[Congressional Record Volume 145, Number 65 (Thursday, May 6, 1999)]
[Senate]
[Pages S4918-S4928]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          AMENDMENTS SUBMITTED

                                 ______
                                 

              FINANCIAL SERVICES MODERNIZATION ACT OF 1999

                                 ______
                                 

                SANTORUM (AND BUNNING) AMENDMENT NO. 307

  Mr. SANTORUM (for himself and Mr. Bunning) proposed an amendment to 
the bill (S. 900) 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; as follows:


[[Page S4919]]


       At the appropriate place, insert the following:
       (e) Use of Fund Reserves To Pay FICO Obligations.--Section 
     7(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 
     1817(b)(2)) is amended by inserting after subparagraph (C) 
     the following:
       ``(D) Use of deposit insurance funds to pay certain 
     financing corporation obligations.--
       ``(i) In general.--Beginning on January 1, 2000, the Board 
     of Directors shall use the funds of the Bank Insurance Fund 
     and the Savings Association Insurance Fund in excess of 1.35 
     percent of estimated insured deposits or such level 
     established by the Board of Directors pursuant to Section 
     7(b)(2)(A)(iv)(II) of the Federal Deposit Insurance Act (12 
     U.S.C. 1817(b)(2)(A)(iv)(II) to pay the bond interest 
     obligations of the Financing Corporation.
       ``(ii) Limitation.--If the funds available under clause (i) 
     are insufficient to meet the Financing Corporation's annual 
     interest obligations, the Board of Directors shall use such 
     amounts available under clause (i) and shall impose a special 
     assessment, consistent with 12 U.S.C. 1441(f)(2) and Section 
     2703(c)(2)(A) of the Deposit Insurance Funds Act of 1996, on 
     insured depository institutions in such amount and for such 
     period as is necessary to generate funds sufficient to permit 
     the Financing Corporation to meet all interest obligations 
     due.
                                 ______
                                 

                        GRAMM AMENDMENT NO. 308

  Mr. GRAMM proposed an amendment to the bill, S. 900, supra; as 
follows:

       On page 98, strike lines 5 through 9, and insert the 
     following:

     SEC. 304. FINANCIAL INFORMATION PRIVACY PROTECTION.

       (a) Financial Information Anti-Fraud.--The Consumer Credit 
     Protection Act (15 U.S.C. 1601 et seq.) is amended by adding 
     at the end the following:

          ``TITLE X--FINANCIAL INFORMATION PRIVACY PROTECTION

     ``SEC. 1001. SHORT TITLE; TABLE OF CONTENTS.

       ``(a) Short Title.--This title may be cited as the 
     `Financial Information Anti-Fraud Act of 1999'.
       ``(b) Table of Contents.--The table of contents for this 
     title is as follows:

          ``TITLE X--FINANCIAL INFORMATION PRIVACY PROTECTION

``Sec. 1001. Short title; table of contents.
``Sec. 1002. Definitions.
``Sec. 1003. Privacy protection for customer information of financial 
              institutions.
``Sec. 1004. Administrative enforcement.
``Sec. 1005. Civil liability.
``Sec. 1006. Criminal penalty.
``Sec. 1007. Relation to State laws.
``Sec. 1008. Agency guidance.

     ``SEC. 1002. DEFINITIONS.

       ``For purposes of this title, 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 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 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)).
       ``(C) Further definition by regulation.--The Board of 
     Governors of the Federal Reserve System may prescribe 
     regulations further defining the term `financial 
     institution', in accordance with subparagraph (A), for 
     purposes of this title.

     ``SEC. 1003. PRIVACY PROTECTION FOR CUSTOMER INFORMATION OF 
                   FINANCIAL INSTITUTIONS.

       ``(a) Prohibition on Obtaining Customer Information by 
     False Pretenses.--It shall be a violation of this title 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 knowingly making a false, fictitious, or 
     fraudulent statement or representation to an officer, 
     employee, or agent of a financial institution with the intent 
     to deceive the officer, employee, or agent into relying on 
     that statement or representation for purposes of releasing 
     the customer information;
       ``(2) by knowingly making a false, fictitious, or 
     fraudulent statement or representation to a customer of a 
     financial institution with the intent to deceive the customer 
     into relying on that statement or representation for purposes 
     of releasing the customer information or authorizing the 
     release of such information; or
       ``(3) by knowingly 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, if the document is 
     provided with the intent to deceive the officer, employee, or 
     agent into relying on that document for purposes of releasing 
     the customer information.
       ``(b) Prohibition on Solicitation of a Person To Obtain 
     Customer Information From Financial Institution Under False 
     Pretenses.--It shall be a violation of this title to request 
     a person to obtain customer information of a financial 
     institution, knowing or consciously avoiding 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 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 Certain Types of Customer 
     Information of Financial Institutions.--No provision of this 
     section shall be construed 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).

     ``SEC. 1004. ADMINISTRATIVE ENFORCEMENT.

       ``(a) Enforcement by Federal Trade Commission.--Except as 
     provided in subsection (b), compliance with this title 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 that title.
       ``(b) Enforcement by Other Agencies in Certain Cases.--
       ``(1) In general.--Compliance with this title 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 title 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 title 
     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 title, any other 
     authority conferred on such agency by law.
       ``(c) State Action for Violations.--
       ``(1) Authority of states.--In addition to such other 
     remedies as are provided under State law, if the chief law 
     enforcement officer of a State, or an official or agency 
     designated by a State, has reason to believe that any person 
     has violated or is violating this title, the State--
       ``(A) may bring an action to enjoin such violation in any 
     appropriate United States district court or in any other 
     court of competent jurisdiction;
       ``(B) may bring an action on behalf of the residents of the 
     State to recover damages of not more than $1,000 for each 
     violation; and

[[Page S4920]]

       ``(C) in the case of any successful action under 
     subparagraph (A) or (B), shall be awarded the costs of the 
     action and reasonable attorney fees as determined by the 
     court.
       ``(2) Rights of federal regulators.--
       ``(A) Prior notice.--The State shall serve prior written 
     notice of any action under paragraph (1) upon the Federal 
     Trade Commission and, in the case of an action which involves 
     a financial institution described in section 1004(b)(1), the 
     agency referred to in such section with respect to such 
     institution and provide the Federal Trade Commission and any 
     such agency with a copy of its complaint, except in any case 
     in which such prior notice is not feasible, in which case the 
     State shall serve such notice immediately upon instituting 
     such action.
       ``(B) Right to intervene.--The Federal Trade Commission or 
     an agency described in subsection (b) shall have the right--
       ``(i) to intervene in an action under paragraph (1);
       ``(ii) upon so intervening, to be heard on all matters 
     arising therein;
       ``(iii) to remove the action to the appropriate United 
     States district court; and
       ``(iv) to file petitions for appeal.
       ``(3) Investigatory powers.--For purposes of bringing any 
     action under this subsection, no provision of this subsection 
     shall be construed as preventing the chief law enforcement 
     officer, or an official or agency designated by a State, from 
     exercising the powers conferred on the chief law enforcement 
     officer or such official by the laws of such State to conduct 
     investigations or to administer oaths or affirmations or to 
     compel the attendance of witnesses or the production of 
     documentary and other evidence.
       ``(4) Limitation on state action while federal action 
     pending.--If the Federal Trade Commission or any agency 
     described in subsection (b) has instituted a civil action for 
     a violation of this title, no State may, during the pendency 
     of such action, bring an action under this section against 
     any defendant named in the complaint of the Federal Trade 
     Commission or such agency for any violation of this title 
     that is alleged in that complaint.

     ``SEC. 1005. CIVIL LIABILITY.

       ``Any person, other than a financial institution, who fails 
     to comply with any provision of this title with respect to 
     any financial institution or any customer information of a 
     financial institution shall be liable to such financial 
     institution or the customer to whom such information relates 
     in an amount equal to the sum of the amounts determined under 
     each of the following paragraphs:
       ``(1) Actual damages.--The greater of--
       ``(A) the amount of any actual damage sustained by the 
     financial institution or customer as a result of such 
     failure; or
       ``(B) any amount received by the person who failed to 
     comply with this title, including an amount equal to the 
     value of any nonmonetary consideration, as a result of the 
     action which constitutes such failure.
       ``(2) Additional damages.--Such additional amount as the 
     court may allow.
       ``(3) Attorneys' fees.--In the case of any successful 
     action to enforce any liability under paragraph (1) or (2), 
     the costs of the action, together with reasonable attorneys' 
     fees.

