdiction, transfer 
any assets and liabilities of the closed insured bank to the 
bridge bank. 
"(B) INTENT OF CONGRESS RELATING TO CONTINUING OPER-
ATIONS.—It is the intent of the Congress that, in order to 
prevent unnecessary hardship or losses to the customers of 
the closed bank with respect to which a bridge bank is 
established, 
especially 
creditworthy 
farmers, 
small 
businesses, and households, the Corporation should— 
"(i) continue to honor commitments made by the 
closed bank to creditworthy customers, and 
:-f.. '-. 
"(ii) not interrupt or terminate adequately secured 
loans which are transferred under subparagraph (A) 
I . 
and are being repaid by the debtor in accordance with 
the terms of the loan instrument. 
"(4) ORGANIZATION.— 
"(A) ARTICLES OF ASSOCIATION.—The articles of associa-
'•f- 
tion and the organization certificate of a bridge bank 
shall be executed by representatives designated by the 
Corporation. 
"(B) INSURED NATIONAL BANK.—Each bridge bank shall be 
a national bank and shall be insured from the time of the 
organization of the bridge bank. 
"(C) MANAGEMENT.—Each bridge bank shall be under the 
management of a board of directors consisting of 5 members 
appointed by the Board of Directors of the Corporation. 
"(5) POWERS OF BRIDGE BANKS.—Each bridge bank established 
under this subsection shall have all corporate powers of, and be 
subject to the same provisions of law as, a national bank, except 
that— 
"(A) the Corporation may— 
"(i) remove the directors of any bridge bank; 
' ** 
"(ii) fix the compensation of members of the board of 
^^ 
directors of any bridge bank; and 
"(iii) waive any requirement established under sec-
tion 5145, 5146, 5147, 5148, or 5149 of the Revised 
12 use 71-75. 
Statutes (relating to directors of national banks) or 
12 use 71a. 
T' 
section 31 of the Banking Act of 1933 which would 
otherwise be applicable with respect to directors of a 
bridge bank by operation of paragraph (4)(B); 
"(B) the Corporation may indemnify the directors of a 
bridge bank on such terms as the Corporation determines to 
be appropriate; 
"(C) no requirement under section 5138 of the Revised 
12 use 51. 
Statutes or any other provision of law relating to the 
capital of a national bank shall apply with respect to any 
bridge bank; 
"(D) the Comptroller of the Currency may establish a 
, J , 
limitation on the extent to which any person may become 
t 
indebted to any bridge bank without regard to the amount 
of the bank's capital or surplus; 
"(E) the board of directors of the bridge bank shall elect a 
,
.
^
y 
chairperson who shall also serve in the position of chief 
.: 
executive officer; 
.-,, 
, „ 
,... 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 631 
"(F) no bridge bank shall be required to purchase stock of 
any Federal Reserve bank; and 
(G) the Comptroller of the Currency may waive any 
requirement for a fidelity bond. 
"(6) CAPITAL.— 
"(A) No CAPITAL REQUIRED.—The Corporation shall not be 
required to— 
"(i) issue capital stock on behalf of any bridge bank 
established under this subsection; or 
"(ii) purchase any capital stock of any bridge bank. 
"(B) OPERATING FUNDS IN UEU OF CAPITAL.—Upon the 
organization of a bridge bank, and thereafter as the Board 
of Directors may in its discretion deem necessary or advis-
able, the Corporation shall promptly make available to the 
bridge bank, upon such terms and conditions and in such 
form and amounts as the Board of Directors may prescribe, 
sufficient funds for the bridge bank to operate. 
"(C) AUTHORITY TO ISSUE CAPITAL STOCK.—Whenever in 
;
^ 
the judgment of the Board of Directors it is desirable to do 
so, the Corporation shall cause capital stock of any bridge 
bank to be issued and offered for sale on such terms and 
conditions as the Corporation determines to be appropriate 
and in an amount sufficient (in the discretion of the Cor-
poration) to make possible the conduct of the business of the 
v 
bridge bank on a sound basis. 
"(7) No FEDERAL STATUS.— 
"(A) AGENCY STATUS.—A bridge bank is not an agency, 
establishment, or instrumentality of the United States. 
"(B) EMPLOYEE STATUS.—Directors, officers, employees, or 
< 
agents of the bridge bank are not officers or employees of 
the United States for purposes of title 5, United States 
Code, or any other provision of law. 
"(8) ASSISTANCE AUTHORIZED.—The Corporation may, in its 
discretion, provide assistance under section 13(c) to facilitate the 
12 use 1873. 
sale or merger of the bridge bank with another insured deposi-
tory institution in the same manner and to the same extent as 
such Eissistance may be provided under such section with re-
spect to a closed insured bank. 
"(9) ACQUISITION BY OUT-OF-STATE BANK HOLDING COMPANY.— 
Any depository institution, including an out-of-State bank, or 
any out-of-State holding company may acquire and retain the 
shares or Eissets of, or otherwise acquire and retain a bridge 
bank which has assumed the insured deposits of one or more 
closed banks which had total assets aggregating $500,000,000 or 
more (determined in the manner provided in section 13(f)(ll) at 
the time such insured bank was closed) in the same manner and 
to the same extent as such depository institution or such out-of-
State holding company may acquire a closed insured bank 
under section 13(f)(2). 
"(10) TERMINATION OF BRIDGE BANK.— 
"(A) IN GENERAL.—A bridge bank shall terminate upon 
the occurrence of the earliest of the following: 
"(i) The bridge bank merges or consolidates with 
another bank that is not a bridge bank. 
"(ii) The bridge bank sells all or substantially all of 
the stock of the bridge bank other than to the Corpora-
tion or to another bridge bank. 
101 STAT. 632 
PUBLIC LAW 100-86—AUG. 10, 1987 
1v >I?'> " ' Jt 
"(iii) A holding company or another bank that is not 
a bridge bank assumes all, or substantially all of the 
t/iv » deposits or other liabilities of a bridge bank. 
"(iv) A period of 2 years following the date the bridge 
bank was organized expires without any other disposi-
M: '/" ' 
tion of the assets and liabilities of the bank having 
occurred. 
;%At, 
"(B) EXTENSION ALLOWED FOR i YEAR.—If the Board of 
Directors finds, after consultation with the Comptroller of 
'^ r 
the Currency, that an extension of time for winding up the 
affairs of the bank is in the best interest of the depositors of 
the closed bank and the public, the Corporation may extend 
the time period specified in subparagraph (A)(iv) for not to 
exceed one year. 
"(11) 2 O
R M
O
R
E BANKS.—The Corporation, in the Corpora-
tion's discretion, may establish a bridge bank under this subsec-
tion to assume the deposits of, assume any other liabilities of, 
and purchase any assets of 2 or more closed banks.". 
(b) DEFINITIONS.—Section 3(i) of the Federal Deposit Insurance Act 
(12 U.S.C. 1813(i)) is amended to read as follows: 
"(i) NEW BANK AND BRIDGE BANK DEFINED.— 
"(1) NEW BANK.—The term 'new bank' means a new national 
bank, other than a bridge bank, organized by the Corporation in 
Ante, p. 629. 
5 .. accordance with section 11(h). 
"(2) BRIDGE BANK.—The term 'bridge bank' means a new 
national bank organized by the Corporation in accordance with 
' 
section ll(i).". 
SEC. 504. CONVERSIONS. 
(a) AMENDMENT TO THE NATIONAL HOUSING ACT.—Section 403 of 
the National Housing Act (12 U.S.C. 1726) is amended by adding at 
the end thereof the following: 
"(e) If, upon application, and pursuant to a plan of conversion to 
, r > 
an institution of a type eligible to be an insured institution, the 
Corporation, in its discretion, determines to grant insurance of 
accounts to a savings bank that is an insured bank (as the term 
'insured bank' is defined in section 3(h) of the Federal Deposit 
Insurance Act), such insurance shall become effective at such time 
as the Corporation stipulates, at which time such institution auto-
matically shall lose its status as such an insured bank. No change of 
deposit insurance agencies from the Federal Deposit Insurance Cor-
poration to the Corporation shall be treated, for the purposes of 
Infra. 
section 18(i) of the Federal Deposit Insurance Act, as involving a 
conversion to a noninsured bank or institution, except that the 
Corporation shall provide the Federal Deposit Insurance Corpora-
tion with notification of any application that, if granted, would 
involve such a change of deposit insurance agencies, shall consult 
with tht Corporation before disposing of the application, and shall 
provide the Federal Deposit Insurance Corporation with notification 
of the determination with respect to such application.". 
flj) AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.— 
(1) SECTION 18 (c) APPLICABIUTY.—Section 18(cX12) of the Fed-
eral Deposit Insurance Act (12 U.S.C. 1828(cX12)) is amended to 
read as follows: 
"(12) The provisions of this subsection shall not apply to any 
transaction where the acquiring, assuming, or resulting institution 
is an insured Federal savings bank or an institution insured by the 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 633 
Federal Savings and Loan Insurance Corporation, except that any 
insured bank involved in the transaction shall notify the Corpora-
tion in writing at least 30 days prior to consummation of the 
transaction and, if any approval by the Federal Home Loan Bank 
Board or the Federal Savings and Loan Insurance Corporation is 
required in connection therewith, such approving authority shall 
provide the Corporation with notification of the application for 
approval, shall consult with the Corporation before disposing of the 
.
% >^ 11 
application, and shall provide notification to the Corporation of the 
determination with respect to said application.". 
(2) SECTION 18 (i) APPUCABIUTY.—Section 18(i) of such Act is Ante, p. 632. 
amended by adding at the end thereof the following: 
"(5) Nothing in this subsection shall apply to a conversion of an 
insured bank to an insured institution pursuant to section 403(e) of 
the National Housing Act (12 U.S.C. 1726(e)).". 
SEC. 505. FEDERAL DEPOSITORY INSTITUTIONS REGULATORY AGENCIES 
NOT SUBJECT TO APPORTIONMENT OF FUNDS PROVISIONS. 
(a) FEDERAL DEPOSIT INSURANCE CORPORATION.—Section 7(b) of the 
Federal Deposit Insurance Act (12 U.S.C. 18170t))) is amended by 
adding at the end thereof the following: 
"(9) APPORTIONMENT.—Notwithstanding any other provision of 
law, amounts received pursuant to any assessment under this sec-
tion and any other amounts received by the Corporation shall not be 
subject to apportionment for the purpose of chapter 15 of title 31, 
United States Code, or under any other authority. . 
,, 
, ^ 
O
t
)
) THE COMPTROLLER OF THE CURRENCY.—The second paragraph 
"' 
' 
of section 5240 of the Revised Statutes (12 U.S.C. 481) is amended by 
inserting after the fifth sentence the following: "Such funds shall 
not be subject to apportionment for the purpose of chapter 15 of title 
31, United States Code, or under any other authority.". 
31 use I50i et 
(c) THE FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION.— seq. 
Section 404 of the National Housing Act (12 U.S.C. 1727) is amended 
by adding at the end thereof the following: 
"(k) APPORTIONMENT.—Notwithstanding any other provision of 
law, amounts received by the Corporation pursuant to any assess-
ment under this Act, deposits required under this section and any 
other moneys received by the Corporation shall not be subject to 
apportionment for the purpose of chapter 15 of title 31, United 
States Code, or under any other authority.". 
(d) THE FEDERAL HOME LOAN BANK BOARD.—The Federal Home 
Loan Bank Act (12 U.S.C. 1421 et seq.) is amended by inserting after 
section 19 (12 U.S.C. 1439) the following: 
"SEC. 12A. APPORTIONMENT. 
12 USC 1439-1. 
"Notwithstanding any other provision of law, amounts received 
pursuant to any assessment under this Act and any other moneys 
received by the Board shall not be subject to apportionment for tne 
purpose of chapter 15 of title 31, United States Code, or under any 
other authority.". 
(e) THE NATIONAL CREDIT UNION ADMINISTRATION.—Title I of the 
Federal Credit Union Act (12 U.S.C. 1751 et seq.) is amended by 
adding at the end thereof the following: 
"SEC. 128. APPORTIONMENT. 
