Gramm-Leach-Bliley Act
PL 106-102 (S.900), enacted 11/12/1999

113 STAT. 1338 
PUBLIC LAW 106-102—NOV. 12, 1999 
Public Law 106-102 
106th Congress 
Nov. 12, 1999 
[S. 900] 
Gramm-Leach-
Bliley Act. 
Inter-
governmental 
relations. 
12 u s e 1811 
note. 
An Act 
To enhance competition in the financial services industry by providing a prudential 
framework for the affiliation of banks, securities firms, insurance companies, 
and other financial service providers, 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 "Gramm-Leach-
BHley Act". 
(b) TABLE OF CONTENTS.—The table of contents for this Act 
is as follows: 
Sec. 1. Short title; table of contents. 
T I T L E I — F A C I L I T A T I N G A F F I L I A T I O N A M O N G B A N K S , SECURITIES FIRMS, 
AND INSURANCE COMPANIES 
Subtitle A—^Affiliations 
Sec. 101. Glass-Steagall Act repeals. 
Sec. 102. Activity restrictions applicable to bank holding companies that are not fi-
nancial holding companies. 
Sec. 103. Financial activities. 
Sec. 104. Operation of State law. 
Sec. 105. MAitual bank holding companies authorized. 
Sec. 106. Prohibition on deposit production offices. 
Sec. 107. Cross marketing restriction; limited purpose bank relief; divestiture. 
Sec. 108. Use of subordinated debt to protect financial system and deposit funds 
from "too big to fail" institutions. 
Sec. 109. Study of financial modernization's effect on the accessibility of small busi-
ness and farm loans. 
Subtitle B—Streamlining Supervision of Bank Holding Companies 
Sec. 111. Streamlining bank holding company supervision. 
Sec. 112. Authority of State insurance regulator and Securities and Exchange Com-
mission. 
Sec. 113. Role of the Board of Governors of the Federal Reserve System. 
Sec. 114. Prudential safeguards. 
Sec. 115. Examination of investment companies. 
Sec. 116. Elimination of application requirement for financial holding companies. 
Sec. 117. Preserving the integrity of FDIC resources. 
Sec. 118. Repeal of savings bank provisions in the Bank Holding Company Act of 
1956. 
Sec. 119. Technical amendment. 
Subtitle C—Subsidiaries of National Banks 
Sec. 121. Subsidiaries of national banks. 
Sec. 122. Consideration of merchant banking activities by financial subsidiaries. 
Subtitle D—Preservation of FTC Authority 
Sec. 131. Amendment to the Bank Holding Company Act of 1956 to modify notifica-
tion and post-approval waiting period for section 3 transactions. 
Sec. 132. Interagency data sharing. 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1339 
Sec. 133. Clarification of status of subsidiaries and affiliates. 
Subtitle E—National Treatment 
Sec. 141. Foreign banks that are financial holding companies. 
Sec. 142. Representative offices. 
Subtitle F—Direct Activities of Banks 
Sec. 151. Authority of national banks to underwrite certain municipal bonds. 
Subtitle G—Effective Date 
Sec. 161. Effective date. 
TITLE II—FUNCTIONAL REGULATION 
Subtitle A—Brokers and Dealers 
Sec. 201. Definition of broker. 
Sec. 202. Definition of dealer. 
_ 
Sec. 203. Registration for sales of private securities offerings. 
Sec. 204. Information sharing. 
Sec. 205. Treatment of new hybrid products. 
Sec. 206. Definition of identified banking product. 
Sec. 207. Additional definitions. 
Sec. 208. Government securities defined. 
Sec. 209. Effective date. 
Sec. 210. Rule of construction. 
Subtitle B—Bank Investment Company Activities 
Sec. 211. Custody of investment company assets by affiliated bank. 
Sec. 212. Lending to an affiliated investment company. 
Sec. 213. Independent directors. 
Sec. 214. Additional SEC disclosure authority. 
Sec. 215. Definition of broker under the Investment Company Act of 1940. 
Sec. 216. Definition of dealer under the Investment Company Act of 1940. 
Sec. 217. Removal of the exclusion from the definition of investment adviser for 
banks that advise investment companies. 
Sec. 218. Definition of broker under the Investment Advisers Act of 1940. 
Sec. 219. Definition of dealer under the Investment Advisers Act of 1940. 
Sec. 220. Interagency consultation. 
Sec. 221. Treatment of bank common trust funds. 
Sec. 222. Statutory disqualification for bank wrongdoing. 
Sec. 223. Conforming change in definition. 
Sec. 224. Conforming amendment. 
Sec. 225. Effective date. 
Subtitle C—Securities and Exchange Commission Supervision of Investment Bank 
Holding Companies 
Sec. 231. Supervision of investment bank holding companies by the Securities and 
Exchange Commission. 
Subtitle D—Banks and Bank Holding Companies 
Sec. 241. Consultation. 
TITLE III—INSURANCE 
Subtitle A—State Regulation of Insurance 
Sec. 301. Functional regulation of insurance. 
Sec. 302. Insurance underwriting in national banks. 
Sec. 303. Title insurance activities of national banks and their affiliates. 
Sec. 304. Expedited and equalized dispute resolution for Federal regulators. 
Sec. 305. Insurance customer protections. 
Sec. 306. Certain State affiliation laws preempted for insurance companies and af-
filiates. 
Sec. 307. Interagency consultation. 
Sec. 308. Definition of State. 
Subtitle B—Redomestication of Mutual Insurers 
Sec. 311. Greneral application. 
Sec. 312. Redomestication of mutual insurers. 
Sec. 313. Effect on State laws restricting redomestication. 
Sec. 314. Other provisions. 
113 STAT. 1340 
PUBLIC LAW 106-102—NOV. 12, 1999 
Sec. 315. Definitions. 
Sec. 316. Effective date. 
Subtitle C—^National Association of Registered Agents and Brokers 
Sec. 321. State flexibility in multistate licensing reforms. 
Sec. 322. National Association of Registered Agents Euid Brokers. 
Sec. 323. Purpose. 
Sec. 324. Relationship to the Federal Government. 
Sec. 325. Membership. 
Sec. 326. Board of directors. 
Sec. 327. Officers. 
Sec. 328. Bylaws, rules, and disciplinary action. 
Sec. 329. Assessments. 
Sec. 330. Functions of the NAIC. 
Sec. 331. Liability of the association and the directors, officers, and employees of 
the association. 
Sec. 332. Elimination of NAIC oversight. 
Sec. 333. Relationship to State law. 
Sec. 334. Coordination with other regulators. 
Sec. 335. Judicial review. 
Sec. 336. Definitions. 
Subtitle D—Rental Car Agency Insurance Activities 
Sec. 341. Standard of regulation for motor vehicle rentals. 
TITLE IV—UNITARY SAVINGS AND LOAN HOLDING COMPANIES 
Sec. 401. Prevention of creation of new S&L holding companies with commercial af-
filiates. 
TITLE V—PRIVACY 
Subtitle A—Disclosure of Nonpublic Personal Information 
Sec. 501. Protection of nonpublic personal information. 
Sec. 502. Obligations with respect to disclosures of personal information. 
Sec. 503. Disclosure of institution privacy policy. 
Sec. 504. Rulemaking. 
Sec. 505. Enforcement. 
Sec. 506. Protection of Fair Credit Reporting Act. 
Sec. 507. Relation to State laws. 
Sec. 508. Study of information sharing among financial affiliates. 
Sec. 509. Definitions. 
Sec. 510. Effective date. 
Subtitle B—Fraudulent Access to Financial Information 
Sec. 521. Privacy protection for customer information of financial institutions. 
Sec. 522. Administrative enforcement. 
Sec. 523. Criminal penalty. 
Sec. 524. Relation to State laws. 
Sec. 525. Agency guidance. 
Sec. 526. Reports. 
Sec. 527. Definitions. 
TITLE VI—FEDERAL HOME LOAN BANK SYSTEM MODERNIZATION 
Sec. 601. Short title. 
Sec. 602. Definitions. 
Sec. 603. Savings association membership. 
Sec. 604. Advances to members; collateral. 
Sec. 605. Eligibility criteria. 
Sec. 606. Management of banks. 
Sec. 607. Resolution Funding Corporation. 
Sec. 608. Capital structure of Federal home loan banks. 
TITLE VII—OTHER PROVISIONS 
Subtitle A—ATM Fee Reform 
Sec. 701. Short title. 
Sec. 702. Electronic fund transfer fee disclosures at any host ATM. 
Sec. 703. Disclosure of possible fees to consumers when ATM card is issued. 
Sec. 704. Feasibility study. 
Sec. 705. No liability if posted notices are damaged. 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1341 
Subtitle B—Community Reinvestment 
Sec. 711. CRA sunshine requirements. 
Sec. 712. Small bank regulatory relief. 
Sec. 713. Federal Reserve Board study of CRA lending. 
Sec. 714. Preserving the Community Reinvestment Act of 1977. 
Sec. 715. Responsiveness to community needs for financial services. 
Subtitle C—Other Regulatory Improvements 
Sec. 721. Expanded small bank access to S corporation treatment. 
Sec. 722. "Plain language" requirement for Federal banking agency rules. 
Sec. 723. Retention of 'Tederal" in name of converted Federal savings association. 
Sec. 724. Control of bankers' banks. 
Sec. 725. Provision of technical assistance to microenterprises. 
Sec. 726. Federal Reserve audits. 
Sec. 727. Authorization to release reports. 
Sec. 728. General Accounting Office study of conflicts of interest. 
Sec. 729. Study and report on adapting existing legislative requirements to online 
banking and lending. 
Sec. 730. Clarification of source of strength doctrine. 
Sec. 731. Interest rates and other charges at interstate branches. 
Sec. 732. Interstate branches and agencies of foreign banks. 
Sec. 733. Fair treatment of women by financial advisers. 
Sec. 734. Membership of loan guarantee boards. 
Sec. 735. Repeal of stock loan limit in Federal Reserve Act. 
,;: ? 
Sec. 736. Elimination of SAIF and DIF special reserves. 
Sec. 737. Bank officers and directors as officers and directors of public utilities. 
Sec. 738. Approval for purchases of securities. 
Sec. 739. Optional conversion of Federal savings associations. 
Sec. 740. Grand jury proceedings. 
TITLE 
I—FACILITATING 
AFFILIATION 
AMONG BANKS, SECURITIES FIRMS, 
AND INSURANCE COMPANIES 
Subtitle A—^Affiliations 
SEC. 101. GLASS-STEAGALL ACT REPEALS. 
(a) SECTION 20 REPEALED.—Section 20 of the Banking Act 
of 1933 (12 U.S.C. 377) (commonly referred to as the "Glass-Steagall 
Act") is repealed. 
(b) SECTION 32 REPEALED.—Section 32 of the Banking Act 
of 1933 (12 U.S.C. 78) is repealed. 
SEC. 102. ACTIVITY RESTRICTIONS APPLICABLE TO BANK HOLDING 
COMPANIES THAT ARE NOT FINANCIAL HOLDING COMPA-
NIES. 
(a) IN GENERAL.—Section 4(c)(8) of the Bank Holding Company-
Act of 1956 (12 U.S.C. 1843(c)(8)) is amended to read as follows: 
"(8) shares of any company the activities of which had 
been determined by the Board by regulation or order under 
this paragraph as of the day before the date of the enactment 
of the Gramm-Leach-Bliley Act, to be so closely related to 
banking as to be a proper incident thereto (subject to such 
• 
terms and conditions contained in such regulation or order, 
unless modified by the Board);". 
(B) CONFORMING CHANGES TO OTHER STATUTES.— 
(1) AMENDMENT TO THE BANK HOLDING COMPANY ACT 
AMENDMENTS OF 1970.—Section 105 of the Bank Holding Com-
pany Act Amendments of 1970 (12 U.S.C. 1850) is amended 
by striking ", to engage directly or indirectly in a nonbanking 
activity pursuant to section 4 of such Act,". 
69-194 -01 - 11 :QL 3 Part 2 
113 STAT. 1342 
PUBLIC LAW 106-102—NOV. 12, 1999 
Notification. 
Deadline. 
Deadline. 
Notification. 
(2) AMENDMENT TO THE BANK SERVICE COMPANY ACT.— 
Section 4(f) of the Bank Service Company Act (12 U.S.C. 
1864(f)) is amended by inserting before the period at the end 
the following: "as of the day before the date of the enactment 
of the Gramm-Leach-Bliley Act". 
SEC. 103. FINANCIAL ACTIVITIES. 
(a) IN GENERAL.—Section 4 of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1843) is amended by adding at the end 
the following new subsections: 
"(k) 
ENGAGING 
IN 
ACTIVITIES 
THAT 
ARE 
FINANCIAL 
IN 
NATURE.— 
"(1) IN GENERAL.—Notwithstanding subsection (a), a finan-
cial holding company may engage in any activity, and may 
acquire and retain the shares of any company engaged in 
any activity, that the Board, in accordance with paragraph 
(2), determines (by regulation or order)— 
"(A) to be financial in nature or incidental to such 
financial activity; or 
"(B) is complementary to a financial activity and does 
not pose a substantial risk to the safety or soundness 
of depository institutions or the financial system generally. 
"(2) COORDINATION BETWEEN THE BOARD AND THE SEC-
RETARY OF THE TREASURY.— 
"(A) PROPOSALS RAISED BEFORE THE BOARD.— 
"(i) CONSULTATION.—The Board shall notify the 
' 
Secretary of the Treasury of, and consult with the 
Secretary of the Treasury concerning, any request, pro-
posal, or application under this subsection for a deter-
mination of whether an activity is financial in nature 
or incidental to a financial activity. 
"(ii) TREASURY VIEW.—The Board shall not deter-
mine that any activity is financial in nature or inci-
dental to a financial activity under this subsection 
if the Secretary of the Treasury notifies the Board 
in writing, not later than 30 days after the date of 
receipt of the notice described in clause (i) (or such 
longer period as the Board determines to be appro-
priate under the circumstances) that the Secretary of 
the Treasury believes that the activity is not financial 
in nature or incidental to a financial activity or is 
not otherwise permissible under this section. 
"(B) PROPOSALS RAISED BY THE TREASURY.— 
"(i) TREASURY RECOMMENDATION.—The Secretary 
of the Treasury may, at any time, recommend in 
writing that the Board find an activity to be financial 
in nature or incidental to a financial activity. 
"(ii) TIME PERIOD FOR BOARD ACTION.—Not later 
than 30 days after the date of receipt of a written 
recommendation from the Secretary of the Treasury 
under clause (i) (or such longer period as the Secretary 
of the Treasury and the Board determine to be appro-
priate under the circumstances), the Board shall deter-
mine whether to initiate a public rulemaking proposing 
that the recommended activity be found to be financial 
in nature or incidental to a financial activity under 
this subsection, and shall notify the Secretary of the 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1343 
Treasury in writing of the determination of the Board 
and, if the Board determines not to seek pubhc com-
ment on the proposal, the reasons for that determina-
tion. 
"(3) FACTORS TO BE CONSIDERED.—In determining whether 
an activity is financial in nature or incidental to a financial 
activity, the Board shall take into account— 
"(A) the purposes of this Act and the Gramm-Leach-
Bliley Act; 
"(B) changes or reasonably expected changes in the 
marketplace in which financial holding companies compete; 
"(C) changes or reasonably expected changes in the 
technology for delivering financial services; and 
"(D) whether such activity is necessary or appropriate 
to allow a financial holding company and the affiliates 
of a financial holding company to— 
"(i) compete effectively with any company seeking 
to provide financial services in the United States; 
"(ii) efficiently deliver information and services 
that are financial in nature through the use of techno-
'' '^ 
logical means, including any application necessary to 
protect the security or efficacy of systems for the trans-
• 
mission of data or financial transactions; and 
"(iii) offer customers any available or emerging 
technological means for using financial services or for 
the document imaging of data. 
"(4) ACTIVITIES THAT ARE FINANCIAL IN NATURE.—For pur-
poses of this subsection, the following activities shall be consid-
ered to be financial in nature: 
"(A) Lending, exchanging, transferring, investing for 
others, or safeguarding money or securities. 
"(B) Insuring, guaranteeing, or indemnifying against 
loss, harm, damage, illness, disability, or death, or pro-
viding and issuing annuities, and acting as principal, agent, 
or broker for purposes of the foregoing, in any State. 
"(C) Providing 
financial, 
investment, or economic 
advisory services, including advising an investment com-
pany (as defined in section 3 of the Investment Company 
Act of 1940). 
"(D) Issuing or selling instruments 
representing 
interests in pools of assets permissible for a bank to hold 
directly. 
"(E) Underwriting, dealing in, or making a market 
in securities. 
"(F) Engaging in any activity that the Board has deter-
mined, by order or regulation that is in effect on the date 
of the enactment of the Gramm-Leach-Bliley Act, to be 
so closely related to banking or managing or controlling 
banks as to be a proper incident thereto (subject to the 
same terms and conditions contained in such order or regu-
lation, unless modified by the Board). 
"(G) Engaging, in the United States, in any activity 
I that— 
"(i) a bank holding company may engage in outside 
! 
of the United States; and 
113 STAT. 1344 
PUBLIC LAW 106-102—NOV. 12, 1999 
"(ii) the Board has determined, under regulations 
prescribed or interpretations issued pursuant to sub-
section (c)(13) (as in effect on the day before the date 
of the enactment of the Gramm-Leach-BHley Act) to 
be usual in connection with the transaction of banking 
,: 
or other financial operations abroad. 
"(H) Directly or indirectly acquiring or controlling, 
whether as principal, on behalf of 1 or more entities 
(including entities, other than a depository institution or 
subsidiary of a depository institution, that the bank holding 
company controls), or otherwise, shares, assets, or owner-
ship interests (including debt or equity securities, partner-
ship interests, trust certificates, or other instruments rep-
resenting ownership) of a company or other entity, whether 
or not constituting control of such company or entity, 
engaged in any activity not authorized pursuant to this 
section if— 
"(i) the shares, assets, or ownership interests are 
not acquired or held by a depository institution or 
subsidiary of a depository institution; 
"(ii) such shares, assets, or ownership interests 
are acquired and held by— 
"(I) a securities affiliate or an affiliate thereof; 
or 
"(II) an affiliate of an insurance company 
described in subparagraph (I)(ii) that provides 
investment advice to an insurance company and 
is registered pursuant to the Investment Advisers 
Act of 1940, or an affiliate of such investment 
adviser; 
as part of a bona fide underwriting or merchant or 
investment banking activity, including investment 
activities engaged in for the purpose of appreciation 
and ultimate resale or disposition of the investment; 
"(iii) such shares, assets, or ownership interests 
are held for a period of time to enable the sale or 
* 
disposition thereof on a reasonable basis consistent 
with the financial viability of the activities described 
in clause (ii); and 
"(iv) during the period such shsires, assets, or 
ownership interests are held, the bank holding com-
pany does not routinely manage or operate such com-
pany or entity except as may be necessary or required 
^» 
to obtain a reasonable return on investment upon 
resale or disposition. 
"(I) Directly or indirectly acquiring or controlling, 
whether as principal, on behalf of 1 or more entities 
(including entities, other than a depository institution or 
subsidiary of a depository institution, that the bank holding 
company controls) or otherwise, shares, assets, or owner-
ship interests (including debt or equity securities, partner-
ship interests, trust certificates or other instruments rep-
resenting ownership) of a company or other entity, whether 
or not constituting control of such company or entity, 
1 engaged in any activity not authorized pursuant to this 
section if— 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1345 
"(i) the shares, assets, or ownership interests are 
not acquired or held by a depository institution or 
a subsidiary of a depository institution; 
"(ii) such shares, assets, or ownership interests 
are acquired and held by an insurance company that 
is predominantly engaged in underwriting life, accident 
and health, or property and casualty insurance (other 
than credit-related insurance) or providing and issuing 
annuities; 
"(iii) such shares, assets, or ownership interests 
represent an investment made in the ordinary course 
of business of such insurance company in accordance 
with relevant State law governing such investments; 
and 
"(iv) during the period such shares, assets, or 
ownership interests are held, the bank holding com-
pany does not routinely manage or operate such com-
pany except as may be necessary or required to obtain 
a reasonable return on investment. 
"(5) ACTIONS REQUIRED.— 
"(A) IN GENERAL.—The Board shall, by regulation or 
order, define, consistent with the purposes of this Act, 
the activities described in subparagraph (B) as financial 
in nature, and the extent to which such activities are 
financial in nature or incidental to a financial activity. 
"(B) ACTIVITIES.—The activities described in this 
subparagraph are as follows: 
"(i) Lending, exchanging, transferring, investing 
for others, or safeguarding financial assets other than 
money or securities. 
"(ii) Providing any device or other instrumentality 
for transferring money or other financial assets. 
"(iii) Arranging, effecting, or facilitating financial 
transactions for the account of third parties. 
"(6) REQUIRED NOTIFICATION.— 
"(A) IN GENERAL.—^A financial holding company that 
acquires any company or commences any activity pursuant 
to this subsection shall provide written notice to the Board 
describing the activity commenced or conducted by the 
company acquired not later than 30 calendar days after 
commencing the activity or consummating the acquisition, 
as the case may be. 
"(B) APPROVAL NOT REQUIRED FOR CERTAIN FINANCIAL 
ACTIVITIES.—Except as provided in subsection (j) with 
regard to the acquisition of a savings association, a finan-
cial holding company may commence any activity, or 
acquire any company, pursuant to paragraph (4) or any 
regulation prescribed or order issued under paragraph (5), 
without prior approval of the Board. 
"(7) MERCHANT BANKING ACTIVITIES.— 
"(A) JOINT REGULATIONS.—The Board and the Sec-
retary of the Treasury may issue such regulations imple-
menting paragraph (4)(H), including limitations on trans-
actions between depository institutions and companies 
controlled pursuant to such paragraph, as the Board and 
the Secretary jointly deem appropriate to assure compliance 
with the purposes and prevent evasions of this Act and 
Regulations. 
Deadline. 
113 STAT. 1346 
PUBLIC LAW 106-102—NOV. 12, 1999 
the Gramm-Leach-Bliley Act and to protect depository 
institutions. 
"(B) SUNSET OF RESTRICTIONS ON MERCHANT BANKING 
ACTIVITIES OF FINANCIAL SUBSIDIARIES.—The r e s t r i c t i o n s 
contained in paragraph (4)(H) on the ownership and control 
of shares, assets, or ownership interests by or on behalf 
of a subsidiary of a depository institution shall not apply 
to a financial subsidiary (as defined in section 5136A of 
the Revised Statutes of the United States) of a bank, if 
the Board and the Secretary of the Treasury jointly 
authorize financial subsidiaries of banks to engage in mer-
chant banking activities pursuant to section 122 of the 
Gramm-Leach-Bliley Act. 
"(1) CONDITIONS FOR ENGAGING IN EXPANDED FINANCIAL ACTIVI-
TIES.— 
"(1) IN GENERAL.—Notwithstanding subsection (k), (n), or 
(o), a bank holding company may not engage in any activity, 
or directly or indirectly acquire or retain shares of any company 
engaged in any activity, under subsection (k), (n), or (o), other 
than activities permissible for any bank holding company under 
subsection (c)(8), unless— 
"(A) all of the depository institution subsidiaries of 
the bank holding company are well capitalized; 
"(B) all of the depository institution subsidiaries of 
the bank holding company are well managed; and 
"(C) the bank holding company has filed with the 
Board— 
"(i) a declaration that the company elects to be 
a financial holding company to engage in activities 
or acquire and retain shares of a company that were 
not permissible for a bank holding company to engage 
in or acquire before the enactment of the Gramm-
Leach-Bliley Act; and 
"(ii) a certification that the company meets the 
requirements of subparagraphs (A) and (B). 
"(2) CRA REQUIREMENT.—Notwithstanding subsection (k) 
or (n) of this section, section 5136A(a) of the Revised Statutes 
of the United States, or section 46(a) of the Federal Deposit 
Insurance Act, the appropriate Federal banking agency shall 
prohibit a financial holding company or any insured depository 
institution from— 
"(A) commencing any new activity under subsection 
(k) or (n) of this section, section 5136A(a) of the Revised 
Statutes of the United States, or section 46(a) of the Federal 
Deposit Insurance Act; or 
"(B) directly or indirectly acquiring control of a com-
pemy engaged in any activity under subsection (k) or (n) 
of this section, section 5136A(a) of the Revised Statutes 
of the United States, or section 46(a) of the Federal Deposit 
Insurance Act (other than an investment made pursuant 
to subparagraph (H) or (I) of subsection (k)(4), or section 
122 of the Gramm-Leach-Bliley Act, or under section 46(a) 
of the Federal Deposit Insurance Act by reason of such 
section 122, by an affiliate already engaged in activities 
under any such provision); 
if any insured depository institution subsidiary of such financial 
holding company, or the insured depository institution or any 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1347 
of its insured depository institution affiliates, has received in 
its most recent examination under the Community Reinvest-
ment Act of 1977, a rating of less than 'satisfactory record 
of meeting community credit needs'. 
"(3) FOREIGN BANKS.—For purposes of paragraph (1), the 
Board shall apply comparable capital and management stand-
ards to a foreign bank that operates a branch or agency or 
owns or controls a commercial lending company in the United 
States, giving due regard to the principle of national treatment 
and equality of competitive opportunity, 
"(m) PROVISIONS APPLICABLE TO FINANCIAL HOLDING COMPA-
NIES THAT FAIL TO MEET CERTAIN REQUIREMENTS.— 
"(1) IN GENERAL.—If the Board finds that— 
"(A) a financial holding company is engaged, directly 
or indirectly, in any activity under subsection (k), (n), or 
(o), other than activities that are permissible for a bank 
holding company under subsection (c)(8); and 
"(B) such financial holding company is not in compli-
ance with the requirements of subsection (1)(1); 
the Board shall give notice to the financial holding company 
to that effiBct, describing the conditions giving rise to the notice. 
"(2) AGREEMENT TO CORRECT CONDITIONS REQUIRED.—Not Deadline, 
later than 45 days after the date of receipt by a financial 
holding company of a notice given under paragraph (1) (or 
such additional period as the Board may permit), the financial 
holding company shall execute an agreement with the Board 
to comply with the requirements applicable to a financial 
holding company under subsection (1)(1). 
"(3) BOARD MAY IMPOSE LIMITATIONS.—Until the conditions 
described in a notice to a financial holding company under 
paragraph (1) are corrected, the Board may impose such limita-
tions on the conduct or activities of that financial holding 
company or any affiliate of that company as the Board deter-
mines to be appropriate under the circumstances and consistent 
with the purposes of this Act. 
"(4) FAILURE TO CORRECT.—If the conditions described in 
a notice to a financial holding company under paragraph (1) 
are not corrected within 180 days after the date of receipt 
by the financial holding company of a notice under paragraph 
(1), the Board may require such financial holding company, 
under such terms and conditions as may be imposed by the 
Board and subject to such extension of time as may be granted 
in the discretion of the Board, either— 
"(A) to divest control of any subsidiary depository 
institution; or 
"(B) at the election of the financial holding company 
instead to cease to engage in any activity conducted by 
such financial holding company or its subsidiaries (other 
than a depository institution or a subsidiary of a depository 
institution) that is not an activity that is permissible for 
a bank holding company under subsection (c)(8). 
"(5) CONSULTATION.—In taking any action under this sub-
section, the Board shall consult with all relevant Federal and 
State regulatory agencies and authorities, 
"(n) AUTHORITY TO RETAIN LIMITED NONFINANCIAL ACTIVITIES 
AND AFFILIATIONS.— 
113 STAT. 1348 
PUBLIC LAW 106-102—NOV. 12, 1999 
"(1) IN GENERAL.—Notwithstanding subsection (a), a com-
pany that is not a bank holding company or a foreign bank 
(as defined in section 1(b)(7) of the International Banking Act 
of 1978) £ind becomes a finsincial holding company after the 
date of the enactment of the Gramm-Leach-Bliley Act may 
continue to engage in any activity and retain direct or indirect 
ownership or control of shares of a company engaged in any 
activity if— 
"(A) the holding company lawfully was engaged in the 
activity or held the shares of such company on September 
30, 1999; 
"(B) the holding company is predominantly engaged 
in financial activities as defined in paragraph (2); and 
"(C) the company engaged in such activity continues 
to engage only in the same activities that such company 
conducted on September 30, 1999, and other activities 
permissible under this Act. 
"(2) PREDOMINANTLY FINANCIAL.—For purposes of this sub-
section, a company is predominantly engaged in financial activi-
ties if the annual gross revenues derived by the holding com-
pany and all subsidiaries of the holding company (excluding 
revenues derived from subsidiary depository institutions), on 
a consolidated basis, from engaging in activities that are finan-
cial in nature or are incidental to a financial activity under 
subsection (k) represent at least 85 percent of the consolidated 
annual gross revenues of the company. 
"(3) No EXPANSION OF GRANDFATHERED COMMERCIAL ACTIVI-
TIES THROUGH MERGER OR CONSOLIDATION.—A financial holding 
company that engages in activities or holds shares pursuant 
to this subsection, or a subsidiary of such financial holding 
company, may not acquire, in any merger, consolidation, or 
other type of business combination, assets of any other company 
that is engaged in any activity that the Board has not deter-
mined to be financial in nature or incidental to a financial 
activity under subsection (k), except this paragraph shall not 
apply with respect to a company that owns a broadcasting 
station licensed under title III of the Communications Act of 
1934 and the shares of which are under common control with 
an insurance company since January 1, 1998, unless such com-
pany is acquired by, or otherwise becomes an affiliate of, a 
bank holding company that, at the time such acquisition or 
affiliation is consummated, is 1 of the 5 largest domestic bank 
holding companies (as determined on the basis of the consoli-
dated total assets of such companies). 
"(4) CONTINUING REVENUE LIMITATION ON GRANDFATHERED 
COMMERCIAL ACTIVITIES.—Notwithstanding any other provision 
of this subsection, a financial holding company may continue 
to engage in activities or hold shares in companies pursuant 
to this subsection only to the extent that the aggregate annual 
gross revenues derived from all such activities and all such 
companies does not exceed 15 percent of the consolidated 
annual gross revenues of the financial holding company 
(excluding revenues derived from subsidiary depository institu-
tions). 
"(5) 
CROSS 
MARKETING 
RESTRICTIONS 
APPLICABLE 
TO 
COMMERCIAL ACTIVITIES.— 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1349 
' . 
"(A) IN GENERAL.—^A depository institution controlled 
by a financial holding company shall not— 
"(i) offer or market, directly or through any 
arrangement, any product or service of a company 
whose activities are conducted or whose shares are 
owned or controlled by the financial holding company 
pursuant to this subsection or subparagraph (H) or 
(I) of subsection (k)(4); or 
"(ii) permit any of its products or services to be 
" • . 
offered or marketed, directly or through any arrange-
ment, by or through any company described in clause 
.-- .^. 
ii). 
"(B) RULE OF CONSTRUCTION.—Subparagraph (A) shall 
not be construed as prohibiting an arrangement between 
a depository institution and a company owned or controlled 
pursuant to subsection (k)(4)(I) for the marketing of prod-
ucts or services through statement inserts or Internet 
websites if— 
"(i) such arrangement does not violate section 106 
£
s of the Bank Holding Company Act Amendments of 
1970; and 
"(ii) the Board determines that the arrangement 
':.• 
is in the public interest, does not undermine the sepa-
ration of banking and commerce, and is consistent 
with the safety and soundness of depository institu-
tions. 
"(6) 
TRANSACTIONS WITH NONFINANCIAL 
AFFILIATES.—A 
depository institution controlled by a financial holding company 
may not engage in a covered transaction (as defined in section 
23A(b)(7) of the Federal Reserve Act) with any affiliate con-
trolled by the company pursuant to this subsection. 
"(7) SUNSET OF GRANDFATHER.—A financial holding com-
pany engaged in any activity, or retaining direct or indirect 
ownership or control of shares of a company, pursuant to this 
subsection, shall terminate such activity and divest ownership 
or control of the shares of such company before the end of 
the 10-year period beginning on the date of the enactment 
of the Gramm-Leach-Bliley Act. The Board may, upon applica-
tion by a financial holding company, extend such 10-year period 
by a period not to exceed an additional 5 years if such extension 
would not be detrimental to the public interest, 
"(o) 
REGULATION OF CERTAIN FINANCIAL HOLDING COMPA-
NIES.—Notwithstanding subsection (a), a company that is not a 
bank holding company or a foreign bank (as defined in section 
1(b)(7) of the International Banking Act of 1978) and becomes 
a financial holding company after the date of enactment of the 
Gramm-Leach-Bliley Act, may continue to engage in, or directly 
or indirectly own or control shares of a company engaged in, activi-
ties related to the trading, sale, or investment in commodities 
and underl3dng physical properties that were not permissible for 
bank holding companies to conduct in the United States as of 
September 30, 1997, if— 
"(1) the holding company, or any subsidiary of the holding 
company, lawfully was engaged, directly or indirectly, in any 
of such activities as of September 30, 1997, in the United 
' 
States; 
113 STAT. 1350 
PUBLIC LAW 106-102—NOV. 12, 1999 
"(2) the attributed aggregate consolidated assets of the 
company held by the holding company pursuant to this sub-
section, and not otherwise permitted to be held by a financial 
holding company, are equal to not more than 5 percent of 
the total consolidated assets of the bank holding company, 
except that the Board may increase that percentage by such 
amounts and under such circumstances as the Board considers 
appropriate, consistent with the purposes of this Act; and 
"(3) the holding company does not permit— 
"(A) any company, the shares of which it owns or 
controls pursuant to this subsection, to offer or market 
any product or service of an affiliated depository institution; 
or 
"(B) any affiliated depository institution to offer or 
market any product or service of any company, the shares 
of which are owned or controlled by such holding company 
pursuant to this subsection.", 
(b) COMMUNITY REINVESTMENT REQUIREMENT.—Section 804 
of 
the Community Reinvestment Act of 1977 (12 U.S.C. 2903) is 
amended by adding at the end the following new subsection: 
"(c) FINANCIAL HOLDING COMPANY REQUIREMENT.— 
"(1) IN GENERAL.—^An election by a bank holding company 
to become a financial holding company under section 4 of the 
Bank Holding Company Act of 1956 shall not be effective if— 
"(A) the Board finds that, as of the date the declaration 
of such election and the certification is filed by such holding 
company under section 4(1)(1)(C) of the Bank Holding Com-
j tt pany Act of 1956, not all of the subsidiary insured deposi-
tory institutions of the bank holding company had achieved 
a rating of 'satisfactory record of meeting community credit 
needs', or better, at the most recent examination of each 
such institution; and 
"(B) the Board notifies the company of such finding 
before the end of the 30-day period beginning on such 
date. 
"(2) 
LIMITED EXCLUSIONS FOR NEWLY ACQUIRED INSURED 
• 
DEPOSITORY INSTITUTIONS.—Any insured depository institution 
acquired by a bank holding company during the 12-month 
period preceding the date of the submission to the Board of 
the declaration and certification under section 4(1)(1)(C) of the 
Bank Holding Company Act of 1956 may be excluded for pur-
poses of paragraph (1) during the 12-month period beginning 
on the date of such acquisition if— 
"(A) the bank holding company has submitted an 
affirmative plan to the appropriate Federal financial super-
visory agency to take such action as may be necessary 
in order for such institution to achieve a rating of 'satisfac-
tory record of meeting community credit needs', or better, 
at the next examination of the institution; and 
"(B) the plan has been accepted by such agency. 
"(3) DEFINITIONS.—For purposes of this subsection, the fol-
lowing definitions shall apply: 
"(A) BANK HOLDING COMPANY; FINANCIAL HOLDING COM-
PANY.—The terms 'bank holding company' and 'financial 
holding company' have the meanings given those terms 
in section 2 of the Bank Holding Company Act of 1956. 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1351 
"(B) BOARD.—The term 'Board' means the Board of 
Governors of the Federal Reserve System. 
"(C) 
INSURED 
DEPOSITORY INSTITUTION.—The term 
'insured depository institution' has the meaning given the 
term in section 3(c) of the Federal Deposit Insurance Act.". 
(c) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) DEFINITIONS.—Section 2 of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841) is amended— 
(A) in subsection (n), by inserting "'depository institu-
tion'," after "the terms"; and 
(B) by adding at the end the following new subsections: 
"(p) FINANCIAL HOLDING COMPANY.—For purposes of this Act, 
the term 'financial holding company means a bank holding company 
that meets the requirements of section 4(1)(1). 
"(q) INSURANCE COMPANY.—For purposes of sections 4 and 5, 
the term 'insurance company' includes any person engaged in the 
business of insurance to the extent of such activities.". 
(2) NOTICE PROCEDURES.—Section 4(j) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 18430')) is amended— 
(A) in each of subparagraphs (A) and (E) of paragraph 
(1), by inserting "or in any complementary activity under 
subsection (k)(l)(B)" after "subsection (c)(8) or (a)(2)"; and 
(B) in paragraph (3)— 
(i) by inserting ", other than any complementary 
activity under subsection (k)(l)(B)," after "to engage 
in any activity"; and 
(ii) by inserting "or a company engaged in any 
' 
complementary activity under subsection (k)(l)(B)" 
after "insured depository institution". 
, 
(d) REPORT.— 
12 use 1843 
(1) IN GENERAL.—By the end of the 4-year period beginning note. 
on the date of the enactment of this Act, the Board of Governors 
' 
of the Federal Reserve System and the Secretary of the 
] Treasury shall submit a joint report to the Congress containing 
a summary of new activities, including grandfathered commer-
I 
cial activities, in which any financial holding company is 
J 
engaged pursuant to subsection (k)(l) or (n) of section 4 of 
the Bank Holding Company Act of 1956 (as added by subsection 
.
• 
(a)). 
(2) OTHER CONTENTS.—^The report submitted to the Con-
gress pursuant to paragraph (1) shall also contain the following: 
(A) A discussion of actions by the Board of Governors 
! 
of the Federal Reserve System and the Secretary of the 
Treasury, whether by regulation, order, interpretation, or 
guideline or by approval or disapproval of an application, 
f 
with regard to activities of financial holding companies 
that are incidental to activities that are financial in nature 
or complementary to such financial activities. 
(B) An analysis and discussion of the risks posed by 
commercial activities of financial holding companies to the 
safety and soundness of affiliate depository institutions. 
(C) An analysis and discussion of the effect of mergers 
and acquisitions under section 4(k) of the Bank Holding 
Company Act of 1956 on market concentration in the finan-
cial services industry. 
113 STAT. 1352 
PUBLIC LAW 106-102—NOV. 12, 1999 
15 use 6701. 
SEC. 104. OPERATION OF STATE LAW. 
(a) STATE REGULATION OF THE BUSINESS OF INSURANCE.—The 
Act entitled "An Act to express the intent of Congress with reference 
to the regulation of the business of insurance" and approved March 
9, 1945 (15 U.S.C. 1011 et seq.) (commonly referred to as the 
"McCarran-Ferguson Act") remains the law of the United States. 
(b) 
MANDATORY INSURANCE LICENSING REQUIREMENTS.—No 
person shall engage in the business of insurance in a State as 
principal or agent unless such person is licensed as required by 
the appropriate insurance regulator of such State in accordance 
with the relevant State insurance law, subject to subsections (c), 
(d), and (e). 
(c) AFFILIATIONS.— 
(1) IN GENERAL.—Except as provided in paragraph (2), no 
State may, by statute, regulation, order, interpretation, or other 
action, prevent or restrict a depository institution, or an affiliate 
thereof, from being affiliated directly or indirectly or associated 
with any person, as authorized or permitted by this Act or 
any other provision of Federal law. 
(2) INSURANCE.—^With respect to affiliations 
between 
depository institutions, or any affiliate thereof, and any insurer, 
paragraph (1) does not prohibit— 
(A) any State from— 
(i) collecting, 
reviewing, 
and 
taking 
actions 
(including approval and disapproval) on applications 
and other documents or reports concerning any pro-
posed acquisition of, or a change or continuation of 
control of, an insurer domiciled in that State; and 
(ii) exercising authority granted under applicable 
State law to collect information concerning any pro-
posed acquisition of, or a change or continuation of 
control of, an insurer engaged in the business of insur-
ance in, and regulated as an insurer by, such State; 
during the 60-day period preceding the effective date of 
the acquisition or change or continuation of control, so 
long as the collecting, reviewing, taking actions, or exer-
cising authority by the State does not have the effect of 
discriminating, intentionally or unintentionally, against a 
depository institution or an affiliate thereof, or against 
any other person based upon an association of such person 
with a depository institution; 
(B) any State from requiring any person that is 
acquiring control of an insurer domiciled in that State 
to maintain or restore the capital requirements of that 
insurer to the level required under the capital regulations 
of general applicability in that State to avoid the require-
ment of preparing and filing with the insurance regulatory 
authority of that State a plan to increase the capital of 
the insurer, except that any determination by the State 
insurance regulatory authority with respect to such require-
ment shall be made not later than 60 days after the date 
of notification under subparagraph (A); or 
(C) any State from restricting a change in the owner-
ship of stock in an insurer, or a company formed for the 
purpose of controlling such insurer, after the conversion 
of the insurer from mutual to stock form so long as such 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1353 
restriction does not have the effect of discriminating, inten-
tionally or unintentionally, against a depository institution 
or an affiliate thereof, or against any other person based 
upon an association of such person with a depository 
institution, 
(d) ACTIVITIES.— 
(1) IN GENERAL.—Except as provided in paragraph (3), and 
except with respect to insurance sales, solicitation, and cross 
marketing activities, which shall be governed by paragraph 
(2), no State may, by statute, regulation, order, interpretation, 
or other action, prevent or restrict a depository institution 
or an affiliate thereof from engaging directly or indirectly, 
either by itself or in conjunction with an affiliate, or any other 
person, in any activity authorized or permitted under this Act 
and the amendments made by this Act. 
(2) INSURANCE SALES.— 
(A) IN GENERAL.—In accordance with the legal stand-
ards for preemption set forth in the decision of the Supreme 
Court of the United States in Bamett Bank of Marion 
County N.A. v. Nelson, 517 U.S. 25 (1996), no State may, 
by statute, regulation, order, interpretation, or other action, 
prevent or significantly interfere with the ability of a 
depository institution, or an affiliate thereof, to engage, 
directly or indirectly, either by itself or in conjunction 
with an affiliate or any other person, in any insurance 
sales, solicitation, or crossmarketing activity. 
(B) 
CERTAIN 
STATE 
LAWS 
PRESERVED.—Notwith-
standing subparagraph (A), a State may impose any of 
the following restrictions, or restrictions that are substan-
tially the same as but no more burdensome or restrictive 
than those in each of the following clauses: 
(i) Restrictions prohibiting the rejection of an 
insurance policy by a depository institution or an affil-
iate of a depository institution, solely because the policy 
has been issued or underwritten by any person who 
is not associated with such depository institution or 
affiliate when the insurance is required in connection 
with a loan or extension of credit. 
(ii) Restrictions prohibiting a requirement for any 
debtor, insurer, or insurance agent or broker to pay 
a separate charge in connection with the handling 
of insurance that is required in connection with a 
loan or other extension of credit or the provision of 
another traditional banking product by a depository 
institution, or any affiliate of a depository institution, 
unless such charge would be required when the deposi-
tory institution or affiliate is the licensed insurance 
agent or broker providing the insurance. 
(iii) Restrictions prohibiting the use of any 
advertisement or other insurance promotional material 
by a depository institution or any affiliate of a deposi-
tory institution that would cause a reasonable person 
to believe mistakenly that— 
(I) the Federal Government or a State is 
responsible for the insurance sales activities of, 
or stands behind the credit of, the institution or 
affiliate; or 
113 STAT. 1354 
PUBLIC LAW 106-102—NOV. 12, 1999 
(II) a State, or the Federal Government 
guarantees any returns on insurance products, or 
is a source of pajonent on any insurance obligation 
of or sold by the institution or affiliate; 
(iv) Restrictions prohibiting the payment or receipt 
of any commission or brokerage fee or other valuable 
consideration for services as an insurance agent or 
broker to or by amy person, unless such person holds 
a valid State license regarding the applicable class 
of insureince at the time at which the services are 
performed, except that, in this clause, the term "serv-
ices as an insurance agent or broker" does not include 
a referral by an unlicensed person of a customer or 
potential customer to a licensed insurance agent or 
broker that does not include a discussion of specific 
insurance policy terms and conditions. 
(v) Restrictions prohibiting any compensation paid 
to or received by any individual who is not licensed 
to sell insurance, for the referral of a customer that 
seeks to purchase, or seeks an opinion or advice on, 
any insurance product to a person that sells or provides 
opinions or advice on such product, based on the pur-
chase of insurance by the customer. 
(vi) Restrictions prohibiting the release of the 
insurance information 
of a customer (defined 
as 
information concerning the premiums, terms, and 
conditions of insurance coverage, including expiration 
dates and rates, and insurance claims of a customer 
contained in the records of the depository institution 
or an affiliate thereof) to any person other than an 
officer, director, employee, agent, or affiliate of a 
depository institution, for the purpose of soliciting or 
selling insurance, without the express consent of the 
customer, other than a provision that prohibits— 
(I) a transfer of insurance information to an 
unaffiliated insurer in connection with transferring 
insurance in force on existing insureds of the 
depository institution or an affiliate thereof, or 
in connection with a merger with or acquisition 
of an unaffiliated insurer; or 
(II) the release of information as otherwise 
authorized by State or Federal law. 
(vii) Restrictions prohibiting the use of health 
information obtained from the insurance records of 
a customer for any purpose, other than for its activities 
as a licensed agent or broker, without the express 
consent of the customer. 
(viii) Restrictions prohibiting the extension of 
credit or any product or service that is equivalent 
to an extension of credit, lease or sale of property 
of any kind, or furnishing of any services or fixing 
or varying the consideration for any of the foregoing, 
on the condition or requirement that the customer 
obtain insurance from a depository institution or an 
affiliate of a depository institution, or a particular 
insurer, agent, or broker, other than a prohibition that 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1355 
would prevent any such depository institution or 
affiliate— 
(I) from engaging in any activity described 
in this clause that would not violate section 106 
of the Bank Holding Company Act Amendments 
of 1970, as interpreted by the Board of Governors 
of the Federal Reserve System; or 
(II) from informing a customer or prospective 
customer that insurance is required in order to 
obtain a loan or credit, that loan or credit approval 
is contingent upon the procurement by the cus-
tomer of acceptable insurance, or that insurance 
is available from the depository institution or an 
affiliate of the depository institution. 
(ix) Restrictions requiring, when an application by 
a consumer for a loan or other extension of credit 
from a depository institution is pending, and insurance 
is offered or sold to the consumer or is required in 
connection with the loan or extension of credit by the 
depository institution or any affiliate thereof, that a 
written disclosure be provided to the consumer or 
prospective customer indicating that the customer's 
choice of an insurance provider will not affect the 
credit decision or credit terms in any way, except that 
the depository institution may impose reasonable 
requirements concerning the creditworthiness of the 
insurer and scope of coverage chosen. 
(x) Restrictions requiring clear and conspicuous 
disclosure, in writing, where practicable, to the cus-
tomer prior to the sale of any insurance policy that 
such policy— 
(I) is not a deposit; 
(II) is not insured by the Federal Deposit 
Insurance Corporation; 
(III) is not guaranteed by any depository 
institution or, if appropriate, an affiliate of any 
such institution or any person soliciting the pur-
chase of or selling insurance on the premises 
thereof; and 
(IV) where appropriate, involves investment 
risk, including potential loss of principal. 
(xi) Restrictions requiring that, when a customer 
obtains insurance (other than credit insurance or flood 
insurance) and credit from a depository institution, 
or any affiliate of such institution, or any person solic-
iting the purchase of or selling insurance on the prem-
ises thereof, the credit and insurance transactions be 
completed through separate documents. 