     ``SEC. 1006. CRIMINAL PENALTY.

       ``(a) In General.--Whoever violates, or attempts to 
     violate, section 1003 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 1003 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. 1007. RELATION TO STATE LAWS.

       ``(a) In General.--This title 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 title, 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 title if the protection such statute, regulation, order, 
     or interpretation affords any person is greater than the 
     protection provided under this title.

     ``SEC. 1008. AGENCY GUIDANCE.

       ``In furtherance of the objectives of this title, each 
     Federal banking agency (as defined in section 3(z) of the 
     Federal Deposit Insurance Act) shall issue advisories to 
     depository institutions under the jurisdiction of the agency, 
     in order to assist such depository institutions in deterring 
     and detecting activities proscribed under section 1003.''.
       (b) Report to Congress on Financial Privacy.--Not later 
     than 18 months after the date of enactment of this Act, the 
     Comptroller General of the United States, in consultation 
     with the Federal Trade Commission, the Federal banking 
     agencies, and other appropriate Federal law enforcement 
     agencies, shall submit to the Congress a report on--
       (1) the efficacy and adequacy of the remedies provided in 
     the amendments made by subsection (a) in addressing attempts 
     to obtain financial information by fraudulent means or by 
     false pretenses; and
       (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.
       (c) Reports on Ongoing FTC Study of Consumer Privacy 
     Issues.--With respect to the ongoing multistage study being 
     conducted by the Federal Trade Commission on consumer privacy 
     issues, the Commission shall submit to the Congress an 
     interim report on the findings and conclusions of the 
     Commission, together with such recommendations for 
     legislative and administrative action as the Commission 
     determines to be appropriate, at the conclusion of each stage 
     of such study and a final report at the conclusion of the 
     study.
       (d) Consumer Grievance Process.--The Federal banking 
     agencies (as that term is defined in section 3 of the Federal 
     Deposit Insurance Act) shall jointly establish a consumer 
     complaint mechanism, for receiving and expeditiously 
     addressing consumer complaints alleging a violation of 
     regulations issued under section 45 of the Federal Deposit 
     Insurance Act (as added by section 202 of this Act), which 
     mechanism shall--
       (1) establish a group within each Federal banking agency to 
     receive such complaints; and
       (2) develop procedures for--
       (A) investigating such complaints;
       (B) informing consumers of rights they may have in 
     connection with such complaints; and
       (C) addressing concerns raised by such complaints, as 
     appropriate, including procedures for the recovery of losses, 
     to the extent appropriate.
                                 ______
                                 

                 JOHNSON (AND OTHERS) AMENDMENT NO. 309

  Mr. JOHNSON (for himself, Mr. Thomas, Mr. Kerrey, Mr. Daschle, Mr. 
Dorgan, Mr. Kohl, and Mrs. Lincoln) proposed an amendment to the bill, 
S. 900, supra; as follows:

       On page 149, strike line 12 and all that follows through 
     page 150, line 21 and insert the following:

     SEC. 601. 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 March 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 March 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,

[[Page S4921]]

     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 March 4, 1999, or a subsequent date, 
     pursuant to an application pending before the Office on or 
     before March 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 March 4, 1999, or a subsequent date, pursuant to an 
     application pending before the Office on or before March 4, 
     1999.''.
       (b) Conforming Amendment.--Section 10(o)(5)(E) of the Home 
     Owners' Loan Act (15 U.S.C. 1467a(o)(5)(E)) is amended by 
     striking ``, except subparagraph (B)'' and inserting ``or 
     (c)(9)(A)(ii)''.
                                 ______
                                 

                       BENNETT AMENDMENT NO. 310

  Mr. GRAMM (for Mr. Bennett) proposed an amendment to the bill, S. 
900, supra; as follows:

       At the appropriate place in the bill, insert the following:
       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.''
                                 ______
                                 

                       BENNETT AMENDMENT NO. 311

  (Ordered to lie on the table.)
  Mr. BENNETT submitted an amendment intended to be proposed by him to 
the bill, S. 900, supra; as follows:

       On page 11, line 11, after ``represent'' insert ``, as 
     determined by the insurance authority of the State of 
     domicile of the insurance company,''.

                              Explanation

       S. 900 requires that for an investment by an insurance 
     company to be treated as ``financial in nature'' it must be 
     ``made in the ordinary course of business of such insurance 
     company in accordance with relevant State law governing such 
     investments.'' This amendment makes clear that the 
     determination whether an investment is ``made in the ordinary 
     course of business of such insurance company in accordance 
     with State law governing such investments'' will be made by 
     the insurance authority of the state of domicile of the 
     insurance company.
       State insurance authorities are most experienced and best 
     qualified to determine whether insurance company investments 
     are made in the ordinary course of business in accordance 
     with relevant state law governing such investments. This 
     amendment also will implement the principle of functional 
     regulation established generally in S. 900 with respect to 
     the conduct of business by insurance companies.
                                 ______
                                 

                     DORGAN AMENDMENTS NOS. 312-313

  Mr. DORGAN proposed two amendments to the bill, S. 900, supra; as 
follows:

                           Amendment No. 312

       At the appropriate place, insert the following:

     SEC. __. LIMITATION ON DERIVATIVES ACTIVITIES.

       (a) Insured 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. DERIVATIVE INSTRUMENTS.

       ``(a) Derivatives Activities.--
       ``(1) General prohibition.--Except as provided in paragraph 
     (2), neither an insured depository institution, nor any 
     affiliate thereof, may purchase, sell, or engage in any 
     transaction involving a derivative financial instrument for 
     the account of that institution or affiliate.
       ``(2) Exceptions.--
       ``(A) Hedging transactions.--An insured depository 
     institution may purchase, sell, or engage in hedging 
     transactions to the extent that such activities are approved 
     by rule, regulation, or order of the appropriate Federal 
     banking agency issued in accordance with paragraph (3).
       ``(B) Separately capitalized affiliate.--A separately 
     capitalized affiliate of an insured depository institution 
     that is not itself an insured depository institution may 
     purchase, sell, or engage in a transaction involving a 
     derivative financial instrument if such affiliate complies 
     with all rules, regulations, or orders of the appropriate 
     Federal banking agency issued in accordance with paragraph 
     (3).
       ``(C) De minimis interests.--An insured depository 
     institution may purchase, sell, or engage in transactions 
     involving de minimis interests in derivative financial 
     instruments for the account of that institution to the extent 
     that such activity is defined and approved by rule, 
     regulation, or order of the appropriate Federal banking 
     agency issued in accordance with paragraph (3).
       ``(D) Existing interests.--During the 3-month period 
     beginning on the date of enactment of this section, nothing 
     in this section shall be construed--
       ``(i) as affecting an interest of an insured depository 
     institution in any derivative financial instrument that 
     existed on the date of enactment of this section; or
       ``(ii) as restricting the ability of the institution to 
     acquire reasonably related interests in other derivative 
     financial instruments for the purpose of resolving or 
     terminating an interest of the institution in any derivative 
     financial instrument that existed on the date of enactment of 
     this section.
       ``(3) Issuance of rules, regulations, and orders.--The 
     appropriate Federal banking agency shall issue appropriate 
     rules, regulations, and orders governing the exceptions 
     provided for in paragraph (2), including--
       ``(A) appropriate public notice requirements;
       ``(B) a requirement that any affiliate described in 
     paragraph (2)(B) shall clearly and conspicuously notify the 
     public that none of the assets of the affiliate, nor the risk 
     of loss associated with the transaction involving a 
     derivative financial instrument, are insured under Federal 
     law or otherwise guaranteed by the Federal Government or the 
     parent company of the affiliate; and
       ``(C) any other requirements that the appropriate Federal 
     banking agency considers to be appropriate.
       ``(b) Definitions.--For purposes of this section--
       ``(1) the term `derivative financial instrument' means--
       ``(A) an instrument the value of which is derived from the 
     value of stocks, bonds, other loan instruments, other assets, 
     interest or currency exchange rates, or indexes, including 
     qualified financial contracts (as defined in section 
     11(e)(8)); and
       ``(B) any other instrument that an appropriate Federal 
     banking agency determines, by regulation or order, to be a 
     derivative financial instrument for purposes of this section; 
     and
       ``(2) the term `hedging transaction' means any transaction 
     involving a derivative financial instrument if--
       ``(A) such transaction is entered into in the normal course 
     of the institution's business primarily--
       ``(i) to reduce risk of price change or currency 
     fluctuations with respect to property that is held or to be 
     held by the institution; or
       ``(ii) to reduce risk of interest rate or price changes or 
     currency fluctuations with respect to loans or other 
     investments made or to be made, or obligations incurred or to 
     be incurred, by the institution; and
       ``(B) before the close of the day on which such transaction 
     was entered into (or such earlier time as the appropriate 
     Federal banking agency may prescribe by regulation), the 
     institution clearly identifies such transaction as a hedging 
     transaction.''.
       (b) Insured Credit Unions.--Title II of the Federal Credit 
     Union Act (12 U.S.C. 1781 et seq.) is amended by adding at 
     the end the following new section:

     ``SEC. 215. DERIVATIVE INSTRUMENTS.