12 USC 1772b. 
"Notwithstanding any other provision of law, funds received by 
the Board pursuant to any method provided by this Act, and in-
101 STAT. 634 
PUBLIC LAW 100-86—AUG. 10, 1987 
terest, dividend, or other income thereon, shall not be subject to 
apportionment for the purpose of chapter 15 of title 31, United 
31 use 1501 et 
States Code, or under any other authority.". 
seq. 
SEC. 506. FEDERAL DEPOSITORY INSTITUTIONS REGULATORY AGENCIES 
NOT SUBJECT TO SEQUESTRATION. 
(a) IN GENERAL.—Paragraph (1) of section 255(g) of the Balanced 
2 use 905. 
Budget and Emergency Deficit Control Act of 1985 is amended— 
(1) by inserting after the item relating to compensation of the 
President the following new item: 
^
< J 
'. 
"Comptroller of the Currency;"; 
(2) by inserting after the item relating to the exchange sta-
.1 
bilization fund the following new items: 
• 
"Federal Deposit Insurance Corporation; 
"Federal Home Loan Bank Board; 
i^ ? 
"Federal Home Loan Bank Board, Federal Savings and 
Loan Insurance Corporation;"; and 
(3) by inserting after the item relating to intragovernmental 
funds the following new items: 
"National Credit Union Administration; 
'; „ «' 
"National Credit Union Administration, central liquidity 
facility; 
"National Credit Union Administration, credit union 
share insurance fund;". 
(b) CERTAIN EXPENSES.—Section 256(b) of the Balanced Budget and 
2 use 906. 
Emergency Deficit Control Act of 1985 is amended by adding at the 
end thereof the following new paragraph: 
"(4) Notwithstanding any other provision of law, this subsec-
tion shall not apply with respect to the following: 
, , , , , • , 
"(A) Comptroller of the Currency. 
"(B) Federal Deposit Insurance Corporation. 
"(C) Federal Home Loan Bank Board. 
"(D) Federal Savings and Loan Insurance Corporation. 
i, 
"(E) National Credit Union Administration. 
"(F) National Credit Union Administration, central 
liquidity facility.". 
SEC. 507. LIQUIDATION PROCEEDINGS. 
Section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821) is 
amended by inserting after subsection (i) (as added by section 
503(a)(3) of this title) the following new subsection: 
"(j) CONDITIONS APPLICABLE TO LIQUIDATION PROCEEDINGS.— 
"(1) CONSIDERATION OF LOCAL ECONOMIC IMPACT REQUIRED.— 
~
* ' 
' 
The Corporation shall fully consider the adverse economic 
impact on local communities, including businesses and farms, of 
actions to be taken by it during the administration and liquida-
tion of loans of a closed bank. 
"(2) ACTIONS TO ALLEVIATE ADVERSE ECONOMIC IMPACT TO BE 
CONSIDERED.—The actions which the Corporation shall consider 
include the release of proceeds from the sale of products and 
t* services for family living and business expenses and shortening 
the undue length of the decisionmaking process for the accept-
ance of offers of settlement contingent upon third party financ-
• 
ing. 
"(3) GUIDELINES REQUIRED.—The Corporation shall adopt and 
publish procedures and guidelines to minimize adverse eco-
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 635 
nomic effects caused by its actions on individual debtors in the 
community.". 
SEC. 508. CAPITAL POOLS. 
(a) FINDINGS.—The Congress hereby finds that— 
(1) the Federal Deposit Insurance Corporation has the statu-
tory authority to engage in open bank assistance for failing 
banks under section 13(c) of the Federal Deposit Insurance Act 
12 use 1873. 
to minimize losses to the insurance fund and to provide for the 
f 
stability of the community; 
(2) communities in depressed regions of the Nation have had 
increasing difficulty in raising capital to infuse into locally 
? 
operated, failing banks; 
(3) States have the authority to establish capital pools to 
' 
supplement Federal Deposit Insurance Corporation funds and 
outside capital in arranging open banks assistance plans; and 
(4) it is not in the public interest to have a fire sale of assets 
acquired by the Federal Deposit Insurance Corporation as a 
part of their acquisitions of nonperforming loans of failed 
banks. 
(b) SENSE OF THE CONGRESS.—It is the sense of the Congress that 
the Federal Deposit Insurance Corporation should— 
(1) exercise its discretionary authority to work with States 
which authorize capital pools described in subsection (a)(3) to 
save community banks during this time of great economic 
distress in certain regions of the country; and 
(2) use its discretionary authority to negotiate sale of loans in 
the Corporation's capacity as receiver for a closed insured bank 
to banks in the area in which such closed bank is located in 
order to prevent further asset devaluation. 
SEC. 509. PERMANENT EXTENSION OF CERTAIN TEMPORARY PROVISIONS 
OF LAW; 5-YEAR EXTENSION OF NET WORTH CERTIFICATES. 
(a) PERMANENT EXTENSION.—Part D of title I of the Garn-St 
Germain Depository Institutions Act of 1982 is repealed. 
(b) 5-YEAR EXTENSION OF NET WORTH CERTIFICATES.—Section 
206(a) of such Act (12 U.S.C. 1729 note) is amended by striking out 
"October 13, 1986" and inserting in lieu thereof "October 13, 1991". 
(c) PRIOR AMENDMENTS NOT EFFECTIVE.—No amendment made by 
part D of title I or section 206 of the Garn-St Germain Depository 
Institutions Act of 1982, as in effect before the date of the enactment 
of this Act, to any other provision of law shall be deemed to have 
taken effect before the date of the enactment of this Act and any 
such provision of law shall be in effect as if no such amendment had 
been made before such date of enactment. 
12 use 1464 
note. 
12 use 1729, 
1823. 
12 use 1464 
note. 
12 use 1729, 
1823. 
TITLE VI—EXPEDITED FUNDS 
AVAILABILITY 
SEC. 601. SHORT TITLE. 
This title may be cited as the "Expedited Funds Availability Act". 
SEC. 602. DEFINITIONS. 
For purposes of this title— 
Expedited Funds 
Availability Act. 
12 use 4001 
note. 
12 use 4001. 
101 STAT. 636 
PUBLIC LAW 100-86—AUG. 10, 1987 
(1) ACCOUNT.—The term "account" means a demand deposit 
account or other similar transaction account at a depository 
institution. 
(2) BOARD.—The term "Board" means the Board of Governors 
of the Federal Reserve System. 
(3) BUSINESS DAY.—The term "business day" means any day 
other than a Saturday, Sunday, or legal holiday. 
' . y 
' 
(4) CASH.—The term "cash means United States coins and 
,; currency, including Federal Reserve notes. 
(5) CASHIER'S CHECK.—The term "cashier's check" means any 
t>? check which— 
'^i 
(A) is drawn on a depository institution; 
(B) is signed by an officer or employee of such depository 
• 
institution; and 
(C) is a direct obligation of such depository institution. 
(6) CERTIFIED CHECK.—The term "certified check" means any 
check with respect to which a depository institution certifies 
that— 
(A) the signature on the check is genuine; and 
(B) such depository institution has set aside funds 
iisri' ^ which— 
(i) are equal to the amount of the check; and 
(ii) will be used only to pay such check. 
(7) CHECK.—The term "check" means any negotiable demand 
draft drawn on or payable through an office of a depository 
institution located in the United States. Such term does not 
include noncash items. 
(8) CHECK CLEARINGHOUSE ASSOCIATION.—The term "check 
clearinghouse association" means any arrangement by which 
participant depository institutions exchange deposited checks 
on a local basis, including an entire metropolitan area, without 
using the check processing facilities of the Federal Reserve 
System. 
^^ 
(9) CHECK PROCESSING REGION.—The term "check processing 
region" means the geographical area served by a Federal Re-
serve bank check processing center or such larger area as the 
>' 
Board may prescribe by regulations. 
(10) CONSUMER ACCOUNT.—The term "consumer account" 
5, ; . 
-, means any account used primarily for personal, family, or 
household purposes. 
(11) DEPOSITORY CHECK.—The term "depository check" means 
,j,r,;, 
any cashier's check, certified check, teller's check, and any 
other functionally equivalent instrument as determined by the 
Board. 
(12) DEPOSITORY INSTITUTION.—The term "depository institu-
tion" has the meaning given such term in clauses (i) through (vi) 
12 use 461. 
of section 19(b)(1)(A) of the Federal Reserve Act. Such term also 
includes an office, branch, or agency of a foreign bank located in 
the United States. 
,,, 
(13) LOCAL ORIGINATING DEPOSITORY INSTITUTION.—The term 
"local originating depository institution" means any originating 
depository institution which is located in the same check 
' 
processing region as the receiving depository institution, 
(14) NONCASH ITEM.—The term "noncash item" means— 
' 
(A) a check or other demand item to which a passbook, 
certificate, or other document is attached; , ,,-,,.» , . < J 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 637 
: tr. 
(B) a check or other demand item which is accompanied 
by special instructions, such as a request for special advise 
of payment or dishonor; or 
(C) any similar item which is otherwise classified £is a 
noncash item in regulations of the Board. 
(15) 
NONLOCAL ORIGINATING DEPOSITORY INSTITUTION.—The 
A . 
term "nonlocal originating depository institution" means any 
originating depository institution which is not a local depository 
institution. 
(16) PROPRIETARY ATM.—The term "proprietary ATM" means 
an automated teller machine which is— 
(A) located— 
(i) at or adjacent to a branch of the receiving deposi-
tory institution; or 
(ii) in close proximity, as defined by the Board, to a 
branch of the receiving depository institution; or 
(B) owned by, operated exclusively for, or operated by the 
receiving depository institution. 
(17) ORIGINATING DEPOSITORY INSTITUTION.—The term "origi-
nating depository institution" means the branch of a depository 
institution on which a check is drawn. 
(18) NONPROPRIETARY ATM,—The term "nonproprietary ATM" 
means an automated teller machine which is not a proprietary 
ATM. 
(19) PARTICIPANT.—The term "participant" means a deposi-
tory institution which— 
(A) is located in the same geographic area as that served 
by a check clearinghouse association; and 
,,, 
(B) exchanges checks through the check clearinghouse 
association, either directly or through an intermediary. 
(20) RECEIVING DEPOSITORY INSTITUTION.—The term "receiving 
depository institution" means the branch of a depository institu-
tion or the proprietary ATM in which a check is first deposited. 
(21) STATE.—The term "State" means any State, the District 
of Columbia, the Commonwealth of Puerto Rico, or the Virgin 
Islands. 
(22) TELLER'S CHECK.—The term "teller's check" means any 
check issued by a depository institution and drawn on another 
depository institution. 
(23) UNITED STATES.—The term "United States" means the 
several States, the District of Columbia, the Commonwealth of 
Puerto Rico, and the Virgin Islands. 
(24) UNIT OF GENERAL LOCAL GOVERNMENT.—The term "unit of 
general local government" means any city, county, town, town-
ship, parish, village, or other general purpose political subdivi-
sion of a State. 
(25) WIRE TRANSFER.—The term "wire transfer" h£is such 
meaning as the Board shall prescribe by regulations. 
SEC. 603. EXPEDITED FUNDS AVAILABILITY SCHEDULES. 
12 USC 4002. 
(a) NEXT BUSINESS DAY AVAILABILITY FOR CERTAIN DEPOSITS.— 
(1) CASH DEPOSITS; WIRE TRANSFERS.—Except as provided in 
subsection (e) and in section 604, in any case in which— 
(A) any cash is deposited in an account at a receiving 
depository institution staffed by individuals employed by 
such institution, or 
101 STAT. 638 
PUBLIC LAW 100-86—AUG. 10, 1987 
(B) funds are received by a depository institution by wire 
transfer for deposit in an account at such institution, 
such cash or funds shall be available for withdrawal not later 
than the business day after the business day on which such cash 
is deposited or such funds are received for deposit. 