(xii) Restrictions prohibiting, when a customer 
obtains insurance (other than credit insurance or flood 
insurance) and credit from a depository institution or 
an affiliate of such institution, or any person soliciting 
the purchase of or selling insurance on the premises 
thereof, inclusion of the expense of insurance premiums 
in the primary credit transaction without the express 
written consent of the customer. 
113 STAT. 1356 
PUBLIC LAW 106-102—NOV. 12, 1999 
(xiii) Restrictions requiring maintenance of sepa-
rate and distinct books and records relating to insur-
ance transactions, including all files relating to and 
reflecting consumer complaints, and requiring that 
such insurance books and records be made available 
to the appropriate State insurance regulator for inspec-
tion upon reasonable notice. 
(C) LIMITATIONS.— 
(i) OCC DEFERENCE.—Section 304(e) does not apply 
with respect to any State statute, regulation, order, 
interpretation, or other action regarding insurance 
sales, 
solicitation, 
or 
cross 
marketing 
activities 
described in subparagraph (A) that was 
issued, 
adopted, or enacted before September 3, 1998, and 
that is not described in subparagraph (B). 
(ii) NONDISCRIMINATION.—Subsection (e) does not 
apply with respect to any State statute, regulation, 
order, interpretation, or other action regarding insur-
ance sales, solicitation, or cross marketing activities 
described in subparagraph 
(A) that was 
issued, 
adopted, or enacted before September 3, 1998, and 
that is not described in subparagraph (B). 
(iii) CONSTRUCTION.—Nothing in this paragraph 
shall be construed— 
(I) to limit the applicability of the decision 
of the Supreme Court in Barnett Bank of Marion 
County N.A. v. Nelson, 517 U.S. 25 (1996) with 
respect to any State statute, regulation, order, 
interpretation, or other action that is not referred 
to or described in subparagraph (B); or 
(II) to create any inference with respect to 
any State statute, regulation, order, interpretation, 
or other action that is not described in this para-
graph. 
(3) INSURANCE ACTIVITIES OTHER THAN SALES.—State stat-
utes, regulations, interpretations, orders, and other actions 
shall not be preempted under paragraph (1) to the extent 
that they— 
(A) relate to, or are issued, adopted, or enacted for 
the purpose of regulating the business of insurance in 
accordance with the Act entitled "An Act to express the 
intent of Congress with reference to the regulation of the 
business of insurance" and approved March 9, 1945 (15 
U.S.C. 1011 et seq.) (commonly referred to as the 
"McCarran-Ferguson Act"); 
(B) apply only to persons that are not depository 
institutions, but that are directly engaged in the business 
of insurance (except that they may apply to depository 
institutions engaged in providing savings bank life insur-
ance as principal to the extent of regulating such insur-
ance); 
(C) do not relate to or directly or indirectly regulate 
insurance sales, solicitations, or cross marketing activities; 
and 
(D) are not prohibited under subsection (e). 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1357 
(4) 
FINANCIAL ACTIVITIES OTHER THAN INSURANCE.—No 
State statute, regulation, order, interpretation, or other action 
shall be preempted under paragraph (1) to the extent that— 
(A) it does not relate to, and is not issued and adopted, 
or enacted for the purpose of regulating, directly or 
indirectly, insurance sales, solicitations, or cross marketing 
activities covered under paragraph (2); 
(B) it does not relate to, and is not issued and adopted, 
or enacted for the purpose of regulating, directly or 
indirectly, the business of insurance activities other than 
sales, solicitations, or cross marketing activities, covered 
under paragraph (3); 
(C) it does not relate to securities investigations or 
enforcement actions referred to in subsection (f); and 
(D)it— 
(i) does not distinguish by its terms between 
depository institutions, and affiliates thereof, engaged 
in the activity at issue and other persons engaged 
in the same activity in a manner that is in any way 
adverse with respect to the conduct of the activity 
by any such depository institution or affiliate engaged 
in the activity at issue; 
(ii) as interpreted or applied, does not have, and 
will not have, an impact on depository institutions, 
or affiliates thereof, engaged in the activity at issue, 
or any person who has an association with any such 
depository institution or affiliate, that is substantially 
more adverse than its impact on other persons engaged 
in the same activity that are not depository institutions 
or affiliates thereof, or persons who do not have an 
association with any such depository institution or affil-
iate; 
(iii) does not effectively prevent a depository 
institution or affiliate thereof from engaging in activi-
ties authorized or permitted by this Act or any other 
provision of Federal law; and 
(iv) does not conflict with the intent of this Act 
generally to permit affiliations that are authorized or 
permitted by Federal law. 
(e) NONDISCRIMINATION.—Except as provided in any restrictions 
described in subsection (d)(2)(B), no State may, by statute, regula-
tion, order, interpretation, or other action, regulate the insurance 
activities authorized or permitted under this Act or any other 
provision of Federal law of a depository institution, or affiliate 
thereof, to the extent that such statute, regulation, 
order, 
interpretation, or other action— 
(1) distinguishes by its terms between depository institu-
tions, or affiliates thereof, and other persons engaged in such 
activities, in a manner that is in any way adverse to any 
such depository institution, or affiliate thereof; 
(2) as interpreted or applied, has or will have an impact 
on depository institutions, or affiliates thereof, that is substan-
tially more adverse than its impact on other persons providing 
the same products or services or engaged in the same activities 
that are not depository institutions, or affiliates thereof, or 
persons or entities affiliated therewith; 
113 STAT. 1358 
PUBLIC LAW 106-102—NOV. 12, 1999 
(3) effectively prevents a depository institution, or affiliate 
thereof, from engaging in insurance activities authorized or 
permitted by this Act or any other provision of Federal law; 
or 
(4) conflicts with the intent of this Act generally to permit 
affiliations that are authorized or permitted by Federal law 
between depository institutions, or affiliates thereof, and per-
sons engaged in the business of insurance. 
if) LIMITATION.—Subsections (c) and (d) shall not be construed 
to affect— 
(1) the jurisdiction of the securities commission (or any 
agency or office performing like functions) of any State, under 
the laws of such State— 
(A) to investigate and bring enforcement actions, con-
sistent with section 18(c) of the Securities Act of 1933, 
with respect to fraud or deceit or unlawful con^Juct by 
any person, in connection with securities or securities 
transactions; or 
(B) to require the registration of securities or the licen-
sure or registration of brokers, dealers, or investment 
advisers (consistent with section 203A of the Investment 
Advisers Act of 1940), or the associated persons of a broker, 
dealer, or investment adviser (consistent with such section 
203A); or 
(2) State laws, regulations, orders, interpretations, or other 
actions of general applicability relating to the governance of 
corporations, partnerships, limited liability companies, or other 
business associations incorporated or formed under the laws 
of that State or domiciled in that State, or the applicability 
of the antitrust laws of any State or any State law that is 
similar to the antitrust laws if such laws, regulations, orders, 
interpretations, or other actions are not inconsistent with the 
purposes of this Act to authorize or permit certain affiliations 
and to remove barriers to such affiliations. 
(g) DEFINITIONS.—For purposes of this section, the following 
definitions shall apply: 
(1) AFFILIATE.—The term "affiliate" means any company 
that controls, is controlled by, or is under common control 
with another company. 
(2) ANTITRUST LAWS.—The term "antitrust laws" has the 
meaning given the term in subsection (a) of the first section 
of the Cla5^on Act, and includes section 5 of the Federal Trade 
Commission Act (to the extent that such section 5 relates 
to unfair methods of competition). 
(3) 
DEPOSITORY 
INSTITUTION.—The 
term 
"depository 
institution"— 
(A) has the meaning given the term in section 3 of 
the Federal Deposit Insurance Act; and 
(B) includes any foreign bank that maintains a branch, 
agency, or commercial lending company in the United 
States. 
(4) INSURER.—The term "insurer" means any person 
engaged in the business of insurance. 
(5) STATE.—The term "State" means any State of the 
United States, the District of Columbia, any territory of the 
United States, Puerto Rico, Guam, American Samoa, the Trust 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1359 
Territory of the Pacific Islands, the Virgin Islands, and the 
Northern Mariana Islands. 
SEC. 105. MUTUAL BANK HOLDING COMPANIES AUTHORIZED. 
Section 3(g)(2) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1842(g)(2)) is amended to read as follows: 
"(2) REGULATIONS.—A bank holding company organized as 
a mutual holding company shall be regulated on terms, and 
shall be subject to limitations, comparable to those applicable 
to any other bank holding company.". 
SEC. 106. PROHIBITION ON DEPOSIT PRODUCTION OFFICES. 
Section 109(e)(4) of the Riegle-Neal Interstate Banking and 
Branching Efficiency Act of 1994 (12 U.S.C. 1835a(e)(4)) is amended 
by inserting "and any branch of a bank controlled by an out-
of-State bank holding company (as defined in section 2(o)(7) of 
the Bank Holding Company Act of 1956)" before the period. 
SEC. 107. CROSS MARKETING RESTRICTION; LIMITED PURPOSE BANK 
RELIEF; DIVESTITURE. 
(a) CROSS MARKETING RESTRICTION.—Section 4(f) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1843(f)) is amended by 
striking paragraph (3). 
(b) DAYLIGHT OVERDRAFTS.—Section 4(f) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1843(f)) is amended by inserting 
after paragraph (2) the following new paragraph: 
"(3) 
PERMISSIBLE OVERDRAFTS DESCRIBED.—For purposes 
of paragraph (2)(C), an overdraft is described in this paragraph 
if— 
"(A) such overdraft results from an inadvertent com-
puter or accounting error that is beyond the control of 
both the bank and the affiliate; 
"(B) such overdraft— 
"(i) is permitted or incurred on behalf of an affiliate 
that 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 that are direct 
obligations of the United States or on which the prin-
cipal and interest are fully guaranteed by the United 
States or by securities and obligations eligible for 
settlement on the Federal Reserve book entry system; 
or 
"(C) such overdraft— 
"(i) is permitted or incurred by, or on behalf of, 
an affiliate in connection with an activity that is finan-
cial in nature or incidental to a financial activity; and 
"(ii) does not cause the bank to violate any provi-
sion of section 23A or 23B of the Federal Reserve 
Act, either directly, in the case of a bank that is 
a member of the Federal Reserve System, or by virtue 
of section 18(j) of the Federal Deposit Insurance Act, 
in the case of a bank that is not a member of the 
Federal Reserve System.". 
(c) INDUSTRIAL LOAN COMPANIES; AFFILIATE OVERDRAFTS.—Sec-
tion 2(c)(2)(H) of the Bank Holding Company Act of 1956 (12 U.S.C. 
113 STAT. 1360 
PUBLIC LAW 106-102—NOV. 12, 1999 
1841(c)(2)(H)) is amended by inserting ", or that is otherwdse permis-
sible for a bank controlled by a company described in section 4(f)(1)" 
before the period at the end. 
(d) ACTIVITIES LIMITATIONS.—Section 4(f)(2) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1843(f)(2)) is amended— 
(1) by striking "Paragraph (1) shall cease to apply to any 
company described in such paragraph if—" and inserting "Sub-
ject to paragraph (3), a company described in paragraph (1) 
shall no longer qualify for the exemption provided under that 
paragraph if—"; 
(2) in subparagraph (A)— 
(A) in clause (ii)(IX), by striking "and" at the end; 
(B) in clause (ii)(X), by inserting "and" after the semi-
colon; 
(C) in clause (ii), by inserting after subclause (X) the 
following new subclause: 
"(XI) assets that are derived from, or inci-
dental to, activities in which institutions described 
in subparagraph (F) or (H) of section 2(c)(2) are 
permitted to engage;"; and 
(D) by striking "or" at the end; and 
(3) by striking subparagraph (B) and inserting the fol-
lowing: 
"(B) any bank subsidiary of such company— 
"(i) accepts demand deposits or deposits that the 
depositor may withdraw by check or similar means 
for payment to third parties; and 
"(ii) engages in the business of making commercial 
loans (except that, for purposes of this clause, loans 
made in the ordinary course of a credit card operation 
shall not be treated as commercial loans); or 
"(C) after the date of the enactment of the Competitive 
Equality Amendments of 1987, any bank subsidiary of such 
company permits any overdraft (including any intraday 
overdraft), or incurs any such overdraft in the account 
of the bank at a Federal reserve bank, on behalf of an 
affiliate, other than an overdraft described in paragraph 
(3).". 
"(e) DIVESTITURE REQUIREMENT.—Section 4(f)(4) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1843(f)(4)) is amended 
to read as follows: 
"(4) DIVESTITURE IN CASE OF LOSS OF EXEMPTION.—If any 
company described in paragraph (1) fails to qualify for the 
exemption provided under paragraph (1) by operation of para-
graph (2), such exemption shall cease to apply to such company 
and such company shall divest control of each bank it controls 
before the end of the 180-day period beginning on the date 
on which the company receives notice from the Board that 
the company has failed to continue to qualify for such exemp-
tion, unless, before the end of such 180-day period, the company 
has— 
"(A) either— 
"(i) corrected the condition or ceased the activity 
that caused the company to fail to continue to qualify 
for the exemption; or 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1361 
"(ii) submitted a plan to the Board for approval 
to cease the activity or correct the condition in a timely 
manner (which shall not exceed 1 year); and 
Hjr 
«(g) implemented procedures that are reasonably 
adapted to avoid the reoccurrence of such condition or 
activity.", 
(f) FOREIGN BANK SUBSIDIARIES OF LIMITED PURPOSE CREDIT 
CARD BANKS.—Section 4(f) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1843(f)) is amended by adding at the end the 
following new paragraph: 
"(14) FOREIGN BANK SUBSIDIARIES OF LIMITED PURPOSE 
CREDIT CARD BANKS.— 
"(A) IN GENERAL.—^An institution described in section 
2(c)(2)(F) may control a foreign bank if— 
"(i) the investment of the institution in the foreign 
bank meets the requirements of section 25 or 25A 
of the Federal Reserve Act and the foreign bank quali-
fies under such sections; 
"(ii) the foreign bank does not offer any products 
^ ^ 
or services in the United States; and 
^^Ij 
"(iii) the activities of the foreign bank are permis-
sible under otherwise applicable law. 
"(B) OTHER LIMITATIONS INAPPLICABLE.—The limita-
Ail 
tions contained in any clause of section 2(c)(2)(F) shall 
? • 3 
' 
'" 
not apply to a foreign bank described in subparagraph 
(A) that is controlled by an institution described in such 
section.". 
SEC. 108. USE OF SUBORDINATED DEBT TO PROTECT FINANCIAL 
12 USC 4801 
SYSTEM AND DEPOSIT FUNDS FROM "TOO BIG TO FAIL" 
note. 
INSTITUTIONS. 
(a) STUDY REQUIRED.—The Board of Governors of the Federal 
Reserve System and the Secretary of the Treasury shall conduct 
a study o
f
— 
(1) the feasibility and appropriateness of establishing a 
requirement that, with respect to large insured depository 
i institutions and depository institution holding companies the 
failure of which could have serious adverse effects on economic 
conditions or financial stability, such institutions and holding 
companies maintain some portion of their capital in the form 
of subordinated debt in order to bring market forces and market 
discipline to bear on the operation of, and the assessment 
of the viability of, such institutions and companies and reduce 
the risk to economic conditions, financial stability, and any 
deposit insurance fund; 
(2) if such requirement is feasible and appropriate, the 
appropriate amount or percentage of capital that should be 
subordinated debt consistent with such purposes; and 
(3) the manner in which any such requirement could be 
incorporated into existing capital standards and other issues 
relating to the transition to such a requirement. 
(b) REPORT.—Before the end of the 18-month period beginning 
on the date of the enactment of this Act, the Board of Governors 
of the Federal Reserve System and the Secretary of the Treasury 
shall submit a report to the Congress containing the findings and 
conclusions of the Board and the Secretary in connection with 
113 STAT. 1362 
PUBLIC LAW 106-102—NOV. 12, 1999 
the study required under subsection (a), together with such legisla-
tive £ind administrative proposals as the Board and the Secretary 
may determine to be appropriate. 
(c) DEFINITIONS.—For purposes of subsection (a), the following 
definitions shall apply: 
(1) BANK HOLDING COMPANY.—The term "bank holding com-
pany has the meaning given the term in section 2 of the 
Bank Holding Company Act of 1956. 
(2) INSURED DEPOSITORY INSTITUTION.—The term "insured 
depository institution" has the meaning given the term in sec-
tion 3(c) of the Federal Deposit Insurance Act. 
(3) SUBORDINATED DEBT.—The term "subordinated debt" 
means unsecured debt that— 
(A) has an original weighted average maturity of not 
less than 5 years; 
\
^ 
(B) is subordinated as to pa)anent of principal and 
interest to all other indebtedness of the bank, including 
' 
deposits; 
(C) is not supported by any form of credit enhancement, 
including a guarantee or standby letter of credit; and 
(D) is not held in whole or in part by any affiliate 
or institution-affiliated party of the insured depository 
institution or bank holding company. 
12 u s e 252 note. 
SEC. 109. STUDY OF FINANCIAL MODERNIZATION'S EFFECT ON THE 
ACCESSIBILITY OF SMALL BUSINESS AND FARM LOANS. 
(a) STUDY.—The Secretary of the Treasury, in consultation 
with the Federal bsmking agencies (as defined in section 3(z) of 
the Federal Deposit Insurance Act), shall conduct a study of the 
extent to which credit is being provided to and for small businesses 
and farms, as a result of this Act and the amendments made 
by this Act. 
(b) REPORT.—Before the end of the 5-year period beginning 
on the date of the enactment of this Act, the Secretary, in consulta-
tion with the Federal banking agencies, shall submit a report to 
the Congress on the study conducted pursuant to subsection (a) 
and shall include such recommendations as the Secretary deter-
mines to be appropriate for administrative and legislative action. 
Subtitle B—Streamlining Supervision of 
Bank Holding Companies 
SEC. 111. STREAMLINING BANK HOLDING COMPANY SUPERVISION. 
Section 5(c) of the Bank Holding Company Act of 1956 (12 
U.S.C. 1844(c)) is amended to read as follows: 
"(c) REPORTS AND EXAMINATIONS.— 
"(1) REPORTS.— 
"(A) IN GENERAL.—The Board, from time to time, may 
require a bank holding company and any subsidiary of 
such company to submit reports under oath to keep the 
Board informed as to— 
"(i) its financial condition, systems for monitoring 
. 
and controlling financial and operating risks, and 
; 
transactions with depository institution subsidiaries of 
the bank holding company; and 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1363 
"(ii) compli£ince by the company or subsidiary with 
appUcable provisions of this Act or any other Federal 
law that the Board has specific jurisdiction to enforce 
against such company or subsidiary. 
"(B) USE OF EXISTING REPORTS.— 
"(i) IN GENERAL.—For purposes of compliance with 
this paragraph, the Board shall, to the fullest extent 
possible, accept— 
"(I) reports that a bank holding company or 
any subsidiary of such company has provided or 
been required to provide to other Federal or State 
^ 
supervisors 
or to 
appropriate 
self-regulatory 
organizations; 
"(II) information that is otherwise required 
to be reported publicly; and 
"(III) externally audited financial statements. 
"(ii) AVAILABILITY.—^A bank holding company or 
a subsidiary of such company shall provide to the 
Board, at the request of the Board, a report referred 
to in clause (i). 
"(iii) REPORTS FILED WITH OTHER AGENCIES.— 
"(I) IN GENERAL.—In the event that the Board 
requires a report under this subsection fi-om a 
functionally regulated subsidisiry of a bank holding 
company of a kind that is not required by another 
Federal or State regulatory authority or an appro-
priate self-regulatory organization, the Board shall 
first 
request that the appropriate 
regulatory 
authority or self-regulatory organization obtain 
.."^ 
such report. 
"(II) AVAILABILITY FROM OTHER SUBSIDIARY.— 
If the report is not made available to the Board, 
and the report is necessary to assess a material 
risk to the bank holding company or any of its 
depository institution subsidiaries or compliance 
with this Act or any other Federal law that the 
Board has specific jurisdiction to enforce against 
'••^i y 
such company or subsidiary or the systems 
described in paragraph (2)(A)(ii)(II), the Board may 
require such functionally regulated subsidiary to 
provide such a report to the Board. 
"(2) EXAMINATIONS.— 
"(A) 
EXAMINATION AUTHORITY FOR BANK HOLDING 
COMPANIES AND SUBSIDIARIES.—Subject to subparagraph 
(B), the Board may make examinations of each bank 
holding company and each subsidiary of such holding com-
pany in order— 
"(i) to inform the Board of the nature of the oper-
ations and financial condition of the holding company 
and such subsidiaries; 
"(ii) to inform the Board o
f
—
-
"(I) the financial and operational risks within 
the holding company system that may pose a 
threat to the safety and soundness of any deposi-
tory institution subsidiary of such holding com-
pany; and 
113 STAT. 1364 
PUBLIC LAW 106-102—NOV. 12, 1999 
I 
"(II) the systems for monitoring and control-
/?'li 'f 
ling such risks; and 
• 
"(iii) to monitor compHance with the provisions 
of this Act or any other Federal law that the Board 
has specific jurisdiction to enforce against such com-
V 
pany or subsidiary and those governing transactions 
j \ , • 
and relationships between any depository institution 
subsidiary and its affiliates. 
"(B) 
FUNCTIONALLY REGULATED SUBSIDIARIES.—Not-
withstanding subparagraph (A), the Board may make 
, 
examinations of a functionally regulated subsidiary of a 
bank holding company only if— 
"(i) the Board has reasonable cause to believe that 
c,; 
such subsidiary is engaged in activities that pose a 
material risk to an affiliated depository institution; 
, 
f
' 
"(ii) the 
Board reasonably 
determines, 
after 
,. 
,p 
reviewing relevant reports, that examination of the 
.!' 
subsidiary is necessary to adequately inform the Board 
, 
V 
of the systems described in subparagraph (A)(ii)(II); 
or 
"(iii) based on reports and other available informa-
tion, the Board has reasonable cause to believe that 
a subsidiary is not in compliance with this Act or 
any other Federal law that the Board has specific 
jurisdiction 
to 
enforce 
against 
such 
subsidiary, 
including provisions relating to transactions with an 
affiliated depository institution, and the Board cannot 
make such determination through examination of the 
• ' 
• 
affiliated depository institution or the bank holding 
' ^ ' 
company. 
"(C) RESTRICTED FOCUS OF EXAMINATIONS.—The Board 
shall, to the fullest extent possible, limit the focus and 
scope of any examination of a bank holding company to— 
"(i) the bank holding company; and 
"(ii) any subsidiary of the bank holding company 
' 
that could have a materially adverse effect on the 
safety and soundness of any depository institution sub-
sidiary of the holding company due to— 
"(I) the size, condition, or activities of the sub-
' 
sidiary; or 
'' 
"(II) the nature or size of transactions between 
the subsidiary and any depository institution that 
is also a subsidiary of the bank holding company. 
"(D) DEFERENCE TO BANK EXAMINATIONS.—The Board 
shall, to the fullest extent possible, for the purposes of 
this paragraph, use the reports of examinations of deposi-
tory institutions made by the appropriate Federal and State 
depository institution supervisory authority. 
"(E) DEFERENCE TO OTHER EXAMINATIONS.—The Board 
shall, to the fullest extent possible, forego an examination 
by the Board under this paragraph and instead review 
the reports of examination made o
f
— 
"(i) any registered broker or dealer by or on behalf 
of the Securities and Exchange Commission; 
"(ii) any registered investment adviser properly 
' 
registered by or on behalf of either the Securities and 
Exchange Commission or any State; 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1365 
"(iii) any licensed insurance company by or on 
behalf of any State regulatory authority responsible 
for the supervision of insurance companies; and 
"(iv) any other subsidiary that the Board finds 
to be comprehensively supervised by a Federal or State 
authority. 
"(3) CAPITAL.— 
"(A) IN GENERAL.—The Board may not, by regulation, 
guideline, order, or otherwise, prescribe or impose any cap-
ital or capital adequacy rules, guidelines, standards, or 
requirements on any functionally regulated subsidiary of 
a bank holding company that— 
"(i) is not a depository institution; and 
"(ii) is— 
"(I) in compliance with the applicable capital 
requirements of its Federal regulatory authority 
(including the Securities and Exchange Commis-
sion) or State insurance authority; 
"(II) properly registered as an investment 
adviser under the Investment Advisers Act of 1940, 
or with any State; or 
"(III) is licensed as an insurance agent with 
the appropriate State insurance authority. 
"(B) RULE OF CONSTRUCTION.—Subparagraph (A) shall 
not be construed as preventing the Board from imposing 
capital or capital adequacy rules, guidelines, standards, 
or requirements with respect to— 
"(i) activities of a registered investment adviser 
other than with respect to investment advisory activi-
ties or activities incidental to investment advisory 
activities; or 
"(ii) activities of a licensed insurance agent other 
than insurance agency activities or activities incidental 
to insurance agency activities. 
"(C) LIMITATIONS ON INDIRECT ACTION.—In developing, 
establishing, or assessing bank holding company capital 
or capital adequacy rules, guidelines, standards, or require-
ments for purposes of this paragraph, the Board may not 
take into account the activities, operations, or investments 
of an affiliated investment company registered under the 
Investment Company Act of 1940, unless the investment 
company is— 
"(i) a bank holding company; or 
"(ii) controlled by a bank holding company by rea-
son of ownership by the bank holding company 
(including through all of its affiliates) of 25 percent 
or more of the shares of the investment company, 
and the shares owned by the bank holding company 
have a market value equal to more than $1,000,000. 
"(4) FUNCTIONAL REGULATION OF SECURITIES AND INSUR-
ANCE ACTIVITIES.— 
"(A) SECURITIES ACTIVITIES.—Securities activities con-
ducted in a functionally regulated subsidiary of a depository 
institution shall be subject to regulation by the Securities 
and Exchange Commission, and by relevant State securities 
authorities, as appropriate, subject to section 104 of the 
Gramm-Leach-Bliley Act, to the same extent as if they 
113 STAT. 1366 
PUBLIC LAW 106-102—NOV. 12, 1999 
were conducted in a nondepository institution subsidiary 
of a bank holding company. 
"(B) INSURANCE ACTIVITIES.—Subject to section 104 of 
the Gramm-Leach-BHley Act, insurance agency and broker-
age activities and activities as principal conducted in a 
functionally regulated subsidiary of a depository institution 
shall be subject to regulation by a State insurance authority 
to the same extent as if they were conducted in a nondeposi-
tory institution subsidiary of a bank holding company. 
"(5) DEFINITION.—For purposes of this subsection, the term 
'functionally regulated subsidiary' means any company— 
"(A) that is not a bank holding company or a depository 
institution; and 
"(B) that is— 
"(i) a broker or dealer that is registered under 
the Securities Exchange Act of 1934; 
"(ii) a registered investment adviser, properly reg-
istered by or on behalf of either the Securities and 
Exchange Commission or any State, with respect to 
the investment advisory activities of such investment 
adviser and activities incidental to such investment 
advisory activities; 
"(iii) an investment company that is registered 
under the Investment Company Act of 1940; 
"(iv) an insurance company, with respect to insur-
ance activities of the insurance company and activities 
incidental to such insurance activities, that is subject 
to supervision by a State insurance regulator; or 
"(v) an entity that is subject to regulation by the 
Commodity Futures Trading Commission, with respect 
to the commodities activities of such entity and activi-
ties incidental to such commodities activities.". 
SEC. 112. AUTHORITY OF STATE INSURANCE REGULATOR AND SECU-
RITIES AND EXCHANGE COMMISSION. 
(a) BANK HOLDING COMPANIES.—Section 5 of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1844) is amended by adding 
at the end the following new subsection: 
"(g) AUTHORITY OF STATE INSURANCE REGULATOR AND THE 
SECURITIES AND EXCHANGE COMMISSION.— 
"(1) IN GENERAL.—Notwithstanding any other provision of 
law, any regulation, order, or other action of the Board that 
requires a bank holding company to provide funds or other 
assets to a subsidiary depository institution shall not be effec-
tive nor enforceable with respect to an entity described in 
subparagraph (A) if— 
"(A) such funds or assets are to be provided by— 
"(i) a bank holding company that is an insurance 
company, a broker or dealer registered under the Secu-
rities Exchange Act of 1934, an investment company 
registered under the Investment Company Act of 1940, 
or an investment adviser registered by or on behalf 
of either the Securities and Exchange Commission or 
any State; or 
"(ii) an affiliate of the depository institution that 
is an insurance company or a broker or dealer reg-
istered under the Securities Exchange Act of 1934, 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1367 
an investment company registered under the Invest-
ment Company Act of 1940, or an investment adviser 
registered by or on behalf of either the Securities and 
Exchange Commission or any State; and 
"(B) the State insurance authority for the insurance 
, 
company or the Securities and Exchange Commission for 
the registered broker, dealer, investment adviser (solely 
with respect to investment advisory activities or activities 
incidental thereto), or investment company, as the case 
may be, determines in writing sent to the holding company 
and the Board that the holding company shall not provide 
such funds or assets because such action would have a 
material adverse effect on the financial condition of the 
insurance company or the broker, dealer, investment com-
pany, or investment adviser, as the case may be. 
"(2) NOTICE TO STATE INSURANCE AUTHORITY OR SEC 
REQUIRED.—If the Board requires a bank holding company, 
or an affiliate of a bank holding company, that is an insurance 
,. company or a broker, dealer, investment company, or invest-
. ment adviser described in paragraph (1)(A) to provide funds 
or assets to a depository institution subsidiary of the holding 
company pursuant to any regulation, order, or other action 
of the Board referred to in paragraph (1), the Board shall 
promptly notify the State insurance authority for the insurance 
company, the Securities and Exchange Commission, or State 
,. 
securities regulator, as the case may be, of such requirement. 
"(3) DIVESTITURE IN LIEU OF OTHER ACTION.—If the Board 
receives a notice described in paragraph (1)(B) from a State 
insurance authority or the Securities and Exchange Commis-
sion with regard to a bank holding company or affiliate referred 
to in that paragraph, the Board may order the bank holding 
company to divest the depository institution not later than 
180 days after receiving the notice, or such longer period as 
the Board determines consistent with the safe and sound oper-
ation of the depository institution. 
"(4) CONDITIONS BEFORE DIVESTITURE.—During the period 
, 
beginning on the date an order to divest is issued by the 
Board under paragraph (3) to a bank holding company and 
ending on the date the divestiture is completed, the Board 
may impose any conditions or restrictions on the holding com-
panj^s ownership or operation of the depository institution, 
including restricting or prohibiting transactions between the 
depository institution and any affiliate of the institution, as 
are appropriate under the circumstances. 
"(5) RULE OF CONSTRUCTION.—No provision of this sub-
section may be construed as limiting or otherwise affecting, 
except to the extent specifically provided in this subsection, 
the regulatory authority, including the scope of the authority, 
of any Federal agency or department with regard to any entity 
that is within the jurisdiction of such agency or department.", 
(b) SUBSIDIARIES OF DEPOSITORY INSTITUTIONS.—The Federal 
Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by 
adding at the end the following new section: 
113 STAT. 1368 
PUBLIC LAW 106-102—NOV. 12, 1999 
12 use 1831V. 
"SEC. 45. AUTHORITY OF STATE INSURANCE REGULATOR AND SECU-
RITIES AND EXCHANGE COMMISSION. 
"(a) IN GENERAL.—Notwithstanding any other provision of law, 
the provisions o
f
— 
"(1) section 5(c) of the Bank Holding Company Act of 1956 
that limit the authority of the Board of Governors of the Federal 
Reserve System to require reports from, to make examinations 
of, or to impose capital requirements on holding companies 
and their functionally regulated subsidiaries or that require 
deference to other regulators; 
"(2) section 5(g) of the Bank Holding Company Act of 
1956 that limit the authority of the Board to require a function-
ally regulated subsidiary of a holding company to provide cap-
ital or other funds or assets to a depository institution sub-
sidiary of the holding company and to take certain actions 
including requiring divestiture of the depository institution; 
and 
"(3) section IDA of the Bank Holding Company Act of 
1956 that limit whatever authority the Board might otherwise 
have to take direct or indirect action with respect to holding 
companies and their functionally regulated subsidiaries; 
shall also limit whatever authority that a Federal b£inking agency 
might otherwise have under any statute or regulation to require 
reports, make examinations, impose capital requirements, or take 
any other direct or indirect action with respect to any functionally 
regulated affiliate of a depository institution, subject to the same 
standards and requirements as are applicable to the Board under 
those provisions. 
"(b) CERTAIN EXEMPTION AUTHORIZED.—No provision of this 
section shall be construed as preventing the Corporation, if the 
Corporation finds it necessary to determine the condition of a 
depository institution for insurance purposes, from examining an 
affiliate of any depository institution, pursuant to section 10(b)(4), 
as may be necessary to disclose fully the relationship between 
the depository institution and the affiliate, and the effect of such 
relationship on the depository institution. 
"(c) DEFINITIONS.—For purposes of this section, the following 
definitions shall apply: 
"(1) FUNCTIONALLY 
REGULATED 
SUBSIDIARY.—The term 
'functionally regulated subsidiary' has the meaning given the 
term in section 5(c)(5) of the Bank Holding Company Act of 
1956. 
"(2) FUNCTIONALLY REGULATED AFFILIATE.—The term 'func-
tionally regulated affiliate' means, with respect to any deposi-
tory institution, any affiliate of such depository institution that 
is— 
"(A) not a depository institution holding compEiny; and 
"(B) a company described in any clause of section 
5(c)(5)(B) of the Bank Holding Company Act of 1956.". 
SEC. 113. ROLE OF THE BOARD OF GOVERNORS OF THE FEDERAL 
RESERVE SYSTEM. 
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et 
seq.) is amended by inserting after section 10 the following new 
section: 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1369 
"SEC. lOA. LIMITATION ON RULEMAKING, PRUDENTIAL, SUPER- 12 USC 1848a 
VISORY, AND ENFORCEMENT AUTHORITY OF THE BOARD. 
"(a) LIMITATION ON DIRECT ACTION.—The Board may not pre-
scribe regulations, issue or seek entry of orders, impose restraints, 
restrictions, guidelines, requirements, safeguards, or standards, or 
otherwise take any action under or pursuant to any provision of 
this Act or section 8 of the Federal Deposit Insurance Act against 
or with respect to a functionally regulated subsidiary of a bank 
holding company unless— 
"(1) the action is necessary to prevent or redress £in unsafe 
or unsound practice or breach of fiduciary duty by such sub-
sidiary that poses a material risk to— 
"(A) the financial safety, soundness, or stability of an 
affiliated depository institution; or 
i- 
"(B) the domestic or international payment system; 
and 
"(2) the Board finds that it is not reasonably possible 
to protect effectively against the material risk at issue through 
action directed at or against the affiliated depository institution 
or against depository institutions generally. 
"(b) LIMITATION ON INDIRECT ACTION.—The Board may not 
prescribe regulations, issue or seek entry of orders, impose 
restraints, restrictions, guidelines, requirements, safeguards, or 
standards, or otherwise take any action under or pursuant to any 
provision of this Act or section 8 of the Federal Deposit Insurance 
Act against or with respect to a bank holding company that requires 
the bank holding company to require a functionally regulated sub-
sidiary of the holding company to engage, or to refrain from 
engaging, in any conduct or activities unless the Board could take 
such action directly against or with respect to the functionally 
regulated subsidiary in accordance with subsection (a). 
"(c) ACTIONS SPECIFICALLY AUTHORIZED.—Notwithstanding sub-
section (a) or (b), the Board may take action under this Act or 
section 8 of the Federal Deposit Insurance Act to enforce compliance 
by a functionally regulated subsidiary of a bank holding company 
with any Federal law that the Board has specific jurisdiction to 
enforce against such subsidiary. 
"(d) FUNCTIONALLY REGULATED SUBSIDIARY DEFINED.—For pur-
poses of this section, the term 'functionally regulated subsidiary* 
has the meaning given the term in section 5(c)(5).". 
SEC. 114. PRUDENTIAL SAFEGUARDS. 
12 USC 1828a. 
(a) COMPTROLLER OF THE CURRENCY.— 
(1) IN GENERAL.—The Comptroller of the Currency may, 
by regulation or order, impose restrictions or requirements 
on relationships or transactions between a national bank and 
a subsidiary of the national bank that the Comptroller finds 
are— 
(A) consistent with the purposes of this Act, title LXII 
•^r 
of the Revised Statutes of the United States, and other 
Federal law applicable to national banks; and 
(B) appropriate to avoid any significant risk to the 
safety and soundness of insured depository institutions or 
i 
any Federal deposit insurance fund or other adverse effects, 
such as undue concentration of resources, decreased or 
? ,1 
unfair competition, conflicts of interests, or unsound 
banking practices. 
113 STAT. 1370 
PUBLIC LAW 106-102—NOV. 12, 1999 
(2) REVIEW.—The Comptroller of the Currency 
shall 
regularly— 
(A) review all restrictions or requirements established 
• - 
pursuant to paragraph (1) to determine whether there is 
• 
' 
a continuing need for any such restriction or requirement 
to carry out the purposes of the Act, including the avoidsmce 
: -. 
of any adverse effect referred to in paragraph (1)(B); and 
(B) modify or eliminate any such restriction or require-
ment the Comptroller finds is no longer required for such 
purposes. 
(b) BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.— 
(1) IN GENERAL.—The Board of Governors of the Federal 
Reserve System may, by regulation or order, impose restrictions 
or requirements on relationships or transactions— 
' 
(A) between a depository institution subsidiary of a 
bank holding comp£iny suid any affiliate of such depository 
-It- 
institution (other than a subsidiary of such institution); 
or 
(B) between a State member bank and a subsidiary 
of such bank; 
if the Board makes a finding described in paragraph (2) with 
respect to such restriction or requirement. 
(2) FINDING.—The Board of Governors of the Federal 
Reserve System may exercise authority under paragraph (1) 
if the Board finds that the exercise of such authority is— 
(A) consistent with the purposes of this Act, the Bank 
, 
Holding Company Act of 1956, the Federal Reserve Act, 
' 
and other Federal law applicable to depository institution 
,^f., ^ 
subsidiaries of bgink holding companies or State member 
'*' * 
banks, as the case may be; and 
,.,, 
(B) appropriate to prevent an evasion of any provision 
of law referred to in subparagraph (A) or to avoid any 
significant risk to the safety and soundness of depository 
institutions or any Federal deposit insurance fund or other 
adverse effects, such as undue concentration of resources, 
decreased or unfair competition, conflicts of interests, or 
unsound banking practices. 
(3) REVIEW.—The Board of Governors of the Federal 
Reserve System shall regularly— 
(A) review all restrictions or requirements established 
pursuant to paragraph (1) or (4) to determine whether 
there is a continuing need for any such restriction or 
requirement to carry out the purposes of the Act, including 
the avoidance of any adverse effect referred to in paragraph 
(2)(B)or(4)(B);and 
(B) modify or eliminate any such restriction or require-
ment the Board finds is no longer required for such pur-
poses. 
(4) FOREIGN BANKS.—The Board may, by regulation or 
order, impose restrictions or requirements on relationships or 
transactions between a branch, agency, or commercial lending 
company of a foreign bank in the United States and any affiliate 
in the United States of such foreign bank that the Board 
finds are— 
(A) consistent with the purposes of this Act, the Bank 
Holding Company Act of 1956, the Federal Reserve Act, 
li. 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1371 
and other Federal law applicable to foreign banks and 
their affiliates in the United States; and 
(B) appropriate to prevent an evasion of any provision 
of law referred to in subparagraph (A) or to avoid any 
significant risk to the safety and soundness of depository 
'' 
institutions or any Federal deposit insurance fund or other 
adverse effects, such as undue concentration of resources, 
decreased or unfair competition, conflicts of interests, or 
unsound banking practices. 
(c) FEDERAL DEPOSIT INSURANCE CORPORATION.— 
(1) IN GENERAL.—The Federal Deposit Insurance Corpora-
tion may, by regulation or order, impose restrictions or require-
ments on relationships or transactions between a State non-
member bank (as defined in section 3 of the Federal Deposit 
Insurance Act) and a subsidiary of the State nonmember bank 
that the Corporation finds are— 
(A) consistent with the purposes of this Act, the Federal 
Deposit Insureince Act, or other Federal law applicable 
to State nonmember banks; and 
' ' 
(B) appropriate to avoid any significant risk to the 
safety and soundness of depository institutions or any Fed-
' 
eral deposit insurance fund or other adverse effects, such 
as undue concentration of resources, decreased or unfair 
^i 
i 
competition, conflicts of interests, or unsound banking prac-
tices. 
(2) REVIEW.—The Federal Deposit Insurance Corporation 
shall regularly— 
(A) review all restrictions or requirements established 
pursuant to paragraph (1) to determine whether there is 
a continuing need for any such restriction or requirement 
to carry out the purposes of the Act, including the avoidance 
of any adverse effect referred to in paragraph (1)(B); and 
. 
(B) modify or eliminate any such restriction or require-
ment the Corporation finds is no longer required for such 
purposes. 
SEC. 115. EXAMINATION OF INVESTMENT COMPANIES. 
12 USC 1820a. 
(a) EXCLUSIVE COMMISSION AUTHORITY.—Except as provided 
in subsection (c), a Federal banking agency may not inspect or 
examine any registered investment company that is not a bank 
holding compginy or a savings and loan holding company. 
(b) 
EXAMINATION RESULTS AND OTHER INFORMATION.—The 
Commission shall provide to any Federal banking agency, upon 
request, the results of any examination, reports, records, or other 
information with respect to any registered investment company 
to the extent necessary for the agency to carry out its statutory 
responsibilities. 
(c) CERTAIN EXAMINATIONS AUTHORIZED.—Nothing in this sec-
tion shall prevent the Corporation, if the Corporation finds it nec-
essary to determine the condition of an insured depository institu-
tion for insurance purposes, from examining an affiliate of any 
insured depository institution, pursuant to its authority under sec-
tion 10(b)(4) of the Federal Deposit Insurance Act, as may be 
necessary to disclose fully the relationship between the insured 
depository institution and the affiliate, and the effect of such rela-
tionship on the insured depository institution. 
113 STAT. 1372 
PUBLIC LAW 106-102—NOV. 12, 1999 
(d) DEFINITIONS.—For purposes of this section, the following 
definitions shall apply: 
(1) BANK HOLDING COMPANY.—The term "bank holding com-
pany" has the meaning given the term in section 2 of the 
Bank Holding Company Act of 1956. 
(2) COMMISSION.—The term "Commission" means the Secu-
rities and Exchange Commission. 
(3) CORPORATION.—The term "Corporation" means the Fed-
eral Deposit Insurance Corporation. 
(4) FEDERAL BANKING AGENCY.—The term "Federal banking 
agency" has the meaning given the term in section 3(z) of 
the Federal Deposit Insurance Act. 
(5) INSURED DEPOSITORY INSTITUTION.—The term "insured 
depository institution" has the meaning given the term in sec-
tion 3(c) of the Federal Deposit Insurance Act. 
(6) REGISTERED INVESTMENT COMPANY.—The term "reg-
istered investment company" means an investment company 
that is registered with the Commission under the Investment 
Company Act of 1940. 
(7) SAVINGS AND LOAN HOLDING COMPANY.—The term 
"savings and loan holding company" has the meaning given 
the term in section 10(a)(1)(D) of the Home Owners' Loan 
Act. 
^^,, ,,„_ 
,
_ 
,._; 
SEC. 116. ELIMINATION OF APPLICATION REQUIREMENT FOR FINAN-
CIAL HOLDING COMPANIES. 
(a) PREVENTION OF DUPLICATIVE FILINGS.—Section 5(a) of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1844(a)) is amended 
by adding at the end the following new sentence: "A declaration 
filed in accordance with section 4(1)(1)(C) shall satisfy the require-
ments of this subsection with regard to the registration of a bank 
holding company but not any requirement to file an application 
to acquire a bank pursuant to section 3.". 
(b) DIVESTITURE PROCEDURES.—Section 5(e)(1) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1844(e)(1)) is amended— 
(1) by striking "Financial Institutions Supervisory Act of 
, , J f 
1966, order" and inserting "Financial Institutions Supervisory 
Act of 1966, at the election of the bank holding company— 
"(A) order"; and 
(2) by striking "shareholders of the bank holding company. 
'^' 
Such distribution" and inserting "shareholders of the bank 
holding company; or 
"(B) order the bank holding company, after due notice 
- and opportunity for hearing, and after consultation with the 
primary supervisor for the bank, which shall be the Comptroller 
of the Currency in the case of a national bank, and the Federal 
Deposit Insurance Corporation and the appropriate State super-
visor in the case of an insured nonmember bank, to terminate 
(within 120 days or such longer period as the Board may 
direct) the ownership or control of any such bank by such 
company. 
The distribution referred to in subparagraph (A)". 
^ 
•
< 
SEC. 117. PRESERVING THE INTEGRITY OF FDIC RESOURCES. 
Section 11(a)(4)(B) of the Federal Deposit Insurance Act (12 
U.S.C. 1821(a)(4)(B)) is amended by striking "to benefit any share-
holder of and inserting "to benefit any shareholder or affiliate 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1373 
(other than an insured depository institution that receives assist-
ance in accordance with the provisions of this Act) of. 
SEC. 118. REPEAL OF SAVINGS BANK PROVISIONS IN THE BANK 
HOLDING COMPANY ACT OF 1956. 
Section 3(f) of the Bank Holding Company Act of 1956 (12 
U.S.C. 1842(f)) is amended to read as follows: 
"(f) [Repealed].". 
SEC. 119. TECHNICAL AMENDMENT. 
Section 2(o)(l)(A) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1841(o)(l)(A)) is amended by striking "section 38(b)" 
and inserting "section 38". 
Subtitle C—Subsidiaries of National Banks 
SEC. 121. SUBSIDIARIES OF NATIONAL BANKS. 
(a) IN GENERAL.—Chapter one of title LXII of the Revised 
Statutes of the United States (12 U.S.C. 21 et seq.) is amended— 
(1) by redesignating section 5136A as section 5136B; and 
l2USC25a. 
(2) by inserting after section 5136 (12 U.S.C. 24) the fol-
lowing new section: 
"SEC. 5136A. FINANCIAL SUBSIDIARIES OF NATIONAL BANKS. 
12 USC 24a. 
"(a) AUTHORIZATION TO CONDUCT IN SUBSIDIARIES CERTAIN 
ACTIVITIES THAT ARE FINANCIAL IN NATURE.— 
"(1) IN GENERAL.—Subject to paragraph (2), a national bank 
may control a financial subsidiary, or hold an interest in a 
financial subsidiary. 
"(2) CONDITIONS AND REQUIREMENTS.—^A national bank may 
control a financial subsidiary, or hold an interest in a financial 
subsidiary, only if— 
"(A) the financial subsidiary engages only in— 
"(i) activities that are financial in nature or inci-
dental to a financial activity pursuant to subsection 
(b); and 
"(ii) activities that are permitted for national banks 
to engage in directly (subject to the same terms and 
conditions that govern the conduct of the activities 
by a national bank); 
"(B) the activities engaged in by the financial sub-
sidiary as a principal do not include— 
"(i) 
insuring, 
guaranteeing, 
or 
indemnifying 
against loss, harm, damage, illness, disability, or death 
(except to the extent permitted under section 302 or 
303(c) of the Gramm-Leach-Bliley Act) or providing 
or issuing annuities the income of which is subject 
to tax treatment under section 72 of the Internal Rev-
enue Code of 1986; 
"(ii) real estate development or real estate invest-
ment activities, unless otherwise expressly authorized 
by law; or 
"(iii) any activity permitted in subparagraph (H) 
or (I) of section 4(k)(4) of the Bank Holding Company 
Act of 1956, except activities described in section 
4(k)(4)(H) that may be permitted in accordance with 
section 122 of the Gramm-Leach-Bliley Act; 
69-194 -01 - 12: QL 3 Part 2 
113 STAT. 1374 
PUBLIC LAW 106-102—NOV. 12, 1999 
Regulations. 
