An Act to promote and preserve local management of savings and loan associations by protecting them against encroachment by holding companies
PL 86-374 (H.R.7244), enacted 09/23/1959

73 S T A T . ] 
PUBLK3 LAW 86-374-8EPT. 23, 1969 
691 
•'k. Nothing in this section shall be construed to affect the authority 
of any State or local agency to regulate activities for purposes other 
than protection against radiation hazards. 
"1. With respect to each application for Commission license author-
izing an activity as to which the Commission's authority is continued 
pursuant to subsection c, the Commission shall give prompt notice to 
the State or States in which the activitj/^ will be conducted of the filing 
of the license application; and shall afford-reasonable opportunity for 
State representatives to offer evidence, interrogate witnesses, and 
advise the Commission as to the application • without requiring such 
representatives to take a position for or against the granting of the 
application. 
"m. No agreement entered into under subsection b., and no exemp-
tion granted pursuant to subsection f., shall affect the authority of the 
Commission under subsection 161 b. or i. to issue rules, regulations, or 
orders to protect the common defense and security, to protect restricted 
data or to guard against the loss or diversion of special nuclear mate-
rial. 
For purposes of subsection 161i., activities covered by exemp-
tions granted pursuant to subsection f. shall be deemed to constitute 
activities authorized pursuant to this Act; and special nuclear material 
acquired by any person pursuant to such an exemption shall be deemed 
to have been acquired pursuant to seetion 53. 
"n. As used in this section, the term 'State' means any State, Terri-
tory, or possession of the United States, the Canal Zone, Puerto Rico, 
and the District of Columbia." 
SEC. 2. Section 108 of the Atomic Energy Act of 1954 is amended 
by deleting the phrase "distributed under the provisions of subsection. 
53a.," from the second sentence. 
Approved September 23, 1959. 
Notice of fUing. 
42 use 2201. 
42 use 2073. 
Definition. 
42 use 2138. 
Public Law 86-374 
AN ACT 
September 23, 1959 
To promote and preserve local management of savings and loan associations by 
[H. R. 7244] 
protecting them against encroachment by holding companies. 
Savings and loan 
Be it eruicted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled, That title IV of the h o l d i n g com-
National Housing Act, as amended (12 U.S.C, sec. 1724 et seq.), is panies. 
amended by adding at the end thereof the following new section: 
48 s?at!^°255. 
'REGULATION OF HOLDING COMPANIES 
"SEC. 408. (a)(1) As used in this section, the term 'company' means 
any corporation, business trust, association, or similar organization, 
but does not include the Federal Savings and Loan Insurance Corpora-
tion, any partnership, or any company the majority of the shares of 
which is owned by the United States or by any State. 
"(2) As used in this section (except when used in subsection (f)), 
the term 'stock' means nonwithdrawable stock, underlying owner-
ship stock other than mutual shares in a mutual institution, perma-
nent stock, guaranty stock, or stock of a similar nature (as defined by 
the Federal Home Loan Bank Board by regulation) by whatever 
name called. 
"(3) For the purposes of this section, a company shall be con-
sidered as having control of an institution or other organization if 
such company owns, controls, or holds with power to vote more than 
Definitions. 
692 
PUBLIC LAW 86-d74-SEPT. 28, 1959 
[78 8T AT. 
Insurance appli-
cations. 
12 use 1730. 
Restrictions. 
Ac qui 8 ition of 
stock. 
Violations, legal 
action. 
10 per centum of the stock of such mstitution or other organization, 
or if the Federal Home Loan Bank Board determines, after reason-
able notice and opportunity for hearing, that such company directly 
or indirectly exercises a controlling influence over the management and 
policies of such institution or other organization. 
"(b)(1) The Corporation shall reject any application made for 
insurance under this title on or after the date of the enactment of this 
section if it finds that the applicant is controlled by any company 
which also controls any insured institution or any other applicant for 
insurance. 
"(2) If an application of any institution for insurance under this 
title is approved on or after the date of the enactment of this section, 
and the Federal Home Loan Bank Board subsequently determines, 
after reasonable notice and opportunity for hearing, that at the time 
of such approval such institution was controlled by a company which 
also controlled another insured institution (or another applicant for 
insurance if the application of such other applicant was approved), 
the Board shall either— 
"(A) terminate the insured status of such institution; or 
"(B) require such company, in the manner provided in sub-
section (e) of this section, to dispose of so much of the stock 
of such institution, or take such other action, or both, as may 
be necessary to divest itself of its control of such institution. 
