[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 900 Enrolled Bill (ENR)]

        S.900

                       One Hundred Sixth Congress

                                 of the

                        United States of America


                          AT THE FIRST SESSION

         Begun and held at the City of Washington on Wednesday,
   the sixth day of January, one thousand nine hundred and ninety-nine


                                 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-Bliley 
Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:
Sec. 1. Short title; table of contents.

  TITLE I--FACILITATING AFFILIATION AMONG BANKS, 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 financial holding companies.
Sec. 103. Financial activities.
Sec. 104. Operation of State law.
Sec. 105. Mutual 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 business 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 Commission.
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 
          notification and post-approval waiting period for section 3 
          transactions.
Sec. 132. Interagency data sharing.
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 affiliates.
Sec. 307. Interagency consultation.
Sec. 308. Definition of State.

             Subtitle B--Redomestication of Mutual Insurers

Sec. 311. General application.
Sec. 312. Redomestication of mutual insurers.
Sec. 313. Effect on State laws restricting redomestication.
Sec. 314. Other provisions.
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 and 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 affiliates.

                            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.

                   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 ``Federal'' 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 COMPANIES.
    (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 Company 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,''.
        (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 financial 
    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 secretary 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, 
            proposal, or application under this subsection for a 
            determination of whether an activity is financial in nature 
            or incidental to a financial activity.
                ``(ii) Treasury view.--The Board shall not determine 
            that any activity is financial in nature or incidental 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 appropriate 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 appropriate under the circumstances), 
            the Board shall determine 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 Treasury in writing of the determination 
            of the Board and, if the Board determines not to seek 
            public comment on the proposal, the reasons for that 
            determination.
        ``(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 
            technological means, including any application necessary to 
            protect the security or efficacy of systems for the 
            transmission 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 purposes of 
    this subsection, the following activities shall be considered 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 providing 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 company (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 
        determined, 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 regulation, unless 
        modified by the Board).
            ``(G) Engaging, in the United States, in any activity 
        that--
                ``(i) a bank holding company may engage in outside of 
            the United States; and
                ``(ii) the Board has determined, under regulations 
            prescribed or interpretations issued pursuant to subsection 
            (c)(13) (as in effect on the day before the date of the 
            enactment of the Gramm-Leach-Bliley 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 ownership 
        interests (including debt or equity securities, partnership 
        interests, trust certificates, or other instruments 
        representing 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 shares, assets, or 
            ownership interests are held, the bank holding company does 
            not routinely manage or operate such company 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 ownership 
        interests (including debt or equity securities, partnership 
        interests, trust certificates or other instruments representing 
        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 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 company does 
            not routinely manage or operate such company 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 financial 
        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 Secretary of 
        the Treasury may issue such regulations implementing paragraph 
        (4)(H), including limitations on transactions 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 the Gramm-
        Leach-Bliley Act and to protect depository institutions.
            ``(B) Sunset of restrictions on merchant banking activities 
        of financial subsidiaries.--The restrictions 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 merchant banking activities pursuant to 
        section 122 of the Gramm-Leach-Bliley Act.
    ``(l) Conditions for Engaging in Expanded Financial Activities.--
        ``(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 company 
        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 of 
    its insured depository institution affiliates, has received in its 
    most recent examination under the Community Reinvestment 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 standards 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 Companies 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 compliance 
        with the requirements of subsection (l)(1);
    the Board shall give notice to the financial holding company to 
    that effect, describing the conditions giving rise to the notice.
        ``(2) Agreement to correct conditions required.--Not 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 (l)(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 limitations 
    on the conduct or activities of that financial holding company or 
    any affiliate of that company as the Board determines 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 
    subsection, the Board shall consult with all relevant Federal and 
    State regulatory agencies and authorities.
    ``(n) Authority To Retain Limited Nonfinancial Activities and 
Affiliations.--
        ``(1) In general.--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 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 
    subsection, a company is predominantly engaged in financial 
    activities if the annual gross revenues derived by the holding 
    company and all subsidiaries of the holding company (excluding 
    revenues derived from subsidiary depository institutions), on a 
    consolidated basis, from engaging in activities that are financial 
    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 activities 
    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 determined 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 company 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 consolidated 
    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 institutions).
        ``(5) Cross marketing restrictions applicable to commercial 
    activities.--
            ``(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 arrangement, 
            by or through any company described in clause (i).
            ``(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 products or services 
        through statement inserts or Internet websites if--
                ``(i) such arrangement does not violate section 106 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 separation of 
            banking and commerce, and is consistent with the safety and 
            soundness of depository institutions.
        ``(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 controlled by the 
    company pursuant to this subsection.
        ``(7) Sunset of grandfather.--A financial holding company 
    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 application 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 Companies.--
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, activities related to the trading, sale, or 
investment in commodities and underlying 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;
        ``(2) the attributed aggregate consolidated assets of the 
    company held by the holding company pursuant to this subsection, 
    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(l)(1)(C) of the Bank Holding Company 
        Act of 1956, not all of the subsidiary insured depository 
        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(l)(1)(C) of the Bank Holding Company Act of 1956 
    may be excluded for purposes 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 supervisory agency to 
        take such action as may be necessary in order for such 
        institution to achieve a rating of `satisfactory 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 
    following definitions shall apply:
            ``(A) Bank holding company; financial holding company.--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.
            ``(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 
        institution','' 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(l)(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. 1843(j)) is amended--
            (A) in each of subparagraphs (A) and (E) of paragraph (1), 
        by inserting ``or in any complementary activity under 
        subsection (k)(1)(B)'' after ``subsection (c)(8) or (a)(2)''; 
        and
            (B) in paragraph (3)--
                (i) by inserting ``, other than any complementary 
            activity under subsection (k)(1)(B),'' after ``to engage in 
            any activity''; and
                (ii) by inserting ``or a company engaged in any 
            complementary activity under subsection (k)(1)(B)'' after 
            ``insured depository institution''.
    (d) Report.--
        (1) In general.--By the end of the 4-year 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 joint report to the Congress containing a summary of new 
    activities, including grandfathered commercial activities, in which 
    any financial holding company is engaged pursuant to subsection 
    (k)(1) 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 Congress 
    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, 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 financial services 
        industry.

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 proposed 
            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 proposed 
            acquisition of, or a change or continuation of control of, 
            an insurer engaged in the business of insurance 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 exercising 
        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 requirement 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 requirement 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 ownership 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 restriction 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.
    (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 standards for 
        preemption set forth in the decision of the Supreme Court of 
        the United States in Barnett 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.--Notwithstanding 
        subparagraph (A), a State may impose any of the following 
        restrictions, or restrictions that are substantially 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 
            affiliate 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 depository 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 depository 
            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
                    (II) a State, or the Federal Government guarantees 
                any returns on insurance products, or is a source of 
                payment 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 any person, unless such person holds a valid State 
            license regarding the applicable class of insurance at the 
            time at which the services are performed, except that, in 
            this clause, the term ``services 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 purchase 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 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 customer 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 customer 
            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 purchase 
                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 soliciting the 
            purchase of or selling insurance on the premises 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.
                (xiii) Restrictions requiring maintenance of separate 
            and distinct books and records relating to insurance 
            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 inspection 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 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).
                (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 paragraph.