Applicability. 
"(C) the national bank and each depository institution 
affihate of the national bank are well capitalized and well 
managed; 
"(D) the aggregate consolidated total assets of all finan-
cial subsidiaries of the national bank do not exceed the 
lesser o
f
— 
"(i) 45 percent of the consolidated total assets of 
the parent bank; or 
"(ii) $50,000,000,000; 
"(E) except as provided in paragraph (4), the national 
bank meets any applicable rating or other requirement 
set forth in paragraph (3); and 
"(F) the national bank has received the approval of 
the Comptroller of the Currency for the financial subsidiary 
to engage in such activities, which approval shall be based 
solely upon the factors set forth in this section. 
"(3) RATING OR COMPARABLE REQUIREMENT.— 
"(A) IN GENERAL.—A national bank meets the require-
ments of this paragraph if— 
"(i) the bank is 1 of the 50 largest insured banks 
and has not fewer than 1 issue of outstanding eligible 
debt that is currently rated within the 3 highest invest-
ment grade rating categories by a nationally recognized 
statistical rating organization; or 
"(ii) the bank is 1 of the second 50 largest insured 
banks and meets the criteria set forth in clause (i) 
or such other criteria as the Secretary of the Treasury 
and the Board of Governors of the Federal Reserve 
System may jointly establish by regulation and deter-
mine to be comparable to and consistent with the pur-
poses of the rating required in clause (i). 
"(B) 
CONSOLIDATED TOTAL ASSETS.—For purposes of 
this paragraph, the size of an insured bank shall be deter-
mined on the basis of the consolidated total assets of the 
bank as of the end of each calendar year. 
"(4) FINANCIAL AGENCY SUBSIDIARY.—The requirement in 
paragraph (2)(E) shall not apply with respect to the ownership 
or control of a financial subsidiary that engages in activities 
described in subsection (b)(1) solely as agent and not directly 
or indirectly as principal. 
"(5) REGULATIONS REQUIRED.—Before the end of the 
270-
day period beginning on the date of the enactment of the 
Gramm-Leach-Bliley Act, the Comptroller of the Currency shall, 
by regulation, prescribe procedures to implement this section. 
"(6) INDEXED ASSET LIMIT.—The dollar amount contained 
in paragraph (2)(D) shall be adjusted according to an indexing 
mechanism jointly established by regulation by the Secretary 
of the Treasury and the Board of Governors of the Federal 
Reserve System. 
"(7) 
COORDINATION WITH SECTION 4(1X2) OF THE BANK 
HOLDING COMPANY ACT OF 1956.—Section 4(1)(2) of the Bank 
Holding Company Act of 1956 applies to a national bank that 
controls a financial subsidiary in the manner provided in that 
section. 
"(b) ACTIVITIES THAT ARE FINANCIAL IN NATURE.— 
"(1) FINANCIAL ACTIVITIES.— 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1375 
"(A) IN GENERAL.—An activity shall be financial in 
nature or incidental to such financial activity only if— 
"(i) such activity has been defined to be financial 
in nature or incidental to a financial activity for bank 
holding companies pursuant to section 4(k)(4) of the 
Bank Holding Company Act of 1956; or 
"(ii) the Secretary of the Treasury determines the 
activity is financial in nature or incidental to a finan-
cial activity in accordance with subparagraph (B). 
"(B) COORDINATION BETWEEN THE BOARD AND THE SEC-
RETARY OF THE TREASURY.— 
"(i) PROPOSALS RAISED BEFORE THE SECRETARY OF 
THE TREASURY.— 
"(I) CONSULTATION.—The Secretary of the Notification. 
Treasury shall notify the Board of, and consult 
with the Board concerning, any request, proposal, 
or application under this section for a determina-
tion of whether an activity is financial in nature 
or incidental to a financial activity. 
"(II) 
BOARD VIEW.—The 
Secretary 
of the 
Treasury shall not determine that any activity is 
financial in nature or incidental to a financial 
activity under this section if the Board notifies 
the Secretary in writing, not later than 30 days 
after the date of receipt of the notice described 
in subclause (I) (or such longer period as the Sec-
retary determines to be appropriate under the cir-
cumstances) that the Board believes that the 
activity is not financial in nature or incidental 
to a financial activity or is not otherwise permis-
sible under this section, 
"(ii) PROPOSALS RAISED BY THE BOARD.— 
"(I) 
BOARD 
RECOMMENDATION.—The 
Board 
may, at any time, recommend in writing that the 
Secretary of the Treasury find an activity to be 
financial in nature or incidental to a financial 
activity for purposes of this section. 
"(II) TIME PERIOD FOR SECRETARIAL ACTION.— 
Not later than 30 days after the date of receipt 
of a written recommendation from the Board under 
subclause (I) (or such longer period as the Sec-
retary of the Treasury and the Board determine 
to be appropriate under the circumstances), the 
Secretary shall determine whether to initiate a 
public rulemaking proposing that the subject rec-
ommended activity be found to be financial in 
nature or incidental to a financial activity under 
this section, and shall notify the Board in writing 
of the determination of the Secretary and, in the 
event that the Secretary determines not to seek 
public comment on the proposal, the reasons for 
that determination. 
"(2) FACTORS TO BE CONSIDERED.—In determining whether 
an activity is financial in nature or incidental to a financial 
activity, the Secretary shall take into account— 
"(A) the purposes of this Act and the Gramm-Leach-
Bliley Act; 
113 STAT. 1376 
PUBLIC LAW 106-102—NOV. 12, 1999 
"(B) changes or reasonably expected changes in the 
marketplace in which banks compete; 
"(C) changes or reasonably expected changes in the 
technology for delivering financial services; and 
"(D) whether such activity is necessary or appropriate 
to allow a bank and the subsidiaries of a bank to— 
"(i) compete effectively with any company seeking 
to provide financial services in the United States; 
"(ii) efficiently deliver information and services 
that are financial in nature through the use of techno-
logical means, including any application necessary to 
protect the security or efficacy of systems for the trans-
mission of data or financial transactions; and 
"(iii) offer customers any available or emerging 
technological means for using financial services or for 
the document imaging of data. 
Regulations. 
"(3) AUTHORIZATION OF NEW FINANCIAL ACTIVITIES.—The 
Secretary of the Treasury shall, by regulation or order and 
in accordance with paragraph (1)(B), define, consistent with 
the purposes of this Act and the Gramm-Leach-Bliley Act, 
the following activities as, and the extent to which such activi-
ties are, financial in nature or incidental to a financial activity: 
"(A) Lending, exchanging, transferring, investing for 
others, or safeguarding financial assets other than money 
or securities. 
"(B) Providing any device or other instrumentality for 
transjferring money or other financial assets. 
"(C) Arranging, effecting, or facilitating financial trans-
actions for the account of third parties. 
"(c) CAPITAL DEDUCTION.— 
"(1) 
CAPITAL 
DEDUCTION 
REQUIRED.—In 
determining 
compli£ince with applicable capital standards— 
"(A) the aggregate amount of the outstanding equity 
investment, including retained earnings, of a national bank 
in all financial subsidiaries shall be deducted from the 
assets and tangible equity of the national bank; and 
"(B) the assets and liabilities of the financial subsidi-
aries shall not be consolidated with those of the national 
bank. 
"(2) FINANCIAL STATEMENT DISCLOSURE OF CAPITAL DEDUC-
TION.—^Any published financial statement of a national bank 
that controls a financial subsidiary shall, in addition to pro-
viding information prepared in accordance with generally 
accepted accounting principles, separately present 
financial 
information for the bank in the manner provided in paragraph 
(1). 
"(d) SAFEGUARDS FOR THE BANK.—A national bank that estab-
lishes or maintains a financial subsidiary shall assure that— 
"(1) the procedures of the national bank for identifjdng 
and managing financial and operational risks within the 
national bank and the financial subsidiary adequately protect 
the national bank from such risks; 
"(2) the national bank has, for the protection of the bank, 
reasonable policies and procedures to preserve the separate 
corporate identity and limited liability of the national bank 
and the financial subsidiaries of the national bank; and 
"(3) the national bank is in compliance with this section. 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1377 
"(e) PROVISIONS APPLICABLE TO NATIONAL BANKS THAT FAIL 
To CONTINUE TO MEET CERTAIN REQUIREMENTS.— 
"(1) IN GENERAL.—If a national bank or insured depository Notice. 
institution affiliate does not continue to meet the requirements 
of subsection (a)(2)(C) or subsection (d), the Comptroller of 
the Currency shall promptly give notice to the national bank 
to that effect describing the conditions giving rise to the notice. 
"(2) AGREEMENT TO CORRECT CONDITIONS.—Not later than Deadline. 
45 days after the date of receipt by a national bank of a 
notice given under paragraph (1) (or such additional period 
as the Comptroller of the Currency may permit), the national 
bank shall execute an agreement vsdth the Comptroller of the 
Currency and any relevant insured depository institution affil-
iate shall execute an agreement with its appropriate Federal 
banking agency to comply with the requirements of subsection 
(a)(2)(C) and subsection (d). 
"(3) IMPOSITION OF CONDITIONS.—Until the conditions 
described in a notice under paragraph (1) are corrected— 
"(A) the Comptroller of the Currency may impose such 
limitations on the conduct or activities of the national 
bank or any subsidiary of the national bank as the Comp-
troller of the Currency determines to be appropriate under 
the circumstances and consistent with the purposes of this 
section; and 
"(B) the appropriate Federal banking agency may 
impose such limitations on the conduct or activities of 
any relevant insured depository institution affiliate or any 
subsidiary of the institution as such agency determines 
to be appropriate under the circumstances and consistent 
with the purposes of this section. 
"(4) FAILURE TO CORRECT.—If the conditions described in Deadline, 
a notice to a national bank under paragraph (1) are not cor-
rected within 180 days after the date of receipt by the national 
bank of the notice, the Comptroller of the Currency may require 
the national bank, under such terms and conditions as may 
be imposed by the Comptroller and subject to such extension 
of time as may be granted in the discretion of the Comptroller, 
to divest control of any financial subsidiary. 
"(5) CONSULTATION.—In taking any action under this sub-
section, the Comptroller shall consult with all relevant Federal 
and State regulatory agencies and authorities. 
"(f) FAILURE TO MAINTAIN PUBLIC RATING OR MEET APPLICABLE 
CRITERIA.— 
"(1) IN GENERAL.—^A national bank that does not continue 
to meet any applicable rating or other requirement of subsection 
(a)(2)(E) after acquiring or establishing a financial subsidiary 
shall not, directly or through a subsidiary, purchase or acquire 
any additional equity capital of any financial subsidiary until 
the bank meets such requirements. 
"(2) EQUITY CAPITAL.—For purposes of this subsection, the 
term 'equity capital' includes, in addition to any equity 
instrument, any debt instrument issued by a financial sub-
sidiary, if the instrument qualifies as capital of the subsidiary 
under any Federal or State law, regulation, or interpretation 
applicable to the subsidiary. 
"(g) DEFINITIONS.—For purposes of this section, the following 
definitions shall apply: 
113 STAT. 1378 
PUBLIC LAW 106-102—NOV. 12, 1999 
"(1) AFFILIATE, COMPANY, CONTROL, AND SUBSIDIARY.—The 
terms 'affiliate', 'company', 'control', and 'subsidiary' have the 
meanings given those terms in section 2 of the Bank Holding 
Company Act of 1956. 
"(2) APPROPRIATE FEDERAL BANKING AGENCY, DEPOSITORY 
INSTITUTION, INSURED BANK, AND INSURED DEPOSITORY INSTITU-
TION.—The terms 'appropriate Federal banking agenc/, 'deposi-
tory institution', 'insured bank', and 'insured depository institu-
tion' have the meanings given those terms in section 3 of 
the Federal Deposit Insurance Act. 
"(3) FINANCIAL SUBSIDIARY.—The term 'financial subsidiary 
means any company that is controlled by 1 or more insured 
depository institutions other than a subsidiary that— 
"(A) engages solely in activities that national banks 
are permitted to engage in directly and are conducted 
subject to the same terms and conditions that govern the 
conduct of such activities by nationgil banks; or 
"(B) a national bank is specifically authorized by the 
express terms of a Federal statute (other than this section), 
and not by implication or interpretation, to control, such 
as by section 25 or 25A of the Federal Reserve Act or 
the Bank Service Company Act. 
"(4) 
ELIGIBLE DEBT.—The term 'eligible debt' means 
unsecured long-term debt that— 
"(A) is not supported by any form of credit enhance-
ment, including a guarantee or standby letter of credit; 
and 
"(B) is not held in whole or in any significsint part 
by any affiliate, officer, director, principal shareholder, or 
employee of the bank or any other person acting on behalf 
of or with funds from the bank or an affiliate of the bank. 
"(5) WELL CAPITALIZED.—The term 'well capitalized' has 
the meaning given the term in section 38 of the Federal Deposit 
Insurance Act. 
"(6) WELL MANAGED.—The term 'well managed' means— 
"(A) in the case of a depository institution that has 
been examined, unless otherwise determined in writing 
by the appropriate Federal banking agency— 
"(i) the achievement of a composite rating of 1 
or 2 under the Uniform Financial Institutions Rating 
System (or an equivalent rating under an equivalent 
rating system) in connection with the most recent 
examination or subsequent review of the depository 
institution; and 
"(ii) at least a rating of 2 for management, if 
such rating is given; or 
"(B) in the case of any depository institution that has 
not been examined, the existence and use of managerial 
resources that the appropriate Federal banking agency 
determines are satisfactory.". 
(b) SECTIONS 23A AND 23B OF THE FEDERAL RESERVE ACT.— 
(1) LIMITING THE EXPOSURE OF A BANK TO A FINANCIAL 
SUBSIDIARY TO THE AMOUNT OF PERMISSIBLE EXPOSURE TO AN 
AFFILIATE.—Section 23A of the Federal Reserve Act (12 U.S.C. 
371c) is amended— 
(A) by redesignating subsection (e) as subsection (f); 
and 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1379 
(B) by inserting after subsection (d), the following new 
subsection: 
"(e) 
RULES RELATING TO BANKS WITH FINANCIAL SUBSIDI-
ARIES.— 
"(1) FiNANCLfVL SUBSIDIARY DEFINED.—For purposes of this 
section and section 23B, the term 'financial subsidiary' means 
any company that is a subsidiary of a bank that would be 
a financial subsidiary of a national bank under section 5136A 
of the Revised Statutes of the United States. 
"(2) FINANCIAL SUBSIDIARY TREATED AS AN AFFILIATE.— 
For purposes of appl5dng this section and section 23B, and 
notwithstanding subsection (b)(2) of this section or section 
23B(d)(l), a financial subsidiary of a bank— 
"(A) shall be deemed to be an affiliate of the bank; 
and 
"(B) shall not be deemed to be a subsidiary of the 
bank. 
"(3) 
EXCEPTIONS 
FOR 
TRANSACTIONS 
WITH 
FINANCIAL 
SUBSIDL\RIES.— 
"(A) EXCEPTION FROM LIMIT ON COVERED TRANSACTIONS 
WITH ANY INDIVIDUAL FINANCIAL SUBSIDIARY.—Notwith-
standing paragraph (2), the restriction contained in sub-
section (a)(1)(A) shall not apply with respect to covered 
transactions between a bank and any individual financial 
subsidiary of the bank. 
"(B) EXCEPTION FOR EARNINGS RETAINED BY FINANCIAL 
SUBSIDIARIES.—Notwithstanding paragraph (2) or sub-
section (b)(7), a bank's investment in a financial subsidiary 
of the bank shall not include retained earnings of the 
financial subsidiary. 
"(4) ANTI-EVASION PROVISION.—For purposes of this section 
and section 23B— 
"(A) any purchase of, or investment in, the securities 
of a financial subsidiary of a bank by an affiliate of the 
bank shall be considered to be a purchase of or investment 
in such securities by the bank; and 
"(B) any extension of credit by an affiliate of a bank 
to a financial subsidiary of the bank shall be considered 
to be an extension of credit by the bank to the financial 
subsidiary if the Board determines that such treatment 
is necessary or appropriate to prevent evasions of this 
Act and the Gramm-Leach-Bliley Act.". 
(2) REBUTTABLE PRESUMPTION OF CONTROL OF PORTFOLIO 
COMPANY.—Section 23A(b) of the Federal Reserve Act (12 U.S.C. 
371c(b)) is amended by adding at the end the following new 
paragraph— 
"(11) REBUTTABLE PRESUMPTION OF CONTROL OF PORTFOLIO 
COMPANIES.—In addition to paragraph (3), a company or share-
holder shall be presumed to control any other company if the 
company or shareholder, directly or indirectly, or acting through 
1 or more other persons, owns or controls 15 percent or more 
of the equity capital of the other company pursuant to subpara-
graph (H) or (I) of section 4(k)(4) of the Bank Holding Company 
Act of 1956 or rules adopted under section 122 of the Gramm-
Leach-Bliley Act, if any, unless the company or shareholder 
provides information acceptable to the Board to rebut this 
presumption of control.". 
113 STAT. 1380 
PUBLIC LAW 106-102—NOV. 12, 1999 
(3) RULEMAKING REQUIRED CONCERNING DERIVATIVE TRANS-
ACTIONS AND INTRADAY CREDIT.—Section 23A(f) of the Federal 
Reserve Act (12 U.S.C. 371c(f)) (as so redesignated by paragraph 
(1)(A) of this subsection) is amended by inserting at the end 
the following new paragraph: 
"(3) 
RULEMAKING 
REQUIRED 
CONCERNING 
DERIVATIVE 
TRANSACTIONS AND INTRADAY CREDIT.— 
Deadline. 
"(A) IN GENERAL.—Not later than 18 months after the 
date of the enactment of the Gramm-Leach-Bliley Act, the 
Board shall adopt final rules under this section to address 
as covered transactions credit exposure arising out of 
derivative transactions between member banks and their 
affiliates and intraday extensions of credit by member 
banks to their affiliates. 
"(B) EFFECTIVE DATE.—The effective date of any final 
rule adopted by the Board pursuant to subparagraph (A) 
shall be delayed for such period as the Board deems nec-
essary or appropriate to permit banks to conform their 
activities to the requirements of the final rule without 
undue hardship.". 
(c) ANTITYING.—Section 106(a) of the Bank Holding Company 
Act Amendments of 1970 (12 U.S.C. 1971) is amended by adding 
at the end the following: "For purposes of this section, a financial 
subsidiary of a national bank engaging in activities pursuant to 
section 5136A(a) of the Revised Statutes of the United States shall 
be deemed to be a subsidiary of a bank holding company, and 
not a subsidiary of a bank.". 
(d) SAFETY AND SOUNDNESS FIREWALLS FOR STATE BANKS WITH 
FINANCIAL SUBSIDIARIES.— 
(1) FEDERAL DEPOSIT INSURANCE ACT.—The Federal Deposit 
Insurance Act (12 U.S.C. 1811 et seq.) is amended by inserting 
after section 45 (as added by section 112(b) of this title) the 
following new section: 
12 use 1831W. 
"SEC. 46. SAFETY AND SOUNDNESS FIREWALLS APPLICABLE TO 
FINANCIAL SUBSIDIARIES OF BANKS. 
"(a) IN GENERAL.—An insured State bank may control or hold 
an interest in a subsidiary that engages in activities as principal 
that would only be permissible for a national bank to conduct 
through a financial subsidiary if— 
"(1) the State bank and each insured depository institution 
affiliate of the State bank are well capitalized (after the capital 
deduction required by paragraph (2)); 
"(2) the State bank complies with the capital deduction 
and financial statement disclosure requirements in section 
5136A(c) of the Revised Statutes of the United States; 
"(3) the State bank complies with the financial and oper-
ational safeguards required by section 5136A(d) of the Revised 
Statutes of the United States; and 
"(4) the State bank complies with the amendments to sec-
tions 23A and 23B of the Federal Reserve Act made by section 
121(b) of the Gramm-Leach-Bliley Act. 
"(b) 
PRESERVATION 
OF 
EXISTING 
SUBSIDIARIES.—Notwith-
standing subsection (a), an insured State bank may retain control 
of a subsidiary, or retain an interest in a subsidiary, that the 
State bank lawfully controlled or acquired before the date of the 
enactment of the Gramm-Leach-Bliley Act, and conduct through 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1381 
such subsidiary any activities lawfully conducted in such subsidiary 
as of such date. 
"(c) DEFINITIONS.—For purposes of this section, the following 
definitions shall apply: 
"(1) SUBSIDIARY.—The term 'subsidiary' means any com-
pany that is a subsidiary (as defined in section 3(w)(4)) of 
1 or more insured banks. 
"(2) FINANCIAL SUBSIDIARY.—The term 'financial subsidiary* 
has the meaning given the term in section 5136A(g) of the 
Revised Statutes of the United States. 
"(d) PRESERVATION OF AUTHORITY.— 
"(1) FEDERAL DEPOSIT INSURANCE ACT.—NO provision of 
this section shall be construed as superseding the authority 
of the Federal Deposit Insurance Corporation to review sub-
sidiary activities under section 24. 
"(2) FEDERAL RESERVE ACT.—No provision of this section 
shall be construed as affecting the applicability of the 20th 
undesignated paragraph of section 9 of the Federal Reserve 
Act.". 
(2) FEDERAL RESERVE ACT.—The 20th undesignated para-
graph of section 9 of the Federal Reserve Act (12 U.S.C. 335) 
is amended by adding at the end the following: "This paragraph 
shall not apply to any interest held by a State member bank 
in accordance with section 5136A of the Revised Statutes of 
the United States and subject to the same conditions and 
limitations provided in such section.". 
(e) CLERICAL AMENDMENT.—The table of sections for chapter 
one of title LXII of the Revised Statutes of the United States 
is amended— 
(1) by redesignating the item relating to section 5136A 
as section 5136B; and 
(2) by inserting after the item relating to section 5136 
the following new item: 
"5136A. Financial subsidiaries of national banks.". 
SEC. 122. CONSIDERATION OF MERCHANT BANKING ACTIVITIES BY 
12 USC 1843 
FINANCIAL SUBSIDIARIES. 
note. 
After the end of the 5-year period beginning on the date of 
the enactment of the Gramm-Leach-Bliley Act, the Board of Gov-
ernors of the Federal Reserve System and the Secretary of the 
Treasury may, if appropriate, after considering— 
(1) the experience with the effects of financial moderniza-
tion under this Act and merchant banking activities of financial 
holding companies; 
(2) the potential effects on depository institutions and the 
financial system of allowing merchant banking activities in 
financial subsidiaries; and 
(3) other relevant facts; 
jointly adopt rules that permit financial subsidiaries to engage 
in merchant banking activities described in section 4(k)(4)(H) of 
the Bank Holding Company Act of 1956, under such terms and 
conditions as the Board of Governors of the Federal Reserve System 
and the Secretary of the Treasury jointly determine to be appro-
priate. 
113 STAT. 1382 
PUBLIC LAW 106-102—NOV. 12, 1999 
Subtitle D—Preservation of FTC Authority 
SEC. 131. AMENDMENT TO THE BANK HOLDING COMPANY ACT OF 1956 
TO MODIFY NOTIFICATION AND POST-APPROVAL WAITING 
PERIOD FOR SECTION 3 TRANSACTIONS. 
Section 11(b)(1) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1849(b)(1)) is amended by inserting "and, if the trans-
action also involves an acquisition under section 4, the Board shall 
also notify the Federal Trade Commission of such approval" before 
the period at the end of the first sentence. 
12 u s e 1828b. 
SEC. 132. INTERAGENCY DATA SHARING. 
(a) IN GENERAL.—To the extent not prohibited by other law, 
the Comptroller of the Currency, the Director of the Office of Thrift 
Supervision, the Federal Deposit Insurance Corporation, and the 
Board of Governors of the Federal Reserve System shall make 
available to the Attorney General and the Federal Trade Commis-
sion any data in the possession of any such banking agency that 
the antitrust agency deems necessary for antitrust review of any 
transaction requiring notice to any such antitrust agency or the 
approval of such agency under section 3 or 4 of the Bank Holding 
Company Act of 1956, section 18(c) of the Federal Deposit Insurance 
Act, the National Bank Consolidation and Merger Act, section 10 
of the Home Owners' Loan Act, or the antitrust laws. 
(b) CONFIDENTIALITY REQUIREMENTS.— 
(1) IN GENERAL.—Any information or material obtained 
by any agency pursuant to subsection (a) shall be treated 
as confidential. 
(2) PROCEDURES FOR DISCLOSURE.—If any information or 
material obtained by any agency pursuant to subsection (a) 
is proposed to be disclosed to a third party, written notice 
of such disclosure shall first be provided to the agency from 
which such information or material was obtained and an oppor-
tunity shall be given to such agency to oppose or limit the 
proposed disclosure. 
(3) OTHER PRIVILEGES NOT WAIVED BY DISCLOSURE UNDER 
THIS SECTION.—The provision by any Federal agency of any 
information or material pursuant to subsection (a) to another 
agency shall not constitute a waiver, or otherwise affect, any 
privilege any agency or person may claim with respect to such 
information under Federal or State law. 
(4) EXCEPTION.—No provision of this section shall be con-
strued as preventing or limiting access to any information 
by any duly authorized committee of the Congress or the Comp-
troller General of the United States. 
Applicability. 
(c) BANKING AGENCY INFORMATION SHARING.—The provisions 
of subsection (b) shall apply to— 
(1) any information or material obtained by any Federal 
banking agency (as defined in section 3(z) of the Federal Deposit 
Insurance Act) from any other Federal banking agency; and 
(2) any report of examination or other confidential super-
visory information obtained by any State agency or authority, 
or any other person, from a Federal banking agency. 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1383 
SEC. 133. CLARIFICATION OF STATUS OF SUBSIDIARIES AND AFFILI-
ATES. 
(a) CLARIFICATION OF FEDERAL TRADE COMMISSION JURISDIC- 
IS use 41 note. 
TION.—Any person that directly or indirectly controls, is controlled 
directly or indirectly by, or is directly or indirectly under common 
control with, any bank or savings association (as such terms are 
defined in section 3 of the Federal Deposit Insurance Act) and 
is not itself a bank or savings association shall not be deemed 
to be a bank or savings association for purposes of any provisions 
applied by the Federal Trade Commission under the Federal Trade 
Commission Act. 
(b) SAVINGS PROVISION.—NO provision of this section shall be is use 4i note. 
construed as restricting the authority of any Federal banking agency 
(as defined in section 3 of the Federal Deposit Insurance Act) 
under any Federal banking law, including section 8 of the Federal 
Deposit Insurance Act. 
(c) HART-SCOTT-RODINO AMENDMENTS.— 
(1) BANKS.—Section 7A(c)(7) of the Clayton Act (15 U.S.C. 
18a(c)(7)) is amended by inserting before the semicolon at the 
end the following: ", except that a portion of a transaction 
is not exempt under this paragraph if such portion of the 
transaction (A) is subject to section 4(k) of the Bank Holding 
Company Act of 1956; and (B) does not require agency approval 
under section 3 of the Bank Holding Company Act of 1956". 
(2) BANK HOLDING COMPANIES.—Section 7A(c)(8) of 
the 
Clayton Act (15 U.S.C. 18a(c)(8)) is amended by inserting before 
the semicolon at the end the following: ", except that a portion 
of a transaction is not exempt under this paragraph if such 
portion of the transaction (A) is subject to section 4(k) of the 
Bank Holding Company Act of 1956; and (B) does not require 
agency approval under section 4 of the Bank Holding Company 
Act of 1956". 
Subtitle E—^National Treatment 
SEC. 141. FOREIGN BANKS THAT ARE FINANCIAL HOLDING COMPA-
NIES. 
Section 8(c) of the International Banking Act of 1978 (12 U.S.C. 
3106(c)) is amended by adding at the end the following new para-
graph: 
"(3) TERMINATION OF GRANDFATHERED RIGHTS.— 
"(A) IN GENERAL.—If any foreign bank or foreign com-
pany files a declaration under section 4(1)(1)(C) of the Bank 
Holding Company Act of 1956, any authority conferred 
by this subsection on any foreign bank or company to 
engage in any activity that the Board has determined to 
be permissible for financial holding companies under sec-
tion 4(k) of such Act shall terminate immediately. 
"(B) RESTRICTIONS AND REQUIREMENTS AUTHORIZED.— 
If a foreign bank or company that engages, directly or 
through an affiliate pursuant to paragraph (1), in an 
activity that the Board has determined to be permissible 
for financial holding companies under section 4(k) of the 
Bank Holding Company Act of 1956 has not filed a declara-
tion with the Board of its status as a financial holding 
company under such section by the end of the 2-year period 
113 STAT. 1384 
PUBLIC LAW 106-102—NOV. 12, 1999 
beginning on the date of the enactment of the Gramm-
Leach-Bliley Act, the Board, giving due regard to the prin-
ciple of national treatment and equality of competitive 
opportunity, may impose such restrictions and require-
ments on the conduct of such activities by such foreign 
bank or company as are comparable to those imposed on 
a financial holding company organized under the laws of 
the United States, including a requirement to conduct such 
activities in compliance with any prudential safeguards 
established under section 114 of the Gramm-Leach-Bliley 
Act.". 
SEC. 142. REPRESENTATIVE OFFICES. 
(a) DEFINITION.—Section l(b)(15) of the International Banking 
Act of 1978 (12 U.S.C. 3101(15)) is amended by striking "State 
agency, or subsidiary of a foreign bank" and inserting "or State 
agency". 
(b) EXAMINATIONS.—Section 10(c) of the International Banking 
Act of 1978 (12 U.S.C. 3107(c)) is amended by adding at the end 
the following new sentence: "The Board may also make examina-
tions of any affiliate of a foreign bank conducting business in 
any State if the Board deems it necessary to determine and enforce 
compliance with this Act, the Bank Holding Company Act of 1956, 
or other applicable Federal banking law.". 
Subtitle F—Direct Activities of Banks 
SEC. 151. AUTHORITY OF NATIONAL BANKS TO UNDERWRITE CER-
TAIN MUNICIPAL BONDS. 
The paragraph designated the Seventh of section 5136 of the 
Revised Statutes of the United States (12 U.S.C. 24(7)) is amended 
by adding at the end the following new sentence: "In addition 
to the provisions in this paragraph for dealing in, underwriting, 
or purchasing securities, the limitations and restrictions contained 
in this paragraph as to dealing in, underwriting, and purchasing 
investment securities for the national bank's own account shall 
not apply to obligations (including limited obligation bonds, revenue 
bonds, and obligations that satisfy the requirements of section 
142(b)(1) of the Internal Revenue Code of 1986) issued by or on 
behalf of any State or political subdivision of a State, including 
any municipal corporate instrumentality of 1 or more States, or 
any public agency or authority of any State or political subdivision 
of a State, if the national bank is well capitalized (as defined 
in section 38 of the Federal Deposit Insurance Act).". 
Subtitle G—Effective Date 
12 u s e 24 note. 
SEC. 161. EFFECTIVE DATE. 
This title (other than section 104) and the amendments made 
by this title shall take effect 120 days after the date of the enact-
ment of this Act. 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1385 
TITLE II—FUNCTIONAL REGULATION 
Subtitle A—Brokers and Dealers 
SEC. 201. DEFINITION OF BROKER. 
Section 3(a)(4) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a)(4)) is amended to read as follows: 
"(4) BROKER.— 
"(A) IN GENERAL.—The term 'broker' means any person 
engaged in the business of effecting transactions in securi-
ties for the account of others. 
"(B) EXCEPTION FOR CERTAIN BANK ACTIVITIES.—A bank 
shall not be considered to be a broker because the bank 
engages in any one or more of the following activities 
under the conditions described: 
"(i) THIRD PARTY BROKERAGE ARRANGEMENTS.—The 
bank enters into a contractual or other written 
arrangement with a broker or dealer registered under 
this title under which the broker or dealer offers 
brokerage services on or off the premises of the bank 
if— 
"(I) such broker or dealer is clearly identified 
as the person performing the brokerage services; 
"(II) the broker or dealer performs brokerage 
services in an area that is clearly marked and, 
to the extent practicable, physically separate from 
the routine deposit-taking activities of the bank; 
"(III) any materials used by the bank to adver-
tise or promote generally the availability of broker-
age 
services under 
the 
arrangement 
clearly 
indicate that the brokerage services are being pro-
vided by the broker or dealer and not by the bank; 
"(IV) any materials used by the bank to adver-
tise or promote generally the availability of 
brokerage services under the arrangement are in 
compliance with the Federal securities laws before 
distribution; 
"(V) bank employees (other than associated 
persons of a broker or dealer who are qualified 
pursuant to the rules of a self-regulatory organiza-
tion) perform only clerical or ministerial functions 
in 
connection 
with 
brokerage 
transactions 
including scheduling appointments with the associ-
ated persons of a broker or dealer, except that 
bank employees may forward customer funds or 
securities and may describe in general terms the 
t3^es of investment vehicles available from the 
bank and the broker or dealer under the arrange-
ment; 
"(VI) bank employees do not receive incentive 
compensation for any brokerage transaction unless 
such employees are associated persons of a broker 
or dealer and are qualified pursuant to the rules 
of a self-regulatory organization, except that the 
bank employees may receive compensation for the 
referral of any customer if the compensation is 
113 STAT. 1386 
PUBLIC LAW 106-102—NOV. 12, 1999 
a nominal one-time cash fee of a fixed dollar 
amount and the payment of the fee is not contin-
gent on whether the referral results in a trans-
action; 
"(VII) such services are provided by the broker 
or dealer on a basis in which all customers that 
receive any services are fully disclosed to the 
broker or dealer; 
"(VIII) the bank does not carry a securities 
account of the customer except as permitted under 
clause (ii) or (viii) of this subparagraph; and 
"(IX) the bank, broker, or dealer informs each 
customer that the brokerage services are provided 
by the broker or dealer and not by the bank and 
that the securities are not deposits or other obliga-
tions of the bank, are not guaranteed by the bank, 
£ind are not insured by the Federal Deposit Insur-
ance Corporation. 
"(ii) TRUST ACTIVITIES.—The bank effects trans-
actions in a trustee capacity, or effects transactions 
in a fiduciary capacity in its trust department or other 
department that is regularly examined by bank exam-
iners for compliance with fiduciary principles and 
standards, and— 
"(I) is chiefly compensated for such trans-
actions, consistent with fiduciary principles and 
standards, on the basis of an administration or 
annual fee (payable on a monthly, quarterly, or 
other basis), a percentage of assets under manage-
ment, or a flat or capped per order processing 
fee equal to not more than the cost incurred by 
the bank in connection with executing securities 
transactions for trustee and fiduciary customers, 
or any combination of such fees; and 
"(II) does not publicly solicit brokerage busi-
ness, other than by advertising that it effects 
transactions in securities in conjunction 
with 
advertising its other trust activities, 
"(iii) PERMISSIBLE SECURITIES TRANSACTIONS.—The 
bank effects transactions in— 
"(I) commercial paper, bankers acceptances, 
or commercial bills; 
"(II) exempted securities; 
"(III) qualified Canadian government obliga-
tions as defined in section 5136 of the Revised 
Statutes, in conformity with section 15C of this 
title and the rules and regulations thereunder, 
or obligations of the North American Development 
Bank; or 
"(IV) any standardized, credit enhanced debt 
security issued by a foreign government pursuant 
to the March 1989 plan of then Secretary of the 
Treasury Brady, used by such foreign government 
to retire outstanding commercial bank loans. 
"(iv) CERTAIN STOCK PURCHASE PLANS.— 
"(I) EMPLOYEE BENEFIT PLANS.—The bank 
effects transactions, as part of its transfer agency 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1387 
activities, in the securities of an issuer as part 
of any pension, retirement, profit-sharing, bonus, 
thrift, savings, incentive, or other similar benefit 
plan for the employees of that issuer or its affili-
ates (as defined in section 2 of the Bank Holding 
Company Act of 1956), if the bank does not solicit 
transactions or provide investment advice with 
respect to the purchase or sale of securities in 
connection with the plan. 
"(11) DIVIDEND REINVESTMENT PLANS.—The 
bank effects trsmsactions, as part of its transfer 
agency activities, in the securities of an issuer 
as part of that issuer's dividend reinvestment plan, 
if— 
"(aa) the bank does not solicit transactions 
or provide investment advice with respect to 
the purchase or sale of securities in connection 
with the plan; and 
"(bb) the bank does not net shareholders' 
buy and sell orders, other than for programs 
for odd-lot holders or plans registered with 
the Commission. 
"(Ill) ISSUER PLANS.—The bank effects trans-
actions, as part of its transfer agency activities, 
in the securities of an issuer as part of a plein 
or program for the purchase or sale of that issuer's 
shares, if— 
"(aa) the bank does not solicit transactions 
or provide investment advice with respect to 
the purchase or sale of securities in connection 
with the plan or program; and 
"(bb) the bank does not net shareholders' 
buy and sell orders, other than for programs 
for odd-lot holders or plans registered with 
the Commission. 
"(IV) 
PERMISSIBLE DELIVERY OF MATERIALS.— 
The exception to being considered a broker for 
a bank engaged in activities described in sub-
clauses (I), (II), and (III) will not be affected by 
delivery of written or electronic plan materials 
by a bank to employees of the issuer, shareholders 
of the issuer, or members of affinity groups of 
the issuer, so long as such materials are— 
"(aa) comparable in scope or nature to 
that permitted by the Commission as of the 
date of the enactment of the Gramm-Leach-
Bliley Act; or 
"(bb) otherwise permitted by the Commis-
sion. 
"(v) SWEEP ACCOUNTS.—The bank effects trans-
actions as part of a program for the investment or 
reinvestment of deposit funds into any no-load, open-
end 
management 
investment 
company 
registered 
under the Investment Company Act of 1940 that holds 
itself out as a money market fund. 
"(vi) AFFILIATE TRANSACTIONS.—The bank effects 
transactions for the account of any affiliate of the 
113 STAT. 1388 
PUBLIC LAW 106-102—NOV. 12, 1999 
bank (as defined in section 2 of the Bank Holding 
Company Act of 1956) other than— 
"(I) a registered broker or dealer; or 
"(11) an affiliate that is engaged in merchant 
banking, as described in section 4(k)(4)(H) of the 
Bank Holding Company Act of 1956. 
"(vii) PRIVATE SECURITIES OFFERINGS.—The bank— 
"(I) effects sales as part of a primary offering 
of securities not involving a public offering, pursu-
ant to section 3(b), 4(2), or 4(6) of the Securities 
Act of 1933 or the rules and regulations issued 
thereunder; 
"(II) at any time after the date that is 1 year 
after the date of the enactment of the Gramm-
Leach-Bliley Act, is not affiliated with a broker 
or dealer that has been registered for more than 
1 year in accordance with this Act, and engages 
in dealing, market making, or underwriting activi-
ties, other than with respect to exempted securi-
ties; and 
"(III) if the bank is not affiliated with a broker 
or dealer, does not effect any primary offering 
described in subclause (I) the aggregate amount 
of which exceeds 25 percent of the capital of the 
bank, except that the limitation of this subclause 
shall not apply with respect to any sale of govern-
ment securities or municipal securities, 
"(viii) SAFEKEEPING AND CUSTODY ACTIVITIES.— 
"(I) IN GENERAL.—The bank, as part of cus-
tomary banking activities— 
"(aa) provides safekeeping or custody serv-
ices with respect to securities, including the 
exercise of warrants and other rights on behalf 
of customers; 
"(bb) facilitates the transfer of funds or 
securities, as a custodism or a clearing agency, 
in connection with the clearance and settle-
ment of its customers' transactions in securi-
ties; 
"(cc) effects securities lending or bor-
rowing transactions with or on behalf of cus-
tomers as part of services provided to cus-
tomers pursuant to division (aa) or (bb) or 
invests cash collateral pledged in connection 
with such transactions; 
"(dd) holds securities pledged by a cus-
tomer to another person or securities subject 
to purchase or resale agreements involving a 
customer, 
or 
facilitates 
the 
pledging 
or 
transfer of such securities by book entry or 
as otherwise provided under applicable law, 
if the bank maintains records separately 
identif3dng the securities and the customer; 
or 
"(ee) serves as a custodian or provider 
of other related administrative services to any 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1389 
individual retirement account, pension, retire-
ment, profit sharing, bonus, thrift savings, 
incentive, or other similar benefit plan. 
"(ID EXCEPTION FOR CARRYING BROKER ACTIVI-
TIES.—The exception to being considered a broker 
for a bank engaged in activities described in sub-
clause (I) shall not apply if the bank, in connection 
with such activities, acts in the United States as 
a carrying broker (as such term, and different 
formulations thereof, are used in section 15(c)(3) 
of this title £ind the rules and regulations there-
under) for any broker or dealer, unless such car-
rying broker activities are engaged in with respect 
to government securities (as defined in paragraph 
(42) of this subsection). 
"(ix) IDENTIFIED BANKING PRODUCTS.—The bank 
effects transactions in identified banking products as 
defined in section 206 of the Gramm-Leach-Bliley Act. 
"(x) 
MUNICIPAL SECURITIES.—The bank 
effects 
transactions in municipal securities. 
"(xi) DE MINIMIS EXCEPTION.—The bank effects, 
other than in transactions referred to in clauses (i) 
through (x), not more than 500 transactions in securi-
ties in any calendar year, and such transactions are 
not effected by an employee of the bank who is also 
an employee of a broker or dealer. 
"(C) EXECUTION BY BROKER OR DEALER.—The exception 
to being considered a broker for a bank engaged in activities 
described in clauses (ii), (iv), and (viii) of subparagraph 
(B) shall not apply if the activities described in such provi-
sions result in the trade in the United States of any security 
that is a publicly traded security in the United States, 
unless— 
"(i) the bank directs such trade to a registered 
broker or dealer for execution; 
"(ii) the trade is a cross trade or other substantially 
similar trade of a security that— 
"(I) is made by the bank or between the bank 
and an affiliated fiduciary; and 
"(II) is not in contravention of fiduciary prin-
ciples established under applicable Federal or 
State law; or 
"(iii) the trade is conducted in some other manner 
permitted under rules, regulations, or orders as the 
Commission may prescribe or issue. 
"(D) FIDUCIARY CAPACITY.—For purposes of subpara-
graph (B)(ii), the term 'fiduciary capacity' means— 
"(i) in the capacity as trustee, executor, adminis-
trator, registrar of stocks and bonds, transfer agent, 
guardian, assignee, receiver, or custodian imder a uni-
form gift to minor act, or as an investment adviser 
if the bank receives a fee for its investment advice; 
"(ii) in any capacity in which the bank possesses 
investment discretion on behalf of another; or 
"(iii) in any other similar capacity. 
"(E) 
EXCEPTION FOR ENTITIES SUBJECT TO SECTION 
15(e).—The term 'broker' does not include a bank that— 
113 STAT. 1390 
PUBLIC LAW 106-102—NOV. 12, 1999 
"(i) was, on the day before the date of enactment 
of the Gramm-Leach-Bliley Act, subject to section 15(e); 
and 
"(ii) is subject to such restrictions and require-
ments as the Commission considers appropriate.". 
SEC. 202. DEFINITION OF DEALER. 
Section 3(a)(5) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a)(5)) is amended to read as follows: 
"(5) DEALER.— 
"(A) IN GENERAL.—The term 'dealer' means any person 
engaged in the business of buying and selling securities 
for such person's own account through a broker or other-
wise. 
"(B) EXCEPTION FOR PERSON NOT ENGAGED IN THE BUSI-
NESS OF DEALING.—The term 'dealer' does not include a 
person that buys or sells securities for such person's own 
account, either individually or in a fiduciary capacity, but 
not as a part of a regular business. 
"(C) EXCEPTION FOR CERTAIN BANK ACTIVITIES.—A bank 
shall not be considered to be a dealer because the bank 
engages in any of the following activities under the condi-
tions described: 
"(i) PERMISSIBLE SECURITIES TRANSACTIONS.—The 
bank buys or sells— 
"(I) commercial paper, bankers acceptances, 
or commercial bills; 
"(II) exempted securities; 
"(III) qualified Canadian government obliga-
tions as defined in section 5136 of the Revised 
Statutes of the United States, in conformity with 
section 15C of this title and the rules and regula-
tions thereunder, or obligations of the North Amer-
ican Development Bank; or 
"(IV) any standardized, credit enhanced debt 
security issued by a foreign government pursuant 
to the March 1989 plan of then Secretary of the 
Treasury Brady, used by such foreign government 
to retire outstanding commercial bank loans. 
"(ii) INVESTMENT, TRUSTEE, AND FIDUCIARY TRANS-
ACTIONS.—The bank buys or sells securities for invest-
ment purposes— 
"(I) for the bank; or 
"(II) for accounts for which the bank acts as 
a trustee or fiduciary. 
"(iii) 
ASSET-BACKED 
TRANSACTIONS.—The 
bank 
engages in the issuance or sale to qualified investors, 
through a grantor trust or other separate entity, of 
securities backed by or representing an interest in 
notes, drafts, acceptances, loans, leases, receivables, 
other obligations (other than securities of which the 
bank is not the issuer), or pools of any such obligations 
predominantly originated by— 
"(I) the bank; 
"(II) an affiliate of any such bank other than 
a broker or dealer; or 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1391 
; 
"(HI) a syndicate of banks of which the bank 
is a member, if the obhgations or pool of obhgations 
consists of mortgage obhgations or consumer-
related receivables. 
"(iv) IDENTIFIED BANKING PRODUCTS.—The bank 
buys or sells identified banking products, as defined 
in section 206 of the Gramm-Leach-Bliley Act.". 
SEC. 203. REGISTRATION 
FOR 
SALES 
OF PRIVATE 
SECURITIES 
OFFERINGS. 
Section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 
78o-3) is amended by inserting after subsection (i) the following 
new subsection: 
"(j) 
REGISTRATION 
FOR 
SALES 
OF 
PRIVATE 
SECURITIES 
OFFERINGS.—A registered securities association shall create a lim-
ited qualification category for any associated person of a member 
who effects sales as part of a primary offering of securities not 
involving a public offering, pursuant to section 3(b), 4(2), or 4(6) 
of the Securities Act of 1933 and the rules and regulations there-
under, and shall deem qualified in such limited qualification cat-
egory, without testing, any bank employee who, in the six month 
period preceding the date of the enactment of the Gramm-Leach-
Bliley Act, engaged in effecting such sales.". 
SEC. 204. INFORMATION SHARING. 
Section 18 of the Federal Deposit Insurance Act is amended 
12 USC 1828. 
by adding at the end the following new subsection: 
"(t) RECORDKEEPING REQUIREMENTS.— 
"(1) REQUIREMENTS.—Each appropriate Federal banking 
agency, after consultation with and consideration of the views 
of the Commission, shall establish recordkeeping requirements 
for banks relying on exceptions contained in paragraphs (4) 
and (5) of section 3(a) of the Securities Exchange Act of 1934, 
Such recordkeeping requirements shall be sufficient to dem-
onstrate compliance with the terms of such exceptions and 
be designed to facilitate compliance with such exceptions. 
"(2) AVAILABILITY TO COMMISSION; CONFIDENTIALITY.—Each 
appropriate Federal banking agency shall make any informa-
tion required under paragraph (1) available to the Commission 
upon request. Notwithstanding any other provision of law, the 
Commission shall not be compelled to disclose any such 
information. Nothing in this paragraph shall authorize the 
Commission to withhold information fi*om Congress, or prevent 
the Commission from complying with a request for information 
fi*om any other Federal department or agency or any self-
regulatory organization requesting the information for purposes 
within the scope of its jurisdiction, or compl3dng with an order 
of a court of the United States in an action brought by the 
United States or the Commission. For purposes of section 552 
of title 5, United States Code, this paragraph shall be consid-
ered a statute described in subsection (b)(3)(B) of such section 
552. 