If the insured status of an institution is terminated under subpara-
graph (A), the provisions of section 407 relating to continuation of 
insurance of accounts, examination by the Corporation during the 
period of such continuation, final insurance premium, and notice to 
insured members shall be applicable as though the termination had 
been ordered under such section 407. 
"(c) It shall be unlawful for any company on or after the date 
of the enactment of this section— 
"(1) to acquire the control of more than one insured institu-
tion; or 
"(2) to acquire the control of an insured institution when it 
holds the control of any other insured institution. 
"(d) Any company may, without regard to subsection (c), acquire 
stock pursuant to a pledge or hypothecation to secure a loan or in 
connection with the liquidation of a loan, but it shall be unlawful 
for any such company to retain for more than one year any control 
the acquisition of which bv such company would, except for this 
subsection, have been unlawful under subsection (c). 
"(e) If, in the opinion of the Federal Home Loan Bank Board, any 
company holds control of an institution and such control was acquired 
in violation of subsection (c) or retained in violation of subsection (d), 
it shall give such company notice that if it does not divest itself of 
such control within thirty days an action will be brought to force the 
divestiture thereof. 
Notice given to such institution shall constitute 
notice to such company for purposes of the preceding sentence. 
If 
such company does not dispose of so much of the stock of such institu-
tion, or take such other action, or both, as may be necessary to divest 
itself of such control within thirty days after the receipt of such 
notice, the Board shall, without regard to any statute of limitation, 
institute in the United States district court for the district in which 
the principal office of such institution is located, and prosecute to 
final satisfaction, an action to require divestiture of such control. 
Process in any such action may be served in any district in which 
such company transacts business or wherever it may be found. 
The 
73 STAT.] 
PUBLIC LAW 86-374-SEPT. 28, 1969 
United States district courts shall have jurisdiction of all actions 
brought under this subsection and, in view of the fact that the ques-
tions involved are of general public importance, shall hear and deter-
mine such actions with all reasonable promptness. 
Any such action 
shall be brought by the Federal Home Tx>an Bank Board in its own 
name and may, in the discretion of the Board, be prosecuted through 
its own attorneys. All expenses of the Board under this subsection 
shall be considered as nonadministrative expenses. 
"(f) It shall be unlawful, on or after the date of the enactment of 
this section, for any insured institution which is controlled by a 
company— 
"(1) to invest any of its funds in the stock, bonds, debentures, 
or other obligations of such company or of any other organization 
controlled by such company; 
"(2) to accept the stock, bonds, debentures, or other obligations 
of such company, or of any other organization controlled by such 
company, as collateral security for advances made to such com-
pany or organization or to any other person; except that such 
institution may accept, and hold for a period not exceeding two 
years, such stock, bonds, debentures, or other obligations as secu-
rity for debts contracted prior to the acquisition of such control; 
" (3) to purchase securities or other assets or obligations under 
repurchase agreement from such company or from any other 
organization controlled by such company; and 
"(4) to make any loan, discount, or extension of credit to such 
company or to any other organization controlled by such company. 
Except as otherwise provided by regulation by the Federal Home Loan 
Bank Board, a non-interest-bearing deposit with a bank, to the credit 
of an insured institution, shall not be deemed to be a loan, discount, 
or extension of credit to such bank for purposes of this subsection. 
As used in this subsection, the term 'organization' means a corporation, 
business trust, association, partnership, or similar organization. 
"(g) (1) This section shall terminate May 31,1961. 
"(2) The Federal Home Loan Bank Board shall make a full and 
complete survey of all aspects of savings and loan holding companies, 
and shall submit a report to the Committees on Banking and Cur-
rency of the Senate and the House of Representatives not later than 
May 31,1960. This survey shall include studies of the nature, growth, 
effects and future prospects of savings and loan holding companies, 
including particularly the extent to which they may have become, or 
may in the future become, injurious or detrimental to free competition 
in the field of mortgage lending or in any related field. 
The report on 
this survey shall contain a full statement on these matters, together 
with recommendations for further legislation on this subject. 
In par-
ticular, the report shall review and make recommendations on the 
legislative proposals submitted at the hearings of the Committees on 
Banking and Currency on H.R. 7244, Eighty-sixth Congress, includ-
ing particularly the need for and feasibility of requiring divestment 
of part or all of the savings and loan associations already acquired or 
part or all of the other interests of such holding companies, the need 
for and feasibility of requiring such holding companies to limit 
their activities or their future acquisitions to a specified distance 
frcwn their principal offices, and the desirability and feasibility of 
regulating and controlling further acquisitions of such holding com-
panies, as compared with prohibiting further acquisitions by such 
holding companies." 
Approved September 23, 1959. 
Restrictions. 
Termination. 
Report 
gress. 
to 
Con-