        (3) Insurance activities other than sales.--State statutes, 
    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 insurance 
        as principal to the extent of regulating such insurance);
            (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).
        (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 
            affiliate;
                (iii) does not effectively prevent a depository 
            institution or affiliate thereof from engaging in 
            activities 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, 
regulation, 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 institutions, 
    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 
    substantially 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;
        (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 persons 
    engaged in the business of insurance.
    (f) 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, 
        consistent with section 18(c) of the Securities Act of 1933, 
        with respect to fraud or deceit or unlawful conduct by any 
        person, in connection with securities or securities 
        transactions; or
            (B) to require the registration of securities or the 
        licensure 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 Clayton 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 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 computer 
        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 principal 
            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 financial 
            in nature or incidental to a financial activity; and
                ``(ii) does not cause the bank to violate any provision 
            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.--Section 
2(c)(2)(H) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1841(c)(2)(H)) is amended by inserting ``, or that is otherwise 
permissible 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 ``Subject 
    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 
        semicolon;
            (C) in clause (ii), by inserting after subclause (X) the 
        following new subclause:

                    ``(XI) assets that are derived from, or incidental 
                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 following:
            ``(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 paragraph (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 exemption, 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
                ``(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
            ``(B) 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 qualifies under 
            such sections;
                ``(ii) the foreign bank does not offer any products or 
            services in the United States; and
                ``(iii) the activities of the foreign bank are 
            permissible under otherwise applicable law.
            ``(B) Other limitations inapplicable.--The limitations 
        contained in any clause of section 2(c)(2)(F) shall 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 SYSTEM AND 
      DEPOSIT FUNDS FROM ``TOO BIG TO FAIL'' INSTITUTIONS.
    (a) Study Required.--The Board of Governors of the Federal Reserve 
System and the Secretary of the Treasury shall conduct a study of--
        (1) the feasibility and appropriateness of establishing a 
    requirement that, with respect to large insured depository 
    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 the study required under 
subsection (a), together with such legislative and 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 company'' 
    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 section 
    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 payment 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.
    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 banking 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 consultation 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 determines 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
                ``(ii) compliance by the company or subsidiary with 
            applicable 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 from a 
                functionally regulated subsidiary of a bank holding 
                company of a kind that is not required by another 
                Federal or State regulatory authority or an appropriate 
                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 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 company in order--
                ``(i) to inform the Board of the nature of the 
            operations and financial condition of the holding company 
            and such subsidiaries;
                ``(ii) to inform the Board of--

                    ``(I) the financial and operational risks within 
                the holding company system that may pose a threat to 
                the safety and soundness of any depository institution 
                subsidiary of such holding company; and
                    ``(II) the systems for monitoring and controlling 
                such risks; and

                ``(iii) to monitor compliance with the provisions of 
            this Act or any other Federal law that the Board has 
            specific jurisdiction to enforce against such company or 
            subsidiary and those governing transactions and 
            relationships between any depository institution subsidiary 
            and its affiliates.
            ``(B) Functionally regulated subsidiaries.--Notwithstanding 
        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 
            such subsidiary is engaged in activities that pose a 
            material risk to an affiliated depository institution;
                ``(ii) the Board reasonably determines, after reviewing 
            relevant reports, that examination of the subsidiary is 
            necessary to adequately inform the Board of the systems 
            described in subparagraph (A)(ii)(II); or
                ``(iii) based on reports and other available 
            information, 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 subsidiary of the 
            holding company due to--

                    ``(I) the size, condition, or activities of the 
                subsidiary; 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 depository 
        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 of--
                ``(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;
                ``(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 capital 
        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 Commission) 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 activities 
            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 requirements 
        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 reason 
            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 insurance 
    activities.--
            ``(A) Securities activities.--Securities activities 
        conducted 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 
        were conducted in a nondepository institution subsidiary of a 
        bank holding company.
            ``(B) Insurance activities.--Subject to section 104 of the 
        Gramm-Leach-Bliley Act, insurance agency and brokerage 
        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 nondepository 
        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 
            registered 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 insurance 
            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 activities 
            incidental to such commodities activities.''.
    SEC. 112. AUTHORITY OF STATE INSURANCE REGULATOR AND SECURITIES 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 effective 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 Securities 
            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 registered 
            under the Securities 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; 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 company, 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 investment 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 Commission 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 operation 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 company'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 subsection 
    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:
    ``SEC. 45. AUTHORITY OF STATE INSURANCE REGULATOR AND SECURITIES 
      AND EXCHANGE COMMISSION.
    ``(a) In General.--Notwithstanding any other provision of law, the 
provisions of--
        ``(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 functionally 
    regulated subsidiary of a holding company to provide capital or 
    other funds or assets to a depository institution subsidiary of the 
    holding company and to take certain actions including requiring 
    divestiture of the depository institution; and
        ``(3) section 10A 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 banking 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 `functionally 
    regulated affiliate' means, with respect to any depository 
    institution, any affiliate of such depository institution that is--
            ``(A) not a depository institution holding company; 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:
``SEC. 10A. LIMITATION ON RULEMAKING, PRUDENTIAL, SUPERVISORY, AND 
ENFORCEMENT AUTHORITY OF THE BOARD.
    ``(a) Limitation on Direct 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 functionally regulated subsidiary of a bank holding 
company unless--
        ``(1) the action is necessary to prevent or redress an unsafe 
    or unsound practice or breach of fiduciary duty by such subsidiary 
    that poses a material risk to--
            ``(A) the financial safety, soundness, or stability of an 
        affiliated depository institution; or
            ``(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 subsidiary 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 subsection 
(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 purposes of 
this section, the term `functionally regulated subsidiary' has the 
meaning given the term in section 5(c)(5).''.

SEC. 114. PRUDENTIAL SAFEGUARDS.

    (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 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 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.
        (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 avoidance of 
        any adverse effect referred to in paragraph (1)(B); and
            (B) modify or eliminate any such restriction or requirement 
        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 company and any affiliate of such depository 
        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 subsidiaries 
        of bank 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 requirement 
        the Board finds is no longer required for such purposes.
        (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, 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 Corporation may, 
    by regulation or order, impose restrictions or requirements on 
    relationships or transactions between a State nonmember 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 Insurance 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 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.
        (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 requirement 
        the Corporation finds is no longer required for such purposes.

SEC. 115. EXAMINATION OF INVESTMENT COMPANIES.

    (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 company 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 section shall 
prevent the Corporation, if the Corporation finds it necessary to 
determine the condition of an insured depository institution for 
insurance purposes, from examining an affiliate of any insured 
depository institution, pursuant to its authority under section 
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 relationship on 
the insured depository institution.
    (d) Definitions.--For purposes of this section, the following 
definitions shall apply:
        (1) Bank holding company.--The term ``bank holding company'' 
    has the meaning given the term in section 2 of the Bank Holding 
    Company Act of 1956.
        (2) Commission.--The term ``Commission'' means the Securities 
    and Exchange Commission.
        (3) Corporation.--The term ``Corporation'' means the Federal 
    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 section 
    3(c) of the Federal Deposit Insurance Act.
        (6) Registered investment company.--The term ``registered 
    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 FINANCIAL 
      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(l)(1)(C) shall satisfy the requirements 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 
    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 supervisor 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 shareholder of'' 
and inserting ``to benefit any shareholder or affiliate (other than an 
insured depository institution that receives assistance 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)(1)(A) of the Bank Holding Company Act of 1956 (12 
U.S.C. 1841(o)(1)(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
        (2) by inserting after section 5136 (12 U.S.C. 24) the 
    following new section:

``SEC. 5136A. FINANCIAL SUBSIDIARIES OF NATIONAL BANKS.