"(3) DEFINITION.—^As used in this subsection the term 
'Commission' means the Securities and Exchange Commission.". 
SEC. 
205. 
TREATMENT 
OF 
NEW 
HYBRID 
PRODUCTS. 
Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 
78o) is amended by adding at the end the following new subsection: 
113 STAT. 1392 
PUBLIC LAW 106-102—NOV. 12, 1999 
"(i) RULEMAKING TO EXTEND REQUIREMENTS TO NEW HYBRID 
PRODUCTS.— 
"(1) CONSULTATION.—Prior to commencing a rulemaking 
under this subsection, the Commission shall consult with and 
seek the concurrence of the Board concerning the imposition 
of broker or dealer registration requirements with respect to 
any new hybrid product. In developing and promulgating rules 
under this subsection, the Commission shall consider the views 
of the Board, including views with respect to the nature of 
the new hybrid product; the history, purpose, extent, and appro-
priateness of the regulation of the new product imder the 
Federal banking laws; and the impact of the proposed rule 
on the banking industry. 
"(2) LIMITATION.—The Commission shall not— 
"(A) require a bank to register as a broker or dealer 
under this section because the hank engages in any trans-
action in, or buys or sells, a new hybrid product; or 
"(B) bring an action against a bank for a failure to 
comply with a requirement described in subparagraph (A), 
unless the Commission has imposed such requirement by rule 
or regulation issued in accordance with this section. 
"(3) CRITERIA FOR RULEMAKING.—The Commission shall not 
impose a requirement under paragraph (2) of this subsection 
with respect to any new hybrid product unless the Commission 
determines that— 
"(A) the new hybrid product is a security; and 
"(B) imposing such requirement is necessary and 
appropriate in the public interest and for the protection 
of investors. 
"(4) CONSIDERATIONS.—In making a determination under 
paragraph (3), the Commission shall consider— 
"(A) the nature of the new hybrid product; and 
"(B) the history, purpose, extent, and appropriateness 
of the regulation of the new hybrid product under the 
Federal securities laws and under the Federal bemking 
laws. 
"(5) OBJECTION TO COMMISSION REGULATION.— 
"(A) FILING OF PETITION FOR REVIEW.—The Board may 
obtain review of any final regulation described in paragraph 
(2) in the United States Court of Appeals for the District 
of Columbia Circuit by filing in such court, not later than 
60 days after the date of publication of the final regulation, 
a written petition requesting that the regulation be set 
aside. Any proceeding to challenge any such rule shall 
be expedited by the Court of Appeals. 
"(B) TRANSMITTAL OF PETITION AND RECORD.—A copy 
of a petition described in subparagraph (A) shall be trans-
mitted as soon as possible by the C^lerk of the Court to 
an officer or employee of the Commission designated for 
that purpose. Upon receipt of the petition, the Commission 
shall file with the court the regulation under review and 
any documents referred to therein, and any other relevant 
materials prescribed by the court. 
"(C) EXCLUSIVE JURISDICTION.—On the date of the 
filing of the petition under subparagraph (A), the court 
has jurisdiction, which becomes exclusive on the filing of 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1393 
the materials set forth in subparagraph (B), to affirm and 
enforce or to set aside the regulation at issue. 
"(D) STANDARD OF REVIEW.—^The court shall determine 
to affirm and enforce or set aside a regulation of the 
Commission under this subsection, based on the determina-
tion of the court as to whether— 
"(i) the subject product is a new hybrid product, 
as defined in this subsection; 
"(ii) the subject product is a security; and 
"(iii) imposing a requirement to register as a 
broker or dealer for banks engaging in transactions 
in such product is appropriate in light of the history, 
purpose, and extent of regulation under the Federal 
securities laws and under the Federal banking laws, 
giving deference neither to the views of the Commission 
nor the Board. 
"(E) JUDICIAL STAY.—The filing of a petition by the 
Board pursuant to subparagraph (A) shall operate as a 
judicial stay, until the date on which the determination 
of the court is final (including any appeal of such deter-
mination). 
"(F) OTHER AUTHORITY TO CHALLENGE.—Any aggrieved 
party may seek judicial review of the Commission's rule-
making under this subsection pursujmt to section 25 of 
this title. 
"(6) DEFINITIONS.—For purposes of this subsection: 
"(A) NEW HYBRID PRODUCT.—The term 'new hybrid 
product' means a product that— 
"(i) was not subjected to regulation by the Commis-
sion as a security prior to the date of the enactment 
of the Gramm-Leach-Bliley Act; 
"(ii) is not an identified banking product as such 
term is defined in section 206 of such Act; and 
"(iii) is not an equity swap within the meaning 
of section 206(a)(6) of such Act. 
"(B) BOARD.—The term 'Board' means the Board of 
Governors of the Federal Reserve System.". 
SEC. 206. DEFINITION OF IDENTIFIED BANKING PRODUCT. 
15 USC 78c note. 
(a) DEFINITION OF IDENTIFIED BANKING PRODUCT.—For pur-
poses of paragraphs (4) and (5) of section 3(a) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a) (4), (5)), the term "identified 
banking product" means— 
(1) a deposit account, savings account, certificate of deposit, 
or other deposit instrument issued by a bank; 
(2) a banker's acceptance; 
(3) a letter of credit issued or lo£in made by a bank; 
(4) a debit account at a bank arising from a credit card 
or similar arrangement; 
(5) a participation in a loan which the bank or an affiliate 
of the bank (other than a broker or dealer) funds, participates 
in, or owns that is sold— 
(A) to qualified investors; or 
(B) to other persons that— 
(i) have the opportunity to review and assess any 
material information, including information regarding 
the borrower's creditworthiness; and 
113 STAT. 1394 
PUBLIC LAW 106-102—NOV. 12, 1999 
(ii) based on such factors as financial sophistica-
tion, net worth, and knowledge and experience in finan-
cial matters, have the capability to evaluate the 
information available, as determined under generally 
applicable banking standards or guidelines; or 
(6) any swap agreement, including credit and equity swaps, 
except that an equity swap that is sold directly to any person 
other thgm a qualified investor (as defined in section 3(a)(54) 
of the Securities Act of 1934) shall not be treated as an identi-
fied banking product. 
(b) DEFINITION OF SWAP AGREEMENT.—For purposes of sub-
section (a)(6), the term "swap agreement" means any individually 
negotiated contract, agreement, warrant, note, or option that is 
based, in whole or in part, on the value of, any interest in, or 
any quantitative measure or the occurrence of any event relating 
to, one or more commodities, securities, currencies, interest or other 
rates, indices, or other assets, but does not include any other 
identified banking product, as defined in paragraphs (1) through 
(5) of subsection (a). 
(c) CLASSIFICATION LIMITED.—Classification of a particular 
product as an identified banking product pursuant to this section 
shall not be construed as finding or implying that such product 
is or is not a security for any purpose under the securities laws, 
or is or is not an account, agreement, contract, or transaction 
for any purpose under the Commodity Exchange Act. 
(d) INCORPORATED DEFINITIONS.—For purposes of this section, 
the terms "bank" and "qualified investor" have the same meanings 
as given in section 3(a) of the Securities Exchange Act of 1934, 
as amended by this Act. 
SEC. 207. ADDITIONAL DEFINITIONS. 
15 use 78c. 
Section 3(a) of the Securities Exchange Act of 1934 is amended 
by adding at the end the following new paragraph: 
"(54) QUALIFIED INVESTOR.— 
"(A) DEFINITION.—Except as provided in subparagraph 
(B), for purposes of this title, the term 'qualified investor' 
means— 
"(i) any investment company registered with the 
Commission under section 8 of the Investment Com-
pany Act of 1940; 
"(ii) any issuer eligible for an exclusion fi"om the 
definition of investment company pursuant to section 
3(c)(7) of the Investment Company Act of 1940; 
"(iii) any bank (as defined in paragraph (6) of 
this subsection), savings association (as defined in sec-
tion 3(b) of the Federal Deposit Insurance Act), broker, 
dealer, insurance company (as defined in section 
2(a)(13) of the Securities Act of 1933), or business 
development company (as defined in section 2(a)(48) 
of the Investment Company Act of 1940); 
"(iv) any small business investment 
company 
licensed by the United States Small Business Adminis-
tration under section 301 (c) or (d) of the Small Busi-
ness Investment Act of 1958; 
"(v) any State sponsored employee benefit plan, 
or any other employee benefit plan, within the meaning 
of the Employee Retirement Income Security Act of 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1395 
1974, other than an individual retirement account, if 
the investment decisions are made by a plan fiduciary, 
as defined in section 3(21) of that Act, which is either 
a bank, savings and loan association, insurance com-
pany, or registered investment adviser; 
"(vi) any trust whose purchases of securities are 
directed by a person described in clauses (i) through 
(v) of this subparagraph; 
"(vii) any market intermediar/^ exempt under sec-
tion 3(c)(2) of the Investment Company Act of 1940; 
"(viii) any associated person of a broker or dealer 
other than a natural person; 
"(ix) any foreign bank (as defined in section 1(b)(7) 
of the International Banking Act of 1978); 
"(x) the government of any foreign country; 
"(xi) any corporation, company, or partnership that 
owns and invests on a discretionary basis, not less 
than $25,000,000 in investments; 
"(xii) any natural person who owns and invests 
on a discretionary basis, not less than $25,000,000 
in investments; 
"(xiii) any government or political subdivision, 
agency, or instrumentality of a government who owns 
and invests on a discretionary basis not less than 
$50,000,000 in investments; or 
"(xiv) any multinational or supranational entity 
or any agency or instrumentality thereof. 
"(B) ALTERED THRESHOLDS FOR ASSET-BACKED SECURI-
TIES AND LOAN PARTICIPATIONS.—For purposes of section 
3(a)(5)(C)(iii) of this title and section 206(a)(5) of the 
Gramm-Leach-Bliley Act, the term 'qualified investor' has 
the meaning given such term by subparagraph (A) of this 
paragraph except that clauses (xi) and (xii) shall be applied 
by substituting'$10,000,000'for'$25,000,000'. 
"(C) ADDITIONAL AUTHORITY.—The Commission may, 
by rule or order, define a 'qualified investor' as any other 
person, taking into consideration such factors as the finan-
cial sophistication of the person, net worth, and knowledge 
and experience in financial matters.". 
SEC. 208. GOVERNMENT SECURITIES DEFINED. 
Section 3(a)(42) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a)(42)) is amended— 
(1) by striking "or" at the end of subparagraph (C); 
(2) by striking the period at the end of subparagraph (D) 
and inserting "; or"; and 
(3) by adding at the end the following new subparagraph: 
"(E) for purposes of sections 15, 15C, and 17A as 
applied to a bank, a qualified Canadian government obliga-
tion as defined in section 5136 of the Revised Statutes 
ofthe United States.". 
SEC. 209. EFFECTIVE DATE. 
12 USC 1828 
This subtitle shall take effect at the end of the 18-month 
period beginning on the date ofthe enactment of this Act. 
113 STAT. 1396 
PUBLIC LAW 106-102—NOV. 12, 1999 
12 u s e 1811 
SEC. 210. RULE OF CONSTRUCTION. 
Nothing in this Act shall supersede, affect, or otherwise limit 
the scope and applicability of the Commodity Exchange Act (7 
U.S.C. 1 et seq.). 
Subtitle B—Bank Investment Company 
Activities 
SEC. 211. CUSTODY OF INVESTMENT COMPANY ASSETS BY AFFILI-
ATED BANK. 
(a) MANAGEMENT COMPANIES.—Section 17(f) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-17(f)) is amended— 
(1) by redesignating paragraphs (1), (2), and (3) as subpara-
graphs (A), (B), and (C), respectively; 
(2) by striking "(f) Every registered" and inserting the 
following: 
"(f) CUSTODY OF SECURITIES.— 
"(1) Every registered"; 
(3) by redesignating the second, third, fourth, and fifth 
sentences of such subsection as paragraphs (2) through (5), 
respectively, and indenting the left margin of such paragraphs 
appropriately; and 
(4) by adding at the end the following new paragraph: 
"(6) The Commission may, after consultation with and 
taking into consideration the views of the Federal banking 
agencies (as defined in section 3 of the Federal Deposit Insur-
ance Act), adopt rules and regulations, and issue orders, con-
sistent with the protection of investors, prescribing the condi-
tions under which a bank, or an affiliated person of a bank, 
either of which is an affiliated person, promoter, organizer, 
or sponsor of, or principal underwriter for, a registered manage-
ment company may serve as custodian of that registered 
management company.". 
(b) UNIT INVESTMENT TRUSTS.—Section 26 of the Investment 
Company Act of 1940 (15 U.S.C. 80a-26) is amended— 
(1) by redesignating subsections (b) through (e) as sub-
sections (c) through (f), respectively; and 
(2) by inserting after subsection (a) the following new sub-
section: 
"(b) The Commission may, after consultation with and taking 
into consideration the views of the Federal banking agencies (as 
defined in section 3 of the Federal Deposit Insurance Act), adopt 
rules and regulations, and issue orders, consistent with the protec-
tion of investors, prescribing the conditions under which a bank, 
or an affiliated person of a bank, either of which is an affiliated 
person of a principal underwriter for, or depositor of, a registered 
unit investment trust, may serve as trustee or custodian under 
subsection (a)(1).". 
SEC. 212. LENDING TO AN AFFILIATED INVESTMENT COMPANY. 
Section 17(a) of the Investment Company Act of 1940 (15 U.S.C. 
80a-17(a)) is amended— 
(1) by striking "or" at the end of paragraph (2); 
(2) by striking the period at the end of paragraph (3) 
and inserting "; or"; and 
(3) by adding at the end the following new paragraph: 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1397 
"(4) to loan money or other property to such registered 
company, or to any company controlled by such registered com-
pany, in contravention of such rules, regulations, or orders 
as the Commission may, after consultation with and taking 
into consideration the views of the Federal banking agencies 
(as defined in section 3 of the Federal Deposit Insurance Act), 
prescribe or issue consistent with the protection of investors.". 
SEC. 213. INDEPENDENT DIRECTORS. 
(a) IN GENERAL.—Section 2(a)(19)(A) of the Investment Com-
pany Act of 1940 (15 U.S.C. 80a-2(a)(19)(A)) is amended— 
(1) by striking clause (v) and inserting the following new 
clause: 
"(v) any person or any affiliated person of a person 
(other than a registered investment company) that, 
at any time during the 6-month period preceding the 
date of the determination of whether that person or 
affiliated person is an interested person, has executed 
any portfolio transactions for, engaged in any principal 
transactions with, or distributed shares for— 
"(I) the investment company; 
"(II) any other investment company having 
the same investment adviser as such investment 
company or holding itself out to investors as a 
related company for purposes of investment or 
investor services; or 
"(III) any account over which the investment 
company's investment adviser has brokerage place-
ment discretion,"; 
(2) by redesignating clause (vi) as clause (vii); and 
(3) by inserting after clause (v) the following new clause: 
"(vi) any person or any affiliated person of a person 
(other than a registered investment company) that, 
at any time during the 6-month period preceding the 
date of the determination of whether that person or 
affiliated person is an interested person, has loaned 
money or other property to— 
"(I) the investment company; 
"(II) any other investment company having 
the same investment adviser as such investment 
company or holding itself out to investors as a 
related company for purposes of investment or 
investor services; or 
"(III) any account for which the investment 
company's 
investment 
adviser has borrowing 
authority,". 
(b) 
CONFORMING 
AMENDMENT.—Section 2(a)(19)(B) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(19)(B)) is 
amended— 
(1) by striking clause (v) and inserting the following new 
clause: 
"(v) any person or any affiliated person of a person 
(other than a registered investment company) that, 
at any time during the 6-month period preceding the 
date of the determination of whether that person or 
affiliated person is an interested person, has executed 
113 STAT. 1398 
PUBLIC LAW 106-102—NOV. 12, 1999 
any portfolio transactions for, engaged in any principal 
transactions with, or distributed shares for— 
"(I) any investment company for which the 
investment adviser or principal underwriter serves 
as such; 
"(11) any investment company holding itself 
out to investors, for purposes of investment or 
investor services, as a company related to any 
investment company for which the investment 
adviser or principal underwriter serves as such; 
or 
"(III) any account over which the investment 
adviser has brokerage placement discretion,"; 
(2) by redesignating clause (vi) as clause (vii); and 
(3) by inserting after clause (v) the following new clause: 
"(vi) any person or any affiliated person of a person 
(other than a registered investment company) that, 
at any time during the 6-month period preceding the 
date of the determination of whether that person or 
affiliated person is an interested person, has loaned 
money or other property to— 
"(I) any investment company for which the 
investment adviser or principal underwriter serves 
as such; 
"(II) any investment company holding itself 
out to investors, for purposes of investment or 
investor services, as a company related to any 
investment company for which the investment 
adviser or principal underwriter serves as such; 
or 
"(III) any account for which the investment 
adviser has borrowing authority,", 
(c) AFFILIATION OF DIRECTORS.—Section 10(c) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-10(c)) is amended by striking 
"bank, except" and inserting "bank (together with its affiliates 
and subsidiaries) or any one bank holding company (together with 
its affiliates and subsidiaries) (as such terms are defined in section 
2 of the Bank Holding Company Act of 1956), except". 
SEC. 214. ADDITIONAL SEC DISCLOSURE AUTHORITY. 
Section 35(a) of the Investment Company Act of 1940 (15 U.S.C. 
80a-34(a)) is amended to read as follows: 
"(a) MISREPRESENTATION OF GUARANTEES.— 
"(1) IN GENERAL.—It shall be unlawful for any person, 
issuing or selling any security of which a registered investment 
company is the issuer, to represent or imply in any manner 
whatsoever that such security or company— 
"(A) has been guaranteed, sponsored, recommended, 
or approved by the United States, or any agency, 
instrumentality or officer of the United States; 
"(B) has been insured by the Federal Deposit Insurance 
Corporation; or 
"(C) is guaranteed by or is otherwise an obligation 
of any bank or insured depository institution. 
"(2) DISCLOSURES.—Any person issuing or selling the secu-
rities of a registered investment company that is advised by, 
or sold through, a bank shall prominently disclose that an 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1399 
investment in the company is not insured by the Federal 
Deposit Insurance Corporation or any other government agency. 
The Commission may, after consultation with and taking into 
consideration the views of the Federal banking agencies (as 
defined in section 3 of the Federal Deposit Insurance Act), 
adopt rules and regulations, and issue orders, consistent with 
the protection of investors, prescribing the manner in which 
the disclosure under this paragraph shall be provided. 
"(3) DEFINITIONS.—TTie terms 'insured depository institu-
tion' and 'appropriate Federal banking agency' have the same 
meanings as given in section 3 of the Federal Deposit Insurance 
Act.". 
SEC. 215. DEFINITION OF BROKER UNDER THE INVESTMENT COM-
PANY ACT OF 1940. 
Section 2(a)(6) of the Investment Company Act of 1940 (15 
U.S.C. 80a-2(a)(6)) is amended to read as follows: 
"(6) The term 'broker' has the same meaning as given 
in section 3 of the Securities Exchange Act of 1934, except 
that such term does not include any person solely by reason 
of the fact that such person is an underwriter for one or 
more investment companies.". 
SEC. 216. DEFINITION OF DEALER UNDER THE INVESTMENT COM-
PANY ACT OF 1940. 
Section 2(a)(ll) of the Investment Company Act of 1940 (15 
U.S.C. 80a-2(a)(ll)) is amended to read as follows: 
"(11) The term 'dealer' has the same meaning as given 
in the Securities Exchange Act of 1934, but does not include 
an insurance company or investment company.". 
SEC. 217. REMOVAL OF THE EXCLUSION FROM THE DEFINITION OF 
INVESTMENT ADVISER FOR BANKS THAT ADVISE INVEST-
MENT COMPANIES. 
(a) INVESTMENT ADVISER.—Section 202(a)(ll)(A) of the Invest-
ment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(ll)(A)) is amended 
by striking "investment company and inserting "investment com-
pany, except that the term 'investment adviser' includes any bank 
or bank holding company to the extent that such bank or bank 
holding company serves or acts as an investment adviser to a 
registered investment company, but if, in the case of a bank, such 
services or actions are performed through a separately identifiable 
department or division, the department or division, and not the 
bank itself, shall be deemed to be the investment adviser". 
(b) SEPARATELY IDENTIFIABLE DEPARTMENT OR DIVISION.—Sec-
tion 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-2(a)) is amended by adding at the end the following: 
"(26) The term 'separately identifiable department or divi-
sion' of a bank means a unit— 
"(A) that is under the direct supervision of an officer 
or officers designated by the board of directors of the bank 
as responsible for the day-to-day conduct of the bank's 
investment adviser activities for one or more investment 
companies, including the supervision of all bank employees 
engaged in the performance of such activities; and 
"(B) for which all of the records relating to its invest-
ment adviser activities are separately maintained in or 
extractable from such unit's own facilities or the facilities 
113 STAT. 1400 
PUBLIC LAW 106-102—NOV. 12, 1999 
of the bank, and such records are so maintained or other-
wise accessible as to permit independent examination and 
enforcement by the Commission of this Act or the Invest-
ment Company Act of 1940 and rules and regulations 
promulgated under this Act or the Investment Company 
Act of 1940.". 
SEC. 218. DEFmiTION 
OF 
BROKER 
UNDER 
THE 
INVESTMENT 
ADVISERS ACT OF 1940. 
Section 202(a)(3) of the Investment Advisers Act of 1940 (15 
U.S.C. 80b-2(a)(3)) is amended to read as follows: 
"(3) The term 'broker' has the same meaning as given 
in section 3 of the Securities Exchange Act of 1934.". 
SEC. 219. DEFINITION 
OF 
DEALER 
UNDER 
THE 
INVESTMENT 
ADVISERS ACT OF 1940. 
Section 202(a)(7) of the Investment Advisers Act of 1940 (15 
U.S.C. 80b-2(a)(7)) is amended to read as follows: 
"(7) The term 'dealer' has the same meaning as given 
in section 3 of the Securities Exchange Act of 1934, but does 
not include an insurance company or investment company.". 
SEC. 
220. 
INTERAGENCY 
CONSULTATION. 
The Investment Advisers Act of 1940 (15 U.S.C. 80b-l et seq.) 
is amended by inserting after section 210 the following new section: 
15 u s e 80b-10a. 
"SEC. 210A. CONSULTATION. 
"(a) EXAMINATION RESULTS AND OTHER INFORMATION.— 
"(1) The appropriate Federal banking agency shall provide 
the Commission upon request the results of any examination, 
reports, records, or other information to which such agency 
may have access— 
"(A) with respect to the investment advisory activities 
of any— 
"(i) bank holding company; 
"(ii) bank; or 
"(iii) separately identifiable department or division 
of a bank, 
that is registered under section 203 of this title; and 
"(B) in the case of a bank holding company or bank 
that has a subsidiary or a separately identifiable depart-
ment or division registered under that section, with respect 
to the investment advisory activities of such bank or bank 
holding company. 
"(2) The Commission shall provide to the appropriate Fed-
eral banking agency upon request the results of any examina-
tion, reports, records, or other information with respect to the 
investment advisory activities of any bank holding company, 
bank, or separately identifiable department or division of a 
bank, which is registered under section 203 of this title. 
"(3) Notwithstanding any other provision of law, the 
Commission and the appropriate Federal banking agencies shall 
not be compelled to disclose any information provided under 
paragraph (1) or (2). Nothing in this paragraph shall authorize 
the Commission or such agencies to withhold information from 
Congress, or prevent the Commission or such agencies from 
complying with a request for information from any other Fed-
eral department or agency or any self-regulatory organization 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1401 
requesting the information for purposes within the scope of 
its jurisdiction, or complying with an order of a court of the 
United States in £in action brought by the United States, the 
Commission, or such agencies. For purposes of section 552 
of title 5, United States Code, this paragraph shall be consid-
ered a statute described in subsection (b)(3)(B) of such section 
552. 
"(b) EFFECT ON OTHER AUTHORITY.—Nothing in this section 
shall limit in any respect the authority of the appropriate Federal 
banking agency with respect to such bank holaing company (or 
affiliates or subsidiaries thereof), bank, or subsidiary, department, 
or division or a bank under any other provision of law. 
"(c) DEFINITION.—For purposes of this section, the term 'appro-
priate Federal banking agency' shall have the same meaning as 
given in section 3 of the Federal Deposit Insurance Act.". 
SEC. 
221. 
TREATMENT 
OF 
BANK 
COMMON 
TRUST 
FUNDS. 
(a) SECURITIES ACT OF 1933.—Section 3(a)(2) of the Securities 
Act of 1933 (15 U.S.C. 77c(a)(2)) is amended by striking "or any 
interest or participation in any common trust fund or similar fund 
maintained by a bank exclusively for the collective investment 
and reinvestment of assets contributed thereto by such bank in 
its capacity as trustee, executor, administrator, or guardian" and 
inserting "or any interest or participation in any common trust 
fund or similar fund that is excluded from the definition of the 
term 'investment company' under section 3(c)(3) of the Investment 
Company Act of 1940". 
(b) SECURITIES EXCHANGE ACT OF 1934.—Section 3(a)(12)(A)(iii) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(12)(A)(iii)) 
is amended to read as follows: 
"(iii) any interest or participation in any common trust 
fund or similar fund that is excluded from the definition 
of the term 'investment company' under section 3(c)(3) of 
the Investment Company Act of 1940;". 
(c) INVESTMENT COMPANY ACT OF 1940.—Section 3(c)(3) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-3(c)(3)) is amended 
by inserting before the period the following: ", if— 
"(A) such fund is employed by the bank solely as an 
aid to the administration of trusts, estates, or other 
accounts created and maintained for a fiduciary purpose; 
"(B) except in connection with the ordinary advertising 
of the bank's fiduciary services, interests in such fund 
are not— 
"(i) advertised; or 
"(ii) offered for sale to the general public; and 
"(C) fees and expenses charged by such fund are not 
in contravention of fiduciary principles established under 
applicable Federal or State law". 
SEC. 222. STATUTORY DISQUALIFICATION FOR BANK WRONGDOING. 
Section 9(a) of the Investment Company Act of 1940 (15 U.S.C. 
80a-9(a)) is amended in paragraphs (1) and (2) by striking "securi-
ties dealer, transfer agent," and inserting "securities dealer, bank, 
transfer agent,". 
SEC. 223. CONFORMING CHANGE IN DEFINITION. 
Section 2(a)(5) of the Investment Company Act of 1940 (15 
U.S.C. 80a-2(a)(5)) is amended by striking "(A) a banking institution 
113 STAT. 1402 
PUBLIC LAW 106-102—NOV. 12, 1999 
organized under the laws of the United States" and inserting "(A) 
a depository institution (as defined in section 3 of the Federal 
Deposit Insurance Act) or a branch or agency of a foreign bank 
(as such terms are defined in section 1(b) of the International 
Banking Act of 1978)". 
SEC. 224. CONFORMING AMENDMENT. 
Section 202 of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-2) is amended by adding at the end the following new sub-
section: 
"(c) CONSIDERATION OF PROMOTION OF EFFICIENCY, COMPETI-
TION, AND CAPITAL FORMATION.—Whenever pursuant to this title 
the Commission is engaged in rulemaking and is required to con-
sider or determine whether an action is necessary or appropriate 
in the public interest, the Commission shall also consider, in addi-
tion to the protection of investors, whether the action will promote 
efficiency, competition, and capital formation.". 
15 u s e 77c note. 
SEC. 225. EFFECTIVE DATE. 
This subtitle shall take effect 18 months after the date of 
the enactment of this Act. 
Subtitle C—Securities and Exchange Com-
mission Supervision of Investment Bank 
Holding Companies 
SEC. 231. SUPERVISION OF INVESTMENT BANK HOLDING COMPANIES 
BY THE SECURITIES AND EXCHANGE COMMISSION. 
(a) AMENDMENT.—Section 17 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78q) is amended— 
(1) by redesignating subsection (i) as subsection (k); and 
(2) by inserting after subsection (h) the following new sub-
sections: 
"(i) INVESTMENT BANK HOLDING COMPANIES.— 
"(1) 
ELECTIVE 
SUPERVISION OF AN INVESTMENT BANK 
HOLDING COMPANY NOT HAVING A BANK OR SAVINGS ASSOCIATION 
AFFILIATE.— 
"(A) IN GENERAL.—An investment hank holding com-
pany that is not— 
"(i) an affiliate of an insured bank (other than 
an institution described in subparagraph (D), (F), or 
(G) of section 2(c)(2), or held under section 4(f), of 
the Bank Holding Company Act of 1956), or a savings 
association; 
"(ii) a foreign bank, foreign company, or company 
that is described in section 8(a) of the International 
Banking Act of 1978; or 
"(iii) a foreign bank that controls, directly or 
indirectly, a corporation chartered under section 25A 
of the Federal Reserve Act, 
may elect to become supervised by filing with the Commis-
sion a notice of intention to become supervised, pursuant 
to subparagraph (B) of this paragraph. Any investment 
bank holding company filing such a notice shall be super-
vised in accordance with this section and comply with 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1403 
the rules promulgated by the Commission applicable to 
supervised investment bank holding companies. 
"(B) NOTIFICATION OF STATUS AS A SUPERVISED INVEST-
MENT BANK HOLDING COMPANY.—An investment bank 
holding company that elects under subparagraph (A) to 
become supervised by the Commission shall file with the 
Commission a written notice of intention to become super-
vised by the Commission in such form and containing such 
information and documents concerning such investment 
bank holding company as the Commission, by rule, may 
prescribe as necessary or appropriate in furtherance of 
the purposes of this section. Unless the Commission finds 
that such supervision is not necessary or appropriate in 
furtherance of the purposes of this section, such supervision 
shall become effective 45 days after the date of receipt 
of such written notice by the Commission or within such 
shorter time period as the Commission, by rule or order, 
may determine. 
"(2) ELECTION NOT TO BE SUPERVISED BY THE COMMISSION 
AS AN INVESTMENT BANK HOLDING COMPANY.— 
"(A) VOLUNTARY WITHDRAWAL.—A supervised invest-
ment bank holding company that is supervised pursuant 
to paragraph (1) may, upon such terms and conditions 
as the Commission deems necessary or appropriate, elect 
not to be supervised by the Commission by filing a written 
notice of withdrawal fi-om Commission supervision. Such Effective date, 
notice shall not become effective imtil 1 year after receipt 
by the Commission, or such shorter or longer period as 
the Commission deems necessary or appropriate to ensure 
effective supervision of the material risks to the supervised 
investment bank holding company and to the affiliated 
broker or dealer, or to prevent evasion of the purposes 
of this section. 
"(B) DISCONTINUATION OF COMMISSION SUPERVISION.— 
If the Commission finds that any supervised investment 
bank holding company that is supervised pursuant to para-
graph (1) is no longer in existence or has ceased to be 
an investment bank holding company, or if the Commission 
finds that continued supervision of such a supervised 
investment bank holding company is not consistent with 
the purposes of this section, the Commission may dis-
continue the supervision pursuant to a rule or order, if 
any, promulgated by the Commission under this section. 
"(3) 
SUPERVISION OF INVESTMENT BANK HOLDING COMPA-
NIES.— 
"(A) RECORDKEEPING AND REPORTING.— 
"(i) IN GENERAL.—Every supervised investment 
bank holding company and each affiliate thereof shall 
make and keep for prescribed periods such records, 
furnish copies thereof, and make such reports, as the 
Commission may require by rule, in order to keep 
the Commission informed as to— 
"(I) the companys or affiliate's 
activities, 
financial condition, policies, systems for monitoring 
and controlling financial and operational risks, and 
transactions and relationships between any broker 
113 STAT. 1404 
PUBLIC LAW 106-102—NOV. 12, 1999 
or dealer affiliate of the supervised investment 
bank holding company; and 
"(11) the extent to which the company or affil-
iate has complied with the provisions of this Act 
and regulations prescribed and orders issued under 
this Act. 
"(ii) 
FORM AND CONTENTS.—Such records 
and 
reports shall be prepared in such form and according 
to such specifications (including certification by an 
independent public accountant), as the Commission 
may require and shall be provided promptly at any 
time upon request by the Commission. Such records 
and reports may include— 
"(I) a balance sheet and income statement; 
"(II) an assessment of the consolidated capital 
of the supervised investment bank holding com-
pany; 
"(III) an independent auditor's report attesting 
to the supervised investment bank holding com-
pany's compliance with its internal risk manage-
ment and internal control objectives; and 
"(IV) reports concerning the extent to which 
the company or affiliate has complied with the 
provisions of this title and any regulations pre-
scribed and orders issued under this title. 
"(B) USE OF EXISTING REPORTS.— 
"(i) IN GENERAL.—The Commission shall, to the 
fullest extent possible, accept reports in fulfillment 
of the requirements under this paragraph that the 
supervised investment bank holding company or its 
affiliates have been required to provide to another 
appropriate 
regulatory 
agency 
or 
self-regulatory 
organization. 
"(ii) AVAILABILITY.—^A supervised investment bank 
holding company or an affiliate of such company shall 
provide to the Commission, at the request of the 
Commission, any report referred to in clause (i). 
"(C) EXAMINATION AUTHORITY.— 
"(i) 
FOCUS 
OF 
EXAMINATION AUTHORITY.—The 
Commission may make examinations of any supervised 
investment bank holding company and any affiliate 
of such company in order to— 
"(I) inform the Commission regarding— 
"(aa) the nature of the operations and 
financial condition of the supervised invest-
ment bank holding company and its affiliates; 
"(bb) the financial and operational risks 
within 
the 
supervised 
investment 
bank 
holding company that may affect any broker 
or dealer controlled by such supervised invest-
ment bank holding company; and 
"(cc) the systems of the supervised invest-
ment bank holding company and its affiliates 
for monitoring and controlling those risks; and 
"(II) monitor compliance with the provisions 
of this subsection, provisions governing trans-
actions and relationships between any broker or 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1405 
dealer affiliated with the supervised investment 
bank holding company and any of the company's 
other affiliates, and applicable provisions of sub-
chapter II of chapter 53, title 31, United States 
Code (commonly referred to as the 'Bank Secrecy 
Act') and regulations thereunder, 
"(ii) RESTRICTED FOCUS OF EXAMINATIONS.—The 
Commission shall limit the focus and scope of any 
examination of a supervised investment bank holding 
company to— 
"(I) the company; and 
"(II) any affiliate of the company that, because 
of its size, condition, or activities, the nature or 
size of the transactions between such affiliate and 
any affiliated broker or dealer, or the centraliza-
tion of functions within the holding company 
system, could, in the discretion of the Commission, 
have a materially adverse effect on the operational 
or financial condition of the broker or dealer, 
"(iii) DEFERENCE TO OTHER EXAMINATIONS.—For 
purposes of this subparagraph, the Commission shall, 
to the fullest extent possible, use the reports of exam-
ination of an institution described in subparagraph 
(D), (F), or (G) of section 2(c)(2), or held under section 
4(f), of the Bank Holding Company Act of 1956 made 
by the appropriate regulatory agency, or of a licensed 
insurance company made by the appropriate State 
insurance regulator. 
"(4) FUNCTIONAL REGULATION OF BANKING AND INSURANCE 
ACTIVITIES OF SUPERVISED INVESTMENT BANK HOLDING COMPA-
NIES.—The Commission shall defer to— 
"(A) the appropriate regulatory agency with regard 
to all interpretations of, and the enforcement of, applicable 
banking laws relating to the activities, conduct, ownership, 
and operations of banks, and institutions described in 
subparagraph (D), (F), and (G) of section 2(c)(2), or held 
under section 4(f), of the Bank Holding Company Act of 
1956; and 
"(B) the appropriate State insursmce regulators with 
regard to all interpretations of, and the enforcement of, 
applicable State insurance laws relating to the activities, 
* conduct, and operations of insurance companies and insur-
ance agents. 
"(5) DEFINITIONS.—For purposes of this subsection: 
"(A) The term 'investment bank holding company' 
means— 
"(i) any person other than a natural person that 
owns or controls one or more brokers or dealers; and 
"(ii) the associated persons of the investment bank 
^ 
holding company. 
"(B) The term 'supervised investment bank holding 
company' means any investment bank holding company 
' 
that is supervised by the Commission pursuant to this 
subsection. 
"(C) The terms 'affihate', 'bank', 'bank holding com-
pany', 'company', 'control', and 'savings association' have 
69-194 -01 - 13: QL 3 Pan 2 
113 STAT. 1406 
PUBLIC LAW 106-102—NOV. 12, 1999 
the same meanings as given in section 2 of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841). 
"(D) The term 'insured bank' has the same meaning 
as given in section 3 of the Federal Deposit Insurance 
Act. 
"(E) The term 'foreign bank' has the same meaning 
as given in section 1(b)(7) of the International Banking 
Act of 1978. 
"(F) The terms 'person associated with an investment 
bank holding company' and 'associated person of an invest-
ment bank holding company' mean any person directly 
or indirectly controlling, controlled by, or under common 
control with, an investment bank holding company. 
"(j) AUTHORITY TO LIMIT DISCLOSURE OF INFORMATION.—Not-
withstanding any other provision of law, the Commission shall 
not be compelled to disclose any information required to be reported 
under subsection (h) or (i) or any information supplied to the 
Commission by any domestic or foreign regulatory agency that 
relates to the financial or operational condition of any associated 
person of a broker or dealer, investment bank holding company, 
or any affiliate of an investment bank holding company. Nothing 
in this subsection shall authorize the Commission to withhold 
information from Congress, or prevent the Commission from com-
plying with a request for information from any other Federal depart-
ment or agency or any self-regulatory organization requesting the 
information for purposes within the scope of its jurisdiction, or 
complying with an order of a court of the United States in an 
action brought by the United States or the Commission. For pur-
poses of section 552 of title 5, United States Code, this subsection 
shall be considered a statute described in subsection (b)(3)(B) of 
Regulations. 
such section 552. In prescribing regulations to carry out the require-
ments of this subsection, the Commission shall designate informa-
tion described in or obtained pursuant to subparagraphs (A), (B), 
and (C) of subsection (i)(5) as confidential information for purposes 
of section 24(b)(2) of this title.". 
(b) CONFORMING AMENDMENTS.— 
(1) Section 3(a)(34) of the Securities Exchange Act of 1934 
(15 U.S.C. 78c(a)(34)) is amended by adding at the end the 
following new subparagraph: 
"(H) When used with respect to an institution described 
in sulDparagraph (D), (F), or (G) of section 2(c)(2), or held 
under section 4(f), of the Bank Holding Company Act of 
1956— 
"(i) the Comptroller of the Currency, in the case 
of a national bank or a bank in the District of Columbia 
examined by the Comptroller of the Currency; 
"(ii) the Board of Governors of the Federal Reserve 
System, in the case of a State member bank of the 
Federal Reserve System or any corporation chartered 
under section 25A of the Federal Reserve Act; 
"(iii) the Federal Deposit Insurance Corporation, 
in the case of any other bank the deposits of which 
are insured in accordance with the Federal Deposit 
Insurance Act; or 
"(iv) the (Commission in the case of all other such 
institutions.". 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1407 
(2) Section 1112(e) of the Right to Financial Privacy Act 
of 1978 (12 U.S.C. 3412(e)) is amended— 
(A) by striking "this title" and inserting "law"; and 
(B) by inserting ", examination reports" after "financial 
records". 
Subtitle D—Banks and Bank Holding 
Companies 
SEC. 241. CONSULTATION. 
15 USC 78m 
(a) IN GENERAL.—The Securities and Exchange Commission 
shall consult and coordinate comments with the appropriate Federal 
banking agency before taking any action or rendering any opinion 
with respect to the manner in which any insured depository institu-
tion or depository institution holding company reports loan loss 
reserves in its financial statement, including the amount of any 
such loan loss reserve. 
(b) DEFINITIONS.—For purposes of subsection (a), the terms 
"insured depository institution", "depository institution holding com-
pany", and "appropriate Federal banking agency" have the same 
meaning as given in section 3 of the Federal Deposit Insurance 
Act. 
TITLE III—INSURANCE 
Subtitle A—State Regulation of Insurance 
SEC. 301. FUNCTIONAL REGULATION OF INSURANCE. 
15 USC 6711. 
The insurance activities of any person (including a national 
bank exercising its power to act as agent under the eleventh 
undesignated paragraph of section 13 of the Federal Reserve Act) 
shall be functionally regulated by the States, subject to section 
104. 
SEC. 302. INSURANCE UNDERWRITING IN NATIONAL BANKS. 
15 USC 6712. 
(a) IN GENERAL.—Except as provided in section 303, a national 
bank and the subsidiaries of a national bank may not provide 
insurance in a State as principal except that this prohibition shall 
not apply to authorized products. 
(b) AUTHORIZED PRODUCTS.—For the purposes of this section, 
a product is authorized if— 
(1) as of January 1, 1999, the Comptroller of the Currency 
had determined in writing that national banks may provide 
such product as principal, or national banks were in fact law-
fully providing such product as principal; 
(2) no court of relevant jurisdiction had, by final judgment, 
overturned a determination of the Comptroller of the Currency 
that national banks may provide such product as principal; 
and 
(3) the product is not title insurance, or an annuity contract 
the income of which is subject to tax treatment under section 
72 of the Internal Revenue Code of 1986. 
(c) DEFINITION.—For purposes of this section, the term "insur-
ance" means— 
113 STAT. 1408 
PUBLIC LAW 106-102—NOV. 12, 1999 
(1) any product regulated as insurance as of January 1, 
1999, in accordance with the relevant State insurance law, 
in the State in which the product is provided; 
(2) any product first offered after January 1, 1999, which— 
(A) a State insurance regulator determines shall be 
regulated as insurance in the State in which the product 
is provided because the product insures, guarantees, or 
indemnifies against liability, loss of life, loss of health, 
or loss through damage to or destruction of property, 
including, but not limited to, surety bonds, life insurance, 
health insurance, title insurance, and property and casualty 
insurance (such as private passenger or commercial auto-
mobile, homeowners, mortgage, commercial multiperil, gen-
eral liability, professional liability, workers' compensation, 
fire and allied lines, farm owners multiperil, aircraft, 
fidelity, surety, medical malpractice, ocean marine, inland 
marine, and boiler and machinery insurance); and 
(B) is not a product or service of a bank that is— 
(i) a deposit product; 
(ii) a loan, discount, letter of credit, or other exten-
sion of credit; 
(iii) a trust or other fiduciary service; 
(iv) a qualified financial contract (as defined in 
or determined pursuant to section ll(e)(8)(D)(i) of the 
Federal Deposit Insurance Act); or 
(v) a financial guaranty, except that this subpara-
graph (B) shall not apply to a product that includes 
an insurance component such that if the product is 
offered or proposed to be offered by the bank as 
principal— 
(I) it would be treated as a life insurance 
contract under section 7702 of the Internal Rev-
enue Code of 1986; or 
(II) in the event that the product is not a 
letter of credit or other similar extension of credit, 
a qualified financial contract, or a financial guar-
anty, it would qualify for treatment for losses 
incurred with respect to such product under section 
832(b)(5) of the Internal Revenue Code of 1986, 
if the bank were subject to tax as an insurance 
company under section 831 of that Code; or 
(3) any annuity contract, the income on which is subject 
to tax treatment under section 72 of the Internal Revenue 
Code of 1986. 
(d) RULE OF CONSTRUCTION.—For purposes of this section, pro-
viding insurance (including reinsurance) outside the United States 
that insures, guarantees, or indemnifies insurance products pro-
vided in a State, or that indemnifies an insurance company with 
regard to insurance products provided in a State, shall be considered 
to be providing insurance as principal in that State. 
15 u s e 6713. 
SEC. 303. TITLE INSURANCE ACTIVITIES OF NATIONAL BANKS AND 
THEIR AFFILIATES. 
(a) GENERAL PROHIBITION.—No national bank may engage in 
any activity involving the underwriting or sale of title insurance. 
(b) NONDISCRIMINATION PARITY EXCEPTION.— 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1409 
(1) IN GENERAL.—Notwithstanding any other provision of 
law (including section 104 of this Act), in the case of any 
State in which banks organized under the laws of such State 
are authorized to sell title insurance as agent, a national bank 
may sell title insurance as agent in such State, but only in 
the same manner, to the same extent, and under the same 
restrictions as such State banks are authorized to sell title 
insurance as agent in such State. 
(2) COORDINATION WITH ''WILDCARD" PROVISION.—A State 
law which authorizes State banks to engage in any activities 
in such State in which a national bank may engage shall 
not be treated as a statute which authorizes State banks to 
sell title insurance as agent, for purposes of paragraph (1). 
(c) GRANDFATHERING WITH CONSISTENT REGULATION.— 
(1) IN GENERAL.—Except as provided in paragraphs (2) 
and (3) and notwithstanding subsections (a) and (b), a national 
bank, and a subsidiary of a national bank, may conduct title 
insurance activities which such national bank or subsidiary 
was actively and lawfully conducting before the date of the 
enactment of this Act. 
(2) INSURANCE AFFILIATE.—In the case of a national bank 
which has an affiliate which provides insurance as principal 
and is not a subsidiary of the bank, the national bank and 
any subsidiary of the national bank maj^ not engage in the 
underwriting of title insurance pursuant to paragraph (1). 
(3) INSURANCE SUBSIDIARY.—In the case of a national bank 
which has a subsidiary which provides insurance as principal 
and has no affiliate other than a subsidiary which provides 
insurance as principal, the national bank may not directly 
engage in any activity involving the underwriting of title insur-
ance. 
(d) "AFFILIATE" AND "SUBSIDIARY" DEFINED.—For purposes of 
this section, the terms "affiliate" and "subsidiary" have the same 
meanings as in section 2 of the Bank Holding Company Act of 
1956. 
(e) RULE OF CONSTRUCTION.—No provision of this Act or any 
other Federal law shall be construed as superseding or affecting 
a State law which was in effect before the date of the enactment 
of this Act and which prohibits title insurance from being offered, 
provided, or sold in such State, or from being underwritten with 
respect to real property in such State, by any person whatsoever. 
SEC. 304. EXPEDITED AND EQUALIZED DISPUTE RESOLUTION FOR 
15USC6714. 
FEDERAL REGULATORS. 
(a) FILING IN COURT OF APPEALS.—In the case of a regulatory 
conflict between a State insurance regulator and a Federal regulator 
regarding insurance issues, including whether a State law, rule, 
regulation, order, or interpretation regarding any insurance sales 
or solicitation activity is properly treated as preempted under Fed-
eral law, the Federal or State regulator may seek expedited judicial 
review of such determination by the United States Court of Appeals 
for the circuit in which the State is located or in the United 
States Court of Appeals for the District of Columbia Circuit by 
filing a petition for review in such court. 
(b) EXPEDITED REVIEW.—The United States Court of Appeals 
in which a petition for review is filed in accordance with subsection 
(a) shall complete all action on such petition, including rendering 
113 STAT. 1410 
PUBLIC LAW 106-102—NOV. 12, 1999 
12 u s e 183 Ix. 
Publication. 
a judgment, before the end of the 60-day period beginning on 
the date on which such petition is filed, unless all parties to such 
proceeding agree to any extension of such period. 
(c) SUPREME COURT REVIEW.—^Any request for certiorari to 
the Supreme Court of the United States of any judgment of a 
United States Court of Appeals with respect to a petition for review 
under this section shall be filed with the Supreme Court of the 
United States as soon as practicable after such judgment is issued. 
(d) STATUTE OF LIMITATION.—No petition may be filed under 
this section challenging an order, ruling, determination, or other 
action of a Federal regulator or State insurance regulator after 
the later o
f
— 
(1) the end of the 12-month period beginning on the date 
on which the first public notice is made of such order, ruling, 
determination or other action in its final form; or 
(2) the end of the 6-month period beginning on the date 
on which such order, ruling, determination, or other action 
takes effect. 