State and local 
(2) GOVERNMENT CHECKS; CERTAIN OTHER CHECKS.—Fuuds 
governments. 
deposited in an account at a depository institution by check 
shall be available for withdrawal not later than the business 
day after the business day on which such funds are deposited in 
the case of— 
(A) a check which— 
(i) is drawn on the Treasury of the United States; and 
^v, 
(ii) is endorsed only by the person to whom it was 
"
^ ' 
issued; 
. ., 
(B) a check which— 
(i) is drawn by a State; 
(ii) is deposited in a receiving depository institution 
which is located in such State and is staffed by individ-
uals employed by such institution; 
(iii) is deposited with a special deposit slip which 
indicates it is a check drawn by a State; and 
(iv) is endorsed only by the person to whom it was 
issued; 
(C) a check which— 
(i) is drawn by a unit of general local government; 
i^ \|i;'. 
^1^ -g deposited in a receiving depository institution 
which is located in the same State as such unit of 
general local government and is staffed by individuals 
employed by such institution; 
~' 
(iii) is deposited with a special deposit slip which 
indicates it is a check drawn by a unit of general local 
government; and 
(iv) is endorsed only by the person to whom it was 
issued; 
(D) the first $100 deposited by check or checks on any one 
•- 
business day; 
(E) a check deposited in a branch of a depository institu-
tion and drawn on the same or another branch of the same 
depository institution if both such branches are located in 
the same State or the same check processing region; 
'- '•' 
(F) a cashier's check, certified check, teller's check, or 
depository check which— 
(i) is deposited in a receiving depository institution 
which is staffed by individuals employed by such 
institution; 
(ii) is deposited with a special deposit slip which 
indicates it is a CEishier's check, certified check, teller's 
-. * 
check, or depository check, as the case may be; and 
(iii) is endorsed only by the person to whom it was 
issued. 
^ • 
(b) PERMANENT SCHEDULE.— 
(1) AVAILABIUTY OF FUNDS DEPOSITED B
Y L
O
C
A
L CHECKS.—Sub-
ject to paragraph (3) of this subsection, subsections (aX2), (d), 
and (e) of this section, and section 604, not more than 1 business 
day shall intervene between the business day on which funds 
are deposited in an account at a depository institution by a 
check drawn on a local originating depository institution and 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 639 
the business day on which the funds involved are available for 
withdrawal. 
(2) AVAILABILITY OF FUNDS DEPOSITED BY NONLOCAL CHECKS.— 
Subject to paragraph (3) of this subsection, subsections (a)(2), (d), 
and (e) of this section, and section 604, not more than 4 business 
days shall intervene between the business day on which funds 
are deposited in an account at a depository institution by a 
check drawn on a nonlocal originating depository institution 
and the business day on which such funds are available for 
withdrawal. 
(3) TIME PERIOD ADJUSTMENTS FOR CASH WITHDRAWAL OF CER-
TAIN CHECKS.— 
(A) IN GENERAL.—Except as provided in subparagraph (B), 
funds deposited in an account in a depository institution by 
check (other than a check described in subsection (a)(2)) 
shall be available for cash withdrawal not later than the 
business day after the business day on which such funds 
otherwise are available under paragraph (1) or (2). 
(B) 5 P.M. CASH AVAILABILITY.—Not more than $400 (or the 
maximum amount allowable in the case of a withdrawal 
from an automated teller machine but not more than $400) 
of funds deposited by one or more checks to which this 
paragraph applies shall be available for cash withdrawal 
not later than 5 o'clock post meridian of the business day on 
which such funds are available under paragraph (1) or (2). If 
funds deposited by checks described in both paragraph (1) 
and paragraph (2) become available for cash withdrawal 
under this paragraph on the same business day, the limita-
tion contained in this subparagraph shall apply to the 
aggregate amount of such funds. 
(C) $100 AVAILABILITY.—Any amount available for with-
drawal under this paragraph shall be in addition to the 
amount available under subsection (a)(2)(D). 
(4) APPLICABILITY.—This subsection shall apply with respect to 
funds deposited by check in an account at a depository institu-
tion on or after September 1, 1990, except that the Board may, 
by regulation, make this subsection or any part of this subsec-
tion applicable earlier than September 1,1990. 
(c) TEMPORARY SCHEDULE.— 
(1) AVAILABILITY OF LOCAL CHECKS.— 
(A) IN GENERAL.—Subject to subparagraph (B) of this 
paragraph, subsections (a)(2), (d), and (e) of this section, and 
section 604, not more than 2 business days shall intervene 
between the business day on which funds are deposited in 
an account at a depository institution by a check drawn on 
a local originating depository institution and the business 
day on which such funds are available for withdrawal. 
(B) TIME PERIOD ADJUSTMENT FOR CASH WITHDRAWAL OF 
CERTAIN CHECKS.— 
(i) IN GENERAL.—Except as provided in clause (ii), 
funds deposited in an account in a depository institu-
tion by check drawn on a local depository institution 
that is not a participant in the same check clearing-
house association as the receiving depository institu-
tion (other than a check described in subsection (a)(2)) 
shall be available for cash withdrawal not later than 
101 STAT. 640 
PUBLIC LAW 100-86—AUG. 10, 1987 
Regulations. 
Alaska. 
Hawaii. 
Puerto Rico. 
Virgin Islands. 
the business day after the business day on which such 
funds otherwise are available under subparagraph (A), 
(ii) 5 P.M. CASH AVAILABILITY.—Not more than $400 
(or the maximum amount allowable in the case of a 
withdrawal from an automated teller machine but not 
more than $400) of funds deposited by one or more 
-' - 
checks to which this subparagraph applies shall be 
available for cash withdrawal not later than 5 o'clock 
post meridian of the business day on which such funds 
are available under subparagraph (A). 
(iii) $100 AVAILABILITY.—Any amount available for 
withdrawal under this subparagraph shall be in addi-
f: 
tion to the amount available under subsection (aX2XD). 
(2) AVAILABILITY OF NONLOCAL CHECKS.—Subject to subsections 
(a)(2), (d), and (e) of this section and section 604, not more than 6 
business days shall intervene between the business day on 
which funds are deposited in an account at a depository institu-
tion by a check drawn on a nonlocal originating depository 
institution and the business day on which such funds are avail-
able for withdrawal. 
(3) APPUCABILTTY.—This subsection shall apply with respect to 
funds deposited by check in an account at a depository institu-
tion after August 31,1988, and before September 1,1990, except 
as may be otherwise provided under subsection Ot))(4). 
(d) TIME PERIOD ADJUSTMENTS.— 
(1) REDUCTION GENERALLY.—Notwithstanding any other provi-
sion of law, the Board shall, by regulation, reduce the time 
periods established under subsections Ot)), (c), and (e) to as short 
a time as possible and equal to the period of time achievable 
under the improved check clearing system for a receiving 
depository institution to reasonably expect to learn of the 
nonpa3mient of most items for each category of checks. 
(2) 
EXTENSION FOR CERTAIN DEPOSITS IN NONCONTIGUOUS 
STATES O
R TERRITORIES.—Notwithstanding any other provision of 
law, any time period established under subsection (b), (c), or (e) 
shall be extended by 1 business day in the case of any deposit 
which is both— 
(A) deposited in an account at a depository institution 
which is located in Alaska, Hawaii, Puerto Rico, or the 
Virgin Islands; and 
(B) deposited by a check drawn on an originating deposi-
tory institution which is not located in the same State, 
commonwealth, or territory as the receiving depository 
institution. 
(e) DEPOSITS AT AN ATM.— 
(1) NONPROPRIETARY ATM—TEMPORARY SCHEDULE.— 
(A) IN GENERAL.—Not more than 6 business days shall 
intervene between the business day a deposit described in 
subparagraph (B) is made at a nonproprietary automated 
teller machine (for deposit in an account at a depository 
institution) and the business day on which funds from such 
deposit are available for withdrawal. 
(B) DEPOSITS DESCRIBED IN THIS PARAGRAPH.—A deposit is 
described in this subparagraph if it is— 
(i) a cash deposit; 
(ii) a deposit made by a check described in subsection 
(a)(2); 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 641 
(iii) a deposit made by a check drawn on a local 
originating depository institution (other than a check 
described in subsection (a)(2)); or 
I 
(iv) a deposit made by a check drawn on a nonlocal 
originating depository institution (other than a check 
described in subsection (a)(2)). 
(C) APPUCABILITY.—This paragraph shall apply with re-
,,. • 
spect to funds deposited at a nonproprietary automated 
teller machine after August 31, 1988, and before Septem-
ber 1, 1990. 
^^ 
T (2) NONPROPRIETARY ATM—PERMANENT SCHEDULE.— 
(A) CASH, GOVERNMENT CHECKS, AND LOCAL CHECKS.—Not 
more than 1 business day shall intervene between the 
business day on which a deposit described in paragraph 
(1)(B) (i), (ii), or (iii) is made at a nonproprietary automated 
j^' 
teller machine (for deposit in an account at a depository 
institution) and the business day on which funds from such 
deposit are available for withdrawal. 
(B) NONLOCAL CHECKS.—Not more than 4 business days 
shall intervene between the business day a deposit de-
scribed in paragraph (l)(B)(iv) is made at a nonproprietary 
automated teller machine (for deposit in an account at a 
p^,. 
depository institution) and the business day on which funds 
^ 
from such deposit are available for withdrawal. 
(C) DETERMINATION OF "LOCAL ORIGINATING DEPOSITORY 
INSTITUTION".—For the purpose of this paragraph, a check 
is drawn on a local originating depository institution if that 
depository institution is located in the same check process-
1 
ing region as the receiving nonproprietary ATM. 
(D) APPLICABILITY.—This paragraph shall apply with re-
spect to funds deposited at a nonproprietary automated 
teller machine on or after September 1,1990. 
(3) PROPRIETARY ATM—TEMPORARY AND PERMANENT SCHED-
ULES.—The provisions of subsections (a), (b), and (c) shall apply 
with respect to any funds deposited at a proprietary auto-
mated teller machine for deposit in an account at a depository 
institution. 
(4) STUDY AND REPORT ON ATM'S.—The Board shall, either 
directly or through the Consumer Advisory Council, establish 
and maintain a dialogue with depository institutions and their 
suppliers on the computer software and hardware available for 
use by automated teller machines, and shall, not later than 
September 1 of each of the first 3 calendar years beginning after 
the date of the enactment of this title, report to the Congress 
regarding such software and hardware and regarding the poten-
tial for improving the processing of automated teller machine 
deposits. 
(f) CHECK RETURN; NOTICE OF NONPAYMENT.—No provision of this 
section shall be construed as requiring that, with respect to all 
checks deposited in a receiving depository institution— 
(1) such checks be physically returned to such depository 
institution; or 
(2) any notice of nonpayment of any such check be given to 
J 
such depository institution within the times set forth in subsec-
tion (a), (b), (c), or (e) or in the regulations issued under any such 
subsection. 
101 STAT. 642 
PUBLIC LAW 100-86—AUG. 10, 1987 
12 use 4003. 
SEC. 604. SAFEGUARD EXCEPTIONS. 
(a) NEW ACCOUNTS.—Notwithstanding section 603, in the case of 
any account established at a depository institution by a new deposi-
tor, the following provisions shall apply with respect to any deposit 
in such account during the 30-day period (or such shorter period as 
the Board may establish) beginning on the date such account is 
established— 
(1) NEXT BUSINESS DAY AVAILABIUTY OF CASH AND CERTAIN 
ITEMS.—Except as provided in paragraph (3), in the case of— 
(A) any cash deposited in such account; 
(B) any funds received by such depository institution by 
' 
wire transfer for deposit in such account; 
' 
(C) any funds deposited in such account by cashier's 
check, certified check, teller's check, depository check, or 
traveler's check; and 
(D) any funds deposited by a government check which is 
described in subparagraph (A), (B), or (C) of section 603(a)(2), 
such cash or funds shall be available for withdrawal on the 
business day after the business day on which such cash or funds 
are deposited or, in the case of a wire transfer, on the business 
day after the business day on which such funds are received for 
deposit. 
(2) AVAILABILITY OF OTHER ITEMS.—In the case of any funds 
deposited in such account by a check (other than a check 
described in subparagraph (C) or (D) of paragraph (1)), the 
availability for withdrawal of such funds shall not be subject to 
the provisions of section 6030>), 603(c), or paragraphs (1) and (2) 
of section 603(e). 
