Industrial bank holding company regulation

(a)

Definitions

(1)

Industrial bank

Section 3(a) of the Federal Deposit Insurance Act (12 U.S.C. 1813(a)) is amended by adding at the end the following new paragraph:

(5)

Industrial bank

The term industrial bank means any insured State bank that is an industrial bank, industrial loan company, or other institution described in section 2(c)(2)(H) of the Bank Holding Company Act of 1956.

(2)

Industrial bank holding company

Section 3(w) of the Federal Deposit Insurance Act (12 U.S.C. 1813(w)) is amended by adding at the end the following new paragraph:

(8)

Industrial bank holding company

The term industrial bank holding company means any company that— (A)controls (as determined by the Corporation), directly or indirectly, any industrial bank; and (B)is not a bank holding company, a savings and loan holding company, or a company that is subject to the Bank Holding Company Act of 1956 pursuant to section 8(a) of the International Banking Act of 1978.

(3)

Technical and conforming amendments to other definitions

(A)

Appropriate federal banking agency

Section 3(q)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)(3)) is amended— (i)by striking or a foreign and inserting , any foreign; and (ii)by inserting , and any industrial bank holding company after insured branch. (B)

Depository institution holding company

Section 3(w)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1)) is amended— (i)by striking or a savings and inserting , any savings; and (ii)by inserting , and any industrial bank holding company before the period at the end. (b)

Industrial bank holding company registration and ownership

The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by adding at the end the following new section:

50.

Industrial bank holding company regulation

(a)

Registration

(1)

In general

Within 90 days after becoming an industrial bank holding company, each industrial bank holding company shall register with the Corporation on forms prescribed by the Corporation. (2)

Information to be included

Each registration submitted under paragraph (1) shall include such information, under oath, with respect to the financial condition, ownership, operations, management, and intercompany relationships of the industrial bank holding company and subsidiaries of such holding company, and other factors (including information described in subsection (b)(1)(C)), as the Corporation may determine to be appropriate to carry out the purposes of this section. (3)

Extension of time for submitting complete information

Upon application by an industrial bank holding company and subject to such requirements, factors, and evidence as the Corporation may require, the Corporation may extend the period described in paragraph (1) within which such company shall register and file the requisite information. (4)

Application to prior holding companies

In the case of any company that becomes an industrial bank holding company by virtue of the enactment of the Industrial Bank Holding Company Act of 2006, the 90-day period referred to in paragraph (1) shall begin on the date of the enactment of such Act. (b)

Reports and examinations

(1)

Reports

(A)

Reports required

Each industrial bank holding company and each subsidiary of an industrial bank holding company, other than an industrial bank, shall file with the Corporation such reports as may be required by the Corporation. (B)

Form and manner

Reports filed under subparagraph (A) shall be made under oath and shall be in such form and for such periods, as the Corporation may prescribe. (C)

Information

Each report filed under subparagraph (A) shall contain such information as the Corporation may require concerning— (i)the operations of the industrial bank holding company and its subsidiaries; (ii)the financial condition of the industrial bank holding company and such subsidiaries, together with information on systems maintained within the holding company for monitoring and controlling financial and operating risks, and transactions with industrial bank subsidiaries of the holding company; (iii)compliance by the industrial bank holding company and its subsidiaries with all applicable Federal and State law; and (iv)such other information as the Corporation may require. (D)

Acceptance of existing reports

For purposes of this paragraph, the Corporation may accept reports that an industrial bank holding company or any subsidiary of such company has provided or has been required to provide to any other Federal or State supervisor or to any appropriate self-regulatory organization. (2)

Examinations

(A)

In general

Each industrial bank holding company and each subsidiary of each such holding company (other than an industrial bank) shall be subject to such examinations by the Corporation as the Corporation may prescribe for purposes of this section. (B)

Furnishing reports to other agencies

Examination and other reports made or received under this section may be furnished by the Corporation to any other Federal agency or any appropriate State bank supervisor. (C)

Use of reports from other agencies

The Corporation may use, for the purposes of this subsection, reports of examination made by any other Federal agency or any appropriate State bank supervisor with respect to any industrial bank holding company or subsidiary of any such holding company, to the extent the Corporation may determine such use to be feasible for such purposes. (c)

Limitation on control

(1)

In general

Except as provided in paragraph (3) or (4), no industrial bank may be controlled, directly or indirectly, by a commercial firm. (2)