(e) STANDARD OF REVIEW.—The court shall decide a petition 
filed under this section based on its review on the merits of all 
questions presented under State and Federal law, including the 
nature of the product or activity and the history and purpose 
of its regulation under State and Federal law, without unequal 
deference. 
SEC. 305. INSURANCE CUSTOMER PROTECTIONS. 
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) 
is amended by inserting after section 46, as added by section 
121(d) of this Act, the following new section: 
"SEC. 47. INSURANCE CUSTOMER PROTECTIONS. 
"(a) REGULATIONS REQUIRED.— 
"(1) IN GENERAL.—The Federal banking agencies shall pre-
scribe and publish in final form, before the end of the 1-
year period beginning on the date of the enactment of the 
Gramm-Leach-Bliley Act, customer 
protection 
regulations 
(which the agencies jointly determine to be appropriate) that— 
"(A) apply to retail sales practices, solicitations, adver-
tising, or oners of any insurance product by any depository 
institution or any person that is engaged in such activities 
at an office of the institution or on behalf of the institution; 
and 
"(B) are consistent with the requirements of this Act 
and provide such additional protections for customers to 
whom such sales, solicitations, advertising, or offers are 
directed. 
"(2) APPLICABILITY TO SUBSIDIARIES.—^The regulations pre-
scribed pursuant to paragraph (1) shall extend such protections 
to any subsidiary of a depository institution, as deemed appro-
priate by the regulators referred to in paragraph (3), where 
such extension is determined to be necessary to ensure the 
consumer protections provided by this section. 
"(3) CONSULTATION AND JOINT REGULATIONS.—The Federal 
banking agencies shall consult with each other and prescribe 
joint regulations pursuant to paragraph (1), after consultation 
with the State insurance regulators, as appropriate. 
"(b) SALES PRACTICES.—The regulations prescribed pursuant 
to subsection (a) shall include antit3dng and anticoercion rules 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1411 
applicable to the sale of insurance products that prohibit a deposi-
tory institution from engaging in any practice that would lead 
a customer to believe an extension of credit, in violation of section 
106(b) of the Bank Holding Company Act Amendments of 1970, 
is conditional upon— 
"(1) the purchase of an insurance product from the institu-
tion or any of its affiliates; or 
"(2) an agreement by the consumer not to obtain, or a 
prohibition on the consumer from obtaining, an insurance 
product from an unaffiliated entity. 
"(c) DISCLOSURES AND ADVERTISING.—The regulations pre-
scribed pursuant to subsection (a) shall include the following provi-
sions relating to disclosures and advertising in connection with 
the initial purchase of an insurance product: 
"(1) DISCLOSURES.— 
"(A) IN GENERAL.—Requirements that the following 
disclosures be made orally and in writing before the comple-
tion of the initial sale and, in the case of clause (iii), 
at the time of application for an extension of credit: 
"(i) 
UNINSURED 
STATUS.—As appropriate, 
the 
product is not insured by the Federal Deposit Insur-
ance Corporation, the United States Government, or 
the depository institution. 
"(ii) INVESTMENT RISK.—In the case of a variable 
annuity or other insurance product which involves an 
investment risk, that there is an investment risk asso-
ciated with the product, including possible loss of value, 
"(iii) COERCION.—The approval of an extension of 
credit may not be conditioned on— 
"(I) the purchase of an insurance product from 
the institution in which the application for credit 
is pending or of any affiliate of the institution; 
or 
"(II) an agreement by the consumer not to 
obtain, or a prohibition on the consumer from 
obtaining, an insurance product from an unaffili-
ated entity. 
"(B) MAKING DISCLOSURE READILY UNDERSTANDABLE.— 
Regulations prescribed under subparagraph 
(A) shall 
encourage the use of disclosure that is conspicuous, simple, 
direct, and readily understandable, such as the following: 
"(i) 'NOT FDIC—INSURED', 
"(ii)'NOT GUARANTEED BY THE BANK'. 
"(iii) 'MAY GO DOWN IN VALUE', 
"(iv) 'NOT INSURED BY ANY GOVERNMENT 
AGENCT. 
"(C) LIMITATION.—Nothing in this paragraph requires 
the inclusion of the foregoing disclosures in advertisements 
of a general nature describing or listing the services or 
products offered by an institution. 
"(D) MEANINGFUL DISCLOSURES.—Disclosures shall not 
be considered to be meaningfully provided under this para-
graph if the institution or its representative states that 
disclosures required by this subsection were available to 
the customer in printed material available for distribution, 
where such printed material is not provided and such 
information is not orally disclosed to the customer. 
113 STAT. 1412 
PUBLIC LAW 106-102—NOV. 12, 1999 
"(E) ADJUSTMENTS FOR ALTERNATIVE METHODS OF PUR-
CHASE.—In prescribing the requirements under subpara-
graphs (A) and (F), necessary adjustments shall be made 
for purchase in person, by telephone, or by electronic media 
to provide for the most appropriate and complete form 
of disclosure and acknowledgments. 
"(F) 
CONSUMER ACKNOWLEDGMENT.—A requirement 
that a depository institution shall require any person 
selling an insurance product at any office of, or on behalf 
of, the institution to obtain, at the time a consumer receives 
the disclosures required under this paragraph or at the 
time of the initial purchase by the consumer of such 
product, an acknowledgment by such consumer of the 
receipt of the disclosure required under this subsection 
with respect to such product. 
"(2) PROHIBITION ON MISREPRESENTATIONS.—A prohibition 
on any practice, or any advertising, at any office of, or on 
behalf of, the depository institution, or any subsidiary, as appro-
priate, that could mislead any person or otherwise cause a 
reasonable person to reach an erroneous belief with respect 
to— 
"(A) the uninsured nature of any insurance product 
sold, or offered for sale, by the institution or any subsidiary 
of the institution; 
"(B) in the case of a variable annuity or insurance 
product that involves an investment risk, the investment 
risk associated with any such product; or 
"(C) in the case of an institution or subsidiary at which 
insurance products are sold or offered for sale, the fact 
that— 
"(i) the approval of an extension of credit to a 
customer by the institution or subsidiary may not be 
conditioned on the purchase of an insurance product 
by such customer from the institution or subsidiary; 
and 
"(ii) the customer is free to purchase the insurance 
product from another source. 
"(d) SEPARATION OF BANKING AND NONBANKING ACTIVITIES.— 
"(1) REGULATIONS REQUIRED.—The regulations prescribed 
pursuant to subsection (a) shall include such provisions as 
the Federal banking agencies consider appropriate to ensure 
that the routine acceptance of deposits is kept, to the extent 
practicable, physically segregated from insurance product 
activity. 
"(2) REQUIREMENTS.—Regulations prescribed pursuant to 
paragraph (1) shall include the following requirements: 
"(A) SEPARATE SETTING.—A clear delineation of the 
setting in which, and the circumstances under which, trans-
actions involving insurance products should be conducted 
in a location physically segregated from an area where 
retail deposits are routinely accepted. 
"(B) REFERRALS.—Standards that permit any person 
accepting deposits from the public in an area where such 
transactions are routinely conducted in a depository institu-
tion to refer a customer who seeks to purchase any insur-
ance product to a qualified person who sells such product, 
only if the person making the referral receives no more 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1413 
than a one-time nominal fee of a fixed dollar amount for 
each referral that does not depend on whether the referral 
results in a transaction. 
"(C) QUALIFICATION AND LICENSING REQUIREMENTS.— 
Standards prohibiting any depository institution 
from 
permitting any person to sell or offer for sale any insurance 
product in any part of any office of the institution, or 
on behalf of the institution, unless such person is appro-
priately qualified and licensed. 
"(e) DOMESTIC VIOLENCE DISCRIMINATION PROHIBITION.— 
"(1) IN GENERAL.—In the case of an applicant for, or an 
insured under, any insurance product described in paragraph 
(2), the status of the applicEint or insured as a victim of domestic 
violence, or as a provider of services to victims of domestic 
violence, shall not be considered as a criterion in any decision 
with regard to insurance underwriting, pricing, renewal, or 
scope of coverage of insurance policies, or pa3ntnent of insurance 
claims, except as required or expressly permitted under State 
law. 
"(2) SCOPE OF APPLICATION.—The prohibition contained in 
paragraph (1) shall apply to any life or health insurance product 
which is sold or offered for sale, as principal, agent, or broker, 
by any depository institution or any person who is engaged 
in such activities at an office of the institution or on behalf 
of the institution. 
"(3) DOMESTIC VIOLENCE DEFINED.—For purposes of this 
subsection, the term 'domestic violence' means the occurrence 
of one or more of the following acts by a current or former 
family member, household member, intimate partner, or care-
taker: 
"(A) Attempting to cause or causing or threatening 
another person physical harm, severe emotional distress, 
psychological trauma, rape, or sexual assault. 
"(B) Engaging in a course of conduct or repeatedly 
committing acts toward another person, including following 
the person without proper authority, under circumstances 
that place the person in reasonable fear of bodily injury 
or physical harm. 
"(C) Subjecting another person to false imprisonment. 
"(D) Attempting to cause or cause damage to property 
so as to intimidate or attempt to control the behavior 
of another person. 
"(f) CONSUMER GRIEVANCE PROCESS.—The Federal banking Establishment, 
agencies shall jointly establish a consumer complaint mechanism, 
for receiving and expeditiously addressing consumer complaints 
alleging a violation of regulations issued under the section, which 
shall— 
"(1) establish a group within each regulatory agency to 
receive such complaints; 
"(2) develop procedures for investigating such complaints; 
"(3) develop procedures for informing consumers of rights 
they may have in connection with such complaints; aind 
"(4) develop procedures for addressing concerns raised by 
such complaints, as appropriate, including procedures for the 
recovery of losses to the extent appropriate. 
"(g) EFFECT ON OTHER AUTHORITY.— 
113 STAT. 1414 
PUBLIC LAW 106-102—NOV. 12, 1999 
Notification. 
Notice. 
"(1) IN GENERAL.—No provision of this section shall be 
construed as granting, limiting, or otherwise affecting— 
"(A) any authority of the Securities and Exchange 
Commission, any self-regulatory organization, the Munic-
ipal Securities Rulemaking Board, or the Secretary of the 
Treasury under any Federal securities law; or 
"(B) except as provided in paragraph (2), any authority 
of any State insurance commission (or any agency or office 
performing like functions), or of any State securities 
commission (or any agency or office performing like func-
tions), or other State authority under any State law. 
"(2) COORDINATION WITH STATE LAW.— 
"(A) IN GENERAL.—Except as provided in subparagraph 
(B), insurance customer protection regulations prescribed 
by a Federal banking agency under this section shall not 
apply to retail sales, solicitations, advertising, or offers 
of any insurance product by any depository institution or 
to any person who is engaged in such activities at an 
office of such institution or on behalf of the institution, 
in a State where the State has in effect statutes, regula-
tions, orders, or interpretations, that are inconsistent with 
or contrary to the regulations prescribed by the Federal 
banking agencies. 
"(B) PREEMPTION.— 
"(i) IN GENERAL.—If, with respect to any provision 
of the regulations prescribed under this section, the 
Board of Governors of the Federal Reserve System, 
the Comptroller of the Currency, and the Board of 
Directors of the Corporation determine jointly that the 
protection afforded by such provision for customers 
is greater than the protection provided by a comparable 
provision of the statutes, regulations, orders, or 
interpretations referred to in subparagraph (A) of any 
State, the appropriate State regulatory authority shall 
be notified of such determination in writing. 
"(ii) CONSIDERATIONS.—Before making a 
final 
determination under clause (i), the Federal agencies 
referred to in clause (i) shall give appropriate consider-
ation to comments submitted by the appropriate State 
regulatory authorities relating to the level of protection 
afforded to consumers under State law. 
"(iii) FEDERAL PREEMPTION AND ABILITY OF STATES 
TO OVERRIDE FEDERAL PREEMPTION.—If the Federal 
agencies referred to in clause (i) jointly determine that 
any provision of the regulations prescribed under this 
section affords greater protections than a comparable 
State law, rule, regulation, order, or interpretation, 
those agencies shall send a written preemption notice 
to the appropriate State regulatory authority to notify 
the State that the Federal provision will preempt the 
State provision and will become applicable unless, not 
later than 3 years after the date of such notice, the 
State adopts legislation to override such preemption. 
"(h) NON-DlSCRIMINATION AGAINST N O N - A F F I L I A T E D AGENTS.— 
The Federal banking agencies shall ensure that the regulations 
prescribed pursuant to subsection (a) shall not have the effect 
of discriminating, either intentionally or unintentionally, against 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1415 
any person engaged in insurance sales or solicitations that is not 
affiliated with a depository institution.". 
SEC. 306. CERTAIN STATE AFFILIATION LAWS PREEMPTED FOR 
15 USC 6715. 
INSURANCE COMPANIES AND AFFILIATES. 
Except as provided in section 104(c)(2), no State may, by law, 
regulation, order, interpretation, or otherwise— 
(1) prevent or significantly interfere with the ability of 
£iny insurer, or any affiliate of an insurer (whether such affiliate 
is organized as a stock company, mutual holding company, 
or otherwise), to become a financial holding company or to 
acquire control of a depository institution; 
(2) limit the amount of an insurer's assets that may be 
invested in the voting securities of a depository institution 
(or any company which controls such institution), except that 
the laws of an insurer's State of domicile may limit the amount 
of such investment to an amount that is not less than 5 percent 
of the insurer's admitted assets; or 
(3) prevent, significantly interfere with, or have the 
authority to review, approve, or disapprove a plan of reorganiza-
tion by which an insurer proposes to reorganize from mutual 
form to become a stock insurer (whether as a direct or indirect 
subsidiary of a mutual holding company or otherwise) unless 
such State is the State of domicile of the insurer. 
SEC. 307. INTERAGENCY CONSULTATION. 
15 USC 6716. 
(a) PURPOSE.—It is the intention of the Congress that the 
Board of Governors of the Federal Reserve System, as the umbrella 
supervisor for financial holding companies, and the State insurance 
regulators, as the functional regulators of companies engaged in 
insurance activities, coordinate efforts to supervise companies that 
control both a depository institution and a company engaged in 
insurance activities regulated under State law. In particular. Con-
gress believes that the Board and the State insurance regulators 
should share, on a confidential basis, information relevant to the 
supervision of companies that control both a depository institution 
and a company engaged in insurance activities, including informa-
tion regarding the financial health of the consolidated organization 
and information regarding transactions and relationships between 
insurance companies and affiliated depository institutions. The 
appropriate Federal banking agencies for depository institutions 
should also share, on a confidential basis, information with the 
relevant State insurance regulators regarding transactions and rela-
tionships between depository institutions and affiliated companies 
engaged in insurance activities. The purpose of this section is to 
encourage this coordination and confidential sharing of information, 
and to thereby improve both the efficiency and the quality of the 
supervision of financial holding companies and their affiliated 
depository institutions and companies engaged in insurance activi-
ties. 
(b) EXAMINATION RESULTS AND OTHER INFORMATION.— 
(1) INFORMATION OF THE BOARD.—Upon the request of the 
appropriate insurance regulator of any State, the Board may 
provide any information of the Board regarding the financial 
condition, risk management policies, and operations of any 
financial holding company that controls a company that is 
engaged in insurance activities and is regulated by such State 
113 STAT. 1416 
PUBLIC LAW 106-102—NOV. 12, 1999 
insurance regulator, and regarding any transaction or relation-
ship between such an insurance company and any affiliated 
depository institution. The Board may provide any other 
information to the appropriate State insurance regulator that 
the Board believes is necessary or appropriate to permit the 
State insurance regulator to administer and enforce applicable 
State insurance laws. 
(2) BANKING AGENCY INFORMATION.—Upon the request of 
the appropriate insurance regulator of any State, the appro-
priate Federal banking agency may provide any information 
of the agency regarding any transaction or relationship between 
a depository institution supervised by such Federal banking 
agency and any affiliated company that is engaged in insurance 
activities regulated by such State insurance regulator. The 
appropriate Federal banking agency may provide any other 
information to the appropriate State insurance regulator that 
the agency believes is necessary or appropriate to permit the 
State insurance regulator to administer and enforce applicable 
State insurance laws. 
(3) STATE INSURANCE REGULATOR INFORMATION.—Upon the 
request of the Board or the appropriate Federal banking agency, 
a State insurance regulator may provide any examination or 
other reports, records, or other information to which such insur-
ance regulator may have access with respect to a company 
which— 
(A) is engaged in insurance activities and regulated 
by such insurance regulator; and 
(B) is an affiliate of a depository institution or financial 
holding company. 
(c) CONSULTATION.—Before making any determination relating 
to the initial affiliation of, or the continuing affiliation of, a deposi-
tory institution or financial holding company with a company 
engaged in insurance activities, the appropriate Federal banking 
agency shall consult with the appropriate State insurance regulator 
of such company and take the views of such insurance regulator 
into account in making such determination. 
(d) EFFECT ON OTHER AUTHORITY.—Nothing in this section 
shall limit in any respect the authority of the appropriate Federal 
banking agency with respect to a depository institution or bank 
holding company or any affiliate thereof under any provision of 
law. 
(e) CONFIDENTIALITY AND PRIVILEGE.— 
(1) CONFIDENTIALITY.—The appropriate Federal banking 
agency shall not provide any information or material that is 
entitled to confidential treatment under applicable Federal 
banking agency regulations, or other applicable law, to a State 
insurance regulator unless such regulator agrees to maintain 
the information or material in confidence and to take all reason-
able steps to oppose any effort to secure disclosure of the 
information or material by the regulator. The appropriate Fed-
eral banking agency shall treat as confidential any information 
or material obtained from a State insurance regulator that 
is entitled to confidential treatment under applicable State 
regulations, or other applicable law, and take all reasonable 
steps to oppose any effort to secure disclosure of the information 
or material by the Federal banking agency. 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1417 
(2) PRIVILEGE.—The provision pursuant to this section of 
information or material by a Federal banking agency or State 
insurance regulator shall not constitute a waiver of, or other-
wise affect, any privilege to which the information or material 
is otherwise subject. 
(f) DEFINITIONS.—For purposes of this section, the following 
definitions shall apply: 
(1) APPROPRIATE FEDERAL BANKING AGENCY; DEPOSITORY 
INSTITUTION.—The terms "appropriate Federal banking agency" 
and "depository institution" have the same meanings as in 
section 3 of the Federal Deposit Insurance Act. 
(2) BOARD AND FINANCIAL HOLDING COMPANY.—The terms 
"Board" and "financial holding company" have the same 
meanings as in section 2 of the Bank Holding Company Act 
of 1956. 
SEC. 308. DEFINITION OF STATE. 
15USC6717. 
For purposes of this subtitle, the term "State" means any 
State of the United States, the District of Columbia, any territory 
of the United States, Puerto Rico, Guam, American Samoa, the 
Trust Territory of the Pacific Islands, the Virgin Isleinds, and the 
Northern Mariana Islands. 
Subtitle B—^Redomestication of Mutual 
Insurers 
SEC. 311. GENERAL APPLICATION. 
15 USC 6731. 
This subtitle shall only apply to a mutual insurance company 
in a State which has not enacted a law which expressly establishes 
reasonable terms and conditions for a mutual insurance company 
domiciled in such State to reorganize into a mutual holding com-
pany. 
SEC. 312. REDOMESTICATION OF MUTUAL INSURERS. 
15 USC 6732. 
(a) REDOMESTICATION.—^A mutual insurer organized under the 
laws of any State may transfer its domicile to a transferee domicile 
as a step in a reorganization in which, pursuant to the laws of 
the transferee domicile and consistent with the standards in sub-
section (f), the mutual insurer becomes a stock insurer that is 
a direct or indirect subsidiary of a mutual holding company. 
(b) RESULTING DOMICILE.—Upon complying with the applicable 
law of the transferee domicile governing transfers of domicile and 
completion of a transfer pursuant to this section, the mutual insurer 
shall cease to be a domestic insurer in the transferor domicile 
and, as a continuation of its corporate existence, shall be a domestic 
insurer of the transferee domicile. 
(c) LICENSES PRESERVED.—The certificate of authority, agents' 
appointments and licenses, rates, approvals and other items that 
a licensed State allows and that are in existence immediately prior 
to the date that a redomesticating insurer transfers its domicile 
pursuant to this subtitle shall continue in full force and effect 
upon transfer, if the insurer remains duly qualified to transact 
the business of insurance in such licensed State. 
(d) 
EFFECTIVENESS OF 
OUTSTANDING POLICIES AND 
CON-
TRACTS.— 
113 STAT. 1418 
PUBLIC LAW 106-102—NOV. 12, 1999 
(1) IN GENERAL.—^All outstanding insurance policies and 
annuities contracts of a redomesticating insurer shall remain 
in full force and effect and need not be endorsed as to the 
new domicile of the insurer, unless so ordered by the State 
insurance regulator of a licensed State, and then only in the 
case of outstanding policies and contracts whose owners reside 
in such licensed State. 
(2) FORMS.— 
(A) Applicable State law may require a redomesticating 
insurer to file new policy forms with the State insurance 
regulator of a licensed State on or before the effective 
date of the transfer. 
(B) Notwithstanding subparagraph (A), a redomes-
ticating insurer may use existing policy forms with appro-
priate endorsements to reflect the new domicile of the 
redomesticating insurer until the new policy forms are 
approved for use by the State insurance regulator of such 
licensed State. 
(e) NOTICE.—^A redomesticating insurer shall give notice of the 
proposed transfer to the State insurance regulator of each licensed 
State and shall file promptly any resulting amendments to corporate 
documents required to be filed by a foreign licensed mutual insurer 
with the insurance regulator of each such licensed State. 
if) PROCEDURAL REQUIREMENTS.—No mutual insurer may re-
domesticate to another State and reorganize into a mutual holding 
company pursuant to this section unless the State insurance regu-
lator of the transferee domicile determines that the plan of reorga-
nization of the insurer includes the following requirements: 
(1) 
APPROVAL BY BOARD OF DIRECTORS AND POLICY-
HOLDERS.—The reorganization is approved by at least a 
majority of the board of directors of the mutual insurer and 
at least a majority of the policyholders who vote after notice, 
disclosure of the reorganization and the effects of the trans-
action on policyholder contractual rights, and reasonable oppor-
tunity to vote, in accordance with such notice, disclosure, and 
voting procedures as are approved by the State insurance regu-
lator of the transferee domicile. 
(2) CONTINUED VOTING CONTROL BY POLICYHOLDERS; REVIEW 
OF PUBLIC STOCK OFFERING.—^After the consummation of a 
reorganization, the policyholders of the reorganized insurer 
shall have the same voting rights with respect to the mutual 
holding company as they had before the reorganization with 
respect to the mutual insurer. With respect to an initial public 
offering of stock, the offering shall be conducted in compliance 
with applicable securities laws and in a manner approved by 
the State insurance regulator of the transferee domicile. 
(3) AWARD OF STOCK OR GRANT OF OPTIONS TO OFFICERS 
AND DIRECTORS.—During the applicable period provided for 
under the State law of the transferee domicile following comple-
tion of an initial public offering, or for a period of six months 
if no such applicable period is provided, neither a stock holding 
company nor the converted insurer shall award any stock 
options or stock grants to persons who are elected officers 
or directors of the mutual holding company, the stock holding 
company, or the converted insurer, except with respect to any 
such awards or options to which a person is entitled as a 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1419 
policyholder and as approved by the State insurance regulator 
of the transferee domicile. 
(4) POLICYHOLDER RIGHTS.—Upon reorganization into a 
mutual holding company, the contractual rights of the policy-
holders are preserved. 
(5) FAIR AND EQUITABLE TREATMENT OF POLICYHOLDERS.— 
The reorganization is approved as fair and equitable to the 
policyholders by the insurance regulator of the transferee 
domicile. 
SEC. 313. EFFECT ON STATE LAWS RESTRICTING REDOMESTICATION. 
15 USC 6733. 
(a) IN GENERAL.—Unless otherwise permitted by this subtitle. 
State laws of any transferor domicile that conflict with the purposes 
and intent of this subtitle are preempted, including but not limited 
to— 
(1) any law that has the purpose or effect of impeding 
the activities of, teiking any action against, or applying any 
provision of law or regulation to, any insurer or an affiliate 
of such insurer because that insurer or any affiliate plans 
to redomesticate, or has redomesticated, pursuant to this sub-
title; 
(2) any law that has the purpose or effect of impeding 
the activities of, taking action against, or applying any provision 
of law or regulation to, any insured or any insurance licensee 
or other intermediary because such person has procured insur-
ance from or placed insurance with any insurer or affiliate 
of such insurer that plans to redomesticate, or has redomes-
ticated, pursuant to this subtitle, but only to the extent that 
such law would treat such insured licensee or other inter-
mediary differently than if the person procured insurance from, 
or placed insurance with, an insured licensee or other inter-
mediary which had not redomesticated; and 
(3) any law that has the purpose or effect of terminating, 
because of the redomestication of a mutual insurer pursuant 
to this subtitle, any certificate of authority, agent appointment 
or license, rate approval, or other approval, of any State insur-
ance regulator or other State authority in existence immediately 
prior to the redomestication in any State other than the trans-
feree domicile. 
(b) DIFFERENTIAL TREATMENT PROHIBITED.—NO State law, regu-
lation, interpretation, or functional equivalent thereof, of a State 
other than a transferee domicile may treat a redomesticating or 
redomesticated insurer or any affiliate thereof any differently than 
an insurer operating in that State that is not a redomesticating 
or redomesticated insurer. 
(c) LAWS PROHIBITING OPERATIONS.—If any licensed State fails 
to issue, delays the issuance of, or seeks to revoke an original 
or renewal certificate of authority of a redomesticated insurer 
promptly following redomestication, except on grounds and in a 
manner consistent with its past practices regarding the issuance 
of certificates of authority to foreign insurers that are not redomes-
ticating, then the redomesticating insurer shall be exempt from 
any State law of the licensed State to the extent that such State 
law or the operation of such State law would make unlawful, 
or regulate, directly or indirectly, the operation of the redomes-
ticated insurer, except that such licensed State may require the 
redomesticated insurer to— 
113 STAT. 1420 
PUBLIC LAW 106-102—NOV. 12, 1999 
(1) comply with the unfair claim settlement practices law 
of the licensed State; 
(2) pay, on a nondiscriminatory basis, applicable premium 
and other taxes which are levied on licensed insurers or policy-
holders under the laws of the licensed State; 
(3) register with and designate the State insurance regu-
lator as its agent solely for the purpose of receiving service 
of legal documents or process; 
(4) submit to an examination by the State insurance regu-
lator in any licensed State in which the redomesticated insurer 
is doing business to determine the insurer's financial condition, 
if— 
(A) the State insurance regulator of the transferee 
domicile has not begun an examination of the redomes-
ticated insurer and has not scheduled such an examination 
to begin before the end of the 1-year period beginning 
on the date of the redomestication; and 
(B) any such examination is coordinated to avoid 
unjustified duplication and repetition; 
(5) comply with a lawful order issued in— 
(A) a delinquency proceeding commenced by the State 
insurance regulator of any licensed State if there has been 
a judicial finding of financial impairment under paragraph 
(7); or 
(B) a voluntary dissolution proceeding; 
(6) comply with any State law regarding deceptive, false, 
or fraudulent acts or practices, except that if the licensed State 
seeks an injunction regarding the conduct described in this 
paragraph, such injunction must be obtained from a court of 
competent jurisdiction as provided in section 314(a); 
(7) comply with an injunction issued by a court of competent 
jurisdiction, upon a petition by the State insurance regulator 
alleging that the redomesticating insurer is in hazardous finan-
cial condition or is financially impaired; 
(8) participate in any insurance insolvency guaranty 
association on the same basis as any other insurer licensed 
in the licensed State; and 
(9) require a person acting, or offering to act, as an insur-
ance licensee for a redomesticated insurer in the licensed State 
to obtain a license from that State, except that such State 
may not impose any qualification or requirement that discrimi-
nates against a nonresident insurance licensee. 
15 use 6734. 
SEC. 314. OTHER PROVISIONS. 
(a) JUDICIAL REVIEW.—The appropriate United States district 
court shall have exclusive jurisdiction over litigation arising under 
this section involving any redomesticating or redomesticated 
insurer. 
(b) SEVERABILITY.—If any provision of this section, or the 
application thereof to any person or circumstances, is held invalid, 
the remainder of the section, and the application of such provision 
to other persons or circumstances, shall not be affected thereby. 
15 use 6735. 
SEC. 315. DEFINITIONS. 
For purposes of this subtitle, the following definitions shall 
apply: 
(1) COURT OF COMPETENT JURISDICTION.—The term "court 
of competent jurisdiction" means a court authorized pursuant 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1421 
to section 314(a) to adjudicate litigation arising under this 
subtitle. 
(2) DOMICILE.—The term "domicile" means the State in 
which an insurer is incorporated, chartered, or organized. 
(3) INSURANCE LICENSEE.—The term "insurance licensee" 
means any person holding a license under State law to act 
as insurance agent, subagent, broker, or consultant. 
(4) INSTITUTION.—The term "institution" meeuis a corpora-
tion, joint stock company, limited liability company, limited 
liability partnership, association, trust, partnership, or any 
similar entity. 
(5) LICENSED STATE.—The term "licensed State" means any 
State, the District of Columbia, any territory of the United 
States, Puerto Rico, Guam, American Samoa, the Trust Terri-
tory of the Pacific Islands, the Virgin Islands, and the Northern 
Mariana Islands in which the redomesticating insurer has a 
certificate of authority in effect immediately prior to the re-
domestication. 
(6) MUTUAL INSURER.—The term "mutual insurer" means 
a mutual insurer organized under the laws of any State. 
(7) PERSON.—The term "person" means an individual, 
institution, government or governmental agency. State or polit-
ical subdivision of a State, public corporation, board, associa-
tion, estate, trustee, or fiduciary, or other similar entity. 
(8) POLICYHOLDER.—The term "policyholder" means the 
owner of a policy issued by a mutual insurer, except that, 
with respect to voting rights, the term means a member of 
a mutual insurer or mutual holding company granted the right 
to vote, as determined under applicable State law. 
(9) REDOMESTICATED INSURER.—The term "redomesticated 
insurer" means a mutual insurer that has redomesticated 
pursuant to this subtitle. 
(10) 
REDOMESTICATING INSURER.—The term "redomes-
ticating insurer" means a mutual insurer that is redomes-
ticating pursuant to this subtitle. 
(11) REDOMESTICATION OR TRANSFER.—The term "redomes-
tication" or "transfer" means the transfer of the domicile of 
a mutual insurer from one State to another State pursuant 
to this subtitle. 
(12) STATE INSURANCE REGULATOR.—The term "State insur-
ance regulator" means the principal insurance regulatory 
authority of a State, the District of Columbia, any territory 
of the United States, Puerto Rico, Guam, American Samoa, 
the Trust Territory of the Pacific Islands, the Virgin Islands, 
and the Northern Mariana Islands. 
(13) STATE LAW.—The term "State law" means the statutes 
of any State, the District of Columbia, any territory of the 
United States, Puerto Rico, Guam, American Samoa, the Trust 
Territory of the Pacific Islands, the Virgin Islands, and the 
Northern Mariana Islands and any regulation, order, or require-
ment prescribed pursuant to any such statute. 
(14) 
TRANSFEREE 
DOMICILE.—The 
term 
"transferee 
domicile" means the State to which a mutual insurer is re-
domesticating pursusint to this subtitle. 
(15) 
TRANSFEROR 
DOMICILE.—The 
term 
"transferor 
domicile" means the State from which a mutual insurer is 
redomesticating pursuant to this subtitle. 
113 STAT. 1422 
PUBLIC LAW 106-102—NOV. 12, 1999 
15 use 6731 
SEC. 316. EFFECTIVE DATE. 
This subtitle shall take effect on the date of the enactment 
of this Act. 
Subtitle C—^National Association of 
Registered Agents and Brokers 
15 use 6751. 
SEC. 321. STATE FLEXIBILITY IN MULTISTATS LICENSING REFORMS. 
Effective date. 
(a) IN GENERAL.—The provisions of this subtitle shall take 
effect unless, not later than 3 years after the date of the enactment 
of this Act, at least a majority of the States— 
(1) have enacted uniform laws and regulations governing 
the licensure of individuals and entities authorized to sell and 
solicit the purchase of insurance within the State; or 
(2) have enacted reciprocity laws and regulations governing 
the licensure of nonresident individuals and entities authorized 
to sell £ind solicit insurance within those States. 
(b) UNIFORMITY REQUIRED.—States shall be deemed to have 
established the uniformity necessary to satisfy subsection (a)(1) 
if the States— 
(1) establish uniform criteria regarding the integrity, per-
sonal qualifications, education, training, and experience of 
licensed insurance producers, including the qualification and 
training of sales personnel in ascertaining the appropriateness 
of a particular insurance product for a prospective customer; 
(2) establish uniform continuing education requirements 
for licensed insurance producers; 
(3) establish uniform ethics course requirements for 
licensed insurance producers in conjimction with the continuing 
education requirements under paragraph (2); 
(4) establish uniform criteria to ensure that an insurance 
product, including any annuity contract, sold to a consumer 
is suitable and appropriate for the consumer based on financial 
information disclosed by the consumer; and 
(5) do not impose any requirement upon any insurance 
producer to be licensed or otherwise qualified to do business 
as a nonresident that has the effect of limiting or conditioning 
that producer's activities because of its residence or place of 
operations, except that countersignature requirements imposed 
on nonresident producers shall not be deemed to have the 
effect of limiting or conditioning a producer's activities because 
of its residence or place of operations under this section. 
(c) RECIPROCITY REQUIRED.—States shall be deemed to have 
established the reciprocity required to satisfy subsection (a)(2) if 
the following conditions are met: 
(1) ADMINISTRATIVE LICENSING PROCEDURES.—At least a 
majority of the States permit a producer that has a resident 
license for selling or soliciting the purchase of insurance in 
its home State to receive a license to sell or solicit the purchase 
of insurance in such majority of States as a nonresident to 
the same extent that such producer is permitted to sell or 
solicit the purchase of insurance in its State, if the producer's 
home State also awards such licenses on such a reciprocal 
basis, without satisfying any additional requirements other 
than submitting— 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1423 
(A) a request for licensure; 
(B) the application for licensure that the producer sub-
mitted to its home State; 
(C) proof that the producer is licensed and in good 
standing in its home State; and 
(D) the payment of any requisite fee to the appropriate 
authority. 
(2) CONTINUING EDUCATION REQUIREMENTS.—A majority of 
the States accept an insurance producer's satisfaction of its 
home State's continuing education requirements for licensed 
insurance producers to satisfy the States' own continuing edu-
cation requirements if the producer's home State also recognizes 
the satisfaction of continuing education requirements on such 
a reciprocal basis. 
(3) No LIMITING NONRESIDENT REQUIREMENTS.—A majority 
of the States do not impose any requirement upon any insur-
ance producer to be licensed or otherwise qualified to do busi-
ness as a nonresident that has the effect of limiting or condi-
tioning that producer's activities because of its residence or 
place of operations, except that countersignature requirements 
imposed on nonresident producers shall not be deemed to have 
the effect of limiting or conditioning a producer's activities 
because of its residence or place of operations under this section. 
(4) RECIPROCAL RECIPROCITY.—Each of the States that 
satisfies paragraphs (1), (2), and (3) grants reciprocity to resi-
dents of all of the other States that satisfy such paragraphs. 
(d) DETERMINATION.— 
(1) NAIC DETERMINATION.—At the end of the 3-year period 
beginning on the date of the enactment of this Act, the National 
Association of Insurance Commissioners (hereafter in this sub-
title referred to as the "NAIC") shall determine, in consultation 
with the insuramce commissioners or chief insurance regulatory 
officials of the States, whether the uniformity or reciprocity 
required by subsections (b) and (c) has been achieved. 
(2) JUDICIAL REVIEW.—The appropriate United States dis-
trict court shall have exclusive jurisdiction over any challenge 
to the NAIC's determination under this section and such court 
shall apply the standards set forth in section 706 of title 5, 
United States Code, when reviewing any such challenge. 
(e) CONTINUED APPLICATION.—If, at any time, the uniformity 
or reciprocity required by subsections (b) and (c) no longer exists, 
the provisions of this subtitle shall take effect 2 years after the 
date on which such uniformity or reciprocity ceases to exist, unless 
the uniformity or reciprocity required by those provisions is satisfied 
before the expiration of that 2-year period. 
(0 SAVINGS PROVISION.—No provision of this section shall be 
construed as requiring that any law, regulation, provision, or action 
of any State which purports to regulate insurance producers, 
including any such law, regulation, provision, or action which pur-
ports to regulate unfair trade practices or establish consumer protec-
tions, including countersignature laws, be altered or amended in 
order to satisfy the uniformity or reciprocity required by subsections 
(b) and (c), unless any such law, regulation, provision, or action 
is inconsistent with a specific requirement of any such subsection 
and then only to the extent of such inconsistency. 
(g) UNIFORM LICENSING.—Nothing in this section shall be con-
strued to require any State to adopt new or additional licensing 
113 STAT. 1424 
PUBLIC LAW 106-102—NOV. 12, 1999 
requirements to achieve the uniformity necessary to satisfy sub-
section (a)(1). 
15 use 6752. 
SEC. 322. NATIONAL ASSOCIATION OF REGISTERED AGENTS AND BRO-
KERS. 
(a) ESTABLISHMENT.—There is estabhshed the National Associa-
tion of Registered Agents and Brokers (hereafter in this subtitle 
referred to as the "Association"). 
(b) STATUS.—The Association shall— 
(1) be a nonprofit corporation; 
(2) have succession until dissolved by an Act of Congress; 
(3) not be an agent or instrumentality of the United States 
Government; and 
(4) except as otherwise provided in this Act, be subject 
to, and have all the powers conferred upon a nonprofit corpora-
tion by the District of Columbia Nonprofit Corporation Act 
(D.C. Code, sec. 29y-1001 et seq.). 
15 use 6753. 
SEC. 323. PURPOSE. 
The purpose of the Association shall be to provide a mechsmism 
through which uniform licensing, appointment, continuing edu-
cation, and other insurance producer sales qualification require-
ments and conditions can be adopted and applied on a multistate 
basis, while preserving the right of States to license, supervise, 
and discipline insurance producers and to prescribe and enforce 
laws and regulations with regard to insurance-related consumer 
protection and vmfair trade practices. 
15 use 6754. 
SEC. 324. RELATIONSHIP TO THE FEDERAL GOVERNMENT. 
The Association shall be subject to the supervision and over-
sight of the NAIC. 
15 use 6755. 
SEC. 325. MEMBERSHIP. 
(a) ELIGIBILITY.— 
(1) IN GENERAL.—^Any State-licensed insurance producer 
shall be eligible to become a member in the Association. 
(2) 
INELIGIBILITY FOR SUSPENSION OR REVOCATION OF 
LICENSE.—Notwithstanding paragraph (1), a State-licensed 
insurance producer shall not be eligible to become a member 
if a State insurance regulator has suspended or revoked such 
producer's license in that State during the 3-year period pre-
ceding the date on which such producer applies for membership. 
(3) RESUMPTION OF ELIGIBILITY.—Paragraph (2) shall cease 
to apply to any insurance producer if— 
(A) the State insurance regulator renews the license 
of such producer in the State in which the license was 
suspended or revoked; or 
(B) the suspension or revocation is subsequently over-
turned. 
(b) 
AUTHORITY TO ESTABLISH MEMBERSHIP CRITERIA.—The 
Association shall have the authority to establish membership cri-
teria that— 
(1) bear a reasonable relationship to the purposes for which 
the Association was established; and 
(2) do not unfairly limit the access of smaller agencies 
to the Association membership. 
(c) ESTABLISHMENT OF CLASSES AND CATEGORIES.— 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1425 
(1) CLASSES OF MEMBERSHIP.—The Association may estab-
lish separate classes of membership, with separate criteria, 
if the Association reasonably determines that performance of 
different duties requires different levels of education, training, 
or experience. 
(2) CATEGORIES.—The Association may establish separate 
categories of membership for individuals and for other persons. 
The establishment of any such categories of membership shall 
be based either on the t5rpes of licensing categories that exist 
under State laws or on the aggregate amount of business han-
dled by an insurance producer. No special categories of member-
ship, and no distinct membership criteria, shall be established 
for members which are depository institutions or for their 
employees, agents, or affiliates. 
(d) MEMBERSHIP CRITERIA.— 
(1) IN GENERAL.—The Association may establish criteria 
for membership which shall include standards for integrity, 
personal qualifications, education, training, and experience. 
(2) MINIMUM STANDARD.—In establishing criteria under 
paragraph (1), the Association shall consider the highest levels 
of insurance producer qualifications established under the 
licensing laws of the States. 
(e) EFFECT OF MEMBERSHIP.—Membership in the Association 
shall entitle the member to licensure in each State for which the 
member pays the requisite fees, including licensing fees and, where 
applicable, bonding requirements, set by such State. 
(f) ANNUAL RENEWAL.—Membership in the Association shall 
be renewed on an annual basis. 
(g) CONTINUING EDUCATION.—^The Association shall establish, 
as a condition of membership, continuing education requirements 
which shall be comparable to or greater than the continuing edu-
cation requirements under the licensing laws of a majority of the 
States. 
(h) SUSPENSION AND REVOCATION.—The Association may— 
(1) inspect and examine the records and offices of the 
members of the Association to determine compliance with the 
criteria for membership established by the Association; and 
(2) suspend or revoke the membership of an insurance 
producer if— 
(A) the producer fails to meet the Applicable member-
ship criteria of the Association; or 
(B) the producer has been subject to disciplinary action 
pursuant to a final adjudicatory proceeding under the juris-
diction of a State insurance regulator, and the Association 
concludes that retention of membership in the Association 
would not be in the public interest. 
(i) OFFICE OF CONSUMER COMPLAINTS.— 
(1) IN GENERAL.—The Association shall establish £in office 
Establishment. 
of consumer complaints that shall— 
(A) receive and investigate complaints from both con-
sumers and State insurance regulators related to members 
of the Association; and 
(B) recommend to the Association any disciplinary 
actions that the office considers appropriate, to the extent 
that any such recommendation is not inconsistent with 
State law. 
113 STAT. 1426 
PUBLIC LAW 106-102—NOV. 12, 1999 
(2) RECORDS AND REFERRALS.—The office of consumer com-
plaints of the Association shall— 
(A) maintain records of all complaints received in 
accordance with paragraph (1) and make such records 
available to the NAIC and to each State insurance regulator 
for the State of residence of the consumer who filed the 
complaint; and 
(B) refer, when appropriate, any such complaint to 
any appropriate State insurance regulator. 
(3) TELEPHONE AND OTHER ACCESS.—The office of consumer 
complaints shall maintain a toll-free telephone number for the 
purpose of this subsection and, as practicable, other alternative 
means of communication with consumers, such as £in Internet 
home page. 
15 use 6756. 
SEC. 326. BOARD OF DIRECTORS. 
(a) ESTABLISHMENT.—There is established the board of directors 
of the Association (hereafter in this subtitle referred to as the 
"Board") for the purpose of governing and supervising the activities 
of the Association and the members of the Association. 
(b) POWERS.—The Board shall have such powers and authority 
as may be specified in the bylaws of the Association. 
(c) COMPOSITION.— 
(1) MEMBERS.—The Board shall be composed of 7 members 
appointed by the NAIC. 
(2) REQUIREMENT.—At least 4 of the members of the Board 
shall each have significant experience with the regulation of 
commercial lines of insurance in at least 1 of the 20 States 
in which the greatest total dollar amount of commercial-lines 
insurance is placed in the United States. 
(3) INITIAL BOARD MEMBERSHIP.— 
(A) IN GENERAL.—If, by the end of the 2-year period 
beginning on the date of the enactment of this Act, the 
NAIC has not appointed the initial 7 members of the Board 
of the Association, the initial Board shall consist of the 
7 State insurance regulators of the 7 States with the 
greatest total dollar amount of commercial-lines insurance 
in place as of the end of such period. 
(B) ALTERNATE COMPOSITION.—If any of the State 
insurance 
regulators 
described 
in 
subparagraph 
(A) 
declines to serve on the Board, the State insurance regu-
lator with the next greatest total dollar amount of commer-
cial-lines insurance in place, as determined by the NAIC 
as of the end of such period, shall serve as a member 
of the Board. 
(C) INOPERABILITY.—If fewer than 7 State insurance 
regulators accept appointment to the Board, the Association 
shall be established without NAIC oversight pursuant to 
section 332. 
(d) TERMS.—The term of each director shall, after the initial 
appointment of the members of the Board, be for 3 years, with 
one-third of the directors to be appointed each year. 
(e) BOARD VACANCIES.—^A vacancy on the Board shall be filled 
in the same manner as the original appointment of the initial 
Board for the remainder of the term of the vacating member. 
(f) MEETINGS.—The Board shall meet at the call of the chair-
person, or as otherwise provided by the bylaws of the Association. 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1427 
SEC. 327. OFFICERS. 
15 USC 6757. 
(a) IN GENERAL.— 
(1) POSITIONS,—The officers of the Association shall consist 
of a chairperson and a vice chairperson of the Board, a presi-
dent, secretary, and treasurer of the Association, and such 
other officers and assistant officers as may be deemed nec-
essary. 
(2) MANNER OF SELECTION.—Each officer of the Board and 
the Association shall be elected or appointed at such time 
and in such manner and for such terms not exceeding 3 years 
as may be prescribed in the bylaws of the Association. 
(b) CRITERIA FOR CHAIRPERSON.—Only individuals who are 
members of the NAIC shall be eligible to serve as the chairperson 
of the board of directors. 
SEC. 328. BYLAWS, RULES, AND DISCIPLINARY ACTION. 
15 USC 6758. 
(a) ADOPTION AND AMENDMENT OF BYLAWS.— 
(1) COPY REQUIRED TO BE FILED WITH THE NAIC—The board 
of directors of the Association shall file with the NAIC a copy 
of the proposed bylaws or any proposed amendment to the 
bylaws, accompanied by a concise general statement of the 
basis and purpose of such proposal. 
(2) EFFECTIVE DATE.—Except as provided in paragraph (3), 
any proposed bylaw or proposed amendment shall take effect— 
(A) 30 days after the date of the filing of a copy 
with the NAIC; 
(B) upon such later date as the Association may des-
ignate; or 
(C) upon such earlier date as the NAIC may determine. 
(3) DISAPPROVAL BY THE NAIC—Notwithstanding paragraph 
(2), a proposed bylaw or amendment shall not take effect if, 
after public notice and opportunity to participate in a public 
hearing— 
(A) the NAIC disapproves such proposal as being con-
trary to the public interest or contrary to the purposes 
of this subtitle and provides notice to the Association set-
ting forth the reasons for such disapproval; or 
(B) the NAIC finds that such proposal involves a 
matter of such significant public interest that public com-
ment should be obtained, in which case it may, after noti-
fying the Association in writing of such finding, require 
that the procedures set forth in subsection (b) be followed 
with respect to such proposal, in the same manner as 
if such proposed bylaw change were a proposed rule change 
within the meaning of such subsection. 
(b) ADOPTION AND AMENDMENT OF RULES.— 
(1) FILING PROPOSED REGULATIONS WITH THE NAIC— 
(A) IN GENERAL.—The board of directors of the Associa-
tion shall file with the NAIC a copy of any proposed rule 
or any proposed amendment to a rule of the Association 
which shall be accompanied by a concise general statement 
of the basis and purpose of such proposal. 
(B) 
OTHER RULES AND AMENDMENTS INEFFECTIVE.— 
No proposed rule or amendment shall take effect unless 
approved by the NAIC or otherwise permitted in accordance 
with this paragraph. 