       ``(a) Derivative Activities.--Except as provided in 
     subsection (b), neither an insured credit union, nor any 
     affiliate thereof, may purchase, sell, or engage in any 
     transaction involving a derivative financial instrument.
       ``(b) Applicability of Section 45 of the Federal Deposit 
     Insurance Act.--Section 45 of the Federal Deposit Insurance 
     Act shall apply with respect to insured credit unions and 
     affiliates thereof and to the Board in the same manner that 
     such section applies to insured depository institutions and 
     affiliates thereof (as those terms are defined in section 3 
     of that Act) and shall be enforceable by the Board with 
     respect to insured credit unions and affiliates under this 
     Act.
       ``(c) Derivative Financial Instrument.--For purposes of 
     this section, the term `derivative financial instrument' 
     means--
       ``(1) an instrument the value of which is derived from the 
     value of stocks, bonds, other loan instruments, other assets, 
     interest or currency exchange rates, or indexes, including 
     qualified financial contracts (as such term is defined in 
     section 207(c)(8)(D)); and
       ``(2) any other instrument that the Board determines, by 
     regulation or order, to be a derivative financial instrument 
     for purposes of this section.''.
       (c) Bank Holding Companies.--Section 3 of the Bank Holding 
     Company Act of 1956 (12 U.S.C. 1842) is amended by adding at 
     the end the following new subsection:
       ``(h) Derivatives Activities.--
       ``(1) In general.--A subsidiary of a bank holding company 
     may purchase, sell, or engage in any transaction involving a 
     derivative financial instrument for the account of that 
     subsidiary if that subsidiary--
       ``(A) is not an insured depository institution or a 
     subsidiary of an insured depository institution; and
       ``(B) is separately capitalized from any affiliated insured 
     depository institution.
       ``(2) Applicability of section 45 of the federal deposit 
     insurance act.--Section 45

[[Page S4922]]

     of the Federal Deposit Insurance Act shall apply with respect 
     to bank holding companies and the Board in the same manner 
     that section applies to an insured depository institution (as 
     such term is defined in section 3 of that Act) and shall be 
     enforceable by the Board with respect to bank holding 
     companies under this Act.
       ``(3) Derivative financial instrument.--For purposes of 
     this subsection, the term `derivative financial instrument' 
     means--
       ``(A) an instrument the value of which is derived from the 
     value of stocks, bonds, other loan instruments, other assets, 
     interest or currency exchange rates, or indexes, including 
     qualified financial contracts (as such term is defined in 
     section 207(c)(8)(D)); and
       ``(B) any other instrument that the Board determines, by 
     regulation or order, to be a derivative financial instrument 
     for purposes of this subsection.''.
                                  ____


                           Amendment No. 313

       At the end of title III, insert the following:

     SEC. 312. TREATMENT OF LARGE HEDGE FUNDS UNDER INVESTMENT 
                   COMPANY ACT OF 1940.

       Section 3(c) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-3(c)) is amended--
       (1) in paragraph (1), in the first sentence, by inserting 
     ``, which has total assets of less than $1,000,000,000, and'' 
     after ``hundred persons''; and
       (2) in paragraph (7), in the first sentence, by inserting 
     ``which has total assets of less than $1,000,000,000,'' after 
     ``qualified purchasers,''.
                                 ______
                                 

                       SCHUMER AMENDMENT NO. 314

  Mr. SCHUMER proposed an amendment to the bill, S. 900, supra; as 
follows:

       At the appropriate place, insert the following:
                       TITLE VII--ATM FEE REFORM

      SEC. 701. SHORT TITLE.

       This title 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:
       ``(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; and
       ``(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.
       ``(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) Electronic fund transfer.--The term `electronic fund 
     transfer' includes a transaction which 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.
       ``(ii) 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 which holds the 
     account of such consumer from which the transfer is made.

       ``(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:
       ``(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)(ii)) if the consumer initiates a 
     transfer from an automated teller machine which 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 and 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 which 
     will be imposed upon the consummation of the transaction by--
       (A) any automated teller machine operator (as defined in 
     section 904(d)(2)(D)(ii) 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 which 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 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, 
     how 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).''.
                                 ______
                                 

                 SHELBY (AND OTHERS) AMENDMENT NO. 315

  Mr. SHELBY (for himself, Mr. Daschle, Mr. Grams, Mr. Reed, Mr. 
Bennett, Mr. Hagel, and Ms. Landrieu) proposed an amendment to the 
bill, S. 900, supra; as follows:

       Redesignate sections 123, 124, and 125 as sections 125, 
     126, and 127 respectively, strike section 122, and insert the 
     following:

     SEC. 122. SUBSIDIARIES OF NATIONAL BANKS AUTHORIZED TO ENGAGE 
                   IN FINANCIAL ACTIVITIES.

       Chapter one of title LXII of the revised statutes of United 
     States (12 U.S.C. 21 et seq.) is amended--
       (1) by redesignating section 5136A (12 U.S.C. 25a) as 
     section 5136B; and
       (2) by inserting after section 5136 (12 U.S.C. 24) the 
     following new section:

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

       ``(a) Activities Permissible.--
       ``(1) In general.--A subsidiary of a national bank may--
       ``(A) engage in any activity that is permissible for the 
     parent national bank;
       ``(B) engage in any activity authorized under section 25 or 
     25A of the Federal Reserve Act, the Bank Service Company Act, 
     or any other Federal statute that expressly by its terms 
     authorizes national banks to own or control subsidiaries 
     (other than this section); and
       ``(C) engage in any activity permissible for a bank holding 
     company under any provision of section 4(k) of the Bank 
     Holding Company Act of 1956 other than--
       ``(i) paragraph (4)(B) of such section (relating to 
     insurance activities) insofar as such

[[Page S4923]]

     paragraph permits a bank holding company to engage as 
     principal in insuring, guaranteeing, or indemnifying against 
     loss, harm, damage, illness, disability, or death, or to 
     engage as principal in providing or issuing annuities; and
       ``(ii) paragraph (4)(I) of such section (relating to 
     insurance company investments).
       ``(2) Limitations.--A subsidiary of a national bank--
       ``(A) may not, pursuant to subparagraph (C) of paragraph 
     (1)--
       ``(i) underwrite insurance other than credit-related 
     insurance;
       ``(ii) engage in real estate investment or development 
     activities (except to the extent that a Federal statute 
     expressly authorizes a national bank to engage directly in 
     such an activity); and
       ``(B) may not engage in any activity not permissible under 
     paragraph (1).
       ``(b) Requirements Applicable to National Banks With 
     Financial Subsidiaries.--
       ``(1) In general.--A financial subsidiary of a national 
     bank may engage in activities pursuant to subsection 
     (a)(1)(C) only if--
       ``(A) the national bank meets the requirements, as 
     determined by the Comptroller of the Currency, of Section 
     (4)(l)(1) of the Bank Holding Company Act of 1956 (other than 
     subparagraph (C));
       ``(B) each insured depository institution affiliate of the 
     national bank meet the requirements, as determined by the 
     Comptroller of the Currency, of Section (4)(l)(1) of the Bank 
     Holding Company Act of 1956 (other than subparagraph (C)); 
     and
       ``(C) the national bank has received the approval of the 
     Comptroller of the Currency by regulation or order.
       ``(2) Corrective Procedures.--
       ``(A) In general.--The Comptroller of the Currency shall, 
     by regulations prescribe procedures to enforce paragraph (1).
       ``(B) Stringency.--The regulation prescribed under 
     subparagraph (A) shall be no less stringent than the 
     corresponding restrictions and requirements of section 4(m) 
     of the Bank Holding Company Act of 1956.
       ``(c) Definitions.--For purpose of this section, the 
     following definitions shall apply;
       ``(1) Affiliate.--The term `affiliate' has the same meaning 
     as in section 3 of the Federal Deposit Insurance Act.
       ``(2) Financial Subsidiary.--The term `financial 
     subsidiary' means a company that--
       ``(A) is a subsidiary of an insured bank; and
       ``(B) is engaged as principal in any financial activity 
     that is not permissible under subparagraph (A) or (B) of 
     subsection (a)(1) of this section.
       ``(3) Subsidiary.--The term `subsidiary' has the same 
     meaning as in section 2 of the Bank Holding Company Act of 
     1956.
       ``(4) Well capitalized.--The term `well capitalized' has 
     the same meaning as in section 38 of the Federal Deposit 
     Insurance Act.
       ``(5) Well managed.--The term `well managed' means--
       ``(A) in the case of an insured depository institution that 
     has been examined, the achievement of--
       ``(i) a composite rating of 1 or 2 under the Uniform 
     Financial Instutitions Rating System (or an equivalent rating 
     under an equivalent rating system) in connection with the 
     most recent examination or subsequent review of the insured 
     depository institution; and
       ``(ii) at least a rating of 2 for management, if that 
     rating is given; or
       ``(B) in the case of an insured depository institution that 
     has not been examined, the existence and use of managerial 
     resources that the appropriate Federal banking agency 
     determines are satisfactory.''.