(3) LIMITATION RELATING TO CERTAIN CHECKS IN EXCESS OF 
' $5,000.—In the case of funds deposited in such account during 
such period by checks described in subparagraph (C) or (D) of 
paragraph (1) the aggregate amount of which exceeds $5,000— 
(A) paragraph (1) shall apply only with respect to the first 
$5,000 of such aggregate amount; and 
(B) not more than 8 business days shall intervene be-
- tween the business day on which any such funds are depos-
ited and the business day on which such excess amount 
shall be available for withdrawal. 
O
t
)
) LARGE OR REDEPOSITED CHECKS; REPEATED OVERDRAFTS.—The 
Board may, by regulation, establish reasonable exceptions to any 
time limitation established under subsection (b), (c), or (e) of section 
603 for— 
(1) the amount of deposits by one or more checks that exceeds 
the amount of $5,000 in any one day; 
(2) checks that have been returned unpaid and redeposited; 
and 
(3) deposit accounts which have been overdrawn repeatedly. 
(c) REASONABLE CAUSE EXCEPTION.— 
(1) IN GENERAL.—In accordance with regulations which the 
Board shall prescribe, subsections (a)(2)(F), (b), (c), and (e) of 
section 603 shall not apply with respect to any check deposited 
in an account at a depository institution if the receiving deposi-
tory institution has reasonable cause to believe that the check is 
uncollectible from the originating depository institution. For 
purposes of the preceding sentence, reasonable cause to believe 
requires the existence of facts which would cause a well-
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 643 
grounded belief in the mind of a reasonable person. Such 
reasons shall be included in the notice required under sub-
section (f). 
(2) BASIS FOR DETERMINATION.—No determination under this 
subsection may be based on any class of checks or persons. 
r 
(3) OVERDRAFT FEES.—If the receiving depository institution 
determines that a check deposited in an account is a check 
« 
described in paragraph (1), the receiving depository institution 
shall not assess any fee for any subsequent overdraft with 
3 
respect to such account, if— 
(A) the depositor was not provided with the written notice 
fc 
required under subsection (f) (with respect to such deter-
i 
mination) at the time the deposit was made; 
(B) the overdraft would not have occurred but for the fact 
* 
* that the funds so deposited are not available; and 
(C) the amount of the check is collected from the originat-
^- 
ing depository institution. 
(4) COMPLIANCE.—Each agency referred to in section 610(a) 
shall monitor compliance with the requirements of this subsec-
tion in each regular examination of a depository institution and 
shall describe in each report to the Congress the extent to which 
this subsection is being complied with. For the purpose of this 
paragraph, each depository institution shall retain a record of 
each notice provided under subsection (f) as a result of the 
application of this subsection. 
(d) EMERGENCY CONDITIONS.—Subject to such regulations as the 
Board may prescribe, subsections (b), (c), and (e) of section 603 shall 
not apply to funds deposited by check in any receiving depository 
institution in the case of^ 
(1) any interruption of communication facilities; 
(2) suspension of payments by another depository institution; 
(3) any war; or 
(4) any emergency condition beyond the control of the receiv-
ing depository institution, 
if the receiving depository institution exercises such diligence as the 
circumstances require. 
(e) PREVENTION OF FRAUD LOSSES.— 
(1) IN GENERAL.—The Board may, by regulation or order, 
suspend the applicability of this title, or any portion thereof, to 
any classification of checks if the Board determines that— 
(A) depository institutions are experiencing an unaccept-
able level of losses due to check-related fraud, and 
(B) suspension of this title, or such portion of this title, 
with regard to the classification of checks involved in such 
fraud is necessary to diminish the volume of such fraud. 
(2) SUNSET PROVISION.—No regulation prescribed or order 
issued under paragraph (1) shall remain in effect for more than 
45 days (excluding Saturdays, Sundays, legal holidays, or any 
day either House of Congress is not in session). 
^ ^ ' ~ 
(3) REPORT TO CONGRESS.— 
(A) NOTICE OF EACH SUSPENSION.—Within 10 days of 
prescribing any regulation or issuing any order under para-
graph (1), the Board shall transmit a report of such action 
to the Committee on Banking, Finance and Urban Affairs 
of the House of Representatives and the Committee on 
Banking, Housing, and Urban Affairs of the Senate. 
91-194 O - 90 - 22 : QL.3 Part 1 
101 STAT. 644 
PUBLIC LAW 100-86—AUG. 10, 1987 
(B) CONTENTS OF REPORT.—Each report under subpara-
graph (A) shall contain— 
(i) the specific reason for prescribing the regulation 
" • '• 
or issuing the order; 
(, 
(ii) evidence considered by the Board in making the 
determination under paragraph (1) with respect to such 
regrulation or order; and 
(iii) specific examples of the check-related fraud 
giving rise to such regulation or order. 
(f) NOTICE OF EXCEPTION; AVAILABIUTY WITHIN REASONABLE 
TIME.— 
(1) IN GENERAL.—If any exception contained in this section 
(other than subsection (a)) applies with respect to funds depos-
j^.,. ited in an account at a depository institution— 
(A) the depository institution shall provide notice in the 
t.^^a-^ 
manner provided in paragraph (2) of— 
(i) the day the funds shall be made available for 
. /» 
withdrawal; and 
(ii) the reason the exception was invoked; and 
(B) except where other time periods are specifically pro-
vided in this title, the availability of the funds deposited 
shall be governed by the policy of the receiving depository 
institution, but shall not exceed a reasonable period of time 
^
^
^
4 
as determined by the Board. 
(2) TIME FOR NOTICE.—The notice required under paragraph 
,fj (1)(A) with respect to a deposit to which an exception contained 
in this section applies shall be made by the time provided in the 
following subparagraphs: 
(A) In the case of a deposit made in person by the 
depositor at the receiving depository institution, the deposi-
j, , tory institution shall immediately provide such notice in 
writing to the depositor. 
(B) In the case of any other deposit (other than a deposit 
described in subparagraph (O), the receiving depository 
institution shall mail the notice to the depositor not later 
than the close of the next business day following the busi-
ness day on which the deposit is received. 
(C) In the case of a deposit to which subsection (d) or (e) 
I *
^
'
- 
applies, notice shall be provided by the depository institu-
^' 
tion in accordance with regulations of the Board. 
(3) SUBSEQUENT DETERMINATIONS.—If the facts upon which the 
determination of the applicability of an exception contained in 
subsection (b) or (c) to any deposit only become known to the 
•
^
- receiving depository institution after the time notice is required 
under paragraph (2) with respect to such deposit, the depository 
institution shall mail such notice to the depositor as soon as 
practicable, but not later than the first business day following 
the day such facts become known to the depository institution. 
12 use 4004. 
SEC. 605. DISCLOSURE OF FUNDS AVAILABILITY POLICIES. 
(a) NOTICE FOR NEW ACCOUNTS.—Before an account is opened at a 
depository institution, the depository institution shall provide writ-
ten notice to the potential customer of the specific policy of such 
depository institution with respect to when a customer may with-
draw funds deposited into the customer's account. 
(b) PREPRINTED DEPOSIT SLIPS.—All preprinted deposit slips that a 
depository institution furnishes to its customers shall contain a 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 645 
summary notice, as prescribed by the Board in regulations, that 
deposited items may not be available for immediate withdrawal. 
(c) MAILING OF NOTICE.— 
(1) FIRST MAILING AFTER ENACTMENT.—In the first regularly 
scheduled mailing to customers occurring after the effective 
date of this section, but not more than 60 days after such 
effective date, each depository institution shall send a written 
notice containing the specific policy of such depository institu-
tion with respect to when a customer may withdraw funds 
deposited into such customer's account, unless the depository 
institution has provided a disclosure which meets the require-
ments of this section before such effective date. 
(2) SUBSEQUENT CHANGES.—A depository institution shall send 
a written notice to customers at least 30 days before implement-
ing any change to the depository institution's policy with re- 
' i S; 
spect to when customers may withdraw funds deposited into 
consumer accounts, except that any change which expedites the 
availability of such funds shall be disclosed not later than 30 
days after implementation. 
(3) UPON REQUEST.—Upon the request of any person, a deposi-
tory institution shall provide or send such person a written 
notice containing the specific policy of such depository institu-
tion with respect to when a customer may withdraw funds 
deposited into a customer's account. 
(d) POSTING OF NOTICE.— 
(1) 
SPECIFIC NOTICE AT MANNED TELLER STATIONS.—Each 
depository institution shall post, in a conspicuous place in each 
location where deposits are accepted by individuals employed by 
such depository institution, a specific notice which describes the 
time periods applicable to the availability of funds deposited in 
a consumer account. 
(2) GENERAL NOTICE AT AUTOMATED TELLER MACHINES.—In the 
case of any automated teller machine at which any funds are 
received for deposit in an account at any depository institution, 
; > r s 
the Board shall prescribe, by regulations, that the owner or 
operator of such automated teller machine shall post or provide 
a general notice that funds deposited in such machine may not 
be immediately available for withdrawal. 
(e) NOTICE OF INTEREST PAYMENT POUCY.—If a depository institu-
tion described in section 60603) begins the accrual of interest or 
dividends at a later date than the date described in section 606(a) 
with respect to all funds, including cash, deposited in an interest-
bearing account at such depository institution, any notice required 
to be provided under subsections (a) and (c) shall contain a written 
description of the time at which such depository institution begins to 
accrue interest or dividends on such funds. 
(f) MODEL DISCLOSURE FORMS.— 
(1) PREPARED BY BOARD.—The Board shall publish model 
disclosure forms and clauses for common transactions to facili-
tate compliance with the disclosure requirements of this section 
and to aid customers by utilizing readily understandable 
language. 
(2) USE OF FORMS TO ACHIEVE COMPLIANCE.—A depository 
institution shall be deemed to be in compliance with the 
requirements of this section if such institution— 
(A) uses any appropriate model form or clause as pub-
lished by the Board, or 
101 STAT. 646 
PUBLIC LAW 100-86—AUG. 10, 1987 
Federal 
Register, 
publication. 
12 use 4005. 
12 use 461. 
12 use 4006. 
(B) uses any such model form or clause and changes such 
form or clause by— 
(i) deleting any information which is not required by 
•' 
this title; or 
*' 
(ii) rearranging the format. 
(3) VOLUNTARY USE.—Nothing in this title requires the use of 
^ 
any such model form or clause prescribed by the Board under 
this subsection. 
(4) NOTICE AND COMMENT.—Model disclosure forms and 
clauses shall be adopted by the Board only after notice duly 
given in the Federal Register and an opportunity for public 
comment in accordance with section 553 of title 5, United States 
Code. 
SEC. 606. PAYMENT OF INTEREST. 
(a) IN GENERAL.—Except as provided in subsection (b) or (c) and 
notwithstanding any other provision of law, interest shall accrue on 
funds deposited in an interest-bearing account at a depository 
institution beginning not later than the business day on which the 
depository institution receives provisional credit for such funds. 
(b) SPECIAL RULE FOR CREDIT UNIONS.—Subsection (a) shall not 
apply to an account at a depository institution described in section 
19(b)(l)(A)(iv) of the Federal Reserve Act if the depository 
institution— 
(1) begins the accrual of interest or dividends at a later date 
than the date described in subsection (a) with respect to all 
funds, including cash, deposited in such account; and 
(2) provides notice of the interest payment policy in the 
manner required under section 605(e). 
(c) EXCEPTION FOR CHECKS RETURNED UNPAID.—No provision of 
this title shall be construed as requiring the payment of interest or 
dividends on funds deposited by a check which is returned unpaid. 
SEC. 607. MISCELLANEOUS PROVISIONS. 
(a) AFTER-HOURS DEPOSITS.—For purposes of this title, any deposit 
which is made on a Saturday, Sunday, legal holiday, or after the 
close of business on any business day shall be deemed to have been 
made on the next business day. 