113 STAT. 1428 
PUBLIC LAW 106-102—NOV. 12, 1999 
Deadline. 
Notice. 
Deadline. 
(2) INITIAL CONSIDERATION BY THE NAIC.—Not later than 
35 days after the date of pubhcation of notice of filing of 
a proposal, or before the end of such longer period not to 
exceed 90 days as the NAIC may designate after such date, 
if the NAIC finds such longer period to be appropriate and 
sets forth its reasons for so finding, or as to which the Associa-
tion consents, the NAIC shall— 
(A) by order approve such proposed rule or amendment; 
or 
(B) institute proceedings to determine whether such 
proposed rule or amendment should be modified or dis-
approved. 
(3) NAIC PROCEEDINGS.— 
(A) IN GENERAL.—Proceedings instituted by the NAIC 
with respect to a proposed rule or amendment pursuant 
to paragraph (2) shall— 
(i) include notice of the grounds for disapproval 
under consideration; 
(ii) provide opportunity for hearing; and 
(iii) be concluded not later than 180 days after 
the date of the Association's filing of such proposed 
rule or amendment. 
(B) DISPOSITION OF PROPOSAL.—At the conclusion of 
any proceeding under subparagraph (A), the NAIC shall, 
by order, approve or disapprove the proposed rule or 
amendment. 
(C) 
EXTENSION OF TIME FOR CONSIDERATION.—The 
NAIC may extend the time for concluding any proceeding 
under subparagraph (A) for— 
(i) not more than 60 days if the NAIC finds good 
cause for such extension and sets forth its reasons 
for so finding; or 
(ii) such longer period as to which the Association 
consents. 
(4) STANDARDS FOR REVIEW.— 
(A) GROUNDS FOR APPROVAL.—The NAIC shall approve 
a proposed rule or amendment if the NAIC finds that 
the rule "or amendment is in the public interest and is 
consistent with the purposes of this Act. 
(B) APPROVAL BEFORE END OF NOTICE PERIOD.—The 
NAIC shall not approve any proposed rule before the end 
of the 30-day period beginning on the date on which the 
Association files proposed rules or amendments in accord-
ance with paragraph (1), unless the NAIC finds good cause 
for so doing and sets forth the reasons for so finding. 
(5) ALTERNATE PROCEDURE.— 
(A) IN GENERAL.—Notwithstanding any provision of 
this subsection other than subparagraph (B), a proposed 
rule or amendment relating to the administration or 
organization of the Association shall take effect— 
(i) upon the date of filing with the NAIC, if such 
proposed rule or amendment is designated by the 
Association as relating solely to matters which the 
NAIC, consistent with the public interest and the pur-
poses of this subsection, determines by rule do not 
require the procedures set forth in this paragraph; 
or 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1429 
(ii) upon such date as the NAIC shall for good 
cause determine. 
(B) ABROGATION BY THE NAIC— 
(i) IN GENERAL.—^At any time within 60 days after 
the date of filing of any proposed rule or amendment 
under subparagraph (A)(i) or clause (ii) of this subpara-
graph, the NAIC may repeal such rule or amendment 
and require that the rule or amendment be refiled 
and reviewed in accordance with this paragraph, if 
the NAIC finds that such action is necessary or appro-
priate in the public interest, for the protection of insur-
ance producers or policyholders, or otherwise in fur-
therance of the purposes of this subtitle. 
(ii) EFFECT OF RECONSIDERATION BY THE NAIC.— 
Any action of the NAIC pursuant to clause (i) shall— 
(I) not affect the validity or force of a rule 
change during the period such rule or amendment 
was in effect; and 
(II) not be considered to be a final action. 
(c) ACTION REQUIRED BY THE NAIC—The NAIC may, in accord-
ance with such rules as the NAIC determines to be necessary 
or appropriate to the public interest or to carry out the purposes 
of this subtitle, require the Association to adopt, amend, or repeal 
any bylaw, rule, or amendment of the Association, whenever 
adopted. 
(d) DISCIPLINARY ACTION BY THE ASSOCIATION.— 
(1) SPECIFICATION OF CHARGES.—In any proceeding to Notification. 
determine whether membership shall be denied, suspended. Records. 
revoked, or not renewed (hereafter in this section referred 
to as a "disciplinary action"), the Association shall bring specific 
charges, notify such member of such charges, give the member 
an opportunity to defend against the charges, and keep a record. 
(2) SUPPORTING STATEMENT.—A determination to take dis-
ciplinary action shall be supported by a statement setting 
forth— 
(A) any act or practice in which such member has 
been found to have been engaged; 
(B) the specific provision of this subtitle, the rules 
or regulations under this subtitle, or the rules of the 
Association which any such act or practice is deemed to 
violate; and 
(C) the sanction imposed and the reason for such sanc-
tion. 
(e) NAIC REVIEW OF DISCIPLINARY ACTION.— 
(1) NOTICE TO THE NAIC.—If the Association orders any 
disciplinary action, the Association shall promptly notify the 
NAIC of such action. 
(2) REVIEW BY THE NAIC.—Any disciplinary action taken 
by the Association shall be subject to review by the NAIC— 
(A) on the NAIC's own motion; or 
(B) upon application by any person aggrieved by such 
action if such application is filed with the NAIC not more 
thgin 30 days after the later o
f
— 
(i) the date the notice was filed with the NAIC 
pursuant to paragraph (1); or 
(ii) the date the notice of the disciplinary action 
was received by such aggrieved person. 
113 STAT. 1430 
PUBLIC LAW 106-102—NOV. 12, 1999 
(f) EFFECT OF REVIEW.—The filing of an application to the 
NAIC for review of a disciplinary action, or the institution of review 
by the NAIC on the NAIC's own motion, shall not operate as 
a stay of disciplinary action unless the NAIC otherwise orders. 
(g) SCOPE OF REVIEW.— 
(1) IN GENERAL.—In any proceeding to review such action, 
after notice and the opportunity for hearing, the NAIC shall— 
(A) determine whether the action should be taken; 
(B) affirm, modify, or rescind the disciplinary sanction; 
or 
(C) remand to the Association for further proceedings. 
(2) DISMISSAL OF REVIEW.—The NAIC may dismiss a pro-
ceeding to review disciplinary action if the NAIC finds that— 
(A) the specific grounds on which the action is based 
exist in fact; 
(B) the action is in accordance with applicable rules 
and regulations; and 
(C) such rules and regulations are, and were, applied 
in a manner consistent with the purposes of this subtitle. 
15 u s e 6759. 
SEC. 329. ASSESSMENTS. 
(a) 
INSURANCE PRODUCERS SUBJECT TO ASSESSMENT.—The 
Association may establish such application and membership fees 
as the Association finds necessary to cover the costs of its oper-
ations, including fees made reimbursable to the NAIC under sub-
section (b), except that, in setting such fees, the Association may 
not discriminate against smaller insurance producers. 
(b) NAIC ASSESSMENTS.—The NAIC may assess the Association 
for any costs that the NAIC incurs under this subtitle. 
15 u s e 6760. 
SEC. 330. FUNCTIONS OF THE NAIC. 
(a) ADMINISTRATIVE PROCEDURE.—Determinations of the NAIC, 
for purposes of making rules pursuant to section 328, shall be 
made after appropriate notice and opportunity for a hearing and 
for submission of views of interested persons. 
(b) EXAMINATIONS AND REPORTS.— 
(1) EXAMINATIONS.—The NAIC may make such examina-
tions and inspections of the Association and require the Associa-
tion to furnish to the NAIC such reports and records or copies 
thereof as the NAIC may consider necessary or appropriate 
in the public interest or to effectuate the purposes of this 
subtitle. 
(2) REPORT BY ASSOCIATION.—As soon as practicable after 
the close of each fiscal year, the Association shall submit to 
the NAIC a written report regarding the conduct of its business, 
and the exercise of the other rights and powers granted by 
this subtitle, during such fiscal year. Such report shall include 
financial statements setting forth the financial position of the 
Association at the end of such fiscal year and the results 
of its operations (including the source and application of its 
funds) for such fiscal year. The NAIC shall transmit such 
report to the President and the Congress with such comment 
thereon as the NAIC determines to be appropriate. 
15 u s e 6761. 
SEC. 331. LIABILITY OF THE ASSOCLATION AND THE DIRECTORS, OFFI-
CERS, AND EMPLOYEES OF THE ASSOCIATION. 
(a) IN GENERAL.—The Association shall not be deemed to be 
an insurer or insurance producer within the meaning of any State 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1431 
law, rule, regulation, or order regulating or taxing insurers, insur-
emce producers, or other entities engaged in the business of insur-
ance, including provisions imposing premium taxes, regulating 
insurer solvency or financial condition, establishing guaranty funds 
and levying assessments, or requiring claims settlement practices, 
(b) LIABILITY OF THE ASSOCIATION, ITS DIRECTORS, OFFICERS, 
AND EMPLOYEES.—Neither the Association nor any of its directors, 
officers, or employees shall have any liability to any person for 
any action taken or omitted in good faith under or in connection 
with any matter subject to this subtitle. 
SEC. 332. ELIMINATION OF NAIC OVERSIGHT. 
15USC6762. 
(a) IN GENERAL.—The Association shall be established without 
NAIC oversight and the provisions set forth in section 324, sub-
sections (a), (b), (c), and (e) of section 328, and sections 329(b) 
and 330 of this subtitle shall cease to be effective if, at the end 
of the 2-year period beginning on the date on which the provisions 
of this subtitle take effect pursuant to section 321— 
(1) at least a majority of the States representing at least 
50 percent of the total United States commercial-lines insurance 
premiums have not satisfied the uniformity or reciprocity 
requirements of subsections (a), (b), and (c) of section 321; 
and 
(2) the NAIC has not approved the Association's bylaws 
as required by section 328 or is unable to operate or supervise 
the Association, or the Association is not conducting its activi-
ties as required under this Act. 
(b) BOARD APPOINTMENTS.—If the repeals required by sub-
section (a) are implemented, the following shall apply: 
(1) GENERAL APPOINTMENT POWER.—The President, with President, 
the advice and consent of the Senate, shall appoint the members Congress. 
of the Association's Board established under section 326 from 
lists of candidates recommended to the President by the NAIC. 
(2) PROCEDURES FOR OBTAINING NAIC APPOINTMENT REC-
OMMENDATIONS.— 
(A) INITIAL DETERMINATION AND RECOMMENDATIONS.— 
After the date on which the provisions of subsection (a) Deadline, 
take effect, the NAIC shall, not later than 60 days there-
after, provide a list of recommended candidates to the 
President. If the NAIC fails to provide a list by that date, 
or if any list that is provided does not include at least 
14 recommended candidates or comply with the require-
ments of section 326(c), the President shall, with the advice 
and consent of the Senate, make the requisite appointments 
without considering the views of the NAIC. 
(B) 
SUBSEQUENT APPOINTMENTS.—After 
the initial Deadline, 
appointments, the NAIC shall provide a list of at least 
six recommended candidates for the Board to the President 
by January 15 of each subsequent year. If the NAIC fails 
to provide a list by that date, or if any list that is provided 
does not include at least six recommended candidates or 
comply with the requirements of section 326(c), the Presi-
dent, with the advice and consent of the Senate, shall 
make the requisite appointments without considering the 
views of the NAIC. 
(C) PRESIDENTIAL OVERSIGHT.— 
113 STAT. 1432 
PUBLIC LAW 106-102—NOV. 12, 1999 
(i) REMOVAL.—If the President determines that the 
Association is not acting in the interests of the pubhc, 
the President may remove the entire existing Board 
for the remainder of the term to which the members 
of the Board were appointed and appoint, with the 
advice and consent of the Senate, new members to 
fill the vacancies on the Board for the remainder of 
such terms. 
(ii) SUSPENSION OF RULES OR ACTIONS.—The Presi-
dent, or a person designated by the President for such 
purpose, may suspend the effectiveness of any rule, 
or prohibit any action, of the Association which the 
President or the designee determines is contrary to 
the public interest, 
(c) ANNUAL REPORT.—^As soon as practicable after the close 
of each fiscal year, the Association shall submit to the President 
and to the Congress a written report relative to the conduct of 
its business, and the exercise of the other rights and powers granted 
by this subtitle, during such fiscal year. Such report shall include 
financial 
statements setting forth the financial position of the 
Association at the end of such fiscal year and the results of its 
operations (including the source and application of its funds) for 
such fiscal year. 
15 use 6763. 
SEC. 333. RELATIONSHIP TO STATE LAW. 
(a) PREEMPTION OF STATE LAWS.—State laws, regulations, 
provisions, or other actions purporting to regulate insurance pro-
ducers shall be preempted as provided in subsection (b). 
(b) PROHIBITED ACTIONS.—NO State shall— 
(1) impede the activities of, take any action against, or 
apply any provision of law or regulation to, any insurance 
producer because that insurance producer or any affiliate plans 
to become, has applied to become, or is a member of the Associa-
tion; 
(2) impose any requirement upon a member of the Associa-
tion that it pay different fees to be licensed or otherwise quali-
fied to do business in that State, including bonding require-
ments, based on its residency; 
(3) impose any licensing, appointment, integrity, personal 
or corporate qualifications, education, training, experience, resi-
dency, or continuing education requirement upon a member 
of the Association that is different from the criteria for member-
ship in the Association or renewal of such membership, except 
that countersignature requirements imposed on nonresident 
producers shall not be deemed to have the effect of limiting 
or conditioning a producer's activities because of its residence 
or place of operations under this section; or 
(4) implement the procedures of such State's system of 
licensing or renewing the licenses of insurance producers in 
a manner different fi-om the authority of the Association under 
section 325. 
(c) SAVINGS PROVISION.—Except as provided in subsections (a) 
and (b), no provision of this section shall be construed as altering 
or affecting the continuing effectiveness of any law, regulation, 
provision, or other action of any State which purports to regulate 
insurance producers, including any such law, regulation, provision, 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1433 
or action which purports to regulate unfair trade practices or estab-
lish consumer protections, including countersignature laws. 
SEC. 334. COORDINATION WITH OTHER REGULATORS. 
15 USC 6764. 
(a) COORDINATION WITH STATE INSURANCE REGULATORS.—The 
Association shall have the authority to— 
(1) issue uniform insurance producer applications and 
renewal applications that may be used to apply for the issuance 
or removal of State licenses, while preserving the ability of 
each State to impose such conditions on the issuance or renewal 
of a license as are consistent with section 333; 
(2) establish a central clearinghouse through which mem-
bers of the Association may apply for the issuance or renewal 
of licenses in multiple States; and 
(3) establish or utilize a national database for the collection 
of regulatory information concerning the activities of insurance 
producers. 
(b) COORDINATION WITH THE NATIONAL ASSOCIATION OF SECURI-
TIES DEALERS.—The Association shall coordinate with the National 
Association of Securities Dealers in order to ease any administrative 
burdens that fall on persons that are members of both associations, 
consistent with the purposes of this subtitle and the Federal securi-
ties laws. 
SEC 335. JUDICIAL REVLEW. 
15 USC 6765. 
(a) JURISDICTION.—The appropriate United States district court 
shall have exclusive jurisdiction over litigation involving the 
Association, including disputes between the Association and its 
members that arise under this subtitle. Suits brought in State 
court involving the Association shall be deemed to have arisen 
under Federal law £ind therefore be subject to jurisdiction in the 
appropriate United States district court. 
(b) EXHAUSTION OF REMEDIES.—An aggrieved person shall be 
required to exhaust all available administrative remedies before 
the Association and the NAIC before it may seek judicial review 
of an Association decision. 
(c) STANDARDS OF REVIEW.—^The standards set forth in section 
553 of title 5, United States Code, shall be applied whenever a 
rule or bylaw of the Association is under judicial review, and 
the standards set forth in section 554 of title 5, United States 
Code, shall be applied whenever a disciplinary action of the Associa-
tion is judicially reviewed. 
SEC. 336. DEFINITIONS. 
15 USC 6766. 
For purposes of this subtitle, the following definitions shall 
apply: 
(1) HOME STATE.—The term "home State" means the State 
in which the insurance producer maintains its principal place 
of residence £ind is licensed to act as an insurance producer. 
(2) INSURANCE.—The term "insurance" means any product, 
other than title insurance, defined or regulated as insurance 
by the appropriate State insurance regulatory authority. 
(3) INSURANCE PRODUCER.—The term "insurance producer" 
means any insurance agent or broker, surplus lines broker, 
insurance consultant, limited insurance representative, and any 
other person that solicits, negotiates, effects, procures, delivers, 
renews, continues or binds policies of insurance or offers advice, 
counsel, opinions or services related to insurance. 
113 STAT. 1434 
PUBLIC LAW 106-102—NOV. 12, 1999 
(4) STATE.—The term "State" includes any State, the Dis-
trict of Columbia, any territory of the United States, Puerto 
Rico, Guam, American Samoa, the Trust Territory of the Pacific 
Islands, the Virgin Islands, and the Northern Mariana Islands. 
(5) STATE LAW.—The term "State law" includes all laws, 
decisions, rules, regulations, or other State action having the 
effect of law, of any State. A law of the United States applicable 
only to the District of Columbia shall be treated as a State 
law rather than a law of the United States. 
Subtitle D—Rental Car Agency Insurance 
Activities 
15 use 6781. 
SEC. 341. STANDARD OF REGULATION FOR MOTOR VEHICLE RENTALS. 
(a) PROTECTION AGAINST RETROACTIVE APPLICATION OF REGU-
LATORY AND LEGAL ACTION.—Except as provided in subsection (b), 
during the 3-year period beginning on the date of the enactment 
of this Act, it shall be a presumption that no State law imposes 
any licensing, appointment, or education requirements on any per-
son who solicits the purchase of or sells insurance connected with, 
and incidental to, the lease or rental of a motor vehicle. 
(b) PREEMINENCE OF STATE INSURANCE LAW.—No provision of 
this section shall be construed as altering the validity, interpreta-
tion, construction, or effect o
f
— 
(1) any State statute; 
(2) the prospective application of any court judgment inter-
preting or appljdng any State statute; or 
(3) the prospective application of any final State regulation, 
order, bulletin, or other statutorily authorized interpretation 
or action, 
which, by its specific terms, expressly regulates or exempts from 
regulation any person who solicits the purchase of or sells insurance 
connected with, and incidental to, the short-term lease or rental 
of a motor vehicle. 
(c) SCOPE OF APPLICATION.—This section shall apply with 
respect to— 
(1) the lease or rental of a motor vehicle for a total period 
of 90 consecutive days or less; and 
(2) insurance which is provided in connection with, and 
incidentally to, such lease or rental for a period of consecutive 
days not exceeding the lease or rental period. 
(d) MOTOR VEHICLE DEFINED.—For purposes of this section, 
the term "motor vehicle" has the same meaning as in section 
13102 of title 49, United States Code. 
TITLE IV—UNITARY SAVINGS AND LOAN 
HOLDING COMPANIES 
SEC. 401. PREVENTION OF CREATION OF NEW S&L HOLDING COMPA-
NIES WITH COMMERCIAL AFFILIATES. 
(a) IN GENERAL.—Section 10(c) of the Home Owners' Loan 
Act (12 U.S.C. 1467a(c)) is amended by adding at the end the 
following new paragraph: 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1435 
"(9) 
PREVENTION OF NEW AFFILIATIONS 
BETWEEN S&L 
HOLDING COMPANIES AND COMMERCIAL FIRMS.— 
"(A) IN GENERAL.—Notwithstanding paragraph (3), no 
company may directly or indirectly, including through any 
merger, consolidation, or other type of business combina-
tion, acquire control of a savings association after May 
4, 1999, unless the company is engaged, directly or 
indirectly (including through a subsidiary other than a 
savings association), only in activities that are permitted— 
"(i) under paragraph (1)(C) or (2) of this subsection; 
or 
"(ii) for financial holding companies under section 
4(k) of the Bank Holding Company Act of 1956. 
"(B) PREVENTION OF NEW COMMERCIAL AFFILIATIONS.— 
Notwithstanding paragraph (3), no savings and loan 
holding 
company may engage 
directly or indirectly 
(including through a subsidiary other than a savings 
association) in any activity other than as described in 
clauses (i) and (ii) of subparagraph (A). 
"(C) PRESERVATION OF AUTHORITY OF EXISTING UNITARY 
S&L HOLDING COMPANIES.—Subparagraphs (A) and (B) do 
not apply with respect to any company that was a savings 
and loan holding company on May 4, 1999, or that becomes 
a savings and loan holding company pursuant to an applica-
tion pending before the Office on or before that date, and 
that— 
"(i) meets and continues to meet the requirements 
of paragraph (3); and 
"(ii) continues to control not fewer than 1 savings 
association that it controlled on May 4, 1999, or that 
it acquired pursuant to an application pending before 
the Office on or before that date, or the successor 
to such savings association. 
"(D) CORPORATE REORGANIZATIONS PERMITTED.—This 
paragraph does not prevent a transaction that— 
"(i) involves solely a company under common con-
trol with a savings and loan holding company from 
acquiring, directly or indirectly, control of the savings 
and loan holding company or any savings association 
that is already a subsidiary of the savings and loan 
holding company; or 
"(ii) involves solely a merger, consolidation, or 
other type of business combination as a result of which 
a company under common control with the savings 
and 
loan holding company acquires, directly or 
indirectly, control of the savings and loan holding com-
pany or any savings association that is already a sub-
sidiary of the savings and loan holding company. 
"(E) AUTHORITY TO PREVENT EVASIONS.—The Director 
may issue interpretations, regulations, or orders that the 
Director determines necessary to administer and carry out 
the purpose and prevent evasions of this paragraph, 
including a determination that, notwithstanding the form 
of a transaction, the transaction would in substance result 
in a company acquiring control of a savings association. 
"(F) 
PRESERVATION 
OF 
AUTHORITY 
FOR 
FAMILY 
TRUSTS.—Subparagraphs (A) and (B) do not apply with 
113 STAT. 1436 
PUBLIC LAW 106-102—NOV. 12, 1999 
respect to any trust that becomes a savings and loan 
holding company with respect to a savings association, 
if— 
"(i) not less than 85 percent of the beneficial owner-
ship interests in the trust are continuously owned, 
directly or indirectly, by or for the benefit of members 
of the same family, or their spouses, who are lineal 
descendants of common ancestors who controlled, 
directly or indirectly, such savings association on May 
4, 1999, or a subsequent date, pursuant to an applica-
tion pending before the Office on or before May 4, 
1999; and 
"(ii) at the time at which such trust becomes a 
savings and loan holding company, such ancestors or 
lineal descendants, or spouses of such descendants, 
have directly or indirectly controlled the savings 
association continuously since May 4, 1999, or a subse-
quent date, pursuant to an application pending before 
the Office on or before May 4, 1999.". 
(b) CONFORMING AMENDMENT.—Section 10(o)(5)(E) of the Home 
Owners' Loan Act (12 U.S.C. 1467a(o)(5)(E)) is amended by striking 
", except subparagraph (B)" and inserting "or (c)(9)(A)(ii)". 
12 use 1467a 
(c) RULE OF CONSTRUCTION FOR CERTAIN APPLICATIONS.— 
note. 
(1) IN GENERAL.—In the case of a company that— 
(A) submits an application with the Director of the 
Office of Thrift Supervision before the date of the enact-
ment of this Act to convert a State-chartered trust company 
controlled by such company on May 4, 1999, to a savings 
association; and 
(B) controlled a subsidiary on May 4, 1999, that had 
submitted an application to the Director on September 
2, 1998; 
the company (including any subsidiary controlled by such com-
pany as of such date of enactment) shall be treated as having 
filed such conversion application with the Director before May 
4, 1999, for purposes of section 10(c)(9)(C) of the Home Owners' 
Loan Act (as added by subsection (a)). 
(2) DEFINITIONS.—For purposes of paragraph (1), the terms 
"company", "control", "savings association", and "subsidiary" 
have the meanings given those terms in section 10 of the 
Home Owners' Loan Act. 
TITLE V—PRIVACY 
Subtitle A—Disclosure of Nonpublic 
Personal Information 
15 use 6801. 
SEC. 501. PROTECTION OF NONPUBLIC PERSONAL INFORMATION. 
(a) PRIVACY OBLIGATION POLICY.—It is the policy of the Con-
gress that each financial institution has an affirmative and con-
tinuing obligation to respect the privacy of its customers and to 
protect the security and confidentiality of those customers' non-
public personal information. 
(b) FINANCIAL INSTITUTIONS SAFEGUARDS.—In furtherance of 
the policy in subsection (a), each agency or authority described 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1437 
in section 505(a) shall establish appropriate standards for the finan-
cial institutions subject to their jurisdiction relating to administra-
tive, technical, and physical safeguards— 
(1) to insure the security and confidentiality of customer 
records and information; 
(2) to protect against any anticipated threats or hazards 
to the security or integrity of such records; and 
(3) to protect against unauthorized access to or use of 
such records or information which could result in substantial 
harm or inconvenience to any customer. 
SEC. 502. OBLIGATIONS WITH RESPECT TO DISCLOSURES OF PER- 15USC6802. 
SONAL INFORMATION. 
(a) NOTICE REQUIREMENTS.—Except as otherwise provided in 
this subtitle, a financial institution may not, directly or through 
any affiliate, disclose to a nonaffiliated third party any nonpublic 
personal information, unless such finsmcial institution provides or 
has provided to the consumer a notice that complies with section 
503. 
(b) OPT OUT.— 
(1) IN GENERAL.—A financial institution may not disclose 
nonpublic personal information to a nonaffiliated third party 
unless— 
(A) such financial institution clearly and conspicuously 
discloses to the consumer, in writing or in electronic form 
or other form permitted by the regulations prescribed under 
section 504, that such information may be disclosed to 
such third party; 
(B) the consumer is given the opportunity, before the 
time that such information is initially disclosed, to direct 
that such information not be disclosed to such third party; 
and 
(C) the consumer is given an explanation of how the 
consumer can exercise that nondisclosure option. 
(2) EXCEPTION.—This subsection shall not prevent a finan-
cial institution from providing nonpublic personal information 
to a nonaffiliated third party to perform services for or fiinctions 
on behalf of the financial institution, including marketing of 
the financial institution's own products or services, or financial 
products or services offered pursuant to joint agreements 
between two or more financial institutions that comply with 
the requirements imposed by the regulations prescribed under 
section 504, if the financial institution fully discloses the pro-
viding of such information and enters into a contractual agree-
ment with the third party that requires the third party to 
maintain the confidentiality of such information. 
(c) LIMITS ON REUSE OF INFORMATION.—Except as otherwise 
provided in this subtitle, a nonaffiliated third party that receives 
from a financial institution nonpublic personal information under 
this section shall not, directly or through an affiliate of such 
receiving third party, disclose such information to any other person 
that is a nonaffiliated third party of both the financial institution 
and such receiving third party, unless such disclosure would be 
lawful if made directly to such other person by the financial institu-
tion. 
(d) 
LIMITATIONS ON THE SHARING OF ACCOUNT NUMBER 
INFORMATION FOR MARKETING PURPOSES.—A financial institution 
69-194 -01 - 14: QL 3 Pan 2 
113 STAT. 1438 
PUBLIC LAW 106-102—NOV. 12, 1999 
shall not disclose, other than to a consumer reporting agency, 
an account number or similar form of access number or access 
code for a credit card account, deposit account, or transaction 
account of a consumer to any nonaffiliated third party for use 
in telemarketing, direct mail marketing, or other marketing through 
electronic mail to the consumer. 
(e) GENERAL EXCEPTIONS.—Subsections (a) and (b) shall not 
prohibit the disclosure of nonpublic personal information— 
(1) as necessary to effect, administer, or enforce a trans-
action requested or authorized by the consumer, or in connec-
tion with— 
(A) servicing or processing a financial product or 
service requested or authorized by the consumer; 
(B) maintaining or servicing the consumer's account 
with the financial institution, or with another entity as 
part of a private label credit card program or other exten-
sion of credit on behalf of such entity; or 
(C) a proposed or actual securitization, secondary 
market sale (including sales of servicing rights), or similar 
transaction related to a transaction of the consumer; 
(2) with the consent or at the direction of the consumer; 
(3)(A) to protect the confidentiality or security of the finan-
cial institution's records pertaining to the consumer, the service 
or product, or the trauisaction therein; (B) to protect against 
or prevent actual or potential fraud, unauthorized transactions, 
claims, or other liability; (C) for required institutional risk 
control, or for resolving customer disputes or inquiries; (D) 
to persons holding a legal or beneficial interest relating to 
the consumer; or (E) to persons acting in a fiduciary or rep-
resentative capacity on behalf of the consumer; 
(4) to provide information to insurance rate advisory 
organizations, guaranty funds or agencies, applicable rating 
agencies of the financial institution, persons assessing the 
institution's compliance with industry standards, and the 
institution's attorneys, accountants, and auditors; 
(5) to the extent specifically permitted or required under 
other provisions of law and in accordance with the Right to 
Financial Privacy Act of 1978, to law enforcement agencies 
(including a Federal functional regulator, the Secretary of the 
Treasury with respect to subchapter II of chapter 53 of title 
31, United States Code, and chapter 2 of title I of Public 
Law 91-508 (12 U.S.C. 1951-1959), a State insurance authority, 
or the Federal Trade Commission), self-regulatory organiza-
tions, or for an investigation on a matter related to public 
safety; 
(6)(A) to a consumer reporting agency in accordance with 
the Fair Credit .Reporting Act, or (B) from a consumer report 
reported by a consumer reporting agency; 
(7) in connection with a proposed or actual sale, merger, 
transfer, or exchange of all or a portion of a business or oper-
ating unit if the disclosure of nonpublic personal information 
concerns solely consumers of such business or unit; or 
(8) to comply with Federal, State, or local laws, rules, 
and other applicable legal requirements; to comply with a prop-
erly authorized civil, criminal, or regulatory investigation or 
subpoena or summons by Federal, State, or local authorities; 
or to respond to judicial process or government regulatory 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1439 
authorities having jurisdiction over the financial institution 
for examination, compHance, or other purposes as authorized 
bylaw. 
SEC. 503. DISCLOSURE OF INSTITUTION PRIVACY POLICY. 
15 USC 6803. 
(a) DISCLOSURE REQUIRED.—At the time of establishing a cus-
tomer relationship with a consumer and not less than annually 
during the continuation of such relationship, a financial institution 
shall provide a clear and conspicuous disclosure to such consumer, 
in writing or in electronic form or other form permitted by the 
regulations prescribed under section 504, of such financial institu-
tion's policies and practices with respect to— 
(1) disclosing nonpublic personal information to affiliates 
and nonaffiliated third parties, consistent with section 502, 
including the categories of information that may be disclosed; 
(2) disclosing nonpublic personal information of persons 
who have ceased to be customers of the financial institution; 
and 
(3) protecting the nonpublic personal information of con-
sumers. 
Such disclosures shall be made in accordance with the regulations 
prescribed under section 504. 
(b) INFORMATION TO BE INCLUDED.—The disclosure required 
by subsection (a) shall include— 
(1) the policies and practices of the institution with respect 
to disclosing nonpublic personal information to nonaffiliated 
third parties, other than agents of the institution, consistent 
with section 502 of this subtitle, and including— 
(A) the categories of persons to whom the information 
is or may be disclosed, other than the persons to whom 
the information may be provided pursuant to section 502(e); 
and 
(B) the policies and practices of the institution with 
, respect to disclosing of nonpublic personal information of 
persons who have ceased to be customers of the financial 
institution; 
(2) the categories of nonpublic personal information that 
are collected by the financial institution; 
(3) the policies that the institution maintains to protect 
the confidentiality and security of nonpublic personal informa-
tion in accordance with section 501; and 
(4) the 
disclosures 
required, 
if any, under 
section 
603(d)(2)(A)(iii) of the Fair Credit Reporting Act. 
SEC. 504. RULEMAKING. 
-;>.:. 
15 USC 6804. 
(a) REGULATORY AUTHORITY.— 
(1) RULEMAKING.—The Federal banking agencies, the 
National Credit Union Administration, the Secretary of the 
Treasury, the Securities and Exchange Commission, and the 
Federal Trade Commission shall each prescribe, after consulta-
tion as appropriate with representatives of State insurance 
authorities designated by the National Association of Insurance 
Commissioners, such regulations as may be necessary to carry 
out the purposes of this subtitle with respect to the financial 
institutions subject to their jurisdiction under section 505. 
(2) 
COORDINATION, CONSISTENCY, AND COMPARABILITY.— 
Each of the agencies and authorities required under paragraph 
(1) to prescribe regulations shall consult and coordinate with 
113 STAT. 1440 
PUBLIC LAW 106-102—NOV. 12, 1999 
the other such agencies and authorities for the purposes of 
assuring, to the extent possible, that the regulations prescribed 
by each such agency and authority are consistent and com-
parable with the regulations prescribed by the other such agen-
cies and authorities. 
(3) PROCEDURES AND DEADLINE.—Such regulations shall 
be prescribed in accordance with applicable requirements of 
title 5, United States Code, and shall be issued in final form 
not later than 6 months after the date of the enactment of 
this Act. 
(b) AUTHORITY TO GRANT EXCEPTIONS.—The regulations pre-
scribed under subsection (a) may include such additional exceptions 
to subsections (a) through (d) of section 502 as are deemed con-
sistent with the purposes of this subtitle. 
15 use 6805. 
SEC. 505. ENFORCEMENT. 
(a) IN GENERAL.—This subtitle and the regulations prescribed 
thereunder shall be enforced by the Federal functional regulators, 
the State insurance authorities, and the Federal Trade Commission 
with respect to financial institutions and other persons subject 
to their jurisdiction under applicable law, as follows: 
(1) Under section 8 of the Federal Deposit Insurance Act, 
in the case of— 
(A) national banks, Federal branches and Federal agen-
cies of foreign banks, and any subsidiaries of such entities 
(except brokers, dealers, persons providing insurance, 
investment companies, and investment advisers), by the 
Office of the Comptroller of the Currency; 
(B) member banks of the Federal Reserve System 
(other than national banks), branches and agencies of for-
eign banks (other than Federal branches, Federal agencies, 
and insured State branches of foreign banks), commercial 
lending companies owned or controlled by foreign banks, 
organizations operating under section 25 or 25A of the 
Federal Reserve Act, and bank holding companies and their 
nonbank subsidiaries or affiliates (except brokers, dealers, 
persons providing insurance, investment companies, and 
investment advisers), by the Board of Governors of the 
Federal Reserve System; 
(C) banks insured by the Federal Deposit Insurance 
Corporation (other than members of the Federal Reserve 
System), insured State branches of foreign banks, and any 
subsidiaries of such entities (except brokers, dealers, per-
sons providing insurance, investment companies, and 
investment advisers), by the Board of Directors of the Fed-
eral Deposit Insurance Corporation; and 
(D) savings associations the deposits of which are 
insured by the Federal Deposit Insurance Corporation, and 
any subsidiaries of such savings associations (except bro-
kers, dealers, persons providing insurance, investment 
companies, and investment advisers), by the Director of 
the Office of Thrift Supervision. 
(2) Under the Federal Credit Union Act, by the Board 
of the National Credit Union Administration with respect to 
any federally insured credit union, and any subsidiaries of 
such an entity. 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1441 
(3) Under the Securities Exchange Act of 1934, by the 
Securities and Exchange Commission with respect to any broker 
or dealer. 
(4) Under the Investment Company Act of 1940, by the 
Securities and Exchange Commission with respect to invest-
ment companies. 
(5) Under the Investment Advisers Act of 1940, by the 
Securities and Exchange Commission with respect to invest-
ment advisers registered with the Commission under such Act. 
(6) Under State insurance law, in the case of any person 
engaged in providing insurance, by the applicable State insur-
ance authority of the State in which the person is domiciled, 
subject to section 104 of this Act. 
(7) Under the Federal Trade Commission Act, by the Fed-
eral Trade Commission for any other financial institution or 
other person that is not subject to the jurisdiction of any 
agency or authority under paragraphs (1) through (6) of this 
subsection. 
(b) ENFORCEMENT OF SECTION 501.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
agencies and authorities described in subsection (a) shall imple-
ment the standards prescribed under section 501(b) in the 
same manner, to the extent practicable, as standards prescribed 
pursuant to section 39(a) of the Federal Deposit Insurance 
Act are implemented pursuant to such section. 
(2) EXCEPTION.—The agencies and authorities described 
in paragraphs (3), (4), (5), (6), and (7) of subsection (a) shall 
implement the standards prescribed under section 501(b) by 
rule with respect to the financial institutions and other persons 
subject to their respective jurisdictions under subsection (a). 
(c) ABSENCE OF STATE ACTION.—If a State insuremce authority 
fails to adopt regulations to carry out this subtitle, such State 
shall not be eligible to override, pursuant to section 47(g)(2)(B)(iii) 
of the Federal Deposit Insurance Act, the insurance customer 
protection regulations prescribed by a Federal banking agency 
under section 47(a) of such Act. 
(d) DEFINITIONS.—The terms used in subsection (a)(1) that are 
not defined in this subtitle or otherwise defined in section 3(s) 
of the Federal Deposit Insurance Act shall have the same meaning 
as given in section 1(b) of the International Banking Act of 1978. 
SEC. 506. PROTECTION OF FAIR CREDIT REPORTING ACT. 
(a) AMENDMENT.—Section 621 of the Fair Credit Reporting 
Act (15 U.S.C. 1681s) is amended— 
(1) in subsection (d), by striking everything following the 
end of the second sentence; and 
(2) by striking subsection (e) and inserting the following: 
"(e) REGULATORY AUTHORITY.— 
"(1) The Federal banking agencies referred to in paragraphs 
(1) and (2) of subsection (b) shall jointly prescribe such regula-
tions as necessary to carry out the purposes of this Act with 
respect to any persons identified under paragraphs (1) and 
(2) of subsection (b), £uid the Board of Governors of the Federal 
Reserve System shall have authority to prescribe regulations 
consistent with such joint regulations with respect to bank 
113 STAT. 1442 
PUBLIC LAW 106-102—NOV. 12, 1999 
holding companies and affiliates (other than depository institu-
tions and consumer reporting agencies) of such holding compa-
nies. 
"(2) The Board of the National Credit Union Administration 
shall prescribe such regulations as necessary to carry out the 
purposes of this Act with respect to any persons identified 
under paragraph (3) of subsection (b).". 
(b) CONFORMING AMENDMENT.—Section 621(a) of the Fair 
Credit Reporting Act (15 U.S.C. 1681s(a)) is amended by striking 
paragraph (4). 
15 use 6806. 
(c) RELATION TO OTHER PROVISIONS.—Except for the amend-
ments made by subsections (a) and (b), nothing in this title shall 
be construed to modify, limit, or supersede the operation of the 
Fair Credit Reporting Act, and no inference shall be drawn on 
the basis of the provisions of this title regarding whether informa-
tion is transaction or experience information under section 603 
of such Act. 
15 use 6807. 
SEC. 507. RELATION TO STATE LAWS. 
(a) IN GENERAL.—This subtitle and the amendments made by 
this subtitle shall not be construed as superseding, altering, or 
affecting any statute, regulation, order, or interpretation in effect 
in any State, except to the extent that such statute, regulation, 
order, or interpretation is inconsistent with the provisions of this 
subtitle, and then only to the extent of the inconsistency. 
(b) GREATER PROTECTION UNDER STATE LAW.—For purposes 
of this section, a State statute, regulation, order, or interpretation 
is not inconsistent with the provisions of this subtitle if the protec-
tion such statute, regulation, order, or interpretation affords any 
person is greater than the protection provided under this subtitle 
and the amendments made by this subtitle, as determined by the 
Federal Trade Commission, after consultation with the agency or 
authority with jurisdiction under section 505(a) of either the person 
that initiated the complaint or that is the subject of the complaint, 
on its own motion or upon the petition of any interested party. 
15 use 6808. 
SEC. 508. STUDY OF INFORMATION SHARING AMONG FINANCIAL 
AFFILIATES. 
(a) IN GENERAL.—The Secretary of the Treasury, in conjunction 
with the Federal fiinctional regulators and the Federal Trade 
Commission, shall conduct a study of information sharing practices 
among financial institutions and their affiliates. Such study ^ ^ 1 
include— 
(1) the purposes for the sharing of confidential customer 
information with affiliates or with nonaffiliated third parties; 
(2) the extent and adequacy of security protections for 
such information; 
(3) the potential risks for customer privacy of such sharing 
of information; 
(4) the potential benefits for financial institutions and affili-
ates of such sharing of information; 
(5) the potential benefits for customers of such sharing 
of information; 
(6) the adequacy of existing laws to protect customer pri-
vacy; 
(7) the adequacy of financial institution privacy policy and 
privacy rights disclosure under existing law; 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1443 
(8) the feasibility of different approaches, including opt-
out and opt-in, to permit customers to direct that confidential 
information not be shared with affiliates and nonaffiliated third 
parties; and 
(9) the feasibility of restricting sharing of information for 
specific uses or of permitting customers to direct the uses 
for which information may be shared. 
(b) CONSULTATION.—^The Secretary shall consult with represent-
atives of State insurance authorities designated by the National 
Association of Insurance Commissioners, and also with financial 
services industry, consumer organizations and privacy groups, and 
other representatives of the general public, in formulating and 
conducting the study required by subsection (a). 
(c) REPORT.—On or before January 1, 2002, the Secretary shall Deadline, 
submit a report to the Congress containing the findings and conclu-
sions of the study required under subsection (a), together with 
such recommendations for legislative or administrative action as 
may be appropriate. 
SEC. 509. DEFINITIONS. 
15USC6809. 
As used in this subtitle: 
(1) FEDERAL BANKING AGENCY.—The term "Federal banking 
agency" has the same meaning as given in section 3 of the 
Federal Deposit Insurance Act. 
(2) FEDERAL FUNCTIONAL REGULATOR.—The term "Federal 
fiinctional regulator" means— 
(A) the Board of Governors of the Federal Reserve 
System; 
(B) the Office of the Comptroller of the Currency; 
(C) the Board of Directors of the Federal Deposit Insur-
ance Corporation; 
(D) the Director of the Office of Thrift Supervision; 
(E) the National Credit Union Administration Board; 
and 
(F) the Securities and Exchange Commission. 
(3) FINANCIAL INSTITUTION.— 
(A) IN GENERAL.—The term "financial institution" 
means any institution the business of which is engaging 
in financial activities as described in section 4(k) of the 
Bank Holding Company Act of 1956. 
(B) PERSONS SUBJECT TO CFTC REGULATION.—Notwith-
standing subparagraph (A), the term "financial institution" 
does not include any person or entity with respect to any 
financial activity that is subject to the jurisdiction of the 
Commodity Futures Trading Commission under the Com-
modity Exchange Act. 
(C) 
FARM 
CREDIT 
INSTITUTIONS.—Notwithstanding 
subparagraph (A), the term "financial institution" does not 
include the Federal Agricultural Mortgage Corporation or 
any entity chartered and operating under the Farm Credit 
Act of 1971. 
(D) 
OTHER SECONDARY MARKET INSTITUTIONS.—Not-
withstanding subparagraph (A), the term "financial institu-
tion" does not include institutions chartered by Congress 
specifically to engage in transactions described in section 
502(e)(1)(C), as long as such institutions do not sell or 
113 STAT. 1444 
PUBLIC LAW 106-102—NOV. 12, 1999 
transfer nonpublic personal information to a nonaffiliated 
third party. 
(4) NONPUBLIC PERSONAL INFORMATION.— 
(A) The term "nonpublic personal information" means 
personally identifiable financial information— 
(i) provided by a consumer to a financial institu-
tion; 
(ii) resulting from any transaction with the con-
sumer or any service performed for the consumer; or 
(iii) otherwise obtained by the financial institution. 
(B) Such term does not include publicly available 
information, as such term is defined by the regulations 
prescribed under section 504. 
(C) Notwithstanding subparagraph (B), such term— 
(i) shall include any list, description, or other 
grouping of consumers (and publicly available informa-
tion pertaining to them) that is derived using any 
nonpublic personal information other than publicly 
available information; but 
(ii) shall not include any list, description, or other 
grouping of consumers (and publicly available informa-
tion pertaining to them) that is derived without using 
any nonpublic personal information. 
(5) NONAFFILIATED THIRD PARTY.—The term "nonaffiliated 
third party" means any entity that is not an affiliate of, or 
related by common ownership or affiliated by corporate control 
with, the financial institution, but does not include a joint 
employee of such institution. 
(6) AFFILIATE.—The term "affiliate" means any company 
that controls, is controlled by, or is under common control 
with another company. 
(7) NECESSARY TO EFFECT, ADMINISTER, OR ENFORCE.—The 
term "as necessary to effect, administer, or enforce the trans-
action" means— 
(A) the disclosure is required, or is a usual, appropriate, 
or acceptable method, to carry out the transaction or the 
product or service business of which the transaction is 
a part, and record or service or maintain the consumer's 
account in the ordinary course of providing the financial 
service or financial product, or to administer or service 
benefits or claims relating to the transaction or the product 
or service business of which it is a part, and includes— 
(i) providing the consumer or the consumer's agent 
or broker with a confirmation, statement, or other 
record of the transaction, or information on the status 
or value of the financial service or financial product; 
and 
(ii) the accrual or recognition of incentives or 
bonuses associated with the transaction that are pro-
vided by the financial institution or any other party; 
(B) the disclosure is required, or is one of the lawful 
or appropriate methods, to enforce the rights of the finan-
cial institution or of other persons engaged in carr3ring 
out the financial transaction, or providing the product or 
service; 
(C) the disclosure is required, or is a usual, appropriate, 
or acceptable method, for insurance underwriting at the 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1445 
consumer's request or for reinsurance purposes, or for £iny 
of the following purposes as they relate to a consumer's 
insurance: Account administration, reporting, investigating, 
or preventing fraud or material misrepresentation, proc-
essing premium payments, processing insurance claims, 
administering insurance benefits (including utilization 
review activities), participating in research projects, or as 
otherwise required or specifically permitted by Federal or 
State law; or 
(D) the disclosure is required, or is a usual, appropriate 
or acceptable method, in connection with— 
(i) the authorization, settlement, billing, proc-
essing, clearing, transferring, reconciling, or collection 
of amounts charged, debited, or otherwise paid using 
a debit, credit or other payment card, check, or account 
number, or by other pa3anent means; 
(ii) the transfer of receivables, accounts or interests 
therein; or 
(iii) the audit of debit, credit or other payment 
information. 
(8) STATE INSURANCE AUTHORITY.—The term "State insur-
ance authority" means, in the case of any person engaged 
in providing insurance, the State insurance authority of the 
State in which the person is domiciled. 
(9) CONSUMER.—The term "consumer" means an individual 
who obtains, from a financial institution, financial products 
or services which are to be used primarily for personal, family, 
or household purposes, and also means the legal representative 
of such an individual. 
(10) JOINT AGREEMENT.—The term "joint agreement" means 
a formal written contract pursuant to which two or more finan-
cial institutions jointly offer, endorse, or sponsor a financial 
product or service, and as may be further defined in the regula-
tions prescribed under section 504. 
(11) CUSTOMER RELATIONSHIP.—The term "time of estab- Regulations, 
lishing a customer relationship" shall be defined by the regula-
tions prescribed under section 504, and shall, in the case of 
a financial institution engaged in extending credit directly to 
consumers to finance purchases of goods or services, mean 
the time of establishing the credit relationship with the con-
sumer. 
SEC. 510. EFFECTIVE DATE. 
15 USC 6801 
This subtitle shall take effect 6 months after the date on 
which rules are required to be prescribed under section 504(a)(3), 
except— 
(1) to the extent that a later date is specified in the rules 
prescribed under section 504; and 
(2) that sections 504 and 506 shall be effective upon enact-
ment. 