Commercial firm defined

For purposes of this section, the term commercial firm means any entity at least 15 percent of the annual gross revenues of which on a consolidated basis, including all affiliates of the entity, were derived from engaging, on an on-going basis, in activities that are not financial in nature or incidental to a financial activity during at least 3 of the prior 4 calendar quarters, as determined by the Corporation in accordance with regulations which the Corporation shall prescribe. (3)

Pre-2003 exclusions

(A)

Grandfathered institutions

Paragraph (1) shall not apply with respect to any industrial bank— (i)which became an insured depository institution before October 1, 2003, or pursuant to an application for deposit insurance which was approved by the Corporation before such date; and (ii)with respect to which there is no change in control, directly or indirectly, of the bank after September 30, 2003, that requires a registration under this section or an application under section 7(j) or 18(c), section 3 of the Bank Holding Company Act of 1956, or section 10 of the Home Owners’ Loan Act. (B)

Corporate reorganizations permitted

The acquisition of direct or indirect control of the industrial bank referred to in subparagraph (A)(ii) shall not be treated as a change in control for purposes of such subparagraph if the company acquiring control is itself directly or indirectly controlled by a company that was an affiliate of such bank on the date referred to in such paragraph, and remains an affiliate at all times after such date. (4)

Pre-2006 exclusions

(A)

Grandfathered commercial firms

Paragraph (1) shall not apply to any commercial firm— (i)which became an industrial bank holding company by virtue of acquiring control of an industrial bank on or after October 1, 2003, and before June 1, 2006; (ii)which does not acquire control of any other depository institution after May 31, 2006; (iii)with respect to which there is no change in control, directly or indirectly, of any depository institution subsidiary after June 1, 2006, that requires a registration under this section or an application under section 7(j) or 18(c), section 3 of the Bank Holding Company Act of 1956, or section 10 of the Home Owners’ Loan Act; and (iv)each industrial bank subsidiary of which remains in compliance with the limitations contained in subparagraph (B). (B)

Activity and branching limitations

An industrial bank subsidiary of a commercial firm described in clauses (i), (ii) and (iii) of subparagraph (A) is in compliance with the requirements of this subparagraph for purposes of subparagraph (A)(iv) so long as the industrial bank— (i)engages only in activities in which the industrial bank was engaged on May 31, 2006; and (ii)does not acquire, establish, or operate any branch, deposit production office, loan production office, automated teller machine, or remote service unit in any State other than the home State of the bank or any host State in which such bank operated branches on May 31, 2006. (C)

Corporate reorganizations permitted

The acquisition of direct or indirect control of a depository institution subsidiary referred to in subparagraph (A)(iii) shall not be treated as a change in control for purposes of such subparagraph if the company acquiring control is itself directly or indirectly controlled by a company that was an affiliate of such subsidiary on the date referred to in such paragraph, and remains an affiliate at all times after such date. (5)

Transition provision

Any divestiture of any industrial bank by an industrial bank holding company that is required by operation of this section shall be completed as quickly as is reasonably possible and not later than the end of the 2-year period beginning on the earliest of, as appropriate— (A)the date on which control of the industrial bank is acquired by a commercial firm; (B)the date on which the industrial bank holding company that controls such bank becomes a commercial firm; or (C)the date on which an industrial bank subsidiary of the industrial bank holding company ceases to comply with any limitation applicable to such bank under paragraph (4)(B). (d)

Administrative provisions

(1)

Agent for service of process

The Corporation may require any industrial bank holding company, or persons connected with such holding company if it is not a corporation, to execute and file a prescribed form of irrevocable appointment of agent for service of process. (2)

Release from registration

The Corporation may at any time, upon the Corporation’s own motion or upon application, release a registered industrial bank holding company from any registration previously made by such company, if the Corporation determines that such company no longer controls any industrial bank.

(c)

Enforcement

Section 8(b) of the Federal Deposit Insurance Act (12 U.S.C. 1818(b)) is amended by adding at the end the following new paragraph:

(11)

Industrial bank holding companies

This subsection and subsections (c) through (s) and subsection (u) of this section shall apply to any industrial bank holding company, and to any subsidiary (other than an industrial bank) of an industrial bank holding company in the same manner as such subsections apply to State nonmember banks.

(d)

Technical and conforming amendment

Section 10(e)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1820(e)(2)) is amended by inserting or section 50(b)(2) after subsection (b)(4).