(b) AVAILABILITY AT START OF BUSINESS DAY.—Except as provided 
in subsections 03)(3) and (c)(1)(B) of section 603, if any provision of 
this title requires that funds be available for withdrawal on any 
business day, such funds shall be available for withdrawal at the 
start of such business day. 
(c) EFFECT ON POLICIES OF DEPOSITORY INSTITUTIONS.—No provision 
of this title shall be construed as— 
(1) prohibiting a depository institution from making funds 
g 
available for withdrawal in a shorter period of time than the 
period of time required by this title; or 
(2) affecting a depository institution's right— 
(A) to accept or reject a check for deposit; 
(B) to revoke any provisional settlement made by the 
depository institution with respect to a check accepted by 
,. 
such institution for deposit; 
(C) to charge back the depositor's account for the amount 
of such check; or 
(D) to claim a refund of such provisional credit. 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 647 
(d) PROHIBITION ON FREEZING CERTAIN FUNDS IN AN ACCOUNT.—In 
any case in which a check is deposited in an account at a depository 
institution and the funds represented by such check are not yet 
available for withdrawal pursuant to this title, the depository 
institution may not freeze any other funds in such account (which 
are otherwise available for withdrawal pursuant to this title) solely 
because the funds so deposited are not yet available for withdrawal. 
(e) EMPLOYEE TRAINING ON AND COMPUANCE WITH THE REQUIRE-
MENTS OF THIS TITLE.—Each depository institution shall— 
(1) take such actions as may be necessary fully to inform each 
employee (who performs duties subject to the requirements of 
this title) of the requirements of this title; and 
(2) establish and maintain procedures reasonably designed 
to assure and monitor employee compliance with such 
requirements. 
SEC. 608. EFFECT ON STATE LAW. 
12 USC 4007. 
(a) IN GENERAL.—Any law or regulation of any State in effect on 
September 1, 1989, which requires that funds deposited or received 
for deposit in an account at a depository institution chartered by 
such State be made available for withdrawal in a shorter period of 
time than the period of time provided in this title or in regulations 
prescribed by the Board under this title (as in effect on September 1, 
1989) shall— 
(1) supersede the provisions of this title and any regulations 
by the Board to the extent such provisions relate to the time by 
which funds deposited or received for deposit in an account 
shall be available for withdrawal; and 
(2) apply to all federally insured depository institutions 
located within such State. 
(b) OVERRIDE OF CERTAIN STATE LAWS.—Except as provided in 
subsection (a), this title and regulations prescribed under this title 
shall supersede any provision of the law of any State, including the 
Uniform Commercial Code as in effect in such State, which is 
inconsistent with this title or such regulations. 
SEC. 609. REGULATIONS AND REPORTS BY BOARD. 
12 USC 4008. 
(a) IN GENERAL.—After notice and opportunity to submit comment 
in accordance with section 553(c) of title 5, United States Code, the 
Board shall prescribe regulations— 
(1) to carry out the provisions of this title; 
(2) to prevent the circumvention or evasion of such provisions; 
and 
(3) to facilitate compliance with such provisions. 
(b) REGULATIONS RELATING TO IMPROVEMENT OF CHECK PROCESSING 
SYSTEM.—In order to improve the check processing system, the 
Board shall consider (among other proposals) requiring, by regula-
tion, that— 
(1) depository institutions be charged based upon notification 
that a check or similar instrument will be presented for pay-
ment; 
(2) the Federal Reserve banks and depository institutions 
provide for check truncation; 
(3) depository institutions be provided incentives to return 
items promptly to the depository institution of first deposit; 
101 STAT. 648 
PUBLIC LAW 100-86—AUG. 10, 1987 
(4) the Federal Reserve banks and depository institutions take 
V such actions as are necessary to automate the process of return-
- 
ing unpaid checks; 
\ 
(5) each depository institution and Federal Reserve bank— 
(A) place its endorsement, and other notations specified 
V 
in regulations of the Board, on checks in the positions 
f 
specified in such reflations; and 
(B) take such actions as are necessary to— 
(i) automate the process of reading endorsements; 
fiv'' 
and 
' 
(ii) eliminate unnecessary endorsements; 
(6) within one business day after an originating depository 
|v institution is presented a check (for more than such minimum 
il 
amount as the Board may prescribe)— 
(A) such originating depository institution determines 
whether it will pay such check; and 
• ' 
(B) if such originating depository institution determines 
uL 
that it will not pay such check, such originating depository 
i', 
institution directly notify the receiving depository institu-
n 
tion of such determination; 
;/ 
(7) regardless of where a check is cleared initially, all re-
< turned checks be eligible to be returned through the Federal 
Reserve System; 
(8) Federal Reserve banks and depository institutions partici-
pate in the development and implementation of an electronic 
^
^
; clearinghouse process to the extent the Board determines, 
^ • pursuant to the study under subsection (f), that such a process is 
feasible; and 
i 
(9) originating depository institutions be permitted to return 
unpaid checks directly to, and obtain reimbursement for such 
checks directly from, the receiving depository institution. 
(c) REGULATORY RESPONSIBIUTY OF BOARD FOR PAYMENT SYSTEM.— 
»
^ 
(1) RESPONSIBILITY FOR PAYMENT SYSTEM.—In order to carry 
^ r out the provisions of this title, the Board of Grovernors of the 
Federal Reserve System shall have the responsibility to 
regulate— 
, 
< 
(A) any aspect of the payment system, including the 
receipt, payment, collection, or clearing of checks; and 
-,j 
(B) any relateid function of the payment system with 
respect to checks. 
(2) REGULATIONS.—The Board shall prescribe such regulations 
as it may determine to be appropriate to carry out its respon-
sibility under paragraph (1). 
(d) REPORTS.— 
(1) IMPLEMENTATION PROGRESS REPORTS.— 
(A) REQUIRED REPORTS.—The Board shall transmit a 
report to both Houses of the Congress not later than 18, 30, 
and 48 months after the date of the enactment of this title. 
(B) CONTENTS OF REPORT.—Each such report 
shall 
describe— 
(i) the actions taken and progress made by the Board 
. 
to implement the schedules established in section 603, 
• 
'* 
and 
(ii) the impact of this title on consumers and deposi-
tory institutions. 
(2) EVALUATION OF TEMPORARY SCHEDULE REPORT.— 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 649 
^ 
(A) REPORT REQUIRED.—The Board shall transmit a report 
to both Houses of the Congress not later than 2 years after 
the date of the enactment of this title regarding the effects 
the temporary schedule established under section 603(c) 
have had on depository institutions and the public. 
^ ^ 
, 
(B) CONTENTS OF REPORT,—Such report shall also assess 
'^^ 
the potential impact the implementation of the schedule 
established in section 603(b) will have on depository institu-
^
„ ,,, 
tions and the public, including an estimate of the risks to 
* * 
and losses of depository institutions and the benefits to 
consumers. Such report shall also contain such rec-
ommendations for legislative or administrative action as 
the Board may determine to be necessary. 
• 
(3) COMPTROLLER GENERAL EVALUATION REPORT.—Not later 
than 6 months after section 603(b) takes effect, the Comptroller 
General of the United States shall transmit a report to the 
Congress evaluating the implementation and administration of 
this title. 
(e) CONSULTATION.—In prescribing regulations under subsections 
(a) and (b), the Board shall consult with the Comptroller of the 
Currency, the Board of Directors of the Federal Deposit Insurance 
Corporation, the Federal Home Loan Bank Board, and the National 
Credit Union Administration Board. 
(f) ELECTRONIC CLEARINGHOUSE STUDY.— 
(1) STUDY REQUIRED.—The Board shall study the feasibility of 
modernizing and accelerating the check payment system 
through the development of an electronic clearinghouse process 
utilizing existing telecommunications technology to avoid the 
necessity of actual presentment of the paper instrument to a 
payor institution before such institution is charged for the item. 
: 
(2) CONSULTATION; FACTORS TO BE STUDIED.—In connection 
with the study required under paragraph (1), the Board shall— 
(A) consult with appropriate experts in telecommuni-
cations technology; and 
(B) consider all practical and legal impediments to the 
o 
development of an electronic clearinghouse process. 
(3) REPORT REQUIRED.—The Board shall report its conclusions 
to the Congress within 9 months of the date of the enactment of 
this title. 
SEC. 610. ADMINISTRATIVE ENFORCEMENT. 
12 USC 4009. 
(a) ADMINISTRATIVE ENFORCEMENT.—Compliance with the require-
ments imposed under this title, including regulations prescribed by 
and orders issued by the Board of Governors of the Federal Reserve 
System under this title, shall be enforced under— 
(1) section 8 of the Federal Deposit Insursince Act in the case 
12 use I8I8 
of— 
(A) national banks, by the Comptroller of the Currency; 
(B) member banks of the Federal Reserve System (other 
; : ; 
than national banks), by the Board of Governors of the 
Federal Reserve System; and 
(C) banks insured by the Federal Deposit Insurance Cor-
poration (other than members of the Federal Reserve 
System), by the Board of Directors of the Federal Deposit 
Insurance Corporation; 
(2) section 5(d) of the Home Owners' Loan Act of 1933, section 
12 use 1464. 
407 of the National Housing Act, and section 17 of the Federal 
12 use nm. 
101 STAT. 650 
PUBLIC LAW 100-86—AUG. 10, 1987 
12 use 1437. 
Home Loan Bank Act, by the Federal Home Loan Bank Board 
(acting directly or through the Federal Savings and Loan Insur-
j ance Corporation), in the case of any institution subject to any 
of those provisions; and 
12 use 1751. 
(3) the Federal Credit Union Act, by the National Credit 
Union Administration Board with respect to any Federal credit 
union or insured credit union. 
(b) ADDITIONAL POWERS.— 
(1) VIOLATION OF THIS TITLE TREATED AS VIOLATION OF OTHER 
^ „ ACTS.—For purposes of the exercise by any agency referred to in 
subsection (a) of this section of its powers under any Act re-
ferred to in that subsection, a violation of any requirement 
imposed under this title shall be deemed to be a violation of a 
requirement imposed under that Act. 
(2) ENFORCEMENT AUTHORITY UNDER OTHER ACTS.—In addition 
to its powers under any provision of law specifically referred to 
in subsection (a) of this section, each of the agencies referred to 
in such subsection may exercise, for purposes of enforcing 
compliance with any requirement imposed under this title, any 
other authority conferred on it by law. 
j 
(c) ENFORCEMENT BY THE BOARD.— 
(1) IN GENERAL,—Except to the extent that enforcement of the 
requirements imposed under this title is specifically committed 
to some other Government agency under subsection (a) of this 
section, the Board of Governors of the Federal Reserve System 
shall enforce such requirements. 
(2) ADDITIONAL REMEDY.—If the Board determines that— 
a 
(A) any depository institution which is not a depository 
! 
institution described in subsection (a), or 
(B) any other person subject to the authority of the Board 
under this title, including any person subject to the author-
ity of the Board under section 605(d)(2) or 609(c), 
has failed to comply with any requirement imposed by this title 
or by the Board under this title, the Board may issue an order 
prohibiting any depository institution, any Federal Reserve 
bank, or any other person subject to the authority of the Board 
from engaging in any activity or transaction which directly or 
indirectly involves such noncomplying depository institution or 
person (including any activity or transaction involving the re-
ceipt, payment, collection, and clearing of checks and any re-
lated function of the payment system with respect to checks). 
(d) PROCEDURAL RULES.—The authority of the Board to prescribe 
regulations under this title does not impair the authority of any 
other agency designated in this section to make rules regarding its 
own procedures in enforcing compliance with requirements imposed 
under this title. 
12 use 4010. 
SEC. 611. CIVIL LIABILITY. 