     SEC. 123. SAFETY AND SOUNDNESS FIREWALLS BETWEEN BANKS AND 
                   THEIR FINANCIAL SUBSIDIARIES.

       (a) Purposes.--The purposes of this section are--
       (1) to protect the safety and soundness of any insured bank 
     that has a financial subsidiary;
       (2) to apply to any transaction between the bank and the 
     financial subsidiary (including a loan, extension of credit, 
     guarantee, or purchase of assets), other than an equity 
     investment, the same restrictions and requirements as would 
     apply if the financial subsidiary were a subsidiary of a bank 
     holding company having control of the bank; and
       (3) to apply to any equity investment of the bank in the 
     financial subsidiary restrictions and requirements equivalent 
     to those that would apply if--
       (A) the bank paid a dividend in the same dollar amount to a 
     bank holding company having control of the bank; and
       (B) the bank holding company used the proceeds of the 
     dividend to make an equity investment in a subsidiary that 
     was engaged in the same activities a the financial subsidiary 
     of the bank.
       (b) Safety and Soundness Firewalls Applicable to 
     Subsidiaries of Banks.--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. SAFETY AND SOUNDNESS FIREWALLS APPLICABLE TO 
                   SUBSIDIARIES OF BANKS.

       ``(a) Limiting the Equity Investment of a Bank in a 
     Subsidiary.--
       ``(1) Capital deduction.--In determining whether an insured 
     bank complies with applicable regulatory capital standards--
       ``(A) the appropriate Federal banking agency shall deduct 
     from the assets and tangible equity of the bank the aggregate 
     amount of the outstanding equity investments of the bank in 
     financial subsidiaries of the bank; and
       ``(B) the assets and liabilities of such financial 
     subsidiaries shall not be consolidated with those of the 
     bank.
       ``(2) Investment limitation.--An insured bank shall not, 
     without the prior approval of the appropriate Federal banking 
     agency, make any equity investment in a financial subsidiary 
     of the bank if that investment would, when made, exceed the 
     amount that the bank could pay as a dividend without 
     obtaining prior regulatory approval.
       ``(b) Operational and Financial Safeguards for the Bank.--
     An insured bank that has a financial subsidiary shall 
     maintain procedures for identifying and managing any 
     financial and operational risks posed by the financial 
     subsidiary.
       ``(c) Maintenance of Separate Corporate Identity and 
     Separate Legal Status.--
       ``(1) In general.--Each insured bank shall ensure that the 
     bank maintains and complies with reasonable policies and 
     procedures to preserve the separate corporate identity and 
     legal status of the bank and any financial subsidiary or 
     affiliate of the bank.
       ``(2) Examinations.--The appropriate Federal banking 
     agency, as part of each examination, shall review whether an 
     insured bank is observing the separate corporate identity and 
     separate legal status of any subsidiaries and affiliates of 
     the bank.
       ``(d) Financial Subsidiary Defined.--For purposes of this 
     section, the term `financial subsidiary' has the same meaning 
     as section 5136A(c)(2) of the Revised Statutes of the United 
     States.
       ``(e) Regulations.--The appropriate Federal banking 
     agencies shall jointly prescribe regulations implementing 
     this section.''.
       (c) Limiting a Bank's Credit Exposure to a Financial 
     Subsidiary to the Amount of Permissible Credit Exposure to an 
     Affiliate.--Section 23A of the Federal Reserve Act (12 U.S.C. 
     371c) is amended--
       (1) by redesignating subsection (e) as subsection (f); and
       (2) 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' has 
     the same meaning as section 5136A(c)(2) of the revised 
     statutes of the United States.
       ``(2) Application to transactions between a financial 
     subsidiary of a bank and the bank.--For purposes of applying 
     this section and section 23B to a transaction between a 
     financial subsidiary of a bank and the bank (or between such 
     financial subsidiary and any other subsidiary of the bank 
     that is not a financial subsidiary), and notwithstanding 
     subsection (b)(2) and section 23B(d)(1)--
       ``(A) the financial subsidiary of the bank--
       ``(i) shall be deemed to be an affiliate of the bank and of 
     any other subsidiary of the bank that is not a financial 
     subsidiary; and
       ``(ii) shall not be deemed a subsidiary of the bank; and
       ``(B) a purchase of or investment in equity securities 
     issued by the financial subsidiary shall not be deemed to be 
     a covered transaction,
       ``(3) Application to transactions between financial 
     subsidiary and nonbank affiliates.--
       ``(A) In general.--A transaction between a financial 
     subsidiary and an affiliate of the financial subsidiary (that 
     is not a subsidiary of a bank) shall not be deemed to be a 
     transaction between a subsidiary of a bank and an affiliate 
     of the bank for purposes of section 23A or section 23B of 
     this Act.
       ``(B) Certain affiliates excluded.--For purposes of this 
     paragraph, the term `affiliate' shall not include a bank, or 
     a subsidiary of a bank that is engaged exclusively in 
     activities permissible for a national bank to engage in 
     directly or authorized for a subsidiary of a national bank 
     under any federal statute other than section 5136A of the 
     Revised Statutes of the United States.''.

     SEC. 124. FUNCTIONAL REGULATION.

       (a) Purpose.--The purpose of this section is to ensure 
     that--
       (1) securities activities conducted in a subsidiary of a 
     bank are functionally regulated by the Securities and 
     Exchange Commission to the same extent as if they were 
     conducted in a nondepository subsidiary of a bank holding 
     company; and
       (2) insurance agency and brokerage activities conducted in 
     a subsidiary of a bank are functionally regulated by a State 
     insurance authority to the same extent as if they were 
     conducted in a nondepository subsidiary of a bank holding 
     company.
       (b) Functional Regulation of Financial Subsidiaries.--The 
     Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), is 
     amended by inserting after section 45 (as added by section 
     123 of this subtitle) the following new section:

     ``SEC. 46. FUNCTIONAL REGULATION OF SECURITIES SUBSIDIARIES 
                   AND INSURANCE AGENCY SUBSIDIARIES OF INSURED 
                   DEPOSITORY INSTITUTIONS.

       ``(a) Broker or Dealer Subsidiary.--A broker or dealer that 
     is a subsidiary of an insured depository institution shall be 
     subject to regulation under the Securities Exchange Act of 
     1934 in the same manner and to the same extent as a broker or 
     dealer that--
       ``(1) is controlled by the same bank holding company as 
     controls the insured depository institution; and
       ``(2) is not an insured depository institution or a 
     subsidiary of an insured depository institution.

[[Page S4924]]

       ``(b) Insurance Agency Subsidiary.--Subject to Section 104 
     of the Act, an insurance agency or brokerage that is a 
     subsidiary of an insured depository institution shall be 
     subject to regulation by a State insurance authority in the 
     same manner and to the same extent as an insurance agency or 
     brokerage that--
       ``(1) is controlled by the same bank holding company as 
     controls the insured depository institution; and
       ``(2) is not an insured depository institution or a 
     subsidiary of an insured depository institution.
       ``(c) Definitions.--For purposes of this section, the terms 
     `broker' and `dealer' have the same meanings as in section 3 
     of the Securities Exchange Act of 1934.''.