    ``(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 
            incidental 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 subsidiary 
        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 Revenue Code of 1986;
                ``(ii) real estate development or real estate 
            investment 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;
            ``(C) the national bank and each depository institution 
        affiliate of the national bank are well capitalized and well 
        managed;
            ``(D) the aggregate consolidated total assets of all 
        financial subsidiaries of the national bank do not exceed the 
        lesser of--
                ``(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 requirements 
        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 investment 
            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 determine to be 
            comparable to and consistent with the purposes of the 
            rating required in clause (i).
            ``(B) Consolidated total assets.--For purposes of this 
        paragraph, the size of an insured bank shall be determined 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(l)(2) of the bank holding 
    company act of 1956.--Section 4(l)(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.--
            ``(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 
            financial activity in accordance with subparagraph (B).
            ``(B) Coordination between the board and the secretary of 
        the treasury.--
                ``(i) Proposals raised before the secretary of the 
            treasury.--

                    ``(I) Consultation.--The Secretary of the Treasury 
                shall notify the Board of, and consult with the Board 
                concerning, any request, proposal, or application under 
                this section for a determination 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 Secretary determines to be appropriate 
                under the circumstances) that the Board believes that 
                the activity is not financial in nature or incidental 
                to a financial activity or is not otherwise permissible 
                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 Secretary 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 recommended 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;
            ``(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 
            technological means, including any application necessary to 
            protect the security or efficacy of systems for the 
            transmission 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.
        ``(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 activities 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 
        transferring money or other financial assets.
            ``(C) Arranging, effecting, or facilitating financial 
        transactions for the account of third parties.
    ``(c) Capital Deduction.--
        ``(1) Capital deduction required.--In determining compliance 
    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 
        subsidiaries shall not be consolidated with those of the 
        national bank.
        ``(2) Financial statement disclosure of capital deduction.--Any 
    published financial statement of a national bank that controls a 
    financial subsidiary shall, in addition to providing 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 establishes or 
maintains a financial subsidiary shall assure that--
        ``(1) the procedures of the national bank for identifying 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.
    ``(e) Provisions Applicable to National Banks That Fail To Continue 
To Meet Certain Requirements.--
        ``(1) In general.--If a national bank or insured depository 
    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 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 with the Comptroller of the Currency and any relevant 
    insured depository institution affiliate 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 Comptroller 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 a 
    notice to a national bank under paragraph (1) are not corrected 
    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 
    subsection, 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 subsidiary, 
    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:
        ``(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 institution.--The 
    terms `appropriate Federal banking agency', `depository 
    institution', `insured bank', and `insured depository institution' 
    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 national 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 enhancement, 
        including a guarantee or standby letter of credit; and
            ``(B) is not held in whole or in any significant 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
            (B) by inserting after subsection (d), the following new 
        subsection:
    ``(e) Rules Relating to Banks with Financial Subsidiaries.--
        ``(1) Financial 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 applying this section and section 23B, and 
    notwithstanding subsection (b)(2) of this section or section 
    23B(d)(1), 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 
    subsidiaries.--
            ``(A) Exception from limit on covered transactions with any 
        individual financial subsidiary.--Notwithstanding paragraph 
        (2), the restriction contained in subsection (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 subsection 
        (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 shareholder 
    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 subparagraph (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.''.
        (3) Rulemaking required concerning derivative transactions 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.--
            ``(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 necessary 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:
    ``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 
    operational safeguards required by section 5136A(d) of the Revised 
    Statutes of the United States; and
        ``(4) the State bank complies with the amendments to sections 
    23A and 23B of the Federal Reserve Act made by section 121(b) of 
    the Gramm-Leach-Bliley Act.
    ``(b) Preservation of Existing Subsidiaries.--Notwithstanding 
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 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 company 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 subsidiary 
    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 paragraph 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 FINANCIAL 
      SUBSIDIARIES.
    After the end of the 5-year period beginning on the date of the 
enactment of the Gramm-Leach-Bliley Act, the Board of Governors of the 
Federal Reserve System and the Secretary of the Treasury may, if 
appropriate, after considering--
        (1) the experience with the effects of financial modernization 
    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 appropriate.

               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 transaction 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.

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 Commission 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 opportunity 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 construed 
    as preventing or limiting access to any information by any duly 
    authorized committee of the Congress or the Comptroller General of 
    the United States.
    (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 supervisory 
    information obtained by any State agency or authority, or any other 
    person, from a Federal banking agency.
    SEC. 133. CLARIFICATION OF STATUS OF SUBSIDIARIES AND AFFILIATES.
    (a) Clarification of Federal Trade Commission Jurisdiction.--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 
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 COMPANIES.
    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 paragraph:
        ``(3) Termination of grandfathered rights.--
            ``(A) In general.--If any foreign bank or foreign company 
        files a declaration under section 4(l)(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 section 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 declaration with the Board of its status 
        as a financial holding company under such section by the end of 
        the 2-year period beginning on the date of the enactment of the 
        Gramm-Leach-Bliley Act, the Board, giving due regard to the 
        principle of national treatment and equality of competitive 
        opportunity, may impose such restrictions and requirements 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 1(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 examinations 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 CERTAIN 
      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

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 enactment of 
this Act.

                    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 securities 
        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 advertise 
                or promote generally the availability of brokerage 
                services under the arrangement clearly indicate that 
                the brokerage services are being provided by the broker 
                or dealer and not by the bank;
                    ``(IV) any materials used by the bank to advertise 
                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 organization) perform only 
                clerical or ministerial functions in connection with 
                brokerage transactions including scheduling 
                appointments with the associated persons of a broker or 
                dealer, except that bank employees may forward customer 
                funds or securities and may describe in general terms 
                the types of investment vehicles available from the 
                bank and the broker or dealer under the arrangement;
                    ``(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 a nominal one-time cash 
                fee of a fixed dollar amount and the payment of the fee 
                is not contingent on whether the referral results in a 
                transaction;
                    ``(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 obligations of the 
                bank, are not guaranteed by the bank, and are not 
                insured by the Federal Deposit Insurance Corporation.

                ``(ii) Trust activities.--The bank effects transactions 
            in a trustee capacity, or effects transactions in a 
            fiduciary capacity in its trust department or other 
            department that is regularly examined by bank examiners for 
            compliance with fiduciary principles and standards, and--

                    ``(I) is chiefly compensated for such transactions, 
                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 management, 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 
                business, 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 obligations 
                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 
                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 affiliates (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.
                    ``(II) Dividend reinvestment plans.--The bank 
                effects transactions, 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.

                    ``(III) Issuer plans.--The bank effects 
                transactions, as part of its transfer agency 
                activities, in the securities of an issuer as part of a 
                plan 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 subclauses (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 Commission.
                ``(v) Sweep accounts.--The bank effects transactions 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 bank 
            (as defined in section 2 of the Bank Holding Company Act of 
            1956) other than--

                    ``(I) a registered broker or dealer; or
                    ``(II) 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, pursuant 
                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 activities, other than 
                with respect to exempted securities; 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 government securities 
                or municipal securities.