(a) CIVIL LIABILITY.—Except as otherwise provided in this section, 
any depository institution which fails to comply with any require-
ment imposed under this title or any regulation prescribed under 
this title with respect to any person other than another depository 
institution is liable to such person in an amount equal to the sum 
of— 
(1) any actual damage sustained by such person as a result of 
" 
the failure; 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 651 
(2)(A) in the case of an individual action, such additional 
amount as the court may allow, except that the liability under 
this subparagraph shall not be less than $100 nor greater than 
$1,000; or 
(B) in the case of a class action, such amount as the court may 
allow, except that— 
(i) as to each member of the class, no minimum recovery 
shall be applicable; and 
(ii) the total recovery under this subparagraph in any 
class action or series of class actions arising out of the same 
failure to comply by the same depository institution shall 
not be more than the lesser of $500,000 or 1 percent of the 
net worth of the depository institution involved; and 
(3) in the case of any successful action to enforce the foregoing 
liability, the costs of the action, together with a reasonable 
attorney's fee as determined by the court. 
Qo) CLASS ACTION AWARDS.—In determining the amount of any 
award in any class action, the court shall consider, among other 
relevant factors— 
-
(1) the amount of any actual damages awarded; 
(2) the frequency and persistence of failures of compliance; 
(3) the resources of the depository institution; 
(4) the number of persons adversely affected; and 
.r 
(5) the extent to which the failure of compliance was 
intentional. 
(c) BONA FIDE ERRORS.— 
(1) GENERAL RULE.—A depository institution may not be held 
s 
liable in any action brought under this section for a violation of 
/, ,,; 
this title if the depository institution demonstrates by a prepon-
derance of the evidence that the violation was not intentional 
and resulted from a bona fide error, notwithstanding the 
maintenance of procedures reasonably adapted to avoid any 
such error. 
(2) EXAMPLES.—Examples of a bona fide error include clerical, 
calculation, computer malfunction and programming, and 
printing errors, except that an error of legal judgment with 
respect to a depository institution's obligation under this title is 
not a bona fide error. 
(d) JURISDICTION.—Any action under this section may be brought 
in any United States district court, or in any other court of com-
petent jurisdiction, within one year after the date of the occurrence 
of the violation involved. 
(e) RELIANCE ON BOARD RULINGS.—No provision of this section 
imposing any liability shall apply to any act done or omitted in good 
faith in conformity with any rule, regulation, or interpretation 
thereof by the Board of Governors of the Federal Reserve System, 
notwithstanding the fact that after such act or omission has oc-
curred, such rule, regulation, or interpretation is amended, re-
scinded, or determined by judicial or other authority to be invalid 
for any reason. 
(f) AUTHORITY TO ESTABLISH RULES REGARDING LOSSES AND LIABIL-
ITY AMONG DEPOSITORY INSTITUTIONS.—The Board is authorized to 
impose on or allocate among depository institutions the risks of loss 
and liability in connection with any aspect of the payment system, 
including the receipt, payment, collection, or clearing of checks, and 
any related function of the payment system with respect to checks. 
Liability under this subsection shall not exceed the amount of the 
101 STAT. 652 
PUBLIC LAW 100-86—AUG. 10, 1987 
check giving rise to the loss or liability, and, where there is bad 
faith, other damages, if any, suffered as a proximate consequence of 
any act or omission giving rise to the loss or liability. 
SEC. 612. PARITY IN CLEARING. 
' 
(a) IN GENERAL.—Section 11A of the Federal Reserve Act (12 
U.S.C. 248a) is amended by adding at the end thereof the following: 
"(e) All depository institutions, as defined in section 19(b)(1) (12 
U.S.C. 461(b)(1)), may receive for deposit and as deposits any evi-
dences of transaction accounts, as defined by section 19(b)(1) (12 
U.S.C. 461(b)(1)) from other depository institutions, as defined in 
section 19(b)(1) (12 U.S.C. 461(b)(1)) or from any office of any Federal 
Reserve bank without regard to any Federal or State law restricting 
the number or the physical location or locations of such depository 
institutions.". 
12 use 248a 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
"ote. 
shall take effect on the date of enactment of this title. 
12 use 4001 
SEC. 613. EFFECTIVE DATES. 
(a) DATE OF ENACTMENT.—Except as provided in subsection (b), 
this title shall take effect on the date of the enactment of this title. 
(b) 1 YEAR AFTER DATE OF ENACTMENT.—Sections 603, 604, 605, 
606, 610, and 611 shall take effect on September 1,1988. 
C
r
e
d
i
t U
n
i
o
n 
TITLE VII—CREDIT UNION AMENDMENTS 
Amendments 
of 1987. 
-^ 
• 
'
^ ' 
" 
12 use 1751 
SEC. 701. SHORT TITLE. 
This title may be cited as the "Credit Union Amendments of 
1987". 
SEC. 702. SECOND MORTGAGE AND HOME IMPROVEMENT LOANS. 
Section 107(5)(A)(ii) of the Federal Credit Union Act (12 U.S.C. 
1757(5)(A)(ii)) is amended by striking out "fifteen years" and all that 
follows and inserting in lieu thereof "15 years or any longer term 
which the Board may allow;". 
SEC. 703. OWNERSHIP INTEREST. 
" 
. 
Section 107(6) of the Federal Credit Union Act (12 U.S.C. 1757(6)) 
is amended by inserting ", representing equity," after "payments". 
SEC. 704. FAITHFUL PERFORMANCE. 
(a) FINANCIAL OFFICER.—Section 112 of the Federal Credit Union 
Act (12 U.S.C. 1761a) is amended by striking out the third sentence 
and inserting in lieu thereof the following: "The board shall elect 
from their number a financial officer who shall give adequate 
fidelity coverage in accordance with section 113(2) of this Act.". 
Ot)) ADEQUATE FIDEUTY COVERAGE.—Section 113 of the Federal 
Credit Union Act (12 U.S.C. 1761b) is amended by striking out 
paragraph (2) and inserting in lieu thereof the following: 
"(2) provide adequate fidelity coverage for officers and 
employees having custody of or handling funds according to 
regulations issued by the Board;". 
SEC. 705. MEMBERSHIP OFFICERS. 
Section 113(1) of the Federal Credit Union Act (12 U.S.C. 1761b(l)) 
is amended by striking out "of the board of directors" and inserting 
in lieu thereof "of the credit union". 
,. 
note. 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 653 
SEC. 706. NONPARTICIPATION. 
» 
' 
Section 118 of the Federal Credit Union Act (12 U.S.C. 1764) is 
amended— 
(1) by striking out "Subject to" in subsection (a) and inserting 
in lieu thereof "Except as provided in"; and 
(2) by inserting "and enforce" after "adopt" in subsection (b). 
^ 
SEC. 707. PROPERTY ACQUISITION FLEXIBILITY. 
Section 120(i)(2) of the Federal Credit Union Act (12 U.S.C. 
1766(i)(2)) is amended— 
(1) by inserting after "reimbursement," the following: "ac-
quire and dispose of, by lease or purchase, real or personal 
property, without regard to the provisions of any other law 
applicable to executive or independent agencies of the United 
States,"; and 
(2) by inserting after "this Act" the following: ", in accordance 
^ 
with the rules and regulations or policies established by the 
Board not inconsistent with this Act' . 
SEC. 708. TREATMENT OF NCUAB FUNDS. 
Title I of the Federal Credit Union Act is amended by adding at 
the end thereof the following: 
"SEC. 129. TRUST FUND. 
12 USC 1772c. 
"Notwithstanding any other provision of law, all moneys of the 
Board shall be treated as trust funds for the purpose of section 
256ia)(2) of the Balanced Budget and Emergency Deficit Control Act 
of 1^85. This section is effective for fiscal year 1986 and every fiscal Ante, p. 634. 
yeai: thereafter.". 
SEC.i709. TECHNICAL AND CLARIFYING AMENDMENTS; REMOVAL AND 
\ 
PROHIBITION AUTHORITY. 
Section 206(g) of the Federal Credit Union Act (12 U.S.C. 1786(g)) 
is amended— 
• (1) in paragraph (1), by striking out "director, officer, or 
committee member" each time it appears and inserting in lieu 
thereof "director, officer, committee member, or employee"; 
(2) in paragraph (2), by striking out "director, officer, or 
committee member" each place it appears and inserting in lieu 
thereof "director, officer, committee member, or emplovee"; 
(3) in paragraph (2), by striking out "any other person' and 
inserting in lieu thereof "any agent or other person"; and 
(4) in paragraph (2), by inserting "employee, agent," before 
"or other person '. 
SEC. 710. EFFECT OF REMOVAL OR SUSPENSION. 
Section 206(g) of the Federal Credit Union Act (12 U.S.C. 1786(g)) 
is amended by adding at the end thereof the following: 
"(7)(A) Any person who, pursuant to this subsection, is removed, 
suspended, or prohibited from participation in the conduct of the 
affairs of an insured credit union shall also be removed, suspended, 
or prohibited from participation in the conduct of the affairs of any 
insured institution, any bank holding company or subsidiary of a 
bank holding company, any organization organized and operated 
under section 25(a) of the Federal Reserve Act or operating under 
section 25 of the Federal Reserve Act, and any savings and loan 
holding company or subsidiary of a savings and loan holding com-
101 STAT. 654 
PUBLIC LAW 100-86—AUG. 10, 1987 
12 use 1701. 
pany (as those terms are defined in the National Housing Act), and 
any institution chartered by and subject to regulation by the Farm 
Credit Administration without the prior written approval of the 
appropriate Federal regulatory agency. 
"(B) As used in subsection (g), the term 'insured institution' means 
an insured credit union or a depository institution whose accounts 
are insured by the Federal Deposit Insurance Corporation or the 
Federal Savings and Loan Insurance Corporation.". 
SEC. 711. IMPOSITION OF CONSERVATORSHIP. 
Section 206(h)(1) of the Federal Credit Union Act (12 U.S.C. 
1786(h)(1)) is amended— 
(1) by striking out "or" at the end of subparagraph (A); 
(2) by striking out the period at the end of subparagraph (B) 
and inserting in lieu thereof a semicolon; and 
(3) by adding at the end thereof the following: 
"(C) there is a willful violation of a cease-and-desist order 
which has become final; or 
"(D) there is concealment of books, papers, records, or assets 
of the credit union or refusal to submit books, papers, records, 
or affairs of the credit union for inspection to any examiner or 
to any lawful agent of the Board.". 
SEC. 712. REDUCTION IN STATE COMMENT WAITING PERIOD. 
Section 206(h)(2)(B) of the Federal Credit Union Act (12 U.S.C. 
1786(h)(2)(B)) is amended by striking out "ninety" and inserting in 
lieu thereof "30". 
SEC. 713. AUTHORITY AS CONSERVATOR. 
Section 206(h) of the Federal Credit Union Act (12 U.S.C. 1786(h)) 
is amended— 
(1) by redesignating paragraph (8) as paragraph (9); and 
(2) by inserting after paragraph (7) the following: 
"(8) The conservator shall have all the powers of the members, the 
directors, the officers, and the committees of the credit union and 
shall be authorized to operate the credit union in its own name or to 
conserve its assets in the manner and to the extent authorized by 
the Board.". 
SEC. 714. LIQUIDATION PROCEEDINGS. 
(a) APPLICATION FOR SHOW CAUSE ORDER.—Section 207(a)(1) of the 
Federal Credit Union Act (12 U.S.C. 1787(a)(1)) is amended— 
(1) by inserting "(A)" after "(1)"; and 
(2) by adding at the end thereof the following: 
"(B) Not later than 10 days after the date on which the Board 
closes a credit union for liquidation pursuant to paragraph (1), or 
accepts appointment as liquidating agent pursuant to subsection (b), 
such insured credit union may apply to the United States district 
court for the judicial district in which the principal office of such 
insured credit union is located or the United States District Court 
for the District of Columbia, for an order requiring the Board to 
show cause why it should not be prohibited from continuing such 
liquidation. Except as otherwise provided in this subparagraph, no 
court may take any action for or toward the removal of any liquidat-
ing agent or, except at the instance of the Board, restrain or affect 
the exercise of powers or functions of a liquidating agent.". 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 655 
(b) LIQUIDATIONS SUBJECT TO REGULATION OF THE BOARD.—Section 
208(c) of the Federal Credit Union Act (12 U.S.C. 1788(c)) is redesig-
nated as subsection (j) of section 207 (12 U.S.C. 1787) and is amended 
by striking out "subject to the regulation of the court or other public 
body having jurisdiction over the matter" and inserting in lieu 
thereof "subject only to the regulation of the Board, or, in cases 
where the Board has been appointed liquidating agent solely by a 
public authority having jurisdiction over the matter other than said 
Board, subject only to the regulation of such public authority". 