                                 ______
                                 

                        BRYAN AMENDMENT NO. 316

  Mr. BRYAN proposed an amendment to the bill, S. 900, supra; as 
follows:

       On page 150, after line 21, add the following:

                TITLE VII--FINANCIAL INFORMATION PRIVACY

     SEC. 701. SHORT TITLE.

       This title may be cited as the ``Financial Information 
     Privacy Act of 1999''.

     SEC. 702. DEFINITIONS.

       In this title--
       (1) the term ``covered person'' means a person that is 
     subject to the jurisdiction of any of the Federal financial 
     regulatory authorities; and
       (2) the term ``Federal financial regulatory authorities'' 
     means--
       (A) each of the Federal banking agencies, as that term is 
     defined in section 3(z) of the Federal Deposit Insurance Act; 
     and
       (B) the Securities and Exchange Commission.

     SEC. 703. PRIVACY OF CONFIDENTIAL CUSTOMER INFORMATION.

       (a) Rulemaking.--The Federal financial regulatory 
     authorities shall jointly issue final rules to protect the 
     privacy of confidential customer information relating to the 
     customers of covered persons, not later than 270 days after 
     the date of enactment of this Act (and shall issue a notice 
     of proposed rulemaking not later than 150 days after the date 
     of enactment of this Act), which rules shall--
       (1) define the term ``confidential customer information'' 
     to be personally identifiable data that includes 
     transactions, balances, maturity dates, payouts, and payout 
     dates, of--
       (A) deposit and trust accounts;
       (B) certificates of deposit;
       (C) securities holdings; and
       (D) insurance policies;
       (2) require that a covered person may not disclose or share 
     any confidential customer information to or with any 
     affiliate or agent of that covered person if the customer to 
     whom the information relates has provided written notice, as 
     described in paragraphs (4) and (5), to the covered person 
     prohibiting such disclosure or sharing--
       (A) with respect to an individual that became a customer on 
     or after the effective date of such rules, at the time at 
     which the business relationship between the customer and the 
     covered person is initiated and at least annually thereafter; 
     and
       (B) with respect to an individual that was a customer 
     before the effective date of such rules, at such time 
     thereafter that provides a reasonable and informed 
     opportunity to the customer to prohibit such disclosure or 
     sharing and at least annually thereafter;
       (3) require that a covered person may not disclose or share 
     any confidential customer information to or with any person 
     that is not an affiliate or agent of that covered person 
     unless the covered person has first--
       (A) given written notice to the customer to whom the 
     information relates, as described in paragraphs (4) and (5); 
     and
       (B) obtained the informed written or electronic consent of 
     that customer for such disclosures or sharing;
       (4) require that the covered person provide notices and 
     consent acknowledgments to customers, as required by this 
     section, in separate and easily identifiable and 
     distinguishable form;
       (5) require that the covered person provide notice as 
     required by this section to the customer to whom the 
     information relates that describes what specific types of 
     information would be disclosed or shared, and under what 
     general circumstances, to what specific types of businesses 
     or persons, and for what specific types of purposes such 
     information could be disclosed or shared;
       (6) require that the customer to whom the information 
     relates be provided with access to the confidential customer 
     information that could be disclosed or shared so that the 
     information may be reviewed for accuracy and corrected or 
     supplemented;
       (7) require that, before a covered person may use any 
     confidential customer information provided by a third party 
     that engages, directly or indirectly, in activities that are 
     financial in nature, as determined by the Federal financial 
     regulatory authorities, the covered person shall take 
     reasonable steps to assure that procedures that are 
     substantially similar to those described in paragraphs (2) 
     through (6) have been followed by the provider of the 
     information (or an affiliate or agent of that provider); and
       (8) establish a means of examination for compliance and 
     enforcement of such rules and resolving consumer complaints.
       (b) Limitation.--The rules prescribed pursuant to 
     subsection (a) may not prohibit the release of confidential 
     customer information--
       (1) that is essential to processing a specific financial 
     transaction that the customer to whom the information relates 
     has authorized;
       (2) to a governmental, regulatory, or self-regulatory 
     authority having jurisdiction over the covered financial 
     entity for examination, compliance, or other authorized 
     purposes;
       (3) to a court of competent jurisdiction;
       (4) to a consumer reporting agency, as defined in section 
     603 of the Fair Credit Reporting Act for inclusion in a 
     consumer report that may be released to a third party only 
     for a purpose permissible under section 604 of that Act; or
       (5) that is not personally identifiable.
       (c) Construction.--Nothing in this section or the rules 
     prescribed under this section shall be construed to amend or 
     alter any provision of the Fair Credit Reporting Act.
                                 ______
                                 

                 LEVIN (AND SCHUMER) AMENDMENT NO. 317

  Mr. LEVIN (for himself and Mr. Schumer) proposed an amendment to the 
bill, S. 900, supra; as follows:

       On page 124, line 25, before ``Section'' insert the 
     following:
       ``(1) It is the intention of this Act subject to carefully 
     defined exceptions which do not undermine the dominant 
     principle of functional regulation to ensure that securities 
     transactions effected by a bank are regulated by securities 
     regulators, notwithstanding any other provision of this Act.
       (2)''.
                                 ______
                                 

                 GRAMM (AND SARBANES) AMENDMENT NO. 318

  Mr. GRAMM (for himself and Mr. Sarbanes) proposed an amendment to the 
bill, S. 900, supra; as follows:

       On page 18, strike line 22 and all that follows through 
     page 19, line 2 and insert the following:
       ``(2) the attributed aggregate consolidated assets of the 
     company held by the bank holding company pursuant to this 
     subsection, and not otherwise permitted to be held by a bank 
     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 bank 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 insured depository institution; 
     or
       ``(B) any affiliated insured depository institution to 
     offer or market any product or service of any company, the 
     shares of which are owned or controlled by such bank holding 
     company pursuant to this subsection.''.
       On page 11, line 11, after ``represent'' insert ``, as 
     determined by the insurance authority of the State of 
     domicile of the insurance company,''.
       At the appropriate place insert:

     SEC. --. INTERSTATE BRANCHES AND AGENCIES OF FOREIGN BANKS.

       Section 5 of the International Banking Act of 1978, as 
     amended (12 U.S.C. Sec. 3103), is mended by striking 
     subsection (a)(7) and substituting the following:
       ``(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 (12 U.S.C. Sec. 611 et seq.); 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 brnch of the type 
     referred to in subsection (a)(7)(A)(ii), located in a State 
     outside the foreign bank's home state, into a Federal or 
     State branch if the establishment and operation of such 
     branch is permitted by such State; and
       ``(i) such agency or branch was in operation in such State 
     on the day before September 29, 1994, or
       ``(ii) such agency or branch has been in operation in such 
     State for a period of time that meets the State's minimum age 
     requirement permitted under 12 U.S.C. Sec. 1831u(a)(5).''
       At the appropriate place, insert the following:

[[Page S4925]]

     SEC. __. PROVISION OF TECHNICAL ASSISTANCE TO 
                   MICROENTERPRISES.

       (a) In General.--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:

    ``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--
       ``(1) the term `Administrator' has the same meaning as in 
     section 103;
       ``(2) the term `capacity building services' means services 
     provided to an organization that is, or 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;
       ``(3) the term `collaborative' means 2 or more nonprofit 
     entities that agree to act jointly as a qualified 
     organization under this subtitle;
       ``(4) 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;
       ``(5) the term `Fund' has the same meaning as in section 
     103;
       ``(6) the term `Indian tribe' has the same meaning as in 
     section 103;
       ``(7) the term `intermediary' means a private, nonprofit 
     entity that seeks to serve microenterprise development 
     organizations and programs as authorized under section 175;
       ``(8) the term `low-income person' has the same meaning as 
     in section 103;
       ``(9) the term `microentrepreneur' means the owner or 
     developer of a microenterprise;
       ``(10) 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) 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 or prospective 
     entrepreneurs;
       ``(12) the term `training and technical assistance' means 
     services and support provided to disadvantaged entrepreneurs 
     or prospective 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; and
       ``(13) 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 Fund 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 Fund 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 
     organization or entity 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 and racially and 
     ethnically diverse populations.

     ``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 Fund.
       ``(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 Fund 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 Fund shall establish.

     ``SEC. 179. RECORDKEEPING.