                ``(viii) Safekeeping and custody activities.--

                    ``(I) In general.--The bank, as part of customary 
                banking activities--

                        ``(aa) provides safekeeping or custody services 
                    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 custodian or a clearing agency, in 
                    connection with the clearance and settlement of its 
                    customers' transactions in securities;
                        ``(cc) effects securities lending or borrowing 
                    transactions with or on behalf of customers as part 
                    of services provided to customers pursuant to 
                    division (aa) or (bb) or invests cash collateral 
                    pledged in connection with such transactions;
                        ``(dd) holds securities pledged by a customer 
                    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 identifying the securities and the 
                    customer; or
                        ``(ee) serves as a custodian or provider of 
                    other related administrative services to any 
                    individual retirement account, pension, retirement, 
                    profit sharing, bonus, thrift savings, incentive, 
                    or other similar benefit plan.

                    ``(II) Exception for carrying broker activities.--
                The exception to being considered a broker for a bank 
                engaged in activities described in subclause (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 and 
                the rules and regulations thereunder) for any broker or 
                dealer, unless such carrying 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 securities 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 provisions 
        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 
                principles 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 subparagraph 
        (B)(ii), the term `fiduciary capacity' means--
                ``(i) in the capacity as trustee, executor, 
            administrator, registrar of stocks and bonds, transfer 
            agent, guardian, assignee, receiver, or custodian under a 
            uniform 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--
                ``(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 requirements 
            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 otherwise.
            ``(B) Exception for person not engaged in the business 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 conditions 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 obligations 
                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 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.

                ``(ii) Investment, trustee, and fiduciary 
            transactions.--The bank buys or sells securities for 
            investment 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
                    ``(III) a syndicate of banks of which the bank is a 
                member, if the obligations or pool of obligations 
                consists of mortgage obligations 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 limited 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 thereunder, and shall deem 
qualified in such limited qualification category, 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 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 demonstrate 
    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 information 
    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 from Congress, or prevent the Commission from complying 
    with a request for information from any other Federal department 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 purposes 
    of section 552 of title 5, United States Code, this paragraph shall 
    be considered 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:
    ``(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 appropriateness of the 
    regulation of the new product under 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 bank engages in any transaction 
        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 banking 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 transmitted as 
        soon as possible by the Clerk 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 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 determination 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 determination).
            ``(F) Other authority to challenge.--Any aggrieved party 
        may seek judicial review of the Commission's rulemaking under 
        this subsection pursuant 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 Commission 
            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.

    (a) Definition of Identified Banking Product.--For purposes 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 loan 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
                (ii) based on such factors as financial sophistication, 
            net worth, and knowledge and experience in financial 
            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 than a qualified investor (as defined in section 3(a)(54) of 
    the Securities Act of 1934) shall not be treated as an identified 
    banking product.
    (b) Definition of Swap Agreement.--For purposes of subsection 
(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.

    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 Company Act of 
            1940;
                ``(ii) any issuer eligible for an exclusion from 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 section 
            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 Administration under 
            section 301 (c) or (d) of the Small Business 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 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 company, 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 intermediary exempt under section 
            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 securities 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 financial 
        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 obligation as 
        defined in section 5136 of the Revised Statutes of the United 
        States.''.

SEC. 209. EFFECTIVE DATE.

    This subtitle shall take effect at the end of the 18-month period 
beginning on the date of the enactment of this Act.

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 AFFILIATED 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 
    subparagraphs (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 Insurance Act), adopt 
    rules and regulations, and issue orders, consistent with the 
    protection of investors, prescribing the conditions 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 management 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 subsections 
    (c) through (f), respectively; and
        (2) by inserting after subsection (a) the following new 
    subsection:
    ``(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 protection 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:
        ``(4) to loan money or other property to such registered 
    company, or to any company controlled by such registered company, 
    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 Company 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 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) 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 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;
                    ``(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 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 
    securities of a registered investment company that is advised by, 
    or sold through, a bank shall prominently disclose that an 
    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.--The terms `insured depository institution' 
    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 COMPANY 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 COMPANY ACT OF 
      1940.
    Section 2(a)(11) of the Investment Company Act of 1940 (15 U.S.C. 
80a-2(a)(11)) 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 INVESTMENT COMPANIES.
    (a) Investment Adviser.--Section 202(a)(11)(A) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11)(A)) is amended by striking 
``investment company'' and inserting ``investment company, 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.--Section 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 
    division' 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 
        investment adviser activities are separately maintained in or 
        extractable from such unit's own facilities or the facilities 
        of the bank, and such records are so maintained or otherwise 
        accessible as to permit independent examination and enforcement 
        by the Commission of this Act or the Investment Company Act of 
        1940 and rules and regulations promulgated under this Act or 
        the Investment Company Act of 1940.''.
    SEC. 218. DEFINITION 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-1 et seq.) is 
amended by inserting after section 210 the following new section:

``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 department 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 Federal 
    banking agency upon request the results of any examination, 
    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 Federal department 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, the Commission, or such agencies. For purposes of 
    section 552 of title 5, United States Code, this paragraph shall be 
    considered 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 holding 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 
`appropriate 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 ``securities 
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 
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 subsection:
    ``(c) Consideration of Promotion of Efficiency, Competition, and 
Capital Formation.--Whenever pursuant to this title the Commission is 
engaged in rulemaking and is required to consider or determine whether 
an action is necessary or appropriate in the public interest, the 
Commission shall also consider, in addition to the protection of 
investors, whether the action will promote efficiency, competition, and 
capital formation.''.

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 Commission 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 
    subsections:
    ``(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 bank holding company 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 Commission 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 supervised in accordance 
        with this section and comply with the rules promulgated by the 
        Commission applicable to supervised investment bank holding 
        companies.
            ``(B) Notification of status as a supervised investment 
        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 supervised 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 investment 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 from 
        Commission supervision. Such notice shall not become effective 
        until 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 paragraph (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 discontinue the supervision pursuant to a 
        rule or order, if any, promulgated by the Commission under this 
        section.
        ``(3) Supervision of investment bank holding companies.--
            ``(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 company's or affiliate's activities, 
                financial condition, policies, systems for monitoring 
                and controlling financial and operational risks, and 
                transactions and relationships between any broker or 
                dealer affiliate of the supervised investment bank 
                holding company; and
                    ``(II) the extent to which the company or affiliate 
                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 company;
                    ``(III) an independent auditor's report attesting 
                to the supervised investment bank holding company's 
                compliance with its internal risk management 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 prescribed 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 investment 
                    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 investment bank 
                    holding company; and
                        ``(cc) the systems of the supervised investment 
                    bank holding company and its affiliates for 
                    monitoring and controlling those risks; and

                    ``(II) monitor compliance with the provisions of 
                this subsection, provisions governing transactions and 
                relationships between any broker or dealer affiliated 
                with the supervised investment bank holding company and 
                any of the company's other affiliates, and applicable 
                provisions of subchapter 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 centralization 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 examination 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 companies.--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 insurance 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 insurance 
        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 `affiliate', `bank', `bank holding 
        company', `company', `control', and `savings association' have 
        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 investment 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.--
Notwithstanding 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 complying with a request for information 
from any other Federal department 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 purposes of section 552 of title 5, United States Code, 
this subsection shall be considered a statute described in subsection 
(b)(3)(B) of such section 552. In prescribing regulations to carry out 
the requirements of this subsection, the Commission shall designate 
information 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 
        subparagraph (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.''.
        (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.

    (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 institution 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 
company'', 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.

    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.