(c) CONFORMING AMENDMENT.—Section 208(d) of the Federal 
Credit Union Act (12 U.S.C. 1788(d)) is redesignated as section 208(c). 
SEC. 715. TRANSFER OF FTC JURISDICTION TO NCUAB. 
(a) IN GENERAL.— 
(1) Sections 5(aX2) and 6(a) of the Federal Trade Commission 
Act (15 U.S.C. 45(a)(2) and 46(a)) are amended by inserting 
immediately after "section 18(fX3)," the following: "Federal 
credit unions described in section 18(f)(4),". 
15 use 57a. 
(2) Section 6(b) of the Federal Trade Commission Act (15 
U.S.C. 46(b)) is amended by inserting immediately after "section 
18(f)(3)," the following "Federal credit unions described in sec-
tion 18(f)(4),". 
(b) INVESTIGATIONS OF FOREIGN TRADE CONDITIONS; REPORTS.—The 
second proviso in section 6 of the Federal Trade Commission Act (15 
^ . 
U.S.C. 46) is amended— 
(1) by inserting immediately after "section 18(f)(3)," the fol-
lowing: "Federal credit unions described in section 18(f)(4),"; 
and 
(2) by inserting immediately after "in business as a savings 
and loan institution," the following: "in business as a Federal 
credit union,". 
(c) REGULATIONS TO BE PRESCRIBED BY NCUAB.— 
(1) The second sentence of section 18(D(1) of the Federal Trade 
Commission Act (15 U.S.C. 57a(f)(l)) is amended by inserting 
immediately after "paragraph (3))" the following: "and the 
National Credit Union Administration Board (with respect to 
Federal credit unions described in paragraph (4))". 
(2) The last sentence of section 18(f)(1) of the Federal Trade 
. ,: 
Commission Act (15 U.S.C. 57a(f)(l)) is amended— 
(A) by striking "either such" and inserting in lieu thereof 
"any such"; 
(B) by inserting "or Federal credit unions described in 
paragraph (4)," immediately after "paragraph (3)," each 
place it appears therein; and 
(C) by inserting immediately after "with respect to 
banks" the following: ", savings and loan institutions or 
Federal credit unions". 
(3) Section 18(f) of the Federal Trade Commission Act (15 
U.S.C. 57a(f)) is amended by redesignating paragraphs (4), (5), 
and (6) as paragraphs (5), (6), and (7), respectively, and by 
inserting immediately after paragraph (3) the following: 
"(4) Compliance with regulations prescribed under this subsection 
shall be enforced with respect to Federal credit unions under sec-
tions 120 and 206 of the Federal Credit Union Act (12 U.S.C. 1766 
and 1786).". 
101 STAT. 656 
PUBLIC LAW 100-86—AUG. 10, 1987 
SEC. 716. ASSETS WHICH MAY BE PLEDGED. 
(a) IN GENERAL.—Section 121 of the Federal Credit Union Act (12 
U.S.C. 1767) is amended by adding at the end thereof the following 
new subsection: 
State and local 
"(b) Any Federal credit union, upon the deposit with it of any 
governments. 
funds by the Federal Government, an Indian tribe, or any State or 
Indians. 
local government or political subdivision thereof as otherwise au-
thorized by this Act, is authorized to pledge any of its assets 
securing the payment of the funds so deposited.". 
(b) CONFORMING AMENDMENT.—Section 121 of the Federal Credit 
Union Act (12 U.S.C. 1767) is amended by striking out "Each" in the 
first sentence and inserting in lieu thereof "(a) Each". 
TITLE VIII—LOAN LOSS AMORTIZATION 
-mi 
SEC. 801. LOAN LOSS AMORTIZATION FOR AGRICULTURAL BANKS. 
Ante, p. 623. 
Section 13 of the Federal Deposit Insurance Act (12 U.S.C. 1823) is 
amended by adding at the end thereof the following: 
"(j) LOAN LOSS AMORTIZATION FOR CERTAIN BANKS.— 
"(1) ELIGIBILITY.—The appropriate Federal banking agency 
shall permit an agricultural bank to take the actions referred to 
in paragraph (2) if it finds that— 
Fraud. 
"(A) there is no evidence that fraud or criminal abuse on 
the part of the bank led to the losses referred to in para-
graph (2); and 
' • 
"(B) the agricultural bank has a plan to restore its cap-
ital, not later than the close of the amortization period 
established under paragraph (2), to a level prescribed by the 
appropriate Federal banking agency. 
"(2) SEVEN-YEAR LOSS AMORTIZATION.—(A) Any loss on any 
qualified agricultural loan that an agricultural bank would 
otherwise be required to show on its annual financial statement 
for any year between December 31, 1983, and January 1, 1992, 
may be amortized on its financial statements over a period of 
-' not to exceed 7 years, as provided in regulations issued by the 
appropriate Federal banking agency. 
Real property. 
"(B) An agricultural bank may reappraise any real estate or 
other property, real or personal, that it acquired coincident to 
' 
the making of a qualified agricultural loan and that it owned on 
January 1, 1983, and any such additional property that it 
acquires prior to January 1, 1992. Any loss that such bank 
would otherwise be required to show on its annual financial 
statements as the result of any such reappraisal may be amor-
tized on its financial statements over a period of not to exceed 7 
' years, as provided in regulations issued by the appropriate 
Federal banking agency. 
"(3) REGULATIONS.—Not later than 90 days after the date of 
enactment of this subsection, the appropriate Federal banking 
agency shall issue regulations implementing this subsection 
with respect to banks that it supervises, including regulations 
implementing the capital restoration requirement of paragraph 
(1)(B). 
"(4) DEFINITIONS.—As used in this subsection— 
"(A) the term'agricultural bank'means a bank— 
;. 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 657 
"(i) the deposits of which are insured by the Federal 
Deposit Insurance Corporation; 
...;; "rfj V,, 
(ii) which is located in an area the economy of which 
is dependent on agriculture; 
"(iii) which has assets of $100,000,000 or less; and 
w^' \ 
"(iv) which has— 
"(I) at least 25 percent of its total loans in quali- 
. • r 
fied agricultural loans; or 
"(II) fewer than 25 percent of its total loans in 
qualified agricultural loans but which the appro-
priate Federal banking agency or State bank 
commissioner recommends to the Corporation for 
eligibility under this section, or which the Corpora-
e 
tion, on its motion, deems el^ble; and 
"(B) the term 'qualified agricultural loan' means a loan 
'>' - 
made to finance the production of agricultural products or 
livestock in the United States, a loan secured by farmland 
or farm machinery, or such other category of loans as the 
appropriate Federal banking agency may deem eligible. 
"(5) MAINTENANCE OF PORTFOUO.—As a condition of eligibility 
under this subsection, the agricultural bank must agree to 
maintain in its loan portfolio a percentage of agricultural loans 
' 
which is not lower than the percentage of such loans in its loan 
portfolio on January 1,1986. . 
TITLE IX—FULL FAITH AND CREDIT 
OF FEDERALLY INSURED DEPOSITORY 
INSTITUTIONS 
SEC. 901. REAFFIRMATION OF SECURITY OF FUNDS DEPOSITED IN FED-
ERALLY INSURED DEPOSITORY INSTITUTIONS. 
(a) FINDINGS.—The Congress finds and declares that— 
(1) since the 1930's, the American people have relied upon 
Federal deposit insurance to ensure the safety and security of 
their funds in federally insured depository institutions; and 
(2) the safety and security of such funds is an essential 
element of the American financial system. 
0)) SENSE OF CONGRESS.—In view of the findings and declarations 
contained in subsection (a), it is the sense of the Congress that it 
should reaffirm that deposits up to the statutorily prescribed 
£unount in federally insured depository institutions are backed by 
the full faith and credit of the United States. 
TITLE X—GOVERNMENT CHECKS 
SEC. 1001. REPORT ON DIFFICULTY IN CASHING TREASURY CHECKS. 
Not later than 6 months after the date of enactment of this Act, 
the Comptroller Genersd of the United States shall conduct a study 
and transmit a report to the Committee on Banking, Finance and 
Urban Affairs of the House of Representatives and the Committee 
on Banking, Housing, and Urban Affairs of the Senate on the extent 
to which individuals who receive Treasury checks have difficulty 
cashing such checks. 
3330. 
101 STAT. 658 
PUBLIC LAW 100-86—AUG. 10, 1987 
SEC. 1002. TIME LIMIT ON PAYMENT OF TREASURY CHECKS. 
Section 3328 of title 31, United States Code, is amended— 
(1) by striking out subsection (a) and inserting in lieu thereof 
the following: 
"(a) TIME LIMIT ON TREASURY CHECKS.— 
"(1) IN GENERAL.—Except as provided in sections 3329 and 
31 use 3329, 
3330 of this title— 
"(A) the Secretary shall not be required to pay a Treasury 
check issued on or after the effective date of this section 
unless it is negotiated to a financial institution within 12 
months after the date on which the check was issued; and 
"(B) the Secretary shall not be required to pay a Treasury 
check issued before the effective date of this section unless 
it is negotiated to a financial institution within 12 months 
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after such effective date. 
"(2) DEFERRAL PENDING SETTLEMENT.—Notwithstanding the 
time limitations imposed by paragraph (1), if the Secretary is on 
notice of a question of law or fact about whether a Treasury 
check is properly payable when the check is presented for 
payment, the Secretary may defer pa3mient on such check until 
the Comptroller General settles the question. 
7 
"(3) Nothing in this subsection shall be construed to affect the 
. « underlying obligation of the United States, or any agency 
thereof, for which a Treasury check was issued."; and 
(2) by adding at the end thereof the following: 
"(f) AUTHORITY TO DECUNE PAYMENT.—Nothing in this section 
limits the authority of the Secretary to decline payment of a Treas-
ury check after first examination thereof at the Treasury.". 
SEC. 1003. CANCELLATION OF TREASURY CHECKS. 
Chapter 33 of title 31, United States Code, is amended by adding 
at the end of subchapter II the following new section: 
"§ 3334. Cancellation and proceeds distribution of Treasury checks 
"(a) IN GENERAL.—(1) The Secretary shall provide monthly to each 
agency that authorizes the issuance of Treasury checks a list of 
those checks issued for such agency on or after such effective date 
that have not been paid and have become more than 12 months old 
during the preceding month, bejginning with the fourteenth month 
following the effective date of this section. 
"(2) Such checks shall be canceled by the Secretary and the 
proceeds thereof shall be returned to the agency concerned and 
credited to the appropriation or fund account initially charged for 
thepa5mient. 
"(b) CHECKS ISSUED BEFORE EFFECTIVE DATE.—(1) Not later than 18 
months after the effective date of this section, the Secretary shall 
identify and cancel all Treasury checks issued before such effective 
date that have not been paid in accordance with section 3328 of this 
title. 
"(2) The proceeds from checks canceled pursuant to paragraph (1) 
shall be applied to eliminate the balances in accounts that represent 
uncollectible accounts receivable and other costs associated with the 
payment of checks and check claims by the Department of the 
Treasury on behalf of all payment certifying agencies. Any remain-
ing proceeds shall be deposited to the miscellaneous receipts of the 
Treasury. 
. 
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PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 659 
"(c) No EFFECT ON UNDERLYING OBLIGATION.—Nothing in this 
section shall be construed to affect the underlying obligation of the 
United States, or any agency thereof, for which a Treasury check 
was issued.". 
SEC. 1004. LIMITATION ON RECLAMATION ACTIONS AND CLAIMS. 
(a) IN GENERAL.—Section 3712(a) of title 31, United States Code, is 
amended to read as follows: 
"(a) CLAIMS OVER FORGED OR UNAUTHORIZED ENDORSEMENTS.— 
"(1) PERIOD FOR CLAIMS.—If the Secretary of the Treasury 
determines that a Treasury check has been paid over a forged or 
unauthorized endorsement, the Secretary may reclaim the 
amount of such check from the presenting bank or any other 
endorser that has breached its guarantee of endorsements prior 
to— 
"(A) the end of the 1-year period beginning on the date of 
payment; or 
"(B) the expiration of the 180-day period beginning on the 
close of the period described in subparagraph (A) if a timely 
claim is received under section 3702. 