113 STAT. 1446 
PUBLIC LAW 106-102—NOV. 12, 1999 
Subtitle B—Fraudulent Access to Financial 
Information 
15 use 6821. 
SEC. 521. PRIVACY PROTECTION FOR CUSTOMER INFORMATION OF 
FINANCIAL INSTITUTIONS. 
(a) PROHIBITION ON OBTAINING CUSTOMER INFORMATION BY 
FALSE PRETENSES.—It shall be a violation of this subtitle for any 
person to obtain or attempt to obtain, or cause to be disclosed 
or attempt to cause to be disclosed to any person, customer informa-
tion of a financial institution relating to another person— 
(1) by making a false, fictitious, or fraudulent statement 
or representation to an officer, employee, or agent of a financial 
institution; 
(2) by making a false, fictitious, or fi-audulent statement 
or representation to a customer of a financial institution; or 
(3) by providing any document to an officer, employee, 
or agent of a financial institution, knowing that the document 
is forged, counterfeit, lost, or stolen, was fi*audulently obtained, 
or contains a false, fictitious, or fraudulent statement or rep-
resentation. 
(b) PROHIBITION ON SOLICITATION OF A PERSON TO OBTAIN 
CUSTOMER INFORMATION FROM 
FINANCIAL INSTITUTION UNDER 
FALSE PRETENSES.—It shall be a violation of this subtitle to request 
a person to obtain customer information of a financial institution, 
knowing that the person will obtain, or attempt to obtain, the 
information fi*om the institution in any manner described in sub-
section (a). 
(c) NONAPPLICABILITY TO LAW ENFORCEMENT AGENCIES.—No 
provision of this section shall be construed so as to prevent any 
action by a law enforcement agency, or any officer, employee, or 
agent of such agency, to obtain customer information of a financial 
institution in connection with the performance of the official duties 
of the agency. 
(d) NONAPPLICABILITY TO FINANCIAL INSTITUTIONS IN CERTAIN 
CASES.—No provision of this section shall be construed so as to 
prevent any financial institution, or any officer, employee, or agent 
of a financial institution, from obtaining customer information of 
such financial institution in the course o
f
— 
(1) testing the security procedures or systems of such 
institution for maintaining the confidentiality of customer 
information; 
(2) investigating allegations of misconduct or negligence 
on the part of any officer, employee, or agent of the financial 
institution; or 
(3) recovering customer information of the financial institu-
tion which was obtained or received by another person in any 
manner described in subsection (a) or (b). 
(e) NONAPPLICABILITY TO INSURANCE INSTITUTIONS FOR INVES-
TIGATION OF INSURANCE FRAUD.—No provision of this section shall 
be construed so as to prevent any insurance institution, or any 
officer, employee, or agency of an insurance institution, from 
obtaining information as part of an insurance investigation into 
criminal activity, fraud, material misrepresentation, or material 
nondisclosure that is authorized for such institution under State 
law, regulation, interpretation, or order. 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1447 
(f) 
NONAPPLICABILITY TO CERTAIN TYPES OF CUSTOMER 
INFORMATION OF FINANCIAL INSTITUTIONS.—No provision of this 
section shall be construed so as to prevent any person from 
obtaining customer information of a financial institution that other-
wise is available as a public record filed pursuant to the securities 
laws (as defined in section 3(a)(47) of the Securities Exchange 
Act of 1934). 
(g) NONAPPLICABILITY TO COLLECTION OF CHILD SUPPORT JUDG-
MENTS.—No provision of this section shall be construed to prevent 
any State-licensed private investigator, or any officer, employee, 
or agent of such private investigator, from obtaining customer 
information of a financial institution, to the extent reasonably nec-
essary to collect child support from a person adjudged to have 
been delinquent in his or her obligations by a Federal or State 
court, and to the extent that such action by a State-licensed private 
investigator is not unlawful under any other Federal or State law 
or regulation, and has been authorized by an order or judgment 
of a court of competent j 
urisdiction. 
SEC. 522. ADMINISTRATIVE ENFORCEMENT. 
15USC6822. 
(a) ENFORCEMENT BY FEDERAL TRADE COMMISSION.—Except 
as provided in subsection (b), compliance with this subtitle shall 
be enforced by the Federal Trade Commission in the same manner 
and with the same power and authority as the Commission has 
under the Fair Debt Collection Practices Act to enforce compliance 
with such Act. 
(b) ENFORCEMENT BY OTHER AGENCIES IN CERTAIN CASES.— 
(1) IN GENERAL.—Compliance with this subtitle shall be 
enforced under— 
(A) section 8 of the Federal Deposit Insurance Act, 
in the case o
f
— 
(i) national banks, and Federal branches and Fed-
eral agencies of foreign banks, by the Office of the 
Comptroller of the Currency; 
(ii) member banks of the Federal Reserve System 
(other than national banks), branches and agencies 
of foreign banks (other than Federal branches, Federal 
agencies, and insured State branches of foreign banks), 
commercial lending companies owned or controlled by 
foreign banks, and organizations operating under sec-
tion 25 or 25A of the Federal Reserve Act, by the 
Board; 
(iii) banks insured by the Federal Deposit Insur-
ance Corporation (other than members of the Federal 
Reserve System and national nonmember banks) and 
insured State branches of foreign banks, by the Board 
of Directors of the Federal Deposit Insurance Corpora-
tion; and 
(iv) savings associations the deposits of which are 
insured by the Federal Deposit Insurance Corporation, 
by the Director of the Office of Thrift Supervision; 
and 
(B) the Federal Credit Union Act, by the Administrator 
of the National Credit Union Administration with respect 
to any Federal credit union. 
(2) VIOLATIONS OF THIS SUBTITLE TREATED AS VIOLATIONS 
OF OTHER LAWS.—For the purpose of the exercise by any agency 
113 STAT. 1448 
PUBLIC LAW 106-102—NOV. 12, 1999 
referred to in paragraph (1) of its powers under any Act referred 
to in that paragraph, a violation of this subtitle shall be deemed 
to be a violation of a requirement imposed under that Act. 
In addition to its powers under any provision of law specifically 
referred to in paragraph (1), each of the agencies referred 
to in that paragraph may exercise, for the purpose of enforcing 
compliance with this subtitle, any other authority conferred 
on such agency by law. 
15 use 6823. 
SEC. 523. CRIMINAL PENALTY. 
(a) IN GENERAL.—Whoever knowingly and intentionally vio-
lates, or knowingly and intentionally attempts to violate, section 
521 shall be fined in accordance with title 18, United States Code, 
or imprisoned for not more than 5 years, or both. 
(b) ENHANCED PENALTY FOR AGGRAVATED CASES.—Whoever vio-
lates, or attempts to violate, section 521 while violating another 
law of the United States or as part of a pattern of any illegal 
activity involving more than $100,000 in a 12-month period shall 
be fined twice the amount provided in subsection (b)(3) or (c)(3) 
(as the case may be) of section 3571 of title 18, United States 
Code, imprisoned for not more than 10 years, or both. 
15 use 6824. 
SEC. 524. RELATION TO STATE LAWS. 
(a) IN GENERAL.—This subtitle shall not be construed as super-
seding, altering, or affecting the statutes, regulations, orders, or 
interpretations in effect in any State, except to the extent that 
such statutes, regulations, orders, or interpretations are incon-
sistent with the provisions of this subtitle, and then only to the 
extent of the inconsistency. 
(b) GREATER PROTECTION UNDER STATE LAW.—For purposes 
of this section, a State statute, regulation, order, or interpretation 
is not inconsistent with the provisions of this subtitle if the protec-
tion such statute, regulation, order, or interpretation affords any 
person is greater than the protection provided under this subtitle 
as determined by the Federal Trade Commission, after consultation 
with the agency or authority with jurisdiction under section 522 
of either the person that initiated the complaint or that is the 
subject of the complaint, on its own motion or upon the petition 
of any interested party. 
15 use 6825. 
SEC. 525. AGENCY GUIDANCE. 
In furtherance of the objectives of this subtitle, each Federal 
banking agency (as defined in section 3(z) of the Federal Deposit 
Insurance Act), the National Credit Union Administration, and 
the 
Securities 
and 
Exchange 
Commission 
or 
self-regulatory 
organizations, as appropriate, shall review regulations and guide-
lines applicable to financial institutions under their respective juris-
dictions and shall prescribe such revisions to such regulations sind 
guidelines as may be necessary to ensure that such financial institu-
tions have policies, procedures, and controls in place to prevent 
the unauthorized disclosure of customer financial information and 
to deter and detect activities proscribed under section 521. 
15 use 6826. 
SEC. 526. REPORTS. 
(a) REPORT TO THE CONGRESS.—Before the end of the 18-month 
period beginning on the date of the enactment of this Act, the 
Comptroller General, in consultation with the Federal Trade 
Commission, Federal banking agencies, the National Credit Union 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1449 
Administration, the Securities and Exchange Commission, appro-
priate Federal law enforcement agencies, and appropriate State 
insurance regulators, shall submit to the Congress a report on 
the following: 
(1) The efficacy and adequacy of the remedies provided 
in this subtitle in addressing attempts to obtain financial 
information by fraudulent means or by false pretenses. 
(2) Any recommendations for additional legislative or regu-
latory action to address threats to the privacy of financial 
information created by attempts to obtain information by 
fraudulent means or false pretenses. 
(b) ANNUAL REPORT BY ADMINISTERING AGENCIES.—The Federal 
Trade Commission and the Attorney General shall submit to Con-
gress an annual report on number and disposition of all enforcement 
actions taken pursuant to this subtitle. 
SEC. 527. DEFINITIONS. 
15 USC 6827. 
For purposes of this subtitle, the following definitions shall 
apply: 
(1) CUSTOMER.—The term "customer" means, with respect 
to a financial institution, any person (or authorized representa-
tive of a person) to whom the financial institution provides 
a product or service, including that of acting as a fiduciary. 
(2) CUSTOMER INFORMATION OF A FINANCIAL INSTITUTION.— 
The term "customer information of a financial institution" 
means any information maintained by or for a financial institu-
tion which is derived from the relationship between the finan-
cial institution and a customer of the financial institution and 
is identified with the customer. 
(3) DOCUMENT.—The term "document" means any informa-
tion in any form. 
(4) FINANCIAL INSTITUTION.— 
(A) IN GENERAL.—The term "financial institution" 
means any institution engaged in the business of providing 
financial services to customers who maintain a credit, 
deposit, trust, or other financial account or relationship 
with the institution. 
(B) CERTAIN FINANCIAL INSTITUTIONS SPECIFICALLY 
INCLUDED.—The term "financial institution" includes any 
depository institution (as defined in section 19(b)(1)(A) of 
the Federal Reserve Act), any broker or dealer, any invest-
ment adviser or investment company, any insurance com-
pany, any loan or finance company, any credit card issuer 
or operator of a credit card system, and any consumer 
reporting agency that compiles and maintains files on con-
sumers on a nationwide basis (as defined in section 603(p) 
of the Consumer Credit Protection Act). 
(C) 
SECURITIES 
INSTITUTIONS.—For 
purposes 
of 
subparagraph (B)— 
(i) the terms "broker" and "dealer" have the same 
meanings as given in section 3 of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c); 
(ii) the term "investment adviser" has the same 
meaning as given in section 202(a)(ll) of the Invest-
ment Advisers Act of 1940 (15 U.S.C. 80b-2(a)); and 
113 STAT. 1450 
PUBLIC LAW 106-102—NOV. 12, 1999 
(iii) the term "investment company" has the same 
me£ining as given in section 3 of the Investment Com-
pany Act of 1940 (15 U.S.C. 80a-3). 
(D) 
CERTAIN 
PERSONS AND ENTITIES 
SPECIFICALLY 
EXCLUDED.—The term "financial institution" does not 
include any person or entity with respect to any financial 
activity that is subject to the jurisdiction of the Commodity 
Futures 
Trading 
Commission 
under 
the 
Commodity 
Exchange Act and does not include the Federal Agricultural 
Mortgage Corporation or any entity chartered and oper-
ating under the Farm Credit Act of 1971. 
(E) FURTHER DEFINITION BY REGULATION.—The Federal 
Trade Commission, after consultation with Federal banking 
agencies and the Securities gind Exchange Commission, 
may prescribe regulations clarifying or describing the t3^es 
of institutions which shall be treated as financial institu-
tions for purposes of this subtitle. 
Federal H
o
m
e 
T I T L E V I — F E D E R A L H O M E L O A N B A N K 
fem"^ 
S Y S T E M M O D E R N I Z A T I O N 
Modernization 
Act of 1999. 
12 use 1421 
SEC. 601. SHORT TITLE. 
This title may be cited as the "Federal Home Loan Bank 
System Modernization Act of 1999". 
SEC. 602. DEFINITIONS. 
Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 
1422) is amended— 
(1) in paragraph (1), by striking "term 'Board' means" and 
inserting "terms 'Finance Board' and 'Board' mean"; 
(2) by striking paragraph (3) and inserting the following: 
"(3) STATE.—The term 'State', in addition to the States 
of the United States, includes the District of Columbia, Guam, 
Puerto Rico, the United States Virgin Islands, American Samoa, 
and the Commonwealth of the Northern Mariana Islands."; 
and 
(3) by adding at the end the following new paragraph: 
"(13) COMMUNITY FINANCIAL INSTITUTION.— 
"(A) IN GENERAL.—The term 'community 
financial 
institution' means a member— 
"(i) the deposits of which are insured under the 
Federal Deposit Insurance Act; and 
"(ii) that has, as of the date of the treinsaction 
at issue, less than $500,000,000 in average total assets, 
based on an average of total assets over the 3 years 
preceding that date. 
"(B) ADJUSTMENTS.—The $500,000,000 limit referred 
to in subparagraph (A)(ii) shall be adjusted annually by 
the Finance Board, based on the annual percentage 
increase, if any, in the Consumer Price Index for all urban 
consumers, as published by the Department of Labor.". 
SEC. 603. SAVINGS ASSOCIATION MEMBERSHIP. 
Section 5(f) of the Home Owners' Loan Act (12 U.S.C. 1464(f)) 
is amended to read as follows: 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1451 
"(f) FEDERAL HOME LOAN BANK MEMBERSHIP.—After the 
end 
of the 6-month period beginning on the date of the enactment 
of the Federal Home Loan Bank System Modernization Act of 
1999, a Federal savings association may become a member of the 
Federal Home Loan Bank System, and shall qualify for such mem-
bership in the manner provided by the Federal Home Loan Bank 
Act.". 
SEC. 604. ADVANCES TO MEMBERS; COLLATERAL. 
(a) IN GENERAL.—Section 10(a) of the Federal Home Loan Bank 
Act (12 U.S.C. 1430(a)) is amended— 
(1) by redesignating paragraphs (1) through (4) as subpara-
graphs (A) through (D), respect'vely, and indenting appro-
priately; 
(2) by striking "(a) Each" and inserting the following: 
"(a) IN GENERAL.— 
"(1) ALL ADVANCES.—Each"; 
(3) by striking the second sentence and inserting the fol-
lowing: 
"(2) PURPOSES OF ADVANCES.—A long-term advance may 
only be made for the purposes o
f
— 
"(A) providing funds to any member for residential 
housing finance; and 
"(B) providing funds to any community 
financial 
institution for small businesses, small farms, and small 
agri-businesses."; 
(4) by striking "A Bank" and inserting the following: 
"(3) COLLATERAL.—A Bank"; 
(5) in paragraph (3) (as so designated by paragraph (4) 
of this subsection)— 
(A) in subparagraph (C) (as so redesignated by para-
graph (1) of this subsection) by striking "Deposits" and 
inserting "Cash or deposits"; 
(B) in subparagraph (D) (as so redesignated by para-
graph (1) of this subsection), by striking the second sen-
tence; and 
(C) by inserting after subparagraph (D) (as so redesig-
nated by paragraph (1) of this subsection) the following 
new subparagraph: 
"(E) Secured loans for small business, agriculture, or 
securities representing a whole interest in such secured 
loans, in the case of any community financial institution."; 
(6) in paragraph (5)— 
(A) in the second sentence, by striking "and the Board"; 
(B) in the third sentence, by striking "Board" and 
inserting "Federal home loan bank"; and 
(C) by striking "(5) Paragraphs (1) through (4)" and 
inserting the following: 
"(4) 
ADDITIONAL 
BANK AUTHORITY.—Subparagraphs 
(A) 
through (E) of paragraph (3)"; and 
(7) by adding at the end the following: 
"(5) 
REVIEW OF CERTAIN COLLATERAL STANDARDS.—The 
Board may review the collateral standards applicable to each 
Federal home loan bank for the classes of collateral described 
in subparagraphs (D) and (E) of paragraph (3), and may, if 
necessary for safety and soundness purposes, require an 
113 STAT. 1452 
PUBLIC LAW 106-102—NOV. 12, 1999 
increase in the collateral standards for any or all of those 
classes of collateral. 
"(6) DEFINITIONS.—For purposes of this subsection, the 
terms 'small business', 'agriculture', 'small farm', and 'small 
agri-business' shall have the meanings given those terms by 
regulation of the Finance Board.". 
(b) CLERICAL AMENDMENT.—The section heading for section 
10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) is amended 
to read as follows: 
"SEC. 10. ADVANCES TO MEMBERS.". 
(c) QUALIFIED THRIFT LENDER STATUS.—Section 10 of the Fed-
eral Home Loan Bank Act (12 U.S.C. 1430) is amended by striking 
the first of the 2 subsections designated as subsection (e). 
(d) FEDERAL HOME LOAN BANK ACCESS.—Section 10(m)(3)(B) 
of the Home Owners' Loan Act (12 U.S.C. 1467a(m)(3)(B)) is 
amended— 
(1) in clause (i), by striking subclause (III) and redesig-
nating subclause (IV) as subclause (III); and 
(2) by striking clause (ii) and inserting the following: 
"(ii) 
ADDITIONAL RESTRICTIONS EFFECTIVE AFTER 
3 YEARS.—Beginning 3 years after the date on which 
a savings association should have become a qualified 
thrift lender, or the date on which the savings associa-
tion ceases to be a qualified thrift lender, as applicable, 
the savings association shall not retain any investment 
(including an investment in any subsidiary) or engage, 
directly or indirectly, in any activity, unless that 
investment or activity— 
"(I) would be permissible for the savings 
association if it were a national bank; and 
"(II) is permissible for the savings association 
as a savings association.". 
SEC. 605. ELIGIBILITY CRITERIA. 
Section 4(a) of the Federal Home Loan Bank Act (12 U.S.C. 
1424(a)) is amended— 
(1) in paragraph (2)(A), by inserting "(other than a commu-
nity financial institution)" after "institution"; 
(2) in the matter immediately following paragraph (2)(C)— 
(A) by striking "An insured" and inserting the fol-
lowing: 
"(3) CERTAIN INSTITUTIONS.—An insured"; and 
(B) by striking "preceding sentence" and inserting 
"paragraph (2)"; and 
(3) by adding at the end the following new paragraph: 
"(4) 
LIMITED 
EXEMPTION 
FOR 
COMMUNITY 
FINANCIAL 
INSTITUTIONS.—A community financial institution that other-
wise meets the requirements of paragraph (2) may become 
a member without regard to the percentage of its total assets 
that is represented by residential mortgage loans, as described 
in subparagraph (A) of paragraph (2).". 
SEC. 606. MANAGEMENT OF BANKS. 
(a) BOARD OF DIRECTORS.—Section 7 of the Federal Home Loan 
Bank Act (12 U.S.C. 1427(d)) is amended— 
(1) in subsection (a), by striking "and bona fide residents 
of the district in which such bank is located" and inserting 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1453 
", and each of whom shall be either a bona fide resident of 
the district in which such bank is located or an officer or 
director of a member of such bank located in that district"; 
(2) in subsection (d), by striking the first sentence and 
inserting the following: "The term of each director, whether 
elected or appointed, shall be 3 years. The board of directors 
of each Federal home loan bank and the Finance Board shall 
adjust the terms of members first elected or appointed after 
the date of the enactment of the Federal Home Loan Bank 
System Modernization Act of 1999 to ensure that the terms 
of the members of the board of directors are staggered with 
approximately Vs of the terms expiring each year."; and 
(3) by striking subsection (g) and inserting the following: 
"(g) CHAIRPERSON AND VICE CHAIRPERSON.— 
"(1) ELECTION.—The Chairperson and Vice Chairperson of 
the board of directors of each Federal home loan bank shall 
be elected by a majority of all the directors of such bank 
fi"om among the directors of the bank. 
"(2) TERMS.—The term of office of the Chairperson and 
the Vice Chairperson of the board of directors of a Federal 
home loan bank shall be 2 years. 
"(3) ACTING CHAIRPERSON.—In the event of a vacancy in 
the position of Chairperson of the board of directors or during 
the absence or disability of the Chairperson, the Vice Chair-
person shall act as Chairperson. 
"(4) PROCEDURES.—The board of directors of each Federal 
home loan hank shall establish procedures, in the bylaws of 
such board, for designating an acting chairperson for any period 
during which the Chairperson and the Vice Chairperson are 
not available to carry out the requirements of that position 
for any reason and removing any person fi-om any such position 
for good cause.". 
(b) COMPENSATION.—Section 7(i) of the Federal Home Loan 
Bank Act (12 U.S.C. 1427(i)) is amended— 
(1) by striking "(i) Each bank may pay its directors" and 
inserting "(i) DIRECTORS' COMPENSATION.— 
"(1) IN GENERAL.—Subject to paragraph (2), each bank may 
pay its directors"; and 
(2) by adding at the end the following new paragraph: 
"(2) LIMITATION.— 
"(A) IN GENERAL.—The annual salary of each of the 
following members of the board of directors of a Federal 
home loan bank may not exceed the amount specified: 
"In the case of the— 
The annual compensation 
^ ' 
may not exceed— 
Chairperson 
$25,000 
Vice Chairperson 
$20,000 
All other members 
$15,000. 
"(B) ADJUSTMENT.—Beginning January 1, 2001, each Effective date. 
dollar amount referred to in the table in subparagraph 
(A) shall be adjusted annually by the Finance Board, based 
on the annual percentage increase, if any, in the Consumer 
Price Index for all urban consumers, as published by the 
Department of Labor. 
"(C) EXPENSES.—Subparagraph (A) shall not be con-
strued as prohibiting the reimbursement of expenses 
113 STAT. 1454 
PUBLIC LAW 106-102—NOV. 12, 1999 
incurred by members of the board of directors of any Fed-
eral home loan bank in connection with service on the 
board of directors.". 
(c) REPEAL OF SECTIONS 22A AND 27.—The Federal Home Loan 
Bank Act (12 U.S.C. 1421 et seq.) is amended by striking sections 
22A (12 U.S.C. 1442a) and 27 (12 U.S.C. 1447). 
(d) SECTION 12.—Section 12 of the Federal Home Loan Bank 
Act (12 U.S.C. 1432) is amended— 
(1) in subsection (a)— 
(A) by striking ", but, except" and all that follows 
through "ten years"; 
(B) by striking "subject to the approval of the Board" 
the first place that term appears; 
(C) by striking "and, by its Board of directors," and 
all that follows through "agent of such bank," and inserting 
"and, by the board of directors of the bank, to prescribe, 
amend, and repeal by-laws governing the manner in which 
its affairs may be administered, consistent with applicable 
laws and regulations, as administered by the Finance 
Board. No officer, employee, attorney, or agent of a Federal 
home loan bank"; and 
(D) by striking "Board of directors" where such term 
appears in the penultimate sentence and inserting "board 
of directors"; and 
(2) in subsection (b), by striking "loans banks" and inserting 
"loan banks". 
(e) 
POWERS AND DUTIES 
OF FEDERAL 
HOUSING 
FINANCE 
BOARD.— 
(1) ISSUANCE OF NOTICES OF VIOLATIONS.—Section 2B(a) 
of the Federal Home Loan Bank Act (12 U.S.C. 1422b(a)) is 
amended by adding at the end the following new paragraphs: 
"(5) To issue and serve a notice of charges upon a Federal 
home loan bank or upon any executive officer or director of 
a Federal home loan bank if, in the determination of the 
Finance Board, the Bank, executive officer, or director is 
engaging or has engaged in, or the Finance Board has reason-
able cause to believe that the Bank, executive officer, or director 
is about to engage in an unsafe or unsound practice in con-
ducting the business of the bank, or any conduct that violates 
any provision of this Act or any law, order, rule, or regulation 
or any condition imposed in writing by the Finance Board 
in connection with the granting of any application or other 
request by the Bank, or any written agreement entered into 
by the Bank with the agency, in accordance with the procedures 
provided in subsection (c) or (f) of section 1371 of the Federal 
Housing Enterprises Financial Safety and Soundness Act of 
1992. Such authority includes the same authority to issue an 
order requiring a party to take affirmative action to correct 
conditions resulting from violations or practices or to limit 
activities of a Bank or any executive officer or director of 
a Bank as appropriate Federal banking agencies have to take 
with respect to insured depository institutions under para-
graphs (6) and (7) of section 8(b) of the Federal Deposit Insur-
ance Act, and to have all other powers, rights, and duties 
to enforce this Act with respect to the Federal home loan 
banks and their executive officers and directors as the Office 
of Federal Housing Enterprise Oversight has to enforce the 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1455 
Federal Housing Enterprises Financial Safety and Soundness 
Act of 1992, the Federal National Mortgage Association Charter 
Act, or the Federal Home Loan Mortgage Corporation Act with 
respect to the Federal housing enterprises under subtitle C 
(other than section 1371) of the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992. 
"(6) To address any insufficiencies in capital levels resulting 
from the application of section 5(f) of the Home Owners' Loan 
Act. 
"(7) To act in its own name and through its own attorneys— 
"(A) in enforcing any provision of this Act or any regu-
lation promulgated under this Act; or 
"(B) in any action, suit, or proceeding to which the 
Finance Board is a party that involves the Board's regula-
tion or supervision of any Federal home loan bank.". 
(2) TECHNICAL AMENDMENT.—Section 111 of Pubhc Law 
93-495 (12 U.S.C. 250) is amended by striking "Federal Home 
Loan Bank Board," and inserting "Director of the Office of 
Thrift Supervision, the Federal Housing Finance Board,". 
if) ELIGIBILITY TO SECURE ADVANCES.— 
(1) SECTION 9.—Section 9 of the Federal Home Loan Bank 
Act (12 U.S.C. 1429) is amended— 
(A) in the second sentence, by striking "with the 
approval of the Board"; and 
(B) in the third sentence, by striking ", subject to 
the approval of the Board,". 
(2) SECTION lo.—Section 10 of the Federal Home Loan 
Bank Act (12 U.S.C. 1430) is amended— 
(A) in subsection (c)— 
(i) in the first sentence, by striking "Board" and 
inserting "Federal home loan bank"; and 
* 
(ii) by striking the second sentence; and 
(B) in subsection (d)— 
(i) in the first sentence, by striking "and the 
approval of the Board"; and 
(ii) by striking "Subject to the approval of the 
Board, any" and inserting "Any", 
(g) SECTION 16.—Section 16(a) of the Federal Home Loan Bank 
Act (12 U.S.C. 1436(a)) is amended— 
(1) in the third sentence— 
(A) by striking "net earnings" and inserting "previously 
retained earnings or current net earnings"; and 
(B) by striking ", and then only with the approval 
of the Federal Housing Finance Board"; and 
(2) by striking the fourth sentence. 
(h) SECTION 18.—Section 18(b) of the Federal Home Loan Bank 
Act (12 U.S.C. 1438(b)) is amended by striking paragraph (4}. 
SEC. 607. RESOLUTION FUNDING CORPORATION. 
(a) IN GENERAL.—Section 21B(f)(2)(C) of the Federal Home 
Loan Bank Act (12 U.S.C. 1441b(f)(2)(C)) is amended to read as 
follows: 
"(C) PAYMENTS BY FEDERAL HOME LOAN BANKS.— 
"(i) IN GENERAL.—To the extent that the amounts 
available pursuant to subparagraphs (A) and (B) are 
insufficient to cover the amount of interest payments, 
each Federal home loan bank shall pay to the Funding 
113 STAT. 1456 
PUBLIC LAW 106-102—NOV. 12, 1999 
Corporation in each calendar year, 20.0 percent of the 
net earnings of that Bank (after deducting expenses 
relating to section 10(j) and operating expenses). 
"(ii) 
ANNUAL 
DETERMINATION.—The 
Board 
annually shall determine the extent to which the value 
of the aggregate amounts paid by the Federal home 
loan banks exceeds or falls short of the value of an 
annuity of $300,000,000 per year that commences on 
the issuance date and ends on the final scheduled 
maturity date of the obligations, and shall select appro-
priate present value factors for making such deter-
minations, in consultation with the Secretary of the 
Treasury. 
"(iii) PAYMENT TERM ALTERATIONS.—The Board 
shall extend or shorten the term of the payment obliga-
tions of a Federal home loan bank under this subpara-
graph as necessary to ensure that the value of all 
pajnnents made by the Bemiks is equivalent to the 
value of an annuity referred to in clause (ii). 
"(iv) 
TERM 
BEYOND 
MATURITY.—If the 
Board 
extends the term of payment obligations beyond the 
final scheduled maturity date for the obligations, each 
Federal home loan bank shall continue to pay 20.0 
percent of its net earnings (after deducting expenses 
relating to section 10(j) and operating expenses) to 
the Treasury of the United States until the value of 
all such payments by the Federal home loan banks 
is equivalent to the value of an annuity referred to 
in clause (ii). In the final year in which the Federal 
home loan banks are required to make any payment 
to the Treasury under this subparagraph, if the dollar 
amount represented by 20.0 percent of the net earnings 
of the Federal home loan banks exceeds the remaining 
obligation of the Banks to the Treasury, the Finance 
Board shall reduce the percentage pro rata to a level 
sufficient to pay the remaining obligation.". 
12 use 1441b 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
note. 
shall become effective on January 1, 2000. Pa3niients made by 
a Federal home loan bank before that effective date shall be counted 
toward the total obligation of that Bank under section 21B(f)(2)(C) 
of the Federal Home Loan Bank Act, as amended by this section. 
SEC. 
608. 
CAPITAL 
STRUCTURE 
OF 
FEDERAL 
HOME 
LOAN 
BANKS. 
Section 6 of the Federal Home Loan Bank Act (12 U.S.C. 
1426) is amended to read as follows: 
"SEC. 
6
. 
CAPITAL 
STRUCTURE 
OF 
FEDERAL 
HOME 
LOAN 
BANKS. 
"(a) REGULATIONS.— 
Deadline. 
"(1) CAPITAL STANDARDS.—Not later than 1 year after the 
date of the enactment of the Federal Home Loan Bank System 
Modernization Act of 1999, the Finance Board shall issue regu-
lations prescribing uniform capital standards applicable to each 
Federal home loan bank, which shall require each such bank 
to meet— 
"(A) the leverage requirement specified in paragraph 
(2); and 
"(B) the risk-based capital requirements, in accordance 
with paragraph (3). 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1457 
"(2) LEVERAGE REQUIREMENT.— 
"(A) IN GENERAL.—The leverage requirement shall 
require each Federal home loan bank to maintain a min-
imum amount of total capital based on the total assets 
of the bank and shall be 5 percent. 
"(B) TREATMENT OF STOCK AND RETAINED EARNINGS.— 
In determining compliance with the minimum leverage 
ratio established under subparagraph (A), the paid-in value 
of the outstanding Class B stock and the amount of retained 
earnings shall be multiplied by 1.5, and such higher 
amounts shall be deemed to be capital for purposes of 
meeting the 5 percent minimum leverage ratio, except that 
a Federal home loan bank's total capital (determined with-
out taking into account any such multiplier) shall not be 
less than 4 percent of the total assets of the bank. 
"(3) RISK-BASED CAPITAL STANDARDS.— 
"(A) IN GENERAL.—Each Federal home loan bank shall 
maintain permanent capital in an amount that is sufficient, 
as determined in accordance with the regulations of the 
Finance Board, to meet— 
"(i) the credit risk to which the Federal home 
loan bank is subject; and 
"(ii) the market risk, including interest rate risk, 
to which the Federal home loan bank is subject, based 
on a stress test established by the Finance Board that 
rigorously tests for changes in market variables, 
including changes in interest rates, rate volatility, and 
changes in the shape of the yield curve. 
"(B) CONSIDERATION OF OTHER RISK-BASED STAND-
ARDS.—In establishing the risk-based standard 
under 
subparagraph (A)(ii), the Finance Board shall take due 
consideration of any risk-based capital test established 
pursuant to section 1361 of the Federal Housing Enter-
prises Financial Safety and Soundness Act of 1992 (12 
U.S.C. 4611) for the enterprises (as defined in that Act), 
with such modifications as the Finance Board determines 
to be appropriate to reflect differences in operations 
between the Federal home loan banks and those enter-
prises. 
"(4) OTHER REGULATORY REQUIREMENTS.—The regulations 
issued by the Finance Board under paragraph (1) shall— 
"(A) permit each Federal home loan bank to issue, 
with such rights, terms, and preferences, not inconsistent 
with this Act and the regulations issued hereunder, as 
the board of directors of that bank may approve, any 1 
or more of— 
"(i) Class A stock, which shall be redeemable in 
cash and at par 6 months following submission by 
a member of a written notice of its intent to redeem 
such shares; and 
"(ii) Class B stock, which shall be redeemable in 
cash and at par 5 years following submission by a 
member of a written notice of its intent to redeem 
such shares; 
"(B) provide that the stock of a Federal home loan 
bank may be issued to and held by only members of the 
113 STAT. 1458 
PUBLIC LAW 106-102—NOV. 12, 1999 
bank, and that a bank may not issue any stock other 
than as provided in this section; 
"(C) prescribe the manner in which stock of a Federal 
home loan bank may be sold, transferred, redeemed, or 
repurchased; and 
"(D) provide the manner of disposition of outstanding 
stock held by, and the liquidation of any claims of the 
Federal home loan bank against, an institution that ceases 
to be a member of the bank, through merger or otherwise, 
or that provides notice of intention to withdraw from mem-
bership in the bank. 
"(5) DEFINITIONS OF CAPITAL.—For purposes of determining 
compliance with the capital standards established under this 
subsection— 
"(A) permanent capital of a Federal home lo£in bank 
shall include— 
"(i) the amounts paid for the Class B stock; and 
"(ii) the retained earnings of the bank (as deter-
mined 
in 
accordance 
with 
generally 
accepted 
accounting principles); and 
"(B) total capital of a Federal home loein bank shall 
include— 
"(i) permanent capital; 
"(ii) the amounts paid for the Class A stock; 
"(iii) consistent with generally accepted accounting 
principles, and subject to the regulation of the Finance 
Board, a general allowance for losses, which may not 
include any reserves or allowances made or held 
against specific assets; and 
"(iv) any other amounts from sources available 
to absorb losses incurred by the hank that the Finance 
Board determines by regulation to be appropriate to 
include in determining total capital. 
"(6) TRANSITION PERIOD.—Notwithstanding any other provi-
sion of this Act, the requirements relating to purchase and 
retention of capital stock of a Federal home loan bank by 
any member thereof in effect on the day before the date of 
the enactment of the Federal Home Loan Bank System Mod-
ernization Act of 1999, shall continue in effect with respect 
to each Federal home loan bank until the regulations required 
by this subsection have taken effect and the capital structure 
plan required by subsection (b) has been approved by the 
Finance Board and implemented by such bank. 
"(b) CAPITAL STRUCTURE PLAN.— 
Deadline. 
"(1) APPROVAL OF PLANS.—Not later than 270 days after 
the date of publication by the Finance Board of final regulations 
in accordance with subsection (a), the board of directors of 
each Federal home loan bank shall submit for Finance Board 
approval a plan establishing and implementing a capital struc-
ture for such bank that— 
"(A) the board of directors determines is best suited 
for the condition and operation of the bank and the 
interests of the members of the bank; 
"(B) meets the requirements of subsection (c); and 
"(C) meets the minimum capital standards and require-
ments established under subsection (a) and other regula-
tions prescribed by the Finance Board. 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1459 
"(2) APPROVAL OF MODIFICATIONS.—The board of directors 
of a Federal home loan bank shall submit to the Finance 
Board for approval any modifications that the bank proposes 
to make to an approved capital structure plan. 
"(c) CONTENTS OF PLAN.—The capital structure plan of each 
Federal home loan bank shall contain provisions addressing each 
of the following: 
"(1) MINIMUM INVESTMENT.— 
"(A) IN GENERAL.—Each capital structure plan of a 
Federal home loan bank shall require each member of 
the bank to maintain a minimum investment in the stock 
of the bank, the amount of which shall be determined 
in a manner to be prescribed by the board of directors 
of each bank and to be included as part of the plan. 
"(B) INVESTMENT ALTERNATIVES.— 
"(i) IN GENERAL.—In establishing the minimum 
investment required for each member under subpara-
graph (A), a Federal home loan bank may, in its discre-
tion, include any 1 or more of the requirements referred 
to in clause (ii), or any other provisions approved by 
the Finance Board. 
"(ii) AUTHORIZED REQUIREMENTS.—^A requirement 
, is referred to in this clause if it is a requirement 
for— 
"(I) a stock purchase based on a percentage 
of the total assets of a member; or 
"(II) a stock purchase based on a percentage 
of the outstanding advances from the bank to the 
member. 
"(C) MINIMUM AMOUNT.—Each capital structure plan 
of a Federal home loan bank shall require that the min-
imum stock investment established for members shall be 
set at a level that is sufficient for the bank to meet the 
minimum capital requirements established by the Finance 
Board under subsection (a). 
"(D) ADJUSTMENTS TO MINIMUM REQUIRED INVEST-
MENT.—The capital structure plan of each Federal home 
loan bank shall impose a continuing obligation on the board 
of directors of the bank to review and adjust the minimum 
investment required of each member of that bank, as nec-
essary to ensure that the bank remains in compliance 
with applicable minimum capital levels established by the 
Finance Board, and shall require each member to comply 
promptly with any adjustments to the required minimum 
investment. 
"(2) TRANSITION RULE.— 
"(A) IN GENERAL.—The capital structure plan of each 
Federal home loan bank shall specify the date on which 
it shall take effect, and may provide for a transition period 
of not longer than 3 years to allow the bank to come 
into compliance with the capital requirements prescribed 
under subsection (a), and to allow any institution that 
was a member of the bank on the date of the enactment 
of the Federal Home Loan Bank System Modernization 
Act of 1999, to come into compliance with the minimum 
investment required pursuant to the plan. 
113 STAT. 1460 
PUBLIC LAW 106-102—NOV. 12, 1999 
"(B) INTERIM PURCHASE REQUIREMENTS.—The capital 
structure plan of a Federal home loan bank may allow 
any member referred to in subparagraph (A) that would 
be required by the terms of the capital structure plan 
to increase its investment in the stock of the bgink to 
do so in periodic installments during the transition period. 
"(3) DISPOSITION OF SHARES.—The capital structure plan 
of a Federal home loan bank shall provide for the manner 
of disposition of any stock held by a member of that bank 
that terminates its membership or that provides notice of its 
intention to withdraw from membership in that bank. 
"(4) CLASSES OF STOCK.— 
"(A) IN GENERAL.—The capital structure plan of a Fed-
eral home loan bank shall afford each member of that 
bank the option of maintaining its required investment 
in the bank through the purchase of any combination of 
classes of stock authorized by the board of directors of 
the bank and approved by the Finance Board in accordance 
with its regulations. 
"(B) RIGHTS REQUIREMENT.—^A Federal home loan bank 
shall include in its capital structure plan provisions estab-
lishing terms, rights, and preferences, including minimum 
investment, dividends, voting, and liquidation preferences 
of each class of stock issued by the bank, consistent with 
Finance Board regulations and market requirements. 
"(C) REDUCED MINIMUM INVESTMENT.—The 
capital 
structure plan of a Federal home loan bank may provide 
for a reduced minimum stock investment for any member 
of that bank that elects to purchase Class B in a manner 
that is consistent with meeting the minimum capital 
requirements of the bank, as established by the Finance 
Board. 
"(D) LIQUIDATION OF CLAIMS.—The capital structure 
plan of a Federal home loan bank shall provide for the 
liquidation in an orderly manner, as determined by the 
bank, of any claim of that bank against a member, 
including claims for any applicable prepayment fees or 
penalties resulting from prepayment of advances prior to 
stated maturity. 
"(5) LIMITED TRANSFERABILITY OF STOCK.—The capital 
structure plan of a Federal home loan bank shall— 
"(A) provide that any stock issued by that bank shall 
be available only to and held only by members of that 
bank and tradable only between that bank and its mem-
bers; and 
"(B) establish standards, criteria, and requirements 
for the issuance, purchase, transfer, retirement, and 
redemption of stock issued by that bank. 
"(6) BANK REVIEW OF PLAN.—Before filing a capital struc-
ture plan with the Finance Board, each Federal home loan 
bank shall conduct a review of the plan by— 
"(A) an independent certified public accountant, to 
ensure, to the extent possible, that implementation of the 
plan would not result in any write-down of the redeemable 
bank stock investment of its members; and 
"(B) at least one major credit rating agency, to deter-
mine, to the extent possible, whether implementation of 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1461 
the plan would have any material effect on the credit 
ratings of the bank. 
"(d) TERMINATION OF MEMBERSHIP.— 
"(1) VOLUNTARY WITHDRAWAL.—Any member may withdraw 
from a Federal home loan bank if the member provides written 
notice to the bank of its intent to do so and if, on the date 
of withdrawal, there is in effect a certification by the Finance 
Board that the withdrawal will not cause the Federal Home 
Loan Bank System to fail to meet its obligation under section 
21B(f)(2)(C) to contribute to the debt service for the obligations 
issued by the Resolution Funding Corporation. The applicable 
stock redemption notice periods shall commence upon receipt 
of the notice by the bank. Upon the expiration of the applicable 
notice period for each class of redeemable stock, the member 
may surrender such stock to the bank, and shall be entitled 
to receive in cash the par value of the stock. During the 
applicable notice periods, the member shall be entitled to divi-
dends and other membership rights commensurate with con-
tinuing stock ownership. 
"(2) INVOLUNTARY WITHDRAWAL.— 
"(A) IN GENERAL.—The board of directors of a Federal 
home loan bank may terminate the membership of any 
institution if, subject to Finance Board regulations, it deter-
mines that— 
"(i) the member has failed to comply with a provi-
sion of this Act or any regulation prescribed under 
this Act; or 
"(ii) the member has been determined to be insol-
vent, or otherwise subject to the appointment of a 
conservator, receiver, or other legal custodian, by a 
Federal or State authority with regulatory and super-
visory responsibility for the member. 
"(B) STOCK DISPOSITION.—An institution, the member-
ship of which is terminated in accordance with subpara-
graph (A)— 
"(i) shall surrender redeemable stock to the Fed-
eral home loan bank, and shall receive in cash the 
par value of the stock, upon the expiration of the 
applicable notice period under subsection (a)(4)(A); 
"(ii) shall receive any dividends declared on its 
redeemable stock, during the applicable notice period 
under subsection (a)(4)(A); and 
"(iii) shall not be entitled to any other rights or 
privileges accorded to members after the date of the 
termination. 
"(C) COMMENCEMENT OF NOTICE PERIOD.—With respect 
to an institution, the membership of which is terminated 
in accordance with subparagraph (A), the applicable notice 
period under subsection (a)(4) for each class of redeemable 
stock shall commence on the earlier o
f
— 
"(i) the date of such termination; or 
"(ii) the date on which the member has provided 
notice of its intent to redeem such stock. 
"(3) LIQUIDATION OF INDEBTEDNESS.—Upon the termination 
of the membership of an institution for any reason, the out-
standing indebtedness of the member to the bank shall be 
liquidated in an orderly manner, as determined by the bank 
113 STAT. 1462 
PUBLIC LAW 106-102—NOV. 12, 1999 
and, upon the extinguishment of all such indebtedness, the 
bank shall return to the member all collateral pledged to secure 
the indebtedness. 
"(e) REDEMPTION OF EXCESS STOCK.— 
"(1) IN GENERAL.—^A Federal home loan bank, in its sole 
discretion, may redeem or repurchase, as appropriate, any 
shares of Class A or Class B stock issued by the bank and 
held by a member that are in excess of the minimum stock 
investment required of that member. 
"(2) EXCESS STOCK.—Shares of stock held by a member 
shall not be deemed to be 'excess stock' for purposes of this 
subsection by virtue of a member's submission of a notice 
of intent to withdraw from membership or termination of its 
membership in any other manner. 
"(3) PRIORITY.—A Federal home loan bank may not redeem 
any excess Class B stock prior to the end of the 5-year notice 
period, unless the member has no Class A stock outstanding 
that could be redeemed as excess. 
"(f) IMPAIRMENT OF CAPITAL.—If the Finance Board or the 
board of directors of a Federal home loan bank determines that 
the bank has incurred or is likely to incur losses that result in 
or are expected to result in charges against the capital of the 
bank, the bank shall not redeem or repurchase any stock of the 
bank without the prior approval of the Finance Board while such 
charges are continuing or are expected to continue. In no case 
may a bank redeem or repurchase £iny applicable capital stock 
if, following the redemption, the bank would fail to satisfy any 
minimum capital requirement. 
"(g) REJOINING AFTER DIVESTITURE OF ALL SHARES.— 
"(1) IN GENERAL.—Except as provided in paragraph (2), 
and notwithstanding any other provision of this Act, an institu-
tion that divests all shares of stock in a Federal home loan 
bank may not, after such divestiture, acquire shares of any 
Federal home loan bank before the end of the 5-year period 
beginning on the date of the completion of such divestiture, 
unless the divestiture is a consequence of a transfer of member-
ship on an uninterrupted basis between banks. 
"(2) 
EXCEPTION FOR WITHDRAWALS FROM 
MEMBERSHIP 
BEFORE 1998.—^Any institution that withdrew from membership 
in any Federal home loan bank before December 31, 1997, 
may acquire shares of a Federal home loan hank at any time 
after that date, subject to the approval of the Finance Board 
and the requirements of this Act. 
"(h) TREATMENT OF RETAINED EARNINGS.— 
"(1) IN GENERAL.—The holders of the Class B stock of 
a Federal home loan bank shall own the retained earnings, 
surplus, undivided profits, and equity reserves, if any, of the 
bank. 
"(2) EXCEPTION.—Except as specifically provided in this 
section or through the declaration of a dividend or a capital 
distribution by a Federal home loan bank, or in the event 
of liquidation of the bank, a member shall have no right to 
withdraw or otherwise receive distribution of any portion of 
the retained earnings of the bank. 
"(3) LIMITATION.—A Federal home loan bank may not make 
any distribution of its retained earnings unless, following such 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1463 
distribution, the bank would continue to meet all applicable 
capital requirements.". 
TITLE VII—OTHER PROVISIONS 
Subtitle A—^ATM Fee Reform 
ATM Fee Reform 
Act of 1999. 
SEC. 701. SHORT TITLE. 
15 USC 1601 
This subtitle may be cited as the "ATM Fee Reform Act of 
1999". 
SEC. 702. ELECTRONIC FUND TRANSFER FEE DISCLOSURES AT ANY 
HOST ATM. 
Section 904(d) of the Electronic Fund Transfer Act (15 U.S.C. 
1693b(d)) is amended by adding at the end the following new 
paragraph: 
"(3) FEE DISCLOSURES AT AUTOMATED TELLER MACHINES.— 
"(A) IN GENERAL.—The regulations prescribed under 
paragraph (1) shall require any automated teller machine 
operator who imposes a fee on any consumer for providing 
host transfer services to such consumer to provide notice 
in accordance with subparagraph (B) to the consumer (at 
the time the service is provided) o
f
— 
"(i) the fact that a fee is imposed by such operator 
for providing the service; and 
"(ii) the amount of any such fee. 