    (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 lawfully 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 
``insurance'' means--
        (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 automobile, 
        homeowners, mortgage, commercial multiperil, general 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 
            extension of credit;
                (iii) a trust or other fiduciary service;
                (iv) a qualified financial contract (as defined in or 
            determined pursuant to section 11(e)(8)(D)(i) of the 
            Federal Deposit Insurance Act); or
                (v) a financial guaranty, except that this subparagraph 
            (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 Revenue 
                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 guaranty, 
                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, providing 
insurance (including reinsurance) outside the United States that 
insures, guarantees, or indemnifies insurance products provided 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.
    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.--
        (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 may 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 insurance.
    (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 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 Federal 
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 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 of--
        (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 prescribe 
    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, 
        advertising, or offers 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 
    prescribed pursuant to paragraph (1) shall extend such protections 
    to any subsidiary of a depository institution, as deemed 
    appropriate 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 antitying and anticoercion rules 
applicable to the sale of insurance products that prohibit a depository 
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 institution 
    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 prescribed 
pursuant to subsection (a) shall include the following provisions 
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 completion 
        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 Insurance 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 
            associated 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 unaffiliated 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 AGENCY'.
            ``(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 paragraph 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.
            ``(E) Adjustments for alternative methods of purchase.--In 
        prescribing the requirements under subparagraphs (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 appropriate, 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, transactions 
        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 
        institution to refer a customer who seeks to purchase any 
        insurance product to a qualified person who sells such product, 
        only if the person making the referral receives no more 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 appropriately 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 applicant 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 payment 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 caretaker:
            ``(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 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; and
        ``(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.--
        ``(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 Municipal 
        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 functions), 
        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, regulations, 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 
            consideration 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-Discrimination Against Non-Affiliated 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 any person engaged in 
insurance sales or solicitations that is not affiliated with a 
depository institution.''.
    SEC. 306. CERTAIN STATE AFFILIATION LAWS PREEMPTED FOR 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 any 
    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 
    reorganization 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.

    (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, Congress 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 information 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 relationships 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 activities.
    (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 insurance regulator, and 
    regarding any transaction or relationship 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 appropriate 
    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 insurance 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 depository 
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 reasonable steps to 
    oppose any effort to secure disclosure of the information or 
    material by the regulator. The appropriate Federal 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.
        (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 otherwise 
    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.

    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 Islands, and the Northern Mariana 
Islands.

             Subtitle B--Redomestication of Mutual Insurers

SEC. 311. GENERAL APPLICATION.

    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 company.

SEC. 312. REDOMESTICATION OF MUTUAL INSURERS.

    (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 subsection (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 Contracts.--
        (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 redomesticating 
        insurer may use existing policy forms with appropriate 
        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.
    (f) Procedural Requirements.--No mutual insurer may redomesticate 
to another State and reorganize into a mutual holding company pursuant 
to this section unless the State insurance regulator of the transferee 
domicile determines that the plan of reorganization of the insurer 
includes the following requirements:
        (1) Approval by board of directors and policyholders.--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 transaction on policyholder 
    contractual rights, and reasonable opportunity to vote, in 
    accordance with such notice, disclosure, and voting procedures as 
    are approved by the State insurance regulator 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 completion 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 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 policyholders 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.

    (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, taking 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 subtitle;
        (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 insurance from 
    or placed insurance with any insurer or affiliate of such insurer 
    that plans to redomesticate, or has redomesticated, pursuant to 
    this subtitle, but only to the extent that such law would treat 
    such insured licensee or other intermediary differently than if the 
    person procured insurance from, or placed insurance with, an 
    insured licensee or other intermediary 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 insurance 
    regulator or other State authority in existence immediately prior 
    to the redomestication in any State other than the transferee 
    domicile.
    (b) Differential Treatment Prohibited.--No State law, regulation, 
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 redomesticating, 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 redomesticated insurer, except that 
such licensed State may require the redomesticated insurer to--
        (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 policyholders 
    under the laws of the licensed State;
        (3) register with and designate the State insurance regulator 
    as its agent solely for the purpose of receiving service of legal 
    documents or process;
        (4) submit to an examination by the State insurance regulator 
    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 redomesticated 
        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 financial 
    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 
    insurance 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 discriminates 
    against a nonresident insurance licensee.

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.

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 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'' means a corporation, 
    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 Territory 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 redomestication.
        (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 political 
    subdivision of a State, public corporation, board, association, 
    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 ``redomesticating 
    insurer'' means a mutual insurer that is redomesticating pursuant 
    to this subtitle.
        (11) Redomestication or transfer.--The term ``redomestication'' 
    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 insurance 
    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 requirement prescribed 
    pursuant to any such statute.
        (14) Transferee domicile.--The term ``transferee domicile'' 
    means the State to which a mutual insurer is redomesticating 
    pursuant to this subtitle.
        (15) Transferor domicile.--The term ``transferor domicile'' 
    means the State from which a mutual insurer is redomesticating 
    pursuant to this subtitle.

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

SEC. 321. STATE FLEXIBILITY IN MULTISTATE LICENSING REFORMS.

     (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 and 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, 
    personal 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 conjunction 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--
            (A) a request for licensure;
            (B) the application for licensure that the producer 
        submitted 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 education 
    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 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.
        (4) Reciprocal reciprocity.--Each of the States that satisfies 
    paragraphs (1), (2), and (3) grants reciprocity to residents 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 subtitle 
    referred to as the ``NAIC'') shall determine, in consultation with 
    the insurance 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 district 
    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.
    (f) 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 purports to 
regulate unfair trade practices or establish consumer protections, 
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 construed 
to require any State to adopt new or additional licensing requirements 
to achieve the uniformity necessary to satisfy subsection (a)(1).
    SEC. 322. NATIONAL ASSOCIATION OF REGISTERED AGENTS AND BROKERS.
    (a) Establishment.--There is established the National Association 
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 corporation by 
    the District of Columbia Nonprofit Corporation Act (D.C. Code, sec. 
    29y-1001 et seq.).

SEC. 323. PURPOSE.

    The purpose of the Association shall be to provide a mechanism 
through which uniform licensing, appointment, continuing education, and 
other insurance producer sales qualification requirements 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 unfair trade 
practices.

SEC. 324. RELATIONSHIP TO THE FEDERAL GOVERNMENT.

    The Association shall be subject to the supervision and oversight 
of the NAIC.

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 preceding 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 
        overturned.
    (b) Authority To Establish Membership Criteria.--The Association 
shall have the authority to establish membership criteria 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.--
        (1) Classes of membership.--The Association may establish 
    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 types of licensing categories that exist under State 
    laws or on the aggregate amount of business handled by an insurance 
    producer. No special categories of membership, 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 education 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 membership 
        criteria of the Association; or
            (B) the producer has been subject to disciplinary action 
        pursuant to a final adjudicatory proceeding under the 
        jurisdiction 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 an office of 
    consumer complaints that shall--
            (A) receive and investigate complaints from both consumers 
        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.
        (2) Records and referrals.--The office of consumer complaints 
    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 an Internet home 
    page.

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 regulator with the next greatest 
        total dollar amount of commercial-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 chairperson, 
or as otherwise provided by the bylaws of the Association.

SEC. 327. OFFICERS.

    (a) In General.--
        (1) Positions.--The officers of the Association shall consist 
    of a chairperson and a vice chairperson of the Board, a president, 
    secretary, and treasurer of the Association, and such other 
    officers and assistant officers as may be deemed necessary.
        (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.