       ``The requirements of section 115 shall apply to a 
     qualified organization receiving assistance from the Fund 
     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 Fund 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.''.
       (b) Administrative Expenses.--Section 121(a)(2)(A) of the 
     Riegle Community Development and Regulatory Improvement Act 
     of 1994 (12 U.S.C. 4718(a)(2)(A)) is amended--
       (1) by striking ``$5,550,000'' and inserting 
     ``$6,100,000''; and
       (2) in the first sentence, by inserting before the period 
     ``, including costs and expenses associated with carrying out 
     subtitle C''.
       (c) Conforming Amendments.--Section 104(d) of the Riegle 
     Community Development and Regulatory Improvement Act of 1994 
     (12 U.S.C. 4703(d)) is amended--
       (1) in paragraph (2)--
       (A) by striking ``15'' and inserting ``17'';
       (B) in subparagraph (G)--
       (i) by striking ``9'' and inserting ``11'';
       (ii) by redesignating clauses (iv) and (v) as clauses (v) 
     and (vi), respectively; and
       (iii) by inserting after clause (iii) the following:
       ``(iv) 2 individuals who have expertise in microenterprises 
     and microenterprise development;''; and
       (2) in paragraph (4), in the first sentence, by inserting 
     before the period ``and subtitle C''.
       At the appropriate place, insert the following:

     SEC. __. DISCLOSURES TO CONSUMERS UNDER THE TRUTH IN LENDING 
                   ACT.

       (a) Disclosure of Late Payment Deadlines and Penalties.--
     Section 127(b) of the Truth in Lending Act (15 U.S.C. 
     1637(b)) is amended by adding at the end the following:
       ``(12) If a charge is to be imposed due to the failure of 
     the obligor to make payment on or before a required payment 
     due date, the date that payment is due or, if different, the 
     date on which a late payment fee will be charged,

[[Page S4926]]

     shall be stated prominently in a conspicuous location on the 
     billing statement, together with the amount of the charge to 
     be imposed if payment is made after such date.''.
       (b) Disclosures Related to ``Teaser Rates''.--Section 
     127(c) (15 U.S.C. 1637(c)) is amended by inserting after 
     paragraph (5) (as so redesignated by section 4 of this Act) 
     the following:
       ``(6) Additional notice concerning `teaser rates'.--
       ``(A) In general.--An application or solicitation for a 
     credit card for which a disclosure is required under this 
     subsection shall contain the disclosure contained in 
     subparagraph (B) or (C), as appropriate, if the application 
     or solicitation offers, for an introductory period of less 
     than 1 year, an annual percentage rate of interest that--
       ``(i) is less than the annual percentage rate of interest 
     that will apply after the end of the introductory period; or
       ``(ii) in the case of an annual percentage rate that varies 
     in accordance with an index, is less than the current annual 
     percentage rate under the index that will apply after the end 
     of such period.
       ``(B) Fixed annual percentage rate.--If the annual 
     percentage rate that will apply after the end of the 
     introductory period will be a fixed rate, the application or 
     solicitation shall include the following disclosure: `The 
     annual percentage rate of interest applicable during the 
     introductory period is not the annual percentage rate that 
     will apply after the end of the introductory period. The 
     permanent annual percentage rate will apply after [insert 
     applicable date] and will be [insert applicable percentage 
     rate].'.
       ``(C) Variable annual percentage rate.--If the annual 
     percentage rate that will apply after the end of the 
     introductory period will vary in accordance with an index, 
     the application or solicitation shall include the following 
     disclosure: `The annual percentage rate of interest 
     applicable during the introductory period is not the annual 
     percentage rate that will apply after the end of the 
     introductory period. The permanent annual percentage rate 
     will be determined by an index, and will apply after [insert 
     applicable date]. If the index that will apply after such 
     date were applied to your account today, the annual 
     percentage rate would be [insert applicable percentage 
     rate].'.
       ``(D) Conditions for introductory rates.--If the annual 
     percentage rate of interest that will apply during the 
     introductory period described in subparagraph (A) is 
     revocable or otherwise conditioned upon any action by the 
     obligor, including any failure by the obligor to pay the 
     minimum payment amount or finance charge or to make any 
     payment by the stated monthly payment due date, the 
     application or solicitation shall include disclosure of--
       ``(i) the conditions that the obligor must meet to retain 
     the annual percentage rate of interest during the 
     introductory period; and
       ``(ii) the annual percentage rate of interest that will 
     apply as a result of the failure of the obligor to meet such 
     conditions.
       ``(E) Form of disclosure.--The disclosures required under 
     this paragraph shall be made in a clear and conspicuous 
     manner, in a prominent fashion.''.
       On page 10, at line 4, following ``by'', insert ``(I)'';
       On page 10, at line 5, following ``thereof'', insert the 
     following: ``or (II) an affiliate of an insurance company 
     described in paragraph (I)(ii) below 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,''
       At the appropriate place in the bill, insert a new section 
     as follows:

     ``SEC.  . CRA SUNSHINE REQUIREMENTS.

       ``(a) Disclosure and Reporting.--The Federal Deposit 
     Insurance Act (12 U.S.C. Sec. 1811 et seq.) is amended by 
     adding at the end thereof the following new section:

     `` `SEC.  . CRA SUNSHINE REQUIREMENTS.

       `` `(a) Public Disclosure of Agreements.--Any agreement 
     entered into by an insured depository institution or 
     affiliate with a nongovernmental entity or person made 
     pursuant to or in connection with the Community Reinvestment 
     Act involving funds or other resources of such insured 
     depository institution or affiliate 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 and shall obligate each party to comply with the 
     provisions of this section.
       `` `(b) Annual Report of Activity.--Each party to the 
     agreement shall report, as applicable, to the appropriate 
     federal banking agency with supervisory responsibility over 
     the insured depository institution, no less frequently than 
     once each year, such information as the federal banking 
     agency may be rule require relating to the following action 
     taken by the party pursuant to an agreement described in 
     subsection (a) during the previous 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; and
       `` `(2) aggregate data on loans, investments and services 
     provided by each party in its community or communities 
     pursuant to the agreement; and
       `` `(3) such other pertinent matters as determined by rule 
     by the appropriate federal banking agency with supervisory 
     responsibility over the insured depository institution.
       `` `(4) The Federal banking agency shall ensure that the 
     regulations implementing this section do not impose an undue 
     burden on the parties and that proprietary and confidential 
     information is protected.
       `` `(c) Existing Agreements.--The requirements of 
     subsection (b)(1), (2), and (3) shall be deemed to be 
     fulfilled with respect to any agreement made prior to May 5, 
     1999.
       `` `(d) Secondary Agreements.--Any agreement made on or 
     after May 5, 1999 pursuant to an agreement described in 
     subsection (a) also is subject to the requirements of 
     subsections (a) and (b).
       `` `(e) Definitions.--
       `` `(1) Ageement.--As used in this section, the term 
     ``agreement'' refers to any written contract, written 
     agreement, or other written understanding with a value in 
     excess of $10,000 annually, or a group of substantively 
     related contracts with an aggregate value of $10,000 
     annually, made pursuant to or in connection with the 
     Community Reinvestment Act of 1977, at least one party to 
     which is an insured depository institution or affiliate 
     thereof, or entity owned or controlled by an insured 
     depository institution or affiliate, whether organized on a 
     profit or not-for-profit basis. The term 1``agreement'' shall 
     not include any specific contract or commitment for a loan or 
     extension of credit to individuals, businesses, farms, or 
     other entities, where the purpose of the loan or extension of 
     credit does not include any re-lending or the borrowed funds 
     to the other parties.
       `` `(2) Appropriate federal banking agency and insured 
     depository institution.--As used in this section, the terms 
     ``appropriate federal banking agency'' and ``insured 
     depository institution'' have the same meanings as defined in 
     section 3 of this Act.
       `` `(d) Violations.--Any violation of the provisions of 
     this section shall be considered a violation of this Act. If 
     the party to the agreement that is not an insured depository 
     institution or affiliate fails to comply with this section, 
     the agreement shall not be enforceable after being given 
     notice and a reasonable period of time to perform or comply.
       `` `(e) Limitation.--Nothing in this section is intended to 
     provide any authority upon any appropriate federal banking 
     agency to enforce the provisions of the agreements that are 
     subject to the requirements of subsection (a).
       `` `(f) Regulations.--Each appropriate federal banking 
     agency shall prescribe regulations requiring procedures 
     reasonably designed to assure and monitor compliance with the 
     requirements of this section.'.''
       At the appropriate place, insert the following:

     SEC. __. FEDERAL RESERVE AUDITS.