"(2) CIVIL ACTIONS.—(A) Except as provided in subparagraph 
(B), the United States may bring a civil action to enforce the 
liability of an endorser, transferor, depository, or fiscal agent on 
a forged or unauthorized signature or endorsement on, or a 
change in, a check or warrant issued by the Secretary of the 
Treasury, the United States Postal Service, or any disbursing 
official or agent not later than 1 year after a check or warrant is 
presented to the drawee for payment. 
"(B) If the United States has given an endorser written notice 
of a claim against the endorser within the time allowed by 
subparagraph (A), the 1-year period for bringing a civil action 
on that claim under subparagraph (A) shall be extended by 3 
years. 
"(3) EFFECT ON AGENCY AUTHORITY.—Nothing in this subsec-
tion shall be construed to limit the authority of any agency 
under subchapter II of chapter 37 of this title.". 
(b) CLAIMS PRESENTED TO AGENCIES.—Section 3702(c) of title 31, 
United States Code, is amended to read as follows: 
"(c) ONE-YEAR LIMIT FOR CHECK CLAIMS.—(1) Any claim on ac-
count of a Treasury check shall be barred unless it is presented to 
the agency that authorized the issuance of such check within 1 year 
after the date of issuance of the check or the effective date of this 
subsection, whichever is later. 
"(2) Nothing in this subsection affects the underlying obligation of 
the United States, or any agency thereof, for which a Treasury 
check was issued.". 
SEC. 1005. REGULATIONS. 
The Secretary of the Treasury may prescribe such rules, regula-
tions, and procedures as the Secretary deems necessary to imple-
ment the amendments made by sections 1002, 1003, and 1004, 
including the recertification of Treasury checks which have been 
canceled or for which a claim has been asserted or barred. 
SEC. 1006. EFFECTIVE DATE. 
The amendments made by sections 1002, 1003, and 1004 shall 
become effective 6 months after the date of enactment of this Act or 
Fraud. 
Infra. 
31 use 3711. 
31 use 3328 
note. 
31 use 3328 
note. 
101 STAT. 660 
PUBLIC LAW 100-86—AUG. 10, 1987 
on such later date as the Secretary of the Treasury may prescribe in 
regulations. 
TITLE XI—INTEREST TO CERTAIN 
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^ DEPOSITORS 
_,.^^;' 
, 
SEC. 1101. INTEREST TO CERTAIN DEPOSITORS. 
(a) PAYMENT OF INTEREST REQUIRED.—Notwithstanding any other 
provision of law, the Federal Deposit Insurance Corporation shall 
pay interest in accordance with the requirements of subsection (b) 
on nonnegotiable certificates (commonly referred to as "yellow cer-
tificates") which— 
New York. 
(1) were issued by the Golden Pacific National Bank of New 
York, New York, before such bank was declared to be insolvent 
by the Comptroller of the Currency on June 21, 1985; and 
(2) have been determined to be insured deposits (as such term 
is defined in section 3(m)(l) of the Federal Deposit Insurance 
12 use 1813. 
Act) in anyj'udicial action or agency proceeding. 
(b) COMPUTATION OF INTEREST.—Interest required to be paid under 
subsection (a) with respect to any certificate described in such 
subsection shall be computed— 
(1) on the principal amount of that portion of such certificate 
which was determined to be an insured deposit; 
New York. 
(2) at the statutory rate of interest in effect under the law of 
the State of New York; and 
(3) for the period beginning on June 21, 1985, and ending on 
the date on which the holder of such certificate, or the holder's 
representative, receives the payment of deposit insurance on 
account of such certificate from the Federal Deposit Insurance 
Corporation. 
TITLE XII—MISCELLANEOUS PROVISIONS 
SEC. 1201. HIGH YIELD BOND STUDY. 
(a) IN GENERAL.—The Comptroller General, in consultation with 
the Securities and Exchange Commission, the Federal Home Loan 
Bank Board, the Comptroller of the Currency, the Board of Gov-
ernors of the Federal Reserve System, the Federal Savings and Loan 
Insurance Corporation, the Federal Deposit Insurance Corporation, 
the Secretary of the Treasury, and the Secretary of Labor shall 
study on a comparative basis to other types of investments made by 
federally insured institutions the issuance of and investment in high 
yield, noninvestment grade bonds during the 5 years prior to the 
, .. 
i(; 
date of enactment of this Act, including— 
(1) the identity and rating (as determined by Moody's, Stand-
ard and Poor's, or other nationally recognized bond rating 
house) of the issuers of these bonds; 
(2) the identity of the major purchasers of these bonds, includ-
ing but not limited to federally insured depository institutions; 
(3) the percentage of the total amount of high yield, 
^si: QSti 
noninvestment grade bonds that are issued as a method of 
s; 
financing 
corporate takeovers; 
(4) the identity of the purchasers including, but not limited to, 
federally insured depository institutions that invest in high 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 661 
yield, noninvestment grade bonds that are issued as a method of 
financing corporate takeovers; 
(5) the purposes for which high jdeld, noninvestment grade 
bonds are issued other than for financing corporate takeovers; 
(6) a summary and analysis of the adequacy of current State 
and Federal laws that regulate investment in high yield, 
t 
noninvestment grade bonds, by investors including, but not 
limited to, federally insured depository institutions and pension 
funds; and 
(7) a review of the impact of the issuance of and investment in 
high yield, noninvestment grade bonds upon corporate debt as it 
relates to Federal monetary policy. 
(b) OTHER TYPES OF DIRECT INVESTMENT.—In preparing this study, 
the Comptroller General, in consultation with the aforementioned 
Federal agencies, shall also examine all other types of direct invest-
ments made by Federally insured institutions and the effect these 
investments have had on Federal insurance funds. 
(c) PuBuc HEARING.—In addition to the collection of information 
through surveys, public document review, interviews, and other 
information-gathering methods, at least one joint public hearing 
shall be held during the course of conducting the study. 
(d) REPORTING DATE.—The Comptroller General shall transmit a 
report containing the results of the study under this section to the 
Congress not later than 6 months after the date of enactment of this 
Act. 
SEC. 1202. STUDY 
OF 
COMPETITIVE 
ISSUES 
IN 
THE 
PAYMENTS 
MECHANISM. 
(a) IN GENERAL.—The Comptroller General, in coordination and 
consultation with the Board of Governors of the Federal Reserve 
System, shall conduct a study of— 
(1) the Federal Reserve System's exemption from the imposi-
tion of presentment fees; 
, , ,, 5 , 
(2) the impact of the imposition of presentment fees on the 
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efficiency of the check collection system; and 
(3) whether the Federal Reserve System requires check 
clearinghouses to provide services to Federal Reserve banks and 
whether Federal Reserve banks should pay check clearing-
houses for any such services. 
(b) REPORTING DATE.—The Comptroller General shall submit its 
report to Congress not later than 6 months after the date of enact-
ment of this Act. 
SEC. 1203. STUDY AND REPORTS CONCERNING DIRECT INVESTMENTS. 
12 USC 1437 
(a) STUDY REQUIRED.—The Federal Home Loan Bank Board shall 
conduct a study of the effect of direct investment activities on 
insured institutions, including comparative analyses of the effect of 
direct investment activities on— 
(1) different sized insured institutions; 
(2) State chartered insured institutions; 
(3) federally chartered insured institutions; and 
(4) insured institutions in each of the Supervisory Examina-
tions Rating Classifications. 
(b) REPORT REQUIRED.—Not later than 18 months after the date of 
enactment of this Act, the Federal Home Loan Bank Board shall 
submit to the Committee on Banking, Finance and Urban Affairs of 
the House of Representatives and the Committee on Banking, Hous-
101 STAT. 662 
PUBLIC LAW 100-86—AUG. 10, 1987 
ing, and Urban Affairs of the Senate, a report containing the 
findings and conclusions of the Board with respect to the study 
required under subsection (a), including— 
(1) the findings and conclusions of the Board concerning the 
i losses to the insurance fund and the degree to which such losses 
were the result of direct investment activities with respect to 
each of the classes of institutions described in subsection (a); and 
(2) a comparison of the effects of direct investment activities 
prior to April 16, 1987, and the effect of such activities on or 
' after April 16, 1987, for each of the classes of institutions 
• described in subsection (a) and the losses to the insurance fund 
as a result of such activities. 
(c) PRIOR REPORTS TO CONGRESS ON CHANGES TO DIRECT INVEST-
MENT REGULATIONS.— 
(1) IN GENERAL.—Not less than 90 days before final approval 
is given by the Federal Home Loan Bank Board to any regula-
tion which repeals or modifies (or has the effect of repealing or 
modifying) any regulation limiting direct investment activities, 
the Board shall submit to the Committee on Banking, Finance 
and Urban Affairs of the House of Representatives and the 
Committee on Banking, Housing, and Urban Affairs of the 
Senate a report describing the proposed regulation and the 
reasons for the proposed regulation, including the effect of such 
regulation on the insurance fund. 
(2) PROSPECTIVE APPLICATION OF RULE.—Paragraph (1) shall 
" 
not apply with respect to Board Resolution Numbered 87-215 
and Board Resolution Numbered 87-215A. 
(d) DIRECT INVESTMENT ACTIVITY DEFINED.—For purposes of this 
section, the term "direct investment activities" means activities 
which are limited under Board Resolution Numbered 87-215 and 
Board Resolution Numbered 87-215A. 
12 use 3806. 
SEC. 1204. ADJUSTABLE RATE MORTGAGE CAPS. 
(a) IN GENERAL.—Any adjustable rate mortgage loan originated by 
a creditor shall include a limitation on the maximum interest rate 
that may apply during the term of the mortgage loan. 
(b) REGULATIONS.—The Board of Governors of the Federal Reserve 
System shall prescribe regulations to carry out the purposes of this 
section. 
(c) ENFORCEMENT.—Any violation of this section shall be treated 
15 use 1601 
as a violation of the Truth in Lending Act and shall be subject to 
note. 
administrative enforcement under section 108 or civil damages 
15 use 1640 
under section 130 of such Act, or both. 
(d) DEFINITIONS.—For the purpose of this section— 
(1) the term "creditor" means a person who regularly extends 
credit for personal, family, or household purposes; and 
(2) the term "adjustable rate mortgage loan" means any loan 
secured by a lien on a one- to four-family dwelling unit, includ-
ing a condominium unit, cooperative housing unit, or mobile 
home, where the loan is made pursuant to an agreement under 
which the creditor may, from time to time, adjust the rate of 
interest. 
(e) EFFECTIVE DATE.—This section shall take effect upon the 
expiration of 120 days after the date of enactment of this Act. 
PUBLIC LAW 100-86—AUG. 10, 1987 
101 STAT. 663 
SEC. 1205. SEPARABILITY OF PROVISIONS. 
12 USC 226 note. 
If any provision of this Act or the application thereof to any 
person or circumstances is held invalid, the remainder of the Act 
and the application of the provision to other persons not similarly 
situated or to other circumstances shall not be affected thereby. 
"' 
Approved August 10, 1987. 
LEGISLATIVE HISTORY—H.R. 27 (S. 790): 
HOUSE REPORTS: No. 100-62 (Comm. on Banking, Finance and Urban Affairs) and 
No. 100-261 (Comm. of Conference). 
SENATE REPORTS: No. 100-19 accompanying S. 790 (Comm. on Banking, Housing, 
and Urban Affairs). 
CONGRESSIONAL RECORD, Vol. 133 (1987): 
May 5, H.R. 27 considered and passed House. 
May 14, considered and passed Senate, amended. 
June 11, House disagreed to Senate amendments. 
Aug. 3, House agreed to conference report. 
Aug. 4, Senate agreed to conference report. 
•WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 23 (1987): 
Aug. 10, Presidential remarks.