    (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 designate; 
        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 contrary to 
        the public interest or contrary to the purposes of this 
        subtitle and provides notice to the Association setting forth 
        the reasons for such disapproval; or
            (B) the NAIC finds that such proposal involves a matter of 
        such significant public interest that public comment should be 
        obtained, in which case it may, after notifying 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 Association 
        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.
        (2) Initial consideration by the naic.--Not later than 35 days 
    after the date of publication 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 Association 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 disapproved.
        (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 accordance 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 purposes of this 
            subsection, determines by rule do not require the 
            procedures set forth in this paragraph; or
                (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 subparagraph, 
            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 appropriate in the public interest, for the 
            protection of insurance producers or policyholders, or 
            otherwise in furtherance 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 accordance 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 determine 
    whether membership shall be denied, suspended, 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 disciplinary 
    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 sanction.
    (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 than 30 
        days after the later of--
                (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.
    (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 proceeding 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.

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 operations, including fees made 
reimbursable to the NAIC under subsection (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.

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 examinations and 
    inspections of the Association and require the Association 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.
    SEC. 331. LIABILITY OF THE ASSOCIATION AND THE DIRECTORS, OFFICERS, 
      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 law, 
rule, regulation, or order regulating or taxing insurers, insurance 
producers, or other entities engaged in the business of insurance, 
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.

    (a) In General.--The Association shall be established without NAIC 
oversight and the provisions set forth in section 324, subsections (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 activities as 
    required under this Act.
    (b) Board Appointments.--If the repeals required by subsection (a) 
are implemented, the following shall apply:
        (1) General appointment power.--The President, with the advice 
    and consent of the Senate, shall appoint the members 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 
    recommendations.--
            (A) Initial determination and recommendations.--After the 
        date on which the provisions of subsection (a) take effect, the 
        NAIC shall, not later than 60 days thereafter, 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 requirements 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 
        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 President, with 
        the advice and consent of the Senate, shall make the requisite 
        appointments without considering the views of the NAIC.
            (C) Presidential oversight.--
                (i) Removal.--If the President determines that the 
            Association is not acting in the interests of the public, 
            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 President, 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.

SEC. 333. RELATIONSHIP TO STATE LAW.

    (a) Preemption of State Laws.--State laws, regulations, provisions, 
or other actions purporting to regulate insurance producers 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 Association;
        (2) impose any requirement upon a member of the Association 
    that it pay different fees to be licensed or otherwise qualified to 
    do business in that State, including bonding requirements, based on 
    its residency;
        (3) impose any licensing, appointment, integrity, personal or 
    corporate qualifications, education, training, experience, 
    residency, or continuing education requirement upon a member of the 
    Association that is different from the criteria for membership 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 from 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, or 
action which purports to regulate unfair trade practices or establish 
consumer protections, including countersignature laws.

SEC. 334. COORDINATION WITH OTHER REGULATORS.

    (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 members 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 Securities 
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 
securities laws.

SEC. 335. JUDICIAL REVIEW.

    (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 and 
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 Association is judicially 
reviewed.

SEC. 336. DEFINITIONS.

    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 and 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.
        (4) State.--The term ``State'' includes 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.
        (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

SEC. 341. STANDARD OF REGULATION FOR MOTOR VEHICLE RENTALS.

    (a) Protection Against Retroactive Application of Regulatory 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 person 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, interpretation, 
construction, or effect of--
        (1) any State statute;
        (2) the prospective application of any court judgment 
    interpreting or applying 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 COMPANIES 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:
        ``(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 combination, 
        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 application 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 control 
            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 company or any savings 
            association that is already a subsidiary 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 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 
            ownership 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 application 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 subsequent 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)''.
    (c) Rule of Construction for Certain Applications.--
        (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 enactment 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 company 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

SEC. 501. PROTECTION OF NONPUBLIC PERSONAL INFORMATION.

    (a) Privacy Obligation Policy.--It is the policy of the Congress 
that each financial institution has an affirmative and continuing 
obligation to respect the privacy of its customers and to protect the 
security and confidentiality of those customers' nonpublic personal 
information.
    (b) Financial Institutions Safeguards.--In furtherance of the 
policy in subsection (a), each agency or authority described in section 
505(a) shall establish appropriate standards for the financial 
institutions subject to their jurisdiction relating to administrative, 
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 PERSONAL 
      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 financial 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 financial 
    institution from providing nonpublic personal information to a 
    nonaffiliated third party to perform services for or functions 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 providing of 
    such information and enters into a contractual agreement 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 institution.
    (d) Limitations on the Sharing of Account Number Information for 
Marketing Purposes.--A financial institution 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 
    transaction requested or authorized by the consumer, or in 
    connection 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 extension 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 
    financial institution's records pertaining to the consumer, the 
    service or product, or the transaction 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 representative 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 organizations, 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 
    operating 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 properly 
    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 authorities having 
    jurisdiction over the financial institution for examination, 
    compliance, or other purposes as authorized by law.

SEC. 503. DISCLOSURE OF INSTITUTION PRIVACY POLICY.

    (a) Disclosure Required.--At the time of establishing a customer 
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 institution'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 consumers.
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 information 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.

    (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 consultation 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 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 comparable with the 
    regulations prescribed by the other such agencies 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 prescribed 
under subsection (a) may include such additional exceptions to 
subsections (a) through (d) of section 502 as are deemed consistent 
with the purposes of this subtitle.

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 agencies 
        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 foreign 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, persons providing 
        insurance, investment companies, and investment advisers), by 
        the Board of Directors of the Federal 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 brokers, 
        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.
        (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 investment companies.
        (5) Under the Investment Advisers Act of 1940, by the 
    Securities and Exchange Commission with respect to investment 
    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 insurance 
    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 Federal 
    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 
    implement 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 insurance 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 
    regulations as necessary to carry out the purposes of this Act with 
    respect to any persons identified under paragraphs (1) and (2) of 
    subsection (b), and the Board of Governors of the Federal Reserve 
    System shall have authority to prescribe regulations consistent 
    with such joint regulations with respect to bank holding companies 
    and affiliates (other than depository institutions and consumer 
    reporting agencies) of such holding companies.
        ``(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).
    (c) Relation to Other Provisions.--Except for the amendments 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 information is transaction or experience 
information under section 603 of such Act.

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 protection 
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.
    SEC. 508. STUDY OF INFORMATION SHARING AMONG FINANCIAL AFFILIATES.
    (a) In General.--The Secretary of the Treasury, in conjunction with 
the Federal functional regulators and the Federal Trade Commission, 
shall conduct a study of information sharing practices among financial 
institutions and their affiliates. Such study shall 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 
    affiliates 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 privacy;
        (7) the adequacy of financial institution privacy policy and 
    privacy rights disclosure under existing law;
        (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 representatives 
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 
submit a report to the Congress containing the findings and conclusions 
of the study required under subsection (a), together with such 
recommendations for legislative or administrative action as may be 
appropriate.

SEC. 509. DEFINITIONS.

    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 
    functional 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 Insurance 
        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.--Notwithstanding 
        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 Commodity 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.--Notwithstanding 
        subparagraph (A), the term ``financial institution'' 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 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 institution;
                (ii) resulting from any transaction with the consumer 
            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 information 
            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 information 
            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 transaction'' 
    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 provided 
            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 financial 
        institution or of other persons engaged in carrying 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 
        consumer's request or for reinsurance purposes, or for any of 
        the following purposes as they relate to a consumer's 
        insurance: Account administration, reporting, investigating, or 
        preventing fraud or material misrepresentation, processing 
        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, processing, 
            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 payment 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 insurance 
    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 financial 
    institutions jointly offer, endorse, or sponsor a financial product 
    or service, and as may be further defined in the regulations 
    prescribed under section 504.
        (11) Customer relationship.--The term ``time of establishing a 
    customer relationship'' shall be defined by the regulations 
    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 consumer.