"(B) NOTICE REQUIREMENTS.— 
"(i) ON THE MACHINE.—The notice required under 
clause (i) of subparagraph (A) with respect to any 
fee described in such subparagraph shall be posted 
in a prominent and conspicuous location on or at the 
automated teller machine at which the electronic fund 
transfer is initiated by the consumer. 
"(ii) ON THE SCREEN.—The notice required under 
clauses (i) and (ii) of subparagraph (A) with respect 
to any fee described in such subparagraph shall appear 
on the screen of the automated teller machine, or on 
a paper notice issued from such machine, after the 
transaction is initiated and before the consumer is 
irrevocably committed to completing the transaction, 
except that during the period beginning on the date 
of the enactment of the Gramm-Leach-Bliley Act and 
ending on December 31, 2004, this clause shall not 
apply to any automated teller machine that lacks the 
technical capability to disclose the notice on the screen 
or to issue a paper notice after the transaction is 
initiated and before the consumer is irrevocably com-
mitted to completing the transaction. 
"(C) PROHIBITION ON FEES NOT PROPERLY DISCLOSED 
AND EXPLICITLY ASSUMED B
Y CONSUMER.—No fee may be 
imposed by any automated teller machine operator in 
connection with any electronic fund transfer initiated by 
a consumer for which a notice is required under subpara-
graph (A), unless— 
"(i) the consumer receives such notice in accord-
ance with subparagraph (B); and 
113 STAT. 1464 
PUBLIC LAW 106-102—NOV. 12, 1999 
"(ii) the consumer elects to continue in the manner 
necessary to effect the transaction after receiving such 
notice. 
"(D) DEFINITIONS.—For purposes of this paragraph, the 
following definitions shall apply: 
"(i) AUTOMATED TELLER MACHINE OPERATOR.—The 
term 'automated teller machine operator' means any 
person who— 
"(I) operates an automated teller machine at 
which consumers initiate electronic fund transfers; 
and 
"(II) is not the financial institution that holds 
the account of such consumer from which the 
transfer is made. 
"(ii) ELECTRONIC FUND TRANSFER.—^The term 'elec-
tronic fund transfer' includes a transaction 
that 
involves a balance inquiry initiated by a consumer 
in the same manner as an electronic fund transfer, 
whether or not the consumer initiates a transfer of 
funds in the course of the transaction. 
"(iii) HOST TRANSFER SERVICES.—The term 'host 
transfer services' means any electronic fund transfer 
made by an automated teller machine operator in 
connection with a transaction initiated by a consumer 
at an automated teller machine operated by such oper-
ator.". 
SEC. 703. DISCLOSURE OF POSSIBLE FEES TO CONSUMERS WHEN ATM 
CARD IS ISSUED. 
Section 905(a) of the Electronic Fund Transfer Act (15 U.S.C. 
1693c(a)) is amended— 
(1) by striking "and" at the end of paragraph (8); 
(2) by striking the period at the end of paragraph (9) 
and inserting "; and"; and 
(3) by inserting after paragraph (9) the following new para-
graph: 
"(10) a notice to the consumer that a fee may be imposed 
b y -
"(A) an automated teller machine operator (as defined 
in section 904(d)(3)(D)(i)) if the consumer initiates a 
transfer fi*om an automated teller machine that is not 
operated by the person issuing the card or other means 
of access; and 
"(B) any national, regional, or local network utilized 
to effect the transaction.". 
SEC. 704. FEASIBILITY STUDY. 
(a) IN GENERAL.—The Comptroller General of the United States 
shall conduct a study of the feasibility of requiring, in connection 
with any electronic fund transfer initiated by a consumer through 
the use of an automated teller machine— 
(1) a notice to be provided to the consumer before the 
consumer is irrevocably committed to completing the trans-
action, which clearly states the amount of any fee that will 
be imposed upon the consummation of the transaction by— 
(A) any automated teller machine operator (as defined 
in section 904(d)(3)(D)(i) of the Electronic Fund Transfer 
Act) involved in the transaction; 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1465 
(B) the financial institution holding the account of 
the consumer; 
(C) any national, regional, or local network utilized 
to effect the transaction; and 
(D) any other party involved in the transfer; and 
(2) the consumer to elect to consummate the transaction 
after receiving the notice described in paragraph (1). 
(b) FACTORS TO BE CONSIDERED.—In conducting the study 
required under subsection (a) with regard to the notice requirement 
described in such subsection, the Comptroller General shall consider 
the following factors: 
(1) The availability of appropriate technology. 
(2) Implementation and operating costs. 
(3) The competitive impact any such notice requirement 
would have on various sizes and t3T5es of institutions, if imple-
mented. 
(4) The period of time that would be reasonable for imple-
menting any such notice requirement. 
(5) The extent to which consumers would benefit from 
any such notice requirement. 
(6) Any other factor the Comptroller General determines 
to be appropriate in analyzing the feasibility of imposing any 
such notice requirement. 
(c) REPORT TO THE CONGRESS.—Before the end of the 6-month 
period beginning on the date of the enactment of this Act, the 
Comptroller General shall submit a report to the Congress 
containing— 
(1) the findings and conclusions of the Comptroller General 
in connection with the study required under subsection (a); 
and 
(2) the recommendation of the Comptroller General with 
regard to the question of whether a notice requirement 
described in subsection (a) should be implemented and, if so, 
the manner in which such requirement should be implemented. 
SEC. 705. NO LIABILITY IF POSTED NOTICES ARE DAMAGED. 
Section 910 of the Electronic Fund Transfer Act (15 U.S.C. 
1693h) is amended by adding at the end the following new sub-
section: 
"(d) EXCEPTION FOR DAMAGED NOTICES.—If the notice required 
to be posted pursuant to section 904(d)(3)(B)(i) by an automated 
teller machine operator has been posted by such operator in compli-
ance with such section and the notice is subsequently removed, 
damaged, or altered by any person other than the operator of 
the automated teller machine, the operator shall have no liability 
under this section for failure to comply with section 904(d)(3)(B)(i).". 
Subtitle B—Community Reinvestment 
SEC 711. CRA SUNSHINE REQUIREMENTS. 
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) 
is amended by inserting after section 47, as added by section 
305 of this Act, the following new section: 
113 STAT. 1466 
PUBLIC LAW 106-102—NOV. 12, 1999 
12 use 183 ly. 
"SEC. 48. CRA SUNSHINE REQUIREMENTS. 
"(a) PUBLIC DISCLOSURE OF AGREEMENTS.—Any agreement (as 
defined in subsection (e)) entered into after the date of the enact-
ment of the Gramm-Leach-Bliley Act by an insured depository 
institution or affihate with a nongovernmental entity or person 
made pursuant to or in connection with the Community Reinvest-
ment Act of 1977 involving funds or other resources of such insured 
depository institution or affiliate— 
"(1) shall be in its entirety fully disclosed, and the full 
text thereof made available to the appropriate Federal banking 
agency with supervisory responsibility over the insured deposi-
tory institution and to the public by each party to the agree-
ment; and 
"(2) shall obligate each party to comply with this section. 
"(b) 
ANNUAL REPORT OF ACTIVITY BY INSURED DEPOSITORY 
INSTITUTION.—Each insured depository institution or affiliate that 
is a party to an agreement described in subsection (a) shall report 
to the appropriate Federal banking agency with supervisory respon-
sibility over the insured depository institution, not less frequently 
than once each year, such information as the Federal banking 
agency may by rule require relating to the following actions taken 
by the party pursuant to the agreement during the preceding 12-
month period: 
"(1) Payments, fees, or loans made to any party to the 
agreement or received from any party to the agreement and 
the terms and conditions of the same. 
"(2) Aggregate data on loans, investments, and services 
provided by each party in its community or communities pursu-
ant to the agreement. 
"(3) Such other pertinent matters as determined by regula-
tion by the appropriate Federal banking agency with super-
visory responsibility over the insured depository institution. 
"(c) ANNUAL REPORT OF ACTIVITY BY NONGOVERNMENTAL ENTI-
TIES.— 
"(1) IN GENERAL.—Each nongovernmental entity or person 
that is not an affiliate of an insured depository institution 
£ind that is a party to an agreement described in subsection 
(a) shall report to the appropriate Federal banking agency 
with supervisory responsibility over the insured depository 
institution that is a party to such agreement, not less frequently 
than once each year, an accounting of the use of funds received 
pursuant to each such agreement during the preceding 12-
month period. 
"(2) 
SUBMISSION TO INSURED DEPOSITORY INSTITUTION.— 
A nongovernmental entity or person referred to in paragraph 
(1) may comply with the reporting requirement in such para-
graph by transmitting the report to the insured depository 
institution that is a party to the agreement, and such insured 
depository institution shall promptly transmit such report to 
the appropriate Federal banking agency with supervisory 
authority over the insured depository institution. 
"(3) 
INFORMATION TO 
BE 
INCLUDED.—The 
accounting 
referred to in paragraph (1) shall include a detailed, itemized 
list of the uses to which such funds have been made, including 
compensation, administrative expenses, travel, entertainment, 
consulting and professional fees paid, and such other categories, 
as determined by regulation by the appropriate Federal banking 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1467 
agency with supervisory responsibility over the insured deposi-
tory institution. 
"(d) APPLICABILITY.—Subsections (b) and (c) shall not apply 
with respect to £iny agreement entered into before the end of the 
6-month period beginning on the date of the enactment of the 
Gramm-Leach-Bliley Act. 
"(e) DEFINITIONS.— 
"(1) AGREEMENT.—For purposes of this section, the term 
'agreement'— 
"(A) means— 
"(i) any written contract, written arrangement, or 
, 
other written understanding that provides for cash 
payments, grants, or other consideration with a value 
in excess of $10,000, or for loans the aggregate amount 
of principal of which exceeds $50,000, annually (or 
the sum of all such agreements during a 12-month 
period with an aggregate value of cash payments, 
; grants, or other consideration in excess of $10,000, 
or with an aggregate amount of loan principal in excess 
of $50,000); or 
"(ii) a group of substantively related contracts with 
an aggregate value of cash payments, grants, or other 
consideration in excess of $10,000, or with an aggregate 
amount of loan principal in excess of $50,000, annually; 
made pursuant to, or in connection with, the fulfillment 
of the Community Reinvestment Act of 1977, at least 1 
party to which is an insured depository institution or affil-
iate thereof, whether organized on a profit or not-for-profit 
basis; and 
"(B) does not include— 
"(i) any individual mortgage loan; 
"(ii) any specific contract or commitment for a loan 
or extension of credit to individuals, businesses, farms, 
or other entities, if the funds are loaned at rates not 
substantially below market rates and if the purpose 
of the loan or extension of credit does not include 
any re-lending of the borrowed funds to other parties; 
or 
"(iii) any agreement entered into by an insured 
depository institution or affiliate with a nongovern-
mental entity or person who has not commented on, 
testified about, or discussed with the institution, or 
otherwise contacted the institution, concerning the 
Community Reinvestment Act of 1977. 
"(2) FULFILLMENT OF CRA.—For purposes of subparagraph 
(A), the term 'fulfillment' means a list of factors that the appro-
priate Federal banking agency determines have a material 
impact on the agency's decision— 
"(A) to approve or disapprove an application for a 
deposit facility (as defined in section 803 of the Community 
Reinvestment Act of 1977); or 
"(B) to assign a rating to an insured depository institu-
tion under section 807 of the Community Reinvestment 
Act of 1977. 
"(f) VIOLATIONS.— 
"(1) VIOLATIONS BY PERSONS OTHER THAN INSURED DEPOSI-
TORY INSTITUTIONS OR THEIR AFFILIATES.— 
113 STAT. 1468 
PUBLIC LAW 106-102—NOV. 12, 1999 
"(A) MATERIAL FAILURE TO COMPLY.—If the party to 
an agreement described in subsection (a) that is not an 
insured depository institution or affihate willfully fails to 
comply with this section in a material way, as determined 
by the appropriate Federal banking agency, the agreement 
shall be unenforceable after the offending party has been 
given notice and a reasonable period of time to perform 
or comply. 
"(B) DIVERSION OF FUNDS OR RESOURCES.—If funds 
or resources received under an agreement described in 
subsection (a) have been diverted contrary to the purposes 
of the agreement for personal financial gain, the appro-
priate Federal banking agency with supervisory responsi-
bility over the insured depository institution may impose 
either or both of the following penalties: 
"(i) Disgorgement by the offending individual of 
funds received under the agreement. 
"(ii) Prohibition of the offending individual from 
being a party to any agreement described in subsection 
(a) for a period of not to exceed 10 years. 
"(2) 
DESIGNATION 
OF SUCCESSOR 
NONGOVERNMENTAL 
PARTY.—If an agreement described in subsection (a) is found 
to be unenforceable under this subsection, the appropriate Fed-
eral banking agency may assist the insured depository institu-
tion in identifying a successor nongovernmental party to 
assume the responsibilities of the agreement. 
"(3) INADVERTENT OR DE MINIMIS REPORTING ERRORS.—An 
error in a report filed under subsection (c) that is inadvertent 
or de minimis shall not subject the filing party to any penalty. 
"(g) RULE OF CONSTRUCTION.—No provision of this section shall 
be construed as authorizing any appropriate Federal banking 
agency to enforce the provisions of any agreement described in 
subsection (a). 
"(h) REGULATIONS.— 
"(1) IN GENERAL.—Each appropriate Federal 
banking 
agency shall prescribe regulations, in accordance with para-
graph (4), requiring procedures reasonably designed to ensure 
and monitor compliance with the requirements of this section. 
"(2) PROTECTION OF PARTIES.—In carrying out paragraph 
(1), each appropriate Federal banking agency shall— 
"(A) ensure that the regulations prescribed by the 
agency do not impose an undue burden on the parties 
and that proprietary and confidential information is pro-
tected; and 
"(B) establish procedures to allow any nongovern-
mental entity or person who is a party to a large number 
of agreements described in subsection (a) to make a single 
or consolidated filing of a report under subsection (c) to 
an insured depository institution or an appropriate Federal 
bsmking agency. 
"(3) PARTIES NOT SUBJECT TO REPORTING REQUIREMENTS.— 
The Board of Governors of the Federal Reserve System may 
prescribe regulations— 
"(A) to prevent evasions of subsection (e)(l)(B)(iii); and 
"(B) to provide further exemptions under such sub-
section, consistent with the purposes of this section. 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1469 
"(4) 
COORDINATION, CONSISTENCY, AND COMPARABILITY.— 
In carrying out paragraph (1), each appropriate Federal 
banking agency shall consult and coordinate with the other 
such agencies for the purposes of assuring, to the extent pos-
sible, that the regulations prescribed by each such agency are 
consistent and comparable with the regulations prescribed by 
the other such agencies.". 
SEC. 712. SMALL BANK REGULATORY RELIEF. 
The Community Reinvestment Act of 1977 (12 U.S.C. 2901 
et seq.) is amended by adding at the end the following new section: 
"SEC. 809. SMALL BANK REGULATORY RELIEF. 
12 USC 2908. 
"(a) IN GENERAL.—Except as provided in subsections (b) and 
(c), any regulated financial institution with aggregate assets of 
not more than $250,000,000 shall be subject to routine examination 
under this title— 
"(1) not more than once every 60 months for an institution 
that has achieved a rating of 'outstanding record of meeting 
community credit needs' at its most recent examination under 
section 804; 
"(2) not more than once every 48 months for an institution 
that has received a rating of 'satisfactory record of meeting 
community credit needs' at its most recent examination under 
section 804; and 
"(3) as deemed necessary by the appropriate Federal finan-
cial supervisory agency, for an institution that has received 
a rating of less than 'satisfactory record of meeting community 
credit needs' at its most recent examination under section 804. 
"(b) No EXCEPTION FROM C R A EXAMINATIONS IN CONNECTION 
WITH APPLICATIONS FOR DEPOSIT FACILITIES.—A regulated financial 
institution described in subsection (a) shall remain subject to exam-
ination under this title in connection with an application for a 
deposit facility. 
"(c) DISCRETION.—^A regulated financial institution described 
in subsection (a) may be subject to more frequent or less frequent 
examinations for reasonable cause under such circumstances as 
may be determined by the appropriate Federal financial supervisory 
agency.". 
SEC. 
713. 
FEDERAL 
RESERVE 
BOARD 
STUDY 
OF 
CRA 
LENDING. 
The Board of Governors of the Federal Reserve System shall Reports. 
conduct a comprehensive study, in consultation with the Chairman Deadline, 
and Ranking Member of the Committee on Banking and Financial 
Services of the House of Representatives and the Chairman and 
Ranking Member of the Committee on Banking, Housing, and 
Urban Affairs of the Senate, of the Community Reinvestment Act 
of 1977, which shall focus on— 
(1) the default rates; 
— 
(2) the delinquency rates; and 
(3) the profitability; 
of loans made in conformity with such Act, and report on the 
study to such Committees not later than March 15, 2000. Such Public 
report and supporting data shall also be made available by the 
information. 
Board of Governors of the Federal Reserve System to the public. 
69-194 - 0 1 - 15: QL 3 Part 2 
113 STAT. 1470 
PUBLIC LAW 106-102—NOV. 12, 1999 
12 u s e 1811 
note. 
12 u s e 2901 
note. 
Deadlines. 
Deadline. 
SEC. 714. PRESERVING THE COMMUNITY REINVESTMENT ACT OF 1977. 
Nothing in this Act shall be construed to repeal any provision 
of the Community Reinvestment Act of 1977. 
SEC. 715. RESPONSIVENESS TO COMMUNITY NEEDS FOR FINANCIAL 
SERVICES. 
(a) STUDY.—The Secretary of the Treasury, in consultation 
with the Federal banking agencies (as defined in section 3(z) of 
the Federal Deposit Insurance Act), shall conduct a study of the 
extent to which adequate services are being provided as intended 
by the Community Reinvestment Act of 1977, including services 
in low- and moderate-income neighborhoods and for persons of 
modest means, as a result of the enactment of this Act. 
(b) REPORTS.— 
(1) IN GENERAL.—The Secretary of the Treasury shall— 
(A) before March 15, 2000, submit a baseline report 
to the Congress on the study conducted pursuant to sub-
section (a); and 
(B) before the end of the 2-year period beginning on 
the date of the enactment of this Act, in consultation with 
the Federal banking agencies, submit a final report to 
the Congress on the study conducted pursuant to subsection 
(a). 
(2) RECOMMENDATIONS.—The final report submitted under 
paragraph (1)(B) shall include such recommendations as the 
Secretary determines to be appropriate for administrative and 
legislative action with respect to institutions covered under 
the Community Reinvestment Act of 1977. 
Subtitle C—Other Regulatory 
Improvements 
SEC. 721. EXPANDED SMALL BANK ACCESS TO S CORPORATION 
TREATMENT. 
(a) STUDY.—The Comptroller General of the United States shall 
conduct a study o
f
— 
(1) possible revisions to the rules governing S corporations, 
including— 
(A) increasing the permissible number of shareholders 
in such corporations; 
(B) permitting shares of such corporations to be held 
in individual retirement accounts; 
(C) clarifying that interest on investments held for 
safety, soundness, and liquidity purposes should not be 
considered to be passive income; 
(D) discontinuation of the treatment of stock held by 
bank directors as a disqualifying personal class of stock 
for such corporations; and 
(E) improving Federal tax treatment of bad debt and 
interest deductions; and 
(2) what impact such revisions might have on community 
banks. 
(b) REPORT TO THE CONGRESS.—Not later than 6 months after 
the date of the enactment of this Act, the Comptroller General 
of the United States shall submit a report to the Congress on 
the results of the study conducted under subsection (a). 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1471 
(c) DEFINITION.—For purposes of this section, the term "S cor-
poration" has the meaning given the term in section 1361(a)(1) 
of the Internal Revenue Code of 1986. 
SEC. 722. "PLAIN LANGUAGE" REQUIREMENT FOR FEDERAL BANKING 
AGENCY RULES. 
(a) IN GENERAL.—Each Federal banking agency shall use plain 
language in all proposed and final rulemakings published by the 
agency in the Federal Register after January 1, 2000. 
(b) REPORT.—Not later than March 1, 2001, each Federal 
banking agency shall submit to the Congress a report that describes 
how the agency has complied with subsection (a). 
(c) DEFINITION.—For purposes of this section, the term "Federal 
banking agency" has the meaning given that term in section 3 
of the Federal Deposit Insurance Act. 
SEC. 723. RETENTION OF "FEDERAL" IN NAME OF CONVERTED FED-
ERAL SAVINGS ASSOCIATION. 
Section 2 of the Act entitled "An Act to enable national banking 
associations to increase their capital stock and to change their 
names or locations", approved May 1, 1886 (12 U.S.C. 30), is 
amended by adding at the end the following new subsection: 
"(d) RETENTION OF 'FEDERAL' IN NAME OF CONVERTED FEDERAL 
SAVINGS ASSOCIATION.— 
"(1) IN GENERAL.—Notwithstanding subsection (a) or any 
other provision of law, any depository institution, the charter 
of which is converted from that of a Federal savings association 
to a national bank or a State bank after the date of the 
enactment of the Gramm-Leach-Bliley Act may retain the term 
'Federal' in the name of such institution if such institution 
remains an insured depository institution. 
"(2) DEFINITIONS.—For purposes of this subsection, the 
terms 'depository institution', 'insured depository institution', 
'national bank', and 'State bank' have the meanings given those 
terms in section 3 of the Federal Deposit Insurance Act.". 
SEC. 
724. 
CONTROL 
OF 
BANKERS' 
BANKS. 
Section 2(a)(5)(E)(i) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1841(a)(5)(E)(i)) is amended by inserting "1 or more" 
before "thrift institutions". 
12 use 4809. 
Deadline. 
SEC. 725. PROVISION OF TECHNICAL ASSISTANCE TO MICROENTER-
PRISES. 
Title I of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (12 U.S.C. 4701 et seq.) is amended 
by adding at the end the following new subtitle: 
**Subtitle C—^Microenterprise Technical 
Assistance and Capacity Building Program 
"SEC. 171. SHORT TITLE. 
"This subtitle may be cited as the 'Program for Investment 
in Microentrepreneurs Act of 1999', also referred to as the 'PRIME 
Act'. 
Program for 
Investment in 
Micro-
entrepreneurs 
Act of 1999. 
15 use 6901 
note. 
113 STAT. 1472 
PUBLIC LAW 106-102—NOV. 12, 1999 
15 use 6901. 
"SEC. 172. DEFINITIONS. 
"For purposes of this subtitle, the following definitions shall 
apply: 
"(1) ADMINISTRATION.—The term 'Administration' means 
the Small Business Administration. 
"(2) ADMINISTRATOR.—The term 'Administrator' means the 
Administrator of the Small Business Administration. 
"(3) CAPACITY BUILDING SERVICES.—The term 'capacity 
building services' means services provided to an organization 
that is, or that is in the process of becoming, a microenterprise 
development organization or program, for the purpose of 
enhancing its ability to provide training and services to dis-
advantaged entrepreneurs. 
"(4) COLLABORATIVE.—The term 'collaborative' means 2 or 
more nonprofit entities that agree to act jointly as a qualified 
organization under this subtitle. 
"(5) DISADVANTAGED ENTREPRENEUR.—The term 'disadvan-
taged entrepreneur' means a microentrepreneur that is— 
"(A) a low-income person; 
"(B) a very low-income person; or 
"(C) an entrepreneur that lacks adequate access to 
capital or other resources essential for business success, 
or is economically disadvantaged, as determined by the 
Administrator. 
"(6) INDIAN TRIBE.—The term 'Indian tribe' has the meaning 
given the term in section 103. 
"(7) INTERMEDIARY.—The term 'intermediary means a pri-
vate, nonprofit entity that seeks to serve microenterprise 
development organizations and programs as authorized under 
section 175. 
"(8) LOW-INCOME PERSON.—The term 'low-income person' 
has the meaning given the term in section 103. 
"(9) MICROENTREPRENEUR.—The term 'microentrepreneur' 
means the owner or developer of a microenterprise. 
"(10) 
MICROENTERPRISE.—The 
term 
'microenterprise' 
means a sole proprietorship, partnership, or corporation that— 
"(A) has fewer than 5 employees; and 
"(B) generally lacks access to conventional loans, 
equity, or other banking services. 
"(11) 
MICROENTERPRISE DEVELOPMENT ORGANIZATION OR 
PROGRAM.—The term 'microenterprise development organiza-
tion or program' means a nonprofit entity, or a program 
administered by such an entity, including community develop-
ment corporations or other nonprofit development orgEinizations 
and social service organizations, that provides services to dis-
advantaged entrepreneurs. 
"(12) TRAINING AND TECHNICAL ASSISTANCE.—The term 
'training and technical assistance' means services and support 
provided to disadvantaged entrepreneurs, such as assistance 
for the purpose of enhancing business planning, marketing, 
management, financial management skills, and assistance for 
the purpose of accessing financial services. 
"(13) VERY LOW-INCOME PERSON.—The term 'very low-
income person' means having an income, adjusted for family 
size, of not more than 150 percent of the poverty line (as 
defined in section 673(2) of the Community Services Block 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1473 
Grant Act (42 U.S.C. 9902(2)), including any revision required 
by that section). 
"SEC. 173. ESTABLISHMENT OF PROGRAM. 
15 USC 6902. 
"The Administrator shall establish a microenterprise technical 
assistance and capacity building grant program to provide assist-
ance from the Administration in the form of grants to qualified 
organizations in accordance with this subtitle. 
"SEC. 174. USES OF ASSISTANCE. 
15 USC 6903. 
"A quaHfied organization shall use grants made under this 
subtitle— 
"(1) to provide training and technical assistance to dis-
advantaged entrepreneurs; 
"(2) to provide training and capacity building services to 
microenterprise development organizations and programs and 
groups of such organizations to assist such organizations £m.d 
programs in developing microenterprise training and services; 
"(3) to aid in researching and developing the best practices 
in the field of microenterprise and technical assistsince pro-
grams for disadvantaged entrepreneurs; and 
"(4) for such other activities as the Administrator deter-
mines are consistent with the purposes of this subtitle. 
"SEC. 175. QUALIFIED ORGANIZATIONS. 
15 USC 6904. 
"For purposes of eligibility for assistance under this subtitle, 
a qualified organization shall be— 
"(1) a nonprofit microenterprise development organization 
or program (or a group or collaborative thereof) that has a 
demonstrated record of delivering microenterprise services to 
disadvantaged entrepreneurs; 
"(2) an intermediary; 
"(3) a microenterprise development organization or program 
that is accountable to a local community, working in conjunction 
with a State or local government or Indian tribe; or 
"(4) an Indian tribe acting on its own, if the Indian tribe 
C£in certify that no private organization or program referred 
to in this paragraph exists within its jurisdiction. 
"SEC. 176. ALLOCATION OF ASSISTANCE; SUBGRANTS. 
15 USC 6905. 
"(a) ALLOCATION OF ASSISTANCE.— 
"(1) IN GENERAL.—The Administrator shall allocate assist-
ance from the Administration under this subtitle to ensure 
that— 
"(A) activities described in section 174(1) are funded 
using not less than 75 percent of amounts made available 
for such assistance; and 
"(B) activities described in section 174(2) are fimded 
using not less than 15 percent of amounts made available 
for such assistance. 
"(2) LIMIT ON INDIVIDUAL ASSISTANCE.—NO single person 
may receive more than 10 percent of the total funds appro-
priated under this subtitle in a single fiscal year. 
"(b) TARGETED ASSISTANCE.—The Administrator shall ensure 
that not less than 50 percent of the grants made under this subtitle 
are used to benefit very low-income persons, including those residing 
on Indian reservations. 
"(c) SuBGRANTS AUTHORIZED.— 
113 STAT. 1474 
PUBLIC LAW 106-102—NOV. 12, 1999 
"(1) IN GENERAL.—^A qualified organization receiving assist-
ance under this subtitle may provide grants using that assist-
ance to qualified small and emerging microenterprise organiza-
tions and programs, subject to such rules and regulations as 
the Administrator determines to be appropriate. 
"(2) LIMIT ON ADMINISTRATIVE EXPENSES.—Not more than 
7.5 percent of assistance received by a qualified organization 
under this subtitle may be used for administrative expenses 
in connection with the making of subgrants under paragraph 
(1). 
"(d) DIVERSITY.—In making grants under this subtitle, the 
Administrator shall ensure that grant recipients include both large 
and small microenterprise organizations, serving urban, rural, and 
Indian tribal communities serving diverse populations. 
"(e) PROHIBITION ON PREFERENTIAL CONSIDERATION OF CERTAIN 
SB 
A PROGRAM PARTICIPANTS.—In making grants under this sub-
title, the Administrator shall ensure that any application made 
by a qualified organization that is a participant in the program 
established under section 7(m) of the Small Business Act does 
not receive preferential consideration over applications from other 
qualified organizations that are not participants in such program. 
15 use 6906. 
"SEC. 177. MATCHING REQUIREMENTS. 
"(a) IN GENERAL.—Financial assistance under this subtitle shall 
be matched with funds from sources other than the Federal Govern-
ment on the basis of not less than 50 percent of each dollar provided 
by the Administration. 
"(b) SOURCES OF MATCHING FUNDS.—Fees, grants, gifts, funds 
from loan sources, and in-kind resources of a grant recipient from 
public or private sources may be used to comply with the matching 
requirement in subsection (a). 
"(c) EXCEPTION.— 
"(1) IN GENERAL.—In the case of an applicant for assistance 
under this subtitle with severe constraints on available sources 
of matching funds, the Administrator may reduce or eliminate 
the matching requirements of subsection (a). 
"(2) LIMITATION.—Not more than 10 percent of the total 
funds made available from the Administration in any fiscal 
year to carry out this subtitle may be excepted from the 
matching requirements of subsection (a), as authorized by para-
graph (1) of this subsection. 
15 use 6907. 
"SEC. 178. APPLICATIONS FOR ASSISTANCE. 
"An application for assistance under this subtitle shall be sub-
mitted in such form and in accordance with such procedures as 
the Administrator shall establish. 
15 use 6908. 
"SEC. 179. RECORDKEEPING. 
Applicability. 
"The requirements of section 115 shall apply to a qualified 
organization receiving assistance from the Administration under 
this subtitle as if it were a community development financial institu-
tion receiving assistance from the Fund under subtitle A. 
15 use 6909. 
"SEC. 180. AUTHORIZATION. 
"In addition to funds otherwise authorized to be appropriated 
to the Fund to carry out this title, there are authorized to be 
appropriated to the Administrator to carry out this subtitle— 
"(1) $15,000,000 for fiscal year 2000; 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1475 
"(2) $15,000,000 for fiscal year 2001; 
"(3) $15,000,000 for fiscal year 2002; and 
"(4) $15,000,000 for fiscal year 2003. 
"SEC. 181. IMPLEMENTATION. 
Regulations. 
1 ^ imp fiQio 
"The Administrator shall, by regulation, establish such require-
ments as may be necessary to carry out this subtitle.". 
SEC. 726. FEDERAL BESERVE AUDITS. 
The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended 
by inserting after section llA the following new section: 
"SEC. IIB. ANNUAL INDEPENDENT AUDITS OF FEDERAL RESERVE 
12 USC 248b. 
BANKS AND BOARD. 
"The Board shall order an annual independent audit of the 
financial statements of each Federal reserve bank and the Bosird.". 
SEC. 
727. 
AUTHORIZATION 
TO 
RELEASE 
REPORTS. 
(a) FEDERAL RESERVE ACT.—The eighth undesignated para-
graph of section 9 of the Federal Reserve Act (12 U.S.C. 326) 
is amended by striking the last sentence and inserting the following: 
"The Board of Governors of the Federal Reserve System, at its 
discretion, may furnish Einy report of examination or other confiden-
tial supervisory information concerning any State member bank 
or other entity examined under any other authority of the Board, 
to any Federal or State agency or authority with supervisory or 
regulatory authority over the examined entity, to any officer, 
director, or receiver of the examined entity, and to any other person 
that the Board determines to be proper.". 
(b) COMMODITY FUTURES TRADING COMMISSION.—The Right to 
Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.) is amended— 
(1) in section 1101(7)— 
12 USC 3401. 
(A) by redesignating subparagraphs (G) and (H) as 
subparagraphs (H) and (I), respectively; and 
(B) by inserting after subparagraph (F) the following 
new subparagraph: 
"(G) the Commodity Futures Trading Commission;"; 
and 
(2) in section 1112(e), by striking "and the Securities and 
12 USC 3412. 
Exchange Commission" and inserting ", the Securities and 
Exchange Commission, and the Commodity Futures Trading 
Commission". 
SEC. 728. GENERAL ACCOUNTING OFFICE STUDY OF CONFLICTS OF 
12 USC 241 note. 
INTEREST. 
(a) STUDY REQUIRED.—The Comptroller General of the United 
States shall conduct a study analyzing the conflict of interest faced 
by the Board of Governors of the Federal Reserve System between 
its role as a primary regulator of the banking industry and its 
role as a vendor of services to the banking and financial services 
industry. 
(b) SPECIFIC CONFLICT REQUIRED TO BE ADDRESSED.—In 
the 
course of the study required under subsection (a), the Comptroller 
General shall address the conflict of interest faced by the Board 
of Governors of the Federal Reserve System between the role of 
the Board as a regulator of the payment system, generally, and 
its participation in the payment system as a competitor with private 
entities who are providing payment services. 
113 STAT. 1476 
PUBLIC LAW 106-102—NOV. 12, 1999 
(c) REPORT TO THE CONGRESS.—Before the end of the 1-year 
period beginning on the date of the enactment of this Act, the 
Comptroller General shall submit a report to the Congress con-
taining the findings and conclusions of the Comptroller General 
in connection with the study required under this section, together 
with such recommendations for such legislative or administrative 
actions as the Comptroller General may determine to be appro-
priate, including recommendations for resolving any such conflict 
of interest. 
12 use 4801 
SEC. 729. STUDY AND REPORT ON ADAPTING EXISTING LEGISLATIVE 
note. 
REQUIREMENTS TO ONLINE BANKING AND LENDING. 
(a) STUDY REQUIRED.—The Federal banking agencies shall con-
duct a study of banking regulations regarding the delivery of finan-
cial services, including those regulations that may assume that 
there will be person-to-person contact during the course of a finan-
cial services transaction, and report their recommendations on 
adapting those existing requirements to online banking and lending. 
(b) REPORT REQUIRED.—Before the end of the 2-year period 
beginning on the date of the enactment of this Act, the Federal 
banking agencies shall submit a report to the Congress on the 
findings and conclusions of the agencies with respect to the study 
required under subsection (a), together with such recommendations 
for legislative or regulatory action as the agencies may determine 
to be appropriate. 
(c) DEFINITION.—For purposes of this section, the term "Federal 
banking agencies" means each Federal banking agency (as defined 
in section 3(z) of the Federal Deposit Insurance Act). 
SEC. 730. CLARIFICATION OF SOURCE OF STRENGTH DOCTRINE. 
Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 
1828) is amended by adding at the end the following new subsection: 
"(t) LIMITATION ON CLAIMS.— 
"(1) IN GENERAL.—No person may bring a claim against 
any Federal banking agency (including in its capacity as conser-
vator or receiver) for the return of assets of an affiliate or 
controlling shareholder of the insured depository institution 
transferred to, or for the benefit of, an insured depository 
institution by such affiliate or controlling shareholder of the 
insured depository institution, or a claim against such Federal 
banking agency for monetary damages or other legal or equi-
table relief in connection with such transfer, if at the time 
of the transfer— 
"(A) the insured depository institution is subject to 
any direction issued in writing by a Federal banking agency 
to increase its capital; 
"(B) the insured depository institution is undercapital-
ized (as defined in section 38 of this Act); and 
"(C) for that portion of the transfer that is made by 
an entity covered by section 5(g) of the Bank Holding 
Company Act of 1956 or section 45 of this Act, the Federal 
banking agency has followed the procedure set forth in 
such section. 
"(2) DEFINITION OF CLAIM.—For purposes of paragraph (1), 
the term 'claim'— 
"(A) means a cause of action based on Federal or State 
law that— 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1477 
"(i) provides for the avoidance of preferential or 
fraudulent transfers or conveyances; or 
"(ii) provides similar remedies for preferential or 
fraudulent transfers or conveyances; and 
"(B) does not include any claim based on actual intent 
to hinder, delay, or defraud pursuant to such a fraudulent 
transfer or conveyance law.". 
SEC. 731. INTEREST RATES AND OTHER CHARGES AT INTERSTATE 
BRANCHES. 
Section 44 of the Federal Deposit Insurance Act (12 U.S.C. 
183 lu) is amended— 
(1) by redesignating subsection (f) as subsection (g); and 
(2) by inserting after subsection (e) the following new sub-
section: 
"(f) APPLICABLE RATE AND OTHER CHARGE LIMITATIONS.— 
"(1) IN GENERAL.—In the case of any State that has a 
constitutional provision that sets a maximum lawful annual 
percentage rate of interest on any contract at not more than 
5 percent above the discount rate for 90-day commercial paper 
in effect at the Federal reserve bank for the Federal reserve 
district in which such State is located, except as provided 
in paragraph (2), upon the establishment in such State of 
a branch of any out-of-State insured depository institution in 
such State under this section, the maximum interest rate or 
amount of interest, discount points, finance charges, or other 
similar charges that may be charged, taken, received, or 
reserved from time to time in any loan or discount made or 
upon any note, bill of exchange, financing transaction, or other 
evidence of debt by any insured depository institution whose 
home State is such State shall be equal to not more than 
the greater of— 
"(A) the maximum interest rate or amount of interest, 
discount points, finance charges, or other similar charges 
that may be charged, taken, received, or reserved in a 
similar transaction under the constitution or any statute 
or other law of the home State of the out-of-State insured 
depository institution establishing any such branch, with-
out reference to this section, as such maximum interest 
rate or amount of interest may change from time to time; 
or 
"(B) the maximum rate or amount of interest, discount 
points, finance charges, or other similar charges that may 
be charged, taken, received, or reserved in a similar trguis-
action by a State insured depository institution chartered 
under the laws of such State or a national bank or Federal 
savings association whose main office is located in such 
State without reference to this section. 
"(2) RULE OF CONSTRUCTION.—NO provision of this sub-
section shall be construed as superseding or affecting— 
"(A) the authority of any insured depository institution 
to take, receive, reserve, and charge interest on any loan 
made in any State other than the State referred to in 
paragraph (1); or 
"(B) the applicability of section 501 of the Depository 
Institutions Deregulation and Monetary Control Act of 
113 STAT. 1478 
PUBLIC LAW 106-102—NOV. 12, 1999 
1980, section 5197 of the Revised Statutes of the United 
States, or section 27 of this Act.". 
SEC. 732. INTERSTATE 
BRANCHES 
AND AGENCIES 
OF 
FOREIGN 
BANKS. 
Section 5(a)(7) of the International Banking Act of 1978 (12 
U.S.C. 3103(a)(7)) is amended to read as follows: 
"(7) ADDITIONAL AUTHORITY FOR INTERSTATE BRANCHES AND 
AGENCIES OF FOREIGN BANKS, UPGRADES OF CERTAIN FOREIGN 
BANK AGENCIES AND BRANCHES.—Notwithstanding paragraphs 
(1) and (2), a foreign bank may— 
"(A) with the approval of the Board and the Comp-
troller of the Currency, establish and operate a Federal 
branch or Federal agency or, with the approval of the 
Board and the appropriate State bank supervisor, a State 
branch or State agency in any State outside the foreign 
bank's home State i
f
— 
"(i) the establishment and operation of such branch 
or agency is permitted by the State in which the branch 
or agency is to be established; and 
"(ii) in the case of a Federal or State branch, 
the branch receives only such deposits as would be 
permitted for a corporation organized under section 
25A of the Federal Reserve Act; or 
"(B) with the approval of the Board and the relevant 
licensing authority (the Comptroller in the case of a Federal 
branch or the appropriate State supervisor in the case 
of a State branch), upgrade an agency, or a branch of 
the type referred to in subparagraph (A)(ii), located in 
a State outside the foreign bank's home State, into a Fed-
eral or State branch if— 
"(i) the establishment and operation of such branch 
is permitted by such State; and 
"(ii) such agency or branch— 
"(I) was in operation in such State on the 
day before September 29, 1994; or 
"(II) has been in operation in such State for 
a period of time that meets the State's minimum 
age requirement permitted under section 44(a)(5) 
of the Federal Deposit Insurance Act.". 
SEC. 733. FAIR TREATMENT OF WOMEN BY FINANCIAL ADVISERS. 
It is the sense of the Congress that individuals offering financial 
advice and products should offer such services and products in 
a nondiscriminatory, nongender-specific manner. 
SEC. 
734. 
MEMBERSHIP 
OF 
LOAN 
GUARANTEE 
BOARDS. 
(a) 
EMERGENCY 
STEEL 
LOAN 
GUARANTEE 
BOARD.—Section 
Ante, p. 252. 
101(e) of the Emergency Steel Loan Guarantee Act of 1999 is 
amended— 
(1) in paragraph (2), by inserting ", or a member of the 
Board of Governors of the Federal Reserve System designated 
by the Chairman" after "the Chairman of the Board of Gov-
ernors of the Federal Reserve System"; and 
(2) in paragraph (3), by inserting ", or a commissioner 
of the Securities and Exchange Commission designated by the 
Chairman" before the period. 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1479 
(b) EMERGENCY OIL AND GAS LOAN GUARANTEE BOARD.—Sec-
tion 201(d)(2) of the Emergency Oil and Gas Guarantee Loan Pro-
gram Act is amended— 
Ante, p. 255. 
(1) in subparagraph (B), by inserting ", or a member of 
the Board of Governors of the Federal Reserve System des-
ignated by the Chairman" after "the Chairman of the Board 
of Governors of the Federal Reserve System"; and 
(2) in subparagraph (C), by inserting ", or a commissioner 
of the Securities and Exchange Commission designated by the 
Chairman" before the period. 
SEC. 735. REPEAL OF STOCK LOAN LIMIT IN FEDERAL RESERVE ACT. 
Section 11 of the Federal Reserve Act (12 U.S.C. 248) is 
amended by striking the paragraph designated as "(m)" gmd 
inserting "(m) [Repealed]". 
SEC. 736. ELIMINATION OF SAIF AND DIF SPECIAL RESERVES. 
(a) SAIF SPECIAL RESERVE.—Section 11(a)(6) of the Federal 
Deposit Insurance Act (12 U.S.C. 1821(a)(6)) is amended by striking 
subparagraph (L). 
(b) DIF SPECIAL RESERVE.—Section 2704 of the Deposit Insur-
ance Funds Act of 1996 (12 U.S.C. 1821 note) is amended— 
(1) by striking subsection (b); and 
12 USC 1821 
(2) in subsection (d)— 
"°**Ton 
(A) by striking paragraph (4); 
12 USC 1821. 
(B) in paragraph (6)(C)(i), by striking "(6) and (7)" 
and inserting "(5), (6), and (7)"; and 
(C) in paragraph (6)(C), by striking clause (ii) and 
inserting the following: 
"(ii) by redesignating paragraph (8) as paragraph 
(5).". 
(c) EFFECTIVE DATE.—This section and the amendments made 
12 USC 1821 
by this section shall become effective on the date of the enactment note. 
of this Act. 
SBC. 737. BANK OFFICERS AND DIRECTORS AS OFFICERS AND DIREC-
TORS OF PUBLIC UTILITIES. 
Section 305(b) of the Federal Power Act (16 U.S.C. 825d(b)) 
is amended— 
(1) by striking "(b) After six" and inserting the following: 
"(b) INTERLOCKING DIRECTORATES.— 
"(1) IN GENERAL.—After 6"; and 
(2) by adding at the end the following: 
"(2) APPLICABILITY.— 
"(A) IN GENERAL.—In the circumstances described in 
subparagraph (B), paragraph (1) shall not apply to a person 
that holds or proposes to hold the positions o
f
— 
"(i) officer or director of a public utility; and 
"(ii) officer or director of a bank, trust company, 
banking association, or firm authorized by law to 
underwrite or participate in the marketing of securities 
of a public utility. 
"(B) CIRCUMSTANCES.—The circumstances described in 
this subparagraph are that— 
"(i) a person described in subparagraph (A) does 
not participate in any deliberations or decisions of 
the public utility regarding the selection of a bank, 
113 STAT. 1480 
PUBLIC LAW 106-102—NOV. 12, 1999 
trust company, banking association, or firm to under-
write or participate in the marketing of securities of 
the pubhc utihty, if the person serves as an officer 
or director of a bank, trust company, banking associa-
tion, or firm that is under consideration in the deUbera-
tion process; 
"(ii) the bank, trust company, banking association, 
or firm of which the person is an officer or director 
does not engage in the underwriting of, or participate 
in the marketing of, securities of the pubUc utihty 
of which the person holds the position of officer or 
director; 
"(iii) the pubhc utihty for which the person serves 
or proposes to serve as an officer or director selects 
underwriters by competitive procedures; or 
"(iv) the issuance of securities of the public utility 
for which the person serves or proposes to serve as 
£in officer or director has been approved by all Federal 
and State regulatory agencies having jurisdiction over 
the issuance.". 
SEC. 738. APPROVAL FOR PURCHASES OF SECURITIES. 
Section 23B(b)(2) of the Federal Reserve Act (12 U.S.C. 371c-
1) is amended to read as follows: 
"Subparagraph (B) of paragraph (1) shall not apply if the pur-
chase 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 based on a determination 
that the purchase is a sound investment for the bank irrespective 
of the fact that an affiliate of the bank is a principal underwriter 
of the securities.". 
SEC. 739. OPTIONAL CONVERSION OF FEDERAL SAVINGS ASSOCIA-
TIONS. 
Section 5(i) of the Home Owners' Loan Act (12 U.S.C. 1464(i)) 
is amended by adding at the end the following new paragraph: 
"(5) CONVERSION TO NATIONAL OR STATE BANK.— 
"(A) IN GENERAL.—Any Federal savings association 
chartered and in operation before the date of the enactment 
of the Gramm-Leach-Bliley Act, with branches in operation 
before such date of enactment in 1 or more States, may 
convert, at its option, with the approval of the Comptroller 
of the (Ilurrency or the appropriate State bank supervisor, 
into 1 or more national or State banks, each of which 
may encompass 1 or more of the branches of the Federal 
savings association in operation before such date of enact-
ment in 1 or more States, but only if each resulting national 
or State bank will meet all financial, management, and 
capital requirements applicable to the resulting national 
or State bank. 
"(B) DEFINITIONS.—For purposes of this paragraph, the 
terms 'State bank' and 'State bank supervisor' have the 
meanings given those terms in section 3 of the Federal 
Deposit Insurance Act.". 
SEC. 740. GRAND JURY PROCEEDINGS. 
Section 3322(b) of title 18, United States Code, is amended— 
PUBLIC LAW 106-102—NOV. 12, 1999 
113 STAT. 1481 
(1) in paragraph (1), by inserting "Federal or State" before 
"financial institution"; and 
(2) in paragraph (2), by inserting "at any time during 
or after the completion of the investigation of the grand jury," 
before "upon". 
Approved November 12, 1999. 
lEGISLATIVE HIgTORY—S. 900 (H.R. 10): 
HOUSE REPORTS: Nos. 106-74, Pts. 1 and 2 (Comm. on Banking and Financial 
Services) and Pt. 3 (Comm. on Commerce) accompansdng 
H.R. 10 and 106-434 (Comm. of Conference). 
SENATE REPORTS: No. 106-44 (Comm. on Banking, Housing, and Urban Affairs). 
CONGRESSIONAL RECORD^Vol. 145 (1999i): 
May 4-6, considered and passed Senati. 
July 20, considered and Passed House, amended, in lieu of H.R. 10. 
Nov. 3, Senate considereaVonference report. 
Nov. 4, Senate and HouseVagreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 35 (1999): 
Nov. 12, Presidential remarks and statement.