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

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

       ``(a) Audit Required.--Each Federal reserve bank shall 
     annually obtain an audit of the financial statements of each 
     Federal reserve bank (which shall have been prepared in 
     accordance with generally accepted accounting principles) 
     using generally accepted auditing standards from an 
     independent auditor that meets the requirements of subsection 
     (b).
       ``(b) Auditor's Qualifications.--The independent auditor 
     referred to in subsection (a) shall--
       ``(1) be a certified public accountant who is independent 
     of the Federal Reserve System; and
       ``(2) meet any other qualifications that the Board may 
     establish.
       ``(c) Certification Required.--In each audit required under 
     subsection (a), the auditor shall certify to the Federal 
     reserve bank and to the Board that the auditor--
       ``(1) is a certified public accountant and is independent 
     of the Federal Reserve System; and
       ``(2) conducted the audit using generally accepted auditing 
     standards.
       ``(d) Certification by Federal Reserve Bank.--Not later 
     than 30 days after the completion of each audit required 
     under subsection (a), the Federal reserve bank shall provide 
     to the Comptroller General of the United States--
       ``(1) a certification that--
       ``(A) the Federal reserve bank has obtained the audit 
     required under subsection (a);
       ``(B) the Federal reserve bank has received the 
     certifications of the auditor required under subsection (c); 
     and
       ``(C) the audit fully complies with subsection (a).
       ``(e) Detection of Illegal Acts.--
       ``(1) Audit procedures.--Each audit required by this 
     section shall include procedures designed to provide 
     reasonable assurance of detecting illegal acts that would 
     have a direct and material effect on the determination of 
     financial statement amounts.
       ``(2) Reporting possible illegalities.--If, in the course 
     of conducting an audit required by this section, the 
     independent auditor detects or otherwise becomes aware of 
     information indicating that an illegal act (whether or not 
     perceived to have an effect on the financial statements of 
     the Federal reserve bank) has or may have occurred, the 
     auditor--
       ``(A) shall determine whether it is likely that the illegal 
     act has occurred; and
       ``(B) shall, if the auditor determines that the illegal act 
     is likely to have occurred--
       ``(i) determine and consider the possible effect of the 
     illegal act on the financial statements of the Federal 
     reserve bank; and

[[Page S4927]]

       ``(ii) as soon as practicable, inform the Board that the 
     illegal act is likely to have occurred.
       ``(3) Report to congress.--The independent auditor under 
     this section shall, as soon as practicable, directly report 
     its conclusions to the Committee on Governmental Affairs of 
     the Senate and the Committee on Government Reform of the 
     House of Representatives with regard to any possible illegal 
     act that has been detected or has otherwise come to the 
     attention of the auditor during the course of the audit 
     required by this section, if, after determining that the 
     Board is adequately informed with respect to such possible 
     illegal act, the auditor concludes that--
       ``(A) the possible illegal act has a direct and material 
     effect on the financial statements of the Federal reserve 
     bank;
       ``(B) the Board has not taken timely and appropriate 
     remedial actions with respect to the possible illegal act; 
     and
       ``(C) the failure to take remedial action is reasonably 
     expected to warrant departure from a standard report of the 
     auditor when made, or warrant resignation from the audit 
     engagement.
       ``(4) Resignation of auditor.--If an independent auditor 
     resigns from its engagement to audit a Federal reserve bank 
     under paragraph (3), the auditor shall furnish to the 
     Committee on Governmental Affairs of the Senate and the 
     Committee on Government Reform of the House of 
     Representatives, not later than 1 business day after such 
     resignation, a copy of the report of the auditor (or 
     documentation of any oral report given).
       ``(f) Recordkeeping.--To facilitate compliance with this 
     section, each Federal reserve bank shall--
       ``(1) ensure that the books, records, and accounts of the 
     Federal reserve bank are maintained and kept in sufficient 
     detail to accurately and fairly reflect the transactions and 
     dispositions of the assets of the bank;
       ``(2) devise and maintain a system of internal controls 
     sufficient to provide reasonable assurance that transactions 
     are recorded as necessary to permit preparation of financial 
     statements in conformity with generally accepted accounting 
     principles and to maintain accountability for assets;
       ``(3) ensure that access to assets of the Federal reserve 
     bank is permitted only in accordance with the general or 
     specific authorization of the Board; and
       ``(4) ensure that--
       ``(A) the recorded accountability for assets is compared 
     with the existing assets at reasonable intervals; and
       ``(B) appropriate action is taken with respect to any 
     differences.
       ``(g) Reports to Board, Congress.--Not later than April 30 
     of each year, each Federal reserve bank shall submit a copy 
     of each audit conducted under this section to the Board, and 
     to the Committee on Governmental Affairs of the Senate and 
     the Committee on Government Reform of the House of 
     Representatives.

     ``SEC. 11C. INDEPENDENT AUDITS OF FEDERAL RESERVE SYSTEM AND 
                   FEDERAL RESERVE BOARD.

       ``(a) Audit of Reserve System.--The Board shall annually 
     obtain an audit of the consolidated financial statements of 
     the Federal Reserve System (which shall have been prepared in 
     accordance with generally accepted accounting principles) 
     from an independent auditor, using generally accepted 
     auditing standards, based on reports of audits of Federal 
     reserve banks submitted to the Board under section 11B(g) and 
     the audit of the Board under subsection (b) of this section.
       ``(b) Audit of Board.--
       ``(1) In general.--The Board shall annually obtain an audit 
     of the financial statements of the Board (which shall have 
     been prepared in accordance with generally accepted 
     accounting principles) from an independent auditor, using 
     generally accepted auditing standards.
       ``(2) Priced services audit.--
       ``(A) In general.--As part of each audit of the Board 
     required by this subsection, the auditor shall--
       ``(i) audit the calculation of the private sector 
     adjustment factor established by the Board pursuant to 
     section 11A(c)(3) for the year that is the subject of the 
     audit; and
       ``(ii) audit the pro forma balance sheet and income 
     statement for the services described in section 11A(b), 
     including the determination of revenue, expenses, and income 
     before income taxes for each service listed in that section 
     (in accordance with the criteria specified in section 
     11A(c)(3)).
       ``(B) Report to the board.--The auditor shall report the 
     results of the audit under subparagraph (A)(ii) to the Board 
     in written form.
       ``(3) Limitation.--The evaluations and audits required by 
     this subsection shall not include deliberations, decisions, 
     or actions on monetary policy matters, including discount 
     authority under section 13, reserves of national banks, 
     securities credit, interest on deposits, and open market 
     operations.
       ``(c) Auditor's Qualifications.--An independent auditor 
     referred to in this section shall--
       ``(1) be a certified public accountant and be independent 
     of the Federal Reserve System; and
       ``(2) meet any other qualifications that the Board may 
     establish.
       ``(d) Certification Required.--In each audit required under 
     this section, the auditor shall certify to the Board that the 
     auditor--
       ``(1) is a certified public accountant and is independent 
     of the Federal Reserve System; and
       ``(2) conducted the audit using generally accepted auditing 
     standards.
       ``(e) Detection of Illegal Acts.--
       ``(1) Audit procedures.--Each audit required by this 
     section shall include procedures designed to provide 
     reasonable assurance of detecting illegal acts that would 
     have a direct and material affect on the determination of 
     financial statement amounts.
       ``(2) Reporting possible illegalities.--If, in the course 
     of conducting an audit of the Federal Reserve System or the 
     Board as required by this section, the independent auditor 
     detects or otherwise becomes aware of information indicating 
     that an illegal act (whether or not perceived to have an 
     effect on the financial statements of the Federal reserve 
     bank) has or may have occurred, the auditor--
       ``(A) shall determine whether it is likely that the illegal 
     act has occurred; and
       ``(B) shall, if the auditor determines that the illegal act 
     is likely to have occurred--
       ``(i) determine and consider the possible effect of the 
     illegal act on the financial statements of the Federal 
     Reserve System or the Board, as applicable; and
       ``(ii) as soon as practicable, inform the Board that the 
     illegal act is likely to have occurred.
       ``(3) Report to congress.--An independent auditor under 
     this section shall directly report, as soon as practicable, 
     its conclusions to the Committee on Governmental Affairs of 
     the Senate and the Committee on Government Reform of the 
     House of Representatives, with regard to any possible illegal 
     act that has been detected or has otherwise come to the 
     attention of the auditor during the course of an audit of the 
     Federal Reserve System or the Board required by this section, 
     if, after determining that the Board is adequately informed 
     with respect to such possible illegal act, the auditor 
     concludes that--
       ``(A) the possible illegal act has a direct and material 
     effect on the financial statements of the Federal Reserve 
     System or the Board, as applicable;
       ``(B) the Board has not taken timely and appropriate 
     remedial actions with respect to the possible illegal act; 
     and
       ``(C) the failure to take remedial action is reasonably 
     expected to warrant departure from a standard report of the 
     auditor when made, or warrant resignation from the audits 
     engagement.
       ``(4) Resignation of auditor.--If an independent auditor 
     resigns from its engagement to audit the Federal Reserve 
     System or the Board under paragraph (3), the auditor shall 
     furnish to the Committee on Governmental Affairs of the 
     Senate and the Committee on Government Reform of the House of 
     Representatives, not later than 1 business day after such 
     resignation, a copy of the report of the auditor (or 
     documentation of any oral report given).
       ``(f) Recordkeeping.--To facilitate compliance with this 
     section, the Board shall--
       ``(1) ensure that the books, records, and accounts of the 
     Board are maintained and kept in sufficient detail to 
     accurately and fairly reflect the transactions and 
     dispositions of assets;
       ``(2) devise and maintain a system of internal controls 
     sufficient to provide reasonable assurance that transactions 
     are recorded as necessary to permit preparation of financial 
     statements in conformity with generally accepted accounting 
     principles and to maintain accountability for assets;
       ``(3) ensure that access to assets of the Board is 
     permitted only in accordance with general or specific 
     authorization of the Board; and
       ``(4) ensure that--
       ``(A) the recorded accountability for assets is compared 
     with the existing assets at reasonable intervals; and
       ``(B) appropriate action is taken with respect to any 
     differences.
       ``(g) Reports to Congress.--Not later than May 31 of each 
     year, the Board shall make available all audits and reports 
     required by this section to the Committee on Governmental 
     Affairs of the Senate and the Committee on Government Reform 
     of the House of Representatives.''.
       (b) Federal Reserve Requirements.--
       (1) Clarification of fee schedule requirements.--
       (A) In general.--Section 11A(b) of the Federal Reserve Act 
     (12 U.S.C. 248a(b)) is amended--
       (i) by redesignating paragraphs (7) and (8) as paragraphs 
     (8) and (9), respectively; and
       (ii) by inserting after paragraph (6) the following:
       ``(7) transportation of paper checks in the clearing 
     process;''.
       (B) Publication of revised schedule.--Not later than 60 
     days after the date of enactment of this Act, the Board of 
     Governors of the Federal Reserve System shall publish a 
     revision of the schedule of fees required under section 11A 
     of the Federal Reserve Act that reflects the changes made in 
     the schedule in accordance with the amendments made by 
     subparagraph (A) of this paragraph.
       (2) Clarification of applicable pricing criteria.--Section 
     11A(c) of the Federal Reserve Act (12 U.S.C. 248a(c)) is 
     amended by striking paragraph (3) and inserting the 
     following:
       ``(3)(A) In each fiscal year, fees shall be established for 
     each service provided by the Federal reserve banks on the 
     basis of all direct and indirect costs actually incurred 
     (excluding the effect of any pension cost credit)