SEC. 510. EFFECTIVE DATE.

    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 
    enactment.

         Subtitle B--Fraudulent Access to Financial Information

    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 information 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 fraudulent 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 fraudulently obtained, or 
    contains a false, fictitious, or fraudulent statement or 
    representation.
    (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 from the institution in 
any manner described in subsection (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 of--
        (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 
    institution which was obtained or received by another person in any 
    manner described in subsection (a) or (b).
    (e) Nonapplicability to Insurance Institutions for Investigation 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.
    (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 otherwise 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 Judgments.--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 necessary 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 
jurisdiction.

SEC. 522. ADMINISTRATIVE ENFORCEMENT.

    (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 of--
                (i) national banks, and Federal branches and Federal 
            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 section 25 or 25A of the 
            Federal Reserve Act, by the Board;
                (iii) banks insured by the Federal Deposit Insurance 
            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 Corporation; 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 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.

SEC. 523. CRIMINAL PENALTY.

    (a) In General.--Whoever knowingly and intentionally violates, 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 violates, 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.

SEC. 524. RELATION TO STATE LAWS.

    (a) In General.--This subtitle shall not be construed as 
superseding, 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 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 protection 
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.

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 guidelines applicable to 
financial institutions under their respective jurisdictions and shall 
prescribe such revisions to such regulations and guidelines as may be 
necessary to ensure that such financial institutions 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.

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 Administration, the 
Securities and Exchange Commission, appropriate 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 
    regulatory 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 Congress an annual 
report on number and disposition of all enforcement actions taken 
pursuant to this subtitle.

SEC. 527. DEFINITIONS.

    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 representative 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 institution which is 
    derived from the relationship between the financial institution and 
    a customer of the financial institution and is identified with the 
    customer.
        (3) Document.--The term ``document'' means any information 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 investment adviser or 
        investment company, any insurance company, 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 consumers 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)(11) of the Investment 
            Advisers Act of 1940 (15 U.S.C. 80b-2(a)); and
                (iii) the term ``investment company'' has the same 
            meaning as given in section 3 of the Investment Company 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 operating 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 and Exchange Commission, may prescribe 
        regulations clarifying or describing the types of institutions 
        which shall be treated as financial institutions for purposes 
        of this subtitle.

         TITLE VI--FEDERAL HOME LOAN BANK SYSTEM MODERNIZATION

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 transaction 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:
    ``(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 membership 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 
    subparagraphs (A) through (D), respectively, and indenting 
    appropriately;
        (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 
    following:
        ``(2) Purposes of advances.--A long-term advance may only be 
    made for the purposes of--
            ``(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 paragraph 
        (1) of this subsection) by striking ``Deposits'' and inserting 
        ``Cash or deposits'';
            (B) in subparagraph (D) (as so redesignated by paragraph 
        (1) of this subsection), by striking the second sentence; and
            (C) by inserting after subparagraph (D) (as so redesignated 
        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 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 Federal 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 
    redesignating 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 association 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 community 
    financial institution)'' after ``institution'';
        (2) in the matter immediately following paragraph (2)(C)--
            (A) by striking ``An insured'' and inserting the following:
        ``(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 otherwise 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 ``, 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 \1/3\ 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 from 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 Chairperson 
    shall act as Chairperson.
        ``(4) Procedures.--The board of directors of each Federal home 
    loan bank 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 from 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 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 construed as 
        prohibiting the reimbursement of expenses incurred by members 
        of the board of directors of any Federal 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 reasonable cause to believe 
    that the Bank, executive officer, or director is about to engage in 
    an unsafe or unsound practice in conducting 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 paragraphs (6) and (7) of section 
    8(b) of the Federal Deposit Insurance 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 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 
        regulation 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 regulation 
        or supervision of any Federal home loan bank.''.
        (2) Technical amendment.--Section 111 of Public 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,''.
    (f) 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 10.--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 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 appropriate present value factors for making such 
            determinations, in consultation with the Secretary of the 
            Treasury.
                ``(iii) Payment term alterations.--The Board shall 
            extend or shorten the term of the payment obligations of a 
            Federal home loan bank under this subparagraph as necessary 
            to ensure that the value of all payments made by the Banks 
            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.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
become effective on January 1, 2000. Payments 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.--
        ``(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 regulations 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).
        ``(2) Leverage requirement.--
            ``(A) In general.--The leverage requirement shall require 
        each Federal home loan bank to maintain a minimum 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 without 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 standards.--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 Enterprises 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 
        enterprises.
        ``(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 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 membership 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 loan bank shall 
        include--
                ``(i) the amounts paid for the Class B stock; and
                ``(ii) the retained earnings of the bank (as determined 
            in accordance with generally accepted accounting 
            principles); and
            ``(B) total capital of a Federal home loan 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 bank that the Finance Board 
            determines by regulation to be appropriate to include in 
            determining total capital.
        ``(6) Transition period.--Notwithstanding any other provision 
    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 Modernization 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.--
        ``(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 structure 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 requirements 
        established under subsection (a) and other regulations 
        prescribed by the Finance Board.
        ``(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 subparagraph (A), 
            a Federal home loan bank may, in its discretion, 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 minimum 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 investment.--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 necessary 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.
            ``(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 bank 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 Federal 
        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 establishing 
        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 members; 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 structure 
    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 
        determine, to the extent possible, whether implementation of 
        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 dividends and other membership rights commensurate with 
    continuing 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 determines that--
                ``(i) the member has failed to comply with a provision 
            of this Act or any regulation prescribed under this Act; or
                ``(ii) the member has been determined to be insolvent, 
            or otherwise subject to the appointment of a conservator, 
            receiver, or other legal custodian, by a Federal or State 
            authority with regulatory and supervisory responsibility 
            for the member.
            ``(B) Stock disposition.--An institution, the membership of 
        which is terminated in accordance with subparagraph (A)--
                ``(i) shall surrender redeemable stock to the Federal 
            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 of--
                ``(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 outstanding 
    indebtedness of the member to the bank shall be liquidated in an 
    orderly manner, as determined by the bank 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 any 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 institution 
    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 membership 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 bank 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 
    distribution, the bank would continue to meet all applicable 
    capital requirements.''.

                      TITLE VII--OTHER PROVISIONS
                       Subtitle A--ATM Fee Reform

SEC. 701. SHORT TITLE.

    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) of--
                ``(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 
            committed to completing the transaction.
            ``(C) Prohibition on fees not properly disclosed and 
        explicitly assumed by 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 subparagraph (A), unless--
                ``(i) the consumer receives such notice in accordance 
            with subparagraph (B); and
                ``(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 `electronic 
            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 operator.''.
    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 
    paragraph:
        ``(10) a notice to the consumer that a fee may be imposed by--
            ``(A) an automated teller machine operator (as defined in 
        section 904(d)(3)(D)(i)) if the consumer initiates a transfer 
        from 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 transaction, 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;
            (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 types of institutions, if implemented.
        (4) The period of time that would be reasonable for 
    implementing 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 subsection:
    ``(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 compliance 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:

``SEC. 48. CRA SUNSHINE REQUIREMENTS.