[[Page S4928]]

     in providing each of the services, including interest on 
     items credited prior to actual collection, overhead, and an 
     allocation of imputed costs, which takes into account the 
     taxes that would have been paid and the return on capital 
     that would have been provided had the services been provided 
     by a private business firm.
       ``(B) The pricing principles referred to in subparagraph 
     (A) shall be carried out with due regard to competitive 
     factors and the provision of an adequate level of such 
     services nationwide.
       ``(C)(i) Not later than 1 year after the date of enactment 
     of the Financial Services Modernization Act of 1999, and not 
     less frequently than once every 3 years thereafter, the Board 
     shall conduct a comprehensive review of the methodology used 
     to calculate the private sector adjustment factor pursuant to 
     section 11A(c)(3), including a public notice and comment 
     period.
       ``(ii) In conducting the review under clause (i), the Board 
     shall publish in the Federal Register all elements of the 
     methodology in use by the Board in the calculation of the 
     private sector adjustment factor pursuant to section 
     11A(c)(3) provide notice and solicit public comment on the 
     methodology, requesting commentators to identify areas of the 
     methodology that are outdated, inappropriate, unnecessary, or 
     that contribute to an inaccurate result in the calculation of 
     the private sector adjustment factor.
       ``(iii) The Board shall--
       ``(I) publish in the Federal Register a summary of the 
     comments received under this subparagraph, identifying 
     significant issues raised; and
       ``(II) provide comment on such issues and make changes to 
     the methodology to the extent that the Board considers to be 
     appropriate.
       ``(iv) Not later than 30 days after the completion of each 
     review under clause (i), the Board shall submit to Congress a 
     report which shall include--
       ``(I) a summary of any significant issues raised by public 
     comments received by the Board under this subparagraph and 
     the relative merits of such issues; and
       ``(II) an analysis of whether the Board is able to address 
     the concerns raised, or whether such concerns should be 
     addressed by legislation.''.
       On page 150, after line 21, add the following:
       ``(5) Conversion to national bank.--Notwithstanding any 
     other provision of law, any Federal savings assiciation 
     chartered and in operation prior to the date of enactment of 
     the Financial Services Modernization Act of 1999, with 
     branches in one or more States, may convert, at its option, 
     with the approval of the Comptroller of the Currency, into 
     one or more National banks, each of whom may ecompass one or 
     more of the branches of the Federal savings association in 
     one or more States; but only if the resulting national bank 
     or banks will meet any and all financial, management, and 
     capital requirements applicable to national banks.''.
       At the appropriate place, insert the following:

     SEC. 2. COMMUNITY DEVELOPMENT INSTITUTIONS TO BE ELIGIBLE TO 
                   BORROW AS A NONMEMBER FROM THE FEDERAL HOME 
                   LOAN BANK SYSTEM.

       Section 10b.--Section 10b of the Federal Home Loan Bank Act 
     (12 U.S.C. 1430b) is amended--
       (1) in subsection (a) by striking the second sentence and 
     inserting the following two sentences: ``Such mortgagees must 
     be (i) chartered institutions having succession and (ii) 
     subject to the inspection and supervision of some 
     governmental agency or a community development financial 
     institution (other than an insured depository institution or 
     a subsidiary thereof) that, at the time of the advance is 
     made, is certified under the Community Development Banking 
     and Financial Institutions Act of 1994. The principal 
     activity of such mortgagees in the mortgage field must 
     consist of lending their own funds and any advances may be 
     subject to the same collateralization requirements as applied 
     to other nonmember borrowers.
       (2) in the last sentence of subsection (a) by replacing the 
     word ``such'' with ``the same'' and by replacing the phrase 
     ``shall be determined by the board'' with the phrade ``are 
     comparable extensions of credit to members''; and
       (3) in subsection (b) by inserting in the first sentence 
     between the words ``agency'' and ``for'' the following 
     phrase: ``or a certified development financial institution''.
       At the appropriate place, insert the following:

     SEC. __. STUDY AND REPORT ON ADVERTISING PRACTICES OF ONLINE 
                   BROKERAGE SERVICES.

       (a) Study.--The Securities and Exchange Commission 
     (hereafter in this section referred to as the 
     ``Commission''), in consultation with the National 
     Association of Securities Dealers and other interested 
     parties, shall conduct a study of--
       (1) the nature and content of advertising by online 
     brokerage services in all media, including television, on the 
     Internet, radio, and in print;
       (2) if such advertising influences investors and potential 
     investors to make investment decisions, and if such 
     advertising improperly influences those investors and 
     potential investors to make inappropriate investment 
     decisions;
       (3) whether such advertising properly discloses the risks 
     associated with trading and investing in the capital markets; 
     and
       (4) whether--
       (A) there are appropriate regulatory mechanisms in place to 
     prevent any improper or deceptive advertising; and
       (B) the Commission has or needs additional resources or 
     authority to actively participate in such regulation.
       (b) Report.--Not later than 180 days after the date of 
     enactment of this Act, the Commission shall submit a report 
     to the Congress on the results of the study conducted under 
     subsection (a), together with any recommendations for changes 
     that it considers necessary to protect investors and 
     potential investors from improper or deceptive advertising.

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