    ``(a) Public Disclosure of Agreements.--Any agreement (as defined 
in subsection (e)) entered into after the date of the enactment of the 
Gramm-Leach-Bliley Act by an insured depository institution or 
affiliate with a nongovernmental entity or person made pursuant to or 
in connection with the Community Reinvestment 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 depository 
    institution and to the public by each party to the agreement; 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 responsibility 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 pursuant to 
    the agreement.
        ``(3) Such other pertinent matters as determined by regulation 
    by the appropriate Federal banking agency with supervisory 
    responsibility over the insured depository institution.
    ``(c) Annual Report of Activity by Nongovernmental Entities.--
        ``(1) In general.--Each nongovernmental entity or person that 
    is not an affiliate of an insured depository institution and 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 paragraph 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 agency with 
    supervisory responsibility over the insured depository institution.
    ``(d) Applicability.--Subsections (b) and (c) shall not apply with 
respect to any 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 affiliate 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 nongovernmental 
            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 appropriate 
    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 
        institution under section 807 of the Community Reinvestment Act 
        of 1977.
    ``(f) Violations.--
        ``(1) Violations by persons other than insured depository 
    institutions or their affiliates.--
            ``(A) Material failure to comply.--If the party to an 
        agreement described in subsection (a) that is not an insured 
        depository institution or affiliate 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 appropriate Federal 
        banking agency with supervisory responsibility 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 Federal banking agency may 
    assist the insured depository institution 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 paragraph (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 protected; and
            ``(B) establish procedures to allow any nongovernmental 
        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 banking 
        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)(1)(B)(iii); and
            ``(B) to provide further exemptions under such subsection, 
        consistent with the purposes of this section.
        ``(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 possible, 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.

    ``(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 financial 
    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 CRA Examinations in Connection With 
Applications for Deposit Facilities.--A regulated financial institution 
described in subsection (a) shall remain subject to examination 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 conduct 
a comprehensive study, in consultation with the Chairman 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 report and 
supporting data shall also be made available by the Board of Governors 
of the Federal Reserve System to the public.

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 subsection (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 of--
        (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).
    (c) Definition.--For purposes of this section, the term ``S 
corporation'' 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 FEDERAL 
      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''.
    SEC. 725. PROVISION OF TECHNICAL ASSISTANCE TO MICROENTERPRISES.
    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'.

``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 disadvantaged 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 `disadvantaged 
    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 private, 
    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 organization or program' 
    means a nonprofit entity, or a program administered by such an 
    entity, including community development corporations or other 
    nonprofit development organizations and social service 
    organizations, that provides services to disadvantaged 
    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 Grant Act (42 U.S.C. 
    9902(2)), including any revision required by that section).

``SEC. 173. ESTABLISHMENT OF PROGRAM.

    ``The Administrator shall establish a microenterprise technical 
assistance and capacity building grant program to provide assistance 
from the Administration in the form of grants to qualified 
organizations in accordance with this subtitle.

``SEC. 174. USES OF ASSISTANCE.

    ``A qualified organization shall use grants made under this 
subtitle--
        ``(1) to provide training and technical assistance to 
    disadvantaged entrepreneurs;
        ``(2) to provide training and capacity building services to 
    microenterprise development organizations and programs and groups 
    of such organizations to assist such organizations and programs in 
    developing microenterprise training and services;
        ``(3) to aid in researching and developing the best practices 
    in the field of microenterprise and technical assistance programs 
    for disadvantaged entrepreneurs; and
        ``(4) for such other activities as the Administrator determines 
    are consistent with the purposes of this subtitle.

``SEC. 175. QUALIFIED ORGANIZATIONS.

    ``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 
    can certify that no private organization or program referred to in 
    this paragraph exists within its jurisdiction.

``SEC. 176. ALLOCATION OF ASSISTANCE; SUBGRANTS.

    ``(a) Allocation of Assistance.--
        ``(1) In general.--The Administrator shall allocate assistance 
    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 funded 
        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 appropriated 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.--
        ``(1) In general.--A qualified organization receiving 
    assistance under this subtitle may provide grants using that 
    assistance to qualified small and emerging microenterprise 
    organizations 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 SBA 
Program Participants.--In making grants under this subtitle, 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.

``SEC. 177. MATCHING REQUIREMENTS.

    ``(a) In General.--Financial assistance under this subtitle shall 
be matched with funds from sources other than the Federal Government 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 paragraph (1) of this subsection.

``SEC. 178. APPLICATIONS FOR ASSISTANCE.

    ``An application for assistance under this subtitle shall be 
submitted in such form and in accordance with such procedures as the 
Administrator shall establish.

``SEC. 179. RECORDKEEPING.

    ``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 institution 
receiving assistance from the Fund under subtitle A.

``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;
        ``(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.

    ``The Administrator shall, by regulation, establish such 
requirements as may be necessary to carry out this subtitle.''.

SEC. 726. FEDERAL RESERVE AUDITS.

    The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended by 
inserting after section 11A the following new section:

``SEC. 11B. ANNUAL INDEPENDENT AUDITS OF FEDERAL RESERVE BANKS AND 
              BOARD.

    ``The Board shall order an annual independent audit of the 
financial statements of each Federal reserve bank and the Board.''.

SEC. 727. AUTHORIZATION TO RELEASE REPORTS.

    (a) Federal Reserve Act.--The eighth undesignated paragraph 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 
any report of examination or other confidential 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)--
            (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 
    Exchange Commission'' and inserting ``, the Securities and Exchange 
    Commission, and the Commodity Futures Trading Commission''.
    SEC. 728. GENERAL ACCOUNTING OFFICE STUDY OF CONFLICTS OF 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.
    (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 containing 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 appropriate, including recommendations for 
resolving any such conflict of interest.
    SEC. 729. STUDY AND REPORT ON ADAPTING EXISTING LEGISLATIVE 
      REQUIREMENTS TO ONLINE BANKING AND LENDING.
    (a) Study Required.--The Federal banking agencies shall conduct a 
study of banking regulations regarding the delivery of financial 
services, including those regulations that may assume that there will 
be person-to-person contact during the course of a financial 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 conservator 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 equitable 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 
        undercapitalized (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--
                ``(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. 1831u) 
is amended--
        (1) by redesignating subsection (f) as subsection (g); and
        (2) by inserting after subsection (e) the following new 
    subsection:
    ``(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, without 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 transaction 
        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 subsection 
    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 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 Comptroller 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 if--
                ``(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 Federal 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 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 Governors 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.
    (b) Emergency Oil and Gas Loan Guarantee Board.--Section 201(d)(2) 
of the Emergency Oil and Gas Guarantee Loan Program Act is amended--
        (1) in subparagraph (B), 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 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)'' and 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 Insurance 
Funds Act of 1996 (12 U.S.C. 1821 note) is amended--
        (1) by striking subsection (b); and
        (2) in subsection (d)--
            (A) by striking paragraph (4);
            (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 by this 
section shall become effective on the date of the enactment of this 
Act.
    SEC. 737. BANK OFFICERS AND DIRECTORS AS OFFICERS AND DIRECTORS 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 of--
                ``(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, trust company, 
            banking association, or firm to underwrite or participate 
            in the marketing of securities of the public utility, if 
            the person serves as an officer or director of a bank, 
            trust company, banking association, or firm that is under 
            consideration in the deliberation 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 public utility of which the 
            person holds the position of officer or director;
                ``(iii) the public utility 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 an 
            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 purchase 
or acquisition of such securities has been approved, before such 
securities are initially offered for sale to the public, by a majority 
of the directors of the bank 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 ASSOCIATIONS.
    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 Currency 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 enactment 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--
        (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''.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.